Florida-headquartered distributor and wholesaler of physical media Alliance Entertainment has published its fiscal Q3 (calendar Q1) results for the three months ending March 31.
Net revenues for the quarter were $227.7 million, compared to $320.4 million in the same period of 2022, a decline of 29% (see below).
The company said this revenue decline was “due mainly to conservative inventory positions by our business-to-business (B2B) customer base and direct to consumer (DTC) sales channels caused by macroeconomic uncertainty.”
The company noted that during the quarter, it “implemented cost savings initiatives, including headcount reduction and management salary cuts, to address macroeconomic headwinds caused by increased inflation and interest rates, and retailers’ relatively conservative inventory positions”.
All the same, Alliance did rack up some wins in the early months of 2023, including a multi-year home entertainment licensing deal with Disney, that will see the company distribute hundreds of live-action movie and TV titles from Disney’s ABC Signature, 20th Television, Hollywood Pictures, Touchstone Pictures and 20th Century Studios content libraries.
The deal is for DVD and Blu-Ray distribution.
The distributed labels owned by Alliance’s AMPED Distribution division garnered 26 nominations at this year’s Grammy Awards, walking away with seven wins. Among them were Bonnie Raitt’s three Grammy wins, including the Song of the Year award for Just Like That.
Other Grammy wins for AMPED this year included Rueben Blades & Boca Livre’s award for Best Latin Pop Album, for Pasieros, from Rueben Blades Productions, and Petaluma Records’ Aaron Neville & The Dirty Dozen Brass Band for Best American Roots Performance.
Alliance also extended its partnership with the Criterion Collection, which licenses “important classic and contemporary films.” Alliance will continue to distribute Criterion Collection titles in physical media form across the U.S., along with “backroom services” such as inventory, order management and financial services.
Alliance completed its SPAC merger during the quarter, joining forces with Adara Acquisition Corp.
The deal saw Adara shareholders take a 22% stake in the new company, while Alliance’s shareholders would retain a 78% stake. The deal gave the new company an implied proforma value of around $480 million.
“As a public company with strong cash flow and with access to capital markets, we are well positioned to grow through acquisitions, enhance DTC relationships, and expand product offerings.”
Jeff Walker, Alliance Entertainment
The company trades on Pink Sheets, an over-the-counter (OTC) stock listing service favored by penny-stock companies. It has reportedly applied for listing on the NASDAQ.
The company had been trading on the OTC market at around $10 per share, but its stock price has since fallen to around $3 per share. That gives the merged company a market capitalization of around $147.5 million.
The company remains positive about its public listing.
“As a public company, we are now well positioned to pursue future strategic combinations that further diversify our products offerings, and to invest in our operations and proprietary technology,” Alliance Chairman Bruce Ogilvie said in a statement.
“Throughout the year we have continued to build on our foundation as one of the largest physical media and entertainment product distributors in the world, securing new partnerships and shifting toward larger scale automation in our operations.”
CEO Jeff Walker said: “As the macro issues impacting us subside, we have implemented multiple value-creation initiatives to reduce costs, including headcount reduction and management salary cuts. We believe that in combination with these initiatives, we have put in place a long-term strategy with the competitive advantages that will position us for ongoing success.
“Looking ahead, we continue to expand and diversify by adding brands, product categories, and retail partnerships in combination with various cost cutting initiatives. To support this growth, we are investing in automating facilities and upgrading proprietary software. As a public company with strong cash flow and with access to capital markets, we are well positioned to grow through acquisitions, enhance DTC relationships, and expand product offerings.
“Finally, we are working to uplist to a national stock exchange that better aligns with our corporate identity and enhances our visibility with investors. We look forward to providing updates on our progress in the months ahead.”
For the nine months ended March 31, 2023 Alliance Entertainment’s net revenues were $911.6 million, compared to $1.152 billion for the nine months ended March 31, 2022.
For the nine months ended March 31, 2023 Adjusted EBITDA loss was $21.0 million, compared to Adjusted EBITDA of $60.6 million for the nine months ended March 31, 2022.
Adjusted EBITDA loss for calendar Q1 (the company’s fiscal Q3) ended March 31, 2023 was ($2.4) million, compared to Adjusted EBITDA of $9.6 million for the same period of 2022.
Net loss for the company’s fiscal Q3 ended March 31, 2023 (calendar Q1) was $7.8 million, compared to net income of $3.7 million for the same period of 2022.Music Business Worldwide