LIVE VENTURES Inc: Form 10-Q for the period ended Mar 31, 2025
Filed with the SEC on May 8, 2025 and accepted by EDGAR at May 8, 2025, 16:50 ET.
Management's discussion and analysis
As filed, 38,406 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and six months ended March 31, 2025, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Form 10-K”).
Note about Forward-Looking Statements
This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.
Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to: (i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months, and (vi) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow or liquidity.
Forward-looking statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include those identified in our 2024 Form 10-K under Item 1A “Risk Factors” and Part II, Item 1A. "Risk Factors" below, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors may generally affect our business, results of operations, and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements except as required by federal securities laws. Any information contained on our website www.liveventures.com (http://www.liveventures.com) or any other websites referenced in this Quarterly Report are not incorporated into and should not be deemed a part of this Quarterly Report.
Our Company
Live Ventures Incorporated is a holding company of diversified businesses, which, together with our subsidiaries, we refer to as the “Company”, “Live Ventures”, “we”, “us” or “our”. We acquire and operate companies in various industries that have historically demonstrated a strong history of earnings power. We currently have five segments to our business: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other.
Under the Live Ventures brand, we seek opportunities to acquire profitable and well-managed companies. We work closely with consultants who help us identify target companies that fit within the criteria we have established for opportunities that will provide synergies with our businesses.
Our principal offices are located at 325 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report Form 10-Q) is located at www.liveventures.com (http://www.liveventures.com). Our common stock trades on the Nasdaq Capital Market under the symbol “LIVE”.
Retail-Entertainment Segment
Our Retail-Entertainment Segment is composed of Vintage Stock, Inc., doing business as Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively, “Vintage Stock”).
Vintage Stock is an award-winning specialty entertainment retailer that offers a large selection of entertainment products, including new and pre-owned movies, video games and music products, as well as ancillary products, such as books, comics, toys and collectibles, in a single location. With its integrated buy-sell-trade business model, Vintage Stock buys, sells and trades new and pre-owned movies, music, video games, electronics and collectibles through 73 retail locations strategically positioned across Alabama, Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, Montana, Nebraska, New Mexico, Oklahoma, Tennessee, Texas, and Utah.
Retail-Flooring Segment
Our Retail-Flooring Segment is composed of Flooring Liquidators, Inc. (“Flooring Liquidators”).
Flooring Liquidators is a leading retailer and installer of flooring, carpeting, and countertops to consumers, builders, and contractors in California and Nevada, operating 27 warehouse-format stores and a design center. Over the years, the company has established a strong reputation for innovation, efficiency, and service in the home renovation and improvement market. Flooring Liquidators serves retail and builder customers through two businesses: retail customers through its Flooring Liquidators retail stores, and builder and contractor customers through Elite Builder Services, Inc.
Flooring Manufacturing Segment
Our Flooring Manufacturing segment is comprised of Marquis Industries, Inc. (“Marquis”).
Marquis is a leading carpet manufacturer and distributor of carpet and hard-surface flooring products. Over the last decade, Marquis has been an innovator and leader in the value-oriented polyester carpet sector, which is currently the market’s fastest-growing fiber category. Marquis focuses on the residential, niche commercial, and hospitality end-markets and serves thousands of customers.
Since commencing operations in 1995, Marquis has built a strong reputation for outstanding value, styling, and customer service. Its innovation has yielded products and technologies that differentiate its brands in the flooring marketplace. Marquis’s state-of-the-art operations enable high quality products, unique customization, and exceptionally short lead-times. Furthermore, the Company has recently invested in additional capacity to grow several attractive lines of business, including printed carpet and yarn extrusion.
Steel Manufacturing Segment
Our Steel Manufacturing segment is comprised of Precision Industries, Inc. (“Precision Marshall”), its wholly-owned subsidiary The Kinetic Co., Inc. (“Kinetic”), Precision Metal Works, Inc. (“PMW”), and Central Steel Fabricators, LLC. ("Central Steel").
