COPPELL, Texas--(BUSINESS WIRE)--
The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today
announced financial results for the second quarter and year-to-date
ended August 30, 2014. The Company reported a 38.7% increase in adjusted
net income of $5.1 million or $0.11 per adjusted diluted common share
compared to $3.7 million or $0.08 per adjusted diluted common share for
the second quarter of fiscal 2013. Net sales were $193.2 million, up
5.2% as compared to the second quarter of fiscal 2013. Company
comparable store sales for the second quarter were down 0.4%.
“Our gross margin is strong, our SG&A expense management is strong, and
we continued to achieve increased average ticket growth. We’re pleased
that this, combined with our new store growth, helped drive our earnings
performance with a 38.7% increase in adjusted net income, despite
sluggish comparable store sales. We have maintained our pricing
integrity in an increasingly promotional retail environment,” said Kip
Tindell, Chairman and Chief Executive Officer. “We are very excited
about our new store growth, with three more openings ahead of us this
year. Our targeted annual 12% minimum square footage growth is among the
fastest growth rates in the retail industry. We are encouraged by the
prospects of our three major initiatives to help drive deeper engagement
with our omni-channel customer and to increase traffic and average
ticket — POP! TM, Contained Home TM and TCS Closets
TM. TCS Closets is without a doubt the most significant
merchandising initiative in our history, leveraging our core competency
of high service sales of exclusive, solutions-based products and
systems.”
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TCS Closets TM: The Company is preparing for
the pilot launch of TCS Closets — its new, exclusive
collection of solid, custom-built solutions crafted from the highest
quality materials and with a variety of choices in wood grain finishes
and extras including lighting, glass doors and innovative storage
options for shoes, jewelry and handbags. TCS Closets is planned to
launch in seven stores in the Dallas/Fort Worth market beginning in
November and includes services in its stores from the retailer’s
expert salespeople, and in the home from the Contained Home Organizers
and Installation Service professionals. TCS Closets is planned to roll
out to the remaining stores by the end of 2015. The Company stated
that it believes the average ticket on an average master TCS Closet
will greatly exceed its day-to-day, $60 average ticket and be much
more than the $2,000 average ticket its Contained Home service has
experienced to date. Therefore, the Company believes TCS Closets will
contribute meaningfully to comparable store sales increases in the
longer term.
-
POP! Perfectly Organized Perks®: The
Container Store’s new customer frequency program has reached almost
one million customer enrollments since launching in all stores in
July. Approximately 50 percent of store sales are now coming from
“POP! Stars TM.”
-
Contained Home TM (previously called ATHOME):
The Company’s in-home, customized design and organization service is
currently available in Dallas, Houston, Austin, Manhattan and Los
Angeles, with plans to rollout in Washington DC this month and in
Denver and San Antonio in November. The service is expected to be
available in all stores by the end of 2015. The Company is encouraged
by the service’s average ticket to date of $2,000.
The Company has opened five new stores this fiscal year (including one
store relocation), with three more planned to achieve its targeted 12%
minimum square footage growth in fiscal 2014:
-
Salt Lake City area in Murray, UT (Fashion Place Mall) (Opening October 18th)
-
Chicago, IL (South Loop — in the Roosevelt Collection) (Opening November 15th)
-
Phoenix area in Glendale, AZ (Arrowhead Towne Center) (Opening February 7,
2015)
Tindell added, “As we move into the second half of the year, we are well
positioned and well invested in the infrastructure to support our
increasing omni-channel customer base. We continue to be encouraged as
we move closer to our important fourth quarter where we’ll be comping
against last year’s weather, which impacted traffic and sales more than
at any time in our history. Historically, over 60 percent of our net
income has been derived in the fourth quarter and we expect it to derive
approximately 70 percent of our reported net income this year. We’ll
continue to maximize every customer interaction while also focusing on
the long-term health and growth opportunities of our business, as well
as on our beloved employees and culture.”
