Fourth quarter sales growth of 13.9% to C$86.3
million
DAVIDsTEA Inc. (Nasdaq:DTEA) today announced financial results for
the three months and year ended January 28, 2017.
For the three months ended January 28,
2017:
- Sales increased by 13.9% to C$86.3 million from C$75.8 million
in the fourth quarter of fiscal 2015. Comparable sales increased by
0.4%.
- Gross profit increased by 6.2% to C$44.8 million from C$42.2
million in the fourth quarter of fiscal 2015, while gross profit as
a percent of sales decreased to 51.9% from 55.7% in the fourth
quarter of fiscal 2015. The decrease in gross profit as a percent
of sales was driven by additional promotional activity, a shift in
product sales mix and the adverse impact from the stronger U.S.
dollar on U.S. dollar denominated purchases.
- Selling, general and administration expenses (“SG&A”)
increased to C$43.6 million from C$26.0 million in the fourth
quarter of fiscal 2015. As a percent of sales, SG&A increased
to 50.5% from 34.3% in the fourth quarter of fiscal 2015. During
the fourth quarter of fiscal 2016, the Company recorded a non-cash
asset impairment charge and provision for onerous contracts for
underperforming stores of $13.1M, or $(0.31) per diluted share.
Adjusted SG&A, a non-IFRS measure, which excludes executive
separation costs, the aforementioned impairment of property and
equipment, and provision for onerous contracts in the fourth
quarter of fiscal 2016, as well as the loss on disposal on property
and equipment in the fourth quarter of fiscal 2015 (see
Reconciliation of IFRS basis to Adjusted selling, general and
administration expenses), increased to C$29.9 million from C$26.0
million in the fourth quarter of fiscal 2015, due primarily to the
hiring of additional staff to support the growth of the Company,
including new stores, and higher store operating expenses to
support the operations of 231 stores as of January 28, 2017 as
compared to 193 stores as of January 30, 2016. As a percent of
sales, adjusted SG&A increased to 34.6% from 34.3%.
- Results from operating activities were C$1.2 million as
compared to C$20.2 million in the fourth quarter of fiscal 2015.
Adjusted results from operating activities, a non-IFRS measure,
which excludes executive separation costs, impairment of property
and equipment and provision for onerous contracts in the fourth
quarter of fiscal 2016 and a stock-based compensation expense
adjustment related to cashless exercise of options in the fourth
quarter of fiscal 2015 (see Reconciliation of IFRS basis to
Adjusted results from operating activities), decreased to C$15.0
million from C$16.2 million in the fourth quarter of fiscal
2015.
- The Company opened 6 new stores in the fourth quarter of fiscal
2016 and ended the quarter with a total of 231 stores in Canada and
the U.S. This represents an increase of 19.7% from the end of the
fourth quarter of fiscal 2015.
- Net income was C$2.0 million compared to net income of C$14.8
million in the fourth quarter of fiscal 2015. Adjusted net income,
a non-IFRS measure, which excludes executive separation costs,
impairment of property and equipment and provision for onerous
contracts in the fourth quarter of 2016, and a stock-based
compensation expense adjustment related to cashless exercise of
options in the fourth quarter of fiscal 2015 (see Reconciliation of
IFRS basis to Adjusted net income (loss) table), was C$10.6 million
compared to C$11.8 million in the fourth quarter of fiscal
2015.
- Adjusted EBITDA was C$18.1 million compared to C$18.9 million
in the fourth quarter of fiscal 2015. Adjusted EBITDA, a non-IFRS
measure, excludes non-cash or one-time costs in the current and
prior year periods (see Reconciliation of Adjusted EBITDA
table).
- Fully diluted income (loss) per common share was C$0.08
compared to C$0.57 in the fourth quarter of fiscal 2015. Adjusted
fully diluted income (loss) per common share, a non-IFRS measure,
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$0.41 per share compared to C$0.45 per share in the fourth quarter
of fiscal 2015.
