Hello everyone, and thank you all for joining us during the Lytham Partners Fall 2026 Investor Conference. My name is Ben Shamsian, Vice President at Lytham Partners. Today, Bruce Ogilvie, Executive Chairman at Alliance Entertainment, will be taking us through a brief slide presentation. Alliance trades under ticker AENT. Let's get started. Bruce, welcome. I will turn the floor over to you for your presentation.
Ben, thank you so much. Yes, Alliance Entertainment is a distributor of entertainment products consisting of movies, music, video games, toys, and collectibles. We like to think that we have a competitive advantage there. Our advantages being that physical ownership still remains relevant in the marketplace, we have exclusive access to content that we offer for people to buy from us, and we have a good selection of premium mix. Our operating leverage is basically our distribution center that I will talk more about later. You can just see for our past year and some areas of funding, we are in a very fast-growing category. Physical music demand still continues to be strong. We have an exclusive music division called AMPED, which I will talk more about. Record Store Day, over 700,000 units of LP shipped out to all these independent retailers in the U.S.
Movies Unlimited is one of our sites that we have where we are pushing video movies. We are expanding our relationship with movie studios, Amazon, MGM, which I will talk more about later. We have proprietary products there that we are trying to use authentication to create more value and protect consumers against any type of bootlegging. As I mentioned, we are a distributor of entertainment products consisting of the tent pole, the largest IP providers you could think of in the world that we deal with there, using the 80/20 rule. 80% of our business come from the top 20% of our suppliers, and I am sure you have heard most of these brands out there in the marketplace there.
With that, all those products that we are a distributor of, either exclusively or non-exclusively, and over 340,000 SKUs that we stock in our distribution center in Shepherdsville, Kentucky, we sell to all these retailers. Once again, the 80/20 rule here. 80% of our business comes from our top 20% of our customers here. These are all just tent pole names I am sure you have heard of there. They are out there in the marketplace. They rely on us, whether we ship directly to their stores or whether we do e-commerce fulfillment, shipping directly to their consumers. We make it very easy for these retailers because we offer them all the metadata, all the artwork, the images. Plus, we bring in inventory that we own, and we take ownership on there.
They do not have to have any knowledge or concern or worry or do all the heavy lifting to populate their websites. They rely on us, with our expertise in shipping direct to consumer, and with our large selection and knowledge, that we can make them very competitive with all the retailers out there, whether they come into their stores or whether they shop on their e-commerce platforms. As I talked about, we have a global network here. Of those online retailers we service, there is over 200 online retailers where we white label ship to those consumers on their behalf. It may look like it was sold to you by Target, but if you were to look closely, you would see that these shipments were white labeled, and they were shipped out of our distribution facility in Shepherdsville, Kentucky.
Over 35% of our revenues were as e-commerce fulfillment, where it is being drop shipped on behalf of that retailer, and shipped to the consumer. It looks like it came from that e-commerce retailer or their brick-and-mortar store, but it came from our distribution center. A little helping understanding of our breakdown of our mix. For the 12 months that just ended, you can see the different categories that we sell. Consisting of vinyl, DVD, Blu-ray, gaming, CDs, collectibles, electronics. You can see that our revenue of our $1.1 billion and how it all breaks down. If you just take the music and taking vinyl and CD, that is pushing right around pretty close to 50% of our revenue is in the music category. Vinyl and CDs. Vinyl has been on a comeback for over 17 years now.
CDs, the six months that it just ended, and also last year, the CDs are on a rise again. Certainly not to the levels of vinyl, but it is a category where people want to own their music or own their video movies. They are kind of realizing now, renting is not in right now. Ownership is better. In the world of AI, everything wants to have products that they believe are real, and they own it, and it is for real. This is our non-GAAP financial highlights here. Just big line there, a lot of green arrows up, which is good. In our adjusted EBITDA, if you look at the year-over-year, $41.5 million versus $36.5 million. I do want to share, this is kind of a slide here, you can look more closely at there, but how we get to that $41.5 million and $36.5 million.
