Coda Octopus Group Inc (CODA) 2023 Q1 法說會逐字稿

Good morning, and welcome to Coda Octopus Group's first-quarter fiscal year 2023 earnings conference call. My name is Nico, and I will be your operator today.

早上好，歡迎來到 Coda Octopus Group 2023 財年第一季度財報電話會議。我叫 Nico，今天我將是您的接線員。

Before this call, Coda Octopus issued its financial results for the fiscal first quarter ended January 31, 2023, including a press release, a copy of which will be furnished in a report filed with the SEC and will be available in the Investor Relations section of the company's website.

在此次電話會議之前，Coda Octopus 發布了截至 2023 年 1 月 31 日的第一財季財務業績，包括新聞稿，其副本將在提交給美國證券交易委員會的報告中提供，並將在投資者關係部分提供公司的網站。

Joining us on today's call from Coda Octopus are its Chair and CEO, Annmarie Gayle; and its CFO, Nathan Parker. (Operator instructions) Before we begin, Jackie Keshner from Gateway Group will make a brief introductory statement. Miss Keshner, please proceed.

與我們一起參加今天來自 Coda Octopus 的電話會議的是其主席兼首席執行官 Annmarie Gayle；及其首席財務官 Nathan Parker。 （操作員說明）在我們開始之前，來自 Gateway Group 的 Jackie Keshner 將做一個簡短的介紹性發言。凱什納小姐，請繼續。

Thank you, Nico. Good morning, everyone, and welcome to Coda Octopus's first-quarter fiscal year 2023 earnings conference call. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

謝謝你，妮可。各位早上好，歡迎來到 Coda Octopus 2023 財年第一季度財報電話會議。在管理層開始正式發表評論之前，我們想提醒大家，我們今天所做的一些聲明可能被視為證券法規定的前瞻性聲明，並涉及許多風險和不確定性。因此，我們提醒您，有許多因素（其中許多是我們無法控制的）可能導致實際結果和事件與前瞻性陳述中描述的結果和事件存在重大差異。

For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

有關與我們的前瞻性陳述相關的更詳細的風險、不確定性和假設，請參閱我們的收益發布和向美國證券交易委員會提交的公開文件中的披露。除非法律要求，否則我們不承擔更新前瞻性陳述以反映前瞻性陳述作出之日之後發生的情況或事件的任何義務或承諾。

We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified in our Form 10-K.

我們建議您參考我們向美國證券交易委員會提交的文件，以詳細披露和描述我們的業務以及不確定性和其他可變情況，包括但不限於我們的 10-K 表格中確定的風險和不確定性。

You may get Coda Octopus's Securities and Exchange Commission filings for free by visiting the SEC website at www.sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of Coda Octopus's website. Now, I will turn the call over to the company's Chair and CEO, Annmarie Gayle. Annmarie?

您可以訪問 SEC 網站 www.sec.gov，免費獲得 Coda Octopus 的證券交易委員會備案文件。我還想提醒大家，這個電話正在錄音中，可以通過 Coda Octopus 網站投資者關係部分的鏈接進行重播。現在，我將把電話轉給公司董事長兼首席執行官 Annmarie Gayle。安瑪麗？

Thanks, Jackie, and good morning, everyone. Thank you for joining us for our first-quarter 2023 earnings call. Last quarter, I walked through an overview of our business and key growth pillars for those that may have been new to our company. While I won't repeat myself today, I will reference some of the growth accelerators discussed and highlight some of the attributes of our company that we believe positions Coda to succeed.

謝謝，傑基，大家早上好。感謝您加入我們的 2023 年第一季度財報電話會議。上個季度，我概述了我們的業務和關鍵增長支柱，這些支柱可能對我們公司來說是新的。雖然我今天不會重複，但我將參考所討論的一些增長加速器，並強調我們公司認為 Coda 能夠取得成功的一些屬性。

I'd now like to summarize our first-quarter 2023 performance. We had strong product phase and operational momentum for our Echoscope PIPE and DAVD system, even as we navigated supply chain and foreign currency headwinds.

我現在想總結一下我們 2023 年第一季度的業績。我們的 Echoscope PIPE 和 DAVD 系統擁有強勁的產品階段和運營勢頭，即使我們在供應鍊和外匯逆風中航行。

We continue to pivot from R&D focus to sales and marketing and brand building and the first quarter 2023 saw us taking a number of actions in this direction, participating in several industry trade shows for the promotion of our products and services. Also, holding key DAV demonstrations for foreign navies and Tier 1 offshore service providers.

我們繼續將重點從研發重點轉向銷售和營銷以及品牌建設，2023 年第一季度，我們朝這個方向採取了許多行動，參加了多個行業貿易展，以推廣我們的產品和服務。此外，還為外國海軍和一級離岸服務提供商舉辦重要的 DAV 演示。

We also had DAVD demonstrations with the US Navy and Naval Surface Warfare Center, Panama City, which incorporated the DAVD in the new deep sea expeditionary with no compression diving suit. That's a new -- that's a diving suit called DSEND.

