Q4 2024 iPower Inc Earnings Call

Speaker Change: Good afternoon everyone and thank you for participating in today's conference call to discuss I-Power's financial results for its fourth fiscal fourth quarter and full year 2024 and did June 30th, 2024. Joining us today are I-Power's Chairman and CEO, Mr. Lawrence Tan, and the company CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Operator: is financial results for its fiscal fourth quarter and full year 2024 ended June 30, 2024.

Operator: Joining us today are iPower's Chairman and CEO, Mr. Lawrence Tan, and the company CFO, Mr. Kevin Vassily.

Kevin Vassily: Mr. Vassily, please go ahead. Thanks, Josh.

Kevin Vassily: Good afternoon, everyone.

Kevin Vassily: By now, everyone should have access to our fiscal fourth quarter and full year 2024 earnings press release, which was issued earlier today at approximately 4:05 PM Eastern Time. Releases available in the Investor Relations section of our website at bdipower.com as well. This call will also be available for webcast replay on our website.

Speaker Change: Thanks Josh. Good afternoon everyone. By now everyone should have access to our fiscal fourth quarter and full year, 2024 earnings, which was issued earlier today at approximately four or five PM Eastern time.

Speaker Change: is available in the Investor Relations section of our website at bdipower.com as well. This call will also be available for webcast replay on our website. Following our prepared remarks, we'll open the call for your questions.

Kevin Vassily: Following our prepared remarks, we'll open the call for your questions.

Kevin Vassily: Before I introduce Lawrence, I'd like to remind listeners that certain comments made on this conference call and webcasts are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, state of the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, and many of which are outside of our control.

Speaker Change: The four introduced Lawrence, I'd like to remind listeners that certain comments made on this conference call, and webcasts are considered forward-looking statements under the private securities litigation reform act of 1995.

Speaker Change: is a future performance.

Speaker Change: and said they're based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, state of the economy and other future conditions.

Speaker Change: is a very difficult project because forward-looking statements relate to the future of their subject on inherent uncertainties, risks, and changes in circumstances that are difficult to predict.

Kevin Vassily: Our actual results in financial condition may differ materially from those indicated in this forward-looking statement. 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, including our annual report on Form 10-K, which was filed with the SEC on September 15, 2023. 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 believe the results of any revision to any forward-looking statements.

Speaker Change: and many of which are outside of our control.

Speaker Change: or actual results in financial condition may differ materially from those indicated sort of what it states.

Speaker Change: is forward-looking statements, they're also subject to other risks and uncertainties that are described from time to time in the company's filing with the SEC, including our annual report on Form 10K, which was filed with the SEC on September 15, 2023.

Speaker Change: is not placed on the 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 result of any revision to any forward-looking statements.

Kevin Vassily: Our presentation today also includes certain non-GAAP financial measures, including adjusted net income and EPS, and supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. We'll find reconciliation tables and other important information in the earnings press release in Form 8-K. We furnished the SEC in this afternoon.

Speaker Change: A presentation today also includes certain non-gap financial measures.

Speaker Change: including adjusted net income in EPS and simple metal measures of performance of our business.

Speaker Change: and I have been reconciled to the most directly comparable gap measures in accordance with SEC rules. We'll find reconciliation tables and other important information in the earnings press release in Form AK. We've furnished the SEC in this afternoon.

Lawrence Tan: With that, I'd now like to turn the call over to iPower's Chairman and CEO, Laura Stan. Thank you, Kevin, and good afternoon, everyone. I'm proud of our team's hard work in fiscal 2024 to drive record levels of cross-margin, operating expenses, reductions, and another year of positive cash flow from operations. Throughout the year, we delivered on multiple strategic initiatives to lay the foundation for future growth and profitability. For example, we onboarded several high-quality supply chain partners onto our super-sweet services platform. We also strengthened the capabilities and resilience of our supply chain through partnerships with suppliers in Southeast Asia.

Speaker Change: with that. I now like to turn the call over to I-Power's Chairman and CEO Laura Stan. Lawrence?

Laura Stan: Thank you, Kevin, and good afternoon, everyone.

Laura Stan: I'm proud of our team's hard work in fiscal 2024 to drive a record-levels across margin, operating expenses, and reductions, and another year of positive cash flow from operations.

Speaker Change: Throughout the year, we delivered on multiple strategic initiatives to lay the foundation for future growth and profitability.

Speaker Change: For example, we onboarded several high-quality supply chain partners, onto our super suite services platform.

Speaker Change: We also strengthened the capabilities and resilience of our supply chain through partnerships with suppliers in Southeast Asia.

Lawrence Tan: Additionally, we expanded the channel distribution by launching sales on new platforms like TikTok Shop and Team. Throughout the year, we continued to evaluate our super suite services platform by integrating key components from value-added partners across logistics, technology, and marketing to enhance our service offerings. This collaborative approach has positioned the super suite as a leader in merchandising and sales, supply chain management and warehousing, and performance, attracting a diverse array of new partners to our platform. As an example, in May, we announced a strategic partnership with the leading provider of comprehensive logistic solutions. Through this collaboration, we integrated the partner's performance center network into the super suite platform, enhancing our operational efficiencies and technology capabilities.

Speaker Change: Additionally, we expanded the channel distribution by launching sales on new platforms like TikTok Shop and Team.

