Duluth (US:DLTH)2019-04-19 20:25Financial Performance - Net sales for fiscal 2018 increased by 20.5% year-over-year to $568.1 million[246] - Net income for fiscal 2018 was flat at $23.2 million compared to the prior year[246] - Adjusted EBITDA for fiscal 2018 increased by 11.6% to $51.8 million[246] - Net sales increased by $96.7 million, or 20.5%, to $568.1 million in fiscal 2018 compared to $471.4 million in fiscal 2017, driven by a $77.0 million increase in retail net sales[260] - Gross profit rose by $49.4 million, or 18.9%, to $310.4 million in fiscal 2018, with a gross margin of 54.6%, down from 55.4% in fiscal 2017[261] - Selling, general and administrative expenses increased by $49.3 million, or 22.0%, to $273.2 million in fiscal 2018, representing 48.1% of net sales[262] - Net income was $23.2 million in fiscal 2018, slightly down from $23.4 million in fiscal 2017[272] - For the fiscal year ended February 3, 2019, net sales increased to $568.1 million, up 21% from $471.4 million in the previous year[358] - Gross profit for the same period was $310.4 million, representing a gross margin of approximately 54.6%[358] - Operating income was reported at $37.2 million, slightly up from $37.1 million in the prior year[358] - Net income attributable to controlling interest was $23.2 million, compared to $23.4 million in the previous year, reflecting a decrease of 0.8%[358] Retail Segment Performance - The direct segment accounted for 61.7% of consolidated net sales in fiscal 2018, down from 70.2% in fiscal 2017[243] - Retail segment net sales represented 38.3% of consolidated net sales in fiscal 2018, up from 29.8% in fiscal 2017[243] - Retail segment operating income increased by $13.7 million, or 57.7%, to $37.5 million in fiscal 2018, with an operating income margin of 17.3%[269] - The company operated 46 stores in fiscal 2018 compared to 31 stores in fiscal 2017, contributing to the increase in retail net sales[260] - The company opened 15 retail stores in fiscal 2018, adding approximately 250,000 gross square feet[243] - The company anticipates opening 15 new stores in fiscal 2019[294] Debt and Assets - Total assets increased to $296.8 million in fiscal 2018 from $223.1 million in fiscal 2017[246] - Total debt rose to $46.8 million in fiscal 2018 from $1.5 million in fiscal 2017[246] - As of February 3, 2019, the company had total contractual cash obligations of $237.63 million, including $16.54 million in revolving line of credit and $190.85 million in operating leases[314] - The company’s total debt obligations as of February 3, 2019, amounted to $30.24 million, with $27.07 million maturing in 2024 and after[314] - Total liabilities rose to $136.6 million, compared to $83.8 million in the prior year, indicating a significant increase in leverage[356] - Total debt as of February 3, 2019, is $30.237 million, a significant increase from $1.508 million in January 28, 2018[430] Cash Flow and Investments - Net cash provided by operating activities was $31.1 million for fiscal 2018, consisting of net income of $23.2 million and non-cash depreciation and amortization of $12.6 million[298] - Net cash used in investing activities was $53.7 million for fiscal 2018, primarily driven by capital expenditures of $53.0 million[303] - Net cash provided by financing activities was $18.6 million for fiscal 2018, including borrowings of $130.1 million on the revolving line of credit[307] - The company expects to spend approximately $40.0 million to $45.0 million in fiscal 2019 on capital expenditures, including $30.0 million to $32.0 million for new retail store expansion[294] Tax and Compliance - Income tax expense decreased to $8.4 million in fiscal 2018 from $11.9 million in fiscal 2017, with an effective tax rate of 26.7%[271] - The effective tax rate related to controlling interest decreased to 33.7% in fiscal 2017 from 38.9% in fiscal 2016[286] - The company was in compliance with all financial and non-financial covenants as of the fiscal year ended February 3, 2019[312] Inventory and Assets Management - The company’s inventories are stated at the lower of cost and net realizable value, with significant estimates used in inventory valuation including obsolescence and shrinkage[321] - Inventory increased to $97.7 million, up from $89.5 million, reflecting a 9.5% rise year-over-year[356] - The principal supplier accounted for 52%, 50%, and 51% of total inventory expenditures in fiscal 2018, 2017, and 2016, respectively[389] Stock and Compensation - The number of Class B common stock available for future issuance under the 2015 Plan was 2,949,658 shares as of February 4, 2019[406] - Total stock compensation expense related to restricted stock was $1.6 million for fiscal 2018, consistent with fiscal 2017, and $1.2 million for fiscal 2016[408] - As of February 3, 2019, the company had unrecognized compensation expense of $2.5 million related to restricted stock awards, expected to be recognized over a weighted average period of 2.2 years[410] Accounting Changes - The company recognized revenue from direct sales upon shipment of the product for fiscal 2018, a change from prior periods where revenue was recognized upon customer receipt[317] - The company expects to adopt ASU 2016-02 on February 4, 2019, which will result in an increase in assets and liabilities due to the recording of right-of-use assets and corresponding lease liabilities[339] - The company's net sales for the year ended February 3, 2019, were reported at $568.1 million, with adjustments due to ASC 606 resulting in a net sales figure of $565.2 million[429] - The gross profit for the same period was $310.4 million, adjusted to $309.5 million after ASC 606[429] - The total liabilities reported were $136.6 million, adjusted to $139.6 million without ASC 606[429]