Imedia Brands, Inc. (NASDAQ:IMBI)

MINNEAPOLIS, Nov. 26, 2019 (GLOBE NEWSWIRE) -- iMedia Brands, Inc. (NASDAQ: IMBI) today announced two important accretive acquisitions, Float Left Interactive and J.W. Hulme. Both accelerate the company’s interactive media growth strategy and position it for growth in 2020.

Float Left Interactive is a leading technology provider delivering OTT and TV-Everywhere solutions to media companies seeking to reach audiences through Roku, Apple TV, Amazon Fire, mobile devices and smart TVs. Founded in 2009 and launching hundreds of OTT apps to date, Float Left has become the industry leader, serving a portfolio of clients including NBC, Comcast, CBS and Fox.

iMedia plans to utilize Float Left’s talented team and proprietary technology platform to further grow its content delivery capabilities in OTT platforms while providing new revenue opportunities for Float Left’s SaaS customers. This acquisition is important to iMedia’s strategy to engage today’s millennial, “cord-cutting” viewers within their own preferred interactive video platforms.

Tim Peterman, iMedia CEO said: “Live streaming and OTT marketplaces are global interactive media opportunities and I can’t think of anyone more qualified to lead our effort than Float Left’s President Tom Schaeffer.”

Schaeffer commented: “Joining forces with the right partner is critical in today’s interconnected, interactive media landscape. iMedia is that perfect partner for us. Our entrepreneurial cultures and visions for live streaming are perfectly aligned.”

J.W. Hulme is an iconic, 114-year-old American e-commerce brand offering artisan-crafted accessories and apparel for both women and men. The brand began making durable tents for the U.S. army in World War I, and today offers a wide range of handbags, accessories and apparel through e-commerce, catalogs and its flagship retail store in St. Paul, Minnesota.

iMedia’s investment thesis centers on accelerating Hulme’s revenue growth by creating its own programming on ShopHQ, iMedia’s national television platform. In addition, Hulme’s talented team will drive iMedia’s revenue growth by crafting private-label accessories for ShopHQ’s existing owned and operated fashion brands.

“The J.W. Hulme team have done an amazing job developing this brand to where it is today,” continued Peterman. “We at iMedia take our role as brand stewards for their next level of growth seriously, and we look forward to working with their team to harness our unique collection of assets.”

Dean Vanech, Olympus Capital Investments CEO and owner of J.W. Hulme said: “We are pleased that iMedia has purchased this iconic American company. Hulme’s amazing leather and canvas products and iMedia’s exceptional marketing skills make the transaction a natural fit. And having iMedia based in Minnesota is a bonus. We believe with iMedia as our partner, this brand will grow for at least another 100 years.”

Both acquisitions were largely financed in iMedia stock. More information on the transactions can be found in an 8-K that will be filed with the Securities and Exchange Commission.

Third Quarter 2019 Financial Results

• Net sales of $115 million compares to $132 million last year, a 12.6% decline.
  
• EPS improved 36% to $(0.09) compared to $(0.14) last year.

“Before I go into our successes achieved this past quarter,” said Tim Peterman, CEO of iMedia Brands, “I want to explain the significance of our Shaquille O’Neal partnership announced yesterday. Specifically, why we worked so hard to make this happen and why we believe the size of this opportunity is significant.

“First and foremost, Shaquille O’Neal is more than a celebrity to iMedia. We know him. We know his work ethic, what kind of partner he will be and how good of an entertainer and entrepreneur he is. That is the ‘why.’ He’s that rare, authentic personality who has grown beyond his achievements to become a pop culture icon. 

“iMedia estimates the size of the financial opportunity here to be meaningful. Shaq’s iconic status combined with iMedia’s television and ecommerce retailing expertise create a unique opportunity for iMedia to build a profitable, omni-channel business that iMedia believes could exceed $200 million in annual revenues.

“Regarding our operating results, prior to my arrival in May, the revenue decline for the previous six months was 17.2%. During these past six months, we successfully reduced that decline to 12.7%. We accomplished this by launching multiple exciting brands, making important staffing changes, simplifying the promotional framework and introducing an innovative loyalty program. Although the revenue decline did slow, it did not slow as fast as we wanted.  The reason was the merchandising effort in the company was more troubled prior to my arrival than previously expected, particularly in our two long-lead businesses of Home and Fashion.”

Outlook

The company expects a year-over-year revenue decline in the upcoming fourth quarter, but at a lower rate than the second and third quarters of 2019.  The company also expects to report positive adjusted EBITDA in the fourth quarter.(1)   

Second Quarter 2019 Financial Results

• Net sales of $131.5 million, a 12.8% decrease year-over-year and an improvement compared to the 16.0% year-over-year decline in the first quarter
• Gross margin rate of 36.3%, a 140 basis point decrease year-over-year and an improvement compared to the 28.4% gross margin rate in the first quarter
• Net loss of $10.2 million, an improvement compared to the $21.0 million net loss in the first quarter
• Adjusted EBITDA of $0.2 million, an improvement compared to the adjusted EBITDA loss of $8.5 million in the first quarter
• EPS of ($0.13), an improvement compared to the ($0.31) EPS in the first quarter

Executive Commentary – Tim Peterman, CEO

“We began this turnaround journey in the first month of this quarter, and I’m proud to report we delivered as promised.   Specifically, we just arrested a nine-month, $33 million year-over-year decline in adjusted EBITDA.  It was a lot of smart, hard work performed by the team in a newly established entrepreneurial culture focused on execution.  This is an exciting time for us – I am encouraged about our growth plan and proud of our employees and vendors.”

Outlook

We expect continued revenue declines in the third and fourth quarters, but at a decreasing year-over-year rate, as we demonstrated in the second quarter compared to the first quarter.  Similarly, we expect continued adjusted EBITDA increases in the third and fourth quarters, but at an increasing year-over-year rate. (1)   

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