Company News: Page (1) of 1 - 11/18/10 Email this story to a friend. email article Print this page (Article printing at MyDmn.com).print page facebook

ShopNBC Q3 Adjusted EBITDA Rose to Positive $0.6 Million From a Loss of $5.6 Million as Net Sales Increased 11% to $132 Million

(November 18, 2010)

MINNEAPOLIS, MN -- (Marketwire) -- 11/18/10 -- ShopNBC (NASDAQ: VVTV)

-- Net sales increased 11% to $132 million -- Positive adjusted EBITDA of $0.6 million vs. ($5.6) million -- Gross Profit increased 19% to $47 million -- E-commerce sales penetration increased 680 bps to 40.5%


ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in multi-media retailing, today announced financial results for its fiscal third quarter ended October 30, 2010. The company will host a conference call and webcast to review its results today at 11:00 a.m. ET. Details provided below.

SUMMARY RESULTS AND KEY OPERATING METRICS ($ Millions, except average price points) Q3 YTD For the three months ending For the nine months ending ------------------------------ ----------------------------- 10/30/2010 10/31/2009 Change 10/30/2010 10/31/2009 Change --------- --------- -------- --------- --------- ------- Net Sales $ 132.3 $ 119.4 10.8% $ 383.4 $ 372.6 2.9% EBITDA $ 0.6 $ (5.6) N/A $ (5.7) $ (18.2) 68.8% as adjusted Net Loss $ (5.8) $ (12.9) 55.0% $ (24.5) $ (33.2) 26.2% Homes 76,768 73,063 5.1% 76,032 73,097 4.0% (Average 000s) Net Shipped 1,317 1,186 11.0% 3,590 3,084 16.4% Units (000s) Average $ 93 $ 95 -2.5% $ 99 $ 114 -13.3% Price Return Rate % 20.8% 21.9% -110 bps 20.2% 21.8% -160 bps Gross Margin % 35.6% 33.2% 240 bps 36.5% 33.1% 340 bps Internet Net 40.5% 33.7% 680 bps 39.8% 31.5% 830 bps Sales % New 562,510 486,474 15.6% N/A N/A Customers 12 month rolling Active 1,110,187 959,508 15.7% N/A N/A Customers 12 month rolling

"Our experienced multi-channel team achieved another consecutive quarter of improved performance," said Keith Stewart, CEO of ShopNBC. "Sales growth of 11%, gross margin improvements, and lower transactional costs contributed to a $0.6 million adjusted EBITDA profit in the third quarter. New and active customers in the quarter continued to engage, interact and shop across our multiple channels with e-commerce sales penetration of 40.5%, up 680 basis points compared to last year. This overall progress is a validation of our continued focus and efforts to turn the company around while executing on new strategies for growth."

Mr. Stewart added: "Going forward, we will continue to focus on customer-centric strategies that will help us build on our existing base. We intend to improve operating processes and gain added efficiencies through disciplined execution and lower transactional costs. Lastly, as the year comes to a close, we anticipate entering into negotiations with several of our cable and satellite affiliates -- representing approximately 25% of our household footprint -- to further reduce distribution costs and improve our channel positioning."

"We are committed to delivering long-term sustained growth. As part of these efforts, we are launching a proactive investor relations outreach program and have recently retained a New York-based IR firm to assist us in that effort."

Third Quarter 2010 Results

Third quarter revenues rose 11% to $132.3 million vs. Q3 2009. The company continued to make progress in its strategy to drive transaction volumes through the reduction of its net average selling price, which decreased 2.5% to $93 vs. $95 in the year-ago quarter while net shipped units increased by 11%. E-commerce sales, which carry lower transaction costs, grew to 40.5% of total company sales in the quarter, from 33.7% in Q3 2009.

Customer trends continued to improve with new and active customers increasing 15.6% and 15.7%, respectively, on a 12-month rolling basis vs. Q2 2009. Return rates for the quarter declined to 20.8% vs. 21.9% in Q3 2009, reflecting improvements in overall customer satisfaction and the benefit of strategic pricing changes.

Gross profit increased 19% to $47.1 million and gross profit margin improved 240 bps to 35.6% vs. 33.2% last year, largely driven by merchandise margin rate improvements across several key categories.

Adjusted EBITDA was positive $0.6 million compared to an adjusted EBITDA loss of $5.6 million in the year-ago period, driven by increased sales, improved gross margin and lower operating expenses.

Operating expenses in the third quarter decreased approximately 1% to $50.8 million, due to lower transactional costs and the impact of prior-year itemized non-recurring expenses.

