Sales increased 4.0%, or 6.2% in constant
currency1
Comparable store sales increased
5.5%
Sales yield2 increased 8.0% to $1.49
Savers Value Village, Inc. (NYSE: SVV), (the “Company”) today
announced financial results for the thirteen weeks ended July 1,
2023 (the “second quarter of 2023”).
Highlights for the Second Quarter of
2023, Compared to the Second Quarter of 2022
- Net sales increased 4.0% to $379.1 million. Constant currency
net sales1 increased 6.2% to $387.4 million.
- Comparable store sales increased 5.5%, with U.S. and Canada up
5.6% and 5.5%, respectively.
- Sales yield2 increased 8.0% to $1.49 per pound.
- The Company opened one new store, ending the second quarter
with 318 stores, a 2.9% net increase in the number of stores year
over year.
- Net income increased 13.6% to $35.1 million, or $0.24 per
diluted share, from $30.9 million, or $0.21 per diluted share. Net
income margin increased 70 basis points to 9.2%.
- Adjusted net income1 totaled $32.6 million, or $0.22 Adjusted
net income per diluted share1.
- Adjusted earnings before interest, taxes, depreciation and
amortization (“EBITDA”)1 increased 4.7% to $89.3 million, and
Adjusted EBITDA margin1 increased 10 basis points to 23.5%.
Adjusted EBITDA1 included a $2.4 million negative impact from
changes in foreign currency rates.
Mark Walsh, Chief Executive Officer, commented, “We are pleased
with our strong second quarter results, which exceeded our
expectations both on the top and bottom lines. At a time when
consumers are seeking value and thinking more about sustainability,
the popularity of thrifting continues to grow. We continue to
leverage our proven business model and execute against our
strategic initiatives to enhance our competitive position and drive
profitable growth.”
1 Adjusted net income, Adjusted net income
per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, as
well as amounts presented on a constant currency basis, are not
measures recognized under U.S. generally accepted accounting
principles (“GAAP”). For additional information on our use of
non-GAAP financial measures, see “Non-GAAP Financial Measures”,
“Constant Currency” and the accompanying financial tables which
reconcile GAAP financial measures to these non-GAAP measures
below.
2 Sales yield is presented on a currency
neutral and comparable store sales growth basis. We define sales
yield as retail sales generated per pound of processed volume.
Fiscal 2023 Outlook
The Company expects the following for the fifty-two weeks ended
December 30, 2023 (“fiscal 2023”):
- The opening of approximately 12 new stores;
- Total net sales of approximately $1.51 billion;
- Comparable store sales growth increase of approximately
5.0%;
- Net income of approximately $23 million;
- Adjusted net income of approximately $98 million1;
- Adjusted EBITDA of approximately $320 million2;
- Capital expenditures in the range of $100 to $105 million;
and
- GAAP-based diluted weighted average common shares outstanding
of approximately 160.0 million.
Assumed in the Company’s net income is stock-based compensation
of approximately $69 million reflecting equity issued in connection
with the Company’s IPO, of which $48 million and $21 million is
expected to be recognized during the third and fourth quarters,
respectively.
1 Adjusted net income is not a measure
recognized under U.S. GAAP. For additional information on our use
of non-GAAP financial measures, see “Non-GAAP Financial Measures”
and the accompanying financial tables which reconcile GAAP
financial measures to non-GAAP measures below.
2 We have not reconciled guidance for
Adjusted EBITDA to the corresponding GAAP financial measure because
we cannot determine the probable significance of the various
reconciling items, as certain items are outside of our control and
cannot be reasonably predicted due to the fact that these items
could vary significantly period to period. Accordingly,
reconciliations to the corresponding GAAP financial measure is not
available without unreasonable effort.
Initial Public Offering
On July 03, 2023, the Company completed its initial public
offering (“IPO”) for the sale of 18.8 million shares of its common
stock at a public offering price of $18.00 per share. Net proceeds
to the Company from the IPO were $305.7 million after deducting
underwriting discounts and commissions of $22.8 million and unpaid
offering expenses of approximately $9.0 million. The Company used
the net proceeds from its IPO, together with an additional $5.9
million of cash on its balance sheet, to redeem $55.0 million
aggregate principal amount of the Senior Secured Notes and repay
$252.4 million aggregate principal amount of outstanding borrowings
under the Term Loan Facility, as well as accrued and unpaid
interest and premium under the Term Loan Facility and the Notes.
