Q1 2022 Vislink Technologies Inc Earnings Call

Tyler can which is our multi camera solution focused on tier two and tier three content was introduced and we saw quite.

A large response to that product and finally, we are in.

Integrated all our products to be part of our linked matrix, which was part of the mobile viewpoint solution to be our complete OS that manages every bit of devices that we have whether they're classic visiting devices or mobile viewpoint devices to our customers on one screen can manage their entire network.

So here's some additional financial and operating updates that we incurred this quarter.

We went too far.

Okay. So.

The live event production market as we know is a big piece of our business.

I think when you look at that market today. The operative word is automation how can we do things more efficiently how can we help our customers acquire and capture more content.

And monetize content more efficiently. So when you look at what we're offering with Archie sports producer or overall, <unk> pilot or any of our automation products, it's about bringing more efficiency and the ability to cover lower tiers of content to be able to monetize those.

Yes on the mill side again automation as acute as it is.

Huge piece of that it's about taking images, whether it's from drones, whether it's from fixed wing or helicopters or on the ground to be able to make decisions quickly. So the massive amounts of content that is created and captured and distributed and then how do you automate that to make decisions effectively.

In the theater of operation, So, that's where a lot of large focus.

Those are in use cases like emergency response crowd, Ryan control disaster support or surveillance.

So now I'll take you through some of the.

Financial highlights I think we skipped the slide we need to go back to the financial highlights.

Susan.

Thanks.

Yes.

So when it comes to financial highlights Mike what specific things have got to make sure that we mentioned and talk about here, yes, sure. We have a slide thanks, Paul we have a slide that.

It covers our financial and operating operational highlights for the quarter. So our gross margins were 52% in the first quarter and we did take a.

Charge for amortization of a step up in basis for our MVP acquisition.

When you take when you subtract that out we were more of that.

55% to 58% gross margin pace, which we think is very good that's where we'd like to stay and that compares to about 46% gross margin in the first quarter of last year. So we've had some significant increase and we've maintained our margins in the first quarter. The Q1 net loss attributable to common shareholders was $2 8 million.

We're about six cents a share that compares to a net loss of $2 7 million or seven a share for Q1 of 2021.

The EBITDA that's earnings before interest taxes, depreciation and amortization for the three months ended March 31, 2022 was a negative $1 3 million compared to a negative $2 4 million for the three months ended March 31 2021.

We also realize some operational efficiencies over the quarter, we did vet and add significantly to our base of suppliers I think at this point, we're up to over 50 key suppliers and Thats important because as we go through this supply chain issue.

Need to increase and have additional sources of supply in order to mitigate some of the shortages that were experiencing so we've done that we feel pretty good about that we think that will help us bolster us against any effects of the supply chain issue as going forward, we did upgrade our United Kingdom facility the operational aspects of it we changed.

And improved our factory floor, we made it more efficient and it now it accommodates our workflows more readily.

We did complete a complete move of our U S facility. We went from Hackettstown, New Jersey to a smaller facility amount all of New Jersey, but we did increase the efficiency of that operation is brand new it looks beautiful and everyone's excited to be there and we think it will improve our operations substantially there as well.

So we are commencing to relocate and upgrade our service and repair and maintenance.

Function and we're going to take that from our prime facility here in cold Chester and move it to loosen and create a new facility there for that function and we think that will improve our customer care and our repair and maintenance.

So I'll run you through some of our M&A and investment.

Thoughts so we still are investigating.

And actively pursuing M&A options.

We have been doing that throughout the year, we are a small company and we think it's very important that we find just the right opportunities. We think we've found that an MVP for a number of different reasons and so we're doing that and that we were looking for organizations that can contribute to the bottom line almost almost immediately and help us in terms of our go to market and our product portfolio.

So our goal is to try to have a deal closed and announced in 2022, we'll continue that.

The deal size that we're looking for is anywhere between 10 and $30 million.

And we are looking at various sectors that could augment our capabilities as they are today, we're looking at AI based and other automated video recognition technology. We are looking at what is called <unk> for ISR, which stands for command control Communications computers intelligence surveillance.

