Geospace Technologies (NASDAQ: GEOS) today announced that it has acquired 100 percent of the outstanding shares of Aquana, LLC, a comprehensive wireless water monitoring and control system provider. Under terms of the agreement, Aquana will operate as a wholly owned subsidiary of Geospace Technologies. The Company intends to retain Aquana’s employees, further strengthening Geospace’s highly skilled technical workforce. Terms of the transaction include an initial cash payment of $1.4 million at closing, subject to adjustment, and additional contingent cash payments over a six-year earn-out period. The contingent cash payments will be derived from revenues generated during the earn-out period from products and services sold by Aquana, LLC.
Founded in 2017, Aquana provides a leading Internet of Things (IoT) water management platform that delivers remote shut-off valve control, remote AMI meter reading, as well as leak and burst protection for municipal water utilities, multi-dwelling properties, and commercial buildings. Aquana combines connected smart valve hardware with cloud-based software in a Software as a Service (SaaS) recurring revenue model.
Rick Wheeler, CEO and President of Geospace Technologies, said, “Building upon Geospace’s deep technology focus and targeted business diversification strategy, I’m pleased to announce the acquisition of Aquana. Aquana’s premier IoT platform offers multifunctional, modular, and enterprise-ready solutions serving the rapidly growing property management and water utility markets. Fully complementary to our existing products and market expertise, Aquana’s state-of-the-art systems incorporate sensors, are Internet connected, and use configurable algorithms to help clients maximize revenue, limit costs, and mitigate water damage.”
Steve Askew, CEO of Aquana, LLC, said, “We are excited to join the Geospace team. Backed by Geospace’s decades of technology development, manufacturing, and extensive customer service, Aquana can better serve our customers, scale more rapidly, and develop new products. Moreover, property managers and water utility operators alike will be able to deploy intelligent leak detection and remote disconnect capabilities to provide more benefits to consumers and tenants.”
Aquana’s leak detection systems serve a valuable role in the property management sector, identifying and alerting property owners of water damaging events in their initial stages. Analysts estimate that approximately two percent of U.S. properties experience leak-related damage each year, resulting in a corresponding increase in insurance claims. 2017 water damage insurance claims payments were $13 billion. The rise in such claims has facilitated the growth of leak detection systems by the more than 400 Water Utilities that serve approximately 140 million domestic customers. Aquana’s business strategy seeks to capture 5% of the remote shut-off valve market which represents a $1.4B opportunity. In addition, Aquana’s submetering, compliance, and automation features play a valuable role in helping users conserve water, ensure compliance with municipal regulations, and justify premium rents.”
Additionally, Aquana’s Internet connected remote value platform improves a utility’s ability to save time, money, and expense. Industry analysts estimate that approximately five to ten percent of water utility users don’t pay their bills, and that each time a utility is forced to disconnect and then reconnect service, significant labor and operational costs are incurred. Aquana’s sensors and actuators enable utilities to disconnect and reconnect services remotely from a secure central location.
The Aquana business division will reside in Geospace’s Adjacent Markets segment. This segment generated a 10% increase in year-over-year revenue for the six-month period ending March 31, 2021, despite the debilitating effects of the worldwide COVID-19 pandemic. Management believes that its technology focused diversification strategy will continue to pay strong dividends.
Wheeler concluded, “I’d like to welcome the highly innovative and talented Aquana personnel to our Geospace team. Through the combination of our technologies, engineering, and core manufacturing competencies, we look forward to forging a profitable and successful enterprise as we continue to drive results for our valued clients and trusted shareholders.”
About Geospace Technologies
Geospace principally designs and manufactures seismic instruments and equipment. We market our seismic products to the oil and gas industry to locate, characterize and monitor hydrocarbon-producing reservoirs. 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 and offshore cables.
Aquana’s premier Internet of Things (IoT) platform offers multifunctional, modular, and enterprise ready solutions serving the rapidly growing water utility and property management markets. The Company’s water management solutions deliver remote shut-off valve control, remote AMI meter reading, as well as leak and burst protection for multi-family properties, commercial buildings, and utilities. Aquana combines connected smart valve hardware with cloud-based software in a Software as a Service (SaaS) recurring revenue model.
Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Statements that contain these words should be read carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. Examples of forward-looking statements include, among others, statements that we make regarding the success of our transaction with Aquana and our diversification strategy. These forward-looking statements reflect our current judgment about future events and trends based on the information currently available to us. However, there will likely be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission, as well as other cautionary language in such Annual Report, any subsequent Quarterly Report on Form 10-Q, or in our other periodic reports, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Aquana transaction and our diversification strategy to yield positive operating results. The occurrence of the events described in these risk factors and elsewhere in our most recent Annual Report on Form 10-K or in our other periodic reports could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.
President and CEO