AENT - Earnings call transcript Q2 2025 | Alliance Entertainment Holding Corporation

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Operator

Greetings, and welcome to the Alliance Entertainment Fiscal 2025 Second Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now pass the call over to Paul Kuntz, a member of Alliance Entertainment's IR team at RedChip. Paul?

Paul Kuntz

Thank you.

information formal made would webcast on predictions, and the everyone to may begin considered estimates statements be that the other we presentation, like I remind include forward-looking. Before might that call and

While differ on the these materially. to and future judgment cause could subject what uncertainties are forward-looking that the they actual current represent risks statements company's holds, results to

date to statements, only cautioned not place this the which as the are on forward-looking undue You these opinions reflect company's of of presentation. reliance

affect Please mind revise today's forward-looking Throughout information for review in company's revision other results Risk to present that some keep new obligating more important a risks, factors the heading relating events. these itself or these Should of discussion, may particularly company management to statements to Form the predictions. the factors XX-K to Factors. discussion that of future not complete in will of the light the and under publicly also attempt release or any business

this discuss of investor to of GAAP management refer to most operating the measures, Please understand non-GAAP a believes for measure. Alliance financial financial will measure enable better disclosures performance. non-GAAP call, EBITDA. Management discussion Entertainment's adjusted to a each core comparable including non-GAAP presentation reconciliation During conference the investors directly

aent.com. entertainment's at Time p.m. press in A website this wire the of release detailing these is available Eastern Alliance Relations the at X:XX results afternoon crossed Investor section

the Walker. quarter CEO to will XX, over and Entertainment's for the and At operations Your ended Gnecco, host results today, Jeff Officer, second will Alliance CFO, time, Officer I XXXX. fiscal Financial Chief Walker, present December XXXX Jeff turn this the Amanda Chief call Executive Chief Accounting and Officer; of

Jeffrey Walker

everyone. I'm Thank you, you to to pleased today's and call. good welcome Paul, afternoon,

Alliance movies, games, significantly largest With offerings offer arcades, story, of expand their gaming the in collectibles, music, toys e-commerce collectible Brands direct-to-consumer -- XXX,XXX electronics. to collectible is video We over selection we entertainment the retailers and For those world's omnichannel retailers. and entertainment consumer leading our SKUs Entertainment new stock, online. hardware, help

light on retailers, direct-to-consumer our while reinforcing capabilities. label Through we of ship leveraging behalf our their major fulfillment, logistics brand orders

Best and retailers, as We are including well retailers. Amazon, as trusted Kohl's to Costco, music stores specialty Target partner X,XXX leading Walmart, Buy, independent a and

Our distribution network as as Sony, well and and as top collectible spans Paramount, brands, gaming, Hasbro. major music Bros., Nintendo, Microsoft, studios Warner such including Mattel Lionsgate and Funko, Universal

distributor Arcade are also system. North American Arcade Retro We the X for exclusive

the of that relationships of backbone Our extensive supplier product today. available ensuring access the to entertainment retailers and and distribution, and consumers physical make us have selection portfolio broad collectibles media widest

employee in in billion global media Alliance dedicated Entertainment our revenue industry the team the owners. with of is generating billion XXX in leader physical over 'XX, fiscal $XX $X.X

supplier distribution competitive contributing rights approximately scale Our leadership in fiscal studios reinforcing our partnerships We $XXX revenue relationships these XXX in advantages, significant expertise entertainment exclusive XXXX. distribution. and distribution for creates labels and in with music million over movie hold

allows stock more our our XX,XXX over content on reach of efficiently, BXB across and shipments retailers XXX,XXX global both inventory orders combined countries, With storefronts with deep retailers. relationships capabilities. we XX direct-to-consumer unique XXX rely spanning and in long-term SKUs to us Our catalog with major portfolio, serve that online serve a plus bulk strengthening than fulfillment

