Greetings, and welcome to the MIND Technology fourth quarter 2022 conference call. At this time, all participants are on a listen-only mode. A brief 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, Mr. Zach Vaughan, with Dennard Lascar Investor Relations. Thank you, Mr. Vaughan. Please go ahead.
Thank you, operator. Good morning, and welcome to the MIND Technology Fiscal 2022 fourth quarter 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 would 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 recorded instant replay until April 28th. Information on how to access the replay was provided in yesterday's earnings release.
Information reported on this call speaks only as of today, Thursday, April 21, 2022, and therefore you're 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, 2022. 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 these statements. Now I'd like to turn the call over to Rob Capps. Rob?
Okay. Thanks, Zach. I'd like to begin by first making some observations on the market environment before Mark discusses the financials in detail. I'll then wrap things up with some final remarks. Consistent with the past several quarters, we continue to see increased levels of customer interest across nearly all of our markets. We think there are a couple of factors driving this. First, the drag of the global pandemic is abating. We're able to travel, see customers, attend trade shows. As of earlier this month, for the first time in two years, we can travel by land between our Singapore and Malaysia facilities. These are important developments. Secondly, the general trends within our primary markets are positive. With oil prices above $100 per barrel, the pricing environment within the energy industry is creating optimism and demand from our customers in that space.
Events in Europe and the general global geopolitical situation highlight the need for maritime security technology and are driving demand for certain of our products. The move towards renewable energy sources, particularly offshore wind farms, is driving activity for our customers in the marine survey space. Our announcement of new orders last week, which we'll talk more about in a bit, is good evidence of these trends and increased activity. Now looking at our full year results, consolidated revenues were up approximately $1.9 million year-over-year. However, our fourth quarter revenue was not what we expected. We had orders at both Seamap and Klein that had been completed, but due to logistical challenges, our customers could not accept delivery. We had certain other orders that we expected to complete and deliver in the quarter, but were unable to do so due to supply chain issues.
As disappointing as these results are, I think it's important to note that each of these issues are ones of timing, not lost opportunities. To be sure, there will be other challenges in the future, but we see the general level of activity increasing. Our backlog of orders as of January 31, 2022, was $13.1 million. Subsequent to our fiscal year-end, we received firm orders of approximately $5.8 million and have responded to requests for quotes, or RFQs, that specify our products of approximately $4.5 million. Therefore, our firm and highly confident orders today total approximately $23.5 million. This is the highest book of business since our transformation away from the legacy equipment leasing business. That's not the end of it. We are pursuing other opportunities and are confident we will be successful on many.
We are encouraged by the level of interest we are receiving from our customers, and the engagement across our commercial and military market gives us optimism that we can translate to further orders. Our strategy to develop innovative technology and to find new applications for our existing technology remains intact. We recently introduced our Spectral AI, Automatic Target Recognition or ATR technology. This development has, in our opinion, been very well received by our customers and can differentiate our sonar products. Our synthetic aperture sonar or SAS development project is progressing. While initial deliveries have been delayed from our original expectations due in large part to component supply issues, we continue to believe this will be an important contributor in the future. Applications for unmanned platforms is another area of focus for us. Our integrated sonar system for unmanned underwater vehicles that we call Mako is an example of that.
We also see our passive sonar arrays as an ideal application for unmanned surface vehicles. Despite these visions for the future, we enter fiscal 2023 with a focus on near-term results. We are concentrating our efforts in areas where we see immediate demand, such as our multi-beam sonar systems, higher capability single beam systems, and seismic exploration systems. That being said, we continue looking to control cost in this challenging environment. I'll let Mark walk you through our fourth quarter and full year financial results in some more detail with probably a few summarizing comments. Mark?
Thanks, Rob, and good morning, everyone. As Rob mentioned earlier, revenues from continuing operations totaled $3.8 million in the quarter, resulting in a decrease of about 41% versus the $6.4 million reported in the same period a year ago. This decrease is largely attributable to the supply chain bottlenecks and delivery delays that Rob alluded to. Full year revenue amounted to $23.1 million, which was up 9% versus fiscal year 2021. Full year gross profit from continuing operations was approximately $6 million, down 17.6% when compared to the same period a year ago. This represents a gross profit margin of 26.1% for the year, which was down from the 34.5% we achieved during fiscal year 2021.
