One Stop Systems, Inc.

Good day and welcome to the One Stop Systems first quarter 2025 conference call and webcast. At this time, all participants are in the listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. As a reminder, this call is being recorded. As part of the discussion today, the representatives from OSS will be making certain forward-looking statements regarding the company's future financial and and operating results, including those relating to revenue growth, as well as business plans, bookings, the company's multi-year strategy, business objectives, and expectations. These statements are based on the company's current beliefs and expectations and should not be regarded as a representation by OSS that any of its plans or expectations will be achieved. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that OSS desires to avail itself of the protections of the safe harbor for this statement. Please also be advised that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in the company's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and recent press releases. Please read these reports and other future filings that OSS will make with the SEC. OSS disclaims any duty to update or revise its forward-looking statements, except as required by applicable law. It is now my pleasure to turn the conference over to OSS President and CEO, Mr. Mike Knowles. Please go ahead, sir.

Thank you, Angeline.

Good morning, everyone, and thank you for joining today's call. I'm pleased to report on the progress we made during the 2025 first quarter, highlighted by both year-over-year and sequential improvements in gross margin, stable year-over-year revenue, and strong OSS segment bookings and demand trends. For the first quarter of 2025, consolidated gross margin increased year-over-year 320 basis points to 32.6%, driven by a strong gross margin of 45.5% within our OSS segment. We also announced a single record contract award of $6.5 million with a large defense prime, as well as new order multiyear relationship with an innovative medical imaging OEM, and two renewals with a combined value of $6 million from existing U.S. Department of Defense programs. As expected, near-term market conditions affected the timing of certain OSS segment orders anticipated for the first and second quarters of 2025. However, based on recent orders as well as future booking expectations, we believe we are on track to achieve our 2025 annual guidance, which includes consolidated revenue of $59 to $61 million and EBITDA break-even for the full year. We believe the second half of 2025 is setting up to be a period of growth and transformation, and I want to use my time to review our expectations for 2025 and beyond. As I mentioned before, we are pursuing strategic growth opportunities that leverage our high-performance edge compute solutions to meet the growing demands of AI, machine learning, autonomy, and sensor fusion at the edge. Over the past two years, we have invested in our organization, technology, and team, which has created the necessary platform to pursue a large, multi-year pipeline of commercial and defense sales. We have a strong and growing pipeline of opportunities across leading defense organizations and advanced commercial enterprises that are looking for partners like OSS to support their need for high-performance edge compute solutions. Our sales approach has been focused on driving adoption of our products through three main business development initiatives. Our first strategy aims at identifying applications and customers early in the engineering cycle to pursue collaborative relationships through customer-funded development programs. We believe this will establish incumbent positions on platforms that will lead to follow-on production and long-term sustainment positions. We believe development relationships will take one to two years before leading to production orders. As a result, we expect certain development programs that we worked on during 2024 to transition to orders and sales in 2025 and beyond. Our second key business development initiative is focused on land and expand strategy. This is supported by the best in class ruggedized enterprise class compute solutions we offer and our differentiated engineering capabilities. We've engineered solutions that compress data center scale performance into compact, ruggedized systems that are capable of thriving in harsh environments at significant size, weight, power, and cost advantages to competing solutions. In fact, our solutions are 350% faster, can run 28 times the number of AI applications, and have 130 times better computational performance than competing offerings. As a result, we are developing meaningful relationships with customers and engineering teams who are looking for the types of enterprise class solutions we provide. For example, a couple of weeks ago, we announced the third program win over the past eight months with a defense customer that is embedding our enterprise class compute and storage products deeper into next generation US Department of Defense initiatives. On the commercial side, as we previously announced, We are further extending our relationship with a customer in the medical field to transition their medical sensing solution to an enterprise class solution. Our hardware will process sensor data and use AI applications to bring significantly better medical information to the doctors and patients to address cancer treatment. Our third sales strategy underway leverages the company's integration of compute and storage architecture capabilities, which is allowing us to address more integrated solutions. Providing integrated solutions helps OSS solve additional customer problems and creates opportunities to expand beyond just supporting prime contracts by delivering OSS products directly to end customers. As momentum builds, our expanding pipeline and recent awards reinforce our belief in the scalability and long-term value of our business model. Higher OSS segment orders are particularly encouraging amid ongoing uncertainty in business and government spending. Longer term, we believe our sales strategies will build highly valuable, predictable, and recurring revenue streams as we pursue a growing number of platforms and program opportunities across our commercial defense markets. This creates an attractive business model where in any given year we have platform programs in development, others transitioning or in production, and a backlog of programs in sustainment and support. We experienced strong bookings within our OSS segment during the first quarter with a book-to-bill ratio of 2.0, which contributed to a trailing 12-month book-to-bill ratio of 1.33. Recent award highlights within our OSS segment include an initial $1.4 million contract award for radar processing systems on the P-8 Poseidon aircraft, including a five-year support agreement, an initial $1.6 million in contract awards to upgrade sonar sensor processing for the Virginia-class submarine, including enhancements to PCIE accelerator systems, with next-generation technology that extends program viability for at least another 10 years, a $500,000 contract with a leading medical OEM with anticipated follow-on production orders valued at over $25 million over the next five years, and a record $6.5 million reward from a leading defense and technology solutions company to support next-generation mobile intelligence platform. Order activity remains strong, supported by growing demand for our enterprise-class compute solutions, and we anticipate further commercial and defense announcements in the coming months. While the German and EU economies were challenged in 2023 and 2024, we are starting to see more stability in the region. Recent bookings and revenue within our Bresna segment have been in line with our targets, and Bresna remains on track to achieve consistent sales and profitability for 2025 compared to last year's results. We do not currently expect tariffs to have a material impact on our operations or cost structure. In fact, we are seeing potential in both our OSS and Fresner segments. In the OSS segment, Terrace provided competitive advantage against lower-cost Asian manufacturers in many of our markets. We are actively pursuing opportunities to displace these competitors in the U.S. markets. Additionally, we are exploring partnerships with international companies seeking U.S.-based manufacturing options, leveraging our excess capacity and technical capabilities. Within our Bresner segment, we see opportunities to capture new business as European customers reassess supply chain dependencies and prioritize partners with secure, tariff-resilient logistics. We are also targeting OEMs that are shifting production strategies due to geopolitical and cost pressures, positioning Bresner as a trusted integration and distribution partner. In addition, the newly heightened desire within NATO and the EU to increase defense spending could create expanded defense opportunities for Bresna and OSS products in 2026 and beyond. Indications are that while budgets are likely to show significant increase, it will take some time for those budgets to work through procurement channels to actual awarded efforts. While tariffs and shifts in government spending have delayed certain programs for the second half of 2025, underlying demand trend remains strong. We continue to see solid engagement across key programs and remain confident in our ability to meet our full year 2025 guidance. Looking ahead, we believe OSS is uniquely positioned to capitalize on a multi-year growth opportunity driven by accelerating adoption of artificial intelligence, machine learning, autonomy, and sensor fusion at the edge. As these requirements become increasingly central to defense and commercial innovation, customers are turning to trusted partners with proven expertise in rugged enterprise class compute solutions. With the right products, a highly capable team, and a focused strategy, we remain well-positioned to capture growing demand across our core markets, and we are energized by the scale of the opportunities ahead. So with this overview, I'd like to turn the call over to Dan. Dan?