Net loss for the third quarter was reduced to ($5.8) million compared to a net loss of ($12.9) million for the same quarter last year.

Liquidity and Capital Resources

The Q3 quarter-end cash and cash equivalents balance was $20.6 million, including $5.0 million of restricted cash. The cash and cash equivalents balance declined $2.3 million from the second quarter, driven by working capital use in the quarter. On a year-to-date basis, cash and cash equivalents have decreased $1.4 million.

Additionally, the company recently announced that it entered into a $25 million term loan with a lending group led by Crystal Financial LLC. The loan has a 5-year maturity, bears a variable interest rate, which will initially be set at 11%, and will be used to finance general working capital needs. The loan replaces a previous $20 million revolving credit facility, and is secured primarily by the company's inventory and accounts receivable.

Conference Call / Webcast Information

Conference Call Dial-In: 1-800-369-2063 (pass code: 7467622; keypad: SHOPNBC)

Webcast URL: https://e-meetings.verizonbusiness.com conference number 8656218, pass code: SHOPNBC. An archived version of the webcast will be available for 30 days.

Call Replay: 1-800-867-1929 with pass code 81810, available for 30 days.

About ShopNBC

ShopNBC is a multi-media retailer operating with a premium lifestyle brand. Over 1 million customers benefit from ShopNBC as an authority and destination in the categories of home, electronics, beauty, health, fitness, fashion, jewelry and watches. As part of the company's "ShopNBC Anywhere" initiative, customers can interact and shop via cable and satellite TV in 76 million homes (DISH Network channels 134 and 228; DIRECTV channel 316); mobile devices including iPhone, BlackBerry and Droid; online at www.ShopNBC.com; live streaming at www.ShopNBC.TV; and social networking sites Facebook, Twitter and YouTube. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV). For more information, please visit www.ShopNBC.com/IR.

EBITDA and EBITDA, as adjusted

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, rebranding, and chief executive officer transition 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 "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) 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; 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.

