iPower (IPW)

Chenlong Tan Co-Founder, Chairman, Chief Executive Officer and President
Kevin Vassily CFO
Michael Baker D.A. Davidson Companies
Scott Fortune ROTH Capital Partners
Call transcript
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Thank you for standing by and welcome to the iPower Q4 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference call maybe recorded. I would now like to turn the conference over to your host Mr. Kevin Vassily, Chief Financial Officer. Sir, you may begin.

Kevin Vassily

Valarie. thanks, Yes, everyone. Good afternoon, Time. everyone quarter should which our now PM access issued have full year fourth Eastern X:XX and approximately release, today fiscal XXXX earlier By at to earnings was press iPower's The release is www.meetipower.com. in the website section Investor at Relations available of also for This on website. webcast the call will replay company's be available

remarks, management the open your for Following call will we questions.

forward-looking webcast the statements made to other conference to to reconciled measures measures performance been are Tan, rules. remind and of listeners and as of directly Today’s certain non-GAAP all those the income Before supplemental Do a measures also no the accordance publicly place of to required on uncertainties conference only forward-looking made Litigation financial most these revision on which reliance from also of I risks risks from statements have in statements. call of revise like this introduce not to company undue any Reform forward-looking described results to to I being XXXX. with forward-looking include these the the that SEC filings in undertakes could statements our comparable These net cause iPower's would will known call in time law, of functions differ EPS, are except call measures, well are including Private by day this release as with the Securities These obligation and and non-GAAP the non-GAAP CEO, time or at statements any materially GAAP and company's SEC. unknown business, any under are actual certain comments to considered results certain Lawrence as Act that subject subject reflected uncertainties are statements. that forward-looking forward-looking the

like press SEC the to Form You With that, other by information release would the to reconciliation and I today. call iPower's CEO, over earnings will charts to and Tan. iPower in important Chairman furnished turn the and find X-K Lawrence

Chenlong Tan

product afternoon data year by Fiscal than XXXX growth to good Thank margin which up good for growing growing of around sales product demand The in XX% tell the you, us grow the the year product research, sale. made We a features to iPower fiscal merchandising design design a highlighted XXXX. That to The we have proprietary able testament were year opportunity. in build and gross customers. XXXX in-house right fiscal products, year our and in-house year very due real of is was Kevin, products, with right and products superior plus our XX% of address expansion we In over our fiscal to our of XX% have the everyone. XXXX mix where needs XX% target the in XXXX. a a market expertise. compared strong more revenue share for year and fiscal clearly revenue to

of coming IPO to our in the chain new this products Most years. investments increasing the fiscal In fourth quarter, logistic on am infrastructure, half with make the our groundwork the into continued growth and SKUs of year fulfillment expansion the fiscal XXXX, we the X market. new of capital catalogue. for months lay and our and two year This to our new fiscal from roughly those thirds launch of programs in co-engineering multiple raised happy the introduce During XXXX, second significant our the product year. supply notably, with continued proprietary launched partners. in particularly last proprietary growth SKU I utilized included we advertisements

full of stages early the potential. in still are we capturing So the

industry. capitalizing this our whose And as hard in turn I look us to the the Although Kevin, we to your hydroponics and to the staff, early to level want at progress call are past year. we model through company, our incredibly of a a our ahead. results. work give iPower I'm pleased We I days our will still in credit the with fantastic perform take forward take us of back our -- to allowed CFO, dedication did financial strong another execution unique year

Kevin Vassily

you, Lawrence. Thank

at diving slightly So in Recall our expectations that fiscal $XX.X financial of into fiscal fourth up with ago revenue pleased quarter overall from our to XXXX mandate. stay-at-home quarter Total benefited was the COVID-XX we a the and due demand heightened with financials, our were line fourth year performance. period from e-commerce million.

it challenging us. comp a So for very, was very

grew For the of XX%. XXXX, historical at of organic our high-end year the fiscal range is to XX% revenues full XX.X% which year-over-year, growth

the in we more emphasize stated brands. in-house of to our we've selling As past, continue

