Oct 3, 2025 4:35 PM Eastern Daylight Time —Leading high-growth retailer specializing in hard-surface flooring offers homeowners and professionals the industry's broadest in-stock selection of tile, natural wood, natural stone and more, celebrates its new warehouse location in Tennessee— ATLANTA--(BUSINESS WIRE)--Floor & Decor (NYSE: FND), the leading high-growth retailer specializing in hard-surface flooring for homeowners and professionals, has announced the grand opening of its newest warehouse location i ...

Summary of Alliance Entertainment Holding Corporation Conference Call Company Overview - **Company**: Alliance Entertainment Holding Corporation (NasdaqCM:AENT) - **Industry**: Distribution of entertainment products including toys, collectibles, music, movies, and video games [2][3] Core Business Model - Alliance Entertainment operates as a stocking distributor, providing e-commerce fulfillment and drop shipping services to independent and chain retailers [2][3] - The company manages a wide selection of over 340,000 SKUs from major suppliers in the entertainment sector [2][3] Financial Performance - **Revenue**: Over $1 billion, with a breakdown as follows: - Vinyl: 32% (~$320 million) - Gaming: 24% (~$240 million) - Movies (DVD, Blu-ray, UHD): 26% (~$260 million) - CDs: 12% (~$120 million) [5][6] - **Earnings Per Share (EPS)**: Increased from $0.05 to $0.11, more than doubling despite a slight revenue decline [9] - **Gross Profit**: Increased from $11.4 million to $15.8 million year-over-year [9] - **Adjusted EBITDA**: Significant growth noted, contributing to stock performance [9] Growth Drivers - Licensing agreements with major studios like Paramount have boosted revenue and gross profit margins [6][7][14] - The company has a strong focus on operational efficiency, including investments in automation (e.g., AutoStore system) that reduced labor costs significantly [11][22] - Direct-to-consumer fulfillment accounts for 40% of the business, enhancing revenue streams [12][33] Market Trends - Vinyl sales are experiencing a resurgence, with significant consumer interest in physical media as collectibles [35] - The company capitalizes on events like Record Store Day, shipping over 600,000 units during the latest event [12] Strategic Initiatives - Alliance Entertainment is exploring further licensing opportunities and potential acquisitions to enhance its market position [25][32] - The company aims to maintain gross profit margins above 15% while expanding its top line through strategic growth initiatives [25] Financial Health - The company has reduced its line of credit from $70 million to $55 million, with expectations to lower it further [21] - Interest expenses are decreasing, and the company is in the process of refinancing for better rates [22] Insider Ownership - Insiders own approximately 77% of the company, indicating strong alignment with shareholder interests [19] Analyst Coverage - Maxim has initiated coverage with a target price of $10, while the stock is currently trading above $7 [22] Conclusion - Alliance Entertainment is positioned for growth through strategic licensing, operational efficiencies, and a focus on consumer trends favoring physical media. The company is actively seeking opportunities to expand its market presence while maintaining strong financial health.

