Picture 2

News Release

 

    Contact:

 Investor Relations

 (281) 776-7575

 ir@tailoredbrands.com

 

 Julie MacMedan, VP, Investor Relations

 Tailored Brands, Inc.

 

   For Immediate Release

 

TAILORED BRANDS, INC. REPORTS

FISCAL 2019 THIRD QUARTER RESULTS

 

·

Q3 2019 GAAP diluted EPS and adjusted diluted EPS(1) from continuing operations of $0.56 and $0.53, respectively

·

Company expects FY 2019 adjusted diluted EPS(1) from continuing operations of $0.97 to $1.02

·

Company repurchased $55 million face value of senior notes

·

Company repurchased $10 million of common shares

·

Company appoints Carrie Ask, brand president Men’s Wearhouse and Moores, to newly created chief customer officer role to oversee Men’s Wearhouse, Jos. A. Bank and Moores brands

 

FREMONT, CA — December 11, 2019 — Tailored Brands, Inc. (NYSE: TLRD) today announced consolidated financial results for the fiscal third quarter ended November 2, 2019.

For the third quarter ended November 2, 2019, the Company reported GAAP earnings from continuing operations per diluted share of $0.56 compared to earnings from continuing operations per diluted share of $0.69 in the third quarter last year.  Excluding the impact of certain items in both periods, third quarter 2019 adjusted earnings from continuing operations per diluted share(1) were $0.53 compared to adjusted earnings from continuing operations per diluted share(1) of $0.95 last year. 

 

Third quarter 2019 pre-tax results include $6.2 million of charges related to our multi-year cost savings and operational excellence programs consisting of $5.5 million in consulting costs, $0.6 million in severance costs and $0.1 million in lease termination costs.  In addition, we have reflected the results of the corporate apparel business, including the loss on sale, as discontinued operations for all periods presented.    

 

Tailored Brands President and CEO Dinesh Lathi said, “We are pleased to report third quarter comparable sales and adjusted earnings per share above our expectations.  We delivered sequential comparable sales improvement at both Men’s Wearhouse and Jos. A. Bank, with a return to positive comparable sales at Jos. A. Bank.  On a sequential basis, both brands generated higher transactions and increased comparable sales across multiple merchandise categories.    Our third quarter performance reflects continued progress in each of our transformational strategies, including improved sales in our polished casual categories, higher online sales driven by enhanced e-commerce experiences and online marketing, and new customer acquisition and increased traffic reflecting more effective marketing campaigns and channel strategies.”

 


(1)

We have reflected the results of the corporate apparel business, including the loss on sale, as discontinued operations for all periods presented.  In addition, we have recast our non-GAAP presentation for prior periods to remove the results of the corporate apparel business and provide results from continuing operations.   The Company believes that disclosure of non-GAAP results for its continuing operations is meaningful to the user’s overall understanding of the Company’s financial performance.  In the third quarter of fiscal 2019, adjusted items consist of $6.2 million in costs related to our multi-year cost savings and operational excellence programs including consulting, severance and lease termination costs and the net release of tax-related valuation allowances totaling $5.9 million.  In the third quarter of fiscal 2018, adjusted items consisted of a loss on extinguishment of debt related to the repricing of the Company’s term loan, costs related to the retirement of our former CEO and costs related to the closure of a rental product distribution center in the second quarter of 2018.  See Use of Non-GAAP Financial Measures for additional information on items excluded from adjusted EPS for the third quarter of fiscal 2019 and with respect to the Company’s outlook for the fourth quarter of fiscal 2019.

 

 

1

Lathi added, “While we still have much more work in front of us, we are encouraged by the improved momentum in the business.  To further accelerate our transformation, we have created a new chief customer officer role providing common leadership for our Men’s Wearhouse, Jos. A. Bank and Moores brands, and we have eliminated the brand president positions for these brands.  Carrie Ask, currently brand president of Men’s Wearhouse and Moores, has been appointed chief customer officer.  We believe the new structure heightens our focus and ability to unlock value across our brand portfolio and will enable us to show up for our customers in more effective and efficient ways.”

