Earnings call: Live Ventures reports Q1 revenue surge

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Earnings call: Live Ventures reports Q1 revenue surge
Credit: © Reuters.

Live Ventures Incorporated (NASDAQ: LIVE), a diversified holding company, reported a significant increase in first-quarter revenue for the fiscal year 2024, despite facing a net loss. The company, which specializes in acquiring and operating businesses in various industries, recorded a 70.5% increase in total revenue, which amounted to $117.6M. This growth was primarily driven by recent acquisitions, including Flooring Liquidators and PMW, and an increase in the flooring manufacturing segment. However, the company registered a net loss of approximately $700,000, with a loss per share of $0.22, contrasting with a net income of $1.8M in the previous year. Adjusted EBITDA saw an uptick of 15.3%, reaching approximately $8.7M.

Key Takeaways

  • Live Ventures reported a 70.5% increase in first-quarter revenue, reaching $117.6M.
  • Net loss for the quarter was approximately $700,000, with a loss per share of $0.22.
  • The acquisition of Flooring Liquidators and PMW contributed significantly to the revenue growth.
  • Adjusted EBITDA increased by 15.3% to approximately $8.7M.
  • The company repurchased 4,346 shares of common stock at an average price of $24.51 per share.

Company Outlook

  • Live Ventures remains focused on increasing productivity, expansion, and innovation.
  • The company continues to execute its long-term buy-build-hold strategy.
  • Management is committed to creating long-term value for stockholders despite industry pressures.

Bearish Highlights

  • Retail entertainment revenue decreased by approximately $2.7M or 11.5%.
  • Corporate and other revenues decreased by approximately $1.2M or 93.2%.
  • Gross margin percentage decreased to 30.9% from 31.8% in the prior year.
  • General and administrative expense increased by approximately $13.1M due to recent acquisitions.

Bullish Highlights

  • Flooring Manufacturing revenue increased by $2.8M or 10.6%.
  • Steel manufacturing revenues increased by approximately $15.4M or 85.5%.
  • Flooring Liquidators contributed a gross margin of 38% in the quarter.

Misses

  • Decreased revenues of approximately $6.2M in other businesses.
  • Decrease in gross margin in the Steel manufacturing segment due to the acquisition of PMW and reduced production in other steel businesses.

Q&A Highlights

  • No updates were provided regarding the buyout proposal on LL Flooring.

In summary, while Live Ventures experienced a substantial increase in revenue, the company's profitability was challenged, resulting in a net loss for the quarter. The acquisitions of Flooring Liquidators and PMW played a significant role in the revenue growth, and the company remains focused on its strategic objectives. Despite the mixed financial results, Live Ventures continues to prioritize long-term stockholder value and its core strategy of buy-build-hold.

InvestingPro Insights

Live Ventures Incorporated's latest financial performance has certainly caught the eye of investors, with a notable increase in revenue juxtaposed against a reported net loss. To provide further context to these figures, let's delve into some key metrics from InvestingPro and consider what they may imply for the company's financial health and investment potential.

InvestingPro Data:

  • Market Cap (Adjusted): 76.21M USD
  • P/E Ratio (Adjusted) last twelve months as of Q1 2024: -22.36
  • Revenue Growth last twelve months as of Q1 2024: 43.83%

These metrics suggest that while Live Ventures has experienced significant revenue growth, this has not yet translated into profitability, as indicated by the negative P/E ratio. However, the strong revenue increase is a positive sign that the company's recent acquisitions are contributing to top-line growth.

InvestingPro Tips:

1. Valuation implies a strong free cash flow yield

2. Liquid assets exceed short-term obligations

The first InvestingPro Tip indicates that despite the current lack of profitability, the company's valuation points to a strong free cash flow yield, which could be appealing to investors looking for potential cash-generating investments. The second tip reassures investors that Live Ventures has a healthy liquidity position, with liquid assets that cover its short-term financial obligations.

For investors seeking a deeper analysis, there are additional InvestingPro Tips available that can provide more nuanced insights into Live Ventures' financial health and future prospects. By using the promo code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of data and expert analysis to inform their investment decisions.

Full transcript - LiveDeal (LIVE) Q1 2024:

Operator: Good afternoon, everyone and welcome to today’s Live Ventures Q1 Fiscal Year 2024 Earnings Call. [Operator Instructions] Also today' call is being recorded, and I will be standing by if anyone should need any assistance. Now at this time, I will turn things over to Mr. Greg Powell, Director of Investor Relations. Please go-ahead sir.

Greg Powell: Thank you, Bob. Good afternoon and welcome to the Live Ventures first quarter fiscal 2024 conference call. Joining us this afternoon for the call are Jon Isaac, our Chief Executive Officer and President; David Verret, our Chief Financial Officer; and Eric Althofer, our Chief Operating 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. You can find a copy of 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 our historical SEC filings. I will now turn the call over to David to walk you through our financial performance.

