Q1 2024 Xcel Brands Inc Earnings Call

Speaker Change: [music].

Okay.

Speaker Change: Welcome to XO brands first quarter 'twenty 'twenty four earnings conference call. Please be advised that production up did you call in whole or in part is not for me that'd be adult prior written authorization of excellent brands and as a reminder, this conference call is being recorded.

Now I'd like to turn the call over to Paul Kuntz from Red Chip Paul you may begin.

Operator: Good evening, everyone, and thank you for joining us. Welcome to the Xcel Brands first quarter 2024 earnings call. We greatly appreciate your participation and interest. With us on the call today are Chairman and Chief Executive Officer Robert DeLoren, Chief Financial Officer Jim Haran, and Executive Vice President of Business Development and Treasury Seth Burroughs. By now, everyone should have access to the earnings release for the quarter ended March 31st, 2024, which went out this evening.

Paul Kuntz: Good evening, everyone and thank you for joining us and welcome to the XL brands first quarter of 2024 earnings call. We greatly appreciate your participation and interest with us on the call today are chairman and Chief Executive Officer, Robert Demorest, Chief Financial Officer, Jim Haran, and executive Vice President of business development and Treasury Seth Burroughs.

Operator: And in addition, the company is filing with the Securities and Exchange Commission its quarterly report on Form 10-Q. The release and the quarterly report will be available on the company's website at www.xcelbrands.com. This call is being webcast, and a replay will be available on the company's investor relations website.

Paul Kuntz: Now everyone should have had access to the earnings release for the quarter ended March 31, 2024, which went out this evening and then in addition, the company is filing with the Securities and Exchange Commission. Its quarterly report on Form 10-Q today the release and the quarterly report will be available on the company's website at Www Dot XL brands Dot Com. This call is being webcast and a replay will be.

Paul Kuntz: Available on the company's Investor Relations website before we begin please keep in mind that this call will contain forward looking statements. All forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here. Today. These risk factors are explained in detail in the company's most recent annual report.

Operator: Before we begin, please keep in mind that this call will contain forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company's most recent annual report filed with the SEC. Xcel 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. The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time.

Paul Kuntz: <unk> 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 the dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time.

Operator: 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 EPS, 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 and to identify business terms relating to the company's results of operations. 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.

Paul Kuntz: 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 EPS 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 and to identify business trends relating to the company's results of operations, our management and leasing.

Paul Kuntz: 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 domestic provide supplemental information to assist investors in evaluating the company's financial results. These non-GAAP measures should not be considered in isolation or as alternatives to net income earnings per share or any other measures of financial performance calculated and <unk>.

Paul Kuntz: Presented in accordance with GAAP.

Operator: These non-GAAP measures should not be considered in isolation or as alternatives to net income, earnings per share, or any other measures of financial performance calculated and presented in accordance with GAAP. You may refer to the attachment to the company's earnings release or to Part 1, Item 2 of the Form 10-Q for reconciliation of non-GAAP measures.

Speaker Change: Refer to the attachment to the Companys earnings release score to part one item two of the Form 10-Q for a reconciliation of non-GAAP measures and now I'm pleased to introduce Robert Lauren Chairman and Chief Executive Officer, Bob. Please go ahead.

Operator: And now, I'm pleased to introduce Robert DeLoren, Chairman and Chief Executive Officer. Bob, please go ahead. Thank you.

Robert DeLoren: Thank you, Paul. Good evening, everyone, and thank you for joining us today.

Speaker Change: Thank you Paul and good evening, everyone and thank you for joining us today I'd like to start today's call with a brief update on our performance for the first quarter and then our outlook for the remainder of the year after that our CFO, Jim Haran will discuss our financial results in more detail.

Robert DeLoren: I'd like to start today's call with a brief update on our performance for the first quarter and then our outlook for the remainder of the year. After that, our CFO, Jim Haran, will discuss our financial results in more detail. As I have previously mentioned, with the discontinuance of all wholesale operations behind us, we have returned to a working capital life, core licensing business. We have made significant headway toward improving our financial performance and operating results. Our total revenues for the first quarter declined year over year given that this was our first quarter in several years with zero product sales from wholesale activities.

Speaker Change: As I have previously mentioned with the discontinuance of all wholesale operations behind US we have returns who were working capital Y core licensing business. We have made significant headway toward improving our financial performance and operating results. Our total revenues for the first quarter declined year over year.

Speaker Change: And given that this was our first quarter in several years with zero product sales from wholesale activities.

Robert DeLoren: Our licensing revenues were up across our brands except for our logo Lori Goldstein brand, which caused royalties to be flat. And our bottom line, on a non-GAAP basis, showed significant improvement. Our adjusted EBITDA for the quarter improved by almost 50% from the prior year quarter.

Speaker Change: Licensing revenues were up across our brands, except for our logo, Lori Goldstein brand, which cause royalties to be flat.

Our bottom line on non-GAAP on a non-GAAP basis showed significant improvement our adjusted EBITDA for the quarter improved by almost 50% from the prior year quarter as we continued to gain traction and accelerate in future quarters, we expect our licensing revenues to grow in our bottom.

Robert DeLoren: As we continue to gain traction and accelerate in future quarters, we expect our licensing revenues to grow and our bottom line results to continue to improve. We plan to launch our new brand, Tower Hill, by Christie Brinkley on HSN later this month, followed by the launch of additional categories of products outside of HSN starting this fall. To date, we have received strong interest from potential licensing partners for the brand across multiple categories, including footwear, handbags, beauty, and skin care. The Sea Wonder by Christian Siriano brand is performing well.

