The Lovesac Company (Nasdaq:LOVE) (the “Company”) today announced
its financial results for the third quarter of fiscal 2020, which
ended on November 3, 2019.
The Company announced its third quarter fiscal
2020 performance, including net sales growth of 25% and total
comparable sales growth of 32.5% driven by increases in new
customers as well as increases in average order value (AOV). New
product introductions including the Sactionals PowerHub and Storage
Seat have exhibited 45% attachment rates and have lifted the
blended AOV of all Sactionals purchases (new and repeat)
significantly. The Company stated it has made good progress on all
strategic priorities including supply chain optimization, sourcing,
growth of the pop-up shop business, and the successful launch of
four permanent shop in shop locations within Macy’s stores intended
as a test toward a larger program.
Shawn Nelson, Chief Executive Officer, stated,
“We are very pleased to have delivered better than expected third
quarter Adjusted EBITDA results even with a slight top-line impact
from a timing shift of showroom openings. This demonstrates our
disciplined approach to managing the business while still achieving
continued high growth.”
The Company experienced a timing shift of
showroom openings in the third quarter. These showrooms are
expected to open in the fiscal fourth quarter for an ending
showroom count of 91, or a 21% increase over last year. As a result
of these third quarter shifts, the Company is narrowing its
expected net sales growth range for the year to 40% - 42% (from 40%
- 45% previously) and continues to expect positive Adjusted EBITDA
for the full fiscal year.
Nelson added, “The all-important fourth quarter
is off to a great start with greater than 42% growth over
fourth quarter last year and we are on track to deliver positive
Adjusted EBITDA for the full fiscal year.”
For the Thirteen Weeks Ended November 3,
2019
- Net sales increased 25.0% to $52.1 million in the third quarter
of fiscal 2020 from $41.7 million in the third quarter of fiscal
2019. This increase was driven by strong showroom, Internet and
pop-up shop (which we previously referred to as shop in shops)
performance with both transaction and ticket growth resulting from
successful digital marketing strategies which drew new customers to
the brand while also driving repeat purchase behavior. Comparable
sales, which includes showroom and Internet sales, increased 32.5%.
Comparable showroom sales increased 27.1% and Internet sales
increased 47.7%.
- The Company opened four new showrooms in the third quarter of
fiscal 2020 and ended the quarter with 84 showrooms in 32 states.
This represents a unit increase of 9.1% over the same quarter in
the prior year.
- Gross profit increased $3.4 million, or 14.7%, to $26.3 million
in the third quarter of fiscal 2020 from $22.9 million in the third
quarter of fiscal 2019. Gross margin decreased to 50.4% of net
sales from 54.9% of net sales in the prior year period. The
expected decrease in gross margin rate was driven primarily by the
impact of the 25% China tariffs, partially offset by reduced costs
of Sactionals and Sacs products. The decrease in costs of
Sactionals and Sacs products was primarily related to cost savings
from improved sourcing of Lovesoft and down blend fills in addition
to an ongoing shift of manufacturing from China to Vietnam. Given
timing factors, the benefits of the sourcing work and recently
negotiated vendor concessions are expected to impact gross margins
starting in the first quarter of fiscal 2021.
- Selling, general and administrative expenses increased $5.2
million, or 26.7%, to $24.5 million in the third quarter of fiscal
2020 compared to $19.3 million in the prior year period. The
increase in selling, general and administrative expenses was
primarily related to investments to support growth including: an
increase in employment costs of $1.6 million, $0.9 million of
increased rent associated with our addition of four showrooms
offset by a reduction of $0.1 million of expenses related to sales
such as an increase of $0.4 million of credit card fees, offset by
a reduction of $0.5 million of pop-up shop sales agent fees.
Overhead expenses increased $2.8 million consisting of an increase
of $2.3 million in infrastructure improvements, increase in
equity-based compensation of $0.1 million, and an increase of $0.4
million related to operating costs of the business such as
insurance.
