Q3 2023 Xcel Brands Inc Earnings Call
Please be advised that reproduction of this call in whole or in part is not permitted without prior written authorization of <unk> brands and as a reminder, this conference call is being recorded I would now.
Speaker 1: Please be advised that reproduction of this call in whole or in part is not permitted without prior written authorization of VEXEL brands and as a reminder, this conference call is being recorded. I would now like to turn the call over to Andrew Berger of SM Berger & Co. Andrew, you may now begin.
Like to turn the call over to Andrew Berger of SM Berger <unk> Company, Andrew you May now begin.
Thank you and good evening, everyone and thank you for joining us and welcome to the XL brands third quarter 2023 earnings call.
Speaker 2: Welcome to the XL Brands third quarter 2023 earnings call. We greatly appreciate your...
Greatly appreciate your participation and interest.
Speaker 2: With us on the call today are Chairman and Chief Executive Officer, Robert DeLoren, Chief Financial Officer, Jim Herron, and Executive Vice President of Business Development and Treasury, Seth Burrows.
With us on the call today are chairman and Chief Executive Officer, Robert to Lauren Chief Financial Officer, Jim Haran, and executive Vice President of business development and Treasury, except burrows.
Speaker 2: By now everyone should have access to the earnings release for the third quarter and it's September 30th, 2023.
By now everyone should have had access to the earnings release for the third quarter ended September 32023.
I Hope this evening and in addition, the company plans to file with the Securities and Exchange Commission. Its quarterly report on Form 10-Q Tomorrow.
Speaker 2: In addition, the company plans to file with the Securities and Exchange Commission its quarterly report on form
Speaker 2: The release and the quarterly report will be available on the company's website at www.xlbrands.com.
The release and the quarterly report will be available on the Companys website at Www Dot XL brands Dot com.
Speaker 2: This call is being webcast and a replay will be available on the company's investor relations website. Before we begin, please keep a...
This call is being webcast and a replay will be available on the company's investor Relations website.
Before we begin please keep in mind that this call will contain forward looking statements.
Speaker 2: All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today.
Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today.
Speaker 2: These risk factors are explained in detail in the company's most recent annual report filed with
These risk factors are explained in detail in the company's most recent annual report filed with the SEC.
Speaker 2: Excel brands do not undertake any obligation to publicly update or revise any forward plan.
L brands does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Speaker 2: whether as a result of new information, future events, or otherwise.
Speaker 2: The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time.
The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time.
Speaker 2: Finally, please note that on today's call, management will refer to certain non-GAF financial...
Finally, please note that on today's call management will refer to certain non-GAAP financial measures, including non-GAAP net income non-GAAP diluted earnings per share and adjusted EBITDA. Our management uses these non-GAAP metrics as measures of operating performance to assist in comparing performance from period to period on a consistent basis.
Speaker 2: including non-GAAP net income, non-GAAP diluted earnings per share, and adjusted EBITDA. Our management... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
Speaker 2: as measures of operating performance to assist in comparing performance from period to period on a consistent basis.
Speaker 2: and to identify business trends related to the company's results of operation.
<unk> business trends relating to the Companys results of operations.
Speaker 2: Our management believes these financial performance measurements are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus they provide supplemental information to assist investors in evaluating the company's financial performance.
Our management believes these financial performance measurements are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results and thus they provide supplemental information to assist investors in evaluating the company's financial results.
Speaker 2: These non-GAAP measures should not be considered in isolation or as alternatives to net income, earnings per share, or any other financial performance calculated and presented in accordance with the law.
These non-GAAP measures should not be considered in isolation or as alternatives to net income earnings per share or any other financial performance calculated and presented in accordance with GAAP you.
Speaker 2: You may refer to the attachment on the company's earnings release or to Part 1, Item 2 of the 10Q for reconciliation of non-GAAM.
You may refer to the attachment on the company's earnings release or to part one item two of the Form 10-Q for a reconciliation of non-GAAP measures.
Speaker 2: And now, I'm pleased to introduce Robert DeLoren, Chairman and Chief Executive Officer.
And now I'm pleased to introduce Robert Ward, Chairman and Chief Executive Officer, Bob. Please go ahead.
Speaker 3: Thank you, Andrew. Good evening, everyone, and thank you for joining us. I would like to start today's call with an update on our strategic transformation effort and how our business is performing under the new operating model. After that, our CFO , Jim Herron, will discuss our financial results in more detail. I would be remiss if I did not extend a special thanks to Jim for powering through a serious bike injury this last weekend to get the 10-Q file.
Thank you Andrew and good evening, everyone and thank you for joining us I would like to start today's call with an update on our strategic transformation efforts.
Our business is performing under the new operating model after that our CFO, Jim Haran will discuss our financial results in more detail I would be remiss if I did not extend a special thanks, Jim for powering through a serious spike injury.
This last weekend to get the 10-Q filed.
