Boxlight Corporation (NASDAQ:BOXL) Q2 2023 Earnings Call Transcript

Boxlight Corporation (NASDAQ:BOXL) Q2 2023 Earnings Call Transcript August 9, 2023

Boxlight Corporation beats earnings expectations. Reported EPS is $-0.12, expectations were $-0.16.

Operator: Thank you and welcome to the Boxlight Second Quarter 2023 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current knowledge and expectation as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements.

A detailed discussion of such risks and uncertainties are contained in the company’s most recent Form 10-K, Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results provide additional analytical tools to understand the company’s operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company’s website at boxlight.com. And with that, I will hand the call over to Boxlight’s Chairman and Chief Executive Officer, Michael Pope.

Michael Pope: Hello, everyone and thank you for joining our Q2 earnings call. After my remarks, you will also hear from Mark Starkey, our President and Greg Wiggins, our Chief Financial Officer. For the second quarter, we delivered $47 million in revenue, $18 million in gross profit, and $5.4 million in adjusted EBITDA. With softer demand across the industry, our revenues declined by 21% over Q2 2022. However, our gross profit improved by 6% and adjusted EBITDA improved by 4%. Our strong profitability was largely a result of our record gross profit margin. For the second quarter, we reported 30% in gross margin, an increase of 970 basis points over Q2 2022. Our balance sheet also improved during the quarter. As of June 30, we reported $65 million in working capital, including $60 million in cash and $38 million in inventory.

Our debt balance at quarter end was $52 million. Subsequent to quarter end, we paid down our debt facility by an additional $3 million resulting in a current debt balance of approximately $49 million. We are revising our revenue guidance for the second half of 2023 and now expect to deliver $60 million for the third quarter and $110 million in revenue for the second half of the year. Despite the lower revenue guidance, we expect adjusted EBITDA for the second half of 2023 to be in line with 2022. We continue to innovate and expand our product lines and have recently introduced several new solutions, including our MyBot Recruit robot with a large format LED display, MyFrontRow app for interactive displays, PowerLine, a low-voltage, easy to install, power supply, and Google EDLA interactive panels bundled with training and support.

EOS Education our professional development division earned the Education Services Partner Specialization in Google Cloud Partner Advantage and will be bundling Google training with our Google EDLA interactive panels. We are committed to both education and enterprise verticals and serve both markets with the most comprehensive integrated solution suite available complete with hardware, software and service components. We are seeing a substantial increase in industry recognition for innovation and market leading solutions. During the second quarter, the Annual EdTech Breakthrough Awards recognized our FrontRow Attention! solution as the best technology solution for student safety. Student safety is an area of significant concern in our schools and one where we can add value.

Attention! is an integrated solution that combines our FrontRow conductor campus-wide, bells, paging, intercom and emergency communication platform with CleverLive, our cloud management platform providing a comprehensive audio visual messaging and alerting system. With Attention!, administrators can broadcast simultaneous audio and video communication across an entire campus, including in the event of an emergency. In 2022, EdTech Breakthrough also recognized Boxlight as the Overall EdTech Company of the Year. Our Mimio and Clevertouch brands received 7 Best of Show awards at Infocomm 2023 from three different journals, AV Technology, Digital Signage, and Tech and Learning for our CleverLive digital signage platform, CleverHub wireless presentation system, Clevertouch UX Pro 2 interactive displays, and Mimio DS non-interactive displays.

Box, that was also honored with 5 SD live Best of Show awards by Tech and Learning, recognizing the excellence of our innovation solutions for MimioWall, Mimio DS, IMPACT Lux, CleverLive and LYNX Whiteboard. Although customer demand has slowed in recent quarters, we are now seeing growth in our sales pipeline and market data suggests the industry will rebound by end of year. We are optimistic that we will return to meaningful revenue growth in 2024. We are better positioned as a company today than ever before with our expanded solution suite, global sales channel and talented employees. Over the next several quarters, we will deliver growth as industry demand increases and through capturing meaningful market share from our competitors. With that, I will now turn the time over to our President, Mark Starkey.

Mark Starkey: Thank you, Michael and good evening from here in Europe. As I mentioned on our last earnings call, we are seeing the world return to normality with supply chains restored. As a result, we continue to see slower order intake in revenues as end users and partners normalize their inventory levels. Our expectation is that during Q3 we will likely see this rebalancing process complete. And order intake will return to growth mode in the third quarter with revenue lagging by a quarter or two. The good news here is that we believe we have exited the pandemic with a much stronger and healthier business with substantially higher profit margins and significant development in our product portfolio, particularly with regard to the integration of our audio solutions into our interactive panels.

