MIND - Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the MIND Technology fiscal 2023 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. pleasure Investor your Relations. my with Zach now Lascar Dennard is to host, introduce Vaughan It Thank you you, may begin.

Zach Vaughan

appreciate quarter Thank welcome you are Financial and call. Rob second Executive and With and Chief Mark to and you We conference Officer, the MIND Capps, Officer. us Operator. Technology’s fiscal me Good today. all of morning Cox, Chief President joining President XXXX Vice

Rob, I Before have few I over turn cover. the items to call to a

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

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

I would Capps. to over turn to call the Now like Rob

Rob Capps

end, things I’d the then the Okay, to on will outlook. begin observations with making the Mark more market thanks like by financials remarks some discuss regarding second about some up quarter I’ll environment. wrap At the our in Zach. detail. and

We’re pleased over to is report revenues XXXX $X.X that and were slightly about year’s $X.X which second XX% second in million. quarter first came Revenues expected. last of quarter million, our below the fiscal results quarter as up

lower research in to approximately first loss million the we $X.X operating year. Importantly, and with million administrative and expenses improved year’s our compared this the quarter selling, margins coupled to second $X.X quarter in costs. year, lower $X.X of last quarter first and and gross this general improvement an saw compared to in development million When

As energy global a industry. The on robust prices in order we’re positioned continued is drive each seismic believe the marine activity in uniquely capitalize that markets. our company, seeing MIND key sustained of to to we the tailwinds

on we’ll therefore book grow for continue we’re situation the look our energy uptick maritime global, forms ongoing our The Our as the wind interest coming of those to optimistic demand. as has prices alternative of highlighted business we attention such in resulting an technology, in and also execute security business security energy, seen also towards from marine high the quarter shifts has need as survey geopolitical growing same to farms.

of beginning up is XXXX as Our at July this fiscal was from year. approximately $XX.X which of million, $XX.X XX, the backlog million

continued addition that this macroeconomic confidence. we to These of that experiencing which for reflect we are uniquely a of we the opportunities are our pursuing momentum products strengthening from to positioned orders benefit and have various the environment. other high believe markets firm In positive backlog orders, number we’re in

and as believe news for space. I’ve exploration As looking markets offshore is demand this of cases, and, products acceptance metrics fleets. the their is an there energy enjoy positive of that’s products reporting improving customers global key resulting mentioned many expand defense surrounding energy is increased momentum farms in some as previously, BuoyLink, survey. - such we Strength within wind SeaLink to demand in in continue three us. to our each good in market. exploration, in are Activity and That’s our GunLink, driving broad alternative the in markets survey space

geopolitical addition interest to global we’re single The applications. produces scan particularly streamer We Europe these in side our high beam Asia recently dimensional SeaLink much multi-beam in interest increased and surveillance resulted in increased higher systems. In introduced resolution resolution sonar security and in and sampling interest images. systems, three systems seeing towed That these situation for for in has maritime which in rates SeaLink, our higher resulted systems.

arrays un-crewed particularly demands, recently and activity other increased this bodes our SeaLink passive which and for platforms. order for program our we commercially scan experienced systems, particularly and have sonar utilize we believe seismic those related for applications, utilizing towed as side is anti-submarine We at to well arrays also developed maritime security multi-beam our sonar to these think warfare

Now you second let let bit to financial a over quarter our and Mark through detail. results in me him turn walk more

Mark Cox

everyone. Thanks Rob, and good morning

in of operations in when to the prior same improved million the Gross in margin levels. year This of $X.X represents quarter second fiscal as continuing gross increase quarter operations in higher earlier, million XXXX. this the quarter absorption compared second greater which ago. quarter a during the period the profit result of quarter million, quarter, approximately margin to mentioned was in a approximately profit a reported The the of costs from the for year the XX% $X.X compared XX% reductions continuing $X.X further achieved up XX% totaled and year. from XX% Rob revenue the of XX% a attributable and As second when during from sustained fixed was to quarter, the revenues the first up expenses is we

Our first general $X.X administrative expenses and were from million XXXX, second the fiscal million down for our was which of in quarter $X.X quarter.

