Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB,
QRTEP) today reported fourth quarter and year end 2023
results(1).
“2023 was a transformational year for Qurate Retail. We executed
better on multiple fronts including merchandising, pricing strategy
and inventory management, and these efforts yielded significant,
positive results in the operational health and financial
performance of the business,” said David Rawlinson, President and
CEO of Qurate Retail. “We increased free cash flow generation,
reduced substantial debt and optimized our portfolio with the
divesture of Zulily, and in the fourth quarter, we grew Adjusted
OIBDA by over 70% as reported. As we enter 2024, we expect to
continue our momentum and drive improved results.”
Fourth quarter and full year 2023 operating results:
- Qurate Retail revenue decreased 4%(2) in Q4 and 5%(2) in full
year in both US Dollars and constant currency(3)
- Qurate Retail Adjusted OIBDA(4) increased 46%(2) in Q4 and
decreased 3%(2) in full year in constant currency
- Qurate Retail reported diluted EPS of $(0.70) in Q4 and $(0.37)
in full year
- Adjusted diluted EPS(4) of $0.22 in Q4 and $0.24 in full
year
- QxH revenue decreased 4% in Q4 and 5% in full year
- QVC International revenue increased 2% in Q4 and decreased 3%
in full year
- In constant currency, revenue was flat in Q4 and decreased 1%
in full year
- Cornerstone revenue decreased 12% in Q4 and 11% in full
year
Corporate updates:
- Reduced Qurate Retail principal amount of debt by $956 million
in 2023
- Delivered redemption notice on February 27, 2024 to redeem
remaining outstanding QVC 4.85% senior secured notes due 2024 on
March 28, 2024
Discussion of Results
Unless otherwise noted, the following discussion compares
financial information for the three months and year ended December
31, 2023 to the same periods in 2022.
FOURTH
QUARTER 2023 FINANCIAL RESULTS
(amounts in millions)
4Q22
4Q23
% Change
% Change Constant Currency(a)
Revenue
QxH
$
2,258
$
2,159
(4
)
%
QVC International
666
679
2
%
—
%
Cornerstone
348
305
(12
)
%
Total Qurate Retail Revenue (excluding
Zulily)
$
3,272
$
3,143
(4
)
%
(4)
%
Zulily(b)
254
—
NM
Total Qurate Retail Revenue (as
reported)
$
3,526
$
3,143
(11
)
%
(11)
%
Operating Income (Loss)
QxH(c)
$
28
$
(193
)
NM
QVC International
85
80
(6
)
%
(6)
%
Cornerstone
(14
)
18
NM
Unallocated corporate cost
(10
)
(8
)
20
%
Total Qurate Retail Operating Income
(Loss) (excluding Zulily)
$
89
$
(103
)
NM
NM
Zulily(b)
(47
)
—
NM
Total Qurate Retail Operating Income
(Loss) (as reported)
$
42
$
(103
)
NM
NM
Adjusted OIBDA (Loss)
QxH(c)
$
150
$
221
47
%
QVC International
97
99
2
%
2
%
Cornerstone
(7
)
27
NM
Unallocated corporate cost
(7
)
(7
)
-
%
Total Qurate Retail Adjusted OIBDA
(excluding Zulily)
$
233
$
340
46
%
46
%
Zulily(b)
(36
)
—
NM
Total Qurate Retail Adjusted OIBDA (as
reported)
$
197
$
340
73
%
73
%
________________________________________
a)
For a definition of constant currency
financial metrics, see the accompanying schedules.
b)
Zulily, LLC (“Zulily”) was divested on May
24, 2023. In the fourth quarter of 2022, Zulily recorded $2 million
in restructuring charges which are included in operating income and
excluded from Adjusted OIBDA.
c)
In the fourth quarter of 2022, QxH
incurred $29 million of restructuring and fire related costs, net
of recoveries. In the fourth quarter of 2023, QxH incurred a $326
million non-cash impairment charge related to goodwill. These
charges are included in operating income and excluded from Adjusted
OIBDA. See reconciling schedule 2.