Second Quarter 2014 Results
For the second quarter (thirteen weeks) ended August 30, 2014, on a
consolidated basis:
-
Net sales were $193.2 million, up 5.2% as compared to the second
quarter of fiscal 2013. Net sales in The Container Store retail
business were $174.8 million, up 5.7% as compared to the second
quarter of fiscal 2013, primarily due to new store sales. This more
than offset the comparable store sales operating measure decline of
0.4%. Elfa’s third party net sales increased by 3.7% in Swedish krona;
however due to the depreciation of the Swedish krona against the US
dollar, Elfa’s third party net sales in US dollars declined slightly
by 0.1%.
-
Gross margin was 58.8%, an increase of 40 basis points compared to the
second quarter of fiscal 2013, as increased margins in non-elfa®
departments were partially offset by lower margins in elfa®
branded products during the second quarter at The Container Store
retail business. This improvement in gross margin at The Container
Store retail business more than offset a decline in the Elfa segment
gross margin, which was due to a shift in sales mix.
-
Selling, general and administrative expenses (“SG&A”) increased by
5.5% to $90.5 million from $85.8 million in the second quarter of
fiscal 2013. SG&A as a percentage of net sales increased 10 basis
points primarily due to ongoing costs incurred related to becoming a
public company, as well as implementation of strategic initiatives.
-
The Company ended the second quarter with 67 stores in 24 states and
the District of Columbia. The Company opened one new store and
relocated one store in each of the second quarters of fiscal 2014 and
fiscal 2013.
-
Net interest expense decreased to $4.4 million from $5.5 million in
the second quarter of fiscal 2013.
-
The effective tax rate for the second quarter of fiscal 2014 was
17.5%, as compared to 30.5% in the second quarter of fiscal 2013. The
decrease in the effective tax rate was primarily due to a $1.8 million
reduction in tax expense recorded in fiscal 2014 primarily related to
an expected refund of tax paid in a prior period, partially offset by
a shift in the mix of projected domestic and foreign earnings.
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U.S. generally accepted accounting principles (“GAAP”) net income
was $7.0 million in the second quarter of fiscal 2014 compared to
$4.1 million in the second quarter of fiscal 2013. After
considering distributions accumulated to preferred shareholders of
zero and $21.9 million in the second quarters of fiscal 2014 and
fiscal 2013, respectively, net income (loss) per diluted common
share was $0.14 in the second quarter of fiscal 2014 compared to
($6.06) in the second quarter of fiscal 2013.
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Adjusted net income was $5.1 million or $0.11 per adjusted diluted
common share in the second quarter of fiscal 2014 compared to $3.7
million or $0.08 per adjusted diluted common share for the second
quarter of fiscal 2013, which excludes certain items that we do
not consider in the evaluation of ongoing operating performance,
including IPO-related expenses, certain restructuring charges, and
certain taxes (see GAAP/Non-GAAP reconciliation table at the end
of this release).
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-
Adjusted EBITDA was $23.4 million compared to $22.1 million in the
second quarter of fiscal 2013, (see GAAP/Non-GAAP reconciliation
table).
For the year-to-date (twenty-six weeks) ended August 30, 2014, on a
consolidated basis:
-
Net sales were $366.7 million, up 6.8% as compared to year-to-date
fiscal 2013. Net sales in The Container Store retail business were
$324.5 million, up 7.2% as compared to year-to-date fiscal 2013. The
increase in net sales was driven by new store sales and the extension
of Our Annual elfa® Sale in the fourth quarter of fiscal
2013, which led to an increase in merchandise delivered to customers
during the first half of fiscal 2014 as compared to the first half of
fiscal 2013. This more than offset the comparable store sales
operating measure decline of 0.6%. Elfa’s third party net sales
increased by 5.5% in Swedish krona; however, due to the depreciation
of the Swedish krona against the US dollar, Elfa’s third party net
sales in US dollars increased 3.7%.
