MIND Technology, Inc. Reports Fiscal 2021 Third Quarter Results

MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

October 31, 2020

January 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

2,664

$

3,090

Restricted cash

—

144

Accounts receivable, net of allowance for doubtful accounts of $1,044 and $2,378 at October 31, 2020 and January 31, 2020, respectively

5,609

6,623

Inventories, net

11,880

12,656

Prepaid expenses and other current assets

1,278

1,987

Assets held for sale

5,440

14,913

Total current assets

26,871

39,413

Property and equipment, net

4,954

5,419

Operating lease right-of-use assets

1,363

2,300

Intangible assets, net

6,831

8,136

Goodwill

—

2,531

Other assets

774

429

Total assets

$

40,793

$

58,228

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

1,441

$

1,767

Deferred revenue

205

731

Accrued expenses and other current liabilities

2,468

1,565

Income taxes payable

691

316

Operating lease liabilities - current

280

1,339

Liabilities held for sale

1,133

2,730

Total current liabilities

6,218

8,448

Operating lease liabilities - non-current

1,083

961

Notes payable

1,607

—

Other non-current liabilities

797

967

Deferred tax liability

134

200

Total liabilities

9,839

10,576

Shareholders' equity:

Preferred stock, $1.00 par value; 2,000 shares authorized; 994 shares issued and outstanding at October 31, 2020 and January 31, 2020

22,104

22,104

Common stock, $0.01 par value; 40,000 shares authorized; 14,773 and 14,097 shares issued at October 31, 2020, and January 31, 2020, respectively

148

141

Additional paid-in capital

125,810

123,964

Treasury stock, at cost (1,929 shares at October 31, 2020 and January 31, 2020)

(16,860)

(16,860)

Accumulated deficit

(95,823)

(77,310)

Accumulated other comprehensive loss

(4,425)

(4,387)

Total shareholders' equity

30,954

47,652

Total liabilities and shareholders' equity

$

40,793

$

58,228

MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

For the Three Months Ended October 31,

For the Nine Months Ended  October 31,

2020

2019

2020

2019

Revenues:

Sale of marine technology products

$

6,541

$

8,175

$

14,814

$

21,039

Total revenues

6,541

8,175

14,814

21,039

Cost of sales:

Sale of marine technology products

4,267

4,860

10,039

12,478

Total cost of sales

4,267

4,860

10,039

12,478

Gross profit

2,274

3,315

4,775

8,561

Operating expenses:

Selling, general and administrative

2,973

3,401

8,915

10,538

Research and development

912

629

2,077

1,442

Impairment of intangible assets

—

—

2,531

—

Depreciation and amortization

662

604

2,092

1,810

Total operating expenses

4,547

4,634

15,615

13,790

Operating loss

(2,273)

(1,319)

(10,840)

(5,229)

Other income (expense):

Other, net

12

(31)

68

145

Total other income (expense)

12

(31)

68

145

Loss from continuing operations before income taxes

(2,261)

(1,350)

(10,772)

(5,084)

(Provision) benefit for income taxes

(109)

31

79

75

Loss from continuing operations

(2,370)

(1,319)

(10,693)

(5,009)

Loss from discontinued operations, net of income taxes

(1,220)

(709)

(6,143)

(2,570)

Net loss

$

(3,590)

$

(2,028)

$

(16,836)

$

(7,579)

Preferred stock dividends

(559)

(522)

(1,677)

(1,492)

Net loss attributable to common shareholders

$

(4,149)

$

(2,550)

$

(18,513)

$

(9,071)

Net loss per common share: - Basic

Continuing operations

$

(0.24)

$

(0.15)

$

(1.01)

$

(0.54)

Discontinued operations

$

(0.10)

$

(0.06)

$

(0.50)

$

(0.21)

Net loss

$

(0.34)

$

(0.21)

$

(1.51)

$

(0.75)

Net loss per common share: - Diluted

Continuing operations

$

(0.24)

$

(0.15)

$

(1.01)

$

(0.54)

Discontinued operations

$

(0.10)

$

(0.06)

$

(0.50)

$

(0.21)

Net loss

$

(0.34)

