Q3 2023 Live Ventures Incorporated Earnings Call

He started.

Good day, everyone and welcome to today's live ventures incorporated 2023 third quarter 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. You may registered to ask a question at any time by pressing the star and one on your telephone keypad.

You may withdraw yourself from the queue by pressing star two. Please note. This call may be recorded I'll be standing by if you need any assistance is now my pleasure to turn the conference over to Greg Powell Director of Investor Relations. Please go ahead Sir.

Thank you Travis and good afternoon, and welcome to the live ventures fiscal 2023 third quarter conference call joining.

Joining us this afternoon for the call are Jon Isaac Chief Executive Officer, and President, David Barrett, Our Chief Financial Officer, and Eric Alt Hopper, our Chief operating officer.

Some of the statements we're making today are forward looking and are based on our best view of 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-K, and 10-Q filed with the Securities and Exchange Commission.

We have no obligation to publicly update any forward looking statements. After this call whether a result of new information future events changes in assumptions or otherwise you can find our press release and 10-Q referenced on this call in the Investor Relations section of the life insurance website.

Thank you to our website www live ventures, dot com or <unk> dot Gov, or our historical SEC filings.

I will now turn the call over to David to walk us through our financial performance.

Thank you, Greg and good afternoon, everyone.

Before jumping into the number let's briefly discuss the precision metal works acquisition.

Subsequent to quarter end, we acquired precision metal works, what I'll refer to as P. M. W. For total consideration of 28 million.

Adding approximately 75 million of revenue per year.

P M W manufacturers and suppliers highly engineered parts and components.

We also offer world class metal, forming assembly, and finishing solutions across diverse industries, including appliance automotive hardware, electrical electronics and medical products and devices.

The acquisition of P. M. W is a source of great excitement for us as it complements our current steel manufacturing operations and aligns perfectly with our long term buy build and hold strategy.

We see immense potential with this acquisition.

Now I will discuss the financial results for our third quarter.

Total revenue for the third quarter increased 34, 1% to $91 5 million.

The increase is primarily attributable to the acquisitions of flooring liquidators and kinetic partially offset by decreased revenues in our other businesses as compared to the prior year period.

Flooring manufacturing revenues of $27 4 million decreased by approximately $4 8 million or 14, 8% as compared to the prior year period, primarily due to reduced consumer demand.

Retail entertainment revenues of $18 million decreased by approximately $1 2 million or six 3% as compared to the prior year.

Revenues decreased due to reduced consumer demand.

As we announced last quarter, we have a new segment the retail flooring segment, which consist of flooring liquidators revenues for our retail flooring were $27 4 million for the third quarter.

Steel manufacturing revenues of $18 4 million increased by approximately $3 4 million or 22, 9% as compared to the prior year period, primarily due to the acquisition of kinetic.

Corporate and other segment revenues decreased by approximately $1 7 million, primarily due to decreased revenues at S. W financial.

Which was due to the shutdown of operations in S. W financing.

It has to be a financial in the current quarter.

As a result of this shutdown we recorded a loss on the disposition of S. W financial assets and liabilities of approximately $1 7 million. In addition, we recognized a $1 million gain related to the SEC related to the settlement agreement we entered into in the second quarter.

Gross profit for the third quarter was $32 2 million up for $22 3 million in the prior year period.

Gross margin percentage for the company increased to 35, 2%.

From 32, 7% in the prior year period. The increase is primarily due to the addition of flooring liquidators in kinetic which have higher margins.

General and administrative expenses of $23 2 million increased $9 8 million as compared to the prior year period.

The increase is primarily due to the additions of flooring liquidators and kinetic.

Selling and marketing expenses increased nine 9% to approximately $3 4 million as compared to the prior year.

Operating income decreased five 2%.

$5 6 million for the third quarter as compared to $5 9 million in the prior year period.

The decrease in operating income is primarily attributable to lower revenues and higher costs in our retail entertainment flooring manufacturing and corporate segments, partially offset by additions.

Flooring liquidators in kinetic.