-
Gross margin was 58.5%, an increase of 10 basis points compared to
year-to-date fiscal 2013. The improvement in gross margin was
primarily due to a higher percentage of net sales coming from our
higher gross margin The Container Store retail business.
-
Selling, general and administrative expenses (“SG&A”) increased by
7.3% to $181.7 million from $169.3 million in year-to-date fiscal
2013. SG&A as a percentage of net sales increased 30 basis points
primarily due to ongoing costs incurred related to becoming a public
company, as well as preparation for future growth and implementation
of strategic initiatives.
-
Net interest expense decreased to $8.7 million from $11.1 million in
year-to-date fiscal 2013.
-
The effective tax rate was (15.5%), as compared to 24.0% in
year-to-date fiscal 2013. The decrease in the effective tax rate was
primarily due to a $1.8 million reduction in tax expense recorded in
fiscal 2014 primarily related to an expected refund of tax paid in a
prior period partially offset by the impact of an increase in pre-tax
earnings from fiscal 2013 to fiscal 2014 and a change in mix between
projected domestic and foreign earnings.
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U.S. generally accepted accounting principles (“GAAP”) net income
was $3.4 million in year-to-date fiscal 2014 compared to a net
loss of $0.7 million in year-to-date fiscal 2013. After
considering distributions accumulated to preferred shareholders of
zero and $44.2 million in year-to-date fiscal 2014 and fiscal
2013, respectively, net income (loss) per diluted common share was
$0.07 in year-to-date fiscal 2014 compared to ($15.31) in
year-to-date fiscal 2013.
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Adjusted net income was $1.5 million or $0.03 per adjusted diluted
common share in year-to-date fiscal 2014 compared to $0.5 million
or $0.01 per adjusted diluted common share in year-to-date fiscal
2013, which excludes certain items that we do not consider in the
evaluation of ongoing operating performance, including IPO-related
expenses, certain restructuring charges, certain taxes, and loss
on extinguishment of debt (see GAAP/Non-GAAP reconciliation table
at the end of this release).
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-
Adjusted EBITDA was $33.6 million compared to $32.7 million in
year-to-date fiscal 2013, (see GAAP/Non-GAAP reconciliation table).
Balance sheet highlights as of August 30, 2014:
-
Cash: $15.3 million
-
Total debt: $366.0 million
-
Total liquidity (cash plus availability on revolving credit facilities
of $58.1 million): $73.4 million
Outlook
The Company is updating its annual fiscal 2014 guidance as follows:
Full fiscal 2014 consolidated net sales are expected to be $800 to $810
million based on announced store openings and an estimated increase in
comparable store sales of flat to slightly positive. Net income is
expected to be $0.52 to $0.57 per diluted common share based on
estimated diluted common shares outstanding of 49 million.
Included in this outlook is a $3.3 million non-taxable gain on the sale
of an Elfa subsidiary, whose principal asset was a building, which the
Company will record in the third quarter of this year. Due to the
non-taxable nature of this entity sale and the tax benefit the Company
recorded in the second quarter of 2014, the Company expects its tax rate
for the full fiscal year 2014 on a GAAP basis to be approximately 30%,
or 38% on an adjusted basis. Adjusting for these items, adjusted net
income is expected to be $0.41 to $0.46 per diluted common share based
on estimated diluted common shares outstanding of 49 million. Adjusted
EBITDA is expected to be $95 to $99 million.
The Company also expects comparable store sales to be flat to down low
single digits in the third quarter of fiscal 2014, and to increase in
the low to mid-single digit range in the fourth quarter of fiscal 2014.
Conference Call Information
A conference call to discuss second quarter fiscal 2014 financial
results is scheduled for today, October 6, 2014, at 4:30 PM Eastern
Time. Investors and analysts interested in participating in the call are
invited to dial (877) 407-3982 (international callers please dial (201)
493-6780) approximately 10 minutes prior to the start of the call. A
live audio webcast of the conference call will be available online at www.containerstore.com
in the investor relations section of the website.
