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Xcel Brands, Inc. Announces First Quarter 2022 Results

·13 min read
Xcel Brands, Inc
Xcel Brands, Inc
  • First quarter revenues of $8.7 million, up 12% from the first quarter of 2021, and up 8% from the fourth quarter of 2021

  • First quarter net loss of $3.5 million, or ($0.18) per share, on a GAAP basis

  • Net loss of $1.9 million, or ($0.10) per share, on a non-GAAP basis

  • Management expects continued growth across all business segments and a return to profitability in 2022

NEW YORK, May 23, 2022 (GLOBE NEWSWIRE) -- Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with significant expertise in livestream shopping, today announced its financial results for the first quarter ended March 31, 2022.

Robert W. D’Loren, Chairman and CEO of Xcel stated, “We are pleased with our first quarter top-line growth across our brands and operating divisions. Despite current economic and retail trends, we expect sales in our wholesale and direct-to-consumer businesses to continue to grow and we believe that these sales will return the Company to profitability in 2022.”

First Quarter 2022 Financial Results
Total revenue was $8.7 million, an increase of $0.9 million or 12% compared to the prior year quarter, primarily driven by revenues related to the Lori Goldstein Brand.

Net loss attributable to Xcel Brands was approximately $3.5 million, or ($0.18) per share, compared with a net loss of $2.5 million, or ($0.13) per share, for the prior year quarter. After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $1.9 million, or ($0.10) per share for the quarter ended March 31, 2022, and a net loss of approximately $1.5 million, or $(0.08) per share, for the quarter ended March 31, 2021. Adjusted EBITDA was negative $0.9 million for both the current quarter and the prior year quarter.

See reconciliation tables below for non-GAAP metrics. These non-GAAP metrics may be inconsistent with similar measures presented by other companies and should only be used in conjunction with our results reported according to U.S. generally accepted accounting principles. Any financial measure other than those prepared in accordance with GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

The Company's balance sheet at March 31, 2022, reflected stockholders' equity of approximately $71 million, cash and cash equivalents of approximately $3.1 million, and working capital, exclusive of the current portion of lease obligations, of approximately $5.2 million.

Conference Call and Webcast
The Company will host a conference call with members of the executive management team to discuss these results with additional comments and details at 4:30 p.m. Eastern Time on May 23, 2022. A webcast of the conference call will be available live on the Investor Relations section of Xcel's website at www.xcelbrands.com. Interested parties unable to access the conference call via the webcast may dial 877-407-3982. A replay of the conference call will be available until June 6, 2022 and can be accessed at 844-512-2921 using the replay pin number 13730049.

About Xcel Brands
Xcel Brands, Inc. (NASDAQ:XELB) is a media and consumer products company engaged in the design, production, marketing, livestreaming, wholesale distribution, and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as one thing. Xcel owns the Isaac Mizrahi, Judith Ripka, Halston, LOGO by Lori Goldstein, and C. Wonder brands, and it owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC, pioneering a true omni-channel sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, brick-and-mortar retail, and e-commerce channels. The company’s brands have generated in excess of $3 billion in retail sales via live streaming in interactive television and digital channels alone. Headquartered in New York City, Xcel Brands is led by an executive team with significant livestreaming, production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. With an experienced team of professionals focused on design, production, and digital marketing, Xcel maintains control of product quality and promotion across all of its product categories and distribution channels. Xcel differentiates by design. www.xcelbrands.com

Forward Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "ongoing," "could," "estimates," "expects," "intends," "may," "appears," "suggests," "future," "likely," "goal," "plans," "potential," "projects," "predicts," "seeks," "should," "would," "guidance," "confident" or "will" or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the "Risk Factors" section and elsewhere in the Company's Annual Report on form 10-K for the year ended December 31, 2021 and its other filings with the SEC, which may cause our or our industry's actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Investor Contact:
Andrew Berger
SM Berger & Company, Inc.
216-464-6400
andrew@smberger.com

Media Contact
Felicia Kane
Berns Communications Group, LLC
212-994-4660
fkane@bcg-pr.com

 

Xcel Brands, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

 

2022

 

2021

Revenues

 

 

 

 

 

 

Net licensing revenue

 

$

5,961

 

 

$

4,307

 

Net sales

 

 

2,786

 

 

 

3,502

 

Net revenue

 

 

8,747

 

 

 

7,809

 

Cost of goods sold

 

 

1,680

 

 

 

1,835

 

Gross profit

 

 

7,067

 

 

 

5,974

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

Salaries, benefits and employment taxes

 

