Q4 2026 Mind Technology Inc Earnings Call

April 16, 2026

Operator: Greetings. Welcome to MIND Technology Fiscal Q4 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. 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.

Speaker #2: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan.

Speaker #2: Thank you, Zach. You may begin. Thank you, operator. Good morning, and welcome to the MIND TECHNOLOGY fiscal 2026 fourth quarter earnings conference call. We appreciate all of you joining us today.

Zach Vaughan: Thank you, operator. Good morning and welcome to the MIND Technology Fiscal 2026 Q4 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 recorded instant replay until 23 April. Information on how to access the replay was provided in yesterday's earnings release.

Speaker #2: 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.

Speaker #2: 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 April 23.

Speaker #2: 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.

Zach Vaughan: Information reported on this call speaks only as of today, Thursday, 16 April 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Zach Vaughan: 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 31 January 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.

Speaker #2: 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.

Speaker #2: Now, I'd like to turn the call over to Rob Capps.

Speaker #3: Okay. Thanks, Zach. 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.

Rob Capps: Okay, thanks, Zach, and thank you all for joining us today. Today, I'll touch on our results for Q4 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 with some remarks about our outlook. A lot has transpired since our last earnings call. As you all know, we're a global company, and our customers work all around the world, but 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.

Speaker #3: 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. A lot has transpired since our last earnings call.

Speaker #3: As you all know, we're a global company, and our customers work all around the world. But we have not experienced any material impact to our operations or prospects due to the current conflict in the Middle East.

Speaker #3: 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.

Speaker #3: All thanks 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.

Rob Capps: 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 Q4 compared to the Q3. 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 state 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 and expect that customers will resume normal activities once conditions stabilize.

Speaker #3: 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 CMAP revenues remain elevated compared to historical levels, and we're essentially flat in the fourth quarter compared with the third quarter.

Speaker #3: As we discussed last quarter, overall interest and engagement remain positive, but we've seen some commitments delayed, given commodity price volatility and the current state of geopolitical affairs.

Speaker #3: This is not uncommon in periods of broad economic uncertainty. However, as the past would indicate, we can continue to view this as a short-term disruption and expect that customers will resume normal activities once conditions stabilize.

Speaker #3: Our long-term growth trajectory and operational momentum are still intact. And our large pipeline of opportunities supports our optimism for the future. Our backlog of firm orders as of January 31, 2026, was approximately $13.9 million.

Rob Capps: Our long-term growth trajectory and operational momentum are still intact, and our large pipeline of opportunities supports our optimism for the future. Our backlog of firm orders as of 31 January 2026 was approximately $13.9 million, compared to $7.2 million as of 31 October 2025, and approximately $16.2 million as of 31 January 2025. As a reminder, during Q4, we received long-anticipated orders totaling about $9.5 million. We were able to deliver roughly half of these orders during Q4 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.

Speaker #3: Compared to $7.2 million as of October 31, 2025, 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: For the reasons I mentioned, this is not unexpected. However, there are signs of recovery, and the long-term outlook for exploration and survey work is trending in the right direction.

Rob Capps: However, there are signs of recovery, and the long-term outlook for exploration and survey 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 stemming from macro uncertainty and geopolitical turmoil, it's also not uncommon to see pauses in order activity throughout the year in a normal environment.

Speaker #3: We believe this bodes well for additional orders and future periods, as the geopolitical instability in the Middle East may well drive exploration activity in other parts of the world.

Speaker #3: We have yet to see any immediate impacts from the dramatic increase in oil prices, but it's something our customers are monitoring closely, and it has the potential to drive incremental activity.

Speaker #3: As a reminder, aside from the protracted customer decision-making process stemming from macro uncertainty and geopolitical turmoil, it's also not uncommon to see pauses in order activity throughout the year in a normal environment.

Speaker #3: 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.

Rob Capps: 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 remains solid and is 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 or more to us, and require that successful bidders provide security bonds. You may have noted that we recently entered into a trade finance facility with HSBC. This facility provides flexibility to help pursue these more significant projects.

Speaker #3: Outside of our backlog, which is defined as orders for which we have a purchase order or assigned contract in hand, the pipeline of potential orders remains solid, and it's several times greater than our firm backlog.

Speaker #3: We are pursuing certain significant projects, but some of these opportunities involve new vessels for governmental organizations. These projects are often relatively large—$10 million or more to us.

Speaker #3: And require that successful bidders provide security bonds. You may have noted that we recently entered into a trade finance facility with HSBC. This facility provides flexibility to help pursue these more significant projects.

Speaker #3: 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 three main product lines.

Rob Capps: We remain cautiously optimistic in our ability to convert opportunities into firm orders in coming periods. Our backlog and pipeline of potential orders consists primarily of our three 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 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. The 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.

