Mitcham Industries, Inc. Stock

Welcome to the MIND Technology Second Quarter Fiscal 2027 Earnings Conference Call. Please note this conference is being recorded.

[Operator Instructions]

Thank you, Operator. Good morning and welcome to the MIND Technology Fiscal 2027 Second Quarter Earnings Conference Call. We appreciate all of you joining us today. With me are Robert Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Robert, 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 September 16. Information on how to access the replay was provided in yesterday's earnings release. The information reported on this call speaks only as of today, Wednesday, September 9, 2026, 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 31, 2026. 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 Robert Capps. Okay, thanks, Zach, and thank you all for joining us today. As usual, I'll touch on the results for the second quarter and provide an update on the current market environment. Mark will then provide a more detailed review of our financials, and I'll return to wrap things up with some remarks about our outlook. Our second quarter results reflect the ongoing market softness, offset to some extent by the resilience of our aftermarket business. Order flow continues to be constrained, and customers are maintaining their wait-and-see approach amid a very unsettled geopolitical and commodity price environment. Our results reflect this. Despite these headwinds, our aftermarket business continues to provide a recurring stream of revenue.

That gives us a durable base through a period when new system orders are difficult to predict. This allows us to remain patient and opportunistic rather than reactive. Last quarter, I laid out two dynamics in the broader energy landscape with the potential to drive increased activity and order flow. There's a growing need for energy security following a significant supply disruption, and a favorable oil pricing backdrop is expected to support a resurgence in exploration activity. We believe both dynamics remain intact, but they have yet to result in firm orders. The [war with Iran] has had a significant impact on our recent results. Certain ongoing projects in the Middle East have been temporarily interrupted. Additionally, and perhaps more importantly, the award and commencement of additional projects in the region have been delayed.

These factors have caused customers to delay spending plans. They also, in some cases, have interrupted our customers' anticipated cash flow, in turn cause certain customers to delay payments to us. We are confident these amounts will be received, just not within the timeframes we originally anticipated. We continue to believe energy independence is top of mind for governments and operators alike, and there's a real need to replenish lost production and secure reliable supply. We expect that to drive exploration investment over time. However, at the present, the stops and starts at the [war with Iran] have created such volatility within the energy markets that customers are hesitant to commit to project timing. While oil prices remain elevated relative to historical standards, it's the durability of these prices, not the level, that drives investment decisions.

The futures market does not expect today's prices to last. What matters more to our customers and to their customers is certainty. into the conflict would remove much of that uncertainty impacting projects today. We would then expect these programs to move forward. We see a resolution to the war as good for our business. Now, our backlog of firm orders as of July 31, 2026, was approximately $4.8 million compared to $7.6 million as of April 30, 2026, and $12.8 million as of July 31, 2025. Protracted customer decision-making regarding new system orders and the execution of our existing backlog during the quarter were the drivers of the decline. As our backlog continues to illustrate, there is considerable variability in the pace and timing of new orders.

This has been magnified by the ongoing macro uncertainty. I'll remind you that even in a normal market, new orders don't always arrive at a constant rate throughout the year. Importantly, we continue to view these as temporary pauses as customers iron out their operational plans and evaluate market conditions. Despite the near-term softness, the longer-term outlook for the marine exploration and the survey industry, and more specifically our business, remains very positive in our opinion. We've begun to see early signs of recovery and feel that an uptick in activity is inevitable. I'll talk a bit more about this later. Outside of our backlog, which is defined as orders for which we have a purchased order or a signed contract in hand, the pipeline of potential orders remains solid and is several times greater than our firm backlog.

We are continuing to pursue certain significant projects, including some worth $10 million or more each. We have taken actions in recent months to strengthen our positioning and make ourselves more competitive bidders. This provides us with optimism as we work to convert these opportunities into firm orders in coming periods. Turning to our results, marine technology product revenues for the second quarter of fiscal 2027 were approximately $5.6 million. The majority of this revenue, roughly 87%, came from aftermarket activity consisting of spare parts, repairs, service, and other support activities. We've talked at length in recent quarters about this component of our business and its critical role within our overall results. This has become increasingly important as system orders have slowed.

While the aftermarket business is influenced by the general activity level within the industry, it is more recurring in nature than orders for new systems. Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND Technology, Inc. since expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. As our installed base of Seamap products expands, so does the potential for increased aftermarket activity. The second quarter was a difficult one, and our results reflect that. Our aftermarket activity held up and continued to generate meaningful revenue at a time when system orders were effectively on hold. This allows us to manage through a period of disruption and position the company for when activity improves. I remain confident in the opportunities ahead of us, and I believe it is just a matter of time until order flow returns.

Now, I'll let Mark walk you through our second quarter financial results in a bit more detail. Thanks, Rob, and good morning, everyone.

Revenues for marine technology product sales totaled approximately $5.6 million for the quarter. As Rob mentioned, our second quarter results continued to be impacted by general market softness and our customers taking a more cautious approach to the decision-making process. Despite these headwinds, we are benefiting from aftermarket activity that provides a solid foundation of recurring revenue. This activity supports our overall results and serves as a buffer in times of reduced large system order volume. Second quarter gross profit was approximately $2.1 million. This represents a gross profit margin of 37% for the quarter. Although a significant portion of our second quarter revenue came from aftermarket activity, which typically generates higher margins than larger system orders.

Lower overall revenue in the quarter resulted in less fixed cost absorption impacting our gross margin. As revenue returns to more normalized levels, we expect our cost optimization efforts and improved production efficiencies to support stronger margins. Our general and administrative expenses were approximately $3.3 million for the second quarter of fiscal 2027. This was down both sequentially and when compared to the same quarter a year ago. Our research and development expense for the second quarter was approximately $407,000, which was up sequentially and compared to the second quarter of fiscal 2026. This increase was due to the timing of cost recognition for component purchases. Consistent with prior periods, these costs were largely directed toward the development and enhancement of our streamer systems and source controller offerings.

Operating loss for the second quarter of fiscal 2027 was approximately $1.8 million compared to operating income of approximately $2.7 million in the second quarter of fiscal 2026. The second quarter Adjusted EBITDA loss was approximately $949,000 compared to Adjusted EBITDA of $3.1 million in the same quarter a year ago. Net loss for the second quarter was approximately $1.7 million compared to net income of $1.9 million in the second quarter of fiscal 2026. As of July 31, 2026, we had working capital of approximately $36.7 million, including $15.8 million of cash on hand. This compares to approximately $19 million of cash at the beginning of the fiscal year. I would caution against reading that change as a reflection of our cash burn rate. Movement in cash reflects the timing of receivable collections as much as it does operating performance.

As Rob mentioned a moment ago, collections in the first half of fiscal 2027 were slower than we anticipated due to circumstances impacting certain of our customers' markets. For a more accurate measure of our operating performance, we would point to our Adjusted EBITDA. The company continues to maintain a clean debt-free balance sheet with a simplified capital structure. We also maintain operational flexibility to pursue strategic opportunities should they arise. I'll now pass it back over to Rob for some concluding comments. Okay, thanks, Mark.

We are operating in a challenging macro environment, and our customer's wait-and-see approach reflects that. Customers continue to delay order commitments regardless of industry or end use, which limits our visibility, and will likely pressure results for another quarter or two. Much of that timing depends on conditions in the Middle East, which remain unsettled. We're not going to predict when that will change. However, I want to emphasize that we believe demand has not gone away. Although the timing remains uncertain, customers are actively evaluating several sizable projects, which we view as an encouraging sign for future activity.

As conditions stabilize, we expect customers will reactivate their capital programs, and we're positioning the business to respond quickly when they do. Customer interest and engagement remain solid, but they're not converting into firm orders at the rate we expected at this point in the year. As a result, our expectations are that our fiscal 2027 results will be below fiscal 2026. Despite this view, two things give us confidence in our ability to manage through this period. Our aftermarket business provides a steady stream of recurring revenue that supports our results, and we have meaningful working capital, including cash on hand. This gives us the flexibility to invest in the business and act on opportunities as they arise. Our conviction regarding the longer-term prospects has not changed.

The underlying dynamics within the marine technology industry remain intact, and we are seeing opportunities to capitalize on new areas of focus within the market. Rather than pull back during this slowdown, we have continued to invest in our technology that is beginning to open doors. As an example, we've started gaining traction with our passive array technology and maritime security applications. Still early days, but we believe this technology provides a cost-effective solution to a real operational need. We're encouraged by the interest we've received and look forward to providing updates as things develop. We are also pursuing upgrades and improvements to our source controller and towed streamer products, which we believe will generate new opportunities. In recent quarters, I've discussed our capital allocation strategy.

We have a simple capital structure and a debt-free balance sheet, and we ended the quarter with $15.8 million in cash. This liquidity gives us flexibility that not all small public companies possess. We are constantly evaluating opportunities to create meaningful long-term value for our stockholders. Our first priority is always to preserve the strength of the company. This includes funding operations through a period of reduced order flow and lower revenue, while continuing to invest in technology that positions us for the recovery we expect. Beyond that, we see a real need to add scale, and we are actively pursuing opportunities to do so. As we've said previously, there are several paths available to us.

We can execute organic growth initiatives that we have identified. We can acquire assets or businesses adjacent to what we already do, we can combine with another organization. What we will not do is jeopardize the progress that we've made in MIND Technology, Inc. by chasing something that does not fit what we do. That being said, we continue to actively seek out transformative transactions. And we also recognize that another attractive use of capital is stock repurchases, especially at current price levels. We believe that recent prices for our stock do not accurately reflect the true value of the company. I point out that as of the end of the most recent quarter, we had working capital of approximately $36.7 million, which equates to more than $4 per common share. Now, despite these apparently attractive economics, we did not purchase any of our common stock during the second quarter.

I understand how many of you are frustrated by this lack of activity. We do believe our stock at current levels represents a good investment. However, there are often limitations on when we can be active in the market. We are precluded from buying or selling, for that matter, our stock during blackout periods, pending the release of periodic financial results. Additionally, we cannot buy or sell our stock when in possession of material information that has not yet been disseminated to the market. These situations could include ongoing preliminary discussions regarding new business or for strategic transactions. We will continue to assess the appropriate time to enter the market against our other capital priorities.

Going forward, preserving and enhancing value remains our primary focus, and we will allocate capital to the areas where we see the greatest return. In closing, the market remains soft, but I am confident about where this business is headed. The projects our customers have deferred have not gone away, and the underlying demand fundamentals are only growing. When activity returns, we intend to be ready for it. We have no debt, real liquidity, and an aftermarket business generating recurring revenue, and technology that is expanding our addressable markets. We're using this period to improve our positioning and sharpen our competitive edge.

We are focused on innovating, adding scale, and partnering with customers that appreciate the value we deliver. We look forward to executing on these priorities, which we believe will drive improved stockholder value. With that, Operator, I think we can now open the call up for some questions.

[Operator Instructions]

Our first question comes from the line of Tyson Bauer with KC Capital. Please proceed with your question. Good morning, gentlemen.

Hello, Tyson. I'm just going to follow up quickly on your last comment and that is given the Middle East conflict on and off situation and no resolution seemingly coming quick. How does that sway your capital use decisions for MIND Technology, Inc.? Does that accelerate some of these things you've talked about as far as improving shareholder value and growing the business? Or do you hang on to that cash a little tighter and you see how things kind of play out? And the follow up to that, as you talked about, these blackout periods and a lot of things, irons in the fire you have going, would you anticipate that most, if not all, of Q3 may be in those blackout periods?

Let me address the last one first. Not necessarily. Again, I don't want to telegraph when we may or may not be in the market, but I wouldn't say that's necessarily the case. I think the situation in the Middle East is something we have to contemplate when we look at capital allocation. If we see a lesser opportunity in the very near term for, you know, new business that might steer us a different direction as far as where we might allocate capital. Maybe if we were inclined to buy back stock at that point, something more strategic. But again, I just don't want to telegraph what we're going to do, but it's something we do have to contemplate. But for sure, the Middle East situation has gone on much longer than I think any of us anticipated, and certainly has a bigger impact than we originally anticipated.

Now you do obviously have business that should not be impacted by the Middle East such as scientific activity in Asia, South Asian Sea, your Scandinavian customers that have been big in the past, critical mineral exploration off the coast of Africa and some of those areas. So when we look at this pipeline being frozen, is it more at the government level for these types of projects, or is it more at the In addition to the corporate budgeting level, there's a kind of a combination at this point.

Yes, so that's really a good question, Tyson. You know, there are some are projects in the Middle East that have been impacted. But also, I think the general, economic macro situation has caused people to be cautious elsewhere in the world. You know, our customers, you know, maybe where they're located in the Middle East and Dubai or, or in Norway or the U.S., you know, operate on a worldwide basis. So just because they aren't in the Middle East doesn't mean they're not impacted by the macroeconomic situation that happens overall. I think that's really the bigger driver factor for the slowdown in activity. You are definitely correct. We do see activity and are actively chasing projects.

That are non-energy related, especially in Southeast Asia. There's a lot going on there in other parts of the world. So we aren't totally energy dependent and we are seeing activity there. And part of that problem is just the budget cycles and those are driven by governmental issues and government budget cycles, not in the U.S. necessarily, but elsewhere in the world. And they just move very slowly sometimes. But those are some of the larger projects that I alluded to earlier.

If we use this analogy of a frozen pipeline, obviously, you've got two solutions. One, a slow thaw that creates a trickle of orders that come on the backside of this. Or if it thaws quickly, you end up with possibly a pipe bursting, which I think we would not treat that as unwelcome, even though you may have a working capital requirement there. How do you see that playing out? Is it more likely a trickle or more likely a taking the Python or the up-varying orders.

Yes, that's a tough one to answer. I personally think it's more of a closer to a trickle. Maybe not trickle's, maybe not the right word I would use, but I don't see things just bursting loose. I think because of the uncertainty that this has created, and companies tend to be much more cautious now than they might've been in the past just because of this uncertainty. That's my read on it, but take it for what it's worth.

Last couple quarters you've thrown up the carrot out there, these $10 million projects. What, if anything, you can add color to, what are they contingent upon? that we can watch in the marketplace that makes it more likely or less likely they could occur.

I think that the particular instances I have in mind are more related to, um, budget cycles and the process we're going to swing through rather than anything from the macro environment. So I don't think the Middle East situation necessarily has a big impact on those particular projects. So government budgets, government agencies, those things. And they move at the pace they move.

A couple quick financials. It appears that Q3-Q4 more likely than less likely to resemble Q2 or within that ballpark of that $5 to $8 million that you've experienced in the past on repair sales and kind of what you've talked about, that recurring revenue base. So, even if we have orders materialize, it's likely that this fiscal year is kind of more or less set. In what we should expect and all the focus then becomes can you grow backlog before the end of the year and what does that imply for fiscal? Is that correct? Yeah. There's definitely truth to what you're saying there.

I guess modify that in that certainly there are orders that are or prospects that were in the pipeline that we could turn around and deliver in this year. Now, obviously, as time goes by, the closer you get to the year, that likelihood reduces. So I wouldn't, you know, write off the back end of the year completely at this point, but I think that's from a standpoint of large system orders. Okay, and last one.

Last one for me, obviously cash level $15 million. You said that it was an abnormal cash use quarter. Don't expect that to continue. What kind of cash management and projection are you looking at for the next quarter or two?

Well, again, I think the issue with the cash situation that Mark alluded to, or addressed was we've had a, we actually had three customers which had their cash flow impacted by the [war with Iran]. We'll come back and look at those. There is the third, which is when we get the middle and we just working through the logistics of getting that resolved. So if that's resolved by the end of the year as we expect it would be, then I think you'll see a significant increase in cash balance at that point.

