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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows significant improvements in financial metrics, including a return to profitability and reduced operating costs. New brand launches, particularly Tower Hill, are performing well. The Q&A session indicates positive sentiment from analysts, with optimistic guidance on licensing revenue and brand growth. However, there is some uncertainty regarding the Halston brand's revenue timeline. Overall, the positive financial turnaround and brand expansion efforts suggest a positive stock price movement.
Total Revenue Q2 2024 $3 million, a decrease of approximately $3.8 million (year-over-year) due to a decrease in net product sales to effectively zero as part of the exit from wholesale operations.
Net Licensing Revenue Q2 2024 Increased by approximately $0.4 million or approximately 16% year-over-year, mainly due to the combination of a Halston national license with G-III apparel, increased revenues from the C. Wonder business on HSN, and the launch of Tower Hill by Christie Brinkley.
Direct Operating Costs and Expenses Q2 2024 $3.1 million, down by $2.1 million or 40% from $5.2 million in the prior year quarter, due to the discontinuance of the wholesale business and related reductions in staffing and overhead costs.
Net Income Q2 2024 Approximately $0.2 million or $0.01 per share, compared with a net loss of $3.5 million or minus $0.18 per share in the prior year quarter.
Non-GAAP Net Loss Q2 2024 $0.3 million or minus $0.01 per share, representing an 85% improvement from the non-GAAP net loss of $2.1 million or minus $0.10 per share in Q2 2023.
Adjusted EBITDA Q2 2024 Negative $40,000, representing a year-over-year improvement of approximately $1.3 million or over 95% from the negative $1.3 million of adjusted EBITDA in the prior year quarter.
Total Revenue Year-to-Date 2024 $5.1 million, a decrease of approximately $7.7 million year-over-year, driven by net product sales to effectively zero following the discontinuance of wholesale operations.
Net Licensing Revenue Year-to-Date 2024 Increased by $0.4 million or 8% year-over-year due to new licensing agreements and brand launches.
Direct Operating Costs and Expenses Year-to-Date 2024 $7.1 million, down from $12.1 million in the prior year, representing a decline of approximately $5 million or 42% due to the discontinuance of the wholesale business.
Net Loss Year-to-Date 2024 Approximately $6.1 million or minus $0.28 per share, compared with a net loss of $9.1 million or minus $0.46 per share in the prior year.
Non-GAAP Net Loss Year-to-Date 2024 $2.1 million or minus $0.10 per share, representing an approximately 60% improvement from the non-GAAP net loss of $5.6 million or minus $0.28 per share in the prior year.
Adjusted EBITDA Year-to-Date 2024 Negative $1.6 million, representing a year-over-year improvement of approximately 50% from the negative $3.3 million of adjusted EBITDA in the prior year.
Cash and Cash Equivalents as of June 30, 2024 Approximately $1.7 million, of which $0.7 million was restricted.
Net Working Capital as of June 30, 2024 Approximately $1.1 million, deemed adequate under the current licensing and working capital-light business model.
New Product Launches: The new brand, Tower Hill by Christie Brinkley, launched on HSN during the second quarter, exceeding plan by 40%. Additional categories of products outside of HSN are planned for spring of 2025.
Product Categories Expansion: We are on track to launch additional new categories of footwear and handbags in spring of 2025.
Celebrity Designer Brand Launch: We expect to announce the launch of another celebrity designer brand on HSN before the end of this year.
Food and Kitchen Products Brand Launch: Another food and kitchen products brand is expected to launch in Q1 of 2025.
Market Performance: The C. Wonder brand is performing well on HSN with second quarter sales exceeding HSN's plan by 6%. The second half of 2024 is planned up from the first half with expectations of achieving in excess of a 60% year-over-year growth rate.
Licensing Partnerships: Strong interest from potential licensing partners for the Tower Hill brand across multiple categories, including footwear, bags, beauty, and skin care.
