Mind Technology Inc Q2 2025 Earnings Call Transcript

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

Question: Tyson Bauer - KC Capital - Analyst : Congratulations, gentlemen.

Question: Tyson Bauer - KC Capital - Analyst : A lot less stressful for all involved now that the cap structure, obviously backlog will be somewhat of a focus, but I think your comments on the outlook kind of soften that we go from 38 to 31 to 26, add another 6. So you're about 32. So you're maintaining your backlog, you mentioned sustain revenue as we go forth in the next couple of quarters with an improvement in the second half results. Do you look at that as kind of now we've hit that benchmark level where other than maybe some unique timing issues, we should be at that $10 million-plus going forward.

Question: Tyson Bauer - KC Capital - Analyst : I think one of the more impressive financial metrics that you posted in the quarter was your gross margin of [47.6]? I think I had you had about [45.5] that's 200 basis points ahead of schedule, which I'll take that over the little lighter on the revenue any day. Is that mainly from that operating leverage or is that just that pricing that's coming through or kind of a combination? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 1:00PM, MIND.OQ - Q2 2025 Mind Technology Inc Earnings Call

Question: Tyson Bauer - KC Capital - Analyst : You see that being sustainable also or widening as we continue?

Question: Tyson Bauer - KC Capital - Analyst : I think another impressive financial metric here is cash flow from operations being up $1 million in the quarter, given you had a $3 million increase in your inventory spend a while that we've had a positive numbers on that line item? Are we expected them to work down a little bit of that inventory or is that going to be kind of a sustained? And what is your net working capital outlook the second half?

Question: Tyson Bauer - KC Capital - Analyst : You go ahead and get those big orders to end, the diluted share count now that we only should be reporting positive EPS as far as GAAP purposes. So with the conversion, which is roughly 8 million shares, what I gave you a quarter around $0.1. I want to thank you very much options or anything else in the money. So is that 8 million a fairly good, diluted number to work with?

Question: Tyson Bauer - KC Capital - Analyst : And I was trying to working on the back of my notes. What are your looking at your book value post conversion? I know you talked about $15 million retained earnings and the preferred get rid of now. What is your book value looks like per share?

Question: Tyson Bauer - KC Capital - Analyst : I'm talking about a lot of things outside of your actual business products and services, one of the key things, you're getting a market value of $29 million and you just got rid of a liquidation value preference of $48 million, which included getting rid of all of those accumulated dividends, which go away and will not continue to accumulate in addition to what the preferred value was in the marketplace before you did the conversion. Are you a little surprised that we haven't seen an adjustment to your market valuation just based on those numbers alone?

Question: Tyson Bauer - KC Capital - Analyst : Yes, as we work through those non-votes on the preferred and no votes, they're converted shares. I would assume, given what you're giving as an outlook and what you posted on a pro forma basis, we should see some positive traction. All other things being equal.

Question: Tyson Bauer - KC Capital - Analyst : Alright. I'm sure somebody else will have some business questions for you, but thanks a lot and great job guys.

Question: Ross Taylor - ARS Investment Partners - Analyst : Thank you, and I'll echo Tyson's. Congratulations and also thank you for your perseverance. It was not an easy thing to get done. I had some people telling me it wouldn't get done and it got done. So I think this is setting the stage for a lot of value creation going forward. And I'm confident as a preferred holder all be better off a year from now than I was I would have been under the old structure. Couple of questions, what were inventory levels at quarter end?

Question: Ross Taylor - ARS Investment Partners - Analyst : Second is you talked about pulling down on CG&A as you're rightsizing the business, what kind of run rate G&A should we expect to see going forward either annually or on a quarter basis.

Question: Ross Taylor - ARS Investment Partners - Analyst : Okay. And that's a number that you should that, to annualized down, works out to us something around $10 million annually. And you're confident that as you grow your revenues that number should be able to hold towards that $10 million range?

