Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Speed Commerce, Inc. | spdc20150208_8k.htm |
Exhibit 99.1
Speed Commerce Reports Fiscal Third Quarter 2015 Results
- Net Revenues Increase 17%; Company Signs Five New E-Commerce Clients and Realigns Senior Leadership -
DALLAS, TX – February 9, 2015 – Speed Commerce, Inc. (NASDAQ: SPDC), a leading provider of omni-channel e-commerce services, reported financial results for its fiscal third quarter ended December 31, 2014. The following figures exclude results from the company’s retail distribution segment, which was reclassified into discontinued operations in the quarter ended March 31, 2014 and sold on July 9, 2014.
Q3 FY2015 and Recent Highlights
|
● |
Net revenues increased 17% to $38.3 million |
|
● |
Acquired e-commerce services provider Fifth Gear, boosting scale and delivering a diverse customer base and significant cross-selling opportunities |
|
● |
Signed agreements with five new clients to provide e-commerce services beginning in fiscal year 2016 |
|
● |
Jeffrey Zisk announces retirement as president of e-commerce |
|
● |
Realigned senior leadership team including the appointment of Matt Konkle to the new position of chief operating officer |
Fiscal Q3 2015 Financial Results
Net revenues in the fiscal third quarter of 2015 increased 17% to $38.3 million compared to $32.6 million in the year-ago quarter. The increase was due to the organic growth of current clients, the addition of new e-commerce clients and the partial inclusion of Fifth Gear, which was acquired in late November 2014. These gains were partially offset by the loss of a significant 3PL client and revenues associated with freight handling on behalf of two other clients. Net revenues from e-commerce clients (excludes 3PL clients) increased 27% during the quarter.
Adjusted gross profit margin in the third quarter was 23.7% compared to 26.6% in the year-ago quarter (see, “Use of Non-GAAP Financial Information,” below for further discussion about this and other non-GAAP measures). The decrease was primarily driven by increased seasonal and temporary labor costs involved in seasonal fulfillment activities.
Total adjusted operating expenses (a non-GAAP measure), net of depreciation and amortization, were $6.5 million compared to $4.6 million in the year-ago quarter. This increase was primarily due to the addition of Fifth Gear. As a percent of net revenues, adjusted operating expenses were 17.1% compared to 14.0% in the year-ago quarter.
Adjusted EBITDA (a non-GAAP measure) was $3.0 million compared to $4.4 million in the year-ago quarter.
Net loss from continuing operations was $6.7 million or $(0.13) per diluted share, compared to $3.0 million or $(0.05) per diluted share in the year-ago quarter.
First Nine Months of Fiscal 2015 Financial Results
Net revenues in the first nine months of fiscal 2015 were $83.4 million compared to $83.2 million in the year-ago period.
Adjusted gross profit margin (a non-GAAP measure) was 23.1% compared to 26.4% in the year-ago period.
Total adjusted operating expenses (a non-GAAP measure), net of depreciation and amortization, were $15.9 million, compared to $14.9 million in the year-ago period.
Adjusted EBITDA (a non-GAAP measure) was $7.2 million compared to $7.6 million in the year-ago period.
Net loss from continuing operations was $12.0 million or $(0.25) per diluted share, compared to $5.5 million or $(0.09) per diluted share in the year-ago period.
Management Commentary
“First, I would like to thank Jeff Zisk, who is retiring from his management role at Speed Commerce,” said Richard Willis, president and CEO of Speed Commerce. “Jeff was the founder of SpeedFC and has played a significant role in our strategy over the past couple of years. We are grateful for his many contributions and pleased he will remain as a member of our board of directors.
“We faced significant challenges during our third quarter. Two large clients transitioned away from our freight services, as each had an ownership structure that was able to aggregate freight activities with other portfolio companies, which provided them access to more competitive rates. We also had a legacy ‘3PL-only’ customer that moved away from our fulfillment services due to their focus on brick-and-mortar store distribution capabilities, a business that we de-emphasized with our retail divestiture last summer.
“The holiday product mix sold by a large newly-added client was unexpectedly weighted towards big ticket consumer electronics, a product category that was still being drop-shipped from their legacy vendor. Finally, we incurred higher than anticipated labor costs in our largest fulfillment center. Despite these headwinds, consolidated revenues still increased 17% while revenues from e-commerce clients grew 27%.”
“Our sales team continues to be successful,” continued Willis. “Mark Steele, our VP of sales and marketing, has led the signing of five new clients and has built the most impressive pipeline that we have seen in our history. The sales pipeline, combined with an organization that has significantly improved its scale, management depth and capabilities with the addition of Fifth Gear, gives us great confidence in our ability to efficiently service our clients and continue to win new business.
