Tom Forte

Tom Forte questioned Alliance Entertainment's capital allocation preferences, including reinvestment, debt reduction, M&A, and stock buybacks.

Answer

CEO Jeff Walker stated that the company prioritizes debt reduction through daily cash sweeps, strategic acquisitions, and internal investments. Stock buybacks are not a current priority due to the small amount of stock outstanding.

Tom Forte from Maxim Group inquired about the key performance indicators (KPIs) for the Products segment, the potential impact of lapping last year's presidential election on digital advertising, and the company's strategy for strategic M&A and capital access.

Answer

CFO Tridivesh Kidambi identified sessions and revenue per session (RPS) as the key KPIs for the Products segment. CEO Michael Blend acknowledged a potential benefit from lapping election ad spend but reiterated that the primary challenge is Google partner network volatility. Blend also detailed the company's M&A strategy, focusing on leveraging their agentic coding expertise to modernize acquired companies, expressing confidence in their ability to access capital for such deals, a sentiment shared by Kidambi.

Tom Forte from Maxim Group asked for an update on the SciPlay business, specifically regarding any changes in economics or consumer purchase frequency following the Apple vs. Epic Games legal ruling that allows for direct payments outside of Apple's platform.

Answer

President & CEO Matt Wilson described the ruling as favorable for the entire games industry, as it allows for margin optimization and a more direct relationship with users. He stated that while Light & Wonder is focused on capturing more value through direct purchases, the primary goal is to maximize long-term player engagement rather than simply increasing purchase frequency. The company views the change as beneficial for both margin enhancement and player intimacy over the long term.

Tom Forte of Maxim Group LLC asked for the specific reasons behind the decision to shutter Vivid Picks. He also requested the company's current outlook on adjusted EBITDA to cash conversion for the remainder of 2025 and into 2026.

Answer

CEO Stan Chia explained the decision was a 'combination of all of the above,' including the product being a distraction from the core business and facing a unique regulatory environment. CFO Lawrence Fey added that they were unable to 'crack the CAC code' at scale. Regarding cash flow, Fey expects Q3 to be cash flow positive due to seasonality and believes returning to top-line growth is key for significant positive cash generation in 2026.

Tom Forte from Maxim Group asked if Beyond Inc. can compel its portfolio company tZERO to go public. He also questioned if the newly announced contingent value right (CVR) could trade on the tZERO platform and inquired about a potential timeline for a GrainChain IPO.

Answer

Executive Chairman & Principal Executive Officer Marcus Lemonis stated that while they can compel tZERO, they prefer mutual alignment on value creation and emphasized that a liquidity event is contingent on converting the tZERO ROP tokens. He clarified the CVR is intended to trade on the NYSE for broad accessibility. Regarding GrainChain, Lemonis indicated an IPO is a possibility they are exploring, but they want to wait for GrainChain to announce its recent major transactions to establish a proper valuation marker first.

Tom Forte of Maxim Group asked about short-term levers to mitigate tariff impacts, adjustments to the supply chain like duplicate tooling, the upcoming license release schedule, the full-year 2025 outlook given Q3's historical importance, and the potential for empty retail shelves during the holiday season.

Answer

CEO Stephen Berman explained that while the company uses a duplicate tool initiative to allow manufacturing in various regions like Vietnam and Mexico, China remains the primary hub due to efficiency. He noted that cost savings from lower tariffs in other countries are often offset by higher manufacturing costs. Berman stated the company is now operating as if current tariffs are the new norm. He declined to detail future licenses, emphasizing the current focus is on cash generation and prudent inventory management, not chasing sales goals. CFO John Kimble added that the key FOB business, which drives Q3, requires customer confidence, which is currently cautious. Berman believes retailers will likely focus on proven, lower-priced items for the holidays, with Halloween sell-through being a key indicator.

Tom Forte from Maxim Group asked how new products like the recliner and EverCouch are attracting new customers, and what provides confidence in selling tech products like StealthTech without the Best Buy partnership.

Answer

Founder & CEO Shawn Nelson explained that new products are strategically designed to attract customers who previously did not purchase, such as those seeking motion furniture or different style profiles. Regarding StealthTech, he expressed high confidence in selling through Lovesac's own channels, stating the brand has established credibility in home audio and that its showrooms are becoming a key destination for consumers to experience unique, integrated technology firsthand.

Asked about the company's confidence in achieving positive adjusted EBITDA and free cash flow in fiscal 2025, as well as the long-term gross and operating margin potential for the Automotive and Consumer segments.

Answer

Executives expressed high confidence in achieving positive adjusted EBITDA and free cash flow in fiscal 2025, citing the end of the UAW strike, new OEM programs, new consumer product launches, cost-cutting measures, and inventory reduction. They aim for Automotive gross margins in the high teens/low 20s and Consumer margins around 30%, which should in turn improve operating margins back to historical levels.