OSS - Earnings call transcript Q2 2020

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Operator

Good afternoon, and thank you for joining us today to discuss One Stop Systems' Financial Results for the Second Quarter Ended June 30, 2020. With us today are the Company's President and Chief Executive Officer, David Raun; and Chief Financial Officer, John Morrison. Also joining today is the Company's Chief Sales and Marketing Officer, Jim Ison.

Following their remarks we will open the call to your questions.

Before we conclude today's call, I will provide some important cautions regarding the forward-looking statements made by management during this call. release to will that replay be instructions today's like be call via also section in and Investors recorded made press would remind Company's today's everyone will the of I the the website. in available for

to like over call David the and to ahead, Please go turn sir. President CEO, I'd Now OSS Raun.

David Raun

you, and good and joining hope I today. being Scott, afternoon, safe for Thank everyone healthy. us everyone. Thank is you

Directors for and the customers senior-level leadership market. M&A, dedication, First, the would in with so management, voting July, our Systems Meeting, on to employees, knowledge marketing, Shareholder much They risk creativity I'd this nimbleness shareholders especially on Annual once all serving beginning At going add during and valuable our like and in join Board. new thank also finance, again partners like One for experience we boards. their public pandemic. I the the to at independent thank and of had three Stop

new part Board new on men been truly One them XX you Systems' now as have three CEO. I'm and as to serving fortunate women, appointment CEO and now we're today Our of our glad Interim and to consists Stop also announced address I’d team. the February. President The of four June Board after since

put efficiency; integration team the on operating million customers, in This was products million management completed $X $X sheet a during June; CDI, with on as of development and this in well areas. that more an proposition, which lastly, and time, of strengthening improved balance as of additional with reductions our keeping focus working our our million of made which several most an executing While in to OSS a the $X.X capital. manufacturing on been expense shipping vision COVID-XX the full value impacted and by focus continuity; included we've its disruption challenged progress reorganization has has with key have across

to much impact well While the we and done; helped pandemic offset the to initiatives have future. up remains work of us more be for the believe these set

Systems top As quarter $X.X down our by year. strong in to million the expected, last and revenues first One large same concerts significantly compared impacted events. We customer quarter. a customer sporting from saw This events, gathering quarter COVID-XX after Stop serves like second the

over overall year-to-date resulted offset of first months contributions and combination year's customers being from the revenues newer Fortunately, our months. the quarter wins some par in a impact total the on six with This half. XX the strong from the first last of to past program same

the to the Jim through But for Jim, For I'll turn return it details outlook today's us Chief about John John? and next next, call, Morrison, over quarter. I first CFO, discuss Then quarter opportunities. to again to the Marketing Sales take I'd Officer, the and like talk our our invited to our Ison, to for half. new financial after

John Morrison

and Earlier available at release first a June good and XXXX. Investor we with our quarter for the press Relations our onestopsystems.com. Thank of afternoon, in for results release David, half today, today. The you, us joining Thank website the issued section is second you everyone. ended XX,

statement operations. with of our Now starting

$XX.X million totaled the compared quarter. Our revenue in same million $XX.X second as year-ago quarter to the in

was a absence as data which pandemic servers production, entertainment As of in media earnings designed of and due custom expected, lower use the call and due to for previously discussed of unit our in product high-margin sale. decrease the storage sales majority the to QX was the COVID-XX and

PCI offset million. of during by period. was the largest technology. reductions This of million first reduction X These customers year Fly Express The products was the the with even revenue despite half and in sales AI two from Gen on basically last of $X.X were $XX about XXXX our increases achieved in at

contributed revenue in in our a QX, the our of business revenue decrease or core consolidated OSS $XX or units, breakdown same This second terms million XX% from XX% operating million in the the year-ago of revenue $X.X was the period. In quarter. between the consolidated

Our or of year-ago the second compares Bressner, consolidated subsidiary the or the quarter. revenue consolidated European in contributed This revenue million in $X.X to of million $X same XX% XX% period.

