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iMedia Brands Reports Second Quarter 2020 Results

08/18/2020

Highest Q2 Net Income in 20 Years
Highest Quarterly Adjusted EBITDA in Company’s History

MINNEAPOLIS, Aug. 18, 2020 (GLOBE NEWSWIRE) -- iMedia Brands, Inc. (the “Company”) (NASDAQ: IMBI) today announced results for the second quarter ended August 1, 2020. 

Second Quarter 2020 Summary & Recent Highlights

  • Net Income was $1.1 million, compared to a net loss of $10.2 million for Q2 prior year.
  • Adjusted EBITDA was $10.7 million, compared to $0.2 million for Q2 prior year.
  • Net sales were $124.5 million, a decline of 5.3% compared to Q2 prior year.
  • Gross margin was 37.2%, an improvement of 90-basis points compared to Q2 prior year.
  • The quarterly Active Customer file grew 1% year-over-year, which was the first time in four years the Company’s active customer file posted growth for a quarter.
  • ShopHQ launched 25 exciting new brands in Q2 and 15 in Q1, representing the highest number of new product launches for any six-month period in the Company’s 30-year history. Revenue for these innovative new product launches generated 19% of the Company’s total revenue for the first two quarters of 2020, which was the highest percent of new product revenue during any six-month period in the Company’s 30-year history.
  • Q2 new product launches included:
    • Fashion & Accessories: GH Bass Footwear; DKNY Fashions; Karl Lagerfeld Paris; Guess Handbags; Fossil Handbags; Oakley Sunglasses; Dolce & Gabbana Eyewear; Elan Fashions; and Heather Dubrow’s Closet.
    • Beauty: Gucci Fragrances; Prada Fragrances; Estee Lauder Fragrances; Melanie Mills Skincare; and Foreo Beauty Tools.   
    • Home: Lladro Collectibles; Spode Dinnerware; SeaBear Crab; Glenda’s Kitchen; Coin Shoppe; Tiller and Hatch; and Wagner Home Improvement.
    • Health: Ladders Nutrition by Lebron James & Arnold Schwarzenegger; Sankom Shapewear; Bee Alive Royal Jelly; Radiant Greens; and Foligain Hair Health.
  • ShopHQ’s increasing viewership trends continued to be driven by its static programming calendar strategy introduced in the final quarter of 2019. For example, Fashion Talk with Fatima & Kathy on Mondays and Thursdays, and Invicta Collectors Room on Thursdays, both achieved double-digit viewership growth year-over-year in Q2.

CEO Commentary

“One year ago, we defined a new innovative interactive media strategy and began to implement it within a leaner, more entrepreneurial culture,” said Tim Peterman, CEO of iMedia Brands. “Today’s financial report card reflects that success – smarter decision-making by a smaller group of entrepreneurial employees who love operational discipline and calculated risk taking.”

Second Quarter 2020 Results

SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average selling price and EPS)
                         
    Q2 2020
8/1/2020
  Q2 2019
8/3/2019
  Change   YTD 2020
8/1/2020
  YTD 2019
8/3/2019
  Change
                         
Net Sales $ 124.5     $ 131.5     (5.3%)     $ 220.3     $ 263.0     (16.2%)  
Gross Margin %   37.2%       36.3%     90 bps       37.1%       32.3%     480 bps  
Adjusted EBITDA $ 10.7     $ 0.2     4,987%     $ 9.1     $ (8.3)     N/A  
Net Income (Loss) $ 1.1     $ (10.2)     N/A     $ (5.8)     $ (31.2)     81%  
EPS $ 0.11     $ (1.35)     N/A     $ (0.65)     $ (4.36)     85%  
                             
Net Shipped Units (000s)   1,763       1,750     1%       3,111       3,649     (15%)  
Average Selling Price (ASP) $63     $68     (7%)     $63     $65     (3%)  
Return Rate %   11.9%       19.8%     (790 bps)       14.6%       20.0%     (540 bps)  
ShopHQ Digital Net Sales %   50.1%       52.7%     (260 bps)       51.4%       52.6%     (120 bps)  
Total Customers - 12 Month Rolling (000s)   1,014       1,147     (12%)       N/A       N/A     N/A  
                                             
% of ShopHQ Net Merchandise Sales by Category                                          
  Jewelry & Watches   36%       48%           40%       46%        
  Home & Consumer Electronics   11%       19%           13%       19%        
  Beauty & Wellness   43%       19%           35%       19%        
  Fashion & Accessories   10%       14%           12%       16%        
  Total   100%       100%           100%       100%        

Liquidity and Capital Resources

As of August 1, 2020, total unrestricted cash was $18.7 million compared to $16.2 million at the end of the first quarter of fiscal 2020. The Company also had an additional $9.4 million of unused availability on its revolving credit facility.

