The Lovesac Company Announces Fourth Quarter and Fiscal 2019 Financial Results
April 30 2019 - 7:00AM
Fourth Quarter Net Sales Increase of 64.4%;
Comparable Sales Increase of 52.2%Fiscal 2019 Net Sales Increase of
62.9%; Comparable Sales Increase of 43.8%Q419 EBITDA increase to
$8.9 million from $3.4 million in Q418; Adjusted EBITDA of $10.0
million vs. $6.0 million in Q418Fiscal 2019 EBITDA of ($3.9)
million vs. ($2.7) million in Fiscal 2018; Adjusted EBITDA increase
to $3.4 million from $1.3 million in Fiscal 2018
The Lovesac Company (Nasdaq:LOVE) today announced its financial
results for the fourth quarter and fiscal year 2019, which ended
February 3, 2019.
Shawn Nelson, Chief Executive Officer, stated, “Our strong
fourth quarter capped a great year for Lovesac during which we
successfully drew new customers while strengthening the loyalty of
existing customers. We continued to expand our showroom,
shop-in-shop and digital presence, leaned into traditional and
digital marketing to capitalize on the tremendous brand awareness
opportunity we have and accelerated our infrastructure and
technology investment to elevate our customer experience and
further strengthen our foundation for growth.”
Mr. Nelson continued, “This year we will build on that progress
in our journey to becoming a widely adopted consumer brand – one
that is best known for the versatility and sustainability of its
unique Designed for Life furniture, and one that is beloved by
customers. The total addressable market opportunity is $31 billion
dollars and as we grow our market share we are making prudent
investments in the business to position the Lovesac brand for
enduring, long-term success.”
For the Thirteen Weeks Ended February 3,
2019
- Net sales increased 64.4% to $64.2 million in the fourth
quarter of fiscal 2019 from $39.0 million in the fourth quarter of
fiscal 2018. The increase was driven by strong showroom, Internet
and shop-in-shop performance as a result of an increase in new
customers combined with an increase in the total number of units
sold and continued accelerated investments in marketing to increase
brand awareness. Comparable sales, which includes showroom and
Internet sales, increased 52.2%. Comparable showroom sales
increased 43.5% and Internet sales increased 76.9%.
- The Company opened no new showrooms, closed two, and remodeled
four showrooms in the fourth quarter of fiscal 2019 and ended the
quarter with 75 showrooms in 30 states. This represents a unit
increase of 14% over the same quarter in the prior year.
- Gross profit dollars increased 54.9% to $35.5 million in the
fourth quarter of fiscal 2019 from $22.9 million in the fourth
quarter of fiscal 2018. Gross margin decreased by 340 basis points
to 55.3% in the fourth quarter of fiscal 2019 from 58.7% in the
fourth quarter of fiscal 2018 due primarily to growth in sactional
products, which carry lower margins than sacs and higher freight
costs as a percentage of net sales, an increase in sales for our
shop-in-shop channel which also carries a lower gross margin than
our other channels and a marginal impact of tariff related costs
that were mitigated through SG&A initiatives. The
decrease in gross margin percentage was partially offset by reduced
costs of our Sactionals and Sac products primarily related to cost
savings from a change in the sourcing of our Lovesoft and down
blend fills and lower costs negotiated with our vendors through
cost reductions and volume rebates.
- Selling, general and administrative expenses increased $5.3
million, or 33.0%, to $21.4 million in the thirteen weeks ended
February 3, 2019 compared to $16.1 million in the fourteen weeks
ended February 4, 2018. The increase in selling, general and
administrative expenses was primarily related to an increase in
employment costs of $1.0 million, $1.5 million of increased rent
associated with our net addition of 9 showrooms, $2.8 million of
expenses related to the increase in sales such as $0.4 million of
credit card fees, $0.5 million of web affiliate program and web
platform hosting commissions and $1.9 million of shop in shop sales
agent fees. Overhead expenses increased $0.4 million to support
company initiatives and public company expenses and stock-based
compensation decreased $0.5 million. As a percent to sales,
total SG&A expense decreased by 789 basis points driven largely
by leverage in employment costs and rent expense.
