• Overstock Announces Second Quarter 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 29 Jul 2021 06:00:00   America/New_York

    SALT LAKE CITY, July 29, 2021 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended June 30, 2021.

    Second Quarter 2021 Financial Highlights, from continuing operations

    •Total net revenue was $795 million, an increase of 4% year over year
    •Gross profit was $175 million or 22.0% of total net revenue
    •Income from continuing operations was $82 million
    •Diluted earnings per share was $1.72
    •Adjusted EBITDA (non-GAAP) was $44 million, which represents 5.6% of net revenue
    •YTD net cash provided by operating activities was $120 million
    •At the end of the second quarter, cash and cash equivalents totaled $536 million

    "In a significant quarter for the company, I am proud to report Overstock delivered both growth and profitability in the second quarter of 2021 as we lapped the start of the pandemic," said Overstock CEO Jonathan Johnson. "Our strong and consistent results stem from foundational operational improvements in the business, a disciplined strategy, and intense focus. The furniture and home furnishings market is large and growing. We expect this market to benefit from strong and sustained demand, and to continue to migrate online over time. Overstock remains well positioned to capture market share and sustain its profitable trajectory through the remainder of 2021 and beyond."

    "In addition to our solid operating results, Overstock recorded two significant accounting items in the second quarter," continued Johnson. "First, based on our consistent profitability and current go-forward outlook, we have released $47 million of our tax valuation allowance. This release illustrates confidence in our ability to continue to deliver sustainable, profitable market share growth. Second, in conjunction with the closing of the transaction with Pelion Venture Partners, we recognized a $228 million net gain, included in discontinued operations. It is great to have the Pelion transaction closed and the Pelion team focused on the Medici Ventures Fund companies."

    Second Quarter 2021 Operational Highlights

    •Active customers reached 9.2 million as of June 30, 2021, an increase of 31% year over year
    •LTM net revenue per active customer was $310 as of June 30, 2021, an increase of 20% year over year
    •Orders delivered in the second quarter of 2021 were 3.7 million, a decrease of 22% year over year
    •Average order value was $213 for the second quarter of 2021, an increase of 33% year over year
    •Orders per active customer, measured as LTM orders divided by active customers, was 1.69 for the second quarter of 2021, compared to 1.62 for the second quarter of 2020
    •Orders placed on a mobile device were 49.9% of gross merchandise sales in the second quarter of 2021, compared to 52.7% for the second quarter of 2020

    Partnership with Pelion Ventures Partners

    On April 23, 2021, we entered into a Limited Partnership Agreement with Pelion MV GP, L.L.C. ("Pelion"), in which Pelion became the sole general partner, holding a 1% equity interest in the partnership, and Overstock became a limited partner, holding a 99% equity interest in the partnership. Commensurate with closing, we recognized a $228 million gain during the quarter, net of income taxes, as part of income from discontinued operations, as we recorded the fair value of our retained equity method investments in the partnership and tZERO. Additionally, our retained equity interest in the limited partnership and tZERO were recognized as equity method investments on our consolidated balance sheets in the amount of $330 million.

    Financial Reporting Presentation in Accordance with the Pelion Transaction

    Medici Ventures' blockchain businesses, including tZERO, met the criteria to be reported as held for sale and discontinued operations as of March 31, 2021, due to their anticipated deconsolidation. As a result of closing the transaction during the second quarter of 2021, these businesses' operating results for the periods prior to deconsolidation have been reflected in our consolidated statements of income as discontinued operations. Additionally, the related assets and liabilities of these businesses associated with the prior periods are classified as discontinued operations in our consolidated balance sheets. As a result of closing this transaction, Overstock has reorganized its remaining businesses into a single reportable operating segment, Retail. Corporate-related overhead costs are included in Retail continuing operations.

    Release of Tax Valuation Allowance

    Each quarter we assess the recoverability of our deferred tax assets. In our assessment for the period ended June 30, 2021, we concluded it is more likely than not that our deferred tax assets related to United States federal income and all states with the exception of Utah will be realizable, therefore, we released approximately $47 million of our valuation allowance. We still maintain a valuation allowance against our deferred tax assets for capital losses and the state of Utah.

    Earnings Webcast Information

    Overstock will hold a conference call and webcast to discuss its second quarter 2021 financial results on Thursday, July 29, 2021, at 8:30 a.m. ET. To access the live webcast and presentation slides, go to http://investors.overstock.com. To listen to the conference call via telephone, dial (877) 673-5346 and enter conference ID 9394705 when prompted. Participants outside the U.S. or Canada who do not have Internet access should dial +1 (724) 498-4326, then enter the conference ID provided above.

