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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Lovesac Company | NASDAQ:LOVE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 22.29 | 19.13 | 24.45 | 0 | 09:00:00 |
Shawn Nelson, Chief Executive Officer, stated, “We reported a strong second quarter with revenue growth of close to 45%, as the entire team is executing our strategies to expand the Lovesac brand and deliver on our near and longer term goals. We are further strengthening our multi-channel model with the addition of productive new showrooms, the expansion of our pop up shop business at Costco and the announcement of a brand new shop in shop pilot with Macy’s that is expected to launch late in the third quarter, as well as increasingly effective advertising and marketing strategies.”
Mr. Nelson continued, “Given our first half performance and our plans for the remainder of the year, we are reiterating our full year outlook for 40% to 45% revenue growth and positive Adjusted EBITDA. Importantly, this outlook includes the net impact from all announced Lists 1 through 4 tariffs to date that our teams continue to successfully mitigate through various means, with only minor price increases. We have reduced our manufacturing in China from 75% of our total manufacturing at the beginning of the year to 44% as of this month. We believe this puts us on a path to being completely out of China, if necessary, well before the end of next year. I would like to thank all of our teams as well as our vendor partners for their hard work and collaboration that have enabled this outcome.”
For the Thirteen Weeks Ended August 4, 2019
Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information. For the Twenty-Six Weeks Ended August 4, 2019
Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for more information.
Conference Call Details
A conference call to discuss the second quarter fiscal 2019 financial results is scheduled for today, September 11, 2019, 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 direct-to-consumer specialty furniture brand with approximately 80 retail showrooms supporting its ecommerce delivery model. Lovesac’s name comes from its original Durafoam filled beanbags called Sacs. The Company derives a majority of its current sales from its proprietary platform called Sactionals, a washable, changeable, reconfigurable, and FedEx-shippable solution for large upholstered seating. Founder and CEO, Shawn Nelson’s, “Designed for Life” philosophy emphasizes sustainable products that are built to last a lifetime and designed to evolve with the customer’s needs, providing long-term utility and ultimately reducing the amount of furniture discarded into landfills.
Non-GAAP Information
This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the “SEC”): adjusted net loss, adjusted diluted loss per share and Adjusted EBITDA. Adjusted net loss excludes the effect of one-time costs related to the Company’s IPO in June 2018 and fees associated with fundraising and reorganizing activities. Adjusted diluted loss per share is defined as adjusted net loss divided by a pro forma share count which assumes the IPO took place before the relevant time period. We define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization, sponsor fees, deferred rent, equity-based compensation, write-off of property and equipment, one-time IPO-related expenses, and fees associated with fundraising and reorganizing activities. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures under “GAAP and Non-GAAP Measures” in this release. The Company believes 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 the Company’s business and facilitate a more meaningful comparison of its diluted income per share and actual results on a period-over-period basis. The Company has provided this information as a means to evaluate the results of its ongoing operations. Other companies in the Company’s industry may calculate these items differently than the Company does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared 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
