Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WEST MARINE INC | v408909_8k.htm |
Exhibit 99.1
[West Marine Logo]
WEST MARINE REPORTS IMPROVED FIRST QUARTER 2015 RESULTS
WATSONVILLE, CA, April 30, 2015 - West Marine, Inc. (Nasdaq: WMAR) today reported financial results for the first quarter ended April 4, 2015.
| · | Net revenues increased by 12.1% over last year to $127.1 million. |
| · | Comparable store sales increased by 13.3%. Approximately 6% of this increase was attributable to the calendar shift in fiscal 2014 from a 53 week fiscal year to a 52 week fiscal year in fiscal 2015, which has a meaningful impact on the company’s seasonal business. |
| · | Pre-tax loss was $18.1 million, compared to a pre-tax loss of $19.2 million last year. |
| · | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was a loss of $13.0 million, compared to an EBITDA loss of $15.0 million for the same period last year. |
| · | Fiscal 2015 pre-tax guidance is reaffirmed. Pre-tax income is expected to range from $6.0 million to $11.0 million, compared to pre-tax income of $4.0 million for 2014. |
| · | Remained debt-free at quarter-end with $115.8 million available on our revolving credit line at the end of the period. |
Matt Hyde, West Marine’s CEO, commented: “The 2015 boating season is off to a strong start and we are very pleased with our comparable store sales results in the first quarter. Our three key strategies performed well as a result of excellent execution by the entire West Marine team. Also, we introduced our first Super Sale in March, which drove top line sales and brought new customers into our stores. We believe we are well positioned for the peak boating in the months ahead.”
Progress on our growth strategies during the first quarter was as follows:
| · | eCommerce: Sales from our eCommerce websites were up by 27.1% as compared to last year, and represented 9.3% of total sales, compared to 8.2% for the same period last year. |
| · | Store optimization: Sales driven by our store optimization strategy increased to 43.1% of total sales compared to 38.2% last year. During the quarter, we opened two new flagship stores and revitalized nine existing stores. |
| · | Merchandise expansion: Sales in these product lines, which include footwear, apparel, clothing accessories, fishing products and paddle sports equipment, were up by 21.2%, with core product sales up 11.1%, compared to last year. |
Net revenues for the 13 weeks ended April 4, 2015 were $127.1 million, an increase of 12.1%, compared to net revenues of $113.3 million for the 13 weeks ended March 29, 2014. Comparable store sales increased by 13.3% for the first three months of 2015 versus the 1.7% decrease reported for the same period last year. As noted above, approximately 6% of this increase is attributable to the fiscal calendar shift from 53 weeks in fiscal 2014 to 52 weeks in fiscal 2015, which has a meaningful impact on our seasonal business. As the boating season builds toward our peak selling months, we expect that we will continue to see a benefit during the first half of the year from this calendar shift. However, during the second half of the year, we expect negative year-over-year comparisons due to the calendar shift, particularly during the third quarter as we move out of the key boating season. The annualized impact is expected to be negligible.
Pre-tax margin improved by 2.8% of revenues to (14.2)% for the first quarter compared to (17.0)% for the first quarter last year. This change was primarily driven by a decrease in selling, general and administrative expense of 3.5% of revenues, partially offset by a 0.8% lower gross profit margin driven by higher inventory shrinkage expense during the first quarter this year.
Net loss for the first quarter was $10.3 million, or ($0.42) per share, compared to net loss of $11.0 million, or ($0.46) per share for the first quarter last year.
Total inventory at the end of the first quarter was $256.6 million, an $11.4 million, or 4.7%, increase versus the balance at March 29, 2014, and a 5.4% increase on an inventory per square foot basis.
2015 Guidance
We are reaffirming our expectation for pre-tax income for the year to be in a range of approximately $6.0 million to $11.0 million. We are also reaffirming our guidance for EBITDA to be in the range of approximately $26.0 million to $31.0 million. Our GAAP diluted earnings per share is expected to be in the range of approximately $0.14 to $0.27. We still anticipate comparable store sales for full-year 2015 to range from up 1.0% to up 4.0%. We also continue to anticipate capital expenditures for fiscal 2015 to be in the range of $22 million to $25 million.
Investor Conference Call
West Marine will hold a conference call and webcast on Thursday, April 30, 2015, at 1:00 p.m. Eastern Time (“EDT”) to discuss its first quarter 2015 financial results. The live call will be webcast and available in real time on the Internet at westmarine.com under "Investor Relations." Participants may also dial (888) 756-1546 in the United States and Canada and (706) 634-1041 for international calls. Please be prepared to give the conference ID number 30281251.
An audio replay of the call will be available April 30, 2015 at 4:00 p.m. EDT through May 7, 2015 at 11:59 p.m. EDT. The replay number is (855) 859-2056 in the United States and Canada and (404) 537-3406 for international calls. The access code is 30281251.