Speaker 3: As stated earlier this year, starting in the first quarter of 2023, we began to restructure our business operations, shifting from a working capital intensive
As stated earlier this year starting in the first quarter of 2023, we began to restructure our business operations shifting from a working capital intensive.
Speaker 3: Wholesale business model to a business model that is working capital light highly profitable and focused on high touch licensing live stream shopping and social commerce growth strategy
Wholesale business model to a business model that is working capital light highly profitable and focused on high touch licensing livestream shopping and social commerce.
Both strategies during the third quarter of 2023, we continue to execute on this plan and I am pleased to report that we have essentially completed this transition of our wholesale and related E Commerce operation.
Speaker 3: During the third quarter of 2023, we continued to execute on this plan, and I am pleased to report that we have essentially completed this transition of our wholesale and related e-commerce operation, and subsequent to the end of the quarter, we have outsourced operations through license agreements for our Longer Burger business.
Frequent to the end of the quarter with outsourced operations through license agreements for our longer Burger business.
Speaker 3: As a result of all of our restructuring efforts going forward, we expect to now save approximately $14 million in operating expenses on an annualized basis as compared with 2022 expense levels, including approximately $7 million of reduced payroll costs and $7 million in lower operating costs. These cost savings
As a result of all of our restructuring efforts going forward, we expect to now save approximately $14 million in operating expenses on an annualized basis as compared with 2022 expense levels, including approximately $7 million of reduced payroll cost and 7 million.
Lower operating costs. These cost savings began in the first quarter of 2023 and are expected to be fully realized by the end of 2023 based upon some delays and concluding the longer Burger licensing agreement and softness in our PVC business that resulted.
Speaker 3: in the first quarter of 2023 and are expected to be fully realized by the end of 2023. please correct
Speaker 3: some delays in concluding the Longaberger licensing agreements and softness in our QVC business that resulted from scheduling conflicts with our on-air talent. Our current financial forecast indicate that we expect to return to profitability by the first quarter of 2024 driven by these cost savings combined with revenue from our new licenses and brand launches in 2023 that will continue to ramp and grow in 2024.
Scheduling conflicts with our on air talent, our current financial forecasts indicate that we expect to return to profitability by the first quarter of 2024, driven by these cost savings combined with revenue from our new licenses and brand launches in 2023 that will continue to ramp and grow.
In 2024 to effectuate. This transformation, we have engaged with best in class business partners and entered into multiple new licensing agreements some of which I spoke about on last quarter's call and some of which are new this quarter. What do you believe that the evolution of our operating model.
Speaker 3: To effectuate this transformation, we have engaged with best-in-class business partners and entered into multiple new licensing agreements, some of which I spoke about on last quarter's call and some of which are new this quarter.
Speaker 3: We believe that the evolution of our operating model through these new arrangements, coupled with the launch of our live stream and social commerce platform, will provide our company with competitive advantage and significant cost savings going forward, while offering our customers exceptional quality at attractive prices.
These new arrangements coupled with the launch of our live streaming social Commerce platform will provide our company with competitive advantage and significant cost savings going forward, while offering our customers exceptional quality at attractive prices. We also believe our live streaming social commerce platform will enable us to fully.
Speaker 3: We also believe our live stream and social commerce platform will enable us to fully engage with and entertain our customers in ways that were not possible in the past. I look forward to sharing more information about this as we get closer to the launch.
We engage with and entertain our customers in ways that were not possible in the past I look forward to sharing more information about this as we get closer to the launch in May we signed the master licensing agreement with G. III apparel group for the Halston, Brian We started to realize revenues from this agreement in the second quarter of 2020.
Speaker 3: In May, we signed a master licensing agreement with G3 Apparel Group for the Halston brand. We started to realize revenues from this agreement in the second quarter of 2023, but expect.
But expect that more meaningful growth will come after <unk> three launches their first collection in fall 2024, which is the season later than we initially had hoped for our partnership with G. III given their extensive production and distribution capabilities provides us with a tremendous opportunity.
Speaker 3: that more meaningful growth will come after G3 launches their first collection in fall 2024, which is a season later than we initially had hoped for.
Speaker 3: Our partnership with G3, given their extensive production and distribution capabilities, provides us with a tremendous opportunity to grow the brand and take Holston to the next level.
Attunity to grow the brand and take cost into the next level for our Judith Ripka brand, we entered into a new licensing agreements in the first and second quarters to move all segments of our Judith Ripka business to jewelry television. The brand launched on October 16th launch was among the best launches.
Speaker 3: For our Judith Ripke brand, we entered into new licensing agreements in the first and second quarters to move all segments of our Judith Ripke business to Jewelry TV. The brand launched on air October 16th. The launch was among the best launches on JTV and exceeded all business metrics established by the network.
Jay TV and exceeded all business metrics established by the network. In fact early indications show over 10 million media impressions generated by the marketing efforts for the launch.
Speaker 3: In fact, early indications show over 10 million media impressions generated by the marketing efforts for the launch show.
