Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three and six months ended March 31, 2025, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (the “2024 Form 10-K”).
Note about Forward-Looking Statements
This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.
Specific forward-looking statements contained in this portion of the Annual Report include, but are not limited to: (i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months, and (vi) statements that the outcome of pending legal proceedings will not have a material adverse effect on business, financial position and results of operations, cash flow or liquidity.
Forward-looking statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include those identified in our 2024 Form 10-K under Item 1A “Risk Factors” and Part II, Item 1A. "Risk Factors" below, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors may generally affect our business, results of operations, and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements except as required by federal securities laws. Any information contained on our website www.liveventures.com or any other websites referenced in this Quarterly Report are not incorporated into and should not be deemed a part of this Quarterly Report.
Our Company
Live Ventures Incorporated is a holding company of diversified businesses, which, together with our subsidiaries, we refer to as the “Company”, “Live Ventures”, “we”, “us” or “our”. We acquire and operate companies in various industries that have historically demonstrated a strong history of earnings power. We currently have five segments to our business: Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, and Corporate and Other.
Under the Live Ventures brand, we seek opportunities to acquire profitable and well-managed companies. We work closely with consultants who help us identify target companies that fit within the criteria we have established for opportunities that will provide synergies with our businesses.
Our principal offices are located at 325 E. Warm Springs Road, Suite 102, Las Vegas, Nevada 89119, our telephone number is (702) 939-0231, and our corporate website (which does not form part of this Quarterly Report Form 10-Q) is located at www.liveventures.com. Our common stock trades on the Nasdaq Capital Market under the symbol “LIVE”.
Retail-Entertainment Segment
Our Retail-Entertainment Segment is composed of Vintage Stock, Inc., doing business as Vintage Stock, V-Stock, Movie Trading Company and EntertainMart (collectively, “Vintage Stock”).
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Vintage Stock is an award-winning specialty entertainment retailer that offers a large selection of entertainment products, including new and pre-owned movies, video games and music products, as well as ancillary products, such as books, comics, toys and collectibles, in a single location. With its integrated buy-sell-trade business model, Vintage Stock buys, sells and trades new and pre-owned movies, music, video games, electronics and collectibles through 73 retail locations strategically positioned across Alabama, Arkansas, Colorado, Idaho, Illinois, Kansas, Missouri, Montana, Nebraska, New Mexico, Oklahoma, Tennessee, Texas, and Utah.
Retail-Flooring Segment
Our Retail-Flooring Segment is composed of Flooring Liquidators, Inc. (“Flooring Liquidators”).
Flooring Liquidators is a leading retailer and installer of flooring, carpeting, and countertops to consumers, builders, and contractors in California and Nevada, operating 27 warehouse-format stores and a design center. Over the years, the company has established a strong reputation for innovation, efficiency, and service in the home renovation and improvement market. Flooring Liquidators serves retail and builder customers through two businesses: retail customers through its Flooring Liquidators retail stores, and builder and contractor customers through Elite Builder Services, Inc.
Flooring Manufacturing Segment
Our Flooring Manufacturing segment is comprised of Marquis Industries, Inc. (“Marquis”).
Marquis is a leading carpet manufacturer and distributor of carpet and hard-surface flooring products. Over the last decade, Marquis has been an innovator and leader in the value-oriented polyester carpet sector, which is currently the market’s fastest-growing fiber category. Marquis focuses on the residential, niche commercial, and hospitality end-markets and serves thousands of customers.
Since commencing operations in 1995, Marquis has built a strong reputation for outstanding value, styling, and customer service. Its innovation has yielded products and technologies that differentiate its brands in the flooring marketplace. Marquis’s state-of-the-art operations enable high quality products, unique customization, and exceptionally short lead-times. Furthermore, the Company has recently invested in additional capacity to grow several attractive lines of business, including printed carpet and yarn extrusion.