The reduced margin is due mainly to revenue mix, but also reflects inefficiencies resulting from the supply chain disruptions and delivery delays noted in Rob's opening comments. Our general and administrative expenses were $3.7 million for the fourth quarter of fiscal 2022, which was down from $3.9 million in the third quarter. We do expect further reductions in our general and administrative expenses following Guy Mauldin's retirement and the departure of Dennis Morris, our Chief Operating Officer. We do not intend to replace those positions. Our research and development expense was about $1 million for the fourth quarter, which was roughly flat with the same period a year ago.
These costs are largely directed toward our strategic initiatives such as automatic target recognition, synthetic aperture sonar, passive sonar arrays, and sensor systems for unmanned platforms, as well as enhancements and upgrades to our other sonar systems. Our loss from continuing operations for the fourth quarter of this year was $5.1 million, as compared to $2.1 million loss in the third quarter of fiscal 2022. Our fourth quarter adjusted EBITDA from continuing operations was a loss of $4.5 million, compared to a loss of $1.3 million in Q3. For our legacy land leasing business, which is classified as discontinued operations, we completed approximately $2.5 million of asset sales in Q4. As of January 31st, we have some miscellaneous equipment remaining, which will likely be monetized in the current fiscal year. MIND's capital structure and liquidity remain solid.
As of January 31, 2022, we had about $18.9 million of net working capital. We continue to have no funded debt or outstanding obligations aside from our normal operating commitments. Also, our cost structure remains lean and flexible. Should market conditions take a turn for the worse, we believe our largely variable cost structure gives us some leeway to reduce our expenses commensurate with any declines in our business. I'll now pass it back over to Rob for some concluding comments.
Okay. Thanks, Mark. While it is evident that supply chain challenges and inflationary pressures remain a factor, we are encouraged by what we are seeing in terms of orders across our business. There will always be some level of microeconomic uncertainty, but we feel that with the robust interest, customer optimism, and quote requests that we've received to date, that we're positioned to meaningfully grow revenue in fiscal 2023. Given the possibility of supply chain disruptions, the timing of orders may be pushed, but it's important to note that these orders are not disappearing. We have a strong backlog, and we're seeing increased customer engagement. After taking all of this into consideration, we are confident that fiscal 2023 will be much improved over fiscal 2022.
We will always remain vigilant when it comes to our cost management, and we'll navigate any supply chain and logistical challenges to the best of our ability if they should arise. We're optimistic about the upcoming opportunities for MIND throughout the year, and we look forward to achieving our long-term goals and generating meaningful shareholder value. With that, operator, let's open the call up for some questions.
Thank you. We will now be conducting a question and answer session. 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. Once again, that is star one to register a question at this time. Our first question today is coming from Tyson Bauer of KC Capital. Please go ahead.
Yeah. Good morning, gentlemen.
Hey, Tyson.
It appears with your current bookings and the backlog that we're starting the year with your fiscal 2022 already in hand, or primarily calendar 2021. Any incremental orders or bookings is just going to accentuate that growth year-over-year. The current end markets probably as strong a tailwind as you've seen in the past umpteen years, maybe the past decade, as far as both defense and with oil being as high as it is. With that scenario on the demand side being there for you, it becomes a story of conversion, getting the orders, getting revenue recognition, getting the cash flow.
Leads us to the big question, with that kind of size of growth potential, your cash management funding and working capital requirements, what is the plan there to be able to smoothly transition without necessarily having to tap the capital markets?
Right. Tyson, the capital raise we did last year was really in anticipation of this. A lot of that working capital build, if you will, has occurred as we've gone out and done more aggressive securing inventory, things of that nature. As we see things today, we think that we'll be able to self-fund the continued growth using the capital we raised last year. You know, if things go dramatically different, you know, maybe that changes. As we see it today, we think we are positioned to fund the growth that we're seeing and the growth that we have in hand, as you point out. I agree with you.
I think the position we're in starting the year is, without a doubt, stronger than any time in the last few years since we've made the change, you know, away from the leasing business. It's definitely a change in the overall market sentiment, and it's a change in our position. You know, it makes us feel pretty good about things. Obviously, the downside of that are the supply chain issues, which are, you know, difficult to manage, and they're there. There'll be things that we don't expect will happen. That's just the way the world is. We're working really hard to manage those. Again, that was one of the reasons we raised the capital last year.
Okay. And given your anticipation of these orders coming in and building your working capital, in expectation of that growth, that 23.5, is that obviously stuff that you anticipate getting delivered, converting this year with incremental as we go through the year, on that side of it? Given that you had some things push out of Q4 into this quarter, your quarter to date, shipments and getting that converted into revenue and then, of course, into cash, should we expect any kind of bump to start the year just because of those lags?
