Investing.com
Published Jun 11, 2025 10:03AM ET
Mind Technology Inc. reported a challenging first quarter of fiscal 2026, with a significant decline in revenue and an operating loss. The company's stock reacted negatively, dropping over 11% following the earnings announcement. According to InvestingPro analysis shows the company holds more cash than debt on its balance sheet, and analysts predict profitability this year. The expansion of their facility in Huntsville is expected to contribute to future revenue growth.
CEO Rob Capps expressed confidence in the company's future, stating, "We expect a meaningful increase in revenue in the current quarter." He emphasized the company's strong product suite and favorable market environment, noting, "Our current visibility, strong backlog and robust pipeline also give us optimism for favorable financial performance."
During the earnings call, analysts inquired about the $5.5 million in delayed orders and the company's plans to address them. Management highlighted ongoing efforts to optimize the supply chain and explore partnerships to mitigate these challenges. The potential expansion into the maritime security market was also discussed, reflecting the company's strategic initiatives to diversify its revenue streams.
Conference Operator: Greetings. Welcome to MIND Technologies First Quarter Fiscal twenty twenty six Earnings Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Zach Vaughan. Thank you, sir. You may begin.
Zach Vaughan, Investor Relations, MIND Technology: Thank you, operator. Good morning, welcome to the MIND Technology Fiscal twenty twenty six First Quarter Earnings Conference Call. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Rob, I have a few items to cover.
If you would like to listen to a replay of today's call, it will be available for ninety days via webcast by going to the Investor Relations section of the company's website at mindtechnology.com or via a recorded instant replay until June 18. Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Wednesday, 06/11/2025, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Before we begin, let me remind you that certain statements made by management during this call may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.
These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10 ks for the year ended 01/31/2025. Furthermore, as we start this call, please also refer to the statement regarding forward looking statements incorporated in our press release issued yesterday. And please note that the contents of our conference call this morning are covered by these statements. Now I'd like to turn the call over to Rob Capps.
Rob Capps, President and Chief Executive Officer, MIND Technology: Hey, thanks Zach, and thank all of you for joining us today. Today, I will discuss some highlights from the quarter. Mark will then provide a more detailed update on our financials. Then I'll return to wrap things up with some remarks about our outlook. As expected, MIND's results for the first quarter were down sequentially after a record fourth quarter.
However, the decline was greater than initially anticipated after several customers were unable to take delivery of approximately 5,500,000 of orders prior to quarter end. These delays are due either to late delivery of certain party components or difficulty in arranging shipping. But these are timing issues, not lost business. I reminded you repeatedly, a slippage of a few weeks or days for a large order can have a significant impact on a particular period. We expect to deliver these orders in the second quarter.
Despite these delays, cash flow from operations again grew during the quarter to about $4,100,000 which is an indication of our improved liquidity. We remain bullish on the balance of this fiscal year despite the shortfall in the first quarter and expect a much improved second quarter. MIND has established a more resilient business with greater order visibility, a strong demand environment and a much improved balance sheet and capital structure. We will almost certainly encounter other timing issues at some point in the future. But to the extent possible, we are working to mitigate the potential impacts on our financial results.
We're doing everything in our power to control what we can control. We're focused on optimizing our supply chain to manage lead times on components to meet the delivery requirements of our customers. Our inventory levels over the past six months have been a great evidence of this as we're now using our improved visibility to draw down our inventory balances. As a result, we believe MIND remains strategically positioned for growth, improved financial results and profitability in coming periods. Our backlog of firm orders as of 04/30/2025 was approximately $21,000,000 compared to 16,200,000.0 as of 01/31/2025, and approximately $31,000,000 as of 04/30/2024.
Beyond this backlog, we have an active pipeline of pending and highly confident orders and prospects that are well in excess of our current backlog of received orders. The order for our GunLink 4,000 system that we announced yesterday morning, which is not included in the above amounts, is a great example of these prospects. Combination with our existing backlog and this active pipeline bode well for strong financial performance as we progress through fiscal twenty twenty six and beyond. Now as we approach the summer months, I want to remind you that orders new orders don't always arrive at a constant rate throughout the year, and order flow is often sporadic. The variance between in order flow is commonplace and not cause for concern.
