Good afternoon, everyone and thank you for participating in today’s conference call to discuss iPower’s financial results for its Fiscal Fourth Quarter and Full Year 2023 ended June 30, 2023. Joining us today are iPower’s Chairman and CEO, Mr. Lawrence Tan and the Company’s CFO, Mr. Kevin Vassily. Mr. Vassily, please go ahead.

Thank you, operator, and good afternoon, everyone. By now, everyone should have access to our fiscal fourth quarter and full year 2023 earnings press release, which was issued earlier today at approximately 4:05 p.m. Eastern Time. The release is available in the Investor Relations section of our website at meetipower.com. This call will also be available for webcast replay on our website. Following our prepared remarks, we’ll open the call for your questions. Before I introduce Lawrence, I’d like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time-to-time in the Company’s filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except for what is required by law, the Company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. With that, I would now like to turn the call now over to iPower’s Chairman and CEO, Lawrence Tan. Lawrence?

Thank you, Kevin, and good afternoon, everyone. Fiscal 2023 marked our third consecutive year of double-digit revenue growth, reaching record sales of almost $90 million. This was driven by the consistent strong demand for our in-house products and continued expansion of our non-hydroponics portfolio. Throughout the year, we continued to prioritize our in-house brands, which made up of more than 90% of the revenue, demonstrating our ability to research, develop and market high-demand products. We are seeing particularly strong momentum in our home category, which includes shelving and fans, as well as our pet category, as some of our older SKU gained market share. Additionally, we experienced incremental gains from new SKU introduced throughout the year. We will continue to invest in the development of new innovative segments to create even greater value for our customers. As we’ve mentioned on past conference calls, hydroponics has become a smaller portion of our business today as we’ve placed a strong emphasis on diversifying our product mix outside the category. For fiscal 2023, non-hydroponic sales made up more than 75% of the revenue. Despite growing other categories within our portfolio, we will continue to offer high-quality hydroponics products and invest in the vertical accordingly as that market evolves. Since launching our business services program earlier in the year, we have begun to see promising tractions with both current and prospective partners. For those who are unfamiliar, our goal is to leverage our superior supply chain, warehousing and merchandising expertise to drive sales growth for partners that have innovative product portfolios. Since inception, we have partnered with companies that operate in home goods and electronic categories. We are still in the early stages but are encouraged by the initial feedback and sales momentum. We look forward to share updates as this segment grows and are excited to offer our services, help more brand partners grow their businesses. As I mentioned on our last conference call, we have been ramping sales and marketing to work through higher priced inventory. During the fiscal fourth quarter, we sold most of the remaining higher cost goods, which we expect will improve gross margins moving forward. We also don’t have to carry as much inventory on hand, given the improved supply chain, which will reduce our operating expenses in fiscal 2024 as we save our warehousing expenses. Now, looking ahead into fiscal 2024, we no longer have the burden of short-term warehousing leases, high cost inventory, or the needs for excess of promotional spend. We will continue to focus on diversifying our sales mix while adding new cutting edge offerings to our in-house product portfolio, all of this coupled with improved supply chain, normalized inventory levels and continued strong demand for our in-house products. We are well equipped to deliver on our growth and the profitability initiatives in the year ahead. I will now turn the call over to our CFO, Kevin Vassily to take you through our financial results in more details. Kevin, please.

Yes. Thanks, Lawrence. Unless referenced otherwise, all variance commentary is versus the prior year quarter. So let me get into the fiscal Q4 results. Total revenue increased 6%, $23.4 million, compared to $22.1 million. The increase was primarily driven by greater product sales to our largest channel partner, as well as strong demand for our non-hydroponic product portfolio. Gross profit in the fiscal fourth quarter remained flat at $9.1 million, compared to the year ago quarter. As a percentage of revenue, gross margin was 38.7%, compared to 41.2%. The decrease in gross margin was primarily driven by higher cost of goods sold related to inventory that previously incurred higher freight charges, as well as normal variations in product and channel mix. With the normalization of freight rates, we expect gross margin to improve in fiscal 2024. Total operating expenses for fiscal Q4 were $12 million compared to $10.6 million for the same period in fiscal 2022. The increase was driven in part by non-core expense related to legal and arbitration proceedings, as well as higher selling, fulfillment and marketing costs related to the sale of inventory built-up in prior quarters. Net loss attributable to iPower in the fiscal quarter was $3 million or $0.10 per share, compared to a net loss of $1.3 million or $0.05 per share. The decline was driven in part by the aforementioned higher operating expenses. Now, quickly turning to our full year of fiscal 2023 results. Total revenue for fiscal year 2023 increased 12% to $88.9 million compared to $79.4 million in fiscal 2022. The increase was primarily driven by greater product sales to our largest channel partner, as well as strong demand for our non-hydroponic and in-house product portfolios. Gross profit for the year increased 5% to $34.8 million compared to $33.2 million with…

[Operator Instructions] Our first question comes from the line of Scott Fortune of ROTH MKM.

