Live Ventures Reports Fiscal Year 2023 Financial Results

Rhea-AI Summary

Live Ventures Incorporated (Nasdaq: LIVE) announced fiscal year 2023 financial results. Revenues increased by 23.8% to $355.2 million. Net loss was ($0.1) million, compared to prior year net income of $24.7 million. Adjusted EBITDA was $31.5 million. The company acquired Flooring Liquidators, Inc., Precision Metal Works, Inc., assets from Cal Coast Carpet Warehouse, Inc., and the Harris Flooring Group® brands for approximately $117 million.

Insights

Financial Analyst

The acquisition of Flooring Liquidators, PMW and other assets, along with a 23.8% revenue increase to $355.2 million, suggests a significant expansion for Live Ventures. The strategic growth through acquisitions aligns with the company's 'buy-build-hold' strategy, indicating a proactive approach to scaling operations.

However, the reported net loss of ($0.1) million and diluted loss per share of ($0.03) contrast with the prior year's net income of $24.7 million, which may raise concerns among investors about the profitability of recent acquisitions and overall expense management. The decrease in Adjusted EBITDA to $31.5 million from $38.4 million further underscores this issue, potentially signaling operational challenges or integration costs that could affect short-term performance.

The repurchase of shares at an average price of $25.35 may reflect management's confidence in the intrinsic value of the company, yet it's essential to monitor whether this use of cash aligns with shareholder interests, especially given the current net loss position.

Industry Analyst

Live Ventures' diversification strategy, marked by the acquisition of companies in different sectors, such as flooring and metalworks, is a double-edged sword. On one hand, it may mitigate sector-specific risks, but on the other, it demands robust management expertise across these varied industries.

The transactions valued at approximately $117 million represent a significant capital allocation that must be scrutinized for return on investment, especially given the downturn in Adjusted EBITDA. The revenue contributions from these acquisitions appear to be substantial, but the long-term value creation will hinge on the company's ability to improve margins and efficiency.

Economist

The financial health of Live Ventures, as indicated by total assets of $421.8 million and stockholders' equity of $100.1 million, seems stable. Yet, the liquidity position, with approximately $37.1 million in cash and credit availability, must be evaluated in the context of the company's expansionary capital expenditures and any potential economic downturns that could affect their diverse business units.

Given the current economic landscape, the company's performance and strategic acquisitions may be influenced by macroeconomic factors such as interest rates, consumer spending patterns and supply chain dynamics. Investors should consider these external variables when assessing the company's long-term growth trajectory and risk profile.

LAS VEGAS, Dec. 20, 2023 (GLOBE NEWSWIRE) -- Live Ventures Incorporated (Nasdaq: LIVE) (“Live Ventures” or the “Company”), a diversified holding company, today announced financial results for its fiscal year ended September 30, 2023. 

Fiscal Year 2023 Key Highlights:

• Acquired Flooring Liquidators, Inc. (“Flooring Liquidators”), Precision Metal Works, Inc. (“PMW”), certain assets from Cal Coast Carpet Warehouse, Inc., and the Harris Flooring Group^® brands, transactions valued at approximately $117 million
• Revenues were $355.2 million, as compared with $286.9 million in the prior year, an increase of 23.8% over the prior year period
• Net loss was ($0.1) million and diluted loss per share was ($0.03), as compared with prior year net income of $24.7 million and diluted earnings per share (“EPS”) of $7.84
• Adjusted EBITDA¹ was $31.5 million, as compared with $38.4 million in the prior year
• Repurchased 39,092 shares of the Company’s common stock at an average price of $25.35
• Total assets of $421.8 million and stockholders’ equity of $100.1 million as of year end
• Approximately $37.1 million of cash and availability under the Company’s credit facilities as of year end

“During fiscal year 2023, revenues increased 23.8%, largely driven by the strategic acquisitions of Flooring Liquidators and PMW acquired during fiscal year 2023 and The Kinetic Co., Inc. (“Kinetic”) acquired in late fiscal year 2022, together contributed in excess of $115 million in revenue and approximately $8.5 million in Adjusted EBITDA. We remain focused on our expansion and innovation, steering our course toward sustained success,” commented David Verret, Chief Financial Officer of Live Ventures.

“In the fiscal year 2023, we bolstered our portfolio through several strategic transactions, aligning with our long-term ‘buy-build-hold’ strategy. Achieving a historic milestone, we executed four transactions, totaling an investment of approximately $117 million,” stated Jon Isaac, President and Chief Executive Officer of Live Ventures. “We are enthusiastic about the prospects these acquisitions unlock, solidifying our steadfast dedication to creating enduring value for our stockholders."

¹ Adjusted EBITDA is a non-GAAP measure. A reconciliation of the non-GAAP measures is included below.