Financial Data and Key Metrics Changes - In fiscal 2025, the company reported net income of $15.1 million, a 229% increase from the previous year [6][11] - Adjusted EBITDA grew 51% to $36.5 million, with gross margin improving from 11.7% to 12.5% year-over-year [6][11] - Earnings per share rose to $0.30, more than tripling from $0.09 in fiscal 2024 [6][11] - For Q4, net income was $5.8 million, or $0.11 per diluted share, compared to $2.5 million, or $0.05 per share in the prior year [7][9] Business Line Data and Key Metrics Changes - Q4 net revenue was $227.8 million, down from $236.9 million in Q4 fiscal 2024, while gross profit increased 34% year-over-year to $36 million [9][10] - Adjusted EBITDA for Q4 grew nearly fivefold to $12.2 million, up from $2.1 million in the prior year [9][10] - Direct-to-consumer fulfillment accounted for 37% of gross revenue, up from 36% in fiscal 2024, reflecting broader retailer adoption [19] Market Data and Key Metrics Changes - The company has established exclusive partnerships that accounted for over $350 million in revenue, representing more than a third of total sales [14][55] - The exclusive distribution agreement with Paramount Pictures is expected to contribute significantly to sales growth in fiscal 2026 [34][36] Company Strategy and Development Direction - The company aims to scale high-margin categories and deepen exclusive content partnerships while strengthening its fulfillment model [23][24] - The focus on automation and AI initiatives is intended to enhance operational efficiency and drive sales growth [21][22][45] - The company is actively pursuing strategic acquisitions to expand its content and capabilities [23][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of margin improvements and profitability, attributing it to structural advantages in the business model [24][41] - The company anticipates strong consumer demand heading into the holiday season, supported by exclusive content releases [8][36] Other Important Information - The company reduced revolver debt by 22% and improved inventory alignment, ending the year with $26.8 million in cash flow from operating activities [7][11] - The company has modernized its fulfillment hub, leading to significant cost savings and increased throughput [20] Q&A Session Summary Question: How should investors think about your ability to sign similar deals with other studios? - Management is actively working on opportunities for similar deals in physical DVD distribution [26] Question: How are you impacted by tariffs, and what efforts are you undertaking to mitigate the impact? - The company has minimal impact from tariffs in music and video, but some price increases are seen in collectible products due to tariffs on imports from China [27][28] Question: Can you talk about your preferences regarding capital allocation? - The company focuses on paying down debt and strategic acquisitions, with no current plans for stock buybacks [30] Question: How sustainable is the lift from the Paramount Pictures exclusive license? - The company expects continued growth from the Paramount deal, with incremental sales opportunities across various channels [34] Question: What does being selected as Walmart's video category advisor mean for the company? - This designation allows the company to assist Walmart with strategic planning in the video category, enhancing its partnership with a major retailer [37] Question: Can you share the profile of your current M&A pipeline? - The company is engaged in multiple acquisition conversations and continuously evaluates opportunities that align with its strategic goals [39][40] Question: How much of the margin expansion is structural versus cyclical? - The margin expansion is attributed to structural improvements, including higher-margin products and significant cost savings from operational efficiencies [41] Question: How is AI going to help the business? - AI initiatives are focused on improving sales efficiency and operational processes, with ongoing training and integration of AI tools [43][45] Question: How do you balance investing in legacy categories versus building out higher growth segments? - The company continues to invest in both legacy categories and new initiatives, seeing growth potential in both areas [47] Question: What gives you confidence Handmade by Robots can break out? - The brand has strong design and licensing potential, with a robust growth strategy and existing operational infrastructure to support scaling [49][50] Question: Why is exclusivity such a big advantage for Alliance Entertainment? - Exclusive partnerships allow the company to be the sole distributor for certain products, enhancing its competitive position and access to major retailers [53][55]

Financial Performance - Revenue for FY25 reached $1063 million, compared to $1100 million in FY24[19, 32] - Adjusted EBITDA for FY25 was $365 million, a significant increase from $243 million in FY24[19, 38] - Earnings per share increased from $009 in FY24 to $030 in FY25[19, 35] - Gross margin improved from 117% in FY24 to 125% in FY25[34] - Net income increased substantially from $46 million in FY24 to $151 million in FY25[37] Q4 FY25 Performance - Revenue for Q4 FY25 was $228 million, slightly lower than $237 million in Q4 FY24[21] - Cost of revenue decreased from $210 million in Q4 FY24 to $192 million in Q4 FY25[23] - Gross margin percentage increased from 114% in Q4 FY24 to 158% in Q4 FY25[25] - Earnings per share increased from $005 in Q4 FY24 to $011 in Q4 FY25[27] - Net income increased from $25 million in Q4 FY24 to $58 million in Q4 FY25[28] - Adjusted EBITDA increased significantly from $21 million in Q4 FY24 to $122 million in Q4 FY25[30] Business Overview - The company's exclusive distribution and licensing agreements drive annual sales exceeding $375 million[40] - Direct-to-consumer (DTC) sales contribute 37% of the company's net revenue[64]

Financial Performance (FY2025) - Revenue for the nine months ended March 31, 2025, was $836 million, compared to $864 million for the same period in 2024 [13] - Net income for the nine months ended March 31, 2025, was $93 million, a significant increase from $21 million in the same period of 2024 [33] - Adjusted EBITDA for the nine months ended March 31, 2025, was $244 million, compared to $222 million for the same period in 2024 [35] - Q3 2025 revenue was $213 million, compared to $211 million in Q3 2024 [23] - Q3 2025 Adjusted EBITDA was $49 million, compared to $29 million in Q3 2024 [23] Balance Sheet (as of March 31, 2025) - Debt was $752 million [17] - Inventory was $932 million [17] - Total Assets were $349396 million and Total Equity was $97402 million [107] Business Segments (Nine Months Ended March 31, 2025) - Vinyl revenue was $264 million, representing 32% of total revenue [13] - Gaming revenue was $225 million, representing 27% of total revenue [13] - DVD/Blu-ray/UltraHD revenue was $196 million, representing 24% of total revenue [13] Strategic Initiatives - Exclusive distribution and licensing agreements drive annual sales exceeding $350 million [55] - The company shipped over 600000 vinyl units to over 1000 stores for Record Store Day [45]

