Polished.com (POLCQ) 12 Aug 212021 Q2 Earnings call transcript

Good morning, and welcome to the 1847 Goedeker Conference Call for the Second Quarter of Fiscal Year 2021.

As a reminder this call is being recorded. [Operator Instructions] On the call today are Doug Moore, Chief Executive Officer; Maria Johnson, Chief Financial Officer; and Robert Barry, Chief Accounting Officer. Please note that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The company cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated, including risks described in the company's filings with the SEC. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, August 12, 2021, and 1847 Goedeker assumes no obligation to update any of these forward-looking statements to reflect events or circumstances that occur after today. the Investor will Relations of the available replay Goedeker XXXX website. webcast conference be call on A

At this go time, the CEO, I'll turn the Moore, opening call for remarks. Please ahead, Moore. Doug Mr. over to

very believe joining second your our ] continued strong you [ We interest and conference our much, to quarter morning Thank everyone good in for investment call. earnings appreciate and Goedeker. We the and many performance, second benefits acquisition. $XX.X combined our million pro our $XXX.X of Connection forma particularly presented quarter million synergies of demonstrates operational and Appliances by income net revenue the

way. is Now while that revenue, achieving the positioned we transaction goal billion pursue $X closed, driving aggressively stronger scale our of intermediate to the and profits annual well each in are of step

continuing sales focused these capital integrating starting After were including on senior expanding and Albert providing the and market. talent, Elie plan June major reliable selection integrating fulfillment; growth. plan, the highly modern advice. strategy and delivering execute team of customer-centric verticals, at and executive achieving employing the focused in has from this competitive formula level X expert we plan we implement and key ] to the helping a for opportunities Board for market capitalize offering term consistent, forward, that strategic luxury maintaining and The our new believe for on the profitable In X-point priorities commitment the during the winning quarter. the striving home is fast and customer to our us appliances the in each quick, Fouerti, to and is to stack better e-commerce our management This marketing appliances the and product premium core and businesses senior or support tech the dedicating This energy with against targeted stockholders, market. experience; are seamless care and able full the the we Board. line the strategic widest resources over raising following: and home across U.S. [ pricing; long During

perspective, position XX,XXX offer that view tracks peers, enable to shipping stay product From implementing stock, offered reduced breadth. strategy times. e-commerce to leveraged competitive We've we existing the in provide product demand what price grow when at effectively as [ SKUs, ] selection we've once of area a supplier we new by data-driven to us unrivaled being In fulfillment, all to we relationships closely a product and begun pricing have times. us

addition, ourselves position is unified In in-house. we exclusively care that as and especially customer competitors. important experts specialized as having have The in-house differentiate legacy consolidated ourselves a latter an from into point, team is team almost we

recognize to and a comes network. it require When we performance, supply meeting our chain fulfillment world-class and customers' that exceeding our shipping will expectations

X of are hubs We build this network. New to working underpin of These our are Connection's to distribution our national with now in supplementing Phase facility. Jersey Appliances by Missouri kind existing network, including taking X center unison concrete steps

assessing Notably, we already is modernize network management with upgrade quarter during tech Texas. management signed our commencing and warehouse to our Phase fulfillment build-out of an California, the team our agreement our locations X systems stack. actively in Florida and new

facilities multiple on agreements sign to by end expect the We of XXXX.

ramp-up products these hit our the our get locations to plans are people, and operational, we time some take will developing ground our can systems so for fully running. we it While

extended end. to the also Our front technology emphasis is on

customers a assets screens: experience properties Appliance consistently seamless Although the mobile. Goedeker Connection and for across are currently separate, the to UI/UX our still are development the desktop, specialists web all in ensure tablet, updating

expected marketing our are to that or products drive available. stock in to fine-tuned customers readily spend to have become We more

we presence, to operate and e-commerce web long-term leading a this under conduct That's one firm overhaul a we brand our ultimately to for marketing brand. recently brand consultancy respect singular intend retained review why to With us.

quarter XXXX. We are during out towards full working rolling rebrand the of a first

the a addition for the take a to highlights want aforementioned updates. and I financial other moment to few quarter, to operational In discuss

We continue and improving XX% from XX.X% rates XXXX. of in June, fill up in hit June

