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spk_0: good the ladies and gentlemen and welcome to the i power fiscal que one twenty twenty two earnings conference call at this time operators events are in the listen only mode later we will conduct a question and answer session instructions will follow at that time if anyone should require assistance during the conference least breast are than zero i just don't tell the phone i would know like that on a conference or with your host kevin vasily think you least go ahead
spk_1: yeah thank you very and are good afternoon everyone that a by now everyone should have access to our our fiscal first quarter twenty twenty two running press release which was issued are today at approximately four or five pm eastern time really should be available in the investor relations section of i powers website at me i power dot com the call was a be available for webcast we play on our website at following i prepared remarks more open up the call for a questions before either this once i'd like to remind listeners that certain comment made of it's coffers call and webcast considered forward looking statements under the private securities litigation reform act at nike ninety five of these forward looking statements are subject to certain known and unknown risks and uncertainties as well as assumption that could cause actual results to differ materially from those reflected and before looking statements of these for the a statement are also subject to other risks and uncertainties their described from time to time the company's families of the fcc do not place undue reliance on any forward looking statements which are being made only ends of the data of call except as required by law the company or takes no obligation to revise are publicly released the results of any revision to forward looking statements at with that i like than answered the call over two hours chairman and
spk_2: you know more than lawrence i bet that think your cabin or and good good afternoon everyone from the has only been about six weeks from the lot of proper update our prepared remarks are they will be relatively brief and the new fiscal year as off to a great start as we generated another record quarter of a wreck kuroda results a revenue was up at sixteen percent year over year despite compete against our highest quarter historically and we also but the trained more broadly given some of the industry weakness in commercial once we believe our lab capital intensive you call us model high margin profile and consumer driven and market sets us apart from other hydroponic players in the face from a product perspective our a house ventilation my was the strongest a category during the quarter today a accounts for about forty percent of a sales compared to roughly thirty percent this time last year and a consistent growth is a reflection of our superior product design and merchandising of ability as well as the work we put in to effectively manage our supply or network our diversify the supply base enabled us to consistently deliver park the it directly to consumers or to our channel partners to give us some perfected to those that that i knew who to our start story we are one of the top sellers of hydroponic equipment on amazon and online so product availability is a key to meeting cost of his humor did in addition to our our momentum in the ventilation systems we have several product design initiatives and way that will incorporate smart functionality into our manipulation they were terrain and likely product line for remote monitoring and operation for our fall apart are we also have a number of saturday's the products be bottom that yogi key elements in grow environment optimization this is entirely new category for us and we are excited about about optionally of finally we have developed several prototype of fog countertop hydroponics applies and are we are a discussion with our supply chain honor on a design and manufacturing parameters while it's to rt to know the exact timing of the launching of these product we hope to have some of these products in market by in the power fiscal year another key developments during the quarter was our first set orders for delivery into western europe are we received the a to purchase order from one of our top honors ah for the uk and sermon market or we are at added very early stage our entrance into the european market i will believe that this market a significant in five at with very little penetration to date now we see your as a high growth option before us over the medium a long time at their a consumer how to punish market developed a overall would continue to execute on and various quote objectives that were laid out during last year's i i've york and i'll go we are very pleased with our momentum but we know that the past days i powered me i had ah wow now time to call over to our yep all cabin and to take you through our financial results a more details i kept
spk_1: i beg you lawrence yet another a solid quarter performance in our fiscal like you won a total revenue that sixty percent from the year ago period to seventeen point four million highlighted by a great mix of our in house product sales as well as increase their the ventilation and between products that we can see like a good answer knowing more about our plans which increased twenty one percent a year over year to fifteen million and accounted for possibly seventy five percent of our sales care to seventy two percent in the year ago quarter as we previously stated gross margins for our products are generally ned twenty to twenty five percentage points higher than our third party
spk_3: it is that we carry
