CAPC - Earnings call transcript Q3 2017 | Capstone Companies, Inc.

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Operator

Greetings and welcome to the Capstone Companies Third quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. And as a reminder, this conference is being recorded. to for conference Capstone like Gaudet, to now Secretary Corporate Companies. would turn over the Aimee I Thank you. Please go ahead.

Aimee Gaudet

Thank you, everyone. to Brenda and good morning,

On us McClinton, question-and-answer Stewart Executive the third followed quarter will is by President, well the on call Chief as strategy as and outlook give be Wallach, discussing Officer; update Financial session. Chief Capstone’s Gerry results Officer. an They and today and

release at If on that not you the was available website have it the yesterday, company’s www.capstonecompaniesinc.com. distributed is do

are in which you make uncertainties statements to As to factors we aware, forward-looking results materially apply and actual other differ during may well are statements Stewart. to These Commission, Exchange from sec.gov. that capstonecompaniesinc.com to today’s are the we could release by as risks With are earnings presentation. well turn as filed documents future that factors cause at events, as over subject the can Company where These with you, Securities as the I'll or be found today. outlined the in which and our it

Stewart Wallach

going Aimee. I'm morning has with head morning once so I today. results. us bear Thank record good time up Capstone I a your apologize of with to appreciate you, report cold please I've everyone. pleased am a to me. you, bit that front, Thank got to that again yielded

be first resonate three XXXX as is products to XXXX. performance of in end ongoing record and planning retail have in strong is the our its our the to year our the company's market year Clearly and company. history our surpassed our the XXXX's have remained consistent of programs strongest approach the to we in financial We partners going to continue shoppers. already attributed quarters support revenues strategic with The

perspective. the financials further offer achievements XXXX and of on some Following elaborate will our I XXXX review Gerry's

Gerry McClinton

and to record quarter. pleasure good report It gives morning, breaking Thank you, another on Stewart everyone. me great

respectively for revenue or September from the XXXX X.X numbers. XX.X XXXX So, and approximately go the increase record. Net was XXXX new XXth million ended million three let's quarterly through an XX.X of months a and and XX.X% million

the XXXX. approximately company compared in million in to allowances also quarter the $XXX,XXX During X.X consumer provided promotional

months XXth XX.X the respectively. revenue was million For September and XX.X XXXX ended approximately XXXX million nine and

an of that's or Now and new sales XX.X% XXXX company has date X.X strong Hoover The initiated. the QX increase product five a as year three Revenue that from of increased Capstone performance Light new Accent million in brands result Lighting also record. watches and Home a Duracell, in including the all a category to LED. we

During promotional the nine XXXX new its launches has million XXXX in product levels months to allowances increased awareness. improve product by and support XXth September also up product X.X company the order to $XXX,XXX from the ended

$X.X were For the nine approximately $XX.X September for months sales the in of sales to XXth compared million three ended approximately million and XXXX as $X.X XXXX Cost respectively. and $X.X million were million international XXXX. months

X.X% revenue compared quarter of equates or provided that's Now to XXXX. to promotional XX.X% additional the revenue XX.X% in of XXXX. XX.X% allowances increase from This in The respectively from increase and were the cost an million the quarter. $X.X resulted to $XXX,XXX of percentage

or compared XXXX nine an that’s cost were million September This of from respectively, For XXXX nine of increase months XX, X.X% the XX.X% $XX.X revenue XX.X% the XX.X% and million and percent and ended provided in increased to and resulted million respectively the of $XX.X The months of additional to approximately revenue. XXXX. XXXX. promotional sales allowances from $X.X equates $XXX,XXX cost of

percentage XXXX was the XXXX. Gross $X.X ended Gross effective was same to XX.X% $X.X as buying and approximately in our quarter steady the period oil as three X.X% profit result remain in a compared in price or of in of stable exchange sales XXXX. overseas factories, and months profit period a rates. from U.S. of respectively, an to Now increase XXXX manufacturing of XX, million unit costs $XXX,XXX with XX.X% September million and for the the programs the continued the

