MIND Technology, Inc. Reports Fiscal 2021 Second Quarter Results
THE WOODLANDS, Texas, Sept. 14, 2020 /PRNewswire/ -- MIND Technology, Inc. (NASDAQ: MIND) ("MIND" or "the Company") today announced financial results for its fiscal 2021 second quarter ending July 31, 2020.
Revenues from continuing operations for the second quarter of fiscal 2021 were $5.1 million compared to $3.2 million in the first quarter of fiscal 2021 and $6.8 million in the second quarter of fiscal 2020. The year-over-year decline was primarily attributable to the impact of COVID restrictions, which caused shipment delays from the Company's Seamap business and a temporary shutdown of production facilities.
During the second quarter of fiscal 2021, as part of the Company's rebranding process and strategic changes, management and the board of directors determined to exit the land seismic leasing business within twelve months of July 31, 2020. Accordingly, the Equipment Leasing segment has been treated as discontinued operations and the associated results are excluded from the Company's results from continuing operations for all periods presented. Assets and liabilities associated with the Equipment Leasing segment have been reclassified as "held for sale" in the accompanying consolidated condensed balance sheet.
The loss from continuing operations for the second quarter of fiscal 2021 was approximately $1.9 million, compared to $1.5 million in the second quarter of fiscal 2020. The Company reported a net loss per share from continuing operations of $(0.20) in the second quarter of fiscal 2021 compared to $(0.16) in the second quarter of fiscal 2020.
Adjusted EBITDA from continuing operations for the second quarter of fiscal 2021 was a loss of $1.5 million compared to a loss of $694,000 in the second quarter of fiscal 2020. Adjusted EBITDA from continuing operations, which is a non-GAAP measure, is defined and reconciled to reported net loss from continuing operations and cash provided by operating activities in the accompanying financial tables. These are the most directly comparable financial measures calculated and presented in accordance with United States generally accepted accounting principles. Backlog as of July 31, 2020 was approximately $7.6 million compared to $10.2 million at April 30, 2020 and $8.9 million at January 31, 2020.
In the second quarter of fiscal 2021, the loss from discontinued operations was approximately $4.7 million, which included the effect of estimated disposal costs of $600,000 and the recognition of a charge for cumulative currency translations adjustments related to those operations of $2.7 million. In the second quarter of fiscal 2020, the loss from discontinued operations was $1.6 million.
Rob Capps, MIND's Co-Chief Executive Officer, stated, "The prolonged disruptions and the decline in international activity caused by the COVID-19 pandemic continued to have a negative impact on our operations and near-term order flow. As an example, we completed a $1.8 million order at Seamap in the second quarter of this year; however, the customer was unable to arrange shipment and take delivery because of COVID-related transportation issues. We expect the shipment to be completed during the third quarter of fiscal 2021. Bid and inquiry activity remains solid, but it appears that customers are delaying making firm commitments. Travel restrictions have exacerbated these issues globally. We believe these factors have affected our recent results and backlog.
"However, we are optimistic about the future. Our MA-X and Micro MA-X technologies continue to attract interest. In addition, despite delays due to travel restrictions, we have recently completed successful demonstrations and tests of these technologies to various organizations within the U.S. Navy, which we believe can lead to significant program opportunities. We remain the dominant supplier of source controller technology to the seismic exploration market and are seeing renewed customer interest in upgrading capabilities, some of which are unique to our products. As announced a few weeks ago, we have entered into an agreement with a major European defense contractor to jointly upgrade existing technology to create the next generation of synthetic aperture sonar systems for commercial and military markets. These and other developments and initiatives fuel our optimism for MIND's future.
"All of our facilities are currently operating, albeit with certain COVID-19 related constraints and various regional restrictions. We also continue to focus on our cost structure to ensure we have the appropriate resources to execute our plans," continued Capps. "At our Annual Meeting of Shareholders held on July 27, 2020, we received shareholder approval for the reincorporation and rebranding of our Company, including a name change to MIND Technology, Inc., a change in our domicile from Texas to Delaware and an expansion of our authorized capital. We think these were important steps in positioning the Company for future growth."