FULL
YEAR 2023 FINANCIAL RESULTS
(amounts in millions)
2022
2023
% Change
% Change Constant Currency(a)
Revenue
QxH
$
7,359
$
6,995
(5
)
%
QVC International
2,528
2,454
(3
)
%
(1)
%
Cornerstone
1,313
1,165
(11
)
%
Total Qurate Retail Revenue (excluding
Zulily)
$
11,200
$
10,614
(5
)
%
(5)
%
Zulily(b)
906
301
NM
Total Qurate Retail Revenue (as
reported)
$
12,106
$
10,915
(10
)
%
(10)
%
Operating Income (Loss)
QxH(c)
$
(1,820
)
$
275
NM
QVC International(d)
306
370
21
%
26
%
Cornerstone(e)
48
35
(27
)
%
Unallocated corporate cost
(36
)
(33
)
8
%
Total Qurate Retail Operating Income
(Loss) (excluding Zulily)
$
(1,502
)
$
647
NM
NM
Zulily(b)
(539
)
(57
)
NM
Total Qurate Retail Operating Income
(Loss) (as reported)
$
(2,041
)
$
590
NM
NM
Adjusted OIBDA (Loss)
QxH(c)
$
750
$
746
(1
)
%
QVC International(d)
358
325
(9
)
%
(6)
%
Cornerstone(e)
78
67
(14
)
%
Unallocated corporate cost
(25
)
(23
)
8
%
Total Qurate Retail Adjusted OIBDA
(excluding Zulily)
$
1,161
$
1,115
(4
)
%
(3)
%
Zulily(b)
(97
)
(41
)
NM
Total Qurate Retail Adjusted OIBDA (as
reported)
$
1,064
$
1,074
1
%
2
%
________________________________________
a)
For a definition of constant currency
financial metrics, see the accompanying schedules.
b)
Zulily was divested on May 24, 2023. For
the year ended December 31, 2022, Zulily recorded (i) a $366
million non-cash impairment charge related to its tradename and
goodwill and (ii) $13 million in restructuring charges. For the
year ended December 31, 2023, Zulily recorded $5 million in
restructuring charges. These items are included in operating income
and excluded from Adjusted OIBDA.
c)
For the year ended December 31, 2022, QxH
incurred (i) a $2.7 billion non-cash impairment charge related to
goodwill and the HSN tradename, (ii) $520 million of gains related
to the sale leaseback of six US properties and (iii) a $10 million
net gain related to restructuring and fire related costs, net of
recoveries. For the year ended December 31, 2023, QxH incurred (i)
a $326 million non-cash impairment charge related to goodwill, (ii)
a $208 million net gain on insurance proceeds representing
insurance proceeds received in excess of fire losses, (iii) $13
million of restructuring costs related to workforce reduction, (iv)
a $17 million gain on the sale of the Rocky Mount, NC fulfillment
center (“Rocky Mount”) and (v) $16 million of penalties. These
items are included in operating income and excluded from Adjusted
OIBDA. See reconciling schedule 2.
d)
For the year ended December 31, 2023, QVC
International incurred $113 million of gains related to the sale
leaseback of its UK and German fulfillment centers partially offset
by $17 million in restructuring charges. These items are included
in operating income and excluded from Adjusted OIBDA. See
reconciling schedule 2.
e)
For the year ended December 31, 2023,
Cornerstone recorded $2 million in restructuring charges related to
a workforce reduction which are included in operating income and
excluded from Adjusted OIBDA. See reconciling schedule 2.
FOURTH
QUARTER AND FULL YEAR 2023 NET INCOME AND ADJUSTED NET
INCOME(4)
(amounts in millions)
4Q22
4Q23
2022
2023
Net income (loss)
$
(51
)
$
(273
)
$
(2,594
)
$
(145
)
Adjusted net income (loss)(a)
$
(18
)
$
87
$
58
$
94
Basic weighted average shares outstanding
("WASO")
381
389
380
387
Potentially dilutive shares
1
1
3
1
Diluted WASO
382
390
383
388
GAAP EPS(b)
$
(0.13
)
$
(0.70
)
$
(6.83
)
$
(0.37
)
Adjusted EPS(a)
$
(0.05
)
$
0.22
$
0.15
$
0.24
________________________________________
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 in the fourth quarter and full year.