$

(0.21)

$

(1.51)

$

(0.75)

Shares used in computing net loss per common share:

Basic

12,313

12,158

12,223

12,135

Diluted

12,313

12,158

12,223

12,135

MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

For the Nine Months Ended
 October 31,

2020

2019

Cash flows from operating activities:

Net loss

$

(16,836)

$

(7,579)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

3,920

5,806

Stock-based compensation

562

612

Impairment of intangible assets

2,531

—

Loss on disposal of discontinued operations

1,859

—

Provision for doubtful accounts, net of charge offs

470

23

Provision for inventory obsolescence

256

—

Gross profit from sale of lease pool equipment

(1,326)

(987)

Gross profit from sale of other equipment

(303)

—

Deferred tax expense

(32)

135

Non-current prepaid tax

—

(157)

Changes in:

Accounts receivable

3,640

(1,020)

Unbilled revenue

(6)

(302)

Inventories

762

(2,835)

Prepaid expenses and other current and long-term assets

1,065

240

Income taxes receivable and payable

390

—

Accounts payable, accrued expenses and other current liabilities

(1,827)

(392)

Deferred revenue

72

1,979

Foreign exchange losses net of gains

—

230

Net cash used in operating activities

(4,803)

(4,247)

Cash flows from investing activities:

Purchases of seismic equipment held for lease

(110)

(1,939)

Purchases of property and equipment

(64)

(893)

Sale of used lease pool equipment

2,010

1,415

Sale of assets held for sale

734

—

Sale of business, net of cash sold

—

239

Net cash provided by (used in) investing activities

2,570

(1,178)

Cash flows from financing activities:

Proceeds from exercise of stock options

—

25

Net proceeds from preferred stock offering

—

2,211

Net proceeds from common stock offering

1,291

—

Preferred stock dividends

(1,118)

(1,492)

Proceeds from PPP loans

1,607

—

Net cash provided by financing activities

1,780

744

Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash

(117)

(69)

Net decrease in cash, cash equivalents and restricted cash

(570)

(4,750)

Cash, cash equivalents and restricted cash, beginning of period

3,234

9,549

Cash, cash equivalents and restricted cash, end of period

$

2,664

$

4,799

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 Ended October 31,

For the Nine Months Ended October 31,

2020

2019

2020

2019

Reconciliation of Net loss from continuing operations to EBITDA and Adjusted EBITDA

Net loss from continuing operations

$

(2,370)

$

(1,319)

$

(10,693)

$

(5,009)

Depreciation and amortization

662

639

2,092

1,914

Provision (benefit) for income taxes

109

(31)

(79)

(75)

EBITDA from continuing operations  (1)

(1,599)

(711)

(8,680)

(3,170)

Non-cash foreign exchange losses

35

18

79

86

Stock-based compensation

113

270

562

612

Impairment of intangible assets

—

—

2,531

—

Adjusted EBITDA from continuing operations  (1)

$

(1,451)

$

(423)

$

(5,508)

$

(2,472)

Reconciliation of Net Cash Used in Operating Activities to EBITDA

Net cash used in operating activities

$

(2,237)

$

(745)

$

(4,803)

$

(4,247)

Stock-based compensation

(113)

(270)

(562)

(612)

Provision for inventory obsolescence

(22)

(23)

(67)

(23)

Changes in accounts receivable (current and long-term)

1,003

2,396

(2,178)

916

Interest paid

11

13

34

40

Taxes paid, net of refunds

(27)

143

219

325

Gross profit from sale of other equipment

303

—

303

—

Changes in inventory

(1,462)

494

(762)

3,162

Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue

685

(1,051)

1,441

(1,935)

Impairment of intangible assets

—

—

(2,531)

—

Changes in prepaid expenses and other current and long-term assets

(162)

(240)

(631)

(145)

Foreign exchange (gains) losses, net

—

(241)

—

(230)

Reserve against non-current prepaid income taxes

—

137

—

—

Other

422

(1,324)

857

(421)

EBITDA from continuing operations  (1)

$

(1,599)

$

(711)

$

(8,680)

$

(3,170)

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. 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