The Container Store Group, Inc. Announces First Quarter Fiscal 2016 Financial Results
Company Posts 4.4% Increase in Net Sales
Sees Positive Impact from TCS Closets® and SG&A Savings Initiatives
Launches its New Customer Financing Program
The Container Store Group, Inc. (NYSE: TCS) (the “Company”), today announced financial results for the first quarter of
fiscal 2016 ended July 2, 2016. In light of the Company’s previously announced fiscal year end change, all references to prior year
results are based on the recast 13 weeks ended July 4, 2015.
- Consolidated net sales were $177.4 million, up 4.4%. Net sales in The Container Store retail business
were $161.2 million, up 5.1%. Elfa International AB third-party net sales were $16.2 million, down 1.8%.
- Comparable store sales for the first quarter of fiscal 2016 were down 1.4% based on the new
comparable store sales reporting method, or down 0.2% based on the prior reporting method (see "Change in Comparable Store Sales
Reporting Method" section in this press release for detail on the new reporting method).
- Consolidated net loss per diluted share (EPS) was ($0.04) compared with ($0.12) in the first quarter
ended July 4, 2015. The ($0.04) is inclusive of an approximate $0.05 benefit from new employment arrangements entered into with
key executives during the quarter.
- The Company opened one new store in the first quarter of 2016 and plans to open an additional seven
locations (inclusive of one relocation) in the remainder of fiscal 2016, opening two stores in the second quarter and the
remaining five in the second half of fiscal 2016. The Company had 80 stores at the end of the first quarter of fiscal 2016, as
compared to 72 as of July 4, 2015.
- On July 12, 2016, the Company launched its previously announced Customer Financing Program through
Synchrony Financial.
Melissa Reiff, Chief Executive Officer, stated, “In our first fiscal quarter of 2016, we saw a benefit from the strategic
investments and ‘closet domination’ focused initiatives we implemented in fiscal year 2015. TCS Closets was again a key driver of
comparable store sales performance providing a 230 basis point lift. And, we improved our operating profitability, as we maintained
strong gross margins and delivered SG&A efficiencies.”
Reiff continued, “Looking ahead to the rest of the year, we remain committed to maximizing the targeted results of our fiscal
year 2016 SG&A savings program. While we are encouraged by the progress being made and resulting improvement in our bottom line
performance, we still have work to do on the top line. My primary focus in my new role, in collaboration with our leadership team,
is to drive consistent sales and profit growth, all with our continued commitment to The Container Store’s principled way of doing
business.”
First Quarter 2016 Results
For the first quarter ended July 2, 2016, on a consolidated basis:
- Net sales were $177.4 million, up 4.4% as compared to the first quarter ended July 4, 2015. Net sales
in The Container Store retail business were $161.2 million, up 5.1%, with the increase driven by new store sales, which more than
offset the comparable store sales decline of 1.4% (or a decline of 0.2% under the prior reporting method). Elfa third-party net
sales declined $0.3 million compared to the first quarter ended July 4, 2015, primarily due to lower sales in Russia, partially
offset by the positive impact of foreign currency translation during the quarter.
- Gross margin was 59.0%, an increase of 40 basis points compared to the first quarter ended July 4,
2015. The Container Store retail business gross margin declined 10 basis points to 58.6% as a growing mix of lower margin
products and services was partially offset by the impact of a stronger U.S. dollar. Elfa gross margin improved 330 basis points
primarily due to lower direct materials costs and production efficiencies. On a consolidated basis, gross margin increased 40
basis points, as the decline in The Container Store retail business gross margin was more than offset by the increase in the Elfa
gross margin.
- Selling, general and administrative expenses (“SG&A”) decreased by 2.1% to $92.3 million from
$94.3 million in the first quarter ended July 4, 2015. SG&A as a percentage of net sales decreased 350 basis points. This was
primarily due to the impact of amended and restated employment agreements entered into with key executives during the first
quarter of fiscal 2016, leading to the reversal of accrued deferred compensation associated with the original employment
agreements, net of costs incurred to execute the agreements, of $3.9 million, or 220 basis points. Additionally, the Company’s
SG&A savings program contributed, in part, to decreased spending on certain major initiatives and decreased 401(k) costs. The
Company also experienced lower healthcare costs during the quarter.