But today's cash balance is greater than the $15.7 million recorded at the end of July.

Roughly. I mean, not dramatically, but roughly. Okay. Thank you. Our next question comes from the line of Ross Taylor with ARS Investment Partners. Please proceed with your question.

Thank you. Well, Tyson covered a lot of ground that I'd wanted to address, but I think getting down to it, what steps, since it sounds like you expect to be in this situation for a quarter or two longer, what steps are you taking to reduce the operating cash burn to a more acceptable level?

Sure. So we're looking at things on the production side, production costs, people primarily. On the production side, what we can do there without hurting the longer term prospects. Same thing on the R&D side. We've really already done a lot on the G&A side, although there are a few tweaks here and there, but those aren't the big dollars. So we're definitely actively looking at those things right now, Ross.

Okay. Um, what's, what are your public company costs?

Oh gosh, since I look at it, it's probably, you know, $2, $3 million anyway on an annual basis.

Okay. So it's not meaningless as

Oh, no, definitely not. Definitely not. Okay. It strikes me from the- I mean, Ross, let me point you to something. If you look at our 10Qs and our financial reports in our quarterly, I'm sorry, our segment disclosures. That gives you some idea of what the corporate costs are. They're substantial. They're not all public company costs, but it gives you some idea of what that is.

Okay, I appreciate that. Um, it does strike me as the situation in the Middle East and also in the Black Sea actually in many ways should be driving increased demand for exploration away from those regions. So is that something that you are seeing? I mean, obviously, no matter what the outcome of the [war with Iran] is, it's going to lead to a lessened interest demand, less confidence in that as an energy source. So I would think that we would be seeing your customers accelerating a desire to invest, explore elsewhere for these types of, for oil, gas and other things? Is that something you're seeing?

Absolutely correct. Absolutely. Just how quickly does that happen? You know, these projects have long lead time. So how quickly do we see them come to fruition and therefore filter down to our business? But that's the uncertainty in our mind right now, but there is no doubt in my mind, I think most people's minds, that what you say is absolutely correct.

Okay, and to kind of just sum with your answer to Tyson's question about cash, currently you've got just under $16 million, so you would expect to be measurably higher than that level of cash at the end of fiscal 2027?

That's correct, based on the collections from this one customer.

Okay. And you've talked a lot about the idea of doing a strategic, you know, potentially something strategic. Given the situation, I mean, it strikes me as MIND Technology, Inc. lacks the size and the stability of revenues, early stability of earnings at this stage to do a lot to leverage your balance sheet. I think you'd be really reticent to make an acquisition that would involve a great deal of debt. However, at the same time, your stock is selling well under book value. I think book value is, you know, coming into the quarter was what, north of $4 and a share and so you're selling well under book which makes it very difficult to use your stock unless a deal is really attractive so how do you think how you what kind of size are you looking at for a deal you talked about transformative i to me that means you know a company that's more than its current size, bigger than it is? Is that a correct read? And stability of profitability. Okay.

Yes, I mean, obviously those deals don't come along every day, but if we can find that sort of situation or if we can find the tuck-ins that we can do on a reasonable basis to gradually increase scale, but at some point, I think a more transformative transaction that you allude to makes some sense. But again, those are hard to come by, and if you can do it on a relative basis, perhaps it makes some sense. But those are the sort of things we are open to. As we've said before, we have a blank sheet of paper there, so we are open to lots of different ideas, but we recognize we need to change the scale of this operation in order to bring more stability to it.

Right, and changing the scale, you, in many ways, also mean you need to create a business that generates a consistent level of cash flow, earnings, revenues, so that we can put a higher multiple on the overall business, correct? It's not just make it bigger. It's really make it bigger. Yes. You're exactly right. Okay, and I will say, I, um, well, you talked about the idea that you kind of, it seems that you're in a lot of blackout periods. It would be nice to find an open blackout, an open period that would allow your insiders to buy stock. I mean, right now, I think I can probably buy a couple shares of stock for a latte, and it would strike me as it might be worthwhile to see some insider buying there hasn't been insider are buying in this company in a long time and that would be a really nice vote of confidence. I understand that 100%. Okay. Yes, I agree. If we can get ourselves to where cash is higher, you know, we're trading well under book value, the stock does strike me as a very attractive investment here for a patient investor.

So, you know, good luck pushing forward.

Man. I appreciate it. Okay. Take care, sir.

This now concludes our question and answer session. I would like to turn the floor back over to management for closing comments.

I'd just like to thank everyone for joining us today and look forward to giving you ongoing updates about our progress and talking to you again after our third quarter. So thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.

This live transcript is auto-generated without human intervention or review.

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Summer Investment Conference 2026. Our next presenting company is MIND Technology, Inc.

[Operator Instructions]

I'd now like to turn the floor over to today's host, Mr. Rob Capps, President and Chief Executive Officer with MIND Technology, Inc. Sir, please go ahead.

Thanks. Good morning, everyone, or perhaps good afternoon based on your location. Thanks for joining us today. I welcome our existing stockholders and some hopefully soon to be stockholders. I think we have a pretty interesting and somewhat unique story to talk to you about today. So I look forward to this.

I'll forgo the safe harbor and spare you that if you'll allow that. So let's give a little background just to -- for those of you who are new to the story. MIND participates in 3 broad markets in the marine environment for which we produce seismic exploration equipment. And those 3 areas are exploration, which includes traditional energy, oil and gas exploration, but also some hard mineral exploration as well as research activity.

Second is what we call survey, which entails ocean bottom surveys for site surveys for underwater installations of all sorts, wind farms, offshore platforms, pipelines, things of that.

And the third is what we call maritime security. We think our technology and the production capabilities that we have are really very well suited for these security and defense applications. Now this is not a part of our historical results, but we do think this could be a very interesting and lucrative area for us going forward, but something we definitely have our eyes on.

Just to summarize as we start into this, we think we're a pretty unusual company for microcap. We have an ongoing business with some pretty compelling advantages as you'll see as we go forward. We were producing positive cash flow and we have a pristine capital structure. We have no debt, have only common stock outstanding, no warrants or other dilutive instruments other than some employee options. So again, pretty unique for a mini microcap, if you will. So again, something we think is pretty unique in this environment.

Now as many of you know, we have seen some recent softness in our order flow and backlog, and I'll talk more about that in some detail here in just a moment. But the longer-term outlook really is quite positive in our opinion, and that's really supported by some of the information on this slide that we're looking at.

I think it's safe to say that there's general consensus within the industry that energy exploration activity is increasing. That's good for our customers, and it's good for us. I think some of the recent activities in the Middle East really bring that home and that there really is a need to replace energy reserves and perhaps outside of the Middle East.

So we believe and many others believe that's going to drive a resurgence in energy exploration all around the globe, which again is good for us. We're seeing some customers that are reporting increasing backlogs and prospects. Again, that's another very positive sign.

Also, interestingly enough, we've seen continued activity within the survey market. Again, the ocean bottom surveys for site surveys. That's notwithstanding the issues that we all are aware of with the wind farm projects in the United States. So again, that's a relatively new market area for us, one that is pretty interesting and I think can help fuel our future growth.

Now over the past 3 years, and for those of you who are new to the story, we've taken some pretty dramatic actions to reach the position that we enjoy today. Now I'm not going to rehash each of these steps over the past 3 years. You can look at this at your leisure. But these steps have allowed us to become profitable, create a clean, debt-free balance sheet and really create significant working capital and liquidity. As I said earlier, we think this is a very unusual situation for a microcap such as MIND.

Now we do, however, recognize the challenges and costs that are associated with being a very small public company, and we are committed to finding ways to expand these operations -- our operations and otherwise bring value to the stockholders. Now these various opportunities or ways we can accomplish that include newly developed products, some things we develop internally, products or businesses that we may acquire from others or combination with other organizations.

And we're open to any or all of these ideas and are actively pursuing each of these. And we have retained an investment bank, as you may know, to help us identify and evaluate any such opportunities as they arise. But our focus, our goal is stockholder value, and we see a variety of ways to accomplish that, and we believe that we have the flexibility and the structure to affect that as they arise.

Now as I said, we've made some pretty dramatic changes over the past 3 years, and this chart gives you a picture of the improvement in our results that really were due to these changes, I believe, these changes I talked about on the prior slide.

Now these changes have allowed us to capitalize on opportunities that arose in the underlying business and also is allowing us to address new opportunities. Now as I did mention at the outset, we have seen some retreat from the very strong growth we saw had in fiscal 2025. And just as a side point, we are a January 31 year-end. So we just finished our fiscal '26 last January. We're currently in fiscal '27. So just to keep you confused from that standpoint.

So as I mentioned, we did see some retreat from very strong growth in 2025. And as we've mentioned publicly, I think the current year fiscal 2027, we'll likely see some further softness. However, as I also said, we are very bullish on the longer-term trends and the opportunities and think we're well positioned to take advantage of that.

Now something that's pretty interesting about our business and the components of our revenue and something we'll talk about a bit more later is what we call our aftermarket activity. And this consists of selling spare parts, replacement parts, repairs, training and other support activities. So things that aren't tied to selling a new system or a whole new installation, if you will.

So as you might imagine, as our installed base of equipment has increased, the support business for aftermarket business has increased as well. So this past quarter, I think it was about 50% of our business, and that's roughly where it's been trading recently. I think historically, it would be around 40%. We've seen some periods as much as 70% of our revenue has come from the aftermarket. So again, a more stable and growing part of our business, we think.

Now clearly, this still is somewhat dependent upon industry activity, but it is more predictable than the orders for full systems. For our customers, generally, these are operating costs as opposed to capital expenditures. Therefore, there's a bit more flexibility and frankly, a bit more need on an ongoing basis to spend these dollars.

They have equipment and they're working, the equipment has to be repaired from time to time. This kit is deployed in a very harsh environment. So it breaks a lot just by the nature of the operation. So it's something that's very important that they keep on top of, which is good, again, for our ongoing business.

Other thing important about this is oftentimes, these orders are on a book-and-bill basis. So you really won't see them reflected in the backlog. Sometimes they are, but not always. Also, these orders tend to garner a bit of a better margin and they typically don't apply a discount from a normal selling price to these orders as you might for a large system, as you might imagine. So again, important and growing part of the business.

As I mentioned earlier, our backlog of firm orders and for us, backlog means something that we have a signed purchase order or a signed contract. So it is truly firm. So that backlog is down from historical levels, as I mentioned. But our pipeline of other orders and prospects is, again, quite robust, as I said.

Now some of these larger -- some of these projects in our pipeline are larger projects, some of which are $10 million or so each. So again, some larger projects that we're looking at today. So again, helps us support our belief that the long-term outlook is really quite bullish despite the softer backlog that we see right now.

Now backlog is great. Don't get me wrong. I love to have backlog and have it to not have it, but it doesn't tell the whole story all the time. As this indicates, our year-end backlog often is significantly above our beginning backlog or beginning of the year backlog.

So again, backlog is important, but it does not tell the whole story. So we often have book-and-bill business. We see order flow come on an intermittent basis during the year sometimes. We'll see some ebbs and flows, have a period of time, especially in the summer as some of the European companies are on vacation. We don't see a lot of order flow, which tends to pick back up in the fall and the winter. But again, just part of the story here.

So let me step back for a moment and let's dive in a bit more detail about our primary products. And again, especially for people who are new to the story. Our operating unit is Seamap. That's our subsidiary and the primary operating unit. It is the operating unit, I should say.

And Seamap has 3 primary product lines. GunLink, which is an energy or again source controller; BuoyLink, which is a GNSS or GPS positioning system and SeaLink, which is an acoustic array or streamer system. We sell these products to the owners and operators of seismic exploration and survey vessels.

These include seismic and survey contractors, vessel owners who lease these vessels to the contractors and some governmental research organizations as well. So we design, manufacture, sell and support the equipment used in these marine surveys. We don't operate the equipment. We sell the kit to those people who own the vessels that are used to conduct these surveys for a variety of purposes. Again, energy exploration, hard mineral exploration, ocean bottom site surveys, all sorts of different applications.

We believe we have a very strong market position with each of these products. In fact, with the GunLink system, we have an overwhelmingly dominant position. So we almost are a monopoly in that particular area. We continue to look for new applications for this technology and enhancements to our existing technology to -- that are complementary to our existing business.

A good example of that is something we've done with our SeaLink system. We reconfigured this system to be used in ocean bottom surveys and therefore, have expanded the market for us, relatively new area for us, but one which holds great promise. I think what you'll see is for much of this equipment for the different applications, you will use the same equipment that may be configured slightly differently. And therefore, by making some relatively minor changes, it allows us to address other markets and larger markets in some cases.

This next slide is maybe a bit difficult to follow. It may take some study at your leisure. But what we're trying to show here is how these applications or these products rather are applied and how they're utilized often in conjunction with each other.

So again, they're deployed in the marine environment, offshore, nearshore, deep ocean, different applications, but again, a very harsh environment and again, used in conjunction with each other oftentimes as well as in conjunction with other equipment, which is an important point as I'll talk about some of our opportunities to expand the business.

So as I said earlier, the equipment can be and is used in different applications, but configured differently. Sometimes that takes some modification on our part from a production or an engineering standpoint, but it's a relatively easy lift to address some of the other applications such as the ocean bottom surveys with our -- what we call our 3D high-res stringer system.

There are a number of ways to expand the business. As we talk about here, we're always looking ways to take this technology into new applications and new markets, as I just talked about. Other important part of the expansion plans, as we talked about, is the aftermarket business. As we continue to expand our installed base, that installs our aftermarket business and expands our recurring streamer business.

Another area -- a couple of other areas specifically where we think we can enhance the business and grow the business is taking our SeaLink streamer system and applying that to larger systems. Historically, we have focused on smaller systems, less dollars, less equipment really for -- due to production reasons, but by expanding our production capacity, which involves some design modification as well as some production changes, we can really effectively address much larger projects.

And that's something we're in process with now and something that we're excited about. I mentioned earlier the application for maritime security. And we think we can take the Sea Serpent, what we call Sea Serpent, which is our SeaLink technology, reconfigure it for these applications and address what we believe is a growing need within the world, not just in the U.S. but overseas to address maritime security and defense applications.

Again, not something we've done historically, but something that we think holds promise for us. So these are a number of ways for us to expand our business. Again, we also look for ways to add products either through internal development as we talk about here or maybe acquiring product lines or businesses from others. All those things are things we're looking at, very important for us.

Take a look here at our locations around the globe right now. We are a global company, and we serve a global market. We have very significant experience serving customers around the world and in operating in a number of foreign jurisdictions. And we see this as a key advantage for us. Not everyone can do that.

To give you some color on that, this is our primary operating location in Singapore. Singapore is the primary operating location for our Seamap unit. Most sales and shipments are made through this entity in Singapore. So activities here include manufacturing, assembly and testing, primarily of electronic components as well as engineering and field service and administrative services, as you might imagine.

Our largest facility is in Malaysia, which is in close proximity to Singapore. It's a drive. It's a 45-minute drive from the Singapore facility. This facility, again, is much larger and allows us to take advantage of a much lower cost structure and better access to workers in Malaysia. So we've continued to move more and more of our manufacturing operations from Singapore into Malaysia to take advantage of those cost advantages.

So as you can see here, in addition to our technology that we own and we control and we develop, we also have very significant manufacturing capacity and expertise. And we think this is another really key advantage, both currently and for future growth, something that's unique, not everyone can do that.

We have a facility in the U.K., in the west of the U.K. in Somerset, West of London, which is primarily an engineering location, but also our primary engineering functions are out of this locations, but also there are some field service as well as training and some sales support as well. Then our final location is in the U.S. in Huntsville, Texas, which is north of Houston.