Speaker Change: Line result to continue to improve we plan to launch our new brand Tower Hill by Christy frankly on HSN. Later this month, followed by the launch of additional categories of products outside of HSN. Starting this fall to date, we have received strong interest from potential licensing partners for the brand across.

Speaker Change: Multiple categories, including footwear handbags beauty and skincare.

Speaker Change: The C wonder by Christian Siriano brand is performing well, we expect to see retail sales volume.

Robert DeLoren: We expect to see retail sales volume up to about $20 to $25 million annually in 2024. That's up 100% from last year's retail sales with a goal of over $50 million in 2025, including HSN and other retailers. We will launch additional new core categories in footwear and handbags in the spring of 2025. We also expect to announce the launch of another celebrity designer brand on HSN before the end of this year. We are working with JTV to offer a greater product assortment, including our Judith Ripka couture jewelry products both on air and on jtv.com.

Speaker Change: To about 20% to 25 million annually in 2024, that's up a 100% from last year as retail sales with the goal of over $50 million in 2025, including HSN than other retailers, we will launch additional new core categories in footwear and handbags in spring of 2025, we also.

Speaker Change: Back to announce the launch of another celebrity designer brand on HSN before the end of this year, we are working with J T V to offer greater product Assortments.

Speaker Change: Quoting our Judith Ripka mature jewelry products, both on air and on <unk> Dot Com. This has the potential to add over 50 million visitors to the Judith Ripka E Commerce business and allows for email marketing campaigns to an additional $2 1 million customers. We look forward to seeing strong sales momentum.

Robert DeLoren: This has the potential to add over 50 million visitors to the Judith Ripka e-commerce business and allows for email marketing campaigns to an additional 2.1 million customers. We look forward to seeing strong sales momentum carry forward through 2024 and 2025. As previously discussed, G3 is on schedule to launch Halston this fall, and we expect it to begin shipping shortly after the second quarter.

Speaker Change: Carry forward through 2024 and 2025.

Speaker Change: Previously discussed G. III is on schedule to launch Halston. This fall, we expect them to begin shipping shortly after the second quarter. We expect revenues from this license to begin to pick up later this year and grow strongly in 2025 and beyond.

Robert DeLoren: We expect revenues from this license to begin to pick up later this year and grow strongly in 2025 and beyond. Ormi Soft launched its video and social commerce marketplace approximately three weeks ago. The Ormi team is doing a great job building awareness for the app and onboarding premier brands. They are pleased with the results to date.

Speaker Change: For me soft launched its video and social commerce marketplace, approximately three weeks ago.

Speaker Change: Army team is doing a great job building awareness for the App and Onboarding Premier brands. They are pleased with the results to date as I. Previously mentioned this is a joint venture with a technology company in which <unk> owns a 30% interest in this.

Robert DeLoren: As I previously mentioned, this is a joint venture with a technology company in which Xcel owns a 30% interest in this new video and social commerce marketplace. We believe this marketplace has the potential to transform the video and social commerce markets in the U.S., and its growth potential is potentially virtually unlimited. Based on all of the progress with Project Fundamentals, our strategic plan to get Xcel back to what made us successful over the years, and the organic growth in our brands, we expect to return to profitability in 2024.

Speaker Change: Video and social Commerce marketplace. We believe this marketplace has the potential to transform the video and social commerce.

Speaker Change: Markets in the U S and its growth potential potentially is virtually unlimited based.

Speaker Change: Based on all of the progress with project fundamentals, our strategic plan to get <unk> back to what made us successful over the years.

Speaker Change: And the organic growth in our brands, we expect to return to profitability in 2024, I should note that our logo Lori Goldstein business was softer than expected in Q1 of 2024 caused by continued scheduling conflicts with talent, we continue to work with QVC and our on air.

Robert DeLoren: I should note that our Logo Lori Goldstein business was softer than expected in Q1 of 2024, caused by continued scheduling conflicts with talent. We continue to work with QVC and our on-air talent to reach a resolution for this. This includes identifying additional on-air guests to support the business or a satisfactory disposition of the brand. Additionally, we are working on launching a robust pipeline of new brands on QVC and HSN and other potential business opportunities as we seek to ensure continued growth in our core live stream interactive TV business. And now, I'd like to turn the call over to Jim to discuss our families in other lives.

Speaker Change: Talent to reach a resolution for this.

Speaker Change: This includes identifying additional on our guests to support the business or a satisfactory.

Speaker Change: Position of the brand also we are working on launching a robust pipeline of new brands on QVC and HSN and other potential business opportunities as we seek to ensure continued growth in our core live stream interactive television business and now I'd like to turn the call over to Jim to discuss our fan.

James F. Haran: So otherwise.

James F. Haran: Jim.

James F. Haran: Thanks, Bob, and good evening, everyone. I will now briefly discuss our financial results for the quarter ended March 31st, 2024. Total revenue for the first quarter of 2024 was $2.2 million, representing a decrease of approximately $3.9 million from the first quarter of 2023. This decline was almost entirely driven by a decrease in net product sales to zero, resulting from our exit from all wholesale operating businesses as part of our Project Fundamentals plan in 2023 and 2024.

James F. Haran: Thanks, Bob and good evening, everyone I will now briefly discuss our financial results for the quarter ended March 31 2024.

