Form: 6-K

Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

March 27, 2024

Exhibit 99.1

 

Mynd Announces Fiscal Year 2023 Results

 

Delivers Revenue of $413.6 Million and Successfully Completes

Transformational Merger Transaction

 

Seattle, WA., March 27, 2024 – Mynd.ai, Inc. (the “Company” or “Mynd”) (NYSE American: MYND) today announced financial results for the fiscal year ended December 31, 2023.

 

- Revenue of $413.6 million for the full year, compared to $584.6 million in the prior year with the decrease primarily driven by the normalization of the education market returning to pre-pandemic levels

 

- Gross Margin improved 30 basis points versus 2022 to 24.9%, largely due to lower materials and freight costs

 

- Cash flow from operations improvement of $3.0 million compared to 2022

 

- Cash balance at year end was $91.8 million compared to $29.3 million at year end 2022

 

- Adjusted EBITDA1 loss of $6.9 million compared to profit of $12.8 million in 2022, primarily driven by lower sales volumes

 

“We are incredibly pleased with the progress our team made during 2023. We successfully completed our merger transaction, we listed our American Depositary Shares on the NYSE American, and we received $65 million in proceeds from the issuance of a secured convertible note, that will fund our continued growth,” said Vin Riera, Chief Executive Officer. “We believe Mynd is exceptionally well positioned to capitalize on market trends and continue to increase market share as the leader in interactive flat panel displays (“IFPDs”) within the global education market, and ultimately deliver products and solutions to help teachers be their best and drive successful education outcomes for students.”

 

While the merger transaction marked a pivotal moment in the evolution of the Company, our dedicated team worked tirelessly throughout 2023 to advance our business and deliver positive outcomes for our customers. Our Promethean brand has been named the global leader in IFPDs for education in the fourth quarter of 2023, according to Futuresource Consulting’s Q4 2023 report on the global IFPD market. During 2023, we captured 17.4% of the K-12 (primary and secondary) IFPD volume market share globally.2 In Q4 2023 alone, we were able to capture 21.1% of the global market share and we continue to be the market leading brand in the United States, United Kingdom and Ireland, and Germany.

 

Our global leadership in the global K-12 market positions us well to continue to grow both our hardware and software business. Over the course of 2024, we plan to continue to drive the evolution and growth of the software business, with enhancements to our core offerings and empowering our sales team to drive engagement with customers. We continue to invest in R&D to maintain our leadership both at the high-end of the market and foster deeper penetration of the broader, lower-price market.

 

1 Adjusted EBITDA is a non-GAAP measure defined as net income (loss), adjusted for loss from discontinued operations, interest expense, income tax expense (benefit), depreciation and amortization, and changes in the fair value of derivative instruments, as well as, non-cash, non-operating expenses such as stock-based compensation; and, one-time, unplanned and/or infrequent events we believe are outside the ordinary course of our continuing operations, including acquisition-related costs, restructuring costs, litigation costs, and gain on forgiveness of debt.

 

2 Excluding China, according to Futuresource Consulting’s Q4 report of the global IFPD market.

 

 

 

 

“We believe that Mynd is in an excellent financial position coming out of 2023 with a strong liquidity profile that will allow us to focus on driving sustainable top-line growth and investments in future growth,” commented Arthur Giterman, Chief Financial Officer. “The $65 million convertible note issued in conjunction with the merger will allow us to continue to invest in our products and strategic initiatives to bolster both our hardware and software product offerings for our customers.”

 

Forward-Looking Statements

 

This press release contains “forward-looking statements,” as defined by federal securities laws. Forward-looking statements reflect Mynd’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” “optimistic,” and the negatives of these words and other similar expressions generally identify forward looking statements. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in Mynd’’s Annual Report on Form 20-F, filed with the SEC on March 27, 2024, as such factors may be updated from time to time in Mynd’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Mynd’s filings with the SEC. While forward-looking statements reflect Mynd’s good faith beliefs, they are not guarantees of future performance. Mynd disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Mynd (or to third parties making the forward-looking statements).