Joel Silver, President and Chief Executive Officer, stated, “Our
fourth quarter financial results were softer than expected on the
bottom line primarily driven by lower gross profit margins mainly
as a result of weaker product assortment that necessitated
more discounting, combined with post-holiday promotions that were
elevated to begin to clear through holiday inventory. Despite the
weakness in our Q4 financial performance, in fiscal 2016 we made
progress in key areas including continuing to grow our e-commerce
business, maximizing the potential of our loyalty program, and
executing several in-store tests which have resulted in a number of
learnings that we will utilize to drive sales, improve the customer
experience and achieve operational efficiencies going forward.”
Mr. Silver continued, “Looking ahead, fiscal 2017 will be a
reset year for DAVIDsTEA. My initial priorities as President and
CEO will be centered around improving the product assortment,
in-store experience and getting back to the core of the DAVIDsTEA
brand while being very disciplined when allocating capital,
purchasing inventory and incurring expenses. We will renew and
streamline our focus on tea, make further investments in our
growing and profitable digital platform, conduct consumer research
and incorporate the resulting insights into our brand strategy, and
continue to invest in our people. While we have our work cut out
for us, we are focused on reinvigorating our sales and customer
experience in order to achieve the full potential that we believe
exists for the DAVIDsTEA brand.”
Mr. Silver concluded, “We are also pleased to announce that
Christine Bullen, currently Managing Director, US, has been
appointed Chief Operating Officer and President of DAVIDsTEA (USA)
effective today. Christine is a great asset to the Company and her
experience leading the Company as Interim President and CEO will be
of great value as we focus on reinvigorating the DAVIDsTEA
brand.”
For the year ended January 28,
2017:
- Sales increased by 19.5% to $216.0 million from C$180.7 million
in the comparable period in fiscal 2015. Comparable sales increased
by 2.2%.
- Gross profit increased by 13.9% to C$108.5 million from C$95.3
million in the comparable period in fiscal 2015, while gross profit
as a percent of sales decreased to 50.2% from 52.8% in fiscal 2015.
The decrease in gross profit as a percent of sales was driven by
additional promotional activity, a shift in product sales mix and
the adverse impact from the stronger U.S. dollar on U.S. dollar
denominated purchases.
- Selling, general and administration expenses (“SG&A”)
increased to C$114.8 million from C$80.1 million in the comparable
period in fiscal 2015. As a percent of sales, SG&A increased to
53.1% from 44.3% in fiscal 2015. Adjusted SG&A, a non-IFRS
measure, which excludes executive separation costs, impairment of
property and equipment, provision for onerous contracts and loss on
disposal of property and equipment in the current year, as well as
the loss on disposal of property and equipment in the prior year
(see Reconciliation of IFRS basis to Adjusted selling, general and
administration expenses), increased to C$97.5 million from C$79.8
million in fiscal 2015, due primarily to the hiring of additional
staff to support the growth of the Company, including new stores,
and higher store operating expenses to support the operations of
231 stores as of January 28, 2017 as compared to 193 stores as of
January 30, 2016, as well as a full year of public company costs.
As a percent of sales, adjusted SG&A increased to 45.1% from
44.2%.
- Results from operating activities were C$ (6.3) million as
compared to C$15.2 million in fiscal 2015. Adjusted results from
operating activities, a non-IFRS measure, which excludes executive
separation costs, impairment of property and equipment, provision
for onerous contracts and loss on disposal of property and
equipment in the current year, as well the loss on disposal of
property and equipment in the prior year (see Reconciliation of
IFRS basis to Adjusted results from operating activities),
decreased to C$10.9 million from C$15.5 million in fiscal
2015.
- The Company opened 38 net new stores in the year ended January
28, 2017 and ended the year with a total of 231 stores in Canada
and the U.S. This represents an increase of 19.7% from fiscal
2015.
