Aterian Inc. Q1 2023 Earnings Call
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First quarter earnings report conference call.
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Would now like to turn the conference over too ill Yonkers, Oscar Vice President of Investor Relations and corporate development. Please go ahead.
Thank you for joining us today to discuss the first quarter of 2023 earnings results.
Today's call are you in need surgery cofounder C E O.
Rodriguez R Chief Financial Officer.
A copy of today's press releases available on the Investor Relations section of the <unk> website editorial dot I O.
I would like to remind you that certain statements. We will make in this presentation of forward looking statements and these forward looking statements reflect the <unk> judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting <unk> business.
Accordingly, you should not place undue reliance on these forward looking statements.
More thorough discussion of the risks and uncertainties associated with the forward looking statements to be made in this conference call and webcast. We refer you to the disclaimer regarding forward looking statements that is included in our first quarter earnings release as well as our filings with the SEC.
We do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information future events or otherwise.
In addition, the company may refer to certain non-GAAP metrics on this call.
Explanation of these metrics can be found in the earnings release filed earlier today with that I'll turn the call over to any.
Thank you thank.
Everyone home golf.
To the other call I'm going to go over the following topics I'll explain the restructuring we announced today.
I'll go over a few takeaways from the first quarter of this year and finally I will discuss the strategic considerations were focused on us reach out about forward for a carrion.
Rapidly changing ecommerce environment.
So there is making a very difficult decision to undergo a significant restructuring with over 70 over our employees and 30 over a contract or at the party and the company.
My heart goes out to the employees affected him deeply grateful for everyone's contribution dedication through all the trials and tribulations with based along the way.
We all worked hard during the last few years to overcome incredible challenges and we should all be very proud of the resilience in Hartford put into getting the companies with them.
As a leadership team, we always hoped that we would not have to reduce our headcount and we worked very hard to look for a path forward that would keep us altogether.
Unfortunately, we are continuing to face headwinds and we have to make the required changes to reach profitability.
During the pandemic, we experienced rapid ecommerce Grove.
Thank you to in an aggressive M&A strategy, but we believe would be a particular period.
We believe that the trend with continuing that our current team was correctly sized to support it there and is expected trajectory.
Unfortunately, like many other retailers and e-commerce companies, we were wrong, we underestimated the economic impact and they were over there, but when overheating economy as a result of COVID-19.
As I mentioned, we fought hard to keep our team together for the last two years through many obstacles, including severe supply chain disruption inflation reduce the men three congress good accuracy inventory and reduce contribution margin.
Since the beginning of the year everyone on the team worked tirelessly to fix those issues. While we were looking for additional emanated dealflo that would allow us to increase our contribution margin would hope to jumpstart the company's path to profitability and restart the growth flywheel.
Despite our efforts and exploration of several opportunities we cannot get comfortable with executing on a transaction that would get a statistic ability and ultimately decided it would make more sense to cut fixed costs. So cheated adjusted EBITDA profitability starting in the second half of this year.
It's very important to clarify that we continue to be very optimistic about a M&A strategy and we believe and we continued to beat a very a physician to the executor scale.
Unfortunately, just like US many of the targets were considering these deals are dealing with similar challenges to our two hour then and the timing of the discussion has not been ideal.
Normally this and continues to happen in our industry. We believe that we will be in a better position to evaluate the acquisitions himself. These businesses in a much more stable environment.
While we continue to work towards these goals.
They were becoming a more efficient company and adjusting to a world where growth without profitability is no longer valid.
Well focused 100% on getting but I'll go first and working on a long term plan where growth and profitability go hand in hand.
It might take us longer to get where we hope to get or patient and committed to our mission.
With regard to the first quarter resolve the continued to be pleased with our efforts to normalize our inventory level and costs.
Our inventory levels and cost basis entering the second half of normalized versus what they were last year.
As a reminder, this as a shipping container Bob Skyrocketing in 2021, and 2022 consumer Brenda brought their industry were forced to ship goods at an average cost of $17000 broken Tanner to stay in business.
Additional costs that we incurred as well of course is to increase our product prices by an average of 20 per cent only to generate an average of 8% contribution margin with some of our product seeing as little as 6% contribution margin versus the target of a 15% C. M I don't normalised pricing.
As we enter the second half of the year I remember I remember the result, basically improve substantially as a average call, especially if the container has dropped a free pandemic levels.
