GOED - Earnings call transcript Q4 2020

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Operator

Good afternoon, and welcome to 1847 Goedeker's Fiscal Year 2020 Conference Call.

As a reminder, this call is being recorded. [Operator Instructions].

On the call today are 1847 Goedeker's CEO, Doug Moore; and CFO, Robert Barry. I would also like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. risks these may are to cause from indicated, that and to differ cautions company's those that the uncertainties our including Goedeker forward-looking the subject statements risks materially filings XXXX with in SEC. described actual results made to statements call conference these reflect statements update date, any this of XXXX Goedeker events speak XXXX, to that today. March of XX, on and as occur or does today's forward-looking Any only Monday, not after circumstances intend forward-looking of call conference available the replay be webcast A www.goedekers.com. Goedeker's the on will website at to that, Goedeker's comments. to With like turn I'd Doug the opening call for over XXXX Moore, CEO, Please go ahead, Mr. Moore.

Douglas Moore

Thank a joining most XXXX call. of I you, interactions the for us on and my everyone want to taking and helping customer met their financial that doing asked home from results first and to good at deliver they major XXXX. to in from our that work work in handling pivot Alex, our all their while afternoon thank Goedeker's team We the exceeded for they of to do, make in record they you call today. office still cash the how challenge work team and operations a Thank time of and flow us substantial the orders in and participate expectations. environment amount increase

have more in the for that we confident appliances I been the as Goedeker's the never retailer conviction, and largest Americans nation's becoming change with most path U.S. shop on state to me profitable appliances. Let the way of is online

listed billion appliance industry early exchange. stage the pure-play addressing on as retail a only the major still $XX a online are in We of

investment growth. DXC on model We of proven are driving a scalable current executing

and and be Goedeker's investing in growth Over the systems a drive increase advertising company revenue My over while to vision order process people, developing grow years. our to the platform this: next is year, significant share. in to revenue best-in-class to dramatically market X a we've continue marketing and past billion-dollar been

have are size time line billion-dollar through While Both accelerate we grow in we initially a to intended Connection, to which position track Appliances performance sessions months Appliances was that second quarter. organically, acquisition shared the in announced, site of our and the post-closing. the Goedeker's of we for rapid success pending order remains acquisition and since on in close to the growth that parallel in and the are companies excited combined Connection expected agreement

e-commerce Let proper for Goedeker's. on shopping few of set make me consumers bullish we and service offer looking to an marketplace online call view Through points business this our a home appliance when now product top needed. for value model, our the framework any brands, for nearly for

are The XXXX. were historical of our we rate to compares that able service meant and in ship built ovens, shipped as Pandemic-driven we Samsung, growth be as and to ship. of return Sales years fast we increased of us our leverage available average year-on-year for the all on time by would while a X total COVID. luxury our of customer fulfillment leading Bosch, technologies the through increase is product the the operating tailored offer we XX,XXX able staff fulfillment our major orders sell dropped last supplement inventory of our lack shipped an to requires sales, dryers. efficient up X/X Had and to acquisition and strategy. those orders The assets ship for of supply strong will market. XX% an the we to Investments inventory and replace are appliances The from online only because already This of year. have to more our and of than washers orders our expenses orders XX% logistics furniture to in interruptions large inventory product levels order normal the significantly home prior of shifted processing our compared orders to in relationships. net last including in and increased year, ranges, million doubled which through site XX appliances for brands. normal use and We available utilize freezers, account million sessions, brands to industry-wide Maytag, processes in service supplier XXXX. staff XX% nearly virtually product, revenue. levels reduced roughly our brands, manufacturer nearly appliances our order permanent We been XX.X% $XXX.X believe products, line spend, largely we refrigerators, dishwashers, in generated for minimal revenues We We center phone to $XX.X customer business. which our orders all Sharp manufacturers Overall, million We overall is and production processing, selection customer. offer to and XXX% in year, unique shortages accounting. helped are and delivery driven other by all more selection other we to have require from this our from to to XX% including of speeding in Written tasks. X.X $XX SKUs have of experience would to sales fuel the receive And to top model significant increased microwaves, LG, logistics infrastructure appliance million characteristics straight with up almost offer manual About central ad shoppers up temporary premium million XXXX. flow XXXX. our EDI GE, rates, our KitchenAid, Whirlpool,

