Boxlight (NASDAQ:BOXL) Corporation (NASDAQ: BOXL), a leading provider of interactive technology solutions, faced headwinds in the fourth quarter of 2023, as revealed in its recent earnings call. CEO Dale Strang outlined the operational challenges and detailed the company's strategic plans to navigate the moderated market demand post-pandemic spending surge.
Despite a 9.3% decline in Q4 revenues and a net loss of $16.6 million for the quarter, Boxlight is implementing cost reduction measures and focusing on product enhancements to improve future results. The company expects full-year revenues for 2024 to be flat year-over-year, with efforts concentrated on managing operating expenses and achieving an adjusted EBITDA margin above 10%.
Key Takeaways
- Boxlight's Q4 2023 revenues decreased by 9.3% year-over-year, totaling $38.8 million.
- The company reported a net loss of $16.6 million for the quarter.
- Cost reduction efforts, including $3 million in fixed costs eliminated, are underway.
- Boxlight plans to streamline debt and finalize agreements with preferred shareholders.
- New products and enhancements for Clevertouch, Mimio, and FrontRow brands are in progress.
- Full-year 2024 revenues are expected to remain flat, with a focus on traditional seasonal trends.
Company Outlook
- Boxlight anticipates flat revenues for the full year of 2024 compared to 2023.
- The company aims to return to traditional seasonal trends and work towards a new run rate by the end of 2024.
- A target adjusted EBITDA margin north of 10% is part of the financial goals.
- New, larger headquarters and warehouse for Clevertouch are expected to improve efficiency and support growth.
Bearish Highlights
- Gross profit margin declined due to non-recurring adjustments to the cost of goods sold.
- The gross profit margin for Q4 stood at 31.7%, a decrease from the same period last year.
- The flat panel market's maturation is expected to contribute to a decline in gross margin percentage.
Bullish Highlights
- Boxlight has reduced operating expenses and is seeking further reductions to align with current revenue opportunities.
- The company is focused on managing operating expenses and reducing G&A costs.
- New product launches and brand enhancements are anticipated to contribute to improved results in the future.
Misses
- Q4 2023 revenues fell short of the previous year's figures, indicating a slower demand in the market.
- Adjusted EBITDA for the full year 2023 was $12.6 million, down from $18.9 million in the previous year.
Q&A Highlights
- The company reaffirmed its commitment to achieving accurate revenue projections and managing the downturn caused by the pandemic.
- Cost-cutting measures, including headcount reductions that do not impact sales teams, are expected to reflect on the income statement in the second quarter.
- The company is actively working on refinancing its debt facility and maintaining a healthy EBITDA leverage ratio.
Boxlight's earnings call painted a picture of a company in transition, facing the challenges of a post-pandemic market but with clear strategies for cost management and revenue growth. The company's focus on efficiency, product development, and strategic financial planning aims to position it for recovery and long-term success. Investors and stakeholders can expect the next update on the company's progress with the Q1 2024 results due in May.
InvestingPro Insights
Boxlight Corporation's recent financial performance and strategic initiatives have been closely monitored by the market, with real-time data from InvestingPro shedding light on the company's valuation and stock movement. Here are some key insights:
InvestingPro Data indicates that Boxlight's market capitalization stands at 8.94M USD, reflecting the company's current valuation in the market. This is coupled with a Price / Book ratio for the last twelve months as of Q4 2023 of 0.44, suggesting the stock may be trading at a low valuation relative to the company's book value. Additionally, the Revenue Growth for the last twelve months as of Q4 2023 shows a decline of 20.32%, which aligns with the reported decrease in quarterly revenues mentioned in the article.
InvestingPro Tips highlight that Boxlight is trading near its 52-week low and has seen a significant price drop over the last year, with a 1 Year Price Total Return as of the current date in 2024 of -81.19%. This may indicate a bearish sentiment in the market, which is consistent with the challenges the company has faced post-pandemic. Moreover, analysts do not anticipate Boxlight to be profitable this year, which could be a factor for investors to consider when evaluating the company's future prospects.
