Investor Relations
NYSE: TCS 4.05 -0.11(-2.64%) Market Open: 4.13 Market Close: 4.16 52 Week High: 9.50 52 Week Low: 3.57 Dec 13, 2019 04:02 PM (Prices delayed 20 mins)

The Container Store Group, Inc. Announces First Quarter Fiscal 2019 Financial Results

07/30/2019

First Quarter Comparable Store Sales up 7.8%; Consolidated Net Sales up 7.0%

First Quarter EPS of ($0.08) vs ($0.14) in Q118; Adjusted EPS of ($0.08) vs ($0.08) in Q118

COPPELL, Texas--(BUSINESS WIRE)-- The Container Store Group, Inc. (NYSE: TCS) (the “Company”), today announced financial results for the first quarter of fiscal 2019 ended June 29, 2019.

  • Consolidated net sales were $209.5 million, up 7.0%. Net sales in The Container Store retail business (“TCS”) were $195.1 million, up 8.3%. Elfa International AB (“Elfa”) third-party net sales were $14.4 million, down 8.3% due to foreign currency translation.
  • Comparable store sales increased 7.8%, with Custom Closets up 11.1%, contributing 500 basis points of the increase in comparable store sales, and all other product categories up 5.1% contributing the remaining 280 basis points.
  • Consolidated net loss and net loss per share (“EPS”) was $4.1 million and ($0.08) compared to a net loss of $6.8 million and ($0.14), respectively, in the first quarter of fiscal 2018. Adjusted net loss per share (“Adjusted EPS”) was ($0.08) compared to ($0.08) in the first quarter of fiscal 2018 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).

“We are very pleased with our strong start to fiscal 2019, as our reinvigorated marketing campaigns and refreshed merchandise assortment across our core Custom Closets business and other product categories, resonated with customers both in store and online. Our entire organization is more agile today, allowing us to quickly react to marketing opportunities, leverage social influencers, as well as capitalize on the heightened awareness and interest in the category of Storage and Organization overall. Combining our agility with our merchandising strategies that include a comprehensive Custom Closets offering, freshness and newness across all product categories, and our unique solutions-based selling approach, we believe we are well positioned for the remainder of the fiscal year and beyond. We are also making good progress against each of our key fiscal 2019 priorities, including increasing our Custom Closets brand awareness and opening our second distribution center in late fiscal 2019, that is currently on time and on budget.”

First Quarter Fiscal 2019 Results

For the first quarter (thirteen weeks) ended June 29, 2019:

  • Consolidated net sales were $209.5 million, up 7.0% as compared to the first quarter of fiscal 2018. Net sales at TCS were $195.1 million, up 8.3%, driven by an increase in comparable store sales of 7.8%, combined with incremental sales from new stores. Elfa third-party net sales were $14.4 million, down 8.3% compared to the first quarter of fiscal 2018, due to the negative impact of foreign currency translation during the quarter.
  • Consolidated gross margin was 57.2%, a decrease of 140 basis points, compared to the first quarter of fiscal 2018, primarily due to a higher mix of lower margin products and services sold in the first quarter of fiscal 2019. TCS gross margin decreased 50 basis points to 57.4%, primarily due to successful marketing and merchandising campaigns that drove a higher mix of campaign driven sales. The decrease was partially offset by improvement in foreign currency translation. Elfa gross margin declined 100 basis points primarily due to higher direct materials costs attributable to higher raw material prices and a weaker Swedish krona.
  • Consolidated selling, general and administrative expenses (“SG&A”) increased by 2.3% to $109.0 million in the first quarter of fiscal 2019 from $106.6 million in the first quarter of fiscal 2018. SG&A as a percentage of net sales decreased 240 basis points. This was primarily due to Optimization Plan expenses incurred in the prior year that were not incurred in the first quarter of fiscal 2019 and ongoing savings and efficiency efforts. These decreases were partially offset by increased Custom Closets marketing expenses and costs associated with the second distribution center.
  • Consolidated net interest expense decreased 27.8% to $5.7 million in the first quarter of fiscal 2019 from $7.9 million in the first quarter of fiscal 2018. In September 2018, the Company amended its Senior Secured Term Loan Facility, which decreased the applicable interest rate margins.
  • The effective tax rate was 30.5%, as compared to 34.0% in the first quarter of fiscal 2018. The decrease in the effective tax rate is primarily due to the remeasurement of deferred tax balances in the first quarter of fiscal 2018 as a result of a change in the Swedish tax rate.
  • Net loss was $4.1 million, or ($0.08) per share, in the first quarter of fiscal 2019 compared to a net loss of $6.8 million, or ($0.14) per share in the first quarter of fiscal 2018. Adjusted net loss was $4.1 million, or ($0.08) per share, in the first quarter of fiscal 2019 compared to adjusted net loss of $4.0 million, or ($0.08) per share in the first quarter of fiscal 2018 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).
  • Adjusted EBITDA (see Reconciliation of GAAP to Non-GAAP Financial Measures table) was $10.6 million in the first quarter of fiscal 2019 compared to $12.4 million in the first quarter of fiscal 2018. The decrease in Adjusted EBITDA was primarily due to planned incremental Custom Closets marketing expense and expenses associated with the opening of a second distribution center that were incurred in the first quarter of fiscal 2019.

