Company Outlines Plans for Major Strategic Initiatives and 2015 New
Store Openings
New Built-in, Custom Closet Solution – TCS Closets™ – Rolling Out To
All Stores This Year
COPPELL, Texas--(BUSINESS WIRE)--
The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today
announced financial results for the fourth quarter and fiscal year 2014
ended February 28, 2015.
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Adjusted net income was $11.8 million or $0.24 per adjusted diluted
common share for the fourth quarter of fiscal 2014 compared to $10.7
million or $0.22 per adjusted diluted common share for the fourth
quarter of fiscal 2013. For full fiscal year 2014, adjusted net income
was $16.5 million or $0.34 per adjusted diluted common share compared
to $16.4 million or $0.33 per adjusted diluted common share in fiscal
2013 (see GAAP/Non-GAAP reconciliation table).
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Adjusted EBITDA was $31.3 million for the fourth quarter of fiscal
2014 compared to $29.3 million for the fourth quarter of fiscal 2013.
Adjusted EBITDA was $88.2 million in the full fiscal year 2014
compared to $86.1 million in fiscal 2013 (see GAAP/Non-GAAP
reconciliation table).
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Net sales were $224.3 million for the fourth quarter of fiscal 2014.
Net sales for the full fiscal year 2014 were $781.9 million.
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Company comparable store sales for the fourth quarter of fiscal 2014
were down 0.8% over the same period in fiscal 2013 and down 1.4% for
the full fiscal year 2014 compared to fiscal 2013.
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The Company opened seven new stores in fiscal 2014 and relocated one
store, and achieved its targeted 12% square footage growth.
“Our fourth quarter did not conclude according to early-in-the-quarter
trends,” said Kip Tindell, Chairman and Chief Executive Officer.
“Weather was a contributing factor, as we experienced winter storms in
February during the vitally important last 4 days of our 50-day Annual
elfa® Sale and during the last week of our 19-day
Sale’s extension. Historically, approximately 20% of our elfa Sale sales
occur during those last 4 days and approximately 60% of the Sale
extension sales occur in the final week. Additionally, a stronger U.S.
dollar had a significant impact on the conversion of our Elfa subsidiary
sales,” Tindell said, “Weather and foreign exchange headwinds aside, our
sales performance fell short of our expectations in fourth quarter and
in fiscal 2014. We can and will do better.”
Tindell continued, “We are focused on strengthening our business as we
build for the future in order to create long-term value for all of our
stakeholders. We remain very confident of, and excited about, the
potential of our three major strategic initiatives – TCS Closets,
Contained Home and POP! – with fiscal 2015 serving as an investment year
for these programs in order to bolster their longer-term success. We’re
also working on shorter-term opportunities to drive the core business,
innovate and differentiate.”
In addition to its three major strategic initiatives, the Company cited
focus on shorter-term initiatives, which include communicating more
frequently and effectively with its best customers and increased focus
on solutions based selling through training and technology.
Additionally, the Company is enhancing its already robust shopping
experience through programs like free shipping on orders over $75, new
delivery options, as well as elevated mobile features for its Click &
Pick Up service and improvements to its online elfa Custom Design
Center. The Company will also launch a customer financing program.
The Company’s three major strategic initiatives; TCS Closets TM,
Contained Home SM and POP! ®,
continue to roll out through the end of fiscal 2015. The Company
expects that, like with every successful major merchandising initiative
it has introduced throughout its history, each month, each quarter and
even each year that they mature, these initiatives will be more
impactful to the business.
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TCS Closets TM: The Company launched the
pilot of TCS Closets, its new, exclusive collection of solid, custom,
built-in closet solutions, in the Dallas/Fort Worth market in November
2014. Each solution is custom built from the floor up using luxurious,
one-inch-thick profile construction in exclusive finishes and gorgeous
glass or solid doors, locking jewelry drawers, beautiful hardware,
customizable islands and soft lighting. Every detail of the
state-of-the-art customer experience has been designed to
differentiate the line from other solid closet offerings, including a
quick turnaround time from design to purchase, delivery and
installation. The current rollout plan during fiscal 2015 for the
remaining 63 stores is as follows with all new stores opening in
fiscal 2015 with TCS Closets. Click to read more about TCS
Closets.
