XCel Brands, Inc. Q3 FY2024 earnings call

• Progressed on Project Fundamentals plan to transition to core working capital licensing business.
• C. Wonder brand performing well on HSN despite hurricane disruptions, with retail sales up 60% over last year.
• Tower Hill by Christie Brinkley launched on HSN, on track to exceed launch plan by 90%.
• Judith Ripka royalties continuing to increase with 98% Q3 sequential growth and nearly 500% YOY growth.
• Halston apparel launched, with footwear and handbags to ship in Q4 2024 for spring 2025.
• Orme Soft's video and social commerce marketplace doing well with 30k users and 25 brands onboarded, expected to transform video and social commerce.
• Expect total social media following for brand portfolio to exceed 50 million followers in 2025.

Total revenue for Q3 2024 was $1.9 million, a decrease of ~$0.7 million from Q3 2023. Net licensing revenues declined by $0.9 million due to sale of Lori Goldstein brand, but was partly offset by increased licensing from C. Wonder and Tower Hill by Christie Brinkley on HSN. During the quarter, ~$0.4 million revenue from sale of remaining Longaberger inventory. Year-to-date, total revenue decreased by ~$8.4 million due to exit from wholesale businesses. Licensing revenue year-to-date declined by ~$0.5 million. C. Wonder on HSN had retail sales up 60% over last year despite hurricanes. Tower Hill by Christie Brinkley on track to exceed launch plan by 90%. Judith Ripka royalties had 98% growth Q3 over Q2 and almost 500% YOY. Halston apparel launched, footwear and handbags to ship in Q4. Orme Soft's video and social commerce marketplace has 30k users and 25 brands.

• Management anticipates improved EBITDA in Q4 2024 and continued improvement going forward.
• Q4 revenue depends on shipments by year-end; if shipments in last two weeks of December ship this year, should hold.
• Anticipates EBITDA in range around 7 million for 2025, driven by G-III's performance and new transactions if signed early and generating revenue.

• Macro environment uncertainties could cause actual results to differ from expectations.
• Hurricanes impacted HSN business in Q3, affecting studio location and fulfillment facility.
• Inventory levels at retailers could impact interactive television business, potentially affecting Halston though G-III's inventory with Halston not expected to have material impact at this time.
• Challenges with Isaac Mizrahi's airtime, leading to conservative asset valuation and non-cash charge in the quarter.

Q: Give color on Halston's performance and prospects going into balance of 2024 and Q1 2025 A: Product is well-received, no sales reports on shoes and bags yet, but they're comfortable with start and expectations for next year in sportswear, outerwear, handbags, and footwear Q: Background on Isaac Mizrahi situation and interest going forward A: Conservative approach on asset value due to Isaac's reduced airtime, introducing someone to pick up airtime in studio starting January, adjustment made with non-cash charge in quarter Q: Q4 adjusted EBITDA outlook A: Expect improvement from Q3, but not sure if will be positive; still some impact from hurricanes in October, but improvement anticipated Q: Quantify revenue impact from hurricanes A: Hurricane impact was ~$450-500k, secured more airtime, hopeful for normal returns and swing to profitability in Q4 Q: Timeline of additional brand launches A: New home category brand launching in March 2025, several others in home and kitchen, apparel, and home hard goods in pipeline, two under LOI and working on prototypes for March launch Q: Q4 revenue expectations A: If shipments in last two weeks of December ship this year, should hold, but won't know until shipments get out by year end Q: Impact of retailer inventory levels on business A: Over-inventoried retailers may mark down and push sales, could impact interactive television business, but generally not seen as material for Halston at this time Q: Trajectory of Orme brand launches next year A: Orme is selective about luxury aspirational brands with higher average order values, goal to keep average order values above 100, with 30 brands onboarded and potential to add couple hundred more Q: Operating cost reduction opportunities A: Looking to cut another $500-750k in operating expenses going into Q1 2025 Q: Need for additional capital raise A: Depends on pipeline transactions; one transaction may require capital (purchase of existing revenue stream and brand), others are JVs with startup costs, all accretive if signed Q: Comfort with EBITDA number for 2025 A: Comfortable with range around 7 million, driven by G-III's performance and new transactions, Halston contract alone is worth 5x market cap