ValueVision Reports Fiscal Third Quarter 2012 Results

ValueVision Reports Fiscal Third Quarter 2012 Results 
MINNEAPOLIS, MN -- (Marketwire) -- 11/14/12 --  ValueVision Media,
Inc. (NASDAQ: VVTV), a multichannel electronic retailer operating as
ShopNBC (www.shopnbc.com), today announced operating results for its
fiscal 2012 third quarter (Q3'12) ended October 27, 2012, and the
Company will host an investor conference call/webcast today at 11am
ET, details below. 


 
                                                                            
SUMMARY RESULTS AND KEY OPERATING METRICS                                   
($ Millions, except average price points)                                   
                                                                            
                             Three months ended        Nine months ended    
                         ------------------------- -------------------------
                          10/27/  10/29/            10/27/  10/29/          
                           2012    2011              2012    2011           
                         ------- -------           ------- -------          
                          Q3 '12  Q3 '11   Change    YTD     YTD     Change 
                         ------- ------- --------- ------- ------- ---------
Net Sales                $ 137.6 $ 135.2      1.8% $ 409.3 $ 410.9     -0.4%
Gross Profit             $  50.8 $  50.2      1.1% $ 153.5 $ 154.9     -0.9%
Gross Profit %             36.9%   37.2%   -30 bps   37.5%   37.7%   -20 bps
EBITDA, as adjusted      $   0.6 $ (0.5) $     1.1 $   0.3 $   3.7 $   (3.4)
                                                                            
Loss Before Debt                                                            
 Extinguishment          $ (3.7) $ (6.3) $     2.6 $(15.8) $(14.1) $   (1.7)
  Debt Extinguishment    $     - $     -       n/a $ (0.5) $(25.7) $    25.2
                         ------- ------- --------- ------- ------- ---------
Net Loss                 $ (3.7) $ (6.3) $     2.6 $(16.3) $(39.7) $    23.5
                         ======= ======= ========= ======= ======= =========
                                                                            
Homes (Average 000s)      83,268  80,728      3.1%  82,366  79,366      3.8%
Net Shipped Units (000s)   1,273   1,188      7.2%   3,857   3,480     10.8%
Average Selling Price    $   100 $   105     -4.8% $    99 $   108     -8.3%
Return Rate %              23.5%   24.6%  -110 bps   22.1%   22.8%   -70 bps
Internet Net Sales %       44.8%   44.1%   +70 bps   45.4%   45.0%   +40 bps

 
ValueVision's Q3'12 net sales rose 1.8% to $137.6 million versus
Q3'11, driven by sales improvements in the Beauty, Health, & Fitness
category. This performance offset a decrease in the categories of
Fashion & Accessories and Home & Consumer Electronics. Gross profit
dollars increased 1.1% though gross profit margin decreased by 30
basis points to 36.9% in Q3'12 versus Q3'11, principally reflecting
an increase in shipping and handling promotions. ValueVision's
operating expenses decreased 3% in Q3'12 versus Q3'11, as rate
reductions within variable expenses helped offset an increase in TV
distribution fees related to a 3.1% growth in the average number of
homes in the Company's distribution footprint. ValueVision reported a
Q3'12 adjusted EBITDA gain of $0.6 million compared to an adjusted
EBITDA loss of $0.5 million in Q3'11. On a year-to-date basis,
adjusted EBITDA is positive $0.3 million compared to $3.7 million in
the prior year. 
The Company's average selling price decreased 4.8% to $100 in Q3'12
versus Q3'11. Net shipped units rose 7.2% in Q3'12 versus Q3'11.
Year-to-date net shipped units rose 10.8% versus the year-ago period.
The Company's Internet sales penetration rose 70 basis points to
44.8% in Q3'12 versus Q3'11. 
ValueVision CEO Keith Stewart, said, "In Q3 we made progress in many
areas of the organization while also addressing areas not yet
performing up to expectations. I am pleased with the progress made in
the emerging category of Beauty, Health, & Fitness. The Company
strategically shifted airtime from Jewelry & Watches to invest in our
Home & Consumer Electronics and Beauty, Health, & Fitness categories
in Q3. This airtime shift helped diversify our product mix and reduce
our average selling price, contributing to improved new and active
customer counts in the quarter. We still have work to do in the Home
& Consumer Electronics category to further broaden our product mix.
Ongoing initiatives to improve customer service and engagement
yielded positive results in the third quarter, including improved
call center efficiency and lower transaction costs. Additionally, our
'Watch & Shop Anytime, Anywhere' strategy is constantly evolving to
align with our customers' shopping preferences. This initiative
further supported growth in our mobile penetration, which has more
than doubled to approximately 16% of Internet sales year-to-date
versus last year." 
Added Mr. Stewart, "As previously announced, starting January 1,
2013, ValueVision will benefit from a $15 million annual distribution
cost savings as well as a second channel of exposure in approximately
19 million television households. Both enhancements are expected to
make important contributions to our operating performance next year." 
ValueVision EVP and CFO William McGrath said, "ValueVision's cash,
including restricted cash, position totaled $32.6 million at the end
of the third quarter, compared to $40.3 million in Q2'12. The
Company's working capital position reflects planned seasonal
inventory increases in advance of our peak fourth quarter selling
season. Inventories rose $8 million to $54 million in Q3'12 versus
$46 million in Q2'12. Additionally, accounts receivable increased in
the quarter due to higher usage of ValuePay installment sales." 
Conference Call / Webcast: Today, Wednesday, November 14 at 11 am ET 
WEBCAST/WEB REPLAY: http://www.media-server.com/m/p/7hni5d7c  
TELEPHONE: 866-825-3209; Passcode: 64100296 
Adjusted EBITDA 
 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 debt extinguishment, non-operating gains
(losses); non-cash impairment charges and write-downs; restructuring;
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), 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 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 
Adjusted
EBITDA to net loss, its most directly comparable GAAP financial
measure, in this release.  
About ValueVision Media/ShopNBC (www.shopnbc.com/ir)
 ValueVision
Media, Inc. operates ShopNBC, a multichannel electronic retailer that
enables customers to shop via TV, phone, Internet and mobile devices
and to interact via the ShopNBC website as well as Facebook, Twitter
and YouTube. The ShopNBC television network reaches 83 million cable
and satellite homes and is also available nationwide on PCs, tablets
and iPhone, Android and other mobile devices via live streaming at
www.shopnbc.com. ShopNBC's merchandise categories include Home &
Consumer Electronics, Beauty, Health & Fitness, Fashion &
Accessories, and Jewelry & Watch. Please visit www.shopnbc.com/ir for
more investor information. 
Forward-Looking Information
 This release contains 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 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; 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) 