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Q1
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28 stores in Houston, South Texas, Washington, DC, Los Angeles,
Manhattan, Boston, Providence, New York, Paramus, Chicago
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Q2
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23 stores in Southern CA, Denver, Florida, Phoenix, San
Francisco/Bay Area, Las Vegas, Salt Lake City, St Louis,
Indianapolis, Cincinnati and Columbus
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Q3
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9 stores in Philadelphia, Atlanta, Charlotte, Raleigh, Nashville,
Little Rock and Minneapolis
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Q4
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3 stores in Seattle and Portland
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The Company ended fiscal 2014 with TCS Closets in seven Dallas/Ft Worth
stores and is very pleased with the early results of the launch that
show an average ticket since inception of over $10,000. To date, just
five months into the launch in the Dallas/Ft. Worth market, with a
relatively small sample size of closets sold thus far, the Company is
experiencing a notable impact to the total comparable store sales growth
in those stores that have it, which is an exciting signal of what this
program can do as it grows into maturity. TCS Closets has a longer
selling cycle than the products historically sold by the Company so
there is lag before sales are achieved once a store begins to offer TCS
Closets. Accordingly, the Company expects the most meaningful impact of
the initiative to sales will come in 2016 and beyond. The Company will
support the rollout of TCS Closets with local and national marketing
including direct mail, online, in-store events, public relations, social
media, and advertising in national home décor and design magazines.
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Contained HomeSM: The Company’s in-home,
customized design and organization service was available in 34 stores
at the end of fiscal 2014. The current rollout plan for the remaining
36 stores is as follows with all new fiscal 2015 stores opening with
Contained Home:
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Q1
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12 stores in Southern CA, Salt Lake City, Boston, Providence, RI and
Chicago
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Q2
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12 stores in Florida, Phoenix, Las Vegas, St Louis, Indianapolis,
Cincinnati and Columbus
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Q3
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9 stores in Philadelphia, Atlanta, Charlotte, Raleigh, Nashville,
Little Rock and Minneapolis
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Q4
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3 stores in Seattle and Portland
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The Company is hiring experienced Contained Home Organizers (currently
100 on board) in each of its markets, with the ability to quickly scale
as customer demand increases. Average ticket for the service remains
strong at over $2,000 since inception. Additionally, in general,
stronger sales performance is being experienced in stores that have had
Contained Home the longest and momentum is building in those stores with
incremental sales directly attributable to the service. Click to read
more about Contained
Home.
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POP! Perfectly Organized Perks®: The Container
Store’s new customer frequency program has reached 2 million customer
enrollments since launching in July 2014, steadily enrolling around
30,000 customers a week. Ongoing analysis of the program shows that
customers who have been in the program for over one year have
increased their shopping frequency on average by at least one
visit since joining the program. The deployment of additional
technology in fiscal 2015 will support deeper, one-on-one, customized
connections, offers and conversations with these loyal customers.
Click to read more about POP!.
New stores
In fiscal 2014, The Container Store opened seven new stores and
relocated one store. The Company continues to be very pleased with its
new store performance, and remains committed to its 12% square footage
growth. The Company expects to open nine new stores in fiscal 2015 and
relocate one store.
