Aterian Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 18, 2025

There are 5 speakers on the call.

Operator

Thank you for standing by. My name is Demi, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Aterion Inc. Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator

After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the conference over to Devin Sullivan of The Equity Group. Please go ahead, sir.

Speaker 1

Thank you, Demi. Thank you, everyone, for joining us today to discuss Atterion's fourth quarter and full year twenty twenty four financial results. On today's call are Arturo Rodriguez, our CEO and Josh Feldman, the company's CFO. A copy of today's press release is available on the Investor Relations section of Atirion's website at atirion.io. Before we get started, I want to remind everyone that the remarks on this call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on current management expectation.

Speaker 1

These may include, without limitation, predictions, expectations, targets or estimates, including regarding our anticipated financial performance, business plans and objectives, future events and developments, and actual results could differ materially from those mentioned. These forward looking statements also involve substantial risks and uncertainties, some of which may be outside of our control and that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties, among others, are discussed in our filings with the SEC. We encourage you to review these findings for a discussion of these risks, including our annual report on Form 10 K when it is available on the Investors portion of our website at atyrion.io. You should not place undue reliance on these forward looking statements.

Speaker 1

These statements are made only as of today, and we undertake no obligation to update or revise them for any new information except as required by law. This call will also contain certain non GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance and facilitate period to period comparisons of our core operating results. Reconciliation of these non GAAP measures to the most comparable GAAP measures and definitions of these indicators are included in our earnings release, which is available on the Investors portion of our website at atyrion.io. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. We are unable to provide a reconciliation of non GAAP adjusted EBITDA margin to net income margin, the most directly comparable GAAP financial measure on a forward looking basis without unreasonable efforts because items that impact this GAAP financial measure are not within the company's control and or cannot be reasonably predicted.

Speaker 1

With that said, I will now turn the call over to Arti. Arti, please go ahead.

Speaker 2

Thank you, Devin, and thank you everyone for joining us today. On today's call, I'll be discussing the following: one, a brief introduction to Atterion for our new callers two,

Speaker 3

a brief highlight of

Speaker 2

the fourth quarter results and a summary on how we have focused, stabilized and simplified Atterion throughout 2024 and three, our plan for 2025, which will be focused on our avenues for growth, our continuing improvement in our profit profile and we'll discuss the subject of tariffs including our responses to date. Josh, our CFO, will then cover in-depth our financial results for the fourth quarter and will provide details on our financial outlook for 2025 and beyond. For those of you joining us for the first time, Epicurean owns and operates its own brands, marketing and selling consumer products across multiple categories, primarily on e commerce marketplaces. We sell our products primarily in The U. S.

Speaker 2

And today we derive our revenues primarily from Amazon.com, Walmart Com, Target Plus and our own websites. Since 2014, we have either organically launched or purchased brands and today our focus is on operating six amazing brands. They are number one, Home Labs, which currently focuses on dehumidification and refrigeration, a best selling leader of dehumidifiers on Amazon. Number two, PureSteam, another best selling brand on Amazon, which leverages the natural power of steam to clean your home with its steam ops or reduce wrinkles in your clothes with its steam irons. Healing Solution, a collection of essential oil brands provides consumers a great essential oil experience.

Speaker 2

Photo Paper Direct, our DIY or do it yourself iron on transfer and photo paper provides joy and fulfillment to all consumers who love making their own T shirts, arts and crafts and printing their own photos from home. Number five, Mueller Living, which focuses on innovative quality products for your kitchen and has multiple top selling products on Amazon. And number six and finally, Squatty Potty, the original toilet stool, the leader in the category. Squatty Potty is the number one way to go number two as it continues to help people daily around the world poop easier and better. With these six foundational brands, Ateron is well positioned to grow and consistently deliver high quality affordable products to consumers.

Speaker 2

Now briefly to our fourth quarter performance. We are pleased with our fourth quarter results as we delivered our net revenue at the high end of our guidance. Adjusted EBITDA for the fourth quarter landed essentially at breakeven in line with guidance and improvement of $5,500,000 versus the same year ago quarter. And we reduced our net losses by approximately $6,400,000 to $1,300,000 for the quarter. The fourth quarter now closes 2024, which has been a year of achievement for Arterion.

