Q1 2024 Boxlight Corp Earnings Call
part.
Please note. This conference is being recorded.
I will now turn to conference over to our host, Mr. Jeff Stanis of FNKIR. You may begin.
Thank you, Operator, and thank you everyone for joining us today.
Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the first quarter ended March 31, 2024. The release is available on the investor relations section of the company's website at www.bockslite.com.
Operator: Good afternoon, and welcome to the Boxlight Corporation first quarter financial results call. At this time, all participants are in a listen-only mode.
Good afternoon, and welcome to the box Life Corporation first quarter financial results call.
Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer.
Before we begin, I'd like to remind participants that during the call, management will be making forward-looking statements. These statements may contain information about Boxite's view of its future expectations, plans, and prospects that constitute forward-looking statements.
Operator: At this time, all participants are on a listen only mode.
Operator: A question and answer session will follow the formal presentation. You could submit a question via the web at any time by typing it in the Ask a Question field. We will also be having a telephone Q&A for analysts, and if you would like to ask a question about that, you may press star one on your telephone keyboard. Please note, this conference is being recorded. I will now turn the conference over to our host, Mr. Jeff Stanlis of FNK-IR.
Operator: A question and answer session will follow the formal presentation.
Operator: You could submit a question via the web at any time by typing them in the ask a question field.
Actual results may differ materially from historical results or those indicated by these forward-looking statements.
Jeff Stanlis: We would also be having a telephone Q&A for analysts.
As a result of a variety of factors, including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, and competition in the industry, among other things.
Jeff Stanlis: And if you would like to ask a question on that you May Press star one on your telephone keypad.
Operator: Please note this conference is being recorded.
Jeff Stanlis: I'll now turn the conference over to our host Mr. Jeff Spotless of F. N K IR you may begin.
Jeff Stanlis: Thank you, operator, and thank you, everyone, for joining us today. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the first quarter ended March 31, 2024. The release is available on the investor relations section of the company's website at www.boxlight.com. Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer. Actual results may differ materially from historical results or those indicated by these forward-looking statements.
Boxlight encourages you to review other factors that may affect future results and performance in Boxlight's filings with the Securities and Exchange Commission.
Jeff Stanlis: Thank you operator, and thank you everyone for joining us today.
Jeff Stanlis: Earlier today oxalate issued a press release, providing an operational update and discussing financial results for the first quarter ended March 31 2020 for.
The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law. And with that, I'd like to turn the call over to Dale Strait, CEO Boxley. Dale, the call is yours.
Jeff Stanlis: The release is available on the Investor Relations section of the company's website at Www Dot box White Dot com.
Jeff Stanlis: During the call today are Dale Strang, Chief Executive Officer, and Gregg weigh against the Companys Chief Financial Officer before we begin I'd like to remind participants that during the call management will be making forward looking statements. These statements. They contain information about bauxite view of its future expectations plans and prospects that constitute forward looking statements.
Thank you, Jeff, and thank you to everyone joining us today.
This was my first full quarter as chief executive at Boxlight. I transitioned from the board of directors to this position in early January this year.
I came to the role with the beliefs of Boxlight was an excellent company in an attractive market.
Jeff Stanlis: Actual results may differ materially from historical results or those indicated by these forward looking statements as.
But I was also convinced that the company needed to refocus on reliable, efficient execution, especially in the face of changing market conditions.
Jeff Stanlis: As a result of a variety of factors, including but not limited to risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, competition in the industry, among others, Boxlight encourages you to review other factors that may affect future results and performance in its filings with the Securities and Exchange Commission. The company does not undertake, and specifically disclaims, any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law.
Jeff Stanlis: As a result of a variety of factors, including but not limited to risks and uncertainties associated with its ability to maintain and grow its business.
These beliefs have been confirmed. We're hard at work on focus initiatives to make those improvements a reality.
Jeff Stanlis: The ability of operating results its development and introduction of new products and services marketing and other business development initiatives and competition in the industry. Among other things oxalate encourages you to review other factors that may affect future results and performance in bauxite <unk> filings with the Securities and Exchange Commission.
We've already made significant progress in those efforts. We've eliminated approximately $5 million in our fixed costs.
which is all part of the process of streamlining both our product lines and our work processes. Well, at the same time, simplifying our overall go-to-market strategy.
Jeff Stanlis: The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by law.
Our first quarter results reflect the benefit from our renewed operational focus. For example, we delivered positive, adjusted even to exceeding our internal expectations, even before all the cost reduction initiatives really took hold.
Jeff Stanlis: And with that, I'd like to turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours. Thank you, Jeff.
Speaker Change: And with that I'd like to turn the call over to <unk> CEO box like the call is yours.
Dale W. Strang: Thank you, Jeff, and thank you to everyone who joined us. This was my first full quarter as chief executive officer at Boxlight. Transitioning from the board of directors to this position in early January of this year, I came to this world with the belief that Boxlight was an excellent company in an attractive market. But I was also convinced that the company needed to refocus on reliable, efficient execution, especially in the face of changing market conditions. These beliefs have been confirmed.
Dale W. Strang: Thank you, Jeff and thank you to everyone joining us today.
Dale W. Strang: This was my first full quarter as chief Executive at box right I transitioned from the board of directors to this position in early January of this year.
In fact, our first quarter results include our one-time severance costs related to our recent headcount reductions. Those actual savings will be reflected in subsequent months.
Dale W. Strang: It came to the walls, who believes that box platelets and excellent company in an attractive market.
will continue to emphasize.
streamlining our product offering while building on our position of having the most comprehensive suite of solutions in the market, we'll achieve this by eliminating product overlap and brand duplication, among other efforts.
Dale W. Strang: But there's also convinced that the company needed to refocus on reliable efficient execution, especially in the face of changing market conditions.
Dale W. Strang: We're hard at work on focus initiatives to make those improvements a reality. We've already made significant progress on them; we've eliminated approximately $5 billion in our fixed costs, which is all part of the process of streamlining both our product lines and our work processes while, at the same time, simplifying our overall go-to-market strategy. Our first quarter results reflect the benefit from our renewed operational focus. For example, we delivered positive adjusted EBITDA exceeding our internal expectations, even before all the cost reduction initiatives really took hold. In fact, our first quarter results include one-time severance costs related to our recent headcount reductions.
Dale W. Strang: These beliefs are being confirmed we're hard at work on focus initiatives to make those improvements.
The market reserve is generally stabilized, and in some areas is showing signs of positive growth.
Speaker Change: Got it.
Dale W. Strang: We've already made significant progress in those efforts, we've eliminated approximately $5 billion our fixed costs.
Globally, the market for interactive flat panel displays, which is the majority of our business,
Dale W. Strang: Which is all part of the process of streamlining both of our product lines and our work processes. While at the same time simplifying our overall go to market strategy.
It remains somewhat soft and we don't expect that to change in the near term.
It's a maturing market, which of course those markets offer challenges, but also offer numerous opportunities for growth. We think that's good for us. It won't be explained why.
Dale W. Strang: Our first quarter results reflect the benefit from our renewed operational focus for example, we delivered positive adjusted EBITDA exceeding our internal expectations.
Boxoight is the only company industry that has a product offering that spans
across the broadest parts of the market. We have traction solutions at every price and specification tier of the market. We offer high performance audio as well as interactive displays, and we offer the ability to offer deep system integration across those domains.
Dale W. Strang: Even before all the cost reduction initiatives really took hold.
Dale W. Strang: In fact, our first quarter results include a one time severance costs related to our recent headcount reductions those actual savings will be reflected in subsequent months.
We provide an array of complementary hardware and software and accessories along with professional development and training.
Dale W. Strang: Those actual savings will be reflected in subsequent, and we will continue to emphasize streamlining our product offering while building on our position of having the most comprehensive suite of solutions in the market. We'll achieve this by eliminating product overlap and brand duplication, among other things. The market we serve is generally stabled and, in some areas, is showing signs of positive growth. Globally, the market for interactive flat panel displays, which is the majority of our business, remains somewhat soft, and we don't expect that to change in the near future. It's a maturing market, which, of course, those markets offer challenges, but also offer numerous opportunities for growth, and we think that's good for us. Boxlight's the only company in the industry that has a product offering that spans across the broadest parts of the We have traction solutions at every price and specification tier of the market.
Dale W. Strang: We will continue to emphasize.
Dale W. Strang: Streamlining our product offering while building on our position.
the breadth and depths of our product line.
