Q3 2021 1847 Goedeker Inc Earnings Call
Good morning, and welcome to the $18 47 get occur conference call for the company's third quarter of fiscal year 2021.
Participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
On the call today are Chief Executive Officer Albert <unk>.
Chief Financial Officer, Maria Johnson, and Executive Chairman I'll re Roberts. 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 of November 15th 2021, and the company assumes no obligation to update any of these forward looking statements to reflect events or circumstances that occur after today.
Please note there will be an opportunity to ask.
Ask questions. After the prepared remarks to ask a question you May Press Star then one on your telephone keypad to withdraw. Please press Star then two.
A replay of the conference call will be available on the $18 47, and <unk> Investor Relations website. This week.
At this time I'll turn the call over to Albert <unk> for opening remarks. Please go ahead Mr. <unk>.
Right.
I wanted to begin by thanking the many stockholders who have provided an encouragement and support to me since I took the CEO role in September of this year I also want to thank our employees for their dedication and our customers for.
Trusting us before getting into the quarter and going over to our outlook I want to discuss the massive opportunities in front of us.
We have a very unique opportunity to become the undisputed e-commerce leaders in the U S home appliance markets. Our market is extremely fragmented and the and lacks a premier online destination for homeowners as well as builders and contractors I agreed to step into the CEO role because they have long term vision for <unk>.
And that white spaces using massive opportunity.
With this context in mind I need to stress that truly great E. Commerce businesses are built over a course of years rather than quarters.
This means it's going to take discipline patience and ongoing investment to fully realize our opportunities.
This also means we're not going to take shortcuts during what I deem our current foundation building phase I feel we can maintain this type of operation operating philosophy, because we have the right pillars of long term growth.
First and foremost we already have a distinct ability to offer customers core premium and luxury appliance brands through one point and click experience second we.
Have a differentiated product expertise that exceeds what other retailers and online marketplaces could provide to consumers and b to b customers.
Third we now have an aligned leadership team with decades of collective experience in E Commerce and home appliance World and lastly, we have an existing gross trajectory that can be built upon.
My My brother and I started appliances connection 20 years ago, we did not have any of these tailwind Gallagher has today yeah.
Yet, we still managed to scale constantly grow revenue.
Each year, we ended up expanding from approximately $155 million in annual sale to approximately 400 million in annual sales over the last five years.
And as a standalone business. This track record of appliances connection is one of the main reasons why I'm, so confident about our path forward now.
We built a standalone business that had superior value proposition relative to the competition.
With respect to our go forward strategy had been working with the board and the rest of the management team to put in place and new clients to solidify our foundation for long term growth.
We are an e-commerce company that specializes in home appliances, and providing great constant not a hardline merchant and not an omni channel retailer our priority must reflect this reality.
In the quarters to come we are going to be focused on initiatives that includes.
Building, a best in class Tech stack and digital marketing funds at the backbone of our success will be our fulfillment and logistics systems as well as the other technologies in our supply chain. This is why we are investing in our tech stack, while also constantly optimizing our consumer facing digital practice.
The legacy <unk> systems do not seamlessly plugged into the appliance connection platform, but you can trust that the combined entities back end and front end tests will be more much more cohesive when the new brand is rolled out in the first half of 2022.
Another priority is recruiting world class talent to the management team, we are interviewing executives with background in analytics E Commerce marketing logistics and supply chain. Many of these individuals are from leading brands and companies over the next couple of quarters.
We plan to make several senior hires and introduce compensation plans that align pay with performance.
Another focus area is ensuring expansive product selection. We are also focused on constantly providing customers access to vast catalog of core premium and luxury brands.
Our catalog will also.
Start to feature more upgraded and environmentally friendly models as well as more private label offering in 2022 private label can be a major opportunity spot because of the attractive margins and opportunity to sell private label is of course, a variety of channels.
To the extent it makes sense for us we believe offering a vast selection is a major competitive advantage that can constantly.
Set us apart from brick and mortar retailers and large E Commerce company.