    A replay of the conference call will be available at http://investors.overstock.com, starting two hours after the live call has ended. An audio replay of the webcast will be available via telephone starting at 11:30 a.m. ET on Thursday, July 29, 2021, through 11:30 a.m. ET on Thursday, August 12, 2021. To listen to the recorded webcast by phone, dial (855) 859-2056, then enter the conference ID provided above. Outside the U.S. or Canada, dial +1 (404) 537-3406 and enter the conference ID provided above.

    Questions may be emailed in advance of the call to ir@overstock.com.

    About Overstock.com

    Overstock.com, Inc. (Common Stock (NASDAQ:OSTK) / Series A-1 Preferred Stock (tZERO ATS:OSTKO) / Series B Preferred Stock (OTCQX:OSTBP)) is an online retailer and technology company based in Salt Lake City, Utah. Its leading e-commerce website sells a broad range of new home products at low prices, including furniture, décor, area rugs, bedding and bath, home improvement, and more. The online shopping site, which is visited by tens of millions of customers a month, also features a marketplace providing customers access to millions of products. In 2014, Overstock was the first major retailer to accept cryptocurrency as a form of payment and continues to do so. Overstock regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Overstock.com.

    O, Overstock.com, O.com, Club O, and Worldstock are registered trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

    Cautionary Note Regarding Forward-Looking Statements

    This press release and the July 29, 2021 conference call and webcast to discuss our financial results may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends, and statements regarding expectations with respect to the performance of Pelion in managing the limited partnership. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including but not limited to, the duration of the COVID-19 pandemic and its ultimate impact on our business and results of operations, adverse tax, regulatory or legal developments, and competition, including how such factors will be impacted at such time as the pandemic subsides throughout the country and globally. Other risks and uncertainties include, among others, the inherent risks associated with the businesses that Medici Ventures and tZERO are pursuing, our continually evolving business model, and difficulties we may have with our infrastructure, our fulfillment partners or our payment processors, including cyber-attacks or data breaches affecting us or any of them, and difficulties we may have with our search engine optimization results. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 26, 2021, in our Form 10-Q for the quarter ended March 31, 2021, which was filed with the Securities and Exchange Commission on May 6, 2021, and in our subsequent filings with the Securities and Exchange Commission. The Form 10-K, 10-Q, and our subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.

    Contacts

    Investor Relations:
    Alexis Callahan
    801-947-5126
    ir@overstock.com

    Media Relations:
    Megan Herrick
    801-947-3564
    pr@overstock.com



    Overstock.com, Inc.
    Consolidated Balance Sheets (Unaudited)
    (in thousands, except per share data)
     June 30,
    2021    		 December 31,
    2020
    Assets   
    Current assets:   
    Cash and cash equivalents$536,445  $495,425 
    Restricted cash1,208  1,197 
    Accounts receivable, net33,008  22,867 
    Inventories7,009  6,243 
    Prepaids and other current assets27,554  22,879 
    Current assets of discontinued operations—  34,129 
    Total current assets605,224  582,740 
    Property and equipment, net109,693  113,767 
    Deferred tax assets, net33,252  37 
    Goodwill6,160  6,160 
    Equity securities330,778  1,412 
    Operating lease right-of-use assets14,242  17,297 
    Other long-term assets, net2,376  2,646 
    Long-term assets of discontinued operations—  106,155 
    Total assets$1,101,725  $830,214 
    Liabilities and Stockholders' Equity   
    Current liabilities:   
    Accounts payable$166,671  $109,759 
    Accrued liabilities112,683  123,646 
    Unearned revenue84,447  72,165 
    Operating lease liabilities, current4,612  5,152 
    Other current liabilities3,413  2,935 
    Current liabilities of discontinued operations—  13,924 
    Total current liabilities371,826  327,581 
    Long-term debt, net39,676  41,334 
    Operating lease liabilities, non-current10,364  13,206 
    Other long-term liabilities3,679  4,082 
    Long-term liabilities of discontinued operations—  7,685 
    Total liabilities425,545  393,888 
    Stockholders' equity:   
    Preferred stock, $0.0001 par value, authorized shares - 5,000   
    Series A-1, issued and outstanding - 4,204 and 4,204—  — 
    Series B, issued and outstanding - 357 and 357—  — 
    Common stock, $0.0001 par value, authorized shares - 100,000   
    Issued shares - 46,607 and 46,331   
    Outstanding shares - 43,012 and 42,7684  4 
    Additional paid-in capital954,518  970,873 
    Accumulated deficit(199,229) (525,233)
    Accumulated other comprehensive loss(545) (553)
    Treasury stock at cost - 3,595 and 3,563(78,568) (71,399)
    Equity attributable to stockholders of Overstock.com, Inc.676,180  373,692 
      Equity attributable to noncontrolling interests—  62,634 
        Total stockholders' equity676,180  436,326 
          Total liabilities and stockholders' equity$1,101,725  $830,214 



