One Stop Systems, Inc. (Nasdaq: OSS), a leader in rugged
high-performance compute (HPC) for artificial intelligence (AI),
machine learning (ML) and sensor processing at the edge, reported
results for the fourth quarter and twelve months ended December 31,
2023. All quarterly and twelve-month comparisons are to the same
year-ago period unless otherwise noted.
“2023 was a transformative year for OSS, highlighted by a new
management team, new board members, and a successful transition
away from lower margin media revenues to our strategic plan focused
on large and rapidly growing global markets driven by AI and ML,”
stated OSS president and CEO, Mike Knowles. “Although revenue for
2023 reflects a $13.7 million year-over-year impact from reduced
media revenue, our overall gross margin increased by 130 basis
points for the year and 640 basis points for the fourth quarter.
This gross margin improvement demonstrates the early success of our
focus on higher margin sales supported by our AI Transportables
growth strategy.”
“During the second half of 2023, we began an extensive review of
our go-to-market strategy and sales pipeline to align with our
strategic focus on AI Transportables within the commercial and
defense markets,” continued Knowles. “After a prudent review and
qualification process, our five-year, unfactored pipeline has
increased to over $1 billion as compared to $850 million just four
months ago. This growth is being driven by increasing interest in
AI/ML solutions, our enhanced sales and marketing platform, new
collaborative relationships, and our expanding engagements with
large prime contractors. As we convert our pipeline to orders, we
believe we are well positioned to return to year-over-year sales
growth in the second half of 2024, with improved gross
margins.”
Q4 2023 Operational Highlights
- Won a multi-million-dollar U.S.
government program with Leidos’ Dynetics, a provider of
mission-critical solutions, for an emerging specialized mobile AI
signal collection application. The award is the first multi-year
win OSS has secured with this prime contractor and is valued at
approximately $2.5 million to $3.5 million over the next three
years, with an initial award of $500,000.
- Unveiled a Gen 5 short-depth server
(SDS), at Super Compute 23, the international conference for high
performance computing. Powered by four PCIe NVIDIA H100 Tensor Core
GPUs, the OSS Gen 5 SDS addresses the growing demand for more
powerful AI compute, storage and latency performance at the
edge.
- Commenced a multi-year design and
manufacturing collaboration for FLYHT Aerospace’s automated flight
information reporting systems (AFIRS™) Edge family. The design and
manufacturing agreement with FLYHT is valued at a minimum of $6
million over the initial five-year term.
- Booked an additional award from the
U.S. Army Ground Vehicle Systems Center for the 360 Degree
Situational Awareness program to include sensor processing for
video data, increasing OSS scope to all rugged compute and
switching for the full system solution.
- Continued to reprofile the board of
directors, including the appointments of Mitchell Herbets and
Joseph Manko, Jr. to the company’s board.
Outlook
The company anticipates revenue of approximately $12.5 million
in the first quarter of 2024.
Q4 2023 Financial Summary
Consolidated revenue decreased 27.9% to $13.2 million due to
lower shipments to a former media customer that have now ended,
which impacted fourth quarter sales by approximately $3.1 million.
The decrease in sales was also due to softer economic conditions
and timing delays associated with certain government programs.
OSS segment revenue declined 43.5% to $6.4 million due to the
factors mentioned above. Bressner segment revenue decreased 2.5% to
$6.8 million.
Consolidated gross margin percentage increased 640 basis points
to 33.7%, from 27.3% in the same year-ago quarter. OSS segment
gross margin increased 14.5 percentage points to 45.9%,
attributable to the absence of lower margin media revenue and
costs, and the higher mix of its rugged edge processing products.
Bressner’s gross margin improved 1.6 percentage points to 22.2%, as
compared to 20.5% in the year-ago quarter, due to product mix, the
sale of higher margin OSS products, and having sought-after
products readily sold at a premium.
Total operating expenses increased 3% to $4.8 million. This
increase was predominantly attributable to approximately $175,000
of transition costs in the quarter.
OSS reported a net loss of $278,000, or $(0.01) per share, as
compared to a net loss of $3.3 million, or $(0.16) per share, in
the same year-ago quarter. Net loss in the fourth quarter of 2023,
included a provision for income taxes of $42,000 as compared to
$4.1 million in the fourth quarter of 2022, reflecting an increase
in taxes being attributable to a write-down of the deferred tax
asset in 2022.
