Evine Live Inc. (“Evine”) (NASDAQ: EVLV) today announced results
for the second quarter ended August 4, 2018.
Fiscal Year 2018 Second Quarter
Highlights
- Net sales of $150.8 million increased 1.2% year-over-year.
- Gross profit margin of 37.7% decreased 20 basis points
year-over-year.
- Net loss of $40,000 improved by approximately $2.0 million
year-over-year, representing the best second quarter performance
since fiscal 2000.
- Adjusted EBITDA of $3.9 million increased 12%
year-over-year.
- EPS of $0.00 improved $0.03 over the prior year.
- Strengthened our balance sheet and our overall liquidity with
an amendment of our credit facility.
- Introduced 17 new brands during the second quarter.
Executive Commentary – Bob Rosenblatt,
CEO
“We had a very productive quarter and I’m
pleased with our results. We not only accelerated top line growth,
but we improved bottom line profitability and grew Adjusted EBITDA
by 12% year-over-year. We also strengthened our balance sheet and
overall liquidity with an amendment of our credit facility that
will provide interest expense savings and additional availability.
Our expertise is in building great brands. We do this by curating a
portfolio of enticing products that have a unique story and then,
with the right storyteller, we bring these products and brands to
life across all of our platforms. We strive to keep our content
fresh and relevant with a combination of both core and new brands.
To that end, we introduced 17 new brands during the quarter and
celebrated a number of milestone anniversaries. Additionally,
during the quarter, we continued to advance our digital and social
initiatives, grow our subscription business and increase purchase
frequency.”
|
SUMMARY RESULTS AND KEY OPERATING
METRICS |
($ Millions, except average selling price and
EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 20188/4/2018 |
|
Q2 20177/29/2017 |
|
Change |
|
YTD 20188/4/2018 |
|
YTD 20177/29/2017 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$ |
150.8 |
|
|
$ |
148.9 |
|
|
1.2% |
|
|
$ |
307.3 |
|
|
$ |
305.3 |
|
|
0.7% |
|
Gross Margin % |
|
|
37.7% |
|
|
|
37.9% |
|
|
(20
bps |
) |
|
|
36.8% |
|
|
|
36.9% |
|
|
(10
bps |
) |
Adjusted EBITDA |
|
$ |
3.9 |
|
|
$ |
3.5 |
|
|
12% |
|
|
$ |
7.2 |
|
|
$ |
6.6 |
|
|
10% |
|
Net Loss |
|
$ |
(0.0 |
) |
|
$ |
(2.0 |
) |
|
N/A |
|
|
$ |
(3.0 |
) |
|
$ |
(5.2 |
) |
|
42% |
|
EPS |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
N/A |
|
|
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
|
38% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Shipped Units
(000s) |
|
|
2,462 |
|
|
|
2,423 |
|
|
2% |
|
|
|
4,934 |
|
|
|
5,003 |
|
|
(1% |
) |
Average Selling Price
(ASP) |
|
$ |
55 |
|
|
$ |
55 |
|
|
0% |
|
|
$ |
56 |
|
|
$ |
54 |
|
|
4% |
|
Return Rate % |
|
|
18.7% |
|
|
|
19.1% |
|
|
(40
bps |
) |
|
|
18.8% |
|
|
|
19.0% |
|
|
(20
bps |
) |
Digital Net Sales
% |
|
|
52.6% |
|
|
|
48.1% |
|
|
450
bps |
|
|
|
52.8% |
|
|
|
49.4% |
|
|
340
bps |
|
Total Customers - 12
Month Rolling (000s) |
|
|
1,255 |
|
|
|
1,377 |
|
|
(9% |
) |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Net Merchandise
Sales by Category |
|
|
|
|
|
|
|
|
|
|
|
|
Jewelry
& Watches |
|
|
40% |
|
|
|
40% |
|
|
|
|
|
40% |
|
|
|
41% |
|
|
|
Home
& Consumer Electronics |
|
|
21% |
|
|
|
22% |
|
|
|
|
|
22% |
|
|
|
21% |
|
|
|
Beauty
& Wellness |
|
|
21% |
|
|
|
17% |
|
|
|
|
|
20% |
|
|
|
17% |
|
|
|
Fashion
& Accessories |
|
|
18% |
|
|
|
21% |
|
|
|
|
|
18% |
|
|
|
21% |
|
|
|
Total |
|
|
100% |
|
|
|
100% |
|
|
|
|
|
100% |
|
|
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2018 Results
- The top performing category in the quarter was Beauty &
Wellness, which grew 27% year-over-year, reflecting continued
strength from our subscription business.
