LEGACY IMBDS, INC. ShopHQ Relaunched on Dish Network on
iMedia Strengthens Balance Sheet - Signs
CEO Commentary –
“Tough economic conditions increasingly distract consumers; therefore, our priority is to ensure we strengthen our balance sheet and build our core businesses to serve our customers.
Our 2022 debt & liquidity management plan is ahead of schedule. On November 8 we executed a letter of intent with a real estate investment firm to sell three of iMedia’s four buildings for gross proceeds of
For the seventh successive quarter, iMedia posted year-over-year customer file growth in Q3, this time 15%. This KPI proves that our strategy of increasing our Q3 promotional activity in our core businesses was successful.
In light of the short-term challenges we faced with the DISH carriage disruption on ShopHQ and the negative impacts from the
As we announced yesterday, ShopHQ relaunched on the DISH Network, ending the six-month carriage disruption pressuring our financial performance. DISH customers can once again engage with their favorite ShopHQ hosts and brands on the same channel location as before.”
Third Quarter and Year-To-Date 2022 Financial Highlights:
- Q3 Net sales were
$123 million , a 5.7% decrease over the same prior year period, primarily driven by ShopHQ’s year-over-year net sales decline from the carriage disruption with DISH. Year-to-date net sales were$411 million , a 15.0% increase over the same prior year period. - Q3 Gross margin was 41.8%, roughly flat to the same prior year period. Year-to-date gross margin was 39.2%, a 231 basis-point decline compared to the same prior year period, primarily driven by 1-2-3.tv’s lower margin posted in the first half of 2022.
- Q3 Net loss was
$21.3 million , compared to a$9.5 million Net loss for the same prior year period. The$11.8 million increase in Net loss was primarily driven by the Company’s capital allocation decision to terminate its Shaq licensing agreement, resulting in a$10 million non-cash write-off during the quarter. - Adjusted EBITDA was
$8.6 million , a 14% decrease over the same prior year-period. This decrease was primarily driven by our year-over-year net sales decline from the carriage disruption with DISH.
Consolidated Third Quarter and Year-to- Date 2022 Results:
| For the Three-Month Periods Ended | For the Nine-Month Periods Ended | ||||||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||
| $ | 123.3 | $ | 130.7 | (6 | %) | $ | 411.0 | $ | 357.3 | 15 | % | ||||||||||||
| Gross Margin % | 41.8 | % | 41.6 | % | 13 bps | 39.2 | % | 41.5 | % | (231 bps | ) | ||||||||||||
| Net loss attributable to non-controlling interest | $ | - | $ | - | - | $ | (0.4 | ) | $ | (0.3 | ) | (47 | %) | ||||||||||
| Net loss attributable to shareholders | $ | (21.3 | ) | $ | (9.5 | ) | (124 | %) | $ | (45.9 | ) | $ | (17.0 | ) | (170 | %) | |||||||
| EPS | $ | (0.72 | ) | $ | (0.44 | ) | (64 | %) | $ | (1.77 | ) | $ | (0.91 | ) | (95 | %) | |||||||
| Adjusted EBITDA | $ | 8.6 | $ | 10.1 | (14 | %) | $ | 22.9 | $ | 26.5 | (14 | %) | |||||||||||
Segment Third Quarter and Year-to-Date 2022 Highlights:
| For the Three-Month Period Ended | For the Three-Month Period Ended | ||||||||||||||||||||||||||||
| Media | Media | ||||||||||||||||||||||||||||
| Consumer | Commerce | Consumer | Commerce | ||||||||||||||||||||||||||
| Entertainment | Brands | Services | Consolidated | Entertainment | Brands | Services | Consolidated | ||||||||||||||||||||||