In light of the macroeconomic conditions and COVID-19, the Company is closely monitoring impacts and potential future impacts to its operations, supply chain, liquidity or financial results.

Outlook

In Q3 and Q4, we believe the Company will post Adjusted EBITDA in the mid-to-high single digit millions. We also continue to believe that the pandemic’s effect on the Company will be reduced because we have a direct-to-consumer revenue model that serves customers who seek to buy goods from the comfort of their own homes, and we are not dependent on the traditional advertising dollars from national advertisers who are impacted by the continued disruption of the brick and mortar shopping experience.   

Conference Call

The Company will hold a conference call today at 8:30 a.m. Eastern time to discuss its second quarter 2020 results.

Date: Tuesday, August 18, 2020
Toll-free dial-in number: (877) 407-9039
International dial-in number: (201) 689-8470
Conference ID: 13707534

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the iMedia Brands website at www.imediabrands.com.

A replay of the conference call will be available after 11:30 a.m. Eastern time on the same day through September 1, 2020.

Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13707534

About iMedia Brands, Inc.

iMedia Brands, Inc. (Nasdaq: IMBI) is a leading interactive media company that manages a growing portfolio of niche lifestyle television networks, niche advertisers and complementary media commerce services.  Its brand portfolio spans multiple business models and product categories and includes ShopHQ, Bulldog Shopping Network, ShopHQ Health, Shop LaVenta, Float Left Interactive and Media Commerce Services. Please visit www.imediabrands.com for more investor information.

Contacts:

Investors:
Gateway Investor Relations
Cody Slach
IMBI@gatewayir.com
(949) 574-3860

Media:
press@imediabrands.com
(800) 938-9707


iMEDIA BRANDS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
             
        August 1,   February 1,
          2020       2020  
        (Unaudited)    
             
ASSETS
             
Current assets:      
  Cash $ 18,703     $ 10,287  
  Accounts receivable, net   58,137       63,594  
  Inventories   61,627       78,863  
  Current portion of television distribution rights, net   18,221       -  
  Prepaid expenses and other   7,013       8,196  
    Total current assets   163,701       160,940  
Property and equipment, net   44,882       47,616  
Television distribution rights, net   7,263       -  
Other assets   3,931       4,187  
      Total Assets $ 219,777     $ 212,743  
             
LIABILITIES AND SHAREHOLDERS' EQUITY
             
             
Current liabilities:      
  Accounts payable $ 79,812     $ 83,659  
  Accrued liabilities   36,839       40,250  
  Current portion of television distribution rights obligation   21,221       -  
  Current portion of long term credit facility   2,714       2,714  
  Current portion of operating lease liabilities   278       704  
  Deferred revenue   188       141  
    Total current liabilities   141,052       127,468  
             
             
Other long term liabilities   9,273       335  
Long term credit facilities   52,006       66,246  
    Total liabilities   202,331       194,049  
             
Commitments and contingencies      
             
Shareholders' equity:      
  Preferred stock, $.01 par value, 400,000 shares authorized;      
    zero shares issued and outstanding   -       -  
  Common stock, $.01 par value, 29,600,000 and 14,600,000 shares authorized;    
    as of August 1, 2020 and February 1, 2020; 10,141,649 and 8,208,227      
    shares issued and outstanding as of August 1, 2020 and February 1, 2020   101       82  
  Additional paid-in capital   457,340       452,833  
  Accumulated deficit   (439,995 )     (434,221 )
    Total shareholders' equity   17,446       18,694  
      Total Liabilities and Shareholders' Equity $ 219,777     $ 212,743  
             