A taped replay of the conference call will be available within two hours
of the conclusion of the call and can be accessed both online and by
dialing (877) 870-5176 (international replay number is (858) 384-5517.
The pin number to access the telephone replay is 13591166. The replay
will be available through October 13, 2014 at 11:59 PM Eastern Time.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this press release that do not relate to matters
of historical fact should be considered forward-looking statements,
including statements regarding our anticipated financial performance and
liquidity; expectations for new store openings; guidance regarding
annual square footage growth; expectations regarding our three major
initiatives — POP!, Contained Home and TCS Closets, including timing of
launch or rollout, as applicable, and average ticket; expectations
regarding our profitability in the fourth quarter of fiscal 2014; and
beliefs regarding our business model and customer experience.
These forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements,
including, but not limited to, the following: our inability to
successfully implement our three major initiatives — POP!, Contained
Home and TCS Closets; overall decline in the health of the economy,
consumer spending, and the housing market; our inability to manage costs
and risks relating to new store openings; our inability to source and
market new products to meet consumer preferences; our failure to achieve
or maintain profitability; our dependence on a single distribution
center for all of our stores; our vulnerability to natural disasters and
other unexpected events, including cyber attacks and inclement weather;
our reliance upon independent third party transportation providers; our
inability to protect our brand; our failure to successfully anticipate
consumer preferences and demand; our inability to manage our growth;
inability to locate available retail store sites on terms acceptable to
us; our inability to maintain sufficient levels of cash flow to meet
growth expectations; disruptions in the global financial markets leading
to difficulty in borrowing sufficient amounts of capital to finance the
carrying costs of inventory to pay for capital expenditures and
operating costs; fluctuations in currency exchange rates; our inability
to effectively manage our online sales; competition from other stores
and internet based competition; our inability to obtain merchandise on a
timely basis at competitive prices as a result of changes in vendor
relationships; vendors may sell similar or identical products to our
competitors; our reliance on key executive management; our inability to
find, train and retain key personnel; labor relations difficulties;
increases in health care costs and labor costs; our dependence on
foreign imports for our merchandise; violations of the U.S. Foreign
Corrupt Practices Act and similar worldwide anti bribery and anti
kickback laws; and our indebtedness may restrict our current and future
operations.
These and other important factors discussed under the caption “Risk
Factors” in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission, or SEC, on May 28, 2014, and our other reports
filed with the SEC could cause actual results to differ materially from
those indicated by the forward-looking statements made in this press
release. Any such forward-looking statements represent management’s
estimates as of the date of this press release. While we may elect to
update such forward-looking statements at some point in the future, we
disclaim any obligation to do so, even if subsequent events cause our
views to change. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to the date of
this press release.
About The Container Store
The Container Store is the nation’s leading retailer of storage and
organization products and the only retailer solely devoted to the
storage and organization category of retailing. The Company originated
the concept of storage and organization retailing when it opened its
first store in 1978. Today, the retailer has 67 store locations
nationwide that each average 25,000 square feet. The Container Store has
over 10,000 products to help customers save space and, ultimately, save
them time. As the pace of modern life accelerates and being organized is
not a luxury anymore but a necessity, The Container Store is devoted to
making customers more productive, relaxed and happier by selling
customized, complete solutions. Since its inception, the retailer has
nurtured an employee-first culture and couples its one-of-kind product
collection with a high level of customer service delivered by its highly
trained organization experts. The Company has been named to FORTUNE
magazine’s 100 Best Companies To Work For® — 15 years in a
row. Visit www.containerstore.com
for more information about store locations, the product collection and
services offered. To find out more about The Container Store’s unique
culture, Foundation Principles® and devotion to Conscious
Capitalism®, visit the retailer’s blog at www.whatwestandfor.com.
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The Container Store Group, Inc.