Fiscal 2015 New Stores:
-
May 30th – Tucson, AZ (Tucson Mall)
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June 27th – Overland Park, KS (Hawthorne Plaza)
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July 18th – Columbus, OH (Easton Gateway) Relocation
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August 15th – Yonkers, NY (Ridge Hill)
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September 12th – Milwaukee, WI (Mayfair Mall)
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September 26th – Phoenix, AZ (The Shops at Town and Country)
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October 17th – Christiana, DE (Christiana Fashion Center)
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November 14th – Oxnard, CA (The Collection at River Park)
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January 30, 2016 – Sacramento, CA (Howe Bout Arden)
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February 20, 2016 – Alpharetta, GA (Avalon)
Fourth Quarter and Full Fiscal Year 2014 Results
For the fourth quarter (thirteen weeks) ended February 28, 2015, on a
consolidated basis:
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Net sales were $224.3 million, up 3.4% as compared to the fourth
quarter of fiscal 2013. Net sales in The Container Store retail
business were $204.7 million, up 5.6% as compared to the fourth
quarter of fiscal 2013. Incremental sales from nine new stores during
the fourth quarter were partially offset by a comparable store sales
decrease of 0.8% as compared to the fourth quarter of fiscal
2013. Elfa third party sales increased 6.2% in local currency
primarily due to stronger sales in the Nordic market, however, due to
the appreciation of the U.S. dollar against the Swedish krona, Elfa
third party net sales in U.S. dollars decreased 14.9% during the
fourth quarter of fiscal 2014 as compared to the fourth quarter of
fiscal 2013. The translation of Elfa’s net sales from Swedish krona
into U.S. dollars negatively impacted Elfa’s third party net sales by
approximately $4.9 million in the thirteen weeks ended February 28,
2015.
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Gross margin was 57.8%, a decrease of 40 basis points compared to the
fourth quarter of fiscal 2013. The Container Store retail business
gross margin improved 30 basis points, primarily due to the
appreciation of the U.S. dollar against the Swedish krona. Elfa gross
margin declined primarily due to a shift in sales mix, as well as
higher freight costs. On a consolidated basis, the decline in Elfa’s
gross margin was partially offset by the impact of the gross margin
improvement in The Container Store retail business.
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Selling, general and administrative expenses (“SG&A”) were $97.9
million, up 1.5% as compared to $96.4 million in the fourth quarter of
fiscal 2013. SG&A as a percentage of net sales decreased 90 basis
points primarily due to savings on marketing and other SG&A costs at
Elfa, partially offset by decreased leverage of fixed costs at The
Container Store retail business.
-
Net interest expense decreased to $4.2 million from $4.3 million in
the fourth quarter of fiscal 2013.
-
The effective tax rate for the fourth quarter of fiscal 2014 was
25.2%, as compared to -12.5% in the fourth quarter of fiscal 2013. The
increase in the effective tax rate is primarily due to the release of
a valuation allowance on certain domestic deferred tax assets during
the fourth quarter of fiscal 2013. In our calculation of adjusted net
income, the effective tax rate for the fourth quarter of fiscal 2014
was 33.2%, as compared to 35.0% in the fourth quarter of fiscal 2013.
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•
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U.S. generally accepted accounting principles
(“GAAP”) net income was $13.0 million in the fourth
quarter of fiscal 2014 compared to $18.3 million in
the fourth quarter of fiscal 2013. Net income per
diluted common share was $0.27 in the fourth
quarter of fiscal 2014 compared to $0.38 in the
fourth quarter of fiscal 2013.
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•
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Adjusted net income was $11.8 million or $0.24
per adjusted diluted common share compared to
$10.7 million or $0.22 per adjusted diluted
common share for the fourth quarter of fiscal 2013,
which excludes certain items that the Company
does not consider in the evaluation of ongoing
operating performance, including IPO-related
expenses, certain restructuring charges, certain
losses on disposal of assets, and certain taxes
(see GAAP/Non-GAAP reconciliation table at the
end of this release).
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Adjusted EBITDA was $31.3 million compared to $29.3 million in the
fourth quarter of fiscal 2013, (see GAAP/Non-GAAP reconciliation
table).
-
For the year (fifty-two weeks) ended February 28, 2015, on a
consolidated basis:
-
Net sales were $781.9 million, up 4.5% as compared to fiscal 2013. Net
sales in The Container Store retail business were $697.7 million, up
5.7%. The increase in net sales was driven by new stores and was
partially offset by a decline in comparable store sales of 1.4%.
Elfa’s third party net sales increased 4.7% in Swedish krona,
primarily due to stronger sales in the Nordic market. However, due to
the appreciation of the U.S. dollar against the Swedish krona, Elfa’s
third party net sales in U.S. dollars declined by 4.5% as compared to
fiscal 2013. The translation of Elfa’s net sales from Swedish krona
into U.S. dollars negatively impacted Elfa’s third party net sales by
approximately $8.1 million during the fiscal year ended February 28,
2015.
