- Q3 2018 retail segment comparable sales up 2.3% with all brands
positive - Q3 2018 GAAP diluted EPS of $0.27 and adjusted diluted EPS(1)
of $1.01 - Q3 2018 custom sales averaged $5 million per week, up 150%
year-over-year - Total debt reduced by $40 million in Q3 2018; down $300 million
year-over-year - Company updates outlook for FY 2018 adjusted diluted EPS to
$2.30 to $2.35
FREMONT, Calif.–(BUSINESS WIRE)–
Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated
financial results for the fiscal third quarter ended November 3, 2018.
For the third quarter ended November 3, 2018, the Company reported GAAP
diluted earnings per share of $0.27 and adjusted diluted earnings per
share(1) of $1.01, compared to GAAP diluted earnings per
share of $0.75 for the same period a year ago. There were no adjusted
items in last year’s third quarter.
“We reported 2.3% positive comparable sales in the third quarter, with
all retail brands delivering positive comparable sales. Our sales growth
was driven primarily by custom suiting, which we sold at an average rate
of $5 million per week, up 150% versus last year,” said Tailored Brands
Executive Chairman Dinesh Lathi. “I am pleased with the team’s execution
on our custom growth strategy. During the quarter, we improved our
custom offering’s speed, selection and service, making custom even more
compelling to consumers.
“That said, as the third quarter progressed we saw a softening of
comparable sales due to lower transactions at Men’s Wearhouse and that
trend continued into November. As a result, we have taken a more
cautious outlook on fourth quarter comparable sales for Men’s Wearhouse
and now expect fiscal 2018 adjusted diluted EPS of $2.30 to $2.35.”
Lathi added, “We also executed our strategies to reduce inventories and
debt to improve capital efficiency and strengthen our balance sheet.
During the quarter, we reduced inventories 10% versus last year. We also
successfully repriced our term loan, reducing the interest rate spread
by 25 basis points, which lowers our annual cash interest expense by
more than $2 million. Our total debt is down approximately $300 million
versus a year ago.”
Third quarter 2018 GAAP results include a goodwill impairment charge of
$24.0 million related to our corporate apparel business, $9.4 million
related to the repricing of the Company’s term loan, $6.4 million
related to the retirement of our former CEO and $0.6 million related to
the previously announced closure of a rental product distribution center
in the second quarter of 2018. Of the $40.4 million total charges, $34.3
million were non-cash.
| (1) |
In the third quarter of fiscal 2018, adjusted items consist of a goodwill impairment charge related to our corporate apparel business, a loss on extinguishment of debt related to the repricing of the Company’s term loan, costs related to the retirement of our former CEO and costs related to the previously announced closure of a rental product distribution center in the second quarter of 2018. There were no adjusted items in last year’s third quarter. See Use of Non-GAAP Financial Measures for additional information on items excluded from adjusted EPS. |
|
Third Quarter Fiscal 2018 Results |
||||||
|
Net Sales Summary(1) |
||||||
|
Net Sales (U.S. |
% Total |
Comparable |
||||
| Retail | $751.7 | 0.6% | 2.3% | |||
| Men’s Wearhouse | $454.9 | 1.3% | 1.7% | |||
| Jos. A. Bank | $169.3 | 4.1% | 3.8% | |||
| K&G | $72.6 | 4.3% | 4.0% | |||
| Moores(3) | $54.9 | – 4.7% | 1.2% | |||
| Corporate Apparel | $61.0 | -3.6% | ||||
| Total Company(4) | $812.7 | 0.2% | ||||
|
(1) |
Amounts may not sum due to rounded numbers. |
|
|
(2) |
Comparable sales is defined as net sales from stores open at |
|
|
(3) |
The Moores comparable sales change is based on the Canadian |
|
|
(4) |
On March 3, 2018, the Company sold its MW Cleaners business. |
|
Net Sales
Total net sales increased 0.2% to $812.7 million. Retail net sales
increased 0.6% primarily due to an increase in retail clothing sales,
which drove positive 2.3% retail comparable sales. This was partially
offset by a $7.3 million decrease in alteration and other services
primarily resulting from the MW Cleaners divestiture.
Corporate apparel net sales decreased 3.6%, or $2.3 million, primarily
due to lower sales in the United Kingdom (“UK”) associated with
uncertainty surrounding Brexit, as well as the impact of a weaker
British pound this year. The Company now expects corporate apparel net
sales to decrease by a mid-single-digit percentage in fiscal 2018,
primarily due to continued soft trends in the UK business, versus
previous guidance of a low-single-digit percentage decrease.
Comparable Sales
Men’s Wearhouse comparable sales increased 1.7%. Comparable sales for
clothing increased primarily due to an increase in average unit retail
partially offset by a decrease in both units per transaction and
transactions. Comparable rental services revenue decreased 0.6%,
primarily reflecting the trend to purchase suits for special occasions
partially offset by the impact of more weddings in the third quarter,
which included the vanity wedding date of August 18, 2018, (“8/18/18”).