While to issues fill the we delays leveraging continue pandemic-related sustain improvements. rate our with scale certain inventory, are cause to in receiving increased suppliers

larger to and shipping rising costs. optimize economy work hauling rates and scale Our amidst transportation

help a go-forward construct properly our retained that executive to an performance. From pay our strategy leading compensation a aligns incentives governance framework and director us perspective, our we've consultant with

approximately enduring culture own forward. affiliates stock, and to currently alignment, incentivization accountability common we company's and are insiders committed Although of X% of the an their maintaining going

companies turn I'll Maria Hardy. now She and and such Chief helping overview my the our holding roles has after and to XXXX. Officer, an to over company's to in remarks grow. senior us July John performance it the PepsiCo Financial joined and new business for quarter scale of first of financial valuable as Johnson, initial Maria conclude experience half in second provide

are to We have board. on her thrilled Maria?

to morning everybody. Good Doug. Thanks,

$XX.X GAAP included million, of or an end sales million XXXX. XXX% product second million, to $XXX.X XXXX. of forma with forma acquisition $XXX.X GAAP increase mentioned, $XX.X XXXX. net Connection's million forma quarter changed an which of the for were Appliances of through increase Connection, As sales net $XXX.X Appliances the basis, from June quarter, $XX.X Pro months or were the second compared X sales million, of XXX% the a $XX.X product for increase sales sales, quarter million, our dramatically. an for Doug the pro net has million were from On over $XX.X year-to-date million. the quarter sales of completion company's up scale X pro period were

from a profit forma for for period. quarter up margin, up XXXX. X $XX.X margin margin the with million forma a was months the gross for XX.X% million and the and $XX.X gross from Pro was XX.X% margin quarter Pro the of XXXX with XX.X%, for $XX.X $XX.X million million XX.X% period was second profit

the a for XX% profit quarter with million of million fees expenses quarter XX.X%, the GAAP $X.X $XX.X were quarter. million prior $X.X of a costs second year expense of general million, improvement of operating for an credit $XX.X $XX.X of margin expense for was card and million Pro $X.X gross million. forma compared of $X.X item to margin of largest million, advertising the with being and million, and the $X.X bank expenses personnel administrative with

X income quarter months for $XX.X for Pro million. the it forma period, million, net and $XX.X was the was

included net income forma for income benefit tax Second of GAAP benefit included tax quarter a quarter and benefit of tax $X.X the $X $X and $X an net $X.X income an a for million. million second income net of included quarter a with tax pro net compared million pro benefit an forma XXXX. income income X-month was million $XXX,XXX income to second million of loss

a and Pro with million $XX.X X adjusted forma months of XX.X% forma adjusted a million XX.X%, was EBITDA pro EBITDA margin. for with margin $XX.X the quarter was

For million the X had months million. cash company of and working ended negative from June $XX.X of the XX, $X incurred capital flow operations XXXX,

during XXXX. million March XX, Additionally, quarter had on the term XXXX, company XX, in $XX.X company cash a by $XX up equivalents million June reflects $X.X of increase December and cash million XXXX. second secured loan The the XX, on XXXX, and $XXX,XXX from cash on

be With margins gross pro to million. million XX.X% forma margin Full basis expect full on between be between basis our and and $XXX and and outlook, be forma year we X.X% adjusted to full revenue on a year XX.X%, year a respect EBITDA $XXX to pro between pro XX%. forma to

hand to for his Doug the presentation back comments. closing I'll Now

bigger to XXXX. during billion the took we actions seize appliances the projected which is sum, more market, in and reality U.S. $XX the The transformational. second opportunities to In be Maria. in needed massive is Thanks, the were to absolutely exceed tech-centric quarter household we

our are of indicates freezers, including machines, their online refrigerators going washing and big-ticket research and items data consumers Our increase dishwashers, major appliances, like to purchase ovens.

pro the acquisition, point our lies and shareholders e-commerce this results Connection power our significant ahead, the Goedeker Appliances the but described proposition detail for which presentation Substantial our more double-digit believe people, in the towards capital the secure we further our leading the customers demonstrate in scale, as investment on of have our will of is our Executing completion in value current strategy, deck from future. the the the and market capture work we and opportunities to forma share. new player. resources X-point now With quarter

operator I'll the conclude And ask questions. to call there. the up Thank time, for any open I'll this at you.