Revenue declined in both periods primarily due to lower units
shipped, which decreased 5% in the fourth quarter and 6% in the
full year, as well as lower shipping and handling revenue and
higher returns. Units shipped in the fourth quarter were impacted
by less inventory liquidation sales compared to the prior year.
These factors were partially offset by a 3% increase in average
selling price in both the fourth quarter and full year. QxH grew
apparel and jewelry with declines in electronics and home in the
fourth quarter. QxH reported declines in all categories for the
full year.
Operating loss in the fourth quarter was primarily driven by a
$326 million non-cash impairment charge related to goodwill. For
the full year, operating income increased due to the $2.7 billion
non-cash impairment charge related to goodwill and the HSN
tradename recorded in the prior year. For the fourth quarter and
full year 2023, Adjusted OIBDA margin(4) increased mainly due to
higher product margins, lower fulfillment (warehouse and freight)
costs and favorable inventory obsolescence expense. Product margins
increased primarily due to mix shift to higher-margin products,
fewer clearance items as a result of improved inventory health and
initiatives to increase initial margin. Fulfillment favorability
was driven by efficiencies from Project Athens initiatives,
significantly lower detention and demurrage costs and improved
freight rates from the new parcel carrier contract that took effect
in July 2023. Inventory obsolescence declined due to an improved
inventory assortment. These gains were partially offset by
unfavorable administrative expenses in both periods, with expenses
for the full year primarily related to outside services for Project
Athens.
QVC International
In the fourth quarter, US Dollar denominated results were
positively affected by exchange rate fluctuations. The US Dollar
weakened 6% against the British Pound and the Euro, partially
offset by the US Dollar strengthening 5% against the Japanese Yen.
Exchange rate fluctuations negatively impacted full year 2023
results. The US Dollar strengthened 7% against the Japanese Yen,
partially offset by weakening 2% against the Euro and 1% against
the British Pound. The financial metrics presented in this press
release also provide a comparison of the percentage change in QVC
International’s results in constant currency (where applicable) to
the comparable figures calculated in accordance with US GAAP for
the fourth quarter and full year 2023.
In the fourth quarter, QVC International’s constant currency
revenue was flat, with a 1% increase in average selling price
offset by a 1% decrease in units shipped. For the full year,
constant currency revenue decreased 1%, reflecting a 3% decline in
units shipped and lower shipping and handling revenue, partially
offset by a 2% increase in average selling price. QVC International
reported growth in beauty and home for both periods, with declines
in apparel and accessories in the fourth quarter and declines in
electronics and jewelry for the full year.
Operating margin declined in the fourth quarter and increased
for the full year and Adjusted OIBDA margin was flat in the fourth
quarter and declined for the full year. Operating income for the
full year benefited from lower depreciation expense following the
sale leaseback transactions in January 2023. For both periods, QVC
International reported higher product margins and lower
obsolescence expense, offset by increased administrative and
fulfillment costs. Product margins increased due to less inventory
clearance, lower supply chain costs and mix shift to higher-margin
products. Obsolescence favorability reflected a reduced and
healthier inventory profile. Administrative costs increased mostly
due to outside services and management incentive accruals.
Fulfillment pressure was mainly attributable to fulfillment center
rents due to the sale leaseback transactions in January 2023 and
increased labor rates, notably in Europe.
Cornerstone
Cornerstone revenue decreased in the fourth quarter and full
year, 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 decreased in the full
year due to higher promotions and deleverage of marketing and
administrative costs, partially offset by lower supply chain costs.
Operating income and Adjusted OIBDA margin increased in the fourth
quarter as a result of continued efforts to manage supply chain
costs.
