XELB - Earnings call 4 2021 | Xcel Brands, Inc.

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Operator

Good morning. Welcome to Xcel Brands Fourth 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. this is reminder, recorded. a as conference being call And call to Andrew Company. I like the over & would now Berger turn to SM Berger of you. Thank Andrew, you may begin.

Andrew Berger

Development your for Good D'Loren; are you Chief Treasury, Officer, Haran; are and and on Jim us. thank Chairman everyone, us safe interest and you Financial With President call morning, We hope Officer, and all of appreciate Burroughs. Executive Robert the participation well. that and and and Executive Business joining Seth Vice today Chief

April everyone should the the annual short the with XX, the Relations now, went and XX, have is the By by available addition, on earnings being access file release report a release The will fourth XXXX, report Securities on to and company's for replay website while a be out be December XX-K at in This the company's will XXXX. the ago. Exchange available webcast, Investor Form www.xcelbrands.com. And call quarter Commission ended company will on annual which website. and its

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

change at on geopolitical environment today's any macroeconomic time. dynamic The call what means and current is the nature said materially could of

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

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

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

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

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

Robert D'Loren

XXXX Thank that, I in financial year you, results will for you beyond. full Good business remarks call and followed detail. in with by thank more insights Haran, brief and discuss highlights our into us. QX XXXX everyone, joining our morning, CFO, Jim for some opening today's operating and the start some After will Andrew. and our

that XXXX or of which in revenues, XX% growth above stronger sales. for with QVC not even economic million strong show is top and we businesses encountered in ended fourth quarter. headwinds million fourth have warehouse would $X.X believe been that the our if quarter apparel our XXXX, fire QVC impacted revenue top year-over-year the we to approximately our all line continue virtually across We despite We growth line $XX of

that and sales COVID-XX. supply now and than are believe at of direct-to-consumer come way. businesses, full headwinds in majority dealing before to growth management with a these is We product wholesale generated on investments streaming, in more increases are year chain a our margin us pressure on in investments may which basis -- industry, a came and company logistics believe position people, when to from economic We our our cost any grow greatly our despite due full basis business materials ours, companies sales benefiting that which The design, the our XXXX's time including well technology, costs. raw year has live development

forefront discuss address channel the opportunity platform live of to we which explain the this first it results, expect to significance goods. by XXXX the selling well shift began are uniquely biggest we're social Longaberger in we're commerce and e-commerce we is streaming at I'd as growth that both in other new I of developing. Before like current why businesses that we will technology behavior consumer as retailer Longaberger our believe excited drive why The business better the consumer our since and leverage in buying to sales positioned for the

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other started interactive and U.S. all outside HSN the here getting is TV in linear QVC, networks. of just This

X entertainment tech started $X testing stream retailers major companies reports. many will capital of invested the researching and shoppable owners retailers their big video. or for for and brand versions the and live XX past go past in have Over In and The widely in commerce, searching solutions including live live fact, own emerge social months, stream all, startups and to distributed for was specialty over platforms according billion it and media will over streaming payment processing succeed. months industry

deep expertise has billion a streaming through television $X stream video scale proven on around sales make world over production and platforms. to live interactive track work TV, with the and Xcel our hours live networks how in record XX,XXX and of own in in

friends could specialized video, hosted imagine ask a with is family on-screen through show-hosting visible who that shoppers real of guests, and and viewers. where where that time with live to live that available is and One stream stream other scores even by a questions communicate communicate them in product and home place a in home products on a XX/X, invited explore all destination to in but live each Now time. XXX, or influencers chat designers classification always home is join single shoppers directly products focused all videos can platform shoppers artisans, curated real shoppable authentic allows their not rather view to

to only and customer then and our buy to exists live happens, button good the but with the And one it clicks for shareholders not purchase news is extraordinary this platform video the interrupting impulse on when across that would stream stream without scalable. product apparel. specialist simply type the highly live Well, be is the we Longaberger, working categories of show. brands shopping e-commerce pioneer classifications in in has example, shopping platforms, industry is other this online as And and Xcel can for and reimagined various leader similar platform and experience. a replicate

