Nov 15, 2021
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Operator
00:07 Good morning, and welcome to the 1847 Goedeker Conference Call for the Company's Third Quarter of Fiscal Year twenty twenty one. All participants will be in listen-only mode.
On the call today, our Chief Executive Officer, Albert Fouerti; Chief Financial Officer, Maria Johnson; and Executive Chairman, Ellery Roberts. 00:34 Please note that various remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of nineteen ninety five.
The company cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated, including risks described in the company's filings with the SEC. 01:02 Any forward-looking statements made on this conference call speak only as of today's date of November fifteen, twenty twenty one, and the company assumes no obligation to update any of these forward-looking statements to reflect events or circumstances that occur after today.
Please note, there will be an opportunity to ask questions after the prepared remarks. A replay of the conference call will be available on the 1847 Goedeker Investor Relations website this week.
01:41 At this time, I'll turn the call over to Albert Fouerti for opening remarks. Please go ahead, Mr.
Fouerti.
Albert Fouerti
01:50 I want to begin by thanking the many stockholders who have provided encouragement and support to me since I took the CEO role in September of this year. I'd also want to thank our employees for their dedication and our customers for trust in us.
02:06 Before getting into the quarter and going over to our outlook, I want to discuss the massive opportunity in front of us. We have a very unique opportunity to become the undistributed e-commerce leaders in the U.S.
home appliance market. Our market is extremely fragmented and lacks a premier online destination for homeowners as well as builders and contractors.
I agreed to step into the CEO role because I have long-term vision for filling that white space of seeding massive opportunity. 02:36 With this context in mind, I need to stress that truly great e-commerce businesses are built over course of years rather than quarters.
This means it's going to take discipline, patients and ongoing investments to fully realize our opportunity. This also means we're not going to take shortcuts during what deemed and our current foundation building phase.
I feel we can maintain this type of operating philosophy because we have the right pillars for long term growth. 03:07 First and foremost, we already have a distinct ability to offer customers core premium and luxury appliance brands through one point and click experience.
Second, we have a differentiated product expertise that exceeds what other retailers and online marketplaces could provide to consumers and B2B customers. Third, we now have an underlying leadership team with decades of collective experience in e-commerce and home appliance world.
And lastly, we have an existing growth trajectory that could be built upon. 03:40 When my brother and I started appliances connections twenty years ago, we did not have any of these tailwinds that Goedeker has today.
Yet, we still managed to scale constantly grow revenue each year. We ended up expanding from approximately one hundred and fifty five million dollars in annual sales to approximately four hundred million dollars in annual sales over the last five years and as a standalone business.
This track record appliances connection is one of the main reasons why I'm so confident about our path forward now. We built a standalone business that has superior value proposition relative to the competition.
04:19 With the respect to our go-forward strategy, I had been working with the Board and the rest of the management team to put in place and new clients to solidify our foundation for long-term growth. We are an e-commerce company that specializes in home appliances and providing great content, not a hard line merchant and not an omni-channel retailer.
Our priorities must reflect this reality. 04:44 In the quarters to come, we are going to be focused on initiatives that includes building a best-in-class tech stack and digital marketing presence, the backbone of our success will be our fulfilment and logistic systems, as well as other technologies in our supply chain.
This is why we are investing in our tech stack while also constantly optimizing our consumer facing digital prospects (ph). The legacy Goedeker systems do not seamlessly plugged into the appliance connection platform, but you can trust that the combined entities back-end and front-end tech will be much more cohesive when the new brand is rolled out in the first half of twenty twenty two.
05:31 Another priority is recruiting world-class talent to the management team. We are interviewing executives with background and analytics e-commerce, marketing, logistics and supply chain.
Many of these individuals are from leading brands and companies over the next couple of quarters. We plan to make several senior hires and introduce compensation plan that aligned pay with performance.
05:55 Another focus area is ensuring expensive product selection. We are also focused on constantly providing customers access to vast catalog of core premium and luxury brands.
Our catalog will also start the feature more upgraded and environmentally friendly models as well as more private label offering in twenty twenty two. Private label can be a major opportunity spot because of the attractive margins and opportunity to sell private label across a variety of channels.
To the extent it makes sense for us. We believe offering a vast selection is a major competitive advantage that can constantly set us apart from brick-and-mortar retailers and large e-commerce companies.
