Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect” or “anticipate” or the negatives thereof, variations thereon or similar terminology. The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but may be found in other locations as well, and include statements regarding our expectations with respect to the impact of our brand re-positioning efforts on sales, strategic initiatives to grow our business, expected marketing costs in 2023, gross margin rates in 2023, expected capital expenditures in 2023, expected timing of stock repurchases under our board-approved stock repurchase program, and our plans with respect to our store portfolio, including anticipated re-brandings and new stores. These forward-looking statements generally relate to plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. The forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and notes to those statements included elsewhere in this Quarterly Report and our audited Consolidated Financial Statements for the year ended January 28, 2023, included in our Annual Report on Form 10-K for the year ended January 28, 2023, as filed with the Securities and Exchange Commission on March 16, 2023 (our “Fiscal 2022 Annual Report”).
Numerous factors could cause our actual results to differ materially from such forward-looking statements. This discussion sets forth certain risks and uncertainties that may have an impact on future results and direction of our Company, including, without limitation, risks related to inflationary pressures, the failure of the U.S. federal government to avoid a default and potential federal government shutdown, changes in consumer spending in response to the economy, increased labor costs, the continuing economic impact of the war in Ukraine, our ability to manage appropriate inventory levels, our ability to successfully execute on our corporate strategy, our ability to predict customer tastes and fashion trends, our ability to grow market share, and the other risks and uncertainties set forth in the “Risk Factors” section in Part I, Item 1A of our Fiscal 2022 Annual Report.
All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. These forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances in which the forward-looking statement is based.
BUSINESS SUMMARY
Destination XL Group, Inc., together with our consolidated subsidiaries (the “Company”), is the largest specialty retailer of big and tall men’s clothing with retail and direct operations in the United States. We operate under the trade names of Destination XL®, DXL®, DXL Outlets, Casual Male XL® and Casual Male XL Outlets. At April 29, 2023, we operated 218 Destination XL stores, 16 DXL outlet stores, 28 Casual Male XL retail stores, 19 Casual Male XL outlet stores and a digital business, including an e-commerce site at dxl.com and a mobile site, m.destinationXL.com, mobile app and third-party marketplaces.
Unless the context indicates otherwise, all references to “we,” “our,” “us” and “the Company” refer to Destination XL Group, Inc. and our consolidated subsidiaries. We refer to our fiscal years, which end on February 3, 2024, January 28, 2023 and January 29, 2022 as "fiscal 2023", “fiscal 2022,” and “fiscal 2021” respectively. Fiscal 2023 is a 53-week period and fiscal 2022 and fiscal 2021 were 52-week periods.
SEGMENT REPORTING
We currently have two principal operating segments: our stores and direct business. We consider our stores and direct business segments to be similar in terms of economic characteristics, production processes and operations, and have therefore aggregated them into one reportable segment, retail segment, consistent with our omni-channel business approach.
COMPARABLE SALES
Our customer’s shopping experience continues to evolve across multiple channels, and we are continually adapting to meet the guest’s needs. The majority of our stores have the capability of fulfilling online orders if merchandise is not available in the warehouse. As a result, we continue to see more transactions that begin online but are ultimately completed at the store level. Similarly, if a customer visits a store and the item is out of stock, the associate can order the item through our website. A customer also has the ability to order online and pick-up in a store and at curbside. We define store sales as sales that originate and are fulfilled directly at the store level.
18
Digital commerce sales, which we also refer to as direct sales, are defined as sales that originate online, whether through our website, at the store level or through a third-party marketplace.
Stores that have been open for at least 13 months are included in comparable sales. Stores that have been remodeled or re-located during the period are also included in our determination of comparable stores sales. Stores that have been expanded by more than 25% are considered non-comparable for the first 13 months. If a store is temporarily closed for more than 7 days, it is removed from the calculation of comparable sales until it reopens and upon its anniversary is once again removed from the calculation until the reopen date. The method of calculating comparable sales varies across the retail industry and, as a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other retailers.