In terms of Q2, order intake was $51.2 million, down 37% year-on-year, with 54% being derived from the U.S., 41% from EMEA, and 5% from Asia-Pac. Interestingly, despite order intake being down 37%, our market share for interactive displays remained relatively consistent with our EMEA market share increasing marginally from 5.5% to 5.8% and our U.S market share increasing from 5.8% to 6.4% during H1 according to data from Futuresource. The bottom line is that we continue to make modest gains in market share despite the significant drop in order intake and revenues across the period. Some of our key orders in the U.S. included $7.2 million from Bluum, $6.7 million from GDI, our U.S. distribution partner, $2.8 million from Data Projections in Texas, and $1.3 million from Digital Range Technologies.

Overseas, we have some excellent orders, including $2.6 million from ASI in Australia, $1.8 million from Camera Mundi, our partner in Puerto Rico, $973,000 from Avion Interactive in Finland, and $961,000 from IDMS based in the UK, to name a few. On new generation of Google accredited screens will start shipping this quarter and orders have already exceeded expectations. We have had some great wins in Germany, where Clevertouch have been officially awarded [indiscernible] for 2600 Clevertouch Lux screens, including cars. This is one of the first large scale deployments of the new Google certified screen in Europe. In the UK, Clevertouch won the Welsh DPS tender, with IDMS for approximately 3,000 screens to be deployed over the next 12 months.

In the U.S., we have some fantastic audio winners. In Texas alone, we booked more than $1.7 million of audio deals featuring our easy room solution, working closely with our partner, Piranha Consulting. We had a fantastic [indiscernible] school district in Washington State with our partner ACT. We also received orders for our Google certified EDLA panels from various partners, including Data Projections and took early orders for our new Digital Signage displays, the DS series from various partners, including VAT. Student safety continues to be a huge issue, particularly in the U.S. Our Attention! solution, which integrates our FrontRow campus solution with our Mimio and Clevertouch interactive panels is a game changer and is the first unit based audio solution capable of this level of integration.

It enables teachers to give audio alerts and visual alerts on both interactive and non-touch panels instantaneously across the campus. The solution is gaining traction and we hope to announce some significant wins for Attention! in the next quarterly call. In summary, Q2 order intake and revenues were down. But our profitability in terms of gross profit percentage and adjusted EBITDA continues to improve. Our expectation is that we will return to growth in order intake during Q3 and revenue growth in Q4 as there remain significant funds available for education establishments to invest in technology. With that, I will now turn the call over to our CFO, Greg Wiggins.

Greg Wiggins: Thanks Mark and good afternoon everyone. I will now review our second quarter results. Revenues for the 3 months ended June 30, 2023 were $47.1 million as compared to $59.6 million for the 3 months ended June 30, 2022, resulting in a 21.1% decrease and was due to lower sales volumes across all markets. Taking a closer look at our sales breakout for the year, EMEA revenues totaled $36.6 million or 41% of our total revenues, Americas revenues totaled $48.8 million or 54% of our total revenues, while revenues from other markets totaled $2.8 million or 5% of our total revenues. Our top 10 customers represented approximately 41% of total sales, with the single largest customer at approximately 15% and are based across a number of markets, namely the U.S., UK and other European countries.

Approximately, 60% of total sales are covered by the top 20 customers. Hardware comprised the largest proportion of total revenues at approximately 92%, of which approximately 69% related to our flat panel displays with the balance related to classroom audio solutions and device accessories. The balance of our total revenues, are comprised of software, professional services and STEM solutions. Gross profit for the 3 months ended June 30, 2023 was $17.8 million as compared to $16.8 million for the 3 months ended Jun 30, 2022. Gross profit margin for Q2 2023 was 37.9%, which is an increase of 970 basis points over the comparable 2022 quarter. Gross profit margin adjusted for the net effect of acquisition related purchase accounting was 39.1% as compared to 30.2% as adjusted for the 3 months ended June 30, 2022.

