XELB - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. I'd like to welcome everyone to the XELB's Q2 2024 Earnings Conference Call [Operator Instructions]. I would now like to turn the call over to Paul Kuntz. Please go ahead.

Paul Kuntz

Good afternoon, everyone, and thank you for joining us. Welcome to the Xcel Brand's Second Quarter of 2024 Earnings Call. participation your appreciate greatly and interest. We Burroughs. By on Executive out evening. Officer, us and the of Treasury, earnings the access the have Officer, XX, call Chief and EVP XXXX, Seth and Development ended Chairman release are Business everyone Robert to last Haran; should had today Jim With now, quarter D'Loren; June for Financial Chief went which and Form addition, in the And XX-Q Commission on quarterly report with Securities company's its Exchange the today. filing report available on quarterly website will www.xcelbrands.com. company's the at and Release be the call a This Relations replay be available is Investor company's will being webcast, and on website. the

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

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

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

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

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

Robert D'Loren

you, financial morning, outlook us year. for on for and call with to After I'd results brief today's Good quarter detail. will for and CFO, Thank Paul. Haran, of remainder more our update everyone, thank the our in the Jim joining you that, start discuss today. the our a like performance second our

focus its namesake, the for and $X our we a second the and it back would like to variety of the growing Before I cover Lori sell sale by to to be allow liabilities net cover best quarter a us Goldstein doing the of interest brand company was so, new potential brands It determined brand $X.X on would reasons. highlights, the of recognized to I and of that and reduced in divestiture million opportunities. million. the gain In

to the We line bottom quarter. while also revenues continued executing working forward. licensing second plan, business, to progress the our licensing fully results Turning top made and core our on project capital to line improving growing fundamentals going for transition our a quarter

our quarter. XX% and during the year, last Our approximately XX% the quarter while the bottom for XX% our by for first and adjusted EBITDA improved year-over-year net earnings quarter, revenues at second non-GAAP licensing approach line, grew our looking breakeven from

on the organic Wonder to bottom strategic our fundamentals, our to quarter brand on and get successful to our in line gain with exceeding operating continue us traction grow growth continue project brands, in and going made improve. Based we The expect all sales our to expect we we future what to well continue and to to grow back accelerate quarters, licensing growth plan progress to plan results core HSN performing of strongly HSN's C. As revenues with our the in years is X%. our second over forward. business by

from The rate. half of is half with XX% a excess achieving second XXXX in planned of year-over-year the up first of growth expectations

We expect and sales to see strongly volumes other continue on grow to XXXX at retailers. retail HSN beyond

new and track footwear of on categories are We to XXXX. in launch spring of handbags additional

plan TWRHLL Brinkley, by launched Christie second by new HSN exceeding brand, the on during Our quarter, XX%.

additional of ] with spring growth outside XXXX. for scheduled the has XXXX. in the brand of of plan been significant categories introduce remainder Additional airtime HSN year products starting [ of the will for Separately,

skin we licensing potential In HSN. brand including to bags, the multiple from addition, care. One have and footwear, last beauty on received partners strong note across categories, interest

announce another on launch to and brand XXXX. in before end HSN another of of QX the year expect celebrity We this kitchen brand of the designer food products and

the Looking at forward and We look by strong sales increased to carry throughout our product Judith forward greater This quarter XX%. is result quarter XXXX of business, momentum Ripka second from royalties assortments. XXXX. seeing first

As this apparel previously G-III launched discussed, fall. Halston

shipping expect they year bags for to begin later spring footwear this addition, and In XXXX.

license up later grow We beyond. this and and begin in strongly expect to revenues year pick from XXXX to this

second As its commerce soft previously quarter. video Orme mentioned, and marketplace launched the social during

to premier transform awareness team commerce the to our and with doing democratize social for believe U.S., marketplace television. to will great job video Orme of the app date. influencer They its goal is pleased a over For building Xcel, video represents the achieve We commerce The Orme expertise brand. onboarding the are and economy. potential the natural in results extension in and this it creator and has a

turn by call excited to like our the Orme. And to now Jim discuss to of results. financial I'd Jim? potential the over very are We

