Algorhythm Holdings Inc (RIME) 2024 Q1 法說會逐字稿

Good afternoon, everyone, and welcome to the Singing Machines First Quarter Fiscal 2024 financial results earnings call. My name is Travis, and I will be your operator. As a reminder, today's call is being recorded. We have a brief safe harbor and then we'll get started.

大家下午好，歡迎參加 Singing Machines 2024 財年第一季度財務業績收益電話會議。我叫特拉維斯，我將成為您的接線員。提醒一下，今天的通話正在錄音。我們有一個短暫的安全港，然後我們就開始。

This call contains forward-looking statements under U.S federal security laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements, included in our current and periodic filings.

本次電話會議包含美國聯邦安全法規定的前瞻性聲明。這些陳述存在風險和不確定性，可能導致實際結果與歷史經驗或當前預期存在重大差異。對一些風險和不確定性的描述可以在我們向美國證券交易委員會提交的報告中找到，包括我們當前和定期提交的文件中包含的警告聲明。

I'll now turn the call over to Gary Atkinson, company CEO. Please go-ahead sir.

我現在將把電話轉給公司首席執行官加里·阿特金森 (Gary Atkinson)。請先生繼續。

Thank you. Good afternoon, everybody. I want to start by thanking everybody for taking the time today to listen in and participate in our first quarter 2024 earnings call.

謝謝。大家下午好。首先，我要感謝大家今天抽出時間聆聽並參與我們的 2024 年第一季度財報電話會議。

Joining me today on today's call, I also have Lioneal Marquis company CFO. Before I turn the call over to Lionel, to walk everyone through our results of operation, I would like to take a moment to help frame the unique nature of our first quarter results for fiscal 2024 versus the same time period last year. For those that have followed our company, you may recall we had a banner first quarter last year, we booked over 11 million in sales, and this was due to three main factors.

今天參加今天的電話會議的還有 Lioneal Marquis 公司的首席財務官。在我將電話轉給萊昂內爾之前，為了向大家介紹我們的運營業績，我想花點時間幫助了解我們 2024 財年第一季度業績與去年同期相比的獨特性。對於那些關注我們公司的人來說，您可能還記得去年第一季度我們的業績非常出色，我們的銷售額超過了 1100 萬，這主要歸功於三個因素。

Last year during the first quarter, we were successful in expanding our karaoke assortment into Walmart's consumer electronics departments, to ramp up and fill an incredible amount of linear shelf space at thousands of locations throughout the country. It required a very large amount of product. This resulted in a single purchase order to set the stores in excess of $3.1 million.

去年第一季度，我們成功地將卡拉 OK 品種擴展到沃爾瑪的消費電子產品部門，在全國數千個地點增加並填滿了令人難以置信的線性貨架空間。它需要大量的產品。這使得商店的單筆採購訂單金額超過 310 萬美元。

Secondly, coming off the heels of an unprecedented supply chain challenges in 2021, the company elected to convert all of its business with Sam's Club to an FOB China program, this gave our customer the ability to leverage its buying power to get better freight efficiencies. As a result of that, we booked 3.5 million sales at that time the product less the docks in China and not one it left our warehouse facility in California. This accelerated sales almost three months earlier and into our first quarter of last year.

其次，在經歷了2021年前所未有的供應鏈挑戰後，該公司選擇將其與山姆會員店的所有業務轉換為FOB中國計劃，這使我們的客戶能夠利用其購買力來獲得更好的貨運效率。結果，我們當時預訂了 350 萬件產品的銷量（減去中國的碼頭），而沒有一件產品離開我們在加利福尼亞州的倉庫設施。這使得我們的銷售提前了近三個月，並進入了去年第一季度。

And finally, the majority of the increase in sales for the first quarter of fiscal 2023, was the result of retailers trying to restock shelves that were empty due to a very strong 2021 holiday season and supply chain struggles that prevented inventory from reaching the retailer. With this in mind, we have returned to our historically normal rhythm of just-in-time sales.

最後，2023 財年第一季度銷售額增長的大部分原因是零售商試圖補充由於 2021 年假期旺季而空置的貨架，以及供應鏈困難導致庫存無法到達零售商的結果。考慮到這一點，我們恢復了歷史上準時銷售的正常節奏。

Retailers continue to release orders, particularly in August, and we expect September and October be extremely active as we compressed six to seven months of sales into a 12-week timeframe. This has many benefits for us, as we've been able to keep inventories lean, free up cash and reduce the risk of overstock. We anticipate this change will help to reduce many of the frictional costs that take away from net sales and gross margins namely returns, co-op fees and markdown incentives. Overall, we are pleased with our operational performance, and we are optimistic on current holiday season.

