First quarter consolidated net sales of
$207.1 million, down 21.1% compared to the first quarter of fiscal
2022, including 30 basis point negative foreign exchange
impact
Comparable store sales^ down 19.9% compared
to the first quarter of fiscal 2022
First quarter loss per share of $0.24
compared to earnings per diluted share of $0.21 in the first
quarter of fiscal 2022; Adjusted loss per share* of $0.21 compared
to adjusted income per diluted share of $0.21 in the first
quarter of fiscal 2022
Updates Fiscal 2023 Earnings Outlook
The Container Store Group, Inc. (NYSE: TCS) (the “Company”),
today announced its financial results for the first quarter of
fiscal 2023 ended July 1, 2023.
For the first quarter of fiscal 2023:
- Consolidated net sales were $207.1 million, down 21.1%,
compared to the first quarter of fiscal 2022, including 30 basis
point negative impact of foreign currency translation. Net sales in
The Container Store retail business (“TCS”) were $195.1 million,
down 20.9%. Elfa International AB (“Elfa”) third-party net sales
were $12.0 million, down 24.4% compared to the first quarter of
fiscal 2022. Excluding the impact of foreign currency translation,
Elfa third-party net sales were down 19.2%.
- Comparable store sales^ decreased 19.9%, with general
merchandise categories down 20.5%, contributing a decrease of 1360
basis points to comparable store sales^. Custom Spaces+ were down
18.6%, negatively impacting comparable store sales^ by 630 basis
points.
- Consolidated net loss and net loss per share were $11.8 million
and $0.24 per share, compared to net income of $10.5 million and
$0.21 per diluted share, respectively, in the first quarter of
fiscal 2022. Adjusted net loss per share* was $0.21 compared to
adjusted net income per diluted share of $0.21 in the first quarter
of fiscal 2022.
Satish Malhotra, Chief Executive Officer and President of The
Container Store, commented, “Our first quarter topline performance
was in line with our expectations and reflects the impact of the
ongoing challenging macro environment. During the quarter, we
continued our focus on bringing merchandise newness and innovation
to our customers, and delivering an engaging in-store experience
demonstrated by a net promoter score of 81. We also tested a number
of different promotional events to entice our customers. While
these tests pressured margins in the quarter, they unlocked key
learnings that we are incorporating into our go-forward promotional
plans. We also successfully executed against our cost-cutting
action plan that did not jeopardize our focus on customer
experience.”
Mr. Malhotra, continued, “We are updating our outlook to reflect
current trends in the business. Even as we continue to navigate the
challenges of the current environment, we are relentlessly focused
on executing against the initiatives that will further solidify our
category leadership position and drive our growth when market
conditions normalize.”
First Quarter Fiscal 2023
Results
For the first quarter (thirteen weeks) ended July 1,
2023:
- Consolidated net sales were $207.1 million, down 21.1%,
including 30 basis point negative impact of foreign currency
translation compared to the first quarter of fiscal 2022.
- Net sales in TCS were $195.1 million, down 20.9%.
- Comparable store sales^ decreased 19.9%, with general
merchandise categories down 20.5%, contributing 1360 basis points
of the decrease in comparable store sales^. Custom Spaces+ were
down 18.6%, negatively impacting comparable store sales^ by 630
basis points.
- Our online sales decreased 15.8% compared to the first quarter
of fiscal 2022.
- Elfa third-party net sales were $12.0 million, down 24.4%
compared to the first quarter of fiscal 2022. Excluding the impact
of foreign currency translation, Elfa third-party net sales were
down 19.2% primarily due to a decline in sales in Nordic
markets.
- Consolidated gross margin was 55.3%, a decrease of 180 basis
points, compared to the first quarter of fiscal 2022. TCS gross
margin decreased 230 basis points to 54.5% primarily due to
increased promotional activity, higher mix of online sales and
associated shipping costs and unfavorable product and services mix,
partially offset by lower freight costs. Elfa gross margin
decreased 420 basis points compared to the first quarter of fiscal
2022 primarily due to higher direct material costs.
