Upexi Inc (UPXI) 2024 Q2 法說會逐字稿

Good day and welcome to the Upexi, Inc. fiscal second-quarter 2024 financial results conference call.

美好的一天，歡迎參加 Upexi, Inc. 2024 年第二季財務業績電話會議。

Please note, this event is being recorded.

請注意，此事件正在被記錄。

I would now like to turn the conference over to Valter Pinto, Managing Director, at KCSA Strategic Communications. Please go ahead.

現在我想將會議轉交給 KCSA 策略傳播公司董事總經理 Valter Pinto。請繼續。

Thank you, operator. Good evening, and welcome, everyone, to Upexi fiscal second-quarter 2024 financial results conference call. I'm joined today by Alan Marshall, Chief Executive Officer; and Andrew Nordstrom, Chief Financial Officer.

謝謝你，接線生。晚上好，歡迎大家參加Upexi 2024財年第二季財務業績電話會議。今天，執行長艾倫馬歇爾 (Alan Marshall) 也加入了我的行列。財務長安德魯‧諾德斯特龍 (Andrew Nordstrom)。

Before we begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to the press release issued this evening and filed with the SEC on Form 8-K as well as the company's reports filed periodically with the SEC.

在我們開始之前，我要提醒大家，今天電話會議中所做的陳述可能被視為 1995 年《私人證券訴訟改革法案安全港》含義內的前瞻性陳述。由於各種風險、不確定性和其他因素，實際結果可能存在重大差異。有關公司業務中一些持續風險和不確定性的詳細討論，請參閱今晚發布並以 8-K 表形式向 SEC 提交的新聞稿以及公司定期向 SEC 提交的報告。

The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law.

除非法律另有要求，否則本公司不承擔任何更新或修改任何前瞻性聲明的意圖或義務，無論是由於新資訊、未來事件或其他原因。

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 they may be different from non-GAAP financial measures used by other companies. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued this evening unless otherwise noted.

此外，在電話會議過程中，我們可能會提及並非按照美國普遍接受的會計原則編制的非 GAAP 財務指標，並且它們可能與其他公司使用的非 GAAP 財務指標有所不同。除非另有說明，否則非公認會計原則財務指標與最直接可比較的公認會計原則財務指標的調節包含在我們今晚發布的收益報告中。

I'd now like to turn the call over to CEO, Alan Marshall.

我現在想將電話轉給執行長艾倫·馬歇爾。

Thank you, Valter. Thank you, and welcome to our fiscal second-quarter 2024 financial results conference call. During the second half of 2023, we focused on optimizing and streamlining our operations, investing in our higher-margin brand products, and generating positive adjusted EBITDA. The enhanced efficiencies across the business channels bolstered our margins and cash flow sequentially, with my expectation that this trend will continue in the quarters to come.

謝謝你，瓦爾特。謝謝，歡迎參加我們的 2024 年第二季財務業績電話會議。2023 年下半年，我們專注於優化和精簡營運、投資於利潤率較高的品牌產品，並產生正的調整後 EBITDA。整個業務管道效率的提高相繼提高了我們的利潤率和現金流，我預計這一趨勢將在未來幾季繼續下去。

While revenues for the most recent fiscal second-quarter decreased sequentially, the operating measures we took allowed us to increase gross profit margins to 38% as compared to the prior fiscal first quarter of 31.8%. We also generated positive adjusted EBITDA although the revenue quarter over quarter was down.

雖然最近第二財季的營收季減，但我們採取的營運措施使我們將毛利率提高到 38%，而上一財年第一季的毛利率為 31.8%。儘管營收季減，我們也產生了正向的調整後 EBITDA。

The revenue decrease sequentially was predominantly related to the calculated decision to reduce the risk of purchasing, excess inventory in our e-commerce business, and investing in our higher margin brand business. The business is navigating challenging market conditions and being carefully managed quarter over quarter to achieve higher profitability while an emphasis on high margin recurring revenue brand businesses. Our e-commerce business will continue to perform, but overall, the enterprise value will be driven by the brands in their overall growth.

