Blue Nile Announces First Quarter 2013 Financial Results

Blue Nile Announces First Quarter 2013 Financial Results

             First Quarter Sales Increased 16.9% to $97.1 million

             First Quarter Earnings Per Diluted Share Total $0.07

SEATTLE, May 2, 2013 (GLOBE NEWSWIRE) -- Blue Nile, Inc. (Nasdaq:NILE), the
leading online retailer of diamonds and fine jewelry, today reported financial
results for its first quarter ended March 31, 2013.

Net sales increased 16.9% to $97.1 million for the first quarter ended March
31, 2013. Operating income for the quarter totaled $1.2 million, representing
an operating margin of 1.2% of net sales. Net income totaled $0.8 million, or
$0.07 per diluted share.

Non-GAAP adjusted EBITDA for the quarter totaled $3.1 million. For the
trailing twelve month period ended March 31, 2013, net cash provided by
operating activities totaled $21.3 million compared to $18.4 million for the
trailing twelve month period ended April 1, 2012. For the trailing twelve
month period ended March 31, 2013, non-GAAP free cash flow totaled $18.6
million.

"We are pleased to announce significant revenue growth along with expanding
profitability in the first quarter of 2013," said Harvey Kanter, President and
Chief Executive Officer. "Clearly our value proposition continues to resonate
with consumers, both in the US and internationally. We look to build on this
momentum through our ongoing investments to enhance our customers' website
experience, present a deep assortment of compelling products, and provide
world class customer service."

Highlights

  *U.S. engagement net sales for the first quarter 2013 increased 19.0% to
    $55.3 million, compared to $46.4 million for the first quarter of 2012.
  *U.S. non-engagement net sales for the first quarter 2013 increased 7.4% to
    $24.2 million, compared to $22.6 million for the first quarter of 2012.
  *International net sales for the first quarter 2013 were $17.6 million,
    compared to $14.1 million for the first quarter 2012, an increase of
    24.8%. Excluding the impact from changes in foreign exchange rates,
    international net sales increased 25.9%.
  *Gross profit for the first quarter 2013 totaled $17.6 million. As a
    percent of net sales, gross profit was 18.2% compared to 18.4% for the
    first quarter of 2012.
  *Selling, general and administrative expenses for the first quarter 2013
    were $16.5 million, compared to $15.1 million in the first quarter of
    2012. Selling, general and administrative expenses includes stock-based
    compensation expense of $1.1 million for the first quarter in 2013 and
    2012.
  *Earnings per diluted share for the first quarter 2013 included stock based
    compensation expense of $0.05 compared to $0.05 for the first quarter of
    2012.
  *At the end of the first quarter 2013, cash and cash equivalents totaled
    $40.5 million.

Financial Guidance

The following forward-looking statements reflect Blue Nile's expectations as
of May 2, 2013. Actual results may be materially affected by many factors,
such as consumer spending, economic conditions and the various factors
detailed below.

Expectations for the second quarter of 2013 (Quarter Ending June 30, 2013):

  *Net sales are expected to be between $100 million and $105 million.
  *Earnings per diluted share are projected at $0.13 to $0.17.

Expectations for the fiscal year 2013 (Year Ending December 29, 2013):

  *Net sales are expected to be between $440 million and $470 million.
  *Earnings per diluted share are projected at $0.75 to $0.85.

Forward-Looking Statements

This press release contains forward-looking statements that include risks and
uncertainties, including, without limitation, all statements related to future
financial and business performance, market opportunity and plans to grow our
business. Words such as "expect," "anticipate," "believe," "project," "will"
and similar expressions are intended to identify forward-looking statements.
These forward-looking statements are based upon our current expectations.
Forward-looking statements involve risks and uncertainties. Our actual results
and the timing of events could differ materially from those anticipated in
such forward-looking statements as a result of these risks and uncertainties,
which include, without limitation, risks related to general economic
conditions, consumer spending (particularly spending by high-end consumers),
product assortment, our fluctuating operating results, currency fluctuations,
seasonality in our business, our ability to acquire products on reasonable
terms, our online business model, demand for our products, our ability to
attract customers in a cost effective manner, the strength of our brand,
competition, fraud, system interruptions, our ability to fulfill orders and
other risks detailed in our filings with the Securities and Exchange
Commission, including our quarterly reports on Form 10-Q and our Annual Report
on Form 10-K for the year ended December 30, 2012. Additional information will
also be set forth in our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2013, which we expect to file with the Securities and Exchange
Commission on or before May 10, 2013. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this press release. All forward-looking statements are qualified in their
entirety by this cautionary statement, and Blue Nile undertakes no obligation
to revise or update any forward-looking statements to reflect events or
circumstances after the date hereof.