additional the to XXXX. XX, was Gross as gross now $X.X sales XX.X% same was in months resulted the and to XXXX months percentage gross $X.X approximately increase an from million for million of $X.X provided $X.X approximately ended XX.X% in in profit A profit three and For of million allowances from the for $X.X million period. nine XXXX increase from The revenue. the respectively, the of XX.X% $XXX,XXX increased September percentage transitional a XX.X% period and XXXX respectively, were profit an in expenses months in of the $XXX,XXX reduction September nine or compared resulted retailers or that’s slight to increase XXXX and sale the XX, profit XXXX. of million XX.X%. gross Operating

comparing brief respectively, and and $XXX,XXX expenses Sales were and XX, $XXX,XXX and XX, the just the to and over marketing increase operating to total expenses an million I'm XX.X% XXXX expense were million summary going that’s September approximately $X.X XXXX. major approximately For for of three an million XXXX respectively, of months increase September you a $X.X compared $X.X the $XXX,XXX XXXX ended variances XXXX by XXXX. category, to ended XXXX nine XXXX. of give or months as

marketing invest Hoover heavily company resulted mainly royalty and to the LED. licenses, payments in the license $XXX,XXX and of sales the from Home its Now branded higher brands in $XXX,XXX of Duracell, expenses Lighting which increase was for XXXX. The continued Capstone than

$XX,XXX. commissions representative sales addition, In by increased

an approximately and XXX,XXX. and were September XXXX $XXX,XXX expenses that’s months nine increase the XX, respectively, million of $X.X sales XXXX and marketing For

resulted $X.X the increase from million revenue in of expense many Now period. these increases

products from summary now $X a million than XXXX in Hoover you ended occurred September XXX,XXX in-store new and XX, show the representative X.X%. license invested for brief XX,XXX we of branded and $XX,XXX by The advertising increased by Sales in trade respectively XXXX give months in to $XX,XXX credits. and three the company higher or XXXX. and over Duracell to license expenses setup that. and was also further Compensation We for was $XX,XXX and Just increased of XXXX approximately expense expensed XXXX. and the $XXX,XXX payments, look increased that of commissions and for prepared XXX,XXX XXXX. XXX,XXX, amount invested media of We

of were X.X%. and respectively, approximately and to XXX,XXX XXX,XXX, performance the the increased for respectively Professional three adjustments For expense September decrease was I compensation of ended or XXX,XXX and salary during September or a the $XXX,XXX period expense XXXX XXXX nine increased XXX,XXX months XX.X%. Directors. result XX, XXXX, stock-based XXXX guess of compensation paid XX, ended approximately fees Compensation $X,XXX,XXX, of months based a as and

engaging the of of the shows, XX, consultant to XXX,XXX For and XX.X%. effort. relations were help sales investor the the XXXX XXXX development respectively, U.S. The in $XX,XXX were approximately increased attendance resulted ended professional various and fees expenses respectively, management’s services professional three sales XXXX nine September hiring XXX,XXX increased months ended for support September or the investor marketing months including XX, at XXX,XXX increase XX,XXX the from an decrease a XX.X%. banker, XXXX of and an XXX,XXX, period Product and investment or office expenses and

September were respectively and ended of XX, approximately For of $XXX,XXXX XXX,XXX, decrease the a months XXX,XXX XXXX X.X%. XXXX development nine product and expenses

we’ve to initial development has testing with including the able costs costs To of reduce company product the the our development, new Now, product and to to product new partners new product been factory of continued prototype development. invest absorb certification. negotiate initial some the of

XXX,XXX three lower. the general ended months that is XXXX expense and a respectively, XX, $X,XXX administration, particular for expenses XXX,XXX category of So and help or Other that and decrease XXXX to approximately keep September X.X%. were

nine XX,XXX and respectively or months ended administration XX.X%. the increase of XX, XXXX other and and For general were September an expenses XXX,XXX XXX,XXX XXXX

activities Net of This approximately and to is $X,XXX,XXX reduction months income increase the the Now three compared liability XXXX. sales XXXX increased increased premiums to or to bank Sterling this higher general X.X% at is a expense $X,XXX,XXX fees revenue during increased and higher travel expenses related processing a XXX,XXX September with of a the XXXX. the of associated ended was result period. XX, insurance compared for levels

to For the XXXX, September months $X,XXX,XXX income the ended in was compared $X,XXX,XXX approximately nine XXth operating XXXX.

