Q2 FY 2024 Net Revenues Totaled
Q2 FY 2024 Gross Profit Up 128% to
Q2 FY 2024 Net Income of
Q2 FY 2024 Adjusted EBITDA of
Second Quarter FY 2024 and Subsequent Operational Highlights
- Closed a new 3-year
$120 million senior secured asset-based credit facility withWhite Oak Commercial Finance, LLC , replacing the Company’s revolver with Bank of America. - Consumer Direct Shipments (CDF) grew to 45% of gross sales revenue for the fiscal second quarter compared to 37% in the year-ago period, totaling 2.3 million shipments of 5.3 million units.
- Significantly Reduced inventory and debt, with fiscal second quarter year over year inventory decreasing from
$175 million down to$114 million , and debt down from$177 million to$107 million . COKeM gaming division reported sales of the popular Arcade1Up home arcade machines that exceeded initial forecasts in the calendar fourth quarter of 2023.- AMPED independent music distribution arm partnered with Vydia, an end-to-end solution to empower the next generation of music creators, managers, and labels, to expand Vydia’s capabilities for physical distribution.
- Partnered with
Grail Game , the premier specialty bid site for high end collectibles, to create a new sales channel, and mystery box experiences for collectors. - Launched a new publishing venture under the banner of
Alliance Entertainment Publications to create and release high quality, full-color, fan-focused collectible magazines. - AMPED achieved a record-breaking 24
Grammy nominations for 19 artists, highlighting the company's commitment to championing independent music and empowering artists to succeed. - AMPED assisted with the successful physical launch of K-Pop band ATEEZ’s latest album, "THE WORLD EP.FIN : WILL", with physical CD and Vinyl sales powering the band’s first US number-one album within its first week of release.
- Alliance’s
Mill Creek Entertainment , Pinnacle Peak Pictures, and Tread Lively announced another successfulHome Entertainment release with THE BLIND, hitting #1 in pre-sales on Amazon during its first weekend across all movies and TV. - Announced 100% vestment of equity grants to 597 employees under its 2023 Omnibus Equity Incentive Plan, establishing employee ownership.
- Participated in investor conference
The ThinkEquity Conference .
“We signed several partnerships and launched a new publishing venture that highlights additional revenue opportunities in physical media. AMPED Distribution and Vydia, an end-to-end solution to empower the next generation of music creators, managers, and labels, are working together to expand Vydia’s capabilities for physical distribution. Vydia delivers digital content to over 200 global audio and video destinations, and this partnership adds physical retailer distribution for its artists. With
“We also launched a new publishing venture under the banner of
“Average selling prices improved in Vinyl, up 4.4% in the fiscal second quarter over the prior year. Potential expansion of K-Pop to the vinyl format this year may improve results going forward. The popularity of K-Pop helped us realize a 19% increase in the average selling price of CDs. Physical movie sales, which include DVDs, Blu-Ray, and Ultra HD, decreased slightly from
“We have taken significant steps over the past year to strengthen our balance sheet, with additional cost savings initiatives planned. Throughout 2023 we were highly focused on reducing inventory and debt, with fiscal second quarter year over year inventory decreasing from
“Looking ahead, we continue to expand and diversify by adding brands, product categories, and retail partnerships to build a strong pipeline. We believe we are now well positioned to continue investment in automating facilities and upgrading proprietary software, which are beginning to show significant improvements. Combined with our cost-cutting initiatives, significant reduction in debt, and reduction in inventory due to improved management, we believe we can improve EBITDA and inventory turns moving forward. Taken together, we begin calendar year 2024 ready to drive accretive growth and build additional value for our shareholders,” concluded Walker.
Second Quarter FY 2024 Financial Results
- Net revenues for the fiscal second quarter ended
December 31, 2023 , were$425.6 million , compared to$445.2 million in the same period of 2022, a decrease of 4.4%. - Gross profit for the fiscal second quarter ended
December 31, 2023 , was$47.7 million , compared to$20.9 million in the same period of 2022, an increase of 128%. - Gross profit margin for the fiscal second quarter ended
December 31, 2023 , was 11.2%, up from 4.7% in the same period of 2022. - Net income for the fiscal second quarter ended
December 31, 2023 , was$8.9 million , compared to net loss of$15.5 million for the same period of 2022. - Adjusted EBITDA for the fiscal second quarter ended
December 31, 2023 , was$17.9 million , compared to Adjusted EBITDA loss of($14.5) million for the same period of 2022.
