ShopNBC (NASDAQ: VVTV), a 24-hour TV shopping network, today
announced financial results for its second fiscal quarter ended
August 2, 2008.
Second Quarter Results
Second quarter revenues were $142 million, a 26% decrease from
the same period last year. EBITDA, as adjusted, was ($10.7) million
compared with $1.8 million in the year-ago period. Net Loss for the
second quarter was ($15.7) million compared with a net loss of
($5.4) million for the same quarter last year.
"Revenues in the second quarter were very disappointing," said
John Buck, ShopNBC's CEO. "The Board fully recognizes these
performance issues, and we are taking decisive action to address
these trends."
Leadership Changes
As announced in a separate press release the Company issued
earlier today, ShopNBC's Board of Directors concluded it was
necessary to make organizational leadership changes that are
effective immediately. The Board appointed John D. Buck to serve as
Chief Executive Officer replacing Rene Aiu, who joined the Company
as President and CEO in March 2008 and is leaving ShopNBC and its
Board. Mr. Buck is currently Executive Chairman and was previously
ShopNBC's Interim CEO from November 2007 to March 2008. The Company
also announced the departures of Glenn Leidahl, COO, Terry Curtis,
SVP of Customer Analytics and Sales Planning, and John Gunder, SVP
of Media & On-air Sales, who were named to their positions in
April 2008.
The Board also appointed Keith R. Stewart, with 20 years of
executive retail experience, as President and Chief Operating
Officer of the Company. Buck commented, "Keith has excellent
leadership skills, a deep understanding of retail operations
domestically and internationally and, importantly, nearly 15 years
of experience in home shopping as an executive at QVC. He possesses
a strong understanding of multi-channel retailing and has a proven
history of delivering growth and profitability spanning markets in
the United States and Germany."
Second Quarter Highlights
The Company noted that in the second quarter:
-- ShopNBC.com launched several live Webcasts to aggressively reach new
customers and drive incremental sales by capitalizing on its strong niche
categories, such as watches and coins.
-- It appointed Kris Kulesza, a retail executive with 23 years of
experience and nearly a decade in home shopping, as Senior Vice President
and Chief Merchant; and Jeff Lewis, a customer service executive with 25
years of leadership experience in retail and direct marketing, as Vice
President of Customer Experience.
-- It continued disciplined control of operating expenses, which were
down year-over-year by 11% in the quarter, driven by headcount and other
fixed overhead reductions.
-- It maintained a strong balance sheet with over $80 million in cash and
securities.
-- It recently signed an extended carriage agreement with one of the top
five cable providers and continues to work on preserving its cable
distribution base while lowering distribution costs.
Business Outlook
"ShopNBC has undergone significant changes this past year," said
Buck. "We greatly appreciate the support and patience of our
shareholders. Despite these challenging times, ShopNBC made
progress in the second quarter in its cable negotiations,
diversifying its merchandise mix with newness, and continued
success of our e-commerce business. ShopNBC is a great company with
strong underlying assets supported by a talented and dedicated
employee base and excellent growth potential.
"We are encouraged by these signs of progress. I look forward to
working with Keith and the rest of our talented management team to
improve performance that will enable us to deliver long-term
shareholder value. Given the changes being implemented at the
Company, we have decided not to provide guidance at this time."
Conference Call Information
The Company has re-scheduled its conference call for 11 a.m. EDT
/ 10 a.m. CDT on Monday, August 25, 2008, to discuss the results
for the fiscal second quarter. To participate, please dial
1-800-857-9866 (pass code SHOPNBC) five to ten minutes prior to the
start time. A replay of the call will be available for 30 days. To
access the replay, please dial 1-866-455-0459 (pass code SHOPNBC).
You may also participate via live audio stream by logging on to
https://e-meetings.verizonbusiness.com. To access the audio stream,
please use conference number 6203440 (pass code SHOPNBC). A
rebroadcast of the audio stream will be available using the same
access information for 30 days after the initial broadcast.
EBITDA and EBITDA, as adjusted
The Company defines EBITDA as net income (loss) from continuing
operations for the respective periods excluding depreciation and
amortization expense, interest income (expense) and income taxes.
The Company defines EBITDA, as adjusted, as EBITDA excluding
non-recurring non-operating gains (losses) and equity in income of
Ralph Lauren Media, LLC; non-recurring restructuring and CEO
transition costs; and non-cash share-based payment expense.
Management has included the term EBITDA, as adjusted, in order to
adequately assess the operating performance of the Company's "core"
television and Internet businesses and in order to maintain
comparability to its analyst's coverage and financial guidance.
