Yahoo Finance Boxlight Corporation (NASDAQ:BOXL) Q1 2024 Earnings Call Transcript
Boxlight Corporation (NASDAQ:BOXL) Q1 2024 Earnings Call Transcript May 8, 2024
Boxlight Corporation beats earnings expectations. Reported EPS is $-0.7624, expectations were $-0.93. BOXL isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, and welcome to the Boxlight Corporation First Quarter Financial Results Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to our host, Mr. Jeff Stanlis of FNK 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. 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 Boxlight’s view of its future expectations, plans and prospects that constitute forward-looking statements.
Actual results may differ materially from historical results or those indicated by these forward-looking statements, 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. Boxlight encourages you to review other factors that may affect future results and performance in Boxlight’s 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.
And with that, I’d like to turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours.
Dale Strang: 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 of this year. I came to the role 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. We’re hard at work on focused initiatives to make those improvements a reality. 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, 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 other onetime severance costs related to our recent head count reductions. Those actual savings will be reflected in subsequent months. We’ll 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. The market we serve has generally stabilized 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, 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. And we think that’s good for us, and let me explain why. Boxlight is the only company in the industry that has a product offering that spans across the broadest parts of the market. We have attractive 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. We provide an array of complementary hardware and software and accessories, along with professional development and training.
The breadth and depth of our product line 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 the competitors and to capture long-term market share. 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 are included on this list. And of all the U.S. ed tech companies, only Boxlight earned a spot in the top 10. 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 initial purchase of their IFPDs and audio systems into upgrades, refreshes and enhanced implementation of those technologies. We are well equipped to address those needs. 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. In many ways, this is the result of our successful and thoughtful acquisitions the company has made over the last few years that 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 to outperform the industry over time. And we’re busy establishing an infrastructure that can be profitable and successful in any macro market environment. My personal approach is to try to manage based on the best available factual information. Data-driven, accurate forecasting is absolutely vital for our capital allocation and our ability to plan and execute. Accurate forecasting also suggests that 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 $37 million. 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.
Investors should not view Q1 as any sort of new baseline necessarily, 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. And 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 and third quarter cash needs, which tend to be the seasonally busiest time of the year.
At the same time, they continue to work collaborative 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 have also established a positive ongoing working relationship with our preferred shareholders. We’ve named them as advisers to our Board. Their input is valuable. We communicate frequently and collaborate deeply. We appreciate the vote of confidence they have expressed in Boxlight’s amended strategy. This has been a period of significant change for Boxlight, 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 our go-to-market approach, and we’re undergoing aggressive cost reductions.
And all this is going on simultaneously. I am incredibly impressed with the positive reaction from our employees who have embraced the challenge of a new Boxlight 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. We are happy with our direction. We think we’re on the right path. We have much more work to do still, but we think we have the right pieces in place. With that, I’ll turn the call over to Greg to discuss our first quarter results.
Greg Wiggins: Thanks, Dale, and good afternoon, everyone. 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. 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. 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 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. 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. From an expense management perspective, we have eliminated approximately $5 million in fixed costs over the last 3 months, mostly through head count 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. 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 revenues. Americas 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.
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 3 months in 2023. The decline in gross profit margin is primarily due to changes in product mix with higher margin FrontRow products representing a smaller percentage of total revenues in Q1 2024 compared to Q1 2023. 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 head count reductions.
Again, the full impact of these reductions are expected to be realized beginning in the second quarter. 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. 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 net loss of $2.9 million or negative $0.35 per basic and diluted share for the prior year quarter. 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/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions.
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, $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 stockholders’ 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. The company continues to expect full year revenues to remain flat year-over-year.
For Q2 2024, the company expects revenues of approximately $43 million to $45 million. Managing operating expenses, primarily controlling our fixed G&A 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 process, including reducing our third-party R&D expenditures as we streamline our current and future product portfolio. 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 – per quarter, and expects 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. With that, we’ll open up the call for questions.
See also
American Politicians are Selling These 10 Stocks and
15 Best Patchouli Perfumes That Smell Seriously Luxurious.
To continue reading the Q&A session, please click here.
