One Stop Systems, Inc. (Nasdaq: OSS), a leader in AI Transportable
solutions on the edge, reported results for the third quarter ended
September 30, 2021. All quarterly comparisons are to the same
year-ago period unless otherwise noted.
The company will hold a conference call at 5:00 p.m. Eastern
time on November 11th to discuss the results (see dial-in
information below).
Q3 2021 Financial Highlights
- Revenue totaled $16.0 million, up
23% versus the same year-ago quarter and up 7% sequentially.
- GAAP net income totaled $981,000 or
$0.05 per share, up from $858,000 or $0.05 per share.
- Non-GAAP net income was $1.5 million
or $0.08 per share versus $1.2 million or $0.07 per share (see
definition of this and other non-GAAP measures and reconciliation
to GAAP, below).
- Adjusted EBITDA was $1.8 million, up
$245,000 from $1.6 million, reaching 11% of total revenue.
- Cash, cash equivalents and short-term investments totaled $18.5
million.
First Nine Months 2021 Financial Highlights
- Record revenue of $44.2 million, up
16%.
- Gross margin up 2.4 percentage
points to 33.0%.
- GAAP net income increased $3.0
million to $2.7 million or $0.14 per diluted share.
- Non-GAAP net income was $3.0 million
or $0.15 per diluted share, up $2.2 million.
- Adjusted EBITDA was $4.3 million, up
$3.6 million.
Q3 2021 Operational Highlights
- Awarded a major program win for a
military AI Transportable application that enables high-speed
sensor data acquisition.
- Closed a major program win with a
market leading printer company for a Gen 4 PCI Express expansion
interconnect that enables high-performance 3D printer control.
Management Commentary
“This quarter exceeded our expectations, with record revenue for
a third quarter at $16.0 million, up 23% over the same year-ago
quarter and up 7% sequentially,” commented OSS president and CEO,
David Raun.
“These strong results reflect exceptional performance by our
European-based Bressner business, as well as strengthening revenue
from our large media and entertainment customer as their new
virtual products continue to gain traction.
“Like most companies, we have been facing supply challenges, but
we have been able to manage the impact during this unusual period
by working closely with our customers and suppliers and carefully
making strategic purchases. Given the positive progress on our
balance sheet and overall financial performance, we remain
undaunted in the pursuit of our AI Transportable vision.
“During the quarter, we had two new major program wins: an AI
transportable data acquisition system and a Gen 4 PCI Express
expansion interconnect for high-performance 3D printing. Together,
they brought our total major wins to eight so far this year.
“Now with the return to live, in-person trade shows, plus our
focus on AI Transportables and the additional key investments in
sales personnel and channels, we are seeing increased activity
across our opportunity pipeline. The pipeline has expanded to 22
major pending opportunities, half of which are in the AI
Transportable space. AI Transportable wins represent higher margins
given our expertise in the space.
“We are planning the launch of an exciting new platform next
week at the SC21 conference, which we anticipate will represent
another major step in the continued evolution of OSS. Based on
initial customer feedback, we expect this leading-edge AI
Transportable solution to drive additional customer engagement,
contract wins, and accelerated growth.
“Looking ahead, we are providing revenue guidance of $17.1
million for the fourth quarter. This would represent 23% growth
over Q4 of last year, 7% growth over Q3, and record annual revenue
of approximately $61.3 million.”
Q3 2021 Financial SummaryRevenue in the third
quarter of 2021 increased 23% to $16.0 million, compared to $13.0
million in the same year-ago quarter. Growth was primarily driven
by exceptional performance from OSS’ European subsidiary, Bressner,
and strengthening revenue from the company’s large media and
entertainment customer.
Revenue from OSS’ largest customer grew to $3.2 million,
quadrupling from a low of $800,000 in the year ago quarter. Most of
the growth was from sales of the customer’s new innovative virtual
products.
Bressner revenue increased 68%, contributing a record $6.7
million in the third quarter. Growth for Bressner is traceable to
maturing leadership, the implementation of pre-planned inventory
strategies, and aggressive sales efforts resulting in expansion of
the European customer base.
