Dover Saddlery Announces Fourth Quarter and Full Year 2014 Financial Results

LITTLETON, MA--(Marketwired - Mar 25, 2015) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading omni-channel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2014.

Fourth quarter results

Total revenues for the fourth quarter of 2014 increased 9.3% to $33.1 million over the same period in the prior year. Revenues from the retail channel increased 14.8% to $15.0 million, and revenues from the direct channel increased 5.0% to $18.0 million. Same-store sales increased 4.9% in the fourth quarter of 2014.

Net income for the quarter was $1,302,000, or $0.23 per diluted share, compared to $1,331,000 or $0.23 achieved in the corresponding quarter of the prior year. "In November, we opened a very large Dover Saddlery store in an excellent location in Wellington, Florida," said Stephen L. Day, president and chief executive officer of Dover Saddlery. "Wellington has become the global center for equestrian activity during the winter months and as expected this store is performing extremely well."

Full Year Results

Total revenues for the fiscal year 2014 increased 8.5% to $101.8 million, from $93.8 million achieved during 2013.

Retail store revenues increased 16.0% to $50.4 million. This increase was due to new store openings and same-store sales increasing 4.3%. The company opened three Dover Saddlery retail stores during 2014, in Cincinnati, OH, Houston, TX and Wellington, FL, bringing the total number of retail stores to twenty-five. Revenues from the direct channel increased 2.0% to $51.4 million.

Net income for fiscal 2014 was $1,231,000, or $0.21 per diluted share, compared to $1,591,000, or $0.29 per diluted share, achieved in the fiscal year 2013. Adjusted EBITDA for the fiscal year 2014 was $4.9 million, compared to $5.0 million achieved in 2013. A reconciliation of the net income calculated in accordance with GAAP and the non-GAAP Adjusted EBITDA measure is provided in the table accompanying this press release. 

Business Outlook

Dover Saddlery is planning to open five to seven retail stores in 2015. Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on other business prospects.

Strategic Initiatives

Since the Company's announcement in September 2013 of a strategic initiatives review, its board of directors and senior management have conducted extensive evaluations of the Company's existing and projected risks, opportunities and strategic alternatives. These deliberations have resulted in a current round of negotiations for a transaction in which all of Dover's shares would be acquired. Dover cautioned that no definitive agreement has been signed and the transaction terms remain under discussion.

There is no assurance that a definitive agreement will be reached; that the current transaction focus or the board's exploration of other strategic alternatives will result in any transaction being pursued, entered into or consummated; and there is no set timetable for the strategic review process. The Company does not intend to comment further regarding its evaluation of strategic alternatives until such time as the board has determined the outcome of the process or otherwise has deemed that disclosure is appropriate.

Today's Teleconference and Webcast
Dover Saddlery will be hosting a conference call at 4:30 P.M. ET today to discuss the fourth quarter and full year 2014 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at http://investor.shareholder.com/DOVR/. This webcast will be archived for a year.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements made about a potential transaction, the outcome of the strategic initiatives process, the Company's business outlook for fiscal 2015, the prospects for overall revenue growth, profitability, consumer sentiment and the opening of new stores. All statements other than statements of historical fact included in this press release regarding the company's strategies, plans, objectives, expectations, and future operating results are forward-looking statements. Although Dover believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. These forward-looking statements involve significant risks and uncertainties, including those discussed in this release and others that can be found in "Item 1A Risk Factors" of Dover Saddlery's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Dover Saddlery is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those Dover Saddlery projects.

(1) Includes twenty-four Dover-branded stores and one Smith Brothers store.

Non-GAAP Financial Measures and Information

From time to time, in addition to financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company provides financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP measures in its analysis of the Company's performance and ongoing operations. The Company believes that these non-GAAP operating measures supplement our GAAP financial information and provide useful information to investors for evaluating the Company's operating results and trends that may be affecting the Company's business, as they allow investors to more readily compare our operations to prior financial results and our future performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

When we use the term "Adjusted EBITDA," we are referring to net income minus interest income, investment income and other income plus interest expense, income taxes, non-cash stock-based compensation, depreciation, amortization and other investment loss. We present Adjusted EBITDA because we consider it an important measure of our performance, and the Company ties its executive and employee bonus pools directly to this measure. We also believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

The following table reconciles net income to Adjusted EBITDA (in thousands):