Geospace Technologies Reports Q4 Loss, Revenues Dip Y/Y - Analyst Blog

Geospace Technologies Corporation (GEOS) recently reported fourth-quarter 2014 results. The company incurred a loss of 14 cents per share, which compared unfavorably with both the Zacks Consensus Estimate of earnings of 17 cents and the year-ago quarter earnings of $1.05 per share.

Quarter Details

Geospace Technologies' fourth-quarter revenues came in at $26.3 million, down 61.5% on a year-over-year basis. Reported revenues also lagged the Zacks Consensus Estimate of $30 million. Lower-than-expected demand for its product sales and decrease in Seismic and Non-Seismic segments unfavorably impacted the quarter's revenues.

Revenues from reservoir products decreased 91% from the year-ago quarter and came in at $38.7 million.  The completion of the Statoil order for permanent reservoir monitoring (PRM) system resulted in lower-than-expected revenues. Traditional exploration products decreased 21% from the year-ago quarter, whereas revenues from Wireless exploration products decreased 5.3% on a year over year basis.

Revenues from non-seismic products decreased 8% from the year-ago-quarter and came in at $5.5 million. The year-over-year decrease was primarily due to a decline in offshore cable shipments.

Geospace Technologies' gross margin decreased from 43.6% reported in the year-ago quarter to 23.2%, primarily due to higher fix cost of manufacturing and rental fleet operations and lower revenue base

The company's operating expenses decreased 11.9% from the year-ago quarter, primarily due to lower selling general and administrative expenses and research and development expenses. However, as a percentage of revenues, operating expenses increased from 15.6% reported in the year-ago quarter to 35.7%, primarily due higher stock price compensation expenses and higher staffing costs. This in turn negatively impacted operating results. Operating loss came in at $3.3 million, which deteriorated from an operating income of $19.1 million reported in the year-ago period.

Geospace Technologies' net loss came in at $1.8 million or 14 cents per share compared to an income of $13.7 million or $1.05 per share reported in the year-ago quarter.

Geospace Technologies exited the fourth quarter with cash and cash equivalents and short-term investments of $53.2 million compared with $58.6 million in the previous quarter. Receivables were $24.6 million versus $25.3 million in the prior quarter. The company did not have any long-term debt for the current quarter.

Outlook

Management expects a significant decline in reservoir seismic products in fiscal 2015 due to delay in order delivery of large scale PRM.

Conclusion

Geospace Technologies reported dismal fourth-quarter results. The company's loss per share compared unfavorably with the Zacks Consensus Estimate. The year-over-year comparisons were unfavorable on both counts, primarily due to lower-than-expected demand from its product sales and declines in Seismic and Non-Seismic segments.

The company primarily deals in manufacturing and selling of instruments and equipment used by the oil and gas industry. The company helps its customers in the acquisition and processing of seismic data as well as in reservoir characterization and monitoring activities. We believe that the company's product launches (especially PRM products) and high value contract wins will boost revenues, going forward.

However, competition from companies like Amphenol Corporation (APH) and CGG (CGG) remains a concern for the company.

Currently, Geospace Technologies has a Zacks Rank #3 (Hold).

Investors can also consider Micron Technology (MU), which has a Zacks Rank #2 (Buy) and is worth buying.