Differential Brands Group Inc. (the “Company”) (NASDAQ:DFBG), a
portfolio of global consumer brands comprised of Hudson Jeans,
Robert Graham and SWIMS, today announced financial results for the
three and twelve months ended December 31, 2016.
- Fourth quarter net sales increased 108%
to $42.0 million; full year net sales increased 104% to $149.3
million, driven by the inclusion of the Hudson Jeans and SWIMS
brands in addition to sales growth in the Robert Graham brand.
- Reports fourth quarter Adjusted EBITDA
of $2.1 million; full year Adjusted EBITDA of $8.7 million.
Michael Buckley, Chief Executive Officer, commented, “We are
pleased with the progress we are making on a number of initiatives
designed to drive organic growth across our brands. This includes
enhancing product offerings and improving product sourcing across
all brands, making strategic and swift investments in e-commerce,
consolidating operations into a single platform enabling us to
leverage talent and expenses, and building a world class leadership
team. During the quarter, Robert Graham’s assortment shift to
fashion basics was well received among customers. As a result,
wholesale sell-through improved at both specialty and department
stores and consumer direct customers embraced the product,
evidenced by an e-commerce sales increase of 63% versus the same
quarter last year. At Hudson Jeans, we executed quality and fit
improvements, as well as strategic sourcing changes, which led to
modest growth in overall comparable sales during the quarter. Our
recent investments in product development positions us to
capitalize on existing fashion trends in denim that we’ve targeted
over the past 12 months. Finally, at SWIMS, we completed our
integration process and we have seen strong demand for the line due
to its unique design perspective, especially in the US market. We
have also completed building the SWIMS US based sales team and we
look forward to increasing consumer demand in the upcoming year.
Looking ahead, we will continue to drive organic growth as we
evolve and expand the product offering, work towards building out a
retail and ecommerce presence and increase penetration in the
wholesale channel.”
Segment net sales and Adjusted EBITDA results were as
follows:
Three months ended* Twelve
months ended* December 31, December 31,
2016 2015 2016 2015
(Preliminary and unaudited, in thousands)
(Preliminary and unaudited, in thousands)
Differential Brands Group Net sales: Wholesale $ 28,504 $ 10,226 $
108,829 $ 41,348 Consumer Direct 13,161 9,805 38,622 29,924
Corporate and other 354 217
1,816 1,785 Total Company net sales $ 42,019
$ 20,248 $ 149,267 $ 73,057
Adjusted EBITDA Operating (loss) income: Wholesale $ 7,576 $ 3,678
$ 29,494 $ 15,581 Consumer Direct 1,107 1,347 (279 ) 1,820
Corporate and other (11,569 ) (4,251 ) (39,368 ) (15,926 )
Adjustments** 5,007 1,455 18,863
4,203 Total Company Adjusted EBITDA $ 2,121
$ 2,229 $ 8,710 $ 5,678
*For the three and twelve months ended
December 31, 2015, net sales and Adjusted EBITDA (above) reflect
only the operations of Robert Graham. For the three months ended
December 31, 2016, net sales and Adjusted EBITDA (above) include
all three brands: Robert Graham, Hudson and SWIMS; and for the
twelve months ended December 31, 2016, net sales and Adjusted
EBITDA (above) include Hudson for the eleven months since January
28, 2016 and SWIMS for approximately 5 months following July 18,
2016. See further discussion at “Basis of Presentation of
Information” below.
**See “Adjusted EBITDA” below.
Fourth Quarter Financial Review
Total Company net sales for the three months ended December 31,
2016, increased 108%, reflecting a 179% increase in Wholesale
segment sales and a 34% increase in Consumer Direct segment sales.
Sales increased for the period primarily due to the addition of the
Hudson Jeans and SWIMS brands, as well as 3% growth in Robert
Graham.
Gross profit was $21.8 million, compared to $12.1 million in the
fourth quarter of fiscal 2015. Gross profit includes $9.7 million
in gross profit from the Hudson and SWIMS acquisitions. Robert
Graham gross profit was flat to the comparable period last year.