During for the in approximately XX% sales XX% to quarter. quarter, of in-house compared accounted year prior the products

our e-commerce channel remains for business. and products XX% Gross For third-party our roughly approximately partner. partners, our remainder total far the sales wholesale in-house margin a up full the in-house made the year year, the ago period. From the of was were sales to quarter prior XXXX. fiscal XX% nearly away XX% channel were and in XX.X% with up flat of products over of largest our sales offline and at XX.X% being fiscal year, essentially Amazon perspective, XX% versus compared in important most through

in-house more quarter. on margins focus selling brands the benefited during Our

points the are products we gross carry. third-party percentage in me, points average margins excuse the XX percent As XX higher, around stated for our in-house that than we've higher on to -- past, products

still mix, costs Our can costs. factors freight a on margins channel program input number of mix, and based fluctuate including product sales

the from XXXX. quarter spending $X.X XXXX operating in of That half that sales quarter million fiscal $X.X merchant with Total product development. fees including several in our to for up co-engineering represents were higher June our a XX.X% forward. margin operating increases expenses this second For our in do million We channel was our going compared as program expenses primarily mix, XX.X%. watermark fiscal accelerate related driven factors year. that gross prior year a same partners the was to up SKUs to fourth New The our us new was the period for ended advertising, fiscal particularly increase by the percentage think not catch for some full year, around launched fiscal were of and

Some same share, excludes $X.XX the year The $X.X expense $X.X XXXX. per $XXX,XXX, merchant partner $X.XX one-time and was for driven of or to fees income decrease of and non loss by $X.X Non-GAAP ago share Net of in or million specific share the to those our the net quarter in increased or was circumstances million a income quarter fiscal net share certain fiscal million, per the per the period this $X.XX $X.X which quarter. was million in period. or spent. items $X.XX cash fourth or during and compared was higher advertising to compared

IPO in proceeds $X.X this of The Moving million and and balance the $XX cash equivalents year. to from just the million our were million year XXXX, over on was increase prior to end million end at were attributed Net the million $X.X sheet. total Cash $X period. $X.X compared inventories the earlier raised debt compared versus in June $X.X at June to XXXX. million the to of

on Before for quick we -- just XXXX. take word give a fiscal questions, I guidance to a want

a the in minimum a should baseline for be for with our today, expectations release we at revenue As growth referenced are earlier press year. growth which XX% organic very setting comfortable

from chain and in cost quite However, and remains and environment volatile, around perspective, costs a costs. margin the supply input particularly freight

we is supply point. So that pressures we of well input at to targets runs of that cost have avoid contract push some we a as ways some some and to larger the it's last production marketplace. channel chain this with we in believe can of procurement, did What back prudent forecasting say bulk our as include which in partners. of exist margin number actually specific program quarter this the manufacturing These mix, some and

a addition, to of this in-house will mix In by new introduce end in-house launch the continue own emphasize and we developed including which line, product sales hope calendar proprietary to SKUs, nutrient our of we year. greater

profitability expect of to margin over of year. these initiatives the benefits provide positive We course the and all to

questions point, at now So will that up prepared Operator? it this remarks. you have. for And that concludes we any our open might


comes is D.A. Our open. Instructions] of from line question Baker Mike The first Davidson. [Operator

Michael Baker

guys. Thanks, we Hi. number of could ask. A questions Okay. here

-- for a hard there this from with Asia. your companies talk more levels, you Can start ones. been In that liked areas even up, big words, to in all? at were of even you the in-stock your your companies, inventory would about Let's lot it's other is Did impact inventory. but quarter products have get that obviously

June [technical you that's impacted the Has all XX% should through quarter. at well? about some And quarter as the Thanks. September difficulty]? it this quarter, so You're have so

Kevin Vassily

dealing we're should with now? of you a take maybe kind Lawrence, at supply shot how of right kind Right.

Chenlong Tan


chain, up. Let September The that little question quarter it impact it the difficulty] and was because and on we difficulty] [technical a broken question that it our last was me ending. XXXX supply currently the had does right? quarter [technical an Is for the repeat bit logistics

Kevin Vassily

bit, a you’re little breaking Mike. up Yes, Okay.

I think Lawrence. right, that’s

the that’s think I question.

