XELB - Earnings call 3 2023 | Xcel Brands, Inc.

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Operator

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 call is being recorded.

I would now like to turn the call over to Andrew Berger of SM Berger & Company. Andrew, you may now begin.

Andrew Berger

Thank you, and good evening, everyone, and thank you for joining us. Brands' XXXX Xcel Call. the to Third Earnings Quarter Welcome participation We your interest. greatly appreciate and the are Haran; call Executive on and us With today Burroughs. D'Loren; President Business Financial Treasury, Vice Seth Officer, Chairman Chief Officer, Executive Jim and of Development Robert Chief and

on website report The should Commission being access and plans This and quarterly evening Exchange now, Securities Relations will third XX-Q Form the earnings company release Investor the file to available in release is company's with and this replay everyone website. the By ended went tomorrow. be September out will the for to the quarter its XX, be on have quarterly had the available webcast, call at report and a XXXX, which the on company's addition, www.xcelbrands.com.

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

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

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

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

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

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

Robert D'Loren

thanks I today's Andrew. model. everyone, operating you, and us. call Thank in Jim bike to like extend Haran, under will performing serious filed. the you for on strategic that, our special After detail. joining XX-Q evening, financial would business this injury with did I start our Good Jim more an how CFO, discuss the new for would a I not update the if efforts remiss and our weekend through powering last be thank results is get our transformation to

capital the earlier on we restructure strategies. working and that business stream shopping business from licensing model highly intensive quarter our social shifting XXXX, stated high-touch starting working live and commerce to business focused began year, and a operations, in growth a light, this As profitable to wholesale model first capital of is

our have agreements through the our have e-commerce operation. to subsequent license During transition am pleased the third we report of and this to quarter this execute operations of the wholesale I essentially of completed business. outsourced related for plan, and Longaberger continue we quarter, to XXXX, on end that we And

As a of restructuring of result all our efforts.

annualized operating XXXX reduced operating basis million including Going and lower payroll million expenses as compared on to save with forward, of $X $XX costs approximately approximately in in expect now levels, we expense an million costs. $X

financial profitability XXXX, driven in indicate return from by and that in current be and to savings in XXXX quarter QVC brand new with we These and and expected of some first softness fully end cost to agreements, talent, the in XXXX. by expect scheduling concluding ramp savings grow the the cost realized combined delays continue will on-air our licenses forecast with licensing by to are began our our of upon Longaberger first that of business in quarter our Based conflicts that XXXX revenue launches these XXXX. to from the resulted

these new and believe are our engaged some into of which and with which of evolution new have our multiple social coupled quarter. cost the advantage of To provide agreement, spoke going competitive quarter's forward, offering commerce effectuate operating while company this best-in-class exceptional a prices. the I with platform live arrangements about new We and will customers quality significant with our partners that our some call launch for licensing entered transformation, this at last we business and on of model stream attractive savings

will G-III our we forward had realize more revenues later social with us season in licensing to more In their launch. May, fall the agreement and information but XXXX, platform for. come the meaningful XXXX, were to a of entertain ways get this brand. that We sharing growth second customers expect the in Group after closer agreement hoped to this and collection with initially I enable will stream past. engage first also about started look which live for Apparel commerce possible our we that believe in launches signed from the master fully not G-III is we than quarter We Halston in the to as

to and production level. G-III, grow us tremendous brand to Holton given with with the Our provides partnership and the extensive next a opportunity take distribution capabilities their

second business entered new first to in our into licensing agreements the Judith Judith brand quarters our all For of and to move segments TV. Ripka we jewelry Ripka

the on the XX. business October and network. on air established launches The metrics launch The all among brand JTV exceeded launched was best by

for marketing In the fact, long the show. million early indications media efforts by show impressions over XX generated

sales for brand, during we brand Wonder growth sales new exciting of We launched the expect Judith partnership at continue HSN C. with to the and on March, achieving over significant end strong of QX. gain momentum planned Ripka with and the our show XXX% in first this

As One our has Jeanswear to previously for the wholesale Group. HSN business stated, been production licensed

