Evine Live Inc. Reports Second Quarter 2016 Results
August 24 2016 - 6:00AM
Evine Live Inc. (NASDAQ:EVLV) today announced results for the
second quarter ended July 30, 2016. The company posted quarterly
net sales of $157 million. The company also posted a net loss
of $2 million, a 35% improvement year-over-year, and an Adjusted
EBITDA of $3.8 million, a 52% improvement year-over-year. Gross
profit as a percentage of sales increased 160 basis points to 38.1%
compared to 36.5% in the second quarter of last year.
“I’m pleased with our team’s delivery of improved profitability
this quarter as we executed on our strategy announced in February.
By improving the merchandising balance, accelerating the
development of engaging brands our customers love and prioritizing
contribution margin discipline, we were able to expand our gross
margin by 160 basis points, improve our cash position by 148% and
lower our net loss to $2.0 million — which is a 35% improvement
compared to the second quarter last year,” said newly appointed CEO
Bob Rosenblatt.
Fiscal Year 2016 Second Quarter
Highlights
- Net sales were $157 million, a 2% decrease year-over-year.
- Gross profit as a percentage of sales increased 160 basis
points to 38.1%.
- Net loss was $2.0 million, a 35% improvement
year-over-year.
- Adjusted EBITDA was $3.8 million, a 52% increase
year-over-year.
- EPS was ($0.03), an improvement of $0.02 year-over-year.
- Total Cash, including restricted cash, increased by 148%
year-over-year to $40.1 million.
Rosenblatt continued, “We continued to drive significant growth
in our merchandising partnerships by adding new brands and
expanding existing ones. From our newer brands like Vanessa
Williams, Paula Deen, Todd English and Beekman 1802, to our more
tenured brands like Invicta, One World and Gems En Vogue, we’re
excited about engaging our customers wherever they are -- on
social, mobile, television and now 'over the top' platforms like
Apple TV, Amazon Fire Stick, Roku and Samsung smart TVs.
Additionally, as Evine’s new CEO, it’s great to be a permanent part
of our newly energized management team and to build something more
special for our customers — both existing and new — our employees,
and our shareholders. We are building a culture based on
trust, mutual support, accountability and a clear definition of
success.”
|
SUMMARY RESULTS AND KEY OPERATING
METRICS |
($ Millions, except average price points and
EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 201607/30/2016 |
|
Q2 201508/01/2015 |
|
Change |
|
YTD 201607/30/2016 |
|
YTD 201508/01/2015 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
|
$ |
157.1 |
|
|
$ |
161.1 |
|
|
|
(2 |
%) |
|
$ |
324.1 |
|
|
$ |
319.5 |
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Margin % |
|
|
38.1 |
% |
|
|
36.5 |
% |
|
160 bps |
|
|
37.4 |
% |
|
|
36.4 |
% |
|
100 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
3.8 |
|
|
$ |
2.5 |
|
|
|
52 |
% |
|
$ |
7.3 |
|
|
$ |
4.1 |
|
|
|
77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
$ |
(2.0 |
) |
|
$ |
(3.0 |
) |
|
|
35 |
% |
|
$ |
(6.9 |
) |
|
$ |
(7.8 |
) |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
|
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
|
40 |
% |
|
$ |
(0.12 |
) |
|
$ |
(0.14 |
) |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes (Average
000s) |
|
|
87,417 |
|
|
|
88,334 |
|
|
|
(1 |
%) |
|
|
87,589 |
|
|
|
88,307 |
|
|
|
(1 |
%) |
|
Net Shipped Units
(000s) |
|
|
2,461 |
|
|
|
2,434 |
|
|
|
1 |
% |
|
|
4,878 |
|
|
|
4,664 |
|
|
|
5 |
% |
|
Average Selling Price
(ASP) |
|
$ |
57 |
|
|
$ |
60 |
|
|
|
(5 |
%) |
|
$ |
59 |
|
|
$ |
62 |
|
|
|
(5 |
%) |
|
Return Rate % |
|
|
19.8 |
% |
|
|
21.4 |
% |
|
(160 bps) |
|
|
19.4 |
% |
|
|
20.9 |
% |
|
(150 bps) |
|
Online Net Sales % |
|
|
47.9 |
% |
|
|
45.9 |
% |
|
200 bps |
|
|
48.4 |
% |
|
|
45.6 |
% |
|
280 bps |
|
Total
Customers - 12 Month Rolling (000s) |
|
1,447 |
|
|
|
1,439 |
|
|
|
1 |
% |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Net
Sales by Category |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jewelry &
Watches |
|
|
41 |
% |
|
|
42 |
% |
|
|
|
|
42 |
% |
|
|
44 |
% |
|
|
|
Home & Consumer
Electronics |
|
|
21 |
% |
|
|
22 |
% |
|
|
|
|
22 |
% |
|
|
24 |
% |
|
|
|
Beauty |
|
|
16 |
% |
|
|
15 |
% |
|
|
|
|
16 |
% |
|
|
14 |
% |
|
|
|
Fashion &
Accessories |
|
|
22 |
% |
|
|
21 |
% |
|
|
|
|
20 |
% |
|
|
18 |
% |
|
|
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2016 Results
- Beauty grew 2% vs. the prior year, followed closely by Fashion
at 1%. Jewelry & Watches declined by 7% and Home & Consumer
Electronics declined by 9%, both on less airtime.