FY 2023 Financial Summary (in thousands except per share amounts)

	During the year ended September 30,
		2023				2022		% Change
Revenues	$	355,171			$	286,913		23.8	%
Operating Income	$	15,449			$	25,927		-40.4	%
Net income	$	(102	)		$	24,741		100.0	%
Diluted earnings (loss) per share	$	(0.03	)		$	7.84		100.0	%
Adjusted EBITDA	$	31,538			$	38,384		-17.8	%

Revenues increased approximately $68.3 million, or 23.8%, to $355.2 million for the year ended September 30, 2023, as compared to the prior year revenues of approximately $286.9 million. The increase is primarily attributable to the Flooring Liquidators and PMW acquisitions acquired in fiscal year 2023 and Kinetic acquired in late fiscal year 2022, which contributed incremental revenue of approximately $115 million, partially offset by decreased revenues in Retail Entertainment, Flooring Manufacturing, and Corporate and Other segments.

Operating income decreased approximately $10.5 million to $15.4 million for the year ended September 30, 2023. The decrease in operating income is primarily attributable to lower gross profit margins as a result of inflationary cost increases and lower operating margins primarily due to higher general and administrative expenses related to the acquisitions of Flooring Liquidators, Kinetic, and PMW.

For the year ended September 30, 2023, net loss was approximately ($0.1) million and diluted loss per share was ($0.03), as compared with net income of $24.7 million and diluted EPS of $7.84 in the prior year. The decrease in net income is attributable to lower profit margins as a result of inflationary cost increases. In addition, the prior year’s net income included a benefit of approximately $11.4 million or $3.56 per diluted share for a gain on the bankruptcy settlement and a charge of approximately $4.9 million or $1.56 per diluted share for an impairment of goodwill and intangibles.

Adjusted EBITDA for the year ended September 30, 2023 was approximately $31.5 million, a decrease of approximately $6.8 million, or 17.8%, as compared to the prior year. The decrease is primarily due to an overall decrease in operating income.

As of September 30, 2023, the Company had total cash availability of $37.1 million, consisting of cash on hand of $4.3 million and cash availability under its various lines of credit of $32.8 million.

FY 2023 Segment Results (in thousands)

	During the year ended September 30,
		2023				2022			% Change
Revenues
Retail - Entertainment	$	78,124			$	86,156			-9.3	%
Retail - Flooring		75,872				-			N/A
Flooring Manufacturing		109,770				130,850			-16.1	%
Steel Manufacturing		88,912				60,617			46.7	%
Corporate & other		2,493				9,290			-73.2	%
	$	355,171			$	286,913			23.8	%
	During the year ended September 30,
		2023				2022			% Change
Operating Income (loss)
Retail - Entertainment	$	9,265			$	12,628			-26.6	%
Retail - Flooring		(292	)			-			N/A
Flooring Manufacturing		6,061				14,154			-57.2	%
Steel Manufacturing		7,978				8,866			-10.0	%
Corporate & other		(7,563	)			(9,721	)		22.2	%
	$	15,449			$	25,927			-40.4	%
	During the year ended September 30,
		2023				2022			% Change
Adjusted EBITDA
Retail - Entertainment	$	10,581			$	14,054			-24.7	%
Retail - Flooring		3,321				-			N/A
Flooring Manufacturing		10,100				17,043			-40.7	%
Steel Manufacturing		12,210				10,230			19.4	%
Corporate & other		(4,674	)			(2,943	)		-58.8	%
Total Adjusted EBITDA	$	31,538			$	38,384			-17.8	%
Adjusted EBITDA as a percentage of revenue
Retail - Entertainment		13.5	%			16.3	%
Retail - Flooring		4.4	%			-
Flooring Manufacturing		9.2	%			13.0	%
Steel Manufacturing		13.7	%			16.9	%
Corporate & other		N/A				N/A
Consolidated adjusted EBITDA as a percentage of revenue		8.9	%			13.4	%

Retail - Entertainment

Retail - Entertainment segment revenues for the year ended September 30, 2023, were approximately $78.1 million, a decrease of approximately $8.0 million, or 9.3%, as compared to the prior year revenues of approximately $86.2 million. Revenues decreased due to reduced demand as a result of a deterioration in general economic conditions and a shift in sales mix toward used products which generally have lower ticket sales with higher margins. The shift in sales mix also contributed to the increase in gross margin to 54.7% for the year ended September 30, 2023, as compared to 52.9% for the prior year. Operating income for the year ended September 30, 2023 was approximately $9.3 million, as compared to operating income of approximately $12.6 million for the prior year.

Retail - Flooring

The Retail - Flooring segment includes Flooring Liquidators, which was acquired in January 2023. Revenues for the year ended September 30, 2023, were approximately $75.9 million and gross margin was 36.6%. Operating loss for the year ended September 30, 2023 was approximately ($0.3) million.

