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iMedia Brands Reports Second Quarter 2021 Results, Increases 2021 Guidance

08/24/2021

MINNEAPOLIS, Aug. 24, 2021 (GLOBE NEWSWIRE) -- iMedia Brands, Inc. (the “Company” or “IMBI”) (NASDAQ: IMBI) today announced results for the second quarter ended July 31, 2021.

“Q2 represented a significant achievement for us,” said Tim Peterman, CEO of IMBI. “Despite short-term logistic challenges that caused inventory receipt delays, we continued to optimize our existing television networks and consumer brands while strengthening our balance sheet and completing the acquisition of a leading video advertising platform that we believe, when combined with our first party customer data and our OTT App platform, Float Left, will become online publishers’ most trusted video advertising platform. Strategically, our goal remains the same - to scale our television networks and consumer brands while improving our digital services offerings because we believe those successes will continue to accelerate our timeline to becoming the leading single-source partner to brands and advertisers seeking to entertain and transact with customers using interactive video.”

Second Quarter and Year-to-Date 2021 Summary & Recent Highlights

  • Q2 12-month rolling active customers grew by 9% compared to same prior-year period, driven by 40% growth in new customers. July 2021 marked the 10th consecutive month of year-over-year new customer growth and the best overall customer file growth rate since April 2010. 
  • Q2 net sales were $113.4 million, a decrease of 9% compared to the same prior-year period, driven by the Company experiencing material delays in seasonal inventory receipts of its best-selling direct-import products resulting from the industry-wide container shortages and congestion delays at U.S. ports.
  • Year-to-date net sales were $226.6 million, which was 3% growth compared to the same prior year period and represent the strongest year-over-year net sales growth in the Company’s first two fiscal quarters in seven years. This success was driven primarily by the 66 new merchandise brand launches occurring year-to-date, which was a 65% increase in new brand launches compared to the same prior year period.
  • On June 28th, 2021, ShopHQ launched in 20+ million high-definition homes in top U.S. markets, including New York City, Los Angeles, San Francisco, Philadelphia, Dallas, Washington DC, Houston, and Boston through an affiliation agreement with RNN.
  • Q2 gross margin was 42.3%, a 510-basis point improvement over the same prior-year period. Year-to-date gross margin was 41.5%, a 430-basis point improvement over the same prior-year period.
  • Q2 net loss attributable to shareholders was ($4.2) million, a $5.3 million decrease from the same prior-year period. Year-to-date net loss attributable to shareholders was ($7.5) million, a $1.7 million decrease from the same prior-year period.
  • Q2 adjusted EBITDA was $8.3 million, a $2.4 million decrease from the same prior-year period. Year-to-date adjusted EBITDA was $16.4 million, a $7.3 million increase or 80% improvement, over the same prior-year period and the highest Q2 year-to-date adjusted EBITDA in the Company’s history.
  • Strategic Acquisition of Leading Video Advertising Platform: On July 30, 2021, the Company closed on the acquisition of Synacor’s Portal and Advertising business segment. The Company has relaunched this business as iMedia Digital Services (“iMDS”) and will offer iMedia’s existing OTT App platform, Float Left (www.floatleft.tv), as one of its products. iMedia expects this transaction to be accretive and expects iMDS to generate at least $45 million in profitable revenue over the next twelve months.
  • Strengthening Its Balance Sheet: On June 14, 2021, the Company closed on a common stock equity raise, generating proceeds of $40.3 million, net of discounts, commissions, and other offering costs. On July 30, 2021, the Company closed on a new, expanded $108.5 million debt financing facility to replace its previous facility.