“We have restructured our leadership team in a manner that enhances accountability with the overriding goal of increasing productivity and improving our customer focus. As such, we recently appointed Matt Konkle to the new position of chief operating officer. Matt comes to Speed through the acquisition of Fifth Gear where he served as president for seven years. With over 15 years of technology and business services management experience, Matt will be working with me to direct our entire fulfillment, customer care and client services operations.
“His involvement with the integration of Fifth Gear is keeping us on-track as we drive forward with our plan to realize synergies and cross-sell our services to existing clients. We have also revamped our IT department and will continuously make changes to ensure our customer service and implementation is world class.”
Fiscal 2015 and 2016 Outlook
Speed Commerce has revised its fiscal 2015 guidance and now expects net revenues to range between $120 million to $125 million. Adjusted EBITDA is now expected to range between $10 million and $12 million. The company has refined its fiscal 2016 outlook and now expects fiscal 2016 net revenues to range between $160 million to $175 million, and adjusted EBITDA to range between$15 million to $17 million.
Conference Call
Speed Commerce will host a conference call today at 10:00 a.m. Eastern time to discuss these results. President and CEO Richard Willis and CFO Terry Tuttle will host the call, followed by a question and answer period.
Date: Monday, February 9, 2015
Time: 10:00 a.m. Eastern time (9:00 a.m. Central time)
Toll free dial-in number: 1-888-428-9480
International dial-in number: 1-719-325-2329
Conference ID: 3092697
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=112791 and via the investor relations section of the Speed Commerce website at www.speedcommerce.com.
A replay of the conference call will be available after 1:00 p.m. Eastern time on the same day through February 23, 2015.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 3092697
About Speed Commerce
Speed Commerce, Inc. (NASDAQ: SPDC) is a single-source provider of e-commerce service solutions to leading retailers and manufacturers. The company’s omni-channel capabilities unite a digital commerce strategy with traditional retail channels, creating the ultimate branded shopping experience. Services include e-commerce platform development; hosting, managed and marketing services; order and inventory management; pick, pack & ship; returns processing; and 24/7 customer care. For additional information, please visit the company's website at www.speedcommerce.com.
Use of Non-GAAP Information
In evaluating the company’s financial performance and operating trends, management considers information concerning the company’s net revenues from e-commerce clients, adjusted gross margins, adjusted operating expenses, and adjusted EBITDA, among other items, which are not calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States of America. The company’s management believes these non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods and for the evaluation of financial results. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method the company uses to produce non-GAAP results is not computed according to GAAP, is likely to differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release and can also be found on the company’s website at www.speedcommerce.com.
Important Cautions Regarding Forward Looking Statements
The statements in this press release are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbors provided therein. These forward-looking statements are subject to risks and uncertainties, and the actual results that the company achieves, or reports in its Form 10-Q in connection with this period, may differ materially from these forward-looking statements due to such risks and uncertainties, including, but not limited to: difficult economic conditions that adversely affect the company or its clients; the company’s revenues being derived from a small group of clients; pending or prospective litigation may subject the company to significant costs; the seasonal nature of the company’s business; the company’s ability to quickly and cost-effectively adapt to the changing demands of its clients; the potential for the company to incur significant costs and to experience operational and logistical difficulties in connection with its information technology systems and fulfillment infrastructure; the company’s dependence on significant clients and vendors; the company’s ability to meet significant working capital requirements; and the company’s ability to compete effectively in the highly competitive markets that it serves. In addition to these, a detailed statement of risks and uncertainties is contained in the company’s reports to the U.S. Securities and Exchange Commission (the “SEC”), including, in particular, the company’s proxy materials, the company’s Form 10-K filings, as well as its other SEC filings and public disclosures.
Investors and shareholders are urged to read this press release carefully. The company can offer no assurances that any projections, assumptions or forecasts made or discussed in this press release, will be met, and investors should understand the risks of investing solely due to such projections. The forward-looking statements included in this press release are made only as of the date of this report and the company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
Investors and shareholders may obtain free copies of the public filings through the website maintained by the SEC at www.sec.gov or at one of the SEC’s other public reference rooms in Washington, D.C., New York, New York or Chicago, Illinois. Please contact the SEC at 1-800-SEC-0330 for further information with respect to the SEC’s public reference rooms.
