CAPC - Earnings call transcript Q3 2019 | Capstone Companies, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, welcome to Capstone Companies Inc.

Third Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

the Companies to Inc., turn Secretary Gaudet, now Capstone for you will conference Aimee over Corporate I may begin.

Aimee Gaudet

and Sheri, you, good everyone. to Thank morning

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

yesterday have www.capstonecompaniesinc.com. the Thursday, release If afternoon you distributed the at on, is was website do on available not it that Company's

forward-looking As to you from where are results statements subject as aware, during today. which that are events we other presentation. we to apply actual may could statements as differ and the uncertainties make well to These materially are risks today's future factors cause

These Commission, our factors well Securities the documents release with can by or as www.sec.gov. which and www.capstonecompaniesinc.com be in as the are the at at Company in filed Exchange earnings outlined found

With over that, to I'll you, Stewart. turn it

Stewart Wallach

you, everyone. us and appreciate today. your time with Thank morning I good to Aimee,

QX XXXX call. to of that quarter a our the raised third few I'd discussion results, introducing Gerry during to Before salient like review points financial were revisit conference

strength During net income our significantly strong to the report revenues slightly, our webcast, goals year-to-date declined of we we and I improved. am our the subject backlog forecasted achieved revenue. and highlighted QX pleased while the

to Thailand from the We also mitigate the China trade highlighted our supply to China war. from activities relative and transitions penalties U.S. related to uncertainty tariff resulting chain

discussion it a Gerry's expansion review our the emerging year-to-date expanding the we market, market smart electronics line LED discussed growth portfolio into importance I caps financials. of in these continue revenues, core the opportunity. beyond our the into as expand product while of we evidenced upon will product electronics Company's LED the in Finally, following on to support the points substantial the home products before

Gerry McClinton

morning everyone. Stewart, and Thank good you,

for of on a revenues from of XX, brand third impact were very the The million respectively, conditioning XXXX. numbers. license and XXXX from straight X.X go Net year-to-date approximately to decrease XXXX September XXX,XXX quarter positive had results. products brand has million our Let's Capstone the the into lighting strategic ended X.X and

million million revenue third quarter quarter XXXX newly products in the Capstone quarter. had The $X.X in powered $X.X sales to the Lighting of XXXX. in revenue XXXX. LED million generated X.X LED to the in the zero of million compared launched represented in compared X.X product battery Licensed

were months of approximately nine million XXX,XXX decrease in the XX.X For ended XX.X XX, net revenues million, XXXX from a XXXX. September

XX.X of $X.X generated XXXX. XXXX during compared the the million. period. brand of Approximately product from million Capstone as That's to LED period to The of introduced from million $X.X an XXXX. in revenue increase zero had sales for products resulted $X.X the of revenue million Licensed new revenue in in $X.X million compared reductions

For ended months ended the were XXXX, and approximately September and XXXX, three for respectively, XX, and International the $XX,XXX $XXX,XXX nine respectively XXXX and $XXX,XXX and $XXX,XXX months September XXXX. XX, sales

XXXX of XX, $XXX,XXX. XX.X% compared and and the was quarter third the month XX.X% was nine decrease a to $X,XXX,XXX respectively, Gross $X,XXX,XXX, in that's profit Gross $X,XXX,XXX slight percentage September was a XXXX. percentage as and slight for respectively. revenue and Gross nine approximately respectively, XXXX the as a as profit for ended three XX, XX.X% September was of XXXX months $XXX,XXX. revenue XXXX the XX.X% $X,XXX,XXX profit reduction profit ended period to of XXXX approximately in Gross months and of