These transactions resulted in a loss on extinguishment of debt of
$10.6 million. Following the partial redemption of the Senior
Secured Notes and partial repayment of the Term Loan Facility, the
total face value of debt outstanding was $819.8 million. Following
the IPO, the Company’s net leverage was 2.3x which we define as
total debt less unrestricted cash, divided by Adjusted EBITDA for
the trailing twelve months.
Conference Call
Information
A conference call to discuss the second quarter financial
results is scheduled for today, August 10, 2023, at 4:30 p.m.
ET.
Investors and analysts who wish to participate in the call are
invited to dial +1 206 962-3782 (international callers, please dial
+1 888 259-6580) approximately 10 minutes prior to the start of the
call. Please reference Conference ID 74899986 when prompted. A live
webcast of the conference call will be available over the Internet,
which you may access by logging on to the Investor Relations
section on the Company’s website at
https://ir.savers.com/events-and-presentations/default.aspx.
A recorded replay of the call will be available shortly after
the conclusion of the call and remain available until August 24,
2023. To access the telephone replay, dial +1 416 764-8692
(international callers, please dial +1 877 674 7070). The access
code for the replay is 899986#. A replay of the webcast will also
be available within two hours of the conclusion of the call and
will remain available on the website for one year.
About the Savers Value Village™ family of thrift
stores
As the largest for-profit thrift operator in the United States
and Canada for value priced pre-owned clothing, accessories and
household goods, our mission is to champion reuse and inspire a
future where secondhand is second nature. Learn more about the
Savers family of thrift stores, our impact, and the #ThriftProud
movement at savers.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward looking statements can be identified by words such as
“could,” “may,” “might,” “will,” “likely,” “anticipates,”
“intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,”
“continues,” “projects” and similar references to future periods,
or by the inclusion of forecasts or projections, the outlook for
the Company’s future business, prospects, financial performance,
including its fiscal 2023 outlook or financial guidance, and
industry outlook. Forward-looking statements are based on the
Company’s current expectations and assumptions regarding its
business, the economy and other future conditions. Because
forward-looking statements relate to the future, by their nature,
they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. As a result, the
Company’s actual results may differ materially from those
contemplated by the forward-looking statements. Important factors
that could cause actual results to differ materially from those in
the forward-looking statements include regional, national or global
political, economic, business, competitive, market and regulatory
conditions, including, but not limited to, legislation, national
trade policy, and the following: the Company’s failure to
adequately procure and manage its inventory or anticipate consumer
demand; changes in consumer confidence and spending; risks
associated with its status as a “brick and mortar” only retailer;
risks associated with intense competition; its failure to open new
profitable stores, or successfully enter new markets on a timely
basis or at all; the risks associated with doing business with
international manufacturers and suppliers including, but not
limited to, transportation and shipping challenges, and potential
increases in tariffs on imported goods; outbreak of viruses or
widespread illness, including the continued impact of COVID-19 and
continuing or renewed regulatory responses thereto; risks
associated with heightened geopolitical instability due to the
Russia/Ukraine conflict; its inability to operate its stores due to
civil unrest and related protests or disturbances; its failure to
properly hire and to retain key personnel and other qualified
personnel; its inability to obtain favorable lease terms for its
properties; the failure to timely acquire, develop and open, the
loss of, or disruption or interruption in the operations of, its
centralized distribution centers; fluctuations in comparable store
sales and results of operations, including on a quarterly basis;
risks associated with its lack of operations in the growing online
retail marketplace; risks associated with litigation, the expense
of defense, and the potential for adverse outcomes; its inability
to successfully develop or implement its marketing, advertising and
promotional efforts; the seasonal nature of its business; risks
associated with the timely and effective deployment, protection,
and defense of computer networks and other electronic systems,
including e-mail; changes in government regulations, procedures and
requirements; risks associated with natural disasters, whether or
not caused by climate change; and its ability to service
indebtedness and to comply with its financial covenants together
with each of the other factors set forth under the heading “Risk
Factors” in its filings with the United States Securities and
Exchange Commission (“SEC”). Any forward-looking statement made by