Consolidated balance sheets (unaudited)
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August 30,
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March 1,
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August 31,
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(In thousands, except share and per share amounts)
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2014
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2014
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2013
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Assets
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Current assets:
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Cash
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$
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15,298
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$
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18,046
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|
$
|
12,744
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Accounts receivable, net
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|
27,732
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32,273
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25,013
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Inventory
|
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|
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|
95,708
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85,595
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91,165
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Prepaid expenses
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9,675
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14,121
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10,249
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Forward contracts
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—
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—
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227
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Income taxes receivable
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2,257
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83
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2,317
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Deferred tax assets, net
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3,967
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3,967
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855
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Other current assets
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9,798
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10,322
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10,583
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Total current assets
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164,435
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164,407
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153,153
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Noncurrent assets:
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Property and equipment, net
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170,562
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161,431
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146,372
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Goodwill
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202,815
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202,815
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202,815
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Trade names
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237,821
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242,290
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240,434
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Deferred financing costs, net
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8,721
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9,699
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10,167
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Noncurrent deferred tax assets, net
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1,158
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1,323
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1,667
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Other assets
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1,064
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1,184
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855
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Total noncurrent assets
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622,141
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618,742
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602,310
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Total assets
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$
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786,576
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$
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783,149
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$
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755,463
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Liabilities and shareholders’ equity
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Current liabilities:
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Accounts payable
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$
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46,600
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$
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49,282
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$
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51,465
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Accrued liabilities
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56,546
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60,496
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51,892
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Revolving lines of credit
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16,779
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16,033
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21,215
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Current portion of long-term debt
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5,985
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7,527
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9,869
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Forward contracts
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486
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—
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—
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Income taxes payable
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1,305
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|
3,474
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|
585
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Deferred tax liabilities, net
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29
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29
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43
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Total current liabilities
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127,730
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136,841
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135,069
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Noncurrent liabilities:
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Long-term debt
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343,264
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327,724
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361,108
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Noncurrent deferred tax liabilities, net
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83,555
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85,442
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88,228
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Deferred rent and other long-term liabilities
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36,469
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35,956
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31,492
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Total noncurrent liabilities
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463,288
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449,122
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480,828
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Total liabilities
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591,018
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585,963
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615,897
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Shareholders’ equity:
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Common stock, $0.01 par value, 250,000,000 shares authorized,
47,979,297 shares
issued and outstanding at August 30, 2014; 250,000,000 shares
authorized,
47,941,180 shares issued and outstanding at March 1, 2014;
3,528,280 shares
authorized, 2,942,326 shares issued and 2,928,760 shares
outstanding at
August 31, 2013
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480
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479
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29
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Preferred stock, $0.01 par value:
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Senior cumulative; no shares authorized, issued or outstanding at
August 30,
2014 and March 1, 2014; 250,000 shares authorized, 202,480
shares issued
and 202,182 shares outstanding at August 31, 2013
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—
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—
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2
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Junior cumulative; no shares authorized, issued or outstanding at
August 30,
2014 and March 1, 2014; 250,000 shares authorized, 202,480
shares issued
and 202,182 shares outstanding at August 31, 2013
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—
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—
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2
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Additional paid-in capital
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854,516
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853,295
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455,460
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Accumulated other comprehensive (loss) income
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|
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|
(4,543
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)
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1,683
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|
|
(569
|
)
|
|
Retained deficit
|
|
|
|
|
|
(654,895
|
)
|
|
|
(658,271
|
)
|
|
|
(314,518
|
)
|
|
Treasury stock, no shares at August 30, 2014 and March 1,
2014;14,162 shares at
August 31, 2013
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(840
|
)
|
|
Total shareholders’ equity
|
|
|
|
|
|
195,558
|
|
|
|
197,186
|
|
|
|
139,566
|
|
|
Total liabilities and shareholders’ equity
|
|
|
|
|
|
$
|
786,576
|
|
|
|
$
|
783,149
|
|
|
|
$
|
755,463
|
|
|
|
|
|
|
The Container Store Group, Inc.
