Earnings Call Transcript - BOXL Q4 2020

Operator, Operator

Thank you and welcome to the Boxlight Fourth Quarter and Full Year 2020 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 meaning of securities law, 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 releases, which will be posted on the Investor Relations section of the company’s website at investors.boxlight.com. And with that, I’ll hand the call over to Boxlight’s Chairman and Executive Chief Officer, Michael Pope.

Michael Pope, Chairman and Executive Chief Officer

Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2020 earnings call. Despite the COVID-19 pandemic that has caused challenging disruptions to traditional communication at both education and business settings, we closed the fourth quarter with record customer orders and outperformed our revenue and earnings guidance. For the quarter, we recorded customer orders of $33 million, revenues of $32 million, and adjusted EBITDA a positive $400,000. We also ended the year with $11 million in back orders, the strongest pipeline in our history for both the U.S. and EMEA, and a healthy balance sheet, including $13 million in cash, $21 million in working capital and $45 million in stockholders' equity. We're seeing an increased demand for our solutions this year, and we expect to report the first quarter of 2021 with revenue greater than $28 million and positive adjusted EBITDA. Although we will not be providing guidance at this time for the full year 2021, note that the first quarter is seasonally slow and has historically accounted for less than 20% of our annual sales. We are benefiting from a robust and growing market for interactive hardware and software solutions with increased spending in both education and corporate sectors. Education systems, in particular, are accessing large budget allocations for technology supported by substantial government funding as they outfit classrooms with solutions for virtual, hybrid and traditional learning. As a company, we see a unique opportunity to take advantage of this expanding market and capture additional market share by optimizing our sales channel and promoting our best-in-class solutions and exceptional customer support. In September of 2020, we acquired Sahara Presentation Systems, our most significant acquisition to date with a purchase price of approximately $74 million. I'm happy to report that the integration has been overwhelmingly seamless, and we are reaping the benefit of our global scale, additional seasoned leadership, expanded product suite, combined sales channel, and dramatically improved financial position. Our five-member executive team today includes three executives from the Sahara transaction namely Mark Starkey as President and Head of Global Sales; Pat Foley as Chief Financial Officer; and Sean Mark who is Chief Technology Officer. You will hear from both Mark and Pat during our remarks today. Although we are headquartered in Atlanta, Georgia, we are a global company with nearly 200 employees, of which approximately 100 are positioned throughout European countries including the United Kingdom, Germany, Holland, Sweden, Finland and Belgium. We're also supported by thousands of representatives globally, through our distributors and reseller partners, which promote our range of solutions to education, corporate and government verticals. We have sold our award-winning Clevertouch, Mimio and Boxlight brands into many of the largest organizations and education systems worldwide. Earlier this week, we announced the acquisition of our Clevertouch distributor in Belgium and Luxembourg, extending our footprint in Europe. This transaction is part of a broader strategy to both improve our profit margins and maintain stronger relationships with our reseller channel and end users. We have closed 10 acquisitions as a company since 2016, and will continue to be acquisitive with a focus on geographic expansion. However, our primary focus as a company is to take advantage of the current market conditions and our unique offering to drive strong organic growth.

