MICS - Earnings call 3 2021 | Algorhythm Holdings, Inc.

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Operator

Good day, everyone, and welcome to today's The Singing Machine Third Quarter Earnings Call. [Operator Instructions]

Please be advised this call may be recorded. It is now my pleasure to turn the program over to Brendan Hopkins. Please go ahead.

Brendan Hopkins

you, taking thank join time and today. us you, everyone, the for to Thank

brief and Private in safe Except a harbor are have We harbor, the to Reform information are statements safe herein, Act made call XXXX. pursuant for of we'll contained the Litigation conference statements the this provisions forward-looking that Securities historical started. get of

results. actual differ unknown involve and uncertainties, forecasted our known materially cause to periods and risks results statements future Forward-looking may in from which

With to of to Singing that like Gary Atkinson, Machine. over said, the call I'd turn the The CEO

Gary Atkinson

gentlemen. Thank the want you, morning. Brendan. get results Good afternoon, afternoon that this third thank ladies an taking this and we for our on released the I of everybody to update to time quarter just

saying, was of a a which very us start very, from we to I obviously were results the for on goals. by very very, It third lot with want quarter quarter. able key in this performance to we're strong quarter holiday pleased off deliver

For in And by the deliver were for close quarter. XX% XX% We top able third were per expand quarter. instance, and year-over-year successful line sales to to for a year-to-date were the able significantly, up whopping $X.XX for to the margin to of we to earnings share we being grow able $X.XX quarter.

that will Bernardo And about saw turn is turning over holidays us color them So the to the bit we're 'XX. to be going Global going VP talk us Fiscal some good update very, over Marquis, who details and the we're you Melo, of call on Bernardo going a today. with an Sales excited results about into CFO. little with And the very our bit some and results. And of we're that, it a being over what be we company's talk the is who pleased we'll numbers. the behind of seeing with to to Lionel that after to Marketing. said, giving give and then We're is Lionel

being said, over with it So want I turn to Lionel. that to

Lionel Marquis

everybody. afternoon, Good

to XXXX, Just returns. the years and by both the year probably By XX-K fiscal which a fiscal as bit XXXX about wanted as this little fiscal QX seen covers and XX-Qs start year. an now, for XXXX amended the for well amended off amended you've of talking QX

which since internal we to controls, In XXX, standard the been an had code reduction accounting contracts. expenses, Essentially, of the revenue our the we relating and from adopted have revenue of fiscal XXXX. our co-op classified deals promotional determined allowances, it operating we X, historically of which reviewing as been our have allowance XXXX, a auditors that of that way recognition issue code selling the identified reporting we adoption co-op year been April that upon part adoption promotional for when on should and with

and net filings. a periods corresponding any to The that The change XXX or on of There made statement operating that originally expenses than nor the returns and any that corrections selling the to allowances were in regards selling reported filed subsequently the to by filed. was allowance. income the and financial filed, -- with co-op was that sales the any only to reduction a amended to promotional originally expenses the was of reflect earnings originally change the amended per occurred other with there ASC to were no amount in income decrease of was statements co-op compliance net -- as be change as operating share were the in

quarter. be were changes have this including both results the now made, comparative of in And I'm to years all been -- So QX. review about in to made for

we is I'm what the tell So about terms year apples-to-apples. the review to We year. in prior current did restate are of and measuring you

been going I'm proceed With that the highlights. to to said, having

up year-to-date, the And promotional we do sales for allowance. quarter, Net to were less we by Approximately were Okay. with cooperative $X,XXX,XXX. $XXX,XXX up has $X,XXX,XXX.

During Christmas or because not periods, did this of we season, we we starting normally the co-op large. in were promotions A do many was in of COVID. as did to those not not There of season, do was as demand this extended, them a -- programs the plus seasonal lot different participate need high. request

and quarter-to-date So up $XXX,XXX, about we picked on year-to-date both that.

only very, $X.X if you was remember again, the additional was specific we of this this it the had sales, is year that little million increased it by difference off with transit, damaged last delay, damaged bit very strong. We goods quarter the a and an problem both We a thought year, And the would the $X.X last for that year. year-to-date have in Carpool of for shipment Our that Karaoke of year. way but that we didn't worth taking we Carpool year, Karaoke a saw results this million. finally Had correctly.

