Company Provides Second Quarter 2024 Results of Operations
The Singing Machine Company (NASDAQ: MICS) reported its Q2 2024 results, highlighting a strategic shift in its legacy business model. Net sales decreased by 7% to $2.44 million, while gross profit fell by 38.8% to $324,000. The company focused on cost control, reducing operating expenses from $2.9 million to $2.6 million year-over-year. However, a $3.9 million non-cash impairment charge led to increased total operating expenses.
Key highlights include:
- Stable existing customer revenues
- Significant reduction in short-term liabilities by 43.8% to $9.1 million
- Strategic shift towards non-retail channels and music subscription model
- Completion of SemiCab acquisition on July 3, 2024
La Singing Machine Company (NASDAQ: MICS) ha riportato i risultati del Q2 2024, evidenziando un cambiamento strategico nel suo modello di business tradizionale. Le vendite nette sono diminuite del 7% a $2,44 milioni, mentre il profitto lordo è sceso del 38,8% a $324.000. L'azienda si è concentrata sul controllo dei costi, riducendo le spese operative da $2,9 milioni a $2,6 milioni rispetto all'anno precedente. Tuttavia, un addebito non monetario di $3,9 milioni ha portato a un aumento delle spese operative totali.
Tra i punti salienti ci sono:
- Entrate stabili dai clienti esistenti
- Riduzione significativa delle passività a breve termine del 43,8% a $9,1 milioni
- Cambiamento strategico verso canali non retail e modello di abbonamento musicale
- Completamento dell'acquisizione di SemiCab il 3 luglio 2024
La empresa Singing Machine Company (NASDAQ: MICS) reportó sus resultados del Q2 2024, destacando un cambio estratégico en su modelo de negocio tradicional. Las ventas netas disminuyeron un 7% a $2.44 millones, mientras que el beneficio bruto cayó un 38.8% a $324,000. La compañía se centró en el control de costos, reduciendo los gastos operativos de $2.9 millones a $2.6 millones respecto al año anterior. Sin embargo, un cargo por deterioro no monetario de $3.9 millones llevó a un aumento de los gastos operativos totales.
Los puntos destacados incluyen:
- Ingresos estables de clientes existentes
- Reducción significativa de las deudas a corto plazo del 43.8% a $9.1 millones
- Cambio estratégico hacia canales no minoristas y modelo de suscripción musical
- Finalización de la adquisición de SemiCab el 3 de julio de 2024
싱잉 머신 컴퍼니(Singing Machine Company, NASDAQ: MICS)는 2024년 2분기 실적을 발표하며 전통적인 비즈니스 모델의 전략적 변화에 주목했습니다. 순매출은 7% 감소하여 244만 달러로 줄어들었고, 총 이익은 38.8% 감소하여 32만 4천 달러를 기록했습니다. 이 회사는 비용 통제에 집중하여 운영 비용을 290만 달러에서 260만 달러로 줄였습니다. 하지만 390만 달러의 비현금 손상 비용이 발생하여 총 운영 비용이 증가했습니다.
주요 사항은 다음과 같습니다:
- 기존 고객 수익 안정성
- 단기 부채가 43.8% 줄어들어 910만 달러
- 소매 채널이 아닌 방향으로의 전략적 전환과 음악 구독 모델
- 2024년 7월 3일, SemiCab 인수 완료
La Singing Machine Company (NASDAQ: MICS) a publié ses résultats pour le deuxième trimestre 2024, mettant en lumière un changement stratégique dans son modèle commercial traditionnel. Le chiffre d'affaires net a diminué de 7 % pour atteindre 2,44 millions de dollars, tandis que le bénéfice brut a chuté de 38,8 % à 324 000 dollars. L'entreprise s'est concentrée sur le contrôle des coûts, réduisant ses dépenses d'exploitation de 2,9 millions à 2,6 millions de dollars d'une année sur l'autre. Cependant, une charge de dépréciation non monétaire de 3,9 millions de dollars a entraîné une augmentation des dépenses opérationnelles totales.