The Company expects to report comparable rental services revenue in the
fourth quarter of up low-single-digits versus last year and still
expects to report a mid-single-digit decrease in rental services revenue
for fiscal 2018.
Jos. A. Bank comparable sales increased 3.8% primarily due to an
increase in both transactions and average unit retail, partially offset
by a decrease in units per transaction.
K&G comparable sales increased 4.0% due to increases in transactions,
units per transaction and average unit retail.
Moores comparable sales increased 1.2% primarily due to an increase in
transactions partially offset by a decrease in units per transaction,
while average unit retail was flat.
Gross Margin
On a GAAP basis, consolidated gross margin was $362.7 million, an
increase of $4.0 million, primarily due to the increase in retail
clothing product sales. As a percent of sales, consolidated gross margin
increased 40 basis points to 44.6%. On an adjusted basis, consolidated
gross margin increased 40 basis points, primarily due to leveraging of
occupancy costs.
On a GAAP basis, retail segment gross margin was $346.1 million, an
increase of $4.1 million, primarily due to the increase in retail
clothing product sales. As a percent of sales, retail segment gross
margin increased 20 basis points to 46.0%. On an adjusted basis, retail
segment gross margin increased $4.1 million, or 20 basis points,
primarily due to leveraging of occupancy costs.
Advertising Expense
Advertising expense decreased $1.3 million to $37.3 million and
decreased 20 basis points as a percent of sales to 4.6%.
Selling, General and Administrative Expenses (“SG&A”)
On a GAAP basis, SG&A increased $2.8 million to $246.3 million and
increased 30 basis points as a percent of sales. On an adjusted basis,
SG&A decreased $4.1 million to $239.3 million primarily due to lower
share-based compensation and the impact of the MW Cleaners divestiture
partially offset by higher store commissions. As a percent of sales,
adjusted SG&A decreased 60 basis points to 29.4%.
Goodwill Impairment Charge
During the third quarter of 2018, sales, profitability and cash flow of
our corporate apparel segment underperformed in comparison to our
forecast. The performance of our corporate apparel business was and
continues to be impacted by increasing uncertainty surrounding Brexit,
which is resulting in lower replenishment demand from existing accounts
in the UK. In addition, in the third quarter of 2018, we received
notification from a significant U.S. customer of their decision not to
renew their existing agreement with us in 2019. As a result of the
continued uncertainty surrounding Brexit and the notification from our
U.S. customer, we lowered our forecast of sales, profitability and cash
flow for the corporate apparel segment for the fourth quarter of 2018
and future years.
As a result of the factors above, we determined that a triggering event
occurred during the third quarter of 2018 and an interim goodwill
impairment test for our corporate apparel segment was required. We
concluded that the segment’s goodwill was fully impaired and recorded a
non-cash goodwill impairment charge of $24.0 million during the third
quarter of 2018.
Operating Income
On a GAAP basis, operating income was $55.1 million compared to $76.6
million last year. On an adjusted basis, operating income was $86.1
million, up 12.3% compared to $76.6 million last year. As a percent of
sales, adjusted operating margin increased 110 basis points to 10.6%.
Net Interest Expense and Net Loss on Extinguishment of Debt
Net interest expense was $18.6 million compared to $24.3 million last
year. The decrease in interest expense resulted from the reduction of
outstanding debt.
On a GAAP basis, net loss on extinguishment of debt was $9.4 million
compared to a net gain on extinguishment of debt of $2.5 million last
year. The net loss on extinguishment of debt resulted from the repricing
of our term loan and consisted of the write-off of original issue
discount and deferred financing costs. On an adjusted basis, there was
no net loss on extinguishment of debt for the quarter compared to a net
gain on extinguishment of debt of $2.5 million in the third quarter last
year.
Effective Tax Rate
On a GAAP basis, the effective tax rate was 48.9% compared to 32.8% last
year. The increased rate this year primarily reflects the
non-deductibility of both the goodwill impairment charge and CEO
retirement costs. On an adjusted basis, the effective tax rate was 23.9%
compared to 32.8% last year. Both the GAAP and the adjusted effective
tax rates reflect the impact of the Tax Cuts and Jobs Act of 2017.
Net Earnings and EPS
On a GAAP basis, net earnings were $13.9 million compared to $36.9
million last year. Diluted EPS was $0.27 compared to $0.75 last year.
On an adjusted basis, net earnings were $51.4 million compared to $36.9
million last year. Adjusted diluted EPS was $1.01 compared to $0.75 last
year.
Balance Sheet Highlights
Cash and cash equivalents at the end of the third quarter of 2018 were
$68.4 million, a decrease of $57.8 million compared to the end of the
third quarter of 2017, resulting from the use of cash on hand in the
second quarter of 2018 to fund a portion of the $175 million partial
redemption of senior notes. At the end of the third quarter of 2018,
there were $58.5 million of borrowings outstanding on our revolving
credit facility.
