Ladies and gentlemen, good morning, and welcome to the MIND Technology Fiscal 2024 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Zach Vaughan. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to the MIND Technology fiscal 2024 fourth quarter earnings conference call. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer; and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Rob, I have a few items to cover. If you'd 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 May 7. Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Tuesday, April 30, 2024, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results, or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time-to-time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31, 2024. 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 those statements. Now, I'd like to turn the call over to MIND, CEO; Rob Capps.

Okay, thanks, Zach. And thanks, all of you, for joining us today. I'll start by discussing the highlights - from the quarter and the full year. Mark will then provide a more detailed update on our financials. Now, we turn to wrap things up, some remarks about our outlook. Our fiscal fourth quarter tapped off a year of immense progress from MIND, and it was evident in our results. We achieved positive adjusted EBITDA in the fourth quarter. And our continuing operations were profitable, for both the fourth quarter and on a full year basis. This was the first profitable year for MIND, since 2014. So needless to say, this is a significant milestone for the company and a reflection of the efforts we've made to strategically position the company for future growth. Furthering our transformation this year was our sale of Klein to General Oceans in the third quarter. This was a meaningful and necessary step towards streamlining our business and focusing our operations on the areas, with the largest potential for growth and profitability. Our Seamap product lines continue to gain traction, drive significant customer demand. The favorable macro environment, our narrowed focus, strong customer relationships, ever increasing capabilities, and valuable partnerships have boosted our order flow. The framework agreement we entered into this past year, which resulted in the single largest order in Seamap's history, is evidence of this. We entered fiscal 2025 with a backlog that exceeds $38 million. This represents another sequentially increase over the end of the third quarter and a 145% above where our backlog related to Seamap stood at the beginning of fiscal 2024. This robust backlog means that we're entering fiscal 2025, with a substantial book of business and that bodes well, for continued favorable financial results. However, as always the…

Thanks, Rob, and good morning, everyone. I'd like to remind everyone that with the sale of Klein, those operations have been treated as discontinued operations. Prior period results have been restated to reflect that. Accordingly, the results from continuing operations that we reported yesterday, and are discussing here today, including prior period comparative data, do not include amounts related to Klein. They include only our ongoing business. As Rob mentioned earlier, revenues from Marine Technology Products sales totaled approximately $13.4 million in the quarter, which was up about 51% from approximately $8.9 million in the same period a year ago. Full year revenue amounted to $36.5 million, which was up approximately 46% over the previous year, and represents the highest annual revenue ever reported by our Seamap business. Our fourth quarter results benefited from a little over $5 million of orders that were delayed from the third quarter, but there were other orders pushed from the fourth quarter into fiscal 2025. The shifting of deliveries and the impact of that on quarterly revenues, is just a fact of life for our business. We continue to believe the strength we are seeing in all our key markets and the growth in our backlog of orders positions us well, for sustained high-level revenue in the coming quarters. Full year gross profit from continuing operations was approximately $16 million, which was up approximately 61%, when compared to the prior year. This represents a gross profit margin of approximately 44% for the year. This is an improvement from the 40% gross profit margin, achieved in fiscal 2023. Incremental year-over-year revenue resulted in greater operating efficiency, and overhead absorption and a much improved gross profit margin. Our general and administrative expenses, were approximately $3 million for the fourth quarter, which was roughly in line with…

Okay, thanks Mark. MIND's results for fiscal 2024 demonstrate, the early benefits of our strategic transformation to streamline our business, and focus on our Seamap operations. We've developed valuable partnerships and customer relationships that have enabled us, to build a record backlog that continues to replenish itself, as we execute and deliver orders. Our deliberate emphasis on growth, and improving our bottom line throughout the year resulted in MIND achieving full year profitability, for the first time in about 10 years. And we're confident that the company's now built to sustain this positive momentum in future periods. Our Marine Technology Products continue to penetrate, a variety of industries and markets, which I believe is a direct correlation to the work that our team has done to develop, and continually adapt our technology to meet the evolving needs, of our customers. The market conditions remain favorable. We believe there are still notable opportunities for our Seamap unit, and our other initiatives. We believe our significant customer engagement and order flow, are indications of the market adoption of our product lines. We're encouraged by results in fiscal 2024, and the noteworthy improvements we've made to the business. However, our eyes remain fixed on the future. We believe MIND is exceptionally well positioned, with a strong foundation to capitalize on future opportunities. Now, despite these positive results and our optimism for the future, we continue to feel prudent to use our increased liquidity, and capital from operations to fund future growth and execute on our record backlog, rather than declare dividends on our preferred stock, and pay the deferred dividends in arrears. Although our operations are much improved, they do not support the required growth in working capital, and the payment of the deferred dividends. As you probably know, we did not declare…

Thank you. [Operator Instructions] Our first question is from the line of Tyson Bauer with KC Capital. Please go ahead.

Good morning, gentlemen.

Hi, Tyson.

I'm glad you threw in the second part, because I wasn't going to touch it with the 10-foot fall to begin with. We're able to stick to the business questions, at least on my part.

Okay.

We have 5 million rollover from third quarter to fourth quarter. We had some orders rollover from fourth quarter to first quarter. It seems like we're to a stage that the rolling 12 months, or the run rate is basically set where we're going to always have those timing issues, but we've really elevated the company to a new range of operating results as these things roll forward, especially with maintaining the backlog that you have. If that is how you are seeing this, what kind of working capital needs are you anticipating for this fiscal year, if we've reached that level of just rolling forward, and we should see similar results to what we just had, as we go through the quarters with some obvious variations?

