News Release
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Highlights for the Fourth Quarter Ended
- Net sales increased 24.4% to
$174.7 million compared to$140.4 million in the prior-year fourth quarter - Gross margin decreased 70 basis points (bps) to 55.4% compared to 56.1% in the prior-year fourth quarter
- Net income was
$14.0 million , or$0.43 per diluted share, compared to$17.5 million , or$0.58 per diluted share in the prior-year fourth quarter. Adjusted for income taxes, pro forma net income for the prior-year fourth quarter was$11.3 million , or$0.37 per diluted share - Adjusted EBITDA1 increased 22.7% to
$24.7 million compared to$20.1 million in the prior-year fourth quarter - During the fourth quarter, the Company opened two new retail stores in
Manassas, Virginia and inIndependence, Missouri - 28th consecutive quarter of increased net sales year-over-year
1See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.
Highlights for the Fiscal Year Ended
- Net sales increased 23.7% to
$376.1 million compared to$304.2 million in the prior year - Gross margin decreased 10 bps to 56.9% compared to 57.0% a year ago
- Net income was
$21.3 million , or$0.66 per diluted share, compared to$27.4 million , or$1.06 per diluted share in the prior year. Adjusted for income taxes, pro forma net income for the prior-year was$17.3 million , or$0.66 per diluted share - Adjusted EBITDA1 increased 21.1% to
$41.2 million compared to$34.0 million in the prior year - During fiscal 2016, the Company opened a total of seven retail stores
1See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.
Management Commentary
“I am pleased to report that net sales increased 24% with adjusted EBITDA up 21% and GAAP diluted earnings per share at
“We made great progress executing our strategic objectives for the year. We have increased our aided brand awareness year-over-year, demonstrating the continued effectiveness of our marketing campaigns. Retail sales grew 76% year-over-year, and they now account for 18% of total net sales. We are also capturing a greater share of the household closet with a broader assortment of men’s products and with women’s apparel continuing to outpace our overall growth.”
“On the retail front, we continue to improve our store opening process and to accelerate the pace of new store openings. We recently opened our 17th store in
Operating Results for the Fourth Quarter Ended
Net sales increased 24.4% to
Gross profit increased 22.8% to
Selling, general and administrative expenses increased 23.6% to
Net income was
The pro forma net income gives effect to the conversion of the Company to a “C” corporation, which was effective
Adjusted EBITDA increased 22.7% to
Balance Sheet and Liquidity
The Company ended the quarter with a cash balance of approximately
Fiscal 2017 Outlook
- Net sales in the range of
$455.0 million to $465.0 million - Adjusted EBITDA1 in the range of
$47.0 million to $49.5 million - EPS in the range of
$0.66 to $0.71 per diluted share - Capital expenditures of
$31.0 to $35.0 million 2 - 10 to 12 new store openings, adding 120,000 to 144,000 of additional selling square footage
1See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.
2Fiscal 2017 capital expenditures primarily include the Company’s plan to open 10 to 12 retail stores and information technology investments.
The table below recaps the Company’s signed new store leases and the opening timeframe.