- Advertising and marketing expense increased 52.1%, or $1.8
million, to $5.2 million in the fourth quarter of fiscal 2019 from
$3.4 million in the fourth quarter of fiscal 2018. The increase
advertising and in marketing costs relates to increased media, to
include national media and direct to consumer programs which drive
revenue beyond the period of the expense.
- Operating income was $8.2 million in the fourth quarter of
fiscal 2019 compared to operating income of $2.5 million in the
fourth quarter of fiscal 2018. Excluding non-recurring items of
$0.1 million in the fourth quarter of fiscal 2019 and $1.3 million
in the fourth quarter of fiscal 2018, operating income was $8.3
million in the fourth quarter of fiscal 2019 and $3.8 million for
the fourth quarter of fiscal 2018
- Net income and net income attributable to common shares were
both $8.4 million. There were no preferred dividends and deemed
dividends in the fourth quarter of fiscal 2019. This is compared to
a net income of $2.4 million, or net income attributable to common
shares of $1.9 million including $0.5 million of preferred
dividends and deemed dividends in the fourth quarter in fiscal
2018. Adjusted net income, which excludes the impact of
non-recurring expenses, was $8.5 million in the fourth quarter of
fiscal 2019 and $3.8 million in the fourth quarter of fiscal 2018
(see “GAAP and Non-GAAP Measures”). Net income per share, including
preferred dividends and deemed dividends, was $0.62 in the fourth
quarter of fiscal 2019 compared to $0.31 in the fourth quarter of
fiscal 2018. Adjusted net income per common share, which is
calculated by dividing adjusted net income by adjusted weighted
average common shares outstanding, assuming the IPO related
issuances occurred at the beginning of each period presented, was
$0.63 in the fourth quarter of fiscal 2019 and $0.28 the fourth
quarter of fiscal 2018 (see “GAAP and Non-GAAP Measures”).
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $8.9 million in the fourth quarter of fiscal 2019
compared to $3.4 million in the fourth quarter of fiscal 2018.
Adjusted EBITDA was $10.0 million compared to $6.0 million in the
fourth quarter of fiscal 2018 (see “GAAP and Non-GAAP
Measures”).
Please see “Non-GAAP Financial Measures” and
“Reconciliation of GAAP to Non-GAAP Financial Measures” below for
more information.
For the Fifty-Two Weeks Ended February
3, 2019
- Net sales increased 62.9% to $165.9 million in fiscal 2019 from
$101.8 million in fiscal 2018. This increase was driven by strong
showroom, Internet and shop-in-shop performance as a result of an
increase in new customers combined with an increase in the total
number of units sold and continued accelerated investments in
marketing to increase brand awareness. Comparable sales, which
includes showroom and Internet sales, increased 43.8%. Comparable
showroom sales increased 35.2% and Internet sales increased
75.1%.
- The Company opened 13 new showrooms and closed four showrooms
in fiscal 2019.
- Gross profit dollars increased 58.8% to $90.9 million in fiscal
2019.
- Gross margin decreased by 140 basis points to 54.8% in fiscal
2019 from 56.2% in the same period of fiscal 2018. The decrease in
gross margin percentage was primarily due to increase in sactional
products, which carry lower margins than sacs and higher freight
costs as a percentage of net sales, an increase in our shop-in-shop
channel sales which also carries a lower gross margin than our
other channels, and a marginal impact of tariff related costs that
were mitigated through SG&A initiatives. The decrease in
gross margin percentage was partially offset by reduced costs of
our Sactionals and Sac products primarily related to cost savings
from a change in the sourcing of our Lovesoft and down blend fills
and lower costs negotiated with our vendors through cost reductions
and volume rebates.
