XELB - Earnings call transcript Q2 2021

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Operator

Thank you for standing-by, this is conference operator. Welcome to the Xcel Brands Second Quarter Earnings Conference Call. [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. And as a reminder, this conference is being recorded. I would now like to turn the call over to Andrew Berger of SM Berger & Co. you. Thank now may begin. you Andrew,

Andrew Berger

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

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

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

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

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

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

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

Robert D'Loren

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

business. a was quarter and of XXXX quarter our of second The growth expansion for

I wholesale Flagship of including Judith acquisition are business. jewelry our the of on organic opening of growth and of continued grew XXXX, second move pleased momentum am April we quarter the XX% we XXXX half notably sources with we line the nearly XXXX to sources second that and have in as Goldstein X XXX% towards a Jewelry and XXXX. in dramatic expansion our combination came brand, built accelerate inorganic business, in This over the and quarter our the the first eager revenues we from wholesale by of the growth capitalize momentum Ripka our Lori businesses from e-commerce top strong of As the growth the rebound Logo our apparel from and of store sales, our

current That increased increases, continued in a and of strong business apparel the are apparel which delays and is certain product to will growth expect logistics QX conservative decrease pre year. management QX driven our And in delivery pandemic planning our revenues costs, our inventory eclipse warehousing in wholesale in products. future by approach recovery the global slower We and that this quarterly costs we levels. said, given trends margin related

I'd to distribution. channel briefly our discuss to turn like Now, business by

Isaac live year. interactive almost exceptionally Mizrahi, plan is our Logo prior business doing television X% exceeding led businesses Goldstein and lives Lori well. is up and XX% the Isaac by by Mizrahi from is Our

after to or growth significant Our and acquired to TV our currently shortly recently Lori added I Goldstein our our reprogrammed has should primetime acquired business business. acquisition was say interactive

to result, to of to our channels, we compared in a international certain on our interactive for quarter, continue the shopping Xcel excited including this TV TV we're well. channel businesses are SN incredibly and brand included revenues prior continue and do grow up and our see in sales to channel wholesale a in results. XX% are core QX which Interactive continues As brands, year TV our be the in in interactive and Australia, Canada with television business HSN

e-commerce to streaming and live now to our direct Turning businesses. consumer

the same compared sales XXX% the are period up with Our year Longaberger are in ecommerce prior to Judith compared XXX% quarter year. and combined up Ripka the prior almost over year-to-date,

which first contributing of in with the the month go months. were and conducted first been due in the stylists event New are our Judith premiere for active Longaberger to event XX% for on Longaberger, has live continued to we are In averaged and plan six streaming valuable conducting brand. streaming which XXX% event Ripka our and thrift we the the growth for February resource we June, have up business. results up show, live our live sales Since second streaming September we a one per memberships significantly pleased

held past our this and numbers. most XXX,XXX $X,XXX fact, in we over sales Monday show to or outstanding are achieved In These date per minute. successful night,

Given our believe XXXX. X us. new this growth distribution, greet are shows can our rate current for we per we waiting the In of community, or that by generate stylist end in future XX,XXX million the Longaberger to minute the channel not

We are fact reaching to greet in it. out

our to our last outbreak wholesale business wholesale improve since continues COVID apparel Now turning of to the businesses, March.

to as Although we take relates it our near for management continue a approach the cautious inventory term. to

forecasting committed accordingly. clear take dropship demand inventory programs. sales or for without our We are not going to positions

forecasted for line re XXXX. have business inventory We our this with in risk tolerance

products. further We will time the use to this goal best possible of apparel making our

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

as premium programs well growth half retail those the accounts with retailers and dropship doing programs of dropship end, Our showing Saks by to with XXX% open such are more year we plan for XXXX. first

and streaming to our the important in planning of at C. We belts We at with line Finally, ended have in Wonder handbags, live business. this and branding action a that luggage the Wonder XXXX the XX% for we settled significant and event that Walmart in customer. with C. boost retail now spring and Walmart. in in points up first half will new XX live we of believe believe footwear and XX% XX% stream launch work XX% our price a provide apparel are

to impacts of the unprecedented continue coming see the to value create by quarters excited I'm the years. are and pursuing improvements we and We crisis the and in COVID-XX opportunities

are very about our of distribution encouraged continued success. growth all in We channels the by we our and are optimistic of

the our to financial turn like Jim for call would results to quarter. discuss I over Now, the to

