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GEOSPACE TECHNOLOGIES CORP (GEOS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue rose 20.9% year over year to $35.4M, with gross margin at ~45.0% and income from operations of $1.2M; reported net loss of $12.9M ($1.00 diluted EPS) was driven by non‑cash charges tied to a Russian entity divestiture ($14.5M) and intangible impairment ($2.8M). Adjusted net income was $4.4M for Q4 and $10.7M for FY24 .
  • Adjacent Markets (Smart Water/Industrial) delivered a standout quarter: revenue up 65% YoY to $17.6M, with Hydroconn smart water cables hitting record quarterly and annual revenue; Oil & Gas was stable YoY at $17.5M, while Emerging Markets fell to $0.2M in Q4 .
  • Balance sheet remains strong with ~$37.1M cash and short-term investments and no debt; operating cash flow was $(9.1)M for FY24 reflecting the Mariner sale mix and non-cash items .
  • Management will realign reporting segments to Smart Water, Energy Solutions, and Intelligent Industrial beginning with the next release; no formal revenue/EPS guidance was provided, and management stated no near-term intent to expand buybacks, a change from Q3’s program extension .
  • Post-earnings, GEOS shares declined amid mixed segment performance and non-cash charges; watch for smart water momentum, OBX rental utilization normalization, and segment realignment updates as potential catalysts .

What Went Well and What Went Wrong

What Went Well

  • Record Hydroconn smart water cable revenue with strong Adjacent Markets growth; “The fourth quarter… was the highest level of quarterly revenue for Hydroconn as well as fiscal year 2024 produced the highest annual revenue for the product line” .
  • First successful international Aquana sale and expanding traction in municipal and multifamily water applications; “We also had our first successful international sale of our Aquana products… We believe that our focus on Smart Water going forward will continue to drive growth” .
  • Resilient balance sheet and liquidity with ~$37.1M cash/short-term investments and no debt; continued investments in rental fleet ($8.3M) and PP&E ($3.9M) support operational capacity .

What Went Wrong

  • Non‑cash charges of $17.3M (Russia divestiture $14.5M; intangible impairment $2.8M) drove a GAAP net loss in Q4 and FY; Emerging Markets posted operating losses amid impairment .
  • OBN/OBX rental fleet utilization remained a headwind at times; management noted industry “excitement” not yet translating to orders and declined to disclose utilization metrics .
  • No near-term expansion of buybacks despite prior authorization; “we don't have any intention in the short term of doing any more stock buybacks” .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$29.3 $25.9 $35.4
Diluted EPS ($USD)$0.33 $(0.16) $(1.00)
Net Income ($USD Millions)$4.4 $(2.1) $(12.9)
Gross Profit ($USD Millions)$14.2 $8.5 $15.9
Gross Margin (%)48.5% 33.0% 45.0%
Operating Income ($USD Millions)$4.1 $(2.4) $1.2
Operating Margin (%)13.9% (9.3%) 3.3%
Net Income Margin (%)15.1% (8.0%) (36.3%)
Adjusted Net Income ($USD Millions)$4.4 N/A$4.4

Segment revenue and operating income (Q4):

SegmentQ4 2023 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Op Inc ($MM)Q4 2024 Op Inc ($MM)
Oil & Gas Markets$17.8 $17.5 $5.9 $4.0
Adjacent Markets$10.6 $17.6 $2.3 $4.7
Emerging Markets$0.8 $0.2 $(0.7) $(3.8)

KPIs:

KPIQ4 2023Q4 2024
Product Revenue ($MM)$16.4 $32.6
Rental Revenue ($MM)$13.0 $2.8
Cash & ST Investments ($MM)$33.7 $37.1 (Cash $6.9; ST Inv $30.2)
Operating Cash Flow (FY, $MM)$15.6 $(9.1)
Rental Fleet Investment (FY, $MM)$9.9 $8.3
PP&E Investment (FY, $MM)$4.0 $3.9
Adjusted Net Income (Q4, $MM)$4.4 $4.4

Notes:

  • Q4 gross/operating/net margins computed from cited figures .
  • Product vs rental mix reflects Mariner sale impact (Q4 product surge; rental trough) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/EPSFY25/Q1No formal guidance provided No formal guidance provided Maintained
CapexQ4 FY24~$5M capex incl. ~$3.5M to rental fleet No new capex guidance; disclosed FY24 actual investments ($8.3M rental; $3.9M PP&E) Maintained (guidance concluded; actual reported)
Share RepurchaseNear-termProgram extended by additional $2M (as of Aug) “No intention in the short term of doing any more stock buybacks” Lowered
Segment ReportingFY25Legacy segments (Oil & Gas, Adjacent, Emerging) Transitioning to Smart Water, Energy Solutions, Intelligent Industrial from next release Realigned
DividendsOngoingNone announcedNone announcedMaintained
Tax Rate, OI&E, OpExOngoingNot guidedNot guidedMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4)Trend
OBX/Mariner rentals & utilizationQ2: Low OBX utilization; gaps expected; Mariner sale pulled from rental . Q3: Extended gaps due to weather/operational issues; rentals expected to resume in Q4 .Energy “excitement” not yet translating to orders; positioned with Pioneer/Mariner offerings .Stabilizing but uncertain near term
Smart Water (Hydroconn/Aquana)Q2: Adjacent strong; Aquana backlog ~$0.9M (first ever) . Q3: Record Adjacent revenue; Aquana gaining traction .Record Hydroconn quarter and year; first international Aquana sale; focus to drive growth .Accelerating
Segment realignmentQ2/Q3: Adjacent growth and strategic diversification emphasized .Formal shift to Smart Water, Energy Solutions, Intelligent Industrial next reporting .Structural transition
Russia divestiture / FXNot present in Q2/Q3.Divested Russian entity; $14.5M non-cash charge, minimal net asset effect (FX translation) .One-time charge; reduced geopolitical exposure
Government/Quantum (DARPA/Border Patrol)Q2: DARPA revenue; gov’t timelines slow; potential FY25 . Q3: DARPA completed; backlog to Apr-2025; gov’t opportunities ongoing .Conversations ongoing; CCS margins unclear; gov’t decisions pending .Long-cycle pipeline continuing
PRM interestQ2: Active discussions; long tender cycles . Q3: Discussions active; tender could be 2H’25; revenue recognition longer .Limited Q4 mention; remains prospective within Energy Solutions.Medium-term optionality
Capital allocation / BuybacksQ3: ~512k shares repurchased; extended by $2M .No near-term buybacks planned .Paused
Supply chain / InventoryQ3: Built long-lead inventory; supply chain prudence .No new specifics in Q4 beyond liquidity strength .Stable operations

Management Commentary

  • “We closed the year with $135.6 million in revenue. This represents the greatest revenue figure in 10 years… excluding these noncash charges, the fiscal year adjusted net income is $10.7 million” — CEO, Q4 prepared remarks .
  • “Record-setting year for our Hydroconn line of smart water cables and our Aquana product line… focus on smart water going forward will continue to drive growth” — Management commentary in press release .
  • “Beginning with our release in early February, we will provide financial information using our 3 new business segments: Smart Water, Energy Solutions and Intelligent Industrial” — CEO, Q4 prepared remarks .
  • “We finished the year with 0 debt and holdings of $37.1 million in cash and short-term investments” — CEO, Q4 prepared remarks .

Q&A Highlights

  • Capital allocation: Management does not intend to expand buybacks in the short term despite strong liquidity .
  • Energy activity: Industry enthusiasm not yet translating to firm orders; Pioneer/Mariner product lines positioned for any demand recovery .
  • Russia divestiture impact: Self-sustaining entity; minimal operational impact post-divestiture .
  • Rental fleet transparency: Management declined to disclose node count or utilization specifics; reiterated non-disclosure policy .
  • Carbon capture: Ongoing conversations; margin comparability to reservoir monitoring uncertain; no specifics to report .
  • Real assets: 17 acres sale expected early next year; assets held for sale include a Colombia facility .
  • Smart Water seasonality: Slight slowdown in calendar Q4 expected for Hydroconn; strong backlog for CY2025; no shares repurchased in Q4 .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and Revenue were unavailable via API today due to access limits; accordingly, estimate comparisons cannot be presented. Values would be retrieved from S&P Global if accessible.
  • Given Adjacent Markets outperformance and a product-heavy mix (Mariner sale), we expect future estimate revisions to focus on smart water growth assumptions and rental utilization normalization; Oil & Gas rental cadence remains a key variable .

Key Takeaways for Investors

  • Adjacent Markets are the growth engine: Hydroconn and Aquana momentum drove a 65% YoY revenue jump in Q4; the segment realignment to Smart Water/Intelligent Industrial should showcase this trajectory .
  • Oil & Gas stable but lumpy: Product sales (Mariner) supported FY growth; rental fleet utilization remains variable and a swing factor for quarterly results .
  • Non‑cash charges mask underlying profitability: Adjusted net income of $4.4M in Q4 and $10.7M for FY24 highlight core earnings power despite divestiture and impairment .
  • Strong balance sheet and liquidity support optionality: ~$37.1M cash/ST investments and no debt provide flexibility for R&D, selective capex, and potential opportunistic actions as demand improves .
  • Near-term buybacks paused: After Q3 repurchases, management indicated no short-term plans to expand buybacks; monitor capital return posture post-segment transition .
  • Watch upcoming catalysts: Segment reporting change (February), smart water backlog conversion, OBX rental project starts, and land sale proceeds could drive narrative and valuation updates .
  • Stock reaction was negative post-print amid mixed segments and charges; positioning for smart water growth and clearer OBX rental visibility may be key to re-rating .

Sources:

  • Q4 2024 press release and 8‑K: financial statements, segment detail, non‑GAAP .
  • Q4 2024 earnings call transcript: prepared remarks, segment realignment, liquidity, Q&A .
  • Q3 2024 press release and call: Adjacent record, buyback progress, rental dynamics, capex guidance .
  • Q2 2024 call: OBX utilization commentary, Mariner sale pull-forward, liquidity .