Q1 2025 PLBY Group Inc Earnings Call
Operator: Greetings and welcome to Plby Group's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode.
Greetings and welcome to the two P. M. B Y groups first quarter 2025 earnings conference call. At this time, all participants are in a listen only mode.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star 0 on your telephone keypad.
Speaker Change: Question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad. It is now my pleasure to introduce your host Matt Chesler. Thank you you may begin.
Matt Chesler: It is now my pleasure to introduce your host, Matt Chesler. Thank you. You may begin.
Matt Chesler: Thank you, Operator, and good afternoon, everyone. I'd like to remind you that the information discussed today is qualified in its entirety by the Form 8K and Form 10-Q filed today by Plby Group, which may be accessed on the SEC's website and on Plby Group's website. Today's call is also being webcast and a replay will be posted to the company's investor relations website.
Speaker Change: Thank you operator, and good afternoon, everyone I'd like to remind you that the information discussed today is qualified in its entirety by the form 8-K and Form 10-Q filed today by P. L. B Y grade, which may be accessed on the Sec's website and on B Y group's website.
Speaker Change: Today's call is also being webcast and a replay will be posted to the company's investor Relations website.
Matt Chesler: 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 PLBY Group's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. forward looking statements are subject to risk and could cause the company's actual results to differ from its historical results at work. including those set forth in the company's filings with the SEC and you should refer to and carefully consider those for more information.
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.
Speaker Change: Such statements are made on the basis of P. L. B Y groups views and assumptions regarding future events and business performance at the time. They are made and we do not undertake any obligation to update these statements.
Speaker Change: Forward looking statements are subject to risks and could cause the company's actual results to differ from its historical results and forecast, including those set forth in the company's filings with the SEC and you should refer to and carefully considered those for more information.
Matt Chesler: This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statement.
Speaker Change: This cautionary statement applies to all forward looking statements made during this call do not place undue reliance on any forward looking statement.
Matt Chesler: during this company may refer to non-GAAP financial measures. Such non-GAAP measures are now prepared in accordance with.
Speaker Change: During the company may refer to non-GAAP financial measures such non-GAAP measures are not prepared in accordance with Jeff.
Speaker Change: Okay.
Operator: Ladies and gentlemen, please stand by, we're having some technical difficulties. And Matt, you may proceed.
Speaker Change: Ladies and gentlemen.
Speaker Change: Standby.
Speaker Change: Technical difficulties.
Speaker Change: And Matt you May proceed.
Matt Chesler: With that, I will hand the call back over to the operator to begin the Q&A session.
Speaker Change: With that I will hand, the call back over to the operator to begin the Q&A session operator.
Operator: Operator? Thank you.
Speaker Change: Okay.
Speaker Change: Uh huh.
Speaker Change: Thank you we will now be conducting a question and answer session.
Operator: We will now be conducting a If you would like to ask a question, please press star 1 on your telephone keypad. A 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 2.
Speaker Change: You'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the starkey.
Operator: One moment, please, while we poll for questions.
Speaker Change: One moment, please pool for questions.
George Kelly: And our first question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question. Hey everyone, thanks for taking my question.
Speaker Change: And our first question comes from the line of George County, with Roth Capital Partners. Please proceed with your question.
George County: Hey, everyone. Thanks for taking my questions.
George Kelly: First, if we could start with Honey Burdett, I was wondering if you could give us your expectations just as you look out for the next couple of quarters with respect to growth. And like when does the compare for the discounting quarters last year, when does that compare ease?
Speaker Change: First if we could start with Honeybear debt I was wondering if you could give us.
Speaker Change: Your expectations just as you look at for the next couple of quarters with respect to <unk>.
Speaker Change: Gross.
Speaker Change: And like when does that compare for.
Speaker Change: For the discounting quarters last year, when does that compare es.
George Kelly: and then also with gross margin. Should we expect much sort of change in gross margin?
Speaker Change: And then also with gross margin should we expect much sort of change in gross margin in the near term.
Speaker Change: Yeah.
