OMNIQ ANNOUNCES 2023 REVENUE OF $81.4 MILLION
- Reduction in General Administrative expenses by $4.7 million, or 17% YoY.
- Increased Cash Assets by $300 Thousand.
- Decrease in current liabilities by $836 Thousand.
- Losses largely impacted by non-cash impairments, with $14.7 million in Goodwill impairment expenses for December 31st, 2023.
- Fourth Quarter 2023 revenue of $16 million, with a net loss of $17.8 million.
- FY 2023 revenue decreased to $81.1 million, with a net loss of $29.4 million.
- Challenges include working capital deficit of $45 million and an accumulated deficit of $114 million.
- Strategic focus on increasing sales with prime customers and profitable product lines.
- Equity raise resulting in $2.5 million in net cash received from investors in October 2023.
- CEO emphasizes reflection on core operations and values to drive significant changes for a healthier future.
- Net loss of $29.4 million for FY 2023.
- Working capital deficit of $45 million and an accumulated deficit of $114 million.
- Revenue decrease to $81.1 million for FY 2023.
- Net loss of $17.8 million for Q4 2023.
- Non-cash impairments impacting financial results.
- Decrease in Gross Profit and Gross Margin compared to previous years.
Insights
The disclosure by OMNIQ Corp. regarding its full year and fourth quarter 2023 financial results indicates a challenging period for the company. A significant reduction in revenue from $100.8 million in 2022 to $81.1 million in 2023, alongside a decrease in gross profit, suggests a contraction in business operations or loss of market share. The reduction in General and Administrative (G&A) expenses and headcount could be viewed as a positive cost control measure, but when coupled with a substantial net loss and non-cash Goodwill impairment of $14.7 million, it raises concerns about the company's asset valuation and future profitability.
From an investor's perspective, the improved cash position and decreased current liabilities might provide some reassurance of financial stability. However, the working capital deficit and accumulated deficit are red flags that could impact the company's ability to sustain operations without further capital infusion. The shift in revenue concentration, where no single customer accounts for more than 10% of revenues, could be interpreted as a diversification strategy to reduce dependency on major clients, but it also necessitates an analysis of the impact on profit margins.
The Adjusted EBITDA loss increasing year-over-year indicates operational challenges that are not solely attributable to non-cash items. This metric often serves as a proxy for operational cash flow and a widening loss could signal underlying issues in core business efficiency. The strategic focus on high-margin products and services, as well as the equity raise and new line of credit, are steps towards financial recovery, but the effectiveness of these measures will need to be closely monitored in subsequent quarters.
OMNIQ's recent contracts and orders in various sectors such as logistics, airport services, fintech and retail indicate an expansion of its product portfolio and entry into new markets. The adoption of AI and IoT technologies in industries like fast-food chains and sporting goods stores showcases the company's ability to innovate and adapt to different market needs. However, the decrease in gross margin from 17% to 13% raises questions about the cost-effectiveness of these ventures and whether they can sustainably contribute to the company's bottom line.
The diversification of OMNIQ's customer base is a strategic move that could mitigate risks associated with over-reliance on a few large customers. However, it's important to assess whether this diversification is also leading to profitable growth or simply spreading resources thin across less lucrative contracts. The multi-year contract for Israel's largest logistics center and orders from high-profile clients such as Nestle and a U.S.-owned restaurant chain are promising developments, but the true impact on the company's financial health will depend on the profitability and execution of these contracts.
Investors should consider the competitive landscape and the company's ability to deliver on its value proposition in a cost-effective manner. The recent acquisition of Codeblocks suggests a strategic move into fintech, which could offer new revenue streams, but also requires careful consideration of the integration costs and potential cannibalization of existing services.
The non-cash impairment charge of $14.7 million is a critical accounting item that reflects a devaluation of the company's goodwill. This could indicate that previous acquisitions or valued intangible assets are not generating the expected returns, or there has been a change in market conditions affecting their valuation. Investors should be aware of the implications of such impairments as they can affect the company's creditworthiness and investor confidence.
Furthermore, the equity raise and new line of credit finalized by management are essential for providing the necessary capital to fund operations and pursue growth. However, these financial maneuvers also increase shareholder dilution and financial leverage, which could impact shareholder value in the long term. It is imperative to scrutinize the terms of these financial arrangements and their alignment with shareholder interests.