收入環比下降主要與降低採購風險、電子商務業務庫存過剩以及投資利潤率較高的品牌業務的深思熟慮的決定有關。該業務正在應對充滿挑戰的市場條件，並逐季進行精心管理，以實現更高的盈利能力，同時強調高利潤經常性收入品牌業務。我們的電商業務會持續表現，但整體來說，企業價值將由品牌整體成長帶動。

With capital constraints, we are prioritizing investments in our brand, products, and businesses, which carries a higher margin profile through subscription revenue opportunity and capturing a higher lifetime value of the consumer brand. Brand products sold during the second quarter increased 16.7% sequentially to $7.7 million as compared to prior quarter of $6.6 million.

由於資本限制，我們優先投資我們的品牌、產品和業務，透過訂閱收入機會獲得更高的利潤率，並獲得消費者品牌更高的生命週期價值。第二季品牌產品銷售額較上季成長 16.7%，達到 770 萬美元，上一季為 660 萬美元。

Branded product sales as a percentage of total revenue this quarter was 35.1% as compared to prior quarter of 24%. This growth and increase as a percentage of sales helped drive gross margins higher sequentially.

本季品牌產品銷售額佔總營收的比例為 35.1%，上一季為 24%。這種成長和占銷售額百分比的增加有助於推動毛利率連續上升。

Last quarter, we discussed the decision to increase our ad spend on VitaMedica in health and wellness to acquire and build subscription rates and increase the overall lifetime value of the products and brands with consumers. During the fiscal second quarter and into our current quarter and we are in, we have seen promising financial benefits on this strategy.

上季度，我們討論了增加 VitaMedica 在健康和保健方面的廣告支出的決定，以獲取和建立訂閱率，並提高產品和品牌與消費者的整體生命週期價值。在第二財季和當前季度，我們看到了這項策略帶來的可觀的財務收益。

While we have maintained our marketing budget as a percentage of revenue, subscription revenue across health and wellness grew approximately 5% month over month. The strategic investment is measured carefully every month and thus far has increased our gross margins and recurring revenue.

雖然我們保持了行銷預算佔收入的百分比，但健康和保健領域的訂閱收入環比增長了約 5%。每個月都會仔細衡量策略投資，到目前為止，我們的毛利率和經常性收入都已增加。

To drive further growth, we still expect data from the acne study soon. Successful data will help increase sales significantly in a very large, sticky, and recurring segment of health and wellness industry. We are making the same investments in our other branded products, including Tytan Tiles and Lucky Tail, particular as these brands also to launch new product offerings to the market.

為了推動進一步成長，我們仍然預期痤瘡研究的數據很快就會出現。成功的數據將有助於顯著提高健康和保健行業規模龐大、粘性大、經常性的細分市場的銷售額。我們正在對其他品牌產品進行相同的投資，包括 Tytan Tiles 和 Lucky Tail，特別是這些品牌也向市場推出新產品。

Before I hand the call over to Andy for further details regarding our financials, I'd like to provide an update from the consolidation of our manufacturing facilities. The consolidation of operations is expected to be complete and fully operational by the end of April. The overall impact on cost savings expected to be $450,000 to $550,000 per quarter or a reduction of approximately $2 million annually in G&A expenses.

在我將電話轉給安迪以了解有關我們財務狀況的更多詳細資訊之前，我想提供有關我們製造設施整合的最新資訊。業務整合預計將於四月底完成並全面投入營運。預計每季節省成本 45 萬至 55 萬美元，或每年減少約 200 萬美元的一般管理費用。

The consolidation will not slow the increase for our growth initiatives that we are investing in. And we anticipate this will lead to increased gross margins and overall cash flow in the coming quarters.

