Boxlight Corporation

Box Light's second quarter 2021 earnings conference call. By now, everyone should have access to the press release issued 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 the securities 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 that 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 10-K, Form 10-Q, and other reports filed within the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management referred 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 direct compatible GAAP financial measures and their 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'll hand the call over to BoxLight's Chairman and Chief Executive Officer, Michael Pope.

Good afternoon, everyone, and thank you for joining our second quarter 2021 earnings call. We delivered another record quarter, again outperforming both our external guidance and internal targets, reporting $76 million in customer orders, $47 million in revenue, 29% gross profit margin as adjusted for acquisition-related purchase accounting, and over $5 million in adjusted EBITDA. For the first half of 2021, we generated $124 million in orders, $80 million in revenue, and $7 million in adjusted EBITDA. We also concluded the second quarter with a healthy balance sheet, including $7 million in cash, $21 million in inventory, $27 million in working capital, and $51 million in stockholders' equity. We are fulfilling our commitment to strong growth and improve profitability, and we are making substantial strides towards our goal to be the industry leader. We entered Q3, our seasonally strongest quarter, with $48 million in back orders, and we expect to generate $60 million in sales, $7 million in adjusted EBITDA, and positive net income. Our strong growth is a result of both a robust industry and execution on our strategy to deliver best-in-class solutions and customer support. In addition to our improving financial performance, our progress is well documented in our case studies and white papers. Since our last call, we have published another 12 customer case studies, bringing the total to 30 success stories excuse me, to 30 success stories this calendar year. Our case studies range from schools where students with disabilities benefit from our innovative tech, such as Clellian Heights School for Exceptional Children in Greensburg, Pennsylvania, to multi-campus institutions for higher education, such as Hull College in the UK. We've also made an impact on expanding school districts like Bennington Public Schools in Nebraska, which is expected to open four more schools within the next few years. These case studies underscore the strong impact our technology solutions have on diverse education systems and enterprise environments across the globe. In addition, we announced a two-year audiovisual equipment and accessories extension agreement with the New York State Office of General Services. The Office of General Services facilitates close to 1,500 centralized contracts for goods, services, and technology, including those needed by educational institutions. Our box site products are available on this contract via our reseller partners, including both minority and women-owned businesses and service-disabled veteran-owned businesses. In May, our EOS Education division joined the Google Cloud Partner Advantage Program as a service partner so that Google Cloud educators can receive specialized professional development focused on Google Cloud tools. Our EOS Education team understands what educators need to make teaching and learning more effective and continually design programs that benefit all district stakeholders, teachers, students, administrators, parents, and community. EOS is equipped to provide diverse support, including offerings designed to help schools meet federal relief funding criteria. In June, EOS launched their ESSER professional development offerings in the U.S. to help education decision-makers support all of those involved in academic progress of students. The offerings guide teachers through the best use of education technology as well as social-emotional learning strategies and ways to better connect with families. Also in June, we introduced BoxLight Financial Services, our customer financing program developed in partnership with Tech Lease Capital, providing customers more payment options when investing in our technologies. Our robust portfolio of technology solutions continue to be recognized for their cutting-edge innovation. In April, our solutions were named as finalists for six EdTech Tool Awards, including our Mimeo Connect Blended Learning Platform, EOS Educator Essentials for Remote and Hybrid Learning, Mimeo STEM Mobile Lab Bundle, My STEM Kids Curriculum, Robo 3D Printer, and Mimeo Clarity Classroom Audio System. In June, our Mimeo Connect Blended Learning Platform won the EdTech Breakthrough Award for Classroom Technology Innovation of the Year. Also, our CleverTouch Technologies brand won the coveted Best Business Growth for 2020 award at the Innovation Awards from Innovate Magazine. With our improved market capitalization this year in June, we announced that we were selected to rejoin the Russell Microcap Index. This membership remains in place for one year and provides automatic inclusion in the appropriate growth and value-style indexes. We are better positioned today than at any time in our history, uniquely equipped with outstanding talent, industry-best solutions, and a loyal and growing partner network. There has never been a better or more exciting time for our industry or our company, and we are optimistic and excited for the future. With that, I will now turn the call over to our president, Mark Starkey, to provide additional insight into our sales results.

