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|Overstock.com Reports First Quarter 2008 Financial Results|
Announces Time and Date of Earnings Call
SALT LAKE CITY, April 18 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK) today reported financial results for the quarterly period ending March 31, 2008.
Key Q1 2008 metrics (comparison to Q1 2007):
This is the third consecutive quarter we've had positive EBITDA. More significantly, over the last twelve months we have generated $27 million of positive operating cash flow. As a result, we ended the quarter with a comfortable $90 million of cash and marketable securities, despite the seasonal reduction of payables following the busy holiday season and $12 million we used to repurchase our shares during the quarter.
Other highlights of the quarter include:
We will discuss our Q1 results on April 22, 2008 at 11:00 a.m. Eastern Daylight Time. Please find details for the conference call below. I look forward to speaking with you then, and in the meantime remain,
Your humble servant,
P.S. Please email Kevin Moon at firstname.lastname@example.org with questions prior to the conference call.
Details for the Q1 conference call/webcast
We will hold our Q1 conference call/webcast on April 22, 2008 at 11:00 a.m. Eastern Daylight Time. To access the live webcast and presentation slides, please go to http://investors.overstock.com. To listen to the conference call via telephone, dial (866) 770-7051 and enter pass code 25722257 when prompted. Participants outside the United States can dial +1 (617) 213-8064 and enter pass code 25722257 when prompted.
We will make available a replay of the webcast at http://investors.overstock.com starting 90 minutes after the live call has ended. We will make available an audio replay of the webcast via telephone starting at 1:00 p.m. Eastern Daylight Time on Tuesday, April 22, through 11:59 p.m. Eastern Daylight Time on Tuesday, April 29, 2008. To listen to the recorded webcast by phone, please dial (888) 286-8010 and enter pass code 67010968 when prompted. Participants outside the U.S. can dial +1 (617) 801-6888 and enter pass code 67010968 when prompted.
Key financial and operating metrics:
Total revenue - Total revenue for the three months ended March 31, 2007 and 2008 was $157.9 million and $200.7 million, respectively, a 27% increase.
Gross profit and gross margin - Gross profit for the three months ended March 31, 2007 and 2008 was $25.3 million and $34.8 million, respectively, a 37% increase, representing margins of 16.0% and 17.3% for those respective periods.
Contribution and contribution margin - "Contribution" (gross profit less sales and marketing expenses) for the three months ended March 31, 2007 and 2008 was $14.0 million (8.9% contribution margin) and $19.8 million (9.8% contribution margin), respectively, a 41% increase.
Three months ended March 31, 2007 2008 Total revenue $ 157,930 $ 200,745 Cost of goods sold 132,615 165,959 Gross profit 25,315 34,786 Less: Sales and marketing expense 11,284 15,019 Contribution $ 14,031 $ 19,767 Contribution margin 8.9% 9.8%
Operating loss - Operating losses for the three months ended March 31, 2007 and 2008 were $17.7 million and $4.3 million, respectively.
EBITDA - EBITDA (a non-GAAP measure) for the three months ended March 31, 2007 and 2008 was $(8.3) million and $3.5 million, respectively. We believe that, because our current capital expenditures are significantly lower than our depreciation levels, discussing EBITDA at this stage of our business is useful to us and investors because it approximates actual cash used or cash generated by the operations of the business.
Three months ended March 31, 2007 2008 Operating loss $(17,720) $(4,312) Add: Depreciation and amortization 7,771 6,497 Stock-based compensation expense 1,073 1,184 Stock-based compensation to consultants for service 5 (14) Stock-based compensation for performance share plan - 150 Treasury stock issued to employees as compensation 602 19 EBITDA $(8,269) $3,524
Net loss - Net loss for the three months ended March 31, 2007, was $21.4 million, or $0.91 loss per share, compared to $3.9 million, or $0.17 loss per share in 2008. For the three months ended March 31, 2007, net loss included restructuring charges of $6.1 million. There were no restructuring charges in 2008.
Free Cash Flow (a non-GAAP measure) - Free cash flow for the three months ended March 31, 2007 and 2008 totaled $(58.7) million and $(42.4) million, respectively. For the twelve months ended March 31, 2007 and 2008, free cash flow totaled $(29.1) million and $23.7 million.