我們還與美國海軍和巴拿馬城海軍水面作戰中心進行了 DAVD 演示，該中心將 DAVD 納入了新的無壓縮潛水服深海探險中。那是一件新的——那是一件叫做 DSEND 的潛水服。

We continue to believe that our most promising pillars of growth are our Echoscope and Echoscope PIPE products as well as our Diver Augmented Vision Display system, or the DAVD system. I would like to provide some updates on our progress on each of these pillars in the first quarter of 2023.

我們仍然相信，我們最有前途的增長支柱是我們的 Echoscope 和 Echoscope PIPE 產品以及我們的 Diver 增強視覺顯示系統或 DAVD 系統。我想提供一些關於我們在 2023 年第一季度在這些支柱上取得進展的最新情況。

Turning to the Echoscope but giving some short remarks about what is the Echoscope. Within our company being -- with our company being a first mover in innovating and commercializing real-time 3D sonar technology, as well as shifts in the market requirements, the real-time 3D imaging in the subsea market, we have positioned Coda to be the market leader in real-time 3D underwater imaging.

轉向 Echoscope，但就什麼是 Echoscope 給出一些簡短的評論。在我們公司內部 - 我們公司是實時 3D 聲納技術創新和商業化的先行者，以及市場需求的變化，海底市場的實時 3D 成像，我們將 Coda 定位為實時 3D 水下成像的市場領導者。

Echoscope technology is currently the only real-time 3D imaging sonar. It is the only sonar that can generate a real-time 3D image of moving objects underwater in zero-visibility conditions. Almost, all activities underwater involve imaging moving objects. Typical examples of our Echoscope applications are: offshore renewables, where cables are being laid or repaired; breakwater construction or remediation work involving the breakwater; bridge inspection or placing or removing something from the seabed; or more broadly, real-time inspection and monitoring underwater in 3D.

Echoscope技術是目前唯一的實時3D成像聲吶。它是唯一能夠在零能見度條件下生成水下移動物體實時 3D 圖像的聲納。幾乎所有水下活動都涉及成像移動物體。我們的 Echoscope 應用的典型示例是：海上可再生能源，鋪設或維修電纜；涉及防波堤的防波堤建造或修復工作；橋樑檢查或從海床上放置或移除某物；或者更廣泛地說，實時檢查和水下 3D 監控。

The Echoscope is the only choice for customers where there is poor- or zero-visibility conditions prevailing or imaging moving objects in 3D. This progress made by our technology business over the last four years, both in expanding the range of available Echoscope models and configuration and getting into some new underwater vehicle programs in the defense and commercial sector, we believe paves the way for us to increase our share of the imaging sonar market over the next two to three years, and that certainly is our goal.

Echoscope 是普遍存在低能見度或零能見度條件或以 3D 方式對移動物體成像的客戶的唯一選擇。我們的技術業務在過去四年中取得的進步，無論是在擴大可用 Echoscope 型號和配置的範圍，還是在國防和商業領域進入一些新的水下航行器項目方面，我們相信都為我們增加份額鋪平了道路未來兩到三年成像聲納市場的發展，這當然是我們的目標。

Turning to the first quarter. Within the first quarter 2023, although our results were broadly in line with our first quarter 2022, we are pleased with the progress against our growth pillars. The technology business, which is our products business, generated in the first quarter 2023, $3.8 million in sales. At the constant exchange rate, which is $4.1 million in sales versus $3.8 million in the first quarter of 2022.

轉到第一季度。在 2023 年第一季度，儘管我們的業績與 2022 年第一季度大致一致，但我們對我們的增長支柱取得的進展感到滿意。技術業務，也就是我們的產品業務，在 2023 年第一季度產生了 380 萬美元的銷售額。按固定匯率計算，銷售額為 410 萬美元，而 2022 年第一季度為 380 萬美元。

Notable, however, is that within the mix of sales of this segment, that's the products business, equipment sales were $2.15 million in the first quarter 2023 compared to $1.9 million in the quarter 2022, representing a 31% increase in equipment sales. This is good progress in respect of our strategy of increasing the Echoscope sonars we are selling quarter by quarter and year on year. We continue to pursue our goals to cement the Echoscope in as many of the new programs for underwater vehicles, and at the same time, continuing to expand our market share of the addressable commercial market.

然而，值得注意的是，在該部門的銷售組合中，即產品業務，2023 年第一季度的設備銷售額為 215 萬美元，而 2022 年第一季度為 190 萬美元，設備銷售額增長了 31%。這是我們逐季逐年增加 Echoscope 聲納銷售戰略的良好進展。我們繼續追求我們的目標，即在許多新的水下航行器項目中鞏固 Echoscope，同時繼續擴大我們在可尋址商業市場的市場份額。

Now turning to the DAVD, to recap first, how did the DAVD come about and what it is? A short recap. The DAVD emanates from a requirement of the Office of Naval Research, referred to as ONR, under its future naval requirements program. Coda, working with ONR and NAVSEA and Naval Surface Warfare Center, Panama City, developed the DAVD.

