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Good afternoon and welcome to the Boxlight Corporation Third 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. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Jeff Stanlis of FNK IR. You may begin.

Thank you, operator and thank you, everyone, for joining. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the third quarter ended September 30, 2024. This 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 constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these 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 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 forward-looking 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 for joining us today. Over the past several months, Boxlight has proven its ability to efficiently operate in what is a challenging environment while still positioning the company to thrive in anticipation of improved market conditions. We're continuing to align our expenses with our current revenue levels and we're effectively communicating our strategic advantages to the market while simultaneously strengthening our product and solution suites. Primary goal of the company is to clearly and effectively deliver increased value to our partners, customers and stakeholders. We're laser-focused on simplifying our business and our solutions, our messaging and ultimately having that be reflected with more efficient operational expenses. A current example of this focus, we are simplifying our brand structure in which our major product lines will be organized under 3 solution categories. Our worldwide IFPD and display products will all be under the Clevertouch label. FrontRow will be our global brand for all audio and communication solutions, while our STEM solutions, Curriculum, software, professional development will continue to feature Mimio and EOS identities. Everything we do will carry the "By Boxlight" umbrella company brand. We'll be rolling these changes out through the first half of 2025. Among the benefits of these moves, we now have the ability to offer a highly regarded Clevertouch IFPD brand to our entire market, specifically the U.S. and Americas. We'll have a unified product lineup and a unified road map for our entire customer base globally. We'll have a simplified supply chain and logistics mechanisms, all while leveraging the Clevertouch, FrontRow and Mimio brand equity that's been created by decades of dedicated market presence. We believe this clarity and expanded opportunity for our sales partners will provide flexibility, a heightened focus and will benefit our partners and customers alike. We plan these adjustments carefully with the needs of these customers and partners top of mind. All services and warranties will remain exactly as our customers have come to expect and the new user experience we provide will be the best of the best in technology with ease of use in mind, so users can select a user experience that's familiar to them. We've had preliminary conversations with partners about these plans to consolidate and it's been very well received. Our internal teams share this enthusiasm. So, streamlining our brands and products is critical to our long-term success. Equally critical is a constant attention to building out what is the most robust end-to-end suite of solutions in our industry. Boxlight's broad portfolio gives us a significant competitive advantage against other players in the industry who often participate in 1 or maybe 2 areas. and often with an inferior set of solutions. Here's one example of our ongoing focus. We recently launched the new upgraded IMPACT Max 2 interactive panel. This panel comes with upgraded storage, an exclusive chipset for a faster, more intuitive display and a unique first-of-its-kind multi-configuration UI, all at a very competitive price point. We will have a number of product line expansions to announce in the months and weeks to come that will support both our education and our enterprise customers' modernization efforts. Boxlight solutions continue to win industry acclaim. Recently, our Clevertouch Edge won a prestigious Pro AV Best in Market Award for 2024. We also achieved an important Cyber Essentials certification, demonstrating our commitment to product safety and security across our whole product line. I'd also note that, as expected, our new FrontRow UNITY and FrontRow TimeSign solutions which I've discussed on our last call, are now shipping. Both products support another important growth opportunity for Boxlight pertaining to school safety and communications and as such, we're receiving very positive, encouraging feedback. As we continue to expand the ecosystem of compatible Boxlight audio and video solutions, we're giving customers a simple interface to communicate broadly or narrowly to address threats and improve school-wide communication. As part of this, we're adding integration partnerships between Boxlight and major third-party emergency management platforms and we expect to add additional related platforms in the months to come. I believe we're better positioned today than we were at the beginning of 2024. We have a more robust suite of solutions, a more streamlined go-to-market message. We've expanded our sales channels. We've deepened our offerings and we're aligning our teams. But IFPD demand remains soft versus prior periods, particularly in some of our largest markets, particularly in the U.S. Europe has been notably stronger than the U.S. For example, our returns in Germany and Belgium in Q3 were up 29% and 18%, respectively. And this benefits us due to our global presence. But as I said, we're aligning all of our resources with our current revenue reality, all while strengthening our business for the better days ahead. This will enable us to meet our profitability targets despite persistent revenue headwinds. We're bullish on the long-term outlook for our market. Our classroom solutions featuring campus communications, convergence, addressing school safety and security needs, our ever-improving digital signage platform and our growth in higher ed and enterprise markets all represent growth areas that will only enhance our core position in K-12 interactive classrooms. As I've said, this progress will likely not be linear with challenging market conditions making quarter-to-quarter volatility an ongoing reality but we are on the right path. With that, I'll now turn the call over to Greg to discuss our third quarter results.

Thanks, Dale and good afternoon, everyone. Before we review the financial results for Q3, I want to provide an update regarding our debt facility and our ongoing plans to reduce operating costs. Earlier this year, our current lenders provided a $4 million bridge loan to help meet the company's short-term seasonal working capital needs. As stated on previous earnings calls, our operations are seasonal with Q2 and Q3 being our busiest periods and the additional liquidity ensured that we would have the necessary inventory on hand to meet our customers' demand. These amounts were required to be repaid by the end of November 2024. We are pleased to announce that these amounts have been repaid in full. Aligning operating expenses with operational performance continues to be a priority. In late Q1, we announced that we would target an annual operating expense run rate of $12 million to $13 million per quarter and we are expecting to achieve that target by the end of 2024. However, the prolonged industry softness requires that we continue to manage operating expenses to align with current revenue demand. To that end, we are actively identifying additional savings across our organization and we plan to share with you more detail of this initiative on our next earnings call. Now turning to our third quarter results. Revenues for Q3 2024 were $36.3 million as compared to $49.7 million for Q3 2023, resulting in a 26.9% decrease. EMEA revenues comprised approximately 49% or $18 million of our total revenues. Americas revenues totaled approximately 48% or $17 million of our total revenues, while revenues from other markets totaled approximately 3% of our total revenues. Flat panel displays comprised approximately 72% of total revenues. Audio solutions comprised 12% of total revenues with the balance of our revenues comprised of device accessories, software, professional services and STEM solutions. Gross profit for the quarter was $12.3 million as compared to $18 million for the prior year period. Gross profit margin for the quarter was 33.8% which is a decrease of 250 basis points over the comparable 3 months in 2023 and is the result of competitive pricing pressures and changes in sales mix between IFPD and audio products. Total operating expenses for Q3 2024 were $13.1 million compared to $29.6 million in Q3 2023 or $16.4 million in Q3 2023, excluding nonrecurring goodwill impairment charges. Other expense for Q3 2024 was a net expense of $2.2 million as compared to net expense of $3.1 million for Q3 2023. The majority of other expense is related to interest expense on our current credit facility and gain/loss on foreign currency exchange. The company reported a net loss of $3.1 million or $0.34 per basic and diluted share for the quarter as compared to net loss of approximately $17.8 million or $1.90 per basic and diluted share for the prior year quarter. Adjusted EBITDA for Q3 2024 was $2.2 million as compared to $4.9 million for Q3 2023. Adjustments to EBITDA include; stock-based compensation expense, severance charges, gains/losses from the remeasurement of derivative liabilities, goodwill impairment charges and the effects of purchase accounting adjustments in connection with prior acquisitions. Turning to the balance sheet. At September 30, 2024, Boxlight had $10.5 million in cash, $45.8 million in working capital, $42.3 million in inventory, $141.5 million in total assets, $38.8 million in debt, net of debt issuance cost of $1.3 million and $6.5 million in stockholders' equity. At September 30, 2024, Boxlight had 9.8 million common shares issued and outstanding and 3.1 million preferred shares issued and outstanding. Subsequent to quarter end, the company paid down $0.5 million additional principal on its term loan, including the remaining amounts due under the short-term borrowings from Q2 and Q3 2024. Our current term loan balance is $39.3 million. With that, we'll open up the call for questions.

[Operator Instructions] Your first question is coming from Brian Kinstlinger with Alliance Global Partners.

I've got a couple of questions. As you consolidate to one brand, Clevertouch, what is the impact on your exclusive channel partner agreements, if at all? And if the Clevertouch brand, I think you said, isn't that widely sold in the U.S., do you see losing any market share before you educate the market and then regain share?

Thanks, Brian. That's a great question. And maybe I can answer it. This is Dale. A few things. Clevertouch has been established in the U.S. for years but on a limited basis. We had a series of exclusive Clevertouch relationships that both predated and postdated our acquisition of that company about 4 years ago. But it's the -- we view this move as a way to expand the Clevertouch reach and we're actually hearing from people that have wanted to -- let me back up. We've addressed the exclusivity provisions with our channel partners and settled them perfectly amicably, everybody. In one case, had a partial state-by-state exclusive for Clevertouch with one major reseller. And what this move allows us to do is to make Clevertouch available to all their market, not just the limited geographic region in which we had that carved out. Secondly, the worldwide mind share that Clevertouch enjoys has already been present in the U.S. for quite a long time. And we found that that worldwide brand equity is translating really well in these conversations. So we view it as an expansionary move without short-term market share risk. The one thing that you alluded to that I think is important is, we aren't orphaning the people who have chosen Mimio over the course of our Boxlight days. It's actually the opposite. The products that we're shipping as we go through this transition will give those customers the opportunity to choose at the time they install and first provision their device to run it with the same Mimio software stack and UI experience that they're used to or they can choose the Clevertouch one, It's a toggle that we've engineered and spent some months doing. So, we've got -- that in addition to the fact that all the same support, warranty and other coverage will be there, makes us feel really good about this transition.

Got it. So you can still buy Mimio. It will just be under a different brand name.

Yes, these panels have been in close resemblance to each other from -- in terms of the hardware itself, the functionality of the chipsets and so on. And there's been some minimal differences. And in the case of preferences for how people have it look and feel and what they're used to using for software, we're addressing that. But by having one supply chain and one product pipeline, we're going to eliminate conflicts on our supply logistics but also in our sales conversation. And I think that that's going to be a really good move towards clarity.

Great. Second question I've got, especially as it relates to the U.S. What do you attribute the market shrinking so quickly to? Is it there -- was so much spending that we're in this kind of pause phase for K-12 to be buying technology? I guess I'm just curious why in the last 1.5 years or so, we've been on this steep decline.

Well, it is a global phenomenon. It's exactly what you described. It's just the -- a period of heavy spending packed into an 18-month, 2-year period has just led to a sort of hangover of the amount of money that's available to school districts around the country. And this situation is more exacerbated, they're more glaring, I think, in the U.S. than elsewhere. One other point that I think the industry didn't know and is learning is that these devices are really well engineered and really well built and they last really long. And so what the refresh cycle or the replacement cycle that people were anticipating to not only never mind adding to their existing footprint but simply upgrading and updating the products they have installed in a favorable way for schools in a way that these products are lasting and are more bulletproof over time than anyone anticipated. That's a -- the good news for us is that the commitment educators have to interact with flat panels as a really keystone technology for education and student empowerment, that isn't wavering. It's just a question of -- I think it's almost a question of timing, both for budget availability and for sort of glaring need that we think is going to be mitigated in the months to come.

Two more questions. The first one is, Dale, you used the word bullish and I believe the market opportunity or the business. I guess in the face of this multiyear weakening demand trends, what makes you bullish? And do you have any insight maybe on how long this downturn might last?

Well, we have our own observation and our own customer and partner conversations to lead us that way. We also have a lot of history Clevertouch, Boxlight and FrontRow have been around 20, 25 and almost 40 years. So it's not a cyclical business that we're unfamiliar with the ups and downs of. That's one point. Second point is when I say I'm bullish, I'm bullish that we can not only enjoy the cyclical rebound when it happens and the outside researchers indicate that, that will begin next year, although we're seeing some signs of it already this year in pockets particularly in EMEA. But it's also just conversational, people -- we have had a lot of anecdotal conversations of school districts or partners that have anticipated efforts or initiatives this year -- all year that have -- are now starting to come into clarity for next year. So we're cautiously optimistic in the short term, we're bullish in the longer term because we think these industries and the way they relate to each other as well as the growth vectors we've identified that are adjacent to our core market, all add up to a robust long-term future for the company.

Great. My last question is for Greg on the balance sheet. You highlighted the $4 million bridge loan is repaid. When I go through your press release, you mentioned not being in compliance with your senior credit agreement. I think that's different. And so, are you not in compliance right now? And maybe talk -- if so, talk us through what negotiations are like right now there and when you expect to get a waiver or an amendment?

Sure. Yes. So, these are 2 different issues to think about. So, earlier in the year, we did receive a $4 million smaller amount bridge loan just to meet seasonal working capital needs as our busier periods are in the summer months. That $4 million was to be repaid by the end of November of this year. And we have actually repaid the $4 million early. So that obligation has been satisfied. Your reference to working through a waiver with our lender. So, that is in relation to a senior leverage ratio covenant that's contained in our agreement and was not met for Q3. We're in the process of finalizing a waiver. We do not anticipate there being any difficulty in obtaining it. But just in the sense that it hasn't been finalized as of today, there could always be a chance something we'll not be able to finalize but we don't expect that. We've maintained good relationships with our lenders. So, we have every expectation that we'll finalize that in the very near term.

