One Stop Systems(US:OSS)2021-05-14 14:53Financial Data and Key Metrics Changes - The company achieved revenue of $13.3 million in Q1 2021, similar to the record first quarter of the previous year, which was not impacted by the pandemic [16] - Adjusted EBITDA improved by $2 million compared to Q1 2020, reaching a record $1.1 million for OSS in the first quarter [6][7] - GAAP net income was $21,000 in Q1 2021, compared to a net loss of $1.1 million in the same period last year [20] - Non-GAAP net income improved to $643,000 or $0.03 per diluted share in Q1 2021, compared to a non-GAAP net loss of $714,000 or $0.04 per diluted share in the same year-ago period [21] - Cash and cash equivalents increased to $19.6 million, the highest in the company's history, up from about $3 million a year ago [23][24] Business Line Data and Key Metrics Changes - The core OSS business revenue increased to $8.6 million compared to $8.4 million in the same year-ago period [16] - Bressner, the European subsidiary, contributed $4.7 million in Q1, down from $4.9 million in the same year-ago period [17] - Gross profit in Q1 2021 was $4.4 million, an increase of $1 million from $3.4 million in Q1 2020, with gross margins of 33.3%, up 7.9 percentage points year-over-year [17][18] Market Data and Key Metrics Changes - The military segment accounted for approximately 37% of OSS' revenue in Q1, which is higher than in previous periods [58] - The company expects military business to grow from 30% to 40% or 50% over the next few years due to increased focus and activity in that area [56] Company Strategy and Development Direction - The company is executing a long-term strategic vision focused on AI Transportables, which are mobile, high-performance computing systems for edge computing applications [9][10] - AI Transportables contributed over 25% of the revenue in Q1, marking it as the fastest-growing and highest-margin segment of the business [11] - The company aims to drive revenue growth and industry expansion opportunities through strategic sales and diversification of the customer base [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the business and market conditions, expecting continued improvements in overall performance [33] - The company anticipates revenue of approximately $14.4 million for Q2 2021, representing a 24% growth over the same quarter last year [36] - The management highlighted the importance of maintaining a strong cash position to invest in future growth initiatives [24][34] Other Important Information - The company completed a registered direct equity offering to strengthen its cash position [23] - The $1.5 million PPP loan received last year has been forgiven, further enhancing the company's financial stability [23] Q&A Session Summary Question: Can you provide updates on your largest customer and component availability? - The largest customer generated $3.3 million in revenue during the quarter, with a positive outlook for their virtual product line [43][39] - Component supply issues have not significantly impacted revenue, particularly as the company focuses on high-end GPUs [40][41] Question: How is the pipeline for AI Transportables looking? - The company has around 24 RFPs in various stages, with a conservative estimate of a 60% or better chance to close [44][45] - The quality of wins is improving due to a focus on margins and AI Transportable solutions [47] Question: What is the potential of military contracts and overall revenue growth? - Military business is expected to grow significantly, with a target of double-digit growth this year and aiming for 20% growth in future years [56][58] - Military contracts accounted for about 25% of overall revenue in Q1 [58] Question: What is the status of the company's debt and cash management? - The company has $2.5 million in senior secured debt, which is likely to convert to equity upon maturity, and minimal foreign debt associated with working capital [61][62]