 
iMEDIA BRANDS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
                     
                     
        For the Three-Month Periods Ended   For the Six-Month Periods Ended
                     
        August 1,   August 3,   August 1,   August 3,
          2020       2019       2020       2019  
Net sales $ 124,515     $ 131,503     $ 220,349     $ 263,024  
Cost of sales   78,223       83,777       138,500       178,005  
      Gross profit   46,292       47,726       81,849       85,019  
      Margin %   37.2%       36.3%       37.1%       32.3%  
Operating expense:              
  Distribution and selling   31,875       43,521       65,610       90,385  
  General and administrative   5,104       5,532       10,471       12,401  
  Depreciation and amortization   6,842       2,502       8,723       4,181  
  Restructuring costs   -       5,165       209       5,165  
  Executive and management transition costs   -       310       -       2,341  
    Total operating expense   43,821       57,030       85,013       114,473  
Operating Income/(Loss)   2,471       (9,304 )     (3,164 )     (29,454 )
                     
Other income (expense):              
  Interest income   -       6       1       11  
  Interest expense   (1,402 )     (864 )     (2,581 )     (1,694 )
    Total other expense   (1,402 )     (858 )     (2,580 )     (1,683 )
                     
Income/(Loss) before income taxes   1,069       (10,162 )     (5,744 )     (31,137 )
                     
Income tax provision   (15 )     (15 )     (30 )     (30 )
                     
Net Income/(Loss) $ 1,054     $ (10,177 )   $ (5,774 )   $ (31,167 )
                     
Net Income/(Loss) per common share $ 0.11     $ (1.35 )   $ (0.65 )   $ (4.36 )
                     
Net Income/(Loss) per common share              
    ---assuming dilution $ 0.11     $ (1.35 )   $ (0.65 )   $ (4.36 )
                     
Weighted average number of              
common shares outstanding:              
      Basic   9,532,369       7,550,265       8,911,580       7,141,055  
      Diluted   9,896,729       7,550,265       8,911,580       7,141,055  
                     


 
iMEDIA BRANDS, INC.
AND SUBSIDIARIES
PERFORMANCE MEASURES BY SEGMENT
($ in Millions)
                       
  For the Three-Month Period Ended   For the Three-Month Period Ended
  August 1, 2020   August 3, 2019
                       
  ShopHQ   Emerging   Consolidated   ShopHQ   Emerging   Consolidated
                       
Net Sales $ 120.7     $ 3.8     $ 124.5     $ 130.7     $ 0.8     $ 131.5  
Gross Profit   44.7       1.6       46.3       47.7       0.1       47.7  
Operating Income/(Loss)   3.7       (1.3 )     2.4       (7.8 )     (1.5 )     (9.3 )
Adjusted EBITDA   11.9       (1.1 )     10.7       0.1       0.1       0.2  
                       
       
  For the Six-Month Period Ended   For the Six-Month Period Ended
  August 1, 2020   August 3, 2019
                       
  ShopHQ   Emerging   Consolidated   ShopHQ   Emerging   Consolidated
                       
Net Sales $ 214.5     $ 5.9     $ 220.3     $ 261.5     $ 1.5     $ 263.0  
Gross Profit   79.7       2.2       81.8       84.8       0.2       0.0  
Operating Income/(Loss)   (0.1 )     (3.1 )     (3.2 )     (27.0 )     (2.4 )     (29.5 )
Adjusted EBITDA   11.9       (2.8 )     9.1       (7.6 )     (0.7 )     (8.3 )
                       


 
iMEDIA BRANDS, INC.
AND SUBSIDIARIES
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
(Unaudited)
(in thousands)
                       
  For the Three-Month Period Ended   For the Three-Month Period Ended
  August 1, 2020   August 3, 2019
                       
  ShopHQ   Emerging   Consolidated
  ShopHQ   Emerging   Consolidated
                       
Net Income (Loss)         $ 1,054             $ (10,177 )
Adjustments:                      
Depreciation and amortization           7,840               3,511  
Interest income           -               (6 )
Interest expense           1,402               864  
Income taxes           15               15  
EBITDA (as defined) $ 11,427   $ (1,116 )   $ 10,311     $ (5,094 )   $ (699 )   $ (5,793 )
                       