Company of impact by profit same Now This period in increase product nine invested was to has $XXX,XXX by the months during compared marketing months ended expansion. $XXX,XXX to X.X% to XX, during investment had invested September support nine promotion the This XXXX. gross in used $X,XXX,XXX reducing the funds LED a investment promote the XXXX. of LED the products retailer the the Capstone new approximately XXXX,

operating to for Total three in expenses were decrease XXXX compared $X,XXX,XXX as the $XXX,XXX. of a XXXX, months XX, approximately $XXX,XXX ended September

months were the $X,XXX,XXX $X,XXX,XXX expenses the September marketing nine by ended $XXX,XXX. compared that's were XXXX, areas. XX reductions total decrease two XXXX, development and the areas in The For expense operating to operating most a impacted of sales, as then basically product

to by ended look So, from brands. marketing a $XX,XXX have $XXX,XXX. reduced XXXX. That's at three as the also we representative agencies XX, $XX,XXX Sales months were Capstone quarter. were commissions and $XXX,XXX all respectively did let's in those. in and a and zero did September that marketing XXXX. sales expenses in were We reduction incur for of were Royalty compared at fees XXXX $XXX,XXX XXXX $XXX,XXX XXXX of Sales in not

period commissions nine Sales respectively, to $XXX,XXX for months a reduced and by XXXX. was XXX,XXX the and XXXX XX, expenses XXX,XXX September in compared For that's and of sales marketing were months were from ended XXXX, $XXX,XXX. respectively. Total zero expenses $XXX,XXX royalty XXX,XXX also nine reduction

Now development the expense three for Capstone for brands slight category strategic expenses this primary was cause the the $XX,XXX respectively as during a ended decrease September approximately of months to and XX plan XXXX of the Lighting and $XX,XXX XX, reducing transitioning $XX,XXX. were period. Product

development $XX,XXX for invest Company the software a Connected and continues the Surfaces project. quarter, the hardware During in to

us XX, September $XXX,XXX decrease months approximately development nine from a the $XXX,XXX. XXXX, were ended to $XXX,XXX compare as product of expenses For XXXX

$XXX,XXX $XX,XXX in $XX,XXX. Connected the for $XXX,XXX a hardware compared in period, and expense sample to Surfaces the was XXXX XXXX, XXXX. Prototype development a to of software and in reduction product testing development in invested a we compared $XX,XXX project During

International we Show costs attend Hardware year. as XXXX were reduced the didn't this sample Our

$XXX,XXX ended XX income XXXX, compared $XXX,XXX. September was $XXX,XXX to income Operating in three an the of of that's increase for months

the XX, to operating a XXXX, For of $X,XXX improvement nine an $XXX,XXX. September compared $XXX,XXX months XXXX, income loss ended in was

overall the $XXX,XXX, period an XXX% performance. the Gross And ended in $X.X million. Net income sales that's to up months loss was Operating was expenses reduction income September were a back XX, the $XX,XXX increase same for $XXX,XXX. of XXXX. in compared of the nine of XXXX summarize were $XXX,XXX, let's net a XXXX. Operating finance over looking $XXX,XXX approximately quarter,

time, the Company incurred strategic for of were for $XX,XXX $XXX,XXX investing same strategic of funds services the Surfaces total a objectives expenses Mirror the programs, the Connected promotional by from management marketing quarter marketing Smart third the in software, development supporting allowances, quarter. continued support and to $XXX,XXX in of a At that's continued that $XX,XXX in

financial Operating performance XXXX. up was expenses the performance income $X,XXX, royalty it $XX.X improvement $X,XXX,XXX, the ended $XXX,XXX months fees. were XXXX, sales brands, Operating $XXX,XXX. September and nine summarizing over no And all of a Capstone million XX, were for was reduction

the new from software, developing by the million Smart and support for services, investing At $XX,XXX XXXX management's a allowances, $XX,XXX Company same program, to Mirror time, $XXX,XXX funds Company’s Connected our continued supporting in promotional marketing continues in Surfaces the website. development strategic the marketing objectives of $X.X

