XCel Brands, Inc. Q2 FY2025 earnings call

• Recently closed a combined public equity offering and management-led private placement equity transaction for ~$2.6 million, strengthening the balance sheet and providing working capital for new brand launches.
• Worked with United Trademark Group on strategic alliance and financing, aiming to accelerate formation of creator influencer brands and reach 100 million social media followers.
• Announced new creator influencer brands: Cesar Millan, Gemma Stafford, Jenny Martinez, and Coco Rocha in Q2 2025, diversifying the brand portfolio.
• C. Wonder and Christie Brinkley are fast-growing at HSN but faced disruption in Q2 due to wholesale licensee change.
• Social media reach grew from 5 million followers at the start of the year to 43 million. Longaberger brand to launch on QVC this fall.
• Implemented business transformation and cost reduction actions, reducing direct operating costs. Discontinued equity method accounting for IM Topco.
• Closed public equity offering and private placement post-quarter end, increasing liquidity for new brand launches in 2025 and 2026.

Total revenues for the second quarter of 2025 were $1.3 million, down from $3 million in the second quarter of the prior year. For the first 6 months of 2025, revenues were $2.7 million compared to $5.1 million in the prior year's first 6 months. Direct operating costs were $1.9 million in the current quarter, down 39% from the prior year quarter, and $4.2 million for the first 6 months, a decrease of 48% from the prior year. Depreciation and amortization expenses declined significantly year-over-year. Losses related to equity method investments decreased year-over-year due to discontinuing equity method accounting for IM Topco. Interest and finance expenses were $2.3 million in the current quarter and $2.9 million for the first 6 months, driven by a loss on early debt extinguishment and higher average debt balances. On a non-GAAP basis, the current quarter had a loss of approximately $0.9 million, and the first 6 months had a net loss of approximately $2.2 million. As of June 30, 2025, stockholders' equity was ~$22 million, unrestricted cash was ~$1 million, and long-term debt was $12.3 million, with $0.5 million due in the next 12 months. Subsequent to quarter end, a public equity offering and private placement raised ~$2.6 million, enhancing liquidity.

• Expected to be on target for forecasts. Cesar Millan, Gemma Stafford, and Jenny Martinez brands launched earlier than expected. Gemma and Jenny launched food products domestically, accelerating their launch. Cesar Millan to launch on QVC for holiday. Third and fourth quarters expected to be in line with forecasts.
• Launching new brands like Cesar, Gemma, and Jenny earlier than initially planned, with Gemma and Jenny's food products allowing earlier launch due to domestic production.

• Dynamic macroeconomic environment could cause actual results to differ materially from expectations.
• Non-GAAP financial measures should not be considered in isolation from GAAP measures.
• Risks related to equity method investments, including changes in ownership and associated losses.
• Interest and finance expenses risks, such as loss on early debt extinguishment and higher average debt balances.
• Risks associated with brand launches, market acceptance, and retailer/customer feedback affecting brand performance.

Q: Could you provide any updates on Halston?

A: We met with the new President at Halston over at G-III last week. They gave their plans going into '26, making substantial investments in people and the brand. We're waiting for a report and forecast from them, but left the meeting feeling they have it on track after adjusting based on feedback.

Q: Could you reference which brands you were mentioning there that are going to be impacting '25?

A: The brands are Cesar Millan, Gemma Stafford and Jenny Martinez. Gemma and Jenny launched food first due to domestic production, Cesar Millan to launch on QVC in the fall.

Q: As you're looking to build that 100 million social media followers, are there any product categories or sector of influencers or stars that's as attractive to the company?

A: We have a strong pipeline of influencers in the fashion sector. Working on one for the Longaberger brand, looking for someone with good following and credibility in the home space for Longaberger's launch on QVC this year.