MINNEAPOLIS, Nov. 21, 2017 (GLOBE NEWSWIRE) -- Evine Live Inc. (“Evine”) (NASDAQ:EVLV) today announced results for the third quarter ended October 28, 2017. The Company posted quarterly net sales of $150 million, which is less than a 1% decrease year-over-year. Management estimates net sales would have increased 1.0% when excluding the estimated $3 million negative sales impact from Hurricanes Harvey and Irma during the quarter. The Company posted a net loss of $1.1 million, a 71% improvement year-over-year, EPS of ($0.02), a 67% improvement year-over-year, and an Adjusted EBITDA of $3.8 million, a 49% improvement year-over-year.
“I am very proud of our Q3 operating results,” said CEO Bob Rosenblatt. “As our stakeholders know, this is the very beginning of what we call year two, the phase in our strategic plan that is focused on delivering revenue and free cash flow growth. In year one, we fixed our merchandising mix and significantly improved our balance sheet and profitability. This coming year our plan is to begin scaling our enterprise. In addition, boosted by our recent sale of our Boston television station, we are positioned to deliver positive EPS for the fiscal year, which would be the first time we have accomplished this since fiscal 2007.”
Rosenblatt continued, “We believe our strategy of a thoughtful transition over time into an interactive digital commerce company will drive sustainable revenue growth, EPS growth and multiple expansion growth that will combine to drive significant shareholder value. Specifically, longer term we seek to build and operate multi-platform digital commerce experiences using proprietary technologies that monetize multiple business models.”
Fiscal Year 2017 Third Quarter Highlights
- Net sales were $150 million, a 0.9% decrease year-over-year.
- Gross profit as a percentage of sales increased 150 basis points to 38.1% year-over-year.
- Net loss was $1.1 million, a 71% improvement year-over-year.
- Adjusted EBITDA was $3.8 million, a 49% increase year-over-year.
- EPS was ($0.02), a 67% improvement year-over-year.
| SUMMARY RESULTS AND KEY OPERATING METRICS | ||||||||||||||||||||||||
| ($ Millions, except average selling price and EPS) | ||||||||||||||||||||||||
| Q3 2017 10/28/2017 | Q3 2016 10/29/2016 | Change | YTD 2017 10/28/2017 | YTD 2016 10/29/2016 | Change | |||||||||||||||||||
| Net Sales | $ | 150.2 | $ | 151.6 | (0.9%) | $ | 455.5 | $ | 475.7 | (4.2%) | ||||||||||||||
| Gross Margin % | 38.1% | 36.6% | 150 bps | 37.3% | 37.1% | 20 bps | ||||||||||||||||||
| Adjusted EBITDA | $ | 3.8 | $ | 2.5 | 49% | $ | 10.3 | $ | 9.8 | 6% | ||||||||||||||
| Net Loss | $ | (1.1) | $ | (3.9) | 71% | $ | (6.3) | $ | (10.8) | 42% | ||||||||||||||
| EPS | $ | (0.02) | $ | (0.06) | 67% | $ | (0.10) | $ | (0.19) | 47% | ||||||||||||||
| Net Shipped Units (000s) | 2,342 | 2,253 | 4% | 7,345 | 7,131 | 3% | ||||||||||||||||||
| Average Selling Price (ASP) | $ | 58 | $ | 60 | (3%) | $ | 55 | $ | 59 | (7%) | ||||||||||||||
| Return Rate % | 19.1% | 20.5% | (140 bps) | 19.0% | 19.8% | (80 bps) | ||||||||||||||||||
| Digital Net Sales % | 51.5% | 49.0% | 250 bps | 50.8% | 48.6% | 220 bps | ||||||||||||||||||
| Total Customers - 12 Month Rolling (000s) | 1,350 | 1,429 | (6%) | N/A | N/A | N/A | ||||||||||||||||||
| % of Net Merchandise Sales by Category | ||||||||||||||||||||||||
| Jewelry & Watches | 39% | 42% | 40% | 42% | ||||||||||||||||||||
| Home & Consumer Electronics | 26% | 25% | 24% | 23% | ||||||||||||||||||||
| Beauty | 15% | 14% | 15% | 15% | ||||||||||||||||||||
| Fashion & Accessories | 20% | 19% | 21% | 20% | ||||||||||||||||||||
| Total | 100% | 100% | 100% | 100% | ||||||||||||||||||||
Third Quarter 2017 Results
- The top performing category in the quarter was Beauty, which grew 10% year-over-year. Fashion, Home, and Consumer Electronics also increased year-over-year.
- Return rate for the quarter was 19.1%; an improvement of 140 basis points year-over-year.
- Gross profit as a percentage of sales increased 150 basis points to 38.1% year-over-year, driven primarily by improved rates. Gross profit dollars increased 3% to $57.3 million year-over-year.
- Operating expense remained flat at $58 million year-over-year.
- Net loss was $1.1 million, a 71% improvement year-over-year, and EPS was ($0.02), a 67% improvement year-over-year. Adjusted EBITDA increased 49% to $3.8 million. These results were primarily driven by a 3% increase in gross profit dollars.
