Moving Image Technologies Inc (MITQ) 2026 Q2 法說會逐字稿

Good morning, everyone, and welcome to the Moving iMage Technologies fiscal 2026 second-quarter conference call. (Operator Instructions) Please note, this conference is being recorded.

I will now turn the call over to Chris Eddy, Investor Relations, to begin. Please go ahead.

Thank you, operator, and good morning to all of you joining today's call. Moving iMage Technologies' CEO, Phil Rafnson, will make some opening remarks, followed by a business update from President and COO, Francois Godfrey; and then CFO, Bill Greene, will conclude with some financial highlights, after which we will open the call to investor questions. This conference is being recorded, and an audio replay and written transcript will be posted to the Investors section of the Moving iMage website in the next few days.

As a reminder, except for historical information, the matters discussed in this presentation are forward-looking statements that involve several risks and uncertainties. Words like believe, expect, and anticipate mean these are our best estimates as of this writing, but that there can be no assurances that expected or anticipated results or events will take place. Actual future results could differ materially from those statements. Further information on the company's risk factors is contained in the company's quarterly and annual reports filed with the SEC.

I will now turn the call over to Moving iMage CEO, Phil Rafnson.

Thanks, Chris, and thank you all for your interest in Moving iMage. We had a very productive second quarter, highlighted by our acquisition of the DCS loudspeaker line, advancing our growth and diversification goals and our achievement of 10% revenue growth versus quarter two last year.

Recent revenue growth reflects continued demand across our core cinema equipment and technology offerings, expanding customer engagement and disciplined execution by our sales, marketing and operational teams. During what is typically a slower period for our industry as exhibitor customers focus on optimizing their holiday season performance, we saw a steady order flow for parts, replacement products and other solutions to maintain our customers' premium presentation environments.

Our results demonstrate a solid base of annually recurring revenues and the relevance of our services in the evolving cinema landscape. We remain cautiously optimistic on the extent of future cinema infrastructure spending to refresh legacy systems with new state-of-the-art laser projection systems as well as direct view technologies and upgraded immersive audio.

Our exhibition industry revenue expectations continue to be shaped by historical capital investment patterns when large projects often lag during the time, summer and holiday season windows, which fall in our fiscal second and third quarters. We remain confident that the long-term fundamentals supporting cinema technology investments remain intact, though their pace and timing will likely be influenced by the success of content pipelines that seem to be strengthening.

Supporting our favorable long-term outlook is the strength of our decades-long track record, broad customer base, sterling reputation and unrivaled ability to execute unique projects in the most effective manner.

Having bolstered our capabilities with our new proprietary DCS loudspeaker line and complementary LEA audio amplifier representation, we believe MiT is on stronger footing to meet equipment and environmental requirements of customers in a broader base of use cases.

Now I'll turn over the call to Francois Godfrey, our COO.

Thanks, Phil, and good morning, everyone. Our recent financial results reflect steady execution in our core business during a seasonally slower period of customer activity as well as execution on our M&A strategy with the structuring and closing of our purchase of the DCS loudspeaker line. We are very excited about the potential for DCS to become a material long-term contributor to our business as it not only expands the depth of our proprietary product lines while also providing a compelling offering to expand our reach into large domestic as well as international exhibition chains where the DCS line has built a solid reputation for quality and performance over the past 20 plus years.

We believe this acquisition will prove to be a prudent use of company cash that should create meaningful value for our shareholders. To this end, we fully expect to recoup our full cash investment through the sale of acquired inventory over the next few years.

Since the closing of the asset purchase in early November, we have focused on the successful onboarding and integration of the DCS loudspeaker line and the build-out of global sales, distribution and fulfillment channels. Using a deliberate approach, we have emphasized the development of a strong operational foundation before pursuing scale in order to ensure customer expectations for quality, reliability, consistency and trust.

We have completed the full onboarding of all DCS inventory, equipment and operational data into MiT's systems and are making rapid progress with quality control processes. Our team has worked closely to onboard contract manufacturing and third-party logistics partners to ensure continuity of supply, predictable lead times and consistent product quality as a solid business base is critical to establishing durable long-term customer and distribution relationships.

