MINNEAPOLIS, Nov. 19 /PRNewswire-FirstCall/ -- ValueVision Media, Inc. today announced financial results for the third quarter ended November 3, 2007.
Third Quarter Performance
ValueVision's third quarter revenue was $184.8 million, matching revenue of the prior year. Third quarter EBITDA, as adjusted, was $0.8 million compared to an EBITDA, as adjusted, of $1.4 million in the same quarter last year. Net loss for the quarter was ($5.7) million compared to a net loss of ($3.1) million for the same quarter last year.
"Our results for the third quarter were certainly below our expectations, but there were several factors that were encouraging as we look more closely at the results," said John D. Buck, interim Chief Executive Officer of ValueVision Media, Inc. "Although sales equaled last year's quarter, the comparison was adversely affected by a change in our merchandise mix. High ticket LCD TV sales, which drove sales growth in 2006, were down significantly for the current quarter. In response, we shifted hours back into our more traditional categories of Gemstones, Watches, Apparel and Notebook Computers which performed strongly but did not totally offset the decrease in LCD TV sales. Our Internet business continues to deliver solid sales growth and our Internet video initiative continues to move forward with the launch of our second generation of ShopNBC.TV last week."
Third Quarter Update Internet Growth Continues. Sales on ShopNBC.com increased by 18% in the third quarter. Internet sales now represent 28% of total merchandise sales. Broad Category Strength. Several of our categories showed significant growth over last year. Watches, Gemstones, Apparel and Notebook Computers all delivered double digit sales growth during the third quarter. CEO Search In Progress. Spencer Stuart continues to move forward with their search for a permanent CEO for ValueVision Media. Alvarez & Marsal Business Review Underway. In partnership with our senior management team, the consulting group of Alvarez and Marsal has initiated a business review focused on identifying revenue and cost savings opportunities. During the fourth quarter, they will complete their assessment and present their finding to the Board of Directors. Stock Buyback Activity. During the third quarter we repurchased 1.1MM shares of stock with a remaining authorization of $14.3MM. Our balance sheet remains strong with $103 million in cash and no debt. Added PayPal as Payment Option. We successfully launched PayPal as a new form of payment on ShopNBC.com. Initial response indicates that this payment option will be popular with many of our existing customers. We also expect PayPal to help attract new customers to ShopNBC.com. Financial Guidance
"Our outlook for the balance of the year remains unchanged and we are reaffirming our annual guidance of low single digit sales growth and adjusted EBITDA of $5MM-$10MM" continued Buck. "We are off to a strong start in the fourth quarter with an outstanding 'All Star' event last week that resulted in a significant increase over last year."
Conference Call Information
Management has scheduled a conference call at 11:00 a.m. EDT/10:00 a.m. CDT on Tuesday, November 20, 2007 to discuss third quarter results.
To participate in the conference call, please dial 1-800-857-9866 (pass code: VALUEVISION) five to ten minutes prior to the call time. If you are unable to participate live, a replay will be available for 30 days after the conference call. To access the replay, please dial 1-800-234-5713.
You may also participate via live audio stream by logging on to https://e-meetings.mci.com/. To access the audio stream, please use conference number 5967117 with pass code 'VALUE VISION'. A rebroadcast of the audio stream will be available using the same access information for 30 days after the initial broadcast.
To be placed on the Company's e-mail notification list for press releases, SEC filings, certain analytical information, and/or upcoming events, please go to http://www.valuevisionmedia.com/ and click on "Investor Relations." Click on "E-mail Alerts" and complete the requested information.
EBITDA and EBITDA, as adjusted
The Company defines EBITDA as net income (loss) from continuing operations 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-recurring non-operating gains (losses) and equity in income of Ralph Lauren Media, LLC; non-recurring restructuring costs; and non-cash stock option expense. Management has included the term EBITDA, as adjusted, 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. 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 small cap, higher growth 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.
About ValueVision Media, Inc
Founded in 1990, ValueVision Media is an integrated direct marketing company that sells general merchandise directly to consumers through television, the Internet, and direct mail. It operates ShopNBC, one of the top three television shopping networks in the United States. For more information, please visit http://www.valuevisionmedia.com/ or http://www.shopnbc.com/ or http://www.shopnbc.tv/.
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 are accordingly 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 distribution for the Company's programming and the fees associated therewith; the success of the Company's e-commerce and rebranding initiatives; the performance of its equity investments; the success of its strategic alliances and relationships; the ability of the Company to manage its operating expenses successfully; risks associated with acquisitions; 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.