$XXX,XXX X% contributed revenue of quarter. in to or or subsidiary compared X% $XXX,XXX CDI the as in year-ago QX Our

revenue. Now the half first looking at XXXX of

core $X.X business as OSS year. compared compared of of of last million the $X of or consolidated the half consolidated first contributed was of in revenue OSS to or consolidated first $X.X of consolidated David core as year's completed mentioned. in CDI Bressner in or contributed or the the the year. million half or revenue X% they X% XX% the CDI, of Our revenue into $XX.X integration XX% contributed of of we part to half. At which beginning reorganization XX% XX.X% XX% million revenue last first compared to as million in revenue half half $X.X operations, the of million first first in that June, or last

on and Bressner. So next core quarter, OSS we business will our report only

Turning profit. gross to

the XX.X% customer quarter of which Bressner's high-margin second This our reduction, XX.X% year-ago margin to earlier. lack specifically contributing same quarter. for quarter XX.X% XX.X%. compares to DSU revenue change quarter in was gross as to margin in second our sales, CDI to and in business declined the million of the to quarter, same million totaled XX% improved OSS attributable $X.X the mentioned that revenue, compared in or in XX.X% the gross from the year-ago margin During or second with profit Gross the to of a decreased gross $X.X which year-ago sales mix, core XX.X% reduced to same quarter. in as

business compared the as was million down same of is first the OSS which half was reduced and revenue year. $X.X XX.X% core again was in margin or million the XX.X% first to to $X.X Gross XX.X% XX.X% for in For the of gross half in CDI's sales last in to year-ago half margin improved, profit attributable of which of in mix. XX.X%. XX.X% to compared first in XX% gross compared changes XXXX, or contributing to margin revenue, the period. first the half decreased customer gross XXXX, Bressner first the to half

the a in Now was speaking expense we expenses operating operating program expenses. the of second XX% expenses year improved of quarter Operating quarter. $X.X quarter forma expense decreased adjusting there revenue reorganization as anticipated resulting year-ago to year-ago million XX% a same reduction reflects in was million the percentage million. annual expense savings compared for a after program. a $X.X $X On This million the due our charge goodwill basis, pro as from to to to Overall, charge operating $X.X the reduction XXXX. the April XX% $X of expenses of expense second decreased quarter; impairment this XX% year to well program, year-ago as decrease our the million impairment goodwill to reduction in the and implemented prior the from The in million of primarily from same quarter. our XXXX compared resulting QX payments $X.X severance to

due XX% percentage pro prior $XXX,XXX $XXX,XXX this impairment after a This year compared the $XXX,XXX, this revenue operations goodwill of our Losses in of last from a $X.X our The for from to the operating again to this On was April payments expenses of was as quarter. as expenses of reflects $X.X the million million the in this year and Overall, to year. cost to to this forma goodwill and operations For primarily in impairment year. and compared from improved year's $X the $X.X the payments, to year-ago half expense XX% in first after from first adjusting improved charge in last prior $XX.X half program adjusting as QX savings half the decreased first year-ago operating million goodwill reduction gain the total of reduction program, XX% of year. expense reorganization the expense half impairment year the On a anticipated resulted charge. was a a severance pro million XXXX ago. in by again quarter. decrease first operating prior half, to resulting $X reduction in year program, XX% year's annual which severance compared from decreased the million introduced expenses loss operating basis, year's $XXX,XXX and QX for from in loss was to forma year's first million which of our a of basis, the

in million million of payments, $X for prior was of our $X.X from half On half million last forma the goodwill year. a first from to the compared after half $X.X adjusting current loss first pro year in million the and as For charge first impairment prior the operations loss year's $X basis, decreased severance operating XXXX, year. the

compares basically in Our that are or loss same of $X.X a $XX,XXX $X.XX QX, which basis a net period. the breakeven. million GAAP share year-ago totaled a in or This loss loss per to indicates of share on per we zero approaching

share of $X.XX me, $XXX,XXX and year. per compared million QX $X.XX For same a in or the non-GAAP of in $X.XX $XXX,XXX the in GAAP a of excuse $X.XX per improvement net year-ago as a last share basic income diluted an loss the loss $X.X QX also first half or was or first or in on totaled basic share. totaled $X.X half period. of basis loss per a share, On of share a per diluted net – XXXX, basis, loss to per This million from

net non-GAAP share first $X.X XXXX. share follow, per in in as non-GAAP year another our non-GAAP we $XX,XXX net the metric or EBITDA, loss was income $X.XX same as the quarter. compared first to the or ago half $XXX,XXX compared QX to $XXX,XXX half of of of per $X.XX million For Adjusted in XXXX, totaled