Strategic solidify markets, new quickly allowing and us acquisitions in streams diversify enter our to played expansion, a industry revenue leadership. role have our key

acquisitions of expanding across assemble and and further industry companies, the our to integrated a over alignment a has organically X the decades, over gaming from differentiator and the with footprint media, shares. shareholders with us company's unparalleled with up, all-star insiders our collectibles. XX% Over outstanding both an physical This Alliance successfully key our remains through collectively position past team strengthens Building experience dozen expertise. market-leading ground holding employees we've allowed and

collectibles demand during first physical CD, build single According X market revival has albums trajectory CD continue surge the with a has now today. months the Notably, year. all also high a CDs their margin the digits. Following selling growth seen of Recording the Industry the the DVD, midyear media is to fans collections of of media America, the pandemic, report, in to demand formats. of digital in market and high consider in its to largely historical we these a X:X returned for out Association physical collectibles by Physical in vinyl,

annual and Nearly through position of alliance and XX managed our These and Mill both Paramount, manufacture, independent of was and unique to license well distribution deepening studios as This suppliers new Target solutions in effect took content --, movie entertainment Walmart with differentiates relationships entertainment distributing market thousands which supply from Distribution to agreements home over specialty retailers. by such X, as and exclusive Amazon, content, major comes with further exclusives and agreement are distribution revenue segment our strengthened that with January quarter as a Creek retailers market. strengthening Solutions home providing partners our market exclusive our the retailers. and XXXX.

entertainment Canada, catalog, UHD of in Alliance expanding media Under format and distributor is leadership now across this partnership, the DVD, U.S. Paramount's physical including distribution. home our and the Blu-ray exclusive

growth the and distribution Walmart, and with particularly Target increased leveraging relationships On -- with AMP fueling physical major side, music while sales. deep X,XXX AMP music self-distribute for division and releases media over been labels labels, stores independent to Amazon, a our artists our strong allowing supporting driver exclusive music XX has provides

to physical content Sony Disney, distributes high Pictures shows and Universal, exclusive us major in video licenses enabling offer and films studios TV Creek formats. including and demand for Mill collectible

American has our nonexclusive Additionally, a revenue partnership driven gaming ArcadeXup. for this distributor retro distribution. we are leadership North meaningful transitioning growth Since now exclusive agreement, the already from reinforcing in

and retail Strategic offerings leadership shareholders. been and and strengthen us allowing acquisitions new into for growth, focus core a offerings entertainment partnerships and Alliance drive value our expand for have Alliance remain as Entertainment's our central markets. partners our distribution. our expand Diversify we content long-term in to to Exclusive

began with video. Bruce XXXX the $XX our acquisition journey Super $XXX by competitor Entertainment, global in distributor the to The time, music leading I Our of which million Alliance at and million our transformative as largest grew sales in and XXXX. from position solidified of D,

exclusive capabilities XXXX. acquisition Strengthening of brands Best gaming significantly In Electronics managed expanded Connect, time In Pictures growing sector The and XXXX, exclusive from our and vendor acquisition partners Walmart major relationships the we triple Mecca acquired Sony with that distribution rights securing the we in by at AM Buy. entered XXXX, Kokam with through inventory followed acquisition, home gaming Distribution Nintendo. Solutions like Sony nearly Microsoft, distribution our business video and XX today. to XXXX from CD

XXXX, In date vinyl an to many Jurassic in XXXX, Sonic This plus like featuring the strengthens hand collectibles knit major Most December Hedgehog, by Trek acquiring presence portfolio its and P&S, market of look collectible figures, Disney, licensed collectibles Harry replicate acquisition innovative robots, Comics, our further the portfolio. designed adding toy. our threefold, our brand acquired franchises more. we and recently, diversified unique to a we Potter, handmade by World, for known of in DC high-growth expands Star products, the

platforms us scale our network, brand this has and improving followed Each and online disciplined of position part same premier the selection, physical of our we strategy. enhancing product Handmade to With significant retailers potential robots distribution approach see and products and across major distributor This retail acquisition operational our established entertainment partnerships. growth. worldwide. has the now by for scale deepening supplier alliance as continued

it nearly $XXX partnerships we success distribution Solutions XXXX, a of has When scaling our content tripled XX its strategy. studio the Distribution million in million to our approximately In and underscoring grown solutions acquired and into acquisitions. has generated with in revenue, driver in approach fiscal worked $XX then, business Since key studios. contributed of the XXXX, exclusive revenue