 

Lathi concluded, “After more than a decade of impactful leadership at Tailored Brands, Mary Beth Blake, brand president, Jos. A. Bank, is resigning from the Company.  We are immensely grateful for everything Mary Beth has done to enhance our performance and we wish her the best in her future endeavors.”

 

Third Quarter Fiscal 2019 Results

 

The following commentary reflects results from the Company’s continuing operations.

 

 

 

 

 

 

 

 

 

 

 

Net Sales Summary(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

% Total Sales

 

Comparable Sales

 

 

 

(U.S. dollars in millions)

 

Change

 

Change(2)

 

 

Men's Wearhouse 

$

438.1

 

(3.7)

%

 

(2.8)

%

 

Jos. A. Bank

$

168.4

 

(0.5)

%

 

0.5

%

 

K&G

$

71.9

 

(1.0)

%

 

(1.5)

%

 

Moores(3) 

$

51.1

 

(6.9)

%

 

(5.5)

%

 

Total

$

729.5

 

(3.0)

%

 

(2.2)

%

 


(1)

Amounts may not sum due to rounded numbers.

(2)

Comparable sales is defined as net sales from stores open at least 12 months at period end and includes e-commerce sales.

(3)

The Moores comparable sales change is based on the Canadian dollar.

 

Net Sales

 

Total net sales decreased 3.0% to  $729.5 million primarily due to a decrease in comparable sales of 2.2%. 

 

Comparable Sales

 

Men’s Wearhouse comparable sales decreased 2.8%. Comparable sales for clothing decreased due to a decrease in average unit retail partially offset by an increase in both transactions and units per transaction. Comparable rental services revenue decreased 2.6%, primarily reflecting a tough comparison against the most popular wedding date of 2018.

 

Jos. A. Bank comparable sales increased 0.5% primarily due to an increase in both units per transaction and transactions partially offset by a decrease in average unit retail.    

 

K&G comparable sales decreased 1.5% primarily due to a decrease in both units per transaction and transactions partially offset by an increase in average unit retail. 

 

Moores comparable sales decreased 5.5% primarily due to a decrease in both average unit retail and transactions while units per transaction were essentially flat.

 

 

 

 

 

 

2

Gross Margin

 

On a GAAP basis, consolidated gross margin was $308.0 million, a decrease of $37.5 million, primarily due to the decrease in net sales.  As a percent of sales, both total gross margin and adjusted total gross margin decreased 380 basis points to 42.2%, primarily due to increased promotional activities, as well as deleveraging of occupancy costs.

 

Advertising Expense

 

Advertising expense decreased $3.1 million to $34.0 million primarily driven by reductions in television advertising reflecting a shift to more efficient online advertising, as well as the timing of marketing spend.  As a percent of sales, advertising expense decreased 20 basis points to 4.7%. 

 

Selling, General and Administrative Expenses (“SG&A”)

 

On a GAAP basis, SG&A decreased $4.6 million to $228.5 million and increased 30 basis points as a percent of sales.  On an adjusted basis, SG&A decreased $3.8 million to $222.3 million primarily due to lower employee-related benefit costs.  As a percent of sales, adjusted SG&A increased 40 basis points to 30.5% primarily due to deleveraging from lower sales.

 

Operating Income

 

On a GAAP basis, operating income was $45.5 million compared to $75.3 million last year and operating margin decreased 380 basis points.  On an adjusted basis, operating income was $51.7 million compared to $82.3 million last year.  As a percent of sales, adjusted operating margin decreased 380 basis points to 7.1%.

 

Net Interest Expense and Net Loss on Extinguishment of Debt

 

Net interest expense was $17.4 million compared to $18.6 million last year.  The decrease in interest expense was due to the reduction of outstanding debt. 

 

On a GAAP basis, net loss on extinguishment of debt was $0.1 million this year compared to $9.4 million last year.  This year’s net loss on extinguishment of debt resulted from the Company’s open market repurchases of senior notes.  Last year’s net loss on extinguishment of debt resulted from the repricing of our term loan and consisted of the write-off of original issue discount and deferred financing costs.  On an adjusted basis, there was a $0.1 million net loss on extinguishment of debt this year with no such loss last year. 