- Digital net sales as a percentage of total net sales increased
450 basis points to 52.6%, reflecting our continued focus on making
the customer experience seamless across all platforms.
- The return rate for the quarter was 18.7%; an improvement of 40
basis points year-over-year and across multiple categories.
- Gross profit dollars increased to $56.9 million and gross
profit margin was 37.7%.
- Operating expenses decreased 1.7% or approximately $1.0 million
year-over-year to $56.0 million, reflecting reduced variable
selling and distribution expenses.
Liquidity and Capital
Resources
As of August 4, 2018, total unrestricted cash
was $28.1 million, compared to $22.1 million at the end of the
second quarter of fiscal 2017. The Company also had an
additional $23.3 million of unused availability on its revolving
credit facility, which gives the Company total liquidity of $51.4
million as of the end of the second quarter.
On July 27, 2018, the Company amended its
Revolving Credit, Term Loan and Security Agreement with PNC Bank.
The amendment reduced the applicable interest margin payable on
LIBOR loans under its revolving credit and term loan facilities by
1.0% and 2.5%, respectively. Additionally, the amendment increased
total availability under its revolving credit facility by
approximately $10.0 million, increased the size of the term loan
facility by $6.0 million to $19.0 million and extended the maturity
date of the credit facility to July 27, 2023.
Executive Team Addition
As previously announced, Anne Martin-Vachon
joined Evine as President on August 1, 2018, and oversees the
Company’s front-of-house functions, including merchandising,
marketing, digital, broadcast and production. Prior to Evine, Ms.
Martin-Vachon was President of the Canadian multiplatform digital
commerce company TSC - Today’s Shopping Choice, a division of
Rogers Media.
Fiscal Year 2018 Outlook
Note: Fiscal 2018 has 52 weeks compared to 53
weeks in Fiscal 2017.
We affirm our expectations for the year. We
continue to expect normalized sales growth in the 2% to 5% range on
a 52-week over 52-week basis, which equates to 0% to 3% on a
reported basis due to the extra week in fiscal 2017. We expect
Adjusted EBITDA to be in the $19 to $21 million range.(1)
Conference Call
As previously announced on August 8, 2018, a
conference call and webcast to discuss the Company's second quarter
earnings will be held later this morning at 8:30 a.m. Eastern Time
on Wednesday, August 29, 2018. Hosting the call will be Bob
Rosenblatt, CEO, Anne Martin-Vachon, President, Diana Purcel, CFO
and Michael Porter, VP of Finance and Investor Relations:
|
|
|
WEBCAST LINK: |
|
https://event.on24.com/wcc/r/1772358/5F6A0ADC329F12E17DAF516E82EB8304 |
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 interactive digital 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 television
homes with entertaining content in a comprehensive digital shopping
experience offered 24 hours a day.
Please visit www.evine.com/ir for more investor
information.
