Fourth Quarter Comparable Store Sales up
8.5%; Consolidated Net Sales up 8.8%
Fiscal 2018 Comparable Store Sales up 3.5%;
Consolidated Net Sales up 4.4%
Fourth Quarter EPS of $0.33 vs ($0.01) in
Q417; Adjusted EPS increases to $0.33 from $0.18 in Q417
Fiscal 2018 EPS of $0.45 vs $0.40 in Fiscal
2017; Adjusted EPS increases to $0.42 from $0.28 in Fiscal
2017
Provides Fiscal 2019 Outlook
The Container Store Group, Inc. (NYSE:TCS) (the “Company”),
today announced financial results for the fourth quarter and fiscal
year 2018 ended March 30, 2019.
For the fourth quarter of fiscal 2018:
- Consolidated net sales were $253.2
million, up 8.8%. Net sales in The Container Store retail business
(“TCS”) were $235.7 million, up 10.1%. Elfa International AB
(“Elfa”) third-party net sales were $17.5 million, down 6.4% due to
foreign currency translation.
- Comparable store sales increased 8.5%,
with Custom Closets up 7.4%, contributing 380 basis points of the
increase to comparable store sales.
- Consolidated net income and net income
per share (“EPS”) were $15.9 million and $0.33 compared to a net
loss of $0.4 million and ($0.01), respectively, in the fourth
quarter of fiscal 2017. Adjusted net income per share (“Adjusted
EPS”) was $0.33 compared to $0.18 in the fourth quarter of fiscal
2017 (see Reconciliation of GAAP to Non-GAAP Financial Measures
table).
- Adjusted EBITDA (see Reconciliation of
GAAP to Non-GAAP Financial Measures table), was $37.8 million
compared to $31.1 million in the prior year period.
“We ended fiscal 2018 with strong results, posting an 8.5%
comparable store sales increase in Q4 that was broad-based across
our core Custom Closets business, as well as our other product
categories,” said Melissa Reiff, Chief Executive Officer. “This
performance reflects the improvements we continue to make across
all aspects of our business – in merchandising and new product
development, marketing, inventory management and in-stock levels,
as well as overall execution with excellence in our stores and our
online channel. It also includes the positive impact from the
“Marie Kondo effect” that is driving even more interest in our core
category of Custom Closets and storage and organization.”
“We have plans in fiscal 2019 to strategically build on our
progress to drive more brand awareness and market share gains,
specifically in our core Custom Closets business where we recently
launched our new Avera™ product line,” Reiff added. “Our second
distribution center in Maryland is planned to become fully
operational in late fiscal 2019, positioning us to generate
significant efficiencies and a considerable reduction in delivery
times leading to improved customer service in fiscal 2020 and
beyond. Across our entire company, we have clear priorities and a
go-to-market strategy grounded in our purpose – which is to help
our customers accomplish projects, maximize their space and make
the most of their homes. We intend to capitalize on the many
opportunities we see for the business and realize our vision to be
a beloved brand and the first choice for customized organization
solutions and services.”
Fourth Quarter Fiscal 2018
Results
For the fourth quarter (thirteen weeks) ended March 30,
2019:
- Consolidated net sales were $253.2
million, up 8.8% as compared to the fourth quarter of fiscal 2017.
Net sales at TCS were $235.7 million, up 10.1%, driven by an
increase in comparable store sales of 8.5%, combined with
incremental sales from new stores. Elfa third-party net sales were
$17.5 million, down 6.4% compared to the fourth quarter ended
March 31, 2018, due to the negative impact of foreign currency
translation during the quarter which decreased third-party net
sales by 11.7%, partially offset by higher sales in the Nordic
markets.
- Consolidated gross margin was 58.6%,
consistent with the fourth quarter of fiscal 2017. TCS gross
margin increased 70 basis points to 57.8%, primarily due to the
impact of the Optimization Plan combined with a positive impact
from foreign currency. Elfa gross margin declined 340 basis points
primarily due to higher direct materials costs attributable to
higher raw material prices and a weaker Swedish krona.