Well, certainly we're getting some benefit from things that got pushed out. They all won't happen in the first quarter necessarily. I think the full $23.5, we do expect to happen this fiscal year. That's fair to say, you know, plus other things. I do expect, of course, a big bump from Q4. That's not much of a comparison, actually. I would expect some improvement from Q1 last year as well.
Okay. When do you anticipate your first SaaS delivery or further developments that it'll be apparent to the market?
Excuse me, Tyson. I think later in the summer, we'll be blessed. The market will see some things.
Okay. Last one, in case Ross or somebody else is on the call. There has been more chatter about unmanned coastal defense, especially in light of the Ukraine situation and U.S. providing funding and Europe providing funding. I'm sure your partner is probably involved with that also. Are you seeing greater interest in your technology for that application, directly or indirectly, that you're able to talk about?
I can say that we definitely are seeing increased interest in that technology, and some of the increase in order activity is directly related to that, and really can't say much more beyond that.
Okay. Thank you, gentlemen.
Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one on your telephone keypad at this time. The next question is coming from Ross Taylor of ARS Investment Partners. Please go ahead.
Thank you. Rob and Mark . Couple quick questions about the business cash flow and operating margin. Looking at the book of business you have, would you anticipate that operating margin should revert back to the mid-30s% this year?
I definitely see improvement. You know, Ross, one of the big factors of driving margin down is just unabsorbed overhead cost. Just as revenues increase, we naturally see an increase in the margin as we absorb more of that. I also think just given the makeup of the orders that we're seeing, I think we're able to be a little more aggressive from a pricing standpoint. I would expect significant improvement in going back to more historical margins.
Therefore, looking at this year, fiscal 2023, do you anticipate that by the end of the year, looking at your order book and the like, you should be generating cash flow, free cash flow?
Well, yes, we think by the end of the year. We think by the end of the year we'll be at that point.
We've been waiting for a long time for. I kind of feel sometimes like someone has glued me to a chair and taped my eyes open and made me watch Waiting for Godot on a continuous loop.
Yeah.
Is this the year that by the end of this year, we're gonna start to see that breakthrough you've been talking about that's gonna push the revenue line from the $3 million-$6 million a quarter range to something meaningfully higher than this?
Ross, that's what we're seeing right now. I think that's what the order book tells us right now. You know, obviously, there are uncertainties in the marketplace that could affect that. We will see some quarter-to-quarter variations. There's no doubt there will be some unexpected events. There's no doubt, in my mind at least, that we are in a much stronger position going into this year and are much better positioned to, you know, deliver that. You know, I feel your pain. Believe me, I'm watching the same loop as you are.
Yeah. It's time that it ends. It wasn't a particularly good film the first time around.
Yeah.
Okay. Looking at this going forward then, when you look at your book of business right now and your book of potential business, is the defense side of the business the hottest area, the area you're seeing the most growth, or is it other areas? I mean, obviously with, you know, the search for things like lithium and rare earths and, you know, various and sundry heavy metals and the like, obviously, you know, in the past there was a lot of talk about undersea exploration or under the ocean being a place we're gonna find that solution. What segment of your business is really what's driving this kind of this move that you expect to occur this year, we're gonna finally achieve our breakout?
Yeah. It's really a bit across the board. Now, the defense or maritime security market is the largest potential, and has been the smallest for us historically. Probably from a percentage growth standpoint, that's gonna be more meaningful for us, I think. You know, the exploration market is really picked up some strength, you know, with the pricing environment for oil. Also, you know, as you mentioned, for other types of exploration activity. You know, I think our most recent order we announced for the institute in Korea is really geared towards that sort of activity, that sort of research. It's really across the board, I think.
Okay. I think this company is strategically worth a lot more than it's trading at, but you and I, and I think everyone on the call understands that you've got to execute to demonstrate that.
Yeah.
If you're not able to do that, I think there's a point in time where you have to recognize that as honorable as your intentions are to get better value for the shareholder through building, I think there's a point in here where you've got to look at it and just say, "The best way to get that value is to find a strategic buyer." I'm sure there are plenty of them who would be interested in what you bring to the table and would be willing to reward shareholders amply from the current price.
I hear you.
Okay. Thank you, sir. Take care.
Okay, Ross.
Thank you. This concludes the Q and A portion of the call. I would like to hand the call back over to Rob Capps for final comments.
just like to thank everyone for joining us today. I look forward to talking to you again here just in a few weeks, actually, when we report our first quarter for the current fiscal year. Thanks very much.
Ladies and gentlemen, thank you for your participation and interest in MIND Technology. You may disconnect your lines at this time or log off the webcast and enjoy the rest of your day.