Q1 2025 Moving iMage Technologies Inc Earnings Call
Thank you.
Speaker Change: Greetings and welcome to the Moving Image Technology's first quarter 2025 earnings call. At this time all participants are in a listen-only mode. A question and answer session will follow formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded. At this time, I would like to turn the call over to Brian Siegel, Vice President of Investor Relations and Strategic Communications. Please go ahead, Brian.
Brian Siegel: Thank you, operator. Good morning and welcome to Moving Image Technology's Earnings Conference Call and Webcast. With me today is Chairman and CEO Bill Rafnson, who will provide an industry overview, Francois Godfrey, President and COO and Co-Founder and Executive VP of Sales and Marketing Joe Delgado, who will provide a strategy and business overview.
Brian Siegel: and our CFO Bill Green. For those of you that have not seen today's release, it is available in the investor section of our website.
Brian Siegel: Before beginning, I would like to remind everyone that, except for historical information, the matters discussed in this presentation are forward-looking statements that involve subtle risks and uncertainties.
Brian Siegel: Words like believe, expect, anticipate, mean that these are our best estimates as of this right, but that there can be no assurances that expected or anticipated results or events will actually take place.
Brian Siegel: Actual future results could differ materially from those statements. Further information on the company's risk factors is contained in the company's quarterly and annual reports filed with the FCC.
Brian Siegel: Now I'd like to turn the call over to Phil. Go ahead, Phil.
Brian Siegel: Thank you, Brian, and thanks to everyone joining us today. I'm Phil Rafnson, CEO of Moving Image Technologies, or MIT. I'm encouraged by the progress we've achieved in our first quarter of fiscal 2025.
Brian Siegel: particularly as the industry begins to rebound from the challenges posed by the Hollywood strikes over the past year.
Those setbacks appear to be behind us now.
Brian Siegel: and were energized by the clear signs of a box office resurgence and a lineup of potential blockbuster releases, sparking renewed enthusiasm for in-theater experiences.
Brian Siegel: The broader industry tone has experienced a positive shift as well. Major players like AMC, Regal, and Cinemark are reporting solid improvements, highlighting the resilience of the cinema sector.
AMC has seen rising attendance, especially for major releases.
Brian Siegel: and Cinemark noted stronger than anticipated demand in their third quarter with audiences embracing both premium experiences and traditional moviegoing. This reinvigorated interest perfectly aligns with our premium offerings.
Brian Siegel: such as immersive sound systems and advanced laser projection upgrades, which are increasingly valued by customers looking to elevate the moving and going experience.
Brian Siegel: Looking at the technology upgrade cycle, the industry is reaching a pivotal point with thousands of projectors and servers due for replacement over the next few years.
Brian Siegel: This need for upgrades represents a growth opportunity for MIT as we continue to support our clients' evolving technological demands. As the industry moves forward, MIT is exceptionally well positioned to capture this growth, leading in cinema innovation with essential products and solutions tailored to meet the high expectations of today's theatergoers. Turning to the recent changes in our leadership structure, the industry and our business is at a critical juncture.
Speaker Change: I wanted to put in place a long-term secession plan sooner than later. After careful consideration, I decided to promote Francois Godfrey to the role of President and COO.
Speaker Change: reporting directly to me. Francois brings decades of industry experience with strong relationships and has been a key part of our team moving our emerging growth initiatives towards viability.
Speaker Change: I look forward to working with him as we move into MIT's next phase as a company. I'll now turn the call over to Francois to say a few words.
Francois Godfrey: Thank you, Phil, and I appreciate the opportunity to join today's call.
Francois Godfrey: I'm very excited about MIT's prospects for success in the years to come.
Francois Godfrey: Over the next month, I plan to thoroughly review our business and operations to develop a business plan designed to accelerate revenue growth, increase gross margin, and take advantage of our operating leverage to generate cash flow and profits.
Francois Godfrey: While I don't expect any radical changes, I believe this review may flush out opportunities to increase the baseline in our core cinema business, improve operational excellence,
Francois Godfrey: and align investment in our emerging offerings with an adequate time to go to market strategy. My goal is to share this plan with you on our second quarter earnings call in mid-February. Now I'll turn the call over to Joe to discuss the business in more detail.
Thank You Francois and good morning everyone
Joe Delgado: Starting with our core cinema business, we're encouraged by signs of a promising future.
Joe Delgado: In addition to the industry's ongoing recovery, a key catalyst here is the technology upgrade cycle, with thousands of projector and server combinations expected to reach the end of their life cycle in these coming years. These upgrades will involve replacing older systems with new laser technology.
Joe Delgado: with prices ranging from $30,000 to $130,000, depending on specifications. While we won't capture every opportunity, our expertise in this space gives us confidence that this cycle will contribute meaningfully to our cinema growth over the next few years.
Joe Delgado: We're also optimistic about our partnership with LEA Professional, which grants us a global distribution rights for their smart power amplifiers in the cinema market. These amplifiers not only offer high margins, but also provide an extended warranty, twice the industry standard, which differentiates them from larger competitors.
Joe Delgado: In North America alone, the existing installed base is valued at approximately $630 million, with an estimated 5-10% of this equipment requiring replacement each year.
