December 31, 2017
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. All statements other than statements of historical facts included herein, including statements regarding the Company’s future financial position and results of operations, future product development initiatives, the Company’s business strategy, the future mix of product revenues, future demand for the Company’s products and general conditions in the energy industry, in general, and the seismic industry, are forward-looking statements. While management believes that these forward-looking statements are reasonable when and as made, actual results may differ materially from such forward- looking statements. Important factors that could cause or contribute to such differences include possible decline in demand for seismic data and our products; the effect of recent declines in oil and natural gas prices on exploration activity; the effect of uncertainty in financial markets on our customers’ ability to obtain financing; loss of significant customers; defaults by customers on amounts due us; possible obsolescence of inventories and impairment of long-lived assets; and foreign currency exchange risk. These factors and others are described and discussed in the Company’s most recently filed Annual Report on Form 10- K, the Company’s most recently filed Quarterly Report on Form 10 -Q, and in the Company’s other filings with the SEC. 1
Management Team Walter R. Wheeler Thomas T. McEntire President & Chief Executive Officer VP & Chief Financial Officer – – 33 years in the seismic industry 20 years in the seismic industry – – 13 years with Input/Output, Inc. (now ION 7 years with APS Holding Corp. Geophysical Corp.) – 8 years with Coopers & Lybrand, LLP Michael J. Sheen Robbin B. Adams Senior VP & Chief Technology Officer Executive VP & Chief Project Engineer – – 47 years in the seismic industry 36 years in the seismic industry All management team members have been with Geospace Technologies for 20 years 2
Business Overview Leading designer and LTM December 31, 2017 manufacturer of seismic equipment for oil & gas Seismic exploration and exploitation 37% Wireless and reservoir 63% monitoring systems drivers of historical revenue growth Incubator of products for other Non-Seismic LTM Revenue: $73 million markets leveraging existing engineering & manufacturing Seismic Non-Seismic expertise 3
Company Highlights Proven Track Record of Technology Leadership Differentiated technology innovation Earnings Generated Over Time Annualized growth in retained earnings of 10% since 1997 IPO Growth Potential through Product Innovation Leading edge wireless (GSX/OBX) systems and permanent reservoir monitoring (PRM) technology past growth drivers, and growing industrial product business Strong Capitalization Clean balance sheet; no long-term debt Experienced Management Team with Long History in Seismic Industry Decades of experience and team continuity 4
Impact of Technology Innovation 1950s 1960s 1970s 1980s 1990s 2000s 2010+ - 24 channels - 24 channels - 120 channels - 192 channels - 4,000 channels - 40,000+ channels - Higher channel counts - 1 st telemetry system - 1 st multi-line 3-D system - Pre-digital revolution - Early digital system - Analog inputs only - Single channel units - Wireless technology - 1 st using transistors - 1 st 24 bit converter - Paper recordings - Huge diameter cables - GPS synchronized 5
Product Development Driven Growth Industry Organic growth Expertise Marketing Engineering – Creating value for our customers Improvements and investors by developing new products Engineering expertise – 69 member engineering team located in Houston with an average of 25 years of product design experience – Design teams for seismic data acquisition systems, sensors, Manufacturing cables, connectors and numerous non-seismic products 6
Differentiated Manufacturing Capabilities Manufacturing expertise & capacity – Electronic assembly, sensor shop, cable shop, machine shop, molding shop, printhead clean room – 417k sq. ft. in Houston – 120k sq. ft. in Ufa, Bashkortostan, Russia – 45k sq. ft. in Calgary 640 employees worldwide We leverage technology development through the products we manufacture – Increased flexibility & cost savings – Control over proprietary intellectual property 7
