20200802 Earnings 2Q 8K





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 8K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





 

 

 

 

 

 

Date of report (Date of earliest event reported):  September 3, 2020

 

DULUTH HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Wisconsin

001-37641

39-1564801

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

 

 

 

201 East Front Street

Mount Horeb, Wisconsin 53572

(Address of principal executive offices, including zip code)

 

(608) 424-1544

(Registrant’s telephone number, including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):





 

 

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Securities registered pursuant to Section 129b) of the Act:





 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class B Common Stock, No Par Value

DLTH

NASDAQ Global Select Market



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).



Emerging growth company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


 



Item 2.02 Results of Operations and Financial Condition.



The following information, including Exhibit 99.1 hereto, referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.



On September 3, 2020, Duluth Holdings Inc. (the “Company” or “Duluth Trading”) issued a press release (the “Earnings Press Release”) discussing, among other things, its financial results for its fiscal second quarter ended August 2, 2020. A copy of the Earnings Press Release is furnished as Exhibit 99.1 to this report.



Forward Looking Information



Certain matters discussed in this Current Report on Form 8-K and other oral and written statements by representatives of the Company including, but not limited to, the Company’s ability to meet its fiscal 2020 expectations (including its ability to increase net sales, adjusted EBITDA, and diluted EPS) and its ability to execute on its growth strategies, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  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 result or 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 SEC on March 20, 2020 and Part II, Item 1A “Rick Factors” in the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 5, 2020, and other factors as may be periodically described in Duluth Trading’s subsequent filings with the SEC.  These risks and uncertainties include, but are not limited to, the following: our ability to maintain and enhance a strong brand image; our ability to successfully open new stores; effectively adapting to new challenges associated with our expansion into new geographic markets; generating adequate cash from our existing stores to support our growth; the inability to maintain the performance of a maturing store portfolio; the impact of changes in corporate tax regulations; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; our ability to attract and retain customers in the various retail venues and locations in which our stores are located; competing effectively in an environment of intense competition; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; and other factors that may be disclosed in our SEC filings or otherwise. Forward-looking statements speak only as of the date the statements are made. Duluth Trading assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws. 




 



Item 9.01 Financial Statements and Exhibits.



 (d)  Exhibits.

The following exhibits are being furnished with this Current Report on Form 8-K.



 

 

 

 

 

 

 

 

 

Exhibit No.

 

Description

 

99.1

 

Earnings Press Release, dated September 3, 2020




 



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.







 

 

 

 

 

 

 

DULUTH HOLDINGS INC.

Date:  September 3, 2020

 

 

 

 

 

 

By:

/s/ David Loretta

 

 

Name: David Loretta

 

 

Title: Senior Vice President and Chief Financial Officer








 



EXHIBIT INDEX





 

Exhibit No.

Description

99.1

Earnings Press Release, dated September 3, 2020




20200802 Earnings Release 2Q F20

Exhibit 99.1





Picture 2





Duluth Holdings Inc. Announces  Second Quarter Fiscal 2020 Financial Results



MOUNT HOREB, Wis., September 3, 2020  Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ: DLTH), a lifestyle brand of men’s and women’s casual wear, workwear and accessories, today announced its financial results for the fiscal second quarter ended August 2, 2020.



Highlights for the Second Quarter Ended August 2, 2020



·

Net sales increased 12.6% to $137.4 million compared to $122.0 million in the prior-year second quarter

·

Direct-to-consumer net sales increased 66.9% and retail store net sales decreased 40.4% as stores re-opened throughout the first half of the quarter

·

Gross margin decreased to 52.8% compared to 53.1% in the prior-year second quarter

·

Operating income increased to $9.8 million compared to operating income of $3.7 million in the prior-year second quarter

·

Net income increased to  $5.9 million, or $0.18 per diluted share, compared to net income of $1.9 million, or $0.06 per diluted share, in the prior-year second quarter.

·

Adjusted EBITDA1 increased 75.3% to $16.8 million compared to $9.6 million in the prior-year second quarter 

·

As of June 15, 2020, we have re-opened all of our 62 retail stores in some capacity

1See Reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.