James F. Haran: Licensing revenue was approximately $2.2 million in both the current quarter and the prior year quarter. Licensing revenue was up across our brands, except for the Lori Goldstein brand, which caused royalties to be flat. Our direct operating costs and expenses were $4 million for the current quarter, down by $3 million, or 43% from $7 million in the prior year quarter. This decrease was mainly attributable to the discontinuance of all wholesale and e-commerce activities in 2023, which included reductions in staffing levels as well as related reductions in other overhead costs.

James F. Haran: Total revenue for the first quarter of 2020 flow was $2 2 million, representing a decrease of approximately $3 9 million from the first quarter of 2023.

James F. Haran: This decline was almost entirely driven by the decrease in net product sales to zero, resulting from our exit from all wholesale operating businesses as part of our project fundamentals planned in 2023 and 2024.

James F. Haran: Licensing revenue was approximately $2 2 million in both the current quarter in the prior year quarter.

James F. Haran: License fee revenue was up across our brands, except for the Lori Goldstein brand, which caused royalties to be flat.

James F. Haran: Our direct operating cost and expenses were $4 million for the firm for the current quarter.

James F. Haran: Down by $3 million or 43% from $7 million in the prior year quarter.

James F. Haran: This decrease was mainly attributable to the discontinuance.

For wholesale and e-commerce activities in 2023, which included reductions in staffing levels as well as related reductions and other overhead costs.

James F. Haran: With the project fundamental initiative substantially completed last year, going forward, we expect our average direct operating costs to be less than $4 million per quarter. Overall, we had a net loss excluding non-controlling interest for the current quarter of approximately $6.3 million, or minus $0.31 per share, compared with a net loss of $5.6 million, or minus $0.29 per share, in the prior year quarter. The current quarter's net loss includes a non-cash operating cost of $2.3 million due to asset impairment charges relating to our successful exit and subleasing of our prior office space as part of Project Fundamentals.

James F. Haran: With the project fundamental initiatives substantially completed last year going forward, we expect our average direct operating costs to be less than $4 million per quarter.

James F. Haran: Overall, we had a net loss excluding noncontrolling interest for the current quarter of approximately $6 3 million or minus 31 per share compared with a net loss of $5 6 million minus <unk> 29 per share in the prior year quarter.

James F. Haran: Current quarters net loss included noncash operating costs of $2 3 billion.

James F. Haran: Due to asset impairment charges relating to our successful.

James F. Haran: And sub leasing.

James F. Haran: Office space is part of the project fundamentals.

James F. Haran: On a non-GAAP basis, we had a net loss for the quarter of $1.8 million, or minus $0.09 per share, which represents a roughly 50% improvement from the non-GAAP net loss of $3.6 million, or minus $0.18 per share, in the first quarter of 2023. Now that we have right-sized our core structure, our non-GAAP net income should continue to improve in future periods as licensing revenues are projected to grow. Finally, adjusted EBITDA was negative 1.6 million for the current quarter, representing a year-over-year improvement of 1.6 million, or approximately 50 percent from the negative 3.2 million EBITDA in the prior year quarter.

James F. Haran: On a non-GAAP basis, we had a net loss for the quarter of $1 8 million or <unk>.

James F. Haran: <unk> nine per share, which.

James F. Haran: Which represents roughly 50% improvement from the non-GAAP net loss of $3 6 million or minus <unk> 18 per share in the first quarter of 2023 now.

Now that we right size our cost structure, our non-GAAP net income should continue to improve in future periods as licensing revenues are projected to grow.

James F. Haran: Finally, adjusted EBITDA was negative $1 6 million for the current quarter.

James F. Haran: Representing a year over year improvement of $1 6 million or approximately 50% from the negative $3 2 million EBITDA in the prior year quarter.

James F. Haran: With our new core structure in place and projected revenue growth, management anticipates achieving positive EBITDA later this year. Once again, I would like to take this opportunity to remind everyone that non-GAAP mid-income, non-GAAP diluted EPS, and adjusted EBITDA are non-GAAP undefined terms. Our earnings press release and Form 10-Q present a reconciliation of these items with the most directly comparable GAAP measures.

James F. Haran: With our new cost structure in place and projected revenue growth management anticipates achieving positive EBITDA later this year.

James F. Haran: Once again I would like to take this opportunity to remind everyone. The non-GAAP net income non-GAAP diluted EPS and adjusted EBITDA are non-GAAP unaudited terms.

James F. Haran: Earnings press release and Form 10-Q presents a reconciliation of these items with the most directly comparable GAAP measures.

James F. Haran: Now, turning to our balance sheet and liquidity. As of March 31st, 2024, the company had total cash and cash equivalents of approximately $2.3 million, of which $0.7 million was restricted. Our net working capital, excluding the current portion of lease obligations and deferred revenue, was approximately $2.1 million, which we believe is adequate and appropriate under our current licensing plus working capital light business model. Since executing our Project Fundamentals Plan, our cash usage has decreased significantly and is projected to continue to improve with the launch of Halston by G3 this fall, the launch of Tower Hill by Christie Brinkley later this month, and continued growth in our Sea Wonder and Juice Bricka licensing businesses.

Now turning to our balance sheet and liquidity.

James F. Haran: As of March 31, 2020, the company had total cash and cash equivalents of approximately $2 3 million of which $27 million was restricted.