- Net interest expense decreased to $4.1 million from $4.2 million in the first quarter ended July 4,
2015.
- The effective tax rate was 33.3%, as compared to 36.8% in the first quarter ended July 4,
2015. The decrease in the effective tax rate is primarily due to a shift in the mix of domestic and foreign earnings.
- Net loss was $2.1 million, or ($0.04) per share, in the first quarter of fiscal 2016 compared to net
loss of $5.8 million, or ($0.12) per share in the first quarter ended July 4, 2015. The net loss of $2.1 million in the first
quarter of fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key
executives during the quarter, net of costs incurred related to management transition and income taxes, of approximately $2.2
million, or $0.05 per share.
- Adjusted EBITDA was $12.0 million in the first quarter of fiscal 2016 compared to $4.7 million in the
first quarter ended July 4, 2015 (see GAAP/Non-GAAP reconciliation table). The Adjusted EBITDA of $12.0 million in the first
quarter of fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key
executives during the quarter, net of costs incurred to execute the agreements, of $3.9 million.
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Balance sheet highlights:
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| (In thousands) |
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July 2, 2016 |
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July 4, 2015 |
| Cash |
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$8,189 |
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$8,397 |
| Total debt, net of deferred financing costs |
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$337,990 |
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$356,603 |
| Liquidity* |
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$78,598 |
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$63,602 |
| *Cash plus availability on revolving credit facilities |
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Change in Comparable Store Sales Reporting Method
In the first quarter of fiscal 2016, the Company changed its comparable store sales operating measure to reflect the point at
which merchandise and service orders are fulfilled and delivered to customers, excluding shipping and delivery. Prior to the first
quarter of fiscal 2016, the comparable store sales operating measure in a given period was based on merchandise and service orders
placed in that period, excluding shipping and delivery, which did not always reflect when the merchandise and services were
received by the customer and, therefore, recognized in the Company’s financial statements as net sales. This revision has no impact
on prior, or current, period reported net sales. The Company believes that changing the comparable store sales operating metric to
better align with net sales presented in the Company’s financial statements will assist investors in evaluating our financial
performance. See Recast Operating Data table for recast quarterly and full year fiscal 2015 comparable store sales on this revised
basis.
Change in Fiscal Year
As previously disclosed, the Company changed its fiscal year end from the Saturday closest to February 28 to the Saturday
closest to March 31 of each year. The fiscal year change was effective beginning with the Company’s current 2016 fiscal year, which
began on April 3, 2016 and will end on April 1, 2017. Recast historical unaudited quarterly and full year financial information for
fiscal 2015 is included in this press release, as well as posted on the Company’s website under the Investor Relations link. As
recast, the first quarter of fiscal 2015 would have ended on July 4, 2015; the second quarter of fiscal 2015 would have ended on
October 3, 2015; the third quarter of fiscal 2015 would have ended on January 2, 2016; and the fourth quarter and full fiscal year
2015 would have ended on April 2, 2016.
Outlook
The Company is maintaining its fiscal 2016 Outlook expecting consolidated net sales to be $830 to $845 million, based on its
planned store openings, and a comparable store sales range of -1.5% to +0.5%. Net income is still expected to be $0.20 to $0.30 per
diluted common share based on estimated diluted common shares outstanding of 49 million. This assumes a tax rate of approximately
39% for the full year.
Conference Call Information
A conference call to discuss first quarter fiscal 2016 financial results is scheduled for today, August 9, 2016, at 4:30 PM
Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 (international
callers please dial (201) 493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference
call will be available online at www.containerstore.com in the investor relations section of the website.
A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both
online and by dialing (877) 870-5176 (international replay number is (858) 384-5517). The pin number to access the telephone replay
is 13640929. The replay will be available through September 9, 2016 at 11:59 PM Eastern Time.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not relate to matters of historical fact should be considered
forward-looking statements, including expectations regarding driving consistent sales and profit growth, expectations for new store
openings and relocations, and statements regarding our anticipated financial performance.
