The Lovesac Company (Nasdaq: LOVE) (“Lovesac” or the
“Company”), the home furnishing brand best known for its
Sactionals, The World's Most Adaptable Couch, today announced
financial results for the third quarter of fiscal 2023, which ended
October 30, 2022.
Shawn Nelson, Chief Executive Officer, stated, “Against a
challenging backdrop, Lovesac’s third quarter results provide the
latest validation of a well-executed and balanced omni-channel
strategy paired with truly innovative products. These results
illustrate the continued momentum from our inflecting brand
awareness and customer adoption bolstered by our industry-leading
in-stock position.”
Mr. Nelson continued, “We believe we are well positioned for the
all-important fourth quarter holiday-season where early signs point
to strong cash flow generation for the quarter. At the same time,
we are planning for continued inflationary pressure on consumers
and intend to maintain tight expense management and careful
prioritization of critical spending to support continued growth.
Sales of StealthTech continue to grow and augment our
differentiation in the landscape, widening our opportunity. Our
addressable market remains vast, at $46.2 billion for the couch +
home audio categories, which combined with significant market
fragmentation and our own fundamental operating strengths and
differentiators, presents a very attractive and long runway for our
growth.”
Key Measures for the Third Quarter and Year-to-date
Period of Fiscal 2023 Ending October 30,
2022:(Dollars in millions, except per share amounts.
Dollar and percentage changes may not recalculate due to
rounding.)
|
Thirteen weeks ended |
Thirty-nine weeks ended |
October 30, 2022 |
October 31, 2021 |
% Inc (Dec) |
October 30, 2022 |
October 31, 2021 |
% Inc (Dec) |
Net Sales |
$134.8 |
|
$116.7 |
|
15.5% |
$412.7 |
|
$302.0 |
|
36.6% |
Gross Profit |
$63.6 |
|
$58.6 |
|
8.5% |
$210.6 |
|
$163.7 |
|
28.6% |
Gross Margin |
|
47.2% |
|
|
50.2% |
|
(300) bps |
|
51.0% |
|
|
54.2% |
|
(320) bps |
Total Operating Expense |
$75.2 |
|
$55.6 |
|
35.1% |
$209.7 |
|
$149.5 |
|
40.3% |
SG&A |
$53.7 |
|
$38.1 |
|
40.9% |
$147.4 |
|
$104.2 |
|
41.5% |
SG&A as a % of Net Sales |
|
39.8% |
|
|
32.6% |
|
720 bps |
|
35.7% |
|
|
34.5% |
|
120 bps |
Advertising & Marketing |
$19.1 |
|
$15.8 |
|
20.3% |
$54.0 |
|
$39.5 |
|
36.6% |
Advertising & Marketing as a % of Net Sales |
|
14.1% |
|
|
13.6% |
|
50 bps |
|
13.1% |
|
|
13.1% |
|
0 bps |
Basic EPS (Loss) Income |
$(0.55) |
|
$0.18 |
|
(405.6%) |
$0.04 |
|
$0.88 |
|
(95.5%) |
Diluted EPS (Loss) Income |
$(0.55) |
|
$0.17 |
|
(423.5%) |
$0.04 |
|
$0.83 |
|
(95.2%) |
Net (Loss) Income |
$(8.4) |
|
$2.8 |
|
(405.9%) |
$0.6 |
|
$13.3 |
|
(95.5%) |
Adjusted EBITDA1 |
$(8.4) |
|
$5.8 |
|
(243.6%) |
$12.1 |
|
$23.6 |
|
(48.6%) |
Net Cash Used in Operating Activities |
$(5.6) |
|
$(15.9) |
|
(65.0%) |
$(65.2) |
|
$(15.2) |
|
(329.4%) |
1 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP
Information” and “Reconciliation of Non-GAAP Financial Measures”
included in this press release.
