Welcome to the Xcel Brands, Inc. Fiscal Year 2018 Fourth Quarter Investor Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator instructions]. I would now like to turn the conference over to Andrew Berger, Investor Relations. Please go ahead.

Good evening everyone and thank you for joining us. We appreciate your participation and interest. With us on the call today are Chairman and Chief Executive Officer, Robert D’Loren; Chief Financial Officer, Jim Haran; and Executive Vice President of Business Development and Treasury, Seth Burroughs. By now, everyone should have had access to the earnings release for the fourth quarter and fiscal year ended December 31, 2018, which went out this afternoon, and in addition the company plans to file with the Securities and Exchange Commission its annual report on Form 10-K by April 1, 2019. The release and the annual report will be available on the company’s website at www.xcelbrands.com. This call is being webcast and a replay will be available on the company’s Investor Relations website. Before we begin, please keep in mind that this call will contain forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company’s SEC filings. Xcel does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Finally, please note that on today’s call, management will refer to certain non-GAAP financial measures such as non-GAAP net income, non-GAAP diluted earnings per share, and adjusted EBITDA. Our management uses non-GAAP metrics as measures of operating performance to assist in comparing performance from period-to-period on a consistent basis and to identify business trends related to the company’s results of operations. Our management believes these financial performance measurements are also useful because these measures adjust for certain cost and other events that management believes are not representative of our core business operating results, and thus they provide supplemental…

Thanks, Bob, and good evening, everybody. I will briefly discuss financial results for the quarter and year ended December 31, 2018. Please note that our financial results are described more fully in our annual report on Form 10-K which will be filed with the SEC by April 1st. Total revenue for fourth quarter of 2018 was $9.9 million, a net increase of $2.9 million or 42% over the prior quarter, primarily driven by sales from the company's Judith Ripka Fine Jewelry wholesale and e-commerce operations and wholesale, apparel operations. Current quarter net revenue increased $0.9 million to $7.9 million from $7 million in the prior year quarter, primarily attributed to net margin from wholesale and e-commerce sales. Our operating expenses were $7.9 million and $19 million in the current and prior year quarters respectively. Excluding a non-recurring facility exit of $0.8 million in the current quarter and a goodwill charge of $12.4 million in the prior year quarter, our operating expenses increased by $0.4 million to $7.1 million in the current quarter compared to $6.7 in the prior quarter. This increase was primarily attributable to $0.6 million of increase in salaries and other operating expenses, $0.1 million increase in amortization and depreciation and partially offset by $0.3 million decrease in stock-based compensation. The increase in salaries and other operating expenses relate to the launch of our wholesale apparel operations and marketing costs associated with our e-commerce business. Interest expense decreased by $0.1 million compared with the prior year quarter. The decrease in interest is attributable to lowering our term debt balance. GAAP net loss was approximately $0.3 million for the fourth quarter or negative $0.02 per basic and diluted share compared with a GAAP net loss of $10.2 million or negative $0.55 per basic and diluted share for the prior…

Yes. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Michael Kawamoto with DA Davidson. Please go ahead.

So we saw a pretty material pick-up in sales versus license revenues for the quarter, kind of activity at your department store business model. Do you expect to ramp that up fairly quickly or kind of the run rate for that piece of business right now, just given the visibility you have? A - Robert D’Loren: I think what you'll see Michael is we'll go at that run rate for Q1 and Q2 we expect increased activity in Q3 and Q4 this year. So similar kind of sales behavior to what you’ve seen in '18. We transitioned from license to wholesale business in November and had a little uptake there in the last quarter, because we picked up some sales. But we'll see -- now we're transitioning through spring and there would be pickup in fall just based upon preliminary selling that we're seeing. The team here has done a nice job, I think you already aware of the Halston brand and with the Isaac. We're getting good feedback from the buyers. So we expect to see a pick-up in Q3 and Q4.

And is a lot of that -- that pick-up in sales in 4Q that you talked about, is that like the private label business that you mentioned on the last call and a couple of other key accounts? A - Robert D’Loren : No. It's both, it’s branded and private label. And we have some of our private label brands that are doing very well, they're exceeding our expectations sell-through has been a fantastic with some of the private label brands that we are working on particularly with [offset]. So we're excited about what's happening there with the private label and I'm really optimistic about the whole line, it was really received well, and we look forward to making those deliveries.

Go ahead. Robert D’Loren : I was going to say, we expect our e-com is going to continue the momentum towards the end of the year?

That's a good segway into my second question on the Judith Ripka Fine Jewelry business. I think you said on a runway to grow over 500%. What do you think the key driver there, is it better styles, that's more on trend or just better awareness around the platform and more stability? What do you think the key drivers are there? A - Robert D’Loren : I think it's product driven. We did a little bit of experimenting with change in the direction of design. Judith Ripka is known for its state point of view and that jewelry is not trending roll like everything in fashion casual, is trending, we live in a much more casual society today and we make some adjustments to design and testing, landed on the design, quite frankly is selling faster than we can produce the product and with that we created five new collections that we're launching and we're seeing the results in real time with e-commerce. Regarding nature of e-commerce as we react our model and it’s going well for us, we see the growth coming from …

Good here and then just on the Halston acquisition you did. Can you talk about maybe what categories or channels that was brand and made you see the largest opportunities for growth going forward? Robert D’Loren : Halston is virtually at every tier of distribution. Halston Heritage is in premium retailers like Neiman Marcus, Saks, and Bloomingdale. H Halston is sold in better retailers like Lord & Taylor and Hudson’s Bay and of course H by Halston on QVC. The part of the transition out of our license agreement gives ourselves more control over design and I'm happy with what our internal teams have done with the product. Also it has eliminated an exclusivity that we had with HPC since that we have much broader distribution with the brand and we're hopeful that in ‘19 and the second half of the year we can begin to distribute the better selling product and more retailers beyond Lord & Taylor and Hudson’s Bay.

And then Michael from a licensing standpoint given that that brand was split, it’s a little bit challenging to find licensees that we didn’t control the entire brand. We are bringing the brand together. We have opened up new licensing opportunities across various categories as you have already signed or license or licenses, number of additional agencies were in discussion with. So, we have already signed four licenses , we have a number of additional licensees, so we are -- those on the core apparel business Halston and Halston Ancillary categories we see significant activity.

Got it, that is really helpful. And then just, last one from me. You are pretty much to do the first quarter at this point. Can you you know give us anything on maybe how the quarter shaped up or where it differed from your expectations as giving everything that you have gone right now? A - Robert D’Loren : We don’t typically provide guidance, again, we're very pleased with the lot of the developments in our core business and you know, we’re looking forward to closing the quarter by next announcement.

This concludes the question-and-answer session. I would now like to turn the conference back over to Robert D' Loren for any closing remarks. Robert D’Loren: Ladies and gentlemen, thank you all for your time this evening. We greatly appreciate your continued interest and support in Xcel Brands. As always, stay fit, eat well and be healthy.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.