Q2 2023 Boxlight Corp Earnings Call

Participants

Gregory S. Wiggins; CFO; Boxlight Corporation

Mark Starkey; President; Boxlight Corporation

Michael Pope

Brian David Kinstlinger; MD, Director of Research, Head of TMT Research & Senior Technology Analyst; Alliance Global Partners, Research Division

Jack Vander Aarde; VP & Senior Research Analyst; Maxim Group LLC, Research Division

Presentation

Operator

Thank you, and welcome to the Boxlight Second Quarter 2023 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meanings of securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-K, Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements.

On this call, management will refer to non-GAAP measures that when used in combination with GAAP results, provide additional analytical tools to understand the company's operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company's website at Boxlight.com. And with that, I'll hand the call over to Boxlight's Chairman and Chief Executive Officer, Michael Pope.

Michael Pope

Hello, everyone, and thank you for joining our Q2 earnings call. After my remarks, you will also hear from Mark Starkey, our President and Greg Wiggins, our Chief Financial Officer. For the second quarter, we delivered $47 million in revenue, $18 million in gross profit and $5.4 million in adjusted EBITDA. With softer demand across the industry, our revenues declined by 21% over Q2 2022. However, our gross profit improved by 6% and adjusted EBITDA improved by 4%. Our strong profitability was largely a result of our record gross profit margin. For the second quarter, we reported 38% in gross margin, an increase of 970 basis points over Q2 2022.

Our balance sheet also improved during the quarter. As of June 30, we reported $65 million in working capital, including $60 million in cash and $38 million in inventory. Our debt balance at quarter end was $52 million. Subsequent to quarter end, we paid down our debt facility by an additional $3 million, resulting in a current debt balance of approximately $49 million. We are revising our revenue guidance for the second half of 2023 and now expect to deliver $60 million for the third quarter and $110 million in revenue for the second half of the year. Despite the lower revenue guidance, we expect adjusted EBITDA for the second half of 2023 to be in line with 2022.

We continue to innovate and expand our product line and have recently introduced several new solutions, including our MyBot Recruit robot with a large-format LED display, My FrontRow app for interactive displays, PowerLine, a low voltage, easy-to-install power supply and Google EDLA interactive panels bundled with training and support. EOS Education, our Professional Development division earned the education services partner specialization and Google Cloud Partner Advantage and will be bundling Google training with our Google EDLA-interactive panels.

We are committed to both education and enterprise verticals and serve both markets with the most comprehensive integrated solutions suite available complete with hardware, software and service components. We are seeing a substantial increase in industry recognition for our innovation and market-leading solutions. During the second quarter, the annual EdTech Breakthrough Awards recognized our FrontRow attention solution as the best technology solution for student safety. Student safety is an area of significant concern in our schools and one where we can add value.

Attention is an integrated solution that combines our FrontRow conductor campus-wide bells paging, intercom and emergency communication platform with CleverLive, our cloud management platform, providing a comprehensive audiovisual messaging and alerting system. With attention, administrators can broadcast simultaneous audio and video communication across an entire campus, including in the event of an emergency.

In 2022, EdTech breakthrough also recognized Boxlight as the overall EdTech Company of the Year. Our Mimio and Clevertouch brands received seven Best of Show awards at Infocom 2023 from three different journals, AV technology, digital signage and Tech & Learning for our CleverLive digital signage platform, Clever Hub wireless presentation system, Clevertouch UX Pro 2 interactive displays and Mimio [DS] noninteractive displays. Boxlight was also honored with five (inaudible 5.29) live Best of Show Awards by Tech & Learning recognizing the excellence of our innovation solutions for MimioWall, Mimio DS, IMPACT Plus, CleverLive and Lynx Whiteboard.

Although customer demand has slowed in recent quarters, we are now seeing growth in our sales pipeline and market data suggests the industry will rebound by end of the year, we are optimistic that we will return to meaningful revenue growth in 2024. We are better positioned as a company today than ever before with our expanded solution suite, global sales channel and talented employees. Over the next several quarters, we will deliver growth as industry demand increases and through capturing meaningful market share from our competitors.

With that, I will now turn the time over to our President, Mark Starkey.