We are equally committed to building the best in class supply chain, we are working to expand our fulfillment network to provide cost effective quicker and more dependable shipping, giving our expanding customer base in the southeast and the southwest we are identifying well positioned fulfillment centers in states such as Texas.
And California.
Our analysis leads us to believe establishing facilities in these locations will limit delivery transfer and touches on the waters, thereby reducing our shipping cost and minimizing product damage.
Though we are taking extra time to negotiate the best deal.
Best possible yields this is an area, we expect to make major headway by.
By the end of Q2 2022.
The final piece of the puzzle for US is strengthening customer service. We are replicating the appliance connection customer care model is get occur. This means building a team that is accommodated and very well versed when it comes to product. Our team is already cutting down on call wait times and improve.
Moving online response by <unk>.
As we expand our system and network and encounter fewer supply chain delays, we expect customer satisfaction to be on the rise in 'twenty to 'twenty two I recognize that some of these initiatives were discussed under the previous management team.
But they are now being pursued by leadership with sizable stockholding and strong e-commerce.
Records, we're going to continue populating the company with people and processes, who can help us grow while meeting all these foundation.
Building goals by the end of 2022 before handing it over to Maria I also want to take the opportunity to acknowledge the challenges and headwinds we worked to address over the past quarter.
First the CEO transition announced in late August was difficult decision for the board, but besides this action was taken that will hopefully make us stronger years to come I intend to lead the companies do great things and aggressively recruit top talent willing to align themselves with the performance.
We are very focused on strength of screening our employee base by adding new skill set and reconciling redundancy.
Okay.
As you can probably tell I'm, bringing a new culture of intensity and rigor to the business.
Second the public concerns conveyed by certain shareholders created unrest, but they also provided management an opportunity to reflect on some of the companies need to.
The settlement ultimately reached with canon wealth management complemented our ongoing board refresh efforts and while we were disappointed that recently appointed director. So I mean, but it will step down because of unforeseen time constraints, we have a pipeline of excellent director candidates in place.
We will be adding multiple directors with additive expertise in the coming quarters.
Last we continue to receive Shaw shareholder feedback regarding our capital structure, including our outstanding warrants.
And.
Prospect of a highly dilutive transaction on the first topic I can share that we had begun exploring strategies for optimizing and simplifying our capital structure and we are interviewing financial advisors to support the process on the second topic, our proxy statement proposal friend.
Increasing shares it was normal course request nothing more.
We want to be opportunistic when it comes to small acquisitions, such as our accretive purchase will find gallery in Florida, We have no plans to explore any dilutive transaction.
I'll now conclude my initial remarks, and then turn it over to Maria Johnson to provide an overview of our financial performance.
Thanks, Albert good morning to everybody.
Net sales for the quarter, while I'm, that's what your $1 9 million an increase of such a $9 7 million of our pro forma sales for the third quarter two plants.
On a year to date basis pro forma net sales were 405 million, which is an increase of $144 5 million over pro for myself for the same nine months period and 20% pro.
Pro forma gross profit for the quarter was 31 4 million and the margin was 22.1% up from 21 million with a 25% margin for the third quarter 'twenty.
We did however, see our gross margin deteriorate, roughly 100 basis points on a quarter over quarter basis, due to lower volume rebates heightened freight costs and perhaps they are the adjustments for the league and she got a kind of business.
Pro forma gross profit for the nine months Gareth was $96 1 million with a 27% margin up from $52 4 million and a margin of 21% for the 'twenty to 'twenty period.
GAAP gross profit for the third quarter was 31 point for me lab compared to 2.2 million for the prior year third quarter.
Pro forma operating expenses for the quarter were approximately 24 million with the largest expense items being personnel cost of.
$8 5 million, which includes certain sovereigns.
Advertising expense of $3 7 million.
People would generate two quarters that cannot be filled quickly.
Bank and credit card fees of $4 9 million and general and administrative expenses a formula.
Pro forma net income for the quarter was $3 9 million and for the nine months period. It was 32.2 at midnight.
Third quarter pro forma net income reflects an income tax expense of two points the mainland versus a $7 3 million tax benefit in the second quarter.
