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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Presentation
Operator
Operator

Welcome to the Geospace Technologies' Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Tom McEntire, the Company's Vice President and Chief Financial Officer. Today's call is being recorded and will be available on the Geospace Technologies' Investor Relations website following the call. [Operator Instructions]

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

Executive
Rick Wheeler

Thank you, Katherine. Good morning everyone and welcome to Geospace Technologies conference call for the fourth quarter of our 2019 fiscal year. I'm 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, along with Robert Curda, the Company's Operational Controller.

I'll start the call with an overview of the fourth quarter and Tom will then offer an in-depth commentary on our financial performance. Afterwards, I'll make a few final remarks and then we'll open the line for questions. Some of today's statements may be considered forward-looking as defined in the Private Securities Litigation Reform Act of 1995, including comments about product markets, revenue recognition, planned operations and capital expenditures. These statements are based on our present awareness, while our actual outcomes are affected by uncertainties and other factors we cannot control or predict.

Both known and unknown risks can lead to undesirable results or performance differences from what we say or imply today. Such risks and uncertainties include those discussed in our SEC Forms 10-K and 10-Q filings. For convenience, we will link a recording of this call on the Investor Relations page of our geospace.com website. Note that information discussed this morning is time sensitive and may not be accurate at the time one listens to the replay. Yesterday, after the market closed, we released our financial results for the fourth quarter and fiscal year ended September 30th, 2019. As reported, revenue was driven in the fourth quarter and throughout the year by a growing number of rental contracts, utilizing our OBX ocean-bottom nodal seismic recorders.

In the fourth quarter revenue surged to $28.9 million and gross profit rose to $10.4 million, both amounts reflect the highest quarterly figures in more than five years. For the full year ended September 30th, 2019 revenue reached $95.8 million and gross profit nearly tripled to $31.4 million. The improved results in both revenue and gross profit are attributed to our growing rental equipment business. Both our fourth quarter and full year results benefited from two favorable, but unusual events. The first is a $7 million gain on the sale of non-essential real estate. And the second is a net reduction of $2.1 million and earn out liabilities related to our acquisitions of Quantum and OptoSeis.

This net adjustment to contingent consideration necessarily flow through the income statement as a charge to operating expenses. If we exclude these favorable adjustments on a pro forma basis, our 2019 fiscal fourth