 

Effective Tax Rate

 

On a GAAP basis, the effective tax rate was 0.9% compared to 26.5% last year.  The decrease in the effective tax rate was primarily driven by the net release of valuation allowances totaling $5.9 million. On an adjusted basis, the effective tax rate was 23.1% compared to 24.4% last year.

 

Net Earnings and EPS 

 

On a GAAP basis, net earnings from continuing operations were $27.8 million compared to net earnings from continuing operations of $34.8 million last year.  Diluted EPS was $0.56 compared to diluted EPS of $0.69 last year.

 

On an adjusted basis, net earnings from continuing operations were $26.3 million compared to net earnings from continuing operations of $48.2 million last year.  Adjusted diluted EPS was $0.53  compared to adjusted diluted EPS of $0.95 last year.

 

 

 

3

Balance Sheet Highlights

 

Cash and cash equivalents at the end of the third quarter of 2019 were $21.2 million, a decrease of $35.1 million compared to the end of the third quarter of 2018 primarily due to the decrease in sales and the use of cash on hand for costs related to our multi-year cost savings and operational excellence programs, and debt reduction.  At the end of the third quarter of 2019, there were $67.5 million of borrowings outstanding on our revolving credit facility.  Total liquidity at the end of the third quarter was $477.0 million, comprised of availability on our revolving credit facility and cash and cash equivalents.

 

Inventories increased $6.1 million, or 0.8%, to $778.3 million at the end of the third quarter of 2019 compared to the end of the third quarter of 2018. 

 

Total debt at the end of the third quarter of 2019 was approximately $1.1 billion, down $56.2 million compared to the end of the third quarter of 2018.  During the third quarter of 2019, the Company repurchased and retired $54.8 million in face value of its senior notes and made its scheduled $2.3 million payment on its term loan, while borrowings on our revolving credit facility increased $22.5 million for seasonal working capital needs. 

 

Cash flow from operating activities for the nine months ended November 2, 2019 was $65.6 million compared to $277.8 million last year.  The decrease was driven by lower net earnings after adjusting for non-cash items, fluctuations in accounts payable and accrued liabilities primarily due to timing, and anniversarying  $15.0 million of income tax refunds received in the third quarter last year.

 

Capital expenditures for the nine months ended November 2, 2019 were $63.4 million compared to $46.9 million last year.  The Company expects capital expenditures for fiscal 2019 of $90.0 million to $95.0 million.

 

During the third quarter, the Company repurchased 2,336,852 shares through open market repurchases for $10.0 million at an average price of $4.28 per share, as part of a share repurchase program approved by the Board of Directors in March 2013.  At November 2, 2019, the remaining balance available under the Board’s authorization was $38.0 million.

 

Q4 FISCAL 2019 OUTLOOK

 

The Company’s outlook for the fourth quarter of fiscal 2019 related to continuing operations is as follows:

 

·

Earnings per Share: The Company expects an adjusted diluted loss per share in the range of ($0.50) to ($0.55). 

·

Comparable Sales: The Company expects comparable sales for:

o

Men’s Wearhouse to be down 1% to up 1%

o

Jos. A. Bank to be down 1% to up 1%  

o

K&G to be flat to up 2%

o

Moores to be down 6% to 8%.

·

Effective Tax Rate: The Company expects an effective tax rate of 22% to 23%.  

·

Real Estate: The Company expects net closures of five  stores.

·

The Company’s outlook excludes expected costs for third party domain experts and other actions associated with its cost savings and operational excellence programs. 

 

 

4

 

STORE INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

November 2, 2019

 

November 3, 2018

 

February 2, 2019

 

 

Number

 

Sq. Ft.

 

Number

 

Sq. Ft.

 

Number

 

Sq. Ft.