- Consolidated selling, general and administrative expenses
(“SG&A”) decreased by 8.6% to $111.4 million in the first
quarter of fiscal 2023 from $121.9 million in the first quarter of
fiscal 2022. SG&A as a percentage of net sales increased 740
basis points to 53.8%, with the increase primarily due to
deleverage on occupancy, compensation and benefit costs, and other
fixed costs on lower sales in the first quarter of fiscal 2023,
partially offset by decreased marketing costs.
- Consolidated depreciation and amortization increased 16.7% to
$10.5 million in the first quarter of fiscal 2023 from $9.0 million
in the first quarter of fiscal 2022. The increase was primarily due
to capital investments in stores and technology in fiscal
2022.
- Other expenses of $2.5 million were recorded in the first
quarter of fiscal 2023 related to severance costs associated with
the previously announced elimination of certain positions.
- Consolidated net interest expense increased 54.1% to $5.0
million in the first quarter of fiscal 2023 from $3.2 million in
the first quarter of fiscal 2022. The increase was primarily due to
a higher interest rate on the Senior Secured Term Loan
Facility.
- The effective tax rate was 23.3% in the first quarter of fiscal
2023, as compared to 28.8% in the first quarter of fiscal 2022. The
decrease in the effective tax rate was primarily related to the
impact of discrete items on a pre-tax loss in the first quarter of
fiscal 2023, as compared to pre-tax income in the first quarter of
fiscal 2022.
- Net loss was $11.8 million, or $0.24 per share, in the first
quarter of fiscal 2023 compared to net income of $10.5 million, or
$0.21 per diluted share, in the first quarter of fiscal 2022.
Adjusted net loss* was $10.1 million, or $0.21 per share, in the
first quarter of fiscal 2023 compared to adjusted net income* of
$10.5 million, or $0.21 per diluted share, in the first quarter of
fiscal 2022.
- Adjusted EBITDA* was $2.9 million in the first quarter of
fiscal 2023 compared to $28.2 million in the first quarter of
fiscal 2022.
New and Existing Stores
As of July 1, 2023, the Company store base was 97 as compared to
94 as of July 2, 2022. The Company did not open any stores during
the first quarter of fiscal 2023.
Balance sheet and liquidity
highlights:
(In thousands)
July 1, 2023
July 2, 2022
Cash
$
12,155
$
23,206
Total debt, net of deferred financing
costs
$
185,388
$
187,115
Liquidity 1
$
94,187
$
115,467
Net cash (used in) provided by operating
activities
$
(2,988
)
$
3,172
Free cash flow *
$
(11,886
)
$
(14,448
)
____________________________
(1)
Cash plus availability on revolving credit
facilities.
Share repurchase
There were no repurchases during the first quarter of fiscal
2023. The Company has $25 million remaining of the original $30
million authorization for share repurchases.
Outlook
The Company today provided the following financial outlook for
the fiscal second quarter ending on September 30, 2023 and the full
year ending March 30, 2024:
Current
Outlook
Current
Outlook
Prior
Outlook
Second
Quarter Ending September 30, 2023
Fiscal
Year Ending March 30, 2024
Fiscal
Year Ending March 30, 2024
Consolidated net sales
$205 - $215 million
$875 - $890 million
$885 - $900 million
Comparable store sales^ decline
Low to mid twenties
High teens
Mid to high teens
Net (loss) income per diluted share
($0.11) - $0.00
($0.10) to $0.00
$0.07 to $0.17
Adjusted net (loss) income per diluted
share*
($0.10) - $0.00
$0.05 to $0.15
$0.21 to $0.31
Assumed dilutive shares
49 million
50 million
50 million
Capital expenditures
$45 to $50 million
$45 to $50 million
Effective tax rate (1)
(20%) to 75%
300% to 115%
60% to 75%
(1)
Effective tax rate for fiscal year ending
March 30, 2024 assumes approximately $5.6 million of discrete
income tax expense expected to be recorded in the third quarter of
fiscal 2023 related to the expiration of certain stock options
granted in connection with our initial public offering in 2013.
