STEIN MART INC (SMRT) SEC Filing 10-Q Quarterly report for the period ending Saturday, November 3, 2018

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Exhibit 99.1

 

LOGO

 

November 27, 2018   

For more information:

  

Linda L. Tasseff

FOR IMMEDIATE RELEASE   

Director, Investor Relations

  

(904) 858-2639

  

ltasseff@steinmart.com

Stein Mart, Inc. Reports Third Quarter 2018 Results

 

   

Comparable sales increased 1.4 percent

 

   

Operating loss improved by more than $10 million from 2017

 

   

Expecting higher fourth quarter operating income driven by gross profit expansion and lower expenses

 

   

Year-to-date adjusted EBITDA increased $33 million

JACKSONVILLE, Fla. – Stein Mart, Inc. (NASDAQ: SMRT) today announced financial results for the third quarter ended November 3, 2018.

Operating loss for the third quarter was $13.4 million for 2018 compared to an operating loss of $23.9 million for 2017. Third quarter 2018 results include advisory fees related to the extension of our credit agreements, as well as expenses and lower gross profit due to the impact of Hurricanes Florence and Michael. These unanticipated items approximated $3 million.

Net loss for the third quarter of 2018 was $16.6 million or $0.36 per share compared to net loss of $14.6 million or $0.31 per share in 2017. As explained below (see Income Taxes), net loss for 2017 includes an income tax benefit of $10.4 million or $0.22 per share compared to no income tax benefit in 2018.

Adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the third quarter of 2018 improved by $11.3 million to negative $2.8 million compared to negative $14.1 million for last year’s third quarter. Adjusted EBITDA for the first nine months of 2018 increased more than $33 million to $25.9 million from negative $7.4 million for last year’s first nine months. (See Note 1.)

“We are pleased with our second consecutive quarter of comparable sales increases and continued gross profit expansion driven by higher regular priced selling. Our core apparel businesses all performed very well during the quarter,” said Hunt Hawkins, Chief Executive Officer. “While better than last year, our third quarter pre-tax operating results were lower than we expected due to disruption caused by the hurricanes and fees associated with the successful renegotiation of our credit agreements which expanded our credit limit and extended the term.”

“We are looking forward to better comparisons against clearance selling that normalized in the fourth quarter last year. This, along with our higher gross profit rate and lower expenses have us well-prepared for a profitable fourth quarter.”

Net Sales

Net sales for the third quarter of 2018 were $279.1 million compared with $285.4 million for the third quarter of 2017. Comparable sales for the third quarter of 2018 increased 1.4 percent including sales from licensed departments (see Note 2). Ecommerce sales were up 76 percent over last year’s third quarter. The decrease in total net sales for the quarter reflects the closing of seven underperforming stores this year.


