Press Release

Boxlight Corporation Reports Third Quarter 2018 Financial Results

Company Release - 11/13/2018 4:05 PM ET
  • Revenue increase of 27% year-over-year to $25.9 million for the first nine months of 2018
  • $5.7 million in deferred revenue and over $4 million in backorders at September 30, 2018
  • Projecting $11 million in revenue for Q4 2018, an increase of 100% over the same period in 2017

LAWRENCEVILLE, Ga.--(BUSINESS WIRE)-- Boxlight Corporation (Nasdaq: BOXL) (“Boxlight”), a leading provider of technology solutions for the global education market, today announced the Company's financial results for the third quarter ended September 30, 2018.

Management Commentary

“Momentum was strong through the important back-to-school season, helping drive a 27% year-over-year increase in revenues for the first nine months of 2018,” commented Mark Elliott, Chief Executive Officer of Boxlight. “Additionally, we ended the quarter with $5.7 million in deferred revenue of which we expect to recognize over $4 million in the fourth quarter. During the quarter, we provided Boxlight’s products to thousands of classrooms across the U.S., including new installations in McMinn County Schools in Tennessee, Huntington Beach City Schools in California and Connellsville Schools in Pennsylvania.”

“We also continue to expand our reach in key international markets including Europe and Latin America. We’ve successfully grown our sales pipeline in those markets, and are pleased to enter the fourth quarter with the largest sales pipeline in our history.”

Mr. Elliott concluded, “We are projecting the fourth quarter of this year will be the strongest in our history with over $11 million in revenue. Importantly, we see a significant opportunity to continue our growth trajectory well into the future through product introductions, growth in our re-seller network and through strategic acquisitions. It is an exciting time at Boxlight. Our mission to improve learning and engagement in classrooms, and to help educators enhance student outcomes, is taking hold as we continue to grow our reach and relevance in classrooms around the world.”

Third Quarter 2018 Financial Highlights

  • Revenue of $10.2 million was flat with the third quarter of 2017.
  • Gross profit of $2.4 million decreased 16.1%, from $2.9 million in the prior year period. Gross margin was 23.9% compared to 28.4% in the third quarter of 2017. The year-over-year decline in gross margin largely reflects a larger concentration of interactive panel sales with lower product margins.
  • Operating expenses of $4.4 million increased from $2.4 million in the third quarter of 2017, primarily driven by a $2.0 million increase in general and administrative expenses, which includes higher operational costs of $0.6 million related to new acquisitions, professional fees of $0.5 million related to a management advisory agreement and legal fees related to acquisition transactions and registration filings, and stock compensation of $0.4 million.
  • Net loss was $(1.2) million, or $(0.12) per diluted share, compared to net income of $0.5 million, or $0.08 per diluted share, in the third quarter of 2017. Adjusted EPS was a loss of $(0.11) per diluted share compared to a gain of $0.14 per diluted share in the third quarter of 2017. The increase in the net loss and net loss per diluted share was primarily due to an increase in cost of sales, commissions, stock compensation expense and professional fees.
  • Adjusted EBITDA was a loss of $(1.1) million compared to a gain of $0.8 million in the third quarter of 2017.

Year-to-Date 2018 Financial Highlights

  • Revenue of $25.9 million increased 26.7% from $20.4 million in the first nine months of 2017. Revenue growth reflects increased sales volume driven by greater adoption of Boxlight’s product solution suite.
  • Gross profit of $5.6 million decreased 3.0%, from $5.8 million in the first nine months of 2017. Gross margin was 21.8% compared to 28.5% in the first nine months of 2017. The year-over-year decline in gross margin is primarily due to a larger concentration of interactive panel sales with lower product margins including two large projects in Buford, South Carolina and Clayton County, Georgia.
  • Operating expenses of $11.6 million increased from $7.4 million in the first nine months of 2017, primarily driven by a $4.1 million increase in general and administrative expenses, which includes higher stock compensation of $1.6 million, professional fees of $0.5 million related to a management advisory agreement, salaries of $0.5 million and additional operating costs for acquisitions of $0.8 million.
  • Net loss was $(6.6) million, or $(0.66) per diluted share, compared to a net loss of $(1.9) million, or $(0.39) per diluted share, in the first nine months of 2017. Adjusted EPS was a loss of $(0.35) per diluted share compared to a loss of $(0.17) per diluted share in the first nine months of 2017. The increase in the net loss and net loss per diluted share was primarily due to an increase in cost of sales, stock compensation expense and a change in fair value of derivative liabilities.
  • Adjusted EBITDA was a loss of $(3.5) million compared to a loss of $(0.8) million in the first nine months of 2017.

