Boxlight Corporation

Thank you and welcome to the BoxLight first quarter 2021 earnings conference call. By now, everyone should have access to the press release issues this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meaning of security laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends, and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form K-10 and Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results provide additional analytical tools to understand the company's operations. The company has provided reconciliation to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the investor relations section of the company's website at investors.boxlight.com. And with that, I will hand the call over to BoxLight Chairman and Chief Executive Officer, Michael Pope.

Good afternoon, everyone, and thank you for joining our first quarter 2021 earnings call. We completed another record quarter with $48 million in customer orders, $33 million in revenues, 28% gross profit margin as adjusted for acquisition-related purchase accounting, and $1.6 million in adjusted EBITDA, again outperforming our guidance for the quarter. We also reported, as of March 31st, $21 million in back orders, a strong balance sheet with $10 million in cash, $23 million in inventory, $22 million in working capital, and $47 million in stockholders' equity. Our triple-digit revenue increase over the same quarter last year is a testament to our winning expansion strategy through both organic growth and strategic acquisitions. We continue to benefit from unprecedented market expansion, particularly in the education sector as schools return to in-class learning and are utilizing increased technology budgets supported by substantial government funding programs. Given our current order volume and growing sales pipeline, we are optimistic on the second quarter and expect to report revenue of $39 million and adjusted EBITDA of more than $1 million, resulting in an expected first half of 2021 with $72 million in revenue and greater than $2.6 million in adjusted EBITDA. In addition to our remarks today, I invite you to reference our shareholder letter published on April 27, which provides a more detailed accounting of our progress to date, as well as insights on our growth strategy. While receiving record order volume, we have experienced some supply chain challenges, including interruptions to inventory production schedules as a result of component shortages, along with delays in the shipping and receiving of goods. We've also been managing cost increases for both hardware and shipping, which has resulted in reduced gross profit margins. These are global challenges and are not unique to us. However, we believe we are managing better than most by extending our production planning and, where we can, increasing prices to our customers. As of today, we have scheduled production through the end of 2021 with anticipated lead times of four to six months on certain hardware solutions. On March 23rd, we acquired Interactive Concepts, our distributor in Belgium and Luxembourg, extending our footprint in Europe. This transaction was part of a broader strategy to both improve our profit margins and maintain stronger relationships with our reseller channel and end users in that territory. Year-to-date, we've published 18 customer case studies highlighting successful technology implementations, including in Canyon City Schools in Colorado, Shelby County Public Schools, and Trinity Parish Schools in Kentucky, the Ridgeway School and the British Academy in the UK, and San Agustin de Bilbao Center for Higher Studies in Spain, among others. These case studies highlight the positive impact that our technology solutions have on learners, including students with special needs, the strong future of STEM solution integration in classrooms, and the benefits of display technology for higher education and corporate environments. we will continue to produce a steady flow of educator and corporate success stories featuring our breadth of solutions. In early March, we announced both our BoxSite Virtual Classroom in Atlanta and CleverTouch Gallery in central London. Our BoxSite Virtual Classroom is a fully staffed classroom space used to facilitate customizable live virtual education experiences utilizing our full solution suite. The virtual space is also used to host weekly education-focused webinars to help educators understand how our solutions can best be used to optimize learning. Our CleverTouch Gallery in London showcases our state-of-the-art collaboration touch screens, commercial displays, digital signage, and cutting-edge LED video wall. The gallery features a boardroom, unified communications huddle space, informal meeting areas, and hot-desking space for partners and colleagues. Also in March, we launched CleverTouch Academy, an expansive hub of resources, tutorials, lesson plans, virtual self-paced training, and detailed downloads designed for educators, trainers, trade partners, and engineers. Earlier this week, we announced our certification as a Google service partner in education with specialization in professional development for the U.S., Europe, Latin America, Australia, and New Zealand. During Q1, we had some significant updates to our software platforms, including the latest releases for Mimeo Connect and Lynx Whiteboard, which is now available in all major app stores, including Google Play, Samsung, Amazon, and Apple. Mimeo Connect has been enhanced with video and audio communication and additional classroom management tools. Our new Clever Touch Live platform is an ecosystem allowing users to deliver and manage digital signage, messaging, alerts, and customizable user interfaces across any network. Our Mimeo touchscreens also feature Mimeo Message, our digital signage platform, and Mimeo Market, our education app store. In addition to the updates to our platforms, we have also developed our next generation of interactive displays with several significant technology updates, making them the most advanced on the market with anticipation to begin shipping later this year. As we continue to expand resources for educators, companies, and partners, we are receiving substantial recognition from the ed tech and AB industries for our innovation. During this year, both our Mimeo Connect blended learning platform and My STEM Kits content earned awards from Tech and Learning Magazine for best remote and blended learning tools in the primary and secondary school categories. Additionally, our Robo 3D printers and My STEM Kits curriculum and our Mimeo Clarity classroom audio system. were named as EdTech finalists by EdTech Digest. CleverTouch was shortlisted at the Innovation Awards for Best Place to Work, Best Business Growth, and Best Communication and Collaboration Product for the UX Pro, with winners to be announced next month. As school systems identify needs for their teachers and students, many school systems are looking to government relief funding to purchase resources, materials, and training. In the U.S., To assist school districts with accessing federal funding such as that provided by the CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan Act, we have developed and promoted support content and services. This includes our newly released relief funding guide and expertise of our internal funding team to help decision makers navigate the process of acquiring this critical funding. I am extremely proud of our progress through Q1 of this year, led by our tremendous leadership team and talented, hardworking employees. We are committed to our loyal partners and supportive shareholders, and we will continue to drive results and realize our mission to be a global leader in providing interactive technologies. With that, I will now turn the call over to our President, Mark Starkey, to provide additional color on our sales efforts for the quarter.