Les faits marquants comprennent:
- Revenus stables provenant des clients existants
- Réduction significative des liquidités à court terme de 43,8 % à 9,1 millions de dollars
- Changement stratégique vers des canaux non commerciaux et un modèle d'abonnement musical
- Finalisation de l'acquisition de SemiCab le 3 juillet 2024
Die Singing Machine Company (NASDAQ: MICS) hat ihre Ergebnisse für das zweite Quartal 2024 veröffentlicht und dabei eine strategische Verschiebung in ihrem traditionellen Geschäftsmodell hervorgehoben. Der Nettoumsatz sank um 7% auf 2,44 Millionen US-Dollar, während der Bruttogewinn um 38,8% auf 324.000 US-Dollar fiel. Das Unternehmen konzentrierte sich auf die Kostenkontrolle und senkte die Betriebskosten im Jahresvergleich von 2,9 Millionen auf 2,6 Millionen US-Dollar. Ein nicht liquiditätswirksamer Wertminderungsaufwand von 3,9 Millionen US-Dollar führte jedoch zu einem Anstieg der gesamten Betriebskosten.
Wichtige Highlights sind:
- Stabile Einnahmen von bestehenden Kunden
- Deutliche Reduzierung der kurzfristigen Verbindlichkeiten um 43,8% auf 9,1 Millionen US-Dollar
- Strategischer Wandel hin zu Non-Retail-Kanälen und einem Musikabonnement-Modell
- Abschluss der Übernahme von SemiCab am 3. Juli 2024
- Reduced operating expenses from $2.9 million to $2.6 million year-over-year
- Decreased short-term liabilities by 43.8% to $9.1 million
- Completed strategic acquisition of SemiCab on July 3, 2024
- Maintained position as #1 brand in consumer karaoke
- Net sales decreased by 7% to $2.44 million
- Gross profit fell by 38.8% to $324,000
- Gross margins declined from 20.2% to 13.3%
- $3.9 million non-cash impairment charge related to hospitality lease
- Operating loss of $2.3 million in Q2 2024
Insights
The Q2 2024 results for Singing Machine (NASDAQ: MICS) reveal a company in transition. While sales remained relatively stable at
However, the non-cash impairment charge of $3.9 million is concerning, leading to an increased operating loss. The strategic shift towards non-retail channels and the music subscription model tied to WiFi-enabled devices could potentially offset declining traditional retail sales. The recent acquisition of SemiCab, while promising, introduces integration risks and potential dilution for existing shareholders.
Singing Machine's Q2 results highlight the challenges facing the consumer electronics industry, particularly in the karaoke segment. The company's flat sales of $2.4 million suggest market saturation and growth opportunities in traditional retail channels. However, the strategic pivot towards non-retail channels and subscription-based models aligns with broader industry trends towards digital and recurring revenue streams.
The company's focus on inventory management and cost control is prudent, given the seasonal nature of the business. The reduction in short-term liabilities by
Singing Machine's strategic shift towards WiFi-enabled karaoke devices and a music subscription model represents a important pivot in the face of changing consumer preferences. This move aligns with the broader trend of hardware-as-a-service models in consumer electronics, potentially creating a more stable, recurring revenue stream.
The acquisition of SemiCab, an AI-powered logistics platform, is particularly intriguing. It suggests a bold move into the high-growth logistics tech sector, leveraging AI for optimization. However, integrating this technology with Singing Machine's core business presents both opportunities and challenges. Success will depend on effective integration and the ability to leverage SemiCab's AI capabilities to enhance operational efficiency across both business segments.
Business Reflects Strategic Shift in Legacy Business Model
Fort Lauderdale, FL, Aug. 19, 2024 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. (“Singing Machine”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products, today announced its results of operations for the three-months ended June 30,2024.
“We are pleased to report our second quarter results of operations,” commented Gary Atkinson, CEO of the Singing Machine. “We spent much of the second quarter focused on the necessary due diligence, legal and audit work to close the SemiCab acquisition. Despite these added expenses, we were successful in controlling overall costs, maintain a strong balance sheet, and preparing for a business holiday retail season for our legacy consumer electronics business.”