Management Commentary



“The real success story of the second quarter is the strength of the Duluth Trading brand and our ecommerce channel. Net sales grew 13% to $137 million driven by a 67% growth in direct sales year-over-year and more than doubled the first quarter’s strong direct sales growth rate,” said Steve Schlecht, Executive Chairman and CEO of Duluth Trading.



“Our solid second quarter results can be attributed to several factors. First, our spring and summer product assortments had widespread appeal to both men and women whether staying at home or venturing outdoors. Second, the technology and infrastructure investments that we made well before the pandemic were critical in meeting the sudden shift in consumer shopping trends. Our enhanced website and mobile capabilities allowed us to easily accommodate the surge in demand. Third, our shift to more digital marketing versus traditional media spend generated a 130% lift in new buyer growth in our direct channel. Finally, the omnichannel model continued to validate our commitment even in the face of lower store traffic. Our thesis that having a store in a market builds overall brand awareness once again proved out in the second quarter. Direct sales growth in store markets outpaced that of non-store markets by 21 percentage points.



1

 


 

“As we move into the fall and holiday seasons, we are doing everything in our control to keep the momentum going. I am confident that our team has the talent, agility and conviction to meet the challenges ahead,” concluded Schlecht.

 

Operating Results for the Second Quarter Ended August 2, 2020

Net sales increased 12.6%, to $137.4 million, compared to $122.0 million in the same period a year ago. The increase was attributed to a 66.9%  increase in direct-to-consumer net sales, partially offset by a 40.4%  decrease in retail store net sales. The increase in the direct-to-consumer net sales was driven by a shift of existing customers to online, as well as new buyer growth, particularly within our women’s products. Total new buyer growth increased 54.6% compared to the same period a year ago. The decrease in retail store net sales was due to the temporary closure of all stores due to the COVID-19 pandemic. Retail store re-openings ranged from the first week in May through the third week in June.

Net sales in non-store markets increased $17.3 million, or 58.6% primarily due to an increase in digital advertising to promote Mother’s Day, Father’s Day and online warehouse clearance events. Net sales in store markets decreased $1.6 million, or 1.8%, due to temporary store closures, partially mitigated by a 79.8% increase in direct-to-consumer sales in store markets. We believe the difference in the increase in website and catalog sales between store and non-store markets continues to demonstrate the importance of our retail stores in building brand awareness and expanding our loyal customer base. 

Men’s business net sales increased 15.3% driven by growth in men’s underwear, Alaskan Hardgear and apparel newness. Women’s business net sales increased 9.6% driven by the summer solved collection, comfortable basics and plus line apparel.

Gross profit increased 11.8%, to $72.5 million, or 52.8% of net sales, compared to $64.8 million, or 53.1% of net sales, in the corresponding prior-year period. The decrease in gross margin rate was primarily driven by promotional, clearance and sitewide sales events to continue moving inventory during the period of slower store traffic and uncertainty in customer demand. The decrease was partially offset by reduced store delivery costs from lower store sales volumes as well as favorable retail physical inventory count results as compared to the same period a year ago. 

Selling, general and administrative expenses increased 2.6% to $62.7 million, compared to $61.1 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses decreased to 45.6%, compared to 50.1% in the corresponding prior-year period. The positive leverage was primarily due to shifting to a more efficient digital marketing approach as customer purchasing patterns migrated to online. 

The increase in selling, general and administrative expense was due to increased shipping costs to support website sales, higher retail overhead costs driven by new store growth and increased depreciation expense associated with investments in technology, partially offset by reduced catalog spend and national TV advertising.



Balance Sheet and Liquidity



The Company ended the quarter with a cash balance of $19.0 million, an inventory balance of $167.6 million, net working capital of $117.7 million, $49.5 million outstanding on its $70.5 million term loan, and  $30.0 million outstanding on its $80.0 million revolving line of credit.



