Evine Live Inc. (“Evine”) (NASDAQ:EVLV) today announced results for
the second quarter ended July 29, 2017. The Company posted
quarterly net sales of $149 million, which is a 5.2% decrease
year-over-year and is within management’s guidance. The
Company posted a net loss of $2.0 million and EPS of ($0.03), both
flat year-over-year, and an Adjusted EBITDA of $3.5 million.
“This second quarter is the final quarter of
expected revenue decline, which was related to the year-long
rebalancing of our Consumer Electronics mix of business that began
in April of last year. This rebalancing was an important step to
position our merchandising offering for long term profitable growth
and we accomplished it while again delivering on our quarterly EPS
guidance,” said CEO Bob Rosenblatt. “When we combine this
progress with the launch of more than 10 million high definition
homes and the launch of our high definition signal in September, we
believe the second half of fiscal 2017 is positioned well to
deliver solid, profitable growth.”
Fiscal Year 2017 Second Quarter
Highlights
- Net sales were $149 million, a 5.2% decrease
year-over-year.
- Gross profit as a percentage of sales decreased 20 basis points
to 37.9% year-over-year.
- Net loss was $2.0 million, flat year-over-year.
- Adjusted EBITDA was $3.5 million, a 9% decrease
year-over-year.
- EPS was ($0.03), flat year-over-year.
- Total cash, including restricted cash, was $23 million.
Rosenblatt continued, “It is clear that there is
a sea change occurring throughout the retail landscape. All
retailers, be it online or those with a significant bricks and
mortar presence, continue to try to find better and differentiated
ways to connect with the consumer. We believe interactive
video commerce messaged to the consumer, based on the delivery
platform used, whether that be through social, or traditional
eCommerce, in concert with the data and predictive analytics
available, marks the next significant growth curve.”
“When I look out two to three years from now,”
Rosenblatt added, “there will be two types of retailers. Those
whose models are based on price, selling commoditized products
available on multiple platforms, and those whose models are based
on product exclusivity and the customer experience. Our goal
is to be a leader in the latter category. Interactive video is the
cornerstone of our digital commerce company that is driving
business opportunities in all digital platforms and business
models, from mobile to social, from laptop to television, and from
merchandising business models to web service business models.
We plan to do this while engaging with all types of customers, from
Millennials to Baby Boomers and to both women and men. A
significant portion of the population will continue to purchase
product from a curated assortment that facilitates the opportunity
of discovery. We believe interactive video commerce at scale,
an expertise we have continued to refine over many years, gives us
an unfair advantage in delivering that experience.”
SUMMARY RESULTS AND KEY OPERATING
METRICS |
($ Millions, except average selling price and
EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2017 7/29/2017 |
|
Q2 2016 7/30/2016 |
|
Change |
|
YTD 2017 7/29/2017 |
|
YTD 2016 7/30/2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
148.9 |
|
$ |
157.1 |
|
(5.2%) |
|
$ |
305.3 |
|
$ |
324.1 |
|
(5.8%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin % |
|
|
37.9% |
|
|
38.1% |
|
(20
bps) |
|
|
36.9% |
|
|
37.4% |
|
(50
bps) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
3.5 |
|
$ |
3.8 |
|
(9%) |
|
$ |
6.6 |
|
$ |
7.3 |
|
(10%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(2.0) |
|
$ |
(2.0) |
|
0% |
|
$ |
(5.2) |
|
$ |
(6.9) |
|
25% |
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.03) |
|
$ |
(0.03) |
|
0% |
|
$ |
(0.08) |
|
$ |
(0.12) |
|
33% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Shipped Units
(000s) |
|
|
2,423 |
|
|
2,461 |
|
(2%) |
|
|
5,003 |
|
|
4,878 |
|
3% |
Average Selling Price
(ASP) |
|
$ |
55 |
|
$ |
57 |
|
(4%) |
|
$ |
54 |
|
$ |
59 |
|
(8%) |
Return Rate % |
|
|
19.1% |
|
|
19.8% |
|
(70
bps) |
|
|
19.0% |
|
|
19.4% |
|
(40
bps) |
Digital Net Sales
% |
|
|
48.1% |
|
|
47.9% |
|
20
bps |
|
|
49.4% |
|
|
48.4% |
|
100
bps |
Total Customers - 12
Month Rolling (000s) |
|
|
1,377 |
|
|
1,447 |
|
(5%) |
|
N/A |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Net Merchandise
Sales by Category |
|
|
|
|
|
|
|
|
|
|
|
|
Jewelry
& Watches |
|
|
40% |
|
|
41% |
|
|
|
|
41% |
|
|
42% |
|
|
Home
& Consumer Electronics |
|
|
23% |
|
|
21% |
|
|
|
|
22% |
|
|
22% |
|
|
Beauty |
|
|
16% |
|
|
16% |
|
|
|
|
16% |
|
|
16% |
|
|
Fashion
& Accessories |
|
|
21% |
|
|
22% |
|
|
|
|
21% |
|
|
20% |
|
|
Total |
|
|
100% |
|
|
100% |
|
|
|
|
100% |
|
|
100% |
|
|
Second Quarter 2017 Results
- The top performing category in the quarter was Home, which grew
9% year-over-year. Consumer Electronics, which declined again
as a result of management’s proactive reduction of lower margin
merchandise, decreased by 8% year-over-year. Our wearables
group decreased collectively by 8% year-over-year driven by
continued pressure in our Watches category.
