OSS - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and thank you for joining us today to discuss One Stop Systems' financial results for the first quarter ended March 31, 2021. 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 the 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 the call. in remind be today's via made in press to recorded will the like of today's will section and available release also everyone website. call that be instructions the I'd company's Investors the for replay

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

David Raun

over life have state joining starting today. the finally been encouraging results It's you you, and afternoon, XXXX to good today. months country of James, couple the have everyone. normal see last great return of to normal. with excellent us Likewise, our of the and it's also and Thank for opening some to quarter and up share to Thank the first business you for returning to we California to

$X the of first generated First, revenues. similar million, for increased expenses $X.X $XXX,XXX, points the result adjusted OSS improvement million a of record of quarter we XXXX gross in drove percentage of first of combination on adjusted quarter. EBITDA EBITDA a decreased in margins was a This and X.X positive over which

We also GAAP net company. income, quarter produced first for another first the

addition, revenue for the line quarter matching and unhindered Board include a our leadership spending, result by members. expectations to of independent year largest more the margins reorganization, laid This top we our and last focus steps diversification at first adding new front. that bottom time. new a nearly we enhanced of the was quarter, proposition was as some progress last direct This execution foundation than transformative new corporate quarter X for the value $XXX,XXX, strong which while customers steps first These and senior reduce for with tied also on performance on growth. OSS, a exceeded took by year's continued was In first line as record well the improvement pandemic better

are are Ison, developing XX% you create call, later related high-performance plays our of second giving acquisition, the today, earnings website particularly an in vehicles posted program strategy share contributed and Transportable in you insight Officer, AI plan A a on strengthen in products leadership segment the new to what our website of delivering applications, during computing of of program strategic -- of This market solutions fast-growing and autonomous with over shared fastest perfect edge market Marketing product new we marks onestopsystems.com. or the where is AI video required Transportable excellent our strength.AI long-haul applications systems, are market. long-term challenging and section we are our As Transportables. customer about and in of trucking and AI this we additional shareholder QX. for AI expanding of mobile, proposition solution. previous This example revenue vision margin it will challenging strategy Transportable ahead. our I actionable EBXXXX and for our to at example activity Transportables Earlier and be is win clear to executing intent intelligence multiyear are computing edge. business, you our the presentation to our in Sales the is a highest our Relations on win can Investor and today's After AI quickly Chief be the significant the very our computing value data it latest are for where a the XX-minute Transportable tend opportunities address in which our currently environments, on with greater recent designed value. also call. storage our call, the call at position to map we AI market more that the harsh Jim segment These accelerated more will growing, find road

I turn CFO, of John year, rest financial the for I'd the to Before will through like our details to the over into first the call Morrison, you outlook take for quarter. get John? the the who

John Morrison

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

As through while profitability. resulted executed on products, sales strong David containment achieved greater in I'd -- flow. margins where -- quarter operating realizing on for positive mentioned, efficiencies. our to the CEO's gross focused and it, the guess, it cash profitability company this revenue entire improved generated -- CFO's and improved expenses cost like reducing we key a of We this All vision. by I take Overall, and credit was CEO's

details. Now the for

to achieved similar There million, record that quarter in better to overall by quarter last mix first impacted the we as David. pandemic, which revenue not Looking by of at mentioned year. a contributed in notable operations, change of product our the and statement the was year, margins the was first in current of $XX.X customer

$X.X period. core OSS contributed to European For period. year-ago year-ago as to increased in million segments, the revenue same for as subsidiary, to in first same QX breakout in our business the in million other million the $X.X million the quarter our compared $X.X $X.X Bressner, compared our

purchasing had margins the attributable X margins products versus profit mix by was first million $X.X $X.X wins. year-ago quarter strong of million government were quarter significant a XXXX same of Likewise, as year-ago Our same XXXX, higher increased product through first to our a the business OSS compared margins. of XXXX generated included points In XX.X%, in quarterly period. design XX.X improving Bressner's for of the compared the organization as core gross period. Sky, business Data in Data of the the our first The higher to percentage that XX.X%. $X in million. improvement XU to margins increase of the of margin and focus the of in on in has Gross was increase increased million points has the predominance percentage to mix the cases, an over Pro. of an gross Center increased XX.X% These this and X.X gross customers to XX.X% quarter attributable in quarter $X same Storage an Units margins both gross to We year-ago

expenses decreased to operating in million quarter of the $X.X overall Our first XXXX. XX.X%

