Mind Technology, Inc (MIND) June 2026 Conference Transcript

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Summer Investment Conference 2026. Our next presenting company is Mind Technology Incorporated. If you'd like to ask a question during the webcast, you may do so at any point during the presentation by clicking the Ask a Question button on the left side of your screen. Type your question into the box and click Send. I'd now like to turn the floor over to today's host, Mr. Rob Capps, President and Chief Executive Officer with Mind Technology Incorporated. Sir, please go ahead.

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 forego the safe harbor and spare you that if you'll allow that.

So let's give a little background just for those of you who are new to the story. MIND participates in three quad markets in the marine environment for which we produce seismic exploration equipment. And those three 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.

It's 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 micro cap, 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 the 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 three 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, you know, rehash each of these steps over the past three 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 micro-cap such as mine now we do however recognize the challenges and cost 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 are ways we can accomplish that include you know newly developed products so 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 to talk over the 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 last three 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 january 31st 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 some retreat from the very strong growth in 2025 and that as we've mentioned publicly i think the current year of fiscal 2027 will likely see some further softness however as i also said we're very bullish on the longer term trends and the opportunities and think we're well positioned to take advantage of that now something is pretty interesting about our business and those 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 are aren't tied to selling a new system or whole new installation, if you will. So as you might imagine, as our install 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 with as much as 70% of our revenue that's 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. If they have equipment and they're working, the equipment has to be repaired from 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 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 in that we 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, it's 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, the 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, you know, despite the software backlog that we see right now.

Now, backlog is great. Don't get me wrong.

I love that backlog is rather a habit than not habit, 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 build business. We see order flow come on a 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. 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 you people who are new to the story. Now, our operating unit is CMAP. That's our subsidiary and the primary operating unit. It's the operating unit, I should say. And CMAP has three primary product lines. GunLink, which is an energy or air gun source controller. BuoyLink, which is a GNSS or GPS positioning system, and C-Link, 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 that are complementary to our existing business. A good example of that is something we've done with our C-Link 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'll 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 might take some study at your leisure. But what we're trying to show here is how these applications, or these products rather, are applied, how they're utilized, often in conjunction with each other. So again, they're deployed in a 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 into 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 install base that installs our aftermarket business and expands our recurring streamer business. Another area, and a couple of other areas specifically where we think we can enhance the business and grow the business is taking our seedling 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. It's 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 ceiling 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 to 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 local operating location for our cmap unit most sales and shipments are made through this entity in Singapore. So activities here include, you know, manufacturing, assembling, 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. It 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 UK, in the west of the UK, 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 services as well as training and some sales support as well. Then our final location is in the US, in Huntsville, Texas which is north of Houston we have recently expanded this facility in order to take advantage of some opportunities that 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 And we believe having locations both in North America and in Asia 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 mine is a unique opportunity, as we're 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.

There's some questions about how to access more information about the company. Again, you can, on our website, there's much information in the presentations or on the All of our filings and print releases are there. As well as you can email 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 you know site surveys and looking at lower horizons in the subsurface you some of the regulations particularly in the us 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, you know, 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 core work in 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, a new system. 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, you know, six or seven or eight million dollar order, where for a half a million or a million dollar spares order, we're not going to do that.

So it tends 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 relate to a new build vessel where oftentimes it's a governmental agency that's building them initially. At least that's the activity we're seeing most often right now, a research organization at some point. So it will be a multipurpose missile with a need for different types of equipment. So we're seeing opportunities to provide a great deal of our kit, you know, really all the products we've talked about, as well as, you know, supplying kit from others as well. So we might be an integrator or participate with another integrator in some of those projects. You know, they don't come along every day, but they are something we've seen more and more of and think we're 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 that 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 um ask as to since there are some newer people to to the story you know what's the most underappreciated aspect of our business um and that's a great question actually you know 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 it's 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 answer real quickly. talking about the Hustville 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 Hustville facility. So it's a bit of both, 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 Incorporated presentation. You may now disconnect, and please consult the conference agenda for the next presenting company.