Second Quarter and Year-to-Date 2021 Results

SUMMARY RESULTS AND KEY OPERATING METRICS  
($ Millions, except average selling price and EPS)  
                             
      Q2
7/31/2021
  Q2
8/1/2020
  Q2
Change
  YTD 2021
7/31/2021
  YTD 2020
8/1/2020
 
Change
 
                             
Net Sales   $ 113.4     $ 124.5     (9 %)   $ 226.6     $ 220.3     3 %  
                             
Gross Margin %     42.3 %     37.2 %   510 bps       41.5 %     37.1 %   430 bps    
                             
Net loss attributable to non-controlling interest $ (0.1 )   $ -     N/A     $ (0.3 )   $ -     N/A    
                             
Net loss attributable to shareholders   $ (4.2 )   $ 1.1     (486 %)   $ (7.5 )   $ (5.8 )   (30 %)  
                             
EPS   $ (0.22 )   $ 0.11     (310 %)   $ (0.43 )   $ (0.65 )   34 %  
                             
Adjusted EBITDA   $ 8.3     $ 10.7     (23 %)   $ 16.4     $ 9.1     81 %  
                             
Net Shipped Units (000s)     1,521       1,763     (14 %)     3,034       3,111     (2 %)  
Average Selling Price (ASP)   $ 67     $ 64     5 %   $ 66     $ 63     5 %  
Return Rate %     15.5 %     11.9 %   360 bps       16.1 %     14.6 %   150 bps    
ShopHQ Digital Net Sales %     47.2 %     50.1 %   (290 bps)       49.4 %     51.4 %   (200 bps)    
Total Customers - 12 Month Rolling (000s)     1,109       1,014     9 %   N/A     N/A     N/A    
                             
% of ShopHQ Net Merchandise Sales by Category                      
  Jewelry & Watches     49 %     36 %         48 %     40 %      
  Home & Consumer Electronics     17 %     11 %         16 %     13 %      
  Beauty & Health     20 %     43 %         21 %     35 %      
  Fashion & Accessories     14 %     10 %         15 %     12 %      
  Total     100 %     100 %         100 %     100 %      
                             

 

Liquidity and Capital Resources

As of July 31, 2021, total unrestricted cash was $20.9 million, an increase of $5.4 million from the prior year-end. The Company also had an additional $13.5 million of unused availability on its new revolving credit facility.

Increased Outlook

For Q3 2021, the Company anticipates reporting at least $9 million of adjusted EBITDA and approximately $127 million in net sales, which is approximately 17% growth in net sales compared to the same prior year period.

For the full year 2021, the Company anticipates reporting full year adjusted EBITDA between $37 and $40 million, which is an increase from its previous guidance range of between $35 and $37 million. In addition, the Company anticipates reporting full year net sales of approximately $502 million, which is a $12 million increase from management’s Q1 guidance.

Conference Call

The Company will hold a conference call today at 8:30 a.m. Eastern time to discuss its second quarter 2021 results.

Date: Tuesday, August 24, 2021
Toll-free dial-in number: (877) 407-9039
International dial-in number: (201) 689-8470
Conference ID: 13722262

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 7, 2021.

Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13722262

About iMedia Brands, Inc.

iMedia Brands, Inc. (Nasdaq: IMBI) is a leading interactive media company that owns a growing portfolio of TV Networks, Consumer Brands and Digital Services that together position the Company as a leading single-source partner to television advertisers and consumer brands seeking to entertain and transact with customers using interactive video.

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)
                 
            July 31,   January 30,
            2021   2021
            (Unaudited)    
                 
ASSETS
Current assets:          
  Cash     $ 20,918     $ 15,485  
  Restricted Cash       2,192       -  
  Accounts receivable, net       64,324       61,951  
  Inventories       76,735       68,715  
  Current portion of television broadcast rights, net     24,972       19,725  
  Prepaid expenses and other       15,027       7,853  
    Total current assets       204,168       173,729  
Property and equipment, net       44,593       41,988  
Television broadcast rights, net       46,234       7,028  
Intangible assets, net       36,915       2,359  
Other assets       12,936       1,533  
      Total Assets     $ 344,846     $ 226,637  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                 
Current liabilities:          
  Accounts payable     $ 58,535     $ 77,995  
  Accrued liabilities       31,816       29,509  
  Current portion of television broadcast rights obligation   29,441       29,173  
  Current portion of long term credit facility     -       2,714  
  Current portion of operating lease liabilities     1,036       462  
  Deferred revenue       679       213  
    Total current liabilities       121,507       140,066  
                 
