SOURCE: ShopNBC

ShopNBC

May 11, 2011 08:03 ET

ValueVision Q1 Net Sales Rose 15% to $143.5 Million and Adjusted EBITDA Rose to $3.1 Million

MINNEAPOLIS, MN--(Marketwire - May 11, 2011) - ValueVision Media, Inc. (NASDAQ: VVTV)

Q1 '11 Highlights:

--  Net Sales rose 15% over prior year to $143.5M
--  Adjusted EBITDA increased by $7.4M to $3.1M
--  Gross Margin rose to 37.2% vs. 36.6% in Q1 '10 and 33.3% in Q4 '10
--  Internet Sales Penetration increased 530 bps to 44.9% from Q1 '10 
    and 90 bps from Q4 '10
--  Raised $55.5M through a 9.5M share offering completed in April at 
    $6.25 per share
    --  Enabled redemption of 12% Series B Preferred and all accrued 
        dividends totaling $47.3M; Redemption eliminates $17.5M in future 
        dividend expense
    --  Provided $8.2M in working capital
    --  Required one-time, non-cash Q1 '11 debt extinguishment charge of 
        $24.5M

ValueVision Media, Inc. (NASDAQ: VVTV), a premium interactive retailer via TV, Internet, mobile and social media, operating under the "ShopNBC" brand, today announced improved operating results for its fiscal first quarter ended April 30, 2011. ValueVision will host a conference call and webcast today at 11:00 a.m. ET to review its results, details below.

SUMMARY RESULTS AND KEY OPERATING METRICS                  
 ($ Millions, except average price points)                  

                                               Three months ended
                                        ---------------------------------- 
                                        4/30/2011    5/1/2010
                                                     
                                          Q1 '11      Q1 '10      Change
                                        ----------  ----------  ---------- 
Net Sales                               $    143.5  $    125.0        14.8%
EBITDA, as adjusted                     $      3.1  $     (4.3)      +$7.4

Loss Before Debt Extinguishment         $     (3.3) $    (11.0)      +$7.7
  Debt Extinguishment                   $    (25.7) $        -         n/a
                                        ----------  ----------  ---------- 
Net Loss                                $    (28.9) $    (11.0)     ($17.9)
                                        ==========  ==========  ========== 

Homes (Average 000s)                        78,291      75,681         3.4%
Net Shipped Units (000s)                     1,134       1,079         5.1%
Average Price Point                     $      117  $      108         8.3%
Return Rate %                                 21.2%       19.2%    +200bps
Gross Margin %                                37.2%       36.6%     +60bps
Internet Net Sales %                          44.9%       39.6%    +530bps
New Customers - 12 month rolling           568,912     548,731         3.7%
Active Customers - 12 month rolling      1,147,536   1,050,599         9.2%

"ValueVision started fiscal 2011 with another quarter of solid progress across our multichannel business, led by strong sales and margin growth and our third consecutive quarter of positive adjusted EBITDA," said Keith Stewart, ValueVision CEO. "In addition to strong merchandising and operational execution, we also strengthened our capital structure and enhanced our financial flexibility through the early redemption of our 12% preferred stock with proceeds from the sale of 9.5 million common shares."

Mr. Stewart added, "We also continued to build our talent pool across key areas of the company, adding four proven interactive retail veterans to our team. Annette Repasch, a multichannel retailing executive of 25 years, joined us to oversee merchandising strategy and product development for Jewelry & Watches, Health & Beauty, and Fashion & Accessories. We also added three industry veteran strategic advisors to focus on major IT, process engineering, merchandising and customer service initiatives. The ShopNBC team is key to our future, and we are executing on an exciting road map to drive improved performance.

"Plans for the remainder of this year are centered around an impressive line-up of new product, top brands, and compelling promotions to drive new and active customer growth. We will also be focused on further increasing our internet sales penetration toward 50% as well as refinancing our long-term debt with lower interest rates."

Q1 Highlights

ValueVision's Q1 net sales reflected strong performances across the Jewelry & Watches and Home & Electronics categories, in addition to solid momentum in the Health & Beauty segment. Fashion & Accessories is still early in its repositioning, though it achieved some well received Q1 brand launches. Strong customer response to higher-priced items, including big screen TVs, mattresses and certain jewelry offerings contributed to a slight up-tick in average selling price in Q1, as well as a more modest increase in units shipped and an expected increase in return rates.