Dale W. Strang: The most comprehensive suite of solutions in the market, we will achieve this by eliminating product overlap and brand duplication among other efforts.
enables us to meet the needs of more customers in the market than any of our competitors.
thereby creating sustainable partnerships with our partners and those customers.
Dale W. Strang: The market, we serve has generally stabilized and some areas are showing signs of positive growth.
So we have the right portfolio to separate ourselves from the competitive
There's going to capture long-term market share.
Dale W. Strang: Globally the market for interactive flat panel displays which is the majority of our business. It remains somewhat soft and we don't expect that to change in the near term.
This position was recently recognized by Time Magazine, who included boxlight among its list of the world's top 250 ed tech companies.
Dale W. Strang: It's a mature market, which of course those markets offer challenges, but also offer numerous opportunities for growth. We think that's good for us will be explained why.
None of our direct competitors included on this list.
And if all the U.S. ed tech companies, only box light, are in the spot the top 10.
This is the latest powerful endorsement of BlackSight and our product sweet and strategy.
Dale W. Strang: <unk> is the only company industry that has a product offering that spans.
Dale W. Strang: Across the broadest parts of the market, we have traction solutions at every price and specification tier of the market, we offer high performance audio as well as the interactive displays.
Our refocused customer-centric sales approach is validating this belief. Many of our customers are transitioning from initial purchase of their IPDs and audio systems into upgrades, refreshes and enhanced implementation of those technologies.
Dale W. Strang: We offer high-performance audio as well as interactive displays, and we have the ability to offer deep system integration across those domains. We provide an array of complimentary hardware, software, and accessories, along with professional development training. The breadth and depth of our product range enables us to meet the needs of more customers in the market than any of our competitors, thereby creating sustainable partnerships with our partners and those customers. So we have the right portfolio to separate ourselves from our competitors and to capture long-term market share.
Dale W. Strang: And we ask the ability to offer deep system integration cross those domains.
Dale W. Strang: Providing an array of complementary hardware software and accessories, along with professional development training.
We're well equipped, we're well equipped to address those teams.
We also have customers that are looking to push their solutions to very low-cost entry points, with others pushing the envelope to the best of the best the industry has to offer. And we are well positioned in both of those cases.
Dale W. Strang: The breadth and depth of our product line.
Dale W. Strang: Enables us to meet the needs of more customers in the market than any of our competitors.
Dale W. Strang: Thereby creating sustainable partnerships with our partners in those customers.
In many ways,
This is the result of our successful and thoughtful acquisitions the companies made over the last few years that expanded, broadened, and deepened our product offering.
Dale W. Strang: We have the right portfolio to separate ourselves from the competitors the capture what's your market share.
Dale W. Strang: This position was recently recognized by Time Magazine, who included Boxlight among its list of the world's top 250 edtech companies. None of our direct competitors included them. And of all the U.S. edtech companies, only Boxlight earned a spot in the top 10.
Dale W. Strang: This position was recently recognized by time magazine, who included bauxite among its list of the world's top 250 of tech companies.
So with the right focus, the right branding, the right go-to-market approach, in conjunction with a lean and agile cost structure, we believe we can win any market battle that comes our
Dale W. Strang: None of our direct competitors included on this list.
Dale W. Strang: All the U S. Ed Tech companies only box late or into slot at the top 10.
We're positioned out before the industry over time, and we're busy establishing infrastructure that can be profitable and successful in any macro market environment.
Dale W. Strang: This is the latest, powerful endorsement of Boxlight and our product suite and strategy. Our refocused customer-centric sales approach is validating this belief; many of our customers are transitioning from the initial purchase of their IFPDs and audio systems into upgrades, refreshes, and enhanced implementation of those technologies. We're well equipped; we're well equipped to address those. We also have customers that are looking to push their solutions to very low cost entry points, with others pushing the envelope to the best of the best.
Speaker Change: This is the latest.
Dale W. Strang: Powerful endorsement of bauxite, and our product suite and strategy.
Dale W. Strang: Our refocused customer centric sales approach is validated validating this belief.
My personal approach is to try to manage based on the best available factual information.
Dale W. Strang: Many of our customers are.
Dale W. Strang: Transitioning from initial purchase.
Data-driven, accurate forecasting is absolutely vital for our capital allocation and our ability to plan and execute.
Dale W. Strang: P DS and audio systems into upgrades refreshes enhance the implementation of those technologies.
Accurate forecasting also suggests we don't over promise.
Dale W. Strang: We're well equipped where are well equipped to address those needs.
You may recall that our stated outwork for Q1 was for revenue of approximately $34 million.
Dale W. Strang: We also have customers that are looking to push their solutions to very low cost entry points with others pushing the envelope to the best of the best.
and we ended up delivering revenue with $37 million.
Dale W. Strang: The industry has to offer it will, and we are well positioned in both of those cases in many ways. This is the result of our successful and thoughtful acquisitions that we have made over the last few years that have expanded, broadened, and deepened our product offering. So with the right focus, the right branding, the right go-to-market approach in conjunction with a lean and agile cost structure, we believe we can win any market battle that comes our way. We're positioned ahead of the industry over time, and we're busy establishing infrastructure that can be profitable and successful in any macro market environment.
We also stated expectations of negative $3 million in adjusted EBITDA.
Dale W. Strang: The industry has to offer and we will and we are well positioned in both of those cases.
And we were able to post-positive adjusted EADD of about $200,000.
Dale W. Strang: In many ways.
Dale W. Strang: This is the result of our successful and thoughtful acquisitions of companies made over the last few years, that's expanded broadened and deepened our product offering.
This is great. This is just one quarter. Investors should not view Q1 as any sort of new baseline necessarily, but I'm encouraged that we exceed their promises.
Dale W. Strang: So with the right focus the right branding the right go to market approach in conjunction with a lean and agile cost structure. We believe we can win any market battle that comes our way.
And I'm also cautiously optimistic we'll see additional progress in Q2.
Any progress, this progress won't be linear. We still have challenges to overcome, and while the market's stabilized, buying decisions can take time to take shape.
Dale W. Strang: We are positioned to outperform the industry over time.
Dale W. Strang: And we're busy established infrastructure that can be profitable and successful and any macro market environment.
We have much more work to do, but we're convinced we're on the right path.
Dale W. Strang: My personal approach is to try to manage based on the best available factual information; data-driven, accurate forecasting is absolutely vital for capital allocation and our ability to plan and execute. Accurate forecasting also suggests we don't overpromise. You may recall that our stated outlook for Q1 was for revenue of approximately $34 million, and we ended up delivering revenue of $0.37. We also stated expectations of negative $3 million in adjusted EBITDA, and we were able to post positive adjusted EBITDA of about $200,000. This is great. This is just one quarter of the pie.
Dale W. Strang: My personal approach to try to manage based on the best available factual information.
We also continue to work
on resolving and improving our capital structure.
Dale W. Strang: Data driven accurate forecasting is absolutely vital for our capital allocation and our ability to plan and execute.
We're encouraged with our progress here, and particularly with the collaborative approach taken by our stakeholders. Our primary lender has extended additional credit to facilitate our second or third quarter cash needs, which tend to be the seasonally busiest time of the year.
Dale W. Strang: Accurate forecasting also suggests that we don't over promise.
Dale W. Strang: You may recall that our stated outlook for Q1 was for revenue of approximately $34 million.
Dale W. Strang: And we ended up delivering revenue of $37 million.
At the same time, they continue to work collaborating with us in our initiatives to identify and secure a long-term resolution to their facility, which was always intended to be short-term in nature.
Dale W. Strang: We also stayed in expectations of negative $3 million and adjusted EBITDA.
Dale W. Strang: And we were able to post positive adjusted EBITDA of about $200000.
We've also established a positive ongoing working relationship with our preferred shareholders.
Dale W. Strang: This is great.
Dale W. Strang: Investors should not necessarily view Q1 as any sort of new baseline, but I'm encouraged that we exceeded our promises, and I'm also cautiously optimistic we'll see additional progress in Q2. Any progress, this progress won't be linear; we still have challenges to overcome. And while the markets stabilize, buying decisions can take time to take shape. We have much more work to do, but we're convinced we're on the right path. We also continue to work on resolving and improving our capital structure. We are encouraged by our progress here and particularly with the collaborative approach taken by our stakeholders. Our primary lender has extended additional credit to facilitate our second and third quarter cash needs, which tend to be the seasonally busiest time of the year.
Dale W. Strang: This is just one quarter.
Dale W. Strang: Investors should not view Q1, as a sort of a new baseline necessarily but I'm encouraged that we exceeded their premises.