- Consolidated selling, general and
administrative expenses ("SG&A") increased by 5.0% to $110.0
million in the fourth quarter of fiscal 2018 from $104.9 million in
the fourth quarter of fiscal 2017. SG&A as a percentage of
net sales decreased 150 basis points. This was primarily due to
decreased marketing expense in the fourth quarter of fiscal 2018
associated with a shift in the timing of recognition of
campaign-related marketing costs from the fourth quarter to the
third quarter as well as decreased costs incurred as part of the
Optimization Plan, decreased professional fees and ongoing savings
and efficiency efforts.
- Consolidated net interest expense
decreased 21.4% to $6.0 million in the fourth quarter of fiscal
2018 from $7.6 million in the fourth quarter of fiscal 2017. In
September 2018, the Company amended its Senior Secured Term Loan
Facility, which decreased the applicable interest rate
margins.
- The effective tax rate was 28.3%, as
compared to 103.1% in the fourth quarter of fiscal 2017. In
the fourth quarter of fiscal 2018, the effective tax rate rose
above the U.S. statutory rate primarily due to items related to the
Tax Cuts and Jobs Act (the “Tax Act”) and a pretax income position.
In the fourth quarter of fiscal 2017, the effective tax rate
increased above the blended U.S. statutory rate primarily due to
the provisional amount recorded for the one-time transition tax on
foreign earnings in connection with the Tax Act.
- Net income was $15.9 million, or $0.33
per share, in the fourth quarter of fiscal 2018 compared to a net
loss of $0.4 million, or ($0.01) per share in the fourth quarter of
fiscal 2017. Adjusted net income was $16.2 million, or $0.33 per
share, in the fourth quarter of fiscal 2018 compared to adjusted
net income of $8.4 million, or $0.18 per share in the fourth
quarter of fiscal 2017 (see Reconciliation of GAAP to Non-GAAP
Financial Measures table).
- Adjusted EBITDA was $37.8 million in
the fourth quarter of fiscal 2018 compared to $31.1 million in the
fourth quarter of fiscal 2017 (see Reconciliation of GAAP to
Non-GAAP Financial Measures table).
For the year (fifty-two weeks) ended March 30,
2019:
- Consolidated net sales were $895.1
million, up 4.4% as compared to fiscal 2017. Net sales at TCS were
$829.6 million, up 5.4%, driven by a comparable store sales
increase of 3.5% combined with incremental sales from new stores.
Elfa third-party net sales were $65.5 million, down 6.2% compared
to fiscal 2017, primarily due to the negative impact of foreign
currency translation which decreased third-party net sales by 6.9%,
partially offset by higher sales in the Nordic markets.
- Consolidated gross margin was 58.5%, an
increase of 50 basis points compared to fiscal 2017. TCS gross
margin increased 80 basis points to 58.0%, primarily due to lower
cost of goods associated with the Optimization Plan, partially
offset by higher promotional activities and increased costs
associated with shipping services. Elfa gross margin declined 320
basis points primarily due to higher direct materials costs
attributable to higher raw materials prices, a shift in product
mix, and a weaker Swedish krona.
- Consolidated SG&A expense increased
by 4.7% to $431.0 million in fiscal 2018 from $411.7 million in
fiscal 2017. SG&A as a percentage of net sales increased
20 basis points. The increase was primarily attributable to the
deleverage of occupancy costs, higher payroll costs, and increased
marketing expense associated with the branding campaign launch in
the second quarter of fiscal 2018, partially offset by decreased
costs associated with the Optimization Plan.
- Pre-opening costs decreased to $2.1
million in fiscal 2018 compared to $5.3 million in fiscal 2017. The
Company opened four new stores (inclusive of two relocations), in
fiscal 2018, ending the fiscal year with 92 stores, as compared to
five new stores opened (inclusive of one relocation) and an ending
store count of 90, in fiscal 2017.