And they're all off of the $3 7 million employee retention tax Craigslist.
GAAP net income was $3 3 million for the quarter compared to a net loss of $4 2 million for the same guy that in 'twenty to 'twenty two.
Pro forma adjusted EBITDA for the quarter was 11 million with a margin of seven 7% and.
And nine months pro forma adjusted EBITDA, both for what you see 90 level with a 10.8% margin.
First quarter pro forma EBITDA is roughly on par with reported second quarter pro forma EBITDA after accounting for the opening balance sheet adjustments to the plants with connection that's at your second quarter gross margin by <unk> 7 million as well as the $3 7 million unemployed some tax credits.
What was the nine months ended September 30 of 2021 the company had working capital of 20 million.
And of course negative cash flow from operations of $18 3 million, mainly as a result of additional investments in inventory required for fuel our continued top line growth and switched to the credit card personalization model forget of course.
Additionally, the company had cash and cash equivalents of $27 2 million and ramped up the quarter down from 45.2 mainland joint pitches from 'twenty to 'twenty, one and up from one 3 million on March 20th century Fox.
The quarter over quarter decrease in costs reflects the company's strategic and purposeful focus on obtaining inventory to seal anticipated basketball artists and helped offset ongoing global supply chain headwinds.
With respect to our outlook, we are reaffirming our full year guidance previously articulated in our second quarter earnings call.
Full year revenue on a pro forma basis of between 525.
550 million full year gross margin on a pro forma basis between 22, 5% to 24.5% and full year pro forma adjusted EBITDA margin between nine 5% and 11%.
Its new management continues to evaluate the industry landscape and implement all e-commerce growth strategy, we will be assessing what the most appropriate metrics should be full.
For potential future guidance no.
Now I'll hand, the presentation back to all of that for closing comments.
Albert.
Thanks Maria.
So you could see our sales have stabilized and we're looking at an upward momentum now.
Now that we have additional storage capacity at our two main warehouses.
We were able to add significant inventory to mitigate the majority of supply chain disruption going forward.
We expect to be back to our.
All the fulfillment rates as early as next quarter. This will obviously have a positive impact on growth.
As far as margin, while we do not have the benefit of rebates right now.
Due to the tight supply, we're introducing price increases where appropriate. Additionally, as fulfillment centers are rolled out and brought online in the coming quarters, our cost of shipping will decrease and help long term margin.
We expect to add at least two new fulfillment centers during the first half of 2022.
I also want to mention that in order to provide further transparency to shareholders.
Included in our 10-Q filing the additional details on our Cogs composition and.
And specifically freight cost increases associated with supply chain constraints.
But as the supply chain normalizes, we will likely to get larger rebates.
Then before because we are a larger company. This will support margin improvement even if the shipping cost remains elevated in closing I want to turn to an exciting new initiative.
We are planning to formally rolled out in the near term our <unk> solution offering our platform could satisfy an array of unmet needs for many builders and contractors as the housing economy continues to thrive.
The market opportunity with builders and contractors is massive.
As well as an address markets, including government hospitality health care and senior living.
Leading us to believe that the right to be offering could be a meaningful sales to our top line in 2022 and beyond we are in the process of finalizing an agreement with highly experienced executive.
To lead our BTB offering.
I continue to believe there'll be or.
Well on the way to becoming a company with a $1 billion in annual sales, especially with the opportunity presented by the by the B to B segment. There's obviously significant work to be done during the rest of 2021 and throughout 'twenty 'twenty. Two as noted earlier, we need to have the right people processes and systems in place.
But we can realistically see ourselves achieving $1 billion in revenue by 2023 or 'twenty 'twenty four based on our planned.
Growth trajectory and the macro tailwind created by the low interest rates and high demand for housing.
I'll conclude there and at this time I ask the operator to open the call up for any questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
If at any time your question has been addressed and you'd like to withdraw. Your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question.
From Matthew Li with Canaccord. Please go ahead.
Great quarter I, just wanted to talk about subscriber metrics I mean can you top us understand.
And why we're seeing such strong subscriber growth year over year, even on an organic basis.