We also believe that recent uncertainty in the global economic environment has caused some delays in purchase commitments. Despite this, in recent weeks, we have identified new opportunities. We think this bodes well for the balance of this fiscal year and beyond. We continue to benefit from three main product lines, our GunLink Source Controllers, BuoyLink Positioning Systems and SeaLink Stringer Systems. All three of these are meaningful contributors to our backlog and will continue to drive improvements in financial results going forward.
As a whole, our SeaMap business enjoys a strong market position with each of its products, even a dominant position in some cases. Our backlog and pipeline of orders are almost entirely comprised of these products, and I'm confident that the favorable market dynamics will enable us to generate many new orders in the future. We're also seeing a number of new promising opportunities related to our products that I hope to be able to update you on later this year. Another component that has meaningfully contributed to the sustainability of our improved financial results is our aftermarket business. Historically, approximately 40% of our revenue comes from this aftermarket activity.
However, in the first quarter of this year, the aftermarket activity represented approximately 71% of our revenues. Now this was to be expected due to the deferral of some system sales, as I discussed a moment ago. As our installed base of CMAP products continues to expand, with the comes the chance for aftermarket opportunities such as spare parts, repairs and support services. As a reminder, our products are deployed in a very harsh environment and damage is common and often inevitable. We are in the final stages of an expansion of our facility in Huntsville, Texas, which will enable us to provide additional repair and manufacturing services from that location.
During the expansion, which has been in progress for the last couple of quarters, our revenue producing activities have been impaired. However, with the completion of these modifications, we expect the contribution from this location to build during the balance of this year and beyond. We anticipate this becoming a meaningful part of our revenue stream. Now turning to our results. Marine Technology product revenues for the first quarter of fiscal twenty twenty six were $7,900,000 As I mentioned, we expected a natural sequential contraction in revenue after an exceptional fourth quarter.
However, we saw approximately $5,500,000 of orders slide to the right. We will continue to capitalize on macro tailwinds and customer engagement to stimulate order flow and generate improved results. We have deliberately worked to improve our execution, efficiency and cost structure. We expect these efforts to deliver favorable results in future periods. Despite broad based macro uncertainties in recent months, general market conditions within the marine technology space continue to be strong.
We see a number of opportunities and continue to field inquiries and respond to requests for quotations. As a result, we are making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers. I'm confident that our differentiated approach, best in class suite of products will continue to give us the competitive advantage to address the demand we see within the marine technology industry. Now I'll let Mark walk you through our first quarter financial results in a bit more detail.
Mark Cox, Vice President and Chief Financial Officer, MIND Technology: Thanks, Rob, and good morning, everyone. As Rob mentioned earlier, revenues from marine technology product sales totaled $7,900,000 for the quarter, which was down approximately 18% from the same period a year ago. Revenue was impacted by the timing of $5,500,000 of orders that were unable to be delivered prior to quarter end. We expect these orders to be delivered in the second quarter. We're continuing to see strength in all our key markets, and the favorable customer demand environment gives us confidence for improved results over the balance of fiscal twenty twenty six and beyond.
First quarter gross profit was $3,300,000 This represents a gross profit margin of 42% for the quarter. Both of these metrics were impacted by lower revenue during the quarter, stemming from the delivery delays addressed in Rob's opening comments. The lower revenue resulted in less cost absorption, drove the year over year declines. Revenue increases in the second quarter and our cost structure continues to benefit from greater production efficiencies. We expect these metrics to improve.
Our general and administrative expenses were approximately $3,400,000 for the first quarter of fiscal twenty twenty six. This was up both sequentially and compared to the same quarter a year ago. The sequential increase is partially expected due to normal seasonality of certain costs. However, our first quarter expense included non recurring costs related to a restructuring of our UK operation and tax analysis surrounding the preferred stock conversion last year. I think it worth noting that the tax analysis confirmed our understanding that the preferred stock conversion did not limit or impair our U.
S. Tax attributes, primarily tax loss carry forwards. Our research and development expense for the first quarter was 380,000 which was down compared to the same quarter a year ago. Consistent with prior periods, these costs were largely directed toward the development of our next generation streamer system. Operating loss for the first quarter was approximately $658,000 compared to operating income of $730,000 in the same quarter a year ago.
