10-Q: Live Ventures Reports Q1 Net Loss Amid Revenue Dip, Debt Refinancing

Live Ventures Incorporated reported a net loss of $64,000 for the first fiscal quarter of 2026, despite a 35.7% increase in Adjusted EBITDA, as revenue declined by 2.7%.

Summary

• Live Ventures Incorporated reported a net loss of $64,000 for the three months ended December 31, 2025, compared to a net income of $492,000 in the prior-year period.
• Revenue decreased by 2.7% to $108.5 million for the quarter ended December 31, 2025, from $111.5 million in the same period last year.
• Gross profit remained largely unchanged at $35.4 million, but the gross margin improved by 90 basis points to 32.6%.
• Operating income significantly increased to $3.5 million for the quarter, up from $762,000 in the prior-year period.
• Adjusted EBITDA rose by 35.7% to $7.8 million for the quarter, compared to $5.7 million in the prior-year period.
• The Retail-Entertainment segment saw an 11.0% revenue increase to $23.6 million, driven by strong consumer demand and a shift to higher-margin products.
• The Retail-Flooring segment experienced a 20.2% revenue decrease to $25.3 million, attributed to store changes and a soft housing market, leading to a higher operating loss.
• Flooring Manufacturing revenue decreased by 1.1% to $28.9 million, but net of intercompany eliminations, revenue increased by $2.0 million, with gross margin improving to 25.0% due to product mix and operational efficiencies.
• Steel Manufacturing revenue decreased by 4.3% to $31.9 million, primarily due to lower sales volumes in metal forming, assembly, and finishing solutions, but gross margin improved to 19.9% due to strategic price increases and operational efficiencies.
• Corporate and Other segment operating loss decreased to $1.2 million from $1.6 million, reflecting reduced corporate expenses.
• Cash on hand increased to $15.1 million as of December 31, 2025, from $8.8 million as of September 30, 2025.
• Working capital increased by $7.0 million to $69.1 million as of December 31, 2025.
• Precision Marshall, Kinetic, and Central Steel refinanced their Fifth Third Bank loans with a new $47.0 million credit facility from Legacy Corporate Lending, maturing December 30, 2028.
• Flooring Liquidators extended its credit facility with Eclipse Business Capital to February 18, 2026, to finalize refinancing terms.
• Vintage Stock amended its credit agreement with Bank Midwest, extending maturity to October 17, 2026, and modifying certain covenants.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral to slightly negative. While operational metrics like operating income and Adjusted EBITDA show improvement, the shift to a net loss and overall revenue decline are concerning. The ongoing, complex legal proceedings also present significant uncertainty and risk.

Positives

• Operating income increased significantly to $3.45 million for the quarter ended December 31, 2025, from $0.76 million in the prior-year period.
• Adjusted EBITDA grew by 35.7% to $7.79 million, indicating improved operational strength.
• Gross profit percentage improved to 32.6% from 31.7% in the prior-year period, driven by favorable product mix and operational efficiencies.
• The Retail-Entertainment segment demonstrated strong revenue growth of 11.0% and increased gross margin to 57.5%.
• Flooring Manufacturing segment's gross margin increased to 25.0% due to a favorable product mix and improved operational efficiencies.
• Steel Manufacturing segment's gross margin increased to 19.9% due to strategic price increases and improved operational efficiencies.
• General and administrative expenses decreased by 7.4% due to targeted cost-reduction initiatives.
• Sales and marketing expenses decreased by 10.4%, primarily in the Flooring Manufacturing segment.
• Net cash provided by operating activities increased to $9.85 million from $9.40 million in the prior-year period.
• Cash on hand increased to $15.13 million as of December 31, 2025, from $8.83 million as of September 30, 2025.
• Working capital increased by $7.0 million to $69.1 million.
• The company believes it has sufficient liquidity for at least the next 12 months from available cash, operating activities, and revolving credit facilities.

Negatives

• The company reported a net loss of $64,000 for the quarter ended December 31, 2025, a decline from a net income of $492,000 in the prior-year period.
• Total revenue decreased by 2.7% to $108.5 million.
• The Retail-Flooring segment experienced a significant revenue decrease of 20.2% and a lower gross margin of 31.7%, leading to an increased operating loss of $3.7 million.
• The Steel Manufacturing segment's revenue decreased by 4.3% due to lower sales volumes in certain business areas.
• The company is involved in multiple ongoing legal proceedings, including an SEC investigation and a class action lawsuit, which pose significant financial and reputational risks.
• The Flooring Liquidators credit facility maturity was extended only to February 18, 2026, indicating a short-term solution while refinancing terms are finalized.

