What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-12 compared with 2025-08-08 · 106 added, 195 removed, 163 unchanged (65% of the section changed)

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”).

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three months ended December 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, 2025 (the “2025 Form 10-K”).

Note about Forward-Looking Statements

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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 principal offices are located at 8548 Rozita Lee Ave., Suite 305, Las Vegas, Nevada 89113, 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”.

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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”).

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.

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.

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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.

Marquis’s state-of-the-art operations enable high quality products, unique customization, and 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.

Our Steel Manufacturing segment is comprised of Precision Metal Works, Inc.

(“PMW”), Precision Industries, Inc.

(“Precision Marshall”), and its wholly-owned subsidiaries The Kinetic Co., Inc.

(“Kinetic”), and Central Steel Fabricators, LLC.

("Central Steel") .

Precision Marshall

Precision Marshall is the North American leader in providing and manufacturing pre-finished de-carb free tool and die steel.

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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.

world-class metal forming, assembly, and finishing solutions across diverse industries, including appliance, automotive, hardware, electrical, electronic, medical products, and devices.

On July 20, 2023, Live acquired PMW.

Founded in 1947 in Louisville, Kentucky, PMW manufactures and supplies highly engineered parts and components across 400,000 square feet of manufacturing space.

PMW offers 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.

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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.

Intercompany Eliminations

Intercompany eliminations include the elimination of intercompany sales, cost of goods sold, profit in inventory, and intercompany accounts payable and receivable in consolidation.

Segment results are presented before these eliminations.

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.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Preparation of these statements requires us to make judgments and estimates.

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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.

Our critical and significant accounting policies include Trade Receivables, Inventories, Goodwill, Revenue Recognition, Fair Value Measurements, and 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 Statement and Supplementary Data - Notes to Consolidated Financial Statements Note 2 – Summary of Significant Accounting Policies in our 2025 Form 10-K.

Adjusted EBITDA

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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.

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.

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GAAP financial measures differently, Adjusted EBITDA, as calculated by the Company, should not be compared to any similarly titled measures reported by other companies.

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):

Results of Operations Three Months Ended December 31, 2025 and 2024 (In $000’s)

The following table sets forth certain statement of income items and as a percentage of revenue, for the three months ended December 31, 2025 and 2024 (in $000’s):

Three Months Ended

June 30, 2025 Three Months Ended

June 30, 2024

December 31, 2025 Three Months Ended

December 31, 2024

Revenue % of Total

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Interest expense, net 3,561 3.3 % 4,162 3.7 %

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.

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

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

Profit % of Total Revenue Gross

Profit % of Total Revenue

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 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 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.

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

Revenue % of Total

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 %)

(Loss) income before provision for income taxes (89) (0.1 %) 573 0.5 %

(Benefit) provision for income taxes (25) — % 81 0.1 %

Net (loss) income $ (64) (0.1 %) $ 492 0.4 %

Adjusted EBITDA (a)

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Corporate & Other (1,163) (1,334)

Intercompany Eliminations (300) (769)

Total Adjusted EBITDA $ 7,792 $ 5,744

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Corporate & Other N/A N/A

Intercompany Eliminations N/A N/A

Consolidated adjusted EBITDA as a percentage of revenue 7.2 % 5.2 %

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The following table sets forth revenue by segment (in $000's):

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Total Revenue Net

Revenue % of Total

For the Three Months Ended December 31, 2025 For the Three Months Ended December 31, 2024

Retail-Entertainment $ 23,621 21.8 % $ 21,274 19.1 %

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Corporate & Other 7 — % 56 0.1 %

Intercompany Eliminations (1,134) (1.0 %) (4,024) (3.6 %)

Total Revenue $ 108,544 100.0 % $ 111,508 100.0 %

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

For the Three Months Ended December 31, 2025 For the Three Months Ended December 31, 2024

Profit % of Total Revenue Gross

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Corporate & Other 2 — % 51 — %

Intercompany Eliminations $ 179 0.2 % $ (768) (0.7 %)

Total Gross Profit $ 35,353 32.6 % $ 35,362 31.7 %

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 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.

Revenue decreased approximately $3.0 million, or 2.7%, to approximately $108.5 million for the three months ended December 31, 2025, compared to revenue of approximately $111.5 million for the three months ended December 31, 2024.

The decrease primarily reflects an approximately $7.1 million decline in the Retail-Flooring and Steel Manufacturing segments, partially offset by an approximately $4.1 million aggregate increase in the Retail-Entertainment and Flooring Manufacturing segments, net of intercompany sales eliminations.

Gross profit was approximately $35.4 million for the three months ended December 31, 2025, essentially unchanged compared to the three months ended December 31, 2024.

