2. 2
Safe Harbor Statement
This document may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements
may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope, should, plan, will or similar expressions. Any statements
contained herein that are not statements of historical fact may be deemed forward-looking statements. These statements are based on management's current
expectations and accordingly are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained
herein due to various important factors, including (but not limited to): consumer preferences, spending and debt levels; the general economic and credit
environment; interest rates; seasonal variations in consumer purchasing activities; the ability to achieve the most effective product category mixes to
maximize sales and margin objectives; competitive pressures on sales; pricing and gross sales margins; the level of cable and satellite distribution for our
programming and the associated fees or estimated cost savings from contract renegotiations; our ability to establish and maintain acceptable commercial
terms with third-party vendors and other third parties with whom we have contractual relationships, and to successfully manage key vendor relationships and
develop key partnerships and proprietary and exclusive brands; our ability to manage our operating expenses successfully and our working capital levels; our
ability to remain compliant with our credit facilities covenants; customer acceptance of our branding strategy and our repositioning as a digital commerce
company; the market demand for television station sales; changes to our management and information systems infrastructure; challenges to our data and
information security; changes in governmental or regulatory requirements; including without limitation, regulations of the Federal Communications
Commission and Federal Trade Commission, and adverse outcomes from regulatory proceedings; litigation or governmental proceedings affecting our
operations; significant public events that are difficult to predict, or other significant television-covering events causing an interruption of television coverage or
that directly compete with the viewership of our programming; our ability to obtain and retain key executives and employees; our ability to attract new
customers and retain existing customers; changes in shipping costs; our ability to offer new or innovative products and customer acceptance of the same;
changes in customer viewing habits of television programming; and the risks identified under “Risk Factors” in our recently filed Form 10-K and any additional
risk factors identified in our periodic reports since the date of such Form 10-K. More detailed information about those factors is set forth in our filings with the
Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are
cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this announcement. We are under no obligation (and
expressly disclaim any such obligation) to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.
Adjusted EBITDA
EBITDA represents net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income
taxes. We define Adjusted EBITDA as EBITDA excluding non-operating gains (losses); activist shareholder response costs; executive and management
transition costs; distribution center consolidation and technology upgrade costs; Shareholder Rights Plan costs and non-cash share-based compensation
expense. We have included the term “Adjusted EBITDA” in our EBITDA reconciliation in order to adequately assess the operating performance of our
television and online businesses and in order to maintain comparability to our analyst's coverage and financial guidance, when given. Management believes
that the term Adjusted EBITDA allows investors to make a more meaningful comparison between our business operating results over different periods of time
with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric to evaluate operating performance under our
management and executive incentive compensation programs. Adjusted EBITDA should not be construed as an alternative to operating income (loss), net
income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles and should not be
construed as a measure of liquidity. Adjusted EBITDA may not be comparable to similarly entitled measures reported by other companies. We have included
a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure on slide 13 of this presentation.
Data in this presentation may be unaudited.
3. Stick To Our Ambition
3
Management’s ambition is to profitably migrate the company away from being known as
an unprofitable micro-cap, third place television retailer into being known as a profitable,
small cap, e-Commerce Company that specializes in live interactive video to build its
brands and engage its customers within a seamless digital experience.
Our strategy is to continue to focus on building proprietary and exclusive brands, which
we believe will be the primary way to drive sales productivity going forward. We are
focused on complementing our existing brands with building more exclusive and
proprietary brands that have both a story and an interesting personality championing it.
Equally important, Evine has evolved its content distribution strategy. We no longer
consider content distribution just on the television screen. Our teams are equally pursuing
new content distribution through online, mobile, over-the-top, social and in some cases,
strategic partnerships within the bricks and mortar sales channel.
Consumer’s preferences are evolving with technology and trends; we want to be part of
the new way we think consumers will be creating personal shopping experiences.
Evine’s Growth Strategy
4. 4
The first step in our growth strategy was completed in 2016, which was to reestablish profitability to
the business model and assemble a team that can execute and build a strong culture. 2016
Milestones achieved were:
1. Balanced the merchandising mix to improve gross margin in excess of $3 million and gross
margin rate by 190 basis points
2. Improved adjusted EBITDA by 76% from prior year
3. Hired five new senior executives to compliment the existing team and further enhance our
agility, decision making and overall culture
4. Secured a strategic investment from Tommy Hilfiger, Tommy Mottola and Morris Goldfarb,
which improved shareholder confidence and accelerated our brand building efforts
5. Completed the installation of the new warehouse management system (WMS) at our fulfillment
center in Bowling Green, Kentucky, which is already enabling us to enhance the customer
experience
6. Improved our cash position, which allowed us to retire $9.5 million of our high interest debt,
which further strengthens our balance sheet
7. Worked with NBCUniversal and Comcast to buyback 4.4 million shares of our stock just after
2016 fiscal year end
2016 Was A Successful First Step
Evine’s Growth Strategy
5. 5
In 2017, management will focus on three core operating principles while it continually
strengthens its balance sheet, improves profitability and broadens its shareholder base.
Those three operating principles are as follows:
▪ New Proprietary & Exclusive Brands Will Drive Sales Productivity.
▪ Smart Additional Content Distribution Will Drive Customer & Margin Growth.
▪ Operational Fundamentals Will Drive Profitability By Managing Expenses
Our 2017 financial plan expectations:
▪ EBITDA to be in the $18 to $22 million range, which would be growth of 11% to
36% year over year.
▪ Reduced Content Distribution Costs / Disciplined Cost Structure
▪ Sales growth in the low single digits
2017 Will Be Filled With More Exciting Milestones
Evine’s Growth Strategy
6. The wave of department store closures is accelerating the shift of retail sales to
e-Commerce. Video commerce can be that bridge between the two channels.
6
The red line shows the increasing percentage of e-commerce sales in total US retail sales
while department store sales steadily drop as part of the total. Source: FRED
Evine Aims To Become the “Bridge” in e-Commerce
7. 7
2016 Full Year Financial Report Card
+76%
Improvement in
Adjusted
EBITDA Improvement
in Net Income
+29%
Gross Profit
Margin
+190bps
Increase in
Total Cash
+168%
Percentage changes represent fiscal year 2016 as compared to fiscal year 2015.
