Earnings call transcript: Live Ventures Q4 2024 sees EPS improvement

Live Ventures Inc (NASDAQ:LIVE). reported its earnings for the fourth quarter of 2024, showing a notable improvement in earnings per share (EPS) and a decrease in revenue compared to the previous year. The company’s stock saw a decline in aftermarket trading, reflecting mixed investor sentiments. According to InvestingPro data, the stock has fallen over 62% in the past year, though analysis suggests the company is currently trading below its Fair Value. Despite a challenging market environment, Live Ventures delivered a diluted EPS of $0.16, surpassing the forecast of $1.44, and reported revenue of $111.5 million, exceeding expectations of $104 million.

Key Takeaways

• EPS improved to $0.16 from a previous loss of $0.22.
• Revenue decreased by 5.2% year-over-year.
• Stock price fell by 2.58% after the earnings release.
• Gross margin increased slightly to 31.7%.
• The company settled significant liabilities, generating $3.5 million in gains.

Company Performance

Live Ventures demonstrated resilience in the face of challenging market conditions, particularly in the flooring industry. The company managed to improve its net income to $500,000 from a net loss of $700,000 in the previous year. Despite a 5.2% decrease in total revenue, the company’s diversified business model, which includes retail entertainment and steel manufacturing, contributed to its stable performance. InvestingPro analysis reveals the company maintains a solid current ratio of 1.4, though it faces profitability challenges with negative returns on assets over the last twelve months.

Financial Highlights

• Total (EPA:TTEF) Revenue: $111.5 million (5.2% decrease year-over-year)
• Net Income: $500,000 (improved from a net loss of $700,000)
• Diluted EPS: $0.16 (up from -$0.22)
• Gross Profit: $35.4 million (decreased by $1 million)
• Gross Margin: 31.7% (up from 30.9%)
• Total Cash Availability: $31.1 million
• Working Capital: $51 million

Earnings vs. Forecast

Live Ventures exceeded revenue expectations, reporting $111.5 million against a forecast of $104 million, a positive surprise of 7.21%. However, the EPS of $0.16 fell significantly short of the forecasted $1.44. This discrepancy highlights the company’s ongoing challenges in meeting profitability expectations despite revenue growth.

Market Reaction

Following the earnings announcement, Live Ventures’ stock price declined by 2.58%, closing at $9.42 in aftermarket trading. This movement reflects investor concerns over the EPS miss and ongoing market challenges. The stock remains closer to its 52-week low of $8.69, indicating cautious investor sentiment. InvestingPro subscribers have access to additional insights, including six key ProTips and comprehensive valuation metrics that help explain the current market dynamics. The company’s beta of 0.88 suggests slightly lower volatility compared to the broader market.

Outlook & Guidance

Live Ventures did not provide specific financial guidance for the upcoming quarters. The company is focusing on initiatives to enhance performance and is exploring potential acquisition opportunities to drive future growth. With an Altman Z-Score of 1.82 and a Piotroski Score of 4, as reported by InvestingPro, investors seeking deeper insights into the company’s financial health and growth potential can access the comprehensive Pro Research Report, available exclusively to subscribers.

Executive Commentary

David Barrett, CFO, emphasized the company’s operational improvements: "We are pleased that both our retail entertainment and steel manufacturing segments delivered improved operating performance." He also hinted at future opportunities: "There’s always opportunities that come up."

Risks and Challenges

• Market Conditions: The flooring industry faces reduced consumer demand, impacting sales.
• Profitability Concerns: The significant EPS miss raises questions about future earnings potential.
• Operational Costs: The need to manage expenses amid challenging conditions remains critical.
• Acquisition Risks: Potential acquisitions could introduce integration and financial risks.
• Economic Uncertainty: Broader economic pressures may affect consumer spending and demand.

Q&A

During the earnings call, analysts inquired about the details of the company’s recent settlements, future earnings potential, and acquisition strategies. Management provided limited forward-looking information, maintaining a cautious outlook on future projections.

Full transcript - Live Ventures Inc (LIVE) Q1 2025:

Conference Operator: Welcome to the Live Ventures FY twenty twenty five First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to Greg Powell, Director of Investor Relations. Please go ahead, sir.

Greg Powell, Director of Investor Relations, Live Ventures: Thank you, Jen. Good afternoon, and welcome to the Live Ventures first quarter fiscal year twenty twenty five conference call. Joining us this afternoon is 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 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 an insult of any new information, future events, changes in assumptions or otherwise. You can find our press release that we referenced on this call today in the Investor Relations section of the Live Ventures website. I will direct you to our website, liveventures.com or sec.gov for our historical 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, and good afternoon, everyone. Let’s jump right in and discuss the financial results for the first quarter ended 12/31/2024. Total revenue for the quarter decreased 5.2% to approximately $111,500,000 The decrease is attributable to the Flooring Manufacturing, Retail Flooring and Steel Manufacturing segments, which decreased by approximately $6,700,000 in the aggregate. Retail entertainment revenue increased $700,000 or 3.3% compared to the prior year period to approximately $21,300,000 The increase in revenue was primarily due to an increase in the number of stores from 70 in Q1 twenty twenty four as compared to 73 in Q1 twenty twenty five. Retail flooring segment revenue decreased $2,600,000 or 7.5% compared to the prior year period to approximately $31,700,000 The decrease is primarily due to reduced demand in the flooring industry.

