LIVE - NASDAQ

Good day, everyone. And welcome to the Live Ventures Fiscal YearSecond Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. Now I'd like to turn the call over to Greg Powell, Director of Investor Relations. Please go ahead, sir.

Thank you, Elvis.Good afternoon, and welcome to the Live Ventures second quarter fiscal year 2025 conference call. Joining us this afternoon are Jon Isaac, our Chief Executive Officer and President; and David Verret our Chief Financial Officer. Some of the statements we are making today are forward-looking and are based on our best view of our businesses as we see them today.The actual results could differ materially due to a number of factors, including those outlined in our latest forms, 10-K and 10-Q, as filed with the Securities and Exchange Commission. We have no obligation to publicly update any forward-looking statements after this call, whether as a result of new information, future events, changes in assumptions, or otherwise. You can find our Press Release and 10-Q referenced on this call in the Investor Relations section of the Live Ventures website.I direct you to our website, www.liveventures.comor sec.gov, for our financial SEC filings. I will now turn the call over to David to walk you through our financial performance.

Thank you, Greg. Good afternoon, everyone. Before discussing our financial results, I'd like to touch on a few key highlights from the quarter. Continuing the trend from the first quarter, we are pleased to report that our retail, Retail-Entertainment and Steel Manufacturing segments deliveredoperational improvements during the second quarter.Both segments posted higher operating income and operating margins compared to the same period last year. As we have previously discussed, our Flooringbusinesses continue to face challenges from industry-specific headwinds, specifically the ongoing softness in the new home construction and home refurbishment markets, as well as uncertainty surrounding the current economic outlook. In response to these challenges in our Retail-Flooring segment, we recently brought in a new executive management team with deep expertise in their respective roles.The new leadership team is actively implementing operational initiatives to enhance performance improvements through top-line growth and operational efficiency. During the second quarter, we initiated a targeted cost reduction initiatives which have already resulted in significant savings. In addition, during the quarter, we successfully negotiated a $19 million reduction in Flooring Liquidatorsseller notes, which, when including the cancellation of accrued interest and other items, resulted in a $22.8 million gain for Live Ventures. Let's now discuss the financial results for the second quarter ended March 31, 2025. Total revenue for the quarter decreased $9.8 million to approximately $107 million. The decrease is attributable to the Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments, which decreased by approximately $13.2 million in the aggregate. Retail-Entertainmentsegment revenue increased $1.6 million, or 9.6%, compared to the prior year period, to approximately $18.5 million. Revenue increased primarily due to increased consumer demand for new products, which typically have higher selling prices. Retail-Flooring segment revenue decreased $4.6 million, or 14.5%, compared to the prior year period, to approximately $27.4 million.The decrease is primarily attributable to the disposition of certain Johnson Floor & Home Carpet Onestores in May 2024. Flooring Manufacturing segment revenue decreased $4.4 million, or 12.8%, compared to the prior year, to approximately $29.8 million. The decrease was primarily due to reduced consumer demand as a result of ongoing weakness in the housing market and uncertainty about the current economic outlook. Steel Manufacturing segment revenue decreased $4.2 million, or 11.7%, compared to the prior year period, to approximately $31.3 million. The decrease is primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3.8 million at Central Steel, which was acquired in May 2024. Gross profit for the quarter remained fairly consistent at $35.1 million, as compared with the prior year period.Gross margin percentage for the company increased to 32.8%, from 29.9% in the prior year period. The increase was primarily attributable to increased margins in our Steel Manufacturing segment, primarily due to improved efficiencies in the acquisition of Central Steel, which has historically generated higher margins. General and administrative expense decreased approximately $1.5 million to $28.3 million.The decrease is primarily due to targeted cost reduction initiatives in the Flooring retail segment and lower general and administrative expenses in the corporate and other segments. Sales and marketing expense decreased approximately $1.7 million to $4.7 million. The decrease was primarily due to reduced sales and marketing expenses in the Retail-Flooring segment.Interest expense decreased 5.6% to $3.9 million, and decrease was lower to average debt balances during the quarter. Net income before taxes was $21.1 million, compared to prior year period net loss before taxes of $4.5 million. The increase in the net income before taxes is primarily attributable to the $22.8 million gain on the modification of the Flooring Liquidators seller note, as previously mentioned. Net income was approximately $15.9 million for the quarter, and diluted EPS was $5.05 compared with a net loss of approximately $3.3 million and a loss per share of $1.04 in the prior year period. Adjusted EBITDA for the quarter was approximately $6.4 million, an increase of approximately $2 million compared to the prior year period. Adjusted EBITDA increased primarily due to the acquisition of Central Steel and certain cost reduction initiatives in the Retail-Flooring, Steel Manufacturing, and Corporate and other segments. Turning to liquidity, we ended the quarter with total cash availability of $26.6 million, consisting of cash on hand of $6.9 million, and availability under our various lines of credit totaling $19.7 million. Our working capital was approximately $49.1 million as of March 31, 2025, compared to $52.3 million as of September 30, 2024. As of March 31, total assets were $393.6 million, and total stockholders' equity was $88.9 million. As part of our capital allocation strategy, we may make share repurchases from time to time. We believe our stock repurchases represent long-term value for our stockholders. During the quarter, we repurchased 31,323 shares of the company's common stock at an average price of $8.28 per share. In conclusion, we are pleased that both our Retail-Entertainmentand Steel Manufacturing segments delivered improved operating performance in the first half of the year, with increased operating income and operating margins compared to the prior year period. However, challenging marketing conditions continue to impact Retail-Flooring and Flooring Manufacturing segments, such as reduced consumer demand weighed on performance. To address this, we are implementing measures to enhance the efficiency of our Flooring business, which, as I mentioned earlier, have already led to significant savings. Looking forward, we will continue to focus on our operational excellence, and we remain confident in the long-term fundamentals of our businesses. We will now take questions from those of you on the conference call. Operator, please open the line for questions.