 

 

of Stores

 

(000's)

 

of Stores

 

(000's)

 

of Stores

 

(000's)

 

Men's Wearhouse(a)

716

 

4,014.5

 

721

 

4,040.8

 

720

 

4,035.5

 

Men's Wearhouse and Tux

45

 

66.3

 

49

 

73.3

 

46

 

68.8

 

Jos. A. Bank(b)

475

 

2,239.5

 

485

 

2,285.2

 

484

 

2,280.2

 

K&G(c)

89

 

2,038.2

 

88

 

2,028.4

 

88

 

2,028.4

 

Moores

126

 

787.4

 

126

 

787.4

 

126

 

787.4

 

Total

1,451

 

9,145.9

 

1,469

 

9,215.1

 

1,464

 

9,200.3

 


(a)

Includes one Joseph Abboud store.

(b)

Excludes 14 franchise stores.

(c)

85, 84 and 84 stores offering women’s apparel at the end of each period, respectively.

Conference Call and Webcast Information

 

At 5:00 p.m. Eastern time on Wednesday, December 11, 2019, management will host a conference call and webcast to discuss fiscal 2019 third quarter results.  To access the conference call, please dial 201-689-8029.  To access the live webcast, visit the Investor Relations section of the Company’s website at focus http://ir.tailoredbrands.com.  A webcast archive will be available free on the website for approximately 90 days.

 

About Tailored Brands, Inc.

 

Tailored Brands is a leading omni-channel specialty retailer of menswear, including suits, formalwear and a broad selection of business casual offerings.  We help our customers look and feel their best by delivering personalized products and services through our convenient network of stores and e-commerce sites. Our brands include Men's Wearhouse, Jos. A. Bank, Joseph Abboud,  Moores Clothing for Men and K&G.

 

For additional information on Tailored Brands, please visit the Company’s websites at www.tailoredbrands.com,  www.menswearhouse.com,  www.josbank.comwww.josephabboud.com,  www.mooresclothing.com,  and www.kgstores.com

 

This press release contains forward-looking information, including the Company’s statements regarding its Q4 2019 outlook for adjusted earnings per share, comparable sales, effective tax rate and store closures. In addition, words such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “guidance,” “may,” “projections,” and “business outlook,” variations of such words and similar expressions are intended to identify such forward-looking statements.  The forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.  Any forward-looking statements that we make herein are not guarantees of future performance and actual results may differ materially from those in such forward-looking statements as a result of various factors.  Factors that might cause or contribute to such differences include, but are not limited to:  actions or inactions by governmental entities; domestic and international macro-economic conditions; inflation or deflation; the loss of, or changes in, key personnel; success, or lack thereof, in formulating or executing our internal strategies and operating plans including new store and new market expansion plans; cost reduction initiatives and revenue enhancement strategies; changes to our capital allocation policy; changes in demand for our retail clothing or rental products; market trends in the retail or rental business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies, including custom clothing; performance issues with key suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import policies, including the enactment of duties or tariffs; advertising or marketing activities of competitors; the impact of cybersecurity threats or data breaches; legal proceedings and the impact of climate change.

 

Forward-looking statements are intended to convey the Company’s expectations about the future, and speak only as of the date they are made.  We undertake no obligation to publicly update or revise any forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law.  However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

 

(Tables Follow)

5

 

 

 

 

 

 

 

 

 

 

 

 

 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

(Unaudited)

 

For the Three Months Ended November 2, 2019 and November 3, 2018

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

2019

Sales

 

 

 

2018

Sales

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

         Retail clothing product

$

573,854

78.7

%

 

$

588,447

78.3

%

 

         Rental services

 

120,021

16.5

%

 

 

124,697

16.6

%

 

         Alteration and other services   

 

35,606

4.9

%

 

 

38,597

5.1

%

 

                Total net sales

 

729,481

100.0

%

 

 

751,741

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

                Total cost of sales

 

421,453

57.8

%

 

 

406,247

54.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

       Retail clothing product

 

307,373

53.6

%

 

 

334,062

56.8

%

 

       Rental services

 

103,980

86.6

%

 

 

107,378

86.1

%

 

       Alteration and other services

 

2,455

6.9

%

 

