One Stop Systems, Inc. (Nasdaq: OSS), a leader in AI Transportable
solutions on the edge, reported results for the fourth quarter and
full year ended December 31, 2021.
Q4 Financial Highlights
- Revenue in the fourth quarter of
2021 totaled $17.8 million, up 11% from the prior quarter revenue,
and up 28% versus the same year-ago quarter.
- GAAP net loss totaled $386,000 or
$(0.02) per share.
- Non-GAAP net income totaled $71,000
or $0.00 per share (see definition of this and other non-GAAP
measures and their reconciliation to GAAP, below).
- Cash and cash equivalents and short-term investments totaled of
$19.6 million on December 31, 2021.
Full Year 2021 Financial Highlights
- Revenue increased 19% from the prior
year to record $62.0 million.
- Income from operations increased to
$1.7 million compared to a loss of $424,000 in the prior year.
- GAAP net income in 2021 totaled $2.3
million or $0.12 per diluted share, as compared to the year-ago net
loss of $6,544 or $(0.00) per basic and diluted share.
- Non-GAAP net income in 2021 totaled
$3.1 million or $0.16 per diluted share, compared to the year-ago
non-GAAP net income of $1.4 million or $0.08 per diluted
share.
- Adjusted EBITDA, a non-GAAP term, increased to $4.9 million
from $1.8 million in 2020.
2021 Operational Highlights
- New program wins continued at a
strong pace. For 2021, the company won a total of 14 new $1
million-plus programs, with six in the fourth quarter.
- New program wins in 2021 yielded
revenue of $8.5 million.
- Launched Rigel Edge Supercomputer,
the company’s most compact and powerful AI Transportable compute
server to date.
- Introduced ExpressBox 4400 (EB4400),
designed to support challenging AI Transportable applications such
as autonomous trucks.
Management Commentary
“In 2021, we set several financial performance records,
including a 19% increase in revenue to a record $62 million,”
commented OSS president and CEO, David Raun. “Revenue generated by
our second and third largest customers in the higher-margin
military space grew about 50%, while sales to our largest customer
in the media and entertainment space nearly doubled year-over-year.
Bressner, our European subsidiary, did exceptionally well,
producing annual growth of 29%.
“In the fourth quarter, our largest customer outperformed by
over 3x its revenue from a year ago. This helped us exceed our
quarterly revenue guidance by about $700,000. The $17.8 million in
fourth quarter revenue represents an increase of 11% over the
previous quarter and 28% over the same year-ago quarter.
“While our fourth quarter was also a record, it involved a
greater mix of lower-margin products compared to the previous three
quarters, yielding only a 28.3% gross margin. However, in the
current quarter we are seeing overall margin returning to normal
levels.
“Still, for the year 2021, we generated record net income of
$2.3 million, in comparison to near break-even in 2020. The strong
bottom-line performance helped drive adjusted EBITDA up nearly 300%
to a record $4.9 million or about 8% of total revenue.
“We ended the year strong, with six new major program wins in
the fourth quarter out of the total 14 major program wins for the
year. These wins in 2021 contributed revenue of $8.5 million, up
approximately 25% over 2020. Five of the 14 were for AI
Transportable solutions, a rapidly growing segment of the edge
computing market where we enjoy a strong competitive edge.
“If fact, we continue to see an acceleration in our AI
Transportable activity. Our pipeline of potential major programs
has expanded to a record 29. More than half of these opportunities
involve new AI Transportable applications.
“Our AI Transportable solutions for the trucking industry has
already enabled hundreds-of-thousands of miles of autonomous
driving. We are committed to solving the challenging requirements
for this industry. This has led to the development and the
introduction of new products while being engaged with multiple key
players.
“We see this as a perfect example of an escalating market that
demands performance without compromise and where we can leverage
our superior technology for AI deployed in harsh environments.
These applications require ruggedization and unique power, cooling,
form factors and quality—all critical areas that we are told by our
customers that OSS remains a leader in the industry.
“On multiple engagements, our customers tell us we are not only
the best solution they’ve found, we’re the only solution that meets
their requirements. Their feedback affirms our vision of providing
superior ruggedized compute and storage products for these
demanding environments.
“While we expect our first quarter to continue to show
traditional seasonality, we anticipate about 26% revenue growth
over the same year-ago quarter, with revenue of about $16.8
million. Combined with a return to normalized gross margins, we
believe this sets the stage for another great year for One Stop
Systems.”
