Geospace Technologies Corporation

Welcome to the Geospace Technologies 3rd Quarter 2025 Earnings Conference Call. Hosting the call today from Geospace is Mr. Rich Kelly, President and Chief Executive Officer. He is joined by Mr. Robert Kurta, the company's Chief Financial Officer. Today's call is being recorded and will be available on the Geospace Technologies Investor Relations website following the call. At this time, all participants have been placed in a listen-only mode. and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, press star 0. It is now my pleasure to turn the floor over to Mr. Rich Kelly. Sir, you may begin.

Thank you, Angela. Good morning, and welcome to GSA Technology's conference call for the third quarter of fiscal year 2025. I am Rich Kelly, the company's chief executive officer and president. I am joined by Robert Carta, the company's chief financial officer. In our prepared remarks, I will first provide an overview of the third quarter, and Robert will then follow up with more in-depth commentary on our financial performance, as well as an overview of our financials. I will then give some final comments before opening the line for questions. Today's commentary on markets, revenues, planned operations, and capitalist expenditures may be considered forward-looking, as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on what we know now, but actual outcomes are affected by uncertainties beyond our control or prediction. Both known and unknown risks can lead to results that differ from what is said or implied today. Some of these risks and uncertainties are discussed in our FEC Form 10-K and 10-Q filings. For convenience, we will link a recording of this call on the Investor Relations page of our geospace.com website. which I invite everyone to browse through and learn more about Geospace, our subsidiaries, and our products. Note that today's recorded information is time-sensitive and may not be accurate at the time one listens to the replay. Yesterday, after the market closed, we released our financial results for the period ended June 30th, our third quarter of fiscal year 2025. For the three months into June 30, 2025, we reported revenue of $24.8 million with a net income of $0.8 million. For the first nine months of our fiscal year, we had $80.1 million in revenue with a net loss of $0.7 million. Strategic accomplishments during the third quarter in all of our business segments have reinforced the success of our diversification efforts. laying the foundation to further our revenue and profitability goals. In our smart water segment, we continue to generate strong organic growth with our Hydrocon Universal AMI connectors. They remain a reliable revenue and profit center, setting another revenue record for the first nine months. Our Aquana line of products continues to gain market acceptance, and we are seeing increased demand. We've also announced the product launch of AquaLink, It is an advanced multi-device and multi-unit Internet of Things, or IoT, endpoint designed to transform sub-metering and leak detection into multi-unit residential and commercial properties. With AquaLink, we are providing a smart, scalable solution that addresses the growing demand for accurate water monitoring in multi-unit properties. This multi-device, multi-unit capability, combined with advanced intelligent features, makes it an invaluable tool for property owners and managers to meet regulatory standards while smartly monitoring usage. These achievements continue to support our position that the smart water segment has great potential for growth. Our energy solutions team announced a permanent reservoir monitoring contract award for the Merrill Fields 3 and 4 from Pecker Brass, operator of the Merrill Fields Consortium. The contract encompasses the supply and installation of nearly 500 kilometers of the Optisize Permanent Reservoir Monitoring System, or BRM, covering 140 square kilometers of seabed area located deep offshore in the Santos Basin off the coast of Brazil. The equipment manufacturing portion of this contract should generate in excess of $80 million in revenue and is anticipated to take 16 to 18 months to complete. We will be recognizing this revenue throughout the project for normal revenue recognition rules. We do not anticipate any revenue recognition in this fiscal year. The contract also includes installation of the system, which is to be completed by Blue Marine Telecom, a Brazilian sub-T cable company. Full installation of this system and any associated revenue is anticipated in fiscal year 2027. Energy Solutions also achieved its first sale of the newly released Pioneer, an ultra-lightweight land node used for seismic surveys. The first units were purchased by a global engineering and professional services firm based in Canada. As part of our ongoing review and modernization of our product portfolio, we sold the assets associated with our Truma Recovery Device product line to Size Gear in June. we have confidence that SciSphere will support SRG customers with outstanding service and experience. While we continue to face headwinds in the ocean bottom node markets, these accomplishments indicate there are still opportunities to generate revenue and profitability in this segment. The increased success in our smart water and energy solution segments have further improved utilization of our Houston facility and should positively impact operational efficiencies. Building off this success, we invested in the growth of our intelligent industrial segment this quarter with the recently announced acquisition of Heartbeat Detector, a security technology developed by the United States Department of Energy's Oak Ridge National Laboratory. Used in more than a dozen countries to address human trafficking and prison security, the Heartbeat Detector is a small, portable device that uses advanced sensors to rapidly identify people hidden in vehicles. providing a modern, user-friendly interface in as little as 10 seconds. The product, which relies on the GSONE low-frequency single-element geophones manufactured in our facilities, has been proven 99% effective by Oak Ridge, Sandia, and Thunder Mountain National Laboratories. Domestically, the heartbeat detector is used extensively by departments of corrections and prison systems. Globally, the product has been leveraged for border crossings and prisons in many countries. There are more than 300 manned border checkpoint crossings in the United States and more than double that in Europe based on EU estimates. We intend to offer the Harpy detector on a subscription basis, aligning with our strategy to grow recurring revenue streams. As we increase the emphasis on our security and defense product portfolio, We have engaged former U.S. Border Patrol Chief Carla Provost to educate fellow national and homeland security professionals and accelerate end-user adoption of our advanced analytics and sensing solutions for border and perimeter security applications. We remain well-positioned to exploit the tremendous potential we have created with our products and services portfolio, our talented staff, and our continuing diversification into new high-margin markets. Additionally, our current backlog places us in a strong position going into the remainder of this year and beyond. Executive leadership continues to address workforce costs and development expenses on our path to sustained profitability. We will continue to pursue growth through acquisition with immediately accretive addition to top-line revenue. Overall, I have continued optimism that our company is well-positioned to perform going forward. I will now turn the call over to Robert to provide more detail of our financial performance.

