Toughbuilt Industries Inc (TBLT) 2022 Q4 法說會逐字稿

Greetings, and welcome to the ToughBuilt Industries fourth-quarter 2022 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Martin Galstyan. Please go ahead.

您好，歡迎來到 ToughBuilt Industries 2022 年第四季度財報電話會議。 （操作員說明）提醒一下，正在錄製此會議。現在我很高興向您介紹主持人 Martin Galstyan。請繼續。

Good morning and thank you all for joining us today to discuss ToughBuilt's fourth-quarter and full-year 2022 financial and operating results. Again, my name is Martin Galstyan, and I'm the Chief Financial Officer of ToughBuilt. Joining me on today's call is Michael Panosian, President and Chief Executive Officer of ToughBuilt. Michael will begin today's discussion by providing operational and financial highlights from the fourth quarter and full year. I will then review our financial performance for those same periods. Michael will conclude the discussion with our growth plans for the upcoming fiscal year and beyond.

早上好，感謝大家今天加入我們，討論 ToughBuilt 的第四季度和 2022 年全年財務和經營業績。再說一遍，我叫 Martin Galstyan，是 ToughBuilt 的首席財務官。和我一起參加今天電話會議的是 ToughBuilt 總裁兼首席執行官 Michael Panosian。邁克爾將通過提供第四季度和全年的運營和財務亮點來開始今天的討論。然後我將審查我們在同一時期的財務業績。邁克爾將以我們對即將到來的財政年度及以後的增長計劃結束討論。

Before turning the call over to Michael, I would like to remind you that any forward-looking statements made by management are covered under the US Private Securities Litigation Reform Act of 1995, and are subject to the changes, risks, and uncertainties described in the press release and in our US security filings. In addition, during the course of the call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and may be different from non-GAAP financial measures used by other companies.

在將電話轉給邁克爾之前，我想提醒您，管理層所做的任何前瞻性陳述均受 1995 年美國私人證券訴訟改革法案的約束，並受新聞稿和我們的美國安全文件。此外，在通話過程中，我們可能會參考未按照美國普遍接受的會計原則編制的非 GAAP 財務指標，並且可能與其他公司使用的非 GAAP 財務指標不同。

Investors are encouraged to review ToughBuilt's current report on Form 8-K furnished with the SEC for ToughBuilt's reasons for including those non-GAAP financial measures in its earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings press release issued earlier today, unless otherwise noted therein.

鼓勵投資者查看 ToughBuilt 當前向 SEC 提供的 8-K 表格報告，了解 ToughBuilt 在其收益發布和演示中包含這些非 GAAP 財務指標的原因。非 GAAP 財務指標與最直接可比的 GAAP 財務指標的對賬包含在我們今天早些時候發布的收益新聞稿中，除非其中另有說明。

I will now turn the call to Michael.

我現在將電話轉給邁克爾。

Thank you, Martin, and thank you all for joining us today.

謝謝 Martin，也感謝大家今天加入我們。

2022 was a very strong year for ToughBuilt, culminating in record revenue of $94.9 million, an approximate 36% year-over-year increase compared to 2021. Fourth-quarter revenue came in at a record $29.6 million, representing a 20% increase compared to the same quarter in the prior year period. Revenue growth in the fourth quarter as well as for the full year in 2022 was driven by a combination of growing business within existing retail partners, onboarding new retail customers, and the introduction of new lines, and continued strong demand for our existing products.

2022 年對 ToughBuilt 來說是非常強勁的一年，收入達到創紀錄的 9490 萬美元，與 2021 年相比同比增長約 36%。第四季度收入達到創紀錄的 2960 萬美元，與 2021 年相比增長 20%去年同期的同一季度。第四季度以及 2022 年全年的收入增長是由現有零售合作夥伴的業務增長、新零售客戶的加入、新產品線的推出以及對我們現有產品的持續強勁需求共同推動的。

Our 2022 results are a testament to the importance of establishing a platform of strong teams in product development, sales, and distribution. This is demonstrated by our numerous product launches, including our own new cutting tools such as Reload Utility Knife, measuring, handsaw line, striking tools, long-handled tools and landscaping tools, screwdriver line, rotary laser levels, workbench, totaling approximately 200-plus SKUs.

我們 2022 年的業績證明了在產品開發、銷售和分銷方面建立強大團隊平台的重要性。我們推出的眾多產品證明了這一點，包括我們自己的新切割工具，例如 Reload Utility Knife、測量、手鋸線、打擊工具、長柄工具和美化工具、螺絲刀線、旋轉激光水平儀、工作台，總計約 200-加上 SKU。

This year proved to be a milestone expansion period for ToughBuilt, growing our network with North American and global trade partners. We are excited to currently be servicing over 17,300 large and midsized stores and online portals worldwide.

