News Release
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Highlights for the Second Quarter Ended
- Net sales increased 27.4% to
$65.8 million compared to$51.7 million in the prior-year second quarter - Gross margin increased 20 basis points (bps) to 59.1% compared to 58.9% in the prior-year second quarter
- Net income was
$3.6 million , or$0.11 per diluted share, compared to$5.7 million , or$0.24 per diluted share in the prior-year second quarter. Adjusted for income taxes, pro forma net income for the prior-year second quarter was$3.4 million , or$0.14 per diluted share. - Adjusted EBITDA1 increased 13.9% to
$7.5 million compared to$6.6 million in the prior-year second quarter - During the quarter, the Company opened two new retail stores, one in LaCrosse,
Wisconsin , and one inOmaha, Nebraska , for a total of 9 retail stores and 2 outlet stores
1See reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.
“Our strong second quarter results marked our 26th consecutive quarter of increased net sales year-over-year. Net sales growth of 27% reflected solid performance in both our direct and retail segments as well as our men’s and women’s product lines. With the momentum gained in the second quarter, we expect to deliver full year fiscal 2016 results as previously guided,” said
“In July, we completed the 75,000 square feet expansion to our
“This quarter we opened two new stores in LaCrosse,
“Regarding store openings for the remainder of 2016, we are anticipating a busy fourth quarter. As previously announced, we signed leases in
Operating Results for the Second Quarter Ended
Net sales increased 27.4% to
Gross profit increased 27.8% to
Selling, general and administrative expenses increased 33.3% to
Adjusted EBITDA was
Net income was
The pro forma net income gives effect to the conversion of the Company to a “C” corporation, which was effective
Balance Sheet and Liquidity
The Company ended the quarter with a cash balance of approximately
Fiscal 2016 Outlook and Long-Term Financial Targets
The Company reaffirmed its fiscal 2016 outlook as follows:
- Net sales in the range of
$370.0 million to $380.0 million - Adjusted EBITDA in the range of
$40.0 million to $42.5 million - GAAP EPS in the range of
$0.66 to $0.70 per diluted share - Capital expenditures of
$24.0 to $25.0 million 1
The Company updated its fiscal 2016 retail store openings:
- The Company now expects to open a total of seven new retail stores, adding 75,000 to 85,000 additional selling square footage
1Fiscal 2016 capital expenditures include the Company’s plan to open seven retail stores coupled with the expansion of our distribution center at the Company’s
The Company also reaffirmed its long-term financial targets of approximately 20% net sales growth, 25% adjusted EBITDA growth and 25% net income growth.
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
September 22, 2016 : 877-344-7529 (domestic) or 412-317-0088 (international) - Replay access code: 10091660
- 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/10091660 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 and six months 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 Duluth Trading’s ability to execute on its growth strategies and statements under the heading “Fiscal 2016 Outlook and Long-Term Financial Targets.” 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,” “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) | ||||||||||
July 31, 2016 | January 31, 2016 | |||||||||
ASSETS | ||||||||||
Current Assets: | ||||||||||
Cash | $ | 23,302 | $ | 37,873 | ||||||
Accounts receivable | 44 | 20 | ||||||||
Other receivables | 401 | 76 | ||||||||
Inventory, net | 66,919 | 55,303 | ||||||||
Prepaid expenses | 3,774 | 3,683 | ||||||||
Deferred catalog costs | 1,411 | 1,435 | ||||||||
Total current assets | 95,851 | 98,390 | ||||||||