| $ | 101.2 | $ | 9.5 | $ | 12.6 | $ | 123.3 | $ | 105.5 | $ | 13.7 | $ | 11.5 | $ | 130.7 | ||||||||||||||
| Gross Profit | $ | 42.6 | $ | 5.4 | $ | 3.5 | $ | 51.5 | $ | 44.4 | $ | 6.6 | $ | 3.4 | $ | 54.4 | |||||||||||||
| Operating Income (Loss) | $ | (19.3 | ) | $ | 2.1 | $ | 1.9 | $ | (15.3 | ) | $ | (6.8 | ) | $ | 0.3 | $ | 0.5 | $ | (6.0 | ) | |||||||||
| Adjusted EBITDA | $ | 3.3 | $ | 2.8 | $ | 2.6 | $ | 8.6 | $ | 7.3 | $ | 0.8 | $ | 2.0 | $ | 10.1 | |||||||||||||
| For the Nine-Month Period Ended | For the Nine-Month Period Ended | ||||||||||||||||||||||||||||
| Media | Media | ||||||||||||||||||||||||||||
| Consumer | Commerce | Consumer | Commerce | ||||||||||||||||||||||||||
| Entertainment | Brands | Services | Consolidated | Entertainment | Brands | Services | Consolidated | ||||||||||||||||||||||
| $ | 341.6 | $ | 32.6 | $ | 36.8 | $ | 411.0 | $ | 313.5 | $ | 29.2 | $ | 14.6 | $ | 357.3 | ||||||||||||||
| Gross Profit | $ | 135.1 | $ | 16.2 | $ | 10.0 | $ | 161.3 | $ | 129.0 | $ | 14.7 | $ | 4.7 | $ | 148.4 | |||||||||||||
| Operating Income (Loss) | $ | (41.4 | ) | $ | 6.6 | $ | 4.2 | $ | (30.6 | ) | $ | (11.6 | ) | $ | 0.9 | $ | 0.3 | $ | (10.4 | ) | |||||||||
| Adjusted EBITDA | $ | 8.2 | $ | 8.0 | $ | 6.7 | $ | 22.9 | $ | 20.9 | $ | 3.7 | $ | 2.0 | $ | 26.5 | |||||||||||||
Entertainment & Consumer Brands Segments’ Third Quarter and Year-to-Date 2022 Key Operating Metrics:
| Entertainment + Consumer Brands | ||||||||||||||||||||||||
| For the Three-Month Periods Ended | For the Nine-Month Periods Ended | |||||||||||||||||||||||
| Description | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||
| Net Units (000s) | 2,418 | 1,986 | 22 | % | 8,671 | 5,261 | 65 | % | ||||||||||||||||
| Average Selling Price (ASP) | $ | 41 | $ | 55 | (25 | %) | $ | 39 | $ | 59 | (34 | %) | ||||||||||||
| Return Rate % | 16.0 | % | 15.8 | % | 17 bps | 17.2 | % | 16.0 | % | 122 bps | ||||||||||||||
| Total Customers - 12 Month Rolling (000s) | 1,416 | 1,229 | 15 | % | ||||||||||||||||||||
| Entertainment + Consumer Brands | ||||||||||||||||||||||||
| For the Three-Month Periods Ended | For the Nine-Month Periods Ended | |||||||||||||||||||||||
| % of Net Merchandise Sales by Category | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||
| Jewelry & Watches | 34 | % | 35 | % | (121 bps) | 37 | % | 40 | % | (303 bps) | ||||||||||||||
| Home & Consumer Electronics | 22 | % | 16 | % | 560 bps | 19 | % | 15 | % | 400 bps | ||||||||||||||
| Beauty & Health | 21 | % | 25 | % | (362 bps) | 20 | % | 24 | % | (426 bps) | ||||||||||||||
| 22 | % | 23 | % | (77 bps) | 24 | % | 21 | % | 330 bps | |||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
(a) For the three-month periods and year-to-date periods ended
Liquidity and Capital Resources:
As of
Outlook:
For the fourth quarter 2022, we expect the holiday season to be challenging and promotional. Accordingly, we anticipate reporting net sales of approximately
For the full-year 2022, we anticipate reporting revenue of approximately
A reconciliation of adjusted EBITDA is not available on a forward-looking basis without unreasonable efforts because we are unable to predict with reasonable certainty the ultimate outcome and timing of certain significant items, including mergers and acquisitions, other transactions, settlements, integration activities, customer concessions, restructuring activities, and certain tax related events. These items are uncertain, depend on various factors and could have a material impact on earnings and cash flow measures determined in accordance with