|
SPEED COMMERCE, INC. |
|
Consolidated Condensed Balance Sheets |
|
(In thousands) |
|
(Unaudited) |
(Audited) |
|||||||
|
December 31, |
March 31, |
|||||||
|
2014 |
2014 |
|||||||
|
Assets: |
||||||||
|
Current assets: |
||||||||
|
Cash |
$ | 7,569 | $ | 13 | ||||
|
Accounts receivable, net |
29,023 | 18,527 | ||||||
|
Inventory |
977 | - | ||||||
|
Prepaid expenses |
2,322 | 1,000 | ||||||
|
Deferred costs |
5,969 | 1,708 | ||||||
|
Assets of discontinued operations |
- | 102,278 | ||||||
|
Total current assets |
45,860 | 123,526 | ||||||
|
Property and equipment, net |
24,111 | 15,409 | ||||||
|
Goodwill and intangible assets, net |
106,926 | 50,261 | ||||||
|
Assets of discontinued operations |
- | 7,578 | ||||||
|
Other assets |
19,321 | 5,914 | ||||||
|
Total assets |
$ | 196,218 | $ | 202,688 | ||||
|
Liabilities and shareholders’ equity: |
||||||||
|
Current liabilities: |
||||||||
|
Revolving line of credit |
$ | - | $ | 38,362 | ||||
|
Current portion of long-term debt |
2,625 | - | ||||||
|
Accounts payable |
16,777 | 12,683 | ||||||
|
Accrued expenses |
18,478 | 1,730 | ||||||
|
Liabilities related to assets of discontinued operations |
- | 88,388 | ||||||
|
Other |
7,566 | 5,383 | ||||||
|
Total current liabilities |
45,446 | 146,546 | ||||||
|
Long-term liabilities: |
||||||||
|
Liabilities related to assets of discontinued operations |
- | 7 | ||||||
|
Long-term debt |
96,750 | - | ||||||
|
Other liabilities |
14,135 | 4,740 | ||||||
|
Total liabilities |
156,331 | 151,293 | ||||||
|
Shareholders’ equity |
39,887 | 51,395 | ||||||
|
Total liabilities and shareholders’ equity |
$ | 196,218 | $ | 202,688 | ||||
|
SPEED COMMERCE, INC. |
|
Consolidated Statements of Operations and Comprehensive (Loss) |
|
(In thousands, except per share amounts) |
|
(Unaudited) |
(Unaudited) |
|||||||||||||||
|
Three months ended December 31, |
Nine months ended December 31, |
|||||||||||||||
|
2014 |
2013 |
2014 |
2013 |
|||||||||||||
|
Net revenues |
$ | 38,257 | $ | 32,576 | $ | 83,384 | $ | 83,154 | ||||||||
|
Cost of revenues |
29,200 | 28,894 | 64,096 | 67,840 | ||||||||||||
|
Gross profit |
9,057 | 3,682 | 19,288 | 15,314 | ||||||||||||
|
Operating expenses: |
||||||||||||||||
|
Selling and marketing |
627 | 732 | 2,392 | 1,879 | ||||||||||||
|
General and administrative |
7,470 | 3,374 | 15,221 | 11,536 | ||||||||||||
|
Information technology |
1,223 | 698 | 3,023 | 2,075 | ||||||||||||
|
Depreciation and amortization |
2,274 | 1,381 | 5,888 | 4,000 | ||||||||||||
|
Total operating expenses |
11,594 | 6,185 | 26,524 | 19,490 | ||||||||||||
|
Income (loss) from operations |
(2,537 | ) | (2,503 | ) | (7,236 | ) | (4,176 | ) | ||||||||
|
Other income (expense): |
||||||||||||||||
|
Interest expense, net |
(1,130 | ) | (432 | ) | (2,509 | ) | (1,230 | ) | ||||||||
|
Loss on early extinguishment of debt |
(3,047 | ) | - | (3,863 | ) | - | ||||||||||
|
Other income (expense), net |
(250 | ) | (2 | ) | 1,511 | 8 | ||||||||||
|
Income (loss) from operations, before income tax |
(6,964 | ) | (2,937 | ) | (12,097 | ) | (5,398 | ) | ||||||||
|
Income tax expense |
(170 | ) | (25 | ) | (343 | ) | (53 | ) | ||||||||
|
Net loss from continuing operations |
(7,134 | ) | (2,962 | ) | (12,440 | ) | (5,451 | ) | ||||||||
|
Discontinued operations: |
||||||||||||||||
|
Gain on sale of discontinued operations |
(1,792 | ) | - | 2,135 | - | |||||||||||
|