The Company plans to open six new small format stores in fiscal
2023 and three new stores in fiscal 2024. The six new stores for
fiscal 2023 are as follows:
Estimated Opening
San Mateo, CA
Fall 2023
Woodland Hills, CA
Fall 2023
Princeton, NJ
Fall 2023
Gaithersburg, MD
Winter 2023
Miami, FL
Spring 2024
Huntington, NY
Spring 2024
References
* See Reconciliation of GAAP to Non-GAAP
Financial Measures table.
+ Custom Spaces includes metal-based and
wood-based custom space products and in-home installation
services.
^ Comparable store sales includes all net
sales from our TCS segment, except for sales from stores open less
than sixteen months, stores that have been closed permanently,
stores that have been closed temporarily for more than seven days
and Closet Works sales to third parties.
Conference Call Information
A conference call to discuss first quarter fiscal 2023 financial
results is scheduled for today, August 1, 2023, at 4:30 PM Eastern
Time. Investors and analysts interested in participating in the
call are invited to dial 877-407-3982 (international callers please
dial 201-493-6780) approximately 10 minutes prior to the start of
the call. A live audio webcast of the conference call will be
available online at investor.containerstore.com.
A taped replay of the conference call will be available within
three hours of the conclusion of the call and can be accessed both
online and by dialing 844-512-2921 (international callers please
dial 412-317-6671). The pin number to access the telephone replay
is 13739988. The replay will be available until September 1,
2023.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including statements regarding our
goals, strategies, priorities and initiatives including future
store openings; future opportunities; our share repurchase program;
the impact of macroeconomic conditions and our anticipated
financial performance and long term targets.
These forward-looking statements are based on management’s
current expectations. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements, including, but not limited to, the
following: a decline in the health of the economy and the purchase
of discretionary items; results of operations and financial
condition; our ability to continue to lease space on favorable
terms; costs and risks relating to new store openings; quarterly
and seasonal fluctuations in our operating results; cost increases
that are beyond our control; our inability to protect our brand;
our failure or inability to protect our intellectual property
rights; our inability to source and market new products to meet
consumer preferences; failure to successfully anticipate, or manage
inventory commensurate with, consumer preferences and demand;
competition from other stores and internet-based competition; our
inability to obtain merchandise from our vendors on a timely basis
and at competitive prices; vendors may sell similar or identical
products to our competitors; our and our vendors’ vulnerability to
natural disasters and other unexpected events; disruptions at our
manufacturing facilities; product recalls and/or product liability,
as well as changes in product safety and other consumer protection
laws; risks relating to operating multiple distribution centers;
our dependence on foreign imports for our merchandise; our reliance
upon independent third party transportation providers; our
inability to effectively manage our online sales; effects of a
security breach or cyber-attack of our website or information
technology systems, including relating to our use of third-party
web service providers; damage to, or interruptions in, our
information systems as a result of external factors, working from
home arrangements, staffing shortages and difficulties in updating
our existing software or developing or implementing new software;
failure to comply with laws and regulations relating to privacy,
data protection, and consumer protection; our indebtedness may
restrict our current and future operations, and we may not be able
to refinance our debt on favorable terms, or at all; fluctuations
in currency exchange rates; our inability to maintain sufficient
levels of cash flow to meet growth expectations; our fixed lease
obligations; disruptions in the global financial markets leading to
difficulty in borrowing sufficient amounts of capital to finance
the carrying costs of inventory to pay for capital expenditures and
operating costs; changes to global markets and inability to predict
future interest expenses; our reliance on key executive management;
our inability to find, train and retain key personnel; labor
relations difficulties; increases in health care costs and labor
costs; violations of the U.S. Foreign Corrupt Practices Act and
similar worldwide anti-bribery and anti-kickback laws; impairment
charges and effects of changes in estimates or projections used to
assess the fair value of our assets; effects of tax reform and
other tax fluctuations; significant fluctuations in the price of
our common stock; substantial future sales of our common stock, or
the perception that such sales may occur, which could depress the
price of our common stock; risks related to being a public company;
our performance meeting guidance provided to the public;
anti-takeover provisions in our governing documents, which could
delay or prevent a change in control; acquisition-related risks and
our failure to establish and maintain effective internal
controls.
