Thank you, operator. Good morning, and welcome to the MIND Technology fiscal 2027 second quarter earnings conference call.

We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer.

Before I turn the call over to Rob, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available for 90 days via webcast by going to the Investor Relations section of the company's website at mind-technology.com or via a recorded instant replay until September 16th.

Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Wednesday, September 9th, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties, and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.

These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31st, 2026. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday, and please note that the contents of our conference call this morning are covered by these statements.

Now I'd like to turn the call over to Rob Capps.

Thanks, Zach, and thank you all for joining us today. As usual, I'll touch on our results for the second quarter and provide an update on the current market environment.

Mark will then provide a more detailed review of our financials, and I'll return to wrap things up with some remarks about our outlook. Our second quarter results reflect the ongoing market softness, offset to some extent by the resilience of our aftermarket business.

Order flow continues to be constrained, and customers are maintaining their wait-and-see approach amid a very unsettled geopolitical and commodity price environment. Our results reflect this.

Despite these headwinds, our aftermarket business continues to provide a recurring stream of revenue. This gives us a durable base through a period when new system orders are difficult to predict.

This allows us to remain patient and opportunistic rather than reactive. Last quarter, I laid out two dynamics in the broader energy landscape with the potential to drive increased activity and order flow.

There is a growing need for energy security following a significant supply disruption, and a favorable oil pricing backdrop is expected to support a resurgence in exploration activity. We believe both dynamics remain intact, but they have yet to result in firm orders.

The war with Iran has had a significant impact on our recent results. Certain ongoing projects in the Middle East have been temporarily interrupted.

Additionally, and perhaps more importantly, the award and commencement of additional projects in the region have been delayed. These factors have caused customers to delay spending plans.

They also, in some cases, have interrupted our customers' anticipated cash flows. This in turn caused certain customers to delay payments to us.

We are confident these amounts will be received, just not within the timeframes we originally anticipated. We continue to believe energy independence is top of mind for governments and operators alike, and there is a real need to replenish lost production and secure reliable supply.

We expect that to drive exploration investment over time. However, at the present, the stops and starts of the war with Iran have created such volatility within the energy markets that customers are hesitant to commit to project timing.

While oil prices remain elevated relative to historical standards, it's the durability of these prices, not the level, that drives investment decisions. The futures market does not expect today's prices to last.

What matters more to our customers and to their customers is certainty. An end to the conflict would remove much of that uncertainty impacting projects today.

We would then expect these programs to move forward. We see a resolution to the war as good for our business.

Now, our backlog of firm orders as of July 31st, 2026, was approximately $4.8 million, compared to $7.6 million as of April 30th, 2026, and $12.8 million as of July 31st, 2025. Protracted customer decision-making regarding new system orders and the execution of our existing backlog during the quarter were the drivers of the decline.

As our backlog continues to illustrate, there is considerable variability in the pace and timing of new orders. This has been magnified by the ongoing macro uncertainty.

I'll remind you that even in a normal market, new orders don't always arrive at a constant rate throughout the year. Importantly, we continue to view these as temporary pauses as customers iron out their operational plans and evaluate market conditions.

Despite the near-term softness, the longer-term outlook for the marine exploration and survey industry, and more specifically our business, remains very positive in our opinion. We've begun to see early signs of recovery and feel that an uptick in activity is inevitable.

I'll talk a bit more about this later. Outside of our backlog, which is defined as orders for which we have a 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 continuing to pursue certain significant projects, including some worth $10 million or more each. We have taken actions in recent months to strengthen our positioning and make ourselves more competitive bidders.

This provides us with optimism as we work to convert these opportunities into firm orders in coming periods. Turning to our results, marine technology product revenues for the second quarter of fiscal 2027 were approximately $5.6 million.

The majority of this revenue, roughly 87%, came from aftermarket activity consisting of spare parts, repairs, service, and other support activities. We've talked at length in recent quarters about this component of our business and its critical role within our overall results.

This has become increasingly important as system orders have slowed. While the aftermarket business is influenced by the general activity level within the industry, it is more recurring in nature than orders for new systems.

Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND since expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures.

As our installed base of Seamap products expands, does the potential for increased aftermarket activity. The second quarter was a difficult one, and our results reflect that.

Our aftermarket activity held up and continued to generate meaningful revenue at a time when system orders were effectively on hold. This allows us to manage through a period of disruption and position the company for when activity improves.

I remain confident in the opportunities ahead of us, and I believe it is just a matter of time until order flow returns. Now I'll let Mark walk you through our second quarter financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. Revenues from marine technology product sales totaled approximately $5.6 million for the quarter.

As Rob mentioned, our second quarter results continued to be impacted by general market softness and our customers taking a more cautious approach to their decision-making process. Despite these headwinds, we are benefiting from aftermarket activity that provides a solid foundation of recurring revenue.

