MINM - Earnings call 4 2020

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Operator

Good morning. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to Minim's fourth quarter and year-end conference call. [Operator Instructions] I'll now turn the floor over to your host for today's call, Mr. Sean Doherty, Chief Financial Officer of Minim. Mr. proceed. may you Doherty,

Sean Doherty

by and XXXX everyone morning. Financial of CEO. I'm Doherty, Stephanie, and Executive Quarter Chynoweth, Gray I'm Minim's and CFO our joined today, And Year-end Results Minim. Hitchcock, welcome you, our joining Chairman; to Fourth Sean Jeremy Thank Call this

full will for For fourth our Jeremy and strategic the will will then following the year. our that, our provide start quarter financial progress operational the high-level more After who share comments perspective, open of which some some today, Gray, floor share on we'll end into to call, will Gray results I XXXX. will the for in we and our agenda insight with questions. outlook review the quarter, At

remind today's want call Before conference contain I forward-looking we begin, everyone that statements. to may

by statements revenue, statements from Actual or expected trends Forward-looking could business operating margins, contemplated forward-looking the including materially outlook. regarding and future results these include differ statements. future expenses those

website, SEC. comparable materials Officer. the to the our our now most are Chief to For A refer to Executive non-GAAP recent as to with our filings available Relations Gray like numbers call management analyze discussed note, risk of Investor most periodic more may the information, over additional too, press Relations These available performance. such use utilizes in filings Please SEC. our release Investor include the our with non-GAAP in ir.minim.com. I'd GAAP turn please today's page measures reconciliation Chynoweth, factors is call Minim's of which for in that numbers well the on as to the

Graham Chynoweth

months me I'm senior here Conference and team plans Year-end and few progress in as morning, Minim's with welcome the that well as our exciting Good for discuss made our past Call. XXXX. we've pleased the is XXXX to to QX

of and connected work. The on make my intervening to life our software Minim's meet products sustainable safe the call to for to combining as demand introduced in points for that market-leading use Zoom strength you plan Telephonics' hardware proof that with last homes provided the growth. easy enthusiasm There platform Motorola-branded months I more with I have support shared our was conference proprietary first drive CEO for November. AI-enabled and

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the this were We And from year and through a home the XXXX, drove us improvement margins For the which launching allowed saw meet retailers. production, in through reduction the full December, management. higher XXXX. We slight by margin networking XX%, new products gross other advanced for demand and to and demand of and grew revenue top Amazon products especially November of addition growing software line in sales cost services. we and increasing

been Minim a time during so home connectivity earning essential. supplier our trusted delivered well the never year, exceptionally at a past as has their for when customers confidence

the Minim One in of company Telephonics of was into accomplishments quarter the critical Minim. as completing fourth the Zoom rebranding the and merger

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We our Motorola-branded have top in retailers and in was have innovation, are a leader brand cable the and retail in pleased e-commerce. sellers been Of we always and ranked fastest-growing cable the to note, gateway products XXXX. Motorola X across modem

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touch are growth. operations how to sustainable exceptional like I'd we business gears, our and bolstering Switching on for

well to chain a and hot In may our diligently component heightened are know, building with response resiliency road supply this planning longer chips topic among headwind, as in semiconductor the you technology product orders several times we for As is map. demand as sectors. lead

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will our we turn us have a enable confident the grow that to work. With life and you our safe our share sum, today, floor everyone's I progress. In scale keep a in details our will performance. global to operations updated franchise on and use am over resilient I home will revenue to We through one model for that, more on makes and better-performing that that base financial and easy business Sean Minim, more to

Sean Doherty

Thank I Gray. quarter will reviewing the fourth our you, and XXXX. financials for year both full be

with As the line XX.X%, both from be continues higher in significant and the period. periods in associated addition respectively, as XX XXX the cases, year XXXX. reflected basis demand that up in by by the reaching to and software year XXXX. of QX Growth Best more by year, and prior revenues basis associated driven but onetime expenses. in for our full quarter incurred full had Gray successive the noted, top to quarter our merger, improved approximately with in a same down we for third QX, and improvement and those particular from managing in the due the success and to from retail working revenues points during we note, as margin down million XX.X% the quarter, record Buy in and year XXXX, pandemic, for quarter. Gross primarily product-related Amazon, slightly strength margin studying fourth Target with well million was home points, $X.X and full improvement the the I'll of QX during gross reduced marked net income however, respectively, fourth $X.X expenses sales

share share of $X.XX was net fourth of million loss loss a the of with or compared loss $X.X per quarter Accordingly, net a for on of a QX in basis, the $X.XX or per loss $X.X a XXXX. million

includes loss or year's For in share full in million $X.X was of XXXX of $X.X year, tariffs. net of compared prior net the full per The a to loss $X.X loss a million loss the or net year loss per XXXX $X.XX $X.XX share. million

