Q4 2024 SKYX Platforms Corp Earnings Call
Operator: Good day and welcome to the Sky X Platforms Corporation fourth quarter 2024 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.
Good day and welcome to the Sky X platforms Corporation fourth quarter 2024 earnings call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded.
Speaker Change: You touched home phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Rani Cohen founder inventor and executive Chairman. Please go ahead Sir.
Rani Kohen: I would now like to turn the conference over to Mr. Rani Kohen, founder, inventor, and executive chairman. Please go ahead, sir. Thank you very much. Good afternoon.
Rani Cohen: Thank you very much good afternoon.
Rani Kohen: We will start our fourth quarter 2024 earning call.
We will start our fourth quarter 'twenty 'twenty, four are earning call and with that I will.
Steve Schmidt: And with that, I will have Steve Schmidt, our president, start with the call. Thank Thank you. Thank you. Rani, thank you very much. We have a lot to report and let's start.
Rani Cohen: Steve Schmidt, our president, let's start with the call. Thank you.
Rani Cohen: Okay.
Rani Cohen: Well. Thank you very much we have a lot to report and let's start.
Rani Cohen: First of all I'm very pleased to talk about the fact that we grew our revenue 48% in 2024 from $58 8 million and 23 to 86.3.
Steve Schmidt: First of all, I'm very pleased to talk about the fact that we grew our revenue 48% in 2024 from $58.8 million in 2023 to $86.3 million in 2024. Sales of our advanced and smart home related products surged over 1,000%. We expect our products to be in 20,000 units and homes by Q1 2025 and additional tens of thousands of units and homes in 2025.
Rani Cohen: 3 million in 2024.
Rani Cohen: Sales of our advanced smart home related products search over 1000%.
Rani Cohen: We expect our products to be in 20000 units at homes by Q1 25 and.
Rani Cohen: An additional tens of thousands of units at homes in 2025.
Steve Schmidt: We expect significant projects and order growth, resulting in becoming cash flow positive in the second half of 2025. We also achieved revenue growth in four consecutive quarters for 2024 from Q1 of $19 million to over $23.7 million in Q4 for record sales.
Rani Cohen: We expect significant projects in order growth resolving becoming cash flow positive in the second half of 2025.
Rani Cohen: We also achieved revenue growth in four consecutive quarters for 2024 from Q1 of $19 billion to over $23 7 million in Q4 for record sales.
Steve Schmidt: our safety code standardization team. which is led by Mark Early, former head of the National Electric Code and chief engineer of the NFPA, and still a member of the International Electric Code, together with Eric Jacobson, former president and CEO of the American Lighting Association. We anticipate major support from additional safety organizations and leading members for our safety mandatory standardization of our electrical ceiling outlet receptacle technology. We have recently received some indications that, based on the significant safety aspects of our technology, we are being positively reviewed by leading personnel, including leading safety experts, that are assisting us with our mandatory safety standardization process, as they strongly believe our technology has met all the criteria to become mandatory.
Rani Cohen: Our safety code standardization team.
Rani Cohen: Which is led by Mark early former head of the National Electric code and Chief engineer of the NFPA and still a member of the International Electric code together with Erik Jacobsen, former President and CEO of the American Lighting Association.
Rani Cohen: We anticipate major support from additional safety organizations and leading members for our safety mandatory standardization of our electrical stealing outlet Receptible technology.
Rani Cohen: We have recently received some indications it based on the significant safety aspects of our technology, we are being positively reviewed by leading personnel.
Rani Cohen: Leading safety experts that are assisting us with our mandatory safety standardization process.
Rani Cohen: They strongly believe our technology has met all the criteria to become mandatory.
Steve Schmidt: A few, as we kind of look at, we generated a record $23.7 million revenue in Q3-24 compared to $22.2 million in Q4-23. We reported $15.5 million in cash, cash equivalents and restricted cash. as of December 24, compared to 13 million as of September 30 of 24. In March 25, we secured additional $1.45 million of funding, including from a strategic investor through our $2.00 Series A1 Preferred Offer. As is common with companies such as ours, when sales are converted into cash rapidly, often referred to as the Dell working capital model, we continue to leverage our trades payable to finance our operations, to enhance our cash position, and to lower our cost of capital.
Rani Cohen: A few as we kind of look at it we generated a record $23 7 million in revenue in Q3, 24 compared to $22 2 million in Q4 23.
Rani Cohen: We reported $15 5 million in cash cash equivalents and restricted cash.
Rani Cohen: As of December 24, compared to <unk> 13 billion as of September 30 of 'twenty four.
Rani Cohen: In March 25, we secured additional 1.45 million of funding <unk>.
Rani Cohen: Including from a strategic investor.
Rani Cohen: Our $2 series, a one preferred offering.
Rani Cohen: As is common with companies such as ours when sales are converted into cash rapidly often referred to as the Dell working capital model.
Rani Cohen: We continue to leverage our trade payable to finance, our operations to enhance our cash position and to lower our cost of capital.
Steve Schmidt: We reduced our G&A expenses by $5.7 million to $31.4 million and 2024 from $37 million as of December 31st, 2023. We reported a $3.3 million decrease in total liabilities and a reduction of $3.9 million in net loss comparing 2024 to 2023. And as I said before, we plan to become cash flow positive in the second half of 2025. As we previously announced, we secured $11 million of equity preferred stock investment, led by the Shainer Group, a leading Marriott hotel owner with over 70 hotels, including significant insider investing by myself at $500,000. co-CEO Len Sokolow and John Campy at $250,000 and a preferred investment representing the $2 per share of common stock with no warrants.
We reduced our G&A expenses by $5 7 million to $31 4 million.
Rani Cohen: And.
Rani Cohen: In 2024 from 37 million as of December 31, 2023.
Rani Cohen: We reported.
Rani Cohen: A 3.3 million dollar decrease in total liabilities and.
Rani Cohen: And a reduction of $3 9 billion and that loss comparing 2024 to 2023 and as I said before we plan to become cash flow positive in the second half of 2025.
