Moving iMage Technologies 2027 Q1 Earnings Call

Please go ahead. Thank you, operator, and thank you all for joining today's call.

MiT President Francois Godfrey will provide a business overview, and CFO Bart Bedard will discuss some financial highlights, after which we will open the call to investor questions. Today's conference is being recorded, and an audio replay and written transcript will be posted to the investors section of the Moving iMage website in the next few days. As a reminder, except for historical information, the matters discussed on this call are forward-looking statements that involve several risks and uncertainties. Words like believe, expect, and anticipate mean that these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will take place. Actual future results could differ materially from those statements.

Further information on the company's risk factors is contained in the company's quarterly and annual reports filed with the SEC. I will now turn the call over to MiT President Francois Godfrey.

Thanks, Chris, and thank you all for your interest in Moving iMage Technologies. We are pleased with our first quarter performance, as it benefited from some of the positive underlying dynamics within the exhibition industry, including two customer projects which were accelerated into the period. As a result, our first quarter revenue rose by 9.2% to $6.1 million, benefiting from DCS loudspeaker sales and increased customer project activity in preparation for the critical holiday feature film release window. The accelerated project timelines caused our Q1 performance to exceed our earlier outlook. Of course, the timing of small and large projects can easily shift a few quarters as customers move implementations forward or back to meet internal operating or financial goals or priorities, creating potential variability in our quarter-over-quarter results. Importantly, we were able to generate positive net income for the quarter.

While we don't want to overemphasize the significance of a single reporting period, I do want to highlight the skill and dedication of our team to serving customers while maintaining a disciplined approach to operating efficiency. As we pursue new avenues of growth potential, we remain firmly focused on building a sustainable business model with the potential to generate profitable growth. As I alluded, we remain encouraged by the industry backdrop and solid box office performances, which are traditionally the strongest indicators for capital investments in new or upgraded cinema technology. Movie industry analysts continue to express optimism about the film slate over the next 12 months, supported by renewed customer enthusiasm for the theatrical experience. We believe this provides exhibitors with greater confidence in the long-term prospects of their business while also providing needed cash flow to fund new equipment and auditorium upgrades.

We believe our expanded product portfolio, including PLF and immersive audio solutions, positions us well to participate in these opportunities as exhibitors evaluate their capital investment priorities for the coming year. As exhibitors seek to maximize attendance, premium large-format auditoriums and immersive audio solutions remain a key pathway to differentiate their venues and enhance the moviegoing experience. Given the technical complexity and scope of such projects, they remain important revenue opportunities for MiT. I am pleased to report that we are seeing a more robust level of activity in our industry, and we are engaged in discussions surrounding several potential projects that could contribute to our business in calendar 2027. These conversations include some meaningful potential opportunities for LEA Professional amplifiers, an industry-leading product line we began working with four years ago and is continuing to gain long-term operational acceptance.

The addition of the DCS loudspeaker line to our business has helped build interest by enabling us to offer a comprehensive audio solution. Having referenced DCS, let me provide an update on the acquisition, which we closed early in the second quarter of last fiscal year. Overall, we are very pleased with how things are going, though there have been some challenges in incorporating the DCS operations into MiT and ramping up our manufacturing and global logistics. As we expected, customer interest is very strong, both with legacy DCS customers around the world and with new prospects. However, it does take time to rebuild the rapport with each customer and to build trust and credibility about our commitment to the quality and service they expect. Our team is progressing well in this regard in a financially disciplined manner.

The net result is that we continue to see great value in expanding our base of proprietary products to provide us entry and competitive advantage in the marketplace. It takes time to establish ourselves with this product, but since closing the acquisition about a year ago, our team has generated total sales of $1.3 million from over 20 countries, approaching the $1.5 million in total consideration paid in the purchase. As is typical in the cinema exhibition industry, customer capital spending activity slows substantially during the November and December holiday season. This upgrade pause allows exhibitors to maximize their revenue opportunity while they also work internally to complete budgeting and planning for theater upgrade priorities for the year ahead.

We look forward to customers releasing their budget plans in the new calendar year so we can work to secure some of their projects and build that outlook into our public outlook for investors. At this point, we have a favorable outlook for project activity leading up to the holiday film release season. Finally, as we have discussed previously, MiT continues to evaluate the merits of potential business combinations or other strategic transactions that we believe could enhance our competitive position, growth potential, and financial results for our shareholders. Now, I'll turn the call over to our CFO, Bart Bedard, to review the financial highlights.

We published our financial statements in this morning's press release and expect to file a Form 10-Q later today. Now I'll briefly walk through our financial results. MiT's Q1 2027 revenue increased 9.2% to $6.09 million, compared with $5.58 million in Q1 of 2026. The increase was principally attributable to two customers who accelerated the timing of projects by one quarter into Q1 of 2027, putting our results well ahead of our prior outlook. This is a very clear example of how the timing of larger customer projects can have on our quarter results and comparisons to other periods. Our Q1 2027 results also benefited from $429,000 of DCS loudspeaker sales, including a large shipment to a customer in Sri Lanka, compared to $400,000 in DCS revenue in Q4 of 2026, and no revenue in the year-ago period prior to the purchase of DCS.

Our DCS order backlog is approximately $459,000 today, and we are pleased with the pace of reception and inquiry by customers for the DCS line one year following the acquisition. Gross margin percentage in Q1 of 2027 decreased to 24.1% compared to 30% in Q1 of 2026, reflecting lower sales of high-margin cinema accessories products and increased costs. Higher global transportation and input costs, particularly in international markets, also contributed to margin pressure during the quarter, increasing the cost of delivering products and equipment to customers. Our Q1 2027 gross profit was $1.47 million compared with $1.67 million in the prior year period, with the decrease attributed to the lower gross margin. Q1 2027 operating expense declined to $1.3 million from $1.32 million in Q1 2026, as MiT continued to benefit from certain cost initiatives put in place the past several quarters.

Q1 of 2027 net income was $181,000, or $0.02 per share, compared with net income of $509,000, or $0.05 per share, in Q1 of 2026. The decrease was due to the lower gross profit, as well as $128,000 of income from the extinguishment of payables that was recorded in Q1 of 2026. Turning to our balance sheet, we had working capital of $4.24 million at the close of Q1 2027, compared to $4.04 million in Q1 of 2026. MiT has no long-term debt. We closed Q1 2026 with net cash of $5.69 million and approximately $0.55 per common share, compared to net cash of $3.19 million in Q4 of 2026. The sequential increase reflects the management of the timing of accounts payable payments, as well as $1 million in customer deposits collected against future work.

Turning to our revenue outlook, MiT currently anticipates revenue of approximately $5.4 million in our fiscal 2027 second quarter ending December 31, supported by the delivery of a turnkey upgrade of a 16-screen theater complex. In summary, achieving positive net income this quarter is an encouraging milestone that reflects our solid customer engagement and the progress we have made in aligning our expense structure with the business. Our priority remains to build on this foundation through disciplined execution, profitable growth, and the conversion of our customer pipeline into revenue-generating projects. With that overview, operator, we are ready to begin the Q&A session.