Speaker #3: FinLink source controllers, BuoyLink positioning systems, SeaLink streamer systems. However, our backlog also contains some aftermarket orders. Together, these serve as the foundation for our business.

Speaker #3: As a whole, our CMAP 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.

Speaker #3: We also pride ourselves in finding innovative ways to capture demand. The growing contributions from our aftermarket activities are also providing a stable and recurring revenue stream that is supporting our overall results.

Speaker #3: This component of our business has become increasingly important. This aftermarket activity consists of spare parts, repairs, service, and other support activities. And 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.

Rob Capps: 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. We've established ourselves as a company that can do this kind of service and repair work quickly, efficiently, and reliably. Additionally, expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. Therefore, customers will allocate funds for these activities differently than they might for a new system. 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, in fiscal 2026, aftermarket business accounted for about 60% of our total revenues.

Speaker #3: Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND. We've established ourselves as a company that can do this kind of service and repair work quickly, efficiently, and reliably.

Speaker #3: Additionally, expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. Therefore, customers will allocate funds for these activities differently than they might for a new system.

Speaker #3: 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.

Speaker #3: 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.

Rob Capps: 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 the prospect for increased aftermarket activity. Additionally, we continue to ramp up activity at our newly expanded Huntsville 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. Marine Technology product revenues for Q4 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. We continue to find ways to generate resilient results.

Speaker #3: As our installed base of CMAP products continues to expand, with it comes the prospect for increased aftermarket activity. Additionally, we continue to ramp up activity at our newly expanded Huntsville facility.

Speaker #3: 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 CMAP products, newly developed products, and services to third parties.

Speaker #3: Now, turning to our results, marine 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.

Speaker #3: 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 on opportunities in future periods to stimulate order flow and generate sustainable results.

Rob Capps: I'm pleased with our ability to navigate uncertainty within the market, and we believe MIND remains well-positioned to capitalize on 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 walk you through our Q4 and full year financial results in a bit more detail.

Speaker #3: We have a demonstrated approach, a 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.

Speaker #3: Now, I'll let Mark walk you through our fourth quarter and full year financial results in a bit more detail.

Speaker #2: Thanks, Rob, and good morning, everyone. Revenues from marine technology product sales totaled approximately $9.8 million for the quarter. Full-year revenue amounted to approximately $40.9 million.

Mark Cox: Thanks, Rob, and good morning, everyone. Revenues for MIND Technology product sales totaled approximately $9.8 million for the quarter. Full year revenue amounted to approximately $40.9 million. As Rob mentioned, the delivery of about half of the orders that we received in December were pushed into fiscal 2027, and this had an impact on our results for the quarter and full year. Despite this, and the general uncertainty that persists in the market, customer interest and engagement remain strong, and our aftermarket business continues to provide significant recurring revenue that is supporting our results. Full year gross profit was approximately $18.7 million. This represents a gross profit margin of 46% for the year compared to 45% for fiscal 2025. The year-over-year margin improvement was primarily attributable to product mix, which included a greater proportion of spare parts and other aftermarket activity.

Speaker #2: As Rob mentioned, the delivery of about half of the orders that we received in December were pushed into fiscal 2027. And this had an impact on our results for the quarter and full year.

Speaker #2: Despite this, and the general uncertainty that persists in the market, customer interest and engagement remain strong, and our aftermarket business continues to provide significant recurring revenue that is supporting our results.

Speaker #2: Full-year gross profit was approximately $18.7 million. This represents a gross profit margin of 46% for the year, compared to 45% for fiscal 2025.

Speaker #2: The year-over-year margin improvement was primarily attributable to product mix, which included a greater proportion 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.

Operator 2: We also continued 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 $3.3 million for Q4 of fiscal 2026. 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 Q4 of fiscal 2025. Consistent with prior periods, these costs were largely directed towards the development enhancement of our streamer systems and source controller offerings. Operating income for Q4 and full year 2026 was approximately $78,000 and $2.9 million, respectively.

Mark Cox: We also continued 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 $3.3 million for Q4 of fiscal 2026. 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 Q4 of fiscal 2025. Consistent with prior periods, these costs were largely directed towards the development enhancement of our streamer systems and source controller offerings. Operating income for Q4 and full year 2026 was approximately $78,000 and $2.9 million, respectively.

Speaker #2: Our general and administrative expenses were approximately $3.3 million for the fourth quarter of fiscal 2026. This was both sequentially and when compared to the same quarter a year ago.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Operator 2: Q4 adjusted EBITDA was approximately $1.1 million, and full year adjusted EBITDA was $5.3 million. Net loss for the Q4 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 31 January 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. I 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.

Mark Cox: Q4 adjusted EBITDA was approximately $1.1 million, and full year adjusted EBITDA was $5.3 million. Net loss for the Q4 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 31 January 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. I 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.

