Q4 2024 PLBY Group Inc Earnings Call
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Outro
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Speaker Change: Good afternoon, everybody and welcome to a Playboy groups fourth quarter 2024 earnings conference call.
Ben Cohen: Hosting todays call are Ben Cohen, Chief Executive Officer, and Mark Crossley, Chief Financial Officer, and Chief operating Officer.
Speaker Change: The company will be hosting a question answer session today.
I'd like to ask a question. Please press star one telephone keypad Gulf of Mexico indicate your widens in the question queue.
Speaker Change: You May press star to remove yourself from the queue.
Speaker Change: What should require operator assistance. Please press star zero on your keep that that's a minor this conference is being recorded.
Speaker Change: Do you wait until the Q.
Speaker Change: I would like to hand, the call over to Matt Chesler from Investor Relations. Thank you. Please go ahead.
Speaker Change: Good afternoon.
Speaker Change: To remind everyone that the information discussed today is qualified in its entirety by the Form 10-K filed today by you'll be why grid, which may be accessed on the Sec's website N P. L. B Y group's website.
Today's call will also be webcast and a replay will be posted to the company's investor Relations website.
Speaker Change: 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.
Such statements are made on the basis of P. L. B Y groups and the views and assumptions regarding future events and business performance at the time they are made.
Speaker Change: And we do not undertake any obligation to update these statements.
Speaker Change: Okay.
Forward looking statements are subject to risks, which could cause the company's actual results to differ from its historical results and forecast, including those risks set forth in the company's filings with SEC and you should refer to and carefully consider those for more information.
It's cautionary statement applies to all forward looking statements made during this call.
Speaker Change: Do not place undue reliance on any forward looking statements.
Speaker Change: During the call the company may refer to non-GAAP financial measures.
Speaker Change: Such non-GAAP measures are not prepared in accordance with generally accepted accounting principles.
Speaker Change: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure is available in the earnings release.
B why do pilots with its form 8-K today.
Speaker Change: I'd like to turn the call over to Dan before we begin the Q&A session.
Dan: Thanks, Matt.
Speaker Change: 'twenty 'twenty four it was a tough year for the company, but didn't necessarily ear as we reposition the business to an asset light model.
We started to see the results of that in Q4, where EBITDA has started to turn positive excluding foreign currency, but most importantly, we completed the buy board deal in the fourth quarter, which from a profitability and cash flow perspective, moving forward completely changes the game and so as we enter 2025.
Speaker Change: We have a new baseline of cash flow that allows us on a full year basis to be free cash flow positive, especially after the first six months, we will be completing the transition of our legacy adult properties and the Playboy club cheap.
Speaker Change: Do you buy bark and what's really exciting is the courthouse prospects, we have moving forward.
Speaker Change: In existing licensing deals like the upside we have in the Bible Gil.
Speaker Change: You start to execute on the turnaround in those properties.
Speaker Change: But also new opportunities that we know work improved in categories that we have monetized historically like in the gaming space.
Speaker Change: That coupled with the really positive re launch of the Playboy magazine.
Speaker Change: At Super Bowl will be part of our strategy moving forward, we plan on releasing four issues once we get fully ramped up a magazine.
Speaker Change: Helping new revenue streams around that magazine Israeli our brands moving forward.
Speaker Change: It's the asset that we leave behind its a marketing vehicle for the company.
Speaker Change: One of you can make money just on print there's opportunities around page 10 voting there's opportunities around sponsorship as we launch events around that and.
Speaker Change: And theres opportunities to subscription or membership around the magazine and so those are the things we're focused on moving forward, yes for the first time in the last two or three years, we actually have a chance to really focus on the growth of the business something that we have not been able to focus on because of the balance sheet that we've had historically and so as we move into 'twenty two.
Speaker Change: Five in the balance of the year very excited by the prospects, we have and actually this new issue that we hope will be out sometime in August tied to a Midsummer Night's Street Party.
And the celebrities and Influencers that will be working with us in that magazine that magazine really taking its editorial form allow us to work with any promotional vehicles and so with that we'd love to open it up to questions.
Speaker Change: Thank you well now be conducting a question and answer session. Once again, if you'd like to ask a question press star one on the telephone keypad.
Speaker Change: Entered the queue. Please.
Speaker Change: Press Star two to remove yourself from the queue.
Speaker Change: One moment, while we poll for questions.
Our first question comes from a J P Wallin with Roth Capital Partners. Please proceed.
Speaker Change: Great Hi, Ben Hi, Mark Thanks for taking my questions here.
Speaker Change: So a few for you guys are maybe if we could kind of start on the revenue side and sort of just wanted to think about the 120 million in.
