Armlogi Q4 2024 Earnings Call Transcript

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Provided by Quartr
September 26, 2024

Key Takeaways

  • Armlogi reported total revenue of $167 million in FY2024, up from $135 million a year earlier, driven by Transportation Services revenue of $115.3 million (+18.8%) and Warehousing Services revenue of $51.5 million (+38.1%), though overall gross margin narrowed from 19.1% to 10.8%.
  • In May, the company raised approximately $8 million net in its IPO and used the proceeds to expand its warehouse network, including the 733,200 sq ft Savannah (SAV1) facility, which has processed over 800 container shipments at 70% occupancy since June.
  • Armlogi enhanced its service portfolio through partnerships, becoming an authorized warehouse provider for the Temu marketplace and collaborating with Massimo Group to assemble and distribute powersport vehicle kits within its U.S. facilities.
  • Technology and sustainability initiatives include a proprietary AWS‐based logistics platform for real‐time tracking, ISO 9001 certification for high inventory accuracy, and participation in California’s low‐carbon fuel standard program using electric forklifts.
  • Management plans to diversify into China, Southeast Asia, and Mexico, invest in AI and data analytics to optimize operations, and pursue accretive acquisitions while acknowledging execution and regulatory risks.
AI Generated. May Contain Errors.
Earnings Conference Call
Armlogi Q4 2024
00:00 / 00:00

There are 5 speakers on the call.

Operator

Thank you for standing by, and welcome to the ARM Logy Holding Corp. Fiscal Year 2024 Earnings Call. Please note that today's call is being recorded. I will now turn the meeting over to Matthew Abnante, Investor Relations for ArmLogi Holding Corp.

Speaker 1

Thank you, operator, and thanks to everyone joining us today for ArmLogi's earnings call to discuss the full year results of 2024. Please note that our earnings press release was issued earlier today and our annual report on Form 10 ks was filed with the Securities and Exchange Commission. Both are available on the Investor Relations section of our website at ir.armlogy.com. Joining us on the call today are Eidi Chow, Chairman and Chief Executive Officer of Armlogy along with Ian Zhou, Chief Financial Officer and Scott Su, Board Secretary. The format of our call will consist of comments provided by management followed by a question and answer session addressing the questions that were submitted by investors.

Speaker 1

We thank everyone for submitting these questions. Now before we get started, I'm going to review the Safe Harbor statement. Please note that today's discussion will contain forward looking statements. In addition, from time to time, we or our representatives may make forward looking statements orally or in writing. We base these forward looking statements on our expectations and projections about future events, which we derive from the information currently available to us.

Speaker 1

Such forward looking statements relate to future events or our future performance, including our financial performance and projection, our growth in revenue and earnings and our business prospects and opportunities. You can identify forward looking statements by those that are not historical in nature, particularly those that use terminology such as may, should, expect, anticipate, contemplate, estimates, intends, believes, plans, projected, predicts, potential or hopes or the negative of these or similar terms. In evaluating these forward looking statements, you should consider various factors, including our ability to change the direction of the company, our ability to keep pace with new technology and changing market needs, and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward looking statements. Forward looking statements are only prediction.

Speaker 1

We are not obligated to publicly update or revise any forward looking statements whether as a result of uncertainties or assumptions. The forward looking events discussed on this call and other statements made from time to time by us or our representatives may not occur and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. And with that, I would like to hand the call to our first speaker, Eiry Chao, Chairman and Chief Executive Officer of ARMAGI. Good afternoon, Eiry.

Speaker 2

Good afternoon and thank you all for joining us for our fiscal year 2024 earnings call in which we will discuss results for the fiscal year ending June 30, 2024. HomeLogic is a dynamic and a rapidly growing U. S.-based warehousing and logistics service provider. We offer a comprehensive suite of the supply chain solution, encompassing warehousing management and our fulfillment pattern to the evolving needs of the business in an increasingly interconnected world. The e commerce firm fueled by the Internet and globalization has created a landscape where merchants increasingly seek to expand their reach through international platform like Amazon and eBay.

Speaker 2

However, this expansion come with a logistic complexity, particularly in cross border shipping, long delivery time, high damage rates and a peak season conjunction as a transformable challenger. ArmLodge's solution is predictive and impact from overseas warehouses by establishing local storage facility in target country. We enter our cross border merchant as part of those work inbound, insurance with and secure delivery to consumer upon order placement. This approach is significantly reduced delivery time and the damage rate, enhancing the overall customer experience. Our commitment to Exelon is inflected in our 1 stop warehousing and logistics service, talented to cross border e commerce merchants outside the U.

Speaker 2

S. Are nicely located warehouse. In fact, with the state after our technology provide a nationwide footprint and an ample storage space. We offer a full spectrum of service from customer broker to transportation and a comprehensive warehouse management ensure seamless operation for our clients. Our dedication to quality is unwavering.