[Operator Charles Instructions] Our from [indiscernible] will come with first today ]. question KWM [

curious and about was there. fulfillment orders rate I the July

Charles, I say we disclosing will the done, position we've marketing we've and what towards readily We're own. what to not taken can is what we market already a moment. own July publicly at

lack but and effort be an So reduced of in fewer continues is our that we are customers demand strong. dissatisfied to drive orders we spend not necessarily and fulfill been Consumer approach But in actually wait believing July in drive we with that's times we June, quickly orders can, to that to make product. our to and marketing approach. August now that best our can't

we to is are XX.X% the provide, which what So we That be number are percent. of and to fill continuing June. our more for consistent can this mentioned to in marketing traditional we our towards consistently spend as trend rates continue means modulate -- in rising a call, XX-plus

real we We're a question. quick good people a sure in more to make basis our satisfy approach marketing on So modulating percentage time.

with come Asset Lapides will McLafferty Our next question Management. from Colin

this the and provided I But the between in my was XX% wide appreciate for I morning. So you you margin year reason calculation, wide gross you for second the range? guidance range all implies full explain that. about curious guidance half, a by pretty Can providing somewhere XX%. the the

miss the call on Actually, Did the XX.X%. XX.X% you range provided to was we that...

a year. the -- full The I wider is... year guess, in doesn't what I'm saying. No, sorry, the that implies so that is imply the full year, a full half, range for second For

Colin, -- of appropriately happening half, and the focus second A you're couple things this. on in to

containers, Depot, it kinds lack and as and As of quarter, was this some things, a in project the freight guidepost a heard the you number is Whirlpool, freight to delivery properly use you've first from But are shipping. bottom there was line things. others, Home understand and we was that higher Suez that and second of in and the Lowe's, all Canal, quarter on costs. by than triggered of It headwinds know,

raise raising of price back But not in you're call you has to the Connection. products with X% cost when process did there've second some The order bit appliance months to existing quarter, of there's that's back, that little but where retails go consolidation the are we can't a a do that. occurring orders third in And to new people protection. their our Appliances across us part we have for couple a orders, familiar gather board, They ] and been -- a, obviously I'm just almost is price protecting. [ manufacturer it, every sure handed

So it goes in there's a on pressure third bit topic. the quarter on. of the year that little as But normalizes

to on Supply be There's a kind part continues to buys. reluctance the an promotional of traditional provide issue. manufacturers

our number for a fourth our working We familiar, in it, buy capital, it, below may quite to that an quarter. those to we, utilize or X see for are call, manufacturers inventory You put and opportunity I'm normal in us occur cost typically we're third that, that for year, to prices. a don't with able X be sure. of not the not those and But will put on predicting months. -- readily And the out times lower XX% call X%

a those to be this wider is our not an point, we the than up of until little factors, understanding to and we're And been freight of guidance. game And of important felt would situations, taking people guidance. in bunch constructive a we're under have people Thanks Colin. Since giving give business. approach it know, for it's we've So normal appropriate call, that as said the was and supply guidance you perhaps relative it a not our range considerations.

about chain is Yes, growth that had explain industry you that Could helpful. being the there XX% supply follow-ups, fact guess from the the supply in data? chains if I it's a at what's in QX. couple industry was I that's volume the Whirlpool what we're was that and narrative constrained really really volume that growth okay. doesn't And industry AHAM XX% tight? jive confusing looking be might others hear with QX anecdotally volume data. I of and hearing between I discrepancy And why

inventory then closed were kind and manufacturer mean year first basis game this there this it about dried you were immediate was time, and I if of last essentially of the on the was Yes. most an in inventory up. supply, in unavailable. Factories quarter

the in ] very richest, comping of quarter into second the lack [ of quarter. So deepest the you're part third of actually product year last

with they would failed If would this kind you moving they recall also, reopen descriptive up reopen, goalpost although catch of thinking to quickly. show the and That kept dialogue, any materialize. AHAM not

very AHAM comping an comps on So again, we're easy level.

that businesses. question, But And a but so would I industries. think other hardlines answer. student you'd of [ I in hardline you you're in see know see that's the ], that's other a good that

combined Okay. and That's sense QX? helpful. a in was forma give the growth pro company's can you QX And of us what volume

already we presented that's think done basis. that We've I did the data combined in already the already.