- Net loss was C$ (3.7) million compared to a net loss of
C$(131.4) million 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, a
non-IFRS measure, which excludes executive separation costs,
impairment of property and equipment, provision for onerous
contracts and loss on disposal of property and equipment in the
current year, as well as IPO-related and other one-time income or
expenses in fiscal 2015 (see Reconciliation of IFRS basis to
Adjusted net income (loss) table), was C$7.5 million compared to
C$10.5 million in fiscal 2015.
- Adjusted EBITDA was C$23.0 million compared to C$24.6 million
in fiscal 2015. Adjusted EBITDA, a non-IFRS measure, excludes
IPO-related and other non-cash or one-time costs in the current and
prior year (see Reconciliation of Adjusted EBITDA table).
- Fully diluted income (loss) per common share was C$ (0.15)
compared to C$(6.65) in fiscal 2015. Adjusted fully diluted income
per common share, a non-IFRS measure, 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$0.29 per share compared to C$0.40
per share in fiscal 2015.
Balance sheet highlights as of January 28,
2017:
- Cash: C$64.4 million.
- Total liquidity (cash plus availability on a C$20.0 million
revolving facility): C$84.4 million.
Fiscal 2017 Outlook:
As the Company conducts its evaluation of the business under new
leadership and develops its go-forward strategy to drive improved
results, quarterly and annual guidance will not be provided.
Conference Call
Information:
A conference call to discuss the fourth quarter and Fiscal 2016
financial results is scheduled for today, April 12, 2017, at 4:30
p.m. Eastern 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
selling, general and administration expenses, Adjusted results from
operating activities, Adjusted EBITDA, Adjusted net income (loss),
and Adjusted fully diluted income (loss) per share. Adjusted
selling, general and administration expenses, Adjusted results from
operating activities, 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 selling, general and administration expenses,
Adjusted results from operating activities, 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 selling, general and
administration expenses, Adjusted results from operating
activities, 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 selling, general and administration expenses,
Adjusted results from operating activities, 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 selling, general and
administration expenses, Adjusted results from operating
activities, Adjusted EBITDA, Adjusted net income (loss) and
Adjusted fully diluted income (loss) per share allow for an
assessment of our operating performance, including new store costs,
without the effect of non-cash charges of the period or other
one-time charges, such as depreciation, amortization, finance
costs, deferred rent, non-cash compensation expense, costs related
to onerous contracts or contracts where we expect the costs of the
obligations to exceed the economic benefit, gain (loss) on
derivative financial instruments, loss on disposal of property and
equipment, impairment of property and equipment, and certain
non-recurring expenses. These measures also function as benchmarks
to evaluate our operating performance. Adjusted selling, general
and administration expenses, Adjusted results from operating
activities, 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 selling, general and
administration expenses, Adjusted results from operating
activities, 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 selling, general and administration expenses, Adjusted
results from operating activities, 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 selling, general and
administration expenses, Adjusted results from operating
activities, 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, store openings, 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; changes in
the Company’s executive management team; 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, 2017 and filed with the Securities and
Exchange Commission on April 13, 2017. 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 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 231 company-operated
DAVIDsTEA stores throughout Canada and the United States as of
January 28, 2017, and its website, davidstea.com. The Company is
headquartered in Montréal, Canada.