Conference Call

Blue Nile will host a conference call to discuss its first quarter financial
results today at 2:00 p.m. PT/5:00 p.m. ET. A live webcast of the conference
call may be accessed athttp://investor.bluenile.com. Following the completion
of the call, a recorded replay of the webcast will be available for 30 days at
the same Internet address. This call will contain forward-looking statements
and other material information regarding Blue Nile's financial and operating
results. In the event that any non-GAAP financial measure is discussed on the
conference call that is not described in this release, related complementary
information will be made available at http://investor.bluenile.com as soon as
practicable after the conclusion of the conference call.

Non-GAAP Financial Measures

To supplement Blue Nile's consolidated financial statements presented in
accordance with generally accepted accounting principles ("GAAP"), Blue Nile
uses non-GAAP adjusted EBITDA and non-GAAP free cash flow as measures of
certain components of financial performance. Blue Nile defines non-GAAP
adjusted EBITDA as earnings before interest and other income, taxes,
depreciation and amortization, adjusted to exclude the effects of stock-based
compensation expense. Blue Nile defines non-GAAP free cash flow as net cash
provided by (used in) operating activities less cash outflows for purchases of
fixed assets, including internal-use software and website development. Blue
Nile reports sales information in accordance with GAAP. Internally, management
monitors its sales performance on a non-GAAP basis that eliminates the
positive or negative effects that result from translating international sales
into U.S. dollars (the "constant exchange rate basis"). Blue Nile's management
does not itself, nor does it suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. Investors should also
note that the non-GAAP financial measures used by Blue Nile may not be the
same non-GAAP financial measures, and may not be calculated in the same
manner, as that of other companies. Whenever Blue Nile uses such non-GAAP
financial measures, it provides a reconciliation of non-GAAP financial
measures to the most closely applicable GAAP financial measures. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most directly
comparable GAAP financial measures.

Blue Nile's management believes that non-GAAP adjusted EBITDA and non-GAAP
free cash flow, as defined, as well as international sales on a constant
exchange rate basis provide meaningful supplemental information to the company
and to investors. Blue Nile believes that both management and investors
benefit from referring to these non-GAAP measures in assessing the performance
of Blue Nile and when planning and forecasting future periods. Further,
management believes that the inclusion of the non-GAAP adjusted EBITDA and
non-GAAP free cash flow calculations provide consistency in Blue Nile's
financial reporting and comparability with similar companies in Blue Nile's
industry. Management believes the constant exchange rate measurement provides
a more representative assessment of the sales performance and provides better
comparability between reporting periods.

A reconciliation of non-GAAP adjusted EBITDA to net income is as follows (in
thousands):

                             Quarter ended  Quarter ended
                             March31, 2013 April1, 2012
Net income                    $832         $154
Income tax expense            470            118
Other income, net             (144)          (53)
Depreciation and amortization 777            896
Stock-based compensation      1,164          1,170
Adjusted EBITDA               $3,099       $2,285

A reconciliation of differences of non-GAAP free cash flow from the comparable
GAAP measure of net cash provided by (used in) operating activities is as
follows (in thousands):

                                      Quarter ended       Quarter ended
                                      March31, 2013      April1, 2012
Net cash used in operating activities  $(44,406)         $(31,274)
Purchases of fixed assets, including                      
internal-use
software and website development       (911)               (770)
Non-GAAP free cash flow                $(45,317)         $(32,044)
                                                         
                                                         
                                      Twelve months ended Twelve months ended
                                      March31, 2013      April1, 2012
Net cash provided by operating         $21,312           $18,446
activities
Purchases of fixed assets, including                      
internal-use
software and website development       (2,666)             (5,112)
Non-GAAP free cash flow                $18,646           $13,334

The following table reconciles year-over-year international net sales
percentage increases (decreases) from the GAAP sales measures to the non-GAAP
constant exchange rate basis:

Quarter ended                           Effectofforeign  Year over year
March 31, 2013    Yearoveryeargrowth exchangemovements growth on constant
                                                           exchange rate basis
International net 24.8%                 (1.1)%             25.9%
sales
Quarter ended                           Effect of foreign  Year over year
April 1, 2012     Year over year growth exchange movements growth on constant
                                                           exchange rate basis
International net 9.3%                  0.8%               8.5%
sales

About Blue Nile, Inc.

Blue Nile, Inc. is the leading online retailer of diamonds and fine jewelry.
The Company delivers the ultimate customer experience, providing consumers
with a superior way to buy engagement rings, wedding rings and fine jewelry.
Blue Nile offers in-depth educational materials and unique online tools that
place consumers in control of the jewelry shopping process. The Company has
some of the highest quality standards in the industry and offers thousands of
independently certified diamonds and fine jewelry at prices significantly
below traditional retail. Blue Nile can be found online at www.bluenile.com.
Blue Nile's shares are traded on the Nasdaq Stock Market LLC under the symbol
NILE.