Consolidated statements of operations (unaudited)
|
|
|
|
(In thousands, except share and
|
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-Six Weeks Ended
|
|
|
per share amounts)
|
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
Net sales
|
|
|
|
$
|
193,247
|
|
|
$
|
183,774
|
|
|
$
|
366,685
|
|
|
$
|
343,419
|
|
|
Cost of sales (excluding depreciation and
amortization)
|
|
|
|
79,581
|
|
|
76,377
|
|
|
152,167
|
|
|
142,818
|
|
|
Gross profit
|
|
|
|
113,666
|
|
|
107,397
|
|
|
214,518
|
|
|
200,601
|
|
|
Selling, general, and administrative expenses
(excluding depreciation and amortization)
|
|
|
|
90,530
|
|
|
85,838
|
|
|
181,719
|
|
|
169,287
|
|
|
Pre-opening costs
|
|
|
|
2,359
|
|
|
1,972
|
|
|
5,346
|
|
|
3,934
|
|
|
Depreciation and amortization
|
|
|
|
7,567
|
|
|
7,580
|
|
|
14,823
|
|
|
15,050
|
|
|
Restructuring charges
|
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
361
|
|
|
Other expenses
|
|
|
|
282
|
|
|
407
|
|
|
807
|
|
|
626
|
|
|
Loss on disposal of assets
|
|
|
|
114
|
|
|
51
|
|
|
214
|
|
|
73
|
|
|
Income from operations
|
|
|
|
12,814
|
|
|
11,429
|
|
|
11,609
|
|
|
11,270
|
|
|
Interest expense, net
|
|
|
|
4,383
|
|
|
5,519
|
|
|
8,685
|
|
|
11,074
|
|
|
Loss on extinguishment of debt
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|
Income (loss) before taxes
|
|
|
|
8,431
|
|
|
5,910
|
|
|
2,924
|
|
|
(905
|
)
|
|
Provision (benefit) for income taxes
|
|
|
|
1,476
|
|
|
1,803
|
|
|
(452
|
)
|
|
(217
|
)
|
|
Net income (loss)
|
|
|
|
$
|
6,955
|
|
|
$
|
4,107
|
|
|
$
|
3,376
|
|
|
$
|
(688
|
)
|
|
Less: Distributions accumulated to preferred
shareholders
|
|
|
|
—
|
|
|
(21,851
|
)
|
|
—
|
|
|
(44,150
|
)
|
|
Net income (loss) available to common
shareholders
|
|
|
|
$
|
6,955
|
|
|
$
|
(17,744
|
)
|
|
$
|
3,376
|
|
|
$
|
(44,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
|
|
|
|
$
|
0.14
|
|
|
$
|
(6.06
|
)
|
|
$
|
0.07
|
|
|
$
|
(15.31
|
)
|
|
Net income (loss) per common share - diluted
|
|
|
|
$
|
0.14
|
|
|
$
|
(6.06
|
)
|
|
$
|
0.07
|
|
|
$
|
(15.31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding -
basic
|
|
|
|
47,976,500
|
|
|
2,929,165
|
|
|
47,961,558
|
|
|
2,929,468
|
|
|
Weighted-average common shares outstanding -
diluted
|
|
|
|
48,539,762
|
|
|
2,929,165
|
|
|
48,611,985
|
|
|
2,929,468
|
|
|
|
|
|
|
The Container Store Group, Inc.
