XCel Brands, Inc. Q3 FY2025 earnings call

• Closed a $2,000,000 net equity offering in Q3, with management and insiders investing ~$2,000,000 in the past 18 months. $250,000 of cash proceeds used to pay down loan with First Eagle, balance for working capital.
• Working with UTG on new business opportunities including leveraging sourcing platform, retail distribution in China, and acquisitions.
• Change in video content business with shift to digital streaming and social commerce. New influencer brands launched with Cesar Millan, Gemma Stafford, Jenny Martinez, Coco Rocha; expect new Longaberger brand transaction.
• Social media reach 46M, on track to reach 100M in 2026. C Wonder and Christie Brinkley brands had disruptions but resolved; G-III adjusting Halston merchandising and design.
• Entered amendment to credit facility with modifications to loan covenant, etc.

Net licensing revenues for the third quarter were $1,100,000 compared to $1,500,000 in 2024. Year-to-date net licensing revenues were $3,800,000 versus $6,500,000 in the prior year period. Direct operating cost expenses for the third quarter were $2,200,000, down 23% from the prior year quarter. Year-to-date direct operating costs were $6,300,000, a decrease of 36% from the prior year comparable period. Interest and finance expense for the third quarter was $500,000 compared to $100,000 in the third quarter of 2024. Year-to-date interest and finance expense was $3,400,000 for the current nine months versus $400,000 in the prior year comparable period. Net loss for the third quarter was approximately $7,900,000 or minus $2.02 per share compared to a net loss of $9,200,000 or minus $3.92 per share in the prior year quarter. Non-GAAP net loss for the third quarter was approximately $1,300,000 or minus $0.34 per share. Adjusted EBITDA for the third quarter was approximately negative $650,000 compared to negative $1,000,000 in 2024. Year-to-date net loss was approximately $14,700,000 or minus $5.06 per share on a GAAP basis. Non-GAAP year-to-date net loss was $3,600,000 or minus $1.24 per share. Year-to-date EBITDA was negative $1,650,000, a 38% improvement from EBITDA of negative $2.7 million for the prior year comparable period.

• New brands launching in Q1 2026. Sequential revenue growth expected in 2026 as new brands come online. Potential for Halston brand growth in 2026. Analysts' reports suggest potential revenue based on royalty flows.

• Macro-economic environment risks affecting consumer spending. Tariff impacts on certain product categories. Halston business not materializing as hoped. Risks related to forward-looking statements and potential differences from actual results.

Q: Thomas Forte asked about Olin Lancaster's hire and how influencer brands are mitigating tariff impact.

A: Robert W. D'Loren said Olin Lancaster brings over 25 years of experience, and influencer brands like Gemma, Jenny, and Cesar are sourcing domestically to mitigate tariff risk, with products launching in Q1 2026.

Q: Michael Kupinski asked about C Wonder/Christie disruption resolution, G-III merchandising tweaks, and product roadmap.

A: Robert W. D'Loren said C Wonder/Christie disruptions were resolved by replacing vendors and addressing HSN move issues; G-III is tweaking merchandising, with adjustments for spring and fall; new brands start hitting market in Q1 2026.

Q: Walter Schenker asked about revenue ramp and 2026 revenue potential.

A: Robert W. D'Loren said sequential revenue growth expected as new brands come online, and potential for Halston brand growth in 2026.

Q: Howard Brous asked about 2026 revenue potential.

A: Robert W. D'Loren mentioned analysts' reports and royalty flows, indicating potential revenue based on brand launches and market metrics.