Chenlong Tan

Okay, great.


in of problem. I So, import saw in May, saw pull they the believe April, the little But partner, We the our orders other historically. logistic it's its to the is due their a far quarter compared remember, also as back August, we had purchase interruption September and of July, times that month for recovering we quarter. probably June year -- June Amazon that to they then as one direct to is or had very

been the I by resolved has problem So them. believe

resolved see interruptions that problem either resolved, XXXX. did or we has believe I been mostly recovered. of So But in QX

-- an we Those been Southeast like in years. our mostly own the manufacturer before of with Asia, network in logistics a mission supply -- supply have logistics, we that terms has So manufacturer chain working in China. and for extensive us had

really good leadership, have we planning. good have and a pretty We

and extend risk the to with chain -- supply into -- So into our [indiscernible] their we our need to and to of the cooperation interruptions. mitigate mitigate further tends help inventory forecast partners deeper work

So any we to did all don't We that products. issue our the see chain has supply supply capacity work.

to are does from but transportation costs have secure the higher lot of facing as the longer to than enough -- The transportation power transportation than -- overseas. able a ourselves. been have of for longer or get time difficulties before we We also usual -- we products it


you. Thank

question ROTH Fortune next Capital. Scott from Our comes of

line Your open. is

Scott Fortune

the hydroponic post-COVID of here? have channel kind quick, can it within in comp And and channel here of side -- segments Thanks those for on you kind yourself your provide the commercial of mix both of what and if the can do taking seen seasonality A on questions. the number in competitors you're third in the hobbyists third a here seeing coming around quarter. growth up commercial provide number color business, you little quarter? mix tough Real

Kevin Vassily


me let real yes, So take quick. that

from website, kind year and which us. rest they change kind commercial into Amazon, side of kind mix last much of offline still remains So remains what kind we've see And when had the IPO. kind partner The roughly quarter, future IPO. or channel we percentage our published of is around the at opportunity of very the still running our of that's from business of wholesale. we say and in perspective, The our of of about The I coming earlier is a same mix and for saw sales a kind small it e-commerce, the combination we didn't that largest XX%. as commercial the are of of in

in wasn't there much mix. So really change

Mike answer the a and different each of to Some did our his number asked in for that is relationships, of Baker Lawrence I that there channel reference that are change, things of the within programs question think third-party them. this

mix And bit. so the changed definitely a program

be is lot our to it traditional our more direct to And I as like place was is But normal. bit the think our took we're seeing drop mix. fourth from little to figure in a inventory direction other import. -- and might in pertains quarter of this seasonality any in where we for kind a normalization And kind we current that of days anything if that's still anything, and XXXX there or of early a quarter, business, meaningful. didn't think the anything out quarter but didn't which new fact partner. doing the largest a a ship than of the more trying referenced suggests pattern haven't I first of in Lawrence kind from fiscal is FY back a seasonality it to standpoint, more noticed in more again, we're we're lot our pushing notice that There we quarter,

fiscal inventory products. lot think of biggest QX. of growth balance is I our since potential look to a added you at our propeller sheet, ability we And end have our the our as

it from up was a pretty pretty So a meaningful move year. big and move last

we year. next going Scott? questions, into pretty I the where fiscal all feel are your Did get we So about good

Scott Fortune

the appreciate Yes. I color there.

Kevin Vassily

asked Oh, sorry, -- you about business. commercial you asked

Scott Fortune


Kevin Vassily

want might answer that you Lawrence, one. to

little a I closer think kind -- a from you're standpoint. of sales

Chenlong Tan

the in question a business? to on referenced on. parts the going few I what's So was segments just commercial that for chip you

Kevin Vassily

why -- the actually those first and can to what yes, the you don’t come the So, answer then back wholesale business. commercial, we --

Chenlong Tan


like -- business. XX% So plus the were we retail we like to

much hasn't health retail So seen roughly that a very BXC care.

more we facing two the our in-house out the of to consists -- were are XX% than products want I pointed of a bit. total Everybody, So sell I is generally challenges sales. that we don't our believe, commercial why today, of that mostly they the more like business, things XX% softening

competitors own name market. chain now, [indiscernible] we but control our better of on mostly So for some versus they them three we the sell parts. much, much have -- won't of our I a supply like

County, further. partners that, than to -- data saying logistics enough mostly be States of that in stopped the the by have we mentioned, today, data, off. -- United better to is external what [indiscernible] had total have chain internal much to with as able very That's control we order in are And and supply like Amazon chain, more more May, when we a the that's of to like challenges. supply there the important doubling IPO parts have secured why for execute a we had had whole to a we on work we such could like space because capability, we much, in facing from warehouse where react to we anywhere, we we time -- compared can efficiency environment our to now. years is chain, realized and tough our That's if during and in our So especially strengthen can everybody where feet new we XX,XXX XXX,XXX even a essentials. successfully what these on problem for spacing, executed resources we based square And early we quickly supply QX importing, since in left compensate in they our period still,