This activity supports our overall results and serves as a buffer in times of reduced large system order volume. Second quarter gross profit was approximately $2.1 million.

This represents a gross profit margin of 37% for the quarter. Although a significant portion of our second quarter revenue came from aftermarket activity, which typically generates higher margins than larger system orders, lower overall revenue in the quarter resulted in less fixed cost absorption, impacting our gross margin.

As revenue returns to more normalized levels, we expect our cost optimization efforts and improved production efficiencies to support stronger margins. Our general and administrative expenses were approximately $3.3 million for the second quarter of fiscal 2027.

This was down both sequentially and when compared to the same quarter a year ago. Our research and development expense for the second quarter was approximately $407,000, which was up sequentially and compared to the second quarter of fiscal 2026.

This increase was due to the timing of cost recognition for component purchases. Consistent with prior periods, these costs were largely directed toward the development and enhancement of our streamer systems and source controller offerings.

Operating loss for the second quarter of fiscal 2027 was approximately $1.8 million, compared to operating income of approximately $2.7 million in the second quarter of fiscal 2026. Second quarter adjusted EBITDA loss was approximately $949,000, compared to adjusted EBITDA of $3.1 million in the same quarter a year ago.

Net loss for the second quarter was approximately $1.7 million, compared to net income of $1.9 million in the second quarter of fiscal 2026. As of July 31st, 2026, we had working capital of approximately $36.7 million, including $15.8 million of cash on hand.

This compares to approximately $19 million of cash at the beginning of the fiscal year. I would caution against reading that change as a reflection of our cash burn rate.

Movement in cash reflects the timing of receivable collections as much as it does operating performance. As Rob mentioned a moment ago, collections in the first half of fiscal 2027 were slower than we anticipated due to circumstances impacting certain of our customers' markets.

For a more accurate measure of our operating performance, we would point to our adjusted EBITDA. The company continues to maintain a clean, debt-free balance sheet with a simplified capital structure.

We also maintain operational flexibility to pursue strategic opportunities should they arise. I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. We are operating in a challenging macro environment, and our customers' wait-and-see approach reflects that.

Customers continue to delay order commitments regardless of industry or end use, which limits our visibility and will likely pressure results for another quarter or two. Much of that timing depends on conditions in the Middle East, which remain unsettled.

We are not going to predict when that will change. However, I want to emphasize that we believe demand has not gone away.

Although the timing remains uncertain, customers are actively evaluating several sizable projects, which we view as an encouraging sign for future activity. As conditions stabilize, we expect customers will reactivate their capital programs, and we're positioning the business to respond quickly when they do.

Customer interest and engagement remain solid, but they're not converting into firm orders at the rate we expected at this point in the year. As a result, our expectations are that our fiscal 2027 results will be below fiscal 2026.

Despite this view, two things give us confidence in our ability to manage through this period: our aftermarket business provides a steady stream of recurring revenue that supports our results, and we have meaningful working capital, including cash on hand. This gives us the flexibility to invest in the business and act on opportunities as they arise.

Our conviction regarding the longer-term prospects has not changed. The underlying dynamics within the marine technology industry remain intact, and we are seeing opportunities to capitalize on new areas of focus within the market.

Rather than pull back during this slowdown, we have continued to invest in our technology, and that is beginning to open doors. As an example, we've started gaining traction with our passive array technology in maritime security applications.

It's still early days, but we believe this technology provides a cost-effective solution to a real operational need. We're encouraged by the interest we've received and look forward to providing updates as things develop.

We're also pursuing upgrades and improvements to our source controller and towed streamer products, which we believe will generate new opportunities. In recent quarters, I've discussed our capital allocation strategy.

We have a simple capital structure and a debt-free balance sheet, and we ended the quarter with $15.8 million in cash. This liquidity gives us flexibility that not all small public companies possess.

We are constantly evaluating opportunities to create meaningful long-term value for our stockholders. Our first priority is always to preserve the strength of the company.

This includes funding operations through a period of reduced order flow and lower revenue while continuing to invest in technology that positions us for the recovery we expect. Beyond that, we see a real need to add scale, and we are actively pursuing opportunities to do so.

As we've said previously, there are several paths available to us. We can execute organic growth initiatives that we have identified, we can acquire assets or businesses adjacent to what we already do, or we can combine with another organization.

What we will not do is jeopardize the progress that we've made at MIND by chasing something that does not fit what we do. That being said, we continue to actively seek out transformative transactions.

We also recognize that another attractive use of capital is stock repurchases, especially at current price levels. We believe that recent prices for our stock do not accurately reflect the true value of the company.

I'd point out that as of the end of the most recent quarter, we had working capital of approximately $36.7 million, which equates to more than $4 per common share. Now, despite these apparently attractive economics, we did not purchase any of our common stock during the second quarter.

