Vislink Technologies Inc

Good afternoon. Welcome to VizLink's third quarter 2023 earnings conference call. My name is Alan, and I will be your operator for today's call. Joining us today are the company's CEO, Mickey Miller, and CFO, Paul Norridge. Following their remarks, we will open the call to questions. Earlier this afternoon, VizLink released results for the third quarter and did September 30th, 2023. A copy of the press release is available on the company's website. Before we begin the call, I would like to provide VizLink's safe harbor statement, which includes cautions regarding forward-looking statements made during this call. Management will make statements during the call that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward looking statements, including without limitation or examination of operating trends and financial expectations, are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not rely on these statements. For a list of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. VizLink disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast of this afternoon, November 8, 2023. Now, I would like to turn the call over to VizLink CEO, Mr. Mickey Miller. Sir, please proceed.

Thank you, operator, and thank you, everyone, for joining us today. This afternoon, we filed our 10-Q with the SEC and issued a press release that provided our financial results for the third quarter ended September 30, 2023, along with highlighted business accomplishments. As a brief overview for today's call, I'll begin by providing third-quarter highlights and recent updates before passing the call to Paul to discuss our financial results in more detail. I'll then come back on to discuss updates within our key markets, product developments, and progress on our go-to-market strategy before taking your questions. And with that, let's begin. In Q3, we made solid progress in our ongoing transformation, maintaining our strong focus on the growing public safety market, A standout moment for the quarter was a strategic acquisition of broadcast microwave services, or BMS, assets. This acquisition solidified BizLink's position as the leader in the airborne video downlink, or ABDS, market, extending our reach across OEMs and end customers, including key players in the emerging drone communications and control networks markets. We believe this positions us for near-term top-line growth ahead of our initial projections. Financially, our cost management efforts lowered our break-even point alongside a noteworthy sequential rebound in total revenue, led by core MilGov revenue growth of 34% year-over-year, and improved key profitability measures, including a 10.6% increase in quarterly gross profit and a reduction in net loss by about $800,000 in Q3. As we continue to execute on opportunities within our robust weighted sales funnel, which currently totals over 40 million and contains significant prospects in both MilGov and live production. Our refined sales approach and commitment to providing industry leading technology remains central to our strategy for enhancing overall performance. In Q3, we continue to strengthen our strategically constructed product portfolio. We proudly introduced the Qlik Koftum transmitter and have already delivered six units to customers. We expect Qlik deliveries to vastly accelerate throughout 2024. We also added to our best-in-class products with the unveiling of the WMT LiveLink, our new bonded cellular transmitter, which received the IBC TVB Europe Best of Show Award. This compact and power-efficient product is driving demand across the MilGov and live production sectors by transforming remote video and data transmission. When combined with our Link Matrix solution, it creates an all-encompassing workflow management platform, enhancing operational efficiency for customers and generating valuable recurring revenue streams through integrated service-level agreements for VizLink. We have steadily improved our services revenue throughout the year. In summary, the third quarter exemplified our transformation and growth. Behind our recent acquisition of BMS assets, our robust sales funnel, and improving sales and operations, we believe we are well positioned to continue improving our market position and financial performance. I'll speak more specifically about some of our operations shortly, but first I'd like to pass it on to Paul to give the details of the financials. Paul.

Thank you, Mickey, and good afternoon, everyone. Looking at our financial results for the third quarter. Our total revenue for the third quarter of 2023 was 7.2 million compared to 7.1 million from quarter three 2022. The slight year over year increase in revenue is primarily due to growth in the MilGov sector and increased adoption of service level agreements. Gross profit for the third quarter of 2023 was 3.9 million compared to 3.5 million in the third quarter of 2022. Our gross profit margin for the third quarter of 2023 was 54%, an improvement from 49% in the third quarter of 2022. The improvement in our gross margin resulted from MilGov mix improvements and cost savings in components. Total expenses in the third quarter of 2023 were £9.5 million, a 5% decrease from £9.9 million for the same period in 2022. The improvement in total expenses was primarily driven by improvements in the cost of components previously mentioned. Turning to our profitability measures, we recorded an operating loss of $2.3 million compared to $2.8 million in the prior year period. The decrease in operating loss was primarily due to the improvements in revenue and margin previously noted. Net loss attributable to common shareholders in the third quarter of 2023 was $2 million or $0.83 per share, an improvement compared to $2.7 million or $1.16 per share in the prior year period. EBITDA for the third quarter of 2023 was a loss of 2 million compared to a loss of 2.3 million in the prior year period. Adjusted EBITDA non-gap metrics for the third quarter of 2023 was a loss of 1.4 million compared to a loss of 1.9 million in the third quarter of 2022. The EBITDA results were primarily a result of cost management. A reconciliation of EBITDA to gap measures is contained in our earnings release issued earlier today. Moving now to our balance sheet. As of September the 30th, 2023, we had cash and cash equivalents of 7.2 million compared to 11 million at the end of the second quarter. We also invested 10.9 million in federal bonds intended to be held to maturity. In the third quarter, we increased inventory by 3% as we continue to enhance our capacity for immediate booking and shipping. Optimizing inventory and increasing working capital will be a priority over the coming quarters. The cash outflow experience in the third quarter was primarily influenced by lower than expected revenue volume in the second quarter of 2023. Additionally, approximately 5 million in shipments from the third quarter were delivered within the final two weeks of the quarter, leading to a deferral of cash collection to the first quarter in accordance with our standard net 30-day payment terms. Improving cash performance is a top priority in the fourth quarter and in 2024. We had 33.4 million in working capital at the end of the third quarter compared to 35.6 million at the end of quarter two. We believe our strong debt-free balance sheet gives us the flexibility to continue investing in high return on investment opportunities that align with our long-term growth potential. This includes actively seeking strategic acquisitions and partnerships in order to enhance our video communication areas, especially within the defence and public safety. That concludes my prepared remarks. I'll now turn it back to Mickey. Thanks, Paul.