Armlogi Holding Corp. common stock Price & Performance (BTOC)

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And with that, I would like to hand the call to our first speaker, [indiscernible] Chairman and CEO of Armlogi. Good morning, Ayety. Good morning, Matt. And thank you, everyone, for joining us today. I would like to discuss our second quarter and first half results for fiscal twenty twenty five and outline our strategic [indiscernible] For Q2 FY twenty twenty five, we generated revenue of $51,100,000 representing growth of 21.8% compared to the same period last year, We are all top line [indiscernible] strong market demand We fixed the margin pressure this quarter as we executed [indiscernible] We will grow from nine to 12 warehouses. Expanding our total space from 2,000,000 to over CHF3.5 million with new strategic location in Savannah, Georgia, Ontario, California and most recently 500,000 square feet facility in the St. Louis Metro Area. Looking ahead, we remain confident in our long term strategy Our expanded footprint now provide access to 70% of The U. S. Population with a two days drive. Our focus remains on optimizing this facility we're maintaining our high service level I will now turn it over to our new CFO, Scott Hsu, who will provide a detailed review of our financial performance.

Thank you, Ivy. I will now take us to a comprehensive review of our financial results [indiscernible] for both the second quarter and the first half of the fiscal year twenty twenty Let me start by extending our revenue performance While we achieved a 21.8% top line growth, reaching 51,100,000.0 in Q2. The composition of this growth reveals important trends.

Across our business segment. Our transportation services revenue grew 20.8 percent 6,100,000.0 driven by increased shipment volumes. From our expanded warehouse network, Our warehousing service revenue showed even stronger growth increased 25.7% to RMB15 million Reflecting the successful Adi of our new facilities, Our other services revenue primarily custom bookings decreased to 6,243 as we focus on our core operation. However, net growth came with a significant cost pressure Our total cost of sales increased by $16,300,000 or 47.6% to 50,900,000.0 in Q2 The increase was driven by two main factors. Chris, there was a rise in freight expense due to higher UPS shipping costs. Second, this expense [indiscernible] and the temporary labor post increased as we extend our warehouse and operation teams to support growth. This close increase reflects both our expansion activities and [indiscernible] resulting in our gross profit margin decreased to 0.9% in Q2 fiscal year twenty twenty five, from 18.3% in Q2 fiscal year twenty twenty four. General and administrative expenses decreased by RMB3.3 million or 9% from 2,900,000.0 for the three months ended 12/31/2023 to 2,600,000.0 for the same period in 2024, primary driver being a 1.2 media professional fees related [indiscernible] As a result, our net loss for the three months ended December 31, 2024 one point six million compared with the net income of $3,700,000 for the same period in 2023, representing a decrease of $5,400,000 Looking at our first half performance, total revenue grew 12.5% to 93,600,000.0 However, the cost pressure I described earlier net net loss of six months and 12/31/2024 of RMB6.3 million compared with the net income by medium, for the same period in 2023, representing a decrease by $12,800,000 Turning to our balance sheet and the liquidity position, as of 12/31/2024, and 06/30/2024, We had cash and restricted cash of $7,400,000 under $10,000,000 respectively.

Which primarily consists of the cash deposits in banks Our cash flow analysis shows operating activities used the net cash of $9,200,000 in the first half primarily due to our expansion related expenses investing activities, just 1,000,000 for the property and equipment purchase while financing activities provided the $7,400,000 primarily We have taken the significant step to strengthen our financial flexibility This includes securing of $50,000,000 standalone equity purchase agreement establishing up to $21,000,000 in convertible promissory notes [indiscernible] [indiscernible] [indiscernible] Our working capital position remains solid with the total current assets $42,900,000 against current liabilities of $40,200,000 and our total stockholders' equity stands at $33,200,000 A particularly encouraging metric is our growing customer base. Which has expanding from 105 at the June 2024 two ninety eight active customers as of 12/31/2024 The NIAV three times scores in our customer base demonstrates for market demand. For our service despite the near term margin pressure. Looking ahead, our financial strategy focused on four key areas: First, improving the deterioration rate at our new facility drive better operating leverage. [indiscernible] implementing automation and efficiency initiatives. To manage operating costs Third, optimizing working capital through the better inventory and the disposal management. And fourth, maintaining adequate liquidity to support our continued growth [indiscernible] [indiscernible] comprehensive financial overview.

I will turn it back to Matt for questions. Thank you, Scott.

We will now move to the question and answer portion of the call. Thank you to everyone who has submitted questions.

Our first question can you provide more color on the UPS cost increases and what steps you're taking to mitigate the impact on margin? [indiscernible] The UPS cost increase contribute a significant to our RMB8.3 million in freight expenses this quarter. We are addressing this through the multiple initiatives. First, our recent integration with Avalanche Shipping that we expect will help to diversify our shipping costs. We are leveraging our new portal transportation management software for optimizing the routing and the consolidated shipping where possible. Finally, we are in ongoing discussion with the multiple carriers we ensure competitive rates as we continue to grow our volume.

Thank you.

Your warehousing footprint has grown significantly but utilization seems Next, What's your target utilization rate and timeline for reaching and across the new facility?

Well, our Sabana facility has reached 70% utilization within six months. Which we are pleased with, Some of our newer facility are still ramping up. Our target utilization rate is 85% across the network. We expect most facilities to reach this level within twelve months to eighteen months. [indiscernible] Based on our historical experiments, The St. Louis facility just came online So that's where it takes some time. But Ontario is taking [indiscernible] Given the cash burn this quarter and current market conditions, do you anticipate needing to drawdown more of the SEPA facility in the near term. We ended the quarter with the 7,400,000.0 cash and the restricted cash And we have only drawn $10,000,000 of our $15,000,000 SEPL plus While we believe our current liquidity position is adequate, for our near term having the facility provides important flexibility as we continue to optimize our extended operations. We will be strategic about any additional growth opportunity is dilution considerations.

Thank you. And our last question. Now you mentioned AI integration in your Can you quantify the expected efficiency gains and timeline for implementation?

Yes. The AI instance of WMAP maps is currently being rolled out across our network. By fiscal year end. [indiscernible] from our pilot facility show potential for the 15 to twenty percent improvement in and the 25% reduction in worker working However, we extend our full benefit to materialize over six to twelve months. As the system learned from our operation. And that we optimize its competition.

Thank you, Scott, and thank you, Ayod, for your comments. And thank you, everyone, for participating on today's call We look forward to providing additional updates in the near future. In the meantime, we can be reached at Armlogi or you could contact me at matthew@strategicir.com. Ladies and gentlemen, this