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spk_0: the day and welcome to the moving image technologies first quarter this call twenty twenty two earnings call and webcast all participants will be in boston only mode should you need assistance please suddenly conference specialist by pressing star than zero on your telephone keypad he will be taking questions through the webcast portal please note this event is being recorded i would now like to turn the conference over to brian siegel managing director at hayden i are please go ahead
spk_1: take the do good afternoon everyone and welcome to the moving image technologies first quarter of fiscal year two thousand and twenty two earnings conference call and webcast with me today is chairman and ceo so rapson and to us on mike sherman and executive vp scale the market er jo don't longer today's will begin with prepared marks and saw was a virtual que no sasha please submit your questions to the webcast portal and we'll do our best answer them literally call may contain forward looking statements as defined in section twenty seven a the securities act of you thirty three as amended you couldn't statements regarding among other things the company's business strategy and growth strategy expressions which identify forward looking statements speak only as a big date of the statement has made his for looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties know which cannot be predicted are qualified and are beyond our control featured developments and actual results could differ materially from those that forth in contemplated by or underlying that forward looking statements might have these risks and uncertainties there can be no assurance that the for the king information will prove to be accurate please view it and to finally with the as you see this afternoon or start tomorrow morning ah to get further information about risks and uncertainties now like to turn the code or sell dope
spk_2: that you buy and
spk_3: and thank you all for joining us today
spk_1: a welcome to our first earnings call as a public company the until rapson ceo a movie image technologies
spk_3: an hour or mit for short as a new a public company today i'm going to spend my part of the call discussing the overall industry trends that we believe will set the base for our outlier type growth at mit over the next few years followed by an overview of mit business and growth strategy and i'll finish with a summary of why i think we are very attractive investment opportunity then i will turn to call over to our see a ball mike sherman to discuss the results in more detail followed by or to and a
spk_1: am i teach serves the commercial cinema and live events industry and several ways today the vast majority of our business is serving cinema owners and operators in north america there are approximately forty thousand screens
spk_3: eighteen thousand of which are outside the top five circus well while we do work with all the majors the majority of our business is what small to medium size operators as you probably know the industry has been hit hard by kobe during twenty twenty and the first half of twenty twenty one let the box office receipts declining from over eleven billion and twenty nine ten to two point one billion and twenty twenty
spk_1: and twenty twenty one we're seeing a tale of two halves at this point over ninety percent of the cinemas in the us are open
spk_3: and we are not only seeing a return to movie theaters by consumers but we are seeing studios committee to theater exclusivity after various attempts on their part and a controversy surrounding the simultaneous streaming and the optical illusions of movies such as a black widow additionally as a recent releases have shown there is a pen up demand for blockbuster black letters with movies like venom too
spk_4: a shame she
spk_3: which had the article laces only and several other movies eclipsing one hundred million at the bar a domestic box office and numerous potential fat masters due to be released before the end of the year
spk_1: the strength has been confirmed recently by numerous large need a change
spk_3: and their earnings reports including a m c regal cinemark and i that to name a few just this trend alone would make me very bullish on the industry and our prospects moving forward however there are several other major drivers on top of this just market recovery the first is related to government grants
spk_5: part of the care act
spk_3: now publicly traded lie be bad operators can access over sixteen billion dollars in grants to the as be a this program called the shuttered venue operators grab or s oh gee today it has provided over ten million in grants during the first round and over two billion going to cinema operators the second round has recently started as well these grants can be used for anything from theater operations to pay roll to upgrading our building new cinemas and this money will need to be spent within the next two years so this is a second major boost to the industry
spk_1: the third boost his the industry is well aware of competition from other entertainment sources and theater operators pro actively refurbishing upgrading and building out new modern theaters in order to significantly enhance the overall movie going experience this includes adding amenities such as
spk_3: a house bars lounges breweries restaurants and in cinema dining among others and that died in cinemas are amongst the fastest growing part of the industries and we are well position with circuit such as alamo drafthouse star cinnamon grill lex brewhouse it's to name a few and finally we're in the early stages of technology upgrade cycle especially for laser projectors and servers during the last upgrade cycle we at mit participated in seventeen thousand cinema screens so we believe not only are we at the very beginning of this cycle but that there is a long run way ahead
spk_1: we are also see some of the premium theaters began to install the next generation of screen technology which is direct view l a day
spk_3: and we have installed the only two to date in the united states a screens require no projector the last three times longer as digital projectors today and have an immeasurable increase and picture and sound quality well pricing is currently prohibitive for the mass market this is a wave of the future and we are well position with to of the three manufacturers the samsung and it
spk_5: the to serve early adopters
