Rick Mills, Chief Executive Officer, commented "CRI's fourth quarter results generated positive EBITDA, build upon the successful stabilization of our business during the third quarter of 2020, and evidence the continued momentum towards a return to sustained growth as we and our customers begin to exit the ongoing COVID-19 pandemic. We believe that our implementation of cost control measures and expansion of our business into the Safe Space Solutions marketplace set CRI on a path for return to expansion in 2021 and beyond."
"During the fourth quarter a resurgence in COVID-19 cases again put pressure on our customers as anticipated re-openings were again delayed; however, as we move through the first quarter of 2021, we experienced a reawakening of many current and potential customers of our digital signage solutions, with a renewed focus on integrating digital technologies into the patron experience as the U.S. prepares for reopening and the easing of government restrictions. We expect that the second half of 2021 will present significant opportunities for CRI as a result of our ability to strengthen the Company's market perception and competitive position during the COVID-19 pandemic, and significantly improve our balance sheet through activities executed in the first quarter of 2021."
Mr. Mills continued, "We believe CRI's suite of Safe Space Solutions product offerings are a clear market leader, and we see continued opportunities for growth for this product line in 2021. The expansion of capabilities we worked to develop alongside our partner InReality have expanded the use cases for these products beyond temperature taking and have generated demand that we believe can be sustained beyond the COVID-19 pandemic."
2020 Financial Overview
Revenue, gross profit, and gross margin:
Revenues were $17.5 million for the year ended December 31, 2020, a decrease of $14.1 million, or 45%, as compared to the same period in 2019.
Hardware revenues were $9.0 million for the year ended December 31, 2020, an increase of $0.8 million, or 9.3%, as compared to the prior year, driven by the introduction of the Thermal Mirror and other Safe Space Solutions products which generated approximately $3.1 million in hardware sales during the year. Gross margin on hardware revenue was 30.5% during 2020 as compared to 24.1% during the same period in 2019 due to the shift in mix of hardware revenues from displays to the Thermal Mirror and other Safe Space Solutions products which typically generate higher gross profit on a per unit basis.
Services and other revenues were $8.5 million for the year ended December 31, 2020, a decrease of $14.9 million, or 63.8%, as compared to the same period in 2019, driven by reductions in (1) installation services of $4.9 million following a significant increase in suspended, delayed, and cancelled customer projects, initiatives, and capital expenditures as a direct result of the COVID-19 pandemic, and (2) software development services of $8.8 million which included nonrecurrence of approximately $7.9 million of 2019 revenue related to software development and licensing arrangements, Reductions in year over year core digital signage business were partially offset by $0.4 million of services revenue generated from our Safe Space Solutions products during the year ended December 31, 2020 following launch of the suite of products at the end of April 2020.
Managed services revenue, which includes both software-as-a-service ("SaaS") and help desk technical subscription services for our traditional digital signage and new Thermal Mirror and Safe Space Solutions product offerings, were $5.4 million for the year ended December 31, 2020, a reduction of $1.2 million, or 18.1%, primarily related to contracts with customers which were partially or permanently closed during the year as a result of the COVID-19 pandemic.
Gross profit was $8.1 million for the year ended December 31, 2020, a decrease of $5.6 million, or 41%, compared to the same period in 2019. Consolidated gross margin increased to 46.5% for the year ended December 31, 2020 from 43.5% in the prior year, driven primarily by higher gross profit generated on sales of the Thermal Mirror and Safe Space products.
Operating expenses:
For the year ended December 31, 2020 as compared to the same period in the prior year:
Exclusive of the incremental year-over-year increase in non-cash charges, general and administrative expenses decreased by $0.7 million, or 8%, for the year ended December 31, 2020 as compared to the same period in 2019.
Operating loss, net loss, and EBITDA:
Operating loss was $16.1 million for the year ended December 31, 2020 as compared to an operating loss of $0.1 million during the same period in 2019. The operating loss included a non-cash goodwill impairment charge of $10.7 million recorded March 31, 2020. Excluding the impact of the impact of the goodwill impairment charge, operating loss was $5.4 million for the year ended December 31, 2020, representing an increase in operating loss of $5.3 million despite a reduction in year-over-year revenue of $14.1 million during the year.
Net loss was $16.8 million for the year ended December 31, 2020 as compared to net income of $1.0 million for the same period in 2019.
EBITDA loss was $13.9 million for the year ended December 31, 2020 as compared to EBITDA of $3.2 million the same period in 2019. Adjusted EBITDA loss was $3.2 million for the year ended December 31, 2020, compared to $1.8 million for the same period in 2019. See below for a description of these non-GAAP financial measures and reconciliation to our net loss.
Subsequent events:
Payroll Protection Program Loan ("PPP Loan"): On January 11, 2021, we received notice that the full principal amount of the PPP Loan and the accrued interest, representing ~$1.6 million, had been forgiven. Accounting for the forgiveness will be recognized in the Company's first quarter of 2021.
Debt Refinancing: On March 7, 2021, the Company refinanced current debt facilities, which:
Registered Direct Offering: On February 18, 2021, the Company entered into a securities purchase agreement with an institutional investor which provided for the issuance and sale by the Company of 800,000 shares of the Company's common stock (the "Shares"), in a registered direct offering (the "Offering") at a purchase price of $2.50 per Share, for gross proceeds of $2.0 million. The net proceeds from the Offering after paying estimated offering expenses were approximately $1.8 million, which the Company intends to use for general corporate purposes. The closing of the Offering occurred on February 22, 2021.
Mr. Mills concluded, "We are proud of the work we have done to prepare the Company for long-term success and are excited about recent customer developments, both those we have previously announced and those we anticipate will come to fruition throughout 2021. We continue to believe that our end-to-end offering has positioned us well within the industry to compete for new and growing opportunities with partners, particularly potential enterprise customers in a variety of key verticals."
Conference Call Details
The Company will host a webinar to review the results and provide additional commentary about the Company's recent performance, which is scheduled for Wednesday, March 9, 2021 at 9:00 am Eastern Time.
Prior to the call, participants should register at https://bit.ly/criearnings2020Q4.
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