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Max232's avatar

Hi Uzo,

Thanks for the interesting case and well-described thesis! I have a few points I wanted to share/ask:

I am disappointed Honey Birdette was not sold. I struggle to see the long-term sense in operating a mediocre business with no USP and also brings China tariff headache with it.

So keeping that means the "one remaining non-core asset to sell" is their artwork. In the Q1 2025 financials "Assets held for sale" was $3.890 million. You wrote "the proceeds from that should wipe out most of my debt" .. I struggle how this amount could significantly reduce a $175 million debt? What do I potentially overlook here?

You mentioned "$20m of overhead (plus $3m SBC)" I assume you mean per quarter, right? PLBY has roughly $100 million in SGA annually. Otherwise, the numbers don't align.

At the moment PLBY will have roughly $30 million per annum from licensing income. With SGA $100 million and annual Interest Expense ca $17 million it's clear they'll need more license deals.

Mgmt states "We are actively pursuing new licensing opportunities, particularly in land-based entertainment and gaming. This includes developing a Playboy-branded membership club in the United States, a significant focus area for us moving forward" I trust Mgmt on this, because the pace of recent deals is strong.

Finally, the recent board approval to increase authorized shares from 150 million to 400 million strikes me as quite significant. Do you expect/see dilution as a potential problem here?

Thanks again for sharing your insights!

Max

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Uzo's avatar

Honey Birdette will be sold...they are just being thoughtful re timing to get a good price. Q1 asset held for sale is irrelevant - sale price will be function of the EBITDA contribution of the business.....believe today's run rate is $7-8m, they expect to get it to double digit ...and are hopeful to selling it for $100m+...personally think $50-100m is probably a more credible exit valuation range.

The $20-25m overhead number is annual, on a ex-Honey Birdette basis and ex the adult assets that are transferred to byborg...the pure licensing remain-co business is what im referring to.

You havent included Byborg royalties in your licensing number...that adds $20m / year...call it closer to 50m of run rate royalties, before any new licensing deals are included.

Share authorisation I dont pay much attention to...but i do expect some dilution given Byborg extra equity injection got rejected by at the AGM. I baked a higher share count into my valuation framework and still come out with a v cheap stock, on the basis of what i think the FCF this can throw off once i give them some credit for growth in royalties (from new licensing deals. recovery in china) and account for reduced debt burden from Byborg prepayment, Honey Birdette proceeds + FCF + forced convertible pref conversion, refinancing of their expensive debt etc.

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