iParty Corp. (NYSE Amex: IPT - news), a party goods retailer,
today reported financial results for its second quarter of fiscal
year 2010, which ended on June 26, 2010.
Second Quarter 2010 Highlights
- Improvements to top line and
bottom line in the second quarter of 2010 compared to the second
quarter of 2009.
- Consolidated revenues of $20.1
million for the second quarter of 2010, a 2.5% increase compared to
the second quarter of 2009.
- Comparable store sales increase
of 1.4% for the second quarter of 2010.
- Net income of $767 thousand for
the second quarter of 2010, compared to net income of $669 thousand
for the second quarter of 2009, representing a 14.7% increase.
- EBITDA for the second quarter of
2010 of $1.27 million, compared to EBITDA in the second quarter of
2009 of $1.34 million (See accompanying schedule for reconciliation
of non-GAAP EBITDA to net income for the period).
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, “The second quarter results reflect a continuation of
improved financial performance. Our modest sales increases in the
first and second quarters of this year follow seven consecutive
quarters of negative comp store sales results prior to the first
quarter of 2010. Again in the second quarter as in the first, we
were able to control our company expenses, allowing us to translate
this sales increase into an improved net income compared to the
second quarter of 2009.”
Mr. Perisano further stated, “Mid way through 2010, we expect to
expand our temporary Halloween store business, as we have now
secured several prime locations for the upcoming Halloween season.
Also, we are on schedule to open an additional permanent store
before October in South Bay Center, Boston Massachusetts, a prime
Boston retail location. The opening of this new permanent store
will further develop the urban store strategy we initiated in late
2009, when we opened our first urban store on Boylston Street in
the Back Bay section of Boston.”
Operating Results
For the second quarter of 2010, consolidated revenues were $
20.06 million, a 2.5% increase compared to $19.57 million for the
second quarter in 2009. Comparable store sales in the second
quarter of 2010 increased 1.4% compared to the year-ago period.
Consolidated gross profit margin was 40.7% for the second quarter
of 2010 compared to a gross profit margin of 40.3% for the same
period in 2009. Consolidated net income for the second quarter of
2010 was $767 thousand, or $0.02 per basic and diluted share,
compared to consolidated net income of $669 thousand, or $0.02 per
basic and diluted share, for the second quarter in 2009. On a
non-GAAP basis, net income for the second quarter of 2010 before
interest, taxes, depreciation and amortization (“EBITDA”)
was $1.27 million compared to EBITDA of $1.34 million for the
second quarter in 2009. EBITDA is calculated as net income (loss),
as reported under United States generally accepted accounting
principles (“GAAP”), plus net interest expense, depreciation
and amortization and income taxes. The schedule accompanying this
release provides the reconciliation of net income for the second
quarters of 2010 and 2009, and net loss for the six-month periods
then ended, under GAAP to a non-GAAP, EBITDA basis.
For the six-month year-to-date period ended June 26, 2010,
consolidated revenues were $ 34.90 million, a 2.2% increase
compared to $34.14 million for the first six months of 2009.
Consolidated revenues for the first six months of 2010 included a
1.3% increase in comparable store sales from the year-ago period.
Consolidated gross profit margin was 38.6% for the six-month
period, compared to 38.3% for the same period in 2009. For the
six-month period, consolidated net loss was $718 thousand, or $0.03
per basic and diluted share, compared to a consolidated net loss of
$1.05 million, or $0.05 per basic and diluted share for the first
six months of 2009. On a non-GAAP basis, EBITDA was $296 thousand
compared to an EBITDA of $294 thousand for the first six months of
2009.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 51 iParty retail stores and licenses
the operation of an Internet site for party goods and party
planning at www.iparty.com. iParty’s aim is to make throwing a
successful event both stress-free and fun. With over 20,000 party
supplies and costumes and an online party magazine and
party-related content, iParty offers consumers a sophisticated, yet
fun and easy-to-use, resource with an extensive assortment of
products to customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues, and, of
course, Halloween. iParty aims to offer reliable, time-tested
knowledge of party-perfect trends, and superior customer service to
ensure convenient and comprehensive merchandise selections for
every occasion. Please visit our site at www.iparty.com.
