Qurate Retail: Opportune Time For Company To Buy Back Stock?

seekingalpha11-23 03:01

Despite the recent stock price decline, Qurate Retail remains financially strong with $873 million in cash and a $1.8 billion credit availability, focusing on debt reduction and strategic growth.CEO ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2485184292?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1149029937/image_1149029937.jpg","is_english":true,"pubTime":"2024-11-23 03:01","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2485184292","market":"hk","top_or_hot":-1,"title":"Qurate Retail: Opportune Time For Company To Buy Back Stock?","media":"seekingalpha","content":"<div>\n<p>Despite the recent stock price decline, Qurate Retail remains financially strong with $873 million in cash and a $1.8 billion credit availability, focusing on debt reduction and strategic growth.CEO ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739701-qurate-retail-qrtea-stock-opportune-time-to-buy-back-stock\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Qurate Retail: Opportune Time For Company To Buy Back Stock?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nQurate Retail: Opportune Time For Company To Buy Back Stock?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-23 03:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739701-qurate-retail-qrtea-stock-opportune-time-to-buy-back-stock><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Despite the recent stock price decline, Qurate Retail remains financially strong with $873 million in cash and a $1.8 billion credit availability, focusing on debt reduction and strategic growth.CEO ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739701-qurate-retail-qrtea-stock-opportune-time-to-buy-back-stock\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4220","symbol_name":"综合零售","start_time":0,"source_url":"https://seekingalpha.com/article/4739701-qurate-retail-qrtea-stock-opportune-time-to-buy-back-stock","article_id":"2485184292","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1149029937/image_1149029937.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485184292","pubTimestamp":1732302062,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Despite the recent stock price decline, Qurate Retail remains financially strong with $873 million in cash and a $1.8 billion credit availability, focusing on debt reduction and strategic growth.CEO D","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4220":"综合零售","BK4122":"互联网与直销零售","QRTEA":"Qurate Retail-A"},"translate_title":"Qurate Retail：公司回购股票的最佳时机？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"QRTEA":0.9},"content_text":"Despite the recent stock price decline, Qurate Retail remains financially strong with $873 million in cash and a $1.8 billion credit availability, focusing on debt reduction and strategic growth.CEO David Rawlinson emphasizes disciplined cost management, maintaining gross margins, and proactive balance sheet management amid challenging macroeconomic conditions and declining sales.Qurate Retail plans to leverage social media and streaming for a $1.5 billion revenue run-rate in three years, maintaining double-digit OIBDA margins and 2.5x leverage.Any plans for a buyback could send a strong message to current shareholders that the board is standing behind the new growth plan.10'000 Hours  Reiterating Strong Buy I published a detailed research report about Qurate Retail (NASDAQ:QRTEA) on Seeking Alpha on Oct 14, 2024, assigning a Strong Buy rating on the company. After the company reported the third quarter results on November 7, 2024, the stock has since traded down from 59c to close at 36c on November 19, 2024. This means the market cap is now $150 million. The company is still expecting to generate free cash flow in the fourth quarter and has so far generated $100 million for the first nine months. It has also continued to address the debt, both paying it down and moving out the various short-term maturities. The cash runway is there until 2029 when more junior debt is due, but the equity market has not recognized it and the stock is trading like a short-term option. I still believe there is significant value for shareholders, so I stick with my previous valuation and Strong Buy rating. Q3 Print However, the company saw a larger decline in viewership and therefore larger sales declined than in previous quarters. The core QVC sales were down 6% versus the second quarter, which saw a 4% decline. The sales pressure at Cornerstone continues and was down 12% in the quarter. The sales decline in the last quarter was 14%. The EBITDA margin, which had improved for five straight quarters, was now down 40bps to 12%. Still, I believe this is a healthy margin compared to 1-2 years ago, and compared to brick-and-mortar retailers like Target (TGT). This is what the CEO had to say in the press release.  \"While the third quarter was anticipated to be the most difficult quarter of 2024, current headline events and the challenging macro-economic climate heavily impacted viewership of our programming and consumer behavior more than expected,\" said David Rawlinson, President and CEO of Qurate Retail. \"As a result, revenue underperformed this quarter and resulted in meaningful bottom-line deleverage. Despite this, we were able to hold consolidated gross margin flat with disciplined cost management and reduced operating expenses. We also continued our proactive balance sheet management, completing an offer in which 89% of QVC's 2027 and 2028 notes were tendered, which improves the QVC credit profile with reduced debt and an extended maturity profile. \"We are nearing the end of our multi-year Project Athens initiative focused on margin and free cash flow. The team has materially improved the business, becoming a more profitable, leaner and more nimble organization. We are transitioning to the next phase of our strategic growth as we enhance our capabilities to reach aggregated audiences on primarily social and streaming platforms.