We expect significant growth with the Judith Ripka brand in this new and exciting partnership for our C. Wonder brand, we launched on HSN at the end of March with the first show achieving over 200% of planned sales and sales continued gained strong momentum during Q3 as previously stated.
Speaker 3: We expect significant growth with the Judas Ripka brand in this new and exciting partnership. For our Sea Wonder brand, we launched on HSN at the end of March, with the first show achieving over 200% of planned sales, and sales continue to gain strong momentum during Q3. As previously stated, the wholesale production for our HSN business has been licensed to one jeanswear group.
Wholesale production for our HSN business has been licensed to one genes where group.
Speaker 3: We are working on some exciting license extensions and other categories for the C1 to brand. Finally, we expect to be announcing before the Christmas holiday, a new brand launch on HSN in March of 2024 with an iconic American supermodel.
We are working on some exciting license extensions and other categories for the C. Wonder brand finally, we expect to be announcing before the Christmas holiday a new brand launched on HSN in March of 2024 with an iconic American supermodel.
Speaker 3: This continues our push into building a brand portfolio of influencers and creators to drive our TV and live stream and social commerce business.
This continues our push into building a brand portfolio of Influencers and creators to drive our TV and <unk>.
<unk> and social commerce businesses.
Speaker 3: With respect to the Longaberger brand, we entered into a new license agreement with an industry-leading outsource e-commerce management company to manage and operate the e-commerce business. Also, we have executed a license for Made in America U.S. baskets. Finally, we are in discussions with other potential partners to license additional homes.
With respect to the Longaberger brand, we entered into a new license agreement with an industry, leading outsource E Commerce management company to manage and operate the E. Commerce business also we have executed a license for made in America U S. Baskets. Finally, we are in discussions with other potential partners.
To license additional home product categories under the Brian Longaberger is an iconic American brand and we're excited after reestablishing the brand in the past few years to now bring in partners, who can help grow the brand and business finally regarding our QVC interactive television business both the.
Speaker 3: product categories under the brand. Longer Burger is an iconic American brand, and we're excited after reestablishing the brand the past few years to now bring in partners who can help grow the brand and business.
Speaker 3: Finally, regarding our QVC interactive television business, both the logo by Lori Goldstein-Brand and Isaac Mizrahi-Brand did not perform as we expected during the third quarter of 2023, primarily due to scheduling conflicts with on-air town as QVC transitions post-COVID from remote shows to 100% in studio shows in Pennsylvania.
Bye and Lori Goldstein, Brian and Isaac Mizrahi brand did not perform as we expected during the third quarter of 2023, primarily due to scheduling conflicts with on air talent as QVC transitions post COVID-19 from remote shows two 100% and studio shows in Pennsylvania, we are exploring ways to.
Speaker 3: We are exploring ways to increase sales through the use of additional gas and other alternatives to drive the business in 2024, including product refreshments.
Increased sales through the use of additional gas and other alternatives to drive the business in 2024, including product refreshment and possible dedicated chose with our backup gas.
Speaker 3: possible dedicated shows with our backup guests.
Speaker 3: In summary, we are on track with the execution of our transition plan, and we look forward to growth in 2024. And now I would like to turn the call over to Jim to discuss our results and financial highlights. Jim? Thanks.
In summary, we are on track with the execution of our transition plan and we look forward to growth in 2024, now I would like to turn the call over to Jim to discuss our results and financial highlights Jim.
Thanks, Bob and good evening everyone.
Speaker 4: I will briefly discuss our financial results for the quarter and nine months ended September 30, 2023.
Ill briefly discuss our financial results for the quarter and nine months ended September 32023.
Total revenue for the third quarter of 2023 was $2 6 million, representing a decrease of approximately $1 9 million from the third quarter 2022.
Speaker 4: Total revenue for the third quarter of 2023 was 2.6 million, representing a decrease of approximately 1.9 million from the third quarter of 2022.
Speaker 4: This decline was primarily driven by a $2.1 million decrease in net product sales due to the exit from our wholesale apparel and fine jewelry sale operations early in 2023 as part of the restructuring and transformation of our business operating model.
This decline was primarily driven by a $2 1 million decrease in net product sales due to the exit from our wholesale apparel and fine jewelry start operations early in 2023 as part of the restructuring and transformation of our business operating model.
Speaker 4: Partially offsetting the decline in net sales was an increase in net licensing revenue of .2 million, primarily driven by the relaunch of our C. Wonder brand on HSM.
Partially offsetting the decline in net sales was an increase in net licensing revenue of <unk> 2 million, primarily driven by the relaunch of our C wonder brands on HSN.
Speaker 4: It should be noted that our Judith Richter brand launched on air on JTV this past October . Thus, we expect to see a positive impact from the brand beginning with the fourth quarter of this year.
It should be noted that our Judith Ripka brand launched an error on JCB. This past October thus, we expect to see a positive impact from the brands beginning with the fourth quarter of this year.
