Image source: The Motley Fool. DATEWednesday, June 4, 2025, at 5 p.
EDTCALL PARTICIPANTSChairman and Chief Executive Officer — Robert D'LorenChief Financial Officer — James HaranChief Operating Officer — Seth BurroughsNeed a quote from one of our analysts.
[ tected]TAKEAWAYSStrategic Transaction: The company a strategic transaction with United Trademark Group in April 2025, viding $3 million in liquidity and eliminating over $1 million per year in interest and principal payments through March 2027.
Revenue: Total revenue was $1. 3 million for Q1 2025, up from $1. 2 million in Q4 2024.
Both figures reflect apximately a 50% decline year-over-year due to the sale of the Lori Goldstein brand in June 2024 and the exit from wholesale operations.
Operating Expenses: Direct operating expenses fell 40% year-over-year to apximately $2. 3 million in Q1 2025, driven by cost reductions. Adjusted EBITDA: Adjusted EBITDA loss was $0.
7 million in Q1 2025, marking a 56% imvement from the prior-year quarter. Net Loss (GAAP/Non-GAAP): GAAP net loss was $2. 8 million in Q1 2025. Non-GAAP net loss was $1.
4 million in Q1 FY2025, representing a 24% year-over-year imvement. Long-term Debt: Refinancing in April 2025 increased term debt to $13.
6 million, but deferred principal repayments until March 31, 2026, with $9. 1 million of interest paid in kind until 2027.
Operating Cost Run Rate: The annual operating cost run rate is now apximately $9 million on a go-forward basis as of the end of Q1 2025.
Social Media Reach: Portfolio-wide social media reach expanded from 5 million ers in January 2025 to 45 million as of June 2025.
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.
Halston Brand Royalties: Guaranteed annual royalty minimums from G-III for Halston are $1.
7 million annually, with incremental pickups expected in Q2 and potential for additional royalties as shipments scale in the fall.
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.
Orme Marketplace: Orme, a marketplace joint venture in which Xcel Brands owns a 19% interest, has onboarded 25 beauty brands, reached 50,000 user downloads, and its influencer base now reaches over 10 million ers.
Guidance: Management jects full-year FY2025 adjusted EBITDA in the $1 million to $2. 5 million range, incorporating expected impacts from tariffs and operational changes at HSN.
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.
Recent refinancing delayed all principal repayments and most cash interest obligations until 2026 or later, supporting near-term flexibility for further strategic initiatives.
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.
By now, everyone should have access to the earnings releases for the quarter and fiscal year December 31, 2024, and the quarter March 31, 2025, which went out last Wednesday and yesterday, respectively.
In addition, the company filed with the Securities and Exchange Commission with its annual report on Form 10-K last Wednesday and will file our quarterly report on Form 10-Q for the quarter March 31, 2025, tomorrow.
The releases, the annual report and the quarterly report will be available on the company's website at www. Xcelbrands.
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. Bob, please go ahead. Robert D'Loren: Thank you, Seth.
Good afternoon, everyone, and thank you for joining us today. I would to start today's call with a brief on our performance over the 2 most recent quarters and our outlook for 2025 and beyond.
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.
The initial transaction vided the company with $3 million of liquidity and s us over $1 million per year in interest and principal payments through March of 2027.
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.
Our social media reach across our brand portfolio has grown from 5 million ers in January of 2025 to 45 million to date.
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. User downloads have reached 50,000 and the influencer base now reaches over 10 million ers.
As previously mentioned, this is a joint venture with a nology company in which Xcel owns a 19% interest in this new marketplace.
We believe that our goal of building a portfolio of creator influencer brands that reaches 100 million ers has the potential to accelerate the growth of Orme.
We generated an adjusted EBITDA loss of $792,000 in Q4. That is a $361,000 imvement over Q4 2023.
I should note that the 2024 loss is apximately $150,000 more than we expected, which was caused by the impacts of the Florida hurricanes in Q4 of 2024. While we forecast a range of $1 million to $2.
5 million of adjusted EBITDA for 2025, much of it was weighted on the results of the back half of this year.
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.
Jim will more fully cover Q4 2024 and the full year '24 results and Q1 '25 results. James Haran: Thanks, Bob, and good afternoon, everyone.
I will now briefly discuss our financial results for the quarter and fiscal year December 31, 2024, and the quarter March 31, 2025. Total revenues were $1.
2 million for the fourth quarter of 2024 and $8. 3 million for the full fiscal year.
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.
Total revenues for the first quarter of 2025 were $1. 3 million, up slightly from the fourth quarter.
As we restructured and transformed our operating model over the past 2 years, starting in 2023 and continuing through 2024, we have taken numerous actions to reduce our payroll, operating and overhead costs.
As a result, our direct operating costs and expenses decreased by nearly 50% year-over-year from fiscal year 2023 to fiscal year 2024 and similarly from the fourth quarter of 2023 to the fourth quarter of 2024.
Management has continued to implement additional cost-cutting measures throughout the first quarter of 2025 to further optimize the company's cost structure.
And as a result, our direct operating expenses for the first quarter were apximately $2. 3 million, which was apximately 40% lower than the prior year period.
As of the end of the first quarter, we have reduced our operating cost to a run rate of apximately $9 million on a go-forward basis.
Looking at our other operating cost and expenses, which are predominantly non-cash in nature, our depreciation and amortization expense have declined significantly year-over-year for both the fourth quarter of 2024, the full fiscal year 2024 and the first quarter of 2025, all primarily as a result of the sale of the Lori Goldstein brand.
During fiscal 2024 and to a lesser extent, in Q1 2025, we recognized some significant charges related to our equity method investments, including $1.
9 million for our portional of losses, a $10 million of other charges related to the valuation of our investment in IM Topco and our contingent contractual obligations to transfer a portion of our equity ownership interest in IM Topco.
Similar charges for the current quarter were apximately $0. And I'd to reiterate that these charges are non-cash in nature and are excluded from our non-GAAP measures of performance.
Further, with the subsequent resolution of the contractual obligation related to the IM Topco in April of 2025, the resulting reduction of our ownership interest in IM Topco from 30% to 17.
5% and the implications under applicable accounting rules. Overall, we had a net loss for the first quarter of 2024 of apximately $7. 1 million or minus $3 per on a GAAP basis and $1.
6 million loss and minus $0. 69 per on a non-GAAP basis. This represents a 53% imvement over last year. Fourth quarter adjusted EBITDA was negative $0. 8 million and also a 31% imvement over last year.
For the full fiscal year 2024, we had a net loss of apximately $22. 4 million or $9. 84 per on a GAAP basis, although this does include $16. 5 million of various noncash charges, as mentioned earlier.
On a non-GAAP basis, we had a net loss of $5. 1 million or minus $.