    Overstock.com, Inc.
    Consolidated Statements of Income (Unaudited)
    (in thousands, except per share data)
     Three months ended
    June 30,    		 Six months ended
    June 30,
     2021 2020 2021 2020
    Net revenue$794,536  $766,956  $1,454,397  $1,106,554 
    Cost of goods sold619,710  589,044  1,126,047  854,436 
    Gross profit174,826  177,912  328,350  252,118 
    Operating expenses       
    Sales and marketing85,272  79,215  158,810  115,560 
    Technology30,383  29,063  60,906  56,344 
    General and administrative22,660  20,837  45,531  44,722 
    Total operating expenses138,315  129,115  265,247  216,626 
    Operating income36,511  48,797  63,103  35,492 
    Interest expense, net(130) (364) (285) (375)
    Other income (expense), net298  246  72  (41)
    Income from continuing operations before income taxes36,679  48,679  62,890  35,076 
    Provision (benefit) for income taxes(45,726) 840  (45,533) 1,003 
    Income from continuing operations82,405  47,839  108,423  34,073 
    Income (loss) from discontinued operations, net of income
    taxes    		227,372  (13,458) 217,246  (19,257)
    Consolidated net income309,777  34,381  325,669  14,816 
    Less: Net loss attributable to noncontrolling interests—discontinued operations(134) (1,975) (335) (5,207)
    Net income attributable to stockholders of Overstock.com, Inc.$309,911  $36,356  $326,004  $20,023 
    Net income per share of common stock:       
    Net income (loss) attributable to common shares—basic       
    Continuing operations$1.73  $1.12  $2.27  $0.82 
    Discontinued operations4.78  (0.27) 4.58  (0.34)
    Total$6.51  $0.85  $6.85  $0.48 
    Net income (loss) attributable to common shares—diluted       
    Continuing operations$1.72  $1.11  $2.26  $0.81 
    Discontinued operations4.75  (0.27) 4.54  (0.34)
    Total$6.47  $0.84  $6.80  $0.47 
    Weighted average shares of common stock outstanding:       
    Basic43,009  40,329  42,948  40,243 
    Diluted43,314  40,590  43,317  40,440 



    Overstock.com, Inc.
    Consolidated Statements of Cash Flows (Unaudited)
    (in thousands)
     Six months ended
    June 30,
     2021 2020
    Cash flows from operating activities:   
    Consolidated net income$325,669  $14,816 
    (Income) loss from discontinued operations, net of income taxes(217,246) 19,257 
    Adjustments to reconcile consolidated net income to net cash provided by operating activities:   
    Depreciation and amortization9,949  10,978 
    Non-cash operating lease cost2,528  2,632 
    Stock-based compensation to employees and directors5,107  4,633 
    Increase in deferred income taxes, net(47,046) 20 
    Other non-cash adjustments721  173 
    Changes in operating assets and liabilities:   
         Accounts receivable, net(10,141) (19,787)
         Inventories(766) (500)
         Prepaids and other current assets(3,452) (3,302)
         Other long-term assets, net(368) 8 
         Accounts payable56,543  54,434 
         Accrued liabilities(10,651) 57,679 
         Unearned revenue12,282  48,470 
         Operating lease liabilities(2,812) (3,363)
         Other long-term liabilities(270) 1,217 
           Net cash provided by continuing operating activities120,047  187,365 
           Net cash used in discontinued operating activities(17,128) (16,922)
             Net cash provided by operating activities102,919  170,443 
    Cash flows from investing activities:   
    Contributions for capital calls(41,122) — 
    Expenditures for property and equipment(5,620) (7,388)
    Other investing activities, net(908) (159)
    Net cash used in continuing investing activities(47,650) (7,547)
    Net cash used in discontinued investing activities(29,703) (431)
      Net cash used in investing activities(77,353) (7,978)
    Cash flows from financing activities:   
    Payments on long-term debt(1,366) (779)
    Proceeds from long-term debt—  47,500 
    Proceeds from sale of common stock, net of offering costs—  2,848 
    Payments of taxes withheld upon vesting of restricted stock(7,812) (1,730)
    Other financing activities, net(1) (3,992)
    Net cash provided by (used in) continuing financing activities(9,179) 43,847 
    Net cash provided by discontinued financing activities2,085  — 
      Net cash provided by (used in) financing activities(7,094) 43,847 
    Net increase in cash, cash equivalents, and restricted cash18,472  206,312 
    Cash, cash equivalents, and restricted cash, beginning of period, inclusive of cash balances
    of discontinued operations    		519,181  114,898 
    Cash, cash equivalents, and restricted cash, end of period, inclusive of cash balances of
    discontinued operations    		537,653  321,210 
    Less: Cash, cash equivalents, and restricted cash of discontinued operations—  19,082 
    Cash, cash equivalents, and restricted cash, end of period$537,653  $302,128 