First quarter adjusted EBITDA was a loss of approximately $179,000 compared to adjusted EBITDA of $1,500,000 in the first quarter a year ago. As I mentioned earlier, the first quarter was impacted by approximately $250,000 of nonrecurring expenses related to restructuring and tax related professional fees that would have otherwise resulted in positive adjusted EBITDA for the quarter. Net loss for the first quarter was approximately $970,000 compared to net income of $954,000 in the same quarter a year ago. As of 04/30/2025, we had working capital of approximately $22,800,000 including $9,200,000 of cash on hand. Liquidity continues to be impacted by our operational requirements, such as acquiring inventory and executing on our backlog of orders.
However, we did generate approximately $4,100,000 of cash flow from operations in the first quarter. This was an improvement of approximately 98% sequentially. The company continues to maintain a clean, debt free balance sheet with a simplified capital structure following the conversion of the preferred stock to common stock in the third quarter of fiscal twenty twenty five. We believe our solid footing and flexibility will further enhance stockholder value in future periods. I'll now pass it back over to Rob for some concluding comments.
Rob Capps, President and Chief Executive Officer, MIND Technology: Thanks, Mark. Our efforts to transform the company in recent years have positioned mine for long term success. The strength of our balance sheet has made mine more resilient, financially flexible, and has opened the door for us to pursue value enhancing strategic opportunities as we strive for growth. We also continue to benefit from significant customer interest and engagement related to our C MAP product lines. Our current visibility, strong backlog and robust pipeline also give us optimism for favorable financial performance for the balance of this year.
Additionally, we are continuously exploring innovative ways to expand and repurpose our existing technology for new applications. I'm excited for us to actively chase these new initiatives and opportunities in the coming periods. Given we spoke with you only a little over a month ago, not much has meaningfully changed in the political and economic landscape. There is still a moderate level of uncertainty present in the market related to tariffs and other trade restrictions. I'll remind everyone that the vast majority of our revenues are generated from our Singapore subsidiary.
A similar proportion of our production activity takes place either in our Singapore or Malaysia facilities. Furthermore, in fiscal twenty twenty five, almost 95% of our revenue was derived from customers outside The United States. Accordingly, our import and export activity through The United States is quite limited. Due to this, we do not currently anticipate a material direct impact on our business from the imposition of additional tariffs, trade tariffs by The United States or other countries. As noted earlier, uncertainty in the global economic environment can cause our customers to delay purchasing decisions.
Of course, this is a fluid situation, and we continue to monitor the evolving dynamics. As we touched on last quarter, we recognize no matter how compelling our recent momentum has been, MIND is still a small company, and with that comes inherent challenges. We've taken necessary steps to strategically position ourselves to realize our full potential and enhance shareholder value. We intend to evaluate all opportunities that present themselves with a focus on adding scale, expanding our offerings and growing existing product lines. This approach should enable us to strengthen MIND and improve its standing within the market for the benefit of all shareholders.
The macro environment remains advantageous for MIND, which gives us optimism for the future. Our marine technology products continue to penetrate a variety of industries and markets. We believe our backlog of firm orders and pipeline of pending orders and other prospects are reflective of the significant demand and market adoption of our product lines. As a result, we expect a meaningful increase in revenue in the current quarter. This will enable us to achieve positive adjusted EBITDA and return to profitability in the second quarter.
Barring any unforeseen circumstances, this is a standard we expect to meet for the remainder of the year. Looking forward, we will continue to control what we can control. Customer delivery requirements and other factors may impact future periods. However, we expect the general trend will be one of improved results in fiscal twenty twenty six and beyond. We have a solid backlog and significant pipeline of pending and highly confident orders.
Both are supported by the robust customer interest and engagement markets. We are also pursuing several new opportunities within our existing and future markets, which I'm confident will bear fruit in the near future. We have a differentiated and market leading suite of products, a favorable market environment and clean capital structure. I'm confident we will deliver another great year in fiscal twenty twenty six as we strive to enhance stockholder value. And with that, operator, we can now open the call for some questions.
Conference Operator: Thank Our question is from Tyson Bauer with KC Capital. Please proceed.
Tyson Bauer, Analyst, KC Capital: Good morning, gentlemen.
Rob Capps, President and Chief Executive Officer, MIND Technology: Hey, Tyson.
Tyson Bauer, Analyst, KC Capital: On the five point five delayed delivery, have those been delivered as of yet? And are they mainly comprised of one or two systems?