As we previously announced we secured $11 million of equity preferred stock investment led by the senior group, a leading very at a hotel owner with over 70 hotels, including significant insider investing by myself.
Rani Cohen: $500000.
Lynn Sokolow: Co CEO Lynn Sokolow, and John can't be at $250000 at a preferred investment representing the $2 per share of common stock with no warrants.
Steve Schmidt: We expect to grow increasingly units and growth to pro builders and retail segment. We continue to grow our market penetration of our advanced and smart plug and play products, expecting our products to be in 20,000 US and Canadian homes and units by the end of Q1 2025. We expect our products to be in tens of thousands of additional homes incrementally this year. A big plus is our technology provides opportunities for recurring revenue through interchangeability, upgrade, monitoring, and subscription. We continue to focus on our razor and blade models, and our product range includes our advanced sealing and electrical outlet, the razor, our advanced smart home plug-and-play products, the blade, including lighting, chandeliers, pennants, ceiling fans, recess lights, down lights, exit signs, emergency lights, holiday kits, theme lights, indoor-outdoor wall lights, among other smart products.
Lynn Sokolow: We expect to grow increasingly units and growth in pro builders and retail segment, we continue to grow our market penetration of our advanced and smart plug and play products.
Lynn Sokolow: <unk> being our products to be in 20000 U S and Canadian homes in units by the end of Q1 2025.
Lynn Sokolow: We expect our products to be in tens of thousands of additional homes incrementally this year.
Lynn Sokolow: A big plus is our technology provide opportunities for recurring revenue through interchange ability upgrades monitoring and subscriptions.
Lynn Sokolow: We continue to focus on a razor and blade model and our product range include our advanced sealing and electrical outlet the razor our advanced smart home plug and play products, the blade, including lighting Chanda layers, and then ceiling fans recessed light downlight exit signs emergency lights holiday gifts.
Lynn Sokolow: Teams are light indoor outdoor wall light among other smart products.
Steve Schmidt: We continue to utilize our e-commerce platform with over 60 websites for lighting and home decor to educate and enhance our market penetration to both the retail and professional segment. From a partnership and collaboration standpoint, we have significant collaborations and partners with Home Depot and Wayfair for our advanced and smart plug-and-play products for both retail and professional segments. Our product offerings will include a variety of our advanced and smart plug-and-play products, including retrofit kits, smart light fixtures, smart ceiling fans, ceiling outlet receptacles, recessed lights, and more. We continue to collaborate with U.S. and world-leading lighting companies, including Kichler, Quisel, European leading company, Eglo.
Lynn Sokolow: We continue to utilize our ecommerce platform over 60 websites for lighting and home decor to educate and enhance our market penetration to both the retail and professional segments.
Lynn Sokolow: From a partnership and collaboration standpoint, we have significant collaborations and partners with home depot and wait there.
Lynn Sokolow: Our advanced and smart plug and play products for both retail and professional segments.
Lynn Sokolow: Product offerings will include a variety of our advanced and smart plug and play products, including retrofit kits smart light fixtures smart ceiling fans ceiling outlet receptacles recessed lights and more.
Lynn Sokolow: We continue to collaborate with you asked and world, leading lighting companies, including Kitchener Wise L European leading company Anglo.
Steve Schmidt: and world-leading manufacturer, Rui. We announce the collaboration with CAFCO Homes, a leading U.S. prefabricated home manufacturer on integrating our advanced and smartened plug plate technologies into CAFCO's high-end premium homes shown at the Builders Show. Capco is a public company that has sold nearly one million homes and continues to deliver close to $20,000 annually. Pre-luxury developments by Forte Developments, including an 80-story high-rise in Miami's Brickell District and projects in Clearwater Beach in Jupiter, Florida, will feature our technology. More than 12,000 smart plug-and-play products, including ceiling outlets, lighting fans, and emergency fixtures, will be supplied across 400-plus units.
Lynn Sokolow: And world leading manufacturer.
Lynn Sokolow: We.
Lynn Sokolow: We announced the collaboration with Calico homes, a leading U S prefabricated home manufacturer on integrating our advanced and smart and blood plate technologies into GAAP goes high end premium Holmes chairman at the builder show.
Lynn Sokolow: <unk> was a public company that has sold nearly 1 million homes and continues to deliver close to 20000 annually.
Lynn Sokolow: Three luxury developments by Forte developments, including an 80 storey high rise in Miami Brickell District and projects in Clearwater Beach in Jupiter, Florida will feature our technology more than 12000, smart plug and play products, including ceiling outlets lighting fan and emergency pictures will be.
Lynn Sokolow: Slide across 400 plus units.
Steve Schmidt: A 1,000-unit mixed-use development by Jeremiah's Baron Companies will incorporate smart plug-and-play technology. with 140 units of initial product supply. This product rollout will include ceiling outlets, lighting fans, and emergency fixtures, with deliveries continuing throughout construction. A strategic partnership with JIT Electrical Supply, a leading builder supplier, will expand SkyX's footprint in electrical lighting and ceiling fan markets. JIT, which has supplied over 100,000 U.S. homes. will distribute Sky-X lighting solutions, ceiling fans, recess lights, emergency lights, exit signs, and indoor-outdoor wall lights beginning early this year.
Speaker Change: A 1000 unit mixed use development by Jeremiah is bearing companies will incorporate smart plug and play technologies with 140 units initial product supply.
Speaker Change: This product rollout will include sealing outlets lighting fans and emergence do pictures with deliveries continuing throughout construction.
Speaker Change: Our strategic partnership with J I T electrical supply a leading builder supplier will expand sky exits, what Brent and electrical lighting and ceiling fan markets.
Speaker Change: J I T, which is supplied over 100000 U S homes will distribute sky ex lighting solutions ceiling fans resets lights emergency like exit signs in indoor outdoor wall White beginning early this year.
Steve Schmidt: On the people front, a couple announcements.
Speaker Change: On the people front, a couple announcements first Huey long former Amazon E Commerce director and executive at Walmart and Ashley furniture has.