1H FY 2024 Financial Results
- Net revenues for the six months ended
December 31, 2023 , were$652.3 million , compared to$683.9 million in the same period of 2022, a decrease of 4.6%. - Gross profit for the six months ended
December 31, 2023 , was$74.0 million , compared to$46.4 million in the same period of 2022, an increase of 59.5%. - Gross profit margin for the six months ended
December 31, 2023 , was 11.3%, up from 6.8% in the same period of 2022. - Net income for the six months ended
December 31, 2023 , was$5.5 million , compared to net loss of$23.0 million for the same period of 2022. - Adjusted EBITDA for the six months ended
December 31, 2023 , was$19.2 million , compared to Adjusted EBITDA loss of($18.6) million for the same period of 2022.
Capital Structure Summary
The company's outstanding common stock as of
For additional information, please see the company's quarterly report on Form 10-Q filed with the
Second Quarter Conference Call
To access the call, please use the following information:
Date: | |
Time: | |
Toll-free dial-in number: | 1-877-407-0784 |
International dial-in number: | 1-201-689-8560 |
Conference ID: | 13743609 |
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact
The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1651014&tp_key=12996f9586 and via the investor relations section of the Company's website here.
A replay of the webcast will be available after
Toll-free replay number: | 1-844-512-2921 |
International replay number: | 1-412-317-6671 |
Replay ID: | 13743609 |
Non-GAAP Financial Measures: We define Adjusted EBITDA as net gain or loss adjusted to exclude: (i) income tax expense; (ii) other income (loss); (iii) interest expense; and (iv) depreciation and amortization expense and (v) other infrequent, non- recurring expenses. Our method of calculating Adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. We use Adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present Adjusted EBITDA as a supplemental measure because we believe such a measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in
US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION | |||||||
Three Months Ended | Three Months Ended | ||||||
($ in thousands) | |||||||
Net Income (Loss) | $ | 8,914 | $ | (15,515 | ) | ||
Add back: | |||||||
Interest Expense | 3,328 | 3,544 | |||||
Income Tax Expense (Benefit) | 3,789 | (5,878 | ) | ||||
Depreciation and Amortization | 1,412 | 1,529 | |||||
EBITDA | $ | 17,443 | $ | (16,320 | ) | ||
Adjustments | |||||||
IC-DISC | — | 1,444 | |||||
Stock-based Compensation Expense | 58 | — | |||||
SPAC Transaction Cost | — | 367 | |||||
Change In Fair Value of Warrants | (41 | ) | — | ||||
Merger-related Contingent Losses (Gains) | 461 | — | |||||
Gain/Loss on Disposal of PPE | — | (3 | ) | ||||
Adjusted EBITDA | $ | 17,921 | $ | (14,513 | ) |
Six Months Ended | Six Months Ended | ||||||
($in thousands) | |||||||
Net Income (Loss) | $ | 5,452 | $ | (23,025 | ) | ||
Add back: | |||||||
Interest Expense | 6,468 | 5,898 | |||||
Income Tax Expense (Benefit) | 2,525 | (8,516 | ) | ||||
Depreciation and Amortization | 3,054 | 3,166 | |||||
EBITDA | $ | 17,499 | $ | (22,477 | ) | ||
Adjustments | |||||||
IC-DISC | — | 2,833 | |||||
Stock-based Compensation Expense | 1,386 | — | |||||
SPAC Transaction Cost | — | 1,007 | |||||
Restructuring Cost | 47 | — | |||||
Change In Fair Value of Warrants | (165 | ) | — | ||||
Merger-related Contingent Losses (Gains) | 461 | — | |||||
Gain/Loss on Disposal of PPE | — | (3 | ) | ||||
Adjusted EBITDA | $ | 19,228 | $ | (18,640 | ) |
About
Forward Looking Statements
Certain statements included in this Press Release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether identified in this Press Release, and on the current expectations of Alliance’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Alliance. These forward-looking statements are subject to a number of risks and uncertainties, including risks relating to the anticipated growth rates and market opportunities; changes in applicable laws or regulations; the ability of Alliance to execute its business model, including market acceptance of its systems and related services; Alliance’s reliance on a concentration of suppliers for its products and services; increases in Alliance’s costs, disruption of supply, or shortage of products and materials; Alliance’s dependence on a concentration of customers, and failure to add new customers or expand sales to Alliance’s existing customers; increased Alliance inventory and risk of obsolescence; Alliance’s significant amount of indebtedness; our ability to refinance our existing indebtedness; our ability to continue as a going concern absent access to sources of liquidity; risks and failure by Alliance to meet the covenant requirements of its revolving credit facility, including a fixed charge coverage ratio; risks that a breach of the revolving credit facility, including Alliance’s recent breach of the covenant requirements, could result in the lender declaring a default and that the full outstanding amount under the revolving credit facility could be immediately due in full, which would have severe adverse consequences for the Company; known or future litigation and regulatory enforcement risks, including the diversion of time and attention and the additional costs and demands on Alliance’s resources; Alliance’s business being adversely affected by increased inflation, higher interest rates and other adverse economic, business, and/or competitive factors; geopolitical risk and changes in applicable laws or regulations; risk that the COVID-19 pandemic, and local, state, and federal responses to addressing the pandemic may have an adverse effect on our business operations, as well as our financial condition and results of operations; substantial regulations, which are evolving, and unfavorable changes or failure by Alliance to comply with these regulations; product liability claims, which could harm Alliance’s financial condition and liquidity if Alliance is not able to successfully defend or insure against such claims; availability of additional capital to support business growth; and the inability of Alliance to develop and maintain effective internal controls.
