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8-K - CURRENT REPORT - Luvu Brands, Inc. | luvu_8k.htm |
Exhibit 99.1
Luvu Brands Reports Strong Fiscal 2021 Third Quarter and Nine Month
Results
Reports Record Third Quarter Net Sales of $6.2 million; Record
Year-To-Date Net Income of $2.3 million
Atlanta, Georgia, May 17, 2021
– Luvu Brands, Inc. (OTCQB: LUVU), a designer, manufacturer
and marketer of a portfolio of consumer lifestyle brands, today
reported fiscal 2021 third quarter and first nine month results.
Fiscal Third Quarter 2021 Highlights
Three months ended March 31, 2021 as compared to the three months
ended March 31, 2020
●
Net
sales increased 53% to a record $6.2 million from $4.0
million.
●
Total
gross profit of $1.7 million, up 63% from $1.1 million in the prior
year.
●
Gross
profit as a percentage of net sales at 28%; up from 26% in
2020.
●
Operating
expenses were up 11% to $1.2 million from $1.1 million in the prior
year.
●
Income
from operations was a record $563,000 compared to $1,000 in
2020.
●
Net
income of $469,000, or $0.01 per share, compared to a net loss of
$(148,000), or $(0.00) per share, in the prior year.
First Nine Months of Fiscal 2021 Highlights
Nine months ended March 31, 2021 as compared to the nine months
ended March 31, 2020
●
Net
sales increased 34% to a record $17.3 million from $12.9
million.
●
Total
gross profit of $4.8 million, up 29% from $3.7 million in the prior
year.
●
Gross
profit as a percentage of net sales at 28%; down from 29% in
2020.
●
Operating
expenses were $3.3 million, up 4.6% from the prior
year.
●
Income
from operations was a record $1,456,000, up 175% from $529,000 in
2020.
●
Net
income of $2,263,000, or $0.03 per share, compared to a net income
of $64,000, or $0.00 per share, in the prior year.
●
Adjusted
EBITDA was a record $2.7 million for the first nine months compared
to $661,000 in the prior year first nine months.
Louis Friedman, Chairman and Chief Executive Officer, commented,
“We continued to deliver strong financial results for the
third quarter and first nine months of fiscal 2021, setting new
records for net sales, gross margin and net income. Demand for
Liberator and Jaxx products increased 69% and 75%, respectively,
from the prior year third quarter and continues to be strong during
the current fourth quarter. Since September, 2020 we have purchased
almost $1 million of new production equipment which we expect will
increase our production capacity across all product
lines.”
Fiscal Third Quarter 2021 Results
Net sales increased 53% to $6.2 million, compared to $4.0 million
in the same year-ago quarter. Sales of Liberator products increased
69% to $2.8 million from $1.7 million in the prior year. Jaxx
product sales totaled $1.5 million, up 75% from $.8 million in the
third quarter of the prior fiscal year. Avana products increased 2%
to $1.0 million from $1.0 million in the prior year.
Gross profit for the third quarter totaled $1.7 million, compared
to $1.1 million in the prior year third quarter. Despite labor and
raw material cost increases during the third quarter; gross profit
as a percentage of net sales increased to 28.2% from 26.5% in the
prior year third quarter.
Operating expenses were approximately 19% of net sales, or
approximately $1,183,000, compared to 26% of net sales, or
approximately $1,067,000, for the same period in the prior
year.
Income
from operations was $563,000 compared to $1,000 in the prior
year.
Net income for the quarter was $469,000, or $0.01 per share,
compared to a net loss of $148,000, or $(0.00) per share in the
prior year third quarter.
Secured and unsecured debt decreased from $3.5 million on June 30,
2020 to $2.9 million on March 31, 2021 and the working capital
deficit improved from $1.4 million at June 30, 2020 to $0.2 million
at March 31, 2021.
Conference Call
Management will host a conference call at 12:00 p.m. EDT (11:00
a.m. CDT; 9:00 a.m. PDT) on Tuesday, May 18, 2021 to review the
results for the third quarter and nine months of fiscal 2021. To
listen and participate in the call, please register on this
weblink
https://www.webcaster4.com/Webcast/Page/2527/41359.
After the formal presentation, there will be a Q&A session.
Shareholders and other interested parties may ask questions through
either the weblink or by calling 877-407-0778 (international
201-689-8565). The replay of the call will remain available on the
Company’s investor relations website, www.luvubrands.com,
until August 18, 2021.
Forward-Looking Statements
Certain matters discussed in this press release may be
forward-looking statements. Such forward-looking
statements can be identified by the use of words such as
''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,''
''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,''
and ''proposes.'' These forward-looking statements are not
guarantees of future performance and are subject to risks,
uncertainties, and other factors, some of which are beyond our
control and difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the
forward-looking statements. You are urged to carefully review and
consider any cautionary statements and other disclosures in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2020
as filed with the Securities and Exchange Commission (the "SEC") on
October 1, 2020 and our other filings with the SEC. All
forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements, many of which are
generally outside the control of Luvu Brands, Inc. and are
difficult to predict. Luvu Brands, Inc. does not undertake any duty
to update any forward-looking statements except as may be required
by law. The information which appears on our websites and our
social media platforms is not part of this press
release.
Use of Non-GAAP Financial Measures
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. As used herein, Adjusted EBITDA represents net income
before interest expense, depreciation and amortization expense, and
stock-based compensation expense. Management believes that this
non-GAAP measure provides useful information about the Company's
operating results. Adjusted EBITDA has not been prepared in
accordance with GAAP. This non-GAAP financial measure should not be
considered as alternative to, or more meaningful than, net income
(loss) as indicators of the Company’s operating performance.
