Boxlight Corporation

Thank you and welcome to the BoxLight fourth quarter and full year 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 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 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 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 analytic tools to understand the company's operations. The company has provided reconciliations 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. With that, I'll hand the call over to BoxLight's Chairman and Chief Executive Officer, Michael Pope.

Hello, everyone, and thank you for joining the call. Despite significant uncertainty in the world today, including growing concerns with the war in Ukraine, an ongoing battle with COVID-19, rising energy costs, rapid inflation, continued supply chain and logistic challenges, and overall volatility in global equity markets, we continue to see growing demand for our interactive solutions, and our outlook is overwhelmingly positive. We have reported double-digit or greater revenue growth for five consecutive quarters, a positive profitability trend, and significantly improved working capital. Just two years prior, we reported the full year 2019 results with $31 million in orders, $33 million in revenue, and an adjusted EBITDA loss of $6 million. We are a dramatically larger company today, benefiting from both market expansion and strategic acquisitions. For the full year 2021, on a pro forma combined basis with Front Row, we generated $250 million in orders, $215 million in revenue, and $21 million in adjusted EBITDA. We are gaining our key competitors with an aim to achieve the top industry position in each of our product categories. For the fourth quarter, excluding Front Row, we reported $44 million in revenue, exceeding our guidance of $40 million, and delivered organic growth of 38% over the fourth quarter of 2020. The financial results of Front Row were not included in our Q4 financial statements because we completed the acquisition on December 31st. However, due to significant one-time costs incurred to complete the acquisition and related financing, we experienced inflated operating expenses. Additionally, supply chain and logistics costs remained high during the quarter, impacting our gross profit margin. As a result of these additional expenses, we reported a fourth quarter adjusted EBITDA loss of $2 million. We concluded the fourth quarter with an improved balance sheet, including $18 million in cash, $53 million in working capital, and $52 million in net assets. For the current year, we are experiencing stronger than expected customer order intake, as well as growth in our sales pipeline, and have lifted our guidance for the full year to $250 million in revenue and $26 million in adjusted EBITDA. For Q1, we expect $44 million in revenue and $2 million in adjusted EBITDA. On December 31st, we formally closed the acquisition of Front Row, a leading provider of classroom audio and campus communication solutions for the education market. The purchase price was $23 million, net of $12 million in acquired working capital. Given the company generated greater than $7 million in EBITDA for 2021 prior to transaction adjustments, the resulting valuation was very attractive at less than four times EBITDA. We had identified classroom and campus audio solutions as our top growth opportunity and Front Row was a clear strategic fit. We are now integrating the company into our BoxSite ecosystem and benefiting from a broader solution suite along with our combined sales resources and global reseller channel. We are also in a position to expand our communication systems with fully integrated audio and video throughout an entire campus, a significant competitive advantage. For the full year 2022, we expect Front Row to contribute greater than $32 million in revenue and $8 million in EBITDA. Also on December 31st, we secured a $58.5 million loan from White Hawk Capital Partners, providing funding to complete the Front Row acquisition, refinance existing debt with Sally Port Commercial Finance and Lynn Global Asset Management, and allow for general working capital. The facility provides an additional $10 million in borrowing, During Q4, we published seven case studies that detail the successful implementation of BoxLight solutions in a broad range of education and enterprise environments. They included Corriedale Academy and Cardiff Metropolitan University in the UK, Ord Public Schools and Phoenix Unified High School District in the US, and Star Car Rental in Germany. One of our case studies featured our strong relationship with Clayton County Public Schools, the fifth largest school district in Georgia. We are working closely with Clayton County to provide teachers and staff with customized training and support and have renewed our professional development contract with the district for a third year. Another success story showcasing our utility in higher education featured Joseph Chamberlain College in the UK, which upgraded from underperforming competitor screens to our impact interactive panels and CM series digital signage displays, along with CleverTouch Live, our flexible and customizable content management platform. Our case studies and success stories reaffirm our dedication to be a trusted ally for our customers by providing turnkey solutions that are cutting edge, comprehensive, and can be fully integrated into diverse communication environments. Adding to the many accolades we have received from industry leaders, our CleverTouch brand won two awards during Q4 at InfoComm 2021. Best in Show for the Impact Plus interactive touchscreen, and Best in Show digital signage for CleverTouch Live. We continue to innovate and release several product updates and feature additions that differentiate us from the competition, including a new generation of interactive and non-interactive flat panels, enhancements to our Mimeo Connect blended learning platform, improved tools to our Lynx whiteboard annotation and lesson plan software, the ability to access our Clever Store 3 education app via a web browser, additional screen sharing tools using Clever Share 5, and the addition of sensor technologies to monitor air quality and meeting spaces, among others. Of course, our success to this point, along with our ability to continue to deliver growth and profitability, is a direct result of our talented and dedicated employees and our supportive channel partners. With that, I will now turn the call over to our president, Mark Starkey, to provide additional insights.