Speaker Change: Throughout the year, we continued to evaluate our super-sweet services platform by integrating key components from value added partners across logistics, technology and marketing to enhance our service offerings.

Speaker Change: This collaborative approach has positioned the super sleigh as a leader in merchandising and sales, supplying management and warehousing and performance.

Speaker Change: is attracting a diverse array of new bars to our platform. As an example, in May, we announced a strategic partnership with the leading provider of a comprehensive and logistic solutions.

Speaker Change: Through this collaboration, we integrated the partner's performance center network into a super-sweer platform.

Speaker Change: Enhancing our operational efficiency and technology capabilities.

Lawrence Tan: This partnership not only adds critical depth to our close capabilities, but also opens the door to a new portfolio of prospective supply chain and brand partners. We also integrated Amazon Logistic Services in June to bolster our last mile delivery capabilities, enhancing a critical component of super suite supply chain offerings. With this partnership, super suite clients can deliver products with the speed, reliability, and efficiency that Amazon is renowned for, adding further depth to the super suite value proposition. As I mentioned earlier, in fiscal 2024, we depended our online presence by launching sales on platforms like TikTok Shop and Teemo.

Speaker Change: This partnership not only has critical deaths to our post-convillities but also opens the door to a new portfolio of prospective supply chain and brand partners.

Speaker Change: We also integrated Amazon Logistics Services in June.

Speaker Change: to bolster our last mile delivery capabilities.

Speaker Change: in enhancing a critical component of super-sweet supply chain offerings.

Speaker Change: with this partnership. Supercells clients can deliver products with the speed, the reliability and efficiency that Amazon is renowned for, and in further steps to the Supercells Value Properization.

Speaker Change: As I mentioned earlier, in fiscal 2024, we depend on our online presence by launching sales on platform like TikTok Shop and Timo.

Lawrence Tan: These additions align with our strategic vision to empower supply chain partners with diversify the sales channels poised for sustained long-term growth. We are pleased with the early results, and we'll continue to explore additional sales channels that would further enhance our partner sales offerings. In regarding to supply chain on our OPEX, the optimization initiatives we implemented earlier this year to drive the improvements in our selling, marketing, and performance operations are yielding results. With a healthier supply chain environment, we no longer need to maintain high levels of inventory at least times when our international suppliers have normalized.

Speaker Change: These traditions align with our strategic vision to empower supply team partners with diversify the sales channels, poisoned for sustained long-term growth.

Speaker Change: We are pleased with the early results and will continue to explore additional sales channels that would further enhance our upon the sales offerings.

Speaker Change: and we're going to support you on the old packs.

Speaker Change: The Optimization Initiatives, we implemented earlier this year to drive the improvement in our selling, marketing and performance operations a yielding results.

Speaker Change: with a healthier supply to environment. We no longer need to maintain high level of inventory, at the lead times, without our international suppliers, have normalized.

Lawrence Tan: It's also worth noting that, with the growth of super suite, our business can operate with lower levels of inventory, leading to improved cash flow generation. Additionally, we have sold through nearly all our high-cost inventory, enabling us to eliminate short-term warehousing expenses and enhance margins. As of June 30, 2024, we further reduced our inventory levels by almost 50% compared to December 31, 2023. We are deeply committed to optimizing our operation to maximize efficiency.

Speaker Change: is also worth noting that with us growths of a super speed, our business can operate with lower levels of inventory, leading to improved cash flow generation.

Speaker Change: Additionally, we have sold through nearly all our high cost inventory.

Speaker Change: in enabling us to eliminate short-term warehousing expenses and enhance margins.

Speaker Change: As of June 30, 2014, we further reduced our inventory levels by almost 50% compared to December 31, 2023.

Speaker Change: We are deeply committed to optimizing our operation to maximise a patient sleep.

Lawrence Tan: Agency. To further this initiative, in June, we announced the addition of a new manufacturer supply, uh, Pover in Vietnam. Explaining our manufacturing base will help mitigate future risk and strengthen the resilience of our supply chain. Looking ahead, we will be leaning into our core principle as a technology and data-driven company, so it has transparency and operational efficiencies between iPower and a supplier, performance, and channel partners. This approach will streamline processes, reduce cost, and improve information utilization across the supply chain to strengthen our customer's operation. We believe this initiative's coupled with our optimized cost structure will enable us to deliver our own workflows and type of ability objectives in fiscal 2025.

Speaker Change: to further this initiative, in June, we announced the addition of a used manufacturer supply power in Vietnam.

Speaker Change: Explaining our manufacturing base will help mitigate the future risk and strengthen the resilience of our supply chain.

Speaker Change: We will be leaning into our core, as a technology and data field in the company, so it has transparency and operational efficiencies between eye power and a supplier, development and channel partners.

Speaker Change: This approach will streamline processes, reduce cost and improve information utilization across the supply chain to strengthen our customer's operation.

Speaker Change: We believe this initiative coupled with our optimized process structure will enable us to deliver our our workflows and have ability objectives in fiscal 2025.

Kevin Vassily: I will now turn the call over to our CFO, Kevin Vassily, to take you through our financial results in more detail.

Kevin Vassily: I will now turn the call over to our CFO Kevin Vassily to take you through our financial results in more detail.