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Full transcript - Boxlight A (BOXL) Q4 2023:
Operator: Good afternoon, and welcome to the Boxlight Corporation Fourth Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Jeff Stanlis of FNK IR. You may begin.
Jeff Stanlis: Thank you, Paul, and thank you everybody for joining. Earlier today, Boxlight issued a press release providing an operational update and discussing financial results for the fourth quarter and full year ended December 31, 2023. The release is available on the Investor Relations section of the company's website at www.boxlight.com. Hosting the call today are Dale Strang, Chief Executive Officer, and Greg Wiggins, the company's Chief Financial Officer. Before we begin, I would like to remind participants that during the call, management will be making forward-looking statements. These statements may contain information about Boxlight's view of its future expectations, plans and prospects that can constitute forward-looking statements. Actual results may differ materially from historical results and those indicated by the forward-looking statements as a result of a variety of factors, including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, and the competition in the industry among other things. Boxlight encourages you to review other factors that may affect its future results and performance in Boxlight's filings with the Securities and Exchange Commission. The company does not undertake and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur, except as required by law. And with that, I'd like to now turn the call over to Dale Strang, CEO of Boxlight. Dale, the call is yours.
Dale Strang: Thank you, Jeff, and thank you to everyone joining us today. I transitioned from our Board of Directors to position of Chief Executive Officer just over two months ago, and I can share with you that my first few weeks in the role have reinforced the prior perception I had about Boxlight. We indeed have excellent products, loyal customers and devoted creative employees who work exceptionally hard. So, the bones here at Boxlight are strong. Over the past few years, we've made a number of acquisitions to broaden our product portfolio and to increase our geographic reach. These acquisitions as a result of -- resulted in expanding our addressable market. Following those -- the completion of those acquisitions during 2022 and 2023, we're able to pay down a meaningful portion of the long-term debt we took on to make those acquisitions and we're convinced that was the right and valid decision. However, after a surge in pandemic-related spending, the market demand moderated, and we didn't, as an organization, react nearly quickly enough to reduce our forecasts, adjust our operating plan and align our expense structure to match the current market environment. Not surprisingly, the combination of these missteps impacted our operations and put a spotlight on certain inefficiencies in our organization. We're now in the process of changing our corporate mindset. Our approach is to manage -- my approach is to manage based on what's the best available factual information and accurate forecasting is paramount for sound capital allocation and to efficiently manage our operations. We recognize that our investors have been frustrated and rightfully so by Boxlight overpromising and underdelivering. We view our share price as a report card on our performance, and we're making adjustments to our operational activities to position us to achieve better grades this year. To be clear, our challenges will take time and energy to address. There's no single solution, and improvement will not happen overnight. There are several challenges to address, and many of the challenges we face are self-inflicted. One challenge is our capital structure. We need to streamline our debt facilities while solidifying our relationship with other stakeholders like our preferred shareholders. Another is operational integration. The multiple acquisitions we've made over the past several years enabled us to grow and expand our private -- product portfolio and enhanced our team, but we've not done enough yet to integrate those acquisitions, which has resulted in duplicative costs, repetitive processes and a fragmented go-to-market strategy. Simply put, we've just not done enough to integrate those valuable assets acquired over the last several years. And as a result, our cost structure is revealed to be too high and we're not capitalizing on the synergies that we have in front of us that can drive efficiencies. These challenges have been heightened by the marketplace dynamics in the education market, which benefited greatly from accelerated government investment during the pandemic, and then corrected once that accelerated government investment started to soften. Boxlight, like