Can you -- sorry, just one follow-up to that. Can you remind us what the interest coverage ratio that was tripped [ph] needs to be at? And then do you foresee any penalty that you need to pay? Yes. So, the leverage ratio, the required covenant was 1.75x. And our original credit agreement, as most do, have step downs over time. It's -- as we've said on our prior calls, we are actively looking to try and refinance our debt. So, we're working through that. But obviously, 1.75x for the current trailing 12 month period, it's a low bar. So something that was going to be difficult to clear. As far as the remedies are concerned, in terms of what a potential waiver will look like, we can't comment on at this time but we don't expect it to be anything that we wouldn't be able to fulfill on our part as an obligation. I think where -- as a big picture, I think the company has been able to pay down a significant amount of debt earlier than anticipated such that our debt balance is under $40 million which I think we're very pleased with at the moment. So yes, to answer your question, I don't think anything -- any requirements that might be needed for us to finalize this waiver is going to be something that the company won't be able to fulfill.

[Operator Instructions] Your next question is coming from Jack Vander Aarde with Maxim Group.

Okay. Great. Good to see you guys continue to tame the OpEx line items despite this kind of tough revenue market for you guys. So Dale, historically, I'm just wondering if I can just get your -- get a sense here for a sanity check. Historically, the third quarter has been the seasonally strongest quarter for the company. I know there's a lot of moving parts involved in the market. But, I mean, do you have a line of sight of maybe when you'll see stabilized sales trends or are we just still just not at that point yet? Because actually I want to get a sense of, do you have any line of sight of when you may return to year-over-year growth? Just any color would be helpful.

Yes. I think there's multiple answers, I think. Jack, nice to chat with you. One is the Americas and EMEA are really different stories in terms of the trajectory. They're on the same overall cyclical nature of the market but with different bumps and valleys, as you can imagine. A couple of things about the U.S. market that I think are -- that really differentiate, a lot of our -- and you're right, Q3 has traditionally been -- and it will be, again, we think next year will be a traditional seasonal cluster of revenue. What has changed, I think, this year and to some extent last year was, that was really driven often in the past by large purchases by a handful of districts. And these whopping where people have taken months and quarters to line up their funding but then they finally get the funding and they say, "Okay, we're going to spend millions of dollars and we need it all right away." That has not been present this year, largely for the reasons we talked about before, that the funding is difficult and it takes a lot of time. The bonds are being delayed. That has happened more so this year than any year in the past. In some of the markets in Europe, it's entirely different or in some cases, just mildly different but it's been less driven by these large, large tenders with some exceptions. But has been the same overall function. If the public money is there, then the spending happens. So, I guess the best way to answer your question is that seasonality was particularly -- the seasonality deviation was particularly strong this year. That's largely due to overall funding pressure but especially funding for large initiatives. And we see signs for that, both from external sources and from our own conversations with partners as already beginning to ease in EMEA. And you can see some of our markets are up this year and some of them are, for instance, the U.K. is down single digits, low single digits year-on-year. So that's starting to mitigate already. U.S., we expect will happen next year.

Okay. Great. That's helpful color. I appreciate that. And maybe it's too early to tell but there was a major U.S. election here, obviously, recently. And just wondering, have you thought of -- your gross margins have been high. I mean, they ticked down a bit this quarter but still they're stronger than historically over the large historical portion of Boxlight's tenure here. So, any thoughts -- initial thoughts on just how U.S. tariffs might impact your existing strategy and manufacturing footprint? Just any color there would be helpful if you're thinking about it.

Well, we've dealt with it before. We've dealt with it before And so we -- it's not an entirely new dynamic for us. First of all, no one knows, right, what sort of stuff is going to emanate as a result of the election. I will say this, though, our main suppliers who are China-based, are well aware of this, as are we. We've been coordinating with them for months about backup plans, about ways to mitigate in the event the tariffs come in really hard and really high. And we feel like we're well prepared to deal with that as well as anyone in the market. Specifically, it always depends upon, of course which countries might be affected and what the nature of those tariffs might be. But we're not sitting and waiting for them to happen. We're trying to be ahead of it. And with our suppliers, I feel like we are. How it affects the school funding stuff, I think it's going to become more of a local and state issue, maybe then if you look at the boom that occurred during the pandemic, much of that was driven by large macro federal initiatives. And I think what we're going to see is it's going to go back to being more local and more state and that's going to be more driven by the demands of the parents, teachers, educators and so on. I'm sorry, Greg, did you have something to add?

No, I think you covered it, Dale. I think the main takeaway is the fact that we've -- our suppliers have kind of experienced this before to some magnitude. And so there's been a lot of preparation that's gone into what might happen that might have happened with the election. So there's been a lot of advanced planning and certainly something we've been able to try and get out ahead of with them to potentially mitigate any negative consequences that may come from it.

Okay, I appreciate the color there, gentlemen. That makes a lot of sense. And maybe just one more for me, kind of more looking down the road here in terms of upside drivers. Higher education and enterprise have -- they've been kind of a smaller piece of Boxlight's kind of historical focus and run rates. But -- and I think enterprise has been around 10% of the business, give or take. But you highlighted these as long-term growth areas and bright spots. So, Dale, maybe can you just provide any color on the enterprise and higher ed verticals? Just where do these -- just your perspective on the opportunities you see and how it may become a bigger focus of Boxlight in the future?

Well, thanks, Jack. First, at a high level, we know there's more meeting rooms even today with hybrid workplace than there are classrooms, right? So we know that there's lots of places where enhanced communication and technology can be deployed. And so we know the opportunity. And we also know that there's different buckets of money represented by both higher ed and corporate. And that can be SMB as well as pure Fortune 1000 companies. What's lacked from a Boxlight perspective over time has been in some markets, we haven't been -- we haven't had the right mechanisms in place. We haven't had the right dealer relationships and sales relationships in order to really go out and speak to those people effectively. We've spent a lot of time walking before we run but we're methodically building that. The other more critical piece is that we have product now that it really matches the needs of enterprise maybe more exactly than certainly last year. And by that, I mean things that have the sort of built-in conferencing features and high -end audio and video stuff in -- present in our high-end panels that don't require additional equipment to make them highly functional, that a recent development from us, characterized by our high-end edge panel which has been responded to very favorably in the market. And we're using as partially a guideline here our business in EMEA. In EMEA, we have somewhere around 20% of our business that comes from these end customers. And there are differences in terms of the channel partners we use but we think that is positive and we think it has a lot of growth built in using both our success to date and also what we're learning in the U.S. and building on that. So we think we're going to -- it's going to be a slow growth thing. It's not going to be explosive but we're going to do it methodically. And we think that it isn't as spot on a fit necessarily as K-12. That's going to remain our core for quite some time because it's kind of really critical to classroom instruction, to interactive classrooms. But we think our upside there is very strong.

[Operator Instructions] You have a follow-up question coming from Brian Kinstlinger with Alliance Global Partners.

You talked about pricing pressure as the market has been shrinking and even as it starts to recover, do you see pricing pressure being more pronounced as your competitors as well as yourself try to gain that market share back? Or do you see pricing pressures easing at any time in the next 12 to 18 months?

Yes. I was going to say I'll start with an explanation and then maybe Dale can jump in. I think we're still seeing it at least in the short to midterm as there's competitiveness in a slower industry. I think we start to see this stabilize a little more in the longer term as we start to see the industry return to growth. So, I think there's -- I don't think we see that as pronounced over the long period of time but maybe more of a short, medium-term type impact as far as the pricing pressures are concerned.

I was going to say in the past and this probably predates you guys but the gross margin of this business was in the high-20s for a while. And so I'm wondering, are we headed back to like 30% range at a sustainable basis? Or do you think that's overstating what might happen?

I think there's going to be downward pressure in the IFPD market on certain deals and at certain time frames. And that's not -- I don't believe that's ever going to go away because the range of products that we're bringing to market, we and our competitors bring into market is broadening, right, from -- we're pushing the envelope as these technologies get cheaper to produce and more efficient. We're pushing the downward price entry point and we're pushing the upward price point and performance threshold, we and everyone else. I think the key, though and we're confident that we can continue to produce better than industry average margins for a couple of reasons. One is by having the experience and the volume that we do with our provider, we're a top 5 provider of the biggest manufacturer of these devices in the world. We're going to continue to have buying leverage that's going to enable us to get the costs as low as they could be. Secondly, we, as well as anyone, understand the trade-off at some point between price, performance and the desired efficacy of the product. And smart buyers who are buying for the second or third time are recognizing that the absolute low end of it doesn't perform the way they need it to perform. It doesn't do everything they need it to do. And we work with our customers and our resellers to do that and the resellers understand it as well as anyone. The third thing is, we are dedicated to the sort of integrated solution aspect of this as opposed to product by product dollar by dollar. And the way these things work together is going to become increasingly important over time and our positioning there, I think, really helps us. So I'm not sure -- I don't know where, for sure, Brian, where the margins for the industry sort of settle out. I think it's going to be an ongoing thing. But we're not resigned to a race to the bottom at all. We think that there's loads of value we can add at every price point that favors us and the outcomes we're providing.

Thank you, everyone. This does conclude our Q&A section of the call. I would now like to turn the floor back over to Dale Strang for any closing remarks.

Thank you, everyone, for your support and for joining us today. As I indicated, Boxlight's competitive position continues to improve. We're making progress to align our costs with current revenue levels and despite less than desired visibility, working to position Boxlight to thrive when those market conditions improve. With the broadest and deepest offering and industry-leading solutions in several key categories, we're capturing market share today and bolstering our position for the future. I am increasingly confident we're on a sustainable path for ultimate success. I'm incredibly proud of the Boxlight team for responding to our industry challenges and operating with both professionalism as well as integrity. With that, I'd like to thank you and wish you the best.

Thank you, everyone.

And we look forward to speaking with you again when we report on our Q4. Sorry about that.

Apologies. Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Good afternoon, and welcome to the Boxlight Corporation First Quarter Financial Results Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to our host, Mr. Jeff Stanlis of FNK IR. You may begin.

Thank you, operator, and thank you, everyone, for joining us today. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the first quarter ended March 31, 2024. 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'd 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 constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these 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 competition in the industry, among other things. Boxlight encourages you to review other factors that may affect 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 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. This was my first full quarter as Chief Executive at Boxlight. I transitioned from the Board of Directors to this position in early January of this year. I came to the role with the belief that Boxlight was an excellent company in an attractive market. But I was also convinced that the company needed to refocus on reliable, efficient execution, especially in the face of changing market conditions. These beliefs have been confirmed. We're hard at work on focused initiatives to make those improvements a reality. We've already made significant progress in those efforts. We've eliminated approximately $5 million in our fixed costs, which is all part of the process of streamlining both our product lines and our work processes, while at the same time simplifying our overall go-to-market strategy. Our first quarter results reflect the benefit from our renewed operational focus. For example, we delivered positive adjusted EBITDA, exceeding our internal expectations, even before all the cost reduction initiatives really took hold. In fact, our first quarter results include other onetime severance costs related to our recent head count reductions. Those actual savings will be reflected in subsequent months. We'll continue to emphasize streamlining our product offering while building on our position of having the most comprehensive suite of solutions in the market. We'll achieve this by eliminating product overlap and brand duplication, among other efforts. The market we serve has generally stabilized and, in some areas, is showing signs of positive growth. Globally, the market for interactive flat panel displays, which is the majority of our business, it remains somewhat soft, and we don't expect that to change in the near term. It's a maturing market, which, of course, those markets offer challenges, but also offer numerous opportunities for growth. And we think that's good for us, and let me explain why. Boxlight is the only company in the industry that has a product offering that spans across the broadest parts of the market. We have attractive solutions at every price and specification tier of the market. We offer high-performance audio, as well as interactive displays. And we offer the ability to offer deep system integration across those domains. We provide an array of complementary hardware and software and accessories, along with professional development and training. The breadth and depth of our product line enables us to meet the needs of more customers in the market than any of our competitors, thereby creating sustainable partnerships with our partners and those customers. So we have the right portfolio to separate ourselves from the competitors and to capture long-term market share. This position was recently recognized by Time Magazine who included Boxlight among its list of the World's Top 250 EdTech Companies. None of our direct competitors are included on this list. And of all the U.S. ed tech companies, only Boxlight earned a spot in the top 10. This is the latest powerful endorsement of Boxlight and our product suite and strategy. Our refocused customer-centric sales approach is validating this belief. Many of our customers are transitioning from initial purchase of their IFPDs and audio systems into upgrades, refreshes and enhanced implementation of those technologies. We are well equipped to address those needs. We also have customers that are looking to push their solutions to very low-cost entry points, with others pushing the envelope to the best of the best the industry has to offer. And we are well positioned in both of those cases. In many ways, this is the result of our successful and thoughtful acquisitions the company has made over the last few years that expanded, broadened and deepened our product offering. So with the right focus, the right branding, the right go-to-market approach, in conjunction with a lean and agile cost structure, we believe we can win any market battle that comes our way. We're positioned to outperform the industry over time. And we're busy establishing an infrastructure that can be profitable and successful in any macro market environment. My personal approach is to try to manage based on the best available factual information. Data-driven, accurate forecasting is absolutely vital for our capital allocation and our ability to plan and execute. Accurate forecasting also suggests that we don't overpromise. You may recall that our stated outlook for Q1 was for revenue of approximately $34 million. And we ended up delivering revenue of $37 million. We also stated expectations of negative $3 million in adjusted EBITDA. And we were able to post positive adjusted EBITDA of about $200,000. This is great. This is just one quarter. Investors should not view Q1 as any sort of new baseline necessarily, but I'm encouraged that we exceeded our promises. And I'm also cautiously optimistic we'll see additional progress in Q2. Any progress, this progress won't be linear. We still have challenges to overcome. And while the markets stabilize, buying decisions can take time to take shape. We have much more work to do, but we're convinced we're on the right path. We also continue to work on resolving and improving our capital structure. And we're encouraged with our progress here, and particularly with the collaborative approach taken by our stakeholders. Our primary lender has extended additional credit to facilitate our second and third quarter cash needs, which tend to be the seasonally busiest time of the year. At the same time, they continue to work collaborative with us in our initiative to identify and secure a long-term resolution to their facility, which was always intended to be short term in nature. We've also established a positive ongoing working relationship with our preferred shareholders. We've named them as advisers to our Board. Their input is valuable. We communicate frequently and collaborate deeply. We appreciate the vote of confidence they've expressed in Boxlight's amended strategy. This has been a period of significant change for Boxlight, but we're convinced that we're on the right direction. We have new senior leadership, we've restructured our operational leadership, we've made adjustments to our go-to-market approach, and we're undergoing aggressive cost reductions. And all this is going on simultaneously. I'm incredibly impressed with the positive reaction from our employees who have embraced the challenge of a new Boxlight and have responded with creativity and renewed dedication. 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 happy with our direction. We think we're on the right path. We have much more work to do still, but we think we have the right pieces in place. With that, I'll turn the call over to Greg to discuss our first quarter results.