You can see our net income was at $13 million per GAAP and $15 million year-over-year. There are just little things that you should probably look down at your leisure here to see the detail there. The one thing that I would just call out is that we did have a one-time supplier that went out of business, and they owed us a lot of money for marketing dollars, and unfortunately, we did not recover those dollars. From a GAAP perspective, that was about a $7.8 million hit to our bottom line, which is the proper way to record it. That is worth about $0.15 to our earnings per share. Just so you understand that to put it all in perspective.
When I was talking about the GAAP numbers here, all those GAAP numbers there, you can just see our earnings per share on a GAAP was at $0.26. We are in a non-GAAP of $0.41, so you can just kind of put it all in perspective. Here is the supporting detail for the information there for you to look at there as needed. Then switching over to our balance sheet there. Some people look and say, "Hey, you do not have enough cash." Our cash is all tied up in our availability in our line of credit. So a better way to look at it there is how much availability we have, which is north of $60 million, which is our cash, our working capital we use.
Our line of credit is used for balance sheet stuff, for accounts receivable, inventory financing, and you can see there that our current borrowing is right around $73 million with a very good interest rate with Bank of America and a five-year term. We are very happy about that. Capital structure, there is roughly 51 million shares out in the marketplace. The float is right around 3.3 million. Insider ownership is very high. That could be a good thing or a bad thing. I think the good thing is that we are highly motivated and looking out for our shareholders. We think that is a good thing there, but we are taking steps and figuring out how we can increase the float and that is all being worked on. We do have some warrants also. That came because we were a SPAC at one time.
We should say we should merge with the SPAC. We had a De-SPAC and those original investors all received some warrants, and they are set to expire in February of 2028. You can see $11.50 strike price. So, where are we trying to go? Well, we got four little strong areas here. Adoption, we are really leaning in on AI to make our operation more efficient, and just try and get more revenue without adding more employees is our goal. We really leaned in heavily with Microsoft Copilot. We like Microsoft Copilot. It works really well. We have a lot of our team members are using it. Everybody has been fully engaged with it for the last eight months, and we are seeing a lot of success there. We just added on a good customer retention program there, HubSpot. That uses a lot of AI too.
It gives us a lot of ways to engage with our customers and stay on top of new customers, potential business and marketing and driving revenue, and we are seeing a lot of good things there. Atlas is just a tool that we have to use. It helps us in demand planning and all that. We have added that in there, and we are currently building a brain. We call it the Alliance Brain, which is just internally where it can be just a resource for all employees so that everybody has access to the information internally that they need, so we are all making right decisions. We are a pretty big organization. We are scattered around the country. We are not in one building. We are scattered around different locations, so having all these tools available and working remotely, it will just make everybody that much more efficient.
Speaking of efficiency, our warehouses really have some efficiencies here. This big red box you are looking at there is a system, a tool called AutoStore. Think of AutoStore as a warehouse inside our warehouse. What we like about this system there, and we are on our fourth year of using it, and our last payment of it is going to be due July of 2027, is it really reduces the travel time. Amazon is constantly investing money in their warehouses, and whether it be adding robotics of any kind there, and we just see that anything we can do to make our warehouse more efficient and lower our operating costs, that makes us very competitive in the marketplace.
With this tool, we went from 41 employees who were walking around and processing LP orders to the record stores that we service. With it, we were able to cut it down from 41 to seven. Really gave us a lot of efficiencies. We are very happy with it there. Our next step is how are we going to deploy our next working capital to get more efficiency out of our distribution center there. We see opportunities in dealing with pallets. We have a lot of pallets of movies and music and video games in our warehouse. If we can eliminate the aisles the same way AutoStore eliminated aisles here, that will just make us that more efficient there, and that is how we would spend our money to keep driving our bottom line and making us more profitable. We have all these exclusive distribution and licensing opportunities.