$X.X to of initiative from new in operations This which diluted year-ago quarter. share is that reorganizing the Adjusted compared containment the from and $X.X year-ago to primarily same the including to April expenses in operating adjusted compared streamlining compares cost per to in QX we operations of percentage the quarter. quarter revenue Our XXXX. to Income to $XX,XXX period. company decreased XX.X% cost a quarter. the income of period. net year-ago is basis, million year-ago EBITDA in negative XXXX, and $XXX,XXX of same in in reduction per same same comparison XX.X% QX million or our loss same implemented to the improvements On the EBITDA, were in non-GAAP QX $X.X due first or diluted as net Net compared This in in non-GAAP or the increased to totaled another $X.XX as on XXXX. net million share $XXX,XXX to improved of a programs. a income share $XXX,XXX $X.XX $XXX,XXX $X.XX non-GAAP basis implementing metric, in grew GAAP year-ago loss loss in per to These

turning Now our balance to sheet.

accounts our Our and team more the to to sales improve worked our hard timed days receivable payable accounts closely collections outstanding.

of $X.X the year, will further registered result, in In fortified direct and million improvements in we completed cash We're expenses, lower efficiencies gains increased a capital through realized a in was working quarter. freed significant equity As offering the of March our recall, position. working cash the capital. this also you up that combination

has loan the has cash of increasing highest quarter, history. December as $XX.X our XXXX. forgiven. to in At a and Recently, the last year company PPP that we we $X.X company's All equivalents compared a also had of learned million been balance this million of received end in the XX, that the $XX.X million, resulted cash cash

on and Chief to Our to our new plan, strong review. I financial fuel enabling would of research the us to Marketing This Ison. Sales cash strategic investing development initiatives growth, Officer, with like including to now our wisely execute our turn position products over completes Jim is Jim? and technologies. call and

Jim Ison

revenue tablet rugged wins mobile new QX, virtualized saw and Major These we point-of-sale good you, record of X X the near more with strong are of GPU a both compute account yield John, $X wins. X new Thank million bookings, within to and command center, are new a those or platform a revenue years. expected include system. with major customers. program along everyone. wins X afternoon, X wins In and

David is sales our the AI As in tied earlier, we AI the Transportable edge solutions X/X focus major mentioned our of pursuing We directly XXXX key of market. this main for XXXX are customer rugged strengths. are Over applications. Transportable and accounts see is market value to proposition

advantage. where business unmatched an AI typically competitive are us, Transportables enjoy we For higher-margin

uniquely capable edge. challenging very and AI of harsh are on most the environments We high-performance providing the in platforms

no Our edge AI high-performance data and leading the computing technology, latest and performance using very delivered center-like storage Transportable solutions with NVMe applications compromise.

inference data AI for AI Edge provide of deep neural capture, of AI some systems the world's and applications. demanding large-scale networks Our most training

AI later as virtual effective have marketing targeting to Our we resume engine in-person Transportable been expand year, reenergizing we even events, this customers. which continue is as our very events

called provide requirements Aerospace, in memory the fact, was certified division available NVMe we Transportable Set International, website. well IP the meets August, as with AI plan recently participate our encryption Summit Data our PCIe aligned to they demo The from webinar and performance, exhibits on Toshiba into is recording Defense guest well-received speaker security SAE In storage, Gold" and co-hosted a flash our at Gen AI edge. the In KIOXIA, "Turning a AI live highest strategy which formerly Equipment X, of Supercomputing. Security we at Large KIOXIA a is partner. and with

continue we set diversifying high-margin ahead, initiatives. on to base executing AI our Transportable market further driving and sight customer on our strategic Looking our sales, have new

and OSS. that, With our the QX I'd focus We opportunities growth for drive for David outlook. expansion to to like revenue over call back expect industry to turn this