RESULTS OF OPERATIONS
Executive Summary
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
(in millions, except percentage of sales and per share data) |
|
|
|
|
|
|
|
Sales |
|
$ |
125.4 |
|
|
$ |
127.7 |
|
|
Net income |
|
$ |
7.0 |
|
|
$ |
13.4 |
|
|
Adjusted net income (Non-GAAP basis) |
|
$ |
7.0 |
|
|
$ |
9.7 |
|
|
Adjusted EBITDA (Non-GAAP basis) |
|
$ |
12.6 |
|
|
$ |
17.3 |
|
|
|
|
|
|
|
|
|
|
Gross margin. as a percentage of sales |
|
|
48.6 |
% |
|
|
50.0 |
% |
|
SG&A expenses, as a percentage of sales |
|
|
38.5 |
% |
|
|
36.5 |
% |
|
|
|
|
|
|
|
|
|
Per diluted share: |
|
|
|
|
|
|
|
Net income |
|
$ |
0.11 |
|
|
$ |
0.20 |
|
|
Adjusted net income (Non-GAAP basis) |
|
$ |
0.11 |
|
|
$ |
0.14 |
|
|
We are pleased to report our ninth consecutive quarter of positive comparative sales growth. The first quarter was a more challenging growth quarter for the retail industry as a whole, which was affected by the macroeconomic headwinds that have impacted consumer spending. While we saw a softening in consumer demand this quarter, we do believe that the work that we have done over the past two years to transform and reposition the DXL brand enabled us to mitigate some of this consumer weakness. For the first quarter of fiscal 2023, we had a comparable sale increase of 0.6%, which was driven primarily by our stores which were up 1.5%, partially offset by our direct business which decreased 1.6%. Our merchandise margins decreased approximately 110 basis points from the first quarter of fiscal 2022 due to increased costs on certain private-label merchandise, much of which we absorbed rather than passing on to the customer through price increases. We also experienced increased shipping costs for our direct-to-consumer orders and increased costs related to our loyalty program, which we relaunched late in fiscal 2022. These costs were partially offset by reduced inbound freight costs. Our SG&A costs were higher by approximately $1.7 million, due primarily to an increase in payroll costs for roles that were added last year to support our sales growth, merit increases in the prior year, as well as increased benefit costs.
Net income for the first quarter of fiscal 2023 was $7.0 million, or $0.11 per diluted share, as compared to net income of $13.4 million, or $0.20 per diluted share, for the first quarter of fiscal 2022. Assuming a normalized tax rate and adjusting for asset impairments (gains), if any, on a non-GAAP basis, net income for the first quarter of fiscal 2023 was $7.0 million, or $0.11 per diluted share, as compared to adjusted net income of $9.7 million, or $0.14 per diluted share, for the first quarter of fiscal 2022.
At April 29, 2023, we had cash and investments of $46.0 million as compared to $7.5 million at April 30, 2022. At April 29, 2023, we had no debt outstanding and no borrowings during the quarter. Our unused excess availability at April 29, 2023 was $93.8 million. Our inventory was in a healthy position at quarter-end, down 11% to 2019 (pre-pandemic) levels with turnover up over 25%, and we expect to continue to maintain our low promotional cadence. With cash on hand, no outstanding debt and full availability under our credit facility, we are continuing to pursue our strategic initiatives this year to further grow our business.
As discussed below, the Company's Board of Directors approved a $15.0 million stock repurchase program in March 2023. There were no repurchases of stock during the first quarter of fiscal 2023. We expect to begin executing on the stock repurchase program in the second quarter of fiscal 2023, however the timing and the amount of any repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The stock repurchase program will expire on March 16, 2024 and may be suspended, terminated or modified at any time for any reason.