Conference Call:
Q3 2022 Earnings Conference Call: As announced on
- Date:
Tuesday, November 22, 2022 - Time:
8:30 a.m. Eastern time (7:30 a.m. Central time ) U.S. dial-in number: 1-877-407-9039- International dial-in number: 1-201-689-8470
- Conference ID: 1373 4238
- Webcast link:
iMedia Brands 3Q earnings webcast
The conference call and webcast will be broadcast live and available for replay via the investor relations section of the
- Toll-free replay number: 1-844-512-2921
- International replay number: 1-412-317-6671
- Replay ID: 1373 4238
About
iMedia’s common stock is traded on the
Investors:
kcooper@imediabrands.com
(952) 943-6119
Media:
press@imediabrands.com
(952) 943-6125
| AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands except share and per share data) | ||||||||
| 2022 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 9,071 | $ | 11,295 | ||||
| Restricted Cash | 1,500 | 1,893 | ||||||
| Accounts receivable, net | 55,351 | 78,947 | ||||||
| Inventories | 119,687 | 116,256 | ||||||
| Current portion of television broadcast rights, net | 21,016 | 27,521 | ||||||
| Prepaid expenses and other | 11,424 | 18,340 | ||||||
| Total current assets | 218,049 | 254,252 | ||||||
| Property and equipment, net | 46,910 | 48,225 | ||||||
| Television broadcast rights, net | 62,090 | 74,821 | ||||||
| 89,323 | 99,050 | |||||||
| Intangible assets, net | 26,293 | 27,940 | ||||||
| Other assets | 19,379 | 18,359 | ||||||
| TOTAL ASSETS | $ | 462,044 | $ | 522,647 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 87,168 | $ | 89,046 | ||||
| Accrued liabilities | 37,144 | 44,388 | ||||||
| Current portion of television broadcast rights obligations | 30,296 | 31,921 | ||||||
| Current portion of long-term debt | 7,100 | 14,031 | ||||||
| Current portion of operating lease liabilities | 2,346 | 2,331 | ||||||
| Deferred revenue | 121 | 427 | ||||||
| Total current liabilities | 164,175 | 182,144 | ||||||
| Long term broadcast rights liability | 63,566 | 81,268 | ||||||
| Long-term debt, net | 186,399 | 176,432 | ||||||
| Long-term operating lease liabilities | 3,354 | 5,169 | ||||||
| Deferred tax liability | 5,183 | 5,285 | ||||||
| Other long term liabilities | 2,741 | 2,986 | ||||||
| Total liabilities | 425,418 | 453,284 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 256 | 216 | ||||||
| Additional paid-in capital | 561,710 | 538,627 | ||||||
| Accumulated deficit | (515,347 | ) | (469,463 | ) | ||||
| Accumulated Other Comprehensive Income/(loss) | (9,993 | ) | (2,429 | ) | ||||
| Total shareholders’ equity | 36,626 | 66,951 | ||||||
| Equity of the non-controlling interest | — | 2,412 | ||||||
| Total equity | 36,626 | 69,363 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 462,044 | $ | 522,647 | ||||
| AND SUBSIDIARIES | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| (In thousands, except share and per share data) | |||||||||||||||||||||
| For the Three-Month Periods Ended | For the Nine-Month Periods Ended | ||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||
| Net sales | $ | 123,264 | $ | 130,681 | $ | 411,042 | $ | 357,325 | |||||||||||||
| Cost of sales | 71,754 | 76,260 | 249,782 | 208,911 | |||||||||||||||||