We have recently expanded this facility in order to take advantage of some opportunities we see for repairs only of our own products as well as products of others. So again, a new business avenue for us as well as some manufacturing support for Singapore as well as some ancillary manufacturing for third parties for streamer systems and other activities. So again, we believe having locations both in North America and in Asia is -- gives us a real logistical advantage and something that's very attractive to many of our customers.

So just to summarize, once again, we do think that MIND is a unique opportunity. That's one not often seen with companies of our size. We have a strong ongoing business with some very unique capabilities and technology.

We have a strong balance sheet and liquidity that's going to allow us to act upon opportunities and frankly, to weather any ups and downs that you see in cyclical markets. So again, we think a very unique opportunity and one that we hope you'll find very interesting. So with that, I think we can take a few questions before we run out of time. So if you have any, I'll be happy to take your questions.

I'm seeing a few questions here. So some questions about how to access more information about the company.

Again, you can -- on our website, there is much information in the presentations on the website, all of our filings and press releases are there as well as you can e-mail the IR site that's on the website, and we can respond from that.

And just reading a couple of questions here. There's a question here about impact on changes in seabed mining and exploration regulations on our business.

As I said earlier, we have reconfigured some of the equipment to address some of these applications, site surveys and looking at lower horizons in the subsurface. Some of the regulations, particularly in the U.S., as you well know, have slowed some of the wind farm development and offshore development.

But frankly, we've seen that activity continue elsewhere in the world in Asia and in Europe. So it certainly has an impact, but I think we've been able to continue to expand that business despite that impact. I also think some of the activity in the North America is probably being encouraged as it relates to energy exploration. So I think that's good for us and good for our customers and therefore, good for us. So I think regulations do have some impact. It's something we monitor. But I think overall, the environment is still very positive.

Here's a question about our aftermarket activity and asking about how we should think about the recurring nature and margins for that business. As I mentioned, about 50% of that came from the -- 50% of our revenue in the first quarter came from that aftermarket business.

As I mentioned, it's more recurring. There is some activity demand, if you will. If the customers aren't working, they don't need the equipment. But if they're working, they need the equipment. So they don't have to buy new equipment and new systems. So that's more recurring. And as we see them go to work, we see that demand for the aftermarket, the repairs and spare parts pick up.

Margins tend to be a bit better here. Again, as I mentioned, a large system will tend to maybe offer a discount as an incentive to get a $6 million or $7 million or $8 million order, where for a $0.5 million or $1 million spares order, we're not going to do that. So it tend to be a bit better margin.

Another question here where I mentioned talking about larger projects in the $10 million range that I mentioned and asking what type of customers or applications we're looking at here.

Typically, things of that size are -- relate to a new build vessel where -- and oftentimes, it's a governmental agency that's building them initially, at least that's the activity we're seeing most often right now, research organization at some point. So it will be a multipurpose vessel with a need for different types of equipment.

So we're seeing opportunities to provide a great deal of our kit, really all the products we've talked about as well as supplying kit from others as well. So we might be an integrator or participate with another integrator in some of those projects. They don't come along every day, but they are something we've seen more and more of and think we're in a much better position today to address those type of opportunities than maybe we might have been in the past.

Another question here about given our liquidity position, our cash position and the fact we have a shelf registration, so access to other capital, how are we thinking about allocation between organic growth, internal development, acquisitions or even share repurchases, which we have said that we're something we've considered.

So it's a function of what's the return on capital on each of these. And that can be a complex calculation as to what that really is given the risk factor of the different projects, the time factor involved. So it's not just as simple as what's the spreadsheet say the best return on investment is, but it's something we're open to considering for all these cases and all these opportunities and something we do look at on an ongoing basis.

It's important, we think, to increase our scale and grow the company and therefore, increase stockholder return and value. But if we see our own stock is the best investment given the circumstances, then we'll do that. And we've said that openly that we'll do that. So we look at the whole.

I guess maybe one more question here. Ask as to -- since there are some newer people to the story, what's the most underappreciated aspect of our business?

That's a great question, actually. The fact that I'm not sure everyone understands how the technology can be applied to so many different areas, and therefore, there are opportunities to expand the applications of the business.

But I think even maybe as importantly is the fact that we have this infrastructure, this production capacity, this global positioning enables us to operate very effectively and therefore, enables us to expand perhaps by acquiring other businesses or other product lines very effectively and rolling that into our own facilities, our own operations on a very efficient basis.

I think that's a real key and something that you don't see very often, especially in a company of our size. So I think that's something that maybe a lot of people miss. I'm not saying this is the most important, but it is important and one I think a lot of people just don't see very well.

So one last question I think I can ask -- I can answer real quickly. Talking about the Huntsville expansion, is that for third-party products or not?

Yes and no. So we actually are servicing some third parties and expect to service more third parties in that location, but we also can do business for our own. We can, again, supplement our Singapore facility and also produce other products out of the Huntsville facility. So it's a bit of both is the answer to that. So I think with that, we are pretty much out of time, I believe.

Thank you. Ladies and gentlemen, that concludes the MIND Technology Inc. presentation. You may now disconnect, and please consult the conference agenda for the next presenting company.

Greetings, and welcome to the MIND Technology First Quarter 2027 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ken Dennard, Investor Relations.

Thank you, operator. Good morning and welcome to the MIND Technology Fiscal 2027 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'd like to listen to a replay of today's call, it'll be available via 90 days via webcast by going to the Investor Relations section of the company's website at mind-technology.com or via instant replay feature until June 18th. Information on how to access the replay was provided in yesterday's earnings release. Information on this call speaks only as of today, Thursday, June 11, 2026, 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 these statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including its annual report on Form 10-K, where the year ended January 31, 2026.

Furthermore, as we start this call, please 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.

And now that behind me, I'd like to turn the call over to Rob Capps. Rob?

Okay. Thanks, Ken, and thank you all for joining us today. It's only been 8 weeks since we last talked and not much has fundamentally changed. There's not been a sea change in the market or our business. But much of what I say today will sound pretty familiar. Our results for the first quarter were essentially in line with their expectations and once again reflected positive adjusted EBITDA. During the quarter, we were able to deliver the remaining orders that slipped past our fiscal year end. As usual, I'll touch on the results for the first quarter, and provide an update on the current market environment. Mark will then provide a more detailed review of our financials, and I'll return to wrap things up with some remarks about our outlook.

I think the near-term market can best be described as uncertain with less visibility than normal. There's a great deal of uncertainty in the world in terms of economics, politics, and security. You'd expect this causes companies and governments to be cautious in committing to exploration and survey projects. As a result, our customers are reluctant to commit to equipment purchases, most notably larger system orders. The current conflict in the Middle East and the changing perceptions of its resolution exacerbate this uncertainty. The longer term outlook, however, is much more positive. There are definite signs of recovery. We'll talk more about this later.

Our backlog of firm orders as of April 30, 2026 was approximately $7.6 million, compared to $13.9 million as of January 31, 2026, and $21 million as of April 30, 2025. As expected, we delivered certain orders that were unable to ship prior to the end of fiscal 2026. This, coupled with the protracted customer decision making, contributed to the backlog decline.

Additionally, as we approach the summer months, I want to remind you that in a normal environment, new orders don't always arrive at a constant rate throughout the year. Variance in order flow is commonplace and not a cause for concern. Macro uncertainty has magnified these policies as customers iron out their operational plans. However, we maintain our belief that long-term outlook in the marine exploration and survey industry is very positive and uptick in activity is inevitable.

Outside of our backlog, which is defined as orders for which we have a purchase order or signed contract in hand, pipeline of potential orders remains solid, and several times greater than our firm backlog. We are continuing to pursue certain significant projects, a few of which total $10 million or more each. Some of these opportunities involve new vessels for governmental organizations and require successful bidders to provide security bonds, something we are now capable of doing. We've taken actions in recent months to strengthen our positioning and make our sales more competitive with bidders. This provides us with optimism as we work to convert these opportunities into firm orders in coming periods.

Now, turning to our results, marine technology product revenues for the first quarter, fiscal 2027, were approximately $9.7 million. Revenue was flat sequentially and improved from last year's first quarter. We once again produced positive adjusted EBITDA of approximately $800,000 compared to $1.1 million in the fourth quarter and a loss of $179,000 in last year's first quarter. Our aftermarket activities are providing a stable and recurring revenue stream that is supporting our overall results. This component of our business has become increasingly important and represented about 50% of our revenues in the first quarter. As a reminder, this aftermarket activity consists of spare parts, repairs, service, and other support activities.

While this business is influenced to some degree by the general activity level within the industry, it is more recurring in nature than orders for new systems. Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND since expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. As our installed base of cement products continues to expand, with it comes the prospect for increased aftermarket activity.

I'm pleased with the resilience of our results in the face of widespread uncertainty, and our aftermarket activity continues to be an important contributor to our consistency. I firmly believe MIND is well positioned to capitalize on opportunities in future periods to stimulate order flow and generate sustainable results.

Now, I'll let Mark walk you through our first quarter financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. Revenues for marine technology product sales totaled approximately $9.7 million for the quarter. As Rob mentioned, our first quarter results benefited from approximately [ 4 million ] of orders that slipped out of fiscal 2026. We also continue to see strong aftermarket activity that provides a solid foundation of recurring revenue. This activity supports our overall results and serves as a buffer in times of reduced large system order volume.

First quarter gross profit was approximately $4.1 million. This represents a gross profit margin of 42% for the quarter, which was in line with the same period a year ago. The sustained margin strength was supported by product mix and reflects a greater contribution of spare parts and other aftermarket activity that generate favorable margins. We expect our cost structure optimization efforts and greater production efficiencies to help us maintain favorable margins in future periods.

Our general and administrative expenses were approximately $3.5 million for the first quarter, fiscal 2027. This was up both sequentially and when compared to the same quarter a year ago. Sequential and year-over-year increases are primarily due to higher incentive compensation and stock-based compensation with the latter being a non-cash item. Our research and development expense for the first quarter was approximately 310,000, which was down both sequentially and compared to the first quarter of fiscal 2026.

Consistent with prior periods, these costs were largely directed toward the development and enhancement of our streamer systems and source controller offerings. Operating income for the first quarter was approximately $14,000 compared to an operating loss of approximately $658,000 in the first quarter of fiscal 2026. First quarter adjusted EBITDA was approximately $811,000 compared to an adjusted EBITDA loss of $179,000 in the same quarter a year ago. Net loss for the first quarter was approximately $411,000 after income tax expense of $476,000.

As a reminder, our income tax expense results primarily from our operations in Singapore. As of April 30, 2026, we had significant working capital of approximately $37.8 million including $17.7 million of cash on hand. Company continues to maintain a clean, debt-free balance sheet with a simplified capital structure. We expect our solid foundation, significant liquidity, and operational flexibility will allow us to pursue opportunities in the coming quarters to enhance stockholder value.

I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. As I mentioned at the outset, macro uncertainty and geopolitical turbulence are causing customers to delay order commitments regardless of industry or end use. This is challenging our near-term visibility, and it is likely we will see some softness in our results. However, there are signs of recovery, and the longer-term outlook continues to be very positive.

Conflict in the Middle East has served as a sobering reminder of how important energy security is for countries around the world. As some have speculated, the stratiform use blockade triggered what may be the largest oil supply shock in history. We believe this bodes well for additional orders in future periods and geopolitical instability and long-term supply concerns will drive exploration activity in other parts of the world. There is an immediate need to replenish lost production and secure reliable energy supplies.

Another near-term dynamic that has the potential to drive incremental activity is the rapid increase in oil prices. But this goes somewhat hand-in-hand with the need for energy security, but we find that customers are often more motivated to launch large programs when the economics are compelling. While we anticipate our customers ramping operations in the coming months to capture the benefits of an attractive pricing backdrop, we haven't yet seen the orders associated with this activity.

Some of our customers have reported increasing backlogs, which is a very positive sign. We also note several industry commentators are predicting a resurgence in exploration and survey activity. Something that we're monitoring very closely. The underlying dynamics within the marine technology industry remain intact, and our long-term pipeline of opportunities continues to be very positive. Our prospects are plentiful and there are emerging opportunities to capitalize on new areas of focus within the market. Uncertainty has clouded visibility for the past several months, but we remain well positioned for the future. I'm confident that any near-term softness will dissipate in the coming months as markets stabilize and volatility becomes less severe.

As a result of our efforts in recent years, MIND is nimble and operating efficiently. This positions us to more readily weather the storms that have historically challenged our business. Rather than sit idly by as customers hit pause, we've continued to innovate and expand our capabilities to address new opportunities. This gives us a competitive edge to capture orders and meet evolving needs in coming months. Our customers are constantly looking to get ahead of the curve, operate more efficiently, and solve new problems, and they want to partner with suppliers to do the same.

Turning to our outlook, current visibility continues to indicate that our results for fiscal 2027 to be down when compared to fiscal 2026. Despite this view, we believe this will still be a positive year for MIND. As I noted on our last call, it will be difficult to replicate the system order volume that we've enjoyed over the past two years, given our recent customer discussions and the prevailing uncertainty. However, we expect to be cash flow positive for the year, even with lower revenue. And our growing aftermarket business will provide us with a substantial stream of recurring revenue to buoy our results. Further, we have meaningful cash on hand to make strategic moves and position the business for the future.

As we've previously discussed, we continue to be aware of the challenges and limitations of being a small public company. Although we are uniquely positioned with a simple capital structure and a debt-free balance sheet, there is a need to add scale and enhance stockholder value. We are actively pursuing opportunities. There are a few different ways we can achieve the desired scale. We can execute identified organic growth opportunities. We can acquire assets or businesses that are similar to our existing business, or we can combine with other organizations. We continue to identify and evaluate such opportunities.

Fortunately, we have ample liquidity to carry out a transaction should the right opportunity arise. However, we will not jeopardize the immense progress that we made in MIND to chase an opportunity that doesn't fit what we do. Preserving and enhancing stockholder value will always be our primary focus.

While we are motivated, we intend to be very disciplined in our approach to capital allocation, weighing the expected return with the cost of capital. Outside of strategic mergers and acquisitions, our capital allocation framework consists of investments in organic growth, such as expanding existing product lines and strategic alliances with industry partners. Each of these represents a tool we can use to generate or strengthen returns. We can draw on any one of these or a combination thereof as market conditions permit and the return on investment meets our threshold for value creation.

In summary, we have a differentiated approach, best in class products, and a unique aftermarket business that will continue to support our financial results for years to come. We're focused on innovating, expanding our capabilities, adding scale, and partnering with customers that appreciate our technology. As these customers prepare for increased activity, we plan to be ready to meet that demand. We've taken meaningful steps to strengthen the company, establishing a resilient platform on a solid foundation.

Going forward, we will keep building on that foundation, improving our standing within the market and sharpening our competitive advantage, all of which we believe will propel MIND into the next phase of growth. Our liquidity will prove advantageous as we expand, and we intend to deploy this capital strategically to pursue new, attractive opportunities to meet the evolving needs of our customers. As we execute these priorities, our focus remains as it always has, on driving sustainable long-term value for our stockholders.

And with that, operator, I think we can open the call up for some questions.

[Operator Instructions] Our first question comes from the line of Tyson Bauer with KC Capital.

You ended with liquidity, so let's talk about liquidity. You had an increase of $4 million on accounts receivable since the end of January to April, and given the pause button that you described for expectation for fiscal Q2, should we anticipate that your cash balance should be above $20 million by the time we have the next earnings call?

I'm not going to predict an exact amount, but I would expect us to start to convert receivables and inventory into cash. So I would expect us to generate cash for the year. So where it hits, I'm not going to predict, but conceptually you're in the right direction there.

Okay. But we're in a solid position of more than $2 a share in cash by the time we get to the end of this quarter.