Speaker 4: On a year-to-day basis, revenue for the current nine months decreased by approximately $6.2 million from the prior nine months to $15.5 million.
On a year to date basis revenue for the current nine months decreased by approximately $6 2 million in the prior year nine months to $15 $5 million.
Speaker 4: This decline in revenue was driven by a $6.3 million decrease in licensing revenue, primarily attributable to the May 2022 sale of a majority interest in the Isaac Mizrahi.
This decline in revenue was driven by a $6 $3 million decrease in licensing revenue primarily attributable to the May 2022 sale of a majority interest in the high.
<unk> brand.
Speaker 4: Net price sales were essentially flat year over year as we sold off all of our apparel and jewelry inventory during the first half of 2012.
Net product sales were essentially flat year over year as we sold off all of our apparel and jewelry inventory during the first half of 2023.
Speaker 4: Our direct operating cost expenses were 5.6 million for the current quarter down by 1.3 million or 19% from 6.9 million in the prior year quarter. It should be noted that $1.3 million in non-recurring costs associated with restructuring were included in the current quarter's operating expenses.
Our direct operating costs and expenses were $5 6 million for the current quarter down by $1 3 million or 19% from $6 9 million in the prior year quarter.
It should be noted that $123 million and nonrecurring costs associated with the restructuring were included in the current quarters operating expenses and if backed out would represented $2 6 million reduction from the prior year quarter.
Speaker 4: and if backed out, would represent a $2.6 million reduction from the prior year quarter.
Speaker 4: On a year-to-date basis, our operating cost and expenses was $17.8 million in the current year period, down by $7 million, or 28%, from $24.7 million in the prior year, nine months.
Our year to date basis, our operating costs and expenses were $17 $8 million in the current year period down by $7 million or 28% from $24 7 million in the prior year nine months.
Speaker 4: This decrease in operating expenses was primarily attributable to the restructuring and transformation of our business in 2023 that Bob discussed earlier, and in addition, the elimination of costs associated with the Isaac Mizrahi brand following sale in May 2022.
This decrease in operating expenses was primarily attributable to the restructuring and transformation of our business in 2023 that Bob discussed earlier and in addition, the elimination of costs associated with the <unk> brand. Following its sale in May 2022.
As Bob mentioned, we've recently announced a licensing of a lager Burger operations.
Speaker 4: As Bob mentioned, we recently announced the licensing of our Langeberg operation.
Speaker 4: Together with the restructuring of apparel and fine jewelry host operations, our operating costs and expenses will continue to decrease and we expect to reach a run rate of under $4 million per quarter by the first quarter of 2024.
Together with the restructuring of apparel and fine jewelry wholesale operations operating cost and expenses will continue to decrease and we expect to reach a run rate of under $4 million per quarter for the first quarter of 2024.
Speaker 4: By comparison, the fourth quarter of 2022 had a run rate of approximately 7.5 million.
By comparison, the fourth quarter of 2022 at a run rate of approximately $7 5 million cost.
Speaker 4: Overall, we had a net loss excluding non-controlling interest for the current quarter of approximately 5.1 million or minus 26 cents per share compared with a net loss of 4 million or 21 cents per share in the prior year quarter.
Overall, we had a net loss excluding noncontrolling interest for the current quarter of approximately $5 million will minus 46 cents per share compared with a net loss of $4 million or 21 per share in the prior year quarter.
On a non-GAAP basis, we had a net loss for the current quarter of $3 million or minus <unk> 15 per share compared with a net loss of $3 3 million or <unk> 17 per share in the prior year quarter.
Speaker 4: On a non-GAAP basis, we had a net loss for the current quarter of $3 million or minus 15 cents per share, compared with a net loss of 3.3 million or 17 cents per share in the prior year quarter.
Speaker 4: This non-gap debt loss includes the $1.3 million in non-recurring restructuring charges that I mentioned earlier.
This non-GAAP net loss includes the $1 3 million nonrecurring restructuring charges that I mentioned earlier.
Speaker 4: Adjusted EBITDA was negative $1.4 million for the current quarter and improvement of approximately $1.5 million compared with negative $2.9 million in the prior year quarter.
Adjusted EBITDA was negative $1 4 million for the current quarter, an improvement of approximately $1 5 million compared with negative $2 9 million in the prior year quarter.
Speaker 4: This level was approximately $400,000 over our forecast as a relief to reduce royalty revenue generated by our QDC business.
This level was approximately $400000 over our forecast as it relates to reduced royalty revenue generated by our PVC businesses.
On a year to date basis, our net loss, excluding non controlling interests for the current nine months was approximately $14 3 million or <unk> 72 per share compared with net income of 2 million or <unk> 10 per share in the prior year comparable period.
Speaker 4: On a year-to-date basis, our net loss, excluding non-controlling interest for the current nine months, was approximately $14.3 million, or $0.72 per share, compared with net income of $2 million, or $0.10 per share, in the prior comparable period.
