Earnings call transcript: Live Ventures Q1 2025 posts strong EPS, stock surges

Live Ventures Inc. reported a robust financial performance for Q1 2025, with earnings per share (EPS) reaching $5.50, a significant turnaround from a loss of $1.04 in the previous year. The company’s revenue stood at $107 million, with a notable increase in net income to $15.9 million. Following the announcement, Live Ventures’ stock surged by 57.51% to $21.35 in aftermarket trading, reflecting strong investor confidence despite a slight dip of 1.7% later. According to InvestingPro data, the stock has delivered an impressive YTD return of 132.8%, though current analysis suggests the stock may be trading above its Fair Value.

Key Takeaways

• Live Ventures reported a significant increase in EPS to $5.50 from a loss last year.
• Stock price jumped by 57.51% in aftermarket trading.
• Gross margin improved to 32.8%, indicating better operational efficiency.
• The company secured a $22.8 million gain through seller note reductions.

Company Performance

Live Ventures demonstrated a strong recovery in Q1 2025, reversing a net loss into a substantial profit. The company’s strategic initiatives, such as cost reduction and operational improvements, contributed to a higher gross margin of 32.8%, up from 29.9% last year. Despite a decrease in total revenue by $9.8 million, the company’s focus on efficiency and profitability has paid off. InvestingPro analysis reveals the company maintains a healthy current ratio of 1.42, though its overall Financial Health Score stands at "FAIR." Subscribers can access 10+ additional ProTips and comprehensive financial metrics through the Pro Research Report.

Financial Highlights

• Revenue: $107 million (decreased by $9.8 million year-over-year)
• Earnings per share: $5.50 (compared to a loss of $1.04 last year)
• Gross profit: $35.1 million (consistent with the previous year)
• Net income: $15.9 million (compared to a net loss of $3.3 million last year)
• Adjusted EBITDA: $6.4 million (increased by $2 million)

Earnings vs. Forecast

Live Ventures exceeded market expectations with an actual EPS of $5.05, surpassing forecasts. This positive surprise marks a significant achievement, especially compared to previous quarters where the company reported losses.

Market Reaction

The stock price of Live Ventures surged by 57.51% to $21.35 in aftermarket trading, indicating strong investor confidence in the company’s turnaround. This movement places the stock closer to its 52-week high of $26.23, a significant leap from its low of $6.25, showcasing a robust recovery. InvestingPro data shows impressive returns across multiple timeframes, with a 98.36% gain in the past week and 101.11% over six months. The stock’s RSI indicates overbought conditions, suggesting investors should monitor valuation levels carefully.

Outlook & Guidance

The company remains confident in its long-term business fundamentals, focusing on operational excellence and exploring domestic vendor relationships. While no immediate tariff impacts are identified, Live Ventures is preparing for potential future challenges by diversifying its vendor base.

Executive Commentary

David Barrett, CFO, emphasized the improved performance in the retail entertainment and steel manufacturing segments, stating, "We are pleased that both our retail entertainment and steel manufacturing segments delivered improved operating performance." CEO John Isaac highlighted the company’s operational achievements, noting, "We will continue to focus on our operational excellence."

Risks and Challenges

• Economic uncertainty affecting consumer demand and new home construction.
• Potential future tariff impacts, though currently not affecting the company.
• Challenges in the housing market impacting the flooring segment.

Q&A

During the earnings call, analysts inquired about the note modification, which resulted in a reduction from approximately $36 million to $15 million. Executives also addressed vendor diversification strategies to mitigate future tariff risks.

Full transcript - Live Ventures Inc (LIVE) Q2 2025:

Conference Moderator: Good day, everyone, and welcome to the Live Ventures Fiscal Year Second Quarter twenty twenty five 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 Rick Powell, Director of Investor Relations. Please go ahead, sir.

Thank you, Elvis. Good afternoon, and welcome to the Live Ventures second quarter fiscal year twenty twenty five conference call. Joining us this afternoon are John Isaac, our Chief Executive Officer and President and David Barrett, 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 ks 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, liveventures.com or sec.gov, for our financial SEC filings. I will now turn the call over to David to walk you through our financial performance.

David Barrett, Chief Financial Officer, Live Ventures: 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 trends in the first quarter, we are pleased to report that our retail entertainment and steel manufacturing segments delivered operational 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 flooring businesses 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 $19,000,000 reduction in flooring liquidators seller notes, which, when including the cancellation of accrued interest and other items, resulted in a $22,800,000 gain for life interest.