 

4,853

 

 

 

4,052

 

Other selling, general and administrative expenses

 

 

3,392

 

 

 

3,038

 

Stock-based compensation

 

 

32

 

 

 

160

 

Depreciation and amortization

 

 

1,820

 

 

 

1,210

 

Total operating costs and expenses

 

 

10,097

 

 

 

8,460

 

 

 

 

 

 

 

 

Operating loss

 

 

(3,030

)

 

 

(2,486

)

 

 

 

 

 

 

 

Interest and finance expense

 

 

 

 

 

 

Interest expense - term loan debt

 

 

708

 

 

 

276

 

Other interest and finance charges (income), net

 

 

1

 

 

 

4

 

Total interest and finance expense

 

 

709

 

 

 

280

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(3,739

)

 

 

(2,766

)

 

 

 

 

 

 

 

Income tax benefit

 

 

-

 

 

 

(138

)

 

 

 

 

 

 

 

Net loss

 

 

(3,739

)

 

 

(2,628

)

Less: Net loss attributable to noncontrolling interest

 

 

(252

)

 

 

(81

)

Net loss attributable to Xcel Brands, Inc. stockholders

 

$

(3,487

)

 

$

(2,547

)

 

 

 

 

 

 

 

Loss per share attributed to Xcel Brands, Inc. common stockholders:

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.18

)

 

$

(0.13

)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

 

19,571,119

 

 

 

19,261,436

 

 

 

 

 

 

 

 


 

Xcel Brands, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

March 31, 2022

 

December 31, 2021

 

 

(Unaudited)

 

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,063

 

 

$

4,483

 

Accounts receivable, net

 

 

8,676

 

 

 

7,640

 

Inventory

 

 

3,941

 

 

 

3,375

 

Prepaid expenses and other current assets

 

 

1,480

 

 

 

1,681

 

Total current assets

 

 

17,160

 

 

 

17,179

 

 

 

 

 

 

 

 

Non-Current Assets:

 

 

 

 

 

 

Property and equipment, net

 

 

2,293

 

 

 

2,549

 

Operating lease right-of-use assets

 

 

6,097

 

 

 

6,314

 

Trademarks and other intangibles, net

 

 

96,775

 

 

 

98,304

 

Restricted cash

 

 

608

 

 

 

739

 

Deferred tax assets, net

 

 

141

 

 

 

141

 

Other assets

 

 

635

 

 

 

555

 

Total non-current assets

 

 

106,549

 

 

 

108,602

 

Total Assets

 

$

123,709

 

 

$

125,781

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

7,855

 

 

$

6,233

 

Accrued payroll

 

 

1,563

 

 

 

577

 

Current portion of operating lease obligations

 

 

1,045

 

 

 

1,207

 

Current portion of long-term debt

 

 

2,500

 

 

 

2,500

 

Total current liabilities

 

 

12,963

 

 

 

10,517

 

Long-Term Liabilities:

 

 

 

 

 

 

Long-term portion of operating lease obligations

 

 

6,963

 

 

 

7,252

 

Long-term debt, less current portion

 

 

24,998

 

 

 

25,531

 

Contingent obligations

 

 

7,539

 

 

 

7,539

 

Other long-term liabilities

 

 

13

 

 

 

0

 

Total long-term liabilities

 

 

39,513

 

 

 

40,322

 

Total Liabilities

 

 

52,476

 

 

 

50,839

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $.001 par value, 50,000,000 shares authorized, and 19,571,119 shares issued and outstanding at March 31, 2022 and December 31, 2021.

 

 

20

 

 

 

20

 

Paid-in capital

 

 

103,069

 

 

 

103,039

 

Accumulated deficit

 

 

(32,266

)

 

 

(28,779

)

Total Xcel Brands, Inc. stockholders' equity

 

 

70,823

 

 

 

74,280

 

Noncontrolling interest

 

 

410

 

 

 

662

 

Total Equity

 

 

71,233

 

 

 

74,942

 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

$

123,709

 

 

$

125,781

 

 

 

 

 

 

 

 


 

Xcel Brands, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

 

2022

 

2021

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(3,739

)

 

$

(2,628

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

1,820

 

 

 

1,210

 

Amortization of deferred finance costs included in interest expense

 

 

91

 

 

 

20

 

Stock-based compensation

 

 

32

 

 

 

160

 

Allowance for doubtful accounts

 

 

-

 

 

 

132

 

Deferred income tax benefit

 

 

-

 

 

 

(138

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(1,036

)

