XELB - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the Xcel Brands First Quarter Earnings Conference Call. Please be advised that reproduction of this call in whole or in part is not permitted without prior written authorization of Xcel Brands. And as a reminder, this conference is being recorded. I would now like to turn the call over to Andrew Berger of SM Berger & Company. Thank you. begin. may you Andrew,

Andrew Berger

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

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

nature financial operations. the the any these on and remains time. circumstances could what impact and today’s set a of significant uncertainty on call dynamic the pandemic of mean materially of COVID-XX ongoing condition, continues There addition, In change have to extent of The results at significant the flow business, is pandemic. cash impact about duration company’s the

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

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

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

may refer X to introduce non-GAAP measures. the X, and Robert ahead. Officer. Chairman or You Item go company’s And Part am of the the pleased on for a reconciliation to XX-Q Executive D’Loren, Bob, release I Chief Form please to of earnings now, attachment

Robert D’Loren

XXXX. some you, I Thank operating families hope us. call I Jim will discuss that, followed today’s all Haran, and our for with of start healthy. Good and will into remarks your our evening, results Andrew. everyone highlights and After in staying joining safe and are brief more some you insights by detail. you opening financial thank CFO,

business. quarter also expanding team of the but our growing recovering, and nearly during With us, and now of hard rebuilding at extraordinary has been just work XXXX the behind not first and events the XXXX,

QX of and year. mentioned QX wholesale with I QX last soft to expected growth and in to a we be in picking up earnings our call, this return normalized our businesses As in momentum QX

to to believe distribution, As value accelerate business. entered we we create beyond. all our we we recently our transactions, in into to In the of across see beginning a growth of significant wholesale X opportunities including order XXXX which enter green the are business, QX, of significant recovery shoots our and will channels expand

First, I the May XX platform, successfully that than in April we am X. have and in on the from integrated to been have early announce the initial we results performance April less licensing brand our days, and existing pleased brand’s acquired the Goldstein Lori business into strong.

will earnings We and this our Goldstein recovered Lori from in business the expect contribute COVID TV pandemic. interactive We of of remainder to the the QX fully for year. year believe has

and Isaac and well year. over last April doing month Our at of with plan sales exceptionally Mizrahi year is this every Live plan has exceeded up XXX% business sales significantly

Our Goldstein shortly to for prime and after off business plan XXX% a our sales and is great to start. Lori recently time was April of acquired acquisition reprogrammed generated

of amortization our over respectively, core capability of Xcel Ripka and on QVC and April channel Halston excited Judith channels to us results. in of our on term Also, our incredibly out be sales over XXX% Interactive HSN, do the Mizrahi loan. included wholesale a grow to of HSN of and brands to pandemic. COVID-XX on well XX, which provided refinanced on of continues million interactive we are in shopping by and the television Isaac in liquidity business for Canada as Fine and facility Brands, the debt XXX% QVC to coming see sales $X international TV we these Our businesses in sales which we’re Jewelry $XX HSN planned reduced the Australia, million TVSN with continue loan additional our channels, continue and in April including generated and

environment. COVID the subject impact gives available are track credit to for opportunistic I getting and on us, we approval back of believe business pandemic acquisition current exist $XX XXXX In up drive in line million, any is of transactions growth an that beyond. may in that of of to addition, this to lender retail us the now behind and the the the worst

of discuss to like distribution. would business channels I Now, by briefly our

As TV extremely stated, our is doing I interactive well. business

We to distribution. positions of with us grow in television live significant all our that experience across shopping also believe channels a stream interactive advantage

holiday streaming same the year our year. the period live for businesses, from up and Judith e-commerce compared Ripka Mother’s to was direct-to-consumer last up business our XX% and to now e-commerce Turning Day is XX%

XX% of to Our an our sales store I Longaberger this demonstrating year-end, all report year June, the that by am in $XX XXXX. e-commerce month streaming anticipated year-end streaming to of rate with its exceeding event growth million to of with brands. per with will continue first grow approximately in plan business direct-to-consumer a we the of pleased monthly conduct our Westchester rate first to run compared streaming across Live $X.X Ripka our simultaneously run at Judith businesses addition operations and live is of million live opening and strong

been the continued taken and XXXX, into approach to April QX. and of businesses, business with the to accelerating wholesale business heading significant we turning strong, growth outbreak with have in in COVID wholesale Now, to that apparel QX, business a to cautious sales our QX growth compared we the continues expect March. show since while QX as last have improve and