spk_1: the will continue to invest and emphasize the and house at part of our catalog going forward although was mostly for the quarter was at four hundred ninety basis points to forty two point one percent and which exceeded expectations given the higher product input costs know that we started to see over the summer as well as increased brain expenses which has been seen napoleon our industry that across all industries ah in addition to hire say make the it has plans the composition photic mix with in our in house brand products sales skew toward the higher end of the bargain distribution we need remain cautiously optimistic about margins going forward even the ongoing volatility in the supply chain to elaborate a expenses for up at school fiscal first quarter were six million dollars compared to four point five million for the same period in fiscal twenty twenty decreases primarily driven by are increasing volumes as well as increased expenses associated with being a publicly traded company which we didn't have and let the prior quarter of fiscal twenty line lol despite the ia sequentially peace and sales from the june quarter operating expenses were down an absolute basis as or and spit or then and normalized the bit and a channel perfect mix resulted in less are small emergencies net income in the quarter in crete sixteen percent your the year to a point nine million or three cents per diluted share her computer net income of and clinique million or force has been diluted share in the same period in fiscal twenty twenty one little of the balance sheet cash and cash of conference where one point two million as of september thirty twenty twenty one compared to six point seven million as of june thirty twenty twenty one decreases in almost entirely to a to the timing of cash floating receive orders from our largest channel partner in low that was not an indication of any business or operating trends now we ended the quarter with approximately twenty four million of working capital told that has it's than the thirtieth at twenty twenty one stood at that point five million compared to point seven million as of june thirty twenty twenty one so again the balance and our fiscal year we remain confident our growth strategy and financial targets from imagine and cause perspective there have been some favorable developments in the last six weeks with regard to contain costs and put dad poor congestion in los angeles and stare a little too early to tell if it is a reversal know that will remain parliament in the water supply chain does when a volatile is is incorrect input costs continue to fluctuate and covered nike competed be very disruptive to the economy's where we add primarily source know our product has he done since then add and then again yeah we are working with our partners in china to minimize any impact also and i met him last year we do have a number of way the push back on the supply chain volatility in an input cost pressures know that you continue to be in place you didn't mood you're trying to manage channel program next now both procurement and acting some of our as supply chain partners ad for a larger production lines at will also continue to emphasize a greater make them are in as product sales and either is new proprietary skews the on the in our catalogue and we are looking forward to another straw year fry power in fiscal twenty twenty two
spk_4: that to conclude or prepared remarks will now open it up for question
spk_0: thank you sir ladies and gentlemen if you have a question of this time please breast a star than a number one key on a touchstone telephone if your question has been answered or you this to remove yourself from the queue least press the pound key
spk_5: your first question comes from the line of my baker from the a davidson your line is open okay are i guys are a couple first are real quick ah to just form of you he said you're our target for year or little balls here but he didn't he doesn't typically reiterated the out for yourself rather of twenty five percent or more i just wanted to make sure that was the that the right way
spk_1: a still to be thinking of it and if so it outbreak or this core about up fifteen percent if you're looking for twenty five percent for the year that that are more than five upset that doesn't apply rab can you talk about you know ah ha you go from city without the type that the year thanks
spk_6: so i might add
spk_1: yeah so yes the he had a targeted we are wind point five percent can i'm at the to the floor growth for the to a team is still intact yeah we only you at our lab call six weeks ago so nothing's nothing's came from that standpoint on him well the thing about you
spk_7: corner relative to the end of the upcoming point is is where campaign was wrong according to the company's history
spk_1: yeah and
spk_8: you know we still he of the doubt to the year two to come to meet that goal so we're happy with ah he city present well we see me a lot of opportunity man
spk_1: we're like several quarters ten ten the get to that goal so they were in a good good spot
spk_5: going forward and me and you are confident then were and meal as good as little as we were will be got the guy with neil luckily the end of september yeah okay make sense are often barn and then i'll turn over it so often and come back in of it may be but ah the arches uptick the update if you were mine on your out nutrients business that they bought can we talk the idea was that that was something you're going to develop and house and hope to be are you'll get a ferret that in november but i think is
spk_1: fill out the possibility of of even making an acquisition they're such as if you could up data from that i appreciate it thanks
spk_2: sure once you want if you want to take that i'm from ah we we are we actually have the new friends are under development are we hoping to have the nutrient available for sale by the end of the calendar year ah with a chance alford actually launching by in the for this month as a war will announce it formally add that time but yeah
spk_5: that's upon my flair
spk_9: and is that the way they had all or that is that you know that changed at all that the time is right thing that sort of impact not as into member november being