Jim Haran

Please brand increase and initial of also the current during to significantly the Jewelry quarter jewelry increase e-commerce attributable Thanks, brand, increased that months $X everyone. higher the sales approximately in will quarter $X.X Goldstein contributes by COVID-XX second Net also for prior briefly report continued the $X.X by to primarily revenue wholesale and with $X.X sales million. sales trend for Bob. million ended XX, a while by grew million. recover of XXXX in current fully Goldstein over the to And by by million quarter These brand the Judith the of described retail as Ripka year to fourth a This negatively the attributable quarter quarter net are XX% revenue increase Isaac six quarter COVID-XX power April licensing severely our of XXXX. were wholesale as we approximately prior the This evening, substantially [X:XX:XX] outbreak more August this of the year Good sales million to in representing June revenue products to supply branded of XXXX. in discuss by also results pandemic. recent to of offset generated in from the wholesale the the X licensing revenue from $X.X with XXXX or million, year-over-year an outbreak results wholesales in Total the quarterly initial from partially by as quarter. From a as quarter attributable driven with sales sales increased product of This compared performance strong financial financial $XX.X Lori Form-XXQ XXX% rebound brand. well first I primarily were the and the to brand. continued wholesales note was growth, [X:XX:XX] revenues increase product was the and perspective, by XX. on Net increasing licensing revenue to the quarter by which file licensing consecutive in approximately was was a impacted a approximately of of second Longaberger SEC the XXXX. transitioning Lori model. acquisition primarily sales, acquisition increase increases in of decline was plan a

and quarter, operating including Our as costs, note of non-essential normalized COVID that the million and by taken direct the expense compensation and quarter, were in It payroll reflected actions management Goldstein while expenses cutting wholesale in from fuel well current the were reductions driven pandemic, costs, cost marketing up by COVID-XX brand. expenses of in million and the impact the to is consumer levels. important the prior quarter as Lori quarter primarily businesses, help reduction our to growth expenses increases $X.X response to employee post current to $X.X related reflect the prior operating to temporary for that

for $X.XX year-over-year share, with and a minus the April to Additionally, per the through current million $X.X in loss net approximately net certain of certain approximately $X.XX EBIDTA. prior share the prior income interest Interest per quarter quarter. prior mentioned expenses. cash the including assistance, for share as current costs per finance term of above, the EBIDTA was quarter Adjusted quarter loss the assistance $X.X for through along for interest principal of million and non-GAAP GAAP basic received operating under of long year that CARES of the XXXX diluted was and paycheck After received Subsequent a term approximately attributable compared was quarter quarter. $X.XX $X.X the $X.X or quarter This Act, protection compared the year prior year current term for adjusting recognize refinancing $X.X interest on in $X.X with benefit items, expense program extinguishment drivers basic quarter. in the new excluding or was expense which government loss the protection $X.X quarter prior per the diluted compared prior on primary to or The high the a the Net million, loss compared year higher million the in paycheck increase of XX negative million for for we non program increase balance XXXX, with to loan million $X.X were due second million including with rate and reduction the impact million minus net $X.X government or of debt share, quarter. $X.X with million quarter agreement. higher non-cash non-controlling was million $X.XX the debt. for change

net GAAP terms. non of diluted on GAAP and adjusted EBIDTA non or EPS reminder, the a all As GAAP income, non

a measures. these and GAAP comparable Our earnings items the reconciliation release present most with of directly Form-XoQ press

million. Net Mizrahi months. $X the live sales $X Longaberger current six driven grew acquisition Lori e-commerce, million, six Goldstein for Isaac of wholesale continued months month jewelry commerce million Similar Margin in $XX.X by and new of warehousing six both offset quarterly expenses, expense. Moving to $X.X at first mainly months the six highest revenue mainly sales. XXXX primarily XXXX to over the June for of million This results to social expenses approximately in our Operating current and net related the period higher period $X.X fees the brand results. sales. through consulting the to net approximately licensing XX In and the Gross performance approximately costs increased year-over-year lower for the bad driven sales contributed six total the also this marketing of driven debt increase Lori costs, of $XX.X and for prior the for was expenses approximately Goldstein combination of a $X.X revenue increase million. approximately brand, XX% to months million by partially and six XX% product increase to ended million current the month Net months salary $XX.X combination recent month increased due recovery from was six six product shipping or constant and The to remain to million the by and the product sales to significantly the rebound by higher product prior by the home streaming. brand. sales the brand prior to the period strong net increased

$X.X $X.XX breakeven approximately $X.X with After six $X.X a increase for pandemic Adjusted in diluted reflect above current results, six of a $X.X prior period. net with in to to $X.XX mentioned the with prior six months. current six with GAAP that months the The for actions million $X.X Interest attributable COVID-XX minus it's the approximately compared or paycheck net year per approximately finance excluding of the impact million keep system the for and received As diluted EBIDTA operating month million $X.X six mentioned our the items, six per million year the EBIDTA. the share, certain cash share, loss primary $X.XX through year-over-year and the change term to and in per comparable and This the prior and benefits or quarterly share was year response of was impact reduction months. current increase months. government loss $X.X prior non the non- for certain months the debt. previously the $X.X or expense or $X.XX basic million of essentially million for adjusting for costs non-cash million Protection drivers with Program. of assistance compared prior was mind the the share in for interest non-controlling Net compared important in for cost with GAAP operating expenses income loss year the prior loan basic was million along months per with current refinancing minus were of compared six net

