Dover Saddlery Reports Third Quarter 2013 Financial Results

Dover Saddlery Reports Third Quarter 2013 Financial Results 
LITTLETON, MA -- (Marketwired) -- 11/12/13 --  Dover Saddlery, Inc.
(NASDAQ: DOVR), the leading multi-channel retailer of equestrian
products, today reported financial results for the third quarter
ended September 30, 2013. 
Total revenues for the third quarter of 2013 increased 10.5%, or $2.1
million, to $22.6 million from $20.5 million achieved in the third
quarter of 2012. Retail store channel revenues increased 15.6%, or
$1.5 million, to $11.4 million and same-store sales increased 4.2%
over the third quarter of 2012. Net income for the third quarter
increased 154.6%, or $269,000, to $443,000 from $174,000. Earnings
per share increased $0.05 to $0.08 from $0.03 per fully diluted share
in the third quarter of 2012. 
Year-to-Date Results  
For the first nine months of 2013, total revenues increased 6.4% to
$63.6 million, from $59.7 million achieved in the corresponding
period in 2012. Retail store channel revenues increased 15.7% to
$30.4 million and same-store sales increased 1.9% year to date. Net
income decreased to $260,000, or $0.05 per fully diluted share, from
$716,000, or $0.13 per fully diluted share.  
"Our retail stores performed extremely well in the third quarter and
same-store sales recovered nicely from the first quarter, and
continue to increase. For the ten-week period ending October 27, same
store sales are up 10% over the same period last year," said Stephen
L. Day, President and CEO of Dover Saddlery. "Our recent new store
opening in Winter Park, Florida exceeded expectations with well over
five hundred guests attending the VIP private reception and shopping
event." 
Business Outlook 2013  
Dover Saddlery has opened two stores since the close of the third
quarter, and is planning to open one store in December 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. 
Today's Teleconference and Webcast  
Dover Saddlery executives will host a conference call at 4:30 pm ET
today, to discuss the results. Interested parties may access the call
by dialing +1-877-712-7037 or may listen to the c
all 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 the balance of fiscal 2013 and beyond, overall
revenue growth, customer sentiment and behavior, sales in the direct
channel, retail-store and same-store sales growth, 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 INCOME                
               (In thousands, except share and per share data)              
                                 (Unaudited)                                
                                                                            
                            Three Months Ended         Nine Months Ended    
                          Sept. 30,     Sept. 30     Sept. 30     Sept 30   
                             2013         2012         2013         2012    
                                                                            
Revenues, net- direct    $    11,180  $    10,567  $    33,175  $    33,472 
Revenues, net - retail                                                      
 stores                       11,435        9,895       30,409       26,276 
                         -----------  -----------  -----------  ----------- 
Revenues, net - total    $    22,615  $    20,462  $    63,584  $    59,748 
Cost of revenues              14,044       12,842       39,976       37,224 
                         -----------  -----------  -----------  ----------- 
Gross profit                   8,571        7,620       23,608       22,524 
Selling, general and                                                        
 administrative expenses       7,640        7,011       22,715       20,665 
                         -----------  -----------  -----------  ----------- 
Income from operations           931          609          893        1,859 
Interest expense,                                                           
 financing and other                                                        
 related costs, net              154          128          426          390 
Other investment                                                            
 (income) loss, net                4           15          (33)         (16)
                         -----------  -----------  -----------  ----------- 
Income before income tax                                                    
 provision                       773          466          500        1,485 
Provision for income                                                        
 taxes                           330          292          240          769 
                         -----------  -----------  -----------  ----------- 
Net income               $       443  $       174  $       260  $       716 
                         ===========  ===========  ===========  =========== 
                                                                            
Net income per share                                             
           
Basic                    $      0.08  $      0.03  $      0.05  $      0.13 
                         ===========  ===========  ===========  =========== 
Diluted                  $      0.08  $      0.03  $      0.05  $      0.13 
                         ===========  ===========  ===========  =========== 
Number of shares used in                                                    
 per share calculation                                                      
Basic                      5,345,000    5,333,000    5,340,000    5,333,000 
Diluted                    5,534,000    5,524,000    5,524,000    5,560,000 
                                                                            
Other Operating Data:                                                       
                                                                            
Number of retail                                                            
 stores(1)                        19           17           19           17 
Capital expenditures             567          716        1,312        1,837 
Gross profit margin             37.9%        37.2%        37.1%        37.7%

 
(1) Includes eighteen Dover-branded stores and one Smith Brothers
store.  