-
Gross margin was 58.6%, a 20 basis point decrease as compared to
fiscal 2013. The Container Store retail business gross margin improved
by 10 basis points, primarily due to the appreciation of the U.S.
dollar against the Swedish krona. Elfa gross margin declined primarily
due to a weaker Swedish krona, as well as a shift in sales mix and
higher freight costs. On a consolidated basis, the decline in Elfa’s
gross margin was partially offset by the impact of the gross margin
improvement in The Container Store retail business.
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SG&A was $372.9 million, up 5.2% from $354.3 million in fiscal 2013.
SG&A as a percentage of net sales increased 40 basis points primarily
due to decreased leverage of fixed costs, increased costs as a result
of being a public company, implementation of strategic initiatives,
and a larger percentage of net sales coming from The Container Store
retail business.
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The Company ended the year with 70 stores in 25 states and the
District of Columbia. The Company opened eight stores, including the
relocation of one undersized, older format store in fiscal 2014.
-
Net interest expense decreased to $17.1 million from $21.2 million in
fiscal 2013.
-
The effective tax rate for fiscal 2014 was 24.1% as compared to 5.2%
in fiscal 2013. The increase in the effective tax rate is primarily
due to the release of a valuation allowance on certain domestic
deferred tax assets during the fourth quarter of fiscal 2013. In our
calculation of adjusted net income, the effective tax rate for fiscal
2014 was 37.0%, as compared to 37.7% in fiscal 2013.
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•
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GAAP net income was $22.7 million in fiscal 2014
compared to $8.2 million in fiscal 2013. After
considering distributions accumulated to preferred
shareholders of zero and $59.7 million in fiscal 2014
and fiscal 2013, respectively, net income per basic
and diluted common share was $0.47 in fiscal 2014
compared to net loss per basic and diluted common
share of $2.87 in fiscal 2013.
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•
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Adjusted net income (see GAAP/Non-GAAP
reconciliation table) was $16.5 million or $0.34 per
adjusted diluted common share compared to
$16.4 million or $0.33 per adjusted diluted
common share in fiscal 2013, which excludes
certain items that the Company does not consider
in the evaluation of ongoing operating
performance, including distributions accumulated
to preferred shareholders, certain stock-based
compensation, IPO-related expenses, certain
restructuring charges, certain gains on disposal of
assets, loss on extinguishment of debt and certain
taxes (see GAAP/Non-GAAP reconciliation table at
the end of this release).
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Adjusted EBITDA was $88.2 million compared to $86.1 million in fiscal
2013, (see GAAP/Non-GAAP reconciliation table).
Balance sheet highlights as of February 28, 2015:
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Cash: $25.0 million
-
Total debt: $334.9 million
-
Total liquidity (cash plus availability on revolving credit facilities
of $72.8 million): $97.8 million
Outlook
The Company’s outlook assumes that fiscal 2015 will be an investment
year with regard to its initiatives and the full financial impact from
such initiatives will likely not be realized until fiscal 2016 and
beyond.
For fiscal 2015, consolidated net sales are expected to be $800 to $815
million, based on the Company’s expected store openings and a comparable
store sales change of -2% to 0%. Net income is expected to be $0.30 to
$0.38 per diluted common share based on estimated diluted common shares
outstanding of 49 million. This assumes a tax rate of approximately 39%
for the full year. Adjusted EBITDA is expected to be between $85 to $91
million.
This outlook incorporates approximately $4.5 million of expenses, or
$0.06 per diluted common share, associated with the implementation of
the above outlined core initiatives, which will be heavily weighted to
the first half of the fiscal year. In addition, it includes an assumed
$0.01 per diluted common share impact from the West Coast port delays
that will also be realized in the first half of fiscal 2015.
For the first quarter of fiscal 2015, the Company expects comparable
store sales to be down 3% to 4% including an estimated 1.0% comparable
store sales impact associated with the port delays. First quarter fiscal
2015 loss per diluted common share is expected to be $0.12 to $0.14
which includes an estimated $0.02 per diluted common share impact from
the aforementioned initiative spend as well as an estimated $0.01 per
diluted common share impact from lost sales and higher freight costs
associated with the port delays.
