Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to the MIND Technology Second Quarter Fiscal 2024 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Ken Dennard. you. Thank

begin. may You

Ken Dennard

President Good second welcome We quarter today. and Rob joining operator. Mark Officer, Technology Vice Cox, appreciate the Fiscal us President Capps, are me XXXX earnings Financial With Chief morning you, Executive to and Officer. and Chief MIND you and Thank conference call.

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

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

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

And to like now, me, Capps. with that I'd turn to call behind the over Rob? Rob

Rob Capps

Okay. Thanks, Ken.

discussing then know, Now like in rationale I'd sale that the a all August, step took discussing before and by as to our significant conditions. believe I XXXX with view as things our as we you our some then transaction detailed wrap with I'll Klein market second unit. quarter begin Mark of the it for Today, of more current update well outlook. our our up about results, will provide on remarks a financials.

discuss it both that Seamap financial associated a thought an we important With those we'll further operations Klein moment, with for to unit, business. the opportunity growing was outlook the we saw sell our arose, opportunity address streamline requirements When our to the MIND's to objectives. strengthening achieve in and

the during operating unit was approximately about contributed of for Our $X.X revenue six in fiscal first an but year, Klein $XXX,XXX. business responsible of months million this loss

for as This a further beginning business million with part other the MIND a ways the at our year, unit operations. sale the would On had forma to $X.X our the pretax on positive we reported. have taken basis, Klein decision loss pro of focus the income reported to and place demonstrates attention opposed basis the

transaction collaboration the earlier added amounted to this $XX.X $X.X loan year. cash. was loan disclosed, from about us the available and As in this and Spectral net with we these term retains. An applications $X.XX arrangement used the important Through is million Oceans. agreement portion Spectral consideration million software Ai MIND hope a cost while million. from opportunity Ai value buyer, sale We our to repayments, which provides the repay [indiscernible]. General we've of to After to arrangement, licensing beyond imported to proceeds suite, the to sale enhance previously benefit licensing the proceeds from from an to realize This the recurring continuing revenue realize

often control. out results our in was unusual, for Our a sequentially of from came our largely scheduling variety second is time business not quarter This often that to are Revenues line reasons to in deliveries. a and expectations. remind with our you off anticipated. That the due activity bit fluctuate roughly revenues in time of that dropped I'll of

capitalize is MIND that believe a achieve long to improvement top-line favorable to market exceptionally positioned the term. well continue on We sustainable dynamics to

As controllers, of pending be Source favorable in GunLink a positioning lines. $XX and million. involve positive position firm of we Subsequent stood streamer weeks, $X.X additional orders of product million. variety July continued we and is confidence at coming the also XX, trend We orders orders end, quarter this we totaling that of products, announce have are we'll that for indicative conditions Seamap And sizable differentiation and to approximately in orders our These the SeaLink Seamap feel a our additional received backlog booked BuoyLink believe systems. backlog market systems imminent. including of to

three ways With new to positioned our we advantageous that fiscal the are of of and believe team and for customers. our the adapt opportunity. needs deploy confident meet before a into momentum and is better now ever our throughout with Each markets, remainder streamlined variety are end defense current and of We focused, our of innovative market our the environment to operations our XXXX remain this to and loaded key survey, our lines markets, technologies MIND. exploration, and to product We beyond. than implement carry will continues develop

for we're not opportunity traditional by SeaLink only projects. including In also our energy-related provide There's new applications streamers, others. to wind seismic Seamap but repair products services, streamer green for for addition to other and for a manufactured technologies, offshore alternative opportunities, farms seeing energy growing MIND also

to and SeaLink significant a maritime believe to demanding market, space. Serpent and Within our we're macroeconomic within for is economical Sea that interest security our and book solution of array is and in intend of near defense the passive to leveraging activity sustained which continue system, system, a the applications we commercially a the seeing that of trends, We the variety customer in derived versatility from lines, demand our developed differentiation product drive our continue the favorable growth and robust and order business term.

of regarding Now, on many our are in preferred interested stock. I dividends know our you plans

working to business. our regarding made While liquidity is this we the evaluate capital associated with our have not decision at position or we ongoing are point, backlog dividends. continuing of accrued a requirements improved, Accordingly, much growing

We once any will, decisions of are course, made. update you

August you us compliance of for the XX. our on NASDAQ was would many to Annual the proposal with listing Meeting Included stock Shareholder held we approval As on the regain standards. the that of enable a agenda are aware, split reverse

an as will until of Our first November minimum things to the and this This We're proposal. step, XX split [mid-price] on necessary shareholders implementing with approved an (ph) has the regain important evolve. requirement. a granted the was and framework compliance now provide us internal specific mechanics update reverse through and NASDAQ going

second I back. our Now, quarter I'll before you come through bit more Mark walk detail in financial let a results

