Q4 2024 Alliance Entertainment Holding Corp Earnings Call

Speaker Change: Greetings and welcome to the Alliance Entertainment 4th quarter and fiscal year 2024 financial results conference call.

Operator: for Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Speaker Change: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator: Before we begin the formal presentation, I would like to remind everyone that the statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent the company's current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Your caution not to place under-reliance on these forward-looking statements, which reflect the company's opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Speaker Change: Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking.

Speaker Change: While these forward-looking statements represent the company's current judgment on what the future holds, they are subject to risk and uncertainties that could cause actual results to differ materially.

Speaker Change: Your caution not to place under reliance on these forward-looking statements.

Speaker Change: which reflect the company's opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Operator: Throughout today's discussion, management will attempt to present some important factors relating to the business that may affect predictions.

Speaker Change: Throughout today's discussion, management will attempt to present some important factors relating to the business that may affect predictions. We should also review the company's form 10K for a more complete discussion of these factors in other ways, particularly under the heading risk factors.

Operator: You should also review the company's Form 10-K for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors.

Operator: During this conference call, management will discuss non-GAAP financial measures, including a discussion of adjusted EBITOP. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure.

Speaker Change: During this conference call, Management will discuss non-gap financial measures, including a discussion of adjusted e-boddop. Management believes non-gap disclosures enable investors to better understand a line-centered payments core operating performance.

Speaker Change: Please refer to the Investor presentation for reconciliation of each non-gab measure to the most directly comparable GAP financial measure.

Operator: It pressed release detailing these results across the wire this afternoon at 4:01 PM Eastern Time and is available in the Investor Relations section of Alliance Entertainment's website at aent.com.

Speaker Change: A press release detailing these results across the wire this afternoon at 401 p.m. eastern time and is available in the Investor Relations section of an Alliance Entertainment Entertainment's website at aant.com

Operator: Your host today, Bruce Ogleby, Executive Chairman, and Jeff Walker, Chief Executive Officer and Chief Financial Officer, will present the results of operations for the fourth quarter and fiscal year and June 30th, 2024.

Speaker Change: Your host today, Bruce Ogilby, Executive Chairman and Jeff Walker, Chief Executive Officer and Chief Financial Officer.

Bruce Ogleby: We'll present the results of operations for the fourth quarter in fiscal year and a June 30, 2024. At this time, I will turn the call over to Alliance Entertainment Executive Chairman Bruce Ogleby.

Bruce Ogleby: At this time, I will turn the call over to Alliance Entertainment Executive Chairman Bruce Ogleby.

Bruce Ogleby: Thank you, operator, and good afternoon, everyone.

Bruce Ogleby: I'm pleased to welcome you to today's fourth quarter and fiscal year 2024 financial results conference call. For those of you that are new to our story, we bring entertainment to you. We are a category leading direct to consumer and e-commerce provider for the entertainment industry, serving as the gateway between brands and retailers. With over 325,000 views in stock, we provide the world's largest selection of music, home video movies, video games, gaming hardware, arcades, collectibles, toys, and consumer electronics. We are a needed supplier for omni retailers in helping them expand their long-tail entertainment selection online and putting them on a level playing field with Amazon.

Bruce Ogilby: Thank you operator and good afternoon everyone. I'm pleased to welcome you today's fourth quarter in fiscal year 2024 financial result conference call.

Speaker Change: For those of you that are new to our story, we bring entertainment to you.

Speaker Change: We are a category leading director-consumer newcomers provider for the entertainment industry serving as the gateway between brands and retailers.

Speaker Change: With over 325,000 students stock, we provide the world's largest selection of music, own video movies, video games, gaming hardware, arcade, collectibles, toys, and consumer electronics.

Speaker Change: We are a needed supplier for Army retailers and helping them expand their long tail entertainment selection online and putting them on a level playing field with Amazon. We white label all their directive consumer shipments to look like it was shipped by the Army retailer but it was really shipped by Alliance.

Bruce Ogleby: We white label all their direct-to-consumer shipments to look like it was shipped by the Omni retailer, but it was really shipped by Alliance. We are a trusted omni channel supplier to retailers and wholesalers worldwide, including Walmart, Amazon, Best Buy, Costco, Target, Coles, DJs, Meyer, plus 2,500 independent music stores and many other retailers. We are a trusted distributor of home entertainment movies for Walt Disney, Paramount, Sony Pictures, Warner Brothers, Universal Pictures. For video games, video game consoles, retro arcades, controllers, and physical software games, we distribute products from Microsoft, Nintendo, Arcade, OneUp, Activision, Electronic Arts, Sega, Ubisoft, Square Enix, and Take 2.

Speaker Change: We are a trusted omnichannel supplier to retailers and wholesalers worldwide, including Walmart, Amazon, Best Buy, Costco, Target, Coles, BJs, Meyer plus 2500 independent music stores in many other retailers.

Speaker Change: We are a trusted district of all entertainment movies for Walt Disney, Paramount, Sony Pictures, Warner Brothers, Universal Pictures, and others.

Speaker Change: For video games, video game consoles, virtual arcades, controllers, and physical software games, we distribute the products from Microsoft, Nintendo, Arcade 1 up, Activision, Electronic Arts, Sega, Ubisoft, Square Enix, and Take 2.

Bruce Ogleby: In music for LP's, CD's, and yes, cassettes, we are a trusted distributor for Universal Music, Sony Music, Warner Music Group, and every independent music label. For the toys category, for collectibles, we distribute for Funko, Mattel, Lego, Hasbro, and over 600 other suppliers. Alliance Entertainment is a global leader in the 10 billion physical media industry and regenerate over 1.1 billion revenue in fiscal 2024 with our team of 654 dedicated employee owners. Our leading position in the industry provides us with unparalleled scale and leverage and has created significant structural and economic barriers in entry that we believe safeguards our market leadership position.

Speaker Change: In music for LP, CD, and yes, cassettes, we are a trusted distributor for universal music. Don't use the more of you is a group and every independent music label.

Speaker Change: For the Toys category, for the collectibles, we distribute for funcote, metal, Lego, Hasbro, and over 600 other suppliers.

Speaker Change: A line to entertainment is a global leader in the 10 billion physical media industry and we generate over 1.1 billion revenue in fiscal 2024 with our team of 654 dedicated employee owners.

Speaker Change: Our leading position in the industry provides us with unparalleled scale and leveraged administrative, significant, structural and economic barriers in the entry that we believe safeguards our market leadership position.

