What changed in this filing

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Item 1. Business

2024-11-22 compared with 2023-11-17 · 52 added, 64 removed, 196 unchanged (37% of the section changed)

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These seismic products are marketed to the oil and gas industry and used to locate, characterize and monitor hydrocarbon producing reservoirs.

More recently, we’ve begun marketing our seismic products for energy transition applications such as carbon storage, geothermal and mining. 

We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications.

We design and manufacture other products of a non-seismic nature, including water meter products, imaging equipment, offshore cables, remote shutoff water valves and Internet of Things ("IoT") platform. 

Additionally, we provide contract manufacturing services, which leverage our capabilities and manufacturing resources.

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Demand for our seismic products targeted at customers in our Oil and Gas Markets segment has been, and will likely continue to be, vulnerable to downturns in the economy and the oil and gas industry in general.

For more information, please refer to the risks discussed under the heading “Risk Factors.”

Segment and Geographical Information

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Oil and Gas Markets, Adjacent Markets and Emerging Markets.

For a discussion of the products sold and markets served by each of our segments, see “Products and Product Development”

For a discussion of the products sold and markets served by each of our segments, see “Products and Product Development” below.

For a discussion of financial information by segment and geographic area, see Note 20 to the consolidated financial statements contained in this Annual Report on Form 10-K.

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Geoscientists use seismic data primarily in connection with the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and the geologic structures that surround them.

This segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables, marine streamer retrieval and steering devices and various other seismic products.

We believe that our Oil and Gas Markets' products are among the most technologically advanced instruments and equipment available for seismic data acquisition.

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On land, our customers use geophones, leader wire, cables and connectors to receive and measure seismic reflections resulting from an energy source into data recording units, which store the seismic information for subsequent processing and analysis.

In the marine environment, large ocean-going vessels tow long seismic cables known as “streamers”

containing hydrophones that are used to detect pressure changes.

Hydrophones transmit electrical impulses back to the vessel’s data recording unit where the seismic data is stored for subsequent processing and analysis.

In the marine environment, large ocean-going vessels tow long seismic cables known as “streamers” containing hydrophones that are used to detect pressure changes.

Hydrophones transmit electrical impulses back to the vessel’s data recording unit where the seismic data is stored for subsequent processing and analysis.

Our marine seismic products also help steer streamers while being towed and help recover streamers if they become disconnected from the vessel.

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As a result, our wireless systems require less maintenance, which we believe allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight and ease of operation.

Each wireless station is available in a single-channel or three-channel configuration.

We have also developed a marine-based wireless seismic data acquisition system called the OBX.

Similar to our land-based wireless systems, the marine OBX system may be deployed in virtually unlimited channel configurations and does not require interconnecting cables between each station.

The Pioneer™ is a small lightweight, cable-free, connector-less, node.

Pioneer™ is the next generation node designed for extended duration land based seismic data acquisition.

The device continuously records for up to 50 days and offers connector less charging and data downloading.

Its lightweight and connector-less design will allow contractors to operate more efficiently and at a lower cost.

We have also developed a marine-based wireless seismic data acquisition system called the OBX, and recently released Mariner™ and Aquanaut™.

Similar to our land-based wireless systems, these marine wireless systems may be deployed in virtually unlimited channel configurations and do not require interconnecting cables between each station.

We have two versions of OBX nodal stations:

A shallow water version that can be used in depths up to 750 meters and a deepwater version that can be deployed in depths of up to 3,450 meters.

a shallow water version that can be used in depths of up to 750 meters and a deepwater version that can be deployed in depths of up to 3,450 meters.

Through September 30, 2024, we have sold 29,000 OBX stations and we currently have 19,000 OBX stations in our rental fleet.

In August 2022, we announced the release of a new seismic acquisition product known as Mariner™, a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder.

The Mariner™ is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder.

Mariner™ is the next generation node designed for extended duration seabed ocean bottom seismic data acquisition.

