LIVE VENTURES Inc 10-Q

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 nine months ended June 30, 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 Quarterly 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 on 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”). 31 Table of Contents 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 72 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 32 Table of Contents 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-U.S. 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 U.S. GAAP, and should not be construed as an alternative to net income or loss and is not indicative of our results of operations, or 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 U.S. GAAP. As companies often define non-U.S. GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies. 33 Table of Contents Results of Operations Three Months Ended June 30, 2025 and 2024 The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended June 30, 2025 and 2024 (in $000’s): Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 % of Total Revenue % of Total Revenue Selected Data Revenue $ 112,530 $ 123,878 Gross profit 38,287 34.0 % 37,045 29.9 % General and administrative expenses 26,275 23.3 % 30,062 24.3 % Sales and marketing expenses 4,009 3.6 % 5,852 4.7 % Interest expense, net 3,854 3.4 % 4,233 3.4 % Income (loss) before provision for income taxes 7,455 6.6 % (3,823) (3.1 %) Provision for (benefit from) income taxes 2,067 1.8 % (968) (0.8 %) Net income (loss) $ 5,388 4.8 % $ (2,855) (2.3 %) Adjusted EBITDA (a) Retail-Entertainment $ 2,573 $ 1,575 Retail-Flooring 590 (258) Flooring Manufacturing 4,960 2,797 Steel Manufacturing 4,271 3,102 Corporate & Other 794 (1,093) Total Adjusted EBITDA $ 13,188 $ 6,123 Adjusted EBITDA as a percentage of revenue Retail-Entertainment 13.5 % 9.5 % Retail-Flooring 1.9 % (0.7 %) Flooring Manufacturing 16.8 % 8.9 % Steel Manufacturing 12.7 % 7.9 % Corporate & Other N/A N/A Consolidated adjusted EBITDA as a percentage of revenue 11.7 % 4.9 % (a) See reconciliation of net income to Adjusted EBITDA below. 34 Table of Contents The following table sets forth revenue by segment (in $000’s): For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024 Net Revenue % of Total Revenue Net Revenue % of Total Revenue Revenue Retail-Entertainment $ 19,017 16.9 % $ 16,503 13.3 % Retail-Flooring 30,373 27.0 % 36,981 29.9 % Flooring Manufacturing 29,487 26.2 % 31,264 25.2 % Steel Manufacturing 33,645 29.9 % 39,047 31.5 % Corporate & Other 8 — % 83 0.1 % Total Revenue $ 112,530 100.0 % $ 123,878 100.0 % 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 June 30, 2025 For the Three Months Ended June 30, 2024 Gross Profit Gross Profit % of Total Revenue Gross Profit Gross Profit % of Total Revenue Gross Profit Retail-Entertainment $ 10,926 9.7 % $ 9,552 7.7 % Retail-Flooring 10,768 9.6 % 13,525 10.9 % Flooring Manufacturing 8,816 7.8 % 7,731 6.2 % Steel Manufacturing 7,772 6.9 % 6,161 5.0 % Corporate & Other 5 — % 76 0.1 % Total Gross Profit $ 38,287 34.0 % $ 37,045 29.9 % Revenue Revenue decreased approximately $11.3 million, or 9.2%, to approximately $112.5 million for the quarter ended June 30, 2025, compared to approximately $123.9 million in the prior-year period. The decrease is primarily attributable to the Retail-Flooring and Steel Manufacturing segments, which decreased by approximately $12.0 million. Gross Profit Gross profit was 34.0% for the three months ended June 30, 2025 as compared to 29.9% for the three months ended June 30, 2024. The increase was primarily driven by higher margins in our Steel Manufacturing segment, reflecting improved efficiencies and the May 2024 acquisition of Central Steel, which has historically generated stronger margins. Additionally, our Flooring Manufacturing segment contributed to the increase through improved efficiencies and a more favorable product mix. General and Administrative Expense General and Administrative expenses decreased by 12.6% to approximately $26.3 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease is primarily due to targeted cost reduction initiatives in our Retail-Flooring segment. Sales and Marketing Expense Sales and marketing expense decreased by 31.5% to approximately $4.0 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to reduced sales and marketing activities in our Retail-Flooring and Flooring Manufacturing segments. 