Speaker 4: On a non-GAAP basis, we had a net loss for the current nine months of $8.7 million, or minus $0.44 per share, compared with a net loss of $8.8 million, or minus $0.45 per share in the prior year nine-month period.
On a non-GAAP basis, we had a net loss for the current nine months of $8 7 million or minus <unk> 44 per share compared with a net loss of $8 8 million will minus <unk> 45 per share in the prior year nine month period.
Speaker 4: And finally, adjusted EBITDA was negative $4.6 million for the current nine months, representing a $2 million improvement over negative $6.6 million of EBITDA in the prior year nine months.
And finally, adjusted EBITDA was negative $4 6 million for the current nine months, representing a $2 million improvement over negative $6 6 million of EBITDA in the prior year nine months.
Speaker 4: Once again, as a reminder, non-GAAP net income, non-GAAP diluted EPS, and adjusted EBITDA are non-GAAP unordered terms. Our earnings press release and Form 10-Q present a reconciliation designs with the most directly comparable GAAP measures.
Once again as a reminder, non-GAAP net income non-GAAP diluted EPS and adjusted EBITDA are non-GAAP unaudited terms, our earnings press release and Form 10-Q presents a reconciliation of these items with the most directly comparable GAAP measures.
Now turning to our balance sheet and liquidity.
Speaker 4: As of September 30th, 2023, the company had cash and cash equivalents of approximately $2.2 million and positive net working capital of $2.9 million, excluding the current portion of our lease obligation.
As of September 32023, the company had cash and cash equivalents of approximately $2 2 million and positive net working capital of $2 9 million, excluding the current portion of our lease obligations.
Speaker 4: executing our restructuring and transformation plans early this year, our cash usage has decreased significantly and is projected to continue to improve.
Since executing our restructuring and transformation plans earlier this year, our cash usage has decreased significantly and is projected to continue to improve.
Speaker 4: Cash use and operating activities during the current nine months was $2.8 million, compared with cash use and operating activities of $11 million in the prior year nine months.
Cash used in operating activities during the current nine.
Two months was $2 8 million compared with cash used in operating activities of $11 million in the prior year nine months.
Also in October 2023, we entered into a new five year term loan of $5 million, which quarterly repayments will commenced in April of 2024, we believe that the additional liquidity provided by this new term loan coupled with our operating expense and working capital position provides the company with.
Speaker 4: Also, in October 2023, we entered into a new five-year term loan of $5 million in which quarterly repayments will commence in April of 2024. We believe that the additional liquidity provided by this new term loan, coupled with our operating expense cuts and working capital position, provides the company with adequate liquidity going forward.
Liquidity going forward.
Speaker 5: And with that, I would like to turn the call back over to Bob.
And with that I would like to turn the call back over to Bob.
<unk>.
Speaker 3: Thank you, Jim. It's great to see you recovering so fast from your bike accident. Ladies and gentlemen, this concludes our prepared remarks. Operator.
Thank you Jim it's great to see recovering so fast from your bike accident, ladies and gentlemen, this concludes our prepared remarks operator.
Speaker 6: Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, simply press star 1 again. One moment, please, for your first question.
Thank you.
Have a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue simply press Star One again one moment. Please for your first question.
Your first question comes from the line of Anthony.
Bids shinskie of Sue detail your line is open.
Speaker 7: Yes, good afternoon. It's Anthony Lubczynski from Sidoti, and thank you for taking the questions, and Jim, I hope you're feeling better, and we'll get better 100% quickly. Pleasure.
Yes, good afternoon, it's Anthony <unk> from Sidoti and thank you for taking the questions.
Jim.
We're feeling better on the rig.
Get better under posted on quickly.
Hi, Jim.
Speaker 8: So, yeah, so first, just looking at the third quarter, Bob, you mentioned that it came in lower than what you guys expected. Part of that was because of the QVC issues. So, have those issues been resolved with QVC or do you think it will still be a drag on the fourth quarter? So, there are two things.
So yes, so first.
Just just.
Looking at the third quarter, Bob you mentioned that it was.
And lower than what you guys expected part of that was because of the UBC issue. So.
Have those issues been resolved with QBC or do you think it will still be a drag on the <unk>.
Fourth quarter.
So there are.
Two things.
Speaker 3: that were driving the difference between where we thought we would be.
We're driving.
The difference.
Between where we thought we would be.
Speaker 3: And where we ended up in the quarter, won about $400,000 in revenue.
And where we ended up in the quarter one about 400000 revenue we were lower.
Speaker 3: than we expected, and that was because missed shows by.
And we expected and that was because.
Just shows by.
Talent.
Speaker 3: And we had about $200,000 more of expenses with the transition of the Longaberger business. We thought we would be able to get everything in place a little sooner than we did. But the good news is that's behind us now.
And.
We had about 200000 more of expenses with the transition of the Longaberger.
We thought we would be able to get everything in place a little sooner than we did that the good news is that's behind us now.
