Algorhythm (RIME) 14 Jul 232023 Q4 Earnings call transcript

Good afternoon, everyone, and welcome to the Singing Machine Fiscal 2023 Financial Results Earnings Call. My name is Travis and I'll be your operator.

As a reminder today's call is being recorded.

We will have a brief Safe Harbor and then we will get started. This call contains forward-looking statements under the U.S. Laws. Securities Federal subject actual are or and that uncertainties expectations. These to to differ cause results experience materially could statements risks from present historical A in the Securities uncertainties Exchange Commission, risks the of cautionary that and and description statement periodic the found included reports with be current in and file we including of some our can the filings.

Please now over to Company CEO. call to Gary the go turn like sir. I would ahead, Atkinson,

Singing Atkinson, CEO. afternoon, everybody. This you, Thank Hi, Gary Travis. good is Machine's

me Melo, Revenue Lionel and Joining call the Marquis, also on is the today's company's CFO Officer. Bernardo Chief company

I'd XX, like in companies for and today's was for year XXXX XX XXXX not by listen taking our in thanking The fiscal year a what electronics challenging to everybody consumer start Machine, many off other participate earnings experienced Singing to March the unlike year. ended time last call. call months

subsequent XXXX, logistics chain faced semiconductors, out pandemic supply the supply transportation. breakdown of manufacturing and suppliers global partners, of and calendar and in partners, as retail to multi-year the uncertainty Coming all our

XXXX. chain into retail in supply that of XXXX, early these finally a pipeline created As we part of moved entered backlog Calendar the issues the inventory

orders. economic As conflict demand, interest which consumers with the levels impact consumer lowering were caused inventory pressures, and Ukraine. coped year faced inflationary consequently of to Retailers rates, the went strong in negative the the new cut on, rising and with them higher

and combined together encouraging a again and factors our negatively very unfortunately which otherwise company unfortunately holiday for of All was season, our team. year our what these to impact XXXX dominated retail successful

would to to year a we of deeper key highlight take during milestones financial Marquis a Lionel performance, into insight CFO, minutes year. provides our the our achieved our that some few fiscal like I Before

NASDAQ diligence. as work, of the months major for a accomplishment represented May This we this hard persistence our in to and team XXXX. was uplisted many successfully First, of

is transparency level this a very process. we are company all the listening on our And as sure accountability you of a As view of very our and today basis. aware of I'm a indication daily embraces uplisting rigorous positive

very the a more to expand successful significantly. business as ongoing expertise knowledge the we Their consumer of our our will and uplisting requirement input part be We part several Board to the Directors fields. for of phase this and the leaders did uplisting solicit greatly on the in but As of of and importantly counsel with experience we advice, as legal, electronics, elected growth within appreciated to plan. accounting process, execute next look finance

national on year, To a the past. exchange terms the during concurrent back raise company uplist executed to a We during $X has better capital successfully we million raises have we executed fiscal what uplisting capital last immediately our raised than May. benefited in in successfully as this

possible for also announced other our transaction for in $X.X out at-the-market clean May transaction all any of term rights a or Neither simple and capital ATM as it year. and investors, as any We warrants million closed preferential involves structure keeping in this derivative shareholders. long October

families. that Moving also more 'XX, Walmart today. stores. the distribution, a with It a central item. retail consumer for They to make an done their department the entertainment It capitalized was operationally centralized location came research on, electronics was not which to had opportunity on a just and internal locations product Walmart, single partner our for electronics. within revamped we toy and largest fiscal largest belongs already expand from determined in prominent adults our their karaoke feature

in end space commitment, department. to newly team showcasing our development, part karaoke products this of electronics expand As Walmart the shelf higher our expanded asked our

Toyatic holiday throughout newer challenging retail The to toy fiscal the to same orders several Walmart shelf environment. were of sold incremental we Machine department, what in we the maintain our in our was for space The net million the offerings. time, showcasing a [ph] offsetting that was year, impact Singing able otherwise of At some some