We've named them as advisors to our board. Their inputs valuable. We communicate frequently and collaborate deeply. We appreciate the vote of confidence they've expressed in box-like amended strategy.
Dale W. Strang: And I'm also cautiously optimistic we'll see additional progress into Q2.
Dale W. Strang: Any progress this progress won't be linear we still have challenges to overcome and while the markets stabilize buying decisions can take time to take shape.
It's been a period of significant change for box life, but we're convinced that we're on the right direction.
We have new senior leadership, we've restructured our operational leadership, we've made adjustments to go-to-market approach, and we're undergoing aggressive cost reductions, and all this is going on simultaneously.
Dale W. Strang: We have much more work to do but we're convinced we're on the right path.
Dale W. Strang: We also continue to work.
Dale W. Strang: On resolving and improving our capital structure.
I'm incredibly impressed with the positive reaction from our employees who've embraced the challenge of a new box light and have responded with
Dale W. Strang: We're encouraged with our progress here and particularly with the collaborative approach taken by our stakeholders.
Dale W. Strang: Our primary lender is extended additional credit to facilitate our second and third quarter.
creativity, and renewed dedication.
Similarly, our customers have been very positive, seeing the changes underway as benefits show to their needs. And as I mentioned, our lenders have been highly cooperative as well.
Dale W. Strang: Cash needs, which tend to be the seasonally busiest time of the year.
Dale W. Strang: At the same time, they continue to work collaboratively with us in our initiative to identify and secure a long-term resolution to their facility, which was always intended to be short-term in nature. We've also established a positive ongoing working relationship with our preferred shareholders. We've named them as advisors to our board. Their input is valuable.
Dale W. Strang: Same time, they continue to work collaboratively with us in our initiative to identify and secure a long term resolution.
We're happy with our direction. We think we're on the right path. We have much more work to do.
Dale W. Strang: Their facility, which was always intended to be short term in nature.
still, but we think we have the right pieces in place.
Dale W. Strang: We've also established a positive ongoing working relationship with our preferred shareholders.
With that, I'll turn the call over to Greg to discuss our first quarter results. Thanks, Dale, and good afternoon, everyone.
Dale W. Strang: We communicate frequently and collaborate deeply. We appreciate the vote of confidence they've expressed in Boxlight's amended strategy. There's been a period of significant change for Boxlight, but we're convinced that we're on the right track. We have new senior leadership, we've restructured our operational leadership, we've made adjustments to a go-to-market approach, and we're undergoing aggressive cost reductions. And all this is going on simultaneously.
Dale W. Strang: Named him as advisors to our board their inputs valuable we communicate frequently and collaborate.
Before we review the financial results for Q1, I want to provide an update to our last earnings call regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating costs.
Dale W. Strang: We appreciate the vote of confidence they've expressed in box like the bad debt strategy.
Dale W. Strang: It's been a period of significant change for bauxite, but we're convinced that we're on the right direction.
In mid-April, our current lenders provided an additional 2 million bridge loan to help beat the company's short-term seasonal working capital needs, with the flexibility to borrow an additional 3 million in June .
Dale W. Strang: We have new senior leadership, we've restructured our operational leadership, we've made adjustments adjustments to our go to market approach and we're undergoing aggressive cost reductions and all of this is going on simultaneously.
As stated on previous earnings calls, our operations are seasonal, with Q2 and Q3 being our busiest periods, and the additional liquidity further ensures that we will have the necessary inventory on hand to meet our customers' demand.
Dale W. Strang: I'm incredibly impressed with the positive reaction from our employees who've embraced the challenge of a new box light and have responded with Creativity and Renewed Dedication. Similarly, our customers have been very positive, seeing the changes underway as beneficial to their needs. And, as I mentioned, our lenders have been highly cooperative as well.
Dale W. Strang: I'm incredibly impressed with the positive reaction from our employees, who have embraced the challenge with new box light and.
Dale W. Strang: And they've responded with.
Dale W. Strang: Creativity and renewed dedication.
We continue to maintain positive relationships with our lenders and are appreciative of their support and commitment to our business.
Dale W. Strang: Similarly, our customers had been very positive seeing the changes underway as beneficial to their needs.
We continue to work with our investment bankers to identify and evaluate long-term solutions to replace our debt facility. This process is expected to take time as we seek and evaluate solutions that will provide box light with more favorable terms than our current facility.
Dale W. Strang: As I mentioned, our lenders have been highly cooperative as well.
Dale W. Strang: We're happy with our direction. We think we're on the right path. We have much more work to do, but we think we have the right pieces. With that, I'll turn the call over to Greg to discuss our first quarter results. Thanks, Dale, and good afternoon, everyone.
Dale W. Strang: We're happy with our direction, we think we're on the right path, we have much more work to do.
Greg: But we think we have the right pieces in place.
Dale W. Strang: With that I'll turn the call over to Greg to discuss our first quarter results.
The successful execution of our recent operating initiatives are a piece of this equation, and we believe that our first quarter results are a starting point in demonstrating Boxlight's ability to deliver on these initiatives.
Gregory S. Wiggins: Thanks, Dale, and good afternoon, everyone. Before we review the financial results for Q1, I want to provide an update on our last earnings call regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating costs. In mid-April, our current lenders provided an additional $2 million bridge loan to help meet the company's short-term seasonal working capital needs, with the flexibility to borrow an additional $3 million in June.
Greg: Thanks, Dale and good afternoon, everyone before.
Gregory S. Wiggins: As stated on previous earnings calls, our operations are seasonal, with Q2 and Q3 being our busiest periods, and the additional liquidity further ensures that we will have the necessary inventory on hand to meet our customers' demands. We continue to maintain positive relationships with our lenders and are appreciative of their support and commitment to our business. We continue to work with our investment bankers to identify and evaluate long-term solutions to replace our debt facility. This process is expected to take time as we seek and evaluate solutions that will provide Boxlight with more favorable terms than our current facility.
Gregory S. Wiggins: Before we review the financial results for Q1, I want to provide an update to our last earnings call regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating cost.
From an expense management perspective, we have eliminated approximately 5 million in fixed costs over the last three months, mostly through headcount reductions that do not impact our sales teams or other revenue generating departments within the organization.
Gregory S. Wiggins: In mid April our current lenders provided an additional $2 million bridge loan to help meet the company short term seasonal working capital needs with the flexibility to borrow an additional $3 million in June.
These reductions led to approximately 750,000 in cost savings in the first quarter. The full impact of these reductions will take time to appear in our income statement, but investors should continue to see the benefits in the second quarter, with additional reductions benefiting the balance of the year.
Gregory S. Wiggins: As stated on previous earnings calls our operations are seasonal with Q2, and Q3 being our busiest periods and the additional liquidity further ensures that we will have the necessary inventory on hand to meet our customers demand.
We incurred related severance charges of approximately 940,000, which were recorded during the first quarter.
Gregory S. Wiggins: We continue to maintain positive relationships with our lenders and are appreciative of their support and commitment to our business we.
And now turning to our first quarter results, revenues for Q1 2024 were 37.1 million as compared to 41.2 million for Q1 2023, resulting in a 9.9% decrease.
Gregory S. Wiggins: We continue to work with our investment bankers to identify and evaluate long term solutions to replace our debt facility.
Gregory S. Wiggins: This process is expected to take time as we seek and evaluate solutions that will provide box site with more favorable terms than our current facility.
Emia revenues comprised 54%, or 20.2 million of our total revenues. America's revenues totaled 42%, or 15.3 million of our total revenues, while revenues from other markets totaled 4%, or 1.6 million of our total revenues.
Gregory S. Wiggins: The successful execution of our recent operating initiatives is a piece of this equation, and we believe that our first quarter results are a starting point in demonstrating Boxlight's ability to deliver on these initiatives. From an expense management perspective, we have eliminated approximately $5 million in fixed costs over the last three months, mostly through headcount reductions that do not impact our sales teams or other revenue-generating departments within the organization. These reductions led to approximately $750,000 in cost savings in the first quarter.
Gregory S. Wiggins: Successful execution of our recent operating initiatives are a piece of this equation and we believe that our first quarter results are a starting point and demonstrating <unk> ability to deliver on these initiatives.
Flat panel displays comprised approximately 71% of total revenues, audio solutions comprised 11% of total revenues, with the balance comprised of device accessories, software, professional services, and STEM solutions.
Gregory S. Wiggins: From an expense management perspective, we have eliminated approximately $5 million and fixed cost over the last three months, mostly through head count reductions that do not impact our sales teams or other revenue generating departments within the organization.