Mark Cox

good everyone. and Thanks, Rob, morning,

which revenues $X.X year same the the million revenues roughly was Rob mentioned a line totaled approximately ago. period of earlier, As in operations $X.X the in continuing from with million quarter, in

Our $X.X the we of markets. Seamap continued largely segment seeing the which energy strength quarter, of believe alternative delivered revenue indicative we're approximately during and in the is that million exploration

prior which in when XXXX. was were Gross $X.X sonar Seamap the segment million, XX% margin during approximately year fiscal of XXX the quarter period. a of higher-margin period period. year margins profit the year period the a gross of sales margins to marginally year decrease in approximately represents current quarter, in same was gross to while points multi-beam was Klein the in second for a significantly recurring quarter gross for profit million the the systems prior the compared segment point This year-over-year, the second Decline basis Gross profit not compared basis from in of when ago. profit for down XXX the period due profit to margins declined up Klein gross prior profit $X.X

cost expenses we've administrative due when compared quarter, quarter management same the from a period were to $X.X the ago. slightly prior that for well over in million to headcount second for year the as down $X.X first executive and improvement which is The approximately initiatives general Our mainly the million other the period and implemented. level were as $X.X million year reductions

largely with second Our development expense loss when period. these research of Operating costs up million, array. ago was approximately was strategic and slightly directed to was approximately both year $XXX,XXX, initiatives, our loss which a second the Consistent which including periods, are second the in and essentially sonar for sequentially quarter towards with prior aperture synthetic quarter compared sonar quarter the million $X.X line was in the $X.X passive of XXXX. for and

adjusted in quarter Our million the approximately EBITDA year. second $XXX,XXX quarter compared loss was loss of $X to a a second of last

liquidity we had sale July August, of capital the in position approximately of of million cash and Klein working from our $XXX,XXX. significantly factoring As XX, XXXX, in proceeds net $XX is improved. After

and upon Rob high-cost comments, closing we MIND again once and incurred Klein debt in of eliminated repaid we sale, that also debt-free. our year, As opening this the his noted the earlier is

over to some for back it pass now Rob concluding comments. I'll

Rob Capps

order the than ever for the our recipe We we for and product the high versatile favorable The on historical right the of efficient forward We've engagement is sit unit seeing necessary building and as confident streamline today, more are and date. we've focused interest MIND differentiated here that success. excited for the Thanks, sustained taken We and significant. think flow, headed we solid meaningful growth. our future Mark. our more and our conditions steps customer long-term a in constructed which and direction. operations, a offerings We're Seamap We're coupling technology. expectations highs contributes to to foundation greater We're market to that of in is MIND company. and look to for opportunities are

with of for variety a and technologies continue to to our Our team uses, the has done needs meet technologies traction our adapting a Seamap end gain customers. great our of globally job evolving customers

The as to back XXXX, and variety a traditionally capitalize requirements. experience and simple between financials. fiscal As year intend challenges forward on improvements quarters seen, the look variation and this in of have customer into likely revenue the circumstances half there we quarter of as due momentum be unforeseen to we well our this positive drive will to to delivery

products, will With technology favorable that taken We've to we is backlog we're market what that one increased revenue trends, be of marine general continues of trend achievable. holds. level customer us growth of interest robust do steps confidence that hard said, excited our MIND and the producer about higher revenue. give as worked believe The future sustainable leading position and and the the a differentiated necessary to

of today, free. As we're debt

balance We value order a market generate sheet forward. customer engagement favorable position. meaningful capitalizing have we and continue achieve to shareholder improved improved which the intend will to on We interest results, liquidity much robust and conditions, and believe strong flow going

And questions. can with that, we the open call for now operator,

Operator

Thank you.

now with Tyson Bauer question will Please We question-and-answer be [Operator your the with Our comes session. first Instructions] of proceed a KC from Capital. question. conducting line

Tyson Bauer

Good morning, gentlemen.

Rob Capps

Tyson. Hey,

Tyson Bauer

bat, last Do you cash morning question right the were or a this balance have, as kind you of of happen where bookkeeping of to the just night? off

Rob Capps

the were I'm at specifically. added so going from But sales, million if you if I want $X.X to or a the talk to about I we you magnitude. sense so, of at that of not look again, mean, give million the or that's end so we've $X sure where quarter, yeah.