Consolidated statements of cash
flows (unaudited)
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended
|
|
|
(In thousands)
|
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
3,376
|
|
|
$
|
(688
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
14,823
|
|
|
15,050
|
|
|
Stock-based compensation
|
|
|
|
546
|
|
|
213
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
(10
|
)
|
|
—
|
|
|
Loss on disposal of property and equipment
|
|
|
|
214
|
|
|
73
|
|
|
Deferred tax (benefit) expense
|
|
|
|
(442
|
)
|
|
79
|
|
|
Noncash refinancing expense
|
|
|
|
—
|
|
|
723
|
|
|
Noncash interest
|
|
|
|
978
|
|
|
901
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
3,495
|
|
|
67
|
|
|
Inventory
|
|
|
|
(11,494
|
)
|
|
(9,708
|
)
|
|
Prepaid expenses and other assets
|
|
|
|
4,921
|
|
|
(174
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
|
(1,751
|
)
|
|
5,091
|
|
|
Income taxes payable
|
|
|
|
(4,316
|
)
|
|
(3,865
|
)
|
|
Other noncurrent liabilities
|
|
|
|
844
|
|
|
1,573
|
|
|
Net cash provided by operating activities
|
|
|
|
11,184
|
|
|
9,335
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
|
(30,917
|
)
|
|
(23,049
|
)
|
|
Proceeds from sale of property and equipment
|
|
|
|
6
|
|
|
389
|
|
|
Net cash used in investing activities
|
|
|
|
(30,911
|
)
|
|
(22,660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Borrowings on revolving lines of credit
|
|
|
|
45,523
|
|
|
31,792
|
|
|
Payments on revolving lines of credit
|
|
|
|
(43,383
|
)
|
|
(23,579
|
)
|
|
Borrowings on long-term debt
|
|
|
|
25,015
|
|
|
105,500
|
|
|
Payments on long-term debt
|
|
|
|
(10,533
|
)
|
|
(19,771
|
)
|
|
Payment of debt issuance costs
|
|
|
|
—
|
|
|
(3,046
|
)
|
|
Proceeds from the exercise of stock options
|
|
|
|
664
|
|
|
—
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
10
|
|
|
—
|
|
|
Purchase of treasury shares
|
|
|
|
—
|
|
|
(53
|
)
|
|
Payment of distributions to preferred shareholders
|
|
|
|
—
|
|
|
(90,000
|
)
|
|
Net cash provided by financing activities
|
|
|
|
17,296
|
|
|
843
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
(317
|
)
|
|
(125
|
)
|
|
Net decrease in cash
|
|
|
|
(2,748
|
)
|
|
(12,607
|
)
|
|
Cash at beginning of period
|
|
|
|
18,046
|
|
|
25,351
|
|
|
Cash at end of period
|
|
|
|
$
|
15,298
|
|
|
$
|
12,744
|
|
|
|
|
The Container Store Group, Inc. Supplemental Information -
Reconciliation of GAAP to Non-GAAP Financial Measures
|
|
(In thousands, except share and per share amounts)
|
|
(unaudited)
|
|
|
The table below reconciles the non-GAAP financial measures of adjusted
net income and adjusted net income per diluted common share with the
most directly comparable GAAP financial measures of GAAP net income
(loss) available to common shareholders and GAAP net income (loss) per
diluted common share.
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-Six Weeks Ended
|
|
|
|
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common
shareholders
|
|
|
|
$
|
6,955
|
|
|
$
|
(17,744
|
)
|
|
$
|
3,376
|
|
|
$
|
(44,838
|
)
|
|
Distributions accumulated to preferred
shareholders
|
|
|
|
—
|
|
|
21,851
|
|
|
—
|
|
|
44,150
|
|
|
IPO costs
|
|
|
|
—
|
|
|
349
|
|
|
—
|
|
|
405
|
|
|
Restructuring charges
|
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
361
|
|
|
Loss on extinguishment of debt
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|
Taxes
|
|
|
|
(1,839
|
)
|
|
(888
|
)
|
|
(1,839
|
)
|
|
(705
|
)
|
|
Adjusted net income
|
|
|
|
$
|
5,116
|
|
|
$
|
3,688
|
|
|
$
|
1,537
|
|
|
$
|
474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding —
diluted
|
|
|
|
48,539,762
|
|
|
2,929,165
|
|
|
48,611,985
|
|
|
2,929,468
|
|
|
Adjust weighting factor of outstanding shares
|
|
|
|
2,797
|
|
|
45,613,394
|
|
|
17,739
|
|
|
45,700,256
|
|
|
Adjusted weighted average common shares
outstanding - diluted
|
|
|
|
48,542,559
|
|
|
48,542,559
|
|
|
48,629,724
|
|
|
48,629,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted common share
|
|
|
|
$
|
0.11
|
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
|
The table below reconciles the non-GAAP financial measure Adjusted
EBITDA with the most directly comparable GAAP financial measure of GAAP
net income (loss).
