Earnings call transcript Q4 2023

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Operator

Good afternoon, everyone and thank you for participating in today’s conference call to discuss iPower’s financial results for its Fiscal Fourth Quarter and Full Year 2023 ended June 30, 2023.

Joining us today are iPower’s Chairman and CEO, Mr. Lawrence Tan and the Company’s CFO, Mr. Kevin Vassily.

Mr. ahead. go please Vassily,

Kevin Vassily

today and Relations to everyone. on available and website. our press meetipower.com. available will issued XXXX operator, Time. call p.m. should release This of The full now, webcast our have for our earnings is earlier was which access fiscal the release, be approximately good you, replay X:XX By Eastern Investor afternoon, in everyone year at section Thank also fourth at quarter website

open call for we’ll remarks, questions. prepared our Following the your

that publicly time-to-time statements, which other made Do reliance forward-looking risks as from any I introduce also like forward-looking assumptions statements These with Reform Company’s differ undertakes I’d as on only are not Except could place call results Lawrence, obligation certain the subject to Litigation reflected described the SEC. of law, statements is comments in are to and These to are any Company to XXXX. results actual the of required statements. those that certain forward-looking that date statements Before unknown are revise by risks well and to remind made under what cause considered for of conference subject materially call. the filings this these Securities the and or undue to uncertainties revision release are from forward-looking of being listeners the forward-looking Private on this no known Act forward-looking any in statements. and as uncertainties webcast

and would iPower’s the CEO, Tan. that, call Lawrence? now I now Chairman turn to to With Lawrence like over

Lawrence Tan

everyone. afternoon, good and Kevin, you, Thank

in-house demand double-digit consistent portfolio. almost sales was million. Fiscal non-hydroponics driven continued by our our XXXX of $XX of strong revenue reaching growth, record our products expansion of marked consecutive third This the for and year

we high-demand XX% to more year, demonstrating which and products. continued research, develop market up the in-house brands, of our ability to than made the prioritize revenue, Throughout of our

our gained older in fans, our share. shelving particularly home our and category, as which strong category, as We SKU momentum well market of are seeing pet some includes as

gains the Additionally, throughout introduced incremental we experienced from SKU new year.

will innovative segments We value of to to for development create greater customers. the our in continue even new invest

smaller business hydroponics as As we’ve has we’ve product a placed on today conference of emphasis on our our past a calls, become mix category. the portion strong mentioned diversifying outside

revenue. For fiscal other market the categories XXXX, vertical that non-hydroponic will than our and the in as to of Despite products portfolio, within made more offer high-quality XX% accordingly sales up continue hydroponics we invest evolves. growing

and to in Since promising the launching tractions see earlier begun with have year, both our services business we program current prospective partners.

are leverage For to with innovative product those supply in companies and operate superior goal for expertise drive portfolios. we to unfamiliar, growth merchandising have chain, partners who that sales our goods that electronic warehousing home inception, and categories. partnered have is Since our

are still and brand share services, sales the and stages momentum. are grows We excited our in segment to businesses. the partners but feedback forward help their as We this early initial offer updates grow more encouraged look to are by

have we been sales work higher inventory. As through ramping priced our call, on marketing mentioned conference and I last to

fiscal moving fourth margins the forward. gross cost During will expect the remaining improve most goods, which sold higher we quarter, we of

our in given the carry chain, reduce fiscal don’t warehousing on expenses also We much have as inventory our as will expenses. XXXX to hand, operating which improved save supply we

short-term no cost burden spend. excess looking for have leases, longer XXXX, needs of or warehousing inventory, the of we fiscal Now, into ahead promotional high the

strong supply our levels diversifying while of our sales demand on cutting and inventory chain, coupled in-house offerings our for We mix to adding will to continued new this edge all in-house improved product focus continue portfolio, with products. normalized

ahead. deliver well to in year profitability the the growth and are initiatives our on equipped We

to Vassily now will in call I turn our details. through please. Kevin the our to more financial results take CFO, Kevin, you over

Kevin Vassily

variance Yes. Unless is the prior otherwise, year versus quarter. all commentary Thanks, referenced Lawrence.