The company reported non-GAAP net income of $177,000, or $0.01
per diluted share, compared to a non-GAAP net loss of $2.7 million,
or $0.14 per diluted share, in the same year-ago quarter.
Adjusted EBITDA, a non-GAAP metric, was $353,000, a decrease
from adjusted EBITDA of $1.6 million in the same year-ago
quarter.
On December 31, 2023, cash and short-term investments totaled
$11.8 million. This represents a decrease of $1.4 million as
compared to the prior year, primarily due to cash deployed in
working capital for inventories.
Full Year of 2023 Financial Summary
For the full year of 2023, consolidated revenue decreased 15.9%
to $60.9 million. The decrease in revenue in the full year of 2023
was due to the same reasons for the decline in the fourth quarter.
Excluding revenue from the former media customer, revenues were up
approximately 4.0%.
OSS segment revenue was $28.8 million and Bressner segment
revenue was $32.1 million, inclusive of approximately $3.2 million
of OSS product offerings.
Consolidated gross margin increased 130 basis points to 29.5%
from 28.2% in 2022. OSS segment gross margin was 35.6%, compared to
32.7% in 2022. The increase in gross margin was due to the shift
from lower margin media sales to higher margin AI transportable
product revenue.
Bressner segment gross margin was 24.0%, compared to 21.5% in
2022, due to strategic management of inventory and having
sought-after products sold at a premium, as well as product mix and
increased sales of OSS products.
Total operating expenses increased 37.4% to $25.9 million. The
increase was primarily due to an increase of $5.6 million
attributable to an impairment of goodwill write-down, and $1.7
million of one-time CEO and board transition costs.
Excluding a goodwill impairment charge of $5.6 million and CEO
transition and board reprofiling costs of $1.7 million, OSS
operating expenses decreased 1.5% from the prior year.
OSS reported a net loss of $6.7 million, or $(0.32) per share,
inclusive of the $1.7 million employee retention credit, compared
to a net loss of $2.2 million, or $(0.11) per share, in 2022.
The company reported a non-GAAP net loss of $415,000, or $(0.02)
per share, as compared to a non-GAAP net loss of $175,000, or
$(0.01) per diluted share, in 2022.
Adjusted EBITDA totaled $1.1 million, compared to $5.2 million
in 2022. Both non-GAAP net income and adjusted EBITDA exclude the
$5.6 million impairment of goodwill and the $1.7 million employee
retention credit.
Loss before the provision for income taxes on a proforma basis,
excluding the impairment of goodwill, CEO transition and board
reprofiling costs and the benefit of the employee retention credit
resulted in a proforma loss of $165,000 as compared to income
before taxes of $2.2 million in 2022.
Conference Call
OSS will hold a conference call later today to discuss its
results for the fourth quarter and full year ended December 31,
2023, followed by a question-and-answer period.
Date: Thursday, March 21, 2024Time: 5:00 p.m. Eastern time (2:00
p.m. Pacific time)Toll-free dial-in number:
1-888-886-7786International dial-in number: 1-416-764-8658 Webcast:
here (live and replay)
A replay of the call will be available after 8:00 p.m. Eastern
time on the same day and through April 4, 2024.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 14953211
About One Stop SystemsOne Stop Systems, Inc.
(Nasdaq: OSS) is a leader in AI Transportable solutions for the
demanding ‘edge.’ OSS designs and manufactures the highest
performance compute and storage products that enable rugged AI,
sensor fusion and autonomous capabilities without compromise. These
hardware and software platforms bring the latest data center
performance to the harsh and challenging applications, whether they
are on land, sea or in the air.
OSS products include ruggedized servers, compute accelerators,
flash storage arrays, and storage acceleration software. These
specialized compact products are used across multiple industries
and applications, including autonomous trucking and farming, as
well as aircraft, drones, ships and vehicles within the defense
industry.
OSS solutions address the entire AI workflow, from high-speed
data acquisition to deep learning, training and large-scale
inference, and have delivered many industry firsts for industrial
OEM and government customers.
As the fastest growing segment of the multi-billion-dollar edge
computing market, AI Transportables require—and OSS delivers—the
highest level of performance in the most challenging environments
without compromise.
OSS products are available directly or through global
distributors. For more information, go to www.onestopsystems.com.