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-Six Weeks Ended
|
|
|
|
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
August 30, 2014
|
|
|
August 31, 2013
|
|
|
Net income (loss)
|
|
|
|
$
|
6,955
|
|
|
$
|
4,107
|
|
|
$
|
3,376
|
|
|
$
|
(688
|
)
|
|
Depreciation and amortization
|
|
|
|
7,567
|
|
|
7,580
|
|
|
14,823
|
|
|
15,050
|
|
|
Interest expense, net
|
|
|
|
4,383
|
|
|
5,519
|
|
|
8,685
|
|
|
11,074
|
|
|
Provision (benefit) for income taxes
|
|
|
|
1,476
|
|
|
1,803
|
|
|
(452
|
)
|
|
(217
|
)
|
|
EBITDA
|
|
|
|
$
|
20,381
|
|
|
$
|
19,009
|
|
|
$
|
26,432
|
|
|
$
|
25,219
|
|
|
Management fees
|
|
|
|
—
|
|
|
250
|
|
|
—
|
|
|
500
|
|
|
Pre-opening costs
|
|
|
|
2,359
|
|
|
1,972
|
|
|
5,346
|
|
|
3,934
|
|
|
IPO costs
|
|
|
|
—
|
|
|
349
|
|
|
—
|
|
|
405
|
|
|
Noncash rent
|
|
|
|
40
|
|
|
311
|
|
|
450
|
|
|
702
|
|
|
Restructuring charges
|
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
361
|
|
|
Stock-based compensation
|
|
|
|
269
|
|
|
114
|
|
|
546
|
|
|
213
|
|
|
Loss on extinguishment of debt
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|
Foreign exchange losses (gains)
|
|
|
|
21
|
|
|
(77
|
)
|
|
(51
|
)
|
|
17
|
|
|
Other adjustments
|
|
|
|
308
|
|
|
80
|
|
|
857
|
|
|
267
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
23,378
|
|
|
$
|
22,128
|
|
|
$
|
33,580
|
|
|
$
|
32,719
|
|
|
|
Note Regarding Non-GAAP Information
This press release includes financial measures that are not calculated
in accordance with GAAP, including adjusted net income, adjusted net
income per diluted common share, and Adjusted EBITDA. The Company has
reconciled these non-GAAP financial measures with the most directly
comparable GAAP financial measures in a table accompanying this release.
The Company believes that these non-GAAP financial measures not only
provide its management with comparable financial data for internal
financial analysis but also provide meaningful supplemental information
to investors. Specifically, these non-GAAP financial measures allow
investors to better understand the performance of the Company’s business
and facilitate a meaningful evaluation of its fiscal 2014 quarterly and
year-to-date diluted income (loss) per common share and actual results
on a comparable basis with its fiscal 2013 quarterly and year-to-date
results. In evaluating these non-GAAP financial measures, investors
should be aware that in the future the Company may incur expenses or be
involved in transactions that are the same as or similar to some of the
adjustments in this presentation. The Company’s presentation of non-GAAP
financial measures should not be construed to imply that its future
results will be unaffected by any such adjustments. The Company has
provided this information as a means to evaluate the results of its
ongoing operations. Other companies in the Company’s industry may
calculate these items differently than it does. Each of these measures
is not a measure of performance under GAAP and should not be considered
as a substitute for the most directly comparable financial measures
prepared in accordance with GAAP. Non-GAAP financial measures have
limitations as analytical tools, and investors should not consider them
in isolation or as a substitute for analysis of the Company’s results as
reported under GAAP.
Source: The Container Store Group, Inc.