Executive Summary

Q1 FY2025 revenue declined 5.2% year over year to $111.5M, as flooring and steel faced softer demand; gross margin improved 80 bps to 31.7% on mix benefits in Retail-Entertainment and Steel .
Net income was $0.5M ($0.16 diluted EPS) vs. a loss of $0.7M in the prior year, driven by non-recurring gains: $2.8M earnout settlement (PMW) and $0.7M seller note settlement; adjusted EBITDA fell 33.9% to $5.7M on lower operating income .
Segment performance bifurcated: Retail-Entertainment and Steel posted higher operating income and margins YoY, while Retail-Flooring and Flooring Manufacturing were pressured by reduced demand and mix; management is implementing efficiency measures in flooring .
No formal guidance was provided; management cited ongoing cost actions and remained confident in the long-term strategy. Street consensus from S&P Global was unavailable at the time of this analysis, so no vs-estimates comparison could be made .

What Went Well and What Went Wrong

What Went Well
- Retail-Entertainment: revenue +3.3% to $21.3M; operating income +8.4% to $3.4M; segment gross margin 56.6% (+60 bps) on higher used product mix .
- Steel Manufacturing: gross margin expanded to 18.3% from 15.8% on price actions and Central Steel acquisition; operating income +18.7% YoY to $1.2M .
- Management tone: “pleased with the operating improvements achieved in our Retail-Entertainment and Steel Manufacturing segments” (CEO Jon Isaac) .
What Went Wrong
- Retail-Flooring: revenue -7.5% to $31.7M; swung to an operating loss of $2.2M vs. $0.1M profit prior year on reduced demand and higher wages/G&A; gross margin fell 80 bps to 37.2% on mix .
- Flooring Manufacturing: revenue -11.1% to $26.0M; operating income turned to a slight loss; gross margin 21.2% (-80 bps) on mix and demand softness .
- Consolidated profitability: operating income fell to $0.8M from $3.5M; adjusted EBITDA down 33.9%, reflecting lower operating income despite improved gross margin rate .

Financial Results

Metric	Q1 FY2024	Q1 FY2025
Revenue ($M)	$117.6	$111.5
Gross Profit ($M)	$36.3	$35.4
Gross Margin (%)	30.9%	31.7%
Operating Income ($M)	$3.5	$0.8
Net Income ($M)	$(0.7)	$0.5
Diluted EPS ($)	$(0.22)	$0.16
Adjusted EBITDA ($M)	$8.7	$5.7

Notes: Q1 FY2025 net income includes one-time gains: $2.8M earnout settlement (PMW) and $0.7M seller note settlement . Sequential (vs prior quarter Q4 FY2024) comparison was not disclosed in a separate quarterly release; consolidated FY 2024 was provided but does not isolate Q4 .

Segment revenue and operating income (YoY):

Segment	Revenue Q1 FY2024 ($M)	Revenue Q1 FY2025 ($M)	Op Inc (Loss) Q1 FY2024 ($M)	Op Inc (Loss) Q1 FY2025 ($M)
Retail – Entertainment	$20.6	$21.3	$3.1	$3.4
Retail – Flooring	$34.3	$31.7	$0.1	$(2.2)
Flooring Manufacturing	$29.2	$26.0	$0.9	$(0.1)
Steel Manufacturing	$33.4	$32.4	$1.0	$1.2
Corporate & Other	$0.09	$0.06	$(1.6)	$(1.6)

Additional KPIs and balance sheet:

KPI	Q1 FY2025
Total cash availability ($M)	$31.1 (cash $7.4M + credit availability $23.7M)
Working capital ($M)	~$51.0
Total assets ($M)	$395.5
Stockholders’ equity ($M)	$73.3
Share repurchases (shrs)	~15,700 during quarter

