Luvu Brands Reports Fiscal First Quarter 2021 Results

Reports Record First Quarter Net Sales of $5.4 million; Record First Quarter Net Income of $329,000

ATLANTA, GA / ACCESSWIRE / November 12, 2020 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands and PPE, reported financial results for its fiscal first quarter ended September 30, 2020.

Fiscal First Quarter 2021 Highlights

Three months ended September 30, 2020 as compared to the three month ended September 30, 2019

Net sales increased 31% to $5.4 million from $4.1 million.
Total gross profit of $1.5 million, up $351,000 from the prior year.
Gross profit as a percentage of net sales unchanged at 28%.
Operating expenses were $1,052,000, an increase of 3%, or approximately $28,000, from the prior year.
Net income of $329,000, or $0.00 per share, compared to a net loss of ($45,000), or ($0.00) per share in the prior year.
Adjusted EBITDA was $494,000 for the quarter compared to $158,000 in the prior year quarter.

Louis Friedman, Chairman and Chief Executive Officer, commented, "We delivered strong financial results for the first quarter. Despite the COVID pandemic, demand for all of our products continues to be strong and we posted significant sales increases across all three of our major brands during the first quarter."

Fiscal First Quarter 2021 Results

Net sales increased 31% to $5.4 million, compared to $4.1 million in the same year-ago quarter. Sales of Liberator products increased 33% to $2.0 million from $1.5 million in the prior year. Jaxx product sales totaled $1.7 million, up 51% from $1.1 million in the first quarter of the prior fiscal year. Avana products increased 14% to $1.0 million from $0.8 million in the prior year. 

Gross profit for the first quarter totaled $1.5 million, compared to $1.1 million in the prior year first quarter. Despite labor and raw material cost increase, gross profit as a percentage of net sales remained constant with the prior year first quarter at 28%.

Operating expenses were approximately 20% of net sales, or approximately $1,052,000, compared to 25% of net sales, or approximately $1,024,000, for the same period in the prior year. Of the $28,000 increase, approximately $78,000 was due to higher general and administrative expenses (higher computer software expense, higher salaries and healthcare costs) and $12,000 in higher depreciation expense, offset in part by $62,000 in lower advertising and other selling and marketing expenses (lower salaries, travel and trade show costs.)

Net income for the quarter was $329,000, or $0.00 per share, compared to a net loss of ($45,000), or ($0.00) per share in the prior year first quarter.

Adjusted EBITDA for the three months ended September 30, 2020 was $494,000 compared to $158,000 in the prior year period.

Conference Call

Management will host a conference call at 11:00 a.m. EDT (10:00 a.m. CDT; 8:00 a.m. PDT) on November 12, 2020 to review the results for the first quarter. To listen and participate in the call, please register on this weblink https://www.webcaster4.com/Webcast/Page/2527/38721 . After the formal presentation, there will be a Q&A session. Shareholders and other interested parties may ask questions through either the weblink or by calling 877-407-0778. The replay of the call will remain available on the Company's investor relations website, www.luvubrands.com, until February 12, 2021.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements. Such forward-looking statements can be identified by the use of words such as ''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and ''proposes.'' These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 as filed with the Securities and Exchange Commission (the "SEC") on October 1, 2020 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Luvu Brands, Inc. and are difficult to predict. Luvu Brands, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms is not part of this press release.

Use of Non-GAAP Financial Measures

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 and Non-GAAP Operating Margin. As used herein, Adjusted EBITDA represents net income before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense, and Non-GAAP Operating Margin means Adjusted EBITDA divided by net sales. Management believes that these non-GAAP measures provide useful information about the Company's operating results. Neither Adjusted EBITDA nor Non-GAAP Operating Margin have been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, gross profit and net income (loss) as indicators of the Company's operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this press release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

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®, medical and personal PPE products and 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. Headquartered in Atlanta, Georgia, the Company occupies a 140,000 square foot vertically-integrated manufacturing facility and employs over 200 people. 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.

