MIND - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to the MIND Technology fiscal 2021 second quarter conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded It is now my pleasure to introduce your host, Mr. Dennard. Ken Mr. you, Thank Dennard.

begin. may You

Ken Dennard

you Operator. Technology appreciate to MIND and of Good XXXX second morning fiscal today. We joining welcome quarter you the us Thank conference all call.

Officer hosts and Malden, Your Executive Executive Marine and President Officer Capps, Rob co-Chief co-Chief Chief Officer, and are Financial Guy of Systems. Vice Executive

the to to management, turn through. run have the I Before I call over details normal housekeeping

call by call, speaks going like you listen instant as Tuesday, replay the transcript at days to and it today’s you will of and XX, XX, to of reading. XX longer today, website features be therefore replay until on only XXXX provided you’d of September replay as section accurate If via or can Relations the no how advised the replay information webcast earnings to may Investor were time company’s recorded sensitive this of any to that release. be for time are yesterday’s of available a September access information listen on the via or in Information reported listening mind-technology.com,

performance company’s this within year include future in annual January of is the and by Before meaning Securities contents are performance predict Furthermore, please regarding that include company actual known those with any and let this SEC, by its results these by me release or statements cause that from unknown future made Form yesterday, the the the current call statements statements other statements. management differ factors, unable time of ended based its statements. from to refer company the uncertainties or the that as statement risks, factors of risk disclosed time implied which the this XXXX. on and expectations for Act issued we including call, to These note uncertainties begin, or our many results forward-looking the and XXXX. in are control, start management’s call materially filing the may XX-K of or to forward-looking covered constitute Litigation on forward-looking certain also to report Reform during Private please may These risks we by incorporated remind press XX, the expressed and statements

Now over I’d the like to call Guy to Guy? turn Malden.

Guy Malden

seismic joining Thanks over the morning implementation the fiscal to rebranding of the the in strategy of away Ken, second I’ll second would come and call. quarter. traditional good and realize first a for We general start conference but to fully is the us strengthen and looms still our some for company’s you back industry this comments like about us our leasing in business, and pandemic important our own thank global land margin quarter today the prospects business me everyone. our moment, large by Though strategic let address vision making milestone move industry. our enabling activity XXXX and shadow COVID-XX more the from

are the results products. our marine statements. now explain, operations operations As leasing business, Rob financial decision reflect our those of as will operations leasing technology discontinued to The reflected fully business, exit continuing with those our in ongoing more land from

by to businesses general sequential results our quarter business adverse marine of technology still operations pleased marine there which with have in there of efforts the a our revenues restrictions of our segment as All however, reduced XX%. reach these Sequentially we our marine rising the second anticipated, conditions; technology year-over-year our activity were well these due higher QX in from place consolidated up from revenues restrictions. are widespread a we pre-pandemic our from goals. COVID-related revenues technology by As On some despite was continuing to pandemic; lingering operations level as roughly things considered, uncertainty were our COVID-XX constrained XX%. products basis, with down about performance and market posted are frustrated however,

rapidly, As and though customers certain which had daily to can to procedures ability operations. COVID. commitments. to new to facilities significant vary we firm and operational, we impact significantly make from presents with on last all due change to believe willingness a challenge restrictions, The a internationally quarter, are of restrictions and of touched our the particularly location uncertainty resulting travel have location and tend Regulations on

robust degree despite both all hand, quite don’t On appear and interest to the other bid actually a industry greatly COVID activity inquiry have customer concerns high uncertainty. of impacted marine have as the with remained the engagement, in and

strong this COVID similar restrictions a when are testing to orders level by and not as has conduct limitations travel-related However, some of interest demonstrations. causing product been attempting accompanied

away as said, a As and just me let from leasing return seismic result now make subject and seem said, of reluctant to that move commitments. I our customers business. strategic the rebranding the With our to

