Dover Saddlery Reports Second Quarter 2013 Financial Results

Dover Saddlery Reports Second Quarter 2013 Financial Results 
LITTLETON, MA -- (Marketwired) -- 08/08/13 --  Dover Saddlery, Inc.
(NASDAQ: DOVR), the leading multi-channel retailer of equestrian
products, today reported financial results for the second quarter
ended June 30, 2013. 
Second Quarter Results 
Total revenues for the second quarter of 2013 increased 8.6%, or $1.8
million, to $22.9 million, compared with $21.1 million achieved in
the same period in the prior year. Retail channel revenues increased
23.2%, or $2.2 million, to $11.7 million and same-store sales
increased 4.2%.  
Net income for the quarter was $355,000, or $0.06 per diluted share,
compared to $400,000, or $0.07 per diluted share, for the
corresponding quarter of 2012. 
"During the second quarter,we experienced strong sales in our retail
stores," said Stephen L. Day, president and CEO of Dover Saddlery.
"In mid-April, we had a very successful grand opening of our new
store in Huntington, New York. Both long-time direct and new retail
customers flocked to the new location and were delighted to have a
Dover Saddlery tack store in their midst. This store will serve the
very active equestrian community on Long Island and sales throughout
the second quarter have been excellent. Direct sales were affected by
cold weather at the start of the second quarter and were off by 1.5%
for the three months ending June 30. However for the four weeks
ending July 28, direct sales were 3% ahead of last year and
substantially ahead of plan." 
Year-to-Date Results  
For the six months ending June 30, 2013, total revenues increased
4.3%, or $1.7 million, to $41.0 million, compared to $39.3 million
for the same period in 2012. Revenues from the retail channel
increased 15.8%, or $2.6 million, to $19.0 million and same-store
sales increased 0.5%.  
Net income (loss) for the six months ending June 30, 2013 decreased
to $(183,000), or $(0.03) per diluted share, compared to $543,000, or
$0.10 per share, for the corresponding period of 2012.  
Business Outlook 2013  
Dover Saddlery is planning to open three more stores in the fall of
2013, which will bring the total number of retail stores to twenty
two. Until there is greater long-term visibility on sustainable
economic conditions and consumer behavior, 
the Company is not
providing guidance on other business prospects in 2013.  
Today's Teleconference and Webcast  
Dover Saddlery executives will host a conference call at 4:15 pm ET
today, to discuss the results. Interested parties may access the call
by dialing +1-877-712-7037 or may listen to the call live via
webcast. To access the webcast please go to
http://investor.shareholder.com/DOVR/events.cfm and click on the
webcast icon.  
About Dover Saddlery, Inc. 
 Dover Saddlery, Inc. (NASDAQ: DOVR) is
the leading multi-channel retailer of equestrian products in the
United States. Founded in 1975 in Wellesley, Massachusetts, by United
States Equestrian team members, Dover Saddlery has grown to become
The Source(R) for equestrian products. Dover offers a broad and
distinctive selection of competitively priced, brand-name products
for horse and rider through catalogs, the Internet and company-owned
retail stores. Dover Saddlery, Inc. serves the English rider and
through Smith Brothers, the Western rider. The Source(R), Dover
Saddlery(R) and Smith Brothers(R) are registered marks of Dover
Saddlery.  
For more information, please call 1-978-952-8062 or visit
www.DoverSaddlery.com. 
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,
overall revenue growth, sales in the direct channel, retail-store and
same-store sales increases, 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,
2012. 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 OPERATIONS              
               (In thousands, except share and per share data)              
                                 (Unaudited)                                
                                                                            
                               Three Months Ended       Six Months Ended    
                              June 30,    June 30,    June 30,    June 30,  
                                2013        2012        2013        2012    
                                                                            
Revenues, net - direct       $   11,211  $   11,605  $   21,995  $   22,905 
Revenues, net - retail stores    11,732       9,525      18,974      16,381 
                             ----------  ----------  ----------  ---------- 
Revenues, net - total        $   22,943  $   21,130  $   40,969  $   39,286 
Cost of revenues                 14,306      13,153      25,932      24,381 
                             ----------  ----------  ----------  ---------- 
Gross profit                      8,637       7,977      15,037      14,905 
Selling, general and                                                        
 administrative expenses          7,810       7,117      15,075      13,654 
                             ------
----  ----------  ----------  ---------- 
Income (loss) from operations       827         860         (38)      1,251 
Interest expense, financing                                                 
 and other related costs, net       147         153         271         262 
Other investment income             (26)        (24)        (37)        (31)
                             ----------  ----------  ----------  ---------- 
Income (loss) before income                                                 
 tax provision (benefit)            706         731        (272)      1,020 
Provision (benefit) for                                                     
 income taxes                       351         331         (89)        477 
                             ----------  ----------  ----------  ---------- 
Net income (loss)            $      355  $      400  $     (183) $      543 
                             ==========  ==========  ==========  ========== 
                                                                            