合併不會減緩我們正在投資的成長計劃的成長。我們預計這將導致未來幾季的毛利率和整體現金流增加。

I'd like to reiterate my confidence in our ability to drive long-term growth, innovation, and value creation. We remain committed to further expanding and enhancing our brand businesses and our e-commerce segments while capitalizing on new growth opportunities and reaching higher EBITDA and cash flow positive results this year.

我想重申我對我們推動長期成長、創新和價值創造的能力充滿信心。我們仍然致力於進一步擴大和加強我們的品牌業務和電子商務部門，同時利用新的成長機會，並在今年實現更高的 EBITDA 和現金流積極成果。

I will now pass the call over to Upexi's CFO, Andrew Norstrud, to discuss our financial results in more detail. Andrew?

我現在將把電話轉給 Upexi 的財務長 Andrew Norstrud，更詳細地討論我們的財務表現。安德魯？

Thank you, Allan. Revenue for the fiscal second-quarter of 2024 total $21.8 million as compared to $26.7 million for the same period in the previous year and $27.3 million for the fiscal first quarter of 2024. The decrease in revenue was primarily due to lower e-commerce revenue through both Amazon channels and wholesale.

謝謝你，艾倫。2024 財年第二季的營收總計為 2,180 萬美元，去年同期為 2,670 萬美元，2024 年第一財季為 2,730 萬美元。收入下降主要是由於亞馬遜通路和批發的電子商務收入下降。

Brand product sales during the quarter increased 16.7% sequentially to $7.7 million as compared to $6.6 million, led by the health and beauty product category. Management will continue to focus on the development and growth of high gross margin brand product sales.

本季品牌產品銷售額較上一季的 660 萬美元成長 16.7%，達到 770 萬美元，其中健康和美容產品類別的銷售額領先。管理層將繼續專注於高毛利率品牌產品銷售的發展和成長。

Cost of revenue for the fiscal second-quarter 2024 totaled $13.6 million, a decrease as compared to the $16.7 million for the same period in the previous year and $18.6 million for the fiscal first-quarter 2024. The cost of revenue decrease was primarily related to the decrease in our e-commerce sales discussed above.

2024財年第二季的營收成本總計1,360萬美元，較上年同期的1,670萬美元及2024財年第一季的1,860萬美元有所下降。收入成本下降主要與上述電子商務銷售額的下降有關。

The gross margin for the fiscal second-quarter 2024 and 2023 was approximately 38% during both periods. The gross margin during the quarter increased sequentially to 38% as compared to 31.8%. Sales and marketing expense for the fiscal second-quarter 2024 decreased 18% compared to the same period in the previous year and was approximately $160,000 lower than the first quarter ended September 30, 2023, on higher branded product revenue.

2024 年和 2023 年第二財季的毛利率約為 38%。本季毛利率較上季增至 38%，上一季為 31.8%。由於品牌產品收入增加，2024 財年第二季的銷售和行銷費用與去年同期相比下降了 18%，比截至 2023 年 9 月 30 日的第一季減少了約 16 萬美元。

The decrease in sales and marketing expense was primarily related to management's efforts to refine sales strategies to focus on long-term recurring sales growth through subscription revenue and sales channel expansion. Management will continue to manage the sales and marketing budget strategically for direct-to-consumer sales channels as the company capitalizes on opportunities to take advantage of lower costs to estimate lifetime value of the customer.

銷售和行銷費用的減少主要與管理層努力完善銷售策略以透過訂閱收入和銷售管道擴張專注於長期經常性銷售成長有關。隨著公司利用降低成本的機會來估計客戶的終身價值，管理層將繼續策略性地管理直接面向消費者的銷售管道的銷售和行銷預算。

Management believes that this strategy will yield significant returns in the next 12 months. Management anticipates that advertising expense will be reduced over time as a percentage of sales in the following quarters, which will increase overall profitability.