Steel Manufacturing Segment
Our Steel Manufacturing segment is comprised of Precision Industries, Inc. (“Precision Marshall”), its wholly-owned subsidiary The Kinetic Co., Inc. (“Kinetic”), Precision Metal Works, Inc. (“PMW”), and Central Steel Fabricators, LLC. ("Central Steel") .
Precision Marshall is the North American leader in providing and manufacturing, pre-finished de-carb free tool and die steel. For over 75 years, Precision Marshall has served steel distributors through quick and accurate service. Precision Marshall has led the industry with exemplary availability and value-added processing that saves distributors time and processing costs.
Founded in 1948, Precision Marshall “The Deluxe Company” has built a reputation of high integrity, speed of service and doing things the “Deluxe Way”. The term Deluxe refers to all aspects of the product and customer service to be head and shoulders above the rest. From order entry to packaging and delivery, Precision Marshall makes it easy to do business and backs all products and service with a guarantee.
Precision Marshall provides four key products to over 500 steel distributors in four product categories: Deluxe Alloy Plate, Deluxe Tool Steel Plate, Precision Ground Flat Stock, and Drill Rod. With over 5,000 distinct size grade combinations in stock every day, Precision Marshall arms tool steel distributors with deep inventory availability and same day shipment to their place of business or often ships direct to their customer saving time and handling.
On June 28, 2022, Precision Marshall acquired Kinetic. Kinetic is a highly recognizable and regarded brand name in the production of industrial knives and hardened wear products for the tissue, metals, and wood industries and is known as a one-stop shop for in-house grinding, machining, and heat-treating. Kinetic is headquartered in Greendale, Wisconsin. Kinetic manufactures more than 90 types of knives and numerous associated parts with modifications and customizations available to each. Kinetic employs approximately 100 non-union employees.
On July 20, 2023, we acquired PMW. Founded nearly 76 years ago in 1947 in Louisville, Kentucky, PMW manufactures and supplies highly engineered parts and components across 400,000 square feet of manufacturing space. PMW offers
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world-class metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices.
On May 17, 2024, Precision Marshall acquired Central Steel. Founded in 1969 in Chicago, Illinois, Central Steel is a manufacturer of specialized fabricated metal products. Central Steel offers over 2,300 unique products to more than 500 customers. Its extensive product line, primarily for data centers, includes cable racks, auxiliary framing, hardware, insulation products, and network bays.
Corporate and Other Segment
Our Corporate and Other segment consists of certain corporate general and administrative costs, and operations of certain legacy products and service offerings for which we are no longer accepting new customers .
Critical Accounting Policies
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP"). Preparation of these statements requires us to make judgments and estimates. Some accounting policies have a significant and material impact on amounts reported in these financial statements. Estimates and assumptions are based on management's experience and other information available prior to the issuance of our financial statements. Our actual realized results may differ materially from management’s initial estimates as reported. Our critical and significant accounting policies include Trade and Other Receivables, Inventories, Goodwill, Revenue Recognition, Fair Value Measurements, Income Taxes. For a summary of our significant accounting policies and the means by which we develop estimates thereon, see Part II, Item 8 – Financial Statements - Notes to unaudited condensed consolidated financial statements Note 2 – summary of significant accounting policies in our 2024 Form 10-K.
Adjusted EBITDA
We evaluate the performance of our operations based on financial measures such as “Adjusted EBITDA”, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’ ability to fund acquisitions and other capital expenditures, and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company's financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by GAAP, and should not be construed as an alternative to net income or loss and is indicative neither of our results of operations, nor of cash flows available to fund all our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.