06:41 We are equally committed to building the best-in-class supply chain. We are working to expand our fulfilment network to provide cost effective, quicker and more dependable shipping, giving our expanding customer base in the Southeast and the Southwest, we are identifying well-positioned for fulfilment centres in states such as Texas and California.
Our analysis leaves us to believe establishing facilities in these locations will limit delivery transfer and touches on orders, thereby reducing our shipping cost and minimizing product damage. Although, we are taking extra time to negotiate the best deals -- the best possible yields, this is an area we expect to make major headway by the end of Q2 twenty twenty two.
07:30 A final piece of the puzzle for us is strengthening customer service. We are replicating the appliance connections, customer care model of Goedeker.
This means building a team that is accommodated and very well versed when it comes to product. Our team is already cutting down on the call wait times and improving online response time, as we expand our system network and encounter fewer supply chain delays we expect customer satisfaction to be on the rise in twenty twenty two.
08:01 I recognize that some of these initiatives were discussed under the previous management team. But they are now being pursued by leadership with sizable stock holding and strong e-commerce track records.
We are going to continue populating the company with people and processes who can help us grow while meeting all these foundation building goals by the end of twenty twenty two. 08:27 Before handing it over to Maria, I also want to take the opportunity to acknowledge the challenges and headwinds we worked to address over the past quarter.
First, the CEO transition announced in late August was difficult decision for the board, but the decisive action was taken, that will hopefully make us stronger years to come. I intend to lead the company to great things and aggressively recruit top talent, willing to align themselves with the performance.
We are very focused on strengthening our employee-based by adding new skill set and reconciling redundancy. As you can probably tell, I am bringing a new culture of intensity and rigor to the business.
09:13 Second, the public concerns conveyed by certain shareholders created unrest, but they also provide management an opportunity to reflect on some of the company's needs. The settlement ultimately reached with Kanen Wealth Management complemented our ongoing Board refresh efforts.
And while we were disappointed that recently appointed to Director, Selim Bassoul step down because of unforeseen time constraints. We have a pipeline of excellent director candidates in place.
We will be adding multiple Directors with additive expertise in the coming quarters. 09:50 Last, we continue to receive shareholder feedback regarding our capital structure including outstanding warrants and prospect of a highly dilutive transaction.
On the first topic, I can share that we had begun exploring strategies for optimizing and simplifying our capital structure and we are interviewing financial advisors to support the process. On the second topic, our proxy big statement proposal for an increase in shares was normal course request, nothing more.
We want to be opportunistic when it comes to small acquisitions such as our accretive purchase with Appliance Gallery in Florida. We have no plans to explore any dilutive transaction.
10:36 I will now conclude my initial remarks and turn it over to Maria Johnson to provide an overview of our financial performance.
Maria Johnson
10:45 Thanks, Albert. Good morning, everybody.
Net sales for the quarter were one hundred and forty one point nine million dollars, an increase of thirty nine point seven million dollars over pro forma sales for the third quarter twenty twenty. On a year-to-date basis, pro forma net sales were four zero five million dollars, which is an increase of one hundred and forty four point five million dollars over pro forma sales for the same nine months period in twenty twenty.
11:11 Pro forma gross profit for the quarter was thirty one point four million dollars and the margin was twenty two point one percent, up from twenty one million dollars with a twenty point five percent margin for the third quarter twenty twenty. We did however, see our gross margin deteriorate roughly one hundred basis points on the quarter-over-quarter basis due to lower volume rebates, heightened freight costs, and prior period adjustments for the legacy Goedeker business.
11:40 Pro forma gross profit for the nine months period was ninety six point one million dollars with a twenty three point seven percent margin, up from fifty two point four million dollars and a margin of twenty point one percent for the twenty twenty period. GAAP gross profit for the third quarter was thirty one point four million dollars compared to two point two million dollars for the prior year third quarter.
12:04 Pro forma operating expenses for the quarter were approximately twenty four million dollars with the largest expense items being personnel cost of eight point five million dollars, which includes certain severance, advertising expense of three point seven million dollars, generating quarters that cannot be filled quickly. Bank and credit card fees of four point nine million dollars and general and administrative expenses of four million dollars.
12:32 Pro forma net income for the quarter was three point nine million dollars and for the nine month period, it was thirty two point one million dollars. Third quarter pro forma net income reflects an income tax expense of two point three million dollars versus a seven point three million dollars tax benefit in the second quarter.