For carry a will products Singing this electronics Walmart, between toys Machine departments and Walmart its year at coming XX total stores of on shelves.

the presented one and Walmart growth in opportunities last of best domestic While our clearest growth fiscal market XXXX path represents our year, beyond. Canadian to

have relationships a commitment sales now this after we've the are on late the period of impact reps in in result, best-in-class and to in a has As number that doubled Canada. steps key our the And sales team took Big moving of retaining fiscal Box down we deep one on seen forward. have positive starting focus the with XXXX we market, a closing Her fiscal retailers. international our year,

examined And opportunities. market. market. that karaoke emerging Number our Number the four, concluded the product in-home karaoke commercial three, can Number end market. the hospitality different be growth karaoke market automotive into we've We've finally, Finally, divided one the high consumer two is global ultimately the karaoke subsets. number is four market.

For we've successful the been the America market in karaoke we and share leading market, for enjoy within our North company, in-home highly in-home product sales.

holiday this this namely challenges and consumer certain year presents proven, low has single supply demand. growth, and digit strong reliance sales volatility, a However, segment chain retail challenging on industry as

will relative in the company. to up has meeting hard be initiatives team our to new growth, to we seeking devote and shareholder sources. we improve these have where this, our order the Leading accomplish team our annual at encouraging strategic accelerate for we areas the is work to space outlook profitability In our intend on revenue hospitality plan, overall accomplish resources to coming and been as diversify September, overall As of our revenue goals. identified part to that our automotive believe

believe we the Our execute record should on we have these track as are look experience the innovation and well opportunities. we opportunities the us compelling, serve growth and brand, that of to

results of I Go Lionel the the mind, on in Marquis, operations turn XXXX. now Lionel. the company over for greater this to give fiscal call to like details With CFO, would ahead to

afternoon, Good Gary. Thanks, everyone.

a walk were approximately to ending $XX.X like I'd year operations the with of delay, the XXXX of year revenues. for fiscal decrease as broad for four results five XX, revenues a our XX.X%, million. further represents $XX.X fiscal through our retail This The fiscal decrease to experienced March including compared To approximately out year $X.X of million start partners. XXXX. in approximately at box million based XXXX. sales any Without or We of

to The in due was decrease largely sales main two factors.

to the which excess buying retail pandemic. in during months few or First, to the during customers more of conservative supply holiday calendar This position with deliveries overstock XXXX. late chains due slightly the season summer due the of lock-jammed situation and latest XXXX, first representative global began stages an in generated the the made of XXXX, inventory

the on fiscal increased season, million to all ended Secondly, $X.X of goods XX, recession. expectations customers major the resulted assist Inflation, for in interest X% customers these to million March sold net X.X% XXXX incentives the holiday rate season. of risk-averse promotion dampened XXXX sales in required our or which to news more incentives taking fiscal sales net holiday inventory of XX, year approach XXXX. $X.X approximately ended year of hikes promotion partners' the compared Co-op or March buying significant for sell-through. as Several the economic co-op holiday leading to to for retail up our

fiscal the compared to net slightly at of the of or gross same approximately total XX.X% million period resulted gross The margin XX.X% for $XX.X of 'XX, to in higher profits about approximately revenues, profit at have fiscal would decrease percentage in held XX.X% XXXX. X.X fiscal increase the million, $X.X million decline for constant been profit had XX.X for Gross gross in points. margin as If margin XXXX compared fiscal sales XXXX an of was XXXX. for was a approximately profit, a levels XXXX compared million. to Talk $X.X effect $X.X yielding

change logistics year to lower this to the cost Contributing that saving approximately company year. in fact million fiscal was compared the expense to $X.X prior overall during was its the successfully able the

However, incentivize increased orders to co-op existing costs approximately higher million. to retailers $X.X by fulfill

company and write-offs. to the in million inventory, incurred relating expenses $X.X addition, non-cash reserves inventory In

in [ph] basis actually XXXX. points growth points Excluding these cash XXX basis improved margins non-cash to gross expenses fiscal X.XX

