UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): | March 25, 2015 |
Dover Saddlery, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
Delaware | 000-51624 | 04-3438294 |
_____________________ (State or other jurisdiction |
_____________ (Commission |
______________ (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
525 Great Road, P.O. Box 1100, Littleton, Massachusetts | 01460 | |
_________________________________ (Address of principal executive offices) |
___________ (Zip Code) |
Registrants telephone number, including area code: | 978-952-8062 |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On March 25, 2015, Dover Saddlery, Inc. (the "registrant") issued a press release reporting on its results of operations for the fourth quarter and twelve months ending December 31, 2014. A copy of that press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The press release includes references to Adjusted EBITDA, a non-GAAP financial measure that management uses in its analysis of the registrant’s performance and ongoing operations. Reconciliation to the most directly comparable GAAP measure is included in the financial statements portion of the press release. The registrant presents Adjusted EBITDA because registrant considers it an important measure of its performance, and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in registrant's industry.
Item 7.01 Regulation FD Disclosure.
Press Release
Results of Operations
On March 25, 2015, Dover Saddlery, Inc. (the "registrant") issued a press release reporting on its results of operations for the fourth quarter and twelve months ending December 31, 2014. A copy of that press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The press release includes references to Adjusted EBITDA, a non-GAAP financial measure that management uses in its analysis of the registrant’s performance and ongoing operations. Reconciliation to the most directly comparable GAAP measure is included in the financial statements portion of the press release. The registrant presents Adjusted EBITDA because registrant considers it an important measure of its performance, and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in registrant's industry.
Strategic Initiatives
Since the Company’s announcement in September 2013 of a strategic initiatives review, its board of directors and senior management have conducted extensive evaluations of the Company’s existing and projected risks, opportunities and strategic alternatives. These deliberations have resulted in a current round of negotiations for a transaction in which all of Dover’s shares would be acquired. Dover cautioned that no definitive agreement has been signed and the transaction terms remain under discussion.
There is no assurance that a definitive agreement will be reached or that the current transaction focus or the board’s exploration of other strategic alternatives will result in any transaction being pursued, entered into or consummated; and there is no set timetable for the strategic review process. The Company does not intend to comment further regarding its evaluation of strategic alternatives until such time as the board has determined the outcome of the process or otherwise has deemed that disclosure is appropriate.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 March 25, 2015 Press Release
The information and exhibits submitted in this Report are and shall be deemed to furnished to the Securities and Exchange Commission, and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
The press release attached as Exhibit 99.1 to this Report 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 a potential transaction, the outcome of the strategic initiatives process, the Company’s business outlook for fiscal 2015, the prospects for overall revenue growth, profitability, consumer sentiment 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 the registrant 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. Actual results could differ materially based upon a number of factors including those identified in the press release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dover Saddlery, Inc. | ||||
March 25, 2015 | By: |
/s/ David R. Pearce
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Name: David R. Pearce | ||||
Title: Chief Financial Officer |
Exhibit Index
Exhibit No. | Description | |
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99.1
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March 25, 2015 Press Release |
Janet Nittmann
jnittmann@doversaddlery.com
Tel 978 952 8062 x218
For Immediate Release
Dover Saddlery Announces Fourth Quarter and Full Year 2014 Financial Results
LITTLETON, MA(MARKET WIRE)March 25, 2015 Dover Saddlery, Inc. (NASDAQ:DOVR - News), the leading omni-channel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2014.
Fourth quarter results
Total revenues for the fourth quarter of 2014 increased 9.3% to $33.1 million over the same period in the prior year. Revenues from the retail channel increased 14.8% to $15.0 million, and revenues from the direct channel increased 5.0% to $18.0 million. Same-store sales increased 4.9% in the fourth quarter of 2014.
Net income for the quarter was $1,302,000, or $0.23 per diluted share, compared to $1,331,000 or $0.23 achieved in the corresponding quarter of the prior year. In November, we opened a very large Dover Saddlery store in an excellent location in Wellington, Florida, said Stephen L Day, president and chief executive officer of Dover Saddlery. Wellington has become the global center for equestrian activity during the winter months and as expected this store is performing extremely well.
Full Year Results
Total revenues for the fiscal year 2014 increased 8.5% to $101.8 million, from $93.8 million achieved during 2013.
