Live Ventures Inc. (NASDAQ:LIVE) is a diversified holding company that has been actively acquiring and operating businesses across various industries. With a strategic focus on value-oriented acquisitions, Live Ventures has built a portfolio of subsidiaries that cater to different market segments. Despite facing some headwinds in recent years, the company's diversified approach and ongoing efforts to optimize its operations have positioned it to navigate the challenges and capitalize on emerging opportunities.
Business Overview and History Live Ventures was founded in 1983 as a diversified holding company. Over the years, the company has grown through a series of strategic acquisitions across various industries, transforming itself into a multi-faceted enterprise. The company's current operating segments include Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other.
In 2015, Live Ventures entered the retail-entertainment segment with the acquisition of Vintage Stock, an award-winning specialty entertainment retailer. Vintage Stock offers a large selection of new and pre-owned movies, video games, music products, books, comics, toys and collectibles across its retail locations. The company further expanded its portfolio in 2017 with the acquisition of Flooring Liquidators, a leading retailer and installer of flooring, carpeting, and countertops in California and Nevada.
In 2018, Live Ventures acquired Marquis Industries, a leading carpet manufacturer and distributor of carpet and hard-surface flooring products. Marquis has established a strong reputation for innovation, quality, and customer service in the residential, niche commercial, and hospitality markets.
The company's steel manufacturing segment was established in 2022 with the acquisitions of Precision Industries, The Kinetic Co., and Precision Metal Works. These businesses provide a range of steel products and fabricated metal solutions across diverse industries.
Throughout its history, Live Ventures has faced various challenges, including an SEC investigation that began in 2018 regarding the restatement of financial statements and certain acquisitions. The company has also weathered industry downturns and competitive pressures in its operating segments. Despite these challenges, Live Ventures has remained focused on executing its strategy of acquiring and operating profitable, well-managed businesses across different industries.
Live Ventures' diversified portfolio has allowed the company to navigate through various economic cycles and industry-specific challenges. However, the company has faced its share of obstacles in recent years, including the impact of the COVID-19 pandemic and macroeconomic headwinds that have pressured certain segments of its business.
Financial Performance Over the past few years, Live Ventures has reported mixed financial results. In the fiscal year ended September 30, 2024, the company's revenue increased by 33.1% to $472.8 million, compared to $355.2 million in the prior year. This growth was primarily driven by the acquisitions of Precision Metal Works and Central Steel Fabricators, as well as strong performance in the Steel Manufacturing segment.
Despite the revenue growth, Live Ventures reported a net loss of $26.7 million, or $8.48 per share, in fiscal year 2024. This was largely due to an $18.1 million goodwill impairment charge in the Retail-Flooring segment, as well as increased operating expenses across the business. The company's adjusted EBITDA for the year was $24.5 million, down from $31.5 million in the prior year.
In the most recent quarter ended December 31, 2024, Live Ventures reported revenue of $111.5 million, a 5.2% decrease compared to the prior-year period. The decline was primarily due to weaker performance in the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments. However, the company was able to achieve a net income of $0.5 million, or $0.16 per diluted share, in the quarter, a significant improvement from the $0.7 million net loss in the same period the previous year. This was largely attributable to a $2.8 million gain on the settlement of the earnout liability related to the Precision Metal Works acquisition and a $0.7 million gain on the settlement of Precision Metal Works seller notes.
The company's gross profit for the quarter decreased by $1 million to $35.4 million, while gross margin percentage increased from 30.9% to 31.7%. Adjusted EBITDA for the quarter decreased by approximately $3 million to $5.7 million.
For the fiscal year 2024, Live Ventures reported annual operating cash flow of $20.6 million and annual free cash flow of $12.1 million.
Liquidity As of December 31, 2024, Live Ventures had total assets of $395.5 million and stockholders' equity of $73.3 million. The company's current ratio, a measure of liquidity, stood at 1.42, indicating a solid ability to meet its short-term obligations. The quick ratio was 0.40, suggesting a more constrained ability to meet immediate short-term obligations without relying on inventory. Additionally, the company's debt-to-equity ratio was 1.31, suggesting a moderate level of leverage.
