iMedia Brands, Inc. - FORM 8-K - EX-99 - PRESS RELEASE - August 20, 2014

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8-K - iMedia Brands, Inc.vv_8k0820.htm
Exhibit 99
 
For Immediate Release

ValueVision Reports Second Quarter 2014 Results

HIGHLIGHTS
 
· Appointment of new CEO and five new directors provides new energy, industry expertise and fresh perspective to lead the Company’s evolution and growth
· Q2 sales increased 5% to $156.6 million and gross profit rose 9% to $60.4 million
· Net loss of ($4.3) million included unusual charges of $5.1 million and adjusted EBITDA grew 46% to $5.5 million
· Total customers increased 18% to 1.4 million over the last 12 months
MINNEAPOLIS, MN – August 20, 2014 – ValueVision Media, Inc. (NASDAQ: VVTV), a multichannel electronic retailer operating as ShopHQ, today announced operating results for its fiscal 2014 second quarter (Q2’14) ended August 2, 2014. The Company’s CEO Mark Bozek and CFO Bill McGrath, will host an investor conference call/webcast today at 11:00 a.m. ET, details below.

SUMMARY RESULTS AND KEY OPERATING METRICS
    
   
   
   
 
($ Millions, except average price points)
 
  
   
   
   
   
   
 
 
  
Q2 '14
    
Q2 '13
    
   
YTD
    
YTD
    
 
 
  
8/2/2014
    
8/3/2013
    
Change
    
8/2/2014
    
8/3/2013
    
Change
  
 
Net Sales
  
$
156.6
    
$
148.6
      
5
%
  
$
316.3
    
$
299.9
      
5
%
Gross Profit
  
$
60.4
    
$
55.7
      
9
%
  
$
120.4
    
$
112.7
      
7
%
Gross Profit %
    
38.6
%
    
37.5
%
  
+110bps
      
38.1
%
    
37.6
%
  
+50bps
  
Adjusted EBITDA
  
$
5.5
    
$
3.8
    
$
1.7
    
$
11.0
    
$
9.6
    
$
1.5
  
 
                                                
Adjusted Net Income/(Loss)
  
$
0.8
    
$ 
(0.8
)
  
$
1.6
    
$
2.3
    
$
0.2
    
$
2.1
  
Less:
                                                
Activist Shareholder Response Costs
  
$ 
(2.5
)
  
$
0.0
    
$ 
(2.5
)
  
$ 
(3.5
)
  
$
0.0
    
$ 
(3.5
)
CEO Transition Costs
  
$ 
(2.6
)
  
$
0.0
    
$ 
(2.6
)
  
$ 
(2.6
)
  
$
0.0
    
$ 
(2.6
)
Net Income/(Loss)
  
$ 
(4.3
)
  
$ 
(0.8
)
  
$ 
(3.5
)
  
$ 
(3.8
)
  
$
0.2
    
$ 
(4.1
)
 
                                                
Net Income/(Loss) per Share
  
$ 
(0.08
)
  
$ 
(0.02
)
  
$ 
(0.06
)
  
$ 
(0.08
)
  
$
0.00
    
$ 
(0.08
)
 
                                                
Adjusted Net Income/(Loss) per Share
  
$
0.01
    
$ 
(0.02
)
  
$
0.03
    
$
0.04
    
$
0.00
    
$
0.04
  
 
                                                
Homes (Average 000s)
    
87,522
      
86,538
      
1
%
    
87,267
      
85,670
      
2
%
Net Shipped Units (000s)
    
2,110
      
1,627
      
30
%
    
4,023
      
3,124
      
29
%
Average Selling Price
  
$
67
    
$
83
      
-19
%
  
$
71
    
$
87
      
-18
%
Return Rate %
    
22.9
%
    
22.5
%
  
+40bps
      
22.6
%
    
22.5
%
  
+10bps
  
Internet Net Sales %
    
43.5
%
    
45.1
%
  
-160bps
      
44.2
%
    
45.7
%
  
-150bps
  
Total Customers - 12 Month Rolling
    
1,421,235
      
1,200,922
      
18
%
    
N/
A
    
N/
A
        

 
The Company’s Q2’14 net sales were $156.6 million, up 5% compared to last year’s same quarter, with strong performance in the Fashion & Accessories and Beauty, Health & Fitness categories. Gross profit dollars increased 9% to $60.4 million in Q2’14, as gross profit as a percent of sales for the quarter improved to 38.6%, compared to 37.5% in Q2’13.
 
