Bidz.com Announces Financial Results for the Fourth Quarter and the Full Year 2008
-
2008 revenues increase 10.8% year-over-year to $207.4 million
-
2008 pre-tax income increases 16.1% year-over-year to $24.0 million
-
2008 cash flow from operations of $18.6 million
-
Strong financial position with approximately $4.5 million in cash,
$32.8 million in positive working capital and zero debt
-
Authorized a significant increase in its share buyback program to
$33.5 million
CULVER CITY, Calif., Feb 23, 2009 (BUSINESS WIRE) -- Bidz.com (NASDAQ: BIDZ), a leading online retailer of jewelry, announced
results for the fourth quarter and fiscal year ended December 31, 2008.
Net revenue for the fourth quarter of 2008 was $35.1 million, compared
with $63.2 million reported in the fourth quarter of 2007, with domestic
and international sales representing 72.1% and 27.9% of sales,
respectively.
In the fourth quarter 2008, gross profit was approximately $12.1
million, compared with $19.8 million in the fourth quarter of 2007.
Gross margins in the fourth quarter of 2008 were 34.4%, compared with
31.2% in the same period of 2007. During the fourth quarter, unlike many
other retailers, the Company did not promote significantly or use heavy
discounting and as a result, the Company was able to better preserve its
profit margins.
"Given the unprecedented challenges that we and most companies faced
over the holiday season, we are very pleased to report EPS in-line with
our previously issued EPS guidance range," said Leon Kuperman, the
Company's President. "Importantly, we increased our fourth quarter gross
margins by 320 basis points. We believe our ability to deliver these
positive results in this environment reflect both the strength and
flexibility of our business model and the tremendous value we offer to
consumers. While the retail spending environment remains exceedingly
difficult and we expect will continue to be so through 2009, we believe
that our focus on profitability and gross margins combined with our
ongoing cost cutting initiatives, will allow us to remain profitable and
financially strong while increasing our market share in the global
jewelry market.
"Looking ahead, we remain intensely focused on executing on our
strategic initiatives that will continue to enhance the Bidz.com
customer experience in all areas," continued Mr. Kuperman. "In times of
rapid change, the right execution model is imperative and we are acting
quickly to ensure we have the proper structure in place to manage and
maximize our business in the current environment."
Operating expenses in the fourth quarter 2008 were $7.6 million compared
to $11.4 million in the prior year period. The significant dollar
decrease in expenses was primarily due to the Company's aggressive cost
cutting initiatives to downsize the number of employees to 165 from 240
in 2007, as well as many other spending reductions in all areas of
operations and administration.
The Company's pre-tax income for the fourth quarter of 2008 was $4.5
million, compared to $8.4 million in the prior year period. The
Company's income tax expense increased to $1.6 million in the fourth
quarter of 2008, compared to $32,000 in prior year period, and the
effective tax rate increased to 35.1% from 0.4%. It is important to note
that the Company became fully taxed in 2008 since all of its operating
loss carry forwards were utilized in 2007.
Net income for the fourth quarter of 2008 was $2.9 million, or $0.13 per
fully diluted share on 23.3 million weighted average shares outstanding,
compared to net income of $8.2 million, or $0.29 per fully diluted share
on 28.5 million weighted average shares outstanding in the same period
of 2007, when the Company was still utilizing its NOLs. The Company's
sufficient flexibility and control over variable costs in the operating
structure allowed it to meet its EPS guidance.
For the twelve months ended December
31, 2008: -
Net revenue was $207.4 million, a 10.8% increase compared with $187.1
million reported for the twelve months ended December 31, 2007.
-
Gross profit increased 7.8% to $58.7 million in 2008 from $54.4
million in 2007. Gross margins in 2008 were 28.3% compared with 29.1%
in the prior year.
-
Operating expenses for the year saw positive leverage and were $34.6
million, or 16.7% of revenue, compared to $33.5 million, or 17.9% of
revenue in the same period a year ago.
-
Income from operations increased to $24.1 million, or 11.6% of
revenue, as compared to $20.9 million, or 11.2% of revenue in the
prior year.
-
Pre-tax income increased 16.1% to $24.0 million, compared to $20.7
million in 2007.