- Other expenses decreased to $0.2
million in fiscal 2018 compared to $5.7 million in fiscal 2017. The
decrease is primarily due to severance costs incurred in fiscal
2017 to implement the Optimization Plan.
- Consolidated net interest expense
increased 9.0% to $27.3 million in fiscal 2018 from $25.0 million
in fiscal 2017 primarily due to the amendment of our Senior Secured
Term Loan Facility in the second quarter of fiscal 2017, which
increased the applicable interest rate margins.
- The effective tax rate was 1.3% in
fiscal 2018 as compared to -189.8% in fiscal 2017. In fiscal
2018, the effective tax rate was below the U.S. statutory rate due
to the finalization of the one-time transition tax on foreign
earnings. In fiscal 2017, the effective tax rate was below the U.S.
statutory rate primarily due to the estimated impact of the Tax Act
enacted in the third quarter of fiscal 2017, including the
provisional benefit for the remeasurement of deferred tax
balances.
- Net income was $21.7 million, or $0.45
per share, in fiscal 2018 compared to net income of $19.4 million,
or $0.40 per share in fiscal 2017. Adjusted net income was $20.4
million, or $0.42 per share, in fiscal 2018 compared to adjusted
net income of $13.6 million, or $0.28 per share in fiscal 2017 (see
Reconciliation of GAAP to Non-GAAP Financial Measures table).
- Adjusted EBITDA was $96.3 million in
fiscal 2018 compared to $89.6 million in fiscal 2017 (see
Reconciliation of GAAP to Non-GAAP Financial Measures table).
Balance sheet and liquidity highlights:
(In thousands) March 30, 2019
March 31, 2018 Cash $ 7,364 $ 8,399 Total debt, net
of deferred financing costs $ 267,487 $ 285,165 Liquidity (1) $
83,532 $ 90,767 Free cash flow (2) $ 21,226 $ 34,530 (1)
Cash plus availability on revolving credit facilities. (2) See
reconciliation of GAAP to Non-GAAP Measures table.
Outlook
The Company is establishing its outlook for fiscal 2019 as
follows:
Fiscal 2019 Outlook Net sales $915
million to $925 million New store openings and store relocations 2
openings, including 1 relocation (2) Comparable store sales Up 2.0%
to up 3.0% Net income per common share (1) $0.41 to $0.51 Adjusted
net income per common share (1) (3) $0.41 to $0.51 Assumed tax rate
30% Estimated share count 49 million (1) Includes
approximately $4 million, or $0.06 per common share of net costs
associated with the opening of a second distribution center in
Aberdeen, MD. (2) The Company plans to open a new store in Memphis,
TN during the second quarter of fiscal 2019. Additionally, during
the second half of fiscal 2019, the Company plans to relocate an
existing store in Dallas, TX. (3) See Reconciliation of GAAP to
Non-GAAP Financial Measures Table.
Conference Call Information
A conference call to discuss fourth quarter fiscal 2018
financial results is scheduled for today, May 14, 2019, at 4:30 PM
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.containerstore.com.
A taped replay of the conference call will be available within
two hours of the conclusion of the call and can be accessed both
online and by dialing (844) 512-2921 (international callers please
dial (412) 317-6671). The pin number to access the telephone replay
is 13690281. The replay will be available until June 14, 2019.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including statements about our future
opportunities; expectations regarding our goals, strategies,
priorities and initiatives; expectations regarding new store
openings and relocations; plans to drive more brand awareness and
attain market share gains; statements regarding our new
distribution center and its anticipated effects on our business;
and our anticipated financial performance and tax rate for fiscal
2019.