- As a percent of net sales, total SG&A expense increased to
47.0% from 46.4% in the prior year period, driven largely by
increases in infrastructure improvements, employment and insurance
costs, partially offset by selling related expenses.
- Advertising and marketing expenses increased $2.1 million, or
40.5%, to $7.3 million in the third quarter of fiscal 2020 compared
to $5.2 million in the third quarter of fiscal 2019. The increase
in advertising and marketing costs relates to increased media and
direct to consumer programs, which are expected to drive revenue
beyond the period of the expense.
- Depreciation and amortization expenses increased $0.3 million
or 27.1% in the third quarter of fiscal 2020 to $1.4 million
compared to $1.1 million in the third quarter of fiscal 2019. The
increase in depreciation and amortization expense principally
relates to capital investments for new and remodeled
showrooms.
- Operating loss was $6.9 million in the third quarter of fiscal
2020 compared to an operating loss of $2.7 million in the third
quarter of fiscal 2019.
- Net loss and net loss attributable to common shares was $6.7
million in the third quarter of fiscal 2020, compared to a net loss
of $2.5 million, or net loss attributable to common shares of $2.9
million including preferred dividends and deemed dividends in the
third quarter in fiscal 2019. Adjusted net loss, which excludes the
impact of the IPO and certain other non-recurring expenses in both
periods, was $6.7 million in the third quarter of fiscal 2020
compared to $2.0 million in the third quarter of fiscal 2019 (see
“GAAP and Non-GAAP Measures”).
- Net loss per share, including preferred dividends and deemed
dividends, was ($0.46) in the third quarter of fiscal 2020 compared
to ($0.22) in the third quarter of fiscal 2019. 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 ($0.46) in the third quarter of fiscal 2020 compared
to ($0.15) in the third quarter of fiscal 2019 (see “GAAP and
Non-GAAP Measures”).
- Adjusted earnings before interest, taxes, depreciation and
amortization (“EBITDA”), was ($3.7) million in the third quarter of
fiscal 2020 compared to ($0.4) million in the third quarter of
fiscal 2019 (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 Thirty-Nine Weeks Ended November 3, 2019
- Net sales increased 38.8% to $141.2 million in the fiscal 2020
year-to-date period from $101.7 million in the same period of
fiscal 2019. This increase was driven by strong showroom, Internet
and pop-up shop performance with both transaction as well as ticket
growth resulting from successful digital marketing strategies which
drew new customers to the brand while also driving repeat purchase
behavior. Comparable sales, which includes showroom and Internet
sales, increased 37.8%. Comparable showroom sales increased 29.5%
and Internet sales increased 64.7%.
- The Company opened 11 new showrooms and closed two showrooms in
the fiscal 2020 year-to-date period.
- Gross profit increased $16.2 million, or 29.2%, to $71.5
million in the fiscal 2020 year-to-date period from $55.4 million
in the corresponding prior year period. Gross margin decreased to
50.7% of net sales in the fiscal 2020 year-to-date period from
54.4% of net sales in the corresponding prior year period. The
decrease in gross margin rate was driven primarily by the impact of
25% China tariffs, partially offset by reduced costs of Sactionals
and Sacs products. The decrease in costs of Sactionals and Sacs
products was primarily related to cost savings from improved
sourcing of Lovesoft and down blend fills in addition to an ongoing
shift of manufacturing from China to Vietnam.
- Selling, general and administrative expenses increased $15.3
million, or 27.9%, to $70.3 million in the fiscal 2020 year-to-date
period compared to $55.0 million in the prior year period. The
increase in selling, general and administrative expenses was
primarily related to investments to support growth including: an
increase in employment costs of $5.1 million, $2.2 million of rent
associated with our net addition of 9 showrooms, and $2.2
million of expenses related to the increase in sales such as
$1.1 million of credit card fees and $1.1 million of pop-up shop
sales agent fees. Overhead expenses increased $5.8 million
consisting of an increase of $6.1 million in infrastructure
investments, an increase in insurance expense of $0.8 million
related to the growth of the Company and an increase of $1.2
million in stock compensation offset by a decrease in IPO and
financing related expense of $2.3 million.