We C. brand. on license in exciting working the some for Wonder are categories extensions other

expect an stream brand the This company commerce live before and to Finally, holiday, TV manage entered outsourced the e-commerce to Longaberger to our respect announcing a with an Christmas business. new drive we brand, into social building businesses. With agreement influencers iconic into on the and a our new industry-leading portfolio of and management a license operate with e-commerce be XXXX model. push March brand in American and we to launch super of creators HSN continues

executed Also, America Madan we license have a baskets. for U.S.

home in license few to is to Finally, we with now discussions the the brand, who and an in years grow bring brand, the and American reestablishing can Longaberger product potential the under other in help past after categories partners are brand we're iconic partners business. additional excited brand

interactive studio on-air due television by conflicts QVC and perform our brand to did the XXX% shows QVC both in Goldstein shows Isaac XXXX, not quarter during from brand regarding with remote Lori scheduling logo transitions talent post-COVID as of as primarily Mizrahi business, Pennsylvania. the expected Finally, in to third we

refreshments of gas guests. including through our the We and other dedicated sales drive use business in backup to with alternatives to and possible the increase are additional product exploring shows ways XXXX,

we are our in plan, summary, on execution forward to we and transition look of the In with XXXX. growth track

discuss I now to And the financial to call like to over would Jim? and turn highlights. Jim results our

James Haran

$X.X ended $X.X X results XXXX Thanks, months a the quarter our was operating decline Bob, of decrease discuss September million transformation XX, apparel the and in exit product the for of to representing restructuring and from of revenue our million financial This business good jewelry part operations evening, in quarter driven million net of for XXXX due third the by everyone. $X.X sales the I XXXX. was from and fine sell and of will approximately model. decrease our XXXX. as primarily Total early briefly third a quarter wholesale

of C. was on relaunch Judith beginning from should expect positive Wonder Thus, year. licensing on our increase quarter this million, decline of primarily that noted October. It in this brand a in we past brand fourth net driven see impact HSN. JTV an brand the the launched offsetting air sales the net our Ripka Partially of by revenue be with the on $X.X to

approximately XXXX May inventory as and of interest of of XXXX. the brand. Net during the sale in On million revenue in from a by year-to-date prior decreased X the year licensing $X.X sold attributable primarily flat year-over-year decline basis, $X.X sales were to Isaac months jewelry half revenue, our X apparel current essentially million months by revenue four for majority a product a first decrease we the in This the million. was $XX.X driven to Mizrahi

million direct were $X.X million quarter, by Our down or operating from quarter. expenses the year million the cost prior in for XX% $X.X current $X.X

X in current restructuring or operating $X million were would a basis, associated year costs million It should backed down with the expenses. in year $X.X months. our $X.X period, a out, be in cost year-to-date expenses prior million in noted million non-recurring On and year quarter. reduction $XX.X the the if were million quarter's the represent the $XX.X current And XX% operating prior by from included from that

of earlier transformation operating May costs the XXXX in expenses and with brand [ licensing sale in business XXXX. decrease and Isaac discussed our Mizrahi the restructuring Bob primarily addition of to attributable in This elimination the was associated that in ]

will Longaberger million XXXX the jewelry and run costs. our of million As the expenses apparel $X Bob $X.X the a rate licensing mentioned, a decrease, of and per continue XXXX. operating approximately and Together rate we we've run fourth reach restructuring first to expect By with host operations. of quarter to operations, quarter of the of under comparison, recently announced fine cost our in by had quarter

a prior million quarter non-recurring or $X.X loss, in of $X we approximately year had earlier. I a a or of $X we with $X.XX charges net million non-controlling in minus the net of a current had for net basis, quarter. minus This non-GAAP million loss share with $X.XX for that $X.X or includes $X.XX per the or mentioned of the Overall, On loss share net compared restructuring per loss prior net per the non-GAAP a million loss share quarter share million excluding the in per quarter. interest year $X.XX current compared $X.X

had approximately was for $X.X excluding current for year-to-date forecast million $X.X a our per our a income share improvement a the approximately per net generated relates approximately $X interest, million per million net basis, X-month prior the year non-GAAP minus or per million our year QVC negative months or prior share X prior the On compared with net months loss, to loss was businesses. quarter. with negative This in a was year compared loss $XXX,XXX of million $X.XX revenue we in of quarter, million the net compared comparable the the of current EBITDA as $X.XX an or On minus royalty $X.X million in it $X.XX $X.X $X.XX of $XX.X for $X.X noncontrolling Adjusted basis, over reduced period. X or with current share by period. share level