Thanks, Rich, and good morning. Before I begin, I'd like to remind everyone that we will not provide any specific revenue or earnings guidance during our call this morning. In yesterday's press release of our third quarter ended June 30, 2025, we reported revenue of $24.8 million compared to last year's revenue of $24.9 million. The net income for the quarter was $760,000, or $0.06 per diluted share, compared to last year's net loss of $2.1 million, or $0.16 per diluted share. For the nine months ended June 30, 2025, we reported revenue of $80.1 million compared to revenue of $100.2 million last year. Our net loss for the nine-month period was $662,000, or 5 cents per diluted share, compared to last year's net income of $6.3 million, or 47 cents per diluted share. Our smart water segment produced revenue of $10.5 million for the three months ended June 30, 2025. This compares with revenue of $9.9 million for the same period of the prior fiscal year, an increase of 6%. For the nine-month period, the segment contributed revenue of $27.3 million versus $20.6 million, an increase of 33%. The increase in revenue of both periods is due to higher demand for our hydrocon connectors. The nine-month revenue marks a new high revenue for our smart water segment. Revenue from our energy solution segment totaled $8.1 million for the three-month period into June 30, 2025. This compares to $9.4 million in revenue for the same prior year period, representing a decrease of 14%. Revenue for the nine-month period is $35 million, a decrease of 42% over the equivalent prior year period. The decrease in revenue for the three-month and nine-month period was due to lower utilization and sales of our marine ocean bottom nodes. Our intelligent industrial segment revenue totaled $6.1 million for the three-month period into June 30, 2025. This compares with $6.5 million for the equivalent year-ago period, representing a decrease of 5%. Revenue for the nine-month period was $17.6 million. This compares to the prior year period of $19.1 million, a decrease of 8%. The decrease in revenue for both periods is due to lower demand from our surveillance and defense products and our imaging products. The decrease for the both periods is partially offset by an increase in demand for our contract manufacturing services. Our operating expenses increased by $900,000 for the third quarter of 2025, or 8%, and increased by $5.4 million, or 18%, for the nine-month period. Increase for both periods is due to the higher personnel cost and increased sales and marketing costs. Our nine-month cash investments in supplant property and equipment was $5.8 million, and additions to our rental fleet was $1.1 million. Our balance sheet at the end of the third quarter reflects $25.6 million of cash in short-term investments, and our credit facility has available borrowings of $15 million with no borrowings outstanding. As of June 30, 2025, the company's working capital is $75 million, which includes $32 million of trade accounts and financing receivables. Additionally, the company owns unencumbered property and real estate in both domestic and international locations. This concludes my discussion, and I'll turn the call back to Rich.