ShopNBC (NASDAQ: VVTV)
-- Net sales increased 11% to $132 million
-- Positive adjusted EBITDA of $0.6 million vs. ($5.6) million
-- Gross Profit increased 19% to $47 million
-- E-commerce sales penetration increased 680 bps to 40.5%
ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in
multi-media retailing, today announced financial results for its
fiscal third quarter ended October 30, 2010. The company will host
a conference call and webcast to review its results today at 11:00
a.m. ET. Details provided below.
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points)
Q3 YTD
For the three months ending For the nine months ending
------------------------------ -----------------------------
10/30/2010 10/31/2009 Change 10/30/2010 10/31/2009 Change
--------- --------- -------- --------- --------- -------
Net Sales $ 132.3 $ 119.4 10.8% $ 383.4 $ 372.6 2.9%
EBITDA $ 0.6 $ (5.6) N/A $ (5.7) $ (18.2) 68.8%
as adjusted
Net Loss $ (5.8) $ (12.9) 55.0% $ (24.5) $ (33.2) 26.2%
Homes 76,768 73,063 5.1% 76,032 73,097 4.0%
(Average 000s)
Net Shipped 1,317 1,186 11.0% 3,590 3,084 16.4%
Units (000s)
Average $ 93 $ 95 -2.5% $ 99 $ 114 -13.3%
Price
Return Rate % 20.8% 21.9% -110 bps 20.2% 21.8% -160 bps
Gross Margin % 35.6% 33.2% 240 bps 36.5% 33.1% 340 bps
Internet Net 40.5% 33.7% 680 bps 39.8% 31.5% 830 bps
Sales %
New 562,510 486,474 15.6% N/A N/A
Customers
12 month
rolling
Active 1,110,187 959,508 15.7% N/A N/A
Customers
12 month
rolling
"Our experienced multi-channel team achieved another consecutive
quarter of improved performance," said Keith Stewart, CEO of
ShopNBC. "Sales growth of 11%, gross margin improvements, and lower
transactional costs contributed to a $0.6 million adjusted EBITDA
profit in the third quarter. New and active customers in the
quarter continued to engage, interact and shop across our multiple
channels with e-commerce sales penetration of 40.5%, up 680 basis
points compared to last year. This overall progress is a validation
of our continued focus and efforts to turn the company around while
executing on new strategies for growth."
Mr. Stewart added: "Going forward, we will continue to focus on
customer-centric strategies that will help us build on our existing
base. We intend to improve operating processes and gain added
efficiencies through disciplined execution and lower transactional
costs. Lastly, as the year comes to a close, we anticipate entering
into negotiations with several of our cable and satellite
affiliates -- representing approximately 25% of our household
footprint -- to further reduce distribution costs and improve our
channel positioning."
"We are committed to delivering long-term sustained growth. As
part of these efforts, we are launching a proactive investor
relations outreach program and have recently retained a New
York-based IR firm to assist us in that effort."
Third Quarter 2010 Results
Third quarter revenues rose 11% to $132.3 million vs. Q3 2009.
The company continued to make progress in its strategy to drive
transaction volumes through the reduction of its net average
selling price, which decreased 2.5% to $93 vs. $95 in the year-ago
quarter while net shipped units increased by 11%. E-commerce sales,
which carry lower transaction costs, grew to 40.5% of total company
sales in the quarter, from 33.7% in Q3 2009.
Customer trends continued to improve with new and active
customers increasing 15.6% and 15.7%, respectively, on a 12-month
rolling basis vs. Q2 2009. Return rates for the quarter declined to
20.8% vs. 21.9% in Q3 2009, reflecting improvements in overall
customer satisfaction and the benefit of strategic pricing
changes.
Gross profit increased 19% to $47.1 million and gross profit
margin improved 240 bps to 35.6% vs. 33.2% last year, largely
driven by merchandise margin rate improvements across several key
categories.
Adjusted EBITDA was positive $0.6 million compared to an
adjusted EBITDA loss of $5.6 million in the year-ago period, driven
by increased sales, improved gross margin and lower operating
expenses.
Operating expenses in the third quarter decreased approximately
1% to $50.8 million, due to lower transactional costs and the
impact of prior-year itemized non-recurring expenses.
Net loss for the third quarter was reduced to ($5.8) million
compared to a net loss of ($12.9) million for the same quarter last
year.
