Boxlight Corporation

Good afternoon and welcome to the Boxlight Corporation fourth quarter financial results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. You can submit a question via the web at any time by typing them in the ask question field and pressing submit. If you have dialed in today please press star 1 on your phone at any time to enter the Q&A queue. Please note that this conference is being recorded. I will now turn the conference over to our host, Jeff Stanliss of FNK IR. You may begin.

Thank you, Paul, and thank you, everybody, for joining. Earlier today, BoxLight issued a press release providing an operational update and discussing financial results for the fourth quarter and full year ended December 31, 2023. 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 would 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 can constitute forward-looking statements. Actual results may differ materially from historical results, and those indicated by the 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 the competition in the industry, among other things. BoxLight encourages you to review other factors that may affect its 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 now turn the call over to Dale Strang, CEO of BoxLight. Dale, the call is yours.

Thank you, Jeff, and thank you to everyone joining us today. I transitioned from our board of directors to the position of chief executive officer just over two months ago. And I can share with you that my first few weeks in the role have reinforced the prior perception I had about BoxLight. We indeed have excellent products, loyal customers, and devoted, creative employees who work exceptionally hard. So the bonds here at BoxLight are strong. Over the past few years, we've made a number of acquisitions to broaden our product portfolio and to increase our geographic reach. These acquisitions resulted in expanding our addressable market. Following the completion of those acquisitions during 2022 and 2023, we were able to pay down a meaningful portion of the long-term debt we took on to make those acquisitions and we're convinced that was the right and valid decision. However, after a surge in pandemic-related spending, the market demand moderated, and we didn't, as an organization, react nearly quickly enough to reduce our forecasts, adjust our operating plan, and align our expense structure to match the current market environment. Not surprisingly, the combination of these missteps impacted our operations and put a spotlight on certain inefficiencies in our organizations. We're now in the process of changing our corporate mindset. Our approach is to manage, my approach is to manage based on what's the best available factual information and accurate forecasting is paramount for sound capital allocation and to efficiently manage our operations. We recognize that our investors have been frustrated and rightfully so by BoxLight over promising and under delivering. We view our share price as a report card on our performance, and we're making adjustments to our operational activities to position us to achieve better grades this year. To be clear, our challenges will take time and energy to address. There's no single solution, and improvement will not happen overnight. There are several challenges to address, and many of the challenges we face are self-inflicted. One challenge is our capital structure. We need to streamline our debt facilities while solidifying our relationship with other stakeholders like our preferred shareholders. Another is operational integration. The multiple acquisitions we've made over the past several years enabled us to grow and expand our product portfolio and enhanced our team, but we've not done enough yet to integrate those acquisitions, which has resulted in duplicative costs, repetitive processes, and a fragmented go-to-market strategy. Simply put, we've just not done enough to integrate those valuable assets acquired over the last several years, and as a result, our cost structure is revealed to be too high, and we're not capitalizing on the synergies that we have in front of us that can drive efficiencies. These challenges have been heightened by the marketplace dynamics in the education market, which benefited greatly from accelerated government investment during the pandemic, and then corrected once that accelerated government investment started to soften. BoxLight, like many companies, scaled our infrastructure during that pandemic to respond to increased demand, but we were a little too slow to respond when the demand moderated. I've been here about 10 weeks since I assumed this position, and we've made significant progress in addressing the issues I outlined. First, we're realigning our leadership team, focused on creating a more customer-centric organization that's designed to better understand the evolving needs of our customers. And we're actively engaged in making sure that we develop these tailored solutions that help meet those needs. We're making really good progress, great progress, in streamlining our product catalog, eliminating redundant products, parts, and other items that consume time and resources without adding commensurate value. And we are taking aggressive steps to adjust our operating cost base. with a focus on aligning those costs exactly to what the current revenue opportunity is likely to be. We've kicked off multiple efficiency-driven work streams that will result in us taking millions of dollars out of our annualized OPEX. And that drive for OPEX efficiency won't be momentary. It'll be thorough and ongoing. Another item we're streamlining, as mentioned, is our capital structure. Our debt facility, our senior debt facility at Whitehawk, was intended to be a short-term solution to fuel our growth initiatives. And prior management expected to refinance that term debt by the end of 2023. And while that hasn't yet happened, we've had productive engagement with those lenders and we're working towards a resolution. We've engaged an investment banker to provide us with options and the initiative is moving forward. In the interim, our existing lenders have been very supportive and cooperative with us as we evaluate an appropriate long-term solution and work towards that resolution. This has been a period of significant change in BoxLight. New senior leadership, restructuring operational leadership, adjustments to our go-to-market approach, and aggressive cost reductions are all going on simultaneously. I'm incredibly impressed with the positive reaction from our employees who embraced the challenge of a new BoxLight and responded with creativity and renewed dedication. And 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're convinced we're on the right path with much work still to do, but we have key pieces in place. Let me speak to the near-term achievements we anticipate delivering to help drive those sustainable improvements in our operations particularly. First, investors should expect to see a meaningful reduction in operating expenses positioning us for sustainable profitability. As I indicated, we have already eliminated approximately $3 million in annualized fixed costs, and there's more to come, not just in the elimination of fixed costs, but in operational efficiencies overall. To be clear, we do see significant opportunities for future growth, and we're committed to investing in the areas that are going to drive those growth opportunities and those results. We're not going to cut costs recklessly, but we also will not spend a nickel more than we need to. Second, we expect to advance initiatives to replace our existing debt with a more permanent facility, either a new debt arrangement or another option to enable us to fund our growth. We also expect to finalize an agreement with our preferred shareholders, directly aligning us with these important stakeholders as we work together to execute this turnaround. Third, investors can expect better sales efficiency as we break down some of the silos. that remain from our multiple acquisitions and establish a single market presence that resonates even more clearly with our customers finally we're in the process of introducing several new products across our clever touch mimeo front row brand lineup these include industry-leading highly capable google certified edla edla active interactive panels that feature enhanced audio and video also we have new devices coming online that make our legacy panels EDLA compatible, which is very important to our install base customers. We've made numerous enhancements to our suite of campus and classroom communication software. These products maintain our technical lead in the marketplace, and they're unique in their integrated solution value. We're the only company that provides the kind of integrated solutions that we're describing here. Most importantly, they're in line with what our customers are asking for. We're confident these solutions will contribute substantially to our improved results in 2024 and beyond. With that, I'll now turn the call over to Greg to discuss the fourth quarter and full year results.