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TI

Toughbuilt Industries, Inc (TBLT)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 revenue was $29.6M, up 20% year over year; full-year 2022 revenue reached a record $94.9M, up 36% .
  • Operating costs remained elevated: Q4 SG&A was ~$23.6M and R&D was ~$4.6M, while COGS was ~$23.6M, reflecting input cost inflation and expansion initiatives .
  • Management highlighted significant logistics savings (shipping rates lowered by ~70%), expanding retail penetration (17,300+ stores/portals), and international growth (Germany, UK, South America) as drivers for continued revenue momentum .
  • No formal numerical guidance was provided; management reiterated confidence in cost savings and profitability plans for 2023, and completed a $7.5M private placement in November 2022 to bolster liquidity .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly and annual revenues: Q4 revenue $29.6M (+20% y/y) and FY 2022 $94.9M (+36% y/y), driven by new products, retail onboarding, and strong demand .
  • Logistics cost relief: “successfully negotiated improved shipping rates, lowering the cost by roughly 70%,” and expanded direct-import arrangements with retail partners .
  • International expansion: Entered four major retailers in Germany; launched with Wickes in the UK; secured a comprehensive distribution agreement with Sodimac across South America .
    • Quote: “We are excited to currently be servicing over 17,300 large and midsized stores and online portals worldwide.”

What Went Wrong

  • Margin pressure vs prior year: FY 2022 gross margin was 23% vs 27% in 2021 due to input inflation (steel, plastics), labor costs, tariffs, and shipping rates; Q3 2022 margin fell to 26.1% from 31.6% in Q3 2021 .
  • Elevated operating expenses: Q4 SG&A of ~$23.6M and R&D ~$4.6M reflect continued investment, with full-year OpEx ~$58.4M, up from ~$51.4M in 2021 .
  • Profitability still a challenge: FY 2022 net loss ~$39.7–$39.8M; management is targeting profitability in 2023 but provided no numeric guidance, indicating ongoing execution and cost control dependence .

Financial Results

Quarterly Comparison (Q4 2021 → Q2 2022 → Q3 2022 → Q4 2022)

MetricQ4 2021Q2 2022Q3 2022Q4 2022
Revenue ($USD Millions)$24.7 $17.9 $30.2 $29.6
Cost of Goods Sold ($USD Millions)$19.4 $12.9 $22.3 $23.6
Gross Margin %n/an/a26.1% n/a
SG&A ($USD Millions)$19.4 $14.5 $14.7 $23.6
R&D ($USD Millions)$3.4 $2.8 $2.8 $4.6
EPS ($USD)n/a$(9.45) $0.05 n/a

Notes:

  • Q4 2022 EPS was not disclosed in the available press release/transcript; FY 2022 net loss per share was $(7.16) .
  • Q4 2021 margin data not explicitly disclosed; FY margins provided below.

Full-Year Comparison (FY 2021 → FY 2022)

MetricFY 2021FY 2022
Revenue ($USD Millions)~$70.0 ~$94.9
Gross Profit ($USD Millions)~$19.1 ~$21.8
Gross Margin %27% 23%
Operating Expenses ($USD Millions)~$51.4 ~$58.4
Net Loss ($USD Millions)~$37.5 ~$39.7–$39.8
Cash ($USD Millions, year-end)n/a~$2.6

KPIs and Operating Metrics

KPIPeriodValue
Amazon Gross Sales ($USD Millions)Q3 2022~$3.91
Amazon Gross Sales YTD ($USD Millions)9M 2022~$10.92
Stores/Portals ServedQ4 202217,300+
Shipping Rate Reduction2022~70% lower vs prior arrangements
Private Placement Proceeds ($USD Millions)Nov 17, 2022~$7.5

Guidance Changes

No formal numerical guidance was issued for Q4 2022. Management reiterated confidence in cost savings and profitability plans, and referenced targeted profitability in 2023 in prior quarters.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Profitability TargetFY 2023Targeting profitability in 2023 Reiterated confidence in profitability plans; no numeric guidance Maintained
Revenue Growth DirectionFY 2023Continued growth from product launches and retail expansion Expect continued retail/online revenue growth y/y Maintained
Cost Savings (Logistics)FY 2022–2023Implement direct import to reduce logistics costs Shipping rates ~70% lower; expanded direct-import arrangements Raised confidence