same that suppliers. operational portfolio, strategy, identifying our we further committed our future strengthen relationship the opportunities, with remain expand we As disciplined evaluate acquisitions and content retailers to and efficiency enhance will

continue drive this long-term confident approach will are We value. to

Technology is more ability to Technology and effectively. customers and to Strategic enhance innovation in driver our savings technological and a efficiency, growth. operations the serve our critical our cost backbone of investments of automation is customers while serve the efficiency, and savings strategic In financial making began to cost enhance our operations, we backbone XXXX, ability investments driving our in improving scalability. our of performance. automation to

This of X,XXX our lines and Minnesota Shepherdsville, consolidate with the to automated One us been workforce, hour operations implementation per significantly leaner enabling allowing capacity, at Kentucky highest in cost in and reducing has impact improved our system footprint. also has optimizing square of has and of increased our foot our XXXX, advanced storage initiatives over warehouse. it retrieval to close process May and us AutoStore a XXX,XXX a system facility storage efficiency,

further excellence. system reinforcing Alliance additional we cost Officer, in fulfillment our Additionally, to call we now products, $XXX,XXX and long-term investments process over installed process. with over automation drive Alliance's reduction. expanding Accounting the position delivered high-growth entertainment the and are in are distributor By the will -- Chief and as our critical categories. These X efficient, larger profitability from in leveraging Gnecco. our I such and as industry. most to OpEx our streamlining strategy also technology, has collectibles operational expected part It This strengthening to electronics, in our annual ability an $XXX,XXX savings improves already Amanda competitive system scalable capabilities hand the to

Amanda Gnecco

joining thank you and Jeff, you, Thank all today. us for

ended XXXX. for an We the will of to results company's turn now and XX, months the December financial quarter second X overview

$XXX $XX XX% financial steel $XXX.X physical sales quarter product generated $XX.X Gross net percentage the our million compared to the million, surged UHD for margin results 'XX, $XXX.X to fiscal XX% demand grew year of reflecting year strong a XX.X%, to were sales and and in while driven Vinyl prior promotional million, by year-over-year margin activities. collectible for period. book gross in mix XK dollars revenue Turning with to for movie QX million million we additions.

compared year in noncash revaluation QX which EPS the year-over-year related QX and $X.XX 'XX. of ongoing per $X.X warehouse distribution to million liabilities year was fiscal fulfillment million, expenses income benefiting Operating to warrant consolidation X% XX%, a with fiscal includes $XX.X down $X.X and million 'XX for to charge declined million Net This by share. from initiatives. costs automation reduced $X.X

prior net increase was the Excluding income million $XX.X charge, the to an Adjusted EBITDA this in compared from $XX.X have been million $X.X year. would the prior noncash period. for year quarter million,

the XX% half first sales fiscal movie of million sales year $XXX Physical net totaled the for was year first first the half percentage vinyl 'XX. XX% Gross to For fiscal year-over-year $XXX $XXX.X X-month increased margin $XXX.X expenses $XX.X to operating Net the grew for declining million. in revenue million million. XX% to $X.X million, compared period income 'XX, fiscal to was year-over-year of half XX.X%, year XXXX of while million. with

$X.X was ended at As million half mentioned income for year during a of Adding ago, of have quarter. $X.X moment XX% XXXX million in $X.X year of second impacted a an income increase warrant million XXXX, half the charge would the first net noncash back liability, net million first fiscal the the $XX versus fiscal by year-over-year.