a compared Interest income were and performance expense, lower $XXX,XXX is company Now XXXX of an record. this improved expense. to new

For to XXXX. compared XXXX and XXXX XX,XXX and respectively approximately expense and XXth September XX,XXX months XX,XXX the was XX.X% other of ended for three a reduction

For respectively months $XXX,XXX XXXX other ended XXXX the or a nine $XXX,XXX or and XX, a expense September and compared was XXXX. $XXX,XXX to a or XX% as reduction approximately

been growth our for the with returns has revenue by the purchase substantial increased have suppliers favorable negotiating despite during Now able need to reduced substantially borrowing which we period curtail funding. overseas order paying having

tax. which loans XXXX in able the cash for expense old period. from been flows director interest also reduce resulted profits With to the reduced increased Provision income we've in substantially also the operational

For compared to was months XXXX $XXX,XXX income approximately XXXX. an September of ended the three XX tax increase $XXX,XXX

has As operating now tax future its income provide expense. year's for the company the losses company previous offset must

months nine the ended $XXX,XXX XX, for income XXXX. XXXX September approximately Net three approximately provision to for the XXXX. compared expense in increase an ended September $X,XXX,XXX compared of $XXX,XXX XX, $XXX,XXX tax the the was XXXX income For to months was

$X.X future approximately of income the promotional months income. company had gross higher record investments and nine for revenue, performance To months record for operating expense $X.X was record XXXX. increased also For from company company in company by resulting after and September achieved net provided as XXth new operating allowances launches million approximately approximately product during net record of has nine to summarize million XXXX of further achieved strategic X,XXX,XXX the the ended X,XXX,XXX the The growth. the net the compared the revenue incurred profit, revenues

approximately September in the tax the and $XXX,XXX provision approximately XXth reason $XXX,XXX for than for during lower Now why months $XXX,XXX main months net XXXX of provided company higher ended it's income the than the which XXXX also nine is was nine XXXX. in

had turn million XXXX. is to as resources. The on September good let’s the hand compared at to XX, XXXX, and Now December that company XX, capital million $X.X as here approximately $X.X cash of of news liquidity

million in $X.X September zero XX, $XXX,XXX our receivable, to accounts $X.X activities, $X.X approximately inventory in interest $X.X sales of approximately $XXX,XXX and income ended was decrease offset XXXX. in million in as compared loan approximately XX, combined ended payable XXXX XXXX, the XXXX. Operating in sterling September net decrease the at usage with and is million decrease months operating to bank decrease and Our million allowances. operating nine the balance of in flow capital cash activities of in payable accrued $XXX,XXX in and In the accounts notes/loans provided decrease cash $XXX,XXX working used the compared activities from December XX, nine $XXX,XXX by $X.X months million

investing for of net of the for XXXX months million activities, used was approximately XX, by $X.X offset the million Investing nine XXXX, in compared approximately September increase receivable. $X.X XXXX. in was to income activities ended During accounts $XX,XXX cash large $XX,XXX

financing the activities, months XXXX. provided and company to will Financing Now flow product million that provide with by approximately expenditures. the these molds capital financing in the future XX, additional invest cash September product tooling product to was cash compared requirements capital will company's and for used plan, increase. expansion needed Management XXXX continues as our in $X.X operations the new ended borrowing from believes for necessary nine in $XXX,XXX activities activities certification,

loan maintain totaling from the $XXX,XXX also repurchased accrued and their company company XXXX Director's interest. $X,XXX. Involve of of zero warrants The bank outstanding $XXX,XXX was stock since the common to including the period, some off outstanding LLC sold Sterling paid and and balance. loans XXXX Company also company’s During at able retired

Now ability highly is liquidity our operating achieving dependent what's sufficient results. noting maintain expected to that upon

has the and bank provided expected XXXX some old working and XXXX However, in and achieving the of the accomplished company capital, through related increased has of outstanding three allowed as loans. first with results repayment liquidity notes quarters

September agreements with of the pursuing two facilities. credit its in XXXX, compliance existing company As XX, of was all

concludes summary you, the third back my I call this turn Now quarter Stewart. will financial to for the XXXX.