Thank you, Michael. Q2 was another record quarter for BoxLight. in terms of orders, revenues, and profitability. And I want to take this opportunity to thank our employees, our investors, and our customers, as this level of growth would not have been possible without their continued support. As Michael stated earlier, we booked over $76 million of orders in Q2. That represents a 986% growth in order intake year-on-year and is a record for BoxLight. If we include Tahara in the pro forma numbers for last year, then the organic growth rate in orders for Q2 is 184%. The growth in order intake reflects the huge market opportunity that we see in both education and corporate sectors. The value of orders booked in H1 was $124 million, which represents more than 780% year-on-year growth. Some of our key orders during Q2 in the U.S. included $15.8 million from our distribution partner, D&H, $12.5 million from our partner, T&E, $3.5 million from data projections, $2.8 million from Atlanta Public Schools, $2.5 million from Central Knox, $1.6 million from Howard Technology Solutions, and 1.4 million of orders from Digital Age Technologies. Outside of the U.S., we received significant orders including $2.5 million from IDNS in the UK, $2.4 million from ASI Solutions in Australia, $2.1 million from Interactive AV Solutions in South Africa, $1.5 million from EET Europarts in Finland, $1.2 million from UnitDK in Denmark, and $1.1 million from NIABAC in Northern Ireland. In total, the U.S. accounted for 58% of our orders booked in Q2, with EMEA accounting for 36% and the rest of the world, 6%. In terms of hardware, for our interactive flat panel market share, we remain in the top two in the UK and expect that to move to number one very soon. We also have the number one market share position in Ireland, Australia, Austria, Sweden, Finland, Denmark, Belgium, Switzerland, and Slovenia. In Spain, South Africa, and UAE, we are a top three provider for IFBDs. Our biggest opportunity for significant growth remains in the U.S., where we are ranked number five with approximately 6% market share, and Germany, where we are ranked number six. In the U.S., we have hired 13 new sales heads in the past 12 months, doubling our sales force, and in Germany, we are due to recruit another two heads in the next quarter. This investment in our sales team reflects the market opportunity that we see and the significant room for organic growth. We are managing our inventory and working capital well and have sufficient stock on either the seas or in our warehouse facilities to fulfill our Q3 targets. In terms of end users, we had another quarter of fantastic wins across the globe. In California, we had a significant win with a large district. who chose our Mimeo Pro Color screens in more than 500 classrooms worth more than $1 million. In Maryland, we continue to do business with a very large school district who ordered more than 3,000 panels in Q2 with up to another 7,000 panels and stands expected to be ordered in Q3. In Georgia, we have started to roll out more than 600 screens to a large school district and we expect that to grow to over 2,000 panels in H2. We have seen our STEM pipeline in the U.S. more than double in Q2, and we see growing interest for these solutions within our customer base. We also had some great wins in the corporate sector, including Kyogen Labs, a leading bioinformatics company in the U.K., who chose Clevertouch for their new U.K. headquarters, and the Real Ideas organization, REO, who purchased a full range of our CleverTouch ecosystem, including UX Pro touchscreens, non-interactive panels, media players, and room booking screens. We also had some great wins in the blue light sector, including a CleverTouch solution for the Merseyside Police Force in the UK. These are great examples of how we can sell our entire ecosystem into both corporate and education-based customers. During Q2, we sold more than 3,300 Mimeo Connect software licenses for Samsung products. These are three-year term-based licenses and will create future repeat software business on an ongoing basis when they are renewed. We expect to sell more than 6,000 Mimeo Connect licenses during H2 as the software is attached to Samsung's hardware product sales. In total, we had $1.4 million of software sales in H1 from Mimeo Connect and Octopus. We expect software revenues of greater than $1.5 million in H2 for these products. And we are exploring the monetization of our CleverTouch software suite, in particular, our Lynx Whiteboard solution. Our expectation is that Mimeo Connect and Lynx Whiteboard will be the foundation of our SaaS-based solutions and create a high margin annuity stream moving forwards. In terms of new products, we will be launching camera solutions in both our Mimeo range and Clevertouch range during Q3. These will provide solutions for both the education and corporate markets with full tracking 4K ability. This is important as we see growing demand for our customers to use Zoom, Teams, and WebEx on their interactive panels. In summary, Q2 was an outstanding quarter in terms of order intake, revenue, and profitability. Our solutions are gaining traction in the market, and we continue to build out our sales channel. As Michael stated earlier, our current revenue guidance for Q3 is $60 million, with an adjusted EBITDA of approximately 12%, or $7 million. The improvement in profitability and adjusted EBITDA percentage is due to the ability of the business to leverage higher revenues and gross margins without substantially increasing the cost base. Our training 12-month revenues at the end of Q3 will be greater than $172 million, and our forecasted order intake for the 12-month period ended 30th September will be in excess of $200 million. With that, I will now turn the call over to our CFO, Patrick Foley.