SOURCE: Dover Saddlery

Dover Saddlery

November 09, 2010 08:00 ET

Dover Saddlery Reports Third Quarter 2010 Financial Results

LITTLETON, MA--(Marketwire - November 9, 2010) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multi-channel retailer of equestrian products, today reported financial results for the third quarter ended September 30, 2010.

Total revenues for the third quarter of 2010 were $18.6 million, an increase of 0.4% from $18.5 million achieved in the corresponding quarter in the prior year. Retail channel revenues increased 4.2% to $7.0 million while same-store sales for the third quarter of 2010 increased 3.2% over the prior year. Direct channel revenues decreased 1.8% to $11.6 million. Net income for the third quarter of 2010 increased 17.8% to $320,000, or $0.06 per diluted share, compared to $272,000, or $0.05 per diluted share, for third quarter of 2009.

Year-to-Date Results

For the first nine months of 2010, total revenues increased 1.2% to $54.7 million as compared to $54.1 million for the same period in 2009. Revenues from the retail channel increased 2.3% to $18.4 million; same-store sales increased 1.6%; and direct channel revenues increased 0.6% to $36.3 million.

Net income for the first nine months of 2010 increased to $997,000, or $0.18 per diluted share, as compared to $21,000, or $0.00 per share, for the corresponding period in 2009. Income from investments increased to $384,000 due primarily to the non-recurring gain from the Hobby Horse investment in the second quarter of 2010. In addition, Adjusted EBITDA for the first nine months of 2010 increased 47% to $2.8 million compared to $1.9 million in the corresponding period in 2009.

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 earnings release. 

"With a quarterly same-store sales increase of 3.2%, we are starting to see some strengthening in customer behavior although purchasing patterns are still erratic," said Stephen L. Day, President and CEO of Dover Saddlery. "We hope that the recessionary mood will soon appear in the rear view mirror and that we will be able to accelerate our retail store roll-out."

Business Outlook

Until there is greater long-term visibility on economic conditions and consumer behavior, the Company is not providing guidance on business prospects for the remainder of 2010 or fiscal 2011.

Conference Call and Webcast

Dover Saddlery will hold a conference call and webcast on Tuesday, November 9, 2010 at 8:30 a.m. ET to discuss its third quarter results. To access the webcast via the Internet, please go to and click on the webcast icon. A telephone replay will be available from 11:30 a.m. ET until November 18th by dialing 719-457-0820, pass code 2450914.

About Dover Saddlery, Inc.
Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multi-channel 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 customer behavior and consumer sentiment, the prospects for overall revenue growth and profitability, and the opening of and revenue growth from 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, 2009, and in our subsequent Quarterly Reports on Form 10-Q.

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   Nine Months Ended  
    Sept. 30,   Sept. 30,   Sept. 30,   Sept. 30,  
    2010   2009   2010   2009  
Revenues, net- direct   $ 11,654   $ 11,864   $ 36,257   $ 36,042  
Revenues, net - retail stores     6,960     6,681     18,438     18,014  
Revenues, net - total   $ 18,614   $ 18,545   $ 54,695   $ 54,056  
Cost of revenues     11,525     11,744     34,308     34,507  
Gross profit     7,089     6,801     20,387     19,549  
Selling, general and administrative expenses     6,218     5,869     18,274     18,370  
Income from operations     871     932     2,113     1,179  
Interest expense, financing and other related costs, net     255     346     766     996  
Other investment (income) loss, net     37     20     (384 )   1  
Income before income tax provision     579     566     1,731     182  
Provision for income taxes     259     294     734     161  
Net income   $ 320   $ 272   $ 997   $ 21  
Net income per share                          
Basic   $ 0.06   $ 0.05   $ 0.19   $ 0.00  
Diluted   $ 0.06   $ 0.05   $ 0.18   $ 0.00  
Number of shares used in per share calculation                          
Basic     5,277,000     5,187,000     5,270,000     5,187,000  
Diluted     5,386,000     5,247,000     5,413,000     5,233,000  
Other Operating Data:                          
Number of retail stores(1)     13     13     13     13  
Capital expenditures     57     105     271     386  
Gross profit margin     38.1 %   36.7 %   37.3 %   36.2 %
(1) Includes twelve Dover-branded stores and one Smith Brothers store.


(In thousands, except share and per share data)
  Sept. 30, 2010     Dec. 31, 2009  
Current assets:              
  Cash and cash equivalents $ 676     $ 732  
  Accounts receivable   624       827  
  Inventory   16,159       15,301  
  Prepaid catalog costs   1,337       1,164  
  Prepaid expenses and other current assets   999       780  
  Deferred income taxes   61       --  
Total current assets   19,856       18,804  
Net property and equipment   3,176       3,365  
Other assets:              
  Deferred income taxes   749       709  
  Intangibles and other assets, net   665       684  
Total other assets   1,414       1,393  
Total assets $ 24,446     $ 23,562  
Current liabilities:              
  Current portion of capital lease obligation and outstanding checks $ 1,143     $ 676  
  Accounts payable   1,661       2,305  
  Accrued expenses and other current liabilities   3,974       4,083  
  Income taxes payable   26       350  
  Deferred income taxes   --       22  
Total current liabilities   6,804       7,436  
Long-term liabilities:              
  Revolving line of credit   3,261       3,000  
  Subordinated notes payable, net   5,207       5,091  
  Capital lease obligation, net of current portion   119       132  
Total long-term liabilities   8,587       8,223  
Stockholders' equity:              
  Common stock, par value $0.0001 per share; 15,000,000 shares authorized; issued 5,277,161 as of Sept. 30, 2010 and 5,263,975 as of December 31, 2009   1       1  
Additional paid in capital   45,336       45,181  
Treasury stock, 795,865 shares at cost   (6,082 )     (6,082 )
Accumulated deficit   (30,200 )     (31,197 )
Total stockholders' equity   9,055       7,903  
Total liabilities and stockholders' equity $ 24,446     $ 23,562  

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 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):

  Three Months Ended   Nine Months Ended
  Sept. 30, 2010   Sept. 30, 2009   Sept. 30, 2010   Sept. 30, 2009
Net income $ 320   $ 272   $ 997   $ 21
Depreciation   176     181     545     580
Amortization of intangible assets   2     2     5     5
Stock-based compensation   45     44     136     135
Interest expense, financing and other related costs, net   255     346     766     996
Other investment (income) loss   37     20     (384 )   1
Provision for income taxes   259     294     734     161
Adjusted EBITDA $ 1,094   $ 1,159   $ 2,799   $ 1,899

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