Q3 2024 Vislink Technologies Inc Earnings Call
Speaker Change: [music].
Good morning, and thank you for holding welcome to visit linked third quarter 2024 earnings results Conference call.
Chris: My name is Chris and I will be your operator for today's call joining us for today's presentation are the company's CEO Micky Miller and CFO, Mike Bondi, who will report results for the second quarter ended September 32024.
Chris: A copy of the press release is available on the company's website.
Chris: Before we begin today's call I would like to provide vigilance safe Harbor statements, which includes cautions regarding forward looking statements made during this call.
Chris: Management will make statements during the call that includes forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Chris: Any statements contained in this call.
Chris: Or that are not statements of historical facts should be deemed to be forward looking statements all forward looking statements, including without limitation.
Chris: Our examination of operating trends and financial expectations are based upon the company's current estimates and various assumptions.
Chris: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Chris: Accordingly, you should not rely on these statements for a list of these risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission.
Chris: Visual Inc, disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information that is accurate only as of the live broadcast this morning November 14th 2024.
Speaker Change: At this time I would like to turn the call over to visit links C. E O. Mickey Miller. Please proceed sir.
Mickey Miller: Thank you operator, and thank you everyone for joining US today. This morning, we filed our Form 10-Q with the SEC and issued a press release that provided a financial results for the third quarter ended September 30th 2024, along with key business accomplishments.
Mickey Miller: As a brief overview of today's call I'll start by discussing our third quarter performance and highlight our progress toward our three year financial goals. I'll, then pass the call to Mike to discuss our financial results. Afterwards, I'll return to discuss recent updates within our key target markets product developments and our go to market.
Mickey Miller: Strategies.
Mickey Miller: I'd like to begin by reaffirming our three year financial and operational goals, which are central to our overall strategy.
Mickey Miller: These objectives include maintaining our strong position in live production, while accelerating growth in the mill golf sector at all.
Mickey Miller: Recurring revenue services business with the intent to achieve cash flow positivity. In 2025, we are pleased to report that our year to date revenue has increased over 26% compared to the prior year.
Mickey Miller: The results recorded in the third quarter alone reflected a temporary decline in revenues compared to the prior year.
Mickey Miller: Primarily caused by unusually high seasonal softness in the live production sector. We believe this is primarily driven by broadcasters focusing on the 'twenty 'twenty four Summer Olympics, which led to several non Olympics projects being put on hold we also experienced some delays in procurement actor.
Mickey Miller: <unk> for new programs in the Middle East region due to heightened alert status caused by regional geopolitical tensions we expect these activities to return to their usual pace in the coming months.
Mickey Miller: This quarter brought several encouraging developments signaling strong growth opportunities ahead bookings within the 1000 Gov sector continued to gain momentum fueled by increased demand for our solutions. We currently have numerous field product evaluations underway across local national and international law enforcement and defense.
And sees this reflects our strategic commitment to ensuring public safety and maintaining a tactical edge.
Our airborne video downlink systems powered by the industry, leading airline transceiver.
Mickey Miller: And the air anywhere solution continue to set the benchmark for unparalleled reliability efficiency and performance in surveillance and emergency response, we take pride in having our downlink solutions deployed in some of the most demanding and high profile environments around the world recently.
Mickey Miller: We initiated the deployment of our systems with a U S Department of Homeland Security. We also secured an order from the D. C Metro Police Department and our technology is set to play a key role in supporting law enforcement at 2025 G. Seven summit in Alberta, Canada.
Mickey Miller: Additionally, we received a major order in Brazil for our downlink solution, which will be used for police and surveillance operations utilizing our bonded cellular technology.
Mickey Miller: With expanding opportunities across global 1000, Gov markets, including the U S. Europe, the middle East and Africa, we are well positioned to build on this momentum and drive significant revenue growth in the coming months and years.
Mickey Miller: In the third quarter, we launched a new ERP system to unify and optimize our core operations driving greater efficiency across the organization.
Mickey Miller: This system enables us to initiate a restructuring program to reduce significant cost delivering annualized savings of over 6 million.
Mickey Miller: Dollar starting in Q4.
Mickey Miller: While we are pleased with our year to date revenue growth. We've proactively responded to signs of near term revenue softness by consolidated operations and strategically positioning ourselves for continued growth in the 1000 Gov sector as.
As part of this effort, we have consolidated our manufacturing facilities into a single location and streamlining our organization to better support our target markets.
Mickey Miller: These actions are designed to eliminate underperforming product lines optimize staffing and align our resources with the company's long term objectives, we remain committed to identifying additional opportunities for cost reduction.
Speaker Change: Before I proceed with further updates I'll pass the call over to our CFO, Mike Bond to provide a detailed overview of our financial results for the third quarter Mike.
Mickey Miller: Yeah.