Adjusted EBITDA increased to $5.5 million in Q2’14 compared to $3.8 million in Q2’13, driven by the Company’s sales and gross profit improvements. Adjusted net income was $0.8 million, or $0.01 per share, in Q2’14 compared to an adjusted net loss of ($0.8) million, or ($0.02) per share in Q2’13.
Mark Bozek, CEO of ValueVision, said, “The Company delivered solid second quarter results with strong growth in total customer counts and increased order volume on mobile devices. I am excited to be leading the Company into a new phase of growth while working alongside our newly formed board and a dedicated and re-energized employee base.”
Continued Mr. Bozek, “Our commerce platforms, led by our reach into 87 million TV homes in the U.S., are unique assets that provide us with tremendous potential. Driving growth will largely be centered around attracting and building a diverse portfolio of proprietary brands and products with the goal of growing our customer base. We will be focused on supporting the growth of these proprietary brands with immersive, personality-driven programming that is designed to drive greater engagement and social commerce on all our platforms. Our process is all about an evolution of the business – not a revolution. Our recently established office in New York City should aid us in all these efforts. I plan to elaborate more on our new vision for the Company in the coming months, as we begin to execute on our strategy of a more fully leveraged multichannel commerce platform.”
 
William McGrath, EVP & CFO of ValueVision, said, “We ended the quarter with $23 million in cash and restricted cash compared to $27 million at the end of Q1’14. Net use of cash includes $5 million in working capital and $3 million in capital expenditures, partially offset by Adjusted EBITDA of $6 million in the quarter.”
Conference Call / Webcast Today, Wednesday, August 20, 2014 at 11 a.m. EST:

LIVE WEBCAST / REPLAY:
http://www.media-server.com/m/p/uc4u6pbe
 
 
TELEPHONE:
866-515-2907; passcode 99611522

 
Adjusted EBITDA, Adjusted Net Income/(Loss) and Adjusted Earnings Per Share
 
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; activist shareholder response costs; CEO transition costs and non-cash share-based compensation expense. The Company defines Adjusted Net Income/(Loss) as net income/(loss) excluding non-cash impairment charges and write-downs; debt extinguishment; CEO transition costs and activist shareholder response costs. 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 the terms Adjusted EBITDA and Adjusted Net Income/(Loss) allow 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 and Adjusted Net Income/(Loss) should not be construed as alternatives 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 measures of liquidity. Adjusted EBITDA and Adjusted Net Income/(Loss) may not be comparable to similarly entitled measures reported by other companies. The Company has included a reconciliation of each of Adjusted EBITDA and Adjusted Net Income/(Loss) to net income (loss), their most directly comparable GAAP financial measure, in this release. 
 
About ValueVision Media/ShopHQ (www.shophq.com/ir)
ValueVision Media, Inc. operates as ShopHQ, 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. The ShopHQ television network reaches over 87 million cable and satellite homes and is also available nationwide via live streaming at www.shophq.com. Please visit www.shophq.com/ir for more investor information.
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Forward-Looking Information
This release 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 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; 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)
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VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)

   
  
August 2,
    
February 1,
  
 
  
2014
    
2014
  
   
  
(Unaudited)
    
 
ASSETS
  
Current assets:
  
   
 
Cash and cash equivalents
  
$
20,790
    
$
29,177
  
Restricted cash and investments
    
2,100
      
2,100
  
Accounts receivable, net
    
92,972
      
107,386
  
Inventories
    
52,332
      
51,162
  
Prepaid expenses and other
    
6,463
      
6,032
  
Total current assets
    
174,657
      
195,857
  
Property and equipment, net
    
26,619
      
24,952
  
FCC broadcasting license
    
12,000
      
12,000
  
Other assets
    
1,062
      
896
  
   
  
$
214,338
    
$
233,705
  
 
                
LIABILITIES AND SHAREHOLDERS' EQUITY
  
 
                
Current liabilities:
                
Accounts payable
  
$
59,030
    
$
77,296
  
Accrued liabilities
    
37,789
      
38,535
  
Deferred revenue
    
85
      
85
  
Total current liabilities
    
96,904
      
115,916
  
 
                
 
                
Capital lease liability
    
62
      
88
  
Deferred revenue
    
292
      
335
  
Deferred tax liability
    
1,551
      
1,158
  
Long term credit facility
    
38,000
      
38,000
  
Total liabilities
    
136,809
      
155,497
  
 
                
Commitments and contingencies
                
 
                
Shareholders' equity:
                
Common stock, $.01 par value, 100,000,000 shares authorized;
55,185,123 and 49,844,253 shares issued and outstanding
    
