Upexi Inc Q2 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mike Albanese - EF Hutton - Analyst : Yeah, thank you, and thanks, guys, for taking my question. A really nice quarter here, nice job driving. Adjusted -- positive EBITDA and with the sale of CBD assets, and a couple of nice acquisitions. Just a couple of questions from me. I think first, just from a macro perspective, I'd love to get some more color around what you're seeing across some of your different brands.

Question: Mike Albanese - EF Hutton - Analyst : Great, thank you. All right, and then your $100 million guidance for the year, I mean, is there organic growth baked into this? Or is that just kind of run rate given the acquisitions that you've piled in or? Help me understand a little bit, what's driving that.

Question: Mike Albanese - EF Hutton - Analyst : Understood, okay, got it. All right, great. And then kind of help me understand, I guess, the drivers in terms of improving EBITDA margins throughout the year, right? I think 8% to 12% target by the end of the year. I mean, is this all coming from OpEx, really? You mentioned -- and I apologize if I got this wrong, but I think $500,000 to $1 million, is that just purely advertising? Was that across all OpEx? G&A decreased a little bit. I guess, help me understand what your expectations are from OpEx standpoint? And if that's really what's driving EBITDA margins, or if it's a -- you're forecasting an improvement to gross margin as well?

Question: Mike Albanese - EF Hutton - Analyst : Right.

Question: Mike Albanese - EF Hutton - Analyst : Sure.

Question: Mike Albanese - EF Hutton - Analyst : Got it, thank you for that context. It's very helpful. And then I guess just my last one, I just want to make sure, do you paid off all your debt?

Question: Mike Albanese - EF Hutton - Analyst : Okay, great. Awesome. All right, that's really it for me. Thanks, guys.

Question: Aaron Grey - Alliance Global Partners - Analyst : Hi, good evening. Thank you for the questions, and nice quarter and inflection to profitability. So first question from me, just want to turn back to the revenue and the implied guidance. So just want to be curious, in terms of -- was there a decent amount of seasonality in the quarter? I know, just for the holiday, maybe with the toys, because you hit $27 million. You only had E-Core for two months. So if you assume a full quarter for that, on a pro forma basis, it looks like you could almost hit the $100 million for the fiscal year 2023, let alone the calendar. So I know you gave some guidance towards flat for some of the newly acquired and growth for some of the legacy business, and the newly acquired ones, of Cygnet and E-Core, to make the majority of the revenue. But just want to go back to in terms of, what you're expecting in terms of that growth. Because it does look like you're well on your way to potentially building to hit that $100 million target for fiscal year, unless there's some seasonality in that quarter there. Thanks.

Question: Aaron Grey - Alliance Global Partners - Analyst : Okay, great. That's helpful. Second question from me. You mentioned in terms of Amazon liquidation business, right now, a lot of it electronics. Looking to expand, I believe you said, potentially into wellness, correct me if I'm wrong. But just wanted to know, is the wellness kind of liquidation, how would that differ versus electronics? A lot more discretionary, so shifting into a different type of category. So talk about how synergistic that might be. And then does that also provide the platform for you to expand into other CPG categories? I know you mentioned educational toys and otherwise. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2023 / 10:00PM, UPXI.OQ - Q2 2023 Upexi Inc Earnings Call

Question: Aaron Grey - Alliance Global Partners - Analyst : Okay, great, thanks. That's really helpful. And then last question from me, you kind of touched on it there. Just on the gross margin front, obviously, down sequentially there. And you mentioned some other things in your prepared remarks, Andrew. But just if you can maybe help out in terms of how much that was driven by E-Core, which seems like a structurally lower gross margin business, just due to the electronics liquidation business. So how much of the sequential decline in gross margin was just driven by the acquisition versus the legacy business? Thanks.

Question: Aaron Grey - Alliance Global Partners - Analyst : Okay, great. Really helpful color there. I'll jump back in the queue.

Question: Mike Zabran - ROTH Capital Partners - Analyst : Hey, guys, it's Mike Zabran, on for Matt. Wanted to start with the progress at Tytan Tiles. I know it's early and we just started hitting shelves in January, but I guess first, how are we tracking so far? And second, any way to quantify the benefit, or just qualitatively speak to how the sales lift we expect to see from physical store sales at Walmart fits into the revenue outlook for 2023? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2023 / 10:00PM, UPXI.OQ - Q2 2023 Upexi Inc Earnings Call

Question: Mike Zabran - ROTH Capital Partners - Analyst : Got it.

Question: Mike Zabran - ROTH Capital Partners - Analyst : Yeah. No, that works. I get it. Nothing public out there. We'll wait for an update. But next question, on the M&A front, maybe if you could just speak to the acquisition pipeline. Just how big is the pipeline, in terms of companies? What does total potential acquisition revenue for the pipeline look like? And further, just what are valuation multiples looking like in the current environment? Anything to call out, in terms of changes since last quarter?

Question: Mike Zabran - ROTH Capital Partners - Analyst : Yep, okay. Makes a lot of sense. Thanks, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2023 / 10:00PM, UPXI.OQ - Q2 2023 Upexi Inc Earnings Call

Question: John McAuliffe - Paulson Investment Company - Analyst : Hey, guys. Nice quarter. Must feel good. Andrew, interest expense for the quarter? And how much of D&A do you have left after getting rid of the CBD business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2023 / 10:00PM, UPXI.OQ - Q2 2023 Upexi Inc Earnings Call

Question: John McAuliffe - Paulson Investment Company - Analyst : No --

Question: John McAuliffe - Paulson Investment Company - Analyst : Just the acquisition interest costs, which I know are 3% or 4%. But what was that number, if you could? Do you know it?

Question: John McAuliffe - Paulson Investment Company - Analyst : Yeah, the interest you pay, the acquisitions that haven't been fully paid for yet, so your interest --

Question: John McAuliffe - Paulson Investment Company - Analyst : Got it. And depreciation and amortization, how much -- was what was that number?

Question: John McAuliffe - Paulson Investment Company - Analyst : Thank you. That's good. So last question is, I'd like to think of this some -- now, you're developing a lot of data, given your customer information. What's the marketing budget look like? And have you changed your idea about how to cross-sell and go after the clients that you've garnered through organic growth and acquisition? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2023 / 10:00PM, UPXI.OQ - Q2 2023 Upexi Inc Earnings Call

Question: John McAuliffe - Paulson Investment Company - Analyst : Thanks, and congratulations again.