We remain optimistic that the Lord lots of good combined with our fixed cost cutting efforts, we will be able to deliver on a promise that a profitable I'd be adjusted EBITDA level in the second half of 2023.
I would like to speak a bit about the long term strategy for a chair and give her a view of what we believed industry is gone.
We'll continue to look for accretive in many opportunities and have discussions with companies in our industry. We're facing similar challenges is up there are several active consolidations I've heard that we're aware up within our people who have been a private markets and will continue to follow those.
We're also very carefully studying the new AI Revolution led by breakthroughs in large language models.
We believe that the exponential progress that she's in this field in the last six months will have a massive impact on our industry in the world in general.
I look forward to the next to the next five plus years, we believe that we need to take steps now to adjusted these changes I think it will arrive faster than anyone expected.
We're especially focused on what we believe will happen to the consumer journey of the future.
Specifically, we believe that conversational product recommendation as an agent will play a very big role and potentially in the long term replace away search consumer sexual products to that.
This is a very meaningful for activity I mean, given that our approach to launching consumer product has always been driven by the analytics and predictions related to consumer demand.
[noise] Wow Covid and the ensuing economic woes have disrupted our business, we believe that over the next five years that current physician actually put the tear it in a more favorable spot to make the changes that will give us an advantage in the industry.
Strangely had these events of the last two years not occurred and had our business drive today it might have even been more difficult to make the adjustments needed to adapt to a future that is barreling towards every company today at an incredible speed.
It's a bit early to share.
The changes were working on meaningful rights area, and and our focus is first and foremost I'm, making our core business profitable.
One I think that we can speak about today is a relief that which photo balance our efforts with regard to the brand versus performance market.
For those familiar with the distinction performance marketing often refers to a more transaction marketing approach, where we look to convert consumers who are in the market for a product that will solve a problem for them regardless of a particular brand name brand marketing referred to the effort of making people think about a brand when they encounter a similar problem as opposed to searching for the best possible product.
Historically adhering has evolved very performance oriented a consumer platform once in a brand or not as well known but they perform well to our expertise analytics and performance marketing for specific father.
Going forward, we will balance this effort and built more brand awareness for several of our portfolio assets.
Because of our mountain. This call. This is a difficult day for a company, but also a step in the necessary direction to pursue a mission.
Despite the challenges we are facing we believe that the efforts were making will pay off in the long run and we look forward to sharing more details on a long term strategy can become the leading a conference consumer platform, which borders.
With that I'll pass it on Florida discuss the financial results.
Thank you nice and good day everyone.
You are the financial performance details of our first quarter.
For the first quarter of 2023, net revenues declined 16.3% to $34 9 million from $41.7 million in the year ago quarter.
Primarily due to reduce consumer demand offset by strategic initiatives to sell a higher price inventory and normalize inventory levels.
Looking at our first.
Quarter net revenue buffets, the 34.9 million broke down as follows 28.6 million sustained point.
2 million and launch and 6.1 million liquidate inventory normalization.
Go quarter net revenue 41.7 million by face broke down as follows.
$8.0 million and sustain point 8 million and launched in 2.9 million and liquidate inventory normalization.
Are sustained net revenues decrease of 9.4 million relate to some revenue shifting into liquidation pays in general consumer salt.
Liquidation net revenue increased by $3.2 million from our strategic initiatives to sell a higher price inventory to normalize inventory levels.
Our lunch revenue in the quarter was slightly lower and the revenues attributed to Newbury reasons existing products we.
We are planning new product introductions in 2023, though the timing will be opportunistic.
Overall gross margin for the first quarter declined to 54.8% from 56.6% in the year ago quarter, but increase from 37.1% in Q4 2022 R.
Decrease in margins in the quarter versus year ago quarters, primarily a tribute to our strategic initiatives to sell a higher price inventory normalized inventory levels.
Our overall Q1 contribution margins to finding our earnings release was five 9%.
Which decreased compared to prior year C M of 9.2% increase compared to the fourth quarter of 2022 of negative 11.5%.
Year over year decline is primarily attributed to higher liquidation revenue from our strategic initiatives to sell a higher price inventory normality inventory levels.
R Q1 2023.
Sars sustained products contribution margin essentially unchanged year over year at 12.6% versus 12.5% in Q1 2022, we expect our sustained contribution margin improve sequentially as we progressed in the second half of 2023.
Looking deeper into our contribution margin for Q1 23 are variable sales and distribution centers a percentage of net revenues increased to 48.8% as compared to 47.5% a year ago quarter.
