Q1 2021 Vislink Technologies Inc Earnings Call
Okay.
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Good day and welcome to the <unk> technologies 2021 in the first quarter earnings update meeting.
During todays presentation, there will be an opportunity to submit online questions. You may submit online questions using the window on the webcast. Please note. This event is being recorded I would now like to turn the conference over to Belinda Marino corporate Secretary of the board of Directors. Please go ahead.
Good morning, I would like to remind everyone of the safe Harbor statement referenced in the SEC filing the <unk>.
<unk> Securities Litigation Reform Act of 1995 provide the safe Harbor for certain forward looking statements, including statements made during the course of today's call statement.
Statements contained herein and better not based upon current or historical facts are forward looking in nature and constitute forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 21 E of the Securities and exchange The act of 1934.
Such forward looking statements reflect the company's expectations about its future operating results performance and opportunities that involve substantial risks and uncertainties.
When used here in the words anticipate believe estimate upcoming plan target intend and expect and similar expressions as they relate to the zinc technologies its subsidiaries or 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 the company's actual results performance perspective prospects and opportunities to differ materially from those expressed in or 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's various filings with the Securities and Exchange Commission and now Mickey Miller.
Thanks, Linda I'd like to walk of you all the the Q1 2021 earnings webcast I'll be joined on this webcast by my bond CFO of good like we'd like to take this opportunity to report on in Q1.
And the progress you've made as well as the latest developments in the future prospects.
Just prints will be able to submit questions during the webcast from the.
Main webcast page, we would try to take as many as possible.
In the first quarter of 2021 start to realize revenue from projects that had been delayed or canceled because of codes of the COVID-19 pandemic. Among the notable wins one of the contract where you seem to be of projects acquired two of substantial equipment upgrade for Alabama public television as well as the U S Department of defense order for a ruggedized.
Video communications equipment, we were proud of the launch two new products from the quarter IP lag three.
Which will have its first major deployment as part of the Alabama public television of order and the quantum of wireless camera receiver, which has begun shipping and we expect to reported many tier one events of some of them both products of healthy sales pipeline will contribute to our plan to introduce more new products. This year than we have in the last five.
Notably we continue to see increased quoting activity for new projects.
The planning for live in person sports and entertainment events of started after being on hold.
This is great news when you consider that the entire lives sports industry experience of contraction of over 70 per cent around the world due to COVID-19.
We were very encouraged of the new business bookings in our key segments were substantially up during the period.
A special note is that our live production business saw bookings jumped almost 70% over same period in 2020.
As of further signs of our business returned to normal levels. Our bookings to date. This year as of mid day were higher than all of 2020. This pretends well for clothing, new orders over the coming quarters.
The lower revenues recorded in the quarter of the significant cost and operational improvements. We have executed resulted in a substantially narrowed the loss, while positioning us for better outcomes as business increases.
In Q1, we nearly have both of our operating EBITDA loss from the same period in the previous year as we continue to better align our operating structure with revenue levels. This was the result of the ongoing stringent average we have made to put our financing and operational processes on a more sustainable footing.
Thanks to the 50 million capital raise we closed in the first quarter of the year, we have not only solidified our financial Foundation. We have also now additional resources to make strategic investments.
The internal operations as well as you evaluate and pursue targeted acquisitions, where they make sense for our business I will now turn it over to Mike Bondi, who will walk us through our financials.
Thanks, Nikki and good morning, everyone.
Here are some of the main financial results for the first quarter.
First quarter 2021 revenue.
Was $4 1 million compared to $5 4 million in the first quarter of 2020.
Gross margins were 45% sorry, 46% of revenue in the first quarter of 2021 compared to <unk> 47 per cent of revenue in the first quarter of 2020.
In the first quarter of 2021, the net loss attributable to common shareholders was $2 7 million or seven cents per share.
Compared to a net loss of $4 4 million or 50 force cents per share in the first quarter of 2020.
The EBITDA, which is earnings before interest taxes, depreciation and amortization for the three months ended March 31, 2021 was negative $2 4 million compared with negative $3 9 million for the three months ended March 31 2020.
We ended the first quarter 2021 with $60 million of cash compared to $5 2 million at December 31 of 2020.
Those of the highlights for the first quarter I'll now turn it back over to Micky to provide an operations update and outlook on business in our markets.
Thanks, Mike our product pipeline remains very robust as I mentioned in Q1, we started shipping the latest iterations of two key products will play a central roles in our offering across the board the.