Certainly. [Operator Instructions].

Let's take a question from Joseph, please.

Joseph Kowalsky, your line is open.

Good afternoon, and you know its afternoon for you guys too. Good afternoon and thank you.I like the fact that we're moving forward, and that's always good. I only have two questions today. One is about the note.Was the modification of the note something that was anticipated in the original agreement, say based on revenue or something like that?Or is this something completely different? Could you just give a little bit more color on that? And then my second question is about if you have any idea about how tariffs might or might not affect any of your businesses.

Yes. So starting off with the first portion of the question on the modification of the debt, this was something that was new.This was not something that was in the original agreement. And, maybe I don’t know if you want to share anything.

Yeah, it was not in the original agreement.It was just renegotiated.

Any other color you want to give on that, or is that?

No, we feel like it's a win for Live as a company and for shareholders. And we were successful in getting this accomplished. I think it's a big win.It cuts the note from about 35 million, 36 million, 37 million, somewhere in there, down to 15 million. So that will reduce.

Absolutely a big win.Absolutely, and I appreciate it very much. I just wondered how you were able to do that, but if that's as far as you want to go on it, that's fine.

Well, its – look, I could tell you that we got it done, and how and why is sort of a little bit irrelevant. I mean, I think we did a good job of getting it done, and it took some time to do it, and we are where we are today. Do you want to talk… [Cross Talk]

I'll take the win.

Yeah, always a win, yes.

And so the next question is tariffs. And so this is something that our businesses have been looking at here for the last several months, and as a part of just making sure that we're prepared for what's coming down, because there is just a lot of uncertainty in that area.We are doing more diversification of any of our vendors that are overseas, as well as making sure that we set up vendor relationships here domestically as well. To this point, we have not experienced any negative impacts related to any discussion or talks or actual tariffs that have been implemented. I know that there's also been, since there's a Chinese New Year, there's been a buildup of inventory.That will give us a little bit more headway in the future to make changes as needed and where we purchase some of our product. But no impact to date, and we're monitoring and making sure that we have alternatives at our disposal to be able to react to any tariffs as they come up.

Thank you very much.

[Operator Instructions].Dave, we have no further questions at this time. I'll turn the conference back over to you for any additional or closing comments.

Okay. I just want to thank everyone for joining the second quarter earnings call. And we look forward to talking to you next quarter. Thank you.