A reconciliation of EBITDA to Adjusted EBITDA is as follows:                    
EBITDA (as defined) $ 11,427   $ (1,116 )   $ 10,311     $ (5,094 )   $ (699 )   $ (5,793 )
Adjustments:                      
Transaction, settlement and integration costs (a)   315     -       315       -       -       -  
Restructuring costs   -     -       -       4,337       828       5,165  
Executive and management transition costs   -     -       -       310       -       310  
Rebranding costs   -     -       -       238       -       238  
Inventory Impairment write-down   -     -       -       -       -       -  
Non-cash share-based compensation expense   108     -       108       350       (59 )     291  
Adjusted EBITDA $ 11,850   $ (1,116 )   $ 10,734     $ 141     $ 70     $ 211  
                       
                       
  For the Six-Month Period Ended   For the Six-Month Period Ended
  August 1, 2020   August 3, 2019
                       
  ShopHQ   Emerging   Consolidated
  ShopHQ   Emerging   Consolidated
                       
Net Loss         $ (5,774 )           $ (31,167 )
Adjustments:                      
Depreciation and amortization           10,745               6,140  
Interest income           (1 )             (11 )
Interest expense           2,581               1,694  
Income taxes           30               30  
EBITDA (as defined) $ 10,364   $ (2,783 )   $ 7,581     $ (21,757 )   $ (1,557 )   $ (23,314 )
                       
A reconciliation of EBITDA to Adjusted EBITDA is as follows:                    
EBITDA (as defined)                      
Adjustments: $ 10,364   $ (2,783 )   $ 7,581     $ (21,757 )   $ (1,557 )   $ (23,314 )
Transaction, settlement and integration costs (b)   574     -       574       -       -       -  
Restructuring costs   209         209       4,337       828       5,165  
Executive and management transition costs   -     -       -       2,341       -       2,341  
Rebranding costs   -     -       -       238       -       238  
Inventory Impairment write-down   -     -       -       6,050       -       6,050  
Non-cash share-based compensation expense   723     -       723       1,205       52       1,257  
Adjusted EBITDA $ 11,870   $ (2,783 )   $ 9,087     $ (7,586 )   $ (677 )   $ (8,263 )
                       


(a) Transaction, settlement and integration costs for the quarter ended August 1, 2020 of $315,000 include COVID-related costs.
(b) Transaction, settlement and integration costs for the six months ended August 1, 2020 of $574,000 include consulting fees incurred to explore additional loan financings and COVID-related costs.


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; restructuring costs; non-cash impairment charges and write downs; transaction, settlement, and integration costs, net; and non-cash share-based compensation expense. The Company has included the “Adjusted EBITDA” measure in its EBITDA reconciliation in order to adequately assess the operating performance of its television and online businesses and in order to maintain comparability to its analyst's coverage and financial guidance, when given. Management believes that the Adjusted EBITDA measure allows investors to make a meaningful comparison between its 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. EBITDA and Adjusted EBITDA are both non-GAAP measures and 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 titled 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 the expected impact of COVID-19 on television retailing are forward-looking. The Company often use words such as anticipates, believes, estimates, expects, intends, seeks, 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, including COVID-19; 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 the Company’s programming and the associated fees or estimated cost savings from contract renegotiations; the Company’s ability to establish and maintain acceptable commercial terms with third-party vendors and other third parties with whom the Company has contractual relationships, and to successfully manage key vendor and shipping relationships and develop key partnerships and proprietary and exclusive brands; the ability to manage operating expenses successfully and the Company’s working capital levels; the ability to remain compliant with the Company’s credit facilities covenants; customer acceptance of the Company’s branding strategy and its repositioning as a video commerce Company; the ability to respond to changes in consumer shopping patterns and preferences, and changes in technology and consumer viewing patterns; changes to the Company’s management and information systems infrastructure; challenges to the Company’s 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 the Company’s 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 its programming; disruptions in the Company’s distribution of its network broadcast to customers; the Company’s ability to protect its intellectual property rights; our ability to obtain and retain key executives and employees; the Company’s ability to attract new customers and retain existing customers; changes in shipping costs; expenses related to the actions of activist or hostile shareholders; the Company’s 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 the Company’s most recently filed Form 10-K and any additional risk factors identified in its periodic reports since the date of such Form 10-K. More detailed information about those factors is set forth in the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. the Company’s is under no obligation (and expressly disclaim any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise. 


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Source: iMedia Brands, Inc.

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