Q4 2023 OMNIQ Corp Earnings Call
Hello, and welcome to the Omni Q Corp's fourth quarter 2023 earnings conference call.
My name is Ali and I will be your coordinator.
For today's call.
With us on the call are Mr. Shai Lustgarten, Chief Executive Officer, and principal accounting officer.
Today's call is being recorded and you should have access to the company's fourth quarter 2023 earnings press release issued after the market closed yesterday.
This information is available on the Investor Relations section of Omni Qs websites.
Www Das omni cute dotcom.
During the course of this conference we will make certain forward looking statements.
All statements that address expectations opinions or predictions about the future are forward looking statements.
Although they reflect our current expectations and are based on our best view of the industry.
And our current expectations on our business as we see them today, they are not guarantees of future performance.
These statements involve a number of risks and uncertainties and since these elements can change and in certain cases are not within our control.
We would ask that you considered that and interpret them in that light.
We urge you to review the Companys forms 10-K, 10-Q, and other SEC filings for a discussion of the principal risks and uncertainties that affect the company's business and performance.
And the factors that could cause actual results to differ materially.
Omni Q undertakes no obligation to publicly update or revise any forward looking statements.
Whether as a result of new information future events or otherwise unless required by law.
Following the prepared remarks, the company will be taking questions as time permits.
Now I will turn the call over to show you. This garden CEO. Mr. Lustgarten. Please go ahead.
Thank you operator welcome.
Lustgarten: Welcome everyone I'm sure. It will go to <unk> and it's my pleasure to welcome you to our and to our earnings call today.
Lustgarten: Today, I'll be sharing our financial results and key developments for the fourth quarter and full year of 2023 fold by insights into our strategic direction and operational achievements.
Lustgarten: We have navigated a challenging landscape our focus remains steadfast on innovation operational efficiency and strategic growth combined with our achieving with the achieving of profit would be able to.
Lustgarten: First.
Let's talk about some of the significant milestones.
Lustgarten: We achieved recently, which truly reflects our dedication to execute a balanced plan of cost caps, resulting in significant savings of over $5 million for the 2023 annual results.
Lustgarten: The effort continues as we speak and will be reflected in the near future on.
Lustgarten: On the business side.
Lustgarten: We continue to leverage our technology leadership to tackle complex challenges across a variety of sectors.
Lustgarten: We signed a multi year contract with Israel's largest logistics center, a clear demonstration of our dedication and ability to improve operational efficiency.
Lustgarten: Additionally, our AI and machine vision technology has been chosen again and again by some of the most demanding security authorities around the world and by airports like JFK, Laguardia and New York.
Sure.
Lustgarten: In the U S and we had first orders coming from Latin America airports as well.
Lustgarten: This represents a major advance in our twice to boost safety and streamline operations at key locations in transportation centers.
Lustgarten: Furthermore, we've made notable strides in AI and Fintech with several key developments.
Lustgarten: Introduction of AI based in car face detection technology sits to revolutionize law enforcement and tariff prevention by ensuring drivers and passengers.
Lustgarten: And make sure they are correctly identified enhancing both security and personalization.
Lustgarten: Our strategic acquisition of coal blocks.
Lustgarten: Leading fintech software company lets us at <unk>.
Lustgarten: Special one at a time features to our financial fixed solutions. These move not only expand what we offer but also strengthens our role in the Fintech World. We do see Sanjay I was one of our growth engines in the near future.
Lustgarten: Additionally, we've rolled out customized fintech solutions for Israel's biggest fast food chain and the restaurant chain owned by a U S company. These actions highlight our skill in adopting and scaling our solutions for various industry demands.
Lustgarten: We've won the contract and collaboration would get taxi, but you can consider it like an Israeli yogurt to install self service taxi kiosks Ben-gurion airport. This FERC set to greatly enhance the travel experience by shortening lines and guaranteeing high service quality safety and fair pricing for travelers.
Lustgarten: In the mobile computing area of our business, we have secured the contract to update the <unk> set up for 450 sporting goods stores across the U S. This shows how versatile and innovative we are in retail.