Financial Data and Key Metrics Changes - For Q3 FY2025, net revenue was $213 million, a slight increase from $211.2 million in Q3 FY2024 [15] - Gross profit rose 3.7% year over year to $29.1 million, with gross margin improving to 13.6% from 13.2% [15] - Net income was $1.9 million or $0.04 per share, compared to a net loss of $3.4 million or $0.07 per share in Q3 of last year [16] - Adjusted EBITDA grew 66% year over year to $4.9 million, up from $2.9 million [16] - For the nine-month period ended 03/31/2025, net revenue was $835.7 million, down from $863.5 million [17] - Net income increased to $9.3 million or $0.18 per diluted share, up sharply from $2.1 million or $0.04 per share last year, representing a 349% improvement [19] Business Line Data and Key Metrics Changes - Exclusive products and licensing agreements accounted for nearly a quarter of overall revenue in the trailing twelve months [7] - Direct to consumer fulfillment accounted for an estimated 40% of gross revenue in Q3, up from 33% in the same period last year [25] Market Data and Key Metrics Changes - The company reported strong performance in key high-margin categories, despite a decline in overall revenue [17] - The gaming segment faced challenges due to limited hardware allocation from Microsoft and tough comparisons from the previous year [38] Company Strategy and Development Direction - The company focuses on expanding its licensing partnerships and acquiring emerging brands to enhance its position in the collectibles market [13] - The new exclusive license agreement with Paramount Pictures is expected to significantly contribute to revenue and earnings [22][60] - The company aims to improve its EBITDA margin, targeting a return to closer to 5% in fiscal 2026 [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the collectibles market and the company's strategic positioning within it [11] - The company is optimistic about the impact of new product releases and licensing agreements on future performance [60] Other Important Information - The company has made significant progress in reducing debt and optimizing working capital, which enhances financial flexibility for future acquisitions [48] - Automation and warehouse optimization efforts have led to a 10.2% year-over-year reduction in distribution and fulfillment costs [29] Q&A Session Summary Question: Do you have a good relationship with Nintendo with the arrival of the upcoming Switch two? - Yes, the company has a significant relationship with Nintendo and is excited about the upcoming hardware and software releases [34][35] Question: How is Handmade by Robots going? Can you provide an update? - The company is optimistic about the Handmade by Robots brand and has plans for new character releases in the second half of 2025 [36][37] Question: What do you attribute the decline in gaming revenue to? - The decline is attributed to limited hardware allocation from Microsoft and tough comparisons from the previous year [38] Question: Do you have a long-term target margin range for the business? - The company aims to exceed a 3% EBITDA margin in fiscal 2026 and is focused on improving both EBITDA and net profit margins [41][42] Question: What type of impact are tariffs having on Alliance's business? - Music and video products are not affected by tariffs, while the company is managing the impact of tariffs on gaming products [43][44] Question: How do you see your financial flexibility evolving over the next few quarters? - The company has made improvements in working capital and debt reduction, providing flexibility for potential acquisitions [48][49] Question: Can you talk about what's driving increased adoption of direct to consumer fulfillment? - The growth is driven by the ability of retailers to offer a wide selection of products without holding inventory, benefiting both retailers and consumers [51][52] Question: Can you tell me more about the Paramount exclusive license agreement? - The agreement allows the company to be the exclusive distributor of Paramount's physical media catalog, which is expected to significantly boost revenue [55][60]