Bruce Ogleby: We are a value-adventure retail distributor with exclusive distribution rights to approximately 150 movie studios and music labels in the film and music industry. Our exclusive distribution licensing deals accounted for over 250 million of our revenue in fiscal 2024. Our extensive portfolio of unique content combined with our deep inventory of long tail selections of the more than 325,000 in stock skews enables us to cater to bulk shipments for B2B and direct to consumer retailers with a vast selection of products, including a growing number of products unavailable to other distributor competitors. This helps us create sticky relationships with our retailers, and growing these exclusive relationships is a key for us moving forward.

Speaker Change: We are a value having retail distributor with exclusive distribution rights, so approximately in the 150 movie studios and music labels in the film and music industry. Our exclusive distribution license-e-deals, accounted for over 250 million of our revenue, in fiscal 2024.

Speaker Change: Our extensive portfolio of unique content combined with our deep inventory of long-tailed selections of the more than 325,000 in stock schemes and able to thus cater to bulk shipments for B2B and direct to consumer retailers with a vast selection of products, including a growing number of products, unavailable to other distributor competitors.

Speaker Change: This helps us create sticky relationships with our retailers, and growing these exclusive relationships is a key for us moving forward.

Bruce Ogleby: We have over 200 online retailers that rely on us to stock the world's largest selection of entertainment products for them, and we ship to more than 35,000 storefronts, reaching 72 countries globally.

Speaker Change: We have over 200 online retailers that rely on us to stock the world's largest selection in your team of products for them. And we shift to more than 35,000 storefronts reaching 72 countries globally.

Bruce Ogleby: Importantly, we have a long and proven track record of growth through strategic acquisitions. Over the past 20 years, we successfully acquired an inquiry that does and companies allow us to rapidly enter new markets, expand our product selection and further diversify our revenue streams. Building a life from the ground up into the market leader has provided our team with a deep bench and an unrivaled experience with further strength in our position as we remain very much aligned with our shareholders, with insiders and employees holding approximately 95% of the outstanding shares of the company. After experiencing a surge in demand during the pandemic, many areas within the physical media market have been normalizing back to the historical growth levels and the high single digits.

Speaker Change: Importantly, we have a long improving track record of growth through a strategic acquisition. Over the past 20 years, we successfully acquired and integrated a dozen companies, allowing us to rapidly enter new markets, expand our product selection, and further diversify our revenue streams.

Speaker Change: Don't even lie.

Speaker Change: From the ground up into the market leader has provided our team with a deep bench and unrivaled experience.

Speaker Change: With further strength in our position as we may very much align with our shareholders with insiders and employees holding approximately 94% of the outstanding shares of the company.

Speaker Change: After experiencing the surge in demand during the pandemic, many areas within the physical media market have been normalizing back to the historical growth levels in the high-fing of digits. Even the CD market has joined the revival with CD's outselling digital albums that await a three-to-one margin in the first six months of the year, according to a mid-year report from the recording industry association of America.

Bruce Ogleby: Even the CD market has joined the revival, with CDs outselling digital albums at a rate of three to one margin in the first six months of the year, according to a mid-year report from the Recording Industry Association of America. As part of our 1.1 billion annual revenue, over 250 million was generated from products on which we are the exclusive distributor. The exclusive deals are managed through our Distribution Solutions, Amps, Mill Creek, and RK-1 of divisions, and they have significantly enhanced our market position by providing unique content that deepens relationship with both suppliers and retailers. Distribution Solutions was responsible for $134 million of this revenue in the first fiscal 2024.

Speaker Change: As part of our 1.1 billion annual revenue over 250 million was generated from products or which we are the exclusive distributor.

Speaker Change: These exclusive deals are managed through our distribution solutions, amps, mill Creek, and RK1 of divisions, and they have significantly enhanced our market position by providing unique context that deepens relationship with both suppliers and retailers.

Speaker Change: Distribution Solutions was responsible for one hundred and thirty-four million of this revenue in the first fiscal.

Bruce Ogleby: Distribution Solutions partners with over 60 home video movie studios to manufacture, supply, and market their content. We distribute this exclusive content to major retailers such as Amazon, Walmart, and Target, as well as thousands of other smaller retailers. By leveraging Alliance Entertainment's vast distribution network, this exclusive content creates a strong, picky relationship with retailers, strengthening ongoing demand. In addition, Distribution Solutions has developed a growing digital distribution business in fiscal year 2023. We generate 8.4 million digital revenue, and we have more than doubles at a fiscal 2024 reaching 20 million. On the music side, our Amps division is a leader in physical distribution of exclusive music content.

Speaker Change: 2024. Distribute social solutions partners with over 60-home video movie studios to manufacture, supply, and market their content. We distribute this exclusive content to major retailers such as Amazon, Walmart, and Target as well as thousands of other smaller retailers.

Speaker Change: By leveraging a line of entertainment, that distribution network, this exclusive content creates a strong, picky relationship with retailers.

Speaker Change: Strengthening on going to man, in addition, distribution solutions have developed a growing digital distribution business in fiscal year 2023, we generate 8.4 million additional revenue and we have more than double that in fiscal 2024 reaching 20 million.

Speaker Change: On the music side, our anti-visions in leader and physical distribution of exclusive music content. Amped works more than 90 exclusive musical labels distributing music across major retailers, like Amazon, Walmart, Target, as well as over 2,500 independent music stores throughout the U.S.

Bruce Ogleby: Amps works more than 90 exclusive music labels distributing music across major retailers like Amazon, Walmart, Target, as well as over 2,500 independent music sources throughout the U.S. Labels and artists, Schusses Shibuzi, Usher, K-POP sensation, ATEEZ, and by-pass major music suppliers, thus lowering their cost themselves, distributing themselves using AMP for their physical distribution needs because they control their own digital streaming and social media marketing while maximizing profitability through our extensive brick-and-mortar and homily retail relationship. K-POP, in particular, has become a rapidly growing segment for AMP, contributing significantly to our sales growth. Our Mill Creek division specializes in exclusive video content licensing from major studios, including Disney, Sony Pictures, Universal, Lionsgate, CBS, and others.

Speaker Change: Ladies and artists, chef Shibuzi, usher K-pop sensation, teens, and five-half major basic suppliers thus lowering their cost and self-distribute themselves using amps for their physical distribution needs because they control their own digital streaming at social media marketing while maximizing profitability through our extensive brick-and-mortar and homely retail relationship.

Speaker Change: Hey poppin particular has become a rapidly growing segment for half contributing significantly to our sales growth.

Speaker Change: Our Mill Creek Division specializes in exclusive video content life and theme from major studios, including Disney, Sony Pictures, Universal Lions, GATVS and others.

