Upexi, Inc.

Good day and welcome to the UPEXI Inc. 2023 Fiscal Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Walter Pinto, Managing Director at KCSA Strategic Communications. Please go ahead.

Thank you, Operator. Good evening, and welcome, everyone, to the UPACC 2023 Fiscal Third Quarter Financial Results Conference Call. I'm joined today by Alan Marshall, Chief Executive Officer, and Andrew Nordstrom, Chief Financial Officer. Before we begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. And actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I'll refer you to the press release issued this evening and filed with the SEC on Form 8K, as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law. 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. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued this evening, unless otherwise noted. I'd now like to turn the call over to Ufexi CEO, Alan Marshall.

Thank you, and welcome to our 2023 Fiscal Third Quarter Financial Results Conference Call. Revenue for the quarter, was $24.2 million, an increase of 447% year-over-year, as compared to $4.4 million for the same period in the prior year. Revenue growth was predominantly driven by strong sales across our health and wellness brands, Vitamedica, Children's Educational Toy brand, Titan Tiles. In our pet category, Lucky Tail, brand Lucky Tail, Ecor and Signet continue to perform and remain poised to drive growth across our liquidation business segment. Gross profit during the quarter totaled $9.6 million, an increase of 52% year-over-year, yielding approximately 40% margins. Our business continues to expand as the organic growth of our core brands drives us towards calendar year 2023, projections of $100 million in sales. With $24 million in revenue this quarter and taking into account the natural seasonality of many of our brands, we see calendar Q4 to calendar Q1 we remain confident in our ability to meet or exceed this goal. Additionally, our focus on cost cuts, improved efficiencies, and optimization has allowed us to achieve 671,000 in positive adjusted EBITDA. It's substantial improvement over 877,000 negative adjusted EBITDA for the same period last year. We anticipate adjusted EBITDA to grow for the remainder of the calendar, trending towards our target of 8% to 12% margin at the end of calendar 2023. We see both continued organic top line growth and additional benefits from our cost cutting and efficiencies efforts to support this trend without taking into account further M&A. During and subsequent to the fiscal third quarter, we have made significant progress across each of our brands and operationally. A diverse business mix of non-discretionary health, wellness, and pet products and liquidation and wholesale, direct to consumer and Amazon, gives us a well-rounded revenue stream that provides opportunity in most economic environments. Highlighting some of our high-performing brands, Vitamedica, our health and wellness brand, was purchased in late 2021 and has seen 88% organic growth since the acquisition. Vitamedica revenues for the third quarter were $1.96 million as compared to $1.16 million for the same period in 2022. An approximately 800% or 69% improvement In 2022, it had a growth rate of 50%, and we look forward to additional growth with the launch of new complementary products like acne treatments later in 2023. This is a perfect example of execution of our model. With Vitamedica, we have successfully taken an already growing brand in a key non-discretionary vertical, optimized their sales through our performance and expanded margins year over year. Lucky Tail, our pet category brand with both Amazon and direct-to-consumer platforms saw 50% organic growth in 2022. Lucky Tail revenues for the fiscal third quarter were $1.36 million. We anticipate additional growth in 2023 with the launch of a pet supplement to its significant existing customer base. Titan Tiles, our children's STEM toy brand, had led the pack with 100% organic growth in 2022. and we expect 50% plus organic growth in 2023 with the launch of 40 products. Titan Tiles revenue for the fiscal third quarter was $1.25 million as compared to $165,000 for the same period in 2022, an approximate 656% improvement. The milestones for Titan Tiles, January Walmart launch in 1,900 stores. An additional order was placed in February due to accelerated sales to double that order. A full 3,911 Walmart store launched for the second half of 2023 as a result of the launch success. Subsequently, we announced the Disney License Agreement for top-tier franchises. We will be developing and launching new branded products under this agreement. The products will be launched on Amazon, direct-to-consumer, and into UPEX's big box retail channels with initial launch planned for 2023 holiday season. In April, we announced an agreement to acquire the remaining 45% interest in Cignet Online, one year ahead of schedule. The deal solidifies our UPEXI Amazon reseller strategy for the future, reduces the overall cost and structure for the business. Closing the deal early offers significant G&A savings and the opportunity to purchase Cignet at a discount to next year's overall anticipated cost. Regarding M&A, we continue to be in a buyer's market. Internally, we don't feel any urgency to do M&A. Therefore, we continue to be strategic and patient in our strategy. We have a very specific mandate in terms of industry, verticals, growth rates, profitability, and structure that we will hold firm on. We continue to focus on high growth for session-resistant cash-flowing businesses that are creative to our future. The profile of the non-binding letter of intent to acquire a wellness and nutrition brand we signed in April falls within that category. The brand has generated trailing 12-month revenues of $15 million in positive EBITDA. The acquisition falls squarely in line with our strategy to acquire founder-owned and operated high-margin profitable brands. We see tremendous cost synergies and value in high-margin, data-rich brands in our non-discretionary product category. Lastly, before I turn the call over to Andy, our teams remain keenly focused on growth, management of costs, and efficiencies to maximize margins. We were able to achieve higher adjusted EBITDA on a lower revenue base this quarter as compared to last sequential quarter by implementing aggressive cost savings and growth in our high margin brands. Calendar 2023 is off to a tremendous start and incremental improvement should continue with very strong growth potential for the second half of the year. Each of our brands has significant opportunity to outperform our expectations with Disney for Titan tiles, new product categories for Lucky Tail, and new product launches for Vitamedica. I will now pass the call over to UPEXC CFO, Andrew Norstrid, to discuss our financial results in more detail. Andrew. Thank you, Alan.