Steve Schmidt: First, Huey Long, former Amazon e-commerce director and executive at Walmart and Ashley Furniture, has joined as head of our Sky X e-platform. He will collaborate with the existing team to expand... market penetration across our 60 lighting and home decor websites and other key e-commerce channels in the U.S. and Canada.
Speaker Change: Joined as head of our Sky UX E platform, he will collaborate with the existing team to expand.
Speaker Change: Market penetration.
Ross R: Ross R 60, lighting and home decor websites and other key e-commerce channels in the U S and Canada.
Steve Schmidt: Additionally, Greg St.
Additionally, Greg St. John former head of office excuse me home depot lighting had an CEO of igloo and Cordelia lighting has been appointed president of lighting fans and smart home products.
Steve Schmidt: John, former head of Home Depot Lighting, head and CEO of Eglu and Cordelia Lighting, has been appointed president of Lighting Fans and Smart Home Products. With 30 plus years of industry experience, he will lead expansion efforts in retail, home builder, and commercial markets, overseeing partnerships with Home Depot, Wayfair, and other major retailers. Hopefully you can see that we have an awful lot going on that we feel very proud about that will provide significant momentum as we go forward.
Ross R: With 30 plus years of industry experience he will be an expansion efforts in retail homebuilder in commercial markets overseeing partnerships with home depot wave bear and other major retailers.
Ross R: Hopefully you can see that we have an awful lot going on that we feel very proud about that will provide significant momentum as we go forward.
Steve Schmidt: Thank you.
Lenny Sokolow: All right, at this point, I'd like to turn the call over to Len Sokolow, our co-CEO, and talk more about our financials and where we're going. Len. Thank you. Thank you very much, Trustee. I appreciate it.
Speaker Change: Thank you alright at this point I'd like to turn the call over to lend Sokolow, Arco's CEO and talk more about our financials and where we're going Len. Thank you.
Ross R: Yes.
Ross R: Okay.
Ross R: Thank you very much appreciate it just a recap a little bit besides the sky UX reporting 48% growth in revenues from 58 8 million in 2023 that $86 3 million in 2024.
Lenny Sokolow: Just to recap a little bit, besides the SkyX reporting the 48% growth in revenues from $58.8 million in 2023 to $86.3 million in 2024, we generated a record $23.7 million in revenue in Q4 compared to $22.2 million in Q4 of 2023. We reported, as Steven mentioned, we're reflecting the Dell working capital model. So, our cash conversion is very rapid, and we're leveraging our trade payables as we continue to grow our operation. We anticipate, as Steve mentioned, number one, the significance of projects and orders.
Ross R: We generated a record 23 point.
Ross R: 7 million in revenue in Q4 compared to $22 2 million in Q4 of.
Ross R: 2023.
Ross R: We.
Ross R: Ported.
Ross R: As Steve had mentioned.
Speaker Change: We're we're reflecting the Dell working capital model, so our cash conversion.
Speaker Change: Is very rapid and we're leveraging our trade payables as we continue to grow our operations.
Speaker Change: The we anticipate does.
Steve Schmidt: Steve mentioned number one the significance of.
Speaker Change: <unk> in orders.
Lenny Sokolow: And in addition, and in light of that, you know, we anticipate that we'll become cash flow positive during the second half of 2025.
Steve Schmidt: In addition.
Speaker Change: In light of that.
Speaker Change: We use this update that will become cash flow positive during the second half of 2025.
Lenny Sokolow: We reported a reduction in general and administrative expense by 5.7 million to 31.4 million as of December 31, 2024, from 37 million at the end of December 31, 2023. We reported, in addition, a $3.3 million decrease in total liabilities. from 23 to 24, and a 10% reduction of approximately $3.9 million in net loss. Our adjusted EBITDA loss per share is a non-gap measure amounted to $0.13 per share in 2024 as compared to $0.17 loss per share in 2023. The company also reported a 14% decrease in loss to $13.1 million in 2024 from $15.2 million in 2023 before interest, taxes, depreciation, and amortization as adjusted for share-based payments or adjusted EBITDA, which is a non-GAAP measure.
Speaker Change: We reported a reduction in general and administrative expense by $5 7 million to 31 4 million as of December 31, 'twenty 'twenty four.
Speaker Change: From $37 million.
Speaker Change: At the end of December 31, 'twenty two 'twenty three.
Speaker Change: We reported in addition, the $3 3 million decrease in total liabilities.
Speaker Change: From 23 to 24, and a 10% reduction.
Speaker Change: Of our approximately $3 9 million or a net loss.
Speaker Change: Our adjusted EBITDA loss per share.
Speaker Change: non-GAAP measured amount amounted to 13 cents per share in 2024.
Speaker Change: As compared to 17 loss per share in 2023.
Speaker Change: The company also reported a 14% decrease in loss to $13 1 million in 2024 from $15 2 million in 2023.
Speaker Change: Before interest taxes, depreciation and amortization as adjusted for share based payments or adjusted EBITDA.
Speaker Change: Which is a non-GAAP measure.
Lenny Sokolow: And of significance is that our gross profit increased 36% year over year by approximately $6.5 million.
Speaker Change: And the significance is that our gross profit.
Speaker Change: Increased.
Speaker Change: 36% year over year by approximately $6 5 million.
Rani Kohen: So with that, in light of those highlights, Rani, anything further? Thank you very much, Steve, and thank you very much, Lenny. I just would like to emphasize that, as Steve mentioned, our leading code members, Mark Early, former head of the National Electrical Code, and Eric Jacobson, former president and CEO of the American Lighting Association, are receiving great support now to the code efforts. There are several organizations that can help expedite that process, and they're working together with those teams to expedite. As Steve mentioned, we feel we met all these criteria, and there are several organizations that can help expediting that process.
Speaker Change: So with that.
Ronnie: In light of those highlights Ronnie.
Speaker Change: Anything further.
Speaker Change: Thank you very much Steve and thank you very much Lenny.
Speaker Change: Just would like to emphasize that.
As Steve mentioned are leading code members Mark early.
Speaker Change: The former head of the National Electrical code and Erik Jacobsen, former President and CEO, but American lighting Association or are receiving great support now to the code experts theres several organizations that that can help expedite that process and.
