Qurate Retail, Inc. (“Qurate Retail”) (Nasdaq: QRTEA, QRTEB,
QRTEP) today reported third quarter 2023 results(1).
“We are delivering on our Project Athens transformation as
planned and have made tangible progress toward building a
materially stronger profit and cash flow profile,” said David
Rawlinson, President and CEO of Qurate Retail. “We produced strong
Adjusted OIBDA growth of over 50% as reported with increases at
each of our businesses, sustained gross margin gains in our core
video commerce businesses and grew free cash flow, all while
moderating the decline in revenue compared to the first half of the
year.
“While we have meaningful work still ahead of us, our third
quarter results strengthen our confidence in our ability to
navigate the current challenged environment and to meet our Project
Athens objectives. We reiterate our expectations for a double-digit
CAGR on Adjusted OIBDA and free cash flow with stable revenues
through 2024 compared to 2022.”
Third quarter 2023 operating results:
- Qurate Retail revenue decreased 3%(2) to $2.5 billion in both
US Dollars and constant currency(3)
- Qurate Retail grew Adjusted OIBDA(4) 35%(2) in constant
currency
- Qurate Retail reported diluted EPS of $0.00
- Adjusted diluted EPS(4) of $0.10
- QxH revenue decreased 3%
- QVC International revenue increased 4%
- In constant currency, revenue increased 1%
- Cornerstone revenue decreased 13%
Corporate headlines:
- $435 million reduction in revolver balance using operating cash
flow and insurance proceeds
- Remaining 1.75% exchangeable debentures were retired or
exchanged during Q3 or after quarter-end
Discussion of Results
Unless otherwise noted, the following discussion compares
financial information for the three months ended September 30, 2023
to the same period in 2022.
THIRD QUARTER 2023
FINANCIAL RESULTS
(amounts in millions)
3Q22
3Q23
% Change
% Change Constant Currency(a)
Revenue
QxH
$
1,663
$
1,617
(3
)
%
QVC International
554
577
4
%
1
%
Cornerstone
327
285
(13
)
%
Total Qurate Retail Revenue (excluding
Zulily)
2,544
2,479
(3
)
%
(3
)
%
Zulily(b)
200
-
NM
Total Qurate Retail Revenue (as
reported)
$
2,744
$
2,479
(10
)
%
(10
)
%
Operating Income (Loss)
QxH(c)
$
(2,251
)
$
91
NM
QVC International
52
63
21
%
21
%
Cornerstone
2
4
100
%
Unallocated corporate cost
(7
)
(7
)
-
%
Total Qurate Retail Operating Income
(excluding Zulily)
(2,204
)
151
NM
NM
Zulily(b)
(403
)
-
NM
Total Qurate Retail Operating Income
(as reported)
$
(2,607
)
$
151
NM
NM
Adjusted OIBDA
QxH(c)
$
143
$
201
41
%
QVC International
62
77
24
%
23
%
Cornerstone
10
11
10
%
Unallocated corporate cost
(5
)
(4
)
20
%
Total Qurate Retail Adjusted OIBDA
(excluding Zulily)
$
210
$
285
36
%
35
%
Zulily(b)
(25
)
-
NM
Total Qurate Retail Adjusted OIBDA (as
reported)
$
185
$
285
54
%
54
%
a)
For a definition of constant currency financial metrics, see the
accompanying schedules.
b)
Zulily was divested on May 24, 2023. In the third quarter of
2022, Zulily recorded (i) a $366 million non-cash impairment charge
related to its tradename and goodwill and (ii) $3 million of
restructuring charges. These items are included in operating income
and excluded from Adjusted OIBDA.
c)
In the third quarter of 2023, QxH incurred (i) a $2 million gain on
the sale of its Rocky Mount, NC fulfillment center (“Rocky Mount”)
in February 2023 on proceeds released from escrow and (ii) $21
million of restructuring, penalties and fire-related costs. In the
third quarter of 2022, QxH recorded (i) a $2.7 billion non-cash
impairment charge related to goodwill and the HSN tradename, (ii) a
$277 million gain on sale related to the sale and leaseback
agreements of five US properties and (iii) a $137 million net gain
on insurance proceeds representing insurance proceeds received in
excess of losses recognized on inventory, fixed assets and other
fire related costs. These items are included in operating income
and excluded from Adjusted OIBDA. See Reconciling Schedule 2.