These forward-looking statements are based on management’s
current expectations. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, the
following: our optimization plan may not result in improved sales
and profitability; our inability to open or relocate new stores, or
remodel existing stores, in the timeframe and at the locations we
anticipate; overall decline in the health of the economy, consumer
spending, and the housing market; our inability to manage costs and
risks relating to new store openings; our inability to source and
market new products to meet consumer preferences; our failure to
achieve or maintain profitability; risks relating to the opening of
a second distribution center; effects of a security breach or
cyber-attack of our website or information technology systems,
including relating to our use of third-party web service providers;
our vulnerability to natural disasters and other unexpected events;
our reliance upon independent third party transportation providers;
our inability to protect our brand; our failure to successfully
anticipate consumer preferences and demand; our inability to manage
our growth; inability to locate available retail store sites on
terms acceptable to us; our inability to maintain sufficient levels
of cash flow to meet growth expectations; disruptions in the global
financial markets leading to difficulty in borrowing sufficient
amounts of capital to finance the carrying costs of inventory to
pay for capital expenditures and operating costs; fluctuations in
currency exchange rates; our inability to effectively manage our
online sales; competition from other stores and internet-based
competition; our inability to obtain merchandise on a timely basis
at competitive prices as a result of changes in vendor
relationships; vendors may sell similar or identical products to
our competitors; our reliance on key executive management, and the
transition in our executive leadership; our inability to find,
train and retain key personnel; labor relations difficulties;
increases in health care costs and labor costs; our dependence on
foreign imports for our merchandise; violations of the U.S. Foreign
Corrupt Practices Act and similar worldwide anti-bribery and
anti-kickback laws; our indebtedness may restrict our current and
future operations, and we may not be able to refinance our debt on
favorable terms, or at all; effects of tax reform; and uncertainty
with respect to tax and trade policies, tariffs and government
regulations affecting trade between the United States and other
countries.
These and other important factors discussed under the caption
“Risk Factors” in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission, or SEC, on May 31, 2018,
and our other reports filed with the SEC could cause actual results
to differ materially from those indicated by the forward-looking
statements made in this press release. Any such forward-looking
statements represent management’s estimates as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change.
These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
About The Container Store
The Container Store (NYSE:TCS) is the nation’s leading retailer
of storage and organization products — a concept they
originated in 1978. Today, with locations nationwide, the retailer
offers more than 10,000 products designed to save space and time, a
suite of custom closet systems and an array of digital shopping
services. Visit www.containerstore.com for more information about
store locations, the product collection and services offered. Visit
www.containerstore.com/blog for real solutions from the really
organized and www.whatwestandfor.com to learn more about the
company’s unique culture.
The Container Store Group, Inc. Consolidated statements
of operations (In thousands, except share
and Thirteen Weeks Ended Fiscal Year Ended per
share amounts) March 30, 2019 March 31, 2018
March 30, 2019 March 31, 2018 (unaudited)
(unaudited) (unaudited) Net sales $ 253,180 $ 232,764
$ 895,093 $ 857,228 Cost of sales (excluding depreciation and
amortization) 104,900 96,248 371,410
360,167 Gross profit 148,280 136,516 523,683 497,061 Selling,
general, and administrative expenses (excluding depreciation and
amortization) 110,048 104,855 430,997 411,721 Stock-based
compensation 859 437 2,846 2,026 Pre-opening costs 185 617 2,103
5,293 Depreciation and amortization 8,953 9,398 36,305 37,922 Other
expenses (120) 826 177 5,734 Loss (gain) on disposal of assets
221 42 (63) 278 Income from operations
28,134 20,341 51,318 34,087 Interest expense, net 5,982 7,615
27,275 25,013 Loss on extinguishment of debt — —
2,082 2,369 Income before taxes 22,152 12,726 21,961
6,705 Provision (benefit) for income taxes 6,270
13,125 281 (12,723) Net income (loss) $ 15,882 $
(399) $ 21,680 $ 19,428 Net income (loss) per common share —
basic and diluted $ 0.33 $ (0.01) $ 0.45 $ 0.40
Weighted-average common shares — basic 48,142,319 48,072,187
48,139,929 48,061,527 Weighted-average common shares — diluted
48,382,433 48,202,980 48,400,407 48,147,725
The Container Store Group, Inc.