Operational Highlights

On August 27, 2018, the Company announced that McMinn County School System in Athens, Tennessee, will be adding 115 of Boxlight’s ProColor interactive flat panels to classrooms as part of its “Even the Playing Field” classroom initiative. Last year, the district purchased and installed 267 ProColor Units, making for a total purchase of 382 interactive flat panels displays with an anticipated completion date by the end of 2018.

On August 29, 2018, Boxlight announced that it was recognized by The Edvocate as a finalist in the 2018 Tech Edvocate Awards for its interactive touch technology offerings of MimioFrame and MimioSpace.

On September 13, 2018, Boxlight announced that California’s Huntington Beach City School District added 60 of its MimioSpace collaborative systems to its classrooms in order to support its expanding technology initiative. The district partnered with Boxlight and premiere reseller partner OnPoint to bring collaborative technology to classrooms in nine schools throughout the district.

On September 24, 2018, the Company announced its acquisition of EOS Education, a consulting and professional development company for the K-12 education market. EOS Education’s training, professional development and support will enable Boxlight to provide a more robust portfolio of end-to-end services which complement the company’s comprehensive suite of hardware and software solutions, providing educators the training they need to fully leverage the technology’s full range of possibilities. The acquisition also brings significant management talent to Boxlight by adding Daniel Leis and Dr. Aleksandra Leis, both with a strong track record of managing high-growth professional services businesses in emerging markets and sectors. EOS Education will operate as a division of Boxlight.

Third quarter 2018 Financial Results Conference Call

Management will host a conference call to discuss the third quarter 2018 financial results today, Tuesday, November 13, 2018 at 4:30 p.m. Eastern Time. The conference call details are as follows:

     
Date: Tuesday, November 13, 2018
Time: 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time
Dial-in:

1-877-407-9716 (Domestic)
1-201-493-6779 (International)

Conference ID: 13684610
Webcast:

http://public.viavid.com/index.php?id=132040

 

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 November 13, 2018 through 11:59 p.m. Eastern Time on November 27, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13684610.

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 in accordance with U.S. generally accepted accounting principles, or GAAP, with EBITDA and Adjusted EBITDA, non-GAAP financial measures of earnings. EBITDA represents net income before income tax expense (benefit), interest income, interest expense, depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock-based compensation. Our management uses EBITDA and Adjusted EBITDA 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

         
September 30, December 31,
2018 2017
 
ASSETS
Current assets:
Cash and cash equivalents $ 1,586,413 $ 2,010,325
Accounts receivable – trade, net of allowances 6,625,980 3,089,932
Inventories, net of reserve 3,905,498 4,626,569
Deferred charges 3,449,710 -
Prepaid expenses and other current assets   1,602,017     388,006  
Total current assets 17,169,618 10,114,832
 
Property and equipment, net of accumulated depreciation 286,131 29,752
Intangible assets, net of accumulated amortization 6,795,851 6,126,558
Goodwill 4,483,069 4,181,991
Other assets   481     292  
Total assets $ 28,735,150   $ 20,453,425  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable and accrued expenses $ 2,989,146 $ 2,502,962
Accounts payable and accrued expenses – related parties 5,482,802 4,391,713
Warranty reserve 978,918 491,956
Short-term debt 2,938,389 752,449
Short-term debt – related party 327,333 54,000
Current portion of earn-out payable – related party 136,667 -
Convertible notes payable – related party 50,000 50,000
Deferred revenues – short-term 5,749,610 1,127,423
Derivative liabilities   1,088,423     1,857,252  
Total current liabilities   19,741,288     11,227,755  
 
Long-term debt – related party 382,667 -
Earn-out payable - related party 273,333 -
Deferred revenues – long-term   163,353     175,294  
 