Balance sheet and liquidity highlights:

(In thousands)

 

June 29, 2019

 

June 30, 2018

Cash

 

$

11,404

 

$

14,102

Total debt, net of deferred financing costs

 

$

289,438

 

$

299,707

Liquidity (1)

 

$

82,709

 

$

84,710

Free cash flow (2)

 

$

(17,024)

 

$

(7,776)


(1) Cash plus availability on revolving credit facilities.

(2) See Reconciliation of GAAP to Non-GAAP Financial Measures table.

Outlook

The Company is maintaining its outlook for fiscal 2019 as follows:

 

 

Fiscal 2019 Outlook

Net sales

 

$915 million to $925 million

New store openings and store relocations

 

2 openings, including 1 relocation (2)

Comparable store sales

 

Up 2.0% to up 3.0%

Net income per common share (1)

 

$0.41 to $0.51

Adjusted net income per common share (1) (3)

 

$0.41 to $0.51

Assumed tax rate

 

30%

Estimated share count

 

49 million


(1) Includes approximately $4 million, or $0.06 per common share of net costs associated with the opening of a second distribution center in Aberdeen, MD.

(2) The Company plans to open a new store in Memphis, TN during the second quarter of fiscal 2019. Additionally, during the second half of fiscal 2019, the Company plans to relocate an existing store in Dallas, TX.

(3) See Reconciliation of GAAP to Non-GAAP Financial Measures Table.

Conference Call Information

A conference call to discuss first quarter fiscal 2019 financial results is scheduled for today, July 30, 2019, 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 13692361. The replay will be available until August 30, 2019.

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 future opportunities; expectations regarding our goals, strategies, priorities and initiatives; expectations regarding new store openings and relocations; plans to drive more brand awareness and attain market share gains; statements regarding our second distribution center and the timing of its completion; and our anticipated financial performance and tax rate for fiscal 2019.

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; risks relating to the opening of a second distribution center; effects of a security breach or cyber-attack of our website or information technology systems, including relating to our use of third-party web service providers; 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; effects of tax reform; and uncertainty with respect to tax and trade policies, tariffs and government regulations affecting trade between the United States and other countries.

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 30, 2019, 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 Group, Inc. (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 10,000 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 statements of operations

 

 

 

 

 

 

 

(In thousands, except share and

 

Thirteen Weeks Ended

per share amounts) (unaudited)

 

June 29, 2019

 

June 30, 2018

 

 

 

 

 

 

 

Net sales

 

$

209,520

 

$

195,823

Cost of sales (excluding depreciation and amortization)

 

 

89,713

 

 

81,052

Gross profit

 

 

119,807

 

 

114,771

Selling, general, and administrative expenses (excluding depreciation and amortization)

 

 

109,029

 

 

106,605

Stock-based compensation

 

 

811

 

 

586

Pre-opening costs

 

 

477

 

 

346

Depreciation and amortization

 

 

9,706

 

 