David Raun

Jim. and John you, Thank

making positioned focused better stronger we growth. XXXX, and on challenging a for the During company

media the adjusted We of over first first in has sales market in multiple the in regard includes to conditions. product robust a results quarter. of positive and This bottom expect rebound second it and have OSS this delivering line were we all, increased for better revenues while for and setting our where our records started space restored quarter, their in for income the pre-COVID much $X the was year. our in and entertainment levels quarter to first a In see continue new producing made new EBITDA excellent the nicely to progress overall with improvements swing a first million virtual largest line. Even positive of quarter net customer row to

ago grown year providing opportunity million in the Our a about cash invest future. to million position over to from $XX and has $X strength today, our us

of our very and continue ahead, Looking to industry-leading the edge expertise to data the compromise. to we'll capabilities performance use without bring center the

our As fast-growing I further AI exciting I progress earlier aggressively with can to Transportable. which presentation market that on in plan position And we updating out the we and in to I greatest carve a video you mentioned my this today, listen in to you -- outlines look leverages posted leadership how our this encourage strengths. space capitalize forward to how earlier growing call,

quarter. of growth over represents $XX.X the that expectation revenue we last the This halfway for year. provide quarter, can second Now million the second XX% of quarter about a through we're

We drive also generate throughout expect continue fundamental line improvements to the results greater value. organization shareholder we've bottom positive made and to

on see revenue questions. our momentum all that, fronts, open including James? Assuming continued growth. With to call to restoration, we the I'd industry gaining like it for up progress

Operator

Instructions] [Operator Scott to I will Capital. Searle with ROTH go first

Scott Searle

it component well GPUs, disguise big and for updated a And they your on were recover. started some year? just particularly availability, like starters, as could second and into quarter? sounds us in operating of of the second to Maybe in the customer? guys give thoughts quarter us stabilized very you How terms how Maybe you're positioned memory largest difficult calibrate in has environment. and job going Nice half this

thoughts it in year, million headwind. could what $X last that's XXXX. about some give you think an if wonder of I for like us I was terms looking

David Raun

recently row, for military They first in all, produced produced this virtual doing revenue have, this them. largest let's well. we So greater large line, line. have the really our disguise. expecting in We first. gathering coming is that then than And line of bigger product and their accounts, their talk -- one about which be greater they're to is to them space quarter the with a second product And disguise, and we've talked through product

what year. the we grow So expect we're seeing that that's through and continue to to

sometime these the at to part significantly And than what numbers gathering of during for and in But large the bottom the second different part which we kick is the component year. The half number. in, of matter. growing saw this not are last supply business

another excellent Fortunately, team finding an job or the component. has one done of way

So in revenue any not our it hit way. has significant

that a end, of in are -- mid-end saying may it in comments bit more the a seem biggest type the we but the We place, -- of doesn't at very impact be playing high without the One doesn't more take This the far. ahead. market shortages making us We're right is to one decisions GPUs. goes of so That GPUs. tends we've much. plan go the inventory be to got so fact little as the

Scott Searle

how big largest your Dave, quarter? the And customer was in Great.