Precision Marshall is the North American leader in providing and manufacturing, pre-finished de-carb free tool and die steel. For over 75 years, Precision Marshall has served steel distributors through quick and accurate service. Precision Marshall has led the industry with exemplary availability and value-added processing that saves distributors time and processing costs.
Founded in 1948, Precision Marshall “The Deluxe Company” has built a reputation of high integrity, speed of service and doing things the “Deluxe Way”. The term Deluxe refers to all aspects of the product and customer service to be head and shoulders above the rest. From order entry to packaging and delivery, Precision Marshall makes it easy to do business and backs all products and service with a guarantee.
Precision Marshall provides four key products to over 500 steel distributors in four product categories: Deluxe Alloy Plate, Deluxe Tool Steel Plate, Precision Ground Flat Stock, and Drill Rod. With over 5,000 distinct size grade combinations in stock every day, Precision Marshall arms tool steel distributors with deep inventory availability and same day shipment to their place of business or often ships direct to their customer saving time and handling.
On June 28, 2022, Precision Marshall acquired Kinetic. Kinetic is a highly recognizable and regarded brand name in the production of industrial knives and hardened wear products for the tissue, metals, and wood industries and is known as a one-stop shop for in-house grinding, machining, and heat-treating. Kinetic is headquartered in Greendale, Wisconsin. Kinetic manufactures more than 90 types of knives and numerous associated parts with modifications and customizations available to each. Kinetic employs approximately 100 non-union employees.
On July 20, 2023, we acquired PMW. Founded nearly 76 years ago in 1947 in Louisville, Kentucky, PMW manufactures and supplies highly engineered parts and components across 400,000 square feet of manufacturing space. PMW offers world-class metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices.
On May 17, 2024, Precision Marshall acquired Central Steel. Founded in 1969 in Chicago, Illinois, Central Steel is a manufacturer of specialized fabricated metal products. Central Steel offers over 2,300 unique products to more than 500 customers. Its extensive product line, primarily for data centers, includes cable racks, auxiliary framing, hardware, insulation products, and network bays.
Corporate and Other Segment
Our Corporate and Other segment consists of certain corporate general and administrative costs, and operations of certain legacy products and service offerings for which we are no longer accepting new customers.
Critical Accounting Policies
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP"). Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant and material impact on amounts reported in these financial statements. Estimates and assumptions are based on management's experience and other information available prior to the issuance of our financial statements. Our actual realized results may differ materially from management’s initial estimates as reported. Our critical and significant accounting policies include Trade and Other Receivables, Inventories, Goodwill, Revenue Recognition, Fair Value Measurements, Income Taxes. For a summary of our significant accounting policies and the means by which we develop estimates thereon, see Part II, Item 8 – Financial Statements - Notes to unaudited condensed consolidated financial statements Note 2 – summary of significant accounting policies in our 2024 Form 10-K.
Adjusted EBITDA
We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’ ability to fund acquisitions and other capital expenditures, and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.
