Alliance Entertainment Holding Corporation

Greetings and welcome to the Alliance Entertainment first quarter fiscal year 2026 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Combs. Thank you, sir. You may begin.

Thank you. 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 the company's current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. We are cautioned not to place undue reliance on these forward-looking statements which reflect the company's opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Throughout today's discussion, management will attempt to present some important factors relating to the business that may affect predictions. You should also review the company's Form 10-K, filed September 10, 2025, for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. During the conference call, management will discuss non-GAAP financial measures, including a discussion of adjusted EBITDA. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. A press release detailing these results crossed the wire this afternoon at 4.01 p.m. Eastern Time and is available in the investor relations section of Alliance Entertainment's website at aent.com. Your host today, Jeff Walker, Chief Executive Officer, and Amanda Netko, Chief Financial Officer, will present the results of operations for the first quarter of fiscal year 2026 and in September 30, 2025. Bruce Ogilvie, Executive Chairman, is also on the line and will be participating during the Q&A session. At this time, I will turn the call over to Alliance Entertainment CEO, Jeff Walker.

Thank you, Paul, and good afternoon, everyone. I'm pleased to welcome you to today's call. We opened fiscal 2026 with strong momentum, delivering both top-line expansion and improved profitability. Revenue grew 11% year over year to $254 million, reflecting solid demand across physical media, collectibles, and direct-to-consumer channels. Adjusted EBITDA increased to $12.2 million from 3.4 million a year ago, a 259% improvement, while gross margin expanded 340 basis points to 14.6%. These results highlight the strength of our content portfolio, disciplined expense management, and the efficiency gains we're achieving through automation and the early benefits of our AI initiatives. At the same time, our handmade by robots brand continues to scale rapidly. New collectible launches this quarter drove exceptional sell-through and expanded retail placement, and we're seeing growing fan engagement across both our own sites and partner channels. This business has quickly become a pillar of our collectible strategy, and we expect continued strength through the holiday season. We also strengthen our corporate governance, welcoming two new highly accomplished independent directors, Dimitri Kosko and Sheila Bangalore. Each bring deep expertise in finance, AI technology, and governance. Their experience complements our leadership team and supports the company's next phase of growth and innovation. Operationally, we're advancing our AI-powered sales transformation. The rollout of HubSpot Sales, Hub, and Microsoft Copilot is already improving lead prioritization, automating content creation, and enabling our teams to work faster and smarter. These tools are helping us convert opportunities more efficiently as we capitalize on our busiest quarter of the year. Finally, our exclusive content portfolio continues to expand. Through AMPT, we signed a new distribution agreement with Virgin Music Group, which adds another premium catalog to our growing roster of label partners. Combined with our ongoing success in film, gaming, and collectibles, these partnerships reinforce Alliance's position at the center of physical media and pop culture ecosystem. Taken together, fiscal 2026 is off to a strong start. We're executing on our strategy, driving profitable growth, advancing technology adoption, and deepening our relationship across entertainment categories. As we move through the balance of the year, our focus remains on delivering consistent results, expanding our exclusive content base, and creating long-term value for our shareholders. This slide offers a quick snapshot of our performance over the past several fiscal years and on a trailing 12-month basis through September 30, 2025. Over the trailing 12 months, revenue totaled nearly $1.1 billion, reflecting stable demand across our core categories and the return to year-over-year top-line growth we saw this quarter. Adjusted EBITDA reached $45.3 million, up from $36.5 million in fiscal 2025 and $24.3 million in fiscal 2024. That continued expansion demonstrates the structural improvements we've made in product mix and cost efficiency. Our adjusted EBITDA margin on a trailing basis now stands at roughly 4.2%, and in the first quarter alone, we achieved 4.8%, a level we view as the new baseline for fiscal 2026 and beyond. That margin durability reflects higher value content, automation benefits, and early productivity gains from our AI initiatives. Earnings per share rose to 38 cents on a trailing 12-month basis, building on a 30 cent last year and a 9 cents the year before. This steady earnings progression highlights the efficiency and strength of our model, even in a balanced revenue environment. On the balance sheet, we ended the quarter with $3.2 million in cash, inventory of $121.7 million, and debt of $66 million, essentially flat versus June 30, 2025, but well below our year-ago levels. Our equity position grew to $108 million, reflecting stronger retained earnings and disciplined working capital management. Subsequent to quarter end, we further strengthened our financial flexibility by closing a new five-year $120 million senior secured revolving credit facility with Bank of America. This agreement replaces our prior asset-based facility and reduces borrowing costs by up to 250 basis points with 61 million of undrawn availability at closing. The new structure provides lower interest expense, longer duration, and greater liquidity to support both seasonal inventory needs and future growth initiatives. Together, these metrics show a company that's expanding margins, generating consistent earnings, and operating from a stronger financial foundation. We're entering the remainder of fiscal 2026 with the balance sheet, liquidity, and operating discipline to sustain that momentum. Before I hand it over to Amanda, I want to take a moment to revisit what makes Alliance such a unique platform, the engine that powers the collectibles value chain. At its core, Alliance Entertainment connects fans to music, movies, games, and collectibles they love. We sit at the intersection of content and commerce, curating, sourcing, and delivering products that celebrate pop culture across every format. Our model is built on fully integrated ecosystem from exclusive product development to omnichannel fulfillment. On the front end, we partner with more than 150 studios, labels, and manufacturers to source and create the most sought-after titles and licensed collectibles. Additionally, through our own brands, like Handmade by Robots, we design and distribute exclusive products that collectors can't find anywhere else. Those products move through a centralized distribution and logistics network that reaches 35,000 retail locations and 175 online platforms worldwide. Whether it's a major retailer, a specialty store, or a direct-to-consumer order, our automation and fulfillment systems ensure accuracy, speed, and cost efficiency at scale. From there, our omnichannel delivery model brings those products to life, serving both B2B partners and consumers directly through our own retail group, which operates sites such as deepdiscount.com, importcds.com, and Movies Unlimited. This structure gives us complete visibility across the supply chain and allows us to respond quickly to demand shifts. Each business unit, AMP Entertainment and Music, Alliance Home Entertainment and Film and Television, and our growing collectible segment plays a specific role in that ecosystem. Together, they create a diversified portfolio that blends reoccurring distribution revenue with higher margin proprietary content and collectibles. It's this combination of deep relationships efficient infrastructure, and a focus on fan-driven categories that gives Alliance its competitive edge and supports the margin profile we delivered in the first quarter. With that, I'll now turn it over to Amanda to walk through the financial results for the first quarter of fiscal 2026 in more detail.