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):
-- Total revenue: $200.7 million vs. $157.9 million (a 27% increase);
-- Gross margin: 17.3% vs. 16.0%
-- Gross profit: $34.8 million vs. $25.3 million (a 37% increase);
-- Sales and marketing expense: $15.0 million vs. $11.3 million
(a 33% increase);
-- Contribution (gross profit less marketing): $19.8 million vs.
$14.0 million (a 41% increase);
-- G&A / Technology expense: $24.1 million vs. $25.7 million
(a 6% decrease);
-- Net loss: $3.9 million, or $(0.17) per share vs. $21.4 million
(an 82% decrease);
-- EBITDA: $3.5 million vs. $(8.3) million (an $11.7 million increase)
-- Operating cash flows (TTM): $27.2 million positive
(a $39.1 million increase)
-- Share buyback: repurchased 1.1 million shares for $12.0 million
Dear Investor:
We returned to above industry-level revenue growth this quarter,
capping off our turnaround plan that started with growth in contribution
and gross profits over a year ago. The combination of an expanding top
line, gross profits and contribution dollars, along with declining fixed
costs, is generating operating leverage in our business.
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:
-- Our customer satisfaction is extraordinary, and customer loyalty is
strong.
-- Our site is getting faster and easier to use. The recommendations we
provide customers are more and more helpful. We've also made many
enhancements to our home page and the overall site design that are
improving our customers' shopping experience.
-- Our selection has grown to become the widest selection of high-end,
quality products at discount prices that we have ever offered.
-- Our car site has launched and is off to a positive start.
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,
Patrick M. Byrne
P.S. Please email Kevin Moon at kmoon@overstock.com 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.
About Overstock.com
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.
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Related links:
http://www.overstock.com
CONTACT:
Media, Kirstie Burden, +1-801-947-3116,
kburden@overstock.com, or Investors, Kevin Moon, +1-801-947-3282,
kmoon@overstock.com, both of Overstock.com, Inc.
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