 
                          VALUEVISION MEDIA, INC.                           
                              AND SUBSIDIARIES                              
                        CONSOLIDATED BALANCE SHEETS                         
               (In thousands except share and per share data)               
                                                                            
                                                  October 27,   January 28, 
                                                     2012          2012     
                                                 ------------  ------------ 
                                                  (Unaudited)               
                                                                            
                                   ASSETS                                   
Current assets:                                                             
  Cash and cash equivalents                      $     30,509  $     32,957 
  Restricted cash and investments                       2,100         2,100 
  Accounts receivable, net                             83,418        80,274 
  Inventories                                          53,884        43,476 
  Prepaid expenses and other                            5,363         4,464 
                                                 ------------  ------------ 
    Total current assets                              175,274       163,271 
Property and equipment, net                            25,587        27,992 
FCC broadcasting license                               23,111        23,111 
NBC Trademark License Agreement, net                    4,997         1,215 
Other Assets                                              833         2,871 
                                                 ------------  ------------ 
                                                 $    229,802  $    218,460 
                                                 ============  ============ 
                                                                            
                    LIABILITIES AND SHAREHOLDERS' EQUITY                    
                                                                            
Current liabilities:                                                        
  Accounts payable                               $     70,806  $     53,437 
  Accrued liabilities                                  32,652        37,842 
  Deferred revenue                                         85            85 
                                                 ------------  ------------ 
    Total current liabilities                         103,543        91,364 
                                                                            
                                                                            
Deferred revenue                                          442           507 
Term Loan                                                   -        25,000 
Long Term Credit Facility                              38,000             - 
                                                 ------------  ------------ 
    Total liabilities                                 141,985       116,871 
                                                                            
Commitments and Contingencies                                               
                                                                            
Shareholders' equity:                                                       
  Common stock, $.01 par value, 100,000,000                                 
   shares authorized; 48,939,486 and 48,560,205                             
   shares issued and outstanding                          490           486 
                                                                            
  Warrants to purchase 6,007,372 shares of                                  
   common stock                                           567           567 
                                                                            
  Additi
onal paid-in capital                          406,332       403,849 
                                                                            
  Accumulated deficit                                (319,572)     (303,313)
                                                 ------------  ------------ 
    Total shareholders' equity                         87,817       101,589 
                                                 ------------  ------------ 
                                                 $    229,802  $    218,460 
                                                 ============  ============ 
                                                                            
                                                                            
                          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 
                            Periods Ended                   Ended           
                     --------------------------  -------------------------- 
                                                                            
                      October 27,   October 29,   October 27,   October 29, 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
Net sales            $    137,592  $    135,187  $    409,320  $    410,857 
Cost of sales              86,802        84,945       255,818       255,955 
                     ------------  ------------  ------------  ------------ 
      Gross profit         50,790        50,242       153,502       154,902 
      Margin %               36.9%         37.2%         37.5%         37.7%
                                                                            
