Xcel Brands, Inc

Please be advised that reproduction of this call in whole or in part is not permitted without prior authorization of Excel brands. And as a reminder, this conference call is being recorded. I would now like to turn the call over to Andrew Berger of SM Berger and Company. Thank you. Angie, you may now begin.

Good evening, everyone, and thank you for joining us, and welcome to the Excel Brands First Quarter 2023 Earnings Call. We greatly appreciate your participation and interest. With us on the call today are Chairman and Chief Executive Officer, Robert DeLoren, Chief Financial Officer, Jim Herron, and Executive Vice President of Business Development and Treasury, Seth Burrows. By now, everyone should have access to the earnings release for the first quarter ended March 31, 2023, which went out today, And in addition, the company filed with the Securities and Exchange Commission its quarterly report on Form 10Q earlier today as well. The release and the quarterly report will be available on the company's website at www.xlbrands.com. This call is being webcast and a replay will be available on the company's investor relations website. Before we begin, please keep in mind that this call will contain forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company's most recent annual report filed with the SEC. Excel Brands does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time. Finally, please note that on today's call, management will refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP diluted earnings per share, and adjusted EBITDA. Our management uses these non-GAAP metrics as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to the company's results of operations. Our management believes these financial performance measurements are also useful because they measure These measures adjust for certain costs and other events that management believes are not representative of our core business operating results. And thus, they provide supplemental information to assist investors in evaluating the company's financial results. These non-GAAP measures should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. You may refer to the attachment to the company's earnings release or Part 1, Item 2 of the Form 10-Q for Reconciliation of Non-GAAP Measures. And now, I'm pleased to introduce Robert DeLoren, Chairman and Chief Executive Officer. Bob, please go ahead.

Thank you, Andrew. Good evening, everyone, and thank you for joining us. I would like to start today's call with a discussion of our strategic transformation efforts. After that, our CFO, Jim Herron, We'll discuss our first quarter financial results in more detail. In the first quarter of 2023, we began a restructure of our business operation, shifting from a wholesale licensing hybrid model to a high-touch licensing and livestream DTC business model with the ultimate goal of transforming our company into a modern asset-light and highly profitable livestream media and consumer products company. We expect the transition of our operating businesses to be substantially complete by the end of the second quarter of 2023. In summary, as a result of all of our restructuring efforts going forward, we expect to save approximately $13 million in operating expenses on an annualized basis, including approximately $6 million of reduced payroll costs and $7 million in lower operating costs. These cost savings started to be realized in the first quarter of 2023 and are expected to be substantially realized by the end of the second quarter of 2023. Our current financial forecast indicates that we will return to profitability this year. To effectuate this transformation, we have engaged with best-in-class business partners and entered into multiple new licensing agreements for which I will provide more details. We believe that the evolution of our operating model through these new arrangements powered by extraordinary live stream and social commerce technology will provide our company a competitive advantage and with significant cost savings going forward and allow us to reduce and better manage our exposure to operating risks while providing our customers with exceptional quality at attractive prices. Also, we believe Our live stream technology will enable us to fully engage with and entertain our customers in ways that were not possible in the past. For our Judith Ripke brand, we have entered into a new licensing agreement to move the interactive television operations to JTV. This new arrangement and agreement with JTV has an initial five-year term with guaranteed minimum royalties. when the brand launches on JTV in the second quarter of 23, it will be a brand with significant on-air presence for the network in the first year and beyond. We believe this presents a fantastic and exciting opportunity to grow the brand on TV and online with our new partner going forward. At the same time, we signed an additional license agreement with JTV for them to take over all operations of and product sourcing for the Judith Ripka e-commerce business. This agreement provides for royalties on net retail sales generated through e-commerce in conjunction with executing the JTV licenses. In April, we sold JTV all of our jewelry inventory. Moving now to apparel and Connection with the launch of our Sea Wonder brand on HSN, we finalized and signed a license agreement with one jeanswear group for them to take over the wholesale production operations related to the Sea Wonder brand and other brands in our HSN show pipeline. This license has an initial term of three years with royalty and minimum sales requirements. For the Halston brand, we recently signed a strategic master license agreement with a soon-to-be-announced industry-leading global wholesale apparel and accessories company under which they will take over and assume all of the existing licensing contracts for the brand, together with apparel wholesale operations and distribution in department stores, e-commerce, and other retailers. This is a 25-year license agreement, which includes a market rate royalty, certain royalty advances, escalating guaranteed minimum sales requirements, and certain guaranteed payments. We will begin to realize revenues from this agreement in Q2 of this year and expect to realize even greater revenues in 2024 when this license launches new products under the Halston brand in spring 2024. Our partnership with this licensee, given their extensive production and distribution capabilities, provides us with a tremendous opportunity to grow the brand and take Halston to the next level. With respect to our Longaberger brand, we are in the process of launching our latest version of live stream technology that we believe will revolutionize social commerce. We expect this business to turn the corner to profitability soon. Regarding our interactive television business, the Isaac Mizrahi and Logo by Glory Goldstein brands are performing well on QVC with sales in the first quarter of 2023 exceeding sales in the fourth quarter of 2022. Sea Wonder launched on HSN at the end of March, and the launch exceeded plan by 130%. Now I'd like to turn the call over to Jim to discuss our results and financial highlights for the first quarter.