Joe Delgado: representing a total addressable market of approximately 32 to 63 million annually. We continue to scope these products into new builds and refurbs whenever possible.
Joe Delgado: Lastly, we're also in the early discussions with potential European customers and we believe LEA could play an instrumental role in expanding our presence there.
Joe Delgado: Next is the eSports and cinemas opportunity, where we've refined and sharpened our strategy over the past few quarters.
Joe Delgado: Initially, our eSports initiative was tied solely to Sandbox, which aims to develop the Little League model for eSports. However, delays in Sandbox rollout due to an extended fundraising period have required us to adapt.
Joe Delgado: Despite this, we can confirm customer interest in this concept has not wavered since Sandbox announced a strong domestic pipeline.
Joe Delgado: Recently, Sandbox pivoted away from relying on external capital to focus on sponsorships and operational plans targeting an early 2025 launch of its first leagues. Meanwhile, we've adjusted our approach, beginning to pursue direct sales to large theater circuits with the internal capabilities to support esport leagues.
Joe Delgado: This proactive ship has enabled us to actively engage with theater circuits ready to integrate esports into their offerings, and we're hopeful these efforts will materialize over the coming quarters.
Joe Delgado: Now, let's talk about eCaddy, an incredibly exciting and innovative opportunity for us to expand beyond cinema.
Joe Delgado: The market potential here is significant with millions of existing stadium and arena seats that could be retrofitted with our eCaddy cup holders alongside a pipeline of new build opportunities
Joe Delgado: What sets eCaddy apart is that it's more than just a product upgrade. It's a new model designed specifically for stadiums and arenas. Imagine a cup holder that not only holds drinks, but also upgrades the fan experience through services such as advertising or promotions, creating new revenue streams for these venues.
Joe Delgado: We've received positive feedback from Major League Baseball and other sports executives and we're currently defining and developing both the model and prototype for this technology. Both precursors to being able to submit proposals at select stadiums and arenas.
Joe Delgado: The eCaddy platform has nearly limitless potential, with tens of millions of seats worldwide and the versatility to adapt across various venues. We believe eCaddy can generate high margin, recurring revenue as it scales, meeting the growth demand for technology-driven fan engagement solutions.
In summary
Joe Delgado: Despite industry challenges, we've stayed focused on our long-term objectives and made solid progress. Our cinema business is showing signs of turning the corner, and our new initiatives, particularly in esports and e-caddy, are full of potential.
Joe Delgado: As the industry recovers from recent disruptions, including the Hollywood strikes, we're incredibly well positioned to see our strategies yield results.
Joe Delgado: We're still in the early stages, but we're excited for what's ahead and look forward to sharing our progress as we reach these key milestones. With that, I thank you, and I'll turn it over to Brian.
Brian Siegel: Thanks Joe and thank you everyone for attending our earnings call. Q125 was always going to be a tough comp as Q124 had tailwinds at its back from the continued box office recovery post-COVID and then momentum from the Barbenheimer phenomenon.
Brian Siegel: Unfortunately, as we pointed out several times, the Hollywood strikes derailed this momentum for the rest of fiscal 24, and we are only now starting to see it pick up. So while our Q125 numbers were down as expected, we did see encouraging signals that gave us optimism for an improved spending environment as we head into the new calendar year.
Brian Siegel: Revenue declined roughly 21% versus last year to $5.3 million. The big difference between the two quarters last year's revenue contained higher run rate business, fewer but larger projects, and more orders related to the technology refresh cycle.
Brian Siegel: Gross profit for the first quarter was $1.4 million, a 24.6% decline from the prior year. Gross margin, however, was 26.1%, down 130 basis points from last year.
Brian Siegel: Encouraging sign here is that the mix improved sequentially versus the prior couple of quarters where we had a large lower gross margin seed order. On the expense side, operating expenses reflecting the headcount and other cost reductions we made at the beginning of the quarter were flat at 1.4 million versus last year.
Brian Siegel: Remember that we took out roughly $600,000 of annualized costs, most of which is expected to impact fiscal 2025.
Brian Siegel: Operating loss was $68,000 compared to operating income of $0.4 million last year. And we achieved EPS break even for the quarter versus EPS of 4 cents last year.
Brian Siegel: Looking through our balance sheet, our cash and cash equivalents were down only $32,000 at $5.2 million, indicating that we remain well capitalized.
Moving to our second quarter.
Brian Siegel: Historically, this has been the seasonally slowest quarter due to the holiday movie schedule and theaters running at high capacity.
Brian Siegel: But we don't expect this pattern to change, we do believe the comp versus last year should be more favorable given the stronger industry spending environment and cost reductions we took this year. In summary, we remain focused on the initiatives and offerings that we believe will accelerate revenue growth, increase gross margins, and drive profits.
Brian Siegel: For our investors, we are committed to providing updates on milestones as our merchant growth strategies unfold. We will continue to announce any key developments or orders through press releases and earnings calls, as well as on X, where we encourage you to follow us at our handle at Moving Image News.
Brian Siegel: Thank you for joining us today and we look forward to speaking with you again during the next call in February. Operator, we are ready for questions, if any.
Speaker Change: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue.
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One moment, please, while we poll for questions.
At this time, there are no questions.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.