BLUE NILE, INC.
Condensed Consolidated Balance Sheets
(in thousands)
                                                               
                                                    March31,   December30,
                                                    2013        2012
                                                    (unaudited) 
ASSETS                                                          
Current assets:                                                 
Cash and cash equivalents                            $40,518   $87,017
Trade accounts receivable                            1,853       2,578
Other accounts receivable                            745         907
Inventories                                          34,013      33,270
Deferred income taxes                                749         926
Prepaids and other current assets                    930         1,229
Total current assets                                 78,808      125,927
Property and equipment, net                          7,800       7,876
Intangible assets, net                               181         195
Deferred income taxes                                8,044       7,786
Note receivable                                      2,000       2,000
Other investments                                    2,000       2,000
Other assets                                         119         117
Total assets                                         $98,952   $145,901
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities:                                            
Accounts payable                                     $74,547   $116,209
Accrued liabilities                                  6,396       12,439
Current portion of long-term financing obligation    60          60
Current portion of deferred rent                     246         246
Total current liabilities                            81,249      128,954
Long-term financing obligation, less current portion 610         625
Deferred rent, less current portion                  2,141       2,188
Other long-term liabilities                          25          25
Stockholders' equity:                                           
Common stock                                         21          21
Additional paid-in capital                           198,691     197,282
Accumulated other comprehensive loss                 (144)       (100)
Retained earnings                                    83,715      82,883
Treasury stock                                       (267,356)   (265,977)
Total stockholders' equity                           14,927      14,109
Total liabilities and stockholders' equity           $98,952   $145,901


BLUE NILE, INC.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
                                                     
                                            Quarter ended
                                            March31, April1,
                                            2013      2012
Net sales                                    $97,111 $83,103
Cost of sales                                79,465    67,825
Gross profit                                 17,646    15,278
Selling, general and administrative expenses 16,488    15,059
Operating income                             1,158     219
Other income, net                                     
Interest income, net                         42        40
Other income, net                            102       13
Total other income, net                      144       53
Income before income taxes                   1,302     272
Income tax expense                           470       118
Net income                                   $832    $154
Basic net income per share                   $0.07   $0.01
Diluted net income per share                 $0.07   $0.01
                                                     
Shares used for computation (in thousands):           
Basic                                        12,482    13,853
Diluted                                      12,693    14,114


BLUE NILE, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
                                                          Year to date ended
                                                          March31, April1,
                                                          2013      2012
Operating activities:                                               
Net income                                                 $832    $154
Adjustments to reconcile net income to net cash used in             
operating activities:
Depreciation and amortization                              777       896
Loss on disposal of property and equipment                 —         24
Stock-based compensation                                   1,184     1,200
Deferred income taxes                                      (81)      281
Tax deficiency from exercise of stock options              (33)      (141)
Excess tax benefit from exercise of stock options          (14)      (6)
Changes in assets and liabilities:                                  
Receivables                                                887       2,983
Inventories                                                (743)     (1,181)
Prepaid federal income taxes                               —         (396)
Prepaid expenses and other assets                          297       129
Accounts payable                                           (41,422)  (31,280)
Accrued liabilities                                        (6,043)   (3,901)
Deferred rent and other                                    (47)      (36)
Net cash used in operating activities                      (44,406)  (31,274)
Investing activities:                                               
Purchases of property and equipment                        (911)     (770)
Net cash used in investing activities                      (911)     (770)
Financing activities:                                               
Repurchase of common stock                                 (1,379)   —
Proceeds from stock option exercises                       219       3,889
Excess tax benefit from exercise of stock options          14        6
Principal payments under long-term financing obligation    (15)      (15)
Net cash (used in) provided by financing activities        (1,161)   3,880
                                                                   
Effect of exchange rate changes on cash and cash           (21)      21
equivalents
                                                                   
Net decrease in cash and cash equivalents                  (46,499)  (28,143)
                                                                   
Cash and cash equivalents, beginning of period             87,017    89,391
Cash and cash equivalents, end of period                   $40,518 $61,248
                                                                   
Supplemental disclosure of cash flow information:                   
Cash paid for income taxes                                 $2,895  $1,145

CONTACT: Blue Nile, Inc.
         Nancy Shipp, 206.388.3626 (Investors)
         nancys@bluenile.com
         or
         Josh Holland, 206.336.6773 (Media)
         joshh@bluenile.com

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