us in this press release speaks only as of the date on which it is
made. Factors or events that could cause the Company’s actual
results to differ may emerge from time to time, and it is not
possible for us to predict all of them. The Company is not under
any obligation (and specifically disclaims any such obligation) to
update or alter these forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with
GAAP. Adjusted net income, Adjusted net income per diluted share,
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial
measures. The Company has included these non-GAAP measures in this
press release as these are key measures used by its management and
its board of directors to evaluate its operating performance and
the effectiveness of its business strategies, make budgeting
decision, and evaluate compensation decisions. Adjusted net income,
Adjusted net income per diluted share, Adjusted EBITDA and Adjusted
EBITDA margin have limitations as analytical tools and you should
not consider them in isolation or as a substitute for analysis of
the Company’s results as reported under GAAP. There are limitations
to using non-GAAP financial measures, including those amounts
presented in accordance with the Company’s definitions of Adjusted
net income, Adjusted net income per diluted share, Adjusted EBITDA
and Adjusted EBITDA margin, as they may not be comparable to
similar measures disclosed by its competitors, because not all
companies and analysts calculate Adjusted net income, Adjusted net
income per diluted share, Adjusted EBITDA and Adjusted EBITDA
margin in the same manner. Because of these limitations, you should
consider Adjusted net income, Adjusted net income per diluted
share, Adjusted EBITDA and Adjusted EBITDA margin alongside other
financial performance measures, including, as applicable, net
income and the Company’s other GAAP results. The Company presents
Adjusted net income, Adjusted net income per diluted share,
Adjusted EBITDA and Adjusted EBITDA margin because we consider
these meaningful measures to share with investors because they best
allow comparison of the performance of one period with that of
another period. In addition, Adjusted net income, Adjusted net
income per diluted share, Adjusted EBITDA and Adjusted EBITDA
margin afford investors a view of what management considers its
operating performance to be and the ability to make a more informed
assessment of such operating performance as compared with that of
the prior period.
Adjusted net income is defined as net income excluding the
impact of loss on extinguishment of debt, non-recurring stock-based
compensation expense, transaction costs, divided-related bonus,
certain other expenses, and the tax effect on the above
adjustments. The Company defines Adjusted net income per diluted
shares as Adjusted net income divided by diluted weighted average
common shares outstanding.
The Company defines Adjusted EBITDA as net income before
interest expense, net, income tax expense, and depreciation and
amortization, Adjusted to exclude loss on extinguishment of debt,
stock-based compensation expense, non-cash occupancy-related costs,
lease intangible asset expense, pre-opening expenses, store closing
expenses, executive transition costs, transaction costs,
dividend-related bonus, and certain other adjustments. The Company
defines Adjusted EBITDA margin as Adjusted EBITDA divided by net
sales.
Constant Currency
The Company reports certain operating results on a
constant-currency basis in order to facilitate period-to-period
comparisons of its results without regard to the impact of
fluctuating foreign currency exchange rates. The term foreign
currency exchange rates refer to the exchange rates used to
translate the Company's operating results for all countries where
the transactional currency is not the U.S. Dollar into U.S.
Dollars. Because the Company is a global company, foreign currency
exchange rates used for translation may have a significant effect
on its reported results. In general, the Company's financial
results are affected positively by a weaker U.S. Dollar and are
affected negatively by a stronger U.S. Dollar. References to
operating results on a constant-currency basis mean operating
results without the impact of foreign currency exchange rate
fluctuations.
The Company believes disclosure of constant-currency results is
helpful to investors because it facilitates period-to-period
comparisons of its results by increasing the transparency of the
underlying performance by excluding the impact of fluctuating
foreign currency exchange rates. However, constant-currency results
are non-GAAP financial measures and are not meant to be considered
as an alternative or substitute for comparable measures prepared in
accordance with GAAP. Constant-currency results have no
standardized meaning prescribed by GAAP, are not prepared under any
comprehensive set of accounting rules or principles and should be
read in conjunction with the Company's consolidated financial
statements prepared in accordance with GAAP. Constant-currency
results have limitations in their usefulness to investors and may
be calculated differently from, and therefore may not be directly
comparable to, similarly titled measures used by other
companies.
Constant currency information compares results between periods
as if exchange rates had remained constant period-over-period.
