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iPower (IPW)

Participants
Kevin Vassily Chief Financial Officer
Chenlong Tan Chairman, Chief Executive Officer, President & Secretary
Jeffrey Walter D.A. Davidson
Scott Fortune ROTH Capital Partners
Call transcript
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Operator

Good afternoon, everyone and thank you for participating in today's conference call to discuss iPower's Financial Results for Fiscal Second Quarter Ended December 31, 2021.

Joining us today are iPower's Chairman and CEO, Mr. Lawrence Tan; and the company's CFO, Mr. Kevin Vassily. Mr. ahead. go please Vassily,

Kevin Vassily

p.m. Good website our By on earnings fiscal issued also Relations for approximately which Justin. available available release have the be ipower.com. in press everyone website. This access our was Investor X:XX at today to second of earlier replay Time. afternoon, you, The now, is iPower's everyone. section should release, Eastern at Thank webcast quarter will XXXX call

questions. we'll Following the open our your for remarks, prepared call

described statements required to place any of call. to and CEO, revise Mr. to publicly date as company no over Chairman SEC. iPower's to cause I like conference now certain undertakes this and these statements to reflected risks on the undue Before to law, actual I'd made I'd forward-looking comments from those known reliance to company's Do the statements. obligation forward-looking the subject from of also turn are certain made Litigation webcast forward-looking materially filings Lawrence forward-looking statements results well time that are as of not any With like Lawrence, remind listeners These unknown and and to could Lawrence? being uncertainties differ in release risks Except any the that, forward-looking Securities introduce only to or uncertainties the considered Act that other Private time as subject statements. by which with statements on These results call revision under XXXX. are forward-looking and Reform the are that this the are in as call assumptions Tan.

Chenlong Tan

afternoon, you, Kevin, and All everyone. right. Thank good

continued last growth period demand second was strong year-over-year, year. by for quarter driven our IPO Our strongest of in-house our was up XX% products. Revenue fiscal revenue our since

of of own We the to realizing products are our available more now having benefit sell.

these introductions multiple SKUs and consumer in they as needs were RAF course were of product and introduced very the the address based brands lines, XXXX, from each we Over that new on intentional shortfalls of in the points data market. the other

products, only having In from have recent of addition also months. strengthened which our our continue benefit in channel deep we partnerships, to to more own

products partners. timely as basis, despite not Our gone deliver chain -- and vital served ability headwinds, on supply to asset chain a unnoticed our to global have a has

quarter, have introduction revenue, ever nutrient among and approximately provide expansion ranging forward. others. for sales new both the product called our During Nutrient fertilizer nutrient These XX% has feedback excellent. of supplements will historically in-house this plant cloning means and a very include fertilizer, product plant and strong nutrients total products fertilizer going opportunity introduced first initial with and vegetable and accounted gels revenue Flourish been line and to both we customer advanced growth us for margin which our from

in devices, early believe medium- with that products. order begun line quarter, our our Subsequent up the time of to expansion and have this in our of largest market sales marketing through the but realize We in-house growth market accessories. its benefit. and step market the opportunity we iPower was grow present This around to take purchase to products Amazon share. the for and take stages other Germany. will air and completion included as our such The expansion early into a tents of delivery We various U.K. to product, branded to accomplished full partner, bags, trimming of European channel sale first the began it officially is long-term European iPower filters; the efforts new

new we have months, joint couple last the ventures. Over announced of two

the a part, a e-commerce offer proven with respective create chain international largest announced logistics partnership supply seller sell provide of brands value end-to-end Global support, their services with a a Social eBay to full iPower a is was supply the iPower one looking efficiencies chain First, platform, venture collision-related morning, of e-commerce States. manufacturers services, parts Harmony marketing commerce formed, we of e-commerce social looking Harmony. which and supply for into Box recently Plus And low-cost venture channels. venture, this the new ability venture This large for via provide social joint auto Box launch to expertise to of in create chain and logistics Media. with us This Autoparts, on in our expand products fit Amazon. chain to a and additional given natural will for Combining expertise. will joint option our our global United partner joint to our we launched the their grow solution business and just will joint provide brand Titanium

to as our the we and awareness plan joint venture brand media other platforms utilize network. their grow For partners global iPower, influencer through TikTok and to drive product

core coming with our recreational cannabis online demographic Looking increase forward. to addressable such at going expect continue markets we Jersey, New to consumer as market new our

introduced expect see commercial the business state, the new market. in to inflection do Although impact garden to not same operator would we as the to a our expect cannabis we as DIY consumers of positive growth are

our We busy iPower, getting executing started. it months As and very for continue organic has inorganic few at been to a we plan see, on growth various are and you just us take I'll turn CFO, forward and over strong of our Kevin? call ahead. financial now detail. to delivering to to results the Vassily, in initiatives more look through the another Kevin execution you year can