Tyson Bauer

significant to have accounts then so revenue, some lower the just you conversion? of Obviously, cash? receivable cash had that And those you receivables timetable I'm Okay. guessing converting with had

Rob Capps

large that are we'll we But mean also to there's ongoing so starting to a we backlog have needs there build, as do continue I certainly Yeah. that. remember, well. that --

combination So things. this is a of

Tyson Bauer

at the if Okay. approximately six months On -- first $XX we look million. in Seamap,

at imply for I'm of growth basing into guessing between and kind shipment that forward. on between of view have for million kind that that. $XX That of the that wrench $XX off million monkey You're now, right $XX revenue you're that of talking you we million any as timings is revenue? have, that things million of some go least some Seamap. you $XX But year, million is if and the growth other million would can $XX to kind as depending $XX throw about a

Rob Capps

but wanting not I in Again, specific, as too of magnitude, right to direction. a think as again, get you're sense far the headed

reasons. importantly, into if gives for first the is that and us mentioned balance very we of shipment have history one the lots think, that year lots which two I for the in of from I at things is happen But look mind of for it a think we backlog important you the next particular year to that to that have is slide well, cause way interesting another. thing activity, or six that the you thing as visibility more keep months or our can

some -- million dollars. a few these sizable these orders, So of are

So have an two those of to impact. it only takes or one

So just keep but everyone is the what not needs mind, different in you to general from that trend described.

Tyson Bauer

Okay. And the being have of or historically, actually kind deliver? growth what XX-plus-percent typically least capacity XX% how what, closer utilization you're able on on and many on depending produce to margins what of the Seamap, at and side, to, been kind --

Rob Capps

seen in we've things say XXs, I'd Yeah. kind where the high Maybe quite of historically. just not that.

of operation. as But so to our been the more production a it's some we're really some in We to be us procurement do in think, of as opportunities, activities our have throughput we to well XXs that inflow improve going in some historically. somewhat. we able that reasonable operations, bit to high be hopeful a the gives have Since visibility or forward, aggressive

Tyson Bauer

was have expenses savings Klein. the G&A primarily to before of And related Klein reduction whatever even kind of And follow-up, a talking of been did a anticipate additional Klein you that corporate. was go on million out already your forward as anticipating and some your expenses corporate previously then R&D, those portion G&A your or those allocated to about what $X now we as are you in that forward go What you Would and that… on expenses?

Rob Capps

which to here. would to you visibility Yeah, defer going including we been. not little XX-Q, some think as entirely. And impact will a But I think alluded it some I in Klein R&D XX-Q that there's financials the can XX-Q. those The we will of bit give quantified we're just give to formas to file away, G&A goes ongoing portion and pro more quite look something we in That's to haven't goes to I you away, do that in tell We which continue things some significant R&D. we're comments I good operation. yet. forma efficient. bit but I'm things make pro the Klein is our looking later a to have also sense. essentially, do when the -- our the But what again, the today, our a think direct today, streamline some at

give will I that think good some information. you

Tyson Bauer

expense And your also? away interest goes

Rob Capps

Yeah. Absolutely, Yeah. absolutely.

Tyson Bauer

to And I'm forward financial the should have the it back doing but I directors type is, napkin choose may obviously, tight guess be just numbers what of leading is, balance. is the to and cash pay dividends, wherewithal your of initially, there, preferred the you you'll

that have on to pay will if operations You you the financial financial to ongoing decide do so? wherewithal

Rob Capps

can like requirements ourselves cost, we but to by really understand position be what a ago in the -- and working the to situation stabilize capital are That just on overall we not what going the to ongoing sure we shoestring. make having Yeah. few for That's months, year to and a also we a how don't Again, to find want a analyzing and do. get hurts trying operation. we're the were overhead

to decisions. take formas into own can going from when you that We're the our see improved. look what like, conclusions. to numbers so you're things certain consideration we are going your much all So Again, the make just pro draw

Tyson Bauer

the or which preferred? to have we'll payment you likely time October, in defer that the And least know October to at Okay. decide to on make is that decision whether early that

Rob Capps

That's correct. right. that's Yeah,

Tyson Bauer

Okay. accrued at that And the is table in amount not now off because time the position to we're address right that really, the being.

going So not pay? what whether can -- the forward the on not we at on point current is is the being you or accrued the to decision or and forward, back want really make future, decision then a and whether pay what some in

Rob Capps

table situation. to overall Tyson. the on I want We're don't all going look -- at it's just that, to Again, right on We're comment now. the

Tyson Bauer

XX-K to have is you or until implication end reverse occur it a have Okay. weeks. your it will make a of even if the it In October, would occur next occur, which days decision appears to though is XX, were XX the if on November that that regarding split, to the within split, $X, the four have above you would

So…

Rob Capps

Yeah.

right that. You're about

Tyson Bauer

because of October? that split, throwing that there in Scenario at for that one have end we the proxy, reverse was the out likely or just a will is would occur occur XX,