Mark Starkey, President and Head of Global Sales

Thank you, Michael. And I'm calling in today from a very dark London. So hello, everyone. It certainly is an exciting industry, and I would like to reiterate your points about how smooth the integration of the Sahara business into Boxlight has been. It literally could not have gone any better. I would also like to take this opportunity to thank all our staff and customers who have helped contribute to our success in Q4. During the fourth quarter, we booked over $33 million in orders from our partners. That represents a 453% growth in order intake year-on-year. Some of our key orders included $4.2 million from D&H in the U.S; $2.8 million from Trox in the U.S; $2.8 million from our partner in Denmark, Unit DK; $1.6 million from our partner in Australia, ASI; $1.3 million of orders from our partner in France, Speechi; $1.2 million of orders from Tierney in the U.S; $807k from our partner in Spain, Charmex; and $668,000 from one of our partners in the U.S., IDNS, to highlight just a few. It is worth noting that in some countries such as Australia, Denmark, Spain, and France, we have a single distributor running the territory. But in other key markets such as the U.S., U.K., and Germany, we run our own channel with many resellers. We have over 1,000 active partners globally, including approximately 500 in the U.K., over 300 in the U.S., and over 70 in Germany. During Q4, per Futuresource Consulting, we retained the number one market share position for interactive flat panels (IFPDs) in Australia and Denmark. Overall, our Q4 market share in EMEA was 6.6% of the IFPD market, just behind Samsung, who had 7.7% market share. The IFPD market in EMEA is currently worth $1.26 billion per annum. The U.S. market for IFPDs is marginally bigger than EMEA at $1.27 billion. And our Q4 market share was 6.1%. This represents a significant growth in market share for Boxlight, and our ambition is to be in the top three spot in both EMEA and the U.S. in the very near future, with our ultimate goal to take the number one spot. To put that into context, we would need to have approximately 15% market share of IFPDs in a market currently worth approximately $2.5 billion in order to take the top three spots. In addition to IFPDs, we are also growing in other product categories, including software, such as our SaaS-based MimioConnect platform, STEM, Professional Services, and Accessories, all of which have high growth expectations and deliver high margins. The total EdTech market is worth in excess of several hundred billion dollars, and there is huge room for us to grow within this market. Outside the U.S. and EMEA, our Latin American business is growing through key partners in Puerto Rico, Colombia, Peru, and Costa Rica. In Australia, we have grown from almost nowhere to become the number one brand in IFPDs over the past 18 months. In Asia, we are developing opportunities with partners in Singapore, Vietnam, Thailand, and Indonesia, predominantly in the private school sector. In Africa, we have a strong partnership with a distributor in South Africa called Interactive AV Solutions, who is actively selling our solutions across Namibia, Botswana, Mozambique, Nigeria, and Ethiopia. In terms of end users, we have literally hundreds of fantastic wins across the globe, from Australia to Austria in Europe; from the UAE in the Middle East to the USA and from Sweden to Russia. One notable win was at Shelby County in Kentucky. The customer saw the value in our Clevershare software suite and CleverMessage Solutions, which differentiate us from the competition. We also had another great win at Sundown ISD in Northwest, Texas. The district stated that the reliability and ease of use, along with CleverMessage and Clevershare, were key factors in choosing our Clevertouch solution. In Germany, our revenue in Q4 grew at 195% year-on-year, and we won many orders. But a couple of standouts, in particular a project with our partner Bechtel to supply a UX Pro solution to the German army. We also won another project in Germany with our partner VIDEOTON Stein to supply our solutions into the German government. In EMEA, approximately 14% of our Q4 revenues were sold to non-K-12 end users, such as health care, government, and corporate organizations, in sectors such as financial services, manufacturing, and retail. Typically, our corporate revenues would be at least 20% of total revenue in EMEA. But this sector has been widely impacted by COVID during 2020 compared with the education sector. The reason that this is so important is that the gross margin achieved on our corporate sales is much higher, achieving 45% on average in Q4. Given that the higher margins achieved in corporate, and the fact that we believe the non-K-12 opportunity is significant, we have decided to launch a dedicated sales team in the U.S. with a sole focus of developing these market opportunities. This team will be led by Dan Deem, SVP of Corporate Sales in the U.S. Prior to Dan joining us in September last year, he spent three years as Senior Director of Visual Systems sales at Panasonic. We look forward to sharing the progress of this team in the future as the economy starts to reopen and our solutions, which are ideally suited to work with the likes of Zoom, Teams, and Cisco WebEx begin to gain traction in the U.S. market. Our strategic partnership with Samsung has continued to progress. Over the last several months, we have developed MimioConnect software so that it can be deployed directly on Samsung's operating system. And we expect that all Samsung IFPDs in the education market will ship with the MimioConnect companion app from this summer. We have also developed a go-to-market plan with Samsung so that both sales teams have the ability to sell the solution into the channel. This has not been a quick task as changing the go-to-market sales processes within Samsung, a $200 billion company, is complex, and has taken a huge amount of effort over the past six months. However, I'm pleased to announce that the systems have now been put in place, and we expect significant revenues to start flowing in Q2 this year in readiness for the main education season. We look forward to discussing ongoing relationships with Samsung, and progress over the coming months.

