Q2 2025 Live Ventures Inc Earnings Call

[music].

Operator: Good day, everyone, and welcome to the Live Ventures fiscal year second quarter 2025 conference call. At this time, all participants are in a listen-only mode.

Good day, everyone and welcome to the live ventures fiscal year second quarter 2025 conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session now I would like to turn the call over to Greg Powell Director of Investor Relations. Please go ahead Sir.

Operator: Later, we'll conduct a question and answer session.

Greg Powell: Now, I'd like to turn the call over to Greg Powell, Director of Investor Relations. Please go ahead.

Greg Powell: Thank you, Elvis. Good afternoon and welcome to the Live Ventures second quarter fiscal year 2025 conference call.

Speaker Change: Thank you all of US good afternoon, and welcome to the live ventures second quarter fiscal year 2025 conference call joining.

Greg Powell: Joining us this afternoon are John Isaac, our chief executive officer and president, and David Verret, our chief financial officer. Some of the statements we are making today are forward-looking and are based on our best view of our businesses as we see them today. The actual results could differ materially due to a number of factors, including those outlined in our latest forms, 10-K and 10-Q, as filed with the Securities and Exchange Commission. We have no obligation to publicly update any forward-looking statements after this call, whether as a result of new information, future events, changes in assumptions, or otherwise.

Speaker Change: Joining us this afternoon are John <unk>, our Chief Executive Officer, and President and David <unk>, Our Chief Financial Officer.

Speaker Change: Some of the statements we're making today are forward looking and are based on our best view of our businesses as we see them today.

Speaker Change: The actual results could differ materially due to a number of factors, including those outlined in our latest forms.

Speaker Change: 10-K, and 10-Q as filed with the Securities and Exchange Commission.

so the control.

Greg Powell: You can find our press release and 10-Q referenced on this call in the Investor Relations section of the Live Ventures website. I direct you to our website, liveventures.com or sec.gov for financial SEC filings.

Speaker Change: I direct you to our website, LiveVentures.com or SEC.gov, for financial SEC filings. I will now turn the call over to David to walk you through our financial performance.

David Verret: I will now turn the call over to David to walk you through our financial performance. Thank you, Greg. Good afternoon, everyone. Before discussing our financial results, I'd like to touch on a few key highlights from the quarter. Continuing the trend from the first quarter, we are pleased to report that our retail entertainment and steel manufacturing segments delivered operational improvements during the second quarter. Both segments posted higher operating income and operating margins compared to the same period last year. As we have previously discussed, our flooring businesses continue to face challenges from industry-specific headwinds, specifically the ongoing softness in the new home construction and home refurbishment markets, as well as uncertainty surrounding the current economic outlook.

Thank you, Greg. Good afternoon, everyone.

David: Before discussing our financial results, I'd like to touch on a few key highlights from the quarter.

David: Continuing the trends from the first quarter, we are pleased to report that our retail entertainment and steel manufacturing segments delivered operational improvements during the second quarter.

David: Both segments posted higher operating income and operating margins compared to the same period last year.

David: As we have previously discussed, our flooring businesses continue to face challenges from industry-specific headwinds, specifically the ongoing softness and the new home construction and home refurbishment markets, as well as uncertainty surrounding the current economic outlook.

David Verret: In response to these challenges in our retail flooring segment, we recently brought in a new executive management team with deep expertise in their respective roles. The new leadership team is actively implementing operational initiatives to enhance performance improvements through top-line growth and operational efficiency. During the second quarter, we initiated a targeted cost reduction initiatives, which have already resulted in significant savings.

David: In response to these challenges in our retail flooring segment, we recently brought in a new executive management team with deep expertise in their respective roles.

David: The new leadership team is actively implementing operational initiatives to enhance performance improvements through top line growth and operational efficiency.

David: During this second quarter, we initiated a target cost reduction initiatives which have already resulted in significant savings.

David Verret: In addition, during the quarter we successfully negotiated a $19 million reduction in Flooring Liquidator's seller notes, which, when including the cancellation of accrued interest and other items, resulted in a $22.8 million gain for Live Ventures.

