MIND Technology - Earnings Call - Q1 2026
June 11, 2025
Executive Summary
- Q1 FY2026 revenue was $7.90M and EPS was $(0.12), missing Wall Street consensus as ~$5.5M of completed orders were not shipped before quarter-end due to third-party component delays and customer logistics; management emphasized these are timing issues, not lost business.
- Versus prior year: revenue down 18% (from $9.68M) and EPS below “<$0.01” last year; versus prior quarter: revenue down from $15.0M and EPS down from $0.25, reflecting record Q4 seasonality plus delivery slippage.
- Cash flow from operations rose to $4.07M and quarter-end cash increased to $9.17M, bolstering liquidity; backlog rose to $21.1M at April 30 from $16.2M at January 31, supporting near-term visibility.
- Management guided to a meaningful revenue increase in Q2, a return to profitability, and positive adjusted EBITDA, positioning Q2 as the key near-term catalyst if delayed orders are delivered and margin absorption normalizes.
What Went Well and What Went Wrong
What Went Well
- Backlog and pipeline strengthened: Marine Technology Products backlog reached $21.1M at April 30, up from $16.2M at January 31; management also announced a >$4.0M GunLink source controller order on the Q1 results day.
- Liquidity improved: Q1 operating cash flow was $4.07M and cash ended at $9.17M, indicating improved working capital management and collections.
- Strategic positioning and aftermarket: Aftermarket activity represented ~71% of Q1 revenue, with Huntsville expansion nearing completion to enhance repair/manufacturing capacity; “timing issues, not lost business” were emphasized by the CEO.
What Went Wrong
- Revenue and EPS missed consensus: Actual revenue of $7.90M vs ~$10.10M consensus and EPS of $(0.12) vs $0.08 consensus; EBITDA was negative vs a positive consensus, driven by shipment delays and lower absorption.
- Margin pressure from lower volume: Gross profit margin was 42% in Q1, down due to lower revenue and cost absorption; non-recurring G&A costs (~$250K) further weighed on profitability.
- Backlog variability and macro uncertainty: Management flagged uneven order flow and slower customer decision-making amid broader uncertainty (tariffs/trade), though direct tariff impacts are limited given operations in Singapore/Malaysia.
Transcript
Operator (participant)
Greetings. Welcome to MIND Technology First Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, 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, sir. You may begin.
Zach Vaughan (Company Representative)
Thank you, operator. Good morning and welcome to the MIND Technology Fiscal 2026 First 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, the company's website at mind-technology.com or via a recorded instant replay until June 18. 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, June 11, 2025, 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, 2025. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday. 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.
Rob Capps (President and CEO)
Okay, thanks, Zach, and thank all of you for joining us today. Today I will discuss some highlights from the quarter. Mark will then provide a more detailed update on our financials. I'll return to wrap things up with some remarks about our outlook. As expected, MIND's results for the first quarter were down sequentially after a record fourth quarter.
However, the decline was greater than initially anticipated after several customers were unable to take delivery of approximately $5.5 million of orders prior to quarter end. These delays are due either to late delivery of certain third party components or difficulty in arranging shipping, but these are timing issues, not lost business. I reminded you repeatedly, a slippage of a few weeks or days for a large order can have a significant impact on a particular period. We expect to deliver these orders in the second quarter. Despite these delays, cash flow from operations again grew during the quarter to about $4.1 million, which is an indication of our improved liquidity. We remain bullish on the balance of this fiscal year despite the shortfall in the first quarter and expect a much improved second quarter.
MIND has established a more resilient business with greater order visibility, a strong demand environment, and a much improved balance sheet and capital structure. We will almost certainly encounter other timing issues at some point in the future, but to the extent possible, we are working to mitigate the potential impacts on our financial results. We are doing everything in our power to control what we can control. We are focused on optimizing our supply chain to manage lead times on components to meet the delivery requirements of our customers. Our inventory levels over the past six months have been a great evidence of this as we're now using our improved visibility to draw down our inventory balances. As a result, we believe MIND remains strategically positioned for growth, improved financial results, and profitability in coming periods.