Percent Increase (Decrease) except showroom count |
|
Thirteen weeks ended |
Thirty-nine weeks ended |
October 30, 2022 |
October 31, 2021 |
October 30, 2022 |
October 31, 2021 |
Total Comparable Sales2 |
8.9% |
|
47.1% |
|
25.7% |
|
44.8% |
|
Comparable Showroom Sales3 |
18.5% |
|
53.3% |
|
34.5% |
|
133.0% |
|
Internet Sales |
(6.3%) |
|
38.2% |
|
11.0% |
|
(11.4%) |
|
Ending Showroom Count |
189 |
|
135 |
|
189 |
|
135 |
|
2 Total comparable sales include showroom transactions through
the point of sale and internet net sales.3 Comparable showroom
sales reflect transactions through the point of sale and not
necessarily product that has shipped to the customer. Product that
has shipped to the customer is included in Net Sales.
Highlights for the Quarter Ended October 30,
2022:
- The net sales increase of 15.5% was driven by growth across the
Showroom and “Other” channels, partially offset by a decline in our
Internet channel. Showroom net sales, which include kiosks and
mobile concierges, increased 19.0%. Our “Other” channel increased
61.8%. The increase in showroom net sales was driven by an increase
of 18.5% in comparable showroom sales related to higher point of
sale transactions, strong promotional campaigns and the addition of
41 new showrooms and 13 new kiosks compared to the prior year
period. The increase in “Other” net sales reflects reintroducing
Costco physical pop-up-shops and the addition of 17 new Best Buy
shop-in-shops, for a total of 22 Best Buy shop-in-shop locations.
Internet net sales decreased 6.3% as we continue to see some shifts
back to in person shopping as compared to the prior year
period.
- The gross profit increase of $5.0 million, or 8.5%, to
$63.6 million was principally due to the increase in net
sales. The decrease in gross margin percentage of 300 basis points
was primarily driven by an increase of approximately 160 basis
points in total distribution and related tariff expenses and a
decline of 140 basis points in product margin. The increase in
total distribution and related tariff expenses over prior year is
principally related to the negative impact of 320 basis points due
to volume deleverage in warehouse and higher outbound
transportation costs, partially offset by a decrease of 160 basis
points in inbound transportation costs principally due to lower
container rates. The product margin rate decline is due to higher
promotional discounting to support net sales growth.
- SG&A expense as a percent of net sales increased by 720
basis points due to deleverage of employment costs, infrastructure
investments, rent, selling related expenses, travel, and insurance,
partially offset by higher leverage in equity-based compensation.
The deleverage in certain expenses are due to the continued
investments to support our ongoing growth.
- Advertising and marketing expense increased 20.3% due to
continued investments in marketing spend to support our sales
growth and expand brand awareness. As a percent of net sales,
advertising and marketing increased by 50 basis points due to a
slight increase in media spend to support our third quarter net
sales growth.
- Operating loss was $11.6 million in the third quarter of
fiscal 2022, compared to operating income of $3.0 million in
the prior year period. Operating margin was (8.6%) of net sales
compared to 2.5% of net sales in the third quarter of fiscal
2022.
- Net loss was $8.4 million in the third quarter of fiscal
2022, compared to net income of $2.8 million in the prior year
period. During the third quarter of fiscal 2023, the Company
recorded an income tax benefit of $3.2 million and an income tax
provision of $0.2 million for the thirteen weeks ended
October 30, 2022 and October 31, 2021, respectively. Our
effective tax rate varies from the 21% federal statutory tax rate
primarily due to state taxes. The increase in the effective tax
rate from 5.9% for the thirteen weeks ended October 31, 2021
to 27.8% for the thirteen weeks ended October 30, 2022 was
primarily due to fiscal 2022 having the benefit from the release of
the valuation allowance on the Company’s net deferred tax assets.
The valuation allowance was fully released as of the end of fiscal
year 2022.
Highlights for the Year-to-date Period Ended
October 30, 2022:
- The net sales increase of 36.6% was driven by growth across all
channels. Showroom net sales, which include kiosks and mobile
concierges, increased 41.6%. Internet net sales increased 11.0%,
and our “Other” channel increased 83.0%. The increase in showroom
net sales was driven by an increase of 34.5% in comparable showroom
sales related to higher point of sale transactions with slightly
higher promotional discounting, strong promotional campaigns and
the addition of 41 new showrooms and 13 kiosks compared to the
prior year period. The Internet net sales increase was driven by
the same strong promotional campaigns. The increase in net sales in
our “Other” channel was impacted by the additional 17 new Best Buy
shop-in-shops and reintroducing Costco physical pop-up-shops.