- As a percent of net sales, total SG&A expense decreased to
49.8% from 54.1% in the prior year period, driven largely by
decreases in equity-based compensation and IPO related expenses,
partially offset by warranty and professional services.
- Advertising and marketing expenses increased $5.6 million, or
42.2%, to $18.7 million in the fiscal 2020 year-to-date period from
$13.2 million in the corresponding prior year period. The increase
in advertising and marketing costs relates to increased media and
direct to consumer programs which are expected to drive revenue
beyond the period of the expense.
- Depreciation and amortization expenses increased $1.1 million
or 45.2% in the fiscal 2020 year-to-date period to $3.6 million
compared to $2.5 million in the corresponding prior year period.
The increase in depreciation and amortization expense principally
relates to capital investments for new and remodeled
showrooms.
- Operating loss was $21.1 million in the fiscal 2020
year-to-date period compared to an operating loss of $15.3 million
in the same period of fiscal 2019.
- Net loss and net loss attributable to common shares was $20.6
million in the fiscal 2020 year-to-date period. This compares to a
net loss of $15.1 million in the prior year period and a net loss
attributable to common shares of $43.0 million including preferred
dividends and deemed dividends in the prior year period. Adjusted
net loss, which excludes the impact of the IPO and certain other
non-recurring expenses, was $20.3 million in the fiscal 2020
year-to-date period compared to $11.1 million in the prior year
period (see “GAAP and Non-GAAP Measures”).
- Net loss per share, including preferred dividends and deemed
dividends, was ($1.45) in the fiscal 2020 year-to-date period
compared to ($4.51) in the prior year period. 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 ($1.43) in the fiscal 2020 year-to-date period
compared to ($1.16) in the prior year period (see “GAAP and
Non-GAAP Measures”).
- Adjusted EBITDA was ($11.7) million in the year-to-date period
of fiscal 2020 compared to ($6.3) million in the prior year period
in fiscal 2019 (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.
Conference Call Details
A conference call to discuss the third quarter
fiscal 2020 financial results is scheduled for today, December 12,
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 with
approximately 90 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 our 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. These
statements are often, but not always, made through the use of words
or phrases such as “may,” “believe,” “anticipate,” “could,”
“should,” “intend,” “plan,” “will,” “aim(s),” “can,” “would,”
“expect(s),” “estimate(s),” “project(s),” “forecast(s)”,
“positioned,” “approximately,” “potential,” “goal,” “pro forma,”
“strategy,” “outlook” and similar expressions. 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. These statements are
based on management’s current expectations and/or beliefs and
assumptions that management considers reasonable, which assumptions
may or may not prove correct. We 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. Actual results and
performance could differ materially from those projected in the
forward-looking statements as a result of many factors. Among the
key factors that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements
are the risk of disruptions to current plans and operations,
including the timing of openings of new showrooms that further
