Polished.com Inc. (AMEX:POL) Q2 2023 Earnings Call Transcript

Eric Landry: Okay, all right. Well, I know you guys have to be careful about what you say, but here’s the deal. At the company’s current level of sales and profitability with the current balance sheet, the equity is worthless. So a lot of work needs to be done over the next 2 to 3 quarters in order for shareholders to survive. So is there any way you could go into more detail about how it is that we’re going to survive past August of next year?

John Bunka: Well, as I said on the previous call and I’d reiterate it, I think it’s meaningful. We have retained a financial adviser for this specific purpose to look at every opportunity for the company to become more efficient. This is all about us establishing an EBITDA threshold based on operating results that improves the financial standing of the company. So our primary focus right now is just that, and that’s – we have engaged this firm to assist us, and we’re going through a process to evaluate all of our operations to become – to improve cash flow. That’s our focus and that’s the purpose that will create value long term to shareholders.

Eric Landry: What’s going to be the cost savings of the warehouse consolidation? Do you have any idea how much you’ll save once that’s all in place?

John Bunka: We are still looking at it. The primary savings as, again, I think we said, the primary savings come from not having to move product between warehouses to ship and not carrying duplicative headcount to do it and the pace that we can do it is improved. So it isn’t – this isn’t entirely an expense reduction as it is improved efficiency. So we’re going to see both headcount reductions and rental savings. However, the primary objectives – we will be next to DMI, and we will be able to be very efficient in our transport both within our markets in terms of the marketplace in New England and New York, Connecticut, Long Island, New Jersey, will be highly efficient as well as it will improve the speed that we reach all markets nationwide. So all of these are going to be improved by our ability to operate out of a single facility.

Eric Landry: Okay. What’s a good run rate for professional fees, one without audit fees and one-timers? You were at $1.8 million in the June quarter, $1.4 million in the March quarter but you were only $1.2 million last year in June. What is the run rate for professional fees?

Robert Barry: That’s a very good question. We have a lot of things going on. I would – for the 3 months, it was – we had $1.8 million in professional fees for the quarter. I think that number will gradually come down. There are several initiatives that we’ve got, several things we’re working on, we’ll be winding up. I would like to see us down to $1 million per quarter. But honestly, I don’t think that’s in the cards for maybe another 2 to 3, 4 quarters before we gradually, I hope, wind down from here from $1.8 million, but we do have several things requiring outside legal assistance that we’re working on right now.

John Bunka: Yes, I was going to say in the interest of time, too, if we can make sure we address as many callers as possible.

Operator: [Operator Instructions] Our next question will come from [Jay Feenberg] with Stone Street Partners. Please go ahead.

Unidentified Analyst: Good morning, gentlemen. It looks like you’ve done a great job getting the ship at least going in the right direction. What would it take to get EBITDA margins to, say, the mid-level, say, 5% by next year?