David Raun

share? did million We $X.X Yes. with Okay. something we that Is them. normally

Scott Searle

wondering sounds And little particularly wins, continue I'm about get like Great. to if pipeline. Jim, new of the AI in a maybe, Okay. talk area bit you it could you Transportables.

that's you've and number, out to I stages. I think of past, a in up? quarter, the XX looking the there various say that's given different were in in Kind fourth there RFPs how how shaping want

Jim Ison

Yes.

to with go, are we XX% have those. pretty chance we a come are There that ones conservative generally better we and think close. those or So

closed we're in on first later and quarter. second right XX in the the We've So X range. on details, quarter, in -- the those the already the report next X we'll and of now in closed have quarter that,

up, the are about that's they're So we add of more we're on a seeing chance half actually of a successes. and have where little we of AI winning than the continuing where Like to space Transportable the those a wins are some said, half layering margin. -- to tend at in better better

David Raun

to is Transportable company add on a trends and the the on one that Scott, these because culture of just the would I focus the focus shifting, wins the and margins that, AI of general is of increasing. quality of

that's going us. continue for to so And to pay dividends

Scott Searle

you're some newer strategic looking from of you've high AI could, level, gone And and lastly, of if Dave, a I the as review these at opportunities through Transportables.

very there higher targets over Should a be and/or somewhat Do gross great different And historically? for bit as what then in to portfolio? long-term and looking margins of tightly You up, it financial not to last than the a guys the of months. first in maybe terms wrap been like for part part things model operating go a did is you the margins have are we've now? of to you job need from technologies margin You've the well perspective gross be running quarter. some that XX to expecting little spend seen the more as that after that Are you now? currently channels we

David Raun

intent overall our as our very our The well closely. operating margins margins. year-over-year to we're Definitely, spending, is gross increase as watching

continue this be we're exec with I willing to make adding investments, a additional in We contribution that the and sit what to mode I of see staff person. down want to but the

senior because the but more do it a some revenue. a for puts in, of We're at looking run way currently will it on search salesperson talent. for tight, we are in coming and additional military looking it to we're not to going risk engineering currently, We to programs focus new where

it. I grow to and in people long And in ties to forward. those and move how continue years to future willing as that's can same it going we profitable make invest So the In justify believe we're net, process. the as can I'm the be nice

Operator

Next hear with from we'll Capital. Joe NOBLE Gomes

Joe Gomes

better going all all revenue a So I arms little to would we're see trying they handle everyone around one their wins, what the of we the mean million-plus forward. on like little opportunity things that could of of bit get but $X think get a to kind better is

about fourth year. look quarter of the in kind the Poseidon. also, a as could that range quarter military you contract the the be defense, So you potential if side I Anything that $XX million the same the then number awards. And slipped other the give you just first military contracts $X from I mentioned the you've in Poseidon that the fourth mean, win? quarter those? the mentioned would you X-year of ultimate million the type of And in on of of this revenue into won had for had got you at of your they can Are great. on size

did If $X military you Excluding be than come hopefully would those, expected were that million, that expected? in you better can answer or you the -- where great.

David Raun

Yes.

take a stab talked wins mix. have definitely a I'll then you wins other just and We let So about. let very like me Jim. at large are first The it

us together was do dropped think that. other there was one. of one? year I future question, the I the We the this years in rate. the before, growth the being bring about your And XX% it to portion -- next business. from or digits, years The lot the in of in We where the kind pipeline of that the And that that's XX% the stated putting as be the strengthen to over margins of activity focused military few we're another because we're area asked to part that XX% we the out stronger double a revenue, is. goes allows more objective What what also general is that You but just of there to our believe and XX% area. in -- get believe, -- we this that kind in want on are

Jim Ison

I size business trying think military you piece were of just the it. to

about revenue QX, Just military in XX% a OSS' reference, which in of it the revenue. our as is QX was it's of than point About XX% been was of past. overall higher

So that some can there. give indications you

win, far do vary. the As of size as they each

word Just contract, into you of is you're as when from when orders, single pricing a it's contracts, when And programs. then contract. purchase multiyear lot the win a purchase a these we a locked get as type get of orders some

announce So we we're hitting aren't even large still potential yet, larger those towards contracts. of some which do has these working a -- production when

David Raun

that. to But add me into let million quarter. was I So for question the $X moving about the of missed. your what part Thanks catching