Yes. I think it's fair to say. I mean, working capital, what's $37 million? And that's a solid working capital number.

Which is, yes, $4, and you've got a $5 stock price. Your SG&A was up $250,000 year-over-year, primarily just due to incentive comp as all of that...

Yes, primarily timing that, actually. If you look year-over-year, the overall amount is not going to be that different. It's just a matter of a hit in the period is the bigger factor.

Okay. So should we expect SG&A ongoing level to recede, or are we going to maintain this level?

I think we'll see it come down some. Typically the first quarter's a bit higher just because of year-end activities, audits, things like that. So I would have expected to see that coming down a bit.

Okay. Are you willing to, at least in general, describe the composition of your backlog, the [ 7.6 ]? Any large orders or systems within that, or are they all fairly small, and any timing or scheduled shipments?

It's a variety of things. There's no huge systems in there at this point. So it's mostly smaller things. Some new orders, some new system activity, but some of the smaller size, as well as aftermarket activity. Timing, I think we'll see most of that, certainly this year. I can't tell you off my head if it's all next quarter or some next. But, obviously, we have lots of book and build business as well. So there's lots going on there, so it's just -- it's a mixed bag.

So we walk into this fiscal second quarter with approximately $5 million recurring, some minor add-ons to there. We don't have the one system that landed in Q1. So Q2 should be your low point, knock on wood, revenue-wise for this fiscal year?

That's probably right. I mean, that can change. We still have, 6 weeks to go and lots of things can happen, but that's probably right.

And when do we get to a point of backlog order recognition where if we don't start to see that materialize, that could have an impact on the second half of this fiscal year where we start slipping quarters to the right of the calendar?

Yes. It's hard to say, Tyson. It kind of depends on the nature of the order. Sometimes we can have enough visibility, we can start building before we have the order in hand. We've done some of that in the past. Some things turn more quickly than others. It just depends what the orders are. So I don't think we hit that situation until much later in the year, probably not until we get to the fourth quarter, frankly, or going into the fourth quarter.

Okay. When we talked about -- obviously you talked about pipeline projects you can build ahead even though you don't have the project in hand per se, a couple of $10 million each. Are there any timelines to those comments or catalyst events that allows those to be realized. Like is there a budgetary, government budgetary passage or certain testing that needs to be completed by X data or RFP? Any color on that side of it with the pipeline of projects?

Sure. The short answer is no. There's really no governmental deadlines, things of that nature, no hurdles we have to get over from a testing or demonstration standpoint. It's more just going through the process. These are larger projects, which involve more than just our equipment. So they move at their own pace sometimes, and sometimes we're not the -- we're kind of the tail being wagged sometimes given the size of our kit compared to the overall project. So it's just a matter of these things going through their process.

Okay. And are you then teamed up with Tier 1 suppliers, especially on the military side or government contracts? So you're the contractor?

So there's not an easy answer that we are certainly partnered with others for other parts of the kit. But typically, we are dealing directly with the principle, if you will, and not going through an integrator or another integrator. We typically are the integrator for these projects as it relates to our equipment.

So you somewhat control your own destiny in that regard?

Yes, yes, in that regard, yes. But again, these are larger projects, so there are other aspects to it that can have impact on schedule.

A lot of comments about the Middle East. You do a lot of business with European contractors, a lot of activity in Asia and some of these are non-petroleum or non-gas type in use or what they're surveying and exploration, whether it's scientific, hydrographic, deep sea mining, renewable offshore, not in the U.S. now, but in other places. Why is that slowed down? It doesn't seem like that should have a lot to do with the Strait of Hormuz and those things, that if China wants to do deep sea mapping or we're doing deep mineral exploration off the east coast of Africa and those areas, they seem to be independent of what's going on in the Middle East. So why are we not seeing more activity in those regards?

I think we are seeing activity there is the short answer. But there is marginal activity that's in the Middle East area that's being impacted. But I think the overall uncertainty politically and economically is causing people to, be cautious in committing X-rays dollars or capital dollars anywhere in the world. You don't know what the energy pricing environment is going to be. You don't know what the security environment is going to be. So I think that just causes overall uncertainty and therefore, overall caution all over the world, not just as it relates directly to the Middle East.

Okay. And typically in this timeframe, we see some activity coming out as some of your bigger customers in Europe, especially Scandinavia. Is that still percolating and still there, just not realized, but you do expect something before the end of the year? Or what's the status of some of those bigger customers that have been repeat customers in years past?

Well, I think they have been cautious, as everyone else has been in making commitments this year in the last several months. I think they are very encouraged about what they're seeing in the future. I don't see that they're quite ready to pull the trigger on things and start to expand capacity, but that's something we hope to see. So I think, as my remarks said, people have been cautious given the uncertainty, but they all, I believe, are feeling fairly optimistic about the future based on what they're seeing from their customers and what they're seeing from their backlogs.

Okay. And last question for me is, what are you hoping to accomplish or to see to show your shareholders before the next earnings call? after Q2 is over and hopefully realize some of the stuff in your outlook that you're providing for the second half of the year. What are some things that shareholders can be watching for?

Sure. I mean, obviously, you know, we start to see order flow will be important, but I want to caution everyone, timing is uncertain. And just because we don't get the order by a certain date doesn't mean things are fundamentally different. But I think looking for order flow, and we continue to look for opportunities to expand our offerings. So that's something we are very actively pursuing right now. So those are the sort of things that we're looking at. But, again, timing is uncertain in lots of these things.

Our next question comes from the line of Ross Taylor with ARS Investment Partners.

On these new areas -- these $10 million plus potential contracts, what are the end markets that are being served?

Typically, these are quasi-governmental agencies, who are building vessels or equipping vessels for a variety of scientific and exploration purposes. So it's not directly energy related necessarily, although there's an aspect of that. But there are all sorts of other things they look to do, deep sea mining, hydrographic work, things of that nature.

But the customers are generally governments, not corporations for these big contracts?

Yes, at least quasi-governmental. That's correct.

Okay. And obviously, how many of them are ex-US, outside the US?

I'd say all of them are.

All of them are. And how many do you have, do you think? Is it 2? Is it 4?

It's a small handful. I don't want to get too specific for some competitive reasons, but it's a small handful.

Okay. And you said obviously you indicated that it would be some draw on the balance sheet or the working capital side because of the need to secure -- provide security for these deals, how much is that going to end up being? If you have a $10 million deal, how much do you have to put up from your side to -- or because you're basically going to, I assume, buy some form of bond on that.

That's correct. We put that facility in place with HSBC recently, so we can do it in that manner. We don't have to post-cash collateral at that point. But it varies based on the contract, but you were talking about a couple million bucks maybe.

Okay. Okay, so if you have 2, 3, 4 of these, obviously it will -- would we see that as an impact on cash or would not be -- would an impact -- should not be an impact?

It should not be an impact on cash. This new facility should not be.

Yes. Okay. So in looking at this situation, it does seem a little odd in many ways. The Chinese have aggressively been mapping pretty much everything inside every island chain they can find off their shores. It would seem that the U.S. and our allies need to do the same. So hopefully this will get going. When you see this, what kind of -- have you built inventory at this stage? Is there inventory on the balance sheet for any of these potential deals?

To some degree, yes, but not a great deal. I mean, we haven't been building a large system to spec, but there are components that we tend to stock. Some of these components are also part of our aftermarket business. So things we sell as spare parts, we also are parts of new builds. So we can kind of pursue both at the same time. But it's not as though we've built a large system that's sitting on the shelf. So there is some lead time involved.

Okay. And you expanded your facility, I think, physically, certainly, down in Texas. How is that demand for that at this stage?

That is starting to ramp up. So we're starting to see improved results there, improved activity, and we think that will continue to increase. So we're pretty optimistic about that. It's not going to be 30 million bucks a year, but it can be meaningful for us.

Okay. And would that -- as you see that move forward, would that change right now, the $5 million, $5.5 million per quarter you're doing on kind of maintenance and repair? Should we expect to see that, you know, Because I think of that as a base and this new additional capacity being on top of that. Is that a correct way to see that?

That's a good way to see that. That's exactly right. That should be fairly recurring and fairly predictable. That's why we're encouraged by that.

Okay. So what we can see in here is that, as we push forward, even if you're not getting new orders, that you should see the maintenance and repair part of your business moving forward?

That's correct.

Okay. You talked a lot about the various and sundry options you have to scale up the company. What kind of financial hurdles, benchmarks are you having in place for making that decision? Are you -- is it something that needs to be additive to earnings, additive to free cash flow, EBITDA needs to have a 20%, 15%, whatever. I mean, have you actually laid down -- you talked about having a discipline with it. Have you laid down metrics, and if so, what are some of the metrics?

Yes, I don't want to get too specific at this point, but we certainly -- anything we do, we want to be accretive without a doubt. And there's been some non financial metrics that we want to look at as well, which really involve risk around a transaction. I want to make sure it's something that we understand that can manage well. So just because we see something that on a spreadsheet has some great metrics, great returns, that doesn't mean there's not risk involved in that. So that's the other aspect we're trying to evaluate in these various opportunities.

Okay. And when you're looking at -- where -- what do you feel MIND's core competency is? And therefore, what -- when you're looking at these deals, how are you seeing the reach of them?

Sure. So obviously we had some specific project products rather, sorry, that are some unique technology that we can add other things to. So the ability to in a very economic way, add additional products, additional capability is a strength of ours. We have ability to build things very effectively and very efficiently through our facilities both here in the U.S. and in Asia. And I think that gives us an advantage in taking in other additional products that perhaps we can build more efficiently and therefore garner more margin. So I think that's our -- two of our core competencies. And we do have some unique technology that we think we can build from as well. So I think those are the key aspects of us.

Okay. And I would be remiss if I didn't note that you issued stock at $11 and currently, your stock is selling in the -- basically at $5. At some point in there would be -- strike me as it would be hard to ignore the fact that you have a chance to actually buy back some of what you issued to reduce the dilution and still leave a fair amount of cash on the balance sheet.

Yes, that's true. As we've said before, we put that in place to give us opportunity. And if that's -- if we think that's the best use of our capital at a certain point in time -- point in time, that's what we'll do. But obviously, I'm not going to predict or indicate what our intentions are, but that is an option for us.

Okay. And just generally, when you're looking at going back to your potential order book, how many of these are kind of new prospects or new uses and how many of them are, as Tyson was referring to kind of repeat buyers?

I'm thinking through. They are a combination. I'm pausing because I'm thinking through the list. There certainly are some new customers in this list as well as some repeat customers who are expanding capacity.

Okay. Well, obviously, we're in a period of struggle, but as Tyson noted that your current working capital at about $4 a share puts very little value on the business. Hopefully, we'll be able to get some of this stuff turned around in the near future and get some value reattached to it.

Our next question comes from a line of [indiscernible] with [indiscernible] Capital.

So a quick question on the income taxes. The $476,000 seemed like a huge number. I understand it's international. But is that an aberration? Is there a way of getting that down? Or what's the cause of that?

Well, again, we are profitable in overseas in Singapore primarily. So we pay taxes in Singapore. We have losses in the U.S. that we can't apply against that. So basically, you have taxable income that's not sheltered by and untaxable losses, if you will. So that's the reason for that. There are some things that we are doing to try to mitigate that.

But fundamentally, as long as we're making money there and not making money here, we're going to see that sort of aberration. Now one thing we are doing is trying to generate more income in the U.S. through our repair activities in our Texas facility, and that will help reduce the appearance of that because we will start to generate taxable income in the U.S., which we'll be able to shelter from our existing loss carryforwards.

Wow, that's -- I mean, obviously, there's a lot of ways to shelter that. When it's a controlled subsidiary, you shouldn't be having that much income in a subsidiary when the parent isn't making that much. But is there any action to kind of minimize that? Because that is a huge number based on last quarter.

So there are limitations on what you can do, your transfer pricing rules between all the countries. So there are some limitations as to how aggressive you can be, but that's something we look at on a continuous basis.

But do we figure that's a going number? I mean, if we do the same number in revenue next quarter, it's going to be the same amount of income taxes?

Well, it's hard to predict because it depends exactly what revenue hits in a particular quarter. So that can certainly -- could be a bit more, it could be a bit less. It just -- it can vary because you're kind of on the margin right now. So a small change can have a big percentage impact.

Okay. So on backlog, in prior quarters, you gave us an update if there were any material contracts since the quarter end. So has there been any new material orders added to the backlog since April 30?

Not material. We would have said so. No. nothing large.

Right. So is the backlog -- can you give us any update on the backlog at the end of May or in the end of last week from that $7.5 million level?

Yes, I really don't want to get into that. But again, if we have a significant change in backlog, we'll announce that. But other than that, I don't want to get too specific.

And then the stock repurchase plan, obviously, you haven't filed your 10-Q, and I would request that you do that at the same time you do your press release going forward, so we can get all the details to be able to ask these questions. But I'm assuming that you have not purchased any shares under the stock repurchase plan to date?

That's correct.

Okay. So my last question then, and kind of last question I got to this. I mean the $40 million net tangible book value and really the working capital primarily from -- well, actually, primarily from really well timing the ATM stock sale, $4.40 a share in -- per share, $4.40, that leaves only at today's price, basically $0.50 or $0.60 per share of residual value on the market value. Is the company looking at the opposite because you're talking about maximizing stockholder value as in you guys acquiring something else. Why isn't it the maximizing stockholder value, either buying your stock or having someone buying this and giving us the value for this business rather than basically quarter of piece price to sales ratio?

That's an option. That certainly is an option that we're looking at. And that's the reason we put the buyback program in place. So we have that option. Again, I don't want to telegraph what our intentions are, what we may or may not do because it's a function of other factors as well, but that is certainly an option for us.

Okay. So then finally, at what point in time in the future do we look at this? This isn't working. We need to do something different, more of an aggressive change. Is it end of this year?

I think there's -- we've got a long runway there. I think there's enough progress and enough opportunity. I think we've got a long way to go on that.

This concludes our question-and-answer session. I would now like to turn the floor back over to Mr. Capps for closing comments.

Okay. Thanks, everyone, for joining us this morning. I look forward to talking to you again in a few weeks, a few months for our second quarter results. Thanks.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings. Welcome to Mine Technology Fiscal Fourth Quarter 2026 Earnings Conference Call.

[Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Zach Vaughan. Thank you, Zach. You may begin.

Thank you, operator. Good morning, and welcome to the Mine Technology Fiscal 2026 Fourth 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. We 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 April 23. We Information on how to access the replay was provided in yesterday's earnings release.

Information reported on this call speaks only as of today, Thursday, April 16, 2026, and therefore, you are advised that any 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 31, 2026.

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.

Thanks, Zack, and thank you all for joining us today. Today, I'll touch on our results for the fourth quarter and the full year and discuss the current market environment. Mark will then provide a more detailed update on our financials, and I'll return to wrap things up for some remarks about our outlook. A lot has transpired since our last earnings call. As you all know, we're a global company. Our customers work all around the world. We have not experienced any material impact to our operations or prospects due to the current conflict in the Middle East. However, this is a situation that we are following closely.

Overall, our performance in fiscal 2026 reflects our ability to deliver resilient results despite the evolving and highly turbulent macro environment. All things considered, I'm pleased to report another year of meaningful cash flow from operations and positive earnings and adjusted EBITDA. We are capitalizing on pockets of demand maintaining our consistent execution and benefiting from production efficiencies. There's been a good bit of uncertainty in the market for some time now. But our Seamap revenues remain elevated compared to historical levels, and were essentially flat in the fourth quarter compared with the third quarter.