Results of Operations Three Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended March 31, 2025 and 2024 (in $000’s):
| Selected Data | Three Months Ended March 31, 2025 | % of Total Revenue | Three Months Ended March 31, 2024 | % of Total Revenue |
|---|---|---|---|---|
| Revenue | $107,013 | $118,626 | ||
| Gross profit | 35,148 | 32.8% | 35,467 | 29.9% |
| General and administrative expenses | 28,321 | 26.5% | 29,824 | 25.1% |
| Sales and marketing expenses | 4,735 | 4.4% | 6,481 | 5.5% |
| Interest expense, net | 3,933 | 3.7% | 4,167 | 3.5% |
| Income (loss) before provision for income taxes | 21,103 | 19.7% | (4,498) | (3.8%) |
| Provision for (benefit from) income taxes | 5,237 | 4.9% | (1,217) | (1.0%) |
| Net income (loss) | $15,866 | 14.8% | $(3,281) | (2.8%) |
| Adjusted EBITDA (a) | ||||
| Retail-Entertainment | $2,755 | $2,153 | ||
| Retail-Flooring | (1,778) | (1,849) | ||
| Flooring Manufacturing | 2,272 | 2,897 | ||
| Steel Manufacturing | 3,742 | 2,331 | ||
| Corporate & Other | (545) | (1,075) | ||
| Total Adjusted EBITDA | $6,446 | $4,457 | ||
| Adjusted EBITDA as a percentage of revenue | ||||
| Retail-Entertainment | 14.9% | 12.8% | ||
| Retail-Flooring | (6.5%) | (5.8%) | ||
| Flooring Manufacturing | 7.6% | 8.5% | ||
| Steel Manufacturing | 11.9% | 6.6% | ||
| Corporate & Other | N/A | N/A | ||
| Consolidated adjusted EBITDA as a percentage of revenue | 6.0% | 3.8% |
(a) See reconciliation of net income to Adjusted EBITDA below.
The following table sets forth revenue by segment (in $000’s):
| Revenue | For the Three Months Ended March 31, 2025 Net Revenue | % of Total Revenue | For the Three Months Ended March 31, 2024 Net Revenue | % of Total Revenue |
|---|---|---|---|---|
| Retail-Entertainment | $18,467 | 17.3% | $16,842 | 14.2% |
| Retail-Flooring | 27,399 | 25.6% | 32,032 | 27.0% |
| Flooring Manufacturing | 29,820 | 27.9% | 34,180 | 28.8% |
| Steel Manufacturing | 31,321 | 29.3% | 35,488 | 29.9% |
| Corporate & Other | 6 | —% | 84 | 0.1% |
| Total Revenue | $107,013 | 100.0% | $118,626 | 100.0% |
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
| Gross Profit | For the Three Months Ended March 31, 2025 Gross Profit | Gross Profit % of Total Revenue | For the Three Months Ended March 31, 2024 Gross Profit | Gross Profit % of Total Revenue |
|---|---|---|---|---|
| Retail-Entertainment | $10,907 | 10.2% | $9,836 | 8.3% |
| Retail-Flooring | 9,415 | 8.8% | 11,702 | 9.9% |
| Flooring Manufacturing | 8,193 | 7.7% | 8,760 | 7.4% |
| Steel Manufacturing | 6,629 | 6.2% | 5,090 | 4.3% |
| Corporate & Other | 4 | —% | 79 | 0.1% |
| Total Gross Profit | $35,148 | 32.8% | $35,467 | 29.9% |
Revenue
Revenue decreased approximately $11.6 million, or 9.8%, to approximately $107.0 million for the quarter ended March 31, 2025, compared to revenue of approximately $118.6 million in the prior year period. The decrease is attributable to the Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments, which decreased by approximately $13.2 million in the aggregate.
Gross Profit
Gross profit was 32.8% for three months ended March 31, 2025 as compared to 29.9% for the three months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and Administrative expenses decreased by 5% to approximately $28.3 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease is primarily due to targeted cost reduction initiatives at Flooring Liquidators.
Sales and Marketing Expense
Sales and marketing expense decreased by 27% to approximately $4.7 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
Interest Expense, net
Interest expense, net, decreased by approximately 5.6% to approximately $3.9 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 due to lower average debt balances.