Kevin Vassily: Kevin? Thanks, Lawrence. Unless referenced otherwise, all variants commentary is in comparison to the prior year quarter, diving right into the fiscal Q4 results. The total revenue in the 23.4 million of the prior year increased was primarily driven by higher promotional activity in the year-ago period relating to selling down inventory. This is partially offset by growth in our super sweet supply chain offering. Gross profit in the fiscal fourth quarter of 2024 increased 2% to 9.2 million compared to 9.1 million in the same quarter of fiscal 2023. Percentage of revenue gross margin increased 870 basis points to 47.4% compared to 38.7% in the year-ago period.

Kevin Vassily: Kevin.

Kevin Vassily: Thanks Lawrence.

Kevin Vassily: on less reference to otherwise all variants commentary is in comparison to the prior year quarter. So, diving right into the fiscal Q4 results.

Kevin Vassily: Total revenue in the fiscal fourth quarter was 19.5 million compared to 23.4 million.

Speaker Change: and the prior year, increased was primarily driven by higher promotional activity in the year ago period relating to selling down inventory.

Speaker Change: This is Partly Off, said by growth in our super sweet supply chain offering.

Speaker Change: Cross-profit in the fiscal fourth quarter of 2024 increased 2% to 9.2 million compared to 9.1 million in the same quarter of fiscal 2023.

Speaker Change: Senate's revenue gross margin increased 870 basis points to 47.4% compared to 38.7% in the year ago period. The increase in gross margin was primarily driven by improved pricing through key supplier negotiations, as well as favorable product mix from the quarter.

Kevin Vassily: The increasing gross margin was primarily driven by improved pricing through key supplier negotiations, as well as favorable product fix in the quarter. Total operating expenses for fiscal Q4 improved 34% to 8 million compared to 12 million for the same period in fiscal 2023. As a percentage of revenue, operating expenses improved 1,050 basis points to 41% compared to 51.5% in the year-ago period. Decrease in operating expenses was driven primarily by lower selling and fulfillment expenses driven by both lower marketing and promotion costs, as well as some vendor credits from some of our key vendors. That income attributable to iPower in the fiscal fourth quarter improved to 0.7 million, or 700,000, or 2 cents per share, compared to a net loss attributable to iPower of 3 million, or a net loss of 10 cents per share, in the same period in fiscal 2023.

Speaker Change: So the Lopper any expenses for fiscal Q4 improved 34% to 8 million compared to 12 million for the same period of fiscal 2023. As a percentage of revenue, operating expenses improved.

Speaker Change: is a 1,050 basis point for 41 percent compared to 51.5 percent in the year ago period.

Speaker Change: the Creason operating expenses was driven primarily by lower selling and fulfillment expenses.

Speaker Change: driven by both lower marketing and promotion costs as well as some vendor credits from some of our key vendors.

Speaker Change: that income attributable to the i-power in the fiscal fourth quarter improved to

Speaker Change: is a 0.7 million or 700,000 or 2 cents per share compared to a net loss, a trip of the high power of 3 million or net loss of 10 cents per share in the same period in fiscal 2023.

Kevin Vassily: Adjust the net income attributable to iPower, which excludes legal fees for arbitration net of their tax impact, improved to a little under a million at 900,000 or 3 cents per share in the fiscal fourth quarter of 2024 compared to an adjusted net loss attributable to iPower of 2.1 million or net loss of 7 cents per share in the year-ago period. Moving to the balance sheet, cash and cash equivalence were 7.4 million at June 30 compared to 3.7 million at June 30, 2023. Note that this cash balance includes the proceeds of approximately 4.5 million from our previously announced registered direct offering in June.

Speaker Change: and Justin Dettin come attributable to I-PAR, which excludes legal fees for arbitration.

Speaker Change: Net of their tax impact improved to a little under a million at 900,000, more three cents per share in the fiscal fourth quarter of 2024 compared to an adjusted net loss of trivial to i-power of 2.1 million or net loss of 7 cents per share in the year ago period.

Speaker Change: Moving to the balance sheet, cash and cash of clavoins were 7.4 million at June 30, compared to 3.7 million at June 30, 2023.

Speaker Change: noticed this cash balance includes net proceeds of approximately 4.5 million from our previously announced registered direct offering in June.

Kevin Vassily: Total debt was reduced by 46 percent to 6.3 million compared to 11.8 million as of June 30, 2023. Cash flow from operations for fiscal Q4 was a little under a million dollars at $960,000, and that's down a bit from our year-ago period. Lawrence mentioned earlier our consistent optimization efforts have enabled us to materially expand our gross margin and achieve a second quarter of profitability in this fiscal Q4. We also continue to make some improvements to our balance sheet, reducing our total debt by nearly half compared to fiscal 2023.

Speaker Change: Total debt was reduced by 46% to 6.3 million compared to 11.8 million as of June 30, 2023.

Speaker Change: Casual from Operations for Fist.

Speaker Change: School of Q4 was a little under a million dollars at $960,000.

Speaker Change: and that's down a bit from our year ago period and Laura's mentioned earlier, our consistent optimization efforts has enabled us to material expand our gross margin.

