SOURCE: Dover Saddlery

Dover Saddlery

November 06, 2014 16:00 ET

Dover Saddlery Reports Third Quarter 2014 Financial Results

LITTLETON, MA--(Marketwired - Nov 6, 2014) - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading omni-channel retailer of equestrian products, today reported financial results for the third quarter ended September 30, 2014.

Total revenues for the third quarter of 2014 increased 9.1%, or $2.1 million, to $24.7 million from $22.6 million achieved in the third quarter of 2013. Retail store channel revenues increased 16.6%, or $1.9 million, to $13.3 million and same-store sales increased 2.5% over the third quarter of 2013.

Net income for the third quarter decreased to $210,000 or $0.04 per diluted share compared to $443,000 or $0.08 achieved in the third quarter of 2013.

Adjusted EBITDA for the third quarter of 2014 declined to $1,086,000, from $1,324,000 achieved in the third 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.

Year-to-Date Results

For the first nine months of 2014, total revenues increased 8.1% to $68.8 million, from $63.6 million achieved in the corresponding period in 2013. Retail store channel revenues increased 16.5% to $35.4 million and same-store sales increased 4.0% year to date. The net loss for the third quarter of 2014 was $(71,000), or $(0.01) per diluted share, compared to a net profit of $260,000 or $0.05 per diluted share achieved in the third quarter of the prior year.

"Our same-stores sales were strong in July and August and softened in September. During the third quarter we continued our successful retail roll-out with the grand openings of our first Dover Saddlery store, in Ohio (in Cincinnati) and our third Dover store in Texas (in Houston)," said Stephen L. Day, President and CEO of Dover Saddlery. "This Fall we will be opening stores in Wellington, Florida and Pittsburgh, Pennsylvania."

Business Outlook 2014

Dover Saddlery is planning to open two stores in the fourth quarter of 2014 which will bring the total number of retail stores to twenty-six. 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 executives will host a conference call at 4:30 pm ET today, to discuss the results. Interested parties may access the call by dialing +1-877-712-7037 or may listen to the call live via webcast. To access the webcast please go to http://investor.shareholder.com/DOVR/events.cfm and click on the webcast icon.

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 www.DoverSaddlery.com.

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 the balance of fiscal 2014 and beyond, overall revenue growth, retail-store and same-store sales growth, 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.

   
DOVER SADDLERY, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except share and per share data)  
(Unaudited)  
             
    Three Months Ended     Nine Months Ended  
    Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,  
    2014     2013     2014     2013  
                                 
Revenues, net - direct   $ 11,335     $ 11,180     $ 33,339     $ 33,175  
Revenues, net - retail stores     13,339       11,435       35,420       30,409  
Revenues, net - total   $ 24,674     $ 22,615       68,759     $ 63,584  
Cost of revenues     15,119       14,044       42,760       39,976  
Gross profit     9,555       8,571       25,999       23,608  
Selling, general and administrative expenses     8,978       7,640       25,750       22,715  
Income from operations     577       931       249       893  
Interest expense, financing and other related costs, net     172       154       482       426  
Other investment (income) loss     (5 )     4       (59 )     (33 )
Income (loss) before income tax provision (benefit)     410       773       (174 )     500  
Provision (benefit) for income taxes     200       330       (103 )     240  
Net income (loss)   $ 210     $ 443     $ (71 )   $ 260  
                                 
Net income (loss) per share                                
Basic   $ 0.04     $ 0.08     $ (0.01 )   $ 0.05  
Diluted   $ 0.04     $ 0.08     $ (0.01 )   $ 0.05  
Number of shares used in per share calculation                                
Basic     5,364,000       5,345,000       5,360,000       5,340,000  
Diluted     5,727,000       5,534,000       5,360,000       5,524,000  
                                 
Other Operating Data:                                
                                 
Number of retail stores(1)     24       19       24       19  
Capital expenditures     924       567       1,849       1,312  
Gross profit margin     38.7 %     37.9 %     37.8 %     37.1 %
                                 

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

 
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, unaudited)
 
    Three Months Ended   Nine Months Ended
    Sept. 30,   Sept. 30,   Sept. 30,     Sept. 30,
    2014   2013   2014     2013
                           
Net income (loss)   $ 210   $ 443   $ (71 )   $ 260
Other comprehensive loss:                          
  Change in fair value of interest rate swap contract, net of tax     17     4     30       53
Total comprehensive income (loss)   $ 227   $ 447   $ (41 )   $ 313
                           
                           
   
DOVER SADDLERY, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands, except share and per share data)  
(Unaudited)  
   
    Sept. 30,
2014
    Dec. 31,
2013
 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 292     $ 319  
  Accounts receivable     1,336       1,300  
  Inventory     29,343       23,633  
  Prepaid catalog costs     1,115       974  
  Prepaid expenses and other current assets     3,043       1,277  
  Deferred income taxes     261       355  
                 
Total current assets     35,390       27,858  
                 
Net property and equipment     6,535       5,763  
                 
Other assets:                
  Deferred income taxes     1,449       1,495  
  Intangibles and other assets, net     778       758  
Total other assets     2,227       2,253  
Total assets   $ 44,152     $ 35,874  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Current portion of capital lease obligations and outstanding checks   $ 260     $ 290  
  Current portion - term notes     786       786  
  Current portion - Capex term loan     792       630  
  Accounts payable     3,098       2,352  
  Accrued expenses and other current liabilities     6,228       7,201  
  Income taxes payable     -       1,006  
Total current liabilities     11,164       12,265  
                 
Long-term liabilities:                
  Revolving line of credit     10,428       95  
  Capex term loan, net of current portion     2,224       2,818  
  Term notes, net of current portion     3,536       4,125  
  Capital lease obligation, net of current portion     66       96  
  Interest rate swap contract     135       189  
Total long-term liabilities     16,389       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 September 30, 2014 and December 31, 2013, respectively     1       1  
Additional paid in capital     46,658       46,304  
Treasury stock, 795,865 shares at cost     (6,082 )     (6,082 )
Other comprehensive loss     (92 )     (122 )
Accumulated deficit     (23,886 )     (23,815 )
Total stockholders' equity     16,599       16,286  
Total liabilities and stockholders' equity   $ 44,152     $ 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 income to Adjusted EBITDA (in thousands):

           
    Three Months Ended   Nine Months Ended  
    Sept. 30,
2014
    Sept. 30,
2013
  Sept. 30,
2014
    Sept. 30,
2013
 
                               
                               
Net income (loss)   $ 210     $ 443   $ (71 )   $ 260  
Depreciation     382       295     1,077       843  
Amortization of intangible assets     17       17     53       52  
Stock-based compensation     110       81     330       219  
Interest expense, financing and other related costs, net     172       154     482       426  
Other investment (income) loss     (5 )     4     (59 )     (33 )
Provision (Benefit) for income taxes     200       330     (103 )     240  
Adjusted EBITDA   $ 1,086     $ 1,324   $ 1,709     $ 2,007  
                               
                               

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