These forward-looking statements are based on management’s current expectations. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, the following: our inability to successfully implement our planned
fiscal 2016 initiatives in the timeframe we expect or at all; our inability to open or relocate new stores in the timeframe and at
the locations we anticipate; overall decline in the health of the economy, consumer spending, and the housing market; our inability
to manage costs and risks relating to new store openings; our inability to source and market new products to meet consumer
preferences; our failure to achieve or maintain profitability; our dependence on a single distribution center for all of our
stores; effects of a security breach or cyber-attack of our website or information technology systems; our vulnerability to natural
disasters and other unexpected events; our reliance upon independent third party transportation providers; our inability to protect
our brand; our failure to successfully anticipate consumer preferences and demand; our inability to manage our growth; inability to
locate available retail store sites on terms acceptable to us; our inability to maintain sufficient levels of cash flow to meet
growth expectations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital
to finance the carrying costs of inventory to pay for capital expenditures and operating costs; fluctuations in currency exchange
rates; our inability to effectively manage our online sales; competition from other stores and internet based competition; our
inability to obtain merchandise on a timely basis at competitive prices as a result of changes in vendor relationships; vendors may
sell similar or identical products to our competitors; our reliance on key executive management, and the transition in our
executive leadership; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care
costs and labor costs; our dependence on foreign imports for our merchandise; violations of the U.S. Foreign Corrupt Practices Act
and similar worldwide anti bribery and anti-kickback laws; and our indebtedness may restrict our current and future operations.
These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission, or SEC, on May 10, 2016, and our other reports filed with the SEC could cause actual
results to differ materially from those indicated by the forward-looking statements made in this press release. Any such
forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such
forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our
views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to
the date of this press release.
About The Container Store
The Container Store (NYSE: TCS) is the nation’s leading retailer of storage and organization products and the only retailer
solely devoted to the storage and organization category of retailing. The company originated the concept of storage and
organization retailing when it opened its first store in 1978. Today, the retailer has 80 store locations nationwide that each
average 25,000 square feet. The Container Store has over 11,000 products to help customers save space and, ultimately, save them
time. As the pace of modern life accelerates and being organized is not a luxury anymore but a necessity, The Container Store is
devoted to making customers more productive, relaxed and happier by selling customized, complete solutions. Since its inception,
the retailer has nurtured an employee-first culture and couples its one-of-kind product collection with a high level of customer
service delivered by its highly trained organization experts. The company has been named to FORTUNE magazine’s 100 Best Companies
To Work For® — 17 years in a row. Visit www.containerstore.com for more information about store locations, the product collection and services offered.
To find out more about The Container Store’s unique culture, Foundation PrinciplesTM and devotion to Conscious
Capitalism®, visit the retailer’s blog at www.whatwestandfor.com.
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| The Container Store Group, Inc. |
| Consolidated statements of operations (unaudited) |
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(In thousands, except share and per share amounts)
|
Thirteen Weeks Ended |
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Five Weeks
Ended
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| |
July 2, 2016 |
|
July 4, 2015 |
|
April 2, 2016 |
| Net sales |
|
$177,448 |
|
$169,958 |
|
$69,218 |
| Cost of sales (excluding depreciation and amortization) |
|
72,753 |
|
70,447 |
|
29,023 |
| Gross profit |
|
104,695 |
|
99,511 |
|
40,195 |
| Selling, general, and administrative expenses (excluding depreciation and
amortization) |
|
92,313 |
|
94,284 |
|
34,504 |
| Stock-based compensation |
|
365 |
|
327 |
|
147 |
| Pre-opening costs |
|
1,096 |
|
1,640 |
|
191 |
| Depreciation and amortization |
|
9,347 |
|
8,231 |
|
3,009 |
| Other expenses |
|
549 |
|
-
|
|
102 |
| (Loss) gain on disposal of assets |
|
(3) |
|
10 |
|
-
|
| Gain (loss) from operations |
|
1,028 |
|
(4,981) |
|
2,242 |
| Interest expense, net |
|
4,110 |
|
4,173 |
|
1,550 |
| (Loss) income before taxes |
|
(3,082) |
|
(9,154) |
|
692 |
| (Benefit) provision for income taxes |
|
(1,025) |
|
(3,366) |
|
338 |
| Net (loss) income |
|
$(2,057) |
|
$(5,788) |
|
$354 |
| Basic and diluted net (loss) income per common share |
|
$(0.04) |
|
$(0.12) |
|
$0.01 |
| Weighted-average common shares - basic and diluted |
|
47,986,975 |
|
47,983,785 |
|
47,986,975 |
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The Container Store Group, Inc.