Location | Timing | |
Noblesville, Indiana | Opened March 2, 2017 | |
Burlington, Massachusetts | Expected March 23, 2017 | |
Macomb, Michigan | First Quarter Fiscal 2017 | |
Warwick, Rhode Island | First Quarter Fiscal 2017 | |
West Chester, Ohio | Second Quarter Fiscal 2017 | |
Pittsburgh, Pennsylvania | Second Quarter Fiscal 2017 | |
Red Wing, Minnesota | Second Quarter Fiscal 2017 | |
St. Charles, Missouri | Third Quarter Fiscal 2017 | |
Avon, Ohio | Third Quarter or Fourth Quarter Fiscal 2017 | |
Thornton, Colorado | Third Quarter or Fourth Quarter Fiscal 2017 | |
Wixom, Michigan | Fourth Quarter Fiscal 2017 or First Quarter Fiscal 2018 |
Conference Call Information
A conference call and audio webcast with analysts and investors will be held on
- Live conference call: 844-875-6915 (domestic) or 412-317-6711 (international)
- Conference call replay available through
April 4, 2017 : 877-344-7529 (domestic) or 412-317-0088 (international) - Replay access code: 10100934
- Live and archived webcast: ir.duluthtrading.com
The Company is enabling investors to pre-register for the earnings conference call so that they can expedite their entry into the call and avoid the need to wait for a live operator. In order to pre-register for the call, investors can visit http://dpregister.com/10100934 and enter in their contact information. Investors will then be issued a personalized phone number and pin to dial into the live conference call. Individuals can pre-register any time prior to the start of the conference call on
About Duluth Trading
Duluth Trading is a rapidly growing lifestyle brand for the Modern, Self-Reliant American. Based in
Non-GAAP Measurements
Management believes that non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Within this release, including the tables attached hereto, reference is made to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). See attached Table “Reconciliation of Net Income to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three months and fiscal year ended
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this press release, including statements concerning Duluth Trading's plans, objectives, goals, beliefs, business strategies, future events, business conditions, its results of operations, financial position and its business outlook, business trends and certain other information herein are forward-looking statements, including statements regarding Duluth Trading’s ability to execute on its growth strategies, statements under the heading “Fiscal 2017 Outlook” and the forecasted results of operations in the Table “Reconciliation of Forecasted Net Income to Forecasted EBITDA to Forecasted Adjusted EBITDA.” You can identify forward-looking statements by the use of words such as “may,” ”might,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “believe,” “estimate,” “project,” “target,” “predict,” “intend,” “future,” “budget,” “goals,” “potential,” “continue,” “design,” “objective,” “forecasted,” “would” and other similar expressions. The forward-looking statements are not historical facts, and are based upon Duluth Trading's current expectations, beliefs, estimates, and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond Duluth Trading's control. Duluth Trading's expectations, beliefs and projections are expressed in good faith, and Duluth Trading believes there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, estimates, and projections will be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including, among others, the risks, uncertainties, and factors set forth under “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the
(Tables Follow)
DULUTH HOLDINGS INC. Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) |
|||||||
January 29, 2017 | January 31, 2016 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash | $ | 24,042 | $ | 37,873 | |||
Accounts receivable | 45 | 20 | |||||
Other receivables | 349 | 76 | |||||
Inventory, net | 70,368 | 55,303 | |||||
Prepaid expenses | 4,860 | 3,683 | |||||
Deferred catalog costs | 1,582 | 1,435 | |||||
Total current assets | 101,246 | 98,390 | |||||
Property and equipment, net | 52,432 | 21,529 | |||||
Restricted cash | 1,435 | — | |||||
Goodwill | 402 | 402 | |||||
Other assets, net | 452 | 299 | |||||