Speaker Change: Also kind of more specifically that the minimum guarantee in the licensing side. So.
I'm trying to just get a sense of you know in that non a M. G portion of the licensing revenue.
How are you assessing what the risk is to that especially given that licensing is such a great profit driver for you guys. So one you know how are you assessing risks there too you touched on the gaming space, but how are you thinking about upside in licensing specifically in 2025.
And then just the third one is just any given takes around.
Speaker Change: Honey and how youre thinking about how that plays into the 120.
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Speaker Change: Hey, J P. It's Marc So let me just start by around the rescue we're talking about on licensing revenue. The other 14% did is not guaranteed minimums is made up of beverages into deals and really what happens 'twenty 'twenty four is when we set the pipeline for 2025.
Speaker Change: So we feel really good about that number we historically know what our over just look like we're not making assumptions that we're going to see anything out of the norm. So I want to say anything guaranteed.
But all the work was done in 2024 to set ourselves up for 2025.
Speaker Change: As it relates to gaming than you are.
Speaker Change: Yeah look I think when I look at where we generate the bulk of our licensing revenues today, that's in the clothing sector.
Speaker Change: So I think the pipeline is strong of new deals, but when I think about categories like gaming, where we used to get paid.
Speaker Change: Millions of dollars, you're not talking about yeah.
Speaker Change: Six figures here, we're talking about seven figures here.
Speaker Change: Dollars from land based casinos from online gaming, we have a strong pipeline of gaming opportunities moving forward and so what I'm focused on is looking at where the company is used to generate revenue.
Speaker Change: You know I gaming and how do we start to rebuild that category with the right partners.
Speaker Change: Moving forward.
Speaker Change: There's opportunities like that there's new opportunities like you know pay 10 voting tied to the magazine.
So I look at it is theres a lot of upside to the numbers. We one thing to note is licensing is not a linear business. If it grows in a step fashion and so what we're really focused on is doing fewer but much larger deals moving forward versus as we said historically just answering the phone when it rains and tight taking deals and so.
I wanted to focus on bigger deals with better partners. If you look at the buy bulk deal we have significant upside in that deal right. If we have a minimum guarantee of 20 million so for everyone's.
A recollection that was a business that historically was losing money for us on the digital side for the most part we can turn that into basically 100% margin licensing business and we retained a significant piece of the upside.
Speaker Change: Those properties online and even in our meetings with them I think there is a lot of low hanging fruit.
Their expertise on where they can improve those properties and so it.
It doesn't mean that everything will be smooth road moving forward.
Speaker Change: If you look at it going back to the rest question I think there's there's more upside than there is downside in the business.
You know obviously you know what.
We're moving into the.
Economy, where consumer spend might be slowing a little bit and obviously, there's uncertainty with tariffs for it but that doesn't really affect us because of the way. We license. The business is mostly by territory, where product that is producing that Tori territory is then sold in that territory as well.
Speaker Change: Great. Thank you.
Speaker Change: And then I guess.
Speaker Change: Maybe just moving kind of down the financial statement, a little bit understanding that you didn't give any kind of EBITDA guidance.
Speaker Change: Just wanted to maybe talk for a second about like.
Speaker Change: The opportunity for reorganizing corporate infrastructure, given the transition to <unk> and just sort of how you're thinking about G&A. You know, we don't need to use numbers, specifically, but are you at a place where you've kind of identified you know what corporate can look like in year.
Speaker Change: First by Board deal World are you still assessing what that looks like kind of where are you in that process.
Speaker Change: So I think we have this asset and we have begun making all of those changes and we'll continue to make those changes through the first half of this year. When we're supposed to have transition the properties fully to buy books. So they they own the properties as of January 1st they've already made their first licensing payment to us.
Speaker Change: But we have transition costs that we will be inquiry as we moved those businesses too.
To them I think what we've said historically is on a full year basis, we expect to be free cash flow positive you can back into that number because you know how much debt. We have you know with $152 million of senior debt today, the interest rate tied to that and then the amortization.
Speaker Change: So, although we're not getting specific.
Speaker Change: Our goal is to be free cash flow positive I believe that at this point, we have solve their balance sheet issues, there's opportunities because for instance, we still own honey for that but overall the business is going to be free cash flow positive that is what we're striving to do and that's how we backed into our corporate overhead in addition to rebuilding the corporate overhead.
Speaker Change: Line by line and say, what do we need and what don't really what we do know we want moving forward is to be an asset light business.
With as few employees as possible to service that.
Speaker Change: You know obviously there are certain things that are important but we wanted to make sure that we partner with the best operators that are out there that have better skill sets that we do and we focus on what we're good at which is the brand of Playboy. That's why we'll bring back the magazine, we're gonna be bringing back 12, Playmates and then theres a lot of opportunities.