Stewart Wallach

Thank you, delivered of company in Well, year-to-date as having experiencing revenues Gerry for the is increases continued the growth you XX%. see, can detailed coverage.

XX%. operating and income profit growing excess excess of dollars gross in in XX% While of

company the to As continues evolve.

pushed approach We discipline invested to to remained our gaining share market revenues to close in growth. have million our QX that alone, into highs. $X.X revenue In campaigns record consumer a we and promotional

started expected product in business we significant to resolute more making today in As invest with But competing yield the line We remain are the programs. levels decisions the with beneficial are business expansion we solid globally, vigorously highest retail year we results Capstone. to-date. at to most

We under one also our introduced of the lines product Duracell.

placement earnings leverage again. year-end Our shipping accurate while on-time, reasons continued operation, to in strong this to revenue overseas XX I’m and potential Capstone which control overheads logistical potential continually day to trailing company’s International to that its projections. XX more We the drive operating continue this delivering factory when offers demand the strength into and supply is Moreover, record also increased we a expected maintained future. tracking is changes trailing the a perspective We say Rim matters, to we the can of performance. suggest issues, approach in It started as pleased efforts sensitive expanded assessments, now with XXXX such XXXX these for the great a record well. that product of remain direct we million. which these approximately $XX future at discussing of matters XXXX and momentum chain revenues are a our off deal as in and coming as sales Pacific

in story the have and positioning, retail value substantial marketing result the revenues We to measure we and and consumer forth we execute market manage we revenue while continue At the carefully in the continued standout have investments. debt awareness debt are Delivering strategies of addition costs. and faster a to willingness of support general anticipated. extra growth investments As continue associates. putting to unfold. there maintaining our we our result factor between to successfully level I we than I to was standings investments, as I management stated time, its need are correlation proud marketing direct couldn’t direct experiencing. and efforts, products as to company we while same more leverage sell-through that a earlier, competitive In the increased operating these short, in reduce and or their a of on growth, be believe, maintaining Capstone’s will

and afforded We demonstrate a this cost to and company have with category opportunities functionality. differentiated LED The us on to decision capabilities. strategies and into style consistent the products, business company’s discipline results. Our battery incorporating strong achieve entry allowed and lighting sound low increased focused significant operated year-over-year

As more LED our company the mainstream, growth the trend. of became followed

Directors the market we market profitable, relatively us to required our competition allowed don't company financial and decisions Our believe level into myself far financing Today, that the provided focus competitive on this many exploit current limited basis The confidence the operate resources to import on the company’s in is products business it ambitions both human sustains successful are than of achieved today. have our we companies our to innovation direct well-respected and company our development life performance. are for for early our and as unencumbered within asset start-up there follows Through status. I of company are market. fully to why model. us we industry. a Considering our financial and support greater including expansion are freedom My a manner. product That a

highly focused strategy business sound by a expansion plan. a innovation and driven have into We product leading us XXXX line

and with afford This path been our opportunity of channel. us a from an successful channels other now focusing business we and complementing category Whereas commodity launching entry products. enables to repeat we while current in focused we has our upon our while club we to broader will success. provide to are shied us warehouse primarily build will were strategy on unique business XXXX line deliberately expanding category away LED will the our have line enter expansion product into that LED new products. a that distribution. reach have early new a and are model our core business us product a Capstone the of channels as today the category an Within Just product innovative

make investor strategy keeping benefit If competitive helps a will hard in and In publicly we launches a market not maintain cannot offer conservative to wrapping up, consistent advantage our primary also been In are us product business. market. are in recognizable consumer XXXX. to the our than we plan since objectives until enter at difference product past the in for future good in this and do This area fit a a supports not and execute our affordable our we the our for relations company's add and better Our a announce inception. we look discussing we disciplines, have taking ready I perspective the with is Capstone. product

to Our company bringing recognize relatively need in to story. is we still the great our invest unknown and attention

