Boxlight Reports Second Quarter 2019 Results

Boxlight Corporation (Nasdaq: BOXL) (Boxlight), a leading provider of interactive technology solutions for the global education market, today announced the Company's financial results for the second quarter ended June 30, 2019.

Information


Boxlight Corporation (Nasdaq: BOXL) (“Boxlight”), a leading provider of interactive technology solutions for the global education market, today announced the Company's financial results for the second quarter ended June 30, 2019.

Key Financial Highlights for Q2 2019

  • Revenues increased by 15% to $11.1 million
  • Received $15 million in customer orders
  • Gross profit margin improved by 11 basis points to 29.4%
  • Adjusted EBITDA improved by 54% to a loss of $562,000
  • Ended quarter with $5 million in backorders

Key Business Highlights for Q2 2019

  • Selected for and commenced new implementations in San Diego Unified School District, CA, Montgomery County School District, MD, Guilford County School District, NC, Chesapeake School District, VA, Provo Schools, UT, West Orange Cove Independent School District, TX, Anacortes Schools, WA, Aurora School District, CO, Stonehenge Schools, UK and Owosso Schools, MI
  • Continued roll-out implementations with Alvin Independent School District, TX, Atlanta Public Schools, GA, Clayton County Schools, GA, Collier County School District, FL, Henry County School District, GA, Highland Park Schools, TX and Tangipahoa Parish School District, LA
  • Introduced new channel partners including Virtuocomm, GA, Sussman Education, NY, Computer Hardware, NE, IA, SD, ND, and Superior Fiber and Data Services, TX
  • Launched MimioClarity audio solution and Mimio MyBot robotics and programming system at the ISTE education technology conference
  • Awarded Two Tech & Learning Best of Show Honors at the ISTE education technology conference

2019 Outlook

The current project roll-out implementation schedule, business pipeline, backlog and awarded contracts support our guidance of at least 25% revenue growth and approximately 30% gross profit margin for the second half of 2019. We expect the increase in gross profit margin over 2018 as higher margin hardware, software and professional services contribute more significantly to revenue. We are adequately capitalized to execute on our 2019 plans and to realize our growth strategy.

Management Commentary

“We continue to see strong demand for our products and services as the K-12 classroom continues to evolve with interactive learning technologies and our products and services are at the forefront of this technology transition,” commented, Mark Elliott, Boxlight’s Chief Executive Officer. “Our strong second quarter growth was driven by roll-outs and implementations across a number of school districts, including San Diego Unified School District, CA, Montgomery County School District, MD, Chesapeake School District, VA, Provo Schools, UT, Anacortes Schools, WA, Atlanta Public Schools, GA, Clayton County Schools, GA, Collier County School District, FL, Henry County School District, GA and Highland Park Schools, TX, among others. Our team continues to do a tremendous job in developing an innovative hardware, software and service solution that educators need to improve engagement and learning in the classroom. This is reflected in our recent awards and recognition at the ISTE education technology conference, several successful implementations, and our tremendous sales pipeline across the U.S. and in key international markets including EMEA and Latin America. We are targeting a record number of prospective sales opportunities and given our high success rate, we feel extremely confident in our year-over-year growth prospects. Over the past three years, we have grown our annual revenues from $20 million to $26 million to $38 million and believe we are better positioned for growth than at any other time in our history. We added several new re-seller partners including Virtuocomm, Sussman Education, Computer Hardware and Superior Fiber and Data Services, and our re-seller partner network is as strong as ever. Our re-sellers coupled with our seasoned management team, strong sales force and continued product development, help us deliver our best-in-class and award-winning interactive technology solutions to the education market globally.”

Recurring Nature of Business Model and Contracts

As the Company’s business continues to evolve, it is taking on more of a recurring revenue characteristic. School districts and counties throughout the U.S. are typically on 5-7 year technology replacement cycles. The majority of significant, school-wide awarded contracts call for multi-year roll-outs. Once in with a school district, the Company is likely to attain additional business with new products and services and replacements and is in an ideal position for next upgrade cycle.

Our relationship with Clayton County Public Schools, Georgia’s fifth-largest school district, is a great example of this recurring nature. Previously, in June 2018, Boxlight was awarded an $11 million contract to install its innovative Mimio classroom solution suite in approximately 3,200 classrooms, comprising of 37 elementary, 14 middle and 11 high schools. The installation was completed by the end of 2018. Subsequently, during the second quarter of 2019, we were awarded an additional services contract to provide a comprehensive program of training, professional development and ongoing support for the school district’s educators. We expect total revenues from this additional contract to exceed $1 million.