I understand how many of you are frustrated by this lack of activity. We do believe our stock at current levels represents a good investment.

However, there are often limitations on when we can be active in the market. We are precluded from buying, or selling for that matter, our stock during blackout periods pending the release of periodic financial results.

Additionally, we cannot buy or sell our stock when in possession of material information that has not yet been disseminated to the market. These situations could include ongoing preliminary discussions regarding new business or for strategic transactions.

We will continue to assess the appropriate time to enter the market against our other capital priorities. Going forward, preserving and enhancing value remains our primary focus, and we will allocate capital to the areas where we see the greatest return.

In closing, the market remains soft, but I am confident about where this business is headed. The projects our customers have deferred have not gone away, and the underlying demand fundamentals are only growing.

When activity returns, we intend to be ready for it. We have no debt, real liquidity, and an aftermarket business generating recurring revenue and technology that is expanding our addressable markets.

We are using this period to improve our positioning and sharpen our competitive edge. We are focused on innovating, adding scale, and partnering with customers that appreciate the value we deliver.

I look forward to executing on these priorities, which we believe will drive improved stockholder value. With that, operator, I think we can now open the call up for some questions.

Good morning, gentlemen.

Hello, Tyson.

I'm just going to follow up quickly on your last comment, and that is given the Middle East conflict, on-and-off situation and no resolution seemingly coming quick, how's that sway your capital use decisions for MIND? Does that accelerate some of these things you've talked about as far as improving shareholder value and growing the business, or do you hang on to that cash a little tighter and you see how things kind of play out?

The follow-up to that is you talked about these blackout periods and a lot of things, irons in the fire you have going. Would you anticipate that most if not all of Q3 may be in those blackout periods?

Let me address the last one first. Not necessarily.

Again, I don't want to telegraph when we may or may not be in the market, but I wouldn't say that's necessarily the case. I think that the situation in the Middle East certainly is we have to contemplate when we look at capital allocation.

Surely if we see a lesser opportunity in the very near term for new business, that might steer us a different direction as far as where we might allocate capital. Maybe be more inclined to buy back stock at that point or something more strategic.

Again, I just don't want to telegraph what we're going to do, but, yes, something we do have to contemplate. For sure, the Middle East situation has gone on much longer than I think any of us anticipated and certainly has had a bigger impact than we originally anticipated.

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

Is it kind of a combination at this point?

That's a really good question, Tyson. There are projects in the Middle East that have been impacted.

Also, I think the general economic macro situation has caused people to be cautious elsewhere in the world. Our customers, maybe whether they're located in the Middle East, in Dubai, or in Norway or the US, operate on a worldwide basis.

Just because they aren't in the Middle East doesn't mean they're not impacted by the macroeconomic situation that happens overall. I think that's really the bigger driver factor for the slowdown in activity.

You are definitely correct: we do see activity and are actively chasing projects that are non-energy related, especially in Southeast Asia, there's a lot going on there, and other parts of the world. We aren't totally energy-dependent and we are seeing activity there.

Again, part of that problem is just the budget cycles and those are driven by governmental issues and government budget cycles, not in the US necessarily, but elsewhere in the world, and they just move very slowly sometimes. Those are some of the larger projects that I alluded to earlier.

If we use this analogy of a frozen pipeline, obviously, you got two solutions: one, a slow thaw that creates a trickle of orders that come on the back side of this, or if it thaws quickly, you end up with possibly a pipe bursting, which I think we would not treat that as unwelcomed even though you may have a working capital requirement there. How do you see that playing out?

Is it more likely a trickle or more likely the pig in the python or a burst of orders?

That's a tough one to answer. I personally think it's closer to a trickle.

Trickle is maybe not the right word I would use, but I don't see things just bursting loose. I think because of the uncertainty that this has created, I think companies tend to be much more cautious now than they might have been in the past, just because of this uncertainty.

That's my read on it, but take it for what it's worth.

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

I think the particular instances I have in mind are more related to budget cycles and the process working its way through rather than anything from the macro environment. I don't think the Middle East situation necessarily has a big impact on those particular projects.

Government budgets, government agencies, those things?

They move at the pace they move.

Right. A couple just quick financials.

Appears that Q3, Q4 more likely than less likely to resemble Q2 or within that ballpark of that $5 to $8 million that you've experienced in the past on repair sales and kind of what you've talked about that recurring revenue base. Even if we have orders materialize, it's likely that this fiscal year is kind of more or less set in what we should expect, and all the focus then becomes, can you grow backlog before the end of the year, and what does that imply for fiscal '28?

Is that correct?

Yeah. There's definitely truth to what you're saying there.

I would I guess modify that in that certainly there are orders that are or prospects that were in the pipeline that we could turn around and deliver in this year. Now, obviously, as time goes by, the closer you get to the end of the year, that likelihood reduces.