So, with to time you like to that long-term our to continued I'd and shareholders company's history. potential exciting our this support our in like thank for to new I'd personally shareholders your welcome and

Aimee Gaudet

So before questions first we'll that. did to want take we we address turn that the after email and to call that to Brenda. moment numerous I'll opening take I up calls will a receive mention the via line, then just

Operator

you Instructions]. [Operator Thank

Aimee Gaudet

This The reduction? XX.X% in date XXXX. year record impacted first explain question million compared gross is directed Could XX.X% profit towards you of further to was to Gerry. what percentage $X.X the

Stewart Wallach

in increase revenue new as reduction. consumer the to and awareness Stewart a million company product $X.X expand alluded Yeah, product product order to achieve and in or year, must an XX.X%

this achieved providing such consumer financial to financial and Now, of statements. the the rebates is impact by programs simply reduce The profit gross has in product by advertising retailer. through our

nine XXXX $XXX,XXX provided year-to-date, reason such have than for million promotions, we that's slight $X.X reduction. margins and the nearly is the in For in higher the of months

than as additional we would if the believe and improved awareness branding our to million, been growth. for $X.X is company revenue the and have revenue we that XXXX. provided deal by investment had increased Now consumer great occurred But a allowances, we higher actual margins not expand and continue in XX% promotional

Aimee Gaudet

Thanks, great. Gerry. Okay,

Second question.

the Wilmington. share of have to what you relationship process? you the Can going coming with you're that through your Assuming learned end

Stewart Wallach

there from on value. perspective as learned company process, were an of discussions in needed was mergers, from deal particularly engaging on perspective, banker simply, very anticipated, with to Wilmington. our was I investment learned regarding that opportunities, key to an objective to one Wilmington be and working and this acquisition, the held and goal focus strengthened objective ways areas et outside question was increase our that shareholder get and expansion - Meetings Through a place good My area general one a That’s behalf perspectives took I on. cetera. to great

category of the a past furthering feel in was in the our year, expansion of successfully of validation and we insight XXXX As for product that be confident been the channel have value this basically new we addressed development will Capstone Companies. the

Aimee Gaudet

Okay, great.

question, million XXXX. Why nearly $X.XXX million such Next there from was expenses large $X.X or of year-to-date increased XX.X% operating by total a increase?

Gerry McClinton

that me answer Let one, Stewart.

of most the lot which are increase, sales expenses, expenses increase proportionately. part a For as our means expenses variable will our also

also Now expenses revenue nine growth in XX.X% with these variable increased. a months,

As and months of in as $X over marketing operating most period, the for in will licenses. increase invested, -- in payments an the accordingly, sales expense most Hoover that’s total example, but product as expensed we also by and an we million Duracell our that the royalty expiring $XXX,XXX, in nine increased of and total the period, offerings, royalties license example

Aimee Gaudet

Okay, thanks, Gerry.

uplifting, need are question, you member? an you are how the considering board an for additional Next address

Stewart Wallach

year. think the discussed were earlier having considering this OTCQB. Well, we’ve We I uplifted OTCQX last in uplifting to after August

opportunity place. NASDAQ. may priority a clearly, put would the moment, at is company hold to emphasize However, new on continues attractive no That the the as category, specific point an uplift to will to reasons, in at revenues the a with for launch remain number wanted we afford of forward. this plan the product year a be of have for listing grow But there us but that down up I as to

Aimee Gaudet

costs can… XXXX $XXX,XXX have $XXX,XXX the trend this continue? Will interest In in question. Gerry the come Maybe reviewing you the for months. Next from to significantly nine down expense,

Gerry McClinton

successes like was and year great worked. stating started have that’s expense. some the one goals interest and has our strategy question. of a here debt to reduce our I of by our to We Clearly,

it's of for XX, the been As XXXX, bank and year. most we way September have debt zero of that

continues to we X.X last year. goal million the interest curtail $X.X million in to from We will same, to continue million as revenue have XXX,XXX down and party remains from grow. even expense Good and up question. This the have reduced bank, related loans strategy X.X our

Aimee Gaudet

is the provide [George services Who and Wells] question. he does Next what to company?