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Outlook	FY2025	None provided	No formal quantitative guidance; management reiterated confidence and highlighted efficiency measures (particularly in flooring); declined to provide projections on the call	Maintained “no guidance” stance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY2024 and FY2024)	Current Period (Q1 FY2025)	Trend
Housing/interest-rate headwinds	Elevated rates and industry-specific headwinds cited; Retail-Flooring inefficiencies from CRO/Johnson integration; Steel margin compression from lower demand	CFO: housing slowdown and high rates impacted Retail-Flooring and Flooring Manufacturing; demand softness across flooring; Steel showed improved margin	Ongoing pressure in flooring; steel margins improving
Segment mix and margins	Steel margins compressed in FY2024 due to PMW and lower demand; Retail-Entertainment margins benefited from used product mix	Gross margin up to 31.7%; Retail-Entertainment and Steel margins improved (mix, pricing, Central Steel)	Company GM improving YoY; steel mix/pricing supportive
Cost actions/efficiency	FY2024: integration and inefficiencies weighed on Retail-Flooring; planning improvements	Management implementing additional measures to enhance efficiency in flooring businesses	Accelerating cost actions in flooring
M&A/portfolio	FY2024 growth driven by acquisitions (Flooring Liquidators, PMW, Central Steel)	Pipeline: “opportunities come up,” but “nothing hot” currently	Pause/monitoring
Non-recurring items	FY2024 included goodwill impairment and non-recurring items	Q1 gains: $2.8M earnout elimination (PMW), $0.7M seller note settlement	One-time tailwinds in Q1

Management Commentary

“Both our Retail-Entertainment and Steel Manufacturing segments delivered improved operating performance in the first quarter... However, high interest rates and a slowdown in the housing market continued to impact our Retail-Flooring and Flooring Manufacturing segments” — CFO, David Verret .
“We are implementing additional measures to enhance the efficiency of our flooring businesses... we remain confident in the long-term strength of our businesses.” — CEO, Jon Isaac .
“Gross margin percentage for the company increased to 31.7% from 30.9%... attributable to increased margins in our Retail-Entertainment segment as well as the Steel Manufacturing segment, primarily due to product mix.” — CFO remarks .

Q&A Highlights

One-time PMW settlements: Management confirmed the $2.8M earnout elimination and $0.7M seller note gain are one-time, reflecting early payoff at a discount and removal of a 5-year earnout .
Outlook/guidance: Management reiterated they do not give projections; cited multiple initiatives across underperforming entities and expects to see results, but provided no quantitative guidance .
M&A pipeline: “Opportunities come up,” but “nothing... worthy of discussing” currently .

Estimates Context

S&P Global (Capital IQ) Wall Street consensus for Q1 FY2025 (revenue, EPS, EBITDA) was unavailable at the time of request due to data access limits; therefore, vs-estimates comparisons are not presented here [GetEstimates error: Daily Request Limit Exceeded].

Key Takeaways for Investors

Quality mix is helping margins: company gross margin rose to 31.7% on mix/pricing; Retail-Entertainment and Steel generated higher operating income despite top-line softness .
Flooring remains the swing factor: Retail-Flooring and Flooring Manufacturing faced demand/mix pressure, driving the YoY decline in operating income and adjusted EBITDA; management is executing efficiency initiatives which are the main medium-term margin catalyst .
Q1 profitability benefited from one-time gains (~$3.5M total), masking underlying softness; normalized earnings power remains below prior year until flooring demand/efficiencies improve .
Liquidity and balance sheet provide flexibility: $31.1M total availability, ~$51M working capital; modest buybacks (15.7k shares) signal confidence but are not thesis-changing near term .
Watch steel momentum and mix: margin improvement and Central Steel contribution supported results; continued pricing discipline could offset demand variability .
Near-term setup hinges on housing macro and cost actions translating to run-rate OpEx savings; absent explicit guidance, next catalyst is Q2 execution and evidence of flooring margin stabilization .

Supporting Detail (Additional Trend Context)

Subsequent quarter (Q2 FY2025) showed operating improvement and a large $22.8M gain on modification of a seller note; adjusted EBITDA rose YoY to $6.4M despite lower revenue, aided by cost reductions in Retail-Flooring (context for momentum into FY2025) .
Prior period (Q3 FY2024) highlighted strong acquisition-driven revenue growth but margin compression in Steel and inefficiencies in Retail-Flooring integration — foreshadowing Q1 FY2025’s bifurcated segment dynamics .

Sources: Q1 FY2025 press release and 8-K (Item 2.02) ; Q1 FY2025 earnings call transcript ; FY2024 release for context ; Q3 FY2024 release ; Q2 FY2025 release for subsequent trend .

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