However, gross margin increased by 90 basis points to 32.6%, as compared to 31.7% in the prior-year period.

The gross margin improvement was attributable to higher margins in the Flooring Manufacturing segment due to improved efficiencies and a favorable product mix, improved efficiencies in the Steel Manufacturing segment, and a favorable product mix in the Retail Entertainment segment, partially offset by lower gross margins in the Retail-Flooring segment.

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.

General and Administrative expenses decreased by 7.4% to approximately $27.8 million for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024.

The decrease was driven primarily by

targeted cost‑reduction initiatives in our Retail‑Flooring segment, including lower compensation expense and reduced professional fees.

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.

Sales and marketing expense decreased by 10.4% to approximately $4.1 million for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, primarily due to reduced sales and marketing activities in our Flooring Manufacturing segment.

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.

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

Interest expense, net, decreased by approximately $0.6 million for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024 due to lower average debt balances.

Results of Operations by Segment for the Three Months Ended December 31, 2025 and 2024

For the Three Months Ended December 31, 2025 For the Three Months Ended December 31, 2024

Retail-Entertainment Retail-Flooring Flooring

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Manufacturing Corporate

& Other Total Retail-Entertainment Retail-Flooring Flooring

& Other I/C Eliminations Total Retail-Entertainment Retail-Flooring Flooring

Manufacturing Steel

Manufacturing Corporate

& Other Total

& Other I/C Eliminations Total

Revenue $ 23,621 $ 25,327 $ 28,861 $ 31,862 $ 7 $ (1,134) $ 108,544 $ 21,274 $ 31,747 $ 29,168 $ 33,287 $ 56 $ (4,024) $ 111,508

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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.

The Retail-Entertainment segment revenue for the quarter ended December 31, 2025, was approximately $23.6 million, an increase of approximately $2.3 million, or 11.0%, compared to approximately $21.3 million in the prior-year period.

The revenue growth was driven by strong consumer demand across all product lines.

Gross margin for the quarter increased to 57.5%, compared to 56.6% in the prior-year period, reflecting a shift in sales mix toward higher‑margin product lines.

Operating income for the quarter ended December 31, 2025, was approximately $4.7 million compared to approximately $3.4 million in the prior-year period.

Strong revenue growth and disciplined management of general and administrative expenses have driven the continued improvement in operating results.

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.

Retail Flooring segment revenue for the quarter ended December 31, 2025, was approximately $25.3 million, representing a decrease of approximately $6.4 million, or 20.2%, compared to approximately $31.7 million in the prior-year period.

The decrease in revenue is primarily due to changes in store locations from the prior-year period, including two store closures and three new store openings late in the fiscal first quarter of 2026 that had not yet materially contributed to revenue, as well as continued softness in the housing market.

Gross margin for the quarter was 31.7%, compared to 37.2% in the prior-year period.

The decrease in gross margin is primarily due to a greater mix of aged inventory sold during the seasonally slower period and a less favorable overall product mix.

Operating loss for the quarter ended December 31, 2025, was approximately $3.7 million, compared to an operating loss of approximately $2.2 million in the prior-year period.

The increased loss was driven mainly by lower revenue and gross margin, partially offset by reduced operating expenses resulting from cost-reduction initiatives implemented in fiscal year 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.

The Flooring Manufacturing segment revenue for the quarter ended December 31, 2025, was approximately $28.9 million, a decrease of approximately $0.3 million, or 1.1%, compared to approximately $29.2 million in the prior-year period.

The decrease in revenue was primarily due to lower sales to the Retail-Flooring segment.

Net of intercompany sales eliminations, revenue increased approximately $2.0 million compared to the prior-year period.

Gross margin for the quarter increased to 25.0%, compared to 21.4% for the prior-year period.

The increase in gross margin is primarily due to a change

in product mix toward carpet, which typically has higher gross margins, combined with improved operational efficiencies.

Operating income for the quarter ended December 31, 2025, was approximately $2.3 million, compared to an operating income of approximately $0.7 million for the prior-year period.

The increase in operating income was primarily due to improved gross margins and lower operating expenses resulting from cost-reduction initiatives.

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

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.

The Steel Manufacturing segment revenue for the quarter ended December 31, 2025, was approximately $31.9 million, a decrease of approximately $1.4 million, or 4.3%, compared to approximately $33.3 million in the prior-year period.

The revenue decrease was primarily driven by lower sales volumes in the metal forming, assembly, and finishing solutions business.

Net of intercompany sales eliminations, revenue decreased approximately $0.7 million compared to the prior-year period.