During the thirteen weeks ended and twenty-six weeks ended July 1,
2023, as compared to the thirteen weeks ended and twenty-six weeks
ended July 2, 2022, the U.S. dollar was stronger relative to the
Canadian and Australian dollars which resulted in an unfavorable
foreign currency impact on our operating results. To present this
information, our current operating results in currencies other than
the U.S. dollar are converted into U.S. dollars using the average
exchange rates from the comparative prior period rather than the
actual average exchange rates in effect.
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Balance Sheets
(All amounts in thousands, except
per share amounts, unaudited)
July 1, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
111,565
$
112,132
Trade receivables, net of allowance for
doubtful accounts
12,924
14,092
Inventories
30,192
21,822
Prepaid expenses and other current
assets
57,039
35,647
Derivative asset – current
9,629
8,625
Total current assets
221,349
192,318
Property and equipment, net
209,208
190,518
Right-of-use lease assets
466,746
437,843
Goodwill
687,440
681,447
Intangible assets, net
168,614
170,651
Derivative asset – non-current
26,023
31,077
Other assets
3,788
3,961
Total assets
$
1,783,168
$
1,707,815
Current liabilities:
Accounts payable and accrued
liabilities
$
104,006
$
80,748
Accrued payroll and related taxes
55,619
62,046
Lease liabilities – current
72,234
79,838
Current portion of long-term debt and
short-term borrowings
13,250
50,250
Total current liabilities
245,109
272,882
Long-term debt, net
1,079,701
783,347
Lease liabilities – non-current
388,803
349,194
Deferred tax liabilities, net
68,652
63,141
Other liabilities
13,474
11,916
Total liabilities
1,795,739
1,480,480
Stockholders’ (deficit) equity:
Preferred stock
—
—
Common stock
—
—
Additional paid-in capital
227,335
226,327
Accumulated deficit
(275,801
)
(38,443
)
Accumulated other comprehensive income
35,895
39,451
Total stockholders’ (deficit)
equity
(12,571
)
227,335
Total liabilities and stockholders’
(deficit) equity
$
1,783,168
$
1,707,815
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Income
(All amounts in thousands, except
per share amounts, unaudited)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Amount
% of Sales
Amount
% of Sales
Amount
% of Sales
Amount
% of Sales
Net sales
$
379,102
100.0
%
$
364,668
100.0
%
$
724,786
100.0
%
$
692,135
100.0
%
Operating expenses:
Cost of merchandise sold, exclusive of
depreciation and amortization
154,945
40.9
146,794
40.3
300,698
41.5
290,749
42.0
Salaries, wages and benefits
67,342
17.7
66,103
18.1
159,974
22.1
131,536
19.0
Selling, general and administrative
73,259
19.3
76,298
20.9
150,304
20.7
148,771
21.5
Depreciation and amortization
14,693
3.9
14,043
3.9
29,177
4.0
26,692
3.9
Total operating expenses
310,239
81.8
303,238
83.2
640,153
88.3
597,748
86.4
Operating income
68,863
18.2
61,430
16.8
84,633
11.7
94,387
13.6
Other (expense) income:
Interest expense, net
(27,734
)
(7.3
)
(14,807
)
(4.1
)
(52,204
)
(7.2
)
(29,401
)
(4.2
)
Gain (loss) on foreign currency, net
4,487
1.1
(6,251
)
(1.6
)
5,782
0.8
(8,268
)
(1.2
)
Other income, net
434
0.1
132
—
218
—
55
—
Loss on extinguishment of debt
—
—
—
—
(6,011
)
(0.8
)
(1,023
)
(0.1
)
Other expense, net
(22,813
)
(6.1
)
(20,926
)
(5.7
)
(52,215
)
(7.2
)
(38,637
)
(5.5
)
Income before income taxes
46,050
12.1
40,504
11.1
32,418
4.5
55,750
8.1
Income tax expense
11,000
2.9
9,646
2.6
7,563
1.1
12,961
1.9
Net income
$
35,050
9.2
%
$
30,858
8.5
%
$
24,855
3.4
%
$
42,789
6.2
%
Net income per share, basic
$
0.25
$
0.22
$
0.18
$
0.30
Net income per share, diluted
$
0.24
$
0.21
$
0.17
$
0.29
Basic weighted average shares
outstanding
141,712
141,545
141,705
141,545
Diluted weighted average shares
outstanding
146,174
146,162
146,258
146,162
SAVERS VALUE VILLAGE, INC.
