Schedule of segment reporting |
| | | | | | | | | | | | | Fiscal Year Ended April 2, 2022 | | TCS | | Elfa | | Eliminations | | Total | Net sales to third parties | | $ | 1,023,193 | | $ | 70,926 | | $ | — | | $ | 1,094,119 | Intersegment sales | | | — | | | 60,794 | | | (60,794) | | | — | Adjusted EBITDA | | | 141,217 | | | 13,114 | | | 4,678 | | | 159,009 | Depreciation and amortization | | | 31,061 | | | 3,228 | | | — | | | 34,289 | Interest expense, net | | | 12,488 | | | 272 | | | — | | | 12,760 | Capital expenditures (1) | | | 29,746 | | | 3,643 | | | — | | | 33,389 | Goodwill | | | 221,159 | | | — | | | — | | | 221,159 | Trade names (1) | | | 187,048 | | | 37,890 | | | — | | | 224,938 | Assets (1) | | | 1,093,447 | | | 107,822 | | | (3,692) | | | 1,197,577 |
| | | | | | | | | | | | | Fiscal Year Ended April 3, 2021 | | TCS | | Elfa | | Eliminations | | Total | Net sales to third parties | | $ | 923,083 | | $ | 67,005 | | $ | — | | $ | 990,088 | Intersegment sales | | | — | | | 62,918 | | | (62,918) | | | — | Adjusted EBITDA | | | 126,543 | | | 24,865 | | | (885) | | | 150,523 | Depreciation and amortization | | | 31,043 | | | 3,688 | | | — | | | 34,731 | Interest expense, net | | | 16,947 | | | 321 | | | — | | | 17,268 | Capital expenditures (1) | | | 15,073 | | | 2,103 | | | — | | | 17,176 | Goodwill | | | 202,815 | | | — | | | — | | | 202,815 | Trade names (1) | | | 187,048 | | | 40,621 | | | — | | | 227,669 | Assets (1) | | | 979,411 | | | 106,408 | | | (7,350) | | | 1,078,469 |
| | | | | | | | | | | | | Fiscal Year Ended March 28, 2020 | | TCS | | Elfa | | Eliminations | | Total | Net sales to third parties | | $ | 852,349 | | $ | 63,604 | | $ | — | | $ | 915,953 | Intersegment sales | | | — | | | 61,955 | | | (61,955) | | | — | Adjusted EBITDA | | | 77,156 | | | 16,988 | | | (3,373) | | | 90,771 | Depreciation and amortization | | | 34,608 | | | 4,030 | | | — | | | 38,638 | Interest expense, net | | | 21,200 | | | 341 | | | — | | | 21,541 | Capital expenditures (1) | | | 30,500 | | | 3,119 | | | — | | | 33,619 | Goodwill | | | 202,815 | | | — | | | — | | | 202,815 | Trade names (1) | | | 187,048 | | | 35,721 | | | — | | | 222,769 | Assets (1) | | | 1,073,888 | | | 99,587 | | | (6,661) | | | 1,166,814 |
(1) | Tangible assets and trade names in the Elfa column are located outside of the United States. |
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Summary of reconciliation of Adjusted EBITDA by segment to income before taxes |
A reconciliation of Adjusted EBITDA to income before taxes is set forth below: | | | | | | | | | | | Fiscal Year Ended | | | April 2, | | April 3, | | March 28, | | | | 2022 | | | 2021 | | | 2020 | | Income before taxes | $ | 112,694 | | $ | 80,843 | | $ | 21,202 | | Add: | | | | | | | | | | Depreciation and amortization | | 34,289 | | | 34,731 | | | 38,638 | | Interest expense, net | | 12,760 | | | 17,268 | | | 21,541 | | Pre-opening costs (a) | | 694 | | | 1,026 | | | 8,237 | | Non-cash lease expense (b) | | (7,115) | | | 4,147 | | | (2,169) | | Stock-based compensation (c) | | 4,263 | | | 7,823 | | | 3,110 | | Management transition costs (d) | | 473 | | | 1,200 | | | — | | Loss on extinguishment of debt (e) | | — | | | 893 | | | — | | Foreign exchange (gains) losses (f) | | (14) | | | 200 | | | (167) | | Elfa France closure (g) | | — | | | — | | | 402 | | Employee retention credit (h) | | — | | | (1,028) | | | — | | Acquisition-related costs (i) | | 745 | | | — | | | — | | COVID-19 costs (j) | | 203 | | | 2,266 | | | — | | COVID-19 severance and other costs (credits) (k) | | 17 | | | 1,154 | | | (23) | | Adjusted EBITDA | | 159,009 | | | 150,523 | | | 90,771 | |
(a) | Non-capital expenditures associated with opening new stores, relocating stores, and net costs associated with opening the second distribution center, including marketing expenses, travel and relocation costs. We adjust for these costs to facilitate comparisons of our performance from period to period. |