Gross margin was 51.8% compared to 59.9% in the fourth quarter of
2015, reflecting the inclusion of Hudson Jeans, which carries a
lower gross margin rate as a wholesale business.
Operating expense for the three months ended December 31, 2016,
was $24.6 million, compared to $11.3 million in the same period of
the prior year. The increase is attributable to the addition of
Hudson and SWIMS operating expenses, which were not reflected in
the same period last year. Robert Graham recognized retail store
impairments of $1.9 million. Operating expense rates, less
depreciation and amortization and store impairments, were
essentially flat to last year.
Net loss from continuing operations was $4.9 million, or $0.37
per share, for the three months ended December 31, 2016. This
compares to net income from continuing operations of $0.7 million,
or $0.07 per share, for the prior year period.
Full Year Fiscal 2016 Financial Review
Total Company net sales for the twelve months ended December 31,
2016, increased 104%, reflecting a 163% increase in Wholesale
segment sales and a 29% increase in Consumer Direct segment sales.
Sales increased primarily due to the addition of the Hudson Jeans
and SWIMS brands. Robert Graham sales declined 4% for the year.
Gross profit was $79.5 million in fiscal 2016, compared to $44.9
million in fiscal 2015. Gross profit includes $37.2 million in
gross profit from the addition of the Hudson and SWIMS brands.
Robert Graham gross profit was down 6% compared to the prior year.
The annual decline for Robert Graham related to a decrease in
product sales featured in the higher-fashion Spring catalog and
resultant markdowns. Gross margin was 53.3% compared to 61.5% in
fiscal 2015, reflecting the inclusion of Hudson Jeans, which
carries a lower gross margin as a wholesale business.
Operating expense for the twelve months ended December 31, 2016,
was $89.6 million, compared to $43.5 million in the prior year. The
increase is attributable to the addition of Hudson and SWIMS
operating expenses and merger and acquisition costs, which were not
reflected in the same period last year. Robert Graham recognized
retail store impairments of $2.2 million. Operating expense rates,
less depreciation and amortization and retail store impairments,
were essentially flat compared to last year.
For the year ended December 31, 2016, net loss from continuing
operations was $16.5 million, or $1.33 per share. This compares to
net income from continuing operations of $0.8 million, or $0.09 per
share, in fiscal 2015. This loss was primarily driven by one-time
expenses related to the acquisitions and merger of Hudson Jeans and
SWIMS.
Basis of Presentation of Information
As previously disclosed in the Company’s first quarter 2016
press release, on January 28, 2016, the Company completed the
acquisition (the “RG Merger”) of all of the outstanding
equity interests of RG Parent LLC and its subsidiaries (“Robert
Graham” or “RG”), a business engaged in the design,
development, sales and licensing of apparel products and
accessories that bear the brand name Robert Graham®. Because RG
members owned a majority of the Company’s issued and outstanding
equity after the Merger, under the acquisition method, RG was
deemed the accounting acquirer for financial reporting purposes,
with the Company, as the legal acquirer, as the accounting
acquiree. As a result, the assets, liabilities and operations
reflected in this press release prior to the RG Merger are only
those of RG and, for comparative purposes, reflect only RG’s
historical financial condition and results of operations. More
specifically, for the twelve months ended December 31, 2016, the
Company’s consolidated financial statements included: (i) from
January 1, 2016 up to the day prior to the closing of the RG Merger
on January 28, 2016, the results of operations and cash flows of
RG; (ii) from and after the RG Merger’s closing date on January 28,
2016, the results of continuing operations, cash flows and, as
applicable, the assets and liabilities of the combined company,
comprising the Company’s Hudson business and RG; (iii) from and
after the RG Merger’s closing date on January 28, 2016, the results
of the discontinued operations from the Joe’s brand retail stores
that later closed by February 29, 2016; and (iv) from and after the
acquisition of SWIMS on July 18, 2016, the results of continuing
operations and cash flows and, as applicable, the assets and
liabilities of SWIMS.