    Supplemental Operational Data

    We measure our business using operational metrics, in addition to the financial metrics shown above and the non-GAAP financial measures explained below. We believe these metrics provide investors with additional information regarding our financial results, including indicators of our growth, customer purchasing patterns, and the mix of products purchased by our customers.

    Active customers represents the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period.

    LTM net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period.

    Orders delivered represents the total number of orders delivered in any given period, including orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and in those circumstances we estimate delivery dates based on historical data.

    Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period.

    Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period.

    The following table provides key operating metrics for the Retail business:
    (in thousands, except for LTM net revenue per active customer, average order value and orders per active customer)

     Three months ended
    June 30,
     2021 2020
    Active customers9,165  7,011 
    LTM net revenue per active customer310  258 
    Orders delivered3,736  4,784 
    Average order value213  160 
    Orders per active customer1.69  1.62 


    Non-GAAP Financial Measures and Reconciliations

    We are providing certain non-GAAP financial measures in this release and related earnings conference call, including adjusted diluted earnings per share from continuing operations, adjusted EBITDA, and free cash flow. We use these non-GAAP measures internally in analyzing our financial results and we believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance in the same manner as our management and board of directors. We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in this earnings release. These non-GAAP financial measures should be used in addition to and in conjunction with the results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

    Adjusted diluted earnings per share for continuing operations is a non-GAAP financial measure that we calculate as net income from continuing operations less the benefit for income taxes associated with our tax valuation allowance release. We believe that this adjustment to our adjusted diluted net income before calculating per share amounts for the current period presented provides a useful comparison between our operating results from period to period.

    Adjusted EBITDA is a non-GAAP financial measure that is calculated as income from continuing operations before depreciation and amortization, stock-based compensation, interest and other income (expense), provision (benefit) for income taxes, and special items. We believe the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring.

    Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by or used in continuing operating activities reduced by expenditures for property and equipment. We believe free cash flow is a useful measure to evaluate the cash impact of the continuing operations of the business including purchases of property and equipment which are a necessary component of our ongoing operations.

    The following table reflects the reconciliation of adjusted diluted earnings per share from continuing operations to diluted earnings per share from continuing operations (in thousands, except per share data):

     Three months ended June 30, 2021
     Diluted EPS Less: tax
    valuation
    allowance
    release    		 Adjusted
    Diluted EPS
    Numerator:     
    Income from continuing operations$82,405  $47,046  $35,359 
    Less: Preferred stock dividends—accumulated182  —  182 
    Undistributed income from continuing operations82,223  47,046  35,177 
    Less: Undistributed income allocated to participating
    securities    		7,882  4,510  3,372 
    Net income from continuing operations attributable to
    common stockholders    		$74,341  $42,536  $31,805 
          
    Denominator:     
    Weighted average shares of common stock outstanding—
    diluted    		43,314  43,314  43,314 
          
    Net income from continuing operations per share of
    common stock:    		     
    Diluted$1.72  $0.99  $0.73 


    The following table reflects the reconciliation of adjusted EBITDA to income from continuing operations (in thousands):

     Three months ended
    June 30,    		 Six months ended
    June 30,
     2021 2020 2021 2020
            
    Income from continuing operations$82,405  $47,839  $108,423  $34,073 
    Depreciation and amortization4,803  5,409  9,949  10,978 
    Stock-based compensation2,802  1,952  5,107  4,633 
    Interest expense, net130  364  285  375 
    Other (income) expense, net(298) (246) (72) 41 
    Provision (benefit) for income taxes(45,726) 840  (45,533) 1,003 
    Special items (see table below)243  (7,272) 56  (8,758)
    Adjusted EBITDA$44,359  $48,886  $78,215  $42,345 
            
    Special items:       
    Special legal charges$—  $(7,272) $(187) $(9,773)
    Severance—  —  —  1,015 
    Transaction costs243  —  243  — 
     $243  $(7,272) $56  $(8,758)


    The following table reflects the reconciliation of free cash flow to net cash provided by continuing operating activities (in thousands):

     Six months ended
    June 30,
     2021 2020
    Net cash provided by continuing operating activities$120,047  $187,365 
    Expenditures for property and equipment(5,620) (7,388)
    Free cash flow$114,427  $179,977 

     


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