(b) | Reflects the extent to which our annual GAAP operating lease expense has been above or below our cash operating lease payments. The amount varies depending on the average age of our lease portfolio (weighted for size), as our GAAP operating lease expense on younger leases typically exceeds our cash operating lease payments, while our GAAP operating lease expense on older leases is typically less than our cash operating lease payments. Non-cash lease expense increased in fiscal 2020 due to renegotiated terms with landlords due to COVID-19 that resulted in deferral of $11,900 of certain cash lease payments, which was repaid as of April 2, 2022. In fiscal 2019, lease expenses associated with the opening of the second distribution center were excluded from Non-cash lease expense and included in Pre-opening costs. |
(c) | Non-cash charges related to stock-based compensation programs, which vary from period to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period to period. |
(d) | Costs related to the transition of key executives including signing bonus, severance and relocation expenses recorded as selling, general and administrative expenses, which we do not consider in our evaluation of ongoing performance. |
(e) | Loss recorded as a result of the Seventh Amendment made to the Senior Secured Term Loan Facility in December 2020, which we do not consider in our evaluation of our ongoing operations. |
(f) | Realized foreign exchange transactional gains/losses our management does not consider in our evaluation of our ongoing operations. |
(g) | Charges related to the closure of Elfa France operations in the second quarter of fiscal 2019, which we do not consider in our evaluation of ongoing performance. |
(h) | Employee retention credit related to the CARES Act recorded in the third quarter of fiscal 2020 as selling, general and administrative expense which we do not consider in our evaluation of ongoing performance. |
(i) | Includes costs incurred in fiscal 2021 associated with the acquisition of Closet Works on December 30, 2021, all of which are recorded as selling, general and administrative expenses, which we do not consider in our evaluation of ongoing performance. |
(j) | Includes incremental costs attributable to the COVID-19 pandemic, which consist of sanitization costs in fiscal 2021 and fiscal 2020, and hazard pay for distribution center employees in the first quarter of fiscal 2020, all of which are recorded as selling, general and administrative expenses which we do not consider in our evaluation of ongoing performance. |
(k) | Severance and other credits/costs include amounts our management does not consider in our evaluation of our ongoing operations. The fiscal 2020 amounts include costs primarily incurred in the first and second quarters of fiscal 2020 associated with the reduction in workforce as a result of the COVID-19 pandemic and the related temporary store closures in fiscal 2020. |
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Schedule of sales by merchandise category as a percentage of total net sales |
The following table shows sales by merchandise category as a percentage of total net sales for fiscal 2021, fiscal 2020, and 2019: | | | | | | | | | | Fiscal Year Ended | | | | April 2, | | April 3, | | March 28, | | | | 2022 | | 2021 | | 2020 | | Custom Closets (1) | | 52 | % | 50 | % | 51 | % | Kitchen and Trash | | 17 | % | 18 | % | 14 | % | Storage and Shelving | | 14 | % | 14 | % | 13 | % | Office, Collections, Hooks | | 7 | % | 8 | % | 8 | % | Bath, Travel, Laundry | | 6 | % | 5 | % | 7 | % | Gift Packaging, Seasonal, Impulse | | 3 | % | 4 | % | 5 | % | Other | | 1 | % | 1 | % | 2 | % | Total | | 100 | % | 100 | % | 100 | % |
(1) | Includes metal-based and wood-based custom space products and in-home services, as well as closet lifestyle department products sold by the TCS segment and Elfa segment sales to third parties. |
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