iPower Inc. Q3 2023 Earnings Call
financial results for its fiscal third quarter 2023 and at March 31, 2023. Joining us today are I-Powers Chairman and CEO Mr. Lawrence-Tan and the company of the company. Mr. Kevin, Vassily, Mr. Vassily, please go ahead.
Thank you operator and good afternoon everyone. By now everyone should have access to our fiscal 3rd quarter earnings press release.
which was issued earlier today at approximately 4.05 p.m. Eastern Time. The release is available in the investor relations section of our website at meetipower.com
This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for your questions.
Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain noun and unknown risks and uncertainties.
as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.
These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC.
do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to forward-looking statements.
With that, I'd like to turn the call now over to iPower's Chairman and CEO , Lawrence Tan. Lawrence?
Thank you, Cabin. And good up to everyone.
We had a challenge in calm this quarter, given the record 74% revenue growth.
We achieved a fiscal Q3 2022.
Nonetheless, we demonstrated a continued momentum in setting through inventory brought up from prior our period. As reflected by our 16% reduction of inventory from last quarter and 36% reduction from our fiscal year end. This is Chapter ? Cleanser.
Throughout the quarter, we continued to emphasize our in-house brand, which made up of more than 90% of the revenue, and destroying the consistent demand for our market leading products.
Some of our strongest red sales come from several of our newer products, most notably in our shopping category.
Consumer feedback for our product remains strong and we expect those categories to grow further as we add new in-demand products to our catalog.
As mission is on prior calls, we have made the strategic decision to diversify our product portfolio beyond the cardioponics. Our mission is on prior calls, we have made the strategic decision to diversify our product portfolio beyond the cardioponics.
What once was the vast majority of our business now accounts for approximately 35% of sales?
Although Hydroponics has become a smaller segment of our business today,
It remains an important catalog and we will continue to invest in the product line as the market takes place.
Investing resources in new product development has been and will always be a key focus for us. To keep our portfolio stock with high quantity products.
Our customer has come to expect.
In the next few weeks, we are planning to unveil our new contact-top hydroplanet flying eye farm.
I farm provide consumer with the easy to operate, space saving appliance to grow herbs, green leafy vegetables, tomatoes, peppers, and other produce in their kitchen year rounds. After extensive research and data collection, we saw a niche in the market that was not being well served. And we built the product with attributes consumer-worldly money.
I farm provide consumer with the easy to operate, space saving appliance to grow herbs, green leafy vegetables, tomatoes, peppers, and other produce in their kitchen year rounds. After extensive research and data collection, we saw a niche in the market that was not being well served. And we built the product with attributes consumer worth of money. And at a compelling price.
We are excited to launch this new product line and look forward to releasing additional products later this year. In recent months, we have experienced promising traction on the services side of our business as well.
Our focus is to leverage our supply chain and merchandising expertise to drive sales growth from partners with cutting edge product portfolio.
This is a small segment of our business today. However, the early demand is encouraging, as reflected by recent partnership with former companies in Hongkos and electronic categories.
We are providing merchandising and sales services as well as some logistics support for these initial pilot.
Since launching the program two months ago, we have already begun to see strong momentum with increasing order volumes.
We will have more to say about these program in the next several quarters. And look forward to offering our sales, marketing and merchandising expertise to service more brands and partners in the future.
As mentioned earlier on the call, we proactively stockpiled inventory in calendar 2022 to offset supply chain challenges.
and to account for increased demand for our in-house products. This led to a surplus of inventory with very high associated freight costs and the need for additional warehousing space.
which increased our operating expenses impacted the probability of probabilities.
The supply chain began stabilizing in late Canada 2022, so we no longer required the access inventory levels or the associated warehousing space.
To date, we have soed through the majority of the inventory carrying the elevated cost of gruel sold. However, we still have a small portion to work through.
Our setting on the marketing costs have been higher, the usual, to move through the excess imagery. However, we expect that to normalize in the quarters ahead. We'll lower our total operating expenses.
These CVs combined with the continued strong demand for our in-house product will enable us to return to probability in Cisco 2024.
Moving ahead, we will focus on future diversifying our product mix while adding depth to our in-house offerings.
We are also optimistic about our services business and looking forward to utilize our best in-class sales marketing and merchandising capabilities to accelerate the growth for high quantity brands looking to elevate their sales channels.
These initiatives coupled with anomalies of supply chain environment and lower upgrading the expenses will enable us to improve our financial and operating results as we enter our next fiscal year.
I'll now turn the call to our CFO , Kevin Lethley, and take you through our financial results in more detail.
to our CFO , Kevin Bethelene, and take you through our financial results in more detail. Kevin?
Thank you, Lawrence. As I mentioned earlier, fiscal Q3 of last year was a period of record growth for RIPOWER. This quarter pretty challenging comp on a year of your basis.
Given the circumstances that we were pleased with our result in this quarter, so that we're right in.