Results of Operations Six Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2025 and 2024 (in $000’s):
| Statement of Income Data: | For the Six Months Ended March 31, 2025 | % of Total Revenue | For the Six Months Ended March 31, 2024 | % of Total Revenue |
|---|---|---|---|---|
| Revenue | $218,521 | $236,219 | ||
| Gross profit | 70,510 | 32.3% | 71,794 | 30.4% |
| General and administrative expenses | 58,392 | 26.7% | 57,503 | 24.3% |
| Sales and marketing expenses | 9,264 | 4.2% | 11,588 | 4.9% |
| Interest expense, net | 8,095 | 3.7% | 8,330 | 3.5% |
| Income (loss) before provision for income taxes | 21,676 | 9.9% | (5,404) | (2.3%) |
| Provision for (benefit from) income taxes | 5,318 | 2.4% | (1,441) | (0.6%) |
| Net income (loss) | $16,358 | 7.5% | $(3,963) | (1.7%) |
| Adjusted EBITDA (a) | ||||
| Retail-Entertainment | $6,565 | $5,867 | ||
| Retail-Flooring | (2,749) | (546) | ||
| Flooring Manufacturing | 3,023 | 4,774 | ||
| Steel Manufacturing | 6,543 | 5,133 | ||
| Corporate & Other | (1,191) | (2,075) | ||
| Total Adjusted EBITDA | $12,191 | $13,153 | ||
| Adjusted EBITDA as a percentage of revenue | ||||
| Retail-Entertainment | 16.5% | 15.7% | ||
| Retail-Flooring | (4.6%) | (0.8%) | ||
| Flooring Manufacturing | 5.4% | 7.5% | ||
| Steel Manufacturing | 10.3% | 7.5% | ||
| Corporate & Other | N/A | N/A | ||
| Consolidated adjusted EBITDA as a percentage of revenue | 5.6% | 5.6% |
(a) See reconciliation of net income to Adjusted EBITDA below.
The following table sets forth revenue by segment (in $000’s):
| Revenue | For the Six Months Ended March 31, 2025 Net Revenue | % of Total Revenue | For the Six Months Ended March 31, 2024 Net Revenue | % of Total Revenue |
|---|---|---|---|---|
| Retail-Entertainment | $39,740 | 18.2% | $37,428 | 15.8% |
| Retail-Flooring | 59,146 | 27.1% | 66,351 | 28.1% |
| Flooring Manufacturing | 55,815 | 25.5% | 63,425 | 26.9% |
| Steel Manufacturing | 63,757 | 29.2% | 68,841 | 29.1% |
| Corporate & other | 63 | —% | 174 | 0.1% |
| Total Revenue | $218,521 | 100.0% | $236,219 | 100.0% |
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
| Gross Profit | For the Six Months Ended March 31, 2025 Gross Profit | Gross Profit % of Total Revenue | For the Six Months Ended March 31, 2024 Gross Profit | Gross Profit % of Total Revenue | |
|---|---|---|---|---|---|
| Retail-Entertainment | $22,951 | 10.5% | $21,364 | 9.0% | |
| Retail-Flooring | 21,218 | 9.7% | 24,734 | 10.5% | |
| Flooring Manufacturing | 13,716 | 6.3% | 15,182 | 6.4% | |
| Steel Manufacturing | 12,571 | 5.8% | 10,352 | 4.4% | |
| Corporate & other | 54 | —% | 162 | 0.1% | |
| Total Gross Profit | $70,510 | 32.3% | 0.322669217146178 | $71,794 | 30.4% |
Revenue
Revenue decreased approximately $17.7 million, or 7.5%, to approximately $218.5 million for the six months ended March 31, 2025, compared to revenue of approximately $236.2 million in the prior year period. The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $20.0 million in the aggregate.
Gross Profit
Gross profit was 32.3% for six months ended March 31, 2025 as compared to 30.4% for the six months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and administrative expense remained generally consistent at approximately $58.4 million and $57.5 million for the six months ended March 31, 2025 and 2024, respectively.
Sales and Marketing Expense
Sales and marketing expense decreased by 20.1% to approximately $9.3 million for the six months ended March 31, 2025, as compared to the six months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
Interest Expense, net
Interest expense, net, remained generally consistent at approximately $8.1 million and $8.3 million for the six months ended March 31, 2025 and 2024, respectively.