About Differential Brands Group
Differential Brands Group Inc. (NASDAQ:DFBG) is a platform that
focuses on branded operating companies in the premium apparel,
footwear and accessories sectors. Our focus is on organically
growing our brands through a global, omni-channel distribution
strategy while continuing to seek opportunities to acquire
accretive, complementary, premium brands.
Our current brands are Hudson®, a designer and marketer of
women’s and men’s premium, branded denim and apparel, Robert
Graham®, a sophisticated, eclectic apparel and accessories brand
seeking to inspire a global movement, and SWIMS®, a Scandinavian
lifestyle brand best known for its range of fashion-forward,
water-friendly footwear, apparel and accessories. For more
information, please visit Differential's website at:
www.differentialbrandsgroup.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The matters discussed
in this release involve estimates, projections, goals, forecasts,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. All statements in this release that
are not purely historical facts are forward-looking statements,
including statements containing the words “may,” “will,” “expect,”
“anticipate,” “intend,” “estimate,” “continue,” “believe,” “plan,”
“project,” “will be,” “will continue,” “will likely result” or
similar expressions. Any forward-looking statement inherently
involves risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. Factors that
would cause or contribute to such differences include, but are not
limited to: the risk of intense competition in the denim and
premium lifestyle apparel industries; the risk that the Company
incurred substantial indebtedness in connection with the
acquisition of RG, and, to a lesser extent, SWIMS, which the
Company may need to refinance or extend or on which the Company may
default; the risks associated with the Company’s foreign sourcing
of its products and the implementation of foreign production for
Hudson’s products, including in light of potential changes in
international trade relations brought on by the new U.S.
presidential administration; the effects of the RG Merger and
acquisition of SWIMS on the Company’s financial results, business
performance and product offerings and risks associated with
successfully integrating these businesses to achieve cost savings
and synergies; risks associated with the Company’s third-party
distribution system; risks associated with changing fashion trends
and business environment and the Company’s small customer base;
risks associated with the Company leasing retail space and
operating its own retail stores; risks associated with the
restatement of the Company’s unaudited condensed consolidated
financial statements as of and for the three months ended March 31,
2016; risks associated with the identification of material
weaknesses in the Company’s internal control over financial
reporting in certain periods in 2016 and the Company’s ability to
maintain effective internal control over financial reporting; the
risk that the credit ratings of the combined company or its
subsidiaries, including the Hudson, RG and SWIMS businesses, may be
different from what the Company expects; the risk that changes in
general economic conditions, consumer confidence, or consumer
spending patterns, including consumer demand for denim and premium
lifestyle apparel, will have a negative impact on the Company’s
financial performance and the Company’s ability to generate cash
flows from operations to service its indebtedness; continued
acceptance of the Company’s brands in the marketplace; and other
risks. The Company discusses certain of these factors more fully in
its additional filings with the SEC, including its annual report on
Form 10-K for the fiscal year ended November 30, 2015 and
subsequent quarterly reports on Form 10-Q filed with the SEC, and
this release should be read in conjunction with those reports,
together with all of the Company’s other filings, including current
reports on Form 8-K, through the date of this release. The Company
urges you to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements
contained in this release.
Any forward-looking statement is based on information current as
of the date of this document and speaks only as of the date on
which such statement is made, and the Company undertakes no
obligation to update these statements to reflect events or
circumstances after the date on which such statement is made.
Readers are cautioned not to place undue reliance on
forward-looking statements.