Gregory S. Wiggins: These reductions led to approximately 750000 in cost savings in the first quarter. The full impact of these reductions will take time to appear on our income statement, but investors should continue to see the benefits in the second quarter with additional reductions benefiting the balance of the year.
Gross profit for the quarter was 12.8 million as compared to 15.1 million for the prior year period.
Gregory S. Wiggins: The full impact of these reductions will take time to appear in our income statement, but investors should continue to see the benefits in the second quarter, with additional reductions benefiting the balance of the year. We incurred related severance charges of approximately $940,000, which were recorded during the first quarter. And now turning to our first quarter results, revenues for Q1 2024 were $37.1 million, as compared to $41.2 million for Q1 2023, resulting in a 9.9% decrease. EMEA revenues comprised 54%, or $20.2 million, of our total revenue. America's revenues totaled 42%, or $15.3 million of our total revenues, while revenues from other markets totaled 4%, or $1.6 million of our total revenues.
Gross profit margin for the quarter was 34.5%, which is a decrease of 230 basis points over the comparable three months in 2023.
Gregory S. Wiggins: We incurred related severance charges of approximately 940000, which were recorded during the first quarter.
The decline in gross profit margin is primarily due to changes in product mix, with higher margin front row products representing a smaller percentage of total revenues in Q12024 compared to Q1 2023.
Gregory S. Wiggins: Flat panel displays comprised approximately 71% of total revenues; audio solutions comprised 11% of total revenues, with the balance comprised of device accessories, software, professional services, and STEM solutions. Gross profit for the quarter was $12.8 million, as compared to $15.1 million for the prior year period. Gross profit margin for the quarter was 34.5%, which is a decrease of 230 basis points over the comparable three months in 2023. The decline in gross profit margin is primarily due to changes in product mix, with higher-margin front row products representing a smaller percentage of total revenues in Q1 2024 compared to Q1 2023.
Gregory S. Wiggins: And now turning to our first quarter results revenues for Q1, 2024 were $37 1 million as compared to $41 2 million for Q1 2023, resulting in a nine 9% decrease.
Total operating expenses for Q12024 were 16.4 million compared to 15.3 million in Q1 2023.
Gregory S. Wiggins: Media revenues comprised 54% or $22 million of our total revenues America's revenues totaled 42% or $15 $3 million of our total revenues while revenues from other markets totaled 4% or $1 6 million of our total revenues.
Q1 2024 operating expenses include approximately 940,000 in severance charges related to our recent headcount reductions.
Again, the full impact of these reductions are expected to be realized beginning in the second
Gregory S. Wiggins: Flat panel displays comprised approximately 71% of total revenues audio solutions comprised 11% of total revenues with the balance comprised of device accessories software and professional services and stem solutions.
Other expense for Q1 was a net expense of 2.6 million as compared to net expense of 2.7 million for Q1, 2023. The majority of other expenses related to interest expense on our current credit facility.
Gregory S. Wiggins: Gross profit for the quarter was $12 8 million as compared to $15 1 million for the prior year period.
The company reported a net loss of 7.1 million or negative 76 cents per basic and diluted share for the quarter as compared to net loss of 2.9 million or negative 35 cents per basic and diluted share for the prior year quarter.
Gregory S. Wiggins: Gross profit margin for the quarter was 34, 5%, which is a decrease of 230 basis points over the comparable three months in 2023.
Adjusted EBITDA for Q1 2020 was 0.2 million as compared to adjusted EBITDA 3.3 million for Q12023.
Gregory S. Wiggins: The decline in gross profit margin is primarily due to changes in product mix with higher margin front row products, representing a smaller percentage of total revenues in Q1 2024 compared to Q1 2023.
Adjustments to EBITI include stock-based compensation expense, severance charges, gains losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions.
Gregory S. Wiggins: Total operating expenses for Q1 2024 were $16.4 million, compared to $15.3 million in Q1 2023. Q1 2024 operating expenses include approximately $940,000 in severance charges related to our recent headcount reduction. Again, the full impact of these reductions is expected to be realized beginning in the second quarter.
Gregory S. Wiggins: Total operating expenses for Q1, 2024 were $16 4 million compared to $15 3 million in Q1 2023.
Turning to the balance sheet at March 31st, 2024, Boxlight had 11.8 million in cash, 46.6 million in working capital, 39.2 million in inventory, 142.4 million in total assets.
Gregory S. Wiggins: Q1, 2020 for operating expenses include approximately 940000 severance charges related to our recent head count reductions.
Gregory S. Wiggins: Again, the full impact of these reductions are expected to be realized beginning in the second quarter.
38.5 million in debt, net of debt issuance cost of 2.5 million, and 9.1 million in stockholders equity.
Gregory S. Wiggins: Other expense for Q1 was a net expense of $2.6 million as compared to a net expense of $2.7 million for Q1 2023. The majority of other expenses related to interest expense on our current credit facility. The company reported a net loss of $7.1 million, or negative $0.76 per basic and diluted share for the quarter, as compared to a net loss of $2.9 million, or negative $0.35 per basic and diluted share for the prior year quarter.
Gregory S. Wiggins: Other expense for Q1 was a net expense of $2 6 million as compared to net expense of $2 7 million for Q1 2023.
At March 31st, 2024, Box Light had 9.8 million common shares issued an outstanding and 3.1 million preferred shares issued in outstanding.
Gregory S. Wiggins: The majority of other expenses related to interest expense on our current credit facility.
Gregory S. Wiggins: The company reported a net loss of $7 1 million or negative 76 per basic and diluted share for the quarter as compared to net loss of $2 9 million or negative 35 per basic and diluted share for the prior year quarter adjust.
As I mentioned, subsequent to quarter-end, the company entered into an amendment with its current lender to provide an additional $2 million to meet the company short-term working capital needs. Following the $2 million borrowing, the principal amount of the company's term loan is $43 million.
Gregory S. Wiggins: Adjusted EBITDA for Q1 2024 was $0.2 million as compared to adjusted EBITDA of $3.3 million for Q1 2023. Adjustments to EBITDA include stock-based compensation expense, severance charges, gains and losses from the re-measurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions.
Gregory S. Wiggins: Adjusted EBITDA for Q1, 2024 was <unk> 2 million as compared to adjusted EBITDA of $3 3 million for Q1 2023.
The company continues to expect four-year revenues to remain flat year over year. For Q2, 2024, the company expects revenues of approximately 43 to 45 million.
Gregory S. Wiggins: Adjustments to EBITDA include stock based compensation expense severance charges gains or losses from the re measurement of derivative liabilities and the effects of purchase accounting adjustments in connection with recent acquisitions.
Managing operating expenses, primarily controlling our fixed G&A costs to align with forecasted revenues, remain the primary focus.
In Q1, the company eliminated approximately 50 positions, primarily in non-sales roles, which we estimate will save the company $5 million on an annual run rate basis. Other cost-saving measures are in process, including reducing our third-party R&D expenditures as we streamline our current and future product portfolio.
Gregory S. Wiggins: Turning to the balance sheet at March 31, 2024, Boxlight had $11.8 million in cash, $46.6 million in working capital, $39.2 million in inventory, and $142.4 million in total assets. 38.5 million in debt, net of debt issuance costs of 2.5 million and 9.1 million in stockholder equity. At March 31, 2024, Boxlight had 9.8 million common shares issued and outstanding and 3.1 million preferred shares issued and outstanding. As I mentioned, subsequent to quarter end, the company entered into an amendment with its current lender to provide an additional $2 million to meet the company's short-term working capital needs. Following the $2 million borrowing, the principal amount of the company's term loan is $43 million.
Gregory S. Wiggins: Turning to the balance sheet at March 31, 2024 box light at $11 8 million in cash $46 6 million and working capital $39 2 million in inventory $142 4 million in total assets $38 5 million in debt net of debt issuance costs of $2 5 million and $9 1 million in stock.
As mentioned during our last earnings call, the company is committed to reducing operating expenses to approximately 12.5 to 13 million per quarter on an annual...
Gregory S. Wiggins: Holders equity.
Gregory S. Wiggins: At March 31, 2020 for bauxite had $9 8 million common shares issued and outstanding and $3 1 million preferred shares issued in outstanding.
per quarter and expects to begin achieving new quarterly run rates by the end of 2024. We are forecasting a just to be that offered Q2 2024 of 2 to 3 million. With that, we'll open up the call for questions.
Gregory S. Wiggins: As I mentioned subsequent to quarter end the company entered into an amendment with its current lender to provide an additional $2 million to meet the company's short term working capital needs. Following the 2 million borrowing the principal amount of the company's term loan is $43 million.