Speaker Change: We're working together.
Speaker Change: They're working together with those teams to expedite that as Steve mentioned, we feel we met all the criteria and there are several organizations that can help expedite need that product process and we also got.
Rani Kohen: We also have some leading members that are helping us on a national level, and the code team feels very confident on their new path here.
Speaker Change: Some leading.
Speaker Change: Members that are helping us on the national level and the coal team our feel that they're very confident on their new path here.
Rani Kohen: That's something we're happy about. We're obviously encouraged by quarter-to-quarter growth and revenues, and also very happy about the RAZR and the BLADE model, as Steve mentioned. Using this is is really to start penetrating with more builders. As you saw, we started announcing some collaborations with builders. And as Steve and Lenny mentioned, we anticipate to have to announce additional projects, additional builders, and some leading projects that we have here. So, overall, we feel that the RAZR and the BLADE model is really working for us. And as we said many times before, we're penetrating first and foremost, creating a new, I would say, way to enhance our sales by providing our sealing outlets.
Speaker Change: And that's something we're happy about our we're obviously encouraged by quoted to corridor growth and revenues and also very happy about the razor and blade model as Steve mentioned using this is.
Speaker Change: It's really to start penetrating with more builders as you saw.
Speaker Change: We started announcing some collaborations with builders.
Stephen Lynch: And as Stephen Lynch, and then you mentioned, we anticipate to have to announce additional projects additional builders and some leading projects that we have here.
Stephen Lynch: So overall, we feel that the razor blade model is really working for us and as we said many times before we're penetrating first.
Stephen Lynch: And foremost creating.
Stephen Lynch: And new I would say.
Stephen Lynch: Wave two to enhance our sales by providing our ceiling outlet here you can see on the left we had 24 pack we have a 24 pack ate that and four pack and one pack of the ceiling outlet related.
Rani Kohen: Here, you can see on the left, we had a 24-pack. We have a 24-pack, 8-pack, and 4-pack, and 1-pack of the sealing outlet receptacle, what we call our RAZR, and we anticipate enhancing and growing our market penetration with those RAZRs. And as Steve mentioned, we expect those RAZRs to create, or those sealing outlets to create, recurring revenues from different types of features, intentionability, and then also down the road with smart products, with monitoring, subscription, data aggregation, and AI, and other features. We also are very proud that our members here, our leading members that are helping us with the code, in addition to our leading members in other areas, we also have Paul Chernofsky, Entrepreneur of the Year, second from right here, former Entrepreneur of the Year by E&Y, is an insurance guy, and we are also encouraged with some initial discussions that we're having with insurance companies that are all waiting for our products, the entire assortment.
Stephen Lynch: Receptacle, what we call our razor and we anticipate.
Speaker Change: Enhancing and growing our market penetration with those razors and as Steve mentioned, we expect those razors to create or those feeling outlets to create.
Speaker Change: Recurring revenues from different types of fixtures are intense she has the ability and then also down the road with smart products with monitoring subscription.
Speaker Change: <unk> data aggregation and AR AI and other features.
Speaker Change: We also are very proud that our members here are our leading members that are helping us with the code. In addition to our leading members and other areas. We also have Paul's janovsky entrepreneur of the year.
Speaker Change: Second from right here, a former partner of the year by E. N Y is an insurance Guy and we are also encouraged with some initial discussions that we're having with insurance companies that are all waiting for our products.
Speaker Change: The entire assortment.
Rani Kohen: to arrive and to be accessible in several places, not only in our 60 websites, but also with Home Depot, with Wayfair, and with other places that we're working on. So we're very happy from the progress and feedback we're receiving using, again, the Blade model to penetrate and we're getting great reaction from builders and also from hotels. We're working with Chainer Group that owns over 60 Marriotts and 20 other hotels. We're working on some of their renovations that once we have some products in the market, the entire assortment, we believe we can start working towards. hopefully hotel renovations, and definitely grow our builder and our pro segments that we have.
Speaker Change: To arrive and to be accessible in several places that not only in our 60 websites, but also with home depot, what weight, there and with other places that we're working on so we're very happy from the progress.
Speaker Change: That wear and feedback receiving using.
Speaker Change: Using again, the razor blade model to penetrate.
Speaker Change: And we're getting great.
Speaker Change: Reaction from from builders and also from hotels, we're working on with Shaner group.
Speaker Change: That owns over 60 marriott's in 'twenty other hotels, we're working on some of our.
Speaker Change: There renovations said that once we have some products in the market.
Speaker Change: The entire assortment, we believe we can start.
Speaker Change: Start working towards.
Speaker Change: Hi.
Speaker Change: Hopefully hotel renovations.
Speaker Change: And definitely a rollout builds.
Speaker Change: <unk> and our pro segments.
Rani Kohen: In addition to this, as Steve mentioned, we have been blessed to join the company, Huey Long, that he's an e-commerce leading, U.S. leading member, was one of directors for Amazon they started, was also head of e-commerce and marketing for Walmart, and also was Ashley Furniture, grew their business substantially when it comes to e-commerce. And joining him, he anticipates to deliver real strong numbers with our e-commerce platform and will share more about this in the coming months. But one of his main goals is also to enhance our B2B towards the pro and the builders through our e-commerce as currently high 90% is retail and really single-digit, small single-digit is pro.
Speaker Change: That we have in addition to this we as Steve mentioned, we we have a blessed to join the company UE long did I E.
Speaker Change: E Commerce, a leading U S leading member.
Speaker Change: <unk> was one of our directors for Amazon when they started it was also a head of e-commerce and marketing for our Walmart and also with.
Speaker Change: Ashley furniture.
Speaker Change: <unk> grew their business substantially when it comes to ecommerce.
Speaker Change: And joining him he.
Speaker Change: He anticipates.
Speaker Change: To deliver a real strong numbers with our e-commerce platform and we will share more about this in the coming months.
Speaker Change: But one of the main goals is also to enhance our b to b.
Speaker Change: <unk> rewards is a pro and the builders through our e-commerce as currently.