Results of Operations by Segment for the Three Months Ended March 31, 2025 and 2024
| For the Three Months Ended March 31, 2025 Retail-Entertainment | Retail-Flooring | Flooring Manufacturing | Steel Manufacturing | Corporate & Other | Total | For the Three Months Ended March 31, 2024 Retail-Entertainment | Retail-Flooring | Flooring Manufacturing | Steel Manufacturing | Corporate & Other | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $18,467 | $27,399 | $29,820 | $31,321 | $6 | $107,013 | $16,842 | $32,032 | $34,180 | $35,488 | $84 | $118,626 |
| Cost of Revenue | 7,560 | 17,984 | 21,627 | 24,692 | 2 | 71,865 | 7,006 | 20,330 | 25,420 | 30,398 | 5 | 83,159 |
| Gross Profit | 10,907 | 9,415 | 8,193 | 6,629 | 4 | 35,148 | 9,836 | 11,702 | 8,760 | 5,090 | 79 | 35,467 |
| General and Administrative Expense | 8,254 | 12,083 | 2,329 | 4,312 | 1,343 | 28,321 | 7,919 | 13,469 | 1,866 | 4,048 | 2,522 | 29,824 |
| Selling and Marketing Expense | 155 | 73 | 4,381 | 121 | 5 | 4,735 | 133 | 1,256 | 4,916 | 170 | 6 | 6,481 |
| Operating Income (Loss) | $2,498 | $(2,741) | $1,483 | $2,196 | $(1,344) | $2,092 | $1,784 | $(3,023) | $1,978 | $872 | $(2,449) | $(838) |
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the quarter ended March 31, 2025 was approximately $18.5 million, an increase of approximately $1.6 million, or 9.6%, compared to prior year period revenue of approximately $16.8 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 59.1% for the quarter ended March 31, 2025, compared to 58.4% for the prior year period. Operating income for the quarter ended March 31, 2025 was approximately $2.5 million, compared to operating income of approximately $1.8 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the quarter ended March 31, 2025, was approximately $27.4 million, a decrease of approximately $4.6 million, or 14.5%, compared to the prior year period revenue of approximately $32.0 million. The decrease in revenue was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the quarter ended March 31, 2025 was 34.4%, compared to 36.5% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the quarter ended March 31, 2025 was approximately $2.7 million, compared to an operating loss of approximately $3.0 million for the prior year period.
Flooring Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $29.8 million, a decrease of approximately $4.4 million, or 12.8%, compared to prior year period revenue of approximately $34.2 million. The decrease in revenue was primarily due to reduced consumer demand, as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 27.5% for the quarter ended March 31, 2025, compared to 25.6% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the quarter ended March 31, 2025 was approximately $1.5 million, compared to approximately $2.0 million in the prior year period.
Steel Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $31.3 million, a decrease of approximately $4.2 million, or 11.7%, compared to prior-year period revenue of approximately $35.5 million. The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3.8 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024. Gross margin was 21.2% for the quarter ended March 31, 2025, compared to 14.3% for the prior-year period. The increase in gross margin was primarily due to strategic price increases as well as the acquisition of Central Steel. Operating income for the quarter ended March 31, 2025 was approximately $2.2 million, compared to approximately $0.9 million in the prior-year period.
Corporate and Other Segment
Revenue for the quarter ended March 31, 2025 was approximately $6,000, a decrease of approximately $78,000, or 92.9%, compared to prior year period revenue of approximately $84,000. Operating loss was approximately $1.3 million and $2.4 million for the quarters ended March 31, 2025 and 2024, respectively.
