UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 30, 2018
 
EVINE Live Inc.
(Exact name of registrant as specified in its charter)
 
Minnesota	 	001-37495	 	41-1673770	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
 
6740 Shady Oak Road,
Eden Prairie, Minnesota 55344-3433
(Address of principal executive offices)
 
(952) 943-6000
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 
 
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 
Item 2.02.	Results of Operations and Financial Condition.	
 
On May 30, 2018, we issued a press release disclosing our results of operations and financial condition for our most recently completed fiscal quarter. The press release is furnished herewith as Exhibit 99.1.
 
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in that filing.
 
Item 9.01.	Financial Statements and Exhibits.	
 
	(d)	Exhibits	
 
The following exhibit is being furnished with this Current Report on Form 8-K.
 
EXHIBIT INDEX
 
Exhibit No.  	 	Description 	
 	 	
99.1	 	Press Release dated May 30, 2018.	

 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.
 
Date: May 30, 2018	EVINE Live Inc.	 	

 	By:	/s/ Andrea M. Fike 	 	
 	 	Andrea M. Fike
General Counsel	 	

 

 
Exhibit 99.1
 
Evine Live Inc. Reports First Quarter 2018 Results
 
Company Delivers Improved Profitability and Revenue Growth
 
MINNEAPOLIS, MN – May 30, 2018 – Evine Live Inc. (“Evine”) (NASDAQ: EVLV) today announced results for the first quarter ended May 5, 2018. The Company posted quarterly net sales of $156.5 million, compared to $156.3 million for the comparable period in the prior year. The Company realized a net loss of $3.0 million and Adjusted EBITDA of $3.3 million, as compared to a net loss of $3.2 million and Adjusted EBITDA of $3.1 million for the first quarter of fiscal 2017.
 
Fiscal Year 2018 First Quarter Highlights
 
	·	Net sales were $156.5 million, a 0.1% increase year-over-year.	
	·	Gross profit as a percentage of net sales decreased 10 basis points year-over-year to 35.9%. Excluding contract termination costs of $753,000, which had a 50 basis point impact, gross profit as a percentage of sales would have been 36.4%, an improvement of 40 basis points year-over-year.	
	·	Net loss was $3.0 million, a 7% improvement year-over-year.	
	·	Adjusted EBITDA was $3.3 million, a 7% increase year-over-year.	
	·	EPS was ($0.05), flat to the prior year and includes ($0.03) impact for executive transition expenses and contract termination costs.	
 
“I am very encouraged by our first quarter operating results,” said CEO Bob Rosenblatt. “It was a very productive quarter for us and the results reflect the hard work and focus of many over the past two years towards our turnaround efforts.”
 
“Strategically, 2018 is about profitable revenue growth, product development and increasing our customer base,” continued Rosenblatt. “We can achieve our goals if we maintain our focus and deliver on our stated strategy to position Evine as a leading omni-channel purveyor of proprietary, exclusive, and under-discovered goods. This, when combined with our fully built out direct-to-consumer and increasingly valuable video commerce platform, will deliver increased value for our shareholders, customers and vendors.”

 	1 	 	

SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average selling price and EPS)
 
 	 	Q1 2018 5/5/2018	 	 	Q1 2017 4/29/2017	 	 	Change	 	
 	 	 	 	 	 	 	 	 	 	
Net Sales	 	$	156.5	 	 	$	156.3	 	 	 	0.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross Margin %	 	 	35.9	%	 	 	36.0	%	 	 	(10 b	ps)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	3.3	 	 	$	3.1	 	 	 	7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Loss	 	$	(3.0	)	 	$	(3.2	)	 	 	7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
EPS	 	$	(0.05	)	 	$	(0.05	)	 	 	0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Shipped Units (000s)	 	 	2,472	 	 	 	2,580	 	 	 	(4	%)	
Average Selling Price (ASP)	 	$	57	 	 	$	54	 	 	 	6	%	
Return Rate %	 	 	18.9	%	 	 	18.8	%	 	 	10 b	ps	
Digital Net Sales %	 	 	53.0	%	 	 	50.6	%	 	 	240 b	ps	
Total Customers - 12 Month Rolling (000s)	 	 	1,269	 	 	 	1,409	 	 	 	(10	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
% of Net Merchandise Sales by Category	 	 	 	 	 	 	 	 	 	 	 	 	
Jewelry & Watches	 	 	40	%	 	 	41	%	 	 	 	 	
Home & Consumer Electronics	 	 	22	%	 	 	21	%	 	 	 	 	
Beauty & Wellness	 	 	19	%	 	 	16	%	 	 	 	 	
Fashion & Accessories	 	 	19	%	 	 	22	%	 	 	 	 	
Total	 	 	100	%	 	 	100	%	 	 	 	 	

