Differential Brands Group Inc. (the “Company”) (NASDAQ:DFBG), a
portfolio of global premium consumer brands comprised of Hudson
Jeans, Robert Graham and SWIMS, today announced financial results
for the three months ended March 31, 2017:
For the first quarter:
- Net sales increased 19% to $40.1
million;
- E-commerce sales grew 46%, leading to
total Consumer Direct Segment growth of 9%;
- Adjusted EBITDA was $2.5 million.
Michael Buckley, Chief Executive Officer, commented, “We were
pleased with the progress we made during the quarter, especially in
our e-commerce business, where we drove a sales increase of 46%.
This was due to strategic investments in digital marketing
platforms to improve customer acquisition as well as the March
launch of our new Hudson Jeans website, www.hudsonjeans.com. We
will build on our efforts to capitalize on the consumer shift to
the online channel through increased investments designed to expand
consumer reach within our Consumer Direct segment. In addition, we
saw 22% sales growth in our Wholesale segment, driven primarily by
the inclusion of a non-comparable month of Hudson Jeans and a full
quarter of SWIMS sales compared to last year’s first quarter. We
also continue to see positive trends in certain areas of the
Wholesale segment, including strong performance of Hudson Jeans in
the specialty retail channel, with sales up 19% over last year’s
quarter, and recovery at certain of our major department store
accounts. While this is encouraging, we remain cautiously
optimistic about the Wholesale segment as we continue to navigate a
difficult macro selling environment. At Robert Graham, we continue
to see strong sell through as the assortment has shifted to more
fashion basics. On the infrastructure front, we are planning the
process of consolidating our warehouses and various operating
platforms, and migrating one of our brands on to our consolidated
ERP. We believe all of these initiatives will improve our time to
market and enhance our cost efficiencies, which should drive gross
margins and result in material expense structure savings. We expect
that we will complete these initiatives over the next four to six
quarters.”
Segment net sales and Adjusted EBITDA results were as
follows:
Three months ended March 31, *
2017 2016 (unaudited, in thousands) Differential
Brands Group Net sales: Wholesale $ 31,144 $ 25,577 Consumer Direct
8,346 7,639 Corporate and other 613 499 Total Company
net sales $ 40,103 $ 33,715 Adjusted EBITDA Operating (loss)
income: Wholesale $ 8,357 $ 8,084 Consumer Direct (1,213) (2,012)
Corporate and other (7,449) (7,839) Adjustments** 2,847
5,313 Total Company Adjusted EBITDA $ 2,542 $ 3,546
*For the three months ended March 31, 2016, net sales and
Adjusted EBITDA reflect the operations of Robert Graham for the
three months ended March 31, 2016 and Hudson for the two months
ended since January 28, 2016. For the three months ended March 31,
2017, net sales and Adjusted EBITDA include all three brands:
Robert Graham, Hudson and SWIMS. See further discussion at “Basis
of Presentation of Information” below.**See “Adjusted EBITDA”
below.
First Quarter Financial Review
Total Company net sales for the three months ended March 31,
2017, increased 19% to $40.1 million, reflecting a 22% increase in
Wholesale segment sales and a 9% increase in Consumer Direct
segment sales. Sales increased for the period primarily due to
sales from the addition of the Hudson Jeans and SWIMS brands for
the full period.
Gross profit was $18.6 million, compared to $16.3 million in the
first quarter of fiscal 2016. Gross profit increases for the first
quarter of 2017 were primarily driven by the increase in sales,
including the non-comparable Hudson and SWIMS sales, which
represented $10.7 million of total gross profit. Gross profit in
the first quarter 2017 also includes $0.3 million due to a change
in the sourcing process that impacts production costs allocated to
inventory. Robert Graham gross profit declined compared to the
prior year period due to lower overall wholesale sales. Total
Company gross margin was 46.4% compared to 48.5% in the first
quarter of 2016, reflecting the inclusion of Hudson Jeans for the
full quarter as well as the inclusion of SWIMS, which carry lower
gross margin rates as primarily wholesale businesses.
Operating expense for the three months ended March 31, 2017 was
$18.9 million compared to $18.1 million in the same period of the
prior year. The increase is attributable to the addition of
Hudson’s operating expenses for the full quarter, as well as SWIMS
operating expenses, which were not reflected in the same period
last year. The increase in operating expenses from the addition of
Hudson and SWIMS more than offset a $1.1 million benefit due to a
change in the sourcing process that impacts production costs
allocated to inventory. Operating expense rates, less depreciation
and amortization and store impairments, decreased to 43.4% from
48.8% in the first quarter of 2017 primarily due to the reduction
in one-time transition costs from mergers and acquisitions.
Excluding non-cash and one-time expenses, operating expense rates,
less depreciation and amortization and retail store impairment,
were essentially flat compared to the same period last year.
Net loss from continuing operations was $2.4 million, or $0.18
per share, for the three months ended March 31, 2017. This compares
to a net loss from continuing operations of $5.2 million, or $0.46
per share, for the same period last year.
Basis of Presentation of Information
As previously disclosed, on January 28, 2016, the Company
completed the acquisition (the “RG Merger”) of all
outstanding equity interests of RG Parent LLC and its subsidiaries,
or the Robert Graham business (“RG”). Because RG was deemed
the accounting acquirer for financial reporting purposes, the
assets, liabilities and operations of the Company prior to January
28, 2016 that are reflected in the financial statements for the
period ended March 31, 2016 reflect only RG’s financial condition
and results of operations and do not include Hudson. More
specifically, for the three months ended March 31, 2016, the
Company’s consolidated financial statements, as presented in part
in this press release, 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; and (iii) from and after the RG Merger’s
closing date on January 28, 2016, the results of the discontinued
operations from the Company’s previously owned Joe’s brand retail
stores that later closed by February 29, 2016.
