Armlogi Q2 2025 Earnings Report

Armlogi EPS Results

• Actual EPS: -$0.04
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Armlogi Revenue Results

• Actual Revenue: $51.14 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Armlogi Announcement Details

• Quarter: Q2 2025
• Date: 2/14/2025
• Time: Before Market Opens
• Conference Call Date: Friday, February 14, 2025
• Conference Call Time: 11:00AM ET

Armlogi (NASDAQ:BTOC) is a warehousing and logistics service provider which offers a comprehensive package of supply-chain solutions related to warehouse management and order fulfillment. Armlogi Holding Corp. is based in WALNUT, CA.

Armlogi Q2 2025 Earnings Call Transcript

Key Takeaways

• In Q2 FY 25, Armlogy generated $51.1 million in revenue, a 21.8% year-over-year increase that underscores strong market demand.
• Gross profit margin contracted to 0.9% from 18.3% due to higher freight expenses (notably UPS) and increased labor costs tied to warehouse expansion.
• The company expanded its network from nine to 12 warehouses—growing total space from 2 million to 3.5 million sq ft—and now covers 70% of the U.S. population within a two-day drive.
• Armlogy reported a Q2 net loss of RMB 1.6 million (versus net income of RMB 3.7 million last year) and an H1 net loss of RMB 6.3 million, reflecting near-term cost pressures from rapid expansion.
• Liquity initiatives include a RMB 50 million standby equity purchase agreement and other financings, with RMB 7.4 million in cash/restricted cash, while the active customer base nearly tripled to 298.

Presentation

[Operator]

Thank you for standing by and welcome to the Armalodie Holding Corp. Second Quarter and First Half of Fiscal Year twenty twenty five Earnings Call.

[Operator]

Please note that today's call is being recorded. I'll now turn the meeting over to Matthew Abenanti, Investor Relations for ArmLogi Holding Corp.

[Executive]

Thank you, operator, and thanks to everyone for joining us today for Armlogy's earnings conference call to discuss the second quarter and first half of '20 '20 '5 results. Please note that our earnings press release was issued yesterday along with our quarterly report on Form 10 Q, which was also filed yesterday with the Securities and Exchange Commission. Both are available in the Investor Relations section of our website at ir.armlogy.com. Joining us on the call today are Eiry Chao, Chairman and Chief Executive Officer of Armlogy and Scott Hsu, Chief Financial Officer. 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.

[Executive]

We thank everyone for submitting these questions. And 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.

[Executive]

Such forward looking statements related 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 non historical in nature, particularly those that use the terminology such as may, should, expects, anticipates, contemplates, 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 predictions.

[Executive]

We are not obligated to publicly update or revise any forward looking statement whether as a result of uncertainties or assumptions. The forward looking statements 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 CEO of Armalaxy. Good morning, Eiry.

[Aidy Chou, Co-Founder, Chief Executive Officer, President, and Chairman of the Board of Directors at Armlogi Holding]

Good morning, Matt, and thank you, everyone, for joining us today. I would like to discuss our second quarter and first half results for fiscal twenty twenty five and outline our strategic progress. For Q2 FY twenty twenty five, we generated revenue

[Aidy Chou, Co-Founder, Chief Executive Officer, President, and Chairman of the Board of Directors at Armlogi Holding]

of

[Aidy Chou, Co-Founder, Chief Executive Officer, President, and Chairman of the Board of Directors at Armlogi Holding]

$51,100,000 representing growth of 21.8% compared to the same period last year, where our top line growth demonstrates strong market demand. We fixed the margin pressure this quarter as we executed on our expansion strategy. We will grow from nine to 12 warehouses, expanding our total space from 2,000,000 to over 3,500,000 square feet with new strategic location in Savannah, Georgia, Ontario, California and most recently as a 500,000 square feet facility in the St. Louis Metro Area. Looking ahead, we remain confident in our long term strategy.

[Aidy Chou, Co-Founder, Chief Executive Officer, President, and Chairman of the Board of Directors at Armlogi Holding]

Our expanded footprint now provides access to 70% of The U. S. Population with a two day drive. Our focus remains on optimizing this facility while maintaining our high service level. I will now turn it over to our new CFO, Scott Xu, who will provide a detailed review of our financial performance.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Thank you, Ivy. I will now take us through a comprehensive review of our financial results and operational metrics for both the second quarter and the first half of the fiscal year 2025. Let me start by expanding our revenue performance. While we achieved the 21.8% top line growth, reaching the $51,100,000 in Q2, the composition of this growth reveals important trends across our business segment. Our transportation services revenue grew 20.8% to RMB36.1 million, driven by increased shipment volumes from our expanded warehouse network.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Our warehousing services revenue saw even stronger growth increased 25.7% to RMB15 million, reflecting the successful addition of our new facilities. Our other services revenue, primarily custom brokerage, decreased to 6,243 as we focus on our core operations. However, the growth came with significant cost pressures. Our total cost of sales increased by RMB 16,300,000.0 or 47.6 percent to RMB 50,900,000.0 in Q2. The increase was driven by two main factors.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

