Live Ventures rporated(LIVE) - 2021 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and equity changes, with explanatory notes Condensed Consolidated Balance Sheets Total assets decreased to $190.6 million, liabilities reduced to $142.0 million, and stockholders' equity increased to $48.6 million Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2020 (Unaudited) | Sep 30, 2020 | | :--- | :--- | :--- | | Total Assets | $190,564 | $197,259 | | Total Current Assets | $91,166 | $95,928 | | Goodwill | $37,754 | $37,754 | | Total Liabilities | $141,979 | $153,587 | | Total Current Liabilities | $52,842 | $57,362 | | Long-term debt, net | $57,961 | $63,390 | | Total Stockholders' Equity | $48,585 | $43,672 | Condensed Consolidated Statements of Income Revenues grew 48.7% to $62.5 million, operating income doubled to $7.3 million, and net income surged to $5.4 million Consolidated Income Statement Highlights (in thousands, except per share) | Metric | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Revenues | $62,454 | $42,001 | | Gross Profit | $22,269 | $16,626 | | Operating Income | $7,291 | $3,487 | | Net Income Attributable to Live Stockholders | $5,413 | $547 | | Basic EPS | $3.45 | $0.30 | | Diluted EPS | $1.63 | $0.15 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $7.7 million, investing cash outflow rose to $3.3 million, and financing cash outflow was $6.2 million Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2020 | Three Months Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $7,668 | $2,999 | | Net Cash from Investing Activities | ($3,258) | ($645) | | Net Cash from Financing Activities | ($6,162) | ($3,533) | | Net Change in Cash | ($1,752) | ($1,179) | | Cash at End of Period | $7,232 | $1,502 | Notes to the Condensed Consolidated Financial Statements Details business segments, accounting policies, COVID-19 impact, long-term debt, related party transactions, and contingencies - The company operates through three segments: Retail (Vintage Stock, ApplianceSmart), Flooring Manufacturing (Marquis), and Steel Manufacturing (Precision Marshall)[20] - The COVID-19 pandemic continues to create uncertainty, with potential for future closures or adverse impacts on revenues, earnings, and cash flows despite all Vintage Stock retail locations reopening by June 30, 2020[23] - Total long-term debt decreased from $82.4 million at September 30, 2020, to $75.5 million at December 31, 2020[35] - The company and three executive officers received "Wells Notices" from the SEC Staff in August and October 2020, indicating a preliminary determination to recommend an enforcement action, which the company intends to vigorously defend[70] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Discusses financial performance, attributing 49% revenue growth to Flooring and Steel Manufacturing segments, covering liquidity and COVID-19 impact Results of Operations Total revenue increased 49% to $62.5 million, driven by Flooring and Steel Manufacturing, with operating income more than doubling Revenue by Segment (in thousands) | Segment | Q1 FY2021 Revenue | Q1 FY2020 Revenue | % Change | | :--- | :--- | :--- | :--- | | Retail | $22,370 | $21,488 | +4.1% | | Flooring Manufacturing | $30,222 | $20,367 | +48.4% | | Steel Manufacturing | $9,735 | $0 | N/A | | Total Revenue | $62,454 | $42,001 | +48.7% | - The increase in Flooring Manufacturing revenue was attributed to new product development and the acquisition of Lonesome Oak in January 2020[115] - The Steel Manufacturing segment's revenue is a new contribution following the acquisition of Precision Marshall in July 2020[116] Liquidity and Capital Resources Total liquidity was $40.0 million, with $7.2 million cash and $32.8 million available credit, supporting operations for 12 months - The company had total liquidity of $40.0 million, consisting of $7.2 million in cash and $32.8 million in available borrowing capacity as of December 31, 2020[133] - Net cash provided by operations increased to $8.7 million for the quarter, compared to $3.0 million for the same period in 2019, primarily due to higher net income[136] - The company utilizes three main asset-based revolver lines of credit with Texas Capital Bank, Bank of America, and Encina Business Credit for its subsidiaries[132] Quantitative and Qualitative Disclosures about Market Risk The company believes it is not subject to material market risks, including foreign currency or commodity price risk - The company does not believe it has material exposure to market risks, including foreign currency exchange risk or commodity price risk[149] Controls and Procedures Disclosure controls and procedures were deemed ineffective due to material weaknesses in documentation and evaluation, with remediation planned - Management concluded that disclosure controls and procedures were not effective as of December 31, 2020[150] - Two material weaknesses were identified: a lack of written documentation for internal control policies and a lack of rigorous procedures for evaluating internal controls across all subsidiaries[154] - The company plans to remediate these weaknesses by documenting its internal control policies and developing an internal testing plan, with an expected conclusion during the fiscal year ending September 30, 2021[155] PART II OTHER INFORMATION Legal Proceedings No new material legal proceedings or developments in previously disclosed cases occurred during the quarter - There were no new material legal proceedings or material developments in previously disclosed proceedings during the quarter[159] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 33,926 common shares at an average price of $10.98, extending the $10 million repurchase plan Common Stock Repurchases (Q1 FY2021) | Period | Number of Shares Repurchased | Average Price Paid | | :--- | :--- | :--- | | October 2020 | 16,489 | $10.51 | | November 2020 | 11,029 | $11.27 | | December 2020 | 6,408 | $11.49 | | Total | 33,926 | - | - The Board of Directors approved an extension of the $10 million stock repurchase program from February 15, 2021, to June 1, 2021[161] Exhibits Lists exhibits filed with the report, including CEO and CFO certifications and XBRL data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[167]