零售商繼續釋放訂單，特別是在 8 月份，我們預計 9 月和 10 月將非常活躍，因為我們將 6 到 7 個月的銷售壓縮到 12 週的時間範圍內。這對我們來說有很多好處，因為我們能夠保持庫存精簡、釋放現金並降低庫存過剩的風險。我們預計這一變化將有助於減少淨銷售額和毛利率中的許多摩擦成本，即回報、合作費和降價激勵。總體而言，我們對我們的運營業績感到滿意，並對當前的假期持樂觀態度。

With this context in mind, I would now like to turn the call over to Lionel Marquis, our CFO to present greater details on the results of operations for fiscal 2023.

考慮到這一背景，我現在想將電話轉給我們的首席財務官萊昂內爾·馬奎斯 (Lionel Marquis)，他將提供有關 2023 財年運營業績的更多詳細信息。

Thank you, Gary. Good afternoon, everyone. And without further delay, I'd like to walk through the results of operations for our first quarter ended June 30, 2023. Revenuesp for the three months ended June 30, 2023, were $2.6 million as compared to $11.7 million for the same period in the prior year. Gary just provided a great deal of color on the dynamics of the respective quarters from a comparative perspective.

謝謝你，加里。大家下午好。我想立即概述一下截至 2023 年 6 月 30 日的第一季度的運營結果。截至 2023 年 6 月 30 日的三個月的收入為 260 萬美元，而 2023 年同期為 1,170 萬美元。前一年。加里剛剛從比較的角度對各個季度的動態提供了大量的色彩。

I would like to simply add that for many years our first quarter sales were historically a low point for us. Fourth quarter for our company is often very slow immediately after Christmas and the retail big box buyers are not normally very active until late spring or during our first quarter. It's that time that they typically begin the release orders for shipments and we normally stage product in Southern California for final fulfillment in late summer to early fall.

我想補充一點，多年來我們第一季度的銷售額一直處於歷史低點。我們公司的第四季度通常在聖誕節後非常緩慢，零售大賣場買家通常直到春末或第一季度才非常活躍。他們通常會在這個時候開始下達發貨訂單，而我們通常會在南加州暫存產品，以便在夏末至初秋期間完成最終交付。

As a result of this lead time and buying pattern we usually book revenue heavily from late July through late October, sometimes into the first week in November for last minute orders, are an extremely seasonal business model, and we rarely -- very rarely generate more than $3.5 million in sales in our first quarter. With the exception of the last fiscal year, our previous three year annual filings have disclosed that between 81% and 86% of our net sales were shipped during the our second and third quarters, beginning in July and ending in December.

由於這種交貨時間和購買模式，我們通常會從7 月下旬到10 月下旬大量預訂收入，有時會在11 月的第一周進行最後一刻的訂單，這是一種季節性很強的商業模式，而且我們很少- 很少產生更多收入第一季度銷售額超過 350 萬美元。除上一財年外，我們前三年的年度報告顯示，我們 81% 至 86% 的淨銷售額是在第二和第三季度（從 7 月開始到 12 月結束）期間發貨的。

We'll talk about gross profit for the first quarter of fiscal 2024 was approximately $900,000, yielding a 32.3% gross margin as compared to approximately $3.2 million and 27.2% margins -- gross profit margins in the first quarter of 2023. Overall, the difference in dollar terms is due to the differences in sales generated, as we have already detail.

我們將討論 2024 財年第一季度的毛利潤約為 90 萬美元，毛利率為 32.3%，而 2023 年第一季度的毛利率約為 320 萬美元，毛利率為 27.2%。總體而言，差異以美元計算是由於所產生的銷售額差異所致，正如我們已經詳細介紹的那樣。

However, the improvement in the margins in the first quarter of this year is primarily due to the fact that sales in this quarter did not include any material direct import shipments from China. Typically when we were responsible for the logistics to bring the product into the U.S and then fulfill from California were able to secure at least 2% or 3% points in improved margin this is a key factor for the improvements this year.

然而，今年第一季度利潤率的改善主要是由於本季度的銷售不包括任何從中國直接進口的材料。通常，當我們負責將產品帶入美國，然後從加利福尼亞發貨的物流時，能夠確保利潤率提高至少 2% 或 3%，這是今年改進的關鍵因素。

Product mix also played a role in the improvement as well as direct, as well because direct import shipments generally include holiday promotional products -- shipments of holiday promotional products, and they are just normal yield, a lower gross profit margin.