Thanks, Dale, and good afternoon, everyone. Before we review the financial results for Q1, I want to provide an update to our last earnings call regarding some of our recent initiatives with respect to bolstering our balance sheet and reducing our operating costs. In mid-April, our current lenders provided an additional $2 million bridge loan to help meet the company's short-term seasonal working capital needs, with the flexibility to borrow an additional $3 million in June. As stated on previous earnings calls, our operations are seasonal with Q2 and Q3 being our busiest periods. And the additional liquidity further ensures that we will have the necessary inventory on hand to meet our customers' demand. We continue to maintain positive relationships with our lenders and are appreciative of their support and commitment to our business. We continue to work with our investment bankers to identify and evaluate long-term solutions to replace our debt facility. This process is expected to take time as we seek and evaluate solutions that will provide Boxlight with more favorable terms than our current facility. The successful execution of our recent operating initiatives are a piece of this equation, and we believe that our first quarter results are a starting point in demonstrating Boxlight's ability to deliver on these initiatives. From an expense management perspective, we have eliminated approximately $5 million in fixed costs over the last 3 months, mostly through head count reductions that do not impact our sales teams or other revenue-generating departments within the organization. These reductions led to approximately $750,000 in cost savings in the first quarter. The full impact of these reductions will take time to appear in our income statement, but investors should continue to see the benefits in the second quarter, with additional reductions benefiting the balance of the year. We incurred related severance charges of approximately $940,000, which were recorded during the first quarter. And now turning to our first quarter results. Revenues for Q1 2024 were $37.1 million, as compared to $41.2 million for Q1 2023, resulting in a 9.9% decrease. EMEA revenues comprised 54% or $20.2 million of our total revenues. Americas revenues totaled 42% or $15.3 million of our total revenues, while revenues from other markets totaled 4% or $1.6 million of our total revenues. Flat panel displays comprised approximately 71% of total revenues, audio solutions comprised 11% of total revenues, with the balance comprised of device accessories, software, professional services and STEM solutions. Gross profit for the quarter was $12.8 million, as compared to $15.1 million for the prior year period. Gross profit margin for the quarter was 34.5%, which is a decrease of 230 basis points over the comparable 3 months in 2023. The decline in gross profit margin is primarily due to changes in product mix with higher margin FrontRow products representing a smaller percentage of total revenues in Q1 2024 compared to Q1 2023. Total operating expenses for Q1 2024 were $16.4 million, compared to $15.3 million in Q1 2023. Q1 2024 operating expenses include approximately $940,000 in severance charges related to our recent head count reductions. Again, the full impact of these reductions are expected to be realized beginning in the second quarter. Other expense for Q1 was a net expense of $2.6 million, as compared to net expense of $2.7 million for Q1 2023. The majority of other expenses related to interest expense on our current credit facility. The company reported a net loss of $7.1 million or negative $0.76 per basic and diluted share for the quarter, as compared to net loss of $2.9 million or negative $0.35 per basic and diluted share for the prior year quarter. Adjusted EBITDA for Q1 2024 was $0.2 million, as compared to adjusted EBITDA of $3.3 million for Q1 2023. Adjustments to EBITDA include stock-based compensation expense, severance charges, gains/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with recent acquisitions. Turning to the balance sheet. At March 31, 2024, Boxlight had $11.8 million in cash, $46.6 million in working capital, $39.2 million in inventory, $142.4 million in total assets, $38.5 million in debt, net of debt issuance costs of $2.5 million, and $9.1 million in stockholders' equity. At March 31, 2024, Boxlight had 9.8 million common shares issued and outstanding and 3.1 million preferred shares issued and outstanding. As I mentioned, subsequent to quarter end, the company entered into an amendment with its current lender to provide an additional $2 million to meet the company's short-term working capital needs. Following the $2 million borrowing, the principal amount of the company's term loan is $43 million. The company continues to expect full year revenues to remain flat year-over-year. For Q2 2024, the company expects revenues of approximately $43 million to $45 million. Managing operating expenses, primarily controlling our fixed G&A costs to align with forecasted revenues, remains the primary focus. In Q1, the company eliminated approximately 50 positions, primarily in nonsales roles, which we estimate will save the company $5 million on an annual run rate basis. Other cost saving measures are in process, including reducing our third-party R&D expenditures as we streamline our current and future product portfolio. As mentioned during our last earnings call, the company is committed to reducing operating expenses to approximately $12.5 million to $13 million per quarter on an annual -- per quarter, and expects to begin achieving new quarterly run rates by the end of 2024. We are forecasting adjusted EBITDA for Q2 2024 of $2 million to $3 million. With that, we'll open up the call for questions.

[Operator Instructions] Thank you. Our first question is coming from Brian Kinstlinger with Alliance Global.

Great. Thank you and appreciate all the hard work that you guys are going through. Can you talk about the order trends in the first quarter as well as how those trends have continued or maybe not continued in the second quarter thus far?

Yes. So we're seeing order trends consistent -- generally consistent with the revenue. So for Q1, if you're looking at Q1 over Q1, the order trend was down about 10%, kind of consistent with our revenue decline. I think we're seeing similar trends in -- so far in Q2. There's only so much visibility you have in terms of predicting orders for the rest of the year. I think our pipeline remains strong at the moment. We see a good bit of activity in the next few months. So we have some visibility into the remainder of Q2. The second half of the year is a little more difficult to project out. I think as we progress toward the latter stages of Q2, we'll have a little more visibility on how the second half of the year shapes up, although I think we're cautiously optimistic that we're going to, at some point, return to order growth as the year progresses.

I guess my follow-up to that would be, with those order trends in the first and second quarter, what gives you the confidence that you can be flat year-over-year in terms of revenue?

Yes. A lot of it is the seasonality that we think we're returning to in the industry. I think we, for the last couple of years, especially following the COVID pandemic, with the spike in orders, it kind of went a little outside the norm of the traditional seasonal periods that you see the spikes usually in Q2, Q3. We think we're going to return to more of that seasonality in 2024 and in the future. And so that's what gives us confidence that we'll still remain flat year-over-year. Again, it will be -- as we get a little further into Q2, especially in the latter half of the quarter where schools are starting to get out, we'll really start to be able to assess whether that trend will hold true. But that's our expectation and what gives us confidence that we'll remain flat for the full year.

Great. And then, can you talk about the progress you're making with FrontRow? Last quarter, you talked about the challenges regarding the lack of education with your partners. They were tasked with selling the product given they were selling your screens. What progress are you making on the sales front with FrontRow?

That's an area we actually invested a lot of attention in in the last 4 months since I've been here. There's a few things we want to recognize about the FrontRow product category, which is it has pockets of demand that lie outside of what our typical interactive flat panel customer represents. Those pockets of demand really include 2 things. One is the audio products often are specified earlier in the construction and refurbishment process at school, and that requires a longer lead time on the sale. And we're making sure we're deploying our people and our expertise to take advantage of that. We've also elevated some of our FrontRow management team into positions of leadership. In fact, our U.S. leader, Jens Holstebro, was a longtime President of FrontRow, and he now leads our entire U.S. division. We're trying to find the right balance between making certain that every salesperson is adept at selling every piece of the portfolio, but we're balancing that with having deep audio expertise available for each person in the sales field to make sure that the message gets across to our resellers and customers properly. So the short answer, I think, is we're recognizing that it's a different sale. And we're making sure that we have a different go-to-market process that reflects that. The demand, the increasing demand and awareness that educators and IT managers have for the value of audio in the U.S. is strengthening, so that we find that as being a very encouraging prospect.

Great. Lastly, any thoughts on when you expect to make progress on refinancing or addressing the debt? I can appreciate you getting the bridge loan. Does it depend on the recovery in the stock? Or is that not relevant?

I mean there's different ways to skin the cat, as I'm sure you know. We don't -- the options we're most actively engaged with are kind of independent of the stock. Do we have a question from Jack at Maxim?

Can you hear me okay?

We can now, yes. Everything went dark for a minute.

Yes. Okay. Sounds good. So I'll just start with the question, I guess, following up on the outlook for 2024. It's encouraging to hear you remain on track with your cost reduction plan. It sounds like revenue is still on track to be at least flat year-over-year. How about the gross margin though? I think last quarter you were expecting maybe like a 100 to 200 basis point contraction over the year. But what do you -- given the strong gross margin this quarter, what are your thoughts on gross margin?

Yes. I think we want to stick with our prediction there in that we think that there are several factors obviously that can affect gross margin, and lots of them are pointing in that direction that we think we want to be conservative on that. The main factors are, on the panel business, just price compression or, in some cases, a buying mix that's going towards the lower-priced end of the market. Some of that's going to be mitigated by the entry of very new high-performance panels at the top end of the market. But it's still unclear what that customer mix is going to be in terms of that. The other piece of the mix that matters, of course, for us is the percentage of audio versus video. It doesn't take a big percentage of our sales to move towards audio for the margin to really shift drastically in that regard. So we don't see a big move downward, but we do think being somewhat conservative on some mild compression remains a good outlook.

Yes. And just to follow up on Dale's comment there about the it doesn't take a significant amount, the mix in audio and visual, to change it. I think what we saw in Q1 was really just that. It was kind of a mix change. It's not necessarily a long-term mix change. It was more of just a quarter-over-quarter change that was enough to drive it down. But I think even with that mix change, at 34.5% margin, I think we're pleased with that just knowing there was a greater concentration on the video side this quarter.

Okay. Great. That's helpful. And then maybe just a follow-up on -- in terms of the guidance and the recent outperformance in terms of the guidance you set. It's good to see you guys set expectations that you believe you can beat, and clearly you're doing that now. Looking at the second quarter now with your guide, is there anything that factors into that guide that maybe played out in the first quarter that kind of caused that same upside? How confident are you in this guidance level? And how conservative is it relative to maybe what could happen?

So I think we can look at that a couple of different ways. There's the top line guidance we've given and then there's the adjusted EBITDA guidance that we've given. If we take the top line, I think there were some internal processes that we needed to refine internally. Some of them were the changes we made to the management structure of the organization, in terms of the reporting chain and just how we went about our process for delivering on the forecast that we provide externally. So there were some changes on that front, some accountability changes that we had to go through internally that I think is really helping us. I think also just getting out there and having that interaction with our partners, with our customers, with other key players in the industry as far as what they were seeing and really being able to refine how we call the top line. As far as our outperformance on an adjusted EBITDA basis, some of that obviously was revenue driven. Certainly, I think we were -- I think, in fairness, probably a little conservative in Q1 as there were some noise as you can expect with a lot of the transition that we wanted to do internally to reduce OpEx. Obviously, a lot of it was on the head count reduction time frame. And some of it was just the timing of when those when those changes were going to be able to be made and the related costs associated with those changes. We were able to execute on those plans probably a little a little quicker than we anticipated. But I think it's also just better discipline in the organization as far as just controlling other costs as well, which gives us some optimism as we proceed throughout the year that we got some -- we're on a good track, we've got some momentum in -- as far as continuing to manage our costs going forward in other areas outside of just employee-related expenses.

Yes. And my only addition to that, Jack, would be one way to look at the market is the overly general global forecast. And the global market for IFPDs has been declining now for several quarters. And those year-on-year declines are starting to get smaller, which is what we predicted and what we're planning on and hoping continues to happen. And so that's one reason both for caution and -- our job is to calibrate what we're hearing from our customers against that sort of global outlook, and we're seeing some really encouraging signs, particularly at various markets in Europe. We've got -- you can look at the European market and say, I think in Q1 it was roughly flat to last year in terms of panel shipments into the market. But we actually picked up a pretty substantial amount of order shipment volume relative to last year's Q1. And in some markets, we're growing really substantially. For instance, Spain and Germany are great drivers of growth within the market. So our job is to -- one of the areas we're focused on is to get the right signals from each of our markets and regions and translate that into a reliable forecast for you. We've had one successful one for the first quarter, and we're going to continue to be as optimistic as caution allows us to be going forward. So that's the best I could do as far as Q2. It's just we haven't refined it yet, but we're in the process of doing it.