Total revenue was 20.2 million compared to 22.8 million in the year ago period.
The decrease was primarily driven by fewer third party branded sales to our channel partners. Our fiscal third quarter revenue mix from in-house brands increased.
to over 90% compared to 82% in the year ago period.
Gross profit in the fiscal third quarter was 7.8 million compared to 9.2 million in the Eurogo quarter.
As a percentage of revenue, Gross margin was 38.5% compared to 40.4% in the year ago quarter, but the decrease in Gross margin primarily driven by higher cost of goods sold, which resulted in selling inventory that previously incurred much higher freight costs.
As we have mentioned,
freight and container shipping costs have normalized this year and we expect Russ Margin to improve as we work through our older inventory. Total operating expenses for Frisco Q3 were 9.6 million compared to 7.8 million for the same period in fiscal 2022.
and or excess warehouse expenses that we had shown in the prior two quarters. Net law contributed a little to iPower and the fiscal third quarter was 1.5 million where five cents per share compared an income of 1.2 million or four cents per share for the same period in fiscal 2022. The decrease in our bottom line was primarily driven by lower gross profit and the aforementioned higher selling, fulfillment, marketing and marketing costs. Moving to the VALOGY, cash and cash equivalents were 1.4 million.
As of March 31st, 2023, compared to 1.8 million at June 30, 2022. As of March 31st, 2023, total debt, stood at 9.7 million, compared to 16 million and as of June 30, 2022.
The decrease was driven by our decision to pay down a significant portion of our revolving credit facility. As a result, our net deposition was reduced 42% to $8.2 million compared to $14.2 million as of June 30, 2022.
As Lawrence mentioned earlier, we expect to improve both on our growth and operating margins.
As Lawrence mentioned earlier, we expect to improve both on our growth and operating margins the stabilization of the supply chain.
and the reduction in our excess inventory and the lowering of our excess warehousing costs.
We believe these initiatives, in addition to the continued strong demand for those products, will enable us to return to growth.
and profitability in our fiscal 2024. So with that, that concludes our prepared remarks and we will now open it for questions.
Thank you. That's a question. Please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.
Please stand by. We'll talk about the Q&A roster one moment.
Our first question will come from the line of Scott Fortune from Roth. Your line is open.
Grafner, and thanks for taking the questions. Inventory levels just want to get sense for obviously you're working through that but there still seems to be some left in there you don't want to discount it too much from that. But when you look at it kind of as a normalized inventory, what type of turns are you looking at and then use kind of sense of the levels here.
And once this can make completely cycled out, kind of the timing here, you expect kind of a inventory to be normalized from the next couple quarters standpoint. That can be helpful from the standpoint. Thanks. Lawrence, do you want to take that one in terms of timing? Yeah.
Yeah, I can talk a little bit about what we think a normalized level would be. The timing to that we return to normal inventory.
Yes, the cycle time through some of the higher cost stuff that we still sit on. I think by the end of June quarter, we should be achieving that goal.
And then from the standpoint of kind of
running the business, you know, six, six and a half turns a year.
I don't know that that's necessarily a realistic
Number however we've got kind of a soft inventory gold.
based on kind of demand expectations of, at least initially, trying to get our inventory levels down to the
15 or 16 million level. Some of that will change depending on...
demand forecast, but I think we still have some absolute levels of inventory reduction that we feel like we can achieve over the next quarter or so.
Yeah, I think our goal is to turn an inventory around five times a year. So that's a goal that we are trying to achieve.
Got it. No, I appreciate that color there. And then you mentioned, you know, attractive service side model here, the drive growth for partners. You're seeing pretty good demand. I know it's initial and just beginning to start up.
It kind of helps us understand the margin profile and the kind of as you try, or you go after these different categories, kind of the service opportunity, where you can see, you know, a percentage, what percentage it can be of the revenue and the margin profile on the services to go for that degree. I hope so from that standpoint.
I'll take this. Kevin. So, it's still early. We have engaged a few partners. We have seen pretty promising results with these pilots. From the profit standpoint, I think it will be...
around the similar levels of our in-house products actually, in terms of the bottom line, in terms of the...
around the similar levels of our in-house products actually, in terms of the bottom line, in terms of the...
I think it's the services side of the revenue has a much, much higher potential than just like a build apparently from a in-house product line point of view. So I think this is something that we could...
I have, I have a high expectation to look for it. Got it. And one last one for me, you know, hydroponics is down to 35% of the sales and the?s are on the new high farm. So I think that any color on big box and in plain
with these potential partners, developing brand strategies and product lines to work with them. We have the attending meetings and conferences, but still take some more time before we can do any significant achievement. Okay, now, please.
participated in the call. We look forward to speaking with you again.
The time that we report our full year, 2023 results.
and that fiscal year will end June 30th of this year. Thanks again, and I look forward to talking to you.
This concludes today's conference call. Thank you for participating. You may not disconnect. Everyone have a great day.
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