First quarter net product sales of $3.5 million, rebounding 35% from the fourth quarterFirst quarter net loss of $2.5 million, or ($0.13) per share, on a GAAP basis; net loss of $1.5 million, or ($0.08) per share, on a non-GAAP basis Adjusted EBITDA of $(0.9) million for the quarter NEW YORK, May 17, 2021 (GLOBE NEWSWIRE) -- Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company, today announced its financial results for the first quarter ended March 31, 2021. Robert W. D'Loren, Chairman and Chief Executive Officer of Xcel commented, “With the extraordinary events of 2020 now nearly behind us, our team has been hard at work during the first quarter of 2021 in not just rebuilding and recovering, but also expanding and growing the business. Our first quarter operating loss was primarily attributable to expected softness in our wholesale apparel business.” “We are beginning to see signs of a recovery from the pandemic as momentum is picking up in the 2021 second quarter and we expect a return to growth in the third and fourth quarters of this year. We are encouraged by the opportunities and future potential we see in our direct-to-consumer and live-streaming businesses and our recent acquisition of the LOGO Lori Goldstein brand. We expect growth to accelerate beginning in the second quarter and our operating results to improve across our business in 2021,” concluded Mr. D’Loren. First Quarter 2021 Financial Results Total revenue was $7.8 million, a decrease of $1.7 million compared to the prior year quarter, primarily driven by the discontinuation of the licensing of the H Halston brand through QVC during the fourth quarter of 2020, and the Company’s transitioning of that brand to a wholesale supply model under arrangements with Qurate Retail affiliates and other interactive television networks. The economic impacts of the ongoing COVID-19 pandemic also negatively impacted both net product sales and net licensing revenues for the quarter. Despite the decrease in revenues and gross profit on an absolute dollar basis, overall gross profit margins remained relatively flat year-over-year, while gross profit margins on product sales increased from 38% in the prior year quarter to 48% in the current quarter. Net loss attributable to Xcel Brands was approximately $2.5 million, or ($0.13) per diluted share, compared with a net loss of $0.8 million, or ($0.04) per diluted share, for the prior year quarter. After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $1.5 million, or ($0.08) per diluted share for the quarter ended March 31, 2021, and net income of approximately $0.2 million, or $0.01 per diluted share, for the quarter ended March 31, 2020. Adjusted EBITDA was approximately $(0.9) million and $0.7 million for the current quarter and the prior year quarter, respectively. The Company's balance sheet at March 31, 2021 remained strong, with stockholders' equity of approximately $84 million, cash and cash equivalents of approximately $3.0 million, and working capital, exclusive of the current portion of lease obligations, of approximately $6.5 million. Conference Call and WebcastThe Company will host a conference call with members of the executive management team to discuss these results with additional comments and details at 5:00 p.m. Eastern Time on Monday, May 17, 2021. A webcast of the conference call will be available live on the Investor Relations section of Xcel's website at www.xcelbrands.com. Interested parties unable to access the conference call via the webcast may dial 1-877-300-8521. A replay of the conference call will be available on the Company website for 30 days following the event and can be accessed at 844-512-2921 using replay pin number 10156596. About Xcel BrandsXcel Brands, Inc. (NASDAQ:XELB) is a media and consumer products company engaged in the design, production, marketing, live streaming, wholesale distribution, and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. The company’s brands have generated in excess of $3BB US in retail sales through live streaming in interactive television and digital channels along. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as one thing. Xcel owns the Isaac Mizrahi, Judith Ripka, Halston, LOGO Lori Goldstein and C Wonder brands, and owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC, pioneering a ubiquitous sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, brick-and-mortar retail, wholesale, and e-commerce channels. Headquartered in New York City, Xcel Brands is led by an executive team with significant livestreaming, production, merchandising, design, production, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. With an experienced team of professionals focused on design, production, and digital marketing, Xcel maintains control of product quality and promotion across all of its product categories and distribution channels. Xcel differentiates by design. www.xcelbrands.com Forward Looking StatementsThis press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "ongoing," "could," "estimates," "expects," "intends," "may," "appears," "suggests," "future," "likely," "goal," "plans," "potential," "projects," "predicts," "seeks," "should," "would," "guidance," "confident" or "will" or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the "Risk Factors" section and elsewhere in the Company's Annual Report on form 10-K for the year ended December 31, 2020 and its other filings with the SEC, which may cause our or our industry's actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. For further information please contact: Andrew BergerSM Berger & Company, Inc. firstname.lastname@example.org Xcel Brands, Inc. and SubsidiariesUnaudited Condensed Consolidated Balance Sheets(in thousands, except share and per share data) March 31, 2021 December 31, 2020 (Unaudited) Assets Current Assets: Cash and cash equivalents $2,969 $4,957 Accounts receivable, net 8,647 8,889 Inventory 2,785 1,216 Prepaid expenses and other current assets 1,797 1,085 Total current assets 16,198 16,147 Property and equipment, net 3,360 3,367 Operating lease right-of-use assets 8,296 8,668 Trademarks and other intangibles, net 92,627 93,535 Restricted cash 1,109 1,109 Other assets 225 228 Total non-current assets 105,617 106,907 Total Assets $121,815 $123,054 Liabilities and Equity Current Liabilities: Accounts payable, accrued expenses and other current liabilities $5,938 $4,442 Accrued payroll 1,283 973 Current portion of operating lease obligation 1,927 2,101 Current portion of long-term debt 2,500 2,800 Total current liabilities 11,648 10,316 Long-Term Liabilities: Long-term portion of operating lease obligation 8,171 8,469 Long-term debt, less current portion 14,158 13,838 Contingent obligation 900 900 Deferred tax liabilities, net 2,918 3,052 Other long-term liabilities 224 224 Total long-term liabilities 26,371 26,483 Total Liabilities 38,019 36,799 Commitments and Contingencies Equity: Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding - - Common stock, $.001 par value, 50,000,000 shares authorized, and 19,262,529 and 19,260,862 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively 19 19 Paid-in capital 102,493 102,324 Accumulated deficit (19,142) (16,595)Total Xcel Brands, Inc. stockholders' equity 83,370 85,748 Noncontrolling interest 426 507 Total Equity 83,796 86,255 Total Liabilities and Equity $121,815 $123,054 Xcel Brands, Inc. and SubsidiariesUnaudited Condensed Consolidated Statements of Operations(in thousands, except share and per share data) For the Three Months Ended March 31, 2021 2020Revenues Net licensing revenue $4,307 $5,641 Net sales 3,502 3,886 Net revenue 7,809 9,527 Cost of goods sold (sales) 1,835 2,400 Gross profit 5,974 7,127 Operating costs and expenses Salaries, benefits and employment taxes 4,052 3,948 Other selling, general and administrative expenses 3,038 2,649 Costs in connection with potential acquisition - 80 Stock-based compensation 160 243 Depreciation and amortization 1,210 1,303 Total operating costs and expenses 8,460 8,223 Operating loss (2,486) (1,096) Interest and finance expense 280 294 Loss before income taxes (2,766) (1,390) Income tax benefit (138) (552) Net loss (2,628) (838)Less: Net loss attributable to noncontrolling interest (81) (33)Net loss attributable to Xcel Brands, Inc. stockholders $(2,547) $(805) Loss per share attributed to Xcel Brands, Inc. common stockholders: Basic net loss per share: $(0.13) $(0.04)Diluted net loss per share: $(0.13) $(0.04) Weighted average number of common shares outstanding: Basic weighted average common shares outstanding 19,261,436 18,870,398 Diluted weighted average common shares outstanding 19,261,436 18,870,398 Xcel Brands, Inc. and SubsidiariesUnaudited Condensed Consolidated Statements of Cash Flows(in thousands) For the Three Months Ended March 31, 2021 2020 Cash flows from operating activities Net loss $(2,628) $(838)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization expense 1,210 1,303 Amortization of deferred finance costs 20 25 Stock-based compensation 160 243 Allowance for doubtful accounts 132 211 Deferred income tax benefit (138) (552)Changes in operating assets and liabilities: Accounts receivable (377) 1,568 Inventory (1,569) 111 Prepaid expenses and other assets (222) (13)Accounts payable, accrued expenses and other current liabilities 1,819 (1,656)Cash paid in excess of rent expense (100) (91)Other liabilities - - Net cash (used in) provided by operating activities (1,693) 311 Cash flows from investing activities Purchase of property and equipment (295) (604)Net cash used in investing activities (295) (604) Cash flows from financing activities Shares repurchased including vested restricted stock in exchange for withholding taxes - (102)Net cash used in financing activities - (102) Net decrease in cash, cash equivalents, and restricted cash (1,988) (395) Cash, cash equivalents, and restricted cash at beginning of period 6,066 5,750 Cash, cash equivalents, and restricted cash at end of period $4,078 $5,355 Reconciliation to amounts on consolidated balance sheets: Cash and cash equivalents 2,969 $4,246 Restricted cash 1,109 1,109 Total cash, cash equivalents, and restricted cash $4,078 $5,355 Supplemental disclosure of non-cash activities: Liability for equity-based bonuses $(9) $(68)Supplemental disclosure of cash flow information: Cash paid during the period for income taxes $15 $17 Cash paid during the period for interest $236 $290 Three Months Ended March 31, March 31,($ in thousands) 2021 2020 (Unaudited) (Unaudited)Net loss attributable to Xcel Brands, Inc. stockholders $(2,547) (805)Amortization of trademarks 876 1,108 Stock-based compensation 160 243 Costs in connection with potential acquisition - 80 Certain adjustments to allowance for doubtful accounts 132 114 Deferred income tax benefit (138) (552)Non-GAAP net (loss) income $(1,517) $188 Three Months Ended March 31, March 31, 2021 2020 (Unaudited) (Unaudited)Diluted loss per share attributable to Xcel Brands, Inc. stockholders $(0.13) $(0.04)Amortization of trademarks 0.04 0.06 Stock-based compensation 0.01 0.01 Costs in connection with potential acquisition - 0.00 Certain adjustments to allowance for doubtful accounts 0.01 0.01 Deferred income tax benefit (0.01) (0.03)Non-GAAP diluted EPS $(0.08) $0.01 Non-GAAP weighted average diluted shares 19,261,436 18,871,020 Three Months Ended March 31, March 31,($ in thousands) 2021 2020 (Unaudited) (Unaudited)Net loss attributable to Xcel Brands, Inc. stockholders $(2,547) $(805)Depreciation and amortization 1,210 1,303 Interest and finance expense 280 294 Income tax benefit (138) (552)State and local franchise taxes 39 38 Stock-based compensation 160 243 Costs in connection with potential acquisition - 80 Certain adjustments to allowance for doubtful accounts 132 114 Adjusted EBITDA $(864) $715 Non-GAAP net income and non-GAAP diluted EPS are non-GAAP unaudited terms. We define non-GAAP net income as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of amortization of trademarks, stock-based compensation, non-cash interest and finance expense from discounted debt related to acquired assets, loss on extinguishment of debt, gain on sales of assets, gain on reduction of contingent obligations, costs (recoveries) in connection with potential acquisitions, certain adjustments to allowances for doubtful accounts related to debtors that have filed for bankruptcy protection or experienced economic hardships triggered by the impact of COVID-19, and deferred income taxes. Non-GAAP net income and non-GAAP diluted EPS measures do not include the tax effect of the aforementioned adjusting items, due to the nature of these items and the Company’s tax strategy. Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net income (loss) attributable to Xcel Brands, Inc. stockholders, before depreciation and amortization, interest and finance expenses (including loss on extinguishment of debt, if any), income taxes, other state and local franchise taxes, stock-based compensation, gain on reduction of contingent obligations, gain on sale of assets, costs (recoveries) in connection with potential acquisitions, and certain adjustments to allowances for doubtful accounts related to debtors that have filed for bankruptcy protection or experienced economic hardships triggered by the impact of COVID-19. Management uses non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to our results of operations. Management believes non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus these non-GAAP measures provide supplemental information to assist investors in evaluating our financial results. Adjusted EBITDA is the measure used to calculate compliance with the EBITDA covenant under our term loan debt agreement. Non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate these measures in a different manner than we do. In evaluating non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this document. Our presentation of non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.