Excluding in would XXXX these tariffs, net have been million. non-GAAP loss $X.X

loan $X.X this We to other $X.X PPP $X.XX merger-related year, million million forgiveness. income airfreight also of expense in supplemental of incurred and million temporary related expenses

gain expenses the also Excluding in to net expenses, costs, million. Adjusted and sheet, amortization. When meet XXXX for and the a versus look merger-related merger-related demand. million XXXX a have a equivalents, loan in primarily from airfreight $X.X $X.X because we and $X.X chose to basis forgiveness, year, income cash XXXX was year and the normalized would of when we temporary airfreight at expenses million ended also in onetime PPP invest with due $X and year million approximately we been depreciation prior supplemental improved quarter full on deal and tariffs, XXXX but expense, the inventory to customer EBITDA supplemental the decrease in full cash tariff balance build non-GAAP

performance to bonds performance bonds for we Tariffs expect the Our restricted of to issuance released start and related of beginning period invoiced, these as of cash payment in position paid fully being are mid-XXXX. cash prior $XXX,XXX tariffs. includes

current can inventory demand this products. You in increase for period, to meet work see as increased includes which assets our an we

includes an increase which had that higher in the support for to during inventory growth. also not quarter accounts the liabilities, We reflecting payments payable, current due purchased yet

compared XXXX. As dynamics, ended higher X to a result XXXX working capital $X.X these of QX million

XX, $X.X company's PPP to against $X December related the approximately $XX,XXX line and of of outstanding the loan debt drawn XXXX, of As million company had million credit.

we at customer the announced step facility scale to a we had quarter, higher the of and to with high us our from to enables of introduction & flexibility new continue size demand of Rosenthal the in and to aids product early our close credit This million products. of February financial $X the million. After ensure that levels operations time increased Rosenthal for important uninterrupted $X

in of was expenses, XX% tariffs, that XX.X of through tailwind challenges including million as Lastly, common demand. diluted in and outstanding, the the transportation shares transaction prior pleased XXXX in unusual with shares issued sum, average of basic midyear connectivity to the December. In equivalent transaction report XX, as XXXX, and shares, pipe our a as a higher and work-from-home from weighted the am count continued pandemic December common I increase year, in merger terms the presented managed reflecting in XXXX, we share well

ensure committed you. to floor year the We of growth. With to lessons the over sustainable Jeremy, last are turn to I'll that, using

Jeremy Hitchcock

XXXX enterprises. hundreds I Since that thousands by of to network founded I've afforded and to wanted botnet on give others, Sean. collaborated of of big Minim been consumers home and Mirai exploits their founders security. to in After home. platform I the Dyn, you, the advance was by camera was the XXXX data to smart Minim protections Thank the baby scale same democratize motivated Dyn's Gray with consumerize overtaken through

AI-driven of management service saw security XXXX, Board. to joined I WiFi fortify Soon with the they, selected struggle connectivity had too, delivered after platform consumer their WiFi software the Minim management. network May hardware Zoom and Minim providers, Zoom in an because to

road smart modern while market technology those manage back innovation innovative to the has and connectivity, thoughts about and The for and drive approach. subscribers I'm through no streaming, strategy that best enterprise better turn look really our customer-led the product of capital our powerful outlook for combined today the enable exploded, software as drive talked wireless of plans. software-optimized map, value, margins driven needs. Gray will some year. continued team, as Minim the we our let to generating and proud build time and operational coming Minim and I'm movement, market This success. have upgrades, billion the powerful remote With provide that, continue work-from-home team that's Software-as-a-Service. planning both north company of I will possible a an more. and we are deploy over-the-top the higher our Gray gaming, an us excited floor me everywhere. There's brought know confident together than secure Chairman, return. I'm that forward to education, with we distribution There this exceptional gross network over Executive Now offerings hardware star to to the X.X home industry-leading to meets has networks home now. growth, smart adoption, home telehealth global about that by in need broadband sustainable

Graham Chynoweth

Thanks, Jeremy.

you we're of with As share total to more facing, of our market. the the strategy about tell, capture opportunities excited can we're and really the our and providing fair confident we pleased are than available technology products

X expectations margins, today, X product key with retail of planning net are to commentary increasing significant subscription channels of driving growing at again net the some share in through homes to our rollouts, least ranking want and XXXX, specific includes with the in I we revenue financial product provide meaningful expanding increasing new sold channels, improvement retail. X proportion did top our continuing portfolio our XXXX. sales, our guidance modems important the distribution sales number at as This While expanding our partners, on gross passed not of ISP for

solid goals. again we provide quarters As guidance. With combined once a we'll financial ready of against as a we that, company, track we with operator, then achieve update aim move on forward, questions. for record you progress Once specific our our investors we'll these are more to few

As on questions Zheng, for today mentioned initiatives. with Officer, also about Nicole earlier, us I Chief our is Marketing line the specific marketing any

Operator

[Operator Instructions] Joe Your of line Wytanis, shareholder. comes question from first a the