Liquidity and Capital Resources
The Q3 quarter-end cash and cash equivalents balance was $20.6
million, including $5.0 million of restricted cash. The cash and
cash equivalents balance declined $2.3 million from the second
quarter, driven by working capital use in the quarter. On a
year-to-date basis, cash and cash equivalents have decreased $1.4
million.
Additionally, the company recently announced that it entered
into a $25 million term loan with a lending group led by Crystal
Financial LLC. The loan has a 5-year maturity, bears a variable
interest rate, which will initially be set at 11%, and will be used
to finance general working capital needs. The loan replaces a
previous $20 million revolving credit facility, and is secured
primarily by the company's inventory and accounts receivable.
Conference Call / Webcast Information
Conference Call Dial-In: 1-800-369-2063 (pass code: 7467622;
keypad: SHOPNBC)
Webcast URL: https://e-meetings.verizonbusiness.com conference
number 8656218, pass code: SHOPNBC. An archived version of the
webcast will be available for 30 days.
Call Replay: 1-800-867-1929 with pass code 81810, available for
30 days.
About ShopNBC
ShopNBC is a multi-media retailer operating with a premium
lifestyle brand. Over 1 million customers benefit from ShopNBC as
an authority and destination in the categories of home,
electronics, beauty, health, fitness, fashion, jewelry and watches.
As part of the company's "ShopNBC Anywhere" initiative, customers
can interact and shop via cable and satellite TV in 76 million
homes (DISH Network channels 134 and 228; DIRECTV channel 316);
mobile devices including iPhone, BlackBerry and Droid; online at
www.ShopNBC.com; live streaming at www.ShopNBC.TV; and social
networking sites Facebook, Twitter and YouTube. ShopNBC is owned
and operated by ValueVision Media (NASDAQ: VVTV). For more
information, please visit www.ShopNBC.com/IR.
EBITDA and EBITDA, as adjusted
EBITDA represents net loss for the respective periods excluding
depreciation and amortization expense, interest income (expense)
and income taxes. The company defines Adjusted EBITDA as EBITDA
excluding non-operating gains (losses); non-cash impairment charges
and write-downs; restructuring, rebranding, and chief executive
officer transition costs; and non-cash share-based compensation
expense. The company has included the term "Adjusted EBITDA" in our
EBITDA reconciliation in order to adequately assess the operating
performance of our "core" television and internet businesses and in
order to maintain comparability to our analyst's coverage and
financial guidance, when given. Management believes that Adjusted
EBITDA allows investors to make a more meaningful comparison
between our core business operating results over different periods
of time with those of other similar companies. In addition,
management uses Adjusted EBITDA as a metric measure to evaluate
operating performance under its management and executive incentive
compensation programs. Adjusted EBITDA should not be construed as
an alternative to operating income (loss) or to cash flows from
operating activities as determined in accordance with generally
accepted accounting principles and should not be construed as a
measure of liquidity. Adjusted EBITDA may not be comparable to
similarly entitled measures reported by other companies.
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 accordingly are 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 and satellite distribution for
the company's programming and the fees associated therewith; the
success of the company's e-commerce and new sales initiatives; the
success of its strategic alliances and relationships; the ability
of the company to manage its operating expenses successfully; the
ability of the Company to establish and maintain acceptable
commercial terms with third party vendors and other third parties
with whom the Company has contractual relationships; 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.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
October 30, January 30,
2010 2010
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 15,674 $ 17,000
Restricted cash and investments 4,961 5,060
Accounts receivable, net 57,312 68,891
Inventories 51,997 44,077
Prepaid expenses and other 4,029 4,333
----------- -----------
Total current assets 133,973 139,361
Property and equipment, net 26,651 28,342
FCC broadcasting license 23,111 23,111
NBC Trademark License Agreement, net 1,734 4,154
Other Assets 1,386 1,246
----------- -----------
$ 186,855 $ 196,214
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,618 $ 58,777
Accrued liabilities 44,493 26,487
Deferred revenue 728 728
----------- -----------
Total current liabilities 96,839 85,992