EBITDA representing $X.X EBITDA terms. And a and was million the income, improvement $X the unaudited million adjusted X finally, year of months negative X EPS for net current non-GAAP diluted Once a $X.X reminder, prior are adjusted again, million as non-GAAP EBITDA negative months. in non-GAAP over

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

our Now balance sheet turning to liquidity.

in position million projected prior and with had $X.X activities restructuring cash our activities the continue current Also, that As X-month this of obligations. provides operating cost the X repayments loan We excluding of positive is and decreased XXXX, XXXX, the the new our into months. and operating loan equivalents adequate net with this the cash company improve. and portion provided in expense transformation of has million XXXX. with lease working in working of of was our in our were liquidity September going $X.X forward. cash in million by of used compared current $X approximately operating capital liquidity term plans and XX, to October entered in believe used a executing Since Cash year to coupled commenced X-year million, $XX capital company year, of $X.X we usage significantly earlier April cash term a new quarterly additional million in which the

turn like to over with would call I Bob. to And back that, the

Robert D'Loren

bike remarks. Thank see accident. you, prepared to from and Operator? this concludes so It's your gentlemen, recovering Jim. you great fast our Ladies

Operator

Lebiedzinski [Operator Instructions] question from the first of Your comes line of Anthony Sidoti.

Anthony Lebiedzinski

It's from you're Lebiedzinski XXX% And Anthony we'll and quickly. better Sidoti. hope get feeling Jim, better

yes. So

-- was at looking just the quarter, you first, mentioned that So was in of lower Part QVC you that issues. because came what the expected. Bob, guys third than of

be been it issues resolved will on have think a do Or you So the still quarter? drag QVC? fourth with those

Robert D'Loren

between and two had the able Longaberger And are more We missed get is were the talent. than little One, we we we we to a things be of in business. where everything there where about and that's lower XXX,XXX with we about would So quarter. transition expected, because revenue, the ended we us behind in we the of difference $XXX,XXX good in thought did. But the expenses that now. news driving up thought by sooner than would shows we be that was were place

scheduled, be in -- guests some times all into you change back sudden as on-air on but policy with on to on so working there QX, We are conflicts imagine, guests have was our we January. we And and media calendar continued our we of that we're just revised on will QVC. that and solutions normal at heading busy schedule don't of miss. It can on-air And fairly talent back we think can working most had a get in on to agreements get so conflicts. our

Anthony Lebiedzinski

Yes. week about sense think in we And about this like of this you impact? deal of kind can forward, you did license out the impact How going that we last a of terms think to own sort the much deal that Longaberger did how announced terms Maybe give of How Alpha maybe of Longaberger. And should of for financial OES Okay. forward? you going you contribute? us should in the previously? that portion with the when then

Robert D'Loren

about I Okay. Well, bit Alpha. little talk think Seth can a

Seth Burroughs

Yes.

the a is traditional license the with like licenses, by the royalty bottom business. margin also many generated the on Anthony, on So side a there's structured incentives

several we said, or If business the at don't brand. over by the been say, years. business, contribution brand report you we've by last look the earnings Longaberger, That in investing

impact. So there positive a should be

longer So to the it negative impact a the positive revenue recognizing business, it impact direct-to-consumer since our EBITDA but of be to won't contribution. will a be from be we should very revenues

Anthony Lebiedzinski

good to That's hear. Okay.

Okay.

will licensing line had be going revenue. sales. will other net you -- guess, So like it this only you net sounds XXX,XXX only reporting I I forward, item, there. quarter, you mean, the sales

or correct? is going it's be pretty guess I So to much forward, going zero that

Seth Burroughs

believe I Yes, correct. that's

James Haran

Longaberger fourth some as be there'll Yes, quarter the quarter. the sales in transition we had during

goods Thereafter, anticipate sold. having we don't of cost sales

Anthony Lebiedzinski

you. Good. And then before Got question I on pass last to others.

of of terms in of third because in run items. expense nonrecurring So the rate, I quarter some some the know higher came

far fourth As above you you that? do expect. or think speaking, just the should to Like roughly $X million as close we be quarter, can

James Haran

transition up some We're cleaning Yes. final just items.

on cost, Bob and So there'll more new of the costs the runway be transition but bit little will this a year, is a exactly into going ] what Will be it full end the guide. be these [ mentioned.

