XELB - Earnings call transcript Q1 2019

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Operator

Thank you. Ladies and gentlemen welcome to Xcel Brands' First Quarter 2019 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator instructions] Please be advised that reproduction of this call in whole or in part is not permitted without prior written authorization of Xcel Brands. this is reminder recorded. a as conference being call And conference to Andrew Co. I like the over & would now Berger turn to SM Berger of you. Thank Andrew you may begin. now

Andrew Berger

which Relations had your release for morning, of call quarter XXXX Securities is today's available Business to Vice company release Seth and Officer, the XXst, and today. access Robert replay Treasury, the be us. will Good and May Jim thank on the in Officer, the plans Chairman its interest. a Burroughs. you will Development for Commission be Executive addition tomorrow everyone quarterly Chief report and quarterly We website call us and report went everyone, the are website. This earlier should on at out www.xcelbrands.com. appreciate earnings By Exchange President D'Loren; Form first participation Chief on Investor being Haran; available and with With Executive have The to joining the company's now on the Financial and March and XXXX. file webcast XX-Q And XXth, company's ended

to any update could statements. materially Before new otherwise. keep revise company's Xcel of does will filings. and events forward-looking or or SEC that are expectations in statements discussed not a are All certain the obligation These in factors any to detail future from cause that risks risk subject publicly forward-looking in explained whether information this we undertake result forward-looking as contain uncertainties actual results statements differ call mind please begin, to today. here

measures as share, adjusted refer non-GAAP net that to non-GAAP note on management diluted please today's earnings certain non-GAAP EBITDA. will financial such Finally, per and income, call

to performance non-GAAP these relating a period-to-period on identify company's comparing basis from management operating results Our in business operations. metrics and as trends to the of to consistent of assist performance measures uses

certain for measures investors share, results thus assist financial events in management also and measurements of costs be non-GAAP believes useful they per other accordance that because representative information evaluating believes or are operating adjust management considered are net supplemental these financial or business measure performance not earnings the to company's results. should calculated and as measures provide Our these other with any core not alternatives and income, presented of in These performance to GAAP. in isolation financial our

to of a of You attachment X for in release company's to XX-Q the may the the non-GAAP earnings reconciliation or Part X Form measures. refer Item

I'm ahead. Executive Now, Chairman go Robert pleased Officer. Chief to introduce Bob and please D'Loren,

Robert D'Loren

Andrew. you, CFO, our us. and provide detail highlights everyone you thank some the will then After Jim discuss year. opening morning more operating financial call will for on Haran that, results joining our and the in our Thank rest we Good conclude for I'll financial the with by thoughts of then and start and Q&A.

our started QX improvement We and attributed highlights. drivers get revenue and XX% financial jewelry to this be showed an let's in with Now, to The XXXX. e-commerce jewelry wholesale XXXX in compared of can business. continued apparel QX our businesses increase increase in

our finished over-planned approximately of our non-recurring nearly Overall, EBITDA our also year are We prior $XXX,XXX. was adjusted we adjusted from charges after the quarter. in pleased which quarter add-backs for EBITDA equal quarter with the to results

vertical transition company. As completion company consumer operating from media, a of our previously reported, technology-based are we a and licensing products, nearing to

products brands in This channels TV remains our all sales of of mortar via includes on our bricks brands and and focus and e-commerce. expanding direct-to-consumer interactive wholesale Our distribution.

our strides We top our are encouraged continue by line revenue in developing growth make current and to platform.

consider strategic to us opportunities. for favorable are conditions believe we Finally, acquisition

our is Isaac Mizrahi our at by brand. distribution look performing interactive well, operations channel, closer in television a especially business taking Now

brand continues planned Halston by new some in in Judith on Ripka we designs macro channel. headwinds exciting QVC, brand. the business while We to this in and H jewelry be our have our introduced see And

Italy. in broadened and and develop is from some in and more start and designers team. off U.K. businesses. in grow international This promising. I of to good merchandising our are senior very particularly level the wholesale our and new Early highly we nicely, accounts growing wholesale QX, with and and our In apparel business, XXXX, direct-to-consumer the direction a to is team am executive a pleased operations fully order Finally, recruited the indications products experienced retail

wholesale also businesses continued and strong show e-commerce to Ripka Judith growth. Our

five the products in our The integrated and QX XD of leverage to to through designed launch of fully technology, launching then consumer collections enabled insight are new collections design pass testing. We us utilizing latest were which platforms. and technologies QX XXXX, which all choose