Okay. Great. And then maybe just one more. Typically, the third quarter is sort of the seasonal peak for you guys in terms of your revenue. Do you -- I know you're not providing explicit guidance, and the customer orders sound like they're on track, but we'll kind of see as we go here. But how do you feel about that third quarter? Is it set up for a -- to be the strongest quarter again this year? Or are we still kind of testing the waters?

The market really doesn't give you that kind of signal. We're happy with the level of bids and conversations and other -- the order intake, we're happy with. But we -- it never gives you that -- the only kind of reliable signal that we seem to be able to focus on is history. And if you look at the seasonal history of our market, our first quarter -- the first quarter generally is somewhere between 15% and 20% of the year, and almost never 15%, not usually 20%. And so if the first quarter is accurate, we're spot-on for our revenue expectation of flat, and Q3 would be part of that. But we'll know more as we get further into Q2. And we're probably some weeks away from really having any reliable signal about Q3.

Okay. Great. Well, congrats on the recent progress and look forward to tracking the story. Thanks.

Appreciate it.

Thanks, Jack.

It looks like we have no more questions left in the live queue.

Well, if there's no more questions, I want to thank everyone for your support and for joining us today. We've had an encouraging [ start to ] 2024 here at the company. I'm increasingly confident we're on a sustainable path for success. We have an understanding of our challenges. We have a plan in place to drive those improvements and to measure them as we go. I'm incredibly proud of our team for responding to those challenges and operating with the professionalism and energy and creativity for which they're known. And I look forward to speaking with you again when we report on our Q2 '24 results. Thanks again.

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. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Jeff Stanlis 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 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 bones 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 as a result of -- resulted in expanding our addressable market. Following those -- the completion of those acquisitions during 2022 and 2023, we're 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 organization. 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 overpromising and underdelivering. 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 private -- 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 process on 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, 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 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 will 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 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, aggressive cost reductions are all going on simultaneously. I'm incredibly impressed with the positive reaction from our employees who embraced the challenge of the new Boxlight and responded with creativity and renewed dedication. And similarly, our customers have been very positive, seeing the changes underway is 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 cost and there are more to come, not just in the elimination of fixed cost 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 they -- 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 Clevertouch, Mimio, FrontRow brand lineup. These include industry-leading, highly-capable, Google-certified EDLA, 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 installed 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. And 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.

Thanks, Dale, and good afternoon, everyone. As Dale mentioned, Boxlight's management team is focused on bolstering our balance sheet and reducing our fixed costs. Before discussing the historic results, let me speak to these two important initiatives. Boxlight continues to work closely with our lenders with the goal of maintaining our liquidity, while seeking a longer-term solution. To-date, our lenders have been very collaborative and they have expressed appreciation for the recent changes to solidify our foundation. We very much appreciate their ongoing support. Simultaneously, we are working with our investment bankers to identify and evaluate options to replace our debt facility. We are communicating regularly with our lenders to keep them apprised of the progress in forging a new facility. We are also actively communicating with our preferred shareholders and they have indicated a willingness to maintain the status quo in relation to the preferred stock, giving us the runway to execute our turnaround. We appreciate their ongoing support and commitment to helping our company succeed. Given their industry expertise and company insights as the former owners of our Sahara business, we have included them as informal advisors to our Board of Directors. We are confident their guidance will be an asset for us moving forward. From an expense management perspective, we have eliminated approximately $3 million in fixed costs over the last two months, mostly through headcount reductions that do not impact our sales teams or other revenue-generating departments within the organization. These reductions will take time to appear on our income statement, but investors should see the initial benefits in the second quarter with additional reductions benefiting the balance of the year. I'll now review our fourth quarter results. Revenues for Q4 2023 were $38.8 million as compared to $42.8 million for Q4 2022, resulting in a 9.3% decrease. EMEA revenues comprised 52% or $20.2 million of our total revenues, while Americas revenues totaled 46% or $17.8 million of our total revenues, and revenues from other markets totaling 2% or $0.8 million of our total revenues. Flat panel displays comprised approximately 71% of total revenues. Audio solutions comprised 13% of total revenues, with the balance comprised of device accessories, software, professional services, and STEM solutions. Gross profit for the quarter was $12.3 million as compared to $14.4 million for the prior-year period. Gross profit margin for the quarter was 31.7%, which is a decrease of 190 basis points over the comparable three months in 2022. The decline in gross profit margin in Q4 is primarily due to non-recurring adjustments to cost of goods sold, partially offset by higher margins associated with FrontRow products. Our current product margins have remained consistent with prior quarters in 2023, and we expect to return to higher gross margins in Q1 2024. Total operating expenses for Q4 2023 were $28.9 million, inclusive of $12 million of non-cash impairment charges. In addition, the company recognized incremental non-cash stock compensation expense of approximately $600,000 for the cancellation of certain previously issued equity awards. Excluding the non-cash impairment charges and incremental stock compensation expense, total operating expenses were approximately $16.3 million compared to $15.2 million in Q4 2022. The increase was due primarily to increased employee-related expenses to support the company's growth in certain markets. Other expense for Q4 2023 was a net expense of $2.6 million as compared to net expense of $1.6 million for Q4 2022. The increase in other expense was primarily due to fluctuations in the gain or loss recognized from the change in fair value of derivative liabilities. The company reported a net loss of $16.6 million or $1.76 per basic and diluted share for the quarter as compared to net loss of $2 million or $0.25 per basic and diluted share for the prior-year quarter. Adjusted EBITDA loss for Q4 2023 was $1.1 million as compared to adjusted EBITDA income of $2.6 million for Q4 2022. Adjustments to EBITDA include stock-based compensation expense, impairment charges, gains/losses from the remeasurement of derivative liabilities, gains/losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. For full year 2023, adjusted EBITDA was $12.6 million as compared to $18.9 million for the prior year. Turning to the balance sheet. At December 31, 2023, Boxlight had $17.3 million in cash, $54.1 million in working capital, $44.1 million in inventory, $158.6 million in total assets, $40.2 million in debt, net of debt issuance costs of $3.1 million, and $16.8 million in stockholders' equity. At December 31, Boxlight had 9.7 million common shares issued in outstanding and 3.1 million preferred shares issued in outstanding. Subsequent to year-end, the company paid down $1.6 million in principal on its term loan, with the principal balance currently at $41.7 million. Looking ahead to 2024, the company is expecting full year revenues to remain flat year-over-year with a continued return to traditional seasonal trends. For Q1 2024, the company expects revenues of approximately $34 million and to approximate 18% to 20% of total annual revenues. While the company has not observed significant product margin decline in recent periods outside of the non-recurring charges in Q4 previously discussed, we are forecasting a 100 basis points to 200 basis point decline in gross margin percentage for full year 2024 as the flat panel market continues to mature. Managing operating expenses, primarily controlling our fixed G&A costs to align with forecasted revenues remains the primary focus for 2024. In January, the company eliminated approximately 25 positions, primarily in non-sales roles, which we estimate will save the company approximately $3 million on an annual run rate basis. Other cost saving measures, including further reductions in employee-related expenditures, are in process, and we look forward to updating you with our progress on future calls. The company is committed to reducing operating expenses to approximately $12.5 million to $13 million per quarter on an annual basis, and expects to begin achieving new quarterly run rates by the end of 2024. We are forecasting adjusted EBITDA for Q1 2024 after giving consideration to severance and other charges associated with our recent headcount reduction of negative $3 million. Managing our debt and equity structure is also a top priority for the company in 2024. We are actively seeking to refinance our debt facility with more favorable terms, while maintaining a healthy EBITDA leverage ratio. We continue to monitor our short-term working capital cash requirements to ensure we have appropriate levels of inventory on hand for future periods. While we may look to obtain liquidity to meet these working capital needs, we are focused on achieving solutions that are not dilutive to our shareholders. With that, we'll open up the call for questions.

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] And the first question today is coming from Brian Kinstlinger from Alliance Global. Brian, your line is live.

Great. Thanks for all the comments. In your prepared remark -- actually in the press release, you mentioned customers' needs are changing and the market is evolving. Your company is making changes to align with that changing market. What are the changes customers are asking for? Is it new products? Is it going to require new M&A, new personnel? And how much capital will it take to meet to make these adjustments?

Hey, Brian, this is Dale, and thank you. Look, that's -- I think there's a lot of pieces to that as to how the customer needs are evolving. A couple of ways we're responding just today that we see as being quite timely is the panels themselves are evolving into much more highly functional computer devices that have resident on the much more in the way -- much more productivity software that the educators use every day. And it's making it easier for them to interact directly with the panels as opposed to using a Chromebook or another intermediate device. So, it's super important to the customers that are sort of leading the way on this that they understand how to use these devices that they have -- devices that are certified by Google's EDLA program and that they can receive training to make sure that their customers get the most out of them. Our new batch of EDLA panels have all that and we're one of the very few people in the market that can offer -- that offers EDLA certified panels. And we have the -- and we offer specific training on both the panels overall, the Google stuff in general, and specific applications that others can't provide. Again, this is what customers are looking for, not only the technology, but the backing and the knowledge on how to use it. Another aspect that's really we think coming to the fore is that it's not just about front of classroom instruction any longer. More and more of our districts are looking at classroom-wide or campus-wide communications. And that's where our FrontRow product line comes in. By integrating our FrontRow line of audio products and services with video, we can not only improve instruction and make that much more meaningful and much more impactful, but we can also tie into the building-wide and campus-wide communications that are increasingly important in the context of safety. And that's opening up whole new conversations for us. Again, this is what more and more people are looking for and we're lucky that we have an asset base in FrontRow that can really respond. Long term, there's much -- so, to answer your question about M&A, I think it's -- we believe it's one of the reasons we want to make sure that our -- we built the company through M&A. Our company is where it is today because of that. We think that it's going to be a very opportunity-rich environment for augmentation. And you don't have to look at far for the technology drivers that are going to make that happen, AI being the current one. And so, by having our operation be well integrated and highly efficient, it will just position us to take advantage of those opportunities as they emerge.

Right. And then, can you speak to the order trends thus far in the March quarter? Have they picked up from the December quarter? I guess the heart of the question is, what gives you confidence given the recent trends that you can generate flat year-over-year revenues?

Yeah. So...

A couple of things -- yeah, go ahead, Greg.

Yeah. So maybe provide a couple of data points here. So, as we talked on our last earnings call as we were kind of heading in kind of the latter part of the year, we've gone through multiple quarters, four quarters or so down year-over-year sales order results. And in Q3, you might remember, we actually saw a slight uptick in sales orders, roughly 10% for the quarter and that decreased slightly about 3% globally in Q4, with our EMEA business actually increasing in sales orders, partially offset by some of our U.S. sales orders. The early indications in Q1 have actually pointed to some positive signs, maybe very modest return to order growth in the U.S. as well. So, we're seeing sporadic data points, but certainly a positive change from where we were in the fourth quarter as kind of heading into Q3. So we're starting to see those data points that start to indicate a turnaround in the industry as well as our discussions that we have in the industry as well. So, I think those data points align as well. And Dale, I know you want to add something to that.

I think I just want to emphasize two things. One is the focus we put on really grinding out our forecasting accuracy has been intense and it will continue to be. We recognize it's important to us and to our stakeholders for us to commit to a number and hit that number. That has always been tough to do in this market, because it's a difficult forecast market, and it tends to be kind of lumpy in terms of you get big orders and then the order gets pushed. But we're committed nevertheless to make that happen, to making sure that we have an accurate number. At a global basis, again, the pandemic spiked what was traditionally a kind of slow and steady growth market into an intense period of growth. And since the pandemic, there's been a sort of negative hangover there that's at a downturn that is unnatural in its cyclicality over time. And one of the things we're focusing on really tight is the seasonality represented by each quarter. The early signals from that data and from the anecdotal data from the field indicate that our -- right now that our flat revenue outlook for the year is sound, but we'll obviously stay right on top of it. I'm not sure if that answers your question.

It does. No, it does. Thank you. The last question I have, I'm hearing you guys right with the cost cutting and future potential cost cutting, you talked about where you would exit the year at a G&A level. And based on the first quarter adjusted EBITDA loss guidance, we're not seeing much of that is what I sense. And with the order trends, I sense the second quarter also will probably be breakeven to a loss too, given the third quarter is where most of your revenue is generated. So, I'm wondering if there's anything to think about from a covenants that we should be mindful of?

