Yankee Cdle (NYSE:YCC)
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The Yankee Candle Company, Inc. ("Yankee" or the
"Company"; NYSE:YCC) today announced financial results for the first
quarter ended April 1, 2006. Earnings per common share on a diluted
basis increased 30% to $0.30 from $0.23 for the prior year quarter.
Total sales for the first quarter were $133.9 million, a 12% increase
over the year ago quarter. Total company comparable store sales
increased 1%.
Included in the first quarter EPS is a favorable federal income
tax adjustment of $2.3 million, or $0.05 per diluted share, primarily
due to the resolution of prior years' outstanding federal income tax
matters. Earnings per common share on a diluted basis before the
benefit of this tax adjustment was $0.25, an increase of 9% over the
year ago quarter.(1)
"First quarter 2006 EPS results were solid and at the high end of
our expectations range, excluding a one-time tax adjustment",
commented Craig Rydin, Chairman and Chief Executive Officer. "Revenue
exceeded our plan overall, with the retail division in all three
business segments delivering higher growth on positive comparable
store sales and wholesale sales within expectations. Our strong
revenue performance this quarter is a tribute to all of our employees
who worked together to create these solid results."
First Quarter Highlights:
-- Retail sales were $61.6 million, a 19% increase over the
fiscal 2005 first quarter. Comparable sales in the 330 retail
stores including the South Deerfield flagship store that have
been open for more than one year increased 3%. Comparable
sales in the 329 retail stores excluding the South Deerfield
flagship store increased 4%. Consumer Direct increased 53%
over the fiscal 2005 first quarter. Including Consumer Direct,
total retail comparable sales increased 8%.
-- Wholesale sales were $72.3 million in the first quarter, an
increase of 7% over the year ago quarter. Wholesale comparable
sales in the first quarter decreased 2%.
-- Gross profit increased 11% to $72.0 million for the first
quarter versus the prior year quarter. As a percentage of
sales, gross profit decreased to 53.8% compared to 54.4% for
the prior year quarter, due to promotional costs in Wholesale
and higher energy and freight costs.
-- Income from operations for the first quarter increased 2% to
$19.2 million, from $18.8 million for the first quarter of
2005.
Craig Rydin continued, "We executed very well on several fronts
this quarter, including our semi-annual clearance sale, our
intensified core candle focus, and improved in-store presentation,
which together with our Q4 price increase contributed to solid retail
segment margins and our segment profit increase of 7%. The strong
retail gain helped offset lower wholesale margins that were pressured
by seasonal markdowns at national customers and the introductory
promotional costs of new brand launches. Additionally, wax supply
constraints at one of our major suppliers appear to be easing as our
wax allocation has been increased from 70% to 100% of 2005 purchases."
Forecast Highlights:
The Company also provided its sales and EPS guidance for the
fiscal 2006 second quarter and full year. As is customary for Yankee
Candle Company, this guidance excludes any impact of additional share
repurchases. In addition, the full-year guidance excludes the first
quarter 2006 one-time tax benefit of $0.05 per share.
-- For second quarter of 2006, the Company expects approximately
6%-8% total sales growth and earnings per diluted common share
of $0.18 to $0.20 versus $0.19 in the second quarter of 2005.
Prior year earnings per share included approximately $0.01 in
a one-time benefit arising from a favorable adjustment to its
gift card liability.
-- The Company's full year guidance for diluted EPS growth
remains unchanged at 11% - 14%, excluding the restructure
charge taken in 2005, or 16% - 20% including the charge. As
noted above, this outlook also excludes the Q1 2006 one-time
tax benefit. Total sales growth is expected to be
approximately 7%-8%.
Mr. Rydin concluded, "We are proud of our first quarter results,
which reflect the initial benefits of the transition we aim to achieve
this year. While we are still in early stages, we are applying the
energy and focus of the entire Yankee Candle team and believe we are
well positioned to deliver on our strategic priorities."