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Its slim profile creates space savings on seismic survey vessels, allowing contractors to fit up to 25% more nodes into a download/charge container.

In August 2023, we announced the latest in our ocean bottom node product line known as Aquanaut™, a deepwater, wireless seismic acquisition node capable of operating for 200 days in water as deep at 3,450 meters.

Through September 30, 2024, we have sold 7,600 Mariner™ nodes.

Our recently introduced Aquanaut™ is a deepwater, wireless seismic acquisition node capable of operating for 200 days in water as deep as 3,450 meters.

Reservoir Products

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Our electrical reservoir monitoring systems are currently installed on numerous offshore reservoirs in the North Sea and elsewhere.

Through our acquisition of the OptoSeis®

fiber optic sensing technology, we now offer both electrical and fiber optic reservoir monitoring systems.

Through our acquisition of the OptoSeis® fiber optic sensing technology, we now offer both electrical and fiber optic reservoir monitoring systems.

These high-definition seismic data acquisition systems have a flexible architecture allowing them to be configured as a subsurface system for both land and marine reservoir-monitoring projects.

The scalable architecture of these systems enables custom designed configuration for applications ranging from low-channel engineering and environmental-scale surveys requiring a minimum number of recording channels to high-channel surveys required to efficiently conduct permanent reservoir monitoring (“PRM”).

The modular architecture of these products allows virtually unlimited channel expansion for these systems.

In the spring of 2023, we released a derivative of the OptoSeis®

technology for high temperature downhole applications. 

The product know as Insight by OptoSeis offers a passive, all-optical downhole sensor network –

no electronics downhole - resulting in years long operational lifetime @ 150 °C.

In the spring of 2023, we released a derivative of the OptoSeis® technology for high temperature downhole applications.

The product know as Insight by OptoSeis® offers a passive, all-optical downhole sensor network – no electronics downhole - resulting in years long operational lifetime at 150 °C.

In addition, we produce seismic borehole acquisition systems that employ a fiber optic augmented wireline capable of very high data transmission rates.

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We have maintained active discussions with potential clients for future PRM systems.

During 2022, in coordination with a potential client, we concluded a successful demonstration of our OptoSeis fiber optic PRM technology in real-world field conditions.

This demonstration was a prerequisite step toward future contract consideration.

We have also held discussions and received requests for information from other major oil and gas producers regarding PRM systems. 

In July 2024, we received requests for bids on Front-End Engineering and Design studies from a major oil and gas producer issued ahead of PRM tenders that may follow.

These are multistage, large-scale opportunities.

We have not received any orders for a large-scale seabed PRM system since November 2012.

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Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and manufacturing into expanded customer markets.

To bolster the solid market share we’ve established in the water utility market for water meter connectors, in fiscal year 2021, we acquired the smart water IoT company Aquana, LLC ("Aquana").

Industrial Products

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Our Emerging Markets business segment consists entirely of our Quantum business.

Quantum’s product line includes a proprietary detection system called SADAR®, which detects, locates and tracks items of interest in real-time.

Using the SADAR® technology, Quantum designs and sells products used for border and perimeter security surveillance, cross-border tunneling detection and other products targeted at movement monitoring, intrusion detection and situational awareness.

Quantum’s customers include various agencies of the U.S.

government including the Department of Defense, Department of Energy, Department of Homeland Security and other agencies as well as energy companies needing real-time monitoring of seismic data.

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We have not changed our primary focus on continued investment in product research and development, selective acquisitions and joint ventures.

Continue Investment in Product Research and Development  – Past periods of revenue growth were primarily driven through our internal development of new products for the oil and gas industry.

Continue Investment in Product Research and Development – Past periods of revenue growth were primarily driven through our internal development of new products for the oil and gas industry.

In past years, our oil and gas product innovations included the introduction of borehole seismology tools, land and seabed PRM systems and wireless data acquisition systems for both land and marine applications.