Net income (loss) per share                                                 
Basic                        $     0.07  $     0.07  $    (0.03) $     0.10 
                             ==========  ==========  ==========  ========== 
Diluted                      $     0.06  $     0.07  $    (0.03) $     0.10 
                             ==========  ==========  ==========  ========== 
Number of shares used in per                                                
 share calculation                                                          
Basic                         5,338,000   5,333,000   5,338,000   5,333,000 
Diluted                       5,515,000   5,567,000   5,338,000   5,580,000 
                                                                            
Other Operating Data:                                                       
                                                                            
Number of retail stores(1)           19          16          19          16 
Capital expenditures                369         679         745       1,121 
Gross profit margin                37.6%       37.8%       36.7%       37.9%
                                                                            
(1) Includes eighteen Dover-branded stores and one Smith Brothers store.    
                                                                            
                                                                            
                                                                            
                    DOVER SADDLERY, INC. AND SUBSIDIARIES                   
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)           
                          (In thousands, unaudited)                         
                                                                            
                                   Three Months Ended    Six Months Ended   
                                   June 30,  June 30,   June 30,   June 30, 
                                     2013      2012       2013       2012   
                                                                            
Net income (loss)                 $     355 $     400  $    (183) $     543 
                                  --------- ---------  ---------  --------- 
Other comprehensive loss:                                                   
  Change in fair value of interest                                          
   rate swap contract, net of tax        33       (20)        50        (10)
                                  --------- ---------  ---------  --------- 
Total comprehensive income (loss) $     388 $     380  $    (133) $     533 
                                  ========= =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                    DOVER SADDLERY, INC. AND SUBSIDIARIES                   
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                          (In thousands, unaudited)                         
                                                                            
                                     
                   June 30,   Dec. 31, 
                                                          2013       2012   
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                            $     254  $     299 
  Accounts receivable                                        989      1,778 
  Inventory                                               22,493     19,915 
  Prepaid catalog costs                                      745        784 
  Prepaid expenses and other current assets                1,565      1,116 
  Deferred income taxes                                      317        300 
                                                       ---------  --------- 
                                                                            
Total current assets                                      26,363     24,192 
                                                                            
Net property and equipment                                 5,232      5,034 
                                                                            
Other assets:                                                               
  Deferred income taxes                                    1,085      1,201 
  Intangibles and other assets, net                          832        784 
                                                       ---------  --------- 
Total other assets                                         1,917      1,985 
                                                       ---------  --------- 
Total assets                                           $  33,512  $  31,211 
                                                       =========  ========= 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Current portion of capital lease obligations and                          
   outstanding checks                                  $     568  $     337 
  Current portion - Term notes                               786        589 
  Current portion - Capex term loan                          468         -- 
  Accounts payable                                         1,617      1,837 
  Accrued expenses and other current liabilities           4,689      6,348 
  Income taxes payable                                        --        936 
                                                       ---------  --------- 
Total current liabilities                                  8,128     10,047 
                                                                            
Long-term liabilities:                                                      
  Revolving line of credit                                 4,452      1,515 
  Capex term loan, net of current portion                  1,794         -- 
  Term notes, net of current portion                       4,518      4,911 
  Capital lease obligation, net of current portion            92        121 
  Interest rate swap contract                                223        320 
                                                       ---------  --------- 
Total long-term liabilities                               11,079      6,867 
Stockholders' equity:                                                       
  Common stock, par value $0.0001 per share;                                
   15,000,000 shares authorized; 6,134,043 and                              
   6,133,343 issued and 5,338,178 and 5,337,478                             
   outstanding as of June 30, 2013 and December 31,                         
   2012, respectively                                          1          1 
Additional paid in capital                                46,114     45,973 
Treasury stock, 795,865 shares at cost                    (6,082)    (6,082)
Other comprehensive loss                                    (139)      (189)
Accumulated deficit                                      (25,589)   (25,406)
                                                       ---------  --------- 
Total stockholders' equity                                14,305     14,297 
                                                       ---------  --------- 
Total liabilities and stockholders' equity             $  33,512  $  31,211 
                                                       =========  ========= 

 
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
the 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     Six Months Ended   
                                  June 30,   June 30,   June 30,   June 30, 
                                    2013       2012       2013       2012   
                                                                            
                                                                            
Net income (loss)                $    355*  $    400*  $ (183)**  $   543** 
Depreciation                           284        217        547        424 
Amortization of intangible                                                  
 assets                                 17         --         34         -- 
Stock-based compensation                70         62        139        124 
Interest expense, financing and                                             
 other related costs, net              147        153        271        262 
Other investment income                (26)       (24)       (37)       (31)
Provision for income taxes             351        331        (89)       477 
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $  1,198*  $  1,139*  $   682**  $ 1,799** 
                                 =========  =========  =========  ========= 

 
(*) For the three months ended June 30, 2013 gift card breakage income
was $30,146. For the three months ended June 30, 2012 gift card
breakage income was $41,632. 
(**) For the six months ended June 30, 2013 gift card breakage income
was $60,292. For the six months ended June 30, 2012 includes the
cumulative impact of the change in accounting for gift card breakage
income of $441,362 plus gift card breakage income for the period of
$83,265. 
Janet Nittmann
jnittmann@doversaddlery.com
Tel 978-952-8062 x218 
 
 
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