Greetings and welcome to the Moving iMage Technologies' Fourth Quarter and Full Year Fiscal 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Siegel, Senior Managing Director and Hayden IR. Thank you, sir. You may begin.

Good morning. And welcome to the Moving iMage Technologies' fourth quarter and full year fiscal 2022 earnings conference call and webcast. With me today, is Chairman and CEO, Phil Rafnson; co-Founder and Executive VP of Sales and Marketing, Joe Delgado and CFO, Mike Sherman. Today's call will begin with prepared remarks and followed with a Q&A session. For those of you on the webcast can submit your questions through the webcast portal, and we'll do our best to answer them. Please note this event is being recorded. This earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things of company's business strategy and growth strategy, expressions which identify forward-looking statements speak only as of the date the statement is made. These forward-looking statements are based largely on a company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in contemplated by or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. Now I'd like to turn the call over to Phil. Phil?

I'm Phil Rafnson, CEO of Moving iMage Technology or MiT for short. Like last quarter, today, I'm going to spend my part providing an update on overall industry trends that we believe will drive the tremendous growth opportunity for MiT over the next few years. And then, Joe will provide an overview of MiT's business and growth strategy. He will then turn the call over to our CFO, Mike Sherman, to discuss today's results, followed by a question-and-answer period. MiT serves the commercial cinema and live event industry in several ways. Today, most of our business is serving cinema owners and operators. In North America, there are approximately 40,000 screens, 18,000 of which are outside the top-five circuits. While we work with majors, most of our business is with small to medium-sized operators. As you probably know, this industry has been hit hard by COVID during 2020, and the first half of 2021, with box office receipts declining from over $11 billion in 2019, to $2.1 billion in 2020. In the second half of 2021, the industry began to recover, and that trend has continued into 2022, with many blockbusters having already been released. As we look to the remainder of the year, we expect probably three more blockbusters, including Avatar: The Way of Water, Black Panther: Wakanda Forever, and the new Black Adam movie, starring The Rock. For 2023, there is also an already existing slate of releases expected, setting the backdrop for an even stronger year. As I've discussed on the past few calls, there are additional trail winds that we expect to benefit both the cinema and live venue industry. The first is related to government grants. This part of The CARES Act -- as part of the CARES Act, non-publicly traded live event operators were able…

Thank you, Phil. And good morning, everyone. I'm going to start with a review of our four-pillar growth strategy. The first pillar, is driving revenue growth and margin expansion by shifting our product mix towards higher margin and proprietary products. Our proprietary products fall in two categories. First, is our proprietary manufactured goods, which we do right here in Fountain Valley, California. Today, we have nearly 50 of those proprietarily manufactured products that tend to help increase project margins and overall margins when sold à la carte. During our fourth quarter, we strengthened this product line and enhanced our accessibility strategy with a very smart purchase of the USL product line, where we essentially acquired inventory and existing orders for the cost of just the inventory. Second are the products we feel have disruptive potential. For example, we bundled a solution for venue management called CineQC. CineQC is a recurring revenue, SaaS platform hardware and service solution for quality assurance, theater operations, staff management, inventory control, back office analytics, and remote access and control over auditorium systems. We believe there's nothing like it available in the industry. And the signing of National Amusements as a customer was a strong validation of that solution. And we hope to have more to announce in fiscal 2023. Next, we have MI Translator, which will provide the high-end product for our accessibility strategy. The MI Translator is a multi-language translation device with a word-tutoring revenue service attached. This is disruptive operating brings multi-language in-theater captioning capabilities, including an American Sign Language through augmented reality. And the market in North America alone is tremendous, with over 70 million non-English proficient speakers that may not have previously attended movies or for those who did, they could now have a significantly enhanced movie going experience. It received…

Thanks, Joe. Good morning, and thank you everyone for attending our earnings call. Like last quarter, I'm going to spend a little time reviewing our model, and then I'll take you through the quarter followed by a Q&A session. Before I move on though there is a company specific issue related to our friends at Cineworld, which owns Regal filing for bankruptcy protection. First, while a customer, we currently have no exposure to Regal financially. Second, we don't expect a negative impact on our business related to the situation in fiscal 2023, and depending upon the outcome, we believe there are scenarios where we could pick up some additional business. Should any of these scenarios play out, we will discuss this in more detail, but for now, we'll let the process play out. Currently, projects are the key driver for our business making up roughly two-thirds of revenue. For projects we basically serve as a project manager procuring and reselling FF&E and services for refurbishing, upgrading and building new theaters. Since much of these are passed through costs, margins are in the mid-teens. We have several routes to improve project margins. First, we provide installation services, which tend to have margins in the mid-20s. Second, we resell technology products, which tend to have margins in the high-teens to low-20s. Finally, we sell our higher margin proprietary manufactured offerings, with margins ranging from 35% to 55%. As we continue to increase the number of proprietary manufactured products, we expect the mix to shift to more favorably impact gross margin. Over the near term, we expect our proprietary manufactured products and the higher margin resale of technology products to drive this margin expansion. Overtime as our CineQC SaaS platform becomes a larger contributor, as we release our MI Translator, and as other…

No. I don't see any currently. Actually, there is one in the queue. Operator, can you give instructions?