Rob Capps, President and Chief Executive Officer, MIND Technology: Partially delivered. There was a large one large system and then a few other orders.
Russ Taylor, Analyst, ARS Investment Partners: Okay.
Rob Capps, President and Chief Executive Officer, MIND Technology: So it's a bit of both. The parts delivered but not completely yet.
Russ Taylor, Analyst, ARS Investment Partners: So those
Rob Capps, President and Chief Executive Officer, MIND Technology: will be soon though.
Tyson Bauer, Analyst, KC Capital: So on an accounting practice, those remain in backlog finished goods. You're expecting those deliveries take place in the second quarter. So that full cash cycle should be complete by the time you end Q2?
Rob Capps, President and Chief Executive Officer, MIND Technology: Yes. From a billing standpoint, yes. From a cash cycle, collections may or may not have happened at that time, but yeah, from growth standpoint, absolutely.
Tyson Bauer, Analyst, KC Capital: Okay. On the tax loss carry forwards, after you did your analysis, determine as the amount that you reasonably have that could be used in the future?
Rob Capps, President and Chief Executive Officer, MIND Technology: About $80,000,000 US dollars of NOL carry forward roughly.
Tyson Bauer, Analyst, KC Capital: Now the problem with that is you have to generate in The U. S. You just commented 95% is out of Singapore. So how do you as a management team unlock that value? And either that comes from U.
S. Generated business or partnering with somebody who has U. S. Business that can utilize your tax carry forward and isn't typically in a that kind of activity of business combination that value on a standalone about 25% of what the listed value is?
Rob Capps, President and Chief Executive Officer, MIND Technology: Yes, you hear all sorts of numbers about that. It really depends on the circumstances, Tyson. I mean, you have to be careful about subsequent ownership changes, which we can limit that. But there certainly are ways to take advantage of that, try to shift more income into The US. You understand that under The US tax laws now, we're taxed on worldwide income with offsets for what you've overseas.
So there is some benefit there. So there are ways to utilize that. So I think there is value there to us. Is it 25% of face value? I'm not going to speculate on that, but there is certainly value there we think.
Tyson Bauer, Analyst, KC Capital: I mean, if it was, that's literally half your enterprise value is just in something that's in an accounting treatment.
Rob Capps, President and Chief Executive Officer, MIND Technology: That's the way the numbers work, Cam.
Tyson Bauer, Analyst, KC Capital: Yes. That's really untapped value that's gone unrecognized by the marketplace. Couple of days after you reported last quarter or the fiscal year end, we see Trump do an executive order for deep sea offshore resources. China is in the news increasing their activity for deep sea mining and rare earth elements. Those things may be further down the line, but there seems to be a lot more attention and activity in regards to those industries that could potentially utilize your technology in finding these things.
Are you seeing that on your customer base that that is an area and an opportunity that could develop in the years coming?
Rob Capps, President and Chief Executive Officer, MIND Technology: I think so. What we're seeing is, some of our existing customers and potentially new customers are looking to go farther afield and what they've done historically and use some of their expertise in that sort of survey type work, exploration survey work. And our products, especially the ceiling product line is right in the wheelhouse for that sort of thing. So that's very encouraging for us.
Tyson Bauer, Analyst, KC Capital: Now in the past, you've done some master supply agreements with some of the bigger worldwide customers, especially those out of Norway, Scandinavian countries. Do you have any currently active and is that an approach that you see as favorable for mine as you go forward to either renew or to develop those master supply type agreements?
Rob Capps, President and Chief Executive Officer, MIND Technology: We certainly have those type agreements with some of our larger customers, which is, you know, again, a framework for general terms, you know, doesn't address specific orders, but it does give us framework. So we certainly have those in place today, and are looking to put others like that in place.
Greg Hillman, Private Investor: Okay. When you
Rob Capps, President and Chief Executive Officer, MIND Technology: That's what that does. It just that just it facilitates new business is what it does.
Tyson Bauer, Analyst, KC Capital: Is it not just an accordion feature that, okay, this is going to be a, say, cost plus type contractor otherwise. So we can expedite the process on getting orders and getting production out to those customers?
Rob Capps, President and Chief Executive Officer, MIND Technology: That's correct. So you've agreed to standard terms and conditions. You may have agreed to some pricing parameters as well. So it certainly facilitates, makes up much quicker for a new order to come through. And that's definitely been our experience.