Condensed Consolidated Statements of Cash Flows
(All amounts in thousands,
unaudited)
Twenty-Six Weeks Ended
July 1, 2023
July 2, 2022
Cash flows from operating
activities:
Net income
$
24,855
$
42,789
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock-based compensation expense
1,857
282
Amortization of debt issuance costs and
debt discount
3,223
1,961
Depreciation and amortization
29,177
26,692
Operating lease expense
58,275
58,148
Deferred income taxes, net
5,290
3,748
Loss on extinguishment of debt
6,011
1,023
Other items, net
(10,800
)
14,080
Changes in operating assets and
liabilities:
Trade receivables
(596
)
(7,099
)
Inventories
(8,291
)
(4,772
)
Prepaid expenses and other current
assets
(19,466
)
(6,518
)
Accounts payable and accrued
liabilities
24,727
(3,489
)
Accrued payroll and related taxes
(6,898
)
(19,962
)
Operating lease liabilities
(55,100
)
(55,376
)
Other liabilities
1,526
(989
)
Net cash provided by operating
activities
53,790
50,518
Cash flows from investing
activities:
Purchases of property and equipment
(47,167
)
(57,794
)
Net settlement of derivative
instruments
32
(691
)
Net cash used in investing activities
(47,135
)
(58,485
)
Cash flows from financing
activities:
Proceeds from issuance of long-term debt,
net
529,247
—
Principal payments on long-term debt
(237,525
)
(6,866
)
Advances on revolving line of credit
42,000
53,000
Repayments of revolving line of credit
(79,000
)
(53,000
)
Prepayment premium on extinguishment of
debt
—
(1,023
)
Net settlement of derivative
instruments
3,889
—
Repurchase of shares and shares withheld
to cover taxes
(849
)
—
Payment of debt issuance costs
(4,359
)
(161
)
Dividends paid
(262,235
)
—
Net cash used in financing activities
(8,832
)
(8,050
)
Effect of exchange rate changes on cash
and cash equivalents
1,610
(898
)
Net change in cash and cash
equivalents
(567
)
(16,915
)
Cash and cash equivalents at beginning
of period
112,132
97,915
Cash and cash equivalents at end of
period
$
111,565
$
81,000
The following unaudited table sets forth the computation of net
income per basic and diluted share as shown on the face of the
accompanying condensed consolidated statements of income:
SAVERS VALUE VILLAGE, INC.
Supplemental Detail on Net Income Per Common Share Calculation
(Unaudited)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
(in thousands, except per share data)
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Numerator
Net income
$
35,050
$
30,858
$
24,855
$
42,789
Denominator
Basic weighted average common shares
outstanding
141,712
141,545
141,705
141,545
Dilutive effect of employee stock options
and awards
4,462
4,617
4,553
4,617
Diluted weighted average common shares
outstanding
146,174
146,162
146,258
146,162
Net income per share
Basic
$
0.25
$
0.22
$
0.18
$
0.30
Diluted
$
0.24
$
0.21
$
0.17
$
0.29
The following unaudited tables present net sales by segment for
the periods presented:
SAVERS VALUE VILLAGE, INC.
Supplemental Detail on Net Sales by Segment
(Unaudited)
Thirteen Weeks Ended
(dollars in thousands)
July 1, 2023
July 2, 2022
$ Change
% Change
U.S. Retail
$
196,500
$
188,199
$
8,301
4.4
%
Canada Retail
153,489
149,952
3,537
2.4
Other
29,113
26,517
2,596
9.8
Total net sales
$
379,102
$
364,668
$
14,434
4.0
%
Twenty-Six Weeks Ended
(dollars in thousands)
July 1, 2023
July 2, 2022
$ Change
% Change
U.S. Retail
$
380,521
$
362,222
$
18,299
5.1
%
Canada Retail
286,762
277,861
8,901
3.2
Other
57,503
52,052
5,451
10.5
Total net sales
$
724,786
$
692,135
$
32,651
4.7
%
SAVERS VALUE VILLAGE, INC.
Supplemental Information Reconciliation of GAAP
to Non-GAAP Financial Measures (Unaudited)
The following information relates to non-GAAP financial measures
and should be read in conjunction with the investor call held on
August 10, 2023, discussing the Company’s financial condition and
results of operations for the second quarter.