Speaker 2

As we've delivered on key strategic objectives of focusing, stabilizing, simplifying our company. Here are the five key highlights. One, streamlining our product portfolio to six highly regarded foundational brands I just mentioned. This focused approach ensures that we are concentrating our efforts on those products that deliver the highest ROI while retaining our ability for diversification with our brands as we grow and evolve. Two, optimize our go to market strategy.

Speaker 2

By simplifying our marketplace account structure, which improves efficiency, marketing effectiveness and conversion rates. Three, strengthen supply chain through diversified partnerships, reduced warehouse footprint and expanding the volume of our shipping contracts, making our operations more agile and resilient enhance our technology stack, our transition to a best in class third party tech platform has improved efficiency, reduced cost and enabled faster expansion into new channels and geographies and five, improved our financial position by rightsizing our inventory, renegotiating and extending our credit facility and strengthening our working capital, setting a solid foundation for our future growth. These actions, along with the support of a remarkable team, produced significant improvements in 2024 in the areas of margin expansion, narrowed losses and an improved financial position. We believe the foundational work we accomplished in 2024 will allow all of us to grow and scale more predictably and efficiently starting in 2025 and beyond. We believe our momentum from 2024 will carry over to 2025 and drive a resumption of growth and improved adjusted EBITDA.

Speaker 2

We expect our net revenue for 2025 will increase between 57% from net revenues of $99,000,000 in 2024. Excluding approximately $4,000,000 in net revenue from discontinued SKUs that occurred in 2024, net revenues is expected to increase on a pro form a basis by 9% to 12%. Further, we are targeting 2025 to be essentially breakeven, including the impacts of tariffs, representing a significant improvement from the twenty twenty four's adjusted EBITDA loss of $2,100,000 Our 2025 growth will be driven by two key elements: one, channel and geo expansion and two, new product launches. Channel expansion along with omni channel approach is a natural progression for any product company, whether they started on Amazon, direct to consumer or brick and mortar. With our third party best in class software model and more nimble supply chain, Atirion is poised to expand channels, which we believe will allow us to grow our top line.

Speaker 2

In 2024, we started our expansion with MercadoLibre in Mexico and late in Q4 with Target plus twenty twenty five's growth on channels will continue with further expansion on our portfolio within Target plus as well as further growth to other MercadoLibre marketplaces. We also expect to add at least two more well known channels in the second half of twenty twenty five. In 2025, we expect to expand further into brick and mortar and to land a select group of products into a national retailer sometime in the second quarter. For geo expansion, our focus in 2025 will be The UK. Late in 2024, we qualified our accounts for Amazon seller fulfilled prime in The UK, which will allow us to expand many of our U.

Speaker 2

S. Products in The UK in the second half of twenty twenty five. As it relates to new product launches, we restarted this engine in 2024. And late in 2024, we launched three new products across our Pure Seam and Mueller Living brands. As we look into 2025, we expect to launch approximately five new categories across brands.

Speaker 2

With our focused brands, we are being very thoughtful on ensuring the products we launch are in tune with our brand vision and strengths. This includes consumable based products. We believe our product portfolio rounding it out with consumer based products will allow consumers to buy repeatedly and often and will help us grow our top line and improve margins long term. Further, consumer products will allow us to pursue broader sourcing opportunities, including products sourced within The United States. Along these lines, we are very excited about the launch of our Squatty Potty flushable wipes.

Speaker 2

In 2025, these wipes will be sourced from Italy with the intention to begin sourcing them from The United States sometime in 2026. When launched, we believe these 100% plant based wipes will be amongst the best in the market, delivering on great cleaning experience for users while still being safe for sensitive and eczema prone skin, pH balanced, alcohol free and up to the latest plumbing and septic standards for both The U. S. And The UK. These wipes will be a natural fit to the Squatty Potty family and will continue to iterate the brand's dedication to improving the bathroom experience.

Speaker 2

We expect these wipes to be available in early fall and will be launched practically simultaneously in both The U. S. And The U. K. Markets.

Speaker 2

As to our profitability in 2025, as we continue to grow, we expect to realize improved leverage and associated profits as our growth rates outpace our fixed cost investments after factoring the impacts of recently announced tariffs. This will be further enhanced over time as we expand our push into consumable products, which with the achievement of certain volumes will on average have better contribution margin than many SKUs in our current portfolio. As to tariffs, this has been a very sensitive and viable topic for the world. Our expectation and guidance does factor the latest tariffs, the 20% on China sourced imports and to a lesser extent Canada. We have planned to raise prices to offset as best as possible the impacts amongst other actions.