shift expect growth to later periods, slower than expected growth
during the fourth quarter and risks related to tariffs, the
countermeasures and mitigation steps that we adopt in response to
tariffs and other similar issues, as well as those
risks and uncertainties disclosed under the sections
entitled “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our most
recent Form 10-K and Form 10-Q filed with the Securities and
Exchange Commission, and similar disclosures in subsequent reports
filed with the SEC, which are available on our investor relations
website at investor.lovesac.com and on the SEC website at
www.sec.gov. Any forward-looking statement made by us in this press
release speaks only as of the date on which we make it. We disclaim
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
THE LOVESAC
COMPANY |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of November 3, 2019 |
|
As of February 3, 2019 |
|
Assets |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
27,896,406 |
|
|
$ |
49,070,952 |
|
|
Trade accounts receivable |
|
|
8,581,102 |
|
|
|
3,955,124 |
|
|
Merchandise inventories |
|
|
50,206,326 |
|
|
|
26,154,314 |
|
|
Prepaid expenses and other current assets |
|
|
8,715,638 |
|
|
|
5,933,872 |
|
|
Total Current Assets |
|
|
95,399,472 |
|
|
|
85,114,262 |
|
|
Property and Equipment, Net |
|
|
21,838,589 |
|
|
|
18,595,079 |
|
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
Goodwill |
|
|
143,562 |
|
|
|
143,562 |
|
|
Intangible assets, net |
|
|
1,200,274 |
|
|
|
942,331 |
|
|
Deferred financing costs, net |
|
|
164,303 |
|
|
|
219,071 |
|
|
Total Other Assets |
|
|
1,508,139 |
|
|
|
1,304,964 |
|
|
Total Assets |
|
$ |
118,746,200 |
|
|
$ |
105,014,305 |
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Accounts payable |
|
$ |
18,971,289 |
|
|
$ |
16,836,816 |
|
|
Accrued expenses |
|
|
5,120,624 |
|
|
|
3,701,090 |
|
|
Payroll payable |
|
|
3,385,340 |
|
|
|
2,269,834 |
|
|
Customer deposits |
|
|
3,427,184 |
|
|
|
1,059,957 |
|
|
Sales taxes payable |
|
|
893,917 |
|
|
|
750,922 |
|
|
Total Current Liabilities |
|
|
31,798,354 |
|
|
|
24,618,619 |
|
|
Deferred Rent |
|
|
2,498,124 |
|
|
|
1,594,179 |
|
|
Line
of credit |
|
|
-- |
|
|
|
31,373 |
|
|
Total Liabilities |
|
|
34,296,478 |
|
|
|
26,244,171 |
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
Preferred Stock $0.00001 par value, 10,000,000 shares authorized,
no shares issued and outstanding as of November 3, 2019 and
February 3, 2019, respectively. |
|
|
- |
|
|
|
- |
|
|
Common Stock $0.00001 par value, 40,000,000 shares authorized,
14,538,586 shares issued and outstanding as of November 3, 2019 and
13,588,568 shares issued and oustanding as of February 3, 2019,
respectivily. |
|
|
145 |
|
|
|
136 |
|
|
Additional paid-in capital |
|
|
168,028,472 |
|
|
|
141,727,807 |
|
|
Accumulated deficit |
|
|
(83,578,895 |
) |
|
|
(62,957,809 |
) |
|
Stockholders' Equity |
|
|
84,449,722 |
|
|
|
78,770,134 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
118,746,200 |
|
|
$ |
105,014,305 |
|
|
|
|
|
|
|
|
THE LOVESAC
COMPANY |
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
(unaudited) |
|
|
|
|
Thirteen weeks ended |
|
|
Thirty-nine weeks ended |
|
|
|
|
November 3, |
|
|
November 4, |
|
|
November 3, |
|
|
November 4, |
|
|
2019 |
2018 |
2019 |
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
52,097,232 |
|
|
$ |
41,685,929 |
|
|
$ |
141,202,010 |
|
|
$ |
101,703,739 |
|
|
Cost of merchandise sold |
|
|
25,843,532 |
|
|
|
18,799,108 |
|
|
|
69,670,642 |
|
|
|
46,331,175 |
|
|
Gross profit |
|
|
26,253,700 |
|
|
|