THIRD QUARTER 2023 NET
INCOME AND ADJUSTED NET INCOME(4)
(amounts in millions)
3Q22
3Q23
Net income
$
(2,747
)
$
1
Adjusted net income (loss)(a)
$
(29
)
$
40
Basic weighted average shares outstanding
("WASO")
381
388
Potentially dilutive shares
1
1
Diluted WASO
382
389
GAAP EPS(b)
$
(7.21
)
$
0.00
Adjusted EPS(a)
$
(0.08
)
$
0.10
a)
See Reconciling Schedule 3.
b)
Represents diluted net income per share attributable to Series A
and Series B common stockholders as presented in Qurate Retail’s
financial statements.
QxH
QxH revenue declined primarily due to a 3% decrease in units
shipped, which was partially offset by a 1% increase in average
selling price. QxH experienced a 6% increase in average spend per
customer. QxH reported declines in electronics, apparel and beauty,
with growth in accessories, jewelry and home.
Operating income and Adjusted OIBDA margin(4) increased mainly
due to lower fulfillment (warehouse and freight) costs, higher
product margins and lower obsolescence expense. Fulfillment
favorability was driven by efficiencies from Project Athens
initiatives, significantly lower detention and demurrage costs
compared to prior year and improved rates from the new parcel
carrier contract that went into effect in July. Product margins
increased primarily due to mix shift to higher-margin products and
fewer clearance items as a result of improved inventory health and
initiatives to increase initial margin. Inventory obsolescence
declined due to an improved mix of inventory. These gains were
partially offset by higher administrative expenses from certain
costs related to Project Athens, including outside services, and to
a lesser extent from increased commissions.
QVC International
US Dollar denominated results were positively impacted by
exchange rate fluctuations, primarily due to the Dollar weakening
8% versus the Euro and 7% versus the British Pound, partially
offset by the Dollar strengthening 5% against the Japanese Yen. The
financial metrics presented in this press release also provide a
comparison of the percentage change in QVC International’s results
in constant currency to the comparable figures calculated in
accordance with US GAAP, where applicable.
QVC International’s constant currency revenue grew primarily due
to a 3% increase in units shipped, which was partially offset by a
1% decrease in average selling price. QVC International reported
growth in beauty, home and apparel, with a decline in
electronics.
Operating income and Adjusted OIBDA margin increased primarily
due to higher product margins and lower inventory obsolescence
expense. Product margin favorability was due to lower supply chain
costs and mix shift to higher-margin products, partially offset by
unfavorable returns. Obsolescence favorability reflects reduced
inventory levels. These gains were partially offset by higher
administrative and fulfillment expenses. Administrative costs
increased mostly due to outside services and management incentive
accruals. Fulfillment pressure was mainly attributable to
fulfillment center rents due to sale leaseback transactions in
January 2023 and increased labor rates, notably in Europe.
Cornerstone
Cornerstone revenue decreased, reflecting softness and
competitive promotional pressure in the home sector as well as
lower demand for apparel at Garnet Hill.
Operating income and Adjusted OIBDA margin increased mainly due
to lower supply chain costs, partially offset by increased
promotions.