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Going forward, we intend to continue significant investments in product research and development of new oil and gas technologies as well as products for our other business segments in order to diversify and grow our revenue base.

Selectively Pursue Acquisitions of Businesses with Technological and Engineering Overlap – The oil and gas industry periodically experiences volatile business cycles requiring us to rapidly increase and decrease our business activities to meet the industry’s demand for our products.

Selectively Pursue Acquisitions of Businesses with Technological and Engineering Overlap – The oil and gas industry periodically experiences volatile business cycles requiring us to rapidly increase and decrease our business activities to meet the industry’s demand for our products.

This industry generally offers equipment manufacturers like us limited visibility into new orders creating challenges for us to manage our manufacturing capacity, workforce, inventories and other working capital challenges.

While our primary growth initiative is to expand our oil and gas seismic product offerings, as seen with our acquisition of the OptoSeis® fiber optic sensing technology in fiscal year 2019, we may also seek out other business opportunities in adjacent markets and emerging markets which complement our existing oil and gas seismic products, engineering and manufacturing capabilities, and company-wide culture.

While our primary growth initiative is to expand our oil and gas seismic product offerings, as seen with our acquisition of the OptoSeis® fiber optic sensing technology in fiscal year 2019, we may also seek out other business opportunities in adjacent markets and emerging markets which complement our existing oil and gas seismic products, engineering and manufacturing capabilities, and company-wide culture.

In order to diversify our revenue base and expose us to different markets with different business cycles, we have directed these efforts toward businesses outside the oil and gas industry, as seen with our acquisition of Quantum in fiscal year 2018 and Aquana in fiscal year 2021.

Financial Management –

Due to the cyclicality of the oil and gas industry, we have historically managed our financial risk by limiting or eliminating debt leverage in our balance sheet.

Financial Management – Due to the cyclicality of the oil and gas industry, we have historically managed our financial risk by limiting or eliminating debt leverage in our balance sheet.

While we are not opposed to moderate amounts of short-term debt during favorable business cycles, we choose to minimize our exposure to long-term debt obligations which, in our view, restrict our ability to operate during periodic difficult business cycles in the oil and gas industry similar to the recent business environment.

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We also believe that the value of our common shares outstanding will be best served in the long-term by retaining our cash to fund future cash outflows as they become necessary.

In this regard, we do not anticipate paying any cash dividends in the foreseeable future, however, during fiscal years 2021 and 2022 we repurchased 841,992 shares of our common stock in open market transactions completing a $7.5 million stock-buy-back program authorized by our board of directors.

In this regard, we do not anticipate paying any cash dividends in the foreseeable future, however, since fiscal year 2021 we have repurchased 1,496,701 shares of our common stock in open market transactions under stock-buy-back programs authorized by our Board of Directors.

Oil and Gas Products

We are one of the world’s largest designers and manufacturers of seismic products used in the oil and gas industry.

The principal competitors for many of our traditional seismic products are Sercel (a division of CGG) and INOVA.

We are one of the world’s largest designers and manufacturers of seismic products used in the oil and gas industry.

The principal competitors for many of our traditional seismic products are Sercel (a division of Viridien, formerly a division of CGG) and INOVA.

Furthermore, entities in China affiliated with Sercel, as well as other Chinese manufacturers produce low-cost oil and gas seismic products, which compete with our traditional seismic products.

The primary competitors for our land wireless data acquisition systems are SmartSolo, Sercel, INOVA, STRYDE, Geophysical Technologies and numerous smaller entities who have introduced similar versions of wireless data acquisition systems.

We believe the primary competitors for our marine nodal data acquisition systems are Magseis Fairfield ASA (a division of TGS), Sercel and InApril AS each of whom utilizes their own proprietary nodal technology.