Bruce Ogleby: Mill Creek licenses, manufactures, and distributes DVDs for these leading studios and enhances our ability to offer exclusive, unique, and end-to-man video content that is thought out by consumers and retailers alike. We are also the exclusive North American distributor for RK-1UP, which licenses and manufactures home arcade consoles with significant market share in the retro gaming space. These include some of the most well-recognized arcade games like Pac-Man, this Pac-Man, MBN Jam, Mortal Kombat, Golden T, and more. The infinity game table even includes the digital version of classic board games including Hasbro's Monopoly, Scrabble, Trivial Pursuit, Shoots, Ladders, Catan, Fauci, and many other iconic games.

Speaker Change: Milk Creek licenses, manufacturers and districts DVDs for these leading studios, and enhancing our ability to offer exclusive unique and in-demand video content that is sought out by consumers and retailers alike.

Speaker Change: We are also exclusive to the American Distributor for Arcade 1-Up, which licenses and manufacturers Home Arcade Conference with significant market share and the retro gaming space. These include some of the most well-recognized Arcade games like Pac-Man, Miss Pac-Man, and BNJM, Mortal Kombat, Golden T and more.

Speaker Change: The infinity game table even includes the digital version of classic board games, including house growth, monopoly, scrawls, trivial pursuit, chutes, ladders, cannulettes, Nazi, and many other iconic games.

Bruce Ogleby: We've had a long history of discipline, accredited of acquisitions, and I want to take a moment to highlight the strategic acquisitions that have been critical to our gaining leadership position in the entertainment space and our growth overall. By 2013, Jeff and I had built up Super D from 18 million in sales starting in 2001 to $194 million. Then we made the pivotal rule of acquiring a line entertainment, our largest competitor, which was doing 725 million revenue at the time, and significantly expanded our footprint with Transformers overnight into the largest distributor of music and video in the world.

Speaker Change: We've had a long history of discipline and credit of acquisition, and I want to take a moment to highlight the strategic acquisition that has been critical to our gaining leadership position in the entertainment space and our growth overall.

Speaker Change: By 2013, Jeff and I had built up superd from 18 million insales starting in 2001 to 194 million.

Speaker Change: Then we made the pivotal rule of the Aquarium Alliance Entertainment, our largest competitor, which is doing 725 million revenue at the time, and significantly expanded our footprint with transforming us overnight into the largest distributed music and video in the world.

Bruce Ogleby: This acquisition marked our first major step in consolidating the package beta categories of music and video. We continue to build on to strategy in 2016 with the acquisition of AN Connect, which gave us exclusive access to sell TVs to Walmart and Best Buy and expanded our important vendor managing inventory capabilities for our portfolio. Our entry into the gaming space came in in 2018 through the acquisition of MECA, enabling us to distribute products or major suppliers like Microsoft, Sony, and Nintendo. That same year, we also acquired distribution solutions from Sony Pictures, which got us into the exclusive home video distribution relationships with 20 movie studios, further strengthening our position in the industry and giving us another vendor number of Walmart and Best Buy and enabling us to become the exclusive seller for these movie studios to Walmart, Amazon, Best Buy, Target, Barnes and Noble, and other retailers in New York and Canada.

Speaker Change: This acquisition marked our first major step in consolidating the package beta categories of music and video.

Speaker Change: We continue to build up to strategy in 2016 with the acquisition of ANC Connect, which gave us exclusive access to cell TVs to Walmart and Best Buy and expanded our important vendor management inventory capable of these four portfolio.

Speaker Change: Our entry into the gaming space came in 2018 through the acquisition of Mecca, and they've only led us to disturb the products and major suppliers like Microsoft, Sony, and the Tendom.

Speaker Change: That same year we'll also acquire distribution solutions from Sony pictures.

Speaker Change: which got us into exclusive home video distribution relationships with 20 movie studios.

Speaker Change: Further strengthening our position in the industry and giving us another vendor number of Walmart and Best Buy. And the neighborhood has to become the exclusive seller for these movie studios to Walmart Amazon Best Buy target Barnes & Noble and other retailers and viewers in Canada.

Bruce Ogleby: In 2020, we expanded our video gaming presence with the acquisition of MECA's competitor, COCO. Thus, expanding our relationship with best-by-target coals, Dell, and the RISES. With the acquisition of COCO, we also started distributing retro arcades from RK-1 Up. In most regions in 2022, we added collectibles to our portfolio with the acquisition of Think Threefold, a move that further diversified our product offering and gave us another supplier number with Walmart.

Speaker Change: In 2020, we expanded our video game presence with the acquisition of Mecca's competitor Coco. Thus expanding our relationship with that side target cold, Dell, and the rise.

Speaker Change: With the acquisition of COCAM, we also started distributing retro-art data to mark A1 up, and most recently 2022, we added collectible to our portfolio with the acquisition that they threefold. A move that further diversified our product offering and gave us another supplier number with Walmart.

Bruce Ogleby: As you can see, we have a proven track record of completing acquisitions, and we will continue with that same strategy to further growth and diversify our company moving forward. While we did put ourselves on hold for acquisitions in 2022 and 2023 for our SAC merger in the beginning of the three-year line of credit in place, we are currently working on four possible future transactions, all in time for our deal pipeline.

Speaker Change: As you can see

Speaker Change: We have a proven track record of completing acquisitions, and we will continue with that same strategy.

Speaker Change: To further growth and diversify in a company moving forward. While we did put ourselves on a whole proactive mission in 2022 and 2023 for our staff merger and getting our new three-year line of credit in place, we are currently working on four possible future transactions all in time for our deal-pipe line.

Bruce Ogleby: To better understand what that could mean for Alliance and moving forward, I want to briefly share a case study from our acquisition of Distribution Solutions in 2018. At the time, they were doing around 80 million revenue, working with 18 studios. Fast forward to today in fiscal 2024, distribution solutions accounted for 134 million revenue, so we are now working with nearly three times the number of studios. As we look at new deals, we continue to apply the same criteria that has worked for us in the past, and are more confident this strategy will continue to yield great results.

Speaker Change: To better understand what that could mean for our lines and move forward, I want to briefly share a case study from our acquisition of distribution solutions in 2018.

Speaker Change: At the time, they were during around 80 million revenue working with 18 studios. That's forward to today in fiscal 2024, distribution solutions accountable, 100, 34 million revenue. And we're now working with nearly three times the number of studios.

Speaker Change: As we look at new deals, we continue to apply the same criteria that's worked for us in the past, and we're confident this strategy will continue to yield great results.