Certain statements either contained in or incorporated by reference into this communication, other than purely historical information, including estimates, projections and statements relating to Lovesac’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “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. All statements, other than statements of historical facts, included in or incorporated by reference into this press release regarding strategy, future operations, future financial position, future revenue, projected expenses, prospects, plans and objectives of management are forward-looking statements. Lovesac may not actually achieve the plans, carry out the intentions or meet the expectations disclosed in the forward-looking statements and you should not place undue reliance on these forward-looking statements. Such statements are based on management’s current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors. Lovesac disclaims 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
(Tables to Follow)
THE LOVESAC COMPANY | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
As of August 4, 2019 | As of February 3, 2019 | ||||||
Assets | (unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 44,202,352 | $ | 49,070,952 | |||
Trade accounts receivable | 5,580,954 | 3,955,124 | |||||
Merchandise inventories | 40,656,908 | 26,154,314 | |||||
Prepaid expenses and other current assets | 7,032,106 | 5,933,872 | |||||
Total Current Assets | 97,472,320 | 85,114,262 | |||||
Property and Equipment, Net | 20,431,956 | 18,595,079 | |||||
Other Assets | |||||||
Goodwill | 143,562 | 143,562 | |||||
Intangible assets, net | 1,075,690 | 942,331 | |||||
Deferred financing costs, net | 182,559 | 219,071 | |||||
Total Other Assets | 1,401,811 | 1,304,964 | |||||
Total Assets | $ | 119,306,087 | $ | 105,014,305 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 17,670,642 | $ | 16,836,816 | |||
Accrued expenses | 4,950,806 | 3,701,090 | |||||
Payroll payable | 2,233,444 | 2,269,834 | |||||
Customer deposits | 1,553,085 | 1,059,957 | |||||
Sales taxes payable | 645,918 | 750,922 | |||||
Total Current Liabilities | 27,053,895 | 24,618,619 | |||||
Deferred Rent | 1,682,953 | 1,594,179 | |||||
Line of credit | - | 31,373 | |||||
Total Liabilities | 28,736,848 | 26,244,171 | |||||
Stockholders’ Equity | |||||||
Preferred Stock $0.00001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of August 4, 2019 and February 3, 2019. | - | - | |||||
Common Stock $.00001 par value, 40,000,000 shares authorized, 14,538,586 shares issued and outstanding as of August 4, 2019 and 13,588,568 shares issued and oustanding as of February 3, 2019, respectivily. | 145 | 136 | |||||
Additional paid-in capital | 167,399,679 | 141,727,807 | |||||
Accumulated deficit | (76,830,585 | ) | (62,957,809 | ) | |||
Stockholders' Equity | 90,569,239 | 78,770,134 | |||||
Total Liabilities and Stockholders' Equity | $ | 119,306,087 | $ | 105,014,305 |
THE LOVESAC COMPANY | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(unaudited) | |||||||||||||||
Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
August 4, | August 5, | August 4, | August 5, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 48,146,415 | $ | 33,249,012 | $ | 89,104,778 | $ | 60,017,810 | |||||||
Cost of merchandise sold | 23,861,242 | 15,410,442 | 43,827,110 | 27,532,067 | |||||||||||
Gross profit | 24,285,173 | 17,838,570 | 45,277,668 | 32,485,743 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative expenses | 21,956,376 | 20,454,183 | 45,817,988 | 35,648,687 | |||||||||||
Advertising and marketing | 6,069,903 | 3,594,868 | 11,459,233 | 8,002,655 | |||||||||||
Depreciation and amortization | 1,205,796 | 758,684 | 2,271,413 | 1,428,829 | |||||||||||
Total operating expenses | 29,232,075 | 24,807,735 | 59,548,634 | 45,080,171 | |||||||||||
Operating loss | (4,946,902 | ) | (6,969,165 | ) | (14,270,966 | ) | (12,594,428 | ) | |||||||
Interest income (expense), net | 169,327 | (435 | ) | 403,890 | (58,420 | ) | |||||||||
Net loss before income taxes | (4,777,575 | ) | (6,969,600 | ) | (13,867,076 | ) | (12,652,848 | ) | |||||||
Benefit (provision) for income taxes | 6,576 | - | (5,700 | ) | - | ||||||||||
Net loss | $ | (4,770,999 | ) | $ | (6,969,600 | ) | $ | (13,872,776 | ) | $ | (12,652,848 | ) | |||
Net loss per common share: | |||||||||||||||