Speaker Change: High 90% is retail and a really single digit small single digit is pro and now bringing all of this assortment P. C. As a great opportunity to grow the beat to be with the plug and play products.
Rani Kohen: And now bringing all this assortment, you see the great opportunity to grow the B2B with the plug-and-play products. We also had the former lighting head of Home Depot join us to accommodate our growth with Home Depot and we hope to share more news on other companies and other growth opportunities, including the existing one with Home Depot and others, but also with hopefully new accounts. So in general, we're happy and we're working very hard. We're growing our business and we're optimistic. Our co-team is very optimistic on some things that help and assistance we're getting here.
Speaker Change: We also had the former a lighting head of home depot join us so to accommodate our growth with home depot, and we hope to share more.
Speaker Change: Who's on other companies and other growth opportunities, including the existing one with home depot and others, but also with <unk>.
Speaker Change: Hopefully new accounts so in general we're happy and we're working very hard that we're growing our business and.
Speaker Change: We're optimistic Arco team is very optimistic and then some things that are.
Speaker Change: Help and assistance, we're getting here.
Rani Kohen: With that being said, thank you everyone and we're probably going to open up to Q&A. Thank you.
Speaker Change: With that being said I think.
Everyone and were probably going to open up to Q&A.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if.
Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star, then 2.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and he would like to withdraw. Your question. Please press Star then two and at this time, we will pause momentarily to assemble our roster.
Operator: And at this time, we'll pause momentarily to assemble our roster.
Patrick McCann: Okay, so maybe Pat from Noble. Hey, Rani, thanks for taking my questions and congrats on the on the strong quarter and the strong year. First, I just wanted to ask about It's almost a mandatory question probably is about the tariffs.
Speaker Change: Okay, So maybe a pet.
Speaker Change: Knowable.
Speaker Change: Hey, Ronny thanks for taking my questions and congrats on the strong quarter and a strong year.
Speaker Change: First I just wanted to ask about I think.
Speaker Change: So almost a mandatory question probably is about the tariffs could you just touch on.
Rani Kohen: Could you just touch on your partnership with RUI and how you may be able to avoid some of the impacts, you know, how that might be, how you might be able to mitigate some of those risks? Thank you, Pat. Last call, we also were asked the same questions and we didn't know those new tariffs will happen. But the good news is, even last call, we answered that we're already working with factories in Vietnam, in Taiwan, and now in Cambodia. And even since last year, way before those tariffs came, has opened other options, including Cambodia and Vietnam, that he can supply products from there.
Speaker Change: Your partnership for three weeks and how you may be able to avoid some of the impacts.
Speaker Change: How that might be how.
Speaker Change: You might be able to mitigate some of those risks.
Speaker Change: Thank you.
Speaker Change: Pat and we are the last call. We also was asked the same questions and we we didn't know those new tariffs.
Speaker Change: All happened, but the good news is we even last call we answered, though we're already working with.
Speaker Change: With factories in Vietnam, and Taiwan, and now in Cambodia, and even where we are since last year way before those terrorists came as the open other options, including Cambodia, and Vietnam that he can supply products from there.
Rani Kohen: And I must say the first two years of the tariffs with COVID and everything else happened, I think a lot of people didn't take it serious. But I must say that in the past two years, the Chinese manufacturers are taking those tariffs very seriously as they saw that tremendous business was lost.
Speaker Change: And I must say the first two years of the tariffs.
Speaker Change: With Covid and everything else happened I think a lot of people didn't take it serious but I must say that in the past two years.
Speaker Change: The Chinese manufacturers are taking those tariffs very seriously as they saw the tremendous business was lost.
Rani Kohen: in China and it didn't until it didn't hurt them they didn't find choices so the good news is they're already working for two years on those solutions and happens to be that that that really serves us well with the new tariffs that no one expected but really that should not affect us as we already have in place and I said in the last earning call the same so we already had it there that time and we definitely are utilizing it for now so it won't affect our business here. Thank you for the question. Right.
Speaker Change: In China, and it didnt until it didn't hurt them they didn't buying choices. So the good news is they're already working for two years and those solutions and happens to be that that it really serves us well with the new tariffs that no unexpected, but really that should not affect us as we already have in place.
Speaker Change: And I said in last earnings call. The same so where he added there that time and we definitely are utilizing it for now so it won't affect our business here, but thank you for the question.
Rani Kohen: And if I could squeeze in one more, I was just also wondering if, you know, you mentioned earlier about the mandatory approval process and that there are some organizations that could sort of help expedite that process. I was wondering if you could give any more insight into, you know, what sorts of organizations those would be, if you had any examples in mind or, you know, any more color you could give there. and the standardization? Yes. Yeah, so what we're finding out, and I don't want to mention names at that point, but we're finding out working with very high-level people that are working with our co-team, that between Mark Early and Eric Jacobson, they actually created more or influenced more standardizations in electrical and the lighting industry than anyone else in the past 35 years in the U.S.
Speaker Change: Great and if I could squeeze in one more I was just also wondering if you.
Speaker Change: You mentioned earlier about the the mandatory approval process and that there are some organizations that could sort of help expedite that process. I was wondering if you could give any more.
Speaker Change: Insight until you know what sorts of organizations those would be if you had any examples in mind or any more color you could give there.
Speaker Change: And and the standardization yes.
Speaker Change: Yeah, So what we're finding out and I don't want to mention names at that point, but what we're finding out working with very high level.
Speaker Change: People that are working with our core team that beat.
Speaker Change: Between the market early and Erik Jacobsen and they actually created more or influenced more standardization and theyre in electrical in the lighting industry than any allowed us in the past 35 years in the U S.
Rani Kohen: So, getting support for them or they feel very confident that there are several other paths of safety organizations that have a criteria to help in situations like this. And as we are starting our process in the last several weeks, the team, the co-team are very optimistic on several options and organizations that are looking into it. And some people that understand that type of business really think that we met, as Steve mentioned, all the criteria to become mandatory. And it's very obvious. There are hundreds of millions of times people go here in the U.S. on ceilings and touching hazardous wires, staying a long time on ladders, would create electrocutions, fires, and many other hazardous incidents.
