Fourth Quarter Earnings Per Share More Than Doubles to $0.17; SG&A
Savings and Efficiency Program Continues to Drive Financial Results
Improvement in Comparable Store Sales to -0.2%
Expects Fiscal 2017 Earnings Per Share of $0.25 to $0.35
COPPELL, Texas--(BUSINESS WIRE)--
The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today
announced financial results for the fourth quarter and fiscal year 2016
ended April 1, 2017. In light of the Company’s previously announced
fiscal year end change, all references to prior fourth quarter and
fiscal year results are based on the recast fourth quarter and fiscal
year 2015 ended April 2, 2016.
For the fourth quarter of fiscal 2016:
-
Consolidated net sales were $221.0 million, up 5.3%. Net sales in The
Container Store retail business were $203.3 million, up 5.8%. Elfa
International AB third-party net sales were $17.8 million, up 0.5%.
-
Comparable store sales were down 0.2%. The Easter timing shift
benefited the quarter’s comparable store sales by approximately 0.6%.
-
Consolidated net income per share (EPS) was $0.17 compared with $0.07,
an increase of 143%.
“We are very pleased to have completed fiscal 2016 with strong fourth
quarter performance that exceeded our expectations across all financial
metrics. Our Custom Closets business continues to positively contribute
to comparable store sales and we’ve seen sales trends improve in our
other product categories driven by new and more targeted marketing
campaigns, as well as merchandising improvements,” said Melissa Reiff,
Chief Executive Officer.
Reiff continued, “In fiscal 2016 we implemented our SG&A savings and
efficiency program, which drove a substantial improvement in
profitability with a full year operating income increase of 67% compared
to fiscal 2015 and a three-fold increase in earnings per share to $0.31.”
“As we begin fiscal 2017, we remain committed to consistently driving
top and bottom line performance that we believe The Container Store is
capable of delivering. We have initiatives in progress to drive sales
productivity improvements, including a complete re-design of our
flagship store in Dallas, which we believe will provide us insight for
the development of new store formats and the evolution of our existing
stores’ layout and customer experience. In addition, today we are
announcing a four-part plan to optimize our consolidated business and
drive improved sales and profitability,” Reiff concluded.
As previously announced, the Company plans to open the following
locations in fiscal 2017:
-
Cleveland, Ohio (First Quarter)
-
Albuquerque, New Mexico (Second Quarter)
-
Livingston, New Jersey (Third Quarter)
-
Staten Island, New York (Third Quarter)
-
Relocation of its Chestnut Hill, Massachusetts store (Third Quarter)
Fourth Quarter and Full Fiscal Year 2016 Results
For the fourth quarter (thirteen weeks) ended April 1, 2017:
-
Consolidated net sales were $221.0 million, up 5.3% as compared to the
fourth quarter ended April 2, 2016. Net sales in The Container Store
retail business (“TCS”) were $203.3 million, up 5.8% as compared to
the fourth quarter ended April 2, 2016, primarily due to new store
sales, partially offset by a 0.2% decrease in comparable store sales.
Elfa International AB (“Elfa”) third party net sales were $17.8
million, up 0.5% compared to the fourth quarter ended April 2, 2016,
primarily due to improved sales in the Nordic markets during the
quarter, almost completely offset by the impact of foreign currency
translation during the quarter, which reduced third party net sales by
5.2%.
-
Consolidated gross margin was 57.6%, a decline of 20 basis points
compared to the fourth quarter ended April 2, 2016. TCS gross margin
declined 80 basis points to 56.0%, primarily due to an increased mix
of lower-margin product and service sales and, to a lesser extent,
increased sales associated with promotional activities during the
fourth quarter of fiscal 2016. Elfa gross margin increased 360 basis
points to 42.8% primarily due to improved production efficiencies
during the quarter. On a consolidated basis, gross margin declined 20
basis points, as the improvement in Elfa gross margin was more than
offset by the decline in TCS gross margin.