Speaker 2

We are able to ISO 9,001 standard, ensure high inventory accuracy and providing 20 fourseven customer support. This commitment coupled with our large volume of process goods allow us to offer a competitive service and deliver fee further strengthening our value proposition. Technology is the heart of our operations. Our proprietary platform anchoring in Amazon Web Services Cloud empowers us to manage shipment efficiently, provide a real time update and ensure the integrity of the deliver. This technology driven approach not only reduce costs, but also minimize the errors, enhancing customer satisfaction.

Speaker 2

As we look ahead, our growth strategy are clear and ambitious. We will expand our diversify our customer base, targeting key marketing in China, Southeast Asia and Mexico. We were enhancing our customer supply chain efficiency by broadening our solution and service, including expanding our international ocean freight capability. We will continue to impact in cutting edge supply chain technology, leveraging AI, data analytics and a smart system to optimize operation and deliver value insight. And we will pursue instantly to expand our capability and generate attractive return.

Speaker 2

Now, I will now turn the call over to Yan Cheung, our Chief Financial Officer, for his remarks.

Speaker 3

Thank you, Eidi. We achieved several strategic and operational milestone in fiscal years of 124 and subsequent to the year end, which I will go through now. In May, we closed our initial public offering of 1,600,000 shares of common stock at a public offering price of $5 per share for a total of $8,000,000 of gross proceeds to the company before deducting underwriting discounts and offering expenses. Net proceeds from the offering are being used to expand the company's warehouse network and develop warehousing and logistics services, international ocean freight services and port trucking services among other things. In addition, we signed a list for new 733200 Square Foot Warehouse Located Nearby the Port of Savannah in Georgia.

Speaker 3

In August, that warehouse known as the SAV1 becoming fully operational and has quickly become the biggest and busiest among our 9 warehouses. SVA1 is equated with the logistics technology and is designed to support a wide range of supply chain activities from storage and distribution to complex logistics solution. A strategic location at one of the business port in the United States provide optical asset for importer and exporter, future enhancing on logic service offering. Since June 2024, the facility has handled over 800 container shipment and maintains over 70% occupancy. We will also become an authorized warehouse provider for seller on the TIMU marketplace in June.

Speaker 3

Through this collaboration, we will offer TIMU sellers streamlined asset to our warehousing facility and Tier World Logistics Service to provide fast order fulfillment and improve inventory management. This collaboration will allow us to serve more e commerce sellers and will allow team sellers to leverage our largest logistic expertise to improve delivery speeds, reduce operational costs and enhance overall customer experience. Furthermore, we announced a strategy partnership with Masimo Group, a manufacturer and distributor of powersport vehicle and pontoon boat to provide streamlined warehousing and logistics service for the assembly and distribution of vehicles with the aim of meeting the rising market demand across key U. S. Regions.

Speaker 3

This collaboration has resulted in the integration of Masimo quality control standards into our modular distribution process, improving our service reliability. Under the terms of agreement, we will manage the reception of container shipment containing MasMOS vehicle kits from Asian suppliers. We will provide asset to our facility located throughout the U. S, which are equated with technology and specialized equipment necessary for handling and storage large and bulky items, adhering to the ISO nine thousand and one industrial standards. Masimo will conduct vehicle assembly within our warehouse, while we will oversee inventory management, storage service and the logistic required for delivering the assembly vehicle to their final order destination across the United States.

Speaker 3

In July, we announced the leasing of a new 60,000 square feet warehouse in the City of Industry, California to support our expansion trucking operations and our partnership with Masimo Group. The facility, which is equated with state of our infrastructures and technology, will provide additional storage and further streamline the distribution process. Subsequent to the end of official years of 2024, we announced the expansion of our trucking department in July, doubling its capacity and expanding service to key clients, including Amazon. We enhanced our logistics service and expand our customer base, particularly in the e sport logistics industry. Investments in staffing, training and equipment aim to meet rising demands and improve our service quality.

Speaker 3

In August, we announced our participation in the low carbon fuel standard program, including electrical forklift across our California warehouse operation to reduce greenhouse gas emissions. The initiative under for our commitment to embrace the renewable energy technologies and our role as a forward thinking organization that prioritize substantial ability in its operations. In addition, our participation in this program qualify Amlogic for monthly energy rebate. This viable strategy and operational milestone achieved in fiscal year 2024 and beyond will allow us to better serve our existing clients as well as expanding our reach to the new market. Now I will turn it to Scott Chu, Board Secretary for Oblogy to provide an overview of our financial performance.