Michael Pope, Chairman and Executive Chief Officer

Thank you, Mark. In addition to the significant investment in our global sales organization, we are also completely committed to product innovation and are proud of the vast awards and accolades we have received in recent months for our various solutions including our line of interactive flat panel displays, MimioConnect blended learning software platform, MyStemKits virtual STEM curriculum, robo 3D printing solution, and professional development content for extending learning beyond the classroom, among others. This month, we announced the grand opening of our virtual classroom in Atlanta, Georgia, which is fully staffed and available for live virtual demonstrations of our full solution suite. We also opened our Clevertouch gallery located in Central London with a key demonstration space, a boardroom, unified communications huddle space, and informal meeting area for partners and colleagues. Last November, we appointed Dr. Don Gemeinhardt as Director of Strategic Funding and Grants at Boxlight to provide an additional resource to K-12 school districts in need of support to access various education grants, as well as the nearly $200 billion in federal funds available to K-12 education from the Cares Act, Coronavirus Response and Relief Supplemental Appropriations Act, and American Rescue Plan. Dr. Gemeinhardt plays a key role in helping education leaders and administrators understand the requirements under the various programs and match solutions needed to solve existing problems and challenges such as returning to the classroom safely and bridging the student learning gap. With that, I will now turn the call over to our CFO, Patrick Foley.