[Operator Instructions] Our first question comes from the line of Kurt Caramanidis with Carl M. Hennig, Please proceed with your question.

Not a bad pronunciation. Thanks, guys. And off the top, I'd like to say you certainly deliver a very thorough outlook for the company as if you were a much larger company, which is reassuring. You definitely go through a lot of detail. And some of my questions have been answered. First of all, on the buyback, I don't think you did buy any shares back yet. And does that window, is it closed now until you report in November, certainly with a stock which was quite a bit higher as pulled back with the overall market looks to be a pretty good opportunity. Can you kind of explain that -- the buyback situation?

Yes. Hey, thanks for joining us and for the call. This is Mike Sherman, the CFO. So currently, right now, the company's focus has been on assuring that we have the capital for acquisition purposes for growth and for our -- carrying out our new product developments. We have established, as you've seen the policy for the buyback. It's only recently that the stock now has come down. So this discussion will be part of our upcoming board meeting. And we will have probably some more insight into what the next steps if any, would be related to any kind of repurchase. But I agree with you.

Okay, marketable securities, are those basically short term bonds, so you're making more versus cash?

Yeah, that's correct. Very conservative approach.

Okay, great. Lastly, I think you've kind of alluded to this. But as your revenues go up, it seems like you've got a really nice pathway to some larger revenues. You would expect margin expansion to go, as you kind of alluded to as well, with your fixed costs. You're getting incremental margin on, as the revenue goes up. Is that the way we should look at it?

That's correct.

Okay, well, thanks a lot. And again, you do a very good job of breaking things down. So we kind of know what -- where the current state of affairs. Now, can -- one thing, Q1 is basically over? Is that what gives you confidence in your guidance? Or is the uncertainty of all the crap going on keeping you maybe a little more modest in your guidance?

Mike, you want me to address that?

Sure. Why don't you go ahead?

Without disclosing anything regarding the first quarter, but, our competence remains pretty strong because of a macro view, right. We feel as we've stated, as Phil has made pretty clear in his opening statement. And the industry overall, in spite of whatever economic headwinds are, we feel it's in a very, very strong position, right. It's still a very economical way to get out of home entertainment even in some more difficult economic headwinds. So we remain confident going forward for sure.

Great, thanks a lot guys. Look forward to the next call.

Thanks very much.

Our next question comes from line of Scott Weis with Semco Capital. Please proceed with your question.

Thank you. Appreciated. Great quarter, guys. Congratulations. With regard to the September quarter your fiscal Q1, we are now mostly through it. Can you give us some commentary on what you're seeing over the past couple of months?

Hey, Scott. It's Joe. Always a pleasure to speak with you, sir.

Thanks, Joe.

It's --I mean, -- as I mentioned to our last caller, our overall enthusiasm for the industry at large remains very strong. Subsequently, competence in our business remains strong.

Okay. With regard to the fiscal '23 revenue guide. Can you provide a little bit more detail and break down, what is coming from the core products, the legacy products versus the newer products like CineQC, for example, and the others?

Well, this is Mike Sherman, by the way. Thank you for your question on it. I don't have the details to give you that in front of you. What I can tell you is how we derived the guidance was to take a very balanced approach. We took what we know right now in our backlog and added to that, the pipelines and with our expectations related to that. And then we also added the expected new product releases that we plan for this upcoming fiscal year. And then we handicapped it. And for the potential disruption, whether it's geopolitical related to inflation or the threat of recession in order to risk reduce it. And at this early stage of the year, we feel that this is an appropriate guidance from a revenue standpoint. And of course, as the year goes on, if there are any changes to that, we will update accordingly.

Okay, thanks. And then last question with regard to the new products. Can you talk a bit about the CineQC pipeline? Have you rolled out to National Amusements yet? And if not, what's the timing on that? And then of the other new products, can you talk about the timing of their rollout to the marketplace?

Yeah. Hi, Scott, it's Joe again. Yeah, we've actually finished the domestic rollout for National Amusements. And we anticipate more the international expansion and more domestic expansion. As far as the timeline, we're looking forward to end of this fiscal and the beginning of the next. So we feel that once CineQC is anchored, it'll start to produce and sell reorders both internationally and domestic.

So we should expect to see revenues in the September quarter, if you've already deployed in domestically?

Because we deployed, the billing cycle doesn't start until this next -- the second quarter, Scott.

Okay, thank you. And then what --

I'm sorry, sir. Can you repeat your question?

Can you share what the timing of the rollout of some of the other new products like MI Translator, among some of the others?

Not yet. As we mentioned in the call Scott, we're going to be in the trialing. And we kind of like to keep our exhibitor partners while we're trialing and getting the product management and customer feedback, a little closer to the vest. But we're pretty excited about how that's going.

Okay, thank you. Nice quarter.

Thanks, Scott. Appreciate your support, sir.

Thanks, Scott.

Thank you. We have no further questions at this time. And with that, the conclusion of today's call. You may disconnect your lines this time. Thank you for your participation. And have a wonderful day.