David: In addition, during the quarter, we successfully negotiated a $19 million reduction in flooring liquidators' cellular notes, which, when including the cancellation of accrued interest and other items resulted in a $22.8 million dollar gain for Live Ventures.

David Verret: Let's now discuss the financial results for the second quarter ended March 31st, 2025. Total revenue for the quarter decreased $9.8 million to approximately $107 million. The decrease is attributable to the retail flooring, flooring manufacturing, and steel manufacturing segments, which decreased by approximately 13.2 million in the aggregate.

David: Let's now discuss the financial results for the second quarter and at March 31, 2025.

David Verret: Retail entertainment segment revenue increased 1.6 million, or 9.6%, compared to the prior year period to approximately 18.5 million. Revenue increased primarily due to increased consumer demand for new products, which typically have higher selling prices. Retail flooring segment revenue decreased $4.6 million or 14.5% compared to the prior year period to approximately $27.4 million. The decrease is primarily attributable to the disposition of certain Johnson Floor & Home Carpet 1 stores in May 2024. Flooring manufacturing segment revenue decreased $4.4 million, or 12.8% compared to the prior year, to approximately $29.8 million. The decrease was primarily due to reduced consumer demand as a result of ongoing weakness in the housing market and uncertainty about the current economic outcome.

David: Retail Entertainment segment revenue increased 1.6 million or 9.6 percent compared to the approximately 18.5 million.

David: Revenue increased primarily due to increased consumer demand for new products which typically have higher selling prices.

David: Retail flooring segment revenue decreased 4.6 million or 14.5 percent compared to the 4.4 million.

David: The decrease is primarily attributable to the disposition of certain Johnson, seven-four-in-home carpet one-stores in May 2024.

David: Blowing manufacturing segment revenue decreased 4.4 million or 12.8 percent compared to the prior year to approximately 29.8 million.

David: The decrease was primarily due to reduced consumer demand as a result of ongoing weakness in the housing market and uncertainty about the current economic outlook.

David Verret: Steel manufacturing segment revenue decreased $4.2 million or 11.7% compared to the prior year period to approximately $31.3 million. The decrease was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3.8 million at Central Steel, which was acquired in May 2024. Gross profit for the quarter remained fairly consistent at $35.1 million as compared with the prior year period. Gross margin percentage for the company increased to 32.8% from 29.9% in the prior year period. The increase was primarily attributable to increased margins in our steel manufacturing segment, primarily due to improved efficiencies in the acquisition of central steel, which has historically generated higher margins.

David: Steel Manufacturing Segment Revenue Decreased 4.2 million or 11.7% compared to the prior year period to approximately 31.3 million.

David: Gross profit for the quarter remains fairly consistent at 35.1 million as compared with the prior year period.

David: The increase was primarily attributable to increased margins in our steel manufacturing segment, primarily due to improved efficiencies in the acquisition of central steel, which has historically generated higher margins.

David Verret: General and administrative expense decreased approximately $1.5 million to $28.3 million. Decreases primarily due to targeted cost reduction initiatives in the flooring retail segments and lower general administrative expenses in the corporate and other segments. Sales and marketing expense decreased approximately $1.7 million to $4.7 million. The decrease was primarily due to reduced sales and marketing expenses in the retail flooring segment. Interest expense decreased 5.6% to $3.9 million. The decrease was lower to average debt balances during the quarter.

David: General and administrative expense decreased approximately 1.5 million to 28.3 million.

David: Decrease is primarily due to targeted cost reduction initiatives in the flooring retail segments and lower general administrative expenses in the corporate and other segment.

David: Sales and marketing expense decreased approximately 1.7 million to 4.7 million. The decrease was primarily due to reduced sales and marketing expenses in the retail flooring segment.

David Verret: Net income before taxes was $21.1 million, compared to prior year period net loss before taxes of $4.5 million. The increase in the net income before taxes is primarily attributable to the $22.8 million gain on modification of the flooring liquidator seller note, as previously mentioned. Net income was approximately $15.9 million for the quarter, and diluted EPS was $5.05 compared with a net loss of approximately $3.3 million and a loss per share of $1.04 in the prior year period. The adjusted EBITDA for the quarter was approximately $6.4 million, an increase of approximately $2 million compared to the prior year period.