FOURTH
QUARTER 2023 SUPPLEMENTAL METRICS
(amounts in millions unless otherwise
noted)
4Q22
4Q23
% Change
% Change
Constant Currency(a)
QxH
Cost of Goods Sold % of Revenue
72.9
%
68.4
%
(450
)
bps
Operating Income Margin (%)(b)
1.2
%
(8.9
)
%
NM
Adjusted OIBDA Margin (%)(b)
6.6
%
10.2
%
360
bps
Average Selling Price
$
53.95
$
55.76
3
%
Units Sold
(5
)
%
Return Rate(c)
12.0
%
13.9
%
190
bps
eCommerce Revenue(d)
$
1,413
$
1,392
(1
)
%
eCommerce % of Total Revenue
62.6
%
64.5
%
190
bps
Mobile % of eCommerce Revenue(e)
67.9
%
70.1
%
220
bps
QVC International
Cost of Goods Sold % of Revenue
64.0
%
63.0
%
(100
)
bps
Operating Income Margin (%)
12.8
%
11.8
%
(100
)
bps
Adjusted OIBDA Margin (%)
14.6
%
14.6
%
—
bps
Average Selling Price
3
%
1
%
Units Sold
(1
)
%
Return Rate(c)
18.6
%
18.1
%
(50
)
bps
eCommerce Revenue(d)
$
326
$
359
10
%
7
%
eCommerce % of Total Revenue
48.9
%
52.9
%
400
bps
Mobile % of eCommerce Revenue(e)
70.7
%
70.5
%
(20
)
bps
Cornerstone
Cost of Goods Sold % of Revenue
71.2
%
59.0
%
(1,220
)
bps
Operating Income Margin (%)
(4.0
)
%
5.9
%
NM
Adjusted OIBDA Margin (%)
(2.0
)
%
8.9
%
NM
eCommerce Revenue(d)
$
273
$
245
(10
)
%
eCommerce % of Total Revenue
78.4
%
80.3
%
190
bps
________________________________________
a)
For a definition of constant currency
financial metrics, see the accompanying schedules.
b)
In the fourth quarter of 2022, QxH
incurred $29 million of restructuring and fire related costs, net
of recoveries. In the fourth quarter of 2023, QxH incurred a $326
million non-cash impairment charge related to goodwill. These
charges 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.
FULL
YEAR 2023 SUPPLEMENTAL METRICS
(amounts in millions unless otherwise
noted)
2022
2023
% Change
% Change Constant Currency(a)
QxH
Cost of Goods Sold % of Revenue(b)
69.7
%
67.3
%
(240
)
bps
Operating Income Margin (%)(c)
(24.7
)
%
3.9
%
NM
Adjusted OIBDA Margin (%)(c)
10.2
%
10.7
%
50
bps
Average Selling Price
$
51.74
$
53.33
3
%
Units Sold
(6
)
%
Return Rate(d)
14.0
%
15.2
%
120
bps
eCommerce Revenue(e)
$
4,450
$
4,321
(3
)
%
eCommerce % of Total Revenue
60.5
%
61.8
%
130
bps
Mobile % of eCommerce Revenue(f)
67.1
%
69.1
%
200
bps
LTM Total Customers(g)
8.9
8.1
(9
)
%
QVC International
Cost of Goods Sold % of Revenue
64.1
%
63.7
%
(40
)
bps
Operating Income Margin (%)(h)
12.1
%
15.1
%
300
bps
Adjusted OIBDA Margin (%)(h)
14.2
%
13.2
%
(100
)
bps
Average Selling Price
1
%
2
%
Units Sold
(3
)
%
Return Rate(d)
18.8
%
19.1
%
30
bps
eCommerce Revenue(e)
$
1,202
$
1,217
1
%
2
%
eCommerce % of Total Revenue
47.5
%
49.6
%
210
bps
Mobile % of eCommerce Revenue(f)
70.8
%
69.9
%
(90
)
bps
LTM Total Customers(g)
4.3
4.1
(5
)
%
Cornerstone
Cost of Goods Sold % of Revenue
64.7
%
61.5
%
(320
)
bps
Operating Income Margin (%)(i)
3.7
%
3.0
%
(70
)
bps
Adjusted OIBDA Margin (%)(i)
5.9
%
5.8
%
(10
)
bps
eCommerce Revenue(e)
$
994
$
902
(9
)
%
eCommerce % of Total Revenue
75.7
%
77.4
%
170
bps
________________________________________
a)
For a definition of constant
currency financial metrics, see the accompanying schedules.
