Armlogi Holding Corp (BTOC) 2024 Q4 法說會逐字稿

Thank you for standing by. Welcome to the Armlogi Holding Corp fiscal year 2024 earnings call. Please note that today's call is being recorded. I will now turn the meeting over to Matthew Abenante, Investor Relations for Armlogi Holding Corp.

Thank you operator, and thanks to everyone, joining us today for Armlogi's earnings call to discuss the full year results of 2024. Please note that our earnings press release was issued earlier today and our Annual report on Form 10-K was filed with the Securities and Exchange Commission. Both are available on the Investor Relation section of our website at ir.armlogi.com.

Joining us on the call today are Aidy Chou, Chairman and Chief Executive Officer of Armlogi; along with Ian Zhou, Chief Financial Officer; and [Scott Chu], Board Secretary.

The format of our call will consist of comments provided by management followed by a question and answer session addressing the questions that were submitted by investors. We thank everyone for submitting these questions.

Now, before we get started, I'm going to review the Safe Harbor statement. Please note that today's discussion will contain forward-looking statements. In addition from time to time, we are, our representatives may make forward-looking statements orally or in writing.

We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including our financial performance and projections, our growth in revenue and earnings and our business prospects and opportunities.

You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as may, should, expect, anticipate, contemplate, estimates, intent, believes, plans, projected, predict, potential or hopes, or the negative of these or similar terms.

In evaluating these forward-looking statements, you should consider various factors including our ability to change the direction of the company, our ability to keep pace with new technology and changing market in the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement.

Forward-looking statements are only predictions. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties or assumption. The forward-looking events discussed on this call and other statements made from time to time by us or our representatives may not occur and actual events and results may differ materially and are subject to risks uncertainties and assumptions about us.

And with that, I would like to hand the call to our first speaker, Aidy Chou, Chairman and Chief Executive Officer of Armlogi. Good afternoon, Aidy.

Good afternoon, and thank you all for joining us for our fiscal year 2024 (inaudible) call in which we will discuss results for the fiscal year ending June 30, 2024. Armlogi is a dynamic and a rapidly growing US space, warehousing and logistics service provider.

We offer a comprehensive suite of a supply chain solution [encompassing] warehousing management, and our fulfillment catering to the evolving needs of the business in an increasingly interconnected world. The e-commerce [blown] built up by the internet and the globalization has created a landscape where merchants increasingly seek to expand their reach through international platforms like Amazon and eBay.

However, this expansion comes with a logistic complexity particularly in cross-border shipping, long delivery time, high damage rates, and the peak season conjunction as formidable challenger. Armlogi solution is [prejuti] impact from overseas warehouses by establishing local storage facilities in target countries with cross-border merchant. So export, those were involved insurance with and secure delivery to consumer up some order placement.

This approach is specifically reduce delivery time and the damage rate enhancing the overall customer experience. Our commitment to excellence is being reflected in our one-stop warehousing and logistics service talented to cross-border e-commerce merchants outside the US [on my secretary] located warehouse. Infact over the state of our technology provide a nationwide footprint and then [temple] storage space.

We offer a full section of a service from customer broker to transportation and a comprehensive warehouse management. Ensure seamless operation for our clients. Our dedication to quality is a waiter with (inaudible) to ISO 9001 standard. Ensure tight inventory accurate and providing 24/7 customer support.

This commitment coupled with our large volume of processed goods allows us to offer capacity of a service and a delivery fees of our value of proposition. Technology is the part of our operations. Our propriety platform anchor it in the Amazon web services account empowers us to management shipment efficiently, provide a real time update and ensure the integrity of the deliveries.

So this technology driven approach not only reduce cost but also minimize the errors, enhancing customer satisfaction. As we look ahead, our global strategy are clear and ambitious. We will expand our diversify our customer base targeting key marketing in China, Southeast Asia, and Mexico.

We are enhancing our customer supply chain efficiency by broadening our solution and services, including expanding our international [ocean] freight capability. We will continue to invest in cutting edge supply chain technology, leveraging AI, data analyst and a smart system to optimize operations and deliver value insight. And we will pursuly to expand our capability and generated a return.

