News Release
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Strong financial condition with
Updates Fiscal 2022 outlook
Highlights for the Third Quarter Ended
- Net sales increase 1.3% to
$147.1 million compared to$145.3 million in the prior year third quarter - AKHG sub-brand registers 44% year-over-year growth led by Women’s
- Total company Women’s sales increase 10%
- Inventories well managed; strategically positioned in core year-round goods; down 4% compared to Q3 2020
- Adjusted EBITDA1 of
$1.7 million
1See Reconciliation of net (loss) income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.
Management Commentary
President and CEO,
Sato concluded, “During the third quarter, we continued the introduction of our AKHG outdoor recreational assortment for Women with great success in new Fall and Winter seasonal items. Our Women’s business overall increased 10% and represented 32% of total third quarter company sales. We are excited to have reconfigured 20 stores with an expansion of our Women’s footprint and the investments we’ve made in product innovation and great brand marketing to build our Women’s collections are paying off by cementing
Operating Results for the Third Quarter Ended
Net sales increased 1.3% to
Gross profit decreased to
Selling, general and administrative expenses increased 7.0% to
The increase in selling, general and administrative expense was primarily due to increased digital advertising to drive brand awareness and store traffic, as well as increased depreciation from continued capital investments.
The effective tax rate related to controlling interest was 25% in both the current and prior year periods.
Balance Sheet and Liquidity
The Company ended the quarter with a cash balance of
Updated Fiscal 2022 Outlook
The Company’s updated fiscal 2022 outlook is as follows:
- Net sales in the range of
$650 million to$680 million - Adjusted EBITDA in the range of
$42 million to$49 million 1 - EPS in the range of
$0.05 to$0.20 per diluted share - Capital expenditures, inclusive of software hosting implementation costs, of approximately
$35 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
December 8, 2022 : 877-344-7529 (domestic) or 412-317-0088 (international) - Replay access code: 2048229
- 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/2048229 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). See attached Table “Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the three and nine months 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.
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 adjusted results 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 “Updated Fiscal 2022 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 | $ | 9,407 | $ | 77,051 | $ | 19,753 | ||||||
| Receivables | 6,466 | 5,455 | 5,133 | |||||||||
| Income tax receivable | 1,452 | — | 605 | |||||||||
| Inventory, net | 204,717 | 122,672 | 165,078 | |||||||||
| Prepaid expenses & other current assets | 17,964 | 17,333 | 14,787 | |||||||||
| Prepaid catalog costs | 11 | 10 | 635 | |||||||||
| Total current assets | 240,017 | 222,521 | 205,991 | |||||||||
| Property and equipment, net | 112,800 | 110,078 | 114,579 | |||||||||
| Operating lease right-of-use assets | 135,164 | 120,911 | 124,164 | |||||||||
| Finance lease right-of-use assets, net | 47,938 | 50,133 | 50,866 | |||||||||
| Available-for-sale security | 5,285 | 6,554 | 6,598 | |||||||||
| Other assets, net | 6,446 | 5,353 | 5,382 | |||||||||
| Total assets | $ | 547,650 | $ | 515,550 | $ | 507,580 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Trade accounts payable | $ | 77,842 | $ | 45,402 | $ | 59,157 | ||||||