Marc Crossman: Hey George, it's Marc. In terms of comps, we're lapping after the first quarter, so in the second quarter we're going to be up against an easy comparable from a sales standpoint, and we're already seeing that we're ahead of plan right now in the second quarter. So, things look good at 100 Breda.
Mark: Hey, George its mark.
George County: In terms of comps, we're lapping after the first quarter so in the second quarter.
George County: We're going to be up against a an easy comparable from a sales standpoint.
George County: We're already seeing that we're ahead of plan right now in the in the second quarter. So.
George County: Okay.
George Kelly: Do you have a second part to that question? Yeah, just on the near-term gross margin expectations there too. And I guess the second part of that would be any kind of impact from Chinese tariffs.
George County: Do you have a second part to that question Yeah, just on the near term gross margin expectations here to you and I guess, the second part of that would be any kind of impact from Chinese tariffs.
Marc Crossman: Yes, so the near-term, right now, all the product that we're selling pretty much in the second quarter is product that was brought in prior to the tariffs.
George County: Yes at the near term right now all the product that we're selling pretty much in the second quarter is product that was brought in prior to the tariffs when we look at the tariff impact going into <unk>, it's tough to quantify right. Now if you were to assume the cash that they have right now it's about.
Marc Crossman: When we look at the tariff impact going into 3Q and 4Q, it's tough to quantify right now if you were to assume the tariffs that they have right now. It's about a million-dollar impact, which is not that big of a number. Now, to help combat that, we put 10% price increases in already. And in addition to that, we're changing some of our shipping thresholds for free shipping. So there are a number of levers that we can pull. And the good thing about the price increases is that should the tariffs stay where they are and not go back up, the price increases stay in regardless, so we'd get a pickup from that.
George County: A million dollar impact, which is not that big of a number.
George County: Now to help combat that we put 10% price increases then.
Already and in addition to that we're changing some of our shipping thresholds for free shipping.
George County: There are a number of levers that we can pull and the good thing about the price increases is that should the tariff stay where they are not go back up the price increases stay Ed.
George County: Regardless, so we'd get a pickup from that yes, so George it's Ben.
Marc Crossman: Yeah, so, George, it's been, you know, remember, the U.S. is roughly $35 million of the business, and so we've put a 10% price increase in on that. And, you know, should tariffs go back up, we have additional levers that we can pull, as other companies have. But the goal was to keep the price increases as permanent. And so if tariffs stay the same, there should actually be a pickup, assuming there's no degradation in volume moving forward. And the million that you mentioned, that's for the back two quarters. Yeah, it's for the back two quarters. and then.
George County: Remember the U S is roughly $35 million of the business and so we've put a 10% price increase in <unk>.
George County: That should tariffs go back up we have additional levers that we can pull.
George County: As other companies have but the goal was to keep the price increases is permanent.
George County: And so if tariff stays the same there should actually be pick up assuming there's no degradation in volume moving forward.
George County: And then the 1 billion that you mentioned that that is true that the back two quarters.
George County: Yes for the back two quarters okay.
George County: And then.
Marc Crossman: Second topic I was hoping you could chat on is the Byborg. What are their plans as far as new product development, timeline, anything you're comfortable sharing on the call just sort of that's in the works with Byborg? Yeah, so we've been working actively with them. We've seen, you know, the new designs they have for the existing products, as well as a live cams business. We're excited by it. But, you know, if you remember, we have a great deal with them. It's a $20 million a year minimum guarantee. And then we get a significant percentage of the ups of 25% above that.
George County: Second topic I was hoping you could could could chat.
George County: Pipe work.
Speaker Change: What are their plans as far as new product development timeline anything you're comfortable sharing on the call just sort of.
George County: It's in the works with <unk>.
Speaker Change: Yes, so we've been working.
George County: Actively with them we've seen.
Speaker Change: The new designs they have for the existing products.
George County: Well it is a.
Speaker Change: Like canvas business.
Speaker Change: We're excited by it but you know if you remember we have a great deal with them.