Bruce Ogleby: Technology is the backbone of our operations and critical drivers of efficiency, cost savings, and growth. In 2023, we began making strategic investments in automation and technical innovation to enhance our ability to serve our customers more effectively. In January 2023, we went live with AutoStore automated storage and retrieval system at our Shepherd's Bill, Kentucky warehouse. I call AutoStore the Olympics cube of AutoStorage Retrieval System. This state-of-the-art system has greatly improved our Kentucky warehouse operations, allowing us to achieve increased levels of speed, reliability, capability, and precision that resulted in significant cost savings. With AutoStore, we now process over 2,000 lines per hour with a fraction of the staff.

Speaker Change: Technology is the backbone of our operations and critical drivers of efficiency, off-saving and grow. In 2023 we began making strategic investments in automation and technical innovation to enhance our ability to serve our customers more effectively.

Speaker Change: In January, 2023, when went live with AutoStore Automated Storage and Retrieval System at our Shepherd's Bill Kentucky Warehouse. I call AutoStore the Ludwig's Cube of AutoStore Retrieval Systems.

Speaker Change: This state-of-the-art system has greatly improved our Kentucky Warehouse operations, allowing us to achieve increased levels of speed, reliability, capability, and precision that resulted in significant cost savings.

Speaker Change: With auto store, we now process over 2,000 lines for all of the fraction of the staff. We went from 41 pickers down to 7 and receiving from 14 associate staff to 8. Year over year, our fulfillment costs are running 1% lower.

Bruce Ogleby: We went from 41 pickers down to seven, and receiving with 14 associates down to eight. Year-over-year, our fulfillment costs are running 1% lower. Because the AutoStore re-eliminated HILES, it created more storage location capacity, enabling us to consolidate operations and close the larger of two buildings in Shackle Beach, Minnesota, thus removing 162,000 square feet of the 190,000 square feet we at least there. This closure process, which began in January, was completed on May 31. The savings from this consolidation will positively and permanently impact and reduce our cost structure in fiscal year 2025, further strengthening our ability to operate efficiently and deliver value to our shareholders.

Speaker Change: Because the bottom store, we eliminate items. It creates more storage location capacity and enabling us to consolidate operations.

Speaker Change: In closing, the larger of two buildings in Chakape, Minnesota, thus removing 162,000 square feet of the under 92,000 square feet we at least there.

Speaker Change: This closure process, which began in January was completed on May 31. The savings from this consolidation will positively and permanently impact and reduce our cost structure fiscal year 2025, further strengthening our ability to offer efficiently and deliver value to our shareholders.

Bruce Ogleby: In addition, in the third quarter of the fiscal 2024, we announced the installation of SureSort X system from OPEX, a cutting-edge sortation technology that delivered nearly half a million dollars in immediate savings by eliminating the direct or fit older technology and expected to deliver another nearly 400,000 annual labor cost savings in our Kentucky facility. Technology has allowed us to handle larger products such as toys and electronics, removing the need for manual sorting and driving the new levels of efficiency and precision.

Speaker Change: In addition, in the third quarter of the fiscal 2024, we announced the installation of SureSortX.

Speaker Change: System from OPEX, a cutting-edge certification technology that lives in nearly half a million dollars in a media savings by eliminating the to retrofit over technology and expected to deliver another nearly 400,000 annual labor cost savings in our Kentucky facility.

Speaker Change: In a distal cal state, we, the Sherex.

Speaker Change: Technology has allowed us to handle larger products, such as toys, electronics, removing the need for manual sorting and driving the new level of efficiency and precision. In the investor presentation, there are hyperlinks to see auto store and OPEX and other processes we do in Kentucky.

Bruce Ogleby: In the investor presentation, there are hyperlinks to see Auto Store and OPEX and other processes we do in Kentucky.

Jeff Walker: I will now hand the call over to Alliance and Chief Executive Officer and Chief Financial Officer Jeff Walker, my partner.

Speaker Change: I will now hand the call over to a line to chief executive officer and chief financial officer, Jeff Walker, my partner.

Jeff Walker: Thank you, Bruce, and thank you all for joining us today. We will now turn to an overview of our financial results for the fourth quarter and fiscal year ended June 30th, 2024. We generated 236.9 million in net revenue for the fourth quarter compared to 247.1 million in the same period last year. While this represents a modest decline, we saw positive shifts in several key areas that positioned us well for the future. Our gross profits for the fourth quarter was 26.9 million, down from 30.2 million in the same quarter last year. This resulted in a gross margin of 11.4%, slightly below the 12.2% achieved in Q4 2023.

Jeff Walker: Thank you, Bruce. And thank you all for joining us today. We will now turn to an overview of our financial results for the fourth quarter and fiscal year ended June 30, 2024.

Speaker Change: We generated 236.9 million and net revenue for the fourth quarter compared to 247.1 million in the same period last year.

Speaker Change: While this represents a modest decline, we saw positive shifts in several key areas that position us well for the future.

Speaker Change: Our gross profits for the fourth quarter was 26.9 million down from 30.2 million in the same quarter last year.

Speaker Change: This resulted in a gross margin of 11.4% slightly below the 12.2% achieved in Q4-2023. Although margins tighten, they've taken steps to streamline costs and improve efficiencies.

Jeff Walker: Although margins tighten, we've taken steps to streamline costs and improve efficiencies, which will be reflected in future quarters.

Jeff Walker: We are pleased to report we delivered net income of 2.5 million for the quarter, a major turnaround from the 4.6 million net loss in the same period last year, an impressive 7.1 million improvement and a clear signal that our focus on operational efficiency is paying off. Adjusted EBITDA for the quarter came in at 2.1 million; our fifth consecutive quarter of positive adjusted EBITDA.

Speaker Change: which will be reflected in future quarters.

Speaker Change: We are pleased to report we delivered net income of 2.5 million for the quarter, a major turnaround from the 4.6 million net loss in the same period last year, and impressive 7.1 million improvement, and a clear signal that our focus on operational efficiency is paying off.

Speaker Change: I just did EBITDAF for the quarter came in at 2.1 million, our fifth consecutive quarter of positive adjusted EBITDAF.

Jeff Walker: Moving on to our full year highlights, net revenues for the fiscal year ended June 2030-2024 were 1.1 billion compared to 1.16 billion for fiscal year 2023. Our shift toward higher margin business, including growth and consumer direct shipments, is one factor helping to drive improved margins and profitability. Consumer direct shipments increased to 36% of our gross revenue, up from 31% in fiscal 2023. Gross profit for the fiscal year was 128.9 million compared to 103.9 million in the prior year at an impressive 24% increase. This improvement was driven by the combination of shifting product mix and new operational efficiencies.