Results of Operations by Segment for the Six Months Ended March 31, 2025 and 2024
| For the Six Months Ended March 31, 2025 Retail-Entertainment | Retail-Flooring | Flooring Manufacturing | Steel Manufacturing | Corporate & Other | Total | For the Six Months Ended March 31, 2024 Retail-Entertainment | Retail-Flooring | Flooring Manufacturing | Steel Manufacturing | Corporate & Other | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $39,740 | $59,146 | $55,815 | $63,757 | $63 | $218,521 | $37,428 | $66,351 | $63,425 | $68,841 | $174 | $236,219 |
| Cost of Revenue | 16,789 | 37,928 | 42,099 | 51,186 | 9 | 148,011 | 16,064 | 41,617 | 48,243 | 58,489 | 12 | 164,425 |
| Gross Profit | 22,951 | 21,218 | 13,716 | 12,571 | 54 | 70,510 | 21,364 | 24,734 | 15,182 | 10,352 | 162 | 71,794 |
| General and Administrative Expense | 16,735 | 25,792 | 3,963 | 8,959 | 2,943 | 58,392 | 16,074 | 25,491 | 3,471 | 8,204 | 4,263 | 57,503 |
| Selling and Marketing Expense | 311 | 340 | 8,352 | 250 | 11 | 9,264 | 317 | 2,178 | 8,788 | 293 | 12 | 11,588 |
| Operating Income (Loss) | $5,905 | $(4,914) | $1,401 | $3,362 | $(2,900) | $2,854 | $4,973 | $(2,935) | $2,923 | $1,855 | $(4,113) | $2,703 |
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the six months ended March 31, 2025 was approximately $39.7 million, an increase of approximately $2.3 million, or 6.2%, compared to prior year period revenue of approximately $37.4 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 57.8% for the six months ended March 31, 2025, compared to 57.1% for the prior year period. Operating income for the six months ended March 31, 2025 was approximately $5.9 million, compared to operating income of approximately $5.0 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the six months ended March 31, 2025 was approximately $59.1 million, a decrease of approximately $7.2 million, or 10.9%, compared to the prior year period revenue of approximately $66.4 million. The decrease was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the six months ended March 31, 2025 was 35.9%, compared to 37.3% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the six months ended March 31, 2025, was approximately $4.9 million, compared to an operating loss of approximately $2.9 million for the prior year period. The increase in operating loss was primarily due to the decrease in revenues and gross margin, partially offset by targeted cost reduction initiatives implemented during the second quarter of fiscal 2025.
Flooring Manufacturing Segment
Revenue for the Flooring Manufacturing segment for the six months ended March 31, 2025 was approximately $55.8 million, a decrease of approximately $7.6 million, or 12.0%, compared to prior year period revenue of approximately $63.4 million. The decrease in revenue was primarily due to reduced consumer demand as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 24.6% for the six months ended March 31, 2025, compared to 23.9% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the six months ended March 31, 2025 was approximately $1.4 million, compared to operating income of approximately $2.9 million for the prior year period.
Steel Manufacturing Segment
Revenue for the six months ended March 31, 2025 was approximately $63.8 million, a decrease of approximately $5.0 million or 7.4%, compared to prior year period revenue of approximately $68.8 million. The decline was primarily driven by lower sales volumes at certain business units partially offset by incremental revenue of $6.9 million at Central Steel, which was acquired in May 2024. Gross margin was 19.7% for the six months ended March 31, 2025, compared to 15.0% for the prior year period. The increase in gross margin was primarily due to strategic price increases, as well as the acquisition of Central Steel. Operating income for the six months ended March 31, 2025 was approximately $3.4 million, compared to operating income of approximately $1.9 million in the prior year period.
Corporate and Other Segment
Revenue for the six months ended March 31, 2025 was approximately $63,000, a decrease of approximately $111,000, or 63.8%, compared to prior year period revenue of approximately $174,000. Operating loss was approximately $2.9 million and $4.1 million for the six months ended March 31, 2025 and 2024, respectively.
