SOURCE: Luvu Brands, Inc.

Luvu Brands, Inc.

February 14, 2017 15:01 ET

Luvu Brands Announces Fiscal 2017 Second Quarter Results

Company will host a business update conference call on Wednesday, February 15, 2017 at 11:15 AM EST

ATLANTA, GA--(Marketwired - Feb 14, 2017) -  Luvu Brands, Inc. (OTCQB: LUVU), a manufacturer and marketer of premium consumer brands in the categories of sexual wellness, comfort top-of-bed accessories and lifestyle fashion furniture, today reported financial results for the three and six months ended December 31, 2016. 

Operating highlights for the quarter ended December 31, 2016:

  • Net sales increased 5% to a record $5.1 million for the second quarter of fiscal 2017, as compared to $4.9 million for the comparable prior-year period.
  • Total gross profit increased 16.3% to $1.5 million, as compared to $1.3 million for the comparable prior-year period.
  • Net income increased 78% to $399,000 during the current year second quarter compared to net income of $224,000 in the prior-year.
  • EBITDA, as adjusted, for the second quarter improved by 40.2% to $579,000, as compared to $413,000 in fiscal 2016.

Operating highlights for the six months ended December 31, 2016:

  • Net sales increased 7.4% to a record $9.2 million for the six months ended December 31, 2016, as compared to $8.6 million for the comparable prior-year period.
  • Total gross profit increased 12.5% to $2.5 million, as compared to $2.2 million for the comparable prior-year period.
  • Net income increased to $222,000 during the six months ended December 31, 2016, as compared to $2,000 for the comparable prior-year period.
  • EBITDA, as adjusted, for the first half of fiscal 2017 improved by 69.5% to $612,000, as compared to $361,000 in the comparable period of fiscal 2016.

Louis Friedman, Chairman and Chief Executive Officer, commented, "We are pleased with the growth in net sales and gross profit during the three and six months ended December, 31, 2016. The production improvements that we made during calendar year 2016 are yielding positive results and the roll pack machine that was delivered in January of this year should allow us to continue that trend."

Mr. Friedman added, "During the second quarter, sales of our Jaxx and Avana products (combined) increased by 27%. Unit shipments of Avana products increased 80% during the second quarter to approximately 4,500 units. And, excluding a one-time order from a retailer last year for 5,000 Jaxx products, unit shipments of Jaxx products increased approximately 19% during the second quarter over last year second quarter. We expect to see continued strong growth for both of these brands during the remainder of calendar 2017."

Luvu Brand's executive management will host a business update conference call for investors, analysts and other interested parties on Wednesday, February 15, 2017 at 11:15 a.m. Eastern Standard Time. To listen to the call, please dial 412-902-6510 and ask to be joined into the Luvu Brands, Inc. call. The replay of the call will remain available on the Company's investor relations website, www.luvubrands.com, for approximately 60 days.

 
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 
  December 31,
2016
(unaudited)
  June 30,
 2016
 
  (in thousands, except share data)  
ASSETS            
Current assets:            
    Cash and cash equivalents $ 570   $ 545  
    Accounts receivable, net   1,119     794  
    Inventories, net   1,630     1,444  
    Prepaid expenses   74     96  
           
      Total current assets   3,393     2,879  
           
Equipment and leasehold improvements, net   950     870  
Other assets   9     3  
    3      
        Total assets $ 4,352   $ 3,752  
           
LIABILITIES AND STOCKHOLDERS' DEFICIT            
Current liabilities:            
    Accounts payable $ 2,560   $ 2,363  
    Current debt   2,360     2,397  
    Other accrued liabilities   515     477  
           
      Total current liabilities   5,435     5,237  
Long-term liabilities:            
    Long-term debt   936     853  
    Deferred rent payable   171     188  
      Total noncurrent liabilities   1,107     1,041  
           
        Total liabilities   6,542     6,278  
Commitments and contingencies (note 15)   -     -  
           
Stockholders' 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 $1,000,000 as of December 31, 2016 and June 30, 2016   -     -  
  Common stock of $0.01 par value, 175,000,000 shares authorized; 73,452,596 shares issued and outstanding at December 31, 2016 and 71,452,596 at June 30, 2016   735     715  
  Additional paid-in capital   6,063     5,968  
  Accumulated deficit   (8,988 )   (9,209 )
      Total stockholders' deficit   (2,190 )   (2,526 )
           
           
        Total liabilities and stockholders' deficit $ 4,352   $ 3,752  
           
           
           
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
 
  Three Months Ended
December 31,
Six Months Ended
December 31,
  2016 2015 2016 2015
  (in thousands, except share data)
Net Sales $ 5,134   $ 4,888   $ 9,239   $ 8,605  
Cost of goods sold   3,593     3,563     6,721     6,366  
    Gross profit   1,541     1,325     2,518     2,239  
Operating expenses                        
  Advertising and promotion   124     111     206     181  
  Other selling and marketing   281     307     566     649  
  General and administrative   563     504     1,147     1,067  
  Depreciation and amortization   52     63     103     122  
    Total operating expenses   1,020     985     2,022     2,019  
      Income from operations   521     340     496     220  
Other Income (Expense):                        
  Loss on disposal of assets   (1 )   -     (1 )   -  
  Interest income   -     -     -     -  
  Interest expense and financing costs   (121 )   (116 )   (273 )   (218 )
      Total Other (Expense)   (122 )   (116 )   (274 )   (218 )
        Income before income taxes   399     224     222     2  
          Provision for income taxes   -     -     -     -  
      Net income $ 399   $ 224   $ 222   $ 2  
Net income per share                        
  Basic $ 0.01   $ 0.00   $ 0.00   $ 0.00  
  Diluted $ 0.01   $ 0.00   $ 0.00   $ 0.00  
                         
Shares used in computing net income per share                        
  Basic   72,496,074     71,159,188     71,974,335     70,930,857  
  Diluted   72,922,615     75,459,188     72,352,420     75,230,857  
                         

Use of Non-GAAP Measure - *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 before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.

Reconciliation of net income to Adjusted EBITDA income for the six months ended December 31, 2016 and 2015:

   
(Dollars in thousands) Six months ended December 31,
  2016   2015
Net income $ 222   $ 2
  Less interest income   -     -
  Plus interest expense, net   273     218
  Plus depreciation and amortization expense   103     122
  Plus stock-based compensation   14     19
Adjusted EBITDA income $ 612   $ 361
           

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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.

About Luvu Brands

Luvu Brands, Inc. designs, manufactures, licenses, and markets a portfolio of premium consumer lifestyle brands including products for intimacy enhancement, fashion seating and furniture, and top-of-bed comfort products. The Company is headquartered in Atlanta, Georgia in a 140,000 square foot vertically-integrated manufacturing facility that employs over 160 people. Bringing manufacturing back to the USA, sustainable manufacturing practices, and decreasing the overall impact on the environment are core to the Company's operating principles. Luvu Brands promotes its products in a variety of consumer categories to retailers, wholesalers, and distributors in the United States and globally. The Company's brand sites include: liberator.com, jaxxliving.com, avanacomfort.com plus other global e-commerce sites. For more information about Luvu Brands, please visit luvubrands.com.

Contact Information

  • Company Contact:
    Luvu Brands, Inc.
    Ronald Scott
    Chief Financial Officer
    770-246-6426
    ron@LuvuBrands.com