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Consolidated balance sheets (unaudited)
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| (In thousands, except share and per share amounts) |
|
|
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July 2, |
|
February 27, |
|
July 4, |
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|
|
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2016 |
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2016 |
|
2015 |
| Assets |
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| Current assets: |
|
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|
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| Cash |
|
|
|
|
|
|
$8,189 |
|
$13,609 |
|
$8,397 |
| Accounts receivable, net |
|
|
|
|
|
|
25,035 |
|
28,843 |
|
21,415 |
| Inventory |
|
|
|
|
|
|
104,144 |
|
86,435 |
|
109,246 |
| Prepaid expenses |
|
|
|
|
|
|
14,817 |
|
8,692 |
|
13,456 |
| Income taxes receivable |
|
|
|
|
|
|
770 |
|
157 |
|
1,186 |
| Deferred tax assets, net |
|
|
|
|
|
|
-
|
|
-
|
|
3,256 |
| Other current assets |
|
|
|
|
|
|
9,852 |
|
8,695 |
|
10,535 |
| Total current assets |
|
|
|
|
|
|
162,807 |
|
146,431 |
|
167,491 |
| Noncurrent assets: |
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment, net |
|
|
|
|
|
|
173,937 |
|
176,117 |
|
173,255 |
| Goodwill |
|
|
|
|
|
|
202,815 |
|
202,815 |
|
202,815 |
| Trade names |
|
|
|
|
|
|
228,699 |
|
228,368 |
|
229,749 |
| Deferred financing costs, net |
|
|
|
|
|
|
389 |
|
419 |
|
222 |
| Noncurrent deferred tax assets, net |
|
|
|
|
|
|
1,269 |
|
2,090 |
|
2,213 |
| Other assets |
|
|
|
|
|
|
1,826 |
|
1,879 |
|
1,808 |
| Total noncurrent assets |
|
|
|
|
|
|
608,935 |
|
611,688 |
|
610,062 |
| Total assets |
|
|
|
|
|
|
$771,742 |
|
$758,119 |
|
$777,553 |
|
|
|
|
|
|
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| Liabilities and shareholders’ equity |
|
|
|
|
|
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| Current liabilities: |
|
|
|
|
|
|
| Accounts payable |
|
$51,552 |
|
$40,274 |
|
$49,505 |
| Accrued liabilities |
|
62,220 |
|
69,635 |
|
55,262 |
| Revolving lines of credit |
|
5,982 |
|
721 |
|
10,379 |
| Current portion of long-term debt |
|
5,464 |
|
5,373 |
|
5,307 |
| Income taxes payable |
|
- |
|
- |
|
56 |
| Total current liabilities |
|
125,218 |
|
116,003 |
|
120,509 |
| Noncurrent liabilities: |
|
|
|
|
|
|
| Long-term debt, net of deferred financing costs |
|
326,544 |
|
316,135 |
|
340,917 |
| Noncurrent deferred tax liabilities, net |
|
79,922 |
|
80,720 |
|
80,293 |
| Deferred rent and other long-term liabilities |
|
33,532 |
|
38,193 |
|
37,781 |
| Total noncurrent liabilities |
|
439,998 |
|
435,048 |
|
458,991 |
| Total liabilities |
|
565,216 |
|
551,051 |
|
579,500 |
|
|
|
|
|
|
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| Shareholders’ equity: |
|
|
|
|
|
|
|
Common stock, $0.01 par value, 250,000,000 shares
authorized; 47,986,975 shares issued at July 2, 2016 and
February 27, 2016; 47,983,804 shares issued at July 4, 2015
|
|
480 |
|
480 |
|
480 |
| Additional paid-in capital |
|
857,381 |
|
856,879 |
|
855,775 |
| Accumulated other comprehensive loss |
|
(19,175) |
|
(19,835) |
|
(17,452) |
| Retained deficit |
|
(632,160) |
|
(630,456) |
|
(640,750) |
| Total shareholders’ equity |
|
206,526 |
|
207,068 |
|
198,053 |
| Total liabilities and shareholders’ equity |
|
$771,742 |
|
$758,119 |
|
$777,553 |
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| The Container Store Group, Inc. |
|
Consolidated statements of cash flows (unaudited)