Speaker Change: So getting support for them or they feel very confident.
There are several other paths of safety organizations did have a criteria to help in situations like this and as we are starting our process in the last several weeks.
Speaker Change: The team the cole team are very optimistic.
Speaker Change: And several options and organizations that.
Speaker Change: Looking into it and.
Speaker Change: And some people that understand that type of business.
Speaker Change: I really think that we a we met as Steve mentioned all of the criteria.
Speaker Change: To become mandatory in it's very obvious you know there are hundreds of millions of times people go here in the U S N and sealing and touching hazards of why Youre staying long time isn't ladders.
Speaker Change: What creates electrocutions ladder fall fires and many other hazardous incidents and now that that brought to attention of leading a very high level, leading members are there kind of a quote unquote in the state of shock and how long it's taking so our co team.
Rani Kohen: And now that that brought to attention of leading, very high-level leading members, they're kind of in a state of shock in how long it's taking.
Rani Kohen: So, our co-team I feel quite confident with that, and we hope we can announce some things in the next coming months to get some more colors, but I think some doors have opened to us. that we were not aware of or we did not have ways to explore in the past few weeks and we hope that that's going to lead to some things we can share in the near future.
Speaker Change: Feel quite confident with that and we hope we can announce some things in the next coming months and it gives them more colors.
Speaker Change: But I think at.
Speaker Change: Some doors have open to us.
Speaker Change: That we were not aware of all we did not have wasteful explore in the past few weeks and we hope that that's going to lead to some things that we can share in the near future.
Rani Kohen: Great.
Patrick McCann: I appreciate the additional commentary, Rani. I'll pass the floor. Thank you.
Speaker Change: Great I appreciate the additional commentary rounding you're all passed before.
Speaker Change: Thank you and Jack for Maxim Hi, Jack how are you.
Jack Aarde: And Jack from Maxim. Hi, Jack. How are you? Hey, Rani, doing well. Thanks for taking my questions, guys. So, it's great to see the continued momentum behind the scenes, and definitely see a good control over the operating expenses.
Speaker Change: Hey, Ronny doing doing well thanks for taking my questions guys. So it's great to see the continued momentum behind the scenes and definitely we see a good control over the operating expenses I do want to touch on the fourth quarter gross margin. So that did dip down a bit I'm. Just wondering if there's anything you could touch on there is this a blip.
Jack Aarde: I do want to touch on the fourth quarter gross margin. So, that did dip down a bit. Just wondering, because I think you touched on that. Is this a blip? Is this seasonality? And then what kind of can we expect for gross margin in the first half of the year, which might be seasonally slower? Thanks.
Speaker Change: Is it seasonality.
Speaker Change: And then what what kind of can we expect for gross margin in the first half of the year, which might be seasonally slower. Thanks.
Rani Kohen: Yes, so with the growth margins, as you know, we're starting to, and we showed it on our slides earlier today, we're starting to bring all our products in with several joint ventures that we announced, and those products have really much higher growth margins than our standard e-commerce products have. And we're blending, we're starting to blend in great products in and, and really what we have is just to put more and more products, we're going to start ceiling fans, it looks like very soon towards this summer with, with high margins, we're going to start some wall sconces, recess lights, indoor and outdoor wall sconces, including a variety of chandeliers and down lights among exit signs and emergency lights.
Speaker Change: Yes, so would the gross margins as we as you know, we're starting to and I saw that we showed in our slides earlier today, we're starting to bring all of our buybacks in a with several joint ventures that we announced in those projects had a really a much higher gross margin.
Speaker Change: Then our standard e-commerce.
Speaker Change: Alex have and we're blending we're starting to blend in.
Speaker Change: Great products in and.
Speaker Change: And really what we have is that just to put more and more products and we're gonna start ceiling fans. It looks like very soon towards the summer with with high margins, we are going to start some.
Speaker Change: Wall Sconces, recessed light indoor and outdoor wall sconces, including variety of G&A will be years, and and downright among exit signs of emergency lights, and we anticipate a very high high gross margins and.
Rani Kohen: And we anticipate very high ghost margins. And our goal is just to blend them more in our system. And that's in the process. Once we have the entire assortment and we anticipate Q2, we'll be, we probably can announce the entire assortment is in place to see that affecting our ghost margins. In addition to that, as we're doing the razor and the blade model, we're currently going with our razors, receptacles into the market. Once the blades hit the ceiling, smart ceiling fans, smart light fixtures, and other light fixtures, that also will help our ghost margins. And we also mentioned that we're working, anticipating some major projects and and major or hopefully significant orders to come.
Speaker Change: Our goal is just to blend them more in our system and that's in the process. Once we have the entire assortment and we anticipate Q2.
Bobby: It will be Bobby can announce the entire assortment is in place.
Bobby: Good to see that affecting our gross margin. In addition to that as we are doing the razor blade model. We currently are.
Bobby: Glenn It would our razors receptacles into the market once the blades hit what moved the ceiling smart ceiling fan smart light fixtures and other light fixtures.
Bobby: That also will help our gross margin and we also mentioned that we're working anticipating them.
Major projects and.
Bobby: And a major hopefully significant orders that come so all of this together, we anticipate will significantly improve our gross margins as we keep on coming with more.
Rani Kohen: So all of this together, we anticipate will significantly improve our gross margins as we keep on coming with more products from our joint ventures and collaboration.
Bobby: Products from our JV and joint ventures and collaboration.
Jack Aarde: Okay, no, that's very helpful.
Bobby: Okay. No. That's very helpful Zero NBA beyond you have cause of <unk>.
Rani Kohen: Can I zero in maybe on, you have tons of recent new announcements, obviously, there's so much to talk about, but just to not take up everyone's time, let me just drill down on the Home Depot and Wayfair collaborations real quick. Can I get an update just kind of how those relationships are performing or moving along? I think you were expecting to be in 100 initial Home Depot stores or online locations. Can you just give an update on how that's been going?
Bobby: Recent new announcements, obviously, there's so much to talk about but just.