Yeah. So, a couple of thoughts there to address. So yes, throughout the year there will be a little lumpiness on our OpEx savings. We can speak a little more closely to the first quarter. And certainly, as you indicated, where we want to be by the end of the year, where we anticipate being at the end of the year is kind of our future run rate of that $12.5 million, $13 million of OpEx per quarter. In the first quarter, you're correct. With some of the other restructuring charges that have gone into some of the changes we've made and as you appreciate when a significant number of the changes made were headcount related, there's some costs that offset some of the immediate savings that won't be really realized until we get into Q2, Q3. Also there are other initiatives as we kind of alluded to in our prepared remarks that this is an ongoing process. So there are further changes to be made and the timeframe in which some of those are executed will certainly impact the timing of those reductions in Q2, Q3. So, we've stopped short of providing full year guidance at this time on where we'll land for the year. But obviously for Q2, Q3, we'll be gradually working towards kind of our new run rate by the end of the year. From a debt compliance standpoint, as I say, we are obviously focused on refinancing our current credit facility, but we also continue to work with our existing lenders with covenant compliance as far as our existing agreement is concerned and we continue to kind of have those discussions with them as we progress through the year.

Okay. Thank you. Good luck.

Thank you. [Operator Instructions] The next question is coming from Jack Vander Aarde from Maxim Group. Jack, your line is live.

Okay, great. Thanks, Dale. Thanks, Greg. Just a couple of questions to follow-up. Dale, can you talk a little bit more about your 2024 revenue outlook, which is for roughly flattish growth? But in terms of geography, are you kind of expecting flattish growth across the board? Or any puts and takes there, whether it be the U.S. market, EMEA or some of the other growth markets you've been gaining share in? Is it kind of a blanketed, just kind of flattish or any markets expected to outperform and others to be kind of laggards? Thanks.

It's tough to say, but thank you, Jack. Yeah, it's tough to look at EMEA and say and look at that as a blanket, right? Our two biggest markets are naturally the U.S. and the UK. We're seeing pretty sharp growth on a maybe smaller base in markets like Germany, which is somebody we invested pretty aggressively in over the last couple of years, and we're seeing some real results there. And we're also seeing growth not just by geography but by sector, meaning we think that our FrontRow business will grow nicely this year and that contributes to our U.S. result. I will say this, the overall the blended basis on EMEA looks like it's got more it's maybe having a little less of the continued softness overall on a blended basis when you average everything else, whereas the panel market in the U.S. is still looking flat to down. But if we hit the number that we're talking about hitting, it will be because of all those factors. It will be that we'll take some market share, that the market will perform well in certain markets and we'll blend in products like our STEM product, our training services and our audio product to achieve the result. It's also worth noting that the U.S. is not monolithic either, right? We're seeing really strong performance in certain states that are growing quickly, as you'd expect, and those states will continue to perform really well. Again, Jack, I'm not sure if that covers it. Globally, the market is going to remain relatively flat. We think that we're covered pretty well in all the areas where we can get growth of sub areas, so we can get growth this year. And we're aggressively working on filling any white space we have to make sure that we grab the business where it is.

Okay, great. That covers a lot of that. I appreciate that. And then maybe a follow-up for Greg and Dale, maybe you can contribute to this as well. But just on the cost reduction front and kind of the go-forward goal, I believe I heard you're targeting maybe -- I know there's seasonality involved, but when all said and done, maybe a $12 million to $13 million kind of normalized quarterly OpEx. Do you just have a sense of what kind of a normalized or targeted adjusted EBITDA margin looks like? It sounds like gross margin might be stepping down 150 bps maybe or so, but still remains pretty strong relative to historical levels and so further OpEx cuts. Just wondering like what is kind of a normalized profit or adjusted EBITDA margin in your eyes, if you could speak to any of that? Thanks.

Yeah. So, I think on a go-forward basis on a full run rate after we start to achieve these operating expense reductions that we plan to put in place this year, our goal is to achieve an adjusted EBITDA margin north of 10%, sustain a margin north of 10%, which we think is able to be accomplished. And a lot of the operating expense reductions we want to put in place this year are based, as we've noted on the call, at a flat year-over-year revenue. We expect this to be an industry that we'll experience some modest growth over time, but even on a flat revenue basis, we think with these operating expense reductions, all things being considered, we can achieve a double-digit EBITDA margin and sustain that going forward.

Okay, great. That's helpful. And then maybe just one more question for me, just because there's a press release on it and everything. Dale, can you touch on the new Clevertouch headquarters and warehouse? I believe it was some of the press releases, it's much larger, 35% bigger. Just how does that impact sort of -- I guess that plays nicely into -- you guys are going through cost cutting initiatives and you expect growth to pick up down the road. What was the decision behind that? And is that fair to say it kind of validates or reinforces your confidence in growth to pick up in the back half of the year just down the road so you can satisfy it? Thanks.

Yeah, sure. The place is -- I was happy enough to be there I think on the second day we were open, and it's really -- it's a vast improvement of what we had before. And most of that is just on consolidation and efficiency. Just if you've ever run a warehouse, which I have not, but I've spoken with people who have, just the ease with which repetitive tasks can be repeated, can really add up to a lot of logistical improvements. And this is a state-of-the-art warehouse with plenty of room for ebbs and flows of inventory levels. Infrastructure-wise, it's placed ideally near the transportation centers there outside of London. And it's also a more effective workplace for the people compared to -- for our staff members compared to the prior place. So, we're excited about it. We think it benefits both of efficiency and in terms of kind of productivity, if you will. But we committed to it based on the expectation of future growth and we're set for that.

Okay. Great. That's it for me guys. Thank you.

Thank you. There were no other questions at this time. I would now like to hand the call back to Dale Strang for closing remarks.

Well, thank you everyone for your support and for joining us today on our fourth quarter 2023 conference call. As I mentioned, the pieces for meaningful improvement are in place. We have a clear understanding of the challenges we need to address and a plan in place to drive improvements. I'm Incredibly proud of the team for responding to the challenges and operating with both professionalism as well as energy and creativity. And we look forward to speaking to you again in May, when we report our Q1 2024 results.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day. Thank you for your participation.

Thank you, and welcome to the Boxlight Third Quarter 2023 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-K, Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results, provide additional analytical tools to understand the company's operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company's website at Boxlight.com. And with that, I'll hand the call over to Boxlight's Chairman and Chief Executive Officer, Michael Pope.

Hello, everyone, and thank you for joining our Q3 earnings call. Following my remarks, you will also hear from Mark Starkey, our President; and Greg Wiggins, our Chief Financial Officer. Greg is joining from our corporate office in Atlanta, Georgia. Mark and I are joining from Singapore, where we're attending the largest education conference and exhibition in Asia. As part of our company's growth strategy, we're evaluating geographic expansion in the Asia-Pacific region, particularly in Indonesia, Singapore, Taiwan, Thailand, the Philippines, and Vietnam. We're meeting with several distribution and reseller partners at the conference this week. For the third quarter, we reported $50 million in revenue, $18 million in gross profit, and $4.9 million in adjusted EBITDA. Revenue declined by 28% for the quarter and by 23% for the nine-months ended September 30th over the same periods last year. The revenue decline was largely a result of softer industry demand. However, we also didn't cash our market shares anticipated, specifically in key geographic markets and with certain product categories. We did maintain a strong gross profit margin reporting 36% for the quarter and 37% for the nine months ended September 30th, both an improvement over 31% and 28% for the respective periods last year. In planning for the next several quarters, we have committed to be more financially conservative by reducing both our growth expectations and operating expense budget to ensure improved profitability. For the fourth quarter, we expect revenue and adjusted EBITDA to be in line with Q4 last year. For the full-year 2024, we anticipate modest revenue growth driven by investments in one, our enterprise vertical, two, certain geographic regions and three, our expanded product suite. To drive improved profit margins, we will be reducing certain G&A expenses that we expect will have minimal impact on short-term growth. We ended the quarter with a strong balance sheet including $61 million in working capital, $18 million in cash and $44 million in inventory. Our balance at quarter end was 48 -- our debt balance at quarter end was $48 million. Subsequent to quarter end, we paid down our debt facility by an additional $4 million, resulting in a current debt balance of approximately $44 million. Over the last 12 months, including the $4 million payment, we have reduced our debt facility by $15 million. And in near term, we plan to refinance our debt with a lower cost facility, which will provide more favorable loan covenants and result in a substantial increase -- substantial interest expense savings. During the third quarter, we officially introduced our Google EDLA interactive panels, Clevertouch IMPACT Lux and MimioPro G. These new additions to our interactive panel lineup are the first to feature direct access to the Google Play Store. They are equipped with 50 touch points, cutting edge, micro antibacterial glass and integrated NFC for quick user profile loading. Every Google EDLA certified IMPACT Lux and MimioPro G display also includes accelerated Level 1 and Level 2 Google certified training. We also launched our new range of Clevertouch commercial displays powered by our award-winning digital signage platform, CleverLive. We're proud to offer a complete digital signage portfolio that supports all types of screen deployment requirements for customer environments in both our education and enterprise verticals. Our Clevertouch CM series display range includes hybrid panels, kiosks, 16 by 7 and 24 by 7 displays, menu boards, and LED video walls. During the third quarter, we were honored to win nine Best of Back to School awards from Tech & Learning, the awarded products by our hardware, software, curriculum, and more categorized by grade levels. We earned awards in both primary and secondary categories for our menu wall LED displays. Mimio DS Digital Signage Series, Mimio MyBot Recruit, Clevertouch IMPACT Lux Interactive Display, and FrontRow teacher Action Mic, powered by ELEVATE wireless technology. This past Friday, CleverLive was also selected as the Digital Signage Technology of the Year by the renowned AV Awards, a highly respected industry recognition judged by experts from end-user organizations, consultants, and industry leaders. This victory solidifies our position as a leading player in the Digital Signage Market. We published multiple success stories in Q3, including our success of Teacher Daniel Thompson at Ron Clark Academy in Atlanta, Georgia, inspiring student engagement with our Labdisc All-in-One Science Labs, and of Cameron Hefner, a STEM Teacher at Liberty Local School District in Youngstown, Ohio, who has enriched STEM learning with our award-winning MySTEM kids STEM curriculum. Clevertouch's success stories showcase comprehensive solutions for LYNX Whiteboard software in CleverLive that enhance interactive learning, transforming classrooms into engaging hubs of education. We had two major rollouts with Worthy Down, part of the Defense Services in the U.K. The initial rollout was for 75 Clevertouch IMPACT Lux touch panels, with some on carts for collaboration and ad hoc signage. The second phase enhanced campus communication via cloud-based digital signage system using Clevertouch CM series displays and CleverLive for easy content management. These examples highlight Boxlight's commitment to innovative and effective solutions and powering all users. Lastly, I'd like to thank our shareholders, employees, reseller partners, and customers for your continued support. With our dedicated employees and industry-best solutions, we expect a return to revenue growth in 2024 and with stronger profit margins. With that, I will now turn the time over to our President, Mark Starkey.

Thank you, Michael and good morning, good afternoon, and good evening to everyone on the call. Q3 was a tougher quarter than we had expected, and we continue to face challenging market conditions in both the U.S. and EMEA. Despite this, we managed to book $48.5 million of orders in the quarter, which represents an 11% increase in Q3 last year. The return to growth order intake is key, because it is an early indicator of revenue growth, and our expectations are that the business should start to return to moderate revenue growth in 2024. The U.S. accounted for 48% of our total order intake during Q3, with 51% coming from EMEA, and 1% coming from the rest of the world. Our market share for interactive flat panels increased marginally in EMEA in Q3, from 6.6% to 6.7%, but decreased in the U.S. from 8.4% to 6.3% due in the main to some large one-off deals with other vendors. On a year-to-date basis, our market share in the U.S. has declined only marginally from 6.9% to 6.2%, and in EMEA, it is broadly the same at 6% versus 6.1% last year. One of the main things that we have focused on is maintaining higher gross profit margins, and we have deliberately avoided some very low margin intender business, especially in Southern Europe, which is part of the reason for the marginal decline in market share. In other markets, we have made some strong gains, such as Australia, where we have increased our market share from 14.9% to 18.8% over the past year. In Finland, we grew our market share from 36.9% to 40.1%, and in Switzerland, we grew from 14.4% to 19.9% compared with last year, according to data from Futuresource. We have very high market share in some other European countries, such as Austria, where we have 36.7%, Ireland, where we have 34.7%, Belgium, with 28.1%; and Denmark, with 22.7%. he most important market in EMEA remains Germany, and this is where we have the largest opportunity as our market share is relatively low at 5.2%. Over the past 12 months, we have doubled the size of the German sales team, and our expectation is that we can achieve double-digit market share within the next two years. Some of our key orders in the U.S. including $7 million from ELB, currently our fastest growing partner, $5 million from Bluum, $2.6 million from Camera Mundi based in Puerto Rico, and $1.2 million from GDI, our U.S. distribution partner. Overseas, we have some excellent orders, including $2.3 million from IDNS in U.K. $1.2 million from CANCOM in Germany, and $1 million from Charmex International in Spain to name a few. Our new generation of Google accredited Clevertouch screens started shipping during Q3 and customer feedback has been excellent. Our Google accredited Mimio screens will start shipping during Q4 in the U.S. We believe these fully integrated Google screens will prove very popular with school districts. In the U.S. we have some fantastic wins including over 3,000 panels and stands shipped to El Paso School District in Texas via our partner ELB. We also continued to supply more than $1.2 million of panels to Las Cruces in New Mexico, again via ELB. We had some great wins in Michigan with over $1 million of screens and audio solutions delivered via our partner DAT. In Dayton, Ohio, we won a very large order to supply our FrontRow audio solutions across district, worth over $1.5 million via our partner Bloom. In the U.K., we supplied our first shipment of 1,100 screens to the Welsh schools via our partner IDNS, worth approximately $1.7 million. We also had some great wins in Germany, shipping 600 screens under the tender via our partner CANCOM, worth approximately $1.2 million. We also won the Düsseldorf tender for 400 screens, which shipped in the quarter worth approximately $800,000. In summary, despite Q3 revenues being down, we booked the first increase in order intake in five quarters, and we believe this marks the turning point in the cycle, with a steady return to revenue and EBITDA growth. With that, I will now turn the call over to our CFO, Greg Wiggins.