Conference Call Information
A conference call to discuss fourth quarter and full fiscal year 2014
financial results is scheduled for today, April 27, 2015, 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. The pin number to access the telephone replay is
13606221. The replay will be available through May 4, 2015.
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 expectations regarding the new POP!, Contained Home and TCS
Closets programs, including plans to invest in those programs in 2015
and the timing of when these programs will be impactful to the business,
expectations for new store openings and relocations, guidance regarding
annual square footage growth, statements regarding our anticipated
financial performance, expenses and liquidity, statements regarding the
anticipated effects of port delays and beliefs regarding stakeholder
value.
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 – in the timeframe we expect or at all; our
inability to open or relocate new stores in the timeframe and at the
locations we anticipate; 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; 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 70 store locations
nationwide that each average 25,000 square feet. The Container Store has
over 10,500 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® — 16 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 PrinciplesTM and devotion to Conscious
Capitalism®, visit the retailer’s blog at www.whatwestandfor.com.
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The Container Store Group, Inc.
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Consolidated balance sheets (unaudited)
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(In thousands, except share amounts)
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February 28,
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March 1,
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2015
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2014
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Assets
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Current assets:
|
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Cash
|
|
|
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|
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$24,994
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$18,046
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Accounts receivable, net
|
|
|
|
|
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24,319
|
|
|
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32,273
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Inventory
|
|
|
|
|
|
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83,724
|
|
|
|
85,595
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Prepaid expenses
|
|
|
|
|
|
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7,895
|
|
|
|
14,121
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Income taxes receivable
|
|
|
|
|
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1,698
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|
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|
83
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Deferred tax assets, net
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|
|
|
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3,256
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|
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3,967
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Other current assets
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11,056
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10,322
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Total current assets
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156,942
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164,407
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Noncurrent assets:
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Property and equipment, net
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169,053
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|
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161,431
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Goodwill
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202,815
|
|
|
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202,815
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Trade names
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229,433
|
|
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242,290
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Deferred financing costs, net
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|
|
|
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7,742
|
|
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9,699
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Noncurrent deferred tax assets, net
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|
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|
|
|
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1,739
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|
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|
1,323
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Other assets
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1,333
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|
|
|
1,184
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Total noncurrent assets
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612,115
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|
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618,742
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Total assets
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$769,057
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$783,149
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Liabilities and shareholders’ equity
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Current liabilities:
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Accounts payable
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$48,904
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|
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$49,282
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Accrued liabilities
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59,891
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|
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58,744
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Revolving lines of credit
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|
|
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2,834
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|
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16,033
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Current portion of long-term debt
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|
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5,319
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|
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7,527
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Income taxes payable
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|
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|
2,188
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|
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3,474
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Deferred tax liabilities, net
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|
|
|
|
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|
-
|
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|
29
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Total current liabilities
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|
|
|
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119,136
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|
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135,089
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Noncurrent liabilities:
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|
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|
|
|
|
|
|
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Long-term debt
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|
|
|
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326,775
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|
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|
327,724
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Noncurrent deferred tax liabilities, net
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|
|
|
|
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|
82,965
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|
|
|
85,442
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Deferred rent and other long-term liabilities
|
|
|
|
|
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|
38,319
|
|
|
|
37,708
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Total noncurrent liabilities
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|
|
|
|
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|
448,059
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|
|
|
450,874
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Total liabilities
|
|
|
|
|
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567,195
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|
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|
585,963
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Shareholders’ equity:
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|
|
|
Common stock, $0.01 par value, 250,000,000 shares authorized;
47,983,660 shares issued and outstanding at February 28, 2015,
47,941,180 shares issued and outstanding at March 1, 2014
|
|
|
|
|
|
|
480
|
|
|
|
479
|
Additional paid-in capital
|
|
|
|
|
|
|
855,322
|
|
|
|
853,295
|
Accumulated other comprehensive (loss) income
|
|
|
|
|
|
|
(18,342)
|
|
|
|
1,683
|
Retained deficit
|
|
|
|
|
|
|
(635,598)
|
|
|
|
(658,271)
|
Total shareholders’ equity
|
|
|
|
|
|
|
201,862
|
|
|
|
197,186
|
Total liabilities and shareholders’ equity
|
|
|
|
|
|
|
$769,057
|
|
|
|
$783,149
|
|
|
The Container Store Group, Inc.