Bobby: Not to take up everyones time, let me just drill down on the home depot and wafer collaborations real quick.
Bobby: Can I get an update just kind of how how those relationships are performing are moving along I.
Bobby: I think you're expected to be in 100 initial home depot stores or online locations can.
Bobby: Can you just give an update on how that's been going and what you expect in 2025 from maybe home depot in wafer or just in general thanks.
Rani Kohen: And what you expect in 2025 from maybe Home Depot and Wayfair just in general? Thanks. Yes, sure. As we, you know, for our e-commerce 60 websites, we're using the same products, plug-and-play products, including ceiling fans and smart ceiling fans, smart lighting, recess light, and all the emergency lights and exit signs and indoor-outdoor wall lanterns to arrive. And as they're arriving, we're also enhancing our product assortment in both Home Depot and in Wayfair. At Home Depot, we're also getting into stores, and we hope that the more stores, the more products we have online, the percentage of products going to store will grow.
Bobby: Yeah sure we as we you know for the other for our E. Commerce 60 websites, we're using the same products.
Bobby: Plug and play products, including ceiling fans and smart ceiling fans smart lighting and recessed light and all the emergency lights and exit signs in indoor or outdoor wall lenders to arrive and as Theyre, arriving we're also enhancing our product assortment in both home depot and in weight, there with home depot.
Bobby: So getting into stores and we hope that the more stores the more our products. We have on like the percentage of product is going to start a wall will grow we're working on some some in store programs that we can't disclose yet but.
Rani Kohen: We're working on some in-store programs that we can't disclose yet, but it's really, for us, it's all about to have more and more products coming in. We're very encouraged that the last several months, since our last call, every month, I would say products, more and more products are coming into the country, and we're continuing that train of products and that supply chain to grow. And the more we grow it, it's going to influence positively both our programs in Home Depot and in Wayfair. Okay, great. I appreciate the color. Look forward to watching you guys execute.
Bobby: It's really for us it's all about to have more and more product coming in we are very encouraged that the last several months since our last call every month I would say products more and more products are coming into the country and we're continuing that train of products and that supply chain to grow and the more we grow it.
Bobby: Is it going to influence positively both our programs and home depot and in waste there.
Speaker Change: Okay, Great I appreciate the color and look forward to watching you guys execute I'll hop back in the queue.
Jack Aarde: I'll hop back in the queue. Thank you.
Speaker Change: Thank you and then we have Jerry.
Brandon Rogers: And then we have Jerry. from Ross Capital.
Jerry: From Roth capital.
Bobby: Yeah.
Brandon Rogers: Hello, this is Brandon Rogers on for Jerry Sweeney. Can you guys hear me? Yes. Hello. Yes. Thanks for taking my call.
Speaker Change: Hello. This is Brendan Rodgers on for Jerry Sweeney can you hear me.
Speaker Change: Yes Hello.
Bobby: Yes.
Rani Kohen: So I just had a question about bringing on Mr. Long. Given his background, does this have any impact to your strategy? Any changes you guys are looking to implement in F2025 and any challenges on this front? Related to tariffs, you mean? No, in terms of just given his e-commerce background, is there any difference? Ah, with Huey Long? Yes, correct. Yes. So, yeah, Huey is really a veteran and well-known, actually, was the director in Amazon and created Amazon's main brand, Amazon Basics. That was their first brand out there. Today, they have 100. And he's really a U.S.-leading e-commerce expert.
Bobby: Thanks for taking my call.
Bobby: Just had a question about.
Speaker Change: Bringing on Mr long.
Bobby: His background.
Bobby: Any impact to your strategy.
Bobby: Any changes you guys are looking to implement in F. 'twenty 'twenty five and any challenges on this front.
Bobby: Well then as of tariffs do you mean.
Speaker Change: No in terms of just given his e-commerce background.
Speaker Change: Is there any differences.
Bobby: <unk>.
Bobby: Yes, correct, yes.
Bobby: Yes, so yeah healing is it really a veteran and and well known to actually was.
Bobby: He was the director and Amazon and created the Amazon main brand Amazon basics that was their first brand out there.
Bobby: Did they have 100 and he's a really a U S leading e-commerce, the experts and to bring that level.
Rani Kohen: And to bring a level, high-level talent in his level, he probably saw something into what we have. And I'll take his word. He started his career as a buyer in Circuit City, and then he opened his own sourcing company, grew it up from $0 to $800 million at that time, and then sold it to the CEO of Circuit City. And then we announced to Amazon and Jeff Bezos that he sold his company. They grabbed him. And I'm saying that because his Circuit City experience is saying, we're going to have 60 websites, and hopefully a lot of them soon, starting to do plug-and-play and down-the-road plug-and-play only.
Speaker Change: High level talent in his level, he probably saw something into what we have and I'll take his words. He started his career here is that as a buyer and circuit City and then he opened his own sourcing company.
Speaker Change: <unk> grew up from zero to 800 million at that time, and then sold at the seal of a circuit City and then we announced the Amazon and Jeff basis that he sold his company they robbed him and I'm, saying that because that is a circuit city experienced is saying, we're going to have 60 websites and <unk>.
Speaker Change: Really a lot of them soon starting to deep plug and play and down Detroit plug and play only and that's going to give us and we can still have competitive pricing that we don't need to significantly if at all to increased costs and that's kind of you said with the circuit city days like selling Tvs.
Rani Kohen: And that's going to give us – and we can still have competitive pricing that we don't need to significantly, if at all, to increase costs. And that's kind of, he said, with the Circuit City days, it's like selling TVs. The Circuit City will sell TVs with remote controls when the competitors will send them without. So, I think he's very optimistic, and we're very happy to have a guy in that caliber come and explore, and also some software options that can increase our conversion rates and competitive edge that he's working on. So, we're quite excited.
Speaker Change: Oh.
Speaker Change: Circuit City, what's Ltvs what.
Speaker Change: Remote controls when the competitors will send them without so I think he's very optimistic and we're very happy to have a guy in that caliber come and explore.
And also some software options that can increase.
Speaker Change: Increase.
