Live Ventures Incorporated (LIVE) has reported a significant 30.2% increase in total revenue for the second quarter of fiscal year 2024, reaching $118.6 million.
The growth was largely attributed to the acquisitions of PMW and Flooring Liquidators, which collectively contributed $29.6 million to the revenue stream.
However, the company faced challenges as it reported a net loss of approximately $3.3 million, contrasting with a net income of $1.6 million in the same quarter the previous year.
Adjusted EBITDA also saw a decrease, and the company ended the quarter with total cash availability of $36 million.
Key Takeaways
- Total revenue for the quarter reached approximately $118.6 million, a 30.2% increase from the previous year.
- Acquisitions of PMW and Flooring Liquidators added $29.6 million to the revenue.
- The Flooring Manufacturing segment generated an additional $3.8 million.
- Gross profit stood at $35.5 million with a gross margin of 29.9%.
- Net loss was reported at approximately $3.3 million, a downturn from the net income of $1.6 million in the prior year.
- Adjusted EBITDA decreased by $4.7 million to approximately $4.5 million.
- The company repurchased 11,849 shares of common stock.
- Live Ventures ended the quarter with $36 million in cash and $78.8 million in working capital.
Company Outlook
- Live Ventures remains focused on their buy-build-hold strategy for long-term sustainable growth.
- The company is adapting to market changes and working to maintain operational efficiency.
- Efforts are ongoing to enhance customer satisfaction despite industry-specific challenges.
Bearish Highlights
- Other businesses within the company experienced a revenue decrease of $5.9 million due to general economic conditions.
- General and Administrative expenses increased by $7.2 million, while Sales and Marketing expenses rose by $2.4 million.
Bullish Highlights
- The company is industry agnostic with acquisition strategies, looking for opportunities that complement existing investments.
- Positive EBITDA and strong free cash flow position, performing well against market peers.
Misses
- Live Ventures reported a net loss this quarter as opposed to a net gain in the same quarter last year.
Q&A Highlights
- In response to questions about acquisition plans, Jon Isaac stated that the company is industry agnostic but prefers acquisitions that complement their existing portfolio.
- David Verret highlighted the company's solid EBITDA and free cash flow, expecting profitability to rise with improved market conditions.
- Verret also noted that high interest rates and low liquidity lead to decreased consumer spending, impacting sales in the flooring industry.
- The profitability of the company is influenced by factors such as manufacturing, interest rates, and consumer sentiment.
Live Ventures, facing a challenging economic landscape, has reported a revenue increase buoyed by strategic acquisitions but also a net loss for the second quarter of fiscal year 2024.
The company's leadership remains committed to their strategic approach and is monitoring market conditions closely, with an emphasis on adapting to consumer needs and operational efficiency.
With strong cash availability and working capital, Live Ventures is positioned to navigate the current economic climate while seeking growth opportunities.
InvestingPro Insights
Live Ventures Incorporated (LIVE) has shown resilience in a challenging economic environment, with a notable 30.2% revenue growth in Q2 2024, largely fueled by strategic acquisitions. The company's financial health and market performance can be further understood through real-time data from InvestingPro.
InvestingPro Data metrics highlight a substantial revenue growth of 42.73% over the last twelve months as of Q2 2024, indicating the company's ability to significantly increase its top line. Despite this, the company's P/E ratio stands at a negative -9.82, reflecting its current lack of profitability. Additionally, the price/book ratio at 0.84 suggests that the stock may be undervalued relative to the company's book value, potentially offering an attractive entry point for investors.
Two InvestingPro Tips provide further insights into LIVE's financial state. The valuation implies a strong free cash flow yield, which is a positive sign for investors looking for companies that can generate cash. Moreover, the company's liquid assets exceed short-term obligations, indicating a solid liquidity position that can support the company in managing its short-term liabilities.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/LIVE. These tips can offer more comprehensive insights into Live Ventures' financial health and future outlook. To access these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes an array of valuable investment tools and data.
Full transcript - LiveDeal (LIVE) Q2 2024:
Operator: Good day, everyone, and welcome to today's Live Ventures Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call is being recorded and I will be standing by if you need any assistance. It's now my pleasure to turn today's conference over to Greg Powell, Director of Investor Relations. Please go ahead, sir.
Greg Powell: Thank you, Travis. Good afternoon and welcome to the Live Ventures second quarter fiscal year 2024 conference call. Joining us this afternoon for the call are Jon Isaac, our Chief Executive Officer and President; 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 a copy of our press release referenced on this call in the Investor Relations section of the Investor Relations website. I direct you to our website www.liveventures.com or sec.gov for our historical SEC filings. And now I'll turn the call over to David to walk you through our financial performance for the quarter.