First, there was a rise in freight expense due to higher UPS shipping charge. Second, this expense, employee salary and the benefit and the temporary labor cost increased as we expand our warehouse and operation teams to support growth. This cost increase reflecting both our expansion activities and the industry wide pressures, resulting in our gross profit margin decreased to 0.9% in Q2 fiscal year twenty twenty five from 18.3% in Q2 fiscal year twenty twenty four. General and administrative expenses decreased by $300,000 or 9% from CNY2.9 million for the three months ended 12/31/2023, to RMB2.6 million for the same period in 2024, with the primary driver being a RMB1.2 million increased professional fees related to the investment financial advisory services. As a result, our net loss for the three months ended 12/31/2024 was RMB 1,600,000.0 compared with the net income of RMB 3,700,000.0 for the same period in 2023, representing a decrease of RMB 5,400,000.0.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Looking at our first half performance, total revenue grew 12.5% to RMB 93,600,000.0. However, the cost pressure I described earlier led to a net loss of the six months ended 12/31/2024 of RMB6.3 million compared with the net income of RMB6.5 million for the same period in 2023, representing a decrease by RMB12.8 million. Turning to our balance sheet and the liquidity position as of 12/31/2024 and 06/30/2024, we had cash under restricted cash of RMB 7,400,000.0 and RMB 10,000,000 respectively, which primarily consists of the cash deposits in banks. Our cash flow analysis shows operating activities used the net cash of the RMB9.2 million in the first half, primarily due to our expansion related expenses, investing activities just RMB1 million mainly for the property and equipment purchase, while financing activities provided RMB7.4 million primarily from our standby equity purchase agreement. We have taken a significant step to strengthen our financial flexibility.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

This includes securing a RMB50 million standby equity purchase agreement with You, establishing up to RMB21 million in convertible promissory nodes and completing two RMB5 million trenches of retail advance. Our working capital position remains solid with a total current asset of $42,900,000 against current liabilities of $40,200,000 and our total stockholders' equity stands at 33,200,000.0 A particularly encouraging metric is our growing customer base, which has expanded from 105 at the June 2024 to two ninety eight active customers as of 12/31/2024. The nearly three times growth in our customer base demonstrates from market demand for our service despite the near term margin pressure. Looking ahead, our financial strategy focused on four key areas: first, improving deterioration rates at our new facility to drive better operating leverage second, implementing automation and efficiency initiatives to manage operating costs third, optimizing working capital to deliver better inventory and the risk level management and four, maintaining adequate liquidity to support our continued growth initiatives. With that comprehensive financial overview, I will turn it back to Matt for questions.

[Executive]

Thank you, Scott. We will now move to the question and answer portion of the call. Thank you to everyone who has submitted questions. Our first question, can you provide more color on the UPS cost increases and what steps you're taking to mitigate the impact on margin?

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Yes. The UPS cost increase contributed significantly to our RMB 8,300,000.0 in France expenses this quarter. We are addressing this through the multiple initiatives. First, our recent integration with Amazon Shipping provides a alternative carrier options that we expect will help to diversify our shipping costs. Second, we are leveraging our new ProPro transportation management software to optimizing the routing and the consolidated shipping where possible.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Finally, we are in ongoing discussion with the multiple carriers to ensure competitive rates as we continue to grow our volume.

[Executive]

Thank you. Your warehousing footprint has grown significantly, but utilization seems mixed. What's your target utilization rate and timeline for reaching it across the new facility?

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Well, our Savanna facility has reached 70% utilization within six months, which we are pleased with. Some of our newer facilities are still ramping up. Our Taki utilization rate is 85% across the network. We expect most facilities to reach this level within twelve months eighteen months of the opening based on our historic car experiments. At St.

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Louis, the facility just came online, so that will take some time, but Ontario is taking similarly to some of our ramp ups curve.

[Executive]

Given the cash burn this quarter and current market conditions, do you anticipate needing to draw down more of the SEPA facility in the near term?

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

We end the quarter with $7,400,000 in cash and the restricted cash and we have only draw $10,000,000 of our $15,000,000 SEPF facility. While we believe our current liquidity position is adequate for our near term needs, having the facility provides important flexibility as we continue to optimize our expanded operations. We will be strategic about any additional growth balancing growth opportunity with dilution considerations.

[Executive]

Thank you. And our last question. Now you mentioned AI integration in your WMS. Can you quantify the expected efficiency gains and timeline for implementation?

[Sheng-Kai Hsu, Chief Financial Officer at Armlogi Holding]

Yes. The AI enhanced WMS is currently being rolled out across our network with full implementation expected by fiscal year end. Early results from our pilot facilities show potential for the 15% to 20% improvement in heating efficiency and the 25% reduction in worker working distance. However, we expect the full benefit to materialize over six to twelve months as the system learned from our operation and we optimize its implementation.

[Executive]

Thank you, Scott, and thank you, Ayiti, for your comments. And thank you, 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 infoarmology dot com or you could contact me at matthewstrategic ir dot com.

[Operator]

Ladies and gentlemen, this concludes our conference for today. Thank you for your participation and you may now disconnect.

Participants

Executives

• Aidy Chou, Co-Founder, Chief Executive Officer, President, and Chairman of the Board of Directors
• Sheng-Kai Hsu, Chief Financial Officer

Analysts

• Executive