Xcel Brands XELB Q1 2025 Earnings Call Transcript

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Brand Developments: New creator influencer brands were announced with Cesar Millan, Gemma Stafford, and Jenny Martinez; each is jected to generate $5 million to $10 million in potential annual royalty income as participation ramps up

Judith Ripka and Longaberger: Judith Ripka achieved its most successful on-air rotation to date at JTV, while Longaberger is scheduled to launch on QVC this fall

SUMMARYXcel Brands (XELB -19. 44%) highlighted substantial year-over-year cost reductions driven by model restructuring and divestitures, with direct operating costs and expenses decreasing by nearly 50% from FY2023 to FY2024

The company reported a significant liquidity imvement from its United Trademark Group alliance, which also created new opportunities for both acquisitions and operational efficiency

Large-scale expansion of social media reach, alongside the formal unveiling of new creator-driven brands, was positioned as a future revenue driver through anticipated licensing and royalty s

The Orme marketplace joint venture's momentum in premium beauty onboarding and audience reach may contribute supplemental growth upside over time

Management said, "believe that influencer brands are the new currency in media, particularly when those brands have credible voices in a category"CEO D'Loren stated, "If we see that we're going to have additional need for capital, we'll address it when that time comes

But at the moment, we believe we're okay. "The company aims to scale brands anchored by large social audiences, identifying $5 million to $10 million in annual royalty potential for new initiatives, though full ramp-up timelines remain unspecified. (Royalty potential figure is not specified as GAAP or non-GAAP. )Xcel Brands management noted that C

Wonder and Christie Brinkley remain the 2 fastest-growing brands on HSN, supporting the view that the company's focus on creator and influencer partnerships is gaining retail traction

INDUSTRY GLOSSARYCreator Influencer Brand: A duct or brand developed and marketed in direct partnership with a minent social media personality or category expert, leveraging their existing audience for duct demand and distribution

Paid in Kind (PIK) Interest: Interest on debt that accrues to principal rather than being paid in cash, typically deferring outflows until maturity or a specified future date

JTV: Jewelry Television, a major television network focused on fine jewelry retailing

HSN: Shopping Network, a televised and digital retail platform known for on-air duct presentations and direct-to-consumer sales

QVC: Quality Value Convenience, a leading televised shopping network and digital retail company

LOI (Letter of Intent): A non-binding document outlining key terms and intent prior to finalizing a definitive agreement, often used in M&A and strategic partnerships

Full Conference Call TranscriptRobert D'Loren; and Chief Financial Officer, Jim Haran

The releases, the annual report and the quarterly report will be available on the company's website at www

This call is being webcast, and a replay will be available on the company's Investor Relations website

Before we begin, please keep in mind that this call will contain forward-looking statements

All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today

These risk factors are explained in detail in the company's most recent annual reports filed with the SEC

Xcel does not undertake any obligation to publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise

The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time

Finally, please note that on today's call, management will refer to certain non-GAAP financial measures, including non-GAAP net income, non-GAAP diluted EPS and adjusted EBITDA

Our management uses these non-GAAP metrics as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify trends related to our company's results of operations

Our management believes these financial performance measurements are also useful because these measurements adjust for certain costs and other events that management believes are not representative of our core results, and thus, they vide supplemental information to assist investors in evaluating the company's financial results

These non-GAAP measures should not be considered in isolation or as alternatives to net income, earnings per or any other measure of financial performance calculated and presented in accordance with GAAP

You may refer to the attached to the company's earnings releases for the Form 10-K and 10-Q for a reconciliation of non-GAAP measures

And now I'm pleased to introduce Robert D'Loren, Chairman and Chief Executive Officer

Robert D'Loren: Thank you, Seth

Good afternoon, everyone, and thank you for joining us today

After that, our CFO, Jim Haran, will discuss our financial results in more detail

But first, I'm happy to report that we have closed a strategic transaction with United Trademark Group in April

This transaction brings together 2 industry leaders in brand management, supply chain management, licensing and and social commerce to create a global powerhouse

The UTG alliance significantly enhances Xcel's goal of achieving global distribution of our existing and new creator-driven brands and our ability to der great ducts with a high-quality-to-value ratio across multiple duct through UTG's supply chain capabilities

Also, UTG puts us in a great position to more aggressively pursue acquisitions, some of which may be transformative to the company

We have been working hard and fast with UTG to present the strength of the combined platforms to retailers across multiple channels of distribution and conducting due diligence for potential acquisitions

Also, we believe that this partnership will accelerate our formation of additional creator-influencer brands on our platform

We continue to work hard with all of our duction partners to drive our

We announced our new creator influencer brands with Cesar Millan, Gemma Stafford and Jenny Martinez in Q2 of 2025

We have identified key category license opportunities for all of these new creator influencer brands

We believe this is an extremely important and valuable media currency going forward given the recent dramatic growth in commerce and creator-led brands

Wonder and Christie Brinkley remain the 2 fastest-growing brands on HSN

We have a strong pipeline of additional new creator influencer brands that we hope to announce in the near future

All that said, we are apaching Q3 and Q4 of this year with caution given the impacts of the tariffs on QVC and HSN's and our licensees, including G-III for our Halston brand and the coming consolidation of HSN's operations into QVC's headquarters in Pennsylvania

Judith Ripka continues to operate on plan at JTV

In fact, our most recent on-air rotation was most was our most successful to date

Our Longaberger brand launches on QVC this fall

The Orme team has onboarded 25 premium beauty brands as it focuses its efforts on the beauty category

We are assessing the impact of the tariffs and the HSN Tampa studio closure on our es and working on potential solutions, including short-term domestic duction for some of our brands

James Haran: Thanks, Bob, and good afternoon, everyone

For both the quarter and full fiscal year period, our revenues were roughly half of what we reported in the prior year comparable period due to the sale of the Lori Goldstein brand in the second quarter of 2024 and the exit from our wholesale operating es as part of our ject fundamentals that began in 2023

And I'd to reiterate that these charges are non-cash in nature and are excluded from our non-GAAP measures of performance