Evine Live Inc. (“Evine”) (NASDAQ:EVLV) today announced results for
the first quarter ended May 5, 2018. The Company posted
quarterly net sales of $156.5 million, compared to $156.3 million
for the comparable period in the prior year. The Company
realized a net loss of $3.0 million and Adjusted EBITDA of $3.3
million, as compared to a net loss of $3.2 million and Adjusted
EBITDA of $3.1 million for the first quarter of fiscal 2017.
Fiscal Year 2018 First Quarter
Highlights
- Net sales were $156.5 million, a 0.1% increase
year-over-year.
- Gross profit as a percentage of net sales decreased 10 basis
points year-over-year to 35.9%. Excluding contract
termination costs of $753,000, which had a 50 basis point impact,
gross profit as a percentage of sales would have been 36.4%, an
improvement of 40 basis points year-over-year.
- Net loss was $3.0 million, a 7% improvement
year-over-year.
- Adjusted EBITDA was $3.3 million, a 7% increase
year-over-year.
- EPS was ($0.05), flat to the prior year and includes ($0.03)
impact for executive transition expenses and contract termination
costs.
“I am very encouraged by our first quarter
operating results,” said CEO Bob Rosenblatt. “It was a very
productive quarter for us and the results reflect the hard work and
focus of many over the past two years towards our turnaround
efforts.”
“Strategically, 2018 is about profitable revenue
growth, product development and increasing our customer base,”
continued Rosenblatt. “We can achieve our goals if we
maintain our focus and deliver on our stated strategy to position
Evine as a leading omni-channel purveyor of proprietary, exclusive,
and under-discovered goods. This, when combined with our fully
built out direct-to-consumer and increasingly valuable video
commerce platform, will deliver increased value for our
shareholders, customers and vendors.”
|
SUMMARY RESULTS AND KEY OPERATING
METRICS |
($ Millions, except average selling price and
EPS) |
|
|
|
|
|
|
|
|
|
Q1 2018 5/5/2018 |
|
Q1 2017 4/29/2017 |
|
Change |
|
|
|
|
|
|
|
Net Sales |
|
$ |
156.5 |
|
|
$ |
156.3 |
|
|
0.1 |
% |
Gross Margin % |
|
|
35.9 |
% |
|
|
36.0 |
% |
|
(10
bps |
) |
Adjusted EBITDA |
|
$ |
3.3 |
|
|
$ |
3.1 |
|
|
7 |
% |
Net Loss |
|
$ |
(3.0 |
) |
|
$ |
(3.2 |
) |
|
7 |
% |
EPS |
|
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
0 |
% |
|
|
|
|
|
|
|
Net Shipped Units (000s) |
|
|
2,472 |
|
|
|
2,580 |
|
|
(4 |
%) |
Average Selling Price (ASP) |
|
$ |
57 |
|
|
$ |
54 |
|
|
6 |
% |
Return Rate % |
|
|
18.9 |
% |
|
|
18.8 |
% |
|
10
bps |
|
Digital Net Sales % |
|
|
53.0 |
% |
|
|
50.6 |
% |
|
240
bps |
|
Total
Customers - 12 Month Rolling (000s) |
|
|
1,269 |
|
|
|
1,409 |
|
|
(10 |
%) |
|
|
|
|
|
|
|
%
of Net Merchandise Sales by Category |
|
|
|
|
|
|
Jewelry & Watches |
|
|
40 |
% |
|
|
41 |
% |
|
|
Home & Consumer Electronics |
|
|
22 |
% |
|
|
21 |
% |
|
|
Beauty & Wellness |
|
|
19 |
% |
|
|
16 |
% |
|
|
Fashion & Accessories |
|
|
19 |
% |
|
|
22 |
% |
|
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
First Quarter 2018 Results
- The top performing category in the quarter was Beauty &
Wellness, which grew 17.3% year-over-year, reflecting strong
results from our subscription business. Home and Consumer
Electronics also had strong year-over-year growth of 5.5% with
strength in our tabletop category.
- Digital net sales as a percentage of total net sales increased
240 basis points to 53.0%, reflecting our continued focus on making
the customer experience as frictionless as possible across all
devices.
- The return rate for the quarter was 18.9%; relatively flat
year-over-year and within our expectations based on our merchandise
mix.
- Gross profit dollars were flat year-over-year at approximately
$56.3 million. Excluding contract termination costs of
$753,000, gross profit dollars would have been approximately $57.0
million, or 1.3% better than last year.
- Operating expenses increased 2.3% or $1.3 million
year-over-year to $58.2 million, including a $518,000 increase for
executive transition expenses. The remaining increase was due
to investments in our organization to support growth.
Additionally, year-over-year increases in program distribution
costs associated with high definition carriage were mostly offset
by savings related to favorable negotiations for other
carriage.
Executive Team Changes
Further strengthening the organization’s
operations, during the quarter, the Company announced two new
members to its senior leadership team. As previously
announced, Diana Purcel was appointed Executive Vice President and
Chief Financial Officer and Mark Locks was appointed as Executive
Vice President of Product Sourcing and Business Development.