Speaker 2

We do believe further increased tariffs on China goods will be impactful in the short term and we would see pressure on our growth rates and leverage. During 2024, we have made efforts with our manufacturing partners to find alternative regions to source and manufacture our key products. Today, we source approximately 75% of our net revenues from China and we are working with our manufacturer partners to have that number reduced by 50% by the end of twenty twenty six. Once the previously announced reciprocal tariffs are communicated, we will be able to more definitively understand the impacts to our cost of goods if we're to move manufacturing away from China and revise these sourcing targets as necessary. We feel confident that we have the ability to further diversify our supply chain away from China over the coming years on our existing products if the cost structure makes sense.

Speaker 2

Further, as previously mentioned, as we continue to expand our product launches into consumable based goods, we naturally will see a diversification away from China. With our strong balance sheet, we believe we can navigate these challenges allowing us to adapt as needed while continuing to focus on long term growth and profitability. As to our capital deployment, we are excited to announce that our Board of Directors has approved a two year share repurchase program, allowing us at our discretion to repurchase up to $3,000,000 of shares of our common stock on the open market over the next two years. This buyback reflects a collective confidence in the company's future, the strength and flexibility of our financial profile and our commitment to shareholders. We firmly believe that Turing stock is significantly undervalued and this repurchase program underscores our conviction in the long term value we are creating.

Speaker 2

Finally, we continue to consider M and A and we still believe this may help our growth opportunistically. However, given the opportunity landscape for organic growth, this is not a primary focus. In closing, Arterion is a turnaround story that is evolving into a growth story. Our passionate, talented and tenacious people worldwide have worked and addressed a variety of issues that impeded our success in the past and have reconstructed a foundation that we believe will allow us to grow and deliver long term shareholder value. It was just about twelve months ago that we reported an adjusted EBITDA loss of more than $22,000,000 for 2023.

Speaker 2

In just one year's time, we've improved that figure by more than $20,000,000 And now, we are proud to report our expectation for even further progress in 2025, including our first year of growth in a very long time. Still a lot of work to do, but we are excited for the challenges ahead. We are confident that we have the balance sheet strength and operational agility to navigate this environment including tariffs, allowing us to continue to grow Ethereum while improving our operating performance. And most importantly, we remain grateful for the continued support of our shareholders. I am looking forward to a successful 2025.

Speaker 2

And with that, I will pass the call to Josh. Thanks, Artie. Good evening, everyone. We are pleased to report that our efforts to focus, simplifies and stabilize our business have produced positive results. These initiatives have led to improved key metrics and we're proud to report that we have reduced our adjusted EBITDA losses in 2024 to $2,100,000 compared to an adjusted EBITDA loss in the prior year of $22,300,000 While there is still work to be done, a 91% reduction in our Net revenue for the fourth quarter of twenty twenty four declined 25% Net revenue for the fourth quarter of twenty twenty four declined 25% to $24,600,000 from $32,800,000 in the year ago quarter, primarily reflecting our SKU rationalization and lower liquidation levels of high cost inventory.

Speaker 2

Adjusting for the impact of SKU rationalization, net revenue would have only declined approximately 4%. Our launch revenue was $300,000 during Q4 twenty twenty four compared to $400,000 in Q4 twenty twenty three. As planned, we had three new products and one new variation launched in the fourth quarter. As already mentioned, we expect to continue launching new products in 2025. Overall gross margin for the fourth quarter increased to 63.4% from 51% in the year ago quarter.

Speaker 2

The year over year improvement was driven by the positive impact of our SKU rationalization efforts, product mix and less liquidation of high cost inventory compared to the prior period. Our overall Q4 twenty twenty four contribution margin as defined in our earnings release was 19.4%, a significant improvement from last year's negative 0.8% and up from 17% in Q3 twenty twenty four. The year over year increase in contribution margin was driven by the positive impact of our SKU rationalization efforts and less liquidation of higher cost inventory compared to the prior period. Looking deeper into our contribution margin for Q4 twenty twenty four, our variable sales and distribution expenses as a percentage of net revenue decreased to 44.1% as compared to 52.8% in the year ago quarter. This decrease in sales and distribution expenses as a percentage of revenue is primarily due to product mix and a reduction in logistics cost as a percentage of revenue.