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| |
|
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|
|
|
|
|
Five Weeks |
|
|
Thirteen Weeks Ended |
|
Ended |
| (In thousands) (unaudited) |
|
July 2, |
|
July 4, |
|
April 2, |
| |
2016 |
|
2015 |
|
2016 |
| Operating activities |
|
|
|
|
|
|
| Net (loss) income |
|
$(2,057) |
|
$(5,788) |
|
$354 |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
| Depreciation and amortization |
|
9,347 |
|
8,231 |
|
3,009 |
| Stock-based compensation |
|
365 |
|
327 |
|
147 |
| (Gain) loss on disposal of property and equipment |
|
(3) |
|
10 |
|
- |
| Deferred tax (benefit) expense |
|
(922) |
|
(3,424) |
|
958 |
| Noncash interest |
|
480 |
|
489 |
|
160 |
| Other |
|
(153) |
|
219 |
|
45 |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
| Accounts receivable |
|
(2,836) |
|
(760) |
|
6,958 |
| Inventory |
|
(19,283) |
|
(20,542) |
|
1,516 |
| Prepaid expenses and other assets |
|
244 |
|
260 |
|
(7,371) |
| Accounts payable and accrued liabilities |
|
18,497 |
|
6,197 |
|
(14,258) |
| Income taxes |
|
175 |
|
(1,422) |
|
(859) |
| Other noncurrent liabilities |
|
(4,523) |
|
(205) |
|
(199) |
| Net cash used in operating activities |
|
(669) |
|
(16,408) |
|
(9,540) |
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
|
| Additions to property and equipment |
|
(8,013) |
|
(12,199) |
|
(2,435) |
| Proceeds from sale of property and equipment |
|
7 |
|
191 |
|
1 |
| Net cash used in investing activities |
|
(8,006) |
|
(12,008) |
|
(2,434) |
|
|
|
|
|
|
|
| Financing activities |
|
|
|
|
|
|
| Borrowings on revolving lines of credit |
|
11,530 |
|
15,016 |
|
4,958 |
| Payments on revolving lines of credit |
|
(9,017) |
|
(11,890) |
|
(2,072) |
| Borrowings on long-term debt |
|
12,000 |
|
23,000 |
|
5,000 |
| Payments on long-term debt |
|
(6,355) |
|
(1,327) |
|
(944) |
| Proceeds from the exercise of stock options |
|
- |
|
1 |
|
- |
| Net cash provided by financing activities |
|
8,158 |
|
24,800 |
|
6,942 |
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash |
|
(103) |
|
494 |
|
232 |
| Net decrease in cash |
|
(620) |
|
(3,122) |
|
(4,800) |
| Cash at beginning of period |
|
8,809 |
|
11,519 |
|
13,609 |
| Cash at end of period |
|
$8,189 |
|
$8,397 |
|
$8,809 |
|
|
|
|
|
|
|
| Supplemental information for non-cash investing and financing activities: |
|
|
|
|
|
|
| Purchases of property and equipment (included in accounts payable) |
|
$751 |
|
$750 |
|
$1,114 |
| Capital lease obligation incurred |
|
$147 |
|
$237 |
|
$60 |
| |
|
|
|
|
|
|
|
|
|
|
|
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Note Regarding Non-GAAP Information
This press release includes financial measures that are not calculated in accordance with GAAP, including adjusted EBITDA. The
Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in a table
accompanying this release. These non-GAAP measures should not be considered as alternatives to net income (loss) as a measure of
financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in
accordance with GAAP and they should not be construed as an inference that the Company’s future results will be unaffected by
unusual or non-recurring items. These non-GAAP measures are key metrics used by management, the Company’s board of directors, and
Leonard Green and Partners, L.P., its controlling stockholder, to assess its financial performance. The Company presents these
non-GAAP measures because it believes they assist investors in comparing the Company’s performance across reporting periods on a