-
Consolidated selling, general and administrative expenses (“SG&A”)
decreased by 0.5% to $99.9 million from $100.4 million in the fourth
quarter ended April 2, 2016. SG&A as a percentage of net sales
decreased 260 basis points, primarily due to decreased costs as a
result of the Company’s SG&A savings program, as well as lower
healthcare costs.
-
Pre-opening costs decreased to $0.3 million in the fourth quarter of
fiscal 2016 compared to $2.0 million in the fourth quarter ended April
2, 2016. The Company did not open any new stores in the fourth quarter
of fiscal 2016 as compared to two new stores in the fourth quarter
ended April 2, 2016.
-
Consolidated net interest expense increased slightly to $4.3 million.
-
The consolidated effective tax rate for the fourth quarter of fiscal
2016 was 35.2%, as compared to 36.2% in the fourth quarter ended April
2, 2016. The decrease in the effective tax rate is primarily due to
changes in the mix of domestic and foreign earnings.
-
Consolidated net income was $8.4 million, or $0.17 per share, in the
fourth quarter of fiscal 2016 compared to net income of $3.4 million,
or $0.07 per share, in the fourth quarter ended April 2, 2016.
-
Consolidated Adjusted EBITDA was $26.9 million compared to $20.6
million in the fourth quarter ended April 2, 2016, (see GAAP/Non-GAAP
reconciliation table).
For the year (fifty-two weeks) ended April 1, 2017:
-
Consolidated net sales were $819.9 million, up 2.9% as compared to the
recast fiscal year ended April 2, 2016. Net sales at TCS were $752.7
million, up 3.4% as compared to the recast fiscal year ended April 2,
2016, primarily due to new store sales, partially offset by a 2.4%
decrease in comparable store sales. Elfa third-party net sales were
$67.3 million, down 3.1% compared to the recast fiscal year ended
April 2, 2016, primarily due to the impact of foreign currency
translation during the fiscal year, which reduced third party net
sales by 2.4%, as well as lower sales in Russia.
-
Consolidated gross margin was 58.1%, a decline of 20 basis points
compared to the recast fiscal year ended April 2, 2016. TCS gross
margin declined 60 basis points to 57.1%, as an increased mix of lower
margin products and services combined with increased sales associated
with promotional activities was partially offset by the impact of a
stronger U.S. dollar. Elfa gross margin improved 120 basis points
primarily due to improved production efficiencies. On a consolidated
basis, gross margin declined 20 basis points, as the improvement in
Elfa gross margin was more than offset by the decline in TCS gross
margin.
-
Consolidated selling, general and administrative expenses (“SG&A”)
decreased by 1.7% to $387.9 million from $394.6 million in the recast
fiscal year ended April 2, 2016. SG&A as a percentage of net sales
decreased 220 basis points. This was primarily due to decreased costs
as a result of the Company’s SG&A savings program, as well as the
reversal of accrued deferred compensation of $3.9 million, which
occurred in the first quarter of fiscal 2016. The Company also
experienced lower healthcare costs and a positive impact from foreign
currency exchange rates during fiscal 2016. The positive impact of
these items was partially offset by deleveraging of occupancy costs
associated with negative comparable store sales growth.
-
Pre-opening costs decreased to $6.9 million in fiscal 2016 compared to
$9.0 million in the recast fiscal year ended April 2, 2016. The
Company opened seven new stores in fiscal 2016 as compared to ten new
stores (inclusive of one relocation) in the recast fiscal year ended
April 2, 2016.
-
Consolidated net interest expense decreased slightly to $16.7 million.
-
The consolidated effective tax rate was 38.6%, as compared to 37.4% in
the recast fiscal year ended April 2, 2016. The increase in the
effective tax rate is primarily due to changes in the mix of domestic
and foreign earnings, combined with the expensing of certain deferred
tax assets due to the expiration of certain stock based compensation
awards.