$XX.X the of $X.X expenses, operating XX.X%. represented Operating an increased This fiscal million, March year. $XX.X during XX, during prior compared XXXX or million increase million year expenses to ended to the

driven to of approximately compared heavily operating of during expenses off approximately sales during million direct XX, general million approximately $X.X March expenses and to performance, year selling XXXX, $X.X an ended $X.X increased March increase formulaic the XXXX, Excluding fiscal fiscal year XX, million.

against settlement in alleged regulatory credit filings, a violation There relations legal, in Bank agreement public and Delaware was professional, to approximately costs lawsuit uplisting, related stock related with costs increase million, part franchise $X.X the to offering, transfer arbitration employee. employment practice the fees, change issues, former an preparation the temporary Third control of investor NASDAQ, of Fifth and in

remaining almost Excluding the just largely increase $XXX,XXX over was nature. the in all almost Delaware one-time of fees $XXX,XXX, of

equity of of one-time the continuation Board with included due was of in primarily There was part and was to non-cash $XXX,XXX related increased it change of the compensation employment an -- expense increase $XXX,XXX, expansion Financial $XXX,XXX a control costs million compensation compensation. also Chief to The of agreement substantial related in a remaining Officer. primarily expense to in Directors, the which

to team inventory as approximately overall Okay, short investments management on liabilities also heavily XX% reduced liquidity, The cash term during of on to of XXXX. $X.X liquid its million, Current March term hand million the XX, March March liabilities. focused XXXX. $X.X and decreased had $XX.X as XX, of management million short heavily position. its hand XX, during cash year more the of reduced capital $X.X company fiscal on compared million The capital XXXX, on as building by company from million $X.X working as

less no fiscal debt, As at trade a the company and XX% result, meaning no debt, term revolving payables short yearend. had

was As these our million. developments March XXXX, capital working XX, a $X.X approximately on all result of

ended company working its the cash offering. working facilities along capital of During proceeds period, liquidity vendor months revolving from for will at-the-market of be with -- combination after its the requirements adequate filing year be least report. net of the from credit the our this our primarily as of generated next believes of line its of the availability credit to completion capital cash, company's that cash from to forecast, of of expected on hand filing on financing cash financing, ATM next the needs we from meet month collected the The and or fiscal XX a plan operating XX at

to call Bernardo share who key we our Bernardo. build Revenue I XXXX Melo, now our the outlook as current and will into turn accounts insight holiday over to the Officer season. Chief would retail some like towards

for estimate and color weathered some coming Lionel, our key how -- the we have our as Thanks headwinds, for everyone for the how have recent on relationships today. everyone. coming our provide some to hello, to you, well holiday responsibility sales economic as listening pleased best thank presentation Yeah, -- I'm see you holiday to seasons. with the

I'd First, the summary of like account to and a key overall health brief of provide our relationships. stability

from overall year. are commitments line For last in from year-to-date, our with customers demand

Our very normal, making profitability out last largest accounts are this in believe precise later ways. commitments a in benefit ordering, little but the several we year should than being about

eager First, partners are businesses our manufacturing really to here. win our just

things concessions. China, some obviously, have tough pricing making are As there, they been

domestic $XX,XXX business, container, peak at the seen some cases. ship $X,XXX as our we've For that container containers a to from decreased we're as now low seeing $XX,XXX in costs

Black conservative We Similarly, our also truly Friday generally inventory being have meet expect we buying surge. to the just to costs to decline due buyers making. co-op they're sale need patterns rates as that flat, our sell-through dramatically

and expenses chargebacks seen reason. decreasing the have we reserves same inventory for Lastly,

off to or remain lingering all these We no retail unchanged. successfully write-downs to restock worked expected retail of There's inventory remaining While are partners. prices of bad our our without decrease, the virtually sales effects debt our excess from COVID-XX. costs from the all partners

