Exhibit 99.1
GSI Commerce Reports Fiscal 2004 First Quarter Operating Results;
Company Achieves Record First Quarter Net Revenues and Reduces Net Loss
KING OF PRUSSIA, Pa., April 28 /PRNewswire-FirstCall/ -- GSI Commerce Inc.
(Nasdaq: GSIC) today announced that for its first fiscal quarter ended April
3, 2004, the company increased its net revenues 36 percent to $66.3 million
and reported a net loss of $4.0 million, or $0.10 per share, decreasing the
company's net loss by $1.5 million, or $0.04 per share, compared to last
year's first fiscal quarter. For the same comparable periods, adjusted
EBITDA, a non-GAAP financial measure, improved by approximately $1.8 million
to a loss of $1.1 million, and net merchandise sales, also a non-GAAP
financial measure, rose 59 percent to $85.9 million. Definitions of the non-
GAAP financial measures, adjusted EBITDA and net merchandise sales, and a
discussion of why the company uses these measures, appear later in this news
release.
Net Revenues and Net Merchandise Sales
Net revenues were $66.3 million for the first quarter of fiscal 2004,
which was a 36 percent increase compared to net revenues of $48.9 million for
the first quarter of fiscal 2003.
Net revenues from product sales generated by the company's sporting goods
category were $33.5 million for the first quarter of fiscal 2004, which was a
37 percent increase compared to $24.4 million for the first quarter of fiscal
2003. Net revenues from product sales generated by the company's other
merchandise categories were $23.3 million for the first quarter of fiscal
2004, which was an 18 percent increase compared to $19.8 million for the first
quarter of fiscal 2003.
Service fee revenues increased 100 percent to $9.4 million in the first
quarter of fiscal 2004 compared to $4.7 million in the first quarter of fiscal
2003.
Net merchandise sales were $85.9 million for the first quarter of fiscal
2004, a 59 percent increase compared to net merchandise sales of $54.2 million
for the first quarter of fiscal 2003. Net merchandise sales represent the
retail value of all sales transactions, inclusive of freight charges and net
of allowances for returns and discounts, which flow through the GSI Commerce
platform, whether or not the company is the seller of the merchandise or
records the full amount of such sales on its financial statements.
Net merchandise sales from the sporting goods category increased 44
percent in the first quarter of fiscal 2004 to $35.1 million compared to $24.4
million in the first quarter of fiscal 2003. Net merchandise sales from the
company's other merchandise categories increased 71 percent in the first
quarter of fiscal 2004 to $50.8 million from $29.8 million in the first
quarter of fiscal 2003. Net merchandise sales and net revenues from product
sales for the company's other merchandise categories included $735,000 and
$8,000 for the first quarter of fiscal 2003 and first quarter of fiscal 2004,
respectively, related to the jewelry business of Ashford.com, which the
company sold in December 2002.
Net Loss, EPS and Adjusted EBITDA
The company had a net loss of $4.0 million for the first quarter of fiscal
2004, which was an improvement of approximately $1.5 million compared to the
net loss of $5.5 million for the first quarter of fiscal 2003.
The company showed a $0.04 per share improvement with a net loss per share
of $0.10 for the first quarter of fiscal 2004 compared to net loss per share
of $0.14 for the first quarter of fiscal 2003.
The company showed a $1.8 million improvement in adjusted EBITDA, with an
adjusted EBITDA loss of $1.1 million in the first quarter of fiscal 2004
versus an adjusted EBITDA loss of $2.9 million in the first quarter of fiscal
2003. Adjusted EBITDA represents earnings (or losses) before interest
income/expense, taxes, depreciation, amortization, and stock-based
compensation.
Gross Profit and Operating Expenses
The company's gross profit improved 45 percent with $24.8 million in the
first quarter of fiscal 2004 compared to a gross profit of $17.0 million in
the first quarter of fiscal 2003. Gross margin improved to 37.4 percent for
the first quarter of fiscal 2004 from 34.8 percent in the first quarter of
fiscal 2003, an increase of 260 basis points.
Total operating expenses were $29.1 million for the first quarter of
fiscal 2004, an increase of 27 percent compared to $22.9 million for the first
quarter of fiscal 2003. Total operating expenses, as a percentage of net
revenues, decreased to 44 percent in the first quarter of fiscal 2004 compared
to 47 percent in the first quarter of fiscal 2003.
In addition, total operating expenses of $29.1 million, as a percentage of
net merchandise sales of $85.9 million, decreased to 34 percent in the first
quarter of fiscal 2004 compared to total operating expenses of $22.9 million,
as a percentage of net merchandise sales of $54.2 million, which was 42
percent in the first quarter of fiscal 2003.