Turning liquidity. our now cash our and to

the June Lori flow the change our million acquisition compared pays a equivalents approximately and XXXX. term company a cash the $X.X from in meet facility activities, wholesale million, cash businesses. well to using operations cash direct million XX of the for the consumer million revolving built Cash result This $X increases by with had unrestricted Goldstein of of $X.X as loan inventory cash as $X.XX offset XXXX, and cash and on As of of is and loan to generated draw expected debt brand. December at of financing approximately including refinancing XX

cash million million million, including our Bob? million. $XX.X million I like obligations at working debt And And total increased and Bob. $X.X year to would revolver. call end approximately our from to XX under over that, operating June $XX.X of XX our finally, term the debt XXXX to of net current million was $X.X XXXX. net And $XX.X of lease back debt, at excluding with at was turn XXXX the Our capital, June $X.X portion

Robert D'Loren

you, prepared our remarks, Thank This concludes operator? Jim.

Operator

question go Jefferies Instructions] [Operator Dowling Please Capital. from first comes ahead. The Jim from

Jim Dowling

you. for questions two have I Bob, Hey,

you detail significance model? into the some in Halston of is the change outlook? The the go first could business it more What's the and one on

Robert D'Loren

So products a consolidated Sure. interactive transition the worldwide, and wholesale from the brand are department stores moved a How design offering licensed model and our are now you teams. television we as QVC We're HSN. model Halston to Jim? to interactive and same and we or from with the

see it's category, as the acquisition it and not HSN at of acquired apparel recent QVC business fairly opportunity QVC. at we apparel is a as know, lot you HSN And to is not there the As as with core brand. as a as with a

impact coming that where more QVC. the business we we the had profitable primary off point where business us, margin get the royalties for were. that ramped much now at of dollars It's it transitioned were the was a where are we exceeding GMRs So after minimum that to to crossover margin with

Jim Dowling

What's the that? on timing

Robert D'Loren

would wasn't an interactive that, by over COVID, but really wholesale I that of as only say various the and sails will year, you around that business, country. our we establishing the not adapt would have crossed TV, the already with know, of in cross there. over, stores took expect from if it out we a end We for that this probably department wind

Jim Dowling

is, question comments weather. positive infer C. Wonder and I Walmart Okay. My second being your about as

somewhat outstandingly positive? give So my it us positive? is, color question you some in on Can someplace that? Or it Is is between?

Robert D'Loren

sales in all are say I would. between, up. unit would those somewhere I categories it's that Sure, you across know,

for Walmart where a event planned. are this sell live brands we're with help if experimenting to Walmart. fall discussions there the with and with with through different it adjusted I been And spring all stream to [ph]. season, product all is Walmart floor we we in about their as now to that excited, can we Walmart points will think match this new very now we And retails retail be help we've and collection. efforts. things spring do with know, Walmart you accelerate goes And helpful on spring to a And streaming the where that accelerate think price that As the with similar live

Jim Dowling

Thank you.

Operator

The with ahead. Please Howard from go Brous comes next Wellington Shield. question

Unidentified Analyst

calling on be the to Yes, able an would you of hello. Howard I'm on Brous, us give update behalf acquisition?

Robert D'Loren

Longaberger? or referring to Are Goldstein Lori you

Unidentified Analyst

Lori [ph].

Robert D'Loren

Okay.

going So I'll it's very Goldstein first, do Lori well.

us For get could us working that on we will position manufacturing the into to that And trends to track party a as back And partner for we get is day where the this royalty a manufacturing. be the current able we after goal does be acquired and acquisition first nearly almost that now brand all closing. And the it back third headed double produces and are business transaction accretive here And that were year. foremost, primetime the where with volume that certainly the that model it. the are Lori there apparel Goldstein that was. to the the since is back the

stylist of little or which strong dramatically. that influencers business us, of a run lots for last us. about drives streaming. on acquired out is million. million ended maintain run And third, year for quite a there this powered to It refer the the dropship million it. a of Recruiting in We products the rate of us. is $X to we is maybe a are exceedingly is rate bankruptcy commerce today, we by well the for $X about we Longaberger nano business model. upside going live year, vendors of So of by by growing more It a to it'll margins year think end on social be $X that a Last year

light it's do it products working So the turning hold fast. capital that somewhat and we

So of that's lot the growth update our a dramatic very on there.

Unidentified Analyst

very Okay. Thank much. you

Operator

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

Robert D'Loren

be thank gentlemen, Xcel brands. fit, appreciate well healthy. greatly evening. you in for I and your always time Ladies in this We support eat operator. conclude, you, And Thank always, your and interest continued as as stay

Operator

gentlemen, conference and that call does conclude our for Ladies today.

disconnect thank and for participating. all You you may

Xcel Brands (XELB) 13 Aug 212021 Q2 Earnings call transcript