Speaker #2: 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.

Speaker #2: As of January 31st, 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.

Speaker #2: I 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.

Speaker #2: I'll now pass it back over to Rob for some concluding comments.

Speaker #3: Hey, 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.

Rob Capps: Okay. 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. 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 MIND 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.

Speaker #3: 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.

Speaker #3: The long-term pipeline of opportunities continues to be very positive. Our prospects are plentiful, and this presents compelling opportunities for MIND to address demand. Capitalize on new areas of focus within the market and deliver improved financial results.

Speaker #3: We remain very well positioned for the future, and I'm optimistic that any near-term softness will abate in the coming months. We remain focused on controlling what we can.

Speaker #3: 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.

Speaker #3: As a reminder, there really doesn't take much to move our needle in a positive direction. As one or two large orders materialize, we have a very different outlook.

Rob Capps: As a reminder, it really doesn't take much to move our needle in a positive direction. As one or two 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. Now, 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 MIND, and we may grow in other ways that may not immediately present themselves in our financial results. We recognize it'll be difficult to replicate the systems order volume that we've enjoyed over the past two years, given our recent customer discussions and the prevalent uncertainty.

Speaker #3: 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.

Speaker #3: Now, 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 MIND.

Speaker #3: And we may grow in other ways that may not immediately present themselves in our financial results. We recognize that it will be difficult to replicate the systems order volume that we've enjoyed over the past two years, given our recent customer discussions and the prevalent uncertainty.

Speaker #3: 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 a simplified capital structure that is equipped to weather periods of reduced order activity.

Rob Capps: 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 have 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 as activity across our end market returns. For the last year or so, you've heard me talk about the need for MIND to add scale. We recognize that we are a small company and that this presents challenges. I firmly believe that we need to be bigger to realize our full potential and enhance shareholder value.

Speaker #3: 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 as activity across our in-market returns.

Speaker #3: Over the last year or so, you've heard me talk about the need for MIND to add scale. We recognize that we are a small company and that this presents challenges.

Speaker #3: I firmly believe that we need to be bigger to realize our full potential and enhance shareholder value. That being said, there are different ways we can achieve this growth.

Rob Capps: 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 at 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, weighing the expected return with the cost of capital. That brings me to our capital allocation strategy.

Speaker #3: 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.

Speaker #3: 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 at MIND to chase an opportunity that does not fit with what we do.

Speaker #3: Our significant liquidity has broadened our opportunity set. However, we intend to be very disciplined in our approach to our capital allocation, weighing the expected return with the cost of capital.

Speaker #3: 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.

Rob Capps: 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, investments in organic growth opportunities, such as the expansion of 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. We can lean on any of these or a combination thereof as market conditions permit 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 MIND's strategic capabilities and scale our business. We have a robust manufacturing footprint that is capable of producing sophisticated, technologically diverse products.

Speaker #3: I've outlined the various levers for growth that we have at our disposal. These include mergers and acquisitions, investments in organic growth opportunities, such as the expansion of existing product lines, and strategic alliances with other industry partners.

Speaker #3: These levers are intended to be tools that we can use to create or enhance value. We can lean on any of these, or a combination thereof, as market conditions permit and the return on investment meets our threshold for value creation.

Speaker #3: Our view is that the marine technology industry is highly fragmented. This creates an opportunity for us to add products and services that fit MIND's strategic capabilities and scale our business.

Speaker #3: We have a robust manufacturing footprint that is capable of producing sophisticated, technologically diverse products. This makes MIND a natural production partner or buyer for innovative technologies that can be sold alongside our existing suite of products.

Rob Capps: This makes MIND a natural production partner or buyer for innovative technologies that can be sold alongside our existing suite of products. We 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 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 MIND for future success. We've taken 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.

Speaker #3: We 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.

Speaker #3: We have no debt and a simple, streamlined capital structure and no material contingent liabilities. And we have liquidity. We think this positions us well to weather any storm and take advantage of the opportunities ahead of us.

Speaker #3: In closing, we remain committed to positioning MIND for future success. We've taken steps to strengthen the company and have built a resilient platform with a solid foundation and a growing opportunity set.

Speaker #3: 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.

Speaker #3: Going forward, we intend to use our liquidity to augment our business with additional investments, with a focus on developing the next generation of marine technology products to meet the evolving needs of our customers.

Rob Capps: 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 stakeholder value. With that, operator, I think we can now open the call up for some questions.

Speaker #3: We also plan to be actively 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.

Speaker #3: With that, Operator, I think we can now open the call up for some questions.

Speaker #2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, it is star one on your telephone keypad to ask a question. Our first question is from Ross Taylor with ARS Investment Partners. Please proceed.