 

Discussion of non-GAAP Financial Measures

 

We believe that providing the non-GAAP ("Generally Accepted Accounting Principles") information to investors, in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors not only to better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information included in this press release should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

 

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent non-GAAP basis, in addition to GAAP, and actual results on a non-GAAP basis are assessed against the non-GAAP annual financial plan. In addition, and as a consequence of the importance of these measures in managing the business, we use non-GAAP measures and results in the evaluation process to establish management’s compensation. For example, our annual bonus program payments are based in part upon the achievement of consolidated revenue and Adjusted EBITDA targets.

 

 

 

 

About Mynd.ai, Inc.

 

Seattle-based Mynd is a global leader in interactive technology offering best-in-class hardware and software solutions that help organizations create and deliver dynamic content; simplify and streamline teaching, learning, and communication; and facilitate real-time collaboration. Our award-winning interactive displays and software can be found in more than 1 million learning and training spaces across 126 countries. Our global distribution network of more than 4,000 reseller partners and our dedicated sales and support teams around the world enable us to deliver the highest level of service to our customers.

 

For investor and media inquiries, please contact:

 

Investor Relations - Mynd.ai, Inc.

E-mail: investorrelations@mynd.ai

Arthur Giterman

Chief Financial Officer

officeoftheCFO@mynd.ai

Tel: (206) 393-4493

 

Financial Tables Follow

 

 

 

 

Mynd.ai. Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share and per share data, or otherwise noted)

 

    December 31,  
    2023     2022  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 91,784     $ 29,312  
Accounts receivable, net of allowance for credit losses of $2,599 and $2,970     63,865       61,061  
Inventories     53,098       111,227  
Prepaid expenses and other current assets     14,666       8,977  
Due from related parties     2,759       2,093  
Loan receivable, related party           7,919  
Prepaid subscriptions           7,300  
Current assets of discontinued operations           5  
Total current assets     226,172       227,894  
                 
Non-current assets:                
Goodwill     46,924       42,048  
Property, plant, and equipment, net     11,878       2,998  
Intangible assets, net     51,450       47,997  
Right-of-use assets     7,491       3,110  
Deferred tax assets, net     56,381       44,627  
Other non-current assets     4,094       107  
Total non-current assets     178,218       140,887  
Total assets   $ 404,390     $ 368,781  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 59,595     $ 81,471  
Accrued expenses and other current liabilities     45,389       47,085  
Loans payable, current     31,942       48,030  
Contract liabilities     14,110       10,148  
Accrued warranties     17,871       13,550  
Lease liabilities, current     4,412       1,788  
Due to related parties     5,080       3,978  
Current liabilities of discontinued operations     163       597  
Total current liabilities     178,562       206,647  
                 
Non-current liabilities:                
Loans payable, non-current     64,859       276  
Loans payable, related parties, non-current     4,670       4,445  
Contract liabilities, non-current     21,762       17,692  
Lease liabilities, non-current     3,412       1,634  
Other non-current liabilities     4,250       1,076  
Deferred tax liabilities     1,317        
Total non-current liabilities     100,270       25,123  
Total liabilities   $ 278,832     $ 231,770  

 

 

               

 

Shareholders’ equity:            
Ordinary shares par value of $0.001; 990,000,000 shares authorized, 456,477,820 and 426,422,220 shares issued and outstanding, respectively. 10,000,000 shares, $0.001 par value, without designation.     456       426  
Additional paid-in capital     473,590       448,065  
Accumulated other comprehensive income (loss)     3,513       4,546  
Accumulated deficit     (353,890 )     (316,026 )
Total Mynd.ai, Inc. shareholders’ equity     123,669       137,011  
Non-controlling interest     1,889        
Total shareholders’ equity     125,558       137,011  
Total liabilities and shareholders’ equity   $ 404,390     $ 368,781  

 

 

 

 

Mynd.ai. Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share and per share data, or otherwise noted)

 