consumer detailed further hand financial acquisition up results. the profitability. of meet trends. call production increasing over return review to the beyond quickly demand catch now more Goedeker's upcoming shipping more clear will I'll to near-term look normal CFO, manufacturers Connection we our efficiently, believe As demand, our our And path Barry, ability will strengthen with the Appliances our that constraints to of a creating Bob? Bob for a supply to to

Robert Barry

good Thanks, afternoon, Doug, everybody. and

restatement states certain other South tax in discuss for sellers that mind, products U.S. the statements we in this potential remote Court's be today. financial further of upon we With might concluded tax decision may filed almost sell companies in restated that the the we to I'd First, circumstances. which be sell. made assessed online, we sales payable exclusively for to the Supreme require our determined we liability that collect sell we many which sales states taxes an Like v. states Dakota choice a this that that under products. might accrual their accrue to sales should XXXX like our reflect We to where Wayfair, by review

and and XXXX third the Overall, and XXXX. to We the XXXX will million second accruals. quarter in changes resulted in both also $X.X reflect of our results charges XXXX accrued restate noncash

results. our Now to year full turning

As Doug ad mentioned, net sea million and change were year-over-year, shift in in a excuse preferences. our primarily buying -- $XX.X by consumer product XXXX, increased up XX.X% spend sales driven me,

in our would also our to well Doug XXXX. XX% $XX available in ordered As revenue what supply in sold shipping were and industry-wide revenue mentioned, product generated based we had as by higher year that from last our million been of expenses, resulted is relative would Lack resulted rate a on of historical have we incentives lack other in customers. lower product That which have additional revenue. of The increase an in estimate operating impacted financial of suppliers. significantly XXX% of as rebates cost goods available,

is year was Personnel goods $X.X the sold million cost more million of versus XXXX. will revenue expect $XX.X becomes as XXXX. levels, million in to our the or of Cost at $X.X levels costs goods million or XX.X% key our to for $X.X 'XX were versus us rightsized of in 'XX. of were production Gross be and increase $X.X of million good in tell near-normal of in or -- pre-COVID quarter. news available sold XX.X% an that be product XXXX The approaching million second end manufacturers the As will expenses million 'XX profit $XX.X for compared $X revenue operating by they XX%. sales. compared That's for

of and in percentage Measuring advertising orders As the of a X.X% orders year decline million were ended $X.X million XXXX. cost a in X.X% XXXX. in XXXX card $X.X orders versus the credit a compared expenses Bank XXXX for to had fell were compared to X.X% million XXXX. percentage million costs as of XXXX. products, our X.X% $X.X in of expenses, include in though, which to our marketing Advertising personnel versus fees to $X.X

percentage orders, orders Operational As were of a 'XX loss results in in showed million. 'XX of X.X% 'XX. X.X% versus of fees $XX.X a in these

$XX.X shipping and $X.X compared in Including million, profit totaling would loss income adjusting $X.X approximately $X was for $X.X approximately the million pre-COVID taxes of items for net net operating $X estimated million, 'XX, of nonrecurring before loss XXXX. million, have and Our income million XX, ended rates taxes before and that's to been loss in SG&A. noncash million year gross a December

million. charges, losses would noncash pretax have Excluding for 'XX $XX.X been

XX, had inventory quickly increased to $X.X financing of restricted cash, online demand Appliances of facilitate March million In completed As acquisition appliance rising we unrestricted meet the including to move Connection, chose of of 'XX, advance and to buy pending and we million. $X December million of of the $X.X inventory. to million $X.X more a in

million the in from a now included in Finally, hand Favorable XXXX. flow, flow million operations to $X.X -- negative inventory. including cash $X.X $X.X positive cash That's million the Doug. improved to of $X.X million in increase XXXX. back from I'll call swing a