Thanks, Mark, and good afternoon everyone. I will now review our third quarter results. Revenues for the three months ended September 30, 2023 were $49.7 million, as compared to $68.7 million for the three months ended September 30, 2022, resulting in a 27.7% decrease and was due to lower sales volumes across all markets. Gross profit for the three months ended September 30, 2023 was $18 million, as compared to $21 million for the three months ended September 30, 2022. Gross profit margin for Q3, 2023 was 36.3%, which is an increase of 570 basis points over the comparable 2022 quarter. Gross profit margin, adjusted for the net effect of acquisition related purchase accounting was 37.2%, as compared to 31.6% as adjusted for the three months ended September 30, 2022. The improvement in gross profit margin in Q3 2023, compared to Q3 2022 is primarily due to lower manufacturing costs and continued reductions in freight costs over the prior year period. Total operating expenses for Q3 2023 were $29.6 million and included a goodwill impairment charge of approximately $13.2 million due primarily to lower sales volume stemming from the industry downturn and a change in the company's reporting segments in 2023, which resulted in a change in the company's reporting units. Other expense for the three months ended September 30, 2023 was a net expense of $3.1 million as compared to net expense of $2.8 million for the three months ended September 30, 2022. The increase in expense was primarily due to an increase in interest expense of approximately 400,000 partially offset by gains recognized from the change in fair value of derivative liabilities of approximately 200,000 in Q3 2023. The company reported a net loss of $17.8 million for the three months ended September 30, 2023 as compared to net income of $3.1 million for the three months ended September 30, 2022. Net loss attributable to common shareholders was approximately $18.1 million for Q3 2023, compared with a net income attributable to common shareholders of $2.8 million for Q3 2022. After deducting the fixed dividends to Series B preferred shareholders of $317,000 in both 2023 and 2022. Total comprehensive loss for the three months ended September 30, 2023 was $20.6 million compared to total comprehensive loss of $1.9 million for the three months ended September 30, 2022, reflecting the effect of foreign currency translation adjustments on consolidation with the net effect in the quarter of approximately $2.9 million loss and $5 million loss for the three months ended September 30, 2023 and 2022 respectively. EPS loss per basic and diluted share was $1.90 for Q3 2023. EPS per basic and diluted share for Q3 2022 was $0.31 and $0.28 respectively. EBITDA loss for the quarter ended September 30, 2023 was $9.4 million, which included the Goodwill impairment charge of $13.2 million as compared to $8.5 million EBITDA for the quarter ended September 30, 2022. Adjusted EBITDA for Q3 2023 was $4.9 million as compared to $9.9 million for Q3 2022. Adjustments to EBITDA include stock-based compensation expense, impairment of Goodwill, gains losses from the re-measurement of derivative liabilities, gains losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. EBITDA loss for the nine months ended September 30, 2023 was $3 million. million as compared to $12.9 million for the nine months ended September 30, 2022. Adjusted EBITDA for Q3 2023 was $13.7 million as compared to $16.3 million for Q3 2022. Turning to the balance sheet at September 30, 2023 Boxlight had $18.4 million in cash, $61.4 million in working capital, $44.1 million in inventory, $180.3 million in total assets, $44.4 million in debt, net of debt issuance cost of $3.6 million and $30.6 million in stockholders equity. At September 30, 2023 Boxlight had 9.6 million common shares issued in outstanding and 3.1 million preferred shares issued in outstanding. At September 30, 2023 the company was not in compliance with the senior leverage ratio under its credit agreement. The company's non-compliance was cured by the company paying $4 million principle in November, which would have resulted in the company being in compliance with the senior leverage ratio at September 30, 2023. The company is actively seeking to refinance its debt with new lenders. So the company believes will be on terms more favorable to the company. Following the $4 million principle repayment, the company's debt balance is approximately $44 million, including the $4 million paid in November, since Q3 2022, the company has repaid principle on its credit facility of approximately $15 million. We continue to strategically review our capital structure and use of free cash, including but not limited to paying down debt, executing on our share repurchase program, and finding more attractive financing agreements to replace our current facilities. We believe that cash flow from operations will continue to support our ongoing operations without the need for additional equity or debt financing. With that, we'll open up the call for questions.

Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions]. Your first question for today is coming from Brian Kinstlinger with Alliance Global Partners.

Great. Thanks for taking my questions. Can you help reconcile the stronger orders you were seeing in July through the first few weeks of August and even for the quarter? And you talked about that at the end of the second quarter conference call. Can you reconcile that with the lower than expected revenue? I think we were looking for a lot more then we've delivered, did you see order cancellations that may have made orders stronger? Did some of the demand disappear? Just trying to understand what changed so quickly versus what was said, I think it was mid-August?

Yes, hi, Brian. Look, I think, basically it was soft demand. We didn't have any canceled orders. We expected, and I think the industry was expecting much stronger demand in Q3. We started to see that, but it just didn't really take off. And the second half of Q3 was a lot slower than we expected. So, the bottom line is it was just softer demand across the board, both in the U.S. and EMEA during Q3.

And so your -- go on.

Yes, we just had, we ended the quarter with an increase in customer orders, up 11% just which we expected, we expected greater than that. But we did see a nice increase, but not nearly to the extent we thought. And then leading into Q4, I'll just mention, you probably heard that we're guiding really revenue to be flat, adjusted EBITDA to be flat with last year. And that's really as a result of Q3 being a little bit slower than we expected rolling into Q4. But we are still quite optimistic for next year, looking at our pipeline and other indicators, we do believe we'll start to see growth again next year.

I guess with the industry and even Boxlight expecting stronger demand, what are customers saying during the conference now, you're seeing customers, is it a lack of budgets? Have they already adopted enough new technology they're trying to digest in the classroom? What do you think has changed in terms of the market dynamic? Or what are you hearing that's changed?

I think generally, Brian, it's -- customers are just like, not maybe as urgent as they were. I mean, definitely after the pandemic and the stresses on the global supply chains, there was a lot of urgency and a huge amount of orders being placed. And maybe, some end users spent a lot of budgets. And now, we're looking at big projects, which are expecting Q3. Now, I know it's just late a few months. It's now happening in Q4. That's been pushed into the New Year. That's kind of what we're seeing. It's not one big thing. It's just a general, people are not as urgent to place large orders and kind of just slowing down slightly.

Now, assuming revenue is flat year-over-year, I get that G&A cuts take some time, but you have much better shipping rates you've talked about, much higher gross margin. If revenue was flattish, why wouldn't EBITDA be higher even marginally?

Looking into next year.

I'm just talking about the fourth quarter because the rates recovered at the beginning of the year. I'm just looking at year-over-year in the fourth quarter, I get the next year is a different story.

I mean, gross profit in Q4 last year I think was just under 34%. And I think we were running a bit higher than that in Q3. So it's going to start to get marginal. You did start to see gross profits increase at the end of last year. So I think it would be marginal differences.

Okay. And then the competitive landscape?

Hey Brian, just a real quick comment on that. I think that's really been, for this year for 2023, we started the year with a bit lower gross profit margin in Q, kind of early in the year and it kind of ramped. Or actually, that was, I guess really, I guess beginning of last year we had Q1, especially with stuff, but we also ramped a little bit kind of this year and we have kind of higher gross profit margin. We've guided last quarter, we mentioned we didn't know that we could sustain 37%, 38% type margins that may come down some. So I think in event to be conservative, Q4 going into next year, I don't know that you had to expect the 36%, 37%, 38% gross profit margin, but we ought to be kind of maybe closer to 35% or so, something like that. And so if that's the case, and we're not going to be real far off from before last year or so.

Got it, one more question. The first one is [Technical Difficulty].

The margin for Q4 last year, just a reminder was close to 34%. So as Michael was saying, it was actually ticking upward towards the end of last year. And so while that's held and actually increased for a good portion of the 2023 year, we'll probably see that start to decline just a little bit. So the pickup from the margin increase, when we're looking at Q4 won't necessarily be as drastic.

Yes, and then in the gaining market share, you've been gaining market share for several quarters. Has anything changed from competitive perspective? Number one. And then in Germany, you're talking about the biggest opportunities to gain share. What do you think makes that market right for market share gains? And then I have one last question.

Yes, maybe I'll say a couple of things. Mark, you can jump in kind of more specifically. Yes, so if you look at this year, year-to-date, we have not gained kind of across the board in our major markets, U.S. and EMEA. If you look at those blended as Mark shared in his portion of the contract, we didn't really gain much market share. So that was a little bit disappointing that that didn't happen. This year we were relatively flat with the market. Now we did in certain geographies. We did have upticks. And other ones we were down a little bit, but we're pretty optimistic that that can turn next year and that we will start to gain market share. Now, when we talk about market share data too, we're only really talking about interactive flat panel displays because that's the market share data that we subscribe to when we receive. We don't see a lot of market data around other solution suite. But speaking to growth in the next year, I'll talk a little bit more broadly and then Mark, you can talk maybe specifically to Germany and other markets, but talking more broadly, looking in next year, the reason that we think we can see some growth is because we've invested in the enterprise vertical. We know we're going to bring in some new business in enterprise. So that's one. Secondly, we invested in certain geographies. You mentioned Germany, which Mark will talk more about, but that's an example of a geography where we're going to see some growth geographically based on people investments we've made in those areas. And the third is growth in our product suite. Because we've launched a lot of new products. If you look over the last 12 months, we launched our new line of non-interactive displays. Those are new in the U.S. We didn't have those before. Our new LED video walls, newly launched this year. Our new media hubs, newly launched this year. Our EDLA interactive flat panel displays, new this year. A lot of new integrations between our audio solution and our interactive flat panels, including our Attention solution, newly launched this year. Large investments in our software and LYNX Whiteboard and MimioConnect, CleverLive, and other software solutions. And so a lot of these product investments, that's act in three area where we expect to see growth. So even if the interactive flat panel display market is relatively flat next year, which we expect it to be in the U.S. and in EMEA, we're going to see some growth because of those investments in those various areas. And we think that because of that, we'll take a little bit of market share as well within IPD today?

Just quick one on Germany, Brian, because you're asking about Germany. So it is now the biggest market for IPDs in Europe. It wasn't until that's changed in the last 15 months, it's the biggest market. And across Europe, in many countries, we actually have really high market share. And Germany is the one that stands out as being significantly low. Last year we were at 4.5% in Germany. We're now up to 5.2%. But we hired and significantly, we doubled the size of our German sales team from like five to 10. And that's only reached, that happened over the last 12 months. Those guys are now starting to kick in in terms of really winning some big deals. The other thing is we've just, next week we're actually flat out to Germany and we're opening our first showroom in Germany. So again, it kind of gives us more presence in Germany. And that will be a key market for us to grow. And we think we've got the right team that's to grow market share.

Great. My last question on the debt covenants. It sounds like you're back in compliance after paying $4 million if I have that right. What is the required covenant for the net leverage ratio or whatever covenant you missed, so we can gauge where you are or going to be in the future?

Sure. So for Q4, it's -- it will be 2.5x and that's in accordance with the original debt agreement that we entered into. Obviously as we've said, we're actively looking to seek refinancing on our credit facility and we're optimistic that we'll be able to find a solution that will give us more favorable terms in the not too distant future, so we're optimistic about that. I would say that in terms of just overall leverage ratio, even despite the four quarter downturn, the industry's experienced, again which we've started to see some early signs have turn around even with the last four quarters being downturn. Our leverage ratio has been maintained under 3x, which I think it speaks to positive EBITDA, we've been able to generate through our improved margins. So, it won't step down to 2.5x, but...

You have to get to 2.5x, or that's where you're going to be?

2.5x is our requirement for Q4.

Got it. Okay. Thank you.

Thanks, Brian.

Your next question is coming from Jack Vander Aarde at Maxim Group.

Okay, great. Thanks for the update, guys. Many of my questions have been asked, but maybe I'll just circle back to kind of the guidance. So, last quarter, the overall tone and just kind of verbal body language felt like you're pretty confident in the third quarter outlook, and obviously, you had a slower back half than expected. But just looking at the fourth quarter guidance, in relative to kind of the tone and body language from last quarter, how confident are you in hitting those targets for the fourth quarter?

Yes. Hi, Jack. It's Mark Starchy. Look, we're pretty confident. I think we try to be more conservative on the Q4 call. We basically said little flat with 2022. Q3 was disappointing, right? Yes, and the second half especially, right? When we did our call three months ago, we did. We could see we're going to definitely grow an order intake. We actually thought the growth in order intake would be higher than what it ended up with. We ended up with 11%. We thought it could potentially be north of 20%. So, it was definitely slower on the second half of Q3. We have been more conservative in our guidance for Q4, as I'd say.