Financial Data and Key Metrics Changes - For Q3 FY2025, net revenue was $213 million, a slight increase from $211.2 million in Q3 FY2024 [14] - Gross profit rose 3.7% year over year to $29.1 million, with gross margin improving to 13.6% from 13.2% [14] - Net income was $1.9 million or $0.04 per share, compared to a net loss of $3.4 million or $0.07 per share in Q3 of last year [15] - Adjusted EBITDA grew 66% year over year to $4.9 million, up from $2.9 million [15] - For the nine-month period, net revenue was $835.7 million, down from $863.5 million last year, primarily due to timing of shipments [16] - Net income increased to $9.3 million or $0.18 per diluted share, up from $2.1 million or $0.04 per share last year, representing a 349% improvement [18] Business Line Data and Key Metrics Changes - Exclusive agreements accounted for nearly a quarter of overall revenue, with $250 million generated from these partnerships over the trailing twelve months [20] - Direct-to-consumer fulfillment accounted for an estimated 40% of gross revenue in Q3, up from 33% in the same period last year [24] Market Data and Key Metrics Changes - The company reported strong performance in high-margin categories, despite a decline in overall revenue [16] - The gaming segment faced challenges due to limited hardware allocation from Microsoft and tough comparisons from the previous year [36] Company Strategy and Development Direction - The company focuses on expanding its licensing partnerships and acquiring emerging brands to enhance its position in the collectibles market [12] - The new exclusive license agreement with Paramount Pictures is expected to significantly contribute to revenue and earnings, allowing the company to be the exclusive distributor of Paramount's physical media catalog [21][56] - The company aims to improve its EBITDA margin, targeting a return to closer to 5% by FY2026 [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential driven by new product releases and strategic partnerships, particularly with major franchises [22][56] - The company is optimistic about the impact of the new Nintendo console on sales throughout 2025 [33] - Management highlighted the importance of automation and warehouse optimization in driving cost efficiencies and improving service levels [26][28] Other Important Information - The company has reduced its revolver debt and improved liquidity while maintaining strong supplier relationships [18] - The acquisition of Handmade by Robots is expected to enhance the company's licensing pipeline and position in the collectibles market [29] Q&A Session Summary Question: Do you have a good relationship with Nintendo with the arrival of the upcoming Switch two? - Yes, the company has a significant relationship with Nintendo and is excited about the upcoming hardware and software releases, which are expected to help sales [32] Question: How is Handmade by Robots going? Can you provide an update? - The company is excited about the brand and has plans for new character releases in the second half of 2025, indicating strong progress since the acquisition [34] Question: What do you attribute the decline in gaming revenue to? - The decline is attributed to limited hardware allocation from Microsoft and tough comparisons from the previous year, with expectations for stronger sales with new Nintendo hardware [36] Question: Do you have a long-term target margin range for the business? - The company aims to exceed a 3% EBITDA margin in FY2026, with a focus on improving both gross and net profit margins [39] Question: What type of impact are tariffs having on Alliance's business? - Music and video products are not affected by tariffs, while the company is managing the impact of tariffs on gaming products and Handmade by Robots [41][42] Question: How do you see your financial flexibility evolving over the next few quarters? - The company has made significant improvements in working capital and debt reduction, with availability on its line of credit for potential acquisitions [46] Question: Can you talk about what's driving increased adoption of direct-to-consumer fulfillment? - The growth is driven by the ability of retailers to offer a wider selection of products without holding inventory, benefiting both retailers and consumers [49] Question: Can you tell me more about the Paramount exclusive license agreement? - The agreement allows the company to be the exclusive distributor of Paramount's physical media catalog, which is expected to significantly boost revenue and extend the life of physical DVDs [53][56]

Financial Data and Key Metrics Changes - The company reported diluted earnings of $0.44 per share for Q4 2024, including a net benefit of $6.8 million from a derivative litigation settlement [14] - For the full year 2024, diluted earnings were $1.90 per share, which also included the $0.05 benefit from the settlement [15] - Q4 2024 gross profit rose by 8.9%, with a gross margin rate of 43.5%, while the full-year gross margin rate increased to 43.3% from 42.1% [56] - Selling and store operating expenses increased by 10.1% in Q4 2024, while general and administrative expenses decreased by 5.4% [57][59] - Adjusted EBITDA for Q4 2024 increased by 11.1% to $119.8 million, while full-year adjusted EBITDA declined by 7.0% to $512.5 million [63][65] Business Line Data and Key Metrics Changes - Total sales for Q4 2024 increased by 5.7% year-over-year, while comparable store sales decreased by 0.8%, showing improvement from previous quarters [23][24] - The company opened 10 new warehouse format stores in Q4 2024, totaling 30 new stores for the fiscal year [19] - Spartan Surfaces experienced a 17.9% decline in Q4 sales, primarily due to weakness in the multifamily residential market [46] Market Data and Key Metrics Changes - The company noted that existing home sales rose for the third consecutive month in December 2024, despite elevated mortgage interest rates [24] - The west division showed encouraging comparable store sales trends, with modest growth year-over-year [28] Company Strategy and Development Direction - The company aims to open 25 new warehouse format stores in fiscal 2025, focusing on strategic growth despite industry pressures [20][21] - Investments in innovative merchandise and technology are prioritized to enhance customer experience and drive long-term growth [15][30] - The company is diversifying its supply chain to reduce reliance on China, with the U.S. now being the largest country of manufacture [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth opportunities in hard-surface flooring due to supply and demand imbalances in housing [16] - The company is carefully planning for fiscal 2025 amid geopolitical uncertainties and mixed economic indicators, with total sales expected to range from $4.740 billion to $4.900 billion [68][70] - Management highlighted the importance of existing home sales for driving growth in same-store sales [100] Other Important Information - The company achieved a record high net promoter score in January 2025, reflecting strong customer service [53] - The company plans to continue investing in technology and e-commerce to enhance customer engagement [37] Q&A Session Summary Question: What is driving the slightly weaker performance quarter-to-date? - Management attributed the slowdown to weather impacts, noting that sales typically recover over time [80] Question: How should we think about the incrementality or flow-through to the model? - Management indicated that better-than-expected sales lead to strong flow-through, with expectations of high 30s flow-through if sales exceed projections [84][86] Question: What are the expectations for housing backdrop and its impact on sales? - Management expects a slow recovery in housing, with benefits from immature stores contributing to sales growth [99][100] Question: How will the company manage supply chain costs and pricing in 2025? - The company plans to negotiate with suppliers, diversify sourcing, and adjust prices as necessary to manage costs [128]