Dover Saddlery Reports Fourth Quarter and Full Year 2008 Financial Results
- Press Release
- Source: Dover Saddlery
- On 8:00 am EDT, Monday March 30, 2009
LITTLETON, MA--(MARKET WIRE)--Mar 30, 2009 -- Dover Saddlery, Inc. (NasdaqCM:DOVR - News), the leading multichannel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Related Quotes
| |||||||||
Fourth quarter results
Total revenues for the fourth quarter of 2008 were $21.4 million compared to $22.9 million for the fourth quarter of 2007, a decrease of 6.8%. It is important to note that retail revenues increased 8.7% to $6.2 million, primarily due to the opening of new stores in 2007 and 2008, while same-store sales declined 11.8% due to a decline in consumer confidence and spending levels.
On a non-GAAP basis the company reported net income of $353,000, or $0.07 per diluted share. This followed a GAAP net income of $920,000 or $0.18 cents a share for the fourth quarter of 2007. In addition, the fourth quarter of 2008 generated an estimated federal taxable income of $625,000.
On a GAAP basis, in the fourth quarter of 2008, a non-cash goodwill impairment charge of $14.3 million was recorded. This resulted in a GAAP net loss of $(13.9) million, or $(2.68) a share.
"In the fourth quarter of 2008 we recorded a non-cash goodwill impairment charge of $14.3 million," said Stephen L. Day, president and CEO of Dover Saddlery. "This charge was required under current accounting rules regarding impairment because our market capitalization declined to a level below our book value. However I do not believe our market capitalization today reflects the true long-term value of our company, in spite of obvious risk and volatility in the short term resulting from current economic conditions."
"During 2008, the value of Dover Saddlery's common stock, like most common stocks, was significantly impacted by the deteriorating economy," Mr. Day continued. "Under GAAP accounting, the goodwill carried on the balance sheet was determined to be impaired, due to a reduction in its fair value compared to its book carrying value. While the goodwill impairment charge reduced reported earnings for the fourth quarter of 2008, it does not affect Dover Saddlery's liquidity, cash flows, cash earnings or debt covenants."
A reconciliation of net income calculated in accordance with GAAP and non-GAAP measures is provided in the tables accompanying this press release.
Full Year Results
Total revenues for the fiscal year 2008 were $78 million compared to $81.4 million for 2007. This decrease was attributable to the weak economic environment as experienced by most retailers, particularly in the fourth quarter.
Retail store revenues increased by 11.4% to $22.2 million. This increase was attributable to the opening of new Dover Saddlery retail stores in 2007 and 2008. Same store sales declined by 4.7% due to lower than usual store traffic in the latter part of the year.
On a non-GAAP basis, net income for 2008 was $418,000 or $0.08 per diluted share This followed GAAP net income of $825,000 or $0.16 per diluted share in year 2007. The full year 2008 performance generated an estimated federal taxable income of $775,000.
The non-cash, goodwill impairment charge of $14.3 million, recorded in the fourth quarter, resulted in a GAAP net loss for the fiscal year 2008 of $(13.8) million, or $(2.68) per share. While the goodwill impairment charge reduced reported earnings for 2008, it does not affect Dover Saddlery's liquidity, cash flows, cash earnings or debt covenants.
"2008 was a difficult operating environment for our industry as a result of numerous external factors which led to all time historical lows in consumer confidence, resulting in a contraction in specialty retail consumer spending," Mr. Day observed. "As a result, the Company has developed several short term strategies to maintain or expand market share, reduce operating costs and reduce capital expenditures. We are pleased that the loyalty of our customers and strength of our brand, combined with our aggressive cost control, resulted in a non-GAAP income from operations of $2.36 million and a positive non-GAAP net income for the year." (See the accompanying table for reconciliation to GAAP.)
Mr. Day continued, "Regarding our retail-rollout, in order to focus on profitability and await an expected more favorable lease environment, we are currently not planning to open additional stores in 2009 unless an exceptionally good opportunity arises. At the end of 2008, Dover Saddlery had completed 25% of its initial retail rollout target of 50 locations, and in spite of a challenging retailing environment, all stores are performing well."
Business Outlook 2009
Until there is greater long-term visibility on the consumer environment, the Company is not providing guidance on business prospects in 2009.
Today's Teleconference and Webcast
Dover Saddlery will be hosting a conference call at 8:30 A.M. ET today to discuss the fourth quarter and full year 2008 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at http://investor.shareholder.com/DOVR/ this web cast will be archived for a year.
About Dover Saddlery, Inc. Dover Saddlery, Inc. (NasdaqCM:DOVR - News) is the leading multichannel retailer of equestrian products in the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a broad and distinctive selection of competitively priced, brand-name products for horse and rider through catalogs, the Internet and company-owned retail stores. Dover Saddlery, Inc. serves the English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.
