EX-99.1 5 d821940dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

ValueVision Media Reports Third Quarter 2014 Results

HIGHLIGHTS

 

  Q3 sales increased 7% to $157M

 

  Gross profit rose 7% to $59M

 

  Adjusted EBITDA grew 33% to $4.8M

MINNEAPOLIS, MN – November 18, 2014 – ValueVision Media, Inc. (NASDAQ: VVTV), a digital commerce company operating as ShopHQ, announced operating results for its fiscal 2014 third quarter (Q3’14) ended November 1, 2014. The Company will host an investor conference call/webcast today at 11:00 a.m. ET.

SUMMARY RESULTS AND KEY OPERATING METRICS

($ Millions, except average price points)

 

     Q3’ 14     Q3’ 13           YTD     YTD        
     11/1/2014     11/2/2013     Change     11/1/2014     11/2/2013     Change  

Net Sales

   $ 157.1      $ 147.3        7   $ 473.4      $ 447.2        6

Gross Profit

   $ 59.1      $ 55.2        7   $ 179.5      $ 167.9        7

Gross Profit %

     37.6     37.5     +10  bps      37.9     37.5     +40  bps 

Adjusted EBITDA

   $ 4.8      $ 3.6        33   $ 15.8      $ 13.2        20

Adjusted Net Income/(Loss)

   $ 1.6        ($0.9   $ 2.5      $ 3.9        ($0.7   $ 4.6   

Less:

            

Activist Shareholder Response Costs

   $ 0.0        ($0.3   $ 0.3        ($3.5     ($0.3     ($3.2

Executive Transition Costs

     ($2.4   $ 0.0        ($2.4     ($5.0   $ 0.0        ($5.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income/(Loss)

     ($0.8     ($1.2   $ 0.4        ($4.6     ($1.0     ($3.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income/(Loss) per Share

     ($0.01     ($0.02   $ 0.01        ($0.09     ($0.02     ($0.07
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income/(Loss) per Share

   $ 0.03        ($0.02   $ 0.05      $ 0.07        ($0.01   $ 0.08   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Homes (Average 000s)

     87,466        86,605        1     87,319        85,958        2

Net Shipped Units (000s)

     2,134        1,665        28     6,157        4,789        29

Average Selling Price

   $ 67      $ 80        -16   $ 70      $ 85        -18

Return Rate %

     21.2     22.8     -160  bps      22.1     22.6     -50  bps 

Internet Net Sales %

     43.5     43.5 %*      —          43.9     44.9 %*      -100  bps 

Total Customers - 12 Month Rolling

     1,443,678        1,246,018        16     N/A        N/A     

 

* The above Internet Net Sales percentage metric for Q3 F13 and YTD F13 reflect a correction of our previously reported Internet Net Sales percentages for these respective periods. Previously reported Internet Net Sales Percentages were 47.2% for Q3 F13 and 46.2% for YTD Q3 F13.

Net Sales and Gross Profit rose 7% in Q3’14 compared to the same quarter last year due principally to strong sales gains in its Fashion & Accessories and Beauty, Health & Fitness categories.

Adjusted EBITDA rose 33% to $4.8 million driven by the net sales and gross profit increases and the inherent operating leverage of the Company’s business model. Adjusted net income rose to $1.6 million, or $0.03 per share, in Q3’14 compared to an adjusted net loss of ($0.9) million, or ($0.02) per share, in Q3’13.

Mark Bozek, CEO of ValueVision, said, “I am pleased with our solid third quarter results. We achieved improvements in operating metrics across the P&L and we are excited for the holiday season. I am also looking forward to accelerating our transition to a true digital commerce company and implementing our new, unified strategy which should expand our reach and further drive long-term growth.”

William McGrath, EVP & CFO of ValueVision, said, “We ended the quarter with $26 million in cash and restricted cash. During the quarter the company had borrowings under our PNC credit facility of around $5 million to fund capital expenditures incurred for our Bowling Green distribution center expansion.”

 

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Conference Call / Webcast Today, Tuesday, November 18, 2014 at 11 a.m. EST:

WEBCAST/WEB REPLAY: http://www.media-server.com/m/p/xqka2ud5

TELEPHONE: (877) 280 4960

PASSCODE: 45252597

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; executive 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; executive 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.

