ToughBuilt Industries (TBLT) 19 Apr 222021 Q4 Earnings call transcript

Greetings. Welcome to the ToughBuilt Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please now Martin Galstyan, would turn the host, your to over CFO. conference I Thank you.

You may begin.

full and Good afternoon, is Financial discuss and Officer to joining Martin us XXXX and thank am you ToughBuilt's all Galstyan, and of fourth the my ToughBuilt. results. Again, operating for I today year name financial Chief quarter

and the begin President with XXXX and Officer for of Executive quarter me today's beyond. today's by year. then Joining discussion Chief I on from the same plans call performance review and is Michael financial providing full and our discussion operational Michael will growth conclude fourth for Michael will highlights period. Panosian, will our ToughBuilt. the financial

remind management forward- statements the uncertainties Reform subject Before the to call changes, covered turning are Act filings. the are and over our U.S. Private that to of made looking you Securities by Michael, to security risks the like press in under U.S. would and Litigation release and in XXXX any described I

that turn today, reasons to noted most presentation. contained release for I including non-GAAP non-GAAP the that by encouraged and course measures Michael. may unless be earlier companies. directly those to the ToughBuilt's are we financial furnished SEC refer for of of accepted call measures now with GAAP therein. review measures States call, to from used earnings reconciliation current in Investors The principles and with non-GAAP the financial in United and otherwise press will during to Form ToughBuilt's in different X-K earnings comparable the releases generally not issued non-GAAP accounting financial prepared the are on financial measures addition, accordance measures our financial are its may other In report the

prior compared year-over-year the revenue you million, keep strong volume revenues and a XX.X a the by continues mind approximately a fourth for based some home full due the ToughBuilt a unique the introduction for that ability XX% culminating as continuing year. period quarter Martin, million, in joining Please the fourth year. highest came new be the much innovation for construction of onboarding quarter that fourth known in developing to existing and our XXXX for our believe typically well the improvement retailers, you, demand SKUs thank the compared XXXX. industry. of of at in and success growth year We talent. year for to an record new was most combination as representing Revenue The the is of of seasonality, to in today's on leader for very XX increase record XXXX quarter of a XXX% call. Thank driven is us best for increase attract ToughBuilt on the all and products. products was our in to to

to shelves Our for concept matter has unique months. join to efficiently draw in professionals proven known to to a and an organization quickly for bring ideas and ability a tremendous its be eager creativity platform from of

importance first our a launches, product laser line. technology-enabled Our tool, the our ToughBuilt by testament are XXXX of demonstrated numerous platform results teams, a strong including to the of establishing

several existing taking we half our I cash back to cheaper we and partners and ordering projects, from which be as steps ToughBuilt while are our to their now place. focus expect major inventory information accounts is product one in shipping Martin burn working well supply track to ToughBuilt to improved turn differentiating possible. is products, their ToughBuilt's larger ports will our One in rates in the for decrease integration innovative of XXXX, the to expedite are continued ship financial in by would cover the own infrastructure our of large customers retail result from partners from more help automate where on products manufacturing combat our empowers retail partners. expect features, demand logistic-related our This import and directly in to Martin? lines our to second as negotiating greater logistics rates, as import This thereby detail. processes a levels, in shipping warehouses. shifting would partners we which significantly significantly confident as to technology allowing XXXX, products with will in our which and costs us well direct chain results in To of scenario ordering at receivable implement of result Based shipping Direct generate all on lines enabling leverage can win-win XXXX. new designing we revenue shipped. decrease call products, to to our our to the costs current

million XX% months as in XX.X prior ended approximately in million approximately to compared of into XX December Revenues of the increased in period. XXXX the XX.X industry-wide sold XX, Selling, over the XXXX sales increased goods inventory year. general and ended for compared XXXX compared to the year. shipping and XXXX. the over XX months primarily have XX approximately cost increased million quarter quarter. development sold in increases of the for XX same to for which product three fourth due last the XX.X to three marketing holiday increased XX.X to chain disruptions, periods advertising expenses XX, hiring X.X both primarily and XXXX compared builds was ended for million over goods December in for months as XXX,XXX Revenue months XXXX. to compared XX, Selling, million additional contractors, development December lines. and Michael. in XX.X for XXXX. million million approximately XX, of increase months administrative XX.X in period higher Research approximately to XXXX fourth mainly the for attributable December employees, were independent season supply compared X.X Cost three XX, you, and The ended of administrative were new million months to period the year XX.X due Cost historically approximately were and demand products, led the period. for increased million the expenses use million costs million XX to the the Thank related XXX% well costs for for in to for Research last December XXXX ended million XX, products XX, expansion to December compared XXXX of XX, XX international portfolio months ending XX continued for new in ended costs general XXXX December materials. for to December were for to in XXXX SG&A and expenses were our XXXX and to XX.X increases same ended XXXX approximately the demand million prior

in We approximately expect loss the as loss we inflated of shipping our In loss In share. of build develop to team the construction year net had is the stockholders The attributable of for a and of and to full the maintain loss a million had mainly million of per design engineering continues fourth prior to tools costs net company XX.X out costs. the industry. net levels $X.XX XX.X a period. R&D common new XX.X quarter we to of or attributable similar to million compared diluted of XXXX, XXXX, the