THIRD QUARTER 2023
SUPPLEMENTAL METRICS
(amounts in millions unless otherwise
noted)
3Q22
3Q23
% Change
% Change Constant Currency(a)
QxH
Cost of Goods Sold % of Revenue
70.2
%
65.4
%
(480
)
bps
Operating Income Margin (%)(b)
NM
5.6
%
NM
Adjusted OIBDA Margin (%)(b)
8.6
%
12.4
%
380
bps
Average Selling Price
$
51.27
$
51.78
1
%
Units Sold
(3
)
%
Return Rate(c)
14.4
%
15.4
%
100
bps
eCommerce Revenue(d)
$
1,000
$
996
-
%
eCommerce % of Total Revenue
60.1
%
61.6
%
150
bps
Mobile % of eCommerce Revenue(e)
67.3
%
69.0
%
170
bps
LTM Total Customers(f)
9.3
8.2
(12
)
%
QVC International
Cost of Goods Sold % of Revenue
64.8
%
63.4
%
(140
)
bps
Operating Income Margin (%)
9.4
%
10.9
%
150
bps
Adjusted OIBDA Margin (%)
11.2
%
13.3
%
210
bps
Average Selling Price
3
%
(1
)
%
Units Sold
3
%
Return Rate(c)
18.9
%
19.6
%
70
bps
eCommerce Revenue(d)
$
256
$
283
11
%
7
%
eCommerce % of Total Revenue
46.2
%
49.0
%
280
bps
Mobile % of eCommerce Revenue(e)
70.4
%
69.3
%
(110
)
bps
LTM Total Customers(f)
4.5
4.2
(7
)
%
Cornerstone
Cost of Goods Sold % of Revenue
66.7
%
62.8
%
(390
)
bps
Operating Income Margin (%)
0.6
%
1.4
%
80
bps
Adjusted OIBDA Margin (%)
3.1
%
3.9
%
80
bps
eCommerce Revenue(d)
$
245
$
218
(11
)
%
eCommerce % of Total Revenue
74.9
%
76.5
%
160
bps
a)
For a definition of constant currency financial metrics, see the
accompanying schedules.
b)
In the third quarter of 2023, QxH incurred (i) a $2 million gain
on the sale of Rocky Mount in February 2023 on proceeds released
from escrow and (ii) $21 million of restructuring, penalties and
fire-related costs. In the third quarter of 2022, QxH recorded (i)
a $2.7 billion non-cash impairment charge related to goodwill and
the HSN tradename, (ii) a $277 million gain on sale related to the
sale and leaseback agreements of five US properties and (iii) a
$137 million net gain on insurance proceeds representing insurance
proceeds received in excess of losses recognized on inventory,
fixed assets and other fire related costs. These items are included
in operating income and excluded from Adjusted OIBDA. See
Reconciling Schedule 2.
c)
Measured as returned sales over
gross shipped sales in US Dollars.
d)
Based on net revenue.
e)
Based on gross US Dollar
orders.
f)
LTM: Last twelve months.
FOOTNOTES
1)
Qurate Retail will discuss these headlines and other matters on
Qurate Retail’s earnings conference call that will begin at 8:30
a.m. (E.T.) on November 3, 2023. For information regarding how to
access the call, please see “Important Notice” later in this
document.
2)
Adjusted for the divestiture of Zulily on May 24, 2023.
3)
For a definition of constant
currency financial metrics, see the accompanying schedules.
Applicable reconciliations can be found in the financial tables at
the beginning of this press release.
4)
For definitions and applicable
reconciliations of Adjusted OIBDA, Adjusted OIBDA margin, adjusted
net income and adjusted diluted EPS, see the accompanying
schedules.
NOTES
Cash and Debt
The following presentation is provided to separately identify
cash and debt information.
(amounts in millions)
6/30/2023
9/30/2023
Cash and cash equivalents
(GAAP)
$
1,483
$
1,099
Indemnification agreement
receivable(a)
$
10
$
21
Debt:
QVC senior secured notes(b)
$
3,509
$
3,509
QVC senior secured bank credit
facility
1,430
995
Total Qurate Retail Group Debt
$
4,939
$
4,504
Senior notes(b)
792
792
Senior exchangeable debentures(c)
861
858
Corporate Level Debentures
1,653
1,650
Total Qurate Retail, Inc. Debt
$
6,592
$
6,154
Unamortized discount, fair market value
adjustment and deferred loan costs
(614
)
(589
)
Total Qurate Retail, Inc. Debt
(GAAP)
$
5,978
$
5,565
Other Financial Obligations:
Preferred stock(d)
$
1,269
$
1,270
QVC, Inc. leverage(e)
2.3x
2.6x
a)
Indemnity from Liberty Broadband Corporation (“Liberty
Broadband”), pursuant to the indemnification agreement with respect
to the 1.75% exchangeable debentures (the “LI LLC Charter
exchangeable debentures”) issued by Liberty Interactive LLC (“LI
LLC”). LI LLC is a wholly-owned subsidiary of Qurate Retail.
