SOURCE: Dover Saddlery

March 22, 2007 08:11 ET

Dover Saddlery Announces Fourth Quarter and Full-Year 2006 Financial Results

LITTLETON, MA -- (MARKET WIRE) -- March 22, 2007 -- Dover Saddlery, Inc. (NASDAQ: DOVR) today reported fourth-quarter and full-year financial results for fiscal year ended December 31, 2006.

For the fourth quarter of 2006, revenues increased 16% to $21.0 million from $18.1 million for the prior year. Retail store revenues increased 53% to $4.1 million from $2.7 million for the fourth quarter of 2005. This increase was primarily attributed to the opening of two new Dover Saddlery stores, while same store sales increased 6%. Fourth-quarter direct sales revenues increased 10% to $17.0 million from $15.4 million for the same period in 2005, and net income rose 188% to $0.6 million.

For full-year 2006, total revenues increased 17% or $10.4 million to $73.0 million, from $62.7 million in 2005. Retail store revenues increased 38% or $3.5 million to $12.8 million from $9.3 million in 2005. This increase was attributable to the acquisition of Dominion Saddlery in June 2006 and the opening of two new Dover Saddlery retail stores. Same store sales increased 8% over the prior year. Direct sales revenues increased 13% or $6.9 million to $60.2 million for full-year 2006 compared with $53.3 million for 2005.

Net income for 2006 was up 69% to $1.4 million from $0.8 million for 2005. This increase was due to growth in sales revenues and gross profit, as well as reduced interest expense.

Earnings per share, fully diluted, increased 44% to $0.26 per share for 2006 compared with $0.18 per share for the prior year.

On June 30, 2006 Dover Saddlery completed its acquisition of Dominion Saddlery for approximately $1.5 million. Dominion Saddlery owned four stores in the mid-Atlantic area; these stores are being successively refurbished and remerchandised with Dover Saddlery inventory.

"Overall, we are pleased with the financial results of 2006," said Stephen L. Day, president and CEO of Dover Saddlery. "We executed on our retail expansion strategy by increasing the number of Dover Saddlery retail stores from four to six and acquiring Dominion Saddlery."

Business Outlook 2007

Dover Saddlery also announced today its business outlook for the current year. The company currently expects revenues will range from $79 million to $83 million. Increased revenues are expected to come mainly from the retail channel. The company plans to open four to five new retail stores in 2007.

Today's Teleconference and Webcast

Dover Saddlery will be hosting a conference call today at 8:30 am Eastern Time to discuss the fourth-quarter and full-year 2006 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 web cast will be archived for a year. In addition, a replay of the conference call will be available until March 29; Dial-in: (719) 457-0820, Passcode: 2405179.

About Dover Saddlery, Inc.

Dover Saddlery, Inc. (NASDAQ: DOVR) is the largest direct marketer 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.

                DOVER SADDLERY, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Dollar amounts in thousands, except per share data, unaudited)

                                     Three Months           Year
                                        Ended              Ended
                                  ------------------  ------------------
                                  Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31,
                                    2006      2005      2006      2005
                                  --------  --------  --------  --------
Revenue - direct                  $ 16,960  $ 15,449  $ 60,249  $ 53,346
Revenue - retail                     4,080     2,663    12,797     9,304
                                  --------  --------  --------  --------
Revenue - total                     21,040    18,112    73,046    62,650

Cost of Revenue                     12,519    11,087    45,771    39,271
                                  --------  --------  --------  --------
Gross Profit                         8,521     7,025    27,275    23,379

Selling, general and
 administrative expenses             7,336     5,930    24,021    19,797
Operating Income                     1,185     1,095     3,254     3,582

Interest expense                       268     1,001       948     2,273
                                  --------  --------  --------  --------
Income before provision
 for income taxes                      917        94     2,306     1,310
Provision for income
 taxes                                 366       (97)      914       484
                                  --------  --------  --------  --------
Net Income                        $    551  $    191  $  1,392  $    826

Net income attributed to
 common stockholders              $    551  $    191  $  1,392  $    826

Net Income Per Common Share
Basic                             $   0.11  $   0.04  $   0.27  $   0.21
Diluted                           $   0.10  $   0.04  $   0.26  $   0.18
Number of Shares Used in
 Per Share Calculations
Basic                                5,074     3,030     5,074     3,374
Diluted                              5,426     4,337     5,320     4,514


Other Operating Data:
 Number of Retail Stores      (1)        6         4         6         4
 Capital Expenditures                  916     4,714     1,674       510
 GP Margin - %                        40.5%     38.8%     37.3%     37.3%


(1) Does not include the two Dominion stores remaining open during
    renovations in Q4 or the fourth store closed for renovation.  Includes
    the new Dover store in Hunt Valley, MD opened on September 29, 2006
    and the Crofton, MD store opened on December 1, 2006.


                  DOVER SADDLERY, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                      (Dollar amounts in thousands)

                                                         Dec. 31, Dec. 31,
                                                           2006     2005
                                                      (Unaudited)

Current assets:
 Cash and cash equivalents                             $    101  $  2,887
 Accounts receivable                                        795       160
 Inventory                                               14,811    10,072
 Prepaid catalog costs                                    2,134     1,601
 Prepaid expenses and other current assets                  987       969
 Income tax receivable                                       --       167
                                                       --------  --------
Total current assets                                     18,828    15,856
                                                       --------  --------

Capital Equipment                                         2,832     1,729

Other assets:
 Deferred income tax assets                                 297       254
 Goodwill and other assets, net                          14,909    13,838
                                                       --------  --------
Total other assets                                       15,206    14,092
                                                       --------  --------

Total assets                                           $ 36,866  $ 31,677
                                                       --------  --------


Current liabilities:
 Short term bank borrowing and current portion of
  capital lease obligations                            $  1,768  $    171
 Accounts payable                                         3,508     2,629
 Accrued expenses and other current liabilities           3,356     2,949
 Income tax payable                                         282        --
 Deferred income tax liability                              206       274
                                                       --------  --------
Total current liabilities                                 9,120     6,023
                                                       --------  --------

Long-term liabilities:
 Revolving line of credit                                 5,900     5,000
 Subordinated notes payable                               3,000     3,000
 Capital lease obligations, net of current portion          117       272
                                                       --------  --------
Total long-term liabilities                            $  9,017  $  8,272
                                                       --------  --------

Total equity                                             18,729    17,382
                                                       --------  --------

Total liabilities and stockholders' equity             $ 36,866  $ 31,677
                                                       --------  --------

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