And they're all off their three point seven million dollars employer retention tax credit. 12:56 GAAP net income was three point three million dollars for the quarter compared to a net loss of four point two million dollars for the same period twenty twenty.
Pro forma adjusted EBITDA for the quarter was eleven million dollars, with a margin of seven point seven percent and nine months pro forma adjusted EBITDA was forty three point nine million dollars with a ten point eight percent margin. 13:19 Third quarter pro forma EBITDA is roughly on par with reported second quarter pro forma EBITDA after accounting for the opening balance sheet on its adjustments to appliances of connection that reduced second quarter gross margin by zero point seven million dollars as well as the three point seven million dollars employee retention tax credit.
13:39 For the nine months ended September thirty, twenty twenty one, the company had working capital of twenty million and incurred negative cash flow for operations of eighteen point three million, mainly as a result of additional investment in inventory acquired to fuel our continuing top line growth and switch to the credit card authorization model for Goedeker business. 14:01 Additionally, the company had cash and cash equivalents of twenty seven point two million dollars at the end of the quarter, down from forty five point two million dollars on June thirty, twenty twenty one and up from one point three million dollars on March thirty one, twenty twenty one.
The quarter-over-quarter decrease on cash reflects the company's strategic and purposeful focus on obtaining inventory to fuel anticipated customer orders and help offset ongoing global supply chain headwinds. 14:31 With respect to our outlook, we are reaffirming our full year guidance previously articulated to our second quarter earnings call.
This includes full year revenue on a pro forma basis of between five hundred and twenty million dollars and five hundred and fifty million. Full year gross margin on a pro forma basis between twenty two point five percent to twenty four point five percent and full year pro forma adjusted EBITDA margins of between nine point five percent and eleven percent.
14:59 As new management continues to evaluate the industry landscape and implement our e-commerce growth strategy, we will be assessing towards most appropriate metrics should be for potential future guidance. 15:13 Now I’ll hand the presentation back to Albert for closing Comments.
Albert?
Albert Fouerti
15:19 Thanks, Maria. So you could see our sales have stabilized and we are looking at an upward momentum.
Now that we have additional storage capacity at our two main warehouses, we were able to add significant inventory to mitigate the majority of supply chain disruption going forward. We expect to be back to our old fulfilment rates as early as next quarter.
This will obviously have a positive impact on growth. 15:49 As far as margins, while we do not have the benefit of rebates right now, due to the tight supply, we're introducing price increases where appropriate.
Additionally, as fulfillment centers are rolled out and brought online in the coming quarters, our cost of shipping will decrease and help long term margin. We expect to add at least two new fulfillment centers during the first half of twenty twenty two.
16:16 I also want to mention that in order to provide further transparency to shareholders we have included in our 10-Q filing, the additional details on our COGS composition and specifically freight cost increases associated with supply chain constraints. But as the supply chain normalizes, we will likely to get larger rebates than before because we are a larger company.
This will support margin improvement even if the shipping costs remains elevated. 16:46 In closing, I want to turn to an exciting new initiative that we are planning to formally roll out in the near term, our B2B solution offering.
Our platform could satisfy an array of unmet needs from many builders, the contracted, the housing economies continues to thrive. The market opportunity with builders and contractors is massive, as well as unadjusted market including government, hospitality, healthcare and senior living.
Leading us to believe that the right B2B to offering could be a meaningful sales to our top line in twenty twenty two and beyond. We are in the process of finalizing an agreement with highly experienced executive, to lead our B2B offering.
17:36 I continue to believe that we are well on the way to becoming a company with a billion dollars in annual sales, especially with the opportunity presented by the B2B segment, there's obviously significant work to be done during the rest of twenty twenty one and throughout twenty twenty two. As noted earlier, we need to have the right people, processes and systems in place, but we can realistically see ourself achieving one billion dollars in revenue by twenty twenty three or twenty twenty four based on our plan, growth trajectory and the macro tailwinds created by the lower interest rate and high demand for housing.
18:14 I'll conclude there and at this call, I ask the operator to open the call up for any questions.
Operator
18:22 We will now begin the question-and-answer session. The first question comes from Matthew Lee with Canaccord.
Please go ahead.
Matthew Lee
18:58 Hi, all. Great quarter.
I just want to talk about subscriber metrics. I mean, can you help us understand, why we're seeing such strong subscriber growth year-over-year ?