While the company's proactive approach to cost reduction and strategic focus on prime customers and profitable product lines is commendable, the legal and regulatory risks associated with such rapid changes should not be overlooked. The company must ensure compliance with securities regulations, especially in light of the financial restructuring and strategic shifts being undertaken.
SALT LAKE CITY, April 01, 2024 (GLOBE NEWSWIRE) -- OMNIQ Corp. (NASDAQ: OMQS) (“OMNIQ” or the “Company”), a provider of Artificial Intelligence (AI) and IoT–based solutions will release Full Year 2023 Earnings after the market close on Monday, April 1st, 2024. The announcement will be followed by a live earnings call with management the following morning, Tuesday, April 2nd, 2024, at 9:00 AM EST.
- Reduction in General Administrative expenses by
$4.7 million , or17% YoY - Reduction of thirty-four employees compared to December 31st, 2022.
- Increased Cash Assets by
$300 Thousand . - Decrease in current liabilities by
$836 Thousand . - For the year ended December 31, 2023, no customer accounted for more than
10% of the Company’s revenues. For the year ended December 31, 2022, one customer accounted for30% of the Company’s revenues. - Losses reported are largely impacted by non-cash impairments*, our non-cash Goodwill impairment expenses amounted to
$14.7 million for December 31st, 2023.
Fourth Quarter 2023 Financial Results
OMNIQ reported revenue of
Net loss for the quarter was
Cash balance on December 31, 2023, was approximately
FY 2023 Financial Results
OMNIQ reported revenue of
Net loss for the year ended December 31, 2022, was
Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization) for the year ended December 31, 2023, amounted to a loss of
Additional Q4 2023 and recent events:
- Multi-year contract for Israel’s largest logistics center.
- AI-machine vision ordered for La Guardia, NY Stewart, and Newark Airports.
- Addition of AI based in-car face detection.
- Acquisition of Codeblocks; a fintech company ensuring proprietary unique features.
- Fintech solution ordered for Israel’s largest fast-food chain.
- Self-Service Taxi kiosks ordered for Ben-Gurion Airport to improve service, safety, and regulate pricing for travelers.
- Fintech solution ordered for U.S.-owned restaurant chain.
- Contract to upgrade 450 sporting goods stores in the US.
- Recent purchase order from Nestle for logistic operations.
Shareholder update
The Company dealt with the challenge of the need to conduct cost cuts mainly attributable to the temporary weakness in the market conditions combined with the need to maintain and improve its position in the huge markets it is involved with to support future growth and profitability. So far, management has taken, and is still taking, aggressive measures reducing annual SG&A costs by
One challenge is that we are experiencing a working capital deficit of
To ensure we have sufficient working capital, in October 2023, management finalized an equity raise which resulted in
“In navigating through the complex landscape shaped by global and market events, it has provided us with a valuable opportunity to reflect deeply on our core operations and values. It's like looking in a mirror, not to critique what we see with harshness, but to understand where our strengths lie and where we need to evolve. These insights are now guiding us toward making significant, forward-thinking changes. We are not just addressing the immediate issues at hand; we are laying down the foundation for a healthier, more robust future for our company. This period of transformation, though demanding, is an investment in our collective future, ensuring we emerge not just intact but stronger and more aligned with our mission than ever before.” – Shai Lustgarten, CEO
OMNIQ Fourth Quarter 2023 Earnings Call Details
Tuesday, April 02, 2024 - 9:00 AM Eastern Time
Participant Numbers: Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 102048
Participants will be greeted by an operator and asked for the access code. If a caller does not have the code, they can reference the company name. We have found that using access codes expedites entry into the call and suggest the code be distributed with the dial in numbers.
Teleconference Replay Number:
Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 50290
Webcast URL: https://www.webcaster4.com/Webcast/Page/2310/50290
About OMNIQ Corp.
OMNIQ Corp. excels in providing state-of-the-art computerized and machine vision image processing technologies, anchored in its proprietary and patented artificial intelligence innovations. The Company's extensive range of services spans advanced data collection systems, real-time surveillance, and monitoring capabilities catered to various sectors, including supply chain management, homeland security, public safety, as well as traffic and parking management. These innovative solutions are strategically designed to secure and optimize the movement of individuals, assets, and information across essential infrastructures such as airports, warehouses, and national borders.