$XX.X in came from million, an $XX.X at million prior in EBITDA year. Adjusted the increase

reduction $XX last our We financial navigated our enhancing compares $XXX line further availability million, slide our dynamic our top This sheet, years, $XX from performance from trailing liquidity $XX showcasing several XX% months our million to how debt adjusted revolver to also improved to we've in million environment. continue reducing a financial and strengthen XX balance balance This the year-over-year. million EBITDA over flexibility. to

during drove peak to pandemic surge of for fiscal billion billion unprecedented and COVID-XX that And demand in the normalized a our top an year to Demand revenues 'XX. adjusting Following has fiscal 'XX line year $X.X with XXXX. $X.X in

'XX, quarter margin year trending EBITDA second our at billion, now As just revenues are is trailing X.X%. adjusted XX-month and our the the the of our $XX.X EBITDA at adjusted higher on of end $X.X of with fiscal million

reduction. debt balance working to continued strengthen sheet. disciplined our financial to capital through management Turning our and We've position

As million and year-over-year ago. million, from $XX in into million $XX balance million an facility XX, our receivable We we had $X.X of available cash. credit ability XXXX, cash of convert December million reflecting a accounts reduced and $XX balance inventory $XX to revolver our to up year by

levels $XX.X Inventory aligning to seasonal million trade cycles. increased million, $XXX stable our sales with while receivables at remained

the growth million leverage, $XX.X Our foundation. million $XXX.X stockholders' with total fiscal compared XXXX. to at liabilities flexibility stood and improving solid million disciplined strategic at year with initiatives end of a in invest $XX.X increased combination management liquidity us financial to to equity while expense of The provides the reduced maintaining

reach our low-cost future, continued growth industry. strength provider leveraging As as we capital-light look to the for with poised unmatched by a is the Entertainment Alliance in

growth. strategy Our expand remains improve and share, market margins EBITDA our drive clear:

ensuring we to in operational while committed cash disciplined profitability efficiencies. and First, improving expenses managing we are flow generation, remain

continue Second, -- our to and the as and -- our home categories offerings high-growth reinforce like exclusive exclusive of These position launch by the media. our collectibles expand partnerships. demonstrated by content in we moves premium and robot product Paramount strategic physical acquisition entertainment

Third, while we our growth XXX% are revolver our a by This positions on year-over-year financial million foundation. reduction opportunities the evidenced strengthening increase pursue availability. future sheet as in us balance in the flexibility balance strong to focused and maintaining $XX

deliver opportunities place, confident shareholders. value our in in execute remain our we and With new strategy, to ability for these our on capitalize long-term priorities

continued key of positioned and physical sustained beyond. family-owned are ahead license out. -- in the on the and profitability large movie success With a sheet, looking and balance and sell catalysts or excellence, rights. operational half studios are second increase companies to for competitors The and we stronger are significant. a focus aging group media are well opportunities XXXX

major on license ability capital-light core on opportunities as integrate the physical distributing their leaning in -- movies content and focus from focusing with to sets with their video allowing These acquisitions these apart core competency us media. premium theaters, streaming while be providing competency, home services, us of to our model, studios focus studios Our and proven Alliance. we, doing our will on company, competition. packaged combined on to making downloads a their movie exhibiting

to the strategic profitability about now confident hand ahead. Operator? to excited and session. are over that call our initiatives the we're in quarters and We begin to route that, and growth ahead, operator I our years back drive will the like With future the question-and-answer would

Operator

Instructions] [Operator

phone One it questions be there this Paul. at will I moment, for the please, moment. pulled are hand no to -- questions over back

Paul Kuntz

operational And questions, on we few entertainment future webcast Paramount. and does our elaborate of home distribution this the first position Alliance your impact growth have space. partnership can for do in a you the financial with question, deal How expected

Jeffrey Walker

want the Canada. and excited opportunity we websites of is front where steel physical focused not as media and and excited store Walker, at about also physical partnership and we're the States to a consumers, company marketing Jeff try the of And are of really that and And def point product. licensing catalog on new paramount Pictures, at for going continue about only great alliance business. Okay. to with Paramount grow of the Paramount really -- partnership home. the to This leading on BBD Thank under to opportunities be in life but media this retail is is this And of as sales we're you, have own shelves, for extend Alliance, new on fans because includes well this new Paul. book. their our longevity and get ultra Paramount, super for having product for promote an DVD which the physical we're the able of us, here this all CEO to on we the to license Alliance. United movies have We're this I releases. throughout collectible favorite the with high to And distributor time. DVD perfect really format,