Financial Results for the Three Months Ended June 30, 2019:

Revenue for the three months ended June 30, 2019 was $11.1 million, an increase of $1.4 million or 15%, compared to $9.7 million for the three months ended June 30, 2018. The increase is primarily attributable to the increase in sales volume of existing products, new products and additional services.

Gross profit for the three months ended June 30, 2019 was $3.3 million, an increase of $1.5 million, compared to $1.7 million for the three months ended June 30, 2018. The resulting gross margin was 29% for the three months ended June 30, 2019, compared to 18% for the three months ended June 30, 2018.

General and administrative expenses for the three months ended June 30, 2019 was $3.9 million, an increase of $0.2 million or 4%, compared to $3.7 million for the three months ended June 30, 2018. The slight increase was the result of the acquisitions of Qwizdom and EOS.

Research and development expenses for the three months ended June 30, 2019 was $0.3 million, an increase of $0.2 million or 83%, compared to $0.2 million for the three months ended June 30, 2018. The increase was due primarily to additional software development.

Other expense for the three months ended June 30, 2019 was an expense of $0.2 million, as compared to an expense of $2.3 million for the three months ended June 30, 2018. Interest expense increase by $0.3 million as a result of increased debt for Sallyport, Radium and Lind Global loans. The change in fair value of derivative liability of $2.4 million was a result of the quarterly mark to market adjustment impacted by change in the stock price.

Operating loss for the three months ended June 30, 2019 was $1.0 million, a decrease of $1.2 million, or 55%, compared to $2.2 million for the three months ended June 30, 2018.

Adjusted EBITDA loss for the three months ended June 30, 2019 was $0.6 million, a decrease of $0.6 million or 54% compared to $1.2 million for the three months ended June 30, 2018.

Net loss for the three months ended June 30, 2019 was $1.2 million, a decrease of $3.3 million, or 74%, compared to $4.5 million for the three months ended June 30, 2018. The resulting EPS loss for the three months ended June 30, 2019 was ($0.11) per diluted share, compared to ($0.45) per diluted share for the three months ended June 30, 2018. The decrease in the net loss was primarily due to increased revenue, a decrease in operating expenses as a percentage of revenue and change in fair value of derivative liabilities.

Adjusted EPS for the three months ended June 30, 2019 was ($0.05) per diluted share, compared to ($0.13) per diluted share for the three months ended June 30, 2018.

Financial Results for the Six Months Ended June 30, 2019:

Revenue for the six months ended June 30, 2019 was $16.1 million, an increase of $0.4 million or 3%, compared to $15.7 million for the six months ended June 30, 2018.

Gross profit for the six months ended June 30, 2019 was $4.8 million, an increase of $1.6 million, compared to $3.2 million for the six months ended June 30, 2018. The resulting gross margin was 30% for the six months ended June 30, 2019, compared to 20% for the six months ended June 30, 2018.

General and administrative expenses for the six months ended June 30, 2019 was $7.7 million, an increase of $0.7 million or 11%, compared to $6.9 million for the six months ended June 30, 2018. The increase was due primarily to the acquisition of Qwizdom.

Research and development expenses for the six months ended June 30, 2019 was $0.6 million, an increase of $0.3 million or 108%, compared to $0.3 million for the six months ended June 30, 2018. The increase was due primarily to additional software development.

Other expense for the six months ended June 30, 2019 was an expense of $2.5 million, as compared to an expense of $1.4 million for the six months ended June 30, 2018. Interest expense increase by $0.4 million from loans entered into with Lind Global and Radium. The change in fair value of derivative liability of $0.7 million was a result of the quarterly mark to market adjustment impacted by change in the stock price.

Operating loss for the six months ended June 30, 2019 was $3.4 million, a decrease of $0.6 million, or 15%, compared to $4.0 million for the six months ended June 30, 2018.

Adjusted EBITDA loss for the six months ended June 30, 2019 was $2.4 million, remaining flat compared to the six months ended June 30, 2018.

Net loss for the six months ended June 30, 2019 was $5.8 million, an increase of $0.5 million, or 9%, compared to $5.4 million for the six months ended June 30, 2018. The resulting EPS loss for the six months ended June 30, 2019 was ($0.56) per diluted share, compared to ($0.55) per diluted share for the six months ended June 30, 2018.