35 Table of Contents Interest Expense, net Interest expense, net, decreased by approximately 9.0% to approximately $3.9 million for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024 due to lower average debt balances. Results of Operations Nine Months Ended June 30, 2025 and 2024 The following table sets forth certain statement of income items and as a percentage of revenue, for the nine months ended June 30, 2025 and 2024 (in $000’s): For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024 % of Total Revenue % of Total Revenue Statement of Income Data: Revenue $ 331,051 $ 360,097 Gross profit 108,797 32.9 % 108,839 30.2 % General and administrative expenses 84,667 25.6 % 87,565 24.3 % Sales and marketing expenses 13,273 4.0 % 17,440 4.8 % Interest expense, net 11,949 3.6 % 12,563 3.5 % Income (loss) before provision for income taxes 29,131 8.8 % (9,227) (2.6 %) Provision for (benefit from) income taxes 7,385 2.2 % (2,409) (0.7 %) Net income (loss) $ 21,746 6.6 % $ (6,818) (1.9 %) Adjusted EBITDA (a) Retail-Entertainment $ 9,139 $ 7,441 Retail-Flooring (2,159) (803) Flooring Manufacturing 7,983 7,571 Steel Manufacturing 10,814 8,235 Corporate & Other (398) (3,169) Total Adjusted EBITDA $ 25,379 $ 19,275 Adjusted EBITDA as a percentage of revenue Retail-Entertainment 15.6 % 13.8 % Retail-Flooring (2.4 %) (0.8 %) Flooring Manufacturing 9.4 % 8.0 % Steel Manufacturing 11.1 % 7.6 % Corporate & Other N/A N/A Consolidated adjusted EBITDA as a percentage of revenue 7.7 % 5.4 % (a) See reconciliation of net income to Adjusted EBITDA below. The following table sets forth revenue by segment (in $000’s): 36 Table of Contents For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024 Net Revenue % of Total Revenue Net Revenue % of Total Revenue Revenue Retail-Entertainment $ 58,758 17.7 % $ 53,930 15.0 % Retail-Flooring 89,519 27.0 % 103,332 28.7 % Flooring Manufacturing 85,302 25.8 % 94,689 26.3 % Steel Manufacturing 97,402 29.4 % 107,889 30.0 % Corporate & other 70 — % 257 0.1 % Total Revenue $ 331,051 100.0 % $ 360,097 100.0 % 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 Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024 Gross Profit Gross Profit % of Total Revenue Gross Profit Gross Profit % of Total Revenue Gross Profit Retail-Entertainment $ 33,877 10.2 % $ 30,916 8.6 % Retail-Flooring 31,986 9.7 % 38,259 10.6 % Flooring Manufacturing 22,532 6.8 % 22,913 6.4 % Steel Manufacturing 20,342 6.1 % 16,513 4.6 % Corporate & other 60 — % 238 0.1 % Total Gross Profit $ 108,797 32.9 % 0.328641206339809 $ 108,839 30.2 % Revenue Revenue decreased approximately $29.0 million, or 8.1%, to approximately $331.1 million for the nine months ended June 30, 2025, compared to revenue of approximately $360.1 million in the prior-year period. The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $33.7 million in the aggregate, partially offset by an increase of approximately $4.8 million in the Retail-Entertainment segment. Gross Profit Gross profit was 32.9% for nine months ended June 30, 2025 as compared to 30.2% for the nine months ended June 30, 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 3.3% to approximately $84.7 million for the nine months ended June 30, 2025 and 2024, respectively. The decrease is primarily due to targeted cost reduction initiatives in our Retail-Flooring segment. Sales and Marketing Expense Sales and marketing expense decreased by 23.9% to approximately $13.3 million for the nine months ended June 30, 2025, as compared to the nine months ended June 30, 2024, primarily due to reduced sales and marketing activities in our Retail-Flooring and Flooring Manufacturing segments. 37 Table of Contents Interest Expense, net Interest expense, net, decreased by approximately 4.9% to approximately $11.9 million for the nine months ended June 30, 2025 and 2024, respectively, due to lower average debt balances. Results of Operations by Segment for the Three Months Ended June 30, 2025 and 2024 For the Three Months Ended June 30, 2025 For the Three Months Ended June 30, 2024 Retail-Entertainment Retail-Flooring Flooring Manufacturing Steel Manufacturing Corporate & Other Total Retail-Entertainment Retail-Flooring Flooring Manufacturing Steel Manufacturing Corporate & Other Total Revenue $ 19,017 $ 30,373 $ 29,487 $ 33,645 $ 8 $ 112,530 $ 16,503 $ 36,981 $ 31,264 $ 39,047 $ 83 $ 123,878 Cost of Revenue 8,091 19,605 20,671 25,873 3 74,243 6,951 23,456 23,533 32,886 7 86,833 Gross Profit 10,926 10,768 8,816 7,772 5 38,287 9,552 13,525 7,731 6,161 76 37,045 General and Administrative Expense 8,444 11,533 964 5,342 (8) 26,275 8,043 13,760 1,662 4,596 2,001 30,062 Selling and Marketing Expense 164 (32) 3,717 153 7 4,009 177 1,263 4,213 195 4 5,852 Operating Income (Loss) $ 2,318 $ (733) $ 4,135 $ 2,277 $ 6 $ 8,003 $ 1,332 $ (1,498) $ 1,856 $ 1,370 $ (1,929) $ 1,131 Retail-Entertainment Segment The Retail-Entertainment segment revenue for the quarter ended June 30, 2025, was approximately $19.0 million, an increase of approximately $2.5 million, or 15.2%, compared to approximately $16.5 million in the prior-year period. Revenue increased primarily due to changes in product mix toward new products, which typically have higher selling prices. The increase in the sales of new products with lower margins contributed to a slight decrease in gross margin to 57.5% for the quarter ended June 30, 2025, compared to 57.9% for the prior-year period. Operating income for the quarter ended June 30, 2025, was approximately $2.3 million, compared to approximately $1.3 million in the prior-year period. Retail-Flooring Segment The Retail-Flooring segment revenue for the quarter ended June 30, 2025, was approximately $30.4 million, a decrease of approximately $6.6 million, or 17.9%, compared to approximately $37.0 million in the prior-year period. The decrease in revenue was primarily attributable to the disposition of certain Johnson stores in May 2024, as well as decreased demand due to broader economic conditions. Gross margin for the quarter ended June 30, 2025, was 35.5%, compared to 36.6% for the prior-year period. The decrease in gross margin was primarily driven by a change in the product mix. Operating loss for the quarter ended June 30, 2025, was approximately $0.7 million, compared to an operating loss of approximately $1.5 million in the prior-year period. The decrease in operating loss is attributable to lower general and administrative expenses and sales and marketing expenses as a result of targeted cost reduction initiatives. . Flooring Manufacturing Segment The Flooring Manufacturing segment revenue for the quarter ended June 30, 2025, was approximately $29.5 million, a decrease of approximately $1.8 million, or 5.7%, compared to approximately $31.3 million in the prior-year period. 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 29.9% for the quarter ended June 30, 2025, compared to 24.7% for the prior-year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the quarter ended June 30, 2025, was approximately $4.1 million, compared to approximately $1.9 million in the prior-year period. The improvement in operating income is attributable to lower general and administrative expenses and sales and marketing expenses. . Steel Manufacturing Segment The Steel Manufacturing segment revenue for the quarter ended June 30, 2025, was approximately $33.6 million, a decrease of approximately $5.4 million, or 13.8%, compared to approximately $39.0 million in the prior-year period. The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $5.0 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024. Gross margin was 23.1% for the quarter ended June 30, 2025, compared to 15.8% 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, which has historically generated higher margins. Operating income for the quarter ended June 30, 2025, was approximately $2.3 million, compared to approximately $1.4 million in the prior-year period. 38 Table of Contents Corporate and Other Segment The Corporate and Other segment operating income for the quarter ended June 30, 2025, was approximately $6,000 compared to an operating loss of $1.9 million in the prior-year period. The change in operating income is due to the reallocation of certain costs from the Corporate holding company level to the segment level, along with a reduction in expenses as compared to the prior-year period. Results of Operations by Segment for the Nine Months Ended June 30, 2025 and 2024 For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024 Retail-Entertainment Retail-Flooring Flooring Manufacturing Steel Manufacturing Corporate & Other Total Retail-Entertainment Retail-Flooring Flooring Manufacturing Steel Manufacturing Corporate & Other Total