-
Net income for 2008 was $14.4 million, compared to $18.1 million, in
2007.
-
Income tax expenses were $9.6 million, with an effective tax rate of
40.0%, compared to $2.5 million with an effective tax rate of 12.3% in
the prior year period.
-
2008 EPS was $0.57 per fully diluted share on 25.1 million weighted
average shares outstanding, compared to fully diluted 2007 EPS of
$0.69 on 26.3 million weighted average shares outstanding.
As of December 31, 2008, the Company had approximately $4.5 million in
cash. Additionally, the Company has no long-term debt and a zero balance
on its $25 million line of credit. The Company believes that its
positive cash flow, strong liquidity and revolving line of credit are
among its core financial strengths. The Company continues to improve its
financial position and has the balance sheet strength, liquidity and
free cash flow it needs to make progress on its core strategies, as the
Company works navigates the current economic downturn.
Additionally, the Company announced that its Board of Directors
authorized a significant increase in its share buyback program by $13.5
million to $33.5 million. The Company has repurchased a total of $13.5
million of its outstanding common stock, leaving $20 million of
authorized capacity available for repurchases at the Company's
discretion.
2008 Highlights and Accomplishments: -
The Company completed a major upgrade of its auction platform. The new
system has high availability, faster end-user response time and
greater scalability among other key features
-
The Company received approval for an increase in its revolving credit
line to $25 million, from $15 million, with Bank of America, as well
as board authorization to significantly increase its share repurchase
program to $20 million from $5 million
-
The Company announced the launch of Buyz.com
-
The Company was selected for ''e-tailer of the Year'' by IDCA, the
Indian Diamond & Colorstone Association, based on excelling in the
sale of Indian diamonds, gemstones, and jewelry.
-
The Company continued to climb in internet rankings. Bidz is now
ranked the number three site in the shopping/auction category,
following eBay.com and eBayUK according to Ranking.com
-
The Company launched a Spanish language version of its online auction
site in May, Arabic in October and German in December
-
The Company acquired a $23.9 million lot of finished jewelry in the
bankruptcy auction of LID Ltd., one of the world's largest
manufacturers of diamond jewelry
-
The Company was added to the Russell 2000, 3000, Microcap and Global
Indices on June 27, 2008
-
As of December 31, 2008 the Company had spent a total of $13.5 million
to repurchase approximately 1.9 million of its shares at an average
price of $7.23, as part of its share buyback program
-
The Company promoted Leon Kuperman to President
The Company was notified recently by the SEC of a formal investigation
relating to certain aspects of its inventory accounting practices, as
well as other matters. The Company intends to fully cooperate with the
SEC regarding this matter. The Company remains confident its inventory
accounting is correct and in full accordance with GAAP.
Business Outlook/Guidance The Company is introducing new revenue guidance for the first quarter of
2009 of $30-$32 million, gross profit margin of approximately 30%,
pre-tax income of approximately $1.8-$2.0 million and, fully taxed GAAP
EPS of $0.04-$0.05.
Investor Conference Call Bidz.com's quarterly earnings conference call is scheduled to begin
later today (February 23, 2009) at 1:30 p.m., Pacific Time. The call
will be open to all interested investors through a live audio Web
broadcast via the Internet on the investor relations section of the
Company's website at http://investors.bidz.com/.
For those unable to participate during the live broadcast, the webcast
will be archived for 90 days and a replay will be available beginning
Monday, February 23, 2009 at 7:30 p.m. ET, through March 9, 2009 at
12:00 a.m. ET. To access the replay, dial 800-406-7325 (U.S.) or
303-590-3030 (International), and use passcode: 3932985.
About Bidz.com Bidz.com, founded in 1998, is an online retailer of jewelry. Bidz offers
its products through a live auction format as well as a fixed price
online retail store, Buyz.com. Bidz.com's auctions are also available in
Spanish, German and Arabic. To learn more about Bidz.com visit its
website at www.bidz.com.