Patrick Foley, CFO

Thanks, Michael, and good evening to everyone. This is our first full quarter where we are reporting the combined results of Boxlight and Sahara. To further expand on what you've already heard from Michael and Mark, I'd like to add a few figures to provide context to both slides and international operations. From a revenue by country and region perspective, our total revenue in Q4 was $31.9 million, of which EMEA represented 64%, the U.S 30%, and the rest of the world 6%, which was mainly Australia. In terms of customers, the top 10 customers represent approximately 54% of total sales in Q4, with the single largest customer just under 10%. These are based across a number of markets, namely the U.S., Denmark, France, Australia, Finland, Spain, Belgium, and the U.K. Nearly two-thirds of total sales are covered by the top 20 customers. In relation to sales, product mix, and gross margin, in Q4 displays remained the largest proportion of total revenues at 73%. These are largely IFPD sales of Mimio and Clevertouch screens, with related accessories generating a further 14.2%. The Sahara legacy distribution business was approximately 10% and the balance coming from software, services, and STEM. Adjusted gross margin for the quarter was 26.4%. The IFPD margin was approximately 27%, which would have been slightly higher; however, due to increased global shipping costs, margins reduced by 2 to 3 percentage points. Although we've seen a slight reduction in global freight and shipping costs, it still remains higher than normal and will impact the next two quarters. In relation to screen sizes, we've seen in recent years, the trend for larger format displays, and in Q4 2020, this trend continued within the education sector, with 75% of all Mimio and Clevertouch IFPD sales being 75-inch and 86-inch panels. I'll now review our fourth quarter and full-year 2020 results. Our financial results for the 3 months ended December 31, 2020 were as follows: Revenues for the 3 months ended December 31 were $31.9 million compared to $5.9 million for the 3 months ended December 31, 2019, resulting in a 437% increase due primarily to the acquisition of Sahara in September 2020. Gross profit for the 3 months ended December 31, 2020 was $3.6 million as compared to $1 million for the same period in 2019. Gross profit margin for the 3 months ended December 31, 2020 was 11.2% compared to 17.6% for the same period in 2019, resulting in a decrease of 64 basis points. The change in profit was mainly due to Sahara purchase accounting adjustments, which resulted in a decrease to gross profit of $4.8 million. However, taking this into consideration, the normalized gross profit rate for the 3 months ended December 31, 2020 was $8.4 million, or 26.4%. This was slightly down year-on-year principally due to the increases in global shipping costs which impacted margins by somewhere between 2 to 3 percentage points. Total operating expenses for the 3 months ended December 31, 2020 were $11.1 million compared to $4.2 million for the same period in 2019. The increase resulted from additional overhead costs associated with the acquired Sahara operations in September 2020. Other income and expenses for the 3 months ended December 31, 2020, was net expense of $1.9 million compared to net other income of $0.2 million for the 3 months ended December 31, 2019. The increase in other expense is due to $0.7 million of increased interest expense associated with increased borrowings, $0.8 million of losses recognized on the settlement of certain debt obligations that are exchanged for common shares, and $0.7 million of gains that were recognized in 2019 upon the re-measurement of certain derivative liability. The company reported a net loss of $8.6 million for the 3 months ended December 31, 2020, as compared to $2.9 million for the same period in 2019. The net loss attributable to common shareholders was $8.9 million and $2.9 million for the 3 months ended December 31, 2020 and 2019, respectively. After deducting dividends to the Series B preferred shareholders, comprehensive loss was $3.3 million and $2.8 million for the 3 months ended December 31, 2020 and 2019, reflecting the fact of cumulative foreign currency translation adjustments of $5.3 million and $0.1 million for the same periods. The resulting EPS loss for the 3 months ended December 31, 2020 was $0.17 loss per diluted share compared to $0.26 loss per diluted share for the 3 months ended December 31, 2019. Adjusted EBITDA for the 3 months ended December 31, 2020 was income of $0.4 million as compared to a loss of $2.6 million for the same period in 2019. Adjustments to EBITDA include stock-based compensation expense, gains and losses for the re-measurement of derivative liabilities, restructuring costs, acquisition costs, and the effects of purchase accounting adjustments in connection with the Sahara acquisition. Adjusted EPS for the 3 months ended December 31, 2020 was $0.01 per diluted share, compared to a $0.24 loss per diluted share for the 3 months ended December 31, 2019. At December 31, 2020, Boxlight had $13.5 million in cash and cash equivalents, $21 million in working capital, $140.4 million in total assets, $24.6 million in debt, and $44.9 million in stockholders' equity. 53.3 million common shares issued and outstanding and 2.9 million preferred shares issued and outstanding. The financial results for the year ended December 31, 2020 have revenues of $54.9 million compared to $33 million for the year ended December 31, 2019, a 66% increase. The increase in revenues was largely a result of the acquisition of Sahara in 2020. Gross profit for the year ended December 31, 2020 was $9.9 million compared to $8.9 million for the same period in 2019, a 10% increase. The gross margin decreased from 27.1% to 18%, driven by the effects of the Sahara purchase accounting adjustments of $5.1 million. The resulting normalized gross profit rate for the year ended December 31, 2020 was 27.2% compared to 27.3% for 2019, showing a slight decrease due to the increased global shipping costs. Total operating expenses for the year ended December 31, 2020 were $22.6 million compared to $17 million for the same period in 2019. Other income and expense for the year ended December 31, 2020, was a net expense of $4.3 million as compared to a net expense of $1.3 million for the year ended December 31, 2019. The increase in other non-operating expenses was primarily due to $1 million of additional interest from the increased borrowings, $1.5 million increase in losses incurred from the settlement of certain notes and $0.4 million of increased expense resulting from the fair value re-measurement of derivative liability. The reported net losses were $16.2 million and $9.4 million for the year ended December 31, 2020 and 2019, respectively. The net loss increased by $6.8 million. However, this includes $6.6 million in GAAP expenses items related to the Sahara acquisition, $1.6 million amortization of intangibles, $4.2 million fair market value inventory purchase accounting adjustments, and $0.8 million fair market value deferred revenue adjustments. Net loss attributable to the common shareholders was $16.5 million and $9.4 million for the year ended December 31, 2020 and 2019, respectively. After deducting fixed dividends to Series B preferred shareholders, comprehensive loss was $10.9 million and $9.3 million for the year ended December 31, 2020 and 2019, reflecting the effect of cumulative foreign currency translation adjustments of $5.2 million and $0.1 million for the year ended December 31, 2020, and 2019 respectively. The resulting EPS loss for the year ended December 31, 2020, was $0.39 per diluted share compared to an $0.88 loss per diluted share for the year ended December 31, 2019. Adjusted EBITDA loss for the year ended December 31, 2020 was $1 million, an improvement of $4.7 million compared to $5.7 million loss for the year ended December 31, 2019. Adjustments to EBITDA include stock-based compensation expense, gains and losses from the re-measurement of derivative liabilities, restructuring costs, acquisition costs, and the effects of purchase accounting adjustments in connection with the Sahara acquisition. The adjusted EPS for the year ended December 31, 2020 was $0.02 loss per diluted share compared to a $0.53 loss per diluted share for the year ended December 31, 2019. And with that, we'll open up the call for questions.