Thank you.
Thank you. At this time, we will be conducting our question and answer session.
Gregory S. Wiggins: The company continues to expect four-year revenues to remain flat year over year. For Q2 2024, the company expects revenues of approximately $43 to $45 million. Managing operating expenses, primarily controlling our fixed GNA costs to align with forecasted revenues, remains the primary focus. In Q1, the company eliminated approximately 50 positions, primarily in non-sales roles, which we estimate will save the company $5 million on an annual run rate basis. Other cost-saving measures are in the process, including reducing our third-party R&D expenditures as we streamline our current and future product portfolio.
Gregory S. Wiggins: The company continues to expect full year revenues to remain flat year over year for Q2 2024, the company expects revenues of approximately 43% to $45 million.
This is for analysts only.
If you would like to ask a question, please press Star 1 on your telephone keypad.
Gregory S. Wiggins: Managing operating expenses, primarily controlling our fixed G&A costs to align with forecasted revenues remains a primary focus in Q1. The company eliminated approximately 50 positions primarily in non sales roles, which we estimate will save the company $5 million on an annual run rate basis other cost saving measures are in process, including reducing.
Confirmation tone will indicate your line is in the question key.
And you may press star 2 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 stair keys.
One moment please while we pause for questions.
Gregory S. Wiggins: Our third party R&D expenditures as we streamline our current and future product portfolio.
Thank you. Our first question is coming from Brian Kinslinger with Alliance Global. Your line is life.
Gregory S. Wiggins: As mentioned during our last earnings call, the company is committed to reducing operating expenses to approximately $12.5 to $13 million per quarter on an annual basis and expects to begin achieving new quarterly run rates by the end of 2024. We are forecasting adjusted EBIT out for Q2 2024 of $2 to $3 million. With that, we'll open up the call for questions.
Gregory S. Wiggins: As mentioned during our last earnings call. The company is committed to reducing operating expenses to approximately 12 $5 million to $13 million per quarter on an annual.
Great, thank you. I appreciate all the hard work that you guys are going through. Can you talk about the ordered trends in the first quarter as well as how those trends have continued or maybe not continued in the second quarter thus far?
Gregory S. Wiggins: The third quarter and expect to begin achieving new quarterly run rates by the end of 2024, we are forecasting adjusted EBITDA for Q2, 2024 of $2 million to $3 million.
Gregory S. Wiggins: With that we'll open up the call for questions.
Gregory S. Wiggins: Yeah.
Yeah, so we're seeing order trends consistent, generally consistent with the revenue. So for Q1, if you're looking at Q1 over Q1, the order trend was down about 10%, kind of consistent with our revenue decline. I think we're seeing
Operator: Thank you. At this time, we will be conducting our question and answer session. This is for analysts only.
Gregory S. Wiggins: Pankey at this time, we will be conducting a question and answer session.
Operator: This is for analysts only.
Operator: If you would like to ask a question, please press Star One on your telephone keypad. The confirmation screen will indicate your line is in the question, and 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 start. One moment, please, while we pause for questions. Thank you. Our first question is coming from Brian Kinstlinger with Alliance Global. Your line is live.
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similar trends in so far in Q2. There's there's only so much
Brian David Kinstlinger: Confirmation tone will indicate your line is in the question queue.
visibility you have, you know, in terms of predicting orders for the rest of the year. I think our pipeline remains strong at the moment. We see, you know, good bit of activity in the next few months. So we have some visibility into the remainder of Q2. The second half of the year is a little more difficult to project out. I think, you know, as we progress toward the latter stages of Q2, we'll have a little more visibility on how the second half of the year the year shapes up, although I think we're we're cautiously optimistic that, uh,
Brian David Kinstlinger: You May press Star two if you would like to remove your question from the queue.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please while we poll for questions.
Brian David Kinstlinger: Thank you.
Brian David Kinstlinger: Our first question.
Brian David Kinstlinger: It's coming from.
Brian David Kinstlinger: Brian can flinger with Alliance Global your line is live.
Brian David Kinstlinger: Great, thank you. I appreciate all the hard work that you guys are going through. Can you talk about the order trends in the first quarter as well as how those trends have continued or maybe not continued in the second quarter thus far?
Brian David Kinstlinger: Great. Thank you I appreciate all the hard work that you guys are going through can you talk about order trends in the first quarter as well as how do those trends have continued or maybe not continued in the second quarter. Thus far.
you know, we're going to at some point return to order growth as the year progresses.
I guess my follow-up to that would be with those order trends in the first and second quarter, what gives you the confidence that you can be flat year-over-year in terms of revenue?
Unknown Executive: Yeah, so we're seeing order trends that are generally consistent with revenue. So for Q1, if you're looking at Q1 over Q1, the order trend was down about 10%, kind of consistent with our revenue decline.
Brian David Kinstlinger: Yes, so were seeing order trends consistent.
Unknown Executive: Generally consistent with the revenue so for Q1, if youre looking at Q1 over Q1.
Yeah, a lot of it's the seasonality that we think we're returning to in the industry. I think we, for the last couple years, especially following the COVID, the,
Unknown Executive: The order order trend was it was down about 10% kind of consistent with our revenue decline I think we're seeing.
Unknown Executive: I think we're seeing similar trends so far in Q2. There's only so much visibility you have in terms of predicting orders for the rest of the year. But I think our pipeline remains strong at the moment.
Unknown Executive: Similar similar trends and in so far in Q2.
the COVID pandemic, you know, with a spike and
Unknown Executive: There's only so much.
in orders that kind of went a little outside the norm of, you know, the traditional seasonal periods that you see the spikes usually in Q2, Q3. We think we're going to return to more of that.
Unknown Executive: Visibility you have.
Unknown Executive: You know in terms of predicting orders for the rest of the year I think our pipeline.
Unknown Executive: We see a good bit of activity in the next few months, so we have some visibility into the remainder of Q2. The second half of the year is a little more difficult to project out. I think as we progress toward the latter stages of Q2, we'll have a little more visibility on how the second half of the year shapes up. Although I think we're cautiously optimistic that we're going to at some point return to order growth as the year progresses.
Unknown Executive: <unk> strong at the moment, we see you know.
Unknown Executive: Good bit of activity in the next few months so.
seasonality in 2024 and in the future. And so that's what gives us confidence that, you know, that,
Unknown Executive: So we have some visibility into it and into the remainder of Q2. The second half of the year is a little more difficult to project out I think you know as we progressed towards the latter stages of Q2, we'll have a little more visibility on how the second half of the year.
you know, that will still remain flat year over year. Again, you know, it'll be, you know, as we get a little further into Q2, especially in the latter half of the quarter where, you know, schools are starting to get out, you know, we'll really start to be able to assess, you know, whether that trend will hold true, but but that's our expectation and what gives us confidence that
Unknown Executive: The year shapes up although I think we're cautiously optimistic that.
Unknown Executive: You know, where we're going to at some point returned to order growth.
Unknown Executive: The year progresses.
Unknown Executive: I guess my follow-up to that would be, with those order trends in the first and second quarter, what gives you the confidence that you can be flat year over year in terms of revenue.
Speaker Change: I guess my follow up to that would be with those order trends in the first and second corridor.
that will remain flat for the full year.
Great. And then can you talk about the progress you're making with Front Row? Last quarter you talked about the challenges regarding the lack of education with your partners. They were tasked with selling the product given they were selling your screens. What progress are you making on the sales front with Front Row?
Speaker Change: What gives you the confidence.
Unknown Executive: That you can be flat year over year in terms of revenue.
Unknown Executive: Yeah, a lot of it's the seasonality that we think we're returning to in the industry. I think we, for the last couple of years, especially following the COVID pandemic, with the spike in orders, it kind of went a little outside the norm of, you know, the traditional seasonal periods that you see the spikes usually in Q2, Q3. We think we're going to return to more of that seasonality in 2024 and in the future.
Speaker Change: Yeah, a lot of it is the seasonality that we think we're returning to in the industry. I think we were there for the last couple of years, especially following the.
That's an area we actually invested a lot of attention in in the last four months since I've been here. There's a few things we want to recognize about the front row product category, which is
Unknown Executive: The COVID-19.
Unknown Executive: The Covid pandemic, you know with the spike in.
Unknown Executive: And orders that kind of went a little little outside the norm of.
Unknown Executive: The traditional seasonal periods that you see the spikes usually in Q2 Q3, we think we're going to return to more of that.