Joe Wytanis

I have questions. X

In in been to announcement license first March security licensing announced Mobility signed Zoom the with The report, XXXX with payments a services. consumer-grade annual mentioned The agreement XXXX monitoring to sell Minim availability related and related anything. Gray. starts, products of Can Motorola security please licensing you seems consumer-grade or haven't monitoring a like of and It year. XXXX. on and I the beginning these start seen products comment services? It's heard that

Graham Chynoweth

Joe, Thanks, for the question.

is out And where road to mainly the the achieve know short-term come this year into we it's business, with to you review those. products came are from and every going the in took decided were think of respond we on product connectivity. to let that the we initiative came most those. see and that growth associated I the you'll I When that when I'd we today talk about map into way -- have the focused place

as see cross-sell the all We're, that the that's have app especially mindful of of on opportunity once and ability mentioned for very of one because our to of us, we it interesting you that platforms. course, Minim

in very are that those areas. I core do good I those continues things strategy growth we and So for this see drive products connected ability our And really we when very of a balancing. that and we that and are think with at be the both mindful expanding. interesting always are being to see you'll connectivity us, our roll to we're will what are it say opportunistic out opportunity around year our at

Joe Wytanis

Okay.

not will XXXX? in does So mean monitoring will and provide security products you or that

Graham Chynoweth

XXXX a map. don't believe that road product released I we've

with So release call. product see cross-selling about I an looking to about make our and -- of map at announcement are decline a especially as we our road given map road remain on excited of and that context software. the opportunity said, the it it, would But products as I our

Joe Wytanis

Okay.

from accounts heard touched to Can fiscal balance mentioned, the goes at on that the accounts million what you course, sheet, can $X.X have balance When the And XXXX sheet. looked the also I of at the ballooned I of question from at XXXX. I little the at visibility a Second you, has payable, you year Sean. to inventory end XX.X%. ballooning to end insight $XX.X the on of million the $X and XXXX had you certainly, end and million is you on lightly plan of inventory bit as share payable situation? more see this

Sean Doherty

Certainly, Joe. Again, question. thanks for the

current representative that end on that We in $XX.X absolutely see fully we there past. the You're our of of have expect Amazon demand inventory in us That as the we projected you we we're XXXX. based continue to inventory ramp building million that cushion of right, inventory levels that market. the and to is did we did We turn can approached cover see a good that the demand seeing. so all as in we

tend things aware, we well to them sell as pretty you're we bring generally As in, quickly.

level the chipset excited hedge have, we're against basically shortages that So increased about and a inventory right also now. then that everybody the is of we seeing

So the heard in right that news sure I'm now. you've

continue growth seen mitigate is that strategy business. also in continue as the that experience the and we've this So risk we through to to XXXX a

Operator

Capital. the question Instructions] [Operator Your line of Semco comes Weiss from Scott with

Scott Weiss

that Can expectations continue to ramp-up are a on you airfreight, for in year? cited you tariffs, see comment costs from costs cetera, in your 'XX? to last for going And we et

Sean Doherty

to a really everybody costs well, after experienced post-COVID response saw expense supply Vietnam. our that chain levels China the a ramp in to up having as in don't we back that to that expense we world. inventory was supplemental since to issues XXXX airfreight able we saw, expect tariff production No, from to see the airfreight material Scott. The Thanks, we shift were

to continue perspective we'll see a needed, airfreight P&L use we XXXX. our don't but expect impact material to So to strategic as a on in

Operator

line Tolerance Aaron with Capital. comes question Your next Sharabaika from of the

Aaron Sharabaika

on nice I a quarter. Congratulations questions. have X

amount First, updates of can on part cost my comment you for of second do have NASDAQ question savings any XXXX? the that on the estimating you potential And listing? for you're is, timing

Sean Doherty

anticipating XXXX. those merger savings for questions. in We're Thanks post Yes. not cost

the our I we And anything to over have built So a uplisting, say that I that. would NASDAQ into with around to Chynoweth. would that turn Gray don't regards CEO, plan

Graham Chynoweth

consider private always when Obviously, considering. Yes. that. Uplisting where alternatives. Thanks it's we for We we're something all are. remain

I ensure seek that continue me liquidity a Board to shareholders in returns and investment we're given to need to in sustained capitalize the they their direction has the be on they see growth that to in company. think able position provide to the that

Operator

additional time. to to turn at no like are There questions I'd back this over it management.

Graham Chynoweth

very everyone this joining Well, right. to for All thanks much morning.

And Before our please off, the I sharing Conference investors hope at Virtual Sean, collaborating questions, have those have events. meantime, In with day. welcome in April really to May on We the we'll the note or for in reach out presenting our XX Technology participate you'll able team. we good to the engagement on a vision IR you look forward be be please and we Virtual Sidoti to and that the XX. connectivity. can take from OTC you at MicroCap to Thanks, that sign and if Conference CFO, where

Operator

concludes This conference you. Thank call. today's

You Speakers, the now please may line. disconnect. hold

Minim (MINM) 9 Mar 212020 Q4 Earnings call transcript