Sure. I mean, that's a tough question, because working capital is dictated by exact timing of shipments, collection activities, terms, what our requirements are from vendors as far as payments, sometimes advanced payments. Do we need to buy materials in advance? So, it's a complicated calculus. I will say we do believe that we can fund that from our existing operations to create the working capital we need. But I think you need to be careful - if you look at the cash on the balance sheet in January, [$5 something million], and you assume that's excess cash sitting around. Well, that's not necessarily the case. That's going to help fund those working capital requirements as we go through the year, and handle those ups and downs. So that's the reason we think, it's very prudent and would be imprudent not to maintain that flexibility, such - that we do have the ability to fund those requirements as they arise, and sometimes they're unforeseen. So, again, I don't have a number for you, but certainly we think things will improve, but if the business continues to expand, that's going to expand the working capital requirements.

So you are anticipating growth off of the fourth quarter run rate then?

I wouldn't say that. I think that's a bit aggressive, given we had the orders flow in from the third quarter.

Well, you threw me a softball. So, I thought I might try to hit it out of the park for you?

Nice try.

Obviously, the end of the quarter is today. Are you willing, or able to give us any kind of insight on how we progress, to where backlog should end up, or where you're kind of standing cash-wise at the end of April?

You know, that side, I don't want to get into that. That's really dangerous to try to project financial results on the last day of the quarter, before we close the books. That's really dangerous. I'll just say that we're pleased about the way the business is progressing. I think we're consistent with what we talked about here today, and just leave it at that.

Okay. But you are pleased with your backlog and how that's progressed thus far?

Sure. Sure. Now, backlog is always going to go up and down. There'll be a period, I'm sure, in the future where backlog goes down a bit, and then it'll go back up. We have large orders that tend to come in batches. So, and I'll be surprise on that.

Yes, when you have systems, obviously, that can skew timing of revenue recognition, receipt, and accounts receivable?

Absolutely.

How would you - give us a little sense of the composition of the backlog, as far as how many are like whole systems that are ex millions of dollars, as opposed to partials that may be a little more, you know, under $1 million or $1 million versus, say, a $4 million or $5 million system?

Oh, gosh. I'm doing some internal math here. The majority of it is going to be systems, because obviously, just because they're bigger, they're going to dominate. So, there are a handful of full systems in the backlog, the balance being spare parts and things of that nature.

Okay. And the delivery timeline of that backlog that you disclose, should all be recognized in fiscal '25?

Most of it. I can't say all of it or some of them might slide into next year, but there'll be other orders that come in as well.

Okay. And the backlog does not include what you anticipate in servicing and parts, which is typically, in a given year, about 10% of what you generate in top line?

Yes. I mean, there may be some spare orders that we already receive, but those, again, happen throughout the year. So, there'll be more of those sort of things.

Okay. You talked about AI used by a couple of navies, global navies with your partnership. What exactly is being utilized with that AI system and your parts in that relationship?

So, Spectral Ai is a data handling and automatic target recognition enabling system. There's different aspects to it. So, simply put, when used with, in this case, side-scan sonars, but could be other sensor systems, it facilitates the handling and annotation of the data, and therefore, then the application of the automatic target recognition, algorithm to it. So, it takes some of the labor out of the process. It's primarily being used in a survey application right now, or survey applications right now. These navies, have their own survey operations. So, we're encouraged by that. We're getting good feedback, we think, as far as the efficacy of the program and making a few tweaks to it. Our arrangement is we still own that IP. We have licensed it to General Oceans, and then as they sell it, or license it to their customers. We retain a sub-license fee. And this relates to side-scan sonars. So, what we would hope to do in the future is then take this same technology towards other sensor systems, and do it directly. But that's something for the future.

Okay. So, currently, it's primarily utilized with your own hardware and software that you provide, but you're trying to make it so it's universal, that it'll work with a variety of different systems, even those not manufactured by yourself. And the licensing fee you get is pretty much just pure profit?

Yes. So, let's just clarify. It's with Klein sonars. So, sonar - at this point is not our equipment. It's the Klein equipment so General Oceans equipment. But, yes, so we've retained that license fee, and we do hope to move that to other sensor systems in the future.

Okay. Last question, and I'll let - others get on if there are others there. Are we anticipating a strong start then, or is this more of a - back-half weighted fiscal '25 as we go through? And obviously, timing, we know those disclaimers that you have, but you have a general sense that we started out this quarter, with a very strong backlog number, very reminiscent of what we had at the end of Q3, and what you were able to produce. And you kind of have a sense of what timing of that backlog is, as far as system deliveries throughout the year?

Nice try. I mean, can I just say that we think it's going to be a solid start, and just leave it from there. Again, I don't want to get too specific.

Okay. All right. Thank you, gentlemen.

Okay.

Thank you. [Operator Instructions] Our next question comes from the line of Sam Schwartz with Kaliber Management. Please go ahead.

Yes. Hi. Good morning. Congratulations on a significant change in quarter and performance. My question is regarding, is there an application, a military application for your AI software as far as targeting is concerned?

Yes. That's a - yes, but it's not something that we would provide. Let me expand on that. The Spectral Ai can be used, again, in the data handling aspects of it. But typically, any military application the military, or the navies are going to apply their own ATR, or model to it. While we have an ATR model that can be provided, typically, the navies of the world want to provide their own model. So, we kind of provide the front end, and they put in the back end, if you will. And there's a regulatory reason for that, too. If we were to provide the model itself, then it becomes much more export - controlled. And therefore, it's something we'd prefer to stay away from.

Thank you.

Is that it?

Yes.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I would now hand the conference over to Rob Capps for any closing comments.

Well, again, thank you, everyone, for joining us today. I look forward to talking to you again in a very few weeks after our first quarter. Thanks very much.

Thank you. The conference of MIND Technology has now concluded. Thank you for your participation. You may now disconnect your lines.