Unknown Executive: And so that's what gives us confidence that, you know, that, you know, that will still remain flat year over year. Again, you know, as we get a little further into Q2, especially in the latter half of the quarter when, you know, schools are starting to get out, we'll really start to be able to assess whether that trend will hold true, that it will remain flat for the full year.
It has
pockets of demand that lie outside of what our typical interactive flat panel customer represents, those pockets of demand really good two things. One is,
Unknown Executive: Seasonality.
Unknown Executive: In 2024 and in the future and so that that's what gives us confidence that you know that.
Unknown Executive: It will still remain flat year over year again it'll be.
The audio products often are specified earlier in a construction and refurbishment process.
Unknown Executive: We get a little further into Q2, especially in the latter half of the quarter, where schools are starting to get out.
at a school, and that requires a longer lead time on the sale. And we're making sure we're deploying our people and our expertise to take advantage of that.
Unknown Executive: Well, we'll really start to be able to assess whether that trend will hold true, but but that's our expectation and what gives us confidence that our.
We've also elevated some of our front row management team into positions of leadership. In fact, our US leader, Jan Tolstabro, was the longtime president of front row. He now leads our entire US division.
Unknown Executive: That will remain flat for the full year.
Dale W. Strang: Great. And then you talk about the progress you're making with Front Row. Last quarter, you talked about the challenges regarding the lack of education with your partners. They were tasked with selling the product given that they were selling your screens. What progress are you making on the sales front with Front Row?
Speaker Change: Great and then can you talk about the progress you're making with front row last quarter, you talked about the challenges regarding the lack of education with your partners. They were tasked with selling the product given they were selling your screens what progress are you, making on the sales front with front row.
We're trying to find the right balance between
Dale W. Strang: That's an area we actually invested a lot of attention in in the last four months since I've been here. There are a few things we want to recognize about the front row product category, which is that it has Pockets of Demand that lie outside of what our typical interactive flat panel customer represents. Those pockets of demand really include two things. One is that audio products are often specified earlier in a construction or refurbishment process at a school, and that requires a longer lead time on the sale.
Dale W. Strang: That's an area, we've actually invested a lot of attention in the last four months since I've been here.
making certain that every salesperson is adept at selling every piece of the portfolio.
Dale W. Strang: There's a few things we want to recognize about about the front row.
But we're balancing that with having deep audio expertise available for each person in the sales field to make sure that the message gets across to our resellers and customers properly. So the short answer I think is we're recognizing
Dale W. Strang: Product category, which is.
Dale W. Strang: It has.
Dale W. Strang: Pockets of demand that lie outside of what our typical interactive flat panel customer represents those pockets of demand really two things one is.
that it's a different sale and we're making sure that we have a different code of market process that reflects that.
Dale W. Strang: It tends to this.
Dale W. Strang: Products often are specified earlier in the construction and refurbishment process and.
Okay.
The demand, the increasing demand and awareness that
Dale W. Strang: At a school and that requires a longer lead time on the sale and we're making sure we're deploying our people and our expertise to take advantage of that we've also.
Dale W. Strang: And we're making sure that we're deploying our people and our expertise to take advantage of that. We've also elevated some of our front row management team into positions of leadership. In fact, our U.S. leader, Jan Tolstenbro, was the longtime president of front row, and he now leads our entire U.S. division.
educators and IT managers have for the value of audio in the US is strengthening so that we find that as being a very encouraging prospect.
Dale W. Strang: Elevated some of our front row management team in the positions.
Dale W. Strang: Our leadership in fact, our U S leader.
Dale W. Strang: In Tulsa Pro was.
Great. Lastly, any thoughts on when you expect to make progress on refinancing or addressing the debt? I can appreciate you getting the bridge loan. Does it depend on recovering the stock or is that not relevant?
Dale W. Strang: What was the long time president.
Dale W. Strang: Front row, and he now leads our entire U S Division.
Dale W. Strang: Uh huh.
Dale W. Strang: We're trying to find the right balance between making certain that every salesperson is adept at selling every piece of the portfolio. But we're balancing that with having deep audio expertise available for each person in the sales field to make sure that the message gets across to our resellers and customers properly. So the short answer, I think, is that we're recognizing that it's a different sale, and we're making sure that we have a different go-to-market process that reflects that. Well, guys, the demand, the increasing demand, and the awareness that educators and IT managers have for the value of audio in the U.S. is strengthening, so we find that to be a very encouraging prospect.
Dale W. Strang: We're trying to find the right balance between.
Dale W. Strang: Making certain that.
Dale W. Strang: Every salesperson is adept at selling every piece of the every piece of the portfolio, but we're balancing that with having deep audio expertise available for each person in the sales field to make sure that the message gets across to our resellers and customers properly. So the short answer I think is we're recognizing that.
It's, I mean, there's different ways to skin the cats. I'm sure you know. The we don't, the options to work most actively engaged with are kind of independent of the stock.
Great. Thank you.
Thank you.
Dale W. Strang: It's a different sale and we are making.
Dale W. Strang: Making sure that we have a different go to market process.
Dale W. Strang: It reflects that.
Dale W. Strang: Okay.
Dale W. Strang: <unk>.
Speaker Change: Oh gosh.
Dale W. Strang: The demand.
Dale W. Strang: The increasing demand.
Dale W. Strang: And awareness that.
Dale W. Strang: Educators and it managers have for the for the.
Dale W. Strang: The value of audio in the U S is strengthening so that we find that as being a very encouraging prospect.
Brian David Kinstlinger: Great. Lastly, any thoughts on when you expect to make progress on refinancing or addressing the debt? I can appreciate you getting the bridge loan.
Speaker Change: Great Lastly, any thoughts on when you expect to make progress on refinancing or addressing that debt.
Speaker Change: Appreciate you getting the bridge loan.
Dale W. Strang: Does it depend on recovering the stock, or is that not relevant? There are different ways to skin the cat, as I'm sure you know. The options we're most actively engaged with are kind of independent of the stock.
Brian David Kinstlinger: It depends on the recovery in the stock or is that not relevant.
Do we have a question from Jack at Maxim?
Dale W. Strang: I mean, there's different ways to skin the cat, as I'm sure you know. The options we're most actively engaged with are kind of independent of the Great.
Dale W. Strang: I mean, there's different there's different ways to skin the cat and so I'm sure you know.
[inaudible]
Can you hear me okay?
Oh, now we can. We can now. Yes. Everything went dark for a minute.
Dale W. Strang: We don't the option to where most actively engaged with our kind of independent of the stock.
Yeah, okay, sounds good.
I'll just start with the question, I guess, falling up on the outlook for 2024. It's encouraging to hear you remain on track with your cost reduction plan. Sounds like revenue still on track to be at least flat year-year.
Brian David Kinstlinger: Great. Thank you. Thank you.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
How about the gross margin, I think last quarter you were expecting maybe like a 100 to 200 base point contraction over the year, but what do you, given the strong gross margin this quarter, what are your thoughts on gross margin?
Yeah, I think we want to stick with our prediction there in that we think that there's several factors obviously can affect gross margin and enough of them are pointing the direction that we think we want to be conservative on that The main factors are
on the panel business, just price compression or in some cases a buying mix that's going towards the lower priced end of the market. Some of that's going to be mitigated by the entry of
Brian David Kinstlinger: Okay.
Operator: Do we have a question from Jack?
Brian David Kinstlinger: Do we have a question from Jack at Maxim.
Operator: Yes.
Jack: Can you hear me okay.
very new high performance panels at the top end of the market, but it's still unclear what that customer mix is going to be chosen at.
Operator: Oh, no, no; we can do it now. Yes, everything went dark for a minute.
Jack: I would now like you said everything went dark for a minute.
Unknown Executive: Yeah, okay, sounds, sounds good. So, um, so, I'll just start with a question, I guess, following up on the outlook for 2024. It's encouraging, you know, encouraging to hear you remain on track with your cost reduction plan.
Speaker Change: Yeah, Okay got it.
Unknown Executive: Good.
The other piece of the mix that matters, of course, for us,
Unknown Executive: So.
Unknown Executive: I'll just start with a question I guess following up on the outlook for 2024.
is
you know, the percentage of audio versus video, it doesn't take a big percentage of our sales to move towards audio for the margin to really shift drastically in that regard. So we don't see a,
Unknown Executive: Encouraging to hear you remain on track with your cost reduction plan. It sounds like revenue is still on track to be at least flat year over year.
Unknown Executive: How about the gross margin.
Unknown Executive: Last quarter, you were expecting maybe like a.
a big move downward, but we do think being somewhat conservative on some mild depression.
