iMedia Brands Reports First Quarter 2020 Results
MINNEAPOLIS, May 27, 2020 (GLOBE NEWSWIRE) — iMedia Brands, Inc. (NASDAQ: IMBI) today announced results for the first quarter ended May 2, 2020.
First Quarter 2020 Summary & Recent HighlightsQ1 net sales of $95.8 million declined 27% compared to prior year, driven primarily by management’s priority to improve operating cash flow. In Q4, management made the decision to reduce Q1 inventory receipts by 47%, which successfully drove a $14.9 million reduction in inventory compared to Q4. This reduction combined with a Q1 gross margin improvement of 710 basis points versus Q4 drove a $20 million increase in Q1 operating cash flow compared to Q4 2019. Q1 gross margin improvement of 870 basis points compared to the prior year Q1.Strong Q1 ShopHQ viewership trends continue, driven by static programming calendar introduced in Q4 2019. March 2020 total viewership was essentially flat compared to March last year, reversing a five-plus year trend of year-over-year viewership declines.Watches and Fashion Accessories Categories posted Q1 viewership growth of 0.4% and 4.4%, respectively. Both categories benefited from the addition of new fixed programming in the quarter: Fashion Talk on Mondays and Thursdays; Wake Up in Style on Tuesdays; as well as Invicta Breakdown on Tuesdays and Invicta Collectors Room on Thursdays. Successful launch of new static programs Paula Deen Sweet Home Savannah and Learning to Cook with Shaq attracted double-digit growth in audiences compared to the same calendar time slots last year.Consolidated net loss of $6.8 million is a $14.2 million improvement compared to a net loss of $21.0 million last year, driven primarily by a $6.1 million reduction in inventory impairment costs, a reduction of $1.8 million in restructuring and transition costs, and a reduction of approximately $14.1 million in expenses, offset by a reduction of roughly $7.8 million in gross profit.ShopHQ Adjusted EBITDA of $20,000 was a material improvement compared to a loss of $7.7 million for the same period last year. Consolidated Adjusted EBITDA loss of $1.6 million was also a material improvement compared to a consolidated loss of $8.5 million for the same period last year.$4 million private investment led by Eyal Lalo, Invicta’s CEO and iMedia Vice Chairman, entered into on April 14th, further strengthening the company’s working capital.CEO Commentary“The COVID-19 situation creates uncertain and stressful times, and our company continues to take every necessary step to keep its employees, vendors, customers, guests, and their families safe,” said Tim Peterman, CEO of iMedia Brands. “With that being said, I am proud to report that in Q1 our teams performed at a high level, accelerating the restaging of this business with precedent improvements in profitability, operating cash flow and viewership.”First Quarter 2020 ResultsLiquidity and Capital ResourcesAs of May 2, 2020, total unrestricted cash was $16.2 million compared to $10.3 million at the end of the fourth quarter of fiscal 2019. The Company also had an additional $5.2 million of unused availability on its revolving credit facility.On April 14, 2020, iMedia entered into a financing agreement to sell $4 million of common stock priced at market to investors that include, among others, Invicta Media Investments, an affiliate of Eyal Lalo, the Company’s Vice Chair, as well as current director Michael Friedman. Proceeds will be used for general working capital purposes.In light of the macroeconomic conditions and COVID-19, the Company is closely monitoring any impact to its operations, supply chain, liquidity or financial results.Television Distribution RightsDuring the first quarter of fiscal 2020, the Company entered into certain affiliation agreements with television providers for carriage of our television programming over their systems, including channel placement rights. The Company recorded television distribution rights of $28.1 million during the first quarter of fiscal 2020, which represents the present value of payments for the television distribution channel placement. Television distribution rights are amortized on a straight-line basis over the lives of the individual agreements. The remaining weighted average lives of the television distribution rights was 1.7 years as of May 2, 2020. Amortization expense related to the television distribution rights was $47,000 for the three-month period ended May 2, 2020 and is included in depreciation and amortization within the condensed consolidated statement of operations. Estimated amortization expense is $12.7 million for fiscal 2020 and $15.4 million for fiscal 2021. The liability relating to the television distribution right was $28.1 million as of May 2, 2020, of which $14.9 million was classified as current in the accompanying balance sheet. The long-term portion of the obligation is included in other long-term liabilities within the accompanying balance sheet.In addition to the channel placement fees, the Company’s affiliation agreements generally provide that we will pay each operator a monthly access fee, most often based on the number of homes receiving our programming, and in some cases marketing support payments. Monthly access fees are expensed as distribution and selling expense within the condensed consolidated statement of operations.OutlookIn terms of our outlook, because of COVID-19, we are not providing guidance currently. However, we believe that television retailing will be less impacted than other businesses because we serve our customers without them ever leaving their homes. Conference CallThe company will hold a conference call today at 8:30 a.m. Eastern time to discuss its first quarter 2020 results.Date: Wednesday, May 27, 2020
Toll-free dial-in number: (877) 407-9039
International dial-in number: (201) 689-8470
Conference ID: 13703524Please 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.
