News Release
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Fourth quarter
Women’s business grew double digits in the fourth quarter across both Duluth and AKHG brands
Strong financial position with
Highlights for the Fourth Quarter Ended
- Net sales increase to
$245.6 million compared to$241.8 million in the prior-year fourth quarter - Strength of the women’s business continued with 12% sales growth
- Net Income of
$7.0 million ; diluted EPS of$0.21 - Adjusted EBITDA1 increased to
$21.1 million compared to$20.6 million in the prior-year
Highlights for the Fiscal Year Ended
- Net sales of
$646.7 million compared to$653.3 million in the prior year - Net Loss of
($9.4) million ; diluted EPS of ($0.28 ) - Adjusted EBITDA1 of
$33.4 million ; reflects 5.2% of net sales - Healthy inventory composition with 90% in current products and a 30% decrease in clearance items
1See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.
Management Commentary
President and CEO
During our peak season, within our core categories and AKHG brand, we introduced more newness than ever before, including a new addition to our iconic Fire Hose pant collection, featuring the strongest flex fabric on the market with a lighter weight than our original Fire Hose. We also launched our first ever fitness apparel category,
Sato concluded, “We remain steadfast on our commitment to the pillars outlined in the Big Dam Blueprint and I am extremely proud of the tremendous progress we have made on related key strategic initiatives. We went live with our new highly automated fulfillment center and are achieving our ramp-up plan to process up to 60% of all online orders and store replenishment volume through this facility. We also meaningfully advanced our sourcing and product innovation functions and expect benefits from this initiative to materialize in 2024 and continue to build over time. These foundational initiatives represent examples of significant enablers to future proof and scale long-term profitable growth.”
Operating Results for the Fourth Quarter Ended
Net sales increased 1.6% to
Women’s apparel net sales increased 12.4% with double digit growth across both Duluth and AKHG brands, while men’s apparel net sales were flat to the prior year.
Gross profit decreased 4.4% to
Selling, general and administrative expenses decreased 3.8% to
The decrease in selling, general and administrative expenses was partially due to lower advertising costs and variable expenses primarily due to efficiencies across the fulfillment center network, partially offset by higher depreciation from strategic investments.
The effective tax rate related to controlling interest was 23% and 25% in the current period and prior comparable period, respectively.
Balance Sheet and Liquidity
The Company ended the quarter with a cash balance of approximately
Fiscal 2024 Outlook
The Company provided the following fiscal 2024 outlook:
- Net sales in the range of
$640 million to$660 million - Adjusted EBITDA1 in the range of
$39 million to$45 million - EPS in the range of (
$0.22 ) to ($0.07 ) per diluted share - Capital expenditures, inclusive of software hosting implementation costs, of approximately
$25 million
1See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.
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
March 14, 2024 : 877-344-7529 (domestic) or 412-317-0088 (international) - Replay access code: 9707034
- Live and archived webcast: ir.duluthtrading.com
Investors can pre-register for the earnings conference call to expedite their entry into the call and avoid waiting for a live operator. To pre-register for the call, please visit https://dpregister.com/sreg/10185439/fb5294b5e7 and enter your contact information. You will then be issued a personalized phone number and pin to dial into the live conference call. Investors can pre-register any time prior to the start of the conference call.
About Duluth Trading
Duluth Trading is a 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), Free Cash Flow and Forecasted Adjusted EBITDA. See attached table “Reconciliation of Net (Loss) Income to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net (loss) income to EBITDA and EBITDA to Adjusted EBITDA for the three months and fiscal year ended
Adjusted EBITDA is a metric used by management and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period.
Management believes Free Cash Flow is a useful measure of performance as an indication of an organization’s financial strength and provides additional perspective on the ability to efficiently use capital in executing growth strategies. Free Cash Flow is used to facilitate a comparison of operating performance on a consistent basis from period-to-period and the ability to generate cash. Free Cash Flow is defined as net cash provided by operating activities less purchase of property and equipment.
The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such measurements are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results.