Speaker 4

Thank you, Yan, and good afternoon, everyone. For further information regarding our full year 2024 financial results and the disclosures, please refer to our earnings release and the annual report on Form 10 ks filed with the SEC. Total revenue for the full year end June 30, 2024 were $167,000,000 up 103.6 percent from $135,000,000 in fiscal year 2023. Our Transportation Services segment reported revenue of $115,300,000 an increase of 18.8% from $97,000,000 in fiscal year 2023. The increase was driven by the regulatory tension of our business in 2023 as we expanded our warehouse operational capacities in California and New Jersey.

Speaker 4

This segment comprised receiving 3rd party carrier services to our customers. Our warehousing services segment generated $51,500,000 a 38.1 percent increase from $37,300,000 in fiscal year 2023. This growth was driven by the growth in our transportation services. This segment comprises inventory management and the storage offerings. Our other services segment generated revenue of $0,600,000 in fiscal year 2024, which was a decrease of $0,500,000 compared to previous year.

Speaker 4

The segment delivery consists of customs brokerage services. Our cost of sales were $148,900,000 in fiscal year 2024, an increase of 36.2 percent or $39,600,000 compared with the $109,300,000 in fiscal year 2023. This increase in cost is Gross profit margin decreased from 19.1% in fiscal year 2023 to 10.8% in 2024, although the profit margin of our transportation services, which include our ocean freight and the truck deliveries, remained stable or slightly higher compared to 2023, our profit margin for our warehousing services decreased during the same period. General and administrative expenses increased by $2,200,000 to $10,000,000 for fiscal year 2024 from $7,800,000 for fiscal year 2023, representing an increase of 28%. The increase was due to increased administrative activities for different rigs related to office supplies and the repairs and the maintenance to accommodate our business expansion.

Speaker 4

Our net income was $7,400,000 $30,900,000 for the full year end June 30, 2024 and 2023, respectively. In conclusion, we executed several important strategic initiatives and delivered strong revenue growth in fiscal year 2024. Looking ahead, we are confident in our ability to navigate the evolving logistic landscape and continue driving value for our shareholders and the partners. Our success would not be possible without our hard working employees, all your customers and the valuable shareholders. Thank you for your continued support and the dedication of our region.

Speaker 4

We look forward to updating you on our business during future earnings calls. Back to you, Nate.

Speaker 1

Thank you, Scott. We will now move to the question and answer portion of the call. Again, thank you to everyone who has submitted questions. Our first question, while our Amagi's growth is impressive, could you elaborate on the current competitive landscape? Who are your main competitors and how does ARMOGY differentiate itself in this space?

Speaker 3

That's a great question. Thank you, Matt. The warehousing and logistics industry is indeed highly competitive. We face competition from both established players and emerging startups. However, Amlogic differentiates itself through several key factors.

Speaker 3

Firstly, our focus on quality evident in our ISO 9,001 certification and high inventory accuracy sets us apart. Secondly, our ability to handle bulky items efficiently and see our specialized warehouse infrastructures and technology give us a unique advantage. Finally, our comprehensive one stop solution including international oven fridge and advanced supply chain technology offer a level of convenience and value that many competitors struggle to match.

Speaker 1

Can you address some of the potential challenges related to your expansion plans, including the complexity of international expansion, the need for significant capital investment and the potential for execution risk?

Speaker 3

Sure. We are fully aware of the challenge associated with the expansion. International expansion require careful navigation of regulatory and cultural differences. We are mitigating this risk by conducting thorough market research and adopting a serious approach to expansion. Capital investment is indeed necessary, but we have a strong track record of financial management and are open to exploring various funding options to support our growth.

Speaker 3

As for execution risk, we have a seasoned management team with a proven ability to execute complex projects. We are also invested in robust project management system and processes to ensure a smooth implication.

Speaker 1

And our last question, ArmLogi's emphasis on technology is commendable. However, could you provide more specifics on the expected return on investment from these technology investments? And how will these investments translate into tangible benefits for the company and its shareholders?

Speaker 3

That's an excellent question. Our technology investments are strategic and to driving a long term substantial growth. We expect this investment to yield a significant ROI through several advantage. Firstly, improving efficiency and automation will lead to cost saving and increasing productivity. Secondly, advanced data analytics and supply chain optimization will enable us to make more informed decision, leading to better inventory management, faster delivery time and enhance our customer certification.

Speaker 3

Finally, our technology platform will open up our new revenue stream such as offering value add services to our customers and partners. This benefit will unlimited translate into the increased profitability and shareholder value.

Speaker 1

Well, thank you, Ian, and thanks to everyone for participating on today's call. We look forward to providing additional updates in the near future. In the meantime, we can be reached at infoarmlogi.com or you can contact me at matthewstrategicirdot

Operator

com. Ladies and gentlemen, that concludes our conference for today.

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