Total assets | $ | 155,967 | $ | 120,620 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Trade accounts payable | $ | 9,330 | $ | 10,611 | |||
Accrued expenses and other current liabilities | 19,822 | 12,049 | |||||
Income taxes payable | 5,225 | 1,308 | |||||
Current maturities of long-term debt | 742 | 722 | |||||
Total current liabilities | 35,119 | 24,690 | |||||
Finance lease obligations under build-to-suit leases | 3,349 | — | |||||
Long-term debt, less current maturities | 35 | 4,301 | |||||
Deferred rent obligations, less current maturities | 2,109 | 1,112 | |||||
Deferred tax liabilities | 1,567 | 31 | |||||
Total liabilities | 42,179 | 30,134 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Capital stock | 86,446 | 85,389 | |||||
Retained earnings | 24,733 | 3,443 | |||||
Accumulated other comprehensive loss | — | (27 | ) | ||||
Total shareholders' equity of Duluth Holdings Inc. | 111,179 | 88,805 | |||||
Noncontrolling interest | 2,609 | 1,681 | |||||
Total shareholders' equity | 113,788 | 90,486 | |||||
Total liabilities and shareholders' equity | $ | 155,967 | $ | 120,620 |
DULUTH HOLDING INC. Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share figures) |
||||||||||||
Three Months Ended | Fiscal Year Ended | |||||||||||
January 29, 2017 | January 31, 2016 | January 29, 2017 | January 31, 2016 | |||||||||
Net sales | $ | 174,653 | $ | 140,377 | $ | 376,116 | $ | 304,157 | ||||
Cost of goods sold (excluding depreciation and amortization) | 77,868 | 61,585 | 161,970 | 130,636 | ||||||||
Gross profit | 96,785 | 78,792 | 214,146 | 173,521 | ||||||||
Selling, general and administrative expenses | 73,930 | 59,797 | 179,145 | 144,371 | ||||||||
Operating income | 22,855 | 18,995 | 35,001 | 29,150 | ||||||||
Interest expense | 86 | 80 | 194 | 306 | ||||||||
Other income, net | 84 | 62 | 247 | 181 | ||||||||
Income before income taxes | 22,853 | 18,977 | 35,054 | 29,025 | ||||||||
Income tax expense | 8,834 | 1,339 | 13,525 | 1,339 | ||||||||
Net income | 14,019 | 17,638 | 21,529 | 27,686 | ||||||||
Less: Net income attributable to noncontrolling interest | 26 | 98 | 214 | 247 | ||||||||
Net income attributable to controlling interest | $ | 13,993 | $ | 17,540 | $ | 21,315 | $ | 27,439 | ||||
Basic earnings per share (Class A and Class B): | ||||||||||||
Weighted average shares of common stock outstanding | 31,549 | 29,557 | 31,527 | 25,250 | ||||||||
Net income per share attributable to controlling interest | $ | 0.44 | $ | 0.59 | $ | 0.68 | $ | 1.09 | ||||
Diluted earnings per share (Class A and Class B): | ||||||||||||
Weighted average shares and equivalents outstanding | 32,274 | 30,240 | 32,249 | 25,978 | ||||||||
Net income per share attributable to controlling interest | $ | 0.43 | $ | 0.58 | $ | 0.66 | $ | 1.06 | ||||
Pro forma net income information (Note 1): | ||||||||||||
Income attributable to controlling interest before provision for income taxes | $ | 18,879 | $ | 28,778 | ||||||||
Pro forma provision for income taxes | 7,552 | 11,511 | ||||||||||
Pro forma net income attributable to controlling interest | $ | 11,327 | $ | 17,267 | ||||||||
Pro forma basic net income per share attributable to controlling interest (Class A and Class B) | $ | 0.38 | $ | 0.68 | ||||||||
Pro forma diluted net income per share attributable to controlling interest (Class A and Class B) | $ | 0.37 | $ | 0.66 |
Note 1: The unaudited pro forma net income information gives effect to the conversion of the Company to a “C” corporation on
DULUTH HOLDINGS INC. Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands) |
||||||||
Fiscal Year Ended | ||||||||
January 29, 2017 | January 31, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 21,529 | $ | 27,686 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 4,698 | 2,837 | ||||||
Amortization of stock-based compensation | 1,224 | 720 | ||||||
Deferred income taxes | 1,536 | 31 | ||||||
Loss on disposal of property and equipment | 3 | 5 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (25 | ) | (3 | ) | ||||
Other receivables | (273 | ) | (2 | ) | ||||
Inventory | (14,446 | ) | (13,623 | ) | ||||
Prepaid expense | (1,177 | ) | (967 | ) | ||||
Deferred catalog costs | 1,472 | 1,502 | ||||||
Trade accounts payable | (2,962 | ) | (5,544 | ) | ||||