many companies, scaled our infrastructure during that pandemic to respond to increased demand, but we were a little too slow to respond when the demand moderated. I've been here about 10 weeks since I assumed this position and we've made significant process on addressing the issues I outlined. First, we're realigning our leadership team, focused on creating a more customer-centric organization that's designed to better understand the evolving needs of our customers. And we're actively engaged, making sure that we develop these tailored solutions that help meet those needs. We're making really good progress, great progress in streamlining our product catalog, eliminating redundant products, parts and other items that consume time and resources without adding commensurate value. And we are taking aggressive steps to adjust our operating cost base with a focus on aligning those costs exactly to what the current revenue opportunity is likely to be. We kicked off multiple efficiency-driven work streams that will result in us taking millions of dollars out of our annualized OpEx. And that drive for OpEx efficiency won't be momentary, it will be thorough and ongoing. Another item we're streamlining, as mentioned, is our capital structure. Our debt facility, our senior debt facility at WhiteHawk was intended to be a short-term solution to fuel our growth initiatives, and prior management expected to refinance that term debt by the end of 2023. And while that hasn't yet happened, we've had productive engagement with those lenders and we're working towards resolution. We've engaged an investment banker to provide us with options and the initiative is moving forward. In the interim, our existing lenders have been very supportive and cooperative with us as we evaluate an appropriate long-term solution and work towards that resolution. This has been a period of significant change in Boxlight. New senior leadership, restructuring operational leadership, adjustments to our go-to-market approach, aggressive cost reductions are all going on simultaneously. I'm incredibly impressed with the positive reaction from our employees who embraced the challenge of the new Boxlight and responded with creativity and renewed dedication. And similarly, our customers have been very positive, seeing the changes underway is beneficial to their needs. And as I mentioned, our lenders have been highly cooperative as well. We're convinced we're on the right path with much work still to do, but we have key pieces in place. Let me speak to the near-term achievements we anticipate delivering to help drive those sustainable improvements in our operations particularly. First, investors should expect to see a meaningful reduction in operating expenses, positioning us for sustainable profitability. As I indicated, we have already eliminated approximately $3 million in annualized fixed cost and there are more to come, not just in the elimination of fixed cost but in operational efficiencies overall. To be clear, we do see significant opportunities for future growth and we're committed to investing in the areas that are going to drive those growth opportunities and those results. We're not going to cut costs recklessly, but we also will not spend a nickel more than we need to. Second, we expect to advance initiatives to replace our existing debt with a more permanent facility, either a new debt arrangement or another option to enable us to fund our growth. We also expect to finalize an agreement with our preferred shareholders, directly aligning us with these important stakeholders as they -- as we work together to execute this turnaround. Third, investors can expect better sales efficiency as we break down some of the silos that remain from our multiple acquisitions and establish a single-market presence that resonates even more clearly with our customers. Finally, we're in the process of introducing several new products across our Clevertouch, Mimio, FrontRow brand lineup. These include industry-leading, highly-capable, Google-certified EDLA, interactive panels that feature enhanced audio and video. Also, we have new devices coming online that make our legacy panels EDLA compatible, which is very important to our installed base customers. We've made numerous enhancements to our suite of campus and classroom communication software. These products maintain our technical lead in the marketplace and they're unique in their integrated solution value. We're the only company that provides the kind of integrated solutions that we're describing here. And most importantly, they're in line with what our customers are asking for. We're confident these solutions will contribute substantially to our improved results in 2024 and beyond. With that, I'll now turn the call over to Greg to discuss the fourth quarter and full year results.
