EX-99.1 2 exhibit991_2014x10k.htm EXHIBIT 99.1 Exhibit 99.1_2014_10K


Exhibit 99.1
 
Geeknet Announces Fourth Quarter and Full Year 2014 Financial Results

FAIRFAX, Va., February 23, 2015 /PRNewswire/ -- Geeknet, Inc. (Nasdaq: GKNT), the parent company of online retailer ThinkGeek.com and ThinkGeek Solutions, today announced financial results for the quarter and year ended December 31, 2014.

Total revenue for the fourth quarter of 2014 was $72.4 million, a decrease of 3% from $74.3 million in the fourth quarter of 2013.  Net income for the fourth quarter of 2014 was $1.0 million or $0.14 per diluted share compared to net income of $5.1 million or $0.76 per diluted share for the same period a year ago. Adjusted EBITDA for the fourth quarter of 2014 was $1.6 million, compared to an adjusted EBITDA of $5.7 million for the same period a year ago. 

Revenue for 2014 grew 2% to $140.7 million. Net loss for 2014 was $8.3 million, or $1.24 per diluted share, compared to net loss of $0.2 million, or $0.04 per diluted share, for 2013. Adjusted EBITDA for 2014 was a loss of $5.6 million, compared to adjusted EBITDA of $3.2 million for 2013.  A reconciliation of net income or loss as reported to adjusted EBITDA is included in this release.

2014 Geeknet Highlights:
•
Drove double digit GeekLabs site revenue growth and 30% wholesale revenue growth.
•
Expanded its presence in video game merchandise through its newly formed subsidiary, ThinkGeek Solutions, based on the acquisition of substantially all of the assets and certain liabilities of Treehouse Brand Stores.
•
Extended and expanded license agreement with Disney for STAR WARS properties through 2016.
•
Executed technology and brand marketing investments to support future growth.

“We are extremely disappointed with our fourth quarter and 2014 performance. It was a very competitive and promotional environment. In addition, the delivery issues experienced at our third party fulfillment center and related customer service issues negatively impacted revenue and gross margin. Therefore, in 2015, we are committed to sharpening our focus on product leadership, executing on our strategic plan and improving the customer experience,” said Katy McCarthy, Chairman and Chief Executive Officer.

Supplemental schedules of the Company's quarterly statements of operations and operational statistics are available on the Company's web site at investors.geek.net.

A conference call and audio webcast will be held at 11:00 a.m. ET on February 23, 2015 and may be accessed by calling (877) 348-9353 or (253) 237-1159 outside the U.S., or by visiting investors.geek.net.




A dial in replay will be available from 2:00 p.m. ET February, 23, 2015 until 11:59 p.m. ET February 25, 2015 by calling (855) 859-2056 or (404) 537-3406, with conference ID 79201061.

About Geeknet, Inc.
Geeknet, Inc. (NASDAQ: GKNT) is the parent company of ThinkGeek and ThinkGeek Solutions. ThinkGeek is the premier retailer for the global geek community.  Since 1999, ThinkGeek has been creating a world where everyone can express their inner geek, embrace their passions, and connect with each other.  ThinkGeek Solutions, which distributes video game-themed merchandise through licensed web-stores for the gaming community, joined our Geeknet family in August 2014. Our obsession is creating and sharing unique and authentic product experiences that stimulate our fans’ imaginations and fuel their geek core.  We believe that there is a geek in everyone and that it should be celebrated.  Want to learn more?  Check out thinkgeek.com or geek.net.

Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, we also report adjusted EBITDA. The method we use to calculate adjusted EBITDA is not in accordance with GAAP, is likely to differ from the methods used by other companies for similarly titled measures and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

We believe that adjusted EBITDA provides useful information to both management and investors and is an additional measurement which may be used to evaluate our operating performance. Our management and Board of Directors use adjusted EBITDA as part of their reporting and planning process and it is the primary measure we use to evaluate our operating performance. In addition, we have historically reported adjusted EBITDA to the investment community. We also believe that the financial analysts who regularly follow and report on us and the business sector in which we compete use adjusted EBITDA to prepare their financial performance estimates to measure our performance against other sector participants and to project our future financial results.