P link Threet auto this is the new Ats C. III advanced studio and transmitter linked system that allows broadcasting service platforms to access new opportunities for monetization.
The quantum of wireless camera receiver is of native IP solution that provides robust reception from wireless camera transmitters at.
It will give you back producers exceptional flexibility in managing their production workflows and substantially lower the operational costs on the product management side, we initiated the remainder of our previously announced plan to rationalize the product lines. This is the way for us to better focus of our engineering and development resources streamline inventory and improve responses.
Miss to the needs of the market.
We also added additional capabilities of our engineering group and we increased spending on the R&D by 20% to help us keep our technology base of the cutting edge.
Even as we enter our growth bogey of maintained our focus on the financial discipline. During Q1, we further tightened up head count completed the closure of of redundant facility and adapt the organization to operate on the leisure basis.
We see the following in store for our key market sectors.
The the broadcast live production market in Q1, we started to see the first tangible signs of recovery in this market. This is the first evidence of what many industry analysts are forecasting, namely that the remainder of 2021 and beyond we'll see a rich pipeline of live sports events coming back online.
But the Mil Gov market. The U S. Army order received in the first quarters of signs no debt market is slowly coming back are.
Our revenue in the sector was substantially higher than Q1 from a year ago.
Our satcom revenue came in higher than projected in Q1, and we foresee growing opportunities for recurring revenues.
Ongoing integration projects.
And finally in services in Q1, we reported one of our first extended warranty contracts under the new managed service category and believe there is more to come with.
With COVID-19 restrictions start to ease we expect to return to be able to execute more onsite service over the coming months.
Looking forward, we forecast increasing demand from our key markets as they returned to post pandemic levels.
As a result, we see considerable opportunities to maximize revenues, we grow our business and deliver shareholder value during the rest of the year and beyond we look forward to updating you on our progress.
Now we'd like to answer some of the questions that have been submitted during the webcast.
Thank you we will now begin the question and answer session. You may submit online questions at any time today using the window on the webcast.
At this time, we will pause momentarily to assemble our roster.
Okay.
The first one I would like to know when we will see the 50 million that was raised a few months ago, you lie to enhance shareholder value. It's a great question. Mike do you want do you want to address that.
Yeah, we are.
We're very confident in one thing we don't want to utilize it in losses like we had in previous periods.
As Micky mentioned, we have reduced our breakeven substantially through operational efficiencies and some cost cutting so that $50 million as you well know still sits on the balance sheet for the most part and we are using that for strategic alternatives Mickey and I are looking.
Most on a daily basis.
Poor opportunity, where we can invest strategically we expect to do something by the end of the year, we're hopeful for that.
Have a lot of opportunity that we're looking at we are we intend to hopefully execute between now and the end of the year.
Yes.
Otherwise you'd mentioned the bookings to date of higher now than all of 2020 will most be recognized as revenue in 2021.
Yeah. The majority of bookings that we booked this year, we expect to ship in 2021.
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We are the operations team are very focused on this and we expect to.
To be able to ship a large portion of that in 2021.
Another question with the COVID-19, coming under control and without.
And with the rollout of vaccines as well.
How does the company out.
But now look now compared to just a few months ago. I think you know based on everything we've seen quoting activity has picked up dramatically in the last few months, particularly in the U S.
As I said, our bookings as of mid May were higher than the entire year of 2020, we're seeing solid demand across no government production. So.
We're really happy with with what we're seeing and the opportunity funnel and the ability to exercise and close on those.
We're optimistic about that continuing.
I think initially.
April continued strong so were pretty happy with where we came in on but can shine in April.
Make the here's the question do you anticipate any supply chain concerns and here, we have seen a tightening of the supply chain, we have strategically procured certain.
Items parts and micro chips that we think are critical for us.
So we have gone long on certain items and we do we don't anticipate any real supply chain interruption at this point.
Okay.
Isn't that what can you briefly touch on the drop in gross margin is that mostly due to supply chain constraints should we expect to see that bounce back. The the gross margin was all volume base.
So as we as we talked about we saw bookings increase.
However.
The the backlog coming in was still per do you do.
Alright are reduced due to COVID-19, so with the new bookings.
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So we werent able to get a lot of the shipments out in the first quarter as we manage our inventory now that we have.
The nice backlog, we will be able to do that.
But it was largely due to volume and then.
So a little bit due to mix, we had higher and higher percentage of them.
Older stack column products that were part of it but we would expect as <unk>.
As revenue is get normalized to what we'd expect.
That will be.
Our margins will be in line with historical margins.