Speaker Change: and the chief of a second second quarter of profitability in this fiscal Q4. We also continue to make some improvements to our balance sheet, reducing our total debt by nearly half compared to fiscal 2023.

Kevin Vassily: You know, we are pleased with the progress we've made in this fiscal year and the foundation we built, and we look forward to delivering out our goals in fiscal 2025.

Speaker Change: We are pleased with the progress we've made in this fiscal year and the foundation will be built. We look forward to delivering on our goals.

Kevin Vassily: This concludes our prepared remarks, and we'll now open it up for questions. Thanks. Thank you.

Speaker Change: in physical 2020-5.

Speaker Change: This concludes our prepared remarks and we'll now open it up for questions. Thanks.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions.

Speaker Change: Thank you. As a reminder, task a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions.

Scott Fortune: Our first question comes from Scott Fortune with Roth Capital Partners. He may proceed. Yes, good afternoon, and thanks for the questions.

Speaker Change: [inaudible]

Speaker Change: Our first question comes from Scott Fortune with Roth Capital Partners he may proceed.

Scott Fortune: Just want to unpack a little bit on the top line and where that growth is coming from your thing. Obviously, you had a big destocking and reordering from your large online partner last quarter. We've seen that probably drop off this quarter, but if you could just provide a little more color on kind of revenue growth that's coming from with your large online partner. And then you mentioned, obviously, ramping up team, and tick talk on that side too.

Speaker Change: Yes, good afternoon, and thanks for the questions.

Speaker Change: This will unpack a little bit on the top line and where that growth has come from, you're seeing, obviously.

Scott Fortune: is a big piece of stocking and reordering from your large online partner last quarter. We see that probably drop off this quarter, but if you could just provide a little more color on.

Scott Fortune: and the revenue.

Speaker Change: a girl for that's coming from which her large online partner and then you mention obviously ramping up T-Moo and TikTok on that side too.

Scott Fortune: And then I'll set that last quarter to princess sales was coming from the super sweet, just kind of a sense word that super sweet, a percentage of sales is on this quarter, just kind of unpack the whole top line, kind of 19.5 million for this quarter and going forward here. May be great. Okay.

Speaker Change: and then I'll set that last quarter to Princess Sales was coming from the Super Sweet, just kind of a sense where that Super Sweet percentage sales is on this quarter. Just kind of unpack the whole pipeline, kind of 19.5 million for this quarter and going forward here. May be great.

Lawrence Tan: Sure. Thank you. The top line, it's the new platform, the Tick Tock shop and team, they are showing pretty good results initially, but in terms of the total percentage, they still little compared to the overall sales. Our majority sales are still coming from the Amazon platform. And in terms of the super sweet, we have seen a pretty healthy growth, and we have onboarded multiple partners, new partners over the last few months, which I believe it will be becoming more and more parts of our revenue. and with the new platforms like TikTok Shop, Timo, and also we signed up with AliExpress, which is kind of similar to Timo, but it's from Alibaba just this month.

Speaker Change: Okay, shush them.

Speaker Change: Thank you. The top line is...

Speaker Change: the new platform that TikTok shop and team will, they are showing pretty good results initially, but in terms of the total percentage, they still compare to the overall sales. Our majority sales are still coming from Amazon platform.

Speaker Change: and then in terms of the super sweet, we have seen a pretty healthy growth and we have onboarded.

Speaker Change: Multiple Partners, New Partners, over the last few months, which I believe it will be coming more and more parts of our revenue.

Speaker Change: and the end.

Speaker Change: with the new platforms like Tikkakshar, Timu, and also we...

Speaker Change: We signed up with Ali Express, which is kind of similar to Timu, but from Ali Baba, just this month.

Lawrence Tan: We're onboarded, and they are coming into the competitions of the US online retail market, which we think it's a pretty beneficial thing for us, like the sellers and services providers for online markets. I believe the competitions between platforms will drive very interesting results in the next coming year or two until it's kind of settled down again, which is great. So for our costing, I think with the momentum we have and the super sweet and the new partners we signed on board, we think it's a very great business line, and we'll continue to see the growth and the smaller platforms and, but yet new platforms, some of these competitive marketplace will will will become a bigger share of our business.

Speaker Change: We're on board and they are coming into the competitions of the US online retail market which we think it's a pretty beneficial thing for us, like the sellers and services providers.

Speaker Change: for online markets. I believe the competitions between plant ones will drive very interesting results in the next coming year or two until it's...

Speaker Change: is a shadow down again, which is great. So for a casting, I think with the momentons we have in the super-sweet and the new new

Speaker Change: and Partners, we sign on board. We think it's a very...

Speaker Change: and Great.

Speaker Change: Business Law and will continue to see it to growth and the smaller platforms, but yet new platforms, some of these competitive marketplace will become a bigger share of our business.

Kevin Vassily: Matt, can we just expand, you know, Kevin, provincially, color on the demand side from your large channel partner, and kind of the return to normalize ordering, you know, that kind of a, you know, point here is kind of where that partner is from a normalize ordering and a growth. I know things can be seasonal, but just want to get a sense for kind of that ordering cadence moving forward from that online channel and how that channel is doing. Right. Yeah, so as we kind of, as we kind of anticipated a bit, we thought there would be some kind of rationalization might be a little strong, but some slow down in kind of their order rate after such a strong rebound from them in March, which again, you know, for kind of listeners who weren't privy to the last couple of calls.

