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spk00: Good afternoon, ladies and gentlemen, and welcome to the Tough Built third quarter 2022 earnings call. During the presentation, all participants will be in a listen-only mode. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, today's conference is being recorded. I would now like to turn the call over to Martin Galston, Chief Financial Officer. Please go ahead.
spk02: Good morning and thank you all for joining us today to discuss Tuftsville's third quarter 2022 financial and operating results. Again, my name is Martin Galfian and I am the Chief Financial Officer of Tuftsville. Joining me on today's call is Michael Panosian, President and Chief Executive Officer of Tuftsville. Michael will begin today's discussion by providing operational and financial highlights from the third quarter. I will then review our financial performance for the same period. Michael will conclude the discussion with our plans for the remainder of 2022 and beyond. Before turning the call over to Michael, I would like to remind you that any forward-looking statements made by management are covered under the U.S. Private Security Litigation Reform Act of 1995 and are subject to the changes, risks, and uncertainties described in the press release and in our U.S. security filings. In addition, during the course of the call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States, and that may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the Tuffield's current report on Form 8-K, furnished with the SEC for Tuffield's reasons for including those non-GAAP financial measures in its earnings release and presentation. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings press release issued earlier today, unless otherwise noted therein. I will now turn the call to Michael.
spk01: Thank you, Martin, and thank you all for joining us on today's call. The third quarter of 2022 was strong for Tuftsville, culminating in revenue $30.2 million. an approximate 76% year-over-year increase compared to Q3 2021. As a result of strong revenue numbers and our expansion efforts, we expect to see both store and online revenues continue to grow year-over-year. In July 2022, we announced that we entered into an agreement with Ace Hardware USA and International to sell 35 Tough Build products in which ACE will distribute utilizing 15 regional service centers to reach 5,500 individual ACE stores. In August 2022, we announced that we have started to sell 93 Tuffbuilt products on Amazon Italy and Amazon Germany. We also announced our entry into supply agreement with many top retailers in Spain hardware market. Finally, in August, we announced the launch of our all-new Reload Utility Knife, a groundbreaking new cutting tool. September was a particularly busy month, with major expansion in both our networks and our tool lines. During the month, we announced our entry into the global measuring and marking $1.4 billion market segment with a family of tape measures and chalk reels. We also announced that we entered into an agreement with two major wholesale tool distributors in Switzerland, marking an expansion of European distribution that includes more than 250 retailers. We also announced major expansion for our network of storefronts in Great Britain, confirming new and expanding agreements with more than 900 collective retail locations in Great Britain. Finally, in September 2022, we announced the launch of 21 new SKUs into the global handsaw segment, beginning with a line of seven cutting tools. The new line will be available Q4 2022 for purchase through a leading US home improvement retailer and throughout our international retail network. Subsequent to the end of third quarter, We continued our strong momentum by continuing to expand both our distribution network and our product lines. In October, we launched a comprehensive line of innovative striking tools and a 500-foot rotary laser level kit. We secured more new distributor agreements with four major retailers in Germany, reaching an agreement with Sodimac, the largest home improvement and construction supplier in South America, and expanding distribution of 84 products used in all 96 Sears stores in Mexico. As you are all aware, supply chain disruptions have caused great difficulty for many industries over the last year. Due to our strong inventory levels in 2021 and the nine months ended September 30, 2022, the ongoing supply chain disruptions have not had a material adverse effect on our operations. And we do not currently anticipate that any continued supply chain disruptions will have a material adverse effect on our operations for the remainder of the fiscal year 2022. As you can see, the third quarter has proved to be a milestone period yielding success, validated by our sales and revenue, giving us confidence to continue our growth and path to profitability going into the remainder of the year. I will turn the call back to Martin to cover our financial results in greater detail. Martin? Thank you, Michael.
spk02: Revenues for the third quarter of 2022 were approximately $30.2 million, an increase of 76% compared to the same period in 2021. Primarily due to the wide acceptance of our products in the tool industry and receipt of recurring sales orders for metal goods and soft goods from our existing and new customers. The introduction and sell of new soft goods products to our customers and an increase in sales through Amazon. Cost of goods sold for three months ended September 30, 2022 and 2021 was 22.3 million and 11.7 million respectively. Cost of goods sold increased by 90% compared to the same period last year, primarily due to our increased sales as well as an increase in materials to manufacture metal goods and soft goods and an increase in labor costs in China. Selling general and administrative expenses for the three months ended September 30, 2022 and 2021 were 14.7 million and $15.2 million, respectively. HG&A expenses decreased in 2022 over 2021 by 3.7%, primarily due to lower shipping costs and some cutbacks. We expect our HG&A expenses will start to increase at a lower rate as our business matures and we develop economies of scale. Research and development costs for the three months and then September 30, 2022 and 2021 were 2.8 million and 1.6 million, respectively. This increase was primarily due to companies developing new tools for their construction industry. We recorded a net income of 539,000 for the three months ended September 30, 2022, as compared to a net loss of 9 million for the three months ended in September 30, 2021. Our balance sheet as of September 30, 2022, our cash position was 1.6 million, Our accounts receivable were $23.4 million. Our inventory was $40 million. Our prepaid and other current assets were $2.8 million. Subtracting our current liabilities of $39.4 million, this gives us a working capital of $28.5 million. Additionally, we have seen cash coming into the company daily as we sell down our inventory. I will now turn the call back to Michael for his final remarks. Michael.
spk01: Thank you, Martin. Before I open the call for questions, I would like to reiterate the tremendous market opportunities that continue to exist at Tuftsville and the infrastructure we have in place to capitalize on those opportunities. We are uniquely positioned with top retailers around the world selling more Tuftsville products and building upon our successes. Amazon.com sales continue to be a leading growth driver due to repeat orders from our strong retail base. As I mentioned previously, our future revenue opportunities can be broken down into three buckets, expanding existing relationships with retail partners, adding new retail partners, introducing new product categories, In the third quarter, we executed on all three of these items. I, along with the entire Tuffield organization, are committed and confident in our ability to maintain our growth position. And ladies and gentlemen, there will be no questions today. We thank you for your participation and ask that you please disconnect your lines.
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