We adjustments And sales have other our remain clean been or negatively that our significant in with net reduction flat position in impact a normally we expect gross our margin. very co-op or clients. post

impact a helping greatly we result, net sales to remain even and unchanged. As gross earnings net improve anticipate margins largely to as

agency expanding We're Walmart, effort, holiday of source tier new season, help we're that's a of in fronts relationship strong beyond top also we online number exciting into to a XXXX revenues industry. and the drive we our in this and becoming signed recently beyond. as have new with our Amazon see executing growth a Looking sales

up to ramp karaoke market to expected are efforts solutions, integrated marketing our And prospects strong make So one We're some accounts push customization build space. in and awareness we strategies auto our we the we Amazon pilot become as into think we're outdoor and the there. can on or bullish very a capabilities, new seeing we landing more also of as embedded console. for entertainment for look the

to Gary look presentation. I wrap provide up call I'll CEO, forward over updates to to that turn further our the back soon. With our

here overall make -- thank we're, some Bernardo. emphasize I year. the from the financial on accomplishments great But Q&A. how lingering to this its during effects and retail a sure how as felt I for fiscal a time obviously would of in results we COVID Perfect, and rapidly. proud we're adjusting want just to some team's save team, our retailers XXXX like began, of impacts and past deal adapted logistics, a But you with I I finally, disappointed to given like we perspective. uncertainty, am Obviously consumers, I management inventory, of

say market. of finally, to with of we've capture market the lot brand a exciting fronts. challenges progress way We as a that been possible, in And especially all the and new overall on products in great we've equally a to it's as our positioned important that much made share seeing lot

So hospitality karaoke, soon steps of long world all to transitioning part brand, and our all best-in-class focus partnerships class growth, we to within do. enter term our sustained automotive and spaces profitable maintaining key in NASDAQ, the taking to are be on

the believe said, to XXXX well, where of are vision only the just we being I accomplished that that beginning our intend milestones So we reflected go. and

So up to open over now to with moderator I'd it back our the Q&A. and said, turn any that for being call like

private Dodd Instructions] do [Operator sir. a Yes, Richards We question have from [ph], investor.

that better? out would of large Okay. unprepared season, retailers there plus could follow-up the holiday about holiday executed of was been ask, that otherwise, like season year? you holiday compared season, with And the this were I have to last to buying for anything

want it. you Bernardo, can, I go that Yeah, to on jump for

with past never you the And changed ahead. the the forecasts think we've mean, But Yeah, the entice how to them orders get but lateness been go their I and to and the is biggest our retailers to reacted we business. plan. thing about And and they that, for that of insight. sell-through, order then some were that into season in good for really were I I'll had yeah, sort we I dealing all those been that just had of retailers and our unprepared -- give we their could of increase they them, have committing the delayed it affected co-ops just our longer finally, longer until years, and assure how going to them,

This plan. I woods is, mean, good everybody's And with and we August. season. through gone September July now conservative. a but still we late going not gone and orders of ship holiday are bit season a -- see the we've out August we little should good are starting yet the And for a to economy how the in have

this their difference And I I'll cleaner than year year that, year. too, just much also was that, by add biggest this saying the our it think we're is retailers, to pipeline seeing last is distribution

of inventory was the supply struggles. we lot a chain last that up there after the So had entered season, year, holiday piled

first that a were much inventory. they've purchase new to they And clean started cleaner this year, long orders. through already the Whereas so wipe through retailers off had had before chance that inventory starting And a on to we slate. placing

the the So more orders year clean coming confident seeing it's we in feeling answers how that hope given question. should we're I just that more are. replenishment repeat channels -- this be

just one not everybody, I we to shelf or know, that to also thing lost really space. emphasize want thing one think have any I and Yeah, Gary decreased that we

increases little strong in in conservative, be As there's shelf presence a remaining on size. the some shelf a still bit is numbers more fact, matter but space. has The cases and in increased of very some space our might

point to out. that I So want did

the especially logistics, having foreseeable your follow-up you a How right I have do for a there don't anticipate lot of product see this now. supply Is do future? now? And container if know to you noise question, impact do global the China ability regards mentioned ship you you the around to any evolving? offering with on down mind. price chains coming I is

really Yeah, container record sure. and since They're Angeles. I mean XXXX. considerably market down ship and high a logistics mean, prices seeing as almost container settled a lows or been obviously has a less to supply seeing to as We're yeah, like and global chain previously, we're I seeing we're container XXXX, -- China $X,XXX from container. for to $XX,XXX down Los they'd now the

significant So we're into better. seeing getting general, States. trucking to be seem flowing easier. cost savings the bringing Ports just And goods in is

I back normal, it's say So of really if that. kind to return a can

And now so to everything right be moving seems smoothly.