Kevin Pervintly: is going to make a logistics stand, Kevin Pervintly, a color on the demand side from your large channel partner and the return to normalized ordering, you know, that's kind of a point here is kind of where that partner is from, a normalized.

Speaker Change: Ordering and a row of fight-known things can be seasonal, but just want to get sense for kind of that ordering cadence moving forward from that online channel and how that challenge is doing.

Speaker Change: right. Yeah, so as we at kind of...

Speaker Change: is really kind of anticipated a bit.

Speaker Change: We thought there would be some kind of...

Speaker Change: was rationalization might be a little strong, but some slow down in their order rate after such a strong rebound.

Speaker Change: from them in March, which again, you know, for kind of listeners who...

Kevin Vassily: You know, our December quarter was, you know, well below kind of what we expected in terms of the man, which was a function of seasonality, you know, some inventory rationalization on the part of our largest channel partner. And it was our belief that they had essentially kind of overrationalized their inventory and that they would, and that they would snap back. We did see the snapback in the March quarter, but you know, we were a little surprised of the strength of the snapback suggesting that, you know, they were still trying to find their bearing, you know, with our products week, you know, over the next quarter.

Speaker Change: and we're in pretty to the last couple of calls. Our December quarter was well below kind of what we expected in terms of the man which...

Speaker Change: was a function of seasonality, you know, some inventory rationalization on the part of our largest channel partner.

Speaker Change: and that they would snap back. We did see the snap back in the March quarter, but yeah, we were a little surprised of the strength of the snap back, suggesting that they were still trying to find their bearings.

Speaker Change: with our products week over the next quarter and so I think what we saw in this quarter was

Lawrence Tan: And so, so I think, you know, what we saw in this quarter was from a top line perspective kind of that, you know, they, you know, took on enough inventory and they worked through some of that while continuing to order. We're getting back to more normal. kind of order patterns, and so I think we don't have a ton of kind of additional color there. I think we're kind of probably narrowing the amplitude of the ups and downs a bit with them after the December quarter. Hopefully, that's kind of what you were looking for. Yeah, yeah, yeah, yeah, yeah, to add on to it.

Speaker Change: from a top line perspective, kind of bad. They took on enough inventory and they worked through some of that while continuing to order. We're getting back to more normal.

Speaker Change: is a kind of order pattern. And so I think we don't have, you don't have a ton of...

Speaker Change: kind of additional color there, I think.

Speaker Change: and we're kind of probably narrowing the amplitude of the ups and downs a bit with a mass through the December quarter. Hopefully that's kind of what you were looking for.

Speaker Change: [inaudible]

Lawrence Tan: I mean, we have compared to what compared to what happened in the like a deer in a culvert, which we have see an up and down in the inventory side. And I think the ordering patterns now is it's much more normalized. So we'll go, we can safely say it's like it's going back to the like pre-COVID pattern where we'll see steady, steady growth and steady inventory turnaround, which to us is very welcomed patterns of operating businesses. And we can continue to deepen the offering of our products, getting more market share and add on supply chain, more supply chain punters.

Speaker Change: He has to add on to it. I mean, we have compared to what...

Speaker Change: So compared to what happened in the like a deal we're in a call that which we have a sea of up and down in the inventory side. And I think the ordering patterns now is much more normalized.

Speaker Change: So we can safely say it's like it's thrown back to the pre-colded pattern, where we'll see.

Speaker Change: Steady Quills and Steady Inventory Turn Around, which, to us, is very welcome to Patents of operating businesses.

Speaker Change: and we can continue deep in the offering of our products, getting more market share, and add a lot of supply chain partners.

Lawrence Tan: And all of this by driving like mature existing channels like Amazon, Walmart, et cetera, et cetera, and adding new sales platform like TikTok and the team who shop at the same time, adding more supply chain punters. So we have more sales channels, better market shares on existing product categories, and adding new suppliers, the supply channel.

Speaker Change: and all of this by driving like mature existing.

Speaker Change: Channel, like Amazon, Walmart, etc. etc., and adding new sales platforms like TikTok, the team will shop at the same time adding more supply cheap partners, so we have more sales channel.

Speaker Change: Um...

Speaker Change: Better Market Shares on existing product categories, adding new supply channels. And supporting these hour-in-house proprietary ERP systems, and our business-in-tated BI-plent ones.

Scott Fortune: So, and and supporting these are our in house, the partry, ERP systems and our business and bi bi platforms. So, so that's that's the model of growth going going forward that I envision. Got it. And thanks for the detail.

Speaker Change: So, that's the motto of girls going forward, that I envision.

Lawrence Tan: Now follow up on the super tweet. You've done a really next job of building out that robust supply chain offering of those super tweet services, which drives higher margins, but just can you provide I know you have three existing partners or customers there. For as part of the business, but can you just provide a little color on potential new customers, ads, and the outlook into 2025 now that you have the foundation that super sweet in place. kind of what that pipelines like and kind of expectations for that converting to new customers on super sweet for 25 here.

Speaker Change: and thanks for the detail. Now follow up on the super sweet. You've done a really nice job of building out that robust supply chain offering.

Speaker Change: of those super-tweet services.