Live Ventures had $7.4 million in cash and $23.7 million in available credit lines as of December 31, 2024. The company's credit facilities include a $25 million revolving credit agreement with Bank of America, a $29 million credit facility with Fifth Third Bank, and a $25 million revolving credit facility with Eclipse Business Capital. Total cash availability at the end of the quarter was $31.1 million, and working capital was approximately $51 million.
Challenges and Opportunities Live Ventures has faced several challenges in recent years, including the impact of the COVID-19 pandemic, which disrupted its retail and manufacturing operations. The company has also grappled with macroeconomic headwinds, such as rising inflation and supply chain issues, that have weighed on the performance of its Flooring Manufacturing and Retail-Flooring segments.
To address these challenges, Live Ventures has implemented various initiatives to enhance the efficiency and profitability of its underperforming business units. The company has also focused on diversifying its revenue streams and exploring new growth opportunities, such as the acquisition of Central Steel Fabricators, which has strengthened its Steel Manufacturing segment.
Looking ahead, Live Ventures sees promising opportunities in the continued expansion of its Retail-Entertainment and Steel Manufacturing operations. The company plans to further grow its Vintage Stock footprint, particularly in the Southeastern United States, and capitalize on the robust demand for its specialized steel products and fabricated metal solutions.
Additionally, the company's recent settlement of the Precision Metal Works earnout liability and seller notes has helped to streamline its capital structure and reduce financial obligations, potentially paving the way for future strategic investments and acquisitions.
The company is currently involved in an ongoing SEC investigation related to financial reporting and disclosure issues from 2016-2018. In August 2021, the SEC filed a civil complaint against the company and two of its executive officers alleging various financial, disclosure, and reporting violations. The litigation is ongoing and presents a significant challenge for Live Ventures as it works to resolve these issues and maintain investor confidence.
Segment Overview Live Ventures operates in five main segments:
1. Retail-Entertainment: This segment consists of Vintage Stock, Inc., which operates 73 retail locations across several states, offering a wide range of entertainment products. Sales in this segment are typically cash-and-carry with a single performance obligation.
2. Retail-Flooring: Comprised of Flooring Liquidators, Inc., this segment operates 27 warehouse-format stores and a design center in California and Nevada. Revenue is derived from the sale of flooring products and installation services.
3. Flooring Manufacturing: This segment includes Marquis Industries, Inc., a leading carpet manufacturer and distributor serving the residential, niche commercial, and hospitality markets.
4. Steel Manufacturing: This segment consists of Precision Industries, Inc., The Kinetic Co., Inc., Precision Metal Works, Inc., and Central Steel Fabricators, LLC. These businesses provide a range of steel products and fabricated metal solutions across various industries.
5. Corporate and Other: This segment includes certain corporate general and administrative costs and legacy operations for which the company is no longer accepting new customers.
Conclusion Live Ventures' diversified business model and ongoing efforts to optimize its operations have positioned the company to navigate the challenges it has faced in recent years. While the company has reported mixed financial results, its ability to generate positive net income in the most recent quarter and reduce its financial obligations suggest that it is making progress in its turnaround efforts.
Looking ahead, Live Ventures' focus on expanding its high-performing Retail-Entertainment and Steel Manufacturing segments, as well as its commitment to exploring new growth opportunities, could help the company overcome the headwinds in its Flooring Manufacturing and Retail-Flooring businesses. As the company continues to execute on its strategic initiatives, investors will be closely watching for signs of a sustained improvement in Live Ventures' financial performance and long-term growth prospects.
However, the ongoing SEC investigation remains a significant concern that could impact the company's reputation and financial stability. Resolution of this issue will be crucial for Live Ventures to fully regain investor confidence and focus on its growth strategy. The company's ability to navigate these legal challenges while continuing to improve its operational performance across its diverse business segments will be key to its future success.