spk_2: time when you get it done
spk_8: ah this this is still the target and i saw and heard about a candidate production okay ah preacher know yes and then ever tasted ten you potential acquisition yeah was probably still
spk_1: ah yeah mugging we think
spk_8: he away faster than of ram would be to bring in a on t developer and that fit the criteria that we think makes sense for them as model is no need to be yeah
spk_1: a brand that know is established but could accelerate with the use of any damage to channel and is me of suited for you commerce distribution till they could be packaging while the and side is better that are appropriate for power you are model and same the of were still in that the him surgeon identify and engage phase which is getting found one that he i think meet all the criteria that we think is is also good product so damn yeah this is it the in how development is ah he have one leg of the schools of his beef new it as it pertains to how we knew from the penetrate and nutrients ah but yeah we're we're excited about can have the opportunity there and young as we move further through the year young
spk_10: the an acquisition of a a brand made sense for us is is still absolutely in the under contemplation so
spk_0: okay thank you
spk_11: your next question is scott fortune from lot capital partner your line is open yeah katherine thanks for taking the question you may him we've seen a hydroponic industry on the commercial flights and very tough for a quarter from that standpoint they can you provide you get it seem to be will be immune to that could view all mine to this thing but can you provide color on the customers in trends going forward into for que in their season now the from a historical standpoint it as we look into the for que en que
spk_1: opportunities here to will they round and round your consumers the and spin going on there
spk_2: turn want him dead be my one thing that one and i'll like and can chime in after your answer that of good yes sir so so the commercial mark canada a is a very small portion of our a proposal a it kinda stop less than ten percent for the corner we were reporting ah so lucky said that we are largely a online retailer them that part doesn't seem to have a ah the theme and a huge up and down compared to the commercial market so wow we haven't noticed any significant change ah i'm in the consumer behavior ah so i don't have any job
spk_1: suggestions that would change from the what we saw his probably yeah and then and this seasonality so you know i think if if we broke our yeah i can log in ten yeah some of the different product tight and categories and they'd the ten they had some different seasonality and been any yeah we've said if in the past and he added we talk to you about this got a little bit numb new coven it nearly kind an air mr a lot of those historical pattern that we see or have seen and sell it in a little bit harder for us to predict seasonality at this point many you you have our own you are performance from the prior fiscal year mom and we're not we're not convinced that that's no no no no we're not sure yet that it's there ah that it's abnormal so in i id
spk_11: more focused really on trying to kind of continue to get product in hand and make sure it's available for your rtl partners great shape color on that i'm and then just say shifting can you provide local color on the traffic tier two web sites and hydro i'm initiatives to to drive and support more customers to your own once website deterrence transact more direct which consumer base
spk_12: step up to a kind of any metric that you're seeing around you advertising and faked his to to your own website and initiatives there
spk_2: and we are
spk_13: no with them
spk_2: in that that's right your we are doing a lot of work behind the scene ah identified new ways to attract more customer to our own website ah we are developing a newer version of the site on that ah that's about to be published soon and whoa whoa let people know about that
spk_11: and accomplish with a new ways to to get more traffic for the website but yeah we have local at we have a lot of work has been developed that out what you hear from i saw in up in a next a couple weeks i them
spk_14: okay and and then it's one last question kevin inventory levels deal with the supply chain challenges they're out there
spk_2: have you put for more in the toilet or kind of how you look at your inventory to meet demand or are you seeing issues there and tacking kinda does this him from outside her house week i with them how we have ah ah our image reposition for september is about the same as june and because we fix movie are without without receive from i feel we we increased ourselves that we could increase the quite a bit of in inventory way into ah our pipeline and i think we are very comfortable with lavoie but in the trees and also we are very comfortable where the auto stop raid and supplier network management is always one of our strength and the one of our core strength ah way i am very happy with the status it is now as i think we are very sufficient all imagery and we are very agile and we be able to deal with any kind of the problems that we encounter so far i think we're doing much better them than the rest of the akashi breath of the industry by we doing pretty good of on my own opinion
spk_11: and going forward ah we'll we'll the out what our focus a smart like to the new products are ya
spk_0: rolling out and our strategic it's like push out like got a web sites and i'm a new new lies or products that those will be out focuses on in terms of a base ah i don't think we have in problem
spk_5: great thanks for their that color in i will come back to the keep
spk_15: you have a follow up question from my baker of the a davidson your line is open