Speaker Change: which drives higher margins but can you provide? I know you have three existing partners or customers there.

Speaker Change: For the part of the business, they can you just provide a little color on potential new customers and the outlook into 2025 now that you have the foundation that you've been in place.

Speaker Change: and what that pipeline's like and ten expectations for that converting to new customers on a super sweet 425 year.

Lawrence Tan: Okay, the we have got some pretty good partnerships from supply chain side onto our super sweet going down. And we have we have got a few pretty significant really great supply chain partners on board over the last few months, including furniture and electronics in these categories as well. Now, these partners so far has been pretty big ones like their their revenues are pretty pretty big going down. We also will start to expand and partners into like channel partner side, where we will work with different channel partners to have their customers to become our customers. So we use our super sweet to the abilities to benefit their customers, which will accelerate the on board process and the members of partners as the super sweet, become more.

Speaker Change: Okay, we have got some pretty good partnerships.

Speaker Change: from supply chain side onto our super-sweet. Going down, and we have got a few pretty significant, really great supply chain partners onboard over a last few months.

Speaker Change: including furniture, electronics.

Speaker Change: and this category as well.

Speaker Change: Now, these partners so far has been pretty big ones, like their revenues are pretty big. Going down, we also will start to expand the partners into...

Speaker Change: like Channel Punner side, where we will work with different Channel Punners.

Speaker Change: to have their customers to become our customers, so we use our super-sweeted abilities to benefit their customers, which will accelerate the onboard process and the members of partners.

Lawrence Tan: more mature. So in the in the next month or two, we'll start to launching more online like platform side of products to enable and reduce the complexity of onboarding new partners and opening up the channels for our channel partners to help driving more customer to our way. So hopefully this answer a question is basically we are working on the technologies to reduce complexity, thus prepare for bigger number of partners, potentially, to come in and through our business development channels with our partners. Appreciate the color there.

Speaker Change: has the super sweet become more and more mature. So in the next month or two, we'll start to launching more online like platform side by side of products.

Speaker Change: to enable and reduce the complexity of onboarding new partners.

Speaker Change: and opening up the channels for our channel partners to help driving more customer to our way.

Speaker Change: So, hopefully, that answer your questions, basically, we are working on the technologies to reduce complexity thus prepare for a bigger number of partners potentially to come in and through our business development channels without partners.

Kevin Vassily: And then one last little one for me, you mentioned you have now manufacturing in Vietnam a partner there. And the savings you can see there moving forward, kind of what percentage of the sourcing you think will come from Vietnam from that standpoint. And does that uphold and kind of keep the margin structure in place, or there can continue to be more savings to pass through on a competitive pricing standpoint to drive volume there. How are you look at that goes margin side from from all the apex savings and right sizing you've done here. Right, it's a great start.

Speaker Change: I appreciate the color there. And then one last little one for me, you mentioned you have now manufacturing it and being on a partner there.

Speaker Change: and the saving you can see there moving forward, kind of what?

Speaker Change: is a percentage of the sourcing you think will come from Vietnam from the standpoint. And this is that I'll uphold and keep the margin structure in place, or there can continue to be more savings to pass through.

Speaker Change: on a competitive pricing standpoint to drive volume there. How you look at that close margin side from all the OPEX savings and right-ties that you've done here.

Kevin Vassily: It's an effort of us, like a diversified supply chain outside China. It's it's just beginning by will grow now in terms of a gross profit and a margin; it definitely saving our cost of the soul. So we definitely see savings there. And I think that will become a generally more profit ability for us and as well as making our product more competitive. I think then we'll go ahead and know it. Yeah, Scott, just to be clear to me, you know, we don't really have product out in the market yet from the transition. You know, we push pretty hard to get that up and started, but you know, the manufacturing time takes time, getting it over.

Speaker Change: Ray, it's a great start. It's a effort of us like a diverse style of supply chain outside China.

Speaker Change: It's just beginning by it will grow. Now, in terms of a cross-profit and margin, it definitely saving our cost to sold. So we definitely see savings there.

Speaker Change: and I think that will become a generally more profitability for us as well as making our product more competitive.

Speaker Change: and we'll go ahead and know it's got just to be clear too. I mean, we don't really have product out in the market.

Speaker Change: Yeah, from the transition, you know, we push pretty hard to get that often started, but, you know,

Kevin Vassily: So those benefits will accrue in future quarters. It's not reflected yet in kind of our financials as we speak. So it will keep you posted on kind of how that rolls out. And I think the other thing that it's worth pointing out is, while we are diversifying out of China, and it will never be completely out of China, but it's a strategic kind of initiative on our part. You know, on an ongoing basis, we continue to rationalize and look for improvements within our existing supplier base in China, as well as you bring on other suppliers.

Speaker Change: and the manufacturing time takes time getting it over. So those benefits will accrue in future quarters.

Speaker Change: is not reflected yet in kind of our financials as we speak. So we'll keep you posted on kind of how that rolls out. And I think the other thing that...

Speaker Change: is worth pointing out is while we are diversifying out of China, and it will never be completely out of China, but it's a strategic kind of initiative on our part. On an ongoing basis, we continue to rationalize and look for improvements within our

Speaker Change: in Sir.

Speaker Change: is existing supplier base in China, as well as bring on other suppliers.