This increase in sales and distribution expenses is predominantly due to the product mix an increase in E. Commerce platform service provider fulfillment fees and an increase in the last mile shipping costs, specifically for besides could we.
We do expect our sales and distribution expenses as a percentage of net revenues to improve as we progressed in the second half of 2023.
Are operating loss of the quarter of $25 million improved by 30% from $36.2 million a year ago quarter as we continue to normalize our business from the impact of the supply chain and strengthen our balance sheet.
Our first quarter of 2023 operating loss includes 2.3 million of non-cash stock compensation and non-cash loss of intangibles to $16.7 million our.
Our first quarter of 2022 operating loss includes 2.8 million of non-cash stock competition, a non-cash loss and goodwill $29 million and a positive change in fair value of contingent earn that liability is $2.8 million.
Our net loss for the quarter of $25 8 million improved by 39% from $42.8 million a year ago quarters, we continue to normalize our business from the impacts of supply chain strengthen our balance sheet.
Our first quarter of 2023 net loss includes $2.3 million non-cash stock compensation, a non-cash loss of intangibles $16.7 million and a gain of $4 million on the fair value weren't liabilities.
Our first quarter of 2022 net loss includes a non-cash loss of goodwill 29 million 2.3 million non-cash stock compensation expense impacts related to the equity issue and warrants of seven $6 million $2.0 million and a gain of filming them sell a note and 2.8 million gain on change in a fair value in there now.
Adjusted EBITDA loss of $4.3 million at the finding our earnings release improved from a loss of $4 5 million in the first quarter of 2022.
Our strategic decision of liquidating higher cost inventory and normalizing our inventory levels impacted our justice, but in the period. However, this is very important efforts that puts us on path to get back to stronger contribution margins adjusted EBITDA profitability in the second half of 2023 and strengthen our balance sheet.
Going to the balance sheet at March 31st we had cast for approximately $33.9 million compared to 43.6 million at the end of December 31st 2022.
This decrease in cash is expected is predominately driven by our net loss in the period 1.6 million net flows outflows from working capital and repayments approximately $2.1 million of our credit facility.
We continued normalized inventory levels in the first quarter of 2023 by liquidating, our higher cost inventory and are on track to completing this effort in the second quarter.
March 31st inventory level was $44 million down from 43.7 million at the end of the fourth quarter of 2022 and down from 75.4 million a year ago quarter.
Our credit facility balance at the end of the first quarter 2023 was $19.1 million down from $21.1 million at the end of the fourth quarter of 2022.
As we look at Q2 2023 taken town impact on inflation and reduction consumer spend we believe net revenues will be between $37 million $44 million. This represents a decrease in the same quarter last year, approximately 30% using the middle of the range. We expect to continue to see similar softness in the remainder of the year.
For Q2, 2023, we expected just to eat at a loss to be in the range of $5.2 million to $6 $2 million, including the estimated restructure impact of $1 million from our workforce reduction.
With our <unk> announced annualized savings of 6 million from our workforce reduction offsetting are continuing expectations softness and consumer spend we continue to be on the path to reach our target of adjusted EBITDA profitability in the second half of 2023.
In closing, we announced difficult decisions, which will impact of workforce.
So we will be think vitamin colleagues. These impacts will ultimately make a tyrion stronger but.
Continue to focus on efficiency, we continue to progress on a path towards suggest EBIT profitability in the second half of 2023.
Past 12 months, we spent a great amount of time, focusing on strengthening our balance sheet to ensure we can navigate the uncertainties ahead. We believe we've accomplished us in today, our balance sheet of strong with our cash balance.
Are normalized inventory levels and continued access to credit facility mid cap. We believe we have the flexibility to navigate the current macroeconomic environment as continues to unfold and further allows us to be laser focus on driving our core business.
With that I'll turn it back to the operator to open the call up the questions.
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Shirley.
Roster.
Oh My first question will come from Koranda Roth M Kam.
[laughter].
Hey, guys as much as I have been on from that maybe just start by speaking to the overall demand environment that we're seeing are there certain product categories, requiring deeper discounting and others have you noticed any price sensitivity previously Brazilian products.
So maybe just elaborate on any new or persistent trends were noticing from the end consumer.
Hey, there you need here thanks for the question.
Interestingly the weakness of consumer seems to be across the board. We don't have any particular category that we believe is down because of consumer issues. So really what can you look across the board and you see overall less strophic to some of the biggest this website.
It's like you know the big the big channels that we sell on so overall consumer demand seems to be weak across the board.