Revenue $ 58,758 $ 89,519 $ 85,302 $ 97,402 $ 70 $ 331,051 $ 53,930 $ 103,332 $ 94,689 $ 107,889 $ 257 $ 360,097 Cost of Revenue 24,881 57,533 62,770 77,060 10 222,254 23,014 65,073 71,776 91,376 19 251,258 Gross Profit 33,877 31,986 22,532 20,342 60 108,797 30,916 38,259 22,913 16,513 238 108,839 General and Administrative Expense 25,179 37,326 4,927 14,300 2,935 84,667 24,117 39,251 5,133 12,801 6,263 87,565 Selling and Marketing Expense 475 308 12,069 403 18 13,273 494 3,441 13,001 487 17 17,440 Operating Income (Loss) $ 8,223 $ (5,648) $ 5,536 $ 5,639 $ (2,893) $ 10,857 $ 6,305 $ (4,433) $ 4,779 $ 3,225 $ (6,042) $ 3,834 Retail-Entertainment Segment The Retail-Entertainment segment revenue for the nine months ended June 30, 2025, was approximately $58.8 million, an increase of approximately $4.8 million, or 9.0%, compared to approximately $53.9 million in the prior-year period. Revenue increased primarily due to changes in product mix toward new products, which typically have higher selling prices. For the nine months ended June 30, 2025, there was a slight increase in gross margin to 57.7%, compared to 57.3% for the prior-year period. Operating income for the nine months ended June 30, 2025, was approximately $8.2 million, compared to approximately $6.3 million in the prior-year period. Retail-Flooring Segment The Retail-Flooring segment revenue for the nine months ended June 30, 2025, was approximately $89.5 million, a decrease of approximately $13.8 million, or 13.4%, compared to approximately $103.3 million in the prior-year period. The decrease was primarily attributable to the disposition of certain Johnson stores in May 2024, as well as decreased demand due to broader economic conditions. Gross margin for the nine months ended June 30, 2025, was 35.7%, compared to 37.0% for the prior-year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the nine months ended June 30, 2025, was approximately $5.6 million, compared to an operating loss of approximately $4.4 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 cost reduction initiatives implemented during the second quarter of fiscal 2025. Flooring Manufacturing Segment The Flooring Manufacturing segment revenue for the nine months ended June 30, 2025, was approximately $85.3 million, a decrease of approximately $9.4 million, or 9.9%, compared to approximately $94.7 million in the prior-year period. 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 26.4% for the nine months ended June 30, 2025, compared to 24.2% for the prior-year period. The increase in gross margin was primarily due to changes in product mix. Operating income for the nine months ended June 30, 2025, was approximately $5.5 million, compared to approximately $4.8 million for the prior-year period. Steel Manufacturing Segment The Steel Manufacturing segment revenue for the nine months ended June 30, 2025, was approximately $97.4 million, a decrease of approximately $10.5 million or 9.7%, compared to approximately $107.9 million in the prior-year period. The decline was primarily driven by lower sales volumes at certain business units, partially offset by incremental revenue of $11.9 million at Central Steel, which was acquired in May 2024. Gross margin was 20.9% for the nine months ended June 30, 2025, compared to 15.3% for the prior-year period. The increase in gross margin was primarily due to strategic price 39 Table of Contents increases, as well as the acquisition of Central Steel. Operating income for the nine months ended June 30, 2025, was approximately $5.6 million, compared to approximately $3.2 million in the prior-year period. Corporate and Other Segment The Corporate and Other segment operating loss was approximately $2.9 million and $6.0 million for the nine months ended June 30, 2025, and 2024, respectively. The change in operating loss is due to the reallocation of certain costs from the Corporate holding company level to the segment level in the fiscal third quarter of fiscal year 2025, as well as a reduction in expenses as compared to the prior-year period. Adjusted EBITDA Reconciliation The following table presents a reconciliation of net income to Adjusted EBITDA for the three and nine months ended June 30, 2025 and 2024 (in 000's): For the Three Months Ended For the Nine Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Net income (loss) $ 5,388 $ (2,855) $ 21,746 $ (6,818) Depreciation and amortization 4,546 4,349 13,362 12,832 Stock-based compensation 50 174 150 274 Interest expense, net 3,854 4,233 11,949 12,563 Income tax expense (benefit) 2,067 (968) 7,385 (2,409) Gain on extinguishment of debt — — (713) — Gain on modification of seller note — — (22,784) — Gain on settlement of earnout liability — — (2,840) — Gain on settlement of holdback (1,282) — (1,186) — Gain on receipt of ERC credits (1,469) — (1,824) — Acquisition costs — 889 — 1,762 Debt acquisition costs — — — 183 Disposition of Johnson — 301 — 301 Other non-recurring charges 34 — 134 587 Adjusted EBITDA $ 13,188 $ 6,123 $ 25,379 $ 19,275 Adjusted EBITDA for the quarter ended June 30, 2025 was approximately $13.2 million, an increase of approximately $7.1 million, or 115.4%, compared to the prior year period. The increase is primarily due to decreases in operating expenses due to targeted cost reduction initiatives. Adjusted EBITDA for the nine months ended June 30, 2025 was approximately $25.4 million, an increase of approximately $6.1 million, or 31.7%, compared to the prior year period. The increase is primarily due to decreases in operating expenses due to targeted cost reduction initiatives. Liquidity and Capital Resources As of June 30, 2025, we had total cash on hand of approximately $7.6 million and approximately $29.5 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 40 Table of Contents 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 $66.6 million as of June 30, 2025, as compared to working capital of approximately $52.3 million as of September 30, 2024; an increase of approximately $14.3 million. The increase is primarily related to decreases in the current portion of long-term debt and accounts payable, partially offset by reduced trade accounts receivable due to decreased revenue, and a decrease in inventory purchases for the period. Cash Flows from Operating Activities The Company’s cash, as of June 30, 2025, was approximately $7.6 million compared to approximately $4.6 million as of September 30, 2024, an increase of approximately $3.0 million. Net cash provided by operations was approximately $21.9 million and $13.9 million for the nine months ended June 30, 2025 and 2024, respectively. The increase was primarily driven by higher operating income, improved collections of accounts receivable, and a reduction in inventory, partially offset by payments of accounts payable and accrued liabilities. 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 $5.8 million for the nine months ended June 30, 2025 consisted of purchases of property and equipment. Our cash flows used in investing activities of approximately $18.0 million for the nine months ended June 30, 2024 consisted of the acquisitions of CRO by Flooring Liquidators, Johnson by CRO, Central Steel by Precision Marshall, Midwest Grinding by Kinetic, and purchases of property and equipment. Cash Flows from Financing Activities Our cash flows used in financing activities of approximately $13.1 million during the nine months ended June 30, 2025 consisted of net payments under revolver loans of approximately $9.3 million, payments on notes payable of approximately $5.2 million, payments of related party notes payable of $2.9 million, payments for finance leases of approximately $2.7 million, cash paid for the settlement of seller notes of approximately $1.9 million, and purchases of treasury stock of approximately $0.5 million, partially offset by net borrowings under related party revolver loans of approximately $7.1 million, proceeds from the issuance of 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 provided by financing activities of approximately $4.5 million during the nine months ended June 30, 2024 consisted of proceeds from failed sales and leaseback transactions of approximately $7.9 million, proceeds from the issuance of notes payable of approximately $2.7 million, net borrowings under revolver loans of approximately $2.0 million, and net borrowings under related party revolver loans of approximately $1.3 million, partially offset by payments on notes payable of approximately $5.1 million, payments for finance leases of approximately $2.5 million, payments of related party notes payable of $0.9 million, and purchases of treasury stock of approximately $0.9 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. 41 Table of Contents