Deferred revenue 607 1,153
Long Term Payable 1,937 4,841
Accrued Dividends - Series B Preferred Stock 8,903 4,681
Series B Mandatorily Redeemable Preferred Stock 12,531 11,243
$.01 par value, 4,929,266 shares authorized;
4,929,266 shares issued and outstanding
----------- -----------
Total liabilities 120,817 107,910
Commitments and Contingencies
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 32,796,077 and 32,672,735
shares issued and outstanding 328 327
Warrants to purchase 6,022,115 shares of
common stock 637 637
Additional paid-in capital 318,932 316,721
Accumulated deficit (253,859) (229,381)
----------- -----------
Total shareholders' equity 66,038 88,304
----------- -----------
$ 186,855 $ 196,214
=========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Nine Month
Periods Ended Periods Ended
------------------------ ------------------------
October 30, October 31, October 30, October 31,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 132,283 $ 119,441 $ 383,437 $ 372,588
Cost of sales 85,234 79,774 243,495 249,172
----------- ----------- ----------- -----------
Gross profit 47,049 39,667 139,942 123,416
Operating expense:
Distribution and
selling 42,752 41,774 133,815 130,898
General and
administrative 4,445 4,264 14,007 13,200
Depreciation and
amortization 2,997 3,507 10,215 10,723
Restructuring costs 412 126 838 715
Rebranding costs 39 - 39 -
CEO transition costs - 1,567 - 1,867
----------- ----------- ----------- -----------
Total operating
expense 50,645 51,238 158,914 157,403
----------- ----------- ----------- -----------
Operating loss (3,596) (11,571) (18,972) (33,987)
----------- ----------- ----------- -----------
Other income
(expense):
Interest income - 2 51 365
Interest expense (2,203) (1,350) (6,148) (3,328)
Gain on sale of
investments - - - 3,628
----------- ----------- ----------- -----------
Total other income
(expense) (2,203) (1,348) (6,097) 665
----------- ----------- ----------- -----------
Loss before income
taxes (5,799) (12,919) (25,069) (33,322)
Income tax (provision)
benefit (15) - 591 157
----------- ----------- ----------- -----------
Net loss (5,814) (12,919) (24,478) (33,165)
Excess of preferred
stock carrying value
over redemption value - - - 27,362
Accretion of
redeemable
Series A preferred
stock - - - (62)
----------- ----------- ----------- -----------
Net loss available to
common shareholders $ (5,814) $ (12,919) $ (24,478) $ (5,865)
=========== =========== =========== ===========
Net loss per common
share $ (0.18) $ (0.40) $ (0.75) $ (0.18)
=========== =========== =========== ===========
Net loss per common
share
---assuming dilution $ (0.18) $ (0.40) $ (0.75) $ (0.18)
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding:
Basic 32,781,462 32,332,278 32,721,377 32,569,618
=========== =========== =========== ===========
Diluted 32,781,462 32,332,278 32,721,377 32,569,618
=========== =========== =========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Loss:
For the Three Month For the Nine Month
Periods Ended Periods Ended
------------------------ ------------------------
October 30, October 31, October 30, October 31,
2010 2009 2010 2009
----------- ----------- ----------- -----------
EBITDA, as adjusted
(000's) $ 578 $ (5,630) $ (5,656) $ (18,152)
Less:
Non-operating gain
on sale of
investments - - - 3,628
Restructuring
costs (412) (126) (838) (715)
CEO transition
costs - (1,567) - (1,867)
Rebranding costs (39) - (39) -
Non-cash
share-based
compensation (616) (741) (2,114) (2,530)
----------- ----------- ----------- -----------
EBITDA (as defined) (a) (489) (8,064) (8,647) (19,636)
----------- ----------- ----------- -----------
A reconciliation of
EBITDA to net loss is
as follows:
EBITDA, as defined (489) (8,064) (8,647) (19,636)
Adjustments:
Depreciation and
amortization (3,107) (3,507) (10,325) (10,723)
Interest income - 2 51 365
Interest expense (2,203) (1,350) (6,148) (3,328)
Income taxes (15) - 591 157
----------- ----------- ----------- -----------
Net loss $ (5,814) $ (12,919) $ (24,478) $ (33,165)
=========== =========== =========== ===========
(a) EBITDA as defined for this statistical presentation represents net
income (loss) 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-operating
gains (losses); non-cash impairment charges and writedowns, restructuring,
rebranding 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
when given. 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
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 Information: Investor/Media Relations Anthony Giombetti
agiombetti@shopnbc.com 612-308-1190 Investor Relations Norberto Aja
& David Collins vvtv@jcir.com 212-835-8500
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