For adjusted year-ago in compared EBITDA a negative $XXX,XXX the negative a XXXX, period. totaled first of the $XXX,XXX to half same

primarily debt $X.X quarter secured and Now as totaled Plan XXXX. The senior of million at turning million is balance XX, offering compared the Protection $X.X to raising XXXX, million. during June sheet. $X.X Cash receiving and cash in equivalents increase March our approximately due $X to convertible a a loan at to XX, million Paycheck

would for half As I cash Jim? like the our us $X.X of we year. have financial believe funds cash now overview completes first to provides of This with the for requirements million. Jim. our the liquidity hand We and turn operations. over call current on and position available July meet of quarter to to cash our sufficient XX,

Jim Ison

you, and Thank afternoon, good everyone. John,

has provides simulation radar military than program more systems This previous first performance of talk of quarter. products industry-leading new I the AXXX our Core fully X We introduced the NVIDIA's Tensor announced expansion expansion GPU. product the in already for would First, contributed shipped GPUs. during and This to quarter. like a orders compute times supports some generation PCI that Express XX Gen about the to system the

to prime combines addition AXXX AI quarter in on data In we the the This Fly the sky product product prototype GPUs threat order airborne received mission-critical contractor. a for expansion, for X a U.S. the in new Gen from our military with AI also server AXXX detection. center rugged state-of-the-art Navy a

purchase Fly their great the on of they received an for application use elements customers to AI next was generation two example of system Another in marquee OSS the we vehicles. from plan orders autonomous

we planning front, X additional product platforms PCI the introduce new are standard the of Express end Gen before three year. to the On

convert significant X seeing in this revenue. products. standard to And expect are interest Gen interest additional these into we We leading-edge

driving, course, to industrial In of opportunities. first half won turning opportunities. major Now eight of Market autonomous new pipeline the XXXX, the Fly. we on include segments applications AI and, our medical, of

is we to nothing of reminder, a a million less years. over $X program that four opportunity expected major As as a than yield define revenue

is expect turn We additional into win Our XX. would the pipeline before currently to approximately half of these year. opportunities the of end a of major

proud results that marketing been sales While and have affected despite challenges. positive we continued companies, have I'm like have to to remained the other our teams by drive COVID-XX focused say and

of With of foreseeable in events. environment leaders, to and quarter, shows, participation the the current addition first we leveraging on the that planned for to have in Edge. virtual second for the trade the market continued In remain future, partnerships and targeted virtual hosted three expectation the marketing webinars, the three invest and Marvell, the we will work same AI high-touch NVIDIA

show on general available During website the per are virtual second half, least to viewing we addition plan month mentioned to the make we previously planning in at our for one onestopsystems.com. webinars at

the to Dave. to with like back I'd Dave? turn Now over that, call

David Raun

Thank you, and John Jim.

lack of baseline $XX and transparency Last the revenue spirit will statements also prevalent We've this COVID-XX of expected, solid year. As build quarter. elected we minimum for foundation quarter, been provide rest visibility, for of in the this revenue to to the a a to our impacted And the past million. likely future. taking the of minimize initiatives working about avoid impact this continue while to

closed you revenue for our million. million. $XX.X the know, we're a spirit providing similar minimum baseline we QX As In at quarter a $XX.X outlook, of

As bring we did little minimum to baseline. I'd plan our color. work on QX to for previous several revenue the fronts like we in quarter, a add this above to

First, than this client we're while and for much revenue entertainment quarter. our media much not sounding counting optimistic is them large ago, days XX more on

rather for world. Fortunately, come back they consider their than to technology the to waiting world have they to the applied virtual what normal, market-leading

video outlined ago. music artists, university on months This now directors, professors back artists, movie As in website, by Perry, and premiered the was American on to virtual to world. Katy who musical work music few a sportscasters their allows a this showcased well-known Idol technology virtual get but

could with We closely their are this on it front support we expands. working demand ensure new as to customer our

we the half which year drive at component, margins Second, have second same of stronger, the a the high-margin expect usual, revenue as up military and can to time.

While some know delay, government are longer of adding is normal, aware one programs uncertainty. by being only and of funding taking of some the the we canceled not than any

larger witnessed these the of effort our diversify reduce of and new decrease largest of importance first base outlined. half, some our offsetting revenue customer and continued on a Jim of portion John the dependency our the two into as accounts, develop our customers we During underscores This our our few larger accounts. to revenue,

improved reorganization, future complete have working we greater expenses, foundation additional But with built lower seven-member new believe We for operating have the independent go. board; and capital efficiency, we to further much a performance.

