iPower Inc. Q4 FY2023 earnings call

• Fiscal 2023 was the third consecutive year of double-digit revenue growth, reaching record sales of almost $90 million, driven by in-house products and non-hydroponics portfolio expansion. In-house brands made up over 90% of revenue. - Strong momentum in home and pet categories, with older SKUs gaining market share and new SKUs contributing. - Non-hydroponic sales were over 75% of revenue in 2023, and hydroponics remains a smaller portion but will continue to be supported. - Business services program showing promising traction, leveraging supply chain expertise for partner sales growth. - Ramped sales and marketing to work through higher priced inventory, sold most remaining in Q4, expecting improved gross margins and reduced operating expenses in 2024. - Focus on diversifying sales mix, adding new innovative offerings, improved supply chain, and normalized inventory levels for fiscal 2024.

For fiscal 2023, iPower achieved record sales of almost $90 million, marking the third consecutive year of double-digit revenue growth. In-house brands made up more than 90% of the revenue, and non-hydroponic sales constituted over 75% of the revenue. For fiscal Q4 2023, total revenue was $23.4 million, an increase of 6% compared to the prior year quarter. Gross profit was $9.1 million, flat compared to the prior year quarter. Net loss attributable to iPower was $3 million or $0.10 per share. For the full year 2023, total revenue increased 12% to $88.9 million. Gross profit increased 5% to $34.8 million, with a gross margin percentage of 39.1% compared to 41.8% in fiscal 2022. Net loss attributable to iPower was $12 million or $0.40 per share.

• Aim to return to normalized growth in the high-teens to 20% levels. - Anticipate resumption of normalized inventory levels with largest channel partner. - New channels like Lowe's and TikTok shops showing potential for incremental sales. - Confident in achieving prior profitability profile with normalized supply chain, including gross margins 42%-45%, EBITDA and net income positive. - Services business expected to be accretive but no specific timetable provided.

None specific operational risks discussed in detail; forward-looking statements subject to known and unknown risks and uncertainties as described in SEC filings.

Q: Can you step us through the cadence moving forward and growth drivers to achieve higher top line growth, including new service offerings?

A: Services are early stage but showing good results. Product categories other than hydroponics growing healthily. Resumption of normalized inventory levels with largest channel partner, new channels like Lowe's and TikTok shops showing potential.

Q: Dig into initial service partnerships, staffing, and cost to ramp?

A: Services are partnerships where iPower provides supply chain, warehousing, and merchandising; no new labor costs but more SKUs mean more work.

Q: Commentary on profitability objectives?

A: Expect to achieve prior profitability profile with normalized supply chain, including gross margins 42%-45%, EBITDA and net income positive.

Q: How are business services compensated, inventory risk?

A: Buy-sell relationship, not commission model. Inventory risk falls on partners as ownership doesn't transfer unless subsequent sales.