MIND Expertise, Inc. (NASDAQ:MIND) Q1 2024 Earnings Name Transcript

MIND Expertise, Inc. (NASDAQ:MIND) Q1 2024 Earnings Name Transcript

MIND Expertise, Inc. (NASDAQ:MIND) Q1 2024 Earnings Name Transcript June 14, 2023

Operator: Greetings. Welcome to the MIND Expertise First Quarter 2024 Convention Name. At the moment, all members are in a listen-only mode. An issue-and-answer session will observe the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded. It’s now my pleasure to introduce your host, Mr. Ken Dennard. Mr. Dennard, you could start.

Ken Dennard: Thanks, operator. Good morning, and welcome to the MIND Expertise fiscal 2024 first quarter earnings convention name. We recognize all of you becoming a member of us at present. With me are Rob Capps, President and Chief Government Officer; and Mark Cox, Vice President and Chief Monetary Officer. Earlier than I flip the decision over to Rob, I’ve a number of gadgets to cowl. If you would like to hearken to a replay of at present’s name, it will be accessible for 90 days through webcast by going to the Investor Relations part of the corporate’s web site at mind-technology.com, or you possibly can hear through a recorded prompt replay by telephone till June 21. Info on find out how to entry the replay options was supplied in yesterday’s earnings launch. Additionally, info reported on this name speaks solely as of at present, Wednesday, June 14, 2023, and due to this fact, you are suggested the time delicate info could not be correct as of the time of any replay listening or transcript studying.

Earlier than we start, let me remind you that sure statements made by administration throughout this name making to represent forward-looking statements throughout the that means of the Non-public Securities Litigation Reform Act of 1995. These forward-looking statements are based mostly on administration’s present expectations and embody identified and unknown dangers, uncertainties and different components, a lot of which the corporate is unable to foretell or management which will trigger the corporate’s precise future outcomes or efficiency to materially differ from any future outcomes or efficiency expressed or implied by these statements. These dangers and uncertainties embody the chance components disclosed by the corporate on occasion in its filings with the SEC, together with in its annual report on Kind 10-Ok for the 12 months ended January 31 2023.

Moreover, as we begin this name, please discuss with the assertion relating to forward-looking statements integrated within the press launch issued yesterday, and please observe that the contents of our convention name this morning are lined by these statements. So now, with out additional ado, I would like to show the decision over to Rob Capps. Rob?

Rob Capps: Okay. Thanks, Ken. As we did final quarter, we have ready an up to date presentation masking our dialogue this morning, and we posted it to our web site. I invite you to discuss with that at your leisure. At this time, I will start by discussing our first quarter 2024 outcomes in addition to our present view of market situations. Mark will then present a extra detailed replace on the financials. I will then wrap issues up with some remarks about our outlook. We’re very happy with the primary quarter outcomes and the beginning of our fiscal 2024, which we imagine reveal our skill to capitalize on MIND’s favorable market place to proceed delivering sustainable top-line enchancment. Our monetary and operational efficiency remained robust within the quarter, as anticipated, leading to a lot improved monetary metrics throughout the board when in comparison with the 12 months in the past interval.

MIND Expertise, Inc. (NASDAQ:MIND) Q1 2024 Earnings Name Transcript

Software program, Expertise, Parts

Photograph by christina wocintechchat on Unsplash

Revenues have been up 39% year-over-year, and regardless of a strong fourth quarter outcomes, we additionally grew our income sequentially. Moreover, we achieved a a lot improved gross revenue margin of 43% throughout the quarter. Most significantly although, we produced optimistic working revenue. As soon as once more, we additionally produced optimistic adjusted EBITDA. The fourth quarter was the primary time since we reworked the corporate that we achieved this, and we’re proud to proceed that pattern within the first quarter. As anticipated, we executed on our backlog, which resulted in important top-line income of $12.6 million. Though we generated substantial income within the quarter, we maintained and even grew our backlog. As of April 30, our backlog of agency orders stood at $22.6 million in comparison with $13.4 million on the identical time a 12 months in the past and $20.7 million on the finish of final quarter.

We imagine this pattern is indicative of the favorable market situations and the differentiation of our product traces, and we’re assured this momentum will carry all through the rest of fiscal 2024. We’re pursuing plenty of different orders and are poised to achieve success on many. We hope to be ready to announce a few of these in coming weeks. We stay inspired by the favorable macroeconomic developments coupled with robust buyer engagement and order exercise. We imagine that the present market setting is advantageous for MIND. We proceed to see substantial tailwinds in every of our three key markets: exploration, protection, and survey. And our staff continues to search out modern methods to adapt our merchandise to fulfill the evolving wants of our prospects.