Judith Ripka Business Growth: Second quarter royalties for Judith Ripka increased from the first quarter by 45% due to greater product assortments.
Operational Efficiency: Direct operating costs and expenses decreased by 40% from $5.2 million in the prior year quarter to $3.1 million.
Cost Structure Improvement: Management anticipates achieving positive quarterly EBITDA in the back half of the year due to a new cost structure and projected revenue growth.
Divestiture Strategy: The sale of the Lori Goldstein brand resulted in a net gain of $3.8 million and reduced liabilities by $6 million, allowing focus on growing brands and new opportunities.
Project Fundamentals Plan: The company is transitioning to a core working capital licensing business, growing top-line licensing revenues while improving bottom line results.
Regulatory Issues: The company mentioned that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, highlighting the dynamic nature of the current macroeconomic environment.
Competitive Pressures: The company is focusing on growing its licensing revenues and improving bottom line results to remain competitive, especially after exiting wholesale operations.
Supply Chain Challenges: The exit from wholesale operations has led to a significant decrease in product sales, indicating potential supply chain challenges as the company transitions to a licensing model.
Economic Factors: The company acknowledged the impact of the macroeconomic environment on its business activities, which could affect future performance.
Financial Risks: The company reported a net loss for the current six months and recognized significant asset impairment charges, indicating financial risks associated with its operational changes.
Cash Flow Risks: As of June 30, 2024, the company had total cash and cash equivalents of approximately $1.7 million, which raises concerns about liquidity and cash flow management.
Divestiture of Lori Goldstein brand: The company sold the Lori Goldstein brand back to its namesake, recognizing a net gain of $3.8 million and reducing liabilities by $6 million.
Project Fundamentals Plan: Xcel is transitioning to a core working capital licensing business, with net licensing revenues growing 16% year-over-year.
C. Wonder brand performance: C. Wonder brand sales exceeded HSN's plan by 6%, with expectations of over 60% year-over-year growth in the second half of 2024.
New product launches: The company plans to launch new categories of footwear and handbags in spring 2025 and has launched the Tower Hill brand, exceeding sales plans by 40%.
Orme marketplace: Orme, a video and social commerce marketplace, is expected to transform the influencer economy and is gaining traction.
Revenue expectations: Management expects licensing revenues to continue to grow strongly, with positive quarterly EBITDA anticipated in the back half of 2024.
Financial projections: Adjusted EBITDA is projected to improve, with a target of achieving positive quarterly EBITDA in the latter half of 2024.
Cash and liquidity outlook: As of June 30, 2024, the company had total cash of approximately $1.7 million, with expectations of continued improvement in cash usage.
Share Buyback Program: None
Dividend Program: None
The earnings call reflects mixed sentiments. Positive factors include strategic alliances, influencer brand launches, and improved EBITDA. However, increased interest expenses, net losses, and vague management responses on future revenue guidance temper optimism. The Q&A highlights efforts to mitigate tariff impacts and resolve disruptions, but lacks detailed revenue projections. The neutral sentiment is due to balancing positive strategic developments against financial uncertainties.
The earnings call reveals a significant decline in revenue and increased net losses, primarily due to the sale of the Lori Goldstein brand. Despite cost reductions and some improvements in adjusted EBITDA, the financial performance remains weak. The Q&A section shows some optimism with new brand launches and stable liquidity but also highlights uncertainties and delays. The lack of clear guidance on future performance further dampens sentiment. Given these factors, the stock is likely to experience a negative reaction, with a potential decline of -2% to -8% over the next two weeks.
The earnings call shows significant improvements in financial metrics, including a return to profitability and reduced operating costs. New brand launches, particularly Tower Hill, are performing well. The Q&A session indicates positive sentiment from analysts, with optimistic guidance on licensing revenue and brand growth. However, there is some uncertainty regarding the Halston brand's revenue timeline. Overall, the positive financial turnaround and brand expansion efforts suggest a positive stock price movement.
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