Lustgarten: It is key because it boosts our enhance.
Lustgarten: To extend our profitable managed services to a big retail chain.
Lustgarten: Lastly, omni Q solution was ordered by Netflix.
Lustgarten: Advanced Logistics center in Israel together these achievements highlights our unwavering commitment to innovation and our ability to deliver cutting edge solutions.
Lustgarten: The evolving needs of our demanding clients across various sectors.
Lustgarten: Next let's discuss our financial performance in the fourth quarter of 2023.
We reported revenue of approximately <unk> $15 5 million for.
Lustgarten: For the quarter ended December 31, 2023, with gross margin of 38, 5%.
Lustgarten: As a result of management's efforts to reduce costs. The total operating expenses for the quarter before the noncash impairment.
Lustgarten: <unk> were $6 5 million.
Lustgarten: Compared with $77 $6 million in the fourth quarter of 2022 that resulted in savings of $1 2 million for the quarter.
Lustgarten: As we experienced a $14 7 million goodwill impairment or total expenses amounted to $19 $1 million.
Lustgarten: Net loss for the quarter was $17 8 million compared with a loss of $4 million.
Lustgarten: Or a loss of $5 three per basic share for the fourth quarter of last year.
Lustgarten: The loss was largely impacted by the $14 seven noncash impairment expense.
Lustgarten: Adjusted earnings before before interest taxes, depreciation and amortization for the for the fourth quarter of 2023 amounted to a loss of $3 6 million.
Lustgarten: Compared with an adjusted EBIT loss of $1 4 million for the fourth quarter of 2022.
Lustgarten: Our cash balance on December 31, 2023 was approximately $1 $7 million compared with $1 1 million on December 31, 2022 that is an increase in our cash assets.
Lustgarten: $100000 in the fourth in the fourth quarter.
Lustgarten: Now, let's look at the whole year 2023 financial results.
We reported revenue of.
Lustgarten: $18 1 million for the year that ended December 31, 2023, a decrease of $919 $6 million for $100 8 million in the same period of 2022, our gross profit decreased to $15 7 million.
Lustgarten: <unk>.
Lustgarten: In the year that ended December 31, 2023, compared to $22 1 million.
Lustgarten: In 2022.
Lustgarten: Total operating expenses, excluding the impairment cost for the year ended December 31, 2023, or $27 2 million.
Lustgarten: Decrease of $4 5 million compared with the same periods of 2022.
Lustgarten: Including the noncash impairment expenses were 14.
Lustgarten: We're 40.
Lustgarten: $41 9 million.
Lustgarten: For the year ended December 31, 2023, we experienced.
Lustgarten: The reduction in general and general administrative expenses by $4 7 million or 17% in 2023.
Lustgarten: Net loss for the year ended December 31, 2022 was 29.
$4 million or loss of $3 45.
Lustgarten: So basic share compared with a loss of $13 6 million or a loss of 182.
Dollars per basic share for the same period of last year.
Our adjusted EBITDA for the year ended December 31, 2023 amounted to a loss of $7 4 million compared with an adjusted EBITDA loss of $2 9 million in 2022.
Next we'll discuss the steps we've taken and are taking to occur to correct. Some of these trends.
Lustgarten: The company built with the challenge of the knee.
Lustgarten: Need to conduct costs.
Lustgarten: In may and mainly additional costs because of the temporary weakness in the market conditions combined with the need to maintain and improve its position in the huge market. It is involved with to support future growth and profitability.
Lustgarten: So far management has taken aggressive measures to reduce annual SG&A costs by $4 $7 million and he's working on further measures to achieve profitability as soon as practically possible ultimately we plan to prioritize timely and cost effective development, we have placed a strategic focus on it.
Lustgarten: Increasing sales with prime customers. Additionally, our sales efforts are focused on the most profitable product lines.
To ensure we have sufficient working capital in October 2023 management finalized an equity raise which resulted in $2 $5 million of net cash received from investors management also finalized a new line of credit with a new financial institution.
