Geospace Technologies Reports Fiscal Year 2013 Second Quarter Results and Other Recent Matters

  Geospace Technologies Reports Fiscal Year 2013 Second Quarter Results and
  Other Recent Matters

Business Wire

HOUSTON -- May 2, 2013

Geospace Technologies Corporation (NASDAQ: GEOS) today announced net income of
$16.9 million, or $1.30 per diluted share, on revenues of $76.4 million for
its fiscal quarter ended March 31, 2013. This compares with a net income of
$11.4 million, or $0.89 per diluted share, on revenues of $56.2 million for
the comparable quarter last year.

For the six months ended March 31, 2013, Geospace recorded revenues of $154.2
million and net income of $38.9 million, or $3.01 per diluted share. For the
comparable period last year, the company recorded revenues of $99.5 million
and net income of $20.1 million, or $1.57 per diluted share.

“The quarter ended March 31, 2013 was the second most profitable quarter in
our company’s history, with revenues and net income up 36% and 48%,
respectively, from last year’s second quarter. While we are pleased with our
performance, these quarterly results were affected by a decrease in our
wireless product revenues which declined from $21.5 million in last year’s
second quarter to $15.7 million for the quarter ended March 31, 2013. Rentals
of our wireless products during the second quarter ended March 31, 2013
increased over the prior year. As we have stated many times, orders and
deliveries of our products can be inconsistent from quarter-to-quarter and
this was especially true for our first and second quarters of fiscal year
2013. We are actively quoting new sales and rentals of our wireless products
and we believe that customer interest in these products remains high. However,
due to the unpredictability of the timing of such orders and our inability to
control delivery terms, we expect sales of our wireless products to continue
to be lumpy in future quarters,” said Gary D. Owens, Geospace Technologies’
Chairman, President and CEO.

“For the second quarter ended March 31, 2013, we sold approximately 13,000
channels of our wireless data acquisition system including small system sales
to three new customers located in Mexico, Russia and Indonesia. A fourth
customer operating in Poland significantly expanded their wireless channel
ownership during the second quarter. These sales transactions reflect our
strategy to place our wireless technology into international markets. Since
its introduction back in 2008 and through March 31, 2013, we sold
approximately 218,000 wireless channels and we had 77,000 wireless channels in
our worldwide rental fleet.”

“During the second quarter, we sold a small OBX subsea nodal system to a
Russian customer. In addition, we shipped two small OBX rental systems during
the second quarter. Interest in our OBX system remains high with numerous
outstanding quotes, including several quotes of a significant size. While we
are optimistic about our marine nodal technology, we cannot predict whether
these quotes will ultimately result in firm orders or when such orders may
occur.”

“During the second quarter we recognized revenue of approximately $21.0
million from the $160 million Statoil order using the percentage of completion
method of accounting. We have revised our previous estimate whereby we now
believe that approximately 45% and 55% of the Statoil order’s revenues and
costs will be recognized in fiscal years 2013 and 2014, respectively. In
addition, we shipped a majority of the components for Shell’s permanent seabed
seismic reservoir monitoring system resulting in $17.1 million of revenues
during the second quarter. The remaining portion of the Shell order totaling
$1.2 million is expected to be shipped in the third quarter.”

“While our traditional seismic product sales for the second quarter were
generally flat compared to the first quarter of fiscal year 2013, sales for
this product group declined 37.5% from last year’s second quarter. Marine
products, sensor products and geophone rentals each contributed to this
decline in sales. It should be noted that we experienced robust marine product
sales during the second quarter of fiscal year 2012, and sales of our marine
products also can fluctuate significantly from quarter to quarter. Despite
revenue declines in these product categories, our Russian and Canadian
operations experienced improved sales and profits during the second quarter
when compared to last year. We are proud to note that our Russian operation
completed its first wireless equipment rental during the second quarter. Also
during the second quarter, our new office in Bogotá, Colombia celebrated its
grand opening and completed its first rental transaction. We believe this
foothold in South America will be beneficial for the company.”

“We recently entered into an agreement to purchase a 9.6 acre plot of land
that adjoins the southern boundary of our Pinemont property in Houston. Upon
completion of this transaction, which is currently scheduled to close next
week, our Pinemont property will contain approximately 29 acres of land. Over
the course of the next two years, we plan to construct significant additional
plant capacity on our Pinemont property to enlarge our cabling, machining,
molding and assembly areas. In addition, we plan to expand our research and
development facilities to accommodate growth in this important area. We will
provide future updates on expected timing of construction activities,
estimated range of capital investment and other information as it becomes
available.”

In a separate matter, the company is pleased to announce that Mr. Richard F.
Miles, a well-known and highly experienced seismic industry executive, has
joined our board of directors to fill a vacancy.

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 Ended                              Six Months Ended
                       March 31, 2013         March 31, 2012           March 31, 2013         March 31, 2012
                                                                                              
Sales                  $ 76,420               $ 56,233                 $ 154,171              $ 99,514
Cost of sales           40,864               31,173                 78,051               53,796     
Gross profit             35,556                 25,060                   76,120                 45,718
                                                                                              
Operating
expenses:
Selling,
general and              5,899                  4,911                    11,262                 9,646
administrative
Research and             3,768                  3,509                    7,133                  6,398
development
Bad debt                338                  168                    607                  604        
expense
Total
operating               10,005               8,588                  19,002               16,648     
expenses
                                                                                              
Gain (loss) on
disposal of             5                    --                     (14        )          --         
equipment
                                                                                              
Income from             25,556               16,472                 57,104               29,070     
operations
                                                                                              
Other income
(expense):
Interest                 (48        )           (43        )             (130       )           (43        )
expense
Interest                 230                    176                      459                    443
income
Foreign
exchange gains           (714       )           171                      (668       )           293
(losses)
Other, net              --                   47                     (19        )          (8         )
Total other
income                  (532       )          351                    (358       )          685        
(expense), net
                                                                                              
Income before            25,024                 16,823                   56,746                 29,755
income taxes
Income tax              8,155                5,392                  17,864               9,639      
expense
                                                                                              
Net income             $ 16,869              $ 11,431                $ 38,882              $ 20,116     
                                                                                              
                                                                                              
Basic earnings         $ 1.31                $ 0.90                  $ 3.02                $ 1.58       
per share
                                                                                              
Diluted
earnings per           $ 1.30                $ 0.89                  $ 3.01                $ 1.57       
share
                                                                                              
                                                                                              
Weighted
average shares
outstanding -           12,882,396           12,726,292             12,854,858           12,715,356 
Basic
Weighted
average shares
outstanding -           12,955,566           12,860,780             12,924,014           12,839,560 
Diluted
                                                                                                           

Contact:

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