results. into fiscal me get the let QX So

compared Total non-hydroponic as to demand revenue profit partner, fourth to million, increased largest at $XX.X product year primarily as driven million. greater our our by strong quarter to flat quarter. X%, channel portfolio. for the $X.X $XX.X million, The well was Gross remained the in product fiscal sales increase compared ago

to incurred charges, of was in As product a well gross in and margin goods as as higher inventory cost normal driven mix. sold percentage gross previously margin decrease revenue, related of by higher compared XX.X%, freight XX.X%. primarily was to variations channel The that

margin XXXX. With the to gross normalization expect we in improve freight fiscal of rates,

$XX.X of The quarters. fiscal were sale QX fiscal operating legal for XXXX. the fiscal costs was $X.XX a and driven loss the in to of non-core to related was in inventory loss by aforementioned quarter built-up $X.X per and arbitration the $X.XX higher share. expense or prior increase the to expenses driven same well as in $XX decline compared by million higher million for to fulfillment in selling, marketing million part iPower operating per million as proceedings, Total net Net attributable to related compared The period share, $X in part expenses. was or

largest compared Now, non-hydroponic year and our fiscal XXXX. was partner, well year to increase full primarily greater $XX.X product revenue to fiscal of demand turning as by XXXX increased our to fiscal portfolios. to as Total XX% for quickly channel $XX.X The strong million sales in-house product results. XXXX for driven million in our

primarily increased was of aforementioned $XX.X year percentage the million in million incurred that margin gross to sold XX.X% $XX.X higher of by XXXX. higher with to goods related for inventory in compared margin X% with the decrease compared charges. to to freight fiscal The cost XX.X% percentage profit driven Gross gross

non-operating or core of expenses some arbitration to fiscal the fiscal $X.XX and approximately well incurred per attributable in $X XXXX $XX million XXXX compared net $X.XX The fiscal included related or impairment to iPower related loss was million as period Net million income earlier per share. goodwill share legal to to year, $X.X proceedings. as in

net $XX.X our increase million reduction Cash The at cash June $XX million sheet. $X.X from XX, as equivalents improvement Moving was to operations June compared $XX.X XX, XXXX. compared debt to XX, by the working million in million XXXX primarily $XX.X to compared Total at at compared to debt inventory associated decrease and of to for XXXX. to XXXX resulted stood $X.X in in as our fiscal $X.X of and to driven, were of year driven June debt prior million reduction XXXX. a flow XX% million which $X.X significantly million The pay-down, strong XX, the June cash by of improved planned balance Cash use year. million was in fiscal capital.

earlier, carry normalized forward much we mentioned supply to need do Lawrence inventory we not that As going chain as see. given currently the

our reduce XX% warehousing in Between inventory improve products, savings, goods coming profitability to are feel of to growth As well the positioned we’re to XXth, approximately this lower objectives expect the we our gross cost for as as on the June with of we our execute coupled margins XXXX. compared in-house June brought million fiscal months. to we’ve the that $XX further the of we seeing demand in And down to XX, inventory by successfully XXXX. and

up it this that, now concludes prepared questions. open our With Operator? for we’ll and remarks,

Operator

ROTH of [Operator first from Instructions] MKM. the of Fortune line comes Scott Our question

Scott Fortune

for Good and afternoon, thanks questions. Hi. the

high-teens Just the offerings? for? step normalized as to In different looking I year And XX% the mentioned initial a you’re is past that of to looking growth, than top quarter, normalized, want that much growth drivers growth much more get moving get then your growth growth, return achieve you levels. but sent here? it’s higher segment know and for for kind how to driving business through line want here. of to in in Can into it of that, new sense annual of how segments service part from us stages, cadence new service to just forward the fiscal kind you ‘XX with of to coming the

Lawrence Tan

Kevin, want to you this do take question? me

Kevin Vassily

Yes.