So consequently, net highlights the sales. those were on

Karaoke gross increase Our million was about also had a $X,XXX,XXX, in the -- of that from of increase. profit for the million, $X.X year. $X,XXX,XXX It's to lot pickup $XXX,XXX. pickup do last and margin quarter allowances Carpool About paid with there to were the due Marketing product. approximately co-ops went increase, margin margin $XXX,XXX up down cooperative. less sales a a from And of by $X.X of was that

we $X.X million. last were there pick-up a increased last There of was million. $X,XXX,XXX there co-ops for margin versus There increase $X pick-up year, were than of a sales of Year-to-date, were And approximately $XX,XXX,XXX approximately year $XXX,XXX. $X.X million. million was year. approximately the almost less of Sales

The percentage, yields or last a the versus Karaoke The higher almost Carpool gross do. products that product Cpk twice the profit product XX.X% year. XX.X% lot normal margin, amount

approximately the of product the we in gave of and that X.X co-ops, X were for margin And approximately that of margin $XXX,XXX, with in that, the margin. The margins. what pickup those what less in points year-to-date X an an remaining us prior increase another X that Carpool another percentage Karaoke another sold of a the sold. Cooperative $XXX,XXX, the increase contributed co-ops, mix the points. versus to points year-to-date mix items. Year-to-date, So XX.X% product increase approximately less allowances, terms in the That's XX.X% due point X of -- contributed marketing contributed and quarter approximately year. points. less on we on X points point

Year-to-date, to to last it. about year of we from in this year. expenses off primarily that down rolled not last marketing less the its lot did year approximately a spend rollout and product year, by money million Selling this went to year. $XXX,XXX. was near that last And anywhere than We due $X,XXX,XXX it's It Karaoke $XXX,XXX Carpool it own, took it year. discretionary spent pushing of getting we on did and last to promote kind that need $X,XXX,XXX

So done all was on year. last the promotion that

expenses, had and employees, It the tested of a bouts get some in year, days COVID for we last it some challenging for a where quarter. COVID some everybody regular million year. versus warehouse, had it our some with warehouse, payroll, times few our approximately of and executive and shut Most million administrative this we down made to bonuses, for $X.XXX $XXX,XXX General increased personnel, the at COVID-related. bonuses and changes $X.XXX was that. of couple We in with

there, as incentive involved well. there So some too, extra was

Year-to-date, California space about year-to-date. California. $XXX,XXX rental for happened at $XX,XXX $X.X when There but it million year. rent off said, that the we premium in million year. renewed warehouse up coming our some that increase, We by in expenses the last a rent $XX,XXX expenses We were we approximately were X-year It did. by a increase had did was damaged okay, the our agreements goods in payroll have off of versus as of out-of-pocket was that. lease, in associated went is up $X the that with a substantially and like also We was space offset, I prior $XXX,XXX, G&A

So offset current charges us didn't we the in payroll to that increase year. any the the goods was by damaged have fact

gross the discussed few earlier. mostly as -- a $X,XXX,XXX Again, minutes million $X,XXX,XXX, to from profit, operations, million as ago. we discussed in was profit Income $X loss $XXX,XXX year. again, Year-to-date, of, million $X.X mostly margin, almost prior $X.X a in gross compared of versus

back $XX,XXX the party, we a pick-up lot year, for in of up $XXX,XXX The increased other of them expense since the interest $XXX,XXX. collected one-time new to not was our income, that related had able we situation, some were the had that pick on we sales more did -- that $XXX,XXX from deemed income did our not deduction before. the we prior Again, the with quarter, deal some us -- offset last and collectible to than to month a versus have were -- financing year. to cost net Other Cosmo, deal for we them had this off, of year. we it money written This by

million in income in income, $X.X the $X.XXX $XXX,XXX expense, you or eat from decrease fiscal the okay, 'XX. net loss, who payable that from Year-to-date, received year. another other recovery will, we in extinguishment insurance It's versus other year will, The $X.X from damaged you we caused goods last or million if if damage. approximately million $XXX,XXX approximately to concession vendor that had accounts -- net, or

from -- party. our Another pick-up again, XXX,XXX related Cosmo, $XXX,XXX and

in by expense $XXX,XXX an year-to-date. income, an We $XXX,XXX interest increase $X.X were also a million year. approximately Net things income net versus had offset almost of -- loss last those increase of in