Now, I will now turn the call over to Ian Zhou, our Chief Financial Officer of his remarks.

Thank you Aidy. We achieved several strategic and operational milestone in fiscal years of '24 and subsequent to the year-end which I will go through now. In May, we closed our initial public offering of 1.6 million shares of common stock at a public offering price of $5 per share. For a total of [$8 million] of gross proceeds to the company before deducting underwriting discounts and offering expenses.

Net proceeds from the offering are being used to expand the company's warehouse network and develop warehousing and logistic services, international ocean freight services and port trucking services among other things.

In addition, we signed a list for new 733 and 200 square foot warehouse located nearby the port of Savannah in Georgia. In August, that warehouse known as the SAV1 becoming fully operational and has quickly become the biggest and busiest among our night warehouses.

SVA1 is equated with the logistic technology and is designed to support a wide range of supply chain activities from. Storage and distribution to complex logistics solution. A strategic location and one of the business port in the United States provide optical assets for importer and exporter. Future enhancing Armlogi service offering.

Since June 2024, the facility has handled over 800 container shipment and maintains over 70% occupancy. We also become an authorized warehouse provider for seller on the Temu marketplace in June. Through this collaboration, we will offer Temu resellers streamlined asset to our warehousing facility until world logistics service to provide fast order fulfillment and improve inventory management.

This collaboration will allow us to serve more e-commerce sellers and will allow team sellers to leverage our large expertise to improve delivery speed, reduce operational costs, and enhance overall customer experience.

Furthermore, we announced a strategic partnership with Massimo Group, a manufacturer and distributor of powersports vehicles and pontoon boats. To provide streamline warehousing and logistics service for the assembly and distribution of vehicles, with the aim of meeting the rising market demand across key us regions.

This collaboration has resulted in the integration of Massimo quality control standards into logic distribution process, improving our service reliability. Under the terms of agreement, we will manage the reception of container shipment containing Massimo's vehicle kits from Asian suppliers.

We will provide asset to our facility located throughout the US which are equipped with technology and specialized equipment necessary for handling and storage, large, and bulky items, adhering to the ISO 9,001 industrial standards,

Massimo will conduct vehicle assembly within our warehouse while we will oversee inventory management, storage service and the logistic required for delivering the assembly vehicle to their final order destination across the United States.

In July, we announced the leasing of a new 60,000 square feet warehouse in the city of industry, California to support our expansion trucking operations and our partnership with Massimo Group. The facility which is equipped with state of art, infrastructures and technology will provide additional storage and further streamline the distribution process.

Subsequent to the end of official year of 2024, we announced the expansion of our trucking department in July doubling its capacity and extension service to key clients including Amazon. We enhance our logistic service and expand our customer base particularly in the [esport] logistic industry, investments in staffing, training and equipment aim to meet rising demand and improve our service quality.

In August, we announced our participation in the low carbon fuel standard program including electrical forklift across our California warehouse operations to reduce greenhouse gas and emissions. The initiative underscore our commitment to embrace the renewable energy technologies and our role as a forward thinking organization that prioritize substantially in its operations.

In addition, our participation in this program qualify for monthly energy rebate. This viable strategy and operational milestone, achieved fiscal year 2024 and beyond will allow us to better serve our existing clients as well as expanding our reach to the new market. Now, I will turn it to Scott Chu, Board Secretary for Armlogi to provide an overview of our financial performance.

Thank you, Ian, and good afternoon everyone. For further information, regarding our four year 2024 financial results and disclosures. Please refer to our annual release and the annual report on Form 10-K start with the SEC. Total revenue for the full year and June 30, 2024 were $167 million, up 23.6% from $135 million in fiscal year 2023.

Our transportation services segment reported revenue of $115.3 million, an increase of 18.8% from $97 million in fiscal year 2023. The increase was driven by the rapid expansion of our business in 2023, as we expanded our warehouse operational capacities in California and New Jersey.