- Return rate for the quarter was 19.8%; an improvement of 160
basis points year-over-year.
- Gross profit dollars increased 1.7% to $59.8 million. Gross
profit as a percentage of sales increased 160 basis points to
38.1%.
- Net loss was $2.0 million, a 35% improvement
year-over-year.
- Adjusted EBITDA increased to $3.8 million primarily due to
improved merchandising margins and increased discipline in
operating expenses and shipping & handling margin.
- Operating expense decreased $1.0 million year-over-year to
$60.0 million, a 2% decrease, driven primarily by stronger
discipline with corporate expenses and a reduction in distribution
facility consolidation and technology upgrade costs.
- EPS for the fiscal 2016 second quarter improved to ($0.03),
which includes $0.2 million in executive and management transition
costs and $0.3 million in distribution facility consolidation and
technology upgrade costs. EPS for the fiscal 2015 second quarter
was ($0.05), which included $0.2 million in executive and
management transition costs, $0.4 million in costs associated with
the implementation of the Shareholder Rights Plan, and $1.0 million
in distribution facility consolidation and technology upgrade
costs.
Liquidity and Capital Resources
As of July 30, 2016, total cash, including restricted cash, was
$40.1 million, compared to $33.2 million at the end of the first
quarter of fiscal 2016. The Company also had an additional
$11.1 million of unused availability on its revolving credit
facility with PNC Bank at the end of the second quarter 2016.
Rosenblatt Named Permanent CEO
Bob Rosenblatt was named CEO of Evine Live Inc. effective August
18, 2016. Mr. Rosenblatt has more than 25 years of leadership
experience at a number of leading retail organizations, including
Group President and Chief Operating Officer of Tommy Hilfiger,
Chief Operating Officer and President of HSN (formerly the Home
Shopping Network) and Chief Financial Officer at
Bloomingdale’s.
2016 Outlook
Executing on our 2016 priority of improving
profitability, the Company expects revenue growth in the back half
of the year to be similar to the low single digit revenue growth
achieved in the first half of the year. We expect third quarter
Adjusted EBITDA to be similar to the first and second quarter 2016
Adjusted EBITDA results, driven primarily by improved margins and a
more balanced merchandising mix. In addition, the Company
expects increased Adjusted EBITDA in the fourth quarter on both a
year over year and previous quarter basis.
Conference Call
A 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 24, 2016:
WEBCAST LINK: |
http://event.on24.com/wcc/r/1205744/B9C7AA68CA790BE786DB7D47B3312400 |
|
|
TELEPHONE: |
1-877-407-9039 (domestic) or
201-689-8470 (international) |
|
|
PASSCODE: |
13641966 |
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 digital commerce company that offers a compelling mix of
proprietary and name brands directly to consumers in an engaging
and informative shopping experience via television, online and on
mobile. Evine reaches approximately 87 million cable and satellite
television homes 24 hours a day with entertaining content in a
comprehensive digital shopping experience.