- Selling, general and administrative expenses increased $25.6
million, or 50.4%, to $76.4 million in the fifty-two weeks ended
February 3, 2019 compared to $50.8 million in the fifty-three weeks
ended February 4, 2018. The increase in selling, general and
administrative expenses was primarily related to an increase in
employment costs of $3.9 million, $4.5 million of increased rent
associated with our net addition of 9 showrooms, $10.6 million of
expenses related to the increase in sales such as $2.2 million of
credit card fees, $0.8 million of showroom and web related selling
expenses, $1.1 million of web affiliate program and web platform
hosting commissions and $6.5 million of shop in shop sales agent
fees. Overhead expenses increased $2.2 million to support company
initiatives and public company expenses, stock-based compensation
increased $2.4 million and $1.9 million of expenses were related to
capital raises. As a percent to sales, total SG&A expense
decreased by 387 basis points due to leverage in employment costs
and rent expense.
- Advertising and marketing expense increased by $9.2 million or
99.8% to $18.4 million in fiscal 2019 from $9.2 million in fiscal
2018. The increase in advertising and marketing costs relates to
increased media, to include national media and direct to consumer
programs which drive revenue beyond the period of the expense.
- Operating loss was $7.0 million in fiscal 2019 compared to an
operating loss of $5.0 million in fiscal 2018. Excluding
non-recurring items of $2.0 million in both fiscal 2019 and fiscal
2018, operating loss was $5.0 million and $3.0 million in the
respective periods.
- Net loss was $6.7 million, and net loss attributable to common
shares was $34.5 million, including preferred dividends and deemed
dividends in fiscal 2019. This compares to a net loss of $5.5
million in fiscal 2018 and a net loss attributable to common shares
of $6.7 million including preferred dividends and deemed dividends.
Adjusted net loss, which excludes IPO related sponsor fees and
equity-based compensation and certain other non-recurring expenses,
was $2.6 million in fiscal 2019 compared to a loss of $3.5 million
in fiscal 2018 (see “GAAP and Non-GAAP Measures”). Net loss per
share, including preferred dividends and deemed dividends, was
$3.28 in fiscal 2019 compared to $1.12 in fiscal 2018. Adjusted net
loss per common share, which is calculated by dividing adjusted net
loss by adjusted weighted average common shares outstanding
assuming the IPO related issuances occurred at the beginning of
each period presented, was $0.19 in fiscal 2019 compared to $0.27
in fiscal 2018 (see “GAAP and Non-GAAP Measures”).
- Earnings before interest, taxes, depreciation and amortization
(“EBITDA”), was a loss of $3.9 million for fiscal 2019 compared to
a loss of $2.7 million in fiscal 2018. Adjusted EBITDA was $3.4
million compared to $1.3 million in the prior year period (see
“GAAP and Non-GAAP Measures”).
Please see Non-GAAP financial measures. Please
see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to
Non-GAAP Financial Measures” below for more information.
Conference Call Details
A conference call to discuss the fourth quarter
and fiscal 2019 financial results is scheduled for today, April 30,
2019 at 8:30 a.m. 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
investor.lovesac.com.
A recorded replay of the conference call will be
available within two hours of the conclusion of the call and can be
accessed online at investor.lovesac.com for 90 days.
About The Lovesac Company
Based in Stamford, Connecticut, The Lovesac
Company is a direct-to-consumer specialty furniture brand currently
with 77 retail showrooms supporting its ecommerce delivery model.
Lovesac’s name comes from its original Durafoam filled beanbags
called Sacs. The Company derives a majority of its current sales
from its proprietary platform called Sactionals, a washable,
changeable, reconfigurable, and FedEx-shippable solution for large
upholstered seating. Founder and CEO, Shawn Nelson’s, “Designed for
Life” philosophy emphasizes sustainable products that are built to
last a lifetime and designed to evolve with the customer’s needs,
providing long-term utility and ultimately reducing the amount of
furniture discarded into landfills.
Non-GAAP Information
This press release includes the following
financial measures defined as non-GAAP financial measures by the
Securities and Exchange Commission (the “SEC”): adjusted net loss,
adjusted diluted loss per share and Adjusted EBITDA. Adjusted net
loss excludes the effect of one-time costs related to the Company’s
IPO in June 2018 and fees associated with fundraising and
reorganizing activities. Adjusted diluted loss per share is
defined as adjusted net loss divided by a pro forma share count
which assumes the IPO took place before the relevant time period.