Speaker 2

Our operating loss of $1,600,000 in the fourth quarter of twenty twenty four narrowed from a loss of $8,200,000 in the year ago quarter, an improvement of approximately 80.4%, primarily driven by the improvement in Centimeters and the reduction of fixed costs due to our cost cutting initiatives. Our fourth quarter twenty twenty four operating loss includes $1,100,000 of non cash stock compensation expense, while our fourth quarter twenty twenty three operating loss included $1,600,000 of non cash stock compensation expense, a reserve for barter credits of $300,000 and a non cash loss on impairment of intangibles of $300,000 dollars Our net loss for the fourth quarter twenty twenty four of $1,300,000 improved from a loss of $7,700,000 in the year ago quarter, up approximately 83.1%, primarily driven by the improvement in Centimeters and a reduction in fixed costs. Our adjusted EBITDA loss of $100,000 as defined in our earnings release improved by 98.5% from an adjusted EBITDA loss of $5,600,000 in the fourth quarter of twenty twenty three, primarily driven by the improvement in Centimeters and the reduction of fixed costs. Moving on to the balance sheet. At 12/31/2024, we had cash of approximately $18,000,000 compared with $16,100,000 at 09/30/2024.

Speaker 2

Borrowings on our credit facility went from $6,700,000 as of the end of the third quarter of twenty twenty four to $6,900,000 at the end of the fourth quarter of twenty twenty four. The credit facility balance is down from $11,100,000 in the prior year period. At 12/31/2024, our inventory level was at $13,700,000 down from $16,600,000 at the end of the third quarter of twenty twenty four and down from $20,400,000 in the year ago quarter end. As we look at 2025, considering our new product launches and expansion into more channels, we believe that net revenue will be between $104,000,000 and $106,000,000 Using the middle of the range, this would be an approximately 6% increase from the 2024 annual revenue of $99,000,000 Adjusting for approximately $4,000,000 of net revenue from discontinued SKUs in the prior year, revenue at the midpoint is expected to increase by 11% compared to last year. The primary drivers of the sales increase year over year is new product launches and omni channel and geo expansion.

Speaker 2

Our sales seasonality remains largely consistent with prior years with the exception of Q1, which we expect to contribute approximately 15% of full year sales, slightly lower than historical trends. This shift is anticipated to be offset by stronger sales in Q4, while Q2 and Q3 are expected to align with typical seasonal patterns. Our current guidance reflects the impacts of recently implemented tariffs. Based on the current 20% tariff on China imports and to a lesser extent the 25% tariff on Canadian imports, we estimated the total impact on our 2025 cost of sales to be approximately $3,500,000 We believe we can mitigate approximately 50% of these additional costs from price increases. However, any future changes to tariff policies or unforeseen macroeconomic factors could affect our operating results.

Speaker 2

We will continue to monitor these developments and adapt our strategy as needed to manage potential risks. For 2025, we are targeting essentially breakeven adjusted EBITDA incorporating the estimated $3,500,000 effect of tariffs on our cost of goods sold. This represents an approximate $2,000,000 improvement from 2024. As trends evolve, we will continue to assess the impact and update our plans accordingly. We remain committed to driving long term sales growth and improving our operating performance over time.

Speaker 2

Our improved financial and operational foundation combined with a well respected product portfolio, exciting new product introductions and strong vendor relationships have given us the confidence to provide longer term sales growth goals. For the three year period between 2025 and 2027, we expect to deliver a CAGR of at least 10% to 12%. We believe this will be achievable through a combination of factors, including launching new products to expand our portfolio, strengthening our omni channel presence through deeper retail and e commerce penetration and entering new international markets. Alongside these growth drivers, our focus on operational efficiencies and cost discipline will support improved leverage, positioning us for sustainable profitability over time. We also continue to believe based on our current forecast that we have sufficient cash above our covenants to achieve our goal of consistent adjusted EBITDA profitability without raising additional capital.