Gross margin was 19.9% for the quarter, compared to 18.0% for the prior-year period.

The increase in gross margin was primarily due to strategic price increases and improved operational efficiencies.

Operating income for the quarter ended December 31, 2025, was approximately $1.6 million, compared to approximately $1.2 million in the prior-year period.

The increase in operating income was primarily due to improved gross margins.

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.

The Corporate and Other segment operating loss was approximately $1.2 million and $1.6 million for the quarters ended December 31, 2025, and 2024, respectively.

The decrease in operating loss is primarily due to a reduction in corporate expenses, including compensation and professional fees.

Intercompany Eliminations

Intercompany eliminations represent intercompany activity, including sales, cost of goods sold, and inventory profit, that is removed in consolidation.

Segment results are presented prior to these eliminations.

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

The following table presents a reconciliation of net income to Adjusted EBITDA for the three months ended December 31, 2025 and 2024 (in $000’s):

For the Three Months Ended

December 31, 2025 December 31, 2024

Net income (loss) $ (64) $ 492

2 unchanged sentences

Interest expense, net 3,561 4,162

Income tax expense (benefit) 2,067 (968) 7,385 (2,409)

Income tax (benefit) expense (25) 81

Debt issuance costs 59 —

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

Other nonrecurring charges 284 96

Adjusted EBITDA $ 7,792 $ 5,744

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.

Adjusted EBITDA increased by approximately $2.0 million, or 35.7%, for the three months ended December 31, 2025, as compared to the prior year period.

The increase was primarily due to an overall increase in operating income, as discussed above.

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.

As of December 31, 2025, we had total cash on hand of approximately $15.1 million and approximately $23.6 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;

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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:

our operations;

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 for at least the next 12 months:

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.

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.

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.

We had working capital of approximately $69.1 million as of December 31, 2025, compared to working capital of approximately $62.1 million as of September 30, 2025, an increase of approximately $7.0 million.

The increase was primarily driven by an aggregate decrease in current liabilities of approximately $9.2 million, reflecting reductions in the current portion of long‑term debt, the current portion of lease obligations, and accrued liabilities, as well as an increase in accounts payable.

These changes were partially offset by an aggregate decrease in current assets of approximately $2.2 million, driven by decreases in trade receivables and inventories.

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.

The Company’s cash, as of December 31, 2025, was approximately $15.1 million compared to approximately $8.8 million as of September 30, 2025, an increase of approximately $6.3 million.

Net cash provided by operations was approximately $9.8 million for the three months ended December 31, 2025, as compared to net cash provided by operations of approximately $9.4 million for the three months ended December 31, 2024.

The increase was primarily driven by changes related to the settlement of the earnout liability and the gain on extinguishment of debt recognized during the three months ended December 31, 2024, and reflects a decrease in the amortization of the seller note discount, decreases in the changes in accounts receivable, inventories, and accrued liabilities, and an increase in the changes in deposits and other assets and accounts payable.

Our primary sources of cash inflows are from customer receipts from sales on account and factored accounts receivable proceeds.

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.

Our cash flows used in investing activities of approximately $1.3 million for the three months ended December 31, 2025, and approximately $1.8 million for the three months ended December 31, 2024, consisted of the 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.

Our cash flows used in financing activities of approximately $2.2 million during the three months ended December 31, 2025 consisted of payments on notes payable of approximately $6.6 million, net borrowings under revolver loans of approximately $3.9 million, payments for finance leases of approximately $1.1 million, payments for debt issuance costs of approximately $0.7 million, and payments on seller notes of approximately $70,000, partially offset by proceeds from the issuance of notes payable of approximately $9.8 million, and net borrowings under related party revolver loans of approximately $0.4 million.

Our cash flows used in financing activities of approximately $4.8 million during the three months ended December 31, 2024 consisted of net borrowings under revolver loans of approximately $3.1 million, cash paid for the settlement of seller notes of $1.9 million, payments on notes payable of approximately $1.8 million, payments for finance leases of approximately $1.0 million, payments on related party notes payable of approximately $0.3 million, and purchases of treasury stock of approximately $0.2 million, partially offset by proceeds from the issuance of related party notes payable of approximately $1.9 million, and net borrowings under related party revolver loans of approximately $1.6 million.

Currently, we are not issuing common shares for liquidity purposes.

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Any financing obtained by us may further dilute or otherwise impair the ownership interest of our existing stockholders.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 31, 2025, we did not participate in any market risk-sensitive commodity instruments for which fair value disclosure would be required.

We believe we are not subject in any material way to other forms of market risk, such as foreign currency exchange risk or foreign customer purchases or commodity price risk.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis