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Singing Machine Reports $47.5 million in net sales; $0.14 EPS

Fort Lauderdale, FL, July 14, 2022 (GLOBE NEWSWIRE) -- The Singing Machine Company, Inc. (“Singing Machine” or the “Company”) (NASDAQ: MICS) – the worldwide leader in consumer karaoke products – today announced its full year financial results for its fiscal year ended March 31, 2022. During the fiscal year, the Company successfully navigated the global supply chain crisis and sold over 1,000,000 karaoke devices worldwide. Singing Machine successfully grew market share by driving strong domestic sales within its world class retail partner network, as well as re-emerging demand in select international markets.

Additional details for the full year fiscal 2022 are as follows:

Singing Machine reported net sales of approximately $47.5 million for the fiscal year ended March 31, 2022 period compared to $45.8 million in the prior fiscal year. The increase in net sales was primarily due to overall increased demand for karaoke products and shelf space expansion. The Company also saw a further reduction in promotional discounts of approximately $0.2 million which indicated a willingness of consumers to pay full price for products.

Gross profit margins decreased 400 basis points to 22.8% compared to approximately 26.8% reported in the prior fiscal year. The decrease in gross margin was in part due to increased costs of approximately $2.4 million for ocean shipping costs, increased raw material and component costs associated with semiconductor shortages, limited ocean container availability, and port congestion in China and Los Angeles.

Total operating expenses decreased by $0.1 million from $10.9 million in the prior year to $10.8 million. The decrease in expenses was primarily due to shifting one major customer from a freight prepaid program to freight collect.

As a result, the Company reported net income for the year of $0.2 million (or $0.14 cents per fully diluted share) compared to net income of $2.2 million in the prior year.

Gary Atkinson, Singing Machine CEO, commented, “Through the hard work of our team, I am proud to announce that we maintained our distribution channels and strong position as the market leader with top-line growth, reduced expenses and continued operating income and EBITDA.”

Mr. Atkinson continued, “During the year, our focus was building inventory to ensure we could meet continued strong consumer demand, navigating extreme transportation surge pricing, innovating on new product technology, and executing on our digital business transformation to become the worldwide leading distributor of digital karaoke content.”

“Despite a very challenging 2021 supply-chain year, am very pleased that we were able to overcome such a wide range of obstacles in manufacturing, transportation, labor shortages and most notably port congestion. During the year, we faced significant shortages in semiconductor parts used in the manufacturing of our karaoke products. We saw an unprecedented, on average, 400% increase in ocean container transportation prices that cost us over $2.4 million in unanticipated shipping costs. We also saw an historic slow-down and backlog at the ports of Yantian China and L.A./Long Beach that delayed receipt of goods by approximately eight weeks. Despite all this, our teams found a way to deliver growth. It’s a testament to our global operations team that worked tirelessly to make this possible.”

Mr. Atkinson added, “Our strategic transformation is well-underway. We now have two new karaoke product categories both launched into the market – our WiFi streaming line of products and our Casting series which recently launched into Walmart Electronics nationwide. Both products take advantage of our strategic partnership with the Stingray Group for recurring digital content subscriptions. We have seen immediate positive success on the Casting line of products and we look forward to extending this technology into more products and services across our karaoke lineup.”

Mr. Atkinson concluded, “As our focus shifts toward fiscal 2023, we believe we can continue to leverage our leading brand recognition, current distribution channels, technology offerings, and our improved capital structure to expand the karaoke category into new product verticals that can continue to drive growth.”

The Company will host a conference call tomorrow, Friday, July 15, 2022, beginning at 10:00 am Eastern time to discuss these results and answer questions. If you would like to participate on the call, please dial (800) 225-9448 and use conference ID: MICS.

An audio rebroadcast of the call will be available later in the day after the earnings call and can be heard at: www.singingmachine.com/investors.

Singing Machine® is the worldwide leader in consumer karaoke products. The first to provide karaoke systems for home entertainment in the United States, the Company sells its products world-wide through major mass merchandisers and on-line retailers. We offer the industry's widest line of at-home karaoke entertainment products, which allow consumers to find a machine that suits their needs and skill level. As the most recognized brand in karaoke, Singing Machine products incorporate the latest technology for singing practice, music listening, entertainment and social sharing. The Singing Machine provides consumers the best warranties in the industry and access to over 100,000 songs for streaming and download. Singing Machine products are sold through most major retailers in North America and also internationally. See www.singingmachine.com for more details.

Investor Relations Contact: Brendan Hopkins (407) 645-5295 [email protected] www.singingmachine.com www.singingmachine.com/investors

Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "may", "could", "expects", "projects," "intends", "plans", "believes", "predicts", "anticipates", "hopes", "estimates" and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon several assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company's control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described in the Company's filings with the Securities and Exchange Commission. The forward-looking statements are applicable only as of the date on which they are made, and the Company does not assume any obligation to update any forward-looking statements.

The Singing Machine Company, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS

The Singing Machine Company, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS

The Singing Machine Company, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS

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