Greg Wiggins: Thanks, Dale, and good afternoon, everyone. As Dale mentioned, Boxlight's management team is focused on bolstering our balance sheet and reducing our fixed costs. Before discussing the historic results, let me speak to these two important initiatives. Boxlight continues to work closely with our lenders with the goal of maintaining our liquidity, while seeking a longer-term solution. To-date, our lenders have been very collaborative and they have expressed appreciation for the recent changes to solidify our foundation. We very much appreciate their ongoing support. Simultaneously, we are working with our investment bankers to identify and evaluate options to replace our debt facility. We are communicating regularly with our lenders to keep them apprised of the progress in forging a new facility. We are also actively communicating with our preferred shareholders and they have indicated a willingness to maintain the status quo in relation to the preferred stock, giving us the runway to execute our turnaround. We appreciate their ongoing support and commitment to helping our company succeed. Given their industry expertise and company insights as the former owners of our Sahara business, we have included them as informal advisors to our Board of Directors. We are confident their guidance will be an asset for us moving forward. From an expense management perspective, we have eliminated approximately $3 million in fixed costs over the last two months, mostly through headcount reductions that do not impact our sales teams or other revenue-generating departments within the organization. These reductions will take time to appear on our income statement, but investors should see the initial benefits in the second quarter with additional reductions benefiting the balance of the year. I'll now review our fourth quarter results. Revenues for Q4 2023 were $38.8 million as compared to $42.8 million for Q4 2022, resulting in a 9.3% decrease. EMEA revenues comprised 52% or $20.2 million of our total revenues, while Americas revenues totaled 46% or $17.8 million of our total revenues, and revenues from other markets totaling 2% or $0.8 million of our total revenues. Flat panel displays comprised approximately 71% of total revenues. Audio solutions comprised 13% of total revenues, with the balance comprised of device accessories, software, professional services, and STEM solutions. Gross profit for the quarter was $12.3 million as compared to $14.4 million for the prior-year period. Gross profit margin for the quarter was 31.7%, which is a decrease of 190 basis points over the comparable three months in 2022. The decline in gross profit margin in Q4 is primarily due to non-recurring adjustments to cost of goods sold, partially offset by higher margins associated with FrontRow products. Our current product margins have remained consistent with prior quarters in 2023, and we expect to return to higher gross margins in Q1 2024. Total operating expenses for Q4 2023 were $28.9 million, inclusive of $12 million of non-cash impairment charges. In addition, the company recognized incremental non-cash stock compensation expense of approximately $600,000 for the cancellation of certain previously issued equity awards. Excluding the non-cash impairment charges and incremental stock compensation expense, total operating expenses were approximately $16.3 million compared to $15.2 million in Q4 2022. The increase was due primarily to increased employee-related expenses to support the company's growth in certain markets. Other expense for Q4 2023 was a net expense of $2.6 million as compared to net expense of $1.6 million for Q4 2022. The increase in other expense was primarily due to fluctuations in the gain or loss recognized from the change in fair value of derivative liabilities. The company reported a net loss of $16.6 million or $1.76 per basic and diluted share for the quarter as compared to net loss of $2 million or $0.25 per basic and diluted share for the prior-year quarter. Adjusted EBITDA loss for Q4 2023 was $1.1 million as compared to adjusted EBITDA income of $2.6 million for Q4 2022. Adjustments to EBITDA include stock-based compensation expense, impairment charges, gains/losses from the remeasurement of derivative liabilities, gains/losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. For full year 2023, adjusted EBITDA was $12.6 million as compared to $18.9 million for the prior year. Turning to the balance sheet. At December 31, 2023, Boxlight had $17.3 million in cash, $54.1 million in working capital, $44.1 million in inventory, $158.6 million in total assets, $40.2 million in debt, net of debt issuance costs of $3.1 million, and $16.8 million in stockholders' equity. At December 31, Boxlight had 9.7 million common shares issued in outstanding and 3.1 million preferred shares issued in outstanding. Subsequent to year-end, the company paid down $1.6 million in principal on its term loan, with the principal balance currently at $41.7 million. Looking ahead to 2024, the company is expecting full year revenues to remain flat year-over-year with a continued return to traditional seasonal trends. For Q1 2024, the company expects revenues of approximately $34 million and to approximate 18% to 20% of total annual revenues. While the company has not observed significant product margin decline in recent periods outside of the non-recurring charges in Q4 previously discussed, we are forecasting a 100 basis points to 200 basis point decline in gross margin percentage for full year 2024 as the flat panel market continues to mature. Managing operating expenses, primarily controlling our fixed G&A costs to align with forecasted revenues remains the primary focus for 2024. In January, the company eliminated approximately 25 positions, primarily in non-sales roles, which we estimate will save the company approximately $3 million on an annual run rate basis. Other cost saving measures, including further reductions in employee-related expenditures, are in process, and we look forward to updating you with our progress on future calls. The company is committed to reducing operating expenses to approximately $12.5 million to $13 million per quarter on an annual basis, and expects to begin achieving new quarterly run rates by the end of 2024. We are forecasting adjusted EBITDA for Q1 2024 after giving consideration to severance and other charges associated with our recent headcount reduction of negative $3 million. Managing our debt and equity structure is also a top priority for the company in 2024. We are actively seeking to refinance our debt facility with more favorable terms, while maintaining a healthy EBITDA leverage ratio. We continue to monitor our short-term working capital cash requirements to ensure we have appropriate levels of inventory on hand for future periods. While we may look to obtain liquidity to meet these working capital needs, we are focused on achieving solutions that are not dilutive to our shareholders. With that, we'll open up the call for questions.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] And the first question today is coming from Brian Kinstlinger from Alliance Global. Brian, your line is live.