事實證明，今年是 ToughBuilt 具有里程碑意義的擴張期，擴大了我們與北美和全球貿易夥伴的網絡。我們很高興目前為全球 17,300 多家大中型商店和在線門戶網站提供服務。

To help combat logistics-related costs during the year, we successfully negotiated improved shipping rates, lowering the cost by roughly 70%. We also worked with our large retail partners to implement direct import ordering as we have discussed on previous earning calls where possible. We've seen this activity significantly decrease our logistics costs in part by shifting several supply chain steps from ToughBuilt to our retail partners. As a result of our strong product introduction momentum and our growing brand recognition around the world, we expect to see retail and online revenues continue to grow year over year in 2023.

為了幫助降低年內與物流相關的成本，我們成功地通過談判提高了運費，將成本降低了大約 70%。我們還與我們的大型零售合作夥伴合作，實施直接進口訂購，正如我們在之前的財報電話會議上討論過的那樣。我們已經看到這項活動顯著降低了我們的物流成本，部分原因是通過將幾個供應鏈步驟從 ToughBuilt 轉移到我們的零售合作夥伴。由於我們強勁的產品推出勢頭和我們在全球範圍內不斷提高的品牌知名度，我們預計 2023 年零售和在線收入將繼續同比增長。

I will turn the call back to Martin to cover our financial results in greater details. Martin?

我會將電話轉回 Martin，以更詳細地介紹我們的財務結果。馬丁？

Thank you, Michael.

謝謝你，邁克爾。

Revenues for the three months ended December 31, 2022, increased over 20% to approximately $29.6 million compared to $24.7 million in the same period last year. Revenues for the 12 months ended December 31, 2022, increased 36% to approximately $94.9 million compared to $70 million in the prior period. The increase in sales for both periods was primarily due to wide acceptance of our products, receipt of recurring sales orders for metal goods and soft goods from our existing and new customers, and the introduction of new soft and electronic goods products to our customers.

與去年同期的 2470 萬美元相比，截至 2022 年 12 月 31 日止三個月的收入增長超過 20%，達到約 2960 萬美元。截至 2022 年 12 月 31 日止 12 個月的收入增長 36% 至約 9490 萬美元，而上一期間為 7000 萬美元。兩個時期的銷售額增長主要是由於我們的產品被廣泛接受，從我們的現有和新客戶那裡收到金屬製品和紡織品的經常性銷售訂單，以及向我們的客戶推出新的紡織品和電子產品。

Cost of goods sold for the three months ended December 31, 2022, were approximately $23.6 million compared to $19.4 million for the same period in 2021. Cost of goods sold for 12 months ended December 31, 2022, were approximately $73.1 million compared to $50.9 million for the year-ago period. Cost of goods sold increased in 2022 over 2021, primarily due to increase in cost of steel and plastic polyester needed to manufacture metal goods and soft goods, an increase in labor costs in China, high inflation rates, as well as increased prices in tariffs and shipping rates.

截至 2022 年 12 月 31 日止三個月的銷貨成本約為 2360 萬美元，而 2021 年同期為 1940 萬美元。截至 2022 年 12 月 31 日止 12 個月的銷貨成本約為 7310 萬美元，而 2021 年同期為 5090 萬美元去年同期。 2022 年的商品銷售成本比 2021 年有所增加，這主要是由於製造金屬商品和軟商品所需的鋼鐵和塑料聚酯成本增加、中國勞動力成本增加、高通貨膨脹率以及關稅和商品價格上漲運費。

Selling, general, and administrative expenses for the three months ended December 31, 2022, were approximately $23.6 million compared to $19.4 million for the same period last year. Selling, general, and administrative expense over 12 months ended December 31, 2022, were approximately $58.9 million compared to $51.4 million for the 12 months ended December 31, 2021. SG&A expenses increased in 2022 over 2021, primarily due to hiring additional employees and engaging additional independent contractors and consultants to grow the company. We expect our SG&A expenses will start to increase at a lesser rate as our business matures, and we will see substantial operating leverage.

截至 2022 年 12 月 31 日止三個月的銷售、一般和管理費用約為 2360 萬美元，而去年同期為 1940 萬美元。截至 2022 年 12 月 31 日止 12 個月的銷售、一般和管理費用約為 5890 萬美元，而截至 2021 年 12 月 31 日止 12 個月為 5140 萬美元。SG&A 費用在 2022 年比 2021 年有所增加，這主要是由於僱用了更多員工並聘請了額外的獨立承包商和顧問來發展公司。我們預計，隨著業務的成熟，我們的 SG&A 費用將開始以較低的速度增長，並且我們將看到可觀的運營槓桿。

Research and development costs for the three months ended December 31, 2022, were approximately $4.6 million compared to $3.4 million in 2021. Research and development costs for the year ended December 31, 2022, were approximately $15.6 million compared to $6.9 million in 2021. This is -- an increase was primarily due to costs incurred in developing new tools and software applications to run on the mobile device related to the construction industry.