Albert Fouerti
19:11 I apologize, could you repeat the question? I don't – I do not understand.
I can't hear you or you speak a little bit closer to the telephone. Hello?
Operator
19:30 Okay. For whatever reason, he must have accidentally disconnected himself, perhaps adjusting his volume.
I do have a question then from Stephen Branstetter of ABL. Please go ahead.
Stephen Branstetter
20:13 Good morning, gentlemen. Great quarter.
Let's talk about growth for twenty two. Everyone knows about supply chain disruptions throughout the country, you guys had an amazing growth quarter.
What are we looking at in twenty twenty two and how do we get there?
Albert Fouerti
20:30 Sure. Thank you for the question.
So, we will focus on the guidance for twenty twenty two once we get closer to the end of the year. At a high level, I could tell you that any investments that we are making basically that we bring out, it's going to help us grow into twenty twenty two.
Once we get to that quarter, much we get closer the twenty twenty two will definitely -- we'll get back to you. If you want to have a one on one call later on, we definitely also pleased to share with IR.
We'll get back to you.
Stephen Branstetter
21:02 Okay. And about, I guess, warehouses or distribution centers, have you strategically ticked where in this country, where across America or where you plan on putting these?
Albert Fouerti
21:14 Yes, definitely. We're spending a little bit more time focusing and getting the right locations closer to the highways, close to where employees are, close to where the right location needs to be, close to where our consumers are relative to.
Definitely, they're spending the right time. We're going to make the right investment in the right location, have the right facilities open up as soon as possible.
Stephen Branstetter
21:36 And margins, if assuming, we get these warehouses open in the next three, four years, how will the margins improve? Where would they prove improve?
Will they be improving because of you have more control over shipping costs, or what would cause improvement in margins by opening these warehouse?
Albert Fouerti
21:59 Sure. It's a multifaceted fixed basically.
So one, we could divert all inventory, we don't have to look -- have all the inventory more location, which is spread out of inventory across all states and all locations that we have our consumers baseline. Second it will reduce touches, it will reduce handling, it will reduce tanker, it will reduce cancellation, it will reduce damages, it’s going to reduce cross docking and it’s going reduce long haul ship bank, that's going be huge investments and new saving there.
Stephen Branstetter
22:31 Gentlemen, thank you for your time, again, continue success.
Albert Fouerti
22:35 Thank you so much.
Operator
22:38 The next question comes from Marc Nuccitelli with Shay Capital. Please go ahead.
Marc Nuccitelli
22:46 Hey, Albert. Congrats.
Great quarter. You kind of addressed the twenty twenty two outlook.
If you could just help me for a moment, I know you mentioned obviously, you've had a lot of supply constraints from your vendors. And maybe you can just talk about are you starting to see better planning and cooperation from your vendor, any kind of visibility into that actually improving into twenty two because I guess based on the prior two quarters, you guys talked about this backlog and having to shut off your marketing window kind of halfway through the days.
So I'm just trying to get a sense on how much demand is actually not even being meet at this juncture. And if you had a better supply chain, what would twenty twenty one in twenty twenty two, what could it look like?
Albert Fouerti
23:31 I can't really speculate about the guidance for twenty twenty two, but I would like to tell you what I think I mentioned in the past, when I took office, it's pretty simple, we changed and this is what's great about our company. We're pretty agile about making sure that we could go out and see where the troubles are and was trying to go fixed adjusted right away.
So we went ahead and we took the approach. It's our time to go ahead and forecast for inventory to the near term future.
So we started building up as you could see our inventory starting to build up. We started back in September.
Now we're in November, we had a pretty significant amount of inventory going into the Q4 towards going into first quarter of twenty twenty two. So, if there's is a supply chain issue continues to happen, we're prepared to have the right inventory in the right locations at the right timing look forward future quarters.
But at the same time, if inventory starts easing up and getting better, which is great for us it will get us better margin, it's going to help us also go into twenty twenty two out of much easier – as much easier and a little bit less inventory that we need to have on hand.
Operator
24:43 It was sort of follow-up Mr. Nuccitelli?
Marc Nuccitelli
24:45 I'm sorry. Hi, Jim.
I’d apologize. So, would you -- could you comment, I mean if the supply chain was a little bit better in twenty one, do you think you could have been ten percent or twenty percent higher if you didn't have those type of constraints?
