PLBY Group, Inc.

Greetings and welcome to the PLBY Group's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Matt Chesler. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. I'd like to remind you that the information discussed today is qualified in its entirety by the Form 8K and Form 10Q filed today by PLBY Group, which may be accessed on the SEC's website and on PLBY Group's website. Today's call is also being webcast and a replay will be posted to the company's investor relations website. Please note that statements made during this call, including financial projections or other not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of PLBY Group's views and assumptions regarding future events and business performance at the time they are made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risk and could cause the company's actual results to differ from its historical results and forecasts, including those set forth in the company's filings with the SEC, and you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statement.

During this

call, the company may refer to non-GAAP financial measures. Such

non-GAAP measures are now prepared in accordance with general regulations. Ladies and gentlemen, please stand by. Thank you. Thank you. And Matt, you may proceed. With that, I will hand the call back over to the operator to begin the Q&A session. Operator. Thank you. We

will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants, use the speaker equipment. It may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. And our first question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.

Hey, everyone. Thanks for taking my questions. First, if we could start with Honey Burdette, I was wondering if you could give us your expectations just as you look out for the next couple quarters with respect to growth. And like when does that compare for the discounting quarters last year? When does that compare ease? And then also with gross margin, should we expect much sort of change in gross margin in the near term?

In terms of comps, we are lapping after the first quarter. So in the second quarter, we are going to be up against an easy comparable from a sales standpoint. And we are already seeing that we are ahead of plan right now in the second quarter.

So things

look good at Honey Burdette.

Do you have a second part to that question?

Yeah, just on the near term gross margin expectations there, too. And I guess the second part of that would be any kind of impact from Chinese tariffs.

Yes, so the near term right now, all the product that we are selling pretty much in the second quarter is product that was brought in prior to the tariffs. When we look at the tariff impact going into 3Q and 4Q, it is tough to quantify right now if you were to assume the tariffs that they have right now. It is about a million dollar impact, which is not that big of a number. Now to help combat that, we put 10% price increases in already. And in addition to that, we are changing some of our shipping thresholds for free shipping. So there are a number of levers that we can pull. And the good thing about the price increases is that should the tariffs stay where they are and not go back up, the price increases stay in regardless so we get a pick up from that.

So George, it's been, you know, remember the US is roughly $35 million of the business. So we put a 10% price increase in on that. And should tariffs go back up, we have additional levers that we can pull as other companies have. But the goal was to keep the price increases as permanent. And so if tariffs stay the same, there should actually be a pick up assuming there is no degradation in volume moving forward.

And the million that you mentioned, that is for the back two quarters?

Yes, it is for the back two quarters. Okay.

And then second topic I was hoping you could chat on is the Byborg. What are their plans as far as new product development timeline, anything you are comfortable sharing on the call just sort of that's in the works with Byborg?

Yeah, so we've been working actively with them. We've seen the new designs they have for the existing products as well as a live CAMS business. We're excited by it. But if you remember, we have a great deal with them. It's a $20 million a year minimum guarantee. And then we get a significant percentage of the ops of 25% above that. And I think as I stated previously, I think that over the life of the deal, we should hopefully see profits well in excess of the MGs. But in the beginning years, they're developing and spending money building out those products. And so for our purposes, we're assuming it's $20 million a year right now as the MG moving forward. We will receive a further $20 million payment from them this year. It's scheduled for July 1st. So that is $5 million for the last two quarters of the year plus what is effectively a $10 million security deposit, which is a prepayment of the last six months of year 15 licensing term.

Okay.

And there that second equity investment remind me on the that the vote date got moved to the annual meeting. Is that correct? Is that later in May?

Yeah. So the dates were sort of coming together. And so we decided just based on participation typically in the annual meeting to put that to the shareholders as part of the annual meeting. That's scheduled for June 16th.

Okay. And then last question for me is about the other licensing business. You made comments in the press release about enthusiasm or what you think is potential around certain other categories. I think you mentioned a club and something maybe hospitality or something else. What stage are is that something we can start to see in the back half of this year? Do you feel like you're getting close? Just any more context around those comments would be helpful.