| Accrued expenses and other current liabilities | 34,795 | 47,504 | 41,832 | |||||||||
| Income taxes payable | — | 6,814 | — | |||||||||
| Current portion of operating lease liabilities | 15,095 | 12,882 | 12,362 | |||||||||
| Current portion of finance lease liabilities | 2,802 | 2,701 | 2,679 | |||||||||
| Duluth line of credit | 10,000 | — | — | |||||||||
| Current maturities of TRI long-term debt1 | 749 | 693 | 675 | |||||||||
| Total current liabilities | 141,283 | 115,996 | 116,705 | |||||||||
| Operating lease liabilities, less current maturities | 120,908 | 107,094 | 110,370 | |||||||||
| Finance lease liabilities, less current maturities | 38,151 | 40,267 | 40,954 | |||||||||
| TRI long-term debt, less current maturities1 | 26,099 | 26,608 | 26,773 | |||||||||
| Deferred tax liabilities | 2,572 | 2,867 | 8,092 | |||||||||
| Total liabilities | 329,013 | 292,832 | 302,894 | |||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders' equity: | ||||||||||||
| (1,459 | ) | (1,002 | ) | (998 | ) | |||||||
| Capital stock | 97,977 | 95,515 | 94,815 | |||||||||
| Retained earnings | 125,725 | 130,868 | 113,509 | |||||||||
| Accumulated other comprehensive income, net | (372 | ) | 489 | 494 | ||||||||
| Total shareholders' equity of |
221,871 | 225,870 | 207,820 | |||||||||
| Noncontrolling interest | (3,234 | ) | (3,152 | ) | (3,134 | ) | ||||||
| Total shareholders' equity | 218,637 | 222,718 | 204,686 | |||||||||
| Total liabilities and shareholders' equity | $ | 547,650 | $ | 515,550 | $ | 507,580 | ||||||
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 | Nine Months Ended | |||||||||||||||
| Net sales | $ | 147,126 | $ | 145,277 | $ | 411,541 | $ | 427,823 | ||||||||
| Cost of goods sold (excluding depreciation and amortization) | 70,205 | 61,627 | 191,949 | 196,204 | ||||||||||||
| Gross profit | 76,921 | 83,650 | 219,592 | 231,619 | ||||||||||||
| Selling, general and administrative expenses | 84,311 | 78,792 | 224,044 | 211,779 | ||||||||||||
| Operating (loss) income | (7,390 | ) | 4,858 | (4,452 | ) | 19,840 | ||||||||||
| Interest expense | 968 | 900 | 2,723 | 3,390 | ||||||||||||
| Other income (loss), net | 56 | (265 | ) | 180 | (193 | ) | ||||||||||
| (Loss) income before income taxes | (8,302 | ) | 3,693 | (6,995 | ) | 16,257 | ||||||||||
| Income tax (benefit) expense | (2,059 | ) | 930 | (1,770 | ) | 4,048 | ||||||||||
| Net (loss) income | (6,243 | ) | 2,763 | (5,225 | ) | 12,209 | ||||||||||
| Less: Net loss attributable to noncontrolling interest | (26 | ) | (43 | ) | (82 | ) | (134 | ) | ||||||||
| Net (loss) income attributable to controlling interest | $ | (6,217 | ) | $ | 2,806 | $ | (5,143 | ) | $ | 12,343 | ||||||
| Basic earnings per share (Class A and Class B): | ||||||||||||||||
| Weighted average shares of common stock outstanding | 32,792 | 32,649 | 32,759 | 32,605 | ||||||||||||
| Net (loss) income per share attributable to controlling interest | $ | (0.19 | ) | $ | 0.09 | $ | (0.16 | ) | $ | 0.38 | ||||||
| Diluted earnings per share (Class A and Class B): | ||||||||||||||||
| Weighted average shares and equivalents outstanding | 32,792 | 32,761 | 32,759 | 32,825 | ||||||||||||
| Net (loss) income per share attributable to controlling interest | $ | (0.19 | ) | $ | 0.09 | $ | (0.16 | ) | $ | 0.38 | ||||||
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
| Nine Months Ended | ||||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | (5,225 | ) | $ | 12,209 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 22,946 | 21,822 | ||||||
| Stock based compensation | 2,000 | 1,612 | ||||||
| Deferred income taxes | (8 | ) | (257 | ) | ||||