These and other important factors discussed under the caption
“Risk Factors” in our Annual Report on Form 10‑K filed with the
Securities and Exchange Commission, (the “SEC”) on May 26, 2023 and
our other reports filed with the SEC could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release. Any such forward-looking
statements represent management’s estimates as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change.
These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
About The Container Store
The Container Store Group, Inc. (NYSE: TCS) is the nation’s
leading specialty retailer of organizing solutions, custom spaces,
and in-home services – a concept they originated in 1978. Today,
with locations nationwide, the retailer offers more than 10,000
products designed to transform lives through the power of
organization.
Visit www.containerstore.com for more information about
products, store locations, services offered and real-life
inspiration.
Follow The Container Store on Facebook, Twitter, Instagram,
TikTok, YouTube, Pinterest and LinkedIn.
The Container Store Group, Inc.
Consolidated statements of
operations
Fiscal Quarter Ended
July 1,
July 2,
(In thousands, except share and per
share amounts)
2023
2022
(unaudited)
(unaudited)
Net sales
$
207,112
$
262,634
Cost of sales (excluding depreciation and
amortization)
92,563
112,546
Gross profit
114,549
150,088
Selling, general, and administrative
expenses (excluding depreciation and amortization)
111,380
121,909
Stock-based compensation
474
1,201
Pre-opening costs
185
36
Depreciation and amortization
10,512
9,006
Other expenses
2,453
—
Loss on disposal of assets
1
1
(Loss) income from operations
(10,456
)
17,935
Interest expense, net
4,967
3,223
(Loss) income before taxes
(15,423
)
14,712
(Benefit) provision for income taxes
(3,586
)
4,233
Net (loss) income
$
(11,837
)
$
10,479
Net (loss) income per common share —
basic
$
(0.24
)
$
0.21
Net (loss) income per common share —
diluted
$
(0.24
)
$
0.21
Weighted-average common shares — basic
49,252,869
49,719,559
Weighted-average common shares —
diluted
49,252,869
50,312,855
The Container Store Group, Inc.
Consolidated balance sheets
July 1,
April 1,
July 2,
(In thousands)
2023
2023
2022
Assets
(unaudited)
(unaudited)
Current assets:
Cash
$
12,155
$
6,958
$
23,206
Accounts receivable, net
21,870
25,870
30,466
Inventory
170,512
170,637
190,752
Prepaid expenses
14,624
14,989
14,612
Income taxes receivable
964
858
808
Other current assets
9,985
10,914
9,826
Total current assets
230,110
230,226
269,670
Noncurrent assets:
Property and equipment, net
157,747
158,702
144,175
Noncurrent operating lease right-of-use
assets
353,402
347,959
365,053
Goodwill
23,447
23,447
221,159
Trade names
219,894
221,278
221,633
Deferred financing costs, net
137
150
190
Noncurrent deferred tax assets, net
517
568
636
Other assets
2,702
2,844
1,923
Total noncurrent assets
757,846
754,948
954,769
Total assets
$
987,956
$
985,174
$
1,224,439
The Container Store Group, Inc.
Consolidated balance sheets
(continued)
July 1,
April 1,
July 2,
(In thousands, except share and per
share amounts)
2023
2023
2022
Liabilities and shareholders’
equity
(unaudited)
(unaudited)
Current liabilities:
Accounts payable
$
53,305
$
52,637
$
68,920
Accrued liabilities
68,218
74,673
81,743
Current borrowings on revolving lines of
credit
—
2,423
11,541
Current portion of long-term debt
2,055
2,063
2,072
Current operating lease liabilities
59,996
57,201
54,605
Income taxes payable
670
1,318
10,464
Total current liabilities
184,244
190,315
229,345
Noncurrent liabilities:
Long-term debt
183,333
163,385
173,502
Noncurrent operating lease liabilities
320,845
314,100
332,800
Noncurrent deferred tax liabilities,
net
45,062
49,338
48,309
Other long-term liabilities
5,394
5,851
6,876
Total noncurrent liabilities
554,634
532,674
561,487
Total liabilities
738,878
722,989
790,832
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value, 250,000,000
shares authorized; 49,390,882 shares issued at July 1, 2023;
49,181,562 shares issued at April 1, 2023; 49,941,336 shares issued
at July 2, 2022
494
492
499
Additional paid-in capital
872,537
872,204
875,016
Accumulated other comprehensive loss
(34,113
)
(32,509
)
(33,241
)
Retained deficit
(589,840
)
(578,002
)
(408,667
)
Total shareholders’ equity
249,078
262,185
433,607
Total liabilities and shareholders’
equity
$
987,956
$
985,174
$
1,224,439
The Container Store Group, Inc.
