Live Ventures Incorporated

Everyone, and welcome to the Live Ventures Fiscal Year Q3 2025 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 Greg Powell, Director of Investor Relations. Please go ahead, Greg. Thank you, Elvis. Good afternoon, and welcome to the Live Ventures Third Quarter Fiscal Year 2025 Conference Call. Joining us this afternoon are John Isaacs, 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, Form 10-K and Form 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 that was referenced on today's call in the Investor Relations section of the LiveVentures 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 through our financial performance.

Thank you, Greg. Good afternoon, everyone. Before discussing our financial results, I'd like to touch on a few key highlights from the quarter. We are pleased to report that all four of our operating segments delivered improved performance in the third quarter, with each achieving higher operating income and operating margin compared to the prior year period. These results were delivered despite continued softness in the new home construction and home refurbishment market. which remain a headwind for our retail flooring and flooring manufacturing segments. As noted last quarter, in response to the challenges in our retail flooring segment, we appointed a new executive leadership team. The new team is actively implementing operational cost-saving initiatives focused on top-line growth and improving efficiency. During the quarter, our targeted cost-saving initiatives are having a significant impact in generating considerable savings in the retail foreign segment. In addition, our other segments are also benefiting from the cost-saving measures implemented during the quarter. Now let's discuss the financial results for the third quarter ended June 30, 2025. Total revenue for the quarter decreased $11.2 million, or 9.2%, to approximately $112.5 million. The decrease is primarily attributable to the retail flooring and steel manufacturing segments, which collectively decreased by approximately $12 million. The retail entertainment segment revenue increased $2.5 million, or 15.2%, to approximately $19 million as compared to the prior year period. The increase in segment revenue is primarily due to increased consumer demand for new products, which typically have higher selling prices. Retail flooring segment revenue decreased $6.6 million, or 17.9%, to approximately $30.4 million as compared to the prior year period. The decrease is primarily attributable to the disposition of certain Johnson Flooring Home carpet 1 stores in May 2024 and reduced consumer demand due to the weakness in the housing market. Flooring manufacturing segment revenue decreased $1.8 million, or 5.7%, to approximately $31.3 million as compared to the prior year period. The decrease is primarily due to reduced consumer demand as a result of the ongoing weakness in the housing market. Steel manufacturing segment revenue decreased $5.4 million, or 13.8%, to approximately $33.6 million as compared to the prior year period. The decrease was primarily driven by lower sales volumes of certain business units, partially offset by incremental revenue of $5 million at Central Steel, which was acquired in May 2024. Gross profits for the quarter increased $1.2 million, or 3.4%, to $38.3 million. Gross margins increased by 410 basis points to 34%, from 29.9% in the prior year period. The increase was primarily driven by higher margins in our steel manufacturing and flooring manufacturing segments. The increase in growth margin in the steel manufacturing segment is primarily due to improved efficiencies and the May 2024 acquisition of Central Steel, which has historically generated higher margins. The increase in growth margin in the flooring manufacturing segment is primarily due to improved efficiencies and more favorable product mix. General and administrative expense decreased approximately 3.8 million or 12.6% to 26.3 million. The decrease was primarily due to lower compensation and other operating expenses resulting from targeted cost reduction initiatives in the retail flooring and flooring manufacturing segments. Sales and marketing expense decreased approximately 1.8 million or 31.5% to 4 million. The decrease was primarily due to lower compensation and marketing expenses resulting from targeted cost reduction initiatives and the retail flooring and flooring manufacturing segments. Interest expense decreased 9% to $3.9 million. The decrease was due to lower average debt balances as compared to the prior year period. Net income was approximately $5.4 million for the quarter, and the rate of EPS was $1.24, compared with a net loss of approximately $2.9 million and a loss per share of $0.91, in the prior year period. That eighth term for the third quarter includes a $1.5 million gain on employee retention credit and a $1.3 million gain on the settlement of a holdback liability related to the precision marshal acquisition. Adjusted EBITDA for the quarter was approximately $13.2 million, an increase of approximately $7.1 million compared to the prior year period. The increase in objectives for the improved operating performance during the third quarter of 2025 reflecting the targeted cost reduction initiatives in the retail flooring and other segments. Turning to liquidity, we ended the quarter with total cash availability of $37.1 million, consisting of cash on hand of $7.6 million and availability under various lines of credit totaling $29.5 million. Our working capital was approximately $65.9 million as of June 30, 2025, compared to $52.3 million as of September 30, 2024. As of the end of the quarter, total assets were $387.5 million, and total stockholders' equity was $94.3 million. As part of our capital allocation strategy, we may make share purchases from time to time. We believe our stock repurchases represent long-term value for our stockholders. During the quarter, we repurchased 12,695 shares of the company's common stock at an average price of $8.83 per share. In conclusion, we are pleased that all four of our operating segments delivered improved performance in the third quarter of fiscal 2025, with each reporting higher operating income and operating margins compared to the prior year period. Our third quarter results reflect the impact of our strategic pricing actions, and continued focus on operational excellence. These outcomes underscore the success of our disciplined cost management and efficiency initiatives across our diversified portfolio. We believe these results affirm our ability to enhance profitability and generate strong cash flow, even in challenging market environments. We will now take questions from those of you on the call. Operator. please open the line for questions.

Certainly. If you'd like to ask a question, please press star 1 on your phone now, and you'll be placed into the queue in the order received. Again, press star 1 for a question, and we'll pause for a moment to form our queue.