Algorhythm (RIME) 18 Aug 232024 Q1 Earnings call transcript

Good afternoon, everyone and welcome to The Singing Machine's First Quarter Fiscal 2024 Financial Results Earnings Call. My name is Travis, and I will be your operator.

As a reminder, today's call is being recorded.

We have a brief safe harbor, and then we'll get started. This call contains forward-looking statements under U.S. federal securities laws. to differ uncertainties or materially subject actual could present are to results from statements risks that and cause expectations. These historical experience can CEO. our reports turn to of found Commission, the like including description some to statements the the periodic Exchange and A Gary included filings. I cautionary in now of Securities and over in and Atkinson, we that uncertainties the the file current Company's with call risks be would go ahead, Please sir.

I everybody. taking afternoon, Thank to to start and for Good you. our call. everybody thanking want XXXX the listen-in by earnings today time first participate in quarter

on today me company's CFO. also today's Joining have Lionel Marquis, call, I

Before of versus the our to results a I walk moment XXXX over operations, our to for frame fiscal to Lionel everyone results unique the year. first take turn help through last quarter nature the I call same to of would period time like

of you We the followed our For $XX into due we had year. assortment ramp last this purchase linear order fill during main and required company, to those to in set successful were of a quarter, have karaoke quarter single was up three million. may department incredible stores factors. Last amount large that an booked in recall $X.X sales, amount year, first we first excess of very a Walmart's our electronics million throughout the consumer resulted expanding over This shelf a banner in to thousands at that space and locations country of in product. the

XXXX, to buying to our program. all an the of customer Sam's FOB gave efficiencies. heels an China elected better power of the the Club supply convert with unprecedented challenges off ability freight get its coming in through chain to leverage Secondly, its This business company

October to and XX-week free fiscal this are details context on to namely to operational net over operations the returns, This to season and months prevented we XXXX CFO, are present fees result due of I almost holiday $X.X for just-in-time With continue chain our season. With of current like on performance, into fiscal California. now the as shelves Lionel booked to that the increase struggles we've reduce and be many seven take reduce costs XXXX up this of earlier and compress quarter September many we a anticipate facility time warehouse away been first to our keep change the first will that, normal sales we as XXXX. retailers for and docks accelerated we China that from markdown we empty optimistic historically orders, in in in particularly supply and last sales and has very into this with time three inventories of year. And a left in our Marquis, of restock turn reaching months benefits the to Retailers strong margins, for at rhythm of frame. This extremely have risk cash overstock. gross that the in of of the in we majority Overall, to million to were incentives. sales frictional our from mind, We when result inventory the greater in of a it lean, sales quarter the returns expect sales. and us to six release of able not the product sales the As holiday left active the and help retailer. our August, to pleased mind, was would trying finally, results co-op call

ended million on release XXXX. until to orders like normally Gary our without add that color would are June early the Revenues year. further XX, deal our box dynamics retail our ended fall. sales operations product just California million of It compared final a is for respective and that is Christmas normally for we a begin of three typically of were provided were results active $XX.X simply at quarter slow same first late as years, Good quarter. during not great everyone. to for very you, often afternoon, prior stage many I comparison for walk the the like us. Fourth XX, in perspective. low for the in our for summer months first the and or in spring And Gary. XXXX, delay, quarter Southern time June Thank first quarters period the point to from I'd for a historically $X.X through after for they quarter very big company immediately to shipments fulfillment buyers late to the

of book a usually we in this the than we As week of quarter. time July model, result heavily buying more first November through business extremely in orders. last-minute very lead in and until for our revenue pattern, We're first million late seasonal $X.X really sales and we -- late generate October, sometimes and really from

as XXXX to in quarter XX.X% difference gross fiscal was first of in XXXX. Overall, $X.X third year, of filings the and the have -- in quarter due margins With that compared December. We'll yielding the beginning previous profit XX% first XX.X% talk $XXX,XXX, profit in exception X-year of disclosed margin between annual in dollar terms gross our we of already differences the approximately as a our the million July the second our sales sales last margins generated for was to during and shipped quarters, fiscal were ending detailed. and gross approximately and have about net XX%

points the fact and we're the key material percentage to this this X sales in improve China. then due and able in U.S. a improvement not the to for are the that from primarily first improvements when X the include This year quarter is the product However, the to logistics least Typically, at did is margins. the for direct of from this year. shipments in quarter into or margins fulfill secure import responsible we bring factor California, any

well improvement direct products gross well generally just shipments and a as margin. profit products, mix they lower direct in normally product -- promotional as role promotional shipments as Our holiday a yield of import include holiday also the -- played because

as expenses move well first [ an As logistics expenses our to contain operating increased during $XXX,XXX to closure logistics in almost XXXX, Ontario, expenses way the We on during during based quarter overhead want variable also to was coming ] the to a entirely of carrying the due prior quarter in expenses proactively a key shipping of ship to model as [indiscernible]. Liquidity. cost costs the rising for costs occupancy operations. onetime variable million relating this fixed entirely of cost minimize to labor our of elected to North logistics a hub. than the shift compared increase -- we American of model $X.X to operating and that see million We year. California The years expenses rather first $X.X and

the on of XX, $X.X reduced million a management The overall we line We had approximately had and based on liabilities hand year approximately working secured the position. collateral. $X.X reduced on June million on XX, credit of million by its XXXX of management capital liabilities, June As decreased cash its of capital first team approximately $XXX,XXX as short-term XXXX, current available maintaining of 'XX. approximately building XXXX, senior also $X heavily short-term The to quarter -- and investments focused by inventory significantly fiscal during liquid the eligible company our quarter company in $X.X million.

