Live Ventures Q1 2024 Earnings Call Transcript

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February 8, 2024

Key Takeaways

  • Q1 revenue surged 70.5% year-over-year to $117.6 million, primarily driven by the acquisitions of Flooring Liquidators and PMW.
  • Adjusted EBITDA rose 15.3% to $8.7 million, reflecting improved underlying cash generation.
  • The company reported a net loss of $0.7 million (–$0.22 per share) versus net income of $1.8 million in the prior year, due to higher interest expense and reduced operating income.
  • Gross margin declined to 30.9% from 31.8% as lower-margin steel manufacturing (including PMW) offset the higher margins from Flooring Liquidators.
  • Liquidity remains solid with $45 million of cash and credit availability, working capital of $81.8 million, and an active share repurchase program with 3.2 million shares still authorized.
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Earnings Conference Call
Live Ventures Q1 2024
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good afternoon, everyone, and welcome to today's Live Ventures Q1 Fiscal Year 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. 2. Also, today's call is being recorded and I will be standing by if anyone should need any assistance.

Operator

Now at this time, I will turn things over to Greg Powell, Director of Investor Relations. Please go ahead, sir.

Speaker 1

Thank you, both. Good afternoon and welcome to the Live Ventures Q1 fiscal 2024 conference call. Joining us this afternoon for the call are John Iasey, our Chief Executive Officer and President David Barrett, our Chief Financial Officer and Eric Kalthauper, our Chief Operating Officer. Some of the statements we are making today are forward looking and are based on our best view of the 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 as 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 a copy of our press release and 10 Q referenced on this call in the Investor Relations section of the Live Ventures website. I direct you to our website, liveventures.com or sec.gov for our historical SEC filings. I will now 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 our Q1, let's briefly discuss 2 acquisitions that Flooring Liquidators completed during the quarter. Flooring Liquidators, our retail flooring business acquired 2 Midwest Flooring Change, which added 10 new showrooms in Arkansas, Oklahoma and Missouri. We executed these transactions because we believe there is significant opportunity for Live Ventures to use our capital and resources to expand and enhance Plumbing Liquidators business and product offering into new markets. Now I'll discuss the financial results for our Q1 ended December 31, 2023.

Speaker 2

Total revenue for the quarter increased 70.5% to $117,600,000 The increase is primarily attributable to Flooring Liquidators and PMW, both of which were acquired after the Q1 of fiscal year 2023, as well as an increase of approximately 2,800,000 in the Flooring Manufacturing segment. The increase was partially offset by decreased revenues of approximately $6,200,000 in our other businesses. Flooring manufacturing revenue of approximately $29,200,000 increased by $2,800,000 were 10.6% as compared to the prior year period. The increase in revenue is primarily due to the buildup of its sales force as a result of the acquisition of Harris Flooring Group Brands in the Q4 of fiscal year 2023. Retail entertainment revenue of $20,600,000 decreased approximately 2,700,000 or 11.5% as compared to the prior year.

Speaker 2

The decrease in revenues is primarily due to reduced consumer demand and a shift in sales mix towards used products, which generally have lower ticket sales with higher margins. As previously announced, we added the retail flooring segment in connection with the acquisition of Flooring Liquidators in January 2023. Revenues for retail flooring were approximately $34,300,000 in the first Fuel Manufacturing revenues of approximately $33,400,000 increased approximately 15,400,000 were 85.5 percent as compared to the prior year. The increase is primarily due to the acquisition of PMW in 2023, which contributed $17,500,000 of revenue in the quarter. This increase was partially offset by a $2,500,000 decrease in our other steel manufacturing businesses due to reduced consumer demand as a result of general economic conditions.

Speaker 2

Corporate and other revenues decreased approximately $1,200,000 or 93.2 percent to $100,000 as compared to the prior year period. The decrease is primarily due to the closure of SW Financial in May 2023. Gross profit for the quarter was $36,300,000 up from $21,900,000 in the prior year period. The gross margin percentage for the company decreased to 30.9% from 31.8% in the prior year period. The decrease in gross margin is primarily attributable to reduced margins in the Steel Manufacturing segment, partially offset by the acquisition of Flooring Liquidators, which contributed a gross margin of 38% in the quarter.

Speaker 2

The decrease in gross margin in the steel manufacturing segment is primarily due to the acquisition of PMW, which historically has generated lower margins, as well as reduced production in certain other steel manufacturing businesses. General and administrative expense increased approximately $13,100,000 as compared to the prior year period. The increase is due to the acquisitions of Flooring Liquidators and PMW, which collectively incurred $14,000,000 of general and administrative expense during the quarter. Selling and marketing expense increased approximately $2,300,000 as compared to the prior year period, primarily due to increased sales personnel, trade show activity in our Flooring Manufacturing segment and the acquisition of Flooring Liquidators. Interest expense increased by approximately $2,100,000 as compared to the prior year period.

Speaker 2

The increase is primarily due to increased debt balances related to the acquisitions of Flooring Liquidators and PMW. Net loss was approximately 700,000 and loss per share was $0.22 as compared to net income of approximately $1,800,000 and diluted EPS of $0.60 in the prior year period. The decrease in net income is attributable to lower operating income and increased interest expense. Adjusted EBITDA for the Q1 was approximately $8,700,000 an increase of approximately $1,200,000 or 15.3% as compared to the prior year period. Turning to liquidity.

Speaker 2

We ended the quarter with total cash availability $45,000,000 consisting cash on hand of $5,600,000 and availability under our various lines of credit totaling $39,400,000 Our working capital was approximately $81,800,000 as of December 31, 2023 compared to $85,000,000 as of September 30, 2023. Total assets were $436,600,000 and total stockholders' equity was $99,400,000 as of December 31. As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our repurchases represent long term value for our stockholders. During the quarter, we repurchased 4,346 shares of common stock at an average price of $24.51 per share.

Speaker 2

As of December 31, the company had approximately 3,200,000 available for repurchases under our repurchase program. In conclusion, we are pleased that our first quarter revenues increased 70.5% and adjusted EBITDA increased 15.3% as compared to the prior year period. However, our businesses continue to be impacted by industry specific pressures. As a result, we remain focused on increased productivity, expansion and innovation. Despite the challenging environment, We remain focused on creating long term value for our stockholders by executing our long term buy, build, hold strategy.

Speaker 2

We'll now take questions from those of you on the conference call. Operator, please open the line for questions.

Speaker 1

Let me take a question From Mark, please, operator.

Operator

Certainly. We'll go to Mark Schleifer at Alpine Global.

Speaker 2

Hi. How's it going? Thank you for taking my questions. I was wondering if you guys have any updates with regards to your buyout proposal Hello,

Speaker 1

Flori. The answer is we do not have an update to share with the public But I do appreciate the question, Mark.

Operator

Thank you. And gentlemen, it appears we have no further questions this afternoon. I'd like to turn the conference back over to the Live Venture's

Speaker 2

I just want to thank everyone for joining the call, and we look forward to our next earnings release next quarter. Thank you.

Operator

Thank you very much. Again, ladies and gentlemen, that will conclude the Live Venture Q1 fiscal year 2024 earnings conference call. We'd like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.

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