現在轉向 DAVD，首先回顧一下 DAVD 是如何產生的，它是什麼？簡短回顧。 DAVD 源於海軍研究辦公室（簡稱 ONR）在其未來海軍需求計劃中的一項要求。 Coda 與 ONR 和 NAVSEA 以及巴拿馬城的海軍水面作戰中心合作開發了 DAVD。

The DAVD embeds the pair of transparent glasses in the diver's heads-up display, and this is used underwater as the data hub for the diver. The DAVD is a fully integrated suite of sensors which provide real-time data to the diver underwater and to the dive supervisor on the surface simultaneously. This means that both the diver and the dive supervisor can share the same subsea view and data including life support data in real time. This is the first time in diving operations the diver and the dive supervisor sharing the same subsea view and a raft of data in real time.

DAVD 將一副透明眼鏡嵌入潛水員的平視顯示器中，這在水下用作潛水員的數據中心。 DAVD 是一套完全集成的傳感器，可同時向水下潛水員和水面潛水主管提供實時數據。這意味著潛水員和潛水主管都可以實時共享相同的海底視圖和數據，包括生命支持數據。這是潛水作業中第一次潛水員和潛水主管實時共享相同的海底視圖和大量數據。

We have also transformed the analog communications with digital communications underwater, thus making voice communications significantly clearer and more effective underwater. The DAVD is transformational for the diving market, both in the defense and commercial sectors because it provides a fully integrated suite of sensor data underwater, which is accessible in real time by all parties involved in the dive operations.

我們還在水下將模擬通信轉換為數字通信，從而使語音通信在水下更加清晰有效。 DAVD 對國防和商業領域的潛水市場都是變革性的，因為它提供了一套完全集成的水下傳感器數據，參與潛水操作的所有各方都可以實時訪問這些數據。

Now turning to our progress on the DAVD in the first quarter 2023. First, our key customer, the US Navy, has now transferred the DAVD from their research and development phase to their field operations and command stage. This is an important milestone for the product as it means that the tethered system is now available for appropriate commands to purchase.

現在轉向我們在 2023 年第一季度的 DAVD 進展。首先，我們的主要客戶美國海軍現已將 DAVD 從研發階段轉移到現場操作和指揮階段。這是該產品的一個重要里程碑，因為這意味著系留系統現在可供適當的命令購買。

This customer has now established a budget line for the acquisition of DAVD systems for new commands, and we expect to receive firm orders in our second quarter 2023. In the quarter also, customization work scope was completed for a DAVD untethered prototype system for a major US military command evaluation. The evaluation will be -- valuation DAVD units to be purchased following the field trials.

該客戶現在已經確定了為新命令採購 DAVD 系統的預算線，我們預計將在 2023 年第二季度收到確定的訂單。在本季度，還完成了一個主要的 DAVD 無繩原型系統的定制工作範圍美國軍事指揮評估。評估將是——評估現場試驗後購買的 DAVD 裝置。

This is a significant leap forward for the DAVD product as this now is an untethered system allowing teams of divers to communicate among the team without any surface space participation. And we believe this deployment presents the biggest opportunity for this product in the military sector.

這是 DAVD 產品的重大飛躍，因為它現在是一個不受束縛的系統，允許潛水員團隊在團隊之間進行交流，而無需任何表面空間參與。我們相信這種部署為該產品在軍事領域提供了最大的機會。

In addition, a major Tier 1 European offshore service provider adopted the DAVD system on a rental basis for critical European underwater construction project. If the field project is successful, we believe this will be the precursor to full-scale adoption of the DAVD by this world's leading service provider. We will be assisting this service provider on this project in April 23.

此外，一家主要的 1 級歐洲離岸服務提供商在關鍵的歐洲水下建設項目中以租賃的方式採用了 DAVD 系統。如果現場項目成功，我們相信這將是這家世界領先的服務提供商全面採用 DAVD 的先兆。我們將於 4 月 23 日在該項目上協助該服務提供商。

We have also completed adaptation work for a second major Tier 1 European offshore service provider who is now changing their diving workflow to incorporate the DAVD as part of their standard operations. Further, we have completed successful trials of the DAVD in Dunoon, Scotland, in February. As a result of these trials, two key foreign navies are now working with us on a DAVD adoption plan, including discussions on purchasing evaluation system in this financial year.

我們還完成了第二家主要的 1 級歐洲離岸服務提供商的適應工作，他們現在正在改變他們的潛水工作流程，將 DAVD 納入他們的標準操作。此外，我們已於 2 月在蘇格蘭達農成功完成了 DAVD 試驗。作為這些試驗的結果，兩個主要的外國海軍現在正在與我們合作制定 DAVD 採用計劃，包括討論本財政年度的採購評估系統。

We have a number of initiatives around the adoption of the DAVD, encompassing both foreign navies mentioned earlier and European offshore providers. We are laser focused on getting these opportunities to the point where the DAVD is adopted within their diving operation, thus bringing scale and volume to this product.