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Results of Operations Three Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended March 31, 2025 and 2024 (in $000’s):
Three Months Ended
March 31, 2025 Three Months Ended
March 31, 2024
% of Total
Revenue % of Total
Revenue
Selected Data
Revenue $ 107,013 $ 118,626
Gross profit 35,148 32.8 % 35,467 29.9 %
General and administrative expenses 28,321 26.5 % 29,824 25.1 %
Sales and marketing expenses 4,735 4.4 % 6,481 5.5 %
Interest expense, net 3,933 3.7 % 4,167 3.5 %
Income (loss) before provision for income taxes 21,103 19.7 % (4,498) (3.8 %)
Provision for (benefit from) income taxes 5,237 4.9 % (1,217) (1.0 %)
Net income (loss) $ 15,866 14.8 % $ (3,281) (2.8 %)
Adjusted EBITDA (a)
Retail-Entertainment $ 2,755 $ 2,153
Retail-Flooring (1,778) (1,849)
Flooring Manufacturing 2,272 2,897
Steel Manufacturing 3,742 2,331
Corporate & Other (545) (1,075)
Total Adjusted EBITDA $ 6,446 $ 4,457
Adjusted EBITDA as a percentage of revenue
Retail-Entertainment 14.9 % 12.8 %
Retail-Flooring (6.5 %) (5.8 %)
Flooring Manufacturing 7.6 % 8.5 %
Steel Manufacturing 11.9 % 6.6 %
Corporate & Other N/A N/A
Consolidated adjusted EBITDA as a percentage of revenue 6.0 % 3.8 %
(a) See reconciliation of net income to Adjusted EBITDA below.
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The following table sets forth revenue by segment (in $000’s):
For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024
Net
Revenue % of
Total
Revenue Net
Revenue % of
Total
Revenue
Revenue
Retail-Entertainment $ 18,467 17.3 % $ 16,842 14.2 %
Retail-Flooring 27,399 25.6 % 32,032 27.0 %
Flooring Manufacturing 29,820 27.9 % 34,180 28.8 %
Steel Manufacturing 31,321 29.3 % 35,488 29.9 %
Corporate & Other 6 — % 84 0.1 %
Total Revenue $ 107,013 100.0 % $ 118,626 100.0 %
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024
Gross
Profit Gross
Profit % of Total Revenue Gross
Profit Gross
Profit % of Total Revenue
Gross Profit
Retail-Entertainment $ 10,907 10.2 % $ 9,836 8.3 %
Retail-Flooring 9,415 8.8 % 11,702 9.9 %
Flooring Manufacturing 8,193 7.7 % 8,760 7.4 %
Steel Manufacturing 6,629 6.2 % 5,090 4.3 %
Corporate & Other 4 — % 79 0.1 %
Total Gross Profit $ 35,148 32.8 % $ 35,467 29.9 %
Revenue
Revenue decreased approximately $11.6 million, or 9.8%, to approximately $107.0 million for the quarter ended March 31, 2025, compared to revenue of approximately $118.6 million in the prior year period. The decrease is attributable to the Retail-Flooring, Flooring Manufacturing, and Steel Manufacturing segments, which decreased by approximately $13.2 million in the aggregate.
Gross Profit
Gross profit was 32.8% for three months ended March 31, 2025 as compared to 29.9% for the three months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and Administrative expenses decreased by 5% to approximately $28.3 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease is primarily due to targeted cost reduction initiatives at Flooring Liquidators.
Sales and Marketing Expense
Sales and marketing expense decreased by 27% to approximately $4.7 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
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Interest Expense, net
Interest expense, net, decreased by approximately 5.6% to approximately $3.9 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 due to lower average debt balances.
