Iparty (AMEX:IPT)
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2 Years : From Jun 2011 to Jun 2013
iParty Corp. (NYSE Amex: IPT - news), a party goods retailer, today
reported financial results for its fourth quarter and fiscal year 2011,
which ended on December 31, 2011.
Fourth Quarter 2011 Highlights
-
Net income of $3.0 million for the fourth quarter of 2011, slightly up
from the fourth quarter of 2010, despite disruptions in the Halloween
season and the temporary loss of the West Lebanon, New Hampshire store.
-
EBITDA of $3.4 million in the fourth quarter of 2011, approximately
equal to EBITDA of $3.4 million for the fourth quarter of fiscal year
2010.
-
Consolidated 14 week revenues for the fourth quarter of fiscal 2011 of
$29.7 million, a 0.7% increase compared to the 13 week fourth quarter
of fiscal 2010.
-
Revenues of $27.8 million on a 13 week basis, a 5.6% decrease
compared to the 13 week fourth quarter of fiscal 2010.
-
Late autumn Nor’easter snowstorm disrupted Halloween business during
final weekend of sales significantly contributing to a calendar
October comparable store sales decline of 12.8% and comparable store
sales decrease of 7.3% compared to the fourth quarter of 2010.
Fiscal Year 2011 Highlights
-
Consolidated 53 week revenues of $80.9 million, a 0.5% decrease
compared to the 52 week fiscal year 2010.
-
Revenues of $79.0 million on a 52 week basis, a 2.8% decrease
compared to fiscal 2010.
-
Comparable store sales decrease of 5.4%.
-
Net loss of $1.3 million, compared to net income of $254 thousand for
fiscal year 2010.
-
EBITDA of $494 thousand compared to EBITDA $2.3 million for fiscal
year 2010.
-
Acquired a Party City store in Manchester, Connecticut and
consolidated that market by closing our older nearby iParty store.
-
Extended revolving credit facility with Wells Fargo for five years
including improved financial terms.
-
The continuation and refinement of our temporary Halloween store
strategy.
-
The re-launch of our Internet site, offering a strong assortment of
Halloween and related merchandise for sale on the Web.
Sal Perisano, iParty’s Chairman and Chief Executive Officer, stated,
"2011 was a very disappointing year from many perspectives. Our sales in
the first half of 2011 suffered in comparison to a relatively strong
first half of 2010. Then in late August, we were hit by Tropical Storm
Irene, which caused disruption in many of our markets as well as the
complete flood loss of our store in West Lebanon, New Hampshire. Finally
and most significant, an early season Nor’easter snow storm struck our
most important market the weekend before Halloween, closing many of our
stores temporarily and significantly reducing our Halloween sales.”
Mr. Perisano further stated, “Despite these events, sales in December
2011 were strong, and that trend has continued through January 2012 and
continues to date, with January sales additionally supplemented by the
post season successes of the New England Patriots. We are cautiously
optimistic that underlying consumer demand in 2012 will continue to
strengthen. We are pleased with the early results in our Manchester,
Connecticut market, where we consolidated two stores into one late in
2011, and also with the performance of our West Lebanon, New Hampshire
store, which we reopened in January. Also, having re-launched our
e-commerce site in 2011 with a full Halloween merchandise assortment, we
intend to expand our online offerings in 2012 to include birthday and
other party categories. Additionally, we believe that our ability to
control key costs in 2011 and the extension to our revolving credit
facility has allowed us to enter 2012 with liquidity sufficient to grow
our business in 2012 and beyond.”
Operating Results
For the fourteen week fourth quarter of 2011, consolidated revenues were
$29.7 million, a 0.7% increase compared to $29.5 million for the
thirteen week fourth quarter in 2010. Comparable store sales in the
fourth quarter of 2011 decreased 7.3% compared to the year-ago period.
Consolidated gross profit margin was 43.1% for the fourth quarter of
2011 compared to a gross profit margin of 42.7% for the fourth quarter
in 2010. Consolidated net income for the fourth quarter of 2011 was $3.0
million, which included a 14th week, compared to $2.9 million
for the 13 week fourth quarter of 2010. Net income per basic and diluted
share were $0.08 and $0.08, respectively, compared to $0.08 and $0.07
per basic and diluted share, for the fourth quarter in 2010. On a
non-GAAP basis, net income for the 14 week fourth quarter of 2011 before
interest, taxes, depreciation and amortization (“EBITDA”) was
$3.4 million, approximately equal to EBITDA of $3.4 million for the 13
week fourth quarter in 2010. EBITDA is calculated as net income (loss),
as reported under United States generally accepted accounting principles
(“GAAP”), plus net interest expense, depreciation and
amortization and income taxes. The schedule accompanying this release
provides the reconciliation of net income for the fourth quarters of
2011 and 2010 and for the twelve-month periods then ended, under GAAP to
a non-GAAP, EBITDA basis.