Further, this non-GAAP financial measure, as presented by the
Company, may not be comparable to similarly titled measures
reported by other companies. The Company has attached to this press
release a reconciliation of this non-GAAP financial measure to its
most directly comparable GAAP financial measure.
About Luvu Brands
Luvu Brands, Inc. designs, manufactures and markets a portfolio of
consumer lifestyle brands through the Company’s websites,
online mass merchants and specialty retail stores worldwide. Brands
include: Liberator®,
a brand category of iconic products for enhancing sexual
performance; 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 polyurethane foam and repurposed polyurethane foam trim.
Headquartered in Atlanta, Georgia, the Company occupies a 140,000
square foot vertically-integrated manufacturing facility and
employs over 200 people. 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
Fiscal 2021 Third Quarter and First Nine Months
Results
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
|
Three Months
Ended
March
31,
|
Nine Months
Ended
March
31,
|
||
|
2021
|
2020
|
2021
|
2020
|
|
(in thousands,
except share data)
|
|||
Net
Sales
|
$6,181
|
$4,032
|
$17,262
|
$12,906
|
Cost of goods
sold
|
4,435
|
2,964
|
12,462
|
9,182
|
Gross
profit
|
1,746
|
1,068
|
4,800
|
3,724
|
Operating
expenses
|
|
|
|
|
Advertising and
promotion
|
180
|
117
|
369
|
313
|
Other selling and
marketing
|
260
|
324
|
797
|
957
|
General and
administrative
|
689
|
588
|
2,021
|
1,808
|
Depreciation and
amortization
|
54
|
38
|
157
|
117
|
Total operating
expenses
|
1,183
|
1,067
|
3,344
|
3,195
|
Income
from operations
|
563
|
1
|
1,456
|
529
|
Other Income
(Expense):
|
|
|
|
|
Gain on forgiveness
of PPP loan
|
—
|
—
|
1,096
|
—
|
Interest expense
and financing costs
|
(94)
|
(149)
|
(289)
|
(465)
|
Total Other Income
(Expense)
|
(94)
|
(149)
|
807
|
(465)
|
Income before
income taxes
|
469
|
(148)
|
2,263
|
64
|
Provision for
income taxes
|
—
|
—
|
—
|
—
|
Net
income (loss)
|
$469
|
$(148)
|
$2,263
|
$64
|
Net
income (loss) per share:
|
|
|
|
|
Basic
|
$0.01
|
$(0.00)
|
$0.03
|
$0.00
|
Diluted
|
$0.01
|
$(0.00)
|
$0.03
|
$0.00
|
|
|
|
|
|
Shares used in
computing net income per share
|
|
|
|
|
Basic
|
75,037,890
|
73,452,596
|
74,050,524
|
73,452,596
|
Diluted
|
76,286,902
|
73,452,596
|
75,264,336
|
74,395,294
|
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
|
March
31,
|
|
|
2021
|
June
30,
|
|
(unaudited)
|
2020
|
Assets:
|
(in thousands,
except share data)
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$1,270
|
$1,152
|
Accounts
receivable, net
|
1,158
|
1,135
|
Inventories,
net
|
2,920
|
1,985
|
Prepaid
expenses
|
91
|
55
|
Total current
assets
|
5,439
|
4,327
|
|
|
|
Equipment, property
and leasehold improvements, net
|
1,739
|
938
|
Finance lease
assets
|
29
|
—
|
Operating lease
assets
|
2,622
|
165
|
Other
assets
|
85
|
17
|
Total
assets
|
$9,914
|
$5,447
|
|
|
|
Liabilities
and stockholders’ equity (deficit):
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$2,647
|
$2,435
|
Current
debt
|
2,204
|
2,007
|
Current portion of
PPP loan
|
—
|
482
|
Other accrued
liabilities
|
555
|
623
|
Operating lease
liability
|
229
|
199
|
Total current
liabilities
|
5,635
|
5,746
|
|
|
|
Noncurrent
liabilities:
|
|
|
Long-term
debt
|
754
|
361
|
PPP
loan
|
—
|
614
|
Long-term operating
lease liability
|
2,505
|
—
|
Total noncurrent
liabilities
|
3,259
|
975
|
Total
liabilities
|
8,894
|
6,721
|
Commitments
and contingencies (See Note 16)
|
—
|
—
|
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 at March 31, 2021 and June 30,
2020
|
—
|
—
|
Common stock, $0.01
par value, 175,000,000 shares authorized, 75,037,890 and 73,452,596
shares issued and outstanding at March 31, 2021 and June 30,
2020, respectively
|
750
|
735
|
Additional paid-in
capital
|
6,163
|
6,147
|
Accumulated
deficit
|
(5,893)
|
(8,156)
|
Total
stockholders’ equity (deficit)
|
1,020
|
(1,274)
|
Total
liabilities and stockholders’ equity (deficit)
|
$9,914
|
$5,447
|
SUPPLEMENTAL
FINANCIAL INFORMATION
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES
Reconciliation of
net income to Adjusted EBITDA for the nine months ended March 31,
2021 and 2020:
(Dollars in thousands)
|
Nine
months ended
March
31,
|
|
|
2021
|
2020
|
Net
income
|
$2,263
|
$64
|
Plus interest
expense, net
|
289
|
465
|
Plus depreciation
and amortization expense
|
157
|
117
|
Plus stock-based
compensation
|
12
|
15
|
Adjusted
EBITDA
|
$2,721
|
$661
|