Liquidity and Capital Resources
As of October 28, 2017, total cash was $23 million, compared to $22 million at the end of the second quarter. The Company also had an additional $13 million of unused availability on its revolving credit facility with PNC Bank, which gives the Company total liquidity of approximately $36 million as of the end of the third quarter.
Sale of Boston Station
As previously announced on August 28, 2017, the Company agreed to sell its television station, WWDP, serving the Boston market, for an aggregate of $13.5 million. The transaction includes two agreements with unrelated parties. The first agreement closed in the third quarter and resulted in the initial receipt of a $2.5 million cash payment. The cash received was used to pay down an equal amount of our loan with GACP. The transaction resulted in an $833 thousand net tax benefit related to the reversal of a deferred tax liability that was partially offset by a $221 thousand loss related to the early debt extinguishment. The second agreement is expected to close in the fourth quarter of fiscal 2017 following satisfaction of customary closing conditions, including FCC approval. The financial impact of this transaction, including the complete paydown of the remaining $3.6 million loan with GACP, is expected to include a $3.0 million positive impact to net income in the fourth quarter.
Fourth Quarter and Full Year 2017 Outlook
The following details relate to our expected performance for the fourth quarter and full-year of fiscal 2017, which include a 53rd week in fiscal 2017:
We continue to expect fourth quarter revenue growth in the mid to high single digits.
We continue to expect full year adjusted EBITDA to be $18 to $22 million, which would be growth of 11% to 36% year over year, and we now expect full year EPS to be $0.00 to $0.04. These results include the impact of the expected close of our Boston Television Station sale in the fourth quarter.
Conference Call
A conference call and webcast to discuss the Company's third quarter earnings will be held at 8:30 a.m. Eastern Time on Tuesday, November 21, 2017:
WEBCAST LINK: https://event.on24.com/wcc/r/1472316/2D4FA277E38225472215B7CA47A90492
TELEPHONE: 1-877-407-9039 (domestic) or 1-201-689-8470 (international)
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 multiplatform interactive digital commerce company that offers a mix of proprietary, exclusive and name brands directly to consumers in an engaging and informative shopping experience via television, online and mobile. Evine reaches more than 87 million cable and satellite television homes with entertaining content in a comprehensive digital shopping experience 24 hours a day.
Please visit www.evine.com/ir for more investor information.
Contacts
Media:
Dawn Zaremba
press@evine.com
(952) 943-6043
Investors:
Michael Porter
mporter@evine.com
(952) 943-6517
| EVINE Live Inc. | |||||||||||||
| AND SUBSIDIARIES | |||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (In thousands except share and per share data) | |||||||||||||
| October 28, | January 28, | ||||||||||||
| 2017 | 2017 | ||||||||||||
| (Unaudited) | |||||||||||||
| ASSETS | |||||||||||||
| Current assets: | |||||||||||||
| Cash | $ | 23,334 | $ | 32,647 | |||||||||
| Restricted cash and investments | 450 | 450 | |||||||||||
| Accounts receivable, net | 84,245 | 99,062 | |||||||||||
| Inventories | 77,068 | 70,192 | |||||||||||
| Prepaid expenses and other | 5,253 | 5,510 | |||||||||||
| Total current assets | 190,350 | 207,861 | |||||||||||
| Property and equipment, net | 53,135 | 52,715 | |||||||||||
| FCC broadcasting license | 9,500 | 12,000 | |||||||||||
| Other assets | 2,188 | 2,204 | |||||||||||
| Total Assets | $ | 255,173 | $ | 274,780 | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 63,527 | $ | 65,796 | |||||||||
| Accrued liabilities | 33,249 | 37,858 | |||||||||||
| Current portion of long term credit facilities | 3,440 | 3,242 | |||||||||||
| Deferred revenue | 35 | 85 | |||||||||||
| Total current liabilities | 100,251 | 106,981 | |||||||||||
| Other long term liabilities | 327 | 428 | |||||||||||
| Deferred tax liability | 3,256 | 3,522 | |||||||||||
| Long term credit facilities | 74,630 | 82,146 | |||||||||||
| Total liabilities | 178,464 | 193,077 | |||||||||||
| Commitments and contingencies | |||||||||||||
| Shareholders' equity: | |||||||||||||
| Preferred stock, $.01 par value, 400,000 shares authorized; | |||||||||||||
| zero shares issued and outstanding | - | - | |||||||||||
| Common stock, $.01 par value, 99,600,000 shares authorized; | |||||||||||||
| 65,261,231 and 65,192,314 shares issued and outstanding | 653 | 652 | |||||||||||
| Additional paid-in capital | 438,257 | 436,962 | |||||||||||
| Accumulated deficit | (362,201 | ) | (355,911 | ) | |||||||||
| Total shareholders' equity | 76,709 | 81,703 | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 255,173 | $ | 274,780 | |||||||||