 

 

(377

)

Inventory

 

 

(566

)

 

 

(1,569

)

Prepaid expenses and other assets

 

 

15

 

 

 

(222

)

Accounts payable, accrued expenses and other current liabilities

 

 

2,620

 

 

 

1,819

 

Cash paid in excess of rent expense

 

 

(128

)

 

 

(100

)

Net cash used in by operating activities

 

 

(891

)

 

 

(1,693

)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(35

)

 

 

(295

)

Net cash used in investing activities

 

 

(35

)

 

 

(295

)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from long-term debt

 

 

(625

)

 

 

-

 

Net cash used in financing activities

 

 

(625

)

 

 

-

 

 

 

 

 

 

 

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(1,551

)

 

 

(1,988

)

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

5,222

 

 

 

6,066

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at end of period

 

$

3,671

 

 

$

4,078

 

 

 

 

 

 

 

 

Reconciliation to amounts on consolidated balance sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

3,063

 

 

$

2,969

 

Restricted cash

 

 

608

 

 

 

1,109

 

Total cash, cash equivalents, and restricted cash

 

$

3,671

 

 

$

4,078

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash activities:

 

 

 

 

 

 

Liability for equity-based bonuses

 

$

2

 

 

$

(9

)

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

623

 

 

$

236

 

Cash paid during the period for income taxes

 

$

-

 

 

$

15

 

 

 

 

 

 

 

 


 

 

 

Three Months Ended

($ in thousands)

March 31,

 

March 31,

 

2022

 

2021

 

(Unaudited)

 

(Unaudited)

Net loss attributable to Xcel Brands, Inc. stockholders

$

(3,487

)

 

 

(2,547

)

Amortization of trademarks

 

1,514

 

 

 

876

 

Stock-based compensation

 

32

 

 

 

160

 

Certain adjustments to provision for doubtful accounts

 

-

 

 

 

132

 

Deferred income tax benefit

 

-

 

 

 

(138

)

Non-GAAP net loss

$

(1,941

)

 

$

(1,517

)

 

 

 

 

 

 

 

Three Months Ended

 

March 31,

 

March 31,

 

2022

 

2021

 

(Unaudited)

 

(Unaudited)

Diluted loss per share

$

(0.18

)

 

$

(0.13

)

Amortization of trademarks

 

0.08

 

 

 

0.04

 

Stock-based compensation

 

0.00

 

 

 

0.01

 

Certain adjustments to provision for doubtful accounts

 

-

 

 

 

0.01

 

Deferred income tax benefit

 

-

 

 

 

(0.01

)

Non-GAAP diluted EPS

$

(0.10

)

 

$

(0.08

)

Non-GAAP weighted average diluted shares

 

19,571,119

 

 

 

19,261,436

 

 

 

 

 

 

 

 

Three Months Ended

($ in thousands)

March 31,

 

March 31,

 

2022

 

2021

 

(Unaudited)

 

(Unaudited)

Net loss attributable to Xcel Brands, Inc. stockholders

$

(3,487

)

 

$

(2,547

)

Depreciation and amortization

 

1,820

 

 

 

1,210

 

Interest and finance expense

 

709

 

 

 

280

 

Income tax (benefit) provision

 

-

 

 

 

(138

)

State and local franchise taxes

 

36

 

 

 

39

 

Stock-based compensation

 

32

 

 

 

160

 

Certain adjustments to provision for doubtful accounts

 

-

 

 

 

132

 

Adjusted EBITDA

$

(890

)

 

$

(864

)

 

 

 

 

 

 

Non-GAAP net income and non-GAAP diluted EPS are non-GAAP unaudited terms. We define non-GAAP net income as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of amortization of trademarks, stock-based compensation, certain adjustments to the provision for doubtful accounts related to the bankruptcy of and economic impact on certain retail customers due to the COVID-19 pandemic and deferred income taxes. Non-GAAP net income and non-GAAP diluted EPS measures do not include the tax effect of the aforementioned adjusting items, due to the nature of these items and the Company’s tax strategy.

Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders, before depreciation and amortization, interest and finance expenses (including loss on extinguishment of debt, if any), income taxes, other state and local franchise taxes and stock-based compensation.

Management uses non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to our results of operations. Management believes non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus these non-GAAP measures provide supplemental information to assist investors in evaluating our financial results. Adjusted EBITDA is the measure used to calculate compliance with the EBITDA covenant under our term loan agreement.

Non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate these measures in a different manner than we do. In evaluating non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this document. Our presentation of non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.