Lustgarten: We also reduced our overall employee count by 34 compared to December 31.
Lustgarten: 31 2022 to continue.
Lustgarten: To reduce administrative costs.
Lustgarten: In conclusion as we reflect on the past year and look ahead, our agility. Our journey is one of transformation and growth. The challenges we faced have not only tested dose, but also highlighted our resilience and capacity for innovation.
Lustgarten: Our strategic focus remains on developing and deploying leading edge technologies to drive value for our customers and stakeholders.
Lustgarten: We believe in integrating our are presented and proprietary AI technology into our existing supply chain offerings will allow our automated our automated logistics monetary and optimization, creating operational efficiencies and higher margins for us and our customers.
I am confident in Bath with charities and I believe our best days are ahead of us.
None: Thank you for your continued support and trust in Omni Q4 now.
None: Now operator, we can go into Q&A.
Thank you ladies and gentlemen, the floor is now open for questions.
None: If you have any questions or comments. Please press star one on your phone at this time.
None: We asked about posing your question you. Please pickup your handset if listening on speaker phone to provide optimum sound quality.
None: Please hold while we poll for questions.
None: Thank you.
Speaker Change: Our first question is coming from Hela <unk> Ski Hill.
Speaker Change: Who is an investor your line is life.
Speaker Change: Thank you and good morning Shai.
Speaker Change: More than half of December.
Hela: Fine. Thank you so I have a question and.
None: And the first.
None: What caused that drop in revenue in 2023, and when do you think the company will continue well.
None: So.
We've seen in our sectors a reduction that is commonly that was common to many of the leading companies that we are that lead the industry for example, like zebra and additional.
None: Additional such organizations that are the main ones in our industry and for example, they suffered a reduction of about 30%. So we havent.
None: Suffered that but the whole market was downsizing.
In sales and we've seen that in several will be organizations that lead our industry.
None: But the main point here is that we haven't had it even one po canceled.
It will of course started from all the recession and additional macroeconomic.
None: No.
None: Reasons, but.
None: Good day.
None: For Omnicare is that none of the orders that we have received.
None: Continued to firm our very strong backlog. These orders were not castle they were postponed for delivery and we started seeing the ramp up.
None: In the for the first quarter of two.
None: <unk> 2024 and of course, continuing in Q2 are mainly in Q2 2024.
None: Okay great.
None: Can you explain that please.
None: With Fintech and what are your plans going forward.
None: Yes, <unk> is one of the automated solutions that we deploy in our total system that we delivered to retail to restaurants and.
None: Some additional.
None: Relevant markets.
None: These we decided to invest.
None: In Fintech and providing software credit card processing or payments Wilson total payments solution not only the hardware, but we've decided to invest in the software as well.
None: The purchasing or procurement.
None: Physician of coal blocks, which was which is a very leading.
None: Very significant and leading.
Software company in the Fintech space.
None: Space.
None: They built a very flexible and innovative in Britain ground breaking through technology that now allows us to provide the complete solution a large low margin by adding additional software component to our solution.
None: And also even more than that is very lucrative due to the fact that it allows us to touch the final consumer and be able to provide additional details for customization and provide additional.
None: Provide additional added value.
None: In the inputs that we need to get to.
None: To be able to discover AI trends.
None: In the consumer behavior for example.
None: No.
None: It was a strategic on our end it is something that also already generates significant revenue and of course one studies.
None: US and differentiates us from our competition. In addition of course not listening.
None: Other reasons it is enlarging our margins and allowing us to provide a much better stickiness too to the consumer level.
None: Sounds good.
None: So I have a last.
None: Last question Andre.
None: Are the cost cuts negatively affecting the sales.
No no we focused on cuts that we did.
None: Declared before.
None: That we are going to take it is according to the plan that we've shared with.
None: With you the investors we have shared with you that we're going to get into.
Now the phase of cost cuts in 2023 and make sure that we reached profitability very soon.
None: These cuts according to the plan that we presented is our.
None: Cuts that are involving more.
