iPower Inc. (Nasdaq: IPW) (“iPower” or the “Company”), a leading
online retailer and supplier of consumer home and garden products,
today announced financial results for its fiscal third quarter
ended March 31, 2023.
Fiscal Q3 2023 Results vs. Year-Ago Quarter
(unless otherwise noted)
- Total revenue
was $20.2 million compared to $22.8 million.
- Gross profit was
$7.8 million, with gross margin of 38.5% compared to 40.4%.
- Net loss
attributable to iPower was $1.5 million or $(0.05) per share,
compared to net income of $1.2 million or $0.04 per share.
- As of March 31,
2023, net debt (total debt less cash) was reduced by 42% to $8.2
million compared to net debt of $14.2 million as of June 30,
2022.
Management Commentary
“We had a challenging comp this quarter given
our record 74% revenue growth in fiscal Q3 2022; however, we
demonstrated continued momentum in clearing out inventory buildup
from prior periods,” said Lawrence Tan, CEO of iPower. “Throughout
the quarter, we prioritized our in-house brands which made up more
than 90% of revenue, underscoring the steady demand for our
high-quality products. We will continue to focus on diversifying
our product portfolio beyond hydroponics, while adding depth to our
in-house product catalog. We expect these initiatives to further
enhance our market position and deliver value to our partners and
customers around the world.”
iPower CFO, Kevin Vassily, added, “We have
continued to sell-through excess inventory that incurred higher
freight rates from calendar 2022, which has been a drag on our
gross margin. While we still have some older product to sell
through, we have cycled through the bulk of that older inventory
and expect that gross margin headwind to ease thereafter, while
also lowering operating expenses as we recently eliminated excess
warehousing costs. With an improved supply chain environment and
normalized inventory levels, coupled with continued demand for our
in-house products, we believe we are well-positioned to return to
profitability in fiscal 2024.”
Fiscal Third Quarter 2023 Financial
Results
Total revenue in the fiscal third quarter of
2023 was $20.2 million compared to $22.8 million for the same
period in fiscal 2022. The decrease was primarily driven by less
third-party branded sales to the Company’s channel partners. The
fiscal third quarter 2023 revenue mix from in-house brands
increased to over 90% compared to 82% in the year-ago period.
Gross profit in the fiscal third quarter of 2023
was $7.8 million compared to $9.2 million for the same quarter in
fiscal year 2022. As a percentage of revenue, gross margin was
38.5% compared to 40.4% in the year-ago period. The decrease in
gross margin was primarily driven by the higher cost of goods sold,
which resulted from selling inventory that previously incurred
higher freight charges. Given the normalization of freight rates in
recent months, the Company expects gross margin to improve in the
second half of calendar year 2023, as capitalized freight costs
incurred in recent months will flow through future periods.
Total operating expenses in the fiscal third
quarter of 2023 were $9.6 million compared to $7.8 million for the
same period in fiscal year of 2022. The increase in operating
expenses was primarily driven by higher selling, fulfilment, and
marketing costs related to the sale of inventory built up in prior
quarters, as well as product mix.
Net loss attributable to iPower in the fiscal
third quarter of 2023 was $1.5 million or $(0.05) per share,
compared to net income of $1.2 million or $0.04 per share for the
same period in fiscal year of 2022. The decline was primarily
driven by lower gross profit and the aforementioned higher selling,
fulfilment, and marketing costs related to the sale of inventory
built up in prior quarters.
Cash and cash equivalents were $1.4 million at
March 31, 2023, compared to $1.8 million at June 30, 2022. Total
debt as of March 31, 2023 was $9.7 million compared to $16.0
million as of June 30, 2022. As a result of the Company’s debt
paydown, iPower’s net debt (total debt less cash) position was
reduced 42% to $8.2 million compared to $14.2 million as of June
30, 2022.
Conference Call
The Company will hold a conference call at 4:30
p.m. Eastern Time on Monday, May 15, 2023, to discuss the results
for its fiscal third quarter ended March 31, 2023.
iPower’s management will host the conference
call, which will be followed by a question-and-answer session.
The conference call details are as follows:
Date: Monday, May 15,
2023Time: 4:30 p.m. Eastern Time Dial-in
registration link: hereLive webcast registration
link: here
Please dial into the conference call 5-10
minutes prior to the start time. If you have any difficulty
connecting with the conference call, please contact the company’s
investor relations team at IPW@elevate-ir.com.
The conference call will also be broadcast live
and available for replay in the Events & Presentations section
of the Company’s website at www.meetipower.com.
About iPower Inc.
iPower Inc. is a leading online retailer and
supplier of consumer home and garden products. iPower offers
thousands of stock keeping units from its in-house brands as well
as hundreds of other brands through its ecommerce channel partners
and its website, www.zenhydro.com. iPower has a diverse customer
base that includes both commercial businesses and individuals. For
more information, please visit iPower's website at
www.meetipower.com.