Stewart Wallach

of professional Larry Wells plus that’s focus a and is Executive, We as benefits He that operations. capacity George he people on myself the Gerry a of have team in years. been situation has consultant. seasoned operates primary and one of sales McClinton, part pay George is been the my company. I all involved He the working He some to my business always XX know it has Sloven a as best projects. in George himself both Wells, for most consultant is advantages for the George has just and don’t of

week. and he We is to XX XX-hour focused are client here his only

our yes, So success. of key team George and part been has it original my he’s to

Aimee Gaudet

explain in receivable, reviewing XXX,XXX, the fi at XX/XX/XX has still was Next at been Could is the which note situation XXX,XXX valid? valued now zero. AC at the question. note valued you Kinetics note

Gerry McClinton

Yes.

First still with earning and $X.X million note have of all, accrued off we interest. a

made Kinetics $X.XX shares. in accept value by the company those collateral we was that Now the at with shares, repurchased repurchasing of AC $X.XX the of provided by clearly, shares in took and the profit each, order note, back company buying of We out we the each. back, the stock ability opportunity, X,XXX,XXX stock buying price of company’s to

decided used results, the that profit Kinetics exposure company observed to in AC all With note. now our we've management the having which tax recent write-off to

available note, collateral to was us. it -- for the shares as As option had were we that the collateral

have summary, on valid zero So, in note we books $X.X million at note, our now a sitting cost.

Aimee Gaudet

was the record provision XXXX. in $XX.X Clearly increase the million of X.X at net compared came million income difference $XXX,XXX revenue of for million, the in to X.X tax XXX,XXX. months a With big nine reduction Gerry. Thanks

up liability? we tax is impact NOLs. your using What XXXX still in to were strategy to As future

Gerry McClinton

has felt having really pay of the the taxes. now until never to impact Up company

this us. gain new So, is for a

several I've the credits most had we meetings already up meetings future effective as have We whatever obtain learn available. ensure and tax it got and you know do out the our given. outside utilize the we're are that with coming tax to and getting tax from strategies [event] from strategies will task take our we're we advice so our planning best us and planners we close

Aimee Gaudet

Thanks Gerry.

Okay, million $XXX last I'm year the yearly to within revenue a books, roadmap in in this revenues? directed actually is is Stewart. million this is that hoping reach. XXXX there was towards the question, Full almost $XX Is

Stewart Wallach

stated I XX as earlier currently Well, annual gauging trailing barometer we're very certainly the million a is is in at in tracking which revenue XX ballpark. so company's good the

so curious statement, the And we that use you an years. say that several accurate achieve have as $XXX I roadmap million goal however because to our number ability under demonstrated my it’s exact far past not we million set management. to achieve that goals have company XXX have is a a to over actually the for the be would our an To

to history yes eye for would yes, target in on. that then my I serves million keeping see if that I'm a like So, is well revenue $XXX definitely Capstone and the

Aimee Gaudet

up for of open minutes calls. we can believe few I Brenda,

Operator

comes please from Tomer ahead. line question of Five first Capital, our with Certainly, go Roads the Cohen

Tomer Cohen

Good first has question my morning, with wholesale. BJ's to do

at experience channel and how mentioned just sell I'm expansion BJ's curious to then You you've tried ever that if went? earlier,

Stewart Wallach

both meet in Yeah, other in channel not small significant than of Costco. our doesn't Sam's it larger experienced percentage Their channels model. leaders all Their we is a as we're we're volume and criteria is selling their and selling. volumes margin have sold from all the other past, the as which are we that BJ's the

Tomer Cohen

opportunities retailers so other I about channel with it's not… you're when okay see, thinking expansion

Stewart Wallach

e-commerce. expansion talking improvement, channel into we're home retailers. channel other it's Absolutely, expansion We're talking into

Tomer Cohen

see, the that color. sales that's okay, then the about Duracell how meeting your was I other you I minimum helpful license? requirements, had And worried license so so on question keep are and you

Stewart Wallach

that requirement there's from. sales just you've I'm Well, first where not an that minimum that got you of sure made. all, assumption there’s a

Tomer Cohen

[indiscernible] something something like one, $X million year like in million two. year $X

Stewart Wallach

No, came sure from where but… Tomer, I'm that not

Tomer Cohen

[Hoover].

