Q1 2026 Moving iMage Technologies Inc Earnings Call

Greetings, welcome to moving image Technologies. First quarter 2026 earnings call.

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The question and answer session will follow today's formal presentation.

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please note that the conference is being recorded.

At this time, I'll turn the conference over to Chris Eddie with Investor Relations. Thank you. You may now begin, Chris.

Thank you, operator, and good morning to all of you joining today's call. Moving Image Technologies CEO, Phil Robinson, will make some opening remarks, followed by a business update from President and COO François Godfrey. Then, CFO William Greene will conclude with some financial highlights, after which we will open the call to investor questions. Today's conference is being recorded, and an audio replay and written transcript will be posted to the investor section of the Moving Image website in the next few days.

As a reminder, except for historical information that matters, the discussions in this presentation contain forward-looking statements that involve several risks and uncertainties. Words like "believe," "expect," and "anticipate" mean that these are our best estimates as of this writing. However, there can be no assurances that expected or anticipated results or events will take place.

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 SEC. I will now turn the call over to Moving iMage Technologies Inc. CEO, Phil Robinson.

Thanks Chris.

And thank you all for your interest in moving image technology.

Our Q1 performance was bolstered by the acceleration of some projects we had expected later in the year and.

By solid operational execution, both in terms of margin and operating costs, the combination of higher revenue, increased gross margin, and lower operating expenses enabled us to achieve our goal for profitability for the quarter while also bolstering our working capital position.

I'm very proud of the operational progress our team has made that enabled us to achieve profitability results. This progress will benefit MIT as we move forward. However, our ability to achieve profitability in any given quarter remains a function of the timing of customer projects as well. As part of the normal seasonality of our business, visibility into longer-term customer spending plans remains limited, despite the substantial scope of industry-wide cinema technology upgrades still to be completed. We believe a major factor in supporting laser projection and audio upgrade investments is the health of the exhibition industry. To that end, domestic box office receipts for the third quarter of the calendar year were approximately $2.4 billion.

Nearly matching the year-ago period, we are now entering the all-important holiday box office season that offers the potential for improvement, given a strong film lineup and steadily improving attendance trends. Our strategy within our target markets has been to continue building on our value proposition with new products and capabilities. We believe our recent acquisition of...

Fiscal Year 2026, our Q1 revenue exceeded our expectations on the top line as certain projects were accelerated by customers into the period. In addition, our bottom line benefited from the meticulous project execution for which MIT is known, enabling us to achieve an operating income of $350,000. We are particularly gratified by achieving profitability in the first quarter, as this resulted from many quarters of work in reducing our overhead cost structure and building our project pipeline focused on higher-margin opportunities.

Given our size, the seasonality of our industry, and the variability of project sizes, their timing, and revenue mix, we continue to expect operating losses in the future until we are able to scale our business to consistent profitability to reach that important goal. We continue to advance a range of internal and external initiatives designed to build our revenue base.

On the project side, our team continues to engage in a variety of new build and technology refresh discussions with exhibitors and other specialty entertainment venues. These projects range from individual auditorium upgrades to full site refresh or new build initiatives, incorporating state-of-the-art laser projection technology coupled with immersive audio technologies. As we have often said, the timing of these.

Opportunities remain fluid, as they are largely dependent on our customers, capital cycles, and strategic decision-making accordingly. This makes it difficult for us to predict project timing, particularly on a quarterly basis. Fortunately, the scope of legacy equipment in the market is quite considerable. Our ongoing engagement with new and existing customers confirms that there remains a very substantial base of potential work over the next few years, so we can continue to believe that. It's not a question of if a broad base of upgrades will take place; it's more of a question of when and at what pace.

In this environment, we have turned management attention toward the things we can control, which include our cost structure, margin profile, and our product and services offering, where we have made good progress and exciting recent developments. From these efforts, a recent development was our purchase of the DCS loudspeaker line from QSC. DCS is a proven and highly regarded line of premium cinema loudspeakers with a global customer footprint, recognized as a de facto standard across cinema post-production studios and screening room environments like MIT. DCS has an over 20-year reputation for quality, reliability, and service, making it a perfect fit with our Cinema Audio Solutions. We believe DCS can become an...