James Haran

quarter to generated net TWRHLL Christie a an by licensing May approximately by for licensing product basis, of net business the driven everyone. zero mainly license decrease decreased our million second launch combination of approximately XXXX the sales previously The I now during the million, the $X.X increase sales a wholesale due attributable net months to of the will on million, G-III second or from revenues of Total have XX% of year-to-date net exit for $X.X both quarter XXXX. and revenue decline HSN our partially the $X.X the fundamentals This current in an discontinuance licensing C. of discuss wholesale with to in were $X.X a six product to agreements decrease months X% of of year-over-year good final Halston million began XXXX. On part decrease inventory, XXXX. the in decrease $X XX, was current in The million of Bob, morning, was and as approximately results June residual to ended Thanks, revenue, in financial of quarter mentioned. briefly $X.X of Wonder increased Brinkley effectively product of related the driven the was brand following again, launches six in due representing revenue, quarter effectively project the an our approximately from apparel, increase offsetting sales which product zero been net for by and million significantly only now revenue the offset operating net businesses approximately to in some fully sales, sale operations. $XXX,XXX natural by plan or by that new liquidated. Possibly the sales product to combination jewelry XXXX. was by

a million for year $X.X $XX.X operating and down XX% representing prior periods expenses attributable quarter, year in XX%. Our from as and million discontinuance costs. or prior levels approximately and as staffing decreased which decline quarter, basis, of in prior for both the quarter the wholesale expenses of $X.X direct reductions $X.X million was from for or direct the included were operating current On a million reductions the costs These year overhead other million related well costs decreases for current the to in year-to-date the million $X.X by the quarter. year-to-date $X quarterly business comparative the the in to

our fundamental the approximately forward, per substantially expect costs be going direct to With operating million $X.X initiatives quarter. average project we completed,

XX, or from year and XXXX. the $X.X approximately XXXX million liabilities share which Overall, $X.XX share, net of respectively. XX% the and of million prior share, of of per $X.XX months, $X.X sold had operating noncash minus We release a contingent of and or loss loss from year million [outer first Lori for net $X.XX in contractual charges in of represents of second million. were including second gain brand, of gain and related for $X.XX brand $X this minus Goldstein in on improvement per prior the as minus notably by all Lori impairment lowered payments from net on six share $X.X of to the balance cost current quarter earn-out for million for quarter. On million or million exit Aside sheet $X.X quarters net with of in a second with we exchange and recognized XXXX of our obligations million $X.X we of results the the certain June quarter the on as $X.X the net a our of non-GAAP sale the The proceeds, loss $X.X direct per basis, charges of compared approximately impairment agreements the the included expenses, recognized $X.X $X.X XXXX space]. our operating divestiture had income asset relief quarter per in sublease quarter the and the currently a or from billion a non-GAAP million aforementioned current well the Goldstein and buyer an

current the approaching of year a back adjusted achieving approximately the place improvement projected Finally, in breakeven revenue and $X.X or or EBITDA growth, cost for anticipates of million $X.X management adjusted million quarter, the positive EBITDA was year-over-year half in from XX% the over EBITDA With quarterly $XX,XXX quarter. new representing negative year. the prior a in negative structure of

loss, a with non-GAAP for a we $X.XX current of revenues per our the per current cost future $X.X had year-to-date licensing loss rightsized net have negative $X.X the and this the minus income, non-GAAP net in a opportunity EPS [indiscernible] of months non-GAAP which adjusted months. non-GAAP basis, continue to share that share structure, a in I again, EBITDA are $X.XX non-GAAP six diluted million year million six the basis, or negative minus non-GAAP had represents to improve to On our months. Adjusted million of of everyone Once $X.X like prior in to net for $X.X from or terms. share, on the minus would $X.XX on year the a million loss or six improvement $X.XX excluding million EBITDA year-over-year we measurements or $X.X prior the net a six interest approximately XX% months was the improvement represented $X.X an loss share noncontrolling as of per basis minus a year million, EBITDA we year-to-date per period. grow. On XX% compared prior net approximately approximately projected periods for comparable of take in Now remind adjusted

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

sheet liquidity. our and Now balance to turning

XXXX, of million, approximately total the cash As restricted. cash was which million June XX, company of of and $X.X $X.X equivalents had

brands. And working and working project the is Our to other Halston executing approximately fundamental with G-III and capital-light call over of by under which current like with our back launch was to Bob? [indiscernible] to has our continue revenue licensing the capital, is and current Since of decreased appropriate Bob. adequate to the believe significantly turn model. excluding improve $X.X plus deferred I'd that, continued our in net we usage portion lease growth million, plan, and business cash our obligations projected