Second quarter operational highlights were as follows:
1) Stable Existing Customer Revenues: Sales were largely flat at
2) Strict Cost Control Across Legacy Operations: Operating expenses for the second quarter were
3) Deleveraged Balance Sheet: The Company focused heavily on contracting its balance sheet, converting short term assets to cash, and significantly reducing its short-term liabilities. In total, short-term liabilities decreased
4) Strategic Shift in the Legacy Business Model: For the legacy consumer electronics business, the strategic shift has accelerated. The Company made significant headway into expanding its karaoke product assortment into non-retail channels. The Company also continues to see growth in its music subscription model tied to its WiFi enabled karaoke devices.
5) Prioritization of SemiCab: Much of the second quarter corporate activities focused on the legal, audit, and due diligence process for the completion of the SemiCab acquisition, which was completed on July 3, 2024. With that transaction now complete, the executive team of the Company is now focused on integration, client expansion, revenue growth and critical vendor relationships.
“As we will expand on in our earnings call, we are now focused on getting back to growth. First, as we begin to enter the Fall season, our production, sales and operations teams are ramping up to execute a successful holiday season. Our manufacturing suppliers are producing inventory and shipping products in coordination with the coming holiday season and retail and consumer demand. The Singing Machine brand remains the #1 brand in consumer karaoke and continues to occupy the bulk of retail shelf space for this coming season. Separately, we are integrating with our new team at SemiCab and aligning them for growth as we collectively push to rapidly expand our customer base, drive revenues and unlock the potential of this exciting, highly-scalable, AI-technology across multiple geographies in the global logistics space.”
Results of operations for the first quarter are summarized as follows:
- Net Sales- Net sales for the three months ended June 30, 2024, decreased to approximately
$2,440,000 from approximately$2,625,000 representing a decrease of approximately$185,000 (7.0 %) as compared to the three months ended June 30, 2023. The decrease was primarily due to lower overall sell-through results during the past holiday season, mostly with our largest customer, Walmart, which in turn diminished inventory restocking requirements during the first six months of the calendar year which is historically off-peak shipping season. - Gross Profit- Gross profit for the three months ended June 30, 2024 decreased to approximately
$324,000 from approximately$529,000 representing a decrease of approximately$205,000 (38.8% ) as compared to the three months ended June 30, 2023. Gross margins for the three months ended June 30, 2024 were13.3% as compared to20.2% for the three months ended June 30, 2023. Approximately$260,000 of the decrease in gross profit was primarily due the increased sales in excess inventory which yielded significantly lower margin than current models sold and was offset by a decrease in expenses of approximately$57,000 associated with the miscellaneous logistics costs relate to the timing of receipt of new goods. - Operating Expenses- During the three months ended June 30, 2024, total operating expenses increased to approximately
$6,478,000 , compared to approximately$2,960,000 during the three months ended June 30, 2023. This represents an increase in total operating expenses of approximately$3,518,000 from the three months ended June 30, 2023. The increase in operating expenses was primarily due to the write-off of impaired operating lease assets of approximately$3,878,000 related to the hospitality lease. This increase in operating expenses was offset by a decrease in seasonal debt reserves of approximately$156,000 , a decrease in logistics costs of approximately$124,000 associated with the closing of the warehouse operation and outsourcing of logistics to a third-party logistics company, acceleration of depreciation expense of approximately$130,000 recognized in the prior year on impaired fixed assets associated with the closing of the warehouse.
About The Singing Machine
The Singing Machine Company, Inc. (NASDAQ: MICS) is the worldwide leader in consumer karaoke products. Based in Fort Lauderdale, Florida, and founded over forty years ago, the Company designs and distributes the industry's widest assortment of at-home and in-car karaoke entertainment products. Their portfolio is marketed under both proprietary brands and popular licenses, including Carpool Karaoke and Sesame Street. Singing Machine products incorporate the latest technology and provide access to over 100,000 songs for streaming through its mobile app and select WiFi-capable products and is also developing the world’s first globally available, fully integrated in-car karaoke system. The Company also has a new philanthropic initiative, CARE-eoke by Singing Machine, to focus on the social impact of karaoke for children and adults of all ages who would benefit from singing. Their products are sold in over 25,000 locations worldwide, including Amazon, Costco, Sam’s Club, Target, and Walmart. To learn more, go to www.singingmachine.com.