Important part of our growth strategy. The purchase was completed on October 31st, and we are now working to integrate the operations and build out our go-to-market strategy, including a couple of select hires to help drive the business. The DCS assets included all intellectual property, customer lists, and finished inventory. We purchased for $1.5 million in cash from our $5.5 million in net cash at the close of our first quarter. We feel the acquisition terms should enable DCS to be accretive to our bottom line, and we see real potential to return our full investment in as little as 2 or 3 years. Now it's up to us to go and execute on that potential. We expect it to take a few quarters to integrate the business and get it fully up to speed with MIT. Now let me backtrack and touch on a few reasons why we are very excited about DCS.

First, it immediately expands our addressable market, product portfolio, competitive position, and brand recognition within the cinema industry. The DCS product line is known, respected, and deployed in auditoriums around the world. The acquisition elevates MIT's visibility while enhancing our audio capabilities and complements the LEA amplifier offering to create a stronger cinema audio offering for a wide range of auditoriums and venues.

Venues.

Second, it builds on our expertise and global distribution relationship with LEA amplifiers, another Hallmark Cinema brand, creating an even more compelling audio offering.

Opportunities for MIT open a range of new overseas markets, particularly in Europe, the Middle East, and Asia, where we have had little or no exposure, while also providing potential for cross-selling opportunities for other products as we grow so far. The feedback from customers and industry partners has been very supportive. We have already begun discussions with potential international distribution partners and have received opening orders from both domestic and international customers. While we onboard the inventory, turning back to the overall business, we continue to progress our efforts to trim costs, as reflected in our first quarter results. At the same time, we have focused efforts on business development that seeks to forge new relationships as well as build on existing accounts.

Looking ahead, we remain optimistic regarding the exhibition industry outlook, as Hollywood content continues to build after the strike. Other impacts on domestic box office trends continue to improve and should be supported by a stronger and more consistent release calendar on the horizon. Assuming continued progress at the box office, we believe exhibitors will have improved access to capital to pursue deferred cinema, technology upgrades, and new theaters. The potential for more available capital, combined with continued...

The aging of legacy cinema systems should provide increasing opportunities for MIT.

Keeping our solutions front and center in the industry, our business development team will attend Cine Asia in Thailand next month from December 8th to 11th and participate in two events: the ICTA Seminar Series in Los Angeles in January and the Dine-in Cinema Summit in Austin in February 2026. These are all ideal forums to showcase our new DCS line and our other capabilities with key customers and technology partners.

To sum up, our team delivered a strong Q1 performance both operationally and strategically, and we remain focused on these disciplines that enabled that success. The DCS Cinema loudspeaker line is an important and complementary addition to our suite of offerings that elevates our value proposition and should support long-term growth. Our pipeline of project dialogues remains active, our partnerships are strong, and our focus on innovation and execution continues to differentiate MIT in the marketplace. We are grateful for your investment and support and look forward to updating shareholders as we move forward. Now, I'll turn the call over to Bill Green, our CFO, to address some financial highlights.

Thanks, Francois. We published our financial statements in the press release this morning and expect to file our Form 10-Q by the close of business. Today, I will touch on select financial results and gladly answer any questions during the Q&A session. In Q1 2026, revenue rose 6.2% to $5.6 million, reflecting the benefit of delivery of a custom cinema project and other client work.

Our Q1 2026 gross profit rose 22% to $1.7 million, supported by higher revenue and an improved gross margin of 30% compared to 26.1% in Q1 2025, primarily due to a favorable mix of products and execution efficiency.

MIT reduced operating expenses by 8% to $1.32 million in Q1 2026 compared to $1.444 million.

We expect continued benefits from this leaner operating model, as we move forward, offset to some degree by selecting new hires, for the DCS operations.

Q1 2026 operating income improved to $350,000 versus an operating loss of $68,000 in the same period last year. The improvement reflects revenue growth, a focus on higher margin opportunities, and ongoing expense management initiatives.

Net income included a $128,000 non-cash gain from the payables extinguishment. That more than offset a decrease in net interest income, largely due to lower interest rates. Our Q1 2026 results underscore MIT's potential to achieve profitability and positive cash flow on higher revenues, with the benefit of our cost and margin disciplines.