Now that, the to like call questions. I'd with up open to your Scott?

Operator

And a NOBLE we go Chris [Operator Bliska you. from with have Please ahead. Instructions] question Thank Capital.

Your line is open.

Chris Bliska

on quarter Hi, a Congratulations in environment. solid tough guys. a

I about Just for And supply wanted Joe. chain ask the -- I'm just in to situation. calling

last little if that's been talked about quarter, in some a boards. PCB some getting you think I alleviated product, difficulties I wonder And bit?

David Raun

Yes, Dave. this is

us. PCB boards, most a have caused issues. the different always, the that at building of those lot for we general, components. longer trick products We It the lead times In worked do behind challenges. they're through On But times. as see some is, we're part,

in real that's And so can't But we an outstanding that way. impacting our how does on be require us overwhelming products. purchase one item to isn't there get strategic like our we that revenue

Chris Bliska

status to I detail? And Disguise. that Okay. just talk then with your Thank business comments you. I of heard in Could you assume little were Raytheon the about related a more

Jim Ison

Yes.

in So as John in expected. had than mentioned that last year, we had the an order earlier come we year

So our loaded, that reflected year. the Most typically and orders come in case back-end the was the half we've of the has year, results. is I year this of time, think been these that which why again back the that's in said

Chris Bliska

those last you I'm out quarter, And RFPs looking Okay. those from let's RFPs see, Thank last you. at quarter. XX And call referenced XX million-plus say had first But that them notes Of contracts. think referenced million how RFPs for my this you you the half. $X I you of in of came those quarter, in many how in? came the that $X XX in? – eight of many heard last I

Jim Ison

Yes.

If basically, we you're wins. from We closed XX. going resolved closed five we've actually that – number, additional

we So resolve had first or for open But for XX those half. the that's month quarter so the here. two. those some where half. of far and the report And the second have year eight we are every we'll still them wins in every

Chris Bliska

much. Okay. Thank you very

David Raun

Thank you.

John Morrison

Thanks, Chris.

Operator

go question ahead. We line Scott with Please ROTH Searle a the of Capital. have from

Your line is open.

Scott Searle

are tends XXXX? million and for looking still that sure customers we as those the as Thanks for for John, customer, coupled the just those just orders along half hand, understand gross to of half actual military baseline dig in with afternoon. margins the storage $XX.X of with I to back gross back make my third looking that want we're you questions. Raytheon of at what the go to in as should terms Dave, the arrays, of understand, quarter, visibility typically, better have for margins. the and couple couple that levers? number from Hey, we taking in year Is the have good they're be a to in, I into And

David Raun

Yes.

all a and things with history. bit although just the based current the line-by-line, is on on what million. we're gone customer some looking dynamics Really, made minimum of very base, marketplace, what's of at personally of uncertainty the and first $XX.X the factors. a of I've the accounts the there, I've on where, judgment So with sales revenue bullish of the probability backlog, couple team guidance through a on There's little in them

spirit So on couple of of again, I the there's as fence. kind things it's a view more a is last time, similar

John Morrison

With anticipated be looking annual for an basis be We that is an QX our basis. respect And approximately XX% XX% on aggregate at to on an gross to we we're aggregate. XX%. basis, to margin, QX, XX% approximately on about will aggregate anticipate –

Scott Searle

how quarters long I taking RFPs about middle Jim, pipeline, well some Great. going it's for to a resolved them of pipeline, as maybe talk last the several you been the that talking to have year. follow-up about can in as into Perfect. in terms opportunities? this of to of ones bit with little been those transition You've now favorably And think, back the revenue-generating

that period ramp before come And so that through. production? they we're starting meaningful understand to into more see trying to But start to up some of I'm gestation

Jim Ison

kick to these side nine on six the Yes, before exactly. is months commercial The they in. for typical sales the cycle

that's to pretty On the consistent. military XX And months. been side, it's XX the

commercial. closed additional this – of we quarter, two the were closed three we were reference, five for just military, of So those in

in things which which Gen being were, that we in. to from X what That's from that X stay and was That we products, we've kicking XX XX XX-month gauge Especially kick the that pretty time experienced about were frame one to there where gives entertainment first customer. the And half flat nine made as some wins in previously. the of commercial where previous around of in the up in, kind able the here. idea. some the Gen six- from have the from months with months was an been can to media you announced, So from you significant a would they win ground

