Moving iMage Technologies Q2 FY2026 Earnings Call - DCS acquisition central to international expansion and margin improvement

Operator: Good morning, everyone, and welcome to the Moving iMage Technologies Fiscal 2026 second quarter conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the call over to Chris Eddy, Investor Relations, to begin. Please go ahead.

Chris Eddy, Investor Relations, Moving iMage Technologies: 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 Technologies CEO, Phil Rafnson.

Phil Rafnson, CEO, Moving iMage Technologies: Thanks, Chris, and thank you all for your interest in Moving iMage Technologies. 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 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 in immersive audio. Our exhibition industry revenue expectations continue to be shaped by historical CapEx investment patterns, when large projects often lag during the 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 complimentary 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.

Francois Godfrey, President and COO, Moving iMage Technologies: 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+ 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 U.S., U.K., 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 roadmap 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.

Bill Greene, CFO, Moving iMage Technologies: 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 2026 revenue rose 10% to $3.3 million, as Phil mentioned at the outset of this call, and our Q2 2026 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 2025, primarily due to higher margin product revenues and execution efficiency. Total operating expense rose by 5.1% to $1.57 million in Q2 2026, compared to $1.49 million during Q2 2025, due primarily to higher legal expense.

Q2 2026 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 2026 net loss improved to negative $388,000, or negative 4 cents per share, compared to a net loss of negative $527,000 or negative 5 cents per share in Q2 last year. Our Q2 2026 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 2026, compared to Q2 2025 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 2026 with net cash of $3.9 million, or approximately $0.39 per share, compared to net cash of $5.3 million at Q2 2025. It is important to note that the increase in inventory at December 2025 of $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.

Francois Godfrey, President and COO, Moving iMage Technologies: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Again, that is star one if you would like to ask a question, and we’ll pause for a moment. Again, star one if you would like to ask a question. It appears there are no questions. Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.