Brian Kinstlinger: Great. Thanks for all the comments. In your prepared remark -- actually in the press release, you mentioned customers' needs are changing and the market is evolving. Your company is making changes to align with that changing market. What are the changes customers are asking for? Is it new products? Is it going to require new M&A, new personnel? And how much capital will it take to meet to make these adjustments?
Dale Strang: Hey, Brian, this is Dale, and thank you. Look, that's -- I think there's a lot of pieces to that as to how the customer needs are evolving. A couple of ways we're responding just today that we see as being quite timely is the panels themselves are evolving into much more highly functional computer devices that have resident on the much more in the way -- much more productivity software that the educators use every day. And it's making it easier for them to interact directly with the panels as opposed to using a Chromebook or another intermediate device. So, it's super important to the customers that are sort of leading the way on this that they understand how to use these devices that they have -- devices that are certified by Google (NASDAQ:GOOGL)'s EDLA program and that they can receive training to make sure that their customers get the most out of them. Our new batch of EDLA panels have all that and we're one of the very few people in the market that can offer -- that offers EDLA certified panels. And we have the -- and we offer specific training on both the panels overall, the Google stuff in general, and specific applications that others can't provide. Again, this is what customers are looking for, not only the technology, but the backing and the knowledge on how to use it. Another aspect that's really we think coming to the fore is that it's not just about front of classroom instruction any longer. More and more of our districts are looking at classroom-wide or campus-wide communications. And that's where our FrontRow product line comes in. By integrating our FrontRow line of audio products and services with video, we can not only improve instruction and make that much more meaningful and much more impactful, but we can also tie into the building-wide and campus-wide communications that are increasingly important in the context of safety. And that's opening up whole new conversations for us. Again, this is what more and more people are looking for and we're lucky that we have an asset base in FrontRow that can really respond. Long term, there's much -- so, to answer your question about M&A, I think it's -- we believe it's one of the reasons we want to make sure that our -- we built the company through M&A. Our company is where it is today because of that. We think that it's going to be a very opportunity-rich environment for augmentation. And you don't have to look at far for the technology drivers that are going to make that happen, AI being the current one. And so, by having our operation be well integrated and highly efficient, it will just position us to take advantage of those opportunities as they emerge.
Brian Kinstlinger: Right. And then, can you speak to the order trends thus far in the March quarter? Have they picked up from the December quarter? I guess the heart of the question is, what gives you confidence given the recent trends that you can generate flat year-over-year revenues?
Greg Wiggins: Yeah. So...
Dale Strang: A couple of things -- yeah, go ahead, Greg.
Greg Wiggins: Yeah. So maybe provide a couple of data points here. So, as we talked on our last earnings call as we were kind of heading in kind of the latter part of the year, we've gone through multiple quarters, four quarters or so down year-over-year sales order results. And in Q3, you might remember, we actually saw a slight uptick in sales orders, roughly 10% for the quarter and that decreased slightly about 3% globally in Q4, with our EMEA business actually increasing in sales orders, partially offset by some of our U.S. sales orders. The early indications in Q1 have actually pointed to some positive signs, maybe very modest return to order growth in the U.S. as well. So, we're seeing sporadic data points, but certainly a positive change from where we were in the fourth quarter as kind of heading into Q3. So we're starting to see those data points that start to indicate a turnaround in the industry as well as our discussions that we have in the industry as well. So, I think those data points align as well. And Dale, I know you want to add something to that.
