Live Ventures Q2 2023 Earnings Call Transcript

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May 11, 2023

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 the opportunity to ask questions during the question and answer session. Please note today's call may be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Director of Investor Relations, Greg Powell.

Operator

Please go ahead.

Speaker 1

Thank you, Chloe. Good afternoon, everyone, and welcome to the Live Ventures fiscal 2023 2nd quarter conference call. Joining us this afternoon for the call are John Isick, our Chief Executive Officer and President and David Barrett, our Chief Financial Officer. Some of the statements we are making today are forward looking and are based on our best views of our businesses as we see them today. The actual results could differ 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.

Speaker 1

You can find our press release and 10 Q, which are referenced on the call in the Investor Relations section of the Live Ventures website. I will direct you to our website, which is www.liveventures.com or www.sec.gov for our historical SEC filings. I will now turn the call over to David to walk us through our financial performance.

Speaker 2

Thank you, Greg, and good afternoon, everyone. For our Q2, we delivered revenue of 91,100,000 Net income of $1,600,000 and adjusted EBITDA of $9,200,000 We were able to report these results despite a tough market environment characterized by rising interest rates, inflation and Weakening Consumer Demand. In addition, during the quarter, we acquired Flooring Liquidators for approximately $78,700,000 Despite the challenging macroeconomic conditions, we continue to execute our multi lever, buy, build, hold strategic plan while also investing in our existing businesses. Before we jump into the number, let's briefly discuss the Flooring Liquidators acquisition. We are very excited about the Flooring Liquidators acquisition, which closed in January of this year.

Speaker 2

Flooring Liquidators is a retailer and installer of floors, carpets and countertops to consumers, builders and contractors in California and Nevada operating 20 warehouse Retail stores and a design center. Over the years, they have established a strong reputation for innovation, efficiency and service in the home renovation and improvement market. Now I'll discuss the financial results for our Q2. Total revenue for the Q2 increased 30.7 percent to 91,100,000 The increase is primarily attributable to the acquisitions of Flooring Liquidators and Kinetic, partially offset by decreased revenues in our other businesses. Flooring manufacturing revenues of $30,300,000 decreased by approximately $2,400,000 or 7.4 percent as compared to the prior year period, primarily due to reduced customer demand.

Speaker 2

Retail entertainment revenues of $19,100,000 decreased by approximately $1,600,000 or 7.5% as compared to the prior year. Revenues decreased due to general economic conditions as well as changes in overall product mix. Beginning this quarter, we have a new segment, the retail flooring segment, which consists of flooring liquidators. Revenues for retail flooring were $20,800,000 for the 2nd quarter. Steel Manufacturing revenues of $19,900,000 increased by approximately $5,900,000 or 42% as compared to the prior year period, primarily due to the acquisition of QinetiQ.

Speaker 2

Corporate and other segment revenues decreased approximately $1,300,000 primarily due to the decreased revenues at SW Financial. Gross profit for the 2nd quarter was 31,600,000 up from $25,000,000 in the prior year period. Gross margin percentage for the company decreased to 34.7% from 35.8% in the prior year. This decrease is primarily due to tightening of margins in our flooring manufacturing and steel manufacturing segments, partially offset by margins in the retail flooring segment. General and administrative expenses of $22,600,000 increased 71.9% as compared to the prior year period.

Speaker 2

The increase is primarily due to the acquisitions of Flooring Liquidators and Kinetic as well as one time acquisition related costs. Selling and marketing expenses of approximately 4,000,000 increased 20.6% as compared to the prior year period. Operating income decreased to $5,000,000 for the Q2 of 2023 as compared to $8,500,000 in the prior year period. The decrease in operating income is primarily attributable to lower gross profit margins increased general and administrative expenses. 2nd quarter interest expense increased approximately $2,400,000 as compared to the prior year period, primarily due to the increased debt balances related to the acquisitions of Fluent Liquidators and Kinetic.

Speaker 2

2nd quarter net income was $1,600,000 and diluted EPS was $0.49 per diluted share as compared to net income of $15,400,000 and diluted EPS of $4.84 per share in the prior year period. Prior year's net income included the benefit of approximately $11,400,000 or $3.58 per diluted share for a gain on bankruptcy settlement. In addition, the decrease in net income is partially attributable to lower profit margins as a result of inflationary cost Adjusted EBITDA for the 2nd quarter was $9,200,000 a decrease of approximately $1,100,000 as compared to prior year period. Turning to liquidity, we ended our 2nd quarter with cash of $4,200,000 and cash availability under our various lines of credit of $21,700,000 for a total combined liquidity of $25,900,000 We had working capital of approximately $80,700,000 as of March 31, 2023, as compared to working capital of approximately $78,400,000 as of September 30, 2022. Total assets increased to $365,400,000 as compared to $278,600,000 as of September 30, 2022.

Speaker 2

Total stockholders' equity increased $6,100,000 to 103,200,000 As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our stock repurchases represent long term value for our stockholders. As previously disclosed, the company had announced a $10,000,000 common stock repurchase As of March 31, the company had approximately $3,400,000 available for repurchases under this program. In conclusion, we remain committed to creating long term value for our stockholders. To achieve this, we focus on strategic, Well planned acquisitions and investments aligning with our growth objectives and generating sustainable returns.

Speaker 2

We believe that our financial strength and strategic focus position us to well weather near term headwinds and emerge as a stronger, We will now take questions from those of you on the conference call. Operator, please open the line for questions.

Operator

We'll pause another moment. It does appear there are no questions at this time.

Speaker 2

I just want to thank everyone for joining the call and we look forward to sharing our progress in the next quarter meeting. Thank you.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful afternoon.

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Earnings Conference Call
Live Ventures Q2 2023
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