The following information was filed by STEIN MART INC on Tuesday, November 27, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18418657_43
    Financial - Expense
    17 The SG&A; decrease for the 13 weeks ended November 3, 2018, was primarily the result of cost savings initiatives, lower advertising expense and the impact of closing underperforming stores.
  • 18418657_41
    Financial - Earnings
    Gross profit is determined as follows: The gross profit rate increase for the 13 and 39 weeks ended November 3, 2018, was primarily due to a higher merchandise margin rate.
  • 18418657_47
    Financial - Expense
    The increase in interest expense for the 13 and 39 weeks ended November 3, 2018, is due to higher borrowing levels and higher interest rates, plus $0.3 million from the early termination of a portion of the Term Loan (as defined in Note 4 "Debt" to the Notes to Condensed Consolidated Financial Statements (Unaudited)) in connection with the extension and amendment of our credit agreements in September.
  • 18418657_38
    Revenue - Product
    Ecommerce sales were up 95.6 percent and contributed approximately a 240-basis point increase to comparable sales for the 39 weeks ended November 3, 2018.
  • 18418657_35
    Revenue - Product
    Ecommerce sales were up 76.1 percent in the 13 weeks ended November 3, 2018, which include online orders shipped from our stores, and contributed approximately a 210-basis point increase to comparable sales in the same period.
  • 18418657_136
    Revenue - Product
    Sales and profitability are historically higher in the first and fourth quarters of the fiscal year, which include the spring and holiday seasons.
  • 18418657_107
    Financial - Debt
    As of November 3, 2018, we had cash and cash equivalents of $13.9 million and $156.6 million in borrowings under our Credit Agreement and $35.0 million in borrowings under the Term Loan, for a total of $190.7 million in outstanding borrowings, net of $0.9 million in unamortized debt issuance costs.
  • 18418657_23
    Revenue - Product
    We believe that providing calculations of changes in comparable sales, both including and excluding sales from licensed departments, assists in evaluating our ability to generate sales growth, whether through owned businesses or departments licensed to third parties.
  • 18418657_77
    Other - Other
    We believe we are able to borrow, on a short-term basis and subject to formal agreement with the lender, amounts up to the cash surrender value of the life insurance policies related to our executive deferred compensation plans to provide additional liquidity if needed.
  • 18418657_56
    Other - Other
    As a result of the Cash Dominion Event, all of our cash receipts were swept daily to repay outstanding borrowings under the Credit Agreement and the amount outstanding under the Credit Agreement was classified as a short-term obligation on the Condensed Consolidated Balance Sheets (Unaudited).
  • 18418657_108
    Other - Other
    As of February 3, 2018, we had cash and cash equivalents of $10.4, and borrowings under our credit facilities of $142.4 million and $13.7 million in borrowings under the Promissory Note, for a total of $156.1 million in outstanding borrowings.
  • 18418657_32
    Revenue - Product
    The 1.4 percent increase in comparable sales on an owned plus licensed basis for the 13 weeks ended November 3, 2018, was primarily driven by higher regular-priced selling compared to last year?s higher clearance selling.
  • 18418657_40
    Revenue - Product
    The slight increase in other revenue for the 13 and 39 weeks ended November 3, 2018, is the result of higher penetration from our growing credit card program.
  • 18418657_44
    Financial - Expense
    Decreases are partially offset by $1.1 million in advisory fees for capital alternatives that resulted in the extension of our credit agreements and $0.7 million in hurricane-related expenses, which we expect to be recovered from insurance in future quarters.
  • 18418657_48
    Other - Other
    Our effective tax rate represents the applicable combined federal and state statutory rates reduced by the federal benefit of state taxes deductible on federal returns, adjusted for the effect of permanent differences.
  • 18418657_116
    Financial - Cash Flow
    Also affecting operating cash flows was increased inventory purchases over last year.
  • 18418657_61
    Financial - Debt
    The net proceeds of $49.1 million from the Term Loan were used to permanently pay off the $25.0 million Tranche A-1 Revolving Loan Commitment (as defined in Note 4 "Debt" in the Notes to Condensed Consolidated Financial Statements (Unaudited)) and to pay down the outstanding Tranche A-1 Revolving Loans (as defined in the Credit Agreement).
  • 18418657_111
    Other - Other
    On November 3, 2018, in addition to outstanding borrowings under the Credit Agreement, Term Loan and Promissory Note, we had $8.5 million of outstanding letters of credit.
  • 18418657_20
    Other - Other
    The methods we used to calculate these non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures.
  • 18418657_21
    Other - Other
    As a result, the non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.
  • 18418657_98
    Other - Other
    Working capital is also used to support capital investments for maintenance of our existing stores, system improvements and new store openings.
  • 18418657_82
    Revenue - Product
    Changes in these factors could have a material effect on our ability to generate sales and thus cash inflows to operate our business.
  • 18418657_22
    Revenue - Product
    Calculations of our comparable sales including sales from licensed departments are non-GAAP financial measures.
  • 18418657_55
    Other - Other
    Pursuant to the Credit Agreement Amendment, a Cash Dominion Event (as defined in the Credit Agreement Amendment) occurred as of the effective date of the Credit Agreement Amendment and at all times thereafter.
  • 18418657_57
    Other - Other
    See below for discussion of the Third Credit Agreement Amendment and the removal of the Cash Dominion Event effective September 18, 2018.
  • 18418657_36
    Revenue - Product
    Comparable sales on an owned plus licensed basis for the 39 weeks ended November 3, 2018, increased 0.4 percent compared to the 39 weeks ended October 28, 2017.
  • 18418657_39
    Revenue - Product
    Other revenue for the 13 and 39 weeks ended November 3, 2018, increased compared to the 13 and 39 weeks ended October 28, 2017.
  • 18418657_70
    Other - Other
    The proceeds from the Promissory Note were used to pay down borrowings under the Credit Agreement to provide additional availability under the Credit Agreement to assist us during our February low working capital period following the holiday selling season.
  • 18418657_42
    Financial - Earnings
    The higher merchandise margin rate was driven by lower markdowns, partially offset by higher Ecommerce fulfillment and shipping costs which were higher due to an increase in online orders.
  • 18418657_6
    Other - Other
    Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise our forward-looking statements in light of new information or future events.
  • 18418657_62
    Other - Other
    After utilizing proceeds from the Term Loan Agreement for repayment of amounts outstanding under the Credit Agreement, the Term Loan increased our total borrowing availability under the combination of the Credit Agreement and Term Loan to $275 million and increased our Excess Availability by approximately $25.0 million.
  • 18418657_119
    Other - Other
    The decrease in capital expenditures was primarily due to lower investment in technologies, fewer remodels to existing stores and fewer tenant improvements during the 39 weeks ended November 3, 2018.
  • 18418657_1
    Other - Other
    This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to certain risks, uncertainties or assumptions and may be affected by certain factors including, but not limited to, the matters discussed in "Item 1A.
  • 18418657_68
    Other - Other
    As we are no longer in Cash Dominion Event status, the amount outstanding under the Credit Agreement is classified as a long-term obligation on the Condensed Consolidated Balance Sheets (Unaudited).
  • 18418657_105
    Financial - Expense
    Alvarez & Marsal also advised us on cost savings and cash flow initiatives and assisted with evaluating capital alternatives which resulted in the Term Loan Agreement.
  • 18418657_74
    Other - Other
    The proceeds were used to provide additional availability as we begin to purchase inventory for the second half of 2018.
  • 18418657_31
    Revenue - Product
    The 2.2 percent decrease in net sales is primarily due to closing underperforming stores in 2018 and lower traffic in the Southeast and Mid-Atlantic states from hurricanes.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0001193125-18-342248
  • Submitted to the SEC: Tuesday, December 4, 2018 4:41:54 PM EST
  • Accepted by the SEC: Tuesday, December 4, 2018
  • Period ending: November 2018
  • Industry: Retail Family Clothing Stores