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Dover Saddlery Announces Financial Results for Fourth Quarter and Full Year 2011

LITTLETON, MA -- (Marketwire) -- 03/27/12 -- Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multi-channel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2011.

Fourth quarter results

Total revenues for the fourth quarter of 2011 increased 1.3% to $23.8 million compared to $23.5 million achieved in the fourth quarter of 2010. Retail store revenues rose 18.5% to $9.0 million, driven by two additional stores and a same-store sales increase of 5.9%. Due primarily to warm weather and lower sales in the direct channel, net income for the fourth quarter of 2011 decreased to $641,000 or $0.12 per diluted share, compared to a net income of $1,048,000 or $0.19 per diluted share achieved in the fourth quarter of 2010.

Full Year Results

Total revenues for fiscal year 2011 increased 3.4% to $80.8 million from $78.2 million achieved in 2010. Retail store channel revenues increased 17.1% to $30.5 million; same-store sales increased 10.8% while sales in the direct channel decreased 3.5% to $50.3 million.

Net income for fiscal 2011 decreased to $1.7 million, or $0.31 per diluted share, from $2.0 million or $0.38 per diluted share achieved for fiscal year 2010.

"As you can see from our financial results, 2011 has been our strongest year to date for performance in the retail store channel," commented Stephen L. Day, president and CEO of Dover Saddlery. "This is due to our ability to accurately locate our stores in areas of high demand and then fulfill our customers' needs with an outstanding selection of in-stock items matched with the highest standard of customer service. We were able to maintain steady gross profit of approximately 38% over the course of the year, in a very competitive environment. Net income was lower due to retail store pre-opening expenses and some softness in the fourth quarter."

Adjusted EBITDA for fiscal year 2011 decreased 7.1% to $4.8 million from $5.1 million achieved in 2010. 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 press release.

Continuing to build on the strong retail performance, Dover Saddlery plans to open four to six retail stores in 2012, the first one being in Warrington, Pennsylvania slated to open in late spring.

Today's Teleconference and Webcast
Dover Saddlery will be hosting a conference call at 4:30 P.M. ET today to discuss the fourth quarter and full year 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 webcast will be archived for a year.

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 2012, the prospects for overall revenue growth, gross margins and profitability, and high fulfillment rates and the opening of new stores. 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 Saddlery'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

                     CONSOLIDATED STATEMENTS OF INCOME

              (In thousands, except share and per share data)

                                (Unaudited)



                               Three Months Ended      Twelve Months Ended

                              Dec. 31,    Dec. 31,    Dec. 31,    Dec. 31,

                                2011        2010        2011        2010



Revenues, net - direct       $   14,773  $   15,884  $   50,334  $   52,140

Revenues, net - retail

 stores                           9,020       7,611      30,497      26,050

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

Revenues, net - total        $   23,793  $   23,495  $   80,831  $   78,190

Cost of revenues                 14,295      14,183      49,836      48,491

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

Gross profit                      9,498       9,312      30,995      29,699

Selling, general and

 administrative expenses          8,212       7,208      27,219      25,493

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

Income from operations            1,286       2,104       3,776       4,216

Interest expense, financing

 and other related costs,

 net                                127         266         728       1,030

Other investment (income)

 loss, net                           22          69          18        (314)

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

Income before income tax

 provision                        1,137       1,769       3,030       3,500

Provision for income taxes          496         721       1,306       1,455

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

Net income                   $      641  $    1,048  $    1,724  $    2,045

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



Net income per share

Basic                        $     0.12  $     0.20  $     0.33  $     0.39

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

Diluted                      $     0.12  $     0.19  $     0.31  $     0.38

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

Number of shares used in per

 share calculation

Basic                         5,307,000   5,277,000   5,293,000   5,272,000

Diluted                       5,461,000   5,403,000   5,482,000   5,399,000



Other Operating Data:



Number of retail stores(1)           15          13          15          13

Capital expenditures                700          35       1,384         306

Gross profit margin                39.9%       39.7%       38.3%       38.0%



(1) Includes fourteen Dover-branded stores and one Smith Brothers store; two

additional Dover-branded stores opened in 2011, Parker, CO in Q2 and

Libertyville, IL in Q4.







                    DOVER SADDLERY, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                          (In thousands, unaudited)



                                      Three Months Ended Twelve Months Ended

                                      Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31,

                                        2011      2010      2011      2010



Net income                           $     641 $   1,048 $   1,724 $   2,045

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

Other comprehensive loss:

  Change in fair value of interest

   rate swap contract, net of tax            2        --       190        --

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

Total comprehensive income           $     639 $   1,048 $   1,534 $   2,045

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









                   DOVER SADDLERY, INC. AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS

                         (In thousands, unaudited)



                                                        Dec. 31,   Dec. 31,

                                                          2011       2010

ASSETS

Current assets:

  Cash and cash equivalents                            $     313  $     745

  Accounts receivable                                        811        533

  Inventory                                               19,383     15,869

  Prepaid catalog costs                                    1,273        930

  Prepaid expenses and other current assets                  896        901

  Deferred income taxes                                      261        105

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



Total current assets                                      22,937     19,083



Net property and equipment                                 3,667      3,025



Other assets:

  Deferred income taxes                                    1,018        848

  Intangibles and other assets, net                          571        593

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

Total other assets                                         1,589      1,441

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

Total assets                                           $  28,193  $  23,549

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



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Current portion of capital lease obligations and

   outstanding checks                                  $   1,100  $      97

  Accounts payable                                         2,201      2,073

  Accrued expenses and other current liabilities           5,741      5,425

  Income taxes payable                                       308        414

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

Total current liabilities                                  9,350      8,009



Long-term liabilities:

  Revolving line of credit                                   987         --

  Term note                                                5,500         --

  Subordinated notes payable, net                             --      5,293

  Capital lease obligation, net of current portion            16         89

  Interest rate swap contract                                322         --

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

Total long-term liabilities                                6,825      5,382

Stockholders' equity:

  Common stock, par value $0.0001 per share;

   15,000,000 shares authorized; 5,332,738 and

   5,277,161 issued and outstanding as of December 31,

   2011 and 2010, respectively                                 1          1

Additional paid in capital                                45,716     45,391

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

Other comprehensive loss                                    (190)        --

Accumulated deficit                                      (27,427)   (29,152)

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

Total stockholders' equity                                12,018     10,158

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

Total liabilities and stockholders' equity             $  28,193  $  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 the Company ties its executive and employee bonus pools directly to this measure. We also 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 Twelve Months Ended

                                     Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31,

                                       2011      2010      2011      2010



Net income                          $     641 $   1,048 $   1,724 $   2,045

Depreciation                              193       185       747       731

Amortization of intangible assets          --         2         5         6

Stock-based compensation                   56        54       242       190

Interest expense, financing and

 other related costs, net                 127       266       728     1,030

Other investment (income) loss, net        22        69        18      (314)

Provision for income taxes                496       721     1,306     1,455

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

Adjusted EBITDA                     $   1,535 $   2,345 $   4,770 $   5,143

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





Janet Nittmann

Email Contact

978 952 8062 x 218



Source: Dover Saddlery

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