A reconciliation of net income and net income per diluted share
on a GAAP basis to Adjusted net income and Adjusted net income per
diluted share for the thirteen and twenty-six weeks ended July 1,
2023 and July 2, 2022 is presented in the table below:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
(in thousands, except per share
amounts)
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net
income:
Net income
$
35,050
$
30,858
$
24,855
$
42,789
Loss on extinguishment of debt(1)
—
—
6,011
1,023
Non-recurring stock-based compensation
expense(1)(2)
26
—
26
—
Transaction costs(1)(3)
780
386
1,720
1,180
Dividend-related bonus(1)(4)
—
—
24,097
—
(Gain) loss on foreign currency,
net(1)
(4,487
)
6,251
(5,782
)
8,268
Other adjustments(1)(5)
170
3,515
(464
)
3,356
Tax effect on adjustments
1,018
(3,228
)
(7,426
)
(4,397
)
Adjusted net income
$
32,557
$
37,782
$
43,037
$
52,219
Net income per share
- diluted:
Net income per diluted share
$
0.24
$
0.21
$
0.17
$
0.29
Loss on extinguishment of debt(1)
—
—
0.04
0.01
Non-recurring stock-based compensation
expense(1)(2)
—
—
—
—
Transaction costs(1)(3)
0.01
—
0.01
0.01
Dividend-related bonus(1)(4)
—
—
0.16
—
(Gain) loss on foreign currency,
net(1)
(0.03
)
0.04
(0.04
)
0.06
Other adjustments(1)(5)
—
0.02
—
0.02
Tax effect on adjustments
0.01
(0.02
)
(0.05
)
(0.03
)
Adjusted net income per diluted share*
$
0.22
$
0.26
$
0.29
$
0.36
*May not foot due to rounding
(1)
Presented pre-tax.
(2)
Reflects stock-based compensation
expense related to restricted stock units issued in connection with
the Company’s IPO.
(3)
Transaction costs are comprised
of non-capitalizable expenses related to the Company’s IPO and the
2nd Ave. acquisition, such as accounting, consulting and legal
fees.
(4)
Represents dividend-related bonus
and related taxes paid in conjunction with the Company’s February
2023 dividend.
(5)
Other adjustments include loss on
asset disposals. The twenty-six weeks ended July 1, 2023 further
includes legal settlement proceeds of $0.5 million.
A reconciliation of the Company’s fiscal 2023 outlook for net
income on a GAAP basis to Adjusted net income is presented in the
table below:
Fifty-Two Weeks Ended
(in millions)
December 30, 2023
Net
income:
Net income
$
23
Loss on extinguishment of debt(1)
17
Non-recurring stock-based compensation
expense(1)(2)
69
Transaction costs(1)(3)
2
Dividend-related bonus(1)(4)
24
Gain on foreign currency, net(1)
(6
)
Other adjustments(1)(5)
(0.5
)
Tax effect on adjustments
(31
)
Adjusted net income
$
98
(1)
Presented pre-tax.
(2)
Reflects stock-based compensation
expense related to performance-based options and restricted stock
units issued in connection with the Company’s IPO.
(3)
Transaction costs are comprised
of non-capitalizable expenses related to the Company’s IPO and the
2nd Ave. acquisition, such as accounting, consulting and legal
fees.
(4)
Represents dividend-related bonus
and related taxes paid in conjunction with the Company’s February
2023 dividend.
(5)
Reflects legal settlement
proceeds of $0.5 million.
A reconciliation of GAAP net income to Adjusted EBITDA for the
thirteen and twenty-six weeks ended July 1, 2023 and July 2, 2022
is presented in the table below:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
(dollars in thousands)
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net income
$
35,050
$
30,858
$
24,855
$
42,789
Interest expense, net
27,734
14,807
52,204
29,401
Income tax expense
11,000
9,646
7,563
12,961
Depreciation and amortization
14,693
14,043
29,177
26,692
Loss on extinguishment of debt(1)
—
—
6,011
1,023
Stock-based compensation expense(2)
940
120
1,857
282
Non-cash occupancy-related costs(3)
714
818
1,411
1,511
Lease intangible asset expense(4)
1,027
2,865
2,153
5,083
Pre-opening expenses(5)
1,214
881
2,592
2,620
Store closing expenses(6)
419
837
867
661
Executive transition costs(7)
—
231
—
1,124
Transaction costs(8)
780
386
1,720
1,180
Dividend-related bonus(9)
—
—
24,097
—
(Gain) loss on foreign currency, net
(4,487
)
6,251
(5,782
)
8,268
Other adjustments(10)
170
3,515
(464
)
3,356
Adjusted EBITDA
$
89,254
$
85,258
$
148,261
$
136,951
Net income margin
9.2
%
8.5
%
3.4
%
6.2
%
Adjusted EBITDA margin
23.5
%
23.4
%
20.5
%
19.8
%
(1)
Removes the effects of the loss
on debt extinguishment in relation to the partial repayment of
outstanding borrowings under the Term Loan Facility on February 6,
2023 and the repayment of a mortgage loan on January 6, 2022.