Capps concluded, "We remain focused on our strategic vision of becoming a leading provider of innovative marine technology and products, and we are excited about the numerous new business and technology initiatives that we believe will create value additions and higher returns on investment. We plan to continue to grow our portfolio of technology and product offerings, whether through internal development, acquisition or alliances, while also expanding the markets for our existing line of products."
CONFERENCE CALL
Management has scheduled a conference call for Tuesday, September 15(th) at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss fiscal 2021 second quarter results. To access the call, please dial (412) 902-0030 and ask for the MIND Technology call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the MIND Technology website, http://mind-technology.com, by logging onto the site and clicking "Investor Relations." A telephonic replay of the conference call will be available through September 22, 2020 and may be accessed by calling (201) 612-7415 and using passcode 13708722#. A webcast archive will also be available at http://mind-technology.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Dennard Lascar Investor Relations by email MIND@dennardlascar.com.
ABOUT MIND TECHNOLOGY
MIND Technology, Inc. provides technology and solutions for exploration, survey and defense applications in oceanographic, hydrographic, defense, seismic and security industries. Headquartered in The Woodlands, Texas, MIND Technology has a global presence with key operating locations in the United States, Singapore, Malaysia and the United Kingdom. Its Klein and Seamap units design, manufacture and sell specialized, high performance sonar and seismic equipment. For more information, visit http://mind-technology.com.
Forward-looking Statements
Certain statements and information in this press release concerning results for the quarter ended July 31, 2020 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "expect," "anticipate," "plan," "intend," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts of our existing operations and do not include the potential impact of any future acquisitions or dispositions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, without limitation, reductions in our customers' capital budgets, our own capital budget, limitations on the availability of capital or higher costs of capital, volatility in commodity prices for oil and natural gas and the extent of disruptions caused by the COVID-19 outbreak.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, unless required by law, whether as a result of new information, future events or otherwise. All forward-looking statements included in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to herein.
Tables to Follow
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
July 31, 2020 January 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $
2,638 $
3,090
Restricted cash - 144
Accounts receivable, net of allowance for doubtful accounts of $1,044 and $2,378 4,439 6,623
at July 31, 2020 and January 31, 2020, respectively
Inventories, net 13,309 12,656
Prepaid expenses and other current assets 1,646 1,987
Assets held for sale 6,650 14,913
Total current assets 28,682 39,413
Seismic equipment lease pool and property and equipment, net 5,157 5,419
Operating lease right-of-use assets 1,636 2,300
Intangible assets, net 7,241 8,136
Goodwill - 2,531
Other assets 776 $
429
Total assets $
43,492 $
58,228
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $
988 $
1,767
Deferred revenue 370 731
Accrued expenses and other current liabilities 2,226 1,565
Income taxes payable 618 316
Operating lease liabilities - current 613 1,339
Liabilities held for sale 1,305 2,730
Total current liabilities 6,120 8,448
Operating lease liabilities - non-current 1,023 961
Long-Term debt 1,607
Other non-current liabilities 854 967
Deferred tax liability 200 200
Total liabilities 9,804 10,576
Shareholders' equity:
Preferred stock, $1.00 par value; 2,000 shares authorized; 994 and 994 shares issued and 22,104 22,104