Speaker 2

As previously stated, if we pursue additional financing, it will be predominantly for accretive material M and A. As already noted, we are also pleased to announce that our Board of Directors had authorized a two year three million dollars share repurchase program. This decision reflects our confidence in the company's long term prospects and our belief that our stock is undervalued. We see this as a strategic use of capital, reinforcing our commitment to driving shareholder value while continuing to invest in growth opportunities. Excluding the buyback and factoring in our breakeven adjusted EBITDA guidance, interest costs and working capital, we anticipate ending 2025 with approximately $16,000,000 to $17,000,000 of cash on hand.

Speaker 2

In closing, I'm very proud of our team's efforts in stabilizing the business and positioning it for future success. We are confident that with our products, strong balance sheet and our balance, our principles of focus, simplification and stabilization, we have turned the corner as a company. I look forward with optimism as we continue our journey towards revenue growth, sustained adjusted EBITDA profitability and ultimate aim to maximize long term shareholder value. With that, I'll turn it back to the operator to open up the call for questions.

Operator

Thank you. We will now begin the question and answer session. And your first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Your line is open.

Speaker 4

Hi, good evening. Thanks for taking my questions. The first question I have is, can you discuss the performance of the SKUs added to Target Plus during Black Friday, which was the beginning in the fourth quarter? And then have you since added more SKUs? Do you plan to, if not, add a number of more SKUs throughout the year?

Speaker 4

Just trying to understand the timeframe and execution on that platform.

Speaker 2

Hey, Brian, Artie here. I'll handle that one. Listen, I think in some aspects and I'll answer it in different order. So the way we looked at Target plus and ultimately all these other channels that we want to get into, we're really looking at this kind of marquee SKU concept. I think it works well for us.

Speaker 2

Some of these channels that we're a lot more nimbler, especially with our tech platform to sort of expand onto these channels, they are different than Amazon. And so it's a little bit of a learning curve. At the same time, especially in this environment, it's hard sometimes hard to forecast. So we want to focus on our best SKUs, get the best SKUs up on these platforms and theoretically see how they perform. And then over time, we want to sort of expand that outside of the marquee SKUs and ultimately eventually have all of our SKUs on there, right, I would say most of our SKUs.

Speaker 2

Keep in mind that when you back out roughly, I would say like some 1,300 SKUs between our papers and oils, we're probably at roughly 100 SKUs that are kind of like the key marquee SKUs, which is the rest of the brands, which would be like Healing Solution sorry, which would be Home Labs and Puresteam and Mueller and Squatty. So I think in some aspects, that's our approach. So we are it's a little bit more conservative than perhaps in the past or in others where people would just shock on these things. We think it's a lot better to be a lot more focused and patient, make sure the SKUs are successful, understand the nuances of those and then continue to hit the gas. And that's what we're doing for Target and obviously the rest of the channels as we expand through 2025.

Speaker 2

As to Q4 performance, we're pleasantly pleased. I think we saw that the steam op did very well on Target plus I think that was probably our lead SKU. We're excited for the second half of this year as we ramp up some of those SKUs around the steam op around pure steam, but also hitting the second half of this year with the seasonal product like dehumidifier. So we're very pleased with the performance so far.

Speaker 4

Great. But by the way, is the cautious nature and plan to learn, you have to commit that inventory to that platform? Is it or does it matter where you sell your inventory, can it all be sourced from different platforms for the same SKUs?

Speaker 2

So unlike Amazon yes, no, I totally follow you. So I think unlike Amazon, like these other channels that we're expanding to, you don't have to necessarily lock that inventory into FDA. Like the Target Plus isn't an FDA model, right? So because we set up our supply chain the appropriate way and we have national warehouses across the continent roughly nine, we can actually still distribute our inventory nationally. And then as we expand channels like Target Plus, if it doesn't sell on Target Plus, yes, we can still sell those products on our other channels like Walmart, B2C and some other things we're looking at.

Speaker 2

So unlike Amazon, where if it's an FBA product like the Steam Op is, you'd have to send that in and you can kind of stuck that inventory in there. We're a lot more flexible because of our national footprint and the fact that we actually are the ones fulfilling for Target Plus and some of these other channels. Does that make sense?

Speaker 4

Yes. Okay. And then I'm wondering on the guidance, if you could dig in a little bit more and describe the dynamics that are leading to probably what you're seeing so far as a weaker relatively weaker first quarter on an annual basis, but gives you confidence the second and third quarter will be typical seasonality and the fourth is relatively strong. What are those dynamics that you see that timing playing out like that?

