Q3 2024 Plby Group Inc Earnings Call

on the SEC's website and PLBY Group's website.

Today's call is also being webcast and a replay will be posted to the company's investor relations website. Please note that statements made during this call including financial projections or other statements that are not historical in nature may constitute forward-looking statements.

Overlooking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecasts, including those risks set forth in the company's filings with the SEC, and you should refer to and carefully consider those for more information.

This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements.

During this call, the company may refer to non-GAAP financial measures. Such non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

Ben: I'd now like to turn the call over to Ben before we begin the Q&A session. Ben.

Ben: Thanks, Matt, and thanks, everyone, for joining us today. Before we get into Q&A, I'd like to quickly review a few of the key developments that we have achieved during the third quarter and in the last couple of weeks.

Ben: And just this week we have restructured our debt, something that we have talked about previously through an exclusivity period with our lenders, where we have realized on a senior debt basis a 66 million dollar discount.

Ben: on the senior debt. With that, we have issued a new $28 million convertible preferred to our lenders, so the net reduction is $38 million in leverage.

The Convert is convertible at our option.

Ben: at any time in cash or in stock at the 5D BWAP.

Ben: to convert it. If the stock were over $4.50, we would always have the option to pay in cash or redeem in stock. And we think the combination of the cash on our balance sheet is the best way to do it.

Ben: and the significant reduction in debt that we have achieved puts us on a much more stable financial footing moving forward.

Speaker Change: We're excited and continuing to work on the strategic deal. We talked about the non-binding LOI. We have signed with FIBORG, and we expect to close that before year-end. And with that, Matt, I will open it up to questions.

Speaker Change: Great, thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker Change: Operator, we do have questions that are submitted via email in advance, and I'd like to go ahead and read those now. Yep, absolutely.

Speaker Change: So we have questions from James Heaney from the research team at Jopry's. Ben James asks, as we

Speaker Change: As we look to 2025, what kind of driver should we expect the Playboy magazine to be? What are the key reasons you've decided to relaunch the magazine?

Sure, so...

Speaker Change: We're not looking at the magazine as a key revenue driver moving forward. This is a promotional tool for the creators and the models that we work with.

Speaker Change: and also, you know, unlike other global brands, we are not a brand that spends millions of dollars in marketing. We have historically done that through content. And so by bringing back the magazine, it serves as two purposes.

Speaker Change: The first is a promotional vehicle for the creators and models we work with. The second is as a brand marketing vehicle to allow us to bring back some of the iconic franchises like the Playboy Interview.

Speaker Change: Like the cover, like 20 questions, things that used to be in the Playboy magazine as a way for continuing to build the brand on a global basis.

Okay, thanks, Ben. The next question is...

Speaker Change: related to the BIBORG relationship. Can you discuss your partnership with BIBORG and the performance requirements, if any, for you to successfully receive the 20 million dollars in annual payments?

Speaker Change: Sure. So, as we publicly announced, we have signed a non-binding LOI for a $300 million total MG over the initial term, so minimum guarantee over the initial term of the deal, which is 15 years.

Speaker Change: that would be paid in $20 million annual payments to us. That includes them operating and licensing our certain of our digital properties.

Speaker Change: as well as developing new business lines for areas that they either operate in today or might decide to operate in in the digital side moving forward.

Speaker Change: Should that deal conclude, those 20 million dollars are minimum guarantees.

against a percentage of the profits of those business lines.

Speaker Change: and so technically outside of you know letting them operate our businesses on the digital side there aren't other today there are not other requirements for those 20 million dollars that is an advanced or minimum guarantee against a percentage of the profits

Speaker Change: In this past quarter, it lost about $2 million. Moving forward, you would basically be replacing, on a minimum guarantee basis,

Speaker Change: that revenue with approximately $5 million a quarter, and you would have very little cost, if any, cost against that. And there might be further opportunities to reduce corporate overhead for unallocated services that support those businesses today.

Speaker Change: The next question would be related to the unsolicited bid that was received recently from Cooper Hefner. Are there any thoughts you're able to share with regard to that, you know, beyond what was said publicly?

Speaker Change: All I can point you to is the press release we put out, the board exercising its fiduciary duty and unanimously rejected the Cooper Heffner offer.

Speaker Change: I think we're on the right track. As we've said, we are moving to an asset-light model. You will notice in the quarter that Honeybird has been moved to discontinued ops.

Speaker Change: As we previously stated, you know, we are in process of looking for partners for that business.

Speaker Change: the, you know, the buy board deal and the other licensing deals that we continue to sign including, you know, the rebuilding of our China business.

Speaker Change: Is the right path for the company moving forward, you know, and should the by board deal close?

Speaker Change: you know, coupled with the others, we would expect that, you know, our goal of getting to meaningful profitability, we're well on our way.

Speaker Change: And that coupled with a restructured balance sheet, we got a lot of cash, about $30 million of cash today.

Speaker Change: We've reduced our senior debt by $66 million, or interest-bearing debt.

Speaker Change: by $66 million. So, we've reduced our cash interest expense moving forward or cash burned from non-operating and financing segments. You know, I feel like we are moving well on our way to where we need to be as a sustainable business moving forward.

Speaker Change: and then through, you know, the by-board participation, other licensing deals that we have restructured where we have upside. I think that is the right path for us to get to this asset-light model.

Speaker Change: change and so with that there are no additional questions that have come in over email.

Bye.

Speaker Change: Appreciate everyone dialing in and we look forward to talking to you in March or about March on their year-end results. So thank you.

Speaker Change: Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

The End