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Dover Saddlery Announces Fourth Quarter and Full Year 2012 Financial Results


Dover Saddlery Announces Fourth Quarter and Full Year 2012 Financial Results

LITTLETON, MA -- (Marketwire) -- 03/26/13 -- Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multichannel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2012.

Fourth quarter results

Total revenues for the fourth quarter of 2012 increased 11.0% to $26.4 million over the same period in the prior year: retail store revenues increased 16.7% to $10.5 million, and direct revenues increased 7.6% to $15.9 million. Same-store sales increased 2.4% in the quarter.

Net income for the quarter increased 39.6% to $895,000, or $0.16 per diluted share, from $641,000 or $0.12 achieved in the corresponding quarter of the prior year. Stephen L. Day, President and Chief Executive Officer, stated, "Our excellent holiday performance is a reflection of the strength of the Dover Saddlery brand as the source for the best selection and service during the all-important gift purchasing season."

Full Year Results

Total revenues for the fiscal year 2012 increased 6.5% to $86.0 million from $80.8 million achieved during 2011. As a result of the opening of new stores and same-store sales increasing 6.0%, retail store revenues increased 19.9% to $36.5 million. The company opened three Dover Saddlery retail stores during 2012, in Warrington, PA, Medina MN and Raleigh, NC, bringing the total number of retail stores to eighteen. Direct revenues for the fiscal year 2012, decreased 1.7% to $49.5 million, mainly due to consumer uncertainty that led to soft sales in the second and third quarters.

Net income for fiscal 2012 was $1,589,000, or $0.29 per diluted share, compared to $1,724,000 or $0.31 per diluted share achieved in the fiscal year 2011. Adjusted EBITDA for the fiscal year 2012 was $4.6 million, compared to $4.8 million achieved in 2011. 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.

Today's 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 2012 results. Investors are invited to listen to the earning s conference call over the Internet through the company's 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 the Company's business outlook for fiscal 2013, 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 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 Saddler's Annual Report on Form 10-K for the fiscal year ended December 31, 2011. 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)               
                                (Unaudited)                                 
                                                                            
                               Three Months Ended      Twelve Months Ended  
                              Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,  
                                2012        2011        2012        2011    
                                                                            
Revenues, net- direct        $   15,891  $   14,773  $   49,475  $   50,334 
Revenues, net - retail                                                      
 stores                          10,529       9,020      36,573      30,497 
                             ----------  ----------  ----------  ---------- 
Revenues, net - total            26,420      23,793      86,048      80,831 
Cost of revenues                 16,127      14,295      53,350      49,836 
                             ----------  ----------  ----------  ---------- 
Gross profit                     10,293       9,498      32,698      30,995 
Selling, general and                                                        
 administrative expenses          8,589       8,212      29,255      27,219 
                             ----------  ----------  ----------  ---------- 
Income from operations            1,704       1,286       3,443       3,776 
Interest expense, financing                                                 
 and other related costs,                                                   
 net                                148         127         538         728 
Other investment loss, net           55          22          39          18 
                             ----------  ----------  ----------  ---------- 
Income before income tax                                                    
 provision                        1,501       1,137       2,866       3,030 
Provision for income taxes          606         496       1,277       1,306 
                             ----------  ----------  ----------  ---------- 
Net income                   $      895  $      641  $    1,589  $    1,724 
                             ==========  ==========  ==========  ========== 
                                                                            
Net income per share                                                        
Basic                        $     0.17  $     0.12  $     0.30  $     0.33 
                             ==========  ==========  ==========  ========== 
Diluted                      $     0.16  $     0.12  $     0.29  $     0.31 
                             ==========  ==========  ==========  ========== 
Number of shares used in per                                                
 share calculation                                                          
Basic                         5,336,000   5,307,000   5,334,000   5,293,000 
Diluted                       5,476,000   5,461,000   5,509,000   5,482,000 
                                                                            
Other Operating Data:                                                       
                                                                            
Number of retail stores(1)           18    
      15          18          15 
Capital expenditures                523         700       2,184       1,384 
Gross profit margin                39.0%       39.9%       38.0%       38.3%
                                                                            
(1) Includes seventeen Dover-branded stores and one Smith Brothers store;   
    one additional Dover-branded store opened in Raleigh, NC in Q4 2012.    
                                                                            
                                                                            
                                                                            
                   DOVER SADDLERY, INC. AND SUBSIDIARIES                    
              CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME               
                         (In thousands, unaudited)                          
                                                                            