Inventories decreased $98.0 million to $875.0 million at the end of the
third quarter of 2018, compared to the end of the third quarter of 2017,
primarily due to a 10% reduction in retail segment inventories.
During the third quarter, the Company made its scheduled $2.3 million
payment on its term loan and repaid $46.0 million on its revolving
credit facility. Total debt at the end of the third quarter of 2018 was
approximately $1.2 billion, a decrease of $299.6 million compared to the
end of the third quarter of 2017.
Cash flow from operating activities for the nine months ended November
3, 2018, was $277.8 million compared to $252.5 million last year. The
increase was driven by higher net earnings, after adjusting for certain
items primarily related to extinguishment of debt and goodwill
impairment, and favorable timing fluctuations in accounts payable,
partially offset by an increase in inventories ahead of the fourth
quarter holiday season.
Capital expenditures for the nine months ended November 3, 2018, were
$46.9 million compared to $56.0 million last year.
FISCAL 2018 FOURTH QUARTER AND FULL YEAR OUTLOOK
The Company is providing guidance for the fourth quarter of 2018 and
updating its outlook for full year fiscal 2018 as follows:
Q4 2018
- Earnings per Share: The Company expects to achieve adjusted
diluted loss per share in the range of $0.24 to $0.29. - Comparable Sales: The Company expects comparable sales for:
- Men’s Wearhouse to be down low-single-digits
- Jos. A. Bank to be up low-single-digits
- Moores to be up low-single-digits
- K&G to be flat-to-up slightly.
- Non-Comparable Sales:
-
The Company expects to report corporate apparel net sales of $55
million to $60 million -
The 53rd week last year contributed $45.7 million of
net sales and $0.05 diluted earnings per share
-
The Company expects to report corporate apparel net sales of $55
FY 2018
- Earnings per Share: The Company expects to achieve adjusted diluted
EPS in the range of $2.30 to $2.35, versus its previous range of $2.35
to $2.50.
- Comparable Sales: The Company expects comparable sales for:
-
Men’s Wearhouse to be flat-to-up slightly versus previous guidance
of up low-single-digits - Jos. A. Bank to be up low-single-digits
- Moores to be up low-single-digits
- K&G to be flat-to-up slightly.
-
Men’s Wearhouse to be flat-to-up slightly versus previous guidance
- Effective Tax Rate: The Company now expects an effective tax
rate of between 23% and 24% versus previous guidance of approximately
25%. - Inventory: The Company continues to expect to reduce
inventories by a high-single-digit percentage. - Capital Expenditures: The Company now expects capital
expenditures of approximately $90 million versus previous guidance of
approximately $100 million. - Depreciation and Amortization: The Company continues to expect
depreciation and amortization of approximately $100 million. - Real Estate: The Company continues to expect approximately net
10 store closures in 2018 resulting from its continuous review of its
real estate portfolio for opportunities to optimize its fleet as lease
terms expire.
The Company noted that fiscal 2018 is a 52-week year versus the 53-week
fiscal 2017.
|
STORE INFORMATION |
||||||||||||
| November 3, 2018 | October 28, 2017 |
|
February 3, 2018 |
|||||||||
|
Number |
Sq. Ft. |
Number |
Sq. Ft. |
Number |
Sq. Ft. |
|||||||
| Men’s Wearhouse (a) | 721 | 4,040.8 | 720 | 4,040.9 | 719 | 4,036.0 | ||||||
| Jos. A. Bank (b) | 485 | 2,285.2 | 493 | 2,318.3 | 491 | 2,309.9 | ||||||
| Men’s Wearhouse and Tux | 49 | 73.3 | 51 | 77.0 | 51 | 77.0 | ||||||
| Moores | 126 | 787.4 | 126 | 787.5 | 126 | 787.5 | ||||||
| K&G (c) | 88 | 2,028.4 | 90 | 2,076.3 | 90 | 2,065.0 | ||||||
| Total | 1,469 | 9,215.1 | 1,480 | 9,300.0 | 1,477 | 9,275.4 | ||||||
| (a) | Includes one Joseph Abboud store. | |
| (b) | Excludes 14 franchise stores. | |
| (c) |
84, 86, and 86 stores offering women’s apparel at the end of each period, respectively. |
|
Conference Call and Webcast Information
At 5:00 p.m. Eastern time on Wednesday, December 12, 2018, management
will host a conference call and webcast to discuss fiscal 2018 third
quarter results. To access the conference call, please dial
201-689-8029. To access the live webcast, visit the Investor Relations
section of the Company’s website at http://ir.tailoredbrands.com.
The webcast archive will be available on the website for approximately
90 days.
About Tailored Brands, Inc.
