Q3 2020 Vislink Technologies Inc Earnings Call

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Welcome to the <unk> technologies third quarter earnings update conference call.

All participants will be in listen only mode.

We've made the <unk> online questions and each time today using the one deal on the west cash.

Please note this event is being recorded.

I would now like to turn the conference over to the London Marino Corporate Secretary. Please go ahead.

Good morning, everyone.

I'd like to remind everyone of the safe Harbor statement referenced and the FCC filing the play.

Private Securities Litigation Reform Act of 1995 provides the safe harbor for certain forward looking statements.

Including statements made during the course of today's call.

And that's contained herein debt are not based on current or historical facts are forward looking in nature and constitute forward looking statements within the meaning of section 27 eight of the.

Securities Act of 933, and section 21 E of the Securities and Exchange Act of 1930 for that.

Such forward looking statements reflect the company's expectations about its future operating results for.

For months and opportunities that involve substantial risks and uncertainties.

When you hear and the words anticipate the lean you estimate upcoming plan target and tend and expect and similar expressions as they relate to the link technologies and subsidiaries for its management are intended to identify such forward looking statements. These.

Forward looking statements are based on information currently available to the company and are subject to a number of risks uncertainties and other factors that could cause of the companys actual results performance prospects and opportunities to differ materially from those expressed and implied by these forward looking statements.

For a more detailed discussion of some of the ongoing risks and some uncertainties of the company's business. Please refer to the company and various filings with the Securities and Exchange Commission.

Thanks, Linda Hi, this is Mickey mouse for I'd like to welcome you to the did late Q3 2020 of earnings webcast I'll be joined on this webcast by Mike BAW and our CFO.

Like to take this opportunity to report on the progress we made and the third quarter of 2020 the.

And you an update of our latest developments and future prospects.

Participants will be able to submit questions. During the webcast from the main Blake webcast page and we try to take it may and of those as possible at the end of the conference.

And the third quarter, we continue to feel the effects of the child, the macro business environment, the ongoing cold and 19 pandemic limited on topline growth due to the reduced demand in our key life production and Mil Gov markets, we experienced customers delaying the deliveries on both new and upgraded equipment.

I want to point out that and almost all cases these were not order cancellations, but rather an extension of delivery schedules requested by customers that will help them better adapt to the fluidity existing and their own budgets and deployment for cash.

The pandemic also negatively impacted our supply chain, and causing interruption and receiving components from a few of our suppliers the.

This further constrict your darden's constricted, our ability from fill orders and the quarter. Although we do expect these interruptions, we resolved over the course of Q4.

This is an area that we were taking country concrete steps to address ideally you design your supply chain with agility to address supplier interruptions, but having dual sources, we are implementing the supply chain discipline on all new design and.

And evaluating existing higher volume designs.

As part of our phase two of our turnaround effort and we continue our efforts and successfully streamlined all aspects of our business.

We built on the discipline cost focus approach, we instituted earlier this year and realize additional operational efficiencies during the quarter. We will continue this approach with additional cost reduction measures that are expected to achieve $5 million and savings on.

Our diligent and adhering to this next phase of our operational turnaround helped us mitigate the effects of the business downturn conserve cash and stabilize our finances. These actually the hubs and put us in a better position to capture growth opportunities as they arise for the remainder of 2020 and into next year.

One of our key developers we undertook during the quarter was the initial implementation of the comprehensive integrated business planning process for IBP. This is the tactical and strategic process from tightly integrating the planning functions and all departments and aligning operations and strategy with the company.

The financial performance, we have already seen positive and impacts from this initiative and the implemented the immediate changes the key processes and business policies.

During the third quarter, we experienced positive results from our product focus innovations. We're pleased to introduce two significant product lines. The D.V. I already sat com and co decoder and.

And the IP links Threed auto digital microwave system. These will be followed by the introduction of the new quantum receiver and the first half of 2021 of them.

We are encouraged by the progress of our development team.

He has made and deploying new technologies to meet market demand.

We also and issue they initiated our product rationalization program with the goal of making the optimal use of our financial and human resources. We are pleased with the progress we have made and will continue to execute on our plan in the coming quarters.