管理層相信這項策略將在未來 12 個月內產生可觀的回報。管理層預計，隨著時間的推移，廣告費用佔接下來幾季銷售額的百分比將下降，這將提高整體獲利能力。

General and administrative expenses for the fiscal second-quarter 2024 totalled $2.3 million, a decrease of 9% as compared to $2.5 million for the same period in the previous year. Management has managed its general administrative costs and will continue to implement strategies to decrease the percentage of general administrative costs as compared to total sales

2024財年第二季的一般及管理費用總計230萬美元，較上年同期的250萬美元下降9%。管理階層已管理好一般管理成本，並將繼續實施降低一般管理成本佔總銷售百分比的策略

Adjusted EBITDA was approximately $29,000 as compared to an adjusted EBITDA of approximately $557,000 for the same period in the previous year and $750,000 for the fiscal first-quarter 2024. The company had net loss from continuing operations for fiscal second-quarter 2024 of $2.4 million as compared to net income of $2.7 million for the same period in the previous year, a net loss of $1.4 million in the first fiscal quarter of 2024.

調整後 EBITDA 約為 29,000 美元，而去年同期調整後 EBITDA 約為 557,000 美元，2024 年第一財季調整後 EBITDA 約為 750,000 美元。該公司 2024 財年第二季持續營運淨虧損為 240 萬美元，而去年同期淨利為 270 萬美元，2024 年第一財季淨虧損為 140 萬美元。

As of December 31, 2023, the company had cash of $1.8 million and total stockholders' equity attributable to Upexi shareholders of approximately $25.5 million. As of February 14, 2024, there are 20,889,384 shares of common stock outstanding.

截至2023年12月31日，該公司擁有現金180萬美元，歸屬於Upexi股東的股東權益總額約2,550萬美元。截至2024年2月14日，已發行普通股數量為20,889,384股。

At this time, I'd like to open up the call for questions. Operator?

此時，我想開放提問。操作員？

Thank you. Ladies and gentlemen, at this time, we'll be conducting a question-and-answer session. (Operator Instructions)

謝謝。女士們、先生們，此時我們將進行問答環節。（操作員說明）

Aaron Grey, Alliance Global Partners.

亞倫·格雷，聯盟全球合作夥伴。

Hi, good evening, and thank you for the questions here. So first question for me. Just want to talk a little bit about the e-commerce business, right? So you pointed to the softness in the quarter certain wholesale transactions, not being completed.

你好，晚上好，謝謝你在這裡提問。所以我的第一個問題。只是想談談電子商務業務，對嗎？因此，您指出了本季某些批發交易的疲軟，尚未完成。

Was it more a matter of pricing? Was it some last-minute changes? Because certainly can understand and appreciate the focus on margin, but looks like inventory did build again in the quarter. So was the pricing just where it was? It would be even like potentially a solo of a margin; it wasn't appealing to you even if it might have had some cash conversion. Just any color you might have in terms of the e-commerce business during the quarter and then also the inventory effect.

這更多的是定價問題嗎？是最後一刻的改變嗎？因為當然可以理解和欣賞對利潤率的關注，但看起來庫存確實在本季再次增加。那麼定價就在原來的水平嗎？它甚至可能像是一個邊緣的獨奏；即使它可能有一些現金轉換，它對你也沒有吸引力。就本季的電子商務業務而言，您可能有任何顏色，然後還有庫存效應。

Hi, Aaron. I think some of it is timing when it comes in and when it goes out and some of it was what we talked about at the end of the last quarter, just kind of making sure no other concerns was that whole overall gross margin dropping.

嗨，亞倫。我認為其中一些是它進入和退出的時機，其中一些是我們在上個季度末討論的，只是確保沒有其他問題是整體毛利率下降。

So we talked about this during the years. We can buy any amount of inventory that's available, but are they meeting our margin profile? So I think that this quarter, we just didn't see the opportunities that would have met the margin we're looking for and also the capital constraints still kind of lead to just us pushing for higher margin on those deals.