Douglas Moore

a Q&A. we have before I few more comments for open Bob. you, Thank up

strong As reputation our a provides position. long-standing customers vendors a leading appliance and with retailer, competitive

way. are and engaging in levels rising, are less transactional Goedeker's a more order our with strategic suppliers As

to supply support. COVID-related availability, inventory and opportunistic Beyond financial is this disruptions, toward including improved leading buys better progress

certification that of our rise staff, marketing position place and none retail in make telephone occurring appliance training quality in And us in further in best will is One investments the investments in offer These This ongoing the logistics augmented second support are we continue our to technologies to by industry. key professionalism infrastructure we that is to industry. differentiators customer in well. repeatable scalable, to the growth. service occurring a strengths and is and are our in to our process extensive as is sales team ensure

would have marketing we agencies With X through expansion. orders; and marketing date, directed one, in growth our partnered and and decision for purchasing efforts to category the center, We be or our we management gross website are and components market well there's interior more home repeat continued opportunities that consumer. the influencing commercial expand and designers who with business. an and our there substantial to market low-price forward, creating many Three, towards construction, record resulting to vendor all Looking strategy: efficiently to new expanding more advertising market to two, revenue have received, we dollars homebuilders, call increasing opportunity collaboration. our remodels business are ad accredited utilize nationally model to consumers. sales this making contractors believe key intend To

direct with future EDI, forge programming, offerings, to options, vendor continue for supply purchasing, more lack inventory We to product in planning expanded its initiatives customer navigating chain product partners and opportunistic and buys, availability. dynamic relationships closer of promotional supply improved

We here. are fulfillment Four, getting optimization. started just

We series customers, new key to we increase in increase of ride center sea for January, online wave St. begin be the continues tripling to operations lease and vendors cut shipping And initiatives with will implementing are of the quarter, a five, to signed vendors. our Louis margins. second retail. we a a in that speed our will the fulfillment progress capacity. shipping Into made change with area key costs Strategic

and online, their the of Goedeker for long-term produce like billion-dollar infrastructure the We our call and the vision closing, appliances. consumers support I we thank have to questions. I we growth are the that, And will with enough a that changes building our to big-ticket enterprise product shareholders meet for that to building demand. open are shop of that for way Americans now XXXX would as want manufacturers believe to items purchasing demonstrated accelerate support In more

Operator

Instructions]. [Operator

Our Private Investor. is Kyle Gallagher, a from first question

Unidentified Analyst

see a on quarter. congratulations Yes. update. Thanks and for Great call and to the the good

had Just question. a

You think annum. guys on extra had purchasing the And a like interest note correct about rate I XX% inventory. said was me put the something if wrong that but no that per doubt I'm

there? the know should -- along thinking financing far any those merger? things the of financing you there the as say, you I is on there's as the investors' can't and we far color? of along As of but Is I terms mean, certain lines thinkings can types there lines color kind any inform as of be how can

Douglas Moore

to close straight circumstances. would those go the kinds obviously me confidential, is the but deal to structure. nowhere Let structure of The structure deal be deal

terms basis know we're But structure on comment the perhaps but financing. briefly to would that for be a of brief, in you on the So on very don't the note deal the want be And proceeding I if Bob, normal percentage helpful. please?

Robert Barry

Well, demand we very we financing get to had for the quickly inventory. to this an opportunity had rising meet

-- around. we that So just rather took shopping we than

So but by and buying able shopping inventory we pay a it ordinarily, be is to than would to continue distracted higher we around better rate. be not for wanted

So yes, do for financing. understand we're the in what talking I certainly that near about but the it's or is high, anywhere not acquisition range

Operator

[Operator Instructions.

