iPower Reports Fourth Quarter and Fiscal 2021 Results

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DUARTE, Calif., Sept. 28, 2021 /PRNewswire/ — iPower Inc. (Nasdaq:IPW) (“iPower” or the “Company”), one of the leading online hydroponic equipment suppliers and retailers in the United States, today announced financial results for its fourth quarter and fiscal year ended June 30, 2021.

Fiscal Q4 2021 Results vs. Year-Ago Quarter

  • Total revenue increased slightly to $14.7 million.
  • Gross profit was $6.5 million compared to $6.6 million. As a percentage of revenue, gross margin was 44.4% compared to 44.7%.
  • Net loss was $(1.9) million or $(0.08) per share, compared to net income of $1.2 million or $0.06 per share.
  • Non-GAAP net income (a non-GAAP financial measure defined below) was $0.6 million or $0.02 per share, compared to $1.2 million or $0.06 per share.

Fiscal 2021 Results vs. Fiscal 2020

  • Total revenue increased 35% to $54.1 million compared to $39.9 million.
  • Gross profit increased 51% to $22.8 million compared to $15.1 million. As a percentage of revenue, gross margin increased 430 basis points to 42.2% compared to 37.9%.
  • Net loss was $(0.8) million or $(0.04) per share, compared to net income of $2.0 million or $0.10 per share.
  • Non-GAAP net income increased 47% to $2.9 million or $0.14 per share, compared to $2.0 million or $0.10 per share.

Management Commentary

“Fiscal 2021 was a solid year for iPower, highlighted by strong revenue growth of more than 35% with considerable gross margin expansion due to a growing mix of in-house product sales,” said Lawrence Tan, CEO of iPower. “The growing demand for our in-house products, which made up 72% of sales in fiscal 2021, is a testament to our superior product research, design and merchandising expertise. Sales of our proprietary products grew nearly 80% in fiscal 2021.  We introduced hundreds of new proprietary SKUs in that same period, with the majority of them introduced in the second half of our fiscal year. We believe we have the right products with the right features to address the needs of our customers.

“During our fiscal fourth quarter, we utilized the growth capital raised from our IPO to make significant investments and lay the groundwork for continued growth in the coming years. This included increased advertising on new products launched in the second half of 2021, expansion of our fulfillment infrastructure, and multiple new programs with our co-engineering and supply chain logistics partners.”

iPower CFO Kevin Vassily added, “As we look toward fiscal 2022, we expect a continued robust demand environment. Historically, our organic revenue growth has ranged between 25-35%, excluding the extraordinary year of fiscal 2020 that benefited from COVID-19 stay-at-home mandates. Hydroponic industry growth at-large appears to be moderating, however, our unique eCommerce model has enabled us to consistently outpace the industry. Given our extensive proprietary SKU introductions over the last six months, we expect to continue outpacing the industry going forward with organic revenue growth of at least 25% in fiscal 2022.

“From a profitability perspective, the cost environment has been more volatile with increased container and product input costs. While we plan to offset some of these costs, we nonetheless believe it is prudent to avoid forecasting exact margin targets until the global supply chain becomes more stable. That said, we are planning a meaningful number of new in-house product introductions, including our own nutrients brand, which we expect will provide margin support during this volatile period. We remain in the early stages of capitalizing on our unique approach to hydroponic eCommerce sales and look forward to another year of strong execution ahead.”

Fiscal Fourth Quarter 2021 Financial Results

Total revenue in the fiscal fourth quarter of 2021 increased slightly to $14.73 million compared to $14.66 million for the same period in fiscal 2020. The Company benefitted from heightened eCommerce demand during the fiscal fourth quarter 2020 as a result of mandatory stay-at-home orders due to COVID-19, and such benefits continued into 2021.

Gross profit in the fiscal fourth quarter of 2021 decreased slightly to $6.5 million compared to $6.6 million. As a percentage of revenue, gross margin was 44.4% compared to 44.7%.

Total operating expenses in the fiscal fourth quarter were $6.3 million compared to $4.8 million for the same period in fiscal 2020. The increase was primarily driven by higher merchant fees related to channel program mix, increases in advertising, and an increase in spending with co-engineering partners.

Net loss in the fiscal fourth quarter of 2021 was $(1.9) million or $(0.08) per share, compared to net income of $1.2 million or $0.06 per share for the same period in fiscal 2020.

Non-GAAP net income in the fiscal fourth quarter was $0.6 million or $0.02 per share, compared to $1.2 million or $0.06 per share. The decrease was driven by the aforementioned higher merchant fees and increased spending.

Cash and cash equivalents were $6.7 million at June 30, 2021, compared to $1.0 million at June 30, 2020. The increase was attributed to proceeds raised from the Company’s initial public offering earlier this fiscal year.