As the leading specialty retailer of men’s tailored clothing and largest
men’s formalwear provider in the U.S. and Canada, Tailored Brands helps
men love the way they look for work and special occasions. We serve our
customers through an expansive omni-channel network that includes over
1,400 stores in the U.S. and Canada as well as our branded e-commerce
websites. Our brands include Men’s Wearhouse, Jos. A. Bank, Joseph
Abboud, Moores Clothing for Men and K&G. We also operate an
international corporate apparel and workwear group consisting of
Dimensions, Alexandra and Yaffy in the United Kingdom and Twin Hill in
the United States.
For additional information on Tailored Brands, please visit the
Company’s websites at www.tailoredbrands.com,
www.menswearhouse.com,
www.josbank.com,
www.josephabboud.com,
www.mooresclothing.com,
www.kgstores.com,
www.dimensions.co.uk,
www.alexandra.co.uk
and www.twinhill.com.
This press release contains forward-looking information, including
the Company’s statements regarding its Q4 2018 outlook for adjusted
earnings per share, comparable sales and non-comparable sales and its
2018 outlook for adjusted earnings per share, comparable sales,
effective tax rate, inventory, capital expenditures, depreciation and
amortization, and net store closures. In addition, words such as
“expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “guidance,” “may,”
“projections,” and “business outlook,” variations of such words and
similar expressions are intended to identify such forward-looking
statements.The forward-looking statements are made pursuant to
the Safe Harbor provisions of the Private Securities Litigation Reform
Act of 1995.Any forward-looking statements that we make herein
are not guarantees of future performance and actual results may differ
materially from those in such forward-looking statements as a result of
various factors.Factors that might cause or contribute to such
differences include, but are not limited to:actions or inactions
by governmental entities; domestic and international macro-economic
conditions; inflation or deflation; the loss of, or changes in, key
personnel; success, or lack thereof, in formulating or executing our
internal strategies and operating plans including new store and new
market expansion plans; cost reduction initiatives and revenue
enhancement strategies; changes in demand for clothing or rental
product; market trends in the retail business; customer confidence and
spending patterns; changes in traffic trends in our stores; customer
acceptance of our merchandise strategies, including custom clothing;
performance issues with key suppliers; disruptions in our supply chain;
severe weather; foreign currency fluctuations; government export and
import policies, including the enactment of duties or tariffs;
advertising or marketing activities of competitors; the impact of
cybersecurity threats or data breaches and legal proceedings; and the
impact of climate change.
Forward-looking statements are intended to convey the Company’s
expectations about the future, and speak only as of the date they are
made.We undertake no obligation to publicly update or revise any
forward-looking statements that may be made from time to time, whether
as a result of new information, future developments or otherwise, except
as required by applicable law.However, any further disclosures
made on related subjects in our subsequent reports on Forms 10-K, 10-Q
and 8-K should be consulted. This discussion is provided as permitted by
the Private Securities Litigation Reform Act of 1995, and all written or
oral forward-looking statements that are made by or attributable to us
are expressly qualified in their entirety by the cautionary statements
contained or referenced in this section.
(Tables Follow)
|
TAILORED BRANDS, INC. |
||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
||||||||||||||
|
(Unaudited) |
||||||||||||||
|
For the Three Months Ended November 3, 2018 and October 28, 2017 |
||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||
| Three Months Ended | ||||||||||||||
| % of | % of | |||||||||||||
| 2018 | Sales | 2017 | Sales | |||||||||||
| Net sales: | ||||||||||||||
| Retail clothing product | $ | 588,447 | 72.4 | % | $ | 575,203 | 70.9 | % | ||||||
| Rental services | 124,697 | 15.3 | % | 126,410 | 15.6 | % | ||||||||
| Alteration and other services | 38,597 | 4.7 | % | 45,909 | 5.7 | % | ||||||||
| Total retail sales | 751,741 | 92.5 | % | 747,522 | 92.2 | % | ||||||||
