Savers Value Village(SVV) - 2024 Q2 - Quarterly Results

Financial Highlights and Outlook This section details Savers Value Village's second quarter financial performance, management's insights, and the revised fiscal 2024 outlook Second Quarter 2024 Financial Highlights Savers Value Village reported a 2.0% increase in net sales to $386.7 million, with flat comparable store sales and a significant drop in net income Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $386.7M | $379.1M | +2.0% | | Constant Currency Net Sales | $389.7M | $379.1M | +2.8% | | Comparable Store Sales | -0.1% | +5.5% | -5.6 p.p. | |    U.S. Comp Sales | +2.1% | +5.6% | -3.5 p.p. | |    Canada Comp Sales | -3.1% | +5.5% | -8.6 p.p. | | Net Income | $9.7M | $35.1M | -72.4% | | Adjusted Net Income | $23.7M | $32.6M | -27.3% | | Net Income per Diluted Share | $0.06 | $0.24 | -75.0% | | Adjusted Net Income per Diluted Share | $0.14 | $0.22 | -36.4% | | Adjusted EBITDA | $80.0M | $89.3M | -10.4% | | Adjusted EBITDA Margin | 20.7% | 23.5% | -2.8 p.p. | - Store expansion continued with the opening of four new stores and the acquisition of seven stores from 2 Peaches Group, LLC, bringing the total store count to 337[1] - The company's loyalty programs saw strong engagement, with total active members in the U.S. and Canada increasing by 11.8% year-over-year to 5.7 million[1] Management Commentary Management highlighted solid U.S. performance and new store success, but a Canadian slowdown led to a revised full-year outlook - The U.S. business experienced solid traffic and sales growth, and new stores are performing above expectations[1] - The Canadian business softened as the quarter progressed, reflecting a challenging economic environment, which led to an update in the fiscal 2024 outlook[1] - The company has repurchased a total of 1.4 million shares at a weighted average price of $10.51 per share, with approximately $35 million remaining on its share repurchase authorization[1] Fiscal 2024 Outlook The company revised its fiscal 2024 guidance downwards due to Canadian weakness, lowering projections for sales, comparable store sales, net income, and Adjusted EBITDA Updated Fiscal 2024 Outlook | Metric | Updated Guidance | Previous Guidance | | :--- | :--- | :--- | | Total Net Sales | $1.53B - $1.56B | $1.57B - $1.59B | | Comparable Store Sales | -1% to 1% | 2% to 3% | | Net Income | $42M - $56M | $85M - $92M | | Adjusted Net Income | $82M - $96M | $126M - $133M | | Adjusted EBITDA | $290M - $310M | $330M - $340M | | New Stores | 29 (22 organic, 7 acquired) | 29 (unchanged) | | Capital Expenditures | $105M - $115M | Unchanged | | Diluted Weighted Avg. Shares | ~168M | ~171M | Financial Statements This section presents the condensed consolidated financial statements, including net income, balance sheet, cash flows, and net sales by segment Condensed Consolidated Statements of Net Income Q2 2024 net income significantly decreased to $9.7 million on $386.7 million net sales, primarily due to operating expenses outpacing sales growth Q2 2024 vs Q2 2023 Income Statement Highlights (in thousands) | Line Item | Q2 2024 (13 wks) | Q2 2023 (13 wks) | YTD 2024 (26 wks) | YTD 2023 (26 wks) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $386,663 | $379,102 | $740,835 | $724,786 | | Operating Income | $32,216 | $68,863 | $48,483 | $84,633 | | Income Before Taxes | $16,005 | $46,050 | $11,046 | $32,418 | | Net Income | $9,712 | $35,050 | $9,245 | $24,855 | | Net Income per Share, Diluted | $0.06 | $0.24 | $0.06 | $0.17 | Condensed Consolidated Balance Sheets As of June 29, 2024, total assets slightly increased to $1.89 billion, while total liabilities decreased to $1.47 billion due to lower debt Balance Sheet Highlights (in thousands) | Account | June 29, 2024 | December 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $250,251 | $257,924 | |    Cash and cash equivalents | $160,651 | $179,955 | | Total Assets | $1,889,410 | $1,867,405 | | Total Current Liabilities | $243,141 | $241,452 | | Long-term debt, net | $735,593 | $784,593 | | Total Liabilities | $1,469,955 | $1,491,350 | | Total Stockholders' Equity | $419,455 | $376,055 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $54.6 million for the first 26 weeks of 2024, with significant cash used in financing, resulting in a $19.3 million net decrease in cash Cash Flow Summary (in thousands) - 26 Weeks Ended | Cash Flow Activity | June 29, 2024 | July 1, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,566 | $53,790 | | Net cash used in investing activities | ($28,004) | ($47,135) | | Net cash used in financing activities | ($43,536) | ($8,832) | | Effect of exchange rate changes on cash | ($2,330) | $1,610 | | Net change in cash and cash equivalents | ($19,304) | ($567) | | Cash at beginning of period | $179,955 | $112,132 | | Cash at end of period | $160,651 | $111,565 | Net Sales by Segment Q2 