Speaker #2: You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #2: Once again, it is star one on your telephone keypad to ask a question. Our first question is from Russ Taylor with ARS Investment Partners.

Speaker #2: Please proceed.

Speaker #3: I'm a little concerned that I'm not following, Tyson.

Ross Taylor: I'm a little concerned that I'm not following Tyson.

Speaker #4: Yeah, I know. I'm not sure we can do it this way.

Rob Capps: I know. I'm not sure we can do it this way.

Speaker #3: Yeah, I don't know if he's behind me in the queue, and therefore I don't want to ask his question or a question today. Talk to us about what you see and where the financing is coming from for your customers. You said you've seen kind of a push-off, a delay.

Ross Taylor: Yeah. I don't know if he's behind me in the queue, and therefore I don't want to ask his question or questions. 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 Strait of Hormuz, just highlighting the need for being able to detect mines and other items underwater and things like that. I read somewhere the Chinese have aggressively mapped around Guam, around Taiwan, around the Philippines, and the like, and I would assume the US Navy probably needs to do something similar. Where's the capital coming from when...

Speaker #3: What do you think is really driving this? We're seeing a lot more interest in subsea mining. We're obviously seeing that the state of Hormuz is highlighting the need for being able to detect mines and other items underwater, and things of that nature.

Speaker #3: 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.

Ross Taylor: I read somewhere the Chinese have aggressively mapped around Guam, around Taiwan, around the Philippines, and the like, and I would assume the US Navy probably needs to do something similar. Where's the capital coming from when...You said, because you're seeing a pullback on your buyers, and yet it seems that the demand should be growing meaningfully given what's happening around the world right now.

Speaker #3: Where's the capital coming from? You said you’re seeing a pullback on your buyers, and yet it seems that the—meaningfully, given what's happening around the world right now.

Ross Taylor: You said, because you're seeing a pullback on your buyers, and yet it seems that the demand should be growing meaningfully given what's happening around the world right now.

Speaker #4: Yeah, I think that's right, Ross, in that I think what our customers have been doing, the people who 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.

Rob Capps: Yeah. I think that's right, Ross, in that I think what our customers have been doing, the people who've 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. Therefore, there was some M&A activity in the market as well. People, companies 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, where for a while they saw, again, their customers weren't placing orders. They weren't entering new projects. They were just being more cautious.

Speaker #4: And therefore, there was some M&A activity in the market as well. So, companies 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 where, for a while, they saw their customers weren't placing orders.

Speaker #4: They weren't entering new projects. They're just being more cautious. Some uncertainty in the wind markets caused some of that. That seems to be returning a bit, especially outside of North America.

Ross Taylor: Mm-hmm.

Rob Capps: Some of the uncertainty in the wind markets caused some of that. That seems to be returning a bit, especially outside North America. I think it was, again, a pause for them trying to be fiscally conservative and fiscally responsible. 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 to expand 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. Again, I think the longer term, it looks pretty darn positive.

Speaker #4: 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.

Speaker #4: 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 to expand capacity.

Speaker #4: 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.

Speaker #4: So again, I think, longer term, it looks pretty darn positive. Again, 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 the Middle East, which is a positive for our customers and for us.

Rob Capps: Again, 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 the Middle East, 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. 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. I think if you look from a macro standpoint, it's got to turn around. Does it happen in two months, or six months, or nine months? I don't know the answer to that for sure. I don't think anyone does.

Speaker #4: As it goes into the military and maritime security side, that has less direct impact on us today, but 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.

Rob Capps: 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. I think if you look from a macro standpoint, it's got to turn around. Does it happen in two months, or six months, or nine months? I don't know the answer to that for sure. I don't think anyone does. I think everyone I talk to in the industry is pretty bullish long term, but cautious in the near term.

Speaker #4: 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 that happen in two months, six months, or nine months?

Speaker #4: I don't know the answer to that for sure. I don't think anyone does. But I think everyone I talk to in the industry is pretty bullish long term, but cautious in the near term.

Rob Capps: I think everyone I talk to in the industry is pretty bullish long term, but cautious in the near term.

Speaker #3: Okay. A couple of different things. Looking at you talk about generating, having a year that's going to be somewhat under what you saw right now last year.

Ross Taylor: Okay. A couple different things. You talk about 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?

Speaker #3: 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 backlogged.

Rob Capps: Correct. That's right.

Speaker #4: Correct. That's right.

Speaker #3: Is there you're talking about generating but being able to generate free cash flow during the course of the year. Am I correct in that assumption that you said you obviously be able to have EBITDA, but should we expect cash flow to be positive in the year?

Ross Taylor: You're talking about being able to generate free cash flow during the course of the year. Am I correct in that assumption that you said you'll obviously be able to have the EBITDA, but should we expect cash flow to be positive in the year?