產品結構也起到了改善的作用，還有直接，因為直接進口出貨一般都包括節日促銷產品——節日促銷產品的出貨量，而且它們只是正常產量，毛利率較低。

As well as operating expenses during the first quarter of 2024, operating expenses increased $3.3 million compared to $3.0 million during the first quarter of the prior year and the $300,000 million increase in expenses was almost entirely due to one-time expenses relating to the closure of our Ontario, California logistics hub.

除 2024 年第一季度的運營費用外，運營費用增加了 330 萬美元，而上一年第一季度為 300 萬美元，費用增加 3000 億美元幾乎完全是由於與關閉我們的安大略省、加利福尼亞州物流中心。

We elected to move to an entirely outsourced shipping model for North American Operations. We see this as a key way to contain logistics expenses in the coming years based on rising occupancy and labor costs that we want to proactively minimize and shift to a variable cost -- variable cost of logistics model, rather than carrying fixed overhead costs during non-peak periods,

我們選擇將北美業務轉向完全外包的運輸模式。我們認為這是未來幾年控制物流費用的一個關鍵方法，因為我們希望主動減少佔用率和勞動力成本的上升，並轉向可變成本——物流模式的可變成本，而不是在非固定期間承擔固定的管理費用。 - 高峰期，

Liquidity as of June 30, 2023, we had cash on hand of approximately $1.6 million, and we had approximately $2.8 million available on our senior secured line of credit, based on eligible collateral. The Company reduced its overall work -- is overall working capital investments by approximately $1.2 million in the quarter as a management team focused heavily on inventory management and building and maintaining a liquid short term capital position.

截至 2023 年 6 月 30 日，我們手頭現金約為 160 萬美元，根據合格抵押品，我們的高級擔保信貸額度上有約 280 萬美元可用資金。由於管理團隊主要專注於庫存管理以及建立和維持流動性短期資本頭寸，公司本季度的總體工作量（即總體營運資本投資）減少了約 120 萬美元。

The company also significantly reduced its short-term liabilities, current liabilities of June 30, 2023, decreased by approximately $800,000 the 5.5 million during the first quarter of 2024 -- fiscal year 24. During the next 12-month period, we plan on financing our working capital needs primarily from a combination of vendor financing, our revolving line of credit, proceeds collected after the fiscal year ended from the completion of our ATM offering -- our ATM stock offerings.

該公司還大幅減少了短期負債，即截至2023 年6 月30 日的流動負債，在2024 年第一季度（第24 財年）期間減少了約550 萬美元，減少了約80 萬美元。在接下來的12 個月期間，我們計劃融資我們的營運資金需求主要來自供應商融資、我們的循環信貸額度、財政年度結束後完成我們的 ATM 發行（我們的 ATM 股票發行）所收取的收益。

The Company believes that its cash on hand, working capital, net of cash, cash expected to be generated from its operating forecast, along with availability of cash for this credit facilities will be adequate to meet the company's liquidity requirements for at least 12 months from the filing of this report.

公司認為，其手頭現金、營運資金（扣除現金後）、預計從經營預測中產生的現金，以及可用於此信貸安排的現金將足以滿足公司自成立以來至少 12 個月的流動性需求。提交本報告。

That is my report on finance. I'd like to turn the call back over to Gary.

這就是我的財務報告。我想把電話轉回加里。

Perfect. Thank you, Lionel. I would now like to provide a brief summary on our outlook for our key upcoming second and third fiscal quarters. I am very pleased to announce that all of our existing retailers and distributors in our international territories remain excited about the karaoke category and have committed again to programs for this coming fall and holiday season.

完美的。謝謝你，萊昂內爾。我現在想簡要總結一下我們對即將到來的第二和第三財季的關鍵展望。我很高興地宣布，我們國際地區的所有現有零售商和分銷商仍然對卡拉 OK 類別感到興奮，並再次承諾為即將到來的秋季和假期推出計劃。

Now that -- this is a very important point and I want to mention it again, all of our existing retailers and distributors have recommitted again to programs for this fall and holiday season. In fact, a number of our customers in international territories are committing to significantly larger programs, including some key customers in Canada that have switched from a competitor brand to singing machine brand products for this year.