Operator, Operator

And we will take our first question from Jack Vander Aarde with Maxim Group. Go ahead, your line is open.

Allen Klee, Analyst

Hello. This is Allen Klee for Jack. My first question is about the Samsung partnership. You've mentioned that it appears to be ramping up. Can you provide insights on its performance in the fourth quarter and your thoughts on the revenue potential for 2021 and beyond?

Patrick Foley, CFO

Yes. Do you want me to take this one, Michael?

Michael Pope, Chairman and Executive Chief Officer

Yes, how about you start and I can fill in if needed.

Patrick Foley, CFO

Yes, certainly. In the fourth quarter, we initiated very limited sales with Samsung. However, the majority of our efforts have focused on revising the go-to-market strategy to ensure that both our sales team and Samsung's can effectively promote the product. This has proven to be quite complex, particularly in understanding how the channel can acquire the Samsung solution, which includes our software integrated into the product. Currently, sales numbers are minimal, but we anticipate being fully prepared to launch this to the market in Q2, allowing both sales teams to sell it more effectively.

Allen Klee, Analyst

Thank you. And then for your just announced acquisition of Interactive Concepts, I think in the press release it said $6.5 million of revenue last year, positive earnings. How should we think about how that can impact like the benefit you get from owning that and the contribution that might have?

Michael Pope, Chairman and Executive Chief Officer

Yes. So, Allen, a couple of thoughts on that. So the first one is that the purpose of acquisition, as we mentioned in the press release and also in our remarks today, was number one, to improve our profit margins. So, of course, us owning a distributor and showing direct to the reseller partners, we pick up additional margin. And that's a major focus for us as a company is to improve our gross profit margins. But then secondarily it's to maintain stronger relationships with our reseller channel in that territory, which is going to help us grow sales in the territory. With that being said, we also mentioned in the press release that we were seeing tremendous growth in the Benelux region, 25% year-on-year growth; I think it can grow quite faster than that. And it's a significant area of Europe. If you look at that Benelux region, it's about 6% of the total European population. So it's important to us strategically. So as far as kind of what it could mean for us is, again, higher gross profit margins, but then also with greater sales growth, we're going to generate, of course, more to our bottom line ultimately.

Allen Klee, Analyst

Thank you. And in regards to MimioClarity, you mentioned how this is going to get coordinated into Samsung. But overall, can you give us a sense of what this can mean for revenues in '21? And also I think last quarter, you said you sold about 300 units. And can you share like how many units were sold in Q4?

Michael Pope, Chairman and Executive Chief Officer

Yes. So with MimioClarity for those that aren't familiar, that's our audio solution. And we don't have a partnership with Samsung, per se on MimioClarity. We can't bundle our MimioClarity solution with Samsung. But the focus was Samsung is on two things. It's our MimioConnect software platform. So that's our SaaS-based education platform, and then also the professional development services that we're offering, including the online self-paced learning modules that we're bundling with the Samsung solutions. As far as MimioClarity, though our audio solution, we are actually starting to see significant sales of that solution. We have a couple of large contracts that we won and we're installing those solutions now. We haven't broken out the sale to this point in time of what that is. But I think that's something we can do, Allen for our next earnings call after the next quarter. But I will tell you that the opportunity with MimioClarity is as big as it's ever been. And we are indeed selling a large number of those units and delivering a large number of those units.