Dale Strang: I think I just want to emphasize two things. One is the focus we put on really grinding out our forecasting accuracy has been intense and it will continue to be. We recognize it's important to us and to our stakeholders for us to commit to a number and hit that number. That has always been tough to do in this market, because it's a difficult forecast market, and it tends to be kind of lumpy in terms of you get big orders and then the order gets pushed. But we're committed nevertheless to make that happen, to making sure that we have an accurate number. At a global basis, again, the pandemic spiked what was traditionally a kind of slow and steady growth market into an intense period of growth. And since the pandemic, there's been a sort of negative hangover there that's at a downturn that is unnatural in its cyclicality over time. And one of the things we're focusing on really tight is the seasonality represented by each quarter. The early signals from that data and from the anecdotal data from the field indicate that our -- right now that our flat revenue outlook for the year is sound, but we'll obviously stay right on top of it. I'm not sure if that answers your question.
Brian Kinstlinger: It does. No, it does. Thank you. The last question I have, I'm hearing you guys right with the cost cutting and future potential cost cutting, you talked about where you would exit the year at a G&A level. And based on the first quarter adjusted EBITDA loss guidance, we're not seeing much of that is what I sense. And with the order trends, I sense the second quarter also will probably be breakeven to a loss too, given the third quarter is where most of your revenue is generated. So, I'm wondering if there's anything to think about from a covenants that we should be mindful of?
Greg Wiggins: Yeah. So, a couple of thoughts there to address. So yes, throughout the year there will be a little lumpiness on our OpEx savings. We can speak a little more closely to the first quarter. And certainly, as you indicated, where we want to be by the end of the year, where we anticipate being at the end of the year is kind of our future run rate of that $12.5 million, $13 million of OpEx per quarter. In the first quarter, you're correct. With some of the other restructuring charges that have gone into some of the changes we've made and as you appreciate when a significant number of the changes made were headcount related, there's some costs that offset some of the immediate savings that won't be really realized until we get into Q2, Q3. Also there are other initiatives as we kind of alluded to in our prepared remarks that this is an ongoing process. So there are further changes to be made and the timeframe in which some of those are executed will certainly impact the timing of those reductions in Q2, Q3. So, we've stopped short of providing full year guidance at this time on where we'll land for the year. But obviously for Q2, Q3, we'll be gradually working towards kind of our new run rate by the end of the year. From a debt compliance standpoint, as I say, we are obviously focused on refinancing our current credit facility, but we also continue to work with our existing lenders with covenant compliance as far as our existing agreement is concerned and we continue to kind of have those discussions with them as we progress through the year.
Brian Kinstlinger: Okay. Thank you. Good luck.
Operator: Thank you. [Operator Instructions] The next question is coming from Jack Vander Aarde from Maxim Group. Jack, your line is live.
Jack Vander Aarde: Okay, great. Thanks, Dale. Thanks, Greg. Just a couple of questions to follow-up. Dale, can you talk a little bit more about your 2024 revenue outlook, which is for roughly flattish growth? But in terms of geography, are you kind of expecting flattish growth across the board? Or any puts and takes there, whether it be the U.S. market, EMEA or some of the other growth markets you've been gaining share in? Is it kind of a blanketed, just kind of flattish or any markets expected to outperform and others to be kind of laggards? Thanks.