Hi. Good afternoon, and thanks for the questions. Just want to get a sense for the cadence moving forward here. In the past quarter, you mentioned looking to return to normalized growth, annual growth, in the high-teens to 20% levels. Can you step us through kind of different business segments and the growth drivers to achieve kind of more than normalized, higher top line growth that you’re looking for? And then with that, how much of it is coming from new service offerings? I know it’s in initial stages, but just want to get sent for how much of new service segment as part of that driving growth into your fiscal year ‘24 here?

Kevin, do you want me to take this question?

Yes. You can take it and I can I can add to it kind of after you are finished.

Sure. The services are at a early stage, but we have been working on it for a while. And this definitely takes time to set up the partnership to get a product physically moved, set up a sales channel and growth. But we have seen some pretty -- pretty good results initially. While it hasn’t yielded as much in terms of percentage of our sales, we believe it will grow to -- like a recognizable chunk, like later -- earlier this fiscal year. So, we will keep you updated on the progress, which I am pretty delightful to see how it goes right now. And in terms of categories, all of our categories other than hydroponics has been growing pretty healthily, including home, pads, and some of the new categories we introduced through our partnership with the electronic manufacturers and brands. I mean, I think both the product category expansion, more market share and sales growth on existing SKUs as well as the new partnership will all contribute to the revenue growth in the coming fiscal year.

Yes. Scott, let me -- I’ll add a couple other things there. So, there are a couple sources of acceleration that we are hoping to tap into this fiscal year, the biggest of which is kind of the resumption of normalized inventory levels with our biggest channel partner, which I am sure you know who that is. The predominant sales model we have with them is a wholesale sales model. And the slowdown in our kind of year-over-year sales was largely a function of that channel partner across the board, not just with us, but across the board, normalizing their inventory. And we think they’re pretty close, if not done with that, which means we can start seeing kind of sales to them that match end demand. And there has been a mitch match of that probably for the last several quarters. So that’s one, and I think we’re pretty close to that. The second piece would be some of the new channels that we’re working on. We’re now engaged very early on with Lowe’s. We have a number of other offline relationships as well that are starting to get some momentum. And so, any of those will be completely incremental sales for us that you obviously didn’t have in the prior years. So, we’re pretty optimistic that those will start to get some traction. And between the two of those, setting aside whether or not we can generate incremental sales yet from the services business, we’re reasonably comfortable that that can get us back to some of our historical growth trends. I think Lawrence, you had one other thing you wanted to mention as well.

Yes. I mean, as you mentioned about like extra channels, we have actually being successfully launching our business on TikTok shops where we sell directly to TikTok viewers. We are one of the very early participated sellers on TikTok platform got approved and so far we have been running properly. And I think that’s on track. And we haven’t mentioned anything about it because the sales volume, even though it’s been growing fast, it’s insignificant as of June. But we have been seeing pretty heavy growth on that. And once it reached to a point where it becomes something that we think is worth mentioning, we’ll definitely let you know. But I think that will be -- that should be soon.

I appreciate that color. That’s helpful. Can we dig into -- next question, dig into a little bit -- I know you have robust product development pipeline and you’re driving new product designs and new channels, like you said. But just kind of step us through again the initial service partnerships in place. Obviously, the ramping of that over the year. And do you have to put in new staffing or cost to really ramp that? Just kind of step us through kind of how we should look at the service offering, the initial ramps and initial categories, and at what size would that require to ramp up more cost from your side to support?

Yes. In terms of like -- I would actually more describe this as partnership instead of servicing. Now, in terms of personnel, we do not participate -- at least at the early stage, we do not participate in product development. That’s solely on our partner. We provide like human resources, all merchandising, warehousing and logistics mostly. So that while doesn’t add new type of labor costs on us, it does require the same amount of work as if we brought on our own new in-house product, like additional SKUs. Yes, no structure changes, but more SKUs. More new SKUs means more work.

Got it. And just to kind of follow up on that, the opportunities out there. I know you’ve targeted electronics and home goods, but you’re seeing a lot of potential partners here that could use the kind of the consulting or the merchandising, the warehousing and even your e-comm expertise moving forward. What’s the key there? Just kind of how open is this to you and what’s the key for these guys coming on with you, with the service offering?