Our are business at over year over plan doors Judith opened over on doors to end. XX year. jewelry dramatically be Ripka is wholesale at last and up independent XXX% from We XX by

we as to Our more Saks, drop-ship programs year-end. drop-ship with open by retail retailers, premium are plan doing well, accounts such and

segments as As and for sales is our wholesale goal for mentioned earnings XXXX. our in over direct-to-consumer call, $XX million previous our

in the from we and excited to unprecedented for opportunities growth create impacts are value coming COVID-XX well years. and the pursuing I the of the we crisis, emerge as are quarters positioned by We am

May see, April all are I As a channels forward you our the year. green to can of the return and showing to growth of reporting throughout and shoots distribution across look progress

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

Jim Haran

a for results XX-Q, a report Thanks, good for this quarter, evening. XX% fully for which interactive discuss XX, was model transition Form quarter evening, our the March net a Bob, Total note are million, quarterly our and million channel that the filed will everyone. financial quarter Please revenues results the of driven $X.X described more approximately primarily briefly of Halston to XXXX. financial distribution. on ended our decrease I year $X.X wholesale in from television prior was or by

business this as as current expect Net our apparel to wholesale gross revenue year-over-year the fourth approximately increased wholesale the in the product As with well XX% the from of primarily by in until margin our Bob the XXXX. XX% the quarter increasing in as Declines third COVID-XX net wholesales, significant economic were from as offset sales growth, growth sales sales QX mentioned, From Longaberger of ongoing was XXXX, of remainder as year this we partially impact million branded impact rebound products. products growth of Despite sales the product perspective, compared profit down product in XX% of with year-over-year. not sales, which quarter. to a sales sales for $X.X television prior see were did grows. year product interactive a quarter consecutive result us of of our approximately of the pandemic, from by Judith the quarter e-commerce our in trend declines, Ripka

Our that volume benefits from margin gives certain move we arrangements revenues expect to of the long-term wholesale greater and and away model decision us direct-to-consumer licensing product to our from and increased through control growth.

negative for for earnings cash the increases a quarter. or year was per share basic of approximately non-cash basic per adjusted quarter approximately expenses from the million compared per year primarily $X.X $X.X $X.XX for loss positive by net $X.XX current minus and Our The the quarter. EBITDA $X.X compared loss, of $X.X million in current $X.X for current ourselves decrease per million share approximately the prior for payroll quarter. marketing or primary were $X.XX for in in net with top share million we in was share quarter in the or position items interest, for the non-controlling line EBITDA. $X.XX X.X% net non-GAAP certain with the $X.X the driven million year $X.X growth million prior million and million the quarter for prior million contributing Net as compared adjusting or operating quarter, was Adjusted and with factor After diluted year current in loss in non-GAAP diluted revenue costs excluding $X.X prior $X.X of minus XXXX. was decrease negative the up and quarter,

income, a adjusted non-GAAP net reminder, non-GAAP As unaudited terms. EPS and are EBITDA diluted non-GAAP

and items directly these reconciliation the of our comparable Form earnings a release presents Our XX-Q with press GAAP measures. most

had company cash XXXX. of cash of approximately the approximately XX, million unrestricted Now as $X March compared December cash and turning our XXXX, with at million equivalents to $X cash and of XX, liquidity,

this previously XX million $XX balance of company Goldstein X brand term over As the LOGO This following thereafter. acquired debt increased revolving increased our Lori on we facility, credit $XX.X and, with following of approximately refinancing refinancing. the to million the $XX liquidity coupled $X with million March term from the mentioned, Bob million as April year and our refinanced the shortly debt provides

result, a cash and $XX of As the million, approximately $XX million. was approximately of of our as April our was debt balance term net end cash

$X.X In was addition, average an of our by scheduled amortization reduced year. per million loan average

into strong over are funds drawn. the We the a back Bob provides mentioned, not future acquisitions. First acquisitions. our we and organically the $XX to and line balance to important It’s we acquisition additional Eagle, BHI sheet such pay entered capacity As until like financial that fees a to call that, note with Bob. they facility any believe And that also or million to I us business, capacity to grow for and with would credit for Bob? unused approval, which both company continue subject through to do other turn with that has