| Corporate apparel clothing product | 61,006 | 7.5 | % | 63,296 | 7.8 | % | ||||||||
| Total net sales | 812,747 | 100.0 | % | 810,818 | 100.0 | % | ||||||||
| Total cost of sales | 450,012 | 55.4 | % | 452,061 | 55.8 | % | ||||||||
| Gross margin (a): | ||||||||||||||
| Retail clothing product | 334,689 | 56.9 | % | 327,910 | 57.0 | % | ||||||||
| Rental services | 107,378 | 86.1 | % | 105,955 | 83.8 | % | ||||||||
| Alteration and other services | 5,575 | 14.4 | % | 11,771 | 25.6 | % | ||||||||
| Occupancy costs | (101,521 | ) | -13.5 | % | (103,579 | ) | -13.9 | % | ||||||
| Total retail gross margin | 346,121 | 46.0 | % | 342,057 | 45.8 | % | ||||||||
| Corporate apparel clothing product | 16,614 | 27.2 | % | 16,700 | 26.4 | % | ||||||||
| Total gross margin | 362,735 | 44.6 | % | 358,757 | 44.2 | % | ||||||||
| Advertising expense | 37,338 | 4.6 | % | 38,664 | 4.8 | % | ||||||||
| Selling, general and administrative expenses | 246,305 | 30.3 | % | 243,466 | 30.0 | % | ||||||||
| Goodwill impairment charge | 23,991 | 3.0 | % | – | 0.0 | % | ||||||||
| Operating income | 55,101 | 6.8 | % | 76,627 | 9.5 | % | ||||||||
| Interest expense, net | (18,550 | ) | -2.3 | % | (24,253 | ) | -3.0 | % | ||||||
| (Loss) gain on extinguishment of debt, net | (9,420 | ) | -1.2 | % | 2,539 | 0.3 | % | |||||||
| Earnings before income taxes | 27,131 | 3.3 | % | 54,913 | 6.8 | % | ||||||||
| Provision for income taxes | 13,256 | 1.6 | % | 18,021 | 2.2 | % | ||||||||
| Net earnings | $ | 13,875 | 1.7 | % | $ | 36,892 | 4.5 | % | ||||||
| Net earnings per diluted common share | $ | 0.27 | $ | 0.75 | ||||||||||
| Weighted-average diluted common shares outstanding: | 50,722 | 49,430 | ||||||||||||
|
(a) Gross margin percent of sales is calculated as a percentage of related sales. |
||||||||||||||
| TAILORED BRANDS, INC. | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||
|
(Unaudited) |
||||||||||||||
| For the Nine Months Ended November 3, 2018 and October 28, 2017 | ||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||
| Nine Months Ended | ||||||||||||||
| % of | % of | |||||||||||||
| 2018 | Sales | 2017 | Sales | |||||||||||
| Net sales: | ||||||||||||||
| Retail clothing product | $ | 1,807,879 | 73.7 | % | $ | 1,753,782 | 71.7 | % | ||||||
| Rental services | 350,019 | 14.3 | % | 373,208 | 15.3 | % | ||||||||
| Alteration and other services | 116,600 | 4.8 | % | 138,835 | 5.7 | % | ||||||||
| Total retail sales | 2,274,498 | 92.7 | % | 2,265,825 | 92.7 | % | ||||||||
| Corporate apparel clothing product | 179,643 | 7.3 | % | 178,657 | 7.3 | % | ||||||||
| Total net sales | 2,454,141 | 100.0 | % | 2,444,482 | 100.0 | % | ||||||||
| Total cost of sales | 1,377,280 | 56.1 | % | 1,356,589 | 55.5 | % | ||||||||
| Gross margin (a): | ||||||||||||||
| Retail clothing product | 1,018,876 | 56.4 | % | 1,004,980 | 57.3 | % | ||||||||
| Rental services | 298,677 | 85.3 | % | 312,628 | 83.8 | % | ||||||||
| Alteration and other services | 15,651 | 13.4 | % | 35,149 | 25.3 | % | ||||||||
| Occupancy costs | (304,312 | ) | -13.4 | % | (311,994 | ) | -13.8 | % | ||||||
| Total retail gross margin | 1,028,892 | 45.2 | % | 1,040,763 | 45.9 | % | ||||||||
| Corporate apparel clothing product | 47,969 | 26.7 | % | 47,130 | 26.4 | % | ||||||||
| Total gross margin | 1,076,861 | 43.9 | % | 1,087,893 | 44.5 | % | ||||||||
| Advertising expense | 117,232 | 4.8 | % | 120,804 | 4.9 | % | ||||||||
| Selling, general and administrative expenses | 739,654 | 30.1 | % | 750,995 | 30.7 | % | ||||||||
| Goodwill impairment charge | 23,991 | 1.0 | % | – | 0.0 | % | ||||||||
| Operating income | 195,984 | 8.0 | % | 216,094 | 8.8 | % | ||||||||
| Interest expense, net | (61,188 | ) | -2.5 | % | (74,876 | ) | -3.1 | % | ||||||
| (Loss) gain on extinguishment of debt, net | (30,253 | ) | -1.2 | % | 6,535 | 0.3 | % | |||||||
| Earnings before income taxes | 104,543 | 4.3 | % | 147,753 | 6.0 | % | ||||||||
| Provision for income taxes | 27,521 | 1.1 | % | 50,551 | 2.1 | % | ||||||||
| Net earnings | $ | 77,022 | 3.1 | % | $ | 97,202 | 4.0 | % | ||||||
| Net earnings per diluted common share | $ | 1.52 | $ | 1.97 | ||||||||||
| Weighted-average diluted common shares outstanding: | 50,764 | 49,251 | ||||||||||||
|
(a) Gross margin percent of sales is calculated as a percentage of related sales. |
||||||||||||||
| TAILORED BRANDS, INC. | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
|
(Unaudited) |
|||||||||
|