Albert Fouerti
25:00 Look, we had inventory with the King unfortunately in the past, I would a year. If we had inventory, we could have been -- growth should've been much better, but we have to deal, what we have to deal with whatever constraint that we had in the inventory and supply, shipping and other stuff, but we worked our way through the old inventory concerns as much as we can and as yes.
Marc Nuccitelli
25:31 Great. I just wanted to follow-up, I think, the line of question is great.
Albert to answer the question perhaps, you could give insight into fill rate as a stat that we track that would show what our sales -- recorded sales percentage of orders, perhaps that we can insight into what twenty one could have been.
Albert Fouerti
25:52 Absolutely. So, we were down to almost sixty four percent of bill rate.
We had a high of almost seventy eight percent of bill rate. So, to your point is, if you have -- if we had inventory and we were filling up at eighty fifth being able to full fill the order at eighty five or ninety percent our quarter would have been significantly higher of this quarter, past quarter, the whole year of twenty twenty one.
So fourteen and certain times in twenty twenty one, we went down to almost sixty four percent to sixty two percent bill rate, which is pretty -- that is not a good bill rate at all. Our historical highs anywhere from eighty five percent to ninety percent and that's really what we're trying to get to in twenty twenty two.
Marc Nuccitelli
26:34 Right. Great.
That's great color. I guess just a final question.
I mean I know that we certainly believe that COVID hits kind of accelerated the adoption of direct to consumer in many, many aspects in the retail environment now, especially in appliances high end appliance commercial like you've spoken about and it's illustrated certainly in your presentation. What I noticed, I don't know if you had a chance to review, I assume we did Whirlpool’s earnings call, they talked about them going a billion dollars in direct to consumer.
So, I'm was just wondering, are they looking to do some of that themselves? And are they turning to you because you have to -- you must be the largest possible outlet to go direct to consumer in this current environment?
Albert Fouerti
27:21 Yes. So just one thing let me correct you there.
It's one billion dollars worldwide, not in the United States. So because in the United States, they're not looking to grow that much, we actually adjusted I spoke to them.
Yes. Once we get our fulfilment centers when we are -- we are going to see the best place to be more direct to consumer appliance company that's out there.
In other countries and other places around the world, they not have companies similar to what we do and they trying to fill that gap, last why they by then doing BDC worldwide, they think they could hit about a billion dollars. But in the United States, we are strictly still picking to whole process or vendors being able to sub-vendors, dealers and other places.
Marc Nuccitelli
28:03 Right. So, I imagine if look, if Whirlpool is making a statement like that.
I imagine they all seem -- they also tend to follow the same in the same direction so I imagine you're having those same conversations, whether it's Viking and Electrolux, or Samsung?
Albert Fouerti
28:18 One thing you got to understand with consumers, not all customers want to buy same products all the time. They might want to buy Bosch dishwasher, or Miele dishwasher, but they want to buy the type of refrigerator different tap of range.
So it's very difficult for any type of -- any type major vendor to be in the B2C business long term. Yes, maybe now make sense to that because they had enjoyed, they had the demand and they're started doing it.
But as a consumer, you typically do not want to buy a refrigerator that matches you – you want to get the product that matches you need and you're not going to stick to one brand, that's one. Two, not all manufactures have all the product that consumers as want.
So to your point, Electrolux, Electrolux had a very good washer and dryer, but they might not have the best range for you need. you want to buy a GE profile or range, you can get that from being just shopping on the B2C type of markets.
It's not like one product that they are offering. You are talking hear about thirty thousand, forty thousand SKUs across multiple different brands out there.
So it's going to be very hard -- manufacturers to be able to do a previously direct long term.
Marc Nuccitelli
29:32 So how many SKUs are you carrying now and how many do you plan on carrying in twenty twenty two and beyond?
Albert Fouerti
29:40 We keep on looking for good partners and good manufacturers to add on to our mix. We have a about right now thirty five sorry, thirty five to fifty thousand SKUs that are ongoing and selling at several of SKUs, but we haven't total about one hundred SKUs, but not all products so as you know just at eighty twenty rule.
So we focus on the product that's available that’s in stock that's coming in if they are being manufactured, and that's really our focus now for the next six months to a year.
Marc Nuccitelli
30:09 And just I guess I apologize I know said final question. But just as far as addressing I mean this type of growth that, you think about one billion dollars company in the next few years.
Everybody is having issues with drivers. How are you – are you competitive?