As we discussed last quarter, overall interest and engagement remains positive, but we've seen some customers defer new order commitments. Given commodity price volatility and the current set of geopolitical affairs. This is not uncommon in periods of broad economic uncertainty. However, as the past would indicate, we continue to view this as a short-term disruption, expect that customers will resume normal activities once conditions stabilize.

Our long-term growth trajectory and operational momentum are still intact, and our large pipeline of opportunities supports our optimism for future -- for the future. Our backlog of firm orders as of January 31, 2026, was approximately $13.9 million compared to $7.2 million as of October 31, 2025, and and approximately $16.2 million as of January 31, 2025. As a reminder, during the fourth quarter, we received long anticipated orders totaling about $9.5 million. We were able to deliver roughly half of these orders during the fourth quarter and expect to make the remaining deliveries early in fiscal 2027.

While backlog is only down slightly year-over-year. we are finding that many customers, regardless of industry or end use are taking a wait-and-see approach to larger system orders given the current climate. For the reasons I mentioned, this is not unexpected. However, there are signs of recovery and the long-term outlook for exploration and surface work is trending in the right direction. We believe this bodes well for additional orders in future periods as the geopolitical instability in the Middle East may well drive exploration activity in other parts of the world. We've yet to see any immediate impacts from the dramatic increase in oil prices but it's something our customers are monitoring closely, and has the potential to drive incremental activity.

As a reminder, aside from the protracted customer decision-making process stating from macro uncertainty and geopolitical turmoil it' also not uncommon to see positives in order activity throughout the year in a normal environment. We continue to monitor various external factors that might impact our business but we maintain our belief that the long-term outlook in the marine exploration and survey industry is very positive and an uptick in activity is inevitable.

Outside of our backlog, which is defined as orders for which we have a purchase order or a signed contract in hand. The pipeline of potential orders remain solid and at several times greater than our firm backlog. We are pursuing certain significant projects. Some of these opportunities involve new vessels for governmental organizations. These projects are often relatively large, $10 million more to us and require that successful bidders provide security bonds. You may have noted that we recently entered to a trade finance facility with HSBC. This facility provides flexibility to help pursue these more significant projects. We remain cautiously optimistic in our ability to convert opportunities into firm orders in coming periods.

Our backlog and pipeline of potential orders consist primarily of our 3 main product lines. Like source controllers, buy length positioning systems, ceiling streamer sets. However, our backlog also contains some aftermarket orders. Together, these serve as the foundation for our business. As a whole, our Seamap business continues to enjoy a strong market position. We've worked hard to carve out a niche within the marine technology industry and have established strong relationships with our customers. We also pride ourselves in finding innovative ways to capture demand.

Growing contributions from our aftermarket activities are also providing a stable and recurring revenue stream that is supporting our overall results. This component of our business has become increasingly important. This aftermarket activity consists of spare parts, repairs, service and other support activities. While this business is influenced to some degree by the general activity level within the industry, this were recurring in nature in order for new systems. Our customers might be slow to purchase new systems but their existing equipment will need maintenance to keep operating. This benefits mine.

We've established ourselves as a company that do this kind of service and repair work quickly, efficiently and reliably. Additionally, expenditures for aftermarket activity are generally operating cost as opposed to capital expenditures. Therefore, customers allocate funds for these activities differently than they might for a new system. Contribution of this activity as a percentage of revenue fluctuates from quarter-to-quarter based on product mix and the timing of larger assistant deliveries. However, in fiscal 2026 aftermarket business accounted for about 60% of our total revenues.

Margins for this business also tend to be better than larger system sales that might attract discounts. Their installed base of semi products continues to expand with it comes the prospect for increased aftermarket activity. Additionally, we continue to ramp up activity at our newly expanded Hetsville facility. The additional floor space at this facility enables us to efficiently take on larger manufacturing and product repair projects. This increased capacity will be used to further support our existing Seamap products, newly developed products and services to third parties.

Now turning to our results. Baring technology product revenues for the fourth quarter and full year 2026 were $9.8 million and $40.9 million, respectively. Quarterly revenue was flat sequentially and slightly lower than our internal expectations due to the delivery of a few orders being pushed into fiscal 2027 but we continue to find ways to generate resilient results.

I'm pleased with our ability to navigate uncertainty within the market, and we believe MIND remains well positioned to capitalize the opportunities in future periods to stimulate order flow and generate sustainable results. We have a differentiated approach best-in-class suite of products and a unique aftermarket business that will continue to give us a competitive advantage and support our financial results for years to come.

Now I'll let Mark point you through our fourth quarter and full year financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. Revenues from Marine Technology product sales totaled approximately $9.8 million for the quarter [indiscernible] full year revenue amounted to approximately $40.9 million. As Rob mentioned, this was up both sequentially and when compared to the same quarter a year ago. The sequential and year-over-year increases are due primarily to higher stock-based compensation. Our research and development expense for the fourth quarter was approximately $389,000, which was down both sequentially and compared to the fourth quarter of fiscal 2025.

Consistent with prior periods, these costs were largely directed toward the development enhancement of our streamer systems and source controller offerings. Operating income for the fourth quarter and full year 2026 was approximately $78,000 and $2.9 million, respectively. Fourth quarter adjusted EBITDA was approximately $1.1 million and full year adjusted EBITDA was $5.3 million. Net loss for the fourth quarter was approximately $271,000 after income tax expense of $471,000. This resulted in net income for fiscal 2026 of approximately $750,000 after income tax expense of $2.2 million.

Our income tax expense results primarily from our operations in Singapore. As of January 31, 2026, we had significant working capital of approximately $37 million including $19.1 million of cash on hand. The company continues to maintain a clean, debt-free balance sheet with a simplified capital structure. We believe our solid footing significant liquidity and operational flexibility will allow us to make moves in the coming quarters that will enhance stockholder value in future periods.

I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. We're operating in a complicated market environment that has fostered uncertainty. In some ways, that uncertainty creates opportunity for us going forward. But for now, it has slowed customer decision-making and delayed order commitments for larger systems. Despite this temporary pause in order activity, the underlying fundamentals for the marine technology industry remain intact. The long-term pipeline of opportunities continues to be very positive. Our prospects are plentiful, and this presents compelling opportunities for mine to address demand, capitalize on new areas of focus within the market and deliver improved financial results.

We remain very well positioned for the future, and I'm optimistic that any near-term softness will abate in coming months. We remain focused on controlling what we can. In recent years, we've strategically structured the company so that we are operating lean and efficiently. This allows us to be more responsive to changing market conditions. As a reminder, it really doesn't take much to move our needle in a positive direction. As 1 or 2 large orders materialize, we have a very different outlook. We continue to drive technological innovation and expand our capabilities to address new opportunities. We are also constantly evaluating ways to repurpose our existing technology for new applications.

Given our current visibility, we expect our results for fiscal 2027 to be down when compared to fiscal 2026. Despite this view, we believe this will still be a positive year for mine, and we may grow in other ways that may not immediately present themselves in our financial results. We recognize, so it will be difficult to replicate the order volume that we've enjoyed over the past 2 years, given our recent customer discussions and a prevalent uncertainty. However, I believe we will be cash flow positive for the year even with lower revenue.

We've built a better, more resilient business with a solid foundation and simplified capital structure that is equipped to weather periods of reduced order activity. We've also meaningfully grown our installed base over the last few years, which lends itself to our aftermarket activity and provides a substantial stream of recurring revenue. We will use our enhanced liquidity to position the business for improved financial results is activity across our end market returns. For the last year or so, you've heard me talk about the needs for mine to add scale. We recognize that we are a small company and this presents challenges.

I firmly believe that we need to be bigger to realize our full potential and enhanced shareholder value. That being said, there are different ways we can achieve this growth. We can execute identified organic growth opportunities -- we can acquire assets or businesses that are similar to our existing business, we can combine with other organizations. These are all options that we are considering and actively pursuing. While we are motivated to add scale and we have ample liquidity to act quickly and efficiently should an opportunity arise, we will not jeopardize the immense progress that we've made on mind to chase an opportunity that does not fit with what we do. Our significant liquidity has broadened our opportunity set.

However, we intend to be very disciplined in our approach to our capital allocation. When to expect a return with the cost of capital. That brings me to our capital allocation strategy. The goal of this strategy is to add accretive scale and expand our offerings in order to enhance our value to our shareholders. I've outlined the various levers for growth that we have at our disposal. These include mergers and acquisitions, investment in organic growth opportunities, such as the expansion of the existing product lines and strategic alliances with other industry partners. These levers are intended to be tools that we can use to create or enhance value.

Filling on any of these or a combination thereof, as market conditions from it and the return on investment meets our threshold for value creation. Our view is that the marine technology industry is highly fragmented. This creates an opportunity for us to add products and services that fit mine's strategic capabilities and scale our business. We have a robust manufacturing footprint is capable of producing sophisticated, technologically diverse products. This makes mine a natural production partner or buyer for innovative technologies that can be sold alongside our existing suite products continue to evaluate a number of such opportunities.

We believe we're unique for a small public company. We have positive earnings and cash flow. We have no debt and a simple streamlined capital structure and no material contingent liabilities and do we have liquidity. We think this positions us well to weather any storm and take advantage of the opportunities ahead of us.

In closing, we remain committed to positioning mine for future success, taking steps to strengthen the company and have built a resilient platform with a solid foundation and a growing opportunity set. Our differentiated and market-leading suite of products gives us a competitive advantage as we partner with our customers to address various demand trends such as power generation, energy transition and subsea exploration.

Going forward, we intend to use our liquidity to augment our business through additional investments with a focus on developing the next generation of marine technology products to meet the evolving needs of our customers. We also plan to be active participants in the industry consolidation, whether that be adding product lines or something more transformative. These efforts will help us realize that meaningful financial improvement as market conditions normalize, which we expect to drive enhanced stockholder value.

With that, operator, I think we can open the call up for some questions.

[Operator Instructions] Our first question is from Ross Taylor with ARS Investment Partners.

Little concerned that I'm not following Tyson.

I'm not sure we can do it this way. .

Yes. I don't know if he's behind me in the queue, and therefore, I don't want to ask a question question Talk to us about what you see where the financing is coming from for your customers? You said you've seen kind of a push off a delay what do you think is really driving this? We're seeing a lot more interest in subsea mining. We're obviously seeing with the Strayer moves is highlighting the need for being able to detect mines and other items under water and things like that. I've read somewhere the Chinese have aggressively mapped around Guam, around Taiwan, around the Philippines and the like, and I would assume the U.S. Navy probably needs to do something similar.

Where is the capital coming from? Because you're seeing a pullback on your buyers and yes, it seems like the demand should be growing meaningfully given what's happening around the world right now.

I think that's right, Ross, in that -- I think what our customers have been doing -- the people have been buying from us recently, they have certainly, the pause last year in the energy markets or the uncertainty in the energy markets had an impact. And therefore, they were -- there were some M&A activity in the market as well. So we built the company who's were consolidating and frankly, looking to conserve cash just from a fiscal conservative basis. in talking to them now, they're seeing improvements in activity. For a while, they saw, again, their customers weren't placing orders. They weren't entering new projects. They're just being more cautious some of the uncertainty in the wind markets caused some of that. That seems to be returning a bit especially outside of North America.

So I think it was, again, a pause for them trying to be physically conservative and physically responsible, but they see that on a longer-term basis, there is that need. And that's the reason we think that as they see their pricing improve, they see their prospects improve, they're going to be coming back to us for the fixed and capacity. We see new entrants into the market some new vessels as we alluded to earlier, which is a bit unusual for these past few years. So again, I think longer term, it looks pretty darn positive. But if you go back to the energy side of it, ironically, the situation in the Middle East is probably a positive in that a lot of people think this is going to drive increased exploration activity outside of Middle eased, which is a positive for our customers and for us.

As it goes into the military and maritime security side, that has less direct impact on us today. that I think that is also starting to expand the opportunities for our technology being used more and more for ocean bottom survey and not just for exploration activity. It's tough to say when this hits but I think if you look from a macro standpoint, it's got to turn around -- does it happen in 2 months or 6 months or 9 months. I don't know the answer to that for sure. I don't think anyone does. But I think everyone I talked to in the industry is pretty bullish long term but cautious in the near term.

Okay. A couple of different things. Looking at -- you talked about generating having a year that's going to be somewhat under what you saw right now, last year, I assume that's assuming that you don't see any of the improvements in any of the things that are kind of prospects become backlog Correct. That's right. Is there you're talking about being able to generate free cash flow during the course of the year. Is -- am I correct in that assumption that you said you'd obviously be able to have EBITDA, but should we expect cash flow to be positive in the year?

We do expect that, yes.

Okay. And with your acquisition or your strategy to enhance value it strikes me as 1 of the natural things is finding a division of a public company or something in an essence, almost them using the mined platform as a way to get public into to gain value out of it, an acquisition it would effectively be able to pay for itself given its economics. Is that the type of thing that 1 of the things I think we should be looking to see out of you guys as we look ahead? And then also comment on -- because you mentioned the -- it sounds like some of what you think about doing is building for others. And how much -- what are the economics when you build for someone else as opposed to for yourself?

Sure. Let me take those kind of reverse order. We don't want to be a contract manufacturer. Those margins aren't very good historically. But if we can partner with someone and have more of an impact in more input into the technology itself, so we're bringing more to the table, if you will. That's the sort of thing we're looking for from a partnership standpoint, where we can sell to our customer base, produce out of our facilities, things like that. also looking at can we acquire technology or product lines from someone, that might entail actually acquiring an entity a company, maybe a 1 or 2 product company or a Mintia acquiring just the technology from someone.

So we're looking at all of those. But the key there from that standpoint is things that are close to what we do now that we can lever our existing capabilities and get those economies of scale and really drive the return on that. That's really important to us. We don't want to do something where we have to do a step out and replicate production facilities somewhere else. That's not the sort of thing we're looking for. The first point you raised, we are a, I think, a bit of a unicorn for small public companies.

As I've said in my comments, we forecast positive. We have no debt. We have a pristine capital structure and balance sheet. That enables us to do some things and I think makes us an attractive vehicle to for some entities to monetize what they have. Maybe there's a venture capital firm who has an investment, they'd like to monetize, and this is a way they could do that. So I think there are some opportunities there. That's the sort of thing that we're looking to do.

Yes. And that would fit with how I would a big part of what I'd be thinking, an acquisition that, as I said, basically pays for itself and you allow an exit strategy, but also a way of that entity perhaps going public. Okay. Exactly. Yes. Obviously, at this stage, difficult outlook as we push ahead. Can you talk about -- you've talked about having a number of these very large prospects. Could you talk a little bit or give us what is for you a very large prospect and how long a lead time you need to fill it?

Call it, $10 million plus is a large prospect. We've moved on several million, $6 million orders but $10 million is large for us. It's -- from receipt of order to delivery, call it, 16 to 24 weeks something like that. But frankly, the process is more -- when the bid is led until actually getting the award, that can be a longer cross time frame. So you can very well chase these things for a year, 1.5 years before you actually make delivery. I would not expect that we would win and deliver a project of that size in this fiscal year, possible but have to happen pretty quickly.

Okay. So that is you could win it this year but it's -- given the other factors, it's unlikely that you would be able to fulfill it fully this year.

Right. Not impossible but unlikely at this stage. .

Okay. And at what price in the stock do you actually consider the company itself to be a worthy investment.

I'm not going to touch that. That's something we think about -- and certainly, we said publicly -- if our stock is the best use of capital, that will be our use of capital. But I don't think I want to touch for that point not being.

Ross. Our next question is from Tyson Bauer with KC Capital.

I don't think the operator like I don't think the operator like me when I tried my Star 1. Interesting that you had talked about new vessels possibly for government entities that could be up to $10 million. Would that be more scientific or what portion of a government structure would that be geared toward. And that $10 million number seems rather large given that 40% of your overall revenues in fiscal '26, $16 million of that was system sales. One order could account for 60% of what you did the prior fiscal year.