Rob Capps

That is an assumption. not unreasonable

Tyson Bauer

of XX% you when we've would not ultimate wants And Oil, that since lot on Seamap. of to your to a where (ph) really It's listeners years order. A for get a ago, are the July. decisions just whether seen Okay. a against year in these Heating as lot [dropped] the else a not a go give or little going oil you're left major place somebody competitor or building the favorable contract market tailwinds be $XX. competitive situation past. not is whether ahead customer that and just sense,

Rob Capps

Yeah.

are relates and town. have than applications more survey some were we only controllers, positioning BuoyLink, is it We focused do the systems, the systems, used high pretty As exploration. do for three-dimensional the some the to purposes competition case. deepwater source for game definitely streamer have more competition in for the We that but on much we resolution,

with systems. deepwater the So streamer go we head-to-head don't

to but we competition it's say. So pretty fair some there, it's thin, do have

Tyson Bauer

correct? the Okay. And yourself and Mark on are not Board,

Rob Capps

Board. not. is I'm Mark on the

Tyson Bauer

Are financials. in decision there's only preferred regards share though The your forward? the the you Board willing one to going the Board in Even cog CEO, you the recommend? the that ultimately make that and going and will ask and being outlook recommendation, recommendation would the for Board. on what on -- to You're CFO's is to

Rob Capps

make Yeah. appropriate decision, wouldn't going me No, Board on be as I a think so don't that. comment on will for comment The whole it that. we're to that to

Tyson Bauer

you, gentlemen. Thank Okay.

Rob Capps

bet. You

Operator

Thank you.

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

Ross Taylor

asks good Always hard fundamental the all to he follow since Tyson questions.

So Rob, -- is preferred I'm good actually just I'm voice here. pretty going thoughts some to damn paper. to going The

you go really it's you marketplace. there's the paper into good way for no fact, can In And guys.

way, I'm if it even two any with found a is guys away The mean think here time walk I your equity hesitancy, under every you that directors off, paid choose the for from was, what, get [XX.X%], And that, close there's that almost I XXX hear preferred You Board that that make holder, in to right, getting holder I for fact a do, equity preferred the about deal do no it there impossible you you next it an off plans banker comments, loan victory confidence, your have what and not first to This feeling and guys as to that. a get you're nothing. to preferred the was? that whole telling term pay with thing that is your holders directors, waiting I've Board and that you're no it I'm to bps this might that makes this and holders sat hire forever the because right. defeat my to the you it would say And and to banker. snatch I

important. it's And so

$X can't It's of be the this to it at Let's should probably you back you I now mean is $X. just -- bank that right million reverse the going value And high And get in bank. thing preferred to hold hope to better and the bag digits that's environment. in I at holders, in able them it's above in that -- to is to and get that and this paper going point stock get to borrow the on to me, common worked X%. out the the reality, sense going, and just I go borrowing holders. off holder that this that common attached the is frustrates get fact, asked million, guys going just the than -- you'll you But there straightforward. with a eventually, the you're be do to a common get it split, basically paper it's $X single

pretty because, smart the Tyson a let the confident this on you're a can't and you are person, sell said, or you to where if as those worth holders Board to known are they're everything, And guy, that with sure a you that the that I'm and going Board, company away between and you? Can they it's more. can't this Tyson. let I know is holders for and walk long good I've I'm at believe smart million confident defer is you I this and time, talk if $XX somewhere preferred some situation $XX And and -- sure I million and So again and of go you $XX I'm happen. person a payment million, preferred it

Rob Capps

hear take and your comments I I those Ross, consideration. into

I So hear you.

Ross Taylor

basically to -- guys Don't but successful an we and the investment don't I can This (ph) want of back this waited basically a [want I've for not having you a long million] holders, call (ph). jaws be come I been preferred victory you for equity [ignominity] honest. supported holders $X have guys to from that of the got mean, I paid for to have, has to me, have still too may don't the long. they tell snatch asset. Yeah.

So let's it. do

Rob Capps

comments. it, appreciate I your Thanks. I Ross. really appreciate Okay.

Ross Taylor

sir. you, Thank

Rob Capps

You bet.

Operator

that comments. and the Capps question-and-answer Ladies gentlemen, you. Thank our session. for to final I'll turn back concludes Mr. floor any

Rob Capps

Thank talking the for look you, you to forward everyone, Thanks, joining today. end quarter. Melissa. us at next to Okay. of our I

good So everyone, have you. a Thank day.

Operator

you. Thank conference concludes today's call. This

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

MIND Technology (MIND) 13 Sep 232024 Q2 Earnings call transcript