We believe the primary competitors for our marine nodal data acquisition systems are Magseis Fairfield ASA (a division of TGS, which recently merged with PGS), Sercel and InApril AS (which merged with SAExploration in September 2024) each of whom utilizes their own proprietary nodal technology.

Most oil and gas seismic products are price sensitive, so the ability to manufacture these products at a low cost is essential to maintain market share.

While price is an important factor in a customer’s decision to purchase a land or marine wireless data acquisition system, we believe customers also place a high value on a product’s historical performance and the ongoing engineering and field support provided by the product’s manufacturer.

The principal keys for success in the seismic instruments and equipment market are technological superiority, product durability under harsh field conditions, reliability, size, weight and customer support.

Product deliverability is always an important consideration for our customers.

In general, most customers prefer to standardize data acquisition systems, geophones and hydrophones, particularly if they are used by seismic companies that have multiple crews which are able to support each other.

In general, most customers prefer to standardize data acquisition systems, particularly if they are used by seismic companies that have multiple crews which are able to support each other.

This standardization makes it difficult for competitive manufacturers to gain market share from other manufacturers with existing customer relationships.

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Beyond this film supplier, we know of no other source for thermal film that performs as well in our imaging equipment.

For a discussion of the risks related to our reliance on these suppliers, see “Risk Factors –

We Rely on Key Suppliers for Certain Components Used in Our Products.”

COVID-19 has disrupted the Company’s supply chain, resulting in longer lead times in materials available from suppliers and extended the shipping time for these materials to reach the Company’s facilities.

For a discussion of the risks related to our reliance on these suppliers, see “Risk Factors – We Rely on Key Suppliers for Certain Components Used in Our Products.”

Our supply chain frequently experiences disruptions, resulting in longer lead times in materials available from suppliers and extended the shipping time for these materials to reach our facilities.

These disruptions could constrain our ability to provide products to our customers in the time frame they require.

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Consistent with industry practice, we normally manufacture our products based on firm customer orders, anticipated customer orders and historical product demand.

As a result of the steep decline in product demand that began in fiscal year 2014, further accentuated by the COVID-19 pandemic creating a global decline in the demand for oil and gas, also aggravated by global supply shortages of electronic components, we currently hold more than twelve months supply of inventory.

Markets and Customers

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Our imaging customers primarily consist of direct users of our equipment as well as specialized resellers that focus on the screen-printing and flexographic printing industries.

Our border and perimeter security customers are primarily government agencies. 

Our smart water connectivity customers include municipalities, water utilities, water meter manufacturing companies as well as asset management firms such as multifamily property owners.

Two customers comprised 26.7% and 11.7% of our revenue during fiscal year 2023. 

One customer comprised 29.3% of our revenue during fiscal year 2022. 

Two customers comprised 27.4% and 16.0% of our revenue during fiscal year 2024.

Two customers comprised 26.7% and 11.7% of our revenue during fiscal year 2023.

The following table describes our revenue by product type (in thousands):

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To attract and retain talented employees, we strive to make Geospace Technologies Corporation a diverse and safe workplace, with opportunities for our employees to receive educational benefits, cross-function skill-development to grow and develop their careers, all supported by competitive compensation and benefits.

Workforce Composition - At September 30, 2023, we employed 681 people predominantly on a full-time basis, of which 451 were employed in the United States, 209 in the Russian Federation and the remainder in the United Kingdom, Canada, China and Colombia.

Workforce Composition - At September 30, 2024, we employed 478 people predominantly on a full-time basis, of which 461 were employed in the United States and the remainder in the United Kingdom, Canada and Colombia.

Our professional staff includes geoscientists, electrical and mechanical engineers, accountants, computer and data scientists, marketing and human resource professionals.

63% of our global workforce is employed in manufacturing, 19% in engineering and 18% in sales and administration.

The majority of our employees in the Russian Federation belong to a regional union for machine manufacturers.

Our remaining employees are not unionized.

Our employees are not unionized.

We have never experienced a work stoppage.