Mike Bond: Thank you Mickey and good morning, everyone.
Mike Bond: Looking at our financial results for the third quarter.
Mike Bond: Revenue in the third quarter was $7 1 million compared to $7 2 million in the third quarter of 2023.
Mike Bond: Revenue for the nine months ended September 32024.
Mike Bond: $24 4 million, an increase of 26% over the prior period.
Mike Bond: Gross margin was 51% that's down from 54% in the prior year period.
Mike Bond: Net loss for the quarter was 3 million or a negative $1.22 per share.
Mike Bond: That compares to a loss of 2 million or a negative 83 cents per share in the prior year period.
Mike Bond: This was the result of lower than expected revenue in the quarter and higher fixed costs across the organization.
Mike Bond: Total expenses were $10 3 million compared to $9 5 million in the prior year period.
Mike Bond: Our Q3 expenses reflected an increase in costs associated with personnel required for the ERP implementation, which ramped up during the quarter as well as higher expenditures for strategic R&D investments.
Mike Bond: Yeah.
Mike Bond: Turning to our profitability measures.
Mike Bond: Operating loss was a negative $3 3 million compared to a loss of $2 3 million in the prior year period.
Net loss attributable to common shareholders was a negative $3 million or a negative $1 22 per share compared to a loss of $2 million or a negative 83 cents per share in the prior year period.
Mike Bond: Moving to our balance sheet.
As of September 30th 2024, our cash and short term investments stood at $9.2 million compared to 11 5 million in June 30 at June 32024.
Mike Bond: Working capital was $27 1 million at the end of third quarter compared to $31 8 million at June 30 of 2024, the company expects to see improving working capital performance in the coming periods, primarily due to better vendor terms through consolidated purchasing shorter.
Mike Bond: Installation and customer acceptance periods for large systems implementations and better inventory management, all driven by the new ERP system implemented in the third quarter.
Speaker Change: That concludes my prepared remarks, I'll now turn it back to Mickey.
Mickey Miller: Thanks, Mike returning to operational updates our mill markets remain on a strong growth trajectory our strategic initiatives to grow in this market are continuing to bear fruit currently half of our sales funnel with a 40% or higher probability our 1000 Gov opportunities. This represents a significant.
Mickey Miller: Shifting for a market that historically accounted for less than 30% of our revenue. It is important to note that this is not a result of a decline in our live production funnel.
Mickey Miller: Opportunities in both markets continue to grow.
Mickey Miller: We project over $9 million 1000, Gov bookings for 'twenty, 'twenty, four which would represent year over year growth of over 60%.
Mickey Miller: Our success in the 1000 Gov sector is driven by our airborne downlink systems.
Mickey Miller: Market leaders in delivering real time video intelligence for critical missions Airlink, our aircraft based transmission unit has become the cornerstone of our downlink solution.
Mickey Miller: Fact, the growing popularity of air link is helping drive sales of other components in our downlink system once law enforcement and defense organizations experience enhanced image quality lower latency and other capabilities of airlink. It often leads them to upgrade their ground infrastructure and other components of the transmit and receive systems.
Mickey Miller: Including migration to our air to anywhere secure streaming platform.
During optimal situational awareness for all stakeholders.
Mickey Miller: Further the release of our Aero five bonded cellular solution addresses the needs of those customers interested in leveraging the public cellular infrastructure.
We believe the drone public safety and defense industry is well positioned for growth driven by increased defense spending and formalized policy.
Mickey Miller: Enhanced investment in R&D for autonomous systems, and secured communication technologies will drive innovation positioning companies to lead and advancing global security and on crude solutions. We view this as an exciting trend and believe that the increased investment we've made in drone command and control.
Mickey Miller: Whole.
Mickey Miller: Position us to capitalize on emerging opportunities in this sector, we are taking steps to enhance our visibility as a thought leader in this sector of unproved communications and to engage more with key players in the market.
Mickey Miller: Turning to our services capability, we continue to focus on driving more recurring revenue through service level agreements for 24 seven support.
Mickey Miller: Depot repair and software upgrades less than 10% of our product base is covered by an SLA, we see tremendous upside in this area and we will continue to invest to create a capability to support our global customer base in December we will introduce the linked matrix V two which will provide a secure.
Mickey Miller: <unk> user friendly interface to communicate and diagnose not only our cellular products, but our entire product portfolio.
Mickey Miller: This will enable our service teams to remotely diagnose manage and provide software updates to all visiting customers.
Mickey Miller: Going forward, we plan to continue targeted R&D investments, introducing incremental enhancements and major upgrades to sustain our competitive advantage.
Among the note worthy installations and our live production area. In Q3, we won several bids from news agencies for airborne dialing systems, featuring the air link transmitter.