19
Financial Summary
Sales
The following table presents sales by segment for the three months ended April 29, 2023 and April 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
(in thousands) |
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
|
Store sales |
|
$ |
87,297 |
|
69.6% |
$ |
88,279 |
|
69.4% |
|
Direct sales |
|
|
38,145 |
|
30.4% |
|
38,994 |
|
30.6% |
|
Retail segment |
|
$ |
125,442 |
|
|
$ |
127,273 |
|
|
|
Wholesale segment |
|
|
— |
|
|
|
382 |
|
|
|
Total sales |
|
$ |
125,442 |
|
|
$ |
127,655 |
|
|
|
Total sales for the first quarter of fiscal 2023 were $125.4 million, as compared to $127.7 million in the first quarter of fiscal 2022. Comparable sales for the first quarter were up 0.6% with comparable sales from our stores up 1.5% and our direct business down 1.6%. This increase in comparable sales was offset by sales from closed stores and a decrease in non-comparable sales.
Sales for the quarter started off strong with a comparable sales increase of 9.1% in February. However, we saw a comparable sales decline in March of (2.8)% and in April of (1.9)%. The slowdown in sales was primarily driven by decreases in traffic, both to our stores and web, but was partially offset by increased dollars per transaction and conversion. Throughout the quarter, our stores performed better than our direct business, but we continued to see sales growth from online marketplaces and our mobile app.
Gross Margin Rate
For the first quarter of fiscal 2023, our gross margin rate, inclusive of occupancy costs, was 48.6% as compared to a gross margin rate of 50.0% for the first quarter of fiscal 2022.
Our gross margin rate decreased by 140-basis points, with a decrease in merchandise margin of 110-basis points and an increase of 30-basis points in occupancy costs, primarily due to the deleveraging of sales. The decrease in merchandise margin of 110-basis points was due to increased costs on certain private-label merchandise, much of which we absorbed rather than passing on to the customer through price increases. We also experienced increased shipping costs related to direct-to-consumer shipments, and costs related to our loyalty program with more sales tendered with loyalty certificates as compared to the first quarter of fiscal 2022. These cost increases were partially offset by lower inbound freight costs. For the year, we expect gross margin rates to be approximately 100-basis points lower than fiscal 2022.
Selling, General and Administrative Expenses
As a percentage of sales, SG&A (selling, general and administrative) expenses for the first quarter of fiscal 2023 were 38.5% as compared to 36.5% for the first quarter of fiscal 2022.
On a dollar basis, SG&A expenses increased by $1.7 million as compared to the first quarter of fiscal 2022. The increase was primarily due to an increase in payroll-related costs from new positions added in the past year and last year's merit increases. We also saw increases in benefit costs over the first quarter of the prior year. The increase in payroll last year was added to support the Company's growth initiatives.
Management views SG&A expenses through two primary cost centers: Customer Facing Costs and Corporate Support Costs. Customer Facing Costs, which include store payroll, marketing and other store and direct operating costs, represented 21.1% of sales in the first quarter of fiscal 2023 as compared to 20.2% of sales in the first quarter of fiscal 2022. Corporate Support Costs, which include the distribution center and corporate overhead costs, represented 17.4% of sales in the first quarter of fiscal 2023 as compared to 16.3% of sales in the first quarter of fiscal 2022. Marketing costs for the first quarter were 5.5% of sales as compared to 5.3% of sales for the first quarter of fiscal 2022. For fiscal 2023, marketing costs are expected to be approximately 5.7% of sales.
Impairment (Gain) of Assets
There were no impairments or non-cash gains recognized in the first quarter of fiscal 2023. During the first quarter of fiscal 2022, we recorded a non-cash gain of $0.5 million related to the reduction of our operating lease liability in connection with our decision to close certain retail stores, which resulted in a revaluation of the lease liability. The portion of the gain that related to a previously recorded impairment charge against the operating lease right-of-use asset was included as an offset to previously recorded asset impairment charge. Accordingly, $0.4 million was included in the Impairment (Gain) of Assets line of the Consolidated Statement of Operations. The remaining gain was recorded as a reduction to occupancy costs.
20
Depreciation and Amortization
Depreciation and amortization for the first quarter of fiscal 2023 decreased to $3.5 million as compared to $4.0 million for the first quarter of fiscal 2022. The decrease was due to a lower depreciable cost base, especially from our store assets, due to our limited capital spending since fiscal 2020.