    For the Year Ended December 31,  
    2023     2022     2021  
Revenue   $ 413,564     $ 584,684     $ 448,193  
Cost of sales     310,423       440,769       309,223  
Gross profit     103,141       143,915       138,970  
Operating expenses:                        
General and administrative     31,319       34,608       31,299  
Research and development     34,604       41,459       35,591  
Sales and marketing     51,488       60,848       60,545  
Acquisition-related costs     19,288       502        
Restructuring     10,195       238       469  
Total operating expenses     146,894       137,655       127,904  
                         
Operating (loss) income     (43,753 )     6,260       11,066  
Other income (expense):                        
Interest expense     (4,661 )     (1,833 )     (173 )
Gain on forgiveness of debt           4,923        
Other income (expense)     2,250       597       (2,248 )
Total other (expense) income     (2,411 )     3,687       (2,421 )
Net (loss) income from continuing operations, before income taxes     (46,164 )     9,947       8,645  
Income tax benefit (expense)     9,156       25,275       (1,787 )
Net (loss) income from continuing operations     (37,008 )     35,222       6,858  
Loss from discontinued operations, net of tax     (823 )     (12,637 )     (7,960 )
Net (loss) income   $ (37,831 )   $ 22,585     $ (1,102 )
Net income (loss) from continuing operations attributable to non-controlling interest     33              
Net (loss) income attributable to ordinary shareholders of Mynd.ai, Inc. from continuing operations     (37,041 )     35,222       6,858  
Net (loss) income attributable to ordinary shareholders of Mynd.ai, Inc.     (37,864 )     22,585       (1,102 )
Net (loss) income per ordinary share                        
Net (loss) income per share attributable to ordinary shareholders of Mynd.ai, Inc. from continuing operations                        
Basic and Diluted     (0.09 )     0.08       0.02  
Net (loss) per share attributable to ordinary shareholders of Mynd.ai, Inc. from discontinued operations                        
Basic and Diluted           (0.03 )     (0.02 )
Net (loss) income per share attributable to ordinary shareholders of Mynd.ai, Inc.                        
Basic and Diluted     (0.09 )     0.05        
Weighted average shares outstanding used in calculating net (loss) income per share                        
Basic and diluted     427,986,755       426,422,220       426,422,220  

 

 

 

Mynd.ai. Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

 

    For the Year Ended December 31,  
    2023     2022     2021  
Net (loss) income   $ (37,831 )   $ 22,585     $ (1,102 )
Other comprehensive (loss) income, net of tax of nil:                        
Change in foreign currency translation adjustments     (1,033 )     (3,367 )     (755 )
Total comprehensive (loss) income   $ (38,864 )   $ 19,218     $ (1,857 )
Less: comprehensive income attributable to non-controlling interest     33              
Comprehensive (loss)/income attributable to Mynd.ai Inc.   $ (38,897 )   $ 19,218     $ (1,857 )

 

 

 

 

Mynd.ai. Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) 

 

