Q3 2022 Toughbuilt Industries Inc Earnings Call
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Good afternoon, ladies and gentlemen, and welcome to the tough built third quarter 2022 earnings call. During the presentation, all participants will be in a listen only mode.
Any time during the conference you need to reach an operator. Please press star Zero as a reminder, today's conference is being recorded I would now like to turn the call over to Martin Goldstein Chief Financial Officer. Please go ahead.
Good morning, and thank you all for joining us today to discuss third.
Third quarter, 2020 financial and operating results.
Again, my name is Mark and golf.
I am the Chief financial officer of tough sales.
Joining me on today's call is Michael <unk>, President and Chief Executive Officer, Dr. Michael.
Michael will begin today's discussion by providing operational and financial highlights from the third quarter I will then review our financial performance for the same period.
Nickel will conclude the discussion what are plans for the remainder of 2022 and beyond.
Before turning the call over to Michael I would like to remind you that any forward looking statements made by management are covered under the U S.
Private Securities Litigation Reform Act of 1095 and are subject to the changes risks and uncertainties described in the press release and in our U S Securities filings.
In addition, during the course of the call. We may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies.
Investors are encouraged to review the total current report on form 8-K.
<unk> with the SEC for a couple reasons for including those non-GAAP financial measures in its earnings release and presentation.
A reconciliation of non-GAAP financial measures that are most directly comparable GAAP financial measures are contained in our earnings press release issued earlier today.
Otherwise noted therein.
I will now turn the call to Michael.
Thank you Martin and thank you all for joining us on today's call. The third quarter of 2022 was strong for tough built culminating in revenue $32 million and.
76% year over year increase compared to Q3 2021.
As a result of strong revenue numbers and our expansion efforts, we expect to see both store and online revenues continued to grow year over year.
In July 2022.
We announced as we entered into an agreement with Ace hardware USA and international to sell 35 tough build products in which <unk> will distribute utilizing 15 regional service centers to reach 5500 individual ace stores.
In August 2022, we announced that we have started to sell 93 tough build products on Amazon, Italy, and Amazon Germany.
We also announced our entry into supply agreements with many top retailers in Spain hardware market.
Finally in August we announced the launch of our all new reload utility knife, a groundbreaking new cutting tool.
September was a particularly busy month with major expansion in both our network and our two lines.
During the month, we announced our entry into the global measuring and marking one $4 billion market segment with a family of tape measures and chalk rules.
We also announced that we entered into an agreement with two major wholesale distributors in Switzerland, marking and the expansion of European distribution that includes more than 250 retailers.
We also announced major expansion for our network of storefronts in Great Britain.
Confirming new and expanding agreements with more than 900 collective retail locations in Great Britain.
Finally in September 2022.
We announced the launch of 21, new skus into the global <unk>.
Salt segment.
Beginning with our line of seven cutting tools.
The new line will be available Q4, 2022 were purchased through a leading U S home improvement retailer and throughout our international retail network.
Subsequent to the end of third quarter, we continued our strong momentum by continuing to expand both our distribution network and our product lines.
In October we launched a comprehensive line of innovative striking tools and a 500 foot rotary laser level kit.
We secured more new distributor agreements with four major retailers in Germany, reaching an agreement with Saudi Mac, the largest home improvement and construction supplier in South America, and expanding distribution of 84 product Skus in all 96, Sears stores in Mexico.
Yeah.
As you are all aware supply chain disruptions have caused great difficulty for many industries over the last year.
Due to our strong inventory levels in 2021, and the nine months ended September 32022, the ongoing supply chain disruptions have not had in materials.
Adverse effect on our operations.
And we do not currently anticipate that any continued supply chain disruptions, we will have a material adverse effect on our operations for the remainder of the fiscal year 2022.
As you can see the third quarter as proved to be a milestone periods, yielding success validated by our sales and revenue.
Giving us confidence to continue our growth and path to profitability going into the remainder of the year.
I will turn the call back to Martin to cover our financial results in greater detail Martin.
Thank you Michael revenues for the third quarter of 2022 aware of approximately $32 million, an increase of 76% compared to the same period in 2021.
Primarily due to a wide acceptance of our products in the tool industry and receipt recurring sales orders for <unk> and software from our <unk>.
Existing and new customers.
The introduction of new software products to our customers and an increase in sell through Amazon.
Cost of goods sold or three months ended September 32022, and 2021 was $22 3 million and $11 $7 million, respectively cost of goods sold increased by 90% compared to the same period last year.
Due to our increased sales as well as an increase in our materials to manufacturer in metal goods and soft goods and an increase in labor cost in China.
Selling general and administrative expenses for the three months ended September 32022, and 'twenty, 'twenty, one or $14 7 million and $15 2 million respectively.
<unk> expenses decreased in 2022 over 2021 by three 7%, primarily due to lower shipping costs and some cutbacks we expect our SG&A expenses will start to increase at a lower rate as our business matures and we develop economies of scale.
Research and development costs for the three months and then September 32022, and 2021 were $2 8 million and $1 6 million.
Actively this increase was primarily due to companies developing new tools, Florida construction industry.
We recorded a net income of 539000 for the three months ended September 32022.
As compared to a net loss of $9 million for the three months ended September 32021.
Our balance sheet as of September 32020 to our cash position was $1 6 million. Our accounts receivable were $23 4 million or inventory it was $40 million, our prepaid and other current assets.
$8 million.
Subtracting our current liabilities of $39 4 million, which gives us a working capital of $28 5 million. Additionally, we are seeing cash coming into the company daily as we sell down our inventory.
I will now turn the call back to Michael for his final remarks, Michael Thank.
Thank you Martin before I open the call for questions I would like to reiterate the tremendous market opportunities that continue to exist at hospitals and the infrastructure, we have in place to capitalize on those opportunities.
We are uniquely positioned with top retailers around the world selling more topical products and.
And building upon our successes.
Amazon Dot com sales continue to be our leading growth driver due to repeat orders from our strong retail base.
As I mentioned previously our future revenue opportunities can be broken down into three buckets.
Expanding existing relationships with the retail partners, adding.
Adding new retail partners, introducing new product categories.
In the third quarter, we executed on all three of these items.
I along with the entire tough field organization are committed and confident in our ability to maintain our growth position.
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And ladies and gentlemen, there'll be no questions. Today, we thank you for your participation and ask that you. Please disconnect your lines.
This is Tom.
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