spk_1: i'll take our real quick here are a couple more if i could i'd take be and gross margin i keep up aware that beat came from and is a sustainable particularly well within the context of container cough coming down ah brave and then and then the art them and i want on on as gina right so
spk_16: you obviously for us he owns the
spk_1: the more volume house brand that weekend your push through the sales channels the better for us but it's in it we talk about you than gross margin delta between are you now so vs third party products that we carry it is a little bit more
spk_17: complicated than that of the the odds are the kind of equations is
spk_1: multi billion for this quarter we had a really nice you need to think about a catalogue in terms of a distribution you have the skill definitely toward the higher
spk_8: margin
spk_1: portion of that distribution so that connelly health ah i'm a woman made it up in the quarter as well as with your we got your channel programs with your some of our partners that the letter product in different ways we did a decent amount of am but i would call directly employed business meeting our channel partner would take ownership of that overseas he ended the of because lose their mid size and there the purchasing power you know they get really good you can tear can cost rates for bringing product costs ah to the us and so when we engage that program you they
spk_18: there was possible for the fray cause mom so that that might help as well
spk_1: ah so humid it sustainable and it's it's always hard throughout the kind of predict
spk_8: in any given quarter how much yeah we can push one channel program over another however ah and you that now meal our strategy is he had to really feature and i am and push our products there's a third party products with our partners and as such you know the more that we do the better i think the other day we could say to is that
spk_1: no back in the the prior quarter and in the period leading up to that end of the prior quarter of and we get a fair amount of new that to use that were added to the catalog and im given you the broader selection you we have an opportunity that he had for our customers that to choose that's more than they might choose a third party product so that that also helps i'm an e o anytime we introduce you a redesign of a we do admit the intention of having a better margin profile for that that product if we can and so we we walk away saying we're we're cautiously optimistic that we can keep he a margin that a really really healthy level and and potential expand them over the next several quarters but
spk_19: you just to be to be yell and then they think fair in the way we think about it he in the that distribution field cayenne from quoted a corner sometimes scheme to the lower end of our margin distribution of in our products so
spk_1: i headache the longer term friend is is good and know what i think when of think we talked about
spk_20: up in prior in bribery fear is that in we expect a little were a you a longer trend period to be able to increase margins
spk_5: add me i'm seven percentage points from here pm me over the next several years
spk_21: yeah i get that all my said
spk_2: five thought of that that the probably referred to in terms of ah your your partner important the product themselves or i believe i think a part of isn't right for that to mean is that sure you'll pay the shipping costs but you get of our product march and on that but also bar merchant fees or is that right but i guess are you saying is sure yet of our merchandise mart and what the fuck it up pay for shipping actually makes it a better all and gross margin is up right interpretation
spk_22: ah no no no
spk_1: yeah so so here's here's what what
spk_2: what's going up going out with for us so out we we you will work with up hundred and we also she brought for add container thing ourself so if the containers price job or the threat job a will help us are in the pot that way if the ah
spk_1: and and the biggest driver i just want to add onto your previous question at the biggest driver fly the margin on in across margin is to continuously pushing out that of product are more that part that the weekend price ah of you know to the market and get more consumer to
spk_23: to realize that that it so that with the aren't these into these part of the and away with eat ourselves with our partners
spk_1: manufacturers at that will tarm drive our our long time gross margin ah on off was that that the keep ah to so continuously introducing done a part of to the market on be the competition that's the key for long time now for a for great afraid a bid price job a low make our last margin and bigger for sure because are you like what combination for the parts we don't pay for eight we don't pay any way for possibly pay you know cheaper faded that of was yeah okay okay again i think a yet the biggest of with add to that just because i'm i'm sure you are getting that there can live right understanding is as well could so yeah so there is some the of played trade off for that and off but again it's not just as simple as say oh you use this program their gross margins are young are said in a couple directions and it but it's better operating margin it depends on the make the product to right to we had the get a bit this corner of your be skewed that iran end of the distribute janelle ah
spk_12: the margin distribution so we'll all be eaten it was better but it it it's not it's not l a
spk_1: a kind of stationary margin for all of our in our products vs our third party products me to the equation a little more complicated than just better gross margin no shipping costs than ned mad but smoked slightly lower price the better operating margin it will we get for that feel when we can reconnect but i don't but i what i want to communicate is that you
spk_24: between your quarters
spk_25: that product next can have an impact but it doesn't mean that the trend is going in one direction or another we we like the longer term friend were margins are going and we expected them to go out