David: Net income before taxes was 21.1 million compared to prior year period net loss before taxes at 4.5 million. The increase in the net income before taxes is primarily achievable to the 22.8 million hour gain out of the occasion of the plowing liquidator cell or note as previously mentioned.

David: That income was approximately 15.9 million for the quarter, and diluted EPS was $5.05, compared with the net loss of approximately $3.3 million, and a loss per share of a dollar, $1.04 in the prior year period.

The adjusted EBITDA for the quarter was approximately 6.4 million, an increase of approximately 2 million compared to the prior year period.

David Verret: Adjusted EBITDA increased primarily due to the acquisition of Central Steel and certain cost reduction initiatives in the retail flooring, steel manufacturing, and corporate and other sectors.

David: Adjusted EBITDA, increased primarily due to the acquisition of central steel and certain cost reduction initiatives and retail flooring, steel manufacturing, and corporate and other

David Verret: Turning to liquidity, we ended the quarter with total cash availability of $26.6 million consisting of cash on hand of $6.9 million and availability under our various lines of credit totaling $19.7 million. Our working capital was approximately $49.1 million as of March 31, 2025, compared to $52.3 million as of September 30, 2024. As of March 31st, total assets were $393.6 million, and total stockholders' equity was $88.9 million. As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our stock repurchases represent long-term value for our stockholders. During the quarter, we repurchased 31,323 shares of the company's common stock at an average price of $8.28 per share.

David: Turning to liquidity, we entered the quarter where total cash availability of 26.6 million, consisting of cash on hand of 6.9 million, and availability under our various lines of credit, totally 19.7 million.

David: Our working capital was approximately 49.1 million as of March 31st, 2025 compared to 52.3 million as of September 30, 2024.

David: As of March 31st, total assets for 393.6 million and total stockholders' equity was 88.9 million.

David: As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our stock repurchases represent long-term value for our stockholders.

David: During the quarter, we repurchased 31,323 shares of the company's common stock at an average price of $8.28 per share.

David Verret: In conclusion, we are pleased that both our retail entertainment and steel manufacturing segments delivered improved operating performance in the first half of the year, with increased operating income and operating margins compared to the prior year period. However, Challenging market conditions continue to impact retail flooring and flooring manufacturing segment. such as reduce consumer demand, weight on performance. To address this, we are implementing measures to enhance the efficiency of our flooring business, which, as I mentioned earlier, have already led to significant savings. Looking forward, we will continue to focus on our operational excellence, and we remain confident in the long-term fundamentals of our business.

David: In conclusion, we are pleased that both our retail entertainment and steel manufacturing segments delivered improved operating performance in the first half of the year, with increased operating income and operating margins compared to the prior year period.

David: However, challenging marking conditions continue to impact retail flooring and flooring manufacturing segments.

David: such as reduced consumer demand, weighed on performance. To address this, we are implementing measures to enhance the efficiency of our flowing business, which, as I mentioned earlier, have already led to significant savings.

David: Looking forward, we will continue to focus on our operational excellence, and we remain confident in the long-term fundamentals of our businesses.

Operator: We will now take questions from those of you on the conference call. Operator, please open the line for questions. certainly. If you'd like to ask a question, please press star one on your phone now and you'll be placed into the queue in the order.

David: We will now take questions from those of you on the conference call.

Operator, please open a line for questions.

Speaker Change: Certainly. If you'd like to ask a question please press star 1 on your phone now and you'll be placed into the queue in the order received. Once again press star 1 for a question and we'll pause for a moment to form the queue.

Operator: Once again, press star 1 for a question, and we'll pause for a moment to form the Let's take a question from Joseph, please.

Thank you.

Let's take a question from Joseph, please.

Joseph Kowalsky: Joseph Kowalsky, your line is open. Good afternoon and thank you. I like the fact that we're moving forward and that's always good. I only have two questions today. One is about the note. Was the modification of the note something that was anticipated in the original agreement, say based on revenue or something like that, or is this something completely different? Could you just give a little bit more color on that?