Tyson Bauer, Analyst, KC Capital: Okay. New streamer system coming on later this year. The interest you've garnered so far, have you been able to go out and demonstrate this to your customers? And what causes the customer to go with the older technology as opposed to the new technology that's coming or the new system that's coming? And will we start to see preorders for that as we get towards the back half of the year?
Rob Capps, President and Chief Executive Officer, MIND Technology: I don't wanna get too deep into that for some competitive reasons, but I would say it's more of enhancement of what we have. It's not like a totally new technology. It's more of an enhancement and allows us to address some additional markets. And let me just leave it at that at this point and not get too detailed about that.
Tyson Bauer, Analyst, KC Capital: Okay. And are you seeing bid margin trends favorable as we're going forward or are they pretty stable?
Rob Capps, President and Chief Executive Officer, MIND Technology: I'd say they're fairly stable. I mean, we have some ability to expand those, but it's fairly stable overall, I'd say.
Tyson Bauer, Analyst, KC Capital: Outside of the last question for me, outside of the normal course of marine seismic activity that were renewable energy, offshore wind, rare earth elements, oil, gas, all those things. You mentioned new opportunities and expanding kind of your addressable market. Any additional color you want to throw on that?
Rob Capps, President and Chief Executive Officer, MIND Technology: Well, I think we've talked a bit about this. In the past, we look at taking some of our technology into a more maritime security application, military type application. We pulled back on that as we try to refocus the company to become profitable, which we've done. So that's an area that we were reexamining today as to how we might, we think that basic concept is still very valid. So we were just looking at how do we best address that and maybe reenter that marketplace.
Tyson Bauer, Analyst, KC Capital: Okay. And that goes beyond your AI spectrum and your Oceans agreement that you have. This
Rob Capps, President and Chief Executive Officer, MIND Technology: is Yes. Yes. Your core product. Okay. Yes.
Absolutely.
Tyson Bauer, Analyst, KC Capital: That sounds wonderful. Thank you.
Rob Capps, President and Chief Executive Officer, MIND Technology: You bet.
Conference Operator: Our next question is from Russ Taylor with ARS Investment Partners. Please proceed.
Russ Taylor, Analyst, ARS Investment Partners: Thank you. congratulations on the real improvement on the balance sheet. In picking up on Tyson's line of reasoning, 25% value of the tax losses add to your cash, you really have a company selling at $3 or less a share in the marketplace with a lot of earnings power. It seems that the market still hasn't quite picked up on that, but eventually they will. You guys have done a great job with that.
So can you give us an idea of what's going on with on the 5,500,000.0, what impact did that have on your, you know, unrecovered costs? You obviously, at this point, you you built out it sounds like you've built out a lot of that, had much of it ready to go, weren't able to ship it out. How did that impact earnings in the quarter?
Rob Capps, President and Chief Executive Officer, MIND Technology: Well, it would have been another $5,500,000 of revenue at least at the margin that we demonstrated. So there's another about $2,000,000 of operating profit or gross profit. So that has taken effect.
Russ Taylor, Analyst, ARS Investment Partners: Yeah. It would have been on the gross profit level, something like 25¢ a share or something of that nature.
Rob Capps, President and Chief Executive Officer, MIND Technology: Yeah. That sounds about right. Yeah.
Russ Taylor, Analyst, ARS Investment Partners: Yeah. Which, once again, goes to the power. And as I said, congratulations on that. And you announced an order yesterday. Can you give us an idea how has the backlog moved since the end of the quarter you're reporting today?
Rob Capps, President and Chief Executive Officer, MIND Technology: Gosh, I wanna be careful what I say there is because we add and subtract things every day. So there's things going in and out all the time. That certainly is an add to the backlog. What's interesting about that, Ross, is that's a prospect. And frankly, if we're having this discussion two months ago, that wasn't on our radar.
So that's really interesting to me that that's a new opportunity that's arisen recently. There's been some others that we've now had visibility on. Don't have the order yet, but we have visibility of prospects that we didn't have two, three months ago, which that's really encouraging me. Some of that is that next fiscal year activity for sure, but that's still good news, I think.
