SOURCE: ShopNBC

ShopNBC

August 21, 2013 16:02 ET

Electronic Retailer ValueVision Media Reports Q2 2013 Net Sales Up 10%

MINNEAPOLIS, MN--(Marketwired - Aug 21, 2013) - ValueVision Media, Inc. (NASDAQ: VVTV), a multichannel electronic retailer via TV, Internet and mobile, today announced results for its fiscal 2013 second quarter (Q2'13) ended August 3, 2013. ValueVision will host an investor conference call/webcast today at 4:30 pm ET, details below. As previously announced, ValueVision is transitioning its consumer brand to ShopHQ from ShopNBC over the balance of fiscal 2013.

ValueVision's Q2'13 net sales increased 10% to $149 million versus Q2'12, driven primarily by strong results in the Fashion & Accessories and Home & Consumer Electronics categories. Adjusted EBITDA improved to $4 million in Q2'13 versus $1 million in the same quarter last year, reflecting higher sales and lower TV distribution costs. ValueVision reported Q2'13 net loss of $1 million, or ($0.02) per share, compared to a net loss of $4 million, or ($0.08) per share, in Q2'12.

Year to date, the Company reported net sales up 10% to $300 million, adjusted EBITDA of $10 million, and net income of $0.2 million.

 
 
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except per share and average price points)
 
  Three months ended   Six months ended
  8/3/2013   7/28/2012       8/3/2013   7/28/2012    
  Q2 '13   Q2 '12   Change   YTD   YTD   Change
Net Sales $ 149   $ 135     10%   $ 300   $ 272     10%
Gross Profit $ 56   $ 52     8%   $ 113   $ 103     10%
Gross Profit %   37.5%     38.2%     -70bps     37.6%     37.8%     -20bps
EBITDA, as adjusted $ 4   $ 1   $ 3   $ 10   $ 0   $ 10
Net Income/(Loss) $ (1)   $ (4)   $ 3   $ 0.2   $ (13)   $ 13
Net Income/(Loss) per Share $ (0.02)   $ (0.08)   $ 0.06   $ 0.00   $ (0.26)   $ 0.26
                                   
Homes (Average 000s)   86,538     82,432     5%     85,670     81,932     5%
Net Shipped Units (000s)   1,627     1,239     31%     3,124     2,584     21%
Average Price Point $ 83   $ 102     -19%   $ 87   $ 98     -11%
Return Rate %   22.5%     21.6%     90bps     22.5%     21.4%     110bps
Internet Net Sales %   45.1%     45.4%     -30bps     45.7%     45.7%     0bps
Total Customers - 12 month rolling   1,200,922     1,083,791     11%     N/A     N/A      
                                   
                                   

Total customers purchasing over the last 12 months rose 11% to 1.2 million, reflecting a broader mix of merchandise at lower average price points, improved customer experience, and the benefits of expanded TV distribution. More specifically, the size of the total customer base that purchased during the three months of Q2'13 increased 22% versus the same period last year.

Net shipped units rose 31% to 1.6 million in Q2'13, reflecting continued diversification of the Company's merchandise mix and a 19% decline in the average price point. Internet sales penetration remained strong at 45%. Mobile net sales grew 56%, increasing to 23% of Internet sales compared to 16% in Q2'12.

ValueVision CEO, Keith Stewart, said, "Second quarter results showed strong top line growth and our fifth consecutive quarter of positive Adjusted EBITDA. We continued to make progress in broadening our product offerings as well as accelerated new and retained customer growth. Our rebranding to ShopHQ, your shopping headquarters, is progressing well and our customers are responding positively."

ValueVision EVP and CFO, William McGrath, said, "Our balance sheet condition remains strong. We ended the second quarter with a cash balance, including restricted cash, of $35 million. Major cash expenditures in the quarter included the final payment under our trademark license agreement with NBCUniversal of $2.8 million as well as $2.5 million in capital expenditures. ValueVision continues to maintain $12 million in undrawn availability under its $50 million credit facility with PNC. This availability further strengthens our balance sheet condition."

Conference Call / Webcast Today, Wednesday, August 21 at 4:30 pm ET:

WEBCAST/WEB REPLAY: http://www.media-server.com/m/p/7yqrbt7i

TELEPHONE: 866-277-1184; Passcode: 95412533

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 debt extinguishment; non-operating gains (losses); non-cash impairment charges and write-downs; 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 Internet businesses and in order to maintain comparability to our 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 to evaluate operating performance under its 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), its most directly comparable GAAP financial measure, in this release.

About ValueVision Media, ShopNBC and ShopHQ

ValueVision Media, Inc. is a multichannel retailer that enables customers to shop and interact via TV, phone, Internet and mobile in the merchandise categories of Home & Consumer Electronics, Beauty, Health & Fitness, Fashion & Accessories, and Jewelry & Watches. ValueVision is transitioning its consumer brand to ShopHQ, your shopping headquarters, from ShopNBC over the balance of fiscal 2013. ValueVision's television network reaches over 86 million cable and satellite homes and is also available nationwide via live streaming at www.shophq.com. Please visit www.shopnbc.com/ir for more investor information.