Scott Searle

now showing why wondering shortlist right up just I'm to the Or when And Jim, opportunities Are your you're kind winning, maybe And in of not going rate, winning terms winning? business the you are you not win that who's who's on guys. follow-up of away? now? against

Jim Ison

On several a consulting make where see when expert from also that product and be especially to the it's do they internally, different provide to fronts, buy, we outside contractors, generally this dealing can versus with for do look some the but they product you're services can an us military them.

– on internal competing usually those side, So resources. we're military the against

commercial, put aircraft, which where military is we and fully airflow on applications. the and really in the critical AI you the heat Fly, try use back it's these order trunk in put On the embedded the approach unique a the into what requirements, product or full-powered a that to position in And from lower-performance taken put ourselves a we systems competitors scale where Fly of we that's is. really they that the and in have may commercial side, with meet the car those product, on have AI difference generally different take put a to

doing that. is. that where people we exactly see That's lot a niche don't So of

Scott Searle

directing markets of are OSS OpEx, back that year sheet product as the Got But we help in lastly, terms forward bit And understand what in the you. the to you several wondering, XXXX? could of key and the on in of you're us is kind if milestones Thanks. been and could XXXX? office strategy. balance you're half of I'm what be in going into first verticals you've could, in end maybe a going now, map if the expect And better some from where and little focused this months looking your road Dave, I integration, of some busy and

David Raun

Yes.

GPUs there, take the we've of of times, if stuff build the you And that. I'll think the vision map, some all Express. We're really PC The with we On road at the and good memory stuff. about all things we additional the one expansion loaded really and doing, many like and up been – good dynamic boxes.

a for add the One inside. to dynamics is too components easy margin example, standpoint, of the on we face up its

an more do looking one expertise you at it our out of strongly different that and appliance-level versus leveraging and can So to things you're we're is with people very the valued do getting competitors. what partnering maybe you how really on so product, more software

But kind answers. path. a have one don't So of the theme going and that's that's the on, we all

a we about As technologies. vision far make products to base there. sure we and this And customer as new more know out is get right where concepts, them now mode we big those get it aligned that's and a rest year, of with get of talking the how that to in the defined We're all get part we're we sharing start and feedback. to go to and want

Scott Searle

Great. Thank you.

Operator

We with ahead. Miller from Rudy question go have Please Miller Corp. Capital a

Your line is open.

Rudy Miller

How Miller. are sir? Rudy you, David,

David Raun

Good. How doing, Rudy? you

Rudy Miller

Not too bad.

Directors pleased some you shareholder to can you've accepted at vote And the so Board statement to make very past actions, actually outstanding Just have see President actually like in members. Board disappointed of and a first a and that their brought position [indiscernible] the company that and you pretty as I'd the as a today.

time sold supply with was like your of that's ago some the the I'm on as my position. and more and very major issue previous position, actions of I'd the questions firms feeling you cetera. asked because China because supply a chain. I majority but thank I their reviewing to well the as becoming chain still people So et a am two mine and position mergers, small out of management And nice. frustration who

more so to China it's address be that that You difficult there. get a handled. as macro situation that with could of did seemed that We level more the even on things being currently, know

options? chain? percent China your you of California. is helicopter for in being So what developed I'm one sound supply of options That's working have other a at that do supply or looking your is questions and you chain on been by, have Coronado, going the you've in the freedom. And that strategically of

reality. I'm been want the previous you that. understand, one months it and of on improved XXXX much kind reorg what it And Is this a to this term, where the So and is the business? I things objective to is little dollar-and-sense look And check the then ask I go? company stabilize current addressed. done questions Where at [ph], was have I trying with trying concept then the your short active six just to the And – sophisticated XXXX. to you detail, a you've to was doing hopefully and are of know to objectives. couple of with, with And management to trying with follow-up a CV-XX a question CV-XX. on strategic you on year-end? Board? double together go challenge Where smaller combined try then you've and bring is in triple challenge more what What to

appreciate color could you any if give So that, me on I'd it.

