Blue Nile Announces Second Quarter Financial Results
- Blue Nile Reports Q2 Net Sales of $43.8 Million, Up 25.1% from Prior
Year
- Achieves Q2 Earnings Per Diluted Share of $0.15
- Announces $6.3 Million in Q2 Share Repurchases
SEATTLE, Aug 02, 2005 /PRNewswire-FirstCall via COMTEX/ -- Blue Nile, Inc. (Nasdaq: NILE) reported financial results for its second quarter ended July 3, 2005.
Blue Nile reported the following highlights for the quarter:
- Second quarter net sales totaled $43.8 million, compared to net sales of
$35.0 million in the second quarter of 2004, an increase of 25.1%.
- Net income in the second quarter increased 49.9% to $2.8 million, or
$0.15 per diluted share, from $1.9 million, or $0.11 per diluted share,
in the prior year.
- The Company repurchased approximately $6.3 million, or 223,200 shares,
of its common stock during the quarter.
- The Company raised its financial guidance for the full year 2005.
"We delivered strong sales and earnings growth for the second quarter,"
said Mark Vadon, Chief Executive Officer. "Our financial performance reflects
outstanding execution across our business, the appeal of our brand among
consumers, and the strength of our competitive position."
Mr. Vadon added, "As we look ahead to the second half of 2005, we are
confident in our ability to achieve our goals. We are focused on expanding
our market share and on further extending our leadership position in online
diamond and jewelry retailing. We remain committed to providing an
exceptional customer experience while delivering strong profitability to our
shareholders."
Other Financial Highlights
- Cash and marketable securities totaled $81.4 million at July 3, 2005.
- Gross profit for the second quarter was $10.0 million, compared to $7.9
million in the second quarter of 2004, an increase of 26.0%. Gross
profit as a percentage of net sales was 22.8% in the quarter versus
22.6% in the prior year period.
- Selling, general and administrative expenses increased 20.9% in the
second quarter of 2005 from $5.1 million to $6.2 million, reflecting the
Company's increase in net sales, additional administrative expenses
required as a public company and increased marketing expenses. As a
percentage of net sales, selling, general and administrative expenses
were 14.1%, compared to 14.6% in the second quarter of 2004.
- For the trailing twelve month period ended July 3, 2005, non-GAAP free
cash flow was $19.9 million, compared to $12.2 million in the prior
year, an increase of 62.8%. Net cash provided by operating activities
for the trailing twelve month period ended July 3, 2005 was $21.6
million, compared to $15.4 million in the prior year.
- Capital expenditures in the second quarter of 2005 totaled $189,000,
compared to $323,000 in the second quarter of 2004.
Financial Guidance
The following forward-looking statements reflect Blue Nile's expectations
as of August 2, 2005.
Expectations for the Third Quarter ending October 2, 2005:
- Third quarter net sales are expected to be between $40.5 million and
$42.5 million.
- Net income is expected to be $0.10 to $0.11 per diluted share.
Updated expectations for the Full Year ending January 1, 2006:
- Net sales are expected to be between $205.0 million and $212.0 million.
- Net income is expected to be in a range of $0.69 to $0.73 per diluted
share.
- The effective tax rate for the full year 2005 is expected to be
approximately 36.0%.
- Capital expenditures are expected to be between $1.5 million and $2.0
million.
Blue Nile will begin expensing stock options, in accordance with the SEC's
guidelines related to the implementation of Statement of Financial Accounting
Standards No. 123R, "Share Based Payment," in the first fiscal quarter of
2006.
Forward-Looking Statements
This press release contains forward-looking statements that include risks
and uncertanties, including, without limitation, all statements related to
future financial performance, anticipated effective tax rate, anticipated
capital expenditures and plans to grow our business and build our brand. Words
such as "expect," "anticipate" 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, the strength of our brand,
competition, our ability to fulfill orders and other risks detailed in our
filings with the Securities and Exchange Commission, including our Quarterly
Report on Form 10-Q for the quarter ended April 3, 2005 and our Annual Report
on Form 10-K for the year ended January 2, 2005. Additional information will
also be set forth in our Quarterly Report on Form 10-Q for the quarter ended
July 3, 2005, which will be filed with the Securities and Exchange Commission
in August 2005. 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
Company management will be holding a conference call to discuss its second
quarter 2005 financial results on August 2, 2005 at 5:00 p.m. ET/2:00 p.m. PT.
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 Measure
To supplement Blue Nile's consolidated financial statements, presented in
accordance with generally accepted accounting principles (GAAP), Blue Nile
uses non-GAAP free cash flow as a measure of certain components of financial
performance. 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.
Blue Nile's management believes that non-GAAP free cash flow provides
meaningful supplemental information regarding liquidity and that both
management and investors benefit from referring to this non-GAAP measure in
assessing the performance of Blue Nile. Further, management believes that the
inclusion of the non-GAAP free cash flow calculation provides consistency in
Blue Nile's financial reporting and comparability with similar companies in
Blue Nile's industry. Investors should note, however, 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 a non-GAAP financial measure, it
provides a reconciliation of non-GAAP financial measures to the most closely
applicable GAAP financial measure. 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 measure.