Let’s now discuss the financial results for the second quarter ended 03/31/2025. Total revenue for the quarter decreased $9,800,000 to approximately $107,000,000 The decrease is attributable to the retail flooring, flooring manufacturing and steel manufacturing segments, which decreased by approximately $13,200,000 in the aggregate. Retail entertainment segment revenue increased $1,600,000 or 9.6% compared to the prior year period to approximately 18,500,000.0. Revenue increased primarily due to increased consumer demand for new products, which typically have higher selling prices. Retail flooring segment revenue decreased 4,600,000.0 or 14.5% compared to the prior year period to approximately 27,400,000.0.

The decrease is primarily attributable to the disposition of certain Johnson Floor and Home Carpet One stores in May 2024. Flooring Manufacturing segment revenue decreased $4,400,000 or 12.8% compared to the prior year to approximately 29,800,000.0 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 $4,200,000 or 11.7% compared to the prior year period to approximately $31,300,000 The decrease was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3,800,000 at Central Steel, which was acquired in May 2024. Gross profit for the quarter remained fairly consistent at $35,100,000 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 $1,500,000 to $28,300,000 Decrease is primarily due to targeted cost reduction initiatives in the flooring retail segments and lower general and administrative expenses in the corporate and other segment. Sales and marketing expense decreased approximately 1,700,000 to $4,700,000 The decrease was primarily due to reduced sales and marketing expenses in the retail flooring segment. Interest expense decreased 5.6% to $3,900,000 The decrease was lower to average debt balances during the quarter. Net income before taxes was $21,100,000 compared to prior year period net loss before taxes of $4,500,000 The increase in the net income before taxes is primarily attributable to the $22,800,000 gain on modification of deploying liquidators seller note, as previously mentioned.

Net income was approximately $15,900,000 for the quarter, and diluted EPS was $5.5 compared with a net loss of approximately $3,300,000 and a loss per share of 1.04 in the prior year period. Adjusted EBITDA for the quarter was approximately $6,400,000 an increase of approximately $2,000,000 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 $26,600,000 consisting of cash on hand of $6,900,000 and availability under our various lines of credit totaling 19,700,000.0 Our working capital was approximately 49,100,000.0 as of 03/31/2025 compared to 52,300,000.0 as of 09/30/2024. As of March 31, total assets were $393,600,000 and total stockholders’ equity was $88,900,000 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 entertainment and 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 market 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.

Conference Moderator: Certainly.

John Isaac, Chief Executive Officer and President, Live Ventures: We’ll take a question from Joseph, please.

Conference Moderator: Joseph Kowalski, your line is open. 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

John Isaac, Chief Executive Officer and President, Live Ventures: this something completely different? Can you just give a

Conference Moderator: 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.

David Barrett, Chief Financial Officer, Live Ventures: Yes. So starting off with the first portion of the question on the modification of the debt. This is something that was new. This was not something that was in the original agreement. Maybe I don’t know if you want to

John Isaac, Chief Executive Officer and President, Live Ventures: share anything. Yes. It was not in the original agreement. It was just renegotiated.

David Barrett, Chief Financial Officer, Live Ventures: Other color you want

Conference Moderator: to give on that? Or is that

John Isaac, Chief Executive Officer and President, Live Ventures: No. We feel like win for life as a company and for shareholders. And we were successful in getting this accomplished. I think it’s a big win. We’ve touched the note from about 35,000,000 30 6 million 30 7 million

Conference Moderator: dollars somewhere in there down to $15,000,000

John Isaac, Chief Executive Officer and President, Live Ventures: So that will reduce

Conference Moderator: 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.

John Isaac, Chief Executive Officer and President, Live Ventures: Well, a look, I can tell you that we got it done and how and why is sort of not a little bit irrelevant. I mean, think we did a good job of getting it done and it took some time to do it, we are where we are today. I’ll take the win. And

David Barrett, Chief Financial Officer, Live Ventures: 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 board diversification of any of our vendors that are overseas as well as making sure that we set up relationships 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. Is

Conference Moderator: you know, we

David Barrett, Chief Financial Officer, Live Ventures: I know that there’s also been the since there’s a Chinese New Year, there’s been a buildup of inventory that’ll give us a little bit more headway, in the future to make, changes as needed and and where, you know,

Conference Moderator: where we purchase some of our product.

David Barrett, Chief Financial Officer, Live Ventures: But Okay. No impact to date, and 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.

Conference Moderator: Thank you very much. Dave, we have no further questions at this time. I’ll turn the conference back over to you for any additional or closing comments.

David Barrett, Chief Financial Officer, Live Ventures: 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.

Conference Moderator: That concludes our conference today. Thanks everyone for joining and have a great day.

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