Vislink Technologies Inc

Okay, good morning. Good morning, everyone. Welcome to VizLink's fourth quarter and full year 2023 earnings conference call. My name is Alison, and I will be your operator for today's call. All participants are in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phone. To withdraw your question, please press star and then two. Joining us for today's presentation are the company's CEO, Mickey Miller, and CFO, Mike Bond, who will report results for the fourth quarter and full year ending December 31, 2023. A copy of the press release is available on the company's website. Before we begin the call, we'd like to provide this link 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 made 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 risks and uncertainties associated with a company's business, please see the company's filings with the Securities and Exchange Commission. This link 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 this morning, April 1st, 2024. Please note, today's event is being recorded. Now, I would like to turn the call over to VizLink CEO, Mr. Mickey Miller. Sir, please proceed.

Thank you, Alison, and thank you, everyone, for joining us today. This morning, we will provide our financial results for the fourth quarter and full year ended December 31st, 2023, along with highlighted business accomplishments. As a brief overview for today's call, I'll start by highlighting our 2023 performance, outline our strategic direction, and detailing our three-year financial goals. Then I'll pass the call to Mike to discuss our financial results. I'll then come back to discuss recent updates within our key target markets, product development, and updates around our go-to-market strategies. With that, let me begin by saying how encouraged we are about our progress and how excited we are about the future of VizLink. 2023 marked a pivotal year for VizLink. As we position ourselves for accelerated revenue growth and enhanced cash flow performance in 24 and beyond, our vision to leverage our proprietary hardware infrastructure to drive new recurring software and service sales is gaining traction. Our software and service revenue climbed north of 10%, of total revenue in 2023, exceeding the 90-10 software and services hardware ratio we targeted at the beginning of last year. The recent announcement of our Air-to-Anywhere platform will be an accelerant to the software service sales. We made significant strides in advancing our presence in the global public safety markets, driven primarily by our airborne video downlink systems, or AVES, solutions. Our efforts led to securing new customer wins across local, state, and U.S. federal agencies and large governments worldwide. To punctuate the progress we've made, we've recorded an impressive 75% year-over-year increase in middle-gov revenue in 2023. Our efforts were bolstered by our strategic acquisition of BMS assets in September, which solidified VizLink's leadership in AVDS, particularly in U.S. federal, global OEMs, in the EMEA region. The BMS customer base significantly broadens our market reach and growth potential in the years ahead. It allows us to drive returns on our extensive new product introduction beyond the traditional visiting customer base. The acquisition has quickly demonstrated its value evidenced by $1 million plus order we received recently in EMEA. Our growth narrative extends beyond AVDS as we gained revenue traction in the video data transport market headed into 2024, as noted by a million dollar order for border surveillance project in Asia. Connected cameras from all types of venues and vehicles is a growing market where our bonded cellular technology plays a key role. In addition to the video data transport market sector, we are seeing growth in the drone command and control or drone C2 area. Through the BMS acquisition, We have secured one OEM market leader and are targeting others. While this is a nation market for us, we expect it to grow 75% this year to just under 2 million in revenue. As we reshaped our revenue profile, VizLink has undergone a significant transformation streamlining our product and operations over the past two plus years. By optimizing our product lineup, we're able to consolidate manufacturing, including moving most of our UK operations to the U.S. and third-party contract manufacturers. While eliminating non-core products impacted our revenue growth, it has enhanced efficiency and profitability, laying the groundwork for our new three-year strategic plan for profitable growth. With the strategic execution throughout 23 and into 2024, we believe we are on track to achieve positive cash flow, and we are targeting cash flow positivity in 2025. Our accelerated middle-gov sales, combined with increasing software and service sales and operating leverage, are expected to drive significant growth. As we enter the second quarter of 2024, VizLink stands stronger than ever. Our weighted sales pipeline is robust at 48 million, and our backlog is at the highest since the pandemic, highlighting the growth opportunities that lie ahead. Furthermore, our improved book-to-ship ratio and significantly enhanced out-of-box success rates shows the effectiveness of our operational enhancements, enabling us to deliver higher quality products at an accelerated pace. We are in full swing to start the year, making substantial progress toward our goals behind our leading technology. We believe we are positioned to gain further market share in our key markets this year and drive meaningful top and bottom line financial improvements. Before I go any further, I'd like to pass the call to our CFO, Mike Bond, to discuss our fourth quarter and full year 2023 results. Mike?