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 and corporate 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

 

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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)

 

     November 1,     February 1,  
     2014     2014  
     (Unaudited  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 23,987      $ 29,177   

Restricted cash and investments

     2,100        2,100   

Accounts receivable, net

     93,460        107,386   

Inventories

     67,797        51,162   

Prepaid expenses and other

     5,043        6,032   
  

 

 

   

 

 

 

Total current assets

     192,387        195,857   

Property and equipment, net

     33,647        24,952   

FCC broadcasting license

     12,000        12,000   

Other assets

     986        896   
  

 

 

   

 

 

 
   $ 239,020      $ 233,705   
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 73,990      $ 77,296   

Accrued liabilities

     40,518        38,535   

Current portion of long term credit facility

     604        —     

Deferred revenue

     85        85   
  

 

 

   

 

 

 

Total current liabilities

     115,197        115,916   

Capital lease liability

     49        88   

Deferred revenue

     271        335   

Deferred tax liability

     1,749        1,158   

Long term credit facility

     42,087        38,000   
  

 

 

   

 

 

 

Total liabilities

     159,353        155,497   

Commitments and contingencies

    

Shareholders’ equity:

    

Common stock, $.01 par value, 100,000,000 shares authorized; 56,137,622 and 49,844,253 shares issued and outstanding

     561        498   

Warrants to purchase common stock

     —          533   

Additional paid-in capital

     417,247        410,681   

Accumulated deficit

     (338,141     (333,504
  

 

 

   

 

 

 

Total shareholders’ equity

     79,667        78,208   
  

 

 

   

 

 

 
   $ 239,020      $ 233,705   
  

 

 

   

 

 

 

 

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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 Nine Month Periods Ended  
     November 1,     November 2,     November 1,     November 2,  
     2014     2013     2014     2013  

Net sales

   $ 157,106      $ 147,318      $ 473,394      $ 447,236   

Cost of sales

     98,040        92,083        293,887        279,311   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     59,066        55,235        179,507        167,925   

Margin %

     37.6     37.5     37.9     37.5

Operating expense:

        

Distribution and selling

     49,457        46,683        149,296        139,477   

General and administrative

     5,357        5,742        18,045        17,811   

Depreciation and amortization

     2,034        3,039        6,465        9,342   

Activist shareholder response costs

     —          344        3,518        344   

Executive transition costs

     2,415        —          5,035        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

     59,263        55,808        182,359        166,974   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (197     (573     (2,852     951   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense:

        

Interest income

     2        3        8        17   

Interest expense

     (406     (355     (1,184     (1,081
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (404     (352     (1,176     (1,064
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (601     (925     (4,028     (113

Income tax provision

     (207     (292     (609     (880
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (808   $ (1,217   $ (4,637   $ (993
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

   $ (0.01   $ (0.02   $ (0.09   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share ---assuming dilution

   $ (0.01   $ (0.02   $ (0.09   $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     55,433,419        49,604,860        52,492,488        49,412,646   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     55,433,419        49,604,860        52,492,488        49,412,646   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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VALUEVISION MEDIA, INC.

AND SUBSIDIARIES

Reconciliation of Adjusted EBITDA to Net Loss:

 

     For the Three Month Periods Ended     For the Nine Month Periods Ended  
     November 1,     November 2,     November 1,     November 1,  
     2014     2013     2014     2013  

Adjusted EBITDA (000’s)

   $ 4,780      $ 3,595      $ 15,822      $ 13,170   

Less:

        

Activist shareholder response costs

     —          (344     (3,518     (344

Executive transition costs

     (2,415     —          (5,035     —     

Non-cash share-based compensation

     (420     (718     (3,338     (2,368
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA (as defined) (a)

     1,945        2,533        3,931        10,458   
  

 

 

   

 

 

   

 

 

   

 

 

 

A reconciliation of EBITDA to net loss is as follows:

        

EBITDA (as defined) (a)

     1,945        2,533        3,931        10,458   

Adjustments:

        

Depreciation and amortization

     (2,142     (3,106     (6,783     (9,507

Interest income

     2        3        8        17   

Interest expense

     (406     (355     (1,184     (1,081

Income taxes

     (207     (292     (609     (880
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (808   $ (1,217   $ (4,637   $ (993
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) EBITDA as defined for this statistical presentation 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 debt extinguishment, non-operating gains (losses); non-cash impairment charges and writedowns, activist shareholder response costs, executive 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.

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Contacts

 

Media:   Investors:

Dawn Zaremba

  Chris Eddy

ShopHQ

  Catalyst Global LLC

press@evine.com

  vvtv@catalyst-ir.com

(952) 943-6043

  (212) 924-9800

Liz Micci and Pat Tucker

Abernathy MacGregor

EDM@abmac.com

PCT@abmac.com

(212) 371-5999

 

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