Forward-Looking Information

This release 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 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; 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.

(tables follow)

   
   
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(In thousands except share and per share data)  
             
    August 3,
2013
    February 2,
2013
 
    (Unaudited)        
             
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 32,360     $ 26,477  
  Restricted cash and investments     2,100       2,100  
  Accounts receivable, net     84,739       98,360  
  Inventories     48,965       37,155  
  Prepaid expenses and other     7,357       6,620  
    Total current assets     175,521       170,712  
Property and equipment, net     24,302       24,665  
FCC broadcasting license     12,000       12,000  
NBC trademark license agreement, net     1,998       3,997  
Other assets     857       725  
    $ 214,678     $ 212,099  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY  
                 
Current liabilities:                
  Accounts payable   $ 64,427     $ 65,719  
  Accrued liabilities     31,977       30,596  
  Deferred revenue     85       85  
    Total current liabilities     96,489       96,400  
                 
                 
Deferred revenue     378       420  
Long term deferred tax liability     580       -  
Long term credit facility     38,000       38,000  
    Total liabilities     135,447       134,820  
                 
Commitments and contingencies                
                 
Shareholders' equity:                
  Common stock, $.01 par value, 100,000,000 shares authorized; 49,455,336 and 49,139,361 shares issued and outstanding    
494
     
491
 
                 
  Warrants to purchase 6,000,000 shares of common stock     533       533  
                 
  Additional paid-in capital     408,969       407,244  
                 
  Accumulated deficit     (330,765 )     (330,989 )
    Total shareholders' equity     79,231       77,279  
    $ 214,678     $ 212,099  
                 
                 
                 
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 Six Month
Periods Ended
 
     
August 3,
2013
     
July 28,
2012
     
August 3,
2013
     
July 28,
2012
 
Net sales     $ 148,564       $ 135,179       $ 299,918       $ 271,728  
Cost of sales       92,907         83,499         187,228         169,016  
      Gross profit       55,657         51,680         112,690         102,712  
      Margin %       37.5 %       38.2 %       37.6 %       37.8 %
Operating expense:                                        
  Distribution and selling       46,542         47,181         92,794         95,546  
  General and administrative       6,177         4,537         12,069         9,204  
  Depreciation and amortization       3,098         3,424         6,303         6,852  
    Total operating expense       55,817         55,142         111,166         111,602  
Operating income (loss)       (160 )       (3,462 )       1,524         (8,890 )
                                         
Other expense:                                        
  Interest income       3         4         14         4  
  Interest expense       (348 )       (384 )       (726 )       (3,192 )
  Loss on debt extinguishment       -         -         -         (500 )
    Total other expense       (345 )       (380 )       (712 )       (3,688 )
                                         
Income (loss) before income taxes       (505 )       (3,842 )       812         (12,578 )
                                         
Income tax provision       (294 )       (3 )       (588 )       (6 )
                                         
Net income (loss)     $ (799 )     $ (3,845 )     $ 224       $ (12,584 )
                                         
Net income (loss) per common share     $ (0.02 )     $ (0.08 )     $ 0.00       $ (0.26 )
                                         
Net income (loss) per common share---assuming dilution     $
(0.02
)     $
(0.08
)     $
0.00
      $
(0.26
)
                                         
Weighted average number of common shares outstanding:                                        
      Basic       49,406,562         48,853,619         49,316,539         48,745,892  
      Diluted       49,406,562         48,853,619         55,206,943         48,745,892  
                                               
                                               
                                               
VALUEVISION MEDIA, INC.  
AND SUBSIDIARIES  
                         
Reconciliation of Adjusted EBITDA to Net Income (Loss):  
                         
                         
    For the Three Month
Periods Ended
    For the Six Month
Periods Ended
 
    August 3,
2013
    July 28,
2012
    August 3,
2013
    July 28,
2012
 
                         
                         
Adjusted EBITDA (000's)   $ 3,780     $ 698     $ 9,576     $ (261 )
Less:                                
  Debt extinguishment     -       -       -       (500 )
  Non-cash share-based compensation     (791 )     (686 )     (1,650 )     (1,677 )
EBITDA (as defined) (a)     2,989       12       7,926       (2,438 )
                                 
                                 
A reconciliation of EBITDA to net income (loss) is as follows:                                
                                 
EBITDA (as defined) (a)     2,989       12       7,926       (2,438 )
Adjustments:                                
  Depreciation and amortization     (3,149 )     (3,474 )     (6,402 )     (6,952 )
  Interest income     3       4       14       4  
  Interest expense     (348 )     (384 )     (726 )     (3,192 )
  Income taxes     (294 )     (3 )     (588 )     (6 )
Net income (loss)   $ (799 )   $ (3,845 )   $ 224     $ (12,584 )
                                 
                                 
                                 

(a) EBITDA as defined for this statistical presentation 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 writedowns, 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 (loss), net income (loss) 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.

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