Xcel(XELB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $1.2 million and for the full fiscal year 2024 were$8.3 million, both approximately half of the prior year due to the sale of the Lori Goldstein brand and exit from wholesale operations [13][14] - Total revenues for Q1 2025 were $1.3 million, showing a slight increase from Q4 2024 [13] - The company reported a net loss of approximately$2.8 million for Q1 2025, an improvement from a loss of $6.3 million in the prior year quarter, representing a 56$700,000, a 56% improvement over the negative $1.6 million reported in the prior year quarter [18] Business Line Data and Key Metrics Changes - The company has significantly reduced direct operating costs and expenses by nearly 50$2.3 million, about 40% lower than the prior year period [14] - The company generated an adjusted EBITDA loss of $792,000 in Q4 2024, which is a$361,000 improvement over Q4 2023 [12] Market Data and Key Metrics Changes - The social media reach across the brand portfolio grew from 5 million followers in January 2025 to 45 million to date, indicating a significant increase in media currency [9] - The company aims to build a portfolio of creator influencer brands that reaches 100 million followers, which is expected to accelerate growth [11] Company Strategy and Development Direction - The company closed a strategic transaction with United Trademark Group in April 2025, enhancing its brand management and supply chain capabilities [7] - The partnership with UTG is expected to accelerate the formation of additional creator influencer brands [8] - The company is focusing on acquiring brands with significant social media followings and media companies to extend its reach [34] Management's Comments on Operating Environment and Future Outlook - Management expressed caution for Q3 and Q4 2025 due to potential impacts from tariffs and the consolidation of HSN's operations [10] - The company is assessing the impact of tariffs and the HSN Tampa studio closure and is working on potential solutions, including short-term domestic production [12] - Management forecasts adjusted EBITDA for 2025 to be in the range of $1 million to$2.5 million, including potential impacts from tariffs and operational disruptions [21] Other Important Information - The company reported stockholders' equity of approximately $26 million and unrestricted cash of approximately$300,000 as of March 31, 2025 [19] - The company refinanced its term debt in April 2025, resulting in a net increase of approximately 3 million in liquidity [19] Q&A Session Summary Question: Clarification on adjusted EBITDA for 2025 - Management confirmed that the adjusted EBITDA forecast includes potential impacts from tariffs and disruptions due to HSN's relocation [21] Question: Run rate of operating costs - The run rate for operating costs is approximately 9 million annually, translating to less than $2.5 million per quarter [23][24] Question: Guarantees from G III on Halston - The guaranteed minimum under the license is$1.7 million per year, with expectations for a slight pickup in Q2 [25] Question: Liquidity needs for upcoming launches - Management indicated that current liquidity is sufficient, but they will address any additional capital needs as they arise [26][27] Question: Revenue potential from new brands - Management anticipates that new brands like Cesar Millan's pet products could generate between $5 million and$10 million in royalty income per year [46] Question: Operating expenses as the business pivots to growth - The structure is designed to scale, with incremental costs primarily tied to revenue growth [47][48]