                               Three Months Ended      Twelve Months Ended  
                               Dec. 31,   Dec. 31,     Dec. 31,   Dec. 31,  
                                 2012       2011         2012       2011    
                                                                            
Net income                   $       895 $      641  $     1,589 $    1,724 
                             ----------- ----------  ----------- ---------- 
Other comprehensive loss:                                                   
  Change in fair value of                                                   
   interest rate swap                                                       
   contract, net of tax               13         (2)           1       (190)
                             ----------- ----------  ----------- ---------- 
Total comprehensive income   $       908 $      639  $     1,590 $    1,534 
                             =========== ==========  =========== ========== 
                                                                            
                                                                            
                                                                            
                   DOVER SADDLERY, INC. AND SUBSIDIARIES                    
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                         (In thousands, unaudited)                          
                                                      Dec. 31,    Dec. 31,  
                                                        2012        2011    
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                          $      299  $      313 
  Accounts receivable                                     1,778         811 
  Inventory                                              19,915      19,383 
  Prepaid catalog costs                                     784       1,273 
  Prepaid expenses and other current assets               1,116         896 
  Deferred income taxes                                     595         261 
                                                     ----------  ---------- 
                                                                            
Total current assets                                     24,487      22,937 
                                                                            
Net property and equipment                                5,034       3,667 
                                                                            
Other assets:                                                               
  Deferred income taxes                                   1,196       1,018 
  Intangibles and other assets, net                         784         571 
                                                     ----------  ---------- 
Total other assets                                        1,980       1,589 
                                                     ----------  ---------- 
Total assets                                         $   31,501  $   28,193 
                                                     ==========  ========== 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Current portion of capital lease obligations and                          
   outstanding checks                                $      337  $    1,100 
  Current Portion - Term Note                               589           - 
  Accounts payable                                        1,837       2,201 
  Accrued expenses and other current liabilities          7,146       5,741 
  Income taxes payable                                      860         308 
                                                     ----------  ---------- 
Total current liabilities                                10,769       9,350 
                                                                            
Long-term liabilities:                                                      
  Revolving line of credit                                1,515         987 
  Term note                                               4,911       5,500 
  Capital lease obligation, net of current portion          121          16 
  Interest rate swap contract                               320         322 
                                                     ----------  ---------- 
Total long-term liabilities                               6,867       6,825 
Stockholders' equity:                                                       
  Common stock, par value $0.0001 per share;                                
   15,000,000 shares authorized; 6,133,343 and                              
   6,128,603 issued and 5,337,478 and 5,332,738                             
   outstanding as of December 31, 2012 and 2011,                            
   respectively                                               1           1 
  Additional paid in capital                             45,973      45,716 
  Treasury stock, 795,865 shares at cost                 (6,082)     (6,082)
  Other comprehensive loss                                 (189)       (190)
  Accumulated deficit                                   (25,838)    (27,427)
                                                     ----------  ---------- 
  Total stockholders' equity                             13,865      12,018 
                                                     ----------  ---------- 
  Total liabilities and stockholders' equity         $   31,501  $   28,193 
                                                     ==========  ========== 

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 Company's management uses these non-GAAP measures in its analysis of t he Company's 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 Company's operating results and trends that may be affecting the Company's 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  
                               Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31, 
                                 2012        2011        2012        2011   
                                                                            
                                                                            
                                                                            
Net income                   $      895* $       641 $   1,589** $     1,724
Depreciation                         249         193         873         747
Amortization of intangible                                                  
 assets                               20           -          57           5
Stock-based compensation              65          56         251         242
Interest expense, financing                                                 
 and other related costs,                                                   
 net                                 148         127         538         728
Other investment loss, net            55          22          39          18
Provision for income taxes           606         496       1,277       1,306
                             ----------- ----------- ----------- -----------
Adjusted EBITDA              $    2,038* $     1,535 $   4,624** $     4,770
                             =========== =========== =========== ===========
                                                                            
(*)  Includes gift card breakage income of $43,088 for the three months     
     ended December 31, 2012. There was no breakage recorded for the same   
     period in 2011.                                                        
(**) Includes the cumulative impact of the change in gift card breakage     
     income of $684,007 recorded in the first quarter of 2012 and current   
     year breakage income for the twelve months ended December 31, 2012 of  
     $172,350. There was no breakage recorded for the same period in 2011.  

Janet Nittmann jnittmann@doversaddlery.com Tel 978 952 8062 x218

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