Consolidated statements of cash
flows
Fiscal Quarter Ended
July 1,
July 2,
(In thousands)
2023
2022
Operating activities
(unaudited)
(unaudited)
Net (loss) income
$
(11,837
)
$
10,479
Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating activities:
Depreciation and amortization
10,512
9,006
Stock-based compensation
474
1,201
Loss on disposal of assets
1
1
Deferred tax benefit
(3,975
)
(1,325
)
Non-cash interest
471
471
Other
193
81
Changes in operating assets and
liabilities:
Accounts receivable
5,894
(2,101
)
Inventory
(234
)
(59
)
Prepaid expenses and other assets
1,173
(2,415
)
Accounts payable and accrued
liabilities
(8,707
)
(17,280
)
Net change in lease assets and
liabilities
4,101
7
Income taxes
(739
)
5,271
Other noncurrent liabilities
(315
)
(165
)
Net cash (used in) provided by operating
activities
(2,988
)
3,172
Investing activities
Additions to property and equipment
(8,898
)
(17,620
)
Investments in non-qualified plan
trust
(128
)
(767
)
Proceeds from non-qualified plan trust
redemptions
83
60
Proceeds from sale of property and
equipment
1
—
Net cash used in investing activities
(8,942
)
(18,327
)
Financing activities
Borrowings on revolving lines of
credit
12,799
23,834
Payments on revolving lines of credit
(15,180
)
(13,528
)
Borrowings on long-term debt
20,000
15,000
Payments on long-term debt
(518
)
(530
)
Payment of taxes with shares withheld upon
restricted stock vesting
(140
)
(712
)
Proceeds from the exercise of stock
options
—
340
Net cash provided by financing
activities
16,961
24,404
Effect of exchange rate changes on
cash
166
(295
)
Net increase in cash
5,197
8,954
Cash at beginning of fiscal period
6,958
14,252
Cash at end of fiscal period
$
12,155
$
23,206
Note Regarding Non-GAAP Information
This press release includes financial measures that are not
calculated in accordance with GAAP, including adjusted net (loss)
income, adjusted net (loss) income per common share - diluted,
Adjusted EBITDA, and free cash flow. The Company has reconciled
these non-GAAP financial measures with the most directly comparable
GAAP financial measures in a table accompanying this release. These
non-GAAP measures should not be considered as alternatives to net
(loss) income as a measure of financial performance or cash flows
from operations as a measure of liquidity, or any other performance
measure derived in accordance with GAAP and they should not be
construed as an inference that the Company’s future results will be
unaffected by unusual or non-recurring items. These non-GAAP
measures are key metrics used by management, the Company’s board of
directors, and Leonard Green and Partners, L.P., to assess its
financial performance.
The Company presents adjusted net (loss) income, adjusted net
(loss) income per common share - diluted, and Adjusted EBITDA
because it believes they assist investors in comparing the
Company’s performance across reporting periods on a consistent
basis by excluding items that the Company does not believe are
indicative of its core operating performance and because the
Company believes it is useful for investors to see the measures
that management uses to evaluate the Company. These non-GAAP
measures are also frequently used by analysts, investors and other
interested parties to evaluate companies in the Company’s industry.