the down that were we end-loaded As to incurred expenses associated expenses quarter, as our the year mentioned front progresses. of last Much tend in travel G&A earlier the we fees. with taper and professional year

periods, Consistent for passive initiatives, was towards which expense costs development $XXX,XXX second down with quarter, largely directed strategic these synthetic are aperture arrays. sonar and prior the sonar research was including our Our XX% nearly sequentially. and

was loss from in $X.X second as $X.X net quarter million loss this million XXXX. of the for second Our year compared the quarter of to continuing operations fiscal

compared $X.X loss We Our positive second $X significant loss was of second the first this operations this a million as in from to quarter in a XXXX of a of see quarter million year. quarter trend. adjusted the of a fiscal million EBITDA improvement continuing and $X.X indicating

approximately and XXXX, approximately of As $XX.X of million cash XX, we working capital had $XXX,XXX. of July

structure no from comments. remains normal respond Rob in We funded over to aside market debt cost obligations. obligations I’ll outstanding our to to Also, trade pass continue for flexibility gives some or it conditions. changes concluding us now largely have variable, which back to

Rob Capps

Thanks Mark.

expectations fiscal in is we’ll the third second half continuing This improve received current second; robust orders we’re quarter gives and MIND see. and as think us we’ve the XXXX will report also encouraged a fall-off we we’re engagement strong expect met, continuing be with to believe fourth customer trends path. interest we Should for those the quarter. improvement these the will half. in fourth that date We and on the in as discussed the earlier of that compared positive Based right schedules, to delivery We’re financial as however, see performance on factors are then continue exceed the market profitable results that quarter the our well operations. it to significant confidence will by that income I indicators likely from first to those

not must in sits and and with day chain about will periods. future good where government feel and and this changing requirements, Nonetheless, technical deliveries. production market challenges impact these believe and continue that course, issues, production today risk. challenges deal the company Of contracting processes, we every are we things trends without is Supply delivery all positive

We also from we will believe our contributions increasing enjoy development programs.

the preferred As on to you we defer quarter decision payment know, last dividend made stock. the of our

as financial MIND resume point payment made fulfill our As but we a of do expect at we time, ability of now remain to expected to the in financial deferred, flow timing with have previously that. orders. that and we demonstrate to Technology think dividends, beginning order current questions. We done this flexibility can preserve including for the decision future was the any to are some and unwavering potential some yet With said performance. We belief and to not our that, for at Operator, and call increasing the improving open of

Operator

proceed the Bauer comes question. Our from your first line question Tyson Capital. KC instructions] of with [Operator with Please

Tyson Bauer

Yes, good morning gentlemen.

Rob Capps

Hey Tyson.

Tyson Bauer

for out million of expectations the Are end quick is couple this an still could kind questions. put year? given a change high variables schedule inkling that still revenue of XXs, top the expectation? as approximately Obviously this, the Just on to all your that - $XX of you your maintaining there

Rob Capps

be to did Again, than definitely in the better the first, of it’s kind ballpark. math so think second in half the that, the the we I Yes, on we so that’s ballpark. expect

Tyson Bauer

with the in knowing and and you function it that quarter producing schedule it, a that’s just a QX and Okay, just with given--is of timing be and kind don’t going so be? take not timetable may is QX, fact of QX, $XX and that that hypothetically number million to how a run QX, QX issue

Rob Capps

you’re it a week impact. have Yes, some can [indiscernible], right. big and relatively involved there’s large and orders slips some so it There’s a

Tyson Bauer

built obviously large time capital expectation quarter Any you working into coming or have Okay. requirements a you are the up, big that have that. orders

You’re sleeve not been necessarily a you’ve position, in do. you’ve some to had up your aces able that great

us require without large dividends, requiring that does need like how but to not work which capital, timetable you meet on means expectation our early being cash that tricky should you may that fulfill and so, preferred management those capital, to give we capital would on large do next be to of kind be to requirements necessitate those whole to which current able that made do contracts, do want we dividends? Just if preferred those and those year, maybe so to that does out really do orders we