consistent basis by excluding items that the Company does not believe are indicative of its core operating performance and because
the Company believes it is useful for investors to see the measures that management uses to evaluate the Company. These non-GAAP
measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s
industry. In evaluating these non-GAAP measures, you should be aware that in the future the Company will incur expenses that are
the same as or similar to some of the adjustments in this presentation. The Company’s presentation of these non-GAAP measures
should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for
these limitations by relying on our GAAP results in addition to using non-GAAP measures supplementally. These non-GAAP measures are
not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is calculated
in accordance with its credit facilities and is one of the components for performance evaluation under its executive compensation
programs. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items, including certain non
cash and other items that the Company does not consider in its evaluation of ongoing operating performance from period to period as
discussed further below. The Company uses Adjusted EBITDA in connection with covenant compliance and executive performance
evaluations, and to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies, to make
budgeting decisions and to compare its performance against that of other peer companies using similar measures. The Company
believes it is useful for investors to see the measures that management uses to evaluate the Company, its executives and its
covenant compliance, as applicable. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested
parties to evaluate companies in the Company’s industry.
| |
|
The Container Store Group, Inc. Supplemental Information - Reconciliation of GAAP to Non-GAAP
Financial Measures
|
|
(In thousands, except share and per share amounts)
|
|
(unaudited)
|
| |
The table below reconciles the non-GAAP financial measure adjusted EBITDA with the most directly comparable GAAP financial
measure of GAAP net loss.
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
| |
|
|
|
July 2, 2016 |
|
July 4, 2015 |
| Net loss |
|
|
|
$(2,057) |
|
$(5,788) |
| Depreciation and amortization |
|
|
|
9,347 |
|
8,231 |
| Interest expense, net |
|
|
|
4,110 |
|
4,173 |
| Income tax benefit |
|
|
|
(1,025) |
|
(3,366) |
| EBITDA |
|
|
|
$10,375 |
|
$3,250 |
| Pre-opening costs (a) |
|
|
|
1,096 |
|
1,640 |
| Noncash rent (b) |
|
|
|
(418) |
|
(670) |
| Stock-based compensation (c) |
|
|
|
365 |
|
327 |
| Foreign exchange losses (gains) (d) |
|
|
|
42 |
|
176 |
| Other adjustments (e) |
|
|
|
572 |
|
14 |
| Adjusted EBITDA |
|
|
|
$12,032 |
|
$4,737 |
|
|
|
|
|
|
|
| (a) |
|
|
|
Non-capital expenditures associated with opening new stores and relocating stores,
including rent, marketing expenses, travel and relocation costs, and training costs. We adjust for these costs to facilitate
comparisons of our performance from period to period. |
|
|
|
|
|
| (b) |
|
|
|
Reflects the extent to which our annual GAAP rent expense has been above or below our
cash rent payment due to lease accounting adjustments. The adjustment varies depending on the average age of our lease
portfolio (weighted for size), as our GAAP rent expense on younger leases typically exceeds our cash cost, while our GAAP rent
expense on older leases is typically less than our cash cost. |
|
|
|
|
|
| (c) |
|
|
|