That's right. So to answer your direct question, this is more scientific research type institutes that we're looking at. That's the type of vessel to talk of the entity that's involved, and there are multipurpose vessels do lots of different things. So we're delivering lots of different stuff beyond just standard streamer systems and gun-control systems for these things. But yes, you're exactly right. Those are large. And as I said in my comments, it doesn't take a lot to move our needle.

Were you hopeful that you may have something in place before this call .

I'm always hopeful Tyson. I didn't expect it, though. I mean, these things do take some time. But again, they happen when they happen.

But there's something in the hopper. You don't know the ultimate outcome, but there's something active right now that may or may not material.

There are more than 1 opportunities at here.

Okay. Just going to follow a little bit out of order here, but given Ross has got to go first. The deals or potential deals, how important is your tax loss forward asset in consideration as far as the payback of doing a deal or somebody with a related business being able to utilize that.

Yes. It really depends on the nature of the counterparty and the structure of the deal but it could be meaningful in that you could have a tax-neutral transaction fairly easily, I think. But look, as I think you'll appreciate that's a complex situation, which may or may not work out but that potentially could have a significant value.

Okay. Is the fact that you are U.S. domiciled a benefit in some of these assets that may want to have that location or that as opposed maybe a foreign entity that may want to enter the U.S. market.

I'd think probably yes for a couple of reasons. One, you're seeing to the U.S. capital markets are available to us. So that's attractive to people as opposed to other capital markets. From an export or control standpoint, it's probably a positive overall. So I think it's a net positive for sure.

Okay. In the quarter of that $9.8 million, what percentage of that was part services repair versus a system delivery. Do you remember the top of your head?

So it would have been probably 55%, 60% aftermarket. We have a number in front of it in that ballpark.

So you're trending around that $6 million, $6.5 million per quarter. Obviously, you can have some lumpiness of that recurring base revenue as we go forward.

Yes, we've seen for last year, last really 5 quarters, we've seen that trend really start to pick up. So I think that's right. Now of course, let me give the caveat. They can always switch a bit. I mean spares orders, they can be lumpy, too. So that can switch. But yes, that's definitely been trending up. And it makes sense, installed base has been going up.

Okay. And given the comments on the -- before the Q&A, it sounds like $4 million or $5 million may have got pushed into fiscal '21.

Yes, that's about right. They're half of that order, that large order we got in the fourth quarter did not get out the door. And we hope to want that we'd be able to just -- it didn't come in soon enough and lots of factors as to win the customer could pick it up and things like that. So we just not get it out the door.

So the current backlog that you disclosed is that made up entirely of system orders.

Not entirely. There's some aftermarket step in the table. Again, I don't have the breakdown in front of me, but it's a combination.

Okay. SG&A, obviously, we had stock comp of $714,000 in the quarter. You typically have some additional professional fees to start the year. There's a level of closer to 2 million going to be a good modeling number as we go forward?

Probably ballpark, again, with some variations from quarter-to-quarter. I think the stock-based comp is going to continue for a while to start to trend off. I don't have those -- the trend off in front here right now but it will trend off over the coming quarters. We did have some unusual things last year, early in the year, which skewed the full year amounts, some tax analysis, some franchise tax adjustments, things like that, which won't be recurring. So I think if you factor out the stock-based comp, we will see things kind of stabilize and maybe trend down just a bit.

Okay. Order timing, typically, capital budgets are set at the end of years or calendar years. then are gradually released the following year, whether it's in the beginning of the year, spring or early summer. But you typically have an idea, your customers have an idea of the ultimate end customers' capital budgets. Are those -- is that what gives you cause of concern? Or is it that the capital budgets have been allocated or but they're not appropriated and you don't know if they'll get fully appropriated as we go through this fiscal year.

Well, I think I would caution that the budgets are set in stone and then executed on. I think in this environment, you see things change during the course of the year. So I think capital budgets can go up or down. We certainly saw the win last year during the year. So I think they can go both directions. Also as we're dealing with some of these governmental agencies, they work on a different calendar than we do then a natural calendar year. So I would be cautious to be too much into that.

Having said that, I think the general trend I'm seeing is a an uptick in inquiries and interest in additional equipment. What's uncertain to us right now, we're trying to emphasize is how quickly those opportunities materialize. Does it happen next month? Or is it 9 months down the road, Hard to say right now. So I think everyone is being cautious still. But I think they're making some preparations to maybe turn things loose it when things are a bit more certain.

One thing I find interest when you talked about the possibility of new vessels is, given your competitive dominance in certain niches of the industry, new vessels require long lead times, dry dock space, those things, and if you're the only game in town for some of these technologies or systems for those vessels to procure, it's almost a function of when, not if for those orders.

Am I framing that scenario correct that?

To a point, you are correct that there are certain aspects of the technology that are unique to us. So we're going to get that business almost certainly. There are other parts of those projects that we pursue that we do have some competition on. So those aren't a foregone conclusion. I think also, you have to understand, especially with the foreign entities, governmental agencies, there sometimes there are contractual requirements that we may not find palatable. So we may walk away from an opportunity because we just don't like the terms. They're too onerous. So that sort of thing can happen.

So I mean, you're right in that to some degree, if the project happens, we're going to get it but not to the same magnitude of the $10 million order necessarily.

Okay. And you're able to work with the CCP or are you working with intermediaries that the ultimate end customer doesn't really impact where your product ultimately ends up.

Okay. Ask that another way. I'm not sure I understand what you're saying.

Do you work directly with Chinese customers? Or do you have to work to...

There's some things we can't sell to the Chinese, and there are some things that have to be -- we have to limit the capabilities of what we sell to the Chinese other things, there are no limits at all. But yes, we deal directly with Chinese. .

Okay. And the last question, probably the most important question for shareholders is how do we keep 27 for becoming a loss year for shareholders -- now you may have expectations as of today of a lower fiscal 2017 compared to fiscal '20 -- or 26 on financials. But if you grow the backlog throughout the year or if you do other activities, that are favorable for shareholder value. Obviously, the investor community will look forward which would give us a return and a reason to basically weigh out this pause that you're seeing currently. Are you seeing that scenario where yes, we're not saying that fiscal 2017 is a lost year for our shareholders. We are, at this point, saying that financials look like they'll be down. But as we progress through the year, you're going to see that our value proposition is actually growing as we transverse throughout fiscal '27.

Tyson that is absolutely correct.

I said that in too much detail. You didn't have to provide any color.

No, exactly right. I mean we tried to allude to that in that -- there may be some things happen that just don't reflect themselves in the financials right away. But I think there are lots of opportunities for us to create value, and that's what we're all about.

zlz

[Operator Instructions] We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Okay. I'd like to thank everyone for joining us today and look forward to talking to you again at the end of our first quarter here in a few weeks. Thanks very much.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Greetings, and welcome to the MIND Technology's Fiscal 2026 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Zach Vaughan. Thank you. You may begin.

Thank you, operator. Good morning, and welcome to the MIND Technology's Fiscal 2026 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, 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 17. 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, December 10, 2025, and therefore, you are advised that the 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 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.

Okay. Thanks, Zach, and thank all of you for joining us today. 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.

MIND results in the third quarter were in line with our expectations. Although Seamap revenues moderated slightly from the strong second quarter, we believe we are positioned for a positive finish to fiscal 2026. We're also pleased to deliver another quarter of profitable results. We believe this demonstrates our consistent execution and the benefits of our cost structure optimization and production efficiencies.

Our business continues to generate resilient results in an uncertain market and we're finding ways to capitalize on pockets of demand. This bodes well for the balance of this fiscal year. The growing contributions from our aftermarket activities are also providing a stable and recurring revenue stream that is supporting our overall results. Now this component of our business has become increasingly important. I'll touch on this in more detail shortly. Overall, MIND remains positioned for growth, favorable financial results and profitability in the coming periods.

Our backlog of firm orders as of October 31, 2025, was approximately $7.2 million compared to $12.8 million as of July 31, 2025, and approximately $26.2 million as of October 31, 2024. However, subsequent to the end of the quarter, we received some long anticipated orders totaling about $9.5 million. We expect these new orders to have a positive impact on our fourth quarter results.

While it's not uncommon to see positives in order activity throughout the year, we are finding that many customers regardless of industry or end use, are taking a wait-and-see approach to larger system orders. Based on discussions with customers and industry commentary, we believe the long-term outlook in the seismic exploration industry is quite bullish. We think the recent lull in order activity is a temporary reaction to geopolitical and economic uncertainty. I think most industry observers would agree with the long-term outlook for marine exploration is very positive and an uptick in activity is inevitable.

Now let me also remind you that for an order to be included in our backlog, we must have a purchase order or a signed contract in hand. Our pipeline of potential orders remain solid. While some customers are delaying their commitments until they have a better visibility of geopolitical and economic factors, we believe we will continue to convert these opportunities into firm orders.

Our backlog and pipeline of potential orders consist primarily of our 3 main product lines: GunLink source controllers, BuoyLink positioning systems and SeaLink streamer systems. However, our backlog also contains some aftermarket orders. Together, these serve as a foundation for our business. As a whole, our Seamap business continues to enjoy a strong market position, even a dominant position in some cases. We've worked hard to carve out a niche within the marine technology industry and have established strong relationships with our customers. We also pride ourselves in finding innovate ways to capture demand.

As I mentioned earlier, our aftermarket business continues to serve as a meaningful contributor to our results. This aftermarket activity consists of spare parts, repair, service and other support activities. Now while this activity is influenced to some degree by the general activity level within the industry, it is more recurring in nature than orders for new systems. Additionally, expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. Therefore, they come from a different budget bucket from -- for our customers.

As I noted, customers may be delaying their purchase decisions for new orders and systems. However, their existing equipment will need maintenance. Products that are currently deployed will need repair and service to keep operating and MIND has established itself as a company that can do this quickly, efficiently and reliably. The contribution of this activity as a percentage of revenue fluctuates from quarter-to-quarter based on product mix and the timing of larger system deliveries.

However, for the first 9 months of this fiscal year, aftermarket revenues accounted for about 64% of our total revenues. Margins for this business also tend to be better than larger system sales that might attract discounts. As our installed base of Seamap products continues to expand with it comes a prospect for increased aftermarket activity.

Additionally, we continue to ramp up activity at our newly expanded Hunstville facility. The additional for space at this facility enables us to efficiently take on significantly larger manufacturing and product repair projects. This increased capacity will be used to further support our existing Seamap &I products, newly developed products and services to third parties.

Now turning to our results. Marine Technology product revenues for the third quarter of fiscal 2026 were $9.7 million. Although revenue was down slightly sequentially, we continue to be profitable and remain on track to achieve our fiscal 2026 goals. I'll touch on our outlook in a moment, but I'm pleased with our ability to navigate uncertainty within the market to generate resilient results.

We will continue to capitalize on opportunity as it presents itself to stimulate order flow and generate sustainable results in future periods. I continue to believe that we have a differentiated approach and best-in-class suite of products that will give us a competitive advantage. To maintain this edge, we will continue making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers.

Now at this point, I'll let Mark walk you through our third quarter financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. Revenues from Marine Technology product sales totaled $9.7 million for the quarter. Our existing backlog, contributions from our aftermarket business, and current visibility give us confidence that we will achieve improved results in the fourth quarter.

Although customer decision-making has slowed, as Rob mentioned earlier, overall interest and engagement remains positive. Third quarter gross profit was $4.5 million. This represents a gross profit margin of 47% for the quarter compared to 45% for the same quarter a year ago. The year-over-year margin improvement was primarily attributable to product mix, which included a greater portion of spare parts and other aftermarket activity.

We also continue to benefit from our cost structure optimization, which includes greater production efficiencies, and we expect these efforts to help maintain favorable gross profit and margins in future quarters.

Our general and administrative expenses were approximately $3 million for the third quarter of fiscal 2026. This was down sequentially but up slightly compared to the same quarter a year ago, with the year-over-year increase primarily due to higher stock-based compensation.

Our research and development expense for the third quarter was $506,000, which was down slightly compared to the same quarter a year ago. Consistent with prior periods, these costs were largely directed toward the development enhancement of our streamer systems and source controller offerings.

Operating income for the third quarter was approximately $774,000 when compared to operating income of $1.9 million in the same quarter a year ago.

Third quarter adjusted EBITDA was approximately $1.3 million compared to adjusted EBITDA of $2 million in the third quarter of fiscal 2025. Net income for the third quarter was $62,000 compared to net income of $1.3 million in the same quarter a year ago.

Our effective tax rate for the third quarter increased significantly both sequentially and year-over-year due to a combination of discrete tax expense items, primarily return to provision adjustments recorded by our Singapore entity and the mix of net income generated in jurisdictions in which we record tax expense, mainly Singapore, the net losses incurred in jurisdictions in which we do not recognize a tax benefit due to valuation allowances on our deferred tax assets, mainly the U.S. and the United Kingdom. The impact of discrete tax items and unbenefited net losses on our effective tax rate is greater when our pretax income is lower.

As of October 31, 2025, we had significant working capital of approximately $35.8 million, including $19.4 million of cash on hand. Approximately $11 million of our cash at quarter end was provided by share issuances through our ATM program during the quarter. The company continues to maintain a clean, debt-free balance sheet with a simplified capital structure. We continue to believe our solid footing and flexibility will help us enhance stockholder value in future periods.

I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. MIND remains very well positioned for future success. Our prospects are plentiful. As we look at today, the long-term pipeline of opportunities continues to be very positive. That being said, our near-term visibility is a bit more limited than it has been in recent periods. As we've discussed, there are some current uncertainties in the market that has caused customers to delay purchase decisions and capital commitments. However, we view these as temporary positive.

Commentary from numerous companies for marine exploration exposure have echoed this sentiment. For the most part, the effect on our business to date have been minimal and impacts to our backlog have been delayed relative to others. I personally believe that geopolitical risk is a major contributor to the prevalent uncertainty today. The global economic environment continues to evolve. Tariffs and complex are creating unease. There's still plenty of positive tailwinds for our business, and we expect this pause in order activity to be temporary and resolve in the coming months. I expect to have a clear picture of how fiscal 2027 will look on our next call.

It's times of uncertainty like this that serve as a great reminder of just how well positioned we are relative to previous cycles. We have a streamlined footprint, strong balance sheet and simplified capital structure. We're operating lean and efficiently, and it really doesn't take much to move our needle in a positive direction. As 1 or 2 large orders materialize, we have a very different outlook.

Our marine technology products continue to penetrate a variety of industries and end markets, and our pipeline of future opportunities remains robust. Additionally, our technological innovation allows us to expand our capabilities and address new opportunities. We are consistently evaluating unique ways to repurchase our existing technology for new applications. We're also looking at ways to expand our product offerings.

Given our visibility, we expected to conclude fiscal 2026 on a positive note. We have line of sight to orders that we anticipate delivering before year-end, barring unforeseen circumstances. We expect improved financial results, which will continue our trend of profitability. There's always a chance that timing issues or customer delivery delays could impact future results. However, I continue to believe that our results for 2026 will look similar to fiscal 2025, and we expect to be profitable for fiscal 2026 as a whole.

Going forward, as a part of our capital allocation strategy, we have several levers we can pull to add accretive scale, expand our offerings and enhance value for our stockholders. These including mergers and acquisitions and investments in organic growth opportunities such as expansion of our existing product lines and strategic alliances with industry partners. We intend to be very disciplined in our approach to capital allocation, weighing the expected return with the cost of capital.

