• Duluth Holdings Inc. Announces Fourth Quarter and Fiscal 2021 Financial Results

    المصدر: Nasdaq GlobeNewswire / 10 مارس 2022 06:45:00   America/New_York

    Full Year Net Sales increase 9.4% to $698.6 million

    Full Year diluted EPS of $0.90 increase 117% compared to 2020 and 55% compared to 2019

    Full year positive free cash flow of $81.6 million1

    Fourth quarter Net Sales increase 5.8% to $270.8 million; diluted EPS of $0.53

    MOUNT HOREB, Wis., March 10, 2022 (GLOBE NEWSWIRE) -- Duluth Holdings Inc. (dba, Duluth Trading Company) (“Duluth Trading” or the “Company”) (NASDAQ: DLTH), a growing lifestyle brand of men’s and women’s casual wear, workwear and accessories, today announced its financial results for the fiscal fourth quarter and fiscal year ended January 30, 2022.

    Highlights for the Fourth Quarter Ended January 30, 2022

    • Net sales increased 5.8% to $270.8 million compared to $256.0 million in the prior-year fourth quarter
    • Gross margin increased to 53.8% compared to 53.0% in the prior-year fourth quarter
    • Operating income decreased 20.6% to $24.3 million, or 9.0% of net sales, compared to $30.5 million, or 11.9% of net sales in the prior-year fourth quarter
    • Net income was $17.4 million, or $0.53 per diluted share, compared to $21.8 million, or $0.67 per diluted share in the prior-year fourth quarter
    • Adjusted EBITDA2 decreased 14.1% to $33.0 million compared to $38.5 million in the prior-year fourth quarter

    Highlights for the Fiscal Year Ended January 30, 2022

    • Net sales increased 9.4% to $698.6 million compared to $638.8 million in the prior year
    • Gross margin increased to 54.0% compared to 51.9% in the prior year
    • Operating income increased 82.1% to $44.1 million, or 6.3% of net sales, compared to $24.2 million, or 3.8% of net sales in the prior year
    • Net income was $29.7 million, or $0.90 per diluted share, compared to $13.6 million, or $0.42 per diluted share in the prior year
    • Adjusted EBITDA2 increased 41.6% to $77.4 million compared to $54.7 million in the prior year
    • Free Cash Flow1 was $81.6 million compared to $38.5 million in the prior year

    1See Reconciliation of Net cash provided by operating activities to Free Cash Flow in the accompanying financial tables.
    2See Reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA in the accompanying financial tables.

    Management Commentary

    President and CEO, Sam Sato commented, “2021 was a year of evolution for Duluth Trading as we embarked on a journey to position our business to better compete and enable long term growth. Our record results, including sales of $698 million, Adjusted EBITDA of $77.4 million, EPS of $0.90 and free cash flow of nearly $82 million showcases the tremendous progress we’ve made on seizing market growth opportunities.”

    “Our company’s mission has long been grounded in the belief that there’s always a better way and we have never been more confident in our ability to execute our Big Dam Blueprint as we march to our goal of $1 billion in sales. I’d like to thank all our team members for an outstanding year in serving our customers at the highest levels and contributing to our record results,” Sato concluded.

    Operating Results for the Fourth Quarter Ended January 30, 2022

    Net sales increased 5.8% to $270.8 million, compared to $256.0 million in the same period a year ago. Retail store net sales increased by 32.8% to $91.1 million, a significant increase over last year’s fourth quarter when store traffic continued to be adversely affected by the pandemic. Direct-to-consumer net sales declined 4.1% to $179.7 million compared to the fourth quarter last year when online shopping was boosted by heavier discounts and customer store traffic was light due to Covid concerns. For a more normalized comparison, direct-to-consumer net sales increased 5.7% compared to the fourth quarter of fiscal 2019.

    Net sales in store markets increased 10.8%, to $186.3 million, compared to $168.1 million in the same period a year ago. The increase was driven by a continued ramp up in store traffic and positive conversion trends as compared to the prior year. Net sales in non-store markets decreased 3.7%, to $82.5 million, compared to $85.6 million in the same period a year ago.

    Men’s apparel net sales increased 7.0% and Women’s apparel net sales decreased 3.7%. The increase in Men’s apparel net sales was due to strength in core year-round items. The decrease on Women’s apparel net sales was primarily attributed to inventory delays resulting in gaps in woven tops.

    Gross profit increased 7.4% to $145.7 million, or 53.8% of net sales, compared to $135.7 million, or 53.0% of net sales, in the corresponding prior-year period. Despite expensing approximately $6 million of expedited freight costs in the current quarter, the gross margin rate increased due to a higher mix of full price sales from lower clearance inventory and successfully dialing back promotion activity.