552
      
498
  
 
                
Warrants to purchase common stock
    
-
      
533
  
 
                
Additional paid-in capital
    
414,310
      
410,681
  
 
                
Accumulated deficit
    
(337,333
)
    
(333,504
)
Total shareholders' equity
    
77,529
      
78,208
  
   
  
$
214,338
    
$
233,705
  

4

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 2,
    
August 3,
    
August 2,
    
August 3,
  
 
  
2014
    
2013
    
2014
    
2013
  
 
Net sales
  
$
156,587
    
$
148,564
    
$
316,288
    
$
299,918
  
Cost of sales
    
96,152
      
92,907
      
195,847
      
187,228
  
Gross profit
    
60,435
      
55,657
      
120,441
      
112,690
  
Margin %
    
38.6
%
    
37.5
%
    
38.1
%
    
37.6
%
Operating expense:
                                
Distribution and selling
    
50,110
      
46,542
      
99,839
      
92,794
  
General and administrative
    
6,776
      
6,177
      
12,688
      
12,069
  
Depreciation and amortization
    
2,163
      
3,098
      
4,431
      
6,303
  
Activist shareholder response costs
    
2,473
      
-
      
3,518
      
-
  
CEO transition costs
    
2,620
      
-
      
2,620
      
-
  
Total operating expense
    
64,142
      
55,817
      
123,096
      
111,166
  
Operating income (loss)
    
(3,707
)
    
(160
)
    
(2,655
)
    
1,524
  
 
                                
Other expense:
                                
Interest income
    
6
      
3
      
6
      
14
  
Interest expense
    
(387
)
    
(348
)
    
(778
)
    
(726
)
Total other expense
    
(381
)
    
(345
)
    
(772
)
    
(712
)
 
                                
Income (loss) before income taxes
    
(4,088
)
    
(505
)
    
(3,427
)
    
812
  
 
                                
Income tax provision
    
(201
)
    
(294
)
    
(402
)
    
(588
)
 
                                
Net income (loss)
  
$
(4,289
)
  
$
(799
)
  
$
(3,829
)
  
$
224
  
 
                                
Net income (loss) per common share
  
$
(0.08
)
  
$
(0.02
)
  
$
(0.08
)
  
$
0.00
  
 
                                
Net income (loss) per common share
---assuming dilution
  
$
(0.08
)
  
$
(0.02
)
  
$
(0.08
)
  
$
0.00
  
 
                                
Weighted average number of common shares outstanding:
                                
Basic
    
52,199,792
      
49,406,562
      
51,022,023
      
49,316,539
  
Diluted
    
52,199,792
      
49,406,562
      
51,022,023
      
55,206,943
  

5

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 2,
    
August 3,
    
August 2,
    
August 3,
  
 
  
2014
    
2013
    
2014
    
2013
  
 
  
   
   
   
 
Adjusted EBITDA (000's)
  
$
5,528
    
$
3,780
    
$
11,042
    
$
9,576
  
Less:
                                
Activist shareholder response costs
    
(2,473
)
    
-
      
(3,518
)
    
-
  
CEO transition costs
    
(2,620
)
    
-
      
(2,620
)
    
-
  
Non-cash share-based compensation
    
(1,874
)
    
(791
)
    
(2,918
)
    
(1,650
)
EBITDA (as defined) (a)
    
(1,439
)
    
2,989
      
1,986
      
7,926
  
 
                                
 
                                
A reconciliation of EBITDA to net income (loss) is as follows:
                                
 
                                
EBITDA (as defined) (a)
    
(1,439
)
    
2,989
      
1,986
      
7,926
  
Adjustments:
                                
Depreciation and amortization
    
(2,268
)
    
(3,149
)
    
(4,641
)
    
(6,402
)
Interest income
    
6
      
3
      
6
      
14
  
Interest expense
    
(387
)
    
(348
)
    
(778
)
    
(726
)
Income taxes
    
(201
)
    
(294
)
    
(402
)
    
(588
)
Net income (loss)
  
$
(4,289
)
  
$
(799
)
  
$
(3,829
)
  
$
224
  

(a)  EBITDA as defined for this statistical presentation represents net income 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, activist shareholder response costs, CEO transition 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 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, net income 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.

###
 

Contacts
 
Media: 
Investors:
Dawn Zaremba 
David Collins, Eric Lentini
ShopHQ 
Catalyst Global LLC
dzaremba@shophq.com
vvtv@catalyst-ir.com
(952) 943-6043 O
(212) 924-9800 O | (917) 734-0339 M



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