So been we have all we these at are pretty kinds doing and strong prepared, of work.

to making majority strong two execution two, with sales, operations backed lot and that’s us I environment. in-house our a navigate like, these tough products, very data these decision help through So the of this think for

second I normal, and in [indiscernible] lot because Now for to half are softening. terms of they People in but industry going like half the more data getting of first with a are still business, we of and of a are there hypes there's the that more up commercial on that year asking particularly We XXXX all opening going XXXX. of get a was that's think kind signals there. from space calendar industry opportunities lot of

Scott Fortune

continuing the definitely we're question hearing that of That's Or can keep cadence that that kind XXX advertising to kind that here up of I of offset to it there. expect softening you XX% going in products look to second we forward? a have appreciate. And at points SKUs to up XXX made up second commercial it view Can at in ramp half. the online continuing do obviously half, maybe level? continue But had the Due we increase? new look to increase? follow-up of are we quarter continue XXXX. How to just strengths. in-house ramp about you're great in and can in-house the sales color. you kind advertising side in That’s coming basis you a board in How mentioned at in with a space on on products in a as SKUs you the

Kevin Vassily

you're -- So ask are you not right? mix margin, asking

Scott Fortune

look how of at you should mix in-house but have XX% Yes, And than we to of products. [indiscernible]. up know that, I higher getting that the guys targeted

Kevin Vassily

right. -- mean I Yes,

So up. goal own to to takes, of drive our in number every is quarter continue definitely puts its as that kind

to think, to several XX% range. go I that over we out to wanting we're an as years get next the comfortable XX%

inching I be to know quarter about year, necessarily no to over a but if of think So, quarter. of I it of to to course that makes full sense up of quarter-to-quarter tend introducing our in doubt business host we there's don't it We terms think new SKUs proprietary year will the the referenced.

that our it's end of I we and hope be revenue launched own have We well this be by -- -- that nutrients brand to will will say should that calendar launched. the year. in-house start we generate will

a should including say, We XXX at mercy We're though, that would that thing be is, business quarter? Is third-party the of points help is to One I commercial Hard up. in the direction still partner. basis business, our really know. customers, it products is channel sell also And could our our too so, opportunity that we a wholesale have there. one offline. sits largely largest

so penetration of to And the products into represents that part our keep still up. market an of that opportunity the percentage driving

Scott Fortune

great. That’s Okay.

Chenlong Tan

I Yes. have a things here. couple

higher it them our are very know But never all the very want for brand friends. are we distributors. they are important of and contribute, out, that that or XP So, have they point don't at same very, they business. owners products I gross margins, to important parts these see any or even time, in-house products, the we like Will though our the retailers see of we

us experiences. help getting they So customer better

and to want more parts. carry more XP So we

product our you with as is new and see products grow to that going we're SKU XP the So well. see see will will growth you in-house

grow. of both So these will parts

sense. great more. do going XX%, and we including very, it where at very really like nutrients, we're positions to already XX%, So to add products, whether it what stay depends makes a dominated continues becomes had or We XX% on

invest We that didn't what that right, XX%, line, is a In we with example it giving -- not continues want doesn't right? out an I these then May, But [technical means category us our become our that products okay, to a like an XX% that gave better is we puncture friends, for it I'm and that, just that, I to fertilizer have -- line. I to example, mean into are than pointed it example, partnered are for we may want front huge selling grade doesn't they necessarily XP, happen. saying it before, difficulty]. just because

invest most of for we're we So the and we be in-house to SKU value provide better new to both customers. products, into introduced, going got to

So on we're technology, increasing and SKU through through better the going SKU new and to introducing customer through advanced [indiscernible]. be innovation in

at we And I So sit it, opportunity. and will we're at opens and that mentioned, take it think there it. look Kevin going to doesn't like that's I look mean commercial business how when up, just an

boost. So our start XP [indiscernible] there be a to may that chances have products

of best to think good don't never going up, like end -- in is going be So, it but as I set certain products, my guess. but myself it's will know the up. in-house here terms will a we're achieve going we where estimation position my and percentage, at and that's continue really already I up a pretty from best sales to goal I

Scott Fortune

back for in will Got detailed answers. it. Thank jump you queue. the I


Our comes from Thank you. [Operator question of Mike Baker Davidson. next Instructions]