Question: Ross Taylor - ARS Investment Partners - Analyst : I'm just wondering your public company costs, obviously, it's pretty expensive to be a small public company. We are not uncommon or the cost over $1 million, what kind of costs you guys incurred? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 1:00PM, MIND.OQ - Q2 2025 Mind Technology Inc Earnings Call

Question: Ross Taylor - ARS Investment Partners - Analyst : Well, so it could be something as high as like $0.15, $0.16 a share in earnings impact?

Question: Ross Taylor - ARS Investment Partners - Analyst : Yeah, under the 8 million shares. Okay. That's actually pretty meaningful in the past. You had to subtract the preferred dividends like the number and Tyson touched on this. I had. Yeah, it always drives me crazy because I think Tyson reported numbers on an adjusted and the Street pick it up as gap. And so they reported as an earnings miss when in fact, I actually think you are probably in line with Tyson's number. He can come back on and confer that confirm that if I'm right or wrong, if I'm wrong, he can comment them laugh at me on that. But when we're looking at that, that's what about almost $0.12 a quarter, roughly $0.47, $0.48 a year, when we go going forward when you get this, are you going to restate past earnings or is this all going to come out and that that you kind of make whole adjustment?

Question: Ross Taylor - ARS Investment Partners - Analyst : Yeah. And all I would say is breakout whatever that number is. So that even Bloomberg can pick it up and be right with our brands. You've talked about in the comments you made, you talked about the fact that you saw the second half being slightly better than the first half. Can you tell us what number you're working on for the first half? And I'm looking at reported GAAP numbers. I have you earning about $0.58. I mean I adjust for the preferred dividends. I add that back. I get $0.24 added to that. So I'm talking about something that's in the $0.81 range. What do you see as the second half? I mean, what should be benchmarking slightly better against $0.57? Is that a different number? I'm not going to compare apples to apples, what should I be using as my first out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 1:00PM, MIND.OQ - Q2 2025 Mind Technology Inc Earnings Call

Question: Ross Taylor - ARS Investment Partners - Analyst : Is there anything in the first half of the year that was uniquely one-time that we should be backing out to get that base level before we add back the preferred dividend.

Question: Ross Taylor - ARS Investment Partners - Analyst : Okay. So that's a really nice setup for the second half of this year. Also your press release the last line and it was interesting to me, you made the comment is a sentence is this is an important step for MIND. It simplifies our capital structure. It's actually the last two sentences. I went to public schools and in my opinion, set for creating meaningful stockholder value. Will you throw out some more color on how you see that value being realized? Is this setting up a situation where obviously we're going to have much better earnings, a clean balance sheet that creates one level of value. But this is also create a situation where strategically you find things that it will be easier for people to look at MIND and value it appropriately and come up with a number that will be found acceptable to all shareholders in the past. And finally, how does the first roughly $50 million was going to the preferred holders, which was very little for the common holders than our all in the same boat. So I'd love to get more insight into what your thinking is behind those two sentences.

Question: Ross Taylor - ARS Investment Partners - Analyst : Well, thank you. And I would agree. I mean, if you just look at if you put a 10 multiple on the preferred dividend, you have a stock that should be closer to $5.4 or $3.5. So that alone. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 1:00PM, MIND.OQ - Q2 2025 Mind Technology Inc Earnings Call Great. And we talked about the public company costs. I mean, there's a huge amount of value here, this company is clearly worth a lot more than $3.5 or $4 a share. And I want to leave you with. I want to thank you I know, as I said, you worked very hard on getting this done. There was you and I know on the I didn't always support or agree with how you are handling this. But in the end, I think you trade at something that should unlock a tremendous amount of value. And you and your Board, your leadership team are to be commended for quite honestly, sticking to something that most people would have walked away from.

Question: Sam Schwartz - Kaliber Management Corp. - Analyst : Hi, good morning, excellent report. So good to read and congratulations on the turnaround and looking forward, I have one particular question. I guess you don't seem to focus on and that is of MIND Technologies, involvement in artificial intelligence and your spectral software. I wonder if you could give us a little color on what's going on there.

Question: Sam Schwartz - Kaliber Management Corp. - Analyst : Great. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 12, 2024 / 1:00PM, MIND.OQ - Q2 2025 Mind Technology Inc Earnings Call