Thank you, Michael. Q1 was certainly a record quarter for us, and I would also like to take this opportunity to thank all of our staff and our customers who have helped contribute to our success during the quarter. As Michael stated earlier, we booked over $47 million of orders from our partners. That represents a 528% growth in order intake year on year and is a record for BoxLight. Some of our key orders in the U.S. included $8.7 million from Tierney, $4.2 million from Central Technologies, $2.4 million from our distribution partner, D&H, $2.2 million from Trox, $2.2 million of orders from Digital Age Technologies, and $2 million from Data Projections. Whilst many of our largest orders were from U.S. partners, it is worth noting that we took over $21 million of orders from partners outside of the US, predominantly in EMEA. This highlights the quality and diversity of our customer base, which will be crucial as we develop and expand our business over the next few years. On the 26th of April, two of our largest partners, Tierney and Trox, merged to become one organization. This is a very significant opportunity for Boxlight because Tierney currently has exclusive rights to sell Clevertouch in 49 of the 50 states in the US. We are discussing the extension of our CleverTouch exclusivity contract to include trucks across 49 states and Canada. This means that once an agreement is reached, the number of salespeople who are actively selling CleverTouch in the US will increase substantially from about 40 heads to over 200 heads. We expect the agreement to be finalized in the next few weeks. This automatically gives Clevertouch true sales presence across the US and Canada. In terms of end users, we had another quarter of fantastic wins across the globe. One notable win was the Ministry of Defense in the UK. The MOD purchased more than $1.4 million of Clevertouch screens to use throughout their bases in the UK. They selected our screens for two main reasons. Firstly, the ability to totally lock down our screens and use them in a very secure environment. And secondly, because of the flexibility of the Link software, allowing the MOD to get the maximum benefit from the clever touchscreens. The Americas region for BoxLight had several key wins in Q1 of 2021. Brighton School District in Michigan purchased more than $1.1 million in BoxLight product, including 330 86-inch panels and our Mimeo Clarity audio system for each classroom. Our key reseller in Tennessee, Central Technologies, continues to do well throughout the state, purchasing more than $2.6 million in box-like products in Q1, including a major win in Warren County. Our strategic partnership with Samsung has continued to progress this year. We recently received our first substantial order from our Minimeo Connect software from Samsung US for approximately $1 million. Furthermore, Samsung has agreed that every interactive panel that they sell into the US education customers will automatically include a Mimeo Connect license. We are also in discussions with Samsung UK and other parts of EMEA about similar opportunities for a Mimeo Connect solution and hope to announce further wins shortly. In addition to the software sales, we are also committed to selling high volumes of Samsung hardware under our partnership agreement, including non-interactive displays and look forward to providing additional updates later this year. In summary, Q1 was a very strong quarter in terms of order intake and revenue, and our solutions are getting a lot of traction in the market. We continue to develop our key partnerships and alliances across the globe, and I look forward to another record quarter in Q2. With that, I will now turn the call over to our CFO, Patrick Foley.