The Container Store Group, Inc., Announces Third Quarter Fiscal 2013 Financial ResultsFont size: A | A | A
4:00 PM ET 1/7/14 | BusinessWire
The Container Store Group, Inc. (NYSE:TCS) (the "Company"), today announced financial results for the third quarter and year-to-date ended November 30, 2013.
Kip Tindell, Chairman and Chief Executive Officer, said: "We are pleased with our operating results in the third quarter. Our net sales increase of 7.3% was fueled by our retail business at The Container Store, where sales increased 10.8%. We saw strong performance across new and existing stores as comparable store sales increased 4.7%; our fourteenth consecutive quarter of comparable store sales increases. This performance in combination with our strong product margins and expense management drove adjusted net income per diluted common share of $0.11. These results demonstrate the strength of our differentiated business model, brand awareness, unique employee-first culture and solid execution by the entire team at The Container Store."
Tindell continued: "Our commitment to our Foundation Principles and Conscious Capitalism, our focus on training, communication and solutions-based selling, coupled with strong partnerships with our vendors, results in an unmatched store experience for our customers as they shop the world's most comprehensive and celebrated collection of storage and organization solutions. With 63 stores today, we have a long runway of growth ahead of us as we expand our store base to realize the 300+ store opportunity that we believe exists."
"During the third quarter we reached a significant milestone with our successful initial public offering," Tindell added. "We couldn't have been more thrilled, humbled and honored by the reception we received from the market. By taking this path, we are also able to facilitate broader employee ownership of The Container Store, increasing our ability to operate a business where everyone associated with it thrives. We look forward to continuing to deliver long-term value for all of our stakeholders."
For the third quarter (thirteen weeks) ended November 30, 2013, on a consolidated basis:
-- Net sales increased by 7.3% to $188.3 million from $175.4 million in the third quarter of fiscal 2012. Comparable store sales increased by 4.7%. Net sales in The Container Store retail business were up 10.8% to $163.7 million and Elfa third party sales decreased 11.3% to $24.6 million.
-- Gross margin was 60.0%, an increase of 60 basis points compared to the third quarter of fiscal 2012. Net sales at The Container Store retail business represented 87.0% of consolidated sales in the third quarter fiscal 2013, as compared to 84.2% in third quarter fiscal 2012. Since gross margin percentage is higher in The Container Store retail business, this shift in sales mix led to an improvement in consolidated gross margin.
-- Selling, general and administrative expenses ("SG&A") increased by 8.7% to $88.8 million from $81.7 million in the third quarter of fiscal 2012. SG&A as a percentage of net sales increased 60 basis points primarily due to increases in expenses incurred in preparation for the Initial Public Offering ("IPO"), expenses associated with operating as a public company as well as a timing shift in direct mail expenses.
-- The Company opened two new stores and ended the quarter with 63 stores in 22 states and the District of Columbia. The Company has opened six new stores including the relocation of one undersized, older format store in fiscal 2013.
-- Net interest expense increased to $5.8 million from $5.1 million in the third quarter of fiscal 2012.
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U.S. generally accepted accounting principles ("GAAP") net loss Adjusted net income was $5.2 million or $0.11 per diluted common was $9.5 million in the third quarter of fiscal 2013, which share compared to $5.3 million or $0.11 per diluted common share includes $14.6 million of IPO-related stock-based compensation for the third quarter of fiscal 2012, which excludes certain expense, compared to net income of $6.9 million in the third items that we do not consider in the evaluation of ongoing quarter of fiscal 2012. After considering distributions operating performance, including IPO-related expenses, and accumulated to preferred shareholders of $15.6 million and $22.5 distributions accumulated to preferred shareholders in both million in the third quarters of fiscal 2013 and fiscal 2012, periods (see GAAP/Non-GAAP reconciliation table at the end of respectively, net loss per basic and diluted common share was this release). $1.39 in the third quarter of fiscal 2013 compared to $5.32 in the third quarter of fiscal 2012.
-- Adjusted EBITDA increased 7.3% to $24.1 million compared to $22.5 million in the third quarter of fiscal 2012, as calculated in accordance with the Company's Senior Secured Term Loan Facility (see GAAP/Non-GAAP reconciliation table).
For the year to date (thirty-nine weeks) ended November 30, 2013, on a consolidated basis:
-- Net sales increased by 8.6% to $531.7 million from $489.7 million in year to date fiscal 2012. Comparable store sales increased by 3.6%. Sales in The Container Store's retail business were up 11.6% to $466.5 million and Elfa third party sales decreased 9.1% to $65.2 million.
-- Gross margin was 59.0%, an increase of 30 basis points compared to year to date fiscal 2012. Net sales at The Container Store retail business represented 87.7% of consolidated sales in the year to date fiscal 2013, as compared to 85.4% in year to date fiscal 2012. Since gross margin percentage is higher in The Container Store retail business, this shift in sales mix led to an improvement in consolidated gross margin.
-- SG&A increased by 8.8% to $257.9 million from $237.0 million in year to date fiscal 2012. SG&A as a percentage of net sales increased 10 basis points primarily due to increases in expenses associated with the IPO and operating as a public company.
-- Net interest expense increased to $16.9 million from $16.0 million in the corresponding period of fiscal 2012.
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GAAP net loss was $10.2 million, which includes $14.6 million of Adjusted net income was $5.7 million or $0.12 per diluted common IPO-related stock based compensation expense, compared to a GAAP share compared to $4.2 million or $0.09 per diluted common share net loss of $2.2 million in the corresponding period of fiscal in the corresponding period of fiscal 2012, which excludes 2012. After considering distributions accumulated to preferred certain items that we do not consider in the evaluation of shareholders of $59.7 million and $65.4 million in the first ongoing operating performance, including IPO-related expenses, thirty-nine weeks of fiscal 2013 and fiscal 2012, respectively, and distributions accumulated to preferred shareholders in both net loss per basic and diluted common share was $8.78 compared periods (see GAAP/Non-GAAP reconciliation table). to $23.08 in the corresponding period of fiscal 2012.
-- Adjusted EBITDA increased 8.0% to $56.8 million compared to $52.6 million in the third quarter of fiscal 2012, as calculated in accordance with the Company's Senior Secured Term Loan Facility (see GAAP/Non-GAAP reconciliation table).
Balance sheet highlights as of November 30, 2013:
-- Cash: $10.8 million
-- Total debt: $368.5 million (after giving effect to pay-down of $31.0 million with net IPO proceeds to the Company)
-- Total liquidity (cash plus availability on revolving credit facilities of $68.1 million): $78.9 million
Outlook
For fiscal 2013, consolidated net sales are expected to be $754 million based on opening six new stores, inclusive of one store relocation, and an increase in comparable store sales of 3.4%. Adjusted net income, which excludes certain items that we do not consider in our evaluation of ongoing operating performance and distributions accumulated to preferred shareholders, is expected to be $0.40 per diluted common share based on estimated adjusted diluted common shares outstanding of 48.8 million.
