Geospace Technologies Corporation (NASDAQ:GEOS) Q4 2019 Earnings Conference Call - Final Transcript

Nov 22, 2019 • 10:00 am ET

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Geospace Technologies Corporation (NASDAQ:GEOS) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question will come today from David Nierenberg with Nierenberg Investment Management Company. Please go ahead.

Analyst
David Nierenberg

Good morning, guys.

Executive
Thomas McEntire

Good morning, David.

Executive
Rick Wheeler

Good morning.

Analyst
David Nierenberg

Thank you for your service to the company and the stakeholders particularly your accomplishments of protecting the Company's balance sheet through a terrible industry downturn, you're pruning the costs of the Company to further conserve cash and your shrewd structuring of the two recent acquisitions to further protect the balance sheet and to put the performance risk on the sellers rather than the shareholders. So thank you for doing all of those things.

Executive
Thomas McEntire

Yeah, thank you, David for those kind comments. I appreciate it.

Analyst
David Nierenberg

The only blemish I can ask you about and I'll start with this and then go on to a couple of other questions is, do you think that changes in credit evaluation of prospective customers or credit monitoring of existing customers should be implemented in light of this latest disclosure about the risks associated with collecting the $8.5 million of accounts receivable?

Executive
Thomas McEntire

Davis, that's a good question. We do have internal programs for monitoring credit and given out credit and there is many decisions that are made, along with those credit, that credit analysis, and those decisions include deploying equipment that is currently inactive and taken a risk to get the equipment out into the market with the customer to produce revenue even though the customer might not be the best customer there is. And so we look at all of that, when we're doing there and we're not afraid to call in the equipment, if we have to, and we don't want to do that. We want to try to work with the customer that I referred to, and we're going to work with them, but if it doesn't work out, we're going to recall the equipment and get it redeployed somewhere else.

Analyst
David Nierenberg

I'd like to ask you one other question, Tom, and that is that the $800,000, if I can call it a mark up of the potential payable to the sellers of OptoSeis, is an interesting and I think a very positive development. I wonder if you could amplify on that please for us to help you understand the reason why your audit committee and you're outside auditors and you were comfortable taking that mark up?

Executive
Thomas McEntire

Yeah, good question, David and just for everybody else that's on the phone, the accounting here is kind of counter-intuitive. The good news is resulting in a charge to the financial statements and the bad news is resulting in gain on the income statement. But we utilize an outside service firm to help us come up with that estimate. We're not staffed internally to be able to really have the abilities and skills to do that and so it's all based on projections and estimates and future revenues and discussions that are going on and the timing of those discussions and a whole lot of different variables and so when our