We jewelry pre-sales This assess to forecast inventory images. have with demand ability experimenting utilizing also apparel in the and successful, and exciting and all to is if begun management these industries. has transform

our for of have conclusion, on QVC. that we successful This a expectations. be shop. in we some exceeded so they ahead. continues all with and collaboration announcements our retail Finally, all-channel in distributions through quarters the our positioned similar to collaboration specialty presence was ourselves customers Balance recently business, our We New plan forms we the everywhere in to make to approach, In announced that programs establish additional can our reach

company less as to of for through add-ons organically platforms, our that potential implementation business funding of that and Now, operational both suitable integrated fast-to-market the nearly growth, the to may as acquisition more drive strategic of will believe, and we advanced with well companies technologies be and complete and our continue than the we technologically the business. opportunities create to planning, our transition ever,

quarter. to to call Now Jim our the financial the review Jim? over turn to results like for I'd

Jim Haran

discuss the and revenue Form financial with the results $X.X our tomorrow. wholesale prior will XXXX. jewelry our quarterly operations. more XX% will XX, report year quarter. described Bob, to $XXX,XXX and $X.X for from million by fully everybody. or briefly by primarily note of over are which I increase on apparel the good sales quarter and March quarter, an e-commerce by overall, year results million, financial morning, decreased ended the be Net million $XX.X Thanks, the to XX-Q, million that in prior increased from Please $X.X SEC in Total filed revenue, driven

that extinguishment share to an share, and Heritage average XX.X for product a year brand After was approximately per for by increase with and per XX.X and prior Our million. the approximately $X.X net million loss weighted sales There the per brand $X.X management Net revenue of debt, diluted million for the a of brand increased and back expenses by expense the decrease design year was of gross year's the $X.XX $X.X non-cash $X.X prior in offset non-GAAP first the bank finite was or earnings prior prior and increase was quarter Halston brand, Total the year current on February. $X.X the the quarter year share EBITDA the the Halston extinguishment $X.X of income million, quarter prior million, refinancing quarter, Approximately in debt Halston share, interest for attributable $X.XX attributable operating has to certain no fees. Halston loss share was of adjusting life, approximately The licensing quarter. Current the quarter million, acquisition finance in amortization of and XX-year $X.XX subject was trademarks, an million outstanding in acquisition debt. million $X.X life, for diluted first our Upon the in the quarter. quarter amortization per or we trademark. first Halston as a net determined million shares and expense items, or margin in cash per from portion million amortization. compared quarter in the $X.XX increase to compared compared was amortization respectively. income to $X.XX million, increased for primarily non-GAAP our Halston triggered million term year to diluted Halston for by on last was $X.XX expense fund the diluted Adjusted debt quarter. $X to income Total of with on restructured of based quarter. the during

and decrease attributable which from Our adjusted non-GAAP EBITDA XXXX income, are the revenues. was non-GAAP diluted net EPS net to in slightly down

the our Heritage million attributable at $X.X to Halston had of $X.X unrestricted as and XX XXXX. approximately March of the Halston XX, the equivalents to cash used position, company cash XXXX acquisition $X now of approximately of was total December million and cash million primarily cash million of decrease Turning Trademarks. cash The in compared with net $X.X

million and Looking lease operating accordance net ASC total contingent of lease deferred a which liability. million right-to-use liability XX, includes with million liabilities $XX at liability March of million of $X.X operating of debt, XX were In have $XX at an approximately debt, approximately XXXX lease million with $X.X of operating and $X million $XX.X $XX.X approximately obligations we term at our XXX million. related recorded asset March cash

In $X.X XX, of ends in $X.X period Wonder all target C. or stock cash with rent option, The reduced to the addition balance the the for XX, June XXXX at payable million December million earnout the XXXX. acquisition accrued we contingent associated obligations X. the contingent company's obligation

payable $X.X no portion inclusive the debt payment at stock in million total quarter. the XXXX second on our of to liabilities million, the contingent $X expect March in approximately of were million current long-term obligation obligations At We $XX made be XX, and contingent current option. this of of

would exclusive used Heritage working of XX. Our the Halston to the reclassification like with million first And I accrued Halston lease million the decreased obligations Bob. was cash current $X.X Bob? that attributable current in at in quarter, $X of $XX.X acquisition the with contingent the liabilities primarily million. to back Working December a to the million of over $X.X and of of to turn portion operating capital to capital rent $X.X portion Trademarks call million of approximately compared by the and