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 30, |
|
January 30, |
|
|
|
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
Current assets: |
|
|
|
|
|
|
Cash |
|
|
$ |
39,644 |
|
|
$ |
11,897 |
|
|
Restricted
cash and investments |
|
|
|
450 |
|
|
|
450 |
|
|
Accounts
receivable, net |
|
|
|
93,246 |
|
|
|
114,949 |
|
|
Inventories |
|
|
|
58,789 |
|
|
|
65,840 |
|
|
Prepaid
expenses and other |
|
|
|
6,047 |
|
|
|
5,913 |
|
|
|
Total
current assets |
|
|
|
198,176 |
|
|
|
199,049 |
|
Property and equipment, net |
|
|
|
50,506 |
|
|
|
52,629 |
|
FCC
broadcasting license |
|
|
|
12,000 |
|
|
|
12,000 |
|
Other assets |
|
|
|
1,661 |
|
|
|
1,819 |
|
|
|
|
|
|
|
$ |
262,343 |
|
|
$ |
265,497 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
|
$ |
64,423 |
|
|
$ |
77,779 |
|
|
Accrued
liabilities |
|
|
|
37,142 |
|
|
|
35,342 |
|
|
Current
portion of long term credit facilities |
|
|
2,993 |
|
|
|
2,143 |
|
|
Deferred
revenue |
|
|
|
85 |
|
|
|
85 |
|
|
|
Total
current liabilities |
|
|
|
104,643 |
|
|
|
115,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue |
|
|
|
121 |
|
|
|
164 |
|
Deferred tax liability |
|
|
|
3,129 |
|
|
|
2,734 |
|
Long term credit facilities |
|
|
|
83,766 |
|
|
|
70,271 |
|
|
|
Total
liabilities |
|
|
|
191,659 |
|
|
|
188,518 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
Preferred
stock, $.01 par value, 400,000 shares authorized; |
|
|
|
|
|
zero shares
issued and outstanding |
|
|
- |
|
|
|
- |
|
|
Common
stock, $.01 par value, 100,000,000 shares authorized; |
|
|
|
|
|
57,335,381
and 57,170,245 shares issued and outstanding |
|
573 |
|
|
|
571 |
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in capital |
|
|
|
424,202 |
|
|
|
423,574 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated
deficit |
|
|
|
(354,091 |
) |
|
|
(347,166 |
) |
|
|
Total
shareholders' equity |
|
|
|
70,684 |
|
|
|
76,979 |
|
|
|
|
|
|
|
$ |
262,343 |
|
|
$ |
265,497 |
|
|
|
|
|
|
|
|
|
|
|
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 30, |
|
August 1, |
|
July 30, |
|
August 1, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net sales |
$ |
157,139 |
|
|
$ |
161,061 |
|
|
$ |
324,059 |
|
|
$ |
319,512 |
|
Cost of sales |
|
97,311 |
|
|
|
102,205 |
|
|
|
202,783 |
|
|
|
203,351 |
|
|
|
|
Gross profit |
|
59,828 |
|
|
|
58,856 |
|
|
|
121,276 |
|
|
|
116,161 |
|
|
|
|
Margin % |
|
38.1 |
% |
|
|
36.5 |
% |
|
|
37.4 |
% |
|
|
36.4 |
% |
Operating expense: |
|
|
|
|
|
|
|
|
Distribution and selling |
|
51,605 |
|
|
|
51,357 |
|
|
|
105,030 |
|
|
|
102,156 |
|
|
General and
administrative |
|
5,878 |
|
|
|
6,391 |
|
|
|
11,647 |
|
|
|
12,103 |
|
|
Depreciation and amortization |
|
1,977 |
|
|
|
2,107 |
|
|
|
4,084 |
|
|
|
4,238 |
|
|
Executive
and management transition costs |
|
242 |
|
|
|
205 |
|
|
|
3,843 |
|
|
|
2,795 |
|
|
Distribution facility consolidation and technology upgrade
costs |
|
300 |
|
|
|
972 |
|
|
|
380 |
|
|
|
972 |
|
|
|
Total
operating expense |
|
60,002 |
|
|
|
61,032 |
|
|
|
124,984 |
|
|
|
122,264 |
|
Operating loss |
|
(174 |
) |
|
|
(2,176 |
) |
|
|
(3,708 |
) |
|
|
(6,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other expense: |
|
|
|
|
|
|
|
|
Interest
income |
|
2 |
|
|
|
2 |
|
|
|
4 |
|
|
|
4 |
|
|
Interest
expense |
|
(1,606 |
) |
|
|
(669 |
) |
|
|
(2,811 |
) |
|
|
(1,267 |
) |
|
|
Total other
expense |
|
(1,604 |
) |
|
|
(667 |
) |
|
|
(2,807 |
) |
|
|