For the fifty-three-week fiscal year ended December 31, 2011,
consolidated revenues were $80.9 million, a 0.5% decrease compared to
$81.3 million for fifty-two week fiscal year 2010. Consolidated revenues
for 2011 included a 5.4% decrease in comparable store sales from the
year-ago period. Consolidated gross profit margin was 39.2% for 2011
compared to 39.7% in 2010. Consolidated net loss for the fiscal year
2011 was $1.3 million, or $0.05 per basic and diluted share, compared to
net income of $254 thousand, or $0.01 per basic and diluted share for
fiscal year 2010. On a non-GAAP basis, EBITDA was $494 thousand for
fiscal year 2011, compared to an EBITDA of $2.3 million for 2010.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party goods
retailer that operates 52 iParty retail stores in New England and
Florida. iParty’s aim is to make throwing a successful event both
stress-free and fun. With an extensive assortment of party supplies and
costumes in our stores, iParty offers consumers a sophisticated, yet fun
and easy-to-use, resource to help them customize any party, including
birthday bashes, Easter get-togethers, graduation parties, summer
barbecues and, of course, Halloween. iParty also operates an internet
site that offers a strong assortment of Halloween and related
merchandise for sale on the internet and focuses on increasing customer
visits to our stores by highlighting the ever changing store product
assortment for all occasions and seasons. The site also features sales
flyers, enter-to-win contests, monthly coupons and ideas and themes to
offer consumers an easy and fun approach to any party. iParty aims to
offer reliable, time-tested knowledge of party-perfect trends, and
superior customer service to ensure convenient and comprehensive
merchandise selections for every occasion. Please visit our site at www.iparty.com.
Non-GAAP Financial Measures
Pursuant to the requirements of Regulation G, we have provided below
reconciliations of any non-GAAP financial measures we use in this press
release to the most directly comparable GAAP financial measures. We
believe that our presentation of EBITDA, which is a non-GAAP financial
measure, is an important supplemental measure of operating performance
to investors. The discussion below defines this term, why we believe it
is a useful measure of our performance, and explains certain limitations
on the use of non-GAAP financial measures such as our use of EBITDA.
EBITDA
EBITDA is a commonly used measure of performance in our industry which
we believe, when considered with measures calculated in accordance with
United States generally accepted accounting principles ("GAAP"),
gives investors a more complete understanding of operating results
before the impact of investing and financing transactions and income
taxes and facilitates comparisons between us and our competitors. EBITDA
is a non-GAAP financial measure and has been presented in this release
because our management and the audit committee of our board of directors
use this financial measure in monitoring and evaluating our ongoing
financial results and trends. Our management and audit committee believe
that this non-GAAP operating performance measure is useful for investors
because it enhances investors' ability to analyze trends in our business
and compare our financial and operating performance to that of our peers.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA has certain limitations. Our presentation of EBITDA
may be different from the presentation used by other companies and
therefore comparability may be limited. Depreciation expense for various
long-term assets, interest expense, income taxes and other items have
been and will be incurred and are not reflected in the presentation of
EBITDA. Each of these items should also be considered in the overall
evaluation of our results. Additionally, EBITDA does not consider
capital expenditures and other investing activities and should not be
considered as a measure of our liquidity. In particular, we have opened
new stores through the expenditure of capital funded with borrowings
under our bank line of credit. Our results of operations, therefore,
reflect significant charges for depreciation, amortization and interest
expense. EBITDA, which excludes these expenses, provides helpful
information about the operating performance of our business, but EBITDA
does not purport to represent operating income or cash flow from
operating activities, as those terms are defined under GAAP, and should
not be considered as an alternative to those measurements as an
indicator of our performance.
Accordingly, EBITDA should be used in addition to and in conjunction
with results presented in accordance with GAAP and should not be
considered as an alternative to net income, operating income, cash flows
from operating activities or any other operating performance measure
prescribed by GAAP, nor should these measures be relied upon to the
exclusion of GAAP financial measures. EBITDA reflects additional ways of
viewing our operations that we believe, when viewed with our GAAP
results and the reconciliations to the corresponding GAAP financial
measures, provides a more complete understanding of factors and trends
affecting our business than could be obtained absent this disclosure. We
strongly encourage investors to review our financial information in its
entirety and not to rely on a single financial measure.
