Mind Technology Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Good morning, gentlemen. You mentioned a couple of times and repeated it that you are looking to build off Q1 results. As you go forward, given your backlog, your cost containments, all that starts to play through as we go forward. Is that to imply that Q1 is kind of the foundation then for the next three quarters? And if that is the case, if there were to be 8 million shares outstanding on a pro forma basis, and you did about $0.12 in the quarter, should we look at that as the baseline then that will work our way forward?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Right, we might have variability. But overall, you're going to average higher quarterly levels.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Yes. I don't think you're going to comment at all on EPS, given your [previous] -- I just wanted to throw out for everybody, that's 8 million shares outstanding if this boat goes through. And this quarter would have been $0.12, just simple math. Working capital relief, you have the increase in inventory and accounts receivable. Give us a little flavor of that cash cycle trying to tighten that up because you keep your accounts payable pretty tight and you have done so through the previous periods. Should we start to see some relief? Or are these going to be kind of those balances as we go forward that we won't have a negative impact. We just will see levels kind of in the range that they were at the end of this quarter. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 1:00PM, MIND.OQ - Q1 2025 Mind Technology Inc Earnings Call

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. But self sustaining where you're not going to be requiring capital going forward, what you have now for what you know is sufficient to maintain your needs internally.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. You talked a lot about order flow. You're very optimistic going forward. Give us some characteristics on are these mainly repeat customers? Are the sizes of these POs larger than what you've experienced before? And the lead times, are you getting an order for something that maybe a year out?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. Are you willing to, if not, in the actual absolute numbers, just kind of give us a sense for halfway through this quarter, how the POs backlog kind of a cash situation? Are you feeling more optimistic today than you were 45 days ago?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. And last one for me before others get on. You have a significant amount of tax loss carry-forwards that are US domiciled, that you're really not able to use depending on where the deliveries take place and you had a 20% tax rate this time. Are there avenues or have you been advised on how to try to monetize those loss carry-forwards in the US to take advantage of those? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 11, 2024 / 1:00PM, MIND.OQ - Q1 2025 Mind Technology Inc Earnings Call

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. And most of your cash is held overseas? Correct?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. Thank you, gentlemen.

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : Thank you. Can you walk through a couple of things? Maybe one is the cost structure which has come down, the SG&A structures come down some. But I would think it has more room to come down, given the shift in the business. So can you walk through the ability to bring that cost structure down?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : What are your public company costs, do you think? Would it be fair to estimate -- are they in the $1 million annual range?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : More than that. So going back to Tyson's 8 million share math. We're talking about public company costs are probably more than $0.12 a share annually at this stage which would go away at some -- if you were to end up merging with another business.

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : Yeah, okay. Let's talk about the amount of time it takes to convert inventories to cash. You've been carrying some pretty high levels of inventory. In some cases, it's because from prior comments you've made, it appears that you are -- you want to make sure you have key components so that when you get orders, you can build them out. But generally, what should we expect that inventory conversion time horizon to be?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : When you price new business, how do you protect yourself against those component -- the cost of those components that might be choke points?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : Okay. So can you talk -- you mentioned the fact that you have some native business really not adding a great deal at this stage. Can you talk about the market opportunity there and what your role or how you get compensated in that business? Is it a royalty set up? Go ahead.

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : And should we expect as that grows that it generates kind of traditional software margins, operating margin?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : Okay. Are you seeing any sectors meaningfully outperform your expectations here or meaningfully underperformed them? And if so, what do you think's driving the out or underperformance?

Question: Ross Taylor - ARS Investment Partners, LLC - Analyst : Okay, great. Real quick, so we got a vote coming up on Wednesday. I know you won't comment on it. What I will say is that we appreciate the fact that you reached out and listened to your shareholders, your preferred shareholders this time. And we -- for one, I can't comment on anyone else, but we are supportive of this transaction at this stage, at this ratio. So thank you very much.