Consolidated Net Sales Up Slightly and Improved Net Income Associated
with SG&A Savings Program
Continues to See Positive Impact from TCS Closets®, Launches Pilot of
elfa® Sliding Doors
COPPELL, Texas--(BUSINESS WIRE)--
The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today
announced financial results for the second quarter of fiscal 2016 ended
October 1, 2016. In light of the Company’s previously announced fiscal
year end change, all references to prior year results are based on the
recast second quarter of fiscal 2015 ended October 3, 2015.
-
Consolidated net sales were $205.1 million, up 0.3%. Net sales in The
Container Store retail business were $189.1 million, up 0.9%. Elfa
International AB third-party net sales were $16.0 million, down 6.0%.
-
Comparable store sales for the second quarter of fiscal 2016 were down
4.2%.
-
Consolidated net income per diluted share (EPS) was $0.07 compared
with $0.07 in the second quarter ended October 3, 2015.
-
The Company opened two new stores in the second quarter of fiscal
2016, has opened two new stores in the third fiscal quarter-to-date
and has plans to open two additional locations in the remainder of the
third fiscal quarter. The Company had 82 stores at the end of the
second quarter of fiscal 2016, as compared to 75 as of October 3, 2015.
Melissa Reiff, Chief Executive Officer, stated, “We are pleased with our
earnings performance in the second fiscal quarter of 2016. And while
there is still work to be done to drive consistent growth in top line
performance, we experienced improving sales trends in September and now
in early third fiscal quarter, as we have encountered more comparable
cadence of merchandising campaigns and promotional activities. Our 2016
SG&A savings program is gaining traction as evidenced by the leveraging
of expenses in a challenging sales environment. This commitment to
strong cost discipline drove SG&A efficiencies and contributed to EPS of
$0.07.”
Reiff continued, “We believe we are making progress on many fronts to
evolve our customer shopping experience in order to improve sales and
profitability. Our new customer financing program, while still in its
infancy, is driving incremental sales, and our TCS Closets line drove
200 basis points of comparable store sales growth this quarter. We are
also working on mid- and long-term goals, strategies and priorities
while we simultaneously execute near-term initiatives such as the pilot
of elfa® Sliding Doors in our two Manhattan stores.”
“We are cautiously optimistic about the second half of the fiscal year.
However, after factoring in our first half results and our expectations
for the remainder of the fiscal year, we are updating our annual sales
outlook. We are pleased to reiterate our previously provided annual EPS
outlook due in part to the continued positive impact of our SG&A Savings
Program,” Reiff concluded.
Second Quarter 2016 Results
For the second quarter (thirteen weeks) ended October 1, 2016:
-
Consolidated net sales were $205.1 million, up 0.3% as compared to the
second quarter ended October 3, 2015. Net sales in The Container Store
retail business (“TCS”) were $189.1 million, up 0.9% as compared to
the second quarter ended October 3, 2015, primarily due to new store
sales, partially offset by a 4.2% decrease in comparable store sales.
Elfa International AB (“Elfa”) third party net sales were $16.0
million, down 6.0% compared to the second quarter ended October 3,
2015, primarily due to lower sales in Russia and the Nordic markets
during the quarter.
-
Consolidated gross margin was 57.7%, a decline of 20 basis points
compared to the second quarter ended October 3, 2015. TCS gross margin
declined 10 basis points to 57.3%, as an increased mix of lower margin
products and services was partially offset by the impact of a stronger
U.S. dollar. Elfa gross margin remained consistent at 38.2%. On a
consolidated basis, gross margin decreased 20 basis points primarily
due to the decline in TCS gross margin.
-
Consolidated selling, general and administrative expenses (“SG&A”)
decreased by 0.6% to $95.5 million from $96.1 million in the second
quarter ended October 3, 2015. SG&A as a percentage of net sales
decreased 40 basis points, primarily due to decreased spending
associated with the Company’s SG&A savings program and a positive
impact from foreign currency exchange rates, partially offset by
deleveraging of occupancy costs associated with negative comparable
store sales growth.
-
Consolidated net interest expense remained consistent at $4.2 million.
-
The effective tax rate for the second quarter of fiscal 2016 was
41.6%, as compared to 41.1% in the second quarter ended October 3,
2015. The increase in the effective tax rate is primarily due to a
change in mix between projected domestic and foreign earnings.
-
Net income was $3.5 million, or $0.07 per share, in the second quarter
of fiscal 2016 compared to net income of $3.3 million, or $0.07 per
share, in the second quarter ended October 3, 2015.
-
Consolidated Adjusted EBITDA was $22.3 million compared to $21.9
million in the second quarter ended October 3, 2015, (see
GAAP/Non-GAAP reconciliation table).