Robert D'Loren

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

Operator

Capital. line NOBLE [Operator of Michael the Kupinski Instructions] comes from Your first question from

Michael Kupinski

performing Congratulations me Christie achieving transformation. of TWRHLL questions. on you Halston? A And additional you and brand, a your some heading other that And anticipating sense QX? how you couple revenue there QX, can Brinkley well are of in have will be a is on into give licensing just couple of from expectations delivering things, the I

Robert D'Loren

well. twice for forecast we plan minimums Michael, launch, by 'XX, as on very HSN year the contractual exceeded lot of potential, doing is are Christie in significant and And TWRHLL We're categories. only having of we're in from going with the the Christie's home we'll what and there, prospects anticipate had into the retailers not this minimum. Sure. in outside Christie excited with Christie. XX%. we a apparel, and but we And traction year, about other the were There and interested with great business actual the double we are where

Michael Kupinski

from revenue third And Halston, for quarter then you licensing revenue Halston, the G-III? in terms from are anticipating of licensing in

Robert D'Loren

guaranteed royalties minimum a there that Well, reminder, under license. just as are

So forward, we to activities There's expect expect the all up coming and third-party in should for or G-III, year. for that just shoes a potential moves those G-III from over -- minimums royalties this are and and get increasing depending place not they brand. of spring. the ship upon, we including They currently whether as with that licenses all in bags

Michael Kupinski

And that sense are Bob, point? a you're us of can this timeline you what kind Halston out of on being give rolled the brand at and the anticipating products

Robert D'Loren

with and apparel that So to that. of what of multiple market then licensees, that they That's distributed categories those drivers that success. and will able which we But expect August, get there off what during G-III's the market are that the categories went Halston across the classifications, in of shoes know and line premium licensing of we would is to we draft typical then with And think and G-III would how and multiple the best-positioned retailers, it's handbags does. went including don't is We'll core are happen. later results third-party be quarter. for

Michael Kupinski

you And that, at since the revenue point, increases you us third year-over-year we're will halfway or of in not can believe in you quarter? the a licensing give quarter, in sense whether see this

Robert D'Loren

brands. We're and significant TV a and these these start. premier off And a and started ramp the Yes. like the brands on roll new with and up just players, to steady great with on launched group, G-III the of with entered HSN, all we're Jewelry all one into businesses with licenses wear Jeans getting the brands we and

Michael Kupinski

associated assume And brand. be the sense kind or will And HSN sense to if be and -- a things in you designer that? there quarter, plan partners you -- on that retail like the of of can can that other I of launching give announce some give with us then that, that a fourth then, will costs us you on that would

If anticipating at you you're this give kind of could what point? us of a sense

Robert D'Loren

the on just And there launch very launching the the all wasn't structured because will brand But it's said, development done, one much that cost -- deal. on has ordered, we and of already that So cost start-up HSN product already product we had, initially. is whatever that we've been way have of do with, TikTok That We on brand and that that plan for kitchen QX to expensed. potential, both products shift a we she tremendous are HSN been close celebrity food has tremendous and launch the we followers, in to outside believe million has this following. has HSN. that X doing

Michael Kupinski

doing us -- give is what Mizrahi this of sense that how Can you expectations a the Isaac going forward? your And brand for brand what point? at are

Robert D'Loren

has on Isaac's that year. and from for relates to year. So position down a of said, talent what for to the mandated QVC, remote is of shows to forecasted in last its Isaac zero shows returned it's was all changed That remote And part studio. coming reduction COVID out on that plan

for of guests for elimination another in bringing on the of studio because Isaac working that remote we've backup time to and shows. that are lost, we actual So of make up

Operator

next of Sidoti. Our line Anthony comes from the Lebiedzinski from question

Anthony Lebiedzinski

you just the brands forward? of growth those opportunities, portfolio? that most out Longaberger, now them, which should you Are Lori Goldstein, far So terms like are? we about divested in happy I about, brands are think guess talked how where overall for just you as with Bob, brand about you I but as except of looking going all think excited

Robert D'Loren

now that the good to Brinkley. focused get the time So with we some a growth shows. we lost to doing right business, excited an is we've onboarded we opportunity on as Isaac had and we now about backup there, the can we're well. Orme, Longaberger. has guests I of are it potential It so help of e-commerce-only think is all Wonder the C. of are with sellers, tremendous to reengaging think, Christie potential we assuming former is Longaberger remote Longaberger And the

portfolio do of And including, core the course, look across we linear for to streaming and opportunities grow we today and with will opportunities there seeking TV for well us through that traditional brands business that as of well, continuing new platforms, the add and think as distribution our new portfolio, also for licensing are distribution that think we're Longaberger. brands kinds We are can distribution, Orme.