- The gross profit increase of $46.9 million, or 28.6%, to
$210.6 million was principally the result of the increase in
net sales. The decrease in gross margin percentage of 320 basis
points was primarily driven by an increase of approximately 360
basis points in total distribution and related tariff expenses,
partially offset by an improvement of 40 basis points in product
margin. The increase in total distribution and related tariff
expenses over prior year is principally related to the negative
impact of the 290 basis points increase in inbound transportation
costs and an increase of 70 basis points due to volume deleverage
in warehouse and higher outbound transportation cost. The product
margin rate improvement is due to continued vendor negotiations to
assist with the mitigation of tariffs and additional one-time US
dollar denominated rebates related to currency impact and slightly
lower promotional discounting.
- SG&A expense as a percent of net sales increased by 120
basis points due to deleverage of employment costs, travel, and
selling related expenses, partially offset by higher leverage in
infrastructure investments, equity-based compensation, and rent.
The deleverage in certain expenses relate to the continued
investments to support our ongoing growth.
- Advertising and marketing expense increased 36.6% due to
continued investments in marketing spend to support our sales
growth. Advertising and marketing expenses were 13.1% of net sales
in both the year-to-date periods ended October 30, 2022 and
October 31, 2021.
- Operating income was $0.9 million compared to
$14.2 million in the year-to-date period ended
October 31, 2021. Operating margin was 0.2% of net sales
compared to 4.7% of net sales in year-to-date period ended
October 31, 2021.
- Net income was $0.6 million compared to $13.3 million
in the prior year period. During the year-to-date period ended
October 30, 2022, the Company recorded an income tax provision
of $0.2 million as compared to $0.8 million in the prior year
period. Our effective tax rate varies from the 21% federal
statutory tax rate primarily due to state taxes. The increase in
the effective tax rate from 6.0% for the thirty-nine weeks ended
October 31, 2021 to 29.2% for the thirty-nine weeks ended
October 30, 2022 was primarily due to fiscal 2022 having the
benefit from the release of the valuation allowance on the
Company’s net deferred tax assets. The valuation allowance was
fully released as of the end of fiscal year 2022.
Other Financial Highlights as of October 30,
2022:
- The cash and cash equivalents balance as of October 30,
2022 was $3.8 million as compared to $47.9 million as of
October 31, 2021. There was no balance on the Company’s line
of credit as of October 30, 2022 and October 31, 2021.
The Company’s availability under the line of credit was $36.0
million and $22.5 million as of October 30, 2022 and
October 31, 2021, respectively. As previously disclosed, on
March 25, 2022, we amended our existing credit agreement with Wells
Fargo Bank, N.A. to, among other things, extend the maturity date
to March 25, 2024 and increase the maximum revolver commitment to
$40.0 million from $25.0 million, subject to borrowing base and
availability restrictions.
- Total merchandise inventory was $154.5 million as of
October 30, 2022 as compared to $94.5 million as of
October 31, 2021 with the year over year change principally
related to a stock inventory increase of $43.2 million coupled with
an increase in freight capitalization of $16.9 million related to
an increase in inbound freight expense.
Conference Call Information:
A conference call to discuss the financial results for the third
quarter ended October 30, 2022 is scheduled for today,
December 7, 2022, at 8:30 a.m. Eastern Time. Investors and analysts
interested in participating in the call are invited to dial (877)
407-3982 (international callers please dial (201) 493-6780)
approximately 10 minutes prior to the start of the call. A live
audio webcast of the conference call will be available online at
investor.lovesac.com.
A recorded replay of the conference call will be available
within two hours of the conclusion of the call and can be accessed
online at investor.lovesac.com for 90 days.
About The Lovesac Company
Based in Stamford, Connecticut, The Lovesac Company is a
technology driven company that designs, manufactures and sells
unique, high quality furniture derived through its proprietary
Designed for Life® approach which results in products that are
built to last a lifetime and designed to evolve as our customers’
lives do. Our current product offering is comprised of modular
couches called Sactionals, premium foam beanbag chairs called Sacs,
and their associated home decor accessories. Innovation is at the
center of our design philosophy with all of our core products
protected by a robust portfolio of utility patents. We market and
sell our products primarily online directly at www.lovesac.com,
supported by direct-to-consumer touch-feel points in the form of
our own showrooms as well as through shop-in-shops and pop-up-shops
with third party retailers. LOVESAC, SACTIONALS, SAC, DESIGNED FOR
LIFE, and THE WORLD'S MOST ADAPTABLE COUCH are trademarks of The
Lovesac Company and are Registered in U.S. Patent and Trademark
Office.
Non-GAAP Information
Adjusted EBITDA is defined as a non-GAAP financial measure by
the Securities and Exchange Commission (the “SEC”) that is a
supplemental measure of financial performance not required by, or
presented in accordance with, GAAP. We define “Adjusted EBITDA” as
earnings before interest, taxes, depreciation and amortization,
adjusted for the impact of certain non-cash and other items that we
do not consider in our evaluation of ongoing operating performance.
These items include management fees, equity-based compensation
expense, write-offs of property and equipment, deferred rent,
financing expenses and certain other charges and gains that we do
not believe reflect our underlying business performance. We have
reconciled this non-GAAP financial measure with the most directly
comparable GAAP financial measure within the schedules attached
hereto.
We believe that these non-GAAP financial measures not only
provide its management with comparable financial data for internal
financial analysis but also provide meaningful supplemental
information to investors. Specifically, these non-GAAP financial
measures allow investors to better understand the performance of
our business, facilitate a more meaningful comparison of our actual
results on a period-over-period basis and provide for a more
complete understanding of factors and trends affecting our
business. We have provided this information as a means to evaluate
the results of our ongoing operations alongside GAAP measures such
as gross profit, operating income (loss) and net income (loss).
Other companies in our industry may calculate these items
differently than we do. These non-GAAP measures should not be
considered as a substitute for the most directly comparable
financial measures prepared in accordance with GAAP, such as net
income (loss) or net income (loss) per share as a measure of
financial performance, cash flows from operating activities as a
measure of liquidity, or any other performance measure derived in
accordance with GAAP. Non-GAAP financial measures have limitations
as analytical tools, and investors should not consider them in
isolation or as a substitute for analysis of the Company’s results
as reported under GAAP.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and other legal authority. Forward-looking statements can be
identified by words such as “may,” “believe,” “anticipate,”
“could,” “should,” “intend,” “plan,” “will,” “aim(s),” “can,”
“would,” “expect(s),” “estimate(s),” “project(s),” “forecast(s)”,
“positioned,” “approximately,” “potential,” “goal,” “pro forma,”
“strategy,” “outlook” or the negative of these words or other
similar terms or expressions that concern our expectations,
strategy, plans, or intentions. All statements, other than
statements of historical facts, included in this press release
