Live Ventures Q4 2023 Earnings Call Transcript

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December 20, 2023

Key Takeaways

  • Positive Sentiment: We executed four strategic acquisitions in FY2023 totaling approximately $117 million—including Flooring Liquidators, Precision Metal Works, Cal Coast assets and the Harris Flooring Group—to advance our Buy, Build, Hold strategy.
  • Positive Sentiment: Total revenue rose 23.8% year-over-year to $355.2 million, driven by the newly acquired Flooring Liquidators and Precision Metal Works along with the late-2022 QinetiQ transaction.
  • Negative Sentiment: We reported a net loss of $0.1 million (-$0.03 per share) in FY2023 versus net income of $24.7 million last year, as operating income declined and interest expenses rose on higher debt and rates.
  • Negative Sentiment: Adjusted EBITDA decreased by 17.8% to $31.5 million, reflecting lower gross margins—down to 32.5% from 34.1%—and increased operating costs from recent acquisitions.
  • Positive Sentiment: We closed the year with $37.1 million in cash availability, $85 million in working capital and repurchased 39,092 shares at an average of $25.35, underscoring financial strength and commitment to shareholder value.
AI Generated. May Contain Errors.
Earnings Conference Call
Live Ventures Q4 2023
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good day, everyone, and welcome to today's Live Ventures Incorporated Earnings Call. At this time, all participants are in a listen only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one key on your telephone keypad. Please note this call is being recorded and that I will be standing by should you need any assistance.

Operator

It is now my pleasure to turn today's program over to Greg Powell, Director of Investor Relations.

Speaker 1

Thank you, Chelsea. Good afternoon and welcome to the Live Ventures fiscal year end 2023 conference call. Joining us this afternoon for the call are John Isick, our Chief Executive Officer and President David Barrett, our Chief Financial Officer and Eric Aldhofer, our Chief Operating Officer. Some of the statements we are making today are forward looking and are based on our best Our businesses as we see them today. The actual results could differ materially due to a number of factors, including those outlined in our latest forms 10 ks and 10 Q filed with the Securities and Exchange Commission.

Speaker 1

We have no obligation to publicly update any forward looking statements after this call, Whether as a result of new information, future events, changes in assumptions or otherwise, you can find our press release referenced on this call in the Investor Relations section of the Live Ventures website. I direct you to our website, liveventures.comorsec.gov for our historical SEC filings. Now, I will turn the call over to David to walk you through our financial performance.

Speaker 2

Thank you, Greg, and good afternoon, everyone. Before jumping into the numbers for fiscal year 2023, let's briefly discuss our record year of acquisitions. We are pleased to report that we significantly bolstered our portfolio through several strategic transactions aligning with our long term Buy, Build, Hold strategy. During the year, we executed 4 transactions Pulling an investment of approximately $117,000,000 We acquired Flooring Liquidators Inc, a retailer and installer of flooring, carpeting and countertops Precision Metal Works, a manufacturer and supplier of highly engineered parts and components Certain assets from Cal Coast Pleasant Warehouse, a flooring retailer and the Harris Flooring Group brand from QEP. In addition and subsequent to year end, we made a public offer to buy all of the outstanding shares of our L.

Speaker 2

Flooring Holdings Inc, a publicly traded flooring retailer. The details of our offer are described in our public filings. We are not able to provide any additional updates on LL Flooring at this time. Now I will discuss the financial results for our fiscal year ended September 30, 2023. Total revenue for the year increased 23.8 percent to 355,200,000 The increase is primarily attributable to the acquisitions of Fluent Liquidators and PMW in 2023 as well as the acquisition of QinetiQ in late 2022.

Speaker 2

The increase was partially offset by decreased revenues in the foreign manufacturing, Retail Entertainment and Corporate and Other segments. Foreign manufacturing revenues of Approximately $109,800,000 decreased by $21,100,000 or 16.1% as compared to the prior year period. The decrease is primarily reduced to consumer demand as a result of general economic conditions. Retail entertainment revenues of approximately $78,100,000 decreased by $8,000,000 or 9.3% as compared to the prior year. Revenues decreased due to reduced demand as a result of the deterioration in general economic conditions and a shift in sales mix towards used products, which generally have lower ticket sales with higher margins.

Speaker 2

As we announced earlier this year, we have added the retail flooring segment in connection with the acquisition of Flooring Liquidators in January 2023. Revenues for retail flooring were approximately $75,900,000 for the year. Steel Manufacturing revenues of approximately $88,900,000 increased by 28,300,000 or 46.7 percent as compared to the prior year period. The increase is due to the acquisitions of QinetiQ In June 2022 and PMW in July 2023, corporate and other revenues Decreased by approximately $6,800,000 or 73.2 percent to $2,500,000 as compared to the prior year period. The decrease is primarily due to the closure of SW Financial in May 2023.