Consolidated balance sheets March 30, March
31, (In thousands) 2019 2018 Assets
(unaudited) Current assets: Cash $ 7,364 $ 8,399 Accounts
receivable, net 25,568 25,528 Inventory 108,650 97,362 Prepaid
expenses 10,078 11,281 Income taxes receivable 1,003 15 Other
current assets 11,705 11,609 Total current assets
164,368 154,194 Noncurrent assets: Property and equipment, net
152,588 158,389 Goodwill 202,815 202,815 Trade names 225,150
229,401 Deferred financing costs, net 241 312 Noncurrent deferred
tax assets, net 1,912 2,404 Other assets 1,670 1,854
Total noncurrent assets 584,376 595,175 Total assets
$ 748,744 $ 749,369
The Container Store Group, Inc. Consolidated balance
sheets (continued) March 30, March 31,
(In thousands, except share and per share amounts)
2019 2018 Liabilities and shareholders’ equity
(unaudited) Current liabilities: Accounts payable $ 58,734 $
43,692 Accrued liabilities 67,163 70,494 Revolving lines of credit
5,511 — Current portion of long-term debt 7,016 7,771 Income taxes
payable 2,851 4,580 Total current liabilities 141,275
126,537 Noncurrent liabilities: Long-term debt 254,960 277,394
Noncurrent deferred tax liabilities, net 51,702 54,839 Deferred
rent and other long-term liabilities 36,114 41,892
Total noncurrent liabilities 342,776 374,125 Total
liabilities 484,051 500,662 Commitments and contingencies
Shareholders’ equity: Common stock, $0.01 par value, 250,000,000
shares authorized; 48,142,319 shares issued at March 30, 2019 and
48,072,187 shares issued at March 31, 2018 481 481 Additional
paid-in capital 863,978 861,263 Accumulated other comprehensive
loss (26,132) (17,316) Retained deficit (573,634)
(595,721) Total shareholders’ equity 264,693 248,707
Total liabilities and shareholders’ equity $ 748,744 $ 749,369
The Container Store
Group, Inc. Consolidated statements of cash flows
Fiscal Year Ended March 30, March 31, (In
thousands) 2019 2018 Operating activities
(unaudited) Net income $ 21,680 $ 19,428 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 36,305 37,922 Stock-based
compensation 2,846 2,026 (Gain) loss on disposal of assets (63) 278
Loss on extinguishment of debt 2,082 2,369 Deferred tax benefit
(1,563) (25,545) Non-cash interest 2,351 2,664 Other (60) 227
Changes in operating assets and liabilities:
Accounts receivable (1,395) 3,192 Inventory (14,688) 8,406 Prepaid
expenses and other assets 1,510 (2,133) Accounts payable and
accrued liabilities 13,622 6,249 Income taxes (2,428) 625 Other
noncurrent liabilities (5,303) 6,468 Net cash
provided by operating activities 54,896 62,176
Investing
activities Additions to property and equipment (33,670)
(27,646) Proceeds from sale of property and equipment 899
96 Net cash used in investing activities (32,771) (27,550)
Financing activities Borrowings on revolving lines of
credit 55,201 47,486 Payments on revolving lines of credit (49,484)
(47,486) Borrowings on long-term debt 331,500 335,000 Payments on
long-term debt and capital leases (356,712) (361,403) Payment of
debt issuance costs (2,384) (11,246) Payment of taxes with shares
withheld upon restricted stock vesting (128) (39) Net
cash used in financing activities (22,007) (37,688) Effect
of exchange rate changes on cash (1,153) 725
Net decrease in cash (1,035) (2,337) Cash at beginning of fiscal
period 8,399 10,736 Cash at end of fiscal period $
7,364 $ 8,399
Note Regarding Non-GAAP Information
This press release includes financial measures that are not
calculated in accordance with GAAP, including adjusted net income,
adjusted net income per diluted share, Adjusted EBITDA, and free
cash flow. The Company has reconciled these non-GAAP financial
measures with the most directly comparable GAAP financial measures
in a table accompanying this release. These non-GAAP measures
should not be considered as alternatives to net income as a measure
of financial performance or cash flows from operations as a measure
of liquidity, or any other performance measure derived in
accordance with GAAP and they should not be construed as an
inference that the Company’s future results will be unaffected by
unusual or non-recurring items. These non-GAAP measures are key
metrics used by management, the Company’s board of directors, and
Leonard Green and Partners, L.P., its controlling stockholder, to
assess its financial performance.