Thank you, Michael. And I'd like to say happy St. Patrick's Day to everyone on the call. Q4 was another record quarter for BoxLight, and I'd like to take this opportunity to thank all our staff and our customers who have helped contribute to our success during the quarter. During Q4, we booked $42 million of orders from our partners, up from $33 million for the same period last year. That represents organic growth of 25% year-on-year. For the full year, our order intake was $216 million, compared with $57 million in 2020, representing 283% year-on-year growth. Some of our key orders received during the quarter included $3.1 million from UnicDK in Denmark, where we retain our number one market share position, and 23% share of interactive displays. In the US, we had significant orders from Bloom, previously Trox, for $2.6 million. Central Technologies, based in Tennessee, for $2.5 million. DMH Distributing, for $2.2 million. $1.9 million from ACT, Advanced Classroom Technologies, and $0.9 million from Data Projections in Texas, to name but a few. Overall, our market share of interactive displays in the U.S. has more than doubled over the past two years to greater than 7%, according to FutureSource. In Australia, we continue to hold the largest market share with 26% of total IFPDs sold and received a further $2.2 million of orders from our partner, ASI. In France, we received $1.3 million of orders from our partner, Speechy, And in the UK, where we have 16% of the IFPD market share, we received orders from over 100 partners, including $1.1 million from Roche AV and $0.9 million from IDMS. This highlights the quality and diversity of our customer base, especially across the US and EMEA. We are also developing very successful partnerships in Australia, South Africa, and South America, During Q4, we also had our first major win in Japan, where our clever touch solution was selected for ease of use with the students' Apple devices. In Russia, we have temporarily suspended our business relationship with our partner in St. Petersburg, although we do not expect any significant impact in our revenues and growth as a result of the war in Ukraine. As previously mentioned, in September 2021, we signed the exclusive contract with Trox, now Bloom, which was a merger between our two largest partners, T&E and Trox. The contract gives Bloom exclusive rights to sell Clevertouch in 49 of the 50 states in the US and Canada. Q4 was our first quarter of trading with the new contract, with a number of salespeople who are actively selling Clevertouch in the US, increasing substantially from 40 heads to over 200 heads. I can now report that our sales pipeline has expanded significantly with Bloom and currently stands at over $20 million of qualified opportunities. CleverTouch is now being actively sold in all 50 states, including Canada, whereas just a few months ago, CleverTouch was only present in 20 states. This means that both of our IFPD brands, Mimeo and CleverTouch, are being proactively sold across all states in the US by our channel partners. The acquisition of Front Row fits very well into our portfolio and gives us a fantastic audio solution for the K-12 marketplace. We expect that the acquisition will be accretive to our collective revenue and, more importantly, to our gross profit, which we anticipate will continue to improve throughout 2022. As a result of the increase in gross profit margins, along with top-line sales growth, We expect $26 million in adjusted EBITDA this year. That equates to more than 29% organic growth in adjusted EBITDA for 2022. In terms of end users, we had another quarter of fantastic wins. One notable win was with Midland ISD in Texas, where we continued the rollout of clever touch panels across the whole school district. In total, we expect Midland ISD to take over 4,000 screens. Midland continued to buy our solution predominantly because of our clever message solution, enabling the schools to push alerts across the district. In Switzerland, we received an order via our local partner for 150 86-inch Impact Plus screens from the city of Goso. They noted that the CleverTouch MDM solution was the main reason for selecting our screens. Our STEM business is also starting to gain traction as COVID restrictions begin to ease. In Poland, we received an order for 370 3D printers, including My STEM Kit platform, activity and curriculum content to be supplied to schools across the country. There are 13,000 schools in Poland and each school is required to have at least two 3D printers. Our solution was recommended to the Polish educational authorities and we expect further significant orders in the coming quarters. Our software ribbon use continues to rise as we pursue a dual strategy of selling our Mimeo and Octopus software under SAS and OEM agreements to customers such as Samsung, Uline and school districts, as well as embedding our Mimeo and Clevertouch software solutions into our own products. Our Octopus OEM software revenues increased from 0.7 million in 2020 to 1.3 million in 2021, an increase of 90% year on year. And sales of Mimeo software increased from $96,000 in 2020 to $1 million in 2021, following our first order of Mimeo Connect in March 21. Combined, our software revenues grew by over 200% from 0.8 million in 2020 to 2.4 million in 2021. We also launched a new cloud-based version of Lynx Whiteboard in September 21 and have had an unprecedented response. Using Google Analytics, we know that in the past five months since launch, we have had 523,000 live sessions on Lynx with an average duration of 54 minutes each. That equates to more than 53 years of lessons being delivered on our platform in the first five months since Lync Whiteboard was launched. We are therefore confident of delivering more than one million lessons over the Lynx platform in its first year. And we will look at the best ways to monetize the solution moving forward. Ultimately, the fact that we own a growing suite of software IP enables us to differentiate our products from the competition. In summary, Q4 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 Q1. With that, I will now turn the call over to our CFO, Patrick Foley.