Both are highly experienced executives with careers spanning a
diverse group of retail companies. Mrs. Purcel replaced Tim
Peterman, formally Chief Operating Officer / Chief Financial
Officer. Mr. Peterman’s Chief Operating Officer
responsibilities have been absorbed by the executive team.
Liquidity and Capital Resources
As of May 5, 2018, total unrestricted cash was
$30.1 million, compared to $23.9 million at the end of fiscal
2017. The Company also had an additional $14.2 million of
unused availability on its revolving credit facility, which gives
the Company total liquidity of $44.3 million as of the end of the
first quarter.
Fiscal Year 2018 Outlook
Note: Fiscal 2018 has 52 weeks compared to 53
weeks in Fiscal 2017.
We affirm our expectations for the year.
We continue to expect normalized sales growth in the 2% to 5% range
on a 52-week over 52-week basis, which equates to 0% to 3% on a
reported basis due to the extra week in fiscal 2017. We
expect Adjusted EBITDA to be in the $19 to $21 million range, which
would equate to growth of 5% to 17% year-over-year.(1)
Conference Call
A conference call and webcast to discuss the
Company's first quarter earnings will be held at 8:30 a.m. Eastern
Time on Wednesday, May 30, 2018:
WEBCAST LINK:
https://event.on24.com/wcc/r/1629797/060866762AFA3753A10ADAA63D569F89
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 television
homes with entertaining content in a comprehensive digital shopping
experience offered 24 hours a day.
Please visit www.evine.com/ir for more investor
information.
Contacts Media: Liz Joseph
press@evine.com (952) 943-6192 Investors:
Michael Porter mporter@evine.com (952) 943-6517
(1) In accordance with SEC Guidance for Item 10(e)(1)(i)(A) of
Regulation S-K, we have not provided a reconciliation of our
expected Adjusted EBITDA range to expected net income range in this
press release due to the uncertainty and inherent difficulty
predicting the occurrence, the financial impact and the periods in
which certain GAAP to non-GAAP adjustments may be recognized. These
adjustments may include the impact of such items as loss on debt
extinguishment, gain on sale of assets, executive and management
transition costs, restructuring charges, the effect of other
certain one-time items, and the income tax effect of such
items. We are unable to quantify these types of adjustments
that would be required to be included in the GAAP measure without
unreasonable efforts. In addition, we believe such a reconciliation
would imply a degree of precision on inherently unpredictable
events in our outlook that could be confusing to investors.
|
EVINE Live
Inc. |
AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 5, |
|
February 3, |
|
|
|
|
|
|
|
2018 |
|
|
|
2018 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
Current assets: |
|
|
|
|
|
|
Cash |
|
|
$ |
30,077 |
|
|
$ |
23,940 |
|
|
Restricted cash equivalents |
|
|
|
450 |
|
|
|
450 |
|
|
Accounts receivable, net |
|
|
|
85,060 |
|
|
|
96,559 |
|
|
Inventories |
|
|
|
73,058 |
|
|
|
68,811 |
|
|
Prepaid expenses and other |
|
|
|
9,142 |
|
|
|
5,344 |
|
|
|
Total current assets |
|
|
|
197,787 |
|
|
|
195,104 |
|
Property and equipment, net |
|
|
|
51,434 |
|
|
|
52,048 |
|
Other assets |
|
|
|
2,027 |
|
|
|
2,106 |
|
|
|
|
Total
Assets |
|
|
$ |
251,248 |
|
|
$ |
249,258 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
|
$ |
59,067 |
|
|
$ |
55,614 |
|
|
Accrued liabilities |
|
|
|
39,827 |
|
|
|
35,646 |
|
|
Current portion of long term credit facilities |
|
|
2,326 |
|
|
|
2,326 |
|
|
Deferred revenue |
|
|
|
35 |
|
|
|
35 |
|
|
|
Total current liabilities |
|
|
|
101,255 |
|
|
|
93,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long term liabilities |
|
|
|
59 |
|
|
|
68 |
|
Long term credit facilities |
|
|
|
68,204 |
|
|
|
71,573 |
|
|
|
Total liabilities |
|
|
|
169,518 |
|
|
|
165,262 |
|
|
|
|
|
|
|
|
|
|
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; |
|
|
|
|
|
65,588,337 and 65,290,458 shares issued and outstanding |
|
656 |
|
|
|
653 |
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
|
439,828 |
|
|
|
439,111 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
|
(358,754 |
) |
|
|
(355,768 |
) |
|
|
Total shareholders' equity |
|
|
|
81,730 |
|
|
|
83,996 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
|
$ |
251,248 |
|
|
$ |
249,258 |
|
|
|
|
|
|
|
|
|
|
|
EVINE Live
Inc. |
AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(Unaudited) |
(In thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month
Periods Ended |
|
|
|
|
|
|
|
|
|
|
|