For more information, please call 1-978-952-8062 or visit www.DoverSaddlery.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements made about the Company's business outlook for fiscal 2009, the prospects for overall revenue growth and profitability, and the opening of and revenue growth from new stores. All statements other than statements of historical fact included in this press release regarding the company's strategies, plans, objectives, expectations, and future operating results are forward-looking statements. Although Dover believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. These forward-looking statements involve significant risks and uncertainties, including those discussed in this release and others that can be found in "Item 1A Risk Factors" of Dover Saddlery's Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Dover Saddlery is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those Dover Saddlery projects.
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
Revenues, net - direct $ 15,182 $ 17,240 $ 55,843 $ 61,519
Revenues, net - retail
stores 6,182 5,685 22,138 19,873
---------- ---------- ---------- ----------
Revenues, net - total $ 21,364 $ 22,925 $ 77,981 $ 81,392
Cost of revenues 13,023 13,620 49,319 50,474
---------- ---------- ---------- ----------
Gross profit 8,341 9,305 28,662 30,918
Selling, general and
administrative expenses 7,103 7,358 26,299 27,263
Litigation settlement
expense -- -- -- 700
Goodwill impairment charge
(1) 14,267 -- 14,267 --
---------- ---------- ---------- ----------
Income (loss) from
operations (13,029) 1,947 (11,904) 2,955
Interest expense, financing
and other related costs,
net 322 454 1,287 1,612
Other investment loss 78 -- 96 --
---------- ---------- ---------- ----------
Income (loss) before income
tax provision (13,429) 1,493 (13,287) 1,343
Provision for income taxes 485 573 562 518
---------- ---------- ---------- ----------
Net income (loss) $ (13,914) $ 920 $ (13,849) $ 825
========== ========== ========== ==========
Net income (loss) per share
Basic $ (2.68) $ 0.18 $ (2.68) $ 0.16
========== ========== ========== ==========
Diluted $ (2.68) $ 0.18 $ (2.68) $ 0.16
========== ========== ========== ==========
Number of shares used in
per share calculation
Basic 5,187,000 5,105,000 5,164,000 5,086,000
Diluted 5,187,000 5,237,000 5,164,000 5,240,000
Other Operating Data:
Number of retail stores(2) 12 10 12 10
Capital expenditures 236 104 1,123 862
Gross profit margin 39.0% 40.6% 36.8% 38.0%
(1) Includes a non-cash, non-tax deductible goodwill impairment charge of
approximately $14,367 triggered by declines in the Company's market
capitalization.
(2) Includes eleven Dover-branded stores and one Smith Brothers store;
the December 31, 2008 store count includes the Branchburg, NJ
Dover-branded store opened in Q2 2008, and the Alpharetta, GA
Dover-branded store opened in Q4 2008.
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31, December 31,
2008 2007
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 448 $ 309
Accounts receivable 833 1,169
Inventory 17,330 16,769
Prepaid catalog costs 1,673 1,427
Prepaid expenses and other current assets 997 952
Deferred income taxes -- 72
----------- -----------
Total current assets 21,281 20,698
Net property and equipment 3,599 3,153
Other assets:
Goodwill -- 14,267
Deferred income taxes 583 472
Intangibles and other assets, net 989 741
----------- -----------
Total other assets 1,572 15,480
----------- -----------
Total assets $ 26,452 $ 39,331
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligation and
outstanding checks $ 480 $ 618
Accounts payable 2,168 3,314
Accrued expenses and other current liabilities 3,640 3,713
Income taxes payable -- 568
Deferred income taxes 212 --
----------- -----------
Total current liabilities 6,500 8,213
Long-term liabilities:
Revolving line of credit 8,300 6,300
Subordinated notes payable, net 4,907 4,738
Capital lease obligation, net of current
portion 125 150
----------- -----------
Total long-term liabilities 13,332 11,188
Stockholders' equity:
Common stock, par value $0.0001 per share;
15,000,000 shares authorized; issued 5,187,038
as of December 31, 2008 and 5,105,318 December
31, 2007 1 1
Additional paid in capital 44,801 44,262
Treasury stock, 795,865 shares at cost (6,082) (6,082)
Accumulated deficit (32,100) (18,251)
----------- -----------
Total stockholders' equity 6,620 19,930
----------- -----------
Total liabilities and stockholders' equity $ 26,452 $ 39,331
=========== ===========
Non-GAAP Financial Measures and Information
From time to time, in addition to financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company provides financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP measures in their analysis of the Company's performance and ongoing operations. These non-GAAP measures are referred to as "Non-GAAP Income from Operations," "Non-GAAP Net Income," and "Non-GAAP Earnings Per Share," which all reflect adjustments for the goodwill impairment charge. Estimated federal taxable income is the amount we report on our federal income tax return as income on which we pay federal taxes. The Company believes that these non-GAAP operating measures supplement our GAAP financial information and provide useful information to investors for evaluating the Company's operating results, and trends that may be affecting the Company's business, as they allow investors to more readily compare our operations to prior financial results, and our future performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
These non-GAAP measures are provided below and on the Company's website at http://www.doversaddlery.com/ (click on the Investor Relations link at the top of the home page). The Company's website is not part of this press release.