    Selling, general and administrative expenses increased 15.5% to $121.4 million, compared to $105.1 million in the same period a year ago. As a percentage of net sales, selling, general and administrative expenses increased to 44.9%, compared to 41.1% in the corresponding prior-year period.

    The increase in selling, general and administrative expenses was primarily due to increased advertising expense as we purposely pulled back in the prior year due to our uncertainty about customer demand resulting from the pandemic, coupled with higher personnel costs and elevated outside services costs in part due to progressing on initiatives tied to the Big Dam Blueprint.

    Balance Sheet and Liquidity

    The Company ended the quarter with a cash balance of approximately $77.1 million, net working capital of $106.5 million, no outstanding Duluth Trading bank debt, and $15.1 million of fiscal 2021 capital expenditures.

    Fiscal 2022 Outlook

    As uncertainties related to COVID-19 begin to slowly decline, the Company expects to see steady improvement in demand in fiscal 2022. The Company provided the following fiscal 2022 outlook:

    • Net sales in the range of $730 million to $755 million
    • Adjusted EBITDA1 in the range of $84 million to $88 million
    • EPS in the range of $0.93 to $1.02 per diluted share
    • Capital expenditures, inclusive of software hosting implementation costs, of approximately $57 million

    1See Reconciliation of forecasted net income to forecasted EBITDA and forecasted EBITDA to forecasted Adjusted EBITDA in the accompanying financial tables.

    Conference Call Information

    A conference call and audio webcast with analysts and investors will be held on Thursday, March 10, 2022 at 9:30 am Eastern Time, to discuss the results and answer questions.

    • Live conference call: 844-875-6915 (domestic) or 412-317-6711 (international)
    • Conference call replay available through March 17, 2022: 877-344-7529 (domestic) or 412-317-0088 (international)
    • Replay access code: 9177748
    • Live and archived webcast: ir.duluthtrading.com        

    Investors can pre-register for the earnings conference call to expedite their entry into the call and avoid waiting for a live operator. To pre-register for the call, please visit https://dpregister.com/sreg/10163846/f1726fbbce and enter your contact information. You will then be issued a personalized phone number and pin to dial into the live conference call. Investors can pre-register any time prior to the start of the conference call.

    About Duluth Trading

    Duluth Trading is a growing lifestyle brand for the Modern, Self-Reliant American. Based in Mount Horeb, Wisconsin, we offer high quality, solution-based casual wear, workwear and accessories for men and women who lead a hands-on lifestyle and who value a job well-done. We provide our customers an engaging and entertaining experience. Our marketing incorporates humor and storytelling that conveys the uniqueness of our products in a distinctive, fun way, and our products are sold exclusively through our content-rich website, catalogs, and “store like no other” retail locations. We are committed to outstanding customer service backed by our “No Bull Guarantee” - if it’s not right, we’ll fix it. Visit our website at http://www.duluthtrading.com/

    Non-GAAP Measurements

    Management believes that non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Within this release, including the tables attached hereto, reference is made to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), Free Cash Flow and Forecasted Adjusted EBITDA. See attached table “Reconciliation of Net Income to EBITDA and EBITDA to Adjusted EBITDA,” for a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three months and fiscal year ended January 30, 2022, versus the three months and fiscal year ended January 31, 2021, “Free Cash Flow” as a liquidity measure for the fiscal years ended January 30, 2022 and January 31, 2021 and “Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA” for a forecasted reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the fiscal year ended January 29, 2023.

    Adjusted EBITDA is a metric used by management and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period.

    Management believes Free Cash Flow is a useful measure of performance as an indication of an organization’s financial strength and provides additional perspective on the ability to efficiently use capital in executing growth strategies. Free Cash Flow is used to facilitate a comparison of operating performance on a consistent basis from period-to-period and the ability to generate cash. Free Cash Flow is defined as net cash provided by operating activities less purchase of property and equipment and capital contributions towards build-to-suit stores.

    The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such measurements are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results.