At the moment, we’re seeing the largest order development in our Seamap phase, which is benefiting from the favorable fundamentals throughout the exploration and various power markets. This development is supported by the 19% sequential enhance in Seamap income that we generated throughout the first quarter, and we anticipate to construct on this momentum going ahead. We intend to leverage and maintain buyer demand and curiosity that we’re seeing in all of our key markets, drive additional development in our ebook of enterprise within the coming quarters. As introduced in early April, we elected to defer the fee of our most popular inventory dividend for the primary quarter of fiscal 2024. I do know that our liquidity place has been a priority for a lot of of you. Though we have seen improved liquidity has resulted to greater income ranges all through the final couple of quarters, we imagine it was prudent to retain the money movement from these actions right now to finish upcoming and different anticipated orders.

Whereas there are extra stringent working capital calls for that include will increase in enterprise, I imagine we have made progress with respect to liquidity. It stays an space of focus for us. We are also conscious of the continued itemizing commonplace discover that was despatched to us by NASDAQ. We’re working via and analyzing choices to regain our compliance. With that, now I will let Mark stroll you thru our first quarter monetary ends in a bit extra element.

Mark Cox: Thanks, Rob, and good morning, everybody. As Rob talked about earlier, revenues from persevering with operations totaled roughly $12.6 million within the quarter, a 39% enhance when in comparison with the $9.1 million in the identical interval a 12 months in the past. Our Seamap phase delivered substantial income of roughly $10.6 million throughout the quarter, which demonstrates the expansion that we’re seeing within the exploration and various power markets. Gross revenue throughout the first quarter was roughly $5.4 million, which was up roughly 65% when in comparison with the prior-year interval. As Rob additionally talked about, this represents a gross revenue margin of 43% for the quarter, a 700 foundation level enhance from the 36% we achieved throughout the identical quarter a 12 months in the past.

The upper income achieved in our first quarter resulted in higher overhead absorption, producing a way more favorable gross revenue margin. Our normal and administrative bills have been roughly $3.9 million for the primary quarter, which have been up barely when in comparison with the $3.7 million from the fourth quarter. Nevertheless, as we have talked about prior to now, our G&A bills are usually front-end loaded as we incur greater payroll taxes, skilled charges and travel-related bills within the first few months of the 12 months. This recurring pattern, though minimal, was evident in our first quarter outcomes. Our analysis and growth expense for the primary quarter was $773,000, which was up roughly 9% sequentially, however down 24% from the identical quarter a 12 months in the past.

In step with prior durations, these prices are largely directed towards our strategic initiatives, together with artificial aperture sonar and passive sonar arrays. Working revenue for the primary quarter was $289,000 as in comparison with a lack of roughly $2.5 million within the first quarter of fiscal 2023. Our first quarter adjusted EBITDA was $913,000 in comparison with a lack of roughly $1.9 million within the first quarter of final 12 months. As of April 30, 2023, we had working capital of roughly $14 million and money of $815,000. As famous in Rob’s opening feedback, we proceed to see enchancment in our liquidity. I will now go it again over to Rob for some concluding feedback.

Rob Capps: Thanks, Mark. We stay inspired by our outcomes for the primary quarter and by the favorable outlook in every of our key markets. We’re producing sustainably greater income whereas sustaining and rising our backlog of enterprise. And buyer demand and engagement stays robust, leading to better-than-ever quarter movement. We’re optimistic that MIND is able to construct on this momentum within the coming quarters. And we sit up for sharing the fruits of our labor with you. As we sit up for our second quarter and the rest of fiscal 2024, we’re excited in regards to the alternatives that lie forward. A lot of our applied sciences proceed to achieve traction with prospects globally for a wide range of finish makes use of. And as I famous earlier, our Seamap merchandise are enjoying a big function in paving the best way for MIND’s continued development.

We have historically seen there’ll seemingly be income variation between quarters as a consequence of a wide range of challenges which are usually out of our management, akin to provide chain points, tighter vendor credit score necessities, evolving supply necessities, authorities contracting processes, and technical and manufacturing challenges that may affect manufacturing and deliveries. Nevertheless, the favorable market developments, strong buyer curiosity and development of our backlog continues to present us confidence that sustainable higher-level income is achievable. We be ok with the place the corporate sits at present. We imagine that our growth applications will proceed to positively contribute. There could also be sure unexpected circumstances that trigger orders or deliveries to slip to the precise, however we do imagine that the final pattern shall be on of elevated income.

As I discussed earlier, there are challenges that include our enhancing enterprise. We’re doing our greatest to handle these challenges and calls for. In closing, we’re enthusiastic about the way forward for MIND Expertise. Our secure and rising backlog, strong order movement and elevated income ranges are indicative of our expertise being in higher demand. We intend to proceed capitalizing on the favorable market situations and macroeconomic setting and strong buyer curiosity and engagement to realize improved outcomes going ahead. We have labored onerous to place MIND as a number one producer of differentiated marine expertise merchandise. We intend to construct on this momentum to generate important income, which we imagine will drive significant shareholder worth all through the rest of fiscal 2024 and past.

And with that, that is our ready remarks. Operator, we are able to now open the decision up for questions.

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