The improvement in gross profit margin in Q2 2023 compared to the prior year quarter is primarily due to lower manufacturing costs and continued reductions in freight costs over the prior year period. Total operating expenses for Q2 2023 decreased slightly to $15.8 million compared to $16.0 million in Q2 2022. Other expense for the 3 months ended June 30, 2023 was a net expense of $2.6 million, as compared to net expense of $0.8 million for the 3 months into June 30, 2022. The increase in other expense was primarily due to gains recognized from the change in fair value of derivative liabilities of $184,000 in Q2 2023, compared to gains of $1.5 million in the prior year quarter, coupled with an increase in interest expense of approximately $0.3 million quarter-over-quarter.

The company reported a net loss of $811,000 for 3 months ended June 30, 2023 as compared to net income of $26,000 for the 3 months ended June 30 2022. Net loss attributable to common shareholders was approximately $1.1 million and $0.3 million for Q2 2023 and 2022 respectively. After deducting the fixed dividends to Series B preferred shareholders have $317,000 in both 2023 and 2022. Total comprehensive income for the 3 months ended June 30, 2023 was $0.9 million compared to total comprehensive loss of $4.6 million for the 3 months ended June 30, 2022, reflecting the effect of foreign currency translation adjustments on consolidation, with the net effect in the quarter of approximately $1.7 million gain and $4.6 million loss for the 3 months ended June 30, 2023 and 2022 respectively.

EPS loss per basic and diluted share was $0.12 for Q2 2023 and $0.04 for Q2 2022. EBITDA for the quarter ended June 30, 2023 was $4.5 million as compared to $4.8 million EBITDA for the quarter ended June 30, 2022. Adjusted EBITDA for Q2 2023 was $5.4 million as compared to $5.2 million for Q2 2022. Adjustments to EBITDA include stock based compensation expense, gains losses from the remeasurement of derivative liabilities, gains losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. EBITDA for the 6 months ended June 30, 2023, was $6.4 million as compared to $4.4 million for the 6 months ended June 30, 2022. Adjusted EBITDA for the 6 months into June 30, 2023, was $8.7 million as compared to $6.4 million for the 6 months into June 30, 2022.

Turning to the balance sheet. At June 30, 2023 Boxlight had $15.6 million in cash $64.8 million in working capital $37.8 million in inventory $182.3 million in total assets, $47.2 million in debt, net of debt issuance cost of $4.5 million and $50.9 million in stockholders equity. On June 14, 2023 we completed our April 1 reverse stock split, which reduced our Class A common shares authorized to 18.75 million and Class A common shares outstanding to approximately 9.5 million shares allowing us to maintain compliance with the $1 minimum per share requirement by NASDAQ. At June 30, 2023, Boxlight had 9.5 million common shares issued and outstanding and $3.1 million preferred shares issued and outstanding. We continue to strategically review our capital structure and use of free cash, including but not limited to paying down debt, executing on our share repurchase program, and finding more attractive financing arrangements to replace our current facilities.

We believe that cash flow from operations will continue to support our ongoing operations without the need for additional equity or debt financing. With that, we will open up the call for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is coming from Brian Kinstlinger with Alliance Global Partners. Your line is live.

Brian Kinstlinger: Hi, good evening, guys. Thanks for taking my questions and solid gross margin and EBITDA. My question is after the solid EBITDA results during the first 6 months, you have generated roughly $8 million plus or minus. What are the puts and takes that resulted in that 6-month timeframe of having $3 million more of that and about the same cash? And over that time, almost $20 million less on inventory, I am just curious what – when we can expect to see greater cash conversions in the results?

Greg Wiggins: Yes, so this is Greg. Thank you for the question. So I think some of what you see in the first 6 months of the year is timing related. So typically, from a cash perspective, the company sees a greater amount of cash rolling in the second half of the years, we get past our busier months of the year call net Q2, Q3 timeframe. So as those sales – the cash comes in related to those typically see a lot more cash inflow in the second half of the year. Early in the year, call it in the late Q1, early Q2 timeframe is seasonally our lower cash months of the year, as we are coming off of course, typically lower quarters from a sales perspective, but also ramping up for inventory for the busier summer months. So that by and large is typically where you see a lot of the cash fluctuations come in.

Now with respect to inventory, specifically in our levels, you see that our inventory levels did decrease significantly, even from year end, and that’s really due to a couple factors. One, it’s really maintaining optimal inventory levels consistent with the sales that we were seeing as the year progressed, which were a little lower than they were in the prior year, but also optimizing our inventory levels following kind of the supply chain issues that were had in the immediate aftermath following the pandemic. So, as there were delays in the past in the supply chain, there was more of a demand to want to increase and have appropriate inventory levels to meet sales as they were generated. But as we’ve seen a lot of that subside, and then again, normalizing our inventory to kind of mirror our current sales demands.

