Live Ventures Fiscal Year 2026 Q1 Earnings Call - Operating income rebounds 352.9% and adjusted EBITDA rises as cost cuts offset revenue softness
Summary
Live Ventures posted a modest revenue decline, but the quarter was defined by a sharp operational recovery. Total revenue fell 2.7% to $108.5 million, led by a 20.2% drop at Retail-Flooring, yet gross margin expanded 90 basis points to 32.6% and operating income jumped to $3.5 million from $0.8 million a year earlier. Adjusted EBITDA rose 35.7% to $7.8 million, driven by targeted cost reductions, better mix in several segments, and lower interest expense.
The company flagged continued housing-market headwinds but highlighted tangible progress in margin mechanics, a recently refinanced steel credit facility, and a company-wide push to integrate AI, robotics, and analytics. Liquidity appears solid with total cash availability reported at $38.7 million, though the company’s presentation included an apparent typo on available credit lines that investors should note. The quarter ends with a small GAAP net loss of about $100,000, and the call drew no questions from attendees, an unusual silence given the mixed print.
Key Takeaways
- Total revenue declined 2.7% year-over-year to $108.5 million for Q1 FY2026.
- Operating income rose to $3.5 million, a 352.9% increase versus $0.8 million in the prior-year quarter.
- Adjusted EBITDA increased 35.7% to $7.8 million, driven primarily by higher operating income and cost actions.
- Gross profit was essentially flat at $35.4 million, while gross margin expanded 90 basis points to 32.6%.
- Retail-Flooring revenue fell 20.2% to $25.3 million, pressured by store closures and a weak housing market; the segment sold more aged inventory, reducing margins.
- Retail-Entertainment revenue climbed 11% to $23.6 million, supported by strong consumer demand and favorable product mix.
- Flooring Manufacturing revenue was $28.9 million, down 1.1% year-over-year, but net of intercompany eliminations the segment reported a roughly $2.0 million increase.
- Steel Manufacturing revenue declined 4.3% to $31.9 million, driven by lower volumes in metal forming, assembly, and finishing; net of intercompany sales the drop was about $700,000.
- General and administrative expense fell $2.2 million, or 7.4%, to $27.8 million, and sales and marketing expense declined 10.4% to $4.1 million due to targeted cost reductions.
- Interest expense decreased 14.4% to $3.6 million, reflecting lower average debt balances and a refinanced credit facility in the steel segment.
- Net loss was approximately $100,000, versus $500,000 net income in the prior year quarter which included a $2.8 million earn-out settlement gain and $700,000 seller note settlement gain.
- Reported total cash availability was $38.7 million, consisting of $15.1 million cash on hand and a stated $23.6 billion availability under credit lines; the $23.6 billion figure is inconsistent with the rest of the presentation and appears to be a typographical error.
- Working capital improved to $69.1 million from $62.1 million at September 30, 2025; total assets were $389.2 million and stockholders’ equity was $95.3 million.
- Management announced a plan to integrate AI, robotics, and data analytics across business units to drive efficiency and modernize operations.
- The company opened three new Retail-Flooring stores late in the quarter that did not materially contribute to results in Q1, while the overall store count was two fewer than in Q1 2025.
- The Q&A brought no investor questions, a notable lack of engagement that investors may read as either quiet confidence or limited interest in the print.
Full Transcript
Elvis, Conference Call Operator: Good day, everyone, and welcome to the Live Ventures Fiscal Year 2026 Q1 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. Now I’ll turn the call over to Greg Powell, Director of Investor Relations. Please go ahead, sir.
Greg Powell, Director of Investor Relations, Live Ventures: Thank you, Elvis. Good afternoon, and welcome to the Live Ventures first quarter fiscal year 2026 conference call. Joining us this afternoon are Jon Isaac, our Chief Executive Officer and President, and David Verret, our Chief Financial Officer. Some of the statements we’re making today are forward-looking and are based on our best view of our businesses as we see them today. The actual results could differ materially due to the number of factors, including those outlined in our latest filings, Form 10-K and 10-Q, as filed with the SEC. We have no obligation to publicly update any forward-looking statements after this call, whether as a result of new information, future events, changes in assumptions, or otherwise. You can find our press release and 10-Q, which we filed today, referenced on this call in the Investor Relations section of the Live Ventures website.
I direct you to our website, liveventures.com, or SEC.gov for our historical SEC filings. I will now turn the call over to David to walk you through our financial performance. David?
David Verret, Chief Financial Officer, Live Ventures: Thank you, Greg. Good afternoon, everyone. Before discussing our financial results, I’d like to touch on a few key highlights from the quarter. During the quarter, our portfolio companies continued to strengthen their operating disciplines and optimize their cost structures. These efforts contributed to a $2.7 million, or 352.9% increase in operating income compared to the prior year period. Additionally, we reported adjusted EBITDA of $7.8 million, a $2 million or 35.7% increase compared to the prior year period. These results were delivered despite sustained softness in new home construction and home refurbishment markets, which continued to weigh on our retail flooring segment. In addition, we successfully refinanced one of our credit facilities in the steel manufacturing segment, strengthening our balance sheet and enhancing our ability to support future growth.