b)
Face amount of Senior Notes and Debentures with no reduction for
the unamortized discount.
c)
Face amount of Senior
Exchangeable Debentures with no adjustment for the fair market
value adjustment.
d)
Preferred Stock has an 8% coupon,
$100 per share initial liquidation preference plus accrued and
unpaid dividends and is non-voting. It is subject to mandatory
redemption on March 15, 2031. The Preferred Stock is considered a
liability for GAAP purposes, and is recorded net of capitalized
costs.
e)
As defined in QVC’s credit
agreement. The gains from sale leaseback transactions completed
within the last twelve months and a portion of expected cost
savings are included in adjusted EBITDA for purposes of the
covenant calculations under QVC’s bank credit facility.
Cash at Qurate Retail decreased $384 million in the third
quarter primarily due to net debt repayment under QVC’s bank credit
facility partially offset by cash from operations. Total debt at
Qurate Retail, Inc. decreased $438 million in the third quarter
primarily due to a $435 million reduction in borrowings under QVC’s
bank credit facility.
QVC’s bank credit facility has $995 million drawn as of
September 30, 2023 with incremental availability of $2.1 billion,
net of letters of credit. QVC’s leverage ratio, as defined by the
QVC revolving credit facility, was 2.6x at quarter-end. Pursuant to
the terms of QVC’s revolving credit facility, gains from sale
leaseback transactions and a portion of expected cost savings are
included in operating income for purposes of QVC’s leverage ratio
for covenant calculations.
As of September 30, 2023, QVC’s consolidated leverage ratio (as
calculated under QVC’s senior secured notes) was greater than 3.5x
and as a result QVC is restricted in its ability to make unlimited
dividends or other restricted payments. Dividends made by QVC to
service the principal and interest of indebtedness of its parent
entities, as well as payments made by QVC to Qurate Retail under an
intercompany tax sharing agreement in respect of certain tax
obligations of QVC and its subsidiaries, are permitted under the
bond indenture and credit agreement.
Qurate Retail is in compliance with all debt covenants as of
September 30, 2023.
Qurate Retail benefits from an indemnification agreement with
Liberty Broadband with respect to its LI LLC Charter exchangeable
debentures. Pursuant to this indemnification agreement, Liberty
Broadband has agreed to indemnify LI LLC for any payments made to a
holder of such debentures that exercised its exchange right on or
before the put/call date of October 5, 2023 in excess of the sum of
the adjusted principal amount of such debentures plus certain
estimated tax benefits to Qurate Retail, if any, resulting from the
exchange. LI LLC would be responsible for paying the adjusted
principal amount to such holder. This indemnity is supported by a
negative pledge in favor of Qurate Retail on the reference shares
of Class A common stock of Charter Communications, Inc. held at
Liberty Broadband that underlie the LI LLC Charter exchangeable
debentures. The indemnification asset on Qurate Retail’s balance
sheet is valued based on the estimated exchange feature in the LI
LLC Charter exchangeable debentures. As of September 30, 2023,
holders of the LI LLC Charter exchangeable debentures had the
ability to put their debentures on October 5, 2023, and
accordingly, the indemnification asset is included as a current
asset. During the three months ended September 30, 2023, Qurate
Retail received indemnification payments from Liberty Broadband in
connection with exchanges of $2 million principal amount of the LI
LLC Charter exchangeable debentures that settled in the quarter.
Subsequent to September 30, 2023, all remaining LI LLC Charter
exchangeable debentures were retired or exchanged.
