Geospace Technologies Reports 25.6% Revenue Decline, Restructures Business Segments

Geospace Technologies Corporation reported a significant decline in financial performance for the three months ended December 31, 2024, with total revenue of $37.2 million, down 25.6% from $50.0 million in the same period last year. The decrease was primarily attributed to a substantial drop in revenue from the Energy Solutions segment, which saw a 39.2% decline, largely due to lower demand for wireless products. The company’s net income for the quarter was $8.4 million, compared to $12.7 million in the prior year, resulting in earnings per share of $0.66, down from $0.96.

The company’s gross profit also decreased, totaling $20.1 million, a decline of 9.4% year-over-year. This reduction was mainly driven by decreased revenue from the Energy Solutions segment, although it was partially offset by a high gross profit margin on a $17 million wireless product sale. Operating expenses rose by 31% to $12.3 million, reflecting higher personnel costs and increased research and development expenditures. The company reported other income of $0.6 million, a notable improvement from a loss of $0.1 million in the previous year, primarily due to increased interest income from short-term investments.

Geospace Technologies has made strategic changes to its business segments, effective October 1, 2024, restructuring into three segments: Smart Water, Energy Solutions, and Intelligent Industrial. This reorganization aims to better allocate manufacturing costs and enhance operational efficiency. The Smart Water segment experienced a 72.1% increase in revenue, driven by heightened demand for its Hydroconn® cable and connector products, while the Energy Solutions segment's revenue was negatively impacted by a shift from rentals to purchases of equipment.

Operationally, the company reported a decrease in rental revenue from its wireless exploration products, which fell by 28.2% due to lower utilization of its OBX rental fleet. The total cash and cash equivalents, along with short-term investments, stood at $22.1 million as of December 31, 2024. The company utilized $11.5 million in cash from operating activities during the quarter, primarily due to increases in inventories and trade accounts receivable. Geospace Technologies maintains a strong balance sheet with no outstanding debt and has a revolving credit facility of $15 million, which it has not drawn upon.

Looking ahead, Geospace Technologies anticipates continued growth in its Smart Water segment, bolstered by the increasing adoption of its products in the water utility market. However, the company remains cautious about the Energy Solutions segment, which is subject to volatility due to economic conditions and oil prices. The management is focused on diversifying its product offerings and expanding its market presence to mitigate risks associated with its traditional energy-related business.