Results of Operations Six Months Ended March 31, 2025 and 2024
The following table sets forth certain statement of income items and as a percentage of revenue, for the six months ended March 31, 2025 and 2024 (in $000’s):
For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024
% of Total
Revenue % of Total
Revenue
Statement of Income Data:
Revenue $ 218,521 $ 236,219
Gross profit 70,510 32.3 % 71,794 30.4 %
General and administrative expenses 58,392 26.7 % 57,503 24.3 %
Sales and marketing expenses 9,264 4.2 % 11,588 4.9 %
Interest expense, net 8,095 3.7 % 8,330 3.5 %
Income (loss) before provision for income taxes 21,676 9.9 % (5,404) (2.3 %)
Provision for (benefit from) income taxes 5,318 2.4 % (1,441) (0.6 %)
Net income (loss) $ 16,358 7.5 % $ (3,963) (1.7 %)
Adjusted EBITDA (a)
Retail-Entertainment $ 6,565 $ 5,867
Retail-Flooring (2,749) (546)
Flooring Manufacturing 3,023 4,774
Steel Manufacturing 6,543 5,133
Corporate & Other (1,191) (2,075)
Total Adjusted EBITDA $ 12,191 $ 13,153
Adjusted EBITDA as a percentage of revenue
Retail-Entertainment 16.5 % 15.7 %
Retail-Flooring (4.6 %) (0.8 %)
Flooring Manufacturing 5.4 % 7.5 %
Steel Manufacturing 10.3 % 7.5 %
Corporate & Other N/A N/A
Consolidated adjusted EBITDA as a percentage of revenue 5.6 % 5.6 %
(a) See reconciliation of net income to Adjusted EBITDA below.
The following table sets forth revenue by segment (in $000’s):
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For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024
Net
Revenue % of
Total Revenue Net
Revenue % of Total
Revenue
Revenue
Retail-Entertainment $ 39,740 18.2 % $ 37,428 15.8 %
Retail-Flooring 59,146 27.1 % 66,351 28.1 %
Flooring Manufacturing 55,815 25.5 % 63,425 26.9 %
Steel Manufacturing 63,757 29.2 % 68,841 29.1 %
Corporate & other 63 — % 174 0.1 %
Total Revenue $ 218,521 100.0 % $ 236,219 100.0 %
The following table sets forth gross profit earned by segment and gross profit as a percentage of total revenue for each segment (in $000’s):
For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024
Gross
Profit Gross
Profit % of Total Revenue Gross
Profit Gross
Profit % of Total Revenue
Gross Profit
Retail-Entertainment $ 22,951 10.5 % $ 21,364 9.0 %
Retail-Flooring 21,218 9.7 % 24,734 10.5 %
Flooring Manufacturing 13,716 6.3 % 15,182 6.4 %
Steel Manufacturing 12,571 5.8 % 10,352 4.4 %
Corporate & other 54 — % 162 0.1 %
Total Gross Profit $ 70,510 32.3 % 0.322669217146178 $ 71,794 30.4 %
Revenue
Revenue decreased approximately $17.7 million, or 7.5%, to approximately $218.5 million for the six months ended March 31, 2025, compared to revenue of approximately $236.2 million in the prior year period. The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $20.0 million in the aggregate.
Gross Profit
Gross profit was 32.3% for six months ended March 31, 2025 as compared to 30.4% for the six months ended March 31, 2024. The increase was primarily attributable to increased margins in our Steel Manufacturing segment primarily due to improved efficiencies, as well as the acquisition of Central Steel during May 2024, which has historically generated higher margins.
General and Administrative Expense
General and administrative expense remained generally consistent at approximately $58.4 million and $57.5 million for the six months ended March 31, 2025 and 2024, respectively.
Sales and Marketing Expense
Sales and marketing expense decreased by 20.1% to approximately $9.3 million for the six months ended March 31, 2025, as compared to the six months ended March 31, 2024, primarily due to reduced sales and marketing activities at Flooring Liquidators.
Interest Expense, net
Interest expense, net, remained generally consistent at approximately $8.1 million and $8.3 million for the six months ended March 31, 2025 and 2024, respectively.