XX, million. December diluted of shares As outstanding XXXX, the average weighted common company's totaled XXX

purposes. approximately X proceeds of end, a direct offering registered quarter million, used we completed of net proceeds for the Following working be which capital will for the

exploring capital to determined position support opportune team is buildup market its raising the the volatility management QX, inventory it in that low cash cash position. time and due to alternative the options, Although was company's from

cash As X.X of ToughBuilt million. position December XX, XXXX, was

translate on revenue back expect the We the receivable to near-term will our flow cash sales. to our growth. now be as capital accounts cash call to collect for Michael? This I final we position remarks. will and turn Michael increase inventory his sufficient addition quarter into to the our recent raise support our first and in

Martin. you, Thank

our questions, would now, retailers to strong we retail world our we to expand in retailers and the to selling the like reiterate professional exist products Before from market our the demand new top seeing on call for globally. have those around opportunities Right tremendous open I we Through infrastructure to and strengthen are relationships. that capitalize I growing orders are at continue and existing the ToughBuilt and base, increased opportunities. the contractors ToughBuilt and place products repeat DIY-ers sales across ToughBuilt Amazon.com for

Amazon in demand, our be demand product we position lines and our to capture America. increase, additional offering Latin continue e-commerce capabilities launch every international To year. and currently As products will to on XX X a products for ToughBuilt we in to expand Europe are

buckets; introducing new be As users' three future with The and existing expanding revenue ultimately another, relationship adding end recognition driven we partners, broken opportunities look and retail our but partners, our dependent ahead, of new are by innovations. can retail into brand on opportunities one revenue products.

or SKUs. retail of order a numerous ToughBuilt's when new of we partner, onboard first a includes example, the portion For typically selection catalog

stores customers. and process basis new Furthermore, their number are customer offerings ToughBuilt's our this As of ahead items. retail in are is retailer the newest products expand recurring likely of partners to positive underlying of on their longevity the introduce increased result year-over-year Even the offering available expand revenue offerings, in to revenue this demonstrates experiences their term. their products still consumer our from demands of oldest for current for are as potential grows, or us. to that is include increasing long likely peak with to the product revenue To us, those The differentiated made products the online existing we more products.

would and unlike our industry. ToughBuilt, entire improvement, confidence ability have to design never potential on disrupt seen world. and begin engineers our to We turn over ToughBuilt in prototypes design our are organization, for along I great to operator best-in-class full home to any the I I that something With before home the including company other believe the that, in entire to the work session. improvement that building like question-and-answer have truly with at operate we the

questions Thank investors. Michael appear to Will be this question-and-answer be private a those session. few we time, taking will conducting Instructions]. a we you. from Martin, and questions? At have [Operator we

Yes.

Okay.

your with investor. proceed Sayed question. Our private is Hassan a first [ph], from Please question

potential Only I'm in profitable, When company's you achieved put full answer. have. we I think one profitability XX-year-old for Mr. money all will your for when? my guy. question much Chairman, be the very Thank stewardship. I'm do and you thoughtful truly your an your will become interested I grandchildren. meaningful

ToughBuilt, ToughBuilt. is investment and your See, Hassan. Thank I in appreciate your old you, Mr. This the Michael. support

but to for of to enough create we make to I'm to sustain next need profitable, back enough meaningful the today profitability. that I'm to the platform achieve being not we growth going products not our company, profitability, hiring. so the aware within that profitable. we The complete two, landscape. We're profitability, here put We trying to meaningful development too just that are least hoping can don't of very meaningful We out we profitability. the can but fast them at raise the XXX,XXX-person us to platform and that is and sales stop means sir. that That become enough need and year profitability can goal and I profitability global people get After can cover out I to that, will cut often so company. have of a enough product build platform products put green and or

time So are time to is to raising from that's platforms. those just two why complete we

I I'm Mr. Thank answer. have thorough Chairman? question, very your I Can done. you then question, Okay. Can one ask follow-up the follow-up for

Sure. Please go ahead.

