Luvu Brands Reports Fiscal 2021 Second Quarter and First Half Results

Reports Record First Half Net Sales of $11.1 million; Record Net Income of $1.8 million

ATLANTA, GA / ACCESSWIRE / February 16, 2021 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands, today reported fiscal 2021 second quarter and first half results.

Fiscal Second Quarter 2021 Highlights

Three months ended December 31, 2020 as compared to the three months ended December 31, 2019

• Net sales increased 20% to a record $5.7 million from $4.8 million.
• Total gross profit of $1.6 million, up slightly from the prior year.
• Gross profit as a percentage of net sales at 27%; down from 32% in 2019.
• Operating expenses were relatively unchanged at $1,109,000.
• Income from operations was a record $457,000, up 10% from $414,000 in 2019.
• Net income of $1,465,000, or $0.02 per share, compared to a net income of $257,000, or $0.00 per share, in the prior year.

First Half Fiscal 2021 Highlights

Six months ended December 31, 2020 as compared to the six months ended December 31, 2019

• Net sales increased 25% to a record $11.1 million from $8.9 million.
• Total gross profit of $3.1 million, up 15% from $2.7 million in the prior year.
• Gross profit as a percentage of net sales at 28%; down from 30% in 2019.
• Operating expenses were $2.2 million, up 1.5% from the prior year.
• Income from operations was a record $893,000, up 69% from $528,000 in 2019.
• Net income of $1,794,000, or $0.02 per share, compared to a net income of $212,000, or $0.00 per share, in the prior year.
• Adjusted EBITDA was a record $2.1 million for the first half compared to $618,000 in the prior year first half.

Louis Friedman, Chairman and Chief Executive Officer, commented, “Even without the PPP loan forgiveness, we continued to deliver strong financial results for the second quarter and first half of fiscal 2021. Demand for Liberator and Jaxx products continued to be strong during the December quarter; Avana sales were limited by our production capacity. We recently purchased over $700,000 of new production equipment which we expect will increase our production capacity across all product lines.”

Fiscal Second Quarter 2021 Results

Net sales increased 20% to $5.7 million, compared to $4.8 million in the same year-ago quarter. Sales of Liberator products increased 25% to $2.5 million from $2.0 million in the prior year. Jaxx product sales totaled $1.7 million, up 45% from $1.2 million in the second quarter of the prior fiscal year. Avana products decreased 20% to $.8 million from $1.0 million in the prior year.

Gross profit for the second quarter totaled $1.6 million, compared to $1.5 million in the prior year second quarter. The Company experienced labor and raw material cost increases during the second quarter; gross profit as a percentage of net sales fell to 27% from 32% in the prior year second quarter.

Operating expenses were approximately 19% of net sales, or approximately $1,109,000, compared to 23% of net sales, or approximately $1,105,000, for the same period in the prior year.

Income from operations was $457,000 compared to $414,000 in the prior year.

Net income for the quarter was $1,465,000, or $0.02 per share, compared to net income of $257,000, or $0.00 per share in the prior year second quarter.

Secured and unsecured debt decreased from $3.5 million on June 30, 2020 to $2.3 million on December 31, 2020 and the working capital deficit improved from $1.4 million to $.6 million.

Conference Call

Management will host a conference call at 12:00 p.m. EDT (11:00 a.m. CDT; 9:00 a.m. PDT) on Tuesday, February 16, 2021 to review the results for the second quarter and six months. To listen and participate in the call, please register on this weblink https://www.webcaster4.com/Webcast/Page/2527/40025. After the formal presentation, there will be a Q&A session. Shareholders and other interested parties may ask questions through either the weblink or by calling 877-407-0778. The replay of the call will remain available on the Company’s investor relations website, www.luvubrands.com, until May 14, 2021.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements. Such forward-looking statements can be identified by the use of words such as ”should,” ”may,” ”intends,” ”anticipates,” ”believes,” ”estimates,” ”projects,” ”forecasts,” ”expects,” ”plans,” and ”proposes.” These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 as filed with the Securities and Exchange Commission (the “SEC”) on October 1, 2020 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Luvu Brands, Inc. and are difficult to predict. Luvu Brands, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms is not part of this press release.

Use of Non-GAAP Financial Measures

Luvu Brands’ management evaluates and makes operating decisions using various financial metrics. In addition to the Company’s GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. As used herein, Adjusted EBITDA represents net income before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense. Management believes that this non-GAAP measures provide useful information about the Company’s operating results. Adjusted EBITDA has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as alternative to, or more meaningful than, net income (loss) as indicators of the Company’s operating performance. Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

About Luvu Brands

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company’s websites, online mass / drug merchants and specialty retail stores worldwide. Brands include: Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; Avana®, inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery and chronic pain; and Jaxx®, a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and our re-purposed polyurethane foam trim. Headquartered in Atlanta, Georgia, the Company occupies a 140,000 square foot vertically-integrated manufacturing facility and employs over 200 people. The Company’s brand sites include: www.liberator.com, www.jaxxliving.com, www.avanacomfort.com plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com.

Company Contact:

Luvu Brands, Inc.
Ronald Scott
Chief Financial Officer
770-246-6426
[email protected]

Fiscal 2021 Second Quarter and First Half Results

LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)

Three Months Ended
December 31, Six Months Ended
December 31,

2020 2019 20202019

(in thousands, except share data)

$ 5,714$ 4,779$ 11,081$ 8,874

4,1483,2608,0276,217

1,5661,5193,0542,657

120116189196

270317537634

6686331,3321,220

513910379

1,1091,1052,1612,129

457414893528

1,096-1,096-

(88)(157)(195)(316)

1,008(157)901(316)

1,4652571,794212

—-

$ 1,465$ 257$ 1,794$ 212

$ 0.02$ 0.00$ 0.02$ 0.00

$ 0.02$ 0.00$ 0.02$ 0.00

73,682,55173,452,59673,567,57473,452,596

74,050,84774,201,19474,550,24974,243,627

LUVU BRANDS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

December 31,

2020 June 30,

(unaudited) 2020

(in thousands, except share data)

$ 1,015$ 1,152

9151,135

2,4901,985

8755

4,5074,327

1,276938

33-

2,684165

2417

$ 8,524$ 5,447

$ 2,524$ 2,435

1,8552,007

-482

470623

247199

5,0965,746

444361

-614

2,437-

2,881975

7,9776,721

—

—

—

750735

6,1596,147

(6,362)(8,156)

547(1,274)

$ 8,524$ 5,447

SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Reconciliation of net income to Adjusted EBITDA for the six months ended December 31, 2020 and 2019:

Six months ended December 31,

2020 2019

$ 1,794$ 212

195316

10379

811

$ 2,100$ 618

SOURCE: Luvu Brands, Inc.

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