ValueVision recorded non-cash debt extinguishment charges totaling $25.7 million in Q1, reflecting accelerated amortization of its Preferred Stock discount. Of the charges, $24.5 million resulted from ValueVision's early redemption of its outstanding 12% Redeemable Preferred stock and accrued dividends. An additional $1.2 million charge was related to a $2.5 million preferred stock payment made prior to the redemption.

Bob Ayd, President of ShopNBC, commented, "Q1 saw a continuation of the trends that drove strong Q4 results and provide our business with a more balanced and resilient platform. In addition, we had more merchandise variety across key product categories and saw benefits from several national brand introductions, including Simmons mattresses, Sur La Table kitchenware, and Anne Klein fashion accessories. This ever-expanding array of quality products and unique offers helped drive customer activity and sales gains in Q1.

"Looking ahead in 2011, we can't help but be optimistic. We have a more established and robust business, strong senior leadership, a growing base of popular products and brands, a healthy balance sheet, and a growing track record of success. All of these factors are proving beneficial in our efforts to both delight our customers as well as to attract exciting new vendors and product exclusives."

Liquidity and Capital Resources

Net proceeds of $55.5 million from the early-April common stock offering were used to redeem all outstanding 12% preferred stock and accrued dividends (totaling $47.3 million) and contributed $8.2 million to working capital. During Q1, ValueVision invested $2.8 million in capital expenditures, $2.4 million in working capital and made a $12 million deferred payment to a distribution partner. ValueVision ended Q1 2011 with cash and cash equivalents of $45.3 million, inclusive of $5.0 million in restricted cash, and has $25 million in long-term debt.

Conference Call / Webcast Today, Wednesday, May 11 at 11:00 a.m. ET:

Webcast/Web Replay: https://e-meetings.verizonbusiness.com/emeet/join/index.jsp

Conference #: 7043730 / Passcode: SHOPNBC; archived for 30 days

Telephone: 800-988-9672 / Passcode: SHOPNBC; keypad: 7467622

Telephone Replay: 866-454-2121 / Passcode: 81810; available for 30 days

Adjusted EBITDA

EBITDA 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 non-operating gains (losses); non-cash impairment charges and write-downs; restructuring; 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 "core" 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 core 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 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.

Forward-Looking Information

This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 spending and debt levels; interest rates; competitive pressures on sales, pricing and gross profit margins; the level of cable and satellite distribution for the company's programming and the fees associated therewith; the success of the company's e-commerce and new sales initiatives; the success of its strategic alliances and relationships; the ability of the company to manage its operating expenses successfully; working capital levels; the ability of the Company to establish and maintain acceptable commercial terms with third party vendors and other third parties with whom the Company has contractual relationships; changes in governmental or regulatory requirements; litigation or governmental proceedings affecting the company's operations; and the ability of the company 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. 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.

About ValueVision Media / ShopNBC (http://www.shopnbc.com)

ValueVision Media, Inc. (NASDAQ: VVTV) is a premium interactive retailer bringing high-quality merchandise to customers via TV, Internet and mobile, under the "ShopNBC" brand. The ShopNBC television network reaches over 79 million homes via cable and satellite and is streamed live at http://www.shopnbc.com. Over 1.1 million customers have interacted with ShopNBC in the categories of Home & Electronics, Health & Beauty, Fashion & Accessories, and Jewelry & Watches, yielding revenues of over $560 million, over $230 million (41%) of which were Internet-based. The Company's "ShopNBC Anywhere" initiative allows customers to interact and shop via TV, phone, mobile devices and online at www.ShopNBC.com and via Facebook, Twitter and YouTube.

                         VALUEVISION MEDIA, INC.
                            AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
              (In thousands except share and per share data)


                                                   April 30,   January 29,
                                                      2011        2011
                                                  -----------  ----------- 
                                                  (Unaudited)

                     ASSETS
Current assets:
   Cash and cash equivalents                      $    40,324  $    46,471
   Restricted cash and investments                      4,961        4,961
   Accounts receivable, net                            85,176       90,183
   Inventories                                         42,215       39,800
   Prepaid expenses and other                           3,688        3,942
                                                  -----------  ----------- 
     Total current assets                             176,364      185,357
Property and equipment, net                            26,380       25,775
FCC broadcasting license                               23,111       23,111
NBC Trademark License Agreement, net                      121          928
Other Assets                                            3,060        3,188
                                                  -----------  ----------- 
                                                  $   229,036  $   238,359
                                                  ===========  =========== 

       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                               $    51,295  $    58,310
   Accrued liabilities                                 41,089       43,405
   Current portion of accrued dividends                     -        1,355
   Deferred revenue                                       728          728
                                                  -----------  ----------- 
     Total current liabilities                         93,112      103,798