Currently, over $350 million of our $1.1 billion comes from these channels. I will talk more about these in other slides. Alliance Home Entertainment is our video division. AMPED is our music label division. Handmade by Robots is our own IP. Weta is a licensing opportunity. We are an exclusive distributor for them. Then I am going to talk about Alliance Authentic, how that is growing for us. So Alliance Home Entertainment, movie studios, there is about 60 different movie studios that we are a distributor for. They rely on us to be their exclusive distributor. Also we have some light studios that we have licensing arrangements with. We have Disney, we have licensed titles with Disney, as well as, Paramount Pictures, which is our largest one of all of them there. Then Amazon, MGM, which is the James Bond franchise and everything you see on Prime Video.
What has been happening is the marketplace is changing and the movie studios, they really want to focus on their core competencies, which is basically going to be their streaming services and making movies and putting them into movie theaters. Their home entertainment departments, they are wanting to outsource that to a third party. We have been very successful in that area, and so that is why when you look at our sales in video movies, it has been growing year-over-year as we take on more licensing opportunities. Big successful title we are really excited about is "Project Hail Mary."
We just shipped a lot of physical movies this quarter. We have not completed this quarter there, but it did very well for us, and it has been our biggest theatrical movie that we have had exclusive distribution on, and it was Amazon's biggest movie they have had to date there.
I don't know if you guys have seen the movie. Highly recommend it. It's really good. Because we service all these independent retailers, and there's over 2,500 of them there, we're their go-to source. I showed you a slide of all the customers we sell to, but we couldn't list all of these independent retailers, and there's a whole bunch of them out there. Independent retail has never been stronger than ever and is doing really well, and we're kind of the leader in the whole category, servicing all these retailers. We have a big event called Record Store Day that happens every year. That event has been very successful for us. This year, we just shipped over 700,000 units to those stores. AMPED is our independent music division, and that basically caters to all these independent music stores as well as the large chain retailers.
This is over 110 exclusive labels where we're their physical distributor for these things. These two divisions, primarily AMPED and Alliance Home Entertainment, is pretty much the lion's share of our $350 million worth of revenue there. Handmade by Robots is a new division. We're in the second year we're running this. We basically look at this as licensing opportunities where we can put out these little figurines and sell exclusively and create it as a collectible because we're really leaning hard in the collectible space there. Because when you get to it, music and movies is becoming a collectibles category, and we're just piggybacking on the success we have here. We are a distributor for a company like Funko, and so we have a lot of expertise in this area there. Lastly here, the ultimate vinyl collection we call Alliance Authentic.
Alliance Authentic is our way of making collecting vinyl a little more protective. Back in the old days when I was young, you used to be able to buy uncirculated coins, and they were encapsulated in plastic. We have this here, the same thing, same idea. We take records, we encapsulate them. We add an NFC chip. That's a way of creating authenticity. It allows creating engagement with the consumer and the owner of the product, as well as the artist, and we create a lot of exciting opportunities here where the artist can make more money on collectibles. Us being the backbone of that to do all that, yes, we're pretty excited about that. Endstate Authentic is a company that's the backbone to Alliance Authentic there, and this is the company we bought last year.
With this, it's creating a lot of. With these NFC chip technology, and a lot of things that are happening in Europe with these Digital Product Passport requirements there, the brands are being asked to create a trail of everything, how a product is manufactured and how it is made and what's in it. Having an NFC chip embedded in that product is a way to support those opportunities there. We're pretty excited about that. I think I'm going to stop right there, and I think I'm ready to hand it back to Ben there, and I want to thank everybody for taking the time today to listen to us.
All right. Well, thank you, Bruce, and thank you, everyone, for watching. If you have any questions or would like to schedule a meeting with Alliance Entertainment, please send me an email at shamsian@lythampartners.com, S-H-A-M-S-I-A-N @lythampartners.com. If you'd like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about future events. We hope you all enjoy the rest of the conference, and have a great day.