Good day, everyone, and welcome to today's One Stop Systems 2024 Quarter 1 Conference Call and Webcast. [Operator Instructions]. Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to President and CEO, Mr. Mike Knowles. Please go ahead, sir.

Thank you, Jennifer. Good afternoon, everyone, and thank you for joining today's call. So they joined the company as CEO almost a year ago, we are focused on transitioning our business away from legacy media and niche enterprise customers to pursue emerging opportunities within large and growing defense and commercial markets. As early adopters of applications that will utilize artificial intelligence or AI, machine learning or ML and sensor processing at the edge, we believe defense and commercial markets support significant opportunities for the company's market-leading rugged enterprise-class compute products. I've also had the opportunity to engage with current and prospective customers and continually hear positive feedback on the value of OSS' products as well as our engineering and support capabilities. I continue to believe our existing products and future road map align extremely well with the growing market trends and technology adoption. With strong product offerings, our efforts over the past 12 months have focused on building a team of proven sales, business development and program management associates. This first phase of our transformation created the necessary infrastructure to identify new opportunities and rebuild our sales pipeline to serve new defense and commercial applications and customers. I'm extremely pleased with the progress we have made throughout my first year at OSS as we have assembled a strong sales organization, expanded our 5-year unfactored pipeline to over $1 billion and enter new multiyear and large-scale platform-based sales opportunities with new and existing customers. In addition, approximately 70% of our current pipeline is comprised of platform opportunities, which we believe will help contribute predictable multiyear revenue and backlog to OSS. We have also pursued a second phase of our transformation aimed at creating a growth-focused multiyear strategic plan. Our new strategic plan was presented to our Board of Directors in early…

Thank you, Mike, and good afternoon, everyone. I believe all show a clear path to deliver strong financial returns over the coming years, and I look forward to updating investors on the progress we are making on future calls. Turning to our financial results for the first quarter ended March 31, 2024, our first charter results reflects the continued transformation of our business model as well as the effect of a fluid operating environment. Despite these impacts, I am pleased to report that our consolidated revenue, gross margin and EBITDA met or exceeded our plans. As a reminder, the company has operated in 2 operating segments. All our OSS segment operates in the United States and is primarily focused and involved in the design and manufacture of high-performance rugged edge processing, compute, storage and connectivity systems. Our Bressner segment operates throughout Europe and is a system integrator who are standard and customer all in one part of our systems and components. Bressner also serves as a channel for OSS products to the European and Middle East markets. The following comments are based upon comparison to the first quarter results of 2024 as compared to the first quarter of 2023. For the first quarter, we reported consolidated revenue of $12.7 million, which exceeds our guidance of $12.5 million. The 24.6% year-over-year reduction in consolidated revenue was primarily due to the timing of orders for data storage component from our large defense customer. Our orders from this customer can fluctuate on a quarterly basis by millions of dollars, which during the first quarter resulted in an approximately $4.4 million swing on a year-over-year basis. For 2024, we anticipate a similar amount of annual order volumes with customers as compared to the prior year. In addition, we experienced the $1.5 million year-over-year reduction…

[Operator Instructions]. And we'll take our first question from Max Michaelis with Lake Street Capital Markets.

First one for me. It's nice to see bookings return to growth here. I was wondering if you could share a percentage increase from this quarter and maybe a bookings growth number for Q2.

Thanks for the question, Max. I would think you're asking if we have the percentage growth year-on-year for bookings?

Yes, maybe for this quarter and then maybe what your expectation is for Q2?

I don't know if John -- I don't have those numbers handy, but we're expecting that to continue to see positive -- our book-to-bill ratio is greater than 1 as we go into Q2 and the following quarters in the fiscal year.

And then a couple more from me. Gross margin seemed to outperform. I think, correct me if I'm wrong, prior expectation was for 32% to 33% in the OSS segment. I think you guys came in a little over 34%. What you may be expecting for maybe the outer quarter or Q2, Q3, Q4? Is this outperformance can continue? Or do you guys expect to return to the norm?

No, you're going to be returning to a norm of about 32.5% for a stand-alone. And for Bressner, you'll see more in the 23% to 24% range as we go throughout the year. And as you see our revenue increased over the period of time.