Operator

Markets. of line question Noble Capital comes McCann of the next Pat from Your

Unknown Analyst

on the completing Mike Pat Kupinski. is restructure. for This on Congratulations

expect do just in seeing one some have which you we this economy? additional the marketplace head of we kind you are demand the Do brands of questions what this various when the into the broadly, far given to what what as state far it already your what holiday seeing? is I my indications you so should question, comes season, holiday of is, for but leading have are of consumer? actually, quarter, any answered, been So -- What so have the season like the from just in

Robert D'Loren

to electronics, been month giftable of historically Apparel, interesting an pivot has month TV food question. interactive networks not and a to because items. big of tend December in it's So the the

product of change December. brands tracking any frankly, their quite our in into apparel. So overall we don't ahead results mix in And QVC going were expect

If we we very we and have the QX didn't very, now would in where think have into heading with been scheduling I QX. were conflict, pleased

are to of seen watching tells talent just on. the of their remains are as Westchester us that money. we we're where course, hard It's But lot -- I said, So deliver People our demand a decisions we PA, about for need spending to we consumer. be should there and And the yet. anything with working overall, haven't quite that products which, that making they carefully. high

Operator

next line Your of Aaron from Breakout comes question the Investors. Warwick of

Aaron Warwick

sounds good that Appreciate It ahead. things all commentary. like some

One you shopping what looking be season? your we those commerce expectations of what the up Could when your on platform. talk in is holiday social launch about I we and imagine thinking for come little bit to on more it's a that your going of current especially as is are, should what terms

Robert D'Loren

Yes.

building X the in ready we participating all and and filter in their with we brands those engines, X our X bot tech including can style the to a completed marketplace content complete filters to machines content So have negative set screening itself, are have filter to everything and engines, chat that wanted recommendation go. the AI of done

will expect December, the were Day provide plans present be We rollout technology conducting revenue that or overview a and will perhaps one at its that the detailed in that to we an conferences we model. scheduled of and the complete Investor of

Aaron Warwick

Okay.

looking for I last super So call. December or that at as Or is specific And on brand? that And where both? mentioned commerce platform you time the have is before, frame had the the a model part for that of you think, that? is social

Robert D'Loren

social who to And able the then, both. was is. about as be It's And would hope all before expect the of of platform. be to holiday Christmas brands We participating course, It's supermodel both. well. our make the that third-party to on commerce brands many we announcement

out far ahead course, want March get of and in the of planned is launch 'XX, doesn't too launch. the to Of HSN

Aaron Warwick

is The XXXX? in launch what March of

Robert D'Loren

of super model. launch our The

Aaron Warwick

available do $X I guess, me, you million that have that now. for thing Final is

and happening, or of the even quarter thought any been current profitability and in potentially like especially that? to expected given happen there talking beyond good You're the next buyback things levels year. to fourth a Has anything stock lot at

Robert D'Loren

yes. to a and something of answer is is carefully. do will that buyback of on will, if looking And that in to It stock stream I of the the launch that. when us the at to some the some platform, size decide So read get that program type we and think we we're need extent, guide live to

Aaron Warwick

beyond of I for a on going a guess there don't if you to one be was selling idea heavy that way about mind to any There bit or was is here, more what seemed month normal. came mind. quite Is what so?

Robert D'Loren

we was the when there Xcel from We HOCO The to was. indemnity realize it HOCO, were that that that's litigation and Yes. their and acquired was shares formed. partner, in Halston bucket that on by were and indemnity an was shares collateral their bucket they settle what held bucket, indemnity sold and of

there pressure of So stock while was the a selling lot on was happening. that

Operator

question of Schenker Next line from of the comes Partners. MAZ Walter

Walter Schenker

asked a question just profitability very was my buyback. question think discount question as asked was of use value, half by main about Aaron, I holidays. would -- but holder, to an asset is so asked a I -- which But the good a have anyway. asset-light same the thank you given my Actually, that's and model expectation answer Happy second and second given not

Operator

to D'Loren now questions for turn I There some at this are no will further Bob call closing remarks. the time. over

Robert D'Loren

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

Operator

today's This conference call. concludes

You disconnect. may now

Xcel Brands (XELB) 20 Nov 232023 Q3 Earnings call transcript