Speaker #4: We do expect that, yes.

Rob Capps: We do expect that, yes.

Speaker #3: Okay. And with your acquisition or your strategy to enhance value, it strikes me as one of the natural things is finding a division of a public company or something, in essence, almost them using the MIND platform as a way to get public, to gain value out of it.

Ross Taylor: Okay. With your acquisition or your strategy to enhance value, it strikes me as one of the natural things is finding a division of a public company or something, and in essence, almost them using the MIND platform as a way to get public and 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 one of the things I think we should be looking to see out of you guys as we look ahead? Also comment on, because you mentioned about the idea, it sounds like some of what you think about doing is building for others, and what are the economics when you build for someone else as opposed to for yourself?

Speaker #3: An acquisition that would effectively be able to pay for itself, given its economics— is that the type of thing that, you know, that's one of the things I think we should be looking to see out of you guys as we look ahead?

Speaker #3: And then also comment on, because you mentioned about the idea, it sounds like some of what you think about doing is building for others.

Speaker #3: And how much—what are the economics when you build for someone else, as opposed to for yourself?

Speaker #4: Sure. I mean, take those kind of in 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 and more of an 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.

Rob Capps: Sure. Let me take those in kind of reverse order. We don't want to be a contract manufacturer. Those margins aren't very good historically.

Rob Capps: Sure. Let me take those in kind of reverse order. We don't want to be a contract manufacturer. Those margins aren't very good historically. If we can partner with someone and have more of an impact and more of an 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.

Ross Taylor: Mm-hmm.

Rob Capps: if we can partner with someone and have more of an impact and more of an 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.

Speaker #4: 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?

Ross Taylor: Mm-hmm.

Rob Capps: Also looking at can we acquire technology or product lines from someone? That might entail actually acquiring an entity, a company, maybe a one- or two-product company, or it might entail acquiring just the technology from someone. We're looking at all of those. The key there from that standpoint is things that are close to what we do now that we can leverage our existing capabilities and get those economies of scale and really drive the return on that. That's really important to us. 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. To the first point you raised, we are, I think, a bit of a unicorn for small public companies.

Speaker #4: That might entail actually acquiring an entity, a company, maybe a one or two product company. Or it might entail acquiring just the technology from someone.

Speaker #4: 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.

Speaker #4: That's really important to us. 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.

Speaker #4: To the first point you raised, we are, I think, a bit of a unicorn for small public companies. As I said in my comments, we forecast a positive.

Rob Capps: As I said in my comments, we're cash flow 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 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. I think there are some opportunities there. That's the sort of thing that we're looking to do.

Speaker #4: 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 for some entities to monetize what they have.

Speaker #4: 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.

Speaker #4: That's the sort of thing that we're looking to do.

Speaker #3: Yeah, 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 for that entity perhaps going public.

Ross Taylor: Yeah. That would fit with 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.

Speaker #3: Okay.

Speaker #4: Exactly right.

Rob Capps: Exactly right.

Speaker #3: Yeah, obviously at this stage, it's a difficult outlook as we push ahead. Can you talk about—you've talked about having a number of these very large prospects.

Ross Taylor: Yeah. Obviously, at this stage, difficult outlook as we push ahead. You've talked about having a number of these very large prospects. Could you talk a little bit more? Give us what is for you a very large prospect and how long a lead time do you need to fill it?

Speaker #3: Could you talk a little bit more? Give us what, for you, is a very large prospect, and how long a lead time do you need to fill it?

Rob Capps: I call it $10 million plus is a large prospect. We've done several $5 million, $6 million orders, but 10 is large for us. It's from receipt of order to delivery, call it 16 to 24 weeks, something like that. Frankly, the process is more when the bid is let until actually getting the award. That can be a longer process timeframe. You can very well chase these things for a year and a half 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 would have to happen pretty quickly.

Speaker #4: I'd call it $10 million plus. It's a large prospect. We've done several $5 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.

Speaker #4: Something like that. But frankly, the process is more—the bid is led until actually getting the award. That can be a longer timeframe. So, you can very well chase these things for a year, year and a half before you actually make delivery.

Speaker #4: I would not expect that we would win and deliver a project of that size in this fiscal year. Possible, but it would have to happen pretty quickly.

Speaker #3: Okay, so the idea is you could win it this year, but given the other factors, it's unlikely that you would be able to fulfill it fully this year.

Ross Taylor: Okay. The idea is you could win it this year, but given the other factors, it's unlikely that you would be able to fulfill it fully this year.

Speaker #4: That's right. Not impossible, but unlikely at this stage.

Rob Capps: Yeah. That's right.

Ross Taylor: Okay.

Rob Capps: Not impossible, but unlikely at this stage.