We define Adjusted EBITDA as net income plus interest expense,
income tax expense, depreciation and amortization, sponsor fees,
deferred rent, equity-based compensation, write-off of property and
equipment, one-time IPO-related expenses, and fees associated with
fundraising and reorganizing activities. The Company has reconciled
these non-GAAP financial measures with the most directly comparable
GAAP financial measures under “GAAP and Non-GAAP Measures” in this
release. The Company believes that these non-GAAP financial
measures not only provide its management with comparable financial
data for internal financial analysis but also provide meaningful
supplemental information to investors. Specifically, these non-GAAP
financial measures allow investors to better understand the
performance of the Company’s business and facilitate a more
meaningful comparison of its diluted income per share and actual
results on a period-over-period basis. The Company has provided
this information as a means to evaluate the results of its ongoing
operations. Other companies in the Company’s industry may calculate
these items differently than the Company does. Each of these
measures is not a measure of performance under GAAP and should not
be considered as a substitute for the most directly comparable
financial measures prepared in accordance with GAAP. Non-GAAP
financial measures have limitations as analytical tools, and
investors should not consider them in isolation or as a substitute
for analysis of the Company’s results as reported under GAAP.
Cautionary Statement Concerning Forward
Looking Statements
Certain statements either contained in or
incorporated by reference into this communication, other than
purely historical information, including estimates, projections and
statements relating to Lovesac’s business plans, objectives and
expected operating results, and the assumptions upon which those
statements are based, are “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.
All statements, other than statements of historical facts, included
in or incorporated by reference into this press release regarding
strategy, future operations, future financial position, future
revenue, projected expenses, prospects, plans and objectives of
management are forward-looking statements. Lovesac may not actually
achieve the plans, carry out the intentions or meet the
expectations disclosed in the forward-looking statements and you
should not place undue reliance on these forward-looking
statements. Such statements are based on management’s current
expectations and involve risks and uncertainties. Actual results
and performance could differ materially from those projected in the
forward-looking statements as a result of many factors. Lovesac
disclaims any intent or obligation to update these forward-looking
statements to reflect events or circumstances that exist after the
date on which they were made.
Investor Relations Contact:Rachel Schacter,
ICR(203) 682-8200InvestorRelations@lovesac.com
(Tables to Follow)
|
THE LOVESAC COMPANY |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
February 3, 2019 |
|
February 4, 2018 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current Assets |
|
|
|
Cash and cash
equivalents |
$ |
49,070,952 |
|
|
$ |
9,175,951 |
|
Trade accounts receivable |
|
3,955,124 |
|
|
|
2,805,186 |
|
Merchandise inventories |
|
26,154,314 |
|
|
|
11,641,482 |
|
Prepaid expenses and other current
assets |
|
5,933,872 |
|
