SEATTLE, May 6 /PRNewswire-FirstCall/ --Blue Nile, Inc. (Nasdaq: NILE)
today reported financial results for its first quarter ended March 30, 2008.
The company posted net sales of $70.5 million, up from $67.9 million in
the first quarter of 2007. Operating income for the quarter totaled $3.0
million. Net income totaled $2.6 million, or $0.16 per diluted share.
Net cash provided by operating activities totaled $29.4 million for the
trailing twelve month period ended March 30, 2008. Non-GAAP adjusted free cash
flow was $24.2 million for the trailing twelve month period ended March 30,
2008.
"We are pleased to have delivered financial results that exceeded our
expectations, particularly in light of the weak consumer environment in the
U.S.," said Diane Irvine, Chief Executive Officer. "In this uncertain
environment, we are keenly focused on enhancing the Blue Nile customer
experience and vigorously managing our costs. We will invest prudently in our
business and execute our unique business model to build long-term value for
our shareholders."
Irvine concluded, "Our international business continued its rapid growth
during the quarter, and we are extremely pleased with the early results of our
recent launches into 25 new countries. Customers around the world are
embracing the Blue Nile value proposition in increasing numbers."
During the quarter, the company repurchased 990,700 shares of its common
stock for $41.7 million.
In a separate release today, the Company announced the appointment of Marc
Stolzman as Chief Financial Officer. Stolzman will join the Company on June 9,
2008.
Selected Financial Highlights
-- Gross profit for the quarter grew 5.1% to $13.9 million, from $13.2
million for the first quarter of 2007. Gross profit as a percentage of
sales increased to 19.8%, compared to 19.5% for the first quarter of
2007.
-- Selling, general and administrative expenses for the quarter were $10.9
million, compared to $9.6 million in the first quarter of 2007.
Selling, general and administrative expenses include stock-based
compensation expense of $1.7 million, compared to $1.2 million in the
first quarter of the prior year.
-- Non-GAAP adjusted EBITDA was $5.2 million for the quarter.
-- Net income per diluted share for the quarter includes stock-based
compensation expense of $0.07, compared to $0.05 for the first quarter
of 2007.
-- International sales totaled $5.7 million in the quarter, an increase of
124% over the first quarter of 2007.
-- The Company's cash and cash equivalents totaled $42.7 million at March
30, 2008.
-- Capital expenditures in the first quarter totaled $0.5 million,
compared to $0.2 million in the first quarter of 2007.
Financial Guidance
The following forward-looking statements reflect Blue Nile's expectations
as of May 6, 2008. Actual results may be materially affected by many factors,
such as consumer spending, economic conditions and the various factors
detailed below.
Expectations for the second quarter 2008 (Quarter Ending June 29, 2008):
-- Net sales growth is expected to be in the range of 0 to 5%.
-- Net income is expected to be in a range of $0.15 to $0.18 per diluted
share. The estimated net income per diluted share includes the
estimated impact of stock compensation expense of approximately $0.08
per diluted share, compared to $0.05 per diluted share in the second
quarter of 2007.
-- The effective tax rate for the quarter is expected to be approximately
35%.
Expectations for fiscal year 2008 (Year Ending January 4, 2009):
-- Our goal is to grow net sales by at least 10% for the year and to grow
non-GAAP adjusted EBITDA by at least 10%.
-- Our net income per diluted share goal for 2008 is to achieve a GAAP EPS
level that approximates 2007.
-- Stock compensation expense for the year is estimated at approximately
$0.30 per diluted share, an incremental impact of $0.08 per diluted
share compared to 2007.
-- The effective tax rate for the year is expected to be approximately
35%.
-- Capital expenditures are expected to be approximately $2.5 million.
Blue Nile reports fiscal results on a 52/53-week format. The Company's
fiscal 2008 reporting period includes 53 weeks, with the additional week
falling into the fourth quarter.
Forward-Looking Statements
This press release contains forward-looking statements that include risks
and uncertainties, including, without limitation, all statements related to
future financial performance, estimated stock-based compensation expense,
anticipated effective tax rate, anticipated capital expenditures and plans to
grow our business. Words such as "expect," "anticipate," "believe," "will" and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are based upon our current expectations.