None: I would say temporary expenses that were significant expenses.
None: Were aimed and targeted into stabilized.
None: 10000, more than 10000 deployments in the U S.
None: Hello.
Sorry, we seem to have temporarily lost audio for Mr. Lustgarten, one moment. Please hello.
Are you backing to hear me now.
Lustgarten: Yes, I'm sorry, some network issues. So I'll just sum up the response that I was speaking to myself I'm, sorry about that but basically the cats. The cuts that we've made we're more.
Mr. Lustgarten: Focused and done with temporary expenses significant expenses that were aimed on product stabilization now that we have more than 10000 deployments of their products in the U S. We no longer need to expense.
Mr. Lustgarten: These expenses and spend the money on stabilizing products, because we have very stable product today. These were mainly the cuts.
Mr. Lustgarten: Okay.
None: Thank you Sai.
None: We were successful at trying to quantify.
None: Thank you very much for your support.
None: Thank you. Our next question is coming from and I apologize if I mispronounce. This javelina signed the kiosks.
None: Who is an investor your line is life.
None: Hello, Hi.
Javelina: I'm personally now.
Javelina: I have two questions for you first.
None: One is do you think market conditions very carefully so that we can start enjoying good I'll once again.
None: And the second question is how are you expecting any big order in the near future.
None: Can you repeat the second question. Please.
The second question is are you expecting any big order in the near future.
None: Okay. Thank you.
None: Regarding the orders.
And the pick up.
None: Going forward, yes, we've we've seen that already starting this quarter, we see that what we see that.
Trends that the whole market faced and we part of the market in 2023 of postponing deliveries.
None: Extent spending less.
None: We see that these.
None: Trends are now.
None: Turning around to what we were used to before so we expect.
None: Growth of course, we expect to.
For 2020 for it to be a great year, a profitable year.
None: We've taken the measures to get there to get to that point now and ramp up again and get to the revenues were used to plus being profitable. So that's the big news.
None: The the big orders, specifically, yes, absolutely we were able to get awarded and we announced several of these awards to the market by awards by very large enterprises, leading enterprises.
None: Fortune 500 enterprises.
None: Even fortune 100 enterprises. So we started seeing that these are new customers. We havent had these customers before so this is new business and that certainly evidence for.
None: Florida going forward success.
None: That's good thank you Scott.
None: Good luck within your test and all the best for 10 to 24.
None: Thank you for your support the Presidio support.
None: Thank you if there will be any final questions or comments. Please indicate so now by pressing star one on your telephone keypad.
None: Okay. As we have no further questions in queue. At this time I will hand back to Mr. Lustgarten for any closing comments you may have.
Thank you operator.
Mr. Lustgarten: As we wrap up today's earnings call.
Mr. Lustgarten: And the Q&A session I want to sincerely. Thank all our devoted employees and you our loyal investors for your unwavering support of Omni Q. Your dedication is vital as we look back on our performance and plan for a profitable future.
In navigating through the complex landscape shaped by global and market events. It has provided us with a valuable opportunity to reflect deeply on our core operations and values.
Mr. Lustgarten: It's like looking in the mirror.
Mr. Lustgarten: Not to take what we see with harsh.
Mr. Lustgarten: But to understand where our strengths lie and where we need to evolve.
These insights are now guiding us towards making significant board thinking changes, we're not just addressing the immediate issues at hand, we're laying down the foundation.
Mr. Lustgarten: For a healthier more robust future for our company this period of transformation.
Mr. Lustgarten: That would be Mandy is an investment in our collective future, ensuring we emerged not just intact, but stronger and more aligned with our mission.
Mr. Lustgarten: Than ever before.
Mr. Lustgarten: We're wrapping up our development, making technological strides and acquiring strategy strategic assets to ensure omnicare remains a top choice for for the major companies looking ahead.
Mr. Lustgarten: Your trust in our direction motivates us to keep innovating and leading thank you for playing such a key role in our journey to lasting success. Thank you all.
Mr. Lustgarten: Yeah.
None: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.