 

5,575

14.4

%

 

       Occupancy costs

 

(105,780)

(14.5)

%

 

 

(101,521)

(13.5)

%

 

                 Total gross margin

 

308,028

42.2

%

 

 

345,494

46.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

34,031

4.7

%

 

 

37,116

4.9

%

 

Selling, general and administrative expenses

 

228,453

31.3

%

 

 

233,100

31.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

45,544

6.2

%

 

 

75,278

10.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(17,425)

(2.4)

%

 

 

(18,550)

(2.5)

%

 

Loss on extinguishment of debt, net

 

(77)

(0.0)

%

 

 

(9,420)

(1.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

28,042

3.8

%

 

 

47,308

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

254

0.0

%

 

 

12,521

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations

 

27,788

3.8

%

 

 

34,787

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of tax

 

(117,378)

(16.1)

%

 

 

(20,912)

(2.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(89,590)

(12.3)

%

 

$

13,875

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations per diluted common share

$

0.56

 

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations per diluted common share

$

(2.35)

 

 

 

$

(0.41)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per diluted common share

$

(1.80)

 

 

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

49,905

 

 

 

 

50,722

 

 

 


(a)

Gross margin percent of sales is calculated as a percentage of related sales.

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

TAILORED BRANDS, INC.

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

 

 

 

(Unaudited)

 

 

 

 

 

 

 

For the Nine Months Ended November 2, 2019 and November 3, 2018

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

2019

Sales

 

 

 

2018

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

 

 

 

         Retail clothing product

$

1,749,533

79.9

%

 

$

1,807,879

79.5

%

 

         Rental services

 

334,090

15.3

%

 

 

350,019

15.4

%

 

         Alteration and other services   

 

106,665

4.9

%

 

 

116,600

5.1

%

 

                Total net sales

 

2,190,288

100.0

%

 

 

2,274,498

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

               Total cost of sales

 

1,258,510

57.5

%

 

 

1,247,168

54.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin (a):

 

 

 

 

 

 

 

 

 

 

       Retail clothing product

 

954,563

54.6

%

 

 

1,017,314

56.3

%

 

       Rental services

 

285,259

85.4

%

 

 

298,677

85.3

%

 

       Alteration and other services

 

6,053

5.7

%

 

 

15,651

13.4

%

 

       Occupancy costs

 

(314,097)

(14.3)

%

 

 

(304,312)

(13.4)

%

 

                Total gross margin

 

931,778

42.5

%

 

 

1,027,330

45.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

111,527

5.1

%

 

 

116,241

5.1

%

 

Selling, general and administrative expenses

 

687,414

31.4

%

 

 

698,833

30.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

132,837

6.1

%

 

 

212,256

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(54,093)

(2.5)

%

 

 

(61,188)

(2.7)

%

 

Loss on extinguishment of debt, net

 

(77)

(0.0)

%

 

 

(30,253)

(1.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

78,667

3.6

%

 

 

120,815

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

14,743

0.7

%

 

 

26,018

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations

 

63,924

2.9

%

 

 

94,797

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of tax

 

(112,106)

(5.1)

%

 

 

(17,775)

(0.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(48,182)

(2.2)

%

 

$

77,022

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations per diluted common share

$

1.27

 

 

 

$

1.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations per diluted common share

$

(2.23)

 

 

 

$

(0.35)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per diluted common share

$

(0.96)

 

 

 

$

1.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding:

 

50,372

 

 

 

 

50,764

 

 

 


(a)

Gross margin percent of sales is calculated as a percentage of related sales.