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Results of Operations by Segment for the Three Months Ended March 31, 2025 and 2024
For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024
Retail-Entertainment Retail-Flooring Flooring
Manufacturing Steel
Manufacturing Corporate
& Other Total Retail-Entertainment Retail-Flooring Flooring
Manufacturing Steel
Manufacturing Corporate
& Other Total
Revenue $ 18,467 $ 27,399 $ 29,820 $ 31,321 $ 6 $ 107,013 $ 16,842 $ 32,032 $ 34,180 $ 35,488 $ 84 $ 118,626
Cost of Revenue 7,560 17,984 21,627 24,692 2 71,865 7,006 20,330 25,420 30,398 5 83,159
Gross Profit 10,907 9,415 8,193 6,629 4 35,148 9,836 11,702 8,760 5,090 79 35,467
General and Administrative Expense 8,254 12,083 2,329 4,312 1,343 28,321 7,919 13,469 1,866 4,048 2,522 29,824
Selling and Marketing Expense 155 73 4,381 121 5 4,735 133 1,256 4,916 170 6 6,481
Operating Income (Loss) $ 2,498 $ (2,741) $ 1,483 $ 2,196 $ (1,344) $ 2,092 $ 1,784 $ (3,023) $ 1,978 $ 872 $ (2,449) $ (838)
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the quarter ended March 31, 2025 was approximately $18.5 million, an increase of approximately $1.6 million, or 9.6%, compared to prior year period revenue of approximately $16.8 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 59.1% for the quarter ended March 31, 2025, compared to 58.4% for the prior year period. Operating income for the quarter ended March 31, 2025 was approximately $2.5 million, compared to operating income of approximately $1.8 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the quarter ended March 31, 2025, was approximately $27.4 million, a decrease of approximately $4.6 million, or 14.5%, compared to the prior year period revenue of approximately $32.0 million. The decrease in revenue was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the quarter ended March 31, 2025 was 34.4%, compared to 36.5% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the quarter ended March 31, 2025 was approximately $2.7 million, compared to an operating loss of approximately $3.0 million for the prior year period.
Flooring Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $29.8 million, a decrease of approximately $4.4 million, or 12.8%, compared to prior year period revenue of approximately $34.2 million. The decrease in revenue was primarily due to reduced consumer demand, as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 27.5% for the quarter ended March 31, 2025, compared to 25.6% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the quarter ended March 31, 2025 was approximately $1.5 million, compared to approximately $2.0 million in the prior year period.
Steel Manufacturing Segment
Revenue for the quarter ended March 31, 2025 was approximately $31.3 million, a decrease of approximately $4.2 million, or 11.7%, compared to prior-year period revenue of approximately $35.5 million. The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $3.8 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024. Gross margin was 21.2% for the quarter ended March 31, 2025, compared to 14.3% for the prior-year period. The increase in gross margin was primarily due to strategic price increases as well as the acquisition of Central Steel. Operating income for the quarter ended March 31, 2025 was approximately $2.2 million, compared to approximately $0.9 million in the prior-year period.
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Corporate and Other Segment
Revenue for the quarter ended March 31, 2025 was approximately $6,000, a decrease of approximately $78,000, or 92.9%, compared to prior year period revenue of approximately $84,000. Operating loss was approximately $1.3 million and $2.4 million for the quarters ended March 31, 2025 and 2024, respectively.
Results of Operations by Segment for the Six Months Ended March 31, 2025 and 2024
For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024
Retail-Entertainment Retail-Flooring Flooring
Manufacturing Steel
Manufacturing Corporate
& Other Total Retail-Entertainment Retail-Flooring Flooring
Manufacturing Steel
Manufacturing Corporate
& Other Total
Revenue $ 39,740 $ 59,146 $ 55,815 $ 63,757 $ 63 $ 218,521 $ 37,428 $ 66,351 $ 63,425 $ 68,841 $ 174 $ 236,219
Cost of Revenue 16,789 37,928 42,099 51,186 9 148,011 16,064 41,617 48,243 58,489 12 164,425
Gross Profit 22,951 21,218 13,716 12,571 54 70,510 21,364 24,734 15,182 10,352 162 71,794
General and Administrative Expense 16,735 25,792 3,963 8,959 2,943 58,392 16,074 25,491 3,471 8,204 4,263 57,503
Selling and Marketing Expense 311 340 8,352 250 11 9,264 317 2,178 8,788 293 12 11,588
Operating Income (Loss) $ 5,905 $ (4,914) $ 1,401 $ 3,362 $ (2,900) $ 2,854 $ 4,973 $ (2,935) $ 2,923 $ 1,855 $ (4,113) $ 2,703
Retail-Entertainment Segment
Retail-Entertainment segment revenue for the six months ended March 31, 2025 was approximately $39.7 million, an increase of approximately $2.3 million, or 6.2%, compared to prior year period revenue of approximately $37.4 million. Revenue increased primarily due to increased consumer demand for new products. The increase in the sales of new products with higher margins contributed to the increase in gross margin to 57.8% for the six months ended March 31, 2025, compared to 57.1% for the prior year period. Operating income for the six months ended March 31, 2025 was approximately $5.9 million, compared to operating income of approximately $5.0 million for the prior year period.