Consolidated statements of operations (unaudited)
|
|
(In thousands, except share and
|
|
|
|
|
|
Thirteen
|
|
|
|
Thirteen
|
|
|
|
Fifty-two
|
|
|
|
Fifty-two
|
per share amounts)
|
|
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
|
|
|
February 28, 2015
|
|
|
March 1, 2014
|
|
|
February 28, 2015
|
|
|
March 1, 2014
|
Net sales
|
|
|
|
|
|
$224,259
|
|
|
|
$216,822
|
|
|
|
$781,866
|
|
|
|
$748,538
|
Cost of sales (excluding
depreciation and amortization)
|
|
|
|
|
|
94,570
|
|
|
|
90,579
|
|
|
|
323,800
|
|
|
|
308,755
|
Gross profit
|
|
|
|
|
|
129,689
|
|
|
|
126,243
|
|
|
|
458,066
|
|
|
|
439,783
|
Selling, general, and administrative expenses (excluding
depreciation and amortization)
|
|
|
|
|
|
97,852
|
|
|
|
96,400
|
|
|
|
372,867
|
|
|
|
354,271
|
Stock-based compensation
|
|
|
|
|
|
339
|
|
|
|
283
|
|
|
|
1,289
|
|
|
|
15,137
|
Pre-opening costs
|
|
|
|
|
|
1,340
|
|
|
|
910
|
|
|
|
8,283
|
|
|
|
6,672
|
Depreciation and amortization
|
|
|
|
|
|
8,412
|
|
|
|
7,733
|
|
|
|
31,011
|
|
|
|
30,353
|
Restructuring charges
|
|
|
|
|
|
-
|
|
|
|
59
|
|
|
|
-
|
|
|
|
532
|
Other expenses
|
|
|
|
|
|
(38)
|
|
|
|
92
|
|
|
|
1,132
|
|
|
|
1,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (gain) on disposal of assets
|
|
|
|
|
|
178
|
|
|
|
136
|
|
|
|
(3,487)
|
|
|
|
206
|
Income from operations
|
|
|
|
|
|
21,606
|
|
|
|
20,630
|
|
|
|
46,971
|
|
|
|
31,027
|
Interest expense, net
|
|
|
|
|
|
4,155
|
|
|
|
4,330
|
|
|
|
17,105
|
|
|
|
21,185
|
Loss on extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,229
|
Income before taxes
|
|
|
|
|
|
17,451
|
|
|
|
16,300
|
|
|
|
29,866
|
|
|
|
8,613
|
Provision (benefit) for income taxes
|
|
|
|
|
|
4,403
|
|
|
|
(2,040)
|
|
|
|
7,193
|
|
|
|
447
|
Net income
|
|
|
|
|
|
$13,048
|
|
|
|
$18,340
|
|
|
|
$22,673
|
|
|
|
$8,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Distributions accumulated to preferred shareholders
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(59,747)
|
Net income (loss) available to common shareholders
|
|
|
|
|
|
$13,048
|
|
|
|
$18,340
|
|
|
|
$22,673
|
|
|
|
($51,581)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic and diluted
|
|
|
|
|
|
$0.27
|
|
|
|
$0.38
|
|
|
|
$0.47
|
|
|
|
($2.87)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
|
|
|
47,982,276
|
|
|
|
47,927,770
|
|
|
|
47,971,243
|
|
|
|
17,955,757
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
48,372,125
|
|
|
|
48,889,364
|
|
|
|
48,520,865
|
|
|
|
17,955,757
|
|
|
The Container Store Group, Inc.