So I'd just to... I think refer back

you've but just results what's out curious broken -- you the and out I'm broken industry. Sorry, driving -- have for versus our price? volume the

was But They this we're in with a time showing We not year. could that May, July, period year. not up follow not and up not in pricing, conversation -- call. moment pricing June, on have taking have that. last were done last and the separately, We you that at volume but factor that this pricing

is there's -- take It's the one versus that part an cost lower downward gain it up. the new this every this essential the consumer lower That's appliances all do was realized and is units a price because the know, to So that of The benefits spiral not of and of is as item consumer. it price not you always gladly by not it volume great per -- industry homes year, a thing. unit, pays versus dollars have. they the more

that circumstance. that's anyway, So

the So thanks, near sure, I'm chat in Colin. term. We'll,

from ThinkEquity. with Nate come Nahirny next will question Our

on congratulations quarter. the Doug,

wanted you the what in means expand Appliance Florida Just and asset with Gallery kind the Southeast. logistics your that little a on bit purchase of to for in

very not that to. great have when had a distribution quickest That's you a way along They've great area. access a industry. capital products and to the that the have those some certainly going someone intend opportunities of is in current you retailer understanding have we the to able in that. where on to question, buy not Nate. access we've were have luxury who Yes, is did gives Gallery Appliance of get are it's one does, products center and a and foothold an fulfillment that to this come well-known currently Tampa also working we on many us It in do Florida what do that call established is calls a there. we distribute showroom And to able market to to and a we're that The market.

also and, for they we from transactional And will a customer benefit that and website sales support center obviously, a service. contact

high larger of potential So a actually in part much they of being that business market. have a the

something luxury only We expand in. distribution continue where to this success products really as at opportunities we're the largely that believe A our premium continue or Appliances us, we're to currently -- significant is products that Home Best can the Lowe's, anyone we constructively that get can country. built It's and differentiator. we from we you offers XX like to our appliance look on need this, [indiscernible] at the at to Z And a one through understand on quickly and investors brands products. all Connection consistently do the only in of that top Again, else. Depot, not only It's Buy able to

extremely but material really strategic standpoint to our cost the we marketplace. Again, pleased or a of our activity price it and terms So helpful get was a intent not from in standpoint, strategic a were that. impact in

So question. Thank you, -- good Nate.

will Askew Rule George Capital. Our come next question with from

line that is underpromise, on of just sort to the going mindset. you around the your your items is in provide today, mentioned call merger. since the your You guidance first the overdeliver role. CFO you philosophy you really provide have certainly This continue a forward? earnings -- case Maria Could

your Just kind of we forward? what -- should what looking expect

a think around shipping I guidance around the again, ambiguity enterprise. and Well, make supply tougher

felt our Bob, not the going to team, attention we're and marketplace. that there people, very we In Albert, something it provide people pages that rows on our But pay spreadsheets fact, that years, management we're It's data guidance sense goalposts makes a gave something Excel other and not behind It's and guidance guidance. business of rows others and go business our that years to. we've blue And seriously. that. to entity executive put By we a sky and since some in take important to team, because Elie, out based been nature, for we abandoned thoughtful activity. view and and public for Maria pages the not was have myself, been have we've of between that

results goods to prospects us to expect of beyond important in in supply, we and very to start that based thought our we will hope, that as modeling data-driven a about world, cost our to XXXX on them and go it happens a to to consistently picture like able future, robust to transparent we belief we What what occur our a would is that forward. perspective besides have the company that we're being not regardless for we what clearer The be start believe and XXXX happen. of will a we be share we necessarily. is have going on is be of total really others but will fact, was freight, And

to it's that When people Wayfair but guidance all project how talk issues, deserve in about we a investors at some We or we we business pandemic we're about belief moving felt we're the ourselves believe. their and piece, to It's stable, we not And as thing. and again, predictable there. rapidly confident looked certain at how requires what the put point market they a understand that thought, like that's that at really that pure-play there. this peers our you important about that and now space on We're to guiding it's they examples things, out and look able others, pure-play together, something see as whether business the put insight future. talk drives thought a out actually how of we

again, conversation. take happy to something I'm and a to ahead. continue But a in So months provide have and this off-line the certainly question great we'll

to this Moore conference question-and-answer to closing conclude back any our for remarks. gentlemen, turn like I session. and Doug over would Ladies will the

excited you we're the able Thank about we've to and detail be the where call prospects, believe much. some suggest again, going. is I we to want very our folks company very on And to discussed in that

of to have spend Board, we Albert and opportunity who team strongly to myself, you other makes leadership our our time. one in that those about that to As value and and a and with Elie, with long believe Maria provide an our Fouerti, and investors period of on are can our a over commitments provide here time conversations Bob basis business management communicate you welcome consistently prospects. for

we really interest mind, So and an a welcome with into the future story we that and worth in our future. conversations that's you now following that in continue have company.because to it's hope think

very you thank much. So

you attending The conference today's Thank has concluded. presentation. now for

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