Got it makes sense.
And and grabbed the Sega margins recovering I'm coming in a bit of a bit better than expected will help us understand to what degree does the adjusted EBITDA profitability target rely on less inventory liquidation versus overall demand normalization versus maybe new products driving incremental demand.
Or do you want to answer that.
Yeah. Thanks. Thanks.
Yeah, So I think listen.
We said last few quarters normalized inventory levels and clearing out much more expensive than to where it was key in us getting back to the adjusted EBITDA profitability targets that we've mentioned.
I think we're saying that we believe we are on track to get to complete that mission I think by the end of the you tube.
Fairness, we're always going to have an inventory logged ness and normalization. It's just it was considering the supply chain issues that we ran into 2021.
It was just an exorbitant amount that was not accustomed to normal business. So now that we're kind of getting back to normal business. That's like step one in it so getting back to inventory levels. I think when you can actually do that considering containers or back down to.
I would say 2019 pricing, we do expect and the second half of this year that our contribution margins will improve to get back closer to normal I think those combinations are really the key drivers for us to get the profitability and lastly that last part of that question was as consumer demand. It's Lewis.
We may be six cost cuts.
We're very difficult decisions it does.
Bring our fixed costs down by $6 million annualized on an annualized basis.
Including that assuming we continue to see some of the buttons because we were down that we mentioned consumer demand that we mentioned I think those three things are really why we can get back to that adjusted properly.
It makes sense. It's helpful last one for me, obviously bottom lines still constricted by by selling an industrial expenses, maybe just elaborate on what exactly needs to happen processes selling the distribution leverage in the back half of the year and is 2021, a good proxy to use.
<unk> I.
I think we were floating around the 46 48 per cent of sales range, whereas for the past couple of quarters he'd been kind of <unk> or <unk> diabetes. So 2021, a good proxy to use I mean, what exactly needs to happen C meaningful leverage in the back half of the year.
Or do you want to take that as well.
Yes. Thanks, thanks, Thanks, she needs.
No I don't I wouldn't necessarily 2021 into the coffee I think those numbers that you mentioned there.
We do see that you know.
Getting below 50 ish percent right I think we just did this passport or $48 eight and we just mentioned.
That's very close I think the other side is needed mentioned in the past the normalization of container rates to allow a gross margin to pick up a couple of points allow us to get back to normal lives pricing, which allow us to increase the velocity. All these things play into that but I don't I don't know if we'll get back to like sub 46% that you're floating I think high forties is probably the right number just like.
We did this quarter, maybe you'll see that and prove a point or two over the coming quarters, but certainly that's kind of the target we're going to be I think.
2423, we saw those number of these high 50% or 55 per cent I think we're gonna be probably closer to the higher 40.
Two one as you are seeing right now.
The total Sanchez that's awesome.
The next question comes from Brian .
Pardon.
Go ahead.
Great. Thanks for taking my questions.
Revenue from sustain down about 25% year over year in the first quarter and based on two Q guidance and it appears a year over year decline. Although you don't give guidance in each of the line items, you can accelerate by a meaningful percentage.
First of all is that a sign that you think the economy getting weaker.
Traffic is gonna get weaker and then on the other hand.
Is that the kind of base language think about for the next few quarters is a little more accelerated in the first quarter song.
Oh, Yeah, I think a good one for you to think as well.
Yes. Thank you.
Quick question rain here yet.
Listen as you said, it's been we've seen general softens across the board first volumes are down on some keys key sites that we sell on.
I think if you go across.
Other.
News announcements from other companies you've seen that it's been very difficult and Bob how to predict I.
I do think that we are guiding and as we said at the middle of the range is quoted 30 per cent would be the drop off.
I think as you get into Q3 and Q4 that we're not guiding at this point I would assume that we would see something similar maybe a little bit less than 30%, maybe it's like 25 per cent when 8%, but certainly that's kind of what we're looking at right now.
Obviously, the other side to be very careful about.
Q2, Q3 is always a very.
Just driven by heat in summer and seasonality and we fell out even a privacy seasonal periods with depending on how that how.
Kind of some or unfolds and some had been unfolds later and you have a little bit more a little bit less numbers in queue to a little bit more than two three and I think right now whether it's been a little bit unpredictable.
And in the sense that we've seen a lot of fluctuation there and across the country in general.
We're not gonna get the reasons why we think that that's that's for another time, but certainly I think it does make it difficult, but I think if you're looking at that similar number going forward I think that would be conservative.