The Company also announced that on April 25, 2006 it entered into
a $100 million 364-day Credit Facility with Citizens Bank of
Massachusetts. The terms and conditions of this credit facility mirror
those of the Company's existing credit facility and are more fully
described in a Current Report on Form 8-K to be filed today with the
Securities and Exchange Commission. The funds will be utilized to
fund, among other things, working capital, letters of credit,
repurchase of the Company's common stock and other general corporate
purposes.
Earnings Conference Call:
The Company will host a conference call to be broadcast via the
Internet at 1:00 p.m. (EST) this afternoon to more fully discuss
fiscal 2006 first quarter results and outlook. This call is being
webcast by CCBN and can be accessed at The Yankee Candle Company's web
site at www.yankeecandle.com. Click on the "About Us" link, and then
select the "Investor Information" link. Enter your registration
information ten minutes prior to the start of the conference.
The Yankee Candle Company, Inc. is the leading designer,
manufacturer, wholesaler and retailer of premium scented candles,
based on sales, in the giftware industry. Yankee has a 36-year history
of offering distinctive products and marketing them as affordable
luxuries and consumable gifts. The Company sells its products through
a North American wholesale customer network of approximately 17,000
store locations, a growing base of Company owned and operated retail
stores (381 located in 42 states as of April 1, 2006), direct mail
catalogs, its Internet website (www.yankeecandle.com), international
distributors and to a European wholesale customer network of
approximately 2,300 store locations (through its distribution center
located in Bristol, England).
This press release contains certain information constituting
"forward-looking statements" for purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements include but are not limited to the
statements contained herein with respect to management's current
estimates of the Company's financial and operating results for Fiscal
2006, and the second quarter thereof, the growth initiatives and
specific actions discussed above and their impact on the Company's
future operating results, and any other statements concerning the
Company's or management's plans, objectives, goals, strategies,
expectations, estimates, beliefs or projections, or any other
statements concerning future performance or events. Actual results
could differ materially from those indicated by these forward-looking
statements as a result of various risks and uncertainties, including
but not limited to the following: the current economic conditions in
the United States as a whole and the continuing weakness in the retail
environment; the risk that we will be unable to maintain our
historical growth rate; the effects of competition from others in the
highly competitive giftware industry; our ability to anticipate and
react to industry trends and changes in consumer demand; our
dependence upon our senior executive officers; the risk of loss of our
manufacturing and distribution facilities; the impact on our stock
price of seasonal, quarterly and other fluctuations in our business;
the risk of any disruption in wax supplies; and other factors
described or contained in the Company's most recent Quarterly Report
on Form 10-Q or Annual Report on Form 10-K on file with the Securities
and Exchange Commission. Any forward-looking statements represent our
views only as of today and should not be relied upon as representing
our views as of any subsequent date. While we may elect to update
certain forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so even if experience or
future events may cause the views contained in any forward-looking
statements to change.
(1)See attached income statement for GAAP reconciliation.
-0-
*T
The Yankee Candle Company, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Thirteen Weeks Thirteen Weeks
Ended Ended
April 1, 2006 April 2, 2005
----------------- -----------------
Sales:
Retail $ 61,637 46.03% $ 51,819 43.45%
Wholesale 72,277 53.97% 67,436 56.55%
----------------- -----------------
Total sales 133,914 100.00% 119,255 100.00%
Cost of sales 61,936 46.25% 54,424 45.64%
----------------- ----------------
Gross profit 71,978 53.75% 64,831 54.36%
Retail 31,976 51.88%(A) 28,340 54.69%(A)
Wholesale 5,291 7.32%(B) 4,153 6.16%(B)
----------------- -----------------
Total selling expenses 37,267 27.83% 32,493 27.25%
General & administrative
expenses 15,464 11.55% 13,532 11.35%
----------------- -----------------
Income from operations 19,247 14.37% 18,806 15.77%
Interest (income) (7) -0.01% (6) -0.01%
Interest expense 2,788 2.08% 936 0.78%
Other (income) expense (145) -0.11% 218 0.18%
----------------- -----------------
Income before provision for
income taxes 16,611 12.40% 17,658 14.81%
Provision for income taxes 4,140 3.09% 6,887 5.78%
----------------- -----------------
Net income $ 12,471 9.31% $ 10,771 9.03%
================= =================
Basic earnings per share $ 0.30 $ 0.23
========= =========
Diluted earnings per share $ 0.30 $ 0.23
========= =========
Weighted avg. basic shares
outstanding 41,016 46,877
Weighted avg. diluted shares
outstanding 41,262 47,312
Reconciliation of
Non-GAAP Measures:
Net income, per common share,
diluted as reported $ 0.30
Tax adjustment (0.05)
---------
Adjusted net income per
common share, diluted $ 0.25
=========
-----------------------------------------------------------------
(A) Retail selling expenses as a percentage of retail sales.