The media and entertainment business and the Bressner subsidiary
revenue tends to be lower margin, having the effect of decreasing
margins 3.3 percentage points as compared to the year-ago quarter.
Overall margins were up over the previous quarter by 3.3 percentage
point.
Gross profit was $5.5 million or 34.5% of revenue in the third
quarter of 2021, up from $4.9 million or 37.8% of revenue in the
third quarter of 2020.
Operating expenses increased 14% to $4.5 million in the third
quarter of 2021 compared to $3.9 million in the same year-ago
quarter. Operating expenses as a percentage of revenue decreased to
28.1% in the third quarter of 2021 versus 30.2% in the year-ago
quarter.
Net income on a GAAP basis totaled $981,000 in the third quarter
of 2021 or $0.05 per basic and diluted share compared to $858,000
or $0.05 per basic and diluted share in the year-ago period.
Non-GAAP net income totaled $1.5 million or $0.08 per basic and
diluted share in the third quarter of 2021, as compared to a
non-GAAP net income of $1.2 million or $0.07 per basic and diluted
share in the same year-ago period.
Adjusted EBITDA, a non-GAAP term, totaled $1.8 million in the
third quarter of 2021 as compared to $1.6 million in the same
year-ago period.
Cash, cash equivalents and short-term investments totaled $18.5
million as of September 30, 2021, as compared to $18.5 million on
June 30, 2021. The company believes its cash position and other
available funds provide sufficient liquidity to meet its cash
requirements for working capital and paying down debt, while
supporting its strategic growth initiatives.
First Nine Months 2021 Financial Summary
Total revenues increased 16% to a record $44.2 million compared
to $38.0 million in the prior year.
Gross profit for the first nine months of 2021 was $14.6 million
or 33.0% of revenue, up 2.4 percentage points, compared to $11.6
million or 30.6% of revenue in the same year-ago period. This was
due to growth in the high-margin military business, a fundamental
corporate focus which is gaining strength. OSS business contributed
an additional 2.9 percentage points, and the Bressner subsidiary
was up by 3.3 percentage points.
Total operating expenses increased 2% to $12.8 million versus
$12.6 million in the first nine months of 2020. Operating expenses
as a percentage of revenue improved to 28.9% during the first nine
months of 2021 versus 33.1% in the same year-ago period.
Net income on a GAAP basis improved by $3.0 million to $2.7
million or $0.14 per diluted share, as compared to a net loss of
$250,000 or $(0.02) per basic and diluted share in the first nine
months of 2020. This includes $1.5 million in PPP loan and interest
forgiveness.
Non-GAAP net income totaled $3.0 million or $0.15 per diluted
share, as compared to $773,000 or $0.05 per basic and diluted share
in the first nine months of 2020.
Adjusted EBITDA, a non-GAAP term, was 9.6% of revenue or $4.3
million, as compared to $682,000 in the first nine months of
2020.
OutlookFor the fourth quarter of 2021, OSS
expects revenue of approximately $17.1 million, which would
represent an increase of 23% versus the same year-ago quarter, 7%
sequentially, and record annual revenue of approximately $61.3
million. Conference CallOSS management will hold a
conference call to discuss its third quarter 2021 results at 5p.m.
Eastern Time November 11th, followed by a question-and-answer
period.
Date: Thursday, November 11, 2021Time: 5:00 p.m. Eastern time
(2:00 p.m. Pacific time)Toll-free dial-in number:
1-866-248-8441International dial-in number:
1-786-204-3966Conference ID: 1378308
The conference call will be webcast live and available for
replay here as well as via a link in the Investors section of the
company’s website at onestopsystems.com. OSS regularly uses its
website to disclose material and non-material information to
investors, customers, employees and others interested in the
company.
Please call the conference telephone number five minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact CMA at 1-949-432-7566.
A replay of the call will be available after 8:00 p.m. Eastern
time on the same day through November 25, 2021.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 1378308
About One Stop SystemsOne Stop Systems, Inc.