DIFFERENTIAL BRANDS GROUP INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
Three months ended Twelve
months ended December 31, December 31,
2016 2015 2016 2015 (Preliminary and
unaudited) (Preliminary and unaudited) Net sales $
42,019 $ 20,248 $ 149,267 $ 73,057 Cost of goods sold 20,257
8,128 69,775 28,129 Gross
profit 21,762 12,120 79,492 44,928 Operating expenses
Selling, general and administrative 21,194 10,306 81,456 39,665
Depreciation and amortization 1,556 1,040 6,012 3,788 Retail store
impairment 1,898 — 2,177
— Total operating expenses 24,648
11,346 89,645 43,453 Operating
(loss) income from continuing operations (2,886 ) 774 (10,153 )
1,475 Other (income) expense Interest expense, net 2,105 156 7,531
558 Other expense, net (79 ) — 42
— Total other (income) expense 2,026
156 7,573 558 (Loss) income from
continuing operations before income taxes (4,912 ) 618 (17,726 )
917 Income tax (benefit) provision (7 ) (37 )
(1,200 ) 157 (Loss) income from continuing operations (4,905
) 655 (16,526 ) 760 Loss from discontinued operations, net of tax
— — (1,286 ) — Net (loss)
income $ (4,905 ) $ 655 $ (17,812 ) $ 760 (Loss)
earnings per common share - basic (Loss) earnings from continuing
operations $ (0.37 ) $ 0.07 $ (1.33 ) $ 0.09 Loss from discontinued
operations — — (0.10 ) —
(Loss) earnings per common share - basic $ (0.37 ) $ 0.07 $
(1.43 ) $ 0.09 (Loss) earnings per common share - diluted
(Loss) earnings from continuing operations $ (0.37 ) $ 0.07 $ (1.33
) $ 0.09 Loss from discontinued operations — —
(0.10 ) — (Loss) earnings per common share -
diluted $ (0.37 ) $ 0.07 $ (1.43 ) $ 0.09 Weighted
average shares outstanding Basic 13,089 8,825 12,428 8,825 Diluted
13,089 8,825 12,428 8,825
As a Percent of Sales
Three months ended Twelve months ended
December 31, December 31, 2016
2015 2016 2015 (Preliminary and
unaudited) (Preliminary and unaudited) Net sales
100.0% 100.0% 100.0% 100.0% Cost of goods sold
48.2% 40.1% 46.7% 38.5% Gross profit
51.8% 59.9% 53.3% 61.5% Operating expenses Selling, general
and administrative 50.5% 50.9% 54.6% 54.3% Depreciation and
amortization 3.7% 5.1% 4.0% 5.2% Retail store impairment
4.5% 0.0% 1.5% 0.0% Total operating expenses
58.7% 56.0% 60.1% 59.5%
Operating (loss) income from continuing operations -6.9% 3.9% -6.8%
2.0% Other (income) expense Interest expense, net 5.0% 0.8% 5.1%
0.8% Other expense, net -0.2% 0.0% 0.0%
0.0% Total other (income) expense 4.8% 0.8%
5.1% 0.8% (Loss) income from continuing operations before
income taxes -11.7% 3.1% -11.9% 1.2% Income tax (benefit) provision
0.0% -0.1% -0.8% 0.2% (Loss) income
from continuing operations -11.7% 3.2% -11.1% 1.0% Loss from
discontinued operations, net of tax 0.0% 0.0%
-0.8% 0.0% Net (loss) income -11.7% 3.2%
-11.9% 1.0%
Adjusted EBITDA
Three months ended
Twelve months ended December 31, December 31,
2016 2015 2016 2015 (Preliminary and
unaudited, in thousands) (Preliminary and unaudited, in
thousands)
Reconciliation of GAAP net (loss) income
from continuing operations to Adjusted EBITDA:
GAAP net (loss) income from continuing operations $ (4,905 ) $ 655
$ (16,526 ) $ 760 Adjustments: (Benefit) provision for
income taxes (7 ) (37 ) (1,200 ) 157 Interest expense, net 2,105
156 7,531 558 Non-cash stock compensation (a) 1,203 — 2,052 —
Depreciation and amortization 1,556 1,040 6,012 3,788
Acquisition-related costs (b) 350 415 5,395 415 Retail store
impairment (c) 1,898 — 2,177 — Restructuring (d) — — 1,559 —
Non-cash inventory expense (e) — — 1,668 — Foreign currency (gain)
loss (79 ) — 42 — Total
Adjustments 7,026 1,574 25,236 4,918
Adjusted EBITDA (1) $ 2,121 $
2,229 $ 8,710 $ 5,678
__________
(1) Adjusted EBITDA is defined as net (loss) income from
continuing operations, excluding: income taxes, interest income or
expense, non-cash stock compensation, depreciation and
amortization, acquisition-related costs, retail store impairment,
restructuring costs, non-cash inventory expenses and gain or loss
related to foreign currency transactions. Management uses Adjusted
EBITDA as a measure of operating performance to assist in comparing
performance from period to period on a consistent basis and to
identify business trends relating to the Company’s financial
condition and results of operations. The Company believes Adjusted
EBITDA provides additional information for determining its ability
to meet future debt service requirements and capital expenditures.