Kevin Vassily

you, Thank Lawrence.

products Total the in period by greater million, our increased $XX.X driven solid another ventilation quarter to year-ago in-house and up revenue sales demand in for product was our So from XX% we performance QX. fiscal had particular. of

our XX% of We year continue selling and to to execute million compared to accounted for quarter. increased the year-over-year $XX XX% approximately These of more on sales, in-house in ago brands. XX%

points higher to the than products carry. percentage previously margins that are XX As stated, generally gross we our we products in-house for third-party XX

of emphasize So we invest this portion business. will continue to our and

to do not we're clear distribution However, and abandoning make third-party want of that products. here I sales

mix margin market costs to the with the product by partially compared the by We sales, input in fiscal quarter. driven will operating of were in-house small quarter for distributing in was compared XX% for a be increase $X.X million quarter, Total Gross greater we the those our expenses period and same to the products continue million, opportunistic freight ago offset higher fiscal XX.X% in XXXX. where in year quarter $X.X second demand. to for see

revenue, our was well new sales as increased increased volumes, as a in launch XX.X% was to quarter. the year to initiatives. XX.X% for support products driven channel headcount of sales by percentage As primarily increase higher of compared The new OpEx prior advertising

awareness iPower. We in sales for an channel We channels, including strategy. expect continue offline new to present to don't our for to benefit immediate ramp believe our sales avenues time as partnerships and additional brand it results take growth new will solid

we same However, to looking the for forward $X.X $X.XX additional million income per on income diluted share, growth XXXX. or million upcoming share net in are the to the the quarter compared to per opportunity increased $X.XX in period Net $X.X fiscal diluted capitalizing in quarters. or of

decrease largest any to business channel to quarter were $X.X to June The our the indication timing on not operating attributed of XX, sheet. of XXXX. end million million partner, an the equivalents and Cash $X or compared on was with Moving the our trends. December balance of at receivables

important the three entered quarter, an $XX has into new year will facility was the an to This facility us we and our structure secured growth our it million JPMorgan accordion flexibility us to take with that with During $XX it capital Chase, million. addition initiatives as strategic fund credit a provides plans. revolving feature which allow to up to

million XX, popular with the stocked utilization June XX, to our as of increases stood New debt long-term facility particularly new increase $X.X As of million, working entirely attributable December XXXX, up inventory the Year for compared we our holiday. XXXX, Chinese credit at capital, to at $X.X to

to Looking our strategy our targets. balance remain in fiscal the growth financial year, and our confident we of

improved recovery are signs last not supply our a volatile last fall. navigate which quarterly chain very continuing has environment, despite to a of We update, materially since

release our actually freight our thus in in costs increased today, mentioned As fiscal QX. earlier press have far

this of we network get as we to we opportunities production and be on of think our when to volatility, setting we procurement XXXX both larger year exceptional for leveraging is supply plan when in past, them mitigating the running capitalizing cost continue growth overseas, runs, diversified volatility chain can. up iPower. the done partners However, we've Despite another

now our that So for open questions. prepared it concludes remarks. up We'll

Justin?

Operator

from Baker Michael And D.A. Davidson. question from [Operator our comes Instructions] first

open. now is line Your

JeffreyWalter

get Hi guys, new My talked we're quarter. question hoping Congrats on sales around is you some around, your this for color on Baker. in about and another to Michael remarks, was solid those. more Kevin, initiatives, Jeffrey channel Walter

Kevin Vassily

Sure.

then as zenhydro.com. is channels with sales X/X got So direct-to-consumer and kind our primary actually channel of eBay and currently, external And have website, captive with we we've two Amazon Walmart, well. our

things got two So underway. we've

The add discussed more e-commerce that on sales investigate in first retail think and that Depot and to such channels, process. kind pursue as e-commerce traditional product in and I brought the or time, very the channels side. we've of it the kind At are such Natural early thing lineup, and Lowe's, that Fits same to Home make past, garden sense we out channels is [ph] of headcount given the bricks mortar, additional sales additional home as our

sense. if Again, names our they these with. and may make have even the are in without the and we're think But is would think any other I guys early I some first and cover names, offline distribution, I However, same stop, the you channels make ecosystem garden online, stages. are that disclosing familiar home could think that sense

Jeffrey Walter

Thank you.

