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Q1 2023 Earnings Conference Call
spk03: Good day and welcome to the tough built industries, 1st quarter, 2023, earning cost. All participants will be in a listen only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by 0. After today's presentation, that will be an opportunity to ask questions to ask a question. You may press more than 1 on your touch tone phone and to withdraw your question. Please press farther than 2. Please note this event is being recorded. I would not like to turn the conference over to Mr. Martin, to financial officer. Please go ahead, sir.
spk02: Good morning and thank you all for joining us today to discuss tough those 1st quarter, 2023, financial and operating results. Again, my name is Martin and I am the chief financial officer of tough. Joining me on today's call is Michael president and chief executive officer of. Michael will begin today's discussion by providing operational and financial highlights from the 1st quarter. I will then review our financial performance. Michael will conclude the discussion with our growth plan 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 US private security litigation reform act of 1995 and are subject to the changes risks and uncertainty described in the press release and in our US security filings. In addition, during the course of the call, we may refer to non gap financial measures that are not prepared in accordance with accounting principles generally accepted in the United States. And that may be different from non gap financial measures used by other companies. Investors are encouraged to review tough calls current report on form 8 K furnished with SEC for couple reasons for including those non gap financial measures in its earnings release and presentation. The reconciliation of non gap financial measures to the most directly comparable gap financial measures are contained in our earnings press release issued earlier today, unless otherwise noted during I will not turn the call to Michael.
spk00: Thank you, Martin and thank you all for joining us today. The 1st quarter of 2023 was very strong for tough build resulting in revenues of 20 million and approximately 17% year over year increase compared to the same quarter for 2022. Gross profit for the 1st quarter was 3.6 million and 18% improvement over the 1st quarter of 2022. The increase in gross profit was primarily driven by the increased demand for our products around the world, enabling us to take advantage of economies of scale with our increased product offerings and corresponding revenue growth. In the 1st quarter of this year, we introduced innovative new lines of pliers, wrenches and screwdriver which combined represents more than 100 new SKUs. Additionally, we expanded our South American distribution agreement with Sodimac, the largest home improvement and construction supplier in South America with the initial launch of 15 SKUs in store and 23 SKUs on Sodimac online marketplace. Online sales to Amazon were also strong in the 1st quarter with 3.8 million in gross sales representing a 10% improvement from the same period in 2022. In the 1st quarter, we continued our expansion goals and both increased product offerings and increased distribution. We are enthusiastic to currently be servicing over 18,500 large and mid-sized storefronts and online portals worldwide with a total catalog of over 550 SKUs. As a result of strong global market demand for our brand and products, we expect to experience continued year over year growth in retail and online revenue in 2023. I will now turn the call back to Martin to cover our financial results in greater details. Martin.
spk02: Thank you, Michael. Revenues for the 3 months ended March 31st, 2023 and 2022 were 20.2 million and 17.2 million respectively, which consisted of metal goods, soft goods and electronic goods sold to customers. Revenues increased in the 1st quarter of 2023 over the same period in 2022 by approximately 3 million or 17%. Primarily due to a wide acceptance of our products in the tool industry and receipt of our recurring sales orders for metal goods and soft goods from our existing and new customers. And introduction and sale of new soft goods products to our customers. Increased in sales through Amazon also contributed to the increase. Cost of goods sold for the 3 months and in March 31st, 2023 and 2022 was 16.7 million and 14.2 million respectively. Cost of goods sold increased in 2023 over 2022 by 2.4 million or 17% primarily due to increased sales. Cost of goods sold as a percentage of revenues for the 1st quarter of 2023 was 82% in line with 82% from the same period in the prior year. Selling general administrative expenses for 3 months and in March 31st, 2023 and 2022 were 15.1 million and 15.9 million respectively. SG&A expenses as a percentage of revenues for the 1st quarter of 2023 was 78% compared to 93% for the same period in the prior year. We expect our SG&A expenses to decrease. Research and development costs for 3 months and in March 31st, 2023 and 2022 were 3.5 million and 2.5 million respectively. The increase was primarily due to the development of new tools for the construction industry. For the 1st quarter of 2023, we recorded a net loss of 8.3 million as compared to a net loss of 12.1 million for the 3 months and in March 31st, 2022. This improvement was primarily due to sales increase, cost reductions in many areas and slowdown in hiring. As of March 31st, 2023, Tuffville's cash position was 2.4 million. Counts receivable and inventory for the period total 12.5 million and 33 million respectively. Management anticipates that our capital resources will improve as our products gain even wider market recognition and acceptance. I will now turn the call back for Michael for his final remarks. Michael.
spk00: Thank you, Martin. I would like to reiterate the tremendous market opportunities that exist at Tuffville and the infrastructure we have in place to capitalize on those opportunities. We are satisfied with our R&D structure and will not be adding significant headcount
spk01: in 2023.
spk00: Moving forward, we plan to continue expanding our product portfolio prudently, raise some prices and cut costs globally. We anticipate that through all the efforts, we will increase our global reach, launch some more lines and push towards profitability. In closing, I want to thank our shareholders and our team for helping grow Tuffville into a high quality brand that customers can rely on. I'm looking forward to the upcoming year and remain highly confident in our ability to execute on our prudent growth, cost savings and profitability plans. With that, I would like to turn it over to our operator.
spk03: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys and to withdraw your question, please press star then two and at this time we'll pause momentarily to assemble our roster. Again, if you have a question, please press star then one. This includes our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.