Yeah. So I think it's important to level set sort of where we are and what we've done. Right. And then we all talk about that. So almost two years ago, we embarked on this asset light model and Q1 was our first positive EBITDA quarter since 23. So I feel really good where we are now as a company and what the future looks like for the balance of this year and moving forward, especially with our adjusted EBITDA positive 2.4 million, there was actually a million dollars of cost in the first quarter related to personnel that we've already eliminated at the end of the quarter. So that would have actually been positive 3.4 million. But what we have is a portfolio of really stable high margin licensing deals. And now what we're actually able, because we have a plan to continue to reduce overhead, but we're in a position now where we should start to produce cash as a company, we can now sort of focus on growth. And I think that comes from two areas. As we mentioned in the press release, we're seeing a lot of traction in what I would say is gaming. And then in the hospitality or LBE side of things, we have actually been approached by two, what I would say is some of the best operators we know of in the United States to develop some form of for lack of a better term, Playboy Club. The physical build out of that and the development of that would actually take a while. That's a one to two year project. But the licensing deals themselves for gaming and some of the other stuff we have in our strong pipeline, that is something that we should see in the back half of this year starting. Obviously revenue recognition when you do a multi-year deal, that's subject to sort of straight lining the accountants. And then in addition to that, what's really interesting is what happened with the magazine. And so we sold out of the magazine, albeit a small print run, online. And then the sell through at Barnes and Noble's was unbelievable. They were our exclusive brick and mortar or new stand sale. And what we've seen come out of that actually, and we're going to do one additional issue this year as we ramp up to hopefully four issues next year, is the ancillary revenue streams that come off of that. Think about these as quasi licensing streams actually from a margin profile perspective. But when we start to get into opportunities around mainstream content, so TV shows both linear and digital, as well as paid voting, we actually have a history of doing paid voting before. Back when we weren't asset light, we had launched Playboy lingerie and we had actually done a paid voting campaign to find the next face of Playboy. And that generated a significant amount of revenue and even a force. This deal that we're doing is slightly different and we'll talk about that on the next call. But it's something that we think is always on ongoing competition, really embracing our community and allowing them to help pick or dominate who might become the next Playmate as we gear up for 12 Playmates a year. And then the ancillary products around that, not only the magazine, but calendars. We had a long history of producing a Playmate calendar that used to produce multiple millions of dollars a year in sales. And so there's a lot of other revenue streams that can come on the back of what we're doing from a content perspective. And then in addition to that, we get the benefit of what I would say is really the strong brand awareness and rebuilding the brand. And so I feel really good with where we are from our plan to continue to reduce overhead moving forward, continuing to increase EBITDA. And then really what is the growth opportunities, which I would say, if I look over the last three to five years, are probably the strongest growth opportunities we've seen. Doesn't mean it will hit in 25. We're really focused on sort of 26 and beyond. But you could see paid voting in the second half of this year. You could start to see a calendar that we're planning for the magazine, which will come out in November. And then you also saw in the first quarter some sponsorship revenue. And we think that will continue and grow moving forward as we continue to refine what I would say is our media and content strategy moving forward,

George. Okay, gotcha. Thank you very much. Thank you. And now I would like to hand it over back

to Matt Chester for further questions.

Operator, we had an additional question on the drivers of the licensing business actually in the quarter from the team at Jeffries, Aseleo Sanjeev, and James Heaney. Ben, I think you answered a lot of this. If you'd like to provide any more details on the drivers of the quarter, go ahead. If not, perhaps we turn it over and have some concluding remarks.

Sure. I'll just reiterate. So, you know, obviously licensing was up a huge 175% year over year with Byborg. Without Byborg, it was still up over 50%. You know, the two primary reasons for that were one, the Byborg deal went into effect January 1st. They've already made their first two payments. The second payment came in after the quarter ended as the contract calls for. But that's $5 million a quarter. And then in addition to that, you know, it's the year over year improvement and rebuilding our China licensing business. We're encouraged by what we see. Obviously, you know, a tough environment with the tariff war, but our partner is doing well. And we think there's continued growth there. And then what we've been really working on is the pipeline moving forward, which we should start to see the benefit of that in the third and fourth quarter. With that pipeline and, you know, getting some of these deals across the finish line, which we're very close on in gaming and other areas. And so I'm excited by that and really excited, as I mentioned, you know, with some of the opportunities we have around content licensing, you know, fast channels, you know, paid playmate voting, etc.

As we move forward. Anything else, Matt, for questions that came in online? Let me

take a quick look. We do not have any more questions online.

Great. I'll conclude it by thanking everyone for joining our Q1 2025 call. Look forward to talking to you sometime in the beginning of August when we report Q2 earnings. So thank you, everyone.

Thank you. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a great day.