spk_5: over the next two to three years in in a way that's very helpful for our
spk_0: for a bottom line
spk_1: yup yup don't like that makes it makes lots of an important ah ok
spk_0: right appreciate our
spk_26: turret
spk_27: there are no further questions at this time presenters please continue
spk_0: great well i'd want to thank everyone for johnny it's a on this call and that we look forward to the next morning relief and conference call and we'll see you all then thank you and killed
spk_1: ladies and gentlemen distant good street conference thank you for your participation have a wonderful day you me all disconnect no and since good the ladies and gentlemen and welcome to the i power fiscal que one twenty twenty two earnings conference call at this time all participants are in the listen only mode later we will conduct a question and answer session and instructions will follow at that time if anyone should require assistance during the conference please press star than zero a touchstone telephone
spk_2: i would though like attend a conference or with your host kevin vasily think you please go ahead he had a cafe and are good afternoon everyone that a by now everyone should have access to our fiscal first quarter twenty twenty can running press release her which was issued are today at approximately four or five pm eastern time the police should be available in the investor relations section of i powers website at me i powered that calm of the call was a be available for webcast replay on her website following are prepared remarks open up the call for a questions before this once i'd like to remind listeners that certain comments made on conference call and webcast are considered forward looking statements under the private securities litigation reform act at nike ninety five of these for looking statements are subject to certain known and unknown risks and uncertainties as well as assumption that could cause actual results to differ materially from those reflected and before looking statements of these for the containment statements are also subject to other risks and uncertainties their described from time to time the company's families of the fcc do not place undue reliance on any forward look these statements which are being made only and of the data this call except as required by law the company or takes no obligation to revise are publicly released the results of any revision to forward looking statements and with that i like the nats from the call over to hours powers chairman and ceo more than mars i bet that thank you to have an hour and good good afternoon everyone from the has only been about six weeks from the last of copper update our prepared remarks are they will be relatively brief and the new fiscal year as off to a great start as we federated not a wreck are quick quarter offer record our results a revenue was up at sixteen percent year over year despite our company against our highest quarter historically and we also but the train more broadly given some of the industry weakness and commercial autobots we believe our last capital intensive you call us model high margin profile and consumer driven and markets sets us apart from other hydroponic players in the face the from a product perspective our a house ventilation my was the strongest a category during the quarter today a accounts for about forty percent of sales compared to roughly thirty percent this time last year and a consistent growth is a reflection of our superior product design and merchandising to ability as well as the work we put in to effectively manage our suppliers or network our diversified a supplier base enabled us to consistently deliver park the it directly to consumers or to our channel partners to give us some perfected to those that that are you due to our start story we are one of the top sellers of hydroponic equipment all amazon and online so product availability is a key to meeting cost of consumer good in addition to our our momentum in the ventilation systems we have several product design initiatives and way that will incorporate smart functionality into our ventilation they were terrain and like a product lawyer for remote monitoring and operation for our fall apart we also have a number of saturday's the product a lot of that yogi t ottomans in grow environment optimization this is in party a new category for us and we are excited about about option optionally
spk_1: and finally we have developed several prototype or far countertop hydroponics applies and are we are a discussion with our supply chain honor on the design and manufacturing parameters while it's to early to know the exact timing of the launching of these product we hope to have some of the of these products a market by in the power fiscal year another key developments during the quarter was our first setup orders for delivery into western europe are we received a to purchase order from one of our top honors ah for the uk and and market or we are at the very early stage our entrance into the european market i would believe that this market a significant in five out with very little penetration today now we see your of as a high growth option before us over the medium a long time at their a consumer counterparts market developed my overall would continue to execute on the various quote objectives that were laid out during last year's i i've york and i'll go we are very pleased with our momentum but we know that the past days where i powered me ahead wow now time to call over to our yep old cabin and to take you through our financial results a more details i kept i beg your lawrence
spk_8: so yet another a third quarter form it's in our fiscal like you won a total revenue with that sixty percent from the year ago period to seventeen point four million