Turning to our balance sheet, working capital grew 12% to $4.8 million at the close of Q1 2026, keeping us in a solid position to fund our business compared to year-end 2025 working capital of $4.3 million, but below year-ago working capital of $5.1 million. MIT continues to have no long-term debt. We closed Q1 2026 with net cash of $5.5 million, or approximately $0.55 per common share, compared to net cash of $5.2 million in Q1 2025 and net cash of $5.7 million at the close of fiscal year 2025.

Our solid cash position enabled us to complete the purchase of the DCS loudspeaker assets for $1.5 million in cash on October 31st, at roughly one-third of the way through our fiscal second quarter.

Turning to our revenue outlook, MIT anticipates Q2 2026 revenue of approximately $3.4 million, reflecting the impact of the holiday season on cinema exhibitors, capital spending, and our current window of customer projects and decision-making.

As you may know, the exhibition industry seeks to maximize its potential box office during the holiday season. As a result, cinema technology and other upgrades are generally limited in scope to prevent any disruption, reflecting the slower pace of business and the expected revenue mix. We also expect our Q2 2026 gross margin percentage to return to a more historical lower level.

We continue to believe that MIT is well positioned to navigate the opportunities and challenges of our industry, to pursue growth, profitability, and stakeholder value.

Our operating structure improvements, business development efforts, the recent acquisition of the DCS loudspeaker line, and the long-term scope of that opportunity are key factors supporting our confidence in achieving those strategic goals.

With that overview, Operator, we are ready to begin the Q&A session.

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Thank you. First question is from the line of Neil Fagan, a private investor. Please receive your questions.

Hey guys. Um, first of all, uh, great quarter. Um, it's really, I guess the word for me is exciting to see that even a modest revenue level of $5.5 million gives you strong GAAP profitability. Um, I was curious just to learn a little bit more about the DCS speaker line. Did I understand that you think you can recoup the purchase cost?

Uh, with revenue over the next 2 to 3 years, is that the metric you were using?

Oh, I can take this. Um, yeah, that is the intent that we modeled out as we’re trying to, um, uh, bring that line, uh, toward where it used to be.

Okay. Well, you know, that wording is interesting because here's kind of where I'm.

Uh, wanting to understand this. It was a very small purchase price, $1.5 million, and from your, uh, prepared remarks, it sounds like this is a line of speakers that is embedded in a lot of the large displays. A lot of the medium-sized displays. Is this a case of where,

Has enormous potential that wasn't being realized.

Uh, by the previous owners, for whatever reasons are, are you guys feeling like, uh,

You can take this to a much higher level than what was being done when you acquired it.

Correct. It's um.

Uh, this line is well respected around the world. Um, and um, it uh has um, extreme potential uh, and market acceptance.

Okay. And you know you talked about how it's that it it's a good go to market. Uh, compatibility product with the LA

Power amplifiers. So, you know, I'm thinking of it. We have DCS, which is an established name and has customers around the world. We have Loba, which is just trying to get into the cinema industry through you guys.

um,

It, I mean, are you feeling like going to market with both is going to potentially...

Um, accelerate the acceptance and adoption of the LEA power amplifiers.

There's synergy there, and so that would be the intent.

Okay. And when you, when you acquired, uh, when you got the right for the, um, for Leah you gave us metrics, um, about the average selling price per power amplifier, and the number of power amplifiers, that would be used in a typical single Screen Cinema. Can you give us a few numbers around the the, the, the, the DCS speakers um, like a typical, a typical theater, a single screen room. Um, what's the revenue opportunity? If it was outfitted with new DCS speakers,

I, I don't have those figures in front of me at this time.

Okay, and final question for me is, um, you guys have highlighted several times in the announcement pursuing international markets and opportunities. You called out the Middle East and Europe. Um, when do you think that you might, uh, in one of these calls?

kind of go into more of the detail about

You know, the status of how we're approaching that and kind of a game plan, is that something we might hear about soon?

Once we, um, finish the process of onboarding the business, we'll have a clear picture.

Okay.

All right, well, thanks again, and we'll stay tuned.

Yeah, thank you very much.

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Thank you.

At this time, this now concludes our question and answer session. This will conclude today's conference, ladies and gentlemen. Thank you for your participation. You may now disconnect your lines at this time and have a wonderful day.

Thanks everybody.

Thank you.