Reports Third Quarter Net Sales of $4.3 million, Net Income of $103,000 and Adjusted EBITDA of $286,000
Atlanta, GA - (NewMediaWire) - May 14, 2019 - Luvu Brands, Inc., (OTCQB: LUVU), a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the third quarter ended March 31, 2019.
For the three months ended March 31, 2019, compared to the three months ended March 31, 2018:
- Net sales of $4.3 million, up 1% from the prior year. Sales of Avana branded products increased 24% from the prior year and for the first time exceeded Jaxx sales.
- Total gross profit of $1.3 million, essentially unchanged compared to the same period in fiscal 2018.
- Gross profit as a percentage of net sales increased to 29% from 28% in the second quarter. Gross profit as a percentage of sales decreased from 30% in the prior year third quarter due to higher labor and raw material costs.
- Operating expenses were $1,010,000 during the three months ended March 31, 2019 and decreased 2%, or $16,000, from the prior year third quarter.
- Net income was $103,000 during the current year third quarter compared to net income of $123,000 in the prior year third quarter.
- Adjusted EBITDA* for the current year third quarter was income of $286,000 compared to income of $301,000 in the prior year.
For the nine months ended March 31, 2019, compared to the nine months ended March 31, 2018:
- Net sales of $13 million, up 4% from the prior year. Sales of Avana branded products increased 45% from the prior year and totaled $2.4 million; Liberator sales are up 4% and Jaxx sales are up 5% from the prior year.
- Total gross profit of $3.6 million, down 2% compared to the prior year.
- Gross profit as a percentage of sales decreased from 29% in the prior year to 27% in the current year, due to higher labor and raw material costs.
- Operating expenses were $2,972,000 during the nine months ended March 31, 2019 and decreased 5%, or $169,000, from the prior year.
- Year to date net income was $164,000 compared to net income of $79,000 in the prior year.
- Adjusted EBITDA* for the current year was income of $728,000 compared to income of $642,000 in the prior year.
Louis Friedman, Chairman and Chief Executive Officer, commented, “During the third quarter, we achieved higher sales across two of our consumer brands; Avana sales were up 24% to $864,000 and Jaxx sales were up 4% to $844,000. And for the first time in the Company’s history, Avana product sales exceeded Jaxx product sales. Liberator sales were essentially flat at $2 million and products purchased for resale declined from $619,000 last year to $447,000 in the current year third quarter.”
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.
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 nine months ended March 31, 2019 and 2018:
|(Dollars in thousands)||Nine months ended March 31,|
|Plus interest expense, net||423||394|
|Plus depreciation and amortization expense||124||151|
|Plus stock-based compensation||17||18|
|Adjusted EBITDA income||$||728||$||642|
About Luvu Brands
Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company’s websites, online mass / drug merchants and specialty retail stores worldwide. Brands include: Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; 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 virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia in a 140,000 square foot vertically-integrated manufacturing facility that employs over 165 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. 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.
Luvu Brands, Inc.
Chief Financial Officer