We define adjusted EBITDA as earnings or loss from continuing operations before interest and other income or expense, income taxes, stock-based compensation and depreciation and amortization. Adjusted EBITDA excludes certain expenses that we believe are not directly related to our core operating results. Although some of the items may recur on a regular basis, management does not consider activities associated with these items as core to its operations. With respect to stock-based compensation, we recognize expenses associated with stock-based compensation that require management to make assumptions about our common stock, such as expected future stock price volatility, the anticipated duration of outstanding stock options and awards and the forfeiture rate. While other forms of expenses (such as cash compensation, inventory costs and real estate costs) are reasonably correlated to our underlying business and such costs are incurred principally or wholly in the particular fiscal period being reported, stock-based compensation expense is not reasonably correlated to the particular fiscal period in question, but rather is based on expected future events that have no relationship (and in certain instances, an inverse relationship) with how well we currently operate our business.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations, involve risks and uncertainties and are inherently difficult to predict. Actual results may differ materially for a variety of reasons from those expressed or implied in such statements. In addition to the factors mentioned above, other risks and uncertainties include: popularity and demand for, as well as inventory management of, our retail products; fulfillment throughput and delivery; system interruptions and technology upgrades; execution of management’s strategy; our ability to attract




and retain key personnel; our ability to continue to invest in developing and acquiring new products; competition, competitors and our ability to compete; liquidity and capital resources; the outcome of any litigation to which we are a party; our accounting policies; and sufficiency of our cash resources and investments to meet our operating and working capital requirements. Investors should consult our filings with the Securities and Exchange Commission, sec.gov, including our most recent Annual Report on Form 10-K and subsequent filings, for further information regarding these and other risks of our business. All forward-looking statements included in this press release are based upon information available to us as of the date hereof, and we do not assume any obligations to update such statements or the reasons why actual results could differ materially from those projected in such statements.

GKNT-F





 GEEKNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)

 
Year Ended
December 31,
 
Three Months Ended
December 31,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Net revenue
$
140,705

 
$
138,262

 
$
72,379

 
$
74,338

Cost of revenue
116,437

 
111,145

 
59,687

 
59,500

Gross margin
24,268

 
27,117

 
12,692

 
14,838

Operating expenses:
 

 
 

 
 

 
 
Sales and marketing
15,733

 
11,888

 
7,402

 
6,130

Technology and design
8,611

 
6,076

 
2,249

 
1,721

General and administrative
8,039

 
9,296

 
1,959

 
1,922

Acquisition-related costs
264

 
—

 
133

 
—

Total operating expenses
32,647

 
27,260

 
11,743

 
9,773

(Loss) income from operations
(8,379
)
 
(143
)
 
949

 
5,065

Interest and other income (expense), net
119

 
(24
)
 
29

 
1

(Loss) income from continuing operations before income taxes
(8,260
)
 
(167
)
 
978

 
5,066

Income tax provision
12

 
—

 
10

 
—

Net (loss) income from continuing operations
(8,272
)
 
(167
)
 
968

 
5,066

(Loss) income from discontinued operations, net of tax
—

 
(67
)
 
—

 
3

Net (loss) income
$
(8,272
)
 
$
(234
)
 
$
968

 
$
5,069

 (Loss) income per share from continuing operations:
 
 
 
 
 
 
 
Basic
$
(1.24
)
 
$
(0.03
)
 
$
0.14

 
$
0.76

Diluted
$
(1.24
)
 
$
(0.03
)
 
$
0.14

 
$
0.76

Loss per share from discontinued operations:
 

 
 

 
 

 
 

Basic
$
—

 
$
(0.01
)
 
$
—

 
$
—

Diluted
$
—

 
$
(0.01
)
 
$
—

 
$
—

Net (loss) income per share:
 
 
 
 
 
 
 
Basic
$
(1.24
)
 
$
(0.04
)
 
$
0.14

 
$
0.76

Diluted
$
(1.24
)
 
$
(0.04
)
 
$
0.14

 
$
0.76

Shares used in per share calculations:
 
 
 
 
 
 
 
Basic
6,697

 
6,620

 
6,719

 
6,638

Diluted
6,697

 
6,620

 
6,720

 
6,698








GEEKNET, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value, unaudited)
 
December 31,
2014
 
December 31,
2013
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
54,747

 
$
53,084

Accounts receivable, net of allowance of $0 and $6 as of December 31, 2014 and December 31, 2013, respectively
7,637

 
9,719

Inventories, net
17,752

 
20,186

Prepaid expenses and other current assets
2,856

 
4,202

Total current assets
82,992

 
87,191

Property and equipment, net
1,601

 
2,465

Goodwill
1,973

 
—

Other intangible assets, net
1,188

 
—

Other long-term assets
83

 
50

Total assets
$
87,837

 
$
89,706

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 

 
 

Accounts payable
$
13,104

 
$
10,250

Deferred revenue
3,290

 
2,828

Accrued and other liabilities
7,696

 
6,661

Total current liabilities
24,090

 
19,739

Other long-term liabilities
925

 
—

Total liabilities
25,015

 
19,739

Commitments and contingencies (Note 5)
 
 
 
Stockholders’ equity:
 

 
 

Preferred stock, $0.001 par value; 1,000 shares authorized; no shares issued or outstanding 
—

