Alliance Entertainment Holding Corporation

Greetings and welcome to the Alliance Entertainment second quarter fiscal year 2024 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise our publicly released results of any resistance to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent form 10-K for a more complete discussion of these factors and other risks, particularly under the heading risk factors. During this conference call, we will discuss non-GAAP financial measures, including a discussion of adjusted EBITDA. We believe non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation for a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. A press release detailing these results crossed the wires this afternoon at 4.05 p.m. Eastern Time, and it is available in the investor relations section of our company's website, aent.com. Your host today, Bruce Ogovie, Executive Chairman, and Jeff Walker, Chief Executive Officer and Chief Financial Officer, will present results of operations for the fiscal second quarter ended December 31, 2023. At this time, I'll turn the call over to Alliance Entertainment Executive Chairman, Bruce Ogilvie.

Thank you, Operator, and good afternoon, everyone.

I'm pleased to welcome you to today's fiscal second quarter ended December 31st, 2023 Financial Results Conference Call. For those of you that are new to our story, we bring entertainment to you. Alliance stocks the world's largest selection of music, movies, video games, gaming hardware, arcades, collectibles, toys, and consumer electronics. We are a trusted omni-channel supplier to the largest retailers and wholesalers across the globe and a trusted distributor for the world's most recognized entertainment and gaming brands. As our most recent June 30, 2023 fiscal year ends, we produced over $1.1 billion in annual revenue and employed over 700 team members. Alliance is a gateway between brands and retailers. We are a trusted omni-channel supplier to Walmart, Amazon, Best Buy, Costco, Target, Kohl's, BJ's, Meijer, Barnes & Noble, and 2,000 additional retailers and wholesalers worldwide, and a trusted distributor for Disney, Paramount, Sony, Warner, Universal, Microsoft, Nintendo, Activision, Electronic Arts, Mattel, Hasbro, Funko, RK1UP, and 600 others. We have over 200 customers that sell online worldwide and ship to more than 35,000 storefronts in 72 countries and distribute over 325,000 in-stock SKUs to the largest retailers and wholesalers in the world. Our AMP and distribution solutions division distribute physical exclusive music and exclusive video respectively, and our Mill Creek division engages in exclusive video licensing and content from Disney, Sony, Universal, Lionsgate, CBS, and others. Distribution Solutions has over 62 significant exclusive video studios that rely on Distribution Solutions to manufacture, supply, and market video products and has direct sales through accounts with Amazon, Walmart, Target, and thousands of retailers and websites through Alliance Entertainment's vast distribution channels. AMP has more than 90 exclusive labels that rely on amp to supply and market music, vinyl and CD, and sells and markets music through Amazon, Walmart, Target, Barnes & Noble, Best Buy, and over 2,000 independent music stores in the U.S. through Alliance Entertainment's worldwide distribution channels. Mill Creek licenses video content from studios to create, manufacture, market, and sell video DVDs with content licensed from Disney, Sony, Universal, Lionsgate, CBS, and significant independent studios. Alliance provides traditional retailers with world-class distribution and e-commerce capabilities by focusing on service, selection, and technology by providing our retailers superior service, stocking the world's largest physical media and entertainment selection, and state-of-the-art technology systems and facilities. Alliance provides efficient omni-channel expansion solutions for retailers, offering full enterprise-level infrastructure and drop-ship orders directly to consumers on behalf of its customers. The entire ordering, confirmation, and invoicing process is automated, allowing customers to focus on sales while we perform all stocking, warehousing, and shipping functions. To the consumer, the shipment they receive looks like it was sent by the large retailer to service. Alliance is also a leader in vendor-managed inventory solutions, providing solutions tailored to our customers to support their inventory needs. These value-add services provide a highly technical, critical business function for our partners. Alliance consolidates and distributes a vast portfolio of entertainment products, while our proprietary database powers retailers' online music and gaming offerings, including vinyl, CDs, DVDs, Blu-ray, gaming products, and retro arcades. Currently, we have over 325,000 unique scenes in stock to support our customers' vast selection of needs. Alliance has invested in enhancements, to our automated handling equipment, which reduced shipping time, streamlined water processing, reduced labor costs, and also improved overall warehouse management. Just over a year ago, we installed an auto store automated storage retrieval system at our Shepherdville warehouse. This improved warehouse operations, allowing us to achieve increased levels of speed, reliability, capacity, and precision that resulted in significant cost savings. This slide highlights our strategically located operations that include seven offices and four distribution centers, including our 873,000 square foot facility in Shepherdsville, Kentucky. In 2023, warehouse shipments totaled over 70 million units to our highly skilled workforce with tech-enabled facilities and infrastructure that allows Alliance to achieve industry-leading speed and accuracy metrics. I will now hand the call over to Alliance's CEO and CFO, my partner, Jeff Walker.