Total liabilities   20,560,641     11,403,049  
 
Commitments and contingencies
 
Stockholders’ 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; 10,170,120 and 9,558,997 Class A shares issued and outstanding, respectively 1,017 956
Additional paid-in capital 26,850,520 21,125,956
Subscriptions receivable (225 ) (325 )
Accumulated deficit (18,605,459 ) (12,028,388 )
Other comprehensive loss   (71,369 )   (47,848 )
Total stockholders’ equity   8,174,509     9,050,376  
 
Total liabilities and stockholders’ equity $ 28,735,150   $ 20,453,425  
 
 
Boxlight Corporation
Consolidated Statements of Operations and Comprehensive Loss
 
 
     

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

2018     2017 2018     2017
       
Revenues, net $ 10,195,968 $ 10,228,389 $ 25,856,310 $ 20,407,258
Cost of revenues   7,763,617     7,327,701     20,217,670     14,595,780  
Gross profit   2,432,351     2,900,688     5,638,640     5,811,478  
 
Operating expense:
General and administrative expenses 4,262,707 2,295,101 11,183,305 7,049,288
Research and development   98,952     60,403     368,555     357,955  
Total operating expense   4,361,659     2,355,504     11,551,860     7,407,243  
 
Income (loss) from operations   (1,929,308 )   545,184     (5,913,220 )   (1,595,765 )
 
Other income (expense):
Interest expense, net (188,457 ) (186,883 ) (542,656 ) (462,581 )
Other income (expense), net 38,796 111,993 42,067 153,157
Change in fair value of derivative liabilities 821,528 - (334,990 ) -
Gain from settlements of liabilities   36,080     -     165,378     -  
Total other income (expense)   707,947     (74,890 )   (670,201 )   (309,424 )
 
Net income (loss) $ (1,221,361 ) $ 470,294   $ (6,583,421 ) $ (1,905,189 )
 
Comprehensive income (loss):
Net income (loss) $ (1,221,361 ) $ 470,294 $ (6,583,421 ) $ (1,905,189 )
Other comprehensive income (loss):
Foreign currency translation gain (loss)   (18,875 )   (18,012 )   (44,561 )   (34,538 )
Total comprehensive income (loss) $ (1,240,236 ) $ 452,282   $ (6,627,982 ) $ (1,939,727 )
 
Net income (loss) per common share – basic $ (0.12 ) $ 0.09   $ (0.66 ) $ (0.39 )
Net income (loss) per common share – diluted $ (0.12 ) $ 0.08   $ (0.66 ) $ (0.39 )
Weighted average number of common shares outstanding – basic   10,095,889     5,379,762     9,946,737     4,910,245  

Weighted average number of common shares outstanding – diluted

  10,095,889     5,810,755     9,946,737     4,910,245  
 
 
Boxlight Corporation
Reconciliation of Net Loss to EBITDA
 
 
     

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

2018     2017 2018     2017
       
Net income (loss) $ (1,221 ) $ 470 $ (6,583 ) $ (1,905 )
Depreciation and amortization 248 184 630 559
Interest expense   188     187   543     463  
EBITDA $ (785 ) $ 841 $ (5,410 ) $ (883 )
 
 
Boxlight Corporation
Reconciliation of Net Loss to Adjusted EBITDA
 
 
     

Three Months Ended
September 30,

   

Nine Months Ended
September 30,

2018     2017 2018     2017
       
Net income (loss) $ (1,221 ) $ 470 $ (6,583 ) $ (1,905 )
Depreciation and amortization 248 184 630 559
Interest expense 188 187 543 463
Stock compensation expense 457 (35 ) 1,567 50

Change in fair value of derivative liability

  (822 )   -     335     -  
Adjusted EBITDA $ (1,150 ) $ 806   $ (3,508 ) $ (833 )

Media:
Nickel Communications
Charlotte Andrist, +1-770-310-5244
charlotte@nickelcommpr.com
or
Investor Relations:
Boxlight Corporation
Michael Pope, +1-360-464-4478
michael.pope@boxlight.com
or
Addo Investor Relations
Laura Bainbridge, +1-310-829-5400
investor.relations@boxlight.com

Source: Boxlight Corporation