Robert D’Loren

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

Operator

come with Thank go Jefferies Jim ahead. our you. Capital. And will question from Instructions] Please today first [Operator Dowling

Jim Dowling

there Bob, on Hey, could going what’s Walmart on if update to anything is with you and us C. Wonder? say

Robert D’Loren

Sure.

we accessories spring business and with MGM the into footwear coming this businesses online are particularly continuing new The well. are added and We doing with categories several season.

now Walmart actually Our well in-store we in the to come potential getting there, we spring for ‘XX store. but for the won’t we’re concepts in and excited working handbag of of business on about buyers review, until know is sales. and are do And doing present to their

Jim Dowling

a possible this changer? Is game

Robert D’Loren

the be if – say business there get possibilities but we’re things into not with that at things Wonder. – most are I game diminish I would Longaberger of here, exciting will some that strong are particularly things is Longaberger Walmart we to the there in Jim. changes course, C. of Wonder but would the in be other say of us – store, good are also one it importance of with to XXXX working have to the C. with and happening, behind Walmart, it’s on, with a

Jim Dowling

Okay, thank you.

Robert D’Loren

Thank you.

Operator

ahead. go Shield. question next Brous come our Howard And Please will with from Wellington

Howard Brous

Bob, well. one you the are Gentlemen, well of not? any everybody I’m families little because glad your and is are getting sleep or

Robert D’Loren

– at a.m. a goes don’t baby but things unusual. and good. probably that baby is – sleep I’ve if very both, It’s every up is know It’s brilliant X pretty She this job. wife’s the wakes a or of So p.m. I thank at to are Howard. it’s my been a blessed, doing day. truly Yes, gift combination you. X

Howard Brous

it’s sure both. of combination I’m a

Let me focus moment. on a Longaberger for

end You revenue. million you year, of had by worth last mentioned doing of that the $X.X were

are million expectations $XX the that, you this one Your year. of by profitability? gives end assume that Can

Robert D’Loren

Yes. And clear, is weekly rate so run a just on basis. talking Howard, growth to we’re the be about dramatic sales because

we the we metric that fascinating in run $X,XXX per We’re it’s for as on And looking is to increase as business by each rate at grows, business stylist, members, a as us we recruit stylist look sales at forward. key a year. board go growth recruit which the

now, goal another exciting would is about have by the strong between running X,XXX we’re which very It’s business. and on-boarded So a stylists at ‘XX. X,XXX end run-rate to put X,XXX us X,XXX a going very to into year members

Howard Brous

adding many... you’re SKUs? members And and are As you so stylists, adding

Robert D’Loren

XXX with SKUs. close started we so to about we’re X,XXX. Yes, Today,

not our of this, is business marketplace. third familiar about you’re If with

that that making a then we’re as food in are we of another the to artisans part are companies and third Ohio. for we’ve home which then course, of function well So And still about are bring an products value-driven baskets, more function U.S., America built as Dresden, onboarding marketplace goods is around products artisans we products. marketplace. like and call of products, in that making our core fragrance third and buying the sourcing into what are consumables, And our and here

that grow expect we The to continue year-end get growth, there. currently, X,XXX X,XXX. by we’re to SKU to at goal So about – about and from is

Howard Brous

How because if XX, look thing just down going ago, X do Longaberger, to how can X billion this at so you years XX $X it at I look next go XXXX back looking I you’ve XXXX. described the road? So and over the this of to years, couple a is years Longaberger business, at

Robert D’Loren

terms goals think in on and it’s $XXX look the revenue, of business. way run we math the you and so do way of is at the At rate XX,XXX, stylists, we should the be a to it I then from just At for how million million we on. have at XX,XXX set $XX there. you’re

and he’s we at a We how recruiting, recruited up person it. direct look a and sales selling very and going senior drive that’s recruiting. the So just national from business head building the that’s team, to and come to

really base flywheel. a your add sales more stylist, it’s of the to The a more the bit of So you grow.

bankruptcy. what artisans out of live and the marketplace So business, to offering it the stylists, it’s coming That’s new recruiting onto to the the really increase Howard. onboarding reposition selling. of drives that company digital and direct It’s with product we the best and did streaming