Mark Starkey, President and Head of Global Sales

I would add that we can't produce them fast enough due to the significant demand.

Allen Klee, Analyst

That's great. And one last question before I get back in the queue. Regarding your end market mix, I remember you mentioning that Sahara's revenues were 15% corporate and 85% education. I'm curious if you expect that mix to change. Additionally, you mentioned your STEM and software offerings, which have higher margins. Can you share your thoughts on whether the mix of these offerings might change in 2021?

Michael Pope, Chairman and Executive Chief Officer

Yes, Pat, could you discuss where we ended up for the quarter? Allen, I'll let you go first, and then I can share my thoughts on how I think things will progress.

Patrick Foley, CFO

Yes, so in terms of the Sahara, kind of revenues for Q4, the Pro as we call it, the corporate market that we delivered to was about 15%, i.e. the corporate market of the total IFPD sales that went out as Clevertouch product, and then the balance being education. So it was quite a significant part of that and it's very lucrative in terms of margin.

Michael Pope, Chairman and Executive Chief Officer

We've discussed Futuresource, which publishes research that we monitor. According to their reports for 2021, they project that the corporate market for all interactive flat panel displays in EMEA will be about 25%, and roughly 16% of the total in the U.S. Looking ahead, we are aiming for a trend that aligns with those figures: approximately 16% of our total sales in the U.S. and 25% in EMEA. I believe we can potentially surpass those figures since we are increasing our emphasis on this area. As Mark mentioned, there is a significant demand, and there are not many strong providers offering interactive flat panels along with the necessary solutions for success in those markets. Additionally, these products offer higher margins, making them even more appealing.

Allen Klee, Analyst

That's great. Congratulations. Thank you. I'll get back in the queue.

Michael Pope, Chairman and Executive Chief Officer

Thank you, Allen.

Operator, Operator

At this time we will take our next question from Brian Kinstlinger with Alliance Global. Your line is open.

Brian Kinstlinger, Analyst

Great, thanks. Can you hear me?

Michael Pope, Chairman and Executive Chief Officer

Yes, we can hear you, Brian.

Brian Kinstlinger, Analyst

Hello. Can you talk about the market share gains that Clevertouch made this year? What do you think is driving those gains, and how is Clevertouch differentiated? Also, with the merger with Boxlight, how can you further differentiate that product to gain more share?

Michael Pope, Chairman and Executive Chief Officer

Yes, so, Brian, I'll speak a little bit and then Mark, feel free to jump in if you'd like. So first off, as far as differentiation, we have the most comprehensive solution suite on the market for education. We also have a quite comprehensive solution suite for corporate and government. But first speaking education, our solution suite includes, of course, interactive flat panels that we've talked about. But beyond that, we sell software, we sell accessories, we have STEM solutions, we have a professional services team where we provide training, professional development, and it really is that broader unique offering that makes us more competitive. And if you start with any one of those solutions, we also feel that we have a superior product than most of our competitors out there. So if we're just competing on interactive flat panels, we believe that we have a superior interactive flat panel to most of our competitors, and we can be competitive on price as well. But when you tack on the software and accessories and the services piece, we think we can win out most of the time when we compete in the market.

Brian Kinstlinger, Analyst

Great. You mentioned the CARES Act and other funds available to schools for various reasons in the U.S. Are most of the school systems you spoke with aware of these funds, or do they need education from channel partners? I'm curious if they approach you knowing they have access, or do you have to provide that education?

