SOURCE: Dover Saddlery

Dover Saddlery

May 08, 2014 16:00 ET

Dover Saddlery Announces First Quarter 2014 Financial Results

LITTLETON, MA--(Marketwired - May 8, 2014) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading omni-channel retailer of equestrian products, today reported financial results for the first quarter ended March 31, 2014.

Total revenues for the first quarter of 2014 increased 9.4% to $19.7 million, from $18.0 million achieved in the first quarter of 2013. Revenues in the retail channel increased 21.5% to $8.8 million from $7.2 million, due primarily to the opening of new stores in 2013; while same-store sales for the first quarter of 2014 increased 3.7%.

The net loss for the first quarter of 2014 was $(543,000), or $(0.10) per diluted share, compared to $(538,000) or $(0.10) per diluted share in the first quarter of the prior year.

"I am pleased to report that the three Dover Saddlery stores opened in the fourth quarter of 2013 performed very well in the first quarter of this year. These stores have contributed towards the 22% increase in retail channel revenues," commented Stephen L. Day, president and CEO of Dover Saddlery. "The increase in selling, general and administrative expense was due primarily to increased direct marketing costs and increased labor and lease expenses associated with the new stores."

Adjusted EBITDA for the first quarter of 2014 improved to $(479,000), from $(514,000) in the first quarter of 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 2014

Dover Saddlery is planning to open four to six retail stores in 2014. Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on other business prospects.

Today's Teleconference and Webcast

Dover Saddlery will be hosting a conference call at 4:30 P.M. EDT today to discuss the first quarter 2014 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at, this web cast will be archived for a year.

About Dover Saddlery, Inc. Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multichannel retailer of equestrian products in the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a broad and distinctive selection of competitively priced, brand-name products for horse and rider through catalogs, the Internet and company-owned retail stores. Dover Saddlery, Inc. serves the English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.

For more information, please call 1-978-952-8062 or visit

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 the Company's business outlook for fiscal 2014, the prospects for overall revenue growth, expense ratios, growth in the retail channel, profitability, 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.

(In thousands, except share and per share data) 
  Three Months Ended  
  March 31,     March 31,  
  2014     2013  
Revenues, net- direct $ 10,912     $ 10,784  
Revenues, net - retail stores   8,800       7,242  
Revenues, net - total   19,712     $ 18,026  
Cost of revenues   12,637       11,629  
Gross profit   7,075       6,400  
Selling, general and administrative expenses   8,024       7,265  
Loss from operations   (949 )     (865 )
Interest expense, financing and other related costs, net   142       124  
Other investment income (loss), net   (2 )     11  
Loss before income tax benefit   (1,093 )     (978 )
Benefit for income taxes   (550 )     (440 )
Net loss $ (543 )   $ (538 )
Net loss per share              
Basic $ (0.10 )   $ (0.10 )
Diluted $ (0.10 )   $ (0.10 )
Number of shares used in per share calculation              
Basic   5,352,000       5,338,000  
Diluted   5,352,000       5,338,000  
Other Operating Data:              
Number of retail stores(1)   22       18  
Capital expenditures   339       376  
Gross profit margin   35.9 %     35.5 %
(1) Includes twenty-one Dover-branded stores and one Smith Brothers store.
(In thousands, unaudited)  
  Three Months Ended  
  March 31,     March 31,  
  2014     2013  
Net loss $ (543 )   $ (538 )
Other comprehensive loss net:              
  Change in fair value of interest rate swap contract, net of tax   9       16  
Total comprehensive loss $ (534 )   $ (522 )


(In thousands, except share data)  
    March 31,
    Dec. 31,
Current assets:                
  Cash and cash equivalents   $ 214     $ 319  
  Accounts receivable     888       1,300  
  Inventory     26,652       23,633  
  Prepaid catalog costs     1,744       974  
  Prepaid expenses and other current assets     1,971       1,277  
  Deferred income taxes     369       355  
Total current assets     31,838       27,858  
Net property and equipment     5,760       5,763  
Other assets:                
  Deferred income taxes     1,346       1,495  
  Intangibles and other assets, net     740       758  
Total other assets     2,086       2,253  
Total assets   $ 39,684     $ 35,874  
Current liabilities:                
  Current portion of capital lease obligations and outstanding checks   $ 347     $ 290  
  Current portion - term note     786       786  
  Current portion - Capex term loan     711       630  
  Accounts payable     1,939       2,352  
  Accrued expenses and other current liabilities     5,534       7,201  
  Income taxes payable     -       1,006  
Total current liabilities     9,317       12,265  
Long-term liabilities:                
  Revolving line of credit     7,673       95  
  Capex term loan, net of current portion     2,620       2,818  
  Term note, net of current portion     3,928       4,125  
  Capital lease obligation, net of current portion     86       96  
  Interest rate swap contract     173       189  
Total long-term liabilities     14,480       7,323  
Stockholders' equity:                
  Common stock, par value $0.0001 per share; 15,000,000 shares authorized; 6,160,103 and 6,147,263 issued and 5,364,238 and 5,351,398 outstanding as of March 31, 2014 and December 31, 2013, respectively     1       1  
Additional paid in capital     46,439       46,304  
Treasury stock, 795,865 shares at cost     (6,082 )     (6,082 )
Other comprehensive loss     (113 )     (122 )
Accumulated deficit     (24,358 )     (23,815 )
Total stockholders' equity     15,887       16,285  
Total liabilities and stockholders' equity   $ 39,684     $ 35,874  

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 loss to Adjusted EBITDA (in thousands):

  Three Months Ended  
  March 31,     March 31,  
  2014     2013  
Net loss $ (543 )   $ (538 )
Depreciation   342       263  
Amortization of intangible assets   18       18  
Stock-based compensation   110       70  
Interest expense, financing and other related costs, net   142       124  
Other investment (income) loss, net   2       (11 )
Benefit for income taxes   (550 )     (440 )
Adjusted EBITDA $ (479 )   $ (514 )

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