2

 


 

Fiscal 2020 Outlook



Given the unpredictability of the effects of the COVID-19 pandemic on, among other things, consumer behavior, store traffic, store operations, production capabilities, timing of deliveries, our people, economic activity and the market generally in the coming weeks and months, the Company is unable to provide specific earnings guidance at this time. 



In response to expected impacts to sales plans, the Company has reduced its planned capital spend levels from the beginning of the fiscal year by 50% to approximately $15 million primarily by decreasing fiscal 2020 new store openings to four and deferring certain technology and infrastructure projects, as well as continuing to focus on managing expense, extending payment terms and adjusting inventory receipt plans.



The following table recaps the Company’s fiscal 2020 stores opened as well as signed new store leases and the anticipated opening timeframes, which reflects the Company’s plan to reduce fiscal 2020 store openings to four.







 

 

 

 



 

 

 

Gross

Location

 

Timing

 

Square Footage

Short Pump, VA

 

Opened March 5, 2020

 

16,828

Springfield, OR

 

Opened August 14, 2020

 

20,388

Orland Park, IL

 

Opened August 20, 2020

 

10,000

Florence, KY

 

Q3 Fiscal 2020

 

11,441

Cherry Hill, NJ

 

Fiscal 2021

 

11,441



Conference Call Information

A conference call and audio webcast with analysts and investors will be held on Thursday,  September 3, 2020 at 9:30 am Eastern Time, to discuss the results and answer questions.

·

Live conference call: 844-875-6915 (domestic) or 412-317-6711 (international)

·

Conference call replay available through September  17, 2020: 877-344-7529 (domestic) or 412-317-0088 (international)

·

Replay access code: 10147470

·

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 http://dpregister.com/10147470 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 growing lifestyle brand for the Modern, Self-Reliant American. Based in Mount Horeb, Wisconsin, we offer high quality, solution-based casual wear, workwear and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience. Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and our products are sold exclusively through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. Visit our website at www.duluthtrading.com.



3

 


 

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 Loss to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net loss to EBITDA and EBITDA to Adjusted EBITDA for the three and six months ended August 2, 2020, versus the three and six months ended August 4, 2019.  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.

4

 


 

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, and statements under the heading “Fiscal 2020 Outlook.” 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 I, Item 1A Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2020 and Part II, Item 1A “Risk Factors” in the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 5, 2020, and other factors as may be periodically described in Duluth Trading’s subsequent filings with the SEC.  These risks and uncertainties include, but are not limited to, the following: adverse changes in the economy or business conditions, including the adverse effects of the COVID-19 pandemic; prolonged effects of the COVID-19 pandemic on store traffic and disruptions to our distribution network, supply chains and operations; our ability to maintain and enhance a strong brand image; our ability to successfully open new stores; effectively adapting to new challenges associated with our expansion into new geographic markets; generating adequate cash from our existing stores to support our growth; the inability to maintain the performance of a maturing store portfolio; the impact of changes in corporate tax regulations; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; our ability to attract and retain customers in the various retail venues and locations in which our stores are located; competing effectively in an environment of intense competition; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; and other factors that may be disclosed in our SEC filings or otherwise. Forward-looking statements speak only as of the date the statements are made. Duluth Trading assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws.



Investor Contacts:

Donni Case (310) 622-8224

Margaret Boyce (310) 622-8247

Financial Profiles, Inc.

Duluth@finprofiles.com



# # #

(Tables Follow)





5

 


 



DULUTH HOLDINGS INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)







 

 

 

 

 

 



 

August 2, 2020

 

February 2, 2020



 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,005 

 

$

2,189 

Receivables

 

 

2,095 

 

 

1,470 

Income taxes receivable

 

 

3,780 

 

 

Inventory, net

 

 

167,584 

 

 

147,849 

Prepaid expenses & other current assets

 

 

9,075 

 

 

9,503 

Prepaid catalog costs

 

 

254 

 

 

1,181 

Total current assets

 

 

201,793 

 

 

162,192 

Property and equipment, net

 

 

136,448 

 

 

137,071 

Operating lease right-of-use assets

 

 

114,211 

 

 

120,431 

Finance lease right-of-use assets, net

 