Joseph Kowalsky, your line is open.

Joseph Kowalski: Good afternoon. It's afternoon for you guys to. Good afternoon. Thank you. I like the fact we're moving forward and that's always good. I only have two questions today. One is about the note. Was the modification of the note something that was anticipated in the original agreement, say based on revenue or something like that, or is this something completely different? Could you just give a little bit more color on that? And then my second question is

Joseph Kowalsky: And then my second question is about if you have any idea about how tariffs might or might not affect any of your businesses.

Joseph Kowalski: is about if you have any idea about how tariffs might or might not affect any of your businesses.

Unnamed Speaker: Yes.

Unnamed Speaker: So starting off with the first portion of the question on the modification of the debt, this is something that was new. This was not something that was in the original agreement. And maybe, I don't know if you want to share. Yeah, it was not in the original agreement. It was just renegotiated. Any other color you want to give on that, or is that... No, we feel like it's a win for Live, the company, and for shareholders. And, you know, we were successful in getting this accomplished. I think it's a, you know, it's a big win.

Joseph Kowalski: Yes, so starting off with the first portion of the question on the modification of the debt. This was something that was new, this was not something that was in the original agreement. And maybe I don't know if you want to share it.

Joseph Kowalski: yeah it was not in the original agreement it was just renegotiated

Joseph Kowalski: You know, we were successful in getting this accomplished. I think it's a big win. We've accustomed the note from about 30.

Greg Powell: We've cut the note from about 30...

5, 36, 37 million, somewhere in there, down to 15.

Joseph Kowalski: That will reduce you. Absolutely a big one. Absolutely and I appreciate it very much. I just wondered how you were able to do that but if that's as far as you want to go on it, that's fine. Well, I can tell you that we got it done and how and why it's sort of you know nothing.

Greg Powell: Greg Powell, Joseph Kowalsky, David Verret, Gregory Powell, Live Ventures, David Verret, I'll take the win.

Joseph Kowalski: a little bit irrelevant. I mean, I think we did a good job of getting it done and it took some time to do it and...

Joseph Kowalski: and we are where we are today. I'll take the win. Yeah, I'll always win. Yep. And so the next question is tariffs. And so this is something that our businesses have been looking at here for the last several months.

Unnamed Speaker: Yeah, yeah, yeah, and so the next question is tariffs.

Unnamed Speaker: And so this is something that our businesses have been looking at here for the last several months, and as a part of just making sure that we're prepared for what's coming down, because there is just a lot of uncertainty in that area, we are doing more diversification of any of our vendors that are overseas as well as making sure that we set up relationships vendor relationships here domestically as well. To this point, we have not experienced any negative impacts related to any discussion or talks or actual tariffs that have been implemented. There is. I know that there's also been, since there's a Chinese New Year, there's been a buildup of inventory that'll give us a little bit more headway in the future to make changes as needed and where we purchase some of our products.

Joseph Kowalski: and as a part of just making sure that we're prepared for what's coming down because there is just a lot of uncertainty in that area.

Joseph Kowalski: to this point we have not experienced any negative impacts related to any discussion or talks or actual tariffs that have been implemented.

Speaker Change: Yeah, I know that there's also been that since there's a Chinese New Year, there's been a buildup of inventory that'll give us a little bit more headway in the future to make changes as needed and where we purchase some of our product.

Unnamed Speaker: But no impact to date. And we're monitoring and making sure that we have alternatives at our disposal to be able to react.

Speaker Change: But so impacted date and we're monitoring and making sure that we have alternatives at our disposal to be able to react.

to any tariffs as they come up.

Operator: Thank you very much. Once again, everyone, press star 1 for a question. Today we have no further questions at this time.

Thank you very much.

Let's again, everyone, press star one for a question.

Greg Powell: I'll turn the conference back over to you for any additional or closing comments. want to thank everyone for joining the second quarter earnings call and we look forward to talking to you next quarter. Thank you.

Operator: That concludes our conference today. Thanks everyone for joining and have a great day.

Operator: The host has ended this call.

Speaker Change: The host has ended this call goodbye.

Operator: Goodbye.