Deferred revenue                                          243          425
Long Term Payable                                           -        4,894
Term Loan                                              25,000       25,000
Accrued Dividends - Series B Preferred Stock                -        6,491
Series B Mandatorily Redeemable Preferred Stock             -       14,599
   $.01 par value, 4,929,266 shares authorized;
   0 and 4,929,266 shares issued and outstanding
                                                  -----------  ----------- 
     Total liabilities                                118,355      155,207

Commitments and Contingencies

Shareholders' equity:
   Common stock, $.01 par value, 100,000,000
    shares authorized; 47,359,188 and 37,781,688 
    shares issued and outstanding                         473          378
   Warrants to purchase 6,014,744 shares of
    common stock                                          602          602
   Additional paid-in capital                         393,785      337,421
   Accumulated deficit                               (284,179)    (255,249)
                                                  -----------  ----------- 
     Total shareholders' equity                       110,681       83,152
                                                  -----------  ----------- 
                                                  $   229,036  $   238,359
                                                  -----------  -----------






                          VALUEVISION MEDIA, INC.                          
                             AND SUBSIDIARIES                              
                  CONSOLIDATED STATEMENTS OF OPERATIONS                    
              (In thousands, except share and per share data)              
                                (Unaudited)                                

        
                                                   For the Three Month 
                                                       Period Ended
                                                -------------------------- 

                                                  April 30,      May 1,
                                                    2011          2010
                                                ------------  ------------ 
Net sales                                       $    143,533  $    124,977
Cost of sales                                         90,141        79,240
                                                ------------  ------------ 
      Gross profit                                    53,392        45,737
      Margin %                                          37.2%         36.6%

Operating expense:
  Distribution and selling                            46,476        46,042
  General and administrative                           4,564         4,768
  Depreciation and amortization                        2,982         3,690
  Restructuring costs                                      -           376
                                                ------------  ------------ 
    Total operating expense                           54,022        54,876
                                                ------------  ------------ 
Operating loss                                          (630)       (9,139)
                                                ------------  ------------ 
Other income (expense):
  Interest income                                          -            42
  Interest expense                                    (2,602)       (1,850)
  Debt extinguishment                                (25,679)            -
                                                ------------  ------------ 
    Total other expense                              (28,281)       (1,808)
                                                ------------  ------------ 
Loss before income taxes                             (28,911)      (10,947)
Income tax provision                                     (19)          (24)
                                                ------------  ------------ 
Net loss                                        $    (28,930) $    (10,971)
                                                ============  ============ 

Net loss per common share                       $      (0.71) $      (0.34)
                                                ============  ============ 

Net loss per common share
 ---assuming dilution                           $      (0.71) $      (0.34)
                                                ============  ============ 

Weighted average number of
common shares outstanding:
     Basic                                        40,655,177    32,679,504
                                                ============  ============ 
     Diluted                                      40,655,177    32,679,504
                                                ============  ============






                          VALUEVISION MEDIA, INC.                          
                             AND SUBSIDIARIES                              
                                                                           
              Reconciliation of Adjusted EBITDA to Net Loss:               


                                                      For the Three Month
                                                         Periods Ended
                                                      -------------------- 
 
                                                      April 30,    May 1,
                                                        2011       2010
                                                      ---------  --------- 

Adjusted EBITDA (000's)                               $   3,118  $  (4,292)
Less:
     Debt extinguishment                                (25,679)         -
     Restructuring costs                                      -       (376)
     Non-cash share-based compensation                     (697)      (781)
                                                      ---------  --------- 
EBITDA (as defined) (a)                                 (23,258)    (5,449)
                                                      ---------  --------- 


A reconciliation of EBITDA to net loss is as follows:

EBITDA, as defined                                      (23,258)    (5,449)
Adjustments:
Depreciation and amortization                            (3,051)    (3,690)
Interest income                                               -         42
Interest expense                                         (2,602)    (1,850)
Income taxes                                                (19)       (24)
                                                      ---------  --------- 
     Net loss                                         $ (28,930) $ (10,971)
                                                      =========  ========= 

(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 non-operating gains
(losses); non-cash impairment charges and writedowns, restructuring 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 "core" 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 core 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.

Contact Information

  • Contact:
    Investors / Media Relations:
    Anthony Giombetti
    ValueVision Media, Inc.
    agiombetti@shopnbc.com
    (612) 308-1190

    Investors:
    Norberto Aja, David Collins, Jennifer Neuman
    Jaffoni & Collins
    vvtv@jcir.com
    (212) 835-8500