UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
for the Quarterly Period Ended
for the transition period from ____ to ____
Commission file number
GEOSPACE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | | ☒ | ||||
| Non-accelerated filer | ☐ | Smaller reporting company | | ||||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 31, 2024, the registrant had
Table of Contents
| Page Number |
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| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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PART I - FINANCIAL INFORMATION
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
| June 30, 2024 | September 30, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Trade accounts and note receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current inventories, net | ||||||||
| Rental equipment, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Non-current trade accounts receivable | ||||||||
| Operating right-of-use assets | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable trade | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current operating lease liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 11) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, shares authorized, shares issued and outstanding | ||||||||
| Common Stock, $ par value, shares authorized; and shares issued, respectively; and and shares outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Treasury stock, at cost, and shares, respectively | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2024 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Products |
$ | $ | $ | $ | ||||||||||||
| Rental |
||||||||||||||||
| Total revenue |
||||||||||||||||
| Cost of revenue: |
||||||||||||||||
| Products |
||||||||||||||||
| Rental |
||||||||||||||||
| Total cost of revenue |
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| Gross profit |
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| Operating expenses: |
||||||||||||||||
| Selling, general and administrative |
||||||||||||||||
| Research and development |
||||||||||||||||
| Provision for (recovery of) credit losses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total operating expenses |
||||||||||||||||
| Gain on disposal of property |
||||||||||||||||
| Income (loss) from operations |
( |
) | ||||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest income |
||||||||||||||||
| Foreign currency transaction gains (losses), net |
( |
) | ( |
) | ||||||||||||
| Other, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total other income, net |
||||||||||||||||
| Income (loss) before income taxes |
( |
) | ||||||||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||
| Net income (loss) |
$ | ( |
) | $ | $ | $ | ||||||||||
| Income (loss) per common share: |
||||||||||||||||
| Basic |
$ | ( |
) | $ | $ | $ | ||||||||||
| Diluted |
$ | ( |
) | $ | $ | $ | ||||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
||||||||||||||||
| Diluted |
||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 30, 2024 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
|||||||||||||
| Net income (loss) |
$ | ( |
) | $ | $ | $ | ||||||||||
| Other comprehensive income (loss): |
||||||||||||||||
| Change in unrealized gains on available-for-sale securities, net of tax |
( |
) | ( |
) | ||||||||||||
| Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||
| Total other comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
| Total comprehensive income (loss) |
$ | ( |
) | $ | $ | $ | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE nine months ended June 30, 2024 and 2023
(in thousands, except share amounts)
(unaudited)
| Common Stock |
Accumulated |
|||||||||||||||||||||||||||
| Additional |
Other |
|||||||||||||||||||||||||||
| Shares |
Paid-In |
Retained |
Comprehensive |
Treasury |
||||||||||||||||||||||||
| Outstanding |
Amount |
Capital |
Earnings |
Loss |
Stock |
Total |
||||||||||||||||||||||
| Balance at October 1, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
( |
) | ||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2023 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at March 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at June 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Balance at October 1, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
— | |||||||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at December 31, 2022 |
( |
) | ( |
) | ||||||||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Net income |
— | |||||||||||||||||||||||||||
| Other comprehensive loss |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| Issuance of common stock pursuant to the vesting of restricted stock units |
||||||||||||||||||||||||||||
| Stock-based compensation |
— | |||||||||||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended |
||||||||
| June 30, 2024 |
June 30, 2023 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Deferred income tax expense |
||||||||
| Rental equipment depreciation |
||||||||
| Property, plant and equipment depreciation |
||||||||
| Amortization of intangible assets |
||||||||
| Accretion of discounts on short-term investments |
( |
) | ( |
) | ||||
| Stock-based compensation expense |
||||||||
| Recovery of credit losses |
( |
) | ( |
) | ||||
| Inventory obsolescence expense |
||||||||
| Gross profit from sale of rental equipment |
( |
) | ( |
) | ||||
| Gain on disposal of property |
( |
) | ||||||
| Loss (gain) on disposal of equipment |
( |
) | ||||||
| Realized foreign currency translation loss from dissolution of foreign subsidiary |
||||||||
| Effects of changes in operating assets and liabilities: |
||||||||
| Trade accounts and note receivable |
( |
) | ||||||
| Inventories |
( |
) | ( |
) | ||||
| Other assets |
( |
) | ||||||
| Accounts payable trade |
( |
) | ||||||
| Other liabilities |
( |
) | ||||||
| Net cash provided by (used in) operating activities |
( |
) | ||||||
| Cash flows from investing activities: |
||||||||
| Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
| Proceeds from the sale of property, plant and equipment |
||||||||
| Investment in rental equipment |
( |
) | ( |
) | ||||
| Proceeds from the sale of rental equipment |
||||||||
| Purchases of short-term investments |
( |
) | ||||||
| Proceeds from the sale of short-term investments |
||||||||
| Net cash provided by investing activities |
||||||||
| Cash flows from financing activities: |
||||||||
| Purchase of treasury stock |