Robert D'Loren

Ladies remarks. our Jim. you, Operator? and concludes gentlemen prepared this Thank

Operator

D.A. first Instructions] Our of Davidson. comes question Michael Kawamoto [Operator from

Michael Kawamoto

How’s guys. going? Hey, it

Robert D'Loren

Michael, how are you?

Michael Kawamoto

line as Doing year how good in thought? business, should about the we a back just the well, how progresses? the in see saw you congrats apparel last it of should think wholesale growth then you call? sales in we have acceleration about the in the on we what Will with maybe an just of year thinking kind how would ramping half out starting -- trending quarter, is be wholesale on And

Robert D'Loren

little we with of the EPS in generate a see we We on and Michael to topline. our non-GAAP, can think retail overall QX back were on expect bit little Yes. that QX. to had pulled But EBITDA and the able I acceleration the partners and with balancing we a in hoped inventories QX were adjusted course for goods. bit you the more QX. were happy

Michael Kawamoto

XXX% at over Ripka, And you year still e-com call to Sounds it I said pivoting has you on last that good. the it last the Is are be Or changed then -- on still trending anything was business. on Judith runway? think there? to

Robert D'Loren

Yes, yes.

get them weekend, with insight technology look further we new early through additional expect and read four of be to all a collections or collections through on And images, with beauty risk onto make they incur that We began year-end be Judith read we images, took those insight any have a kind apparel. based we coming then e-com is of have collections or testing those samples than indications And these we demand. on the presales realistic testing were market our we little are. past that jewelry consumer these are consumer this to And by which And we don't a able running this strong. over The we inventory The in demand. with images, were reservations same deliveries able up interesting to where of full to bring to running good. platforms put the to along for testing. looked for XD. July jewelry further We on get just real mold behind website read With would design a in because it's them we new very with the and on plan of XD And all loaded are place Ripka will apparel in establish. in we XD we take it launched. until was getting

very new well are received Ripka. with continued lines the expect being we how and from The year good So along last customers. year our this would of growth grew to collections by Judith we quite strong

Michael Kawamoto

some had Got interactive I And Judith building headwinds you you elaborate it. you Can Ripka, on you're think on just what that seeing TV the on there? said segment.

Robert D'Loren

headwinds doing not brand with It's per se. the brand The well. is

continue jewelry. QVC on headwinds the of and we largest are That from plan jewelry. channel of distribution be -- to there been one jewelry allocating We have categories it been time has said exceeding month. other in It's each with QVC. to that away taking air brands

brand as We are the QVC both brands the on only well QVC jewelry or one too. as networks only jewelry of and HSN

happy macro are what's level happening jewelry at we with to on So relative the QVC.

Michael Kawamoto

it's it. just your know of have case you some could China? because on last What need yet if footprint top hasn't then And Got your the manufacturers named been everyone's I And In pivot there? exposure you worked but mind. is in tariff's with your list, be? apparel

Robert D'Loren

a to So closely. apparel. pivoted this and production to manufacture to we we of AAFA have participate I places now wait we And monitoring and Vietnam. XX% year our it's last new we will to with actively fairly Vietnam and in close look our continue are the of all this see. about And for

Michael Kawamoto

your Got luck much it. for and year. rest for so the good the time, Thanks of

Robert D'Loren

Thanks, Michael.

Operator

questions are for There I to closing over now to further at Instructions] the would turn remarks. this call any time. Mr. no [Operator back like D'Loren

Robert D'Loren

and all Ladies you this thank for We Xcel gentlemen, interest greatly and in your support appreciate morning. Brands. continued time your

As healthy. eat well, and be always stay fit,

Operator

conference concludes call. that gentlemen, and today's Ladies

You and for you day. may have pleasant disconnect a your Thank participating lines.

Xcel Brands (XELB) 14 May 192019 Q1 Earnings call transcript