Yes. Most of the guys that who we currently partner with have shared similar characteristics where they are both manufacturers and they are also online retailers. Most of these manufacturers have been trying to do online with their in-house teams and yield not so satisfied results. And in turn, they came to us because we have better merchandising skills. We have better knowledges and deeper channel integrations. We do this -- they consider us as expertise in this side. So we work together. That’s why they came to us. They tried. While they have pretty good products, a lot of times they can’t sell better than competitors who has not as -- portfolios not competitive than theirs. So they realize that they need help, they need to partner with somebody like us.

That’s perfect. I appreciate Lawrence for the color. I will -- thanks for all the answers to the questions.

Thank you. Please standby for our next question. Our next question comes from the line of Thierry Wuilloud of Water Tower Research.

Hey. Good afternoon, Lawrence, good afternoon, Kevin. Thanks for taking the call. Scott has covered a lot of ground. But you mentioned with the business services, you mentioned home goods and electronics, and does that mean you have a second client or a second relationship there already? You’ve announced one so far.

Yes. We are already selling like computer monitors with our partners, online as of today as we’re speaking.

Okay. So, we haven’t announced the name as of yet. So, when we get to a position where we’re comfortable and they’re comfortable we’ll do that. But as of this point we haven’t announced who they are yet.

Okay. Well, it’s great to see a second partnership there. Any comments on the pipeline in terms of where do you expect to end at the end of the first quarter in terms of how many partners you might be working with?

The members of a partnership will not be many, even going forward will not be many. But we are partnering with companies who are at $1 billion revenue scale. So, while the number of partners are limited, the sales are probably not going to be limited. So, the key here is, like, how much revenue we’ll get and what we’ll be through that partnership? Are we going to be the top 3 or the best sellers in that category? I think that’s more like of my goals.

Great. That’s helpful. Maybe one more question. You mentioned in the prepared remarks and I think on the press release that you are well-positioned to execute on your profitability objectives in fiscal 2024. Any commentary as to what those profitability objectives are? I’m not sure how details you want to give us, but maybe some rough numbers at the gross margin level and maybe whether you think you will be positive at the net income level?

Yes. I’ll take that one. So we don’t give guidance for guidance, partly given the nature of the business, partly given the fact that we’re still a pretty small company. What we’ve said in different forums is that now that we are back to a more normalized environment, we believe that we can -- or we should be able to achieve the kind of profitability profile that we had prior to the big inventory build that we have. So, we were clearly EBITDA positive. We were clearly net income positive. We had gross margins in the 42% to 45% range. And that was -- the fluctuation there was largely a function of the large product category and some of the multiple channels that we sell through. And that kind of multi-variant mix can create some changes quarter-to-quarter. But that would be an achievable profile to get to at some point during the fiscal kind of 2024 year. That does not include contribution from the services business. And we think that that is likely a reasonably accretive business for us going forward. So, we don’t want to give a timetable. But, we are pretty comfortable that we are back. We are looking into a next kind of period of time for us where given the normalized supply chain that our prior levels of gross margin and EBITDA and net income margin should be achievable. So hopefully that’s helpful.

Yes. That’s very helpful. Thank you very much. Maybe one last question. In terms of the business services, can you give us a sense as to that will show up as a -- how are you compensated for that service that you provide? How you are going to be -- is it going to be at the revenue level and you will buy and sell the product, or are you just going to get a net margin? How should we think of that?

At this moment, different -- since these partners are pretty sizable ones, I won’t expect every single one to follow the same exact like templates. But so far the ones that we set up have -- is running in the term where we cut purchase order to the partners. So, it will be like a buy-sell relationship at the very basic. So, it’s not a commission model, not for...

And there won’t really be like inventory risk or anything of that nature for you?

What we set up so far is that we help providing services on logistics and warehousing while the inventory ownership doesn’t transfer, unless we have a sales from our like subsequential channels. So there will -- the risk of inventory really end of the day falls on the partners, and not us.

Okay, great. Hey, thanks to take my questions and looking forward to a good 2024.

Thank you.

Thank you. I would now like to turn the conference back to Kevin Vassily for closing remarks. Sir?

Yes. Thank you, operator. Thanks everyone for joining for our fiscal Q4 and year-end earnings call. We look forward to speaking with you again next quarter. Have a good day.

This concludes today’s conference call. Thank you for participating. You may now disconnect.