|
|
6,062,946 |
|
|
|
|
|
Total Current Assets |
|
85,114,262 |
|
|
|
29,685,565 |
|
|
|
|
|
Property and Equipment, Net |
|
18,595,079 |
|
|
|
11,037,289 |
|
|
|
|
|
Other Assets |
|
|
|
Goodwill |
|
143,562 |
|
|
|
143,562 |
|
Intangible assets, net |
|
942,331 |
|
|
|
526,370 |
|
Deferred financing costs, net |
|
219,071 |
|
|
|
48,149 |
|
|
|
|
|
Total Other
Assets |
|
1,304,964 |
|
|
|
718,081 |
|
|
|
|
|
Total Assets |
$ |
105,014,305 |
|
|
$ |
41,440,935 |
|
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
16,836,816 |
|
|
$ |
12,695,954 |
|
Accrued expenses |
|
3,701,090 |
|
|
|
784,340 |
|
Payroll payable |
|
2,269,834 |
|
|
|
1,454,193 |
|
Customer deposits |
|
1,059,957 |
|
|
|
909,236 |
|
Sales taxes payable |
|
750,922 |
|
|
|
894,882 |
|
Line of credit |
|
- |
|
|
|
405 |
|
|
|
|
|
Total Current Liabilities |
|
24,618,619 |
|
|
|
16,739,010 |
|
|
|
|
|
Deferred Rent |
|
1,594,179 |
|
|
|
1,063,472 |
|
|
|
|
|
Line of Credit |
|
31,373 |
|
|
|
- |
|
|
|
|
|
Total Liabilities |
|
26,244,171 |
|
|
|
17,802,482 |
|
|
|
|
|
Commitments and Contingencies (see Note
6) |
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
Preferred Stock $.00001 par value,
10,000,000 shares authorized, no shares issued and outstanding as
of February 3, 2019 and 1,018,600 shares issued and outstanding as
of February 4, 2018. |
|
- |
|
|
|
10 |
|
Common Stock $.00001 par value,
40,000,000 shares authorized and 13,535,268 shares issued and
outstanding as of February 3, 2019, and 6,064,500 shares issued and
outstanding as of February 4, 2018, respectively. |
|
136 |
|
|
|
61 |
|
|
|
|
|
Additional paid-in capital |
|
141,727,807 |
|
|
|
79,891,835 |
|
|
|
|
|
Accumulated deficit |
|
(62,957,809 |
) |
|
|
(56,253,453 |
) |
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
78,770,134 |
|
|
|
23,638,453 |
|
|
|
|
|
Total Liabilities and Stockholders'
Equity |
$ |
105,014,305 |
|
|
$ |
41,440,935 |
|
|
|
|
|
|
|
|
THE LOVESAC
COMPANY |
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
Thirteen weeks ended |
|
Fourteen weeks ended |
|
Fifty-two weeks ended |
|
Fifty-three weeks ended |
|
February 3, 2019 |
|
February 4, 2018 |
|
February 3, 2019 |
|
February 4, 2018 |
|
(unaudited) |
|
|
|
|
Net sales |
$ |
64,177,558 |
|
|
$ |
39,041,375 |
|
|
$ |
165,881,297 |
|
|
$ |
101,810,413 |
|
|
|
|
|
|
|
|
|
Cost of merchandise sold |
|
28,669,301 |
|
|
|
16,111,276 |
|
|
|
75,000,476 |
|
|
|
44,593,261 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
35,508,257 |
|
|
|
22,930,099 |
|
|
|
90,880,821 |
|
|
|
57,217,152 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
21,448,783 |
|
|
|
16,128,851 |
|
|
|
76,426,892 |
|
|
|
50,848,128 |
|
Advertising and
marketing |
|
5,196,137 |
|
|
|
3,416,847 |
|
|
|
18,363,491 |
|
|
|
9,192,358 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
620,742 |
|
|
|
837,543 |
|
|
|
3,133,751 |
|
|
|
2,214,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
27,265,662 |
|
|
|
20,383,241 |
|
|
|
97,924,134 |
|
|
|
62,254,985 |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
8,242,595 |
|
|
|
2,546,858 |
|
|
|
(7,043,313 |
) |
|
|
(5,037,833 |
) |
|
|
|
|
|
|
|
|
Interest income (expense),
net |
|
212,922 |
|
|
|
(94,210 |
) |
|
|
355,364 |
|
|
|
(437,965 |
) |
|
|
|
|
|
|
|
|
Net income (loss) before
taxes |
|
8,455,517 |
|
|
|
2,452,648 |
|
|
|
(6,687,949 |
) |
|
|
(5,475,798 |
) |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
(16,407 |
) |
|
|
(26,000 |
) |
|
|
(16,407 |