outstanding at July 31, 2020 and January 31, 2020, respectively
Common stock, $0.01 par value; 40,000 shares authorized; 14,097 and 14,097 shares issued at 141 141
July 31, 2020, and January 31, 2020, respectively
Additional paid-in capital 124,413 123,964
Treasury stock, at cost (1,929 shares at July 31, 2020 and January 31, 2020) (16,860) (16,860)
Accumulated deficit (91,674) (77,310)
Accumulated other comprehensive loss (4,436) (4,387)
Total shareholders' equity 33,688 47,652
Total liabilities and shareholders' equity $
43,492 $
58,228
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months For the Six Months
Ended July 31, Ended July 31,
2020 2019 2020 2019
Revenues:
Sale of marine technology products $
5,086 $
6,820 $
8,273 $
12,864
Total revenues 5,086 6,820 8,273 12,864
Cost of sales:
Sale of marine technology products 3,069 4,013 5,772 7,618
Total cost of sales 3,069 4,013 5,772 7,618
Gross profit 2,017 2,807 2,501 5,246
Operating expenses:
Selling, general and administrative 2,988 3,380 5,942 7,137
Research and development 755 498 1,165 813
Impairment of intangible assets 2,531
Depreciation and amortization 700 605 1,430 1,206
Total operating expenses 4,443 4,483 11,068 9,156
Operating loss (2,426) (1,676) (8,567) (3,910)
Other income (expense):
Other, net 136 56 176
Total other income 136 56 176
Loss before income taxes (2,426) (1,540) (8,511) (3,734)
Benefit for income taxes 530 46 188 44
Loss from continuing operations $
(1,896) $
(1,494) $
(8,323) $
(3,690)
Loss from discontinued operations, net of income taxes $
(4,708) $
(1,643) $
(4,923) $
(1,861)
Net loss $
(6,604) $
(3,137) $
(13,246) $
(5,551)
Preferred stock dividends (559) (499) (1,118) (970)
Net loss attributable to common shareholders $
(7,163) $
(3,636) $
(14,364) $
(6,521)
Net loss per common share: - Basic
Continuing Operations $
(0.20) $
(0.16) $
(0.78) $
(0.39)
Discontinued Operations $
(0.39) $
(0.14) $
(0.40) $
(0.15)
Net loss $
(0.59) $
(0.30) $
(1.18) $
(0.54)
Net loss per common share: - Diluted
Continuing Operations $
(0.20) $
(0.16) $
(0.78) $
(0.39)
Discontinued Operations $
(0.39) $
(0.14) $
(0.40) $
(0.15)
Net loss $
(0.59) $
(0.30) $
(1.18) $
(0.54)
Shares used in computing loss per common share:
Basic 12,182 12,128 12,177 12,124
Diluted 12,182 12,128 12,177 12,124
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended
July 31,
2020 2019
Cash flows from operating activities:
Net loss $
(13,246) $
(5,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 3,210 3,960
Stock-based compensation 449 341
Impairment of intangible assets 2,531
Loss on disposal of discontinued operations 1,859
Provision for doubtful accounts, net of charge offs 470
Provision for inventory obsolescence 234
Gross profit from sale of lease pool equipment (1,326) (780)
Deferred tax expense 263 135
Changes in:
Accounts receivable 4,404 100
Unbilled revenue (9) 3
Inventories (675) (2,372)
Prepaid expenses and other current and long-term assets 766 (11)
Income taxes receivable and payable (47)
Accounts payable, accrued expenses and other current liabilities (1,583) 632
Deferred revenue 87 (50)
Foreign exchange losses net of gains 137
Net cash used in operating activities (2,566) (3,503)
Cash flows from investing activities:
Purchases of seismic equipment held for lease (110) (230)
Purchases of property and equipment (302) (573)
Sales of used lease pool equipment 2,010 1,186
Sale of business, net of cash sold 239
Net cash provided by investing activities 1,598 622
Cash flows from financing activities:
Proceeds from exercise of stock options 26
Net proceeds from preferred stock offering 1,980
Preferred stock dividends (1,118) (970)
Proceed from PPP loans 1,607
Net cash provided by financing activities 489 1,036
Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash (117) (65)
Net decrease in cash, cash equivalents and restricted cash (596) (1,910)
Cash, cash equivalents and restricted cash, beginning of period 3,234 9,549
Cash, cash equivalents and restricted cash, end of period $
2,638 $
7,639
MIND TECHNOLOGY, INC.