Important Notice: Qurate Retail, Inc. (Nasdaq: QRTEA,
QRTEB, QRTEP) will discuss Qurate Retail’s earnings release on a
conference call which will begin at 8:30 a.m. (E.T.) on November 3,
2023. The call can be accessed by dialing (877) 704-4234 or (215)
268-9904, passcode 13736993, at least 10 minutes prior to the start
time. The call will also be broadcast live across the Internet and
archived on our website. To access the webcast go to
https://www.qurateretail.com/investors/news-events/ir-calendar.
Links to this press release and replays of the call will also be
available on Qurate Retail’s website.
This press release includes certain forward-looking statements,
including statements about business strategies and initiatives
(including Project Athens) and their expected benefits, market
potential, future financial performance and prospects, the
indemnification by Liberty Broadband, future repayment of debt, the
continuation of our stock repurchase program and other matters that
are not historical facts. These forward-looking statements involve
many risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such
statements, including, without limitation, possible changes in
market acceptance of new products or services, competitive issues,
regulatory matters affecting our businesses, continued access to
capital on terms acceptable to Qurate Retail, changes in law and
government regulations, the availability of investment
opportunities, general market conditions (including as a result of
COVID-19 or other public health crises), issues impacting the
global supply chain and labor market, and market conditions
conducive to stock repurchases. These forward-looking statements
speak only as of the date of this press release, and Qurate Retail
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement contained
herein to reflect any change in Qurate Retail's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based. Please refer to the publicly
filed documents of Qurate Retail, including the most recent Forms
10-K and 10-Q, for additional information about Qurate Retail and
about the risks and uncertainties related to Qurate Retail's
business which may affect the statements made in this press
release.
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our
financial results, this press release includes a presentation of
Adjusted OIBDA, which is a non-GAAP financial measure, for Qurate
Retail, QVC (and certain of its subsidiaries), Zulily (through May
23, 2023) and Cornerstone together with a reconciliation to that
entity or such businesses’ operating income, as determined under
GAAP. Qurate Retail defines Adjusted OIBDA as operating income
(loss) plus depreciation and amortization, stock-based
compensation, and where applicable, separately identified
impairments, litigation settlements, restructuring, penalties,
acquisition-related costs, fire related costs, net (including Rocky
Mount inventory losses), and (gains) losses on sale leaseback
transactions. Further, this press release includes Adjusted OIBDA
margin, which is also a non-GAAP financial measure. Qurate Retail
defines Adjusted OIBDA margin as Adjusted OIBDA divided by
revenue.
Qurate Retail believes Adjusted OIBDA is an important indicator
of the operational strength and performance of its businesses by
identifying those items that are not directly a reflection of each
business’s performance or indicative of ongoing business trends. In
addition, this measure allows management to view operating results
and perform analytical comparisons and benchmarking between
businesses and identify strategies to improve performance. Because
Adjusted OIBDA is used as a measure of operating performance,
Qurate Retail views operating income as the most directly
comparable GAAP measure. Adjusted OIBDA is not meant to replace or
supersede operating income or any other GAAP measure, but rather to
supplement such GAAP measures in order to present investors with
the same information that Qurate Retail's management considers in
assessing the results of operations and performance of its assets.
Please see the attached schedules for applicable
reconciliations.
In addition, this press release includes references to adjusted
net income and adjusted earnings per share, which are non-GAAP
financial measures, for Qurate Retail. Qurate Retail defines
adjusted net income as net income, excluding the impact of
acquisition accounting amortization (net of deferred tax benefit),
mark-to-market adjustments on certain public debt and equity
securities, (gain) loss on sale of fixed assets and other one-time
adjustments. Qurate Retail defines adjusted earnings per share as
diluted earnings per share plus the diluted per share effects of
certain adjustments, net of tax.
Qurate Retail believes adjusted net income and adjusted earnings
per share are important indicators of financial performance due to
the impact of purchase accounting amortization, mark-to-market
adjustments and other one-time items identified in Schedule 3
below. Because adjusted net income and adjusted earnings per share
are used as measures of overall financial performance, Qurate
Retail views net income and diluted earnings per share,
respectively, as the most directly comparable GAAP measures.