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, including statements under the heading “Fiscal 2024 Outlook” are forward-looking statements. 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 Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the
(Tables Follow)
***
Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands) |
||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 32,157 | $ | 45,548 | ||||
| Receivables | 5,955 | 6,041 | ||||||
| Income taxes receivable | 617 | — | ||||||
| Inventory, net | 125,757 | 154,922 | ||||||
| Prepaid expenses & other current assets | 16,488 | 15,154 | ||||||
| Total current assets | 180,974 | 221,665 | ||||||
| Property and equipment, net | 128,755 | 112,564 | ||||||
| Operating lease right-of-use assets | 121,430 | 131,753 | ||||||
| Finance lease right-of-use assets, net | 44,278 | 47,206 | ||||||
| Available-for-sale security | 4,986 | 5,539 | ||||||
| Other assets, net | 9,020 | 8,727 | ||||||
| Deferred tax asset | 1,010 | — | ||||||
| Total assets | $ | 490,453 | $ | 527,454 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 51,122 | $ | 56,547 | ||||
| Accrued expenses and other current liabilities | 30,930 | 40,815 | ||||||
| Income tax payable | — | 1,761 | ||||||
| Current portion of operating lease liabilities | 16,401 | 15,571 | ||||||
| Current portion of finance lease liabilities | 3,149 | 2,842 | ||||||
| Current maturities of TRI long-term debt1 | 847 | 768 | ||||||
| Total current liabilities | 102,449 | 118,304 | ||||||
| Operating lease liabilities, less current portion | 106,413 | 117,366 | ||||||
| Finance lease liabilities, less current portion | 34,276 | 37,425 | ||||||
| TRI long-term debt, less current maturities1 | 25,141 | 25,913 | ||||||
| Deferred tax liabilities | — | 1,249 | ||||||
| Total liabilities | 268,279 | 300,257 | ||||||
| (1,738 | ) | (1,459 | ) | |||||
| Capital stock | 103,579 | 98,842 | ||||||
| Retained earnings | 123,816 | 133,172 | ||||||
| Accumulated other comprehensive income | (427 | ) | (148 | ) | ||||
| Total shareholders' equity of |
225,230 | 230,407 | ||||||
| Noncontrolling interest | (3,056 | ) | (3,210 | ) | ||||
| Total shareholders' equity | 222,174 | 227,197 | ||||||
| Total liabilities and shareholders' equity | $ | 490,453 | $ | 527,454 | ||||
1Represents debt of the variable interest entity,
| DULUTH HOLDING INC. Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share figures) |
||||||||||||||
| Three Months Ended | Fiscal Year Ended | |||||||||||||
| Net sales | $ | 245,613 | $ | 241,766 | $ | 646,681 | $ | 653,307 | ||||||
| Cost of goods sold (excluding depreciation and amortization) | 127,180 | 117,923 | 321,710 | 309,872 | ||||||||||
| Gross profit | 118,433 | 123,843 | 324,971 | 343,435 | ||||||||||
| Selling, general and administrative expenses | 108,846 | 113,160 | 333,804 | 337,204 | ||||||||||
| Operating income (loss) | 9,587 | 10,683 | (8,833 | ) | 6,231 | |||||||||
| Interest expense | 1,123 | 930 | 4,156 | 3,653 | ||||||||||
| Other income, net | 619 | 196 | 923 | 376 | ||||||||||
| Income (loss) before income taxes | 9,083 | 9,949 | (12,066 | ) | 2,954 | |||||||||
| Income tax expense (benefit) | 2,093 | 2,478 | (2,693 | ) | 708 | |||||||||
| Net income (loss) | 6,990 | 7,471 | (9,373 | ) | 2,246 | |||||||||
| Less: Net income (loss) attributable to noncontrolling interest | 7 | 24 | (17 | ) | (58 | ) | ||||||||
| Net income (loss) attributable to controlling interest | $ | 6,983 | $ | 7,447 | $ | (9,356 | ) | $ | 2,304 | |||||
| Basic earnings per share (Class A and Class B): | ||||||||||||||
| Weighted average shares of common stock outstanding | 33,007 | 32,811 | 32,955 | 32,772 | ||||||||||
| Net income (loss) per share attributable to controlling interest | $ | 0.21 | $ | 0.23 | $ | (0.28 | ) | $ | 0.07 | |||||
| Diluted earnings per share (Class A and Class B): | ||||||||||||||
| Weighted average shares and equivalents outstanding | 33,007 | 32,811 | 32,955 | 32,991 | ||||||||||
| Net income (loss) per share attributable to controlling interest | $ | 0.21 | $ | 0.23 | $ | (0.28 | ) | $ | 0.07 | |||||
Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands) |
||||||||
| Fiscal Year Ended | ||||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | (9,373 | ) | $ | 2,246 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 32,159 | 30,810 | ||||||