Now let me take a moment to address the recent sales of stock to our ATM program that Mark mentioned. As a result of our pricing approach and strategic planning, we have a framework in place to quickly and efficiently strengthen our balance sheet and enhance liquidity during the third quarter. Our stock price experienced a positive fluctuation, and we were given the opportunity to raise capital at levels that we deemed appropriate without negatively impacting our existing stockholders.

In total, we raised approximately $11 million prior to quarter end. This additional liquidity gives us immense flexibility and opportunity. As a result, we have broadened our opportunity set as it pertains to acquisitions of businesses or product lines to help grow our existing business. We will continue to evaluate the potential impacts of any ATM activities in the future with the primary focus of preserving stockholder value for years to come. We remain committed to positioning MIND for success and strengthening it for the future. We continue to evaluate all suitable opportunities with the goal of maintaining financial flexibility, preserving our balance sheet, adding scale, expanding our offerings and growing existing product lines. All of these address our overall objective of increasing stockholder value.

To conclude today's call, I'd like to reiterate our long-term optimism for the future. Despite our limited near-term visibility, our long-term trajectory is still intact. The underlying fundamentals associated with various macro demand trends such as power generation, energy transition, defense and offshore energy exploration are positive for the marine survey exploration and security entries and more specifically, MIND's technology. I'm proud of the platform we've built. And our differentiated and market-leading suite of products continue to position us favorably.

We are pursuing several new opportunities within our current and future markets, which I expect to bear fruit. I look forward to sharing updates on our outlook and other strategic actions in the coming periods as we strive to enhance stockholder value.

And with that, operator, I think we can open the call up for some questions.

[Operator Instructions] Our first question comes from the line of Tyson Bauer with KC Capital.

Before we get to the ATM questions, your confidence in your fiscal Q4, does that in part we got that recurring base around $6 million per quarter. And even though we just heard the announcement on the orders, these are orders we've talked about for a couple of quarters. Does that imply that they were already in process? So the turnaround for delivery is going to be much quicker than maybe a typical order that you might get that would require 2, 3 quarters before you actually deliver those?

That's exactly the case, Tyson. We've expected these orders for some time. As we said, we were working with the customer very closely to finalize configuration of the system itself. But we have been building these systems. Actually, I'm in Singapore right now, as a matter of fact. And I've actually seen the systems on the bench being worked on. So we very much have been working on these.

And yes, the aftermarket business, kind of the base level does have an impact on our visibility and our outlook for the quarter. What the exact amount is each quarter will vary from time to time, but it is a growing piece of our business, but that certainly does help give us confidence for what we see in the fourth quarter.

If we look at past quarters, such as Q1 of fiscal '25, similar revenue, similar product mix. This go around, you had a 300 basis point improvement in your gross margin. So you've done well in that part of the business, obviously offset a little bit by a 10% increase on the SG&A due to stock-based comp. When we see the system sales included in those numbers where it makes up a bigger part of that mix, it appears the contribution margin of those large systems is 60% roughly or if not greater. Is that what you're able to bid those projects at? Or is that because we're seeing some of that fixed cost absorption that allows that contribution margin to be so robust?

I think it's more than 4% fixed overhead more than anything. A large system, as you might imagine, we will be a bit more aggressive on pricing sometimes. So therefore, you might see a larger discount than you do on aftermarket business. But certainly, as we have greater volume, we're absorbing more fixed costs. So that's a big contributor. That's the biggest contributor, I should say.

Okay. And you talked about a lull period, orders slowed. Give us little -- you talked about geopolitical risk, given the leadership in the globe right now, it doesn't seem like that's going to abate anytime soon. What gives you that confidence that lull period ends? And two, of the pipeline of orders that you do have, is it more from existing past customers? Or are you seeing an influx of new customers showing interest in your product lines?

Let me answer the last first. It's both, Tyson. We certainly have a number of new prospects we're looking at, people that we haven't sold to in the past necessarily or haven't sold to on a regular basis, I should say. But at the same time, we are seeing recurring revenues from existing customers as well. So it's really a mix. But I will say, I am kind of -- I'm encouraged by we're seeing some new customers, some new opportunities that we haven't seen in the past. So that's very encouraging to me.

Okay. Now let's get to the ATM. Backing into the numbers, it looks like you sold about 1 million shares at $11 less brokerage fees at the end of the quarter. The 2 weeks subsequent to the quarter, the stock price runs up to 14%. I would assume if you participated, you would have let us know that and probably by ending the ATM, allow the stock to get up to 14 on that side of it. Where -- did you see something that you are targeting as a potential event? Or is this more of a case of just getting a buffer to your net working capital?

I think it's more of the latter. Certainly, there are things that we are looking at right now, but I can't say there's a specific event that we were looking to finance. We just saw the value proposition looks positive. The stock was moving in the right direction and took the opportunity to put a little working capital on the balance sheet and give us the opportunity to move quickly should we be able to bring a couple of these opportunities to fruition.

Does that imply that if the share price got back in that range, you would use that as an opportunity again? Or are you pretty well set with where you are now?

Not necessarily. I think I don't want to make a comment one or another as to what we might or might not do. I think I'll just leave it at if we see the value at what we think given the current circumstances are appropriate, we might go back in the market, but not necessarily.

Okay. And you talked about the Horizon long term still looks good. What creates that step-up function for the company where we're not in that $8 million to $14 million a quarter type outlook depending on the schedules and deliveries, where we get that to that $12 million to $20 million a quarter going forward. What's it going to take to step it up? Is it going to be a potential M&A type situation or affiliation? Or is there something a new product or something that allows us to step up to show that growth for the company?

Yes. Tyson I think that's really -- you go back to what we said earlier this year as to our approach to try to increase our scale. So that's all we need to do to get to that position. And it could be any of those things. I think most likely, it's -- we can look at adding new offerings to our quiver, if you will, new products maybe addressing some new markets. So it doesn't necessarily have to be an M&A where we go and acquire a product line or another company or something like that. There are some organic things within our current technology that we think we can add to, which will give us that opportunity. But it's adding scale is the bottom line. And there are different ways to get there.

[Operator Instructions] Our next question comes from the line of [ Mike Mitcham ] with NCR Corporation.

Could you expand a little bit on the GWL collaboration is that meant to be an aftermarket servicing? Or is that more of a product line expansion or whatever you can share would be great.

Sure. That's really more of a product line expansion. I don't want to get too detailed as to that offering just yet. We're early days in it, and there's some competitive reasons not to get too detailed about it, but it is an expansion of our product line and partnering with someone else in the industry. So that's a great example of what I was alluding to earlier with Tyson's question, as something we can add to our quiver and therefore, help increase our scale.

Our next question comes from the line of Ross Taylor with ARS Investment Partners.

First, I just want to confirm, so you had done no ATM action in the current quarter, correct?

That's correct. We've been in a blackout. The only -- let me clarify that. There was the trades on the last day of the quarter, the past quarter, there were, I don't know, 60,000, 65,000 shares that traded that didn't settle until the current quarter. And so that will be reported in the current quarter just because that's the way the accounting rules work. But no, we have been in blackout since the end of the quarter and have not been active in the market.

But when you're talking about your 1 million shares and $11 million raise, you're including what you did on the last day, correct?

We are not. No, we are not. So there's no -- about 60,000, 65,000. No, just the accounting rules don't let you do that. This says you have to look at the settlement date, which I don't agree with, but I don't make the rules.

Okay. So we got the math from that now. Okay. A couple of things. One, you talked about the ability to do a quick turnaround on the recent orders that you got after the end of the prior quarter. Are the costs for building those systems. It sounds like you've already started building some of them. You might even have some of them already built. Are those costs when we get the Q, will those costs actually be in the Q anywhere?

They will be an inventory. Anything we spent to date on those orders will be in inventory.

Okay. And what kind of cost are we looking at? So how much of inventory should we assume is tied into orders that will be going out this quarter?

Oh gosh. Ross, I'm not sure I can answer that very accurately. There's $10 millions of orders. Just to make the math easy, the cost is half of that. And so we've spent some amount of that. But I wouldn't get too worried about trying to figure those numbers out. We always are carrying some inventory. We always are carrying some for current future orders. So I think if you try to chase that down the road hole too much, it's not going to tell you very much, frankly.

Okay. I'm trying to get the idea of what cash -- what we should be looking at for free cash flow. And it would seem that you should have a pretty strong free cash flow quarter given that you've already put some of the costs in the inventory?

Okay. I understood where you're heading on that now. So yes, you're right about that. Just the issue is when do we actually deliver that and therefore, when do we actually get paid for it. So I could deliver it on January 20 and not get paid until February. So it doesn't show up in the free cash flow in that quarter. So it kind of works both ways on it, but I understand your question. So yes, we have spent a great deal of the cost already and therefore, would not be a cash outlay in the quarter.

Okay, cool. Now it looks like you've talked about your opportunities. You obviously appear to be trying to find a way to ship or create income in the U.S. where you have tax loss carryforwards. Can you give an idea of kind of what type of magnitude, what type of expense? How do you value something if you're going to -- if you want to build that, how much of it can you effectively greenfield, you have your new expanded facility? How should we see run through that on an annual basis? Because it does sound like what you're trying to do is become -- you've got that tax asset and you're trying to find a way to turn that into value.

Yes, you're right about that. And expanding the wholesale facility is certainly part of that strategy. The majority of our revenues have been out of Singapore historically. That's going to continue to be the case. So we're not going to start creating half of revenue in the U.S., all of a sudden. But if we can increase that to $3 million, $4 million, $5 million, $10 million a year out of the U.S. that can have a big impact on that tax rate. So that's what we're trying to do.

So just to give you a sense of magnitude, again, it's not going to be half our revenue, but it could be a significant portion going forward. And as we look at opportunities beyond what we've done in Huntsville and expanding that facility, we'll continue to evaluate that, and that's just part of our economics and looking at new opportunities.

Okay. And touching on something Tyson asked on the 661 and kind of maintenance-type work that you guys -- recurring work you guys are doing. Is that -- is that a safe run rate on a quarterly basis effectively going forward, should we assume that how does it grow as your systems in the market grow?

Yes. I mean, I'm hesitant to put a dollar value on that because it does fluctuate from time to time, but it certainly is a growing percentage of our business as we've demonstrated. It just grows as we have more stuff out there. Everything we have out in the field needs to be serviced. Does activity within the industry have some impact? Sure. If people aren't using their equipment, it doesn't work out as much. If they're using it more, it wears out more quickly. So that does have an impact.

But the important thing in my mind is it's not a capital expenditure decision. Our customers are bought the stuff to use it. So they're out trying to generate revenue. So by and large, if they bought it, they're using it. And so that it becomes more and more recurring for us. So just as we sell more stuff, that's going to layer on over time. So I don't see that going down over time. I see it continue to increase incrementally.

Okay. And lastly, should we be looking at expecting your operating profit margin to push back up towards levels you were at some of your prior quarters? This quarter sets up -- it sounds like it sets up to be a strong quarter. You've got a lot of business that you got some systems business that should, I would think, allow you to push pretty well into the fixed cost structure. The last quarter, I have to say a little with the net profit margin. So I'm wondering if we're going to see it recover strongly in the current quarter.

Well, the gross profit were 47% in the quarter. So I mean, gross profit is going in the right direction. Operating profit, top line impacts that. So we have some fixed G&A type costs that don't get absorbed as much. So certainly, as we have a better top line, we're going to see improvement there. But as Mark said, I think, in his comments, the -- a big part of the increase in the G&A line was stock-based compensation, which is a noncash item, obviously. And so that's really otherwise, it's pretty flat from an excellent standpoint.

Well I'm excited to see what you can do this quarter. I'm hopeful that you will stay off the ATM for a bit until you find a way to spend it to make back that money. I understand you want U.S. liquidity, but at the same time, I think shareholders would love to see you actually -- would love to see that capital deployed in the way that's going to be adding to value for the company. So other than that, that's what I...

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Capps for any final comments.

Thanks, everyone, for joining us this morning. I appreciate your time and look forward to visiting with you again as we report our fourth quarter in the new year. Thank you very much.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to MIND Technology's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Zach Vaughan. Thank you. Mr. Vaughan. You may begin.

Thank you, operator. Good morning, and welcome to MIND Technology's Fiscal 2026 Second 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 September 17. 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, September 10, 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 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 financial 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 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.

Thanks, Zach, and thank you all for joining us today. 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.

MIND delivered strong results for the second quarter that were in line with our expectations. We were able to get back on track and return to profitability after certain delivery delays in the first quarter. We generated increased second quarter Seamap revenues, driven by system sales and the growing contributions from our aftermarket activities, which I'll touch on in more detail shortly.

Our business continues to operate efficiently, and our execution is generating resilient results. Despite some economic uncertainty, we are finding ways to capitalize on pockets of demand, and our near-term visibility bodes well for the balance of this fiscal year. MIND remains strategically positioned for growth, favorable financial results and continued profitability in the coming periods.

Our backlog of firm orders as of July 31, 2025, was approximately $12.8 million, compared to $21.1 million as of April 30, 2025, and approximately $26 million as of July 31, 2024. Now, I'll remind you that it's not uncommon to see positives in order activity throughout the year, especially during the summer months, and more specifically, our second quarter. Therefore, this lower sequential backlog is not unexpected after the substantial deliveries we made this quarter.

Let me also remind you that for an order to be included in our backlog, we must have a purchase order or a signed contract in hand. There are a number of pending orders in various stages that we are highly confident in. Let me give you a little color on that. There are 2 orders in particular, totaling about $10 million that we believe are imminent. We've been in almost constant contact with this customer finalizing technical specifications, which is necessary before the formal purchase orders are issued. These orders are not in our backlog, but we are highly confident that they will be received soon.

Our pipeline of potential orders remain strong. We believe we will continue to convert these into firm orders. Within our backlog, our orders for MIND is 3 main product lines: GunLink source controllers, BuoyLink positioning systems and SeaLink streamer systems. All 3 of these product lines provide the foundation for our business and will continue to drive our financial results going forward. As a whole, our Seamap business continues to enjoy a strong market position in each of its products, even a dominant position in some cases.

As I mentioned earlier, another component that has meaningfully contributed to our improved financial results is our aftermarket business. This consists of spare parts, repair, service and other support activities. Contribution as a percentage of revenue fluctuates from quarter-to-quarter based on product mix and the timing of larger system deliveries. However, in the first 6 months of this fiscal year, aftermarket revenue accounted for about 68% of our total revenues.

I'm pleased that our aftermarket activity has continued to meaningfully support revenue. Additionally, this often carries higher margins since these orders normally do not attract discounts as might a full system order.

As our installed base of Seamap products continues to expand, with it comes the prospect for increased aftermarket activity. Now, to address this growing aftermarket opportunity, and as I highlighted last quarter, we recently expanded our manufacturing and repair facility in Huntsville, Texas. This expansion provides us with additional floor space and other enhancements that will allow our MIND Maritime Acoustics unit to efficiently take on significantly larger manufacturing and product repair projects from that location. This increased capacity will be used to further support our existing Seamap products, newly developed products and services to third parties.

Now, turning to our results. Marine Technology product revenues for the second quarter of fiscal 2026 were $13.6 million. This was a healthy improvement from the same quarter last year. And despite the noise from the first quarter, we remain on track to achieve our fiscal 2026 goals. I'll touch on our outlook in a moment, but I'm pleased with our ability to navigate uncertainty within the market to generate favorable results.

We will continue to capitalize on opportunity as it presents itself to stimulate order flow and generate improved returns in future periods. Although we are pleased with our results for the second quarter and maintain our near-term optimism, the current market and global economic environment remain impacted by various macro uncertainties that are limiting visibility into next year.

