Earnings release
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February 10, 2025 2:40 PM Luvu Brands Announces Second Quarter Fiscal 2025 Financial Results Reports Second Quarter Fiscal 2025 Net Sales of $7.2 million, Net Profit increased 566% from the prior year. ATLANTA, GA / ACCESS Newswire / February 10, 2025 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer, and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the second quarter of fiscal 2025 ending December 31, 2024. For the three months ended December 31, 2024, highlights include: Net revenue increased 6% to $7.2 million versus the prior year. Gross margin increased to 28% from 27% a year ago. Net income of $193,000 was in increase of 566% compared to the prior year. Adjusted EBITDA of $402,000 was an increase of 47% versus the prior year. For the six months ended December 31, 2024, highlights include: Net revenue was $12.94 million versus $12.91 million in the prior year. Gross margin increased to 27% compared to 26% from a year ago. Net loss was $17,000, down 82%, compared a net loss of $97,000 in the prior year. Adjusted EBITDA of $399,000 was in increase of 33% versus the prior year. Three Month Operating Results: Net revenue in Q2 FY2025 increased 6% to $7.2 million compared to $6.8 million in the prior year. The year-over-year increase is primarily attributable to stronger sales from e-commerce sites and dropship network. This increase was slightly offset by a decline in our wholesale accounts. Gross profit in Q2 FY2025 totaled $1.98 million compared to $1.82 million in the prior year, while the gross margin improved to 28% in Q2 FY2025 versus 27% a year ago. The increase in gross profit is primarily due to the increase in sales, lower freight, and reduced raw material costs compared to a year ago. Operating costs, excluding sales and marketing in Q2 FY2025, were $899,000, or 12.5% of net revenue, compared to $849,000, or 12.5% of net revenue in the prior year. The increase was primarily attributable to increases in personnel expenses and professional fees. Sales and marketing expenses in Q2 FY2025 totaled $684,000, or 9.5% of net revenue, compared to $711,000, or 10.5% of net revenue, in the prior year. This decrease resulted from eliminating unprofitable pay-per-click spending and reduced graphic design needs due to fewer new product launches compared to the prior year. Net income in Q2 FY2025 was $193,000 compared to net income of $29,000 in the prior year. Increased sales and cost control measures returned a significant improvement compared to the prior year. Adjusted EBITDA of $402,000 is a 47% increase from a profit of $273,000 a year ago. Six Month Operating Results: Net revenue in six months ending December 31, 2024 increased 0.2% to $12.94 million compared to $12.91 million in the prior year. The company continues to focus on returning to growth through the development of new and innovated products at good margin. Gross profit during the six months totaled $3.5 million compared to $3.4 million in the prior year. Improved sourcing of raw material vendors and tighter control on production costs continues to improve the overall gross margin. Operating costs, excluding sales and marketing during the six months were $1,780,000, or 13.8% of net revenue, compared to $1,668,000, or 12.9% of net revenue in the prior year. The increase was primarily attributable to increases in personnel expenses and equipment repairs. Sales and marketing expenses in the six months ending December 31, 2024 totaled $1,330,000, or 10.3% of net revenue, compared to $1,407,000, or 10.9% of net revenue, in the prior year. This decrease was the result from focusing on marketing channels that provide a higher return on spend. The company continues to seek out new marketing channels to reach more customers. Net loss for the six months was $17,000 compared to net loss of $96,000 in the prior year. Our strategy of continued improvement in our production and fulfilment processes coupled with innovative product launches significantly improved the bottom line compared to the prior year. Adjusted EBITDA of $399,000 is a 33% increase from a profit of $299,000 a year ago. Louis Friedman, CEO of Luvu Brands, commented, "Our second quarter results underscore the strength of our business model and the effectiveness of our strategic initiatives. We have successfully driven sales growth through our diverse product assortment, while reducing operating expenses through targeted marketing channels, reduced production costs, and tighter headcount management." The company's strong performance in the second quarter reflects its commitment to delivering value to its customers and shareholders. By leveraging its robust e-commerce platforms and implementing cost-effective measures, LUVU Brands continues to enhance its profitability and maintain a competitive edge in the market. Friedman also said "We continue to look at investments that will improve our e-commerce platforms 2025-02-10 14:54 News Release https://feeds.issuerdirect.com/news-release.html?newsid=6568120580902661 1/5