Howard Brous

represents general XXXX on Just percentage live even or revenue asking ‘XX? projection? thoughts, much how a So for a on for looking XXXX basis potential your or streaming of not the

Robert D’Loren

Sure.

should our of it sales. about So be Longaberger XX%

month. currently of first We’re conducting every doing Monday exceptionally The shows well. shows live are the

streaming. X,XXX selling those currently are numbers to say that minute more QVC grows, around beat the minute television QVC as most live could per per we networks interactive think world, U.S. we’re than actually we And U.S. except when customer We base for XX,XXX

streaming. goal. the the So it from because We set way And here. centralize live as the that’s we is the we grows up grow streaming do we base space the stylist the customer live

have We the room. production

stream then to event, stream for paid fees just and follow-up event marketing they the they the invite and the their their need get after live just stylists, do invite. customers the to making live Our

Howard Brous

Alright.

Goldstein I coming Let then could I for revenue How in look turn me at XXXX terms XXXX-XXXX to and bad a in turnaround Lori Goldstein? Lori of at the timeframe. do ‘XX potential What ‘XX? look off of

Robert D’Loren

was were goal we big know, correct on the XXXX, we well. was, things well to product do you to made able in closed it’s to it. key time, which Certainly, double a closing. the back prime prime to prime in in to the opposed And selling Lori of get be difference resolved. after product some as reviews into very in of doing which sell-throughs new the us There almost is hours. now mistakes in Goldstein it business are immediately it working when we less were product as selling have back we one where was that So, for time, on get think The which would where Lori to is almost

Howard Brous

of a hundred in? about talking couple dollars million You’re

Robert D’Loren

Yes.

Howard Brous

revenue? In

Robert D’Loren

Lori for recording sales, in course, of we’re product. royalties. Well, Goldstein Yes. licensing And us,

ideal the an goal the acquired royalties from in double world, them. to would we So be where

Howard Brous

Alright.

items, I that Book book Any a than a company me, $X.XX two why as may, Let of value. to me look $X.XX book – isn’t often It better address situation exists? share are of thoughts if selling other XX% possibly XX%, value. that’s excuse for that is at selling I please. bit values a little

Robert D’Loren

It’s a answer, hard question to Howard.

part has a think would intangibles, it’s community. retail and hard value although in that been people not good, it more in in institutional trading of the the of market, big say understand volume that’s some is to the factor for from regards, community, I I but from the Xcel. valuing liquidity

Howard Brous

that. understand I

of out, acquisition the looking and two-thirds down an $X type line. paid you’ve taken million $XX as a Xx, You’ve Q, if multiple million, at? which I are acquisition for almost EBITDA purposes? of you of just came remember for reading What example,

Robert D’Loren

to X X.Xx brand less we’ve every EBITDA. Xx company months the more not than we ‘XX. speaking, in started new and/or generally royalties a So business acquired XX than to since date, paid almost We’ve and,

target. that is say the That’s would I So correct.

Howard Brous

looked pretax adding still acquisition amortization, an Xx at can’t I that the it, for rate million I So – $X target. million But at about million that if depreciation you and with the you’re EBITDA, $XX talking $XX call my and to you spending about $X.XX sound at being charged, made you’re know interest right? if to Is X% numbers close comment although EBITDA. Xx

Robert D’Loren

cuts, Your in it would speaking, the on sound it numbers That the And way be be could that do but more. are right. to the would speaking, we shareholders. could is accretive investing work. expense brand, works. be depending highly Generally the generally it If way less, somewhat that’s it

Howard Brous

of wish your you Bob, all you I best for thank time. the and

Robert D’Loren

Thank Howard. you,

Jim Haran

Thanks, Howard.

Operator

further to turn time. Mr. there And the this over any I’d no back closing remarks. call for at like questions to D’Loren are

Robert D’Loren

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

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

Operator

you The attending Thank for presentation. conference now concluded. today’s has

You at now lines your time. disconnect may this

Andrew Berger	Investor Relations
Robert D’Loren	Chairman and Chief Executive Officer
Jim Haran	Chief Financial Officer
Seth Burroughs	Executive Vice President, Business Development and Treasury
Jim Dowling	Jefferies Capital
Howard Brous	Wellington Shield

Xcel Brands (XELB) 18 May 212021 Q1 Earnings call transcript