David Raun

Yes.

try comments, to you, talk and those it's But let me your for So been nice first. to thanks a hit while. it's to

started hard, hit QX, chain, in QX, started we dynamic. although we seeing the On didn't the us supply they seeing in

with we And to of additional customers had of so put worked forces expense lot and part sustaining working to especially with hit into that. more our components we plan on the sources, cost So that do that. reduction at on suppliers do to focus engineering a that a do and and the us lot adding also cost things reductions team to boards, looking like get implemented which That us. additional really well PCB could different tend

isn't more China Taiwan. But from dependence have from so China coming do we overwhelming. Our products some but

guy. to how So – interesting. finding and than of But of did issues did mean, as of done to a told lot kind first we what supply cut yes, was this sense a are and we reorg. strategic, making COVID. more sure that's time getting I actually rather in back, the the But – we And figure we just get – be a watch But to more we're would there But orders we out cash the and anyway. I've primarily of more it people, because other carefully. that have orders the value to summary kind we have Objectives a the it's frame. our we're from dominate urgency all, try I reorg impacted – one personally supply issues needed we're with there. revenue, by I of out to kind of very we we edge the products have with go within and need to that really serving do company particular is that space able but a segments on be proposition. and is there, clear customers

figure what top going there. and intent to know. five I and let Because kind please to guys go on. have That's somewhere." through just top answered – to Hopefully, we're focused? need say, we let's away working be get the the get the me out four the of out to that say five supplier find be to And so "Hey, we go marketplace in out from, have "Okay, your If the we're a next not to that's five." but need it on and we're not, the looking and it's at answers, edge big And that question. to I've space opportunity more we going that path of I'm

Rudy Miller

that's color. some No, me gave

some go employees your buying capital And there? to any long trying lesser at looking now? it in on got – any you're your I've where of get how is can and again, headcount positions putting take make before stock major you Just understand or to sure deals, to what's I

David Raun

at We're under John? XX, right, is just that

John Morrison

Yes. About XX.

David Raun

Yes.

Rudy Miller

Okay.

with And last If one other I send ask insurance problem. that don't you think and an some you the you've a of as – any have some there, or having. and things had one the some services. your headcount engineering-related what have was have an home I've [indiscernible] had how out I'll And of is is to of they two CV-XX? people calls you had having problems. interesting, been days the on with to a it – manufacturer one that or were and But XX-plus positive with people company far investments three as and found And happening and since with products services many the problems you other

David Raun

cases no do. had we've home because that's situation, the our to manufacturing take the is which and line, So key hard on

locations were a they little only So The we've of bit had it. isolated. activity had is we've of are and no that remote issues people

So pick they where person. here to issue it isolated, we being another they didn't didn't it's were and an up spread from have so

been fortunate. also we the we've People as sure we've a that team But are spread I organization stay We're lot out. following a efforts working others, really a job John's is guidelines. within Everybody of disciplined. done to good due healthy. to will and So CDC say make

Rudy Miller

that's one everybody family. to It's and great. concerned person happened will wish on my that. actually It's that. all the in Well, to with good I we And be certainly – hear call people

of one shortage of on for had insurance where manufacturer note couple company, let people. claims the know. CV-XX company, haven't touches a reserves want work. here. you for on one for or perspective, So it's won't personally you the manufacturing and since with had and A your their as their business people news, still But else the went me equate a people with see on like you came, up I the – problems other had That one that everything to see insurance future it a someone you with

of the insight. grid apply But But things you And little equity very know, a to have and/or don't didn't you people that that. system want for I we where having to that. on headcount me. their just you investors, a manufactured. have be period. watching closely. did stock ability, on gave investors a you I they color to getting it So problem were was appreciate vacation And the And I'm as David, the get problem.

So your thank time. you for

David Raun

you, Thank Rudy.

John Morrison

Rudy, to It's hear voice. thank good much. you very your

Rudy Miller

you. John, not that's

used I I just to much so can't too and younger. say, little had a you John." at "Hey, holler sound throat You like I surgery, I'm gravelly. recent

John Morrison

Well, it's hear to nice voice. your

Rudy Miller

gravelly, Guys, Well, appreciate like – question. a by and the have your travel costs on companies down be tremendously as congratulations with the back. I turnaround the the time. most Travel we're still We conferences we're in that's One I about Board. okay. invested executing and it with last with. And should but for with has little We're the cut thanks cost? it. CV-XX program. way, doing... how little we've might all And

John Morrison

of There travel of has conference a halt. on. expenses. our Every has basically is And one to sources that that been come Rudy canceled. screeching the reduced going is no

Rudy Miller

Because this, Well, or we're from with clients, the how Zooming know learn to way. seeing I I'm cetera, want get and going was you're we saying that know all only I future, that And that forward just you're private et plane. our that there's but assume and looking in it. conferences, with I things. to to on no all we're different just a

the you for Thanks closely you I'll I listen, let go. and appreciate that's So guys I watching time. Well, am time. the And it.