Safe Harbor Statement This press release includes forward looking statements about the
Company's estimated revenue and earnings within the meaning of the
Private Securities Litigation Reform Act of 1995.All statements
other than statements of historical facts contained in this release,
including statements regarding the Company's future financial position,
business strategy and plans and objectives of management for future
operations, are forward looking statements.The words "believe,"
"may," "will," "estimate," "continue," "anticipate," "intend," "expect,"
and similar expressions, as they relate to the Company, are intended to
identify forward looking statements.We have based these
forward-looking statements largely on current expectations and
projections about future events and financial trends that we believe may
affect the Company's financial condition, results of operations,
business strategy and financial needs.Risks and uncertainties
include that our common stock is subject to short selling and trading,
and prices of our stock may be volatile; that we are subject to "prank"
bidding; that we may face increasing costs to acquire new customers; the
ability of the Company to attract customers to its website and offer
attractive products; the ability to maintain profit levels while
expanding international sales; the ability to detect fraud if we fail to
maintain an effective system of internal controls; the ability to
maintain our website, electronic data processing systems, and systems
hardware; the abilityto forecast accurately net revenue and plan
for expenses; that we do not have a guaranteed supply of jewelry
products and that we have a heavy concentration of inventory purchase
from our top two suppliers; the ability to protect our intellectual
property rights; and potential litigation and government enforcement
actions that may result from our prior securities offerings.Please
refer to Bidz.com's reports and filings with the Securities and Exchange
Commission for a further discussion of these risks and uncertainties.Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date they are made. Bidz.com
undertakes no obligation to update publicly any forward-looking
statements to reflect new information, events or circumstances after the
date they were made or to reflect the occurrence of unanticipated events. | Bidz.com, Inc. | | Balance Sheets | | | | | | | | | (in thousands, except share data and per share) | | | | December 31, | | |
| 2007 | | | 2008 | | | | | | | | | Assets | | | | | | | |
Current assets:
| | | | | | | |
Cash
| |
$
|
4,808
| | |
$
|
4,456
| | |
Accounts receivable
| | |
2,146
| | | |
591
| | |
Inventories, net of reserves of $1,075 and $820 at December 31, 2007
and December 31, 2008, respectively
| | | | | | | | |
56,686
| | | |
37,657
| | |
Other receivable (includes related party amounts of $673 and $102 at
December 31, 2007 and December 31, 2008, respectively)
| | | | | | | | |
3,002
| | | |
1,041
| | |
Current deferred tax assets
| | |
2,121
| | | |
1,950
| | |
Other current assets
| | |
485
| | | |
689
| | |
Total current assets
| | |
69,248
| | | |
46,384
| | |
Long term deferred tax asset
| | |
129
| | | |
84
| | |
Property and equipment, net
| | |
1,323
| | | |
1,672
| | |
Intangible asset
| | |
161
| | | |
161
| | |
Deposits
| | |
104
| | | |
104
| | |
Total assets
| |
$
|
70,965
| | |
$
|
48,405
| | | | | | | | | | Liabilities and Stockholders' Equity | | | | | | | |
Current liabilities:
| | | | | | | |
Revolving credit line
| |
$
|
5,924
| | |
$
|
-
| | |
Accounts payable (includes related party amounts of $5,050 and
$1,364 at December 31, 2007 and December 31, 2008, respectively)
