ValueVision Media Reports Third Quarter 2014 Results

MINNEAPOLIS, MN--(Marketwired - Nov 18, 2014) - ValueVision Media, Inc. (NASDAQ: VVTV)

HIGHLIGHTS

  • Q3 sales increased 7% to $157M
  • Gross profit rose 7% to $59M
  • Adjusted EBITDA grew 33% to $4.8M

ValueVision Media, Inc. (NASDAQ: VVTV), a digital commerce company operating as ShopHQ, announced operating results for its fiscal 2014 third quarter (Q3'14) ended November 1, 2014. The Company will host an investor conference call/webcast today at 11:00 a.m. EST.

                 
SUMMARY RESULTS AND KEY OPERATING METRICS               
($ Millions, except average price points)                    
 
    Q3 '14   Q3 '13       YTD   YTD    
    11/1/2014   11/2/2013   Change   11/1/2014   11/2/2013   Change
Net Sales   $ 157.1   $ 147.3     7%   $ 473.4   $ 447.2     6%
Gross Profit   $ 59.1   $ 55.2     7%   $ 179.5   $ 167.9     7%
Gross Profit %     37.6%     37.5%     +10 bps     37.9%     37.5%     +40 bps
Adjusted EBITDA   $ 4.8   $ 3.6     33%   $ 15.8   $ 13.2     20%
                                     
Adjusted Net Income/(Loss)   $ 1.6   $ (0.9)   $ 2.5   $ 3.9   $ (0.7)   $ 4.6
Less:                                    
  Activist Shareholder Response Costs   $ 0.0   $ (0.3)   $ 0.3   $ (3.5)   $ (0.3)   $ (3.2)
  Executive Transition Costs   $ (2.4)   $ 0.0   $ (2.4)   $ (5.0)   $ 0.0   $ (5.0)
Net Income/(Loss)   $ (0.8)   $ (1.2)   $ 0.4   $ (4.6)   $ (1.0)   $ (3.6)
                                     
Net Income/(Loss) per Share   $ (0.01)   $ (0.02)   $ 0.01   $ (0.09)   $ (0.02)   $ (0.07)
                                     
Adjusted Net Income/(Loss) per Share   $ 0.03   $ (0.02)   $ 0.05   $ 0.07   $ (0.01)   $ 0.08
                                     
Homes (Average 000s)     87,466     86,605     1%     87,319     85,958     2%
Net Shipped Units (000s)     2,134     1,665     28%     6,157     4,789     29%
Average Selling Price   $ 67   $ 80     -16%   $ 70   $ 85     -18%
Return Rate %     21.2%     22.8%     -160 bps     22.1%     22.6%     -50 bps
Internet Net Sales %     43.5%     43.5% *   -     43.9%     44.9% *   -100 bps
Total Customers - 12 Month Rolling     1,443,678     1,246,018     16%     N/A     N/A      
                                     
* The above Internet Net Sales percentage metric for Q3 F13 and YTD F13 reflect a correction of our previously reported Internet Net Sales percentages for these respective periods. Previously reported Internet Net Sales Percentages were 47.2% for Q3 F13 and 46.2% for YTD Q3 F13.
 

Net Sales and Gross Profit rose 7% in Q3'14 compared to the same quarter last year due principally to strong sales gains in its Fashion & Accessories and Beauty, Health & Fitness categories.

Adjusted EBITDA rose 33% to $4.8 million driven by the net sales and gross profit increases, and the inherent operating leverage of the Company's business model. Adjusted net income rose to $1.6 million, or $0.03 per share, in Q3'14 compared to an adjusted net loss of ($0.9) million, or ($0.02) per share, in Q3'13.

Mark Bozek, CEO of ValueVision, said, "I am pleased with our solid third quarter results. We achieved improvements in operating metrics across the P&L, and we are excited for the holiday season. I am also looking forward to accelerating our transition to a true digital commerce company and implementing our new, unified strategy which should expand our reach and further drive long-term growth."

William McGrath, EVP & CFO of ValueVision, said, "We ended the quarter with $26 million in cash and restricted cash. During the quarter, the Company had borrowings under our PNC credit facility of around $5 million to fund capital expenditures incurred for our Bowling Green distribution center expansion." 

Conference Call / Webcast Today, Tuesday, November 18, 2014 at 11 a.m. EST:
WEBCAST/WEB REPLAY:
http://www.media-server.com/m/p/xqka2ud5
TELEPHONE: (877) 280 4960; PASSCODE: 45252597

Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted Earnings Per Share
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 debt extinguishment; non-operating gains (losses); non-cash impairment charges and write-downs; activist shareholder response costs; executive transition costs and non-cash share-based compensation expense. The Company defines Adjusted Net Income/(Loss) as net income/(loss) excluding non-cash impairment charges and write-downs; debt extinguishment; executive transition costs and activist shareholder response costs. The Company has included the term "Adjusted EBITDA" in our EBITDA reconciliation in order to adequately assess the operating performance of our television and Internet businesses and in order to maintain comparability to our analyst's coverage and financial guidance, when given. Management believes that the terms Adjusted EBITDA and Adjusted Net Income/(Loss) allow investors to make a more 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 and Adjusted Net Income/(Loss) should not be construed as alternatives to operating income (loss), net income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be construed as measures of liquidity. Adjusted EBITDA and Adjusted Net Income/(Loss) may not be comparable to similarly entitled measures reported by other companies. The Company has included a reconciliation of each of Adjusted EBITDA and Adjusted Net Income/(Loss) to net income (loss), their most directly comparable GAAP financial measure, in this release.