) |
|
|
(26,000 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
8,439,110 |
|
|
$ |
2,426,648 |
|
|
$ |
(6,704,356 |
) |
|
$ |
(5,501,798 |
) |
|
|
|
|
|
|
|
|
Net income (loss) per common
share: |
|
|
|
|
|
|
|
Basic and
diluted |
$ |
0.62 |
|
|
$ |
0.31 |
|
|
$ |
(3.28 |
) |
|
$ |
(1.12 |
) |
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
Basic and
diluted |
|
13,538,426 |
|
|
|
6,002,633 |
|
|
|
10,536,721 |
|
|
|
6,000,699 |
|
|
Thirteen weeks ended |
|
|
Fourteen weeks ended |
|
|
|
|
|
|
|
|
|
February 3, 2019 |
|
February 4, 2018 |
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income - Basic and
diluted |
$ |
8,439,110 |
|
|
$ |
2,426,648 |
|
|
|
|
|
|
|
|
|
Preferred dividends and
deemed dividends |
|
- |
|
|
|
(538,398 |
) |
|
|
|
|
|
|
|
|
Net income attributable
to common shares |
|
8,439,110 |
|
|
|
1,888,250 |
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares for basic and diluted net income per share |
|
13,538,426 |
|
|
|
6,002,633 |
|
|
|
|
|
|
|
|
|
Basic and diluted net
income per share |
$ |
0.62 |
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifty-two weeks ended |
|
|
Fifty-three weeks ended |
|
|
|
|
|
|
|
|
|
February 3, 2019 |
|
February 4, 2018 |
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - Basic and
diluted |
$ |
(6,704,356 |
) |
|
$ |
(5,501,798 |
) |
|
|
|
|
|
|
|
|
Preferred dividends and
deemed dividends |
|
(27,832,998 |
) |
|
|
(1,208,003 |
) |
|
|
|
|
|
|
|
|
Net loss attributable
to common shares |
|
(34,537,354 |
) |
|
|
(6,709,801 |
) |
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares for basic and diluted net loss per share |
|
10,536,721 |
|
|
|
6,000,699 |
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share |
$ |
(3.28 |
) |
|
$ |
(1.12 |
) |
|
|
|
|
|
|
|
|
|
THE LOVESAC COMPANY |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
Fiscal year ended |
|
February 3, 2019 |
|
February 4, 2018 |
|
|
|
|
Cash Flows from Operating
Activities |
|
|
|
Net loss |
$ |
(6,704,356 |
) |
|
$ |
(5,501,798 |
) |
Adjustments to reconcile net loss
to net cash |
|
|
|
used in operating activities: |
|
|
|
Depreciation and amortization of
property and equipment |
|
2,935,202 |
|
|
|
1,996,191 |
|
Amortization of other intangible
assets |
|
198,549 |
|
|
|
218,308 |
|
Amortization of deferred financing
fees |
|
121,173 |
|
|
|
144,505 |
|
Loss on disposal of property and
equipment |
|
254,720 |
|
|
|
196,540 |
|
Equity based compensation |
|
3,310,018 |
|
|
|
950,554 |
|
Deferred rent |
|
530,707 |
|
|
|
359,829 |
|
Changes in operating assets and
liabilities: |
|
|
|
Accounts receivable |
|
(1,149,938 |
) |
|
|
(1,796,671 |
) |
Merchandise inventories |
|
(14,512,832 |
) |
|
|
(2,208,463 |
) |
Prepaid expenses and other current
assets |
|
129,074 |
|
|
|
(4,164,720 |
) |
Accounts payable and accrued
expenses |
|
7,729,293 |
|
|
|
6,851,550 |
|
Customer deposits |
|
150,721 |
|
|
|
213,838 |
|
|
|
|
|
Net Cash Used in Operating
Activities |
|
(7,007,669 |
) |
|
|
(2,740,337 |
) |
|
|
|
|
Cash Flows from Investing
Activities |
|
|
|
Purchase of property and
equipment |
|
(10,747,712 |
) |
|
|
(6,636,489 |
) |
Payments for patents and
trademarks |
|
(614,510 |
) |
|
|
(172,861 |
) |
|
|
|
|
Net Cash Used in Investing
Activities |
|
(11,362,222 |
) |
|
|
(6,809,350 |
) |
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
Proceeds from initial public
offering, net of issuance costs |
|
58,908,551 |
|
|
|
- |
|
Taxes paid for net share settlement