22,886,821 |
|
|
|
71,531,368 |
|
|
|
55,372,564 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
24,484,791 |
|
|
|
19,329,422 |
|
|
|
70,302,779 |
|
|
|
54,978,109 |
|
|
Advertising and marketing |
|
|
7,258,284 |
|
|
|
5,164,699 |
|
|
|
18,717,517 |
|
|
|
13,167,354 |
|
|
Depreciation and amortization |
|
|
1,377,659 |
|
|
|
1,084,180 |
|
|
|
3,649,072 |
|
|
|
2,513,009 |
|
|
Total operating expenses |
|
|
33,120,734 |
|
|
|
25,578,301 |
|
|
|
92,669,368 |
|
|
|
70,658,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(6,867,034 |
) |
|
|
(2,691,480 |
) |
|
|
(21,138,000 |
) |
|
|
(15,285,908 |
) |
|
Interest income, net |
|
|
134,416 |
|
|
|
200,862 |
|
|
|
538,306 |
|
|
|
142,442 |
|
|
Net loss before taxes |
|
|
(6,732,618 |
) |
|
|
(2,490,618 |
) |
|
|
(20,599,694 |
) |
|
|
(15,143,466 |
) |
|
Provision for income taxes |
|
|
(15,692 |
) |
|
|
- |
|
|
|
(21,392 |
) |
|
|
- |
|
|
Net loss |
|
$ |
(6,748,310 |
) |
|
$ |
(2,490,618 |
) |
|
$ |
(20,621,086 |
) |
|
$ |
(15,143,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.46 |
) |
|
$ |
(0.22 |
) |
|
$ |
(1.45 |
) |
|
$ |
(4.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
14,538,586 |
|
|
|
13,465,882 |
|
|
|
14,179,995 |
|
|
|
9,536,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE LOVESAC
COMPANY |
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW |
|
|
(unaudited) |
|
|
|
|
Thirty-nine weeks ended |
|
|
|
November 3, |
|
November 4, |
|
2019 |
2018 |
|
|
|
|
|
|
Cash
Flows from Operating Activities |
|
|
|
|
|
Net
loss |
|
$ |
(20,621,086) |
|
$ |
(15,143,466) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation
and amortization of property and equipment |
|
|
3,457,737 |
|
|
2,374,743 |
|
Amortization
of other intangible assets |
|
|
191,335 |
|
|
138,266 |
|
Amortization
of deferred financing fees |
|
|
54,768 |
|
|
102,917 |
|
Net
(gain)loss on disposal of property and equipment |
|
|
(166,865) |
|
|
6,139 |
|
Equity based
compensation |
|
|
4,020,978 |
|
|
2,849,842 |
|
Deferred
rent |
|
|
903,945 |
|
|
382,353 |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(4,625,978) |
|
|
(108,136) |
|
Merchandise
inventories |
|
|
(24,052,012) |
|
|
(12,977,256) |
|
Prepaid
expenses and other current assets |
|
|
(2,781,766) |
|
|
(190,920) |
|
Accounts
payable and accrued expenses |
|
|
4,812,508 |
|
|
6,726,184 |
|
Customer
deposits |
|
|
2,367,227 |
|
|
1,615,798 |
|
Net
Cash Used in Operating Activities |
|
|
(36,439,209) |
|
|
(14,223,536) |
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities |
|
|
|
|
|
|
|
Purchase of
property and equipment |
|
|
(6,834,382) |
|
|
(8,436,529) |
|
Payments for
patents and trademarks |
|
|
(449,278) |
|
|
(440,185) |
|
Proceeds
from the disposal of property and equipment |
|
|
300,000 |
|
|
- |
|
Net
Cash Used in Investing Activities |
|
|
(6,983,660) |
|
|
(8,876,714) |
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities |
|
|
|
|
|
|
|
Proceeds
from issuance of common shares, net |
|
|
25,610,000 |
|
|
59,168,596 |
|
Payments of
initial public offering issuance costs |
|
|
- |
|
|
(260,044) |
|
Taxes paid
for net share settlement of equity awards |
|
|
(3,342,304) |
|
|
(7,902) |
|
Proceeds from the sale of preferred stock and warrants, net of
issuance costs |
12,000 |
|
|
- |
|
Paydowns of
borrowings on the line of credit, net |
|
|
(31,373) |
|
|
(405) |
|
Payments of
deferred financing costs |
|
|
- |
|
|
(292,095) |
|
Net
Cash Provided by Financing Activities |
|
|
22,248,323 |
|
|
58,608,150 |
|
Net
Change in Cash and Cash Equivalents |
|
|
(21,174,546) |