Adjusted EPS for the six months ended June 30, 2019 was ($0.23) per diluted share, compared to ($0.24) per diluted share for the six months ended June 30, 2018.

Second Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the second quarter 2019 financial results on Tuesday, August 13, 2019 at 4:30 p.m. Eastern Time. The conference call details are as follows:

 

Date:

Tuesday, August 13, 2019

Time:

4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time

Dial-in:

1-844-407-9500 (Domestic)

1-862-298-0850 (International)

Webcast:

https://www.investornetwork.com/event/presentation/52022

 

For those unable to participate during the live broadcast, a replay of the call will also be available from 7:30 p.m. Eastern Time on August 13, 2019 through 11:59 p.m. Eastern Time on November 13, 2019 by dialing 1-877-481-4010 (domestic) and 1-919-882-2331 (international) and referencing the replay pin number: 52022.

Use of Non-GAAP Financial Measures

To supplement Boxlight’s financial statements presented on a GAAP basis, Boxlight provides EBITDA, Adjusted EBITDA and Adjusted EPS as supplemental measures of its performance.

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA, Adjusted EBITDA and Adjusted EPS as non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation and change in fair value of derivative liabilities. Adjusted EPS represents Adjusted EBITDA divided by the number of fully diluted shares outstanding. Our management uses EBITDA, Adjusted EBITDA, and Adjusted EPS as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time. We find this especially useful when reviewing pro forma results of operations, which include large non-cash amortizations of intangible assets from acquisitions and stock-based compensation. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

About Boxlight Corporation

Boxlight Corporation (Nasdaq: BOXL) (“Boxlight”) is a leading provider of technology solutions for the global education market. The company aims to improve learning and engagement in classrooms and to help educators enhance student outcomes, by developing the products they need. The company develops, sells, and services its integrated, interactive solution suite including software, classroom technologies, professional development and support services. For more information about the Boxlight story, visit http://www.boxlight.com.

Forward Looking Statements

This press release 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, competition in the industry, etc. Boxlight encourages you to review other factors that may affect its future results in Boxlight's filings with the Securities and Exchange Commission.

 
Boxlight Corporation
Consolidated Balance Sheets
 
 

June 30

December 31

2019

2018

ASSETS
 
Current asset:
Cash and cash equivalents

$

945,389

 

$

901,459

 

Accounts receivable-trade, net of allowances

 

7,391,438

 

 

3,634,726

 

Inventories, net of reserves

 

3,249,590

 

 

4,214,316

 

Prepaid expenses and other current assets

 

1,475,186

 

 

1,214,157

 

Total current assets

 

13,061,603

 

 

9,964,658

 

 
Property and equipment, net of accumulated depreciation

 

209,641

 

 

226,409

 

Intangible assets, net of accumulated amortization

 

5,994,817

 

 

6,352,273

 

Goodwill

 

4,723,549

 

 

4,723,549

 

Other assets

 

302

 

 

298

 

Total Assets

$

23,989,912

 

$

21,267,187

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable and accrued expenses

$

4,714,287

 

$

1,883,626

 

Accounts payable and accrued expenses - related parties

 

5,393,354

 

 

6,009,112

 

Warranty

 

652,541

 

 

580,236

 

Short-term debt

 

4,077,626

 

 

2,306,227

 

Short-term debt - related parties

 

435,668

 

 

377,333

 

Current portion of earn-out payable - related party

 

196,654

 

 

136,667

 

Deferred revenues - short-term

 

333,732

 

 

938,050

 

Derivative liabilities

 

2,268,272

 

 

326,452

 

Other short-term liabilities

 

37,189

 

 

5,128

 

Total current liabilities

 

18,109,323

 

 

12,562,831

 

 
Deferred revenues - long-term

 

115,406

 

 

134,964

 

Earn-out payable - related party

 

213,346

 

 

273,333

 

Long-term debt - related party

 

217,562

 

 

328,000

 

Long-term debt

 

1,846,365

 

 

-

 

Total liabilities

 

20,502,002

 

 

13,299,128

 

 
Commitments and contingencies
 
Stockholders's equity:
Preferred stock, $0.0001 par value, 50,000,000 shares authorized; 250,000 shares issued and outstanding

 

25

 

 

25

 

Common stock, $0.0001 par value, 200,000,000 shares authorized; 10,588,118 and 10,176,433 Class A shares issued and outstanding, respectively