                 
Other long term liabilities       64,157       8,855  
Long term credit facilities       73,919       50,666  
    Total liabilities       259,583       199,587  
                 
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 shares authorized as of      
    July 31, 2021 and January 30, 2021; 21,254,414 and 13,019,061 shares    
    issued and outstanding as of July 31, 2021 and January 30, 2021   212       130  
  Additional paid-in capital       536,835       474,375  
  Accumulated deficit       (454,932 )     (447,455 )
    Total shareholders' equity       82,115       27,050  
    Equity of the Non-Controlling Interest     3,148     $ -  
    Total Equity     $ 85,263     $ 27,050  
      Total Liabilities and Shareholders' Equity   $ 344,846     $ 226,637  


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
 
                       
        July 31,   August 1,   July 31,   August 1,  
        2021   2020   2021   2020  
Net sales $ 113,442     $ 124,515     $ 226,644     $ 220,349    
Cost of sales $ 65,456       78,223       132,651       138,500    
      Gross profit $ 47,986     $ 46,292       93,993       81,849    
       Margin %   42.3 %     37.2 %     41.5 %     37.1 %  
Operating expense:                
  Distribution and selling $ 35,357       31,875       69,605       65,610    
  General and administrative $ 7,387       5,104       13,822       10,471    
  Depreciation and amortization $ 7,611       6,842       14,986       8,723    
  Restructuring costs $ -       -       -       209    
    Total operating expense $ 50,355     $ 43,821       98,413       85,013    
Operating income (loss) $ (2,369 )   $ 2,471       (4,420 )     (3,164 )  
                       
Other income (expense):                
  Interest income $ 39       -       39       1    
  Debt Extinguishment $ (654 )     -       (654 )     -    
  Interest expense $ (1,381 )     (1,402 )     (2,694 )     (2,581 )  
    Total other expense $ (1,996 )   $ (1,402 )     (3,309 )     (2,580 )  
                       
Income (Loss) before income taxes $ (4,365 )   $ 1,069     $ (7,729 )     (5,744 )  
                       
Income tax provision $ (15 )     (15 )     (30 )     (30 )  
                       
Net income (loss) $ (4,380 )   $ 1,054     $ (7,759 )   $ (5,774 )  
                       
Less: Net loss attributable to non-controlling interest $ (131 )     -       (282 )     -    
                       
Net income (loss) attributable to shareholders $ (4,249 )   $ 1,054     $ (7,477 )   $ (5,774 )  
                       
Net income (loss) per common share $ (0.22 )   $ 0.11     $ (0.43 )   $ (0.65 )  
                       
Net income (loss) per common share                
    ---assuming dilution $ (0.22 )   $ 0.11     $ (0.43 )   $ (0.65 )  
                       
Weighted average number of                
common shares outstanding:                
      Basic   19,101,652       9,532,369       17,314,317       8,911,580    
      Diluted   19,101,652       9,896,729       17,314,317       8,911,580    


iMEDIA BRANDS, INC.  
AND SUBSIDIARIES  
PERFORMANCE MEASURES BY SEGMENT  
($ in Millions)  
                             
      For the Three-Month Period Ended   For the Three-Month Period Ended  
      July 31, 2021   August 1, 2020  
                             
      ShopHQ   Emerging   Consolidated   ShopHQ   Emerging   Consolidated  
                             
Net Sales   $ 94.8     $ 18.6   $ 113.4     $ 120.7   $ 3.8     $ 124.5    
                             
Gross Profit   $ 39.3     $ 8.7   $ 48.0     $ 44.7   $ 1.6     $ 46.3    
                             
Operating Loss   $ (2.8 )   $ 0.4   $ (2.4 )   $ 3.7   $ (1.3 )   $ 2.5    
                             
Adjusted EBITDA   $ 6.4     $ 1.9   $ 8.3     $ 11.8   $ (1.1 )   $ 10.7    
                             
      For the Six-Month Period Ended   For the Six-Month Period Ended  
      July 31, 2021   August 1, 2020  
                             