Speaker #3: Okay. And at what price in the stock do you actually consider the company itself to be a worthy investment?

Ross Taylor: Okay. At what price in the stock do you actually consider the company itself to be a worthy investment?

Rob Capps: I'm not going to touch that. That's something we think about, and certainly, we've said publicly, if our stock is the best use of capital, that'll be our use of capital. I don't think I want to touch from that point on, B.

Speaker #4: I'm not going to touch that. That's something we think about and certainly we've said publicly. If our stock is the best use of capital, that'll be our use of capital.

Speaker #4: But I don't think I want to touch that point, might be.

Speaker #3: Okay. Well, I'll pass it on to others. Thank you. Good luck.

Ross Taylor: Okay. Well, I'll pass it on to others. Thank you. Good luck.

Speaker #4: Okay, thanks, Ross. You bet. Thanks.

Rob Capps: Okay. Thanks, Ross. You bet. Thanks.

Speaker #3: Take care.

Ross Taylor: Thanks.

Speaker #1: Our next question is from Tyson Bauer with Casey Capital. Please proceed.

Operator: Our next question is from Tyson Bauer with KC Capital. Please proceed.

Tyson Bauer: Good morning, gentlemen. I don't think the operator liked.

Speaker #5: Good morning, gentlemen. I don't think the operator—I said, I don't think the operator—liked me when I tried my Star One. Interesting that you had talked about the new vessels, possibly for government entities.

Rob Capps: Say what?

Tyson Bauer: I said, I don't think the operator liked me when I tried my star one. 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? That $10 million number seems rather large given that 40% of your overall revenues in fiscal 2026, $16 million of that was system sales. One order could account for 60% of what you did the prior fiscal year.

Speaker #5: 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.

Speaker #5: One order could account for 60% of what you did the prior fiscal year.

Speaker #4: Yep. 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, the type of entity that's involved.

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

Speaker #4: And there are multi-purpose vessels, do lots of different things. So we're delivering lots of different stuff, beyond just standard streamer systems and gun control systems.

Speaker #4: For these things. But yeah, you're exactly right. Those are large, and as I said in my comments, it doesn't take a lot to move our needle.

Speaker #5: Were you hopeful that you may have something in place before this call?

Tyson Bauer: Were you hopeful that you may have something in place before this call?

Rob Capps: Oh, I'm always hopeful, Tyson. Didn't expect it, though. I mean, these things do take some time. Again, they happen when they happen.

Speaker #4: Oh, 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.

Speaker #5: 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 materialize.

Tyson Bauer: 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 materialize.

Speaker #4: Yeah, there are more than one opportunities active.

Rob Capps: There are more than one opportunity, exactly.

Speaker #5: Okay, just going to follow a little bit out of order here, but given Ross's 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?

Tyson Bauer: 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 carryforward asset in consideration as far as the payback of doing a deal or somebody with a related business being able to utilize it?

Speaker #4: Yeah, it really depends on the nature of the counterparty and the structure of the deal, but it could be meaningful. And you could have a tax-neutral transaction fairly easily, I think.

Rob Capps: Yeah. 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. 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.

Speaker #4: But as I think you'll appreciate, that's a complex situation in which you may or may not work out, but potentially could have a significant value.

Speaker #5: Okay. Is the fact that you are US-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 US

Tyson Bauer: Okay. Is the fact that you are US domiciled a benefit in some of these assets that may want to have that location or maybe a foreign entity that may want to enter the US market?

Rob Capps: I'd say probably yes, for a couple of reasons. Number one, your US entity, US capital markets are available to us, so that's attractive to people as opposed to other capital markets. From an export control standpoint, it's probably a positive overall. I think it's a net positive, for sure.

Speaker #4: I'd say probably yes. For a couple of reasons. Number one, US entity, US capital markets are available to us. So that's attractive to people as opposed to other capital markets.

Speaker #4: From an expert or control standpoint, it's probably a positive overall. So I think it's a net positive. For sure.

Speaker #5: Okay. In the quarter of that $9.8, what percentage of that was parts, services, repair versus a system delivery?

Tyson Bauer: Okay. In the quarter, that $9.8, what percentage of that was parts, services, repair versus a system delivery?

Rob Capps: Do you remember off the top of your head? It would've been probably 55%, 60% aftermarket.

Speaker #4: Do you remember off the top of your head? So it would have been probably 55, 60 percent aftermarket. I don't have the number in front of me, but in that ballpark.

Tyson Bauer: Okay.

Rob Capps: I don't have the number in front of me. In that ballpark.

Speaker #5: So you're trending around that 6, 6 and a half million per quarter. Obviously, you can have some lumpiness, but of that reoccurring base revenue as we go forward?