Mark Starkey

Thank you, Michael, and good evening from here in Europe. As I mentioned on our last earnings call, we are seeing the world return to normality with supply chains restored. As a result, we continue to see slower order intake and revenues as end users and partners normalize their inventory levels. Our expectation is that during Q3, we will likely see this rebalancing process complete and order intake will return to growth mode in the third quarter with revenue lagging by a quarter or two. The good news here is that we believe we have exited the pandemic with a much stronger and healthier business with substantially higher profit margins and significant development in our product portfolio, particularly with regards to the integration of our audio solutions into our interactive panels.

In terms of Q2, order intake was $51.2 million, down 37% year-on-year, with 54% being derived from the U.S., 41% from EMEA and 5% from Asia Pac. Interestingly, despite order intake being down 37%, our market share for interactive displays remained relatively consistent with our EMEA market share increasing marginally from 5.5% to 5.8% and our U.S. market share increasing from 5.8% to 6.4% during H1, according to data from future source.

The bottom line is that we continue to make modest gains in market share despite the significant drop in order intake and revenues across the period. Some of our key orders in the U.S. included $7.2 million from Blue, $6.7 million from GDI, our U.S. distribution partner, $2.8 million from data projections in Texas and $1.3 million from digital age technologies. Overseas, we have some excellent orders, including $2.6 million from ASI in Australia, $1.8 million from Camera Mundi or partner in Puerto Rico, $973,000 from AVION Interactive in Finland and $961,000 in IDMS based in the U.K. to name a few.

Our new generation of Google accredited screens will start shipping this quarter, and orders have already exceeded expectations. We've had some great wins in Germany where Clevertouch have been officially awarded the [kit tenders] for 2,600 Clevertouch Lux screens, including cards. This is one of the first large-scale deployments of the new Google certified screen in Europe. In the U.K., Clevertouch won the Welsh GPS tenders with IDMS for approximately 3,000 screens to be deployed over the next 12 months. In the U.S., we had some fantastic audio wins. In Texas alone, we booked more than $1.7 million of audio deals featuring our ezRoom solution, working closely with our partner [Verano] consulting. We had a fantastic win in our (inaudible 9.24) school district in Washington State with our partner ACT. We've also received orders for our Google-certified ELA panels from various partners, including data protections and took early orders for our new digital signage displays, the DS Series from various partners, including VAT.

Student safety continues to be a huge issue, particularly in the U.S., our ATTENTION! solution, which integrates our FrontRow campus solution with our Mimio and Clevertouch interacted panels is a game changer and is the first student-based audio solution capable of this level of integration. It enables teachers to give audio alerts and visual alerts on both interactive and non-touch panels instantaneously across the campus. The solution is gaining traction, and we hope to announce some significant wins for attention in the next quarterly call.

In summary, Q2 order intake and revenues were down, but our profitability in terms of gross profit percentage and adjusted EBITDA continues to improve. Our expectation is that we will return to growth in order intake during Q3 and revenue growth in Q4 as there remains significant funds available for education establishments to invest in technology.

With that, I will now turn the call over to our CFO, Greg Wiggins.

Gregory S. Wiggins

Thanks, Mark, and good afternoon, everyone. I will now review our second quarter results. Revenues for the three-months ended June 30, 2023, were $47.1 million as compared to $59.6 million for the three-months ended June 30, 2022, resulting in a 21.1% decrease and was due to lower sales volumes across all markets. Taking a closer look at our sales breakout for the year, EMEA revenues totaled $36.6 million or 41% of our total revenues, Americas revenues totaled $48.8 million or 54% of our total revenues, while revenues from other markets totaled $2.8 million or 5% of our total revenues.

Our top 10 customers represented approximately 41% of total sales with the single largest customer at approximately 15% and are based across a number of markets, namely the U.S., U.K. and other European countries. Approximately 60% of total sales are covered by the top 20 customers. Hardware comprised the largest proportion of total revenues at approximately 92%, of which approximately 69% related to our flat panel displays with the balance related to classroom audio solutions and device accessories. The balance of our total revenues are comprised of software, professional services and STEM solutions.

Gross profit for the three-months ended June 30, 2023, was $17.8 million as compared to $16.8 million for the three-months ended June 30, 2022. Gross profit margin for Q2 2023 was 37.9%, which is an increase of 970 basis points over the comparable 2022 quarter. Gross profit margin adjusted for the net effect of acquisition-related purchase accounting was 39.1% as compared to 30.2% as adjusted for the three-months ended June 30, 2022. The improvement in gross profit margin in Q2 2023 compared to the prior year quarter is primarily due to lower manufacturing costs and continued reductions in freight costs over the prior year period.