現在，這是非常重要的一點，我想再次提及，我們所有現有的零售商和分銷商都再次承諾今年秋季和假期的計劃。事實上，我們在國際地區的許多客戶正在致力於規模更大的項目，其中包括加拿大的一些主要客戶，他們今年已從競爭對手品牌轉向歌唱機品牌產品。

I also want to note again, something that we touched upon in our last earnings call, and that is to say that our inventory pipeline within our retail channels is particularly lean right now. Retailers have been cautious in ordering so far this year, which is evidenced by last year's fourth quarter and this year's first quarter results. But the positive news to this, is that our customers do not have a big buildup of inventory that they need to sell through first, before placing their committed orders for this year.

我還想再次指出，我們在上次財報電話會議中提到的一些事情，也就是說，我們零售渠道內的庫存管道目前特別精簡。今年到目前為止，零售商對訂購一直持謹慎態度，去年第四季度和今年第一季度的業績就證明了這一點。但對此的積極消息是，我們的客戶在下今年的承諾訂單之前，不需要先銷售掉大量庫存。

Further, we continue to develop new products and innovate on new karaoke technology. Our relationship with our strategic partner Stingray, continues to deepen as we anticipate to roll out a major new update to our streaming karaoke app this coming holiday season. We are also introducing over five new karaoke products this year, including a totally redesigned flagship Wi-Fi streaming product, scheduled to go into Costco U.S later this fall.

此外，我們不斷開發新產品並創新卡拉OK新技術。我們與戰略合作夥伴 Stingray 的關係繼續加深，我們預計將在即將到來的假期期間對我們的流媒體卡拉 OK 應用程序推出重大更新。今年我們還將推出超過五種新的卡拉 OK 產品，其中包括一款完全重新設計的旗艦 Wi-Fi 流媒體產品，計劃於今年秋季晚些時候在美國 Costco 上市。

We continue to remain the captain of the karaoke category and we are not slowing down our product development process. In fact, you will see Singing Machine featured in many prominent national promotions and ads this year.

我們繼續保持卡拉 OK 領域的領先地位，並且我們不會放慢產品開發進程。事實上，今年您會在許多著名的全國性促銷和廣告中看到 Singing Machine 的身影。

Finally, I would like to provide a brief update on our emerging growth opportunities in the hospitality and automotive space. Over the past few months, we have gradually introduced the concept, that we believe we can leverage our experience, our scale and our expertise in the karaoke space to launch new complementary business segments beyond our core consumer electronics business.

最後，我想簡要介紹一下我們在酒店和汽車領域新興的增長機會。在過去的幾個月裡，我們逐漸引入了這樣的概念，即我們相信我們可以利用我們在卡拉OK 領域的經驗、規模和專業知識，在我們的核心消費電子業務之外推出新的互補業務領域。

We believe we will be able to begin providing greater detail and achieve meaningful milestones in the near term, particularly in the hospitality space. We have spent a great deal of time and energy preparing for this opportunity, and we are excited to begin providing additional insight into our growth strategy. We believe these new areas present a unique opportunity to maintain our strong core business, while at the same time, launching a series of exciting, high-growth potential projects before the end of this current calendar year. We are truly excited and look forward to providing additional information to shareholders soon.

我們相信，我們將能夠在短期內開始提供更多細節並實現有意義的里程碑，特別是在酒店領域。我們花費了大量的時間和精力來準備這個機會，我們很高興開始提供有關我們增長戰略的更多見解。我們相信這些新領域為維持我們強大的核心業務提供了獨特的機會，同時在本日曆年年底之前推出一系列令人興奮的、具有高增長潛力的項目。我們真的很興奮，並期待盡快向股東提供更多信息。

So, at this point, I would like to turn the call over to our moderator, see if there's any additional questions.

因此，現在我想將通話轉給我們的主持人，看看是否還有其他問題。

At this time. (Operator Instructions). We do have a question from Dodge Richard, private investor.

此時。 （操作員說明）。我們確實收到了私人投資者 Dodge Richard 的提問。

Well, can you hear me, I'm sorry, I'm driving at the moment and apologize.

好吧，你能聽到我說話嗎，對不起，我現在正在開車，抱歉。

(Inaudible) It sounds like the current holiday season will be in line with last year was very strong. How should we view this developing?

（聽不清）聽起來當前的假期將與去年一樣非常強勁。我們應該如何看待這一發展？

I'm sorry, the question broke up a little bit if I can reframe it. Were you asking a comparison between last year's holiday season and this year's holiday season and our expectation?

抱歉，如果我可以重新組織一下，這個問題就有點破裂了。您是想問一下去年的假期和今年的假期以及我們的預期之間的比較嗎？

Yes, that's basically, I mean it was last year, wasn't that -- wasn't very strong. So how do you compare it to? were you expecting this?