For the year-to-date (twenty-six weeks) ended October 1, 2016:
-
Consolidated net sales were $382.5 million, up 2.2% as compared to the
year-to-date ended October 3, 2015. Net sales at TCS were $350.3
million, up 2.8% as compared to the year-to-date ended October 3,
2015, primarily due to new store sales, partially offset by a 3.0%
decrease in comparable store sales. Elfa third-party net sales were
$32.2 million, down 3.9% compared to the year-to-date ended October 3,
2015, primarily due to lower sales in Russia.
-
Consolidated gross margin was 58.3%, an increase of 10 basis points
compared to the year-to-date ended October 3, 2015. TCS gross margin
declined 10 basis points to 57.9%, as an increased mix of lower margin
products and services was partially offset by the impact of a stronger
U.S. dollar. Elfa gross margin improved 150 basis points primarily due
to lower direct materials costs and improved production efficiencies,
partially offset by higher freight costs. On a consolidated basis,
gross margin improved as the improvement in Elfa gross margin was
partially offset by the decline in TCS gross margin.
-
Consolidated selling, general and administrative expenses (“SG&A”)
decreased by 1.3% to $187.8 million from $190.4 million in the
year-to-date ended October 3, 2015. SG&A as a percentage of net sales
decreased 170 basis points. This was primarily due to the impact of
the reversal of accrued deferred compensation of $3.9 million, or 100
basis points, which occurred in the first quarter of 2016.
Additionally, the Company’s SG&A savings program contributed to
decreased spending. The Company also experienced a positive impact
from foreign currency exchange rates and lower healthcare costs during
the first half of fiscal 2016. The positive impact of these items was
partially offset by deleveraging of occupancy costs associated with
negative comparable store sales growth during the first half of fiscal
2016.
-
Consolidated net interest expense decreased to $8.3 million from $8.4
million in the year-to-date ended October 3, 2015.
-
The effective tax rate was 50.3%, as compared to 29.6% in the
year-to-date ended October 3, 2015. The increase in the effective tax
rate was primarily due to a shift in mix between projected domestic
and foreign earnings, combined with the impact of a pre-tax income
position in the first half of fiscal 2016, as compared to a pre-tax
loss position in the first half of fiscal 2015.
-
Net income was $1.5 million, or $0.03 per share, compared to net loss
of $2.4 million, or ($0.05) per share, in the year-to-date ended
October 3, 2015. Net income of $1.5 million in the first half of
fiscal 2016 includes a benefit from the impact of amended and restated
employment agreements entered into with key executives, net of costs
incurred related to management transition and income taxes, of
approximately $1.6 million, or $0.03 per share.
-
Consolidated Adjusted EBITDA was $34.3 million compared to $26.6
million in the year-to-date ended October 3, 2015, (see GAAP/Non-GAAP
reconciliation table). The Adjusted EBITDA of $34.3 million in the
first half of fiscal 2016 includes a benefit from the impact of
amended and restated employment agreements entered into with key
executives during the first quarter of 2016, net of costs incurred to
execute the agreements, of $3.9 million.
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Balance sheet highlights:
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(In thousands)
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
Cash
|
|
|
$9,329
|
|
|
$7,397
|
Total debt
|
|
|
$333,030
|
|
|
$352,478
|
Liquidity*
|
|
|
$98,775
|
|
|
$65,578
|
|
|
|
|
|
|
|
*Cash plus availability on revolving credit facilities
|
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Outlook
The Company is updating its fiscal 2016 sales outlook and now expects
consolidated net sales to be $820 to $830 million, based on its planned
store openings, and a comparable store sales range of -3.0% to -1.5%.
Net income for fiscal 2016 is still expected to be $0.20 to $0.30 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 fiscal year.
Conference Call Information
A conference call to discuss second quarter fiscal 2016 financial
results is scheduled for today, November 9, 2016, 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 13647884. The replay
will be available through December 9, 2016 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 expectations regarding driving consistent sales and profit
growth, expectations regarding our goals, strategies, priorities and
initiatives, including the 2016 SG&A savings program, new customer
financing program and elfa® Sliding Doors initiative,
expectations for new store openings and relocations, and statements
regarding our anticipated financial performance.
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 planned fiscal 2016 initiatives 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;
effects of a security breach or cyber-attack of our website or
information technology systems; 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, and the transition in our executive leadership; 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 10, 2016, 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 (NYSE: TCS) 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 84 store
locations nationwide that each average 25,000 square feet. The Container
Store has over 11,000 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® — 17
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 culture blog at www.whatwestandfor.com.
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The Container Store Group, Inc.
Consolidated balance sheets (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except share and per share amounts)
|
|
|
October 1,
|
|
|
February 27,
|
|
|
October 3,
|
|
|
2016
|
|
|
2016
|
|
|
2015
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
$9,329
|
|
|
$13,609
|
|
|
$7,397
|
Accounts receivable, net
|
|
|
27,896
|
|
|
28,843
|
|
|
24,177
|
Inventory
|
|
|
112,916
|
|
|
86,435
|
|
|
112,115
|
Prepaid expenses
|
|
|
10,368
|
|
|
8,692
|
|
|
14,873
|
Income taxes receivable
|
|
|
-
|
|
|
157
|
|
|
1,447
|
Deferred tax assets, net
|
|
|
-
|
|
|
-
|
|
|
3,256
|
Other current assets
|
|
|
8,546
|
|
|
8,695
|
|
|
9,507
|
Total current assets
|
|
|
169,055
|
|
|
146,431
|
|
|
172,772
|
Noncurrent assets:
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
172,324
|
|
|
176,117
|
|
|
175,904
|
Goodwill
|
|
|
202,815
|
|
|
202,815
|
|
|
202,815
|
Trade names
|
|
|
228,360
|
|
|
228,368
|
|
|
229,253
|
Deferred financing costs, net
|
|
|
366
|
|
|
419
|
|
|
190
|
Noncurrent deferred tax assets, net
|
|
|
1,286
|
|
|
2,090
|
|
|
2,448
|
Other assets
|
|
|
1,659
|
|
|
1,879
|
|
|
1,743
|
Total noncurrent assets
|
|
|
606,810
|
|
|
611,688
|
|
|
612,353
|
Total assets
|
|
|
$775,865
|
|
|
$758,119
|
|
|
$785,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$60,287
|
|
|
$40,274
|
|
|
$57,038
|
Accrued liabilities
|
|
|
56,924
|
|
|
69,635
|
|
|
53,430
|
Revolving lines of credit
|
|
|
1,550
|
|
|
721
|
|
|
7,097
|
Current portion of long-term debt
|
|
|
5,506
|
|
|
5,373
|
|
|
5,290
|
Income taxes payable
|
|
|
383
|
|
|
-
|
|
|
245
|
Total current liabilities
|
|
|
124,650
|
|
|
116,003
|
|
|
123,100
|
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
325,974
|
|
|
316,135
|
|
|
340,091
|
Noncurrent deferred tax liabilities, net
|
|
|
81,123
|
|
|
80,720
|
|
|
82,014
|
Deferred rent and other long-term liabilities
|
|
|
33,653
|
|
|
38,193
|
|
|
38,561
|
Total noncurrent liabilities
|
|
|
440,750
|
|
|
435,048
|
|
|
460,666
|
Total liabilities
|
|
|
565,400
|
|
|
551,051
|
|
|
583,766
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 250,000,000 shares authorized;
47,995,450 shares issued at October 1, 2016; 47,986,975 shares
issued at February 27, 2016 and October 3, 2015
|
|
|
480
|
|
|
480
|
|
|
480
|
Additional paid-in capital
|
|
|
857,816
|
|
|
856,879
|
|
|
856,179
|
Accumulated other comprehensive loss
|
|
|
(19,212)
|
|
|
(19,835)
|
|
|
(17,892)
|
Retained deficit
|
|
|
(628,619)
|
|
|
(630,456)
|
|
|
(637,408)
|
Total shareholders’ equity
|
|
|
210,465
|
|
|
207,068
|
|
|
201,359
|
Total liabilities and shareholders’ equity
|
|
|
$775,865
|
|
|
$758,119
|
|
|
$785,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Container Store Group, Inc.
