Live Ventures Incorporated

Welcome to the LiveVenture Fiscal Year 2024 Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. I would now like to turn the call over to Greg Powell, Director of Investor Relations. Please go ahead, sir.

Thank you, Jen. Good afternoon, and welcome to the LiveVenture's Fiscal Year 2024 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, our 10-K and our 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 reference 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 historical SEC filings. I will now turn the call over to David to walk us through our financial performance. David?

Thank you, Greg, and good afternoon, everyone. Let's jump right in and discuss the financial results of our fiscal year ended September 30, 2024. Total revenue for the year increased 33.1% to approximately $472.8 million. The increase is primarily attributable to the acquisitions of Flooring Liquidators and PMW, both of which were acquired during fiscal year 2023, and Central Steel, which was acquired in May 2024. That collectively added approximately $118.3 million, as well as an increase of approximately $15.2 million and our flooring manufacturing segment. The increase was partially offset by decreased revenue of approximately $13.7 million in the company's other businesses, primarily due to general economic conditions. Retail entertainment segment revenue decreased $7.1 million, or 9.1%, to approximately $71 million compared to the prior year. The decrease in revenue was primarily attributable to reduced consumer demand and a shift in sales mix towards used products, which generally have lower ticket sales prices with higher margins. Retail flooring segment revenue increased 61.1 million, or 80.6%, to approximately 137 million compared to the prior year. The increase is primarily due to the acquisition of flooring liquidators in the second quarter of fiscal year 2023, increased revenue in flooring liquidators builder design and installation segment elite builder services, and the acquisition of carpet remnant outlet during the first quarter of fiscal year 2024. Flooring manufacturing segment revenue increased $15.2 million, or 13.8%, to approximately 125 million compared to the prior year. The increase is primarily due to increased sales related to Harris Flooring Group brands, which were acquired in the fourth quarter of fiscal year 2023. Steel manufacturing segment revenue increased 50.7 million, or 57%, to approximately 139.6 million compared to the prior year. The increase is primarily due to increased revenue of approximately $51.2 million at PMW and approximately $6 million at Central Steel, partially offset by a $6.5 million decrease in the company's other steel manufacturing businesses. Gross profit for the year was approximately $144.8 million, up from $115.6 million in the prior year. The gross margin percentage for the company decreased to 30.6% from 32.5% in the prior year. The decrease in margin percentage is primarily due to the acquisition of PMW, which was historically generated lower margins, and decreased margins in the steel manufacturing segment due to reduced production efficiencies as a result of lower demand. The decrease in gross margin was partially offset by increased margins at the retail, entertainment, and flooring manufacturing segments. General and administrative expense increased approximately $31.4 million to $118 million. The increase is primarily due to the acquisitions of flooring liquidators and PMW during fiscal year 2023. Sales and marketing expense increased approximately $8.9 million to $22.4 million. The increase is primarily due to increased sales personnel required in connection with the acquisition of Harris Flooring Group brands, increased convention and trade show activity in the flooring manufacturing segment, and an increase in sales force in the retail flooring segment. During the fourth quarter of fiscal year 2024, our retail flooring segment recorded a goodwill impairment charge of $18.1 million. This charge was driven by declining performance at flooring liquidators, reflecting the adverse impacts of broader economic conditions that have troubled the floor covering industry as a whole. Specifically, flooring liquidators has been impacted by high interest rates, lingering inflation, and lower consumer confidence. These factors have affected the housing market, including home resales, new construction starts, and renovation activities. Interest expense increased by approximately $4.1 million compared to fiscal year 2023. The increase is primarily attributable to the incremental debt incurred in connection with the acquisitions of Flooring Liquidators and PMW. Net loss for the year was approximately $26.7 million and loss per share was $8.48 compared with a net loss of approximately $100,000 and loss per share of $0.03 in fiscal year 2023. The decrease is primarily attributable to the goodwill impairment charge, lower operating and earnings, and higher interest expense compared to the prior year. Adjusted EBITDA for the year was approximately $24.5 million, a decrease of approximately $7 million as compared to the prior year. Turning to liquidity, we ended the year with total cash availability of $33.3 million, consisting of cash on hand of $4.6 million and availability under our various lines of credit totaling $28.7 million. Our working capital was approximately $52.3 million as of September 30, 2024, compared to $85 million as of September 30, 2023. The decrease is primarily due to increase in current portion of long-term debt associated with PMW. As of September 30, PMW was in default of one of its financial covenants. As a result, PMW's long-term debt balance and seller refinance loans were reclassed to current liabilities. We are currently in the process of resolving the default with our creditors and hope to resolve the issue in a timely manner. As of September 30, total assets were $407.5 million and total stockholders' equity was $72.9 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 year, we repurchased 34,624 shares of common stock. In conclusion, we are pleased that our fiscal year 2024 revenue and gross profit increased 33% and 25% respectively. However, challenging market conditions in our retail, flooring, and steel manufacturing segments have adversely affected the operating results of these businesses. Despite these specific conditions, we remain confident in our businesses and our long-term buy-build-hold strategy. We will now take questions from those of you on the conference call. Operator, please open the line for questions.