| | | | | | | | |
26,050
| | | |
9,636
| | |
Accrued expenses
| | |
4,509
| | | |
3,091
| | |
Deferred revenue
| | |
2,900
| | | |
872
| | |
Total current liabilities
| | |
39,383
| | | |
13,599
| | | | | | | | |
Commitments and contingencies
| | | | | | | | | | | | | | |
Stockholders' equity:
| | | | | | | |
Preferred stock: par value $0.001; authorized 4,000,000 shares; none
issued and outstanding at December 31, 2007 and December 31, 2008,
respectively
| | | | | | | | |
-
| | | |
-
| | |
Common stock: par value $0.001; authorized 100,000,000 shares;
issued and outstanding 24,556,354 and 22,917,918 at December 31,
2007 and December 31, 2008, respectively
| | | | | | | | | | | | | | |
25
| | | |
23
| | |
Additional paid in capital
| | |
36,961
| | | |
24,520
| | |
Shares held in treasury, at cost; 100,000 and 0 shares at December
31, 2007 and December 31, 2008, respectively
| | | | | | | | |
(886
|
)
| | |
-
| | |
Employees share purchase receivable
| | |
(1,086
|
)
| | |
(708
|
)
| |
Accumulated earnings (deficit)
| | |
(3,432
|
)
| | |
10,971
| | |
Total stockholders' equity
| | |
31,582
| | | |
34,806
| | | |
$
|
70,965
| | |
$
|
48,405
| | | | | | | | | | |
| Bidz.com, Inc. | | Statements of Income | | | | | | | | | | | | | | | (in thousands, except share and per share data) | | | Year Ended
December 31, | | | Three Months Ended
December 31, | | | | 2007 | | | 2008 | | | 2007 | | | 2008 | | | | | | | | | | | | | | |
Net revenue:
| | | | | | | | | | | | | |
Merchandise sales
| | $ |
186,830
| | | $ |
177,089
| | | $ |
63,169
| | | $ |
35,078
| | |
Wholesale merchandise sales
| | |
-
| | | |
29,886
| | | |
-
| | | |
-
| | |
Other revenue
| | |
301
| | | |
435
| | | |
64
| | | |
61
| | | | |
187,131
| | | |
207,410
| | | |
63,233
| | | |
35,139
| | |
Cost of revenue
| | |
132,683
| | | |
148,688
| | | |
43,482
| | | |
23,064
| | |
Gross Profit
| | |
54,448
| | | |
58,722
| | | |
19,751
| | | |
12,075
| | |
Operating expenses:
| | | | | | | | | | | | | |
General and administrative
| | |
20,458
| | | |
21,209
| | | |
5,684
| | | |
4,355
| | |
Sales and marketing
| | |
12,578
| | | |
12,681
| | | |
5,552
| | | |
3,037
| | |
Depreciation and amortization
| | |
498
| | | |
690
| | | |
152
| | | |
185
| | |
Total operating expenses
| | |
33,534
| | | |
34,580
| | | |
11,388
| | | |
7,577
| | |
Income from operations
| | |
20,914
| | | |
24,142
| | | |
8,363
| | | |
4,498
| | |
Other income - interest income
| | |
41
| | | |
40
| | | |
8
| | | |
16
| | |
Other expense - interest (expense)
| | |
(291
|
)
| | |
(182
|
)
| | |
(126
|
)
| | |
(6
|
)
| |
Income before income tax expense
| | |
20,664
| | | |
24,000
| | | |
8,245
| | | |
4,508
| | |
Income tax expense
| | |
2,538
| | | |
9,597
| | | |
32
| | | |
1,584
| | |
Net income
| | $ |
18,126
| | | $ |
14,403
| | | $ |
8,213
| | | $ |
2,924
| | | | | | | | | | | | | | | |
Net income per share available to common shareholders - basic
| | $ |
0.77
| | | $ |
0.61
| | | $ |
0.34
| | | $ |
0.13
| | |
Net income per share available to common shareholders - diluted
| | $ |
0.69
| | | $ |
0.57
| | | $ |
0.29
| | | $ |
0.13
| | |
Weighted average number of shares outstanding - basic
| | |
23,567,995
| | | |
23,798,338
| | | |
24,150,069
| | | |
23,312,209
| | |
Weighted average number of shares outstanding - diluted
| | |
26,266,008
| | | |
25,069,509
| | | |
28,507,483
| | | |
23,313,289
| | | | | | | | | | | | | | | | | | |
| Bidz.com, Inc. | | Statements of Cash Flows | | | | | | | | | | | | | (in thousands) | | | | |
| | | | | | | | | Years Ended December 31, | | | | 2006 | | | 2007 | | | 2008 | | | | | | | | | | | | | Cash flows provided by (used for) operating activities: | | | | | | | | | | |