Stewart Wallach

yeah… something That Yeah. has like,

Tomer Cohen

I see, understood. okay. I

Stewart Wallach

license was with promotion as Duracell recognized, utilized directly Costco. you The probably a for

this under us it no to expand fact, initiated up joint pretty at and companies, or we of effort want not assigned much In It’s that. to our to minimum point, there both whether that that’s was through license review. were

Tomer Cohen

sorts it. what things think want about if expand to deciding I you of you see, will

Stewart Wallach

anticipate same branded for you us you're Capstone, selling an should some if be the the of increase in fully of don't sales product, generated get isn’t there's a less Well, at and When warranted. we investment at able advantage least that's time, brand then overselling ourselves payments branded kind from that XX% our the benefit. the over growth if a can't the to products like royalty XX% product to in realize

Tomer Cohen

That sense. makes

you hit then that was I And Okay. whether on point, Hoover. to for guess my there realized Any minimum numbers? or a that questions now I original not can those

Stewart Wallach

We far exceeded the minimum requirements.

Tomer Cohen

Yeah. Yeah, exactly.

then… And Okay.

Operator

Our next question your with is question. [indiscernible] ahead Partners. Please Tony go coming from the line of

Unidentified Analyst

a to and be… this Hi. the I you new line understand as sort thing wanted that that to decent you I it's -- a mentioned ask I’m to you product look about months but you then should expect get trailing in to at, you a line material ready of referred terms launch new you revenue of said how sense to product to of do won’t XX talk it, till well, trying

Stewart Wallach

core intuitive very I'm XX our when Tony, question. talking about months, as trailing a exists is very, talking business today. very, I'm That’s it

manager, the any operate while to size product next get layer the point, be we I'm us at the million, of it that may a not displace of will of really course to tripling shareholder in, business business of but be So, we will our category I over some as it million company that of will business, to can a we relative my the where top a there’s years. it’s need business. business $XX at on From looking, make money, that value. new the look unit comfortably core I'm perspective doubling, business, new that $XX

trading be the we So, but adding revenue we wouldn't be initial to it. off would

XX I anything basis, the think that do question I not a relative would category. understand on I have if included and trailing So, yes, your to new product

Unidentified Analyst

second this essence question distribution your concentration, also product that, and decrease final expect the we new And is new a do Great. in on would product…

Stewart Wallach

business it. Channel us and of costs the it target our was the can we entry strategy channel wanted to into through Club to When products decision. the to Recognizing at do actually focusing more started entry the company channels. the those we that’s a very existing we’ve fact sound of on and we it that Warehouse company, just continued significant that to was primary very thing add low that we gave have and recognize expand to build expansion, the that unrealistic grow Tony, market

to ecommerce, we absolutely of objective the take into and furnishings into channel, primary the enable those in home true same LED entered channel, category us channels. was so, was that the in innovation. to of distribution XXXX new all So, do way, But improvement home walk us the

history never been never not of commodity it’s our ever have years a not my of business, in evolved tea, We cup it’s products, in been wheelhouse. involved XX I’ve

category a find with except we marketplace exist were you is, emerging the with So, the to we we today few have it not in right will in be in sporadic share what specialized LED. just as and early highly an does frankly the I market can category, areas. It’s

more to going and excited in about I it. So, be mainstream bringing we’re couldn’t be

Operator

Private [indiscernible] next Please from line go your question. Investor. with question of our ahead And comes the

Unidentified Analyst

the you’re yet stock product that mentioning a trades. keep You not suddenly commodity

of so, need with more itself. you, you selling I a little And agree investment the

if but the products, self-commodity your So, stock you don’t. fact trade, in

the or getting. think rather of message sort that’s I that yet that aren’t is the investors So, message,

Stewart Wallach

you I completely. would agree with

Unidentified Analyst

but the mean to you new you not what obviously, product seem fact going able be in share introduction. you very this to confidence you’re that lot, I be but for gives product gives significant company? you the what Just to What about gives to seem going enthusiastic briefly a you, this is have, a