Okay. That makes sense. It's helpful. And then maybe just, Michael, you opened up with comments about Asia and everyone's different geographical positions or locations. Can you just talk a little bit more about your expansion opportunity plans in Asia and it sounds like you're somewhat early in maybe devaluation phases, but when might you see some tangible results from any new potential Asia market opportunities?

Yes, so right now clearly the biggest opportunities for growth for us are in the U.S., and then I would say Western Europe particularly Germany. We're also seeing a lot more opportunities in Eastern Europe. We also have an employee now in the Middle East and there seem more opportunities in the Middle East. So I think again the U.S., EMEA region are by far the largest growth opportunities for us over the next 12 months, but we're just starting to and we sell some in the APAC region and particularly Australia do it quite well, and we have sold in other countries throughout Southeast Asia, not large quantities, but I would say we're optimistic. We can start to see some meaningful growth even over the next 12 months in that region, but I would say if you're looking at again, over the next 12 months in particular, it's substantial growth. It's really going to come from our existing territories over the next two quarters.

Okay. And then maybe just in terms of some of the orders that were slow, the slowdown kind of happened in the back half of the quarter. Can you talk about maybe, was there any nuanced trends, a bigger slowdown in corporate enterprise versus your K-12 education markets? Was there any sort of distinct trends there or was it pretty much just, was it really indeed general overall softness?

Well, if you look at overall business, enterprise is less than 10% of our total business. I mean, we are largely, really largely K-12 education company today. Now we're looking to grow that enterprise vertical and that's happening as we saw growth in enterprise. And we think we're going to see substantial growth in enterprise next year. And so it wasn't enterprise vertical. It was purely education vertical that was slower than expected.

Okay. Understood. I think that's it for me, guys. I appreciate the update and good luck going forward. Thank you.

Thanks, Jack.

We have reached the end of the question-and-answer session. And I will now turn the call over to Michael for closing remarks.

Thank you everybody for joining the call today. And we appreciate your support. We look forward to speaking again in March when we report our 2023 full-year results.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Thank you and welcome to the Boxlight Second Quarter 2023 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current knowledge and expectation as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company’s most recent Form 10-K, Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results provide additional analytical tools to understand the company’s operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company’s website at boxlight.com. And with that, I will hand the call over to Boxlight’s Chairman and Chief Executive Officer, Michael Pope.

Hello, everyone and thank you for joining our Q2 earnings call. After my remarks, you will also hear from Mark Starkey, our President and Greg Wiggins, our Chief Financial Officer. For the second quarter, we delivered $47 million in revenue, $18 million in gross profit, and $5.4 million in adjusted EBITDA. With softer demand across the industry, our revenues declined by 21% over Q2 2022. However, our gross profit improved by 6% and adjusted EBITDA improved by 4%. Our strong profitability was largely a result of our record gross profit margin. For the second quarter, we reported 30% in gross margin, an increase of 970 basis points over Q2 2022. Our balance sheet also improved during the quarter. As of June 30, we reported $65 million in working capital, including $60 million in cash and $38 million in inventory. Our debt balance at quarter end was $52 million. Subsequent to quarter end, we paid down our debt facility by an additional $3 million resulting in a current debt balance of approximately $49 million. We are revising our revenue guidance for the second half of 2023 and now expect to deliver $60 million for the third quarter and $110 million in revenue for the second half of the year. Despite the lower revenue guidance, we expect adjusted EBITDA for the second half of 2023 to be in line with 2022. We continue to innovate and expand our product lines and have recently introduced several new solutions, including our MyBot Recruit robot with a large format LED display, MyFrontRow app for interactive displays, PowerLine, a low-voltage, easy to install, power supply, and Google EDLA interactive panels bundled with training and support. EOS Education our professional development division earned the Education Services Partner Specialization in Google Cloud Partner Advantage and will be bundling Google training with our Google EDLA interactive panels. We are committed to both education and enterprise verticals and serve both markets with the most comprehensive integrated solution suite available complete with hardware, software and service components. We are seeing a substantial increase in industry recognition for innovation and market leading solutions. During the second quarter, the Annual EdTech Breakthrough Awards recognized our FrontRow Attention! solution as the best technology solution for student safety. Student safety is an area of significant concern in our schools and one where we can add value. Attention! is an integrated solution that combines our FrontRow conductor campus-wide, bells, paging, intercom and emergency communication platform with CleverLive, our cloud management platform providing a comprehensive audio visual messaging and alerting system. With Attention!, administrators can broadcast simultaneous audio and video communication across an entire campus, including in the event of an emergency. In 2022, EdTech Breakthrough also recognized Boxlight as the Overall EdTech Company of the Year. Our Mimio and Clevertouch brands received 7 Best of Show awards at Infocomm 2023 from three different journals, AV Technology, Digital Signage, and Tech and Learning for our CleverLive digital signage platform, CleverHub wireless presentation system, Clevertouch UX Pro 2 interactive displays, and Mimio DS non-interactive displays. Box, that was also honored with 5 SD live Best of Show awards by Tech and Learning, recognizing the excellence of our innovation solutions for MimioWall, Mimio DS, IMPACT Lux, CleverLive and LYNX Whiteboard. Although customer demand has slowed in recent quarters, we are now seeing growth in our sales pipeline and market data suggests the industry will rebound by end of year. We are optimistic that we will return to meaningful revenue growth in 2024. We are better positioned as a company today than ever before with our expanded solution suite, global sales channel and talented employees. Over the next several quarters, we will deliver growth as industry demand increases and through capturing meaningful market share from our competitors. With that, I will now turn the time over to our President, Mark Starkey.

Thank you, Michael and good evening from here in Europe. As I mentioned on our last earnings call, we are seeing the world return to normality with supply chains restored. As a result, we continue to see slower order intake in revenues as end users and partners normalize their inventory levels. Our expectation is that during Q3 we will likely see this rebalancing process complete. And order intake will return to growth mode in the third quarter with revenue lagging by a quarter or two. The good news here is that we believe we have exited the pandemic with a much stronger and healthier business with substantially higher profit margins and significant development in our product portfolio, particularly with regard to the integration of our audio solutions into our interactive panels. In terms of Q2, order intake was $51.2 million, down 37% year-on-year, with 54% being derived from the U.S., 41% from EMEA, and 5% from Asia-Pac. Interestingly, despite order intake being down 37%, our market share for interactive displays remained relatively consistent with our EMEA market share increasing marginally from 5.5% to 5.8% and our U.S market share increasing from 5.8% to 6.4% during H1 according to data from Futuresource. The bottom line is that we continue to make modest gains in market share despite the significant drop in order intake and revenues across the period. Some of our key orders in the U.S. included $7.2 million from Bluum, $6.7 million from GDI, our U.S. distribution partner, $2.8 million from Data Projections in Texas, and $1.3 million from Digital Range Technologies. Overseas, we have some excellent orders, including $2.6 million from ASI in Australia, $1.8 million from Camera Mundi, our partner in Puerto Rico, $973,000 from Avion Interactive in Finland, and $961,000 from IDMS based in the UK, to name a few. On new generation of Google accredited screens will start shipping this quarter and orders have already exceeded expectations. We have had some great wins in Germany, where Clevertouch have been officially awarded [indiscernible] for 2600 Clevertouch Lux screens, including cars. This is one of the first large scale deployments of the new Google certified screen in Europe. In the UK, Clevertouch won the Welsh DPS tender, with IDMS for approximately 3,000 screens to be deployed over the next 12 months. In the U.S., we have some fantastic audio winners. In Texas alone, we booked more than $1.7 million of audio deals featuring our easy room solution, working closely with our partner, Piranha Consulting. We had a fantastic [indiscernible] school district in Washington State with our partner ACT. We also received orders for our Google certified EDLA panels from various partners, including Data Projections and took early orders for our new Digital Signage displays, the DS series from various partners, including VAT. Student safety continues to be a huge issue, particularly in the U.S. Our Attention! solution, which integrates our FrontRow campus solution with our Mimio and Clevertouch interactive panels is a game changer and is the first unit based audio solution capable of this level of integration. It enables teachers to give audio alerts and visual alerts on both interactive and non-touch panels instantaneously across the campus. The solution is gaining traction and we hope to announce some significant wins for Attention! in the next quarterly call. In summary, Q2 order intake and revenues were down. But our profitability in terms of gross profit percentage and adjusted EBITDA continues to improve. Our expectation is that we will return to growth in order intake during Q3 and revenue growth in Q4 as there remain significant funds available for education establishments to invest in technology. With that, I will now turn the call over to our CFO, Greg Wiggins.

Thanks Mark and good afternoon everyone. I will now review our second quarter results. Revenues for the 3 months ended June 30, 2023 were $47.1 million as compared to $59.6 million for the 3 months ended June 30, 2022, resulting in a 21.1% decrease and was due to lower sales volumes across all markets. Taking a closer look at our sales breakout for the year, EMEA revenues totaled $36.6 million or 41% of our total revenues, Americas revenues totaled $48.8 million or 54% of our total revenues, while revenues from other markets totaled $2.8 million or 5% of our total revenues. Our top 10 customers represented approximately 41% of total sales, with the single largest customer at approximately 15% and are based across a number of markets, namely the U.S., UK and other European countries. Approximately, 60% of total sales are covered by the top 20 customers. Hardware comprised the largest proportion of total revenues at approximately 92%, of which approximately 69% related to our flat panel displays with the balance related to classroom audio solutions and device accessories. The balance of our total revenues, are comprised of software, professional services and STEM solutions. Gross profit for the 3 months ended June 30, 2023 was $17.8 million as compared to $16.8 million for the 3 months ended Jun 30, 2022. Gross profit margin for Q2 2023 was 37.9%, which is an increase of 970 basis points over the comparable 2022 quarter. Gross profit margin adjusted for the net effect of acquisition related purchase accounting was 39.1% as compared to 30.2% as adjusted for the 3 months ended June 30, 2022. The improvement in gross profit margin in Q2 2023 compared to the prior year quarter is primarily due to lower manufacturing costs and continued reductions in freight costs over the prior year period. Total operating expenses for Q2 2023 decreased slightly to $15.8 million compared to $16.0 million in Q2 2022. Other expense for the 3 months ended June 30, 2023 was a net expense of $2.6 million, as compared to net expense of $0.8 million for the 3 months into June 30, 2022. The increase in other expense was primarily due to gains recognized from the change in fair value of derivative liabilities of $184,000 in Q2 2023, compared to gains of $1.5 million in the prior year quarter, coupled with an increase in interest expense of approximately $0.3 million quarter-over-quarter. The company reported a net loss of $811,000 for 3 months ended June 30, 2023 as compared to net income of $26,000 for the 3 months ended June 30 2022. Net loss attributable to common shareholders was approximately $1.1 million and $0.3 million for Q2 2023 and 2022 respectively. After deducting the fixed dividends to Series B preferred shareholders have $317,000 in both 2023 and 2022. Total comprehensive income for the 3 months ended June 30, 2023 was $0.9 million compared to total comprehensive loss of $4.6 million for the 3 months ended June 30, 2022, reflecting the effect of foreign currency translation adjustments on consolidation, with the net effect in the quarter of approximately $1.7 million gain and $4.6 million loss for the 3 months ended June 30, 2023 and 2022 respectively. EPS loss per basic and diluted share was $0.12 for Q2 2023 and $0.04 for Q2 2022. EBITDA for the quarter ended June 30, 2023 was $4.5 million as compared to $4.8 million EBITDA for the quarter ended June 30, 2022. Adjusted EBITDA for Q2 2023 was $5.4 million as compared to $5.2 million for Q2 2022. Adjustments to EBITDA include stock based compensation expense, gains losses from the remeasurement of derivative liabilities, gains losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. EBITDA for the 6 months ended June 30, 2023, was $6.4 million as compared to $4.4 million for the 6 months ended June 30, 2022. Adjusted EBITDA for the 6 months into June 30, 2023, was $8.7 million as compared to $6.4 million for the 6 months into June 30, 2022. Turning to the balance sheet. At June 30, 2023 Boxlight had $15.6 million in cash $64.8 million in working capital $37.8 million in inventory $182.3 million in total assets, $47.2 million in debt, net of debt issuance cost of $4.5 million and $50.9 million in stockholders equity. On June 14, 2023 we completed our April 1 reverse stock split, which reduced our Class A common shares authorized to 18.75 million and Class A common shares outstanding to approximately 9.5 million shares allowing us to maintain compliance with the $1 minimum per share requirement by NASDAQ. At June 30, 2023, Boxlight had 9.5 million common shares issued and outstanding and $3.1 million preferred shares issued and outstanding. We continue to strategically review our capital structure and use of free cash, including but not limited to paying down debt, executing on our share repurchase program, and finding more attractive financing arrangements to replace our current facilities. We believe that cash flow from operations will continue to support our ongoing operations without the need for additional equity or debt financing. With that, we will open up the call for questions.

Thank you. [Operator Instructions] Our first question is coming from Brian Kinstlinger with Alliance Global Partners. Your line is live.

Hi, good evening, guys. Thanks for taking my questions and solid gross margin and EBITDA. My question is after the solid EBITDA results during the first 6 months, you have generated roughly $8 million plus or minus. What are the puts and takes that resulted in that 6-month timeframe of having $3 million more of that and about the same cash? And over that time, almost $20 million less on inventory, I am just curious what – when we can expect to see greater cash conversions in the results?