(OSS) designs and manufactures innovative AI Transportable edge
computing modules and systems, including ruggedized servers,
compute accelerators, expansion systems, flash storage arrays and
Ion Accelerator™ SAN, NAS and data recording software for AI
workflows. These products are used for AI data set capture,
training, and large-scale inference in the defense, oil and gas,
mining, autonomous vehicles and rugged entertainment applications.
OSS utilizes the power of PCI Express, the latest GPU
accelerators and NVMe storage to build award-winning systems,
including many industry firsts, for industrial OEMs and government
customers. The company enables AI on the Fly® by bringing AI
datacenter performance to ‘the edge’, especially on mobile
platforms, and by addressing the entire AI workflow, from
high-speed data acquisition to deep learning, training and
inference. OSS products are available directly or through global
distributors. For more information, go to
www.onestopsystems.com.
Non-GAAP Financial MeasuresManagement believes
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 expenses, impairment of
long-lived assets, financing costs, fair value adjustments from
purchase accounting, stock-based compensation expense and expenses
related to discontinued operations. For this reporting period, it
excludes PPP loan forgiveness, which the company does not
anticipate will reoccur in the foreseeable future.
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, management believes that providing a
non-GAAP financial measure that excludes non-cash and non-recurring
expenses allows for meaningful comparisons between the company’s
core business operating results and those of other companies, as
well as providing management with an important tool for financial
and operational decision making and for evaluating the company’s
own core business operating results over different periods of
time. The company’s adjusted EBITDA measure may not
provide information that is directly comparable to that provided by
other companies in its industry, as other companies in the
company’s industry may calculate non-GAAP financial results
differently, particularly related to non-recurring, unusual items.
The company’s 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. Management does not consider adjusted EBITDA
to be a substitute for, or superior to, the information provided by
GAAP financial results.
|
|
For the Three Months EndedSeptember
30, |
|
|
For the Nine Months EndedSeptember
30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net income (loss) |
|
$ |
980,696 |
|
|
$ |
857,790 |
|
|
$ |
2,719,016 |
|
|
$ |
(250,404 |
) |
Depreciation and amortization |
|
|
396,165 |
|
|
|
410,552 |
|
|
|
1,171,737 |
|
|
|
1,208,762 |
|
Amortization of deferred gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(53,838 |
) |
Stock-based compensation expense |
|
|
399,148 |
|
|
|
210,280 |
|
|
|
1,302,878 |
|
|
|
503,419 |
|
Interest expense |
|
|
128,315 |
|
|
|
174,205 |
|
|
|
447,328 |
|
|
|
393,175 |
|
Interest income |
|
|
(92,105 |
) |
|
|
(143,931 |
) |
|
|
(159,203 |
) |
|
|
(267,911 |
) |
PPP loan and interest forgiveness |
|
|
- |
|
|
|
- |
|
|
|
(1,514,354 |
) |
|
|
- |
|
(Benefit) provision for income taxes |
|
|
(320 |
) |
|
|
57,753 |
|
|
|
295,495 |
|
|
|
(851,056 |
) |
Adjusted EBITDA |
|
$ |
1,811,899 |
|
|
$ |
1,566,649 |
|
|
$ |
4,262,897 |
|
|
$ |
682,147 |
|
Adjusted EPS excludes the impact of certain items and therefore
has not been calculated in accordance with GAAP. Management
believes that exclusion of certain selected items assists in
providing a more complete understanding of the company’s underlying
results and trends and allows for comparability with its peer
company index and industry. Management uses this measure along with
the corresponding GAAP financial measures to manage the company’s
business and to evaluate its performance compared to prior periods
and the marketplace. The company defines Non-GAAP (loss) income as
(loss) or income before amortization, stock-based compensation,
expenses related to discontinued operations, impairment of
long-lived assets and non-recurring acquisition costs. For this
reporting period, it excludes PPP loan forgiveness, which the
company does not anticipate will reoccur in the foreseeable future.