Unknown Executive: 100 to 200 basis point contraction over the year, but what do you given the strong gross margin this quarter what are your thoughts on gross margin.
remains a good outlook.
Dale W. Strang: Yeah, I think we want to stick with our prediction there in that we think that there are several factors that obviously can affect gross margin, and enough of them are pointing in the direction that we think we want to be conservative on that. The main factors are in the panel business, just price compression or, in some cases, a buying mix that's going towards the lower priced end of the market. Some of that's going to be mitigated by the entry of very new high performance panels at the top end of the market, but it's still unclear what that customer mix is going to be.
Yeah, and just a follow up on Dale's comment there, you know, about the, doesn't take a significant amount, you know, the mix and audio and visual to change it. I think what we saw in Q1 was really just that. It was kind of a mixed change. It's not necessarily a long-term mix change. It was more of just a quarter-over-quarter change that was enough to drive it down. But I think even with that mix change, you know, at 34 to half percent margin, I think we were pleased with that just knowing there was a greater concentration. on the video side this quarter.
Unknown Executive: I think we want to stick with our with our prediction there in that we think that Theres. Several factors, obviously can affect gross margin and.
Dale W. Strang: And after that point.
Dale W. Strang: Pointing that direction that we think we want to be conservative on that the main the main factors are.
Dale W. Strang: On the panel this is just price compression or in some cases.
Dale W. Strang: Buying.
Dale W. Strang: Buying mix, that's going towards the lower priced into the market.
Dale W. Strang: I mean, thats going to be mitigated by the entry is very.
Dale W. Strang: New high performance payments at the top end of the market, but it's still unclear what the customer mix is going to be chosen at the other piece of the mix. It matters of course for us is.
Dale W. Strang: The other piece of the mix that matters, of course, for us is the percentage of audio versus video. It doesn't take a big percentage of our sales to move towards audio for the margin to really shift drastically in that regard, so we don't see a big move downward, but we do think being somewhat conservative on some mild compression remains a good outlook.
Okay, great, that's helpful. And then maybe just to follow up on in terms of the guidance and the recent outperformance, in terms of the guidance you said, it's good to see you guys set expectations.
Dale W. Strang: The percentage of audio versus versus video it doesn't take a big percentage of our sales to move towards the audio for the margin to really shift drastically.
that you believe are, you know, you can beat and clearly you're doing that now. What, you know, looking at the second quarter now with your guide, is there anything that that factors into that guide that, you know, maybe played out in the first quarter that kind of caused that same upside?
Dale W. Strang: So we don't see it.
Dale W. Strang: A big move downward, but we do think being somewhat conservative on some mild compression remains remains a good outlook and just just to follow up on <unk> comment there about the does it take a significant amount.
How confident are you in this guidance level and how conservative is it relative to maybe what could happen? Thanks.
Gregory S. Wiggins: Yeah, just to follow up on Dale's comment there, you know, about it doesn't take a significant amount of the mix and audio and visual to change it. I think what we saw in Q1 was really just that it was kind of a mixed, mixed change. It's not necessarily a long-term exchange. It was more of just a quarter over quarter change that was enough to drive it down. But I think even with that mixed change, you know, at 34 and a half percent margin, I think we were pleased with that, just knowing there was a greater concentration on the video side this quarter.
Gregory S. Wiggins: The mix in audio visual to change it I think what we saw in Q1 was really just that it was kind of a mix makes change it's not necessarily a long term mix changed it was more of just a quarter over quarter change that was enough to drive it down, but I think even with that makes change at 34, 5% margin I think where we're at.
So I think we can look at that a couple different ways. There's, you know, there's the top line guidance we've given, and then there's the adjusted EBITDA guidance that we've given. You know, if we take the top line, you know, I think there were some, you know, internal processes that we needed to refine. And internally, some of them were the changes we made to the management structure of the organization in terms of the reporting chain and
Gregory S. Wiggins: Pleased with that just knowing there was a greater concentration on the on the video side.
just how we went about our process for delivering on the forecast that we provide externally. So there were some changes on that front, some accountability changes that we had to go through internally that I think is really helping us think also
Gregory S. Wiggins: This quarter.
Unknown Executive: Okay, great, that's helpful. And then maybe just to follow up on in terms of the guidance. In terms of the guidance, you said, it's good to see you guys set expectations that you believe are, you know, you can beat, and clearly you're doing that now. What, you know, looking at the second quarter now with your guide, is there anything that factors into that guide that, you know, maybe played out in the first quarter that kind of caused that same upside? How confident are you in this at this guidance level? And how conservative is it relative to maybe what could happen?
Speaker Change: Okay, Great. That's helpful. And then maybe just a follow up on in terms of the guidance and the recent outperformance in terms of the guidance you said, it's good to see you guys set expectations.
Unknown Executive: Do you believe.
Unknown Executive: You can be and.
you know, just getting out there and, you know, having that interaction with our partners, with our customers, with other key players in the industry as far as, you know, what they were seeing and really being able to refine how we call the top line. You know, as far as.
Unknown Executive: Clearly you are doing that now looking.
Unknown Executive: Looking at the second quarter now with your guide.
Unknown Executive: Is there anything that factors into that guide that you know maybe played out in the first quarter that kind of caused that same upside how confident are you in this in this guidance level and how conservative is it relative to maybe what could happen.
you know, our outperformance, you know, on an adjusted EBITDA basis, you know, some of that obviously was revenue driven, you know, certainly. I think, you know, we were, I think in fairness, probably a little, you know, a little conservative in Q1 as there was some noise, as you can expect, you know, with a lot of the transition that, you know, we wanted to do internally to reduce OPX. Obviously, a lot of it was on a headcount reduction timeframe. And some of it was just the timing of, you know, when those...
Gregory S. Wiggins: So I think we can look at that in a couple different ways. There's, you know, the top line guidance that we've given, and then there's the adjusted EBITDA guidance that we've given. You know, if we take the top line, you know, I think there were some internal processes that we needed to refine. Internally, some of them were the changes we made to the management structure of the organization in terms of the reporting chain and just how we went about our process for delivering on the forecast, you know, that we provide externally.
Unknown Executive: Okay.
Unknown Executive: So I think we can look at that a couple of different ways.
Gregory S. Wiggins: Theres the topline guidance, we've given and then theres the adjusted EBITDA guidance that we've given if we if we take the take the top line I think there were some internal processes that we needed to refine and internally. Some of them are the changes we made to the management structure of the organization in terms.
when those changes were going to be able to be made and the related costs associated with those changes.
Gregory S. Wiggins: The reporting change.
Gregory S. Wiggins: Just how we went about our process for for delivering on the forecast.
We were able to execute on those plans probably a little quicker than we anticipated. But I think it's also just better discipline in the organization as far as just controlling other costs as well, which gives us some optimism as we proceed throughout the year that we've got some, you know, we're on a good track, we've got some momentum. And as far as continuing...
Gregory S. Wiggins: We provided externally.
Gregory S. Wiggins: So there were some changes on that front, some accountability changes, you know, that we had to go through internally that I think are really helping us. I think also, you know, just getting out there and having that interaction with our partners, with our customers, with other key players in the industry as far as, you know, what they were seeing and really being able to refine what we call the top line.
Gregory S. Wiggins: So there were there were some changes on that front. Some accountability changes that we had to go through internally that I think is really helping us.
Gregory S. Wiggins: <unk> also.
Gregory S. Wiggins: Just.
Gregory S. Wiggins: Getting out there and.
Gregory S. Wiggins: Having that interaction with our partners with <unk>.
Gregory S. Wiggins: With our customers, where they are with other key players in the industry as far as what they were seeing and really being able to to refine how we call the top line.
continuing to manage our costs going forward in other areas outside of just employee-related expenses. Yeah, and my only addition to that, Jeff, would be one way to look at the market is the overly general global forecast. You know, and the global market for ISPDs
Gregory S. Wiggins: As far as.
Gregory S. Wiggins: You know, as far as you know, our outperformance, you know, on an adjusted EBITDA basis, some of that obviously was revenue driven. You know, certainly, I think, in fairness, probably a little, you know, a little conservative in Q1, as there was some noise, as you can expect with a lot of the transition that, you know, we wanted to do internally to reduce OPEX.
Gregory S. Wiggins: Our outperformance on adjusted EBITDA basis, some of that obviously is revenue driven.
Gregory S. Wiggins: Certainly I think we were I think in fairness is probably a little.
has been declining now for, you know, several quarters.