James F. Haran: Our net working capital excluding the current portion of lease obligations and deferred revenue was approximately $2 1 million, which we believe is adequate and appropriate under our current licensing plus working capital light business model.

Since you since executing our project fundamentals plan, our cash usage has decreased significantly and is projected to continue to improve with the launch of halston by G. III. This fall the launch Tower Hill by Christie Brinkley later this month and continued growth in our C Wonder in June.

James F. Haran: Sensing businesses.

James F. Haran: In March 2024, we did a small common stock offering for net proceeds of approximately $2 million. This recent capital raise, combined with our current working capital position, lower operating costs, and balance sheet borrowing capacity, provides us with adequate liquidity to meet our obligations as they become due while growing our business. And with that, I would like to turn the call back over to Bob. Thank you, Jim.

James F. Haran: In March 2024, we did a small common stock offering with net proceeds of approximately $2 million.

James F. Haran: This recent capital raise combined with our current working capital position lower operating costs and balance sheet borrowing capacity provides us with adequate liquidity to meet our obligations.

James F. Haran: Some do while growing the business.

Speaker Change: And with that I would like to turn the call back over to Bob Bob.

Robert DeLoren: Thank you, Jim. Ladies and gentlemen, this concludes our prepared remarks. Operator.

Thank you, Jim Ladies and gentlemen, this concludes our prepared remarks operator.

Speaker Change: Yeah.

Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening through a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue, and your first question comes from the line of Michael Kupinski with Noble Capital Markets.

Speaker Change: We will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question. Thank you Brett sorry, one again, if you are called upon to ask your question and are listening by a loud speaker on your device. Please speak up.

Your handset and ensured that your phone is on mute when asking your question.

Chris: Again, Chris I wanted to join the queue.

Speaker Change: And your first question comes from the line of Michael Lupinski with noble capital markets.

Michael A. Kupinski: Thank you for taking my questions and good afternoon. First of all, can you talk a little bit about Lori Goldstein and how much does that brand account for your total licensing revenue, maybe in the latest quarter and for the full year 2023? And then finally, can you talk a little bit about what you mean by options for a satisfactory disposition of the brand as a prospect there? What do you mean by that? Okay.

Michael A. Kupinski: Taking my questions and good afternoon.

Michael A. Kupinski: First of all can you talk a little bit about Lori Goldstein and how much does.

Speaker Change: <unk> brand account for your total licensing revenue maybe in the latest quarter and for the full year 2023, and then finally can you talk a little bit about what you mean by options for a satisfactory disposition of the brand as a prospect there what do you mean by that okay. So.

Robert DeLoren: Okay, so the Lloyd Goldstein brand, Michael, generates about $5 million in top-line royalties. And because there's an earn out there with a contingent obligation that's booked on the balance sheet of about $5 million, the way the deal works is there's a sweep. It doesn't contribute a lot of cash flow to us.

Speaker Change: Lori Goldstein brand, Michael generates about $5 million in topline royalties.

And because there is an earn out there with a contingent obligation that's booked on the balance sheet of about $5 million. The way. The deal works is there's a sweep it doesn't contribute a lot of cash flow to us.

Robert DeLoren: And we've been concerned about trends in the business and some of the complications of logistics for Lori herself now having moved to Palm Springs and being able to get to Westchester, Pennsylvania, to give us the time that we need to really drive the sales. Everyone is working through it. We are all doing whatever is necessary under the circumstances to keep the flow in the business as good as we can because no one wants to create any issues for QVC with the business. And part of the negotiations is that perhaps we would sell the brand back to Lori under satisfactory terms and conditions, and we're exploring all of that now in good faith on both sides.

Speaker Change: And we've been concerned about trends in the business and some of the.

Speaker Change: Complications.

Speaker Change: Hmm.

Speaker Change: Logistics for Lori herself now, having moved to Palm springs, and being able to get to.

Speaker Change: Westchester, Pennsylvania to give us the time that we need to really drive the sales.

Speaker Change: We've been challenged by that everyone is working through it.

Speaker Change: We are.

Speaker Change: We are all doing whatever is necessary under the circumstances to keep the flow in the business as good as we can because no one wants to.

Speaker Change: To create any issues for PVC with the business.

Speaker Change: Part of the negotiations are perhaps.

Speaker Change: We would sell the brand back to Lori under satisfactory terms and conditions and we're exploring all of that now in good shape on both sides.

Robert DeLoren: Thank you. And then in terms of the launch of Halston, obviously a big event for the company and a key factor to your swing toward profitability, you indicated that the shipping of the product would be after the second quarter. Was there a little slippage in the timing of that? No, I don't think so.

Speaker Change: Thank you and then in terms of the launch of our Halston, obviously, a big event for the company and a key factor to your swing towards profitability you indicated that the shipping of the product will be after the second quarter was there a little slippage in that timing of that Idaho, I don't think so.

Robert DeLoren: We anticipated initially when we signed the license with G3 that they would be launching in spring, but they pushed it out to fall. They simultaneously launched apparel, footwear, and handbags, get it all, for the spring launch. They may have already begun shipping some goods. We have. Gotcha. And then, can you talk a little bit about Christie Brinkley, the brand there, in terms of the number of SKUs that you'd be launching initially, that sort of thing?

Speaker Change: <unk>.

Speaker Change: Initially when we signed the license with G III that they would be launching in spring.

Speaker Change: But they pushed it out to fall.