regarding strategy, future operations, future financial position or
projections, future revenue, projected expenses, future cash
availability, sustainability goals, prospects, plans and objectives
of management are forward-looking statements. These statements are
based on management’s current expectations, beliefs and assumptions
concerning the future of our business, anticipated events and
trends, the economy and other future conditions. We may not
actually achieve the plans, carry out the intentions or meet the
expectations disclosed in the forward-looking statements and you
should not rely on these forward-looking statements. Actual results
and performance could differ materially from those projected in the
forward-looking statements as a result of many factors. Among the
key factors that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements
include: the effect and consequences of current economic
conditions, including the impact of COVID-19, the conflict between
Russia and Ukraine, and inflation, on our business, sales, results
of operations and financial condition; changes in consumer spending
and shopping preferences, and economic conditions; our ability to
achieve or sustain profitability; our ability to manage and sustain
our growth effectively, including our ecommerce business, forecast
our operating results, and manage inventory levels; our ability to
advance, implement or achieve our sustainability, growth and
profitability goals through leveraging our Designed for Life and
Circle-to-Consumer philosophies; our ability to realize the
expected benefits of investments in our supply chain and
infrastructure; disruption in our supply chain and dependence on
foreign manufacturing and imports for our products; our ability to
acquire new customers and engage existing customers; reputational
risk associated with increased use of social media; our ability to
attract, develop and retain highly skilled associates; system
interruption or failures in our technology infrastructure needed to
service our customers, process transactions and fulfill orders; any
inability to implement and maintain effective internal control over
financial reporting or inability to remediate any internal controls
deemed ineffective; unauthorized disclosure of sensitive or
confidential information through breach of our computer system; the
ability of third-party providers to continue uninterrupted service;
the impact of tariffs, and the countermeasures and tariff
mitigation initiatives; the regulatory environment in which we
operate, our ability to maintain, grow and enforce our brand and
intellectual property rights and avoid infringement or violation of
the intellectual property rights of others; our ability to improve
our products and develop and launch new products; our ability to
successfully open and operate new showrooms; and our ability to
compete and succeed in a highly competitive and evolving industry,
as well as those risks and uncertainties disclosed under the
sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our
most recent Form 10-K and in our Form 10-Qs filed with the
Securities and Exchange Commission, and similar disclosures in
subsequent reports filed with the SEC, which are available on our
investor relations website at investor.lovesac.com and on the SEC
website at www.sec.gov. Any forward-looking statement made by us in
this press release speaks only as of the date on which we make it.
We disclaim any intent or obligation to update these
forward-looking statements to reflect events or circumstances that
exist after the date on which they were made.
Investor Relations Contact:Rachel Schacter,
ICR(203) 682-8200InvestorRelations@lovesac.com
THE LOVESAC COMPANY
CONDENSED BALANCE
SHEETS(unaudited)
|
October 30,2022 |
|
January 30,2022 |
(amounts in thousands, except share and per share amounts) |
|
|
|
Assets |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
3,832 |
|
|
$ |
92,392 |
