Business Context and Reporting Period
Company: Live Ventures Inc (LIVE)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended March 31, 2026
Business Overview: Live Ventures is a diversified holding company operating in four reportable segments: Retail-Entertainment (Vintage Stock), Retail-Flooring (Flooring Liquidators), Flooring Manufacturing (Marquis), and Steel Manufacturing (Precision Marshall, Kinetic, PMW, Central Steel). The company focuses on value-oriented acquisitions of domestic middle-market companies.
Key Financial Metrics
| Metric (in thousands) | 3 Months Ended Mar 31, 2026 | 6 Months Ended Mar 31, 2026 |
|---|---|---|
| Revenue | $102,899 | $211,443 |
| Gross Profit | $34,580 | $69,933 |
| Gross Margin | 33.6% | 33.1% |
| Operating Income (Loss) | $(2,009) | $1,442 |
| Net Income (Loss) | $(2,448) | $(2,512) |
| Adjusted EBITDA | $5,878 | $13,673 |
| Cash and Equivalents | $15,173 | $15,173 |
| Total Debt (Current + Long-Term) | $82,727 | $82,727 |
| Working Capital | $74,439 | $74,439 |
Note: Debt figures exclude related party notes payable and seller notes unless specified in the balance sheet totals. Total liabilities were $299.6 million as of March 31, 2026.
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 3.8% ($4.1 million) for the quarter and 3.2% ($7.1 million) for the six months compared to the prior year. The decline was primarily driven by the Retail-Flooring segment, which saw a 26.2% drop in quarterly revenue due to headwinds in new-home construction and home-refurbishment markets.
- Goodwill Impairment: The company recorded a non-cash goodwill impairment charge of $4.0 million in the Steel Manufacturing segment (specifically Precision Metal Works, or PMW) due to sustained operating losses and performance below internal projections. This charge significantly impacted operating income for the quarter.
- Profitability Shift: The company reported a net loss of $2.4 million for the quarter, a reversal from the $15.9 million net income reported in the same period last year. The prior year's income was bolstered by a $22.8 million gain on the modification of a seller note, which did not recur in the current period.
- Margin Expansion: Despite revenue declines, consolidated gross margin improved by 80 basis points to 33.6% for the quarter, driven by improved efficiencies in manufacturing segments and a favorable revenue mix shift toward the higher-margin Retail-Entertainment segment.
Outlook, Risks, and Contingencies
- Debt Covenant Default (PMW): Precision Metal Works (PMW) defaulted on its Fixed Charge Coverage Ratio (FCCR) covenant under its Revolving Credit Facility with Fifth Third Bank. Consequently, approximately $10.5 million of PMW's long-term debt has been reclassified as current liabilities. The company entered a Forbearance Agreement on March 24, 2026, extending the deadline to refinance or cure the default to June 15, 2026.
- Liquidity Position: Management believes that current cash balances ($15.2 million), operating cash flows, and approximately $24.6 million in available borrowing capacity under revolving credit facilities will provide sufficient liquidity for the next 12 months.
- Legal Proceedings: The company is involved in ongoing litigation, including an SEC civil complaint regarding financial reporting and disclosure violations from 2016-2018, and a shareholder class action lawsuit (Sieggreen). The company denies liability in these matters. Additionally, a wage and hour class action involving a former subsidiary is pending.
- Related Party Transactions: The company maintains significant debt relationships with related parties, including Isaac Capital Group, LLC (controlled by the CEO), with outstanding balances totaling over $21 million in notes payable and seller notes.
Investor Verification Checklist
- PMW Refinancing Status: Verify the progress of PMW's refinancing efforts required by the June 15, 2026, forbearance deadline to avoid acceleration of debt.
- Retail-Flooring Recovery: Monitor the Retail-Flooring segment for signs of recovery in the housing market, as this segment continues to report significant operating losses.
- Legal Exposure: Review updates on the SEC enforcement action and the Sieggreen class action lawsuit to assess potential financial penalties or disgorgement requirements.
- Related Party Debt Terms: Examine the terms of the $21+ million in related party debt, specifically the conversion features and interest rates, to understand potential dilution or cash flow impacts.
- Inventory Levels: Assess the $121.6 million inventory balance against sales trends to ensure no further write-downs are necessary, particularly in the flooring segments.