(In thousands) |
|||||||||
| November 3, | October 28, | ||||||||
| 2018 | 2017 | ||||||||
|
ASSETS |
|||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 68,425 | $ | 126,244 | |||||
| Accounts receivable, net | 80,696 | 81,193 | |||||||
| Inventories | 875,003 | 973,001 | |||||||
| Other current assets | 70,433 | 53,566 | |||||||
| Total current assets | 1,094,557 | 1,234,004 | |||||||
| Property and equipment, net | 430,878 | 454,921 | |||||||
| Rental product, net | 102,540 | 125,320 | |||||||
| Goodwill | 79,475 | 119,125 | |||||||
| Intangible assets, net | 164,833 | 169,072 | |||||||
| Other assets | 17,257 | 8,859 | |||||||
| Total assets | $ | 1,889,540 | $ | 2,111,301 | |||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 235,958 | $ | 186,862 | |||||
| Accrued expenses and other current liabilities | 302,322 | 281,533 | |||||||
| Income taxes payable | 16,277 | 21,224 | |||||||
| Current portion of long-term debt | 9,000 | 8,750 | |||||||
| Total current liabilities | 563,557 | 498,369 | |||||||
| Long-term debt, net | 1,167,906 | 1,467,735 | |||||||
| Deferred taxes and other liabilities | 148,590 | 160,197 | |||||||
| Total liabilities | 1,880,053 | 2,126,301 | |||||||
| Shareholders’ equity (deficit): | |||||||||
| Preferred stock | – | – | |||||||
| Common stock | 501 | 492 | |||||||
| Capital in excess of par | 501,835 | 485,299 | |||||||
| Accumulated deficit | (464,993 | ) | (469,463 | ) | |||||
| Accumulated other comprehensive loss | (27,856 | ) | (31,328 | ) | |||||
| Total shareholders’ equity (deficit) | 9,487 | (15,000 | ) | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | 1,889,540 | $ | 2,111,301 | |||||
| TAILORED BRANDS, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
|
(Unaudited) |
|||||||||
| For the Nine Months Ended November 3, 2018 and October 28, 2017 | |||||||||
| Nine Months Ended | |||||||||
| 2018 | 2017 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net earnings | $ | 77,022 | $ | 97,202 | |||||
| Adjustments to net earnings: | |||||||||
| Depreciation and amortization | 78,088 | 78,929 | |||||||
| Rental product amortization | 30,720 | 32,779 | |||||||
| Goodwill impairment charge | 23,991 | – | |||||||
| Asset impairment charges | 504 | 2,867 | |||||||
| Loss (gain) on extinguishment of debt, net | 30,253 | (6,535 | ) | ||||||
|
Amortization of deferred financing costs and discount on long-term debt |
2,936 | 5,391 | |||||||
| Loss on disposition of assets | 8,599 | 1,407 | |||||||
| Other | 8,994 | 15,029 | |||||||
| Changes in operating assets and liabilities | 16,710 | 25,469 | |||||||
| Net cash provided by operating activities | 277,817 | 252,538 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Capital expenditures | (46,927 | ) | (55,956 | ) | |||||
| Proceeds from divestiture of business | 17,755 | – | |||||||
| Acquisition of business, net of cash | – | (457 | ) | ||||||
| Proceeds from sales of property and equipment | – | 2,157 | |||||||
| Net cash used in investing activities | (29,172 | ) | (54,256 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Payments on old term loan | (993,420 | ) | (9,879 | ) | |||||
| Proceeds from new term loan | 895,500 | – | |||||||
| Payments on new term loan | (6,750 | ) | – | ||||||
| Proceeds from asset-based revolving credit facility | 465,500 | 235,900 | |||||||
| Payments on asset-based revolving credit facility | (407,000 | ) | (235,900 | ) | |||||
| Repurchase and retirement of senior notes | (199,365 | ) | (106,731 | ) | |||||
| Deferred financing costs | (6,713 | ) | (2,464 | ) | |||||
| Cash dividends paid | (27,833 | ) | (26,895 | ) | |||||
| Proceeds from issuance of common stock | 6,149 | 1,334 | |||||||
| Tax payments related to vested deferred stock units | (7,510 | ) | (1,682 | ) | |||||
| Net cash used in financing activities | (281,442 | ) | (146,317 | ) | |||||
| Effect of exchange rate changes | (2,385 | ) | 3,390 | ||||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (35,182 | ) | 55,355 | ||||||
| Balance at beginning of period | 103,607 | 70,889 | |||||||
| Balance at end of period | $ | 68,425 | $ | 126,244 | |||||
|
TAILORED BRANDS, INC. |
|
UNAUDITED NON-GAAP FINANCIAL MEASURES |
|
(In thousands, except per share amounts) |
Use of Non-GAAP Financial Measures
In addition to providing financial results in accordance with GAAP, we
have provided adjusted information, if applicable, for our fiscal third
quarter and nine months ended November 3, 2018 and October 28, 2017.