In evaluating these non-GAAP measures, you should be aware that in
the future the Company will incur expenses that are the same as or
similar to some of the adjustments in this presentation. The
Company’s presentation of these non-GAAP measures should not be
construed to imply that its future results will be unaffected by
any such adjustments. Management compensates for these limitations
by relying on our GAAP results in addition to using non-GAAP
measures supplementally. These non-GAAP measures are not
necessarily comparable to other similarly titled captions of other
companies due to different methods of calculation.
The Company defines adjusted net (loss) income as net (loss)
income before restructuring charges, severance charges,
acquisition-related costs, impairment charges related to intangible
assets, loss on extinguishment of debt, certain losses (gains) on
disposal of assets, legal settlements and the tax impact of these
adjustments and other unusual or infrequent tax items. We define
adjusted net (loss) income per common share - diluted as adjusted
net (loss) income divided by the diluted weighted average common
shares outstanding. We use adjusted net (loss) income (loss) and
adjusted net (loss) income (loss) per common share - diluted to
supplement GAAP measures of performance to evaluate the
effectiveness of our business strategies, to make budgeting
decisions and to compare our performance against that of other peer
companies using similar measures. We present adjusted net (loss)
income and adjusted net (loss) income per common share - diluted
because we believe they assist investors in comparing our
performance across reporting periods on a consistent basis by
excluding items that we do not believe are indicative of our core
operating performance and because we believe it is useful for
investors to see the measures that management uses to evaluate the
Company.
The Company defines EBITDA as net (loss) income before interest,
taxes, depreciation, and amortization. Adjusted EBITDA is
calculated in accordance with the Company’s credit facilities and
is one of the components for performance evaluation under its
executive compensation programs. Adjusted EBITDA reflects further
adjustments to EBITDA to eliminate the impact of certain items,
including certain non-cash and other items that the Company does
not consider in its evaluation of ongoing operating performance
from period to period. The Company uses Adjusted EBITDA in
connection with covenant compliance and executive performance
evaluations, and to supplement GAAP measures of performance to
evaluate the effectiveness of its business strategies, to make
budgeting decisions and to compare its performance against that of
other peer companies using similar measures. The Company believes
it is useful for investors to see the measures that management uses
to evaluate the Company, its executives and its covenant
compliance. EBITDA and Adjusted EBITDA are also frequently used by
analysts, investors and other interested parties to evaluate
companies in the Company’s industry.
The Company presents free cash flow, which the Company defines
as net cash provided by operating activities in a period minus
payments for property and equipment made in that period, because it
believes it is a useful indicator of the Company’s overall
liquidity, as the amount of free cash flow generated in any period
is representative of cash that is available for debt repayment,
investment, and other discretionary and non-discretionary cash
uses. Accordingly, we believe that free cash flow provides useful
information to investors in understanding and evaluating our
liquidity in the same manner as management. Our definition of free
cash flow is limited in that it does not solely represent residual
cash flows available for discretionary expenditures due to the fact
that the measure does not deduct the payments required for debt
service and other contractual obligations. Therefore, we believe it
is important to view free cash flow as a measure that provides
supplemental information to our Consolidated Statements of Cash
Flows. Although other companies report their free cash flow,
numerous methods may exist for calculating a company’s free cash
flow. As a result, the method used by our management to calculate
our free cash flow may differ from the methods used by other
companies to calculate their free cash flow.
Additionally, this press release refers to the change in Elfa
third-party net sales after the conversion of Elfa’s net sales from
Swedish krona to U.S. dollars using the prior year’s conversion
rate, which is a financial measure not calculated in accordance
with GAAP. The Company believes the disclosure of the change in
Elfa third-party net sales without the effects of currency exchange
rate fluctuations helps investors understand the Company’s
underlying performance.
The Container Store Group, Inc. Supplemental Information -
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except share and per share amounts)
(unaudited)
The table below reconciles the non-GAAP financial measures of
adjusted net (loss) income and adjusted net (loss) income per
common share - diluted with the most directly comparable GAAP
financial measures of GAAP net (loss) income and GAAP net (loss)
income per common share - diluted.