| Gross profit | 51,510 | 54,421 | 161,260 | 148,414 | |||||||||||||||||
| Gross Profit % | 41.8 | % | 41.6 | % | 39.2 | % | 41.5 | % | |||||||||||||
| Operating expense: | |||||||||||||||||||||
| Distribution and selling | 35,261 | 39,302 | 115,150 | 108,907 | |||||||||||||||||
| General and administrative | 21,185 | 10,746 | 44,818 | 24,569 | |||||||||||||||||
| Depreciation and amortization | 8,778 | 9,741 | 27,421 | 24,727 | |||||||||||||||||
| Restructuring costs | 1,551 | 634 | 4,490 | 634 | |||||||||||||||||
| Total operating expense | 66,775 | 60,423 | 191,879 | 158,837 | |||||||||||||||||
| Operating loss | (15,265 | ) | (6,002 | ) | (30,619 | ) | (10,423 | ) | |||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest income and other | 20 | 85 | 230 | 124 | |||||||||||||||||
| Interest expense | (6,038 | ) | (3,551 | ) | (15,931 | ) | (6,245 | ) | |||||||||||||
| Change in fair value of warrant liability | - | - | 1,937 | - | |||||||||||||||||
| Loss on divestiture | - | - | (985 | ) | - | ||||||||||||||||
| Loss on debt extinguishment | - | (9 | ) | (884 | ) | (663 | ) | ||||||||||||||
| Total other expense | (6,018 | ) | (3,475 | ) | (15,633 | ) | (6,784 | ) | |||||||||||||
| Loss before income taxes | (21,283 | ) | (9,477 | ) | (46,252 | ) | (17,207 | ) | |||||||||||||
| Income tax (provision) benefit | (15 | ) | (15 | ) | (47 | ) | (45 | ) | |||||||||||||
| Net loss | (21,298 | ) | (9,492 | ) | (46,299 | ) | (17,252 | ) | |||||||||||||
| Less: Net loss attributable to non-controlling interest | - | - | (415 | ) | (282 | ) | |||||||||||||||
| Net loss attributable to shareholders | $ | (21,298 | ) | $ | (9,492 | ) | $ | (45,884 | ) | $ | (16,970 | ) | |||||||||
| Net loss per common share | $ | (0.72 | ) | $ | (0.44 | ) | $ | (1.77 | ) | $ | (0.91 | ) | |||||||||
| Net loss per common share | |||||||||||||||||||||
| ---assuming dilution | $ | (0.72 | ) | $ | (0.44 | ) | $ | (1.77 | ) | $ | (0.91 | ) | |||||||||
| Weighted average number of | |||||||||||||||||||||
| common shares outstanding: | |||||||||||||||||||||
| Basic | 29,415,680 | 21,503,340 | 25,932,294 | 18,710,658 | |||||||||||||||||
| Diluted | 29,415,680 | 21,503,340 | 25,932,294 | 18,710,658 | |||||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| For the Three-Month Period Ended | For the Three-Month Period Ended | ||||||||||||||||||||
| Media | Media | ||||||||||||||||||||
| Consumer | Commerce | Consumer | Commerce | ||||||||||||||||||
| Entertainment | Brands | Services | Consolidated | Entertainment | Brands | Services | Consolidated | ||||||||||||||
| Net Loss | $ | (21,298 | ) | $ | (9,492 | ) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||
| Television Broadcast Rights Amortization | 6,617 | 7,926 | |||||||||||||||||||
| Depreciation and Amortization, other | 2,999 | 2,751 | |||||||||||||||||||
| Interest, net | 6,018 | 3,466 | |||||||||||||||||||
| Tax | 15 | 15 | |||||||||||||||||||
| EBITDA (as defined) | $ | (9,828 | ) | $ | 1,913 | $ | 2,266 | $ | (5,649 | ) | $ | 3,516 | $ | 554 | $ | 596 | $ | 4,666 | |||
| A reconciliation of EBITDA to Adjusted EBITDA is as follows: | |||||||||||||||||||||
| EBITDA (as defined) | $ | (9,828 | ) | $ | 1,913 | $ | 2,266 | $ | (5,649 | ) | $ | 3,516 | $ | 554 | $ | 596 | $ | 4,666 | |||
| Adjustments: | - | ||||||||||||||||||||
| Transaction, Settlement and Integration costs, net (a) | 10,824 | 887 | 82 | 11,793 | 2,205 | 256 | 1,374 | 3,835 | |||||||||||||