business, completion rolling corporate this the and saying these objectives. Overall worldwide. of the this capitalized enthusiastic and company It that technological our work to major exit shareholder our approval, completed believe we a reincorporation which the to the prospects and rebranding We our tremendous it last additional and and website we to for financing us in as It a that time we on a goes underscores represents capabilities fully provides about important formalizing This identity. presence departure to our from a enable development evolution times receiving of name. after traditional by know, excited we in establishing in to change company and you fresh uncertain As industry. our more seismic fully identity our entirely. have flexibility of without marine out MINE step our marine new expand and are represents the Technology, the marks growth pursue products new month, also both new changes we and also domicile of reflects an that services leasing process decided have navigate the revitalized

Let add before comments me in Rob, turn come turning call over over the the detail. to call discuss closing more back will our some who I for financial Q&A. will now results to

Rob Capps

Guy. Okay, by review like briefly. that I’d financial start highlight on proceed, of but important the Guy detailed to I touched before I’ll item giving more an a thanks results,

by Given board and tax continuing management leasing therefore segment’s be the in now the to net will reflected operations operations. separately our discontinued results exit leasing decision of is after recorded the equipment the segment land the financial statements, seismic as business,

the balance addition, segment’s held for now classified separately grouped are assets liabilities sale sheet. the In as on and and

been reflect prior that all to have restated You’ll note periods reclassifications. these

the operations, marine our continuing business. technology which consists financial Let me of our first of products review results

but quarter almost second up from For the from XX% the year-over-year to in sequentially. in $X.X totaled in were $X.X quarter but million XX% year the a fiscal continuing ago from up $X.X down quarter, million million quarter revenues million of XXXX. revenues $X.X the operations in about million, from second first XX% year ago Seamap were $X the down quarter

that streamer events and a uncertainty the were and guard; to spending stated customers however Second impacted and other our year a quarter, have Sealink installation decrease delay XX% $X have the introduced revenues a ago by caused have results. believe the vessel as coast COVID decisions the did a from logistical many we Japanese and million, quarter million disruptions $X.X earlier, challenges we built pandemic introduced from for deliver Klein about for on sequentially. system down In

quarter Let with customer to that. a shipping $X.X me the the give order restrictions, and In you second million; delivery about completed due an quarter, but take to value Sealink and recognize shipment example arrange Accordingly, the were travel of quarter. we of of related a however, to so do unable we we expect to unable was in the sale do the in system. third that

revenues. from was gross $X compares was but the QX improved XX% year. was million, to represents above we million increase margins higher Second to in this quarter from and a year. profit well last overhead margin this favorably down of the from The XX% ago in prior result in year’s a a up which due second $X.X achieved million manufacturing of This gross quarter of quarter of a dollars year operations absorption the profit half which XX% in continuing achieved

continue expenses the general quarter operations efforts which our for containment second is to savings sequentially. yield as our administrative million structure cost XX% to $X XXXX, were fiscal continuing cost flat ongoing of our and related essentially Our lower to and year-over-year

activities. was which up quarter of technology product expense $XXX,XXX, ongoing a and XX% up is was and development our and ago the development research from from reflective This of year this Our first XX% year.

$X.X year of loss million operating quarter in the as and compared this for overall the quarter in this of an million year $X.X operating $X.X was loss loss to second ago Our posted QX year. a million

a and loss end second included a and solid. remains year. about MIND’s capital At we $X.X million quarter, QX EBITDA cash a debt that adjusted capital free structure quarter million loss $X.X in liquidity of of million the working to of was last continuing of equivalents over $X.X cash quarter Our had of $XX operations million. about second the is this compared of $XXX,XXX from and loss in year’s of

our monetize we As business period should an the environment of our well position With With free and cost we we’ve handle shroud for structure, touched more inquiries leasing this for are persist no enhances restricted cost ourselves well structures business as the on before, term do covenants, debt, recovery. we obligations remains, gives solid to of our and and as of to the market Though well plans capital which for conditions the of are uncertainty of baseline and extended significantly financial strictures are time. the environment. quotes. and viability requests flexibility uncertainty positioned the a of see us continuing suited flexible to navigate this of challenging near eventual

said, Guy restrictions due yet many hasn’t both regulation the in As we activity to present more this cautionary interest markets that environment robust been manifested order in but and the serve. and customer a has

million. second at order firm was quarter few questions. quarter end comments backlog to at turn let me the from our things result, that, back take a we over first $XX.X $X.X the the Guy your down before of of million backlog closing a With for As

