Luvu Brands Announces Fiscal 2018 Third Quarter Results

Net sales of Jaxx and Avana products increased 36% during the first nine months to $4.4 million and over 40,000 units

ATLANTA, May 11, 2018 (GLOBE NEWSWIRE) -- Luvu Brands, Inc., (OTCQB:LUVU), a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands today reported financial results for the three and nine months ended March 31, 2018.  

Operating highlights for the quarter ended March 31, 2018:

Operating highlights for the nine months ended March 31, 2018:

Louis Friedman, Chairman and Chief Executive Officer, commented, “We continue to be pleased with the rapid growth in sales of our Jaxx and Avana product lines.  Our high-quality products are resonating with consumers and the products reviews are extremely positive. During the first nine months of fiscal 2018, we manufactured and shipped over 20,000 Jaxx products and almost 21,000 Avana products. We expect to see continued growth from both of these brands during the remainder of calendar 2018 and into 2019. For Liberator products, we’re expanding our international distribution into South Korea, Japan, India, China and Russia with new customers in all of these countries.”

 
 
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
     
  March 31,  
  2018 June 30,
  (unaudited) 2017
        
Assets:(in thousands, except share data)
Current assets:    
Cash and cash equivalents$380  $742 
Accounts receivable, net 620   631 
Inventories, net 1,524   1,545 
Prepaid expenses 48   80 
Total current assets 2,572   2,998 
        
Equipment and leasehold improvements, net 810   869 
Other assets 12   9 
Total assets $3,394  $3,876 
        
Liabilities and stockholders’ deficit:       
Current liabilities:       
Accounts payable $2,172  $2,177 
Current debt 2,066   2,115 
Other accrued liabilities 419   535 
Total current liabilities 4,657   4,827 
        
Noncurrent liabilities:       
Long-term debt 721   1,094 
Deferred rent payable 111   147 
Total noncurrent liabilities 832   1,241 
Total liabilities 5,489   6,068 
 
Commitments and contingencies (See 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 at March 31, 2018 and June 30, 2017		 —   —  
Common stock, $0.01 par value, 175,000,000 shares authorized,
73,452,596 shares issued and outstanding  at March 31, 2018 and
June 30, 2017		 735   735 
Additional paid-in capital 6,097   6,079 
Accumulated deficit (8,927)  (9,006)
Total stockholders’ deficit (2,095)  (2,192)
Total liabilities and stockholders’ deficit $3,394  $3,876 
        
        




 
LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
     
  Three Months Ended
March 31,		 Nine Months Ended
March 31,
  2018 2017 2018 2017
                 
  (in thousands, except share data)
Net Sales $4,266  $4,026  $12,524  $13,265 
Cost of goods sold  2,989   2,678   8,910   9,399 
Gross profit  1,277   1,348   3,614   3,866 
Operating expenses                
Advertising and promotion  94   95   314   300 
Other selling and marketing  292   311   850   876 
General and administrative  595   648   1,826   1,796 
Depreciation and amortization  45   54   151   157 
Total operating expenses  1,026   1,108   3,141   3,129 
Income from operations  251   240   473   737 
 
Other Income (Expense):		                
Loss on disposal of assets  -   -   -   (1)
Interest expense and financing costs  (128)  (129)  (394)  (402)
Total Other (Expense)  (128)  (129)  (394)  (403)
Income before income taxes  123   111   79   334 
Provision for income taxes  -   -        -  
Net income  $123  $111  $79  $334 
Net income per share:                
Basic $0.00  $0.00  $0.00  $0.00 
Diluted $0.00  $0.00  $0.00  $0.00 
                 
Shares used in computing net income
per share:		                
Basic  73,452,596   73,452,596   73,452,596   72,459,895 
Diluted  74,636,822   73,907,315   74,666,320   72,814,459 
                 

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, 2018 and 2017: 

   
 (Dollars in thousands) Nine months ended March 31,
  2018 2017
Net income $79  $334 
Plus interest expense, net  394   402 
Plus depreciation and amortization expense  151   157 
Plus stock-based compensation  18   21 
Adjusted EBITDA income $642  $914 
         

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 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 160 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.

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