Retail-Flooring Segment
The Retail-Flooring segment revenue for the six months ended March 31, 2025 was approximately $59.1 million, a decrease of approximately $7.2 million, or 10.9%, compared to the prior year period revenue of approximately $66.4 million. The decrease was primarily attributable to the disposition of certain Johnson Floor & Home Carpet One stores in May 2024. Gross margin for the six months ended March 31, 2025 was 35.9%, compared to 37.3% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the six months ended March 31, 2025, was approximately $4.9 million, compared to an operating loss of approximately $2.9 million for the prior year period. The increase in operating loss was primarily due to the decrease in revenues and gross margin, partially offset by targeted cost reduction initiatives implemented during the second quarter of fiscal 2025.
Flooring Manufacturing Segment
Revenue for the Flooring Manufacturing segment for the six months ended March 31, 2025 was approximately $55.8 million, a decrease of approximately $7.6 million, or 12.0%, compared to prior year period revenue of approximately $63.4 million. The decrease in revenue was primarily due to reduced consumer demand as a result of the ongoing weakness in the housing market and uncertainty about the current economic outlook. Gross margin was 24.6% for the six months ended March 31, 2025, compared to 23.9% for the prior year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the six months ended March 31, 2025 was approximately $1.4 million, compared to operating income of approximately $2.9 million for the prior year period.
Steel Manufacturing Segment
Revenue for the six months ended March 31, 2025 was approximately $63.8 million, a decrease of approximately $5.0 million or 7.4%, compared to prior year period revenue of approximately $68.8 million. The decline was primarily driven by lower sales volumes at certain business units partially offset by incremental revenue of $6.9 million at Central Steel, which was acquired in May 2024. Gross margin was 19.7% for the six months ended March 31, 2025, compared to 15.0% for the prior year period. The increase in gross margin was primarily due to strategic price increases, as well as the acquisition of Central Steel. Operating income for the six months ended March 31, 2025 was approximately $3.4 million, compared to operating income of approximately $1.9 million in the prior year period.
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Corporate and Other Segment
Revenue for the six months ended March 31, 2025 was approximately $63,000, a decrease of approximately $111,000, or 63.8%, compared to prior year period revenue of approximately $174,000. Operating loss was approximately $2.9 million and $4.1 million for the six months ended March 31, 2025 and 2024, respectively.
Adjusted EBITDA Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA for the three and six months ended March 31, 2025 and 2024 (in 000's):
For the Three Months Ended For the Six Months Ended
March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024
Net income (loss) $ 15,866 $ (3,281) $ 16,358 $ (3,963)
Depreciation and amortization 4,401 4,188 8,816 8,483
Stock-based compensation 49 50 100 100
Interest expense, net 3,933 4,167 8,095 8,330
Income tax expense (benefit) 5,237 (1,217) 5,318 (1,441)
Gain on extinguishment of debt — — (713) —
Gain on modification of seller note (22,784) — (22,784) —
Gain on settlement of earnout liability — — (2,840) —
Acquisition costs — 468 — 874
Debt acquisition costs — — — 183
Other non-recurring charges (256) 82 (159) 587
Adjusted EBITDA $ 6,446 $ 4,457 $ 12,191 $ 13,153
Adjusted EBITDA for the quarter ended March 31, 2025 was approximately $6.4 million, an increase of approximately $2.0 million, or 44.6%, compared to the prior year period. The increase is primarily due to decreases in operating expenses targeted cost reduction initiatives.