CONSOLIDATED BALANCE SHEETS |
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
As at |
|
As at |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
$ |
|
$ |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current |
|
|
|
|
|
Cash |
|
64,440 |
|
|
72,514 |
|
|
Accounts
and other receivables |
|
3,485 |
|
|
2,702 |
|
|
Inventories |
|
31,264 |
|
|
17,767 |
|
|
Income
tax receivable |
|
539 |
|
|
605 |
|
|
Prepaid
expenses and deposits |
|
5,659 |
|
|
4,493 |
|
|
Derivative financial instruments |
|
454 |
|
|
3,442 |
|
|
Total
current assets |
|
105,841 |
|
|
101,523 |
|
|
Property
and equipment |
|
51,160 |
|
|
47,330 |
|
|
Intangible assets |
|
2,958 |
|
|
2,242 |
|
|
Deferred
income tax assets |
|
14,375 |
|
|
7,877 |
|
|
Total
assets |
|
174,334 |
|
|
158,972 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current |
|
|
|
|
|
Trade and
other payables |
|
19,681 |
|
|
14,435 |
|
|
Deferred
revenue |
|
4,885 |
|
|
3,762 |
|
|
Income
taxes payable |
|
— |
|
|
62 |
|
|
Current
portion of provisions |
|
2,562 |
|
|
512 |
|
|
Total
current liabilities |
|
27,128 |
|
|
18,771 |
|
|
Deferred
rent and lease inducements |
|
7,824 |
|
|
6,002 |
|
|
Provisions |
|
5,932 |
|
|
162 |
|
|
Total
liabilities |
|
40,884 |
|
|
24,935 |
|
|
Equity |
|
|
|
|
|
Share
capital |
|
263,828 |
|
|
259,205 |
|
|
Contributed surplus |
|
8,833 |
|
|
7,094 |
|
|
Deficit |
|
(142,398 |
) |
|
(138,465 |
) |
|
Accumulated other comprehensive income |
|
3,187 |
|
|
6,203 |
|
|
Total
equity |
|
133,450 |
|
|
134,037 |
|
|
|
|
174,334 |
|
|
158,972 |
|
|
|
|
|
|
|
|
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 year
ended |
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
86,302 |
|
|
75,760 |
|
|
215,984 |
|
|
180,690 |
|
|
Cost of sales |
|
41,462 |
|
|
33,590 |
|
|
107,534 |
|
|
85,359 |
|
|
Gross
profit |
|
44,840 |
|
|
42,170 |
|
|
108,450 |
|
|
95,331 |
|
|
Selling, general and
administration expenses |
|
43,640 |
|
|
26,018 |
|
|
114,756 |
|
|
80,116 |
|
|
Stock-based
compensation related to cashless exercise |
|
— |
|
|
(4,052 |
) |
|
— |
|
|
— |
|
|
Results
from operating activities |
|
1,200 |
|
|
20,204 |
|
|
(6,306 |
) |
|
15,215 |
|
|
Finance costs |
|
21 |
|
|
20 |
|
|
76 |
|
|
1,051 |
|
|
Finance income |
|
(85 |
) |
|
(117 |
) |
|
(479 |
) |
|
(348 |
) |
|
Accretion of preferred
shares |
|
— |
|
|
— |
|
|
— |
|
|
401 |
|
|
Loss from embedded
derivative on Series A, A-1 and A-2 preferred shares |
|
— |
|
|
— |
|
|
— |
|
|
140,874 |
|
|
Income
(loss) before income taxes |
|
1,264 |
|
|
20,301 |
|
|
(5,903 |
) |
|
(126,763 |
) |
|
Provision for income
tax (recovery) |
|
(781 |
) |
|
5,547 |
|
|
(2,235 |
) |
|
4,668 |
|
|
Net
income (loss) |
|
2,045 |
|
|
14,754 |
|
|
(3,668 |
) |
|
(131,431 |
) |
|
Other
comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to income: |
|
|
|
|
|
|
|
|
|
Unrealized net gain
(loss) on forward exchange contracts |
|
(265 |
) |
|
3,359 |
|
|
(2,247 |
) |
|
5,253 |
|
|
Realized net gain on
forward exchange contracts reclassified to inventory |
|
(346 |
) |
|
(700 |
) |
|
(742 |
) |
|
(1,811 |
) |
|
Provision for income
tax recovery (income tax) on comprehensive income |
|
162 |
|
|
(705 |
) |
|
793 |
|
|
(913 |
) |
|
Cumulative translation
adjustment |
|
(50 |
) |
|
1,167 |
|
|
(820 |
) |
|
1,388 |
|
|
Other
comprehensive income (loss), net of tax |
|
(499 |
) |
|
3,121 |
|
|
(3,016 |
) |
|
3,917 |
|
|
Total
comprehensive income (loss) |
|
1,546 |
|
|
17,875 |
|
|
(6,684 |
) |
|
(127,514 |
) |
|
Net
income (loss) per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
0.08 |
|
|
0.61 |
|
|
(0.15 |
) |
|
(6.65 |
) |
|
Fully diluted |
|
0.08 |
|
|
0.57 |
|
|
(0.15 |
) |
|
(6.65 |
) |
|
Weighted average number of shares
outstanding |
|
|
|
|
|
|
|
|
|
—
basic |
|
25,133,644 |
|
|
24,012,512 |
|
|
24,699,290 |
|
|
19,776,946 |
|
|
— fully
diluted |
|
26,035,505 |
|
|
25,929,818 |
|
|
24,699,290 |
|
|
19,776,946 |
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
For the three months
ended |
|
For the year
ended |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
2,045 |
|
|
14,754 |
|
|
(3,668 |
) |
|
(131,431 |
) |
|
Items not affecting
cash: |
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
2,251 |
|
|
1,739 |
|
|
8,069 |
|
|
5,832 |
|
|
Amortization of intangible assets |
|
231 |
|
|
180 |
|
|
758 |
|
|
613 |
|
|
Loss on
disposal of property and equipment |
|
45 |
|
|
5 |
|
|
356 |
|
|
297 |
|
|
Impairment of property and equipment |
|
5,000 |
|
|
— |
|
|
7,516 |
|
|
— |
|
|
Deferred
rent |
|
294 |
|
|
350 |
|
|
1,325 |
|
|
1,165 |
|
|
Provision
(Recovery) for onerous contracts |
|
8,092 |
|
|
— |
|
|
8,140 |
|
|
(265 |
) |
|
Stock-based compensation expense |
|
691 |
|
|
473 |
|
|
2,264 |
|
|
1,749 |
|
|
Settlement related to cashless exercise of stock options, net of
income taxes recovered |
|
— |
|
|
(2,976 |
) |
|
— |
|
|
(2,976 |
) |
|
Amortization of financing fees |
|
20 |
|
|
65 |
|
|
75 |
|
|
241 |
|
|
Accretion
of preferred shares |
|
— |
|
|
— |
|
|
— |
|
|
401 |
|
|
Loss from
embedded derivative on Series A, A-1 and A-2 preferred
shares |
|
— |
|
|
— |
|
|
— |
|
|
140,874 |
|
|
Deferred
income taxes (recovered) |
|
(4,855 |
) |
|
353 |
|
|
(4,380 |
) |
|
1,364 |
|
|
|
|
13,814 |
|
|
14,943 |
|
|
20,455 |
|
|
17,864 |
|
|
Net change in other
non-cash working capital balances related to operations |
|
22,174 |
|
|
13,938 |
|
|
(9,293 |
) |
|
(2,272 |
) |
|
Cash
flows related to operating activities |
|
35,988 |
|
|
28,881 |
|
|
11,162 |
|
|
15,592 |
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Repayment of finance
lease obligations |
|
— |
|
|
— |
|
|
— |
|
|
(552 |
) |
|
Proceeds from issuance
of long-term debt |
|
— |
|
|
— |
|
|
— |
|
|
9,996 |
|
|
Repayment of long-term
debt |
|
— |
|
|
— |
|
|
— |
|
|
(20,010 |
) |
|
Repayment of loan from
the controlling shareholder |
|
— |
|
|
— |
|
|
— |
|
|
(2,952 |
) |
|
Proceeds from issuance
of common shares pursuant to exercise of stock options |
|
973 |
|
|
57 |
|
|
2,779 |
|
|
143 |
|
|
Gross proceeds of
initial public offering ("IPO") |
|
— |
|
|
— |
|
|
— |
|
|
79,370 |
|
|
IPO-related
expenses |
|
— |
|
|
(41 |
) |
|
— |
|
|
(10,661 |
) |
|
Financing fees |
|
— |
|
|
14 |
|
|
— |
|
|
(172 |
) |
|
Cash
flows related to financing activities |
|
973 |
|
|
30 |
|
|
2,779 |
|
|
55,162 |
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Additions to property
and equipment |
|
(5,033 |
) |
|
(4,437 |
) |
|
(20,531 |
) |
|
(16,852 |
) |
|
Additions to intangible
assets |
|
(624 |
) |
|
(211 |
) |
|
(1,484 |
) |
|
(1,172 |
) |
|
Cash
flows related to investing activities |
|
(5,657 |
) |
|
(4,648 |
) |
|
(22,015 |
) |
|
(18,024 |
) |
|
Increase (decrease) in
cash during the period |
|
31,304 |
|
|
24,263 |
|
|
(8,074 |
) |
|
52,730 |
|
|
Cash,
beginning of period |
|
33,136 |
|
|
48,251 |
|
|
72,514 |
|
|
19,784 |
|
|
Cash,
end of period |
|
64,440 |
|
|
72,514 |
|
|
64,440 |
|
|
72,514 |
|
|
Reconciliation of Adjusted
EBITDA |
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
|
For the three months
ended |
|
|
For the year
ended |
|
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,045 |
|
|
$ |
14,754 |
|
|
$ |
(3,668 |
) |
|
$ |
(131,431 |
) |
|
Finance
costs |
|
|
21 |
|
|
|
20 |
|
|
|
76 |
|
|
|
1,051 |
|
|
Finance
income |
|
|
(85 |
) |
|
|
(117 |
) |
|
|
(479 |
) |
|
|
(348 |
) |
|
Depreciation and amortization |
|
|
2,482 |
|
|
|
1,919 |
|
|
|
8,827 |
|
|
|
6,445 |
|
|
Loss on
disposal of property and equipment |
|
|
45 |
|
|
|
5 |
|
|
|
45 |
|
|
|
5 |
|
|
Provision
for income tax (recovery) |
|
|
(781 |
) |
|
|
5,547 |
|
|
|
(2,235 |
) |
|
|
4,668 |
|
|
EBITDA |
|
$ |
3,727 |
|
|
$ |
22,128 |
|
|
$ |
2,566 |
|
|
$ |
(119,610 |
) |
|
Additional adjustments
: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense (a) |
|
|
691 |
|
|
|
473 |
|
|
|
2,264 |
|
|
|
1,749 |
|
|
Stock-based compensation expense related to
cashless exercise (b) |
|
|
— |
|
|
|
(4,052 |
) |
|
|
— |
|
|
|
— |
|
|
Executive
separation costs related to salary (c) |
|
|
330 |
|
|
|
— |
|
|
|
835 |
|
|
|
— |
|
|
Impairment of property and equipment (d) |
|
|
5,000 |
|
|
|
— |
|
|
|
7,516 |
|
|
|
— |
|
|
Provision
(recovery) for onerous contracts (e) |
|
|
8,092 |
|
|
|
— |
|
|
|
8,140 |
|
|
|
(265 |
) |
|
Deferred
rent (f) |
|
|
294 |
|
|
|
350 |
|
|
|
1,325 |
|
|
|
1,165 |
|
|
Loss on
disposal of property and equipment (g) |
|
|
— |
|
|
|
— |
|
|
|
311 |
|
|
|
292 |
|
|
Accretion
of preferred shares (h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
401 |
|
|
Loss from
embedded derivative on Series A, A-1 and A-2 preferred shares
(i) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
140,874 |
|
|
Adjusted EBITDA |
|
$ |
18,134 |
|
|
$ |
18,899 |
|
|
$ |
22,957 |
|
|
$ |
24,606 |
|
|
(a) Represents non-cash stock-based compensation expense.(b)
Represents expense related to cashless exercise of options by
former employees.(c) Executive separation costs related to salary
represent salary owed to certain executives as part of their
separation agreements.(d) Represents costs related to impairment of
property and equipment for stores.(e) 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.(f) Represents the extent to which our annual
rent expense has been above or below our cash rent.(g) Represents
non-cash costs related to the loss on disposal of property and
equipment due to construction of a new store concept at an existing
location in the current year period and to the closure of one store
due to termination of sub-lease in the prior year period.(h)
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.(i) 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 year
ended |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (loss) |
|
$ |
2,045 |
|
|
$ |
14,754 |
|
|
$ |
(3,668 |
) |
|
$ |
(131,431 |
) |
|
Stock-based compensation expense related to cashless exercise
(a) |
|
|
— |
|
|
|
(4,052 |
) |
|
|
— |
|
|
|
— |
|
|
Executive
separation costs (b) |
|
|
673 |
|
|
|
— |
|
|
|
1,267 |
|
|
|
— |
|
|
Finance
costs related to preferred shares (c) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
477 |
|
|
Impairment of property and equipment (d) |
|
|
5,000 |
|
|
|
— |
|
|
|
7,516 |
|
|
|
— |
|
|
Provision
for onerous contracts (e) |
|
|
8,092 |
|
|
|
— |
|
|
|
8,140 |
|
|
|
— |
|
|
Loss on
disposal of property and equipment (f) |
|
|
— |
|
|
|
— |
|
|
|
311 |
|
|
|
292 |
|
|
Accretion
of preferred shares (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
401 |
|
|
Loss from
embedded derivative on Series A, A-1 and A-2 preferred shares
(h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
140,874 |
|
|
Income
tax expense adjustment (i) |
|
|
(5,203 |
) |
|
|
1,076 |
|
|
|
(6,099 |
) |
|
|
(75 |
) |
|
Adjusted net income |
|
$ |
10,607 |
|
|
$ |
11,778 |
|
|
$ |
7,467 |
|
|
$ |
10,538 |
|
|
(a) Represents expense related to cashless exercise of options
by former employees.(b) Executive separation costs represent salary
owed to certain executives of $330 and $835 for three months and
year ended January 28, 2017 payable as part of their separation
agreements and stock-based compensation expense of $343 and $432
for three months and year ended January 28, 2017 relating to the
vesting of equity awards pursuant to the separation agreements.(c)
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.(d)
Represents costs related to impairment of property and equipment
for stores.(e) Represents provision related to certain stores where
the unavoidable costs of meeting the obligations under the lease
agreement are expected to exceed the economic benefits expected to
be received from the contract.(f) Represents non-cash costs related
to the loss on disposal of property and equipment due to
construction of a new store concept at an existing store location
in the current year period and to the closure of one store due to
termination of sub-lease in the prior year period.(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.(i) Removes the income tax
impact of the stock-based compensation expense related to cashless
exercise, executive separation costs related to salary, impairment
of property and equipment, provision for onerous contracts, and
loss on disposal of property and equipment referenced in notes (a),
(b), (d), (e) and (f).
Reconciliation of IFRS basis to Adjusted
results from operating activities |
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
For the three months
ended |
|
For the year
ended |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
Results
from operating activities |
|
|
1,200 |
|
|
20,204 |
|
|
|
(6,306 |
) |
|
|
15,215 |
|
Stock-based compensation expense for cashless exercise (a) |
|
|
— |
|
|
(4,052 |
) |
|
|
— |
|
|
|
— |
|
Executive
separation costs (b) |
|
|
673 |
|
|
— |
|
|
|
1,267 |
|
|
|
— |
|
Impairment of property and equipment (c) |
|
|
5,000 |
|
|
— |
|
|
|
7,516 |
|
|
|
— |
|
Provision
for onerous contracts (d) |
|
|
8,092 |
|
|
— |
|
|
|
8,140 |
|
|
|
— |
|
Loss on
disposal of property and equipment (e) |
|
|
— |
|
|
— |
|
|
|
311 |
|
|
|
292 |
|
Adjusted results from operating
activities |
|
$ |
14,965 |
|
$ |
16,152 |
|
|
$ |
10,928 |
|
|
$ |
15,507 |
|
(a) Represents expense related to cashless exercise of options
by former employees.(b) Executive separation costs represent salary
owed to certain executives of $330 and $835 for three months and
year ended January 28, 2017 payable as part of their separation
agreements and stock-based compensation expense of $343 and $432
for three months and year ended January 28, 2017 relating to the
vesting of equity awards pursuant to the separation agreements.(c)
Represents costs related to impairment of property and equipment
for stores.(d) Represents provision related to certain stores where
the unavoidable costs of meeting the obligations under the lease
agreement are expected to exceed the economic benefits expected to
be received from the contract.(e) Represents non-cash costs related
to the loss on disposal of property and equipment due to
construction of a new store concept at an existing store location
in the current year period and to the closure of one store due to
termination of sub-lease in the prior year period.