<unk> and that is obviously utilized and as an initiative by the U S military to combine all of those functions into one central command.

We are looking at automated live production.

And we're also looking at process or.

Digital automation, if you will.

Different solutions and technologies that would help us.

Our offers forward in that in that respect.

So in the first quarter, we had two large shows the Hilli Expo, which I talked about earlier, we introduced we have about 4000 people that are focused on.

Helicopters drones.

And fixed wing to some degree and it was all about bringing our new.

Aero linked product to market. We had incredible response, we're now working with those customers to finalize our demos and introduce that product later this fall.

2022 was a fantastic first broadcast event in over two years.

It was a large event 45000 people registered.

We generated over 400 leads that were following up on and we're able to engage with many of our customers that we've known for years and these are the major networks and the major content owners and the major producers of content throughout the world. There was an international event and we're really pleased that we were named the ICU sports producer won the best AI lives.

Streaming solution from video make your magazine.

Thrilled to be part of it.

We've got a lot of events today and tomorrow in Dubai Cab sat 2022 is happening.

That's a large event in the middle east around our solutions, both for broadcasters and military.

Later this week starting tomorrow.

No Paul Asia, and Thats, all about public safety and civil defense that'll be happening, Singapore, and then next week Millipore Cutover again still a defense counterterrorism and public safety will be happen in Qatar in June we'll have broadcast Asia, followed by NAFTA in Las Vegas apps Con.

Which is aviation public safety nets again fixed wing unmanned drone technologies will be in Reno, and then Texas Association of broadcasters and then yet again one of the larger events. The second largest event behind NAV, which will be RBC in September in Amsterdam.

With that we'll open up to Q&A.

All right welcome back everyone happy to have you all here with this man like.

Like you mentioned, we're going to do some Q&A here at this point in the program. So you have the chat function over there on the right hand side of your screen drop as a question. If we answered one of your questions and she said to run with it we'll send use invisalign swagger T shirt or something like that so make sure to be asking questions of in there in the channel. We know that there are questions that you have an information that you need to make sure to add.

Over there and we will kick things off here with a question from Jay <unk>, who asks how are your efforts at landing new contracts, making let me pass this over to you.

Thanks, Tyler what's interesting is we've been working on our digital marketing and we've been working on how to engage with customers and potential customers in the Covid World and then also bringing that as live events come around.

And we've been really pleased right now.

We're seeing more quote activity than we ever have in the history of the company. So the activity is tremendous we are spending a lot of time working with these customers whether its on live production or on first responder military of understanding the challenges the problems, we're trying to solve and how our technology can best help them.

And then we'll see as the market will evolve obviously with interest rates going up.

There is concern, possibly but from what we're seeing two things are evident one on the live production side. The consumer is spending their discretionary income on consuming content all types of content. We've seen incredible amounts of very unique types of content and then and then.

Following on the first responder side, we are seeing what we saw last year kind of a slowness around the deep fund the police efforts, we're seeing that come back and the activity around not only traditional opportunities, but opportunities that <unk> bring we're seeing a tremendous amount of quoting activity around that.

Excellent excellent John Rutherford would like to know.

When do you expect to breakeven and be profitable here in the future.

No. That's a great question and so we've done a lot of work over the two years that Micky and I have been here to kind of optimize the business model.

Consolidated a lot of our facilities.

Changed some of our workflows, we've optimized our teams we think to go to market. We've done one successful acquisition with global viewpoint, and we did peak above.

The breakeven line late last year.

We frankly think we can do that this year as well we've optimized the operations to produce profit and to be profitable. We think we're going to do that this year.

<unk> had a slightly slight loss this quarter and some of that had to do with the fact that we did have some material shortages of supply chain challenges, but we think we think there's all kinds of reasons to believe we will be returning to profitability in the coming quarters, we do see it like Mickey set a comeback in the live event market.

I think the our ability to sell in the military and government market is as good as ever. So we think we have a good shot of being profitable share.