Forward-looking statements involve risks and uncertainties. Our actual results
and the timing of events could differ materially from those anticipated in
such forward-looking statements as a result of these risks and uncertainties,
which include, without limitation, risks related to our fluctuating operating
results, seasonality in our business, our ability to acquire products on
reasonable terms, our online business model, demand for our products, our
ability to attract customers in a cost effective manner, our limited operating
history, the strength of our brand, competition, fraud, system interruptions,
our ability to fulfill orders and other risks detailed in our filings with the
Securities and Exchange Commission, including our Annual Report on Form 10-K
for the year ended December 30, 2007. Additional information will be set forth
in our Quarterly Report on Form 10-Q for the quarter ended March 30, 2008,
which we expect to file with the Securities and Exchange Commission on or
before May 9, 2008. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. All forward-looking statements are qualified in their entirety by
this cautionary statement, and Blue Nile undertakes no obligation to revise or
update any forward-looking statements to reflect events or circumstances after
the date hereof.
Conference Call
The Company will host a conference call to discuss its first quarter
financial results today at 2:00 p.m. PT/5:00 p.m. ET. A live webcast of the
conference call may be accessed at http://investor.bluenile.com. Following the
completion of the call, a recorded replay of the webcast will be available for
30 days at the same Internet address. This call will contain forward-looking
statements and other material information regarding the Company's financial
and operating results. In the event that any non-GAAP financial measure is
discussed on the conference call that is not described in this release,
related complementary information will be made available at
http://investor.bluenile.com as soon as practicable after the conclusion of
the conference call.
Non-GAAP Financial Measures
To supplement Blue Nile's consolidated financial statements presented in
accordance with generally accepted accounting principles ("GAAP"), Blue Nile
uses non-GAAP adjusted EBITDA and non-GAAP free cash flow as measures of
certain components of financial performance. Blue Nile defines non-GAAP
adjusted EBITDA as earnings before interest and other income, taxes,
depreciation and amortization, adjusted to exclude the effects of stock-based
compensation expense. Blue Nile defines non-GAAP free cash flow as net cash
provided by operating activities less cash outflows for purchases of fixed
assets, including internal use software and website development. Blue Nile's
management does not itself, nor does it suggest that investors should,
consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
Investors should also note that the non-GAAP financial measures used by Blue
Nile may not be the same non-GAAP financial measures, and may not be
calculated in the same manner, as that of other companies. Whenever Blue Nile
uses such non-GAAP financial measures, it provides a reconciliation of
non-GAAP financial measures to the most closely applicable GAAP financial
measures. Investors are encouraged to review the related GAAP financial
measures and the reconciliation of these non-GAAP financial measures to their
most directly comparable GAAP financial measures.
Blue Nile's management believes that non-GAAP adjusted EBITDA and non-GAAP
free cash flow, as defined, provide meaningful supplemental information to the
company and to investors. Blue Nile believes that both management and
investors benefit from referring to these non-GAAP measures in assessing the
performance of Blue Nile and when planning and forecasting future periods.
Further, management believes that the inclusion of the non-GAAP adjusted
EBITDA and non-GAAP free cash flow calculations provide consistency in Blue
Nile's financial reporting and comparability with similar companies in Blue
Nile's industry.
A reconciliation of non-GAAP adjusted EBITDA is as follows (in thousands):
Quarter Ended Quarter Ended
March 30, 2008 April 1, 2007
Net income $2,571 $3,163
Income tax expense 1,381 1,698
Other income, net (926) (1,176)
Depreciation and amortization 412 391
Stock-based compensation 1,749 1,274
Adjusted EBITDA $5,187 $5,350
A reconciliation of differences of non-GAAP free cash flow from the
comparable GAAP measure of net cash provided by (used in) operating activities
is as follows (in thousands):
Twelve Months Ended Twelve Months Ended
March 30, 2008 April 1, 2007
Net cash provided by
operating activities $29,376 $33,727
Purchases of fixed assets,
including internal-use software
and website development (5,219) (1,493)
Non-GAAP free cash flow $24,157 $32,234
About Blue Nile, Inc.