This segment comprising third-party carrier services to our customers, our warehousing services segment generated $51.5 million, a 38.1% increase from $37.3 million in fiscal year 2023. This growth was driven by the growth in our transportation services. This segment comprises inventory management and the storage offerings.

All the services segment generated revenue of $0.6 million in fiscal year 2024 which was a decrease of $0.5 million compared to previous years. The segment by delivery consists of customs brokerage services. Our cost of sales were $148.9 million in fiscal year 2024, an increase of 36.2% or $39.6 million compared with the $109.3 million in fiscal year 2023.

This increase in cost is preliminary driven by growth in transportation and warehousing services leading to higher expenses across warehouse operations, particularly rental, labor, and the operational expenses. Gross profit margins decreased from 19.1% in fiscal year 2023 to 10.8% in 2024. Although the profit margin of our transportation services which include our ocean freight and the truck deliveries remain stable or slightly higher compared to 2023. Our profit margin for our warehousing services decreased during the same period.

General and administrative expenses increased by $2.2 million to $10 million for fiscal year 2024 from $7.8 million for fiscal year 2023 representing an increase of 28%. The increase was due to increased administrative activities for different related to office supplies and the repairs and maintenance to accommodate our business expansion.

Our net income was $7.4 million and $13.9 million for the full year end, June 30, 2024 and 2023 respectively. In conclusion, we execute several important strategic initiatives and deliver strong revenue growth in fiscal year 2024. Looking ahead, we are confident in our ability to navigate the evolving logistic landscape and the continued driving value for our shareholders and our partners.

Our success would not be possible without our hardworking employees or your customers and the valuable shareholders. Thank you for your continued support and belief in our vision. We look forward to updating you on our business, during future earning calls.

Back to you, Mate.

Thank you, Scott. We will now move to the question-and-answer portion of the call. Again thank you to everyone who has submitted questions. Our first question, while Armlogi growth is impressive, could you elaborate on the current competitive landscape? Who are your main competitors, and how does Armlogi differentiate itself in this space?

That's a great question. Thank you, Mate. The warehousing and logistics industry is indeed highly competitive. We replace competition from both established players and emerging startups. However, our logic differentiates itself through several key factors. Firstly, our focus on quality evident in our ISO 9001 certification and high inventory accuracy sets us apart.

Secondly, our ability to handle bulky items efficiently sent to our specialized warehouse infrastructures and technology give us a unique advantage. Finally, our comprehensive one-stop solution including international ocean freight and advanced supply chain technology offer a level of convenience and value that many competitors struggle to match.

Can you address some of the potential challenges related to your expansion plans, including the complexity of international expansion, the need for significant capital investment and the potential for execution risk?

Sure. We are fully aware of the challenge associated with the extension. International expansion require careful navigation of regulatory and cultural differences. We are mitigating this risk by conducting the thorough market research and adopting a serious approach to expansion. Capital investment is indeed necessary. But we have a strong track record of financial management and are open to exploring various funding options to support our growth.

As for execution risk, we have a seasoned management team with a proven ability to execute complex projects. We are also invested in robust project management system and processes to ensure a smooth implication.

And our last question, Armlogi emphasis on technology is commendable. However, could you provide more specifics on the expected return on investment from these technology investments? And how will these investments translate into tangible benefits for the company and its shareholders?

That's an excellent question. Our technology investments are strategic and aim to driving a long-term substantial growth. We expect this investment to yield a significant ROI to several advantage. Firstly, improving efficiency and automation will lead to cost saving and increasing productivity. Secondly, advanced data analytics and supply chain optimization will enable us to make more informed decisions leading to better inventory management.

Faster delivery time and enhance our customer satisfaction. Finally, our technology platform will open up our new revenue stream, such as offering value added services to our customers and partners. This benefit will unlimited translate into the increased profitability and shareholder value.

Well, thank you Ian, and thanks to everyone for participating on today's call. We look forward to providing additional updates in the near future. In the meantime, we can be reached at info@armlogi.com or you can contact me at matthew@strategic-ir.com.

Ladies and gentlemen, that concludes our conference for today. Thank you for your participation. You may now disconnect.