Adjusted EPS expresses adjusted (loss) income 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. Management
expects 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
the company’s presentation of these non-GAAP financial measures
that these costs are unusual, infrequent or
non-recurring.
The following table reconciles net loss attributable to common
stockholders and diluted earnings per share:
|
|
For the Three Months EndedSeptember
30, |
|
|
For the Nine Months EndedSeptember
30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net income (loss) |
|
$ |
980,696 |
|
|
$ |
857,790 |
|
|
$ |
2,719,016 |
|
|
$ |
(250,404 |
) |
Amortization of intangibles |
|
|
163,900 |
|
|
|
170,985 |
|
|
|
491,701 |
|
|
|
520,035 |
|
Stock-based compensation expense |
|
|
399,148 |
|
|
|
210,280 |
|
|
|
1,302,878 |
|
|
|
503,419 |
|
PPP loan and interest forgiveness |
|
|
- |
|
|
|
- |
|
|
|
(1,514,354 |
) |
|
|
- |
|
Non-GAAP net income |
|
$ |
1,543,744 |
|
|
$ |
1,239,055 |
|
|
$ |
2,999,241 |
|
|
$ |
773,050 |
|
Non-GAAP net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.17 |
|
|
$ |
0.05 |
|
Diluted |
|
$ |
0.08 |
|
|
$ |
0.07 |
|
|
$ |
0.15 |
|
|
$ |
0.05 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,636,337 |
|
|
|
16,585,773 |
|
|
|
18,170,700 |
|
|
|
16,469,457 |
|
Diluted |
|
|
19,963,270 |
|
|
|
17,018,614 |
|
|
|
19,466,023 |
|
|
|
16,902,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, to our management’s expectations for
revenue growth generated by new products and design wins. 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 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 we undertake 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 Contact: Katie RiveraOne Stop Systems,
Inc. Tel (760) 745-9883Email contact
Investor Relations:Ronald Both or Justin
LumleyCMA Investor RelationsTel (949) 432-7557 Email contact
ONE STOP SYSTEMS, INC. (OSS)
UNAUDITED CONSOLIDATED BALANCE
SHEETS
|
|
Unaudited |
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,955,215 |
|
|
$ |
6,316,921 |
|
Short-term investments |
|
|
14,534,084 |
|
|
|
- |
|
Accounts receivable, net |
|
|
5,808,184 |
|
|
|
7,458,383 |
|
Inventories, net |
|
|
14,361,034 |
|
|
|
9,647,504 |
|
Prepaid expenses and other current assets |
|
|
1,121,868 |
|
|
|
655,708 |
|
Total current assets |
|
|
39,780,385 |
|
|
|
24,078,516 |
|
Property and equipment, net |
|
|
3,090,908 |
|
|
|
3,487,178 |
|
Deposits and other |
|
|
35,629 |
|
|
|
81,709 |
|
Deferred tax assets, net |
|
|
3,604,607 |
|
|
|
3,698,593 |
|
Goodwill |
|
|
7,120,510 |
|
|
|
7,120,510 |
|
Intangible assets, net |
|
|
170,556 |
|
|
|
662,257 |
|
Total Assets |
|
$ |
53,802,595 |
|
|
$ |
39,128,763 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,846,282 |
|
|
$ |
976,420 |
|
Accrued expenses and other liabilities |
|
|
3,442,091 |
|
|
|
3,481,444 |
|
Current portion of notes payable, net of debt discount of $0 and
$2,047, respectively |
|
|
1,736,546 |
|
|
|
1,365,204 |
|
Current portion of related party notes payable, net of debt
discount of $0 and $6,726, respectively |
|
|
- |
|
|
|
199,943 |
|