VALUE VISION MEDIA, INC. Key Performance Metrics* (Unaudited) Q3 YTD For the three months For the nine months ending ending 11/3/2007 11/4/2006 % 11/3/2007 11/4/2006 % Program Distribution Cable FTEs 41,726 39,854 5% 41,156 39,055 5% Satellite FTEs 27,687 26,018 6% 27,421 25,691 7% Total FTEs (Average 000s) 69,413 65,873 5% 68,577 64,746 6% Net Sales per FTE (Annualized) $10.46 $11.07 -6% $10.77 $11.18 -4% Active Customers - 12 month rolling 876,261 834,701 5% n/a n/a % New Customers - 12 month rolling 52% 54% n/a n/a % Retained - 12 month rolling 48% 46% n/a n/a Customer Penetration - 12 month rolling 1.3% 1.3% n/a n/a Product Mix Jewelry 38% 35% 39% 40% Watches, Apparel and Health & Beauty 26% 24% 25% 23% Home & All Other 36% 41% 36% 37% Shipped Units (000s) 1,069 1,098 -3% 3,350 3,648 -8% Average Price Point - shipped units $240 $225 7% $233 $208 12% * Includes ShopNBC TV and ShopNBC.com only. 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 November 3, November 4, November 3, November 4, 2007 2006 2007 2006 Net sales $184,821 $184,886 $563,543 $550,592 Cost of sales 119,837 121,311 365,124 358,588 (exclusive of depreciation and amortization shown below) Operating expense: Distribution and selling 59,126 55,069 179,619 165,470 General and administrative 5,423 7,476 19,128 21,339 Depreciation and amortization 4,734 5,777 15,581 16,527 Restructuring costs 1,061 - 3,104 - CEO transition costs 2,096 - 2,096 - Asset impairments and write offs - - - 29 Total operating expense 72,440 68,322 219,528 203,365 Operating loss (7,456) (4,747) (21,109) (11,361) Other income: Other income (expense) - - (119) 350 Interest income 1,728 990 4,543 2,951 Total other income 1,728 990 4,424 3,301 Loss before income taxes and equity in net income of affiliates (5,728) (3,757) (16,685) (8,060) Gain on sale of RLM investment - - 40,240 - Equity in income of affiliates - 646 609 2,192 Income tax provision - (15) (921) (45) Net income (loss) (5,728) (3,126) 23,243 (5,913) Accretion of redeemable preferred stock (73) (73) (218) (217) Net income (loss) available to common shareholders $(5,801) $(3,199) $23,025 $(6,130) Net income (loss) per common share $(0.16) $(0.09) $0.54 $(0.16) Net income (loss) per common share --- assuming dilution $(0.16) $(0.09) $0.55 $(0.16) Weighted average number of common shares outstanding: Basic 36,330,800 37,628,215 42,438,322 37,700,351 Diluted 36,330,800 37,628,215 42,458,720 37,700,351 VALUEVISION MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) November 3, February 3, 2007 2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $20,755 $41,496 Short-term investments 82,039 29,798 Accounts receivable, net 105,344 117,169 Inventories 80,914 66,622 Prepaid expenses and other 5,009 5,360 Total current assets 294,061 260,445 Property and equipment, net 36,768 40,107 FCC broadcasting license 31,943 31,943 NBC Trademark License Agreement, net 11,414 12,234 Cable distribution and marketing agreement, net 1,088 1,759 Other assets 738 5,492 $376,012 $351,980 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $66,409 $57,196 Accrued liabilities 54,786 47,709 Deferred revenue 599 369 Total current liabilities 121,794 105,274 Other long-term obligations - 2,553 Deferred revenue 2,295 1,699 Series A Redeemable Convertible Preferred Stock, $.01 par value, 5,339,500 shares authorized; 5,339,500 shares issued and outstanding 43,825 43,607 Shareholders' equity: Common stock, $.01 par value, 100,000,000 shares authorized; 35,930,578 and 37,593,768 shares issued and outstanding 359 376 Warrants to purchase 4,036,858 shares of common stock 22,972 22,972 Additional paid-in capital 273,566 287,541 Accumulated deficit (88,799) (112,042) Total shareholders' equity 208,098 198,847 $376,012 $351,980 VALUEVISION MEDIA, INC. AND SUBSIDIARIES Reconciliation of EBITDA, as adjusted, to Net Income (Loss): Nine- Nine- Month Month Third Third Period Period Quarter Quarter Ended Ended 3-Nov-07 4-Nov-06 3-Nov-07 4-Nov-06 EBITDA, as adjusted (000's) $817 $1,422 $1,066 $6,333 Less: Non-operating gains (losses) and equity in income of RLM - 646 40,730 2,542 Restructuring costs (1,061) - (3,104) (29) CEO transition costs (2,096) - (2,096) - Non-cash stock option expense (382) (392) (1,394) (1,138) EBITDA (as defined) (a) (2,722) 1,676 35,202 7,708 A reconciliation of EBITDA to net income (loss) is as follows: EBITDA, as defined (2,722) 1,676 35,202 7,708 Adjustments: Depreciation and amortization (4,734) (5,777) (15,581) (16,527) Interest income 1,728 990 4,543 2,951 Income taxes - (15) (921) (45) Net income (loss) $(5,728) $(3,126) $23,243 $(5,913)