Private Our next a question John, Peter Investor. St. is from

Unidentified Analyst

on last a it John. ACI, late St. announced. of This to is items brief. year was acquisition to in close interested as when especially order remaining get the just sense to is action Peter the relates My question I'm

Douglas Moore

Yes. about this? get any I true able you are with really there. good don't of that. It's I'm the speed to to What say proceeding comment and Peter. Thanks, on precision obstacles talk not We deliberate can again. foresee to to

We I conclude quarter. that an my the I the been just will to comments on before expectation never [Indiscernible] of state, go or that. And bullish on that should any having track. further can't we this around think confident as did that more than call, we expedient continue indicate we're an second end

Operator

a is question Private next Our from Investor. [indiscernible],

Unidentified Analyst

you hear can me guys? Sorry,

Douglas Moore

Doug there? Moore. you is This Are

Unidentified Analyst

hear you can Doug, me?

Douglas Moore

you can yes. I you. hear now, Thank

Unidentified Analyst

you, Thank good. Okay, Doug.

we marketing have U.S. the across and increase, to our products, home in board, analytics that the the kitchen indicate seen with is So consumer related deal I and lot a work the in and

obviously, going this [indiscernible] -- online. and which to onetime So is a for likely is some have stickiness

world. growth that XX.X% were the in What is, the compete question my areas [indiscernible] last of that's you so Goedeker's So that industries was year. the or

Douglas Moore

in market are things, that more or a that The you'll are which reported. one but participate little The -- Yes. the shipments whether ranges, was, in of panels, the those broken a let has couple And luxury of industry stoves, refrigerator, and traditional plus range, between a consumer here. on goods, as a white where X industry it's if negative luxury X and bit go overall ovens, -- we some well. source the manufacturer the that all depending are mostly fell me premium And in dishwashers, and And those again, includes premium and and into of kind products. the panels core,

increases. register small, you don't rebounded of So of and have it kind it declines the classic supply. single-digit bath low X didn't low really with tape limited clarity very single-digit it, but X call could then first, it COVID, really to that a the best it weeks or And the -- a took

really Appliances are for to speak backlog orders. significant big So so in backlog to the where -- can't kinds big don't every don't not a manufacturer a And a not into and you I are. there's big for orders where those It's they're backlog to we at certainly backlog hold retailer, a everybody. Connection. online certainly and necessarily It's of don't orders a really know able really independents. the -- take companies they models brick-and-mortar. go way I on -- typically, the

it buy if You it's there.

in out that because relative X expected range. give you in I or some But It's move too people just the air. order percentage legs, But them read. that's to and want with, are home don't XXX% And things if range I close of indication place substantial remodeling on it's change there the the sea -- actual increase overwhelming that to just orders orders kind in money predictable. what to not thin mean, towards a true improvement There really the I numbers. buy. shipped not it's to we think, come that order, begin be You on an we it's are to it's refinancing. of how or what a base reasonably of doesn't

converting of So it's just on process to increase change in. shoppers buyers thought XXX% Again, from much this that comes is increase in permanent. sort orders probably they're sea that the sessions higher also which at that's change tells anyway, you rate, -- in speaks where a XX%

Unidentified Analyst

industry great about the Thank and how clarification XX.X% you. It's becomes performed a golden.

Operator

question-and-answer closing now We I over the and the for of the Doug remarks. have to will end call session, reached Moore, turn CEO,

Douglas Moore

Thank acquisition existed point. group in the on really near feel with Alex, our working here. you, and our that direct-to-consumer a on-track all going we're to that to future. of and in drives and of superior hasn't to your then, the participate everyone, of -- course, perfect just partnership chain. been at the position, very space be And thanks, really each We other then you scalability towards and on interest areas has we look really the the remarks, that service, position it's efficient of to online just enjoy We continued continue time. the more and around think progress talk strongly the who's business. Appliances appliance consummating And and that Connection. appliances. to see reiterate a to call to Bob listened customer in Goedeker Barry appreciate and them We up company in, to the that our to XXXX the a in very update deal look that And strengths on progress I space, this the forward XXXX want Goedeker in growth is our becoming We myself. strong our we in we're supply growth

and you, this taking afternoon. So again the thank thanks time for

Operator

day. your participation, for conference, this concludes and Thank your have may you today's disconnect and at great a you time. This lines

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