Yahoo Finance The Singing Machine Company, Inc. (NASDAQ:MICS) Q2 2024 Earnings Call Transcript
The Singing Machine Company, Inc. (NASDAQ:MICS) Q2 2024 Earnings Call Transcript November 23, 2023
Operator: Good morning, everyone, and welcome to Singing Machine's Second Quarter Fiscal 2024 Financial Results Earnings Call. My name is Natalie, and I will be your operator today. As a reminder, today's call is being recorded. We have a brief safe harbor and then we'll get started. This call contains forward-looking statements under U.S. federal securities law. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the reports that we file with the Securities and Exchange Commission, including the cautionary statements included in our current and periodic filings. I would now like to turn the call over to Gary Atkinson, company's CEO.
Gary Atkinson: Good morning, ladies and gentlemen. I would like to start off this morning by thanking everyone for taking the time to listen in and participate in our second quarter 2024 earnings call. Joining me on today's call, I have Lionel Marquis, company's CFO; and Bernardo Melo, Chief Revenue Officer. As is customary with our business, the second quarter is typically one of the busiest times of our fiscal year. This is when we start to deliver our programs for the holidays to our retail partners, and we are very, very active in fulfilling these orders daily from July through October with final replenishment into November, and drop shipments starting in December. Due to the timing of our long-standing warehouse lease and its expiration in Ontario, California back in August, we were challenged to execute a complete transition from a 100% in-house logistics model to a fully outsourced 3PL model right at the peak of our shipping season.
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For those that may not be aware, this process involved a complete overhaul in our entire customer fulfillment operations process, which impacted staffing, IT integration, accounting data flow, internal reporting and customer relationship management. While this was a massive undertaking for the entire team, I am very pleased with how the team has executed and made it happen day in and day out for a week time and as we made the transition. The impacts moving forward should be significant to our business. We avoided absorbing significant rent cost increases related to our previous warehouses. We've eliminated a large percentage of our workforce and we've moved our entire logistics returns and repairs model to a variable just-in-time solution that should mitigate hundreds of thousands of dollars in cost increases annually for the foreseeable future.
Beyond this major milestone, it was largely business as usual. The piping challenges and inbound container prices have fully normalized for this year. We saw customer demand reverse much closer to our normal just-in-time delivery model. We also participated in several forward-looking industry events such as last month toy fair in New York that indicate that 2024 should see further stabilization and improvement in the overall U.S. retail environment. We were very active presenting and promoting our upcoming 2024 product offering which include our new Sesame Street licensed line of products, along with new Karaoke innovations and technology that we plan to unveil in the early part of 2024. With this context in mind, I would like to turn the call over to Lionel Marquis, company's CFO, to present greater details on the results of operations for our second quarter.
Lionel Marquis: Good morning, everyone. Without further delay, I'd like to walk through some of the brief highlights on results of operations for our second quarter ended September 30, 2023. Revenues for the three months ended September 30, 2023, were $15.9 million as compared to $17.1 million for the same period in the prior year. The decrease was due to delays in -- a few delays in product shipped in late September that will ultimately shift in the first two weeks of October and an increase of approximately $900,000 in co-op incentive accruals planned for the holiday promotions and this was an increase over 2022. Gross profit margin, gross profit for the second quarter of fiscal 2024 was approximately [$3.7] million, yielding a 23.2% gross profit margin as compared to approximately $3.9 million or 22.8% in margin in the second quarter fiscal 2023.
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