Okay.
Follow up.
Hello, you've announced the difficult and acting headcount reductions gives me demand trends.
<unk>, obviously implied some level needed to get to profitability of revenue what is that new revenue target that gets you roughly two a breakeven into an adjusted EBITDA either on an annual and quarterly basis.
[noise].
Uh-huh.
Well I guess, there's not really a guidance question you're looking for a number are there any any thoughts on how to answer that the best way.
Yeah.
Think Brian .
Brian Good question.
I think a lot of it depends on how RCM unfolds, we've always had a target model cm, a 15% right and that's something we've talked about publicly and are a lot of our investor presentations.
Don't think we'd get there this year, but certainly I think we're heading in that right direction. So a lot of it's really going to be a blend and again I'm, making up numbers, but if you look if you run radio or fixed costs from the last.
The last couple of years, you know you're kind of in those 30 numbers, we just announced saving six or doing $24 million, a fixed cost or something like that right. So I think I think in some aspect if you look at one.
$100.
60, 170 million, depending on the cm, you can probably get to something that's above adjusted EBITDA.
Profitability right. If you go a little bit lower you probably had a breakeven. So I think we're not adding to that right now cause I think things are a bit volatile and we're still working on a lot of different things were watching some products that you've mentioned so I think we're still focus on a lot of things, but I haven't eaten that could change the numbers to the positive, but I certainly think that it's going to be a little bit of a split.
And.
How you actually get to that I think we're not necessarily targeting what's the what's that breakeven point is from a number of perspective, which is really focused on getting.
Getting through this restructuring that we've announced getting too.
Cleaning up the inventory with finalized and and Q2 and I think hopefully this summer season, because we expect and it will be able to give a little bit better information on that number is a as we progressed until August [laughter].
Great. Thanks, and then the last question I have based on your comments on the environment.
No bird too and complaints from the acquisition you may have looked at.
Should we expect until the markets on stronger footing in the economy's on stronger putting me on hold for now is that what I'm reading into those comments.
Sorry could you just repeat the last piece of those and then should we expect.
Sorry.
I'm just wondering is M&A essentially what you wanted to communicate is on hold right now until the economy's on stronger footing no.
No I would not say that I think we're very actively looking at things. It's more of that the same challenges. We have are affecting others and they're still I think a lot of you know I think on every side is I think a little bit of them.
Wanting to understand what's the ability is in price discovery around what these assets are looking for forward and we just like you know again as we continue to be very active in this environment and we believe there's still a lot of opportunity and believed that again into longterm. It's still a every part of our strategy.
There's just too much noise for us and in some of these situations right now to to pull the trigger that being said everything's dynamic right. Just like we are dynamically moving and and adjusting these other companies and assets that we're looking at are also quickly adjusting and so.
I wouldn't say that we would have to wait for any type of normalization, it's more of that we.
We're going to continue to follow these us opportunities very closely and if the opportunity comes because of distress or any other momentum thing that's happening in other company, we might still do something earlier, if we can write but but we just need to get comfortable.
That.
You know that that what we're looking at is is is in a position that we can take it on right. So.
Yeah, great. Thank you no.
Okay.
Once again, if you would like to ask a question.
[noise].
And our next question will come from Alex Firman of Craig Hallum Capital Group. Please go ahead.
Hey, guys. Thanks for taking my question I wanted to ask about the headcount reduction initiative can you give us a sense of what most of the eliminated positions are and your plan to absorb those responsibilities across the rest of the organization.
And then it looks like you had to.
Pretty senior positions eliminated as part of this restructuring or they're going to need to be any hires kind of around the edges too.
Replace some of what you've lost or is the thinking that your existing organization minus the 70 employees and 30 contractors can can handle pretty much everything you're talking about now on the current revenue base.
Oh, Great question I'll I'll start with the end of it which is in terms of hiring and plans right like right now there is no.
Plan to hire any significant role or replace we believe that the current organization.
Capable of getting us, where we need to get on the profitability side.
As I mentioned in my remarks, right. The organization was sized and built and designed to rap.
Rapidly scale too much larger numbers based on the trends that we're seeing.
Back in 2020 and.
Really what's your what's what's gonna happen really is that you know the the team. That's left is just going to have to work harder for sure it's going to benefit from a lot of things.
Tools and infrastructure that we build the automated a lot of things.
And how do we grow into the speed at which we are we expected you know I think the team that was here before before we had to unfortunately.
