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Edited Transcript of ATV earnings conference call or presentation 19-Dec-16 1:30pm GMT

Q3 2016 Acorn International Inc Earnings Call

Shanghai Mar 18, 2019 (Thomson StreetEvents) -- Edited Transcript of Acorn International Inc earnings conference call or presentation Monday, December 19, 2016 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Elaine Ketchmere

Compass Investor Relations - Partner

* Jacob A. Fisch

Acorn International, Inc. - President & CEO

* Weiji Gao

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Presentation

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Operator [1]

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Good day, and welcome to the Acorn International third quarter earnings conference call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Elaine Ketchmere. Please go ahead, ma'am.

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Elaine Ketchmere, Compass Investor Relations - Partner [2]

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Good morning, everyone, and thank you for joining us today for the discussion of our unaudited financial results for the third quarter of 2016. With me today are Mr. Jacob Fisch, our President; and Mr. Geoffrey Gao, our CFO. After our prepared remarks, we will open the line for questions.

Before we continue, I would like to remind you that the discussion today will contain certain forward-looking statements. These forward-looking statements include, among others, statements regarding the company's ability to increase revenue; maintain margins; manage expenses and generate additional cash flow; the company's ability to grow sales of its proprietary-branded products as well as third-party products and brands through e-commerce, its other direct sales platforms as well as its nationwide distribution network; and the company's ability to sell its noncore assets as planned.

A number of the potential inherent risks and uncertainties that Acorn's business involves are outlined in the company's public filings with the U.S. Securities and Exchange Commission. As such, actual results may be materially different from the views expressed or anticipated results described today.

Acorn International does not undertake any obligation to update any forward-looking statement, except as required by applicable law.

And now I will turn the call over to Jacob Fisch who will discuss our financial results for the quarter.

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Jacob A. Fisch, Acorn International, Inc. - President & CEO [3]

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Thanks, Elaine. In the third quarter of 2016, Acorn's management continued to execute its business turnaround strategy. Revenues declined year-over-year, reflecting the ongoing transition of the company's business model. However, significantly higher gross margin and lower operating expenses led to a dramatic improvement in the net loss during the quarter to $1.8 million compared to a net loss of $9.8 million a year ago. The company closed the quarter with a solid cash position of $27.7 million, up from $12.3 million at the end of 2015.

In the remainder of 2016, Acorn will seek to increase revenue, maintain healthy margins, manage expenses and generate additional cash flow. Management will focus on growing sales of its proprietary-branded products as well as third-party products and brands through e-commerce, its sales platforms as well as its nationwide distribution network.

As part of its ongoing policy to liquidate noncore assets, Acorn plans to sell certain noncore assets with a carrying amount of approximately $17.2 million and may sell shares of Yimeng Software Technology Co., Ltd., a publicly traded company in China, as appropriate.

Now turning to the financial results for the third quarter of 2016. Total net revenues were $7.5 million in the third quarter of 2016, down from $14 million in the third quarter of 2015. Cost of sales in the third quarter of 2016 was $3.4 million, down from $14 million in the third quarter of 2015.

Gross profit in the third quarter of 2016 was $4.1 million as -- sorry, $4.1 million as compared to $35,876 in the third quarter of 2015. Gross margin was 54.5% in the third quarter of 2016, up from 0.3% in the third quarter of 2015.

Total operating expenses in the third quarter of 2016 were $5.6 million compared to total operating expenses of $10 million in the third quarter of 2015. Loss from operations was $1.5 million in the third quarter of 2016 as compared to a loss from operations of $9.9 million in the third quarter of 2015.

Share-based compensation was $79,538 in the third quarter of 2016 as compared to 0 in the third quarter of 2015. Other income was $0.5 million in the third quarter of 2016 as compared to other income of $0.1 million in the third quarter of 2015.

Net loss was $1.8 million in the third quarter of 2016 as compared to a net loss of $9.8 million in the third quarter of 2015.

As of September 30, 2016, Acorn's cash and cash equivalents with restricted cash totaled $27.7 million as compared to $12.3 million as of December 31, 2015.

As of September 30, 2016, the company had repurchased 140,563 ADSs at an average price of $7.60 per ADS under its share repurchase program.

That concludes the prepared remarks section of the call. Now myself and Geoffrey Gao, our CFO, will remain on the line for Q&A sessions -- session. Over to you, operator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And there are no phone questions at this time.

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Elaine Ketchmere, Compass Investor Relations - Partner [2]

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Well, thank you, everyone. With that, I will conclude our call for today. For additional questions, please feel free to contact any member of our IR team at ir@chinadrtv.com. Thank you, all, again, and have a good day. Goodbye.

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Weiji Gao, [3]

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Bye-bye.

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Operator [4]

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This concludes today's conference. Thank you for your participation. You may now disconnect.