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We focus on continuous learning and provide feedback to assist in the development of talent.

Company Culture –

Our Board of Directors established a Code of Business Conduct applicable to all our employees, directors and officers and a Code of Ethics for Senior Financial Officers in accordance with applicable U.S.

Company Culture – Our Board of Directors established a Code of Business Conduct applicable to all our employees, directors and officers and a Code of Ethics for Senior Financial Officers in accordance with applicable U.S.

federal securities laws and the NASDAQ Listed Company Manual.

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We offer a Whistle Blower program designed to protect any employee who reports valid suspicions related to our financial accounting, internal controls or like matters to management without fear of termination or similar repercussions.

Human Rights –

This year, we introduced a Human Rights Policy Statement which demonstrates our commitment to supporting and promoting human rights that benefit all our stakeholders, including our customers, employees, shareholders, investors, and the communities in which we live and operate.

Human Rights – Last year, we introduced a Human Rights Policy Statement which demonstrates our commitment to supporting and promoting human rights that benefit all our stakeholders, including our customers, employees, shareholders, investors, and the communities in which we live and operate.

Our approach is applied in our business operations, across our supply chain and through ethical business conduct.

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Annually, we hold an internal Core Values survey to inform leadership on the values in action and opportunities to improve.

Governance –

We pride ourselves on the highly ethical and transparent standards through the governance under our Board of Directors.

Governance – We pride ourselves on the highly ethical and transparent standards through the governance under our Board of Directors.

Board Composition - Our Board of Directors is chaired by a highly experienced, independent Director whose position is wholly separate and divided from the role of the Chief Executive Officer.

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Executive Sessions Without Management - In order to ensure original and independent thought, non-management Board members meet throughout the year.

Audit Policies –

Our Audit Committee is comprised of trusted members who ensure the integrity of our financial statements, internal controls, compliance with legal and regulatory requirements, as well as the performance of our independent auditor.

Enterprise Risk Management ("ERM") –

Our Board of Directors takes an enterprise-wide approach to reviewing each of our business segments, which encompass Oil & Gas, Adjacent Markets, and Emerging Markets operations which include our Security & Surveillance sector.

Audit Policies – Our Audit Committee is comprised of trusted members who ensure the integrity of our financial statements, internal controls, compliance with legal and regulatory requirements, as well as the performance of our independent auditor.

Enterprise Risk Management ("ERM") – Our Board of Directors takes an enterprise-wide approach to reviewing each of our business segments, which encompass Oil & Gas, Adjacent Markets, and Emerging Markets operations which include our Security & Surveillance sector.

Board members meet regularly to oversee and ensure that company objectives are met, shareholder concerns are addressed and ERM policies are maintained.

Environmental –

We are committed to zero harm to people, property and the environment.

Environmental – We are committed to zero harm to people, property and the environment.

We have an ISO 14001 certified environmental management system, employed over many health, safety and environmental programs.

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This includes production recyclable materials (aluminum, brass, copper, stainless steel, steel, and titanium as well as armored cable, film, lithium batteries, PCB boards and solder paste) plus paper, plastic, cardboard and e-waste (electronics).

We produce an Environmental, Society and Governance (ESG) report annually which is made public on our website.

Financial Information by Segment and Geographic Area

For a discussion of financial information by segment and geographic area, see Note 20 to the consolidated financial statements contained in this Annual Report on Form 10-K.

For a description of risks attendant to our foreign operations, please see “Risk Factors - Our Foreign Subsidiaries and Foreign Marketing Efforts Are Subject to Additional Political, Economic, Legal and Other Uncertainties Not Generally Associated with Domestic Operations and The Ongoing Armed Conflict Between Russia and Ukraine Could Adversely Affect Our Business, Financial Condition, and Results of Operations".

Available Information

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).

Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov.

We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).

Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov.

Our SEC filings are also available to the public free of charge on our website at www.geospace.com.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business