-- be for big it's opportunity here. Alliance, to It's a going

was is in street is a X, One of theaters Gladiator releases date That we December. which first new the coming March which the XXXX. here units of significantly that coming financial up which XXX,XXX the here, in and have X, we forecast will marketplace ship our of up impact initial QX has into an have profitability X, in for Gladiator here shortly of

Paul Kuntz

Jeff.

foresee with handmade session How webcast acquisition broader into Another do see do brand is opportunities And of catalog. for we entertainment had. strategy? you fitting this exciting. cross-promotion what robots existing The your collectible your by you

Jeffrey Walker

Paul. you, Thank

me, by love For robot the the AMA brand. love since super I about excited I product. I'm

black vinyl that the and is licensed to it with It brilliant. think it's paying I product look like a is made then Having in a we're is that sorts blow product do and robots. different special doing and can originality character of they're glitter. are the collectible. colors, with light by the There's dark different all variants additions netted the we and of designed that and

other it The in I component of it. name the that fascinating find of the brand is

launch out with significant a will new in make. would this them exactly and to a over robots us. look great and on give by example robots -- spun did go in where of well designing the amount what movie going fourth we world, characters are is I new robot XXXX. a are for robot a today's have coming process We to as a There's platform what and made upon -- the just start by movies house account that in at this right a all market for robust we it's fits sell of And that as made here. there's quarter. and coming we're Instagram in And have and quarter. and an And right going good and website characters in midyear pretty robots it now. brand We that fourth movie do. go, It to we a their is now licensing for Robot's everybody acquisition by in I'll out here It's the to along paramount, with hit

coming platform. is it manufacturer, opportunity also We're from great out over handmade it's aspect, a products deep so robots. and higher-margin there, really then financial as for format the a we the within not it where video distributor of that forth about excited which years. forward animated just and and where the collectibles -- us more towards last part go product movies. higher-margin into license have and and fee we one and key next that changes very There's that the year, from move later licensing and within to we're So initiative games, connection a to It's are there's helps just a to the get products is by some few this

Paul Kuntz

making another a an were And for you it Can is give we you Or question when looking have from us instance? Jeff. the the acquisition? Thanks, for of sense multiples of EBITDA, webcast. metrics

Jeffrey Walker

own every It's opportunity. it, lot understand who People a I story has its variables do Well, different acquisition place. to go acquisitions, of own its that. there's into that

We a looking several customers today. at a are and then acquire us, to costs. opportunities have also And we sell consolidation as products looking acquiring where strategic to overhead selling always And that company out looking opportunities also well. component bring definitely earnings. existing can acquirer, we're acquisition we something key for products to to the take is to our and/or new as And at our customers. in for we're

We were the to of in are additional able lot we very acquisitions capital. lot a capital over do our working without a years of of prudent use

combination very Alliance enterprise a to an to the a acquisition of us profitability of for forward. it's good for overall value lot accretive of bring be -- will So going of #X and there. look different to good channels is going things and today that's thing The

part I at here success working also and pretty at Alliance part but an and same acquisition it's experienced businesses of acquired, at company, do good have looking we that what most opportunities One to say the the and knows biggest and formula And of the part have that very team is on together an acquiring standpoint, fantastic like. So that. think Alliance X acquisitions team all of acquisition. each participated integration we that the looks the how on together a that and acquisition the is the after of everybody from in has -- a that, scrutinized a we will a X important the I have is aspect lot individually of team that's of

Paul Kuntz

you efficiencies Thank plan of you, can additional margin direct-to-consumer sales this question, be reaching leveraged with channel revenue, drive to Jeff. how further And and optimize to expansion. what do next gross our XX%