RECONCILIATION OF GAAP TO NON-GAAP INCOME FROM OPERATIONS, NON-GAAP NET
INCOME AND EARNINGS PER SHARE
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Dec. 31, 2008
--------------------------------
GAAP Impairment Non-GAAP
As Charges Pro-forma
Reported Total
Revenues, net - total $ 21,364 -- $ 21,364
Cost of revenues 13,023 -- 13,023
--------- --------- ----------
Gross profit 8,341 -- 8,341
Selling, general and administrative
expenses 7,103 -- 7,103
Goodwill impairment charge 14,267 (14,267) --
--------- --------- ----------
Income (loss) from operations (13,029) 14,267 1,238
Interest expense, financing and other
related costs, net 322 -- 322
Other investment loss 78 -- 78
--------- --------- ----------
Income (loss) before income tax provision (13,429) 14,267 838
Provision for income taxes 485 -- 485
--------- --------- ----------
Net income (loss) $ (13,914) $ 14,267 $ 353
========= ========= ==========
Net income (loss) per share
Basic $ (2.68) $ -- $ 0.07
========= ========= ==========
Diluted $ (2.68) $ -- $ 0.07
========= ========= ==========
Number of shares used in per share
calculation
Basic 5,187,000 -- 5,187,000
Diluted 5,187,000 -- 5,227,000
Year Ended Dec. 31, 2008
--------------------------------
GAAP Impairment Non-GAAP
As Charges Pro-forma
Reported Total
Revenues, net - total $ 77,981 -- $ 77,981
Cost of revenues 49,319 -- 49,319
--------- --------- ----------
Gross profit 28,662 -- 28,662
Selling, general and administrative
expenses 26,299 -- 26,299
Litigation settlement expense -- -- --
Goodwill impairment charge 14,267 (14,267) --
--------- --------- ----------
Income (loss) from operations (11,904) 14,267 2,363
Interest expense, financing and other
related costs, net 1,287 -- 1,287
Other investment loss 96 -- 96
--------- --------- ----------
Income (loss) before income tax provision (13,287) 14,267 980
Provision for income taxes 562 -- 562
--------- --------- ----------
Net income (loss) $ (13,849) $ 14,267 $ 418
========= ========= ==========
Net income (loss) per share
Basic $ (2.68) $ -- $ 0.08
========= ========= ==========
Diluted $ (2.68) $ -- $ 0.08
========= ========= ==========
Number of shares used in per share
calculation
Basic 5,164,000 -- 5,164,000
Diluted 5,164,000 -- 5,266,000
RECONCILIATION OF GAAP INCOME BEFORE TAXES TO ESTIMATED FEDERAL TAXABLE
INCOME
(In thousands)
(Unaudited)
Three Months Ended
Dec. 31, 2008
------------------------
Income (loss) before taxes $ (13,429)
Permanent differences 14,286
State taxes (tax) (117)
Timing differences (115)
------------------------
Estimated federal taxable income $ 625
========================
Year Ended Dec. 31, 2008
------------------------
Income (loss) before taxes $ (13,287)
Permanent differences 14,446
State taxes (tax) (143)
Timing differences (241)
------------------------
Estimated federal taxable income $ 775
========================
Contact:
Contact:
Janet Nittmann
Email Contact
Tel 978 952 8062 x218
Related Headlines
- DOVER SADDLERY INC Financials - EDGAR Online Financials
- New Star Analyst Rankings for Dover Saddlery, Inc. - StarMine
- DOVER SADDLERY INC Files SEC form 8-K, Results of Operations and Financial Condition, Financial Statements and Exhibi - EDGAR Online
- Dover Saddlery Reports Third Quarter 2009 Financial Results - Marketwire
- Q3 2009 DOVER SADDLERY INC Earnings Release - Before Market Open - CCBN
Sponsored Links
-
Need Affordable Health Care?
Get Affordable Health Insurance Quotes Online - Rates from $30 / Month -
Refinance Now at 4.25% Fixed
No hidden fees-4.4% APR! No obligation. Get 4 free quotes. No SSN req.
-
Obama Wants You to Return to School
Get Your Degree Now. Financial Aid & Scholarships are available. -
Try Forex Currency Trading at Forex.com
Free $50,000 practice account with real-time charts news and research.
Tech Ticker Recent Posts
Add Alert Copyright © 2009 Marketwire. All rights reserved. All the news releases provided by Marketwire are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.