$X.X So $X.X have of year, in approximately $X.XXX year-to-date, this net million a million. million a income million. almost of $X.X last pick-up versus we And pick-up year

one-time So to were as big of took losses last recover most see, of we year. we this those you those that most can year, able

this recovered we them fact, In year. of all

So a the flow that we're of cash perspective. this you're year reaping from benefits seeing,

at things balance end million. inventory of Inventory at December, time year, couple the of last Of a million. sheet. is Inventory, the $X.X at note, now this was on our $X.X

that inventory -- $X.X drop a inventory, very could we year, with demand and period, was very were last stay-at-home We that million the dollars' left ended more So COVID that lot positive. little probably of for of stuff excess up during money a Karaoke even this a had worth, we strong. to million this of able on couple approximately table. The year, in move

million million that currently of to We million, the stuff, almost put approximately year vendors in accounts $X.X the about payable to to $X reduced end owed use. of had $X.X period and at has XX/XX. or that last cash our good and as We

from all the So and our to last year payable, cash stay that vendors took off that of we're accounts the most here. terms with paid from in debt current we we of current generated old inventory, able

of that's report. my plenty about sales and I'm have some sure the have. successes say to So we positive, is will It very that

Gary Atkinson

Sales Global detailed more and Marketing, Lionel, it. the now going We a during report. Bernardo. Bernardo third happened Perfect. VP you, for over appreciate turn what We're call into Well, the of some to insight for quarter. ahead, thank sales Melo, to Go

Bernardo Melo

In the and I, also wanted Guys, I quarter that those general. gone questions and bit, kind recap a yes. and get to some for year then the so of answers given account-by-account at to I've little and the past, highlights just time the accounts, want third leave into just on in end.

so far with year -- at retail year, -- we had we've fiscal But really this -- partnerships. year our this major good a

of their and electronic Singing the are more all in the either retailers. particular position or branding, Some key that the seen becoming retailers consumer we've strengthening toy relevant department across. those department to Machine We're with

and when inventory. XX%, year, attributed They Carpool they everybody up in were Karaoke. happen winners For TikTok, of And at a in ship -- banner they tagging just popular lot -- lot have them got We example, really of a ended had item additional item Target, off. the was A inventory, that Target year, were was that they and to year of took -- to one able year. on early to year it. really the the year-over-year, calendar this this some

step-up could drop-off But a higher well, any those We items Their a pony. $XX.XX. it success bit and high karaoke is a wasn't unit our price priced. had with entry-level They in as be are didn't see and their little just as we -- $XXX, point. of one-trick also higher as they core huge a carry of

As were they a big matter of for winners us. fact,

stores, about the And we XX%, of transition but gross Target, microphone our Unfortunately, brick-and-mortar margin did of at its year, have to also also in stood we microphone done handheld with another own. out increase XX% margin handheld Carpool came allowed the XX% for the there. that to -- business that their with was us to in them to gross in Karaoke for which by and increase

we're take benefited were into it to as people do to Amazon drastically totally with to with reduce rushing presence and again, with have well. margin Target from Machine, going our do outflow year. while well, to that other good our Amazon either of want in Marketing to that is and per one to expense of really as So marketing do those didn't We Amazon our there, that continues to there. we another AMS, retailers it's or Singing transitioning to Amazon. with from able their out, -- fiscal and a of paid retailers XXXX expense some expand increased strategy increased this just -- promotions or about the shopping. numbers -- well. online to We a lot We Services, Amazon as

the didn't of same fact, matter of a Friday still year's we end. participate Target with Black maintained from sales number in As and

able a inventory to store, prove well supported perform well is in that were could category marketed that them not to that this the for promotional them. is with only So and karaoke we

even As end of toyetic well, about the that department. within up end fact, ended holiday cap that cross-promoted was a the and a toy where brought us matter given. in performed items promotional through with selling of XX% department really cap they Target awarded That electronic some

stores in So we're this expand we to if could and it grandfather to that this see looking to all on it get year. only year

year. excitement So good doing year-over-year still there. getting the numbers about what QX, from in now our back with Amazon, showing to really we last XXX% were is We're

The number. really moving is continuing wasn't So -- the it XXXX It's not a forward. trend trend just is continuing.

And higher. fact, we those we had could more numbers as probably bit inventory, even matter a if little of do a

XXXX able sort of only were As inventory of full Lionel of without sold Not to year that inventory. end-of-life discount sold-out on items. good also mentioned, of to with the last We on on get a -- lot pretty but than we're We're coming that. cost out many and of having through much out that, less We year. inventory. our those we had all

just we're So was we cash those up settling on key the returns. did very, And sell-through Target. due right number we minimal. if very settled sales now and take because But that not have low retailers with in did, to some out -- Club to situation and much a Sam's ended overstocks. out so inventory the better we the receive to like inventory Costco, not We overstock at

positive extremely So that was for us.