截至 2022 年 12 月 31 日止三個月的研發成本約為 460 萬美元，而 2021 年為 340 萬美元。截至 2022 年 12 月 31 日止年度的研發成本約為 1560 萬美元，而 2021 年為 690 萬美元。是——增加的主要原因是開發在與建築行業相關的移動設備上運行的新工具和軟件應用程序所產生的成本。

In the full year of 2022, we had a net loss of $39.7 million compared to $37.5 million in the year-ago period. The net loss is mainly attributable to building our team to meet the demand for current product lines and new product lines and design, as well as significant increase in cost of goods sold prices as noted previously.

在 2022 年全年，我們的淨虧損為 3970 萬美元，而去年同期為 3750 萬美元。淨虧損主要歸因於建立我們的團隊以滿足對當前產品線和新產品線和設計的需求，以及如前所述的商品銷售價格成本的顯著增加。

As of December 31, 2022, cash position was $2.6 million. The management anticipate that our capital resources will improve and our products will gain even wider market recognition and acceptance, resulting in its increased product sales. On November 17, 2022, we completed a private placement with aggregate gross proceeds of $7.5 million before deducting placement agent fees and other offering expenses.

截至 2022 年 12 月 31 日，現金頭寸為 260 萬美元。管理層預計我們的資本資源將得到改善，我們的產品將獲得更廣泛的市場認可和接受，從而增加產品銷量。 2022 年 11 月 17 日，我們完成了一筆私募，在扣除配售代理費和其他發行費用之前，總收益為 750 萬美元。

I will now turn the call back to Michael for his final remarks. Michael?

我現在將把電話轉回給邁克爾，聽取他的最後評論。邁克爾？

Thank you, Martin. I would like to reiterate the tremendous market opportunities that exist at ToughBuilt and the infrastructure we have in place to capitalize on those opportunities.

謝謝你，馬丁。我想重申 ToughBuilt 存在的巨大市場機會以及我們為利用這些機會而建立的基礎設施。

To this end in the fourth quarter, we entered into four major retailers in Germany, which accounts for 35% share of global hand tools market in 2022; and also successfully launched ToughBuilt products into a major retailer, Wickes, which has 230 locations across the United Kingdom. Moreover, Toolstation UK, with over 550 stores nationwide, and Toolstation France demonstrated consistent and impressive sales.

為此在第四季度，我們進入了德國四大零售商，2022年佔全球手工具市場35%的份額；並且還成功地將 ToughBuilt 產品引入了一家大型零售商 Wickes，該零售商在英國擁有 230 家分店。此外，在全國擁有超過 550 家商店的 Toolstation UK 和 Toolstation France 表現出一致且令人印象深刻的銷售。

Lastly, we reached a comprehensive distribution agreement with Sodimac, the largest home improvement and construction supplier in South America. In this agreement, stores in Peru and Colombia initially began with 15 SKUs in store and growing. The agreement has subsequently been expanded to encompass other countries in the region and brought 23 SKUs to Sodimac online marketplace as well.

最後，我們與南美最大的家裝和建築供應商Sodimac達成了全面的分銷協議。在該協議中，秘魯和哥倫比亞的商店最初在店內有 15 個 SKU，並且還在不斷增加。該協議隨後擴展到包括該地區的其他國家，並將 23 個 SKU 帶到 Sodimac 在線市場。

As demand for our products increase around the world, we continue to expand our capabilities to meet this growing demand. As we look ahead, our future revenue growth opportunities include continuing to expand with existing retail partners, adding new retail partners internationally, and the introduction of new product lines. I firmly believe that we can be a disruptor in the home improvement industry and are well positioned for 2023.

隨著全球對我們產品的需求增加，我們不斷擴大我們的能力以滿足這種不斷增長的需求。展望未來，我們未來的收入增長機會包括繼續與現有零售合作夥伴一起擴張，在國際上增加新的零售合作夥伴，以及引入新的產品線。我堅信我們可以成為家裝行業的顛覆者，並為 2023 年做好準備。

In closing, I'd like to thank our shareholders and our team for helping grow ToughBuilt into a high-quality brand that customers can rely on. Our team remains dedicated to our mission even through a global pandemic and difficult economic conditions. I'm looking forward to the upcoming year and remain very confident in our ability to execute on our growth, cost saving, and profitability plans.

最後，我要感謝我們的股東和我們的團隊幫助 ToughBuilt 成長為客戶可以信賴的優質品牌。即使在全球大流行和困難的經濟條件下，我們的團隊仍然致力於我們的使命。我期待著即將到來的一年，並對我們執行增長、成本節約和盈利計劃的能力充滿信心。

With that, I would like to turn it over to our operator.

有了這個，我想把它交給我們的運營商。

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

今天的電話會議到此結束。此時您可以斷開您的線路，感謝您的參與。