Armlogi Holding Corp.

Thank you for standing by and welcome to the Arm Lodgy 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 Arm Lodgy Holding Corp.

Thank you, Operator, and thanks to everyone joining us today for Armlogy'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-K 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 I.D. Chow, Chairman and Chief Executive Officer of Arm Lodging, along with Ian Zhao, Chief Financial Officer, and Scott Stu, 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. 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. Such forward-looking statements relate to future events or our future performance, including our financial performance and projections, 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, 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 marketing, and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. We are not obligated to publicly update or revise any forward-looking statement, 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, I.D. Chow, Chairman and Chief Executive Officer of ArmLogic. Good afternoon, I.D.,

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 rapidly growing U.S. space with housing and logistics service provided. We offer a comprehensive suite of supply chain solutions, encompassing warehousing management and fulfillment catering to the involving needs of businesses in increasingly interconnected work. The e-commerce forum, fueled by the Internet and globalization, has created a landscape where merchants increasingly seek to expand their reach through international platforms like Amazon and eBay. However, this expansion comes with a logistic complexity, particularly in cross-border shipping, long delivery times, high damage rates, and peak season congestion present a possible challenge. Amlogic's solution is protected and intact from overseas warehouses by establishing local storage facilities in target countries. We empower cross-border merchants to export those goods in bulk. insurance rates and secure delivery to consumers upon order placement. This approach statistically reduces delivery time and damage rate, enhancing overall customer experience. Our commitment to excellence is reflected in our one-stop warehousing and logistics service talented to cross-border e-commerce merchants outside the U.S. on a locally located warehouse. Equipped with state-of-the-art technology, provide a nationwide footprint and a temple storage space. We offer a full spectrum of service from customer to broker. to transportation and a comprehensive warehouse management. Ensure seamless operation for our clients. Our dedication to quality is unwavered. We are able to ISO 9001 standard. Ensure tight inventory, accuracy, and providing 24-7 customer support. This commitment Coupled with our large volume of processed goods, allow us to offer competitive service and delivery, further strengthening our value proposition. Technology is the heart of our operations. Our proprietary platform anchoring in Amazon Web Service Cloud. empowers us to manage shipment efficiently, provide a real-time update, and ensure the integrity of the deliverer. This technology-driven approach not only reduces costs but also minimizes errors, enhancing customer satisfaction. As we look ahead, our growing strategies are clear and ambitious. We will expand and diversify our customer base, targeting key marketing in China, Southeast Asia, and Mexico. We will enhance our customer supply chain efficiency by broadening our solutions and services, including expanding our international ocean-free capabilities. We will continue to invest in cutting-edge supply chain technology, leveraging AI, data analytics, and smart systems to optimize operations and deliver value insights. And we will pursue industry to expand our capability and generate attractive returns. I will now turn the call over to Ian Chow, our Chief Financial Officer, of his remarks.