Speaker Change: $20 million a year minimum guarantee and then we got a significant percentage of the ops of 25% above that and I think as I've stated previously I think that over the life of the deal we should hopefully see.
Marc Crossman: And I think, as I've stated previously, you know, I think that over the life of the deal, we should hopefully see, you know, profits well in excess of the MGs. But in the beginning years, they're developing and spending money building out those products. And so, you know, for our purposes, we're assuming it's $20 million a year right now is the MG. Moving forward, we will receive a further $20 payment from them this year. It's scheduled for July 1.
Speaker Change: Profits well in excess of the <unk>, but in the beginning years theyre developing and spending money building out those products.
Speaker Change: And so for our purposes, we're assuming it's $20 million a year right now is the Mg I'm moving forward, we will receive a further $20 million payment from them this year.
Speaker Change: It's scheduled for July one that.
George Kelly: That is $5 million for the last two quarters of the year, plus what is effectively a $10 million security deposit, which is a prepayment of the last six months of year 15 licensing. Okay, okay.
Speaker Change: Is $5 million for the last two quarters of the year, plus what is effectively a $10 million security deposit.
Speaker Change: Which is a prepayment of the last six months of year 15 licensing term.
Speaker Change: Okay.
Speaker Change: Okay. Okay.
George Kelly: And, and there, that second equity investment, remind me on the, that the, the vote date got moved to the annual meeting. Is that correct? Is that later in May? Yeah, so the dates were sort of coming together.
Speaker Change: And there.
Speaker Change: Second equity investment.
Speaker Change: Remind me of that.
Speaker Change: That the vote take up move to the annual meeting is that correct is that later in may.
Speaker Change: Yes, so the gates were sort of coming together and so we decided just based on participation typically in the annual meeting to put that to the shareholders as part of the annual meeting.
Marc Crossman: And so we decided, just based on participation, typically in the annual meeting, to put that to the shareholders as part of the annual meeting that's scheduled for June 16. Okay.
Speaker Change: That's scheduled for June 16th.
Speaker Change: Okay and then last question for me is about the other licensing business you made comments in the press release about.
George Kelly: And then last question for me is about the other licensing business. You made comments in the press release about enthusiasm or what you think is potential around certain other categories. I think you mentioned a club and something, maybe hospitality or something else.
Speaker Change: Enthusiasm for.
Speaker Change: What you think is potential around certain other categories. I think you mentioned a club and same thing maybe hospitality or something else.
Speaker Change: Yes.
Marc Crossman: What stage are, is that something we can start to see in the back half of this year? Do you feel you're getting close? Just any more context around those comments would be.
Speaker Change: What stage or.
Speaker Change: Is that something we can start to see in the back half of this year do you feel like Youre getting close just any more context around those comments would be helpful.
Marc Crossman: Yeah, so I think it's important to level set sort of where we are and what we've done, right? And then we all talk about that. So, you know, almost two years ago, we embarked on this asset light model. And, you know, Q1 was our first positive EBITDA quarter since 23. So I feel really good where we are now as a company. And what the future looks like for the balance of this year and moving forward, you know, especially with our adjusted EBITDA positive, you know, 2.4 million, there was actually a million dollars of cost in the first quarter related to personnel that we've already eliminated at the end of the quarter.
Speaker Change: Yes, so I think it's important to level set sort of where we are what we've done right and then I'll talk about that so almost two years ago, we embarked on this asset light model.
Speaker Change: Q1 was our first positive EBIT quarter since twenty-three so I feel really good where we are now as a company.
Speaker Change: What the future looks like for the balance of this year and moving forward.
Speaker Change: Especially with our adjusted EBITDA positive too.
Speaker Change: $2 4 million, there was actually a $1 million of costs.
Speaker Change: In the first quarter related to personnel that we've already eliminated at the end of the quarter. So that would have actually been positive $3 4 million.
Marc Crossman: So that would have actually been positive 3.4 million.
Speaker Change: But what we have is a portfolio of really stable high margin licensing deals.