Current portion of senior secured convertible note, net of debt
discounts of $20,462 and $256,242, respectively |
|
|
2,570,447 |
|
|
|
1,789,212 |
|
Total current liabilities |
|
|
11,595,366 |
|
|
|
7,812,223 |
|
Senior secured convertible
note, net of current portion and debt discounts of $0 and
$14,107, respectively |
|
|
- |
|
|
|
531,347 |
|
Paycheck protection program
note payable |
|
|
- |
|
|
|
1,499,360 |
|
Total liabilities |
|
|
11,595,366 |
|
|
|
9,842,930 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common stock, $.0001 par value; 50,000,000 shares
authorized; 18,666,022 and 16,684,424 shares issued and
outstanding, respectively |
|
|
1,867 |
|
|
|
1,668 |
|
Additional paid-in capital |
|
|
41,040,749 |
|
|
|
30,758,354 |
|
Accumulated other comprehensive income |
|
|
207,333 |
|
|
|
287,547 |
|
Accumulated earnings (deficit) |
|
|
957,280 |
|
|
|
(1,761,736 |
) |
Total stockholders’ equity |
|
|
42,207,229 |
|
|
|
29,285,833 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
53,802,595 |
|
|
$ |
39,128,763 |
|
|
|
|
|
|
|
|
|
|
ONE STOP SYSTEMS, INC. (OSS)
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
|
$ |
15,984,293 |
|
|
$ |
12,976,058 |
|
|
$ |
44,205,054 |
|
|
$ |
37,961,023 |
|
Cost of revenue |
|
|
10,467,590 |
|
|
|
8,074,445 |
|
|
|
29,602,823 |
|
|
|
26,338,527 |
|
Gross profit |
|
|
5,516,703 |
|
|
|
4,901,613 |
|
|
|
14,602,231 |
|
|
|
11,622,496 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
1,920,574 |
|
|
|
1,817,499 |
|
|
|
5,726,978 |
|
|
|
6,208,922 |
|
Marketing and selling |
|
|
1,570,135 |
|
|
|
1,103,384 |
|
|
|
4,217,328 |
|
|
|
3,137,833 |
|
Research and development |
|
|
999,715 |
|
|
|
1,001,288 |
|
|
|
2,839,965 |
|
|
|
3,213,339 |
|
Total operating expenses |
|
|
4,490,424 |
|
|
|
3,922,171 |
|
|
|
12,784,271 |
|
|
|
12,560,094 |
|
Income (loss) from operations |
|
|
1,026,279 |
|
|
|
979,442 |
|
|
|
1,817,960 |
|
|
|
(937,598 |
) |
Other income (expense),
net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
92,105 |
|
|
|
143,931 |
|
|
|
159,203 |
|
|
|
267,911 |
|
Interest expense |
|
|
(128,315 |
) |
|
|
(174,205 |
) |
|
|
(447,328 |
) |
|
|
(393,175 |
) |
Other income (expense), net |
|
|
(9,693 |
) |
|
|
(33,625 |
) |
|
|
1,484,676 |
|
|
|
(38,598 |
) |
Total other (expense) income, net |
|
|
(45,903 |
) |
|
|
(63,899 |
) |
|
|
1,196,551 |
|
|
|
(163,862 |
) |
Income (loss) before income
taxes |
|
|
980,376 |
|
|
|
915,543 |
|
|
|
3,014,511 |
|
|
|
(1,101,460 |
) |
(Benefit) provision for income
taxes |
|
|
(320 |
) |
|
|
57,753 |
|
|
|
295,495 |
|
|
|
(851,056 |
) |
Net income (loss) |
|
$ |
980,696 |
|
|
$ |
857,790 |
|
|
$ |
2,719,016 |
|
|
$ |
(250,404 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.15 |
|
|
$ |
(0.02 |
) |
Diluted |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,636,337 |
|
|
|
16,585,773 |
|
|
|
18,170,700 |
|
|
|
16,469,457 |
|
Diluted |
|
|
19,963,270 |
|
|
|
17,018,614 |
|
|
|
19,466,023 |
|
|
|
16,469,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Stop Systems (NASDAQ:OSS)
Historical Stock Chart
From Aug 2024 to Sep 2024
One Stop Systems (NASDAQ:OSS)
Historical Stock Chart
From Sep 2023 to Sep 2024