( |
) | ||||||
| Payments on contingent consideration |
( |
) | ||||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Effect of exchange rate changes on cash |
( |
) | ||||||
| Increase (decrease) in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
| Cash paid for income taxes |
$ | $ | ||||||
| Inventory transferred to rental equipment |
||||||||
The accompanying notes are an integral part of the consolidated financial statements.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2023 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at June 30, 2024 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine months ended June 30, 2024 and 2023 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. All significant intercompany balances and transactions have been eliminated. The results of operations for the three and nine months ended June 30, 2024 are not necessarily indicative of the operating results for a full year or of future operations.
Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2023.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to revenue recognition, credit loss, collectability of rental revenue, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill and other intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. While management believes current estimates are reasonable and appropriate, actual results may differ from these estimates under different conditions or assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. At June 30, 2024, cash and cash equivalents included $
Impairment of Long-lived Assets
The Company's long-lived assets are reviewed for impairment whenever an event or circumstance indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of the expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. During the quarter ended June 30, 2024, no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in generally accepted accounting principles. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The Company adopted this standard on October 1, 2023. The adoption of this standard did not have any material impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued guidance which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance shall be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and the impact on its consolidated financial statements.
In December 2023, the FASB issued guidance improvements on income tax disclosure which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt this guidance in its fourth quarter of fiscal year 2026. The guidance allows for adoption using either a prospective or retrospective transition method. The adoption of this guidance is not expected to have any material impact on its consolidation financial statements.
All other new accounting pronouncements that have been issued, but not yet effective, are currently being evaluated and at this time are not expected to have a material impact on the Company's financial position or results of operations.
2. Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when performance of contractual obligations are satisfied, generally when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.
The Company primarily derives product revenue from the sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract are satisfied, control is transferred and collectability of the sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment or delivery or performance has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit.
Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.
The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year. The Company has determined that ASC 606 does not apply to rental contracts, which are within the scope of ASC Topic 842, Leases.
As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses.
The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost and not as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.
At June 30, 2024, the Company had
For the three months ended June 30, 2024 and 2023, revenue recognized from contracts with customers satisfied over-time was $
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Oil and Gas Markets | ||||||||||||||||
| Traditional exploration product revenue | $ | $ | $ | $ | ||||||||||||
| Wireless exploration product revenue | ||||||||||||||||
| Reservoir product revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Adjacent Markets | ||||||||||||||||
| Industrial product revenue | ||||||||||||||||
| Imaging product revenue | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Emerging Markets | ||||||||||||||||
| Revenue | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
See Note 12 for more information on the Company’s operating segments.
For each of the geographic areas where the Company operates, the following table presents revenue (in thousands) from the sale of products and services under contracts with customers. The table excludes all revenue earned from rental contracts:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Asia (including Russian Federation) | $ | $ | $ | $ | ||||||||||||
| Canada | ||||||||||||||||
| Europe | ||||||||||||||||
| United States | ||||||||||||||||
| Other | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributable to countries based on the geographic location of the initial shipment.
3. Short-term Investments
The Company classifies its short-term investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized gains and losses reported as a component of accumulated other comprehensive loss in stockholders’ equity.
The Company’s short-term investments were composed of the following (in thousands):
| As of June 30, 2024 | ||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||
| Short-term investments: | ||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | ) | $ | ||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency | ( | ) | ||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
| As of September 30, 2023 | ||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | |||||||||||||
| Short-term investments: | ||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | ) | $ | ||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
The Company had
4. Fair Value of Financial Instruments
The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts and notes receivable and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts and notes receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The Company measures its short-term investments at fair value on a recurring basis.
