This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Greetings and welcome to the Tough Built Industries fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. 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, Martin Galston. Please go ahead.
spk02: Good morning and thank you all for joining us today to discuss Tough Built's fourth quarter and full year 2022 Financial and Operating Results. Again, my name is Martin Galassian and I am the Chief Financial Officer of Tufts Build. Joining me on today's call is Michael Panossian, President and Chief Executive Officer of Tufts Build. Michael will begin today's discussion by providing operational and financial highlights from the fourth quarter and full year. I will then review our financial performance for the same periods. Michael will conclude the discussion with our growth plans for the upcoming fiscal year 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 Securities 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 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 Tuftal's current report on Form 8K, furnished with the SEC, for Tuftal'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 today. 2022 was a very strong year for TuffBuild, culminating in record revenue of 94.9 million and approximate 36% percent year-over-year increase compared to 2021. Fourth quarter revenue came in at a record 29.6 million, representing a 20 percent increase compared to the same quarter in the prior year period. Revenue growth in the fourth quarter, as well as for the full year in 2022, was driven by a combination of growing business within existing retail partners, onboarding new retail customers, and the introduction of new lines and continued strong demand for our existing products. Our 2022 results are testament to the importance of establishing a platform of strong teams in product development, sales, and distribution. This is demonstrated by our numerous product launches, including our all new cutting tools, such as reload utility knife, measuring, hand saw line, striking tools, long-handled tools and landscaping tools, screwdriver line, rotary laser levels, work bench, totaling approximately 200 plus SKUs. This year proved to be a milestone expansion period for Tuftsville, growing our network with North American and global trade partners. We are excited to currently be servicing over 17,300 large and mid-sized stores and online portals worldwide. To help combat logistics-related costs during the year, we successfully negotiated improved shipping rates, lowering the cost by roughly 70%. We also worked with our large retail partners to implement direct import ordering, as we have discussed on previous earning calls, where possible. We've seen this activity significantly decrease our logistics costs in part by shifting several supply chain steps from Tuffville to our retail partners. As a result of our strong product introduction momentum and our growing brand recognition around the world, we expect to see retail and online revenues continue to grow year over year in 2023. I will turn the call back to Martin to cover our financial results in greater details. Martin. Thank you, Michael.
spk02: Revenues for the three months ended December 31st, 2022 increased over 20% to approximately 29.6 million compared to 24.7 million in the same period last year. Revenues for the 12 months ended December 31st, 2022 increased 36% to approximately 94.9 million compared to 70 million. in the prior period. The increase in sales for both periods was primarily due to wide acceptance of our products, receipt of recurring sales orders for metal goods and soft goods from our existing and new customers, and the introduction of new soft and electronic goods products to our customers. Cost of goods sold for the three months ended December 31st, 2022 were approximately $23.6 million compared to $19.4 million for the same period in 2021. Cost of goods sold for 12 months ended December 31, 2022, where approximately $73.1 million, compared to $50.9 million for the year-ago period. Cost of goods sold increased in 2022 over 2021, primarily due to the increase in cost of steel and plastic polyester needed to manufacture metal goods and soft goods, an increase in labor costs in China, high inflation rates, as well as increased prices in tariffs and shipping rates. Selling, general, and administrative expenses for the three months ended December 31st, 2022 were approximately 23.6 million compared to 19.4 million for the same period last year. Selling, general, and administrative expenses for 12 months ended December 31st, 2022 were approximately 58.9 million compared to 51.4 million for the 12 months ended December 31st, 2021. SG&A expenses increased in 2022 over 2021, primarily due to hiring additional employees and engaging additional independent contractors and consultants to grow the company. We expect our SG&A expenses will start to increase at a lesser rate as our business matures and we will see substantial operating leverage. Research and development costs for the three months ended December 31st, 2022 were approximately 4.6 million compared to 3.4 million in 2021. Research and development costs for the year ended December 31st, 2022 were approximately 15.6 million compared to 6.9 million in 2021. This is an increase was primarily due to the cost incurred in developing new tools and software applications to run on the mobile device related to the construction industry. In the full year of 2022, we had a net loss of 39.7 million compared to 37.5 million in the year ago period. The net loss is mainly attributable to building our team to meet the demand for current product lines and new product lines in design, as well as significant increase in cost of goods sold prices, as noted previously. As of December 31st, 2022, cash position was $2.6 million. Management anticipates that our capital resources will improve and our products will gain even wider market recognition and acceptance, resulting in its increased product sales. On November 17, 2022, we completed a private placement with aggregate growth policies of 7.5 million before deducting placement agent fees and other offering expenses. I will now turn the call back to Michael for his final remarks. Michael.
spk01: Thank you, Martin. I would like to reiterate the tremendous market opportunities that exist at Toughbuilt and the infrastructure we have in place to capitalize on those opportunities. To this end, in the fourth quarter, we entered into four major retailers in Germany, which accounts for 35% share of global hand tools market in 2022, and also successfully launched Toughbill products into a major retailer, Wix, which has 230 locations across the United Kingdom. Moreover, Toolstation UK, with over 550 stores nationwide, and Toolstation France, demonstrated consistent and impressive sales. Lastly, we reached a comprehensive distribution agreement with Sodimac, the largest home improvement and construction supplier in South America. In this agreement, stores in Peru and Colombia initially began with 15 SKUs in store and growing. The agreement has subsequently been expanded to encompass other countries in the region and brought 23 SKUs to Sodimac online marketplace as well. As demand for our products increase around the world, we continue to expand our capabilities to meet this growing demand. As we look ahead, our future revenue growth opportunities include continuing to expand with existing retail partners, adding new retail partners internationally, and introduction of new product lines. I firmly believe that we can be a disruptor in the home improvement industry and are well positioned for 2023. In closing, I'd like to thank our shareholders and our team for helping grow Tuffbuilt into a high quality brand that customers can rely on. Our team remains dedicated to our mission, even through a global pandemic and difficult economic conditions. I'm looking forward to the upcoming year. and remain very confident in our ability to execute on our growth, cost-saving, and profitability plans. With that, I would like to turn it over to our operator.
spk00: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
Disclaimer