Let’s now discuss the financial results for the first quarter ended December 31, 2025. Total revenue decreased approximately $3 million or 2.7% to approximately $108.5 million for the quarter ended December 31, 2025, compared to revenue of approximately $111.5 million in the prior year period. The decrease in revenue is primarily attributable to a $7.1 million decline in the Retail-Flooring and Steel Manufacturing segments, partially offset by a $4.1 million increase in the Retail-Entertainment and Flooring Manufacturing segments, net of intercompany sales eliminations. Retail-Entertainment segment revenue for the first quarter was approximately $23.6 million, an increase of approximately $2.3 million, or 11% compared to $21.3 million in the prior year period.
The revenue growth was driven by strong consumer demand across all product lines. Retail flooring segment revenue for the first quarter was approximately $25.3 million, down $6.4 million, or 20.2%, compared to $31.7 million in the prior year period. The decline was primarily driven by changes in our store footprint and continued softness in the housing market. During the quarter, we operated two fewer locations compared to the first quarter of 2025 due to store closures over the last year. That said, we did open three new stores late in the first quarter of 2026. While those locations had not yet materially contributed to revenue in the period, we’re encouraged by the expansion and the opportunity they represent going forward.
Flooring manufacturing segment revenue for the first quarter was approximately $28.9 million, a decrease of approximately $300,000 or 1.1%, compared to approximately $29.2 million in the prior year period. The decrease in revenue was primarily due to lower sales to the retail flooring segment. Net of intercompany sales eliminations, revenue increased approximately $2 million compared to the prior year period. Steel manufacturing segment revenue for the first quarter was approximately $31.9 million, a decrease of approximately $1.4 million, or 4.3%, compared to approximately $33.3 million in the prior year period. The decrease in revenue was primarily driven by lower sales volumes in the metal forming, assembly, and finishing solutions business. Net of intercompany sales eliminations, revenue decreased approximately $700,000 compared to the prior year period.
Gross profit was approximately $35.4 million for the first quarter, essentially unchanged compared to the prior year period. However, gross margin increased by 90 basis points to 32.6%, as compared to 31.7% in the prior year period. Gross margin improvement was attributable to higher margins in the Flooring Manufacturing segment due to improved efficiencies and favorable product mix, improved efficiencies in the Steel Manufacturing segment, and favorable product mix in the Retail-Entertainment segment, partially offset by lower gross margins in the Retail-Flooring segment. Gross margin for the Retail-Flooring segment declined year-over-year, primarily due to a greater mix of aged inventory sold during this seasonally slower period.... General and administrative expense decreased approximately $2.2 million, or 7.4%, to approximately $27.8 million.
The decrease was driven primarily by targeted cost reduction initiatives in our Retail-Flooring segment, including lower compensation and professional fee expenses. Sales and marketing expense decreased 10.4% to approximately $4.1 million, primarily reflecting lower compensation and product sample-related expenses in our Flooring Manufacturing segment. Operating income increased approximately $2.7 million, or 352.9%, to $3.5 million for the first quarter, compared with operating income of approximately $800,000 in the prior year period. The increase in operating income was primarily driven by higher gross margins and lower operating expenses in the Retail-Flooring, Flooring Manufacturing, and Corporate & Other segments, reflecting targeted cost reduction initiatives. Interest expense decreased 14.4% to approximately $3.6 million. The decrease was primarily due to lower average debt balances as compared to the prior year period.
For the quarter ended December 31, 2025, net loss was approximately $100,000, and loss per share was $0.02, compared to net income of approximately $500,000 and diluted EPS of $0.16 in the prior year period. Net income for the prior year quarter includes a $2.8 million gain related to the settlement of the earn-out liability from the Precision Metal Works acquisition and a $700,000 gain from the settlement of PMW seller notes. Adjusted EBITDA for the first quarter was approximately $7.8 million, an increase of approximately $2 million, or 35.7%, compared to $5.7 million in the prior year period. The increase in adjusted EBITDA was primarily driven by higher operating income.
Turning to liquidity, we ended the first quarter with total cash availability of $38.7 million, consisting of cash on hand of $15.1 million and availability under various lines of credit of $23.6 billion. Our working capital was approximately $69.1 million as of December 31, 2025, compared to $62.1 million as of September 30, 2025. As of December 31, total assets were $389.2 million, and total stockholders’ equity was $95.3 million. In conclusion, we delivered a solid first quarter, marked by meaningful operating improvements across the businesses, despite a still challenging housing market backdrop. To build on this momentum, we are rolling out a comprehensive strategy to integrate AI across the business units.
By applying AI alongside robotics and data analytics, we are modernizing operations, improving efficiency across the organization, and reinforcing the cost discipline that supports our long-term strategy. We will now take questions from those of you on the conference call. Operator, please open the line for questions.
Elvis, Conference Call Operator: Certainly. If you’d like to ask a question, please press star one on your phone now, and you’ll be placed into the queue. Again, star one on your phone, and we’ll pause briefly to form our queue. Once again, everyone, star one for a question. David, we have no questions at this time. I’ll turn it back over to you for any additional or closing comments.
David Verret, Chief Financial Officer, Live Ventures: Okay. All right. We thank everyone for attending our Q1 conference call, and we look forward to talk, speaking with you, when we release our Q2 earnings. Thank you.
Elvis, Conference Call Operator: That concludes our meeting today. You may now disconnect.
Greg Powell, Director of Investor Relations, Live Ventures: The host has ended this call. Goodbye.