我們圍繞 DAVD 的採用採取了許多舉措，包括前面提到的外國海軍和歐洲離岸供應商。我們非常專注於獲得這些機會，以便在他們的潛水操作中採用 DAVD，從而為該產品帶來規模和數量。

I now want to talk about the adoption curve. DAVD is an important part of our strategy, and we think it is important to update the market on the likely adoption curve for this recently launched technology. The customer adoption curve for nearly all such opportunities is the same.

我現在想談談採用曲線。 DAVD 是我們戰略的重要組成部分，我們認為讓市場了解這項最近推出的技術的可能採用曲線非常重要。幾乎所有此類機會的客戶採用曲線都是相同的。

Stage 1 consists of trials that are [unspecific] to that customer's workflow. This is designed to establish a certain level of interest in the product. Stage 2 consists of evaluation designed to incorporate the DAVD in the customer's specific diving operation workflow. And we are intimately involved with the customer in this evaluation phase. This then culminates in a decision to move to Stage 3, adoption. At that point, assuming a favorable review, the customer decides that this technology should be adopted in its workflow and sets up a purchase plan.

第 1 階段包括針對該客戶工作流程 [非特定] 的試驗。這是為了建立對產品的一定程度的興趣。第 2 階段包括旨在將 DAVD 納入客戶特定潛水操作工作流程的評估。在這個評估階段，我們與客戶密切合作。然後最終決定進入第 3 階段，即採用。在這一點上，假設獲得好評，客戶決定在其工作流程中採用該技術並製定購買計劃。

Based on the initiatives we are engaged in, we believe that the likely inflection point for the DAVD, therefore, is in financial year where we hope to have acquisition budget lines established with other customers outside of the US Navy. And importantly, where the US military command has started purchasing systems following completion of their evaluation of the untethered system we have recently customized and for which we are in trials in March and April this year.

因此，根據我們參與的舉措，我們認為 DAVD 的可能拐點是在我們希望與美國海軍以外的其他客戶建立採購預算線的財政年度。重要的是，美國軍事司令部在完成對我們最近定制的不受限制系統的評估後開始採購系統，我們在今年 3 月和 4 月進行了試用。

To conclude, therefore, we remain comfortable targeting approximately $25 million in revenue for the technology that's the product business on a stand-alone basis in the financial year 2024. To put some context on this, in the financial year 2022, the products business had revenue of approximately $15 million. And this year, we're targeting $18 million for this business on a standalone basis, and at the same time, maintaining our profitability.

因此，總而言之，我們仍然很樂意將 2024 財年作為獨立產品業務的技術收入定為約 2500 萬美元。為了說明這一點，在 2022 財年，產品業務有收入約為 1500 萬美元。今年，我們的目標是在獨立的基礎上為這項業務投入 1800 萬美元，同時保持我們的盈利能力。

Now turning to our marine engineering business. This segment is important for our group as it is a strong -- it has strong pedigree in defense engineering with stellar relationships with prime defense contractors spanning decades. These are important relationships for our group strategy. There is a strong crossover of engineering skills, which is vital for us to maintain our competitive lead in real-time 3D imaging and our diving technology.

現在轉向我們的海洋工程業務。這部分對我們集團很重要，因為它是一個強大的 - 它在國防工程方面擁有強大的血統，與主要國防承包商建立了長達數十年的良好關係。這些是我們集團戰略的重要關係。工程技能有很強的交叉，這對我們保持實時 3D 成像和潛水技術的競爭領先地位至關重要。

This business, that is the marine engineering business, supplies subassemblies into broader mission critical programs under subcontract with prime defense contractors. This gives them the opportunity to have repeat orders for these subassemblies for the life of the program.

這項業務，即海洋工程業務，根據與主要國防承包商的分包合同，為更廣泛的關鍵任務項目提供組件。這使他們有機會在項目生命週期內重複訂購這些組件。

Within this business segment, that's the marine engineering business, we are navigating headwinds from supply chain issues across various defense programs. The supply chain difficulties apply not only to our own sourcing of components, but also crucially to our customers' own supply chain issues resulting in the broader program design require mobility of components. This has led to many instances of multiple iterations of the design proposals being submitted for the same work package, which in turn has resulted in much slower order take in the first quarter for the marine engineering business.

在這個業務部門中，即海洋工程業務，我們正在應對來自各種國防計劃的供應鏈問題的逆風。供應鏈困難不僅適用於我們自己的組件採購，而且對我們客戶自身的供應鏈問題也至關重要，導致更廣泛的程序設計需要組件的移動性。這導致許多情況下，為同一工作包提交設計方案的多次迭代，這反過來又導致第一季度海洋工程業務的訂單接收速度大大放緩。

As we work to mitigate these issues, we also remain focused on growing the number of programs where we supply engineering subassemblies to support the broader growth of this segment. It is critical to return the services segment to a $10 million-plus revenue profile, and therefore, achieve our overall growth plan for the next two years.

