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Xcel(XELB) - 2024 Q3 - Earnings Call Transcript
XELBXcel(XELB)2024-12-24 03:12
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Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was approximately 1.9million,adecreaseofabout1.9 million, a decrease of about 0.7 million from Q3 2023 [21] - Non-GAAP earnings improved by approximately 56% from the previous year, with adjusted EBITDA improving by approximately 26% from Q3 2023 [11] - The net loss for Q3 2024 was approximately 9.2million,comparedtoanetlossof9.2 million, compared to a net loss of 5.1 million in the prior year quarter [27] Business Line Data and Key Metrics Changes - The C. Wonder brand saw a 60% increase in retail sales over the previous year, despite disruptions from hurricanes [12] - Judith Ripka business royalties increased significantly, achieving 98% growth from Q2 2024 and almost 500% year-over-year growth [15] - The company recognized approximately 0.4millionfromthesaleofremainingLongabergerbrandinventory,withnoinventoryleftonbooks[23]MarketDataandKeyMetricsChanges−Thecompanyexpectsretailsalesvolumetocontinuestronggrowthinto2025,particularlyonHSNandwithotherretailers[13]−TheimpactofhurricanesonHSNbusinesswasestimatedatabout0.4 million from the sale of remaining Longaberger brand inventory, with no inventory left on books [23] Market Data and Key Metrics Changes - The company expects retail sales volume to continue strong growth into 2025, particularly on HSN and with other retailers [13] - The impact of hurricanes on HSN business was estimated at about 450,000 to 500,000[48]CompanyStrategyandDevelopmentDirection−ThecompanyistransitioningtoacoreworkingcapitallicensingbusinessfocusedonlivestreamingoverTVandsocialmedia[11]−Planstolaunchadditionalnewcategoriesinfootwearandhandbagsinspring2025areunderway[13]−TheOrmeplatformisseenasatransformativeforceinvideoandsocialcommerce,withagoaltodemocratizetheinfluencereconomy[19]ManagementCommentsonOperatingEnvironmentandFutureOutlook−ManagementanticipatesimprovedEBITDAinQ42024andcontinuedimprovementgoingforwardduetoanewcoststructureandprojectedrevenuegrowth[29]−ThecompanyremainsoptimisticabouttheperformanceoftheHalstonbrandandexpectstointroducenewproductsin2025[39][40]OtherImportantInformation−Thecompanyenteredintoanew500,000 [48] Company Strategy and Development Direction - The company is transitioning to a core working capital licensing business focused on live streaming over TV and social media [11] - Plans to launch additional new categories in footwear and handbags in spring 2025 are underway [13] - The Orme platform is seen as a transformative force in video and social commerce, with a goal to democratize the influencer economy [19] Management Comments on Operating Environment and Future Outlook - Management anticipates improved EBITDA in Q4 2024 and continued improvement going forward due to a new cost structure and projected revenue growth [29] - The company remains optimistic about the performance of the Halston brand and expects to introduce new products in 2025 [39][40] Other Important Information - The company entered into a new 10 million term loan agreement, providing additional liquidity [32] - The company has reduced operating costs significantly, with potential for further reductions of 500,000to500,000 to 750,000 in Q1 2025 [66] Q&A Session Summary Question: How is Halston performing? - Management believes the Halston collection is off to a good start, with expectations for sportswear, outerwear, handbags, and footwear [37] Question: What are the prospects for 2025 with Halston? - Management remains optimistic about Halston's performance and is comfortable with the product adjustments made [39] Question: Can you explain the situation with Isaac Mizrahi? - A conservative approach was taken regarding the asset value of Isaac Mizrahi due to challenges in getting him back in studio [42] Question: Will Q4 show positive adjusted EBITDA? - While Q4 is expected to show improvement, it is uncertain if it will return to profitability [46] Question: How much revenue was impacted by the hurricanes? - The estimated impact was about 450,000to450,000 to 500,000, but management is hopeful for normal returns in Q4 [48] Question: What is the status of additional brand launches? - A new home category brand is set to launch in March 2025, with several others in the pipeline [50] Question: What is the outlook on inventory levels at retailers? - Over-inventoried retailers may impact sales, but management does not foresee a material impact on Halston at this time [60] Question: What are the expectations for Orme's brand trajectory? - Orme aims to onboard luxury aspirational brands, with a goal of maintaining higher average order values [63] Question: What additional cost reductions are planned? - Management is looking to cut an additional 500,000to500,000 to 750,000 in operating expenses without disrupting operations [66] Question: Will there be a need for another capital raise? - Future capital needs depend on transactions in the pipeline, with only one potentially requiring capital [68]