iPower Reports Fiscal Third Quarter 2023 Results

May 15, 2023

iPower Management to Host Conference Call Today at 4:30 p.m. Eastern Time

DUARTE, Calif., May 15, 2023 (GLOBE NEWSWIRE) -- iPower Inc. (Nasdaq: IPW) (“iPower” or the “Company”), a leading online retailer and supplier of consumer home and garden products, today announced financial results for its fiscal third quarter ended March 31, 2023.

Fiscal Q3 2023 Results vs. Year-Ago Quarter (unless otherwise noted) 

  • Total revenue was $20.2 million compared to $22.8 million.
  • Gross profit was $7.8 million, with gross margin of 38.5% compared to 40.4%.
  • Net loss attributable to iPower was $1.5 million or $(0.05) per share, compared to net income of $1.2 million or $0.04 per share.
  • As of March 31, 2023, net debt (total debt less cash) was reduced by 42% to $8.2 million compared to net debt of $14.2 million as of June 30, 2022.

Management Commentary 

“We had a challenging comp this quarter given our record 74% revenue growth in fiscal Q3 2022; however, we demonstrated continued momentum in clearing out inventory buildup from prior periods,” said Lawrence Tan, CEO of iPower. “Throughout the quarter, we prioritized our in-house brands which made up more than 90% of revenue, underscoring the steady demand for our high-quality products. We will continue to focus on diversifying our product portfolio beyond hydroponics, while adding depth to our in-house product catalog. We expect these initiatives to further enhance our market position and deliver value to our partners and customers around the world.”

iPower CFO, Kevin Vassily, added, “We have continued to sell-through excess inventory that incurred higher freight rates from calendar 2022, which has been a drag on our gross margin. While we still have some older product to sell through, we have cycled through the bulk of that older inventory and expect that gross margin headwind to ease thereafter, while also lowering operating expenses as we recently eliminated excess warehousing costs. With an improved supply chain environment and normalized inventory levels, coupled with continued demand for our in-house products, we believe we are well-positioned to return to profitability in fiscal 2024.”

Fiscal Third Quarter 2023 Financial Results 

Total revenue in the fiscal third quarter of 2023 was $20.2 million compared to $22.8 million for the same period in fiscal 2022. The decrease was primarily driven by less third-party branded sales to the Company’s channel partners. The fiscal third quarter 2023 revenue mix from in-house brands increased to over 90% compared to 82% in the year-ago period.

Gross profit in the fiscal third quarter of 2023 was $7.8 million compared to $9.2 million for the same quarter in fiscal year 2022. As a percentage of revenue, gross margin was 38.5% compared to 40.4% in the year-ago period. The decrease in gross margin was primarily driven by the higher cost of goods sold, which resulted from selling inventory that previously incurred higher freight charges. Given the normalization of freight rates in recent months, the Company expects gross margin to improve in the second half of calendar year 2023, as capitalized freight costs incurred in recent months will flow through future periods.

Total operating expenses in the fiscal third quarter of 2023 were $9.6 million compared to $7.8 million for the same period in fiscal year of 2022. The increase in operating expenses was primarily driven by higher selling, fulfilment, and marketing costs related to the sale of inventory built up in prior quarters, as well as product mix. 

Net loss attributable to iPower in the fiscal third quarter of 2023 was $1.5 million or $(0.05) per share, compared to net income of $1.2 million or $0.04 per share for the same period in fiscal year of 2022. The decline was primarily driven by lower gross profit and the aforementioned higher selling, fulfilment, and marketing costs related to the sale of inventory built up in prior quarters.

Cash and cash equivalents were $1.4 million at March 31, 2023, compared to $1.8 million at June 30, 2022. Total debt as of March 31, 2023 was $9.7 million compared to $16.0 million as of June 30, 2022. As a result of the Company’s debt paydown, iPower’s net debt (total debt less cash) position was reduced 42% to $8.2 million compared to $14.2 million as of June 30, 2022.

Conference Call 

The Company will hold a conference call at 4:30 p.m. Eastern Time on Monday, May 15, 2023, to discuss the results for its fiscal third quarter ended March 31, 2023.

iPower’s management will host the conference call, which will be followed by a question-and-answer session.

The conference call details are as follows:

Date: Monday, May 15, 2023
Time: 4:30 p.m. Eastern Time
Dial-in registration link: here
Live webcast registration link: here

Please dial into the conference call 5-10 minutes prior to the start time. If you have any difficulty connecting with the conference call, please contact the company’s investor relations team at IPW@elevate-ir.com.

The conference call will also be broadcast live and available for replay in the Events & Presentations section of the Company’s website at www.meetipower.com.

About iPower Inc. 

iPower Inc. is a leading online retailer and supplier of consumer home and garden products. iPower offers thousands of stock keeping units from its in-house brands as well as hundreds of other brands through its ecommerce channel partners and its website, www.zenhydro.com. iPower has a diverse customer base that includes both commercial businesses and individuals. For more information, please visit iPower's website at www.meetipower.com.

Forward-Looking Statements 

All statements other than statements of historical fact in this press release are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that iPower believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. iPower undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances, or changes in its expectations, except as may be required by law. Although iPower believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and iPower cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results and performance in iPower's Annual Report on Form 10-K, as filed with the SEC on September 28, 2022, iPower’s Quarterly Reports on Form 10-Q, most recently filed with the SEC on May 15, 2023, and in its other SEC filings.