Speaker Change: Our our conversion rates.
Speaker Change: And competitive edge.
Speaker Change: He's working on so we're quite excited and as I answered earlier.
Rani Kohen: And as I answered earlier, I think on another question, I think we'll have some announcements together with him in the coming months.
Speaker Change: I think on another question I think we will have some announcements together with him in the coming months.
Rani Kohen: Thank you, and if I could just ask another one, can you give me any updates on the continued expansion into the Residential Home Builders channel? I know you said that you expect 20,000 homes by end of 1Q and additional tens of thousands of units in 2025. Any additional color on this front? Yes, so as we announced, we believe by this quarter, we're going to be around 20,000 units slash homes with our products and we have indications and started and will supply, we believe, tens of thousands, hopefully on the higher side of tens of thousands, but additional pipelines that we have here and that's with a variety of projects and we hope to be able to announce some of them in the coming months.
Speaker Change: Thank you and if I could just ask another one.
Speaker Change: Can you give me any updates on the continued expansion into the residential homebuilders channel.
Speaker Change: You said that you expect 28000 homes by the end of <unk> and additional tens of thousands of units in 2025 and any additional color on this front.
Speaker Change: Yes, so as we announced we believe by this.
Speaker Change: Quarters are we going to be around 20000 units slash homes are what are.
Speaker Change: Our products and we.
Speaker Change: Have indications and started oh well supply.
Speaker Change: We believe tens of thousands hopefully on the higher side of tens of thousands, but additional pipelines that we have here and that's with variety of projects and we hope to be able to announce some of them in the coming months, but we really have great feedback from builders.
Rani Kohen: But we really have great feedback from builders, pro segments, hotel owners. I don't know if we mentioned this, but not only the Shainer Group with 60 hotels invested with us and 60 Marriott and probably 20 Hiltons and Intercontinentals that they own globally and we hope to grow with them globally. But we also have one of our, that round, another leading investor that owns Waldorf Astoria and several, maybe 10 or more Hiltons that's also very excited. So, for us, it's just to get the products here and it's coming. It's slowly but surely.
Speaker Change: Our pro segment hotel owners.
Speaker Change:
Speaker Change: Don't know if we mentioned this but not only are the shaner Gould with 60 hotels.
Speaker Change: Invested with us but.
Speaker Change: And 60, Marriott and probably 'twenty Hilton and Intercontinental that they own globally, and we hope to grow with them globally, but we also have one of her that round another leading investor that owns Waldorf Astoria, and several maybe 10 or more hiltons. That's also very excited so.
Speaker Change: For us is just to get the products here.
Speaker Change: And it's coming it's a you know slowly, but surely and again I want to remind everyone that as a razor blade model. The razor always goes first that feeling receptacle and sometimes it can take you know three to six to nine months and filled the blades come in and that's where the revenue growth is anticipated. So we're very encouraged.
Rani Kohen: And again, I want to remind everyone, it's a razor and a blade model. The razor always goes first, the sealing receptacle. And sometimes it can take, you know, three to six to nine months until the blades come in and that's where the revenue growth is anticipated. So, we're very encouraged on our razor and the blade model and we think that this program is really a great success for us. We just need to get more blades, as we say, more products down here to accommodate demand.
Speaker Change: On the razor and blade model and we think this is a.
Speaker Change: Program is really a great success for us and we're just a lethal to get more more blades as we say more products down here.
Speaker Change: To accommodate the.
Speaker Change: The man.
Rani Kohen: Thank you and then if I could just ask one more. You mentioned cash flow positive during the second half 2025. Can you just walk me through what you need to accomplish to get to cash flow positive? You mentioned significant projects and orders. Any more to add there? So it's a combination of orders that we anticipate in the razor and the blade model to more blades, more fixtures into the market and growing our collaborations that we announced on higher gross margins and getting more products here. So our management is confident that we have in the second half of the year a path to get cash flow positive as we are going to get more products and more projects out there and anticipate them announcing some projects and orders in combination with our collaborations that all are in the direction of increasing gross margins what we anticipate and expect that that can bring us to cash flow positive in the second half of 2025.
Speaker Change: Thank you and then if I could just ask one more.
Speaker Change: You mentioned the cash flow positive during the second half 2025.
Speaker Change: Can you just walk me through what do you need to do accomplish that gets cash flow positive you mentioned significant projects and orders any more to add there.
Speaker Change: Yeah.
Speaker Change: So it's a combination of of orders that we anticipate in the razor blade model to more blades more fixtures into the market and growing our collaboration with <unk> that we.
Speaker Change: Announced on higher gross margins and getting more products here So management.
Speaker Change: Is confident that we have you know in the second half of the year a path to get cash flow positive as we are going to get more products and more projects out there.
Speaker Change: And anticipate them announcing some.
Speaker Change: Projects and orders.
Speaker Change: In combination with our collaboration that all are in the direction of increasing gross margins, what we anticipate and expect that that can bring us to a cash flow positive in the second half of 2025.
Brandon Rogers: Awesome.
Brandon Rogers: Thank you, Rani. I appreciate it.
Speaker Change: Awesome. Thank you Ronny I appreciate it thanks for taking my call.
Operator: Thanks for taking my call.
Operator: Sure.
Speaker Change: Sure.
Rani Kohen: Okay, thank you very much everyone. We're looking forward to talk to you more and hopefully we can share more things that we're doing once we may come to fruition but we're quite confident in the company's direction.
Speaker Change: Okay. Thank you very much everyone.
Speaker Change: Looking forward to.
Speaker Change: Talk to you more and hopefully we can share more things that we're doing.
Speaker Change: Once we make.
Speaker Change: It may come to fruition, but we're.
Speaker Change: Quite confident in the company's direction.
Rani Kohen: And we'd like to say thank you, Steve Schmidt, our president, and our co-CEO, Lenny Sokolow. And thank you for participating in that call. Looking forward to our next call. Thank you.
Lenny Sokolow: And we would like to say thank you Steve Schmidt, our President then our co CEO Lenny Sokolow and thank you for your participating in that call and looking forward for our next call. Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].