Tyson Bauer: You're trending around that $6 to $6.5 million per quarter. Obviously, you can have some lumpiness, but of that recurring base revenue as we go forward.

Speaker #4: Yeah, we've seen for the last year—really the last five quarters—we've seen that trend really start to pick up. So I think that's right.

Rob Capps: Yeah. For the last year, last really 5 quarters, we've seen that trend really start to pick up. I think that's right. Now, of course, let me give you the caveat. That can always switch a bit. Spares orders, they can be lumpy, too. That can switch. Yeah, that's definitely been trending up. It makes sense. Installed base has been going up.

Speaker #4: Of course, let me give you the caveat. That can always switch a bit. I mean, spares orders, they can be lumpy too. So that can switch.

Speaker #4: But yeah, that's definitely been trending up. And it makes sense. Install base has been going up.

Speaker #5: Okay. And given the comments and before the Q&A, it sounds like $4 million or $5 million may have gotten pushed into fiscal '27?

Tyson Bauer: Okay. Given the comments before the Q&A, it sounds like $4 or 5 million may have got pushed into fiscal 2027?

Speaker #4: Yeah, that's about right. They're half of that order—that large order we got in the fourth quarter—that did not get out the door. And we...

Rob Capps: Yeah, that's about right. Half of that order, that large order we just got in the Q4, did not get out the door. We had hoped at one point that we'd be able to, it just didn't come in soon enough, and lots of factors as to when the customer could pick it up and things like that. We just did not get it out the door.

Speaker #4: We had hoped at one point that we'd be able to and just it didn't come in soon enough. And lots of factors as to when the customer could pick it up and things like that.

Speaker #4: So, we just did not get it out the door.

Speaker #5: So the current backlog that you disclosed, is that made up entirely of systems orders?

Tyson Bauer: The current backlog that you disclosed, is that made up entirely of system orders?

Rob Capps: Not entirely. There's some aftermarket stuff in there, too. Again, I don't have the breakdown in front of me, but it's a combination.

Speaker #4: Not entirely. There's some aftermarket stuff in there too. And again, I don't have the breakdown in front of me, but it's a combination.

Speaker #5: 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. Is a level closer to 2.8 going to be a good modeling number as we go forward?

Tyson Bauer: Okay. SG&A, obviously we had stock comp of $714,000 a quarter. You typically have some additional professional fees to start the year.

Tyson Bauer: Okay. SG&A, obviously we had stock comp of $714,000 a quarter. You typically have some additional professional fees to start the year. Is a level closer to 2.8 going to be a good modeling number as we go forward?

Rob Capps: Yep.

Tyson Bauer: Is a level closer to 2.8 going to be a good modeling number as we go forward?

Rob Capps: Probably ballpark. Again, with some variations from quarter to quarter. I think the stock-based comp is going to continue for a while. That'll start to trend off. Again, I don't have the trend off in front of me right now, but it will trend off over the coming quarters. 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. I think if you factor out the stock-based comp, you'll see things kind of stabilize or maybe trend down just a bit.

Speaker #4: Probably ballpark—again, with some variations from quarter to quarter. I think the stock-based comp is going to continue for a while; it'll start to trend off.

Speaker #4: Again, I don't have the trend off in front of me right now, but it will trend off over the coming quarters. Did we did have some unusual things last year, early in the year, which skewed the full year amounts?

Speaker #4: Some tax analysis, some franchise tax adjustments, things like that, which won't be reoccurring. So I think if you factor out the stock-based comp, you'll see things kind of stabilize and maybe trend down just a bit.

Speaker #5: Okay. Order timing, typically, capital budgets are set at the end of a year or calendar years. Then our gradually release the following year, whether it's in the beginning of the year, spring, or early summer.

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

Speaker #5: 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?

Speaker #4: 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 a year.

Rob Capps: 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 a year. I think capital budgets can go up or down. We certainly saw them go down last year, during the year. 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, than a natural calendar year. I would be cautious to put too much into that. Having said that, I think the general trend I'm seeing is an uptick in inquiries and interest in additional equipment. What's uncertain to us right now, we've tried to emphasize, is how quickly those opportunities materialize. Does it happen next month or is that nine months down the road? Hard to say right now.

Speaker #4: So I think capital budgets can go up or down. We certainly saw them go down last year. During the year. So I think they can go both directions.

Speaker #4: Also, as we're dealing with some of these governmental agencies, they work on a different calendar than we do. They're on a natural calendar year, so I would be cautious to put too much into that.

Speaker #4: Having said that, I think the general trend I'm seeing is a uptick in inquiries and interest in additional equipment. What's uncertain to us right now, we've tried to emphasize this, how quickly those opportunities materialize.

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

Speaker #4: Does it happen next month, or is it nine months down the road? Hard to say right now. So I think everyone's being cautious still.