|
Trade accounts receivable |
|
15,357 |
|
|
|
8,547 |
|
Merchandise inventories |
|
154,481 |
|
|
|
108,493 |
|
Prepaid expenses and other current assets |
|
41,867 |
|
|
|
15,726 |
|
Total Current Assets |
|
215,537 |
|
|
|
225,158 |
|
Property and equipment, net |
|
47,477 |
|
|
|
34,137 |
|
Operating lease right-of-use assets |
|
133,075 |
|
|
|
100,891 |
|
Other Assets |
|
|
|
Goodwill |
|
144 |
|
|
|
144 |
|
Intangible assets, net |
|
1,395 |
|
|
|
1,413 |
|
Deferred financing costs, net |
|
73 |
|
|
|
— |
|
Deferred tax asset |
|
9,695 |
|
|
|
9,836 |
|
Total Other Assets |
|
11,307 |
|
|
|
11,393 |
|
Total Assets |
$ |
407,396 |
|
|
$ |
371,579 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
47,267 |
|
|
$ |
33,247 |
|
Accrued expenses |
|
33,126 |
|
|
|
40,497 |
|
Payroll payable |
|
7,199 |
|
|
|
9,978 |
|
Customer deposits |
|
5,861 |
|
|
|
13,316 |
|
Current operating lease liabilities |
|
20,774 |
|
|
|
16,382 |
|
Sales taxes payable |
|
4,770 |
|
|
|
5,359 |
|
Total Current Liabilities |
|
118,997 |
|
|
|
118,779 |
|
Operating Lease Liabilities, long-term |
|
130,229 |
|
|
|
96,574 |
|
Line of Credit |
|
— |
|
|
|
— |
|
Total Liabilities |
|
249,226 |
|
|
|
215,353 |
|
Commitments and Contingencies |
|
|
|
Stockholders’ Equity |
|
|
|
Preferred Stock $0.00001 par value, 10,000,000 shares authorized,
no shares issued or outstanding as of October 30, 2022 and
January 30, 2022. |
|
— |
|
|
|
— |
|
Common Stock $.00001 par value, 40,000,000 shares authorized,
15,192,134 shares issued and outstanding as of October 30,
2022 and 15,123,338 shares issued and outstanding as of
January 30, 2022. |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
175,108 |
|
|
|
173,762 |
|
Accumulated deficit |
|
(16,938 |
) |
|
|
(17,536 |
) |
Stockholders’ Equity |
|
158,170 |
|
|
|
156,226 |
|
Total Liabilities and Stockholders’ Equity |
$ |
407,396 |
|
|
$ |
371,579 |
|
THE LOVESAC COMPANY
CONDENSED STATEMENTS OF
OPERATIONS(unaudited)
|
Thirteen weeks ended |
|
Thirty-nine weeks ended |
(amounts in thousands, except
per share data and share amounts) |
October 30,2022 |
|
October 31,2021 |
|
October 30,2022 |
|
October 31,2021 |
Net sales |
$ |
134,784 |
|
|
$ |
116,678 |
|
|
$ |
412,698 |
|
|
$ |
302,041 |
|
Cost of merchandise sold |
|
71,212 |
|
|
|
58,062 |
|
|
|
202,092 |
|
|
|
138,317 |
|
Gross profit |
|
63,572 |
|
|
|
58,616 |
|
|
|
210,606 |
|
|
|
163,724 |
|
Operating expenses |
|
|
|
|
|
|
|
Selling, general and administration expenses |
|
53,658 |
|
|
|
38,087 |
|
|
|
147,425 |
|
|
|
104,191 |
|
Advertising and marketing |
|
19,050 |
|
|
|
15,832 |
|
|
|
54,039 |
|
|
|
39,548 |
|
Depreciation and amortization |
|
2,459 |
|
|
|
1,726 |
|
|
|
8,196 |
|
|
|
5,748 |
|
Total operating expenses |
|
75,167 |
|
|
|
55,645 |
|
|
|
209,660 |
|
|
|
149,487 |
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(11,595 |
) |
|
|
2,971 |
|
|
|
946 |
|
|
|
14,237 |
|
Interest expense, net |
|
(69 |
) |
|
|
(45 |
) |
|
|
(101 |
) |
|
|
(135 |
) |
Net (loss) income before
taxes |
|
(11,664 |
) |
|
|
2,926 |
|
|
|
845 |
|
|
|
14,102 |
|
Benefit from (Provision for)
income taxes |
|
3,245 |
|
|
|
(174 |
) |
|
|
(247 |
) |
|
|
(842 |
) |
Net (loss) income |
$ |
(8,419 |
) |
|
$ |
2,752 |
|
|
$ |
598 |
|
|
$ |
13,260 |
|
|
|
|
|
|
|
|
|
Net (loss) income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.55 |
) |
|
$ |
0.18 |
|
|
$ |
0.04 |
|
|
$ |
0.88 |
|
Diluted |
$ |
(0.55 |
) |
|
$ |
0.17 |
|
|
$ |
0.04 |
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
15,220,593 |
|
|
|
15,146,890 |
|
|
|
15,190,079 |
|
|
|
15,092,844 |
|
Diluted |
|
15,220,593 |
|
|
|
16,069,729 |
|
|
|
16,067,066 |
|
|
|
16,015,683 |
|
THE LOVESAC COMPANY
CONDENSED STATEMENT OF CASH
FLOWS(unaudited)
|
Thirty-nine weeks ended |
(amounts in thousands) |
October 30,2022 |
|
October 31,2021 |
Cash Flows from
Operating Activities |
|
|
|
Net income |
$ |
598 |
|
|
$ |
13,260 |
|
Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
Depreciation and amortization of property and equipment |
|
7,911 |
|
|
|
5,121 |
|
Amortization of other intangible assets |
|
285 |
|
|
|
627 |
|
Amortization of deferred financing fees |
|
117 |
|
|
|
68 |
|
Net loss on disposal of property and equipment |
|
41 |
|
|
|
— |
|
Equity based compensation |
|
2,929 |
|
|
|
2,850 |
|
Non-cash operating lease cost |
|
13,582 |
|
|
|
11,003 |
|
Impairment of right of use lease asset |
|
— |
|
|
|
554 |
|
Deferred income taxes |
|
141 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Trade accounts receivable |
|
(6,810 |
) |
|
|
(5,281 |
) |
Merchandise inventories |
|
(45,988 |
) |
|
|
(44,127 |
) |
Prepaid expenses and other current assets |
|
(20,547 |
) |
|
|
1,166 |
|
Accounts payable and accrued expenses |
|
3,281 |
|
|
|
9,265 |
|
Operating lease liabilities |
|
(13,227 |
) |
|
|
(10,396 |
) |
Customer deposits |
|
(7,455 |
) |
|
|
711 |
|
Net Cash Used in
Operating Activities |
|
(65,142 |
) |
|
|
(15,179 |
) |
Cash Flows from
Investing Activities |
|
|
|
Purchase of property and equipment |
|
(21,292 |
) |
|
|
(11,386 |
) |
Payments for patents and trademarks |
|
(267 |
) |
|
|
(455 |
) |
Net Cash Used in
Investing Activities |
|
(21,559 |
) |
|
|
(11,841 |
) |
Cash Flows from
Financing Activities |
|
|
|
Payment of deferred financing costs |
|
(276 |
) |
|
|
— |
|
Taxes paid for net share settlement of equity awards |
|
(1,583 |
) |
|
|
(3,563 |
) |
Proceeds from the exercise of warrants |
|
— |
|
|
|
104 |
|
Net Cash Used in
Financing Activities |
|
(1,859 |
) |
|
|
(3,459 |
) |
Net Change in Cash and
Cash Equivalents |
|
(88,560 |
) |
|
|
(30,479 |
) |
Cash and Cash Equivalents -
Beginning |
|
92,392 |
|
|
|
78,341 |
|
Cash and Cash Equivalents -
Ending |
$ |
3,832 |
|
|
$ |
47,862 |
|
Supplemental Cash Flow
Disclosures |
|
|
|
Cash paid for taxes |
$ |
9,811 |
|
|
$ |
775 |
|
Cash paid for interest |
$ |
65 |
|
|
$ |
80 |
|
THE LOVESAC COMPANY
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(Unaudited)
(amounts in
thousands) |
|
Thirteen weeks ended October 30, 2022 |
|
Thirteen weeks endedOctober 31, 2021 |
|
Thirty-nine weeksended October 30, 2022 |
|
Thirty-nine weeksended October 31, 2021 |
Net (loss) income |
|
$ |
(8,419 |
) |
|
$ |
2,752 |
|
$ |
598 |
|
|
$ |
13,260 |
Interest expense, net |
|
|
69 |
|
|
|
45 |
|
|
101 |
|
|
|
135 |
(Benefit) provision for income taxes |
|
|
(3,245 |
) |
|
|
174 |
|
|
247 |
|
|
|
842 |
Depreciation and amortization |
|
|
2,459 |
|
|
|
1,726 |
|
|
8,196 |
|
|
|
5,748 |
EBITDA |
|
|
(9,136 |
) |
|
|
4,697 |
|
|
9,142 |
|
|
|
19,985 |
Equity-based compensation (a) |
|
|
739 |
|
|
|
1,121 |
|
|
3,034 |
|
|
|
3,014 |
Loss on disposal of property and equipment (b) |
|
|
41 |
|
|
|
— |
|
|
41 |
|
|
|
— |
Other non-recurring expenses (c) |
|
|
— |
|
|
|
— |
|
|
(105 |
) |
|
|
— |
Impairment of right of use lease asset (d) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
554 |
Adjusted EBITDA |
|
$ |
(8,356 |
) |
|
$ |
5,818 |
|
$ |
12,112 |
|
|
$ |
23,553 |
(a) |
Represents expenses, such as stock compensation expense related to
the amortization of restricted stock units and stock option awards
granted to our associates and our board of directors in addition to
the employer taxes related to the vesting and exercise of this
equity. |
|
|
(b) |
Represents the loss on disposal of fixed assets related to showroom
remodels. |
|
|
(c) |
There were no other non-recurring expenses in the thirteen weeks
ended October 30, 2022 and October 31, 2021, respectively. Other
non-recurring expenses in the thirty-nine weeks ended October 30,
2022 represent costs related to a legal settlement. There were no
other non-recurring expenses in the thirty-nine weeks ended October
31, 2021 |
|
|
(d) |
Represents the impairment of the right of use lease asset for one
showroom. |
|
|
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