Total operating expenses for Q2 2023 decreased slightly to $15.8 million compared to $16.0 million in Q2 2022. Other expense for the three-months ended June 30, 2023, was a net expense of $2.6 million as compared to net expense of $0.8 million for the three-months ended June 30, 2022. The increase in other expense was primarily due to gains recognized from the change in fair value of derivative liabilities of $184,000 in Q2 2023 compared to gains of $1.5 million in the prior year quarter, coupled with an increase in interest expense of approximately $0.3 million quarter-over-quarter. The company reported a net loss of $811,000 for the three-months ended June 30, 2023, as compared to net income of $26,000 for the three-months ended June 30, 2022. The Net loss attributable to common shareholders was approximately $1.1 million and $0.3 million for Q2 2023 and 2022, respectively, after deducting the fixed dividends to Series B preferred shareholders of $317,000 in both 2023 and 2022.

Total comprehensive income for the three-months ended June 30, 2023, was $0.9 million compared to total comprehensive loss of $4.6 million for the three-months ended June 30, 2022, reflecting the effect of foreign currency translation adjustments on consolidation, with the net effect in the quarter of approximately $1.7 million gain and $4.6 million loss for the three-months ended June 30, 2023, and 2022, respectively.

EPS loss per basic and diluted share was $0.12 for Q2 2023 and $0.04 for Q2 2022. The EBITDA for the quarter ended June 30, 2023, was $4.5 million as compared to $4.8 million EBITDA for the quarter ended June 30, 2022. Adjusted EBITDA for Q2 2023 was $5.4 million as compared to $5.2 million for Q2 2022. Adjustments to EBITDA include stock-based compensation expense, 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. EBITDA for the six-months ended June 30, 2023, was $6.4 million as compared to $4.4 million for the six-months ended June 30, 2022. Adjusted EBITDA for the six-months ended June 30, 2023, was $8.7 million as compared to $6.4 million for the six-months ended June 30, 2022.

Turning to the balance sheet. At June 30, 2023, Boxlight had $15.6 million in cash, $64.8 million in working capital, $37.8 million in inventory, $182.3 million in total assets, $47.2 million in debt, net of debt issuance costs of $4.5 million and $50.9 million in stockholders' equity. On June 14, 2023, we completed our 8-for-1 reverse stock split, which reduced our Class A common shares authorized to $18.75 million and Class A common shares outstanding to approximately 9.5 million shares, allowing us to maintain compliance with the $1 minimum per share requirement by NASDAQ.

At June 30, 2023, Boxlight had 9.5 million common shares issued and outstanding and 3.1 million preferred shares issued in outstanding. We continue to strategically review our capital structure and use of free cash, including, but not limited to paying down debt, executing on our share repurchase program and finding more attractive financing arrangements to replace our current facilities. We believe that cash flow from operations will continue to support our ongoing operations without the need for additional equity or debt financing. With that, we'll open up the call for questions.

Question and Answer Session

Operator

Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions.] One moment please while we poll for questions. Thank you. Our first question is coming from Brian Kinstlinger with Alliance Global Partners.

Brian David Kinstlinger

Solid gross margin EBITDA. My question is, after the solid EBITDA results during the first six months, you've generated roughly $8 million, plus or minus. What are the puts and takes that resulted in that six-month time frame of having $3 million more of debt and about the same cash. Over that time, almost $20 million less in inventory. I'm just curious when we can expect to see greater cash conversion from these results?

Gregory S. Wiggins

Yes. Thank you for the question. So, I think some of what you see in the first six months of the year is timing related. So typically, from a cash perspective, the company sees a greater amount of cash roll in, in the second half of the year as we get past our busier months of the year, calling that Q2, Q3 time frame. So as those sales -- the cash comes in related to those sales, we typically see a lot more cash inflow in the second half of the year. Early in the year, call it, in the late Q1, early Q2 timeframe is seasonally our lower cash month of the year as we are coming off, of course, typically lower quarters from a sales perspective, but also ramping up for inventory for the busier summer months. So that, by and large, is typically where you see a lot of the cash fluctuations come in. Now with respect to inventory, specifically in our levels, you see that our inventory levels did decrease significantly even from year-end, and that's really due to a couple of factors. One, it's really maintaining optimal inventory levels consistent with the sales that we're seeing as the year progressed, which were a little lower than they were in the prior year, but also optimizing our inventory levels following kind of the supply chain issues that were had in the immediate aftermath following the pandemic. So as there were delays in the past in the supply chain, there was more of a demand to want to increase and have appropriate inventory levels to meet sales as they were generated. But as we've seen a lot of that subside and then again, normalizing our inventory to kind of mirror our current sales demands, that's kind of reflecting the inventory decrease that you're seeing.