是的，基本上，我的意思是去年的情況，不是嗎——不是很強勁。那麼你如何比較它呢？你期待這個嗎？

Okay, perfect, great question. Thank you for asking that. So, I can jump on this line, the way we're -- the way that we our thinking about this year compared to last year, I would say last year we were coming off of a very strong holiday season the year before and so retailers were coming out of a strong holiday season. They had experienced a lot of interruptions in getting inventory delivered due to a lot of supply chain problems.

好的，完美，很好的問題。謝謝你這麼問。所以，我可以跳上這條線，我們的方式——我們對今年與去年相比的思考方式，我想說，去年我們剛剛度過了前年非常強勁的假期，所以零售商剛剛度過了強勁的假日季節。由於許多供應鏈問題，他們在交付庫存方面經歷了多次中斷。

And so when we entered last year, they were coming with very aggressive forecasts for sales. And so typically what we do is, when we get forecasts from our customers, we will go ahead and build inventory for those forecasts. And as we did that, I think the broader macro-economic climate changed pretty quickly. You know, we started seeing rise in inflation, interest rate spike, consumer demands dropped significantly as we enter the holiday season.

因此，當我們去年進入時，他們對銷售做出了非常積極的預測。因此，我們通常所做的是，當我們從客戶那裡得到預測時，我們將繼續為這些預測建立庫存。當我們這樣做時，我認為更廣泛的宏觀經濟環境發生了相當快的變化。你知道，隨著進入假期季節，我們開始看到通脹上升、利率飆升、消費者需求大幅下降。

So, sort of I guess, sum it up last year we had a lot of inventory coming in based off of some very lofty projections from our customers, the economy changed quickly as we entered the holiday season. And to summarize it quickly, there was more inventory than there was demand. And so that ended up hurting us a lot last season, in the sense that we ended up having a giveaway a lot of promotions and take back overstock returns of our product.

所以，我想，總結一下，去年我們有大量庫存，這是基於我們客戶的一些非常高的預測，隨著我們進入假期季節，經濟發生了迅速變化。簡而言之，庫存多於需求。因此，上一季這對我們造成了很大的傷害，從某種意義上說，我們最終進行了很多促銷活動，並收回了我們產品的積壓退貨。

And this year, we're thinking about things a lot differently, to start we're being a lot more cautious about the quantity of inventory that we're buying, I would say that the forecasts that we're receiving while still very strong or much more realistic and reasonable in terms of just what we're all seeing in the broader on the broader economy.

今年，我們對事情的思考有很大不同，首先，我們對購買的庫存數量更加謹慎，我想說的是，我們收到的預測仍然非常強勁或者就我們在更廣泛的經濟中所看到的情況而言，更加現實和合理。

So, I think we're much better prepared this year, we're much better prepared for this coming holiday season. I think we're in better alignment with our retail partners, and we're getting all of the supply chain struggles that we've seen in recent years are pretty much all cleaned up and gone away.

所以，我認為我們今年準備得更好，我們為即將到來的假期做好了更好的準備。我認為我們與零售合作夥伴的關係更加協調，近年來我們所看到的所有供應鏈困境幾乎都得到了解決和消失。

So we see an opportunity here this year where we're looking at increasing overall gross margins. And so I see a significantly different story for this coming holiday season than what happened last year. Last year was a very sort of unexpected reactive season, whereas I think this year, we're in a much better more proactive position. So hopefully that it gives you a little bit of insight and answers the question.

因此，我們今年看到了一個機會，我們正在考慮提高整體毛利率。因此，我認為即將到來的假期季節的情況與去年發生的情況截然不同。去年是一個非常出乎意料的反應季節，而我認為今年，我們處於一個更好、更主動的位置。希望它能為您提供一點見解並回答問題。

It does. Thank you for taking my question.

確實如此。感謝您回答我的問題。

Thank you.

謝謝。

We have no further questions in the queue at this time. I would now like to turn the call back over to today's speakers.

目前我們隊列中沒有其他問題。我現在想把電話轉回給今天的發言者。

Okay. Well, thank you, everybody. This concludes our presentation for our first quarter results of operations. I do want to thank everyone today for participating in today's call, and I look forward to sharing more updates with everybody on our next quarterly update call. So, thanks everybody. We will talk to you all soon, take care.

好的。嗯，謝謝大家。我們第一季度經營業績的介紹到此結束。我確實要感謝今天大家參加今天的電話會議，我期待著在下一次季度更新電話會議上與大家分享更多最新消息。所以，謝謝大家。我們很快就會與大家交談，請保重。

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

今天的節目到此結束。感謝您的參與。您可以隨時斷開連接。