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the together through next home our shopping but people for have events customers affiliate to of these XX come purchase Longaberger fees nano-influencers, base community Longaberger's in income an commerce, and allows and marketing marketplace and paid business while and for a consumer designers fast-growing home that stream nano-influencers artisans, opportunity new attractive is leverage capability X,XXX future platform technology that products. burger creating retailing live supported by social who Longaberger's growing the powerful attribution get for a the platform vendors products, view of earning Longaberger's live not marketing all live just for built-in unique XXX,XXX members months. only business-to-business of through to and level streaming brands also over for and streaming technology, nano-influencers

will join and we performing the platform well, the categories community plan the more side is Americans many future product and have platforms grow stream we that this in According of to of our pandemic, to all gig businesses for built this expect With address nano-influencers a of and now, Longaberger with than over and as growing developing customers of and specialty shows Jewelry live through new all more we're This unique excited to as powerful in growing verticals. stream sales. X/X a the economy. platform the We well Oxygen, feature new is year-over-year, also and home marketplace drive Longaberger hustle Judith effect nano-influencers our to Longaberger other believe world, XXX% Longaberger the potential flywheel live sales we're the channel. and Ripka other producing from and started during pilot up

like our channel distribution. I'd by division of to and business briefly Now discuss

programming revenue TV pace a shows, which in TSV in and business X% last a were from significantly caused one fire QVC's our planned total Unfortunately, Despite interactive QX experienced show, a revenue. year. devastating of which substantial XXXX. a by X% Our the of revenues year certain for interactive up was impacted prior core our fire, on of Isaac loss warehouses record TV the large resulted of from revenue in brand the including was the year mid-December, Mizrahi loss up from business

international to We continue HSN interactive TV and channels. certain our on with grow of brands

new announce present as interactive We for will as significant opportunities with existing a beyond our that both hope and brands well soon. we in expect to opportunity XXXX TV that us

the we retail as the the of with evolution channel new a Finally, is retail TV digital are verge live this we ground with Qurate and streaming, partner. excited live retailers be in are TV at believe digital U.S. on in zero streaming a grandfather of interactive Interactive to

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

force driving Our up brands, in year. the compared stylists of with the was XXXX. of and XX% XX% nano-influencers this streaming respectively, Judith in Ripka XXX%, live Longaberger and Longaberger up business number sales were that or prior e-commerce The are

We to expect this XXXX. in growth rate accelerate

Now turning businesses. wholesale to our

if door start let for retailer we third-party controlling by everywhere by and customers us saying allocations is product First, me our and management, this that et managed necessary where be that business, cetera, to markdowns properly shop. promotions, believe

up year. full XX% business heading over into by for our rightsized inflation Our was sacrificing wholesale retail the margins for with We compared pricing quality. apparel adjusting last year without product XXXX

products as deal the strong fall recent and well going our are through the led in distribution 'XX, new board our in apparel has fact, In of just distribution XXXX a retail U.K. to across sell-throughs accounts signed brands as increased we seeing to

improved have for our to base ship accounts. significant Our to business will wholesale in believe drop is our to customer margins styles introduce wholesale strategically continue that and grow continue XXXX plan sales apparel and growth great and we

wholesale Looking with in more closely the dramatically compared up at was Ripka at year. the business, jewelry XXXX our over Judith XXX% prior as business

is another business this Xst summary, more growth. in sales QVC in remained great and business than In our as we we out for to margin quarter, our continued year Our expect XXXX. double close and strong, again XXXX poised

live as We of leverage acceleration segment and leverage to in investments ability expertise relationships wholesale business expansion brands by including with and and live expect that and return our our existing our as our businesses with shopping direct-to-consumer for with streaming both profitability expansion both HSN. and this great our a deep to products And infrastructure streaming through our and QVC of continued expect year. through we channel, well driven the systems in our new opportunities,

both I be Overall, the brand. a a year and and positioned emerging Xcel entered We XXXX for is environment. with platform strong year transformative for compelling will that current believe, well the retail

quarters create and result, we long-term we by in have coming value our had As to growth history, pipeline the the years. opportunities strongest a I and am in of pursuing the are we've actions excited

Now I'd full like and to the our to for financial turn year. the Jim to discuss call quarter over results