Operating expense:                                                          
  Distribution and                                                          
   selling                 46,762        47,577       142,308       140,366 
  General and                                                               
   administrative           4,242         4,824        13,446        14,796 
  Depreciation and                                                          
   amortization             3,174         3,210        10,026         9,278 
                     ------------  ------------  ------------  ------------ 
    Total operating                                                         
     expense               54,178        55,611       165,780       164,440 
                     ------------  ------------  ------------  ------------ 
Operating loss             (3,388)       (5,369)      (12,278)       (9,538)
                     ------------  ------------  ------------  ------------ 
                                                                            
Other expense:                                                              
  Interest income               7            17            11            61 
  Interest expense           (379)         (982)       (3,571)       (4,528)
  Gain on sale of                                                           
   assets                     100             -           100             - 
  Loss on debt                                                              
   extinguishment               -             -          (500)      (25,679)
                     ------------  ------------  ------------  ------------ 
    Total other                                                             
     expense                 (272)         (965)       (3,960)      (30,146)
                     ------------  ------------  ------------  ------------ 
                                                                            
Loss before income                                                          
 taxes                     (3,660)       (6,334)      (16,238)      (39,684)
                                                                            
Income tax provision          (15)          (16)          (21)          (52)
                     ------------  ------------  ------------  ------------ 
                                                                            
Net loss             $     (3,675) $     (6,350) $    (16,259) $    (39,736)
                     ============  ============  ============  ============ 
                                                                            
Net loss per common                                                         
 share               $      (0.08) $      (0.13) $      (0.33) $      (0.87)
                     ============  ============  ============  ============ 
                                                                            
Net loss per common                                                         
 share --- assuming                                                         
 dilution            $      (0.08) $      (0.13) $      (0.33) $      (0.87)
                     ============  ============  ============  ============ 
                                                                            
Weighted average                                                            
 number of common                                                           
 shares outstanding:                                                        
      Basic            48,931,464    48,472,205    48,807,749    45,752,867 
                     ============  ============  ============  ============ 
      Diluted          48,931,464    48,472,205    48,807,749    45,752,867 
                     ============  ============  ============  ============ 
                                                                            
                                                                            
                          VALUEVISION MEDIA, INC.                           
                              AND SUBSIDIARIES                              
                                                                            
               Reconciliation of Adjusted EBITDA to Net Loss:               
                                                                            
                         For the Three Month     For the Nine Month Periods 
                            Periods Ended                   Ended           
                     --------------------------  -------------------------- 
                                                                            
                      October 27,   October 29,   October 27,   October 29, 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
                                                                            
                                                                            
Adjusted EBITDA                                                             
 (000's)             $        561  $       (537) $        301  $      3,677 
Less:                                                                       
  Loss on debt                                                              
   extinguishment               -             -          (500)      (25,679)
  Gain on sale of                                                           
   assets                     100             -           100             - 
  Non-cash share-                                                           
   based  
                                                                  
   compensation              (725)       (1,561)       (2,403)       (3,737)
                     ------------  ------------  ------------  ------------ 
EBITDA (as defined)                                                         
 (a)                          (64)       (2,098)       (2,502)      (25,739)
                     ------------  ------------  ------------  ------------ 
                                                                            
                                                                            
A reconciliation of                                                         
 EBITDA to net loss                                                         
 is as follows:                                                             
                                                                            
EBITDA (as defined)                                                         
 (a)                          (64)       (2,098)       (2,502)      (25,739)
Adjustments:                                                                
  Depreciation and                                                          
   amortization            (3,224)       (3,271)      (10,176)       (9,478)
  Interest income               7            17            11            61 
  Interest expense           (379)         (982)       (3,571)       (4,528)
  Income taxes                (15)          (16)          (21)          (52)
                     ------------  ------------  ------------  ------------ 
Net loss             $     (3,675) $     (6,350) $    (16,259) $    (39,736)
                     ============  ============  ============  ============ 

 
(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 Adjusted EBITDA as EBITDA excluding debt
extinguishment, non-operating gains (losses); non-cash impairment
charges and writedowns, restructuring 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 "core" 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 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), net 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. Adjusted EBITDA may not
be comparable to similarly entitled measures reported by other
companies. 
Contact:
Media Relations: 
Dawn Zaremba 
ShopNBC 
dzarembal@shopnbc.com
(952) 943-6043 
Investors:
David Collins, Eric Lentini
Catalyst Global LLC
vvtv@catalyst-ir.com
(212) 924-9800 o 
(917) 734-0339 m 
 
 
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