Excellent stuff excellent stuff so.

Next question that we got here are you seeing increase in component costs, sneaky and something that we're seeing quite a bit of around the world is that something that youre seeing as well.

Yes, we have Tyler, particularly around semiconductors.

As you know being a tech company a lot of our IP.

We put in firmware and software that rides.

Rides on our IC systems on a chip and so we've seen increases we've instituted increases ourselves we're able to pass those increases on we had across.

Many product lines and increase in May and we will continue to monitor that to see how things are responding in the supply chain environment and what we do from a product standpoint.

With our markets.

Well said well said when can we expect to see orders realized from all the leads you got at the big shows that <unk> exhibited at we saw all of the the big events that you guys have been at and where you're going here in the future. So when can we expect to start seeing some of those orders.

Yes, I think almost immediately it's interesting we had such a good response and we had such a good experience at this most recent Nab show and as Micky said, we had over 400 leads generated from that that opportunity that event alone. So as Micky mentioned, we have a lot of events scheduled we're going to be.

Canvassing the world at these various events. So we think it's almost immediate we think we will look at this we'll continue to kind of snowball and gain momentum as we move through the year.

Great stuff, great stuff, Mike Mckee listening back over to you, which parts of <unk> business are growing the fastest right now.

Well I think when you saw the numbers around live production, we saw a large increase in the order base there they go over 40%.

And that's obviously driven by our live events coming back when you look at.

You name it across every major Lee now people are in the stands.

Audiences around the world.

Assuming this content and so we not only see it happening at the tier one premier events, but we also see tier two events schooner events you name. It everything you could conceive of is being created and now consume as content. So we see more of an opportunity is the premier tier one events come back.

But also as the appetite for all types of content increase that we will see additional opportunities around those types of content and those types of events.

Yes, great Great does that kerwin chimes in with the question Zack. Thank you. So much for this question and it's a really pertinent one in a really good one do you have any equipment being utilized in Ukraine at this time.

Yes, good question Zack.

We do.

We're careful how we discuss that but we.

We are very much in tune with the crisis and the effort to supply the Ukrainian military.

So if we can be a part of that we could be helpful.

Nick and I have made the decision we will do that.

Yes, very well very well put I appreciate that Mike and Michael Let's stick with you for this has come and shifted your orders in revenue run rate forward.

It has slightly.

Again, the pandemic had a decidedly.

Significant effect on our live production business last.

Last year, as Micky said and what we've seen in some of the shows that we've attended and some of the customer responses that we're getting is that people feel that the COVID-19 pandemic has been put behind us substantially there are parts of the world that are still shut down mostly in Asia, but we are seeing a lot of places come back online we're <unk>.

<unk> the <unk>.

Customers that we have the big producers of live events coming back and saying that they see a need and a necessity for even more.

Immersive content and therefore, they are upgrading and continually adding more equipment to their portfolio and their repertoire in order to provide that type of content. So we're seeing it all of the world in all shapes and forms and live events and were also seeing again. This idea that there is.

An emphasis on various aspects of first responder in military spending that fit very neatly into the things that we do both standing off in surveillance and in observation of things capturing video and transporting that wirelessly to a <unk>.

An area, where you can utilize it or monetize it. So we think we're very well positioned as the world comes out of the pandemic to really to benefit from all the various.

Areas, where we think theres going to be increased business and increased activity.

Yes, Tyler I think.

The largest component of growth on the Internet is live production.

And that's a tailwind that we're writing to provide solutions and services that allow people to take their content.

Our live video in whatever case, it is and put it over the internet in a reliable way.

Good stuff guys. Good stuff. So the next question is the big one is something that a lot of people have asked so maybe I'll come to you with this can you discuss <unk> relationship with Sterling.

Yeah.

Yes.

Well, we can say today is we're sorry about casting with Starlink. So we've got a.

This is a more of a viewpoint ultra link what this product does it takes the input from the camera and this is this is power here and then has the ability to go over the air.

Three or four or five G. Whenever you like as well as connect to a starlink.