Contacts
Media: Liz
Josephpress@evine.com(952) 943-6192
Investors: Michael
Portermporter@evine.com(952) 943-6517
|
|
|
|
|
(1) |
|
In
accordance with SEC Guidance for Item 10(e)(1)(i)(A) of Regulation
S-K, we have not provided a reconciliation of our expected Adjusted
EBITDA range to expected net income range in this press release due
to the uncertainty and inherent difficulty predicting the
occurrence, the financial impact and the periods in which certain
GAAP to non-GAAP adjustments may be recognized. These adjustments
may include the impact of such items as loss on debt
extinguishment, gain on sale of assets, executive and management
transition costs, restructuring charges, the effect of other
certain one-time items, and the income tax effect of such items. We
are unable to quantify these types of adjustments that would be
required to be included in the GAAP measure without unreasonable
efforts. In addition, we believe such a reconciliation would imply
a degree of precision on inherently unpredictable events in our
outlook that could be confusing to investors. |
|
|
|
|
|
EVINE Live
Inc. |
AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands except share and per share data) |
|
|
|
|
|
|
|
August 4, |
|
February 3, |
|
|
2018 |
|
2018 |
|
|
(Unaudited) |
|
|
|
|
|
|
|
ASSETS |
Current
assets: |
|
|
|
|
Cash |
|
$ |
28,142 |
|
|
$ |
23,940 |
|
Restricted cash equivalents |
|
|
450 |
|
|
|
450 |
|
Accounts
receivable, net |
|
|
82,611 |
|
|
|
96,559 |
|
Inventories |
|
|
65,392 |
|
|
|
68,811 |
|
Prepaid
expenses and other |
|
|
11,043 |
|
|
|
5,344 |
|
Total
current assets |
|
|
187,638 |
|
|
|
195,104 |
|
Property and
equipment, net |
|
|
51,070 |
|
|
|
52,048 |
|
Other
assets |
|
|
2,017 |
|
|
|
2,106 |
|
Total Assets |
|
$ |
240,725 |
|
|
$ |
249,258 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
52,344 |
|
|
$ |
55,614 |
|
Accrued
liabilities |
|
|
37,201 |
|
|
|
35,646 |
|
Current
portion of long term credit facilities |
|
|
2,714 |
|
|
|
2,326 |
|
Deferred
revenue |
|
|
36 |
|
|
|
35 |
|
Total
current liabilities |
|
|
92,295 |
|
|
|
93,621 |
|
|
|
|
|
|
Other long term
liabilities |
|
|
50 |
|
|
|
68 |
|
Long term
credit facilities |
|
|
66,042 |
|
|
|
71,573 |
|
Total
liabilities |
|
|
158,387 |
|
|
|
165,262 |
|
|
|
|
|
|
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; |
|
|
|
|
|
|
|
|
66,287,786 and 65,290,458 shares issued and outstanding |
|
|
663 |
|
|
|
653 |
|
Additional paid-in capital |
|
|
440,469 |
|
|
|
439,111 |
|
Accumulated deficit |
|
|
(358,794 |
) |
|
|
(355,768 |
) |
Total
shareholders' equity |
|
|
82,338 |
|
|
|
83,996 |
|
Total Liabilities and Shareholders' Equity |
|
$ |
240,725 |
|
|
$ |
249,258 |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
August 4, |
|
July 29, |
|
August 4, |
|
July 29, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
sales |
|
$ |
150,799 |
|
|
$ |
148,949 |
|
|
$ |
307,304 |
|
|
$ |
305,292 |
|
Cost of
sales |
|
|
93,929 |
|
|
|
92,469 |
|
|
|
194,179 |
|
|
|
192,526 |
|
Gross
profit |
|
|
56,870 |
|
|
|
56,480 |
|
|
|
113,125 |
|
|
|
112,766 |
|
Margin
% |
|
|
37.7% |
|
|
|
37.9% |
|
|
|
36.8% |
|
|
|
36.9% |
|
Operating
expense: |
|
|
|
|
|
|
|
|
Distribution and selling |
|
|
47,958 |
|
|
|
48,687 |
|
|
|
96,845 |
|
|
|
97,417 |
|
General
and administrative |
|
|
6,521 |
|
|
|
6,012 |
|
|
|
13,240 |
|
|
|
12,007 |
|
Depreciation and amortization |
|
|
1,522 |
|
|
|
1,680 |
|
|
|
3,094 |
|
|
|
3,316 |
|
Executive
and management transition costs |
|
|
- |
|
|
|
572 |
|
|
|
1,024 |
|
|
|
1,078 |
|
Total
operating expense |
|
|
56,001 |
|
|
|
56,951 |
|
|
|
114,203 |
|
|
|
113,818 |
|
Operating
income/(loss) |
|
|
869 |
|
|
|
(471 |
) |
|
|
(1,078 |
) |
|
|
(1,052 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
income |
|
|
9 |
|
|
|
2 |
|
|
|
16 |
|
|
|
4 |
|
Interest
expense |
|
|
(898 |
) |
|
|
(1,313 |
) |
|
|
(1,924 |
) |
|
|
(2,808 |
) |
Loss on
debt extinguishment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(913 |
) |
Total
other expense |
|
|
(889 |
) |
|
|
(1,311 |
) |
|
|
(1,908 |
) |
|
|
(3,717 |
) |
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
|
(20 |
) |
|
|
(1,782 |
) |
|
|
(2,986 |
) |
|
|
(4,769 |
) |