This non-GAAP financial information is provided to enhance the user’s
overall understanding of the Company’s financial performance by removing
the impacts of large, unusual or unique transactions that we believe are
not indicative of our core business results. For the third quarter of
fiscal 2018, adjusted items consist of a goodwill impairment charge
related to our corporate apparel business, a loss on extinguishment of
debt related to the repricing of the Company’s term loan, costs related
to the retirement of our former CEO and costs related to the closure of
a rental product distribution center. There were no adjusted items in
last year’s third quarter.
Management uses these adjusted results to assess the Company’s
performance, to make decisions about how to allocate resources and to
develop expectations for future performance. In addition, adjusted EPS
is used as a performance measure in the Company’s executive compensation
program to determine the number of performance units that are ultimately
earned for certain equity awards.
The non-GAAP financial information should be considered in addition to,
not as a substitute for or as being superior to, financial information
prepared in accordance with GAAP. Management strongly encourages
investors and shareholders to review the Company’s financial statements
and publicly filed reports in their entirety and not to rely on any
single financial measure.
A reconciliation of full year fiscal 2018 adjusted EPS, which is a
forward-looking non-GAAP financial measure, to the most directly
comparable GAAP financial measure, is not provided because the Company
is unable to provide such reconciliation without unreasonable effort.
The inability to provide this reconciliation is due to the uncertainty
and inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be recognized.
These GAAP measures may include the impact of items such as costs
related to optimizing our capital structure and the tax effect of such
items. Historically, the Company has excluded these types of items from
non-GAAP financial measures. The Company currently expects to continue
to exclude these items in future disclosures of non-GAAP financial
measures and may also exclude other items that may arise. The decisions
and events that typically lead to the recognition of non-GAAP
adjustments are inherently unpredictable as to if or when they may
occur. For the same reasons, the Company is unable to address the
probable significance of the unavailable information, which could be
material to future results.
Reconciliations of non-GAAP information to our actual results follow and
amounts may not sum due to rounded numbers. In addition, only the line
items affected by adjustments are shown in the tables.
|
GAAP to Non-GAAP Adjusted Consolidated Statements of Earnings |
|||||||||||||||||||||||
| GAAP to Non-GAAP Adjusted – Three Months Ended November 3, 2018 | |||||||||||||||||||||||
| Consolidated Results | GAAP Results |
Repricing of |
Closure of |
CEO Retirement |
Interim Corporate |
Total |
Non-GAAP |
||||||||||||||||
| Rental services gross margin |
$ |
107,378 |
$ – |
$ 19 |
$ – |
$ | – | $ | 19 | $ | 107,397 | ||||||||||||
| Total retail gross margin | 346,121 | 19 | – | – | 19 | 346,140 | |||||||||||||||||
| Total gross margin | 362,735 | 19 | – | – | 19 | 362,754 | |||||||||||||||||
| Selling, general and administrative expenses | 246,305 | (560 | ) | (6,417 | ) | – | (6,977 | ) | 239,328 | ||||||||||||||
| Goodwill impairment charge | 23,991 | (23,991 | ) | (23,991 | ) | – | |||||||||||||||||
| Operating income | 55,101 | 579 | 6,417 | 23,991 | 30,987 | 86,088 | |||||||||||||||||
| Loss on extinguishment of debt | (9,420 | ) | 9,420 | – | – | 9,420 | – | ||||||||||||||||
| Provision for income taxes(5) | 13,256 | 2,861 | 16,117 | ||||||||||||||||||||
| Net earnings | 13,875 | 37,546 | 51,421 | ||||||||||||||||||||
| Net earnings per diluted common share | $ | 0.27 | $ | 0.74 | $ | 1.01 | |||||||||||||||||
|
(1) Consists of the elimination of unamortized deferred financing costs and original issue discount related to the repricing of the Term Loan totaling $9.4 million. |
|||||||||||||||||||||||
|
(2) Consists of $0.3 million of closure related costs, $0.2 million of severance and $0.1 million of accelerated depreciation, all related to the retail segment. |
|||||||||||||||||||||||
|
(3) Consists of $5.4 million of severance and consulting costs, $0.7 million related to accelerated vesting of certain share-based awards (net of the impact of forfeited awards) and $0.3 million of other costs related to the shared services segment. |