Pedestal the be that know perform was unit, it launch performed are at the at a than going because Wi-Fi it enabled thing higher We usual. And point happened what the end our is about which higher well. year, price new -- Another than really of unit. used carrying, of a $XX to how didn't to to was going was we it the to clubs $XX

a some early that stronger on already for actually little model, have we for XXXX. So commitments XXXX going particular bit

highlights other direct. done We've that now for Canadian the -- things took we Other distribution. back that our year,

with that relationships going Source market. Canada, we're And years, year, us. our And The that Canadian was overall. continuing down it business in amongst others. taking for "R" to direct market Us, established we've increased previous now, expand for Toys first over, steadily Cosmo And we So with in

Other things, challenging talk us. still about, to Europe is general, in situation a for

lot Our main seen handheld mics. a of U.K. has those competition distributor from

that, Europe back. commitments, year some that coming up our challenges this out there strengthen in So continuing of are who that already knowing off just Europe. But things strategy for that in retailers, business the key Asia. have making hoping opening with our But with bounce can to the we're early started our numbers number is are

starting shape to so up. things are And

our that by that lot [ was increased this had a direct-to-consumer sales The and business with other influencers some wanted to it partnerships -- of that affiliate ]. called I go A triggered its some year. other Digital Old over, highlight things with company we

they TikTok, were So them we items their website. were our and on promoting on signing directly

and healthier better, margin only items inventory. in our of And most then, situation with mics, good, for was the a of contributor Not Obviously, fully were listed also moving-forward promotion Pedestal was out I mics with much coming sellable inventory part. about a but the a big lot too. Karaoke up where talked are party the the Carpool no that some to handheld gross also, the

margins some So good generated gross that well. as

the kind said, that to you, if with over Gary questions being leave of afterwards, And I'll I'll Q&A. for on. some highlights transfer And the we discuss to then, of could some have touch you in Gary.

Gary Atkinson

we make Great of have close an do want you, I coming I opportunity up are job. know, to kind people to here, for Bernardo. time sure Thank and questions. Okay.

And it we up your with now? sure I'm don't why open continue Q&A for questions. So we'll

Operator

[Operator Instructions].

take Mike with Schellinger MicroCapClub. from our question will first We

Mike Schellinger

What I have seasonality you Carpool product Karaoke. a of the line? of about the can on seasonality product that regular question tell versus us

Bernardo Melo

strong and great in question, that I'm Actually, products. because or are parents either of seasonal it we early for really summer what glad kids popularity then, one the numbers some a actually or that late our it product use the of March, of it. think of in is are That's it And you cars, -- buying karaoke it Carpool we're Yes. asked was as to driving the their was vacations positives had summer. we for the whether around And doing April. think real it do during kids launched It buying this summer. traditional the actually mostly wasn't as we Karaoke

right then fall into holiday. and they then continue And

remained some good launched -- February. promotion So pretty in strong on solid pretty some it. that without strong -- We right it's January still have numbers. also, it numbers behind a some seeing Amazon's launched we're just to and now, costco.com, numbers And here and

we the expanding business. other handheld not more that those because items. And as seasonal are to that's mics, focus seems it's as on want right, on why our it So year-round

Mike Schellinger

And the refresh also that? think be mentioned to there's I prepared we would to expect you in remarks Carpool that in see a When Karaoke. going

Bernardo Melo

Day Day to to X.X from to we going We're coincide planning it with in so X.X. it launch late that on early But that's back we summer. the some with this -- up to and summer, it are move Prime store. transition the now retail Amazon going launch rumors into looking also, launch to And we're to year, are of The at could the another we And is October. July. going Prime Yes. probably were going the that set August, it's promotion

So through launch in August. get after to we're then we that promotion, looking sometime

Mike Schellinger

then Okay. have And put do to past now an refinance out great in year results point you view, from a the loan here? of you've with opportunity the

Lionel Marquis

The possibly. good a into to But It's size first yet. deal, again, out the that answer get there's a financing, I'm only X-year even year checking possibilities we now. now. through and current to is, those the out-clause been haven't

see at on out make thing of may we that to it's period some in X have table it until recovery, not work favorable enough the at expenses got be this the terms reasonable I those out. time. Maybe I then least So going possibilities. it favorable if of over But would something I'm would -- years to for expires. longer I've a eat would But looking to

Operator

Instructions] [Operator

further questions time. we appears have no at It this

Gary Atkinson

we you, our to And go our speaking want third to on to Okay. look update again over with Again, get their everybody. an we I numbers. quarter afternoon spending results. year-end appreciate you when everybody some all time forward Well, on Monday thank

day. thank of you, care, everybody. your have a So good Take and rest

Operator

This participation. Thank for does conclude today's your you program.

disconnect. may You

Algorhythm (RIME) 22 Feb 212021 Q3 Earnings call transcript