- Return rate for the quarter was 19.1%; an improvement of 70
basis points year-over-year.
- Gross profit as a percentage of sales decreased 20 basis points
to 37.9% year-over-year, driven primarily by mix pressure from the
Home category. Gross profit dollars decreased 6% to $56.5
million year-over-year.
- Operating expense decreased $3.1 million year-over-year to $57
million, a 5% decrease, driven by reduced distribution and selling
expenses.
- Net loss was $2.0 million and EPS was ($0.03) for the fiscal
2017 second quarter. Both were flat year-over-year.
Adjusted EBITDA decreased 9% year-over-year to $3.5 million.
Liquidity and Capital Resources
As of July 29, 2017, total cash, including
restricted cash, was $23 million, compared to $26 million at the
end of the first quarter. The Company also had an additional
$11 million of unused availability on its revolving credit facility
with PNC Bank, which gives the Company total liquidity of
approximately $34 million as of the end of the second quarter.
Third Quarter and Full Year 2017
Outlook
The following details relate to our expected
performance for the third quarter and full-year of fiscal 2017:
For Q3: We expect revenue
growth in the low single digits and net income and EPS that is
slightly improved to prior year’s Q3 results.
For Full Year: We
continue to expect adjusted EBITDA to be in the $18 to $22 million
range, which would be growth of 11% to 36% year over year.
These results include a 53rd week in fiscal 2017.
Conference CallA conference
call and webcast to discuss the Company's second quarter earnings
will be held at 8:30 a.m. Eastern Time on Wednesday, August 23,
2017:
WEBCAST LINK:
http://event.on24.com/wcc/r/1400380/564716D174B109733474197672B07CA3
TELEPHONE: 1-877-407-9039 (domestic) or 1-201-689-8470
(international)
Please visit www.evine.com/ir for more investor
information and to review an updated investor deck.
About Evine Live Inc.Evine Live Inc.
(NASDAQ:EVLV) operates Evine, a multiplatform video commerce
company that offers a mix of proprietary, exclusive and name brands
directly to consumers in an engaging and informative shopping
experience via television, online and mobile. Evine reaches more
than 87 million cable and satellite television homes with
entertaining content in a comprehensive digital shopping experience
24 hours a day.
Please visit www.evine.com/ir for more investor
information.
EVINE Live
Inc. |
AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands except share and per share data) |
|
|
|
|
|
July 29, |
|
January 28, |
|
|
2017 |
|
|
|
2017 |
|
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
Current
assets: |
|
|
|
Cash |
$ |
22,059 |
|
|
$ |
32,647 |
|
Restricted cash and investments |
|
450 |
|
|
|
450 |
|
Accounts
receivable, net |
|
82,814 |
|
|
|
99,062 |
|
Inventories |
|
63,748 |
|
|
|
70,192 |
|
Prepaid
expenses and other |
|
5,564 |
|
|
|
5,510 |
|
Total
current assets |
|
174,635 |
|
|
|
207,861 |
|
Property and
equipment, net |
|
53,135 |
|
|
|
52,715 |
|
FCC
broadcasting license |
|
12,000 |
|
|
|
12,000 |
|
Other
assets |
|
2,231 |
|
|
|
2,204 |
|
Total
Assets |
$ |
242,001 |
|
|
$ |
274,780 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
47,082 |
|
|
$ |
65,796 |
|
Accrued
liabilities |
|
36,881 |
|
|
|
37,858 |
|
Current
portion of long term credit facilities |
|
3,440 |
|
|
|
3,242 |
|
Deferred
revenue |
|
85 |
|
|
|
85 |
|
Total
current liabilities |
|
87,488 |
|
|
|
106,981 |
|
|
|
|
|
|
|
|
|
Other long term
liabilities |
|
286 |
|
|
|
428 |
|
Deferred tax
liability |
|
3,916 |
|
|
|
3,522 |
|
Long term
credit facilities |
|
73,308 |
|
|
|
82,146 |
|
Total
liabilities |
|
164,998 |
|
|
|
193,077 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
Preferred
stock, $.01 par value, 400,000 shares authorized; |
|
|
|
zero
shares issued and outstanding |
|
- |
|
|
|
- |
|
Common
stock, $.01 par value, 99,600,000 shares authorized; |
|
|
|
65,220,233 and 65,192,314 shares issued and outstanding
|
|
652 |
|
|
|
652 |
|
|
|
|
|
Additional paid-in capital |
|
437,449 |
|
|
|
436,962 |
|
|
|
|
|
Accumulated deficit |
|
(361,098 |
) |
|
|
(355,911 |
) |
Total
shareholders' equity |
|
77,003 |
|
|
|
81,703 |
|
Total
Liabilities and Shareholders' Equity |
$ |
242,001 |
|
|
$ |
274,780 |
|
EVINE Live
Inc. |
AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(Unaudited) |
(In thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month
Periods Ended |
|
For the Six-Month
Periods Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 29, |
|
July 30, |
|
July 29, |
|
July 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Net
sales |
$ |
148,949 |
|
|
$ |
157,139 |
|
|
$ |
305,292 |
|
|
$ |
324,059 |
|
Cost of
sales |
|
92,469 |
|
|
|
97,311 |
|
|
|
192,526 |
|
|
|
202,783 |
|
Gross
profit |
|
56,480 |
|
|
|
59,828 |
|
|
|
112,766 |
|
|
|
121,276 |
|
Margin
% |
|
37.9 |
% |
|
|
38.1 |
% |
|
|
36.9 |
% |
|
|
37.4 |
% |
Operating
expense: |
|
|
|
|
|
Distribution and selling |
|
48,687 |
|
|
|
51,605 |
|
|
|
97,417 |
|
|
|
105,030 |
|
General
and administrative |
|
6,012 |
|
|
|
5,878 |
|
|
|
12,007 |
|
|
|
11,647 |
|
Depreciation and amortization |
|
1,680 |
|
|
|
1,977 |
|
|
|
3,316 |
|
|
|
4,084 |
|
Executive
and management transition costs |
|
572 |
|
|
|
242 |
|
|
|
1,078 |
|
|
|
3,843 |
|
Distribution facility consolidation and technology upgrade costs
|
|
- |
|
|
|
300 |
|
|
|
- |
|
|
|
380 |
|
Total
operating expense |
|
56,951 |
|
|
|
60,002 |
|
|
|
113,818 |
|
|
|
124,984 |
|
Operating
loss |
|
(471 |
) |
|
|
(174 |
) |
|
|
(1,052 |
) |
|
|
(3,708 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
income |
|
2 |
|
|
|
2 |
|
|
|
4 |
|
|
|
4 |
|
Interest
expense |
|
(1,313 |
) |
|
|
(1,606 |
) |
|
|
(2,808 |
) |
|
|
(2,811 |
) |
Loss on
debt extinguishment |
|
- |
|
|
|
- |
|
|
|
(913 |
) |
|
|
- |
|
Total
other expense |
|
(1,311 |
) |
|
|
(1,604 |
) |
|
|
(3,717 |
) |
|
|
(2,807 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
(1,782 |
) |
|
|
(1,778 |
) |
|
|
(4,769 |
) |
|
|
(6,515 |
) |
|
|
|
|
|
|
Income tax
provision |
|
(209 |
) |
|
|
(205 |
) |
|
|
(418 |
) |
|
|
(410 |
) |
|
|
|
|
|
|
Net
loss |
$ |
(1,991 |
) |
|
$ |
(1,983 |
) |
|
$ |
(5,187 |
) |
|
$ |
(6,925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share |
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
--assuming
dilution |
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of |
|
|
|
|
|
common shares
outstanding: |
|
|
|
|
|
Basic |
|
64,091,228 |
|
|
|
57,258,672 |
|
|
|
62,504,868 |
|
|
|
57,219,914 |
|
Diluted |
|
64,091,228 |
|
|
|
57,258,672 |
|
|
|
62,504,868 |
|
|
|
57,219,914 |
|
EVINE Live Inc. |
AND SUBSIDIARIES |
Reconciliation of Net Loss to Adjusted
EBITDA: |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month
Periods Ended |
|
For the Six-Month
Periods Ended |
|
|
|
|
|
|
|
|
|
|
July 29, |
|
July 30, |
|
July 29, |
|
July 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(1,991 |
) |
|
$ |
(1,983 |
) |
|
$ |
(5,187 |
) |
|
$ |
(6,925 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,655 |
|
|
|
3,070 |
|
|
|
5,259 |
|
|
|
6,111 |
|
Interest
income |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
Interest
expense |
|
|
1,313 |
|
|
|
1,606 |
|
|
|
2,808 |
|
|
|
2,811 |
|
Income
taxes |
|
|
209 |
|
|
|
205 |
|
|
|
418 |
|
|
|
410 |
|
EBITDA
(as defined) |
|
$ |
2,184 |
|
|
$ |
2,896 |
|
|
$ |
3,294 |
|
|
$ |
2,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
reconciliation of EBITDA to Adjusted EBIDTA is as follows: |
|
|
|
|
|
|
|
EBITDA
(as defined) |
|
$ |
2,184 |
|
|
$ |
2,896 |
|
|
$ |
3,294 |
|
|
$ |
2,403 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Executive and
management transition costs |
|
|
572 |
|
|
|
242 |
|
|
|
1,078 |
|
|
|
3,843 |
|
Loss on
debt extinguishment |
|
|
- |
|
|
|
- |
|
|
|
913 |
|
|
|
- |
|
Distribution facility consolidation and technology upgrade costs
|
|
- |
|
|
|
300 |
|
|
|
- |
|
|
|
380 |
|
Non-cash share-based
compensation expense |
|
|
746 |
|
|
|
398 |
|
|
|
1,267 |
|
|
|
635 |
|
Adjusted EBITDA |
|
$ |
3,502 |
|
|
$ |
3,836 |
|
|
$ |
6,552 |
|
|
$ |
7,261 |
|
Adjusted EBITDAEBITDA represents net income
(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); executive and management transition
costs; loss on debt extinguishment; distribution facility
consolidation and technology upgrade 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 television and online businesses
and in order to maintain comparability to our analyst's coverage
and financial guidance, when given. Management believes that the
term Adjusted EBITDA allows investors to make a meaningful