John Morrison

Thank sir. you,

Operator

Instructions] private have Please David a investor. go [ph], Flowers [Operator question ahead. We from

Unidentified Analyst

circumstances The PPP there $X.X are million be must that Good presentation. repaid? loan, which under not John. Hi,

John Morrison

belief Right management's forgiven. now, it's will that, be that

as to have in you which period absorb am And know, XX-week we time a I Now – those. did absorb of funds. those we

that our fully So will forgiven. it is be anticipation that,

Unidentified Analyst

the far QX versus in expenses, Great. reductions. With dollar expectations as as regard are congratulations on What QX your to expenses? the

John Morrison

in a as to Yes. that incurred in negatives. year-end, audits in that things and and did have QX, expenses such expense we like revenue additional We of in benefits also, and other the we as did there's the come quarter. as QX, There going had that, positives have QX into extra see and a towards our were risk some some are QX. we result But second severance that some we In also not uptick in some come some QX. is an that we normally incurred

the a So be little expenses fairly you'll bit. see that to will flat up

as with for expenses, example, associated expense. item, of new and compensation of it In for noncash addition, some will you'll the a stock CEO. onboarding see increase a It's noncash in QX charges additional result QX but a

Unidentified Analyst

Okay. and that inventory entertainment Great. The does any customers, cause problems? medical

John Morrison

plan inventory we the is on a to controlling invested as that amount with always And try upon have to right account. the QX, our side. well based receivable production total high that that now, inventory. that and are the inventory And able we're down. be we on QX a largest manage as accounts that We But into we'll customer. is basis, for of little bring That

Unidentified Analyst

That's company great. profitable is when I on do a you will guess GAAP be the the final question basis? think

John Morrison

things us. behind some we're putting There are

are gets with acquisitions some associated is now impairing winding of amortization purchase their you with the GAAP accounting. down So of ability be that intangibles our against profitable charged CDI things as the to on that know, income

expenses to the We the on Bressner those that non-cash We'll its go away period. is also of see have some amortization of coming side. end

we if on side. see the non-cash. initial day, said, forward. end But you're are start-up of seeing at the on quarters some ability think will a I start GAAP at the costs you're to hopefully, here to It cash moving for in stock impair going proxy of EBITDA, the the looking the profitable side comp be that's profitability As still to going I some

Unidentified Analyst

good. Great. good the Keep work. Thank guys. Very up Okay. you,

John Morrison

Thank you, David.

David Raun

you. Thank

Operator

And have back questions our remarks. no the closing to for to I'd turn time. conference more this like speakers we at

David Raun

and Scott, today. everyone, Meanwhile, up call. We and on ahead feel to joining reach you, you wrap talking look forward to to me our reporting or and any at you, Thank Jim for progress. free out the Scott, us please go the John, thank future time. in to

Operator

Thank you.

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forward-looking the of Litigation this after which date under to is no statements Safe statement, to circumstances revise reliance this Act only call, All of provision Private the in date speak You forward-looking conference are cautioned the not are undertake we and the XXXX. of entirety to thereof. Reform or obligation Harbor Securities update of cautionary this qualified events place on statements under reflect information these or undue made which as

conference. to we This everyone will be you this the end release call XX. and concludes would Before available available ir.onestopsystems.com. starting today's for Company's evening to like us today. for through the Thank Please joining press replay for via replay website instructions at dial-in today's remind later August conference, refer this I

disconnect. now may You

David Raun	President, Chief Executive Officer and Director
John Morrison	Chief Financial Officer, Treasurer and Secretary
Jim Ison	Chief Sales & Marketing Officer
Christian Bliska	NOBLE Capital
Scott Searle	ROTH Capital Partners
Rudy Miller	Miller Capital Corporation

One Stop Systems (OSS) 8 Aug 202020 Q2 Earnings call transcript