Flooring Manufacturing

Revenues for the year ended September 30, 2023, were approximately $109.8 million, a decrease of approximately $21.1 million, or 16.1%, as compared to the prior year revenues of approximately $130.8 million, primarily due to reduced customer demand as a result of general economic conditions. Gross margin was 21.8% for the year ended September 30, 2023, as compared to 24.4% for the prior year. The decrease in gross margin is primarily due to increases in raw material costs, as compared to the prior year. Operating income for the year ended September 30, 2023 was approximately $6.1 million, as compared to operating income of approximately $14.2 million for the prior year.

Steel Manufacturing

Revenues for the year ended September 30, 2023, were approximately $88.9 million, an increase of approximately $28.3 million or 46.7%, as compared to the prior year revenues of approximately $60.6 million. The increase is primarily due to the acquisitions of Kinetic in June 2022 and PMW in July 2023, partially offset by a decrease of $6.4 million by Precision Marshall. The decrease by Precision Marshall was due to reduced customer demand as a result of general economic conditions. Gross margin was 22.5% for the year ended September 30, 2023, as compared to 27.8% for the prior year. The decrease in gross margin is primarily due to the acquisition of PMW, which has historically generated lower margins. General and administrative expenses increased by approximately $4.0 million, or 54.4%, primarily due to the acquisitions of Kinetic and PMW, partially offset by reduced compensation expense at Precision Marshall. Operating income for the year ended September 30, 2023 was approximately $8.0 million, as compared to operating income of approximately $8.9 in the prior year.

Corporate and Other

Revenues for the year ended September 30, 2023, were approximately $2.5 million, a decrease of approximately $6.8 million, or 73.2%, as compared to the prior year revenues of approximately $9.3 million. The decrease was primarily due to the closure of SW Financial in May 2023. Operating loss for the year ended September 30, 2023 was approximately $7.6 million, as compared to a loss of approximately $9.7 million in the prior year. In connection with the closure, the Company entered into a settlement agreement with the SW Financial sellers and recognized a gain of approximately $2.75 million and a loss on deconsolidation of SW Financial's assets and liabilities of approximately $1.7 million.

Non-GAAP Financial Information

Adjusted EBITDA

We evaluate the performance of our operations based on financial measures, such as “Adjusted EBITDA,” which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’s ability to fund acquisitions and other capital expenditures and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company’s financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by generally accepted accounting principles (“GAAP”), should not be construed as an alternative to net income or loss, and is indicative neither of our results of operations, nor of cash flow available to fund our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by Live Ventures Incorporated, should not be compared to any similarly titled measures reported by other companies.

Forward-Looking and Cautionary Statements

The use of the word “Company” refers to Live Ventures and its wholly owned subsidiaries. Certain statements in this press release contain or may suggest "forward-looking" information within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, each as amended, that are intended to be covered by the “safe harbor” created by those sections. Words such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar statements are intended to identify forward-looking statements. Live Ventures may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 10-K and 10-Q, Current Reports on Form 8-K, in its annual report to stockholders, in press releases and other written materials, and in oral statements made by its officers, directors or employees to third parties. There can be no assurance that such statements will prove to be accurate and there are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by the Company, including, but not limited to, plans and objectives of management for future operations or products, the market acceptance or future success of our products, and our future financial performance. The Company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (when filed). Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. Live Ventures undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

About Live Ventures Incorporated

Live Ventures is a diversified holding company with a strategic focus on value-oriented acquisitions of domestic middle-market companies. Live Ventures’ acquisition strategy is sector-agnostic and focuses on well-run, closely-held businesses with a demonstrated track record of earnings growth and cash flow generation. The Company looks for opportunities to partner with management teams of its acquired businesses to build increased stockholder value through a disciplined buy-build-hold long-term focused strategy. Live Ventures was founded in 1968. In late 2011 Jon Isaac, Chief Executive Officer and strategic investor, joined the Board of Directors of the Company and later refocused it into a diversified holding company. The Company’s current portfolio of diversified operating subsidiaries includes companies in the textile, flooring, tools, steel, and entertainment industries.