Income (loss) from discontinued operations, net of tax |
(476 | ) | 1,898 | (11,399 | ) | (2,186 | ) | |||||||||
|
Net loss |
$ | (9,402 | ) | $ | (1,064 | ) | $ | (21,704 | ) | $ | (7,637 | ) | ||||
|
Basic net loss per common share |
||||||||||||||||
|
Continuing operations |
$ | (0.13 | ) | $ | (0.05 | ) | $ | (0.25 | ) | $ | 0.09 | |||||
|
Discontinued operations |
(0.03 | ) | 0.03 | (0.14 | ) | (0.04 | ) | |||||||||
|
Net loss |
$ | (0.16 | ) | $ | (0.02 | ) | $ | (0.39 | ) | $ | 0.05 | |||||
|
Diluted net loss per common share |
||||||||||||||||
|
Continuing operations |
$ | (0.13 | ) | $ | (0.05 | ) | $ | (0.25 | ) | $ | (0.09 | ) | ||||
|
Discontinued operations |
(0.03 | ) | 0.03 | (0.14 | ) | (0.04 | ) | |||||||||
|
Net loss |
$ | (0.16 | ) | $ | (0.02 | ) | $ | (0.39 | ) | $ | (0.13 | ) | ||||
|
Weighted average shares outstanding: |
||||||||||||||||
|
Basic |
65,928 | 64,928 | 65,561 | 59,332 | ||||||||||||
|
Diluted |
65,928 | 64,928 | 65,561 | 59,332 | ||||||||||||
|
Other comprehensive loss: |
||||||||||||||||
|
Net unrealized gain on foreign exchange rate translation, net of tax |
153 | 157 | (572 | ) | 192 | |||||||||||
|
Comprehensive loss |
$ | (9,249 | ) | $ | (907 | ) | $ | (22,276 | ) | $ | (7,445 | ) | ||||
|
SPEED COMMERCE, INC. |
|
Supplemental Information |
|
(In thousands) |
|
(Unaudited) |
|
Adjusted Pro Forma (Loss) Before Income Tax for the Three Months Ended December 31, |
|
GAAP Information |
Adjusted Pro Forma Information |
|||||||||||||||||||||||||||||||
|
Three Months Ended December 31, |
Three Months Ended December 31, |
|||||||||||||||||||||||||||||||
|
2014 |
% of sales |
2013 |
% of sales |
2014 |
% of sales |
2013 |
% of sales |
|||||||||||||||||||||||||
|
Net revenues |
$ | 38,257 | $ | 32,576 | $ | 38,257 | $ | 32,576 | ||||||||||||||||||||||||
|
Gross profit (1) |
9,057 | 23.7 | % | 3,682 | 11.3 | % | 9,057 | 23.7 | % | 8,679 | 26.6 | % | ||||||||||||||||||||
|
Operating expenses (2) |
11,594 | 30.3 | % | 6,185 | 19.0 | % | 8,807 | 23.0 | % | 5,955 | 18.3 | % | ||||||||||||||||||||
|
Income (loss) from operations |
(2,537 | ) | (2,503 | ) | 250 | 2,724 | ||||||||||||||||||||||||||
|
Other expense, net (3) |
(4,427 | ) | (434 | ) | (1,380 | ) | (434 | ) | ||||||||||||||||||||||||
|
Income (loss) from continuing operations before income tax |
$ | (6,964 | ) | $ | (2,937 | ) | $ | (1,130 | ) | $ | 2,290 | |||||||||||||||||||||
|
Three Months Ended December 31, |
||||||||||||||||||||||||||||||||
|
2014 |
2013 |
|||||||||||||||||||||||||||||||
|
(1) Pro forma adjustments to gross profit consist of the following: |
||||||||||||||||||||||||||||||||
|
Transaction and transition costs |
$ | - | $ | 4,997 | ||||||||||||||||||||||||||||
|
Total adjustments |
$ | - | $ | 4,997 | ||||||||||||||||||||||||||||
|
(2) Pro forma adjustments to operating expenses consist of the following: |
||||||||||||||||||||||||||||||||
|
Transaction and transition costs |
$ | 695 | $ | 230 | ||||||||||||||||||||||||||||
|
Acquisition costs |
2,092 | |||||||||||||||||||||||||||||||
|
Total adjustments |
$ | 2,787 | $ | 230 | ||||||||||||||||||||||||||||
|
(3) Pro forma adjustments to other expense, net consist of the following: |
||||||||||||||||||||||||||||||||
|
Acquisition costs |
$ | - | $ | - | ||||||||||||||||||||||||||||
|
Loss on extinguishment of debt |
3,047 | |||||||||||||||||||||||||||||||
|
Total adjustments |
$ | 3,047 | $ | - | ||||||||||||||||||||||||||||