Your open. line is

Michael Baker

In it I’m should sound on better. this landline, time a so

and last questions So time. off I couple got obviously cut I’ve a

One, won't quantify quarter them the sort sort little mentioned, -- all here. one-time, consider in right jump of ongoing some you if nature. be that bit. this shouldn't that the term costs we or a I'll more incurred Kevin you So of Could that's together of

what is and that that you XX% private Should comfortable you talk know more about color you how can you're become how think we September and again, year. for and, additional this loaded label? that any but about for it's about fiscal of big comparisons that, just don't if plus this the could growth be percent we business, can And assume given this, you. back I you do Thank talking end you think then lastly, remind should growth Secondly, XX the that quarter, will us quarter? expected September nutrient

Kevin Vassily

let's the on last mind. with with -- one Okay, let fresh me start since start that's my first

we So, Lawrence, and XX% revenues XX% wrong, but in-house. think -- correct I'm products that now, our to is sales if of XX% around that third-party have is sell. We right me all total generated don't I nutrients from

us And that us have margin quite for is both So, of large But business standpoint, a play Do mix, of revenue business. very more around place right? it's standpoint. XX%, the that from it importantly we have. given natural a the products Lawrence? a opportunity other from margin to gross kind for to Is is the I XX% kind nutrient rich

Chenlong Tan

right. You're

You're right.

Kevin Vassily



the of give to cost, pertains little bit bit a -- a it just just of let little me As color. a

a of was significantly and fees of We and much this I partners. merchant the partner function detail, fees mix. our to this to call into supply channel what's period June. to that they was chain one -- account we So biggest don't distress higher our changes referenced, biggest some April the quarter-to-quarter Lawrence pay. In was get were but quarter-over-quarter too in what quarter, the of the that program really having clearly was want

Chenlong Tan

That's speakers]. our [multiple

Kevin Vassily

tend as inventory U.S. almost in they our us shipping our here overseas exclusively from as import could in but mix Yes, from to partners it our and We were happened, direct ship needed to warehouses. as our they the speculate they business warehouse do they yes, with well, why in our that -- they from includes of have to -- inventory, a

So kind their the that's the programs merchant were of we're higher some behalf. on that fee drop us that programs. supporting shipping account And of

fees. as normal ship locations was come no all and forward And that direct continue. going not so think mix our probably will we from generated -- highest higher going down. of had. of the It to that that mix, business type that is we've that where won't We happened drop those it import, just such, than So, have fees

new we had of constrained. for IPO of for that Two, ramp held one. half once the first side, got quickly. on happen, complete, went lot essentially advertising waiting and to a we were because products advertising in fairly was off And that the the the largely that's were IPO because we year, capital the introduced we on So the

that, some was up. catch meant again, Now, to play

And spending our, earlier to year co-engineering of with IPO I call get in up think the some then development in we we to we do lastly, kind had had partners them up anticipated our catch product back speed. completion. to

that overdue of as the But getting come some that them. long queue So will down with well. were in we to

part biggest I fee -- was the outlook was that you normal again, right, merchant and think more that And year. that the I account environment the for Mike? this of So some driven had the is have quarter. by the cadence And Is of then, kind program mix. about a to one think you revenue question back

Michael Baker

exactly. Yes,

Kevin Vassily


should product puts put we quarter, XX% we specific the of But gave which year, I kind we seeing to more when best than have -- fiscal we helps channel -- the this it much that benefit good our as it. I for let's from and available plays that commentary. is, inventory, takes to way refrain quarter-to-quarter I yes, way helps our think it year. be to this color kind way, it So exactly but or out have to comfort of enough out, some of -- have of think with people want growth rather want this to do I'd maybe get say close good in on of this we're able it number, answer we're that kind in months close work that it have for we're just But partners and avoid of us we floor X first it shape kind How speculating. the actual and of

we feel good about where are. So we

Michael Baker

Okay. Thanks, That's I appreciate helpful. it. Kevin.

Kevin Vassily



I'm at showing time. you. Thank no the further questions

So over call I'd any management for back like remarks. to closing to turn the

Kevin Vassily

you for to Thank next call. the today. of to our fiscal to forward us our the on want and you. QX And look we I about rest thank Well, Great. everyone year talking joining


you conference. does for this gentlemen, Thank all and Ladies you. participating. conclude today’s Thank

disconnect. may day. Have You all a great