 
First Quarter 2018 Results
 
	·	The top performing category in the quarter was Beauty & Wellness, which grew 17.3% year-over-year, reflecting strong results from our subscription business. Home and Consumer Electronics also had strong year-over-year growth of 5.5% with strength in our tabletop category.	
	·	Digital net sales as a percentage of total net sales increased 240 basis points to 53.0%, reflecting our continued focus on making the customer experience as frictionless as possible across all devices.	
	·	The return rate for the quarter was 18.9%; relatively flat year-over-year and within our expectations based on our merchandise mix.	
	·	Gross profit dollars were flat year-over-year at approximately $56.3 million. Excluding contract termination costs of $753,000, gross profit dollars would have been approximately $57.0 million, or 1.3% better than last year.	
	·	Operating expenses increased 2.3% or $1.3 million year-over-year to $58.2 million, including a $518,000 increase for executive transition expenses. The remaining increase was due to investments in our organization to support growth. Additionally, year-over-year increases in program distribution costs associated with high definition carriage were mostly offset by savings related to favorable negotiations for other carriage.	

 	2 	 	

Executive Team Changes
 
Further strengthening the organization’s operations, during the quarter, the Company announced two new members to its senior leadership team. As previously announced, Diana Purcel was appointed Executive Vice President and Chief Financial Officer and Mark Locks was appointed as Executive Vice President of Product Sourcing and Business Development. Both are highly experienced executives with careers spanning a diverse group of retail companies. Mrs. Purcel replaced Tim Peterman, formally Chief Operating Officer / Chief Financial Officer. Mr. Peterman’s Chief Operating Officer responsibilities have been absorbed by the executive team.
 
Liquidity and Capital Resources
 
As of May 5, 2018, total unrestricted cash was $30.1 million, compared to $23.9 million at the end of fiscal 2017. The Company also had an additional $14.2 million of unused availability on its revolving credit facility, which gives the Company total liquidity of $44.3 million as of the end of the first quarter.
 
Fiscal Year 2018 Outlook
 
Note: Fiscal 2018 has 52 weeks compared to 53 weeks in Fiscal 2017.
 
We affirm our expectations for the year. We continue to expect normalized sales growth in the 2% to 5% range on a 52-week over 52-week basis, which equates to 0% to 3% on a reported basis due to the extra week in fiscal 2017. We expect Adjusted EBITDA to be in the $19 to $21 million range, which would equate to growth of 5% to 17% year-over-year. (1)
 
Conference Call
 
A conference call and webcast to discuss the Company’s first quarter earnings will be held at 8:30 a.m. Eastern Time on Wednesday, May 30, 2018:
 
WEBCAST LINK: https://event.on24.com/wcc/r/1629797/060866762AFA3753A10ADAA63D569F89
 
TELEPHONE: 1-877-407-9039 (domestic) or 1-201-689-8470 (international)
 
Please visit www.evine.com/ir for more investor information and to review an updated investor deck.

 	3 	 	

About Evine Live Inc.
 
Evine Live Inc. (NASDAQ:EVLV) operates Evine, a multiplatform interactive digital commerce company that offers a mix of proprietary, exclusive and name brands directly to consumers in an engaging and informative shopping experience via television, online and mobile. Evine reaches more than 87 million television homes with entertaining content in a comprehensive digital shopping experience offered 24 hours a day.
 
Please visit www.evine.com/ir for more investor information.
 