Rob Capps

Yes, There’s things looking we’re at, various understand. Tyson. I

we’re so liquidity managing significant we’re that orders - we capital looking to have and form is the do to degree. important able - capital working still require for now so is us working execute, capital, of capital in receivables right right inventory, You’re to because some managing monetize things to big do working

contracts, contracts. some the pre-payments attempt of help negotiate those fund contracts, Some we mitigate for pending purchasing to and in those cases requirements to

to remaining continue some We such monetize assets assets. pool try lease non-strategic as to the to look

We the top so that have some owned a opportunities those kind non-dilutive are also of in monetize some we think estate there’s real to way, things.

also mind. at we might basis. our just Obviously that’s is that, the noted, for come aim our you’ve and there outside avoid dilution to so want of on we consider capital, we As out at go any of that to regular consider look least something forefront minimize at that’s prudence so or from do look a

dividends, As not may factor. it preferred ties may into be or a that the

at we said issues. to just As definitely it again timing current, we of all the and reinstate that these into get look other intend earlier, I need as to those factors those

Tyson Bauer

better as quarter, seeing fourth after realistic current make opportunity this where you’re be position? have to financially year a would financial fiscal first probably Well, post those in or your to

Rob Capps

if But that. we’re be it again, of other than able monetize the potentially. Potentially, sooner assets, to some might

Tyson Bauer

wonderful. that Okay, would be

your Your see European fiscal with dictate next geopolitical situation? utilizing that of a opportunities, you the that with QX, obviously really about. probably or location-wise relationship is of especially lot that European a that events those Do JV revenues start that we would you’re status, year some to talked in

Rob Capps

outside be necessarily probably could joint in opportunities this not more that more we’re some the for next The next that year already us to year. starting benefits I geopolitical year. think directly are Thanks they’re there from for that. year, other well. as this are that venture There relationship, than There to tied but Europe so of see, is situation that

Tyson Bauer

see now is out? have we’re or JV own your to own your right even ability? everything seeing of cognizance just that We So benefits on yet the play

Rob Capps

fair a statement. that’s think I

Tyson Bauer

Okay. Backlog, XX.X.

going I’m fairly would but guessing You good also you’re there’s necessarily significant amount that certain that what that number, said may confidence a that to be of in that call feeling me that you in that or but could sense not about. something Is not high backlog XX%, ballpark? you’re of give that something a us give XX%, increase a what number, hard implies.

Rob Capps

probability for large to we’re It’s that will year, but that, to it’s a deliveries amount. of a comparable And of the say, significant all lot a what the varies almost there’s are are we’re orders, timing next Again, degree. be a that, firmer I’m I actually, pursuing A backlog. going number and in seeing size in understand to would refer and a stage, in of so much are trying different things whole of things that mind. others to litany different the lot our mind, and our ones these early to are firmer timing

Tyson Bauer

delivered this hit that backlog your year? the revenue be targets, that being you all able Obviously be to anticipate fiscal must Okay. of to XX.X

Rob Capps

it, the majority, yes. all Not of vast but of majority quite the it,

Tyson Bauer

year in capable new are of orders this fall where Okay. Are getting delivering next year, we you orders new receiving fiscal into later the or the year? and fiscal

Rob Capps

We for and of deliver a Oh, we orders weeks, can receive sure. in and lots certainly that. couple of have

I systems, aspects year next know, into of especially definitely. times are just the the [indiscernible] lead because business think far a you to for systems, - most side, spare have large components, things very those like parts, yes, tend as systems. certain will seismic certainly But go that, smaller to certain able on we any of book-and-bill as

Tyson Bauer

of Last color on pipeline. Servicing, a all those things. give little that us one, more kind

obviously then is prices is we’re the at defense elevated really described energy climate in, maintained and You that positive, up, very levels. survey picking given

So when how between that defense, pipeline, seismic, at breaking survey? down looking that you you’re are

Rob Capps

we’re the we’re areas, have for our that’s so recently. seeing side, benefit marked competition, strong It’s very benefit some Obviously from board. really lot the side, us. really energy uptick there. had position we across a really we a the real market survey seeing especially position, In But the a so of a in in no space, seismic

about our SeaLink that area think really we’ve is lot of application I and kind and getting that’s the defense right course of the interest some product across board. a in now, of talked

Tyson Bauer

you. Got Thank sounds That it. gentlemen. great,

Rob Capps

Yes.