Company Contact:

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

Fiscal First Quarter Fiscal 2021 Summary Financial Tables

 
Three Months Ended
 

 
9/30/2020
 
 
9/30/2019
 

 
(Unaudited)
 
 
(Unaudited)
 

Net Sales

 
$ 
5,367
 
 
$ 
4,094
 

Cost of goods sold

 
 
3,879
 
 
 
2,957
 

Gross profit

 
 
1,488
 
 
 
1,137
 

Operating expenses:

Advertising and promotion

 
 
69
 
 
 
80
 

Other selling and marketing

 
 
267
 
 
 
318
 

General and administrative

 
 
664
 
 
 
586
 

Depreciation

 
 
52
 
 
 
40
 

Total operating expenses

 
 
1,052
 
 
 
1,024
 

Operating income (loss)

 
 
436
 
 
 
113
 

Total interest and other expense

 
 
(107
)
 
 
(158
)

Income (loss) from operations before income taxes

 
 
329
 
 
 
(45
)

Provision for income taxes

 
 
–
 
 
 
–
 

Net income (loss)

 
$ 
329
 
 
$ 
(45
)

Net income (loss) per share:

Basic

 
$ 
0.00
 
 
$ 
(0.00
)

Diluted

 
$ 
0.00
 
 
$ 
(0.00
)

Shares used in calculation of net income (loss) per share:

Basic

 
 
73,452,596
 
 
 
73,452,596
 

Diluted

 
 
76,034,134
 
 
 
73,452,596
 

Condensed Consolidated Balance Sheets

Dollars in thousands

 
9/30/2020
 
 
6/30/2020
 

ASSETS

 
(unaudited)
 
 
 
 

Current assets:

Cash and cash equivalents

 
$ 
932
 
 
$ 
1,152
 

Receivables, net

 
 
1,039
 
 
 
1,135
 

Inventories, net

 
 
2,186
 
 
 
1,985
 

Prepaid expenses

 
 
90
 
 
 
55
 

Total current assets

 
 
4,247
 
 
 
4,327
 

Equipment and leasehold improvements, net

 
 
914
 
 
 
938
 

Finance lease assets

 
 
34
 
 
 
–
 

Operating lease assets

 
 
85
 
 
 
165
 

Other assets

 
 
17
 
 
 
17
 

Total assets

 
$ 
5,297
 
 
 
5,447
 

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable

 
$ 
2,422
 
 
$ 
2,435
 

Current debt

 
 
1,814
 
 
 
2,007
 

Current portion of PPP loan

 
 
666
 
 
 
482
 

Other accrued liabilities

 
 
538
 
 
 
623
 

Operating lease liability

 
 
102
 
 
 
199
 

Total current liabilities

 
 
5,542
 
 
 
5,746
 

Noncurrent liabilities:

Long-term debt

 
 
264
 
 
 
361
 

PPP loan

 
 
430
 
 
 
614
 

Total noncurrent liabilities

 
 
694
 
 
 
975
 

Total liabilities

 
 
6,236
 
 
 
6,721
 

Stockholders' deficit:

Common stock

 
 
735
 
 
 
735
 

Additional paid-in capital

 
 
6,153
 
 
 
6,147
 

Accumulated deficit

 
 
(7,827
)
 
 
(8,156
)

Total stockholders' deficit

 
 
(939
)
 
 
(1,274
)

Total liabilities and stockholders' deficit

 
$ 
5,297
 
 
$ 
5,447
 

 
Three Months Ended
 

 
September 30, 2020
 
 
September 30, 2019
 

Net income (loss) – GAAP

 
$ 
329
 
 
$ 
(45
)

Plus interest expense

 
 
107
 
 
 
158
 

Plus depreciation and amortization expense

 
 
52
 
 
 
40
 

Plus stock-based compensation expense

 
 
6
 
 
 
5
 

Adjusted EBITDA – non-GAAP

 
$ 
494
 
 
$ 
158
 

Non-GAAP operating margin

 
 
9.2
%
 
 
3.4
%

SOURCE: Luvu Brands, Inc. 

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