Adjusted net income and adjusted earnings per share are not meant
to replace or supersede net income, diluted earnings per share or
any other GAAP measure, but rather to supplement such GAAP measures
in order to present investors with a supplemental metric of
financial performance. Please see the attached schedules for a
reconciliation of adjusted net income to net income (loss) and
adjusted earnings per share to diluted earnings per share, in each
case, calculated in accordance with GAAP for Qurate Retail
(Schedule 3).
This press release also references certain financial metrics on
a constant currency basis, which is a non-GAAP measure, for Qurate
Retail. Constant currency financial metrics, as presented herein,
are calculated by translating the current-year and prior-year
reported amounts into comparable amounts using a single foreign
exchange rate for each currency.
Qurate Retail believes constant currency financial metrics are
an important indicator of financial performance, in particular for
QVC, due to the translational impact of foreign currency
fluctuations relating to its subsidiaries in the UK, Germany, Italy
and Japan. We use constant currency financial metrics to provide a
framework to assess how our businesses performed excluding the
effects of foreign currency exchange fluctuations. Please see the
financial tables at the beginning of this press release for a
reconciliation of the impact of foreign currency fluctuations on
revenue, operating income, Adjusted OIBDA and average selling
price.
SCHEDULE 1
The following table provides a reconciliation of Qurate Retail’s
Adjusted OIBDA to its operating income calculated in accordance
with GAAP for the three months ended September 30, 2022, December
31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023,
respectively.
CONSOLIDATED
OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
3Q22
4Q22
1Q23
2Q23
3Q23
Qurate Retail Operating Income
(Loss)
$
(2,607
)
$
42
$
176
$
366
$
151
Depreciation and amortization
107
110
100
104
105
Stock compensation expense
15
14
16
14
10
Restructuring, penalties and fire related
costs, net of (recoveries) (including Rocky Mount inventory
losses)(a)
(134
)
31
—
(208
)
19
Impairment of intangible assets
3,081
—
—
—
—
(Gains) on sale of intangible asset and
sale leaseback transactions(b)
(277
)
—
(113
)
(6
)
—
Qurate Retail Adjusted OIBDA
$
185
$
197
$
179
$
270
$
285
a)
In the third quarter of 2023, QxH incurred (i) a $2 million gain
on the sale of Rocky Mount in February 2023 on proceeds released
from escrow and (ii) $21 million of restructuring, penalties and
fire-related costs. In the third quarter of 2022, QxH recorded (i)
a $2.7 billion non-cash impairment charge related to goodwill and
the HSN tradename, (ii) a $277 million gain on sale related to the
sale and leaseback agreements of five US properties and (iii) a
$137 million net gain on insurance proceeds representing insurance
proceeds received in excess of losses recognized on inventory,
fixed assets and other fire related costs. These items are included
in operating income and excluded from Adjusted OIBDA.
b)
Includes gains on the sale related to the modification of a
lease that resulted in a sale leaseback for US GAAP purposes of
five US properties completed in the third quarter of 2022, the sale
leaseback transactions of UK and German properties in the first
quarter of 2023 and the sale of an intangible asset primarily
related to the sale of a channel positioning right in the second
quarter of 2023.
SCHEDULE 2
The following table provides a reconciliation of Adjusted OIBDA
for QVC and Cornerstone to that entity or such businesses’
operating income (loss) calculated in accordance with GAAP for the
three months ended September 30, 2022, December 31, 2022, March 31,
2023, June 30, 2023 and September 30, 2023, respectively.