Speaker 2

Gross profit for the year was $115,600,000 up from $97,800,000 in the prior year period. Gross margin percentage for the company decreased to 32.5% from 34.1% in the prior year. The decrease is primarily attributable to the impacts of inflationary cost increases, partially offset by the acquisition of foreign liquidators, which generate margins of over 36% in 2023. General and administrative expenses increased by approximately 32 $1,000,000 or 58.8 percent as compared to the prior year period. The increase is primarily due to the acquisitions of Flooring Liquidators, PMW and Kinetic, which collectively contributed $32,800,000 of general and administrative expenses in 2023.

Speaker 2

Selling and marketing expenses increased by approximately $1,000,000 as compared to the prior year period, primarily due to an increase in marketing activity in our Flooring Manufacturing and Retail Flooring segments. Operating income Decreased to approximately $15,400,000 as compared to $25,900,000 in the prior year period. The decrease in operating income was Hi, Larry. 2, lower gross profit margins and increased operating expenses. Interest expense increased by approximately $5,000,000 compared to the prior year period.

Speaker 2

The increase is primarily due to the increased debt balances related to the acquisitions of Corning Liquidators, PMW and Kinetic as well as increased interest rates during the period. Net loss $100,000 and diluted loss per share was 0 point 0 $3 as compared to net income of $24,700,000 and diluted Yes, of $7.84 in the prior year period. The decrease in net income is attributable to lower operating income and increased Interest expense. In addition, prior year's net income included a benefit of approximately $11,400,000 or 3.56 dollars per diluted share related to the ApplianceSmart bankruptcy settlement and a charge of approximately $4,900,000 or $0.156 per diluted share related to the impairment of SW Financial goodwill and intangibles. Adjusted EBITDA for the year was Approximately $31,500,000 a decrease of approximately $6,800,000 or 17.8% as compared to the prior year period.

Speaker 2

The decrease is primarily due to an overall decrease in operating income. Turning to liquidity. We ended the year with total cash availability of $37,100,000 consisting of cash on hand of $4,300,000 And cash availability under our various lines of credit totaling $32,800,000 We had working capital of Approximately $85,000,000 as of September 30, 2023 as compared to $78,400,000 in the prior year. Total assets were $421,800,000 as of September 30, 2023 as compared to $278,600,000 in the prior year. Total stockholders' equity was $100,100,000 as compared to $97,200,000 as of September 30, 2022.

Speaker 2

As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our stock repurchases represent a long term value for our stockholders. During the year, we repurchased 39,092 shares of common stock at an average price Approximately $25.35 per share. As of September 30, the company had approximately $3,300,000 available for repurchases under our repurchase program. In conclusion, fiscal year 2023 was marked by challenging economic headwinds.

Speaker 2

In spite of the challenging environment, we remain focused on creating long term value for our stockholders by executing our long term buy build hold strategy. As I mentioned earlier, we completed 4 transactions during the year and we are excited about the opportunities that these acquisitions offer us going forward. We believe that these transactions, our financial strength and our strategic focus position us well to weather the near term headwind We will now take questions from those of you on the conference call. Operator, please open the line for questions.

Speaker 1

Queue. Let's take a call from the question from Theodore, please.

Operator

All right. Theodore, your line is now open.

Speaker 2

Thank you. I was just wondering if you could give us some color on Precision. If you look across the 3 segments that are in industrial, appliance and automotive, Is there any particular strength or relative to what you were expecting from that? Yes. So, yes, as you mentioned, we do cover various industries and we believe that that kind of makes us And if the automotive is going down because of the strike or something like that, there's other industries that are picking up.

Speaker 2

And what we've seen so far from Precision to different companies is actually in our Kinetic They really, I'd say, close to exceeded, if not exceeded our from the acquisition this year. We're very pleased with where they are and then how they've been performing. And on the Precision Marshall side, They've been doing pretty well. They were really it was a banner year last year. It come down a little bit off of that, but they're still doing very well and we're very

Operator

Thank you.

Speaker 1

Just taking a question from Tom, please.

Operator

All right, Tom, your line is open.

Speaker 2

I have a question. Do you still own any LLL shares? And if So what's the status on the offer that you made?

Speaker 1

Thank you for your question. At this time, we really cannot discuss anything related to L. L. Flooring. I do appreciate the question.

Speaker 1

The only thing we can point to you is The press release of what we've made publicly available for Alta Read. I do appreciate the question though.

Speaker 2

Okay. Thank you.

Speaker 1

Thank you, Tom.

Operator

All right. And at this time, there are no further questions in the queue.

Speaker 2

I want to thank everyone for attending the year end call

Operator

Thank you, ladies and gentlemen. This concludes today's program and we appreciate your participation. You may disconnect at any time.

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