Alliance Entertainment (AENT) - 2025 Q1 - Quarterly Report

Revenue Performance - Net revenues increased from $211 million to$ 213 million (+ $1.8 million, +1%) for the three months ended March 31, 2025[138] - Vinyl record sales rose from$ 78 million to $86 million (+$ 8 million, +11%) for the three months ended March 31, 2025, driven by an 18.8% increase in volume[138] - Physical movie sales increased from $42 million to$ 58 million (+ $16 million, +39%) for the three months ended March 31, 2025, with a 27.6% rise in average selling price[140] - Net revenues decreased from$ 864 million to $836 million (-$ 28 million or -3.2%) for the nine months ended March 31, 2025[151] - Vinyl record sales increased from $242 million to$ 266 million ( $24 million or 10%) for the nine months ended March 31, 2025[152] - Physical movie sales increased from$ 159 million to $197 million (+$ 39 million or +25%) for the nine months ended March 31, 2025[154] - Gaming product revenue declined from $43 million to$ 29 million (- $14 million, -32%) due to limited hardware availability and broader industry slowdown[142] - Gaming product revenue decreased from$ 287 million to $226 million (-$ 61 million or -21%) for the nine months ended March 31, 2025[156] Cost and Expenses - Total cost of revenues, excluding depreciation and amortization, increased from $183 million to$ 184 million (+ $1 million, +0.4%) year over year[143] - Total operating expenses decreased from$ 88.4 million to $76.4 million (-$ 11.9 million or -13.5%) for the nine months ended March 31, 2025[158] - Total distribution and fulfillment expense declined from $38 million to$ 31.4 million for the nine months ended March 31, 2025[158] - Gross margin dollars decreased from $102 million to$ 97 million, resulting in a slight margin decline from 11.8% to 11.6% for the nine months ended March 31, 2025[157] Profitability Metrics - Non-GAAP Adjusted EBITDA improved from approximately $2.9 million to$ 4.9 million, a year-over-year increase of $2.0 million for the three months ended March 31, 2025[147] - Non-GAAP Adjusted EBITDA improved to approximately$ 24.4 million, up $2.2 million from approximately$ 22.2 million for the prior year period[162] - Net income increased to $9.3 million for the nine months ended March 31, 2025, compared to$ 2.1 million for the same period in 2024[163] Cash Flow and Liquidity - Cash provided by operating activities was $16.1 million, a decrease from$ 46.1 million in the prior year[169] - Cash availability increased from $47 million to$ 52 million (+ $5 million, +11%) as of March 31, 2025[167] - Cash used in investing activities was$ 7.6 million for the nine months ended March 31, 2025, primarily due to the acquisition of Handmade by Robots[170] - Net cash used in financing activities improved to $7.6 million from$ 45.2 million in the prior year, reflecting tighter cash management controls[170] Debt and Financing - The Company entered into a three-year $120 million senior secured asset-based credit facility on December 21, 2023[164] - The revolver balance was reduced from$ 73 million to $68 million (-$ 5 million, -6.8%) year-over-year[166] - Interest expense decreased from $3.1 million to$ 2.4 million (- $0.6 million or -20.2%) for the three months ended March 31, 2025[145] - Total interest expense decreased from$ 9.5 million to $8.1 million (-$ 1.4 million, -14.9%) for the nine months ended March 31, 2025[159] Strategic Initiatives - The acquisition of Handmade by Robots for $7.6 million diversifies the product offerings with licensed vinyl figures[125] - Alliance entered into an exclusive distribution agreement with Paramount Pictures, enhancing its home entertainment distribution capabilities[123] - Direct-to-consumer (DTC) solutions accounted for approximately 35% of gross revenue for the three months ended March 31, 2025[138] - The company expects strong future demand for gaming hardware and accessories as the market awaits the next generation of consoles[142] Inventory Management - Inventory decreased by$ 15 million (14%) from approximately $108 million at March 31, 2024, to approximately$ 93 million at March 31, 2025[169]