Speaker Change: Moving on to our full year of highlights, net revenues for the fiscal year ended June 30, 2020, for 1.1 billion compared to 1.16 billion for fiscal year 2020.

Speaker Change: Our shift towards higher margin business, including growth, and consumer direct shipments, is one factor helping to drive improved margins and profitability.

Speaker Change: Consumer direct shipments increased to 36% of our gross revenue up from 31% in fiscal 2023.

Speaker Change: Growth's profits of the fiscal year was 128.9 million compared to 133.9 million in a prior year and impressive 24% increase.

Speaker Change: This improvement was driven by the combination of shifting product mix and new operational efficiencies.

Jeff Walker: Gross profit margin also saw a substantial boost, rising to 11.7% up from 9% in fiscal 2023, representing a 270 basis point improvement.

Speaker Change: Rose Prof. Margin also saw a substantial boost rising to 11.7% of from 9% in fiscal 2023 representing a 270 basis point improvement.

Jeff Walker: In addition to the year-over-year growth and our quarterly gross profit, we achieved a significant 21.9 million reduction in operating expenses, a 16% decrease, bringing expenses down from 136.7 million to 114.7 million. This reduction was largely driven by the warehouse efficiencies and new technologies we implemented throughout the year. These improvements are not just one-time gains; they will continue to positively impact our cost structure and overall profitability moving forward.

Speaker Change: In addition to the year-over-year growth and our quarterly growth's profit, we achieved a significant 21.9 million reduction in operating expenses, a 16% decrease.

Speaker Change: Bringing expenses down from 136.7 million to 114.7 million.

Speaker Change: This reduction was largely driven by the warehouse of fish and food and new technologies we implemented throughout the year.

Speaker Change: These improvements are not just one-time games, they will continue to positively impact our cost structure and overall profitability moving forward.

Jeff Walker: Net income for fiscal 2024 was $4.6 million, a $40 million improvement over the $35.4 million net loss in fiscal 2023, underscoring the effectiveness of our ongoing initiatives to improve margins to manage costs. Our adjusted EBITDA tells a similar story, improving by $41.9 million to $24.3 million, up from an adjusted EBITDA loss of $17.6 million in fiscal 2023.

Speaker Change: Net income for fiscal 2024 was $4.6 million, a $40 million improvement over the $35.4 million net loss in fiscal 20.

Speaker Change: 23, underscoring the effectiveness of our ongoing initiatives to improve margins of managed costs.

Speaker Change: Our adjusted eBadet tells a similar story, improving by 41.9 million to 24.3 million out from an adjusted eBadet a lot of 17.6 million in fiscal 2023.

Jeff Walker: Net cash provided by operating activities surged to $55.8 million in fiscal 2024, up from $3.4 million in the prior year, a remarkable increase of 1,547%. This cash generation strengthens our ability to reinvest in a business and drive future growth.

Speaker Change: Next task provided by operating activities surge to 55.8 million in fiscal 2024 up from 3.4 million in the prior year, a remarkable increase to 1547%.

Speaker Change: Those types of generations strengthens our ability to re-invest in a business and drives future growth.

Jeff Walker: And just to reiterate something Bruce mentioned earlier, we expect significant cost savings in fiscal 2025 from the closing of our Minnesota facility, which was completed in late May. Over the past year, we've also made significant efforts to strengthen our balance sheet, and those efforts are continuing to bear fruit, with both inventory and debt continuing to decline year-over-year. Inventory drops from $147 million to $97 million as of June 30, 2024, and debt was reduced from $133 million to $73 million.

Speaker Change: And just to reiterate something Bruce mentioned earlier, we expect significant cost savings in fiscal 2025 from the closing of our Minnesota facility, which was completed in late May.

Speaker Change: Over the past year, we've also made significant efforts to strengthen our balance sheet, and those efforts are continuing to bear fruit, with both inventory and debt continuing to decline year over year.

Speaker Change: Anantory drops from 147 million to 97 million as of June 30, 2024, and that was reduced from 133 million to 73 million.

Jeff Walker: In conjunction with these initiatives, we secured a new $3-year $120 million senior secured credit facility with White Oak Commercial Finance earlier this year to proceed to, which was used to refinance the existing credit facility, fund working capital needs, and provide for general corporate purposes. These steps have also positioned us to focus and execute on implementing our acquisition strategy going forward.

Speaker Change: Anconjunction with these initiatives, we've security.

Speaker Change: New 3-year $120 million senior secured out-of-based credit facility with wide-o commercial finance.

Speaker Change: Earlier this year.

Speaker Change: The proceeds of which was used to refine and to exist in credit facility.

Speaker Change: Fun working capital needs and provide for general corporate purposes. These steps have also positioned us to focus and execute on implementing our acquisition strategy going forward.

Jeff Walker: Taking a broader view of our financial performance over the last five fiscal years, this slide showcases how we've navigated a dynamic environment. In fiscal 2020, we generated $776 million in revenue. Over the next two years, a combination of growth initiatives for team-to-go acquisition and an unprecedented surge in demand during the COVID-19 pandemic drove our top line to a peak of $1.4 billion in fiscal 2022. As expected, this demand is normalized, with revenues adjusting to around $1.1 billion for fiscal 23 and 24. While adjusted EBITDA in fiscal 2023 was impacted by one-time supply chain issues, the significant rebound in fiscal 2024 also reflects the strategic steps we've taken to enhance profitability, including reducing cost and optimizing operations.

Speaker Change: Taking a broader view of our financial performance over the last five fiscal years, this slide showcases how we've navigated a dynamic environment. In fiscal 2020, we generated 776 million in revenue.

Speaker Change: Over the next two years, a combination of growth initiatives for team to got positions and an unprecedented surge in demand during COVID-19 pandemic drove our top line to a peak of 1.4 billion in fiscal 2022.

Speaker Change: As expected, this demand is normalized, which revenues adjusting to around 1.1 billion for fiscal 23 and 24.

Speaker Change: Well, I just believe it in fiscal 2023 was impacted by one time supply chain issues that significant rebound in fiscal 2024 also reflects the strategic steps we've taken to enhance.

Jeff Walker: Our adjusted EBITDA margin was 2.2% for fiscal 2024.

Speaker Change: Profitability, including reducing cost and optimizing operations.

Speaker Change: Our adjusted EBITDA margin was 2.2% for fiscal 2024.

Jeff Walker: Turning to our balance sheet, as mentioned a moment ago, our focus on reducing inventory and debt has paid off, with inventory levels dropping to 97 million and debt reduced to 73 million as of June 30, 2024. These reductions have streamlined our operations and improved our financial flexibility.