Consolidated statements of cash
flows(unaudited)
|
|
Fiscal year ended
|
(In thousands)
|
|
|
|
|
February 28,
|
|
|
March 1,
|
|
|
|
|
2015
|
|
|
2014
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$22,673
|
|
|
$8,166
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
31,011
|
|
|
30,353
|
Stock-based compensation
|
|
|
|
|
1,289
|
|
|
15,137
|
Excess tax provision (benefit) from stock-based compensation
|
|
|
|
|
4
|
|
|
(70)
|
(Gain) loss on disposal of assets
|
|
|
|
|
(3,487)
|
|
|
206
|
Deferred tax expense (benefit)
|
|
|
|
|
1,423
|
|
|
(5,791)
|
Noncash refinancing expense
|
|
|
|
|
-
|
|
|
851
|
Noncash interest
|
|
|
|
|
1,956
|
|
|
1,857
|
Other
|
|
|
|
|
(504)
|
|
|
5
|
Changes in operating assets and liabilities:
|
|
|
|
|
-
|
|
|
-
|
Accounts receivable
|
|
|
|
|
4,137
|
|
|
(6,565)
|
Inventory
|
|
|
|
|
(2,668)
|
|
|
(3,553)
|
Prepaid expenses and other assets
|
|
|
|
|
4,705
|
|
|
(3,974)
|
Accounts payable and accrued liabilities
|
|
|
|
|
5,562
|
|
|
5,613
|
Income taxes
|
|
|
|
|
(2,582)
|
|
|
1,648
|
Other noncurrent liabilities
|
|
|
|
|
1,106
|
|
|
6,722
|
Net cash provided by operating activities
|
|
|
|
|
64,625
|
|
|
50,605
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
|
|
(48,740)
|
|
|
(48,408)
|
Proceeds from sale of subsidiary, net
|
|
|
|
|
3,846
|
|
|
-
|
Proceeds from sale of property and equipment
|
|
|
|
|
950
|
|
|
739
|
Net cash used in investing activities
|
|
|
|
|
(43,944)
|
|
|
(47,669)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Borrowings on revolving lines of credit
|
|
|
|
|
74,411
|
|
|
66,787
|
Payments on revolving lines of credit
|
|
|
|
|
(85,474)
|
|
|
(64,365)
|
Borrowings on long-term debt
|
|
|
|
|
34,389
|
|
|
126,000
|
Payments on long-term debt and capital leases
|
|
|
|
|
(36,591)
|
|
|
(76,260)
|
Payment of debt issuance costs
|
|
|
|
|
-
|
|
|
(3,662)
|
Proceeds from issuance of common stock, net
|
|
|
|
|
-
|
|
|
237,013
|
Payment of distributions to preferred shareholders
|
|
|
|
|
-
|
|
|
(295,826)
|
Purchase of treasury shares
|
|
|
|
|
-
|
|
|
(53)
|
Proceeds from the exercise of stock options
|
|
|
|
|
742
|
|
|
322
|
Excess tax (provision) benefit from stock-based compensation
|
|
|
|
|
(4)
|
|
|
70
|
Net cash used in financing activities
|
|
|
|
|
(12,527)
|
|
|
(9,974)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
(1,206)
|
|
|
(267)
|
Net increase (decrease) in cash
|
|
|
|
|
6,948
|
|
|
(7,305)
|
Cash at beginning of fiscal year
|
|
|
|
|
18,046
|
|
|
25,351
|
Cash at end of fiscal year
|
|
|
|
|
$24,994
|
|
|
$18,046
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
$15,255
|
|
|
$20,339
|
Taxes
|
|
|
|
|
$7,192
|
|
|
$5,498
|
Supplemental information for non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment (included in accounts payable)
|
|
|
|
|
$4,918
|
|
|
$4,616
|
Capital lease obligation incurred
|
|
|
|
|
$513
|
|
|
$-
|
Exchange of outstanding preferred shares for common shares
|
|
|
|
|
$-
|
|
|
$551,145
|
|
|
The Container Store Group, Inc. Supplemental Information -
Reconciliation of GAAP to Non-GAAP Financial Measures
|
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
|
|
|
|
Thirteen
|
|
|
|
Fifty-two
|
|
|
|
Fifty-two
|