Our backlog of firm orders as of April 30, 2025 was approximately $21 million, compared to $16.2 million as of January 31, 2025, and approximately $31 million as of April 30, 2024. Beyond this backlog, we have an active pipeline of pending and highly confident orders and prospects that are well in excess of our current backlog of received orders. The order for our GunLink 4000 system that we announced yesterday morning, which is not included in the above amounts, is a great example of these prospects. Combination of our existing backlog and this active pipeline bode well for strong financial performance as we progress through fiscal 2026 and beyond. Now, as we approach the summer months, I want to remind you that new orders do not always arrive at a constant rate throughout the year, and order flow is often sporadic.
The variance in order flow is commonplace and not cause for concern. We also believe that recent uncertainty in the global economic environment has caused some delays in purchase commitments. Despite this, in recent weeks we have identified new opportunities. We think this bodes well for the balance of this fiscal year and beyond, we continue to benefit from three main product lines, our GunLink Source Controllers, BuoyLink Positioning Systems, and SeaLink Streamer Systems. All three of these are meaningful contributors to our backlog and will continue to drive improvements in financial results going forward. As a whole, our Seamap business enjoys a strong market position with each of its products, even a dominant position in some cases.
Our backlog and pipeline of orders are almost entirely comprised of these products, and I'm confident that the favorable market dynamics will enable us to generate many new orders in the future. We're also seeing a number of new promising opportunities related to our products that I hope to be able to update you on later this year. Another component that has meaningfully contributed to the sustainability of our improved financial results is our aftermarket business. Historically, approximately 40% of our revenue comes from this aftermarket activity. However, in the first quarter of this year, the aftermarket activity represented approximately 71% of our revenues. Now, this was to be expected due to the deferral of some system sales. As I discussed a moment ago, as our install base of Seamap products continues to expand, with it comes the chance for aftermarket opportunities such as spare parts, repairs and support services.
As a reminder, our products are deployed in a very harsh environment and damage is common and often inevitable. We are in the final stages of an expansion of our facility in Huntsville, Texas, which will enable us to provide additional repair and manufacturing services from that location. During the expansion, which has been in progress for the last couple of quarters, our revenue producing activities have been impaired. However, with the completion of these modifications, we expect the contribution from this location to build during the balance of this year and beyond. We anticipate this becoming a meaningful part of our revenue stream. Turning to our results, marine technology product revenues for the first quarter of fiscal 2026 were $7.9 million. As I mentioned, we expected a natural sequential contraction in revenue after an exceptional fourth quarter. However, we saw approximately $5.5 million of orders slide to the right.
We will continue to capitalize on macro tailwinds and customer engagement to stimulate order flow and generate improved results. We have deliberately worked to improve our execution efficiency and cost structure. We expect these efforts to deliver favorable results in future periods. Despite broad-based macro uncertainties in recent months, general market conditions within the marine technology space continue to be strong. We see a number of opportunities and continue to field inquiries and respond to requests for quotations. As a result, we are making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers. I'm confident that our differentiated approach, best-in-class suite of products, will continue to give us the competitive advantage to address the demand we see within the marine technology industry.
Now I'll let Mark walk you through our first quarter financial results in a bit more detail.
Mark Cox (VP and CFO)
Thanks Rob and good morning everyone. As Rob mentioned earlier, revenues from marine technology product sales totaled $7.9 million for the quarter, which was down approximately 18% from the same period a year ago. Revenue was impacted by the timing of $5.5 million of orders that were unable to be delivered prior to quarter end. We expect these orders to be delivered in the second quarter. We're continuing to see strength in all our key markets and the favorable customer demand environment gives us confidence for improved results over the balance of fiscal 2026 and beyond. First quarter gross profit was $3.3 million. This represents a gross profit margin of 42% for the quarter. Both of these metrics were impacted by lower revenue during the quarter stemming from the delivery delays addressed in Rob's opening comments.