Yes.
Hey, I apologize could you repeat the question I, just I don't I did not understand I can't hear you.
Close at Verifone.
Okay.
Yeah.
Hello.
Okay for whatever reason he must have accidentally disconnected himself, perhaps suggesting is volume. So again. If you have a question. Please press star then one on a touchtone phone.
Once again, if you have a question. Please press Star then one.
Yeah.
I do have a question then from.
Steven Branstetter of a B L.
Please go ahead.
Good morning, gentlemen, great quarter.
Let's talk about growth for 2022.
Everyone knows about supply chain disruptions throughout the country, you guys had an amazing growth quarter.
What are we looking at in 2022, and how do we get there.
Sure. Thank you for the question.
So we will focus on the guidance for 2022.
Once we get closer to the end of the year at a high level I can tell you that any investments that were making basically that right now.
It's going to help us grow into 2022, once we get to that quarter. Once we get closer to the 2022 was definitely.
We'll get back to you. If you wanted to have a one on one call later on we definitely also please share with IR will get back to you.
Okay, and about Oh, I guess warehouses or distribution centers have you strategically picked where in this country, where we're across America, what do you plan on putting these.
Yes, definitely where we're spending a little bit more time, focusing on getting the right locations closer to the highways closer where employees are closer to where the right location needs to be close to where our consumers are relative.
Secondly, we're spending the right time, and we're going to make the right investments in the right locations have the right facilities open up as soon as possible.
And margins if assuming we get these warehouses opened in the next three four years, how will the margins improve where would they prove improve whether you'd be improving because of.
You have more control over.
Our shipping costs are you know what what would cause improvement in margins by opening these warehouses.
Sure.
It's a multifaceted.
Fixed basically so one weekend.
Divert all inventory, we don't have to have all the inventory in one location, we can spread out of inventory across all states and all locations that where our consumers are based on second it will reduce talk to you as it will reduce handling and reduce returns have reduced cancellation reduce damages. There's a huge savings there and it's been a reduced cross dock.
And it's going to reduce long haul shipping that's going to be huge investments and savings there.
Gentlemen, thank you for your time again continues to SaaS.
Thank you so much.
The next question comes from Mark did you Tele with J capital. Please go ahead.
Well.
Hey, Albert Congrats great quarter.
Thank you.
You kind of address the 2022 outlook. If you could just help me for a moment.
I know you mentioned, obviously, you've had a lot of supply constraints from your vendors and maybe you can just talk about are you starting to see a better planning and cooperation from your vendors any kind of visibility into that actually improving into 'twenty two because I guess based on the prior two quarters you guys talked about this backlog and having to shut off your market.
The window kind of halfway through the day. So I'm just trying to get a sense on how much demand is actually not even being met at this juncture and if you if you had a better supply chain.
What what would a 'twenty one and 'twenty two what could have looked like.
I can't really speculate about the guidance for 2022, what I would like to tell you what I think I mentioned in the past when I took office.
It's pretty simple we changed and this is what's great about our company were pretty high Jai all about making sure that we could go out there you would have troubles are in it was tried to fix it and address it right away. So we went ahead and we took that approach. It's our time to go ahead and forecast for inventory for the near term future. So we started bulking up as you can see our inventory starting to.
It built up we started this.
Back in September.
Now we're in November we have a pretty significant amount of inventory.
800, acute board plus going into the first quarter of 2022. So if there is a supply chain issue it continues to happen.
To have the right inventory in the right locations at the right timing.
Future quarters, but at the same time inventory stocks easing up and is getting better which is great for us it will get us better margin and he's going to help US also go into clinic.
2022 out of much easier.
Much easier in the letter a little bit less inventory that we need to have on hand.
Was there a follow up Mr neutral tele.
Oh, I'm, sorry, I had you on mute I apologize.
So would you would you could you comment, though I mean, if the supply chain was a little bit better in 'twenty. One do you think you could have been 10 or 20% higher if you didnt have those type of constraints.
Look.