Retail store revenues increased 16.0% to $50.4 million. This increase was due to new store openings and same-store sales increasing 4.3%. The company opened three Dover Saddlery retail stores during 2014, in Cincinnati, OH, Houston, TX and Wellington, FL, bringing the total number of retail stores to twenty-five. Revenues from the direct channel increased 2.0% to $51.4 million.
Net income for fiscal 2014 was $1,231,000, or $0.21 per diluted share, compared to $1,591,000, or $0.29 per diluted share, achieved in the fiscal year 2013. Adjusted EBITDA for the fiscal year 2014 was $4.9 million, compared to $5.0 million achieved in 2013. A reconciliation of the net income calculated in accordance with GAAP and the non-GAAP Adjusted EBITDA measure is provided in the table accompanying this press release.
Business Outlook
Dover Saddlery is planning to open five to seven retail stores in 2015. Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on other business prospects.
Strategic Initiatives
Since the Companys announcement in September 2013 of a strategic initiatives review, its board of directors and senior management have conducted extensive evaluations of the Companys existing and projected risks, opportunities and strategic alternatives. These deliberations have resulted in a current round of negotiations for a transaction in which all of Dovers shares would be acquired. Dover cautioned that no definitive agreement has been signed and the transaction terms remain under discussion.
There is no assurance that a definitive agreement will be reached; that the current transaction focus or the boards exploration of other strategic alternatives will result in any transaction being pursued, entered into or consummated; and there is no set timetable for the strategic review process. The Company does not intend to comment further regarding its evaluation of strategic alternatives until such time as the board has determined the outcome of the process or otherwise has deemed that disclosure is appropriate.
Todays Teleconference and Webcast
Dover Saddlery will be hosting a conference call at 4:30 P.M. ET today to discuss the fourth
quarter and full year 2014 results. Investors are invited to listen to the earnings conference call
over the Internet through the companys website at http://investor.shareholder.com/DOVR/.
This webcast will be archived for a year.
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 a potential transaction, the outcome of the strategic initiatives process, the Companys business outlook for fiscal 2015, the prospects for overall revenue growth, profitability, consumer sentiment and the opening of new stores. All statements other than statements of historical fact included in this press release regarding the companys 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 Saddlerys Annual Report on Form 10-K for the fiscal year ended December 31, 2013. 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)
Three Months Ended | Twelve Months Ended | |||||||||||||||
(unaudited) | ||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues, net- direct |
$ | 18,036 | $ | 17,171 | $ | 51,375 | $ | 50,346 | ||||||||
Revenues, net retail stores |
15,028 | 13,088 | 50,448 | 43,497 | ||||||||||||
Revenues, net total |
$ | 33,064 | $ | 30,259 | $ | 101,823 | $ | 93,843 | ||||||||
Cost of revenues |
19,560 | 17,151 | 62,320 | 57,127 | ||||||||||||
Gross profit |
13,504 | 13,108 | 39,503 | 36,716 | ||||||||||||
Selling, general and administrative expenses |
10,839 | 10,537 | 36,590 | 33,252 | ||||||||||||
Income from operations |
2,665 | 2,571 | 2,913 | 3,464 | ||||||||||||
Interest expense, financing and other related costs, net |
174 | 150 | 655 | 576 | ||||||||||||
Other investment (income) loss |
45 | 46 | (14 | ) | 13 | |||||||||||
Income before income tax provision |
2,446 | 2,375 | 2,272 | 2,875 | ||||||||||||
Provision for income taxes |
1,144 | 1,044 | 1,041 | 1,284 | ||||||||||||
Net income |
$ | 1,302 | $ | 1,331 | $ | 1,231 | $ | 1,591 | ||||||||
Net income per share |
||||||||||||||||
Basic |
$ | 0.24 | $ | 0.25 | $ | 0.23 | $ | 0.30 | ||||||||
Diluted |
$ | 0.23 | $ | 0.23 | $ | 0.21 | $ | 0.29 | ||||||||