The lower revenue resulted in less cost absorption, drove the year over year declines, revenue increases in the second quarter and our cost structure continues to benefit from greater production efficiencies. We expect these metrics to improve. Our general and administrative expenses were approximately $3.4 million for the first quarter of fiscal 2026. This was up both sequentially and compared to the same quarter a year ago. The sequential increase is partially expected due to normal seasonality of certain costs. However, our first quarter expense included non recurring costs related to a restructuring of our U.K. operation and tax analysis surrounding the preferred stock conversion last year. I think it worth noting that the tax analysis confirmed our understanding that the preferred stock conversion did not limit or impair our U.S. tax attributes, primarily tax loss carryforwards.
Our research and development expense for the first quarter was $380,000, which was down compared to the same quarter a year ago, consistent with prior periods. These costs were largely directed toward the development of our next generation streamer system. Operating loss for the first quarter was approximately $658,000 compared to operating income of $730,000 in the same quarter a year ago. First quarter adjusted EBITDA was a loss of approximately $179,000 compared to adjusted EBITDA of $1.5 million in the first quarter a year ago. As I mentioned earlier, the first quarter was impacted by approximately $250,000 of non-recurring expenses related to restructuring and tax-related professional fees that would have otherwise resulted in positive adjusted EBITDA for the quarter. Net loss for the first quarter was approximately $970,000 compared to net income of $954,000 in the same quarter a year ago.
As of April 30, 2025, we had working capital of approximately $22.8 million, including $9.2 million of cash on hand. Liquidity continues to be impacted by our operational requirements such as acquiring inventory and executing on our backlog of orders. However, we did generate approximately $4.1 million of cash flow from operations in the first quarter. This was an improvement of approximately 98%. Sequentially, company continues to maintain a clean, debt-free balance sheet with a simplified capital structure following the conversion of the preferred stock to common stock in the third quarter of fiscal 2025. We believe our solid footing and flexibility will further enhance stockholder value in future periods. I'll now pass it back over to Rob for some concluding comments.
Rob Capps (President and CEO)
Thanks, Mark. Our efforts to transform the company in recent years have positioned MIND for long term success. The strength of our balance sheet has made MIND more resilient, financially flexible, and has opened the door for us to pursue value enhancing strategic opportunities as we strive for growth. We also continue to benefit from significant customer interest and engagement related to our Seamap product lines. Our current visibility, strong backlog and robust pipeline also give us optimism for favorable financial performance for the balance of this year. Additionally, we are continuously exploring innovative ways to expand and repurpose our existing technology for new applications. I'm excited for us to actively chase these new initiatives and opportunities in the coming periods. Given we spoke with you only a little over a month ago, not much has meaningfully changed in the political and economic landscape.
There is still a moderate level of uncertainty present in the market related to tariffs and other trade restrictions. I remind everyone that the vast majority of our revenues are generated from our Singapore subsidiary. A similar proportion of our production activity takes place either in our Singapore or Malaysia facilities. Furthermore, in fiscal 2025, almost 95% of our revenue was derived from customers outside the U.S. Accordingly, our import and export activity through the U.S. is quite limited. Due to this, we do not currently anticipate a material direct impact on our business from the imposition of additional tariffs or trade tariffs by the U.S. or other countries. As noted earlier, uncertainty in the global economic environment can cause our customers to delay purchasing decisions. Of course, this is a fluid situation and we continue to monitor the evolving dynamics.
As we touched on last quarter, we recognized no matter how compelling our recent momentum has been, MIND is still a small company and with that comes inherent challenges. We've taken necessary steps to strategically position ourselves to realize our full potential and enhance shareholder value. We intend to evaluate all opportunities that present themselves with a focus on adding scale, expanding our offerings and growing existing product lines. This approach should enable us to strengthen MIND and improve its standing within the market for the benefit of all shareholders. The macro environment remains advantageous for MIND, which gives us optimism for the future. Marine technology products continue to penetrate a variety of industries and markets. We believe our backlog of firm orders and pipeline of pending orders and other prospects are reflective of the significant demand and market adoption of our product lines.