Guy Malden

for do term in own Based to business and restricted activity continuation that and but will regulations, visibility, revenue be product We prospects activity near the technology believe comparable levels long challenging uncertain. and Rob. business economic the third the on orders marine our timing term remain second. of we the travel confident of remain for Thanks the our quarter fundamentals currently

conditions our to of We will and continue execution focusing the and operational market on technology. advancement adapting

by recognized As more our contractor market the will an resolution a jointly efficient leveraging higher expertise an that aperture as addressable the we sonar a produced to better combining develop bring the the commercial technology well. marine improve example, market vastly employ quality strength and cost marine both serve of imaging. the by to can to will respective needs, and and sonar and major agreement innovative products generation believe developed increase our customers is emerging and market yield announced acoustic can latest for image new solutions we achieve Klein parties. market technology respective military solutions that our products for in our this our and these highlight needs being more like side the help SASS, defense alliance previously has with on the believe quickly that recently traditional By of next and to technologies bring or by This I’d markets. to the both SASS to effort synthetic scan We an of strengths, for address European sonar. better that systems, market address of contractor aims products,

COVID we marine technology reductions, to lingering and customers. our Our of able efforts don’t Despite the reach have activity products restrictions to of our there, demonstrate the end nonetheless further effectiveness been for either.

are products and there requiring as of more source in such to hydrophone in many marine good GunLink enhanced and Furthermore, activity technology U.S. our opportunities the developments Max or how through alliances. future flow capable demonstrations our other capabilities and customers our We Navy. to signs expanded These favorable their to of new to provide this for whether are been with instance, of we has We are various products all exploration aggressively a ability important unique the in technical are groups they the acquisition plan also controllers. For furtherance sonar product capabilities. our and opening believe technology us. seeing deal internal dual development, also as for Micromax market are developments pursue order demonstrate doors

the In market and higher conclusion, also markets see in on we more of as existing investment. to well. We expand plan challenges but for the our line value to products on focus opportunities return addition we on solid providing financial and the capital, we With liquidity for now challenges questions. the the strong access open foundation call we to position debt, additional opportunities. will to and have our capitalize With of needed no up overcome and the that, see

Operator

[Operator instructions] Thank you.

come first of line Tyson Bauer questions Please with KC proceed Our your questions. with the from Capital.

Tyson Bauer

Good morning gentlemen.

Guy Malden

Hey Tyson.

Tyson Bauer

sale and and asset income is dwindling sold, The that activity balance side, as in we discontinued always that work that a original asset viewed be as a would ops that we then would once with got statement where lease business thus business $X.X to off that the opposed the the land discontinued million, its the in the that why something see was just was that ops, which an sheet? label entity, plans to single as just way down I went the then

Rob Capps

announced and really we’ve the a exiting that that accounting treat we were that choice. a dictated is really ops. had get an we We don’t discontinued since segment issue. accounting that We business, that as rules It’s really that rules disclosed,

Tyson Bauer

all because you it marine, Given got on why seen treated you’ve separately, out? just land segmented that’s

Rob Capps

There’s one of specific of segment a your as to business, criteria. accounting exactly and is a discontinued some in operation defined those That’s what the exiting rules, rules constitutes as right.

Tyson Bauer

depreciation, appear situation? gets more everything this cumulative It or is clean-up Okay. into and would a that kind and effects currency quarter just less thrown of

Rob Capps

one the estimated exactly It’s look That’s the disposal so that things right. way costs, of at nature, to currency CTA, loss, that’s translation it.