Yes, so this is Greg. Thank you for the question. So I think some of what you see in the first 6 months of the year is timing related. So typically, from a cash perspective, the company sees a greater amount of cash rolling in the second half of the years, we get past our busier months of the year call net Q2, Q3 timeframe. So as those sales – the cash comes in related to those typically see a lot more cash inflow in the second half of the year. Early in the year, call it in the late Q1, early Q2 timeframe is seasonally our lower cash months of the year, as we are coming off of course, typically lower quarters from a sales perspective, but also ramping up for inventory for the busier summer months. So that by and large is typically where you see a lot of the cash fluctuations come in. Now with respect to inventory, specifically in our levels, you see that our inventory levels did decrease significantly, even from year end, and that’s really due to a couple factors. One, it’s really maintaining optimal inventory levels consistent with the sales that we were seeing as the year progressed, which were a little lower than they were in the prior year, but also optimizing our inventory levels following kind of the supply chain issues that were had in the immediate aftermath following the pandemic. So, as there were delays in the past in the supply chain, there was more of a demand to want to increase and have appropriate inventory levels to meet sales as they were generated. But as we’ve seen a lot of that subside, and then again, normalizing our inventory to kind of mirror our current sales demands. That’s kind of how it’s reflecting the inventory decrease that you’re seeing

Hey, Brian, I would add one quick thing, you’re looking at cash, and you’re looking at inventory, but really, you’ll see working capital improved, right, working capital at quarter end was $65 million. If you have to look at the rest of kind of current assets, current liabilities, and one item, for example, if you look at accounts payable from December 31, 2022, AP was it $37 million versus a quarter June 30 was $21 million, right? So if you look, I think you’re better off rather than just looking at cherry picking cash in inventory, for example, you have to look at that whole working capital bucket, because it’s all interrelated AR, AP inventory, cash, all interrelated.

So assuming, to your comments in the second half of year cash flow is better. Are there any restrictions from you paying down debt, companies, micro caps right now with lots of debt clearly aren’t generating any meaningful valuation or equity? Is that something that is a high priority for you?

Absolutely, Brian. I was just going to make a quick comment. So we paid down $3 million post quarter end, right? So we paid down over $3 million of our debt. And so we’re moving in the right direction. Currently, our current facility, amortize it 5% down per year. So at a minimum, we’re paying just that that regular debt amortization, amortization of 5% per year. But that’s actually something we’re looking at. But I would point out one additional thing in addition to the debt going down, but our profitability is going up. And so that ratio is quite important. And if you look at our debt leverage, our EBITDA – debt-to-EBITDA ratio that’s been improving pretty dramatically. At quarter end, we were about 2.4 versus we were almost 4 if you just go back a couple of quarters. And we think that will improve as the debt goes down but also as profitability increases.

Absolutely. And I will put more profit even if there were smaller firm. And then last quarter you talked about year-end budget pressures gave you confidence that orders would be up year-over-year in the second half of the year. Just seeing how orders and revenue played out during the second quarter give you slightly less confidence in order growth, maybe it will recover in the second half of the year, and then maybe you can help us understand how things have begun to trend in July and August?

Do you want to start on that Michael? And then I will jump in.

Yes. Maybe I will say couple of things. Yes, let me start, you can jump in and more color. Yes. So first off, clearly order intake lagged quite a bit more than we expected starting with the second half of last year. And so lagging orders in the second half of last year resulted in lower revenue, both say Q3, Q4, but also rolling into Q1, Q2. But the reason we’re optimistic for the future, there’s a couple of things that make us optimistic. The first is that we’re seeing our internal pipeline grow. And of course, that improves your optimism, but also, we’re seeing the order intake ramp, we’re starting to get more and more orders. And we’re seeing that, now that revenue doesn’t show up until later, right, once we receive the orders. But we believe based on what we’re seeing now, the Q3, we will see a growth in order intake, as Mark shared in his part of the beginning of earnings call. So, we expect order intake increase in Q3, which will result in we think growth in Q4, leading us into next year. But beyond just our internal metrics we are looking at also we get external data. And that includes – that’s included from industry data, which industry data is showing that they think that there is a bounce back, and we are going to see growth, end of this year, into next year. But then also talking to our large resellers, which many of which are much larger than we are, they are also seeing the same thing. We are seeing – they are seeing pipeline growth, order intake growth. And our large manufacturers who supply us and potentially supply others in the space, they are seeing the same thing. So, I think across the board, what we are seeing internally, also we are hearing about externally does support and we are going to start to see that and we are seeing the beginnings of that internally right now.

Thank you two more questions. And I will get back in the queue. First, the demand environment, can you speak to forward-looking on U.S. versus Europe? Which do you see driving that order growth over the next six months? Is it a clear cut winner one over the other?

That’s a very good call. Actually, Brian, it’s very hard to say. I think typically we have historically seen some really good growth in the U.S. But there are some big tenders out there as well in the next six months in Europe, particularly in Spain, and in Germany and parts of Eastern Europe. So, I don’t think it’s clear cut. It’s all coming from the U.S. or it’s all coming from EMEA. I think it depends on the specific [indiscernible] we are actually working on. We just recently won a very large deal in the U.S., and very large deal in EMEA. So, that’s kind of balancing each other out. So, overall, I would say it’s a good mix.

Great. Last question for me. The gross margin, I have been covering you for a long time. You have done a great job of getting where it is no doubt. And last quarter, you talked about competitive pricing pressures long-term. Can you help with near-term expectations, say, next 12 months to 18 months versus what you think sustainability long-term? Can you sustain these for the next several quarters before pricing pressure eats in, or do you think that is not feasible?

Yes. I think that I mean 12 months to 18 months, it’s hard to say looking out that far. I do think we are going to see some erosion of gross profit margin definitely over 12 months to 18 months. I think we have a couple quarters of holding it relatively steady. We may see it go down a couple points, especially if we win some of these larger tenders. Generally, the larger tenders are a lot more price competitive. And for us to win those tenders in their large quantities, and for us to win those tenders, we have to come down on pricing. So, if we are successful in some of these large tenders, both in the U.S. and internationally, that will erode the margins. So, I think we were forecasting out a couple of quarters, we think we may lose a couple of percentage points. But if you are going out much further than that I do think that longer term on our core solutions, we are going to erode back down to around 30 points is what we would have expected. If you went back a few quarters, we thought would be around 3 points today. And we have benefited from a lot of different factors. But I think that is closer to run rate with our core products today that we are selling. But we have talked about in the past, and we will continue to talk about it that long-term, we think that that gross profit margin can improve as we sell high margin products, which we are working on and we are pushing, they make some – makeup a smaller percentage of our total business today. But we think out a couple of years, those other solutions that are high margin, including software and professional services, and some of the accessories we saw that are high margin, it’s STEM solutions. As we do better with those solutions, we are going to see the margin potentially start to creep up. And then the other thing we have talked about, which we will continue to talk about is the enterprise vertical. The enterprise market is less price sensitive, and that is higher margin. And today, it’s a small piece of our business less than 5%. But we think in the future, it could be much more substantial. We have been investing and then the enterprise vertical, and that’s going to allow us to be able to improve that gross profit margin. So, again, I think in short, over the next couple of quarters, we are going to probably erode a couple of points, we will see. And then looking out maybe a year or so then maybe come down a little bit more. But if you are looking at multiple years, I think we can improve on where we are today.

Thank you so much.

Thanks Brian.

Thank you. Our next question is coming from Jack Vander Aarde with Maxim Group. Your line is live.

Okay. Great. Thanks for the update guys and solid gross margin and EBITDA results for sure. A couple of questions, maybe just because I missed it, just to reiterate the guidance, I heard that third quarter revenue and EBITDA of $60 million and $10 million. And in the second half ‘23 revenue guide of $110 million. Did you mention second half adjusted EBITDA?

I think we did not guide to second half adjusted EBITDA. We just guided only Q3. But I think you could probably extrapolate roughly what – assuming we come in at the Q4 revenue then we will be up on adjusted EBITDA year-over-year given the higher gross profit margin.

Okay. Great. And then just one more thing to reiterate or just because I missed it was your market share gains – I think I heard in EMEA for the first half of the year , that increased to 5.8%. And I missed what you said about the U.S. Did the U.S. market share increase again and to what percent it did?

We looked at it across the half, we will look at the numbers across the half, so in the U.S., went from 5.8% to 6.4% for H1, we will look at the half year numbers for both EMEA and the U.S.?

Okay. Great. Fantastic.

Note Jack, that is on interactive displays, right, which make up about 70% of our business. So, we are only providing market data really on that segment of our product line.

Yes. Understood. I appreciate the clarity there. But nonetheless, good work and good momentum there. And then just in terms of maybe if I circle back to the overall revenue slowdown. You mentioned lower sales volume across all markets, but just are there any more specific factors you can point to that caused maybe a slower top line and just the pace of new order intake than you were previously expecting, whether that would be by geo or corporate versus education? Any of your subsidiary businesses maybe FrontRow versus [indiscernible] just whatever else you also can provide, or was it really indeed a – in overall just general slower I mean growing volume orders?

Jack, my overall view on this is genuinely that there was a kind of a hangover from the issues do with COVID. And the fact that the supply chains were so – were impacted so much, that so many customers, end users, partners, were buying like, okay, we will let you know, there is problems on the supply chain, let’s make sure we order plenty. And I think we have had the hangover from that, it started in Q3 – it started at this time last year, started in Q3 last year. And it’s kind of worked through, and I definitely see it’s a much more normalized environment now. So, it’s been – it’s kind of big decrease in order intake, and yet our market share is increasing slightly, because it’s definitely across the board.

Yes. Understood. Okay, that’s helpful. And then maybe just I want to emphasize the point, that’s probably the most important is that you do expect, order intake to return to growth in the third quarter, revenue to rebound in the fourth quarter and then you expect meaningful growth in 2024. One question to the drivers of 2024 growth and your confidence in that, how does the government funding those programs? How do they play a role in that? Is that a factor that you expect to help to drive or return to growth in 2024, I mean what’s the status of the government funds?

Absolutely, that’s part of the driver. I think the biggest reason for the growth will just be to Mark’s point, the return to normality in buying cycles. There has been this low that Mark talked about and once that low is behind us, and we are back to regular buying, we expect steady growth in EdTech spending, as we have seen in the past. And keep in mind, you can go back post-2000 and post-2008. And there were lows after that. And then once our buying returned, it was steady growth again. And so and before I talk about special money, which there were a lot of special funding that came into education, but just run rate, education budgets have generally not declined across the board, including in the U.S. If you look at public school budgets in the U.S., about half of that funding comes from property taxes. Property taxes, just property values are still quite robust, in fact they went up substantially right post-COVID. And the balance of the budget comes from State and Federal funds. And those generally have not decreased either. So, schools have funding. They are still allocating that funding to technology spend. And that allocation is not declining. So, the money is absolutely there. And that’s true if you talk about most of Western Europe and other countries as well. Now, beyond that, there has been a lot of special funding. We talked about the extra funds in the U.S., which was nearly $200 billion allocated to education. There is still a large chunk of that that hasn’t been spent. And those funds that have not been spent, are going to expire end of 2024. And so we do think there is going to be a little bit of a jump of in spending there. But other countries have also allocated substantial spending. Germany is a good example where they allocate a substantial spending with their digital pack. There is others as well. But I would say that, yes, there is Federal monies, both in the U.S. and other government monies, they are going to help drive. But I think the bigger thing that’s going to drive growth is back to normality and regular spending of technology budgets on a go forward basis barring another disaster or something else that happens, so.

Got it. That’s helpful color. And then maybe just one more question, kind of given that your cash balance. Can you provide an update on the share repurchase program, and any thoughts there you can provide? Share price, where the share price is at relative to the cash you have on hand and liquidity? I mean do you have any update there?

Yes. So really, we are in the same place we were last quarter, and that we absolutely what we plan on utilizing the stock repurchase program, something we are definitely looking at. We mentioned after last quarter was something we are going to evaluate second half of the year, so it’s going we are going to be valuing over the next few months. And it’s really a function of cash flow as we generate more cash from operations, and we can look at how do we utilize that cash to drive shareholder value. Some of that will be we will look at growth in the business. We will look at reducing our debt, potentially, as Brian Kinstlinger brought up. But then also, we will look at that share repurchase program. You will notice that cash from operations for Q2 was slightly positive. And so we are starting to go in the right direction. But also, you will know that last year we generated I believe it was $7 million in cash from operations in the second half of the year, which is typical that we are going to see that heavier cash from operations in that second half. The same thing will be the second half of this year. We are going to see a larger flood of cash coming in Q3, Q4. And as that comes in, we are going to evaluate that as a management team, and of course, it’s the Board of Directors of how do we best utilize those funds to drive value. And one of the questions that will be on the Board every time will be, is it time to utilize the cash repurchase program or the stock repurchase program.

Okay. Great. I appreciate the color guys. Great to see the momentum building and the return to growth on the horizon. Thanks guys.

Yes. Appreciate it.

Thank you. We currently have no further questions at this time. So, I will hand it back to Mr. Pope for any closing comments you may have.

Well, thank you everyone for your support and for joining us today on our second quarter 2023 conference call. We look forward to speaking to you again in November when we report our Q3 2023 results.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. And we thank you for your participation.