Speaker 2

Hey, Brian, it's Josh. I think what's driving that really is that our new product launches will predominantly be launched in the second half of the year, as well as our expansion into two new marketplaces, as well as brick and mortar expansion is happening in the second quarter. So we're kind of we're about more Q4 heavy than we are Q1 heavy versus prior years.

Speaker 4

And then the first quarter is just seeing relative weakness just in volume while we wait for those things to play out, is that right?

Speaker 2

I wouldn't say it's weakness. I just think that our sales growth that we've described in our guidance is being driven by these new products and new marketplaces, which will be in full effect in the back half of the year.

Speaker 4

Okay. The last question I have, the underlying growth is 9% to 12% making adjustments. It sounds like you got eight new SKUs, expansion in Target and Mercado. And I thought on the 75% of products sourced from China, I could have misunderstood. I thought you said you were increasing prices by 20%.

Speaker 4

So maybe that's wrong, but if all of that is right, what are you expecting what are your expectations on transaction volume with all those things moving in the right direction? Obviously tariffs prices for tariffs, but I'm just trying to understand how you think the impact is to transaction volume?

Speaker 2

So I guess I'll start off a little bit with Brian. Your tariffs were 20% and then theoretically if you back off like cost of goods sold when you actually look at the FOB, which is the actual tariff impact thing, it's roughly anywhere from a 7% to 10% price increase. Now the reality is not every single one of our products went up 20%, right? There's some price elasticity across certain of our categories and certain of our brands. So some of them might have gone a little bit higher where other ones couldn't go the whole way.

Speaker 2

And so I think in some aspects, we do feel that we've been able to adjust through the tariffs at this level and feel pretty confident of our plan going forward. I think when it comes to the pull through of that, there'll be some pressure on gross margin comparably year over year, right, but you'll still see a healthy Centimeters. And so we do feel pretty bullish that we can hit those growth targets, even with increased pricing, considering some of the channels we're launching to and some of the activity we've already seen and some of the performance we've already seen in Q4 on some of those channels. At the same time, we are very confident in our product launches that are going to help us drive that revenue even though it's second half weighted. You're right, there is a limit to the tariff exercise.

Speaker 2

And as we said in the prepared remarks, if those keep going up, we'll have to revisit some of those plans. But certainly right now, we do feel pretty bullish even though there's been a lot of noise in the economy about consumer confidence reducing. We still feel that the product areas we've picked on and this is why we've been a bit cautious and thoughtful. These are products that are going to have multi years and multi SKUs over time, right? This is not like one off product.

Speaker 2

So we still feel very bullish even with the some of the headwinds there.

Speaker 4

Okay. Thank you.

Operator

Your next question comes from the line of Alex Fuhrman with Craig Hallum. Your line is open.

Speaker 3

Hey guys, thanks for taking my question and congratulations on all the progress that you made in 2024. Artie wanted to ask about the longer term kind of three year growth targets. Obviously that implies some kind of acceleration in 2026 and beyond. Is that mostly just driven by the fact that you're going to have a lot of these new products launching in the second half of the year and you're going to feel the full impact of that next year? Would love to just hear a little bit more about how you kind of build into that multiyear CAGR.

Speaker 2

Yes. Thanks, Alex. Appreciate it. Yes, that's part of it. I think you theoretically you have an exit velocity concept, right?

Speaker 2

If you're launching a product in sometime in the second half, that's not really the full run rate impact in the year. So that's one. Number two, we're going to continue to launch products, right? Just because I'm doing five this year, we're going to do more in 2026 and more in 2027. So you're going to get a little bit of a flywheel effect that helps get to that CAGR that Josh talked about in that range.

Speaker 2

I think the other side is also the channel expansions, right? We're adding two well known channels sometime in the second half of this year, and we do have visions into more channels over time in 2026 and in 2027 also other geos. So I think the combination of all of that is why you see that uplift. And yes, at some point you'll see an acceleration on the growth if everything hits right. If that's technically 2026, I think a lot of it depends on timing of some of the things I just mentioned.

Speaker 2

But certainly, it is kind of heading that way.

Speaker 3

Okay. That's really helpful. Thanks. And then you mentioned consumer confidence. Obviously, there's has been signs that that is declining just across the country and it sounds like your brand you feel are better positioned than most to weather the storm.