(1,263 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(1,778 |
) |
|
|
(2,843 |
) |
|
|
(6,515 |
) |
|
|
(7,366 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
(205 |
) |
|
|
(205 |
) |
|
|
(410 |
) |
|
|
(410 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(1,983 |
) |
|
$ |
(3,048 |
) |
|
$ |
(6,925 |
) |
|
$ |
(7,776 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share |
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share |
|
|
|
|
|
|
|
|
|
---assuming dilution |
$ |
(0.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of |
|
|
|
|
|
|
|
common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
57,258,672 |
|
|
|
57,092,654 |
|
|
|
57,219,914 |
|
|
|
56,866,711 |
|
|
|
|
Diluted |
|
57,258,672 |
|
|
|
57,092,654 |
|
|
|
57,219,914 |
|
|
|
56,866,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Evine Live Inc. |
AND SUBSIDIARIES |
Reconciliation of Adjusted EBITDA to Net
Loss: |
(Unaudited) |
|
|
|
|
|
|
|
|
|
For the Three-Month Periods
Ended |
|
For the Six-Month Periods
Ended |
|
|
|
|
|
|
|
|
|
July 30, |
August 1, |
|
July 30, |
August 1, |
|
|
|
2016 |
|
|
2015 |
|
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(000's) |
|
$ |
3,836 |
|
$ |
2,532 |
|
|
$ |
7,261 |
|
$ |
4,111 |
|
Less: |
|
|
|
|
|
|
Executive and management transition
costs |
|
|
(242 |
) |
|
(205 |
) |
|
|
(3,843 |
) |
|
(2,795 |
) |
Distribution facility
consolidation and technology upgrade costs |
|
(300 |
) |
|
(972 |
) |
|
|
(380 |
) |
|
(972 |
) |
Shareholder Rights Plan costs |
|
|
- |
|
|
(364 |
) |
|
|
- |
|
|
(364 |
) |
Non-cash share-based
compensation |
|
|
(398 |
) |
|
(768 |
) |
|
|
(635 |
) |
|
(1,376 |
) |
EBITDA (as
defined) |
|
|
2,896 |
|
|
223 |
|
|
|
2,403 |
|
|
(1,396 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
EBITDA to net loss is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (as
defined) |
|
|
2,896 |
|
|
223 |
|
|
|
2,403 |
|
|
(1,396 |
) |
Adjustments: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
(3,070 |
) |
|
(2,399 |
) |
|
|
(6,111 |
) |
|
(4,707 |
) |
Interest income |
|
|
2 |
|
|
2 |
|
|
|
4 |
|
|
4 |
|
Interest expense |
|
|
(1,606 |
) |
|
(669 |
) |
|
|
(2,811 |
) |
|
(1,267 |
) |
Income taxes |
|
|
(205 |
) |
|
(205 |
) |
|
|
(410 |
) |
|
(410 |
) |
Net
loss |
|
$ |
(1,983 |
) |
$ |
(3,048 |
) |
|
$ |
(6,925 |
) |
$ |
(7,776 |
) |
|
|
|
|
|
|
|
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);
activist shareholder response costs; executive and management
transition costs; distribution facility consolidation and
technology upgrade costs; Shareholder Rights Plan 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
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
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 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 Adjusted EBITDA to net income (loss),
the most directly comparable GAAP financial measure, 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; 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; our ability to successfully transition our brand name
and corporate name; customer acceptance of our new branding
strategy and our repositioning as a digital 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; 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:
Carl Schroeder
Evine Live Inc.
press@evine.com
(952) 943-6574
Investors:
Jason Iannazzo
Evine Live Inc.
jiannazzo@evine.com
(952) 943-6126
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