Michael Pope

Brian, I would just add -- I would add one quick thing. I mean you're looking at cash and you're looking at inventory. But really, you'll see working capital improve, right, working capital at quarter end was $65 million. So, you have to look at the rest of kind of current assets, current liabilities. And one item, for example, if you look at accounts payable from December 31, 2022, AEP was at $37 million versus at quarter end June 30, was $21 million, right? So, if you look -- I think you're better off rather than just looking at cherry-picking cash and inventory, for example, you have to look at that whole working capital bucket because it's all interrelated, AR, AP, inventory cash, all interrelated.

Brian David Kinstlinger

So, assuming to your comments in the second half of the year, cash flow is better -- are there any restrictions from you paying down debt companies micro caps right now with lots of debt clearly aren't generating any meaningful valuation or equity. Is that something that is a high priority for you?

Michael Pope

Yes. Absolutely, Brian. Well, I was just going to make a quick comment. So, we paid down $3 million post quarter end, right? So, we paid down another $3 million of our debt. And so, we're moving in the right direction. Currently, our current facility amortizes at 5% down per year. So, at a minimum, we're paying just that regular debt amortization, pre-amortization of 5% per year, but that's actually something we're looking at. But I would point out one additional thing. In addition to the debt going down, but our profitability is going up. And so that ratio is quite important. And if you look at our debt leverage, our EBITDA, debt-to-EBITDA ratio, that's been improving pretty dramatically. At quarter end, we were about $2.4 billion versus we were almost 4%, if you just go back a couple of quarters, and we think that will improve as the debt goes down, but also with profitability increases.

Brian David Kinstlinger

Absolutely. And all [for] more profit, even if you're a smaller firm. And then last quarter, you talked about year-end budget flushes gave you confidence that orders would be up year-over-year in the second half of the year. Just seeing how orders and revenue played out during the second quarter give you slightly less confidence in order growth that it will recover in the second half of the year? And then maybe you can help us understand how things have begun to trend in July and August?

Mark Starkey

Do you want to start that Michael and I'll jump in?

Michael Pope

Maybe I'll say a couple of things. Yes. Yes, let me start. You can jump in at lower color. Yes. So first off, clearly, order intake lagged quite a bit more than we expected, starting with the second half of last year. And so lagging orders in the second half of last year resulted in lower revenue, both, say, Q3, Q4 but also rolling into Q1, Q2. But the reason we're optimistic for the future, there's a couple of things that make us optimistic. The first is that we're seeing our internal pipeline grow, and of course, that improves our optimism. But also, we're seeing the order intake ramp. We're starting to get more and more orders, and we're seeing that. Now that revenue doesn't show up until later, right, once we receive the orders. But we believe, based on what we're seeing now, that Q3, we will see a growth in order intake, as Mark shared in his part of the beginning of the earnings call. So, expect order intake increase in Q3, which will result in, we think, growth in Q4, leading us into next year.

But beyond just our internal metrics we're looking at, also, we get external data and that's included from industry data, which industry data has shown that they think that there's a bounce back, and we're going to see growth end of this year into next year. But then also talking to our large resellers, which many of which are much larger than we are, they're seeing the same thing. They're seeing pipeline growth, order-intake growth and our large manufacturers who supply us and potentially supply others in the space, they're seeing the same thing. So, I think across the board, what we're seeing internally, also what we're hearing about externally does support that we're going to start to see that, and we're seeing the beginnings of that internally right now.

Brian David Kinstlinger

Two more questions, and then I'll go back in the queue with more. First, the demand environment. Can you speak to forward-looking on U.S. versus Europe, which do you see driving that order growth over the next six months? Is it a clear-cut winner one over the other?

Mark Starkey

It's a very good question actually, Brian. It's very hard to say. I think, typically, we've historically seen some really good growth in the U.S. But there's some big tenders out there as well in the next six months in Europe, particularly in Spain and in Germany and parts of Eastern Europe. So, I don't think it's a clear cut. It's all coming from the U.S. or it's all coming from EMEA. I think it depends on the specific -- that actually working on. We just recently won a very large deal in the U.S. and a very large deal in EMEA. So that's -- they're kind of balancing each other out. So overall, I'd say it's a good mix.

