Evine Live Inc. (“Evine”) (NASDAQ:EVLV) today announced results for
the first quarter ended April 29, 2017. The Company posted
quarterly net sales of $156 million. The Company also posted
a net loss of $3.2 million, a 35% improvement year-over-year, EPS
of ($0.05), a 44% improvement year-over-year, and an Adjusted
EBITDA of $3.1 million.
“As expected, it was a tough retail environment so I’m pleased
that our teams were able to deliver on our revenue and EPS guidance
to our stakeholders,” said CEO Bob Rosenblatt. “This is the
fourth quarter in a row we have improved our bottom line
profitability. We are more passionate than ever that our
discipline around the interactive video commerce fundamentals is
positioning our company well for continued improvement in
profitability throughout the year.”
Fiscal Year 2017 First Quarter
Highlights
- Net sales were $156 million, a 6.3% decrease
year-over-year.
- Gross profit as a percentage of sales decreased 80 basis points
to 36.0% year-over-year.
- Net loss was $3.2 million, a 35% improvement
year-over-year.
- Adjusted EBITDA was $3.1 million, an 11% decrease
year-over-year.
- EPS was ($0.05), a 44% improvement year-over-year.
- Total cash, including restricted cash, was $26 million.
Rosenblatt continued, “Our 2017 growth strategy remains focused
on building proprietary and exclusive brands as well as using our
national multi-platform distribution to showcase lesser known
compelling brands that cannot replicate our kind of reach in
today’s retail landscape. Our team finds the brands and helps tell
their stories in a way only interactive video commerce can
do.”
“It is clear,” Rosenblatt added, “the traditional department
store retail strategy of offering everything to everyone has been
disrupted by technology, which allows for narrowcasting of personal
shopping capabilities to consumers. We believe our growth
strategy positions us to become the platform for the next
generation of personalized ecommerce.”
SUMMARY RESULTS AND KEY OPERATING
METRICS |
|
($ Millions, except average selling price and
EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 20174/29/2017 |
|
Q1 20164/30/2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Net
Sales |
|
$ |
156.3 |
|
|
$ |
166.9 |
|
|
(6.3 |
%) |
|
Gross
Margin % |
|
|
36.0 |
% |
|
|
36.8 |
% |
|
(80 bps) |
|
Adjusted
EBITDA |
|
$ |
3.1 |
|
|
$ |
3.4 |
|
|
(11 |
%) |
|
Net
Loss |
|
$ |
(3.2 |
) |
|
$ |
(4.9 |
) |
|
(35 |
%) |
|
EPS |
|
$ |
(0.05 |
) |
|
$ |
(0.09 |
) |
|
(44 |
%) |
|
|
|
|
|
|
|
|
|
|
Net Shipped
Units (000s) |
|
|
2,580 |
|
|
|
2,417 |
|
|
7 |
% |
|
Average
Selling Price (ASP) |
|
$ |
54 |
|
|
$ |
62 |
|
|
(13 |
%) |
|
Return Rate
% |
|
|
18.8 |
% |
|
|
19.2 |
% |
|
(40 bps) |
|
Digital Net
Sales % |
|
|
50.6 |
% |
|
|
48.8 |
% |
|
180 bps |
|
Total Customers - 12
Month Rolling (000s) |
|
|
|
1,409 |
|
|
|
1,441 |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
% of Net
Merchandise Sales by Category |
|
|
|
|
|
|
|
Jewelry & Watches |
|
|
41 |
% |
|
|
43 |
% |
|
|
|
Home & Consumer Electronics |
|
|
22 |
% |
|
|
24 |
% |
|
|
|
Beauty |
|
|
15 |
% |
|
|
15 |
% |
|
|
|
Fashion & Accessories |
|
|
22 |
% |
|
|
18 |
% |
|
|
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2017 Results
- Wearable categories, which include Jewelry & Watches,
Fashion & Accessories, and Beauty, decreased in sales by 5%
year-over-year, which was primarily driven by the Watches
category. The top performing category in the quarter was
Fashion, which grew 8% year-over-year. Consumer Electronics,
which continues to decline as a result of Management’s proactive
reduction of lower margin merchandise in this category, decreased
by 45% year-over-year.
