MIND Technology, Inc.

Greetings, and welcome to the MIND Technology third quarter fiscal 2025 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Zach Vaughn. Thank you. You may begin.

Thank you, Operator. Good morning, and welcome to the Mind Technology Fiscal 2025 Third 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 90 days via webcast by going to the Investor Relations section of the company's website at mind-technology.com. or via a recorded instant replay until December 18th. Information on how to access this replay was provided in yesterday's earnings release. The information reported on this call speaks only as of today, Wednesday, December 11th, 2024, 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 management's 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-K for the year ended January 31st, 2024. 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.

Hey, thanks, Zach. And I'd like to thank everyone for joining us today. So today I'll discuss some highlights from the quarter. Mark will then provide a more detailed update on our financials, and I'll return to wrap things up with some remarks about our outlook. As expected, mine delivered strong third quarter results. Our business continues to operate efficiently, and our emphasis on cost management and execution is yielding returns. Our cash flow from operations again grew during the quarter, which helped improve liquidity. We're also pleased to have generated our fourth consecutive quarter of profitable results. These results are great indicators of the transformations we've made. We're building good momentum. That's visible in our backlog and pipeline of orders, which I'll elaborate on in a moment. Our improved capital structure and encouraging business environment provide MIND with important opportunities that we look to take advantage of in the coming quarters. we believe MIND is strategically positioned for growth, improved financial results, and continued profitability in coming periods. As I touched on last quarter, the conversion of all preferred stock into common stock was a significant development. Upon the conversion, we issued approximately 6.6 million shares of common stock and now have just under 8 million shares outstanding. All outstanding preferred stock along with the associated accrued but undeclared dividends, have been retired. The impact of this conversion can be seen in our third quarter financials. Mark will touch on the accounting for this transaction in just a moment. We entered the fourth quarter with a strong backlog of approximately $26 million. While the backlog is essentially flat, we made substantial order deliveries during the third quarter that contributed to our improved revenues, yet we were able to offset this activity with new orders. As I previously mentioned, order flow is often sporadic, and we don't announce each and every order we receive. However, the general trend is one of elevated order flow and activity, and our backlog is much higher than historical standards. Beyond that, we have an active pipeline of pending and highly confident orders and prospects that are well in excess of our backlog of received orders. We currently estimate this pipeline to be more than double our backlog of firm orders. This robust backlog and pipeline of opportunities gives us confidence for improved financial results in the coming periods. Three meaningful contributors to our strong backlog are gun link source controllers, buoy link positioning systems, and sea link streamer systems. CMF enjoys a strong market position with these products, even a dominant position in some cases. We currently have a number of pending orders across these product lines, and I'm confident that the favorable market dynamics and our focus will prove to be a recipe for success in generating many more orders in the future. As we continue to grow our installed base of products, we also increase our opportunity for aftermarket business, such as spare parts, repairs, and support. The third quarter of this year, approximately 40% of our revenue came from this aftermarket activity. Now, as I've done in the past, I must remind you that the timing of the specific orders is subject to variability due to any number of challenges, unforeseen circumstances, or just customer delivery requirements. The visibility that our backlog and pipeline gives us has allowed us to better manage supply chain issues. For the past year or so, we've been aggressive in acquiring key components for those with long lead times. While this has contributed to an increase in inventories, it has allowed us to meet the delivery requirements of our customers and increase revenue. We've recently been able to draw down our inventory balances to some degree and expect that this trend to continue into the fourth quarter. Turning to our results, we again were able to grow our revenue both sequentially and year-over-year. Marine Technology Products revenues for the third quarter of fiscal 2025 were $12.1 million. We continued to capitalize on macro tailwinds and customer engagement to stimulate order flow and generate improved results. We're also continually working to improve our execution, efficiency, and cost structure. which we expect to contribute to sustained profitability in future quarters. General market conditions within the marine technology space continue to be strong. We see a number of opportunities to continue to field inquiries and respond to requests for accreditations. Our team continues to develop new and innovative ways to adapt and implement our technologies to meet the evolving needs of our customers. Recent sales and inquiries related to our C-Link streamer systems are a good example of this. As a result, we are making additional investments to further develop and advance the next generation of our ultra-high resolution C-Link streamer system. I'm confident that our differentiated approach and best-in-class suite of products will continue to give us the competitive advantage to address the growing demand we're seeing within the marine technology industry. We'll continue to see traction for our Spectral AI software suite While revenue from this has been de minimis thus far, customer feedback has been very positive. There are a number of prospective customers that are being pursued. We're also exploring ways in which we can more quickly address an expanded market for this technology. Now, for that, let me let Mark walk you through our third quarter financials in a bit more detail, then I'll come back.