You it of I can you can can add are after finished. I take it to and kind

Lawrence Tan

at to initially. The the we results while. product get and set stage, some a definitely set are early to good pretty up on this a partnership have -- have working physically seen takes but channel Sure. sales a we And growth. time it for pretty up services moved, been a But

yielded fiscal year. this percentage grow sales, like our of believe -- it it -- we later much hasn’t to will of earlier as like in terms a While recognizable chunk,

So, goes keep it the I you which we right now. will how on am updated progress, pretty see to delightful

home, the other pretty with pads, and brands. manufacturers our And the hydroponics in of we introduced all new terms including healthily, of through our of some been categories, has categories than and partnership categories electronic growing

revenue well partnership growth on as more product I think share will expansion, contribute to the all mean, the SKUs both market fiscal the existing coming I new the as year. and in sales growth category

Kevin Vassily

there. a let couple I’ll me -- Scott, things Yes. add other

sure partner, are function year, the they’re a in normalizing a that not that mitch which levels us, of sources fiscal we with am with match sales of slowdown a across The biggest board, end can of match pretty biggest year-over-year we are that couple And inventory sales resumption this inventory. our we which hoping of the channel means think you several but probably of been model. demand. with sales them if that of which across And was acceleration And last that, normalized with start of know wholesale is a quarters. close, is. them has of is have the tap predominant board, partner just who we kind I not seeing model our the for that there kind channel there largely sales the kind So, their into done the to to

to think and one, that’s I So close that. pretty we’re

The working some new would the on. channels second that be we’re of piece

on early engaged with now We’re Lowe’s. very

We are get of starting a to well as momentum. number have offline that some relationships other

didn’t will so, obviously any in you those completely us the sales years. And of have that be for incremental prior

whether business, the trends. that get traction. between growth So, start those, from incremental will to that aside some sales we’re can or comfortable our we of historical us not the reasonably that those we’re two pretty yet of setting get generate services some to And can back optimistic

think other to wanted I one well. had mention you as thing you Lawrence,

Lawrence Tan

Yes. about viewers. we channels, have shops like actually TikTok sell we to mean, launching on I TikTok you directly where as extra mentioned successfully our business being

properly. track. and fast, have about anything one it’s it And running sellers early are the though on far TikTok we been so I approved volume, that’s very growing we been mentioned think And sales haven’t the it’s But platform June. insignificant because But -- on as I that even growth you We of got something seeing think should we’ll mentioning, on of becomes pretty it let have know. definitely that worth we it where once be is be point heavy soon. will we And think to a reached that been that. participated

Scott Fortune

staffing support? And more new ramps the and question, through next that? product said. -- your I us at really service color. appreciate of kind over into offering, to in That’s you have you know Can like I categories, initial and cost designs kind should into bit have that that and require place. a development kind we or robust put do of Obviously, and again product would just size helpful. step cost you’re ramp through of little us the dig at initial pipeline look to step year. new initial dig you partnerships up the to service in ramping to that we of -- ramp new side driving But how from what Just the the channels,

Lawrence Tan

Yes.

this I as servicing. -- like instead actually would of describe more terms partnership In of

the personnel, provide stage, like human do development. Now, mostly. of in product least logistics not our solely in not resources, and on at participate early terms all do partner. -- at participate we we warehousing We merchandising, That’s

new SKUs. structure of no new as costs More amount the like doesn’t while more means changes, additional does work product, if type add we on that it in-house SKUs. our but us, So of new brought SKUs require on work. labor same more own Yes,

Scott Fortune

kind on seeing home of the on just And the merchandising, you’re a the forward. partners how it. e-comm follow guys with What’s and to consulting of coming know or there? service what’s use is you’ve could this Just key key moving offering? goods, and of you kind the and of here warehousing lot electronics that the the for opportunities I up open that, to Got the even potential you, with but the expertise your targeted kind out there. these

Lawrence Tan

results. to manufacturers guys and the partner with where also And trying currently of skills. online these who satisfied their manufacturers online both they characteristics not better Most we came have to merchandising similar shared us have are they turn, been Yes. do of Most in-house are have teams that yield because so in they and with retailers. we

and as consider do We integrations. in We they have side. us this -- expertise this better knowledges deeper channel

to tried. together. they So us. came why That’s we work They

have portfolios competitors times they of than not than pretty has lot not better a While who competitive theirs. can’t good they products, sell as --

that partner realize help, with they like need they somebody need us. So they to

Scott Fortune

will That’s the to perfect. color. the I -- questions. appreciate thanks for I the Lawrence answers for all