David Verret: Thank you, Greg, and good afternoon, everyone. Let's jump right in and discuss the financial results for the second quarter ended March 31st, 2024. Total revenue for the quarter increased 30.2% to approximately $118.6 million. The increase is primarily attributable to the acquisitions of PMW, which was acquired during the fourth quarter of fiscal year 2023, and Flooring Liquidators, which was acquired during the second quarter of fiscal year 2023, which collectively added $29.6 million in revenue. In addition, the Flooring Manufacturing segment contributed incremental revenue of approximately $3.8 million in the quarter. The increase was partially offset by decreased revenue of approximately $5.9 million and the company's other businesses due to general economic conditions. Flooring Manufacturing revenue of approximately $34.2 million increased by $3.8 million or 12.7% as compared to the prior year period. The increase is primarily due to increased sales related to Harris Flooring Group brands, which was acquired in the fourth quarter of fiscal year 2023. Retail Entertainment revenue of approximately $16.8 million decreased $2.3 million or 12.2% as compared to the prior year period. The decrease in revenue is primarily due to reduced consumer demand and a shift in sales mix towards used products, which generally have lower ticket sales with higher margins. Retail Flooring revenue for the quarter was approximately $32 million, an increase of $11.3 million or 54.2% compared to the prior year period. The increase is due to the acquisition of Flooring Liquidators in fiscal year 2023 as well as the acquisitions of CRO and Johnson in Q1 2024. Steel Manufacturing revenue of approximately $35.5 million increased $15.6 million or 78.2% as compared to the prior year period. The increase is primarily due to increased revenue of approximately $18.3 million at PMW, partially offset by a $2.7 million decrease in the company's other Steel Manufacturing businesses. Corporate and Other revenue was approximately $100,000, a decrease of $800,000 compared to the prior year period. The decrease is primarily due to the closure of SW Financial in May 2023. Gross profit for the second quarter was $35.5 million, up from $31.6 million in the prior year period. The gross margin percentage for the company decreased to 29.9% from 34.7% in the prior year period. The decrease in gross margin is primarily due to the acquisition of PMW, which has historically generated lower margins as well as overall decreased margins in the Steel Manufacturing segment due to general economic conditions impacting the industry. The decrease in gross margin was partially offset by the acquisition of Flooring Liquidators, which contributed a gross margin of 36.5% in the quarter. General and Administrative expense increased approximately $7.2 million to $29.8 million. The increase is primarily due to the acquisitions of Flooring Liquidators and PMW, which collectively contributed an additional $6.4 million in General and Administrative expense during the quarter. Sales and Marketing expense increased approximately $2.4 million to $6.5 million. The increase is primarily due to increased sales personnel acquired in connection with the acquisition of Harris Flooring Group brands and increased convention and trade show activity in the Flooring Manufacturing segment. Interest expense increased by approximately $925,000 as compared to the prior year period. The increase is primarily due to incremental debt incurred in connection with the acquisitions of Flooring Liquidators and PMW. Net loss was approximately $3.3 million and loss per share was $1.04 compared to net income of approximately $1.6 million and diluted EPS of $0.49 per share in the prior year period. This decrease is primarily attributable to the quarter's operating loss and higher interest expense. Adjusted EBITDA for the second quarter was approximately $4.5 million, a decrease of approximately $4.7 million compared to the prior year period. Turning to liquidity. We ended the quarter with total cash availability of $36 million, consisting of cash on hand of $4.5 million and availability under our various lines of credit totaling $31.5 million. Our working capital was approximately $78.8 million as of March 31st, 2024, compared to $85 million as of September 30, 2023. Total assets were $433.9 million and total stockholders' equity was $95.9 million as of March 31st. 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've repurchased 11,849 shares of common stock at an average price of approximately $25.16 per share. As of March 31st, the company had approximately $2.9 million available for repurchases under our repurchase program. In conclusion, we are pleased that our second quarter revenue increased 30.2%. Despite some challenging industry specific headwinds, we are committed to adapting to market changes, maintaining operational efficiency and enhancing customer satisfaction. As we navigate the current market conditions, we're confident about our business prospects and are steadfast in our commitment to our long-term strategy of buy-build-hold. This approach underscores our belief in creating sustainable growth and value over time. We will now take questions from those of you on the conference call. Operator, please open the line for questions.
Operator: [Operator Instructions]
Greg Powell: Let's take the question from Joseph, please.
Operator: We do have a question from Joseph Kowalsky. Joseph Kowalsky, JD (NASDAQ:JD) Investment Partners.
Joseph Kowalsky: Hello and good afternoon.
David Verret: Good afternoon.
Joseph Kowalsky: Thanks for the information. Nice talking to you guys. Well, I'm very happy to hear about the increased revenue. I like the idea of having the new products. Obviously, I'm not thrilled with losses as opposed to profits. But I have a couple of questions specifically. Where do we stand on debt? And is there a timetable for the reduction of that debt? I mean I know you said how much debt there was and so on, but I mean what's your timetable or what's your thought on the timetable for reducing the debt?
David Verret: Well, we'll reduce debt as the company has performed you know provide cash. And really, there are lines of credit that we borrow as we need for current needs, but absent any future acquisitions, I mean, we're going to constantly look at our leverage ratio and just make the best decisions based on the leverage ratio and kind of what prospects we have out there in terms of acquisitions.
Joseph Kowalsky: Okay. I mean I love having share buybacks. But I just wonder if it would be more prudent to focus more on debt reduction as opposed to share buybacks for the foreseeable future until things become more profitable. Is that, I mean, I presume that's part of the consideration?