b)
Excludes $95 million in
write-down costs related to inventory remaining at Rocky Mount
included in cost of goods sold for the twelve months ended December
31, 2022.
c)
For the year ended December 31,
2022, QxH incurred (i) a $2.7 billion non-cash impairment charge
related to goodwill and the HSN tradename, (ii) $520 million of
gains related to the sale leaseback of six US properties and (iii)
a $10 million net gain related to restructuring and fire related
costs, net of recoveries. For the year ended December 31, 2023, QxH
incurred (i) a $326 million non-cash impairment charge related to
goodwill, (ii) a $208 million net gain on insurance proceeds
representing insurance proceeds received in excess of fire losses,
(iii) $13 million of restructuring costs related to workforce
reduction, (iv) a $17 million gain on the sale of Rocky Mount and
(v) $16 million of penalties. These items are included in operating
income and excluded from Adjusted OIBDA. See reconciling schedule
2.
d)
Measured as returned sales over
gross shipped sales in US Dollars.
e)
Based on net revenue.
f)
Based on gross US Dollar
orders.
g)
LTM: Last twelve months.
h)
For the year ended December 31,
2023, QVC International incurred $113 million of gains related to
the sale leaseback of the UK and German fulfillment centers
partially offset by $17 million in restructuring charges. These
items are included in operating income and excluded from Adjusted
OIBDA. See reconciling schedule 2.
i)
For the year ended December 31,
2023, Cornerstone recorded $2 million in restructuring charges
related to a workforce reduction which are included in operating
income and excluded from Adjusted OIBDA. See reconciling schedule
2.
FOOTNOTES
1)
Qurate Retail will discuss these
highlights and other matters on Qurate Retail’s earnings conference
call that will begin at 8:30 a.m. (E.T.) on February 28, 2024. 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)
9/30/2023
12/31/2023
Cash and cash equivalents
(GAAP)
$
1,099
$
1,121
Indemnification agreement
receivable(a)
$
21
$
—
Debt:
QVC senior secured notes(b)
$
3,509
$
3,509
QVC senior secured bank credit
facility
995
857
Total Qurate Retail Group Debt
$
4,504
$
4,366
Senior notes(b)
792
792
Senior exchangeable debentures(c)
858
781
Corporate Level Debentures
1,650
1,573
Total Qurate Retail, Inc. Debt
$
6,154
$
5,939
Unamortized discount, fair market value
adjustment and deferred loan costs
(589
)
(599
)
Total Qurate Retail, Inc. Debt
(GAAP)
$
5,565
$
5,340
Other Financial Obligations:
Preferred stock(d)
$
1,270
$
1,270
QVC, Inc. leverage(e)
2.6x
2.4x
________________________________________
a)
Indemnity from Liberty Broadband
Corporation (“Liberty Broadband”), pursuant to an indemnification
agreement with respect to the Liberty Interactive LLC ("LI LLC")
1.75% exchangeable senior debentures due 2046 (the "LI LLC Charter
exchangeable debentures"). Liberty Broadband was required 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.
All remaining LI LLC Charter exchangeable debentures were retired
or exchanged in the fourth quarter of 2023.
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 a 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, Inc.’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 increased $22 million in the fourth
quarter as cash from operations more than offset debt reduction.
Total debt at Qurate Retail, Inc. decreased $215 million in the
fourth quarter due to net debt repayment of $138 million under
QVC’s bank credit facility and the final payment of all outstanding
LI LLC Charter exchangeable debentures.