Q4 Financial Summary
Revenue in the fourth quarter of 2021 totaled $17.8 million, up
11% from $16.0 million in the previous quarter and up 28% compared
to $13.9 million in the same year-ago quarter.
The sequential improvement was primarily due to increased sales
to the company’s two largest accounts as well as new customers. The
increase over the same year-ago quarter was primarily due to the
29% increase in the company’s core OSS business revenue to $11.5
million as compared to the same year-ago quarter. The increase was
also due to the revenue from Bressner, the company’s European
subsidiary, increasing 25% to $6.3 million. The increase for
Bressner was due to capitalizing on planned strategic inventory
purchases during a time of constrained product availability.
Gross profit totaled $5.0 million or 28.3% of revenue as
compared to $4.8 million or 34.5% in the same year-ago quarter. The
decrease in gross margin was primarily due to a change in product
sales mix for the quarter that included increased lower-margin
sales from the company’s large media and entertainment customer,
and, to a lesser extent, higher than anticipated supply and
engineering costs.
Operating expenses increased 19% to $5.1 million compared to
$4.3 million in the same year-ago quarter. However, operating
expenses as a percentage of revenue decreased to 28.7% in the
fourth quarter of 2021 versus 30.9% in the year-ago quarter.
GAAP net loss totaled $386,000 or $(0.02) per basic and diluted
share compared to a net income of $244,000 or $0.01 per basic and
diluted share in the same year-ago period.
Non-GAAP net income totaled $71,000 or $0.00 per share, as
compared to $636,000 or $0.04 per basic and diluted share in the
same year-ago period.
Adjusted EBITDA, a non-GAAP term, totaled $620,000 compared to
$1.1 million in the same year-ago period.
Cash and cash equivalents and short-term investments totaled
$19.6 million as of December 31, 2021, as compared to $6.3 million
on December 31, 2020. The increase is due to a registered direct
offering completed in the first quarter of 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.
Full Year 2021 Financial SummaryFor the year
2021, revenue was $62.0 million, an increase of 19% from $51.9
million in the same year-ago period. The increase was due primarily
to an increase in sales to the company’s media and entertainment
customers and government OEM suppliers.Gross profit was $19.6
million or 31.7% of revenue, compared to $16.4 million or 31.7% of
revenue in 2020.
Operating expenses increased 6% to $17.9 million from $16.9
million in 2020. Operating expenses as a percentage of revenue
improved to 28.9% versus 32.5% in the year-ago period. The increase
in operating expense is largely attributable to an increase in
marketing and selling expense of $2.1 million, partially offset by
a decrease in general and administrative expense of $760,000 and a
decrease in research and development expense of $287,000.
GAAP net income totaled $2.3 million or $0.12 per diluted share,
as compared to a loss of $6,544 or $(0.00) per share in 2020.
Non-GAAP net income totaled $3.1 million or $0.16 per diluted
share, as compared to non-GAAP net income of $1.4 million or $0.08
per diluted share in the full year of 2020.
Adjusted EBITDA, a non-GAAP term, was $4.9 million, as compared
to $1.8 million in 2020.
OutlookFor the first quarter of 2022, OSS
expects revenue of approximately $16.8 million, which represent 26%
growth over the first quarter of last year.
Conference CallOSS management will hold a
conference call to discuss its fourth quarter and full year 2021
results later today, followed by a question-and-answer period.
Date: Thursday, March 24, 2021Time: 5:00 p.m. Eastern time (2:00
p.m. Pacific time)Toll-free dial-in number:
1-888-204-4368International dial-in number:
1-786-789-4797Conference ID: 1238670Webcast: here (live and
replay)
The webcast will include a slide presentation viewable via the
webcast link above.