of equity awards |
|
(382,533 |
) |
|
|
- |
|
Proceeds from sale of preferred
stock and warrants, net of issuance costs |
|
- |
|
|
|
21,139,845 |
|
Principal payments on note
payable |
|
- |
|
|
|
(194,530 |
) |
Proceeds from (paydowns of) the
line of credit, net |
|
30,968 |
|
|
|
(3,098,372 |
) |
Payments of deferred financing
costs |
|
(292,095 |
) |
|
|
- |
|
Net Cash Provided by Financing
Activities |
|
58,264,892 |
|
|
|
17,846,943 |
|
|
|
|
|
Net Change in Cash and Cash
Equivalents |
|
39,895,001 |
|
|
|
8,297,256 |
|
|
|
|
|
Cash and Cash Equivalents -
Beginning |
|
9,175,951 |
|
|
|
878,696 |
|
|
|
|
|
Cash and Cash Equivalents -
End |
$ |
49,070,952 |
|
|
$ |
9,175,952 |
|
|
|
|
|
Supplemental Cash Flow
Disclosures |
|
|
|
Cash paid for taxes |
$ |
18,246 |
|
|
$ |
25,771 |
|
Cash paid for interest |
$ |
61,436 |
|
|
$ |
173,447 |
|
|
|
|
|
|
|
|
THE LOVESAC COMPANY |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
(unaudited) |
|
|
|
|
|
|
|
Thirteen weeks ended |
Fourteen weeks ended |
|
Fifty-two weeks |
Fifty-three weeks ended |
(dollars in
thousands) |
February 3, 2019 |
February 4, 2018 |
|
February 3, 2019 |
February 4, 2018 |
Net loss |
$ |
8,439 |
|
$ |
2,427 |
|
$ |
(6,704 |
) |
$ |
(5,502 |
) |
Interest
(income) expense |
|
(213 |
) |
|
94 |
|
|
(355 |
) |
|
438 |
|
Taxes |
|
16 |
|
|
26 |
|
|
16 |
|
|
26 |
|
Depreciation and amortization |
|
621 |
|
|
838 |
|
|
3,134 |
|
|
2,359 |
|
EBITDA |
|
8,863 |
|
|
3,384 |
|
|
(3,909 |
) |
|
(2,679 |
) |
Sponsor
fees (a) |
|
185 |
|
|
125 |
|
|
1,177 |
|
|
484 |
|
Deferred
Rent (b) |
|
148 |
|
|
118 |
|
|
531 |
|
|
360 |
|
Equity-based compensation (c) |
|
460 |
|
|
935 |
|
|
3,310 |
|
|
951 |
|
Write-off
of property and equipment (d) |
|
249 |
|
|
194 |
|
|
255 |
|
|
197 |
|
Other
non-recurring expenses (e) |
|
70 |
|
|
1,265 |
|
|
2,021 |
|
|
1,959 |
|
Adjusted EBITDA |
$ |
9,975 |
|
$ |
6,022 |
|
$ |
3,385 |
|
$ |
1,272 |
|
(a) |
Represents management
fees and expenses charged by our equity sponsors. |
|
|
(b) |
Represents the difference between rent expense recorded and the
amount paid by the Company. In accordance with generally accepted
accounting principles, the Company records monthly rent expense
equal to the total of the payments due over the lease term, divided
by the number of months of the lease terms. |
|
|
(c) |
Represents expenses
associated with stock options and restricted stock units granted to
our management and equity sponsors. |
|
|
(d) |
Represents the net loss on
the disposal of fixed assets. |
|
|
(e) |
Other
expenses in fiscal 2019 are made up of: (1) $380 in fees and costs
associated with our fundraising and reorganizing activities
including the legal and professional services incurred in
connection with such activities; (2) $508 in fees paid for investor
relations and public relations relating to the IPO; (3) $140 in
executive recruitment fees to build executive management team; (4)
$261 in secondary offering legal fees; (5) $84 in travel and
logistical costs associated with the offering; (6) $198 in
accounting fees related to the offering; and (7) $450 in IPO
bonuses paid to executives. Other expenses in fiscal 2018 are
made up of: (1) $1,072 in fees and costs associated with our
fundraising and reorganizing activities including the legal and
professional services incurred in connection with such activities;
(2) $182 in travel and logistical costs associated with our IPO;