2024 net sales showed U.S. Retail strength with a 5.4% increase, while Canada Retail declined by 2.4% Net Sales by Segment - Q2 (in thousands) | Segment | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | U.S. Retail | $207,068 | $196,500 | 5.4% | | Canada Retail | $149,836 | $153,489 | (2.4)% | | Other | $29,759 | $29,113 | 2.2% | | Total net sales | $386,663 | $379,102 | 2.0% | Net Sales by Segment - YTD (in thousands) | Segment | YTD 2024 | YTD 2023 | % Change | | :--- | :--- | :--- | :--- | | U.S. Retail | $399,648 | $380,521 | 5.0% | | Canada Retail | $283,955 | $286,762 | (1.0)% | | Other | $57,232 | $57,503 | (0.5)% | | Total net sales | $740,835 | $724,786 | 2.2% | Supplemental Information and Non-GAAP Reconciliations This section defines and reconciles non-GAAP financial measures, including Adjusted Net Income and Adjusted EBITDA, and provides supplemental operational metrics Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted Net Income and Adjusted EBITDA to provide a clearer view of core operating performance - The company uses non-GAAP measures like Adjusted Net Income and Adjusted EBITDA as key tools for management to evaluate operating performance and business strategies[8] - Adjusted Net Income excludes items such as loss on debt extinguishment, IPO-related stock-based compensation, transaction costs, and foreign currency gains/losses[8][9] - Adjusted EBITDA excludes interest, taxes, depreciation, amortization, and other specific adjustments like stock-based compensation, pre-opening expenses, and transaction costs[9] Reconciliation of GAAP to Non-GAAP Financial Measures This section details reconciliations from GAAP net income to non-GAAP measures, including Adjusted Net Income and Adjusted EBITDA Reconciliation of Net Income to Adjusted Net Income (in thousands) | Description | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (GAAP) | $9,712 | $35,050 | $9,245 | $24,855 | | IPO-related stock-based compensation | $19,732 | $26 | $37,725 | $26 | | Tax effect on adjustments | ($7,179) | $1,018 | ($15,861) | ($7,426) | | Other adjustments | $1,449 | ($3,519) | $5,724 | $20,586 | | Adjusted Net Income (Non-GAAP) | $23,714 | $32,557 | $36,833 | $43,037 | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Description | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (GAAP) | $9,712 | $35,050 | $9,245 | $24,855 | | Interest expense, net | $15,767 | $27,734 | $31,843 | $52,204 | | Income tax expense | $6,293 | $11,000 | $1,801 | $7,563 | | Depreciation and amortization | $17,380 | $14,693 | $35,681 | $29,177 | | Stock-based compensation expense | $21,650 | $940 | $40,779 | $1,857 | | Other adjustments | $8,241 | ($409) | $21,169 | $22,605 | | Adjusted EBITDA (Non-GAAP) | $80,043 | $89,254 | $140,318 | $148,261 | Constant-Currency Reconciliation This section reconciles reported net sales to constant-currency net sales, showing a 2.8% growth after adjusting for foreign currency impact Reconciliation of GAAP Net Sales to Constant-Currency Net Sales (in thousands) | Description | Q2 2024 | Q2 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales (GAAP) | $386,663 | $379,102 | $7,561 | 2.0% | | Impact of foreign currency | $3,005 | n/a | $3,005 | n/m | | Constant-currency net sales | $389,668 | $379,102 | $10,566 | 2.8% | Supplemental Metrics Supplemental metrics show divergent regional comparable store sales, with U.S. up 2.1% and Canada down 3.1%, alongside increased store count Q2 2024 vs Q2 2023 Supplemental Metrics | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Comparable Store Sales (Total) | (0.1)% | 5.5% | |    United States | 2.1% | 5.6% | |    Canada | (3.1)% | 5.5% | | Number of Stores (Total) | 337 | 318 | |    United States | 165 | 152 | |    Canada | 159 | 154 | | Processed Supply Volume (lbs mm) | 254 | 246 | | Sales Yield | $1.46 | $1.49 | Other Information This section provides an overview of Savers Value Village and important disclosures regarding forward-looking statements and associated risks About Savers Value Village Savers Value Village is the largest for-profit thrift operator in the U.S. and Canada, promoting reuse and secondhand shopping - The company is the largest for-profit thrift operator in the U.S. and Canada[5] - Its mission is to champion reuse and inspire a future where secondhand is second nature[5] Forward-Looking Statements This section contains forward-looking statements, including the fiscal 2024 outlook, subject to inherent risks and uncertainties that could cause actual results to differ - The report contains forward-looking statements, including the fiscal 2024 outlook, which are not guarantees of future performance[6] - Actual results may differ materially due to various factors, including economic conditions, consumer spending, supply and demand for secondhand goods, and risks associated with international operations, particularly in Canada[7]