Mickey Miller: These cases are dally systems will be used to deliver areal coverage for breaking news and sports. This highlights how we are leveraging our expertise in supporting complex military and public safety mission to provide the broadcast in E. G market with high quality video reliable connectivity and seamless distribution.
Mickey Miller: Across all broadcast and cloud platforms.
Mickey Miller: We're also seeing exciting growth in the international markets for our live production solutions.
Mickey Miller: During the quarter, we secured a bid for a bonded cellular transmission system to support live telecast of Mexico Supreme Court. Additionally, our bonded cellular solutions were deployed to cover the elections in the country of Georgia at the end of October. We also won a project to upgrade.
Mickey Miller: Malaysia is national broadcaster enhancing.
Mickey Miller: Enhancing live news and sports coverage.
Speaker Change: Overall international quoting activity remains strong and we expect continue robust contributions to our global revenues from non North American markets.
Speaker Change: Our go to market strategy of continually evolving yielding encouraging outcomes across our four primary focus areas.
Speaker Change: Live video connectivity video data transport, a b D S and drone C to progress in drones. He too has been especially notable why still an emerging sector. We anticipate a rapid expansion in coming years, particularly related to border security.
Speaker Change: And our focus on American made defense platforms.
Speaker Change: Our bonded cellular technology continues to be a cornerstone for live video connectivity and video data transport, providing reliable high quality video transmission for a wide range of applications. We are strengthening collaborations with key OEM partners to ensure our technology roadmap aligns with our evolving needs.
Speaker Change: Further solidifying our leadership in meeting market demands.
Speaker Change: We look forward to engaging with companies in emerging technology fields, such as virtual and augmented reality and artificial intelligence, where our live video transmission technology can unlock new commercial applications and drive growth.
Speaker Change: Our collaboration with focal point B R. On the aid to our L. Abu Dhabi Autonomous Racing League is a Prime example of this and as earned several awards for its innovation.
Speaker Change: Looking ahead, we remain committed to our three year strategy.
We may adjust the timeline to reflect the evolving market landscape, we have recalibrated, our cost structure to align with this extended timeframe with strong ongoing demand for our trusted solutions a shift toward high margin service revenue and a continued focus on cost efficiency we are confident.
And our ability to execute our strategy and achieve sustainable profitable growth over the long term.
Speaker Change: We appreciate your continued support and confidence Invisalign <unk>, we look forward to keeping you updated on our progress in the coming quarters.
Operator, please provide the appropriate instructions.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: As a reminder to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw it. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And today's first question comes from Brian Kingston Linger with Alliance Global Partners. Please proceed.
Speaker Change: Great. Thanks, so much for taking my questions.
Speaker Change: I might have missed it.
Speaker Change: Did you share the total pipeline I guess I was wondering if its been impacted by some of your short term challenges.
Speaker Change: Yeah.
Speaker Change: No you didn't miss it Brian.
Speaker Change: Hey.
Speaker Change: The pipeline is is above where we are last I think was carried at 48 were around 50 million weighted pipeline right now.
Speaker Change: As we mentioned.
Speaker Change: Of that about 40% of mill golf opportunities, which we think is there.
Speaker Change: Positive given that traditionally was a less than 30% revenue source for us.
Speaker Change: But we continue to see.
Speaker Change: Opportunities on the on the live production side as well so it's not that those are going down.
Speaker Change: Overall, we just saw some.
In this core and it's in this quarter some softness on the live production side.
Speaker Change: And a lot of it has to do with a lot of customers who are busy for a month and a half in Paris with the Olympics.
Speaker Change: So if we could start with no golf business in your prepared remarks.
Speaker Change: You mentioned it was lower than expected you commented.
Speaker Change: No GOG order in the middle East It was delayed.
Speaker Change: How big was this order and what are your expectations based on discussions.
Speaker Change: At least it doesn't appear the heightened unchanged in that area.
Speaker Change: Anytime soon.
Speaker Change: Yeah, that's a good point.
Speaker Change: We had in August we had a demonstration of the new technology.
Speaker Change: That will work with them. This is a customer that particular opportunity. We're talking about is a customer were worthy embedded.
Speaker Change: Incumbent source, where they have over.
200, rotary helicopters and fixed wing as well as multiple received sites to cover the entire country.
Speaker Change: And in August that was delayed.
Speaker Change: We're seeing signs that that will pick up.
Speaker Change: At the early part of next year to be able to do that demonstration in trial and proceed.
Speaker Change: With executing on that project.
Speaker Change: What are you expecting about a six month delay to that.
Speaker Change: Got it.
Speaker Change: Then.
Speaker Change: Can you can you talk about the pipeline you mentioned they know they have about half.
Speaker Change: I think the goal was to eliminate shortfalls due to one or getting delayed obviously show.
Speaker Change: Are there designated opportunities and there are there many more than that I'm just trying to understand you know the diversification yeah pipeline.