Speaker Change: As we bought back that magazine that have come to light.
We're not we're not forecasting right now, but they give us significant upside around new revenue opportunities around at that point.
Understood and I think you know kind of finished with one and then hop back in the queue, but you kind of led me there.
Speaker Change: I think the press release had some information about kind of some of these additional revenue sources.
Speaker Change: I think there was maybe some podcasts and some videos and some different sponsorship stuff you know.
Speaker Change: How would you assess like what's the rationale around kind of going further.
Speaker Change: Down that road and how do you think about balancing sort of you know keeping.
Keeping that asset light model a lot of licensing and then using the magazine is kind of more marketing and publicity this feels a little more going.
Speaker Change: Further there so I guess kind of how are you just what's the rationale behind that.
Speaker Change: Some of those additional revenue levers yeah.
Speaker Change: Yeah. So we have to go where consumers consume content today and people as much as the magazines a beautiful product and I think the first issue. We put out is a good starter issue I think there's a lot of areas to continue to improve on that but just can take us a little while to get back up to full speed on that and we're doing that the outsource model is way as well.
Speaker Change:
But we don't we're not we're one of the largest brands in the world and we don't spend any money as a company on marketing ourselves right and so our content becomes our marketing vehicle and our brand voice and.
Speaker Change: We're very focused on sort of returning Playboy to what it what it's Bruce was it's a men's brand at the end of the day first and foremost it doesn't mean that we don't have a big women audience for the company that buys our products, but our core audience are met and when you think about the key words.
Speaker Change: When I think about Playboy I think about fun I think about sexy I think about provocative I think about aspirational.
And the magazine allows us to work with talent.
Speaker Change: So an editorial lens in a way that allows us to punch way above our weight. So we're not paying people to work with us in the magazine, we're using the editorial lens of the magazines.
Two really magnify.
And amplify that editorial voice and the positioning and branding of the company.
Speaker Change: The podcasts and other things the simplest way to think about it as taking franchises like the platelets, which are you know one of the best brand ambassadors out there or the Playboy advisor, which is a columnist fits in the magazine that gay sex and relationship advice, how could you take those to distribute distribution media.
Speaker Change: In city, where consumers are consuming content. So it's great to have at the Playboy adviser in the magazine, but that's really the byproduct of being able to interact with their audiences.
Speaker Change: The daily or weekly basis, the way to do that is.
Speaker Change: Is through.
Podcast is video series through social media, where we are staying relevant in our consumers' lives on a daily basis. The magazine will come out once a quarter. It's a beautiful glossy it's something that you can leave on your coffee table and the price point will reflect that.
But it's the byproduct of content that we can partner with other people.
And leverage those channels to build an audience much larger without spending the money by working with the right Influencers and celebrities today that already have those audiences are communicating with taking these franchises that have existed at Playboy for the last 70, plus years and breaking into the right distribution vehicles for the way consumers consume content today.
Pay me two is another great example of that.
Speaker Change:
Speaker Change: It allows us to work, we're going to have 12 a year.
What will really ramp up to play plus a play made it a year plus we'll have a whole host of them wander off but you know one of the things we've been looking at and we definitely did this a couple of years ago with Playboy lingerie. When we ran a search to find the face of Playboy law and you're right. We had tens of thousands of women apply to that you can do the same thing today.
But do it through a combination of the panel of celebrity judges are our editors.
Speaker Change: Coupled with fan voting examples of that are the voice dancing with the stars and other shows that have really leverage.
Speaker Change: Theyre contestants audiences of those contestants.
Speaker Change: And there's a lot of money and that helps us from a brand perspective, because the woman or going out to the social media channels.
Speaker Change: To get their fans to vote for them and so that allows the opportunity for sponsorships. It allows the opportunity for our live events.
Speaker Change: And I think there's an opportunity to bring back through partnerships Playboy hospitality.
Got it that makes that makes sense I appreciate the answers and I'll hop back in the queue.
Speaker Change: Thank you.
Thank you.
Speaker Change: And it does look like there are no further questions at this time I'd like to pass the call back to Ben for closing remarks.
Ben Cohen: I appreciate everyone, joining our Q4 and annual call and look forward to talking to everyone on our next earnings call. So thank you for joining.
Thank you.
Ben Cohen: This does conclude today's teleconference. We thank you for your participation you may disconnect your lines at this time.
Ben Cohen: [music].
Okay.
Ben Cohen: [music].
Ben Cohen: Mhm.
Ben Cohen: [music].
Ben Cohen: Hmm.