The following tables present the fair value of the Company’s short-term investments by valuation hierarchy and input (in thousands):
| As of June 30, 2024 |
||||||||||||||||
| (Level 1) |
(Level 2) |
(Level 3) |
Totals |
|||||||||||||
| Short-term investments: |
||||||||||||||||
| Corporate bonds |
$ | $ | $ | $ | ||||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency |
||||||||||||||||
| Total assets |
$ | $ | $ | $ | ||||||||||||
| As of September 30, 2023 |
||||||||||||||||
| (Level 1) |
(Level 2) |
(Level 3) |
Totals |
|||||||||||||
| Short-term investments: |
||||||||||||||||
| Corporate bonds |
$ | $ | $ | $ | ||||||||||||
| U.S. treasury securities and securities of U.S. government-sponsored agency |
||||||||||||||||
| Total assets |
$ | $ | $ | $ | ||||||||||||
5. Trade Accounts and Notes Receivable
Trade accounts receivable, net (excluding notes receivable) are reflected in the following table (in thousands):
| June 30, 2024 | September 30, 2023 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Non-current trade accounts receivable | $ | $ | ||||||
Trade accounts receivable at June 30, 2024, included $
Allowance for credit losses related to trade accounts receivable are reflected in the following table (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Allowance for credit losses: | ||||||||||||||||
| Beginning of period | ||||||||||||||||
| Provision for credit losses | ||||||||||||||||
| Recoveries | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Write-offs | ( | ) | ( | ) | ( | ) | ||||||||||
| Currency translation | ( | ) | ||||||||||||||
| End of period | $ | $ | $ | $ | ||||||||||||
The Company had one note receivable from a customer at September 30, 2023, with a balance of $
6. Inventories
Inventories consist of the following (in thousands):
| June 30, 2024 | September 30, 2023 | |||||||
| Finished goods | $ | $ | ||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Obsolescence reserve (net realizable value adjustment) | ( | ) | ( | ) | ||||
| Less current portion | ||||||||
| Non-current portion | $ | $ | ||||||
Inventory obsolescence expense for each of the three and nine months ended June 30, 2024, was $
7. Rental Equipment
The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to year. All of the Company’s current leasing arrangements, which the Company acts as lessor, are classified as operating leases. The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition systems.
The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. The Company suspends revenue recognition when the collectability of amounts due are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received. As of June 30, 2024, the Company’s trade accounts receivable included lease receivables of $
Rental revenue related to leased equipment for the three and nine months ended June 30, 2024, was $
Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of June 30, 2024, were $
Rental equipment consisted of the following (in thousands):
| June 30, 2024 | September 30, 2023 | |||||||
| Rental equipment, primarily wireless recording equipment | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
8. Long-Term Debt
On July 26, 2023, the Company entered into a credit agreement (“the Agreement”) with Woodforest National Bank, as sole lender. The Agreement refinanced the Company's credit agreement dated May 6, 2022, with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. The Agreement provides a revolving credit facility with a maximum availability of $
9. Stock-Based Compensation
During the nine months ended June 30, 2024, the Company issued
As of June 30, 2024, there were
10. Earnings (Loss) Per Common Share
The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | $ | ||||||||||
| Less: Income allocable to unvested restricted stock | ||||||||||||||||
| Income (loss) attributable to common shareholders for diluted earnings (loss) per share | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted average number of common share equivalents: | ||||||||||||||||
| Common shares used in basic earnings (loss) per share | ||||||||||||||||
| Common share equivalents outstanding related to RSUs | ||||||||||||||||
| Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share | ||||||||||||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | $ | ||||||||||
| Diluted | $ | ( | ) | $ | $ | $ | ||||||||||
For the calculation of diluted earnings (loss) per share for the three months ended June 30, 2024 and 2023, there were
11. Commitments and Contingencies
Contingent Compensation Costs
In connection with the acquisition of Aquana, LLC (“Aquana”) in July 2021, the Company is subject to additional contingent cash payments to the former members of Aquana over a -year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for the first years of the year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction. Earn-outs achieved, if any, will be recorded as compensation expense when incurred.
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