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spk00: Good morning. My name is Ludi and I will be your conference operator today. At this time, I would like to welcome everyone to the Pluribus Technologies Corp conference call to present the financial results for the fourth quarter ended December 31, 2023. All lines have been placed on mute to prevent any background noise. After the management's prepared remarks, there will be a question and answer session and instructions on how to ask a question will be given at that time. Forward-looking information is based on a number of assumptions, including the business plans of the company, including the successful completion and pace of future acquisitions, management's expectation on the growth, the company's ability to meet its debt service obligations, the company's ability to align costs to revenues, profitability and performance of its current and future acquisitions, the company's ability to continue acquiring business-to-business software companies at reasonable prices, and the company's ability to grow its portfolio companies into significant organizations and other assumptions, as set out in the Risk Factors section of the company's fourth quarter and DNA dated April 29, 2024. Forward-looking information is subject to risk, many of which are beyond the company's control. A comprehensive summary of the risks and uncertainties that may affect the business is set out in the company's filing statement dated January 7, 2022. This forward-looking information represents management's expectations as of today and accordingly is subject to change. Such information is based on current assumptions that may not materialize and is subject to a number of important risks and uncertainties. Actual results may differ materially and listeners are cautioned not to place any reliance on this forward-looking information. Floribus does not undertake any obligation to update forward-looking information, whether as a result of new information, future events, or otherwise, except as expressly required under applicable securities laws. Floribus MD&As and filing statements are available on the corporate website and in its filings with the Canadian Securities Administrators on CDAR at www.cdarplus.ca. With that, I will now turn the call over to Mr. Richard Adair, Chief Executive Officer of Pluribus Technologies. Mr. Adair, you may begin your remarks.
spk02: Thank you, Ludi. Good morning, everyone, and thank you for joining us today. On the call with me today is Nancy Fahey, our CFO. In terms of an agenda, I will review the key highlights for the fourth quarter before turning the call over to Nancy for a brief financial review. We'll then open the call to questions. Our health tech and digital enablement verticals are stable. However, the company continues to face a challenging macroeconomic environment, which is impacting customer spending at e-learning and increased churn within e-commerce. We delivered another quarter of positive adjusted EBITDA in this difficult environment, with the benefits of the previous announced cost-cutting initiatives we implemented in Q2 2023 and Q3 2023 benefiting adjusted EBITDA. Following the noncompliance with the debt covenants under the fiscal year 2022 credit facility, we entered into a forbearance agreement with the National Bank in January 2024. The agreement was subsequently amended in March and April, which allows the company to continue its strategic review. The special committee and its strategic advisor continue to review and evaluate strategic alternatives that may be available to further enhance growth, development, and prosperity in the short and long term. There can be no assurances that the strategic review process will result in transaction and whether such transaction will have its intended outcome. In parallel to these activities, we continue to focus on expanding revenue and profitability through continued cross-selling, developing channel partnerships, and finding new markets and new verticals for the products and services that our business units offer. By minimizing investment in new direct sales and focusing on leveraging existing relationships and partnerships, Any incremental revenue generated from these initiatives would start off a leaner cost base and improve operating cash flow from operations. With that, I'm going to turn the call over to Nancy for a brief financial review. Nancy?
spk01: Thank you, Richard. Good morning, everyone. Revenue for the quarter ended December 31, 2023, with $9.2 million, a decrease of $0.8 million, or 8%, compared to $10.1 million for the prior year period. The decline in revenue was driven by e-learning due to lower customer spending at the learning and networks offset by growth in cash and revenue, primarily from the growth in its recruitment platform and partnership with PowerSchool. For the year, revenue was $36.8 million, a decrease of $1.3 million, or 4%, compared with $38.1 million for the prior year. The decrease in revenue was driven by e-learning consistent with the quarterly trend, offset by growth in digital enablement, health tech, and e-commerce. Operating expenses for the fourth quarter were $4.8 million, consistent with the prior year period. Operating expenses for the year were $19.4 million compared to $18.8 million in the prior year. The increase was driven by R&D costs primarily from e-commerce and from Tortle and Rowan Wood, which were acquired in May 2022, offset by the benefits of cost savings announced by the company in Q2 2023 and Q3 2023 starting to be realized. Adjusted EBITDA for the quarter was $1.3 million and $4.1 million for the year-to-date period. compared to 1.5 million and 5.6 million respectively in the same period in 2022. The decline was primarily driven by adjusted EBITDA from the e-learning business unit and increase in R&D expenditures. Net loss for the quarter was 9.5 million, a decrease of 10.2 million compared to net profit of 0.6 million for the prior year. For the 12 months ended December 31st, 2023, net loss was 15.7 million, a decline of 6.9 million compared to 8.8 million in 2022. The decline in net loss for the quarter and year-to-date periods was primarily due to the impairment charge booked at eLearning in Q4 2023, offset by the gain recognized on the revaluation of contingent consideration. Turning to the balance sheet, we closed the quarter with cash on hand of 1.3 million compared to 5.3 million at December 31st, 2022. That concludes the financial review and our prepared remarks for today. I will now turn the call back to the operator to begin the Q&A session. Ludi?
spk00: Thank you. And ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star, followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled under the order they are received. Should you wish to decline from the polling process, please press the star, followed by the number two. One moment, please, for your first question. Your first question comes from the line of Robert Young from Conacore Genuity. Your line is open.
spk03: Hi. Can you just give us an overview of the discussions you're having with your lender and just an overview of the forbearance? I think it ended or it's in place through the end of April, so what's the current status of forbearance maybe as of the end of April, which is today, I guess?
spk02: So we are continuing to negotiate with the bank. It's a good relationship. As I said in my remarks, they want to give us time to finish our strategic review. So we're in process of talking to them right now.
spk03: And then on the restructuring, two rounds, I think you said there's a bigger impact here, full impact in Q1. Do you have any other levers to reduce operating expenses in the short run that you're looking at?
spk02: We continually look at our cost structure based on what revenue we're carrying. We don't have a specific restructuring plan at this point, but we continue to look at it every month.
spk03: And then I guess the total cost of servicing the debt today looks like it's about $700,000 a quarter interest payment and $700,000 repayment of the debt. Maybe just give me a sense of if I'm correct there, what's the total quarterly cost of debt service? You've got $1.3 million of cash on the balance sheet at the end of it. Maybe give us an update on where cash sits as of today.
spk01: So what I can say is that principal payments are typically around $950,000 a quarter. Interest has increased for December was I think about $175,000 maybe per month. I was just pausing because that's been increased as we moved over to the prime and U.S.-based rates when we entered into the forbearance agreement. So that'll be seen in 2024. So that's our total kind of outlay right now. Under the forbearance agreement, that we signed in January, we have been able to defer certain principal payments. So we defer the January principal payment, which has since been paid off, and we've now deferred the April principal payment.
spk03: I guess that's all for me. Thank you. Thanks, Robert.
spk00: Thanks, Robert. Once again, if you would like to ask a question, Simply press store followed by the number one on your telephone keypad. And at this time, there are no further questions. I would like to turn it back to Mr. Adair for closing remarks.
spk02: Thanks, Ludi, and thank you all for joining us today. We look forward to updating you on our progress in our Q1 conference call in May 2024. Have a great day.
spk00: Thank you, presenters, and ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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