Speaker 3: And we are working on solutions to get talent back on calendar and on schedule so that we don't miss. It was a.
And we are working on solutions.
To get talent back on calendar and on schedule, So that we don't mess.
It was.
It was fairly sudden change in policy at QVC us.
Speaker 3: fairly sudden change in policy at QVC.
Speaker 3: And as you can imagine, most of our on-air guests have busy media scheduled, and we just had conflicts. We think there will be some continued.
And as you can imagine most of our on air guest have busy media schedules and we just had complex. We think there will be some continued.
Speaker 3: conflicts in Q4, but we're working on revised agreements with all of our on-air guests so that we can get back to normal on-air times heading into January .
Conflicts in Q4, but we're working on.
Revised agreements with all of our on air guest so that we can get back to normal on Aero timed heading into January.
Speaker 7: Okay, yeah. Thanks for that, Bob. And in terms of the license deal that you announced last week with Alpha OES for Longaberger, you know, how should we think about the impact of this deal now going forward? Maybe you can give a sense to us, maybe as to like,
Okay, Yeah, thanks for that Bob and in terms of the.
License deal that you announced last week with Alpha Oes for longer Burger.
How should we think about the impact of this deal now going forward, maybe you can give a sense to us maybe yes.
When you open them.
Speaker 7: the portion of Longer Burger that you did previously, how much did that contribute? And then kind of going forward, how should we think about the business in terms of the financial impact?
The portion of Longaberger that you did previously how much did that contribute in that kind of going forward. How should we think about the diverse in terms of the financial impact.
Okay.
Speaker 9: can talk a little bit about Alpha.
SaaS can talk a little bit about alpha yeah. So Anthony.
The license in structured with.
Sure.
Speaker 9: royalty like many traditional licenses, there's also a
Our royalty like many traditional licenses theres also.
Speaker 9: incentive on the bottom side on the margin generated by the business.
Incentive on the bottoms side on the margin generated by the business. If you look at the business We don't report.
Speaker 9: If you look at the business, say, you know, we don't report earnings by brand or contribution by brand. That said, you know, Longer Burger, we've been investing in the business over the last several years, so there should be a positive impact. So it'll be a negative impact to revenue since we won't be recognizing.
Earnings by brand or contribution by brand that Sir.
Ted Longaberger, we've been investing in the business over the last several years. So there should be a positive impact so it'll be a negative impact to revenue since we wont be recognizing the.
Speaker 9: the direct-to-consumer revenues from the longer-route business, but it should be a very positive impact to our EBITDA contributions.
The direct to consumer revenues from the longer business.
But it should be a very positive impact to our EBITDA contribution.
Speaker 7: Okay, that's good to hear. Okay, so going forward, it sounds like you will only be reporting net licensing revenue. I guess the other line item, net sales, I mean, this quarter, you only had $256,000 of sales there. So I guess going forward, it's going to be...
Okay. That's good to hear okay. So so so going forward.
You will it sounds like he will only be reporting that licensing revenue will be I guess at the other line item.
I mean this quarter, we only had $276000.
The sales there.
So I guess going forward.
It's going to be pretty much zero.
Is that correct.
Speaker 4: Yeah, I believe that's correct. Yeah, there'll be some sales in the fourth quarter, as we had transition Langeberg during the quarter. Thereafter, we don't anticipate having sales.
Yes, I believe Thats correct, yes, there'll be some there'll be some sales in the fourth quarter.
As we had transition longer Barbara during the quarter.
Thereafter, we don't anticipate that.
Sales.
Cost of goods sold.
Got you, Okay, and then last question before I pass on to others. So in terms of the expense run rate I know some of the third quarter came in higher because of some nonrecurring items.
Speaker 7: Got you. Okay. And then last question before I pass on to others. So in terms of the expense run rate that I know some of the third quarter came in higher because of some non recurring items. As far as the fourth quarter. Do you think you can be close to 4 million or above that, just roughly speaking, you know, should we expect
As far as the fourth quarter or do you think it can be close to 4 million or above.
Just roughly speaking.
Should we expect.
Speaker 4: Yeah, we're just cleaning up some final transition items, so there'll be a little bit more cost, but this is the end of these transition costs and going into the new year. It'll be exactly where Bob mentioned.
Yes.
We're just cleaning up some.
Final transition items, so there'll be a little bit more cost, but this is this is the end of these transition costs going into the new year, it'll be exactly where Bob mentioned.
Have you run rate on the floor.
Speaker 7: All right. Well, that's good to hear. Well, thank you very much. Best of luck and happy Thanksgiving to all.
Alright, well that's good to hear well. Thank you very much best of luck and happy Thanksgiving to all.
Thanks Anthony.
Speaker 1: Your next question comes from the line of Pat McCann of Noble Capital Markets. Your line is open.
Your next question comes from the line of Pat Mccann of Noble capital markets. Your line is open.