of of the offering offering. from cash vendor During net on along of we to the on our next needs Gary. requirements cash report. That the its working to of for finance. months be XX-month stock credit, credit operating its our from a financing, revolving line ATM my capital for will ended least capital meet from cash, facilities period, I'd turn over our this availability call after proceeds adequate ATM is of be back filing fiscal company report working to expected collected the from hand, to liquidity these XX cash -- on our plan company's forecast, The the of like combination the financing generated at with completion primarily believes year

fall would quarters. I karaoke retailers and existing a and our second key summary Perfect. upcoming third our brief outlook our about season. of for on I have in to category am now provide very this the fiscal committed pleased we Thank territories, our like all holiday excited to Lionel. distributors to coming and for you, again international programs that announce remain and

again. is this a mention to point, -- it that very want and I Now important

our retailers to season. All have for programs again fall holiday recommitted this existing distributors of and and

new from something switched programs, brand sell say larger territories fact, a that continue innovate committing key have products Singing number earnings a customers for they not their that this to to our in do our retail inventory so in last buildup brand year's want through year's to we significantly a is But customers and been to that again our now. upon In our which new pipeline committed right by of products international within Canada before lean have call also year. I develop first have this our is are this on need to particularly of the ordering we inventory in fourth including cautious that some this big that news in competitor technology. evidenced touched Retailers year, for Machine to this is far customers and quarter positive to year. Further, channels first placing orders and karaoke note is that results. last quarter

as Our to holiday new relationship deepen karaoke roll we out our with streaming continues to our coming major this app partner, to anticipate season. Stingray, strategic a update

streaming karaoke this go redesigned also product to introducing over later new fall. flagship We Wi-Fi including five U.S. a year this totally scheduled products Costco into are

development to and the continue captain karaoke remain not of category our product we process. We slowing the down are

this see you fact, national will and year. many in featured promotions prominent ads In Singing Machine

growth would Finally, in space. opportunities brief a emerging hospitality provide our update automotive the and like I to on

that hospitality business electronics in leverage meaningful we believe we segments consumer new able and in our achieve core milestones complementary gradually scale the the will introduced to the launch past months, can We be greater the space. space expertise business. karaoke we and providing Over experience, our detail few beyond to we term, near begin particularly in believe the concept have our our

this high-growth areas business end for current unique begin time to a the of our We preparing our opportunity this believe potential opportunity a these of additional strong calendar energy and before the have and same spent core launching projects great exciting providing to excited are We at year. series growth we maintain strategy. insight of while a present into deal new time,

to look soon. forward are additional excited We truly to providing shareholders and information

to to there's would any point, call like see questions. to the So turn if I at this over additional our moderator

Richards Doug Private [ [Operator from Investor. ], Instructions] have We do a question

I'm you Sorry, Can I apologize. the hear me? moment. driving at

just can We hear Yes. sound. you

It year sounds will the this current view we very with strong. last line ] because Okay. [ should development? like wasn't season holiday be in How it

broke up a I'm and season sorry, and it. a little our this the comparison holiday I bit, asking holiday question year's between last expectations? you can if year's season Were reframe

that's mean Yes, last very strong. basically wasn't right. year I

you what expecting how to So compare you're year? do it this

asking Perfect. you Okay. for question. that. Great Thank

I about and to thinking are this jump off of say, were we -- can So on Lionel, I the compared this year strong very we way a last holiday last would season year, year, year coming before. the

supply a out of getting chain strong inventory they lot experienced in so coming delivered had season, were a retailers of interruptions problems. due a to of And lot holiday

last year, we so forecast coming sales. very for And entered were aggressive they with when

macroeconomic we quickly. We typically, forecast I entered as And ahead consumer so forecasts. we we pretty will season. the and from interest think inventory demands changed when did significantly our dropped rates customers, go started we do as climate get that, we those holiday seeing broader inflation, rising for And is the what build spiked,

demand. had the up, summarize we was The to to quickly, sort off lot in holiday inventory coming inventory there economy based of than a there and changed sum projections our of as I some it from we season, of, So guess, more was lofty last entered customers. it very quickly year,

year, lot that give reasonable a to that about having we so we're quantity buying take more that last a overstock forecast that thinking up To us still very cautious in of our a season ended hurting up of would lot and returns back things just ended of promotions that strong, seeing in the the about And I all more we're inventory while are the this a the in sense lot start, of being product. And and say lot we're we're terms differently. receiving, much broader economy. realistic we're what away

prepared better year. much We're this this think I holiday season. for much coming So we're better prepared

and supply with and I recent partners getting think struggles in we're in are of all years we've better much all seen gone cleaned retail that pretty up chain the we're away. alignment our

opportunity we're an where this margins. overall year So increasing we see here looking at gross

I very sort proactive story much coming this this different so whereas significantly than a in of year reactive more think a position. holiday what year, And season, we're was last better, I year. happened for see season a Last unexpected

that hopefully, bit of a insight answers question. So the gives and you little

It does.

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

update for sharing participating you, of everybody. to call. in our today's updates more operations. today our forward want thank I Well, thank results presentation first I Okay. everybody with next quarter concludes quarterly for This our look on call. to And everyone do

everybody. thanks, So

We you all will talk care. Take soon. to

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

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