Speaker Change: Because they are simultaneously launching apparel footwear and handbags and they just couldnt get it altogether for the spring launch. They may may have already begun shipping some goods. We haven't received any shipping reports and then yeah.

Speaker Change: Got you and then can you talk a little bit about Christie Brinkley the brand there.

Speaker Change: In terms of the number of Skus that you'll be launching that initially that sort of thing.

Robert DeLoren: So, the Christie launch is a full apparel collection. And that launches next week. We have a big press event that will hit simultaneously with the launch of the show. Christy was fantastic in the photo shoot for it. And it will be tops, bottoms, sweaters, a full collection in apparel. And we are working now across multiple categories, including bags, shoes, accessories, skin care, beauty, and possibly fragrance.

Speaker Change: So christy launches a full apparel collection.

Speaker Change: And as that launches next week.

Speaker Change: We have a big press event.

Speaker Change: That will hit simultaneously with the launch of the show Christy was fantastic.

Speaker Change: And the photo shoot for it.

Speaker Change: And it will be tops bottoms sweaters.

Speaker Change: Full collection and apparel.

Speaker Change: We're working now across multiple categories.

Speaker Change: For bags shoes accessories skin.

Speaker Change: Skin care beauty.

Speaker Change: And and.

Speaker Change: And possibly fragrance.

Michael A. Kupinski: Gotcha. Final question. I'm sorry for so many. Can you give us an update on the number of vendors for Army at this point and any particular update on when you might move towards a full-scale launch?

Speaker Change: Got you and final question I'm, sorry for so many can you give us an update on the number of vendors for army at this point in any particular update on.

Speaker Change: And you might move towards full scale launch.

Robert DeLoren: So, as far as we know from ORMI, the pipeline of vendors now is between three to five per week coming on board. We just onboarded Ankline. That will be the first of the WHP brands, and we're working with them to analyze which of their brands really works, given their model as a licensing company. They don't operate most of the e-com sites. And then we expect other major brands to come on board as well over the next 30 days.

Speaker Change: As far as we know from army.

Speaker Change: The pipeline of vendors now is between three to five per week coming on we just on boarded and Cline.

Speaker Change: That will be the first of the <unk> brand.

Speaker Change: And we're working with them to analyze which of their brands really works given their model as a licensing company they don't operate.

Speaker Change: Most of the E com site.

Speaker Change: And then we expect other major brands to come on as well over the next 30 days.

Michael A. Kupinski: Perfect. That's all I have for now. Thank you.

Speaker Change: Perfect. That's all I have for now thank you.

Speaker Change: Michael.

Operator: Your next question comes from the line of Anthony Lebiedzinski with SIDOT.

Anthony Chester Lebiedzinski: Your next question comes from the line of Anthony <unk> with Sidoti.

Anthony Chester Lebiedzinski: Good afternoon, and thank you for taking the questions. So first, I just wanted to follow up on Lori Goldstein. So, Bob, I know you talked about the continued scheduling conflicts. But it sounds like it was meaningful for the quarter as the other brands were up. So any way you can quantify it, take a stab at trying to share, like, you know, how much you think this was – how much this impacted your top line?

Speaker Change: Good afternoon, and thank you for taking the questions.

Speaker Change: So first just wanted to follow up on the Lori Goldstein.

Bob Bob: So Bob I know you talked about the continued scheduling conflicts it sounds like it was.

Speaker Change: Earnings call for the quarter as the other brands were up so.

Speaker Change: Any way you could quantify I take a stab at trying.

Speaker Change: China's share like how much.

Speaker Change: Do you think this was how much this impacted your top line.

Robert DeLoren: So we won't know for this year until and unless we reach a settlement agreement with Lori. We are close. I think it's in good shape. Everyone's been acting in good faith. Obviously, we'll have the first half of the year, just because of timing, to get anything done with Lurie, but I think based on where we are in the discussions, it'll be good for us, and the shareholders, and good for Lori. That's where we are.

Speaker Change: So we won't know for this year, but until we.

Speaker Change: Until and unless we reach a settlement agreement with Laurie.

Speaker Change: We are close.

Speaker Change: Inc.

Speaker Change: It's in good shape everyone's been acting in good faith, obviously, we will have the first half of the year.

Speaker Change: Hmm.

Speaker Change: Just because of timing to get anything done with Laurie.

Speaker Change: But I think.

Speaker Change: Based on where we are in the discussions it it'll be good for us.

Speaker Change: And the shareholders and good for Lori.

Speaker Change: That's where we are.

Anthony Chester Lebiedzinski: Gotcha. Okay. All right. So, and this sounds like, from a cash flow perspective, it's not overly meaningful, so it doesn't really... take away from your goals?

Speaker Change: Okay Alright.

Speaker Change: And it sounds like from a cash flow perspective, it's not overly meaningful so it doesn't really.

Speaker Change: Let's take away from your goals.

Robert DeLoren: No, it's not. And with all the things that we have coming on, you know, with the business doubling and C. Wunder and Holson getting launched, Kirstie getting launched, other things we have in the pipeline. Because this wasn't a big cash flow contributor, we're happy with where we are in the negotiations with Lurie.

Speaker Change: And with with all the things that we have coming on.

Speaker Change: The business doubling in <unk> and <unk>.

Speaker Change: C Wonder.

Speaker Change: Halston and getting launched Christie getting launched other things we have in the pipeline.

Speaker Change: This wasn't a big cash flow contributor.

Speaker Change: We're happy with where we are in negotiations with Laurie.

Anthony Chester Lebiedzinski: Gotcha. Okay. And then, you know, in terms of profitability for this year, I think you said that you expected to be positive EBITDA later this year. So do you mean for one of the quarters later this year, or do you think you'll be positive EBITDA for the full year? I just wanted to get a little bit more clarification on that.

Speaker Change: Gotcha Okay.

Speaker Change: And then in terms of profitability for for this year.

Speaker Change: You said that you would expect to be positive EBITDA. Later this year. So do you mean for one of the quarters. Later this year or do you think youll be positive EBITDA for the full year, just wanted to get a little bit more clarification in terms of that.

Robert DeLoren: I think it will depend quarter by quarter and, quite frankly, how fast we see the ramp up in the G3 license. But we expect for the full year it will be positive. And coming into Q3 and Q4, that's when we're going to see that pickup, because that's really when G3 starts to ramp up.

I think.

Speaker Change: It will depend quarter by quarter and quite frankly, how fast.

Speaker Change: We see the ramp up and the G three license.

Speaker Change: But we expect for the full year will be positive and coming into Q3 and Q4, that's when we're going to see that pickup because that's really when G. III starts to ramp.

Anthony Chester Lebiedzinski: So G3, will it start already in July, or are we talking about later in the quarter? Like, what's the timing, so we just have a better understanding as to how the business will flow as the year progresses?

Speaker Change: So in Q3 will it start already in July or are we talking about later in the quarter like whats the timing. So we just have a better understanding.

Speaker Change: And that's how the business will flow as this quarter.

Speaker Change: As the year progresses, I'm sorry, yes.

Operator: I'm sorry.

Robert DeLoren: Yeah, they should be shipping now, so we're going to wait for them to send us their shipping reports, but to get in for Paul, shipping is starting now.

Speaker Change: They should be shipping now so.

We're going to wait for them to send to us they're shipping report, but to get in for Paul shipping is starting now.

Anthony Chester Lebiedzinski: Okay. Gotcha. Good. So, it sounds like as the year progresses, each quarter should be better from both a top line and bottom line perspective. Is that fair to say?

Speaker Change: Okay got you so it sounds like as the year progresses progresses, each quarter should be better from both a.

Topline and bottom line perspective is that fair to say, that's how we see it unless there's an adjustment for Lori topline may change, but.

Robert DeLoren: That's how we see it. Unless there's an adjustment for Lori, the top line may change, but we believe the bottom line and cash flow will be better.

Speaker Change: We believe bottom line and cash flow will be better.

Anthony Chester Lebiedzinski: Okay, that's very encouraging. And then, you know, in terms of OrbMe, you talked about onboarding, you know, three to five per week. Do you think that perhaps could maybe accelerate as the year progresses as well? Or do you think that's the pace that, you know, you'll be happy with if you could continue with that? No.

Speaker Change: Okay, that's very encouraging.

Speaker Change: In terms of or me.

Speaker Change: You talk about on boarding three to five per week do you.

Speaker Change: I think that perhaps could maybe accelerate.

Speaker Change: As the year progresses, as well or do you think thats the pace that.

Speaker Change: You'll be happy with 50 could continue with that no I think it will accelerate for me has been hiring staff.

Robert DeLoren: No, I think it will accelerate. Orme's been hiring staff, BizD people, and we're helping them with the bigger brands, making contacts for them. But they're staffing up, and they're beginning to really operate.

Speaker Change: Does the people and we're helping them with the bigger brands, making contacts for them.

Speaker Change: But they're staffing up and beginning to really operate.

Anthony Chester Lebiedzinski: Gotcha, okay. So, I mean, and you did, I guess my last question here, so you did a small capital raise during the quarter. Do you think, given the state of business, that you should be all set, or do you project any other issues?

Speaker Change: Got you okay. So.

Speaker Change: You did.

Speaker Change: I guess my last question here. So you did a small capital raise during the quarter.

Do you think given the state of business that you should be all set or you do.

Speaker Change: Do you project any other.

Speaker Change: Capital raises.

Robert DeLoren: I think we're good for now. That's where we are. And unless there's some kind of transaction where we have a need for cash, I don't. I don't foresee us doing another equity deal unless there's a need for the capital to affect the transaction.

Speaker Change: I think we're good for now.

Speaker Change: And given where we are.

Speaker Change: And unless there is some kind of transaction that we have a need for cash.

Speaker Change:

Speaker Change: I don't foresee us doing another equity deal unless isn't there is a need for the capital to affect that transaction.

Anthony Chester Lebiedzinski: Got it. Very good. All right. Well, thank you, gentlemen, and best of luck.

Speaker Change: Got it very good alright, well, thank you gentlemen, and best of luck.

Anthony: Okay. Thank you Anthony.

Anthony: Yeah.

Operator: Again, if you would like to ask a question, press star and then the number one on your telephone keypad. And your next question comes from the line Howard Brous with Wellington Shields.

Speaker Change: Again, if you would like to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: And your next question comes from the line of Howard Brows with Wellington Shields.

Howard Brous: So a couple of questions that I have been asked, but not in the depth that I'd like them, or me. How many companies have you signed up, and can you give us some sense of the names that have signed up?

Howard Brous: So a couple of questions that I have been asked but not in the desert sunlight or me.

Howard Brous: How many companies have you signed up and can you.

Howard Brous: Give us some sense of names.

Howard Brous: That have signed up.

Robert DeLoren: So... Howard, one, we don't have, you know, daily reports on Morme. Remember, we own 30% of that company. We've invested in it. Morme is a private company.

So.

Howard Brous: Howard.

Speaker Change: One we don't have daily reports some army.

Speaker Change: We own 30% of that company.

Robert DeLoren: And they share some information, but not all information, with us. What I can see coming through is they're adding three to five brands per week now to their pipeline. And, of course, as brands come on board, then they email those customer databases and recruit users for the app. And at some point, Army will do its own capital raise and then report accordingly, so that we all have a little more visibility into the Army business. But there are some things that they're just not reporting on.

Speaker Change: <unk> invested in its armies of private company.

Speaker Change: And they share.

Speaker Change: Some information, but not all information with us what I can see.

Speaker Change: <unk> coming through as they're adding three to five brands per week now to their pipeline and of course as brands come on then the email those customer databases.

Speaker Change: And recruit users for the App.

Speaker Change: And at some point or me.

Speaker Change: We will do its own capital raise and then report accordingly, so that we all have a little more visibility into the into the army business, but there are some things that they're just not reporting on.

Howard Brous: Do you not know how many brands have signed up already?

Speaker Change: How many brands have signed up already.

Robert DeLoren: Nine are on, and there's about another nine in the pipeline. The biggest one that was just put on is Amclon.

Speaker Change: Nine are on and there is about another 9% in the pipeline.

Speaker Change: The biggest one that was just put on as an end client.

Speaker Change: Yeah.

Howard Brous: So looking at G3, and the minimum is basically guaranteed to you. I'm looking at, if you will, next year's numbers. Is it fair to say that...

Speaker Change: So looking at G III and the minimum base basically guaranteed.

Speaker Change: Thank you.

Speaker Change: I'm looking at.

Speaker Change: If you will next year's numbers.

Speaker Change: Uh huh.

Speaker Change: Is it fair to say that.

Speaker Change: Okay.

Robert DeLoren: The EBITDA number certainly, and the direction it is going in, is increasing significantly. And can you comment on what people are looking for in terms of EBITDA for next year? And the estimate out there is, call it, 11 million.

Speaker Change: The EBITDA number certainly directionally is increasing significantly.

Speaker Change: Could you comment on what people are looking for in terms of EBITDA for next year, and we estimate out there is call it $11 million.

Robert DeLoren: well as the catalyst for top-line Ibida, R. Halston, T. Wanderer, and Kristen going into next year. Cwunder is doing incredibly well.

Speaker Change: Hello.

Speaker Change: The catalyst for topline.

Speaker Change: EBITDA.

Speaker Change: Our halston and C wonder.

Speaker Change: And Christy.

Speaker Change: Going into next year.

Robert DeLoren: It did $12.9 million in 2023. It's planned at approximately $25 for this year. We believe it could hit $50 next year based on the trend that it's on and the release now of handbags and footwear and some other licensed categories. And Christie, we believe, just has tremendous potential.

Speaker Change: <unk> is doing incredibly well it did $12 9 million and 23.

Speaker Change: As planned.

Speaker Change: Approximately 25 for this year.

Speaker Change: We believe it could hit 70 next year based on the trend that it's on it in the release now handbags and footwear and some other licensed categories.

Speaker Change: Christy we believe just has tremendous potential there is another transaction that we will be.

Robert DeLoren: There is another transaction that we will be executing on with HSM this year. It'll come in... the latter part of Q3, possibly the beginning of Q4 for the holiday season. And those will be the catalyst for revenue. And, of course, Judith Repka continues to do well with JTV. They have decided to move all of the full-priced product to JTV.com, which exposes that product to another 50 million unique visitors per year on Jewelry TV and gives us access to millions of customers for the Judith Repka e-commerce business that they're running.

Speaker Change: Executing on with HSN this year it will come in.

Speaker Change: Latter part of Q3, possibly the beginning of Q4 for holiday season.

Speaker Change: And those those will be the catalyst for revenue and of course, Judith Ripka continues to do well with J T V.

Speaker Change: They have decided to move all of the full priced product.

Speaker Change: <unk> <unk> dot com, which exposes that product to another 50 million unique visitors per year on jewelry television.

Speaker Change: And gives us access to millions of customers for the juice, our e-commerce business that theyre running.

Robert DeLoren: So we're excited about what JTV is doing with Judith Repka, and that will be the catalyst for growth. We do have other brands that we anticipate that we will be launching going into next year that could be immediate drivers of revenue. And we look forward to announcing those as we get closer to finalizing.

Speaker Change: Where we're excited about what <unk> is doing with Judith Ripka.

Speaker Change: And those will be the catalyst for growth we do have other.

Speaker Change: Brands that we anticipate that we will be launching.

Speaker Change: Going into next year that could be immediate drivers of revenue.

Speaker Change: We look forward to announcing those.

Speaker Change: As we get closer to finalizing.

Howard Brous: So is it fair to say the estimate for EBITDA for next year is how conservative? Let me ask it that way.

Speaker Change: So is it fair to say the estimate for EBITDA for next year.

Speaker Change: How concerned or let me ask it that way.

Robert DeLoren: Well, we're standing behind the estimates that are out there, Howard, based on what we see in the pipeline and the business.

Speaker Change: We are standing behind the estimates that are out there.

Speaker Change: Based on what we see in the pipeline in the business.