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performance, reduce the time it takes to bring products to market, and expand our distribution network. These core strategic objectives are essential to our growth plan and increasing shareholder value." Additional Information: Please see www.luvubrands.com for updated events, press, and new product releases. If you wish to speak to us directly, please email chris.knauf@luvubrands.com with your preferred day and time. Forward-Looking Statements Certain matters discussed in this press release may be forward-looking statements. 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. *Use of Non-GAAP Measures - 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 (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense. 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®, yoga, inclined sleep therapy, and orthopedic pillow products; 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 190 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.jaxxbeanbags.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. Chris Knauf Chief Financial Officer 770-246-6426 Chris.knauf@LuvuBrands.com Consolidated Statements of Operations Three Months Ended Six Months Ended December 31, December 31, 2024 2023 2024 2023 (in thousands, except share data) (in thousands, except share data) Net Sales $ 7,186 $ 6,786 $ 12,941 $ 12,912 Cost of goods sold (excluding depreciation expense presented below) 5,204 4,968 9,444 9,512 Gross profit 1,982 1,818 3,497 3,400 Operating expenses: Advertising and promotion 247 273 478 541 Other selling and marketing 437 439 851 866 General and administrative 899 849 1,783 1,668 Depreciation 108 103 217 203 Total operating expenses 1,691 1,664 3,329 3,278 Operating income 291 154 168 122 2025-02-10 14:54 News Release https://feeds.issuerdirect.com/news-release.html?newsid=6568120580902661 2/5
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Other income (expense): Interest expense and financing costs (98) (94) (185) (188) Total other income (expense) (98) (94) (185) (188) Income from operations before income taxes 193 60 (17) (66) Provision for income taxes - (31) - (31) Net Income/(loss) $ 193 $ 29 $ (17) $ (97) Net loss per share: Basic $ (0.00) $ (0.00) $ (0.00) $ (0.00) Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00) Shares used in calculation of net income per share: Basic 76,834,057 76,547,672 76,834,057 76,547,672 Diluted 76,834,057 76,547,672 76,834,057 76,547,672 Consolidated Balance Sheets December 31, 2024 June 30, (unaudited) 2024 Assets: (in thousands, except share data) Current assets: Cash and cash equivalents $ 1,349 $ 1,028 Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $10 on December 31, 2024 and $11 on June 30, 2024 1,611 1,061 Inventories, net of allowance for inventory reserve of $165 on December 31, 2024 and $214 on June 30, 2024 3,242 3,287 Other current assets 139 141 Total current assets 6,341 5,517 Equipment, property and leasehold improvements, net 1,648 1,870 Finance lease assets 104 103 Operating lease assets 1,297 1,545 Other assets 96 96 Total assets $ 9,486 $ 9,131 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 2,040 $ 1,502 Current debt 2,117 1,639 Other accrued liabilities 621 508 Operating lease liability 584 528 Total current liabilities 5,362 4,177 Noncurrent liabilities: Deferred Tax Liability 119 119 Long-term debt 340 854 Long-term operating lease liability 836 1,151 2025-02-10 14:54 News Release https://feeds.issuerdirect.com/news-release.html?newsid=6568120580902661 3/5
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Total noncurrent liabilities 1,295 2,124 Total liabilities 6,657 6,301 Commitments and contingencies (See Note 13) - - Stockholders' equity (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 as of December 31, 2024 and June 30, 2024 - - Common stock, $0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively 766 765 Additional paid-in capital 6,270 6,253 Accumulated deficit (4,206) (4,188) Total stockholders' equity 2,830 2,830 Total liabilities and stockholders' equity $ 9,486 $ 9,131 Consolidated Statement of Cash Flow Six Months Ended December 31, 2024 2023 (in thousands) OPERATING ACTIVITIES: Net income $ (18) $ (97) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 217 203 Stock-based compensation expense 18 5 Provision for bad debt - 1 Inventory reserves 49 - Loss on sale of fixed asset 7 - Change in operating assets and liabilities: Accounts receivable (550) (227) Inventory (4) 709 Prepaid expenses and other assets 2 (27) Accounts payable 541 (258) Accrued expenses and interest 112 63 Operating lease liability (260) (192) Amortization of operating lease asset 248 190 Net cash provided by operating activities 363 370 INVESTING ACTIVITIES: Investment in equipment, software and leasehold improvements (3) (39) Net cash used in investing activities (3) (39) FINANCING ACTIVITIES: Borrowing (repayment) under revolving line of credit 160 52 Repayment of unsecured line of credit (0) (6) Proceeds from unsecured notes payable - 200 Repayment of unsecured notes payable - (200) 2025-02-10 14:54 News Release https://feeds.issuerdirect.com/news-release.html?newsid=6568120580902661 4/5
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Payments on equipment notes (187) (197) Principal payments on capital leases (12) (8) Net cash used in financing activities (39) (159) Net increase (decrease) in cash and cash equivalents 321 172 Cash and cash equivalents at beginning of year 1,028 1,041 Cash and cash equivalents at end of year $ 1,349 $ 1,213 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 176 $ 191 SUPPLEMENTAL FINANCIAL INFORMATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Reconciliation of Net Income/(Loss) to Adjusted EBITDA income for the three and six months ended December 31, 2024 and 2023: Three Months Ended Six Months Ended December 31, December 31, 2024 2023 2024 2023 (in thousands) (in thousands) Net income (loss) $ 193 $ 29 $ (17) $ (97) Plus interest expense, financing costs and income tax 92 126 181 188 Plus depreciation and amortization expense 108 104 217 203 Plus stock-based compensation expense 9 14 18 5 Adjusted EBITDA $ 402 $ 273 $ 399 $ 299 SOURCE: Luvu Brands, Inc. View the original press release on ACCESS Newswire 2025-02-10 14:54 News Release https://feeds.issuerdirect.com/news-release.html?newsid=6568120580902661 5/5