Geospace Technologies Corporation (NASDAQ:GEOS) Q2 2018 Earnings Conference Call - Preliminary Transcript

May 04, 2018 • 10:00 am ET

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Geospace Technologies Corporation (NASDAQ:GEOS) Q2 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Welcome to the Geospace Technologies' Second Quarter 2018 Earnings Conference Call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He's joined by Tom McEntire, the company's Vice President and Chief Financial Officer. Today's call is being recorded and will be made available on the Geospace Technologies' Investor Relations website following the call. (Operator Instructions).

It is now my pleasure to turn the floor over to Mr. Rick Wheeler. Sir, you may begin.

Executive
Rick Wheeler

Thank you, Erica. Good morning, and welcome to Geospace Technologies' conference call for the second quarter of fiscal year 2018. I am Rick Wheeler, the company's President and Chief Executive Officer, and I'm joined by Tom McEntire, the company's Vice President and Chief Financial Officer. We'll start the call with my overview of the second quarter followed by Tom's in-depth commentary on our financial performance. I'll then offer some final remarks, after which, we will open the line for questions.

As mentioned for everyone's convenience, we will link a recording of this call in the Investor Relations section of our website at www.geospace.com. The information discussed this morning is time-sensitive and may not be accurate on the date one listens to the replay. Also, many of today's statements can be considered forward-looking as defined in the Private Securities Litigation Reform Act of 1995. This includes comments about our product markets, revenue recognition, planned operations, and capital expenditures. All such statements are based on our present knowledge and perception, while actual outcomes are influenced by uncertainties and other factors that we're unable to predict or control.

Related known and unknown risk, can lead to undesirable results or cause our performance to materially differ from what we say or imply. These risks and uncertainties include those discussed in our SEC Form 10-K and 10-Q filings. Yesterday, after the market close, we released our financial results for the second quarter of fiscal year 2018, which ended March 31, 2018. As reported, revenue of $19.2 million for the quarter reflects a notable sequential increase over the prior three months, but signaled a slight reduction from the $20.6 million generated in last year's second quarter.

Similarly, revenue of $33.9 million for the six months ended March 31, 2018, declined slightly from the $35.8 million reported for the same period a year ago. Despite lower revenue in both recent periods compared to last year, we successfully managed to generate a gross profit for the first time in three years. The gross profit was primarily driven by lower inventory obsolescence charges as well as other financial management and cost- reduction efforts that were implemented during these periods. Further evidence of our cost control efforts is exemplified by our lower operating expenses.

Excluding bad debt reserves and recoveries, operating expenses compared to last year fell by 15% and 8%, respectively, for the three and six month periods ended March 31, 2018.Together, positive gross profits and lower operating expenses helped narrow the net losses for these periods over last year. Revenue