Reconciliation of IFRS basis to Adjusted
selling, general and administration expenses |
|
[Unaudited and in thousands of Canadian
dollars] |
|
|
|
For the three months
ended |
|
For the year
ended |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
expenses |
|
|
43,640 |
|
|
26,018 |
|
|
114,756 |
|
|
80,116 |
|
Executive
separation costs (a) |
|
|
673 |
|
|
— |
|
|
1,267 |
|
|
— |
|
Impairment of property and equipment (b) |
|
|
5,000 |
|
|
— |
|
|
7,516 |
|
|
— |
|
Provision
for onerous contracts (c) |
|
|
8,092 |
|
|
— |
|
|
8,140 |
|
|
— |
|
Loss on
disposal of property and equipment (d) |
|
|
— |
|
|
— |
|
|
311 |
|
|
292 |
|
Adjusted selling, general and administration
expenses |
|
$ |
29,875 |
|
$ |
26,018 |
|
$ |
97,522 |
|
$ |
79,824 |
|
(a) Executive separation costs represent salary owed to certain
executives of $330 and $835 for three months and year ended January
28, 2017 payable as part of their separation agreements and
stock-based compensation expense of $343 and $432 for three months
and year ended January 28, 2017 relating to the vesting of equity
awards pursuant to the separation agreements.(b) Represents costs
related to impairment of property and equipment for stores.(c)
Represents provision related to certain stores where the
unavoidable costs of meeting the obligations under the lease
agreement are expected to exceed the economic benefits expected to
be received from the contract.(d) Represents non-cash costs related
to the loss on disposal of property and equipment due to
construction of a new store concept at an existing store location
in the current year period and to the closure of one store due to
termination of sub-lease in the prior year period.
Reconciliation of fully diluted weighted
average common shares outstanding, as reported, adjusted fully
diluted weighted average common shares outstanding |
|
[Unaudited and in thousands of Canadian
dollars, except per share] |
|
|
|
For the three months
ended |
|
For the year
ended |
|
|
|
January 28,
2017 |
|
January 30,
2016 |
|
January 28,
2017 |
|
January 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding,
fully diluted |
|
26,035,505 |
|
25,929,818 |
|
24,699,290 |
|
|
19,776,946 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Adjustment for conversion of preferred shares Series A, A-1
and A-2 (a) |
|
— |
|
— |
|
— |
|
|
2,888,749 |
|
|
Initial
public company share issuance (b) |
|
— |
|
— |
|
— |
|
|
1,213,332 |
|
|
Adjustment for anti-dilution (c) |
|
— |
|
— |
|
1,310,218 |
|
|
2,229,057 |
|
|
Adjusted weighted average number of shares
outstanding, fully diluted |
|
26,035,505 |
|
25,929,818 |
|
26,009,508 |
|
|
26,108,084 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share, fully diluted |
|
0.08 |
|
0.57 |
|
(0.15 |
) |
|
(6.65 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share, fully
diluted |
|
0.41 |
|
0.45 |
|
0.29 |
|
|
0.40 |
|
|
(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.(c) Reflects the diluted impact of
stock options, utilizing the treasury method, and restricted stock
units.
Investor Contact
ICR Inc.
Rachel Schacter
(203) 682-8200
investors@davidstea.com
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