Dale Strang: It's tough to say, but thank you, Jack. Yeah, it's tough to look at EMEA and say and look at that as a blanket, right? Our two biggest markets are naturally the U.S. and the UK. We're seeing pretty sharp growth on a maybe smaller base in markets like Germany, which is somebody we invested pretty aggressively in over the last couple of years, and we're seeing some real results there. And we're also seeing growth not just by geography but by sector, meaning we think that our FrontRow business will grow nicely this year and that contributes to our U.S. result. I will say this, the overall the blended basis on EMEA looks like it's got more it's maybe having a little less of the continued softness overall on a blended basis when you average everything else, whereas the panel market in the U.S. is still looking flat to down. But if we hit the number that we're talking about hitting, it will be because of all those factors. It will be that we'll take some market share, that the market will perform well in certain markets and we'll blend in products like our STEM product, our training services and our audio product to achieve the result. It's also worth noting that the U.S. is not monolithic either, right? We're seeing really strong performance in certain states that are growing quickly, as you'd expect, and those states will continue to perform really well. Again, Jack, I'm not sure if that covers it. Globally, the market is going to remain relatively flat. We think that we're covered pretty well in all the areas where we can get growth of sub areas, so we can get growth this year. And we're aggressively working on filling any white space we have to make sure that we grab the business where it is.
Jack Vander Aarde: Okay, great. That covers a lot of that. I appreciate that. And then maybe a follow-up for Greg and Dale, maybe you can contribute to this as well. But just on the cost reduction front and kind of the go-forward goal, I believe I heard you're targeting maybe -- I know there's seasonality involved, but when all said and done, maybe a $12 million to $13 million kind of normalized quarterly OpEx. Do you just have a sense of what kind of a normalized or targeted adjusted EBITDA margin looks like? It sounds like gross margin might be stepping down 150 bps maybe or so, but still remains pretty strong relative to historical levels and so further OpEx cuts. Just wondering like what is kind of a normalized profit or adjusted EBITDA margin in your eyes, if you could speak to any of that? Thanks.
Greg Wiggins: Yeah. So, I think on a go-forward basis on a full run rate after we start to achieve these operating expense reductions that we plan to put in place this year, our goal is to achieve an adjusted EBITDA margin north of 10%, sustain a margin north of 10%, which we think is able to be accomplished. And a lot of the operating expense reductions we want to put in place this year are based, as we've noted on the call, at a flat year-over-year revenue. We expect this to be an industry that we'll experience some modest growth over time, but even on a flat revenue basis, we think with these operating expense reductions, all things being considered, we can achieve a double-digit EBITDA margin and sustain that going forward.
Jack Vander Aarde: Okay, great. That's helpful. And then maybe just one more question for me, just because there's a press release on it and everything. Dale, can you touch on the new Clevertouch headquarters and warehouse? I believe it was some of the press releases, it's much larger, 35% bigger. Just how does that impact sort of -- I guess that plays nicely into -- you guys are going through cost cutting initiatives and you expect growth to pick up down the road. What was the decision behind that? And is that fair to say it kind of validates or reinforces your confidence in growth to pick up in the back half of the year just down the road so you can satisfy it? Thanks.
Dale Strang: Yeah, sure. The place is -- I was happy enough to be there I think on the second day we were open, and it's really -- it's a vast improvement of what we had before. And most of that is just on consolidation and efficiency. Just if you've ever run a warehouse, which I have not, but I've spoken with people who have, just the ease with which repetitive tasks can be repeated, can really add up to a lot of logistical improvements. And this is a state-of-the-art warehouse with plenty of room for ebbs and flows of inventory levels. Infrastructure-wise, it's placed ideally near the transportation centers there outside of London. And it's also a more effective workplace for the people compared to -- for our staff members compared to the prior place. So, we're excited about it. We think it benefits both of efficiency and in terms of kind of productivity, if you will. But we committed to it based on the expectation of future growth and we're set for that.
Jack Vander Aarde: Okay. Great. That's it for me guys. Thank you.
Operator: Thank you. There were no other questions at this time. I would now like to hand the call back to Dale Strang for closing remarks.
Dale Strang: Well, thank you everyone for your support and for joining us today on our fourth quarter 2023 conference call. As I mentioned, the pieces for meaningful improvement are in place. We have a clear understanding of the challenges we need to address and a plan in place to drive improvements. I'm Incredibly proud of the team for responding to the challenges and operating with both professionalism as well as energy and creativity. And we look forward to speaking to you again in May, when we report our Q1 2024 results.
Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day. Thank you for your participation.
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