在我們努力緩解這些問題的同時，我們還繼續專注於增加我們提供工程組件的項目數量，以支持該領域的更廣泛增長。將服務部門的收入恢復到 1000 萬美元以上至關重要，從而實現我們未來兩年的總體增長計劃。

Let me now turn to -- turn over the call to our CFO, Nathan Parker, to walk you through our financials before I provide my closing remark. Nathan?

現在讓我轉向 - 將電話轉給我們的首席財務官 Nathan Parker，在我發表結束語之前向您介紹我們的財務狀況。內森？

Thanks, Annmarie, and good morning, everyone. Let me take you through our fiscal first-quarter financial results. First, looking at our revenue, in the first quarter of 2023, we recorded total revenue of $5.6 million compared to $5.8 million in the first quarter of last year. The slight decline was due to a 12% sales decrease in our marine engineering business as a result of supply chain issues with certain defense programs.

謝謝，安瑪麗，大家早上好。讓我向您介紹我們第一財季的財務業績。首先，看看我們的收入，在 2023 年第一季度，我們的總收入為 560 萬美元，而去年第一季度為 580 萬美元。略有下降是由於某些國防項目的供應鏈問題導致我們的海洋工程業務銷售額下降了 12%。

The marine technology business generated revenue of $3.8 million compared to $3.8 million in the prior quarter. However, applying the constant rate, the marine technology business revenue would have been $4.1 million. We're excited about the mix of our sales as in the first quarter, we saw an increase in our Echoscope sales.

海洋技術業務產生了 380 萬美元的收入，而上一季度為 380 萬美元。然而，如果採用固定匯率，海洋技術業務收入將為 410 萬美元。我們對第一季度的銷售組合感到興奮，我們看到 Echoscope 的銷售額有所增加。

Now turning to our gross profit. In the first quarter, we generated gross profit of $3.8 million compared to $4.2 million in fiscal first quarter of 2022. Gross margin in the first quarter of 2023 was 67.1% versus 71.3% in the same year ago period. The reduction in gross profit was primarily due to higher product sales through Coda's network of sales agents, which carry higher commission costs.

現在轉向我們的毛利潤。第一季度，我們產生了 380 萬美元的毛利潤，而 2022 財年第一季度為 420 萬美元。2023 年第一季度的毛利率為 67.1%，而去年同期為 71.3%。毛利的減少主要是由於通過 Coda 的銷售代理網絡進行的產品銷售增加，這帶來了更高的佣金成本。

Our marine technology business gross margin decreased to 72% in fiscal first quarter 2023 compared to 85% in the prior year quarter. This was due to a disproportionate percentage of our product business being made through our sales agents' network and thus incurring significantly higher commission payments.

我們的海洋技術業務毛利率在 2023 財年第一季度下降至 72%，而去年同期為 85%。這是由於我們的產品業務中有不成比例的比例是通過我們的銷售代理網絡進行的，因此產生了更高的佣金支付。

Our marine engineering business gross margin was 56% versus 45% in the prior year as a greater percentage of revenue was generated from our engineering services contracts.

我們的海洋工程業務毛利率為 56%，而上一年為 45%，這是因為我們的工程服務合同產生了更大比例的收入。

Now moving on to our operating expenses, total operating expenses for the first quarter of 2023 decreased 14% to $2.4 million compared to $2.8 million in the first quarter of 2022, driven by a 34% reduction in R&D expenses due to the conclusion of several multiyear R&D programs.

現在轉向我們的運營費用，2023 年第一季度的總運營費用下降 14% 至 240 萬美元，而 2022 年第一季度為 280 萬美元，這是由於幾個多年期的研發費用減少了 34%研發計劃。

Our selling, general, and administrative costs in the first quarter of 2023 totaled $2 million, reduced from $2.1 million in the prior year quarter. As a percentage of revenue, our selling, general and administrative costs for the first quarter of 2023 decreased to 35% of total revenue compared to 36% in the first quarter of 2022.

我們在 2023 年第一季度的銷售、一般和管理成本總計 200 萬美元，低於去年同期的 210 萬美元。從占收入的百分比來看，我們 2023 年第一季度的銷售、一般和管理成本佔總收入的比例從 2022 年第一季度的 36% 下降到 35%。

Looking forward on our cost structure, given the significant progress we have made in R&D in the last four years, we remain focused on aligning a significant portion of our resources and strategy from research and development to global business development, brand building, and Investor Relations. We believe we have developed world-class products and solutions that will provide market-leading positions for Coda, and that can make meaningful progress in our markets to these investments to create shareholder value.