(3) $484 in costs related to our IPO and finance fees; and (4) $221
in accounting fees related to the offering. Other expenses in the
thirteen weeks ended February 3, 2019 are made up of $70 in
secondary offering legal and professional fees. Other expenses in
the fourteen weeks ended February 4, 2018 are made up of: (1) $946
in fees and costs associated with our fundraising and reorganizing
activities including the legal and professional services incurred
in connection with such activities; (2) $157 in travel and
logistical costs associated with our IPO; and (3) $162 in
accounting fees related to the offering. |
|
|
|
|
|
THE LOVESAC COMPANY |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
(unaudited) |
|
|
|
|
|
|
|
Thirteen weeks ended |
Fourteen weeks ended |
|
Fifty-two weeks |
Fifty-three weeks ended |
(dollars in
thousands) |
February 3, 2019 |
February 4, 2018 |
|
February 3, 2019 |
February 4, 2018 |
Net income (loss) as
reported |
$ |
8,439 |
$ |
2,427 |
|
$ |
(6,704 |
) |
$ |
(5,502 |
) |
Adjustments: |
|
|
|
|
|
Adjustments to selling, general and administrative
expense: |
|
|
|
|
|
Sponsor
fees relating to the IPO (a) |
|
- |
|
- |
|
|
625 |
|
|
- |
|
Equity
based compensation related to the IPO (b) |
|
- |
|
- |
|
|
1,442 |
|
|
- |
|
Other
non-recurring expenses (c)(d) |
|
70 |
|
1,265 |
|
|
2,021 |
|
|
1,959 |
|
Adjusted net income
(loss) |
$ |
8,509 |
$ |
3,692 |
|
$ |
(2,616 |
) |
$ |
(3,543 |
) |
|
|
|
|
|
|
Adjusted basic and
diluted weighted average shares outstanding- adjusted for IPO
related issuance |
|
13,538,426 |
|
13,362,304 |
|
|
13,468,274 |
|
|
13,360,370 |
|
Adjusted net income
(loss) per common share |
$ |
0.63 |
$ |
0.28 |
|
$ |
(0.19 |
) |
$ |
(0.27 |
) |
(a) |
$625 paid in sponsor
monitoring fees paid as a result of the IPO |
(b) |
$700 in executive
restricted stock awards vested as a result of the IPO and $742 IPO
bonus payable to Satori in common stock |
(c) |
Other
expenses in fiscal 2019 are made up of: (1) $380 in fees and costs
associated with our fundraising and reorganizing activities
including the legal and professional services incurred in
connection with such activities; (2) $508 in fees paid for investor
relations and public relations relating to the IPO; (3) $140 in
executive recruitment fees to build executive management team; (4)
$261 in secondary offering legal fees; (5) $84 in travel and
logistical costs associated with the offering; (6) $198 in
accounting fees related to the offering; and (7) $450 in IPO
bonuses paid to executives. Other expenses in fiscal 2018 are
made up of: (1) $1,072 in fees and costs associated with our
fundraising and reorganizing activities including the legal and
professional services incurred in connection with such activities;
(2) $182 in travel and logistical costs associated with our IPO;
(3) $484 in costs related to our IPO and finance fees; and (4) $221
in accounting fees related to the offering. |
(d) |
Other
expenses in the thirteen weeks ended February 3, 2019 are made up
of $70 in secondary offering legal and professional
fees. Other expenses in the fourteen weeks ended February 4,
2018 are made up of: (1) $946 in fees and costs associated with our
Fundraising and reorganizing activities including the legal and
professional services incurred in connection with such activities;
(2) $157 in travel and logistical costs associated with our IPO;
and (3) $162 in accounting fees related to the offering. |
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