10-Q: Live Ventures Reports Q2 Loss Amid Subsidiary Default

Live Ventures Incorporated reported a net loss for the quarter ended June 30, 2026, with significant challenges noted at its Precision Metal Works subsidiary, which is in default on its credit facility.

Summary

• Live Ventures Incorporated reported a net loss of $1.06 million for the three months ended June 30, 2026, compared to a net income of $5.39 million in the prior year period.
• For the nine months ended June 30, 2026, the company reported a net loss of $3.57 million, a significant decrease from a net income of $21.75 million in the same period last year.
• Revenue for the quarter decreased by 3.2% to $108.9 million, primarily due to a $9.0 million decline in the Retail-Flooring segment.
• The Steel Manufacturing segment showed revenue growth of 7.3% for the quarter, reaching $36.3 million.
• A significant concern is the default status of its subsidiary, Precision Metal Works (PMW), on its credit facility with Fifth Third Bank, with forbearance extended only through August 19, 2026.
• PMW incurred a $4.0 million goodwill impairment charge in the first quarter of 2026.
• The company's total cash on hand as of June 30, 2026, was $10.9 million.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the net loss reported and the ongoing default issues at a key subsidiary, despite some segment revenue improvements.

Positives

• Revenue increased in the Retail-Entertainment segment by 12.7% for the quarter and 12.8% for the nine-month period.
• The Steel Manufacturing segment saw revenue increases of 7.3% for the quarter and 2.1% for the nine-month period.
• Gross margin improved slightly to 34.1% for the quarter and 33.4% for the nine-month period.
• The company has $10.9 million in cash and $28.9 million in available borrowing capacity under its revolving credit facilities as of June 30, 2026.

Negatives

• The company reported a net loss of $1.06 million for the three months ended June 30, 2026, compared to a net income of $5.39 million in the prior year.
• For the nine months ended June 30, 2026, the company reported a net loss of $3.57 million, a significant drop from a net income of $21.75 million in the prior year.
• Revenue decreased by 3.2% to $108.9 million for the quarter, primarily driven by a $9.0 million decline in the Retail-Flooring segment.
• The Retail-Flooring segment reported an operating loss of $3.2 million for the quarter, widening from a $0.7 million loss in the prior year.
• A $4.0 million goodwill impairment charge was recorded for the Precision Metal Works (PMW) segment in the nine months ended June 30, 2026.
• PMW is in default on its credit facility with Fifth Third Bank, with forbearance expiring August 19, 2026, posing a significant risk.

Risks

• The subsidiary Precision Metal Works (PMW) is in default under its credit facility with Fifth Third Bank, with forbearance extended only through August 19, 2026. Failure to refinance or resolve the default could lead to acceleration of indebtedness or enforcement of remedies against PMW's assets.
• The company's ability to continue operations and its financial condition could be adversely affected if PMW cannot resolve its default status.
• The Retail-Flooring segment continues to face headwinds in new-home construction and home-refurbishment markets, leading to declining revenues.
• The company's significant debt obligations, including related party notes payable, require careful management and refinancing efforts.
• The ongoing SEC investigation and class action lawsuit present potential legal and financial risks.

Future Outlook

The company believes that its available cash balances, cash generated from operations, and funds available under its asset-based revolver lines of credit will provide sufficient liquidity for at least the next 12 months to fund operations, pay loan payments, repurchase shares, and pay preferred stock dividends. However, the default status of PMW presents a significant uncertainty.

Management Comments

• Management believes that available cash balances, cash generated from operating activities, and funds available under asset-based revolver lines of credit will provide sufficient liquidity for at least the next 12 months.
• Management believes that the outcome of pending legal proceedings will not, individually or in the aggregate, have a material adverse effect on the company's financial position, results of operations, or cash flows.
• Management believes that the default at PMW and potential acceleration or enforcement action by Fifth Third Bank would not be material to the company or its overall liquidity, given the consolidated cash position and available borrowing capacity under other facilities.

Industry Context

StockSavvy.ai notes that the decline in the Retail-Flooring segment reflects broader challenges in the home renovation and construction markets, while the growth in Steel Manufacturing aligns with demand in industrial sectors.

Comparison to Industry Standards

• The company's gross margin of 34.1% for the quarter is within a typical range for diversified industrial and retail businesses, though specific comparisons depend heavily on the sub-segments.
• The net loss reported for the quarter is a negative indicator when compared to industry peers that are consistently profitable.
• The significant goodwill impairment at PMW suggests potential overpayment or underperformance relative to acquisition expectations, a risk that can affect companies in acquisition-heavy industries.
• The company's reliance on debt financing, including related-party loans, is common in leveraged buyouts but requires careful management to avoid distress, as seen with PMW's situation.

Legal Proceedings

• The company and certain executive officers are defendants in a civil enforcement action by the SEC related to financial reporting, disclosures, and executive compensation from 2016-2018. The SEC seeks injunctions, officer/director bars, disgorgement, and penalties. The court denied cross-motions for summary judgment, and a trial date is not yet set.
• A class action lawsuit (Sieggreen) alleges violations of federal securities laws, with allegations similar to the SEC complaint. The case is proceeding through discovery after a motion to dismiss the second amended complaint was denied.

Related Party Transactions

• Significant notes payable and revolving credit facilities are held by related parties, including Isaac Capital Group, LLC and Spriggs Investments, LLC, with interest rates often at 12%.
• Jon Isaac, CEO, is President and sole member of ICG, which beneficially controls a significant portion of the company's voting power.
• Marquis entered into a sale-leaseback transaction with Store Capital Acquisitions, LLC, involving a note payable.
• AI Financial, whose CEO is a director's son, rents office space from the company.
• Marquis entered into building leases with Spyglass Estate Planning, LLC, where Jon Isaac is the sole member.

Stakeholder Impact

• Shareholders may be impacted by the net loss and the ongoing legal proceedings, which could affect future stock performance.
• Creditors and lenders face increased risk due to the default at PMW and the company's overall debt levels.
• Employees at PMW may face uncertainty regarding the subsidiary's future operations.
• Suppliers may experience payment delays if the company's liquidity is strained.

Next Steps

• Evaluate financing terms with a prospective replacement lender for PMW.
• Continue to pursue acquisitions and strategic transactions.
• Monitor capital market conditions for potential fundraising.
• Manage working capital and cash flows to ensure liquidity.
• Address the default status of PMW's credit facility.

Key Dates

Recommendation

The company's reported net loss, declining revenues in key segments, and the critical default situation at its subsidiary PMW, coupled with ongoing litigation, present significant financial and operational risks. While some segments show growth, the overall financial health and the unresolved issues at PMW outweigh the positives, suggesting a cautious approach and a sell recommendation.

Keywords

Live Ventures, Form 10-Q, Quarterly Report, Financial Statements, Revenue, Net Loss, Goodwill Impairment, Credit Facility Default