Tyson Bauer

assets do $X.X and of anticipate cash? Okay, that into when you realizing million turning

Rob Capps

that, made something doesn’t we we’re to what expect necessarily is do million to we announcement, we’ve but it, it months. the shorter reflect That could It working $X.X as realize than when on now. carrying on we but value. XX the the within expect said it’s Well, be

Tyson Bauer

Okay. be hold you you received, you The $X.X forgiven to or the expect incur million rate? will X% and PPP that loan do that that interest

Rob Capps

bit part it be actually do in part to a will that. we��re is We have the we on treat forgiven. process that a as able cumbersome that making until think it application The We think a be forgiven, for great forgiven. will forgiven of we is process can’t significant but actually and

Tyson Bauer

Okay.

things a for of you run little next the what rate have outlook us couple quarter into of you Given lot looking over a as quarter, this a kind gave bit quarters? are and next burn at to you an cash

Rob Capps

specific the the I projections, hold can things business, hold to the want we well all we but don’t think I operations. think we we I considered, think can feel can leasing somewhat our our own. be as to as other with own activity with as

Tyson Bauer

Okay.

completed You announced the for U.S. Navy. some tests

procurement qualify pushed As that kind as looking you’re going, contracts player been kind as that gets do helping is far or you in and now timeline of hopefully this; the their timeline issuing DoD the what suppliers a has and complete? on testing for since of A, now keeping you two, small program are the that at

Rob Capps

of to with project. there, variety that variety There a really a forecasts to make are we’re entities difficult really there. programs, I’m so a it’s of answer. difficult reluctant to Tyson, that’s any thing dealing

Guy Malden

good now The it multiple, started grown multiple entities, many from we angles Tyson. that We trying it’s out to it’s and as news hit into possibly with so can. we’re is one as

Tyson Bauer

Is that, it your company? to something win allows and funds just keep to to continue in you possible coming into that prototypes

Guy Malden

Yes, absolutely.

Rob Capps

sure. Yes,

Tyson Bauer

partnership? place, was should during should period, it you out fall, time in so, possible on what further with us the was give Is expect timeline the see the see a product to further if vague of which things. announcement that those partner, alluded we that we can and on European In original color to introductions, announcements sometime any still but

Rob Capps

Guy more. say beyond not think much I’m I’d said, sure I what Well,

the I time holding is up. think frame

much with you’ll that. on months, We’re on that, and see in think pretty coming more more so schedule I the weeks out and come

Tyson Bauer

Should or that from those we announcements, European to expect yourselves? side, side, it see from the

Rob Capps

I side. think this from ourselves, from

Tyson Bauer

gone one, away. Last that hasn’t growing, about you bid opportunities talked

talking a possibilities, larger sense us sense shareholders just we changing us remain to size? pipeline Are Give patient. what pool million, sense features? discontinuing--? what accordion million million shareholders, to that should the $XX on $XX Delaware, million, your a multi-year $X to the us is For that give depending a they’re talking Give a if led why name, $XX on of programs, of to changing we’re about of

Guy Malden

domestic a too are, potentially are time so Again, and without not the trying offerings definite significant arena activity only activity to frame, think from and give about there be there even we and a side, inquiries tens specific an uptick seismic talking programs, internationally specific opportunities, large on are are looking multiple within that where we well. but at upside we feel. millions from there’s is in here, as more There the of we’re We equipment-- these in of that traditional product

Rob Capps

yes. system sales, be would Those

Guy Malden

we time So that’s it. the it’s a there’s and big think upside reason to do

Tyson Bauer

with that even still similar that Is to to QX So correct? QX that sale with there. that be be system additional QX, in recognized should $X.X million anticipating sale even you’re in

Rob Capps

It’s in you but in now Again, understand we see the right that has ballpark. it away, uncertainty how gone that’s not marketplace to have today. the

Tyson Bauer

Okay, thank you gentlemen.

Operator

you. Thank

next Investment with Our of the ARS Taylor Partners. question proceed from with comes your Ross questions. line Please

Ross Taylor

already partnership, is if the or split preset Is - how revenue that Do are it of Tyson. products sold? you from I sold, some most to in the guys technology the certain with it you on come going the describe with going your answered Can is well to going get depend you European what more are split specifically have percentage? go to problem following that’s partnership? this new Okay, were questions

Rob Capps

economics split, we if see, specific sells see that Again, of on to of you specific an effect. who yet, will, that specific have too doesn’t so just much without more what they it specific or what arrangement, as a being and it’s

Ross Taylor

setup Does to process where to development is good. to going and additional they for work technologies? uses your you also it that’s the Okay, involve going together are there, a develop

Guy Malden

Yes.

Rob Capps

Absolutely, yes.

Ross Taylor

of this purpose them better from access of into U.S. the European And part the the is market? to give side

Rob Capps

I well worldwide. non-military market it, into as one think market, as is yes, aspect entrance of commercial the that

Ross Taylor

to good, part you’re a lot process so the--although you’re to them? from for Okay, like this, an basically player, to a are--you you’re going table looks smaller important there lot this a bring much it of do and bring the

Rob Capps

Yes, that’s They what we think, sure. choices. for had

Guy Malden

as look at it well. they’d Yes, that way

Ross Taylor

might this you does impact have the government? current initiatives how and Okay, any U.S. with

Rob Capps

think to a SASS it positive products, our a of future for potentially. map capability I products think shows clear doors this I in Well, us opens for road so that is lots existing and it

Guy Malden

That’s fills the important piece, is offering. portfolio, the that gives missing we us--this out our with and the in the portfolio were SASS this SASS

Ross Taylor

an other of the we’ve but JV? for, outside of working waiting they this these are Okay, been example, you’ve projects been in purview some on and

Rob Capps

yes. Yes,

Ross Taylor

working Okay. nature, entities When the U.S. question, from just you agencies talked with such is or about Tyson’s security things that or Navy? answer in different U.S. does away other that that you’re parts uses, other governmental to homeland mean the Navy for uses of of multiple as

Rob Capps

is the Different we Navy referring to. what parts were U.S. of

Ross Taylor

does that the up set from Okay, Navy? of and purchase different possibility the for parts multiple orders

Rob Capps

Sure.

Ross Taylor

in you’re across basically is so the seeing Navy interest technology? seeing what your you’re Okay, expanded an

Rob Capps

I that’s to fair think say.

Guy Malden

Yes.

Ross Taylor

is increasing of because seem of safely. probably underwater launched launched the this of to deploy the think any store, GPS water need that you great vehicles, cruise do more autonomous long growing that missiles fact it find they hit tied this, sensing, to regularly, this such underwater the energy, their mapping of could you the that is grocery a that department see that sea could underwater a even can do use pretty a not to and underwater extensive some exists be going way as and going effort? and just so hotspots lot do can’t sure pretty going country they’re or much need a that they what it’s targets, part Is into I need air if also people need in term store would so vehicles, because so opportunity? you Navy traditional forget to unmanned Okay. is you use to with vehicles, the Is that believe, map have here, to and for the why to and greater so transmits vehicles autonomous of significantly make that

Guy Malden

very underwater. Max It’s the focus related big definitely been that arena, Micromax to we’ve that talking developed - and a working there’s on to that about with technology again, The on we begin in very, that well both fact vehicles, we’re technology. and have and with, surface fits

I answer surface is it is think both vehicles, yes, underwater. So by and driven the

Ross Taylor

[indiscernible] of up airing feel although Well, that I’ve my quickly. Godot walked is for like it’s times into Waiting show damn exciting, does do Godot, I pretty but an hope

Rob Capps

at [indiscernible], feel in Ross, that we the all Certainly I understand. we too. helped we’re understand, way sometimes but environment hasn’t things

Ross Taylor

feel feel the with But that top--I do it types a the one issues move you to to things on. ahead programs seem, what I mean, of you, Navy if are find to important mean, this hope so they providing huge get pretty not other they’re importance you them, able to are to the you’re Navy--these Thank should gentlemen. ways think going environment, programs, of done. would to--they’re starts that the would you--with time you have that do workaround would doesn’t Navy fail these

Guy Malden

There’s a amount to that a been comment, has has unmapped of only so one ocean going of been areas factor, mapped, so Ross. activity. be activity, just been U.S. Yes, around ocean-related explored, the the of there’s explored--X% lot the not ocean out One world. but there, has the translate tremendous Navy

Ross Taylor

does anything because reduce mapping to it appear out, ability there appear--I and there these increase be now, out a that at strike capabilities. Right than cost and higher for the definitely competitive the example, huge rate it the increase a speed advantage, technology, efficiency undersea much me would any you like--. all point Well, competitive do mean, to as initiatives giving are--your you should doesn’t as

Guy Malden

and--it’s efficiency as efficiency quality and as right, You’re imaging it’s improvement. absolutely well so image

Ross Taylor

get get there. we I six, thought need very there months sounds going it said, I in next to as but hopefully were know exciting, to ago, we we’ll Well nine be the there we just three. Yes.

Rob Capps

Ross. thanks it. Okay, Appreciate

Operator

lien is with Bauer with coming your next the of question. Please Our Tyson proceed question from KC Capital.

Tyson Bauer

promise to things unique that, ongoing quick. operating this and you expenses go there [indiscernible] Are to of without expect make didn’t your leverage that I a your included what were SG&A should to, to discontinued. there whole the some help have and in SG&A, there? lot out we

Rob Capps

nothing there. much Really unusual

you a re-casted If just so continuing fairly year, it’s roughly dramatic as see constant in the I we the operations, change wouldn’t look with constant, been this near term at least.

Tyson Bauer

looks you just like break current that need given looking a what $XX it quarter? approximately it? of what, on, hit trying at a to Because million your million do, margins, that you’re up to really even get that you Is are to correct? $XX Is focusing to on quarter side or

Rob Capps

that’s of the ballpark, That’s right. kind

got math. the just do You’ve to

Tyson Bauer

Okay.

be easily that in the other in get On are Klein, the there far to existing your off-the-shelf that that’s can integrated out new shelf, same paid vehicles are with make that’s Will doing think technology? manufacturers? the or now and more the you creating vehicle better going better technology what’s by to off that that mindset, option other affordable be that today be with than used technology technology route for, in market you SASS trying Which offering, you more to - that you’re you’ve you’ll affordable way something available more guys offer usually offering companies. with a been of you’re trying where an this

Rob Capps

of is a both, little It’s zillion much standpoint, much more from bit we’re trying affordable the of Tyson. a guys, multi so a quality do solution that offer to a from of What higher product dollar a both. resolution yet you see big than the bit

find there. middle, trying in We’re to the medium happy meet a

Tyson Bauer

[indiscernible] and technology money they’ve little side develop European this? give really And spent spent on putting many to the from a they’ve into us the can you trying standpoint, on this the how partner detail years

Rob Capps

many Many years and millions.

Tyson Bauer

the be correct? manufacturer, you then and Okay,

Rob Capps

That’s correct.

Tyson Bauer

right, All thank Okay. you.

Operator

management closing end the to We have remarks. reached now answer any over for session. will call question the and I back the of turn

Rob Capps

you. you joining thank and much. everyone after appreciate seeing very quarter. we third to Okay, today, look We us our Thank forward you

Operator

This a you conclude does Have conference. for your Thank participation. day. great today’s

MIND Technology (MIND) 15 Sep 202021 Q2 Earnings call transcript