Speaker 10: Hey, this is Pat on for Mike Kapinski. Thanks for taking my questions and congratulations on completing the restructure. So actually, some of my questions have already been answered, but I do have one additional question, which is just broadly, what are you seeing in the marketplace for your various brands so far in this quarter, just when it comes to, as we head into the holiday season,
Hey, this is Pat on for Mike Kopinski, Thanks for taking my questions and congratulations on completing the restructure.
No actually.
Some of my questions have already been answered, but I do have one additional question, which is just broadly what are you seeing in the marketplace.
For your various brands so far.
So far in this quarter just when it comes to as we head into the holiday season.
Speaker 10: what's what is the demand like from the consumer you know what you know kind of what are you seeing you have any leading indications of of what we should expect um this holiday season given the state of the economy?
What what is the demand like from the consumer what kind of what are you seeing if you have any leading indications of of what we should expect.
This holiday season, given the state of the economy.
Speaker 3: So it's an interesting question. Apparel, historically, the month of December has not been a big month in interactive TV because the networks tend to pivot to electronics, food, and giftable items.
So.
It's an interesting question.
Apparel historically.
The month of December has not been a big month in interactive television because the networks tend to pivot to electronics food and giftable items.
So we don't expect.
Speaker 8: So we don't expect...
Any change in the product mix going into this into December.
Speaker 8: any change in their product mix going into December . And quite frankly, our brands were tracking ahead of
And quite frankly, our brands were tracking ahead of QVC overall results and apparel. If we didn't have the scheduling complex I think we would've been very very pleased with where we were in Q3 and now heading into <unk>.
Speaker 8: overall results in apparel. If we didn't have the scheduling conflicts, I think we would have been very, very pleased with where we were in Q3 and now heading into Q4. So that tells us that this
Q4.
So that tells us that.
This.
Speaker 8: There remains high demand for our products with the consumer. And of course, we are watching that carefully. People are making a lot of hard decisions about where they should be spending their money. But overall, we haven't seen anything quite yet. It's just, we need to deliver the talent to Westchester PA, which, as I said, we're working on.
There remains a high demand for our products with the consumer and of course, we are watching that carefully people are making a lot of hard decisions about where they should be spending their money.
But overall.
We haven't we haven't seen anything quite yet it's just we need we need to deliver the talent.
To Westchester PAA, which as I said, we're working on.
Great. Thanks for the color that's it for me.
Thanks Pat.
Speaker 1: Your next question comes from the line of Aaron Warwick of Breakout Investors. Your line is open.
Your next question comes from the line of Erin Warwick of breakout investors. Your line is open.
Hey, guys. Thanks for taking my call and I appreciate all that commentary sounds like some good things ahead.
Speaker 11: Hey, guys, thanks for taking my call and appreciate all that commentary. Sounds like some good things ahead. 1 of those, I imagine is your social commerce platform. Could you talk a little bit more about what your current thinking on that is in terms of when it's going to launch. What we should be looking for and what are what your expectations are, especially as we come up on the holiday shopping season. Yes, so, um.
Those I imagine easier social commerce platform can you talk a little bit more about what your current thinking on that is in terms of when it's going to launch what we should be looking for and what are what your expectations are especially as we come up on the holiday shopping season.
Yes.
<unk>.
We had <unk>.
Speaker 8: Completed everything we wanted to complete with the tech itself including building in for AI engines to recommendation engines one content filter to have the machines filter out negative content that Our brands participating on the marketplace can set their screening filters and a style chat
Complete it everything we wanted to complete with attack itself, including building in for AI engines.
Recommendation engines, one content filter.
To have the machines filter.
Negative content.
<unk>.
Our brands participating on the marketplace can set their screening filters.
And a style chat.
Bob and all of those are done and ready to go we expect that we will be conducting an investor day or perhaps.
Speaker 8: But, and all of those are done and ready to go. We expect that we will be conducting an investor day or perhaps at one of the conferences that we're scheduled to present at in December . We will provide the complete rollout plans and a detailed overview of the technology and its revenue model.
One of the conferences that were scheduled to.
Present that in December.
We will we will provide the complete rollout plans and.
A detailed overview of the technology.
Its revenue model.
Yes.
Okay. So looking at December timeframe for that and is that.
Speaker 11: Okay, so looking at December time frame for that and is that where you have, you had mentioned the supermodel before I think on the last call and is that for a specific brand or is that as part of the social commerce platform or both?
Where you have.
You had mentioned the Super model.
<unk> I think on the last call and is that a specific brand or is that as part of the social commerce platform or both.
Speaker 3: It's both. It's both. You know, we would expect all of our brands to be participating on the social commerce platform and then of course many third-party brands as well.
It's both it's both.
We would expect.
All of our brands to be participating on the social commerce platform none.
And then of course, many third party brands as well.
Yes.
Speaker 12: We hope to be able to make the announcement before the Christmas holiday about who that supermodel is. Of course, the planned launch is in March of 24, and HSN doesn't want to get too far out ahead of the launch.