Approximately two hours after the Q&A session, an archived
version of the webcast will be available 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 April 7, 2022.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 1238670
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 Measures
The company 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
expense, impairment of long-lived assets, financing costs, 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, the company 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 us 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 the company’s industry, as other companies in the
company’s industry may calculate non-GAAP financial results
differently, particularly related to non-recurring and 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. The company does 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, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net income (loss) |
|
$ |
(386,243 |
) |
|
$ |
243,860 |
|
|
$ |
2,332,773 |
|
|
$ |
(6,544 |
) |
Depreciation and amortization |
|
|
308,870 |
|
|
|
397,770 |
|
|
|
1,480,608 |
|
|
|
1,606,532 |
|
Amortization of deferred gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(53,838 |
) |
Stock-based compensation expense |
|
|
392,227 |
|
|
|
220,959 |
|
|
|
1,695,105 |
|
|
|
724,378 |
|
Interest income |
|
|
(85,179 |
) |
|
|
(150,468 |
) |
|
|
(244,382 |
) |
|
|
(418,379 |
) |
Interest expense |
|
|
79,811 |
|
|
|
157,599 |
|
|
|
527,139 |
|
|
|
550,774 |
|
PPP loan and interest forgiveness |
|
|
- |
|
|
|
|
|
(1,514,354 |
) |
|
|
- |
|
Provision (benefit) for income taxes |
|
|
310,180 |
|
|
|
247,312 |
|
|
|
605,675 |
|
|
|
(603,744 |
) |
Adjusted EBITDA |
|
$ |
619,666 |
|
|
$ |
1,117,032 |
|
|
$ |
4,882,564 |
|
|
$ |
1,799,179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share, or adjusted EPS, excludes the
impact of certain items and, therefore, has not been calculated in
accordance with GAAP. The company 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 the company’s peer company index and
industry. The company uses this measure along with the
corresponding GAAP financial measures to manage the company’s
business and to evaluate the its performance compared to prior
periods and the marketplace. The Company defines non-GAAP income
(loss) as income or (loss) before amortization, 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. The company
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 income (loss) to adjusted EPS
and diluted earnings per share:
|
|
For The Three Months Ended December 31, |
|
For the Year Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
Net income (loss) |
|
$ |
(386,243 |
) |
|
$ |
243,860 |
|
$ |
2,332,773 |
|
|
$ |
(6,544 |
) |
Amortization of intangibles |
|
|
65,171 |
|
|
|
170,985 |
|
|
556,842 |
|
|
|
683,935 |
|
Stock-based compensation expense |
|
|
392,227 |
|
|
|
220,959 |
|
|
1,695,105 |
|
|
|
724,378 |
|
PPP loan and interest forgiveness |
|
|
- |
|
|
|
- |
|
|
(1,514,354 |
) |
|
|
- |
|
Non-GAAP net income |
|
$ |
71,155 |
|
|
$ |
635,804 |
|
$ |
3,070,366 |
|
|
$ |
1,401,769 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
0.04 |
|
$ |
0.17 |
|
|
$ |
0.08 |
|
Diluted |
|
$ |
0.00 |
|
|
$ |
0.04 |
|
$ |
0.16 |
|
|
$ |
0.08 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
18,707,006 |
|
|
|
16,639,514 |
|
|
18,305,878 |
|
|
|
16,512,203 |
|
Diluted |
|
|
19,834,079 |
|
|
|
17,143,126 |
|
|
19,503,737 |
|
|
|
16,752,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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
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
LumleyCMATel (949) 432-7557 Email contact
ONE STOP SYSTEMS, INC. (OSS) |
|
UNAUDITED CONSOLIDATED BALANCE SHEETS |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,101,174 |
|
|
$ |
6,316,921 |
|
Short-term investments |
|
|
14,535,750 |
|
|
|
- |
|
Accounts receivable, net |
|
|
5,089,804 |
|
|
|
7,458,383 |
|
Inventories, net |
|
|
12,277,873 |
|
|
|
9,647,504 |
|
Prepaid expenses and other current assets |
|
|
580,651 |
|
|
|