|
SPEED COMMERCE, INC. |
|
Supplemental Information |
|
(In thousands) |
|
(Unaudited) |
|
Adjusted Pro Forma (Loss) Before Income Tax for the Nine Months Ended December 31, |
|
GAAP Information |
Adjusted Pro Forma Information |
|||||||||||||||||||||||||||||||
|
Nine Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||||||||||||||||||||||
|
2014 |
% of sales |
2013 |
% of sales |
2014 |
% of sales |
2013 |
% of sales |
|||||||||||||||||||||||||
|
Net revenues |
$ | 83,384 | $ | 83,154 | $ | 83,384 | $ | 83,154 | ||||||||||||||||||||||||
|
Gross profit (1) |
19,288 | 23.1 | % | 15,314 | 18.4 | % | 19,288 | 23.1 | % | 21,934 | 26.4 | % | ||||||||||||||||||||
|
Operating expenses (2) |
26,524 | 31.8 | % | 19,490 | 23.4 | % | 21,783 | 26.1 | % | 18,949 | 22.8 | % | ||||||||||||||||||||
|
Income (loss) from operations |
(7,236 | ) | (4,176 | ) | (2,495 | ) | 2,985 | |||||||||||||||||||||||||
|
Other expense, net |
(4,861 | ) | (1,222 | ) | (998 | ) | (1,222 | ) | ||||||||||||||||||||||||
|
Income (loss)from continuing operations before income tax |
$ | (12,097 | ) | $ | (5,398 | ) | $ | (3,493 | ) | $ | 1,763 | |||||||||||||||||||||
|
Nine Months Ended December 31, |
||||||||||||||||||||||||||||||||
|
2014 |
2013 |
|||||||||||||||||||||||||||||||
|
(1) Pro forma adjustments to gross profit consist of the following: |
||||||||||||||||||||||||||||||||
|
Transaction and transition costs |
$ | - | $ | 6,620 | ||||||||||||||||||||||||||||
|
Total adjustments |
$ | - | $ | 6,620 | ||||||||||||||||||||||||||||
|
(2) Pro forma adjustments to operating expenses consist of the following: |
||||||||||||||||||||||||||||||||
|
Transaction and transition costs |
$ | 2,649 | $ | 541 | ||||||||||||||||||||||||||||
|
Acquisition costs |
2,092 | |||||||||||||||||||||||||||||||
|
Total adjustments |
$ | 4,741 | $ | 541 | ||||||||||||||||||||||||||||
|
(3) Pro forma adjustments to other expense, net consist of the following: |
||||||||||||||||||||||||||||||||
|
Acquisition costs |
$ | - | $ | - | ||||||||||||||||||||||||||||
|
Loss on extinguishment of debt |
3,863 | - | ||||||||||||||||||||||||||||||
|
Total adjustments |
$ | 3,863 | $ | - | ||||||||||||||||||||||||||||
|
SPEED COMMERCE, INC. |
|
Supplemental Information |
|
(In thousands) |
|
(Unaudited) |
|
Reconciliation of Net Loss to Adjusted EBITDA |
|
Three Months |
Nine Months |
|||||||||||||||
|
December 31, |
December 31, |
|||||||||||||||
|
2014 |
2013 |
2014 |
2013 |
|||||||||||||
|
Net loss from continuing operations, as reported |
$ | (7,134 | ) | $ | (2,962 | ) | $ | (12,440 | ) | $ | (5,451 | ) | ||||
|
Interest expense, net |
1,130 | 432 | 2,509 | 1,230 | ||||||||||||
|
Income tax expense |
170 | 25 | 343 | 53 | ||||||||||||
|
Loss on early extinguishment of debt, net |
3,047 | - | 3,863 | - | ||||||||||||
|
Depreciation and amortization |
2,274 | 1,381 | 5,888 | 4,000 | ||||||||||||
|
Share-based compensation |
556 | 272 | 1,516 | 654 | ||||||||||||
|
Mark-to-market adjustment on warrants |
191 | - | (353 | ) | - | |||||||||||
|
Infrastructure expansion |
- | - | 1,093 | - | ||||||||||||
|
Acquisition costs |
2,092 | - | 2,092 | - | ||||||||||||
|
Transaction and transition costs |
695 | 5,227 | 2,649 | 7,161 | ||||||||||||
|
Adjusted EBITDA |
$ | 3,021 | $ | 4,375 | $ | 7,160 | $ | 7,647 | ||||||||
Investor Relations
Liolios Group, Inc.
Cody Slach
1-949-574-3860
SPDC@liolios.com
9