iPower Inc. Q4 FY2024 earnings call

• Strategic initiatives: Onboarded high-quantity supply chain partners onto SuperSuite, strengthened supply chain via Southeast Asia partnerships, and expanded channel distribution on TikTok Shop and Temu.
• SuperSuite platform: Integrated logistics, technology, and marketing components, partnered with leading logistics provider and Amazon Logistics to enhance efficiencies.
• Supply chain optimization: Reduced inventory by 50% since December 2023, sold through high-cost inventory, and added a Vietnam manufacturer partner to mitigate risk.
• Financial improvements: Achieved record gross margin, reduced operating expenses, improved net income and adjusted net income, reduced debt, and increased cash.

In the fiscal fourth quarter of 2024, total revenue was $19.5 million compared to $23.4 million in the prior year. Gross profit was $9.2 million in Q4 2024 vs $9.1 million in Q4 2023, with gross margin at 47.4% (up 870 basis points from 38.7% prior year). Operating expenses were $8 million in Q4 2024 vs $12 million in Q4 2023, a 34% improvement. Net income attributable to iPower was $0.7 million ($0.02 per share) in Q4 2024 vs a net loss of $3 million ($0.10 per share) in Q4 2023. Adjusted net income was $900,000 ($0.03 per share) in Q4 2024 vs an adjusted net loss of $2.1 million ($0.07 per share) in Q4 2023. Cash and cash equivalents were $7.4 million at June 30, 2024 vs $3.7 million at June 30, 2023. Total debt was reduced to $6.3 million vs $11.8 million prior year. Cash flow from operations was $960,000 in Q4 2024.

• Fiscal 2025 goals: Continue leveraging SuperSuite growth, expand new platforms (TikTok Shop, Temu), optimize supply chain, and maintain margin and cash flow.
• Expect growth from SuperSuite and new platforms, with ongoing supply chain optimization to drive further growth.

• Forward-looking statements subject to uncertainties, risks outside control, and actual results may differ from projections.
• Supply chain risks, market competition, and economic conditions affecting demand.

Q: Just want to unpack a little bit on the top line and where that growth is coming from. Asked about revenue growth from large online partner, SuperSuite percentage, and new platforms.

A: Top line has growth from new platforms like TikTok Shop and Temu, but majority still from Amazon. SuperSuite has healthy growth with onboarded partners. New platforms like Ali Express added. For large online partner, moving to normalized ordering patterns.

Q: Can we just expand on color on the demand side from your large channel partner and kind of the return to normalized ordering that this kind of big point here is kind of for that partner is from a normalized ordering growth?

A: Anticipated slowdown in order rate after strong rebound in March, moving to more normalized ordering patterns, back to pre-COVID like steady growth.

Q: Just provide a little color on potential new customer adds in the outlook in 2025 now that you have the foundation that SuperSuite in place kind of what that pipeline is like and kind of expectations for that converting to new customers on that SuperSuite for '25 here?

A: Working on technologies to reduce complexity for onboarding new partners, launching more online platform products, and using channel partners to drive more customers through SuperSuite.

Q: You mentioned you have now manufacturing in Vietnam, a partner there, and the savings you can see there moving forward, kind of what percentage of the sourcing do you think will come from Vietnam from that standpoint?

A: It's a great start, diversified supply chain outside China, beginning to grow, saving cost of goods sold, making products more competitive. Benefits will accrue in future quarters not yet reflected in financials.

Q: Are those new different contract manufacturers? Or are those people you work with in China and they're just moving operations with you at your request in Vietnam?

A: The new manufacturer in Vietnam is a new supply chain partner, with some suppliers already moving production lines outside China but not all at cost-competitive points yet.

Q: You've had some movements, some categories are becoming more important. Others are becoming less. So, I'm kind of wondering if you can give us a rough idea of where that's at?

A: Focus on hard lines like home furniture, pads, electronics; hydroponics is less significant. Growth expected in home furniture, pads, electronics with new partners and supply chain optimization.