9,337

Other (income) expenses

 

 

(27)

 

 

193

(Gain) loss on disposal of assets

 

 

(4)

 

 

40

Loss from operations

 

 

(185)

 

 

(2,336)

Interest expense, net

 

 

5,709

 

 

7,908

Loss before taxes

 

 

(5,894)

 

 

(10,244)

Benefit for income taxes

 

 

(1,795)

 

 

(3,480)

Net loss

 

$

(4,099)

 

$

(6,764)

 

 

 

 

 

 

 

Net loss per common share—basic and diluted

 

$

(0.08)

 

$

(0.14)

 

 

 

 

 

 

 

Weighted-average common shares—basic and diluted

 

 

48,231,148

 

 

48,138,907

 

The Container Store Group, Inc.

Consolidated balance sheets

 

 

 

 

 

 

 

 

 

 

 

 

June 29,

 

March 30,

 

June 30,

(In thousands)

 

2019

 

2019

 

2018

Assets

 

(unaudited)

 

 

 

 

(unaudited)

Current assets:

 

 

 

 

 

 

 

 

 

Cash

 

$

11,404

 

$

7,364

 

$

14,102

Accounts receivable, net

 

 

27,821

 

 

25,568

 

 

24,840

Inventory

 

 

120,512

 

 

108,650

 

 

104,135

Prepaid expenses

 

 

11,129

 

 

10,078

 

 

10,842

Income taxes receivable

 

 

1,124

 

 

1,003

 

 

812

Other current assets

 

 

11,867

 

 

11,705

 

 

12,577

Total current assets

 

 

183,857

 

 

164,368

 

 

167,308

Noncurrent assets:

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

152,448

 

 

152,588

 

 

151,455

Noncurrent operating lease assets

 

 

353,490

 

 

 

 

Goodwill

 

 

202,815

 

 

202,815

 

 

202,815

Trade names

 

 

225,182

 

 

225,150

 

 

226,613

Deferred financing costs, net

 

 

223

 

 

241

 

 

294

Noncurrent deferred tax assets, net

 

 

1,898

 

 

1,912

 

 

2,101

Other assets

 

 

1,607

 

 

1,670

 

 

1,777

Total noncurrent assets

 

 

937,663

 

 

584,376

 

 

585,055

Total assets

 

$

1,121,520

 

$

748,744

 

$

752,363

 

The Container Store Group, Inc.

Consolidated balance sheets (continued)

 

 

 

 

 

 

 

 

 

 

 

 

June 29,

 

March 30,

 

June 30,

(In thousands, except share and per share amounts)

 

2019

 

2019

 

2018

Liabilities and shareholders’ equity

 

(unaudited)

 

 

 

 

(unaudited)

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

55,387

 

$

58,734

 

$

52,215

Accrued liabilities

 

 

68,507

 

 

67,163

 

 

71,817

Revolving lines of credit

 

 

9,951

 

 

5,511

 

 

889

Current portion of long-term debt

 

 

6,931

 

 

7,016

 

 

7,780

Current operating lease liabilities

 

 

58,664

 

 

 

 

Income taxes payable

 

 

2,011

 

 

2,851

 

 

2,019

Total current liabilities

 

 

201,451

 

 

141,275

 

 

134,720

Noncurrent liabilities:

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

272,556

 

 

254,960

 

 

291,038

Noncurrent operating lease liabilities

 

 

327,221

 

 

 

 

Noncurrent deferred tax liabilities, net

 

 

50,182

 

 

51,702

 

 

49,378

Other long-term liabilities

 

 

8,903

 

 

36,114

 

 

41,337

Total noncurrent liabilities

 

 

658,862

 

 

342,776

 

 

381,753

Total liabilities

 

 

860,313

 

 

484,051

 

 

516,473

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 250,000,000 shares authorized; 48,283,197 shares issued at June 29, 2019; 48,142,319 shares issued at March 30, 2019; 48,138,907 shares issued at June 30, 2018

 

 

483

 

 

481

 

 

481

Additional paid-in capital

 

 

864,386

 

 

863,978

 

 

861,726

Accumulated other comprehensive loss

 

 

(25,929)

 

 

(26,132)

 

 

(24,239)

Retained deficit

 

 

(577,733)

 

 

(573,634)

 

 

(602,078)

Total shareholders’ equity

 

 

261,207

 

 

264,693

 

 

235,890

Total liabilities and shareholders’ equity

 

$

1,121,520

 

$

748,744

 

$

752,363

 

 
The Container Store Group, Inc.