Investor Relations Contact:
investors@singingmachine.com
www.singingmachine.com
www.singingmachine.com/investors
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "may", "could", "expects", "projects," "intends", "plans", "believes", "predicts", "anticipates", "hopes", "estimates" and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon several assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company's control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in the Company's filings with the Securities and Exchange Commission. The forward-looking statements are applicable only as of the date on which they are made, and the Company does not assume any obligation to update any forward-looking statements.
The Singing Machine Company, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 1,245,000 | $ | 6,703,000 | ||||
| Accounts receivable, net of allowances of | 2,349,000 | 7,308,000 | ||||||
| Due from Oxford Bank | 187,000 | - | ||||||
| Accounts receivable related parties | 414,000 | 269,000 | ||||||
| Inventory | 6,910,000 | 6,871,000 | ||||||
| Returns asset | 619,000 | 1,919,000 | ||||||
| Prepaid expenses and other current assets | 67,000 | 136,000 | ||||||
| Total Current Assets | 11,791,000 | 23,206,000 | ||||||
| Property and equipment, net | 305,000 | 404,000 | ||||||
| Operating leases - right of use assets | 178,000 | 3,926,000 | ||||||
| Other non-current assets | 93,000 | 179,000 | ||||||
| Total Assets | $ | 12,367,000 | $ | 27,715,000 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 3,676,000 | $ | 7,616,000 | ||||
| Accrued expenses | 1,842,000 | 2,614,000 | ||||||
| Refund due to customer | 1,171,000 | 1,743,000 | ||||||
| Customer prepayments | 38,000 | 687,000 | ||||||
| Reserve for sales returns | 2,174,000 | 3,390,000 | ||||||
| Other current liabilities | 37,000 | 75,000 | ||||||
| Current portion of operating lease liabilities | 165,000 | 84,000 | ||||||
| Total Current Liabilities | 9,103,000 | 16,209,000 | ||||||
| Other liabilities, net of current portion | - | 3,000 | ||||||
| Operating lease liabilities, net of current portion | 4,136,000 | 3,925,000 | ||||||
| Total Liabilities | 13,239,000 | 20,137,000 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ (Deficit) Equity | ||||||||
| Preferred stock, | - | - | ||||||
| Common stock | 64,000 | 64,000 | ||||||
| Additional paid-in capital | 33,465,000 | 33,429,000 | ||||||
| Accumulated deficit | (34,401,000 | ) | (25,915,000 | ) | ||||
| Total Shareholders’ (Deficit) Equity | (872,000 | ) | 7,578,000 | |||||
| Total Liabilities and Shareholders’ (Deficit) Equity | $ | 12,367,000 | $ | 27,715,000 | ||||
See notes to the condensed consolidated financial statements
The Singing Machine Company, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Net Sales | $ | 2,440,000 | $ | 2,625,000 | $ | 4,866,000 | $ | 6,008,000 | ||||||||
| Cost of Goods Sold | 2,116,000 | 2,096,000 | 4,040,000 | 4,659,000 | ||||||||||||
| Gross Profit | 324,000 | 529,000 | 826,000 | 1,349,000 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling expenses | 547,000 | 445,000 | 1,177,000 | 1,257,000 | ||||||||||||
| General and administrative expenses | 2,053,000 | 2,515,000 | 4,212,000 | 4,670,000 | ||||||||||||
| Operating lease impairment expense | 3,878,000 | - | 3,878,000 | - | ||||||||||||
| Total Operating Expenses | 6,478,000 | 2,960,000 | 9,267,000 | 5,927,000 | ||||||||||||
| Loss from Operations | (6,154,000 | ) | (2,431,000 | ) | (8,441,000 | ) | (4,578,000 | ) | ||||||||
| Other (Expenses) Income | ||||||||||||||||