Dish, which we should have in this case, it's connected via Wi Fi and then outside of here is a starlink dish. So that's one example of how we work with Sterling and.

Those are the kinds of things that we're able to do by bringing the technology no matter what medium that goes across but to do that in a very highly reliable.

Way, but also in a very low latency because it's not so much about speed, it's about the latency how fast you'd get a response to when you send video cross to get a response to that so I think thats an area that we focus on and by our acquisition of mobile viewpoint. It brings together all these different technologies under one roof.

<unk>.

Yeah, absolutely and let's let's wrap up here today talking a little bit about acquisition. So maybe I'll come back to you with this are you happy with the MVP acquisition.

Very happy with the NDP acquisition on multiple fronts, one as I just talked about it brought a whole new product offering that augments and complements our traditional cost of networks very well. So now we can go to every customer no matter what the medium. However, you want transport video. However, you want to analyze that video we can do it second.

Thing is the AI that they've been working on for over three and a half years bring.

Bringing that to bear to our current customers has been tremendous and the access that the combined of the customer set that we have with the technology that mobile viewpoint has has been tremendous so we're really happy about that and the third thing is the personnel. The great team that we have led by Michelle Bice.

Our senior leadership team.

J D. The head of sales is our senior leadership team in Charlotte, who heads up marketing is RSV senior leadership team across every area products technology and talent <unk> has made a massive contribution to <unk> and will be a foundation, which we build on for the future.

So then when are you going to make your next acquisition.

Great question.

We'd like to have made a yesterday so were but were very careful we are vetting a lot of opportunities we've done that throughout last year and this year, we continue to do that but micky and I both feel that we can't make a mistake. Here. This is one thing we've got to get right. We think we did it pretty well with MVP. We thought we would make you say we got a tremendous.

Team, great product, great entre with unique market.

And we're looking for something similar to that something that really complements and augments our capability going forward and obviously adds to the bottom line and helps us on the top line as well. So again, we're going to be careful but just want everyone to know we are working very diligently and it's it's job one for frankly for me and a lot of ways.

And we have expanded our team we've added an individual that has come to us through the banking investment banking private equity door.

He is helping us that end and kind of spread out through the world looking for opportunity and a much more aggressive way than we could have last year without them. So we're pretty confident and we're very excited by the fact that we think will have some good news to share with everybody in the coming quarters.

We appreciate all of the questions that we got from the audience here today, and we try to run through as many as we could so I'm not going to give before we wrap this up any final thoughts anything you want to leave.

And fifth year today that you think is important to share important for them to know.

Yes, Tyler I think.

Drew covered we built a strong foundation here, we pulled together a team that can take this company to the next level will continue to focus on the fundamentals of how we operate these businesses. Our customers would you have to be very customer centric and focused on providing them solutions that solve their problems and with that and complementary.

<unk>, we see a very bright future for <unk>.

Yes, I'd Echo the same I think it's a good.

Question, we're well positioned.

Mickey and I, both feel very confident that all the hard work, we've experienced and done in the last couple of years puts.

Puts us in good stead to realize.

Growth profitable growth.

Hopefully acquisitions and other things that will help the company grow, but we're pretty bullish on the future.

Absolutely well Mickey Miller, and Mike Bond guys. Thank you so much for joining us here today, and giving US an update on all things visiting from the first quarter and all of the things to look forward to throughout the rest of the year. The huge defense. The shows all of those things that we appreciate your time today and all the information you're able to share with us.

Thank you to all our shareholders and owners of the company. We view you as owners, we focus on allocating your capital in the best ways to get the best returns for you.

Thank you thanks, everybody.

Thanks, Terry very well. Thank you guys very much I hope you enjoy the rest of our nice day in the UK one of those rare rare Sunny days and we appreciate your time today very much and everyone out there. Thank you for joining US here for this update that from Q1 from visiting we appreciate it very much of course stay tuned we'll be back sooner and do more of these in the future of course, so states.

For that but for this one for Micky and Mike on <unk>, and we will talk to you all again very soon.