Blue Nile, Inc. is the leading online retailer of diamonds and fine
jewelry. The Company delivers the ultimate customer experience, providing
consumers with a superior way to buy engagement rings, wedding rings and fine
jewelry. Blue Nile offers in-depth educational materials and unique online
tools that place consumers in control of the jewelry shopping process. The
Company has some of the highest quality standards in the industry and offers
thousands of independently certified diamonds and fine jewelry at prices
significantly below traditional retail. Blue Nile can be found online at
http://www.bluenile.com, http://www.bluenile.ca and http://www.bluenile.co.uk.
Blue Nile's shares are traded on the Nasdaq Stock Market LLC under the symbol
NILE.
BLUE NILE, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
March 30, December 30,
2008 2007
Assets
Current assets:
Cash and cash equivalents $ 42,726 $122,793
Trade accounts receivable 1,334 2,452
Other accounts receivable 582 1,124
Inventories 19,486 20,906
Deferred income taxes 468 799
Prepaids and other current assets 856 1,072
Total current assets 65,452 149,146
Property and equipment, net 7,676 7,601
Intangible assets, net 278 286
Deferred income taxes 4,030 3,489
Other assets 64 64
Total assets $ 77,500 $160,586
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 44,166 $ 85,866
Accrued liabilities 5,051 9,549
Current portion of long-term financing
obligation 39 38
Current portion of deferred rent 223 238
Total current liabilities 49,479 95,691
Long-term financing obligation, less
current portion 870 880
Deferred rent, less current portion 521 538
Stockholders' equity:
Common stock 20 20
Additional paid-in capital 136,340 134,207
Deferred compensation - (3)
Accumulated other comprehensive income 185 75
Retained earnings 27,140 24,569
Treasury stock (137,055) (95,391)
Total stockholders' equity 26,630 63,477
Total liabilities and stockholders' equity $ 77,500 $160,586
BLUE NILE, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Quarter Ended
March 30, April 1,
2008 2007
Net sales $70,460 $67,910
Cost of sales 56,536 54,661
Gross profit 13,924 13,249
Selling, general and administrative expenses 10,898 9,564
Operating income 3,026 3,685
Other income, net:
Interest income, net 835 973
Other income 91 203
Total other income, net 926 1,176
Income before income taxes 3,952 4,861
Income tax expense 1,381 1,698
Net income $ 2,571 $ 3,163
Basic net income per share $ 0.16 $ 0.20
Diluted net income per share $ 0.16 $ 0.19
Shares used for computation:
Basic 15,601 15,874
Diluted 16,275 16,545
BLUE NILE, INC.
Condensed Consolidated Statements of Cash Flow
(Unaudited)
(in thousands)
Year to Date Ended
March 30, April 1,
2008 2007
Operating activities:
Net income $ 2,571 $ 3,163
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 412 391
Loss on disposal of property and equipment 17 -
Stock-based compensation 1,780 1,304
Deferred income taxes (210) (459)
Tax benefit from exercise of stock options 76 704
Excess tax benefit from exercise of
stock options (9) (48)
Changes in assets and liabilities:
Receivables 1,660 396
Inventories 1,420 (876)
Prepaid expenses and other assets 225 201
Accounts payable (41,700) (28,425)
Accrued liabilities (4,527) (2,476)
Deferred rent and other 25 (56)
Net cash used in operating activities (38,260) (26,181)
Investing activities:
Purchases of property and equipment (515) (193)
Proceeds from the sale of property and
equipment 5 -
Purchases of marketable securities - (20,094)
Proceeds from the maturity of marketable
securities - 10,000
Net cash used in investing activities (510) (10,287)
Financing activities:
Repurchase of common stock (41,664) (13,532)
Proceeds from stock option exercises 257 656
Principal payments under long-term
financing obligation (9) -
Excess tax benefit from exercise of
stock options 9 48
Net cash used in financing activities (41,407) (12,828)
Effect of exchange rate changes on cash
and cash equivalents 110 -
Net decrease in cash and cash equivalents (80,067) (49,296)
Cash and cash equivalents, beginning
of period 122,793 78,540
Cash and cash equivalents, end of period $42,726 $29,244
SOURCE Blue Nile, Inc.
CONTACT: Eileen Askew, Investors, +1-206-336-6745, eileena@bluenile.com,
or Liz Powell, Media, +1-206-336-6755, liz@bluenile.com, both of Blue Nile,
Inc
Web site: http://www.bluenile.com