comparison between our business operating results over different
periods of time with those of other similar companies. In addition,
management uses Adjusted EBITDA as a metric to evaluate operating
performance under the Company’s management and executive incentive
compensation programs. Adjusted EBITDA should not be construed as
an alternative to operating income (loss), net income (loss) or to
cash flows from operating activities as determined in accordance
with generally accepted accounting principles (“GAAP”) and should
not be construed as a measure of liquidity. Adjusted EBITDA may not
be comparable to similarly entitled measures reported by other
companies. The Company has included a reconciliation of the
comparable GAAP measure, net income (loss) to Adjusted EBITDA in
this release.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995This document may
contain certain “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, including
guidance regarding anticipated future operating results, the
Company’s focus for the remainder of the fiscal year and the
Company’s beliefs regarding the future of retailing. Such
statements may be identified by words such as anticipate, believe,
estimate, expect, intend, predict, hope, should, plan, will or
similar expressions. Any statements contained herein that are not
statements of historical fact may be deemed forward-looking
statements. 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 preferences, spending and
debt levels; the general economic and credit environment; interest
rates; seasonal variations in consumer purchasing activities; the
ability to achieve the most effective product category mixes to
maximize sales and margin objectives; competitive pressures on
sales; pricing and gross sales margins; the level of cable and
satellite distribution for our programming and the associated fees
or estimated cost savings from contract renegotiations; our ability
to establish and maintain acceptable commercial terms with
third-party vendors and other third parties with whom we have
contractual relationships, and to successfully manage key vendor
relationships and develop key partnerships and proprietary and
exclusive brands; our ability to manage our operating expenses
successfully and our working capital levels; our ability to remain
compliant with our credit facilities covenants; customer acceptance
of our branding strategy and our repositioning as a video commerce
company; the market demand for television station sales; changes to
our management and information systems infrastructure; challenges
to our data and information security; changes in governmental or
regulatory requirements; including without limitation, regulations
of the Federal Communications Commission and Federal Trade
Commission, and adverse outcomes from regulatory proceedings;
litigation or governmental proceedings affecting our operations;
significant public events that are difficult to predict, or other
significant television-covering events causing an interruption of
television coverage or that directly compete with the viewership of
our programming; our ability to obtain and retain key executives
and employees; our ability to attract new customers and retain
existing customers; changes in shipping costs; our ability to offer
new or innovative products and customer acceptance of the same;
changes in customers viewing habits of television programming; and
the risks identified under “Risk Factors” in our recently filed
Form 10-K and any additional risk factors identified in our
periodic reports since the date of such Form 10-K. More detailed
information about those factors is set forth in our filings with
the Securities and Exchange Commission, including our annual report
on Form 10-K, quarterly reports on Form 10-Q, and current reports
on Form 8-K. You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
announcement. We are under no obligation (and expressly disclaim
any such obligation) to update or alter our forward-looking
statements whether as a result of new information, future events or
otherwise.
Contacts
Media:
Dawn Zaremba
press@evine.com
(952) 943-6043
Investors:
Michael Porter
mporter@evine.com
(952) 943-6517
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