Rob Capps: I think everyone's being cautious still, but I think they're making some preparations to maybe turn things loose a bit when things are a bit more certain.

Speaker #4: But I think they're making some preparations to maybe turn things loose a bit when things are a bit more certain.

Speaker #5: One thing I find interesting, when you talked about the possibility of new vessels, is that, given your competitive dominance in certain niches of the industry, new vessels require long lead times, dry dock space, those things.

Tyson Bauer: One thing I find interesting 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. 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 you're-

Speaker #5: 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 correctly?

Rob Capps: Well-

Speaker #4: Well, to a point. 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.

Tyson Bauer: Confident of the time?

Rob Capps: To a point. You are correct that there are certain aspects of the technology that are unique to us. 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. Those aren't a foregone conclusion. I think also you have to understand, especially with the foreign entities, governmental agencies, there sometimes are contractual requirements that we may not find palatable. We may walk away from an opportunity because we just don't like the terms. They're too onerous. That sort of thing can happen. You're right in that, to some degree, if a project happens, we're going to get it. Not to the same magnitude of a $10 million order necessarily.

Rob Capps: Well to a point. You are correct that there are certain aspects of the technology that are unique to us. 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. Those aren't a foregone conclusion. I think also you have to understand, especially with the foreign entities, governmental agencies, there sometimes are contractual requirements that we may not find palatable. We may walk away from an opportunity because we just don't like the terms. They're too onerous. That sort of thing can happen. You're right in that, to some degree, if a project happens, we're going to get it. Not to the same magnitude of a $10 million order necessarily.

Speaker #4: 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 are sometimes there are contractual requirements that we may not find palatable.

Speaker #4: 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.

Speaker #4: So I mean, you're right in that to some degree, if a project happens, we're going to get it. But not to the same magnitude of a $10 million order necessarily.

Speaker #5: Okay. And you're able to work with the CCP, or are you working with intermediaries so that the ultimate end customer doesn't really impact where your product ultimately ends up?

Tyson Bauer: Okay. 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?

Rob Capps: Okay. Ask that another way. I'm not sure I understand what you're getting at.

Speaker #4: Okay. Could you phrase that differently? I'm not sure I understand what you're getting at.

Speaker #5: Can you work directly with Chinese customers or do you have to work with intermediaries?

Tyson Bauer: Do you work directly with Chinese customers or do you have to work with intermediaries?

Speaker #4: Yes. Yes, we do.

Rob Capps: Yes.

Tyson Bauer: You already do. Okay. The last-

Speaker #5: Okay.

Speaker #4: And what it is. There's some things we can't sell to the Chinese, and there's some things that have to be we have to limit the capabilities of what we sell to the Chinese.

Rob Capps: It depends what it is. There's some things we can't sell to the Chinese, and there's some things we have to limit the capabilities of what we sell to the Chinese. Other things, there are no limits at all. Yes, we deal directly with Chinese.

Speaker #4: Those are things there are no limits at all. But yes, we deal directly with Chinese.

Speaker #5: Okay. And the last question, probably the most important question for shareholders, is how do we keep 27 if we're becoming a loss year for shareholders?

Tyson Bauer: Okay. The last question, probably the most important question for shareholders is, how do we keep 2027 from becoming a loss year for shareholders? Now, you may have expectations as of today of a lower fiscal 2027 compared to fiscal 2026 on financials. 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 wait out this pause that you're seeing currently. Are you seeing that scenario where we're not saying that fiscal 2027 is a loss 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 traverse throughout fiscal 2027?

Speaker #5: Now, you may have expectations as of today of a lower fiscal 27 compared to fiscal 28 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.

Speaker #5: Are you seeing that scenario where we're not saying that fiscal 27 is a loss 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 traverse throughout fiscal 27?

Rob Capps: Tyson, that is absolutely correct.

Speaker #4: I would toss in that is absolutely correct.

Tyson Bauer: I said it in too much detail. You didn't have to provide any color.

Speaker #5: I said it in too much detail. You didn't have to provide any color.

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

Speaker #4: No, that's exactly right. I mean, we tried to allude to that, in that there may be some things happening that just don't reflect themselves in the financials right away.

Speaker #4: But I think there are lots of opportunities for us to create value, and that's what we're all about.

Tyson Bauer: All right. That sounds great. Thanks a lot, gentlemen.

Rob Capps: Okay, you bet.

Speaker #5: All right. That sounds great. Thanks a lot, gentlemen.

Speaker #4: Okay. You bet.

Operator: 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.

Speaker #1: 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.

Rob Capps: Okay. I'd like to thank everyone for joining us today and look forward to talking to you again at the end of our Q1 here in a few weeks. Thanks very much.

Speaker #4: 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.

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

Speaker #4: Thanks very much.

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