About West Marine
Founded in 1968 by a sailor, West Marine, Inc. is the largest omni-channel specialty retailer exclusively offering boating gear, apparel and footwear and other waterlife-related products to anyone who enjoys recreational time on or around the water. With over 270 stores located in 38 states, Puerto Rico and Canada and an eCommerce website reaching domestic and international customers, West Marine is the leading waterlife outfitter for cruisers, sailors, anglers, paddle sports enthusiasts and industry service providers. West Marine has everything you need for your life on the water. For more information on West Marine, its products and store locations, visit westmarine.com or call 1-800-BOATING (1-800-262-8464). West Marine’s stock is traded on NASDAQ under the symbol WMAR.
Special Note Regarding Forward-Looking Statements
This press release includes “forward-looking” information (as defined in the Private Securities Litigation Reform Act of 1995), including statements that are predictive or express expectations that depend on future events or conditions that involve risks and uncertainties. These risks and uncertainties include, among other things, expectations related to our earnings and growth in profitability, expectations and projections with respect to our ability to execute on our strategic growth strategies, expectations related to our ability to increase profitability, expectations related to our ability to manage our assets, including inventory productivity, reduce our operating expenses, and our expectations for full-year 2015 results, as well as facts and assumptions underlying these expectations and projections. In addition, the results presented in this release are preliminary and unaudited, and may change as we finalize our financial statements. Actual results for the first quarter of 2015 and the current fiscal year may differ materially from the preliminary expectations expressed or implied in this release due to various risks, uncertainties or other factors, including the risk factors set forth in West Marine’s annual report on Form 10-K for the fiscal year ended January 3, 2015, as well as the discussion of critical accounting policies in our Form 10-K for the year ended January 3, 2015. Except as required by applicable law, West Marine assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.
Non-GAAP Financial Information
This release references certain financial information not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), specifically EBITDA. We believe that EBITDA provides a clearer picture of operating performance of the business, given the significant investments we are making in the growth of the business, by eliminating the effects of depreciation and interest expense. EBITDA is not a measure of financial performance under GAAP and may not be defined and calculated by other companies in the same manner. This non-GAAP measure should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management has reconciled this non-GAAP financial measure to the most directly comparable GAAP financial measure in the table set forth below.
Contact: West Marine, Inc.
Deborah Ajeska, Controller and Principal Financial Officer
(831) 761-4229
West Marine, Inc.
Condensed Consolidated Balance Sheets
(Unaudited and in thousands, except share data)
| April 4, 2015 | March 29, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 6,637 | $ | 10,436 | ||||
| Trade receivables, net | 9,639 | 9,287 | ||||||
| Merchandise inventories | 256,633 | 245,179 | ||||||
| Deferred income taxes | 5,487 | 4,388 | ||||||
| Other current assets | 33,052 | 27,881 | ||||||
| Total current assets | 311,448 | 297,171 | ||||||
| Property and equipment, net | 81,937 | 74,939 | ||||||
| Long-term deferred income taxes | 3,887 | 5,574 | ||||||
| Other assets | 3,898 | 3,548 | ||||||
| TOTAL ASSETS | $ | 401,170 | $ | 381,232 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 53,525 | $ | 46,713 | ||||
| Accrued expenses and other | 45,210 | 44,435 | ||||||
| Total current liabilities | 98,735 | 91,148 | ||||||
| Deferred rent and other | 19,920 | 15,653 | ||||||
| Total liabilities | 118,655 | 106,801 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.001 par value: 1,000,000 shares authorized; no shares outstanding | - | - | ||||||
| Common stock, $.001 par value: 50,000,000 shares authorized; 25,239,559 shares issued and 24,550,670 | ||||||||
| shares outstanding at April 4, 2015, and 24,712,822 shares issued and 24,023,933 shares outstanding | ||||||||
| at March 29, 2014. | 25 | 25 | ||||||
| Treasury stock | (9,205 | ) | (9,089 | ) | ||||
| Additional paid-in capital | 209,545 | 204,127 | ||||||
| Accumulated other comprehensive loss | (446 | ) | (524 | ) | ||||
| Retained earnings | 82,596 | 79,892 | ||||||
| Total stockholders' equity | 282,515 | 274,431 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 401,170 | $ | 381,232 | ||||
West Marine, Inc.