Contacts

Media:
Liz Joseph
press@evine.com
(952) 943-6192

Investors:
Michael Porter
mporter@evine.com
(952) 943-6517
 
	(1)	In accordance with SEC Guidance for Item 10(e)(1)(i)(A) of Regulation S-K, we have not provided a reconciliation of our expected Adjusted EBITDA range to expected net income range in this press release due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which certain GAAP to non-GAAP adjustments may be recognized. These adjustments may include the impact of such items as loss on debt extinguishment, gain on sale of assets, executive and management transition costs, restructuring charges, the effect of other certain one-time items, and the income tax effect of such items. We are unable to quantify these types of adjustments that would be required to be included in the GAAP measure without unreasonable efforts. In addition, we believe such a reconciliation would imply a degree of precision on inherently unpredictable events in our outlook that could be confusing to investors.	

 	4 	 	

EVINE Live Inc.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
 
 	 	May 5,	 	 	February 3,	 	
 	 	2018	 	 	2018	 	
 	 	(Unaudited)	 	 	 	 	
 	 	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash	 	$	30,077	 	 	$	23,940	 	
Restricted cash equivalents	 	 	450	 	 	 	450	 	
Accounts receivable, net	 	 	85,060	 	 	 	96,559	 	
Inventories	 	 	73,058	 	 	 	68,811	 	
Prepaid expenses and other	 	 	9,142	 	 	 	5,344	 	
Total current assets	 	 	197,787	 	 	 	195,104	 	
Property and equipment, net	 	 	51,434	 	 	 	52,048	 	
Other assets	 	 	2,027	 	 	 	2,106	 	
Total Assets	 	$	251,248	 	 	$	249,258	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	59,067	 	 	$	55,614	 	
Accrued liabilities	 	 	39,827	 	 	 	35,646	 	
Current portion of long term credit facilities	 	 	2,326	 	 	 	2,326	 	
Deferred revenue	 	 	35	 	 	 	35	 	
Total current liabilities	 	 	101,255	 	 	 	93,621	 	

Other long term liabilities	 	 	59	 	 	 	68	 	
Long term credit facilities	 	 	68,204	 	 	 	71,573	 	
Total liabilities	 	 	169,518	 	 	 	165,262	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Preferred stock, $.01 par value, 400,000 shares authorized;	 	 	 	 	 	 	 	 	
zero shares issued and outstanding	 	 	-	 	 	 	-	 	
Common stock, $.01 par value, 99,600,000 shares authorized;	 	 	 	 	 	 	 	 	
65,588,337 and 65,290,458 shares issued and outstanding	 	 	656	 	 	 	653	 	
 	 	 	 	 	 	 	 	 	
Additional paid-in capital	 	 	439,828	 	 	 	439,111	 	
 	 	 	 	 	 	 	 	 	
Accumulated deficit	 	 	(358,754	)	 	 	(355,768	)	
Total shareholders’ equity	 	 	81,730	 	 	 	83,996	 	
Total Liabilities and Shareholders’ Equity	 	$	251,248	 	 	$	249,258	 	

 	5 	 	

 EVINE Live Inc.
 AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 (In thousands, except share and per share data) 
 
 	 	For the Three-Month
Periods Ended	 	
 	 	 	 	
 	 	May 5,	 	 	April 29,	 	
 	 	2018	 	 	2017	 	
Net sales	 	$	156,505	 	 	$	156,343	 	
Cost of sales	 	 	100,250	 	 	 	100,057	 	
Gross profit	 	 	56,255	 	 	 	56,286	 	
Margin %	 	 	35.9	%	 	 	36.0	%	
Operating expense:	 	 	 	 	 	 	 	 	
Distribution and selling	 	 	48,887	 	 	 	48,730	 	
General and administrative	 	 	6,719	 	 	 	5,995	 	
Depreciation and amortization	 	 	1,572	 	 	 	1,636	 	
Executive and management transition costs	 	 	1,024	 	 	 	506	 	
Total operating expense	 	 	58,202	 	 	 	56,867	 	
Operating loss	 	 	(1,947	)	 	 	(581	)	
 	 	 	 	 	 	 	 	 	
