MIND Incurs Q1 Loss Amid Shipment Delays, Stock Down 11%

Shares of MIND Technology, Inc. MIND have declined 10.6% since the company reported its fiscal first quarter earnings for the period ended April 30, 2025, significantly underperforming the S&P 500 index, which dipped just 0.5% over the same timeframe. Over the past month, the stock has retreated 4.9% compared to the broader market’s modest gain of 0.5%.

For the first quarter of fiscal 2026, MIND incurred a net loss of 12 cents per share compared to breakeven earnings per share in the year-ago quarter. The deterioration in earnings was attributed to both lower sales volume and increased operating expenses. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company reported revenues of $7.9 million, a 18.4% decline from $9.7 million in the same quarter last year. This downturn resulted in a net loss of $1 million against a net income of $1 million in the year-ago quarter. 

Notably, adjusted EBITDA turned negative at $0.2 million compared to a positive $1.5 million a year earlier, signaling a meaningful drop in operational profitability.

MIND Technology, Inc. Price, Consensus and EPS Surprise

MIND Technology, Inc. price-consensus-eps-surprise-chart | MIND Technology, Inc. Quote

Other Key Business Metrics

Gross Profit and Margins

Gross profit for the quarter stood at $3.3 million, down 21% from $4.2 million in the year-ago period. The company cited lower sales volume and reduced absorption of fixed manufacturing costs as the key drivers of this decline. Gross margin slipped from approximately 43.6% in the prior-year quarter to around 42.2%, indicating some resilience despite the revenue drop.

Operating Expenses

Operating expenses increased 14.4% year over year to $4 million, driven primarily by a rise in general and administrative (G&A) costs, which included non-recurring items. Specifically, the company incurred expenses related to a reorganization of its U.K. operations and engaged third-party consultants for tax strategy analysis post a preferred stock conversion.

Cash Flow and Liquidity

Despite the net loss, MIND generated $4.1 million in cash flow from operations, a significant improvement from the $4.8 million outflow in the same quarter last year. The company ended the quarter with a cash balance of $9.2 million and reported working capital of $22.8 million, underscoring improved liquidity and operational efficiency.

Management Commentary

CEO Rob Capps characterized the quarter as a predictable step-down following a record fourth quarter, with results impacted by delayed deliveries. These orders were complete but could not be shipped due to supply chain bottlenecks or customer-side logistics issues. Management anticipates these shipments will be recognized in the second quarter of fiscal 2026, potentially reversing some of the first-quarter revenue shortfall.

Capps expressed confidence in the company’s long-term trajectory, citing continued investment in operational optimization and liquidity improvements. He highlighted the strength of the backlog and noted a healthy pipeline of opportunities, although recent global economic uncertainties have introduced delays in customer decision-making.

Factors Influencing the Headline Numbers

Revenue for the quarter was hampered significantly by shipment delays. Approximately $5.5 million in orders, which were fully completed, could not be recognized due to the timing of third-party component deliveries or the customer's inability to take receipt. Had these deliveries been completed, MIND’s revenues and gross profits would likely have been substantially higher.

Additionally, G&A costs were elevated by one-time expenses related to international restructuring and tax advisory services, which further weighed on operating income.

Guidance

Management reiterated its expectation for a stronger second quarter as delayed shipments are recognized and new opportunities materialize. The company cited strong market tailwinds and customer demand as encouraging indicators for the remainder of fiscal 2026. Management also discussed the strategic flexibility provided by its improved balance sheet, suggesting a readiness to pursue value-enhancing initiatives if suitable opportunities arise.

Other Developments

MIND disclosed that it is nearing the completion of an expansion project at its facility in Huntsville, TX. Once completed, this facility will enhance the company’s ability to provide repair and manufacturing services. Additionally, the Seamap product line continues to see broad-based deployment, creating future aftermarket service opportunities, such as parts, repairs and support. 

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This article originally published on Zacks Investment Research (zacks.com).

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