-
Consolidated net income was $15.0 million, or $0.31 per share,
compared to net income of $4.9 million, or $0.10 per share, in the
recast fiscal year ended April 2, 2016. Net income of $15.0 million in
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 $1.8 million, or $0.04 per share.
-
Consolidated Adjusted EBITDA was $86.6 million compared to $68.4
million in the recast fiscal year ended April 2, 2016, (see
GAAP/Non-GAAP reconciliation table). The Adjusted EBITDA of $86.6
million in 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.
Balance sheet highlights:
(In thousands)
|
|
|
April 1, 2017
|
|
|
|
February 27, 2016
|
Cash
|
|
|
$10,736
|
|
|
|
|
$13,609
|
|
Total debt, net of deferred financing costs
|
|
|
$317,471
|
|
|
|
|
$322,229
|
|
Liquidity*
|
|
|
$99,594
|
|
|
|
|
$104,382
|
|
|
|
|
|
|
|
|
|
*Cash plus availability on revolving credit facilities
|
|
Optimization Plan
Today the Company is announcing the implementation of a four-part
optimization plan to drive improved sales and profitability. This plan
includes sales initiatives, certain full-time position eliminations at
TCS, organizational realignment at Elfa and ongoing savings and
efficiency efforts. The Company expects to incur pre-tax charges
associated with the optimization plan of approximately $9 to $11 million
in fiscal 2017, or $0.12 to $0.14 on a per share basis. The expected
annualized pre-tax savings associated with the optimization plan are
approximately $20 million, of which approximately $12 to $15 million, or
$0.15 to $0.19 on a per share basis, is expected to be realized in
fiscal 2017, for an estimated net benefit of approximately $0.03 to
$0.05 on a per share basis.
Outlook
For fiscal 2017, consolidated net sales are expected to be $830 to $850
million, based on the Company’s four expected new store openings and a
comparable store sales decrease in the low single digit range. Net
income is expected to be $0.25* to $0.35* per common share based on
estimated common shares outstanding of 49 million, and includes the
aforementioned optimization plan charges and benefits. This assumes a
tax rate of approximately 39% for the full year.
*Assumes existing debt structure remains in place. The Company
may seek opportunities to refinance its debt in fiscal 2017.
Conference Call Information
A conference call to discuss fourth quarter and full fiscal year 2016
financial results is scheduled for today, May 23, 2017, 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 investor.containerstore.com.
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 844-512-2921 (international callers please dial 412-317-6671).
The pin number to access the telephone replay is 13661123. The replay
will be available until June 23, 2017.
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 about our expectations regarding driving top and
bottom line performance, sales and productivity; anticipated effects of
our re-design of our flagship store in Dallas; expectations regarding
our goals, strategies, priorities and initiatives, including the
exploration of new store formats and our Optimization Plan; expectations
regarding new store openings and relocations and remodeling of existing
stores; anticipated financial performance and tax rate for fiscal 2017;
and seeking opportunities to refinance our debt in fiscal 2017.
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 optimization plan may
not result in improved sales and profitability; our inability to open or
relocate new stores, or remodel existing 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; our indebtedness
may restrict our current and future operations, and we may not be able
to refinance our debt on favorable terms, or at all; and increased
uncertainty with respect to tax and trade policies, tariffs and
government regulations affecting trade between the United States and
other countries as a result of the recent presidential and congressional
elections in the United States.
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 – a concept they originated in 1978.
Today, with locations nationwide, the retailer offers more than 11,000
products designed to save space and time, a suite of custom closet
systems and an array of digital shopping services. Visit www.containerstore.com
for more information about store locations, the product collection and
services offered. Visit www.containerstore.com/blog
for real solutions from the really organized and www.whatwestandfor.com
to learn more about the company’s unique culture.
The Container Store Group, Inc.
|
Consolidated balance sheets (unaudited)
|
|
(In thousands, except share amounts)
|
|
April 1,
|
|
|
February 27,
|
|
2017
|
|
|
2016
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
|
|
$
|
10,736
|
|
|
|
$
|
13,609
|
|
Accounts receivable, net
|
|
|
27,476
|
|
|
|
|
28,843
|
|
Inventory
|
|
|
103,120
|
|
|
|
|
86,435
|
|
Prepaid expenses
|
|
|
10,550
|
|
|
|
|
8,692
|
|
Income taxes receivable
|
|
|
16
|
|
|
|
|
157
|
|
Other current assets
|
|
|
10,787
|
|
|
|
|
8,695
|
|
Total current assets
|
|
|
162,685
|
|
|
|
|
146,431
|
|
Noncurrent assets:
|
|
|
|
|
|
Property and equipment, net
|
|
|
165,498
|
|
|
|
|
176,117
|
|
Goodwill
|
|
|
202,815
|
|
|
|
|
202,815
|
|
Trade names
|
|
|
226,685
|
|
|
|
|
228,368
|
|
Deferred financing costs, net
|
|
|
320
|
|
|
|
|
419
|
|
Noncurrent deferred tax assets, net
|
|
|
2,139
|
|
|
|
|
2,090
|
|
Other assets
|
|
|
1,692
|
|
|
|
|
1,879
|
|
Total noncurrent assets
|
|
|
599,149
|
|
|
|
|
611,688
|
|
Total assets
|
|
$
|
761,834
|
|
|
|
$
|
758,119
|
|
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
44,762
|
|
|
|
$
|
40,274
|
|
Accrued liabilities
|
|
|
60,107
|
|
|
|
|
69,635
|
|
Revolving lines of credit
|
|
|
-
|
|
|
|
|
721
|
|
Current portion of long-term debt
|
|
|
5,445
|
|
|
|
|
5,373
|
|
Income taxes payable
|
|
|
2,738
|
|
|
|
|
-
|
|
Total current liabilities
|
|
|
113,052
|
|
|
|
|
116,003
|
|
Noncurrent liabilities:
|
|
|
|
|
|
Long-term debt
|
|
|
312,026
|
|
|
|
|
316,135
|
|
Noncurrent deferred tax liabilities, net
|
|
|
80,679
|
|
|
|
|
80,720
|
|
Deferred rent and other long-term liabilities
|
|
|
34,287
|
|
|
|
|
38,193
|
|
Total noncurrent liabilities
|
|
|
426,992
|
|
|
|
|
435,048
|
|
Total liabilities
|
|
|
540,044
|
|
|
|
|
551,051
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
Common stock, $0.01 par value, 250,000,000 shares authorized;
48,045,114 shares issued at April 1, 2017, 47,986,975 shares issued
at February 27, 2016
|
|
|
480
|
|
|
|
|
480
|
|
Additional paid-in capital
|
|
|
859,102
|
|
|
|
|
856,879
|
|
Accumulated other comprehensive loss
|
|
|
(22,643
|
)
|
|
|
|
(19,835
|
)
|
Retained deficit
|
|
|
(615,149
|
)
|
|
|
|
(630,456
|
)
|
Total shareholders’ equity
|
|
|
221,790
|
|
|
|
|
207,068
|
|
Total liabilities and shareholders’ equity
|
|
$
|
761,834
|
|
|
|
$
|
758,119
|
|
|
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
|
|
April 1, 2017
|
April 2, 2016
|
April 1, 2017
|
April 2, 2016
|
Net sales
|
|
$
|
221,042
|
|
|
$
|
209,881
|
|
|
$
|
819,930
|
|
|
$
|
797,087
|
|
Cost of sales (excluding depreciation and amortization)