| Loss on disposal of property and equipment | 40 | 404 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (1,011 | ) | (2,863 | ) | ||||
| Income taxes receivable | (1,452 | ) | (605 | ) | ||||
| Inventory | (82,045 | ) | (16,026 | ) | ||||
| Prepaid expense & other current assets | (1,107 | ) | (1,571 | ) | ||||
| Software hosting implementation costs, net | (318 | ) | (2,939 | ) | ||||
| Deferred catalog costs | (1 | ) | 379 | |||||
| Trade accounts payable | 34,719 | 24,944 | ||||||
| Income taxes payable | (6,814 | ) | (7,579 | ) | ||||
| Accrued expenses and deferred rent obligations | (13,377 | ) | 4,117 | |||||
| Other assets | (436 | ) | (918 | ) | ||||
| Noncash lease impacts | 1,081 | 29 | ||||||
| Net cash (used in) provided by operating activities | (51,008 | ) | 32,758 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (24,245 | ) | (9,108 | ) | ||||
| Principal receipts from available-for-sale security | 120 | 108 | ||||||
| Proceeds from disposals | 8 | 55 | ||||||
| Net cash used in investing activities | (24,117 | ) | (8,945 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | 10,000 | 5,000 | ||||||
| Payments on line of credit | — | (5,000 | ) | |||||
| Payments on delayed draw term loan | — | (48,250 | ) | |||||
| Payments on TRI long term debt | (509 | ) | (457 | ) | ||||
| Payments on finance lease obligations | (2,015 | ) | (1,894 | ) | ||||
| Payments of tax withholding on vested restricted shares | (457 | ) | (370 | ) | ||||
| Other | 462 | 327 | ||||||
| Net cash provided by (used in) financing activities | 7,481 | (50,644 | ) | |||||
| Decrease in cash and cash equivalents | (67,644 | ) | (26,831 | ) | ||||
| Cash and cash equivalents at beginning of period | 77,051 | 47,221 | ||||||
| Cash and cash equivalents at end of period | $ | 9,407 | $ | 20,390 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 2,723 | $ | 3,328 | ||||
| Income taxes paid | $ | 6,626 | $ | 12,585 | ||||
| Supplemental disclosure of non-cash information: | ||||||||
| Unpaid liability to acquire property and equipment | $ | 1,540 | $ | 2,518 | ||||
Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA
For the
(Unaudited)
(Amounts in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||
| (in thousands) | ||||||||||||||
| Net (loss) income | $ | (6,243 | ) | $ | 2,763 | $ | (5,225 | ) | $ | 12,209 | ||||
| Depreciation and amortization | 7,572 | 7,306 | 22,946 | 21,822 | ||||||||||
| Amortization of internal-use software hosting | ||||||||||||||
| subscription implementation costs | 783 | 478 | 2,203 | 1,252 | ||||||||||
| Interest expense | 968 | 900 | 2,723 | 3,390 | ||||||||||
| Income tax (benefit) expense | (2,059 | ) | 930 | (1,770 | ) | 4,048 | ||||||||
| EBITDA | $ | 1,021 | $ | 12,377 | $ | 20,877 | $ | 42,721 | ||||||
| Stock based compensation | 726 | 605 | 2,000 | 1,612 | ||||||||||
| Adjusted EBITDA | $ | 1,747 | $ | 12,982 | $ | 22,877 | $ | 44,333 | ||||||
Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA
For the Fiscal Year Ending
(Unaudited)
(Amounts in thousands)
| Low | High | |||||
| Forecasted | ||||||
| Net income | $ | 1,500 | $ | 6,700 | ||
| Depreciation and amortization | 30,000 | 30,200 | ||||
| Amortization of internal-use software hosting subscription implementation costs | 3,100 | 3,100 | ||||
| Interest expense | 3,900 | 3,800 | ||||
| Income tax expense | 500 | 2,200 | ||||
| EBITDA | $ | 39,000 | $ | 46,000 | ||
| Stock based compensation | 3,000 | 3,000 | ||||
| Adjusted EBITDA | $ | 42,000 | $ | 49,000 | ||
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/46b5b8eb-a951-4894-8fe8-25ee06d98869
Investor Contacts:Tom Filandro ICR, Inc. (646) 277-1200 DuluthIR@icrinc.com
Women’s Store Expansion
Women’s Store Expansion
Source: Duluth Trading Company