David Verret: Thank you, Greg, and good afternoon, everyone. Before I jump again to the numbers for our first quarter, let's briefly discuss two acquisitions that Flooring Liquidators completed during the quarter. Flooring Liquidators, our retail flooring business acquired two Midwest flooring chains, which added 10 new showrooms in Arkansas, Oklahoma and Missouri. We executed these transactions because we believe there is a significant opportunity for Live Ventures to use our capital and resources to expand and enhance deploying Liquidators business and product offering into new markets. Now I'll discuss the financial results for our first quarter ended December 31, 2023. Total revenue for the quarter increased 70.5% to $117.6 million. The increase is primarily attributable to Flooring Liquidators and PMW, both of which were acquired after the first quarter of fiscal year 2023 as well as an increase of approximately $2.8 million in the flooring manufacturing segment. The increase was partially offset by decreased revenues of approximately $6.2 million in our other businesses. Flooring Manufacturing revenue of approximately $29.2 million increased by $2.8 million or 10.6% as compared to the prior year period. The increase in revenue is primarily due to the buildup of its sales force as a result of the acquisition of Harris Flooring Group brands in the fourth quarter of fiscal year 2023. Retail entertainment revenue of $20.6 million decreased approximately $2.7 million or 11.5% as compared to the prior year. The decrease in revenues is primarily due to reduced consumer demand and a shift in sales mix for its used products, which generally have lower ticket sales with higher margins. As previously announced, we added the retail flooring segment in connection with the acquisition of Flooring Liquidators in January 2023. Revenues for retail flooring were approximately $34.3 million in the first quarter. Steel manufacturing revenues of approximately $33.4 million increased approximately $15.4 million or 85.5% as compared to the prior year. The increase is primarily due to the acquisition of PMW in 2023, which contributed $17.5 million of revenue in the quarter. This increase was partially offset by a $2.5 million decrease in our other steel manufacturing businesses due to reduced consumer demand as a result of general economic conditions. Corporate and other revenues decreased approximately $1.2 million or 93.2% to $100,000 as compared to the prior year period. The decrease is primarily due to the closure of SW Financial in May 2023. Gross profit for the quarter was $36.3 million, up from $21.9 million in the prior year period. The gross margin percentage for the company decreased to 30.9% from 31.8% in the prior year period. The decrease in gross margin is primarily attributable to reduced margins in the Steel manufacturing segment, partially offset by the acquisition of Flooring Liquidators, which contributed a gross margin of 38% in the quarter. The decrease in gross margin in the Steel manufacturing segment is primarily due to the acquisition of PMW, which historically has generated lower margins as well as reduced production in certain other steel manufacturing businesses. General and administrative expense increased approximately $13.1 million as compared to the prior year period. The increase is due to the acquisition of Flooring Liquidators and PMW, which collectively incurred $14 million of general and administrative expense during the quarter. Selling and marketing expense increased approximately $2.3 million as compared to the prior year period, primarily due to increased sales personnel, trade show activity in our Flooring Manufacturing segment and the acquisition of Flooring Liquidators. Interest expense increased by approximately $2.1 million as compared to the prior year period. The increase is primarily due to increased debt balances related to the acquisition of Flooring Liquidators and PMW. Net loss was approximately $700,000 and loss per share was $0.22 as compared to net income of approximately $1.8 million and diluted EPS of $0.60 in the prior year period. The decrease in net income is attributable to the lower operating income and increased interest expense. Adjusted EBITDA for the first quarter was approximately $8.7 million, an increase of approximately $1.2 million or 15.3% as compared to the prior year period. Turning to liquidity. We ended the quarter with total cash availability of $45 million, consisting cash on hand of $5.6 million and availability under our various lines of credit totaling $39.4 million. Our working capital was approximately $81.8 million as of December 31, 2023, compared to $85 million as of September 30, 2023. Total assets were $436.6 million and total stockholders' equity was $99.4 million as of December 31. 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 4,346 shares of common stock at an average price of $24.51 per share. As of December 31, the company had approximately $3.2 million available for repurchases under our repurchase program. In conclusion, we are pleased that our first quarter revenues increased 70.5% and adjusted EBITDA increased 15.3% as compared to the prior year period. However, our businesses continue to be impacted by industry-specific pressures. As a result, we remain focused on increased productivity, expansion and innovation. Despite the challenging environment, we remain focused on creating long-term value for our stockholders by executing our long-term buy-build-hold strategy. We'll now take questions from those of you on the conference call. Operator, please open the line for questions.

Operator: Thank you, Mr. Barrett. [Operator Instructions]

David Verret: Let's take a question from Mark, please operator.

Operator: Certainly. We'll go to Mark Schleifer at Alpine Global.

Mark Schleifer: Hi. How is it going. Thank you for taking my question. I was wondering if you guys had any updates with regards to your buyout proposal on LL Flooring?

Eric Althofer: The answer is we do not have an update to share with the public at this time. But I do appreciate the question, Mark.

Operator: Thank you. [Operator Instructions] And gentlemen, it appears we have no further questions this afternoon. I'd like to turn the conference back over to the Live Ventures management team for any closing comments.

David Verret: I just want to thank everyone for joining the call and we look forward to our next earnings release next quarter. Thank you.

Operator: Thank you very much. Again, ladies and gentlemen, that will conclude the Live Ventures Q1 fiscal year 2024 earnings conference call. We'd like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.

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