Operator

one and to star, Thank queue, reminder, please as the press you’d you. on a question join telephone Ladies if like your gentlemen, keypad.

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

Ross Taylor

what obviously would is A alternative it’s consider trying a at, always seem that Thank follow better hard equity opposed off of to to the stock things. as you. just strategic of such with at trading price, of selling It the issue It’s option. out leaves the uncovered. to the couple Tyson to shareholders. an hell an comment. price low your company, basically dilute he not because would where be That’s you’d One, me issuance really would [indiscernible] incredibly to equity it be

think concept? and idea defense of Second, you Is incoming Was opportunities on at come to the said, U.S. you the the in or the commented and that defense this is looked know, you perhaps, concept that this agencies an others, it guys that have something and or using works? array towed SeaLink you in countries, a have like. other works, and maybe said, we

Rob Capps

not that so did soon, that interesting think of I have demonstration and as a array U.S. from it’s be for well. that but looked you What’s it’s be see something platforms it I Early than could road we the on, so might think a that in something there’s that’s smaller unmanned robust historical think applications, only lot dollars, with of of many developing concept for ago these we’ll two of receiving used I could a--that’s be we millions and sort or Navy but really the the a U.S. is use a hey, in actually a said, be a that, one not these but un-crewed developed, We something work conventional lot of contribution weeks yet driven or sonar interest, to really down cheaper applications. elsewhere the systems, applied so going these traction going we’ve because have or interesting. in this really any system us, commercially that’s that’s getting at

Ross Taylor

both underwater Okay, and vehicles? as said, as well the is and surface surface--unmanned idea for unmanned this works vehicles, you as

Rob Capps

vehicles, be I due I to likely on some think application. unmanned surface It’s technical more yes, think the surface but applied issues, it’s more is initial initially. Conceptually, to vessels

Ross Taylor

year Okay, year believe over income a see you actually that quarter cool. kinds half, Also, quarter, look in see building calendar half do second from and asked half profits, the should Tyson of XXXX and as enough to in fourth while this essence into the loss which so a perpetual some strong being basically ways to fourth the phase? stage question positive EBITDA about a be to at generation company it overall the profitability, that probably second do pull the in we the positive the you sets switches better

Rob Capps

the half that possible back It’s positive. we’ll see

I think quarter a the not loss. you call I’m think forward, we’re set to of have that’s a that’s possibility. we’re going this the case going level for be it as recalibrating downs within orders, the for ups that’s get where - we going some of think realm that large I not and perpetual closer certainly as saying to to long that, set say, from to going this, quarter you certainly have of is as but stage but are. going going so I base on to to the stage do business higher out it’s

Ross Taylor

think ’XX? that this XXXX--and you of every have they in year, So desert a but downstairs, you the of left in got out you edge, should the basically after get years of to map wandering turned desert, in time I they the right, think instead

Rob Capps

what think. Ross. That’s I think, what I That’s

Ross Taylor

Do issues--it of probably that new if any working home up see defense impacted budget? well continuing a would like Washington. programs some you’re in if grips Congress with negatively happen. run Okay, looks a end could to on of with going huge to any you resolution going to obviously, that cannot be, the come Are we’re form be

Rob Capps

that Hard really think on, I impact. I term, no. me on I but think we’re and say have for anything are are that’s that of counting near term you know little as it some out that. to there. Don’t a to for comment issue It’s things things some sure, might far an see farther don’t - near the for as hard know,

Ross Taylor

the are right time, hopes the Okay, well patient it that Early out thank the to that that congratulations much wander profitability very nice for developments, long be keep would something land a so of we tangible into I quarter. be with ’XX you improved been think would it of that quite up. shareholders and would--we’ve desert you on reward - in patience

Rob Capps

appreciate Ross, Okay it.

Ross Taylor

Thank you.

Operator

Ladies management you. will question that and and turn any Thank the to call for gentlemen, session. concludes answer final back I our comments.

Rob Capps

like quarter. and just to at us talking I’d very Thanks the today to third look to joining Okay, much. everyone forward of again end our thank for you

Operator

This concludes you. today’s conference. Thank

at You may your Thank lines for time. participation. disconnect your this you

MIND Technology (MIND) 13 Sep 222023 Q2 Earnings call transcript