|
|
35,507,900 |
|
Cash
and Cash Equivalents - Beginning |
|
|
49,070,952 |
|
|
9,175,951 |
|
Cash
and Cash Equivalents - End |
|
$ |
27,896,406 |
|
$ |
44,683,851 |
|
Supplemental Cash Flow Disclosures |
|
|
|
|
|
|
|
Cash paid
for interest |
|
$ |
38,632 |
|
$ |
48,256 |
|
|
|
|
|
|
|
|
|
|
THE LOVESAC
COMPANY |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Thirty-nine weeks ended |
|
|
(dollars in thousands) |
|
November 3, |
|
November 4, |
|
November 3, |
|
November 4, |
|
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
Net loss |
|
$ |
(6,748 |
) |
|
$ |
(2,490 |
) |
|
$ |
(20,621 |
) |
|
$ |
(15,143 |
) |
|
|
Interest
income, net |
|
|
(134 |
) |
|
|
(201 |
) |
|
|
(538 |
) |
|
|
142 |
|
|
|
Taxes |
|
|
16 |
|
|
|
- |
|
|
|
21 |
|
|
|
- |
|
|
|
Depreciation
and amortization |
|
|
1,378 |
|
|
|
1,084 |
|
|
|
3,649 |
|
|
|
2,513 |
|
|
|
EBITDA |
|
|
(5,488 |
) |
|
|
(1,607 |
) |
|
|
(17,489 |
) |
|
|
(12,488 |
) |
|
|
Management
fees (a)(b) |
|
|
141 |
|
|
|
125 |
|
|
|
438 |
|
|
|
992 |
|
|
|
Deferred
Rent (c) |
|
|
816 |
|
|
|
131 |
|
|
|
904 |
|
|
|
382 |
|
|
|
Equity-based
compensation (d) |
|
|
628 |
|
|
|
516 |
|
|
|
4,021 |
|
|
|
2,850 |
|
|
|
(Gain) loss
on disposal of of property and equipment (e) |
|
|
- |
|
|
|
- |
|
|
|
(167 |
) |
|
|
6 |
|
|
|
Other
non-recurring expenses (f)(g) |
|
|
174 |
|
|
|
444 |
|
|
|
598 |
|
|
|
1,982 |
|
|
|
Adjusted
EBITDA |
|
$ |
(3,729 |
) |
|
$ |
(391 |
) |
|
$ |
(11,695 |
) |
|
$ |
(6,276 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Management fees in the thirteen weeks ended November 3, 2019 are
made up of $141 monitoring fees. Management fees in the thirteen
weeks ended November 4, 2018 are made up of monitoring fess of
$125. |
|
|
|
|
|
|
|
(b) |
Management fees in the thirty-nine weeks ended November 4, 2019 are
made up of $438 monitoring fees. Management fees in the thirty-nine
weeks ended November 4, 2018 are made up of monitoring fees of $367
and one time payments of $625 relating to the IPO. |
|
|
|
|
|
|
|
(c) |
Represents the difference between rent expense recorded and the
amount paid by the Company. In accordance with GAAP, 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. |
|
|
|
|
|
|
|
(d) |
Represents expenses associated stock options and restricted stock
units granted to our management and equity sponsors. |
|
|
|
|
|
|
|
(e) |
Represents the net (gain) loss on the disposal of property and
equipment. |
|
|
|
|
|
|
|
(f) |
Other expenses in the thirteen weeks ended November 3, 2019 are
made up of: (1) $76 in financing fees associated with our
primary and secondary offering and (2) $98 in executive
recruitment fees. Other expense in the thirteen weeks ended
November 4, 2018 are made up of: (1) $110 in fees and costs
associated with our fundraising and reorganizing activities
including the legal and professional services incurred in
connections with such activities; (2) $261 in legal fees related to
the secondary offering (3) $29 in fees paid for investor relations
and public relations relating to the IPO and (4) $44 in
executive recruitment fees to build executive management
team. |
|
|
|
|
|
|
|
(g) |
Other expenses in the thirty-nine weeks ended November 3, 2019
are made up of: (1) $247 in recruitment fees to build executive
management team and Board of Directors; (2) $268 in
fees associated with our primary and secondary shares
offerings and (3) $83 in financing fees associated with our
secondary offering. Other expenses in the thirty-nine weeks
ended November 4, 2018 are made up of: (1) $341 in fees and