The Company presents adjusted net income, adjusted net income
per diluted share, and Adjusted EBITDA because it believes they
assist investors in comparing the Company’s performance across
reporting periods on a consistent basis by excluding items that the
Company does not believe are indicative of its core operating
performance and because the Company believes it is useful for
investors to see the measures that management uses to evaluate the
Company. These non-GAAP measures are also frequently used by
analysts, investors and other interested parties to evaluate
companies in the Company’s industry. In evaluating these non-GAAP
measures, you should be aware that in the future the Company will
incur expenses that are the same as or similar to some of the
adjustments in this presentation. The Company’s presentation of
these non-GAAP measures should not be construed to imply that its
future results will be unaffected by any such adjustments.
Management compensates for these limitations by relying on our GAAP
results in addition to using non-GAAP measures supplementally.
These non-GAAP measures are not necessarily comparable to other
similarly titled captions of other companies due to different
methods of calculation.
The Company defines adjusted net income as net income before
restructuring charges, charges related to an Elfa manufacturing
facility closure, impairment charges related to intangible assets,
losses on extinguishment of debt, certain gains on disposal of
assets, certain management transition costs incurred and benefits
realized, charges incurred as part of the implementation of our
Optimization Plan, and the tax impact of these adjustments and
other unusual or infrequent tax items. We define adjusted net
income per diluted share as adjusted net income divided by the
diluted weighted average common shares outstanding. We use adjusted
net income and adjusted net income per diluted share to supplement
GAAP measures of performance to evaluate the effectiveness of our
business strategies, to make budgeting decisions and to compare our
performance against that of other peer companies using similar
measures. We present adjusted net income and adjusted net income
per diluted share because we believe they assist investors in
comparing our performance across reporting periods on a consistent
basis by excluding items that we do not believe are indicative of
our core operating performance and because we believe it is useful
for investors to see the measures that management uses to evaluate
the Company.
The Company defines EBITDA as net income before interest, taxes,
depreciation, and amortization. Adjusted EBITDA is calculated in
accordance with its credit facilities and is one of the components
for performance evaluation under its executive compensation
programs. Adjusted EBITDA reflects further adjustments to EBITDA to
eliminate the impact of certain items, including certain non-cash
and other items that the Company does not consider in its
evaluation of ongoing operating performance from period to period
as discussed further below. The Company uses Adjusted EBITDA in
connection with covenant compliance and executive performance
evaluations, and to supplement GAAP measures of performance to
evaluate the effectiveness of its business strategies, to make
budgeting decisions and to compare its performance against that of
other peer companies using similar measures. The Company believes
it is useful for investors to see the measures that management uses
to evaluate the Company, its executives and its covenant
compliance. EBITDA and Adjusted EBITDA are also frequently used by
analysts, investors and other interested parties to evaluate
companies in the Company’s industry.