Basic and diluted | $ | (0.33 | ) | $ | (3.71 | ) | $ | (0.99 | ) | $ | (5.29 | ) | |||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic and diluted | 14,331,185 | 9,077,549 | 14,000,565 | 7,571,377 |
THE LOVESAC COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW | |||||||
(unaudited) | |||||||
Twenty-six weeks ended | |||||||
August 4, | August 5, | ||||||
2019 | 2018 | ||||||
Cash Flows from Operating Activities | |||||||
Net loss | $ | (13,872,776) | $ | (12,652,848) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization of property and equipment | 2,147,743 | 1,350,493 | |||||
Amortization of intangible assets | 123,670 | 78,336 | |||||
Amortization of deferred financing fees | 36,512 | 84,661 | |||||
Net (gain) loss on disposal of property and equipment | (166,865) | 6,139 | |||||
Equity based compensation | 3,393,099 | 2,334,104 | |||||
Deferred rent | 88,774 | 251,643 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (1,625,830) | (1,229,087) | |||||
Merchandise inventories | (14,502,594) | (8,598,437) | |||||
Prepaid expenses and other current assets | (1,098,234) | 268,482 | |||||
Accounts payable and accrued expenses | 1,942,148 | 3,521,298 | |||||
Customer deposits | 493,128 | 1,290,383 | |||||
Net Cash Used in Operating Activities | (23,041,225) | (13,294,833) | |||||
Cash Flows from Investing Activities | |||||||
Purchase of property and equipment | (4,117,755) | (6,033,856) | |||||
Payments for patents and trademarks | (257,029) | (243,249) | |||||
Proceeds from disposal of property and equipment | 300,000 | - | |||||
Net Cash Used in Investing Activities | (4,074,784) | (6,277,105) | |||||
Cash Flows from Financing Activities | |||||||
Proceeds from issuance of common shares, net | 25,610,000 | 58,908,552 | |||||
Taxes paid for net share settlement of equity awards | (3,343,218) | (7,902) | |||||
Proceeds from exercise of warrants | 12,000 | - | |||||
Principal paydowns on the line of credit, net | (31,373) | (405) | |||||
Payments of deferred financing costs | - | (292,095) | |||||
Net Cash Provided by Financing Activities | 22,247,409 | 58,608,150 | |||||
Net Change in Cash and Cash Equivalents | (4,868,600) | 39,036,212 | |||||
Cash and Cash Equivalents - Beginning | 49,070,952 | 9,175,951 | |||||
Cash and Cash Equivalents - End | $ | 44,202,352 | $ | 48,212,163 | |||
Supplemental Cash Flow Disclosures | |||||||
Cash paid for interest | $ | 24,045 | $ | 38,803 |
THE LOVESAC COMPANY | ||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||||
(dollars in thousands) | August 4, | August 5, | August 4, | August 5, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Net loss | $ | (4,771 | ) | $ | (6,970 | ) | $ | (13,873 | ) | $ | (12,653 | ) | ||||||
Interest (income) expense | (169 | ) | - | (404 | ) | 58 | ||||||||||||
Taxes | (7 | ) | - | 6 | - | |||||||||||||
Depreciation and amortization | 1,206 | 759 | 2,271 | 1,429 | ||||||||||||||
EBITDA | (3,741 | ) | (6,211 | ) | (12,000 | ) | (11,166 | ) | ||||||||||
Management fees (a)(b) | 133 | 742 | 297 | 867 | ||||||||||||||
Deferred Rent (c) | 77 | 128 | 89 | 252 | ||||||||||||||
Equity-based compensation (d) | 171 | 2,039 | 3,394 | 2,334 | ||||||||||||||
Net (gain) loss on disposal of property and equipment (e) | (214 | ) | - | (167 | ) | 6 | ||||||||||||
Other non-recurring expenses (f)(g) | 275 | 1,292 | 425 | 1,508 | ||||||||||||||
Adjusted EBITDA | $ | (3,299 | ) | $ | (2,010 | ) | $ | (7,962 | ) | $ | (6,199 | ) | ||||||
(a) | Management fees in the thirteen weeks ended August 4, 2019 reflect monitoring fees of $133k and for the thirteen weeks ended August 5, 2018, reflect monitoring fess of $117k and one-time IPO bonus payments of $625k, respectively. | |||||||||||||||||
(b) | Management fees in the twenty-six weeks ended August 4, 2019 monitoring fees of $297k and in the twenty-six weeks ended August 5, 2018 monitoring fees of $242k and one-time IPO bonus payments of $625k. | |||||||||||||||||
(c) | Represents the difference between rent expense recorded and the amount paid by the Company. In accordance with GAAP, the Company records monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease terms. | |||||||||||||||||
(d) | Represents expenses associated restricted stock units granted to our management. | |||||||||||||||||