Russ Taylor, Analyst, ARS Investment Partners: So when you say as a new customer, is this a situation where they are is it a new use or is it someone in one of your areas that you're currently operating that you had not been doing business with that is now doing business with you?
Rob Capps, President and Chief Executive Officer, MIND Technology: Oh, I wouldn't say it's a new customer. It's someone we've done business with in the past, and so they were an existing customer, but it's a new need for them.
Russ Taylor, Analyst, ARS Investment Partners: Okay. Interesting. Interesting. We're talking about, obviously, with your tax losses, you've talked about you've been building up your Texas repair refurbishment capability, a couple of things. One is how much money have you put into that facility, and how does that coming to, you know, being brought online impact your income statement and the cash flow?
Rob Capps, President and Chief Executive Officer, MIND Technology: So we've sent roughly a call of a half million dollars to expand that. That's in rough terms over the past nine months or so, something like that. Just about done with that. We think the activities there will then start to ramp up. We won't turn it on completely, but we think this can be several million dollars a year of additional revenue for us.
Again, starting here soon and then kind of ramping up to the balance of this year and into next year. And to your point, that's a nice piece of business for us. And that is more recurring, more predictable, and also it's US based. So it helps us utilize those tax losses.
Russ Taylor, Analyst, ARS Investment Partners: That's just where I was going with that, the fact that it's actually going to start to help build that up. And therefore, that income will have a significant will be tax advantaged here in The US for you.
Rob Capps, President and Chief Executive Officer, MIND Technology: Correct. That's right.
Russ Taylor, Analyst, ARS Investment Partners: Okay. So in looking at this whole situation also, I noticed with thoughts on my opinion, you guys have an arrangement or announced an arrangement, or you guys actually didn't necessarily, with a I think it's a German company, GWL. Could you give any background? What is that tied into?
Rob Capps, President and Chief Executive Officer, MIND Technology: So again, I think we'll have more to say about that later. But that is a company that has a new product concept they're working on and we're looking to partner with them to bring that to market and kind of jointly promote that. But we'll have more to say about that in the near future.
Russ Taylor, Analyst, ARS Investment Partners: Okay. I mean, is interesting because you've been talking, Tyson asked you about this. Your comments even on your release talked about new opportunities, and it sounds like new opportunities is both new customers but also new business lines. Is that correct?
Rob Capps, President and Chief Executive Officer, MIND Technology: Absolutely. I mean, one of our objectives is to expand our offerings. So we have more kit to offer our existing customers and new customers. So, yeah, most definitely that's part of the strategy, most definitely.
Russ Taylor, Analyst, ARS Investment Partners: Okay. I think Tyson pretty much got everything else that I was looking at. My long list of questions tends to become very short once he's spoken. But, no, I think as I said, I congratulate you guys on what you've been doing. It looks like, as Tyson brought out, the fact is that the financial assets of this company are worth basically, you know, well over half or half of the value of this business right now.
And, you know, it seems to me that you guys is it safe to assume that, you know, when we're trying to bud look at you for a model you for a year instead of a quarter, is that 48 to $50,000,000 revenue for a year or something? I mean, I look at this number, and this would have been over if if we had done if we'd gotten everything shipped, this would have been a 13 plus million. You had a strong fourth quarter. You know, honestly, this is a stronger quarter than I thought it was gonna be ex the the, you know, inability to ship. You know?
Is that the type of thing we should be looking at when you're talking about numbers being that we should be able to be pushing up towards that 50,000,000 annual run rate?
Rob Capps, President and Chief Executive Officer, MIND Technology: Yes, roughly. Yes, roughly. I think we'd be real happy with that if we got to that point this year. That's two years in row going in that direction. But I mean, that's order of magnitude, that's where we are, I think.
Russ Taylor, Analyst, ARS Investment Partners: Okay. And your margins should be in line to perhaps a little bit better as we push forward?
Rob Capps, President and Chief Executive Officer, MIND Technology: Yes, I think that's right. Marginal
Russ Taylor, Analyst, ARS Investment Partners: is Yes. You guys have done a great job. Company is worth a lot more than it's trading at. Thanks and keep executing.
Rob Capps, President and Chief Executive Officer, MIND Technology: Yeah, Ross. Appreciate it.
Conference Operator: Our next question is from Greg Hillman, private investor. Please proceed.