For investor inquiries, please contact:
(949) 491-8235
AENT@mzgroup.us
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
($ in thousands) | |||||||
(Unaudited) | |||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 2,655 | $ | 865 | |||
Trade Receivables, Net | 183,564 | 104,939 | |||||
Inventory, Net | 113,933 | 146,763 | |||||
Other Current Assets | 6,438 | 8,299 | |||||
Total Current Assets | 306,590 | 260,866 | |||||
Property and Equipment, Net | 12,525 | 13,421 | |||||
Operating Lease Right-of-Use Assets | 3,090 | 4,855 | |||||
89,116 | 89,116 | ||||||
Intangibles, Net | 15,331 | 17,356 | |||||
Other Long-Term Assets | 274 | 1,017 | |||||
Deferred Tax Asset, Net | 1,089 | 2,899 | |||||
Total Assets | $ | 428,015 | $ | 389,530 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Accounts Payable | $ | 212,297 | $ | 151,622 | |||
Accrued Expenses | 7,982 | 9,340 | |||||
Current Portion of Operating Lease Obligations | 3,252 | 3,902 | |||||
Current Portion of Finance Lease Obligations | 2,540 | 2,449 | |||||
Revolving Credit Facility, Net | — | 133,281 | |||||
Contingent Liability | 511 | 150 | |||||
Promissory Note | — | 495 | |||||
Total Current Liabilities | 226,582 | 301,239 | |||||
Revolving Credit Facility, Net | 96,939 | — | |||||
Shareholder Loan (subordinated), Non-Current | 10,000 | — | |||||
Warrant Liability | 41 | 206 | |||||
Finance Lease Obligation, Non- Current | 5,736 | 7,029 | |||||
Operating Lease Obligations, Non-Current | 215 | 1,522 | |||||
Total Liabilities | 339,513 | 309,996 | |||||
Commitments and Contingencies (Note 12) | |||||||
Stockholders’ Equity | |||||||
Preferred Stock: Par Value | — | — | |||||
Common Stock: Par Value | 5 | 5 | |||||
48,058 | 44,542 | ||||||
Accumulated Other Comprehensive Loss | (77 | ) | (77 | ) | |||
Retained Earnings | 40,516 | 35,064 | |||||
Total Stockholders’ Equity | 88,502 | 79,534 | |||||
Total Liabilities and Stockholders’ Equity | $ | 428,015 | $ | 389,530 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||||||||
($ in thousands except share and per share amounts) | |||||||||||||||
Net Revenues | $ | 425,586 | $ | 445,162 | $ | 652,341 | $ | 683,862 | |||||||
Cost of Revenues (excluding depreciation and amortization) | 377,883 | 424,265 | 578,384 | 637,495 | |||||||||||
Operating Expenses | |||||||||||||||
Distribution and Fulfillment Expense | 15,144 | 20,365 | 26,858 | 35,230 | |||||||||||
Selling, General and Administrative Expense | 15,116 | 15,044 | 29,553 | 29,777 | |||||||||||
Depreciation and Amortization | 1,412 | 1,529 | 3,054 | 3,166 | |||||||||||
Transaction Costs | — | 367 | — | 1,007 | |||||||||||
IC DISC Commissions | — | 1,444 | — | 2,833 | |||||||||||
Restructuring Cost | — | — | 47 | — | |||||||||||
(Gain) on Disposal of Fixed Assets | — | (3 | ) | — | (3 | ) | |||||||||
Total Operating Expenses | 31,672 | 38,746 | 59,512 | 72,010 | |||||||||||
Operating Income (Loss) | 16,031 | (17,849 | ) | 14,445 | (25,643 | ) | |||||||||
Other Expenses | |||||||||||||||
Interest Expense, Net | 3,328 | 3,544 | 6,468 | 5,898 | |||||||||||
Total Other Expenses | 3,328 | 3,544 | 6,468 | 5,898 | |||||||||||