Thank you, Mickey, and good morning, everyone. Looking at our financial results for the fourth quarter and full year, our total revenue for the fourth quarter of 2023 was $8.1 million, an increase from $7.4 million in Q4 2022. This improved revenue performance primarily stemmed from the growth of our solutions in MilGov markets, aided by strategic acquisition of the BMS assets, and the increased adoption of service level agreements. For the full year, our total revenue was $27.5 million, compared to $28.1 million in 2022. The change was primarily due to product rationalization efforts and the discontinuation of lower margin subscale product lines. Gross profit for the fourth quarter of 2023 was 3.7 million, with our gross profit margin for the quarter at 46%. This was compared to a gross profit of 2.4 million and a 33% gross profit margin in the fourth quarter of 2022. Gross margin improvement was due for the greater contribution of MilGov and software and services to the total revenue, partially offset by some one-time manufacturing charges related to new product introduction. For the full year, gross profit was $14.1 million, compared to $12.9 million in the prior year. Our gross profit margin for 2023 was 51%, a strong improvement from 46% in 2022. Total expenses in the fourth quarter of 2023 were 10.6 million, a 21% decrease from 12.9 million for the same period in 2022. For the full year, our total expenses were 38.1 million, an 11% decrease from 42.2 million in 2022. Turning to our profitability measures, we recorded an operating loss of $2.6 million in the fourth quarter and improvement from $5.6 million loss in the prior year. For the full year 2023, our operating loss was $10.6 million compared to $14.1 million loss in the prior period. These improvements reflect a strategic cost management effort and the increase in high-margin software services and milgov revenue. Net loss attributable to common shareholders in the fourth quarter of 2023 was $2.4 million, a $0.99 per share, an improvement compared to $5.5 million, or $2.36 per share, in the prior year period. For the full year, Net loss attributable to common shareholders was negative 9.1 million or $3.83 per share, a 25% improvement compared to 13.5 million or $5.81 per share in the prior year. EBITDA for the full year 2023 was a loss of 9 million compared to a loss of 12 million in the prior year period. Adjusted EBITDA, a non-GAAP metric for the year, was a loss of $6.4 million compared to a loss of $7.8 million in 2022. A reconciliation of EBITDA to GAAP measures is contained in our earnings release issued earlier today. On slide six, moving to the balance sheet, As of December 31st, 2023, we had a cash and short-term investments of 14.2 million compared to 18.2 million at the end of the third quarter. Improving cash performance remains a top priority for us in 2024. We maintain a strong working capital base with 31.8 million in working capital at the end of the fourth quarter compared to 33.4 million at the end of Q3. We expect to see improvements in our working capital terms in the coming quarters. Our strong debt-free balance sheet gives us the flexibility to actively seek strategic acquisitions and partnerships to enhance our capabilities and channels, especially within the defense and public safety markets. In summary, our efforts over the past two plus years restructure our cost base, redesign our product line, integrate two key acquisitions, and rejuvenate our sales channels have begun to bear fruit in 2023, marking a significant improvement in our profitability. Our progress in 2023 is largely attributed to strategic cost management, operations optimization, and an increased contribution from high margin sectors such as software, services, and MilGov revenue. As we progress in 2024, these initiatives are expected to further solidify our position and give us a trajectory towards greater growth. That concludes my prepared remarks for 2023. I'll now turn it back to Mickey.