 
—

Common stock, $0.001 par value; authorized — 25,000;  issued — 7,005 and 6,901 shares, as of December 31, 2014 and December 31, 2013, respectively; outstanding — 6,720 and 6,639 shares as of December 31, 2014 and December 31, 2013, respectively
7

 
7

Treasury stock, 285 shares at December 31, 2014 and 263 shares at December 31, 2013
(3,834
)
 
(3,479
)
Additional paid-in capital
818,308

 
816,826

Accumulated other comprehensive income
16

 
16

Accumulated deficit
(751,675
)
 
(743,403
)
Total stockholders’ equity
62,822

 
69,967

Total liabilities and stockholders’ equity
$
87,837

 
$
89,706









GEEKNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 
Year Ended
December 31,
 
2014
 
2013
 
Cash flows from operating activities from continuing operations:
 
 
 
 
Net loss
$
(8,272
)
 
$
(234
)
 
Loss from discontinued operations, net of tax
—

 
67

 
Loss from continuing operations
(8,272
)
 
(167
)
 
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization expense
1,383

 
1,258

 
Stock-based compensation expense
1,445

 
2,070

 
Change in fair value of contingent consideration liability
106

 
—

 
Deferred income taxes
10

 
—

 
Provision for bad debts
(5
)
 
70

 
Provision for inventory write-downs
102

 
(15
)
 
Loss on disposal of assets, net
4

 
16

 
Changes in assets and liabilities, net of effects of acquisition:
 
 
 
 
Accounts receivable
2,127

 
(8,739
)
 
Inventories
3,136

 
(3,514
)
 
Prepaid expenses and other assets
1,487

 
96

 
Accounts payable
2,154

 
58

 
Deferred revenue
179

 
525

 
Accrued and other liabilities
96

 
2,396

 
Other long-term liabilities
50

 
(29
)
 
Net cash provided by (used in) operating activities
4,002

 
(5,975
)
 
Cash flows from investing activities:
 

 
 

 
Acquisition of a business
(1,421
)
 
—

 
Purchase of property and equipment
(343
)
 
(216
)
 
  Proceeds from sale of discontinued operations
—

 
3,000

 
Net cash (used in) provided by investing activities
(1,764
)
 
2,784

 
Cash flows from financing activities:
 

 
 

 
Payment of contingent consideration
(250
)
 
—

 
Proceeds from issuance of common stock
30

 
317

 
Repurchase of stock
(355
)
 
(1,297
)
 
Net cash used in financing activities
(575
)
 
(980
)
 
Cash flows from discontinued operations:
 
 
 
 
Net cash used in operating activities
—

 
(39
)
 
Net cash used in discontinued operations
—

 
(39
)
 
Net change in cash and cash equivalents
1,663

 
(4,210
)
 
Cash and cash equivalents, beginning of year
53,084

 
57,294

 
Cash and cash equivalents, end of period
$
54,747

 
$
53,084

 







GEEKNET, INC.
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(In thousands, unaudited)



 
Year Ended
December 31,
 
Three Months Ended
 December 31,
 
2014
 
2013
 
2014
 
2013
Net (loss) income - as reported
$
(8,272
)
 
$
(234
)
 
$
968

 
$
5,069

Reconciling items:
 
 
 
 
 
 
 
Loss (income) from discontinued operations - net of tax
—

 
67

 
—

 
(3
)
Interest and other (income) expense, net
(119
)
 
24

 
(29
)
 
(1
)
Income tax provision
12

 
—

 
10

 
—

Stock-based compensation expense included in cost of revenues
105

 
(81
)
 
20

 
20

Stock-based compensation expense included in operating expenses
1,340

 
2,151

 
180

 
297

Depreciation and amortization expense
1,383

 
1,258

 
402

 
308

Adjusted EBITDA
$
(5,551
)
 
$
3,185

 
$
1,551

 
$
5,690








GEEKNET, INC.
Segment Data
(In thousands, unaudited)

 
 
Website
 
Wholesale
 
Total
Year Ended December 31, 2014
 
 
 
 
 
 
  Net revenue
 
$
111,609

 
$
29,096

 
$
140,705

  Cost of revenue
 
97,489

 
18,948

 
116,437

  Gross margin
 
$
14,120

 
$
10,148

 
$
24,268

  Gross margin %
 
12.7
%
 
34.9
%
 
17.2
%
 
 
 
 
 
 
 
Year Ended December 31, 2013
 
 
 
 
 
 
  Net revenue
 
$
115,909

 
$
22,353

 
$
138,262

  Cost of revenue
 
96,458

 
14,687

 
111,145

  Gross margin
 
$
19,451

 
$
7,666

 
$
27,117

  Gross margin %
 
16.8
%
 
34.3
%
 
19.6
%
 
 
 
 
 
 
 




CONTACT: ir@geek.net for Geeknet, Inc.