As a result, we expect a meaningful increase in revenue in the current quarter. This will enable us to achieve positive adjusted EBITDA and return to profitability in the second quarter, barring any unforeseen circumstances. This is a standard we expect to meet for the remainder of the year. Looking forward, we will continue to control what we can control. Customer delivery requirements and other factors may impact future periods. However, we expect the general trend will be one of improved results in fiscal 2026 and beyond. We have a solid backlog and significant pipeline of pending and highly confident orders. Both are supported by the robust customer interest and engagement that we are seeing within our key markets. We are also pursuing several new opportunities within our existing and future markets which I'm confident will bear fruit in the near future.
We have a differentiated and market leading suite of products, a favorable market environment and a clean capital structure. I'm confident we will deliver another great year in fiscal 2026 as we strive to enhance stockholder value and with that operator, we can now open the call for some questions.
Operator (participant)
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. Our first question is from Tyson Bauer with KC Capital. Please proceed.
Tyson Bauer (Analyst)
Good morning, gentlemen.
Rob Capps (President and CEO)
Hey Tyson.
Tyson Bauer (Analyst)
On the 5.5 delayed delivery, have those been delivered as of yet and are they mainly comprised of one or two systems?
Rob Capps (President and CEO)
Partially delivered, there's one large system and then a few other orders. Okay, so it's a little bit of both. The partially delivered but not completely yet. Those will be soon
though.
Tyson Bauer (Analyst)
On an accounting practice those remain in backlog finished goods. You're expecting those deliveries take place in the second quarter, so that full cash cycle should be complete by the time you end.
Q2.
Rob Capps (President and CEO)
Yes, from a billing standpoint?
Yeah.
From a cash cycle, you know, collections may or may not have happened at that time, but yeah.
Tyson Bauer (Analyst)
Okay.
On the tax loss carryforwards, after you did your analysis, what did you determine as the amount that you reasonably have that could be used in the future?
Rob Capps (President and CEO)
About $80 million U.S. dollars of NOL carryforward, roughly.
Tyson Bauer (Analyst)
Now the problem with that is you have to generate in the U.S. you just commented 95% is out of Singapore. How do you as a management team unlock that value? Either that comes from U.S. generated business or partnering with somebody who has U.S. business that can utilize your tax carry forward and isn't typically in that kind of activity, a business combination that that value on a stand alone about 25% of what the listed value is?
Rob Capps (President and CEO)
Yeah, you hear all sorts of numbers about that. It really depends on the circumstances, Tyson. I mean, you have to be careful about subsequent ownership changes, which we can limit that, but there certainly are ways to take advantage of that, try to shift more income into the U.S. There are, you know, you understand that under the U.S. tax laws now we're taxed on worldwide income with offsets for what you pay overseas. There is some benefit there. There are ways to utilize that. I think there is value there to us. You know, is it 25% of face value? I'm not going to speculate on that, but there is certainly value there, we think.
Tyson Bauer (Analyst)
I mean if it was, that's literally half your enterprise value is just in something that's in an accounting treatment.
Rob Capps (President and CEO)
That's the way the numbers work.
Tyson Bauer (Analyst)
Yeah, that's really untapped value that's gone unrecognized by the marketplace. A couple days after you reported last quarter or the fiscal year end, we see Trump do an executive order for deep sea offshore resources. China's in the news for increasing their activity for deep sea mining and rare earth elements. Those things may be further down the line, but there seems to be a lot more attention and activity in regards to those industries that could potentially, potentially utilize your technology in finding these things. Are you seeing that on your customer base that that is an area and an opportunity that could develop in the?
Years coming.
Rob Capps (President and CEO)
I think. What we're seeing is, you know, some of our existing customers and potentially new customers are, you know, looking to, you know, go farther afield than what they've done historically and, you know, use some of their expertise in that sort of survey type work, exploration survey work. You know, our products, especially the SeaLink product line, are, you know, right in the wheelhouse for that sort of thing. That's very encouraging for us.
Tyson Bauer (Analyst)
Now in the past you've done some master supply agreements with some of the bigger worldwide customers, especially those out of Norway, Scandinavian countries. Do you have any currently active and is that, is that an approach that you see as favorable for MIND as you go forward to either renew or to develop those master supply type agreements?