Forward-Looking Statements
All statements other than statements of
historical fact in this press release are forward-looking
statements. These forward-looking statements involve known and
unknown risks and uncertainties and are based on current
expectations and projections about future events and financial
trends that iPower believes may affect its financial condition,
results of operations, business strategy, and financial needs.
Investors can identify these forward-looking statements by words or
phrases such as "may," "will," "expect," "anticipate," "aim,"
"estimate," "intend," "plan," "believe," "potential," "continue,"
"is/are likely to" or other similar expressions. iPower undertakes
no obligation to update forward-looking statements to reflect
subsequent events or circumstances, or changes in its expectations,
except as may be required by law. Although iPower believes that the
expectations expressed in these forward-looking statements are
reasonable, it cannot assure you that such expectations will turn
out to be correct, and iPower cautions investors that actual
results may differ materially from the anticipated results and
encourages investors to review other factors that may affect its
future results and performance in iPower's Annual Report on Form
10-K, as filed with the SEC on September 28, 2022, iPower’s
Quarterly Reports on Form 10-Q, most recently filed with the SEC on
May 15, 2023, and in its other SEC filings.
Investor Relations Contact:
Sean Mansouri, CFAElevate IR(720)
330-2829IPW@elevate-ir.com
iPower Inc. and
Subsidiaries |
Unaudited Condensed
Consolidated Balance Sheets |
As of March 31, 2023
and June 30, 2022 |
|
|
March 31, |
|
June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and cash equivalent |
$ |
1,419,495 |
|
|
$ |
1,821,947 |
|
Accounts receivable, net |
|
15,704,882 |
|
|
|
17,432,287 |
|
Inventories, net |
|
19,646,934 |
|
|
|
30,433,766 |
|
Other receivable - related party |
|
39,853 |
|
|
|
51,762 |
|
Prepayments and other current assets |
|
3,470,167 |
|
|
|
5,444,463 |
|
Total current assets |
|
40,281,331 |
|
|
|
55,184,225 |
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Right of use - non-current |
|
8,504,929 |
|
|
|
10,453,282 |
|
Property and equipment, net |
|
577,719 |
|
|
|
544,633 |
|
Deferred tax assets |
|
1,546,159 |
|
|
|
- |
|
Non-current prepayments |
|
601,873 |
|
|
|
925,624 |
|
Goodwill |
|
3,034,110 |
|
|
|
6,094,144 |
|
Investment in joint venture |
|
34,759 |
|
|
|
43,385 |
|
Intangible assets, net |
|
4,442,414 |
|
|
|
4,929,442 |
|
Other non-current assets |
|
395,284 |
|
|
|
406,732 |
|
Total non-current assets |
|
19,137,247 |
|
|
|
23,397,242 |
|
|
|
|
|
|
|
Total assets |
$ |
59,418,578 |
|
|
$ |
78,581,467 |
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts payable |
|
13,406,565 |
|
|
|
9,533,408 |
|
Credit cards payble |
|
296,847 |
|
|
|
807,687 |
|
Customer deposit |
|
482,862 |
|
|
|
273,457 |
|
Other payables and accrued liabilities |
|
2,442,105 |
|
|
|
5,915,220 |
|
Advance from shareholders |
|
89,968 |
|
|
|
92,246 |
|
Investment payable |
|
- |
|
|
|
1,500,000 |
|
Lease liability - current |
|
2,356,545 |
|
|
|
2,582,933 |
|
Long-term promissory note payable - current portion |
|
2,004,181 |
|
|
|
1,879,065 |
|
Income taxes payable |
|
389,126 |
|
|
|
299,563 |
|
Total current liabilities |
|
21,468,199 |
|
|
|
22,883,579 |
|
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
Long-term revolving loan payable, net |
|
7,653,372 |
|
|
|
12,314,627 |
|
Long-term promissory note payable, net |
|
0 |
|
|
|
1,781,705 |
|
Deferred tax liabilities |
|
- |
|
|
|
939,115 |
|
Lease liability - non-current |
|
6,571,404 |
|
|
|
8,265,611 |
|
|
|
|
|
|
|
Total non-current liabilities |
|
14,224,776 |
|
|
|
23,301,058 |
|
|
|
|
|
|
|
Total liabilities |
|
35,692,975 |
|
|
|
46,184,637 |
|
|
|
|
|
|
|
Commitments
and contingency |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
Preferred stock, $0.001 par value; 20,000,000 shares authorized; 0
shares issued and |
|
|