Here's the question do you see additional business from the government infrastructure spending and here. We think we will we'll think we'll benefit very well from that we have seen quoting activity in the first quarter go up dramatically and in some cases multiples of what we experienced last year is.
As Mickey as mentioned before we sell into most of the countries police departments of first responders and we feel very confident that we'll get the.
The increase the amount of the activity of business from that sector.
Okay.
Greg Here's the question is does linked part of the Olympics and the answer to that is yes in a variety of ways. There's many producers and the participants in the Olympics from of broadcast perspective.
We have as customers vary.
A vast array of those those particular vendors who will participate in telecast in the Olympics and again, we see a lot of activity a lot of quote activity related to the Olympics and other major sporting events that are now coming back online after after COVID-19.
So here's the one when do you expect to be profitable.
As you know, we don't give forward guidance, but here's how we look at it you can see in our 10-K, you brought down the cost of our platform extensively through the initiatives, we implemented last year.
We did this while increasing our R&D spend for new products, but with just the illustrated in Q1, 'twenty, one even though our revenues were 20% 24% lower.
Our EBITDA was 39% better so all things being equal like product mix, we should be expect to be profitable at not the normal non COVID-19 revenue based on the the initiatives that we put in place to lower our breakeven.
Here's the question that says I imagine you booked very little in 2020 due to the pandemic so how much.
Do those low bookings impact 2021 moving forward for the next three quarters and the answer there is that yes, we had low bookings at the end of last year, but again, we're seeing a substantial increase in those bookings as Nicky said, we've now booked more business.
These year to date than we had in the entire last year and we are quoting activity has gone up by multiples. So we do see a <unk>.
Increase in business and the prospect for more business.
Again, we're very bullish on the next couple of quarters.
Yeah.
Here's one.
What puts you ahead of your competitors in terms of securing contracts.
The first thing Disney has a great brand in the markets that we serve.
The you know.
The long history of.
Bringing new technologies and supporting our customers. So we have a great brand, but the challenge that we had last year.
In the prior year was because of the financial position the company they were unable to.
True pay suppliers and hence we're unable to ship reliably the customer we have fixed that through the initiatives, we put in place as well as the.
The the efforts that we put around our financial foundation. So now we're in a position to build from that great name of the CAD and the extensive sales force and global partners that we have.
So.
Many cases.
Whether it be in live sports or in Mil Gov. We are.
Perceived as as the tech leader and as the most effective solution to solve the problems of our customers are trying to solve which largely around taking video and use it to make.
Is the incredible content or or make a very cost effective decisions and so we'll continue to build on the the <unk>.
Markets that we serve as well as growing into new markets.
I think that's the end of the questions.
Yeah, I think there's a few more here.
But I think some of them are consistent.
Are we under any sort of oriented or any acquisitions talk of course, Mike mentioned that the fun.
Raising we did in February is targeted for growth.
We're in we're in a lot of discussions but.
But you know we want to make sure that we're disciplined in our efforts and.
We won't do a deal just to do a deal Mike and I both.
Our careers of scene.
The most acquisitions don't work out and don't provide value to shareholders, whether it's culture related or strategy.
So we're going to be very disciplined and deploy capital, where we believe our shareholders will get the best returns.
And we'll continue in that effort.
As we as Mike said, we're very involved in a variety of discussions where we see opportunity, but but it's got to be the right deal for our shareholders.
Yeah.
Let's see I think just one last one here.
Which might kind of touch on what do you see of the biggest hurdles for 2021.
Now that we have the people of the new products and processes and cost effective infrastructure in place.
And in COVID-19 in some parts of the world is under control.
We need to execute on a revenue plan the biggest hurdles we see.
Would you here.
It is component availability, particularly semiconductors, our supply chain team is working diligently to identify potential risk and address them.
As you know this is not something unique to us.
The electronics industry phenomenon.
But we're super focused on that because now that we see things coming back from one to make sure that we can fulfill the opportunities that we do have we're fortunate to have a strong balance sheet and an excellent supplier relationships to address the problems if they do come up.
Well the couch.
We've got other questions, but I think they are all.
I think the major themes, we hit based on.
The other questions of Iraq so.
So this will this will end the question the answer portion of the webcast.
I appreciate all of those who submitted questions.
And we as Mike and I talked about our focus here on the on building shareholder value.
And we will continue to focus on that we're encouraged by what we've seen in the market. We are encouraged with the product pipeline that we have coming out as well as the.
The opportunity in sales funnel that we're seeing.
So we're going to conclude here will report on.
The second quarter in August.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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