Adjusted EBITDA for the six months ended March 31, 2025 was approximately $12.2 million, a decrease of approximately $1.0 million, or 7.3%, compared to the prior year period. The decrease is primarily due to a decrease in gross profit.
Liquidity and Capital Resources
As of March 31, 2025, we had total cash on hand of approximately $6.9 million and approximately $19.7 million of available borrowing under our revolving credit facilities. As we continue to pursue acquisitions and other strategic transactions to expand and grow our business, we regularly monitor capital market conditions and may raise additional funds through borrowings or public or private sales of debt or equity securities. The amount, nature, and timing of any borrowings or sales of debt or equity securities will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.
Based on our current operating plans, we believe that available cash balances, cash generated from our operating activities, and funds available under our asset-based revolver lines of credit will provide sufficient liquidity to do the following: fund our operations; pay our scheduled loan payments; ability to repurchase shares under our share buyback program; and, pay dividends on our shares of Series E Preferred Stock as declared by the Board of Directors, for at least the next 12 months.
Working Capital
We had working capital of approximately $49.1 million as of March 31, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024; a decrease of approximately $3.2 million. The decrease is primarily due to increases in accrued liabilities, the current portion of long-term debt, and the current portion of operating lease obligations, and a decrease in income taxes receivable, partially offset by decreases in the current portion of notes payable to related parties and accounts payable, and an increase in accounts receivable.
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Cash Flows from Operating Activities
The Company’s cash, as of March 31, 2025, was approximately $6.9 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $2.3 million. Net cash provided by operations was approximately $9.6 million and $2.1 million for the six months ended March 31, 2025 and 2024, respectively. The increase was primarily due to collections of accounts receivable and reduction in inventory, partially offset by decreases in income taxes payable.
Our primary sources of cash inflows are from customer receipts from sales on account, factored accounts receivable proceeds, receipts for securities sales commissions, and net remittances from directory services customers processed in the form of ACH billings. Our most significant cash outflows include payments for raw materials and general operating expenses, including payroll costs and general and administrative expenses that typically occur within close proximity of expense recognition.
Cash Flows from Investing Activities
Our cash flows used in investing activities of approximately $4.3 million for the six months ended March 31, 2025 consisted of purchases of property and equipment. Our cash flows used in investing activities of approximately $4.9 million for the six months ended March 31, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, and Johnson by CRO, and purchases of property and equipment.
Cash Flows from Financing Activities
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2025 consisted of payments on notes payable of approximately $3.4, payments for finance leases of approximately $2.0 million, cash paid for the settlement of seller notes of approximately $1.9 million, net borrowings under revolver loans of approximately $1.3 million, payments of related party notes payable of $0.6 million, and purchases of treasury stock of approximately $0.4 million, partially offset by net borrowings under related party revolver loans of approximately $4.3 million, proceeds from the issuance related party notes payable of approximately $1.9 million, and proceeds from the issuance of notes payable of approximately $0.5 million.
Our cash flows used in financing activities of approximately $3.0 million during the six months ended March 31, 2024 consisted of net borrowings under revolver loans of approximately $7.7 million, payments on notes payable of approximately $3.4 million, proceeds from related parties of $1.0 million, purchases of treasury stock and payments for finance leases of approximately $0.4 million, and payments of related party notes payable of $0.6 million.
Currently, we are not issuing common shares for liquidity purposes. We prefer to use asset-based lending arrangements and mezzanine financing together with Company provided capital to finance acquisitions and have done so historically. Occasionally, as our Company history has demonstrated, we will issue stock and derivative instruments linked to stock for services or debt settlement.
Future Sources of Cash; New Products and Services
We may require additional debt financing or capital to finance new acquisitions, refinance existing indebtedness or other strategic investments in our business. Other sources of financing may include stock issuances and additional loans; or other forms of financing. Any financing obtained by us may further dilute or otherwise impair the ownership interest of our existing stockholders.