Net income
| |
$
|
5,389
| | |
$
|
18,126
| | |
$
|
14,403
| | | | | | | | | | | | | | Adjustments to reconcile net income to net cashprovided
by operating activities: | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
| | |
273
| | | |
498
| | | |
686
| | |
Loss on disposal of fixed asset
| | |
-
| | | |
-
| | | |
4
| | |
Change in inventory reserve
| | |
130
| | | |
614
| | | |
(255
|
)
| |
Impairment in employees share purchase receivable
| | |
-
| | | |
-
| | | |
256
| | |
Amortization of deferred stock-based compensation
| | |
100
| | | |
-
| | | |
-
| | |
Stock-based compensation
| | |
235
| | | |
774
| | | |
641
| | | Changes in assets and liabilities: | | | | | | | | | | | (Increase) decrease in assets: | | | | | | | | | | |
Accounts receivable
| | |
(1,044
|
)
| | |
(216
|
)
| | |
1,555
| | |
Inventories
| | |
(18,517
|
)
| | |
(22,992
|
)
| | |
19,284
| | |
Other receivable
| | |
-
| | | |
(3,002
|
)
| | |
1,961
| | |
Current deferred tax assets
| | |
-
| | | |
(2,121
|
)
| | |
171
| | |
Other current assets
| | |
(1,034
|
)
| | |
357
| | | |
(204
|
)
| |
Deposits
| | |
115
| | | |
21
| | | |
-
| | | Increase (decrease) in liabilities: | | | | | | | | | | |
Post-dated check financing
| | |
(5,315
|
)
| | |
-
| | | |
-
| | |
Accounts payable
| | |
14,690
| | | |
4,413
| | | |
(16,414
|
)
| |
Accrued expenses
| | |
178
| | | |
2,557
| | | |
(1,418
|
)
| |
Deferred revenue
| | |
2,358
| | | |
(1,035
|
)
| | |
(2,028
|
)
| |
Net cash provided by (used for) operating activities
| | |
(2,442
|
)
| | |
(2,006
|
)
| | |
18,642
| | | | | | | | | | | | | | Cash flows provided by (used for) investing activities: | | | | | | | | | | |
Capital expenditures
| | |
(367
|
)
| | |
(1,354
|
)
| | |
(1,058
|
)
| |
Proceeds from sale of fixed asset
| | |
-
| | | |
-
| | | |
19
| | |
Net cash used for investing activities
| | |
(367
|
)
| | |
(1,354
|
)
| | |
(1,039
|
)
| | Cash flows provided by (used for) financing activities: | | | | | | | | | | |
Revolving credit line
| | |
3,941
| | | |
1,983
| | | |
(5,924
|
)
| |
Long term deferred tax assets
| | |
-
| | | |
(129
|
)
| | |
45
| | |
Issuance of common stock
| | |
-
| | | |
-
| | | |
5
| | |
Employees share purchase receivable
| | | | | |
(1,086
|
)
| | |
122
| | |
Retirements of common stock from net vesting of restricted stocks
| |
(690
|
)
| | |
-
| | | |
(10
|
)
| |
Proceeds from exercise of stock options
| | |
-
| | | |
4,772
| | | |
2,095
| | |
Retirements of common stock from net exercise of stock options
| | |
-
| | | |
-
| | | |
(2,480
|
)
| |
Tax benefit from exercise of stock options
| | |
-
| | | |
3,155
| | | |
716
| | |
Purchase of treasury stock
| | |
(90
|
)
| | |
(886
|
)
| | |
(12,524
|
)
| |
Net cash provided by (used for) financing activities
| | |
3,161
| | | |
7,809
| | | |
(17,955
|
)
| | | | | | | | | | | | | Net increase (decrease) in cash | | |
352
| | | |
4,449
| | | |
(352
|
)
| | Cash, beginning of period | | |
7
| | | |
359
| | | |
4,808
| | | Cash, end of period | |
$
|
359
| | |
$
|
4,808
| | |
$
|
4,456
| | | | | | | | | | | | | | Supplemental disclosure of cash flow information: | | | | | | | | | | |
Interest paid
| |
$
|
48
| | |
$
|
291
| | |
$
|
182
| | |
Income taxes paid
| |
$
|
323
| | |
$
|
502
| | |
$
|
9,874
| | | Supplemental disclosure of non-cash investing andfinancing
activities: | | | | | | | | | | | | | | | | | | | |
Retirement of property and equipment
| |
$
|
17
| | |
$
|
293
| | |
$
|
9
| | |
Retirement of treasury shares
| |
$
|
-
| | |
$
|
90
| | |
$
|
13,410
| |
SOURCE: Bidz.com
Investor Relations:
ICR
Andrew Greenebaum or Patricia Dolmatsky, 310-954-1100
Copyright Business Wire 2009
|