James Haran

significant net or grew driven XX%, direct-to-consumer sales licensing growth by primarily in in small decline $X Total ended wholesale businesses will by net and was and million, briefly everyone. in where XXXX. more revenue partially and in fiscal described good quarter that results Please by $X.X the annual results QVC. XX% XXXX offset a increase our revenue, prior up for million, revenue to on for fourth our the fully increase fourth XX, X% from approximately our of morning, representing Bob, of note the licensing was Prior related are which at track largely report on to fire, Form the over warehouse year revenue discuss was the quarter. warehouse year was be financial or financial a Thanks, fire an XX-K. This our $X.X to I quarter. for quarter December million

year direct-to-consumer total Judith million, apparel and Longaberger from primarily represented year. The growth in XX% the increase year, and wholesale approximately and businesses, year increased the wholesale prior increase sales. $XX.X a to in XX% which including by Ripka, significant $X.X revenue prior accounted the $X.X of revenue our million total was for For altogether full million over full revenue improvements or driven

The licensing wholesale Goldstein to Lori million partially driven of H the remaining by growth which by the brand a brand, offset year-over-year the of was Halston revenue acquisition model. XXXX including April the $X.X was supply transition the of activity,

sell-off and XX% the of XXXX from XXXX, costs. increased profit in material in in raw adjusted freight Gross the driven and declined quarter, and to global economic XX% inventory, primarily proactively and inflation fourth from by more domestic address sales XXXX, labor we fiscal margin pricing to was aged This year fiscal approximately approximately heading margin the costs, pronounced trend caused into trends. our pressure by year

prior the $XX.X year a brand, and partially quarter by normalized higher million down primarily expenses with operations payroll newly current quarter, to return associated costs. from prior by store Goldstein acquired charges the warehousing Lori $XX.X year operating significantly in asset which were impairment were the logistic driven Our quarter, shipping, for and million in costs costs, offset our retail

million year, $XX.X the in For operating $XX.X down were expenses million, full from XXXX.

and in which businesses, In will include in and reflect also pandemic, our operating line Program. the current It the depreciation previously benefit related amortization addition, Protection the assistance year contribute our The reflect certain and note bottom the wholesale of operating expenses increase XXXX. our that of reduction to compensation cost to primarily expense also mentioned to continued the reductions of to includes important including response is Paycheck brand. Goldstein higher actions in begin investments growing Lori took XXXX expect that expenses to direct-to-consumer strongly categories received the impact government through COVID-XX temporary in of employee we we

include these XXXX expenses Our operating not do items.

was basis, the $X.X quarter Net for current was $X.XX million loss ended net quarter. a million for the per year approximately on and million loss full or $X.X minus interest for $X.XX $X.X excluding prior year $X.X respectively. share. quarter EBITDA And $X.X was $XX.X million, approximately share. million XXXX years Adjusted Adjusted compared per minus with noncontrolling was or a positive negative EBITDA the and for negative positive XX, December current the XXXX, million

and to all fourth EBITDA. both in saw our impacted impact sell-off across of As our the margin fourth apparel quarter loss which quarter virtually was the due the of we discussed, positive while of fire warehouse primarily certain our fourth businesses, growth for QVC inventory, quarter

and of temporary. sell-off margin portion inventory that and [ appropriately We our we from impact warehouse the to ] impact we of the reacted XXXX inflation the QVC earning have certain were believe that as Also, of believe were material fire fourth the such nonrecurring quarter a margins. impacts, on

any minor finally, this not to of believe continued impact from the material first see rest we QVC warehouse some interactive our fire and quarter expect the TV, past And XXXX. we will impact sales while to on to were that have for this,

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

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

Now turning sheet. balance to our

cash of $X.X approximately current had our the capital XX, unrestricted of the As working equivalents positive lease portion of cash net XXXX, and December company and $X.X million, of million obligations. excluding

$XX net at debt debt million. term bank loan XX, of Our December and was XXXX, million approximately $XX.X was cash

this Lastly, like Bob. based positioned that, social uniquely and entering. on And call will strong XXXX, to with Bob? in profitability into that and growth return back would we believe, cycle our heading for to to I over we're that we're closing, forecast commerce the turn company new the for all

Robert D'Loren

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

Operator

Instructions] [Operator

there the questions at comments. seems Mr. floor back closing no turn are D'Loren I'll this to for It time. over

Robert D'Loren

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

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

Operator

you. Thank This concludes today's conference.

participation. this your at disconnect Thank may lines for You you time. your

Xcel Brands (XELB) 14 Apr 222021 Q4 Earnings call transcript