May 5, |
|
April 29, |
|
|
|
|
2018 |
|
2017 |
Net
sales |
$ |
156,505 |
|
|
$ |
156,343 |
|
Cost of
sales |
|
100,250 |
|
|
|
100,057 |
|
|
|
|
Gross
profit |
|
56,255 |
|
|
|
56,286 |
|
|
|
|
Margin % |
|
35.9 |
% |
|
|
36.0 |
% |
Operating
expense: |
|
|
|
|
Distribution and selling |
|
48,887 |
|
|
|
48,730 |
|
|
General and administrative |
|
6,719 |
|
|
|
5,995 |
|
|
Depreciation and amortization |
|
1,572 |
|
|
|
1,636 |
|
|
Executive and management transition costs |
|
1,024 |
|
|
|
506 |
|
|
|
Total operating expense |
|
58,202 |
|
|
|
56,867 |
|
Operating
loss |
|
(1,947 |
) |
|
|
(581 |
) |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
Interest income |
|
7 |
|
|
|
2 |
|
|
Interest expense |
|
(1,026 |
) |
|
|
(1,495 |
) |
|
Loss on debt extinguishment |
|
- |
|
|
|
(913 |
) |
|
|
Total other expense |
|
(1,019 |
) |
|
|
(2,406 |
) |
|
|
|
|
|
|
|
Loss before income
taxes |
|
(2,966 |
) |
|
|
(2,987 |
) |
|
|
|
|
|
|
|
Income tax provision |
|
(20 |
) |
|
|
(209 |
) |
|
|
|
|
|
|
|
Net
loss |
$ |
(2,986 |
) |
|
$ |
(3,196 |
) |
|
|
|
|
|
|
|
Net loss per common
share |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
Net loss per common
share |
|
|
|
|
|
---assuming
dilution |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
Weighted average number of |
|
|
|
common shares outstanding: |
|
|
|
|
|
|
Basic |
|
65,360,951 |
|
|
|
60,918,508 |
|
|
|
|
Diluted |
|
65,360,951 |
|
|
|
60,918,508 |
|
|
|
|
|
|
|
|
|
EVINE Live Inc. |
AND SUBSIDIARIES |
Reconciliation of Net Loss to Adjusted
EBITDA: |
(Unaudited) |
(in thousands) |
|
|
|
|
|
|
|
For the Three-Month
Periods Ended |
|
|
|
|
|
|
|
May 5, |
|
April 29, |
|
|
2018 |
|
2017 |
|
|
|
|
|
Net
loss |
|
$ |
(2,986 |
) |
|
$ |
(3,196 |
) |
Adjustments: |
|
|
|
|
Depreciation and amortization |
|
|
2,620 |
|
|
|
2,604 |
|
Interest
income |
|
|
(7 |
) |
|
|
(2 |
) |
Interest
expense |
|
|
1,026 |
|
|
|
1,495 |
|
Income
taxes |
|
|
20 |
|
|
|
209 |
|
EBITDA (as
defined) |
|
$ |
673 |
|
|
$ |
1,110 |
|
|
|
|
|
|
|
|
|
|
|
A
reconciliation of EBITDA to Adjusted EBITDA is as follows: |
|
|
|
EBITDA (as
defined) |
|
$ |
673 |
|
|
$ |
1,110 |
|
Adjustments: |
|
|
|
|
Executive
and management transition costs |
|
|
1,024 |
|
|
|
506 |
|
Contract
termination costs |
|
|
753 |
|
|
|
- |
|
Loss on
debt extinguishment |
|
|
- |
|
|
|
913 |
|
Non-cash
share-based compensation expense |
|
|
820 |
|
|
|
521 |
|
Adjusted EBITDA |
|
$ |
3,270 |
|
|
$ |
3,050 |
|
|
|
|
|
|
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; contract termination costs; gain on sale of
television station and non-cash share-based compensation expense.
The Company has included the “Adjusted EBITDA” measure 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 Adjusted EBITDA
measure 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. Any statements contained
herein that are not statements of historical fact, including
statements regarding guidance, industry prospects, or future
results of operations or financial position are forward-looking. We
often use words such as anticipates, believes, estimates, expects,
intends, predicts, hopes, should, plans, will and similar
expressions to identify 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): variability in consumer
preferences, shopping behaviors, 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 and sales
promotions; 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
and shipping 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; our ability to respond to changes in
consumer shopping patterns and preferences, and changes in
technology and consumer viewing patterns; 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
events (including disasters, weather events or events attracting
significant television coverage) that either cause an interruption
of television coverage or that divert viewership from our
programming; disruptions in our distribution of our network
broadcast to our customers; our ability to protect our intellectual
property rights; our ability to obtain and retain key executives
and employees; our ability to attract new customers and retain
existing customers; changes in shipping costs; expenses related to
the actions of activist or hostile shareholders; our ability to
offer new or innovative products and customer acceptance of the
same; changes in customer viewing habits of television programming;
and the risks identified under Item 1A(Risk Factors) in our most
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.
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