Brian David Kinstlinger

Great. Last question for me. The gross margin, I've been covering you for a long time. You've done a great job of getting where it is. There's no doubt. Last quarter, you talked about some creative pricing pressures long term. Can you help with near-term expectations, say, the next 12 to 18 months versus what you think sustainability long term? Can you sustain these for the next several quarters before pricing pressure eats in? Or do you think that is not feasible?

Michael Pope

Yes, I think that -- I mean, 12 to 18 months, it's hard to say looking out that far. I do think we're going to see some erosion of gross profit margin definitely over 12 to 18 months. I think we have a couple of quarters of holding it relatively steady. We may see it go down a couple of points, especially if we win some of these larger tenders. Generally, the larger tenders are a lot more price competitive. And for us to win those tenders in their large quantities and for us to win those tenders, we have to come down on pricing. So, if we're successful in some of these large tenders, both in the U.S. and internationally, that will erode the margins some. So, I think we were forecasting out a couple of quarters, we think we may lose a couple of percentage points. But if you're going out much further than that, I do think that longer term on our core solutions, we are going to erode back down to around 30 points is what we would have expected. If you went back a few quarters, we thought we'd be around 30 points today, and we've benefited from a lot of different factors, but I think that is closer to run rate with our core products today that we're selling but we've talked about in the past and we'll continue to talk about it that long term, we think that, that gross profit margin can improve as we sell high-margin products, which we're working on and we're pushing. They make up a smaller percentage of our total business today, but we think out a couple of years, those other solutions that are high margin, including software and professional services and some of the accessories we sell that are high-margin and STEM solutions. As we do better with those solutions, we're going to see the margin potentially start to creep up.

And then the other thing we've talked about, which we'll continue to talk about is the enterprise vertical. The enterprise market is less price sensitive and that is higher margin. And today, it's a small piece of our business, less than 5%, but we think in the future, it could be much more substantial. We've been investing in enterprise vertical, and that's going to allow us to be able to improve that gross profit margin. So again, I think in short, over the next couple of quarters, we're going to probably erode a couple of points. We'll see. And then looking out maybe a year or so that maybe come down a little bit more. But if you're looking at multiple years, I think we can improve on where we are today.

Operator

Our next question is coming from Jack Vander Aarde with Maxim Group.

Jack Vander Aarde

Okay. Great. Thanks for the update, guys and solid gross margin and EBITDA results for sure. A couple of questions, maybe just because I missed it, just to reiterate the guidance. I heard the third quarter revenue and EBITDA of $60 million and $10 million, and then the second half 2023 revenue guide of $110 million. Did you mention second half adjusted EBITDA?

Michael Pope

We did not guide to second half adjusted EBITDA. Yes, we just guided only to Q3. But I think you could probably extrapolate roughly what -- assuming we come in at the Q4 revenue, then we will be up on adjusted EBITDA year-over-year given the higher gross profit margin.

Jack Vander Aarde

Okay. Great. And then just one more thing to reiterate or just because I missed it, was your market share gains? I think I heard in EMEA for the first half of the year, that increased to 5.8%. And I missed what you said about the U.S. Did the U.S. market share increase again and to what percent?

Mark Starkey

We looked at -- across the half. We were looking at the numbers across the half. So, in the U.S., we went from 5.8% to 6.4% for H1, we were look at the half year numbers for both EMEA and the U.S.

Jack Vander Aarde

Okay. Great. Fantastic.

Michael Pope

So, no, Jack, that is on interactive displays, right, which make up about 70% of our business. So, we're only providing market data really on that segment of our product line.

Jack Vander Aarde

Yes. Understood. Understood. I appreciate the clarity there. But nonetheless, good work and good momentum there. And then just in terms of maybe if I circle back to the overall revenue slowdown, you mentioned lower sales volume across all markets, but just -- are there any more specific factors you can point to that caused maybe a slower top line and just the pace of new order intake than you were previously expecting whether that be by GO or corporate versus education, any of your subsidiary businesses, maybe FrontRow versus Sahara? Just whatever else you can provide? Or was it really indeed an overall just general slower blowing of volume orders?