How do you feel about getting equipment and bringing those drivers or other things you're doing to augment your delivering force to keep up that, let's call at first class service?
Albert Fouerti
30:37 Absolutely. So that's why in the beginning of the call that we mentioned, we working on building the right infrastructure, in the right locations, in the right placement, we're not just going to open up in a great warehouse that we get drivers for.
You can get many people to work. So we took the strategic approach and that's how we've been doing here.
And we've been doing for the past ten years. We'll be running the business.
We always look at a great investment. We don't look at it just short term but look at long term.
Yes. So, we're focusing on our drivers, our pay structure is pretty good, as you could see yes, we did have some impact in shipping, and that's really what we look at shipping from our clouds, so we could show you the cost impact that we had in the shipping.
But once we get that address, we could see the cost improvements enhancement in margin, once we get the shipping to cost under control, open up our fulfillment reduce our touch, reduce our damages, reduce our return, get to the customer faster and return is going to convert better for us and return when we able to recruit better driver, but our services -- world class customer service, world class sales and world-class deliveries system.
Marc Nuccitelli
31:43 Okay, great. Thanks guys.
Operator
31:48 The next question comes from Kevin Mangan with ThinkEquity. Please go ahead.
Kevin Mangan
31:55 Good morning and congratulations on the quarter. Just touching on fill rates, which you just brought up I think earlier in the call, you mentioned expecting to get back to your historical levels kind of early in twenty twenty two.
Just wondering, if you could provide some commentary on how you think that relates to the rest of the industry.
Albert Fouerti
32:22 Sure. So, historical before the pandemic, we were always being able to fill that eighty five plus percent and that's really what we're focused on.
And that with the way we are going to focus on it by being able to go out there, forecast once ahead and that's what we have to commitments of doing this year. We started forecasting months ahead, looking at our top product that will focus product and geared the product consumer to website to marketing or to go after the product that's being manufactured, we could actually source the product for the ongoing twenty twenty one and ongoing twenty twenty two and that's where we can have to focus on.
I can't really give you a better color on the supply chain that's all controlled by the manufacture control by employment, controlled by chip shortages, but we're going to focus and we're focused on what we have focused on right now is going out there source to product that we are going to market with. Try to get it up to the eighty five plus percent that’s we're historically have been achieving.
Operator
33:33 Okay. Well, sort of follow-up, Mr.
Mangan?
Kevin Mangan
33:37 Yes. I guess, do you see yourself ahead of the industry on par behind based on kind of what you just discussed?
Albert Fouerti
33:50 Look, our focus that's been in the past many, many years. We focus on technology.
We focus our systems to work. We adjust our systems, our people, our processes to go ahead and to always be ahead of the curve.
And that's what makes us different. And that's what we always focus in an e-commerce company.
We're not just traditional hard line merchant that focus on both buys and focus a onetime time buys. We are true e-commerce company.
We built systems. We build processes.
We built personnel to go add in to over be ahead to compare.
Kevin Mangan
34:29 Got it. Thank you.
Operator
34:31 The next question comes from Steve Emerson with Emerson Investment Group. Please go ahead.
Albert Fouerti
34:37 Good morning.
Operator
34:42 Mr, Emerson your line is open. Okay.
We'll go to the next questioner. The next questioner is Tom Demayo with ThinkEquity.
Please go ahead. Excuse me, Mr.
Demayo, your line is open. Please go ahead with your question.
Okay. The next question is a follow-up from Stephen Branstetter of ABL.
Please go ahead.
Stephen Branstetter
35:28 Gentlemen, would your company consider doing a reverse stock split to get the stock price higher this way more institutions would be interested in buying this stock, a lot of institutions don't want to buy stocks below three dollars and you discussed about cleaning up the market cap with the warrants. If you did like a five to one or a ten to one reverse split, there'd be many more institutions.
How do you -- put any thoughts that? Ci.
Ellery Roberts
35:56 Yeah. Sure It's our – Albert, I think I'd like to take our first crack of this call and then return to Albert.
We're absolutely evaluating all options to address any concerns or take advantage of any possible means of solidifying an institutional shareholder base that would be more reflective of what we think our business should be from a market capitalization standpoint. So, in terms of investors who need a certain share price or certain market capitalization that's in the back front line, but as Albert outlined earlier on the call, we have to your point, we're seeking ways we think a critically managed I guess pretty mature that being said I that we think there opportunities out there.