Free cash flow reflects an additional way of viewing our cash flows and liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Free cash flow, which we reconcile to "Cash provided by operating activities," is cash flow from operations reduced by "Expenditures for property and equipment." Although we believe that cash flow from operating activities is an important measure, we believe free cash flow is a useful measure to evaluate our business since purchases of fixed assets are a necessary component of ongoing operations. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows. We believe that analyzing free cash flows on a trailing twelve month basis eliminates seasonal fluctuations in cash flows and more accurately reflects trends in this non-GAAP measure.
Three months ended Twelve months ended March 31, March 31, 2007 2008 2007 2008 Net cash provided by operating activities $(58,240) $(41,044) $(11,955) $27,173 Expenditures for property and equipment (477) (1,313) (17,114) (3,479) Free cash flow $(58,717) $(42,357) $(29,069) $23,694
Cash and working capital - At March 31, 2008, Overstock.com had cash, cash equivalents and marketable securities of $89.8 million and working capital of $61.7 million.
Early Q2 Developments
On April, 8, 2008, we entered into a lease for a 686,865 square foot warehouse facility now under construction in Salt Lake City, Utah. We plan to consolidate warehouse operations from two smaller warehouse facilities into the new warehouse. We anticipate in the future that we may construct a corporate office facility within the new warehouse. More details regarding this lease are contained in the Form 8-K we filed on April 11, 2008 which can be found in our investor relations link on our website.
On April 14, 2008, Gradient filed a countersuit accusing us and Patrick Byrne of libeling Gradient. We believe this countersuit is meritless and we will vigorously defend against it. We issued a separate press release about this countersuit on April 15, 2008.
On April 15, 2008, we received a letter from the Office of the District Attorney of Marin County, California, stating that the District Attorneys of Marin and four other counties in California have begun an investigation into the way we advertise products for sale, together with an administrative subpoena seeking related information and documents. We follow industry advertising practices and we intend to respond fully to the subpoena and cooperate with the investigation.
Overstock.com, Inc. is an online "closeout" retailer offering discount, brand-name merchandise for sale over the Internet. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory liquidation distribution channel. Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com.
Overstock.com(R) is a registered trademark of Overstock.com, Inc. All other trademarks are the property of their respective owners.
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding revenue growth, completion of a turnaround, operating leverage, future cash generation and EBITDA results, the helpfulness of product recommendations, construction of and/or feasibility of consolidating warehouse operations, building a corporate office in the new warehouse, our following industry advertising practices, the meritless nature of Gradient's countersuit, the selection of products on our site, the status of our auctions and car sites, and the outlook of the company, and the date and time of the Q1 earnings call. Our Form 10-K for the year ended December 31, 2007, our quarterly reports on Form 10-Q, or any amendments, and our subsequent filings with the Securities and Exchange Commission identify important factors that could cause the actual results to differ materially from those contained in our projections, estimates or forward-looking statements.
Overstock.com, Inc. Consolidated Statements of Operations (unaudited) (in thousands, except per share amounts) Three months ended March 31, 2007 2008 Revenue Direct $45,701 $51,483 Fulfillment partner 112,229 149,262 Total revenue 157,930 200,745 Cost of goods sold Direct 39,320 44,314 Fulfillment partner 93,295 121,645 Total cost of goods sold 132,615 165,959 Gross profit 25,315 34,786 Operating expenses: Sales and marketing 11,284 15,019 Technology 14,973 14,516 General and administrative 10,689 9,563 Restructuring 6,089 - Total operating expenses 43,035 39,098 Operating loss (17,720) (4,312) Interest income 990 1,304 Interest expense (1,029) (901) Loss from continuing operations (17,759) (3,909) Discontinued operations: Loss from discontinued operations (3,624) - Net loss $(21,383) $(3,909) Net loss per common share - basic and diluted: Loss from continuing operations $(0.75) $(0.17) Loss from discontinued operations $(0.16) $- Net loss per common share - basic and diluted $(0.91) $(0.17) Weighted