(2)
Represents non-cash stock based
compensation expense related to stock options and restricted stock
units granted to certain of the Company’s employees and
directors.
(3)
Represents the difference between
cash and straight-line lease expense for all periods.
(4)
Represents lease expense
associated with acquired lease intangibles. Prior to the adoption
of Topic 842, this expense was included within depreciation and
amortization.
(5)
Pre-opening expenses include
expenses incurred in the preparation and opening of new stores and
processing locations, such as payroll, training, travel, occupancy
and supplies.
(6)
Costs associated with the closing
of certain retail locations, including lease termination costs,
amounts paid to third parties for rent reduction negotiations, and
fees paid to landlords for store closings.
(7)
Represents severance costs
associated with executive leadership changes and the 2nd Ave.
Acquisition.
(8)
Transaction costs are comprised
of non-capitalizable expenses related to the Company’s IPO and the
2nd Ave. acquisition, such as accounting, consulting and legal
fees.
(9)
Represents dividend-related bonus
and related taxes paid in conjunction with the Company’s February
2023 dividend.
(10)
Other adjustments include loss on
asset disposals. The twenty-six weeks ended July 1, 2023 further
includes legal settlement proceeds of $0.5 million.
Constant-currency
The Company calculates constant-currency net sales by
translating current-period net sales using the average exchange
rates from the comparative prior period rather than the actual
average exchange rates in effect. The Company’s constant-currency
net sales are not financial measures prepared in accordance with
GAAP.
A reconciliation of GAAP net sales to constant-currency net
sales for the thirteen and twenty-six weeks ended July 1, 2023 and
July 2, 2022 is presented in the table below:
Thirteen Weeks Ended
(dollars in thousands)
July 1, 2023
July 2, 2022
$ Change
% Change
Net sales
$
379,102
$
364,668
$
14,434
4.0
%
Impact of foreign currency
8,258
n/a
8,258
n/m
Constant-currency net sales
$
387,360
$
364,668
$
22,692
6.2
%
Twenty-Six Weeks Ended
(dollars in thousands)
July 1, 2023
July 2, 2022
$ Change
% Change
Net sales
$
724,786
$
692,135
$
32,651
4.7
%
Impact of foreign currency
17,767
n/a
17,767
n/m
Constant-currency net sales
$
742,553
$
692,135
$
50,418
7.3
%
n/a - not applicable
n/m - not meaningful
Supplemental Metrics
In assessing the performance of the Company’s business, it
considers a variety of supplemental metrics to evaluate the
performance of its business, identify trends, formulate financial
projections and make strategic decisions. The Company believes that
these metrics provide useful information to investors and others in
understanding and evaluating its results of operations in the same
manner as its management team.
The following table summarizes certain supplemental metrics for
the thirteen and twenty-six weeks ended July 1, 2023 and July 2,
2022:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Comparable Store Sales Growth
United States
5.6 %
1.7 %
5.6 %
4.8 %
Canada
5.5 %
61.7 %
7.1 %
51.8 %
Total(1)
5.5 %
22.4 %
6.3 %
21.3 %
Number of Stores
United States
152
149
152
149
Canada
154
150
154
150
Total(1)
318
309
318
309
Pounds processed (lbs mm)
246
256
485
496
Sales yield
$ 1.49
$ 1.38
$ 1.44
$ 1.33
(1)
Total comparable store sales growth and total number of stores
includes the Company’s Australia retail locations, in addition to
the United States and Canada.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810325196/en/
Investor: John Rouleau/Lyn Walther ICR, Inc.
Investors@savers.com
Media: Sara Gaugl Savers Value Village
sgaugl@savers.com
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