Michael Pope, Chairman and Executive Chief Officer

Yes, we don't need to inform them about the funds since everyone is aware of them. The funds are generally distributed by state and then further allocated to school districts. However, school districts do not automatically receive the funds; there usually has to be an application process. So yes, they know about the funds, but sometimes they might not fully understand how to access them. Even if they do, they might lack the resources or ability to prepare the necessary documentation to request the funds. That's why we hired an in-house grant writer to assist with this process, and we actively promote this service. Additionally, our website features email campaigns that discuss how we can help educators access these relief funds. Ultimately, preparing the grant paperwork or request documentation can be quite extensive and complex, but we have resources, including our grant writer, to help school districts apply for and receive the funds.

Brian Kinstlinger, Analyst

Right. A few more. First of all, you mentioned which I think was bullish that the first quarter normally is less than 20% of revenue. But when I take the combination of your two companies, but then I add the Samsung opportunity, which may be meaningful as well as some other catalysts. It seems to you possibly that may be even less of a percentage than it typically is this year or is it too soon to tell?

Michael Pope, Chairman and Executive Chief Officer

Yes, it's probably too soon to tell, because there's a few things that are going into play. One is Samsung, if that ramps, of course, that would make a difference. How soon these federal funds enter the market, that could play into it. Also, buying habits have shifted a little bit, of course, with COVID and initially there were a lot of the buying habits shifted to address the initial needs. And now they're flexing back the other way to address traditional classroom needs. So I think it's tough to tell, but our best estimate is roughly what we provided. And our guidance, you remember it was $28 million for Q1, and then typically Q1 is less than 20%. So you can get an idea of how we're training for the year based on those numbers.

Brian Kinstlinger, Analyst

With all the components like Samsung and STEM in mind, I'd like to ask about the gross margin. Looking at the adjusted figure of 26.4%, even with freight costs decreasing, do you anticipate gaining some margin over the year? Do you still believe that 26.4% is achievable, and could you explain how the mix may change a bit?

Michael Pope, Chairman and Executive Chief Officer

Yes, so still feel like we can improve that. Keep in mind the 26.4% was not including the adjustment of 2 to 3 points on freight costs, right. So if you take the 26.4% plus 2 to 3 points, that's getting you closer to that 30 number. In the past we talked about, we got to be 25 to 30 and we got to be on the high end of that approaching 30. I think this is going to be that year where we can start to demonstrate additional improvement in gross profit margin, and we definitely have to push that 30% margin number. But looking into future years, we've always said, and this is still the case, so we know we need to be higher than that. And that's going to happen as we improve our product mix as we talked about, including selling more of our higher-margin accessories and our professional services and our software solutions, which are high margin. That's how we're going to get there. We're not going to get there by keeping the same product mix we have today, which is predominantly interactive flat panels.

Brian Kinstlinger, Analyst

Yes. Lastly, on the acquisition you made this week with Interactive Concepts. Is there a pipeline of similar channel partners or distributors that you're evaluating in various geographies, in Europe given wanting to be closer to the customer and the reseller?

Michael Pope, Chairman and Executive Chief Officer

The answer is yes. Yes, there are several others we're looking at. So we'll have to see how that plays out over time. But our model is, ideally in most cases, there's exceptions to this, but in most cases our model is that we want to be closer to the reseller partners and to the end users, where we can again have those higher margins by cutting out that distributor, but then also, where we have a lot more influence. And we think us having more influence, that's going to result in a higher sales growth versus just relying only on a distributor. And keep in mind that distributors sell a lot of other solutions besides our solutions. And so we're competing sometimes to be able to get market share from that distributor of their business. And so generally, yes, there's going to be others, we're looking at others, and we hope to announce additional opportunities in future quarters.

Brian Kinstlinger, Analyst

I have one more question that Allen was trying to ask. Did this distributor generate $6.4 million in revenue? How much revenue did you make through that distributor? I'm curious about how your revenue compares to other technologies available.

Michael Pope, Chairman and Executive Chief Officer

Yes, we didn't report that number. But to give you an idea, about half of their business came through Clevertouch, but the other half came through other distribution. So you could run some numbers on that. And in addition to their revenues of the $6.5 million, they were quite profitable. So I think we said profitable, but they were quite profitable, and that's going to hit our bottom line.

