Q3 2023 ToughBuilt Industries Inc Earnings Call
Speaker 1: Good afternoon, everyone, and welcome to the Tough Bill of Industries third quarter 2023 earnings conference.
Good afternoon, everyone and welcome to the tough industries third quarter 2023 earnings Conference call.
Speaker 1: All participants will be in a listen-only mode. If you need assistance, you may send to a conference specialist by pressing the star key followed by zero.
All participants will be in a listen only mode.
It's going to make you know a conference specialist by pressing the star key followed by email.
Speaker 1: Please also note today's event is being recorded and at this time I would like to turn the floor over to Martin Niedolski, Chief Financial Officer.
Please also note today's event is being.
Caught it.
And at this time I would like to turn the floor over to Martin Goldstein.
<unk> Financial Officer, Sir Please go ahead.
Speaker 2: Good afternoon and thank you all for joining us today to discuss Tuffville's third quarter 2023 financial and operating results.
Good afternoon, and thank you all for joining us today to discuss the third.
Third quarter, 2023 financial and operating results.
Speaker 2: Again, my name is Martin Galstian, and I am the Chief Financial Officer of Toughbills. Joining me on today's call is Michael Panossian, Toughbills President and Chief Executive Officer.
Again, my name is Mark and golf, Dan and I am the Chief financial Officer of Copel joining.
Joining me on today's call are Michael <unk>, President and Chief Executive Officer, Michael will begin today's discussion by providing operational and financial highlights from the third quarter I will then review our financial performance.
Speaker 2: Michael will begin today's discussion by providing operational and financial highlights from the third quarter. I will then review our financial performance.
Speaker 2: Michael will conclude the discussion with our growth plans for the upcoming fiscal year and the up.
Michael will conclude the discussion what our growth plans for the upcoming fiscal year and beyond.
Speaker 2: Before turning the call over to Michael, I would like to remind you that forward-looking statements made by management during today's call and that any forward-looking statements are covered under the U.S. Private Securities Litigation Reform Act of 1995.
Before turning the call over to Michael I would like to remind you that forward looking statements made by management during today's call and that any forward looking statements are covered under the U S. Private Securities Litigation Reform Act of 1995.
Speaker 2: Actual results could differ materially from what is described in those statements and are subject to the changes, risks, and uncertainties as described in our press release and in our SEC periodic and other filings.
Actual results could differ materially from what is described in those statements and are subject to the changes risks and uncertainties as described in our press release and in our periodic and other filings.
Speaker 2: Additionally, information on risk factors that could cause results differ is available in the company's most recent form, 10K, filed with the SEC.
Additionally, information on risk factors that could cause results to differ is available in the company's most recent Form 10-K filed with the SEC.
Speaker 2: In addition, during the course of the call, we may be inadvertently used or referred to financial measures that are now 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 comp-
In addition, during the course of the call we may be and are rarely use or refer to 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.
Speaker 2: If any GAAP financial measures are mentioned in today's call, the company will promptly file a Form 8K with the SEC, re-consuming such non-GAAP numbers to GAAP. I will now turn the call to Michael.
If any GAAP financial measures mentioned in today's call. The company will pump they filed a form 8-K with the FCC reconciling such non-GAAP numbers to GAAP.
I'll now turn the call to Michael.
Speaker 2: Thank you, Martin, and thank you all for joining us today. For the third quarter of 2023, the company reported revenue of $20.6 million, a 9% increase compared to the prior quarter.
Thank you Martin and thank you all for joining us today for.
For the third quarter of 2023, the company reported revenue of $20 6, million% to 9% increase compared to the prior quarter.
Speaker 2: We are very aware of the challenging macroeconomic background that has been affecting our industry.
We are very aware of the challenging macroeconomic background that has been affecting our industry.
Speaker 2: As a result, we continue to work diligently to decrease overhead.
As a result, we continue to work diligently to decrease overhead.
Speaker 2: For the third quarter, SG&A expenses were $12.5 million, a 33% decrease compared to the prior quarter, and a decrease of 30% compared to the same quarter last year.
For the third quarter SG&A expenses were $12 5, million% to 33% decrease compared to the prior quarter and a decrease of 30% compared to the same quarter last year.