spk_1: so how does this impact us mit is a technology and hardware design and manufacture and integrator and distributor of third party technologies and a project manager to theater industry we have longstanding relationships with suppliers to technology providers and customers as well as architects and technical personnel which will help design in our products
spk_3: today we have over forty five proprietary products a higher margin line which which has a higher margin line at which we are expanding on well the big three circuits are well are all customers would get over seventy percent of our revenue from small to mid size cinema operators which trump to be expanding more quickly from a prestige perspective we have also installed over forty and home screen roms for industry the ideas
spk_0: which include senior executives industry
spk_3: producers directors and
spk_6: and actors
spk_3: there are four pillars to our growth strategy first there's the shift our product as we mentioned to mix towards higher margin proprietary products we plan to develop introduce or support disruptive technologies
spk_1: add recurring revenue sources including software as a service also called sas and subscriptions i already spoke spoke to the direct view l e d opportunity the on that we're about to start field trials for our translation device and service this disruptive offering brings multi language and theater captioning capabilities including the american sign language
spk_3: the through augmented reality glasses and the market here in north america alone is tremendous with over seventy million non english profession speakers that may not have attended movies previously or for those that did they could now have a significantly and ass movie viewing experience this product meets all eighty a requirements as well
spk_1: what is open to the opportunity for theaters to engage with consumers in those markets
spk_3: we believe this product is internationally bible for example if the movies are not originally made in the local language instead of voice overs the original language film could be shown and translated into any local language using this technique we also have a bundled solution for venue management called a to see the same clothes a recurring as a sash a platform hardware and services and includes applications such as quality assurance
spk_0: the rap ration staff management a control back offer back office analytics and remote access and control over auditorium systems similar to our translation offerings we believe this product is viable an international basis
spk_3: the second pillar is leveraging our cat a product line which we acquired and twenty nine ten
spk_0: khadija science and cells cup holders and other ceiling based products as well as lady systems daddy also has over twenty current pants
spk_3: they are them market leader and cinema stadiums and arenas
spk_1: for example their customers include over eighty percent of the
spk_3: major league baseball or hockey
spk_1: mb a an nfl stadium the opportunity includes not only retrofitting millions of seats
spk_3: but we have some interesting new digital technology and development that we think can also disrupt the industry and material expand caddies addressable market finally we bleed catty will enable us to expand into stadiums and arenas the sell our proprietary items for example we believe our city que se software can transition with minimal investment and can address a significant gap and stadium operations and management
spk_1: i third pillar is international expansion over the next twelve to twenty four months we plan on targeting europe
spk_2: and long term we see the potential in asia and south america
spk_0: part of this is renewing the relationships that we have built over the for kobe and the other is being able to offer our internationally bible products with the translator solution and civic you see
spk_7: and for it we are targeting emanate
spk_3: there are three main areas we are focused on the first is consolidating industry technology equipment providers and broadening our offer it operates the second is acquiring strategic projects
spk_1: products and services with recurring revenue streams this will likely focus on sas or other subscription type offerings
spk_3: that will hit when hands up by polio and provide higher value to our customers and finally
spk_1: we will look at companies that could enhance or add to our customer relationships now i like to summarize my remarks with the following key points so that
spk_8: as i
spk_1: i'm extremely optimistic that our fiscal twenty twenty one
spk_3: it was a tough year and we can a bounce back was significant growth in fiscal twenty twenty two and beyond
spk_1: first industry trends are favorable right way way to industry analysts are forecasting domestic box office sales the return to twenty ninety levels and growth in the following years
spk_2: the when combined with billions of dollars and industry grabs a technology replacement cycle pent up demand for refurbishment and upgrades and new the reconstruction the industry has significant trail wins at its back
spk_3: second we are extremely well positioned to take advantage of these trail and so our relationships with both going and small and midsize cinema circuits as well as a top three circuits third we have a strong and growing the proprietary product offering complemented by industry leading partnerships and distribution of third party technologies and forth we believe we have multiple organic and inorganic growth opportunities and disruptive new technologies international expansion and million two adjacent live performance values that just stadiums and arenas as you can see we have a lot of opportunities most market driven and mit specific try to capitalize on and i believe we are in a position to do so
spk_9: do so
spk_3: before i turn that the the call over to mike i like to thank our dedicated employees without them we would not be and what i believe is the strongest position with ever been and as a as a copy from an operational financial products and competitive perspectives and i'm excited about are strong growth prospects and so thank you all and mike taken away
spk_10: thanks help i'd also like to welcome everyone to our first earnings call
spk_11: i'm going to take you through the corner and then will take questions to the webcast
spk_10: or before i get into our results i want to take you through a somewhat high level discussion of our financial model and what an impact our business on a quarterly or a year over year basis for example projects i get the for various reasons and parts of a project or the whole project itself may push out into a future quarter or into the next fiscal year what's them to someone peanuts and revenue and gross margin from a quarter to quarter and or a year over year basis that times additionally our business historically has had seasonality with you to be in the slow it as i said i'm operators don't want to take any theaters that a rotation during the fall and winter holiday season one of their behavior from there to three starts to pick up at you for into one tend to show season on strike