| Gain from Employee Retention Credit Program refund | - | - | - | 704,000 | ||||||||||||
| Interest expense | (17,000 | ) | (29,000 | ) | (45,000 | ) | (69,000 | ) | ||||||||
| Total Other (Expenses) Income, net | (17,000 | ) | (29,000 | ) | (45,000 | ) | 635,000 | |||||||||
| Loss Before Income Tax Benefit (Provision) | (6,171,000 | ) | (2,460,000 | ) | (8,486,000 | ) | (3,943,000 | ) | ||||||||
| Income Tax Benefit (Provision) | 52,000 | - | - | (1,502,000 | ) | |||||||||||
| Net Loss | $ | (6,119,000 | ) | $ | (2,460,000 | ) | $ | (8,486,000 | ) | $ | (5,445,000 | ) | ||||
| Loss per common share | ||||||||||||||||
| Basic and diluted | $ | (0.95 | ) | $ | (0.64 | ) | $ | (1.32 | ) | $ | (1.56 | ) | ||||
| Weighted Average Common and Common Equivalent Shares: | ||||||||||||||||
| Basic and diluted | 6,418,061 | 3,872,447 | 6,418,061 | 3,487,299 | ||||||||||||
See notes to the condensed consolidated financial statements
The Singing Machine Company, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended | ||||||||
| June 30, 2024 | June 30, 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (8,486,000 | ) | (5,445,000 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 105,000 | 238,000 | ||||||
| Provision for estimated cost of returns | 1,301,000 | 1,820,000 | ||||||
| Provision for inventory obsolescence | - | 271,000 | ||||||
| Credit losses | 14,000 | 7,000 | ||||||
| Operating lease impairment expense | 3,878,000 | - | ||||||
| Loss from disposal of property and equipment | - | 3,000 | ||||||
| Stock based compensation | 36,000 | 138,000 | ||||||
| Amortization of right of use assets | 20,000 | 316,000 | ||||||
| Change in net deferred tax assets | - | 1,399,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 4,945,000 | 6,303,000 | ||||||
| Due from banks | (187,000 | ) | - | |||||
| Accounts receivable - related parties | (145,000 | ) | 87,000 | |||||
| Inventories | (38,000 | ) | (1,714,000 | ) | ||||
| Prepaid expenses and other current assets | 69,000 | (167,000 | ) | |||||
| Other non-current assets | (64,000 | ) | (135,000 | ) | ||||
| Accounts payable | (3,940,000 | ) | 560,000 | |||||
| Accrued expenses | (771,000 | ) | (1,939,000 | ) | ||||
| Customer deposits | (572,000 | ) | - | |||||
| Refunds due to customers | (649,000 | ) | 577,000 | |||||
| Reserve for sales returns | (1,217,000 | ) | (2,604,000 | ) | ||||
| Operating lease liabilities | 291,000 | (329,000 | ) | |||||
| Net cash used in operating activities | (5,410,000 | ) | (614,000 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (6,000 | ) | (137,000 | ) | ||||
| Net cash used in investing activities | (6,000 | ) | (137,000 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from sale of stock, net of offering costs | - | 1,640,000 | ||||||
| Net payments on revolving lines of credit | - | (1,761,000 | ) | |||||
| Other | (42,000 | ) | (33,000 | ) | ||||
| Net cash used in financing activities | (42,000 | ) | (154,000 | ) | ||||
| Net change in cash | (5,458,000 | ) | (905,000 | ) | ||||
| Cash at beginning of year | 6,703,000 | 2,795,000 | ||||||
| Cash at end of period | 1,245,000 | 1,890,000 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | 40,000 | 24,000 | ||||||
| Equipment purchased under capital lease | - | 55,000 | ||||||
See notes to the condensed consolidated financial statements
FAQ
What were Singing Machine's (MICS) Q2 2024 net sales?
How did Singing Machine's (MICS) gross profit change in Q2 2024?
What was the impact of the SemiCab acquisition on Singing Machine (MICS)?
How did Singing Machine (MICS) manage its short-term liabilities in Q2 2024?