Non-cash charges related to stock-based compensation programs, which vary from period
to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period
to period. |
|
|
|
|
|
| (d) |
|
|
|
Realized foreign exchange transactional gains/losses our management does not consider
in our evaluation of our ongoing operations. |
|
|
|
|
|
| (e) |
|
|
|
Other adjustments include amounts our management does not consider in our evaluation
of our ongoing operations, including certain severance and other charges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Container Store Group, Inc. |
| Recast consolidated statements of operations (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Fifty-two |
|
|
Weeks
|
|
Weeks
|
|
Weeks
|
|
Weeks
|
|
Weeks
|
|
(In thousands, except share and per share amounts)
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
| |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
|
April 2, 2016 |
| Net sales |
|
$169,958 |
|
$204,412 |
|
$212,836 |
|
$209,881 |
|
$797,087 |
| Cost of sales (excluding depreciation and amortization) |
|
70,447 |
|
86,139 |
|
87,402 |
|
88,606 |
|
332,594 |
| Gross profit |
|
99,511 |
|
118,273 |
|
125,434 |
|
121,275 |
|
464,493 |
|
Selling, general, and administrative expenses
(excluding depreciation and amortization)
|
|
94,284 |
|
96,068 |
|
103,867 |
|
100,366 |
|
394,585 |
| Stock-based compensation |
|
327 |
|
373 |
|
488 |
|
387 |
|
1,575 |
| Pre-opening costs |
|
1,640 |
|
3,532 |
|
1,784 |
|
2,048 |
|
9,004 |
| Depreciation and amortization |
|
8,231 |
|
8,393 |
|
9,081 |
|
8,923 |
|
34,628 |
| Other expenses |
|
- |
|
- |
|
- |
|
102 |
|
102 |
| Loss (gain) on disposal of assets |
|
10 |
|
(3) |
|
58 |
|
(3) |
|
62 |
| (Loss) income from operations |
|
(4,981) |
|
9,910 |
|
10,156 |
|
9,452 |
|
24,537 |
| Interest expense, net |
|
4,173 |
|
4,232 |
|
4,209 |
|
4,158 |
|
16,772 |
| (Loss) income before taxes |
|
(9,154) |
|
5,678 |
|
5,947 |
|
5,294 |
|
7,765 |
| (Benefit) provision for income taxes |
|
(3,366) |
|
2,336 |
|
2,023 |
|
1,914 |
|
2,907 |
| Net (loss) income |
|
($5,788) |
|
$3,342 |
|
$3,924 |
|
$3,380 |
|
$4,858 |
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) income per common share - basic and diluted |
|
($0.12) |
|
$0.07 |
|
$0.08 |
|
$0.07 |
|
$0.10 |
|
|
|
|
|
|
|
|
|
|
|
| Weighted-average common shares - basic |
|
47,983,785 |
|
47,986,401 |
|
47,986,975 |
|
47,986,975 |
|
47,986,034 |
| Weighted-average common shares - diluted |
|
47,983,785 |
|
47,986,972 |
|
47,986,975 |
|
47,986,975 |
|
47,986,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Container Store Group, Inc. |
| Recast selected consolidated balance sheet data (unaudited) |
|
|
|
|
|
As of |
| (In thousands) |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
| Cash |
|
$8,397 |
|
$7,397 |
|
$20,953 |
|
$8,809 |
| Inventory |
|
109,246 |
|
112,115 |
|
101,899 |
|
85,627 |
| Total assets (1) |
|
777,553 |
|
785,125 |
|
786,255 |
|
757,076 |
| Long-term debt, net of deferred financing costs(1) |
|
346,224 |
|
345,381 |
|
349,491 |
|
326,048 |
| Stockholders' equity |
|
198,052 |
|
201,359 |
|
205,048 |
|
211,564 |
|
|
|
|
|
|
|
|
|
|
(1) In the first quarter of fiscal 2016, TCS retrospectively adopted Accounting Standards Update
(“ASU”) 2015-03, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. As such, the
total asset and long-term debt amounts presented above reflect the adjustments to reclassify deferred financing costs from
noncurrent assets to a reduction of long-term debt in accordance with the new guidance.