QVC’s bank credit facility has $857 million drawn with
incremental availability of approximately $2.3 billion, net of
letters of credit. QVC’s leverage ratio, as defined by the QVC
revolving credit facility, was 2.4x at quarter-end. Pursuant to the
terms of QVC’s revolving credit facility, gains from sale leaseback
transactions completed within the last twelve months and a portion
of expected cost savings are included in operating income for
purposes of QVC’s leverage ratio for covenant calculations.
As of December 31, 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 under its senior secured
notes. 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
December 31, 2023.
Important Notice: Qurate Retail (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 February
28, 2024. The call can be accessed by dialing (877) 704-4234 or
(215) 268-9904, passcode 13742822, 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, future
repayment of debt 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 future public health
crises), issues impacting the global supply chain and labor market
and use of social media and influencers. 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 Form 10-K, 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, fire
related costs, net (including Rocky Mount inventory losses), and
gains 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 (loss) calculated in
accordance with GAAP for the three months ended December 31, 2022,
March 31, 2023, June 30, 2023, September 30, 2023 and December 31,
2023 and years ended December 31, 2022 and 2023.
CONSOLIDATED
OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
4Q22
1Q23
2Q23
3Q23
4Q23
2022
2023
Qurate Retail Operating Income
(Loss)
$
42
$
176
$
366
$
151
$
(103
)
$
(2,041
)
$
590
Depreciation and amortization
110
100
104
105
98
481
407
Stock compensation expense
14
16
14
10
13
60
53
Restructuring, penalties and fire related
costs, net of (recoveries)(a)
31
—
(208
)
19
—
3
(189
)
Impairment of intangible assets(b)
—
—
—
—
326
3,081
326
(Gains) on sale of assets and sale
leaseback transactions(c)
—
(113
)
(6
)
—
6
(520
)
(113
)
Qurate Retail Adjusted OIBDA
$
197
$
179
$
270
$
285
$
340
$
1,064
$
1,074
________________________________________
a)
The year ended December 31, 2022 includes
(i) $95 million in write-down costs at QxH related to inventory
remaining at Rocky Mount included in cost of goods sold, (ii) a
$132 million net gain at QxH on insurance proceeds received in
excess of losses recognized primarily on inventory, fixed assets
and other fire related costs, (iii) $3 million of costs at QxH
related to Rocky Mount that will not be reimbursed by QVC’s
insurance policies, (iv) $24 million of costs at QxH related to
workforce reductions and (v) $13 million in restructuring charges
at Zulily. The year ended December 31, 2023 includes (i) a $208
million net gain on insurance proceeds representing insurance
proceeds received in excess of fire losses, (ii) $13 million of
restructuring costs related to workforce reduction, (iii) a $17
million gain on the sale of Rocky Mount, (iv) $16 million of
penalties and (v) $2 million and $5 million in restructuring
charges related to workforce reductions at Cornerstone and Zulily,
respectively. Zulily was divested on May 24, 2023.
b)
Includes $2.7 billion and $366 million
non-cash impairment charges related to goodwill and tradenames
recognized at QxH and Zulily, respectively, for the year ended
December 31, 2022 and a $326 million non-cash impairment charge
related to goodwill recognized at QxH for the year ended December
31, 2023. Zulily was divested on May 24, 2023.
c)
Includes gains on the sale related to the
modification of a lease that resulted in a sale leaseback for GAAP
purposes of six US properties completed the year ended December 31,
2022 and the sale leaseback transactions of UK and German
properties in the year ended December 31, 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 December 31, 2022, March 31, 2023, June 30,
2023, September 30, 2023 and December 31, 2023 and years ended
December 31, 2022 and 2023.