Brian Kinstlinger, Analyst

Great. Thanks so much.

Michael Pope, Chairman and Executive Chief Officer

Yes, thanks, Brian.

Operator, Operator

And we will take our last question from Jack Vander Aarde. I believe that's Allen in for Jack. Please go ahead. Your line is open.

Allen Klee, Analyst

Yes, hi. I have two quick questions. First, you mentioned that you received 33 million in customer orders. Could you clarify how you define that? Does it include future orders, and if so, what time frame do you expect to close them? I'm asking this in relation to the current situation with container ships and your inventory levels. I believe you finished the year with about 21 million in inventory. Are you concerned about having enough inventory, or do you have strategies to address that?

Michael Pope, Chairman and Executive Chief Officer

That's a great question, Allen. Managing the supply chain has been somewhat challenging due to shipping issues and shortages of certain components. However, we have handled it well and don't anticipate any impact on our numbers. Our inventory levels are healthy, and we're in a good position. Regarding the $33 million in customer orders, those are orders we actually received during the quarter but have not yet shipped. We had $30 million or $32 million in sales for the quarter, referring to the solutions we delivered or shipped. Concerning the $33 million in back orders, I believe it was…

Patrick Foley, CFO

$11 million. The $11 million would be shipped in Q1, I mean that we recognize that $11 million in Q1. There would be minimal, if any, that was not recognized in Q1. And so as far as how long do they carry over was going to be less than a quarter in almost every case. To add to that point, regarding Allen's comments on supply chain challenges that businesses are facing globally, we have a strong balance sheet and anticipated these supply chain issues in Q4. We proactively built up our stock to address these challenges and ensure we have inventory available for sale. We took similar measures for Q1 and beyond. We always keep an eye on the planning horizon, looking at supply chain disruptions at least 3 to 6 months out to effectively manage our demand planning.

Allen Klee, Analyst

Great. I think Brian mentioned this, so I’ll try to phrase it differently regarding the seasonality across different quarters. You noted that Q1 is typically your slowest season, but when I analyzed the last five years, I found that the revenue comparison between Q4 and Q1 shows no consistent trend. Some years it's higher, while in other years it's not. This suggests to me that there's an equal likelihood for Q1 revenues to increase sequentially. So, I’m curious why you believe that may not be the case based on your current insights.

Michael Pope, Chairman and Executive Chief Officer

Yes, so we think the …

Patrick Foley, CFO

Michael …

Michael Pope, Chairman and Executive Chief Officer

Yes, let me say a couple of thoughts. Let me say a couple of thoughts, and you can step in. So if you look at Boxlight historical, we are much more business. And as a smaller business, one large order, right could swing a quarter pretty substantially. And so if you're looking at again quarters from '18, '19, and then first part of '20, we did have some large orders and you would see swings in those quarters. Now that we’re a much larger business and the concentration of one order or one partner is much smaller, you're going to see a more normalized approach to evaluate in quarters. And you're not going to see that same variability. But you're right, I mean the potential there could be a large number of orders, or in our case now it'd be have to be several significant contracts that would be able to swing a quarter abnormally. But I think we feel pretty good about that 20% guidance for Q1. We got to be around that number, if you're looking out into the future for Q1.

Allen Klee, Analyst

Okay, thank you so much.

Patrick Foley, CFO

So very briefly to add, just in terms of seasonality as a global business, don't forget the northern and southern hemisphere summer periods of difference, and summer holiday schedules for schools. So buying patterns by behavior changed just on that regard. But also within Europe, there are different buying patterns and ordering patterns in terms of placing their orders on us, so that actually comes into play to help smooth that, but actually it does create a different trend to what you would have seen historically on the Boxlight figures quarterly.

Allen Klee, Analyst

That is very helpful. Thank you.

Michael Pope, Chairman and Executive Chief Officer

Thank you everyone for your support and joining us today on our fourth quarter and full year 2020 conference call. We look forward to speaking to you again in May when we report our first quarter 2021 results.

Operator, Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.