Adjusted EBITDA Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA for the three and six months ended March 31, 2025 and 2024 (in 000's):
| For the Three Months Ended March 31, 2025 | March 31, 2024 | For the Six Months Ended March 31, 2025 | March 31, 2024 | |
|---|---|---|---|---|
| Net income (loss) | $15,866 | $(3,281) | $16,358 | $(3,963) |
| Depreciation and amortization | 4,401 | 4,188 | 8,816 | 8,483 |
| Stock-based compensation | 49 | 50 | 100 | 100 |
| Interest expense, net | 3,933 | 4,167 | 8,095 | 8,330 |
| Income tax expense (benefit) | 5,237 | (1,217) | 5,318 | (1,441) |
| Gain on extinguishment of debt | — | — | (713) | — |
| Gain on modification of seller note | (22,784) | — | (22,784) | — |
| Gain on settlement of earnout liability | — | — | (2,840) | — |
| Acquisition costs | — | 468 | — | 874 |
| Debt acquisition costs | — | — | — | 183 |
| Other non-recurring charges | (256) | 82 | (159) | 587 |
| Adjusted EBITDA | $6,446 | $4,457 | $12,191 | $13,153 |
Adjusted EBITDA for the quarter ended March 31, 2025 was approximately $6.4 million, an increase of approximately $2.0 million, or 44.6%, compared to the prior year period. The increase is primarily due to decreases in operating expenses targeted cost reduction initiatives.
Adjusted EBITDA for the six months ended March 31, 2025 was approximately $12.2 million, a decrease of approximately $1.0 million, or 7.3%, compared to the prior year period. The decrease is primarily due to a decrease in gross profit.
Liquidity and Capital Resources
As of March 31, 2025, we had total cash on hand of approximately $6.9 million and approximately $19.7 million of available borrowing under our revolving credit facilities. As we continue to pursue acquisitions and other strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature, and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities, and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to do the following: fund our operations; pay our scheduled loan payments; ability to repurchase shares under our share buyback program; and, pay dividends on our shares of Series E Preferred Stock as declared by the Board of Directors, for at least the next 12 months.
Working Capital
We had working capital of approximately $49.1 million as of March 31, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024; a decrease of approximately $3.2 million. The decrease is primarily due to increases in accrued liabilities, the current portion of long-term debt, and the current portion of operating lease obligations, and a decrease in income taxes receivable, partially offset by decreases in the current portion of notes payable to related parties and accounts payable, and an increase in accounts receivable.
Cash Flows from Operating Activities
The Company’s cash, as of March 31, 2025, was approximately $6.9 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $2.3 million. Net cash provided by operations was approximately $9.6 million and $2.1 million for the six months ended March 31, 2025 and 2024, respectively. The increase was primarily due to collections of accounts receivable and reduction in inventory, partially offset by decreases in income taxes payable.
Our primary sources of cash inflows are from customer receipts from sales on account, factored accounts receivable proceeds, receipts for securities sales commissions, and net remittances from directory services customers processed in the form of ACH billings. Our most significant cash outflows include payments for raw materials and general operating expenses, including payroll costs and general and administrative expenses that typically occur within close proximity of expense recognition.
Cash Flows from Investing Activities
Our cash flows used in investing activities of approximately $4.3 million for the six months ended March 31, 2025 consisted of purchases of property and equipment. Our cash flows used in investing activities of approximately $4.9 million for the six months ended March 31, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, and Johnson by CRO, and purchases of property and equipment.
Cash Flows from Financing Activities
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2025 consisted of payments on notes payable of approximately $3.4, payments for finance leases of approximately $2.0 million, cash paid for the settlement of seller notes of approximately $1.9 million, net borrowings under revolver loans of approximately $1.3 million, payments of related party notes payable of $0.6 million, and purchases of treasury stock of approximately $0.4 million, partially offset by net borrowings under related party revolver loans of approximately $4.3 million, proceeds from the issuance related party notes payable of approximately $1.9 million, and proceeds from the issuance of notes payable of approximately $0.5 million.
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2024 consisted of net borrowings under revolver loans of approximately $7.7 million, payments on notes payable of approximately $3.4 million, proceeds from related parties of $1.0 million, purchases of treasury stock and payments for finance leases of approximately $0.4 million, and payments of related party notes payable of $0.6 million.