 

45,920 

 

 

46,677 

Restricted cash

 

 

163 

 

 

51 

Available-for-sale security

 

 

6,004 

 

 

6,432 

Other assets, net

 

 

1,644 

 

 

1,196 

Total assets

 

$

506,183 

 

$

474,050 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

40,141 

 

$

33,053 

Accrued expenses and other current liabilities

 

 

28,816 

 

 

29,464 

Income taxes payable

 

 

 

 

3,427 

Current portion of operating lease liabilities

 

 

10,411 

 

 

10,674 

Current portion of finance lease liabilities

 

 

1,664 

 

 

1,600 

Current portion of Duluth long-term debt

 

 

2,500 

 

 

1,000 

Current maturities of TRI long-term debt1

 

 

589 

 

 

557 

Total current liabilities

 

 

84,121 

 

 

79,775 

Operating lease liabilities, less current maturities

 

 

101,506 

 

 

106,120 

Finance lease liabilities, less current maturities

 

 

36,934 

 

 

37,434 

Duluth long-term debt, less current maturities

 

 

77,000 

 

 

38,332 

TRI long-term debt, less current maturities1

 

 

27,512 

 

 

27,778 

Deferred tax liabilities

 

 

11,710 

 

 

8,505 

Total liabilities

 

 

338,783 

 

 

297,944 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Treasury stock

 

 

(581)

 

 

(407)

Capital stock

 

 

91,921 

 

 

90,902 

Retained earnings

 

 

78,395 

 

 

87,589 

Accumulated other comprehensive income, net

 

 

(82)

 

 

188 

Total shareholders' equity of Duluth Holdings Inc.

 

 

169,653 

 

 

178,272 

Noncontrolling interest

 

 

(2,253)

 

 

(2,166)

Total shareholders' equity

 

 

167,400 

 

 

176,106 

Total liabilities and shareholders' equity

 

$

506,183 

 

$

474,050 

1 Represents debt of the variable interest entity, TRI Holdings, LLC, that is consolidated in accordance with ASC 810, Consolidation.  Duluth Trading Company is not the guarantor nor the obligor of this debt.

6

 


 

DULUTH HOLDING INC.

Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands, except per share figures)







 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

August 2, 2020

 

August 4, 2019

 

August 2, 2020

 

August 4, 2019

Net sales

 

$

137,375 

 

$

121,963 

 

$

247,292 

 

$

236,207 

Cost of goods sold (excluding depreciation and amortization)

 

 

64,903 

 

 

57,159 

 

 

122,488 

 

 

110,485 

Gross profit

 

 

72,472 

 

 

64,804 

 

 

124,804 

 

 

125,722 

Selling, general and administrative expenses

 

 

62,680 

 

 

61,069 

 

 

133,986 

 

 

132,091 

Operating income (loss)

 

 

9,792 

 

 

3,735 

 

 

(9,182)

 

 

(6,369)

Interest expense

 

 

1,778 

 

 

1,203 

 

 

3,128 

 

 

1,631 

Other (loss) income, net

 

 

(250)

 

 

(8)

 

 

(191)

 

 

196 

Income (loss) before income taxes

 

 

7,764 

 

 

2,524 

 

 

(12,501)

 

 

(7,804)

Income tax expense (benefit)

 

 

1,866 

 

 

678 

 

 

(3,220)

 

 

(2,005)

Net income (loss)

 

 

5,898 

 

 

1,846 

 

 

(9,281)

 

 

(5,799)

Less: Net loss attributable to noncontrolling interest

 

 

(43)

 

 

(90)

 

 

(87)

 

 

(163)

Net income (loss) attributable to controlling interest

 

$

5,941 

 

$

1,936 

 

$

(9,194)

 

$

(5,636)

Basic earnings (loss) per share (Class A and Class B):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

 

32,445 

 

 

32,288 

 

 

32,408 

 

 

32,253 

Net income (loss) per share attributable to controlling interest

 

$

0.18 

 

$

0.06 

 

$

(0.28)

 

$

(0.17)

Diluted earnings (loss) per share (Class A and Class B):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares and equivalents outstanding

 

 

32,445 

 

 

32,399 

 

 

32,408 

 

 

32,253 

Net income (loss) per share attributable to controlling interest

 

$

0.18 

 

$

0.06 

 

$

(0.28)

 

$

(0.17)

7

 


 

DULUTH HOLDINGS INC.

Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)







 

 

 

 

 

 



 

Six Months Ended



 

August 2, 2020

 

August 4, 2019

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(9,281)

 

$

(5,799)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

13,292 

 

 

9,405 

Stock based compensation

 

 

881 

 

 

1,029 

Deferred income taxes

 

 

3,300 

 

 

(694)

Loss on disposal of property and equipment

 

 

321 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

(625)

 

 

606 

Income taxes receivable

 

 

(3,780)

 

 

(2,331)

Inventory

 

 

(19,735)

 

 

(17,164)

Prepaid expense & other current assets

 

 

2,594 

 

 

1,508 

Deferred catalog costs

 

 

927 

 

 

1,935 

Trade accounts payable

 

 

3,360 

 

 

10,766 

Income taxes payable

 

 

(3,427)

 

 

(218)

Accrued expenses and deferred rent obligations

 

 

(1,556)

 

 

(7,088)

Noncash lease impacts

 

 

927 

 

 

Net cash used in operating activities

 

 

(12,802)

 

 

(8,045)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(8,842)

 

 

(13,773)

Capital contributions towards build-to-suit stores

 

 

(357)

 

 

(3,013)

Principal receipts from available-for-sale security

 

 

64 

 

 

56 

Change in other assets

 

 

 

 

17 

Net cash used in investing activities

 

 

(9,135)

 

 

(16,713)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from line of credit

 

 

52,484 

 

 

104,871 

Payments on line of credit

 

 

(41,816)

 

 

(76,413)

Proceeds from delayed draw term loan

 

 

30,000 

 

 

Payments on delayed draw term loan

 

 

(500)

 

 

Payments on TRI long term debt

 

 

(234)

 

 

(240)

Payments on finance lease obligations

 

 

(793)

 

 

(273)

Shares withheld for tax payments on vested restricted shares

 

 

(174)

 

 

(313)

Other

 

 

(102)

 

 

197 

Net cash provided by financing activities

 

 

38,865 

 

 

27,829 

Increase in cash, cash equivalents and restricted cash

 

 

16,928 

 

 

3,071 

Cash, cash equivalents and restricted cash at beginning of period

 

 

2,240 

 

 

3,085 

Cash, cash equivalents and restricted cash at end of period

 

$

19,168 

 

$

6,156 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Interest paid

 

$

3,151 

 

$

1,712 

Income taxes paid

 

$

40 

 

$

562 

Supplemental disclosure of non-cash information:

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

2,451 

 

$

509 

8

 


 

DULUTH HOLDINGS INC.

Reconciliation of Net Income (Loss) to EBITDA and EBITDA to Adjusted EBITDA

(Unaudited)

(Amounts in thousands)













 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

August 2, 2020

 

August 4, 2019

 

August 2, 2020

 

August 4, 2019

Net income (loss)

 

$

5,898 

 

$

1,846 

 

$

(9,281)

 

$

(5,799)

Depreciation and amortization

 

 

6,603 

 

 

5,013 

 

 

13,292 

 

 

9,405 

Interest expense

 

 

1,778 

 

 

1,203 

 

 

3,128 

 

 

1,631 

Amortization of build-to-suit operating leases
capital contribution

 

 

198 

 

 

265 

 

 

397 

 

 

479 

Income tax expense (benefit)

 

 

1,866 

 

 

678 

 

 

(3,220)

 

 

(2,005)

EBITDA

 

$

16,343 

 

$

9,005 

 

$

4,316 

 

$

3,711 

Stock based compensation

 

 

418 

 

 

555 

 

 

881 

 

 

1,029 

Adjusted EBITDA

 

$

16,761 

 

$

9,560 

 

$

5,197 

 

$

4,740 



9