Speaker 2: Our gross profit for Q3 decreased by 20% to $4.9 million, compared to the third quarter of 2022.
Our gross profit for Q3 decreased by 20% to $4 9 million.
Compared to the third quarter of 2022.
Speaker 2: Although the gross margin decreased this Q3, however, on first nine months comparison basis, it only declined 0.32%.
Although the gross margin decrease this Q3 <unk>.
Over on the first nine months comparison basis, you don't need to decline to 0.32%.
The decrease in.
Speaker 2: in gross profit margin in 2023 third quarter was primarily driven by a decrease in demand in the overall sector.
And gross profit margin in 2023 third quarter was primarily driven by a decrease in demand in the overall sector.
Speaker 2: We are focused on improving gross profit margins in the quarters ahead.
We are focused on improving gross profit margins in the quarters ahead.
Speaker 2: During the last quarter, we continued to streamline the organization and focus on driving efficiencies on our planned path towards profitability by focusing on innovation and sustaining and scaling customer partnerships.
During the last quarter, we continued to streamline the organization are focused on driving efficiencies on our planned path towards profitability by focusing on innovation and sustaining and scaling customer partnerships.
We believe our 'twenty two product lines provide a strong foundation for growth.
Speaker 2: Even as we introduce additional new products, we believe that a significant portion of our major new design work
Even as we introduce additional new products, we believe that a significant portion of our major new design work.
Speaker 2: has been completed and we will begin to reap the rewards of what we have built so far in years to come.
Has been completed and we will begin to reap the rewards of what we have built so far in the years to come.
We recently launched the newest product line, our stack thick mobile stacking two box system.
Speaker 2: We recently launched the newest product line, our StackTech Mobile Stacking Toolbox System.
Speaker 2: The StackTech line is not only the world's first auto-locking, stacking tool storage solution, but with the launch, we are able to break into new market sectors.
The stack that line is not the only the world's first auto locking stacking tool storage solution.
But with the launch we were able to break into new market sectors.
Speaker 2: We anticipate our entrance into the stacking tool storage and toolbox market will drive us closer to our profitability target, and we expect to see a strong contribution to future net sales.
We anticipate our entrance into the stacking tool storage and toolbox market will drive us closer to our profitability target and we expect to see a strong contribution to future net sales.
Speaker 2: I will now turn the call back to Martin to cover our financial results in greater detail. Martin?
I will now turn the call back to Martin to cover our financial results in greater details.
Martin.
Speaker 3: Thank you, Michael. Revenues for the three months ended September 30, 2023 and 2022 were 20.6 million and 30.2 million, respectively, which consisted of metal goods, soft goods, and electronics goods sold to customers. Revenues decreased in the third quarter of 2023 over the same period in 2022 by approximately 9.6 million or 31.8%, primarily due to a decrease in demand for the tool sector.
Thank you Michael revenue for the three months and at September 32023, and 2022, or $28 6 million and $32 million respectively.
Which consisted of metal goods soft goods and electronics goods sold to customers.
<unk> decreased in the third quarter of 2023 over the same period in 2022 by approximately $9 6 million or 31, 8% primarily due to a decrease in the mine, Florida tool sector.
Speaker 3: Cost of goods sold for the three months ended September 30, 2023 and 2022 was $15.7 million and $22.3 million, respectively. Cost of goods sold as a percentage of revenues in the third quarter of 2023 was 76%, up from 74% in the same period prior year.
Cost of goods sold for the three months ended September 32023, and 2022 was $15 7 million and $22 3 million respectively. After goods sold as a percentage of revenues in the third quarter of 2023 was 76% up from 74% in the same period prior year.
Speaker 3: Ashina expenses for three months ended September 30, 2023 and 2022 were $12.5 million and $14.7 million respectively.
SG&A expenses for three months ended September 32023, and 2022 and were $12 5 million and $14 7 million respectively.
Speaker 3: SG&A expenses as a percentage of revenues for the third quarter of 2023 was 61% compared to 49% for the same period.
SG&A expenses as a percentage of revenues for the third quarter of 2023 was 61% compared to 49% for the same period prior year.