Consolidated statements of operations (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except share and
|
|
|
|
|
|
|
|
|
|
|
|
|
per share amounts)
|
|
Thirteen Weeks Ended
|
|
|
Twenty-Six Weeks Ended
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
Net sales
|
|
|
$205,060
|
|
|
$204,412
|
|
|
$382,508
|
|
|
$374,370
|
Cost of sales (excluding depreciation and amortization)
|
|
|
86,705
|
|
|
86,139
|
|
|
159,458
|
|
|
156,586
|
Gross profit
|
|
|
118,355
|
|
|
118,273
|
|
|
223,050
|
|
|
217,784
|
Selling, general, and administrative expenses (excluding
depreciation and amortization)
|
|
|
95,518
|
|
|
96,068
|
|
|
187,831
|
|
|
190,351
|
Stock-based compensation
|
|
|
391
|
|
|
373
|
|
|
756
|
|
|
701
|
Pre-opening costs
|
|
|
2,544
|
|
|
3,532
|
|
|
3,640
|
|
|
5,172
|
Depreciation and amortization
|
|
|
9,478
|
|
|
8,393
|
|
|
18,825
|
|
|
16,623
|
Other expenses
|
|
|
108
|
|
|
-
|
|
|
657
|
|
|
-
|
Loss (gain) on disposal of assets
|
|
|
44
|
|
|
(3)
|
|
|
41
|
|
|
8
|
Income from operations
|
|
|
10,272
|
|
|
9,910
|
|
|
11,300
|
|
|
4,929
|
Interest expense, net
|
|
|
4,205
|
|
|
4,232
|
|
|
8,315
|
|
|
8,405
|
Income (loss) before taxes
|
|
|
6,067
|
|
|
5,678
|
|
|
2,985
|
|
|
(3,476)
|
Provision (benefit) for income taxes
|
|
|
2,526
|
|
|
2,336
|
|
|
1,501
|
|
|
(1,030)
|
Net income (loss)
|
|
|
$3,541
|
|
|
$3,342
|
|
|
$1,484
|
|
|
$(2,446)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic and diluted
|
|
|
$0.07
|
|
|
$0.07
|
|
|
$0.03
|
|
|
$(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
47,991,445
|
|
|
47,986,401
|
|
|
47,989,210
|
|
|
47,985,093
|
Weighted-average common shares outstanding - diluted
|
|
|
48,001,112
|
|
|
47,986,972
|
|
|
47,995,766
|
|
|
47,985,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Container Store Group, Inc.
Consolidated statements of cash
flows (unaudited)
|
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks Ended
|
(In thousands)
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
Operating activities
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$1,484
|
|
|
$(2,446)
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
18,825
|
|
|
16,623
|
Stock-based compensation
|
|
|
756
|
|
|
701
|
Loss on disposal of property and equipment
|
|
|
41
|
|
|
8
|
Deferred tax provision (benefit)
|
|
|
37
|
|
|
(1,988)
|
Noncash interest
|
|
|
960
|
|
|
978
|
Other
|
|
|
(145)
|
|
|
285
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(6,340)
|
|
|
(3,767)
|
Inventory
|
|
|
(28,031)
|
|
|
(23,117)
|
Prepaid expenses and other assets
|
|
|
6,633
|
|
|
186
|
Accounts payable and accrued liabilities
|
|
|
22,489
|
|
|
11,793
|
Income taxes
|
|
|
1,304
|
|
|
(1,476)
|
Other noncurrent liabilities
|
|
|
(4,595)
|
|
|
576
|
Net cash provided by (used in) operating activities
|
|
|
13,418
|
|
|
(1,644)
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
(15,214)
|
|
|
(23,467)
|
Proceeds from investment grant
|
|
|
-
|
|
|
479
|
Proceeds from sale of property and equipment
|
|
|
7
|
|
|
199
|
Net cash used in investing activities
|
|
|
(15,207)
|
|
|
(22,789)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Borrowings on revolving lines of credit
|
|
|
24,166
|
|
|
28,558
|
Payments on revolving lines of credit
|
|
|
(26,192)
|
|
|
(28,583)
|
Borrowings on long-term debt
|
|
|
20,000
|
|
|
28,000
|
Payments on long-term debt
|
|
|
(15,760)
|
|
|
(7,656)
|
Proceeds from the exercise of stock options
|
|
|
-
|
|
|
57
|
Net cash provided by financing activities
|
|
|
2,214
|
|
|
20,376
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
95
|
|
|
(65)
|
Net increase (decrease) in cash
|
|
|
520
|
|
|
(4,122)
|
Cash at beginning of period
|
|
|
8,809
|
|
|
11,519
|
Cash at end of period
|
|
|
$9,329
|
|
|
$7,397
|
|
|
|
|
|
|
|
Supplemental information for non-cash investing and financing
activities:
|
|
|
|
|
|
|
Purchases of property and equipment (included in accounts payable)
|
|
|
$817
|
|
|
$1,189
|
Capital lease obligation incurred
|
|
|
$620
|
|
|
$361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Regarding Non-GAAP Information
This press release includes financial measures that are not calculated
in accordance with GAAP, including 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.