展望我們的成本結構，鑑於我們在過去四年中在研發方面取得的重大進展，我們仍然專注於將我們的大部分資源和戰略從研發調整到全球業務發展、品牌建設和投資者關係.我們相信我們已經開發出世界一流的產品和解決方案，這些產品和解決方案將為 Coda 提供市場領先地位，並且可以在我們的市場上通過這些投資取得有意義的進展，從而創造股東價值。

Now looking at our overall income and earnings, our operating income in the first quarter of 2023 was $1.3 million compared to $1.4 million in the year ago quarter. Our operating margin was 24.1% compared to 23.6% in the first quarter of last year. Net income before taxes in the first quarter of 2023 remained flat at $1.4 million compared to the year ago quarter. Net income after taxes in the first quarter was $1.4 million or $0.12 per diluted share compared to $1.2 million or $0.11 per diluted share in the same year ago quarter.

現在看看我們的整體收入和收益，我們在 2023 年第一季度的營業收入為 130 萬美元，而去年同期為 140 萬美元。我們的營業利潤率為 24.1%，而去年第一季度為 23.6%。 2023 年第一季度的稅前淨收入與去年同期相比持平，為 140 萬美元。第一季度稅後淨收入為 140 萬美元或攤薄後每股收益 0.12 美元，而去年同期為 120 萬美元或攤薄後每股收益 0.11 美元。

Now moving on to our balance sheet. As of January 31, 2023, we had $24.5 million in cash on hand and no debt. This represents a $1.6 million cash build in the quarter. That completes my financial summary. Now I'll turn the call over to Annmarie for closing remarks.

現在轉到我們的資產負債表。截至 2023 年 1 月 31 日，我們手頭有 2450 萬美元現金，沒有債務。這代表本季度增加了 160 萬美元的現金。這完成了我的財務摘要。現在我將把電話轉給 Annmarie 以作結束語。

Thank you, Nathan. As we look to the remainder of the fiscal 2023, we will continue to support the momentum of our products business for further solidifying our current programs and identifying new opportunities. As we grow our product deployments, we will remain focused on increasing the number of programs we are supplying in our engineering business.

謝謝你，內森。展望 2023 財年的剩餘時間，我們將繼續支持我們產品業務的發展勢頭，以進一步鞏固我們當前的計劃並尋找新的機會。隨著我們產品部署的增長，我們將繼續專注於增加我們在工程業務中提供的程序數量。

We remain pleased with the traction we have generated for our Echoscope PIPE and DAVD solution, and we're optimistic about their future prospects as the main pillars of our growth for our company. We have demonstrated track record of generating high margin and solid profitability. And we have had a very healthy balance sheet with cash on hand and no debt, which gives us confidence in our outlook for Coda. We're now happy to take your questions. Operator?

我們對 Echoscope PIPE 和 DAVD 解決方案產生的吸引力仍然感到滿意，我們對它們作為我們公司發展的主要支柱的未來前景持樂觀態度。我們已經證明了產生高利潤和穩健盈利能力的記錄。我們的資產負債表非常健康，手頭有現金，沒有債務，這讓我們對 Coda 的前景充滿信心。我們現在很樂意回答您的問題。操作員？

(Operator instructions) Brian Kinstlinger, Alliance Global Partners.

（操作員說明）Brian Kinstlinger，Alliance Global Partners。

Hi, thanks for taking my questions, guys. I wanted to start first with component shortages that are driving delays for your services and engineering business. What's your visibility into receiving shipments of these components? And can you approximate how much revenue you've been not able to generate as a result of these shortages, either in a one-quarter or 12-month perspective?

嗨，謝謝你提出我的問題，伙計們。我想首先解決導致您的服務和工程業務延誤的組件短缺問題。您對接收這些組件的發貨有何了解？您能否從一個季度或 12 個月的角度估計由於這些短缺而無法產生的收入有多少？

Well, thank you very much, Brian. So let's start with orders on hand. So, if I give you an example, we have a contract on our -- for our UK services business, and we've had that contract since November. And that contract is a manufacturing contract for a major European industrialist manufacturer. And that order is $2.3 million for the business.

好吧，非常感謝你，布賴恩。因此，讓我們從手頭的訂單開始。所以，如果我給你舉個例子，我們有一份關於我們的英國服務業務的合同，我們從 11 月開始就有了這份合同。該合同是歐洲一家主要實業家製造商的製造合同。該訂單為企業提供了 230 萬美元。

Since November last year, we're waiting on a single component to convert this to revenues for the business. And we've had several false starts on the components required, so it's very difficult because when we get what we call a lot of de-commits. You have a firm commitment from the component supplier to supply the item on a particular date. And right at that point, we get to de-commit. So it's very difficult to say with any confidence, given what's happening in the market, if you think of the FPGA market, it really supplies [can't].