| 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 Nine-Month Periods Ended | |||||||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Net sales | $ | 150,212 | $ | 151,636 | $ | 455,504 | $ | 475,695 | ||||||||||||
| Cost of sales | 92,918 | 96,205 | 285,444 | 298,988 | ||||||||||||||||
| Gross profit | 57,294 | 55,431 | 170,060 | 176,707 | ||||||||||||||||
| Margin % | 38.1 | % | 36.6 | % | 37.3 | % | 37.1 | % | ||||||||||||
| Operating expense: | ||||||||||||||||||||
| Distribution and selling | 48,501 | 49,161 | 145,918 | 154,191 | ||||||||||||||||
| General and administrative | 6,779 | 5,690 | 18,786 | 17,337 | ||||||||||||||||
| Depreciation and amortization | 1,475 | 1,941 | 4,791 | 6,025 | ||||||||||||||||
| Executive and management transition costs | 893 | 568 | 1,971 | 4,411 | ||||||||||||||||
| Distribution facility consolidation and technology upgrade costs | - | 150 | - | 530 | ||||||||||||||||
| Total operating expense | 57,648 | 57,510 | 171,466 | 182,494 | ||||||||||||||||
| Operating loss | (354 | ) | (2,079 | ) | (1,406 | ) | (5,787 | ) | ||||||||||||
| . | ||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 6 | 3 | 10 | 7 | ||||||||||||||||
| Interest expense | (1,158 | ) | (1,586 | ) | (3,966 | ) | (4,397 | ) | ||||||||||||
| Loss on debt extinguishment | (221 | ) | - | (1,134 | ) | - | ||||||||||||||
| Total other expense | (1,373 | ) | (1,583 | ) | (5,090 | ) | (4,390 | ) | ||||||||||||
| Loss before income taxes | (1,727 | ) | (3,662 | ) | (6,496 | ) | (10,177 | ) | ||||||||||||
| Income tax provision | 624 | (205 | ) | 206 | (615 | ) | ||||||||||||||
| Net loss | $ | (1,103 | ) | $ | (3,867 | ) | $ | (6,290 | ) | $ | (10,792 | ) | ||||||||
| Net loss per common share | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.19 | ) | ||||||||
| Net loss per common share | ||||||||||||||||||||
| ---assuming dilution | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.10 | ) | $ | (0.19 | ) | ||||||||
| Weighted average number of | ||||||||||||||||||||
| common shares outstanding: | ||||||||||||||||||||
| Basic | 65,191,367 | 60,513,215 | 63,400,368 | 58,317,681 | ||||||||||||||||
| Diluted | 65,191,367 | 60,513,215 | 63,400,368 | 58,317,681 | ||||||||||||||||
| EVINE Live Inc. | |||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA: | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| For the Three-Month Periods Ended | For the Nine-Month Periods Ended | ||||||||||||||||
| October 28, | October 29, | October 28, | October 29, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Net loss | $ | (1,103 | ) | $ | (3,867 | ) | $ | (6,290 | ) | $ | (10,792 | ) | |||||
| Adjustments: | |||||||||||||||||
| Depreciation and amortization | 2,451 | 3,093 | 7,710 | 9,204 | |||||||||||||
| Interest income | (6 | ) | (3 | ) | (10 | ) | (7 | ) | |||||||||
| Interest expense | 1,158 | 1,586 | 3,966 | 4,397 | |||||||||||||
| Income taxes | (624 | ) | 205 | (206 | ) | 615 | |||||||||||
| EBITDA (as defined) | $ | 1,876 | $ | 1,014 | $ | 5,170 | $ | 3,417 | |||||||||
| A reconciliation of EBITDA to Adjusted EBITDA is as follows: | |||||||||||||||||
| EBITDA (as defined) | $ | 1,876 | $ | 1,014 | $ | 5,170 | $ | 3,417 | |||||||||
| Adjustments: | |||||||||||||||||
| Executive and management transition costs | 893 | 568 | 1,971 | 4,411 | |||||||||||||
| Loss on debt extinguishment | 221 | - | 1,134 | - | |||||||||||||
| Distribution facility consolidation and technology upgrade costs | - | 150 | - | 530 | |||||||||||||
| Non-cash share-based compensation expense | 790 | 797 | 2,057 | 1,432 | |||||||||||||
| Adjusted EBITDA | $ | 3,780 | $ | 2,529 | $ | 10,332 | $ | 9,790 | |||||||||
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); executive and management transition costs; loss on debt extinguishment; distribution facility consolidation and technology upgrade 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 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 (“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. The Company has included a reconciliation of the comparable GAAP measure, net income (loss) to Adjusted EBITDA 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, including guidance regarding anticipated future operating results, the Company’s focus for the remainder of the fiscal year and the Company’s beliefs regarding the future of retailing. 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 or estimated cost savings from contract renegotiations; 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; customer acceptance of our branding strategy and our repositioning as a video 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; including without limitation, regulations of the Federal Communications Commission and Federal Trade Commission, and adverse outcomes from regulatory proceedings; 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; disruptions in our distribution of our network broadcast to our customers; 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.