\"  The company is maintaining healthy liquidity with $873 million in cash and $1.8 billion available on the QVC bank credit facility. The cash amount held at the corporate level was $476 million (including $275 million at Qurate Retail Inc, QRI), CBI (Cornerstone) held $100 million, and QVC, after using a chunk to pay off bondholders, held $297 million. There is a bond due on February 15th, 2025 - the QVC 4.45% $586 million Senior Secured Notes. The company has stated they will use cash flow and the credit facility to pay it down. Then the next maturity is the credit facility which is due September 2026. It's pari passu with new 2029 Secured notes which are trading at 11.5/12% yield which indicates the company has access to capital, being able to refinance the debt. This is what the company said in the latest earnings call:  Karru Martinson All right. And then when we look at the capital structure, obviously, a big move with the extension to the 29s. We should expect the 25s to get paid off with revolver in cash, I would assume. And how does that kind of feed into the revolver refinancing outlook here? Ben Oren This is Ben Oren. Essentially, the exchange offer gave us the runway to put an extension of the revolver in either late 2028 or early 2029. We still need to negotiate with our banks. We feel like we have the right tools to be able to offer them the improved terms and reduction in total borrowings to be able to facilitate that.  The company has cash at the corporate level to pay preferred dividends and could be using cash for the buyback of common. There are no restrictions with the cash at this box. However, capital allocation has been focused on deleveraging and moving out maturities. The QVC Inc operating company has restrictions on being able to ship cash to the parent. The company is currently not in compliance with the 3.5x restricted test to use cash at the QVC level to buy back shares or pay dividends. However, with QVC gross debt of $4012 million and $1,103 million in LTM, the EBITDA leverage is 3.64x and will most likely be lower when the company pays down the Feb 2025 notes, as the test is a total leverage test not net of cash. My calculation is that the debt will be low by $250 million, as they use free cash flow, $200 million generated in 4Q, according to my estimates, and borrowing under the credit facility to pay down the secured bond due in Feb. Gross debt goes to $3,762 million from $4,012 million. EBITDA at QVC, Inc. improved last quarter, but to be conservative, I kept the last twelve-month EBITDA at $1,103 million. This will give you 3.41x, which is below 3.5x. The fact they will be in compliance is just an extra bonus, meaning now the free cash flow generated in the future could be applied to buy back the common shares. The cash at QRI can still be used to buy back the common, even if not in compliance. To me, with the stock currently down, it seems to be an opportune time to launch a buyback program. The company's CEO and Chairman also spoke at the Liberty Media Investor Day in NYC on November 14, 2024. The company will be leaning into social media and streaming and expects within three years to achieve a run-rate of $1.5 billion in revenue from these efforts. While maintaining stable double-digit OIBDA margins and committing to 2.5x leverage as defined in the QVC credit agreement, which was 3.1x as of the third quarter of 2024. The company will also change its name to QVC Group and the ticker will be $QVCG. This will occur around the time they file the 10K. The company is focusing its efforts on the core business, which actually generates most of the earnings and the cash flow. Cornerstone only did 2% of the $250 million OIBDA generated by QVC, Inc. The company is facing a potential de-listing from Nasdaq if the stock remains below $1.00/share, but has to end of June 2025 (with an extension). This could be fixed with a reverse stock split. The company will, no matter what, continue to be listed on Nasdaq if they so choose to. Regarding capital management, so far, the focus has been on reducing debt and exchanging the 2027/28 bonds into 2029 bonds, but the stock has continued to sell off. Alright, So What Do I Think Could Happen? The board could take advantage of the extremely low share price and a seemingly endless number of sellers. Especially, if they believe in the management efforts to stage a revenue comeback with the new plan launched at Investor Day. Give the sellers an out and show commitment to current shareholders. The current management has shown they were able to execute on Project Athens and strengthen the company. For instance, they did deliver on the goals of double-digit OIBDA margin and free cash flow growth by 2024. The management has executed on the cost and cash flow side of the equation. Leverage is down, and the company has liquidity. The company has launched a new strategic plan to grow the business. All of this makes me believe that this could be an opportune time for the company to take advantage of the low stock price. If they offer to buy 100 million shares at 50c, that would only mean they had to spend $50 million for 25% of the total shares (397 million) outstanding! Pretty astonishing. As I mentioned before, the company has plenty of cash at the corporate level, so it would barely make a dent in its bank account. But the buyback, if it happens, would send a strong message to current shareholders that the board is standing behind the new growth plan.  Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"Shareholding Changes,analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485184292"}