Operator

you. ROTH Scott showing from our from Capital next -- And, And comes thank Partners. I'm question no Fortune

ScottFortune

in sales, XX% and the to brand thanks and a of You XX% nutrients little with type jump you where here? products, XX% the nutrient level revenue, as side that's quick sales real but you overall are mentioned going nutrients for primarily in-house impact primarily plus to questions. now of a anywhere in-house -- that the bit see the big from move are kind A dig third-party things we that at from Is there. third-party now one sales still of from a still overall Can can color, forward? your sales? the of side an Thank

Kevin Vassily

some could of Lawrence, we kind you color that. timing around Yes. around maybe how give see

Chenlong Tan

our for consumable category, -- actually, relative the hydroponics sure. Yes, market among its as will a maintain Nutrient share important supplies. equipment always or most the product all consumable

So see trend that don't we change.

but just for are brand, it, potential. launched there what realize we like and we full for and work So mentioned, in-house the a of to lot -- our us

We takes and a know we little that, takes know and to it we're to but how do it prepared So that, do time. just that, time.

changes in numbers third the the I but are have the don't before. me, past from there party, structural months the So I of of sales believe most front the three any don't to compared in

our it. So continue saying trend what will is new I'm that line marking

We have also work really, with each they It's product of distinct brand third-party big their people. different brands products. are brand, by the feature needed and have category, each different because and really a

brand. market We'll changes. is line structural any get than big products more continue the we our products to So, also just batch I popularized. after to don't nutrient see to of our more enough fit first one add

so So achieved but too have yes, it's the track. on are early we we solidly what to say far,

Scott Fortune

a we've hydroponic follow-up lot side. in the demand, of softness here. then, the And on a seen Obviously, commercial especially

we quarter kind kind side side and states the as revenues. seeing strength the out things, onboard the kind with percent of in What color coming second of commercial even of into new third are the of on start DIY continuing half here especially of break XXXX? on overall the XXXX here, You you your commercial of

Chenlong Tan

from, We that's we commercial pretty everybody that the weak by is having the believing does think have later so to is -- do the are directly business But the that where that's what -- coming not it case. last see stable a much partners retail is also side our of like I we much hope a does market this retail influenced our mentioned, commercial into market. the on not year. but Yes, industry two bounce influence the that's major quarters over not of factors more factors, which the our the believe couple like also is and us, and our and market, is correlated -- on is certainly more market

on trend we sales, we a a what that something We is continue and based believe on see growth this strong we seeing our This today. is will year. what have strong we're -- to

Kevin Vassily

following Scott, up on that.

in of kind contribution as percentage quarter below below was was the XX%. to Just Commercial revenue XX%.

Scott Fortune

Right.

product near seeing positions Okay. last chain sounds then capacity time the or going on inventory not here. are through to be sell levels And term higher Or But to able like here inventory it looking elevated like passing sounds you're categories? start remain your end higher and costs -- and Are really the any you're chain question further in levels supply good or coming to from supply how markets? your continuing at that here that that these standpoint. supply different higher here? there issues, you Obviously, chain alleviating board it through to inflation that costs issues

Chenlong Tan

Right.

for been have We X. and the any may mitigate come into and with risk better the we Everybody with deal dealing put us up. that places the year experiences, the issues past already got or to help tools issues

with honestly stage, -- do the have everybody for as we as with more it. to certain moment, the so good trying partially make because better to our that for market others, of see do better a speaking. don't and facing than pretty issue can us. I an to have is the on efficient we at than growth track deal an for to a think pass this are And on And absorb record If -- actually a the at market. make trying we While immediate and we're resolve the opportunity to issue, experience see I more deal think competitor do we'll cost, I this operation [ph] -- retail we

negative. it's opportunity. So not It's also totally

on think well we're regard. pretty I doing that

Scott Fortune

the queue. will I jump Thanks. back in Congrats.

Chenlong Tan

you. Thank

Operator

call the Kevin to for Vassily now I'm And showing remarks. closing like turn Thank further I to back questions. would you. no

Kevin Vassily

Yes.

the sometime April talking or So just numbers forward again. want joining today, to thank May. and when call we in to again early everyone on we we report us you look March for Thanks, to late quarter our

Operator

concludes participating. you Thank This today's conference for call.

now You disconnect. may