(B) Wholesale selling expenses as a percentage of wholesale sales.
The Yankee Candle Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
ASSETS April 1, December 31,
2006 2005
----------- -----------
(unaudited)
Current Assets:
Cash and cash equivalents $ 9,091 $ 12,655
Accounts receivable, net 42,920 42,546
Inventory 63,114 55,528
Prepaid expenses and other current assets 10,118 9,060
Deferred tax assets 5,428 6,734
----------- -----------
Total Current Assets 130,671 126,523
Property, Plant And Equipment, net 135,218 139,089
Marketable Securities 2,284 2,223
Deferred Financing Costs 694 593
Deferred Tax Assets 73,000 73,975
Other Assets 12,408 12,731
----------- -----------
Total Assets $ 354,275 $ 355,134
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 14,827 $ 21,068
Accrued payroll 10,267 14,319
Accrued income taxes 1,905 20,828
Other accrued liabilities 16,394 34,326
----------- -----------
Total Current Liabilities 43,393 90,541
Deferred Compensation Obligation 2,330 2,418
Long-Term Debt 208,000 178,000
Deferred Rent 15,767 16,031
Stockholders' Equity 84,785 68,144
----------- -----------
Total Liabilities And Stockholders'
Equity $ 354,275 $ 355,134
=========== ===========
The Yankee Candle Company, Inc.
April 26, 2006 Earnings Release
Supplemental Data
Year to
Quarter Date Total
------------ ----------- ---------
Retail Stores 4 4 381
Wholesale Customer Locations -
North America (a) 663 663 17,047
Wholesale Customer Locations -
Europe 100 100 2,300
Square Footage - Gross 5,787 5,787 779,219
Square Footage - Selling 4,725 4,725 609,254
Total Company Comp Sales Change % 1% 1%
Wholesale Comp Sales Change % -2% -2%
Retail Comp Store Sales Change % 3% 3%
Retail Comp Store Count 330 - 330
Retail Comp Store Sales Change %,
excl. S. Deerfield 4% 4%
Retail Comp Store & Consumer Direct
Sales Change % 8% 8%
Sales per Square Foot (1) - $ 566
Store Count - 335
Average store square footage,
gross (2) - 1,660
Average store square footage,
selling (2) - 1,284
Gross Profit (3)
Retail $ $ 38,758 $ 38,758
Retail % 62.9% 62.9%
Wholesale $ $ 33,219 $ 33,219
Wholesale % 46.0% 46.0%
Segment Profit (3)
Retail $ $ 6,783 $ 6,783
Retail % 11.0% 11.0%
Wholesale $ $ 27,928 $ 27,928
Wholesale % 38.6% 38.6%
Depreciation & Amortization (3) $ 6,485 $ 6,485
Inventory per Store $ 43,000 -
Inventory Turns 4.2 4.5 (4)
Capital Expenditures (3) $ 2,279 $ 2,279
Shares Outstanding 41,073,371 -
Weighted avg diluted shares in EPS
calculation 41,262,000 -
(1) Trailing 12 months, stores open for full 12 months, excluding S.
Deerfield Flagship Store.
(2) Excludes S. Deerfield and Williamsburg, VA Flagship stores.
(3) Dollars in thousands.
(4) Rolling four quarters.
(a) Excludes Pet, Club, Office and tests
*T