    Forward-Looking Statements

    This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts included in this press release, including statements concerning Duluth Trading's plans, objectives, goals, beliefs, business strategies, future events, business conditions, its results of operations, financial position and its business outlook, business trends and certain other information herein, including statements under the heading “Fiscal 2022 Outlook” are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” ”might,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “believe,” “estimate,” “project,” “target,” “predict,” “intend,” “future,” “budget,” “goals,” “potential,” “continue,” “design,” “objective,” “forecasted,” “would” and other similar expressions. The forward-looking statements are not historical facts, and are based upon Duluth Trading's current expectations, beliefs, estimates, and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond Duluth Trading's control. Duluth Trading's expectations, beliefs and projections are expressed in good faith, and Duluth Trading believes there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, estimates, and projections will be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including, among others, the risks, uncertainties, and factors set forth under Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 26, 2021 and other factors as may be periodically described in Duluth Trading’s subsequent filings with the SEC. These risks and uncertainties include, but are not limited to, the following: the prolonged effects of COVID-19 on store traffic and disruptions to our distribution network, supply chains and operations; our ability to maintain and enhance a strong brand image; effectively adapting to new challenges associated with our expansion into new geographic markets; generating adequate cash from our existing stores to support our growth; effectively relying on sources for merchandise located in foreign markets; transportation delays and interruptions, including port congestion; inability to timely and effectively obtain shipments of products from our suppliers and deliver merchandise to our customers; the inability to maintain the performance of a maturing store portfolio; the impact of changes in corporate tax regulations; identifying and responding to new and changing customer preferences; the success of the locations in which our stores are located; our ability to attract and retain customers in the various retail venues and locations in which our stores are located; competing effectively in an environment of intense competition; our ability to adapt to significant changes in sales due to the seasonality of our business; price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold in global market constraints; increases in costs of fuel or other energy, transportation or utility costs and in the costs of labor and employment; failure of our information technology systems to support our current and growing business, before and after our planned upgrades; and other factors that may be disclosed in our SEC filings or otherwise. Forward-looking statements speak only as of the date the statements are made. Duluth Trading assumes no obligation to update forward-looking statements to reflect actual results, subsequent events or circumstances or other changes affecting forward-looking information except to the extent required by applicable securities laws.


    (Tables Follow)

    DULUTH HOLDINGS INC.
    Condensed Consolidated Balance Sheets
    (Unaudited)
    (Amounts in thousands)

           
      January 30, 2022 January 31, 2021
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $77,051  $46,584 
    Receivables  5,455   2,820 
    Inventory, net  122,672   149,052 
    Prepaid expenses & other current assets  17,333   10,203 
    Prepaid catalog costs  10   1,014 
    Total current assets  222,521   209,673 
    Property and equipment, net  110,078   124,237 
    Operating lease right-of-use assets  120,911   117,490 
    Finance lease right-of-use assets, net  50,133   53,468 
    Available-for-sale security  6,554   6,111 
    Other assets, net  5,353   3,961 
    Total assets $515,550  $514,940 
    LIABILITIES AND SHAREHOLDERS' EQUITY      
    Current liabilities:      
    Trade accounts payable $45,402  $33,647 
    Accrued expenses and other current liabilities  47,504   37,686 
    Income tax payable  6,814   7,579 
    Current portion of operating lease liabilities  12,882   11,050 
    Current portion of finance lease liabilities  2,701   2,629 
    Current maturities of Duluth long-term debt     2,500 
    Current maturities of TRI long-term debt1  693   623 
    Total current liabilities  115,996   95,714 
    Operating lease liabilities, less current portion  107,094   104,287 
    Finance lease liabilities, less current portion  40,267   43,299 
    Duluth long-term debt, less current maturities     45,750 
    TRI long-term debt, less current maturities1  26,608   27,229 
    Deferred tax liabilities  2,867   8,200 
    Total liabilities  292,832   324,479 
    Treasury stock  (1,002)  (628)
    Capital stock  95,515   92,875 
    Retained earnings  130,868   101,166 
    Accumulated other comprehensive income  489   48 
    Total shareholders' equity of Duluth Holdings Inc.  225,870   193,461 
    Noncontrolling interest  (3,152)  (3,000)
    Total shareholders' equity  222,718   190,461 
    Total liabilities and shareholders' equity $515,550  $514,940 

    1Represents debt of the variable interest entity, TRI Holdings, LLC, that is consolidated in accordance with ASC 810, Consolidation. Duluth Trading Company is not the guarantor nor the obligor of this debt.


    DULUTH HOLDING INC.
    Consolidated Statements of Operations
    (Unaudited)
    (Amounts in thousands, except per share figures)

                 
      Three Months Ended Fiscal Year Ended
      January 30, 2022 January 31, 2021 January 30, 2022 January 31, 2021
    Net sales $270,761  $255,960  $698,584  $638,783 
    Cost of goods sold (excluding depreciation and amortization)  125,056   120,275   321,260   307,257 
    Gross profit  145,705   135,685   377,324   331,526 
    Selling, general and administrative expenses  121,446   105,136   333,225   307,311 
    Operating income  24,259   30,549   44,099   24,215 
    Interest expense  1,327   1,492   4,717   6,263 
    Other income, net  248   169   55   65 
    Income before income taxes  23,180   29,226   39,437   18,017 
    Income tax expense  5,839   7,464   9,887   4,637 
    Net income  17,341   21,762   29,550   13,380 
    Less: Net loss attributable to noncontrolling interest  (18)  (69)  (152)  (197)
    Net income attributable to controlling interest $17,359  $21,831  $29,702  $13,577 
    Basic earnings per share (Class A and Class B):            
    Weighted average shares of common stock outstanding  32,660   32,494   32,618   32,447 
    Net income per share attributable to controlling interest $0.53  $0.67  $0.91  $0.42 
    Diluted earnings per share (Class A and Class B):            
    Weighted average shares and equivalents outstanding  32,809   32,665   32,851   32,580 
    Net income per share attributable to controlling interest $0.53  $0.67  $0.90  $0.42 