In strategic overall total, million in income $X.X the we period. XX, have performance funds expensed which nine impacted the in the of September months net XXXX, ended

note of cash or we not However, any that investment strategic been this occurrence operating will interest. debt has financed in did flow result and through

the sources. at look a take capital and liquidity Let's

million. $X.X and million. cash million agreement XXXX had Our million the bank $X.X an The XXXX $X.X borrowing XX, reduction Company as XX, of we of December of approximately respectively, also reduced additional and $X.X which balances that’s a September under were

approximately and for Bank approximately provided periods operating and XXXX -- by XX, As $XX,XXX of flows zero. September provided Sterling was in to both cash operating was December activities nine million months Cash compared XX, period XXXX, XXXX. $X.X used ended activities the balance same September by during the the XXth

a partially $XXX,XXX a $XX,XXX and increased revenue The in allowances cash $X increase by accounts quarter from usage decrease from receivables, decrease was That account resulted resulting in quarter. in payable period increase offset and in in in million pre-tax. the $XXX,XXX the sales the

respectively. ended was XXXX in for Cash the approximately and months XX, XXXX nine flows used zero $XX,XXX activities September financing and

During repurchased cost September shares funds. into credit with full the XXX,XXX churns Company XXth, of the the due periods, all existing in Company $XX,XXX. compliance At at was the a

months. line hand from anticipated on adequate will at under invest current basic we further our the believed and Based next performance flow on cash products. management and to cash position, availability to operations capital for needs in and past our XX capital the working daily expectations, continue our expenditures that to our ability of have are operations for development we company’s With credit that believe the least be the

This concludes you. my back to it Stewart, I’ll reports. pass

Stewart Wallach

first we as these season. week did Thank limited portfolio, deliver September of holiday our There the as Smart you, have our ability Gerry. case. Consumer the the We expanded had Briefly program again Show products our development continuing that for to our of the discussion are which Electronic was preparing January. regarding delays in launch in interest, was time been available efforts, XXXX simply Mirror early selling at a not high in would some see formal Capstone’s and product level the but for

we will said, pricing capitalize product supply chain China on the being imposed tariff proceeded channels through production our penalties with line delays our market That did social production. have being support CES to and established Thailand for the Moreover, expanded objectives media the and and introductions we prior exhibition. in under which as competitive planned

Thai production up. scales triggered program facility Smart Mirror The be will the when

to In occur exploit China runs of that small to in short, sample early fullest We may missing in avoid potential. will initial continue produce new this are balance any venture to fully its possibly we orders small XXXX. prepared prototypes, and opportunity to the

The goals Company achieve and a will controlled disciplined manner. continue its in to

our embracing the cost, time managing its in the forward rewards Company best as makes into demonstrated have it to the look foray We yielding electronics future. commitment It's containing to innovation. field. emerging Capstone We an practices while exciting all shareholders for for near cash, the

your welcome thank exciting shareholders, to At like chapter. I to and shareholders would and our you potential to continued long-term like time, I'd to for this support; our Capstones new firstly new

Aimee Gaudet

Stuart. you, Thank

lines, some I'd to received address Before the like the opening via we up that email. questions of

you status came regarding that more specifics Can First chain in provide supply some question Thailand? the in.

Stewart Wallach

Yes. our process factories chain. Thailand. aspect At We don't which the foresee our factory -- to part and is required ready this ready by through auto we pilot also become to of in processed issues box point, supply of big retail stringent manufacturing to out proceed orders test each Thai we've approval short gaining formally logistics auditing the and any of have partners, process, and

Aimee Gaudet

was XXXX million months X.X Next XX, $X.X three XXXX. September million, question. ended Gross for in than lower slightly profit the

As the months was to year-to-date we mean the Does a margin trends in XXXX. margin gross positive in expect gross period? this XX.X% quarter can in XX.X% compared percent of revenue, six for future

Gerry McClinton

Gross our the shift vary quarter, of -- greatly and in marketing margin strategic our product investments the the investment mix, plans. in level based will on

of during decrease. XX.X% margin in to example, the a put overall were nine revenue slight a an As XXXX XX.X% months gross of XXXX,

after that achieved did was what the the XX.X, continue had of To However, reported. stated as investment performance as more hadn't we envision so period that makes to compare, than special approximately is funds product mixed in trends gross not we margin marketing in invested current made this XXXX. we trending then gross will $XXX,XXX be would this additional if margin grow. We XX.X that at