Speaker Change: Yeah, Great question, Yes, it's quite robust and just give you. An example in this past year alone Baltimore, we deploy Baltimore city, but just looking at history and I will talk about the future.
Speaker Change: We deployed Baltimore City, Baltimore County, New Jersey State Police, we mentioned D C Metro on this call.
Speaker Change: We also got our first initial opportunity with department of Homeland Security.
Speaker Change: So yeah, we've got a quite a track record of high profile.
Speaker Change: We're a meaningful customer engagement.
Speaker Change: That have resulted in success and we're building on that because he was most recently got an order from the Danish M O D and in it and so we're seeing them pick up not only here in the U S with state and local which has been a strong point for us, but through our acquisition of BNS now, we're having a much greater exposure to.
Speaker Change: Two middle Eastern European and Asian opportunities, where they will incumbents and that's why we're seeing the big opportunities that traditionally weren't part of the portfolio of customers.
Speaker Change: Okay.
Speaker Change: The last one I know guy can you quantify the percentage of revenue actually in the third quarter. I know you gave some rough numbers what it historically has been but maybe a third quarter number it might be helpful to understand.
Speaker Change: Growth trajectory.
Agribusiness.
Speaker Change: Yeah, Brian just proportionately out of the $7 million. We did live production was 4.4 and build golf was one eight and then we had some service revenue in there for 700.
Speaker Change: Great. Thank you and then moving to live entertainment and.
Speaker Change: Here, we are five months after the Olympics are.
Speaker Change: Are you starting to see a pick up and you've got more first half of the ear and we'll see another sluggish fourth quarter, just trying to maybe help.
Speaker Change: With timing and expectation for investors.
Speaker Change: Yeah, I think Brian what we're seeing we're seeing a pick up in quoting and purchasing activity.
Speaker Change: Sure. We had we had a good start to two this quarter, but again.
Speaker Change: Some of this will be backend loaded so we will have a sluggish.
Speaker Change: Fourth quarter, one of the reasons, we took proactive.
Speaker Change: Restructuring activity just to point out on that.
Speaker Change: When he saw around margins.
Speaker Change: We had acquired BNS last year with that we acquired the BMS production facility and then we also had two production facilities within visit.
Speaker Change: There's like and so now were consolidated into a single facility, that's going to allow us to obviously improve our conversion costs to move online.
Speaker Change: There's been a inventory.
Speaker Change: So so you know we expect to weather through this next quarter, but we're looking back.
Speaker Change: Back to you.
Speaker Change: And the kind of growth that we're looking at at the beginning of the year in.
Speaker Change: In this quarter you got a good start in October November is looking good and we hope to finish strong in December but much of that will be core deliverables next year.
Speaker Change: Great last question you started the answer Greg.
Speaker Change: Millions of large numbers of your business.
Speaker Change: Are you moving to one or two production facilities and then how much.
Speaker Change: Is that reduce footprint saving verses equal or maybe anything else that you're doing.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: They want and they can do the detail.
Speaker Change: Yeah and we're.
Speaker Change: We're taking out.
Speaker Change: Costs associated with two facilities. One we're downsizing will we're taking out completely those costs are around 800000, and they'll come out in the next I would say the next quarter.
In fourth quarter or first quarter of next year.
Speaker Change: And then we're taking out a significant number of head count and just about $6 million. The head count alone is $3 7 million.
And the majority of that is either notified and is leaving the business now or will leave.
Speaker Change: In the fourth quarter, but some remainder in the first quarter of next year, but the vast majority will be going out.
Speaker Change: At the end of the fourth quarter.
Speaker Change: Just doing the math here quickly.
Speaker Change: When you say $800000 for the facilities is that per quarter, but then it adds at that time.
Speaker Change: So that's alleviation of rent taxes.
Speaker Change: Utilities things like that it's about 850.
Speaker Change: And then we've got other expenses that were cutting in the business.
Speaker Change: That will total up to probably another $1 1 million that will come out over time over there.
Speaker Change: The remainder of next year there'll be a ratable a reduction in our run rate.
Speaker Change: Okay. Thanks, so much good luck.
Speaker Change: Thanks.
Speaker Change: And again, if you do have a question. Please press Star then one on your Touchtone phone.
Speaker Change: And at this time, we're showing no further questioners in the queue and this does conclude our question and answer session. At this time I would like to turn the conference back over to Mr. Mickey Miller for any closing remarks.
Mickey Miller: Thanks, Chris and thank you everyone for joining us today, we look forward to continue.
Mickey Miller: To build this company and.
Deliver those returns or do you expect so thank you very much.
Speaker Change: The conference has now concluded thank you for joining us today for digitally Inc's third quarter 2024 conference call and you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
[music].
Speaker Change: Yeah.
Speaker Change: [music].
Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Yeah.