The Company presents free cash flow, which the Company defines
as net cash provided by operating activities in a period minus
payments for property and equipment made in that period, because it
believes it is a useful indicator of the Company’s overall
liquidity, as the amount of free cash flow generated in any period
is representative of cash that is available for debt repayment,
investment, and other discretionary and non-discretionary cash
uses. Accordingly, we believe that free cash flow provides useful
information to investors in understanding and evaluating our
liquidity in the same manner as management. Our definition
of free cash flow is limited in that it does not solely
represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt service and other contractual
obligations. Therefore, we believe it is important to
view free cash flow as a measure that provides
supplemental information to our Consolidated Statements of
Cash Flows. Although other companies report their free cash
flow, numerous methods may exist for calculating a
company’s free cash flow. As a result, the method used by our
management to calculate our free cash flow may differ
from the methods used by other companies to calculate
their free cash flow.
The Container Store Group, Inc. Supplemental
Information - Reconciliation of GAAP to Non-GAAP Financial
Measures
(In thousands, except share and per share amounts)
(unaudited)
The table below reconciles the non-GAAP financial measures of
adjusted net income and adjusted net income per diluted share with
the most directly comparable GAAP financial measures of GAAP net
income and GAAP net income per diluted share.
Thirteen Fiscal
Year Fiscal Year Weeks Ended
Ended 2019 Outlook March 30, 2019
March 31, 2018 March 30, 2019
March 31, 2018 Low High
Numerator: Net income (loss) $ 15,882 $ (399) $ 21,680 $ 19,428 $
20,100 $ 24,900 Elfa manufacturing facility closure (a) — (49) —
803 — — Loss (gain) on disposal of real estate (b) 13 — (374) — — —
Loss on extinguishment of debt (c) — — 2,082 2,369 — — Optimization
Plan implementation charges (d) — 737 4,864 11,479 — — Taxes (e)
258 8,152 (7,820) (20,485) —
— Adjusted net income $ 16,153 $ 8,441 $ 20,432 $ 13,594 $
20,100 $ 24,900 Denominator: Weighted average common shares
outstanding — diluted 48,382,433 48,202,980 48,400,407 48,147,725
49,000,000 49,000,000 Net income (loss) per diluted share $
0.33 $ (0.01) $ 0.45 $ 0.40 $ 0.41 $ 0.51 Adjusted net income per
diluted share $ 0.33 $ 0.18 $ 0.42 $ 0.28 $ 0.41 $ 0.51 (a)
Charges related to the closure of an Elfa
manufacturing facility in Lahti, Finland in fiscal 2017, recorded
in other expenses, which we do not consider in our evaluation of
our ongoing performance. (b) Gain recorded as a result of
the sale of a building in Lahti, Finland, recorded in fiscal 2018
in loss (gain) on disposal of assets, which we do not consider in
our evaluation of our ongoing performance. (c) Loss recorded
as a result of the amendment made to the Senior Secured Term Loan
Facility in fiscal 2018 and the amendments made to the Senior
Secured Term Loan Facility and the Revolving Credit Facility in
fiscal 2017, which we do not consider in our evaluation of our
ongoing performance. (d) Charges incurred as part of the
implementation of our Optimization Plan, which include certain
consulting costs recorded in SG&A expenses in fiscal 2018 and
fiscal 2017, cash severance payments associated with the
elimination of certain full-time positions at the TCS segment
recorded in other expenses in fiscal 2017, and cash severance
payments associated with organizational realignment at the Elfa
segment recorded in other expenses in fiscal 2017, which we do not
consider in our evaluation of ongoing performance. (e)
Tax impact of adjustments to net income
(loss), as well as the estimated impact of the Tax Cuts and Jobs
Act recorded in fiscal 2017, the tax benefit recorded in the first
quarter of fiscal 2018 as a result of a reduction in the Swedish
tax rate, and the tax benefit recorded in the third quarter of
fiscal 2018 as a result of the finalization of the impact of the
Tax Cuts and Jobs Act, which are considered to be unusual or
infrequent tax items, all of which we do not consider in our
evaluation of ongoing performance.