If we had inventory inventory with the king Unfortunately in the past I would say a year. We added inventory, we could've been growth should have been much better but you have to deal with what we have to deal with whatever constraint that we had in inventory and supply shipping and other stuff, but we worked our way through.
The inventory constraints as much as we can and this is a good season.
Please go.
The only place yet.
Albert.
And last question.
We're an accelerated just wanted to follow up.
The line of questioning is great Albert.
To answer the question, perhaps you could get insight into fill rate.
Stuff that we track.
That would show what our sales recorded sales worth percentage quarters, perhaps that led into what 'twenty one could have been.
Absolutely. So we were down to almost 64% of accelerating.
We had a high of almost 78% of go away. So to your point is if you had if we had inventory and we were filling up at 80 being able to fulfill orders at 85 or 90% our quarter would have been significantly higher.
<unk> passport or the whole year of 2021, so unfortunately certain times in 2020, why do we went down to almost 64% to 62% bill rate, which is pretty.
Yeah.
Not a good fill rate at all.
Our historical highs anywhere from 85% to 90% and that's really what we're trying to get to in 2022.
Right right great. That's great color I guess just final question I mean, I know, we certainly believe that Covid has kind of accelerated the adoption of direct to consumer and many many aspects in the retail environment now, especially in appliances high end appliances commercial like you've spoken about and it's illustrated certainly in your.
<unk>.
What I noticed I know if you had a chance to review I assume you did whirlpools earnings call.
He talked about them going a $1 billion indirect to consumer. So I'm. Just wondering you know are they looking to do some of that themselves are they turning to you because you have to be you must be the largest possible outlet.
To go direct to consumer in this in this current environment.
Yeah. So just one thing that would be correct you there, it's 1 billion worldwide not in the United States.
So because in the United States and not looking to grow that much we actually adjusted it was spoke to them, yes. Once we get our German centers. When we aren't we are going to be the best.
Place to be for direct to consumer appliance company Thats out there.
Other countries and other places around the world, but not have company similar to what we do.
Trying to fill that gap and that's why they buy them doing BBC worldwide. They think that you had about $1 billion, but in the United States.
Strictly still sticking to the whole process of vendors being able to self vendor dealers and other other places.
Alright, so I imagine if look at whirlpool is making a statement like that I imagine they they all seem they also tend to follow the same the same direction. So I imagine you're having those same conversations whether it's a viking intellectual lux.
Samsung.
One thing you've got to understand what consumers not all customers want to buy and products. All the time, they might want to buy Bosch dishwasher, Neely dishwasher, but they want to buy a.
A different type of a refrigerator a different type of range. So it's very difficult for any type of BD.
Any type of major vendor at the beating the BDC business long term, yes, maybe now it made sense to them because they have enjoyed it had the demand they started doing it but as a consumer you typically do not want to buy a furniture and refrigerator that matches you want to get a product that matches you need and you are not going to stick to one brand. That's one two not all Manny.
Factors have build a product that consumers want so to your point the electric trucks electric Russia is a very good washer and dryer, but they might not have the best range for you need you want to go out there you might want to buy a G profile of G. Monogram range, you can get that from being just shopping on the BDC type of market, it's not like <unk>, where you can just one product.
The offering you're talking here about 30 or 40000 skus across multiple different brands. That's out there so it's going to be very heartbeat.
The manufacturers to be able to do a PTC direct.
Long term.
So how how many skus are you carrying now and how many do you plan on carrying in in.
In 'twenty two and beyond.
We keep on looking for good partners and good manufacturers to add on to our mix. We have right now 35, I'm, sorry, 35 to 50000 skus that ongoing selling at several of Skus, but we have in total about 100000, skus, but not all products. So as you noticed that 80 20 rule. So that we focus on the product that's available.
In stock that's coming in being manufactured that's really our focus now for the next.
Six months of the year.
And then just I guess I apologize just final question, but just as far as addressing here.
Cut type of growth that you think about a $1 billion company in the next few years.
Everybody is having issues with drivers.
Hi, how are you are you competitive how do you feel about getting equipment in and bringing those drivers or other things you're doing to augment your youre delivering forced the key to keep up that the scope that first class service.