I wouldn't write off the back end of the year completely at this point, but I think that's from the standpoint of large system orders.

Last one— I— Last one for me. Obviously, cash level $15 million, you said that it was an abnormal cash use quarter, don't expect that to continue.

What kind of cash management and projection are you looking at for the next quarter or two?

Again, I think the issue with the cash situation that Mark alluded to or addressed was we actually had three customers which had their cash flow impacted by the Middle East situation directly. [Coughs] Excuse me.

Two of those have been resolved, have been collected as of now. There's just a third that is still an issue, which is a substantial amount.

Again, we're very confident about the collection given who it is, but we're just working through the logistics of getting that resolved. If that's resolved by the end of the year as we expect it would be, then I think you'll see a significant increase in cash balance at that point.

Today's cash balance is greater than the 15.7 you recorded at the end of July?

Roughly. Not dramatically, but roughly.

Okay. Thank you.

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

Sure. We're looking at things on the production side, production cost, the people primarily, on the production side, what we can do there without hurting the longer-term prospects.

Same thing on the R&D side. I think we've really already done a lot on the G&A side, although there are a few tweaks here and there, but those aren't the big dollars.

We were definitely actively looking at those things right now, Ross.

Okay. What are your public company costs?

Oh, gosh. Depends how you look at it.

It's probably $2, $3 million anyway on an annual basis.

Okay. It's not meaningless as a—

Oh, no, definitely not, definitely not.

Okay. It strikes me from the—

Ross, let me point you to something. If you look at our 10-Qs and our financial reports, and our segment disclosures, that gives you some idea of what the corporate costs are.

They're

substantial. They're not all public company costs, but it gives you some idea of what that is.

I appreciate that. It does strike me as the situation in the Middle East and also in the Black Sea actually, in many ways, should be driving increased demand for exploration away from those regions.

Is that something that you were seeing? Obviously, no matter what the outcome of the war with Iran is, it's going to lead to a lessened interest, demand, less confidence in that as an energy source.

I would think that we would be seeing your customers accelerating a desire to explore elsewhere for oil, gas, and other things. Is that something you're seeing?

Absolute correct. Absolutely.

Just how quickly does that happen? These projects have a long lead time, how quickly do we see them come to fruition and therefore filter down to our business?

That's the uncertainty in our mind right now, but there's no doubt in my mind, and I think most people's minds, that what you say is absolutely correct.

Okay. To kind of just sum with your answer to Tyson question about cash, currently you've got just under 16, you would expect to be measurably higher than that level of cash at the end of the fiscal year?

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

Okay. You've talked a lot about the idea of doing potentially something strategic.

Given the situation, it strikes me as MIND lacks the size and the stability of revenues or stability of earnings at this stage to do a lot to leverage your balance sheet. I think you'd be really reticent to make an acquisition that would involve a great deal of debt.

However, at the same time, your stock is selling well under book value. I think book values, coming into the quarter was what, north of 4.5 bucks a share,

and so

you're selling well under book, which makes it very difficult to use your stock unless a deal is really attractive. What kind of size are you looking at for a deal?

You talk about transformative. To me, that means a company that's more than its current size, bigger than it is.

Is that a correct read,

and the

ability of profitability?

Obviously those deals don't come along every day. If we can find that sort of situation, or if we can find the tuck-ins that we can do on a reasonable basis to gradually increase scale.

At some point, I think a more transformative transaction, as you allude to, makes some sense. Again, those are hard to come by, and if you can do it on a relative basis, perhaps that makes some sense.

Those are the sort of things we are open to. As we've said before, we have a blank sheet of paper there, we are open to lots of different ideas, but we recognize we need to change the scale of this operation in order to bring more stability to it.

Right. Changing the scale, you in many ways also mean you need to create a business that generates a consistent level of cash flow, earnings, revenues, so that we can put a higher multiple on the overall business.

Correct? It's not just make it bigger, it's really make

it Give it

Yeah.

No, no, absolutely. Exactly right.

Okay. While you talk about the idea that it seems that in a lot of blackout periods, it would be nice to find an open period that would allow your insiders to buy stock.

Right now, I think I can probably buy a couple shares of stock for a latte, and it strikes me as it might be worthwhile to see some insider buying. There hasn't been insider buying in this company in a long time, and that would be a really nice vote of confidence.

I understand that 100%.

Okay.

I'd have to say

if we can get ourselves to where cash is higher, we're trading well under book value, the stocks does strike me as a very attractive investment here for a patient investor. Good luck pushing forward.

All right, man. I appreciate it.

Okay. Take care, sir.

Yep.

Just like to thank everyone for joining us today, and look forward to giving you ongoing updates about our progress, and talking to you again after our third quarter. Thanks very much.