You can also follow OSS on X, YouTube, and LinkedIn.
Non-GAAP Financial Measures
We believe that the use of adjusted earnings before interest,
taxes, depreciation and amortization, or adjusted EBITDA, is
helpful for an investor to assess the performance of the Company.
The Company defines adjusted EBITDA as income (loss) before
interest, taxes, depreciation, amortization, acquisition expense,
impairment of long-lived assets, financing costs, government funded
programs, fair value adjustments from purchase accounting,
stock-based compensation expense and expenses related to
discontinued operations.
Adjusted EBITDA is not a measurement of financial performance
under generally accepted accounting principles in the United
States, or GAAP. Because of varying available valuation
methodologies, subjective assumptions and the variety of equity
instruments that can impact a company’s non-cash operating
expenses, we believe that providing a non-GAAP financial measure
that excludes non-cash and non-recurring expenses allows for
meaningful comparisons between our core business operating results
and those of other companies, as well as providing us with an
important tool for financial and operational decision making and
for evaluating our own core business operating results over
different periods of time.
Our adjusted EBITDA measure may not provide information that is
directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial results differently, particularly related to
non-recurring and unusual items. Our adjusted EBITDA is not a
measurement of financial performance under GAAP, and should not be
considered as an alternative to operating income or as an
indication of operating performance or any other measure of
performance derived in accordance with GAAP. We do not consider
adjusted EBITDA to be a substitute for, or superior to, the
information provided by GAAP financial results.
|
|
For the Three MonthsEnded December
31, |
|
|
For the Year Ended December
31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net loss |
|
$ |
(277,560 |
) |
|
$ |
(3,263,644 |
) |
|
$ |
(6,716,176 |
) |
|
$ |
(2,229,055 |
) |
Depreciation and amortization |
|
|
263,743 |
|
|
|
265,252 |
|
|
|
1,077,516 |
|
|
|
1,050,299 |
|
Stock-based compensation expense |
|
|
454,461 |
|
|
|
533,487 |
|
|
|
2,345,358 |
|
|
|
1,991,117 |
|
Interest income |
|
|
(159,487 |
) |
|
|
(84,832 |
) |
|
|
(544,958 |
) |
|
|
(237,751 |
) |
Interest expense |
|
|
29,662 |
|
|
|
28,681 |
|
|
|
117,774 |
|
|
|
162,391 |
|
Employee retention credit (ERC) |
|
|
- |
|
|
|
- |
|
|
|
(1,716,727 |
) |
|
|
- |
|
Impairment of goodwill |
|
|
- |
|
|
|
- |
|
|
|
5,630,788 |
|
|
|
- |
|
Provision for income taxes |
|
|
41,796 |
|
|
|
4,136,643 |
|
|
|
927,128 |
|
|
|
4,423,597 |
|
Adjusted EBITDA |
|
$ |
352,615 |
|
|
$ |
1,615,587 |
|
|
$ |
1,120,703 |
|
|
$ |
5,160,598 |
|
Adjusted EPS excludes the impact of certain items and,
therefore, has not been calculated in accordance with GAAP. We
believe that exclusion of certain selected items assists in
providing a more complete understanding of our underlying results
and trends and allows for comparability with our peer company index
and industry. We use this measure along with the corresponding GAAP
financial measures to manage our business and to evaluate our
performance compared to prior periods and the marketplace. The
Company defines non-GAAP income (loss) as income or (loss) before
amortization, government funded programs, impairment of long lived
assets, stock-based compensation, expenses related to discontinued
operations, and acquisition costs. Adjusted EPS expresses adjusted
income (loss) on a per share basis using weighted average diluted
shares outstanding.
Adjusted EPS is a non-GAAP financial measure and should not be
considered in isolation or as a substitute for financial
information provided in accordance with GAAP. These non-GAAP
financial measures may not be computed in the same manner as
similarly titled measures used by other companies. We expect to
continue to incur expenses similar to the adjusted income from
continuing operations and adjusted EPS financial adjustments
described above, and investors should not infer from our
presentation of these non-GAAP financial measures that these costs
are unusual, infrequent or non-recurring.