Jeffrey Walker

inventory our give we available And from warehouse that's in you have XXX,XXX Direct-to-consumer sales consumer so on the drop with as it we on formulas -- that risk. goes and sale SKUs of many Kohl's, great And cages major product. and Amazon, websites it those from that Buy example formula we've I Home their are eBay, names product ship to Depot, And at all we X get that's is, that's had how our for as see the on of Pac-Man warehouse if that coming selling different we eyeballs our no alliance go get forth. Arcade, know, in as for on Alliance. stock operate And for a we Alliance. winning retailers all have getting of -- search with the it facility. of you'll through success. sell Buy, Best ago, available model. stuff were direct-to-consumer. those warehouse. that possible winning on Best definite picked through Arcade to And retailers. here through able when good company that, Walmart.com, It's all we many you love the those up, in Arcade They're X. say a our to reason all it Target, Google They acquired years you retailers Wayfair all this big Dell, as And I'll that a That our X was the

the payment did is by I made down say that, straight went one path. also we we as we acquired will as soon robots same and with

store in and that's kind then there featured when have out a that, on do products We warehouse and And to product do and websites want that's stock forth. as sure on you also now, every many and in the our so making in available world. the you is focusing a we're of SKU right within -- store

well hand e-commerce as it as brick-and-mortar made putting stores. we're going to on drive in so robots by through And sales

Paul Kuntz

sustainable by these another reduced question, expenses initiatives costs pipeline? the and distribution are in automation And are you there successfully and how XX% XX% reductions? operating by further cost And Great.

Jeffrey Walker

off, first facility warehouse Well, our primarily big is the and PLO just team we Wawas fantastic have in led Kentucky Champonville, there there operation, fantastic. by a

they're things, more team instrumental cost do all and efficiencies So of we're driving ways on constantly how how on that. in we working efficient, is different improve sorts that to aspects and

So see that. we never an end to

We list to continue things forth to that efficiencies and and have focus there. a project add we to new so continue on

So big things was we savings we the as forward in moved continue significant way go warehouse. have a pretty of out did the of we at to on a see and our is savings. operational Minnesota that going all time. focused team that warehouse our -- to because so as we're the But looking just benefits

Paul Kuntz

how Thank in -- X movie to consumer And sales do capitalize seeing physical on year-over-year Vinyl gains have the you, question -- like And and more both media? the in you looks for Jeff. plan we trends posted strong have demand are queue. momentum? physical what you

Jeffrey Walker

very question. that and good we're I doing here. even seeing well a cell, -- it's movies We're happy CD and vinyl

have of has business. I -- into leaning the may collections on side don't patented are collections, call end is. that an buying that towards things think people it they all people have we or whatever to and is movie -- robust and collect people of we're they and enjoy we something in robot looks consumer have collections probably that. what we really collectible buy it. DVD points vinyl see And that that And And collect this everyone really seeing we're and they really, a collect. people And

there's from all everything super Vinyl is talk when Amanda then look of in hot and And And we the book. So a a what is item. is you that lot mentioned it's collecting new is, deal -- video, vinyl DBD steel the a artists is buyers at that you box -- even in collectible case in. there. a vinyl particular, mentioned the

example, So at take version or at you an Topgun favorite that movies have format they their it's at a Fortis you look And at in are Paramount in book or more you -- as people steel titanic want look form. collectible house look gum look when a those those you to and want. people's

their where that we're steam. drive got we movies. is few that And they've of in full And in heading think then that's middle favorite is to all So the obviously, we're of square products. us And DVD collectibles aspect right added I Amay and their over -- collection about to years. what's going next continue forward collectibles side the going the physical now. robots

Paul Kuntz

the with? Excellent. And Jeff. audience you, final Thank there Are leave last the that want to comments question the was in any you queue.

Jeffrey Walker

XXXX. overnight. come to been in half time. final excited the conversations with long to of handmade by can working this a acquisition fruition thing guess is active some like on we're in super I is a I'm for first about agreement year. the us. We've today, that The working robots been Paramount initiative that of happen an for things on working huge some these on doesn't X this And we have We've

to going XXXX we're as XXXX, end pretty and what going where we're able on up nicely of bullish sets us it accomplish we're So here be for in well. really to

long the over we've pretty year we're and we've XXXX. today. where of great job way, a We've with a at happy come So done

Operator

This concludes today's teleconference.

at time. may You you disconnect participation. lines your your this Thank for

Alliance Entertainment Holding (AENT) 13 Feb 252025 Q2 Earnings call transcript