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Dover Saddlery Reports Second Quarter 2011 Financial Results

LITTLETON, MA -- (MARKET WIRE) -- 08/09/11 -- Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multi-channel retailer of equestrian products, today reported financial results for the second quarter ended June 30, 2011.

Second Quarter Results

Total revenues for the second quarter of 2011 increased 2.0% to $20.2 million compared with $19.9 million achieved in the same period in the prior year. Retail channel revenues increased $1.1 million or 16.1% to $8.1 million, and same-store sales increased 14.1%.

Net income for the quarter decreased to $627,000 or $0.12 per diluted share compared to $869,000 or $0.16 per diluted share for the corresponding quarter of 2010. When excluding the one-time gain of $402,000 from the insurance settlement from the Hobby Horse investment achieved in the second quarter of 2010, adjusted income before taxes ("IBT") increased $58,000 or 5.5% from $1,050,000 to $1,108,000.

Adjusted EBITDA for the second quarter of 2011 was $1.42 million, compared to $1.52 million in the second quarter of 2010.

"During the second quarter we experienced very strong sales in our retail stores," said Stephen L. Day, president and CEO of Dover Saddlery. "At the end of the quarter we had a very successful grand opening at our new store in Parker, Colorado. Both existing direct and new retail customers flocked to the new location and seem delighted to now have a local Dover Saddlery tack store in their community. The success of this grand opening and the 14.1% increase in same-store sales is clearly showing the strength of our retail expansion plan and the desire for our customers to shop retail whenever possible."

Dover Saddlery opened one store in the second quarter of 2011, bringing the total number of retail stores to fourteen. Dover Saddlery is planning to open a second store in the fall of 2011 in the Midwest.

Year-to-Date Results

For the first six months of 2011, total revenues increased 4.0% to $37.5 million, compared to $36.1 million for the same period in 2010. Revenues from the retail channel increased 15.8% to $13.3 million and same-store sales increased 14.6%.

Adjusted EBITDA for the first six months of 2011 increased 35.8% to $2.3 million compared to $1.7 million achieved in the corresponding period in 2010. Net income for the first six months of 2011 increased 11.1% to $752,000 or $0.14 per diluted share, compared to $677,000 or $0.12 per diluted share for the first six months of 2010. When excluding the one-time gain of $402,000 from the insurance settlement from the Hobby Horse investment achieved in the second quarter of 2010, adjusted income before taxes ("IBT") increased $611,000 or 81.5% to $1,361,000 from $750,000.

A reconciliation of the net income calculated in accordance with GAAP and the non-GAAP adjusted EBITDA measure is provided in the table accompanying this earnings release.

A reconciliation of the net income calculated in accordance with GAAP and the non-GAAP Adjusted IBT measure is provided in the table accompanying this earnings release.

Business Outlook 2011

Until there is greater long-term visibility on sustainable economic conditions and consumer behavior, the Company is not providing guidance on business prospects in 2011.

Today's Teleconference and Webcast

Dover Saddlery will be hosting a conference call at 8:30 A.M. ET today to discuss the second quarter 2011 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at http://investor.shareholder.com/DOVR/; this web cast will be archived for a year.

About Dover Saddlery, Inc.

Dover Saddlery, Inc. (NASDAQ: DOVR) is the leading multi-channel retailer of equestrian products in the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a broad and distinctive selection of competitively priced, brand-name products for horse and rider through catalogs, the Internet and company-owned retail stores. Dover Saddlery, Inc. serves the English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.

For more information, please call 1-978-952-8062 or visit www.DoverSaddlery.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements made about the Company's business outlook for fiscal 2011, the prospects for continued retail channel and same store sales growth, and operating income and cash flow improvements. All statements other than statements of historical fact included in this press release regarding the Company's strategies, plans, objectives, expectations, and future operating results are forward-looking statements. Although Dover believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. These forward-looking statements involve significant risks and uncertainties, including those discussed in this release and others that can be found in "Item 1A Risk Factors" of Dover Saddler's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Dover Saddlery is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those Dover Saddlery projects.




                   DOVER SADDLERY, INC. AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

              (In thousands, except share and per share data)

                                (unaudited)



                               Three Months Ended       Six Months Ended

                              June 30,    June 30,    June 30,    June 30,

                                2011        2010        2011        2010



Revenues, net - direct       $   12,172  $   12,901  $   24,240  $   24,603

Revenues, net - retail

 stores                           8,075       6,954      13,293      11,478

                             ----------  ----------  ----------  ----------

Revenues, net - total        $   20,247  $   19,855  $   37,533  $   36,081

Cost of revenues                 12,767      12,404      23,484      22,783

                             ----------  ----------  ----------  ----------

Gross profit                      7,480       7,451      14,049      13,298

Selling, general and

 administrative expenses          6,306       6,163      12,227      12,056

                             ----------  ----------  ----------  ----------

Income from operations            1,174       1,288       1,822       1,242

Interest expense, financing

 and other related costs,

 net                                103         259         477         510

Other investment income             (37)       (423)        (16)       (420)

                             ----------  ----------  ----------  ----------

Income before income tax

 provision                        1,108       1,452       1,361       1,152

Provision for income taxes          481         583         609         475

                             ----------  ----------  ----------  ----------

Net income                   $      627  $      869  $      752  $      677

                             ==========  ==========  ==========  ==========





Net income per share

Basic                        $     0.12  $     0.16  $     0.14  $     0.13

                             ==========  ==========  ==========  ==========

Diluted                      $     0.12  $     0.16  $     0.14  $     0.12

                             ==========  ==========  ==========  ==========

Number of shares used in per

 share calculation

Basic                         5,288,000   5,268,000   5,287,000   5,266,000

Diluted                       5,413,000   5,454,000   5,339,000   5,425,000



Other Operating Data:



Number of retail stores(1)           14          13          14          13

Capital expenditures                281         183         402         214

Gross profit margin                36.9%       37.5%       37.4%       36.9%



(1) Includes thirteen Dover-branded stores and one Smith Brothers store.