Perfect. my for taking Thank you question.

you. right. Thank All

from David, Our Scott Instructions] question [Operator private investor. comes next

your have and take it's left about give other my has question very sense market? wrap one, And you mean, space. Okay, a you you with this end really excited I opportunity? you very what basic you me in bars why Can here. I us the Atkinson. a between karaoke Mr. well, up. there's hospitality those and thank a kind automotive from link us at strong And bars of letting the questions. years? as of carpool so is of seem two would Why kind your And been for growth this this karaoke karaoke see experience? for

question. great a That's

automotive part So I'll start question by of answering first. your off the

I general. in the automotive excited yeah, category mean we're So about really

microphones at carpool of right us five thing. in trivial market experience not not And given a -- karaoke it's You're for that's least developing a years has cars. the trivial

strategic announced the we and the saw the to got content brands. in Group into microphone of support we the in cars. a interest a response built And works last with saw one we've Consumer we We've system automotive -- infotainment that of when overwhelming to automotive most of Stingray product. has our entrance And the the of the that most space, went major Show our Electronics integrates in and we And January, investors product. the overwhelming honestly that lot

I seen their only It's Tesla what we launch we've the So in success, was in China to cars. the understand first the been microphones successful. But from that's mean probably market.

And lot into karaoke microphones conversations automotive of the a so bring a had with lot major of to brands we've car.

Now these broader as they've A more I a conservative. of in sort bit gone little it just, economic lot of hasn't quickly think they as been had guys, environment, the automotive hoped. we

on now that developing think XXXX. been dealing with cars, is or I will that other be the that forward. cars They're road looking thing building in we've they're they're XXXX, the

we of start a liked is So first our interest would sort signing slower But market to been the it's little huge. just there, have than partnerships. the is

You millions think every and cars, cars And automotive that interest day, it's there's of these about new EV coming the market. particularly a on the big of millions a lot are brands. from road

something or be I pushing player to Show, these know on And again, Show, going New And Auto I'm it's about. space. York front we're confident shows hopefully just brands. where it that the to I excited Auto stay excited these able in really the that be and LA attending just about. to is team some a big feel be of in we'll start So of like automotive the

I there a was as guess And your part well. two to question

you that space. say individual been There's very carefully. now looking sort the that's lot would is about of I at And right karaoke hospitality another were earlier market we've of fragmented a area So thinking really said think venue about I hard I'd something the the about market, players. asking market. and

hasn't operators a pop been of brand market. every that the in of and has there But forefront the single single almost terms or innovation in really mom basically, sort company really led space. So in major

a karaoke a see looks opportunity see traditional And so we just to like. we what venue disrupt huge --

in to if consolidate end, concept one's be lead gamified. And that the sense really talk-off sort obviously, up and it's the sense, the to it's market physical to analogy it. in higher is really And no a of up we that the really is food sort a again, karaoke, quality And environment and upscale, technology makes a that wrapped There's that upscale, of envision for of component category like the goal there. high stepped with us beverage.

opportunity tremendous tremendous, a that. do see to just we So

and thinking hard so we've been something And looking about. it's really at

you. Thank

Thank you.

We like back queue at over turn have the this further in now no I questions would the call speakers. to to time. today's

our to Well, Excellent. appreciate time All today I to everybody's listen presentation. right.

forward our is So talking to earnings all look we which again just corner. first quarter you right report, at the around to

Happy to we'll Everybody, talk that Thank you with great all you. So and Friday. a soon. have weekend,

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

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