average common shares outstanding - basic and diluted 23,594 23,345 Other data: Shopping bookings (in 000s) $170,362 $216,322 Auction gross merchandise volume (in 000s) $4,695 $2,610 Average customer acquisition cost (shopping) $24.58 $25.21 Overstock.com, Inc. Consolidated Balance Sheets (unaudited) (in thousands) December 31, March 31, 2007 2008 Assets Current assets: Cash and cash equivalents $101,394 $60,094 Marketable securities 46,000 29,750 Cash, cash equivalents and marketable securities 147,394 89,844 Accounts receivable, net 12,304 13,042 Note receivable 1,506 1,004 Inventories, net 25,933 17,970 Prepaid inventory 3,572 2,568 Prepaid expenses 7,572 10,118 Total current assets 198,281 134,546 Property and equipment, net 27,197 22,069 Goodwill 2,784 2,784 Other long-term assets, net 86 30 Note receivable 4,181 4,317 Total assets $232,529 $163,746 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $70,648 $32,839 Accrued liabilities 52,598 40,008 Capital lease obligations, current 3,796 2 Total current liabilities 127,042 72,849 Other long-term liabilities 3,034 2,828 Convertible senior notes 75,623 75,710 Total liabilities 205,699 151,387 Stockholders' equity: Common stock 2 2 Additional paid-in capital 333,909 335,188 Accumulated deficit (243,709) (247,618) Treasury stock (63,278) (75,218) Accumulated other comprehensive loss (94) 5 Total stockholders' equity 26,830 12,359 Total liabilities and stockholders' equity $232,529 $163,746 Overstock.com, Inc. Consolidated Statements of Cash Flows (unaudited) (in thousands) Three months ended Twelve months ended March 31, March 31, 2007 2008 2007 2008 Cash flows from operating activities of continuing operations: Net loss $(21,383) $(3,909) $(107,239) $(27,541) Adjustments to reconcile net loss to cash provided by (used in) operating activities of continuing operations: Loss from discontinued operations 3,624 - 9,727 300 Depreciation and amortization 7,771 6,497 33,948 28,221 Realized loss (gain) on marketable securities - - (1,868) - Loss on disposition of property and equipment - - 1 1 Stock-based compensation 1,073 1,184 4,235 4,633 Stock-based compensation to consultants for services 5 (14) (15) 170 Stock-based compensation relating to performance share plan - 150 - (400) Treasury stock issued to employees as compensation 602 19 882 (89) Amortization of debt discount and deferred financing fees 86 87 364 345 Asset impairment and depreciation (restructuring) - - - 2,169 Restructuring 6,089 - 11,763 4,025 Notes receivable accretion - (136) - (408) Changes in operating assets and liabilities, net of effect of acquisition and discontinued operations: Accounts receivable, net 3,827 (738) (541) (5,531) Inventories, net 3,612 7,963 58,703 (1,308) Prepaid inventory (360) 1,004 6,234 33 Prepaid expenses (1,962) (2,546) 936 (683) Other long-term assets 90 - 539 381 Accounts payable (38,059) (37,809) (9,638) 4,762 Accrued liabilities (23,255) (12,590) (19,986) 18,492 Other long-term liabilities - (206) - (399) Net cash provided by (used in) operating activities (58,240) (41,044) (11,955) 27,173 Cash flows from investing activities of continuing operations: Change in restricted cash - - 55 - Purchases of marketable securities - (6,539) - (81,756) Sales of marketable securities - 22,911 49,475 52,169 Expenditures for property and equipment (477) (1,313) (17,114) (3,479) Proceeds from the sale of property and equipment - - 1 - Proceeds from the sale of discontinued operations, net of cash transferred - - - 9,892 Collection of note receivable 3,941 502 3,941 1,757 Decrease in cash resulting from de-consolidation of variable entity - - (102) - Net cash provided by (used in) investing activities 3,464 15,561 36,256 (21,417) Cash flows from financing activities of continuing operations: Payments on capital lease obligations (5,247) (3,794) (5,776) (3,808) Borrowings on line of credit 1,169 5,268 57,122 6,522 Payments on line of credit (1,169) (5,268) (77,122) (6,522) Issuance of common stock in offerings, net of issuance costs - - 64,406 - Purchase of treasury stock - (12,000) - (12,000) Exercise of stock options 1,153 - 2,660 2,077 Net cash provided by (used in) financing activities (4,094) (15,794) 41,290 (13,731) Effect of exchange rate changes on cash (15) (23) 4 (11) Cash provided by (used in) operating activities of discontinued operations 410 - 2,167 (614) Cash used in investing activities of discontinued operations (53) - (578) - Net increase (decrease) in cash and cash equivalents (58,528) (41,300) 67,184 (8,600) Change in cash and cash equivalents from discontinued operations (357) - (1,590) 614 Cash and cash equivalents, beginning of period 126,965 101,394 2,486 68,080 Cash and cash equivalents, end of period $68,080 $60,094 $68,080 $60,094
SOURCE Overstock.com, Inc.