 
                                                                            
                    DOVER SADDLERY, INC. AND SUBSIDIARIES                   
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME              
                          (In thousands, unaudited)                         
                                                                            
                              Three Months Ended       Nine Months Ended    
                            Sept. 30,   Sept. 30,    Sept. 30,    Sept. 30  
                               2013        2012         2013        2012    
                                                                            
Net income                 $       443 $       174  $       260 $       716 
                           ----------- -----------  ----------- ----------- 
Other comprehensive loss:                                                   
  Change in fair value of                                                   
   interest rate swap                                                       
   contract, net of tax              4          (2)          53         (12)
                           ----------- -----------  ----------- ----------- 
Total comprehensive income $       447 $       172  $       313 $       704 
                           =========== ===========  =========== =========== 
                                                                            
                                                                            
                    DOVER SADDLERY, INC. AND SUBSIDIARIES                   
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
               (In thousands, except share and per share data)              
                                 (Unaudited)                                
                                                    Sept. 30,     Dec. 31,  
                                                       2013         2012    
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                        $       230  $       299 
  Accounts receivable                                      988        1,778 
  Inventory                                             24,322       19,915 
  Prepaid catalog costs                                    971          784 
  Prepaid expenses and other current assets              1,131        1,116 
  Deferred income taxes                                    246          300 
                                                   -----------  ----------- 
                                                                            
Total current assets                                    27,888       24,192 
                                                                            
Net property and equipment                               5,503        5,034 
                                                                            
Other assets:                                                               
  Deferred income taxes                                  1,282        1,201 
  Intangibles and other assets, net                        826          784 
                                                   -----------  ----------- 
Total other assets                                       2,108        1,985 
                                                   -----------  ----------- 
Total assets                                       $    35,499  $    31,211 
                                                   ===========  =========== 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Current portion of capital lease obligations and                          
   outstanding checks                              $     1,355  $       337 
  Current portion - Term notes                             786          589 
  Current portion - Capex term loan                        468           -- 
  Accounts payable                                       2,733        1,837 
  Accrued expenses and other current liabilities         4,986        6,348 
  Income taxes payable                                      76          936 
                                                   -----------  ----------- 
Total current liabilities                               10,404       10,047 
                                                                            
Long-term liabilities:                                                      
  Revolving line of credit                               3,997        1,515 
  Capex term loan, net of current portion                1,638           -- 
  Term notes, net of current portion                     4,321        4,911 
  Capital lease obligation, net of current portion          77          121 
  Interest rate swap contract                              216          320 
                                                   -----------  ----------- 
Total long-term liabilities                             10,249        6,867 
Stockholders' equity:                                                       
  Common stock, par value $0.0001 per share;                                
   15,000,000 shares authorized; 6,144,619 and                              
   6,133,343 issued and 5,348,754 and 5,337,478                             
   outstanding as of September 30, 2013 and                                 
   December 31, 2012, respectively                           1            1 
Additional paid in capital                              46,209       45,973 
Treasury stock, 795,865 shares at cost                  (6,082)      (6,082)
Other comprehensive loss                                  (136)        (189)
Accumulated deficit                                    (25,146)     (25,406)
       
                                            -----------  ----------- 
Total stockholders' equity                              14,846       14,297 
                                                   -----------  ----------- 
Total liabilities and stockholders' equity         $    35,499  $    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   Nine Months Ended        
                            Sept. 30,   Sept. 30,   Sept. 30,    Sept. 30,  
                               2013        2012        2013         2012    
                                                                            
Net income                 $      443* $      174* $     260**  $     716** 
Depreciation                       295         237         843          661 
Amortization of intangible          17          --          52           -- 
 assets                                                                     
Stock-based compensation            81          62         219          186 
Interest expense,                  154         128         426          390 
 financing and other                                                        
 related costs, net                                                         
Other investment (income)            4          15         (33)         (16)
 loss, net                                                                  
Provision for income taxes         330      292            240          769 
                           ----------- ----------- -----------  ----------- 
Adjusted EBITDA            $    1,324* $      908* $   2,007**  $   2,706** 
                           =========== =========== ===========  =========== 

 
(*) For the three months ended September 30, 2013 gift card breakage
income was $30,146. For the three months ended September 30, 2012
gift card breakage income was $41,632. 
(**) For the nine months ended September 30, 2013 gift card breakage
income was $90,438. The nine months ended September 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 $124,896. 
Janet Nittmann
jnittmann@doversaddlery.com
Tel 978-952-8062 x218