Property and equipment, net | 35,926 | 21,529 | ||||||||
Restricted cash | 774 | — | ||||||||
Deferred tax assets | 197 | — | ||||||||
Goodwill | 402 | 402 | ||||||||
Other assets, net | 292 | 299 | ||||||||
Total assets | $ | 133,442 | $ | 120,620 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Trade accounts payable | $ | 17,994 | $ | 10,611 | ||||||
Income taxes payable | 314 | 1,308 | ||||||||
Current maturities of long-term debt | 4,132 | 722 | ||||||||
Accrued expenses: | ||||||||||
Salaries and benefits | 1,390 | 3,649 | ||||||||
Deferred revenue | 3,341 | 2,744 | ||||||||
Freight | 769 | 2,089 | ||||||||
Product returns | 775 | 1,244 | ||||||||
Other | 4,861 | 2,323 | ||||||||
Total current liabilities | 33,576 | 24,690 | ||||||||
Long-term debt, less current maturities | 747 | 4,301 | ||||||||
Deferred rent obligations, less current maturities | 1,202 | 1,112 | ||||||||
Deferred tax liabilities | — | 31 | ||||||||
Total liabilities | 35,525 | 30,134 | ||||||||
Commitments and contingencies | ||||||||||
Shareholders' equity: | ||||||||||
Capital stock | 85,837 | 85,389 | ||||||||
Retained earnings | 10,278 | 3,443 | ||||||||
Accumulated other comprehensive loss | (15 | ) | (27 | ) | ||||||
Total shareholders' equity of Duluth Holdings Inc. | 96,100 | 88,805 | ||||||||
Noncontrolling interest | 1,817 | 1,681 | ||||||||
Total shareholders' equity | 97,917 | 90,486 | ||||||||
Total liabilities and shareholders' equity | $ | 133,442 | $ | 120,620 | ||||||
DULUTH HOLDING INC. | ||||||||||||
Consolidated Statements of Operations | ||||||||||||
(Unaudited) | ||||||||||||
(Amounts in thousands, except per share figures) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
July 31, 2016 | August 2, 2015 | July 31, 2016 | August 2, 2015 | |||||||||
Net sales | $ | 65,823 | $ | 51,677 | $ | 134,455 | $ | 108,484 | ||||
Cost of goods sold | 26,901 | 21,215 | 55,842 | 45,359 | ||||||||
Gross profit | 38,922 | 30,462 | 78,613 | 63,125 | ||||||||
Selling, general and administrative expenses | 32,936 | 24,707 | 67,286 | 54,616 | ||||||||
Operating income | 5,986 | 5,755 | 11,327 | 8,509 | ||||||||
Interest expense | 37 | 60 | 75 | 112 | ||||||||
Other income, net | 60 | 26 | 130 | 75 | ||||||||
Income before income taxes | 6,009 | 5,721 | 11,382 | 8,472 | ||||||||
Income tax expense | 2,325 | — | 4,386 | — | ||||||||
Net income | 3,684 | 5,721 | 6,996 | 8,472 | ||||||||
Less: Net income attributable to noncontrolling interest | 65 | 22 | 136 | 82 | ||||||||
Net income attributable to controlling interest | $ | 3,619 | $ | 5,699 | $ | 6,860 | $ | 8,390 | ||||
Basic earnings per share (Class A and Class B): | ||||||||||||
Weighted average shares of common stock outstanding |
31,520 | 23,815 | 31,520 | 23,815 | ||||||||
Net income per share attributable to controlling interest |
$ | 0.11 | $ | 0.24 | $ | 0.22 | $ | 0.35 | ||||
Diluted earnings per share (Class A and Class B): | ||||||||||||
Weighted average shares and equivalents outstanding |
32,263 | 23,970 | 32,265 | 24,260 | ||||||||
Net income per share attributable to controlling interest |
$ | 0.11 | $ | 0.24 | $ | 0.21 | $ | 0.35 | ||||
Pro forma net income information (Note 1): | ||||||||||||
Income attributable to controlling interest before provision for income taxes |
$ | 5,699 | $ | 8,390 | ||||||||
Pro forma provision for income taxes | 2,280 | 3,356 | ||||||||||
Pro forma net income attributable to controlling interest |
$ | 3,419 | $ | 5,034 | ||||||||
Pro forma basic net income per share attributable to controlling interest (Class A and Class B) |
$ | 0.14 | $ | 0.21 | ||||||||
Pro forma diluted net income per share attributable to controlling interest (Class A and Class B) |
$ | 0.14 | $ | 0.21 | ||||||||
Note 1: The 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) | ||||||||||
Six Months Ended | ||||||||||