Consolidated statements of cash flows

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

June 29,

 

June 30,

(In thousands) (unaudited)

 

2019

 

2018

Operating activities

 

 

 

 

 

 

Net loss

 

$

(4,099)

 

$

(6,764)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

9,706

 

 

9,337

Stock-based compensation

 

 

811

 

 

586

(Gain) loss on disposal of assets

 

 

(4)

 

 

40

Deferred tax benefit

 

 

(1,891)

 

 

(3,874)

Non-cash interest

 

 

465

 

 

759

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(2,200)

 

 

110

Inventory

 

 

(11,923)

 

 

(9,975)

Prepaid expenses and other assets

 

 

(670)

 

 

(198)

Accounts payable and accrued liabilities

 

 

2,275

 

 

10,030

Net change in lease assets and liabilities

 

 

(152)

 

 

Income taxes

 

 

(1,009)

 

 

(3,303)

Other noncurrent liabilities

 

 

370

 

 

(68)

Net cash used in operating activities

 

 

(8,321)

 

 

(3,320)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Additions to property and equipment

 

 

(8,703)

 

 

(4,456)

Proceeds from sale of property and equipment

 

 

4

 

 

1

Net cash used in investing activities

 

 

(8,699)

 

 

(4,455)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Borrowings on revolving lines of credit

 

 

17,961

 

 

7,581

Payments on revolving lines of credit

 

 

(13,599)

 

 

(6,663)

Borrowings on long-term debt

 

 

19,000

 

 

15,000

Payments on long-term debt

 

 

(1,741)

 

 

(1,954)

Payment of taxes with shares withheld upon restricted stock vesting

 

 

(347)

 

 

(122)

Net cash provided by financing activities

 

 

21,274

 

 

13,842

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

(214)

 

 

(364)

 

 

 

 

 

 

 

Net increase in cash

 

 

4,040

 

 

5,703

Cash at beginning of fiscal period

 

 

7,364

 

 

8,399

Cash at end of fiscal period

 

$

11,404

 

$

14,102

 

Note Regarding Non-GAAP Information

This press release includes financial measures that are not calculated in accordance with GAAP, including adjusted net loss, adjusted net loss per common share - diluted, Adjusted EBITDA, and free cash flow. 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 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 adjusted net loss, adjusted net loss per common share - diluted, and Adjusted EBITDA 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 adjusted net loss as net loss before restructuring charges, charges related to an Elfa manufacturing facility closure, impairment charges related to intangible assets, losses on extinguishment of debt, certain gains on disposal of assets, certain management transition costs incurred and benefits realized, charges incurred as part of the implementation of our Optimization Plan, and the tax impact of these adjustments and other unusual or infrequent tax items. We define adjusted net loss per common share - diluted as adjusted net loss divided by the diluted weighted average common shares outstanding. We use adjusted net loss and adjusted net loss per common share - diluted to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. We present adjusted net loss and adjusted net loss per common share - diluted because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance and because we believe it is useful for investors to see the measures that management uses to evaluate the Company.

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 Company presents free cash flow, which the Company defines as net cash provided by operating activities in a period minus payments for property and equipment made in that period, because it believes it is a useful indicator of the Company’s overall liquidity, as the amount of free cash flow generated in any period is representative of cash that is available for debt repayment, investment, and other discretionary and non-discretionary cash uses. Accordingly, we believe that free cash flow provides useful information to investors in understanding and evaluating our liquidity in the same manner as management. Our definition of free cash flow is limited in that it does not solely represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. Although other companies report their free cash flow, numerous methods may exist for calculating a company’s free cash flow. As a result, the method used by our management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow.