Reconciliation of Net Loss From Continuing Operations and Net Cash Provided by Operating Activities to EBITDA and
Adjusted EBITDA From Continuing Operations
(in thousands)
(unaudited)
For the Three Months For the Six Months
Ended July 31, Ended July 31,
2020 2019 2020 2019
Reconciliation of Net loss from continuing operations to EBITDA and Adjusted EBITDA
Net loss from continuing operations $
(1,896) $
(1,493) $
(8,323) $
(3,689)
Depreciation and amortization 714 639 1,479 1,275
Provision (benefit) for income taxes (530) (46) (188) (44)
EBITDA from continuing operations (1) (1,712) (900) (7,032) (2,458)
Non-cash foreign exchange losses 33 37 44 68
Stock-based compensation 219 169 449 341
Impairment of intangible assets 2,531
Adjusted EBITDA from continuing operations (1) $
(1,460) $
(694) $
(4,008) $
(2,049)
Reconciliation of Net Cash Provided by Operating Activities to EBITDA
Net cash provided by (used in) operating activities $
(3,495) $
(1,652) $
(2,566) $
(3,503)
Stock-based compensation (219) (169) (449) (341)
Provision for inventory obsolescence (23) (45)
Changes in accounts receivable (current and long-term) (46) (168) (3,181) (1,480)
Interest paid 12 13 23 27
Taxes paid, net of refunds 97 85 246 182
Changes in inventory 143 1,883 699 2,668
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue 1,100 (1,129) 756 (884)
Impairment of intangible assets (2,531)
Changes in prepaid expenses and other current and long-term assets (310) (504) (469) 95
Foreign exchange (losses) gains, net (5) 11
Reserve against non-current prepaid income taxes (137) (137)
Other 1,029 883 485 904
EBITDA from continuing operations (1) $
(1,712) $
(900) $
(7,032) $
(2,458)
1. EBITDA is defined as net income
before (a) interest income and
interest expense, (b) provision for
(or benefit from) income taxes and
(c) depreciation and amortization.
Adjusted EBITDA excludes non-cash
foreign exchange gains and losses,
non-cash costs of lease pool
equipment sales, impairment of
intangible assets, stock-based
compensation and other non-cash tax
related items. We consider EBITDA
and Adjusted EBITDA to be important
indicators for the performance of
our business, but not measures of
performance or liquidity calculated
in accordance with GAAP. These non-
GAAP financial measures are not
intended to replace the presentation
of financial results in accordance
with GAAP. Rather, we have included
these non-GAAP financial measures
because management utilizes this
information for assessing our
performance and liquidity, and as
indicators of our ability to make
capital expenditures and finance
working capital requirements and. We
believe that EBITDA and Adjusted
EBITDA are measurements that are
commonly used by analysts and some
investors in evaluating the
performance and liquidity of
companies such as us. In particular,
we believe that it is useful to our
analysts and investors to understand
this relationship because it
excludes transactions not related to
our core cash operating activities.
We believe that excluding these
transactions allows investors to
meaningfully trend and analyze the
performance of our core cash
operations. EBITDA and Adjusted
EBITDA are not measures of financial
performance or liquidity under GAAP
and should not be considered in
isolation or as alternatives to cash
flow from operating activities or as
alternatives to net income as
indicators of operating performance
or any other measures of performance
derived in accordance with GAAP. In
evaluating our performance as
measured by EBITDA, management
recognizes and considers the
limitations of this measurement.
EBITDA and Adjusted EBITDA do not
reflect our obligations for the
payment of income taxes, interest
expense or other obligations such as
capital expenditures. Accordingly,
EBITDA and Adjusted EBITDA are only
two of the measurements that
management utilizes. Other
companies in our industry may
calculate EBITDA or Adjusted EBITDA
differently than we do and EBITDA
and Adjusted EBITDA may not be
comparable with similarly titled
measures reported by other
companies.
Contacts:
Rob Capps, Co-CEO
MIND Technology, Inc.
281-353-4475
Ken Dennard / Zach Vaughan
Dennard Lascar Investor Relations
713-529-6600
MIND@dennardlascar.com
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SOURCE MIND Technology, Inc.