(e) | Represents the net (gain) loss on the disposal of property and equipment. | |||||||||||||||||
(f) | Other expenses in the thirteen weeks ended August 4, 2019 are made up of: (1) $83 in financing fees associated with our secondary offering and (2) $192 in legal and professional fees. Other expenses in the thirteen weeks ended August 5, 2018 are made up of: (1) $176 in fees and costs associated with our fundraising and reorganizing activities including the legal and professional services incurred in connections with such activities; (2) $73 in travel and logistical costs associated with the offering; (3) $88 in accounting fees related to the offering; (4) $450 in IPO bonuses paid to executives; (5) $446 in fees paid for investor relations and public relations relating to the IPO and (6) $59 in executive recruitment fees to build executive management team. | |||||||||||||||||
(g) | Other expenses in the twenty-six weeks ended August 4, 2019 are made up of: (1) $150 in recruitment fees to build executive management team and Board of Directors; (2) $83 in fees associated with our secondary offering finance expense and (3) $192 in legal and professional fees. Other expenses in the twenty-six weeks ended August 5, 2018 are made up of: (1) $201 in fees and costs associated with our fundraising and reorganizing activities including the legal and professional services incurred in connection with such activities; (2) $84 in travel and logistical costs associated with the offering; (3) $198 in accounting fees related to the offering; (4) $450 in IPO bonuses paid to executives; (5) $479 in fees paid for investor relations and public relations relating to the IPO and (6) $96 in executive recruitment fees to build executive management team. |
THE LOVESAC COMPANY | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||
(unaudited) | |||||||||
Thirteen weeks ended | Twenty-six weeks ended | ||||||||
(dollars in thousands) | August 4, 2019 | August 5, 2018 | August 4, 2019 | August 5, 2018 | |||||
Net loss as reported | $ (4,771) | $ (6,970) | $ (13,873) | $ (12,653) | |||||
Adjustments: | |||||||||
Adjustments to selling, general and administrative expense: | |||||||||
Other expenses (a)(b) | 275 | 1,292 | 425 | 1,508 | |||||
Adjusted net loss | $ (4,496) | $ (5,678) | $ (13,448) | $ (11,145) | |||||
Adjusted basic and diluted weighted average shares outstanding- adjusted for IPO related issuance | 14,331,185 | 9,077,549 | 14,000,565 | 7,571,377 | |||||
Adjusted net loss per common share | $ (0.31) | $ (0.63) | $ (0.96) | $ (1.47) | |||||
(a) | Other expenses in the thirteen weeks ended August 4, 2019 are made up of: (1) $83 in financing fees associated with our secondary offering and (2) $192 in legal and professional fees. Other expenses in the thirteen weeks ended August 5, 2018 are made up of: (1) $176 in fees and costs associated with our fundraising and reorganizing activities including the legal and professional services incurred in connections with such activities; (2) $73 in travel and logistical costs associated with the offering; (3) $88 in accounting fees related to the offering; (4) $450 in IPO bonuses paid to executives; (5) $446 in fees paid for investor relations and public relations relating to the IPO and (6) $59 in executive recruitment fees to build executive management team. | ||||||||
(b) | Other expenses in the twenty-six weeks ended August 4, 2019 are made up of: (1) $150 in recruitment fees to build executive management team and Board of Directors; (2) $83 in fees associated with our secondary offering finance expense and (3) $192 in legal and professional fees. Other expenses in the twenty-six weeks ended August 5, 2018 are made up of: (1) $201 in fees and costs associated with our fundraising and reorganizing activities including the legal and professional services incurred in connection with such activities; (2) $84 in travel and logistical costs associated with the offering; (3) $198 in accounting fees related to the offering; (4) $450 in IPO bonuses paid to executives; (5) $479 in fees paid for investor relations and public relations relating to the IPO and (6) $96 in executive recruitment fees to build executive management team. |
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