MIND Technology (NasdaqCM:MIND) Q3 2026 Earnings Call December 10, 2025 09:00 AM ET Company ParticipantsZach Vaughan - Head of Investor RelationsRob Capps - President and CEOMark Cox - VP and CFOConference Call ParticipantsMike Mitcham - AnalystTyson Bauer - AnalystRoss Taylor - AnalystOperatorGreetings and welcome to the MIND Technology Fiscal 2026 Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If any ...

Financial Data and Key Metrics Changes - MIND Technology reported third-quarter revenues of $9.7 million, slightly down from the previous quarter but still profitable, indicating consistent execution and cost structure optimization [12][14] - Gross profit for the quarter was $4.5 million, resulting in a gross profit margin of 47%, an improvement from 45% year-over-year, primarily due to a favorable product mix [14][17] - Net income decreased to $62,000 compared to $1.3 million in the same quarter last year, influenced by a higher effective tax rate due to discrete tax expense items [17][18] Business Line Data and Key Metrics Changes - The aftermarket business accounted for approximately 64% of total revenues in the first nine months of the fiscal year, providing a stable and recurring revenue stream [11][12] - The backlog of firm orders as of October 31, 2025, was approximately $7.2 million, down from $12.8 million as of July 31, 2025, but new orders totaling about $9.5 million were received after the quarter ended [7][10] Market Data and Key Metrics Changes - Customers across various industries are adopting a wait-and-see approach to larger system orders due to geopolitical and economic uncertainties, although the long-term outlook for the seismic exploration industry remains positive [8][19] - The company maintains a solid pipeline of potential orders, primarily from its three main product lines: GunLink source controllers, BuoyLink positioning systems, and SeaLink streamer systems [10][19] Company Strategy and Development Direction - MIND Technology aims to capitalize on growth opportunities by investing in the development of next-generation marine technology products and expanding its product offerings [13][20] - The company is exploring mergers and acquisitions, organic growth opportunities, and strategic alliances to enhance stockholder value and expand its scale [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving improved results in the fourth quarter despite current market uncertainties, viewing the recent lull in order activity as temporary [6][19] - The long-term pipeline of opportunities is considered very positive, with expectations for a clearer outlook for fiscal 2027 in the next call [20][24] Other Important Information - The company raised approximately $11 million through share issuance via its ATM program, enhancing its liquidity and flexibility for future opportunities [18][22] - MIND Technology maintains a clean, debt-free balance sheet with significant working capital of approximately $35.8 million, including $19.4 million in cash [17][18] Q&A Session Summary Question: Confidence in fiscal Q4 and order turnaround - Management confirmed that recent orders were anticipated and in process, contributing to confidence for Q4 results [28][29] Question: Gross margin improvement and system sales contribution - The improvement in gross margin was attributed to fixed cost absorption rather than pricing strategies on large systems [30][31] Question: Geopolitical risks and customer interest - Management noted a mix of new and existing customers showing interest, indicating a positive outlook despite geopolitical risks [32] Question: ATM program and capital deployment - The ATM program was utilized to strengthen working capital, with no specific event targeted for financing [33][34] Question: Future revenue growth and scaling opportunities - Management indicated that growth could come from new product offerings or market expansions, not solely through M&A [36][38] Question: GWL collaboration details - The collaboration is focused on product line expansion rather than aftermarket servicing [42][43] Question: U.S. revenue generation and tax asset utilization - The company aims to increase U.S. revenue to leverage tax loss carryforwards, with potential annual contributions of $3-10 million [60] Question: Maintenance work as a revenue driver - Maintenance work is expected to grow as the installed base increases, contributing to recurring revenue [61][62] Question: Operating profit margin expectations - Management anticipates improvements in operating profit margins as top-line revenue increases, despite recent stock-based compensation impacts [63][64]

Financial Data and Key Metrics Changes - MIND Technology reported record fiscal 2025 results with fourth quarter revenues of $15 million, up 12% year-over-year and 24% sequentially [20][26] - Full year revenue reached approximately $46.9 million, representing a 28% increase over the previous year, marking the highest annual revenue for the Seamap business [27] - Gross profit for the full year was approximately $21 million, a 31% increase compared to fiscal 2024, resulting in a gross profit margin of approximately 45% [28] - Operating income for the fourth quarter was approximately $2.8 million, compared to $2.3 million in the same quarter of 2024, with full year operating income of $6.8 million, an increase of approximately $6.3 million from 2024 [31] - Net income from continuing operations for the fourth quarter was $2 million, improving 36% from the same quarter a year ago, while total net income for 2025 was approximately $5.1 million compared to a loss of $1.1 million in 2024 [32] Business Line Data and Key Metrics Changes - Marine Technology product revenues for the fourth quarter were $15 million, and for the full fiscal year, they totaled $46.9 million, both showing significant growth [20][26] - Approximately 40% of revenue comes from aftermarket activities, which are expected to grow as the installed base of Seamap products expands [17] Market Data and Key Metrics Changes - The general market conditions within the Marine Technology space remain strong, with numerous opportunities and inquiries being fielded [22] - The company has a backlog of approximately $16 million entering fiscal 2026, with additional orders received post-year-end supporting this backlog [13][14] Company Strategy and Development Direction - MIND Technology aims to enhance its scale and is exploring various strategic alternatives, including organic growth opportunities and potential acquisitions [40][41] - The company is focused on optimizing its supply chain and improving operational efficiencies to drive revenue improvements [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued success, citing improved liquidity and a strong demand environment [11][12] - The company anticipates fluctuations in quarterly revenue but believes it is strategically positioned for growth and profitability in the coming periods [12][46] - Management noted that the majority of revenues are generated from international markets, reducing the impact of U.S. trade tariffs [38][39] Other Important Information - The company has retained Lucid Capital Markets to assist in identifying and analyzing growth opportunities [42] - A shelf registration statement will be filed with the SEC to provide financial flexibility for future growth opportunities [43] Q&A Session Summary Question: Discussion on pipeline and backlog - Management confirmed confidence in future orders not yet in backlog due to ongoing negotiations with customers [56][58] Question: Shelf registration and historical context - Management clarified that the shelf registration is a common practice and a return to normalcy after previous restrictions [61][62] Question: Growth targets and capacity - Management indicated substantial capacity for growth exists, with a focus on achieving greater scale [63][64] Question: Order book outlook and industry trends - Management highlighted opportunities in ocean bottom mapping and other applications beyond traditional energy exploration [81][84] Question: Defense market engagement - Management acknowledged past pauses in defense market efforts but expressed hope for re-engagement [88][89] Question: Overall expectations for fiscal 2026 - Management expects marginally better performance in fiscal 2026 compared to fiscal 2025, with a focus on maintaining margins [93][94]