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Xcel Brands, Inc. Announces Third Quarter 2018 Financial Results
14
Nov '18

NEW YORK, Nov. 14, 2018 (GLOBE NEWSWIRE) Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a consumer products company, today announced its financial results for the third quarter and nine months ended September 30, 2018.

Robert W. D'Loren, Chairman and Chief Executive Officer of Xcel commented, “Our third quarter results saw a marked improvement in total revenues, operating income and net income from the prior year. We continue to experience positive momentum across our multiple channels of distribution, including expanding our wholesale and direct to consumer platforms.  He further stated, I am pleased by our results and the direction we are heading.”  

Third Quarter 2018 Financial Results

Total revenue for the third quarter of 2018 was $8.3 million, a net increase of $0.4 million over the prior year quarter, primarily driven by sales from the Company’s jewelry wholesale and e-commerce business. Net revenue for the third quarter of 2018 increased $.1 million from $7.9 million to $8.0 million as higher licensing revenue from the Company’s ongoing interactive television business was primarily offset by lower revenue associated with the previously reported transition of the C. Wonder Brand from QVC, whose sell-off period terminated in January 2018.

Net income was approximately $1.0 million for the quarter ended September 30, 2018, or $0.05, per basic and diluted share, compared with net income of $0.3 million, or $0.01 per basic and diluted share, for the prior year quarter.  After adjusting for certain cash and non-cash items, non-GAAP net income for the quarters ended September 30, 2018 and September 30, 2017, were approximately $1.6 million, or $0.09 per diluted share for each period.

Adjusted EBITDA for the quarter ended September 30, 2018 was approximately $2.33 million, compared to approximately $2.36 million in the prior year quarter, a decrease of $0.03 million from the same quarter in the prior year. 

Nine Months Ended September 30, 2018 Financial Results

Total revenue for the nine months ended September 30, 2018 was $25.5 million, an increase of $0.8 million or 3% over the prior year period.  Total revenue for the nine months ended September 30, 2018 was positively affected by the launch of the wholesale and e-commerce jewelry business. Net revenue for the nine months ended September 30, 2018 was $24.9 million, an increase of $0.19 from the prior year period primarily attributable to net margin from wholesale and e-commerce sales of our jewelry business.  

Net income was approximately $1.4 million for the nine months ended September 30, 2018, or $0.07 per basic and diluted share, an increase of $1.3 million, or $0.07 per basic and diluted share from the prior year nine months.  After adjusting for certain cash and non-cash items, non-GAAP net income for the nine months ended September 30, 2018 was approximately $4.5 million, or $0.25 per diluted share, compared with $4.3 million, or $0.22 per diluted share in the prior year nine months, representing an increase of 6% and 12%, respectively, from the prior year period.

Adjusted EBITDA for the nine months ended September 30, 2018 was approximately $6.7 million, an increase of $0.15 million, or 2.3% from the prior year period. 

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 ("GAAP"). 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 September 30, 2018 remained strong, with stockholders' equity of approximately $100 million, cash and cash equivalents of $8.6 million, and working capital, exclusive of contingent obligations payable with stock, of approximately $11.2 million. During the current nine months, the Company reduced its term debt by approximately $4.5 million to approximately $17.6 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 9:00 a.m. Eastern Time on Wednesday, November 14, 2018. 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 1-855-327-6837. A replay of the conference call will be available on the Company website for 30 days following the event and can be accessed at 844-512-2921 using replay pin number 10005782.

About Xcel Brands
Xcel Brands, Inc. (NASDAQ:XELB) is a media and consumer products company engaged in the design, production, marketing, and direct-to-consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of dynamic consumer lifestyle brands.  Xcel was founded by Robert W. D’Loren in 2011 with a vision to reimagine shopping, entertainment, and social as one. Xcel owns and manages the Isaac Mizrahi, Judith Ripka, H Halston, C. Wonder, and Highline Collective brands, pioneering a ubiquitous sales strategy which includes the promotion and sale of products under its brands through interactive television, internet, brick-and-mortar retail, and e-commerce channels. Headquartered in New York City, Xcel Brands is led by an executive team with significant production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. With a team of over 100 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, 2017 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.

 

 
Xcel Brands, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
               
    September 30, 2018   December 31, 2017
    (Unaudited)   (Note 1)
Assets              
Current Assets:              
Cash and cash equivalents   $ 8,638     $ 10,185  
Accounts receivable, net     9,640       8,528  
Inventory     924       -  
Prepaid expenses and other current assets     1,508       592  
Total current assets     20,710       19,305  
Property and equipment, net     2,999       2,376  
Trademarks and other intangibles, net     109,272       110,120  
Restricted cash     1,509       1,509  
Other assets     726       1,708  
Total non-current assets     114,506       115,713  
Total Assets   $ 135,216     $ 135,018  
               
Liabilities and Stockholders' Equity              
Current Liabilities:              
Accounts payable, accrued expenses and other current liabilities   $ 2,499     $ 1,260  
Accrued payroll     1,653       2,270  
Deferred revenue     13       16  
Current portion of long-term debt     5,315       5,459  
Current portion of long-term debt, contingent obligations     2,950       100  
Total current liabilities     12,430       9,105  
Long-Term Liabilities:              
Long-term debt, less current portion     12,266       19,389  
Deferred tax liabilities, net     8,092       6,375  
Other long-term liabilities     2,307       2,455  
Total long-term liabilities     22,665       28,219  
Total Liabilities     35,095       37,324  
               
Commitments and Contingencies              
               
Stockholders' 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 at September 30, 2018 and December 31, 2017, respectively, and 18,266,202 and 18,318,961 issued and outstanding at September 30, 2018 and December 31, 2017, respectively     18       18  
Paid-in capital     100,055       98,997  
Retained earnings (accumulated deficit)     48       (1,321)  
Total Stockholders' Equity     100,121       97,694  
               
Total Liabilities and Stockholders' Equity   $ 135,216     $ 135,018  
               

 

 
Xcel Brands, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
                         
    For the Three Months Ended   For the Nine Months Ended
    September 30,   September 30,
    2018   2017   2018   2017
Revenues                        
Net licensing revenue   $ 7,823     7,890   $ 24,445   $ 24,690
Sales     444     -     1,075     -
  Total revenue     8,267     7,890     25,520     24,690
Cost of goods sold (sales)     231     -     640     -
  Net revenues     8,036     7,890     24,880     24,690
                         
Operating costs and expenses                        
Salaries, benefits and employment taxes     3,815     4,079     12,361     12,806
Other design and marketing costs     639     287     2,194     1,803
Other selling, general and administrative expenses     1,281     1,188     3,691     3,602
Stock-based compensation     447     690     1,415     2,496
Depreciation and amortization  

 

(This story has not been edited by Fibre2Fashion staff and is published from a syndicated feed.)


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