Upexi, Inc.

Good day and welcome to the UPEXI Inc. Fiscal Second Quarter 2024 Financial Results Conference Call. Please note, 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 UPEXI Fiscal Second Quarter 2024 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. 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 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 they 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 UPACC's CEO, Alan Marshall.

Thank you, Walter. Thank you and welcome to our fiscal second quarter 2024 financial results conference call. During the second half of 2023, we focused on optimizing and streamlining our operations, investing in our higher margin brand products, and generating positive adjusted EBITDA. The enhanced efficiencies across the business channels bolstered our margins and cash flow sequentially, with my expectation that this trending will continue in the quarters to come. While revenues for the most recent fiscal second quarter decreased sequentially, the operating measures we took allowed us to increase gross profit margins to 38% as compared to the prior fiscal first quarter of 31.8%. We also generated positive adjusted EBITDA, although the revenue quarter over quarter was down. The revenue decreased sequentially was predominantly related to the calculated decision to reduce the risk of purchasing excess inventory in our e-commerce business and investing in our higher margin brand business. The business is navigating challenging market conditions and being carefully managed quarter over quarter to achieve higher profitability while on emphasis on the high margin recurring revenue brand businesses. The re-commerce business will continue to perform, but overall, the enterprise value will be driven by the brand and their overall growth. With capital constraints, we are prioritizing investments in our brand products businesses. which carries a higher margin profile through subscription revenue opportunity and capturing a higher lifetime value of the consumer. Brand product sales during the second quarter increased 16.7% sequentially to 7.7 million as compared to prior quarter of 6.6 million. Branded product sales as a percentage of total revenue this quarter was 35.1% as compared to prior quarter of 24%. This growth and increase as a percentage of sales help drive gross margins higher sequentially. Last quarter, we discussed the decision to increase our ad spend on Vitamedica in health and wellness to acquire and build subscription rates and increase the overall lifetime value of the products and brands with consumers. During the fiscal second quarter and into our current quarter we're in, we have seen promising financial benefits on this strategy. While we have maintained our marketing budget as a percentage of revenue, Subscription revenue across health and wellness grew approximately 5% month over month. This strategic investment is measured carefully every month, and thus far has increased our gross margins and recurring revenue. To drive further growth, we still expect data from the ACME study soon. Successful data will help increase sales significantly in a very large, sticky, and recurring segment of health and wellness industry. We are making the same investments in our other branded products, including Titan Tiles, and Lucky Tail, particularly as these brands also launch new product offerings to the market. Before I hand the call over to Andy for further details regarding our financials, I'd like to provide an update on the consolidation of our manufacturing facilities. The consolidation of operations is expected to be complete and fully operational by the end of April. The overall impact on cost savings is expected to be $450,000 to $550,000 per quarter, or a reduction of approximately $2 million annually in G&A expenses. The consolidation will not slow the increase of our growth initiatives as we are investing in, and we anticipate this will lead to increased growth margins and overall cash flow in the coming quarters. I'd like to reiterate my confidence in our ability to drive long-term growth, innovation, and value creation. We remain committed to further expanding and enhancing our brand businesses and re-commerce segments while capitalizing on new growth opportunities and reaching higher EBITDA and cash flow positive results this year. I will now pass the call over to PECC's CFO, Andrew Nordstrom, to discuss our financial results in more detail. Andrew?