    For the Year Ended December 31,  
    2023     2022     2021  
CASH FLOWS FROM OPERATING ACTIVITIES:                        
Net (loss) income   $ (37,831 )   $ 22,585     $ (1,102 )
Loss from discontinued operations, net of tax     823       12,637       7,960  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                        
Depreciation and amortization     5,124       4,520       6,116  
Deferred taxes     (10,307 )     (25,275 )     (3,505 )
Non-cash lease expense     1,958       1,818       1,867  
Non-cash interest expenses     325              
Gain on forgiveness of debt           (4,923 )      
Amortization of RDEC credit     (839 )     (460 )     (134 )
Accrued tax credit RDEC     (1,732 )            
Change in fair value of derivative liability     (432 )            
Write-off of Inventory     4,630       3,951        
Write-off of prepaid subscriptions     5,668              
Change in fair value of earn out liabilities     64              
Impairment of right-of-use assets                 1,553  
Loss on disposal of property, plant and equipment     8       30       94  
Change in operating assets and liabilities:                        
Accounts receivable     1,361       25,346       (46,249 )
Inventories     54,615       (20,237 )     (57,393 )
Prepaid expenses and other assets     (5,115 )     701       (5,015 )
Prepaid subscriptions     1,632       (7,300 )      
Due from related parties     (531 )     (4,376 )     1,034  
Accounts payable     (23,201 )     (1,820 )     54,786  
Accrued expenses and other liabilities     (4,564 )     (12,820 )     21,943  
Accrued warranties     3,883       3,266       2,735  
Due to related parties     1,102       3,469       509  
Contract liabilities     4,713       7,779       3,430  
Lease obligations - operating leases     (2,327 )     (2,084 )     (2,111 )
Net cash (used in) provided by operating activities - continuing operations     (973 )     6,807       (13,482 )
Net cash used in operating activities - discontinued operations     (1,252 )     (12,079 )     (8,422 )
Net cash (used in) provided by operating activities     (2,225 )     (5,272 )     (21,904 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:                        
Acquisition of property, plant and equipment     (389 )     (829 )     (1,194 )
Internal-use software development costs     (4,434 )     (1,028 )      
 Repayment (issuance) of loan receivable, related party     8,019       (7,919 )      
Acquisition of businesses, net of cash     16,138       (6,000 )      
Net cash provided by (used in) investing activities - continuing operations     19,334       (15,776 )     (1,194 )
Net cash used in investing activities - discontinued operations                  
Net cash provided by (used in) investing activities     19,334       (15,776 )     (1,194 )
                         

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:                  
Repayment of Revolver     (80,300 )     (49,305 )      
Proceeds from Revolver     62,000       63,000       34,000  
Proceeds from convertible note     64,884              
Contingent consideration payments     (2,174 )            
Repayment of Paycheck Protection Program Loan     (192 )     (5 )      
Repayment of NetDragon group loans           (3,210 )     (33,320 )
Proceeds from NetDragon group loans     219       869       24,781  
Net cash provided by financing activities - continuing operations     44,437       11,349       25,461  
Net cash provided by financing activities - discontinued operations                  
Net cash provided by financing activities     44,437       11,349       25,461  
Net change in cash     61,546       (9,699 )     2,363  
Cash and cash equivalents, beginning of year     29,312       40,508       37,817  
Exchange rate effects     926       (1,497 )     328  
Cash and cash equivalents, end of year   $ 91,784     $ 29,312     $ 40,508  
Supplemental disclosure of non-cash investing and financing activities transactions:                        
Non-cash repayment of NetDragon group loans   $     $     $ 23,970  
Accrued purchase price related to acquisition of businesses   $     $ 1,688     $  
Accrued value of earnout related to acquisition of businesses   $     $ 377     $  
Noncash consideration transferred for acquisition of businesses   $ 22,848     $     $  
Supplemental disclosure of cash transactions:                        
Cash paid for interest   $ 5,223     $     $  
Cash paid for taxes, net of refunds   $ 914     $ 969     $ 6,419  

 

 


 

 

 

 

Mynd.ai. Inc.

SUPPLEMENTAL FINANCIAL INFORMATION

Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

 

    Year Ended December 31,  
    2023     2022     2021  
                   
    (in thousands)  
Net income (loss)   $ (37,831 )   $ 22,585     $ (1,102 )
Loss from discontinued operations     823       12,637       7,960  
Interest expense     4,661       1,833       173  
Income tax expense (benefit)     (9,156 )     (25,275 )     1,787  
Depreciation and amortization     5,124       4,520       6,116  
Acquisition-related costs     19,288       502        
Restructuring costs1     10,195       238       469  
Litigation costs2           637       1,840  
Gain on forgiveness of debt3           (4,923 )      
Adjusted EBITDA   $ (6,896 )   $ 12,754     $ 17,243  

 

(1)  Refers to employee severance costs, contract termination costs, facility restructuring, and business restructuring efforts undertaken by management.

(2)  Refers to costs incurred to defend against, opportunistically settle, and establish a reserve for claims associated with litigation.

(3)  Refers to forgiveness of loan provided by the U.S. Small Business Administration provided under the Payroll Protection Program (PPP).