That’s kind of how it’s reflecting the inventory decrease that you’re seeing

Michael Pope: Hey, Brian, I would add one quick thing, you’re looking at cash, and you’re looking at inventory, but really, you’ll see working capital improved, right, working capital at quarter end was $65 million. If you have to look at the rest of kind of current assets, current liabilities, and one item, for example, if you look at accounts payable from December 31, 2022, AP was it $37 million versus a quarter June 30 was $21 million, right? So if you look, I think you’re better off rather than just looking at cherry picking cash in inventory, for example, you have to look at that whole working capital bucket, because it’s all interrelated AR, AP inventory, cash, all interrelated.

Brian Kinstlinger: So assuming, to your comments in the second half of year cash flow is better. Are there any restrictions from you paying down debt, companies, micro caps right now with lots of debt clearly aren’t generating any meaningful valuation or equity? Is that something that is a high priority for you?

Michael Pope: Absolutely, Brian. I was just going to make a quick comment. So we paid down $3 million post quarter end, right? So we paid down over $3 million of our debt. And so we’re moving in the right direction. Currently, our current facility, amortize it 5% down per year. So at a minimum, we’re paying just that that regular debt amortization, amortization of 5% per year. But that’s actually something we’re looking at. But I would point out one additional thing in addition to the debt going down, but our profitability is going up. And so that ratio is quite important. And if you look at our debt leverage, our EBITDA – debt-to-EBITDA ratio that’s been improving pretty dramatically. At quarter end, we were about 2.4 versus we were almost 4 if you just go back a couple of quarters. And we think that will improve as the debt goes down but also as profitability increases.

Brian Kinstlinger: Absolutely. And I will put more profit even if there were smaller firm. And then last quarter you talked about year-end budget pressures gave you confidence that orders would be up year-over-year in the second half of the year. Just seeing how orders and revenue played out during the second quarter give you slightly less confidence in order growth, maybe it will recover in the second half of the year, and then maybe you can help us understand how things have begun to trend in July and August?

Greg Wiggins: Do you want to start on that Michael? And then I will jump in.

Michael Pope: Yes. Maybe I will say couple of things. Yes, let me start, you can jump in and more color. Yes. So first off, clearly order intake lagged quite a bit more than we expected starting with the second half of last year. And so lagging orders in the second half of last year resulted in lower revenue, both say Q3, Q4, but also rolling into Q1, Q2. But the reason we’re optimistic for the future, there’s a couple of things that make us optimistic. The first is that we’re seeing our internal pipeline grow. And of course, that improves your optimism, but also, we’re seeing the order intake ramp, we’re starting to get more and more orders. And we’re seeing that, now that revenue doesn’t show up until later, right, once we receive the orders.

But we believe based on what we’re seeing now, the Q3, we will see a growth in order intake, as Mark shared in his part of the beginning of earnings call. So, we expect order intake increase in Q3, which will result in we think growth in Q4, leading us into next year. But beyond just our internal metrics we are looking at also we get external data. And that includes – that’s included from industry data, which industry data is showing that they think that there is a bounce back, and we are going to see growth, end of this year, into next year. But then also talking to our large resellers, which many of which are much larger than we are, they are also seeing the same thing. We are seeing – they are seeing pipeline growth, order intake growth.

And our large manufacturers who supply us and potentially supply others in the space, they are seeing the same thing. So, I think across the board, what we are seeing internally, also we are hearing about externally does support and we are going to start to see that and we are seeing the beginnings of that internally right now.

Brian Kinstlinger: Thank you two more questions. And I will get back in the queue. First, the demand environment, can you speak to forward-looking on U.S. versus Europe? Which do you see driving that order growth over the next six months? Is it a clear cut winner one over the other?

Michael Pope: That’s a very good call. Actually, Brian, it’s very hard to say. I think typically we have historically seen some really good growth in the U.S. But there are some big tenders out there as well in the next six months in Europe, particularly in Spain, and in Germany and parts of Eastern Europe. So, I don’t think it’s clear cut. It’s all coming from the U.S. or it’s all coming from EMEA. I think it depends on the specific [indiscernible] we are actually working on. We just recently won a very large deal in the U.S., and very large deal in EMEA. So, that’s kind of balancing each other out. So, overall, I would say it’s a good mix.