VALUEVISION MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) October 30, January 30, 2010 2010 ----------- ----------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 15,674 $ 17,000 Restricted cash and investments 4,961 5,060 Accounts receivable, net 57,312 68,891 Inventories 51,997 44,077 Prepaid expenses and other 4,029 4,333 ----------- ----------- Total current assets 133,973 139,361 Property and equipment, net 26,651 28,342 FCC broadcasting license 23,111 23,111 NBC Trademark License Agreement, net 1,734 4,154 Other Assets 1,386 1,246 ----------- ----------- $ 186,855 $ 196,214 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 51,618 $ 58,777 Accrued liabilities 44,493 26,487 Deferred revenue 728 728 ----------- ----------- Total current liabilities 96,839 85,992 Deferred revenue 607 1,153 Long Term Payable 1,937 4,841 Accrued Dividends - Series B Preferred Stock 8,903 4,681 Series B Mandatorily Redeemable Preferred Stock 12,531 11,243 $.01 par value, 4,929,266 shares authorized; 4,929,266 shares issued and outstanding ----------- ----------- Total liabilities 120,817 107,910 Commitments and Contingencies Shareholders' equity: Common stock, $.01 par value, 100,000,000 shares authorized; 32,796,077 and 32,672,735 shares issued and outstanding 328 327 Warrants to purchase 6,022,115 shares of common stock 637 637 Additional paid-in capital 318,932 316,721 Accumulated deficit (253,859) (229,381) ----------- ----------- Total shareholders' equity 66,038 88,304 ----------- ----------- $ 186,855 $ 196,214 =========== =========== VALUEVISION MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) For the Three Month For the Nine Month Periods Ended Periods Ended ------------------------ ------------------------ October 30, October 31, October 30, October 31, 2010 2009 2010 2009 ----------- ----------- ----------- ----------- Net sales $ 132,283 $ 119,441 $ 383,437 $ 372,588 Cost of sales 85,234 79,774 243,495 249,172 ----------- ----------- ----------- ----------- Gross profit 47,049 39,667 139,942 123,416 Operating expense: Distribution and selling 42,752 41,774 133,815 130,898 General and administrative 4,445 4,264 14,007 13,200 Depreciation and amortization 2,997 3,507 10,215 10,723 Restructuring costs 412 126 838 715 Rebranding costs 39 - 39 - CEO transition costs - 1,567 - 1,867 ----------- ----------- ----------- ----------- Total operating expense 50,645 51,238 158,914 157,403 ----------- ----------- ----------- ----------- Operating loss (3,596) (11,571) (18,972) (33,987) ----------- ----------- ----------- ----------- Other income (expense): Interest income - 2 51 365 Interest expense (2,203) (1,350) (6,148) (3,328) Gain on sale of investments - - - 3,628 ----------- ----------- ----------- ----------- Total other income (expense) (2,203) (1,348) (6,097) 665 ----------- ----------- ----------- ----------- Loss before income taxes (5,799) (12,919) (25,069) (33,322) Income tax (provision) benefit (15) - 591 157 ----------- ----------- ----------- ----------- Net loss (5,814) (12,919) (24,478) (33,165) Excess of preferred stock carrying value over redemption value - - - 27,362 Accretion of redeemable Series A preferred stock - - - (62) ----------- ----------- ----------- ----------- Net loss available to common shareholders $ (5,814) $ (12,919) $ (24,478) $ (5,865) =========== =========== =========== =========== Net loss per common share $ (0.18) $ (0.40) $ (0.75) $ (0.18) =========== =========== =========== =========== Net loss per common share ---assuming dilution $ (0.18) $ (0.40) $ (0.75) $ (0.18) =========== =========== =========== =========== Weighted average number of common shares outstanding: Basic 32,781,462 32,332,278 32,721,377 32,569,618 =========== =========== =========== =========== Diluted 32,781,462 32,332,278 32,721,377 32,569,618 =========== =========== =========== =========== VALUEVISION MEDIA, INC. AND SUBSIDIARIES Reconciliation of EBITDA, as adjusted, to Net Loss: For the Three Month For the Nine Month Periods Ended Periods Ended ------------------------ ------------------------ October 30, October 31, October 30, October 31, 2010 2009 2010 2009 ----------- ----------- ----------- ----------- EBITDA, as adjusted (000's) $ 578 $ (5,630) $ (5,656) $ (18,152) Less: Non-operating gain on sale of investments - - - 3,628 Restructuring costs (412) (126) (838) (715) CEO transition costs - (1,567) - (1,867) Rebranding costs (39) - (39) - Non-cash share-based compensation (616) (741) (2,114) (2,530) ----------- ----------- ----------- ----------- EBITDA (as defined) (a) (489) (8,064) (8,647) (19,636) ----------- ----------- ----------- ----------- A reconciliation of EBITDA to net loss is as follows: EBITDA, as defined (489) (8,064) (8,647) (19,636) Adjustments: Depreciation and amortization (3,107) (3,507) (10,325) (10,723) Interest income - 2 51 365 Interest expense (2,203) (1,350) (6,148) (3,328) Income taxes (15) - 591 157 ----------- ----------- ----------- ----------- Net loss $ (5,814) $ (12,919) $ (24,478) $ (33,165) =========== =========== =========== =========== (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 EBITDA, as adjusted, as EBITDA excluding non-operating gains (losses); non-cash impairment charges and writedowns, restructuring, rebranding and CEO transition costs; and non-cash share-based compensation expense. Management has included the term EBITDA, as adjusted, 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 EBITDA, as adjusted, 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 EBITDA, as adjusted, as a metric measure to evaluate operating performance under its management and executive incentive compensation programs. EBITDA, as adjusted, should not be construed as an alternative to operating 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. EBITDA, as adjusted, may not be comparable to similarly entitled measures reported by other companies.

Contact Information:
Investor/Media Relations
Anthony Giombetti
agiombetti@shopnbc.com
612-308-1190

Investor Relations
Norberto Aja & David Collins
vvtv@jcir.com
212-835-8500


Copyright @ Marketwire

Page: 1


Related Keywords: ShopNBC, Office Equipment, Sales, Finance, Sales & Marketing, Networking, Internet, Business Issues, Management, Finance/Accounting, Sales, CEO/CFO, Finance/Accounting, Sales, Broadcast, Pro AV, Post/Production, Management, Streaming, Management, Presentors, Management, Internet/Web, Prosumer/Consumer, Business, Programming, Internet, Webcasting, Authoring/Programming, Broadcast Technology, Internet Media, Facilities, webcast, Marketwire, Inc., Apple Computer, Financial, Television, Lifestyle, Internet Technology, Business, Internet, Social Networking, Other,

HOT THREADS on DMN Forums
Content-type: text/html  Rss  Add to Google Reader or
Homepage    Add to My AOL  Add to Excite MIX  Subscribe in
NewsGator Online 
Real-Time - what users are saying - Right Now!

Our Privacy Policy --- @ Copyright, 2015 Digital Media Online, All Rights Reserved