Risks

• Ongoing SEC investigation and civil complaint alleging financial, disclosure, and reporting violations from 2016-2018, seeking permanent injunctions, officer-and-director bars, disgorgement of profits, and civil penalties.
• Pending Sieggreen Class Action lawsuit with similar allegations to the SEC complaint, with fact and expert discovery scheduled to conclude by June 29, 2027.
• Unresolved Wage and Hour class action lawsuit against a subsidiary (Elite Builder Services, Inc.) alleging failure to pay minimum/overtime wages, provide breaks, and accurate wage statements.
• Potential for additional debt financing or capital raises through stock issuances, which could dilute existing stockholders' ownership interest.
• Reliance on asset-based lending arrangements and mezzanine financing, which may carry specific covenants and restrictions.
• Risk of default under related party seller notes, which could lead to the revocation of principal reductions and an increase in outstanding debt (e.g., Flooring Liquidators Seller Note).
• Exposure to variable interest rates on significant debt facilities (e.g., Legacy Revolver, Legacy Term, Legacy Capex, Eclipse Revolver, Eclipse M&E) tied to SOFR and Adjusted Term SOFR, which could increase interest expense.
• Softness in the housing market impacting the Retail-Flooring segment's revenue and profitability.
• Dependence on the continued successful performance of a group of Borrowers, as the successful operation of each is dependent on the others.

Future Outlook

Management believes that available cash balances, cash generated from operating activities, and funds from asset-based revolving credit facilities will provide sufficient liquidity for at least the next 12 months to fund operations, pay scheduled loan payments, repurchase shares, and pay preferred stock dividends. The company may require additional debt or equity financing for new acquisitions, refinancing existing debt, or strategic investments, which could dilute existing stockholders. The company prefers asset-based lending and mezzanine financing for acquisitions and does not currently issue common shares for liquidity, but may issue stock or derivative instruments for services or debt settlement.

Management Comments

• Revenue growth in the Retail-Entertainment segment was driven by strong consumer demand across all product lines.
• The decrease in Retail-Flooring revenue is primarily due to changes in store locations, 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.
• The increase in Flooring Manufacturing gross margin is primarily due to a change in product mix toward carpet, which typically has higher gross margins, combined with improved operational efficiencies.
• The Steel Manufacturing segment's revenue decrease was primarily driven by lower sales volumes in the metal forming, assembly, and finishing solutions business, but gross margin improvement was due to strategic price increases and improved operational efficiencies.
• The decrease in Corporate and Other operating loss is primarily due to a reduction in corporate expenses, including compensation and professional fees.
• 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 for at least the next 12 months.

Industry Context

StockSavvy.ai notes that Live Ventures' mixed performance reflects broader economic trends, with strong consumer demand in entertainment contrasting with softness in the housing market impacting flooring segments. The strategic debt refinancings across its diverse portfolio indicate proactive financial management in a dynamic interest rate environment. The focus on operational efficiencies and strategic pricing in manufacturing segments aligns with industry efforts to maintain profitability amidst fluctuating demand.

Comparison to Industry Standards

• The Retail-Entertainment segment's 11.0% revenue growth and 57.5% gross margin are strong indicators, potentially outperforming general retail trends which have faced inflationary pressures and shifting consumer spending habits.
• The Retail-Flooring segment's 20.2% revenue decline and lower gross margin suggest underperformance compared to a stable or growing home improvement market, likely due to specific store location changes and broader housing market slowdowns.
• The Flooring Manufacturing segment's improved gross margin (25.0%) despite a slight revenue dip indicates effective cost management and product mix optimization, potentially positioning it favorably against competitors facing raw material cost volatility.
• The Steel Manufacturing segment's revenue decline (4.3%) but improved gross margin (19.9%) suggests a focus on higher-value products or efficiency gains, which could be a competitive advantage in a cyclical industrial sector.
• The significant increase in operating income and Adjusted EBITDA, despite a net loss, highlights the company's ability to control core operational costs and generate cash flow, which is crucial for diversified holding companies.

Legal Proceedings

• SEC Investigation: A civil complaint filed on August 2, 2021, by the SEC against the company and two executive officers (Jon Isaac and Virland Johnson) alleging financial, disclosure, and reporting violations from 2016-2018. The SEC seeks permanent injunctions, officer-and-director bars, disgorgement of profits, and civil penalties. Fact discovery concluded on May 20, 2024, and expert discovery in September 2024. Cross Motions for Summary Judgment were filed in October 2024, and the case is on hold pending rulings.
• Sieggreen Class Action: A class action complaint filed on August 13, 2021, by Daniel E. Sieggreen against the company, Jon Isaac, and Virland Johnson, with allegations similar to the SEC complaint. The court denied a motion to dismiss the Second Amended Complaint on September 30, 2025. Fact and expert discovery is scheduled to conclude by June 29, 2027.
• Wage and Hour Matter: A class action complaint filed on July 27, 2022, by Irma Sanchez against Elite Builder Services, Inc. (a subsidiary) alleging failure to pay minimum and overtime wages, provide lawful meal and rest breaks, provide accurate wage statements, and pay all wages due upon separation. Mediation has been repeatedly postponed.

