Second quarter sales growth of 25.3% to C$41.1
million; comparable sales increase of 5.1%
DAVIDsTEA Inc. (Nasdaq:DTEA) today announced financial
results for the three months and six months ended July 30, 2016.
For the three months ended July 30,
2016:
- Sales increased by 25.3% to C$41.1 million from C$32.8 million
in the second quarter of fiscal 2015. Comparable sales increased by
5.1%.
- Gross profit increased by 23.6% to C$19.9 million from C$16.1
million in the second quarter of fiscal 2015, while gross profit as
a percent of sales decreased to 48.5% from 49.0% in the second
quarter of fiscal 2015. The decrease in gross profit as a percent
of sales was driven primarily by the adverse impact of the stronger
U.S. dollar on U.S. dollar denominated purchases, partially offset
by supply chain efficiencies. On a constant currency basis, gross
profit as a percent of sales increased 10 basis points to
49.1%.
- Selling, general and administration expenses (“SG&A”)
increased to C$22.8 million from C$18.2 million in the second
quarter of fiscal 2015, due primarily to the hiring of additional
staff to support the growth of the Company, higher store operating
expenses to support the operations of 208 stores as of July 30,
2016 as compared to 165 stores as of August 1, 2015, as well as
newly incurred public company costs. As a percent of sales,
SG&A decreased to 55.5% from 55.6% in the second quarter of
fiscal 2015. Excluding the loss on disposal of property and
equipment in the prior year period, SG&A increased to C$22.8
million from C$17.9 million in the second quarter of fiscal 2015.
As a percent of sales, SG&A excluding the loss on disposal of
property and equipment in the prior year period increased to 55.5%
from 54.6%.
- Results from operating activities were C$(2.9) million as
compared to C$(2.2) million in the second quarter of fiscal 2015.
Excluding the loss on disposal of property and equipment in the
prior year period, results from operating activities decreased to
C$(2.9) million from C$(1.9) million in the second quarter of
fiscal 2015.
- The Company opened 10 net new stores in the second quarter of
fiscal 2016 and ended the quarter with a total of 208 stores in
Canada and the U.S. This represents an increase of 26% from the end
of the second quarter of fiscal 2015.
- Net income was C$(2.3) million compared to C$(52.1) million in
the second quarter of fiscal 2015 which, as previously stated,
includes a C$50.2 million non-cash loss associated with the
embedded derivative on Series A, A-1 and A-2 preferred shares as
all preferred shares were converted into common shares in
conjunction with the IPO transaction (see Reconciliation of IFRS
basis to Adjusted net income (loss) table). Adjusted net income,
which excludes IPO-related and other one-time income or expenses in
the prior year period (see Reconciliation of IFRS basis to Adjusted
net income (loss) table), was C$(2.3) million compared to C$(1.6)
million in the second quarter of fiscal 2015.
- Adjusted EBITDA was C$0.2 million compared to C$0.2 million in
the second quarter of fiscal 2015. Adjusted EBITDA excludes
IPO-related and other non-cash or one-time costs (see
Reconciliation of Adjusted EBITDA table).
- Fully diluted income per common share was C$(0.09) compared to
C$(2.73) in the second quarter of fiscal 2015. Adjusted fully
diluted income per common share, which is adjusted net income on an
adjusted fully diluted weighted average shares outstanding basis
(see Reconciliation of fully diluted weighted average common shares
outstanding table), was C$(0.09) per share compared to C$(0.07) per
share in the second quarter of fiscal 2015.
Sylvain Toutant, President and Chief Executive Officer, stated,
“We are pleased with our second quarter results which are a
testament to the strength of our brand and the progress we continue
to make on our goals. In the U.S., strong e-commerce sales were
offset by our store sales which were lower than expected. We
continue to refine the U.S. model, learn from our customers and
remain enthusiastic and focused on the expansion opportunity we see
for our brand.”
Mr. Toutant concluded, “Given our first half performance and our
outlook for the rest of the year, we are reaffirming our previously
provided FY16 guidance. We are excited about our innovative product
pipeline and marketing line-up for holiday that we believe will
resonate with our customers, and we remain focused on delivering
continued progress against our strategic priorities of building the
brand, growing our store base and e-commerce footprint, driving
profitability and realizing the significant potential we believe
exists for this business.”
For the six months ended July 30,
2016:
- Sales increased by 24.6% to C$85.5 million from C$68.6 million
in the comparable period in fiscal 2015. Comparable sales increased
by 5.0%.
- Gross profit increased by 22.8% to C$43.1 million from C$35.1
million in the comparable period in fiscal 2015, while gross profit
as a percent of sales decreased to 50.3% from 51.2% in the
comparable period in fiscal 2015. The decrease in gross profit as a
percent of sales was driven primarily by the adverse impact of the
stronger U.S. dollar on U.S. dollar denominated purchases,
partially offset by supply chain efficiencies. On a constant
currency basis, gross profit as a percent of sales increased 60
basis points to 51.8%.
- Selling, general and administration expenses (“SG&A”)
increased to C$43.9 million from C$35.2 million in the comparable
period in fiscal 2015, due primarily to the hiring of additional
staff to support the growth of the Company, higher store operating
expenses to support the operations of 208 stores as of July 30,
2016 as compared to 165 stores as of August 1, 2015, as well as
newly incurred public company costs. As a percent of sales,
SG&A increased to 51.4% from 51.3% in the comparable period in
fiscal 2015. Excluding the loss on disposal of property and
equipment in the prior year period, SG&A increased to C$43.9
million from C$34.9 million in the comparable period in fiscal
2015. As a percent of sales, SG&A excluding the loss on
disposal of property and equipment in the prior year period
increased to 51.4% from 50.9%.
- Results from operating activities were C$(0.9) million as
compared to C$(4.1) million in the comparable period in fiscal
2015. Excluding the stock-based compensation expense related to
cashless exercise and the loss on disposal of property and
equipment in the prior year period, results from operating
activities decreased to C$(0.9) million from C$0.2 million in the
comparable period in fiscal 2015.
- The Company opened 15 net new stores in the comparable period
in fiscal 2016 and ended the period with a total of 208 stores in
Canada and the U.S. This represents an increase of 26% from the end
of the comparable period in fiscal 2015.
- Net income was C$(0.8) million compared to net income of
C$(145.3) million in the comparable period in fiscal 2015 which, as
previously stated, includes a C$140.9 million non-cash loss
associated with the embedded derivative on Series A, A-1 and A-2
preferred shares as all preferred shares were converted into common
shares in conjunction with the IPO transaction (see Reconciliation
of IFRS basis to Adjusted net income (loss) table). Adjusted net
income, which excludes IPO-related and other one-time income or
expenses in the prior year period (see Reconciliation of IFRS basis
to Adjusted net income (loss) table), was C$(0.8) million compared
to C$(0.5) million in the comparable period in fiscal 2015.
- Adjusted EBITDA was C$4.7 million compared to C$4.2 million in
the comparable period in fiscal 2015. Adjusted EBITDA excludes
IPO-related and other non-cash or one-time costs (see
Reconciliation of Adjusted EBITDA table).
- Fully diluted income per common share was C$(0.03) compared to
C$(9.35) in the comparable period in fiscal 2015. Adjusted fully
diluted income per common share, which is adjusted net income on an
adjusted fully diluted weighted average shares outstanding basis
(see Reconciliation of fully diluted weighted average common shares
outstanding table), was C$(0.03) per share compared to C$(0.02) per
share in the comparable period in fiscal 2015.
Balance sheet highlights as of July 30,
2016:
- Cash: C$60.6 million.
- Total liquidity (cash plus availability on a C$20.0 million
revolving facility): C$80.6 million.
Third Quarter and Fiscal 2016
Outlook:
For the third quarter of fiscal 2016, sales are expected to be
in the range of C$43.0 million to C$44.0 million based on opening
15 new stores and assuming a comparable sales increase in the
low-single digit range. This low-single digit expected comp range
is due to an August technical issue, which has since been resolved,
with our e-mail distribution during which a significant portion of
our marketing emails were not being delivered to our customers.
Adjusted EBITDA is expected to be in the range of C$0.6 million to
C$0.9 million. Net loss is expected to be in the range of
C$(2.0) million to C$(2.3) million, with fully diluted income per
common share in the range of C$(0.08) to C$(0.09) on approximately
24.8 million fully diluted weighted average shares outstanding.
For fiscal 2016, sales are expected to be in the range of
C$215.0 million to C$219.0 million based on opening 40 new stores
for the full year and assuming a comparable sales increase in the
mid-single digit range. Adjusted EBITDA is expected to be in the
range of C$31.0 million to C$33.0 million. Adjusted net income is
expected to be in the range of C$13.0 million to C$14.0 million,
with an adjusted fully diluted income per common share range of
C$0.50 to C$0.54 on approximately 26.1 million adjusted fully
diluted weighted average shares outstanding.
Conference Call
Information:
A conference call to discuss the second quarter of fiscal 2016
financial results is scheduled for today, September 7, 2016, at
4:30 p.m. Eastern Standard Time. The conference call will be
webcast and may be accessed via the Company’s Investor Relations
section of its website at www.davidstea.com. An online archive of
the webcast will be available within two hours of the conclusion of
the call and will remain available for one year.
Non-IFRS Information:
This press release includes non-IFRS measures including Adjusted
results from operating activities, Adjusted EBITDA, Adjusted net
income(loss), and Adjusted fully diluted income(loss) per share.
Adjusted EBITDA, Adjusted net income(loss) and Adjusted fully
diluted income(loss) per share are not presentations made in
accordance with IFRS, and the use of the terms Adjusted EBITDA,
Adjusted net income(loss) and Adjusted fully diluted income(loss)
per share may differ from similar measures reported by other
companies. We believe that Adjusted EBITDA, Adjusted net
income(loss) and Adjusted fully diluted income(loss) per share
provide investors with useful information with respect to our
historical operations. We present Adjusted EBITDA, Adjusted net
income(loss) and Adjusted fully diluted income(loss) per share as
supplemental performance measures because we believe they
facilitate a comparative assessment of our operating performance
relative to our performance based on our results under IFRS, while
isolating the effects of some items that vary from
period-to-period. Specifically, Adjusted EBITDA, Adjusted net
income(loss) and Adjusted fully diluted income(loss) per share
allow for an assessment of our operating performance and our
ability to service or incur indebtedness without the effect of
non-cash charges of the period or other one-time charges, such as
depreciation, amortization, impairment costs, costs related to
onerous contracts or contracts where we expect the costs of the
obligations to exceed the economic benefit and non-recurring
expenses relating to our initial public offering. These measures
also function as benchmarks to evaluate our operating performance.
Adjusted EBITDA, Adjusted net income(loss), and Adjusted fully
diluted income(loss) per share are not measurements of our
financial performance under IFRS and should not be considered in
isolation or as alternatives to net income, net cash provided by
operating, investing or financing activities or any other financial
statement data presented as indicators of financial performance or
liquidity, each as presented in accordance with IFRS. We understand
that although Adjusted EBITDA, Adjusted net income(loss), and
Adjusted fully diluted income(loss) per share are frequently used
by securities analysts, lenders and others in their evaluation of
companies, they have limitations as analytical tools, and you
should not consider them in isolation, or as a substitute for
analysis of our results as reported under IFRS. Some of these
limitations are:
- Adjusted EBITDA, Adjusted net income(loss), and Adjusted fully
diluted income(loss) per share do not reflect changes in, or cash
requirements for, our working capital needs; and
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements.
Because of these limitations, Adjusted EBITDA, Adjusted net
income(loss), and Adjusted fully diluted income(loss) per share
should not be considered as discretionary cash available to us to
reinvest in the growth of our business or as a measure of cash that
will be available to us to meet our obligations.
Forward-Looking
Statements:
This press release includes forward-looking statements. These
forward-looking statements generally can be identified by the use
of words such as “anticipate,” “expect,” “plan,” “could,” “may,”
“will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and
other words of similar meaning. These forward-looking statements
address various matters including management’s beliefs about the
Company’s growth prospects, product offerings and financial
guidance for the coming fiscal quarter and fiscal year. The Company
cannot assure investors that future developments affecting the
Company will be those that it has anticipated. Actual results may
differ materially from these expectations due to risks and
uncertainties including: the Company’s ability to maintain and
enhance its brand image, particularly in new markets; the Company’s
ability to compete in the specialty tea and beverage category; the
Company’s ability to expand and improve its operations; levels of
foot traffic in locations in which the Company’s stores are
located; changes in consumer trends and preferences; fluctuations
in foreign currency exchange rates; general economic conditions and
consumer confidence; minimum wage laws; the importance of the
Company’s first fiscal quarter to results of operations for the
entire fiscal year; and other risks set forth in the Company’s
Annual Report on Form 10-K dated April 12, 2016 and filed with the
Securities and Exchange Commission on April 13, 2016. If one or
more of these risks or uncertainties materialize, or if any of the
Company’s assumptions prove incorrect, the Company’s actual results
may vary in material respects from those projected in these
forward-looking statements. Any forward-looking statement made by
the Company in this release speaks only as of the date on which the
Company makes it. The Company undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by any applicable securities laws.
About DAVIDsTEA:
DAVIDsTEA is a fast-growing retailer of specialty tea, offering
a differentiated selection of proprietary loose-leaf teas,
pre-packaged teas, tea sachets and tea-related gifts, accessories
and food and beverages, primarily through 208 company-operated
DAVIDsTEA stores throughout Canada and the United States as of July
30, 2016, and its website, davidstea.com. The Company is
headquartered in Montréal, Canada.
INTERIM CONSOLIDATED BALANCE
SHEETS |
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
|
|
|
|
|
As at |
|
As at |
|
|
|
July 30, 2016 |
|
January 30,2016 |
|
|
|
$ |
|
$ |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
|
|
|
Cash |
|
|
60,604 |
|
|
|
72,514 |
|
|
Accounts and other receivables |
|
|
2,313 |
|
|
|
2,702 |
|
|
Inventories |
|
|
25,112 |
|
|
|
17,767 |
|
|
Income tax receivable |
|
|
1,178 |
|
|
|
605 |
|
|
Prepaid expenses and deposits |
|
|
8,375 |
|
|
|
4,493 |
|
|
Derivative financial
instruments |
|
|
554 |
|
|
|
3,442 |
|
|
Total
current assets |
|
|
98,136 |
|
|
|
101,523 |
|
|
Property and equipment |
|
|
52,481 |
|
|
|
47,330 |
|
|
Intangible assets |
|
|
2,363 |
|
|
|
2,242 |
|
|
Deferred income tax assets |
|
|
8,439 |
|
|
|
7,877 |
|
|
Total
assets |
|
|
161,419 |
|
|
|
158,972 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current |
|
|
|
|
|
Trade and other payables |
|
|
19,229 |
|
|
|
14,435 |
|
|
Deferred revenue |
|
|
3,557 |
|
|
|
3,762 |
|
|
Income taxes payable |
|
— |
|
|
62 |
|
|
Current portion of provisions |
|
|
140 |
|
|
|
512 |
|
|
Total
current liabilities |
|
|
22,926 |
|
|
|
18,771 |
|
|
Deferred rent and lease
inducements |
|
|
6,911 |
|
|
|
6,002 |
|
|
Provisions |
|
|
253 |
|
|
|
162 |
|
|
Total
liabilities |
|
|
30,090 |
|
|
|
24,935 |
|
|
Equity |
|
|
|
|
|
Share capital |
|
|
260,567 |
|
|
|
259,205 |
|
|
Contributed surplus |
|
|
7,609 |
|
|
|
7,094 |
|
|
Deficit |
|
|
(139,459 |
) |
|
|
(138,465 |
) |
|
Accumulated other comprehensive
income |
|
|
2,612 |
|
|
|
6,203 |
|
|
Total
equity |
|
|
131,329 |
|
|
|
134,037 |
|
|
|
|
|
161,419 |
|
|
|
158,972 |
|
|
|
|
|
|
|
|
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(LOSS) |
|
|
|
|
|
|
|
|
|
|
AND COMPREHENSIVE INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
[Unaudited and in thousands of Canadian
dollars, except share information] |
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the six months
ended |
|
|
|
July 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
41,079 |
|
|
|
32,781 |
|
|
|
85,548 |
|
|
|
68,625 |
|
|
Cost of sales |
|
|
21,171 |
|
|
|
16,731 |
|
|
|
42,485 |
|
|
|
33,486 |
|
|
Gross
profit |
|
|
19,908 |
|
|
|
16,050 |
|
|
|
43,063 |
|
|
|
35,139 |
|
|
Selling, general and
administration expenses |
|
|
22,810 |
|
|
|
18,219 |
|
|
|
43,929 |
|
|
|
35,210 |
|
|
Stock-based
compensation related to cashless exercise |
|
— |
|
— |
|
— |
|
|
4,052 |
|
|
Results
from operating activities |
|
|
(2,902 |
) |
|
|
(2,169 |
) |
|
|
(866 |
) |
|
|
(4,123 |
) |
|
Finance costs |
|
|
19 |
|
|
|
222 |
|
|
|
36 |
|
|
|
1,014 |
|
|
Finance income |
|
|
(148 |
) |
|
|
(72 |
) |
|
|
(269 |
) |
|
|
(123 |
) |
|
Gain on derivative
financial instruments |
|
— |
|
|
(164 |
) |
|
— |
|
|
(164 |
) |
|
Accretion of preferred
shares |
|
— |
|
|
87 |
|
|
— |
|
|
401 |
|
|
Loss from embedded
derivative on Series A, A-1 and A-2 preferred shares |
|
— |
|
|
50,169 |
|
|
— |
|
|
140,874 |
|
|
Loss
before income taxes |
|
|
(2,773 |
) |
|
|
(52,411 |
) |
|
|
(633 |
) |
|
|
(146,125 |
) |
|
Provision for income
tax (recovery) |
|
|
(506 |
) |
|
|
(323 |
) |
|
|
120 |
|
|
|
(811 |
) |
|
Net
loss |
|
|
(2,267 |
) |
|
|
(52,088 |
) |
|
|
(753 |
) |
|
|
(145,314 |
) |
|
Other
comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to income: |
|
|
|
|
|
|
|
|
|
Unrealized net gain
(loss) on forward exchange contracts |
|
|
1,678 |
|
|
|
1,849 |
|
|
|
(2,519 |
) |
|
|
1,849 |
|
|
Realized net (gain)
loss on forward exchange contracts reclassified to inventory |
|
|
598 |
|
|
— |
|
|
(370 |
) |
|
— |
|
Provision for income
tax (recovery) on comprehensive income |
|
|
(604 |
) |
|
|
(534 |
) |
|
|
767 |
|
|
|
(534 |
) |
|
Cumulative translation
adjustment |
|
|
853 |
|
|
|
815 |
|
|
|
(1,469 |
) |
|
|
241 |
|
|
Other
comprehensive income (loss), net of tax |
|
|
2,525 |
|
|
|
2,130 |
|
|
|
(3,591 |
) |
|
|
1,556 |
|
|
Total
comprehensive income (loss) |
|
|
258 |
|
|
|
(49,958 |
) |
|
|
(4,344 |
) |
|
|
(143,758 |
) |
|
Net
loss per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
(0.09 |
) |
|
|
(2.73 |
) |
|
|
(0.03 |
) |
|
|
(9.35 |
) |
|
Fully diluted |
|
|
(0.09 |
) |
|
|
(2.73 |
) |
|
|
(0.03 |
) |
|
|
(9.35 |
) |
|
Weighted average number of shares
outstanding |
|
|
|
|
|
|
|
|
|
—
basic |
|
|
24,625,414 |
|
|
|
19,057,409 |
|
|
|
24,380,306 |
|
|
|
15,536,182 |
|
|
— fully
diluted |
|
|
24,625,414 |
|
|
|
19,057,409 |
|
|
|
24,380,306 |
|
|
|
15,536,182 |
|
|
|
|
|
|
|
|
|
|
|
|
INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
|
|
|
|
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the six months
ended |
|
|
|
July 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(2,267 |
) |
|
|
(52,088 |
) |
|
|
(753 |
) |
|
|
(145,314 |
) |
|
Items not affecting
cash: |
|
|
|
|
|
|
|
|
|
Depreciation of
property and equipment |
|
|
1,921 |
|
|
|
1,350 |
|
|
|
3,708 |
|
|
|
2,648 |
|
|
Amortization of
intangible assets |
|
|
169 |
|
|
|
142 |
|
|
|
329 |
|
|
|
265 |
|
|
Loss on disposal of
property and equipment |
|
— |
|
|
292 |
|
|
— |
|
|
292 |
|
|
Gain on derivative
financial instruments |
|
— |
|
|
(164 |
) |
|
— |
|
|
(164 |
) |
|
Deferred rent |
|
|
366 |
|
|
|
284 |
|
|
|
646 |
|
|
|
482 |
|
|
Recovery for onerous
contracts |
|
— |
|
|
(191 |
) |
|
— |
|
|
(265 |
) |
|
Stock-based
compensation expense |
|
|
614 |
|
|
|
493 |
|
|
|
930 |
|
|
|
818 |
|
|
Amortization of
financing fees |
|
|
18 |
|
|
|
10 |
|
|
|
36 |
|
|
|
176 |
|
|
Accretion of preferred
shares |
|
— |
|
|
87 |
|
|
— |
|
|
401 |
|
|
Loss from embedded
derivative on Series A, A-1 and A-2 preferred shares |
|
— |
|
|
50,169 |
|
|
— |
|
|
140,874 |
|
|
Deferred income taxes
(recovered) |
|
|
189 |
|
|
|
673 |
|
|
|
22 |
|
|
|
688 |
|
|
|
|
|
1,010 |
|
|
|
1,057 |
|
|
|
4,918 |
|
|
|
901 |
|
|
Net change in other
non-cash working capital balances related to operations |
|
|
(2,793 |
) |
|
|
(945 |
) |
|
|
(7,489 |
) |
|
|
(7,446 |
) |
|
Cash
flows related to operating activities |
|
|
(1,783 |
) |
|
|
112 |
|
|
|
(2,571 |
) |
|
|
(6,545 |
) |
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Repayment of finance
lease obligations |
|
— |
|
— |
|
— |
|
|
(552 |
) |
|
Proceeds from issuance
of long-term debt |
|
— |
|
— |
|
— |
|
|
9,996 |
|
|
Repayment of long-term
debt |
|
— |
|
|
(9,996 |
) |
|
— |
|
|
(20,010 |
) |
|
Repayment of loan from
the controlling shareholder |
|
— |
|
|
(2,952 |
) |
|
— |
|
|
(2,952 |
) |
|
Proceeds from issuance
of common shares pursuant to exercise of stock options |
|
|
500 |
|
|
|
59 |
|
|
|
844 |
|
|
|
59 |
|
|
Gross proceeds of
initial public offering |
|
— |
|
|
79,370 |
|
|
— |
|
|
79,370 |
|
|
IPO-related
expenses |
|
— |
|
|
(9,996 |
) |
|
— |
|
|
(10,548 |
) |
|
Financing fees |
|
— |
|
|
(52 |
) |
|
— |
|
|
(171 |
) |
|
Cash
flows related to financing activities |
|
|
500 |
|
|
|
56,433 |
|
|
|
844 |
|
|
|
55,192 |
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Additions to property
and equipment |
|
|
(6,876 |
) |
|
|
(3,190 |
) |
|
|
(9,722 |
) |
|
|
(5,030 |
) |
|
Additions to intangible
assets |
|
|
(305 |
) |
|
|
(400 |
) |
|
|
(461 |
) |
|
|
(668 |
) |
|
Cash
flows related to investing activities |
|
|
(7,181 |
) |
|
|
(3,590 |
) |
|
|
(10,183 |
) |
|
|
(5,698 |
) |
|
Decrease in cash during
the period |
|
|
(8,464 |
) |
|
|
52,955 |
|
|
|
(11,910 |
) |
|
|
42,949 |
|
|
Cash,
beginning of period |
|
|
69,068 |
|
|
|
9,778 |
|
|
|
72,514 |
|
|
|
19,784 |
|
|
Cash,
end of period |
|
|
60,604 |
|
|
|
62,733 |
|
|
|
60,604 |
|
|
|
62,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the six
months ended |
|
(in thousands) |
|
July 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
|
(2,267 |
) |
|
$ |
|
(52,088 |
) |
|
$ |
|
(753 |
) |
|
$ |
|
(145,314 |
) |
|
Finance costs |
|
|
19 |
|
|
|
|
222 |
|
|
|
|
36 |
|
|
|
|
1,014 |
|
|
Finance income |
|
|
(148 |
) |
|
|
|
(72 |
) |
|
|
|
(269 |
) |
|
|
|
(123 |
) |
|
Depreciation and amortization |
|
|
2,090 |
|
|
|
|
1,492 |
|
|
|
|
4,037 |
|
|
|
|
2,913 |
|
|
Provision for income tax
(recovery) |
|
|
(506 |
) |
|
|
|
(323 |
) |
|
|
|
120 |
|
|
|
|
(811 |
) |
|
EBITDA |
$ |
|
(812 |
) |
|
$ |
|
(50,769 |
) |
|
$ |
|
3,171 |
|
|
$ |
|
(142,321 |
) |
|
Additional adjustments : |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
(a) |
|
|
614 |
|
|
|
|
493 |
|
|
|
|
930 |
|
|
|
|
818 |
|
|
Stock-based compensation expense
related to cashless exercise (b) |
|
— |
|
|
— |
|
|
— |
|
|
|
4,052 |
|
|
Provision (recovery) for onerous
contracts (c) |
|
— |
|
|
|
(191 |
) |
|
|
— |
|
|
|
(265 |
) |
|
Deferred rent (d) |
|
|
366 |
|
|
|
|
284 |
|
|
|
|
646 |
|
|
|
|
482 |
|
|
Gain on derivative financial
instruments (e) |
|
— |
|
|
|
(164 |
) |
|
|
— |
|
|
|
(164 |
) |
|
Loss on disposal of property and
equipment (f) |
|
— |
|
|
|
292 |
|
|
|
— |
|
|
|
292 |
|
|
Accretion of preferred shares
(g) |
|
— |
|
|
|
87 |
|
|
|
— |
|
|
|
401 |
|
|
Loss from embedded derivative on
Series A, A-1 and A-2 preferred shares (h) |
|
— |
|
|
|
50,169 |
|
|
|
— |
|
|
|
140,874 |
|
|
Adjusted EBITDA |
$ |
|
168 |
|
|
$ |
|
201 |
|
|
$ |
|
4,747 |
|
|
$ |
|
4,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents non-cash stock-based
compensation expense. |
(b) Represents expense related to
cashless exercise of options by former employees. |
(c) Represents provision and
non-cash recovery related to certain stores where the unavoidable
costs of meeting the obligations under the lease agreements
are expected to exceed the economic benefits expected to be
received from the contract. |
(d) Represents the extent to which
our annual rent expense has been above or below our cash rent. |
(e) Represents the non-cash gain on
derivative financial instruments. |
(f) Represents non-cash costs
related to closure of one store due to termination of
sub-lease. |
(g) Represents non-cash accretion
expense on our preferred shares. In connection with the completion
of our initial public offering on June 10, 2015, all of our
outstanding preferred shares were converted automatically into
common shares. |
(h) Represents non-cash market loss
for the conversion feature of the Series A, A-1 and A-2
preferred shares. In connection with our initial public offering,
this liability was converted into equity. |
|
Reconciliation of IFRS basis to Adjusted net
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the six months
ended |
|
|
|
July 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
|
(2,267 |
) |
|
$ |
|
(52,088 |
) |
|
$ |
|
(753 |
) |
|
$ |
|
(145,314 |
) |
|
Stock-based compensation expense
related to cashless exercise (a) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
4,052 |
|
|
Finance costs related to preferred
shares (b) |
|
|
— |
|
|
|
126 |
|
|
|
— |
|
|
|
477 |
|
|
Gain on derivative financial
instruments (c) |
|
|
— |
|
|
|
(164 |
) |
|
|
— |
|
|
|
(164 |
) |
|
Loss on disposal of property and
equipment (d) |
|
|
— |
|
|
|
292 |
|
|
|
— |
|
|
|
292 |
|
|
Accretion of preferred shares
(e) |
|
|
— |
|
|
|
87 |
|
|
|
— |
|
|
|
401 |
|
|
Loss from embedded derivative on
Series A, A-1 and A-2 preferred shares (f) |
|
|
— |
|
|
|
50,169 |
|
|
|
— |
|
|
|
140,874 |
|
|
Income tax expense adjustment
(g) |
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
(1,108 |
) |
|
Adjusted net loss |
|
$ |
|
(2,267 |
) |
|
$ |
|
(1,612 |
) |
|
$ |
|
(753 |
) |
|
$ |
|
(490 |
) |
|
________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents expense related to
cashless exercise of options by former employees. |
(b) Represents finance fees related
to the preferred shares. Upon the completion of our initial public
offering, we converted the liability associated with these
preferred shares into equity. |
(c) Represents non-cash gain on
derivative financial instruments. |
(d) Represents non-cash costs
related to the closure of one store due to termination of
sub-lease. |
(e) Represents non-cash accretion
expense on our preferred shares. In connection with the completion
of our initial public offering on June 10, 2015, all of our
outstanding preferred shares were converted automatically into
common shares. |
(f) Represents non-cash market loss
for the conversion feature of the Series A, A-1 and A-2
preferred shares. In connection with our initial public offering,
this liability was converted into equity. |
(g) Removes the income tax impact of
the stock-based compensation expense for cashless exercise, gain on
derivative financial instruments and loss on disposal of property
and equipment referenced in notes (a), (c) and (d). |
|
Reconciliation of fully diluted weighted
average common shares outstanding, as reported, adjusted fully
dilutedweighted average common shares outstanding |
|
[Unaudited and in thousands of Canadian
dollars, except per share] |
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
For the six months
ended |
|
|
|
July 30, 2016 |
|
August 1, 2015 |
|
July 30, 2016 |
|
August 1, 2015 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding,
fully diluted |
|
|
24,625,414 |
|
|
|
19,057,409 |
|
|
|
24,380,306 |
|
|
|
15,536,182 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Adjustment for conversion of
preferred shares Series A, A-1 and A-2 (a) |
|
— |
|
|
3,432,162 |
|
|
— |
|
|
5,793,457 |
|
|
Initial public company share
issuance (b) |
|
— |
|
|
1,441,577 |
|
|
— |
|
|
2,433,368 |
|
|
Adjusted weighted average number of shares
outstanding, fully diluted |
|
|
24,625,414 |
|
|
|
23,931,148 |
|
|
|
24,380,306 |
|
|
|
23,763,007 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, fully diluted |
|
|
(0.09 |
) |
|
|
(2.73 |
) |
|
|
(0.03 |
) |
|
|
(9.35 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per share, fully
diluted |
|
|
(0.09 |
) |
|
|
(0.07 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
|
______________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Reflects the impact of the conversion of Series A, A-1 and A-2
preferred shares into common shares, as if they had been available
the entire period. |
(b)
Reflects the number of common shares issued in the initial public
offering, as if they had been available the entire period. |
|
Investor Contact
ICR Inc.
Farah Soi/Rachel Schacter
(203)-682-8200
investors@davidstea.com
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