Although we experienced demand challenges and our sports and entertainment and Mil Gov markets. We are seeing increased activity and the professional and motor sports market, which has been making and come back from the slow down and live events caused by the cash pandemic earlier in the year.

We recently received the very large order from a prominent global motor Sports Racing series of public announcement of the orders will be forthcoming and we expect the liver the order this quarter.

Well continue to invest in our technologies like AR and VR onboard systems that are used to capture the live video and high speeds the.

They had been deployed and many demanding high profile sporting events around the world, including Moto GP and modal American motorcycle racing series and were considered the world leader in the solutions.

During the quarter, we also saw.

The increase in our service business, we successfully integrated our service and sales platforms. So that all service solutions can be sold through a global sales teams.

I'll now turn it over to Mike Bond, who will walk us through the financials.

Thanks, Mickey and good morning, everyone.

Here are some of the essential financial highlights from the third quarter.

Revenues for the three months ended September 32020 for 4.8 million compared to 5 million for the three months ended September Thirtyth 2019.

Gross margins were 31.8 percentage of revenue and the third quarter of 2020.

Impaired the 40.7% and the third quarter of 2019.

The the D.A., which is earnings before interest taxes, depreciation and amortization was a negative 2.4 million for the three months ended September Thirtyth 20 Twond.

Which represented an improvement of 2.3 million over the negative 4.7 million for the three months ended September Thirtyth 2019.

We ended the third quarter 20, Twond for 3.1 million and cash on hand.

Net loss attributable to common shareholders narrowed from 2.8 million for 17 cents per share and the third quarter 2012, compared to a net loss of 5 million for $2.41 per share and the third quarter of 2019.

Net loss attributable to common shareholders was 8 million for 61 cents per share for the nine months ended September Thirtyth 2020, which compares to a net loss of 11.7 million for.

$12.77 per share for the nine months ended September Thirtyth 2019.

I'll now turn it back over the Micky provided up and outlook on the business and our markets.

As we continue phase two of our turnaround we will maintain our focus on and integrated business planning process initiatives, which will improve our cash efficiency and customer satisfaction. In addition, we will continue execution of our product rationalization and new product development initiatives to meet the.

Future needs of our customer for video capture and transport.

We are tightly aligning with our customers and each of our verticals try to identify new opportunities and to align our product Roadmaps and.

Looking forward, we see the following the in store for our key market sectors, while the canceling broadcasts and live production market or the.

The canceling and scaling back of major live sporting and the entertainment event has pushed back infrastructure investments over the past two quarters, we are slowly witnessing such events coming back online and the.

This will allow us to again leverage our experience and covering the events like the Olympic games, The World Cup and other tier one competitions that we traditionally participated in.

The middle gone the market.

We see growth potential and the business from law enforcement and defense agencies that are pursuing aircraft acquisitions upgrades and down and the network modernization projects. We're in the process of ramping up business through targeted indirect sales channels, including OEM and bars on.

On a satcom business, we're starting to see results from the increased focus and investment earlier this year.

As mentioned in our service business, we are bullish on our ability to increase our service business and expect to see growth in this area that accompanies the general increase and solution sales, we expect and you realize over the course of 2021.

In summary, we remain cautiously optimistic for a return to normalcy and the industries. We serve in the meantime, we were encouraged by the effort and the progress the team has made and blocking and tackling and elements of our business.

That being said, we still see tremendous opportunities for improvement in every aspect of our business and we look forward to reported back to you on our progress and subsequent quarters.

Now we'd like to answer some questions that have been submitted during the the webcasts.

And.

There's a question I was excited to hear about the development of new products. How are you determining what products that fit the links growing portfolio.

On our product depth.

Definition and product management team works with our sales teams.

Tightly aligned with our customers and our development teams to identify the needs of the customers, where they're heading and how new technologies can impact those developments to make our customers for more successful. So the two new products and we introduced this current quarter.

On the IP Threed auto and the D.R. and D.. We are all based on that type of effort of our product management team working closely with sales and our customers coupled with working aligned with our development team and the new technologies and so we're very optimistic about.