Interest Expense, Net
Net interest income for the first quarter of fiscal 2023 was $0.3 million, as compared to interest expense of $0.1 million for the first quarter of fiscal 2022. For the first quarter of fiscal 2023, interest income was earned from investments in U.S. government-backed investments and money market accounts. Interest costs for both periods were minimal because we had no outstanding debt and no borrowings under our credit facility during either period.
Income Taxes
As a result of the valuation allowance against our deferred tax assets being substantially released during fiscal 2022, we have returned to a normal tax provision for fiscal 2023. Accordingly, for the first quarter of fiscal 2023, the effective tax rate was 26.6% as compared to 0.8% for the first quarter of fiscal 2022. The effective tax rate for the first quarter of fiscal 2022 was reduced from the statutory rate due to the utilization of fully reserved net operating loss carryforwards ("NOLs").
Net Income
For the first quarter of fiscal 2023, we recorded net income of $7.0 million, or $0.11 per diluted share, as compared to net income of $13.4 million, or $0.20 per diluted share, for the first quarter of fiscal 2022.
On a non-GAAP basis, assuming a normalized tax rate of 26% and adjusting for asset impairments (gains), if any, adjusted net income for the first quarter of fiscal 2023 was $7.0 million, or $0.11 per diluted share, as compared to adjusted net income of $9.7 million, or $0.14 per diluted share for the first quarter of fiscal 2022. There was no asset impairment (gains) for the first quarter of fiscal 2023 and an asset impairment (gain) of $(0.4) million for the first quarter of fiscal 2022.
Inventory
As of April 29, 2023, our inventory increased approximately $3.4 million to $100.3 million, as compared to $96.9 million at April 30, 2022. While our inventory increased over last year's first quarter, inventory levels were down 11% and turnover was up over 25% from the first quarter of fiscal 2019, or pre-pandemic levels. Managing our inventory remains a primary focus for us given the potential impact that inflation may have on consumer spending. Based on the sales trends we started to see in March 2023, we took proactive measures and adjusted our receipt plan. At April 29, 2023, our clearance inventory was 7.8% of our total inventory, as compared to 6.9% at April 30, 2022 and below our historical benchmark of approximately 10.0%.
SEASONALITY
Historically, and consistent with the retail industry, we have experienced seasonal fluctuations as it relates to our operating income, net income, and free cash flow. Traditionally, a significant portion of our operating income, net income, and free cash flow is generated in the second and fourth quarters. Our inventory is typically at peak levels by the end of the third quarter, which represents a significant use of cash, which is then relieved in the fourth quarter as we sell-down our inventory through the holiday shopping season.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are our cash and cash equivalents, short-term investments, cash generated from operations and availability under our credit facility, which is discussed below. At April 29, 2023, we had no outstanding debt, including no borrowings under our credit facility during the first three months of fiscal 2023. Cash that is in excess of our forecasted needs may be invested in money market accounts and U.S. government-backed securities.
We believe that our cash and cash equivalent balances, short-term investments, cash generated from operations, and borrowings available to us under our credit facility will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months. However, we remain cautious regarding the effect that the current macroeconomic conditions, including inflation and rising interest costs, may have on consumer spending as well as the continuing geopolitical impact of Russia's invasion of Ukraine on our business and the global economy. We believe that cash flows from operating activities and cash on hand will also be sufficient to satisfy our capital requirements in the longer-term, however, to the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital will be financed by our credit facility, as discussed below.
For the first three months of fiscal 2023, cash flow from operations decreased to $(4.2) million as compared to $(1.5) million for the first three months of fiscal 2022. Free cash flow, a non-GAAP measure, decreased to $(5.9) million for the first three months of fiscal
21
2023 as compared to $(2.7) million for the first three months of fiscal 2022. The first quarter is historically a period of net cash outflows as we build our seasonal inventories and pay out prior year performance incentive accruals. The year-over-year decrease in free cash flow was primarily due to our lower earnings.
Cash flow used for investing activities increased by $16.5 million for the first quarter of fiscal 2023 as compared to the first quarter of fiscal 2022, primarily due to the purchase of $16.1 million of short-term investments.
