• Total Revenue: $1.9 million for Q3 2024, a decrease of approximately $0.7 million from Q3 2023.
• Licensing Revenue Decline: $8.9 million decline due to the sale of the Lori Goldstein brand.
• Non-GAAP Earnings Improvement: Improved by approximately 56% from last year.
• Adjusted EBITDA Improvement: Improved by approximately 26% from Q3 2023.
• Net Loss: $9.2 million or minus $0.39 per share for the current quarter.
• Non-GAAP Net Loss: $1.3 million or minus $0.06 per share, a 56% improvement from Q3 2023.
• Adjusted EBITDA: Negative $1 million for the current quarter.
• Direct Operating Costs: $2.8 million for the current quarter, down by 50% from the prior year quarter.
• Cash and Cash Equivalents: Approximately $1 million as of September 30, 2024.
• New Term Loan Agreement: $10 million, providing approximately $3.5 million of additional equity.

• Warning! GuruFocus has detected 5 Warning Signs with XELB.

Release Date: December 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Xcel Brands Inc (NASDAQ:XELB) improved its non-GAAP earnings by approximately 56% from the previous year.
• The C Wonder brand performed well on HSN, with retail sales up 60% over the previous year.
• Tower Hill by Christie Brinkley exceeded its launch plan by 90% and is expected to continue strong sales growth into 2025.
• The company achieved a 98% growth in royalties for its 'due to thrift' business from the second quarter.
• Xcel Brands Inc (NASDAQ:XELB) has reduced its operating costs significantly, achieving a 50% reduction in direct operating costs for the current quarter compared to the previous year.

Negative Points

• Total revenue for the current quarter decreased by approximately $0.7 million compared to the third quarter of 2023.
• The sale of the Lori Goldstein brand led to an $8.9 million decline in net licensing revenues.
• The company experienced disruptions in its HSN business due to two hurricanes, impacting sales and fulfillment.
• Xcel Brands Inc (NASDAQ:XELB) reported a net loss of approximately $9.2 million for the current quarter.
• The company recognized a $6.3 million non-cash charge related to a contractual contingent obligation.

Q & A Highlights

Q: Can you provide more details on how Halston is performing and expectations for the future? A: Robert D'Loren, CEO, mentioned that the Halston collection is off to a good start, although sales reports for shoes and bags are not yet available. They are optimistic about the brand's performance in 2025, particularly in sportswear, outerwear, handbags, and footwear.

Q: Could you explain the situation with Isaac Mizrahi and how it might affect your interest going forward? A: Robert D'Loren, CEO, explained that they took a conservative approach on the asset value due to challenges with QVC and Isaac's reduced studio presence. They are introducing someone to increase Isaac's airtime next year, and CFO James Haran added that a reserve was put against the asset value, resulting in a non-cash charge for the quarter.

Q: Do you anticipate Q4 to show adjusted EBITDA improvement or profitability? A: James Haran, CFO, stated that while Q4 will show improvement from Q3, it is uncertain if it will return to profitability due to residual impacts from hurricanes affecting HSN business.

Q: How are you managing the impact of hurricanes on revenue, and can you quantify the impact? A: Robert D'Loren, CEO, estimated the impact at about $455,000. They secured more airtime, and a successful show on HSN helped mitigate some losses. They are hopeful for profitability in Q4, depending on shipments and reporting.

Q: What is the timeline for launching additional brands, and how are you progressing? A: Robert D'Loren, CEO, mentioned a new home category brand launch in March next year, with several others in home and kitchen categories planned. Two are under letters of intent, and they are finalizing agreements and prototypes for the March launch.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.