The following table reconciles net loss to adjusted EPS and
diluted earnings per share:
|
|
For The Three Months Ended December 31, |
|
For the Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net
loss |
|
$ |
(277,560 |
) |
|
$ |
(3,263,644 |
) |
|
$ |
(6,716,176 |
) |
|
$ |
(2,229,055 |
) |
Amortization of intangibles |
|
|
- |
|
|
|
15,807 |
|
|
|
42,154 |
|
|
|
63,231 |
|
Stock-based compensation expense |
|
|
454,461 |
|
|
|
533,487 |
|
|
|
2,345,358 |
|
|
|
1,991,117 |
|
Employee retention credit (ERC) |
|
|
- |
|
|
|
|
|
(1,716,727 |
) |
|
|
- |
|
Impairment of goodwill |
|
|
- |
|
|
|
- |
|
|
|
5,630,788 |
|
|
|
Non-GAAP net
(loss) income |
|
$ |
176,901 |
|
|
$ |
(2,714,350 |
) |
|
$ |
(414,603 |
) |
|
$ |
(174,707 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP net
(loss) income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
Diluted |
|
$ |
0.01 |
|
|
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
20,632,300 |
|
|
|
20,059,269 |
|
|
|
20,854,777 |
|
|
|
19,730,698 |
|
Diluted |
|
|
20,632,300 |
|
|
|
20,059,269 |
|
|
|
20,854,777 |
|
|
|
19,730,698 |
|
|
|
|
|
|
|
|
|
|
Forward-Looking StatementsOne Stop Systems
cautions you that statements in this press release that are not a
description of historical facts are forward-looking statements.
These statements are based on the company's current beliefs and
expectations. The inclusion of forward-looking statements should
not be regarded as a representation by One Stop Systems or its
partners that any of our plans or expectations will be achieved,
including but not limited to, management’s expectation for new
opportunities in the AI transportable solutions and other spaces,
the company’s penetration of the Defense and AI Transportable
sectors, our ability to successfully convert our pipeline to sales,
our expectations regarding revenue growth, the anticipated value of
our project wins, future changes to our business objectives, and
other future financial projections. Actual results may differ from
those set forth in this press release due to the risk and
uncertainties inherent in our business, including risks described
in our prior press releases and in our filings with the Securities
and Exchange Commission (SEC), including under the heading "Risk
Factors" in our latest Annual Report on Form 10-K and any
subsequent filings with the SEC. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof, and the company undertakes no
obligation to revise or update this press release to reflect events
or circumstances after the date hereof. All forward-looking
statements are qualified in their entirety by this cautionary
statement, which is made under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.
Media Contacts: Katie RiveraOne Stop Systems,
Inc. Tel (760) 745-9883Email contact
Tim RandallCMA Media RelationsTel (949) 432-7572Email
Contact
Investor Relations:Ronald Both or Grant
StudeCMA Investor RelationsTel (949) 432-7557 Email contact
ONE STOP SYSTEMS, INC. (OSS)CONSOLIDATED
BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,048,948 |
|
|
$ |
3,112,196 |
|
Short-term investments |
|
|
7,771,820 |
|
|
|
10,123,535 |
|
Accounts receivable, net |
|
|
8,318,247 |
|
|
|
11,327,244 |
|
Inventories, net |
|
|
21,694,748 |
|
|
|
20,775,366 |
|
Prepaid expenses and other current assets |
|
|
611,066 |
|
|
|
502,156 |
|
Total current assets |
|
|
42,444,829 |
|
|
|
45,840,497 |
|
Property and equipment, net |
|
|
2,370,224 |
|
|
|
2,570,124 |
|
Operating lease right-of use
assets |
|
|
1,922,784 |
|
|
|
731,043 |
|
Deposits and other |
|
|
38,093 |
|
|
|
60,243 |
|