But right now, we're taking this pause to reflect on the growth towards in the, but all options that be achievable. We're working with advisors.
Stephen Branstetter
37:46 Okay. Yeah, you guys are breaking up a little bit on the call.
Also, is the billion dollars target organic growth or are we making acquisitions to get that growth?
Albert Fouerti
38:04 We feel very confident in what we're doing right now, but actually doing any type of major M&A type of deals. We feel confident in the growth in the company and what we've built.
As you could tell for the past five, six, seven years, we’ve been in this business, we are able to grow year over year, we feel very confident being able to grow the company year over year. So, yes, available, we have some type of the accretive proposition comes across our table.
We're more happy to look at that also.
Stephen Branstetter
38:38 Very good. Thank you gentlemen.
Operator
38:42 And the last questioner today will be William Bremer with Vanquis (ph). Please go ahead.
Unidentified Analyst
38:51 Good morning, gentlemen. Can you speak on the underlying agreement that you have with the manufacturers of your products?
and Secondly, Premier brands, the Vikings, the Wolfs, Thermadors, how do we or when are we going to be receiving direct involvement with the premier manufacturers there, as I don't see them being listed on your website.
Albert Fouerti
39:30 So what we do right now is, we sell all brands that's available in consumer products. There's certain products and certain brands that could only be sold in certain location geographic areas.
So you could only sell them either one hundred mile radius, sixty mile radius, one hundred fifty mile radius or just certain counties. So each manufacturer are at certain high end, not so many of them just few of them have certain geographic territory areas by us expanding our footprints, we will have better service.
We able to cover more churn in manufacturing product on the ultra luxury items. That's only limited about three or four brands.
But others, rest of the brand are basically you could sell them anywhere across the country nationwide.
Unidentified Analyst
40:23 Okay. And your return policies, how does that work if unfortunately, the product is damaged in the shipping and handling?
How does that flow back to your true balance sheet?
Albert Fouerti
40:38 So right now, we take it back, it's just a regular process return. If you take the product, it gets returned back to us, we process at exchange or process a refund to the consumer and depends the star manufacturing take it back and our factories just gets allowance.
Each manufacturing has a different process in place to take back and address these stock returns. But obviously, and that's what I wanted to ultimately goals up we're trying to focus on, we could see a huge improvement in margin by focusing on getting these other fulfilment centers up and running.
Once we get them up and running that's going to reduce the averages that's coming to reduce touch probably we've bit a better experience that consumer customers don't have to wait fourteen days or twenty one days or thirty days to get the product, which can return it's going to let us and help us go out there and get that consumer that's right now printing our head and going to the way we feel stored out there. So, hey, do we say what future you get me this particular product?
Right now, they won't have to because we can't supply that particular customer and they won't be just show our website, it's actually not to be able to convert a lot higher not faster there.
Unidentified Analyst
41:44 Okay. That makes sense.
And then finally, you mentioned your products that were your future endeavors to private label. What specific are you targeting?
Are you targeting the cooking area, refrigeration, dishwashers? Can you give us a little bit more clarity on what you are strategically thinking now?
Albert Fouerti
42:05 Sure, there's a lot of items that outdated in the markets that are missing from being in the market. So there's certain products that are demanded by the consumer.
They're not being able to be addressed by the other manufactures, they don't want to address these particular products or the particular price points or particular feature sets that the consumers demand not because they don't – each manufacturers has own tool, they have their own processes place sixteen years to build out a product. So what we realized there is missing gap in this industry that there's certain product or demand about consumers, and we went ahead and committed, it's in the middle, that's a premium to luxury.
And it's very old category. It's not just cooking or refrigeration.
We're look at a full line of appliances.
Unidentified Analyst
42:51 Okay. Very nice.
Also, I just want to let you know, I requested a one on one with this management since September seventeen. I have not received the validation of that.
So I would like to follow-up with you directly. So if you can let me know, or I'm sure he's on this call.
That I would like to have a one on one with you. Thank you.
Albert Fouerti
43:13 Absolutely, no problem. Thank you.
Operator
43:17 This concludes our question-and-answer session. I would like to turn the conference back over to Albert Fouerti for any closing remarks.
Albert Fouerti
43:25 I just want to say thank you to everybody for joining the call. We appreciate your time and have a great day.
Operator
43:33 The conference has now concluded. Thank you for attending today's presentation.
You may now disconnect.