Live Ventures rporated(LIVE) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported quarterly revenue of $46.9 million, representing a decrease of 10% over the same period last fiscal year [8] - Gross profit for the quarter was $18.6 million, down 5.1% year-over-year, with a gross profit percentage increase to 39.7% [9][10] - Operating income was $2 million compared to $4.1 million in the same period last fiscal year, and net income was $0.473 million compared to $1.9 million [9] - Interest expense decreased to $1.5 million from $1.8 million due to debt paydown and refinancing [12] - As of March 31, 2019, the company reported approximately $3.3 million in cash and $13.9 million in available credit [13] Business Line Data and Key Metrics Changes - ApplianceSmart's operational performance has lagged, but management believes it is beginning to turn around [11] - The company has consolidated underperforming stores, focusing on more profitable out-of-box products [18][19] - Marquis Industries reported a gross profit increase of 15% through Q1 and 17% overall for the first half of the year, with a shift away from low-margin synthetic turf [23][25] Market Data and Key Metrics Changes - The majority of the revenue decline was attributed to ApplianceSmart, which accounted for over 90% of the decrease from $52 million to $46 million [26][27] - The hard surface flooring category for Marquis Industries is up 26% year-over-year, despite tariff challenges [25] Company Strategy and Development Direction - The company aims to focus on a smaller, more profitable business model rather than a larger one with suboptimal performance [20][26] - Management is actively looking for acquisition opportunities while also buying back shares due to the stock trading at a low valuation [30][31] - The company is committed to reducing higher-cost debt, with significant paydowns planned [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by tariffs on new appliances but is optimistic about the profitability of out-of-box products [44] - The company is focused on improving margins and operational efficiency, particularly in the ApplianceSmart division [11][18] Other Important Information - The company has reduced total liabilities by approximately $12 million over the past few months [36] - Stockholders' equity increased to $41.2 million, with a book value of $21.59 per common share [13][34] Q&A Session Summary Question: Can you provide insights on ApplianceSmart's turnaround? - Management noted that margins are improving due to a focus on out-of-box products and expense reductions, with store consolidations contributing to optimism [18] Question: How does the company view share buybacks versus acquisitions? - The company is actively buying back shares while also exploring acquisition opportunities, emphasizing efficient capital allocation [30] Question: What is the impact of tariffs on the appliance business? - Management is aware of the tariff impacts and is focusing on out-of-box products, which are more profitable and better positioned for customer demand [44]