Management believes that EBITDA, as adjusted, allows investors to
make a more meaningful comparison between our core business
operating results over different periods of time with those of
other similar small cap, higher growth companies. In addition,
management uses EBITDA, as adjusted, as a metric measure to
evaluate operating performance under its management and executive
incentive compensation programs. EBITDA, as adjusted, should not be
construed as an alternative to operating income (loss) or to cash
flows from operating activities as determined in accordance with
GAAP and should not be construed as a measure of liquidity. EBITDA,
as adjusted, may not be comparable to similarly entitled measures
reported by other companies.
About ShopNBC
ShopNBC is a direct-to-consumer, multi-media shopping
destination for little luxuries and fashion must-haves. The
shopping network reaches 70 million homes in the United States via
cable affiliates and satellite: DISH Network channel 228 and
DIRECTV channel 316. www.ShopNBC.com is recognized as a top
e-commerce site. ShopNBC is owned and operated by ValueVision Media
(NASDAQ: VVTV). For more information, please visit
www.ShopNBC.com.
Forward-Looking Information
This release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current
expectations and are accordingly subject to uncertainty and changes
in circumstances. Actual results may vary materially from the
expectations contained herein due to various important factors,
including (but not limited to): consumer spending and debt levels;
interest rates; competitive pressures on sales, pricing and gross
profit margins; the level of cable distribution for the Company's
programming and the fees associated therewith; the success of the
Company's e-commerce and rebranding initiatives; the performance of
its equity investments; the success of its strategic alliances and
relationships; the ability of the Company to manage its operating
expenses successfully; risks associated with acquisitions; changes
in governmental or regulatory requirements; litigation or
governmental proceedings affecting the Company's operations; and
the ability of the Company to obtain and retain key executives and
employees. More detailed information about those factors is set
forth in the Company's filings with the Securities and Exchange
Commission, including the Company's annual report on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K.
The Company is under no obligation (and expressly disclaims any
such obligation to) update or alter its forward-looking statements
whether as a result of new information, future events or
otherwise.
VALUE VISION MEDIA, INC.
Key Performance Metrics*
(Unaudited)
Q2 YTD
For the three months ending For the six months ending
------------------------- -------------------------
8/2/2008 8/4/2007 % 8/2/2008 8/4/2007 %
-------- -------- ----- -------- -------- -----
Program Distribution
Cable FTEs 42,988 41,446 4% 42,673 40,901 4%
Satellite FTEs 28,676 27,486 4% 28,528 27,292 5%
-------- -------- ----- -------- -------- -----
Total FTEs (Average
000s) 71,664 68,932 4% 71,201 68,193 4%
Net Sales per FTE
(Annualized) $ 7.92 $ 10.85 -27% $ 8.32 $ 10.92 -24%
Product Mix
Jewelry 39% 40% 41% 40%
Apparel, Fashion
Accessories,
Health & Beauty 9% 8% 10% 8%
Computers &
Electronics 18% 23% 17% 23%
Watches, Coins &
Collectibles 26% 17% 23% 16%
Home & All Other 8% 12% 9% 13%
Shipped Units (000s) 870 1,132 -23% 1,874 2,281 -18%
Average Price Point -
shipped units $ 224 $ 233 -4% $ 226 $ 229 -1%
-------- -------- ----- -------- -------- -----
*Includes ShopNBC TV and ShopNBC.com only.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Six Month
Periods Ended Periods Ended
---------------------- ----------------------
August 2, August 4, August 2, August 4,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 141,927 $ 190,613 $ 298,215 $ 378,722
Cost of sales 94,046 123,291 200,378 245,287
(exclusive of
depreciation and
amortization shown
below)
Operating expense:
Distribution and
selling 53,827 60,033 110,910 120,493
General and
administrative 5,682 6,210 12,017 13,705
Depreciation and
amortization 4,246 5,261 8,565 10,847
Restructuring costs - 2,043 330 2,043
CEO transition costs 553 - 830 -
---------- ---------- ---------- ----------
Total operating
expense 64,308 73,547 132,652 147,088
---------- ---------- ---------- ----------
Operating loss (16,427) (6,225) (34,815) (13,653)
---------- ---------- ---------- ----------
Other income (loss):
Other loss - (119) - (119)
Interest income 761 1,575 1,586 2,815
---------- ---------- ---------- ----------
Total other income 761 1,456 1,586 2,696
---------- ---------- ---------- ----------
Loss before income taxes
and equity in net income
of affiliates (15,666) (4,769) (33,229) (10,957)
Gain on sale of RLM
investment - - - 40,240
Equity in income of
affiliates - - - 609
Income tax provision (18) (640) (33) (921)