Strategic Focus Within Seismic Market Processing Equipment Data Multi-Client Data Processing & Company Manufacturing Leasing Acquisition Data Library Interpretation Geospace Technologies BGP (Inova) Multi-Service CGG (Sercel) ION Geophysical WesternGeco (Schlumberger) Dawson Acquisition or Processing Geokinetics Focused PGS SAExploration TGS Seitel Equipment Geospace does not Focused Mitcham compete with its customers in these areas Teledyne 8
Seismic Segment 9
Traditional Seismic Exploration Products LTM¹ Revenue Contribution Land & Marine Applications Sensor Products – Geophones Seismic - Traditional – Hydrophones 22% – Multi-component packages Seismic - Wireless 37% Cable Products Seismic - Reservoir – Leader wire (geophone string application) – Acquisition system cables Non-Seismic – Marine cables 37% 4% Connectors – Cable connectors – Geophone string connectors – Acquisition system connectors Marine Products – Streamer retriever devices – Wet and dry mate connectors – Shallow water connectors 1 LTM as of December 31, 2017 10
Wireless Products Providing Significant Growth LTM¹ Revenue Contribution Geospace Seismic Recorder (GSX) Wireless seismic data acquisition system – Introduced leading land-based wireless data acquisition system in 2008 Seismic - Traditional 22% – Permits new multi-source acquisition techniques 37% Seismic - Wireless – Enables virtually unlimited channel count Rapid customer acceptance Seismic - Reservoir – Most widely used wireless data acquisition system Non-Seismic – 480,000 channels sold or available for rent in N. and S. 4% 37% America, Europe, Africa, Asia and Australia Rental fleet of approximately 63,000 channels Note: Channel counts as of December 31, 2017 1 LTM as of December 31, 2017 11
The GSX Wireless Advantage Conventional Technology → Cabled Our Technology → Wireless Deployment is time-consuming Increases crew productivity and decreases crew footprint Maintenance is constant Lightweight and easy to deploy Cables are heavy, raising HSE issues Significantly reduces maintenance Allows crews to start work at daybreak Roads, railroads, fences, rivers, lakes & instead of waiting on cable repairs towns are obstacles 12
GSX Market Opportunity Sold more wireless channels than any other Cumulative Wireless Channels competitor Sold / Available for Rent Opportunity to capture market share as cabled systems are replaced due to aging and 500 inefficiency 480 473 463 461 459 – 4-5 million estimated channel market opportunity 450 – Target market approximately 2-3 million channels 400 – Channel count per seismic crew growing Channels in thousands 350 316 Over 40 GSX Customers 300 250 210 200 150 105 100 50 33 10 2 - FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 Q1 18 Sales Available for Rent 13
The OBX Wireless Advantage Conventional Technology → Cabled Our Technology → Wireless Deployment and retrieval is time -consuming Increases crew productivity Maintenance is constant and downtime is Much more reliable thus reduces maintenance expensive costs More stations per vessel size allowing for use Cables take-up deck space thus requiring of smaller vessels larger vessels Cables are expensive to purchase and replace 14
Leader in Reservoir Characterization Products Pioneered and market leader in permanent seismic reservoir LTM¹ Revenue Contribution monitoring (PRM) systems PRM contracts provided substantial revenue growth in 2013-2014 – Seismic - Traditional $18 Million Shell contract for BC-10 field in Brazil (FY 2013) 22% – $172 Million Statoil contract for Snorre & Grane fields in Seismic - Wireless 37% Norway (FY 2013 and 2014) – Seismic - Reservoir No PRM contracts since Statoil award in November 2012 Ocean bottom and borehole data acquisition systems 37% Non-Seismic – Retrievable & permanent versions 4% Selected Customers 1 LTM as of December 30, 2017 15
Non-Seismic Segment 16
Non-Seismic Markets LTM¹ Revenue Contribution Utilizes existing engineering and manufacturing resources to broaden product Seismic - Traditional lines and markets 22% 37% Seismic - Wireless Strategy focuses on thermal imaging, cabling, molding and machining capabilities Seismic - Reservoir Non-Seismic 37% 4% Thermal Imaging and Digital Inkjet Printing Industrial Sensors 43% Industrial/Corporate Water Meter Cables and Connectors 57% Imaging Subsea Cables Contract Manufacturing LTM 1 Revenue: $27 million 1 LTM as of December 31, 2017 17
Financials 18
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