OYO Geospace Reports Fiscal Year 2008 Results

For the fourth quarter ended September 30, 2008, OYO Geospace recorded sales of $30.5 million and net income of $3.3 million, or $0.54 per diluted share. For the comparable period last year, the company recorded sales of $30.8 million and a net income of $4.9 million, or $0.81 per diluted share. The company noted that the prior year’s fourth quarter results include a pretax gain of $1.7 million, or $0.21 per diluted share, from the partial sale of a surplus property.

As previously disclosed, in the fourth quarter of fiscal year 2008, the company was hindered by the effects of Hurricane Ike which resulted in a shutdown of its Houston facility for ten days, mostly due to electrical power disruptions. Although it remains difficult to determine the exact extent of this loss, after consideration of business interruption insurance proceeds, the company estimates that approximately $1.8 million of sales were deferred to future periods and approximately $0.5 million of operating profits were lost or deferred to future periods.

“Last year’s financial results were heavily influenced by the $16.2 million sale of a seabed reservoir monitoring system for BP’s Azeri complex in the Caspian Sea. Excluding the impact of this sale in fiscal year 2007, we experienced record-setting sales growth in fiscal year 2008 in each of our seismic segment product categories, including our land, marine, borehole, offshore cable and industrial sensor products. Our employees met the challenges of a strong market and the company generated a very respectable 20% pretax return on shareholders’ equity in fiscal year 2008,” said Gary D. Owens, OYO Geospace’s Chairman, President and CEO.

“While we were unable to repeat the sale of a large seabed system in fiscal year 2008, sales of our seismic borehole systems increased significantly as more oil and gas producers increased their demand for this technology. We remain optimistic regarding our proven seabed reservoir monitoring technologies and we are responding to several on-going inquiries for retrievable and permanent versions of this product. As previously mentioned, sales of these large seabed systems are often sporadic and can significantly distort the comparability of our year-over-year financial results,” said Owens.

“Sales of our non-seismic industrial products including offshore cables and industrial sensors continue to grow significantly, increasing 30% in fiscal year 2008. Our thermal solutions segment more than doubled its operating profit on relatively flat sales in fiscal year 2008,” said Owens.

“As we enter fiscal year 2009, we face a global financial crisis that casts a pall over our industry. In spite of this crisis and plummeting energy prices, many of our customers are facing record contract backlogs, primarily in markets outside North America. Similarly, our backlog of product orders is also robust, approaching recent highs. However, many of our customers rely on commercial financing and capital markets as a source of funds to acquire seismic equipment. Funds from equity capital and commercial financing could be scarce in the near term. Therefore, it is difficult for us to forecast the impact of this crisis on the company and we remain cautious about the near future. Fortunately, we believe the company has a strong balance sheet and is well-positioned to weather the impact of this crisis through fiscal year 2009. Furthermore, we are very fortunate to have a growing number of new products which are expected to outperform fiscal year 2008 sales levels,” continued Owens.