---------- ---------- ---------- ----------
Net income (loss) (15,684) (5,409) (33,262) 28,971
Accretion of redeemable
preferred stock (73) (73) (146) (145)
---------- ---------- ---------- ----------
Net income (loss)
available to
common shareholders $ (15,757) $ (5,482) $ (33,408) $ 28,826
========== ========== ========== ==========
Net income (loss) per
common share $ (0.47) $ (0.15) $ (0.99) $ 0.67
========== ========== ========== ==========
Net income (loss) per
common share
---assuming dilution $ (0.47) $ (0.15) $ (0.99) $ 0.68
========== ========== ========== ==========
Weighted average number of
common shares outstanding:
Basic 33,574,131 37,366,541 33,576,015 42,822,333
========== ========== ========== ==========
Diluted 33,574,131 37,366,541 33,576,015 42,846,686
========== ========== ========== ==========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
August 2, February 2,
2008 2008
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 48,829 $ 25,605
Short-term investments 10,892 33,473
Accounts receivable, net 55,730 109,489
Inventories 55,634 79,444
Prepaid expenses and other 5,646 4,172
----------- -----------
Total current assets 176,731 252,183
Long term investments 20,487 26,306
Property and equipment, net 34,694 36,627
FCC broadcasting license 31,943 31,943
NBC Trademark License Agreement, net 8,994 10,608
Cable distribution and marketing agreement, net 502 872
Other assets 615 541
----------- -----------
$ 273,966 $ 359,080
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,543 $ 73,093
Accrued liabilities 34,598 44,609
Deferred revenue 692 648
----------- -----------
Total current liabilities 71,833 118,350
Deferred revenue 2,132 2,322
Series A Redeemable Convertible Preferred Stock,
$.01 par value, 5,339,500 shares authorized;
5,339,500 shares issued and outstanding 44,045 43,898
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 33,590,834 and 34,070,422
shares issued and outstanding 336 341
Warrants to purchase 2,036,858 shares of
common stock 12,041 12,041
Additional paid-in capital 272,745 274,172
Accumulated other comprehensive losses (6,314) (2,454)
Accumulated deficit (122,852) (89,590)
----------- -----------
Total shareholders' equity 155,956 194,510
----------- -----------
$ 273,966 $ 359,080
=========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Income (Loss):
Six-Month Six-Month
Second Second Period Period
Quarter Quarter Ended Ended
2-Aug-08 4-Aug-07 2-Aug-08 4-Aug-07
--------- --------- --------- ---------
EBITDA, as adjusted (000's) $ (10,666) $ 1,764 $ (23,059) $ 515
Less:
Non-operating gains (losses)
and equity in income of RLM - (119) - 40,730
Restructuring costs - (2,043) (330) (2,043)
CEO transition costs (553) - (830) -
Non-cash share-based
compensation (962) (685) (2,031) (1,278)
--------- --------- --------- ---------
EBITDA (as defined) (a) (12,181) (1,083) (26,250) 37,924
--------- --------- --------- ---------
A reconciliation of EBITDA to
net income (loss) is as
follows:
EBITDA, as defined (12,181) (1,083) (26,250) 37,924
Adjustments:
Depreciation and amortization (4,246) (5,261) (8,565) (10,847)
Interest income 761 1,575 1,586 2,815
Income taxes (18) (640) (33) (921)
--------- --------- --------- ---------
Net income (loss) $ (15,684) $ (5,409) $ (33,262) $ 28,971
========= ========= ========= =========
(a) EBITDA as defined for this statistical presentation represents net
income (loss) from continuing operations for the respective periods
excluding depreciation and amortization expense, interest income (expense)
and income taxes. The Company defines EBITDA, as adjusted, as EBITDA
excluding non-recurring non-operating gains (losses) and equity in income
of Ralph Lauren Media, LLC; non-recurring restructuring and CEO transition
costs; and non-cash share-based compensation expense.
Management has included the term EBITDA, as adjusted, in its EBITDA
reconciliation in order to adequately assess the operating performance of
the Company's "core" television and Internet businesses and in order to
maintain comparability to its analyst's coverage and financial guidance.
Management believes that EBITDA, as adjusted, allows investors to make a
more meaningful comparison between our core business operating results over
different periods of time with those of other similar small cap, higher
growth companies. In addition, management uses EBITDA, as adjusted, as a
metric measure to evaluate operating performance under its management and
executive incentive compensation programs. EBITDA, as adjusted, should not
be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with GAAP and should
not be construed as a measure of liquidity. EBITDA, as adjusted, may not
be comparable to similarly entitled measures reported by other companies.
CONTACT: Frank Elsenbast Chief Financial Officer
952-943-6262
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