Rob Capps (President and CEO)
We certainly have those type agreements with some of our larger customers, which is again a framework for general terms. It does not address specific orders, but it does give us a framework. We certainly have those in place today and are looking to put others like that in place. What that does, that just facilitates new business is what it does.
Tyson Bauer (Analyst)
Is it not just an accordion feature that, okay, this is going to be a cost plus type contract or otherwise, so we can expedite the process on getting orders and getting production out to those customers?
Rob Capps (President and CEO)
That's correct. You have agreed to standard terms and conditions. You may have agreed to some pricing parameters as well. It certainly facilitates, makes it much quicker for a new order to come through. That has definitely been our experience.
Tyson Bauer (Analyst)
Okay.
New streamer system coming on later this year. The interest you've garnered so far, have you been able to go out and demonstrate this to your customers and what causes the customer to go with the older technology as opposed to the new technology that's coming or the new system that's coming? Will we start to see pre orders for that as we get toward the back half of the year?
Rob Capps (President and CEO)
I don't want to get too deep into that for some competitive reasons, but I would say it's more of an enhancement of what we have. It's not like a totally new technology. It's more of an enhancement and allows us to address some additional markets. Let me just leave it at that at this point and not get too detailed about that.
Tyson Bauer (Analyst)
Okay. Are you seeing bid margin trends favorable as we're going forward or are they pretty stable?
Rob Capps (President and CEO)
I'd say they're fairly stable. We have some ability to expand those, but it's fairly stable overall.
I'd say.
Tyson Bauer (Analyst)
Outside of the last question, for me, outside of the normal course of marine seismic activity that were renewable energy, offshore wind, rare earth elements, oil, gas, all those things you mentioned, new opportunities and expanding kind of your addressable market. Any additional customers you want to throw on that?
Rob Capps (President and CEO)
I think we've talked a bit about this in the past. We looked at taking some of our technology into a more maritime security application. Military type application. We pulled back on that as we tried to refocus the company to become profitable, which we've done. That is an area that we're re-examining today as to how we might, we think that basic concept is still very valid. We are just looking at how do we best address that and maybe re-enter that marketplace.
Tyson Bauer (Analyst)
Okay. And that goes beyond your AI spectrum and your Oceans agreement that you have.
This is the core product. Okay,
Rob Capps (President and CEO)
yes, absolutely.
Tyson Bauer (Analyst)
That sounds wonderful.
Thank you.
Operator (participant)
Our next question is from Ross Taylor with ARS Investment Partners. Please proceed.
Ross Taylor (Partner and Portfolio Manager)
Thank you. First, congratulations on the real improvement on the balance sheet in picking up on Tyson's line of reasoning, 20-25% value of the tax losses. Add to your cash. You really have a company selling at $3 or less a share in the marketplace with a lot of earnings power. Seems that the market still hasn't quite picked up on that, eventually they will. You guys have done a great job. Can you give us an idea of what's gone on with the $5.5 million? What impact did that have on your unrecovered cost? You obviously at this point you built out, it sounds like you built out a lot of that, had much of it ready to go, weren't able to ship it out. How did that impact earnings in the quarter?
Rob Capps (President and CEO)
Oh, it would have been another, you know, $5.5 million of revenue at, you know, at least at the margin that we demonstrated. So there's another about $2 million of operating profit or gross profit.
Ross Taylor (Partner and Portfolio Manager)
Yeah, it would have been on the gross profit level something like $0.25 a share or something of that nature.
Rob Capps (President and CEO)
Yeah, that sounds about right. Yep.
Ross Taylor (Partner and Portfolio Manager)
Yeah. Which once again goes to the power. As I said, congratulations on that. You announced an order yesterday. Can you give us an idea how has the backlog moved since the end of the quarter you are reporting today?
Rob Capps (President and CEO)
Oh, gosh, I want to be careful what I say there. It's, you know, because we add and subtract things every day, so there's things going in and out all the time. You know, that certainly is an add to the backlog. What's interesting about that, Ross, is, you know, that's a prospect and frankly, if we're having this discussion two months ago, that wasn't on our radar. That's really interesting to me that that's a new opportunity that's arisen recently. There have been some others that we now have visibility on, don't have the order yet, but we have visibility of prospects that we didn't have, you know, two, three months ago, which that's really encouraging me. Some of that, you know, is that next fiscal year activity for sure. That is still good news, I think.
Ross Taylor (Partner and Portfolio Manager)
When you say as a new customer, is this a situation where they are, is it a new use or is it someone in one of your, you know, areas that you're currently operating that you had not been doing business with, that is now doing business with you?
Rob Capps (President and CEO)
Oh, it's a, I wouldn't say it's a new customer, someone we've done business with in the past. They were an existing customer, but it's a new need for them.
Ross Taylor (Partner and Portfolio Manager)
Okay, interesting, interesting. We're talking about, obviously with your tax losses. You talked about you've been building up your Texas repair refurbishment capability. A couple things. One is how much money have you put into that facility and how does that coming to, you know, being brought online impact your income statement and the cash flows?
Rob Capps (President and CEO)
We've sent roughly, call it, $500,000 to expand that. That's in rough terms over the past, you know, nine months or so, something like that. Just about done with that. We think the activities there will then start to ramp up. We won't turn it on completely, but we think this can be several million dollars a year of additional revenue for us again, starting here soon and then kind of ramping up through the balance of this year and into next year. To your point, that's a nice piece of business for us in that it's more recurring, more predictable, and also it's U.S. based, so it helps us utilize those tax losses.
Ross Taylor (Partner and Portfolio Manager)
That's just where I was going with that. The fact that it's actually going to start to help build that up and therefore that income will have a significant, will be tax advantaged here in the
U.S. for you.
Rob Capps (President and CEO)
Correct. That's right.
Ross Taylor (Partner and Portfolio Manager)
Okay. So in looking at this whole situation also, I noticed it was brought to my attention you guys have an arrangement or announced an arrangement or you guys actually didn't necessarily with a, I think it's a German company, GWL. Could you give any background what is that tied into?
Rob Capps (President and CEO)
Again, we'll have more to say about that later. That is a company that has a new product concept they're working on and we're looking to partner with them to bring that to market and kind of jointly promote that. We'll have more to say about that in the near future.
Ross Taylor (Partner and Portfolio Manager)
Okay.
I mean it is interesting because you've been talking, Tyson asked you about this. Your comments even on your release talked about new opportunities. It sounds like new opportunities is both new customers but also new business lines. Is that correct?
Rob Capps (President and CEO)
Oh, absolutely. I mean, we, one of our objectives is to expand our offerings so we have, you know, more kit to offer our existing customers and new customers. So yeah, most definitely. That's part of the strategy. Most definitely.
Ross Taylor (Partner and Portfolio Manager)
Okay. I think Tyson pretty much got everything else that I was looking at. My long list of questions tends to become very short once you. I congratulate you guys on what you've been doing. It looks like, as you know, Tyson brought out, the fact is that the financial assets of this company are worth, you know, basically, you know, well over half or half of the value of this business right now. You know, it seems to me that you guys, is it safe to assume that, you know, when we're trying to look at you or model you for a year instead of a quarter, is that $48 million-$50 million revenue for a year or something?
I mean, I look at this number, this would have been over if we had done, if we'd gotten everything shipped. This would have been a $13+ million. You had a strong fourth quarter. You know, honestly, this is a stronger quarter than I thought it was going to be ex the inability to ship, you know, is that the type of thing we should be looking at when you're talking about numbers? Seeing that we should be able to be pushing up towards that $50 million annual run rate?
Rob Capps (President and CEO)
Roughly. Yeah, roughly. I think we'd be real happy with that if we got to that point this year. That's a, you know, two years in a row going in that direction. I mean that's order of magnitude. That's where we are, I think.
Ross Taylor (Partner and Portfolio Manager)
Okay.
Your margins should be in line to perhaps a little bit better as we push forward.
Rob Capps (President and CEO)
Yeah, I think that's right.
Margin.