Income taxes payable | 3,917 | 1,308 | ||||||
Accrued expenses and deferred rent obligations | 4,757 | 264 | ||||||
Net cash provided by operating activities | 20,253 | 14,214 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (28,672 | ) | (7,306 | ) | ||||
Change in restricted cash | (1,435 | ) | — | |||||
Purchases of other assets | (234 | ) | (56 | ) | ||||
Net cash used in investing activities | (30,341 | ) | (7,362 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from initial public offering | — | 83,923 | ||||||
Proceeds from line of credit | 25,385 | 102,862 | ||||||
Payments on line of credit | (25,385 | ) | (103,462 | ) | ||||
Proceeds from long term debt | — | 47,100 | ||||||
Payments on long term debt | (4,226 | ) | (46,899 | ) | ||||
Payments on capital lease obligations | (20 | ) | (261 | ) | ||||
Payments on finance lease obligations under build-to-suit leases | (19 | ) | — | |||||
Distributions to shareholders | (192 | ) | (60,077 | ) | ||||
Distributions to holders of noncontrolling interest in variable interest entities | (30 | ) | (390 | ) | ||||
Capital contributions to variable interest entities | 744 | 344 | ||||||
Net cash provided by (used in) financing activities | (3,743 | ) | 23,140 | |||||
Increase (Decrease) in cash | (13,831 | ) | 29,992 | |||||
Cash at beginning of period | 37,873 | 7,881 | ||||||
Cash at end of period | $ | 24,042 | $ | 37,873 | ||||
Supplemental disclosure of cash flow information | ||||||||
Interest paid | $ | 185 | $ | 301 | ||||
Income taxes paid | $ | 6,698 | $ | — | ||||
Property and equipment acquired under build-to-suit leases | $ | 3,369 | $ | — | ||||
Unpaid liability to acquire property and equipment | $ | 3,485 | $ | 112 |
DULUTH HOLDINGS INC. Reconciliation of Net Income to EBITDA and EBITDA to Adjusted EBITDA (Unaudited) (Amounts in thousands) |
||||||||||||
Three Months Ended | Fiscal Year Ended | |||||||||||
January 29, 2017 | January 31, 2016 | January 29, 2017 | January 31, 2016 | |||||||||
Net income | $ | 14,019 | $ | 17,638 | $ | 21,529 | $ | 27,686 | ||||
Depreciation and amortization | 1,483 | 839 | 4,698 | 2,837 | ||||||||
Interest expense | 86 | 80 | 194 | 306 | ||||||||
Income tax expense | 8,834 | 1,339 | 13,525 | 1,339 | ||||||||
EBITDA | $ | 24,422 | $ | 19,896 | $ | 39,946 | $ | 32,168 | ||||
Non-cash stock based compensation | 255 | 221 | 1,224 | 720 | ||||||||
Payment of grantees' tax liabilities associated with grant of restricted stock awards | — | — | — | 1,115 | ||||||||
Adjusted EBITDA | $ | 24,677 | $ | 20,117 | $ | 41,170 | $ | 34,003 |
DULUTH HOLDINGS INC. Segment Information (Unaudited) (Amounts in thousands) |
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Three Months Ended | Fiscal Year Ended | |||||||||||
January 29, 2017 | January 31, 2016 | January 29, 2017 | January 31, 2016 | |||||||||
Net sales | ||||||||||||
Direct | $ | 143,237 | $ | 125,100 | $ | 309,674 | $ | 266,341 | ||||
Retail | 31,416 | 15,277 | 66,442 | 37,816 | ||||||||
Total net sales | $ | 174,653 | $ | 140,377 | $ | 376,116 | $ | 304,157 | ||||
Operating income | ||||||||||||
Direct | $ | 15,764 | $ | 14,761 | $ | 24,458 | $ | 21,031 | ||||
Retail | 7,091 | 4,234 | 10,543 | 8,119 | ||||||||
Total operating income | 22,855 | 18,995 | 35,001 | 29,150 | ||||||||
Interest expense | 86 | 80 | 194 | 306 | ||||||||
Other income, net | 84 | 62 | 247 | 181 | ||||||||
Income before income taxes | $ | 22,853 | $ | 18,977 | $ | 35,054 | $ | 29,025 |
DULUTH HOLDINGS INC. Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA For the Fiscal Year Ending January 28, 2018 (Unaudited) (Amounts in thousands) |
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Low | Mid-point | High | |||||||
Forecasted | |||||||||
Net income | $ | 21,500 | $ | 22,400 | $ | 23,000 | |||
Depreciation and amortization | 8,800 | 8,800 | 8,800 | ||||||
Interest expense | 1,500 | 1,500 | 1,500 | ||||||
Income tax expense | 13,600 | 14,200 | 14,600 | ||||||
EBITDA | $ | 45,400 | $ | 46,900 | $ | 47,900 | |||
Non-cash stock based compensation | 1,600 | 1,600 | 1,600 | ||||||
Adjusted EBITDA | $ | 47,000 | $ | 48,500 | $ | 49,500 |
Investor Contacts:Donni Case (310) 622-8224Johan Yokay (310) 622-8241Financial Profiles, Inc. Duluth@finprofiles.com