Howard Brous: So effectively, you're selling one and a half times EBITDA for next year. Is that a fair comment?

Speaker Change: So effectively you are selling at one five times EBITDA for next year.

Speaker Change: That's a fair comment.

Speaker Change: That's.

Speaker Change: It seems.

Robert DeLoren: [inaudible] teams, reasonable when you think about where that EBITDA can be.

Speaker Change: Reasonable when you when you think about where that EBITDA could be yes.

Howard Brous: That's all I have. Thank you. Good luck, Bob.

Speaker Change: That's all I have thank you good luck Bob.

Bob Bob: Thank you.

Operator: Your last question comes from the line of Michael Kupinski with Noble Capital Markets.

Speaker Change: Your last question comes from the line of Michael Lupinski with <unk> capital markets.

Michael A. Kupinski: Hi, thanks. I'm sorry.

Speaker Change: Alright, Thanks, I'm, sorry, just one quick follow up Bob in terms of the New brand you hope to launch you said that I believe it's might be featured on HSN.

Robert DeLoren: Just one quick follow-up, Bob. In terms of the new brand you hope to launch, you said that I believe this might be featured on HSN. Will this be in a – can you give us any additional color on that, whether or not it's an apparel brand, or will it also be streaming? Can you just kind of give us a little additional color there? Sure. And maybe even some thoughts about how much revenue it might, you know, generate this year. So it is.

Michael A. Kupinski: Can you give us any additional color on that whether or not it's a apparel brand or will it also be streaming can you just kind of give us a little additional color there and maybe even some thoughts about how much revenue.

Michael A. Kupinski: Generate this year.

Robert DeLoren: So, it is an apparel brand, and it is with a celebrity designer. We don't think it will contribute much this year, Michael, just because of when it's launching, but it will be a contributor coming into 2025, you know, just based on timing where we are now. It does look like the holiday is when it will get out, but we're excited.

Bob Bob: It is.

Brian: And apparel, Brian and it is with a celebrity designer.

Speaker Change: We don't think it'll contribute much this year.

Michael A. Kupinski: Michael just because when it's launching.

Michael A. Kupinski: But.

Michael A. Kupinski: It will be a contributor coming into 'twenty five.

Michael A. Kupinski: Based on timing, where we are now.

Michael A. Kupinski: It's a great opportunity, great designer, great product, and we're not making that product for a licensee who's doing it. Man, our goal is to do more of these at HSN, where each of these brands could be 30 to 50 million in volume on each sale. That's the goal. Thank you.

Michael A. Kupinski: It does look like holiday is one that we will get out but were excited it's a great opportunity great design a great product.

Michael A. Kupinski: We're not making that promise a licensee who is doing it.

Michael A. Kupinski: It's been our goal.

Michael A. Kupinski: Is to do more of these at HSN.

Michael A. Kupinski: Where.

Michael A. Kupinski: Each of these brands could be $30 million to $50 million in volume on HSN. That's the goal.

Michael A. Kupinski: So.

Michael A. Kupinski: Perfect. Well, good luck with that. Thank you. That's all I have.

Speaker Change: Perfect well good luck with that thank you that's all I have thank you.

Operator: There are no further questions at this time. I will now turn the call back over to Mr. DeLoren for closing remarks.

Speaker Change: There are no further questions at this time I will now turn the call back over to Mr. Randy <unk> for closing remarks.

James F. Haran: Just, just, Bob, Bob, before you begin. Yes. I just want to let everyone know that we had some technical difficulties getting our earnings release out. I have just been informed that they have fixed them, and the release should be going out momentarily. We did file our 10-Q earlier this afternoon, so apologies for having that release not issued prior to the call. So I just want to let everyone know we had technical issues with the release, but at least now it's fixed, so sorry about that.

Speaker Change: Just about that before you begin.

Speaker Change: Yes.

Speaker Change: I just wanted to let everyone know that we had some technical difficulties getting our earnings release out I was just informed that they fixed them into really shouldnt going out momentarily. We did file our 10-Q earlier. This afternoon, so apologies to having that release issued prior to the call.

Speaker Change: We had technical issues with the with the.

Speaker Change: With the.

Speaker Change: The relation.

Speaker Change: At least now expects so sorry about that.

Robert DeLoren: Okay, so thank you, Jim. Ladies and gentlemen, thank you for your time this evening. We greatly appreciate your continued interest and support in Xcel Brands. As always, stay fit, eat well, and be healthy. Ladies and gentlemen, that does conclude our conference call for today. You may all disconnect.

Speaker Change: Okay.

James F. Haran: Thank you, Jim ladies and gentlemen, thank you for your time. This evening, we greatly appreciate your continued interest and support in XL brands.

James F. Haran: It states that eat well and be healthy.

Operator: Ladies and gentlemen, that does conclude our conference call for today. You may all disconnect, and thank you for participating.

James F. Haran: Ladies and gentlemen that does conclude our conference call for today you may all disconnect and thank you for participating.

James F. Haran: Yes.

James F. Haran: Yeah.

James F. Haran: [music].

Operator: and more

James F. Haran: Yeah.

James F. Haran: Okay.

James F. Haran: Okay.

James F. Haran: Okay.

James F. Haran: Okay.

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James F. Haran: Yes.

James F. Haran: [music].

James F. Haran: Okay.

[music].

James F. Haran: Yeah.

James F. Haran: [music].

Okay.

James F. Haran: Yeah.