Anthony Lebiedzinski

if can give as as actually, far of touch as about app? more with then us details base Orme. you And And that? like guys as been so some sales far you just far just Orme, are the actually through number for what you the maybe you've seen Maybe what's coming seeing could downloads

Robert D'Loren

Sure.

owner Orme. team know, of us. Orme you has are you to As the I reported what can give XX% we

all the with in this been in And for far and focused brands with social between very we values average what Flip only perhaps thing this doing alliance. those have very marketplaces about short-form order Orme and need dramatic implications platforms. think are it's video First, reaching Orme those is, and and social difference is, TikTok Flip and The has TikTok, that Orme with announcement market better the Orme are of new and of TikTok become Amazon. the both the there and higher There than on alliance today. is to commerce, know I of recent activity commerce very, three

about be and on team generated segment implementing market Orme In the we're the than brands July are its to going platform. that XX. on. focused present the weeks, of that of distribution XX,XXX the three platform on that's selective So been very kinds began less strategies we've Orme app on downloads the the

the perspective platform, onboarding value. an very to on major site both selection are and date, the from on brands. There up very, to are and standards user XX a brands high ramp So continuing they

Anthony Lebiedzinski

profitability forward here. going just then about And the thinking

and in happy up and coming C. brands Brinkley Halston you're trajectory well. should to Wonder the with the obviously, be fall both as Christie So

and structure rightsized -- the So there. you've cost

So or you that EBITDA? us going just you earnings positive, If consistently every do out is you think just earnings maybe forward, could of Or could here help be just with quarter? that. kind

Robert D'Loren

think just of into positive heading be we exactly enough That's the the how for including year. have see the case year. We of worst the 'XX breakeven, balance of up. ramping the what will visibility EBITDA I do case rest into year, all the best will be will brand balance for brands, Halston with don't the Halston

Anthony Lebiedzinski

up Halston. follow -- So to as far in terms of just as

that of your timing the you revenue is from latest you'll as I out So I far guess, what's to coming the that -- think but of as it's hands, -- brand? know the start Halston see,

Robert D'Loren

revenue there Well, There coming contractual from now. were is it minimums.

We expect what of we'll the we it's year. to next the a ramp But And delayed anticipated. year. It's right we forward little terms going begin track. nicely had really in that think into initially next on move

Anthony Lebiedzinski

well-performing have seem you other Is brands But to delay. say? like they're that some of some that that fair offsetting

Robert D'Loren

and nicely, the up is all particularly we're Exactly. Yes. doing Everything moving on HSN. things

Operator

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

Aaron Warwick

right to or forward? that the you undervalued it with going is just given Congratulations XX% on were do you're If Bob, getting the agreements had comment compensation more compensation preserving and on know, that. thinking where a cash. cash modified, getting base the recently business I of on share your yourself, in for behind wanted your Is Seth, I prospects instead price that track. just reasoning the that. question of could of on some the to stock quite

Robert D'Loren

to of well price that are preserve what growth in we of I foremost, year. And We -- we perspective the to are prudent, brands it on can believe both share the state think and think exceeds the we with cap that, into do from our assuming is, value Seth undervalued, is the are company. revenues, given the can our track we forward we And I this. value First then in and royalty market next going the of extent of do of where stay just a position affairs. relative world brands. like a that's the and the think below if far Also, trading current we potential our the think earnings smart we lastly, thing something that cash,

Aaron Warwick

try a I is where promote -- the they're guess, What's kind it we commercialization full bit about current roll the You've more, the for little for the the expectations? mentioned masses? when thing, what's there really to One it to launch Orme. and -- and timeline out final July XX, to something plan going really soft of started to