The Company serves a broad spectrum of clients, including government agencies and esteemed Fortune 500 corporations across several industries—manufacturing, retail, healthcare, distribution, transportation, logistics, food and beverage, and the oil, gas, and chemical sectors. By adopting OMNIQ Corp.'s advanced solutions, these organizations are better equipped to manage the intricacies of their domains, thereby enhancing their operational effectiveness.
OMNIQ Corp. has established a significant footprint in rapidly expanding markets. This includes the Global Safe City sector, predicted to reach
For additional information, please visit www.OMNIQ.com.
Information about forward-looking statements
This press release includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, specifically under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements, which address expected future events, economic performance, and financial outcomes, are not historical facts but predictions based on current expectations and projections.
Such forward-looking statements, identifiable by terms like "anticipate," "expect," "may," "believe," and similar expressions, should not be seen as guarantees of future results. They are based on the information available at the time of making and reflect management's current expectations about future events. These statements are subject to various risks and uncertainties that could cause actual results to differ significantly from those projected or implied. Some of these risks include fluctuations in product demand, the introduction of new offerings, maintaining customer and strategic relationships, competitive pressures, market growth, financial liquidity, debt management, and the ability to integrate new acquisitions effectively.
Specific forward-looking statements in this release include expectations regarding financial strategies, revenue growth, and operational improvements. For a detailed discussion of risks and uncertainties that could affect OMNIQ Corp.'s future performance, please refer to our recent filings with the Securities and Exchange Commission at https://www.sec.gov. OMNIQ Corp. does not commit to updating these forward-looking statements unless required by law.
Contact Info:
IR@OMNIQ.com
* Impairment of Goodwill – During the year ended December 31, 2023, the Company experienced significant decline in our stock price and sustained losses from operations. Therefore, we completed a quantitative goodwill impairment analysis as of December 31, 2023. The results of the analysis indicated an impairment loss for goodwill related to acquisitions prior to 2021, and we recorded a non-cash impairment of
OMNIQ CORP.
CONSOLIDATED BALANCE SHEETS
As of December 31,
| (In thousands, except share and per share data) | 2023 | 2022 | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 1,678 | $ | 1,311 | ||||
| Accounts receivable, net | 18,654 | 23,893 | ||||||
| Inventory | 6,028 | 8,726 | ||||||
| Prepaid expenses | 969 | 1,268 | ||||||
| Other current assets | 25 | 473 | ||||||
| Total current assets | 27,354 | 35,671 | ||||||
| Property and equipment, net of accumulated depreciation of | 1,066 | 1,086 | ||||||
| Goodwill | 1,788 | 16,542 | ||||||
| Trade name, net of accumulated amortization of | 1,377 | 1,826 | ||||||
| Customer relationships, net of accumulated amortization of | 3,777 | 4,967 | ||||||
| Other intangibles, net of accumulated amortization of | 504 | 675 | ||||||
| Right of use lease asset | 1,862 | 2,300 | ||||||
| Other assets | 1,758 | 1,744 | ||||||
| Total Assets | $ | 39,486 | $ | 64,811 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 56,741 | $ | 53,701 | ||||
| Line of credit | 240 | 1,971 | ||||||
| Accrued payroll and sales tax | 1,537 | 2,633 | ||||||
| Notes payable, related parties – current portion | - | 293 | ||||||
| Notes payable – current portion | 10,196 | 11,572 | ||||||
| Lease liability – current portion | 885 | 942 | ||||||
| Other current liabilities | 3,106 | 2,429 | ||||||