|
|
|
93,724
|
|
|
|
88,606
|
|
|
|
343,860
|
|
|
|
332,594
|
|
Gross profit
|
|
|
127,318
|
|
|
|
121,275
|
|
|
|
476,070
|
|
|
|
464,493
|
|
Selling, general, and administrative expenses (excluding
depreciation and amortization)
|
|
|
99,911
|
|
|
|
100,366
|
|
|
|
387,948
|
|
|
|
394,585
|
|
Stock-based compensation
|
|
|
634
|
|
|
|
387
|
|
|
|
1,989
|
|
|
|
1,575
|
|
Pre-opening costs
|
|
|
294
|
|
|
|
2,048
|
|
|
|
6,852
|
|
|
|
9,004
|
|
Depreciation and amortization
|
|
|
9,063
|
|
|
|
8,923
|
|
|
|
37,124
|
|
|
|
34,628
|
|
Other expenses
|
|
|
219
|
|
|
|
102
|
|
|
|
1,058
|
|
|
|
102
|
|
Loss (gain) on disposal of assets
|
|
|
16
|
|
|
|
(3
|
)
|
|
|
57
|
|
|
|
62
|
|
Income from operations
|
|
|
17,181
|
|
|
|
9,452
|
|
|
|
41,042
|
|
|
|
24,537
|
|
Interest expense
|
|
|
4,253
|
|
|
|
4,158
|
|
|
|
16,687
|
|
|
|
16,772
|
|
Income before taxes
|
|
|
12,928
|
|
|
|
5,294
|
|
|
|
24,355
|
|
|
|
7,765
|
|
Provision for income taxes
|
|
|
4,551
|
|
|
|
1,914
|
|
|
|
9,402
|
|
|
|
2,907
|
|
Net income
|
|
$
|
8,377
|
|
|
$
|
3,380
|
|
|
$
|
14,953
|
|
|
$
|
4,858
|
|
|
|
|
|
|
|
|
|
|
Net income per common share - basic and diluted
|
|
$
|
0.17
|
|
|
$
|
0.07
|
|
|
$
|
0.31
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares - basic
|
|
|
48,009,029
|
|
|
|
47,986,975
|
|
|
|
47,996,746
|
|
|
|
47,986,034
|
|
Weighted-average common shares - diluted
|
|
|
48,073,420
|
|
|
|
47,986,975
|
|
|
|
48,016,010
|
|
|
|
47,976,034
|
|
|
The Container Store Group, Inc.
|
Consolidated statements of cash flows(unaudited)
|
|
|
|
|
Fiscal year ended
|
(In thousands)
|
|
|
April 1,
|
|
|
April 2,
|
|
|
2017
|
|
|
2016
|
Operating activities
|
|
|
|
|
|
|
Net income
|
|
|
$
|
14,953
|
|
|
|
$
|
4,858
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
37,124
|
|
|
|
|
34,628
|
|
Stock-based compensation
|
|
|
|
1,989
|
|
|
|
|
1,575
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
Loss on disposal of assets
|
|
|
|
57
|
|
|
|
|
62
|
|
Deferred tax expense
|
|
|
|
(96
|
)
|
|
|
|
763
|
|
Noncash interest
|
|
|
|
1,921
|
|
|
|
|
1,937
|
|
Other
|
|
|
|
(29
|
)
|
|
|
|
498
|
|
Changes in operating assets and liabilities:
|
|
|
|
-
|
|
|
|
|
Accounts receivable
|
|
|
|
(5,861
|
)
|
|
|
|
(1,917
|
)
|
Inventory
|
|
|
|
(19,598
|
)
|
|
|
|
3,976
|
|
Prepaid expenses and other assets
|
|
|
|
4,028
|
|
|
|
|
(640
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
10,965
|
|
|
|
|
(2,578
|
)
|
Income taxes
|
|
|
|
3,527
|
|
|
|
|
(1,206
|
)
|
Other noncurrent liabilities
|
|
|
|
(4,341
|
)
|
|
|
|
418
|
|
Net cash provided by operating activities
|
|
|
|
44,639
|