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 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; the risk that the Company will be unsuccessful in gauging
fashion trends and changing customer preferences; 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 or strategies and the Company’s
ability to generate cash flows from its operations to service its
indebtedness; 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; risks
related to the Company’s ability to respond to the business
environment and fashion trends; risks related to continued
acceptance of the Company’s brands in the marketplace; risks
related to the Company’s reliance on a small number of large
customers; risks related to the Company’s ability to implement
successfully any growth or strategic plans; risks related to the
Company’s ability to manage the Company’s inventory effectively;
the risk of cyber-attacks and other system risks; risks related to
the Company’s ability to continue to have access on favorable terms
to sufficient sources of liquidity necessary to fund ongoing cash
requirements of the Company’s operations or new acquisitions; risks
related to the Company’s ability to continue to have access on
favorable terms to sufficient sources of liquidity necessary to
fund ongoing cash requirements of its operations or new
acquisitions; risks related to the Company’s pledge of all its
tangible and intangible assets as collateral under its financing
agreements; risks related to the Company’s ability to generate
positive cash flow from operations; risks related to a possible
oversupply of denim in the marketplace; and other risk. 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 December 31, 2016 and subsequent reports
filed with the SEC, and this release should be read in conjunction
with those reports 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.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Since the Company operates in a rapidly changing environment, new
risk factors can arise and it is not possible for the Company’s
management to predict all such risk factors, nor can the Company’s
management assess the impact of all such risk factors on the
Company’s business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
The Company’s future results, performance or achievements could
differ materially from those expressed or implied in these
forward-looking statements. The Company does not undertake any
obligation to publicly revise these forward-looking statements to
reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events, except as may be
required by law.
DIFFERENTIAL BRANDS GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
Three months ended March 31, 2017
2016 (unaudited) Net sales $ 40,103 $ 33,715 Cost of
goods sold 21,499 17,378 Gross profit
18,604 16,337 Operating expenses Selling, general and
administrative 17,411 16,463 Depreciation and amortization 1,498
1,362 Retail store impairment — 279
Total operating expenses 18,909 18,104
Operating loss from continuing operations (305 )
(1,767 ) Interest expense, net 2,047 1,341 Other expense, net
24 — Loss from continuing operations
before income taxes (2,376 ) (3,108 ) Income tax (benefit)
provision (26 ) 2,087 Loss from continuing
operations (2,350 ) (5,195 ) Loss from discontinued operations, net
of tax — (1,286 ) Net loss $ (2,350 ) $ (6,481
) Loss per common share - basic and diluted Loss from
continuing operations $ (0.18 ) $ (0.46 ) Loss from discontinued
operations - (0.11 ) Loss per common share -
basic and diluted $ (0.18 ) $ (0.57 ) Weighted average
shares outstanding Basic 13,287 11,325 Diluted 13,287 11,325
As a Percent of
Sales
Three months ended March 31, 2017 2016
(unaudited) Net sales 100.0 % 100.0 % Cost of goods sold
53.6 % 51.5 % Gross profit 46.4 % 48.5 % Operating
expenses Selling, general and administrative 43.4 % 48.8 %
Depreciation and amortization 3.8 % 4.1 % Retail store impairment
0.0 % 0.8 % Total operating expenses 47.2 %
53.7 % Operating loss from continuing operations
-0.8 % -5.2 % Interest expense, net 5.0 % 4.0 % Other
expense, net 0.1 % 0.0 % Loss from continuing
operations before income taxes -5.9 % -9.2 % Income tax (benefit)
provision 0.0 % 6.2 % Loss from continuing operations
-5.9 % -15.4 % Loss from discontinued operations, net of tax
0.0 % -3.8 % Net loss -5.9 % -19.2 %
Adjusted EBITDA
Three months ended March 31, 2017 2016
(unaudited, in thousands)
Reconciliation of GAAP net loss from
continuing operations
to Adjusted EBITDA:
GAAP net loss from continuing operations $ (2,350 ) $ (5,195 )
Adjustments: (Benefit) provision for income taxes (26 )
2,087 Interest expense, net 2,047 1,341 Non-cash stock compensation
(a) 439 707 Depreciation and amortization 1,498 1,362
Acquisition-related costs (b) — 2,160 Retail store impairment (c) —
279 Restructuring (d) 843 613 Non-cash inventory expense (e) — 192
Store closure costs (f) 67 — Foreign currency loss 24
— Total Adjustments 4,892 8,741
Adjusted EBITDA (1) $ 2,542 $ 3,546
___________________
(1)
Adjusted EBITDA is defined as net loss
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, store closure
costs 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. These costs are not representative of the
Company’s day-to-day business.
(c)
Represents impairment of retail store
leasehold improvements related to one store.
(d)
Represents restructuring charges for
severance and recruiting costs related to a change in management,
and additional costs incurred related to launching the new Hudson
e-commerce website and moving e-commerce distribution in house.
(e)
Represents a non-cash inventory expense of
Hudson inventory acquired and stepped up to fair value that was
sold during the three months ended March 31, 2016.
(f)
Represents the write-off of assets related
to one store in which the lease was cancelled during the
quarter.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures that
exclude the (i) effect of transaction expenses associated with the
RG Merger (including acquisition-related costs and the non-cash
inventory expense of the Hudson inventory acquired and stepped up
to fair value that was sold) during the three months ended March
31, 2016 and (ii) other provisions and expenses during the three
months ended March 31, 2017 and 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,
the Company’s other measures of the Company’s 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170515006546/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 9월(9) 2024 으로 10월(10) 2024
Differential Brands Group Inc. (NASDAQ:DFBG)
과거 데이터 주식 차트
부터 10월(10) 2023 으로 10월(10) 2024