    DULUTH HOLDINGS INC.
    Consolidated Statements of Cash Flows
    (Unaudited)
    (Amounts in thousands)

           
      Fiscal Year Ended
      January 30, 2022 January 31, 2021
    Cash flows from operating activities:      
    Net income $29,550  $13,380 
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation and amortization  29,225   28,520 
    Stock-based compensation  2,198   1,629 
    Deferred income taxes  (5,483)  (255)
    Loss on disposal of property and equipment  398   324 
    Changes in operating assets and liabilities:      
    Receivables  (3,185)  (1,350)
    Inventory  26,380   (1,203)
    Prepaid expense & other assets  (2,438)  2,615 
    Software hosting implementation costs, net  (4,701)  (4,089)
    Deferred catalog costs  1,004   167 
    Trade accounts payable  10,481   (1,464)
    Income taxes payable  (765)  4,152 
    Accrued expenses and deferred rent obligations  9,865   7,719 
    Other  (845)  606 
    Noncash lease impacts  297    
    Net cash provided by operating activities  91,981   50,751 
    Cash flows from investing activities:      
    Purchases of property and equipment  (10,352)  (11,743)
    Capital contributions towards build-to-suit stores     (520)
    Principal receipts from available-for-sale security  147   131 
    Change in other assets  55    
    Net cash used in investing activities  (10,150)  (12,132)
    Cash flows from financing activities:      
    Proceeds from line of credit  5,000   95,388 
    Payments on line of credit  (5,000)  (114,720)
    Proceeds from delayed draw term loan     30,000 
    Payments on delayed draw term loan  (48,250)  (1,750)
    Payments on TRI long term debt  (623)  (483)
    Payments on finance lease obligations  (2,559)  (1,958)
    Shares withheld for tax payments on vested restricted stock  (374)  (221)
    Other  442   106 
    Net cash (used in) provided by financing activities  (51,364)  6,362 
    Increase in cash and cash equivalents  30,467   44,981 
    Cash and cash equivalents at beginning of period  46,584   1,603 
    Cash and cash equivalents at end of period $77,051  $46,584 


    DULUTH HOLDINGS INC.
    Reconciliation of Net Income to EBITDA and EBITDA to Adjusted EBITDA
    (Unaudited)
    (Amounts in thousands)

                 
      Three Months Ended Fiscal Year Ended
      January 30, 2022 January 31, 2021 January 30, 2022 January 31, 2021
    Net income $17,341 $21,762 $29,550 $13,380
    Depreciation and amortization  7,403  7,311  29,225  28,520
    Amortization of internal-use software hosting subscription implementation costs  545  61  1,797  229
    Interest expense  1,327  1,492  4,717  6,263
    Income tax expense  5,839  7,464  9,887  4,637
    EBITDA (non-GAAP) $32,455 $38,090 $75,176 $53,029
    Stock based compensation  586  366  2,198  1,629
    Adjusted EBITDA (non-GAAP) $33,041 $38,456 $77,374 $54,658


    DULUTH HOLDINGS INC.
    Free Cash Flow
    (Unaudited)
    (Amounts in thousands)

           
      Fiscal Year Ended
      January 30, 2022 January 31, 2021
           
    Net cash provided by operating activities $91,981  $50,751 
    Purchases of property and equipment  (10,352)  (11,743)
    Capital contributions towards build-to-suit stores     (520)
    Free Cash Flow (non-GAAP) $81,629  $38,488 


    DULUTH HOLDINGS INC.
    Reconciliation of Forecasted Net Income to Forecasted EBITDA and Forecasted EBITDA to Forecasted Adjusted EBITDA
    For the Fiscal Year Ended January 29, 2023
    (Unaudited)
    (Amounts in thousands)

           
      Low High
    Forecasted      
    Net income $30,800 $33,500
    Depreciation and amortization  32,200  32,600
    Amortization of internal-use software hosting subscription implementation costs  3,000  3,200
    Interest expense  4,750  4,450
    Income tax expense  10,250  11,150
    EBITDA (non-GAAP) $81,000 $84,900
    Stock based compensation  3,000  3,100
    Adjusted EBITDA (non-GAAP) $84,000 $88,000

     


    Investor Contacts:
    ICR, Inc.
    (646) 277-1200
    DuluthIR@icrinc.com

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