July 31, 2016 | August 2, 2015 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 6,996 | $ | 8,472 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||||
Depreciation and amortization | 1,951 | 1,174 | ||||||||
Amortization of stock-based compensation | 615 | 332 | ||||||||
Deferred income taxes | (228 | ) | — | |||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (24 | ) | (4 | ) | ||||||
Other receivables | (325 | ) | (186 | ) | ||||||
Inventory | (10,855 | ) | (6,124 | ) | ||||||
Prepaid expense | (12 | ) | (797 | ) | ||||||
Deferred catalog costs | 1,067 | (37 | ) | |||||||
Trade accounts payable | 5,641 | 584 | ||||||||
Income taxes payable | (994 | ) | — | |||||||
Accrued expenses and deferred rent obligations | (2,760 | ) | (4,462 | ) | ||||||
Net cash provided by (used in) operating activities | 1,072 | (1,048 | ) | |||||||
Cash flows from investing activities: | ||||||||||
Purchases of property and equipment | (14,513 | ) | (3,842 | ) | ||||||
Change in restricted cash | (774 | ) | — | |||||||
Purchases of other assets | (20 | ) | (15 | ) | ||||||
Net cash used in investing activities | (15,307 | ) | (3,857 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from line of credit | — | 34,086 | ||||||||
Payments on line of credit | — | (28,160 | ) | |||||||
Proceeds from long term debt | — | 800 | ||||||||
Payments on long term debt | (135 | ) | (468 | ) | ||||||
Payments on capital lease obligations | (9 | ) | (251 | ) | ||||||
Change in bank overdrafts | — | 964 | ||||||||
Distributions to shareholders | (192 | ) | (9,915 | ) | ||||||
Capital contributions to variable interest entities | — | 344 | ||||||||
Other | — | (10 | ) | |||||||
Net cash used in financing activities | (336 | ) | (2,610 | ) | ||||||
Decrease in cash | (14,571 | ) | (7,515 | ) | ||||||
Cash at beginning of period | 37,873 | 7,881 | ||||||||
Cash at end of period | $ | 23,302 | $ | 366 | ||||||
Supplemental disclosure of cash flow information | ||||||||||
Interest paid | $ | 75 | $ | 111 | ||||||
Income taxes paid | $ | 5,544 | $ | — | ||||||
DULUTH HOLDINGS INC. | ||||||||||||
Reconciliation of Net Income to EBITDA to Adjusted EBITDA | ||||||||||||
(Unaudited) | ||||||||||||
(Amounts in thousands) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
July 31, 2016 | August 2, 2015 | July 31, 2016 | August 2, 2015 | |||||||||
Net income | $ | 3,684 | $ | 5,721 | $ | 6,996 | $ | 8,472 | ||||
Depreciation and amortization | 1,082 | 620 | 1,951 | 1,174 | ||||||||
Interest expense | 37 | 60 | 75 | 112 | ||||||||
Income tax expense | 2,325 | — | 4,386 | — | ||||||||
EBITDA | $ | 7,128 | $ | 6,401 | $ | 13,408 | $ | 9,758 | ||||
Non-cash stock based compensation | 335 | 152 | 615 | 332 | ||||||||
Payment of grantees' tax liabilities associated with grant of restricted stock awards |
— | — | — | 1,115 | ||||||||
Adjusted EBITDA | $ | 7,463 | $ | 6,553 | $ | 14,023 | $ | 11,205 | ||||
DULUTH HOLDINGS INC. | ||||||||||||
Segment Information | ||||||||||||
(Unaudited) | ||||||||||||
(Amounts in thousands) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
July 31, 2016 | August 2, 2015 | July 31, 2016 | August 2, 2015 | |||||||||
Net sales | ||||||||||||
Direct | $ | 53,841 | $ | 43,343 | $ | 114,166 | $ | 94,698 | ||||
Retail | 11,982 | 8,334 | 20,289 | 13,786 | ||||||||
Total net sales | $ | 65,823 | $ | 51,677 | $ | 134,455 | $ | 108,484 | ||||
Operating income | ||||||||||||
Direct | $ | 4,587 | $ | 3,976 | $ | 8,778 | $ | 6,144 | ||||
Retail | 1,399 | 1,779 | 2,549 | 2,365 | ||||||||
Total operating income | 5,986 | 5,755 | 11,327 | 8,509 | ||||||||
Interest expense | 37 | 60 | 75 | 112 | ||||||||
Other income, net | 60 | 26 | 130 | 75 | ||||||||
Income before income taxes | $ | 6,009 | $ | 5,721 | $ | 11,382 | $ | 8,472 | ||||
Investor Contacts:Donni Case (310) 622-8224Paige Hart (310) 622-8244Financial Profiles, Inc. Duluth@finprofiles.com