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

November 2,

 

November 3,

 

 

 

2019

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

21,193

 

$

56,293

 

 

Accounts receivable, net

 

42,056

 

 

34,637

 

 

Inventories

 

778,342

 

 

772,206

 

 

Other current assets

 

60,778

 

 

66,063

 

 

Current assets - discontinued operations

 

-

 

 

165,358

 

 

  Total current assets

 

902,369

 

 

1,094,557

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

405,000

 

 

416,061

 

Operating lease right-of-use assets

 

908,505

 

 

 -

 

Rental product, net

 

92,785

 

 

102,540

 

Goodwill

 

79,392

 

 

79,475

 

Intangible assets, net

 

146,890

 

 

154,144

 

Other assets

 

5,450

 

 

17,232

 

Non-current assets - discontinued operations

 

-

 

 

25,531

 

 

  Total assets

$

2,540,391

 

$

1,889,540

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

210,165

 

$

218,114

 

 

Accrued expenses and other current liabilities

 

250,706

 

 

290,422

 

 

Current portion of operating lease liabilities

 

184,422

 

 

 -

 

 

Income taxes payable

 

9,928

 

 

12,360

 

 

Current portion of long-term debt

 

9,000

 

 

9,000

 

 

Current liabilities - discontinued operations

 

 -

 

 

33,661

 

 

  Total current liabilities

 

664,221

 

 

563,557

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

1,111,732

 

 

    1,167,906

 

Operating lease liabilities

 

754,956

 

 

 -

 

Deferred taxes and other liabilities

 

 

73,968

 

 

144,138

 

Non-current liabilities - discontinued operations

 

 

 -

 

 

4,452

 

 

  Total liabilities

 

2,604,877

 

 

1,880,053

 

 

 

 

 

 

 

 

 

Shareholders' (deficit) equity:

 

 

 

 

 

 

 

Preferred stock

 

 -

 

 

 -

 

 

Common stock

 

507

 

 

501

 

 

Capital in excess of par

 

513,106

 

 

501,835

 

 

Accumulated deficit

 

(534,979)

 

 

(464,993)

 

 

Accumulated other comprehensive loss

 

(33,120)

 

 

(27,856)

 

 

Treasury stock, at cost

 

(10,000)

 

 

 -

 

 

  Total shareholders' (deficit) equity

 

(64,486)

 

 

9,487

 

 

   Total liabilities and shareholders' (deficit) equity

$

2,540,391

 

$

1,889,540

 

 

 

 

 

8

 

 

 

 

 

 

 

 

TAILORED BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the Nine Months Ended November 2, 2019 and November 3, 2018

(In thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net (loss) earnings

$

(48,182)

 

$

77,022

 

 

Adjustments to net (loss) earnings:

 

 

 

 

 

 

 

  Depreciation and amortization

 

79,394

 

 

78,088

 

 

  Non-cash lease expense

 

147,602

 

 

 -

 

 

  Rental product amortization

 

29,739

 

 

30,720

 

 

  Goodwill impairment charge

 

 -

 

 

23,991

 

 

  Asset impairment charges

 

1,185

 

 

504

 

 

  Loss on extinguishment of debt, net

 

77

 

 

30,253

 

 

  Amortization of deferred financing costs and discount on long-term debt

 

1,431

 

 

2,936

 

 

Loss on divestiture of business

 

82,808

 

 

3,766

 

 

Loss on release of cumulative foreign currency translation adjustment

 

26,885

 

 

 -

 

 

  Loss on disposition of assets

 

1,942

 

 

4,833

 

 

  Other

 

6,380

 

 

8,994

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

1,078

 

 

(5,661)

 

 

Inventories

 

(55,116)

 

 

(49,739)

 

 

Rental product

 

(25,798)

 

 

(14,665)

 

 

Other assets

 

(16,804)

 

 

10,560

 

 

Accounts payable, accrued expenses and other current liabilities

 

(13,076)

 

 

70,924

 

 

Income taxes payable

 

(5,239)

 

 

10,313

 

 

Other liabilities

 

(148,744)

 

 

(5,022)

 

 

       Net cash provided by operating activities

 

65,562

 

 

277,817

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

(63,408)

 

 

(46,927)

 

 

Proceeds from divestiture of business, net

 

45,034

 

 

17,755

 

 

       Net cash used in investing activities

 

(18,374)

 

 

(29,172)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Payments on old term loan

 

 -

 

 

(993,420)

 

 

Proceeds from new term loan

 

 -

 

 

895,500

 

 

Payments on new term loan

 