所以這些年來我們一直在談論這個問題。我們可以購買任意數量的可用庫存，但它們是否符合我們的利潤狀況？因此，我認為本季我們只是沒有看到能夠滿足我們所尋求的利潤率的機會，而且資本限制仍然導致我們在這些交易上爭取更高的利潤率。

And the reinvestment in the brands is really where it's going to drive overall growth. I mean, we've talked about this over and over. We need that brand revenue with 80%-plus margin to be a bigger percent of our business.

對品牌的再投資確實會推動整體成長。我的意思是，我們已經一遍又一遍地討論過這個問題。我們需要利潤率超過 80% 的品牌收入在我們的業務中佔據更大的比例。

So the reinvestments there really were precedent to that. But there's no issues with the business. We could do a quarter with $20 million, $30 million in e-commerce revenue, which is not what we chose to do at this point in time.

因此，那裡的再投資確實有先例。但生意上沒有任何問題。我們可以在一個季度實現 2000 萬美元、3000 萬美元的電子商務收入，但這不是我們此時選擇做的。

So inventory did bill. We did -- we are always buying stuff. It just sometimes it doesn't get sold. By the end of the quarter, shutdown. That may or may not come -- be sold in this quarter and make a difference as well.

所以庫存確實計費了。我們確實這麼做了——我們總是在買東西。只是有時賣不出去。到季度末，停工。這可能會也可能不會——在本季出售，也會產生影響。

Okay. I appreciate that color. Third question is going to e-commerce. So kind of overall, are you seeing -- is it that the margin hurdle is higher for you guys now or are you just -- margins are the same and you're seeing less opportunities out there?

好的。我很欣賞那種顏色。第三個問題是電子商務。總的來說，你是否看到——現在你們的利潤障礙更高了，還是只是——利潤率是一樣的，而你看到的機會卻更少了？

And that's -- I know we've always talked about the shift to brands, right, but you always had kind of the e-commerce, the business there, potentially finding synergies within even with the brands. But I think about the e-commerce business today and that gross margin really spoke to, is it that -- the hurdle has been raised or the hurdle is the same and it's harder to find those opportunities out there? I know it can really come and go depending on what's out there from the manufacturers and of what they're buying product from. Thanks.

那就是——我知道我們一直在談論向品牌的轉變，對吧，但你總是有某種電子商務，那裡的業務，甚至有可能在品牌內部找到協同效應。但我想到今天的電子商務業務，毛利率真正說明的是——障礙已經提高了，還是障礙是相同的，而且更難找到這些機會了？我知道它的變化確實取決於製造商的產品以及他們從哪裡購買產品。謝謝。

I mean, we've seen good opportunities on much -- or even large deals. We just have really decided to focus more on this brand business today. The margins available maybe not as much as it had been throughout the prior year. But expect that after the holidays here, we just see that opportunity again. The margins usually increase again whenever we want to get stuck with that overstocked inventory.

我的意思是，我們在許多甚至是大型交易上都看到了很好的機會。今天我們才真正決定要更加關注這個品牌業務。可用利潤可能不如去年那麼多。但預計在假期結束後，我們會再次看到這個機會。每當我們想要解決庫存過剩的問題時，利潤率通常會再次增加。

But we're seeing plenty of deals. Just trying to manage the business and not lose focus on the overall value of the investing in the higher brand -- higher gross margin business. Like our gross margin increase this quarter was just a start of what we will we think trends over the next couple of quarters.

但我們看到很多交易。只是試圖管理業務，而不是失去對投資更高品牌——更高毛利率業務的整體價值的關注。就像我們本季毛利率的成長只是我們認為未來幾季趨勢的開始。

Okay, great. Thanks. And yeah, shifting over to brands then. Now it was up 16.7%. You said that it was led by health and beauty, I believe. I think Andrew said that.