 

1,059

 

 

1,018

 

Additional paid-in capital

 

28,664,527

 

 

27,279,931

 

Subscriptions receivable

 

(200

)

 

(225

)

Accumulated deficit

 

(25,055,896

)

 

(19,206,271

)

Other comprehensive loss

 

(121,605

)

 

(106,419

)

Total stockholders' equity

 

3,487,910

 

 

7,968,059

 

 
Total liabilities and stockholders' equity

$

23,989,912

 

$

21,267,187

 

 
Boxlight Corporation
Consolidated Statement of Operations
 
 
Three Months Ended Six Months Ended
June 30, June 30,
 

2019

2018

2019

2018

 
Revenues

$

11,096,016

 

$

9,663,657

 

$

16,108,730

 

$

15,660,342

 

Cost of Revenues

 

7,847,790

 

 

7,938,340

 

 

11,275,964

 

 

12,454,053

 

Gross Profit

 

3,248,226

 

 

1,725,317

 

 

4,832,766

 

 

3,206,289

 

 
Operating Expense:
General and administrative expenses

 

3,894,154

 

 

3,726,585

 

 

7,654,266

 

 

6,920,598

 

Research and development expenses

 

324,582

 

 

177,098

 

 

560,578

 

 

269,603

 

Total operating expense

 

4,218,736

 

 

3,903,683

 

 

8,214,844

 

 

7,190,201

 

 
Loss from operations

 

(970,510

)

 

(2,178,366

)

 

(3,382,078

)

 

(3,983,912

)

 
Other income(expense):
Interest expense, net

 

(479,022

)

 

(207,271

)

 

(759,625

)

 

(354,199

)

Other income (expense), net

 

23,670

 

 

16,732

 

 

44,879

 

 

3,271

 

Gain on settlement of liabilities, net

 

-

 

 

103,560

 

 

146,434

 

 

129,298

 

Change in fair value of derivative liabilities

 

263,260

 

 

(2,191,677

)

 

(1,899,235

)

 

(1,156,518

)

Total other expense

 

(192,092

)

 

(2,278,656

)

 

(2,467,547

)

 

(1,378,148

)

 
Net Loss

$

(1,162,602

)

$

(4,457,022

)

$

(5,849,625

)

$

(5,362,060

)

 
Comprehensive loss:
Net Loss

$

(1,162,602

)

$

(4,457,022

)

$

(5,849,625

)

$

(5,362,060

)

Other comprehensive income (loss):
Foreign currency translation gain (loss)

 

22,962

 

 

(30,549

)

 

(15,185

)

 

(25,686

)

Total comprehensive loss

$

(1,139,640

)

$

(4,487,571

)

$

(5,864,810

)

$

(5,387,746

)

 
Net loss per common share - basic

 

(0.11

)

 

(0.45

)

 

(0.56

)

 

(0.55

)

Net loss per common share - diluted

 

(0.11

)

 

(0.45

)

 

(0.56

)

 

(0.55

)

 
Weighted average number of common shares outstanding - basic

 

10,590,451

 

 

9,810,905

 

 

10,424,054

 

 

9,760,427

 

Weighted average number of common shares outstanding - diluted

 

10,590,451

 

 

9,810,905

 

 

10,424,054

 

 

9,760,427

 

 
Boxlight Corporation
Reconciliation of Net Loss to Adjusted EBITDA
 
Three Months Ended
June 30,
 

2019

2018

Net Loss

$

(1,163

)

$

(4,457

)

Depreciation and amortization

 

225

 

 

194

 

Interest expense

 

479

 

 

207

 

EBITDA

$

(459

)

$

(4,056

)

Stock compensation expense

 

160

 

 

636

 

Change in fair value of derivative liabilities

 

(263

)

 

2,192

 

Adjusted EBITDA

$

(562

)

$

(1,228

)

 
 
 

Boxlight Corporation

Reconciliation of Net Loss to Adjusted EBITDA

 
Six Months Ended
June 30,
 

2019

2018

Net Loss

$

(5,850

)

$

(5,362

)

Depreciation and amortization

 

467

 

 

382

 

Interest expense

 

760

 

 

354

 

EBITDA

$

(4,623

)

$

(4,626

)

Stock compensation expense

 

321

 

 

1,111

 

Change in fair value of derivative liabilities

 

1,899

 

 

1,157

 

Adjusted EBITDA

$

(2,403

)

$

(2,358

)