Earnings Call Themes & Trends

TopicQ2 2022 (Prev-2)Q3 2022 (Prev-1)Q4 2022 (Current)Trend
Supply chain/logisticsNegotiating better shipping rates; direct-import to partners Cost control; margin at 26.1%; shipping/marketing cutbacks Shipping rates lowered ~70%; direct-import expanded Improving cost efficiency
International distribution93 products launched on Amazon Italy/Germany; Spain distributor agreements Entered four new retailers in Germany; expanded UK networks; Switzerland distributors Germany expansion; Wickes UK launch; Sodimac South America agreement Accelerating rollout
Product launchesAuto-Reloading Utility Knife; plan 5–10 new lines Measuring/marking tapes; handsaws; ShockStop hammers 200+ SKUs introduced across multiple categories Broadening portfolio
Amazon channelQ2: ~$3.54M gross sales (+41% y/y) Q3: ~$3.91M (+28% y/y) and ~$10.92M 9M 2022 Continued online growth expected Sustained growth
Margins/input costsInput inflation (steel/plastics), China labor, tariffs/shipping Margin down to 26.1% vs 31.6% prior year; COGS up with volume and materials FY 2022 GM 23% vs 27% in 2021; logistics improvement supports margin outlook Mixed: structural pressure with mitigation
Capital/liquidityn/aWorking capital $28.5M; cash $1.6M Year-end cash ~$2.6M; $7.5M private placement Stabilizing liquidity

Management Commentary

  • “Fourth quarter revenue came in at a record $29.6 million… driven by… growing business within existing retail partners, onboarding new retail customers and the introduction of new lines” .
  • “We successfully negotiated improved shipping rates, lowering the cost by roughly 70%… and implemented direct import ordering… significantly decreased our logistics costs” .
  • “We are excited to currently be servicing over 17,300 large and midsized stores and online portals worldwide” .
  • International expansion highlights: “entered into 4 major retailers in Germany… launched ToughBuilt products into… Wickes… agreement with Sodimac… expanded to encompass other countries… 23 SKUs to Sodimac online marketplace” .
  • Tone: Confident in growth, cost savings, and profitability plans for 2023; emphasis on product innovation and distribution breadth .

Q&A Highlights

  • The Q4 2022 transcript available consisted of prepared remarks; analyst Q&A was not captured in the retrieved document –.
  • Prior quarter Q&A emphasized balancing Amazon vs retail pricing/margins, inventory sufficiency for Ace rollout, SKU expansion, and diversified manufacturing to mitigate China disruptions –.

Estimates Context

  • S&P Global consensus estimates for TBLT Q4 2022 were unavailable due to missing CIQ mapping in the system. As a result, comparison vs Wall Street consensus could not be performed via S&P Global for this period. Investors should note the lack of published estimates in this dataset and rely on reported actuals and management commentary [SpgiEstimatesError].

Key Takeaways for Investors

  • Revenue momentum is intact: Q4 2022 +20% y/y and FY 2022 +36% y/y, aided by product launches and global distribution wins .
  • Cost normalization underway: shipping rates lowered ~70% with direct-import programs; this should support margin stabilization in 2023 despite input cost pressures .
  • Operating discipline is critical: elevated Q4 SG&A and R&D reflect growth investment; focus on leveraging OpEx as business matures .
  • Channel diversification: Amazon remains a growth driver (Q3 gross sales ~$3.91M) while retail penetration expands across Europe and Latin America, reducing channel concentration risk .
  • Liquidity actions: November 2022 $7.5M private placement strengthens near-term capital resources amid year-end cash of ~$2.6M .
  • Near-term trading: Watch for margin commentary and any formal guidance updates; logistics savings and international expansion are positive catalysts, but absence of EPS disclosure limits estimate-driven reactions .
  • Medium-term thesis: Execution on new SKUs, geographic expansion, and cost controls underpin the path to profitability; monitoring input costs (steel/plastics), tariff dynamics, and SG&A leverage remains key .