自去年 11 月以來，我們一直在等待一個組件將其轉化為業務收入。而且我們在所需的組件上有幾次錯誤的開始，所以這非常困難，因為當我們得到我們所說的大量取消提交時。您從組件供應商那裡得到了在特定日期供應該項目的堅定承諾。就在那時，我們開始取消承諾。所以很難有信心地說，鑑於市場上正在發生的事情，如果你想到 FPGA 市場，它確實供應 [can't]。

So we don't have a lot of -- although, we might have commitments, the risk is that we get de-committed at the last minute by the component supplier. And there's not a lot of reason to explain from the component supplier why they have de-committed it. It's simply the date is moved.

所以我們沒有很多 - 儘管我們可能有承諾，但風險是我們在最後一刻被組件供應商取消承諾。並且沒有太多理由從組件供應商那裡解釋他們為什麼取消承諾。這只是日期被移動了。

So we see this a lot. Nevertheless, I mean, we are really, really working to mitigate some of these. The problem is when a design is locked in, you're fixed with that component, and then you have to go through a qualification process to get a substitute component within the project.

所以我們看到了很多。儘管如此，我的意思是，我們真的、真的在努力減輕其中的一些影響。問題是，當設計被鎖定時，您就固定在該組件上，然後您必須通過資格認證流程才能在項目中獲得替代組件。

And just to be sure -- one more question, then we'll move to more important pieces of your business. Are customers generally understanding? Have there been cancellations of orders? Just talk about what the customer is communicating as a result.

並且可以肯定的是 - 再問一個問題，然後我們將轉向您業務中更重要的部分。客戶普遍理解嗎？有沒有取消訂單？只需談談客戶溝通的結果。

No, no, because then, for example, this contract that I talk about, this customer also weighted in and tried to get the component because they are a sizable manufacturer and they feel it's the same outcome. So it's -- we're working really closely with the customer, and everybody, they're in the same position. This is not just a Coda problem. This is a global problem with the supply chain shortages that we see.

不，不，因為那時，例如，我談到的這個合同，這個客戶也參與進來並試圖獲得這個組件，因為他們是一個相當大的製造商，他們覺得這是相同的結果。所以它 - 我們正在與客戶密切合作，每個人都處於相同的位置。這不僅僅是 Coda 問題。這是我們所看到的供應鏈短缺的全球性問題。

The customers are understanding, and cancellation is not an option. These are programs that we work on year in year out. These are our own proprietary [parts]. So there's no risk of that. And also just to say within the chain, it is a domino effect because it's not just Coda that's suffering that problem.

客戶理解，取消不是一種選擇。這些是我們年復一年開展的項目。這些是我們自己的專有 [零件]。所以沒有這樣的風險。而且只是在鏈內說，這是多米諾骨牌效應，因為不僅僅是 Coda 遇到了這個問題。

Got it. Thank you. And then with your comments regarding the targets for fiscal '24, we can back and do at least a rough expectation for the DAVD next year. Are you able to quantify the total addressable market for tethered and untethered DAVD? And does a pending untethered DAVD have a different target audience or might some navies wait for this untethered product before ramping their purchases?

知道了。謝謝。然後根據您對 24 財年目標的評論，我們可以支持並至少對明年的 DAVD 做出粗略的預期。您是否能夠量化系留和非系留 DAVD 的總目標市場？待定的不受限制的 DAVD 是否有不同的目標受眾，或者某些海軍可能會在增加購買量之前等待這種不受限制的產品？

No, they are two different markets. Actually, you have the surface and the deep diving. The deep diving is really the untethered version. So we've been focused then on the US market for the time being because then the product started as a US project. And if I think about -- it's a difficult question, but if I think about how many fields there are. There are 2,500 fields. There are -- in the US Navy experimental diving unit, there -- 120. And then for others like combatant divers amphibious support, there is 1,225. So in total, in terms of diving personnel, you have about 3,845.

不，它們是兩個不同的市場。實際上，你有表面和深潛。深潛是真正的無繩版本。所以我們一直專注於美國市場，因為當時該產品是作為美國項目開始的。如果我考慮——這是一個難題，但如果我考慮有多少個字段。有 2,500 個字段。在美國海軍實驗潛水部隊中，有 120 人。然後對於戰鬥潛水員兩棲支援等其他人，有 1,225 人。所以總的來說，就潛水人員而言，你有大約 3,845 人。

Now when I look at this, Brian, and say, okay, for us, what we have modeled as -- because then when we think of how our technology is adopted, it's always going to be a phased adoption of the product. So because there's management risk, all of these for the customer.

現在，當我看到這個時，布賴恩，然後說，好吧，對我們來說，我們所建模的是什麼——因為當我們考慮如何採用我們的技術時，它總是會分階段採用產品。所以因為存在管理風險，所有這些都是為了客戶。

So we've modeled something like 15% of that market over five years. And it might be conservative but for just the way the adoption curve is, and as I said, when you phase in new technology, it will take time. And so, 15% of that addressable market in the US would be about $47 million. And we think that -- and that's just 15% we have targeted. (multiple speakers)

所以我們在五年內模擬了大約 15% 的市場。它可能是保守的，但就採用曲線的方式而言，正如我所說，當你逐步採用新技術時，這需要時間。因此，美國潛在市場的 15% 約為 4700 萬美元。我們認為 - 我們的目標只是 15%。 （多個揚聲器）

$47 million is 15% or 40 -- 15% of 40 -- $47 million is 15%, is what you're saying?