Condensed Consolidated Statements of Operations
(Unaudited and in thousands, except per share data)
| 13 Weeks Ended | ||||||||||||||||
| April 4, 2015 | March 29, 2014 | |||||||||||||||
| Net revenues | $ | 127,067 | 100.0 | % | $ | 113,338 | 100.0 | % | ||||||||
| Cost of goods sold | 100,085 | 78.8 | % | 88,415 | 78.0 | % | ||||||||||
| Gross profit | 26,982 | 21.2 | % | 24,923 | 22.0 | % | ||||||||||
| Selling, general and administrative expense | 44,975 | 35.4 | % | 44,041 | 38.9 | % | ||||||||||
| Loss from operations | (17,993 | ) | (14.2 | )% | (19,118 | ) | (16.9 | )% | ||||||||
| Interest expense | 112 | 0.0 | % | 108 | 0.1 | % | ||||||||||
| Loss before income taxes | (18,105 | ) | (14.2 | )% | (19,226 | ) | (17.0 | )% | ||||||||
| Income tax benefit | (7,846 | ) | (6.1 | )% | (8,211 | ) | (7.3 | )% | ||||||||
| Net loss | $ | (10,259 | ) | (8.1 | )% | $ | (11,015 | ) | (9.7 | )% | ||||||
| Net loss per common and common equivalent share: | ||||||||||||||||
| Basic | $ | (0.42 | ) | $ | (0.46 | ) | ||||||||||
| Diluted | $ | (0.42 | ) | $ | (0.46 | ) | ||||||||||
| Weighted average common and common equivalent | ||||||||||||||||
| shares outstanding: | ||||||||||||||||
| Basic | 24,486 | 24,141 | ||||||||||||||
| Diluted | 24,486 | 24,141 | ||||||||||||||
West Marine, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited and in thousands)
| 13 Weeks Ended | ||||||||
| April 4, 2015 | March 29, 2014 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (10,259 | ) | $ | (11,015 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 5,025 | 4,055 | ||||||
| Share-based compensation | 685 | 867 | ||||||
| Excess tax benefit from share-based compensation | - | (108 | ) | |||||
| Deferred income taxes | (175 | ) | (72 | ) | ||||
| Provision for doubtful accounts | 55 | (34 | ) | |||||
| Lower of cost or market inventory adjustments | 1,423 | 1,024 | ||||||
| Loss on asset disposals | 144 | 41 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade receivables | (2,851 | ) | (2,812 | ) | ||||
| Merchandise inventories | (43,759 | ) | (43,167 | ) | ||||
| Other current assets | (7,261 | ) | (8,521 | ) | ||||
| Other assets | 3 | (120 | ) | |||||
| Accounts payable | 20,152 | 24,803 | ||||||
| Accrued expenses and other | 4,150 | 7,236 | ||||||
| Deferred items and other non-current liabilities | (28 | ) | 77 | |||||
| Net cash used in operating activities | (32,696 | ) | (27,746 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of property and equipment | 17 | 5 | ||||||
| Purchases of property and equipment | (7,507 | ) | (6,226 | ) | ||||
| Net cash used in investing activities | (7,490 | ) | (6,221 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Borrowings on line of credit | 366 | 427 | ||||||
| Repayments on line of credit | (366 | ) | (427 | ) | ||||
| Proceeds from exercise of stock options | 1,136 | 546 | ||||||
| Excess tax benefit from share-based compensation | - | 108 | ||||||
| Treasury shares acquired | (34 | ) | (4,684 | ) | ||||
| Net cash provided by (used in) financing activities | 1,102 | (4,030 | ) | |||||
| Effect of exchange rate changes on cash | 46 | 25 | ||||||
| NET DECREASE IN CASH | (39,038 | ) | (37,972 | ) | ||||
| CASH AT BEGINNING OF PERIOD | 45,675 | 48,408 | ||||||
| CASH AT END OF PERIOD | $ | 6,637 | $ | 10,436 | ||||
| Other cash flow information: | ||||||||
| Cash paid for interest | $ | 69 | $ | 73 | ||||
| Cash paid for income taxes, net of refunds of $80 and $1,391 | 7 | (697 | ) | |||||
| Non-cash investing activities: | ||||||||
| Property and equipment additions in accounts payable | 596 | 1,272 | ||||||
West Marine
Reconciliations of Non-GAAP Information
Net Income (loss) to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
(Unaudited and in millions)
| 13 Weeks Ended | 13 Weeks Ended | |||||||
| April 4, 2015 | March 29, 2014 | |||||||
| GAAP net loss | (10.3 | ) | (11.0 | ) | ||||
| Add Back: | ||||||||
| Interest Expense | 0.1 | 0.1 | ||||||
| Depreciation and Amortization | 5.0 | 4.1 | ||||||
| Income Tax Benefit | (7.8 | ) | (8.2 | ) | ||||
| (2.7 | ) | (4.0 | ) | |||||
| EBITDA | (13.0 | ) | (15.0 | ) | ||||
| Estimated | ||||||||
| Fiscal Year 2015 | ||||||||
| Low | High | |||||||
| Estimated GAAP net income | 3.6 | 6.5 | ||||||
| Add Back Estimated: | ||||||||
| Interest Expense | 0.4 | 0.4 | ||||||
| Depreciation and Amortization | 19.6 | 19.6 | ||||||
| Income Tax Expense | 2.4 | 4.5 | ||||||
| 22.4 | 24.5 | |||||||
| Estimated EBITDA | 26.0 | 31.0 | ||||||