Thank you, ID. We achieved several strategic and operational milestones in facial years of 2024 and subsequent to the year end, which I will go through now. In May, we closed our initial public offering of 1.6 million shares of common stock at a public offering price of $5 per shares. For a total of $8 million 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 a new 733 and 200 square foot warehouse located nearby the port of Savannah in Georgia. In August, that warehouse known as the SAV1 becoming fully operational and has quickly become the biggest and busiest among our nine warehouses. SVA1 is equipped with the logistic technology and is designed to support a wide range of supply chain activities, from storage and distribution to complex logistics solutions. Its strategic location and one of the business ports in the United States provide optical assets for importers and exporters, future enhancing Amlogic's service offering. Since June 2024, The facility has handled over 800 container shipments and maintains over 70% occupancy. We will also become an authorized warehouse provider for sellers on the Timu marketplace in June. Through this collaboration, we will offer Timu sellers streamlined access to our warehousing facility and to our logistics services. 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 Omnlogic's logistic expertise to improve delivery speeds, reduce operational costs, and enhance overall customer experience. Furthermore, we announced a strategy partnership with Maxmo Group. a manufacturer and distributor of power sport vehicle and platoon 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. This collaboration has resorted to the integration of maximum quality control standards into Amlogic's distribution process, improving our service reliability, Under the terms of agreement, we will manage the reception of container shipment containing maximum vehicle kits from Asian suppliers. We will provide assets to our facility located throughout the U.S. which are equipped with technology and specialized equipment necessary for handling and storage large and bulky items adhering to the ISO 9001 industrial standards. Massimo will conduct vehicle assembly within our warehouse while we will oversee inventory management, storage service, and the logistics required for delivering the assembly vehicle to their final order destination across the United States. 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 Maximo Group. The facility, which is equipped with state-of-the-art 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 extending service to key clients, including Amazon. We enhance our logistics service and expand our customer base, particularly in the export logistics industry. Investments in staffing, training, and equipment aim to meet rising demands, and improve our service quality. 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 underscored our commitment to embrace the renewable energy technologies and our role as a forward-thinking organization that prioritizes sustainability in its operations. In addition, our participation in this program qualifies Omnology for monthly energy rebates. 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 Amlogic, to provide an overview of our financial performance.

Thank you, Yan, and good afternoon, everyone. For further information regarding our four-year 2024 financial results and the disclosures, Please refer to our earnings release and the annual report on Form 10-K, start with the SEC. Total revenue for the full year end June 30, 2024 were $167 million, up 23.6% from $135 million in fiscal year 2023. Our transportation services segment reported revenue of $115.3 million, an increase of 18.8% from $97 million in fiscal year 2023. The increase was driven by the rapid expansion of our business in 2023 as we expanded our warehouse operational capacities in California and New Jersey. This segment comprises receiving third-party carrier services to our customers. Our warehousing services segment generated $51.5 million, a 38.1% increase from $37.3 million in fiscal year 2023. This growth was driven by the growth in our transportation services. This segment comprises inventory management and the storage openings. Our other services segment generated which was a decrease of $3.5 million compared to previous years. The segment by delivery consists of customs brokerage services. Our cost of sales were $148.9 million in fiscal year 2024, an increase of 36.2% or $39.6 million compared with the $109.3 million in fiscal year 2023, This increase in cost is predominantly driven by growth in transportation and warehousing services, leading to higher expenses across warehouse operations, particularly rental, labor, and operational expenses. Post-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, remains 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 $2.2 million to $10 million for fiscal year 2024, from $7.8 million 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 repairs and maintenance to accommodate our business expansion. Our net income was $7.4 million and $13.9 million 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 the continued driving value for our shareholders and partners. Our success would not be possible without our hardworking employees, loyal customers, and valuable shareholders. Thank you for your continued support and belief in our region. We look forward to updating you on our business during future earning course. Back to you, Nate.

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 Armlogy's growth is impressive, could you elaborate on the current competitive landscape? Who are your main competitors, and how does Armlogy differentiate itself in this space?

That's a great question. Thank you, Matt. The warehousing and logistics industry is indeed highly competitive. We pace competition from both established players and emerging startups. However, Amlogic depreciates itself through several key factors. Firstly, our focus on quality, evident in our ISO 9001 certification and high inventory accuracy, sets us apart. Secondly, our ability to handle bulky items efficiently thanks to our specialized warehouse infrastructures and technology give us a unique advantage. Finally, our comprehensive one-stop solution, including international open fridge and advanced supply chain technology, offer a level of convenience and value that many competitors struggle to match.

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?

Sure. We are fully aware of the challenge associated with the expansion. International expansion requires 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. 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.

And our last question, Armlogy'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?

That's an excellent question. Our technology investments are strategic and aim to drive in a long-term substantial growth. We expect this investment to yield a significant ROI through several advantages. 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 decisions, leading to better inventory management, faster delivery time, and enhance our customer certification. 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.

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 info at armlogy.com. Or you can contact me at Matthew at strategic-ir.com.

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