Absolutely. So that's why at the beginning of the call that we mentioned we are working on building the right infrastructure and the right locations and the right placement, but we're not just going to open up and a great warehouse that can even get drivers you can get the right people to work. So we took the strategic approach and that's what we've been doing here.
In doing for the past 10 years, we've been running the business. We always look at a great investments. We don't look at it just short term, but look at it was long term.
Yes, so we're focusing on our drivers that would pay structure is pretty good as you can see yes, we did have some impact in shipping and that's really why we broke out the shipping from our Cogs. So we could show you the cost impact that we had in the shipping but once we get that addressed we can see the cost improvements and enhancements in margin once we get the shifting to cost under control open up.
Our fulfillment reduce our touch.
Damages reduce that return gets to the customer faster and return is going to convert better for us and return going to be able to recruit better driver better service the world class customer service World class sales and workloads delivery system.
Okay, great. Thanks, guys.
The next question comes from Kevin Mangan with think equity. Please go ahead.
Good morning, and congratulations on the quarter.
Just touching on fill rate.
You just brought up I think earlier in the call you mentioned expecting to get back to your historical levels kind of early in 2020 to.
I'm just wondering if you could provide some commentary on how you think that relates to the rest of the industry.
Sure. So historically before independent <unk>, we were always being able to sell about 85 plus percent and Thats really what were focused on and that's the way we're going to focus on it by being able to go out there forecast once a head and neck.
What we had commitments of doing this year. We started forecasting months ahead looking at our top product focus product and gear the product to consumer to website to marketing all to go after product Thats being manufactured we could actually source the product for for the ongoing 2021 and ongoing 2000.
<unk> 22, and that's where we can have to focus on I cant really give you a better color on the supply chain, that's all controlled body manufacturer.
Controlled by employment.
Controlled by chip shortages, but we're going to focus and where we're focused on what we are focused on right. Now is going to have their source of product that we are going to market with try to get it up to the 85 plus percent that we have historically have been achieving.
Okay.
Okay was there a follow up Mr Mangan.
Yes, I guess I guess do you see yourself ahead of ahead of the industry on par behind based on kind of.
What you just discussed.
Look.
So.
Our focus that's been in the past many many years, we focus on technology, we focus our systems to work, we adjust our systems our people our processes to glad that to always be ahead of the curve.
What makes us different and Thats, where we focus as an E. Commerce company, we're not just the traditional heartland merchant that focus on bulk buys and focus on one time buys we are true E. Commerce company. We built systems, we build processes. We built person now to go add into OSB, you hadn't get care.
Yeah.
Got it thank you.
The next question comes from Steve Emerson with Emerson Investment Group. Please go ahead.
Partnerships that were significant good morning.
Mr. Emerson Your line is open.
Yeah.
Okay, we'll go to the next questioner.
The next questioner is Tom de Mayo would think equity. Please go ahead.
Excuse me Mr de Mayo. Your line is open. Please go ahead with your question.
Yeah.
Okay. The next questioner is a follow up from Steven Branstetter of a B L.
Go ahead.
Gentlemen.
Would your company considered doing a reverse stock split to get the stock price higher display more institutions would be interested in buying the stock a lot of institutions don't want to buy stocks below $3.
And you discussed about cleaning up the market cap with the warrants.
Like a five for one or a 10 for one reverse split there'll be many more institutions have you put any thought into that.
Okay.
Hum.
Yeah.
So it's all it's Ellerey Robert St. Alberta, I think I'd like to take a first crack at this call and then returning to Elba, we're absolutely evaluating all options to.
The address.
Any concerns or.
Take advantage of any.
Possible means of solidifying our institutional shareholder base that would be more reflective of what we think.
Our business should be from a market capitalization.
Standpoint, so in terms of the investors, who need a certain share price or market capitalization.
It isn't about volume.
About.
Oh well have earlier.
Okay.
Dilutive.
We're seeking ways to win.
It's lucie.
Right.
Besides warrants.
I guess so.
Sure.
Exactly.
But we think with the.
Peter.
Opportunities out there.
Now, we're taking a pause.