Mark Starkey

Jack, my overall view on this is generally that there is a kind of a hangover from the issues to do with COVID and the fact that the supply change was so -- were impacted so much that so many customers, end users, partners were buying like, okay, we -- there's problems on the supply chain, let's make sure we order plenty. And I think we've had the hangover from that, and it started Q3, it started this time last year. It starting in Q3 last year, and it's kind of worked through. And I definitely see it's a much more normalized environment now. So, it's been -- it's kind of a big decrease in order intake. And yet our market share is increasing slightly. It's definitely across the board.

Jack Vander Aarde

Yes. Understood. Okay. That's helpful. And then maybe just -- I want to emphasize the point that's probably the most important is that you do expect order intake to return to growth in the third quarter. revenue to rebound in the fourth quarter and then you expect meaningful growth in 2024. One question to the drivers of 2024 growth and your confidence in that. How does the government funding those programs? How do they play a role in that? Is that a factor that you expect to help drive a return to growth in 2024? What's the status of the government funds?

Michael Pope

Absolutely, that's part of the driver. I think the biggest reason for the growth will just be, to Mark's point, the return to normality in buying cycles. There's been this lull that Mark talked about. And once that lull is behind us, when we're back to regular buying, we expect steady growth in EdTech spending as we've seen in the past. And keep in mind, you can go back post-2000 and post-2008 and there were lulls after that. And then once buying returned, it was steady growth again.

And so -- and before I talk about special money, there were a lot of special funding that came into education, but just run rate education budgets have generally not declined across the board, including in the U.S. If you look at public school budgets in the U.S., about half of that funding comes from property taxes. Property taxes -- just property values are still quite robust. In fact, they went up substantially, right, post-COVID. And then the balance of the budget comes from state and federal funds, and those generally have not decreased either. So, schools have funding, they're still allocating that funding to technology spend, and that allocation is not declining. So, the money is absolutely there. And that's true if you talk about most of Western Europe and in other countries as well.

Now beyond that, there has been a lot of special funding. We talk about the ESSER funds in the U.S. which was nearly $200 billion allocated to education. There is still a large chunk of that that hasn't been spent and that -- those funds that have not been spent are going to expire end of 2024. And so, we do think there's going to be a little bit of a jump in spending there. But other countries have also allocated substantial spending. Germany is a good example where they allocate substantial spending with their digital pack. There's others as well. But I would say that, yes, there is federal monies, both in the U.S. and other government monies that are going to help drive. But I think the bigger thing that's going to drive growth is back to normality and regular spending of technology budgets on a go-forward basis, barring another disaster or something else that happens.

Jack Vander Aarde

Got it. That's helpful color. And then maybe just one more question kind of given that your cash balance. Can you provide an update just on the share repurchase program? And any thoughts there that you could provide share price? Where the share price is at relative to the cash you have on hand and liquidity? I mean do you think -- any update there?

Michael Pope

Yes. So really, we're in the same place we were last quarter in that we actually we plan on utilizing the stock repurchase program, something we're definitely looking at. We mentioned after last quarter was something we're going to evaluate second half of the year. So, it's going to be something we're going to be evaluating over the next few months. And it's really a function of cash flow as we generate more cash from operations, and we can look at how do we utilize that cash to drive shareholder value. Some of that will be we'll look at growth in the business. We'll look at reducing our debt potentially as Brian Kinstlinger brought up, but then also we will look at that share repurchase program. You'll notice that cash from operations for Q2 was slightly positive. And so, we're starting to go in the right direction. But also, you'll note that last year, we generated, I believe it was $7 million in cash from operations in the second half of the year, which is typical that we're going to see that heavier cash from operations in that second half. The same thing will be the second half of this year. We're going to see a larger flood of cash coming in Q3, Q4. And as that comes in, we're going to evaluate that as a management team, and of course, as the Board of Directors of how do we best utilize those funds to drive value. And one of the questions that will be on the board every time will be, is it time to utilize the cash repurchase program -- or the stock repurchase program?

Jack Vander Aarde

Okay. Great. I appreciate the color, guys. Great to see the momentum building and the return to growth on the horizon.

Operator

Thank you. We currently have no further questions at this time. So, I will hand it back to Mr. Pope for any closing comments he may have.

Michael Pope

Well, thank you, everyone, for your support and for joining us today on our second quarter 2023 conference call. We look forward to speaking to you again in November when we report our Q3 2023 results.

Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.