Investor Relations Contact:

Sean Mansouri, CFA
Elevate IR
(720) 330-2829

iPower Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of March 31, 2023 and June 30, 2022
 March 31, June 30,
  2023   2022 
Current assets     
Cash and cash equivalent$1,419,495  $1,821,947 
Accounts receivable, net 15,704,882   17,432,287 
Inventories, net 19,646,934   30,433,766 
Other receivable - related party 39,853   51,762 
Prepayments and other current assets 3,470,167   5,444,463 
Total current assets 40,281,331   55,184,225 
Non-current assets     
Right of use - non-current 8,504,929   10,453,282 
Property and equipment, net 577,719   544,633 
Deferred tax assets 1,546,159   - 
Non-current prepayments 601,873   925,624 
Goodwill 3,034,110   6,094,144 
Investment in joint venture 34,759   43,385 
Intangible assets, net 4,442,414   4,929,442 
Other non-current assets 395,284   406,732 
Total non-current assets 19,137,247   23,397,242 
Total assets$59,418,578  $78,581,467 
Current liabilities     
Accounts payable 13,406,565   9,533,408 
Credit cards payble 296,847   807,687 
Customer deposit 482,862   273,457 
Other payables and accrued liabilities 2,442,105   5,915,220 
Advance from shareholders 89,968   92,246 
Investment payable -   1,500,000 
Lease liability - current 2,356,545   2,582,933 
Long-term promissory note payable - current portion 2,004,181   1,879,065 
Income taxes payable 389,126   299,563 
Total current liabilities 21,468,199   22,883,579 
Non-current liabilities     
Long-term revolving loan payable, net 7,653,372   12,314,627 
Long-term promissory note payable, net 0   1,781,705 
Deferred tax liabilities -   939,115 
Lease liability - non-current 6,571,404   8,265,611 
Total non-current liabilities 14,224,776   23,301,058 
Total liabilities 35,692,975   46,184,637 
Commitments and contingency -   - 
Stockholders' Equity     
Preferred stock, $0.001 par value; 20,000,000 shares authorized; 0 shares issued and    
outstanding at December 31, 2022 and 2021 -   - 
Common stock, $0.001 par value; 180,000,000 shares authorized; 29,572,382 and     
29,572,382 shares issued and outstanding at March 31, 2023 and June 30, 2022 29,573   29,573 
Additional paid in capital 29,499,585   29,111,863 
(Accumulated deficits) Retained earnings (5,740,401)  3,262,948 
Non-controlling interest (22,110)  (13,232)
Accumulated other comprehensive income (loss) (41,044)  5,678 
Total equity 23,725,603   32,396,830 
Total liabilities and equity$59,418,578  $78,581,467 

iPower Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended March 31, 2023 and 2022
 For the Three Months Ended March 31, For the Nine Months Ended March 31,
  2023   2022   2023   2022 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES$20,225,619  $22,808,214  $65,502,882  $57,300,642 
TOTAL REVENUES 20,225,619   22,808,214   65,502,882   57,300,642 
COST OF REVENUES 12,433,898   13,598,563   39,755,919   33,219,677 
GROSS PROFIT 7,791,721   9,209,651   25,746,963   24,080,965 
Selling and fulfillment 6,537,124   5,030,267   24,294,673   12,338,027 
General and administrative 3,065,795   2,802,395   8,879,326   7,940,349 
Impairment loss - goodwill -   -   3,060,034   - 
Total operating expenses 9,602,919   7,832,662   36,234,033   20,278,376 
(LOSS) INCOME FROM OPERATIONS (1,811,198)  1,376,989   (10,487,070)  3,802,589 
Interest expenses (238,623)  (152,030)  (800,783)  (227,142)
Other financing expenses -   (71,010)  -   (80,010)
Loss on equity method investment (1,297)  (12,289)  (8,625)  (12,289)
Other non-operating income (72,235)  75,882   199,125   85,473 
Total other expenses, net (312,155)  (159,447)  (610,283)  (233,968)
(LOSS) INCOME BEFORE INCOME TAXES (2,123,353)  1,217,542   (11,097,353)  3,568,621 
PROVISION FOR INCOME TAX (BENEFIT) EXPENSE (589,581)  39,855   (2,085,126)  705,545 
NET (LOSS) INCOME (1,533,772)  1,177,687   (9,012,227)  2,863,076 
Non-controlling interest (3,238)  (4,070)  (8,878)  (4,070)
NET (LOSS) INCOME ATTRIBUTABLE TO IPOWER INC.$(1,530,534) $1,181,757  $(9,003,349) $2,867,146 
Foreign currency translation adjustments 17,604   (3,226)  (46,722)  (3,226)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO IPOWER INC.$(1,512,930) $1,178,531  $(9,050,071) $2,863,920 
Basic 29,730,914   28,045,130   29,702,014   26,999,342 
Diluted 29,730,914   28,045,130   29,702,014   26,999,342 
Basic$(0.051) $0.042  $(0.303) $0.106 
Diluted$(0.051) $0.042  $(0.303) $0.106