The acceptance of those products on the market because they've been designed with our customers.

And Mickey Here's the question.

It says are there any defense programs overseas that have prospects for your products and the the answer is absolutely and yes, we do continue to flow.

Focusing on the military and government and first responder markets and we think the debt the products that we had that we sold here domestically in the United States also have good cross applicability to the to markets into the solutions and.

In other countries other military organizations and also first responder and police organization. So we continue to look at that we think thats a fertile area of growth for the company. We continue to push very hard on the military government side, and we think there's a lot of a lot of the or prospects for for growth in that area.

Thanks, Mike on other let you of slate how do you go to market. We go to market, we have a global footprint of of our direct sales people as well as partnering with value added resellers and rep representatives throughout the world.

We have very tight relationships for those in specific verticals, where they bring value of both.

No and the summer and also in deployment of those those types of products. So yes, we have a very broad on sales organization.

And here's a question and says your future sales look you have lost two point what is your future sales outlook. You of luck 2.4 million. This quarter and you had 3.1 million of cash the se and simple words, you survive one more quarter and answer is absolutely not nothing could be further from the true.

The mic it mentioned, we had a down quarter based on some slides for the right of some of our customer orders, we anticipate having a much better quarter next quarter, we have the constructed the company and and put some cost saving measures in place that will get us to a what we think is a breakeven or better point.

And we won't be burning cash like we had and the last quarter.

At this point, we still have access good access the public markets to raise funds if we need to.

And so we feel very very confident that we have the staying power and the financial resources.

The stay the course for at least through the next year if not for that.

Thanks, Mike the other one set at the end of this.

Quarter to you and form that there's no issues with supply chain due to Cove, and and now you're saying you did.

Yeah and quarter, two we had no disruptions on our supply chain in the third quarter, we did have.

Two vendors one with the unique product for our satcom products.

On which experienced the covance situation on their facilities, so their ability to respond to not only us and there are other customers was impaired as I mentioned in my comments earlier.

We need of design into our supply chain and into our products agility to be able to handle situations like that so you know that went on assets and area of the improvement for US. This is the product that's been around for a long time and does link, but as we build new products and as we evaluate our just and product portfolio.

We will evaluate it on.

From a perspective to ensure that we have a dual source and where we need to on key critical components and the ability not to have situations like this impact our revenue.

So thats the scenario of area.

And for us to improve and and we're well along that.

And the gears a question is is there another <unk> reverse split and the works and I'm sure. That's on the minds of a lot of our investors. The answer is no that Mickey and I are not a big fan of reverse splits. We felt we had to do the last one to two accomplish of staying with the in compliance with the NASDAQ.

We feel very confident where the share price is and where we will deliver value to to continue the could increase value for the shareholders to raise the share price and not necessitate a reverse split and so we feel very strongly that we have we can the go forward without reverse splits.

Necessarily to raise capital in the markets.

And we can keep our share price above.

On the requisite the requirement for the NASDAQ.

Yeah, and there's a couple of a couple of questions that our launch I'll ask and both are there any new contracts and the pipeline and how comfortable are you with the visibility of future sales. So there is a lot of contracts in the pipeline, there's a lot of activity happening.

The the confidence around.

Around the timing on those is the challenge.

For now experience of global increase and the pandemic.

We'll have to see how that plays out but I can say he you know in the first quarter or the first month of this quarter things are robust as a lot of.

For the existing projects as Weve been involved and talking about as well as new loans coming to the table. So.

Our visibility of and Greg given given what's happening with the pandemic, but I know there are many conversations going on with our sales teams and development teams around the needs of customers of to bring technology to help them you to be more efficient the increase or revenue.

And we'll be more productive so.

And we'll continue to monitor that and as you've seen we will monitor our cost base accordingly.

But as we mentioned we're cautiously optimistic based on the activity that we're seeing.

The one set of question is is there any order of products.

Are there any order of your products from the law enforcement area and the answer is absolutely yes, we continue to emphasize.

Emphasized law enforcement, given recent events and the requirements of law enforcement Theres, a greater requirement for them to surveil and to a and.