| Total current liabilities | 72,705 | 73,541 | ||||||
| Long term liabilities | ||||||||
| Notes payable, related party, less current portion | - | 0 | ||||||
| Accrued interest and accrued liabilities, related party | 73 | 72 | ||||||
| Notes payable, less current portion | 265 | 55 | ||||||
| Lease liability | 1,011 | 1,404 | ||||||
| Other long term liabilities | 452 | 265 | ||||||
| Total liabilities | 74,506 | 75,337 | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Series A Preferred stock; | - | - | ||||||
| Series B Preferred stock; | - | - | ||||||
| Series C Preferred stock; | 1 | 1 | ||||||
| Common stock; | 11 | 8 | ||||||
| Additional paid-in capital | 78,339 | 73,714 | ||||||
| Accumulated (deficit) | (113,923 | ) | (84,460 | ) | ||||
| Accumulated other comprehensive income | 551 | 211 | ||||||
| Total OmniQ stockholders’ equity (deficit) | (35,020 | ) | (10,526 | ) | ||||
| Total liabilities and equity (deficit) | $ | 39,486 | $ | 64,811 | ||||
OMNIQ CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Years Ended December 31,
| (In thousands, except share and per share data) | 2023 | 2022 | ||||||
| Revenues | $ | 81,193 | $ | 100,758 | ||||
| Cost of goods sold | 65,485 | 78,654 | ||||||
| Gross profit | 15,708 | 22,104 | ||||||
| Operating expenses | ||||||||
| Research & Development | 2,154 | 1,826 | ||||||
| Selling, general and administrative | 22,960 | 27,707 | ||||||
| Depreciation | 464 | 324 | ||||||
| Amortization | 1,640 | 1,799 | ||||||
| Goodwill impairment expense | 14,686 | - | ||||||
| Total operating expenses | 41,904 | 31,656 | ||||||
| Loss from operations | (26,196 | ) | (9,552 | ) | ||||
| Other income (expenses): | ||||||||
| Interest expense | (3,303 | ) | (3,496 | ) | ||||
| Other (expenses) income | (1,145 | ) | (601 | ) | ||||
| Total other expenses | (4,448 | ) | (4,097 | ) | ||||
| Net Loss Before Income Taxes | (30,074 | ) | (13,649 | ) | ||||
| Provision for Income Taxes | ||||||||
| Current | 643 | 35 | ||||||
| Total Provision for Income Taxes | 643 | 35 | ||||||
| Net Loss | $ | (29,431 | ) | $ | (13,614 | ) | ||
| Net income attributable to noncontrolling interest | - | 67 | ||||||
| Net Loss attributable to OmniQ Corp | $ | (29,431 | ) | $ | (13,681 | ) | ||
| Net Loss | $ | (29,431 | ) | $ | (13,614 | ) | ||
| Foreign currency translation adjustment | 340 | 365 | ||||||
| Comprehensive loss | $ | (29,091 | ) | $ | (13,249 | ) | ||
| Reconciliation of net loss to net loss attributable to common shareholders | ||||||||
| Net loss | $ | (29,431 | ) | $ | (13,614 | ) | ||
| Less: Dividends attributable to non-common stockholders’ of OmniQ Corp | (32 | ) | (206 | ) | ||||
| Net loss attributable to common stockholders’ of OmniQ Corp | $ | (29,463 | ) | $ | (13,820 | ) | ||
| Net (loss) per share - basic attributable to common stockholders’ of OmniQ Corp | $ | (3.50 | ) | $ | (1.82 | ) | ||
| Weighted average number of common shares outstanding - basic | 8,412,494 | 7,576,434 | ||||||
OMNIQ Corp.
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
| The year ended | ||||||||
| (In thousands) | December 31, | |||||||
| Adjusted EBITDA Calculation | 2023 | 2022 | ||||||
| Net loss | (29,431 | ) | (13,614 | ) | ||||
| Depreciation & amortization | 2,104 | 2,119 | ||||||
| Interest expense | 3,303 | 3,496 | ||||||
| Income taxes | (643 | ) | (35 | ) | ||||
| Stock compensation | 1,955 | 3,323 | ||||||
| Goodwill impairment | 14,686 | - | ||||||
| Nonrecurring loss events | 619 | 1,786 | ||||||
| Adjusted EBITDA | (7,407 | ) | (2,925 | ) | ||||
| Total revenues, net | 81,193 | 100,758 | ||||||
| Adjusted EBITDA as a % of total revenues, net | (9.12 | %) | (- | |||||
FAQ
What is OMNIQ Corp.'s ticker symbol?
What were OMNIQ Corp.'s revenue and net loss for Fourth Quarter 2023?
How much was the reduction in General Administrative expenses for OMNIQ Corp.?
What caused the net loss for FY 2023 for OMNIQ Corp.?
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What strategic focus is OMNIQ Corp. adopting to address challenges?