好的，太好了。謝謝。是的，然後轉向品牌。現在上漲了16.7%。你說的話以健康和美麗為主導，我相信。我想安德魯是這麼說的。

So was Tytan Tiles also within that and was that also a bigger gap than more of a health and beauty side? And then as you think about growth going forward, how do you think about split between e-commerce and brick-and-mortar? Because obviously brick-and-mortar can have some of that lower margin than some of the e-commerce. But I know you've had some initiatives with Tytan Tails -- with Tytan Tiles in terms of getting increased exposure in the brick-and-mortar space. Thanks.

那麼 Tytan Tiles 是否也在其中，這是否也是一個比健康和美麗方面更大的差距？然後，當您考慮未來的成長時，您如何看待電子商務和實體店之間的劃分？因為顯然實體店的利潤率可能比某些電子商務低。但我知道你們已經與 Tytan Tails 和 Tytan Tiles 採取了一些舉措，以增加在實體空間的曝光度。謝謝。

Yes, we're going to go -- we're going to continue -- we're going to (inaudible) from all aspects, right? Like Tytan is born out of first starting in DTC or -- and then really evolved into brick-and-mortar. And now we're looking to bring of Disney products back to DTC. The margin there is great. The opportunity is great.

是的，我們將繼續——我們將繼續——我們將從各個方面（聽不清楚），對吧？就像 Tytan 最初是在 DTC 中誕生的，然後才真正演變成實體。現在我們希望將迪士尼產品帶回 DTC。那裡的利潤很大。機會很大。

But our other brands have higher margins and are strictly, at this point, direct to consumer with great opportunity. We've seen -- I'm not sure, I guess significant reinvestment in growth just in the first quarter. I think VitaMedica's Amazon was up 30%, 40% since we made those -- started to reinvest just at the beginning of the quarter.

但我們的其他品牌的利潤率更高，並且在這一點上嚴格直接面向消費者，有很大的機會。我們已經看到——我不確定，我想第一季就出現了大量的成長再投資。我認為自從我們製造這些產品以來，VitaMedica 的亞馬遜股價上漲了 30%、40%——我們在本季初就開始再投資。

So I think we're just going to continue on all channels, blending that margin, but still the bulk of our business is going to be direct to consumer with the much higher margin.

因此，我認為我們將繼續在所有管道上混合利潤，但我們的大部分業務仍將直接面向消費者，利潤率也高得多。

Okay. All right. Great. Thank you very much. I will jump back in the queue,

好的。好的。偉大的。非常感謝。我會跳回隊列，

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

隊列中沒有其他問題。我想將電話轉交給管理階層以供結束語。

All right, all. I want to thank everyone for joining the call. And just to summarize, the company has had a very good position to increase the overall profitability due to several reasons. Our consolidation of operations and the reduction of $2 million G&A. This will reduce our overall cost structure and not slow the growth of the brands or the growth of the profitability.

好吧，全部。我要感謝大家加入這通通話。總而言之，由於多種原因，該公司在提高整體獲利能力方面處於非常有利的地位。我們整合了營運並減少了 200 萬美元的一般管理費用。這將降低我們的整體成本結構，並且不會減緩品牌的成長或獲利能力的成長。

Brand revenues should continue to be a bigger percentage of overall sales, the higher gross margin. Businesses will push our gross margins even higher this year. And regardless of market conditions or external factors, myself and our team intend to reach those higher EBITDA and cash flow positive results in the next several quarters.

品牌收入在整體銷售額中所佔的比例應該會持續更大，毛利率也會更高。今年，企業將進一步推高我們的毛利率。無論市場狀況或外部因素如何，我​​和我們的團隊都打算在未來幾季實現更高的 EBITDA 和現金流正面成果。

So I want to thank everyone for joining our call, and I hope everyone has a great evening.

因此，我要感謝大家加入我們的電話會議，並希望大家度過一個愉快的夜晚。

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路並度過美好的一天。