Speaker Change: Now, what we're actually able to because we have a plan to continue to reduce overhead, but we're in a position now where we should start to produce cash as a company. We can now sort of focus on growth and I think that comes from two areas as we mentioned in the press release.
Speaker Change: Seeing a lot of traction in what I would say is gaming and they didn't.
Speaker Change: Hospitality or L. B E side of things.
Speaker Change: I've actually been approached by two what I would say is some of the best operators, we know of in the United States to develop some form of for lack of a better term Playboy club.
Speaker Change: The physical build out of that in the development of that would actually take a while that's a one to two year project, but the licensing deals themselves.
For gaming and some of the other stuff we have in our strong pipeline that is something that we should see in the back half of this year, starting obviously revenue recognition when you do a multiyear.
Speaker Change: Deal, that's subject to sort of straight lining the accountants.
Speaker Change: Then in addition to that what's really interesting is what happened with the magazine.
Speaker Change: We sold out of the magazine, albeit a small print run online.
Speaker Change: And then the sell through of Barnes <unk> nobles was unbelievable they weren't our exclusive brick and mortar.
Speaker Change: Or new Stan sale.
Speaker Change: What we've seen commodity that actually and we're going to we're going to do one additional issue. This year as we ramp up hopefully four issues next year is the ancillary revenue streams that come off of that think about these as quasi licensing streams actually from a margin profile perspective, but when we start to get into.
Speaker Change: Opportunities around mainstream content, so TV shows both linear and digital as well as paid voting, we actually have a history of doing P voting before.
Speaker Change: Back when we Werent asset light, we had launched Playboy lingerie and we've actually done the paid voting.
Speaker Change: Campaign to find the next phase of Playboy and that generated significant amount of revenue and EBITDA for us. This deal that we're doing slightly different and we will talk about that on the next call.
Speaker Change: But it's something that we think is.
Speaker Change: Always on ongoing competition really embracing our community and allowing them to help.
Marc Crossman: pick or dominate who might become the next Playmate as we as we gear up for 12 Playmates a year. And then the ancillary products around that, you know, not only, you know, the magazine, but calendars, we had a, we had a long history of producing a Playmate calendar that used to produce, you know, multiple millions of dollars a year in sales. And so there's a lot of other revenue streams that can come on the back of what we're doing from a content perspective. And then in addition to that, we get, you know, the benefit of what I would say is really the strong brand awareness and and rebuilding the brand.
Speaker Change: Pik or dominate who might become the next play may as we as we gear up for 12 play meets a year and then the ancillary products around that not only the magazine, but the calendar is we had a we had a long history of producing a play may calendar that used to produce multiple millions of dollars a year in sales.
Speaker Change: And so theres a lot of other revenue streams that could come on the back of what we're doing from a content perspective.
Speaker Change: And then.
Speaker Change: In addition to that we get the benefit of what I would say is really the strong brand awareness and.
Speaker Change: And we building the brand and so I.
Marc Crossman: And so, you know, I feel really good with where we are from our plan to continue to reduce overhead moving forward, continuing to increase EBITDA. And then really what is the growth opportunities, which I would say, you know, if I look over the last three to five years, they're probably the strongest growth opportunities we've seen.
Speaker Change: I feel really good with where we are from our plan to continue to reduce overhead moving forward continuing to increase EBITDA and then really what is the growth opportunities, which I would say if I look over the last three to five years or probably the strongest growth opportunities. We see doesn't mean it will hit in 25, we're really focused on sort of 26 <unk>.
Marc Crossman: Doesn't mean it will hit in 25. We're really focused on sort of 26 and beyond. But you could see paid voting in the second half of this year. You could start to see calendar that we're planning for the magazine, which will come out in November.
Speaker Change: Beyond.
Speaker Change: But you could see paid voting in the second half of this year you could start to see.
Speaker Change: Our calendar that we're planning for the magazine, which will come out in November.
Marc Crossman: And then you also saw in the first quarter some sponsorship revenue.
Speaker Change: Then you also saw in the first quarter some sponsorship revenue.