I a meaningful two you Those does mean? two statement -- Could In your been profound to sir, a question, lot emerging understand the to it transnational words and bit, -- interested mission going and active be very or read is your statement, follow-up much Did very, growth. company you are China, very multinational an is in very very you but I entity? My important of your you an China is vision have explain time you in I'm you little what are and company. me used in ToughBuilt and promises. much or say competitor. spent emerging growth

to the of could an investors, regular explain ongoing So other growth kindly versus and emerging an me, you man, company? old explain I'm concept company for our

much lines we numerous are company, will I Sure. that's launch what turn meant, of platforms and my revenues. of platforms is development bigger which see generate at the are in the the in we emerging speaking really we company. around least growing coming, a that world, create I Emerging what mean. are saying this of And I'm rapid Once products, we growth you company, sales view up an and language, an when about, fast

a becoming -- that launching full flywheel instead faster. few a by once will completely year have we world flywheel and is launch XX of a and time we products different generating are more and We And lot XX of around that revenue. of becoming product retailers hopefully lines generate at bigger year which will our revenue, level a lines is a XX, force, the

Thank you, and appreciate good sir, for for results us. and your Okay. wish some I I your company leadership answer. your produce thorough answers. my

you. Thank

that, working are do and We to be sir. able day night to

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I appreciate it. Thank you.

Dede of Wainwright. Please is your proceed question. with H.C. next Our Kevin question from

do see hindering see don't helping of distribution. you things. for mentioned in the long implement do takes question. just Michael, of much it taking Michael. you about you. locations? into other couple or, think me to Thank I help goods very U.S. understand Thanks Hi, you And and a sales up I my you that? Curious flow How how guess switch Hi, it it Martin. know, the

Sure.

As in obviously we far China. as manufacturing concerned, started is

must Please that And The materials. good, We the and currently. plus doing components, near-shoring necessary. bringing all it's more the or are around possible. to is and quality and of raw do near-shoring in countries or places, craftsmanship well plus we of that available home factories trying expertise six expertise where other going idea the factory are be but understand

the not be more every set shipping is So will meaningful or provide to is import up the we to or of details have goods the all they from are expensive they because or are for through components manufacturing. those their If higher, China careful, company price not is much infrastructure materials either roof. missing

manufacturing also the implement that up hope question. the we Gradually world But answers your doesn't taking before are base. to steps. has full gradually China So mean catch with slowly. international fully can we I

now? helps. to it count your count Yes, at you retailer Can And the now talk the of you where end SKU year? numbers those do to be and your expect

are professional we we want want then operate. have launching such from wide products. a products. The from XXX lot company quality reason Currently, launching and more the That's screwdriver not product is They a don't to a over Sure. and another drill spread demands products They buy lines. innovative SKUs they of because go company. how

have open orders. and we each SKUs. once Retailers about into buy So we new introduce it. new constantly Then XXX then with get And recurring the are products. lines we doors retailer,

even account big alone line, So retailers. account box smallest the the the becomes let meaningful down a

the So DIY-ers. are serious that's portfolio basically offering increase to to we and widen and professionals our trying how the

and at -- Michael. partners and year where your Thanks, the But year? to retail give the the Okay. count to on the end hard of you your number us SKU you can numbers have of have end expect goes of the

Sure.

we over with customers to will be retail? many the There's how thousands lines thousands was doors target. which question X years. are approximately to of around SKUs? throughout are the we targeted that how different XX We are the then XX,XXX retail And of of over be We XXX, have servicing customers This that in year, trying over to many third the we many and And more minimum get will the part of lines. XXX XXX doors. XXX second doors XXX,XXX The products question, launching world. our currently adding to is part something

SKUs. lines some SKUs, have XX have lines XX Some

situation. about average, on to X to of should a hit guidance and of XX lines It's but I of exact products. launching miss we don't give world kind be detail, new to because the So want the

will So of be XXX, another pieces XXX we products. adding

Michael. Thank the need Okay. I'll back to in the turn you, I to hop over people, but call other queue.

Kevin. Thank you, Okay.

end the will I Panosian to reached closing the back question-and-answer remarks. have We now over call session. the Michael of for turn

efforts what in time giving dedicated grow to first rely all for I'm a on and get it and that to even difficult In has ToughBuilt can the its employees globally. line. closing, ability and in for our and of customers us for the thank this very want store confident to their ToughBuilt into mission our and down company turning I excited XXXX our distribution brand through to profitability pandemic remaining quality

your This concludes today's conference. Thank you participation. for

lines You at time. your this may disconnect