Cause.
To reflect on the.
Okay.
To close the transaction and Albert Murray and the team there.
There was balanced growth.
Yes tore.
Yeah.
All options are on the table.
Sure.
For us.
Anyway so.
Okay.
Awesome.
Uh huh.
Okay.
Okay.
Okay.
Thank you Brook.
Yeah, you guys are breaking up a little bit on the call also is the $1 billion.
Target organic growth or are we making acquisitions to get that growth.
We feel very confident in what we're doing right now without actually doing any type of major.
M&A type of deals we feel confident in the growth in the company and what we built as you can tell for the past 567 years. We've been in this business, we are able to grow year over year, and we feel very confident in being able to grow the company year over year.
So yes.
Billable, but we have some type of accretive.
Proposition comes across our table, where morning happy to look at that also.
Very good thank you gentlemen.
And the last questioner today will be William Bremmer.
Vanquish. Please go ahead.
Good morning, gentlemen.
Can you speak on the underlying agreement that you have with the manufacturers.
All of your products and.
Secondly, the premier brands the Vikings the Wolf the derma doors.
How do we.
Or when are we going to be receiving direct involvement with the premier.
Manufacturers there so I don't see them being listed on your website.
So what we do right now we sell.
All the brands that's out there that's available and consumer products.
There are certain products and certain brands that can only be sold in certain location geographic areas.
So you can only sell them either 100 mile media strict Monterrey, there's 160 mile radius or just certain counties. So each manufacturer were sharing high and not so many of them just a few of them have certain demographic territorial areas by by us.
Expanding our footprint, we will have better service.
To cover more areas and certain manufacturing certain product on the ultra luxury items.
That's only limited about three or four brands, but all the rest of the rest of the brands are basically you could sell them anywhere across the country nations nationwide.
Yeah.
Okay.
And your return policies, how does that work with D. E. F. Unfortunately, the product is damaged in the shipping and handling how does that flow back to your to balance sheet.
So right now we take you back just a regular process return if you take the product gets returned back to US we process of exchangeable process refunds for the consumer.
And it depends if we start manufacturers take backs on our infectious.
Allowance each manufacturer has a different process in place to take back and address these type of returns.
But obviously and that's why we wanted to ultimate goals that we're trying to focus on we could see a huge improvement in margins by focusing on getting these other fulfillment.
Fulfillment centers up and running once we get them up and running that's going to reduce damages, that's coming to reduce touching what's going to get a better experience or consumer customers don't have to wait 14 days at 21 days or 30 days to get the product, which can return its gonna, let us and help us.
Go out there and get that consumer Thats right now printing, our AD and going to a retail store that's out there to hate to my favorite did you get any of this particular product right now, but they won't have to because we can supply that particular customer and they won't be just show me. Our website. It is actually going to be able to convert a lot higher faster.
Okay that makes sense and then finally, you mentioned in your private wealth your future endeavors to private label.
What specific are you targeting are you targeting the cooking area refrigeration dishwashers.
Give us a little bit more clarity on what you are strategically thinking now.
Sure. There's a lot of items that are out there in the market that are missing from being in the market. So there are certain products that are demanded by consumers did not being able to be addressed by the other manufacturers. They don't want to address two particular products at a particular price points.
A particular feature set to consumers demand now because they don't.
Each manufacturer on tooling they have their own processes in place. It takes them years to build that product. So what we realize is that missing missing gap in this industry that they serve products are demanded by consumers and we went ahead and created it's in the middle of it as a premium to luxury.
And it's very old.
All categories, not just cooking or refrigeration and we're looking at a full line of appliances.
Okay very nice all sorts just want to let you know I requested a one on one with this management September 17th I have not received the validation of that so I would like to follow up with you directly.
So if you could let Gregg no.
I'm sure. He is on this call that I would like to have a one on one with you. Thank you.
Absolutely no problem. Thank you.
This.
Our question and answer session I would like to turn the conference back over to Albert <unk> for any closing remarks.
I just want to say thank you everybody for joining the call. We appreciate your time and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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Yeah.
Yes.
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