Operator

you. for our Thank next Please standby question.

next comes Thierry of from Research. Water question Tower Our the Wuilloud line of

Thierry Wuilloud

good one a You’ve But has call. and you covered client second announced have and afternoon, Lawrence, a second taking you mentioned already? of services, far. you or the Scott afternoon, there Good goods Hey. the ground. Thanks Kevin. a mentioned mean electronics, lot with business home does that so for relationship

Lawrence Tan

Yes.

our online with as We as computer speaking. we’re today of are selling already partners, like monitors

Kevin Vassily

Okay.

yet. of we So, the haven’t as name announced

we’ll where this are But to when a announced do comfortable we So, get point that. who haven’t they’re we’re they comfortable of and as yet. we position

Thierry Wuilloud

second to to a comments the of be in Well, the great partnership you where many first partners with? of working at expect Okay. of the in on terms there. might terms do how Any you end it’s end see pipeline quarter

Lawrence Tan

be going will even But forward revenue The many, are at a $X with we companies will who billion many. partnering partnership be are members of scale. not not

of number sales So, be limited. while are the not probably to limited, partners are the going

get more goals. the to in think through key be that we’ll the sellers my like, revenue we category? is, or best top be X much partnership? that and how of So, the we’ll that’s here I like Are going what

Thierry Wuilloud

question. Maybe That’s Great. one more helpful.

I income some remarks but at press margin I’m to the are not numbers sure net objectives prepared profitability in be and maybe will on on whether well-positioned us, fiscal maybe release the as profitability give the the commentary objectives are? XXXX. and think think your gross how details you at positive in you Any want you those mentioned that to you You what execute rough level? to level

Kevin Vassily

Yes. I’ll take that one.

a guidance, business, is fact So forums that we the -- nature profile pretty inventory the What more that of given a still company. don’t said the the can achieve big we’ve partly of had different able believe we environment, or to have. we that should for to back be give guidance we’re that given kind now build we that partly small to normalized profitability are we prior we that in we the

forward. kind mix multi-variant XXXX not going accretive to does we positive. point some EBITDA at the in fluctuation margins that clearly the net the for achievable can profile the be us we changes that channels was fiscal income a We XX% was positive. through. of product services gross And the And And range. We function So, largely would of that there business. But create -- were were clearly is that that an get had quarter-to-quarter. large the think kind contribution sell some to to XX% of That during of and include reasonably category that a we multiple from year. likely some business

comfortable So, we to we timetable. pretty want give are are that we back. don’t But, a

looking time of income into a margin supply period for margin next where We given prior normalized chain of that be the EBITDA of and are achievable. us levels gross net and our should kind

hopefully helpful. that’s So

Thierry Wuilloud

That’s Thank question. Yes. very very Maybe helpful. one much. you last

compensated will that? to should it net the and you be think the to or at the product, going as margin? services, are up level terms give to get business sell a a How -- that you that -- and how us we are you service going In for can a as How going you sense of will are provide? show is of just revenue be you to you that buy

Lawrence Tan

pretty exact partners won’t to to these the I single in every running one where are since far ones, sizable templates. -- -- different same up But moment, so the set purchase order cut have like we we expect the this term the follow that is At ones partners.

be will it the relationship at very like basic. So, a buy-sell

for... not model, commission a not it’s So,

Thierry Wuilloud

inventory you? like of won’t risk nature And that there be or really anything for

Lawrence Tan

is like and our warehousing from on the What help have transfer, far we channels. we we inventory sales subsequential up unless providing services ownership that so logistics a set doesn’t while

-- partners, falls will us. there really of and not the day inventory risk So the the on of end

Thierry Wuilloud

looking good thanks a Okay, take to to and XXXX. Hey, forward great. my questions

Lawrence Tan

Thank you.

Operator

Thank Sir? Kevin back for remarks. now conference the I turn to Vassily you. would to closing like

Kevin Vassily

Yes. and joining operator. our Thank QX you, year-end fiscal Have for for forward day. Thanks call. you everyone again good We look earnings next speaking with quarter. to a

Operator

This Thank concludes conference you today’s for participating. call.

disconnect. now may You

iPower (IPW) 14 Sep 232023 Q4 Earnings call transcript