The table below reconciles the non-GAAP financial measure
Adjusted EBITDA with the most directly comparable GAAP financial
measure of GAAP net income (loss).
Thirteen Weeks Ended Fiscal Year Ended March 30,
2019 March 31, 2018 March 30, 2019 March 31,
2018 Net income (loss) $ 15,882 $ (399) $ 21,680 $ 19,428
Depreciation and amortization 8,953 9,398 36,305 37,922 Interest
expense, net 5,982 7,615 27,275 25,013 Income tax provision
(benefit) 6,270 13,125 281 (12,723)
EBITDA $ 37,087 $ 29,739 $ 85,541 $ 69,640 Pre-opening costs (a)
185 617 2,103 5,293 Non-cash rent (b) (210) (464) (1,327) (1,915)
Stock-based compensation (c) 859 437 2,846 2,026 Loss on
extinguishment of debt (d) — — 2,082 2,369 Foreign exchange (gains)
losses (e) (9) (290) 60 (596) Optimization Plan implementation
charges (f) — 737 4,864 11,479 Elfa manufacturing facility closure
(g) — (49) — 803 Other adjustments (h) (119) 369
178 504 Adjusted EBITDA $ 37,793 $ 31,096 $ 96,347 $
89,603 (a) Non-capital expenditures associated
with opening new stores and relocating stores, including rent,
marketing expenses, travel and relocation costs, and training
costs. We adjust for these costs to facilitate comparisons of our
performance from period to period. (b) Reflects the extent
to which our annual GAAP rent expense has been above or below our
cash rent payment due to lease accounting adjustments. The
adjustment varies depending on the average age of our lease
portfolio (weighted for size), as our GAAP rent expense on younger
leases typically exceeds our cash cost, while our GAAP rent expense
on older leases is typically less than our cash cost. (c)
Non-cash charges related to stock-based compensation programs,
which vary from period to period depending on volume and vesting
timing of awards. We adjust for these charges to facilitate
comparisons from period to period. (d) Loss recorded as a
result of the amendment made to the Senior Secured Term Loan
Facility in fiscal 2018 and the amendments made to the Senior
Secured Term Loan Facility and the Revolving Credit Facility in
fiscal 2017, which we do not consider in our evaluation of our
ongoing performance. (e) Realized foreign exchange
transactional gains/losses our management does not consider in our
evaluation of our ongoing operations. (f) Charges incurred
as part of the implementation of our Optimization Plan, which
include certain consulting costs recorded in SG&A expenses in
fiscal 2018 and in fiscal 2017, cash severance payments associated
with the elimination of certain full-time positions at the TCS
segment recorded in other expenses in fiscal 2017, and cash
severance payments associated with organizational realignment at
the Elfa segment recorded in other expenses in fiscal 2017, which
we do not consider in our evaluation of ongoing performance.
(g) Charges related to the closure of an Elfa manufacturing
facility in Lahti, Finland in fiscal 2017, recorded in other
expenses, which we do not consider in our evaluation of our ongoing
performance. (h) Other adjustments include amounts our
management does not consider in our evaluation of our ongoing
operations, including certain severance and other charges.
The table below reconciles the non-GAAP financial measure of
free cash flow with the most directly comparable GAAP financial
measure of net cash provided by operating activities.
Fiscal Year Ended
March 30, March 31, 2019 2018 Net cash
provided by operating activities $ 54,896 $ 62,176 Less: Additions
to property and equipment (33,670) (27,646) Free cash
flow $ 21,226 $ 34,530
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190514005981/en/
Investors:ICR, Inc.Farah Soi/Caitlin Churchill,
203-682-8200Farah.Soi@icrinc.comCaitlin.Churchill@icrinc.comorMedia:The
Container Store Group, Inc.Mara Richter,
972-538-6893publicrelations@containerstore.com
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