Forward-Looking Information
This release 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 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; 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; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our long-term credit facility covenants; our ability to successfully transition our brand name and corporate name; the market demand for television station sales; our management and information systems infrastructure; challenges to our data and information security; changes in governmental or regulatory requirements; 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; and our ability 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. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. 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)  
             
    November 1,     February 1,  
    2014     2014  
    (Unaudited)        
                 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 23,987     $ 29,177  
  Restricted cash and investments     2,100       2,100  
  Accounts receivable, net     93,460       107,386  
  Inventories     67,797       51,162  
  Prepaid expenses and other     5,043       6,032  
    Total current assets     192,387       195,857  
Property and equipment, net     33,647       24,952  
FCC broadcasting license     12,000       12,000  
Other assets     986       896  
    $ 239,020     $ 233,705  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
Current liabilities:                
  Accounts payable   $ 73,990     $ 77,296  
  Accrued liabilities     40,518       38,535  
  Current portion of long term credit facility     604       -  
  Deferred revenue     85       85  
    Total current liabilities     115,197       115,916  
                 
Capital lease liability     49       88  
Deferred revenue     271       335  
Deferred tax liability     1,749       1,158  
Long term credit facility     42,087       38,000  
    Total liabilities     159,353       155,497  
                 
Commitments and contingencies                
                 
Shareholders' equity:                
  Common stock, $.01 par value, 100,000,000 shares authorized;                
    56,137,622 and 49,844,253 shares issued and outstanding     561       498  
  Warrants to purchase common stock     -       533  
  Additional paid-in capital     417,247       410,681  
  Accumulated deficit     (338,141 )     (333,504 )
    Total shareholders' equity     79,667       78,208  
    $ 239,020     $ 233,705  
                 
   
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except share and per share data)  
(Unaudited)  
                         
                         
    For the Three Month Periods Ended     For the Nine Month Periods Ended  
                         
    November 1,     November 2,     November 1,     November 2,  
    2014     2013     2014     2013  
Net sales   $ 157,106     $ 147,318     $ 473,394     $ 447,236  
Cost of sales     98,040       92,083       293,887       279,311  
      Gross profit     59,066       55,235       179,507       167,925  
      Margin %     37.6 %     37.5 %     37.9 %     37.5 %
Operating expense:                                
  Distribution and selling     49,457       46,683       149,296       139,477  
  General and administrative     5,357       5,742       18,045       17,811  
  Depreciation and amortization     2,034       3,039       6,465       9,342  
  Activist shareholder response costs     -       344       3,518       344  
  Executive transition costs     2,415       -       5,035       -  
    Total operating expense     59,263       55,808       182,359       166,974  
Operating income (loss)     (197 )     (573 )     (2,852 )     951  
                                 
Other expense:                                
  Interest income     2       3       8       17  
  Interest expense     (406 )     (355 )     (1,184 )     (1,081 )
    Total other expense     (404 )     (352 )     (1,176 )     (1,064 )
Loss before income taxes     (601 )     (925 )     (4,028 )     (113 )
Income tax provision     (207 )     (292 )     (609 )     (880 )
Net loss   $ (808 )   $ (1,217 )   $ (4,637 )   $ (993 )
                                 
Net loss per common share   $ (0.01 )   $ (0.02 )   $ (0.09 )   $ (0.02 )
                                 
Net loss per common share ---assuming dilution   $
(0.01
)   $
(0.02
)   $
(0.09
)   $
(0.02
)
                                 
Weighted average number of common shares outstanding:                                
      Basic     55,433,419       49,604,860       52,492,488       49,412,646  
      Diluted     55,433,419       49,604,860       52,492,488       49,412,646  
                                 
   
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
                         
Reconciliation of Adjusted EBITDA to Net Loss:  
                         
    For the Three Month Periods Ended     For the Nine Month Periods Ended  
                         
    November 1,     November 2,     November 1,     November 2,  
    2014     2013     2014     2013  
                                 
                                 
Adjusted EBITDA (000's)   $ 4,780     $ 3,595     $ 15,822     $ 13,170  
Less:                                
  Activist shareholder response costs     -       (344 )     (3,518 )     (344 )
  Executive transition costs     (2,415 )     -       (5,035 )     -  
  Non-cash share-based compensation     (420 )     (718 )     (3,338 )     (2,368 )
EBITDA (as defined) (a)     1,945       2,533       3,931       10,458  
                                 
A reconciliation of EBITDA to net loss is as follows:                                
                                 
EBITDA (as defined) (a)     1,945       2,533       3,931       10,458  
Adjustments:                                
  Depreciation and amortization     (2,142 )     (3,106 )     (6,783 )     (9,507 )
  Interest income     2       3       8       17  
  Interest expense     (406 )     (355 )     (1,184 )     (1,081 )
  Income taxes     (207 )     (292 )     (609 )     (880 )
Net loss   $ (808 )   $ (1,217 )   $ (4,637 )   $ (993 )
                                 

(a) EBITDA as defined for this statistical presentation 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 debt extinguishment, non-operating gains (losses); non-cash impairment charges and writedowns, activist shareholder response costs, executive transition costs and non-cash share-based compensation expense.

Management has included the term Adjusted EBITDA in its EBITDA reconciliation in order to adequately assess the operating performance of the Company's television and internet businesses and in order to maintain comparability to its analyst's coverage and financial guidance, when given. Management believes that Adjusted EBITDA allows investors to make a more 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 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, net income or to cash flows from operating activities as determined in accordance with 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. 



Contacts

Media:
Dawn Zaremba
ShopHQ
press@evine.com
(952) 943-6043

Liz Micci and Pat Tucker
Abernathy MacGregor
EDM@abmac.com
PCT@abmac.com
(212) 371-5999

Investors:
Chris Eddy, Eric Lentini
Catalyst Global LLC
vvtv@catalyst-ir.com
(212) 924-9800