Balance Sheet
The company's cash, cash equivalents, short-term investments and
marketable securities at the end of fiscal 2004's first quarter were $51.9
million compared to $69.5 million at fiscal 2003 year end, a decrease of $17.6
million, which was attributable to the expected seasonality of working
capital. Cash, cash equivalents, short-term investments and marketable
securities at the end of fiscal 2004's first quarter increased $623,000
compared to the $51.9 million at the end of fiscal 2003's first quarter.
The company's inventory at the end of fiscal 2004's first quarter was
$21.1 million compared to $22.9 million at fiscal 2003 year end, a decrease of
$1.9 million. Comparing inventory at the end of fiscal 2004's first quarter
to the end of fiscal 2003's first quarter, inventory decreased $4.0 million to
$21.1 million from $25.1 million.
Management's Commentary
"GSI Commerce had an excellent first quarter of fiscal 2004," said Michael
Rubin, chairman and CEO of GSI Commerce. "We generated substantial revenue
growth and added meaningful improvement to the bottom line. The revenue
growth exceeded our guidance, and we delivered bottom-line results that came
in at the high-end of our guidance, as we continued to focus strategically on
investing to build a foundation for the planned growth of our business. We
remain confident in our financial outlook for the year and, more importantly,
with our long-term prospects."
Highlights since Feb. 18, 2004
-- Liz Claiborne Inc. launched its new e-commerce store at
www.LizClaiborne.com on the GSI Commerce e-commerce platform.
-- MLB Advanced Media, LP (MLBAM), the interactive media and Internet
company of Major League Baseball, launched its new e-commerce store
located at shop.mlb.com, on the GSI Commerce e-commerce platform.
-- GSI Commerce has partnered with Wilsons Leather Direct, Inc., the
e-commerce arm of Wilsons The Leather Experts Inc. (Nasdaq: WLSN), the
leading specialty retailer of leather outerwear, accessories and
apparel in the United States, to provide a single-sourced, e-commerce
solution for the Wilsons Leather online store.
-- James Flanagan, an HR executive with more than 18 years' experience,
was hired to fill the company's newly created post of senior vice
president of human resources. Flanagan's leadership will support the
company's evolving growth, which will require the company to invest in
attracting, developing, rewarding and retaining the industry's top
talent.
Fiscal 2004 Second Quarter and Annual Financial Guidance
The following forward-looking statements reflect GSI Commerce's
expectations as of April 28, 2004. GSI Commerce provides guidance for its
business based only on signed agreements. Given the potential changes in
general economic conditions and consumer spending, the emerging nature of e-
commerce, and various other risk factors discussed below, actual results may
differ materially.
The company provides the following guidance for fiscal 2004 second
quarter:
-- Net revenues are expected to be in the range of $63 million to $67
million.
-- Net merchandise sales are expected to be in the range of $90 million
to $94 million.
-- Net loss is expected to be in the range of $3 million to $4 million.
-- Adjusted EBITDA is expected to be in the range of a loss of $500,000
to an adjusted EBITDA profit of $500,000.
The company also raised its guidance for fiscal 2004:
-- Net revenues are expected to be in the range of $300 million to $320
million.
-- Net merchandise sales are expected to be in the range of $440 million
to $460 million.
-- Net income is expected to be in the range of $0 to $2 million.
-- Adjusted EBITDA is expected to be in the range of $13.5 million to $15
million.
Non-GAAP Financial Measures
This press release contains adjusted EBITDA, net merchandise sales and
certain ratios that use net merchandise sales. GSI Commerce uses adjusted
EBITDA as a means to evaluate its performance period to period without taking
into account certain expenses, particularly stock-based compensation expense,
which may fluctuate materially due to fluctuations in the price of GSI
Commerce's common stock both on a quarterly and annual basis, and does not
consistently reflect GSI Commerce's results from its core business activities.
GSI Commerce also uses net merchandise sales as a metric for operating its
business. Variable costs such as fulfillment and customer service labor
expense, order processing costs such as credit card and bank processing fees
and business management costs such as marketing department staffing levels are
related to the amount of sales made through GSI Commerce's platform, whether
or not GSI Commerce records the revenue from such sales. GSI Commerce
believes that investors will have a more thorough understanding of its
historical expenses and expense trends if they have visibility to both GAAP
net revenue as well as the non-GAAP financial measure net merchandise sales
and the percentages that such expenses bear to net revenues and net
merchandise sales. These financial measures should be considered in addition
to, and not as a substitute for, or superior to, other measures of financial
performance prepared in accordance with GAAP. These financial measures
included in this press release have been reconciled to the nearest GAAP
measure as is required under SEC rules.
First Quarter Conference Call
GSI Commerce has scheduled a conference call on April 28 at 4:45 p.m. EDT
to discuss the company's fiscal 2004 first quarter results and expectations
for future performance. For access to the conference call, please call the
toll-free conference number, 1-888-928-9510, by 4:30 p.m. EDT. The conference
password is "commerce" and the leader's name is "Michael Rubin."