spk_1: i'll buy a great mix of our in house product sales as well as increasing their the ventilation and in between products that we can city like a kid on selling moreover he announced plans which increased twenty one percent a year over year to fifteen million in accounting for approximately seventy five percent of our sales to go to seventy two percent in the year ago quarter as we previously thought it was margins for our products are generally net twenty to twenty five percentage points higher than our third party parties that we carry some will continue to invest in emphasize the and house as part of our catalog going forward overall was mildly for the quarter was at four hundred ninety basis points to forty two point one percent which exceeded expectations given the higher product input costs know that we started to see over the summer as well as increasing expenses which has been seen mentally and our industry that across all industries ah in addition the highest a victim it as rams the composition of product mix with in our in house brand products failed skew toward the higher end of the bargain distribution we may remain cautiously optimistic about margins going forward even with the ongoing volatility in the supply chain to elaborate expenses for a fiscal first quarter was six million dollars compared to four point five million for the same period in fiscal twenty twenty the increase was primarily driven by are increasing volumes as well as increased expenses associated with being a publicly traded company which we didn't have and let the their prior quarter of fiscal twenty line despite the a sequential increase in sales from the june quarter operating expenses were down an absolute basis as or and spit or at then and normalized the bit and a channel perfect mix resulted in less are small emergencies net income in the quarter in creep sixteen percent your the us to a point nine million or three cents per diluted share compare the net income of on clinique million or force has been diluted share in the same period in fiscal twenty twenty one move of the balance sheet cash and cash equivalents were one point two million as of september thirty twenty twenty one compared to six point seven million as of june thirty twenty twenty one truth is in almost entirely to attributable to the timing of cash wedding receivables from our largest channel partner and that was not an indication of any business or operating trends now we ended the quarter with approximately twenty four million of working capital told that as of september thirtieth at twenty twenty one stood at that point five million compared to point seven million as of june thirty twenty twenty one
spk_4: so again the balance of our fiscal year we remain confident our growth strategy in financial targets from imagine and cause perspective there have been some favorable developments in the last six weeks with regard to contain costs and put get corps congestion in los angeles
spk_0: can still a little you where the talent that is a reversal that will remain permanent in the water supply chain does when a volatile is as input input costs continue to fluctuate and color like the completed be very disruptive to the economy is where we add primarily source you are proud it
spk_5: has he done since then add and then again yeah we are working with our partners in china to minimize any impact also internet and last quarter your we do have a number and way to push back on the supply chain volatility in an input costs pressures you that you continue to be in place you do include you're trying to manage channel program next now both procurement and asking some of our
spk_1: so quietly partners for a larger production lines at will also continue to empathize a greater make them are in our product sales and either these new proprietary skews the brought me going out catalog and we're looking forward to another strong year fry power in fiscal twenty twenty two
spk_7: so that i conclude that prepared remarks will now open it up for question
spk_1: thank you sir
spk_8: ladies and gentlemen if you have a question of this time please pass the star than a number one key on a touchstone telephone if your question has been answered or you this to remove yourself from the queue be stressed the pound key your first question comes from the line of my baker from the a davidson your line is open
spk_1: okay i guys are a couple first are real quick ah to just wanna hear you said you're a target for year or little i'll here buddy it didn't have a similarly reiterated the out for yourself rather of twenty five percent or more i just want to make sure that was the that the right way
spk_8: they still to be thinking of it and if so it outbreak or this core about up fifteen percent if you're looking for twenty five percent for the year that that are more than five upset that doesn't imply rab can you talk about you know ah ha you go from fucking with that the type of the year thanks
spk_5: sure my add yeah so
spk_1: yes the he had targeted we are wind point five percent can him at the to the floor growth for the complaint i do is still intact yeah we only you at our lab called six weeks ago so nothing's nothing's changed from that standpoint on him when i would say about your this
spk_2: corner relative to the kind of the upcoming quarters is the where campaign was wrong according to the company's history yeah and tab you know we still have of the down to the year two to come to meet that goal so we're happy with ah yeah city present ground we see me a lot of opportunity man
spk_5: like several quarters ten ten
spk_9: get the that goal so addicting and were in good good spot
spk_2: going forward and and you are confident that were and me up as good as the details we were will be got the guy with neil luckily the end of september yeah okay make sense are often on barn and then i'll turn over it so often they come back end of it may be but ah the arches up the update us if you were my