Aimee Gaudet

reduced and as continue? this to Next operating expenses contributed as question, some performance. provide you this total detail greatly trend from will improve significantly XXXX achieved to how Can and were was

Stewart Wallach

to This promote was continue Part in increased At That's approximately cost to determine of was well. strategy into years the threat of plan initially to branded we When costs. the stimulate strategy This royalty brand a direct to ago now, strategy remain raised have good margins time, same strategic mitigate reductions provided rising licensed our consistent fees. three This support referenced we almost it's observation. in through. is rather result in the tariffs Capstone substantially Gerry that the Capstone through the of retail campaigns should which overall the elimination products sell than webcast. brands. of had achievement the invested was XXXX resulted as

Aimee Gaudet

Thanks Stewart.

could question, be the Smart products you an the Next when on release ready provide update will and to of Mirror ship?

Stewart Wallach

All right.

of the in introduce some the social So, and media through as in to webcast, delays we experienced foremost we promote CES while program continue launch. development, the anticipation channels in referenced our

to beginning these our before and early are shipments expected are orders commence We year-end. website receive adopter through to

Aimee Gaudet

starting Can campaign your And continue media on see like campaign social is going to initial this to Facebook it Mirror exciting. and XXXX? channels is And the is into very objectives? Instagram, confirm meeting Smart this

Stewart Wallach

to of know you dimension another experience are to great starting It's Capstone's marketing. that

and campaigns social these we as far, managed programs to on are programs internally these are absolutely, via expand media continuing sales strategists So these initial our realized. plan

awareness is capstoneconnectedhome.com You impressed performing the see. last haven't Smart new and may may have please the excitement or it seen program. sure you was not in be which you'll Mirror I if the think it, our just to and seen for visit giveaway, establishing By but plan a with what week, announced way you PR the be

Aimee Gaudet

and future in? while, revenues how is? you for Maybe Stewart this the shed exciting you when business stage on you sets And all light is And very growth, will any large think can come can… the

Stewart Wallach

Well, LED generate be Smart The and million keep early core programming supported in revenues is to our is what in XXXX. generally is $XX The through exciting. expected XXXX. the is QX, program continues mind that to approximately size market most of Mirror

Smart in homes. This position broadband however, transition Mirror translate $XXX. stated households portfolio. have in a that reaching product on, I to keep webcasts, while prices a major As million project will revenues early in of consider Also not our this X our approximately at retail previous that is fixed mind, only I'm start in to of X% would

Aimee Gaudet

question, Capstone's you repurchase repurchasing Okay. still update Are an program? Last stocks? provide on please can you

Gerry McClinton

I'll active. initiated directors have the answer shares not we insiders like purchased of specific sales and program brokers XXX,XXX Moreover, have any and to one. I'd The Yes, to point that conditions. stocks. their have the remains out purchase under shares. terms continued To-date,

whole [indiscernible] program this all is So,

Aimee Gaudet

you Sheri, the open can lines up. Gerry. Thanks

Operator

at Thank remark? take you to phone [Operator closing There Instructions] questions you. are no time. this Would a like

Stewart Wallach

like us On some travel an Yes. doing I slot to had morning. everybody today, with would Monday We webcast for behalf on thank It's conflicts Sheri. you. Thanks the unusual schedule. here my of just time

not have able it, make on for who that you those the possibly site. revisit to and recorded appreciate those transcript it I are morning this So, our made

advised is are with not our relates a very well to It's into starts please development. we media you at programming. as the we in the tune with keep coverage CES. Smart our But We've it, our had unusual will the developments social We of tuned market. few resonating particularly consumer amazing. and it that Mirror technology exciting. false on which plan And into to major track, make response launch is because stay particularly It's a

wish safe you again, and and once you thank holiday So, all season. happy

Operator

today's conference. concludes This

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

Capstone Companies (CAPC) 18 Nov 192019 Q3 Earnings call transcript