Flooring manufacturing segment revenue decreased $3,200,000 dollars or 11.1% compared to the prior year period to approximately $26,000,000 The decrease in revenue was also primarily due to reduced demand in the flooring industry. Steel Manufacturing segment revenue decreased $900,000 or 2.8% compared to the prior year period to approximately $32,400,000 The decrease is primarily due to reduced consumer demand, partially offset by revenue of $3,100,000 at Central Steel, which was acquired in May 2024. Gross profit for the quarter was approximately $35,400,000 a decrease of $1,000,000 compared to the prior year period. The gross margin percentage for the company increased to 31.7% from 30.9% in the prior year period. The increase is primarily attributable to increased margins in our retail entertainment segment as well as the steel manufacturing segment, primarily due to product mix.

General and administrative expense increased approximately $2,400,000 to $30,100,000 The increase is primarily due to increased compensation and other general and administrative expenses in the retail flooring segment. Sales and marketing expense decreased approximately $600,000 to $4,500,000 This decrease was primarily due to reduced sales and marketing activities in the retail flooring segment. Interest expense remained constant at $4,200,000 in the current quarter as compared to the prior year period. Net income for the quarter was approximately $500,000 and diluted EPS was $0.16 compared to net loss of approximately $700,000 and loss per share of $0.22 in the prior year period. The increase in net income is primarily attributable to a $2,800,000 gain on the settlement of the earn out liability related to the PMW acquisition and a $700,000 gain on the settlement of PMW seller notes.

Adjusted EBITDA for the quarter was approximately $5,700,000 a decrease of approximately $3,000,000 as compared to the prior year period. Turning to liquidity, we ended the quarter with total cash availability of $31,100,000 consisting of cash on hand of $7,400,000 and availability under our various lines of credit totaling $23,700,000 Our working capital was approximately $51,000,000 as of 12/31/2024, compared to $52,300,000 as of 09/30/2024. As of December 31, total assets were $395,500,000 and total stockholders’ equity was $73,300,000 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 approximately 15,700 shares of common stock.

In conclusion, we are pleased that both our retail entertainment and steel manufacturing segments delivered improved operating performance in the first quarter with increases in operating revenue and operating margins as compared to the prior year period. However, challenging market conditions continue to impact our retail flooring and our flooring manufacturing segments as reduced consumer demand weighed on performance. To address this, we are implementing measures to enhance efficiency of our flowing businesses. Despite these challenges, we remain confident in the long term strategy of our businesses. We will now take questions from those of you on the conference call.

Operator, please open the line for questions.

Conference Operator: Thank you. And our first question will come from Joseph Kowalski with JD (NASDAQ:JD) Investments.

Joseph Kowalski, Investor, JD Investments: Hello and nice to see earnings. I just wondered if you could give me some color, give us some color on the settlement, what it relates to, how it works, is there more to it in the future, is it a one time thing?

David Barrett, Chief Financial Officer, Live Ventures: Sure. Yes. This is a one time thing. It was our goal to get the sellers kind of out completely out of the picture going forward. So we had approached them on settling.

It was a $2,500,000 seller notes and as well as eliminating the earn out liability, which was a five year earn out period. And we were able to negotiate with them, paying off the loan early at a discount and forgiving the earnout for basically, that helped us get a, about a $3,500,000 gain out of the deal.

Joseph Kowalski, Investor, JD Investments: Very nice. So without that and into the future, how do things look? I mean, obviously, we had losses last year. Do you anticipate losses continuing for this year? And in which divisions?

Or do you anticipate earnings profits?

David Barrett, Chief Financial Officer, Live Ventures: Yes. I’ll start off with that. We don’t kind of give guidance on expectations for projections in the future. I will say that there has been a number of initiatives that we have been implementing across a couple of our entities whose performance have struggled more than others. And I think we’re pleased with what we’re seeing.

And we’re expecting to see some results of these initiatives that we’re enacting here in the near future.

Joseph Kowalski, Investor, JD Investments: Okay, fair enough. And then, last question. Anything on the horizon as far as new company to be added to the portfolio? Are there things that you’re working on in the near term as opposed to just looking around out there?

David Barrett, Chief Financial Officer, Live Ventures: Yes. There’s always opportunities that come up. I’ll say that there’s really nothing that’s hot at the moment that

Greg Powell, Director of Investor Relations, Live Ventures: is worthy of discussing.

Joseph Kowalski, Investor, JD Investments: Okay. Thank you very much.

Conference Operator: And it appears we have no further questions. Mr. Verett, I’ll turn the conference back to you for any additional or closing remarks.

David Barrett, Chief Financial Officer, Live Ventures: Okay. I just want to thank everyone for attending our Q1 earnings call, and we look forward to giving you an update in Q2. Thank you.

Conference Operator: And this does conclude today’s conference call. Thank you for attending.

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