SUBSIDIARY ADJUSTED
OIBDA RECONCILIATION
(amounts in millions)
3Q22
4Q22
1Q23
2Q23
3Q23
QVC
Operating income (loss)
$
(2,199
)
$
113
$
230
$
374
$
154
Depreciation and amortization
94
96
89
94
98
Stock compensation
9
9
9
11
7
Restructuring, penalties and fire related
costs, net of (recoveries) (including Rocky Mount inventory
losses)
(137
)
29
(4
)
(211
)
19
(Gains) on sale of intangible asset and
sale leaseback transactions
(277
)
—
(113
)
(6
)
—
Impairment of intangible assets
2,715
—
—
—
—
Adjusted OIBDA
$
205
$
247
$
211
$
262
$
278
QxH Adjusted OIBDA
$
143
$
150
$
139
$
185
$
201
QVC International Adjusted
OIBDA
$
62
$
97
$
72
$
77
$
77
Cornerstone
Operating income (loss)
$
2
$
(14
)
$
(2
)
$
15
$
4
Depreciation and amortization
6
7
5
7
7
Stock compensation
2
—
1
1
—
Restructuring costs
—
—
—
2
—
Adjusted OIBDA (Loss)
$
10
$
(7
)
$
4
$
25
$
11
SCHEDULE 3
The following table provides a reconciliation of Qurate Retail’s
net income (loss) to its adjusted net income and diluted earnings
(loss) per share to adjusted earnings per share, in each case,
calculated in accordance with GAAP for the three months ended
September 30, 2022, December 31, 2022, March 31, 2023, June 30,
2023 and September 30, 2023, respectively.
ADJUSTED NET INCOME
AND ADJUSTED EPS RECONCILIATION
(amounts in millions)
3Q22
4Q22
1Q23
2Q23
3Q23
Qurate Retail Net Income (Loss)
(GAAP)
$
(2,747
)
$
(51
)
$
20
$
107
$
1
Purchase accounting amort., net of
deferred tax benefit(a)
16
18
17
15
14
Impairment of intangible assets, net of
tax impact
3,004
—
—
—
—
Restructuring, penalties and fire related
costs, net of (recoveries) and tax impact (including Rocky Mount
inventory losses)
(101
)
24
—
(156
)
14
Gains on sale of intangible asset and sale
leaseback transactions, net of tax impact
(207
)
—
(92
)
(5
)
—
Mark-to-market adjustments, net(b)
6
(9
)
35
26
11
Adjusted Net Income (Loss)
$
(29
)
$
(18
)
$
(20
)
$
(13
)
$
40
Diluted earnings (loss) per share
(GAAP)
$
(7.21
)
$
(0.13
)
$
0.05
$
0.28
$
—
Total adjustments per share, net of
tax
7.13
0.08
(0.10
)
(0.31
)
0.10
Adjusted earnings (loss) per
share
$
(0.08
)
$
(0.05
)
$
(0.05
)
$
(0.03
)
$
0.10
a)
Add-back relates to non-cash, non-tax deductible purchase
accounting amortization from Qurate Retail’s acquisitions of QVC,
HSN, Zulily and Cornerstone, net of book deferred tax benefit.
b)
Add-back includes realized and unrealized gains/losses on
financial instruments, net of tax.
