iMedia Brands, Inc.

and speak only as of today's date. We undertake no obligation to update or revise these forward-looking statements for any reason. We believe the expectations reflected in our forward-looking statements are reasonable but give no assurance such expectations or any of our forward-looking statements will prove to be correct. For additional information, please refer to the Safe Harbor Statement in today's earnings release and our SEC filings. Finally, we will make references to non-GAAP measures on this call, such as adjusted EBITDA and free cash flow. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures, are included within our earnings release. Now I will turn the call over to iMedia Brands CEO, Tim Peterman. Tim? Thank you, Monty.

I would like to begin this morning reiterating that iMedia Brands continues to be focused on taking every step it can during these uncertain times to keep its employees, vendors, customers, guests, and their families safe. Q4 2020 was another strong report card for us. Q4 net revenue was $125 million, an increase of 1% compared to the same prior year period. Q4 adjusted EBITDA was $8.4 million, a $17.5 million improvement compared to the same prior year period. And Q4 new customers grew by 12%, the highest growth rate for this metric in seven years. Regarding our Q4 balance sheet, cash was $15.5 million, a $5.2 million improvement from the same prior year period. As a reminder, the company's debt structure today is composed of a credit facility that provides a $75 million line of credit, subject to a borrowing base, and a term loan that matures in July 2023. As of the end of Q4 2020, the company had $41 million outstanding on its line of credit, which was a 24% decrease, or $13 million, compared to the same prior year period. In addition, the company had $12.4 million outstanding on its term loan at the end of Q4, which was an 18% decrease, or $2.7 million, compared to the same prior year period. our Q4 inventory balance was $69 million, a 13% decrease compared to the same prior year period. Regarding capital expenditures, during the quarter, we spent approximately $1.2 million on capital projects, reflecting primarily the investments and upgrades to our website and infrastructure. Regarding our Q4 expenses, operating expenses decreased 16%, or $8.5 million, to $45.8 million. Full-year 2020 operating expenses decreased 19%, or $41.2 million to $175 million. These meaningful expense reductions reflect the continued positive impact of our leaner organization's expense discipline. As strong as these Q4 results are, I would like to note that these results are also consistent with our full-year 2020 performance. For example, For the full year 2020, the company posted a $42 million annual improvement in adjusted EBITDA, a $21 million reduction in net debt, and a $16 million reduction in accounts payables and accrued liabilities. Full year 2020 cash flow from operations was $6.2 million, a $12.4 million improvement compared to the same prior year period. Full year 2020 free cash flow was $1.3 million, a $14.6 million improvement compared to the same prior year period. We launched 60 plus new merchandising brands in the year that generated roughly 20% of the company's annual revenue, which is the highest number and the highest percent of annual revenue in our company's history. New customer growth for 2020 was 14% compared to the same prior year period. In addition, the company grew its new customer file for three consecutive quarters in 2020. And that's the first time since 2014. Gross margin growth in Q4 was 560 basis points compared to the same prior year period. And for the full year 2020, it was a 420 basis point growth compared to the same prior year period. ShopHQ was the first and only national television network to offer an FDA-authorized at-home COVID-19 test to consumers in the U.S. Shop HQ was the first television retailer to use its national promotional platform to generate demand from brick-and-mortar retailers for Shop HQ products. For example, our Shack Kitchen products today are available in over 1,700 Target and Sam's Club stores nationwide. Taking a step back from our 2020 financial results, I want to reiterate how passionately we work every day to drive our new interactive media growth strategy that centers on building a growing portfolio of lifestyle television networks, consumer brands, and media commerce services. Since May 2019, we have launched two additional 24-7 television networks, Shop Bulldog TV and Shop HQ Health, as well as a new online discount marketplace, Our Galleria. We acquired an OTT SaaS company, Float Left, and two leading consumer brands, JW Hume and Shaxx. Most recently, we've accomplished the following. On February 5th, the company contributed approximately $3.5 million in inventory to acquire a controlling interest in an online marketplace called The Closeout, which offers consumers exclusive and name brand products at deep discounts. On February 18th, the company successfully closed on its oversubscribed common stock equity raise, totaling $21.2 million. On March 1st, the company entered into a licensing partnership with Restore Capital, a Hilco Global company, where iMedia will operate and grow the Christopher Banks business in all sales channels, including digital, television, catalog, and brick and mortar. Regarding our 2021 company priorities, they are consistent with 2020 to accelerate the revenue growth of what we know works. In 2021, we will... drive continued innovation in our merchandising and programming offerings while continuing to improve our customers' experiences. We will increase the high-definition penetration of our television networks distribution footprint, particularly in the larger DMA markets. We will drive profitable revenue growth in our proprietary online marketplaces by leveraging iMedia's television networks promotional power. We will capitalize on the success of our innovative Shack business model by deploying it with other key iMedia brands. We will leverage iMedia's existing television programming to accelerate our ability to launch compelling OTT streaming services. And we will opportunistically and profitably scale our media commerce services. In terms of our 2021 outlook, the company anticipates posting Q1 revenue growth between 3% and 5%, compared to the same prior year period. In addition, the company reiterates its earlier guidance that the company anticipates posting at least $6 million in Q1 adjusted EBITDA and between $28 and $32 million in adjusted EBITDA for the full year 2021. As a reminder, from a tax perspective, the company has approximately $397 million in federal NOLs that are available to us to offset future taxable income. In closing, I would like to say that we are excited and optimistic about our ability to deliver consistent, profitable annual revenue growth. Thank you for your time this morning. I will turn the call back over to the operator for Q&A. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your question. Thank you. Our first questions come from the line of Thomas Forte with DA Davidson. Please proceed with your question.