spk_1: on your out nutrients business at they bought can we talk the idea was that that was something you're going to develop and house and hope to be are you'll get ferret that in november but i think he still out the possibility of of even making an acquisition they're such as if you could have data from that i appreciate it thanks
spk_8: sure once you a you want to take that
spk_1: i'm from ah we we are we actually have the need friends are under development are we hoping to have the nutrient available for sale by the end of the calendar year
spk_8: with a chance alford actually launching by in the for this month the war will announce it formally add on that time or but yeah
spk_1: that's upon my clinic and it that way that had all or that is that you know that changed all that the time is right thing that sort of impact now that into member november being time when you got your it done ah this this is still the target and a saw under the bumper a candidate production okay ah petunia know yes and then ever tasted ten your potential acquisition yeah was a lot of we still
spk_10: ah you mugging we think
spk_0: he away faster than of ram would be to bring in any on t developer and that me fit the criteria that we think makes sense
spk_11: for them this model and no need to be you a brand that know is established but could accelerate with the use of any damage channel and is me of suited for he commerce distribution feel they could be packaging ah the and side is better that are appropriate for ah
spk_1: you are model and same the of were still in that the of
spk_2: surgeon identify it engage phase which is haven't found one that yeah i think eat all the criteria that we think is is also good product so damn near this is it the in have development is he have one leg of the schools of his beef new as it pertains to know how we knew from the penetrate and nutrients ah but yeah we're we're excited about can have the opportunity air and young as we move further through the year young the an acquisition of a a brand that made sense for us is is still absolutely in the undercard ablation so
spk_1: okay thank you your next question is scott fortune from not capital partner your line is open yeah katherine thanks for taking the question you may him we've seen a hydroponic industry come on the commercial flights and very top quarter to quarter from that standpoint that can you provide you get it seem to be will be immune to that if you are mine and to this thing but can you provide color on the customers been trends going forward into for que in their season now the from a historical standpoint it as we look into the for que en que opportunities here to says will their round and round you consumers the and stuff going on there turn want would dead be my i think that one and i'll like and can chime in after your answer thought of that yes sir so so the commercial mark canada or is a very small portion of our up of oil
spk_11: in is kinda stopped less than ten percent for the quarter we were recording ah so lucky said that we are largely a online retailer armed and that part doesn't seem to have a ah the theme and the a huge up and down compared to the commercial market so wow we haven't noticed any significant change i'm in the consumer behavior ah so i don't have any
spk_12: suggestions that would change from the what we saw his probably
spk_2: yeah and then and with seasonality so you know i think if if we broke our you can log in ten
spk_13: yeah some of the different product tyson categories and they'd the ten they had some different seasonality and than any we've said live in the past and he added we talk to you about this got a little bit numb
spk_2: no coven it nearly kind of near the stern a lot of those historical pattern that we see or i've seen in film it is a little bit harder for us to predict seasonality at this point many you you have our ah you are performance from the prior fiscal year mom and we're not we're not convinced that that's normal the we're not sure yet that it's
spk_11: ah that it's abnormal so in i think we're focused really on trying to cut of continue to get product in hand and make sure it's available for your rtl partners great shape color on that ah
spk_2: and then just say shifting can you provide them a color on the traffic tier two web sites and hydro nice it is to to drive and support more customers to your own once a website deterrence transact more direct with your consumer base constitute a kind of any metric that you're seeing around you advertising and site visits to to your own website and initiatives there and we are oh i'm in that that's right your we are doing a lot of work behind the scene ah identified new ways to attract more customer to our own website ah we are developing a newer version of the site on that ah that's about to be published as soon as whoa whoa let people know about that and accomplish with a new ways to to get more traffic for the website but yeah we have local at we have a lot of work has been to balance that out what you're here from i saw in a in a next a couple weeks i guess
spk_11: okay and and then it's one last question kevin inventory levels deal with the supply chain challenges they're out there
spk_0: have you pull for more in victoria are kind of how you look at your inventory to meet demand or are you seeing issues there and tacking kinda does this come from outside her house we evaluate them
spk_5: how we have ah ah
spk_15: our image reposition fire september is about the same as june and because we fix movie
spk_1: without without receive from i feel we we increased ourselves that will increase that part of that i bought by in it's way into our pipeline and i think we are very comfortable with the level of in the trees and also we are very comfortable with the auto stopped right arm and supplier network management is always one of our friends and the one of our core strength ah
spk_16: i am very happy with the status it is now arm as i think we are very sufficient all imagery and we are very a chow and we be able to deal with any kind of the problems that we encounter so far as link between much better them than the rest of us