Currently, we are not issuing common shares for liquidity purposes. We prefer to use asset-based lending arrangements and mezzanine financing together with Company provided capital to finance acquisitions and have done so historically. Occasionally, as our Company history has demonstrated, we will issue stock and derivative instruments linked to stock for services or debt settlement.
Future Sources of Cash; New Products and Services
We may require additional debt financing or capital to finance new acquisitions, refinance existing indebtedness or other strategic investments in our business. Other sources of financing may include stock issuances and additional loans; or other forms of financing. Any financing obtained by us may further dilute or otherwise impair the ownership interest of our existing stockholders.
Market risk
As filed, 496 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
As of March 31, 2025, we did not participate in any market risk-sensitive commodity instruments for which fair value disclosure would be required. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk. We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk.
Controls and procedures
As filed, 4,984 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Control and Procedures. We carried out an evaluation, under the supervision, and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, we concluded that, as of March 31, 2025, the period covered in this report, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting further described below.
Despite the identified material weakness, management concluded that the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. generally accepted accounting principles.
Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent or detect all errors and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the following: judgements in decision-making can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals, acting alone or in collusion with each other, or by management override. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Our management assessed the design and effectiveness of our internal control over financial reporting as of March 31, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) of 2013 regarding Internal Control – Integrated Framework. Based on our assessment using those criteria, our management concluded that our internal controls over financial reporting were ineffective as of March 31, 2025. Management noted the following deficiency that management believes to be a material weakness:
- Lack of sufficient controls around the financial reporting and consolidation process.
In response to the above identified weakness in our internal control over financial reporting, we plan to improve the control policies and procedures over financial reporting and consolidation processes. We expect to conclude these remediation initiatives during the fiscal year ended September 30, 2025. We continue to evaluate testing of our internal control policies and procedures, including assessing internal and external resources that may be available to complete these tasks, but do not know when these tasks will be completed.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.
There were no changes in our internal control over financial reporting that occurred during the six months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2025-01-01 to 2025-03-31 | $107.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months2024-10-01 to 2025-03-31 | $218.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months2025-01-01 to 2025-03-31 | $71.9m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months2024-10-01 to 2025-03-31 | $148.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months2025-01-01 to 2025-03-31 | $35.1m | us-gaap:GrossProfit |
| Gross profit | 6 months2024-10-01 to 2025-03-31 | $70.5m | us-gaap:GrossProfit |
| Operating income | 3 months2025-01-01 to 2025-03-31 | $2.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months2024-10-01 to 2025-03-31 | $2.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2025-01-01 to 2025-03-31 | $3.9m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months2024-10-01 to 2025-03-31 | $8.1m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months2025-01-01 to 2025-03-31 | $5.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months2024-10-01 to 2025-03-31 | $5.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-01-01 to 2025-03-31 | $15.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months2024-10-01 to 2025-03-31 | $16.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-01-01 to 2025-03-31 | $5.05 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months2024-10-01 to 2025-03-31 | $5.20 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-01-01 to 2025-03-31 | $5.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months2024-10-01 to 2025-03-31 | $5.25 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-01-01 to 2025-03-31 | 3,138,711 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months2024-10-01 to 2025-03-31 | 3,143,213 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months2024-10-01 to 2025-03-31 | $9.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months2024-10-01 to 2025-03-31 | $4.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months2024-10-01 to 2025-03-31 | $416.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | At period end2025-03-31 | $6.9m | us-gaap:Cash |
| Current assets | At period end2025-03-31 | $174.2m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-03-31 | $393.6m | us-gaap:Assets |
| Current liabilities | At period end2025-03-31 | $125.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2025-03-31 | $304.6m | us-gaap:Liabilities |
| Shareholders' equity | At period end2025-03-31 | $88.9m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0001628280-25-023889. Last ingested by Listed: Oct 24, 2026, 15:03 ET. Listed shows no prices and gives no investment advice.