Greg Hillman, Private Investor: Yeah. Hi, Rob. Hey, Greg. Hey. I wanted to ask you about the sale of Klim Marine Systems.
I think it went for, like, two times revenue, roughly, something like that. And I was wondering if, you know, in terms of metrics for what the value of your company is now, would would that fall into that area?
Rob Capps, President and Chief Executive Officer, MIND Technology: Oh, wow, Greg, that's a tough one. I guess you could make that assumption that there's kind of different markets, kind of a different situation, different buyers. So I think that's not necessarily a metric that would apply, but it is one data point for sure.
Greg Hillman, Private Investor: Okay. And in terms of the sale, did did you you have an investment bank or, you know, line up, you know, strategic buyers and financial buyers and bid that out or was that sold in some other way? And did your need for cash at the time affect the price?
Rob Capps, President and Chief Executive Officer, MIND Technology: We did have a banker assist in the process, but I would say it's more we identify potential buyers and approach potential buyers. They're all industry partners, so we knew. So it wasn't like an auction, the typical investment banker process. We certainly were in a different financial position then. And so we had a need, we think, to make that transaction.
So I think that certainly did have some impact on our motivation. So did it impact the ultimate price? Who knows? But certainly, we were motivated to sell.
Greg Hillman, Private Investor: Okay. And just another thing. Basically, is offshore drilling more environmentally friendly than fracking onshore?
Rob Capps, President and Chief Executive Officer, MIND Technology: Gosh. I'm not sure how to answer that. That that's a that's a huge question. I think there are opinions on both sides of those arguments for both things. So I'm sure you can kinda compare the two.
I think there are issues for both to be addressed or be aware of that I think they both are, you know, overall very safe and very effective. And so I think the concerns are, in my opinion, least, are over over over talked about.
Greg Hillman, Private Investor: Okay. And just another kind of a macro thing. I think 37% of world oil production comes from offshore. How's that trending over time or where do you see that going?
Rob Capps, President and Chief Executive Officer, MIND Technology: Well, I think that trend continues probably to increase. Think what we're seeing is the general attitude or general trend in offshore exploration is positive from a long term standpoint. And there are short term disruptions and the price of oil today really, in my opinion, doesn't impact what people are doing from an exploration standpoint because there's much longer term horizon. So I I think the general trend is one of being pretty bullish about offshore exploration and offshore production.
Greg Hillman, Private Investor: Okay. And, you know, those companies that have databases of mapping and sell out the databases, do you have any, like, valuable data that you sell?
Rob Capps, President and Chief Executive Officer, MIND Technology: No. We we we all we're doing, Greg, is providing equipment that people use to gather data. We don't gather the data. We don't have the data at all. That's not what we do.
Greg Hillman, Private Investor: Then then what's that software business that you have to I didn't quite get what does that do? Don't you have a software suite?
Rob Capps, President and Chief Executive Officer, MIND Technology: It was something we actually retained from the Klein sale with our Spectral AI, but that's really limited to side scan sonar and we actually are promoting that through the company that bought Klein General Oceans. So that has not produced significant revenue at all to us. It's been de minimis so far. So I wouldn't put a lot of value on that on a go forward basis. I think it's something that's interesting that might be able to generate some things in the future, but it's not really our focus right now.
Greg Hillman, Private Investor: Okay. And then finally, could you say something on the human resource side of the company, what you're doing to develop people, and also whether you have really like superstar engineers that can come up with patentable stuff.
Rob Capps, President and Chief Executive Officer, MIND Technology: So we're a company of 150 people or so roughly around the world. We have really smart engineers of all sorts that help develop new things. We've got really smart production people. We've got really smart admin people. So we try to give these guys the tools they need to do those jobs, give them a good career path.
Most of our employees are outside The US, as you might imagine. So a little different environment in some cases. But I wouldn't say there's one or two superstars that we keep locked in the closet to come develop new things. I think we have a broad bench of really good people that do those sort of things for us.
Greg Hillman, Private Investor: And great. And and then you appreciate it, Greg. Thanks a lot.
Conference Operator: That will conclude our question and answer session. I would like to turn the conference back over to management for closing remarks.
Rob Capps, President and Chief Executive Officer, MIND Technology: Okay, just like to thank everyone for joining us today and look forward to talking to you again here in a few weeks, months after our second quarter. Thanks very much.
Conference Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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Written By: Investing.com
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