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
|
(20 |
) |
|
|
(209 |
) |
|
|
(40 |
) |
|
|
(418 |
) |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(40 |
) |
|
$ |
(1,991 |
) |
|
$ |
(3,026 |
) |
|
$ |
(5,187 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
common share |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
common share |
|
|
|
|
|
|
|
|
---assuming dilution |
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number
of |
|
|
|
|
|
|
|
|
common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
66,009,117 |
|
|
|
64,091,228 |
|
|
|
65,685,034 |
|
|
|
62,504,868 |
|
Diluted |
|
|
66,009,117 |
|
|
|
64,091,228 |
|
|
|
65,685,034 |
|
|
|
62,504,868 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
August 4, |
|
July 29, |
|
August 4, |
|
July 29, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(40 |
) |
|
$ |
(1,991 |
) |
|
$ |
(3,026 |
) |
|
$ |
(5,187 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,515 |
|
|
|
2,655 |
|
|
|
5,135 |
|
|
|
5,259 |
|
Interest
income |
|
|
(9 |
) |
|
|
(2 |
) |
|
|
(16 |
) |
|
|
(4 |
) |
Interest
expense |
|
|
898 |
|
|
|
1,313 |
|
|
|
1,924 |
|
|
|
2,808 |
|
Income
taxes |
|
|
20 |
|
|
|
209 |
|
|
|
40 |
|
|
|
418 |
|
EBITDA
(as defined) |
|
$ |
3,384 |
|
|
$ |
2,184 |
|
|
$ |
4,057 |
|
|
$ |
3,294 |
|
|
|
|
|
|
|
|
|
|
A
reconciliation of EBITDA to Adjusted EBITDA is as follows: |
|
|
|
|
|
|
|
EBITDA
(as defined) |
|
$ |
3,384 |
|
|
$ |
2,184 |
|
|
$ |
4,057 |
|
|
$ |
3,294 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Executive
and management transition costs |
|
|
- |
|
|
|
572 |
|
|
|
1,024 |
|
|
|
1,078 |
|
Contract
termination costs |
|
|
- |
|
|
|
- |
|
|
|
753 |
|
|
|
- |
|
Loss on
debt extinguishment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
913 |
|
Non-cash
share-based compensation expense |
|
|
538 |
|
|
|
746 |
|
|
|
1,358 |
|
|
|
1,267 |
|
Adjusted EBITDA |
|
$ |
3,922 |
|
|
$ |
3,502 |
|
|
$ |
7,192 |
|
|
$ |
6,552 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
EBITDA 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; contract termination costs; gain on sale of
television station and non-cash share-based compensation expense.
The Company has included the “Adjusted EBITDA” measure 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 Adjusted EBITDA
measure 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 1995
This document may contain certain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements contained
herein that are not statements of historical fact, including
statements regarding guidance, industry prospects, or future
results of operations or financial position are forward-looking. We
often use words such as anticipates, believes, estimates, expects,
intends, predicts, hopes, should, plans, will and similar
expressions to identify 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): variability in consumer
preferences, shopping behaviors, 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 and sales
promotions; 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
and shipping 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; our ability to respond to changes in
consumer shopping patterns and preferences, and changes in
technology and consumer viewing patterns; 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
events (including disasters, weather events or events attracting
significant television coverage) that either cause an interruption
of television coverage or that divert viewership from our
programming; disruptions in our distribution of our network
broadcast to our customers; our ability to protect our intellectual
property rights; our ability to obtain and retain key executives
and employees; our ability to attract new customers and retain
existing customers; changes in shipping costs; expenses related to
the actions of activist or hostile shareholders; our ability to
offer new or innovative products and customer acceptance of the
same; changes in customer viewing habits of television programming;
and the risks identified under Item 1A(Risk Factors) in our most
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.
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