<unk>.
We hope to be able to make the announcement before the Christmas holiday.
Nope.
Who that.
Super model is of course, the planned launch is in March 24, and HSN doesn't want to get too far out ahead of the launch.
The launch of wet in March 2024.
Speaker 3: the launch of our supermodel.
The launch it was ours our supermodel.
Oh, okay, Okay yeah.
Speaker 11: The final thing for me, I guess, is that you do have that $5 million available now. You're talking, you know, a lot of good things happening, expected to happen.
Final thing from me I guess is the.
You do have that $5 million available.
Available now.
You're talking a lot of good things happening expected to happen.
Speaker 11: in the fourth quarter and beyond, and even profitability next year. Has there been any thought given, especially at the current levels, to potentially stock buyback?
In the fourth quarter and beyond and even profitability next year.
Is there been any thought given especially.
At the current levels too.
Potentially stock buyback or anything like that.
Speaker 8: So the answer to that is yes, it is something that we're looking at carefully, and
So the answer to that is yes.
It is something that we're looking at carefully.
And.
I think we need to get a read on the launch.
Speaker 8: I think we need to get a read on the launch of the live stream platform.
Live streaming platform.
And.
Speaker 8: that will, to some extent, will guide us in.
That will to some extent.
We will guide us in.
Speaker 3: when and the size of some type of stock buyback program if we decide to.
When and and the size of some type.
Stock buyback program, if we decide to do that.
Speaker 11: I guess one more that came to mind here, if you don't mind.
I guess, one more that came to mind.
If you don't mind.
Speaker 11: There seemed to be quite a bit of heavy selling, way beyond what is normal. Is there any idea what was going on for about...
There would seem to be quite a bit of heavy selling.
And way beyond what is normal is there any any idea what was going on.
About a month or so.
Speaker 8: Yes, we when we acquired Halston.
Yes.
When we acquired Holston.
Speaker 8: from Coco and their partner, there was an indemnity bucket.
Cocoa and there they are partner there was an indemnity bucket.
Speaker 3: that was formed. The collateral in that indemnity bucket was shares of XL that were held by Hillcobb. And they settled.
That was formed the collateral and that indemnity bucket was shares of XL that were held by <unk>.
<unk> out.
They settled our litigation.
Speaker 8: and shares were sold to realize on the indemnity box.
Shares were still too to realize on the indemnity bucket and Thats. What it was that there was a lot of pressure on the stockpile that selling was happening.
Speaker 3: That's what it was. There was a lot of pressure on the stock while that selling was happening.
Speaker 11: Oh, okay. Well, that makes sense. So I mean that was price-insensitive essentially then, huh?
Oh, okay.
Makes sense.
Price insensitive to essentially then huh.
I mean, they just had to sell.
Speaker 11: Yes, that explains a lot. Okay, that's good to hear. I appreciate the commentary around that. Have a happy Thanksgiving, good holiday season, and look forward to the future here. Thank you. Sounds good. Thanks, Aaron.
Yes got it mathematics that explains a lot. Okay. That's good to hear I appreciate the commentary around that.
Happy Thanksgiving and holiday season, and look forward to the future here.
Thank you it sounds good thanks, Erin good morning happy holidays.
Speaker 1: Again, if you would like to ask a question, press star and the number one on your telephone keypad. Your next question comes from the line of Walter Schenker of Maz Partners. Your line is open.
Again, if you would like to ask a question press star and the number one on your telephone keypad. Your next question comes from the line of Walter.
Schenker of <unk> partners. Your line is open.
Speaker 13: Actually, my main question was just asked by Aaron, which is given an asset-like model and expectation of profitability, I second, not second, I would have asked the same question about a buyback, but as a holder, I think that's a very good use given the discount to asset value. But my question was asked and answered, so thank you anyway. Happy holidays. Thanks, Walter.
Actually my main question was just asked by Amarin, which has given an asset light model X.
The expectation of profitability.
I second that second <unk> asked the same question about buyback, but as a holder I think that's a very good use given the discount to asset value, but my question was asked and answered. So thank you anyway happy holiday.
Thanks, Paul.
Okay.
There are no further questions at this time I will now turn the call over to Bob to Lauren for some closing remarks.
Speaker 1: There are no further questions at this time. I will now turn the call over to Bob DeLoren for some closing remarks.
Thank you operator, ladies and gentlemen, thank you all for your time. This evening, we greatly appreciate your continued interest and support.
Speaker 8: Thank you, operator, ladies and gentlemen. Thank you all for your time this evening. We greatly appreciate your continued interest and support in Accel Brands, and as always, stay fit, eat well, and be healthy.
And XL brands and as always stay fit eat well.
Thanks.
This concludes today's conference call you may now disconnect.
Speaker 6: This concludes today's conference call, you may now disconnect. This concludes today's conference call, you may now disconnect. This concludes today's conference call, you may now disconnect.
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Okay.
Okay.
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Yeah.
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Yes.