A reconciliation of differences of non-GAAP free cash flow from the
comparable GAAP measure of net cash provided by operating activities is as
follows (in thousands):
Twelve months Twelve months
ended ended
July 3, 2005 July 4, 2004
Net cash provided by operating activities $21,643 $15,395
Purchases of fixed assets, including
internal-use software and website
development $(1,754) $(3,175)
Non-GAAP free cash flow $19,889 $12,220
About Blue Nile, Inc.
Blue Nile (www.bluenile.com) is a leading online retailer of high quality
diamonds and fine jewelry. The Blue Nile web site showcases over 55,000
independently certified diamonds and more than 1,000 styles of fine jewelry,
including rings, wedding bands, earrings, necklaces, pendants, bracelets and
watches.
BLUE NILE, INC.
Condensed Consolidated Balance Sheets
July 3, January 2,
2005 2005
(Unaudited)
(in thousands)
Assets
Current assets:
Cash and cash equivalents $31,489 $59,499
Restricted cash 119 --
Marketable securities 49,821 41,868
Total cash and marketable securities 81,429 101,367
Accounts receivable 656 760
Inventories 8,849 9,914
Deferred income taxes 7,021 8,442
Prepaids and other current assets 1,197 1,046
Total current assets 99,152 121,529
Property and equipment, net 3,431 3,916
Intangible assets, net 368 385
Deferred income taxes 1,472 2,475
Other assets 77 77
Total assets $104,500 $128,382
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $18,150 $37,775
Accrued liabilities 2,755 5,713
Current portion of deferred rent 207 203
Total current liabilities 21,112 43,691
Deferred rent, less current portion 953 1,071
Commitments and contingencies
Stockholders' equity:
Common stock 19 18
Additional paid-in capital 105,276 104,684
Deferred compensation (696) (929)
Accumulated other comprehensive loss (2) (2)
Accumulated deficit (14,120) (19,515)
Treasury stock (8,042) (636)
Total stockholders' equity 82,435 83,620
Total liabilities and
stockholders' equity $104,500 $128,382
Note: The balance sheet at January 2, 2005 has been derived from the
audited financial statements at that date.
BLUE NILE, INC.
Condensed Consolidated Statements of Operations
Quarter Ended Year To Date Ended
July 3, July 4, July 3, July 4,
2005 2004 2005 2004
(Unaudited) (Unaudited)
(in thousands, except(in thousands, except
per share data) per share data)
Net sales $43,826 $35,022 $87,942 $70,806
Cost of sales 33,836 27,095 68,265 54,667
Gross profit 9,990 7,927 19,677 16,139
Selling, general and administrative
expenses 6,184 5,111 12,307 10,419
Operating income 3,806 2,816 7,370 5,720
Other income (expense) net:
Interest income 559 97 1,060 139
Other income -- 14 -- 38
559 111 1,060 177
Income before income taxes 4,365 2,927 8,430 5,897
Income tax expense 1,572 1,063 3,035 2,129
Net income $2,793 $1,864 $5,395 $3,768
Basic net income per share $0.16 $0.18 $0.30 $0.51
Diluted net income per share $0.15 $0.11 $0.29 $0.22
Shares used for computation:
Basic 17,625 10,388 17,688 7,329
Diluted 18,650 17,616 18,726 17,021
BLUE NILE, INC.
Condensed Consolidated Statements of Cash Flows
Year to Date Ended
July 3, July 4,
2005 2004
(Unaudited)
(in thousands)
Operating activities:
Net income $5,395 $3,768
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 835 734
Loss on disposal of assets 10 --
Stock-based compensation 169 188
Deferred income taxes 2,883 2,017
Changes in assets and liabilities:
Receivables, net 104 326
Inventories 1,065 3,523
Prepaid expenses and other assets (151) (748)
Accounts payable (19,625) (12,502)
Accrued liabilities (2,958) (1,486)
Deferred rent (114) (99)
Net cash used in operating activities (12,387) (4,279)
Investing activities:
Purchases of property and equipment (346) (425)
Proceeds from the sale of property and equipment 5 --
Purchases of marketable securities (71,955) (15,928)
Proceeds from the sale of marketable securities 64,000 --
Transfers of restricted cash (119) 340
Net cash provided by investing activities (8,415) (16,013)
Financing activities:
Proceeds from sale of common stock, net of
issuance costs -- 42,493
Repurchase of common stock (7,406) --
Proceeds from warrant and stock option exercises 198 62
Net cash (used in) provided by financing activities (7,208) 42,555
Net decrease in cash and cash equivalents (28,010) 22,263
Cash and cash equivalents, beginning of period 59,499 30,383
Cash and cash equivalents, end of period $31,489 $52,646
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