Ross Taylor (Partner and Portfolio Manager)
Yeah. You guys have done a great job. Company's worth a lot more than it's trading at. Thanks. Keep executing.
Rob Capps (President and CEO)
Yeah, Ross, appreciate it.
Operator (participant)
As a reminder, to star one on your telephone keypad if you would like to ask a question. Our next question is from Greg Hillman, private investor. Please proceed.
Yeah, hi, Rob.
Rob Capps (President and CEO)
Hey, Greg.
Hey.
I wanted to ask you about the.
Sale of Klein Marine Systems. I think it went for like two times revenue, roughly, something like that. I was wondering if, you know, in terms of metrics for what the value of your company is now, would that fall into that area.
Oh, wow, Greg, that's a, that's a tough one. I mean, I guess you could, you could make that assumption. You know, there's kind of different markets, kind of a different situation, different buyers. I think that's not necessarily, you know, a metric that would apply, but you know, it is one data point for sure.
Okay. And just in terms of the sale, did you have an investment banker line up strategic buyers and financial buyers?
Bid that out or was that sold in some other way and did your need for cash at the time affect the price?
We did have a banker assist in the process, but I would say it's more we identified potential buyers and approached potential buyers. They're all industry partners that we knew. It wasn't like an auction, the typical investment banker process. We certainly were in a different financial position then. We had a need, we think, to make that transaction. I think that certainly did have some impact on our motivation. You know, did it impact the ultimate price? Who knows? Certainly we were motivated to sell.
Okay.
Just another thing basically is, is.
Offshore drilling more environmentally friendly than fracking onshore?
Gosh, I'm not sure how to answer that. That's a huge question. I think there are opinions on both sides of those arguments for both things. I'm not sure you can kind of compare the two. I think there are issues for both to be addressed or be aware of, but I think they both are overall very safe and very effective. I think the concerns are, in my opinion at least, are over talked about.
Okay. Just another kind of macro thing. I think 37% of world oil production comes from offshore.
How's that trending over time or where?
Do you see that going?
I think that trend continues probably to increase. I think what we're seeing is the general attitude or general trend in offshore exploration is positive from a long term standpoint and other short term disruptions. The price of oil today really, in my opinion, doesn't impact what people are doing from an exploration standpoint because there's a much longer term horizon. I think the general trend is one of being pretty bullish about offshore exploration and offshore production.
Okay. You know those companies that have databases of mapping and sell out the databases. Do you have any like valuable data that you sell?
we all were doing, Greg, is providing equipment that people use to gather data. We do not gather the data. We do not have the data at all. That is not what we do.
What's that software business that you have?
I didn't quite get. What does that do? Like, don't you have like a software suite?
Something we actually retained from the Klein sale with our Spectral AI, that's really limited to side scan sonar, and we actually are promoting that through the company that bought Klein, General Oceans. That has not produced significant revenue at all to us. It's been de minimis so far. I wouldn't put a lot of value on that on a go forward basis. I think it's something that's interesting that might be able to generate some things in the future, but that's not really our focus right now.
Okay, and then finally, could you, you.
Know, say something on the human resource side of the company, you know, what you're doing, you know, to develop people and also whether you have really like superstar engineers that can come up with, you know, patentable stuff.
So, you know, we're a company of 150 people or so roughly around the world. We have really smart engineers, you know, of all sorts that help develop new things. We've got really smart production people, we've got really smart admin people. So we, you know, try to give these guys, you know, the tools they need to do those jobs, you know, give them a good career path. Most of our employees are outside the U.S. as you might imagine. A little different environment in some cases. I wouldn't say there's one or two superstars that we keep locked in the closet to come develop new things.
I think we have a broad bench of really good people that do those sort of things for us.
Okay.
Appreciate it, Greg.
Thanks a lot.
Operator (participant)
That will conclude our question and answer session. I would like to turn the conference back over to management for closing remarks.
Rob Capps (President and CEO)
Okay. Just like to thank everyone for joining us today and look forward to talking to you again here in a few weeks, months after our second quarter. Thanks very much.
Operator (participant)
Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.