SUBSIDIARY ADJUSTED
OIBDA RECONCILIATION
(amounts in millions)
4Q22
1Q23
2Q23
3Q23
4Q23
2022
2023
QVC
Operating income (loss)
$
113
$
230
$
374
$
154
$
(113
)
$
(1,514
)
$
645
Depreciation and amortization
96
89
94
98
91
401
372
Stock compensation
9
9
11
7
10
36
37
Restructuring, penalties and fire related
costs, net of (recoveries) (including Rocky Mount inventory
losses)
29
(4
)
(211
)
19
—
(10
)
(196
)
(Gains) on sale of assets and sale
leaseback transactions
—
(113
)
(6
)
—
6
(520
)
(113
)
Impairment of intangible assets
—
—
—
—
326
2,715
326
Adjusted OIBDA
$
247
$
211
$
262
$
278
$
320
$
1,108
$
1,071
QxH Adjusted OIBDA
$
150
$
139
$
185
$
201
$
221
$
750
$
746
QVC International Adjusted
OIBDA
$
97
$
72
$
77
$
77
$
99
$
358
$
325
Cornerstone
Operating income (loss)
$
(14
)
$
(2
)
$
15
$
4
$
18
$
48
$
35
Depreciation and amortization
7
5
7
7
7
27
26
Stock compensation
—
1
1
—
2
3
4
Restructuring costs
—
—
2
—
—
—
2
Adjusted OIBDA (Loss)
$
(7
)
$
4
$
25
$
11
$
27
$
78
$
67
________________________________________
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
December 31, 2022, March 31, 2023, June 30, 2023, September 30,
2023 and December 31, 2023 and years ended December 31, 2022 and
2023.
ADJUSTED NET INCOME
AND ADJUSTED EPS RECONCILIATION
(amounts in millions)
4Q22
1Q23
2Q23
3Q23
4Q23
2022
2023
Qurate Retail Net Income (Loss)
(GAAP)
$
(51
)
$
20
$
107
$
1
$
(273
)
$
(2,594
)
$
(145
)
Purchase accounting amort., net of
deferred tax benefit(a)
18
17
15
14
14
68
60
Impairment of intangible assets, net of
tax impact
—
—
—
—
326
3,004
326
Restructuring, penalties and fire related
costs, net of (recoveries)
24
—
(156
)
14
—
3
(142
)
(Gains) on sale of assets and sale
leaseback transactions, net of tax impact
—
(92
)
(5
)
—
6
(392
)
(91
)
Mark-to-market adjustments, net(b)
(9
)
35
26
11
14
(31
)
86
Adjusted Net Income (Loss)
$
(18
)
$
(20
)
$
(13
)
$
40
$
87
$
58
$
94
Diluted earnings per share (GAAP)
$
(0.13
)
$
0.05
$
0.28
$
—
$
(0.70
)
$
(6.83
)
$
(0.37
)
Adjustments, net of tax
0.08
(0.10
)
(0.31
)
0.10
0.92
6.98
0.61
Adjusted earnings per share
$
(0.05
)
$
(0.05
)
$
(0.03
)
$
0.10
$
0.22
$
0.15
$
0.24
________________________________________
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.
BALANCE SHEET
INFORMATION
(unaudited)
December 31, 2023
December 31, 2022
amounts in millions
Assets
Current assets:
Cash and cash equivalents
$
1,121
1,275
Trade and other receivables, net
1,308
1,394
Inventory, net
1,044
1,346
Indemnification agreement receivable
—
50
Other current assets
209
210
Total current assets
3,682
4,275
Property and equipment, net
512
570
Intangible assets not subject to
amortization
5,862
6,219
Intangible assets subject to amortization,
net
526
612
Operating lease right-of-use assets
635
585
Other assets, at cost, net of accumulated
amortization
151
310
Total assets
$
11,368
12,571
Liabilities and Equity
Current liabilities:
Accounts payable
$
895
976
Accrued liabilities
983
1,133
Current portion of debt
642
828
Other current liabilities
97
162
Total current liabilities
2,617
3,099
Long-term debt
4,698
5,525
Deferred income tax liabilities
1,531
1,440
Preferred stock
1,270
1,266
Operating lease liabilities
615
518
Other liabilities
148
198
Total liabilities
10,879
12,046
Equity/Attributed net assets
(liabilities)
385
412
Non-controlling interests in equity of
subsidiaries
104
113
Total liabilities and equity
$
11,368
12,571
QURATE RETAIL, INC.