Gregory S. Wiggins: A little conservative in Q1 as there was some noise as you can expect G&A with a lot of the transition that we wanted to do internally to reduce opex. Obviously, a lot of it was on a on the head count reduction.
And those year and year declines are starting to get smaller, which is what we predicted and what we're planning on and hoping continues to happen.
And so that's one reason both for caution and, you know, our job is to calibrate what we're hearing for our customers against that sort of global outlook. And we're seeing some really encouraging signs.
Gregory S. Wiggins: Timeframe and some of it was just the timing of when those when those changes where we're going to be able to to be made and the related costs associated with those changes.
Gregory S. Wiggins: Obviously, a lot of it was on a headcount reduction timeframe, and some of it was just the timing of when those changes were going to be able to be made and the related costs. associated with those changes. We were able to execute on those plans probably a little quicker than we anticipated. But I think it's also just better discipline in the organization as far as just controlling other costs as well, which gives us some optimism as we proceed throughout the year that we're on a good track, and we have some momentum as far as continuing to manage our costs going forward in other areas outside of just employee-related expenses.
Gregory S. Wiggins: We were able to.
Gregory S. Wiggins: Execute on those plans, probably a little quicker than.
particularly at various markets in Europe . We've got, you can look at the European market and say, I think in Q1 it was roughly flat to last year in terms of panel shipments into the market.
Gregory S. Wiggins: Than we anticipated.
Gregory S. Wiggins: But I think it's also just better discipline.
Gregory S. Wiggins: And the organization as far as just controlling other cost as well.
Gregory S. Wiggins: Which which gives us.
Gregory S. Wiggins: Some optimism as we proceed throughout the year that we will.
But we actually picked up a pretty substantial amount of order shipment volume relative to last year's Q1. And in some markets were growing really substantially, for instance,
Gregory S. Wiggins: We've got some.
Gregory S. Wiggins: We're on a good track and get some momentum and as far as continuing.
Speaker Change: Continuing to manage our costs going forward in other areas outside of just employee related expenses. Yes. This is my only addition to that Jeff would be one way to look at the market as the overly general global forecast.
Dale W. Strang: Yeah, and my only addition to that, Jeff, would be, you know, one way to look at the market is the overly general global forecast, and the global market for ISPs has been declining now for several quarters. And those year-on-year declines are starting to get smaller, which is what we predicted and what we're planning on and hoping that continues to happen. And so that's one reason both for caution, and our job is to calibrate what we're hearing from our customers against that sort of global outlook.
Spain and Germany are great growth within the market. So our job is to, one of the areas we're focused on is to get the right signals from each of our markets and regions
Dale W. Strang: Global market for Isps has been declining now for.
Dale W. Strang: Several quarters and those year on year declines are starting to get smaller which is what we predicted and what work.
and translate that into a reliable forecast review. We've had one successful one for the first quarter, and we're going to continue to be as optimistic as caution allows us to be going forward.
Dale W. Strang: Planning on helping continues to happen and.
Dale W. Strang: So that's one reason both for caution.
So that's the best I could do as far as G2. It's just we haven't refined it yet, but we're in the process of doing it.
Dale W. Strang: Our job is to calibrate what we're hearing from our customers against that that sort of global outlook and we're seeing some really encouraging signs.
Dale W. Strang: And we're seeing some really encouraging signs, particularly in various markets in Europe. You can look at the European market and say, I think in Q1, it was roughly flat to last year in terms of panel shipments into the market. But we actually picked up a pretty substantial amount of order shipment volume relative to last year's Q1. And in some markets, we're growing really substantially. For instance, Spain and Germany are experiencing great growth within the market.
Okay, great. And then maybe just one more. Typically the third quarter is sort of the seasonal peak for you guys in terms of your revenue. I know you're not providing, you know, explicit guidance and...
Dale W. Strang: Particularly at various markets in Europe, we've got.
Dale W. Strang: You can look at the European market and say I think in Q1, it was roughly flat to last year in terms of.
the customer orders sound like they're on track, but you know, we'll we'll kind of see as we go here. But how do you feel about that third quarter? Is it set up for a, you know, to be the strongest quarter again this year or are we?
Dale W. Strang: Panel shipments into the market.
Dale W. Strang: We actually picked up.
Dale W. Strang: Any substantial amount of order shipment volume relative to last year's Q1 and in some markets. We're growing really substantially for instance.
still kind of testing the waters. The market really doesn't give you that kind of signal, you know.
Dale W. Strang: So our job is to – one of the areas we're focused on is to get the right signals from each of our markets and regions and translate that into a reliable forecast. We had one successful forecast for the first quarter, and we're going to continue to be as optimistic as caution allows us to be going forward. So that's the best I could do as far as Q2. It's just we haven't refined it yet, but we're in the process of doing so.
Dale W. Strang: Spain, and Germany are great growth growth growth within the market. So our job is to one of the areas we're focused on it.
We're happy with the level of bids and conversations and other, you know, the ordered intake we're happy with.
Dale W. Strang: You get the right signals from each of our markets and regions and translate that into a reliable forecast for you.
But it never gives you that. The only kind of reliable signal that we seem to be able to focus on is history. And if you look at the seasonal history,
Dale W. Strang: We've had one successful one for.
Dale W. Strang: For the first quarter and we're going to continue to be optimistic as caution allows us to be going forward. So that's the best I can do is first you too. It's just we haven't refined it yet, but we are in the process of doing it.
of our market.
Our first quarter, the first quarter generally is somewhere between 15 and 20% of the year, and almost never 15%, and not usually 20.
Unknown Executive: Okay, great. And then maybe just, just one more.
Speaker Change: Okay, Great and then maybe just one more typically the third quarter is sort of the seasonal peak for you guys in terms of your revenue.
And so
If the first quarter is accurate, we're spot on for our revenue of expectation of flat and Q3 would be part of that.
But we'll know more as we get further into Q2. And, you know, we're probably, you know, some weeks away from really having any of your liable signal about Q3.
Speaker Change: I know youre, not providing explicit guidance in.
Unknown Executive: Typically, the third quarter is sort of the seasonal peak for you guys in terms of your revenue. I know you're not providing, you know, explicit guidance, and The Customer Order sounds like they're on track. But, you know, we'll, we'll kind of see as we go here. But how do you how do you feel about that third quarter? Is it set up for, you know, to be the strongest quarter again this year? Or are we still kind of testing the waters?
Unknown Executive: The customer order sounded like they are on track.
Unknown Executive: What kind of see as we go here, but how do you how do you feel about that third quarter is it set up for a to be the strongest quarter again this year or are we.
Okay, great. Well, congrats on the recent progress and look forward to tracking the story. Thanks.
Unknown Executive: Still kind of testing the waters the market really doesn't give you that kind of signal.
Unknown Executive: The market really doesn't give you that kind of signal, you know. We're happy with the level of bids and conversations and other, you know, the order intake we're happy with. But it never gives you that.
Appreciate it. Thanks, Jack.
Unknown Executive: The only kind of reliable signal that we seem to be able to focus on is history. And if you look at the seasonal history of our market, our first quarter, and the first quarter generally, is generally somewhere between 15 and 20% of the year, and almost never 15%, not usually 20. And so, you know, if the first quarter is accurate, we're spot on for the revenue expectation of flat, and Q3 would be part of that. But we'll know more as we get further into Q2. And, you know, we're probably, you know,
Speaker Change: Uh huh.
Unknown Executive: We're happy with our with the level of bids and conversations in other other the order intake we're happy with.
Unknown Executive: It never gives you that the only kind of reliable signal that we've seen.
Looks like we have no more questions left in the live queue.
Unknown Executive: The appeal to to focus on his history and if you look at the seasonal history.
Unknown Executive: Of our market.
Well, if there's no more questions, I want to thank you, everyone, for your support and for joining us today. We've got to encourage you, 2024 here at the company.
Unknown Executive: Our first quarter and the first quarter generally generally somewhere between 15 and 20%.
Unknown Executive: The year and almost never 15% dot usually 20.
I'm increasingly confident we're on a sustainable path for success. We have an understanding of our challenges. We have a plan in place to drive those improvements to measure them as we go.
Unknown Executive: So.
Unknown Executive: The first quarter's accurate we're spot on for.
Unknown Executive: Our revenue expectation of flat in Q3 would be part of that but we'll know more as we get further.
I'm incredibly proud of our team for responding to those challenges and operating with the professionalism and energy and creativity for which they're known. And I look forward to speaking with you again and we report on our Q2-24 results.
Unknown Executive: Further into Q2.
Thanks again.