|
|
outstanding at December 31, 2022 and 2021 |
|
- |
|
|
|
- |
|
Common stock, $0.001 par value; 180,000,000 shares authorized;
29,572,382 and |
|
|
|
|
|
29,572,382 shares issued and outstanding at March 31, 2023 and June
30, 2022 |
|
29,573 |
|
|
|
29,573 |
|
Additional paid in capital |
|
29,499,585 |
|
|
|
29,111,863 |
|
(Accumulated deficits) Retained earnings |
|
(5,740,401 |
) |
|
|
3,262,948 |
|
Non-controlling interest |
|
(22,110 |
) |
|
|
(13,232 |
) |
Accumulated other comprehensive income (loss) |
|
(41,044 |
) |
|
|
5,678 |
|
Total equity |
|
23,725,603 |
|
|
|
32,396,830 |
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
59,418,578 |
|
|
$ |
78,581,467 |
|
iPower Inc. and
Subsidiaries |
Unaudited Condensed
Consolidated Statements of Operations |
For the Three and
Nine Months Ended March 31, 2023 and 2022 |
|
|
For the Three Months
Ended March 31, |
|
For the Nine Months
Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
REVENUES |
$ |
20,225,619 |
|
|
$ |
22,808,214 |
|
|
$ |
65,502,882 |
|
|
$ |
57,300,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES |
|
20,225,619 |
|
|
|
22,808,214 |
|
|
|
65,502,882 |
|
|
|
57,300,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES |
|
12,433,898 |
|
|
|
13,598,563 |
|
|
|
39,755,919 |
|
|
|
33,219,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
7,791,721 |
|
|
|
9,209,651 |
|
|
|
25,746,963 |
|
|
|
24,080,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
Selling and fulfillment |
|
6,537,124 |
|
|
|
5,030,267 |
|
|
|
24,294,673 |
|
|
|
12,338,027 |
|
General and administrative |
|
3,065,795 |
|
|
|
2,802,395 |
|
|
|
8,879,326 |
|
|
|
7,940,349 |
|
Impairment loss - goodwill |
|
- |
|
|
|
- |
|
|
|
3,060,034 |
|
|
|
- |
|
Total operating expenses |
|
9,602,919 |
|
|
|
7,832,662 |
|
|
|
36,234,033 |
|
|
|
20,278,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)
INCOME FROM OPERATIONS |
|
(1,811,198 |
) |
|
|
1,376,989 |
|
|
|
(10,487,070 |
) |
|
|
3,802,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
(238,623 |
) |
|
|
(152,030 |
) |
|
|
(800,783 |
) |
|
|
(227,142 |
) |
Other financing expenses |
|
- |
|
|
|
(71,010 |
) |
|
|
- |
|
|
|
(80,010 |
) |
Loss on equity method investment |
|
(1,297 |
) |
|
|
(12,289 |
) |
|
|
(8,625 |
) |
|
|
(12,289 |
) |
Other non-operating income |
|
(72,235 |
) |
|
|
75,882 |
|
|
|
199,125 |
|
|
|
85,473 |
|
Total other expenses, net |
|
(312,155 |
) |
|
|
(159,447 |
) |
|
|
(610,283 |
) |
|
|
(233,968 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS)
INCOME BEFORE INCOME TAXES |
|
(2,123,353 |
) |
|
|
1,217,542 |
|
|
|
(11,097,353 |
) |
|
|
3,568,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAX (BENEFIT) EXPENSE |
|
(589,581 |
) |
|
|
39,855 |
|
|
|
(2,085,126 |
) |
|
|
705,545 |
|
NET (LOSS)
INCOME |
|
(1,533,772 |
) |
|
|
1,177,687 |
|
|
|
(9,012,227 |
) |
|
|
2,863,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
(3,238 |
) |
|
|
(4,070 |
) |
|
|
(8,878 |
) |
|
|
(4,070 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)
INCOME ATTRIBUTABLE TO IPOWER INC. |
$ |
(1,530,534 |
) |
|
$ |
1,181,757 |
|
|
$ |
(9,003,349 |
) |
|
$ |
2,867,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE LOSS |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
17,604 |
|
|
|
(3,226 |
) |
|
|
(46,722 |
) |
|
|
(3,226 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO IPOWER INC. |
$ |
(1,512,930 |
) |
|
$ |
1,178,531 |
|
|
$ |
(9,050,071 |
) |
|
$ |
2,863,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
29,730,914 |
|
|
|
28,045,130 |
|
|
|
29,702,014 |
|
|
|
26,999,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
29,730,914 |
|
|
|
28,045,130 |
|
|
|
29,702,014 |
|
|
|
26,999,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSSES)
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.051 |
) |
|
$ |
0.042 |
|
|
$ |
(0.303 |
) |
|
$ |
0.106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
(0.051 |
) |
|
$ |
0.042 |
|
|
$ |
(0.303 |
) |
|
$ |
0.106 |
|
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