Speaker 3: prior year. We implemented cost-cutting strategies in preparation for an anticipated decrease in demand. We have and will continue to examine further operating expense leverages in the coming quarters.
Implemented cost cutting strategies in preparation for an anticipated increase in demand, we have and will continue.
Examine Florida operating expense leverages in the coming quarters.
Speaker 3: Research and development costs for the three months and that's September 30, 2023 and 2022 were 2.9 million and 2.8 million respect.
Research and development costs for the three months ended September 32023, and 2022 were $2 9 million and $2 8 million respectively.
Speaker 3: The year-over-year increase was primarily due to development of new innovative tools for the construction industry.
The year over year increase was primarily due to the development of new innovative tools for the construction industry.
Speaker 3: For the third quarter of 2023, we recorded a net loss of $5.9 million as compared to a net profit of $8 million for the three months ended September 30, 2023.
For the third quarter of 2023, we recorded a net loss of $5 9 million as compared to a net profit of 8 million for the three months ended September 32022.
Speaker 3: As of September 30, 2023, Tesla's cash position was $1.8 million, accounts receivable and inventory for the period totaled $10.6 million and $27.5 million respectively.
As of September 32000, Twenty's retail both cash position was $1 8 million.
Receivable and inventory for the period totaled $10 6 million and 27 5 million respectively.
Speaker 3: This and a reduced net loss help drive an 80% improvement in net cash use in operating activities for the first nine months of 2023 compared to net cash use of 6 million for the first nine months of 2022.
And a reduced net loss helped drive an 80% improvement in net cash used in operating activities, Florida first nine months of 2023 compared to a net cash use of 6 million for the first nine months of 2022.
Speaker 3: Management anticipates that our capital resources will improve as our products gain even wider market recognition and acceptance. We seek to further improve our growth margins and we continue to work to decrease costs.
Management anticipates that all the capital resources will improve as our that's again, even wider market recognition and acceptance.
Seek to further improve our gross margins and we continue to work to decrease call.
Speaker 3: I will now turn the call back to Michael for his final remarks. Michael.
I'll now turn the call back to Michael for his final remarks, Michael.
Thank you Martin I would like to reiterate that tough built has tremendous market opportunities ahead, and the infrastructure. We have built to capitalize on those opportunities is sound.
Speaker 2: We are satisfied with our current operating structure and do not plan to add significant headcounts in 2023. Moving forward, we plan to expand our product portfolio prudently, selectively adjust prices, and focus on efficiency throughout the organization.
We are satisfied with our current operating structure and do not plan to add significant head count in 2023.
Moving forward, we plan to expand our product portfolio prudently selectively adjust prices and focus on efficiency throughout the organization.
Speaker 2: We are pleased to report that our commitment to innovation and market responsiveness has resulted in impactful product expansion, building a stronger foundation from which we believe can achieve sustained growth and long-term profitability.
We are pleased to report that our commitment to innovation and market responsiveness as a resulted in impactful product expansion.
Building, a stronger foundation from which we believe can achieve sustained growth and long term profitability.
Speaker 2: We anticipate that these efforts will enable us to create new revenue streams by increasing our global reach, launching additional new product categories, and moving us closer to profitability.
We anticipate that these efforts will enable us to create new revenue streams by increasing our global reach launching additional new product categories, and moving us closer to profitability.
Speaker 2: We aim to enforce our position as a leader in the industry by meeting demand and evolving customer needs.
We aim to enforce our position as a leader in the industry by meeting demand and evolving customer needs.
Speaker 2: In closing, I want to thank our shareholders and our team for helping grow Toughbuild into a high-quality brand that has a bright future.
In closing I want to thank our shareholders and our team for helping grow tough built into a high quality brand that has a bright future.
Speaker 2: With that, I'd like to turn it over to our operator.
With that I'd like to turn it over to our operator.
Speaker 1: Ladies and gentlemen, we do thank you for joining today's presentation. That does conclude today's conference. You may now disconnect your line.
Ladies and gentlemen, we do thank you for joining today's presentation that does conclude today's conference.
May now disconnect your lines.
Okay.