Conference Call

The Company will conduct a conference call today at 4:30 p.m. Eastern Time to discuss the results for its fourth quarter and fiscal year ended June 30, 2021.

iPower management will host the conference call, followed by a question-and-answer period.

Date: September 27, 2021
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (833) 882-8474
International dial-in number: (409) 981-0009
Conference ID: 3283489

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

The conference call will be broadcast live and available for replay here and on the Company’s investor relations website at www.meetipower.com.  

About iPower Inc.

iPower Inc. is one of the leading online retailers and suppliers of hydroponics equipment and accessories in the United States. iPower offers thousands of stock keeping units from its in-house brands as well as hundreds of other brands through its website, www.zenhydro.com, and its online platform partners. All orders are fulfilled from its two fulfillment centers in Southern California. iPower has a diverse customer base that includes both commercial businesses and individuals. For more information, please visit iPower’s website at https://ir.meetipower.com/.

Non-GAAP Financial Measures

iPower has disclosed non-GAAP net income/(loss) and non-GAAP earnings per share in this press release, which are non-GAAP financial measures as defined by SEC Regulation G. The company defines non-GAAP net income/(loss) as net income/(loss) before stock-based compensation, one-time IPO related costs, D&O insurance, amortization of debt and non-cash financing costs, changes in fair value of warrants and conversion features, and adjustments to tax provisions. A table providing a reconciliation of non-GAAP net income/(loss) and non-GAAP EPS is included at the end of this press release.

The Company’s management believes that presenting non-GAAP net income/(loss) and non-GAAP EPS provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations, as well as providing for more consistent period-over-period comparisons. This non-GAAP measure assists management in its operational and financial decision-making, as well as monitoring the Company’s performance. non-GAAP net income/(loss) and non-GAAP EPS are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure.

Forward-Looking Statements

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All statements other than statements of historical fact in this announcement 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 occurring 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 in iPower’s registration statement and in its other filings with the SEC.

Investor Relations Contact

Sherry Zheng
Weitian Group LLC
(718) 213-7386
shunyu.zheng@weitian-ir.com

iPower Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2021 and 2020

(Unaudited)

June 30,

June 30,

2021

2020

ASSETS

Current assets

Cash and cash equivalent

$

6,651,705

$

977,635

Accounts receivable

7,896,347

6,067,199

Inventories, net

13,065,741

5,743,181

Prepayments and other current assets

4,693,000

616,231

Total current assets

32,306,793

13,404,246

Non-current assets

Right of use – non-current

1,819,421

262,875

Property and equipment, net

55,659

6,252

Non-current prepayments

1,357,292

Other non-current assets

99,645

Total non-current assets

3,332,017

269,127

Total assets

$

35,638,810

$

13,673,373

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

3,940,963

4,220,347

Credit cards payable

584,311

892,792

Customer deposit

297,407

741,301

Due to related parties

133,793

Other payables and accrued liabilities

2,487,441

1,940,858

Short-term loans payable

162,769

1,329,680

Lease liability – current

731,944

262,875

Long-term loan payable – current portion

29,244

Income taxes payable

790,823

721,211

Total current liabilities

9,024,902

10,242,857

Non-current liabilities

Long-term loan payable

458,571

500,000

Lease liability – non-current

1,169,552

Total non-current liabilities

1,628,123

500,000

Total liabilities

10,653,025

10,742,857

Commitments and contingency

Stockholders’ Equity

Common stock, $0.001 par value; 180,000,000 shares authorized;
26,448,663 and 20,204,496 shares issued and outstanding at June 30,
2021 and June 30, 2020 *

26,449

20,204

Class B common stock, $0.001 par value; 0 and 14,000,000 shares
authorized; 0 and 14,000,000 shares issued and outstanding at June 30,
2021 and June 30, 2020 *

14,000

Subscription receivable

(14,000)

Additional paid in capital

23,214,263

389,490

Retained earnings

1,745,073

2,520,822

         Total equity

24,985,785

2,930,516

         Total liabilities and equity

$

35,638,810

$

13,673,373

*On November 16, 2020, the Company implemented a 2-for-1 forward split of the issued and outstanding shares of Common Stock of the Company. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

*On October 20, 2020, the Company issued to its Founders 14,000,000 shares of the Company’s Class B Common Stock. The issuance was considered as a nominal issuance, in substance a recapitalization transaction, which was recorded and presented retroactively as outstanding for all reporting periods.

iPower Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

For the Three Months Ended
June 30,

For the Years Ended June 30,

2021

2020

2021

2020

REVENUES

$

14,727,768

$

14,660,133

$

54,075,922

$

39,938,472

TOTAL REVENUES

14,727,768

14,660,133

54,075,922

39,938,472

COST OF REVENUES

8,184,358

8,099,954

31,257,358

24,810,907

GROSS PROFIT

6,543,410

6,560,179

22,818,564

15,127,565

OPERATING EXPENSES:

Selling and fulfillment

4,403,285

3,847,275

13,473,602

8,961,627

General and administrative

1,897,774

949,345

6,384,398

3,257,989

Total operating expenses

6,301,059

4,796,620

19,858,000

12,219,616

INCOME FROM OPERATIONS

242,351

1,763,559

2,960,564

2,907,949

OTHER INCOME (EXPENSE)

Interest income (expenses)

(44,129)

(124,764)

(153,785)

(168,283)

Other financing expenses

(50,000)

(148,139)

PPP loan forgiveness

175,500

Other non-operating income (expense)

(2,048,545)

12,621

(2,843,127)

20,734

Total other income (expense), net

(2,142,674)

(112,143)

(2,969,551)

(147,549)

(LOSS) INCOME BEFORE INCOME TAXES

(1,900,323)

1,651,416

(8,987)

2,760,400

PROVISION FOR INCOME TAXES

6,075

462,400

766,762

773,438

NET (LOSS) INCOME

$

(1,906,398)

$

1,189,016

$

(775,749)

$

1,986,962

WEIGHTED AVERAGE NUMBER OF
COMMON STOCK*

Basic and diluted

23,863,538

20,170,788

21,113,942

20,093,004

EARNINGS PER SHARE *

    Basic and diluted

$

(0.080)

$

0.059

$

(0.04)

$

0.10

*On November 16, 2020, the Company implemented a 2-for-1 forward split of the issued and outstanding shares of Common Stock of the Company. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

*On October 20, 2020, the Company issued to its Founders 14,000,000 shares of the Company’s Class B Common Stock. The issuance was considered as a nominal issuance, in substance a recapitalization transaction, which was recorded and presented retroactively as outstanding for all reporting periods. The computation of basic and diluted EPS did not include the Class B Common Stock as the holders of Class B Common Stock have no dividend or liquidation right until such time as their shares of Class B Common Stock have been converted into Class A Common Stock

iPower Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

For the Three Months Ended
June 30,

For the Years Ended June 30,

2021

2020

2021

2020

GAAP OPERATING EXPENSES

$

6,301,059

$

4,796,620

$

19,858,000

$

12,219,616

Stock-based compensation

(111,683)

(111,683)

IPO related costs expensed

(196,240)

(795,445)

D&O Insurance

(100,655)

(100,655)

NON-GAAP OPERATING EXPENSES

$

5,892,481

$

4,796,620

$

18,850,217

$

12,219,616

GAAP INCOME FROM OPERATIONS

$

242,351

$

1,763,559

$

2,960,564

$

2,907,949

Stock-based compensation

111,683

111,683

IPO related costs expensed

196,240

795,445

D&O Insurance

100,655

100,655

NON-GAAP INCOME FROM OPERATIONS

$

650,929

$

1,763,559

$

3,968,347

$

2,907,949

GAAP OTHER INCOME (EXPENSE)

$

(2,142,674)

$

(112,143)

$

(2,969,551)

$

(147,549)

Amortization of debt discount and non-cash
financing costs

1,148,494

1,611,874

Change in fair value of warrants and conversion
features

1,023,991

1,358,555

NON-GAAP OTHER INCOME (EXPENSE)

$

29,811

$

(112,143)

$

878

$

(147,549)

GAAP NET (LOSS) INCOME

$

(1,906,398)

$

1,189,016

$

(775,749)

$

1,986,962

Stock-based compensation

111,683

111,683

IPO related costs expensed

196,240

795,445

D&O Insurance

100,655

100,655

Amortization of debt discount and non-cash
financing costs

1,148,494

1,611,874

Change in fair value of warrants and conversion
features

1,023,991

1,358,555

Adjustments to tax provision

(114,335)

(282,014)

NON-GAAP NET (LOSS) INCOME

$

560,330

$

1,189,016

$

2,920,449

$

1,986,962

GAAP (LOSS) EARNINGS PER SHARE *

Basic and diluted

$

(0.080)

$

0.059

$

(0.04)

$

0.10

Impact of Non-GAAP adjustments

0.103

0.175

NON-GAAP (LOSS) EARNINGS PER SHARE *

$

0.022

$

0.059

$

0.138

$

0.099

WEIGHTED AVERAGE NUMBER OF
COMMON STOCK*

Basic and diluted – GAAP and NON-GAAP

23,863,538

20,170,788

21,116,750

20,093,004

                                                                                                                                        

Cision View original content:https://www.prnewswire.com/news-releases/ipower-reports-fourth-quarter-and-fiscal-2021-results-301385965.html

Source: iPower Inc.

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