655,708 |
|
Total current assets |
|
|
37,585,252 |
|
|
|
24,078,516 |
|
Property and equipment, net |
|
|
3,091,415 |
|
|
|
3,487,178 |
|
Deposits and other |
|
|
46,845 |
|
|
|
81,709 |
|
Deferred tax assets, net |
|
|
3,641,032 |
|
|
|
3,698,593 |
|
Goodwill |
|
|
7,120,510 |
|
|
|
7,120,510 |
|
Intangible assets, net |
|
|
105,385 |
|
|
|
662,257 |
|
Total Assets |
|
$ |
51,590,439 |
|
|
$ |
39,128,763 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,059,059 |
|
|
$ |
976,420 |
|
Accrued expenses and other liabilities |
|
|
3,846,488 |
|
|
|
3,481,444 |
|
Current portion of notes payable, net of debt discount of $0
and$2,047, respectively |
|
|
1,137,651 |
|
|
|
1,365,204 |
|
Current portion of related-party notes payable, net of debt
discountof $0 and $6,726, respectively |
|
|
- |
|
|
|
199,943 |
|
Current portion of senior secured convertible note, net of debt
discounts of $2,384 and $256,242 |
|
|
2,588,525 |
|
|
|
1,789,212 |
|
Total current liabilities |
|
|
9,631,723 |
|
|
|
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 |
|
|
9,631,723 |
|
|
|
9,842,930 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common stock, $.0001 par value; 50,000,000 shares authorized;
18,772,214 and 16,684,424 shares issued and outstanding,
respectively |
|
|
1,877 |
|
|
|
1,668 |
|
Additional paid-in capital |
|
|
41,232,441 |
|
|
|
30,758,354 |
|
Accumulated other comprehensive income |
|
|
153,361 |
|
|
|
287,547 |
|
Accumulated earnings (deficit) |
|
|
571,037 |
|
|
|
(1,761,736 |
) |
Total stockholders’ equity |
|
|
41,958,716 |
|
|
|
29,285,833 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
51,590,439 |
|
|
$ |
39,128,763 |
|
ONE STOP
SYSTEMS, INC. (OSS) |
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
For the Three Months Ended December 31, |
|
For the Year Ended December 31, |
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Revenue |
|
$ |
17,777,050 |
|
|
$ |
13,934,365 |
|
|
$ |
61,982,104 |
|
|
$ |
51,895,388 |
|
|
Cost of
revenue |
|
|
12,739,992 |
|
|
|
9,122,247 |
|
|
|
42,342,815 |
|
|
|
35,460,774 |
|
|
Gross margin |
|
|
5,037,058 |
|
|
|
4,812,118 |
|
|
|
19,639,289 |
|
|
|
16,434,614 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
1,931,440 |
|
|
|
2,209,436 |
|
|
|
7,658,418 |
|
|
|
8,418,358 |
|
|
Marketing and selling |
|
|
1,983,900 |
|
|
|
982,945 |
|
|
|
6,201,228 |
|
|
|
4,120,778 |
|
|
Research and development |
|
|
1,192,651 |
|
|
|
1,106,420 |
|
|
|
4,032,616 |
|
|
|
4,319,759 |
|
|
Total operating expenses |
|
|
5,107,991 |
|
|
|
4,298,801 |
|
|
|
17,892,262 |
|
|
|
16,858,895 |
|
|
(Loss)
income from operations |
|
|
(70,933 |
) |
|
|
513,317 |
|
|
|
1,747,027 |
|
|
|
(424,281 |
) |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
85,179 |
|
|
|
150,468 |
|
|
|
244,382 |
|
|
|
418,379 |
|
|
Interest expense |
|
|
(79,811 |
) |
|
|
(157,599 |
) |
|
|
(527,139 |
) |
|
|
(550,774 |
) |
|
Gain on forgiveness of Paycheck Protection Program (PPP) loan and
interest |
|
|
- |
|
|
|
- |
|
|
|
1,514,354 |
|
|
|
- |
|
|
Other expense, net |
|
|
(10,498 |
) |
|
|
(15,014 |
) |
|
|
(40,176 |
) |
|
|
(53,612 |
) |
|
Total other expense, net |
|
|
(5,130 |
) |
|
|
(22,145 |
) |
|
|
1,191,421 |
|
|
|
(186,007 |
) |
|
(Loss)
income before income taxes |
|
|
(76,063 |
) |
|
|
491,172 |
|
|
|
2,938,448 |
|
|
|
(610,288 |
) |
|
Provision
(benefit) for income taxes |
|
|
310,180 |
|
|
|
247,312 |
|
|
|
605,675 |
|
|
|
(603,744 |
) |
|
Net (loss) income |
|
$ |
(386,243 |
) |
|
$ |
243,860 |
|
|
$ |
2,332,773 |
|
|
$ |
(6,544 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.13 |
|
|
$ |
(0.00 |
) |
|
Diluted |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
18,707,006 |
|
|
|
16,639,514 |
|
|
|
18,305,878 |
|
|
|
16,512,203 |
|
|
Diluted |
|
|
18,707,006 |
|
|
|
17,143,126 |
|
|
|
19,503,737 |
|
|
|
16,512,203 |
|
|
|
|
|
|
|
|
|
|
|
|
One Stop Systems (NASDAQ:OSS)
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From Mar 2024 to Apr 2024
One Stop Systems (NASDAQ:OSS)
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From Apr 2023 to Apr 2024