Blue Nile, Inc. News
Blue Nile Announces First Quarter 2008 Financial Results
The company posted net sales of
Net cash provided by operating activities totaled
"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
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
In a separate release today, the Company announced the appointment of
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
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
Conference Call
The Company will host a conference call to discuss its first quarter financial results today at
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.
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