QURATE RETAIL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEET INFORMATION
(unaudited)
September 30,
December 31,
2023
2022
amounts in millions
Assets
Current assets:
Cash and cash equivalents
$
1,099
1,275
Trade and other receivables, net of
allowance for credit losses
952
1,394
Inventory, net
1,229
1,346
Indemnification agreement receivable
21
50
Other current assets
184
210
Total current assets
3,485
4,275
Property and equipment, net
506
570
Intangible assets not subject to
amortization
6,155
6,219
Intangible assets subject to amortization,
net
567
612
Operating lease right-of-use assets
577
585
Other assets, at cost, net of accumulated
amortization
147
310
Total assets
$
11,437
12,571
Liabilities and Equity
Current liabilities:
Accounts payable
813
976
Accrued liabilities
804
1,133
Current portion of debt
730
828
Other current liabilities
109
162
Total current liabilities
2,456
3,099
Long-term debt
4,835
5,525
Deferred income tax liabilities
1,515
1,440
Preferred stock
1,270
1,266
Operating lease liabilities
539
518
Other liabilities
129
198
Total liabilities
10,744
12,046
Equity
590
412
Non-controlling interests in equity of
subsidiaries
103
113
Total liabilities and equity
$
11,437
12,571
QURATE RETAIL, INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS INFORMATION
(unaudited)
Three months ended
September 30,
2023
2022
Revenue:
Total revenue, net
$
2,479
2,744
Operating costs and expenses:
Cost of goods sold (exclusive of
depreciation shown separately below)
1,603
1,905
Operating expense
186
205
Selling, general and administrative,
including stock-based compensation
415
464
Restructuring, penalties and fire related
costs, net of (recoveries)
19
(134
)
Depreciation and amortization
105
107
Impairment of intangible assets
—
3,081
Gains on sale of intangible asset and sale
leaseback transactions
—
(277
)
2,328
5,351
Operating income (loss)
151
(2,607
)
Other income (expense):
Interest expense
(119
)
(107
)
Dividend and interest income
14
2
Realized and unrealized gains (losses) on
financial instruments, net
(15
)
(8
)
Gain (loss) on extinguishment of debt
1
14
Tax sharing income (expense) with Liberty
Broadband
(4
)
36
Other, net
5
21
(118
)
(42
)
Earnings (loss) before income taxes
33
(2,649
)
Income tax (expense) benefit
(21
)
(87
)
Net earnings (loss)
12
(2,736
)
Less net earnings (loss) attributable to
noncontrolling interests
11
11
Net earnings (loss) attributable to Qurate
Retail, Inc. shareholders
$
1
(2,747
)
QURATE RETAIL, INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS INFORMATION
(unaudited)
Nine months ended
September 30,
2023
2022
amounts in millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)
$
164
(2,502
)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
309
371
Impairment of intangible assets
—
3,081
Stock-based compensation
40
46
Realized and unrealized (gains) losses on
financial instruments, net
95
(29
)
Gain on sale of intangible asset and sale
leaseback transactions
(119
)
(520
)
Gain on insurance proceeds, net of fire
related costs
(225
)
(139
)
Insurance proceeds received for operating
expenses and business interruption losses
226
96
Loss on disposition of Zulily, net
64
—
(Gain) loss on extinguishment of debt
(45
)
(8
)
Deferred income tax expense (benefit)
62
45
Other, net
13
(59
)
Changes in operating assets and
liabilities
Decrease (increase) in accounts
receivable
378
483
Decrease (increase) in inventory
63
(163
)
Decrease (increase) in prepaid expenses
and other assets
90
98
(Decrease) increase in trade accounts
payable
(103
)
(418
)
(Decrease) increase in accrued and other
liabilities
(410
)
(419
)
Net cash provided (used) by operating
activities
602
(37
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(151
)
(171
)
Expenditures for television distribution
rights
(111
)
(36
)
Cash proceeds from dispositions of
investments
71
12
Cash paid for disposal of Zulily
(35
)
—
Proceeds from sale of fixed assets
202
701
Insurance proceeds received for fixed
asset loss
54
184
Payments for settlements of financial
instruments
(179
)
—
Proceeds from settlements of financial
instruments
167
—
Other investing activities, net
—
14
Net cash provided (used) by investing
activities
18
704
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of debt
1,137
2,069
Repayments of debt
(1,893
)
(2,577
)
Dividends paid to noncontrolling
interest
(35
)
(39
)
Dividends paid to common shareholders
(8
)
(11
)
Indemnification agreement settlement
26
—
Other financing activities, net
(3
)
(13
)
Net cash provided (used) by financing
activities
(776
)
(571
)
Effect of foreign currency rates on cash,
cash equivalents and restricted cash
(17
)
(59
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(173
)
37
Cash, cash equivalents and restricted cash
at beginning of period
1,285
596
Cash, cash equivalents and restricted cash
at end period
$
1,112
633
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102501251/en/
Qurate Retail, Inc. Shane Kleinstein, 720-875-5432
Qurate Retail (NASDAQ:QRTEP)
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