Live Ventures Inc (LIVE) 2023 Q4 法說會逐字稿

Good day, everyone, and welcome to today's Live Ventures Incorporated Earnings Call. (Operator Instructions) Please note this call is being recorded and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Greg Powell, Director of Investor Relations.

Thank you, Chelsea. Good afternoon, and welcome to the Live Ventures Fiscal Year End 2023 conference call. Joining us this afternoon for the call are Jon Isaac, our Chief Executive Officer, and President, David Verret, our Chief Financial Officer; and Eric Althofer, our Chief Operating 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 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 referenced on this call in the Investor Relations section of the ventures website. I'd direct you to our website liveventures.com or sec.gov, our historical SEC filings. Now I will turn the call over to David to walk you through our financial performance.

Thank you, Greg, and good afternoon, everyone. Before jumping into the numbers for fiscal year 2023. Let's briefly discuss our record year of acquisitions. We are pleased to report that we significantly bolstered our portfolio through several strategic transactions aligning with our long-term buy build page strategy. During the year, we executed four transactions totaling an investment of approximately $117 million. We acquired Flooring Liquidators, Inc., a retailer an installer of flooring, carpeting and countertops, precision metal works and manufacture and supplier of highly engineered parts. Certain assets from Cal close that warehouse, a flooring retailer and the Harris flooring group brands from GP. In addition, and subsequent to year end, we made a public offer to buy all of the outstanding shares of LL. flooring Holdings, Inc. a publicly traded 0.8. The details of our offer are described in our public filings. We are not able to provide any additional update on LL Flooring at this time.

Yes, now I will discuss the financial results for our fiscal year ended and the third is 2023. Total revenue for the year increased 23.8%, $355.2 million. The increase is primarily attributable to the acquisitions of flooring liquidators and PMW. in 2023, as well as the acquisition of Canetic in late 2022. The increase was partially offset by decreased revenues in the foreign manufacturing, retail, entertainment, corporate and other segments. Flooring manufacturing revenues of approximately $109.8 million decreased by $21.1 million or 16.1% as compared to the prior year period. The decrease is primarily due to consumer demand as a result of general economic conditions. Retail entertainment revenues of approximately $78.1 million decreased by $8 million or 9.3% as compared to the prior year. Revenues decreased due to reduced demand as a result of a deterioration in general economic conditions and a shift in sales mix towards used products, which generally have lower ticket sales with higher margin as we announced earlier this year, we have added the retail flooring segment in connection with the acquisition of foreign liquidators in January 2023. Revenues for retail point were approximately $75.9 million for the year. Steel Manufacturing revenues of approximately $88.9 million increased by $28.3 million. We were 46.7% as compared to the prior year period. The increase is due to the acquisitions of Canetic in June 2022 and PMW. and <unk> 2023 Corporate and Other revenues decreased by approximately $6.8 million. We're 73.2% to $2.5 million as compared to the prior year period. The decrease is primarily due to the closure of SWS Financial in May 2023. Gross profit for the year was $115.6 million, up from $97.8 million in the prior year period. Gross margin percentage for the company decreased to 32.5% from 34.1% in the prior year. The decrease is primarily attributable to the impacts of inflationary cost increases, partially offset by the acquisition of Fluent liquidators. We generate margins above 36%, 2023, general and administrative expenses increased by approximately $32.1 million or 58.8% as compared to the prior year period. Increase is primarily due to the acquisitions of foreign liquidators, PMW. and Kinetic, which collectively contributed $32.8 million of general and administrative expenses in 2023.

Selling and marketing expenses increased by approximately $1 million as compared to the prior year period, primarily due to an increase in marketing activities and our foreign manufacturing. In retail flooring segment operating income decreased to approximately $15.4 million as compared to $25.9 million in the prior year period. The decrease in operating income was primarily attributable to lower gross profit margins and increased operating expenses. Interest expense increased by approximately $8.5 million compared to the prior year period. The increase was primarily due to the increased debt balances related to the acquisitions deploying liquidators, P&W and QinetiQ as well as increased interest rates during the period. Net loss was $0.1 million and diluted loss per share was $0.03 as compared to net income of $24.7 million and diluted EPS of $7.84 in the prior-year period. The decrease in net income is attributable to lower operating income and increased interest expense. In addition, prior year's net income included a benefit of approximately 11.4 million was $2.56 per diluted share related to the ApplianceSmart bankruptcy settled in a charge of approximately $4.9 million or $0.0156 per diluted share related to the impairment of SWI. fine goodwill and intangibles. Adjusted EBITDA for the year was approximately $31.5 million, a decrease of approximately $6.8 million or 17.8% as compared to the prior year period decrease is primarily due to an overall decrease in operating income.

Turning to liquidity, we ended the year with total cash availability of $37.1 million consisting of cash on hand of $4.3 million and cash availability under our various lines of credit, total $32.8 million. We had working capital of approximately $85 million as of September 30th, 2023, as compared to $78.4 million in the prior year. Total assets were $421.8 million as of September 30, 2023, as compared to $278.6 million in the prior year. Total stockholders' equity was $100.1 million as compared to $97.2 million as of September 30, 2022.

As part of our capital allocation strategy, we may make share repurchases from time to time we believe our stock repurchases represent a long-term value for our stockholders. During the year, we repurchased 39,092 shares of common stock at an average price, approximately $25.35 per share. As of September 30, the Company had approximately $3.3 million available were repurchases under our repurchase program.

In conclusion, fiscal year 2023 was marked by challenging economic head. In spite of the challenging environment, we remain focused on creating long-term value for our stockholders by executing our long-term five build-to-hold strategy. As I mentioned earlier, we completed four transactions during the year, and we are excited about the opportunities that these acquisitions offer us going forward. We believe that these transaction on financials and our strategic focus position us well to weather the near-term headwinds and emerge as a stronger, more resilient company in the long run. We will now take questions from those of you on the conference call. Operator, please open the line for questions.

(Operator Instructions)

We'll take a call from Theodore, please.

All right, Theodore, your line is now open.

Thank you. I was just wondering if you could give us some color on precision. If you look across the three segments there in industrial appliance and automotive, is there any particular strength to it relative to what you're expecting from that?

Yeah. So yeah, as you mentioned, we do cover various industries and we believe, in fact, that kind of makes us somewhat resilient. And if the automotive is going down because of a strike or something like that. There's other industries that are picking up on and what we've seen so far from precision to different companies. It is actually in our Kinetic, but they really are, I'd say, close to exceeded it. And if not exceeded our expectations from the acquisition this year, we're very pleased with where they are and then how they've been performing and on the precision module side, if they've been doing pretty well, there was really a banner year last year. They come down a little bit off of that, but they're still doing very well, and we're very pleased with what we're seeing in combat from our steel segment.

Thank you very much.

(Operator Instructions)

We'll take a question from Tom, please.

All right, Tom, your line is open.

I have a question. Do you still own any LL. shares? And if so, what's the status on the operating units?

Thank you for your question. At this time, we really cannot discuss anything related to LL Flooring. I do appreciate the question. The only thing we can point to is the the press release and what we've made publicly available for all to read. I do appreciate the question though.

Okay. Thank you.

Thank you, Tom.

All right. And at this time, no further questions in the queue.

I want to thank everyone for attending the year-end call, and I look forward to sharing results for Q1 shortly. Thank you.

Thank you, ladies and gentlemen, this concludes today's program, and we appreciate your participation. You may disconnect at any time.