Dover Saddlery Reports Third Quarter 2013 Financial Results

Marketwired

LITTLETON, MA--(Marketwired - Nov 12, 2013) -  Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multi-channel retailer of equestrian products, today reported financial results for the third quarter ended September 30, 2013.

Total revenues for the third quarter of 2013 increased 10.5%, or $2.1 million, to $22.6 million from $20.5 million achieved in the third quarter of 2012. Retail store channel revenues increased 15.6%, or $1.5 million, to $11.4 million and same-store sales increased 4.2% over the third quarter of 2012. Net income for the third quarter increased 154.6%, or $269,000, to $443,000 from $174,000. Earnings per share increased $0.05 to $0.08 from $0.03 per fully diluted share in the third quarter of 2012.

Year-to-Date Results

For the first nine months of 2013, total revenues increased 6.4% to $63.6 million, from $59.7 million achieved in the corresponding period in 2012. Retail store channel revenues increased 15.7% to $30.4 million and same-store sales increased 1.9% year to date. Net income decreased to $260,000, or $0.05 per fully diluted share, from $716,000, or $0.13 per fully diluted share.

"Our retail stores performed extremely well in the third quarter and same-store sales recovered nicely from the first quarter, and continue to increase. For the ten-week period ending October 27, same store sales are up 10% over the same period last year," said Stephen L. Day, President and CEO of Dover Saddlery. "Our recent new store opening in Winter Park, Florida exceeded expectations with well over five hundred guests attending the VIP private reception and shopping event."

Business Outlook 2013

Dover Saddlery has opened two stores since the close of the third quarter, and is planning to open one store in December of 2013, which will bring the total number of retail stores to twenty two. Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on other business prospects.

Today's Teleconference and Webcast

Dover Saddlery executives will host a conference call at 4:30 pm ET today, to discuss the results. Interested parties may access the call by dialing +1-877-712-7037 or may listen to the call live via webcast. To access the webcast please go to http://investor.shareholder.com/DOVR/events.cfm and click on the webcast icon.

About Dover Saddlery, Inc. Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multi-channel 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 the balance of fiscal 2013 and beyond, overall revenue growth, customer sentiment and behavior, sales in the direct channel, retail-store and same-store sales growth, and the opening of 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 Saddler's Annual Report on Form 10-K for the fiscal year ended December 31, 2012. 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 INCOME
(In thousands, except share and per share data)
(Unaudited)
             
    Three Months Ended     Nine Months Ended  
    Sept. 30,     Sept. 30     Sept. 30     Sept 30  
    2013     2012     2013     2012  
                         
Revenues, net- direct   $ 11,180     $ 10,567     $ 33,175     $ 33,472  
Revenues, net - retail stores     11,435       9,895       30,409       26,276  
Revenues, net - total   $ 22,615     $ 20,462     $ 63,584     $ 59,748  
Cost of revenues     14,044       12,842       39,976       37,224  
Gross profit     8,571       7,620       23,608       22,524  
Selling, general and administrative expenses     7,640       7,011       22,715       20,665  
Income from operations     931       609       893       1,859  
Interest expense, financing and other related costs, net     154       128       426       390  
Other investment (income) loss, net     4       15       (33 )     (16 )
Income before income tax provision     773       466       500       1,485  
Provision for income taxes     330       292       240       769  
Net income   $ 443     $ 174     $ 260     $ 716  
                                 
Net income per share                                
Basic   $ 0.08     $ 0.03     $ 0.05     $ 0.13  
Diluted   $ 0.08     $ 0.03     $ 0.05     $ 0.13  
Number of shares used in per share calculation                                
Basic     5,345,000       5,333,000       5,340,000       5,333,000  
Diluted     5,534,000       5,524,000       5,524,000       5,560,000  
                                 
Other Operating Data:                                
                                 
Number of retail stores(1)     19       17       19       17  
Capital expenditures     567       716       1,312       1,837  
Gross profit margin     37.9 %     37.2 %     37.1 %     37.7 %
                                 

(1) Includes eighteen Dover-branded stores and one Smith Brothers store.