General market conditions within the marine technology space continued to be good. However, at this stage, some customers are taking a more wait and see approach. This has caused some delays in purchase commitments. Despite this limited visibility, we remain encouraged by the favorable long-term market dynamics within the marine technology industry and expect customers to firm up their calendar 2026 plans in the coming months.

I continue to believe that we have a differentiated approach and best-in-class suite of products that will give us a competitive advantage. To maintain this competitive edge, we will continue making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers.

Now, I'll let Mark walk you through our second quarter financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. As Rob mentioned earlier, revenues from marine technology product sales totaled $13.6 million for the quarter, which was up approximately 35% from the same period a year ago. We are continuing to see strength in all our key markets, and the current favorable customer demand environment and our backlog give us confidence for solid results in the second half of fiscal 2026.

Second quarter gross profit was $6.8 million. This represents a gross profit margin of 50% for the quarter. These metrics improved both sequentially and year-over-year due primarily to product mix, which included a greater proportion of spare parts and other aftermarket activity.

Additionally, higher revenue in the quarter helped absorb overhead costs. We also continue to benefit from our cost structure optimization, which includes greater production efficiencies, and we expect these efforts to help maintain favorable gross profit and margins in future quarters.

Our general and administrative expenses were approximately $3.6 million for the second quarter fiscal 2026. 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, such as incentive and stock-based compensation.

Our research and development expense for the second quarter was $311,000, which was down slightly compared to the same quarter a year ago. Consistent with prior periods, these costs were largely directed toward the development and enhancement of our streamer and source controller arm.

Operating income for the second quarter was approximately $2.7 million, which represents an increase of approximately 86% when compared to operating income of $1.4 million in the same quarter a year ago. Second quarter adjusted EBITDA was approximately $3.1 million compared to adjusted EBITDA of $1.8 million in the second quarter a year ago.

Net income for the second quarter was approximately $1.9 million compared to net income of $798,000 in the same quarter a year ago. As of July 31, 2025, we had working capital of approximately $25.1 million, including $7.8 million of cash on hand. Liquidity is impacted by the timing of receipts and expenditures as well as our operational requirements, such as acquiring inventory and executing on our backlog of orders.

The company continues to maintain clean, debt-free balance sheet with a simplified capital structure. We continue to believe our solid footing and flexibility will help us enhance stockholder value in future periods.

I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. MIND remains well positioned for long-term success, and we are focused on enhancing and maximizing stockholder value. We've taken necessary steps to strategically position the company to realize its full potential. We intend to evaluate all suitable opportunities with the goal of maintaining financial flexibility, preserving our balance sheet, adding scale, expanding offerings and growing existing product lines. This proactive approach should enable us to strengthen MIND and improve its standing within the market for the benefit of all stockholders.

Operationally, we have a streamlined footprint, but our technological innovation allows us to expand our capabilities and address new opportunities. We are constantly evaluating unique ways to repurpose our existing technology for new applications. I'm excited to chase these new opportunities in coming periods. We look forward to providing an update as we strive for growth.

Given our current visibility, we remain bullish on the balance of this fiscal year. Customer interest and engagement related to our Seamap product lines remain steady. However, the prevalent uncertainty within the market has slowed some customer decision-making for the next year. Despite this, the current strength of our existing backlog and pipeline of orders gives us optimism with favorable financial performance in the coming quarters. We expect customers to solidify their plans for next year in the coming months, and I look forward to sharing updates as our longer-term pipeline takes shape.

Now, let me take a moment to address our recent actions to establish an at-the-market, or ATM, program and the stock buyback program. I know some of you have questioned these steps or at least the timing of the steps. We believe that these preparatory actions are entirely consistent with and supportive of our stated objective of enhancing stockholder value by whatever remains available.

The ATM facility enables us to raise capital if and when we believe circumstances dictate and in amounts we think appropriate. By having the program in place in advance, we can act quickly and efficiently to take advantage of opportunities. These opportunities could include acquisitions of businesses or product lines to help grow our business. We intend to be very disciplined in our approach to this, weighing the expected return with the cost of capital.

Cost of additional capital, essentially the price of our stock at the time, will always be an important consideration. Conversely, market conditions and our view of the prospects for our business might indicate that buying our own stock is the best use of our capital. By establishing the buyback program now, we are able to react quickly and efficiently should circumstances dictate.

There's always a chance that timing issues or customer delivery delays, like the ones we experienced earlier this year, could impact our results in any given period. However, our current belief is that our results for fiscal 2026 will look similar to that of fiscal 2025.

Our marine technology products continue to penetrate a variety of industries and markets. We believe our backlog of firm orders and the pipeline of pending orders and other prospects are reflective of the significant demand and market adoption of our product lines.

As a result, we have line of sight that gives us confidence for continued favorable financial results in the near future. Barring any unforeseen circumstances, we expect to achieve positive adjusted EBITDA and profitability in each of the remaining quarters of fiscal 2026 and on a full year basis.

Looking forward, we are encouraged by the setup for the back half of this year. With a solid existing backlog and pipeline of pending and highly competent orders, that will prove advantageous, as we aim to deliver consistently favorable financial results. We are also pursuing several new opportunities within our current and future markets, which I'm confident will bear fruit. We will remain focused on controlling what we can control, which includes optimizing our operations and efficiently managing our cost.

Customer delivery requirements and other factors may impact future periods, but we are doing everything in our power to mitigate these impacts in our -- on our financial results. We have a differentiated and market-leading suite of products, a favorable market environment and a clean capital structure. We look forward to sharing updates on our strategic actions in the coming periods, as we strive to enhance stockholder value.

With that, operator, I think we can now open the call up for some questions.

[Operator Instructions] Our first question is from Tyson Bauer with KC Capital.

Just a couple of clarifications on some of the numbers. The parts and services revenue, given you're 68% for the full year, so that was roughly about $7 million in the quarter.

That's probably about right. I don't have the number in front of me, but that's in the ballpark anyway.

All right. No, that's how the math works. Does that include any catch-up from Huntsville, where you had kind of the delays until you got that capital project done? Or is that $7 million from what we've seen in the first quarter, second quarter, a fairly good run rate as we go through the second half of the year?

Yes. So it's -- there's really no catch-up from Huntsville, first answer. Run rate, I'm hesitant to say that's a run rate. I think it's indicative of where that trend is going. Could it be less next quarter? Sure, it could because there will still be some fluctuations in that. But clearly, that line is trending up and going to be more consistent as we go forward.

And should we see a boost given the expansion in Huntsville at some point going forward?

I think we will. We'll be ramping up that operation to the balance of this year and into next year. So I think we'll see that start to increase.

Okay. You had a $4.5 million delayed order in Q1 that hit in Q2, at least that was what was related to us on the last conference call. Given the $7 million, that leaves about $2 million in new activity in the quarter to hit your revenue level, which I find interesting with your backlog because you ended April with $21.1 million, you had a $4 million order on June 10, a GunLink system. So if you deliver that $4.5 million, you had $2 million in new activity, backlog looks like it should be closer to $18 million, ended up $12.8 million. Were there a cancellation? Were there a reclassification? Just kind of where is that variance of $6 million.

Yes. So a couple of things. There's no cancellations for sure. Some of the aftermarket business will be in backlog. So we'll get an order for spare parts that will be in backlog at some point in time. So that's part of it. And I'm not sure the $7 million is exactly the number for the quarter. Again, I don't have that in front of me. So I think the combination of those things make up that difference.

Okay. As we go forward, you made a comment that fiscal '26 should be now similar to fiscal '25, which is a little different. We are almost like the Fed speak here. Previously, you said that fiscal '25. So you have a little bit of an adjustment there. The implication is with your expectation of parts and services, that's about 1 -- basically 2 or 3 more full systems delivered before year-end to hit those numbers. Does that sound about right? And if we're going to get $10 million immediately on new orders, it almost seems like we need to get another $10 million just to feel comfortable that that's achievable for the second half of the year.

Yes. So it's -- Tyson, the timing of some of these orders is when we'll get them out the door is there's some uncertainty there, of course, as when we actually get some of the new orders. So when we'll actually be able to lever them or when they want to be delivered. We do have additional systems in the pipeline, including the 2 orders that we talked about specifically. So that's what we're trying to guide to.

And I think it's not too inconsistent with what we said before. I mean, I think we -- I think what we said before was we're going to be in the same ballpark. I think what I tried to guide to is don't expect the same sort of growth in this fiscal year as you saw it before. It's going to be a little more consistent. And I think we're still seeing that. Could there be a $2 million or $3 million swing or a $4 million swing between quarters because of delivery? You bet there could be, as we saw in the first quarter. But I think our general view of the year is pretty consistent as it has been all along.

Okay. This is the time of the year where you typically have received a large annual order from our Scandinavian friends, companies over there. Are they still in that time schedule? Or have -- are they cautious also?

I think there is some cautiousness in the marketplace. There has been some softening in the seismic market at least, at least temporarily. So I think there's some caution there. I think people have been careful about CapEx commitments right now. So I think, again, that's what we're trying to indicate. And the one reason I think we've seen the backlog down a bit from where it had been. But I think, again, the long-term prospects, the overall activity, offshore exploration is very bullish. So I think it's just a matter of timing from that standpoint. So again, people are just being cautious about making those commitments until they have their business in hand. I think it's across the board. That's just not Scandinavia. That's across the board.

Okay. And last 1 for me, and I'll let others ask questions about your capital stuff. The -- what we hear from the rhetoric from the administration, let's play a little, what's real, what's just headlines, moratorium and offshore wind projects, having an adverse look at wind energy, especially the offshore stuff, but wanting more rare earths and deep sea mapping, those kind of things, which we say may be off in the future or may be more of a commentary of what they want to do as opposed to what will be done. What's true? What's false between these headlines regarding those 2 things that do affect your business?

Well, I wish if I knew all those answers, I guess I would have to work for a living, Tyson. But I think what we're seeing is we're -- remember, we're selling to people who do survey work. And that's all sorts of different kind of survey work. It can be energy exploration, it can be wind farm installations, it can be carbon capture installations, it can be rare earth exploration. So they're doing lots of different things. And we don't always know what they're buying the equipment for. Sometimes you do based on configuration, but not always.

Certainly, there's been a slowdown in U.S. activity for offshore wind, no doubt about that. But we're seeing continued activity elsewhere in the world. So that's still been a good market for us. I think that's part of the cautiousness we see in the market right now is as to what is going to happen from a macro standpoint, what's this administration going to do. So it's hard to know what's really going to happen there. I think it's certainly though has caused some of the caution that we're experiencing right now. But again, I think long term, I think those things will work themselves out, and it's still very bullish.

Our next question is from Ross Taylor with ARS Investment Partners.

First, great quarter. I will admit I was one of those people who was somewhat surprised. I think I've been in this business for a little over 40 years, and I've never seen an ATM and a buyback announced on the same press release, but it's always good to learn. Along that line, I'd love for you to talk to me or us a little bit more about your acquisition strategy from what you've said and the like, what makes the most sense as you'd use the ATM if you were looking at -- you had a very interesting acquisition that fell in. What is your -- what are you looking for? Are you looking for products that you see fit into your current structure? What would be additive? Also what's your thinking of dilution and the like? You've talked a lot about wanting to do the right thing by shareholders and driving and concerns about share price. I'm curious about have you given thought about what parameters you would put on any acquisition you would make.

Yes. So Ross, what we're looking for primarily are things that are additive to what we do. We don't want to do a large step out, and frankly, do another client. We don't want to -- that's not what we're looking to do. What we're wanting to do are things that are additive to what we're doing, things that we understand well operationally, so things that we can tuck in, not go out to make a $30 million acquisition of another company necessarily. The things that tie into our customer base, the technologies that we know, so things that have a lower risk profile from that standpoint. With any acquisition, there's risk. But the better you understand it, the closer it is to what you're doing, the lower that risk. So that's the sort of thing we're looking for.

Okay. So products or small divisions of other companies, things of that nature is what you'd be looking to do?

Yes, that's the ideal situation for us.

Okay. Last quarter, we talked about a deal with a company that's innovative newcomer into the mapping space and the like. Has there been any progress with that?

There has. We -- that project is ongoing right now. So we're right in the middle of it. I really don't have anything I could share right now for some proprietary reasons, but we are right in the middle of that right now. That is progressing well.

And what kind of opportunities do you think if we come back -- looking back a year in the future, 2 years or 3 years in the future, what kind of opportunity are you looking at from that?

In that deal specifically?

Yes.

Yes. Again, I think I don't want to get too specific on that. I think, again, that is a product that would be used by our existing customer base, so it will be easy for us to sell in partnership with the other company. So it's an easy step out for us. It's a technology that's very familiar to us. Is it going to double the company? No. But is it additive? Can it add a few million dollars? Yes. That's that sort of magnitude, just to give you a sense of it. So again, relatively low risk, relatively low investment at this point. So that's the ideal situation for us.

I might have missed it, but did you mention what cash was at the end of the quarter?

I think it's about $7.2 million.

Yes.

$7.2 million.

Okay. Also, can you talk about the opportunity -- you've mentioned, and Tyson asked about Huntsville, can you talk about the opportunities? What is Huntsville going to do? And what kind of opportunities do you see coming out of it business-wise? Will this be something that's meaningful? Meaningful meaning do you see it being able to add around 10% or more to annual revenues? Or is it something less meaningful than that?

Well, I think it's in that magnitude if not a little bit more, frankly. So what we are doing is we are repairing products that have been manufactured by others, so third-party products. We're doing some repair work, and not just one customer. We are doing some ancillary work for Seamap at Singapore. There are some things that we can do here effectively or efficiently that help expand their capacity. So that's new products as well as some support activities as well.

We also, in some cases, are doing some manufacturing for third parties of their designs. So it's not our IP, it's their IP that we're building for them. So it's really a combination of those things. The other thing that's interesting is if we're able to move our technology into the maritime security space, as we've talked about, and again, it's still very early days there, being able to do that in the United States is a real plus for security reasons. So that's another reason we want to expand that still.

And also for tax and cash flow reasons then, right, as well, right?

Absolutely right. For cash flow, for sure. We don't have to bring money back from overseas. Obviously, we have tax loss carry forward. So if we can generate U.S. income, we can shelter that very efficiently. You're exactly right about that.

So that would be meaningful as well. With regard to your comments about this year, last year, last year, top line grew at about 29%. So far this year, it's been growing at about a 9% rate. Listening to you and Tyson talk, leaves me feeling that you're probably -- you might not want to commit to it, but you're probably shooting for that kind of a continuation of the first half growth over -- year-over-year to see in the second half or something in that high single digits, low double digits type range. Am I wrong in that interpretation?

No, you're not wrong. I think the caution I'm trying to throw in here is given what we saw in the first quarter, that situation, that situation can repeat itself and that can have a big impact on that growth rate. So I think, generally, we're seeing that -- those opportunities for that sort of maybe a single-digit -- high single-digit growth rate. Will that all fall within this time period? That's more difficult to say with precision right now. So that's the reason I want everyone to be cautious.

Yes. So it's lumpy, but the trends are there. And if it's not made, it's likely it's going to be seen in the backlog if you're not able to get it because...

That's right.

Right.

That's what we think. Yes.

Okay. So basically, we're looking at this thing, so we can still trust Tyson in his numbers. I don't usually drink early in the morning, but sometimes I. So -- but yes, it's great. Good job. I think you continue to push forward with it. Thank you for giving us some explanation on the overlapping ATM and share buyback, that did leave me somewhat scratching my rather thinning hair. But other than that, thank you, keep it up.

Thanks, Ross. Appreciate it.

This now concludes our question-and-answer session. I would like to turn the floor back over to Rob for closing comments.

Okay. Thanks, everyone, for joining us today, and I look forward to getting with you again here in just a few months after we report our third quarter in early December. Thanks very much.

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.