[noise] head counts.
You know that team would have been in a good starting position to scale very very quickly right for the current them today, if all of a sudden we have the opportunity to scale. It Ah Hyperscale right, which obviously the environment that we live in today doesn't allow for right right. It would be much harder, whereas the team that was here before was able to do that in two.
Very quickly adopt too.
And just more companies that we would buy assimilate them and then run them as well as we can going forward right.
The difference is just we just cannot we will not be able to go as fast if we had the opportunity to but I just don't believe that the opportunity.
To move as fast as we thought we could back.
Bobby.
Not too long ago right.
Doesn't seem to be there anymore right. So again bottom line is the team that is today is sized correctly for what we're trying to get to profitability and from there we expect to build and grow with profitability and growth kind of going hand in hand, right until the environment changes again, maybe in hyper growth is all the rage, and we might reevaluate, but right now.
We believe this is a better site theme for the environment, we're in and and to get us to our goals of profitability already I Dunno, if you want to add anything.
Yeah, no great answering even yeah listen we we've made difficult decisions.
Still feel comfortable that this is a good size organization to do what we need to do and to provide growth maybe teenage pointed out at the same speed and.
And rigor that we were initially anticipating early in the year, but certainly we feel we have the talent and the dedication and the wherewithal to manage the business and grow the business with this team.
Yeah.
We're all taken on additional responsibilities I think that's kind of in our DNA, we kind of believe we can all.
Do better it'd be more efficient and we're gonna try that and we're all for the challenge we're kind of excited by this though it's sad C. Colleagues go I think we got a lot of work to do and I think we're gonna be able to do some exciting exciting things with this team.
Okay. That's really helpful. Thank you both.
Okay.
This concludes our question and answer session I would like to turn the conference back.
Krasowski for any closing remarks.
Thank you.
Part of our shareholder Parks program, which is a reminder, investors can sign up for at <unk> Dot I O forward Slash perks participants have the ability to ask management questions on our earnings call I wanted to thank all the shareholder perks participants for their loyalty and their participation in the program and their questions I have picked a few of the.
Most popular questions that they have submitted.
First question is please update us on the European expansion.
You need yep. Thanks, Julia Yeah. So the good news on that as we continue to our products and we see a lot of opportunity for growth as we mentioned in previous calls right.
I've heard is going to take time, just because of the nature of our business and the time that it takes too.
Bring the products from a regulatory perspective to be Ah Ah compliant with European standards, the manufactured into shipped them there. So.
Europe is again, a very important opportunity for growth for us.
It's just gonna take time, as we continued to add more and more products there and we look forward to update of one on future calls on the progress that we're making their.
Thanks next question is is carrion going bankrupt.
Alrighty are your needs.
Yeah, Let me, let me take that an order you cannot outside the answer is a category. You know we are in a very strong cash position, we have minimal that would only be L. And we're very far from any of the debt covenants.
We we don't believe that we have any reason to be worried about any ending close to bankruptcy. At this point. We just are adapting to the environment and worth up into an environment that favors profitability and making some tough calls along the way, but really that's it.
I Dunno, if you want to add anything.
No you need welfare, I mean listen and we have a great partner with mid cap in our credit facility.
Access to increase that credit facility up to $40 million is needed.
I think we have very like covenants on that as soon as you mentioned I think we're in good shape. As we said we spent the last 12 months really trying to clean up our balance sheet and strengthening I think we've done a great job. There we got a good cash balance we have good access to you could could working capital access through our ABL with mid cap and then ultimately you know.
Worked hard to normalize inventory balance, which is going to put us in a good position to continue to run the business and and be nimble and flexible as the current environmental.
Oh, Okay. Thank you next question is is it <unk> going to do a reverse split.
Give me a priority.
Oh, Yeah, let me, let me take it in already.
So just to remind everyone. We have 180 days to regain compliance with NASDAQ then we will probably likely be granted another 180 days.
Comment further on the stock price and and again the focus is really on on just getting us to second half adjusted EBITDA profitability at this point.
Are they don't know if you want to add anything to that.
Nope I think that's well said Geneva. Thanks [noise].
Great. This concludes the Q and a portion of the call in terms of the upcoming calendar carrion management will be participating in the Sidoti Microcap conference may 10th through 11th which will be held virtually in the Oppenheimer consumer growth and E Commerce conference, which will be held virtually June 12th.
To 14th.
We look forward to speaking with you on future calls and this and I'll call you may now disconnect.
Okay.
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