Lawrence Tan: We think that is one important for keeping us continually cost competitive and also keeping kind of our contract manufacturing partners. You know, kind of honest, you know, we've been good partners for, you know, almost all of them, you know, over the last, let's call it five years. You know, but we still have expectations that they need to deliver. You know, when we see areas for kind of efficiency and improvement. So, you know, our supplier base is an ongoing optimization effort, and Vietnam and potentially other places in Southeast Asia over time is just part of that.

Speaker Change: We think that is one important for keeping us continually cost-competitive, and also keeping kind of our contract manufacturing partners.

Speaker Change: You know, kind of honest, you know, we've been good partners for it.

Speaker Change: you know, almost all of them, you know, over the last looks call it five years, you know, but we still have expectations that they need to deliver, you know, when we see areas for kind of efficiency and improvement. So, you know, our.

Speaker Change: are on our supplier base as an ongoing.

Speaker Change: Optimization effort and Vietnam and potentially other playcans in Southeast Asia over time is just the part of that ongoing strategy.

Lawrence Tan: and going strategy? Yeah, just in addition to what Kevin mentioned, it doesn't mean that we are not optimizing; we are ditching China. It's not like that. We have been optimizing our supply chain in China over the last few months as well, and we've seen, we have seen significant cost down from there, so we'll see these savings showing up later on.

Speaker Change: Yes, just in addition to what Kevin mentioned, it doesn't mean that we are not optimizing where a kitchen China is not like that. We have been optimizing our supply chain in China over the last few months as well, and we have seen significant cost down from there.

Welfare Vassily: Welfare Vassily, we'll see you in the next video.

Scott Fortune: Thank you. I'll jump back in the queue. Thank you.

Speaker Change: Thank you, now, I'll jump back in the queue.

Thierry Wuilloud: Our next question comes from Thierry Wuilloud with Water Tower Research. She may proceed. Thank you, just following up maybe on the activities in Southeast Asia, in Vietnam. Are those new different contract manufacturers, or are those people you work with in China, and they're just moving operations with you or at your request in Vietnam?

Speaker Change: Our next question comes from Tierra, well out with Water Tierra research he may proceed.

Tierra: I thank you just following up maybe on the activities in Southeast Asia.

Tierra: in Vietnam. Those new different contact manufacturers or those people you work with in China and they're just moving operations with you or at your request.

Lawrence Tan: That's a new manufacturer. Yeah, although we have seen a lot of our suppliers in the process or already moved out of their production lines outside China, including Vietnam, Mexico, and other countries, not all of them have reached the cost point where it's cheaper overall, so we're still waiting for some of them to speed up and make the new manufacturer more efficient. But to answer your question, the specific ones that we are talking about in Vietnam, which where we started, is a new supply chain comment.

Tierra: in Vietnam.

Tierra: K-S-S-S-S-S-S-S-S

Speaker Change: is a new manufacturer. Though we have seen a lot of our suppliers in the process, or already moved certain of their production lines outside China, including the Vietnam, Mexico and other countries, not all of them has reached the...

Speaker Change: which cost.

Speaker Change: is a very important point where it's cheaper overall, so we're still waiting for some of them to speed up and make the new manufacturer more efficient. But to answer your question, the specific ones that we are talking about in the B&M, which where we started is a new supply chain pump.

Lawrence Tan: Okay, and then maybe if you have some colors on how the specific categories we're doing, you've had some movements. Some categories are becoming more important, others are becoming less, so I'm kind of wondering if you could give us a rough idea of where that's at. Is it about the same as at the end of the March quarter, or do you see areas where the cells are growing and others where they might be slowing down? Any color there? Right. We continue to focus on the hard lines. In terms of the sales composition of different categories, the few top-setting categories still on a home pad, furniture, etc., the hydroponics line is no longer a significant part of the overall sales as compared to a few years ago.

Speaker Change: Okay.

Speaker Change: and then maybe if you had some colors on how the specific care.

Speaker Change: Carigo is doing, you've had some movements.

Speaker Change: some categories are becoming more important, others are becoming less so.

Speaker Change: I'm kind of wondering if you can give us a...

Speaker Change: Ruff idea of where that side is about the same as at the end of the March quarter, or you see AIS kind of where the sales are going and others where they might be slowing down, or any color there.

Speaker Change: Right, we continue to focus on the heartlines.

Speaker Change: In terms of the sales composition of different categories, the few top-setting categories still on a home pad furniture.

Speaker Change: is no longer a significant part of the overall sales as compared to, well, a few years ago.

Lawrence Tan: And the growth will come in the future, I believe, home furniture, pads, and electronics as well. So these are the categories that we think will continuously see growth on. We have seen quite a few quantity partners on board over the last few months in these categories. We also are, like I mentioned earlier with Camden, optimizing the existing supply chain network with better quantitative products and lower cost, and also expanding that network to different countries to make a more robust. So we'll continue to see the cost down from existing suppliers. We also will see more quantity partners coming on board through Super-sweet.

Speaker Change: and the Proce will come in the future, I believe, home furniture pads and electronics as well. So these are the categories that we think will continuously see growth on.

Speaker Change: We have seen quite a few quantity partners on board over the last few months in these categories.