4700 萬美元是 15% 或 40 -- 40 的 15% -- 4700 萬美元是 15%，是你說的嗎？

Yes, 15% is $47 million, yes.

是的，15% 是 4700 萬美元，是的。

And that's just US.

那隻是美國。

Just the US.

只是美國。

That's super helpful. Thank you.

這非常有幫助。謝謝。

Based on those number that I give you 3,845 diving personnel. And I also want to clarify that $43 million excludes complementary Echoscope sales. This is pure DAVD. So I have not included within $47 million the pairing of the Echoscope with the DAVD.

根據這些數字，我給你 3,845 名潛水人員。我還想澄清一下，4300 萬美元不包括互補的 Echoscope 銷售額。這是純 DAVD。所以我沒有將 Echoscope 與 DAVD 的配對包括在 4700 萬美元之內。

And the way we think that will go down for commands is it won't be a one for one, but certainly there will be a number of Echoscopes that they will introduce with the DAVD because, as I mentioned before, what the sonar data there in that environment, why it's important. Divers are diving in zero-visibility conditions, and that's really the Echoscope that's going to provide insurance from that.

我們認為命令會下降的方式是它不會是一對一的，但肯定會有許多 Echoscopes 將與 DAVD 一起引入，因為正如我之前提到的那樣，那裡的聲納數據是什麼在那種環境下，為什麼它很重要。潛水員在能見度為零的條件下潛水，而 Echoscope 確實可以提供這種保護。

That was really helpful. Last question I have, and I'll get back in the queue. Is there any predictability as to the mix of agent sales versus direct sales, which currently have a little bit of a different margin profile? And then in addition, can you talk, are DAVD sales direct or indirect? And what is their impact on gross margin as they become a bigger piece of your business?

這真的很有幫助。我有最後一個問題，我會回到隊列中。代理銷售與直接銷售的組合是否有任何可預測性，目前兩者的利潤率略有不同？另外，您能談談 DAVD 銷售是直接銷售還是間接銷售？當它們在您的業務中佔據更大份額時，它們對毛利率有何影響？

Yeah. So just to say, Brian, one of the things we have emphasized as we pivot from R&D into real hardcore sales and marketing, that necessarily means that we are agnostic where sales come from as we are expanding our agent network globally, including in Asia.

是的。因此，布萊恩，我們在從研發轉向真正的硬核銷售和營銷時強調的一件事必然意味著，隨著我們在全球範圍內（包括在亞洲）擴展我們的代理網絡，我們不知道銷售來自何處。

So it's -- what we really want is more sales, although what that means then there will be commissions paid on those sales. But then at the same time, if we expand our direct workforce, there's also that cost -- it will not hit margins, but it certainly will be our operating costs.

所以它是 - 我們真正想要的是更多的銷售，儘管這意味著將對這些銷售支付佣金。但與此同時，如果我們擴大我們的直接員工隊伍，也會產生成本——它不會影響利潤率，但肯定會是我們的運營成本。

That's to, we think -- I mean, I can't give you a projection of what percentage will come, but we're certainly pushing the boot out to capture all corners of the market globally for our technology. The DAVD is different. Right at this moment, we do not see the DAVD being via agents just because of the process of adopting the DAVD.

那就是，我們認為——我的意思是，我不能給你一個百分比的預測，但我們肯定會推出靴子，以便為我們的技術佔領全球市場的各個角落。 DAVD 是不同的。就在此時，我們沒有看到 DAVD 只是因為採用 DAVD 的過程而通過代理。

But having said that, for example, helmet suppliers might need good distributors of the technology, and that's discussions we have ongoing and, be in that context, we would pay a commission, but we're not at that point yet.

但話說回來，例如，頭盔供應商可能需要好的技術分銷商，這是我們正在進行的討論，在這種情況下，我們會支付佣金，但我們還沒有到那個地步。

Great. Thank you so much, Annmarie.

偉大的。非常感謝，安瑪麗。

Thank you. At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Annmarie Gayle.

謝謝。至此，我們的問答環節到此結束。我現在想把電話轉回 Annmarie Gayle。

Thank you very much, everyone, for joining today, and we look forward to speaking to you again. Thank you very much for your time today.

非常感謝大家今天的加入，我們期待再次與您交談。非常感謝你今天的時間。

Thank you for joining us today for Coda Octopus's conference call. You may now disconnect.

感謝您今天加入我們參加 Coda Octopus 的電話會議。您現在可以斷開連接。

Thank you.

謝謝。

Thank you.

謝謝。