Speaker Change: Turning to our balance sheet, as mentioned in a moment ago, our focus on reducing inventory and debt has paid off. With inventory levels dropping to 97 million, and debt reduced to 73 million as of June 30, 2024.

Speaker Change: These reductions have streamlined our operations and improved our financial flexibility.

Jeff Walker: As already mentioned, we also expect further cost savings for fiscal 2025, particularly from the closure of our Minnesota facility in May. Additionally, our 120 million database credit facility with White Oak, which was secured to support working capital and refinance existing debt, has positioned us well for continued growth and execution of our acquisition strategy going forward.

Speaker Change: As I already mentioned, we also expect further cost savings for fiscal 2025, particularly from the closer of our Minnesota facility in May.

Speaker Change: Additionally, our 120 million activates credit facility with white oak, which was secured to support working capital and refinance existing that has positioned us well for continued growth and execution of our acquisition strategy going forward.

Bruce Ogleby: I will now turn the call back over to Bruce.

Bruce Ogleby: Thank you, Jeff. As we look to the future, Alliance Entertainment is poised for continued growth by leveraging our strength as a capital-like low-cost provider with unmatched reach in the industry. Our strategy is clear. Expand our market share, improve margins, and drive EBITDA growth. First, we see tremendous opportunities to expand into under-penetrated channels, particularly in areas like digital video streaming, where direct vendor selling remains low and cost-ineffective. This is where Alliance can truly shine by offering efficient, scalable solutions. In fiscal 2024, our loan, our exclusive distribution agreement generate over 250 million in sales, and we expect to build on this momentum moving forward.

Speaker Change: I will now turn the call back over to Bruce.

Bruce: Thank you, Jeff. As we look to the future, Alliance Entertainment is poised for continued growth by leveraging our strength as a capital-like low-cost provider with unmatched reach in the industry. Our strategy is clear. Expand our market share and improve margins and drive the target.

Speaker Change: First, we see tremendous opportunities to expand and to under-penetrated channels, particularly in areas like digital video training, where direct-minder selling remains low and cost-infective. This is where lines can truly shine by offering efficient scalable solution.

Speaker Change: In fiscal 2020 for our long, our exclusive distribution agreement generated over 250 million in sales, and we expect the bill on its momentum moving forward.

Bruce Ogleby: Second, we are investing in automation and restructuring to enhance our operational efficiency. Technologies like AutoStore are already driving significant cost savings, and these improvements will continue to bolster our margins while providing the scale that we need to capture more of our market share.

Speaker Change: Second, we are investing in automation and restructuring to enhance our operational efficiency. Technologies like auto store are already driving, significant cost savings, and these improvements will continue to bolster our margins while providing the scale that we need to capture more of our good share.

Bruce Ogleby: Third, mergers and acquisitions remain central to our close strategy. Through strategic M&A, we plan to rapidly expand our product categories and verticals across music, home video movies, video gaming, toys, and collectibles. Doing so, we will not only diversify our offerings, but also strengthen relationships with our major retail partners, positioning lines for long-term success. The opportunities ahead are significant. Family-owned competitors are age-out, and large movie studios and companies are looking to sell or lighten physical media rights. Our capital-like model, combined with our proven ability to integrate acquisition, sets us apart from the competition. These major movie studios will be doing an alliance to allow opportunities to license their home video content and allow these major movie studios to focus on their core competency of making movies, exhibiting in theaters, doing premium downloads, and focusing on their streaming services.

Speaker Change: Third, mergers and acquisitions remain central to our close strategy.

Speaker Change: Through strategic M&A, we plan to rapidly expand our product categories and verticals across music, home video movies, video gaming, toys and collectibles.

Speaker Change: By doing so, we will not only diversify our offerings, but also strengthen relationships with our major retail partners positioning aligned for long-term success.

Speaker Change: The opportunities ahead are significant, family-owned competitors are aging out in large newly-studios and companies who are looking to sell or license physical media rights.

Speaker Change: Our capital light model combined with our proven ability to integrate acquisition.

Speaker Change: That's a support from the competition.

Speaker Change: Please make your movie studios, we don't even know why it's still allowed opportunities to license their own video content. And allow, please.

Speaker Change: Major movie studios have focused on their core competency at making movies, exhibiting theaters, doing premium download, and focusing their streaming services. Alliance of core competency is distributing package physical media.

Bruce Ogleby: Alliance's core competency is distributing package physical media. We are excited about the road ahead, and we're confident that our strategic initiatives will drive future goals and profitability for years to come.

Speaker Change: We are excited about the road ahead and we are confident that our strategic initiatives will drive future growth and profitability for years to come. With that, I'd like to hand the call back to the operator and begin our question and answer session. Operator?

Operator: With that, I'd like to hand the call back to the operator and begin our question-and-answer session.

Operator: Thank you.

Operator: We'll now be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing the keys. One moment, please, while we poll for questions.

Speaker Change: [inaudible]

Speaker Change: Thank you. Now we conduct a question and answer session. If you'd like us a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue.

Speaker Change: For participants using speaker equipment to maybe necessary to pick up your hands set before pressing the star keys. One moment please while we pull for questions.

Speaker Change: [inaudible]

Operator: Thank you.

David Levine: Our first question is from David Levine with Crickle Research. Please proceed with your question. I guess great results, really impressive, great turnaround, all that stuff. I wonder if you would be willing to comment a little bit on, given all the changes that have been made and some of the positive developments that you're seeing in the business, if it's reasonable to expect, say, adjusted EBITDA in the future quarters and coming years to trend something closer to where you were previously, say, in the four and five percent range.

Speaker Change: Thank you. Our first question is from David Levine, with critical research, please pursue your question.

David Levine: I gave great results, feeling impressive, great turnaround, all that stuff. I wonder if you would be willing to comment a little bit on, given all the...

Speaker Change: Change is that it has been made in some of the positive developments that you are seeing in the business.

Speaker Change: If it's reasonable to expect, say, adjusted EBITDA in the future quarters and coming years to trend something closer to where you were previously, say, in the, you know, four and five percent range.

Jeff Walker: Hello, David. Hey, this is Jeff Walker. I'll answer that there for you. We definitely see our EBITDA trending upwards, and we do believe that we can get back into that four to five percent EBITDA goals goal or target that we've been focused on. So, you know, that 24 was still a year of some cleanup as well as consolidation, so we should definitely see that improving as we're moving in the fiscal 25 and 26.

Speaker Change: i

Speaker Change: Hello David Hey, this is Jeff Walker, I'll answer that there for you. We definitely see our EBITDA trending upwards.