Fiscal Quarter Ended
Q2 2023 Outlook
FY 2023 Outlook
July 1,
July 2,
2023
2022
Low
High
Low
High
Numerator:
Net (loss) income
$
(11,837
)
$
10,479
$
(5,525
)
$
—
$
(5,000
)
$
—
Severance charges (a)
2,453
—
—
—
2,453
2,453
Taxes (b)
(749
)
—
625
—
5,100
5,100
Adjusted net (loss) income
$
(10,133
)
$
10,479
$
(4,900
)
$
—
$
2,553
$
7,553
Denominator:
Weighted-average common shares outstanding
— basic
49,252,869
49,719,559
49,000,000
49,000,000
49,000,000
49,000,000
Weighted-average common shares outstanding
— diluted
49,252,869
50,312,855
49,000,000
49,000,000
50,000,000
50,000,000
Net (loss) income per common share — basic
& diluted
$
(0.24
)
$
0.21
$
(0.11
)
$
0.00
$
(0.10
)
$
0.00
Adjusted net (loss) income per common
share — basic & diluted
$
(0.21
)
$
0.21
$
(0.10
)
$
0.00
$
0.05
$
0.15
____________________________
(a)
TCS segment severance charges associated
with the elimination of certain positions recorded in other
expenses in the first quarter of fiscal 2023, which we do not
consider in our evaluation of ongoing performance.
(b)
Tax impact of adjustments to net (loss)
income that are considered to be unusual or infrequent tax items.
For fiscal 2023, includes approximately $5.6 million of discrete
income tax expense expected to be recorded in the third quarter of
fiscal 2023 related to the expiration of certain stock options
granted in connection with our initial public offering in 2013, all
of which we do not consider in our evaluation of ongoing
performance.
The table below reconciles the non-GAAP
financial measure Adjusted EBITDA with the most directly comparable
GAAP financial measure of GAAP net (loss) income.
Fiscal Quarter Ended
July 1,
July 2,
2023
2022
Net (loss) income
$
(11,837
)
$
10,479
Depreciation and amortization
10,512
9,006
Interest expense, net
4,967
3,223
(Benefit) provision for income taxes
(3,586
)
4,233
EBITDA
$
56
$
26,941
Pre-opening costs (a)
185
36
Non-cash lease expense (b)
(174
)
34
Stock-based compensation (c)
474
1,201
Foreign exchange gains (d)
(75
)
(24
)
Severance charges (e)
2,453
—
Adjusted EBITDA
$
2,919
$
28,188
____________________________
(a)
Non-capital expenditures associated with
opening new stores and relocating stores, including marketing
expenses, travel and relocation costs, and training costs. We
adjust for these costs to facilitate comparisons of our performance
from period to period.
(b)
Reflects the extent to which our annual
GAAP operating lease expense has been above or below our cash
operating lease payments. The amount varies depending on the
average age of our lease portfolio (weighted for size), as our GAAP
operating lease expense on younger leases typically exceeds our
cash operating lease payments, while our GAAP operating lease
expense on older leases is typically less than our cash operating
lease payments.
(c)
Non-cash charges related to stock-based
compensation programs, which vary from period to period depending
on volume and vesting timing of awards. We adjust for these charges
to facilitate comparisons from period to period.
(d)
Realized foreign exchange transactional
gains/losses our management does not consider in our evaluation of
our ongoing operations.
(e)
TCS segment severance charges associated
with the elimination of certain positions recorded in other
expenses in the first quarter of fiscal 2023, which we do not
consider in our evaluation of ongoing performance.
The table below reconciles the non-GAAP
financial measure of free cash flow with the most directly
comparable GAAP financial measure of net cash (used in) provided by
operating activities.
Thirteen Weeks Ended
July 1,
July 2,
2023
2022
Net cash (used in) provided by operating
activities
$
(2,988
)
$
3,172
Less: Additions to property and
equipment
(8,898
)
(17,620
)
Free cash flow
$
(11,886
)
$
(14,448
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801098180/en/
Investors:
ICR, Inc. Farah Soi/Caitlin Churchill 203-682-8200
Farah.Soi@icrinc.com Caitlin.Churchill@icrinc.com
or
Media: The Container Store Group, Inc. Katelyn Clinton,
972-538-6491 publicrelations@containerstore.com
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