We have established warehouses in California, the Netherlands and China to support our global business. To date, we have signed distribution relationships with over 25 established cinema equipment dealers in the EMEA, APAC, Americas and SAARC regions to promote DCS in over 50 countries and are continuing to advance discussions in a range of other countries. Our discussions are focused on aligning expectations around support, training and long-term product evolution in addition to near-term sales opportunities.

Importantly, we have executed initial shipments with customers in the US, UK, Taiwan, Thailand, Korea, Germany, Italy, Chile and Vietnam with total sales and pending sales backlogs of $400,000, which we expect to record starting in our current fiscal third quarter.

Our initial sales activity confirms market interest in the DCS product line, both domestically and abroad and validates our confidence in the potential for DCS to provide meaningful expansion into international markets where we have had little prior penetration. In parallel, we are actively establishing and strengthening component manufacturer relationships to support future product development and the evolution of the DCS line. Our longer-term DCS product road map involves ongoing efforts to enhance the line's performance to ensure it remains in a strong competitive market position.

Looking beyond DCS, our core cinema technology solutions and system integration business continues to offer long-term potential. Exhibitors around the world face an ongoing need to modernize aging infrastructure, improve operational efficiency and enhance the customer experience. MiT is well positioned to meet these needs with flexible practical solutions that address real-world constraints.

In closing, we are encouraged by the progress we made during the quarter. We delivered solid revenue growth, executed a strategically important acquisition and laid the groundwork for future expansion, both domestically and internationally. While there is always more work to do, particularly as we scale the DCS opportunity, we believe we are building the right foundation to support sustainable growth and long-term value creation.

Now I'll turn the call over to Bill Greene, our CFO, to address some financial highlights.

Thanks, Francois. We published our financial statements in a press release this morning and expect to file our Form 10-Q by the close of business today. I will now touch on select financial results. MiT's Q2 '26 revenue rose 10% to $3.3 million (sic - $3.8 million), as Phil mentioned at the outset of this call. And our Q2 '26 gross profit dollars rose 24% to $1.16 million, supported by higher revenue and an improved gross margin of 30.7% compared to 27.2% in Q2 '25, primarily due to higher-margin product revenues and execution efficiency.

Total operating expense rose by 5.1% to $1.57 million in Q2 '26 compared to $1.49 million during Q2 '25 due primarily to higher legal expense. Q2 '26 operating loss improved to negative $408,000 versus an operating loss of negative $561,000 in the same period last year. This improvement reflects revenue growth and benefit from higher-margin opportunities.

Similarly, Q2 '26 net loss improved to negative $388,000 or negative $0.04 per share compared to a net loss of negative $527,000 or negative $0.05 per share in Q2 last year. Our Q2 '26 results underscore MiT's potential to achieve respectable revenue growth during a slower season time of year and the integration of a significant strategic transaction.

Turning to our balance sheet. We achieved working capital of $4.46 million at the close of Q2 '26 compared to Q2 '25 working capital of $4.59 million despite the spending of $1.5 million to fund the DCS acquisition. This keeps us in a solid position to fund our business. MiT continues to have no long-term debt.

We closed Q2 '26 with net cash of $3.9 million or approximately $0.39 per share compared to net cash of $5.3 million at Q2 '25. It is important to note that the increase in inventory at December 2025 at $3.08 million compared to $1.72 million at the end of September 2025. This reflects the assets acquired under the DCS loudspeaker acquisition and finished goods received as part of the purchase price.

Turning to our revenue outlook. MiT anticipates Q3 2026 revenue of approximately $3 million, reflecting the customary seasonality in our core business and modest initial ramp in sales that result from the DCS loudspeaker assets acquisition. As we move through the next steps of the strategic integration of the DCS acquisition, our focus remains on disciplined execution, balance sheet strength and seamless integration.

We believe the foundational work underway positions us to unlock operating leverage, support sustainable growth and deliver long-term value as global demand for advanced cinema technology continues to evolve.

With that overview, operator, we are now ready to begin the Q&A session.

(Operator Instructions)

And it appears there are no questions. So ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.