Cash flow used for financing activities for the first three months of fiscal 2023 decreased by $5.0 million as compared to the first three months of fiscal 2022, primarily due to the repurchase of $5.0 million shares of the Company's common stock in the first quarter of fiscal 2022. There were no repurchases of common stock during the first quarter of fiscal 2023.
Stock Repurchase Program
In March 2023, the Company’s Board of Directors approved a stock repurchase program. Under the stock repurchase program, the Company may repurchase up to $15.0 million of its common stock through open market and privately negotiated transactions. The Company did not repurchase any shares in the first quarter of fiscal 2023. Any shares of repurchased common stock will be held as treasury stock. We expect to begin executing on the stock repurchase program in the second quarter of fiscal 2023, however the timing and the amount of any repurchases will be determined based on the Company’s evaluation of market conditions and other factors. The stock repurchase program will expire on March 16, 2024 and may be suspended, terminated or modified at any time for any reason.
Credit Facility
On October 28, 2021, we entered into a $125.0 million revolving credit agreement with Citizens Bank, N.A., with a maturity date of October 28, 2026. On April 20, 2023, the Company entered into the First Amendment to Credit Agreement which provided for the replacement of the London Interbank Offering Rate (“LIBOR”) interest rate options with the secured overnight financing rate ("SOFR") based options (as amended, the "Credit Agreement"). The Credit Agreement includes a sublimit of $20.0 million for commercial and standby letters of credit and a sublimit of up to $15.0 million for swingline loans. April 20, 2023, borrowings under the Credit Agreement bear interest at either a Base Rate loan or Daily Simple SOFR rate, at the Company's option. Base Rate loans will bear interest at a rate equal to (i) the greater of: (a) the Prime Rate, (b) the Federal Funds effective rate plus 0.50% per annum and (c) the Daily Simple SOFR rate plus 1.00% per annum (provided the Base Rate shall never be less than the Floor (as defined in the First Amendment)), plus (ii) a varying percentage, based on the Company’s average excess availability, of either 0.25% or 0.50% (the “Applicable Margin”). Daily Simple SOFR loans will bear interest at a rate equal to (i) the Daily Simple SOFR rate plus an adjustment of 0.10% (provided the Daily Simple SOFR rate shall never be less than the Floor), plus (ii) the Applicable Margin. Any swingline loan will continue to bear interest at a rate equal to the Base Rate plus the Applicable Margin. We are subject to an unused line fee of 0.25%.
We had no outstanding borrowings under our Credit Agreement at April 29, 2023 and no borrowings during the first three months of fiscal 2023. At April 29, 2023, outstanding standby letters of credit were $3.8 million and outstanding documentary letters of credit were $1.3 million. The average unused excess availability during the first three months of fiscal 2023 was approximately $82.5 million and the unused excess availability at April 29, 2023 was $93.8 million.
Capital Expenditures
The following table sets forth the open stores and related square footage at April 29, 2023 and April 30, 2022, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
Store Concept |
|
Number of Stores |
|
|
Square Footage |
|
|
Number of Stores |
|
|
Square Footage |
|
|
(square footage in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
DXL Retail |
|
|
218 |
|
|
|
1,663 |
|
|
|
219 |
|
|
|
1,671 |
|
|
DXL Outlets |
|
|
16 |
|
|
|
80 |
|
|
|
16 |
|
|
|
80 |
|
|
Casual Male XL Retail |
|
|
28 |
|
|
|
92 |
|
|
|
32 |
|
|
|
106 |
|
|
Casual Male Outlets |
|
|
19 |
|
|
|
57 |
|
|
|
19 |
|
|
|
57 |
|
|
Total Stores |
|
|
281 |
|
|
|
1,892 |
|
|
|
286 |
|
|
|
1,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have executed our first lease agreement this year for a new store in the Los Angeles market. We are very close on our second new store which will be in the New York market and we expect to sign at least one more lease for a third whitespace store that we expect to open by the end of 2023. We have also started to convert four Casual Male stores to the DXL store format and we have started to remodel one existing DXL store. By the end of fiscal 2023, we expect to open 3 new DXL stores and 10 Casual Male to DXL conversion stores. We expect to have begun construction on at least 5 DXL remodels by the end of the year. Over the next three to
22
five years, we believe we could potentially open 50 new DXL stores across the country. We expect our capital expenditures to range from $19.0 million to $21.0 million in fiscal 2023.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to the critical accounting policies and estimates disclosed in our Fiscal 2022 Annual Report. See Note 1 to the Consolidated Financial Statements included in this report for information on recent accounting pronouncements and changes in accounting principles.