(a) Represents stock compensation expense related to the
grant of restricted stock units and stock options. (b) Represents
acquisition-related costs related to legal, advisory and accounting
services in connection with the RG Merger and SWIMS® acquisition.
These costs are not representative of the Company’s day-to-day
business. (c) Represents impairment of retail store leasehold
improvements related to six stores. (d) Represents restructuring
charges for severance and termination of consulting arrangements
related to the RG Merger. (e) Represents a non-cash inventory
expense of Hudson and SWIMS inventory acquired and stepped up to
fair value that was sold during the year ended December 31, 2016.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures that
exclude the effect of transaction expenses associated with the RG
Merger and SWIMS® acquisition, including acquisition-related costs
and the non-cash inventory expense of the Hudson and SWIMS®
inventory acquired and stepped up to fair value that was sold
fiscal 2016. Generally, a non-GAAP financial measure is a numerical
measure of a company’s historical or future financial performance,
financial position, or cash flows that either excludes or includes
amounts which are not normally excluded or included in the most
directly comparable measure calculated and presented in accordance
with generally accepted accounting principles generally accepted in
the United States (GAAP). Management uses these non-GAAP financial
measures to evaluate the performance of the business over time on a
consistent basis, identify business trends relating to the
financial condition and results of operations and make business
decisions. The Company believes that providing non-GAAP measures is
useful to provide a consistent basis for investors to understand
the Company’s financial performance in comparison to historical
periods and to allow investors to evaluate the performance using
the same methodology and information as that used by management.
However, investors need to be aware that non-GAAP measures are
subject to inherent limitations because they do not include all of
the expenses included under GAAP and they involve the exercise of
judgment of which charges are excluded from the non-GAAP financial
measure. Investors should consider these non-GAAP financial
measures in addition to, and not as substitutes for or superior to,
our other measures of our financial performance that the Company
prepares in accordance with GAAP. Further, non-GAAP information may
be different from the non-GAAP information provided by other
companies.
Below is a reconciliation of the non-GAAP measures to the
equivalent GAAP measure.
DIFFERENTIAL BRANDS GROUP INC. AND
SUBSIDIARIES
NON-GAAP NET (LOSS) INCOME FROM
CONTINUING OPERATIONS
(in thousands)
Three months ended
Twelve months ended December 31, December 31,
2016 2015 2016 2015 (Preliminary and
unaudited) (Preliminary and unaudited) GAAP net (loss)
income from continuing operations $ (4,905 ) $ 655 $ (16,526 ) $
760 Acquisition-related costs and non-cash inventory expense — 415
7,063 415 Less: Tax expense effect — 166
2,825 166 Non - GAAP net (loss) income,
excluding transaction expenses and non-cash inventory expense $
(4,905 ) $ 904 $ (12,288 ) $ 1,009
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170309006397/en/
Investor Relations:Differential Brands Group Inc.Bob Ross,
323-558-5115Chief Financial Officer
Differential Brands Group Inc. (NASDAQ:DFBG)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Differential Brands Group Inc. (NASDAQ:DFBG)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024