Brian Kinstlinger: Great. Last question for me. The gross margin, I have been covering you for a long time. You have done a great job of getting where it is no doubt. And last quarter, you talked about competitive pricing pressures long-term. Can you help with near-term expectations, say, next 12 months to 18 months versus what you think sustainability long-term? Can you sustain these for the next several quarters before pricing pressure eats in, or do you think that is not feasible?

Michael Pope: Yes. I think that I mean 12 months to 18 months, it’s hard to say looking out that far. I do think we are going to see some erosion of gross profit margin definitely over 12 months to 18 months. I think we have a couple quarters of holding it relatively steady. We may see it go down a couple points, especially if we win some of these larger tenders. Generally, the larger tenders are a lot more price competitive. And for us to win those tenders in their large quantities, and for us to win those tenders, we have to come down on pricing. So, if we are successful in some of these large tenders, both in the U.S. and internationally, that will erode the margins. So, I think we were forecasting out a couple of quarters, we think we may lose a couple of percentage points.

But if you are going out much further than that I do think that longer term on our core solutions, we are going to erode back down to around 30 points is what we would have expected. If you went back a few quarters, we thought would be around 3 points today. And we have benefited from a lot of different factors. But I think that is closer to run rate with our core products today that we are selling. But we have talked about in the past, and we will continue to talk about it that long-term, we think that that gross profit margin can improve as we sell high margin products, which we are working on and we are pushing, they make some – makeup a smaller percentage of our total business today. But we think out a couple of years, those other solutions that are high margin, including software and professional services, and some of the accessories we saw that are high margin, it’s STEM solutions.

As we do better with those solutions, we are going to see the margin potentially start to creep up. And then the other thing we have talked about, which we will continue to talk about is the enterprise vertical. The enterprise market is less price sensitive, and that is higher margin. And today, it’s a small piece of our business less than 5%. But we think in the future, it could be much more substantial. We have been investing and then the enterprise vertical, and that’s going to allow us to be able to improve that gross profit margin. So, again, I think in short, over the next couple of quarters, we are going to probably erode a couple of points, we will see. And then looking out maybe a year or so then maybe come down a little bit more.

But if you are looking at multiple years, I think we can improve on where we are today.

Brian Kinstlinger: Thank you so much.

Michael Pope: Thanks Brian.

Operator: Thank you. Our next question is coming from Jack Vander Aarde with Maxim Group. Your line is live.

Jack Vander Aarde: Okay. Great. Thanks for the update guys and solid gross margin and EBITDA results for sure. A couple of questions, maybe just because I missed it, just to reiterate the guidance, I heard that third quarter revenue and EBITDA of $60 million and $10 million. And in the second half ‘23 revenue guide of $110 million. Did you mention second half adjusted EBITDA?

Michael Pope: I think we did not guide to second half adjusted EBITDA. We just guided only Q3. But I think you could probably extrapolate roughly what – assuming we come in at the Q4 revenue then we will be up on adjusted EBITDA year-over-year given the higher gross profit margin.

Jack Vander Aarde: Okay. Great. And then just one more thing to reiterate or just because I missed it was your market share gains – I think I heard in EMEA for the first half of the year , that increased to 5.8%. And I missed what you said about the U.S. Did the U.S. market share increase again and to what percent it did?

Michael Pope: We looked at it across the half, we will look at the numbers across the half, so in the U.S., went from 5.8% to 6.4% for H1, we will look at the half year numbers for both EMEA and the U.S.?

Jack Vander Aarde: Okay. Great. Fantastic.

Michael Pope: Note Jack, that is on interactive displays, right, which make up about 70% of our business. So, we are only providing market data really on that segment of our product line.

Jack Vander Aarde: Yes. Understood. I appreciate the clarity there. But nonetheless, good work and good momentum there. And then just in terms of maybe if I circle back to the overall revenue slowdown. You mentioned lower sales volume across all markets, but just are there any more specific factors you can point to that caused maybe a slower top line and just the pace of new order intake than you were previously expecting, whether that would be by geo or corporate versus education? Any of your subsidiary businesses maybe FrontRow versus [indiscernible] just whatever else you also can provide, or was it really indeed a – in overall just general slower I mean growing volume orders?