|
|
|
|
|
|
|
|
|
|
| The Container Store Group, Inc. |
| Recast selected consolidated cash flow data (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Thirteen |
|
Twenty-six |
|
Thirty-nine |
|
Fifty-two |
|
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
| (In thousands) |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
| Cash flows (used in) provided by operating activities |
|
($16,409) |
|
($1,644) |
|
$22,065 |
|
$42,371 |
| Cash flows used in investing activities |
|
(12,008) |
|
(22,789) |
|
(31,607) |
|
(41,195) |
| Cash flows provided by financing activities |
|
24,800 |
|
20,376 |
|
19,303 |
|
(3,916) |
| Effect of exchange rate changes on cash |
|
495 |
|
(65) |
|
(327) |
|
30 |
| Net (decrease) increase in cash |
|
(3,122) |
|
(4,122) |
|
9,434 |
|
(2,710) |
| Cash at beginning of fiscal period |
|
11,519 |
|
11,519 |
|
11,519 |
|
11,519 |
| Cash at end of fiscal period |
|
8,397 |
|
7,397 |
|
20,953 |
|
8,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Container Store Group, Inc. |
| Recast Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Fifty-two |
| Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
| (In thousands) |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
|
April 2, 2016 |
| Net (loss) income |
|
($5,788) |
|
$3,342 |
|
$3,924 |
|
$3,380 |
|
$4,858 |
| Depreciation and amortization |
|
8,231 |
|
8,393 |
|
9,081 |
|
8,923 |
|
34,628 |
| Interest expense, net |
|
4,173 |
|
4,232 |
|
4,209 |
|
4,158 |
|
16,772 |
| Income tax (benefit) expense |
|
(3,366) |
|
2,336 |
|
2,023 |
|
1,914 |
|
2,907 |
| EBITDA |
|
3,250 |
|
18,303 |
|
19,237 |
|
18,375 |
|
59,165 |
| Pre-opening costs |
|
1,640 |
|
3,532 |
|
1,784 |
|
2,048 |
|
9,004 |
| Noncash rent |
|
(670) |
|
(311) |
|
(508) |
|
(295) |
|
(1,784) |
| Stock-based compensation |
|
327 |
|
373 |
|
488 |
|
387 |
|
1,575 |
| Foreign exchange losses (gains) |
|
176 |
|
(44) |
|
141 |
|
(47) |
|
226 |
| Other adjustments |
|
14 |
|
16 |
|
22 |
|
124 |
|
176 |
| Adjusted EBITDA |
|
4,737 |
|
21,869 |
|
21,164 |
|
20,592 |
|
68,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The Container Store Group, Inc. |
| Recast Operating Data (unaudited) |
|
|
|
|
|
|
|
As of |
|
|
| |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
|
|
| Store count |
|
72 |
|
75 |
|
77 |
|
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Thirteen |
|
Fifty-two |
|
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
|
Weeks Ended |
| |
|
July 4, 2015 |
|
October 3, 2015 |
|
January 2, 2016 |
|
April 2, 2016 |
|
April 2, 2016 |
|
Comparable store sales growth
for the period(2)
|
|
-1.9% |
|
0.5% |
|
-0.8% |
|
-1.0% |
|
-0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
(2) A store is included in the comparable store sales calculation on the first day of the sixteenth
full fiscal month following the store’s opening. Comparable store sales are net of discounts and returns and exclude shipping
and delivery sales. When a store is relocated, the Company continues to consider net sales from that store to be comparable
store sales. Net sales from the Company’s website and call center are also included in calculations of comparable store
sales.
|
| |
| In the first quarter of fiscal 2016, the Company changed its comparable store sales
operating measure to be based on the point at which merchandise and service orders are fulfilled and delivered to customers,
excluding shipping and delivery. Prior to the first quarter of fiscal 2016, the comparable store sales operating measure in a
given period was based on merchandise and service orders placed in that period, excluding shipping and delivery, which did not
always reflect when the merchandise and services were received by the customer and, therefore, recognized in the Company’s
financial statements as net sales. The Company believes that changing the comparable store sales operating metric to better
align with net sales presented in the Company’s financial statements will assist investors in evaluating our financial
performance. The comparable store sales percentages presented have been adjusted to reflect the updated definition. |
| |
Investors:
ICR, Inc.
Farah Soi/Anne Rakunas, 203-682-8200
Anne.Rakunas@icrinc.com
or
Media:
The Container Store
Casey Shilling, 972-538-6621
casey@containerstore.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20160809006310/en/