For the three months ended
For the twelve months ended
RECONCILIATION OF NON-GAAP MEASURES
Dec 31, 2011
Dec 25, 2010
Dec 31, 2011
Dec 25, 2010
Net income (loss) as reported under GAAP
$
2,983,683
$
2,917,972
$
(1,314,638
)
$
254,449
plus, Interest expense, net
56,847
41,161
305,530
249,195
plus, Depreciation and amortization
361,626
443,894
1,484,212
1,766,462
plus, Income tax expense (benefit)
19,343
(2,613
)
19,343
(2,613
)
EBITDA, non-GAAP
$
3,421,499
$
3,400,414
$
494,447
$
2,267,493
Safe harbor statement under the Private Securities Litigation Reform
Act of 1995
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 as
contained in Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. You can identify these
statements by the fact that they use words such as "anticipate,"
"believe," "estimate," "expect," "intend," "project," "plan," "outlook,"
and other words and terms of similar meaning. These statements involve a
number of risks and uncertainties that could cause actual results to
differ materially from the potential results discussed in the
forward-looking statements. Among the factors that could cause actual
results and outcomes to differ materially from those contained in such
forward-looking statements are the following: changes in consumer
confidence and consumer spending patterns, particularly those impacting
the New England region and Florida, which may result from, among other
factors, rising or sustained high levels of unemployment, access to
consumer credit, mortgage foreclosures, credit market turmoil, declines
in the stock market, general feelings and expectations about the overall
economy, and unseasonable weather; disruptions to our most important
selling season, Halloween; the successful implementation of our growth
and marketing strategies; our ability to access our existing credit line
or to obtain additional financing, if required, on acceptable terms and
conditions; rising commodity prices, especially oil and gas prices;
effect of Chinese inflation on our suppliers and product pricing; our
relationships with our third party suppliers; the failure of our
inventory management system and our point of sale system; competition
from other party supply stores and stores that merchandise and market
party supplies, including big discount retailers, dollar store chains,
and temporary Halloween merchandisers; risks related to e-commerce; the
availability of retail store space on reasonable lease terms; and
compliance with evolving federal securities, accounting, and stock
exchange rules and regulations applicable to publicly-traded companies
listed on the NYSE Amex. For a more detailed discussion of risks and
uncertainties which could cause actual results to differ from those
contained in the forward-looking statements, see Item 1A, "Risk Factors"
of iParty's most recently filed Annual Report on Form 10-K for the
fiscal year ended December 25, 2010 and our other periodic reports filed
with the SEC. iParty is providing this information as of this date, and
does not undertake to update the information included in this press
release, whether as a result of new information, future events or
otherwise.
iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended
For the twelve months ended
Dec 31, 2011
Dec 25, 2010
Dec 31, 2011
Dec 25, 2010
Revenues
$
29,710,785
$
29,491,967
$
80,882,751
$
81,291,429
Operating costs:
Cost of products sold and occupancy costs
16,912,576
16,908,670
49,147,010
49,023,399
Marketing and sales
8,082,924
8,032,949
25,509,559
24,927,511
General and administrative
1,649,697
1,604,661
6,827,196
6,850,321
Flood loss
5,715
-
398,751
-
Operating income (loss)
3,059,873
2,945,687
(999,765
)
490,198
Change in fair value of warrant liability
-
10,833
10,000
10,833
Interest expense, net
(56,847
)
(41,161
)
(305,530
)
(249,195
)
Income (loss) before income taxes
3,003,026
2,915,359
(1,295,295
)
251,836
Income taxes (benefit)
19,343
(2,613
)
19,343
(2,613
)
Net income (loss)
$
2,983,683
$
2,917,972
$
(1,314,638
)
$
254,449
Income (loss) per share:
Basic
$
0.08
$
0.08
$
(0.05
)
$
0.01
Diluted
$
0.08
$
0.07
$
(0.05
)
$
0.01
Weighted-average shares outstanding:
Basic
38,930,281
38,358,472
24,386,220
38,251,888
Diluted
39,201,487
39,392,056
24,386,220
39,281,252
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Dec 31, 2011
Dec 25, 2010
ASSETS
Current assets:
Cash
$
63,650
$
62,650
Restricted cash
819,604
616,742
Accounts receivable
1,377,234
626,181
Inventories
15,965,507
14,950,933
Prepaid expenses and other assets
1,415,780
253,749
Deferred income tax asset - current
46,761
95,163
Total current assets
19,688,536
16,605,418
Property and equipment, net
2,664,086
3,000,798
Intangible assets, net
626,900
934,477
Other assets
333,731
264,179
Deferred income tax asset
540,842
476,354
Total assets
$
23,854,095
$
21,281,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and book overdrafts
$
5,970,014
$
4,572,147
Accrued expenses
2,295,467
2,254,049
Current portion of capital lease obligations
4,614
9,228
Current note payable and warrant liability
-
10,000
Borrowings under line of credit
5,366,512
3,102,213
Total current liabilities
13,636,607
9,947,637
Long-term liabilities:
Capital lease obligations, net of current portion
-
4,613
Deferred rent
1,504,973
1,517,157
Total long-term liabilities
1,504,973
1,521,770
Commitments and contingencies
Convertible preferred stock
13,012,668
13,024,721
Common stock
24,409
24,294
Additional paid-in capital
52,987,574
52,760,302
Accumulated deficit
(57,312,136
)
(55,997,498
)
Total stockholders' equity
8,712,515
9,811,819
Total liabilities and stockholders' equity
$
23,854,095
$
21,281,226
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