 The Parker, CO Dover-branded store opened in Q2 2011.





                   DOVER SADDLERY, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED BALANCE SHEETS

              (In thousands, except share and per share data)

                                (unaudited)



                                                         June 30,  Dec. 31,

                                                           2011      2010

ASSETS

  Current assets:

  Cash and cash equivalents                              $    295  $    745

  Accounts receivable                                         826       533

  Inventory                                                18,285    15,869

  Prepaid catalog costs                                       904       930

  Prepaid expenses and other current assets                 1,070       901

  Deferred income taxes                                       117       105

                                                         --------  --------



Total current assets                                       21,497    19,083



Net property and equipment                                  3,062     3,025



Other assets:

  Deferred income taxes                                       943       848

  Intangibles and other assets, net                           576       593

                                                         --------  --------

Total other assets                                          1,519     1,441

                                                         --------  --------

Total assets                                             $ 26,078  $ 23,549

                                                         ========  ========



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Current portion of capital lease                       $     97  $     97

  Accounts payable                                          1,924     2,073

  Accrued expenses and other current liabilities            3,862     5,425

  Income taxes payable                                         79       414

                                                         --------  --------

Total current liabilities                                   5,962     8,009



Long-term liabilities:

  Revolving line of credit                                  3,450        --

  Term note                                                 5,500        --

  Subordinated notes payable, net                              --     5,293

  Capital lease obligation, net of current portion             46        89

  Interest rate swap derivative                               174        --

                                                         --------  --------

Total long-term liabilities                                 9,170     5,382

Stockholders' equity:

  Common stock, par value $0.0001 per share; 15,000,000

   shares authorized; issued 5,288,027 as of June 30,

   2011 and 5,277,161 as of December 31, 2010,

   respectively                                                 1         1

Additional paid in capital                                 45,530    45,391

Treasury stock, 795,865 shares at cost                     (6,082)   (6,082)

Other comprehensive loss                                     (103)       --

Accumulated deficit                                       (28,400)  (29,152)

                                                         --------  --------

Total stockholders' equity                                 10,946    10,158

                                                         --------  --------

Total liabilities and stockholders' equity               $ 26,078  $ 23,549

                                                         ========  ========



Non-GAAP Financial Measures and Information

From time to time, in addition to financial results determined in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company provides financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP measures in its analysis of the Company's performance and ongoing operations. The Company believes that these non-GAAP operating measures supplement our GAAP financial information and provide useful information to investors for evaluating the Company's operating results and trends that may be affecting the Company's business, as they allow investors to more readily compare our operations to prior financial results and our future performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

When we use the term "Adjusted EBITDA," we are referring to net income minus interest income, investment income and other income plus interest expense, income taxes, non-cash stock-based compensation, depreciation, amortization and other investment loss. We present Adjusted EBITDA because we consider it an important measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

The following table reconciles net income to Adjusted EBITDA (in thousands):




                                  Three Months Ended     Six Months Ended

                                  June 30,   June 30,   June 30,   June 30,

                                    2011       2010       2011       2010





Net income                       $     627  $     869  $     752  $     677

Depreciation                           184        183        365        369

Amortization of intangible

 assets                                  2          2          4          3

Stock-based compensation                62         45        124         91

Interest expense, financing and

 other related costs, net              103        259        477        510

Other investment income                (37)      (423)       (16)      (420)

Provision for income taxes             481        583        609        475

                                 ---------  ---------  ---------  ---------

Adjusted EBITDA                  $   1,422  $   1,518  $   2,315  $   1,705

                                 =========  =========  =========  =========



When we use the term Adjusted income before taxes ("Adjusted IBT"), we are referring to net income minus income taxes and non-recurring other investment income or losses. The Company recognizes this is a non-GAAP measure; however, we present Adjusted IBT because we consider it an important measure of our performance.

The following table reconciles net income to Adjusted IBT (in thousands):




                                  Three Months Ended     Six Months Ended

                                  June 30,   June 30,   June 30,   June 30,

                                    2011       2010       2011       2010





Net income                       $      627 $     869  $      752 $     677

Insurance settlement from the

 Hobby Horse investment                  --      (402)         --      (402)

Provision for income taxes              481       583         609       475

                                 ---------- ---------  ---------- ---------

Adjusted IBT                     $    1,108 $   1,050  $    1,361 $     750

                                 ========== =========  ========== =========



Janet Nittmann

Email Contact

Tel 978-952-8062 x218



Source: Dover Saddlery

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