Proprietary Products Differentiate Moving iMage Technologies in the Industry: Co-Founder Joe Delgado

More than two years after the coronavirus outbreak, the film industry in the United States is recovering from one of the biggest setbacks in its history. Although the widespread closings of cinemas have led to a massive shift to online platforms, the rebound in activity in recent months indicates that cinemas will remain more relevant than ever.

Moving iMage Technologies, Inc. (NYSE: MITQ) is a market leader in the burgeoning motion picture exposure industry, providing the equipment and technology necessary for motion picture production and exposure. The company’s services range from custom engineering and digital technology solutions for 3D to audiovisual integration and installation and project management.

In an exclusive interview with AlphaStreetJoe Delgado, co-founder and executive vice president of sales and marketing at Moving iMage Technologies, spoke about various aspects of the company and emerging trends in the industry.

As a public company, how has the journey been since last year’s IPO in terms of expanding the business and creating shareholder value?

The level of excitement has increased as our revenues have grown. We communicated a plan of secular growth engines that would serve as tailwinds for the business, combined with our current market leadership and proprietary product strategy that would drive higher margins and recurring revenue. So far, we’ve raised our initial FY22 revenue growth forecast from 93% to 121%, reshaped our balance sheet and taken advantage of opportunities we previously couldn’t capture, including account discounts. suppliers and opportunistic inventory purchases. Our available cash and our equity currency also allow us to execute the M&A pillar of our growth strategy.

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Do you see a long-term impact on the business from the ongoing shift from theaters to OTT platforms, which accelerated after the coronavirus outbreak?

Streaming, OTT and similar platforms are benign on their own. The behaviors of the controlling entities of media companies, which have temporarily turned their attention to the success of their online platforms, were at the root of much of this concern. However, they’ve now seen that strategy doesn’t work, whether it’s Marvel’s experience with Black Widow or DC’s experience with releasing their films only via streaming that has brought them back to the theatrical release model. . With a theatrical release, the content has much more potential to gain downstream revenue, including increased recognition for VOD, OTT, broadcast, premium/non-premium bundles, merchandising, toys , video games, etc. Success has proven that the theatrical release model drives value as a springboard to downstream revenue. Studies have also shown that consumer attention and content retention are higher in movies.

How do you view the competition and what are the factors that give Moving iMage Technologies an edge over its rivals?

Platforms and product/service offerings are unique, and there is no “comparable” competition. We have strong relationships and scale with the industry’s leading suppliers, whether it’s Samsung, LG and Sony for displays or Christie Digital Systems and Barco for projectors. Additionally, we have nearly 50 exclusive manufactured products that set us apart in the industry. Finally, we are introducing potentially disruptive new technology offerings such as our CineQC SaaS platform, our MiTranslator product and a subscription service that allows audiences to watch a film in multiple different languages ​​in the same auditorium, and more in development.

From a project perspective, we are the only company with national capabilities. Most of our competitors are local and regional dealers or resellers. Our advantage is that we have signed agreements with growing circuits with national and international footprints. Additionally, our technical resources, people and scale allow us to win the vast majority of sales for which we compete.

What is your current strategy to become profitable, especially after achieving impressive revenue growth in the last quarter?

We are always looking for ways to improve our margins and cash flow. He is sometimes opportunistic. As I mentioned earlier, we used our balance sheet to pay down our debt and eliminate interest charges; we took advantage of prepayment discounts and made opportunistic purchases of discounted inventory.

From an ongoing profitability perspective, in 2021 we have used the pandemic to lighten our manufacturing, which will help gross margins. Also, we have minimal variable operating expenses, so there’s significant operating leverage where we probably won’t have to add resources until we start approaching $50 or $60 million of income. Additionally, we are constantly striving to shift our mix towards higher margin offerings. For example, since the last cycle, we have added nearly 50 proprietary manufactures and acquired Caddy products, both of which have gross margins above 40%. Finally, we are in the early stages of ramping up our emerging proprietary technology products such as the CineQC SaaS platform and solutions, our MiTranslator AR glasses and subscription service, and the digitization of real estate on our Caddy products.

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What are the emerging trends in the industry for film production technologyand where do you see Moving iMage Technologies in five years?

Film production will continue to evolve. We already see filming in 4k. From a viewing technology perspective, we are in the very early days of a revolutionary screen technology called Direct View LED. This technology from our partners Samsung, LG and Sony eliminates the need for a projector, dramatically increases the useful life of a screen and, most importantly for viewers, picture and sound quality is improved. an order of magnitude larger than current laser projectors. There have been less than a handful of installations in the US to date, and we’ve done them all. Right now it’s a super premium product, but over the next few years we expect the demand to increase and the cost to decrease, which will lead to the next upgrade cycle. technological level in the second half of the decade.

As for us, we believe we can be a $100 million company over the next few years, driven by a number of industry tailwinds. First, the domestic box office recovery. After making over $11 billion in 2019, 2020 and 2021 were at levels likely in the $2-3 billion range. Industry analysts predict that with a long list of potential blockbusters in 2022, a return of over $10 billion is likely, and then continued growth in subsequent years.

Then we start a technology upgrade cycle for servers, screens and projectors. These cycles usually last 4 to 5 years. Additionally, upgrades and renovations are being made to existing theaters as they add amenities such as breweries, bars, restaurants, and more. to attract customers. With this very solid backdrop in place, we are in the best position we have ever known to benefit from these tailwinds.

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From a company-specific point of view, we have a whole range of proprietary and potentially disruptive products, as I mentioned earlier. We also brought in a senior business development executive with over 20 years of industry experience to identify new growth opportunities through mergers and acquisitions, as well as to drive our new technology offerings such as CineQC and MiTranslator. . We also see the opportunity to offer these and other technologies to adjacent markets such as stadiums and arenas, where our Caddy business has a strong leadership position and existing relationships. We believe they will also be attractive beyond North America, which aligns with our expansion goals in Europe over the next 24 months and parts of Asia in the longer term. All in all, it’s no exaggeration that the company has grown from less than $20 million to $100 million today.

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