|
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
|
|
|
|
February 28, 2015
|
|
|
|
March 1, 2014
|
|
|
|
February 28, 2015
|
|
|
|
March 1, 2014
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
|
|
|
|
$13,048
|
|
|
|
$18,340
|
|
|
|
$22,673
|
|
|
|
$(51,581)
|
Distributions accumulated to preferred shareholders
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,747
|
Stock-based compensation
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,602
|
IPO costs
|
|
|
|
|
|
-
|
|
|
|
90
|
|
|
|
-
|
|
|
|
1,259
|
Restructuring charges
|
|
|
|
|
|
-
|
|
|
|
59
|
|
|
|
-
|
|
|
|
532
|
Loss (gain) on disposal of subsidiary and real estate
|
|
|
|
|
|
149
|
|
|
|
-
|
|
|
|
(3,681)
|
|
|
|
-
|
Loss on extinguishment of debt
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,229
|
Taxes
|
|
|
|
|
|
(1,440)
|
|
|
|
(7,804)
|
|
|
|
(2,491)
|
|
|
|
(9,434)
|
Adjusted net income
|
|
|
|
|
|
$11,757
|
|
|
|
$10,685
|
|
|
|
$16,501
|
|
|
|
$16,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – diluted
|
|
|
|
|
|
48,372,125
|
|
|
|
48,889,364
|
|
|
|
48,520,865
|
|
|
|
17,955,757
|
Adjust weighting factor of outstanding shares
|
|
|
|
|
|
-
|
|
|
|
6,269
|
|
|
|
-
|
|
|
|
30,939,876
|
Adjusted weighted average common shares outstanding - diluted
|
|
|
|
|
|
48,372,125
|
|
|
|
48,895,633
|
|
|
|
48,520,865
|
|
|
|
48,895,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per diluted common share
|
|
|
|
|
|
$0.24
|
|
|
|
$0.22
|
|
|
|
$0.34
|
|
|
|
$0.33
|
|
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
|
|
|
Thirteen
|
|
|
Fifty-two
|
|
|
Fifty-two
|
|
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
Weeks Ended
|
|
|
|
|
|
|
February 28, 2015
|
|
|
March 1, 2014
|
|
|
February 28, 2015
|
|
|
March 1, 2014
|
Net income
|
|
|
|
|
|
$13,048
|
|
|
$18,340
|
|
|
$22,673
|
|
|
$8,166
|
Depreciation and amortization
|
|
|
|
|
|
8,412
|
|
|
7,733
|
|
|
31,011
|
|
|
30,353
|
Interest expense, net
|
|
|
|
|
|
4,155
|
|
|
4,330
|
|
|
17,105
|
|
|
21,185
|
Income tax expense (benefit)
|
|
|
|
|
|
4,403
|
|
|
(2,040)
|
|
|
7,193
|
|
|
447
|
EBITDA
|
|
|
|
|
|
$30,018
|
|
|
$28,363
|
|
|
$77,982
|
|
|
$60,151
|
Management fees
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
667
|
Pre-opening costs
|
|
|
|
|
|
1,340
|
|
|
910
|
|
|
8,283
|
|
|
6,672
|
IPO costs
|
|
|
|
|
|
-
|
|
|
90
|
|
|
-
|
|
|
1,259
|
Noncash rent
|
|
|
|
|
|
(427)
|
|
|
(398)
|
|
|
(374)
|
|
|
260
|
Restructuring charges
|
|
|
|
|
|
-
|
|
|
59
|
|
|
-
|
|
|
532
|
Stock-based compensation
|
|
|
|
|
|
339
|
|
|
283
|
|
|
1,289
|
|
|
15,137
|
Loss on extinguishment of debt
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,229
|
Foreign exchange losses (gains)
|
|
|
|
|
|
1
|
|
|
(48)
|
|
|
(171)
|
|
|
(224)
|
Other adjustments
|
|
|
|
|
|
(19)
|
|
|
20
|
|
|
1,221
|
|
|
418
|
Adjusted EBITDA
|
|
|
|
|
|
$31,252
|
|
|
$29,279
|
|
|
$88,230
|
|
|
$86,101
|
|
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 quarterly and fiscal year
2014 diluted income per common share and actual results on a comparable
basis with its quarterly and fiscal year 2013 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
release. 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.