Live Ventures rporated(LIVE) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements This section presents Live Ventures Incorporated's unaudited condensed consolidated financial statements for Q1 FY2022 and Q1 FY2021, including balance sheets, income statements, cash flows, and equity changes, with detailed notes Condensed Consolidated Balance Sheets Total assets increased to $219.0 million as of December 31, 2021, driven by higher cash and inventories, while total stockholders' equity grew to $81.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 (Unaudited) | Sep 30, 2021 | | :--- | :--- | :--- | | Total Current Assets | $105,231 | $98,790 | | Total Assets | $218,987 | $211,738 | | Total Current Liabilities | $62,684 | $64,960 | | Total Liabilities | $137,343 | $136,658 | | Total Stockholders' Equity | $81,644 | $75,080 | | Total Liabilities & Equity | $218,987 | $211,738 | Condensed Consolidated Statements of Income Revenues increased 20.3% year-over-year to $75.2 million for Q1 FY2022, with net income attributable to Live Stockholders rising to $6.5 million Statement of Income Summary (in thousands, except per share) | Metric | Q1 FY2022 (ended Dec 31, 2021) | Q1 FY2021 (ended Dec 31, 2020) | Change | | :--- | :--- | :--- | :--- | | Revenues | $75,158 | $62,454 | +20.3% | | Gross Profit | $27,616 | $22,269 | +24.0% | | Operating Income | $10,407 | $7,291 | +42.7% | | Net Income to Live Stockholders | $6,546 | $5,413 | +20.9% | | Diluted EPS | $2.04 | $1.63 | +25.2% | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities decreased to $4.2 million for Q1 FY2022, with a net cash increase of $5.4 million for the quarter Cash Flow Summary (in thousands) | Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $4,244 | $7,668 | | Net Cash from Investing Activities | ($3,070) | ($3,258) | | Net Cash from Financing Activities | $4,193 | ($6,162) | | Increase (Decrease) in Cash | $5,367 | ($1,752) | | Cash, End of Period | $10,031 | $7,232 | Notes to the Condensed Consolidated Financial Statements Notes detail accounting policies, business segments including Retail, Flooring, and Steel Manufacturing, long-term debt of $57.9 million, and significant legal contingencies like the SEC investigation and ApplianceSmart bankruptcy - The company operates through three main segments: Retail (Vintage Stock, ApplianceSmart), Flooring Manufacturing (Marquis Industries), and Steel Manufacturing (Precision Marshall)[20][81] - Total long-term debt, including current portions, was $57.9 million as of December 31, 2021[39] - The company is involved in an SEC investigation and a civil complaint filed in August 2021, alleging financial, disclosure, and reporting violations, which the company is defending against[70][71][72] - Subsidiary ApplianceSmart's Chapter 11 reorganization plan was confirmed in December 2021, with the company expecting to emerge upon full satisfaction of the plan[74][76] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY2022 financial results, highlighting a 20% revenue growth to $75.2 million, increased Adjusted EBITDA to $12.1 million, and sufficient liquidity for the next 12 months Q1 FY2022 Performance Highlights (in thousands) | Metric | Q1 FY2022 | Q1 FY2021 | | :--- | :--- | :--- | | Revenues | $75,158 | $62,454 | | Gross Profit | $27,616 | $22,269 | | Net Income | $6,546 | $5,279 | | Adjusted EBITDA | $12,102 | $9,930 | - Revenue increased by $12.7 million (20%) due to increased sales pricing and demand across Flooring, Steel, and Retail segments, including new store openings[112] - As of December 31, 2021, the company held $10.0 million in cash and had $28.8 million available under revolving credit facilities[125] Results of Operations by Segment All operating segments reported year-over-year revenue growth, with Retail up 17% to $26.2 million, Flooring Manufacturing up 9% to $32.9 million, and Steel Manufacturing up 27% to $12.4 million, significantly boosting its operating income Segment Revenue (in thousands) | Segment | Q1 FY2022 | Q1 FY2021 | Change | | :--- | :--- | :--- | :--- | | Retail | $26,211 | $22,370 | +17.2% | | Flooring Manufacturing | $32,872 | $30,222 | +8.8% | | Steel Manufacturing | $12,366 | $9,735 | +27.0% | Segment Operating Income (in thousands) | Segment | Q1 FY2022 | Q1 FY2021 | Change | | :--- | :--- | :--- | :--- | | Retail | $4,810 | $4,493 | +7.1% | | Flooring Manufacturing | $4,608 | $4,150 | +11.0% | | Steel Manufacturing | $1,654 | $144 | +1048.6% | Liquidity and Capital Resources Working capital increased to $42.5 million as of December 31, 2021, with management confident in sufficient liquidity from current cash, operations, and credit lines for the next 12 months - Working capital was approximately $42.5 million as of December 31, 2021, an increase from $33.8 million as of September 30, 2021[127] - Net cash provided by operations was $4.2 million, a decrease from $7.7 million in the prior year, primarily due to inventory purchases and payments on accrued liabilities[128] Quantitative and Qualitative Disclosures about Market Risk The company states that it does not participate in market risk-sensitive commodity instruments and believes it is not subject in any material way to other market risks such as foreign currency exchange risk or commodity price risk - The company reports no material exposure to market risk, including foreign currency or commodity price risk[136] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 31, 2021, due to material weaknesses in internal control over financial reporting, with remediation efforts planned for fiscal year 2022 - Management concluded that disclosure controls and procedures were not effective as of December 31, 2021[137] - Identified material weaknesses include insufficient written documentation of internal control policies, inadequate procedures for evaluating subsidiary controls, and insufficient resources for segregation of duties[142] - The company plans to improve documentation and develop an internal testing plan to remediate these weaknesses during fiscal year 2022[142] PART II - OTHER INFORMATION Legal Proceedings This section details ongoing legal matters, primarily an SEC civil complaint filed in August 2021 alleging financial and disclosure violations, which the company is disputing, and the expected emergence of subsidiary ApplianceSmart from Chapter 11 bankruptcy - The SEC filed a civil complaint against the company and two executives on August 2, 2021, alleging violations related to financial reporting, stock promotion, and executive compensation[150] - The company filed a motion to dismiss the SEC complaint on October 1, 2021, and intends to defend itself vigorously[151][152] - A reorganization plan for the subsidiary ApplianceSmart was confirmed on December 14, 2021, with an expectation to emerge from Chapter 11 bankruptcy[153] Risk Factors The company reported no new material risk factors during the quarter - No new risk factors are disclosed in this report[154] Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common stock during Q1 FY2022, with approximately $6.8 million remaining available under its $10 million repurchase program - No common stock was repurchased during the quarter ended December 31, 2021[155] - Approximately $6.8 million remains available under the company's stock repurchase program as of December 31, 2021[155] Defaults upon Senior Securities The company reported no defaults upon senior securities - None reported[156] Mine Safety Disclosures The company reported no mine safety disclosures - None reported[157] Other Information The company reported no other information - None reported[158] Exhibits This section lists the exhibits filed with or incorporated by reference into the Quarterly Report, including corporate governance documents and officer certifications