spk_1: i can see less of a industry by we doing pretty good of on my own opinion and going forward ah we'll we'll dig out what our focus is marked liked the new products are ya rolling out and ah strategists like push out like ah ah
spk_17: web sites and i'm a new new lies or product that those will be our focuses on in terms of a base ah i don't think we have a problem
spk_1: great thanks for their that color in i will come back to me keep
spk_8: you have a follow up question from my baker of the a davidson your line is open
spk_1: i'll take our real quick here are a couple more if i could ah be and gross margin aki talk aware that it came from and is a sustainable particularly well within the context of container cough coming down ah brave and then and then the art that and i want on on as gina right so you obviously for us he owns the the more volume house brand that weekend your push through sales channels the better for us
spk_18: but it's in a we talk about you than gross margin delta between are you now it's vs third party products and we carry it is a little bit more
spk_1: complicated than that ah that the odds are that kind of equation is is
spk_8: multi billion for this corner we had a really nice you need you think about a catalogue in terms of a distribution you have the skill definitely towards the higher margin portion of that distribution so that connelly health ah i'm a woman laid out in the quarter as well as that we got your channel programs with your some of our partners that
spk_1: the letter product in different ways we did a decent amount of am when i would call direct import business meeting our channel partner with take ownership of that overseas he ended the of because yeah their size and there the purchasing power know they get really good you can container can it cost rates for bringing product costs ah to the u s and so when we engage that program you they there was possible for the fray cause mom so that that might help as well ah so humid it sustainable and it's it's always hard for us to kind of predict in at any given quarter how much yeah we can push one channel program over another however ah and you that now you our strategy is he had to really feature and
spk_19: i am and push our products there's a third party products with our partners and as such you know the more that we do the better at a gathering we could say to is that
spk_1: no back in
spk_20: the the prior quarter and in the period leading up to that end of the prior quarter of and we get a fair amount of knew that can use that were added to the catalog
spk_5: and im given you the water selection you we have an opportunity
spk_2: that he had for our customers the to choose that more than they might choose a third party products so that that also helps i'm an e o anytime we introduce you a redesign of a skier we do with the intention of having a better margin profile for that that product if we can and so we we walk away saying we're we're cautiously optimistic that we can keep
spk_22: a a a margin that a really really healthy level and and potentially expand them over the next several quarters but
spk_1: he just to be to be you and it like a fair in the way we think about it he i'm the that movie distribution he of km from quarter to quarter sometimes due to the lower end of our market distribution of an outback so ah headache know monitoring friend is is good
spk_2: and know what i think one of things we talked about in prior in by a brief period that in we expect over a longer trend period to be able to increase margins
spk_1: add me of
spk_23: several percentage points from here we're he over the next several years
spk_1: yeah that that all my said cyborg not our fault that that that problem he referred to in terms of ah your your partner important the product themselves i believe i think part of it in line for that to mean is that sure you'll pay the shipping costs but you get of our product march and on that but also bar merchant fees or is that right but i guess are you saying is sure yet of our merchandise mart and what the fuck it up a for shipping actually makes it a better all and gross margin is up right interpretation ah no no not yet so so here's here's what what what's going on going out with for us both out we we you will work with hundred or we also she brought for container thing our south so if the containers a price job or the for a job a will help us are in the pot that way if the ah and and the biggest driver i just want to add onto your app previous question at the biggest driver fly the margin on in across margin is to continuously pushing out that of product are more that for the weekend price ah on you know to the market and get more consumer to
spk_12: to realize that that it so that with the aren't these into these part of the and away with eat ourselves with our partners
spk_1: manufacturers and that will torn drive our our long pharma gross margin ah on off was that that the keep ah to so continuously introducing done a part of to the market on people competition that's the key for long time now for a for freight afraid if the price job a low make our last margin a bigger for sure because are you like what have nation for the parts we don't pay for we don't pay anyway put a price possibly pay you know cheaper faded that of was yeah i'll get i'll get up again i i you a
spk_5: yeah
spk_0: the biggest of was add to that just because i'm i'm sure you are getting that there can have the right
spk_1: understanding is as well could so yet so there is some the of played trade off for that and off but again it's not just as simple as say oh you use this program their gross margins are young are said in a couple directions and it but it's better operating margin it depends on the make the product to right so we had to get a bit this quarter of your be skewed that iran of the issue
spk_0: hmm
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