 

The Container Store Group, Inc. Supplemental Information - Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except share and per share amounts)
(unaudited)

The table below reconciles the non-GAAP financial measures of adjusted net (loss) income and adjusted net (loss) income per common share - diluted with the most directly comparable GAAP financial measures of GAAP net (loss) income and GAAP net (loss) income per common share - diluted.

 

Thirteen

 

Fiscal Year

 

Weeks Ended

 

2019 Outlook

 

June 29, 2019

 

June 30, 2018

 

Low

 

High

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(4,099)

 

$

(6,764)

 

$

20,100

 

$

24,900

Optimization Plan implementation charges (a)

 

 

 

4,864

 

 

 

 

Taxes (b)

 

 

 

(2,112)

 

 

 

 

Adjusted net (loss) income

$

(4,099)

 

$

(4,012)

 

$

20,100

 

$

24,900

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding — diluted

 

48,231,148

 

 

48,138,907

 

 

49,000,000

 

 

49,000,000

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share — diluted

$

(0.08)

 

$

(0.14)

 

$

0.41

 

$

0.51

Adjusted net (loss) income per common share — diluted

$

(0.08)

 

$

(0.08)

 

$

0.41

 

$

0.51


(a)

Charges incurred to implement our four-part optimization plan to drive improved sales and profitability, launched during fiscal 2017 (the “Optimization Plan”), which include certain consulting costs recorded in SG&A expenses in fiscal 2018, which we do not consider in our evaluation of ongoing performance.

(b)

Tax impact of adjustments to net (loss) income and the tax benefit recorded in the first quarter of fiscal 2018 as a result of a reduction in the Swedish tax rate, which are considered to be unusual or infrequent tax items, all of which we do not consider in our evaluation of ongoing performance.

 

The table below reconciles the non-GAAP financial measure Adjusted EBITDA with the most directly comparable GAAP financial measure of GAAP net loss.

 

Thirteen Weeks Ended

 

June 29, 2019

 

June 30, 2018

Net loss

$

(4,099)

 

$

(6,764)

Depreciation and amortization

 

9,706

 

 

9,337

Interest expense, net

 

5,709

 

 

7,908

Income tax benefit

 

(1,795)

 

 

(3,480)

EBITDA

$

9,521

 

$

7,001

Pre-opening costs (a)

 

477

 

 

346

Non-cash lease expense (b)

 

(64)

 

 

(637)

Stock-based compensation (c)

 

811

 

 

586

Foreign exchange (gains) losses (d)

 

(75)

 

 

38

Optimization Plan implementation charges (e)

 

 

 

4,864

Other adjustments (f)

 

(27)

 

 

193

Adjusted EBITDA

$

10,643

 

$

12,391


(a)

Non-capital expenditures associated with opening new stores and relocating stores, including 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 operating lease expense has been above or below our cash operating lease payments. The amount varies depending on the average age of our lease portfolio (weighted for size), as our GAAP operating lease expense on younger leases typically exceeds our cash operating lease payments, while our GAAP operating lease expense on older leases is typically less than our cash operating lease payments.

(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)

Charges incurred to implement our Optimization Plan, which include certain consulting costs recorded in SG&A expenses in fiscal 2018, which we do not consider in our evaluation of ongoing performance.

(f)

Other adjustments include amounts our management does not consider in our evaluation of our ongoing operations, including certain severance and other charges.

 

The table below reconciles the non-GAAP financial measure of free cash flow with the most directly comparable GAAP financial measure of net cash provided by operating activities.

 

 

Thirteen Weeks Ended

 

 

June 29,

 

June 30,

 

 

2019

 

2018

Net cash used in operating activities

 

$

(8,321)

 

$

(3,320)

Less: Additions to property and equipment

 

 

(8,703)

 

 

(4,456)

Free cash flow

 

$

(17,024)

 

$

(7,776)

 

Investors: 
ICR, Inc. 
Farah Soi/Caitlin Morahan 
203-682-8200 
Farah.Soi@icrinc.com
Caitlin.Morahan@icrinc.com 
or 
Media: 
The Container Store Group, Inc.
Mara Richter, 972-538-6893
publicrelations@containerstore.com

 

Source: The Container Store Group, Inc.