| Non-Cash Share-Based Compensation | 952 | - | - | 952 | 949 | - | - | 949 | |||||||||||||
| Loss on Debt Extinguishment | - | - | - | - | 9 | - | - | 9 | |||||||||||||
| Restructuring Costs | 1,341 | - | 210 | 1,551 | 626 | 8 | - | 634 | |||||||||||||
| Adjusted EBITDA | $ | 3,289 | $ | 2,800 | $ | 2,558 | $ | 8,647 | $ | 7,305 | $ | 818 | $ | 1,970 | $ | 10,093 | |||||
| For the Nine-Month Period Ended | For the Nine-Month Period Ended | ||||||||||||||||||||
| Media | Media | ||||||||||||||||||||
| Consumer | Commerce | Consumer | Commerce | ||||||||||||||||||
| Entertainment | Brands | Services | Consolidated | Entertainment | Brands | Services | Consolidated | ||||||||||||||
| Net Loss | $ | (45,884 | ) | $ | (16,970 | ) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||
| Television Broadcast Rights Amortization | 19,689 | 19,121 | |||||||||||||||||||
| Depreciation and Amortization, other | 10,358 | 8,444 | |||||||||||||||||||
| Interest, net | 15,701 | 6,121 | |||||||||||||||||||
| Loss on divestiture | 985 | - | |||||||||||||||||||
| Change in fair value of warrant liability | (1,937 | ) | - | ||||||||||||||||||
| Tax | 47 | 45 | |||||||||||||||||||
| EBITDA (as defined) | $ | (13,269 | ) | $ | 7,264 | $ | 4,964 | $ | (1,041 | ) | $ | 14,492 | $ | 1,675 | $ | 594 | $ | 16,761 | |||
| A reconciliation of EBITDA to Adjusted EBITDA is as follows: | |||||||||||||||||||||
| EBITDA (as defined) | $ | (13,269 | ) | $ | 7,264 | $ | 4,964 | $ | (1,041 | ) | $ | 14,492 | $ | 1,675 | $ | 594 | $ | 16,761 | |||
| Adjustments: | - | ||||||||||||||||||||
| Transaction, Settlement and Integration costs, net (a) | 12,671 | 731 | 1,503 | 14,905 | 2,370 | 2,013 | 1,374 | 5,757 | |||||||||||||
| Non-Cash Share-Based Compensation | 3,061 | - | - | 3,061 | 2,385 | - | - | 2,385 | |||||||||||||
| Loss on Debt Extinguishment | 884 | - | - | 884 | 663 | - | - | 663 | |||||||||||||
| Other | 618 | - | - | 618 | |||||||||||||||||
| Restructuring Costs | 4,280 | - | 210 | 4,490 | 626 | 8 | - | 634 | |||||||||||||
| One Time Customer Adjustment | - | - | - | - | 341 | - | - | 341 | |||||||||||||
| Adjusted EBITDA | $ | 8,245 | $ | 7,995 | $ | 6,677 | $ | 22,917 | $ | 20,877 | $ | 3,696 | $ | 1,968 | $ | 26,541 | |||||
(a) Transaction, settlement and integration costs for the three-month and year-to-date periods ended
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; one-time customer concessions; 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 segments 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 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 anticipated closing of the sale-leaseback transaction, the value to be received by the Company in connection with the sale-leaseback transaction, the timing to close on the sale-leaseback transaction and the Company's use of proceeds related thereto, the Company's new DISH Network agreement, the Company's expected performance for the remainder of 2022, and the Company's belief about the state of consumer demand are forward-looking. The Company often use words such as anticipates, believes, estimates, expects, intends, seeks, predicts, hopes, should, plans, will, or the negative of these terms and similar expressions to identify forward-looking statements, although not all forward looking-statements contain these words. 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
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