Speaker 3

Are there any areas that you have been seeing different consumer behavior the last couple of months either in terms of basket size or certain products that they're gravitating towards?

Speaker 2

No, honestly, no. I think so far things are relatively on pace to our plan. We've had some out of stocks and some other things that have been kind of natural progressions after a pretty good Q4. So I don't think we're seeing a tremendous amount of softness coming directly because of consumer confidence or anything like that. I think some of it is just the reset of Q1 after Q4 that you naturally have a little bit of noise that way.

Speaker 2

I think from our perspective, we look it's one thing, it's like a blessing and a curse. We're pretty diversified, right? We're across six brands. They sell totally different things. And I think because of that, we have a lot of different price points.

Speaker 2

So in some aspects, if Wells Fargo is seeing a shift towards more value play, we do have brands that perhaps could play really well into that and take up some of the lion's share of growth and offset maybe more premium brands that may be struggling a little bit. And so I do think we're well positioned to sort of you kind of handle this kind of pending volatility or storm that's going out there. But so far, we haven't seen it particularly across our brands. But I do like the fact in this type of scenario, I do like being diversified because it gives us a lot of opportunities and things to think about with our revenue team and supply chain team to sort of see how we handle softness. If we see any, at the same time take opportunity take advantage of the opportunity if we see a more value play going.

Speaker 3

Great. That's really helpful. Thank you very much.

Operator

Seeing no further questions in the queue, I will turn the call back over to Devin Sullivan. Please go ahead.

Speaker 1

Thank you, Demi. As part of Atirion's shareholder perks program, which as a reminder, investors can sign up for at atirion. Ioperks, Participants have the ability to ask management questions on our earnings calls. We want to thank all of our shareholder PERKS participants for their loyalty, their participation in the program and their questions. We've picked two of the most popular questions that have been submitted by shareholders and I'll read them now and for Arti and Josh to respond.

Speaker 1

The first question, why do Atirion's brands have a lack of presence on eBay? Is there a reason behind letting third party sellers sell our products on eBay instead of creating our direct from brand accounts like other companies such as Ninja Kitchen and Dyson?

Speaker 2

I'll grab that Josh. So Devin, thank you for that and thank you for the shareholder who submitted that one. EBay is an interesting channel. I mean, we do sell certain items on eBay, particularly some open box and return. We primarily handle refurbishments currently through liquidators and other wholesale partners versus direct selling.

Speaker 2

If you look at the Dyson and Ninja Kitchen and when you look at those particular brands and others, that's like a direct refurbishment program that they do. So they take a lot of their returns back and open boxes and things they actually certify refurbished and they sell through eBay. It's not like brand new items. This is certainly something that company has discussed and has looked at in the past. Right now, we don't think it's a priority for us.

Speaker 2

We think there's a lot more upside when we look at other channels like Target plus as we mentioned, some of the ones we're planning to launch in the future. But it's an interesting thing. We'll continue to monitor it. But certainly, I think there's better upside for Turing and the newer products or brand new products on Target Plus and other channels like that.

Speaker 1

All right. Thank you, Artie. The next question, why are you not engaged on social media platforms?

Speaker 2

Thanks, Devin. Again, thank you to the shareholders submitted that question. It's a good one. Listen, we've done a lot of foundational work over the last eighteen months. We've relaunched few of our brands' websites, including our corporate site.

Speaker 2

And currently right now, we're ramping up our social media posting for our brands. This is for sure an area opportunity for Tyrian. It's part of our roadmap. We do think there's the power of social media will definitely be part of Tieriant strength in the future and something we continue to invest in and improve on. So people get to be clear, a lot of that work right now is going to our brand pages, right?

Speaker 2

We are focused on the investments we're making there and the additional postings we're doing is very focused on our brand pages and not the tiering corporate website, just to be clear on that or the tiering corporate social media pages. So we are improving those brand pages.

Speaker 1

Great. Thank you, Artie. With those two questions being answered, this concludes the Q and A portion of today's call. In terms of upcoming calendar, Aterion management will be participating in the Planet Microcap Showcase in Las Vegas April Twenty Second Two To Twenty Four. We look forward to speaking with you on our next earnings call.

Speaker 1

This ends our call for today. Thank you again for your participation and you may disconnect.

Operator

This concludes today's conference call. You may now disconnect.

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Earnings Conference Call
Aterian Q4 2024
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