Income (Loss) Before Income Tax Expense (Benefit) | 12,703 | (21,393 | ) | 7,977 | (31,541 | ) | |||||||||
Income Tax Expense (Benefit) | 3,789 | (5,878 | ) | 2,525 | (8,516 | ) | |||||||||
Net Income (Loss) | 8,914 | (15,515 | ) | 5,452 | (23,025 | ) | |||||||||
Net Income (Loss) per Share – Basic and Diluted | 0.18 | (0.33 | ) | $ | 0.11 | $ | (0.48 | ) | |||||||
Weighted Average Common Shares Outstanding | 50,930,770 | 47,500,000 | 50,716,470 | 47,500,000 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Six Months Ended | Six Months Ended | ||||||
($ in thousands) | |||||||
Cash Flows from Operating Activities: | |||||||
Net Income (Loss) | $ | 5,452 | $ | (23,025 | ) | ||
Adjustments to Reconcile Net Income (Loss) to | |||||||
Net Cash Provided by (Used in) Operating Activities: | |||||||
Inventory Write-down | — | 10,800 | |||||
Depreciation of Property and Equipment | 1,027 | 1,138 | |||||
Amortization of Intangible Assets | 2,027 | 2,028 | |||||
Amortization of Deferred Financing Costs (Included in Interest) | 159 | 83 | |||||
Bad Debt Expense | 333 | 330 | |||||
Gain on Disposal of Fixed Assets | — | (3 | ) | ||||
Changes in Assets and Liabilities, Net of Acquisitions | |||||||
Trade Receivables | (78,957 | ) | (69,193 | ) | |||
Related Party Receivable | — | 245 | |||||
Inventory | 32,831 | 68,547 | |||||
Income Taxes PayableReceivable | 2,557 | (9,098 | ) | ||||
Operating Lease Right-of-Use Assets | 1,764 | 1,748 | |||||
Operating Lease Obligations | (1,957 | ) | (1,943 | ) | |||
Other Assets | 2,217 | (5,424 | ) | ||||
Accounts Payable | 60,675 | (28,981 | ) | ||||
Accrued Expenses | (2,022 | ) | 12,088 | ||||
Net Cash Provided by (Used In) Operating Activities | 26,106 | (40,660 | ) | ||||
Cash Flows from Investing Activities: | |||||||
Capital Expenditures | (131 | ) | — | ||||
Cash Received for Business Acquisitions, Net of Cash Acquired | — | 1 | |||||
(131 | ) | 1 | |||||
Cash Flows from Financing Activities: | |||||||
Payments on Revolving Credit Facility | (591,057 | ) | (580,484 | ) | |||
Borrowings on Revolving Credit Facility | 558,768 | 621,048 | |||||
Proceeds from Shareholder Note (Subordinated), Non-Current | 46,000 | — | |||||
Payments on Shareholder Note (Subordinated), Current | (36,000 | ) | — | ||||
Issuance of common stock, net of transaction costs | 3,516 | — | |||||
Deferred Financing Costs | (4,211 | ) | — | ||||
Payments on Financing Leases | (1,201 | ) | — | ||||
(24,185 | ) | 40,564 | |||||
Net Increase (Decrease) in Cash | 1,790 | (95 | ) | ||||
Cash, Beginning of the Period | 865 | 1,469 | |||||
Cash, End of the Period | $ | 2,655 | $ | 1,374 | |||
Supplemental disclosure for Cash Flow Information | |||||||
Cash Paid for Interest | $ | 6,468 | $ | 5,898 | |||
Cash Paid for Income Taxes | $ | 44 | $ | 586 | |||
Supplemental Disclosure for Non-Cash Investing and Financing Activities | |||||||
Stock-based compensation conversion to stock | $ | 1,386 | $ | — | |||
Fixed Asset Financed with Debt | $ | — | $ | 8,252 | |||
Capital Contribution (Note 13) | $ | — | $ | 6,592 |
Source:
2024 GlobeNewswire, Inc., source