| Stock-based compensation | 4,195 | 2,711 | ||||||
| Deferred income taxes | (2,166 | ) | (1,403 | ) | ||||
| Loss on disposal of property and equipment | 130 | 1,392 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | 86 | (586 | ) | |||||
| Income taxes receivable | (617 | ) | — | |||||
| Inventory | 29,165 | (32,250 | ) | |||||
| Prepaid expense & other assets | (1,675 | ) | 5,101 | |||||
| Software hosting implementation costs, net | (216 | ) | (6,121 | ) | ||||
| Deferred catalog costs | — | 10 | ||||||
| Trade accounts payable | (5,449 | ) | 12,685 | |||||
| Income taxes payable | (1,761 | ) | (5,053 | ) | ||||
| Accrued expenses and deferred rent obligations | (5,141 | ) | (11,768 | ) | ||||
| Other | 58 | (365 | ) | |||||
| Noncash lease impacts | (722 | ) | 1,195 | |||||
| Net cash provided by (used in) operating activities | 38,673 | (1,396 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (49,086 | ) | (27,065 | ) | ||||
| Principal receipts from available-for-sale security | 181 | 164 | ||||||
| Change in other assets | 16 | 28 | ||||||
| Changes in the |
171 | — | ||||||
| Net cash used in investing activities | (48,718 | ) | (26,873 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | 56,000 | — | ||||||
| Payments on line of credit | (56,000 | ) | — | |||||
| Proceeds from delayed draw term loan | — | 25,000 | ||||||
| Payments on delayed draw term loan | — | (25,000 | ) | |||||
| Payments on TRI long term debt | (767 | ) | (692 | ) | ||||
| Payments on finance lease obligations | (2,842 | ) | (2,701 | ) | ||||
| Shares withheld for tax payments on vested restricted stock | (279 | ) | (457 | ) | ||||
| Other | 542 | 616 | ||||||
| Net cash used in financing activities | (3,346 | ) | (3,234 | ) | ||||
| Decrease in cash and cash equivalents | (13,391 | ) | (31,503 | ) | ||||
| Cash and cash equivalents at beginning of period | 45,548 | 77,051 | ||||||
| Cash and cash equivalents at end of period | $ | 32,157 | $ | 45,548 | ||||
Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA (Unaudited) (Amounts in thousands) |
|||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||
| Net (loss) income | $ | 6,990 | $ | 7,471 | $ | (9,373 | ) | $ | 2,246 | ||||
| Depreciation and amortization | 8,725 | 7,864 | 32,159 | 30,810 | |||||||||
| Amortization of internal-use software hosting subscription implementation costs |
1,314 | 1,189 | 4,961 | 3,392 | |||||||||
| Interest expense | 1,123 | 930 | 4,156 | 3,653 | |||||||||
| Income tax expense (benefit) | 2,093 | 2,478 | (2,693 | ) | 708 | ||||||||
| EBITDA (non-GAAP) | $ | 20,245 | $ | 19,932 | $ | 29,210 | $ | 40,809 | |||||
| Stock based compensation | 890 | 711 | 4,195 | 2,711 | |||||||||
| Adjusted EBITDA (non-GAAP) | $ | 21,135 | $ | 20,643 | $ | 33,405 | $ | 43,520 | |||||
Free Cash Flow (Unaudited) (Amounts in thousands) |
||||||||
| Fiscal Year Ended | ||||||||
| (in thousands) | ||||||||
| Net cash provided by (used in) operating activities | $ | 38,673 | $ | (1,396 | ) | |||
| Purchases of property and equipment | (49,086 | ) | (27,065 | ) | ||||
| Free Cash Flow (non-GAAP) | $ | (10,413 | ) | $ | (28,461 | ) | ||
Reconciliation of Forecasted Net Loss to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA For the Fiscal Year Ended (Unaudited) (Amounts in thousands) |
||||||||
| Low | High | |||||||
| Forecasted | ||||||||
| Net loss | $ | (7,400 | ) | $ | (2,300 | ) | ||
| Depreciation and amortization | 34,000 | 34,000 | ||||||
| Amortization of internal-use software hosting subscription implementation costs | 5,000 | 5,000 | ||||||
| Interest expense | 5,550 | 4,800 | ||||||
| Income tax expense | (2,400 | ) | (750 | ) | ||||
| EBITDA (non-GAAP) | $ | 34,750 | $ | 40,750 | ||||
| Stock based compensation | 4,250 | 4,250 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | 39,000 | $ | 45,000 | ||||
Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/bb9fcddb-6fd2-4ccf-aa20-ac9b3aee3a62
https://www.globenewswire.com/NewsRoom/AttachmentNg/ac8f4fb5-148d-4595-87b7-91fe6565bf28
Investor Contacts:ICR, Inc. (646) 277-1200 DuluthIR@icrinc.com
AKHG Fitness By Duluth Trading
AKHG Fitness By Duluth Trading
Fire Hose HD By Duluth Trading
Fire Hose HD By Duluth Trading
Source: Duluth Trading Company