To.

Surveillance of of the urban areas and we are technology plays very well in that area. We continue to see a lot of interest from law enforcement and first responder organizations for the equipment that we sell and have been selling for quite some time. So we're very bullish again on that that segment of the Mark and we think we'll we'll have additional sales.

Sales and additional revenue and.

And the go in coming quarters.

Yeah, Here's one of the reverse split the Dot goes so well how you plan and take care of your investors and the future what does your schedule on PR investor relationship Communications.

From Marco on lever that's great question, you know when we look at this.

Oh yeah.

We see a first of all we brought on case USA to help us to with it with our communications to investors and what we're seeing from a lot of our customers of reticence and these days, whether it's through the defund police efforts or just general market situation. The make large announcements we are however.

Working with customers on on some things that we'll be able to announce in the future and there's a lot of activity going on and.

We haven't been able to announce many of those largely because of.

The of the subdued.

Directs and make public announcements along those but we are.

The engage and many opportunities, but a lot of of the has to do with the just the global caution around and what's happening with the pandemic and so we'd like to announce as much as we could and out to.

The the market because of.

When you look of what we've done with this business. This this company is effectively five companies that had been acquired overtime. So within it was and multiple set of processes organizations peoples facilities, and we've been able to pull that together and make a rationalization effort to lower our cost base.

Improve our efficiency and bring new products to market, we bought more products and markets this quarter than and effectively did in some times, though.

We're continuing to build on the fundamentals of the business.

We can't control the pandemic, but we can control what we do every day in terms of what we focus on and what we do to improve our business and that's what our team is doing we were making massive improvements from everything from.

How we go to market.

We define our products, how we develop our products and how we producer of products and how we ship our products, we have a lot of room for improvement.

And Thats whats encouraging here, we see a good platform with an excellent customer base and each of the markets that we serve and now we're working on the fundamentals and we see tremendous opportunity for improvement and we're making progress each quarter to that as you can see with this quarter. We had roughly the same amount of sales as we had a year ago and we lost half as much.

Okay.

No I'm not proud of that we we don't like to lose money and we.

We have areas to improve and by making additional cost savings like we have to achieve additional five moving dollars and savings.

Yes, and we were not sitting back and taken this cold and situation.

And wait until it's over and we're taking action internally to position ourselves to come out of co head of better and we went in and and so really encouraged with what our team has done with our entire organization has done but we have a lot more to do we have a lot more room for improvement.

The making what maybe one final question I see is the someone asked you mentioned the acquisitions and an interview last month.

Is that still in the cards and the answer to that is you know Mick and I look almost on a daily basis basis, and organic and inorganic growth. We obviously are very much concentrated on organic growth at this point, we see we do see as Micky said, a lot of opportunity and the markets we participate.

And and the business size.

Business segments that we participate and and we do see adjacency and other markets that we can also play and as well and for.

Our prime products, but we also are looking for inorganically as well and that will continue we do have a big push the look at other areas that we could potentially use our products and the other areas, we could use our customer base and to effectively take other products and put them into those for this customer bases as well so it'll be the ongoing price.

Process we.

We can't say much at this point, but we do continue to look at inorganic growth as well as organic growth.

[noise] well that's right. So the so that's where we are we appreciate the engagement of our investors. We appreciate the questions. You know just to summarize we got a lot of work to do we're happy with the progress we've made so far but we've got a lot of work to.

I do and I think.

And we do see just some reasonable normalcy and the sports and entertainment Mark lets face it and.

Sports and entertainment has been back but it's.

Fraction fraction of the.

Of the amount of event I think I saw the rights holders of had losses are down 80%. This year on last year. So the oil markets been impacted.

But the things that we're doing internally when that market returns, we're going to bring innovation and a big way. There's a great deal of new technologies that will be and applying to our overall portfolio and we'll have a platform that will allow us to efficiently efficiently.

The Liberty for our customers and return and results to our investors. So that's our goal. The we're focused on this 24, seven and we'll continue to do that.

Thanks, everybody and thanks, everybody.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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