Other income (expense):	 	 	 	 	 	 	 	 	
Interest income	 	 	7	 	 	 	2	 	
Interest expense	 	 	(1,026	)	 	 	(1,495	)	
Loss on debt extinguishment	 	 	-	 	 	 	(913	)	
Total other expense	 	 	(1,019	)	 	 	(2,406	)	
 	 	 	 	 	 	 	 	 	
Loss before income taxes	 	 	(2,966	)	 	 	(2,987	)	
 	 	 	 	 	 	 	 	 	
Income tax provision	 	 	(20	)	 	 	(209	)	
 	 	 	 	 	 	 	 	 	
Net loss	 	$	(2,986	)	 	$	(3,196	)	
 	 	 	 	 	 	 	 	 	
Net loss per common share	 	$	(0.05	)	 	$	(0.05	)	
 	 	 	 	 	 	 	 	 	
Net loss per common share	 	 	 	 	 	 	 	 	
—assuming dilution	 	$	(0.05	)	 	$	(0.05	)	
 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding:	 	 	 	 	 	 	 	 	
Basic	 	 	65,360,951	 	 	 	60,918,508	 	
Diluted	 	 	65,360,951	 	 	 	60,918,508	 	

 	6 	 	

EVINE Live Inc. AND SUBSIDIARIES
Reconciliation of Net Loss to Adjusted EBITDA:
(Unaudited)
(in thousands)
 
 	 	For the Three-Month
Periods Ended	 	
 	 	 	 	 	 	 	
 	 	May 5,	 	 	April 29,	 	
 	 	2018	 	 	2017	 	
 	 	 	 	 	 	 	
Net loss	 	$	(2,986	)	 	$	(3,196	)	
Adjustments:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	2,620	 	 	 	2,604	 	
Interest income	 	 	(7	)	 	 	(2	)	
Interest expense	 	 	1,026	 	 	 	1,495	 	
Income taxes	 	 	20	 	 	 	209	 	
EBITDA (as defined)	 	$	673	 	 	$	1,110	 	

A reconciliation of EBITDA to Adjusted EBITDA is as follows:	 	 	 	 	 	 	 	 	
EBITDA (as defined)	 	$	673	 	 	$	1,110	 	
Adjustments:	 	 	 	 	 	 	 	 	
Executive and management transition costs	 	 	1,024	 	 	 	506	 	
Contract termination costs	 	 	753	 	 	 	-	 	
Loss on debt extinguishment	 	 	-	 	 	 	913	 	
Non-cash share-based compensation expense	 	 	820	 	 	 	521	 	
Adjusted EBITDA	 	$	3,270	 	 	$	3,050	 	
 
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; loss on debt extinguishment; contract termination costs; gain on sale of television station and non-cash share-based compensation expense. The Company has included the “Adjusted EBITDA” measure in our EBITDA reconciliation in order to adequately assess the operating performance of our television and online businesses and in order to maintain comparability to our analyst’s coverage and financial guidance, when given. Management believes that the Adjusted EBITDA measure allows investors to make a meaningful comparison between our 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. Adjusted EBITDA 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 entitled 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. 

 	7 	 	

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 guidance, industry prospects, or future results of operations or financial position are forward-looking. We often use words such as anticipates, believes, estimates, expects, intends, 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; 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 our programming and the associated fees or estimated cost savings from contract renegotiations; our ability to establish and maintain acceptable commercial terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor and shipping relationships and develop key partnerships and proprietary and exclusive brands; our ability to manage our operating expenses successfully and our working capital levels; our ability to remain compliant with our credit facilities covenants; customer acceptance of our branding strategy and our repositioning as a video commerce company; our ability to respond to changes in consumer shopping patterns and preferences, and changes in technology and consumer viewing patterns; changes to our management and information systems infrastructure; challenges to our 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 our 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 our programming; disruptions in our distribution of our network broadcast to our customers; our ability to protect our intellectual property rights; our ability to obtain and retain key executives and employees; our ability to attract new customers and retain existing customers; changes in shipping costs; expenses related to the actions of activist or hostile shareholders; our 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 our most recently filed Form 10-K and any additional risk factors identified in our periodic reports since the date of such Form 10-K. More detailed information about those factors is set forth in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.

 	8