Speaker Change: And we do believe that we can get back into that 4% or 5% EBITDA.

Speaker Change: Goal or target that we've been

Speaker Change: So, you know, that 24 was still a year of some clean up as well as consolidation. So, we should definitely see that improving as we're moving into fiscal 25 and 26.

David Levine: Great, thanks.

Operator: Thank you, David. Thank you.

Speaker Change: Great thanks.

Operator: There are no further questions in the queue at this time.

Speaker Change: i

Operator: I would like to pass it back to Paul Coons for any questions from the webcast. Thank you, Paul.

Speaker Change: Thank you. There are no further questions in the queue at this time. I would like to pass it back to Paul Coons for any of the questions from the webcasts.

Jeff Walker: And now we are going to turn to the questions coming in from the webcast participants. Our first question was, how will interest rate reductions impact the earnings? Thank you, Paul. I'll take this one as well here. We expect to see a very big decline in our interest expense for fiscal 26. With our continued debt reduction that we're in the process of today and continuing through fiscal 25, and combining that with potential Fed interest rate reductions, that should have a pretty significant impact on our interest cost. In fiscal 25, but a real significant impact for fiscal 26 as well.

Speaker Change: Thank you, Paul. And now we are going to turn to the questions coming in from the webcast participants. Our first question was, how interest rate reductions impact the earnings?

Speaker Change: i

Speaker Change: Thank you Paul. I'll take this one as well here. We expect to see a very big decline in our interesting stance.

Speaker Change: for fiscal 26th

Speaker Change: With our continued debt reduction that

Speaker Change: that we're in the process of today and continuing through fiscal 25 and combining that with

Speaker Change: potential of fatty interest rate reductions. And that should have a pretty significant impact on our interest cost in fiscal 25. But a significant real significant impact for fiscal 26 as well.

Operator: Thank you.

Jeff Walker: And our next question: what growth initiatives are aligned to be focused on in fiscal 2025? Thank you, Paul. We're really focused and timely right now on increasing our exclusive distribution opportunities and video music and collectibles. We definitely mentioned that quite a bit in this statement in our press release here. It's a very important aspect of our business to have the exclusive distribution of products. It really helps us with fail to our retailers, and it really drives our business there. We are looking at including significant video licensing opportunities with our Mill Creek division. And we currently have a significant conversation happening here because of Alliance's extensive distribution capabilities and being great solutions for our partners.

Speaker Change: Thank you. And our next was your What Growth Initiatives, our Alliance focused on in fiscal 2025.

Speaker Change: Thank you Paul. We're really focused and timely right now on increasing our exclusive distribution opportunities and video music and collectibles.

Speaker Change: We definitely mentioned that quite a bit in this.

Speaker Change: and our press release here. It's a very important aspect of our business as the exclusive distribution of products.

Speaker Change: It really helps us with fail to our retailers and it really drives our business there. We are looking at including significant video licensing opportunities with our Milk Creek Division.

Speaker Change: and

Speaker Change: We currently have a significant conversation happening here because of the alliances.

Speaker Change: Extensive distribution capabilities and being great solutions for our partners.

Jeff Walker: So really, our solution has been very successful for the labels and studios that have come to us for exclusive distribution. And part of that is that we have all their inventory and stock, and our sales opportunities and sales channels not only to the brick and mortar but across all e-commerce selling media products is really our bread and butter there for our exclusive vendors. And it's really driving incremental sales for them.

Speaker Change: So, really, our solution has been very successful for the labels and studios that have come to us for exclusive distribution. And part of that is that we have all their inventory and stock in our...

Speaker Change: Our sales opportunities and sales channels, not only to the brick and mortar, but across all e-commerce, selling media products, is really our bread and butter there for our exclusive vendors.

Speaker Change: and it's really driving incremental fails for them.

Jeff Walker: Thank you. And our next question, collectibles, we're down in fiscal 2024. What is the future in them? Some of you probably know that are on this call. COVID was fantastic for all consumer products, and collectibles were definitely super hot during COVID with for retailers, wholesalers, manufacturers. As it was humming along so well, we all really got severely overstocked, and lots of products had to be marked down and sold through with all the major retailers, wholesalers, and manufacturers. I think today the collectible market is in a much better position today. There's just a small amount of excess products still in the pipeline, but nothing like it was a couple of years ago.

Speaker Change: Thank you. And our next was a collectable sales were down in fiscal 2024. What is the future in them?

Speaker Change: Some of you probably know that are on this call, you know, COVID was fantastic for consumer products and collectibles. We're definitely super hot during COVID with for retailers, wholesalers, manufacturers, weak.

Speaker Change: As it was a humming along so well, we all really got severely overstocked and lots of products had to be.

Speaker Change: Mark down and sold through with all the major retailers and wholesalers and manufacturers. I think today the collectible market is in a much better position today.

Speaker Change: There's just a small amount of excess products still in the pipeline. But nothing like it was a couple of years ago, and there's a lot of excess products in the pipeline. It really flows down sales for everybody in the category.

Jeff Walker: And when there's a lot of excess products in the pipeline, it really flows down sales for everybody in the category. So Alliance was not immune to it. We took hits on those that affected our sales and margins, and we've come through this as well.

Speaker Change: So, Alliance, please.

Speaker Change: Not immune to it, we took hits on this that affected our sales and margins and we've come through this as well.

Jeff Walker: And if you follow Funkto, who is definitely a leader in collectibles, they definitely describe the challenges, and going into 2025, the collectible business is definitely normalizing for them and other manufacturers. I will say that the overall collectible industry is very, very robust. Consumers are still loving to collect their favorite products.

Speaker Change: And you know, if you follow Fanto, who is definitely a leader in collectibles.

Speaker Change: They definitely describe the challenges and going into 20-25, the collectable businesses definitely normalizing for them and other manufacturers.

Speaker Change: I will say that the overall collectible industry is very, very robust.

Speaker Change: Consumers are still loving to collect their favorites.

Jeff Walker: And so we also see more exclusive distribution opportunities for alliance in collectibles, as well as a lot of great acquisition opportunities in the collectible space that we're in discussions, and we'll be in our acquisition strategy for years to come.

Speaker Change: products. And so we also see more exclusive distribution opportunities for alliance.

Speaker Change: In collectibles, as well as a lot of great acquisition opportunities in the collectible space that we're in discussions and we'll be in our acquisition strategy for years to come.

Operator: Thanks, Jeff, and we had another question. I know you did not provide guidance, but it sounds as if we should be looking for going forward as perhaps limited revenue growth with better gross margins and net margins. Is that a fair assessment? Yes, I would say that's a pretty fair assessment.