Speaker Change: We also are like I mentioned earlier with Kevin, optimizing the existing supply technology work with better quantitative products and lower cost.

Kevin: and also expanding that network to different countries to make a more robust.

Kevin: So, we'll continue to see the cost down from existing suppliers, we'll also see more quantity partners coming on board through SuperSweet.com.

Thierry Wuilloud: But mostly eight months. Yeah. Okay.

Kevin Vassily: Well, you probably have a ground with Scott, so Kevin, did you have any other color to add? Yeah, I just wanted to kind of follow on. Lawrence is coming about Hydroponics. You know, it has become, you know, a much less meaningful portion of, you know, our overall sales. And I don't think it's any secret that kind of the demand environment more broadly for hydroponics has not been terribly good. I know I think when we look at our results, you know, relative to what we've seen in kind of others who are, you know, selling consumer-ish products in the marketplace.

Ray Vass: but mostly Ray Vass.

Ray Vass: I'm going to talk to you about the story of the story of Kevin Vassily.

Speaker Change: did you have any other color to add? Yeah, I just wanted to kind of follow on.

Speaker Change: Lawrence is comment about hydroponics, you know, it has become...

Speaker Change: is a much less meaningful portion of

Speaker Change: you know, our overall sales. I don't think it's any secret that, uh...

Speaker Change: kind of the demand environment more broadly for hydroponics has not been terribly good. I think when we look at our results, you know.

Speaker Change: Relatives of what we've seen in kind of others who are selling consumerish.

Kevin Vassily: I think we are faring better, but it's still not, it's not a great demand environment for that. And so, I mean, I think luckily for us, you know, we have restored kind of the profitability of that business along, you know, with everything else that we've done in the last 18 months. But that is not an area that we expect a whole lot of growth for us going forward. You know, partly because we've got other categories and other initiatives that make the most sense, but until that end market becomes a bit more robust, it's hard for us to see that the hydroponics piece be a bigger portion of kind of our overall revenues anytime soon.

Speaker Change: I think we are fairing better, but it's still not a great demand environment for that.

Speaker Change: Luckily for us, we have restored the profitability of that business along with everything else that...

Speaker Change: We've done in the last 18 months, but that is not an area that we expect a whole lot of.

Speaker Change: of growth for Roscoe in forward, partly because we've got other categories and other initiatives that will make them a sense, but until that...

Speaker Change: Till that end market becomes a bit more robust.

Speaker Change: It's hard for us to see that the pigroponics piece.

Lawrence Tan: So, you know, I think that color is pretty consistent with I think what other people are seeing. I think, you know, there's some underlying, there's some underlying weakness in that end market that, you know, we've been lucky enough to overcome with some of our other products. Yeah, I mean, that market is still there. It's not going away. We're still leader on the online retail side. But our course trends came from the technology and data. And our platform we built, like our ERP systems, internally we build and the business intelligence platforms, reporting as well as the super sweet products we build, which enable us to moving quantity products from any categories to the consumers.

Speaker Change: is a bigger portion of our overall revenues anytime soon. So I think that color.

Speaker Change: I think what other people are seeing, I think there's a...

Speaker Change: There's some underlying

Speaker Change: and I'm here with a couple of other projects that we've been lucky enough to overcome with some of our other projects that I've been lucky enough to overcome with some of our other projects.

Speaker Change: Yeah, I mean, that market is still there. It's not going away. We still leave it on the online retail side, but our core strengths came from the technology and data.

Speaker Change: and our plant one, we build our ERP systems internally, we build and the business intelligent plant forms.

Speaker Change: Reporting as well as the super-sweet, the products we build, which enable us to move in quality products from any categories.

Lawrence Tan: So joining that, that's the, that's the trends and that's where the growth will come from by becoming efficient merchandising and distribution and setters online, providing all these great services to all of our partners and move the best value of the product to the consumers. That's where the foundation comes from. And I believe that's a business model where we focus on what would expand in the future pretty quickly.

Speaker Change: to the consumers. So joining, that's the stress and that's where the girls will come from by become a efficient.

Speaker Change: Merchandising and distribution and setters online, providing all these great services to all of our partners and move the best of that to the product to the consumers.

Speaker Change: and that's where the foundation comes from, and I believe that's a business model where we focus on would expand in the future pretty quickly.

Kevin Vassily: Great. Thank you.

Kevin Vassily: I would not like to turn the call back over to Kevin Vassily for any closing remarks. Thank you, Josh. Thanks, everyone, for your questions and for dialing in.

Speaker Change: Great, thank you.

Speaker Change: Thank you. I would not like to turn the call back over to Kevin Vassily for any closing remarks.

Kevin Vassily: Thank you Josh, thanks everyone for your questions.

Kevin Vassily: I look forward to speaking with you again shortly for our fiscal first quarter results and potentially some investor conferences over the next several months. Thanks again, and we'll talk again soon. Bye. Thank you.

Ford Dile: and Ford Dile again.

Kevin Vassily: I'm looking forward to speaking with you again shortly for our fiscal first quarter results and potentially at some investor conferences over the next several months. Thanks again and we'll talk again soon. Bye.

Operator: This concludes the conference. Thank you for your participation.

Operator: You may now disconnect.

Speaker Change: Thank you. This concludes the conference. Thank you for your participation. You may not disconnect.