Related Party Transactions

• Isaac Capital Group, LLC (ICG), controlled by CEO Jon Isaac, has a revolving promissory note with the company. The ICG Revolver had an outstanding balance of $12.0 million as of December 31, 2025, with a maturity date extended to April 8, 2030, and a fixed conversion price of $7.85 per share. A $6.0 million non-cash capital contribution was recognized due to the conversion feature.
• ICG also holds a $5.0 million promissory note for Flooring Liquidators, maturing January 18, 2028, bearing 12% interest, fully guaranteed by the company.
• An ICG PMW Note of $2.6 million was outstanding as of December 31, 2025, maturing December 17, 2029, bearing 12% interest. Proceeds of $1.9 million from this note were used to settle PMW Seller Financed Loans, with a $0.7 million discount accreted to interest expense.
• Spriggs Investments, LLC, controlled by Vintage Stock CEO Rodney Spriggs, holds a promissory note (Spriggs Loan II) with an outstanding principal of $0.8 million as of December 31, 2025, with its maturity extended to July 31, 2026.
• ALT5 Sigma Corporation, where Tony Isaac (board member and CEO's father) serves as interim CEO, paid the company $59,000 in rent and reimbursed expenses for the three months ended December 31, 2025.
• Marquis Industries, Inc. entered into two 20-year building leases with Spyglass Estate Planning, LLC, controlled by CEO Jon Isaac, on July 1, 2022, with rental amounts determined to be at market rates.
• A seller-financed mezzanine loan for Flooring Liquidators, initially $34.0 million, was reduced to $15.0 million on February 25, 2025, with an 8.24% interest rate and a February 2028 maturity. In case of default, the principal reduction can be revoked, increasing the outstanding balance to $34.0 million.
• A seller-financed loan for Kinetic of $3.0 million was outstanding as of December 31, 2025, bearing 7.0% interest and maturing September 27, 2027.
• A seller-financed loan for Central Steel of $0.9 million was outstanding as of December 31, 2025, bearing 8.0% interest and maturing May 15, 2029.

Stakeholder Impact

• Shareholders: The net loss and potential future equity raises could negatively impact shareholder value. However, increased Adjusted EBITDA and working capital, along with the share buyback program, could provide some support. The ongoing legal proceedings introduce significant uncertainty.
• Employees: The cost-reduction initiatives in the Retail-Flooring segment and reduced corporate expenses could impact employee compensation or headcount. The wage and hour lawsuit against Elite Builder Services, Inc. directly affects employees.
• Creditors/Lenders: The debt refinancings (Legacy Corporate Lending, Eclipse Business Capital, Bank Midwest) indicate active management of debt obligations. The company's stated liquidity for 12 months is positive, but the short-term extension for Flooring Liquidators' facility and the default revocation clause in the Flooring Liquidators Seller Note highlight ongoing credit risks.
• Customers: Changes in store locations for Retail-Flooring and lower sales volumes in Steel Manufacturing could affect customer access or product availability in those segments.

Next Steps

• Continue to pursue acquisitions and other strategic transactions to expand and grow the business.
• Monitor capital market conditions for potential additional debt financing or capital raises.
• Negotiate and finalize terms for the refinancing of Flooring Liquidators' credit facility with Eclipse Business Capital by February 18, 2026.
• Continue to fund operations, pay scheduled loan payments, repurchase shares under the buyback program, and pay dividends on Series E Preferred Stock.
• Address ongoing legal proceedings, including awaiting rulings on cross Motions for Summary Judgment in the SEC case and concluding discovery in the Sieggreen class action by June 29, 2027.

Key Dates

Recommendation

The company presents a mixed financial picture with a net loss and revenue decline, offset by strong Adjusted EBITDA growth and improved operating income. While liquidity appears sufficient for the near term and debt has been proactively refinanced, the ongoing, complex legal proceedings (SEC investigation, class action, wage dispute) introduce substantial uncertainty and potential liabilities. A seasoned investor would likely 'hold' due to the operational improvements and financial stability, but remain cautious given the significant legal overhang and the shift to a net loss, awaiting clearer resolution on these matters before making a more definitive investment decision.

Keywords

Diversified Holding Company, SEC Filing, Quarterly Report, Financial Performance, Revenue, Net Loss, Adjusted EBITDA, Debt Refinancing, Credit Facility, Legal Proceedings, Retail-Entertainment, Retail-Flooring, Flooring Manufacturing, Steel Manufacturing, Working Capital, Liquidity, SOFR, Asset-Based Lending, Related Party Transactions