Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Polished’s Second Quarter Earnings Conference Call.

Please note that certain statements made during the call constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These statements and uncertainties are described in the company’s financial statements, press release and its filings with the SEC. The forward-looking statements today are made as of the date of this call, and the company does not undertake any obligation to update the forward-looking statements.

to call like CEO, to now Mr. would turn over the Polished’s I Polished’s Mr. Bunka; CFO, Rick and Bob Barry. Please ahead, go gentlemen.

John Bunka

last committed Good morning, been our hasn’t the call. We and thank you that for long with regular communication to joining It call. investors. remain since

wanted questions. we some provide we briefly results the opportunity color and last night to give the to that so And on posted ask some

quarter in context call do to Bob second results hand on the some provide the off greater I I’ll Before discuss detail, results. the to

Similar X that the our drivers declines comparable the main second first was were Polished, categories businesses. to quarter quarter, of first quarter decline were the second our characterized the the sales performance These net both to experienced are largely by now headwinds. luxury experienced declines quarter similar Unlike at the seeing category core we a though, the and attributed in appliance. in to mass appliance

the business to continues team Our strengthening focus stabilizing the and foundation. on

As more normalized our with deliver volume. positive on EBITDA we and second demonstrate reduced that the quarter margins can results first quarter,

to and take those steps underscore on steps some and of are last moment we toward spoke I’d like of to that the we that the have call a taken taking reiterate the goals.

into Bank defaults entered and loan. operating loan of we reestablish bank operating a banking waive by our technical specific First, for America, amendment the group led with would under which conditions our

the our marketing performance advertising to on generation our to leading focus spend to investment us marketing continue particular. improving on lead pay-per-click with and help company’s engaged we with in and agency Second, and digital return improve respect a

and and activities efficiencies, of the continued steps consolidate including improve our to distribution year. warehouse have consolidate reductions to end headcount Third, our the enact single the to expense a by into reductions we operations

qualify improve – a liquidity. conventional customers customers, and Fourth, implementing not the financing to provide addition some who alternative a credit, changes leasing for we’re label that including options for additional phases card final improve private made do payment branded processor to and new in our of in credit we’ve additional

prioritizing Fifth, appliances including where value-based as which higher margin, we’re produce mass specific market opposed small categories appliances. to –

we lastly, by improve of vendors sell of products the terms we’re several – our with that to actively largest terms And and negotiating are operating under.

that, with results to financial and the to I’d to some like forward Now color the projections. pass about Bob the call Bob? talk give on over

Robert Barry

Rick, Thanks, good morning. and

For the XXXX. to quarter, quarter sales in of $XXX.X were the compares that million second $XX.X and million

cost. and any compares margin at our in margin improvement Our emphasis pursuing second is $XX that gross at million XXX over of $XX.X on a growth result versus profit margin and gross profit to XXXX. percentage a gross was revenue quarter point XX.X%, of XX.X% profitability basis rate a the This improving of of in

million to million. Operating advertising largest expenses were for The of $X credit of and to down fees million, the $XX.X bank $X.X personnel $X.X million $XX.X quarter items expense in quarter card compared $X the second were G&A of and XXXX. million, million of costs of

per diluted $X.XX for shares EBITDA was Adjusted $X.X a X.X%. margin share, a XXXX. that to with $X.XX Net or and common of of compares $X share income or $X.X diluted per was quarter loss the per – for million million common million

XXXX $XXX single-digit EBITDA As million conference call year we are having for the look of forward, $XXX our and last million full and low in the provided between we guidance reaffirming revenue margins.

rolled mentioned, One card. a a a estimates yesterday. rolled of we for store-branded is Actually, our our of out, we rest that quarter big the company. typically year, as QX credit things. making is couple for the assumptions and We In out very the considered Rick

We May. had haven’t one since

XX term XX a charge. million. Pay Citizens of I credit at months us believe, same special good are the normal and they That’s on would a financing a card using, for pay and is offering days we for, $X rate rate we’re card our no And interest

expecting our We’re improvements our marketing in marketing of consultants. – results

customers alternative Leasing are will through product. leasing progressive credit, And finally, conventional and financing us that Progressive qualify the that we for out not be do with of rolling an helping marketing

to So I’d to turn it like with those comments, Q&A. operator back for the the

Operator

[Operator with come Please will Instructions] sir. And Landry Capital. ahead, our Eric first from question BML go

Eric Landry

questions from I’d to the deposits, past about generating for generate balance that to opportunities, we there’s answer cash Good can been nothing about that like I to seems the the if vendor cash. there any, do and some morning. in know sheet. be there’s talk the

please assumption? correct or So and expand could if that whether Thank you. a on you not that’s

Robert Barry

I’ll this sheet with we’ve rate and question, the we do sheet the looked the Bob. of to handle cash balance Eric, swap that transaction, on nothing no, we at agreement. is closing raise loan have could that out by is balance interest the Actually, required our exception which

mentioned, you accounts account deposit is primary our the pledged at our all secure to All DMI, vendor. payable of – vendor as the

reduce So use on there’s to the could sheet that use nothing monetize can that debt. to we we balance –

John Bunka

and free would of product to and the the turn improves delivering been buying business carefully lead our and is selling The will is up it. shortening having I Eric, of color does and reducing it that, give and cash. have inventory, That core only from time the inventory and that we aside levels

right liquidity. it’s narrow a the And time. of year, product. some reduction naturally efficiency available become we will team – housing product program for for us done provides is period, the year And more sale. can available of this at last we much capital this which inventory, Over have generally going but our We now, you’re see were so efficient have priority to working

Eric Landry

Okay.

million no do with have by the deposits, is matter some that static chance higher how is? your still Or if $XX in number vendor you big inventory in inventory to the a future? So up grow that go will

Robert Barry

the And them. we mentioned, use That accounts DMI. the secures That them inventory. is vendor, number we million is with not $XX related primary as – payable our that to have there, was I

– and is money it we amount grows we balance and earmarked, rebates us accounts get by just vendor, as allowing increasing, that the as deposit that by others, of grows by to from have. payable increase that we So DMI

to a improving that to by thing to But Rick So about cash number. extent, – for pocket mentioned static is having our accounts add not out payable. flow come And one that we are I’ll of the and inventory what inventory.

some to have it working We’re be carry not from that vendor source to would fulfill with facilities. our We a product. might They – it. would to their able of

which we’re our to – we not signed on, We’re would working free us a contract but and something reduce enable have inventory. not up

a million from it we looking can that are And over as $X year-end. we that is reduce at something down Inventory little is always how to number.

see that the Our about inventory range. XX I’d love XXx. traditionally XXx turn in to to runs

capital So It’s of simply couple working contributing just DMI. are that to to we – can’t get working not there purchases make we’re on. things we Vendor a things the the pay touch. those having is deposits of by from one for

Eric Landry

Well, profitability worthless. sheet, Okay, guys here’s the what you careful know and I current current have the the of the about be to deal. sales equity balance you level company’s with is all right. At say, but

to next X for lot needs of shareholders survive. over to X done work a in quarters be So the to order

survive you detail going year? go there past it of into any next that could So way August how more about is to is we’re

John Bunka

it’s previous the and call I’d meaningful. reiterate I I as it, said Well, on think

financial for the financial a results to this is operating retained every become about have an standing purpose on the to for We more based opportunity This specific improves that us the company. at establishing threshold adviser look efficient. company all EBITDA of

have we improve the become going our of our cash now that’s shareholders. flow. to this assist through and So to that and is operations to to focus That’s primary that, – focus us, right process evaluate engaged to term all and value will firm long a create – that’s purpose just we’re our

Eric Landry

the of be much idea going place? the have that’s save Do you any What’s you’ll how to in warehouse consolidation? cost all once savings

John Bunka

headcount looking it are move we We pace The do between it the still can savings come we the as, not is from carrying duplicative primary said, ship savings to primary having it. to not I and again, warehouses do improved. to and product at that think

this isn’t efficiency. it entirely expense an improved as is – it So isn’t reduction

to and going reductions both we’re headcount So rental savings. see

that will markets However, be DMI, to be be we in both next transport the be our within England – Long all we York, improve marketplace highly in it to New able and the very our well New the and Jersey, of as terms reach we will will Connecticut, efficient speed New objectives nationwide. as primary will in markets Island, efficient

So these are facility. all operate to by out of our ability be to single going a improved of

Eric Landry

but in the $X.X you Okay. were professional year audit the without at in million run quarter, the What’s only March rate in fees? What quarter fees million for is June million for rate one $X.X good June. professional a fees, and last You were one-timers? run $X.X

Robert Barry

That’s a very question. good

on. lot for quarter. going it months, professional million – of in had was fees for $X.X we We things I the have the a would – X

several think number on, initiatives we’ll down. we’re I got, There will things that we’ve winding are gradually that working several be come up.

quarters us per down X assistance we’re million, for X, several things from quarter. on now. that hope, that’s outside maybe here in have gradually, before we cards right to like I honestly, another the $X.X requiring to X But down would see $X to I but wind think do million don’t we from I legal working

John Bunka

we if as make in going to we can callers was many address of too, sure time, possible. the I Yes, as say interest

Operator

with Please Instructions] [Operator come from Our [Jay Street question go Partners. Stone ahead. next will Feenberg]

Unidentified Analyst

the EBITDA done the margins It gentlemen. great X% least by morning, year? a in next say, to What going to, direction. Good take the looks it like getting would job say, get ship mid-level, you’ve at right

Robert Barry

that numbers we year. revenue looking we’re this for, say would I the for achieved

low single about talking We’re digits.

revenue we expense XXX to going the say would Rick for get employees. our as that our October, almost margin at in We and margins costs. can I above look would forward – think we when that EBITDA with I more more arrived revenue. had improve fixed example, I structure, cover

of slightly under now, As right have XXX. we just

control and we our we those, time, costs So to revenue at same will cover looking expenses have. increased and allow the to fixed the are at that trying us

hope would year looking a I in the that EBITDA in you’re time talking about be having mid-teens. margin next an we’re range the call, So at we’ll this that

John Bunka

costs working that through about acquisition at primary said and onset, I Yes, upside. challenge has expense the been considerable – And spend. but talking structure, been process the our Bob’s And we digital has our have through the

advice we revenue cost been XX% can external about. XX% in are and meaningful, leverage where significant Google acquiring see of a occur anywhere obviously, should digital because Those spend. our overall improvements the the produces spend our talking will that in that has Bob’s is that improvements and from customer to gains that Our we the

concern a both in experienced efficiency been the months for years and the seen X I’ve have of has it you to the in And that primary in now industry talked our X, that productive decline as spend been we’ve past. now We that’s can cost. not acquisition was revenue. – of see driver significant that a as That’s

at that this spend, yields So the look even going cost gain though will the of you’re productivity, it’s really to debt made. the the marginal be

is the an step getting So to in important be making spend we’re going there.

Unidentified Analyst

Very is good. XXXX, of the the past I Since sometime went of July all guess, Connection, Appliances was even acquisition to it go restatements Goedeker that or completed back did where back June that? and

Robert Barry

XXXX. had of in audit acquisition That to continued Those ‘XX, and statements be It had then into be back was to restated – of the started and restated. that the XX-Q with ‘XX. June the the started year-end QX to

Unidentified Analyst

Okay.

So at done the has any that guess, and name. current the not was, management Is noticed investment in the sure I’m the impropriety the really it was there I at time recognized? ThinkEquity what bank, or time, auditors

Robert Barry

We reaudit of this and the that. things needed that statements improprieties had financial or the But not, course, ‘XX. into did to get saw we into year. correct, get When had can’t really X, to we can’t audit whether to that we we in I we felt I and that. do ‘XX,

just... we So

John Bunka

and the there X the was meaningful period, of most fiscal Well, matter matter to mean, that one – were adjustments other most ‘XX visibility. hindsight the was were I of a made the a X and stocking. process it’s

we call to of then method in and that the far we on we what was made were it from audited. as and they have scrutiny process recognition as I’d changes able back accounting applied was took and ‘XX first great The revenue the

call change process that’s recognition, delivery. So we we And is I in the which shipment. employ, last standard of on conformity was should have said the to really for the which recognize on revenue ‘XX revenue We have. on the

we of period. from, we’re on if way that should goods took through be and shipment standard. all So credit to we’re the back. adjustments taking we’re there revenue that’s we’re the that testing goods, time And – And charging cards that and producing and producing applied

so of second audit, a returns. you second, our was just second with return see no process them of there – both, the reserve. was the yielded visibility time at of And first the was need hindsight can forward the the a return for And – the percent, there

So consistent that added with the doing again was all tried sheet back it return are balance make today. to reserve on what we and

Unidentified Analyst

shareholders. point who a of a litigation management didn’t Is investor potential case, they general it like to And management value accepted current to the fiduciary view, to an seems basically Is decimated them going accounting if the previous of the company? responsibility the follow principles. there From to the have people hold against that’s that? this file

John Bunka

that know to has we steps we objective, this that I for hear and question, today. toward your any a have has date, that hear There made but we – think management been, your question. response don’t not I that team

Unidentified Analyst

hearing Understood accepted followed falls the guys it, And shareholders when generally you’ve essentially office, acquisition And lap. starting occurred, currently somebody principles your is in the have you taken position to accounting shareholders a not responsibility in them it you’re responsible offense, this if but previous stock hold XXXX no in accountable. had since management to that to the own fiduciary today.

Is hold hire received you from shareholders accountable, to company there offering? the previous is? disappeared. you a into money that responsibility decided hold its basically to Are – accountable, them – management the management, ready look And for secondary to them representation management. to legal the fiduciary firm haven’t million law The $XXX deserve previous from they

John Bunka

Bob that, do – Bob? not say weren’t do they with number hairs we How split you, of generally And guess, are trying following could things you I I Bob. guess practices, not said a – to. accounting hard that we clarify take I’m accepted how to – but we that exception to didn’t you

Robert Barry

the adjustment, returns The at some questions where are time other sue. Rick was back that see hindsight we to mentioned these year What available one was returns. And XX/XX. look a issues, them I judgment the the case the We had whether some of of of should that’s can’t to go calls. to the and whole and answer

have We under They’re D&O the insurance. insurance. D&O covered

sound answer we’re don’t I a to question. lawyer. to I I’m know So honestly, pollyannish, know. what Management but end, not back. don’t I – don’t not that and the looking want to

and trying to we forward looking handed were something. – We’re

We’re it. working on

We’re forward to trying to make it better and go from here.

come – back we time We of business if the for grow anything. think continue the that’s If from a – I’m recession. not where to stockholders. can looking the the in personally, given But to value ship to – the retribution will right and midst or we here I’m

it. want I is. got We’ve my view. view. view. the board’s I I change forward. So back. – that’s look Rick’s That’s right. can’t think what don’t my That’s That’s view. not not it is I to to want It look it

I number, GAAP. the was XX/XX of $X a and to $X reserve following hindsight’s adjustments, returns are these reserve million. some big mean, But million We

John Bunka

you active And there by that holding can this addressed shareholder us forward. them respond hope team your to be go quite fairly I as that’s And in seeing in appreciate question processed is you specific be and as will was we is cautious the that. accountable an And to – will why manner described? management how that. action be But we for and you’re

Operator

The go will with Capital. ahead. from question Tiberi] come next Rebus [Steven Please

Unidentified Analyst

and Hi call. for taking you Yes. my thank

back that especially tail consistently looking the for so turning I very congratulation and intention because with you litigation, I thank of stuff you a the grow when to evidence that. around, kind that. are that, careful Also, providing sometimes all, things on you do you be kind mean, is are of that head First agree and of – want cut like to the costly engaging out, is process. got That guys

guys. I that on it applaud moving something is forward, you So

people back with of guys this working is, question lot lot on, lot a competition gives My company, And right out the win? and address, that gives are track, on through there. There’s on of a getting the customers to right to were there’s a guys This missed. acquire step on a to you in the now you a that process win what simple If digital, guys trying summarize of opportunities you honestly, people everything question. you what of right? can market trying moving So lot to that. is It forward? very

John Bunka

What educate this does and and purchase give quite I is very expensive it question, appreciate extremely about confidence well That’s question. the we and consumer that is complicated. often in a don’t our company talk a great

today, With that your can the the to is home, daunting they’re and the people appliance their specifically to local It’s actions quite find beyond difficult. of very informed experience – outfit in selling. product the be know shopping industry hard number decision the items

So this the we’re may that my for for I other know home? and I are have yes, available. option consumer’s constantly challenged them what vendor options We with, but

to an have retailer through of find a halls the hunt don’t to You big-box expert.

available through them we coach We’re this and process. can

– it’s replacement we immediately well someone experience and as So consumers can help want. important that’s that is decision available. something best what very we experience in experience. our when our the have expertise remodel as that their both we That’s And through process

from purchase replacement reported back historically units that available. longer many no what in What full difficult in is toward has The today a or as those because or the is shifting kitchen discontinued replacement cases, were units percents industry the remodel been on is shift whole units. are kitchen

expert an is. you what you and criteria the can that your is is choice That have our you meet need the really to where process. find make the through you team home So something within advise

that the is sales talented, is asset and trained available on company. distinctive a the that of have call, force We

Robert Barry

to that because separates what won was, me the being website’s that best website, to website to. go awards us, add Rick, one too the let for our thing question the

I think U.S.

was that last made one award. BorderReport and the an News

So that’s another distinguishing feature website. is our

Unidentified Analyst

a because the they about of there digital, right, on that’s lot the a the a good kind point decision say, execute a is consumers lot consumer of online XX%, of I the and XX% would new lot then new say – Yes, is make I of where XX%. would of last now generation or

also putting easier kind where So looking all like experience that’s think was and make that the the capture I your more guys was you are to about of answer I effort if for. customers to you explained, it

my so So thank you much for taking it. Appreciate call.

John Bunka

for you Thank question. the

Operator

I concludes over go session. back question-and-answer Bunka Rick This our to would conference to any the ahead, sir. Mr. like closing remarks. turn for Please

John Bunka

call. our Thank truly you and and next quarter. next with results the your We post appreciate in we’ll the being support the forward and continued time to that all timely for all joining on look financials

So thank you again.

Operator

The conference Thank you has now attending presentation. for today’s concluded.

now may You disconnect.

John Bunka	Interim Chief Executive Officer
Robert Barry	Interim Chief Financial Officer
Eric Landry	BML Capital

Polished.com (POLCQ) 15 Aug 232023 Q2 Earnings call transcript