And then the last one to me. I know you guys are seeing some delays on the defense side. Wondering if you've seen any order cancellations.

On our side, we have not seen order cancellations, Max. Realistically, the biggest impact has been because of the CR. So there's a few bids that we have in that are tied to new programs. The government is not allowed to release new programs or award new programs under CR. So that CR for the Defense Department. I believe it was mid-April when it was finally lifted or other budgets approved. So the government now has been spending the last few weeks and months aligning and getting money flowing and awarded. So no cancellations in the forecast or in our pipeline.

Okay. And then maybe other outside of defense and other commercial markets.

Yes. We have not seen cancellations in commercial either. Just some softness, if you will, as we mentioned in Bressner with the European economy. But as we've checked in with experts and data there, there's still an expected recovery in the second half of the year.

[Operator Instructions]. We will take our next question from Joe Gomes with Noble Capital.

So when you talk about I wonder if you could size possibly when you're transitioning away I understand we all do for how big the legacy media customer was. But when you talk about the niche enterprise customers, what size of that of that business you're transitioning away from?

Sure. I think you're asking what was the size of the media customer business we're moving away from.

No, we all knew that. When you also say niche enterprise customers that you're transitioning away from, just trying to get what size of on revenue contribution those customers were making to the company.

Yes. they were minimal comparative to the media customer.

Okay. And then it sounds a lot of opportunity there. You guys think you're going to see some after the second quarter, some sequential growth. But really, what's going to give you that confidence? We've seen many delays, a lot of system starts historically. And so just trying to get a better handle on what is there giving you that confidence that we're actually going to start to see sequential revenue growth here in the back half of the year?

Yes. Thanks, Joe, for that question. I think it's a couple of things. So right now, we have multiple bids that are out for some of these customer-funded development programs and a couple of other multiyear contract opportunities that we have out there. So that we'll expect to see from Q2 on to see those awards. Those are the ones that will start to lay in quarter-on-quarter ability to have backlog built in. So that gives me confidence. When I joined the company over a year ago, we did not have that the scope or scale of these kinds of programs that we already had proposals out and we're pursuing. So that gives me some good confidence. The other one is I'll take it back to the comment I made, as we've gone through and reorganized and reestablished our pipeline, around 70% of our pipeline is built out on customers that would be bringing multiyear type programs and opportunities to the company. And as we prosecute those, it just continues to build the floor of consistent available quarter-on-quarter, year-on-year revenue that allows us to build up and drive that growth. So given the bids that we already have out and the ones that we have forecasted, we'll be submitting between Q2, Q3 and Q4 this year. That's what gives me the confidence to drive the sequential growth for this year and establish that kind of firm foundation of kind of multiyear revenue opportunities.

Great. And then I know it's very early days, but just maybe a little color here on you hired Craig and looking at that international defense and opportunities and some international commercial opportunities. Just maybe give us an update on progress to date.

Yes, we're making steady progress, I think, on that effort. So Craig was a key addition. There's a lot just in the U.S. DoD space that he's bringing to bear and into the pipeline given his experience in the market. So we're really excited about leveraging that. He's already making impacts in just the few short weeks that he's been here. But in addition, his reach into Canada and some other areas has started to open up some avenues for us to procure and pursue and look at to build our pipeline and our opportunities to go after given his experience in those markets. And I'd say the other thing is we've really spent in the last year a lot of time continuing to utilize our Bressner facility as an opportunity for channel to market for a lot of the products we're developing out of the U.S. site here. And they've done a really good job year-on-year growing the amount of product they pull through and sell. We've been able to use that channel through training them and supporting their technical ability and their technical ability to operate with that in our products in Europe. But we've really expanded through trade shows and outreach all across Europe, the U.K. and into the Middle East with our reach in just the last year. So that's another way we're finding expanding our international reach with the existing resources that we have. As we continue to grow the company and as affordable, we'll look to expand upon that even more.

[Operator Instructions]. We will pause for a moment to allow questions to queue. It appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

We thank you for your support, and we can transition ending the call.

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.