Marc Crossman: And we think that will continue and grow moving forward as we continue to refine what I would say is our media and content strategy moving forward. Okay, okay, gotcha.
Speaker Change: We think that will continue and grow moving forward.
George County: As we continue to refine what I would tell you is our media and content strategy moving forward George.
George County: Okay. Okay got you. Thank you very much.
George Kelly: Thank you very much. Thank you.
George County: Okay.
George County: Thank you.
Matt Chesler: Now I would like to hand it over back to Matt Chesler for further questions. Yeah, operator, we had an additional question on the drivers of the licensing business actually in the quarter from from from the team at Jeffries, Salil Sanjiv and James Heaney. Ben, I think you answered a lot of this. If you'd like to provide any more details on the drivers of the quarter, go ahead.
George County: I would like to hand.
Speaker Change: I'll hand, it over to back to Matt Justice for further questions.
Speaker Change: Yes, operator, we had an additional question.
Speaker Change: Drivers of the licensing business actually in the quarter from <unk>.
Speaker Change: From from the team at Jefferies.
Speaker Change: Sanjiv and James TV, Ben I think you answered a lot of this if you'd like to provide any more details on the drivers of the quarter go ahead at that perhaps.
Marc Crossman: If not, perhaps we turn it over and have some concluding Sure, I'll just reiterate. So, you know, obviously, licensing was up a huge 175% year over year with Byborg, without Byborg, it was still up over 50%. You know, the two primary reasons for that were one, the Byborg deal went into effect January 1, they've already made their first two payments. The second payment came in after the quarter ended as the contract calls for. But that's $5 million a quarter. And then in addition to that, you know, it's the year over year improvement and we building our China licensing business, we're encouraged by what we see obviously, obviously, you know, a tough environment with the tariff war, but our partner is doing well.
Speaker Change: I'll turn it over and you have some concluding remarks.
Speaker Change: Sure I'll just reiterate so obviously licensing was up huge 175% year over year with <unk> without <unk> It was still up over 50%.
The two primary reasons for that were won the <unk> deal went into effect.
Speaker Change: January 1st they've already made their first two payments.
Speaker Change: The second payment came in after the quarter.
Ended as the contract calls for.
Speaker Change: But that's $5 million a quarter and then in addition to that if the year over year improvement in rebuilding our China licensing business. We're encouraged by what we see obviously, obviously a tough environment with the tariff war, but our partner is doing well.
Marc Crossman: And we think there's continued growth there. And then what we've been really working on is the pipeline moving forward, which we should start to see the benefit of that in the third and fourth quarter with that pipeline and, you know, getting some of these deals across the finish line, which we're very close on in gaming and other areas. And so I'm excited by that. And I'm really excited, as I mentioned, you know, with some of the opportunities we have around content licensing, you know, fast channels, you know, paid playmate voting, etc, as we move forward.
Speaker Change: And we think there is continued growth there and then what we've been really working on is the pipeline moving forward, which we should start to see the benefit of that in the third and fourth quarter.
Speaker Change: With that pipeline and getting some of these deals across the finish line, which we're very close on in gaming and other areas.
Speaker Change: And so I'm excited by that and I'm really excited as I mentioned with some of the opportunities we have around content licensing fast channels.
Speaker Change: Playmate voting et cetera.
Speaker Change: As we move forward.
Matt Chesler: Anything else, Matt, for questions that came in online? Let me take a quick look. We do not have any more questions on. Great.
Speaker Change: Anything else now for questions that came in online.
Speaker Change: Let me take a quick look.
Speaker Change: We do not have any more questions online.
Speaker Change: Great well I'll conclude by thanking everyone for joining our Q1 2025 call look forward to talking to you sometime in the beginning of August when we report our Q2 earnings. So thank you everyone.
Matt Chesler: I'll conclude it by thanking everyone for joining our Q1 2025 call. Look forward to talking to you sometime in the beginning of August when we report Q2 earnings. So thank you, everyone.
Operator: Thank you, and this does conclude today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.
Speaker Change: Thank you and this does concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
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