Non-GAAP Financial Measures
Free cash flow, adjusted net income, adjusted net income per diluted share, adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures. These non-GAAP measures are not presented in accordance with GAAP and should not be considered superior to or as a substitute for net income or cash flows from operating activities or any other measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, the non-GAAP measures presented in this Quarterly Report may not be comparable to similar measures used by other companies. We believe that inclusion of these non-GAAP measures helps investors gain a better understanding of our performance, especially when comparing such results to previous periods and that they are useful as an additional means for investors to evaluate our operating results, when reviewed in conjunction with our GAAP financial statements.
Reconciliations of these non-GAAP measures are presented in the following tables (certain columns may not foot due to rounding):
Free Cash Flow. We define free cash flow as cash flow from operating activities less capital expenditures. Free cash flow excludes the mandatory and discretionary repayment of debt. Free cash flow is a metric that management uses to monitor liquidity. We expect to fund our ongoing capital expenditures with cash flow from operations.
The following table reconciles free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
(in millions) |
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
Cash flow from operating activities (GAAP basis) |
|
$ |
(4.2 |
) |
|
$ |
(1.5 |
) |
|
Capital expenditures |
|
|
(1.7 |
) |
|
|
(1.2 |
) |
|
Free Cash Flow (non-GAAP basis) |
|
$ |
(5.9 |
) |
|
$ |
(2.7 |
) |
|
Adjusted Net Income and Adjusted Net Income Per Diluted Share: The above discussion includes adjusted net income, on a non-GAAP basis. For comparability, the adjusted net income has been calculated to adjust for asset impairment charge (gain), if any, and to apply a normal tax rate of 26%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
|
$ |
|
|
Per diluted share |
|
|
$ |
|
|
Per diluted share |
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$ |
7.0 |
|
|
$ |
0.11 |
|
|
$ |
13.4 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjust for impairment (gain) of assets |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
|
|
Add back actual income tax provision |
|
|
2.5 |
|
|
|
|
|
|
0.1 |
|
|
|
|
Add income tax provision, assuming a normal tax rate of 26% |
|
|
(2.5 |
) |
|
|
|
|
|
(3.4 |
) |
|
|
|
Adjusted net income (non-GAAP basis) |
|
$ |
7.0 |
|
|
$ |
0.11 |
|
|
|
9.7 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding on a diluted basis |
|
|
|
|
|
66.3 |
|
|
|
|
|
|
68.4 |
|
23
Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization and is before any impairment of assets, if any. We believe that adjusted EBITDA is useful to investors in evaluating our performance and is a key metric to measure profitability and economic productivity. The following table reconciles adjusted EBITDA from net income:
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
|
(in millions) |
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$ |
7.0 |
|
|
$ |
13.4 |
|
|
Add back: |
|
|
|
|
|
|
|
Impairment (gain) of assets |
|
|
— |
|
|
|
(0.4 |
) |
|
Provision for income taxes |
|
|
2.5 |
|
|
|
0.1 |
|
|
Interest (income) expense |
|
|
(0.3 |
) |
|
|
0.1 |
|
|
Depreciation and amortization |
|
|
3.5 |
|
|
|
4.0 |
|
|
Adjusted EBITDA (non-GAAP basis) |
|
$ |
12.6 |
|
|
$ |
17.3 |
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
125.4 |
|
|
$ |
127.7 |
|
|
Adjusted EBITDA margin (non-GAAP), as a percentage of sales |
|
|
10.1 |
% |
|
|
13.5 |
% |
|