Speaker Change: Thank you. And we had another question. I know you did not provide guidance, but it sounds as if we should be looking for going forward as perhaps limited revenue growth of better growth margins in that margins. Is that a fair assessment?

Speaker Change: I would say that's a pretty fair assessment.

Jeff Walker: Our overall core business is stable, and we might have a small uptick in sales, but really our growth from overall net revenue is definitely going to come from our acquisition strategy and adding acquisition to the business. That is how we've grown the company over the last 20 years, so there's definitely from the acquisition side. We are definitely in some other organic conversations to bring on some more exclusive distribution that could drive some growth in our top line revenue. And then, as we mentioned on the call, really continuing to focus on our operational efficiencies will also help to reduce our costs and improve our overall net margins.

Speaker Change: Our overall core business is stable and

Speaker Change: You know, we might have a small up-tick in sales, but really are gross from overall net revenue is.

Speaker Change: Definitely get a come from our acquisition strategy and adding.

Speaker Change: acquisition for the business.

Speaker Change: That is how we've grown the company over.

Speaker Change: Over the last 20 years and

Speaker Change: So, there's definitely from the acquisition side. We are definitely in some other organic conversations that are bring on some more exclusive distribution that could drive some growth in our top line revenue.

Speaker Change: And then, you know, as we mentioned on the call, really continuing to focus on our operational efficiencies will also help to reduce our costs and improve our overall net margins.

Operator: Thank you, Jeff, and we have two related questions to what you're just talking about there. The next one is, can you give any clarity on the offering filing and your intent to raise cash for future acquisitions? Can you repeat that one for me? Absolutely. Can you give any clarity on the offering filing and your intent to raise cash for future acquisitions? Yeah, we did put an F1 filing out earlier this year with the intent to raise capital for acquisitions.

Speaker Change: Thank you. If we can have two related questions to what you're just talking about there, the next one can you get any clarity on the offering, filing, and you're in contact with the race crash for future acquisitions.

Speaker Change: Can you repeat that one for me?

Speaker Change: Absolutely. Can you give any clarity on the offer in filing and your intent to raise cash for future acquisitions?

Speaker Change: Yeah, we did put an F1 filing out earlier this year.

Jeff Walker: I think it's dependent on having a significant acquisition queued up and ready to go, but we're trying to prepare ourselves for all the different options and things that might come our way. On last part on that, from an acquisition standpoint, we're a very diverse business as we just described, and from that diversity, that gives us a lot of different acquisition opportunities and all the different categories and divisions and sales channels that we mentioned earlier today.

Speaker Change: With the intent to raise capital for acquisitions.

Speaker Change: I think, you know, it's dependent on having a significant acquisition, queued up and ready to go. But, you know, we're trying to prepare ourselves for all the different options and things that might come our way.

Speaker Change: You know, we're on last part on that from an acquisition standpoint. We're very diverse business as we described and...

Speaker Change: From that diversity that gives us a lot of different acquisition opportunities in all the different categories and divisions and sales channels that we mentioned earlier today.

Operator: Thank you, Jeff. And it looks like we have one more question.

Jeff Walker: What is the expected expense reduction in fiscal 2025 from the closing of the Minnesota warehouse, and is there additional reductions plans? Yeah, we acquired COCOM in September of 2020, and we continued to operate their facilities and so forth through there. The lease was coming due in the main warehouse there at the end of May of 2004 this year. So, about a year ago, we started our plan to do that consolidation, and so in fiscal 24, we still ran that warehouse and that operation. So we did not have much savings in Fiscal 24. The savings is really coming here as we move into Fiscal 25.

Speaker Change: And let's look at one more question. What is the expected expense for adoption in fiscal 2025 from the closing of the Minnesota Warehouse and is their additional reductions plan?

Speaker Change: Yeah, that, you know, we acquired Coke in September of 2020 and

Speaker Change: You know, we continued to operate their facilities and so forth through there. The least was coming due in the main warehouse there at the end of May of 24 this year.

Speaker Change: So, about a year ago, we started our plan to do that consolidation.

Speaker Change: And so in fiscal 24, we still ran that warehouse and that operation. So we did not have...

Speaker Change: Much savings in fiscal 24. The savings is...

Jeff Walker: And we're forecasting right about $5 million of operational savings per fiscal 25, and obviously going forward from that completed consolidation. And the key aspect on it is not just the rent and the payroll, but one of the key aspects is that we were running on COCOM's legacy IT system as well. So the company had alliances system and COCOM system, and being able to retire that legacy system at COCOM does say the huge amount of money, not only maintaining systems and as well as IT team and so forth, and its and compliance issues and all those different things as a public company.

Speaker Change: Really coming here as we move into fiscal 25

Speaker Change: And we're forecasting right about $5 million of operational savings.

Speaker Change: for fiscal 25 and obviously going forward, from that completed.

Speaker Change: and a key aspect on it is not just the rent and the payroll, but one of the key aspects is that we were running on tokens legacy IT system as well. So, the company had a Lyon system and tokens system in.

Speaker Change: You know, being able to retire that legacy system at Cokeham.

Speaker Change: Does say the huge amount of money, not only maintaining systems and as well as ITP and so forth. And it's when compliance issues and all those different things as a public company.

Jeff Walker: So that's where the significant part of that savings is coming from.

Jeff Walker: We do also have a second smaller facility in Minnesota that was across the street from the big one. It's about 30,000 square feet. The lease is up in September of 25, so a year from now and we will be exiting that one as our lease comes up. So we'll be working on that summer. It's not as significant of a savings as the big warehouse that we just completed, but it will be on some additional. saving so.

Speaker Change: That's where the significant part of that savings is coming from.

Speaker Change: We do also have a second smaller facility in Minnesota that's

Speaker Change: was across the streets from the big one. It's about 30,000 square feet. The lease is up in September of 25, so a year from now, and we will be exiting now one as our lease comes up, so we'll be working on that next summer. It's not as significant of a savings as...

Speaker Change: as the big warehouse that we just completed, but it will be some additional savings now.

Jeff Walker: Thank you, Jeff, and that was the last question we've had come in. Okay, thank you everybody. We're very excited; we had a fantastic fiscal year, and we're pretty excited here going into fourth quarter in the holiday season.

Speaker Change: Thank you Jeff, and that was the last question we've had come in.

Speaker Change: OK

Speaker Change: Thank you, everybody. We're very excited. We had a fantastic fiscal year and we're pretty excited here going into fourth quarter in the holiday season.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: I'm going to tell you something about this.