Geospace Technologies Reports Fiscal Year 2013 First Quarter Results

  Geospace Technologies Reports Fiscal Year 2013 First Quarter Results

Business Wire

HOUSTON -- February 6, 2013

Geospace Technologies Corporation (NASDAQ: GEOS) today announced net income of
$22.0 million, or $1.70 per diluted share, on revenues of $77.8 million for
its fiscal quarter ended December 31, 2012. This compares with a net income of
$8.7 million, or $0.68 per diluted share, on revenues of $43.3 million for the
comparable quarter last year.

“We are very pleased with the company’s performance in the first quarter
whereby we reported all-time record revenues and net income. Revenues
increased 80% over last year’s first quarter and net income grew 153%.
Wireless product sales led the way with revenues of $46.9 million, driven by
the sale of 47,000 channels of our GSX system. As expected, revenues from our
reservoir products increased significantly to $11.2 million primarily driven
by the recognition of $8.7 million of revenues from the Statoil order.
Quarterly revenues from our traditional seismic products were level with last
year, and our non-seismic products declined slightly,” said Gary D. Owens,
Geospace Technologies’ Chairman, President and CEO.

“The number of our wireless channels in the market place continues to increase
at a strong pace. As previously announced, we sold a 24,000-channel GSX system
to TGC Industries and a 12,000-channel GSX system to Dawson Geophysical, both
existing wireless customers operating in North America. In addition, we sold a
10,000-channel GSX system to SAExploration, a new international customer
offering seismic services in both North and South America. Since its
introduction back in 2008 and through December 31, 2012, we have sold 205,000
wireless channels and at December 31, 2012 we had 65,000 wireless channels in
our worldwide rental fleet. Since the end of the first quarter, we have
received and delivered a smaller GSX system to a new customer operating in
Mexico, and we have received an order from a Russian customer for another
small GSX system. While these systems are small, these transactions are
important to our goal of gaining more international exposure with the GSX
wireless system during fiscal year 2013.”

“Interest remains high for our new OBX subsea nodal system. Similar to the
GSX’s land seismic wireless applications, the OBX is our wireless system for
marine environments. We have recently received two small OBX orders from
Russian customers, one for a purchase and the other for a short-term rental.
Another small OBX system is expected to be rented to a customer operating in
West Africa. We expect to ship each of these OBX systems in the second quarter
of fiscal year 2013.”

“As mentioned in our last earnings report, the permanent seabed seismic
reservoir monitoring system ordered by Shell Brasil Petróleo Ltda is expected
to be shipped in our second quarter of fiscal year 2013. Revenue from this
contract is now expected to be approximately $17.7 million; however, the
incremental increase from the previously reported value of $14.9 million is
predominantly composed of incremental costs which will be passed-through to
Shell with little or no mark-up. During the quarter, we recognized $8.7
million of revenue from the $160 million Statoil order utilizing the
percentage of completion method of revenue recognition. At this time, we
reiterate our previous estimate that approximately 45%, 40% and 15% of the
Statoil order’s revenues and costs will be recognized in fiscal years 2013,
2014 and 2015, respectively.”

“Our current level of business activity has resulted in the need for new
employees. We added 31 new employees in our Houston operations in the first
quarter ended December 31, 2012 – a 4% increase – and our total employee count
for our Houston operations now stands at 844 and our worldwide employee count
stands at 1,216, slightly less than our all-time high.”

“During the quarter, we completed the purchase of two new buildings. One of
these buildings is a 19,000 square foot warehouse in Bogotá, Colombia which
will house our South American sales, equipment rental and product support
operations for our wireless and other seismic products. The second building is
a 30,000 square foot facility located near our Pinemont facility in northwest
Houston. The initial purpose of this facility is to provide the space
necessary to store and test the permanent seabed data acquisition systems for
both Shell and Statoil. We are pursuing additional space to expand other areas
of our operations, including our engineering and manufacturing areas.”

“The company’s balance sheet remains strong. We ended the quarter with $159
million of working capital, $65 million of cash and short-term investments,
and no long-term debt on our balance sheet. Our $25 million credit facility
remains untouched at this time, resulting in total liquidity of $90 million at
the end of the first quarter. We are in good shape to continue the production
of the Statoil order, expand our OBX inventories, and invest in new product
opportunities.”

Geospace Technologies Corporation designs and manufactures instruments and
equipment used by the oil and gas industry in the acquisition and processing
of seismic data as well as in reservoir characterization and monitoring
activities. The company also designs and manufactures non-seismic products,
including industrial products, offshore cables, thermal printing equipment and
film.

This press release includes “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included herein including statements regarding
potential future products and markets, our potential future revenues, future
financial position, business strategy, future expectations and estimates and
other plans and objectives for future operations, are forward-looking
statements. We believe our forward-looking statements are reasonable. However,
they are based on certain assumptions about our industry and our business that
may in the future prove to be inaccurate. Important factors that could cause
actual results to differ materially from our expectations include the level of
seismic exploration worldwide, which is influenced primarily by prevailing
prices for oil and gas, the extent to which our new products are accepted in
the market, the availability of competitive products that may be more
technologically advanced or otherwise preferable to our products, tensions in
the Middle East and other factors disclosed under the heading “Risk Factors”
and elsewhere in our most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q, which are on file with the Securities and Exchange
Commission. Further, all written and verbal forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by such factors.

                                                         
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)
                                                             
                                       Three Months          Three Months
                                       Ended                 Ended
                                       December 31, 2012     December 31, 2011
                                                             
Sales                                  $  77,751             $  43,281
Cost of sales                            37,187              22,623      
Gross profit                              40,564                20,658
                                                             
Operating expenses:
Selling, general and administrative       5,363                 4,735
expenses
Research and development expenses         3,365                 2,889
Bad debt expense                         269                 436         
Total operating expenses                 8,997               8,060       
                                                             
Loss on disposal of equipment            (19         )        --          
                                                             
Income from operations                   31,548              12,598      
                                                             
Other income (expense):
Interest expense                          (85         )         --
Interest income                           229                   267
Foreign exchange gains                    46                    122
Other, net                               (16         )        (55         )
Total other income, net                  174                 334         
                                                             
Income before income taxes                31,722                12,932
Income tax expense                       9,709               4,247       
                                                             
Net income                             $  22,013            $  8,685       
                                                             
                                                             
Basic earnings per common share        $  1.72              $  0.68        
                                                             
Diluted earnings per common share      $  1.70              $  0.68        
                                                             
                                                             
Weighted average common share            12,827,918          12,704,538  
outstanding - Basic
Weighted average common share            12,926,814          12,835,096  
outstanding - Diluted

Contact:

Geospace Technologies Corporation
Gary D. Owens, 713.986.4444
Chairman, President and CEO
Fax: 713.986.4445
 
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