Michael Pope: Jack, my overall view on this is genuinely that there was a kind of a hangover from the issues do with COVID. And the fact that the supply chains were so – were impacted so much, that so many customers, end users, partners, were buying like, okay, we will let you know, there is problems on the supply chain, let’s make sure we order plenty. And I think we have had the hangover from that, it started in Q3 – it started at this time last year, started in Q3 last year. And it’s kind of worked through, and I definitely see it’s a much more normalized environment now. So, it’s been – it’s kind of big decrease in order intake, and yet our market share is increasing slightly, because it’s definitely across the board.

Jack Vander Aarde: Yes. Understood. Okay, that’s helpful. And then maybe just I want to emphasize the point, that’s probably the most important is that you do expect, order intake to return to growth in the third quarter, revenue to rebound in the fourth quarter and then you expect meaningful growth in 2024. One question to the drivers of 2024 growth and your confidence in that, how does the government funding those programs? How do they play a role in that? Is that a factor that you expect to help to drive or return to growth in 2024, I mean what’s the status of the government funds?

Michael Pope: Absolutely, that’s part of the driver. I think the biggest reason for the growth will just be to Mark’s point, the return to normality in buying cycles. There has been this low that Mark talked about and once that low is behind us, and we are back to regular buying, we expect steady growth in EdTech spending, as we have seen in the past. And keep in mind, you can go back post-2000 and post-2008. And there were lows after that. And then once our buying returned, it was steady growth again. And so and before I talk about special money, which there were a lot of special funding that came into education, but just run rate, education budgets have generally not declined across the board, including in the U.S. If you look at public school budgets in the U.S., about half of that funding comes from property taxes.

Property taxes, just property values are still quite robust, in fact they went up substantially right post-COVID. And the balance of the budget comes from State and Federal funds. And those generally have not decreased either. So, schools have funding. They are still allocating that funding to technology spend. And that allocation is not declining. So, the money is absolutely there. And that’s true if you talk about most of Western Europe and other countries as well. Now, beyond that, there has been a lot of special funding. We talked about the extra funds in the U.S., which was nearly $200 billion allocated to education. There is still a large chunk of that that hasn’t been spent. And those funds that have not been spent, are going to expire end of 2024.

And so we do think there is going to be a little bit of a jump of in spending there. But other countries have also allocated substantial spending. Germany is a good example where they allocate a substantial spending with their digital pack. There is others as well. But I would say that, yes, there is Federal monies, both in the U.S. and other government monies, they are going to help drive. But I think the bigger thing that’s going to drive growth is back to normality and regular spending of technology budgets on a go forward basis barring another disaster or something else that happens, so.

Jack Vander Aarde: Got it. That’s helpful color. And then maybe just one more question, kind of given that your cash balance. Can you provide an update on the share repurchase program, and any thoughts there you can provide? Share price, where the share price is at relative to the cash you have on hand and liquidity? I mean do you have any update there?

Michael Pope: Yes. So really, we are in the same place we were last quarter, and that we absolutely what we plan on utilizing the stock repurchase program, something we are definitely looking at. We mentioned after last quarter was something we are going to evaluate second half of the year, so it’s going we are going to be valuing over the next few months. And it’s really a function of cash flow as we generate more cash from operations, and we can look at how do we utilize that cash to drive shareholder value. Some of that will be we will look at growth in the business. We will look at reducing our debt, potentially, as Brian Kinstlinger brought up. But then also, we will look at that share repurchase program. You will notice that cash from operations for Q2 was slightly positive.

And so we are starting to go in the right direction. But also, you will know that last year we generated I believe it was $7 million in cash from operations in the second half of the year, which is typical that we are going to see that heavier cash from operations in that second half. The same thing will be the second half of this year. We are going to see a larger flood of cash coming in Q3, Q4. And as that comes in, we are going to evaluate that as a management team, and of course, it’s the Board of Directors of how do we best utilize those funds to drive value. And one of the questions that will be on the Board every time will be, is it time to utilize the cash repurchase program or the stock repurchase program.

Jack Vander Aarde: Okay. Great. I appreciate the color guys. Great to see the momentum building and the return to growth on the horizon. Thanks guys.

Michael Pope: Yes. Appreciate it.

Operator: Thank you. We currently have no further questions at this time. So, I will hand it back to Mr. Pope for any closing comments you may have.

Michael Pope: Well, thank you everyone for your support and for joining us today on our second quarter 2023 conference call. We look forward to speaking to you again in November when we report our Q3 2023 results.

Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. And we thank you for your participation.