Alternatively, to listen to the call live on the Web, go to the GSI Commerce
Web site, www.gsicommerce.com, and click on the link provided on the home
page. Please do this at least 15 minutes prior to the call (4:30 p.m. EDT) to
register, download and install any necessary audio software. For those who
cannot listen to the Web broadcast, a telephone replay of the conference call
will be available one hour after the completion of the call and remain
available through May 12.
About GSI Commerce
GSI Commerce provides an e-commerce solution enabling retailers, branded
manufacturers, entertainment companies and professional sports organizations
to operate e-commerce businesses. The company's e-commerce solution includes
Web site design, e-commerce technology, managed hosting, order fulfillment,
customer service, merchandising and order management, online merchandising,
customer relationship management, content development and online marketing.
The company operates either all or a portion of the e-commerce businesses for
more than 40 partners.
Forward-Looking Statements
All statements made in this release and to be made in GSI Commerce's
fiscal 2004 first quarter conference call, including those in the tape
recording, live audio and live Webcast of the call, other than statements of
historical fact, are or will be forward-looking statements. The words
"anticipate," "believe," "estimate," "expect," "intend," "may," "plan,"
"will," "would," "should," "guidance," "potential," "continue," "project,"
"forecast," "confident," "prospects," and similar expressions typically are
used to identify forward-looking statements. Forward-looking statements are
based on the then-current expectations, beliefs, assumptions, estimates and
forecasts about the business of GSI Commerce and the industries and markets in
which GSI Commerce operates. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions, which are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or implied by these forward-looking
statements. Factors which may affect GSI Commerce's business, financial
condition and operating results include the effects of changes in the economy,
consumer spending, the financial markets and the industries in which GSI
Commerce and its partners operate, changes affecting the Internet and e-
commerce, the ability of GSI Commerce to develop and maintain relationships
with strategic partners and suppliers, the ability of GSI Commerce to timely
and successfully develop, maintain and protect its technology and product and
service offerings and execute operationally, the ability of GSI Commerce to
attract and retain qualified personnel, the ability of GSI Commerce to
successfully integrate its acquisitions of other businesses, if any, and the
performance of acquired businesses. More information about potential factors
that could affect GSI Commerce can be found in its most recent Form 10-K, Form
10-Q and other reports and statements filed by GSI Commerce with the
Securities and Exchange Commission. GSI Commerce expressly disclaims any
intent or obligation to update these forward-looking statements, except as
otherwise specifically stated by GSI Commerce.
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
January 3, April 3,
2004 2004
ASSETS
Current assets:
Cash and cash equivalents $57,558 $35,813
Marketable securities 11,912 16,096
Accounts receivable, net of
allowance of $709 and $666,
respectively 4,898 7,768
Inventory 22,910 21,063
Current portion - notes
receivable 1,377 1,385
Prepaid expenses and other
current assets 1,848 1,927
Total current assets 100,503 84,052
Property and equipment, net 44,840 44,643
Goodwill, net 13,453 13,453
Notes receivable 2,356 2,168
Other equity investments 2,159 2,159
Other assets, net of accumulated
amortization of $2,644 and $3,012,
respectively 12,272 11,868
Total assets $175,583 $158,343
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $27,677 $17,995
Accrued expenses and other 22,538 19,636
Deferred revenue 14,998 13,225
Total current liabilities 65,213 50,856
Mandatorily redeemable preferred
stock, Series A, $0.01 par value,
10,000 shares authorized; 0 shares
issued and outstanding as of
January 3, 2004 and April 3,
2004, respectively - -
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par
value, 4,990,000 shares
authorized; 0 shares issued and
outstanding as of January 3, 2004
and April 3, 2004, respectively - -
Common stock, $0.01 par value,
90,000,000 shares authorized;
40,781,036 and 40,974,462 shares
issued as of January 3, 2004 and
April 3, 2004, respectively;
40,779,826 and 40,973,252
shares outstanding as of
January 3, 2004 and April 3, 2004,
respectively 408 410
Additional paid in capital 287,571 288,739