Stewart Wallach

fair question. a that’s And

said, you to let me some bunch. picked of being a now. assumptions. If has typically this That’s working its been bit is part of in we for to history, we year That a over niche expand got nature, the And that research and But It’s that of research to -- in but could successfully. opportunity on sell find is My to up that to we around businesses players decide that this of on and we’re the that’s been to course company the we reach. not our the the try you. a of why you market relative not consumer buyers been profile. into bring research. watched watched little category have these. probably can then going has research market, better on be based look the, hunch, we retail initial When research business share on new process business with the into one of based part a proposition background a of mainstream And

about data and enable a the data us the and say to potentials, talking is enthusiasm result market that relatively is my but future the as is what company, that I been can market and than will further based. of more extrapolation currently product relevant based am it large, market The in and a together more product this. more the I it's technology strategy in that conservative to very being, approach it's and a the So, that it's that is in and today's has lifestyle and the my entire That differentiate put a we're markets potential on data. to of my

was here able So, we're experience that background you do I that level around actually company as well a announcement hoping the and pretty type this to we good development of to and hate year. the are in I excessive. which online and we talking project to that do. how sitting to by on at areas there's not still we a been consumer what out the it ship created it able of consumer areas a isn't Robust want are to need to it's to testing. just frankly impacted of to the This at be to to Amazon and return. predominantly hurdles, a cover of particularly also very we and doing it's today's applications product understanding software really I've it. looking so a has of say it minor by behind anybody of product rates way. would time be a couple but -- I things Because exciting, to to a about something few we're that before manage bit testing just would I can flesh it's but do submit have software easy robust easy security developed our this ease for it return consists people to higher make with world they so has few a e-commerce, participate little a product development an in

than or product of consumer use mistake, but involved more expectation of or to sell. endure Lot important that how importantly that's endure, that abuse expensive particularly operation going a abused their any only exceeds That products products expensive type product the has of from very the we of it. software more products, can currently what meets to error, a consumer standpoint are it's in intentionally particularly So, the considerably otherwise. be most

make lengthy Smartphones we easy you the down sure than have it’s we lengthier probably applications use actually meets] see and and and today widget that typically that than So, to nature. that in more a planned. that’s [score answer so dumb of it of follows would to you anticipated, things That's world

Unidentified Analyst

appreciate the question seasonal. briefly discuss and I the Capstone you is can your business No, final just business or insight, is

Stewart Wallach

buy business industry February. to in Well a in the I'm for they buy this, buy a very not our a October has say time line me product industry, say the means highly it, specific a to like and means seasonality only it's ship let seasonal, specific thing because words it in toy over is in and current that's to it it going is season other seasonal, July, in the seasonal the

obviously categories very usually in the you’ve clean-up why can appeal QX been that products quarter Spring is we promotional the us, and bring to holiday spring afford some forward. I product February your residual the holiday through us which and sometimes because QX to themselves to our in year And make for would say, more historically. the us have our has in relatively those side. which to renovation, quarter Christmas inventories items new a just giving, March, have gift in for pipeline gift and to that's expense gift to to say room of first a another because it’s those numbers in relative is and lot need January going generate that business and for in will giving sales business the our of a you'll our go seasonal widest periods. support of we your into is got product for move giving, reflected there strong that is your also it retailer launches. good category accelerate inventory conscious But that's another So, being numbers, see the that QX so certain much allow promotion because sell-through sometimes decision on we'll make and retailers to

So but seasonal. seasonal not somewhat, somewhat, seasonality, yes,

Operator

Yeah.

like comments So, would make? any you closing to

Stewart Wallach

No.

I didn’t presentation everybody the to medicine the think very they’re hope much. want their and performance are bit too Thank that’s apologize, cold, time, always dilute it. our I enthusiastic about thank cold head of I a I got you have for a we as I hope much. again so I

Gerry McClinton

Thank you.

Operator

concludes you. Thank This teleconference. today’s

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

Capstone Companies (CAPC) 16 Nov 172017 Q3 Earnings call transcript