Non-GAAP Financial Measures
Pursuant to the requirements of Regulation G, we have provided
below reconciliations of any non-GAAP financial measures we use in
this press release to the most directly comparable GAAP financial
measures. We believe that our presentation of EBITDA, which is a
non-GAAP financial measure, is an important supplemental measure of
operating performance to investors. The discussion below defines
this term, why we believe it is a useful measure of our
performance, and explains certain limitations on the use of
non-GAAP financial measures such as our use of EBITDA.
EBITDA
EBITDA is a commonly used measure of performance in our industry
which we believe, when considered with measures calculated in
accordance with United States generally accepted accounting
principles ("GAAP"), gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions and income taxes and facilitates
comparisons between us and our competitors. EBITDA is a non-GAAP
financial measure and has been presented in this release because
our management and the audit committee of our board of directors
use this financial measure in monitoring and evaluating our ongoing
financial results and trends. Our management and audit committee
believe that this non-GAAP operating performance measure is useful
for investors because it enhances investors' ability to analyze
trends in our business and compare our financial and operating
performance to that of our peers.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA has certain limitations. Our presentation of
EBITDA may be different from the presentation used by other
companies and therefore comparability may be limited. Depreciation
expense for various long-term assets, interest expense, income
taxes and other items have been and will be incurred and are not
reflected in the presentation of EBITDA. Each of these items should
also be considered in the overall evaluation of our results.
Additionally, EBITDA does not consider capital expenditures and
other investing activities and should not be considered as a
measure of our liquidity. In particular, we have opened new stores
through the expenditure of capital funded with borrowings under our
bank line of credit. Our results of operations, therefore, reflect
significant charges for depreciation, amortization and interest
expense. EBITDA, which excludes these expenses, provides helpful
information about the operating performance of our business, but
EBITDA does not purport to represent operating income or cash flow
from operating activities, as those terms are defined under GAAP,
and should not be considered as an alternative to those
measurements as an indicator of our performance.
Accordingly, EBITDA should be used in addition to and in
conjunction with results presented in accordance with GAAP and
should not be considered as an alternative to net income, operating
income, or any other operating performance measure prescribed by
GAAP, nor should these measures be relied upon to the exclusion of
GAAP financial measures. EBITDA reflects additional ways of viewing
our operations that we believe, when viewed with our GAAP results
and the reconciliations to the corresponding GAAP financial
measures, provides a more complete understanding of factors and
trends affecting our business than could be obtained absent this
disclosure. We strongly encourage investors to review our financial
information in its entirety and not to rely on a single financial
measure.
For the quarter ended For the six
months ended RECONCILIATION OF NON-GAAP MEASURES June 26, 2010 June
27, 2009 June 26, 2010 June 27, 2009 Net income (loss) as
reported under GAAP $ 767,484 $ 668,868 $ (717,650 ) $ (1,046,403 )
plus, Interest expense, net 71,545 128,511 137,708 265,035
plus, Depreciation and amortization 433,614 539,698 876,261
1,075,655 plus, Income taxes - - -
- EBITDA, non-GAAP $ 1,272,643 $ 1,337,077 $
296,319 $ 294,287
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
as contained in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. You can
identify these statements by the fact that they use words such as
"anticipate," "believe," "estimate," "expect," "intend," "project,"
"plan," "outlook," and other words and terms of similar meaning.
