ATLANTA, May 11, 2018 (GLOBE NEWSWIRE) -- Luvu Brands, Inc., (OTCQB:LUVU), a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands today reported financial results for the three and nine months ended March 31, 2018.
Operating highlights for the quarter ended March 31, 2018:
- Net sales increased 6% to $4.3 million for the third quarter of fiscal 2018, as compared to $4.0 million for the comparable prior-year period. The increase was driven by a $298,000 (75%) increase in the sales of Avana products and $139,000 (21%) increase in Jaxx products and was partially offset by a $131,000 decrease in sales of purchased products.
- Total gross profit decreased 5% to $1.28 million, as compared to $1.35 million for the comparable prior-year period. The decrease was due to higher labor and raw material costs.
- Income from operations increased to $251,000 from $240,000 reported in the prior year third quarter.
- EBITDA, as adjusted, for the third quarter was $301,000, as compared to $302,000 in the third quarter of fiscal 2017.
Operating highlights for the nine months ended March 31, 2018:
- Net sales decreased 6% to $12.5 million for the nine months ended March 31, 2018, as compared to $13.3 million for the comparable prior-year period. This decrease was due to a $1.9 million decrease in the sales of Tenga products and was partially offset by a $1.2 million increase in sales of the Company’s Jaxx and Avana products. Jaxx sales increased 26% from the prior year to $2.7 million and Avana sales increased 56% from the prior year first half to $1.7 million.
- Total gross profit decreased 7% to $3.6 million, as compared to $3.9 million for the comparable prior-year period.
- Income from operations was $473,000 during the nine months ended March 31, 2018, as compared to $737,000 for the comparable prior-year period.
- EBITDA, as adjusted, for the first three quarters of fiscal 2018 declined to $642,000, as compared to $914,000 in the comparable period of fiscal 2017.
Louis Friedman, Chairman and Chief Executive Officer, commented, “We continue to be pleased with the rapid growth in sales of our Jaxx and Avana product lines. Our high-quality products are resonating with consumers and the products reviews are extremely positive. During the first nine months of fiscal 2018, we manufactured and shipped over 20,000 Jaxx products and almost 21,000 Avana products. We expect to see continued growth from both of these brands during the remainder of calendar 2018 and into 2019. For Liberator products, we’re expanding our international distribution into South Korea, Japan, India, China and Russia with new customers in all of these countries.”
| LUVU BRANDS, INC. AND SUBSIDIARIES | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| March 31, | |||||||
| 2018 | June 30, | ||||||
| (unaudited) | 2017 | ||||||
| Assets: | (in thousands, except share data) | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 380 | $ | 742 | |||
| Accounts receivable, net | 620 | 631 | |||||
| Inventories, net | 1,524 | 1,545 | |||||
| Prepaid expenses | 48 | 80 | |||||
| Total current assets | 2,572 | 2,998 | |||||
| Equipment and leasehold improvements, net | 810 | 869 | |||||
| Other assets | 12 | 9 | |||||
| Total assets | $ | 3,394 | $ | 3,876 | |||
| Liabilities and stockholders’ deficit: | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,172 | $ | 2,177 | |||
| Current debt | 2,066 | 2,115 | |||||
| Other accrued liabilities | 419 | 535 | |||||
| Total current liabilities | 4,657 | 4,827 | |||||
| Noncurrent liabilities: | |||||||
| Long-term debt | 721 | 1,094 | |||||
| Deferred rent payable | 111 | 147 | |||||
| Total noncurrent liabilities | 832 | 1,241 | |||||
| Total liabilities | 5,489 | 6,068 | |||||
| Commitments and contingencies (See Note 15) | — | — | |||||
| Stockholders’ deficit: | |||||||
| Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding | — | — | |||||
| Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 at March 31, 2018 and June 30, 2017 | — | — | |||||
| Common stock, $0.01 par value, 175,000,000 shares authorized, 73,452,596 shares issued and outstanding at March 31, 2018 and June 30, 2017 | 735 | 735 | |||||
| Additional paid-in capital | 6,097 | 6,079 | |||||
| Accumulated deficit | (8,927 | ) | (9,006 | ) | |||
| Total stockholders’ deficit | (2,095 | ) | (2,192 | ) | |||
| Total liabilities and stockholders’ deficit | $ | 3,394 | $ | 3,876 | |||
| LUVU BRANDS, INC. AND SUBSIDIARIES | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (in thousands, except share data) | ||||||||||||||||
| Net Sales | $ | 4,266 | $ | 4,026 | $ | 12,524 | $ | 13,265 | ||||||||
| Cost of goods sold | 2,989 | 2,678 | 8,910 | 9,399 | ||||||||||||
| Gross profit | 1,277 | 1,348 | 3,614 | 3,866 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Advertising and promotion | 94 | 95 | 314 | 300 | ||||||||||||
| Other selling and marketing | 292 | 311 | 850 | 876 | ||||||||||||
| General and administrative | 595 | 648 | 1,826 | 1,796 | ||||||||||||
| Depreciation and amortization | 45 | 54 | 151 | 157 | ||||||||||||
| Total operating expenses | 1,026 | 1,108 | 3,141 | 3,129 | ||||||||||||
| Income from operations | 251 | 240 | 473 | 737 | ||||||||||||
| Other Income (Expense): | ||||||||||||||||
| Loss on disposal of assets | - | - | - | (1 | ) | |||||||||||
| Interest expense and financing costs | (128 | ) | (129 | ) | (394 | ) | (402 | ) | ||||||||
| Total Other (Expense) | (128 | ) | (129 | ) | (394 | ) | (403 | ) | ||||||||
| Income before income taxes | 123 | 111 | 79 | 334 | ||||||||||||
| Provision for income taxes | - | - | - | |||||||||||||
| Net income | $ | 123 | $ | 111 | $ | 79 | $ | 334 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Shares used in computing net income per share: | ||||||||||||||||
| Basic | 73,452,596 | 73,452,596 | 73,452,596 | 72,459,895 | ||||||||||||
| Diluted | 74,636,822 | 73,907,315 | 74,666,320 | 72,814,459 | ||||||||||||
Use of Non-GAAP Measure – *Adjusted EBITDA
Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
As used herein, Adjusted EBITDA income represents net income before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.
Reconciliation of net income to Adjusted EBITDA income for the nine months ended March 31, 2018 and 2017:
| (Dollars in thousands) | Nine months ended March 31, | |||||||
| 2018 | 2017 | |||||||
| Net income | $ | 79 | $ | 334 | ||||
| Plus interest expense, net | 394 | 402 | ||||||
| Plus depreciation and amortization expense | 151 | 157 | ||||||
| Plus stock-based compensation | 18 | 21 | ||||||
| Adjusted EBITDA income | $ | 642 | $ | 914 | ||||
Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability. The Company assumes no obligation to update the cautionary information in this release.
About Luvu Brands
Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company’s websites, online mass / drug merchants and specialty retail stores worldwide. Brands include: Liberator ® , a brand category of iconic products for enhancing sensuality and intimacy; Avana ® , inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery and chronic pain; and Jaxx ® , a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia in a 140,000 square foot vertically-integrated manufacturing facility that employs over 160 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. The Company's brand sites include: www.liberator.com , www.jaxxliving.com , www.avanacomfort.com plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com .
Company Contact: Luvu Brands, Inc. Ronald Scott Chief Financial Officer 770-246-6426 ron@LuvuBrands.com