- Return rate for the quarter was 18.8%; an improvement of 40
basis points year-over-year.
- Gross profit as a percentage of sales decreased 80 basis points
to 36.0% year-over-year, driven primarily by rate and mix pressures
from the Watches category. Gross profit dollars decreased 8%
to $56.3 million year-over-year.
- Operating expense decreased $8.1 million year-over-year to
$56.9 million, a 12% decrease, driven by reduced selling and
distribution expenses, reduced management transition costs and
other reductions from our continued profit improvement
initiatives.
- Net loss was $3.2 million, a 35% improvement year-over-year and
Adjusted EBITDA decreased 11% to $3.1 million. EPS for the
fiscal 2017 first quarter improved $0.04 or 44% to ($0.05)
year-over-year.
Liquidity and Capital Resources
On January 31, 2017, as previously announced, the Company
purchased 4,400,000 shares of its common stock, representing
approximately 6.7% of shares then outstanding, for
approximately $4.9 million or $1.12 per share
in a private transaction with NBCUniversal Media, LLC, a
subsidiary of Comcast
Corporation (“Comcast”)(NASDAQ:CMCSA). The Company used
cash on hand to buy back the shares.
On March 21, 2017, also as previously announced, the Company
continued to strengthen its balance sheet and paid down $9.5
million, or approximately 60%, of its Great American Capital
Partners (GACP) high interest term loan. The Company used a
combination of cash on hand and $6.0 million from its lower
interest PNC Credit Facility to fund this pay down.
As of April 29, 2017, total cash, including restricted cash, was
$26 million, compared to $33 million at the end of fiscal
2016. The decrease is primarily related to the cash used in
the two transactions listed above. The Company also had an
additional $12 million of unused availability on its revolving
credit facility with PNC Bank, which gives the Company total
liquidity of approximately $38 million as of the end of the first
quarter.
Second Quarter and Full Year 2017
Outlook
The following details relate to our expected
performance for the second quarter and full-year of fiscal
2017:
For Q2: We expect revenues to decline 3% to 5%,
which reflects management’s continued rebalancing of the Company’s
merchandising mix to reduce low margin consumer electronics that
began back in Q2 of 2016. From a profitability perspective,
management expects the Company to post net income and EPS that is
in line with prior year’s Q2 results.
For Full Year: We continue to expect
slightly positive sales for fiscal 2017 and 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 Call
A conference call and webcast to discuss the
Company's first quarter earnings will be held at 8:30 a.m. Eastern
Time on Tuesday, May 23, 2017:
WEBCAST LINK:
http://event.on24.com/wcc/r/1336366/E19C012FADA147573983E34DDF0EE365
TELEPHONE: 1-877-407-9039 (domestic) or 1-201-689-8470
(international)
PASSCODE: 13661446
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 29, |
|
January 28, |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
Current assets: |
|
|
|
|
Cash |
$ |
25,938 |
|
|
$ |
32,647 |
|
|
Restricted cash and investments |
|
450 |
|
|
|
450 |
|
|
Accounts receivable, net |
|
85,538 |
|
|
|
99,062 |
|
|
Inventories |
|
75,649 |
|
|
|
70,192 |
|
|
Prepaid expenses and other |
|
5,784 |
|
|
|
5,510 |
|
|
Total current assets |
|
193,359 |
|
|
|
207,861 |
|
|
Property and equipment, net |
|
53,672 |
|
|
|
52,715 |
|
|
FCC
broadcasting license |
|
12,000 |
|
|
|
12,000 |
|
|
Other assets |
|
2,306 |
|
|
|
2,204 |
|
|
Total Assets |
$ |
261,337 |
|
|
$ |
274,780 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
58,211 |
|
|
$ |
65,796 |
|
|
Accrued liabilities |
|
42,944 |
|
|
|
37,858 |
|
|
Current portion of long term credit facilities |
|
3,440 |
|
|
|
3,242 |
|
|
Deferred revenue |
|
85 |
|
|
|
85 |
|
|
Total current liabilities |
|
104,680 |
|
|
|
