Armlogi Holding Corp. common stock Q4 FY2025 earnings call

• Fiscal 2025 was a year of significant growth and strategic investment despite operational challenges and cost pressures, with strong revenue growth due to standard demand for comprehensive supply chain solutions. • Expanded warehousing footprint and customer base to support cross-border e-commerce merchants and domestic customers with one-stop services. • 10 warehouses spanning approximately 3,905,020 square feet in the U.S. equipped with advanced systems for bulky items, maintaining ISO 9001 compliance and 99.64% average inventory accuracy. • Focus on optimizing operations, leveraging technology to drive efficiency and manage costs.

For fiscal year end June 30, 2025, total revenue reached $190.4 million, an increase of 14% compared to $167 million in fiscal year 2024. Cost of sales were $193.4 million, a 29.9% increase, resulting in a gross profit loss of $3 million. General and admin expenses totaled $14.7 million, a 47.2% increase, leading to a net loss of $15.3 million. The company's product segments are warehousing and logistics services. Revenue contribution: PRC-based clients accounted for around 84% of revenue in fiscal year 2025, with continued demand for transportation and warehousing services driving growth.

• For fiscal year 2026, revenue growth expected to be driven by continued demand for comprehensive warehousing and logistics services, particularly from cross-border e-commerce merchants and expanding U.S.-based customer base, with operation of the 10-warehouse network as a key factor. • Anticipate receiving contributions from new customers in domestic and international markets, but no single new contract expected to have material impact. • Expect gradual improvement in margins as expanded footprint reaches full utilization and efficiencies from technology investments take hold, with consistent profitability and positive free cash flow as key priorities in coming fiscal years assuming stable market conditions and successful execution of growth strategies.

• External factors such as trade policies and inflation may impact results. • Operational challenges and cost pressures, including increased freight costs, rental, labor, and warehouse expenses. • Customer concentration risks, though efforts are made to diversify customer base.

Q: What do you see as the main drivers of revenue growth for fiscal year 2026? And are there any new contracts or customers expected to have a material impact on results?

A: For fiscal year 2026, revenue growth to be primarily driven by continued demand for comprehensive warehousing and logistics services, particularly from cross-border e-commerce merchants and expanding U.S.-based customer base. Key factors include operation of 10-warehouse network and focus on diversifying customer mix. While not disclosing specific contracts, anticipate contributions from new customers but no single new contract to have material impact.

Q: When does management expect the company to achieve consistent profitability and positive free cash flow?

A: We are implementing measures like operational optimization, cost management, and diversification of carrier relations. While no specific timelines provided, expect gradual improvement in margins as expanded footprint reaches full utilization and efficiencies from technology investments take hold. Consistent profitability and positive free cash flow are key priorities, with progress anticipated in coming fiscal years assuming stable market conditions and successful execution of growth strategies.

Q: How concentrated is revenue among your largest customers? And how does Armlogi plan to differentiate itself from larger logistics competitors or regional operators?

A: In fiscal year 2025, one customer accounted for around 10% of revenue, down from prior years, reflecting efforts to diversify customer base. To differentiate, leverage competitive strength including high-quality ISO 9001 compliant services, 99.64% inventory accuracy, 24/7 multilingual support, reasonable fees via high-volume processing and long-term carrier agreements, advanced technologies like cloud-based OMS, and focus on bulky item handling, one-stop solution for cross-border e-commerce, and nationwide warehouse coverage to serve niche needs larger players may overlook.