|||||||||||||||||||||||
|
(4) Consists of a $24.0 million goodwill impairment charge related to our corporate apparel segment. |
|||||||||||||||||||||||
|
(5) The tax effect of the excluded items is computed as the difference between tax expense on a GAAP basis and tax expense on an adjusted non-GAAP basis. |
|||||||||||||||||||||||
| GAAP to Non-GAAP Adjusted – Nine Months Ended November 3, 2018 | |||||||||||||||||||||||||||||||||||
| Consolidated Results |
GAAP |
Divestiture of |
Refinancing |
Partial |
Closure of |
CEO |
Interim Corporate |
Total |
Non-GAAP |
||||||||||||||||||||||||||
| Rental services gross margin | $ | 298,677 | $ | – | $ | – | $ | – | $ | 4,029 | $ | – | $ | – | $ | 4,029 | $ | 302,706 | |||||||||||||||||
| Total retail gross margin | 1,028,892 | – | 4,029 | – | – | 4,029 | 1,032,921 | ||||||||||||||||||||||||||||
| Total gross margin | 1,076,861 | – | 4,029 | – | – | 4,029 | 1,080,890 | ||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 739,654 | (3,766 | ) | (925 | ) | (6,417 | ) | – | (11,108 | ) | 728,546 | ||||||||||||||||||||||||
| Goodwill impairment charge | 23,991 | (23,991 | ) | (23,991 | ) | – | |||||||||||||||||||||||||||||
| Operating income | 195,984 | 3,766 | 4,954 | 6,417 | 23,991 | 39,128 | 235,112 | ||||||||||||||||||||||||||||
| Loss on extinguishment of debt | (30,253 | ) | 21,278 | 8,122 | 29,400 | (853 | ) | ||||||||||||||||||||||||||||
| Provision for income taxes(7) | 27,521 | 14,177 | 41,698 | ||||||||||||||||||||||||||||||||
| Net earnings | 77,022 | 54,351 | 131,373 | ||||||||||||||||||||||||||||||||
| Net earnings per diluted common share | $ | 1.52 | $ | 1.07 | $ | 2.59 | |||||||||||||||||||||||||||||
|
(1) Consists of a $3.8 million loss upon divestiture of MW Cleaners business related to the retail segment. |
|||||||||||||||||||||||||||||||||||
|
(2) Consists of the elimination of unamortized deferred financing costs and original issue discount related to the refinancing and repricing of the Term Loan totaling $21.3 million. |
|||||||||||||||||||||||||||||||||||
|
(3) Consists of the $6.1 million premium and elimination of unamortized deferred financing costs totaling $2.0 million related to the partial redemption of senior notes. |
|||||||||||||||||||||||||||||||||||
|
(4) Consists of $4.0 million of rental product writeoffs, $0.4 million of severance, $0.3 million of closure related costs and $0.3 million of accelerated depreciation, all related to the retail segment. |
|||||||||||||||||||||||||||||||||||
|
(5) Consists of $5.4 million of severance and consulting costs, $0.7 million related to accelerated vesting of certain share-based awards (net of the impact of forfeited awards) and $0.3 million of other costs, related to the shared services segment. |
|||||||||||||||||||||||||||||||||||
|
(6) Consists of a $24.0 million goodwill impairment charge related to our corporate apparel segment. |
|||||||||||||||||||||||||||||||||||
|
(7) The tax effect of the excluded items is computed as the difference between tax expense on a GAAP basis and tax expense on an adjusted non-GAAP basis. |
|||||||||||||||||||||||||||||||||||
| GAAP to Non-GAAP Adjusted – Nine Months Ended October 28, 2017 | ||||||||||||||
| Consolidated Results |
GAAP Results |
Macy’s |
Total |
Non-GAAP Adjusted |
||||||||||
| Rental services gross margin | $ | 312,628 | $ | 1,416 | $ | 1,416 | $ | 314,044 | ||||||
| Total retail gross margin | 1,040,763 | 1,416 | 1,416 | 1,042,179 | ||||||||||
| Total gross margin | 1,087,893 | 1,416 | 1,416 | 1,089,309 | ||||||||||
| Selling, general and administrative expenses | 750,995 | (15,736 | ) | (15,736 | ) | 735,259 | ||||||||
| Operating income | 216,094 | 17,152 | 17,152 | 233,246 | ||||||||||
| Provision for income taxes(2) | 50,551 | 5,671 | 56,222 | |||||||||||
| Net earnings | 97,202 | 11,481 | 108,683 | |||||||||||
| Net earnings per diluted common share | $ | 1.97 | $ | 0.23 | $ | 2.21 | ||||||||
|
(1) Consists of $12.3 million of termination costs, $1.4 million of rental product writeoffs, $1.2 million of asset impairment charges and $2.3 million of other costs, all related to the retail segment. |
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|
(2) The tax effect of the excluded items is computed as the difference between tax expense on a GAAP basis and tax expense on an adjusted non-GAAP basis. |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20181212005762/en/
Contact:
Investor Relations
(281)
776-7575
[email protected]
Julie MacMedan, VP, Investor Relations
Tailored Brands, Inc.
Source: Tailored Brands, Inc.
Released December 12, 2018