106,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long term liabilities |
|
407 |
|
|
|
428 |
|
|
Deferred tax liability |
|
3,719 |
|
|
|
3,522 |
|
|
Long term credit facilities |
|
78,454 |
|
|
|
82,146 |
|
|
Total liabilities |
|
187,260 |
|
|
|
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; |
|
|
|
|
60,968,092 and 65,192,314 shares issued and outstanding |
|
610 |
|
|
|
652 |
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
432,574 |
|
|
|
436,962 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
(359,107 |
) |
|
|
(355,911 |
) |
|
Total shareholders' equity |
|
74,077 |
|
|
|
81,703 |
|
|
Total Liabilities and Shareholders' Equity |
$ |
261,337 |
|
|
$ |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 29, |
|
April 30, |
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Net
sales |
$ |
156,343 |
|
|
$ |
166,920 |
|
|
|
Cost of sales |
|
100,057 |
|
|
|
105,472 |
|
|
|
Gross profit |
|
56,286 |
|
|
|
61,448 |
|
|
|
Margin % |
|
36.0 |
% |
|
|
36.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense: |
|
|
|
|
|
Distribution and selling |
|
48,730 |
|
|
|
53,425 |
|
|
|
General and administrative |
|
5,995 |
|
|
|
5,769 |
|
|
|
Depreciation and amortization |
|
1,636 |
|
|
|
2,107 |
|
|
|
Executive and management transition costs |
|
506 |
|
|
|
3,601 |
|
|
|
Distribution facility consolidation and technology upgrade
costs |
|
- |
|
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expense |
|
56,867 |
|
|
|
64,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
(581 |
) |
|
|
(3,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest income |
|
2 |
|
|
|
2 |
|
|
|
Interest expense |
|
(1,495 |
) |
|
|
(1,205 |
) |
|
|
Loss on debt extinguishment |
|
(913 |
) |
|
|
- |
|
|
|
Total other expense |
|
(2,406 |
) |
|
|
(1,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
(2,987 |
) |
|
|
(4,737 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
(209 |
) |
|
|
(205 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(3,196 |
) |
|
$ |
(4,942 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share |
$ |
(0.05 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share |
|
|
|
|
|
---assuming
dilution |
$ |
(0.05 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of |
|
|
|
|
|
common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
60,918,508 |
|
|
|
57,181,155 |
|
|
|
Diluted |
|
60,918,508 |
|
|
|
57,181,155 |
|
|
|
|
|
|
|
|
|
|
|
|
EVINE Live Inc. |
|
AND SUBSIDIARIES |
|
Reconciliation of Net Loss to Adjusted
EBITDA: |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
For the Three-Month
Periods Ended |
|
|
|
|
|
|
|
|
|
|
April 29, |
April 30, |
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
(In Thousands) |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,196 |
) |
$ |
(4,942 |
) |
|
|
Adjustments: |
|
|
|
|
|
Depreciation and amortization |
|
|
2,604 |
|
|
3,041 |
|
|
|
Interest income |
|
|
(2 |
) |
|
(2 |
) |
|
|
Interest expense |
|
|
1,495 |
|
|
1,205 |
|
|
|
Income taxes |
|
|
209 |
|
|
205 |
|
|
|
EBITDA
(as defined) |
|
$ |
1,110 |
|
$ |
(493 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of EBITDA to Adjusted EBIDTA is as
follows: |
|
|
|
|
EBITDA
(as defined) |
|
$ |
1,110 |
|
$ |
(493 |
) |
|
|
Adjustments: |
|
|
|
|
|
Executive and
management transition costs |
|
|
506 |
|
|
3,601 |
|
|
|
Loss on debt extinguishment |
|
|
913 |
|
|
- |
|
|
|
Distribution facility consolidation and technology upgrade
costs |
|
- |
|
|
80 |
|
|
|
Non-cash
share-based compensation |
|
|
521 |
|
|
237 |
|
|
|
Adjusted
EBITDA |
|
$ |
3,050 |
|
$ |
3,425 |
|
|
|
|
|
|
|
|
|
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; 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 1995
This document may contain certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. 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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