These statements involve a number of risks and uncertainties that
could cause actual results to differ materially from the potential
results discussed in the forward-looking statements. Among the
factors that could cause actual results and outcomes to differ
materially from those contained in such forward-looking statements
are the following: changes in consumer confidence and consumer
spending patterns, particularly those impacting the New England
region and Florida, which may result from, among other factors,
rising or sustained high levels of unemployment, access to consumer
credit, mortgage foreclosures, credit market turmoil, declines in
the stock market, general feelings and expectations about the
overall economy, and unseasonable weather; the successful
implementation of our growth and marketing strategies; our ability
to access our existing credit line or to obtain additional
financing, if required, on acceptable terms and conditions; rising
commodity prices, especially oil and gas prices; our relationships
with our third party suppliers; the failure of our inventory
management system and our point of sale system; competition from
other party supply stores and stores that merchandise and market
party supplies, including big discount retailers, dollar store
chains, and temporary Halloween merchandisers; the availability of
retail store space on reasonable lease terms; and compliance with
evolving federal securities, accounting, and stock exchange rules
and regulations applicable to publicly-traded companies listed on
the NYSE Amex. For a more detailed discussion of risks and
uncertainties which could cause actual results to differ from those
contained in the forward-looking statements, see Item 1A, "Risk
Factors" of iParty's most recently filed Annual Report on Form 10-K
for the fiscal year ended December 26, 2009 and our other periodic
reports filed with the SEC. iParty is providing this information as
of this date, and does not undertake to update the information
included in this press release, whether as a result of new
information, future events or otherwise.
iPARTY CORP. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)
For the three months ended For the six
months ended Jun 26, 2010
Jun 27, 2009 Jun 26, 2010
Jun 27, 2009 Revenues $ 20,064,832 $ 19,569,009
$ 34,901,211 $ 34,137,416 Operating costs: Cost of products sold
and occupancy costs 11,903,928 11,691,950 21,438,697 21,074,016
Marketing and sales 5,586,561 5,441,459 10,523,328 10,420,777
General and administrative
1,735,314
1,638,221 3,519,128
3,423,991 Operating income
(loss) 839,029 797,379 (579,942 ) (781,368 ) Interest
expense, net (71,545 ) (128,511 ) (137,708 )
(265,035 ) Net income (loss) $ 767,484 $
668,868 ($717,650 ) ($1,046,403 )
Income (loss) per share: Basic
$
0.02 $ 0.02
$ (0.03 ) $
(0.05 ) Diluted
$
0.02 $ 0.02
$ (0.03 ) $
(0.05 ) Weighted-average shares
outstanding: Basic
38,221,631
38,222,344 22,987,994
22,731,667 Diluted
39,528,113 38,222,344
22,987,994
22,731,667 iPARTY CORP.
CONSOLIDATED BALANCE SHEETS Jun 26,
2010 Dec 26, 2009 ASSETS
(Unaudited) Current assets: Cash and cash equivalents $ 60,950 $
61,050 Restricted cash 625,108 1,056,525 Accounts receivable
771,327 688,506 Inventories, net 14,648,192 13,048,104 Prepaid
expenses and other assets 226,142 174,752 Deferred income tax asset
- current
70,997 70,997
Total current assets 16,402,716 15,099,934 Property and
equipment, net 2,726,476 2,892,835 Intangible assets, net 1,270,531
1,606,585 Other assets 306,778 349,378 Deferred income tax asset
343,690 343,690
Total assets
$ 21,050,191 $
20,292,422 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
6,555,051 $ 3,885,062 Accrued expenses 2,499,658 2,649,468 Current
portion of capital lease obligations 9,228 9,228 Current note
payable 600,000 600,000 Borrowings under line of credit
1,378,775 2,526,982 Total
current liabilities 11,042,712 9,670,740 Long-term
liabilities: Capital lease obligations, net of current portion
9,227 13,841 Other liabilities
1,525,085
1,529,257 Total long-term liabilities 1,534,312
1,543,098 Commitments and contingencies Convertible
preferred stock 13,043,321 13,589,491 Common stock 23,268 22,799
Additional paid-in capital 52,968,993 52,311,059 Accumulated
deficit
(57,562,415 )
(56,844,765 ) Total stockholders' equity
8,473,167 9,078,584
Total liabilities and stockholders' equity
$
21,050,191 $ 20,292,422
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