Accumulated other comprehensive loss - (25)
Accumulated deficit (177,609) (181,637)
110,370 107,487
Less: Treasury stock, at par - -
Total stockholders' equity 110,370 107,487
Total liabilities and
stockholders' equity $175,583 $158,343
GSI COMMERCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 29, April 3,
2003 2004
Revenues:
Net revenues from product sales $44,173 $56,878
Service fee revenues 4,706 9,390
Net revenues 48,879 66,268
Cost of revenues from product sales 31,853 41,508
Gross profit 17,026 24,760
Operating expenses:
Sales and marketing, exclusive
of $229 and $494 reported below
as stock-based compensation,
respectively 13,124 17,449
Product development, exclusive
of $0 and $49 reported below
as stock-based compensation,
respectively 3,699 4,483
General and administrative,
exclusive of $59 and $84
reported below as stock-based
compensation, respectively 3,081 3,920
Stock-based compensation 288 627
Depreciation and amortization 2,698 2,599
Total operating expenses 22,890 29,078
Other (income) expense:
Interest income (381) (290)
Total other (income) expense (381) (290)
Net loss $(5,483) $(4,028)
Losses per share - basic and diluted:
Net loss $(0.14) $(0.10)
Weighted average shares outstanding:
basic and diluted 38,784 40,868
GSI COMMERCE, INC. AND SUBSIDIARIES
ADJUSTED EBITDA AND RECONCILIATION TO
GAAP RESULTS
(In thousands)
(Unaudited)
Three Months Ended
March 29, April 3,
2003 2004
Adjusted EBITDA:
Net loss excluding interest
income and expense,
taxes and charges for stock-
based compensation
and depreciation and
amortization $(2,878) $(1,092)
Reconciliation of Adjusted EBITDA to
GAAP results:
Adjusted EBITDA $(2,878) $(1,092)
Interest expense - -
Interest income (381) (290)
Taxes - -
Stock-based compensation 288 627
Depreciation and amortization 2,698 2,599
Net loss $(5,483) $(4,028)
GSI COMMERCE, INC. AND SUBSIDIARIES
NET MERCHANDISE SALES (1) AND
RECONCILIATION TO GAAP RESULTS
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 29, April 3, Variance
2003 2004 Amount %
Net merchandise sales (1) - (a non-
GAAP financial measure):
Category:
Sporting goods $24,407 $35,086 $10,679 44%
Other (2) 29,769 50,801 21,032 71%
Total net merchandise
sales (1) - (a non-
GAAP financial
measure) $54,176 $85,887 $31,711 59%
Net revenues - (GAAP basis):
Net revenues from product sales:
Category:
Sporting goods $24,407 $33,538 $9,131 37%
Other (2) 19,766 23,340 3,574 18%
Total net revenues
from product sales 44,173 56,878 12,705 29%
Service fee revenues 4,706 9,390 4,684 100%
Total net revenues -
(GAAP basis) $48,879 $66,268 $17,389 36%
Reconciliation of net merchandise
sales (1) to net revenues:
Net merchandise sales (1) - (a
non-GAAP financial measure):
Category:
Sporting goods $24,407 $35,086 $10,679 44%
Other (2) 29,769 50,801 21,032 71%
Total net merchandise
sales (1) - (a non-
GAAP financial
measure) 54,176 85,887 31,711 59%
Less:
Sales by partners (3):
Category:
Sporting goods - (1,548) (1,548) -
Other (10,003) (27,461) (17,458) 175%
Total sales by
partners (3) (10,003) (29,009) (19,006) 190%
Add:
Service fee revenues 4,706 9,390 4,684 100%
Net revenues - (GAAP
basis) $48,879 $66,268 $17,389 36%
(1) Net merchandise sales represents the retail value of all sales
transactions, inclusive of freight charges and net of allowances for
returns and discounts, which flow through the GSI Commerce platform,
whether or not GSI Commerce is the seller of the merchandise or
records the full amount of such sales on its financial statements.
(2) The "Other" categories of both net merchandise sales and net
revenues from product sales include $735,000 and $8,000 for the
three-month periods ended March 29, 2003 and April 3, 2004,
respectively, related to Ashford.com.
(3) Represents the retail value of all product sales through the GSI
Commerce platform where the inventory is owned by the partner and
the partner is the seller of the merchandise. GSI Commerce records
service fee revenues on these sales.
Contacts:
Media Investor
Greg Ryan Michael Conn
Director, Corporate Communications Senior Vice President
tel: 610-491-7294 tel: 610-491-7002
fax: 610-265-2866 fax: 610-491-7302
e-mail: ryang@gsicommerce.com e-mail: connm@gsicommerce.com
SOURCE GSI Commerce, Inc.
-0- 04/28/2004
/CONTACT: Media: Greg Ryan, Director, Corporate Communications,
+1-610-491-7294, fax: +1-610-265-2866, e-mail: ryang@gsicommerce.com; or
Investor: Michael Conn, Senior Vice President, +1-610-491-7002, fax:
+1-610-491-7302, e-mail: connm@gsicommerce.com, both of GSI Commerce/
/Web site: http://www.gsicommerce.com /
(GSIC WLSN)
CO: GSI Commerce, Inc.; Wilsons Leather Direct, Inc.; Wilsons The Leather
Experts Inc.
ST: Pennsylvania
IN: ECM CPR MLM REA
SU: ERN ERP MAV CCA