David Verret: It is part of the consideration and actually the share repurchase program and as at the end of May. So that's something that we'll look at.
Jon Isaac: We only repurchased 11,849 shares. It's not a --
Joseph Kowalsky: Right. No, I saw that. I appreciate it.
Jon Isaac: Huge amount. Relative, yes, exactly. So as David stated, we will make the right money allocation decisions as they come up. A lot of our debt is submarket now anyway. So we are getting some favorable rates in some areas and others not so much. But, yes, we're keenly focused on debt repayment as one of the places that we can invest our cash.
Joseph Kowalsky: All right. Cool. So then the other two questions that I had are -- you mentioned that in the entertainment world, there were more of the secondary sales, which were lower sales -- lower ticket sales with higher margins. Is it generally better in your opinions to have higher margins even if the ticket sales are lower? Or would you rather see higher ticket sales even if the margins are lower? Or is that not something that you're directing yourself? Is it something that you just say, well, what's the market looking for and we have to do it?
David Verret: That's probably the best case of what it is, I would characterize it, but higher margins is obviously preferable. But at the same time, we also have to offer the new products because they kind of go hand-in-hand.
Jon Isaac: We're focused on the bottom line, Joe. But as David stated, sometimes we have to sell the high ticket items in order to increase the momentum on the lower items. For example, the vintage stock, I know when a new console comes out, we have to sell it, even though we make very, very little, we make pennies on it. And we offer it because when we sell it, people end up, psychologically, they come back to the same place, they bought the console and they end up buying games and they end up buying other items and then they end up selling it back to us. So it's more of a service more than anything. But to answer your question, we're more focused, obviously, on what brings returns to shareholders and what -- how do we maximize profitability. We're not -- revenue is a great number to have a great headline have. But at the end of the day, it's all about earnings per share and bottom line.
Joseph Kowalsky: I'm suddenly reminded of the sales of razor blades and you see all these add for Harris. They want to -- in all these companies. They want to sell you their holders, so they can then sell you the blades because that's where the money is. So it sounds similar. Do you plan to -- when you're looking for new companies to acquire, are you looking more into areas that are like the companies that you have or in the areas of the companies that you have? Are you looking for any type of company that you think would be beneficial? Or is there some goal to have a certain scale of the companies that you have, I guess, is what I'm getting at.
Jon Isaac: Yes, I don't know that we look for a particular industry. I think we look for what is out there and what is -- makes sense. It happens that as we get into the carpet industry, we have -- we start getting a lot more opportunities that complement the business that we have. And to the extent that we can make our current investment, it's even more profitable by adding on. I think that's also another positive. But I think we're industry agnostic. But to the extent of complements we have, that's a bonus.
Joseph Kowalsky: Got you. I think the only -- the last question I had is and forgive me because I'm no accountant, but how does free cash flow play into all this? And do you have a timetable when you think profitability will be in hand? And then I'm done.
David Verret: So I mean from an EBITDA standpoint, we like that we're positive. When you're looking at free cash flow, I mean, I think we're in good shape. And even in today's market, when we're -- everybody is kind of having a little bit of hardships, we look at our peers, we see that we're performing about the same, if not better in certain circumstances as well. So I think we like how we're positioned. And so when we start to see an uptick I think that's going to just help across the board, but.
Joseph Kowalsky: I don't know if it specifically answers my question. I was, I mean, look, in my business, I don't look for profits, I look for doing the right things for customers and the profits come along with that. And that's what I would expect that you guys would be doing as well. I certainly don't expect you to say, oh, yes, we're going to profit at any cost because that's not profit in the long run as far as I'm concerned. But I was just wondering if you had a vision or an idea based on your knowledge of the markets as far as when it appears that things would turn from losses to profits. Maybe you do, maybe you don't, I don't know.
David Verret: No, no. I think -- I mean, we're in a different industry that are all kind of somewhat related, but also have its own unique aspects. But when you're looking at the Flooring business, I mean, it's interest rates. Interest rates is what drives consumer decisions, and so that's one of the things we're kind of keeping an eye on. When people are moving, then they're replacing carpets, they're buying new carpets. When we're building new houses, then there's more carpets getting sold. When a market is tight, interest rates are high and liquidity is down on the consumers, we're going to see less spending and that kind of even correlates even to the retail side, which -- on the retail side, on the entertainment with vintage, we see that, well, people are spending less money because they have less free cash and, but they're buying higher margin items for us. So we're making up for a little bit on the back end. So, yes, there are kind of various things, just, I think, in general, manufacturing, interest rates and just consumer sentiment.
Joseph Kowalsky: All right. So I'll go talk to Jay Powell. Thank you very much.
Jon Isaac: Let us know what he says. Thank you.
Joseph Kowalsky: Will do.
Operator: We have no further questions in the queue at this time.
Greg Powell: Okay. I'd like to thank everyone for calling in to the second quarter earnings call and look forward next quarter to talking with everyone. Thank you.
Jon Isaac: Thank you.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
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