      ShopHQ   Emerging   Consolidated   ShopHQ   Emerging   Consolidated  
                             
Net Sales   $ 195.0     $ 31.6   $ 226.6     $ 214.5   $ 5.8     $ 220.3    
                             
Gross Profit   $ 79.7     $ 14.3   $ 94.0     $ 79.7   $ 2.1     $ 81.8    
                             
Operating Loss   $ (4.6 )   $ 0.2   $ (4.4 )   $ -   $ (3.1 )   $ (3.1 )  
                             
Adjusted EBITDA   $ 13.5     $ 2.9   $ 16.4     $ 11.8   $ (2.7 )   $ 9.1    


iMEDIA BRANDS, INC.  
AND SUBSIDIARIES  
Reconciliation of Net Income (Loss) Attributable to Shareholders to Adjusted EBITDA:  
(Unaudited)  
(in thousands)  
                           
    For the Three-Month Period Ended   For the Three-Month Period Ended  
    July 31, 2021   August 1, 2020  
                           
    ShopHQ   Emerging   Consolidated ShopHQ   Emerging   Consolidated  
                           
Net income (loss) attributable to shareholders           $ (4,249 )           $ 1,054    
Adjustments:                          
     Depreciation and amortization             8,572               7,840    
     Interest income             (39 )             -    
     Interest expense             1,381               1,402    
     Income taxes             15               15    
EBITDA (as defined)   $ 4,948   $ 722   $ 5,680     $ 11,427   $ (1,116 )   $ 10,311    
                           
A reconciliation of EBITDA to Adjusted EBITDA is as follows:                      
EBITDA (as defined)   $ 4,948   $ 722   $ 5,680     $ 11,427   $ (1,116 )   $ 10,311    
Adjustments:                          
     Transaction, settlement and integration costs, net (a)   40     1,180     1,220       315     -       315    
     Non-cash share-based compensation expense     758     -     758       109     -       109    
  Loss on Debt Extinguishment     654     -     654       -     -       -    
Adjusted EBITDA   $ 6,400   $ 1,902   $ 8,312     $ 11,851   $ (1,116 )   $ 10,734    
                           
    For the Six-Month Period Ended   For the Six-Month Period Ended  
    July 31, 2021   August 1, 2020  
                           
    ShopHQ   Emerging   Consolidated ShopHQ   Emerging   Consolidated  
                           
Net loss attributable to shareholders           $ (7,477 )           $ (5,774 )  
Adjustments:                          
     Depreciation and amortization             16,888               10,745    
     Interest income             (39 )             (1 )  
     Interest expense             2,695               2,581    
     Income taxes             30               30    
EBITDA (as defined)   $ 10,915   $ 1,182   $ 12,097     $ 10,364   $ (2,783 )   $ 7,581    
                           
A reconciliation of EBITDA to Adjusted EBITDA is as follows:                      
EBITDA (as defined)   $ 10,915   $ 1,182   $ 12,097     $ 10,364   $ (2,783 )   $ 7,581    
Adjustments:                          
     Restructuring costs     -     -     -       209     -       209    
     One-time customer concessions     341     -     341       -     -       -    
     Transaction, settlement and integration costs, net   164     1,756     1,920       574     -       574    
     Non-cash share-based compensation expense     1,436     -     1,436       723     -       723    
  Loss on Debt Extinguishment     654     -     654       -     -       -    
Adjusted EBITDA   $ 13,510   $ 2,938   $ 16,448     $ 11,870   $ (2,783 )   $ 9,087    

(a)   Transaction, settlement and integration costs for the three-month period ended July 31, 2021, includes transaction and integration costs related primarily to the Christopher & Banks transaction. Transaction, settlement and integration costs for three-month period ended August 1, 2020, includes contract settlement costs, business acquisition and integration-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; rebranding costs; 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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