Goodwill |
|
|
1,489,722 |
|
|
|
7,120,510 |
|
Intangible assets, net |
|
|
- |
|
|
|
42,154 |
|
Total Assets |
|
$ |
48,265,652 |
|
|
$ |
56,364,571 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
1,201,781 |
|
|
$ |
4,592,713 |
|
Accrued expenses and other liabilities |
|
|
3,202,519 |
|
|
|
3,013,869 |
|
Current portion of operating lease obligation |
|
|
390,926 |
|
|
|
536,588 |
|
Current portion of notes payable |
|
|
2,077,895 |
|
|
|
2,952,447 |
|
Total current liabilities |
|
|
6,873,121 |
|
|
|
11,095,617 |
|
Long-term debt, net of current
portion |
|
|
- |
|
|
|
409,294 |
|
Deferred tax liability,
net |
|
|
44,673 |
|
|
|
138,662 |
|
Operating lease obligation,
net of current portion |
|
|
1,765,536 |
|
|
|
397,249 |
|
Total liabilities |
|
|
8,683,330 |
|
|
|
12,040,822 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Common stock, $0.0001 par value; 50,000,000 shares authorized;
20,661,341 and 20,084,528 shares issued and outstanding,
respectively |
|
|
2,066 |
|
|
|
2,008 |
|
Additional paid-in capital |
|
|
47,323,673 |
|
|
|
45,513,807 |
|
Accumulated other comprehensive income |
|
|
675,310 |
|
|
|
510,485 |
|
Accumulated deficit |
|
|
(8,418,727 |
) |
|
|
(1,702,551 |
) |
Total stockholders’ equity |
|
|
39,582,322 |
|
|
|
44,323,749 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
48,265,652 |
|
|
$ |
56,364,571 |
|
|
|
|
|
|
|
|
ONE STOP
SYSTEMS, INC. (OSS)UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
|
|
For the Three Months Ended December 31, |
|
For the Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
13,155,208 |
|
|
$ |
18,249,481 |
|
|
$ |
60,896,797 |
|
|
$ |
72,421,345 |
|
Cost of
revenue |
|
|
8,720,637 |
|
|
|
13,270,713 |
|
|
|
42,942,175 |
|
|
|
52,023,736 |
|
Gross margin |
|
|
4,434,571 |
|
|
|
4,978,768 |
|
|
|
17,954,622 |
|
|
|
20,397,609 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
General and administrative |
|
|
1,970,746 |
|
|
|
1,793,232 |
|
|
|
9,264,447 |
|
|
|
7,279,401 |
|
Impairment of goodwill |
|
|
|
|
|
|
5,630,788 |
|
|
|
- |
|
Marketing and selling |
|
|
1,667,765 |
|
|
|
1,745,085 |
|
|
|
6,651,516 |
|
|
|
6,806,306 |
|
Research and development |
|
|
1,127,194 |
|
|
|
1,087,554 |
|
|
|
4,331,024 |
|
|
|
4,743,574 |
|
Total operating expenses |
|
|
4,765,705 |
|
|
|
4,625,871 |
|
|
|
25,877,775 |
|
|
|
18,829,281 |
|
(Loss) income from operations |
|
|
(331,134 |
) |
|
|
352,897 |
|
|
|
(7,923,153 |
) |
|
|
1,568,328 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
159,487 |
|
|
|
84,832 |
|
|
|
544,958 |
|
|
|
237,751 |
|
Interest expense |
|
|
(29,662 |
) |
|
|
(28,681 |
) |
|
|
(117,774 |
) |
|
|
(162,391 |
) |
Employee retention credit |
|
|
- |
|
|
|
- |
|
|
|
1,716,727 |
|
|
|
- |
|
Other expense, net |
|
|
(34,455 |
) |
|
|
463,951 |
|
|
|
(9,806 |
) |
|
|
550,854 |
|
Total other income (expense), net |
|
|
95,370 |
|
|
|
520,102 |
|
|
|
2,134,105 |
|
|
|
626,214 |
|
(Loss)
income before taxes |
|
|
(235,764 |
) |
|
|
872,999 |
|
|
|
(5,789,048 |
) |
|
|
2,194,542 |
|
Provision
for income taxes |
|
|
41,796 |
|
|
|
4,136,643 |
|
|
|
927,128 |
|
|
|
4,423,597 |
|
Net loss |
|
$ |
(277,560 |
) |
|
$ |
(3,263,644 |
) |
|
$ |
(6,716,176 |
) |
|
$ |
(2,229,055 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
20,632,300 |
|
|
|
20,059,269 |
|
|
|
20,854,777 |
|
|
|
19,730,698 |
|
Diluted |
|
|
20,632,300 |
|
|
|
20,059,269 |
|
|
|
20,854,777 |
|
|
|
19,730,698 |
|
|
|
|
|
|
|
|
|
|
One Stop Systems (NASDAQ:OSS)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
One Stop Systems (NASDAQ:OSS)
Gráfica de Acción Histórica
De May 2023 a May 2024