|
|
|
|
42,372
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
|
(28,515
|
)
|
|
|
|
(41,877
|
)
|
Proceeds from investment grant
|
|
|
|
-
|
|
|
|
|
479
|
|
Proceeds from sale of subsidiary, net
|
|
|
|
-
|
|
|
|
|
-
|
|
Proceeds from sale of property and equipment
|
|
|
|
7
|
|
|
|
|
203
|
|
Net cash used in investing activities
|
|
|
|
(28,508
|
)
|
|
|
|
(41,195
|
)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Borrowings on revolving lines of credit
|
|
|
|
42,731
|
|
|
|
|
88,891
|
|
Payments on revolving lines of credit
|
|
|
|
(46,216
|
)
|
|
|
|
(92,334
|
)
|
Borrowings on long-term debt
|
|
|
|
30,000
|
|
|
|
|
5,000
|
|
Payments on long-term debt and capital leases
|
|
|
|
(40,496
|
)
|
|
|
|
(5,267
|
)
|
Payment of debt issuance costs
|
|
|
|
-
|
|
|
|
|
(266
|
)
|
Proceeds from the exercise of stock options
|
|
|
|
-
|
|
|
|
|
58
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
|
2
|
|
Net cash used in financing activities
|
|
|
|
(13,981
|
)
|
|
|
|
(3,916
|
)
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
(223
|
)
|
|
|
|
29
|
|
Net increase (decrease) in cash
|
|
|
|
1,927
|
|
|
|
|
(2,710
|
)
|
Cash at beginning of fiscal year
|
|
|
|
8,809
|
|
|
|
|
11,519
|
|
Cash at end of fiscal year
|
|
|
$
|
10,736
|
|
|
|
$
|
8,809
|
|
|
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. 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.
|
|
Thirteen
|
|
Thirteen
|
|
Fifty-two
|
|
Fifty-two
|
Weeks Ended
|
|
Weeks Ended
|
|
Weeks Ended
|
|
Weeks Ended
|
|
|
April 1, 2017
|
|
April 2, 2016
|
|
April 1, 2017
|
|
April 2, 2016
|
Net income
|
|
$
|
8,377
|
|
|
$
|
3,380
|
|
|
$
|
14,953
|
|
|
$
|
4,858
|
|
Depreciation and amortization
|
|
|
9,063
|
|
|
|
8,923
|
|
|
|
37,124
|
|
|
|
34,628
|
|
Interest expense, net
|
|
|
4,253
|
|
|
|
4,158
|
|
|
|
16,687
|
|
|
|
16,772
|
|
Income tax expense
|
|
|
4,551
|
|
|
|
1,914
|
|
|
|
9,402
|
|
|
|
2,907
|
|
EBITDA
|
|
$
|
26,244
|
|
|
$
|
18,375
|
|
|
$
|
78,166
|
|
|
$
|
59,165
|
|
Pre-opening costs (a)
|
|
|
294
|
|
|
|
2,048
|
|
|
|
6,852
|
|
|
|
9,004
|
|
Noncash rent (b)
|
|
|
(395
|
)
|
|
|
(295
|
)
|
|
|
(1,365
|
)
|
|
|
(1,784
|
)
|
Stock-based compensation (c)
|
|
|
634
|
|
|
|
387
|
|
|
|
1,989
|
|
|
|
1,575
|
|
Foreign exchange (gains) losses (d)
|
|
|
(131
|
)
|
|
|
(47
|
)
|
|
|
(342
|
)
|
|
|
226
|
|
Other adjustments (e)
|
|
|
263
|
|
|
|
124
|
|
|
|
1,259
|
|
|
|
176
|
|
Adjusted EBITDA
|
|
$
|
26,909
|
|
|
$
|
20,592
|
|
|
$
|
86,559
|
|
|
$
|
68,362
|
|
|
|
|
(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/20170523006335/en/
Source: The Container Store Group, Inc.