costs associated with our fundraising and reorganizing activities
including the legal and professional services incurred in
connection with such activities; (2) $84 in travel and logistical
costs associated with the offering; (3) $198 in accounting
fees related to the offering; (4) $450 in IPO bonuses
paid to executives; (5) $508 in fees paid for investor
relations and public relations relating to the IPO (6) $140 in
executive recruitment fees to build executive management team and
(7) $261 in legal fees relating to the secondary offering. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE LOVESAC
COMPANY |
|
|
|
|
|
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES |
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks ended |
|
Thirty-nine weeks ended |
|
|
(dollars in thousands) |
November 3, 2019 |
|
November 4, 2018 |
|
November 3, 2019 |
|
November 4, 2018 |
|
|
Net loss as reported |
$
(6,748) |
|
$
(2,490) |
|
$
(20,621) |
|
$
(15,143) |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Adjustments to selling, general and administrative expense: |
|
|
|
|
|
|
|
|
|
|
Management fees relating to the IPO (a) |
- |
|
- |
|
- |
|
625 |
|
|
|
Equity based compensation related to the IPO (b) |
- |
|
- |
|
- |
|
1,442 |
|
|
|
Other
expenses (c)(d) |
76 |
|
444 |
|
350 |
|
1,982 |
|
|
Adjusted net loss |
$ (6,672) |
|
$ (2,046) |
|
$ (20,271) |
|
$ (11,094) |
|
|
Adjusted basic and diluted weighted average shares outstanding-
adjusted for IPO related issuance |
14,538,586 |
|
13,465,882 |
|
14,179,995 |
|
9,536,164 |
|
|
Adjusted net loss per common share |
$ (0.46) |
|
$ (0.15) |
|
$ (1.43) |
|
$ (1.16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
$625 paid in
management fees to equity sponsors related to the IPO |
|
|
|
|
|
|
|
|
|
(b) |
$700 in
executive Restricted Stock awards vested as a result of the IPO and
$742 IPO bonus paid to equity sponsor in common stock. |
|
|
|
|
|
|
|
|
|
(c) |
Other expenses in the thirteen weeks ended November 3, 2019 are
made up of $76 in financing fees associated with our primary
and secondary offering. Other expenses in the thirteen weeks ended
November 4, 2018 are made up of: (1) $110 in fees
and costs associated with our fundraising and reorganizing
activities including the legal and professional services incurred
in connections with such activities; (2) $261 in legal fees related
to the secondary offering (3) $29 in fees paid for investor
relations and public relations relating to the IPO and (4) $44
in executive recruitment fees to build executive management
team. |
|
|
|
|
|
|
|
(d) |
Other expenses in the thirty-nine weeks ended November 3, 2019
are made up of: (1) $268 in fees associated with our
primary and secondary shares offerings and (2) $83 in financing
fees associated with our secondary offering. Other expenses in
the thirty-nine weeks ended November 4, 2018 are made up of: (1)
$341 in fees and costs associated with our fundraising and
reorganizing activities includingthe legal and professional
services incurred in connection with such activities; (2) $84 in
travel and logistical costs associated with the offering; (3)
$198 in accounting fees related to the offering; (4) $450
in IPO bonuses paid to executives; (5) $508 in fees paid for
investor relations and public relations relating to the IPO (6)
$140 in executive recruitment fees to build executive management
team and (7) $261 in legal fees relating to the secondary
offering. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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