Contact:
Live Ventures Incorporated
Greg Powell, Director of Investor Relations
725.500.5597
gpowell@liveventures.com
www.liveventures.com

Source: Live Ventures Incorporated

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands, except per share amounts)
	September 30, 2023				September 30, 2022
Assets
Cash and cash equivalents	$	4,309			$	4,600
Trade receivables, net		41,194				25,665
Inventories, net		131,314				97,659
Income taxes receivable		1,116				4,403
Prepaid expenses and other current assets		4,919				2,477
Total current assets		182,852				134,804
Property and equipment, net		80,703				64,590
Right of use asset - operating leases		54,544				33,659
Deposits and other assets		1,282				647
Intangible assets, net		26,568				3,844
Goodwill		75,866				41,093
Total assets	$	421,815			$	278,637
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable	$	27,190			$	10,899
Accrued liabilities		31,826				16,486
Current portion of long-term debt		23,077				18,935
Current portion of notes payable related parties		4,000				2,000
Current portion of lease obligations - operating leases		11,369				7,851
Current portion of lease obligations - finance leases		359				217
Total current liabilities		97,821				56,388
Long-term debt, net of current portion		78,710				59,704
Lease obligation long term - operating leases		48,156				30,382
Lease obligation long term - finance leases		32,942				19,568
Notes payable related parties, net of current portion		6,914				2,000
Seller notes - related parties		38,998				3,000
Deferred tax liability		14,035				8,818
Other non-current obligations		4,104				1,615
Total liabilities		321,680				181,475
Commitments and contingencies
Stockholders' equity:
Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 issued and outstanding at September 30, 2023 and 2022 , respectively, with a liquidation preference of $0.30 per share		—				—
Common stock, $0.001 par value, 10,000,000 shares authorized, 3,164,330 shares issued and outstanding at September 30, 2023; 3,074,833 issued and outstanding at September 30, 2022		2				2
Paid-in capital		69,387				65,321
Treasury stock common 660,063 shares as of September 30, 2023 and 620,971 shares as of September 30, 2022		(8,206	)			(7,215	)
Treasury stock Series E preferred 50,000 shares as of September 30, 2023 and 2022		(7	)			(7	)
Accumulated earnings		38,959				39,509
Equity attributable to Live stockholders		100,135				97,610
Non-controlling interest		—				(448	)
Total stockholders' equity		100,135				97,162
Total liabilities and stockholders' equity	$	421,815			$	278,637

LIVE VENTURES, INCORPORATED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED) (dollars in thousands, except per share)
	Years Ended September 30,
		2023				2022
Revenues	$	355,171			$	286,913
Cost of revenues		239,605				189,086
Gross profit		115,566				97,827
Operating expenses:
General and administrative expenses		86,670				54,531
Sales and marketing expenses		13,447				12,459
Impairment expense		—				4,910
Total operating expenses		100,117				71,900
Operating income		15,449				25,927
Other income (expense):
Interest expense, net		(12,741	)			(4,209	)
Loss on disposition of SW Financial		(1,696	)			—
SW Financial settlement gain		2,750				—
Gain on bankruptcy settlement		—				11,352
Other expense, net		(2,293	)			(1,454	)
Total other (expense) income, net		(13,980	)			5,689
Income before income taxes		1,469				31,616
Provision for income taxes		1,571				6,875
Net (loss) income		(102	)			24,741
(Loss) income per share:
Basic	$	(0.03	)		$	7.94
Diluted	$	(0.03	)		$	7.84
Weighted average common shares outstanding:
Basic		3,133,554				3,116,214
Diluted		3,153,033				3,155,535

LIVE VENTURES INCORPORATED NON-GAAP MEASURES RECONCILIATION
Adjusted EBITDA
The following table provides a reconciliation of Net income (loss) to total Adjusted EBITDA for the periods indicated (dollars in thousands):
	For the Year Ended September 30,
		2023				2022
Net (loss) income	$	(102	)		$	24,741
Depreciation and amortization		14,257				7,168
Stock-based compensation		446				37
Interest expense, net		12,741				4,209
Income tax expense		1,571				6,875
Gain on bankruptcy settlement		—				(11,352	)
Loss on extinguishment of debt		—				84
SW Financial settlement gain		(2,750	)			—
Loss on disposition of SW Financial		1,697				—
Acquisition costs		3,554				1,470
Write-off of fixed assets		—				438
Impairment of goodwill and intangibles		—				4,910
Other non-recurring company initiatives		124				(196	)
Adjusted EBITDA	$	31,538			$	38,384

FAQ

What were Live Ventures' fiscal year 2023 revenues?

Live Ventures' fiscal year 2023 revenues were $355.2 million, a 23.8% increase from the prior year.

What acquisitions did Live Ventures make in fiscal year 2023?

Live Ventures acquired Flooring Liquidators, Inc., Precision Metal Works, Inc., assets from Cal Coast Carpet Warehouse, Inc., and the Harris Flooring Group® brands for approximately $117 million.

What was Live Ventures' net loss in fiscal year 2023?

Live Ventures' net loss in fiscal year 2023 was ($0.1) million, compared to prior year net income of $24.7 million.

What was Live Ventures' Adjusted EBITDA in fiscal year 2023?

Live Ventures' Adjusted EBITDA in fiscal year 2023 was $31.5 million.

What was Live Ventures' total investment in acquisitions in fiscal year 2023?

Live Ventures' total investment in acquisitions in fiscal year 2023 was approximately $117 million.