Number of shares used in per share calculation |
||||||||||||||||
Basic |
5,399,000 | 5,339,000 | 5,370,000 | 5,343,000 | ||||||||||||
Diluted |
5,714,000 | 5,703,000 | 5,740,000 | 5,548,000 | ||||||||||||
Other Operating Data: |
||||||||||||||||
Number of retail stores(1) |
25 | 22 | 25 | 22 | ||||||||||||
Capital expenditures |
880 | 579 | 2,729 | 1,891 | ||||||||||||
Gross profit margin |
40.8 | % | 43.3 | % | 38.8 | % | 39.1 | % |
(1) | Includes twenty-four Dover-branded stores and one Smith Brothers store. |
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Three Months Ended | Twelve Months Ended | |||||||||||||||
(unaudited) | ||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income |
$ | 1,302 | $ | 1,331 | $ | 1,231 | $ | 1,591 | ||||||||
Other comprehensive loss: |
||||||||||||||||
Change in fair value of |
4 | 13 | 34 | 66 | ||||||||||||
interest rate swap
contract, net of tax |
||||||||||||||||
Total comprehensive income |
$ | 1,306 | $ | 1,344 | $ | 1,265 | $ | 1,717 | ||||||||
DOVER SADDLERY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
Dec. 31, | Dec. 31, | |||||||
2014 | 2013 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 315 | $ | 319 | ||||
Accounts receivable |
1,644 | 1,300 | ||||||
Inventory |
28,260 | 23,633 | ||||||
Prepaid catalog costs |
1,267 | 974 | ||||||
Prepaid expenses and other current assets |
1,943 | 1,277 | ||||||
Deferred income taxes |
347 | 355 | ||||||
Total current assets |
33,776 | 27,858 | ||||||
Net property and equipment |
7,019 | 5,763 | ||||||
Other assets: |
||||||||
Deferred income taxes |
1,772 | 1,495 | ||||||
Intangibles and other assets, net |
717 | 758 | ||||||
Total other assets |
2,489 | 2,253 | ||||||
Total assets |
$ | 43,284 | $ | 35,874 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
||||||||
Current portion of capital lease obligations and
outstanding checks |
$ | 1,522 | $ | 290 | ||||
Current portion term notes |
786 | 786 | ||||||
Current portion Capex term loan |
792 | 630 | ||||||
Accounts payable |
2,577 | 2,352 | ||||||
Accrued expenses and other current liabilities |
7,432 | 7,201 | ||||||
Income taxes payable |
551 | 1,006 | ||||||
Total current liabilities |
13,660 | 12,265 | ||||||
Long-term liabilities: |
||||||||
Revolving line of credit |
3,992 | 95 | ||||||
Capex term loan, net of current portion |
4,006 | 2,818 | ||||||
Term notes, net of current portion |
3,339 | 4,125 | ||||||
Capital lease obligation, net of current portion |
57 | 96 | ||||||
Interest rate swap contract |
128 | 189 | ||||||
Total long-term liabilities |
11,522 | 7,323 | ||||||
Stockholders equity: |
||||||||
Common stock, par value $0.0001 per share; 15,000,000
shares authorized; 6,205,357 and 6,147,263 issued and
5,409,492 and 5,351,398 outstanding as of December
31, 2014 and 2013, respectively |
1 | 1 | ||||||
Additional paid in capital |
46,856 | 46,304 | ||||||
Treasury stock, 795,865 shares at cost |
(6,082 | ) | (6,082 | ) | ||||
Other comprehensive loss |
(89 | ) | (122 | ) | ||||
Accumulated deficit |
(22,584 | ) | (23,815 | ) | ||||
Total stockholders equity |
18,102 | 16,285 | ||||||
Total liabilities and stockholders equity |
$ | 43,284 | $ | 35,874 | ||||
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 Companys management uses these non-GAAP measures in its analysis of the Companys 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 Companys operating results and trends that may be affecting the Companys 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 | Twelve Months Ended | |||||||||||||||
(unaudited) | ||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income |
$ | 1,302 | $ | 1,331 | $ | 1,231 | $ | 1,591 | ||||||||
Depreciation |
396 | 319 | 1,473 | 1,162 | ||||||||||||
Amortization of intangible assets |
11 | 17 | 64 | 69 | ||||||||||||
Stock-based compensation |
109 | 91 | 440 | 310 | ||||||||||||
Interest expense, financing and |
174 | 150 | 655 | 576 | ||||||||||||
other related costs, net |
||||||||||||||||
Other investment (income) loss |
45 | 46 | (14 | ) | 13 | |||||||||||
Provision for income taxes |
1,144 | 1,044 | 1,041 | 1,284 | ||||||||||||
Adjusted EBITDA |
$ | 3,181 | $ | 2,998 | $ | 4,890 | $ | 5,005 | ||||||||