These non-GAAP measures should not be considered as alternatives to net
income (loss) as a measure of financial performance or cash flows from
operations as a measure of liquidity, or any other performance measure
derived in accordance with GAAP and they should not be construed as an
inference that the Company’s future results will be unaffected by
unusual or non-recurring items. These non-GAAP measures are key metrics
used by management, the Company’s board of directors, and Leonard Green
and Partners, L.P., its controlling stockholder, to assess its financial
performance. The Company presents these non-GAAP measures because it
believes they assist investors in comparing the Company’s performance
across reporting periods on a consistent basis by excluding items that
the Company does not believe are indicative of its core operating
performance and because the Company believes it is useful for investors
to see the measures that management uses to evaluate the Company. These
non-GAAP measures are also frequently used by analysts, investors and
other interested parties to evaluate companies in the Company’s
industry. In evaluating these non-GAAP measures, you should be aware
that in the future the Company will incur expenses that are the same as
or similar to some of the adjustments in this presentation. The
Company’s presentation of these non-GAAP measures should not be
construed to imply that its future results will be unaffected by any
such adjustments. Management compensates for these limitations by
relying on our GAAP results in addition to using non-GAAP measures
supplementally. These non-GAAP measures are not necessarily comparable
to other similarly titled captions of other companies due to different
methods of calculation.
The Company defines EBITDA as net income before interest, taxes,
depreciation, and amortization. Adjusted EBITDA is calculated in
accordance with its credit facilities and is one of the components for
performance evaluation under its executive compensation programs.
Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the
impact of certain items, including certain non-cash and other items that
the Company does not consider in its evaluation of ongoing operating
performance from period to period as discussed further below. The
Company uses Adjusted EBITDA in connection with covenant compliance and
executive performance evaluations, and to supplement GAAP measures of
performance to evaluate the effectiveness of its business strategies, to
make budgeting decisions and to compare its performance against that of
other peer companies using similar measures. The Company believes it is
useful for investors to see the measures that management uses to
evaluate the Company, its executives and its covenant compliance, as
applicable. EBITDA and Adjusted EBITDA are also frequently used by
analysts, investors and other interested parties to evaluate companies
in the Company’s industry.
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 measure Adjusted
EBITDA with the most directly comparable GAAP financial measure of GAAP
net income (loss).
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-Six Weeks Ended
|
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
|
|
October 1, 2016
|
|
|
October 3, 2015
|
Net income (loss)
|
|
|
$3,541
|
|
|
$3,342
|
|
|
$1,484
|
|
|
$(2,446)
|
Depreciation and amortization
|
|
|
9,478
|
|
|
8,393
|
|
|
18,825
|
|
|
16,623
|
Interest expense, net
|
|
|
4,205
|
|
|
4,232
|
|
|
8,315
|
|
|
8,405
|
Provision (benefit) for income taxes
|
|
|
2,526
|
|
|
2,336
|
|
|
1,501
|
|
|
(1,030)
|
EBITDA
|
|
|
$19,750
|
|
|
$18,303
|
|
|
$30,125
|
|
|
$21,552
|
Pre-opening costs (a)
|
|
|
2,544
|
|
|
3,532
|
|
|
3,640
|
|
|
5,172
|
Noncash rent (b)
|
|
|
(254)
|
|
|
(311)
|
|
|
(672)
|
|
|
(981)
|
Stock-based compensation (c)
|
|
|
391
|
|
|
373
|
|
|
756
|
|
|
701
|
Foreign exchange (gains) losses (d)
|
|
|
(306)
|
|
|
(44)
|
|
|
(264)
|
|
|
132
|
Other adjustments (e)
|
|
|
175
|
|
|
16
|
|
|
747
|
|
|
30
|
Adjusted EBITDA
|
|
|
$22,300
|
|
|
$21,869
|
|
|
$34,332
|
|
|
$26,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Non-capital expenditures associated with opening new stores and
relocating stores, including rent, marketing expenses, travel and
relocation costs, and training costs. We adjust for these costs to
facilitate comparisons of our performance from period to period.
|
|
|
|
(b)
|
|
Reflects the extent to which our annual GAAP rent expense has been
above or below our cash rent payment due to lease accounting
adjustments. The adjustment varies depending on the average age of
our lease portfolio (weighted for size), as our GAAP rent expense
on younger leases typically exceeds our cash cost, while our GAAP
rent expense on older leases is typically less than our cash cost.
|
|
|
|
(c)
|
|
Non-cash charges related to stock-based compensation programs,
which vary from period to period depending on volume and vesting
timing of awards. We adjust for these charges to facilitate
comparisons from period to period.
|
|
|
|
(d)
|
|
Realized foreign exchange transactional gains/losses our
management does not consider in our evaluation of our ongoing
operations.
|
|
|
|
(e)
|
|
Other adjustments include amounts our management does not consider
in our evaluation of our ongoing operations, including certain
severance and other charges.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161109005910/en/
Source: The Container Store Group, Inc.