STATEMENT OF OPERATIONS
INFORMATION
(unaudited)
Years ended December
31,
2023
2022
amounts in millions
Revenue:
Total revenue, net
$
10,915
12,106
Operating costs and expenses:
Cost of goods sold (exclusive of
depreciation shown separately below)
7,230
8,417
Operating expense
795
835
Selling, general and administrative,
including stock-based compensation
1,869
1,945
Impairment of intangible assets
326
3,081
Gains on sale of assets and sale leaseback
transactions
(113
)
(520
)
Restructuring, penalties and fire related
costs, net of (recoveries)
(189
)
(92
)
Depreciation and amortization
407
481
10,325
14,147
Operating income (loss)
590
(2,041
)
Other income (expense):
Interest expense
(451
)
(456
)
Dividend and interest income
52
10
Realized and unrealized gains (losses) on
financial instruments, net
(61
)
55
Loss on disposition of Zulily, net
(64
)
-
Tax sharing income (expense) with Liberty
Broadband
(11
)
79
Other, net
11
45
(524
)
(267
)
Earnings (loss) from continuing operations
before income taxes
66
(2,308
)
Income tax (expense) benefit
(160
)
(224
)
Net earnings (loss)
(94
)
(2,532
)
Less net earnings (loss) attributable to
the noncontrolling interests
51
62
Net earnings (loss) attributable to Qurate
Retail shareholders
$
(145
)
(2,594
)
QURATE RETAIL, INC.
STATEMENT OF CASH FLOWS
INFORMATION
(unaudited)
Years ended December
31,
2023
2022
amounts in millions
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings (loss)
$
(94
)
(2,532
)
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
407
481
Impairment of intangible assets
326
3,081
Stock-based compensation
53
60
Noncash interest expense
9
10
Realized and unrealized (gains) losses on
financial instruments, net
61
(55
)
Gains on sale of assets and sale leaseback
transactions
(113
)
(520
)
Gain on insurance proceeds, net of fire
related costs
(225
)
(132
)
Deferred income tax expense (benefit)
80
12
Insurance proceeds received for inventory,
operating expenses and business interruption losses
226
96
Loss on disposition of Zulily, net
64
—
Other noncash charges (credits), net
15
(38
)
Changes in operating assets and
liabilities
Decrease (increase) in accounts
receivable
36
124
Decrease (increase) in inventory
257
254
Decrease (increase) in prepaid expenses
and other assets
68
102
(Decrease) increase in trade accounts
payable
(34
)
(446
)
(Decrease) increase in accrued and other
liabilities
(217
)
(303
)
Net cash provided (used) by operating
activities
919
194
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash proceeds from dispositions of
investments
71
13
Investment in and loans to cost and equity
investees
—
(7
)
Capital expenditures
(230
)
(268
)
Cash paid for disposal of Zulily
(41
)
—
Expenditures for television distribution
rights
(113
)
(45
)
Insurance proceeds received for fixed
asset loss
54
184
Proceeds from sale of fixed assets
208
704
Payments for settlements of financial
instruments
(179
)
—
Payments from settlements of financial
instruments
167
—
Other investing activities, net
9
20
Net cash provided (used) by investing
activities
(54
)
601
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of debt
1,267
3,029
Repayments of debt
(2,258
)
(3,008
)
Withholding taxes on net share settlements
of stock-based compensation
(1
)
(7
)
Dividends paid to noncontrolling
interest
(53
)
(68
)
Dividends paid to common shareholders
(8
)
(12
)
Indemnification agreement settlement
45
-
Other financing activities, net
(2
)
(6
)
Net cash provided (used) by financing
activities
(1,010
)
(72
)
Effect of foreign currency exchange rates
on cash, cash equivalents and restricted cash
(4
)
(34
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(149
)
689
Cash, cash equivalents and restricted cash
at beginning of period
1,285
596
Cash, cash equivalents and restricted cash
at end of period
$
1,136
1,285
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227714996/en/
Shane Kleinstein 720-875-5432
Qurate Retail (NASDAQ:QRTEP)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Qurate Retail (NASDAQ:QRTEP)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024