spk_11: all it said given a pass up the man from for projects that were delayed very during colvin plus some new business and project that we've recently been awarded we currently don't expect to see much said that seasonality that year ah margin profile product margins historically been below the company average due to the resale of furniture pictures and equipment
spk_0: or as often as we call it being a set pass through costs
spk_11: how will you can improve these margins on these projects is through installation services and and sales of our other higher margin proprietary offerings which tend to be well above the company average
spk_0: as to mention we have strategic focus on increasing our pride proprietary product line which includes as he mentioned caddy as well as diversifying into sas subscription revenue and other services to bring a higher high margin recurring revenue element to the business
spk_10: on a related note our business max has historically been about two thirds project based and about one third equipment and technology sales
spk_0: in recent years this minutes has increased favorably towards proprietary equipment and higher margin technology sales as we introduce more proprietary products that are so either our cars are a part of the projects
spk_11: our goal is to continue to make shift away from project work by adding disruptive technologies and products including senate you see carry are more language translator and some other opportunity that we have in the pipeline that we're just not quite ready for discussion now move onto the results
spk_10: so i'm very happy to say that our results were strong
spk_0: revenue increased ninety eight percent to three point five million
spk_10: much of this was related to the pick up of projects to build new theaters are upgrading read existing theaters and we finish the corner with a strong seven point seven million dollar backlog gross profit increased two point seven million from point five million last year
spk_11: as you look at our financial model nixon timing can also play a role in margins from quarter to quarter
spk_10: this quarter we had a project where we only could recognize revenue for a portion of the product or for portion of the project which happened before the effort than a portion and we also had a large resale at a similar type margin and as i mentioned these march
spk_12: and are
spk_10: sat and are significantly below the company average
spk_11: though the net impact was lower gross profit and gross margin in the corridor we do expect to see the higher margin portions of this project hit revenue in a subsequent quarter moving onto our operating expenses an income yeah operating expenses increased from point eight million last year to one point three million this year
spk_10: in addition to the hundred and sixty four thousand a one time adjustments outlined in the earnings release sales and marketing expenses were a big driver of the year over year increase his last year we were not traveling attending trade shows or conferences or doing much face to face
spk_13: business development due to coven
spk_11: general and administrative expenses with the next biggest driver of the increase with approximately point two million related to the executive team taking a significant compensation caught in fiscal two thousand and twenty one which has now been restored as a fiscal two thousand and one too
spk_10: our gas operating loss increased from point three million last year two point five million this year adjusted operating loss was about point four million versus point four million last year
spk_11: a calculation of adjusted operating loss as back stock based compensation expense and one time items for que one
spk_0: twenty two this included the app retention bonuses of approximately fifty thousand dollars for those employees that remain with us through the cold it pandemic about sixty thousand dollars and start compensation based expect and about sixty thousand dollar
spk_14: related to a line of credit guaranteed an audit work done on our incentive plan related to our as a filing
spk_10: there were no adjustments to the prior years gap operating loss yes net loss and last per share four point six million and six cents per share vs point four million and seven cents per share last year adjusted net lost and lot for sure we're point four million and four cents per share vs point four million and seven cents per share last year respectively now moving on to the balance sheet we raised and net of twelve point three million from our i feel and finished with cash cash equivalents finish the quarter with about eleven million dollars besides a strong balance sheet that big can be used for and then a purposes the i feel fun gave us the flexibility to take advantage of a p and prepaid in the tory discount that well as us and a half hour margins going forward
spk_11: we also extinguished three point one million dollars of debt without using any of the i feel proceeds reducing our debt to approximately point seven million which is a second ppp loans that we expect to also be forgiven like the first one we expect the sections of save us about point three million an interest expense during fiscal twenty twenty two now looking at the remainder of the fiscal year we believe the recovery in the box office combined with the f b o g money is going to drive significant year over year revenue growth in fact or backlog increase to eight point seven million during october
spk_10: given the strength we're setting our initial revenue guidance for fiscal year two thousand and twenty two as between twelve and fifteen million dollars we also anticipate the generate positive cash flow from operations
spk_0: as we get further into the year we plan on providing updates to this guidance as appropriate
spk_11: the conclusion i'd like to thank everyone for attending our first conference call and i look forward to speaking with you again at the end of our second fiscal quarters
spk_0: and now we will answer your questions we will now begin the question and answer session
spk_1: to ask a question can use used webcast portal
spk_0: right there are no questions thank you ben this concludes today's call
spk_15: thank you for sending today's presentation
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