Robert D'Loren

So do their is the to are business technology capital and potential. metrics, own and expectations and Orme then are really I that when will to they will would its their of do is and funded, they The fully raise. launched, going built the raise. And they drive funded all -- own full expect proving its business

Aaron Warwick

when sort they to that Any raise? estimate on would do of plan

Robert D'Loren

to try to is year-end. plan before Their do it

Operator

Wellington line Shields. next the question Brous Our comes from Howard of from

Howard Brous

on I the pin have to if it's I Bob, all questions of you possible. at a down congratulations turn. want couple

recommended got numbers company. penny how comfortable on That's couple You've are reports the a those comfortable I'd within tell are numbers? you not I'm on, for like you next of question. first but a year? you or that have asking me to research the the you two, that with to comment

Robert D'Loren

Howard, are. those believe today's continues reflects numbers, We're think businesses of that to our the next has given been ramp company and and going comfortable into just certainly, So growing everything reasonable, begins stock all where potential they with year. accurately is way the of the price the really across don't we it I G-III grow assuming

Howard Brous

or bluntly basically at Xx flow and trading EBITDA, haven't that selling at. free I've Because Xx found cash you're many companies what are that's

to to pretty So saying the going you on brands are you numbers. Orme? major What that I launch those be am with got are comfortable

Robert D'Loren

team Orme a robust There's strong So business a had pipeline. development there.

same now, contacts. midsized branded to expect in some of brands. to on brands with new on those days. company helping going the they're relationships the I you the space, I'm are retail with course, the XX have tremendous And And would up. platform within companies amount XX wholesale and a know, Of both as stay of of I type make ramp

not on at like that that is continue the This TikTok, marketplace, the to of are of some see small some there targeting than of luxury be pace. vendors. is Initially, or you to where going Flip they're the lots platforms. Orme other more really seeking aspirational think I brands

So Orme. I downloads number the of users onboarding and you'll see of brands, continued and growth continued think better in on

Howard Brous

can't comment you on names is Could Or currently? you the something today? that

Robert D'Loren

similar date was [indiscernible], brand for onboarded great marketplace others of beauty and that's to can. some been are team brands. I'm very not way that activewear so the a we doing, is They've then, continue largest brands brand nicely in some The with positioned made there help but the endorsement and home in great progress and like as the pleased some them in Orme quite And and on what platform, DLXXXX onboarding, is the every and an large, are brands platform. Orme to we'll

Howard Brous

shares ago, $X.XX, over $X.XX taking and about change the several more purchased, have months year, in at next XXX,XXX $X.X XXX,XXX you're million. You at than

you a You're of stock. purchasing Can shares. comment? XXX,XXX about that's some another $X.XX And of the lot stock

Robert D'Loren

can say I I'm Other in X because these shares it's making to stock million XXX I What investments total. nearly more in than what -- Howard, believe doing. we're of million

Operator

Noble line from back Michael Kupinski comes question next of Our of the Capital.

Michael Kupinski

thinking on major Just other the distribution indicated you're if about you're that wondering HSN, talk at in channels about you the terms one was looking more outside are might if more a distribution then platforms? can just of was add bit outside I offer wondering HSN. I those little you of Brinkley, looking big-box of you brand and quick Bob, products stores, -- or you there. we can retail that Christie digital a are at color the talking that you follow-up, bit the little products And distribution,

Robert D'Loren

accessories, beauty. be fashion So would pet accessories, and home, apparel, course, categories of

brand We major on of the big and all categories has have box those retailers. focus been the under

Michael Kupinski

And I when that that? would fairly something I would be announce like big think. announcement, expect would to a you mean, because

Robert D'Loren

for given We're But on make like would date. I reason, would it development, at working then for something 'XX. that spring by we retailer do to to market push to to whatever timelines fall. with product speed to get light we'd of try can't if, a just it, that say

Operator

there Xcel in I the concludes are the for Brands Thank the team session. turn our remarks. to back that call you. Seeing questions as more now no will question-and-answer over queue, closing

Robert D'Loren

ladies We in continued you, your gentlemen. Thank Brands. your interest Xcel morning. appreciate and and support greatly for Thank time this you

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

Operator

Ladies that you joining. call. today's concludes gentlemen, and Thank for all

now disconnect. may You

Xcel Brands (XELB) 14 Aug 242024 Q2 Earnings call transcript