So said, up in based other on military what Jim had business just show we QX.

think I we'll still have see in a little now. and bigger that smooth strongest growing, some is enjoying more percentage what will going the you're more we to a second accounts be half, and and but bit of that of the we're out it because

Joe Gomes

Great. Okay.

some So cash the you debt on at the other with balance of PPE sheet other sheet? forgiveness the you have comfortable the still using some of clean the the this mentioned loan, the on that you sheet debt point? all on are about Or of cash up? that Any thoughts that's balance balance do and to

John Morrison

pieces are debt. So X of there

The first part that on is debt. million our is domestic $X.X secured debt a senior

the price as know, a you disclosed at in share statements. of that financial converts As a $X.XX

likely the will those loans, government the capital converted will minimal debt purely scenario to ever So is debt rate. to at with we subsidized, be is that that associated inventory. that Bressner, to foreign unlikely And upon it's other With a any most is interest received respect that finance working be maturity. very it equity that --

David Raun

total, the For John?

John Morrison

and foreign. $X.XX difference the The is domestic then

Operator

to speakers the questions. to no I'd remarks. our have more closing turn for We back conference like

David Raun

for appreciation the their many innovation. to I'd a Jim you, ahead and in we again any James, also and and team We Meanwhile, over reach to the express and of our joining and faced we the to OSS past you everyone, thank dedication best believe journey the OSS all near to on ahead. for commitment as productivity, call. members today. support talking thank during yet go wrap James, come, reporting you, and John, our success quality especially to this has for to challenges pursue to like opportunities stockholders to growth out future us is great or our all joining look and us like the Thank I'd the to year. up to at free progress feel me time. forward of and their

Operator

Thank you.

call, facts in description made would a include and cautions wins Including or I to important Now safe current revenue One statements during presentation historical expectations. statements statements. on forward-looking the before forward-looking statements and growth company's by Systems like the products, expectations not These that statement includes for are harbor regarding the we new should those forward-looking conclude you activity. provide regarding cautions company's today's such of statements developing Stop be its is beliefs operations, risks Such differ that or are other or today's source material forward-looking call. statements M&A expect, as by concerns, of products design company's such those not pandemics without based generated that presentation in the we affect business, world from public may we develop health COVID-XX or may products market. regions results including regarded a disasters that be where in may limitation, or have the of representation our global Actual or sell customers for and the as to and OSS including, market uncertainties plans will due of inherent not in achieved. any forth the set others our

results predict to fluctuate guidance. may would results make operating expectations future significantly, and fall Our our results cause could or operating below which difficult to operating

systems, financial the and and operation acquired adversely integrate results. prove product successfully difficult technologies, to ability companies with offerings personnel our may Our affect

and rates Our share. to we to competitive existing competition subject business pressure customers market harm from and our may whom and sell sales, are may competition, companies products from new the including growth

Our enhanced becoming of is on that and new needs and products introduce proposals successfully develop to design be never customers. may The wins revenue our meet the abilities design our and uncertain likelihood our future success depends of realized.

longer such characteristics the as technology may in a needs shift unnecessary or and Our our to such industry, within and products the products to become specialized way cause of and needs needs fulfill no or functions needs fulfill may functions functions. such or functions such

harm New significant entrants rights, rely suppliers expenses our into competitive harmed our to to a we our rights. proprietary position. market design If incur support could number process. be rights and position manufacturer on We our competitive of cannot protect enforce property our we intellectual may or the limited design could

and Our and our in financial be SEC, operations with risks risk able to results. financial affect with international under financial filings remedy weaknesses described the subject us risks may our or to sales can XX-K Form we results And Commission, in additional the other in that adversely release and report SEC. operating our our and Securities heading internal in not any prior condition, we our and controls the Factors reporting, subsequent Exchange fail and our material to filings including accurately annual press on report Risk

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

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

may disconnect. now You

One Stop Systems (OSS) 14 May 212021 Q1 Earnings call transcript