 
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (In thousands, unaudited)
             
    Three Months Ended     Nine Months Ended  
    Sept. 30,   Sept. 30,     Sept. 30,   Sept. 30  
    2013   2012     2013   2012  
                     
Net income   $ 443   $ 174     $ 260   $ 716  
Other comprehensive loss:                            
  Change in fair value of interest rate swap contract, net of tax     4     (2 )     53     (12 )
Total comprehensive income   $ 447   $ 172     $ 313   $ 704  
                             
 
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
    Sept. 30,
2013
    Dec. 31,
2012
 
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 230     $ 299  
  Accounts receivable     988       1,778  
  Inventory     24,322       19,915  
  Prepaid catalog costs     971       784  
  Prepaid expenses and other current assets     1,131       1,116  
  Deferred income taxes     246       300  
                 
Total current assets     27,888       24,192  
                 
Net property and equipment     5,503       5,034  
                 
Other assets:                
  Deferred income taxes     1,282       1,201  
  Intangibles and other assets, net     826       784  
Total other assets     2,108       1,985  
Total assets   $ 35,499     $ 31,211  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
  Current portion of capital lease obligations and outstanding checks   $ 1,355     $ 337  
  Current portion - Term notes     786       589  
  Current portion - Capex term loan     468       --  
  Accounts payable     2,733       1,837  
  Accrued expenses and other current liabilities     4,986       6,348  
  Income taxes payable     76       936  
Total current liabilities     10,404       10,047  
                 
Long-term liabilities:                
  Revolving line of credit     3,997       1,515  
  Capex term loan, net of current portion     1,638       --  
  Term notes, net of current portion     4,321       4,911  
  Capital lease obligation, net of current portion     77       121  
  Interest rate swap contract     216       320  
Total long-term liabilities     10,249       6,867  
Stockholders' equity:                
  Common stock, par value $0.0001 per share; 15,000,000 shares authorized; 6,144,619 and 6,133,343 issued and 5,348,754 and 5,337,478 outstanding as of September 30, 2013 and December 31, 2012, respectively     1       1  
Additional paid in capital     46,209       45,973  
Treasury stock, 795,865 shares at cost     (6,082 )     (6,082 )
Other comprehensive loss     (136 )     (189 )
Accumulated deficit     (25,146 )     (25,406 )
Total stockholders' equity     14,846       14,297  
Total liabilities and stockholders' equity   $ 35,499     $ 31,211  
                 

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 its analysis of the Company's performance and ongoing operations. 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.

When we use the term "Adjusted EBITDA", we are referring to net income minus interest income, investment income and other income plus interest expense, income taxes, non-cash stock-based compensation, depreciation, amortization and other investment loss. We present Adjusted EBITDA because we consider it an important measure of our performance, and the Company ties its executive and employee bonus pools directly to this measure. We also believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

The following table reconciles net income to Adjusted EBITDA (in thousands):

           
    Three Months Ended   Nine Months Ended  
    Sept. 30,
2013
  Sept. 30,
2012
  Sept. 30,
2013
    Sept. 30,
2012
 
                             
Net income   $ 443*   $ 174*   $ 260**     $ 716**  
Depreciation     295     237     843       661  
Amortization of intangible assets     17     --     52       --  
Stock-based compensation     81     62     219       186  
Interest expense, financing and other related costs, net     154     128     426       390  
Other investment (income) loss, net     4     15     (33 )     (16 )
Provision for income taxes     330     292     240       769  
Adjusted EBITDA   $ 1,324*   $ 908*   $ 2,007**     $ 2,706**  
                             

(*) For the three months ended September 30, 2013 gift card breakage income was $30,146. For the three months ended September 30, 2012 gift card breakage income was $41,632.

(**) For the nine months ended September 30, 2013 gift card breakage income was $90,438. The nine months ended September 30, 2012 includes the cumulative impact of the change in accounting for gift card breakage income of $441,362 plus gift card breakage income for the period of $124,896.

Contact:
Janet Nittmann
Email Contact
Tel 978-952-8062 x218
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