(9,370)

 

 

(6,750)

 

 

Proceeds from asset-based revolving credit facility

 

1,065,000

 

 

465,500

 

 

Payments on asset-based revolving credit facility

 

(1,046,000)

 

 

(407,000)

 

 

Repurchase and retirement of senior notes

 

(54,425)

 

 

(199,365)

 

 

Deferred financing costs

 

 -

 

 

(6,713)

 

 

Cash dividends paid

 

(27,938)

 

 

(27,833)

 

 

Proceeds from issuance of common stock

 

1,220

 

 

6,149

 

 

Tax payments related to vested deferred stock units

 

(1,118)

 

 

(7,510)

 

 

Repurchases of common stock

 

(10,000)

 

 

 -

 

 

       Net cash used in financing activities

 

(82,631)

 

 

(281,442)

 

 

Effect of exchange rate changes

 

1,205

 

 

(2,385)

 

 

 

 

 

 

 

 

 

DECREASE IN CASH AND CASH EQUIVALENTS

 

(34,238)

 

 

(35,182)

 

 

Balance at beginning of period

 

55,431

 

 

103,607

 

 

Balance at end of period

$

21,193

 

$

68,425

 

 

 

 

 

 

 

9

TAILORED BRANDS, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

 

Use of Non-GAAP Financial Measures

 

In addition to providing financial results in accordance with GAAP, we have provided adjusted information for the fiscal third quarters and nine months ended November 2, 2019 and November 3, 2018.  This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s financial performance by removing the impacts of large, unusual or unique transactions that we believe are not indicative of our core business results. In addition, we have recast our non-GAAP presentation for prior periods to remove the results of the corporate apparel business and provide results from continuing operations.  The Company believes that disclosure of non-GAAP results for its continuing operations is meaningful to the user’s overall understanding of the Company’s financial performance.    

 

For the third quarter of fiscal 2019, adjusted items consist of costs related to our multi-year cost savings and operational excellence programs and the net release of tax-related valuation allowances.   For the third quarter of fiscal 2018, adjusted items consisted of a loss on extinguishment of debt related to the repricing of the Company’s term loan, costs related to the retirement of our former CEO and costs related to the closure of a rental product distribution center.

 

Management uses these adjusted results to assess the Company’s performance, to make decisions about how to allocate resources and to develop expectations for future performance.  In addition, adjusted EPS from continuing operations is used as a performance measure in the Company’s executive compensation program to determine the number of performance units that are ultimately earned for certain equity awards.

 

The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, financial information prepared in accordance with GAAP.  Management strongly encourages investors and shareholders to review the Company’s financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. 

 

A reconciliation of fourth quarter fiscal 2019 adjusted EPS from continuing operations, which is a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure, is not provided because the Company is unable to provide such reconciliation without unreasonable effort.  The inability to provide this reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized.  These GAAP measures may include the impact of items such as costs related to our multi-year cost savings and operational excellence programs and the tax effect of such items. Historically, the Company has excluded these types of items from non-GAAP financial measures.  The Company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise. The decisions and events that typically lead to the recognition of non-GAAP adjustments are inherently unpredictable as to if or when they may occur. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

 

Reconciliations of non-GAAP information to our actual results follow and amounts may not sum due to rounded numbers.  In addition, only the line items affected by adjustments are shown in the tables.

 

 

 

 

 

 

 

 

 

10

 

 

 

 

GAAP to Non-GAAP Adjusted Consolidated Statements of Earnings Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP to Non-GAAP Adjusted - Three Months Ended November 2, 2019

 

 

 

 

 

Multi-Year Costs

 

 

 

 

 

 

 

GAAP

 

Savings and Operational

 

Total

 

Non-GAAP

 

Consolidated Results

 

Results

 

Excellence Program(1)

 

Adjustments

 

Adjusted Results

 

Selling, general and administrative expenses

 

$

228,453

 

$

(6,165)

 

$

(6,165)

 

$

222,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

45,544

 

 

6,165

 

 

6,165

 

 

51,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes(2)

 

 

254