Third quarter interest expense increased approximately $2 8 million as compared to the prior year period, primarily due to the increased debt balances related to the acquisitions of flooring liquidators and kinetic.

Third quarter net income was $1 1 million and diluted EPS was <unk> 33 per share as compared to the.

With net income of $3 5 million and diluted EPS of $1 11 in the prior year period. The decrease in net income is primarily attributable to lower operating margins and higher interest expense.

Adjusted EBITDA for the third quarter was $9 6 million, an increase of approximately 700000 as compared to the prior year period.

Turning to liquidity, we ended our third quarter with cash of $3 5 million in cash availability under our various lines of credit of $28 8 million for a combined total liquidity of $32 3 million.

We had working capital of approximately $81 6 million as of June 32023, as compared to working capital of approximately $78 4 million as of September 32022.

Total assets were $360 2 million as of June 32023, as compared to 2200, $78 6 million as of September 32022.

Total stockholders equity was $104 2 million.

As compared to $97 1 million as of September 32022.

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 all stockholders.

As previously disclosed the company announced a $10 million common stock repurchase plan in 2018.

Our third quarter, we repurchased 3702 shares of common stock at an average price of approximately $25.31 per share under this program.

As of June 30, the company had approximately $3 3 million 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.

We believe that our financial strength and strategic focus.

<unk> well to weather near term headwinds and emerge as a stronger more resilient company in the long run.

We will now take questions from those of you on the conference call. Operator, Please open the line for questions.

Yes, Sir at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question, we will pause to allow questions to queue.

Can you open the line for Theodoor. Please.

Yes, we have a question from Theodore O'neill Beechwood fields Hills research.

Thank you very much.

A question on the Salomon Whitney <unk>.

Disposition.

It seems like I ought to be able to net those two things together the settlement and the loss, but you've kind of broken out separately. So there must be a reason for that can you give us just a little history of let's call. It a little.

More information about the settlements about.

Well just from an accounting standpoint, the AR.

The loss is just related to disposal of the.

Yes, as the consolidating.

And so that requires a separate line item and is this settlement gains we provided some disclosures in our 10-Q related to this settlement.

But well I guess, what I'll say about the settlement agreement is.

But that's how I'm in agreement with.

Basically pursuant to the that written agreement that we believe is in the best interest of live in a shareholders that that we shut down.

Close the operations around down the operations at Salomon Whitney and according to that agreement. We are limited on what we can discuss and so really what I wanted to do is just refer you over to our disclosures in our 10-Q okay.

Read the Q I was just looking for yeah formation, but that's fine.

If you look at the if you look at the press release that we published.

Down to adjusted EBITDA, Youll see a breakdown there and it'll it'll say solid Whitney financial settlement gain and disposition youll see that and you can get it pretty.

Pretty easily yeah, yeah, okay.

And you've you've sort of.

Talked about the flooring business and the retail business, having reduced customer demand is is there anything idiosyncratic about that that's going on or is that just sort of a general economic.

I think it's going to be more or less the general economic conditions I mean, the only other thing I would add as you know during 2020 in 2021, there was a lot of no there.

There was a decent boost in revenues and a lot of people were getting home remodels and things like that so.

Between that and just overall general economic conditions and what we're seeing is kind of right in line with our peer companies I would say feed or if you. If you went and looked at.

Companies are similarly.

We do look at the numbers it will paint a very clear picture.

L. L flooring publish their numbers yesterday youll see that their same store sales were down 22% I think that we are outperforming the general market, but this is my opinion yeah. Okay that makes total sense, everybody was staying at home and doing remodeling or finding something else just get entertained at home and now we're all out and about.

Okay that was all my questions. Thank you.

Excellent. Thank you Peter.

We have no further questions in the queue at this time I would now like to turn the call back over to today's speakers.

Well I want to thank everyone.

For attending the call today, and we'll look forward to our next call for our yearend. So thank you.

This does conclude today's program. Thank you for your participation you may disconnect at any time.

Okay.

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