CONTAINER STORE GROUP, INC., 10-Q filed on 11/1/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Sep. 29, 2018
Oct. 26, 2018
Document and Entity Information    
Entity Registrant Name Container Store Group, Inc.  
Entity Central Index Key 0001411688  
Document Type 10-Q  
Document Period End Date Sep. 29, 2018  
Amendment Flag false  
Current Fiscal Year End Date --03-30  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Common Stock Outstanding   48,913,277
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
v3.10.0.1
Consolidated balance sheets - USD ($)
$ in Thousands
Sep. 29, 2018
Mar. 31, 2018
Sep. 30, 2017
Current assets:      
Cash $ 7,212 $ 8,399 $ 10,145
Accounts receivable, net 25,400 25,528 26,083
Inventory 110,801 97,362 109,277
Prepaid expenses 11,021 11,281 11,519
Income taxes receivable 3,394 15 1,456
Other current assets 10,562 11,609 13,021
Total current assets 168,390 154,194 171,501
Noncurrent assets:      
Property and equipment, net 149,259 158,389 162,884
Goodwill 202,815 202,815 202,815
Trade names 226,939 229,401 230,482
Deferred financing costs, net 276 312 335
Noncurrent deferred tax assets, net 1,979 2,404 2,240
Other assets 1,796 1,854 1,696
Total noncurrent assets 583,064 595,175 600,452
Total assets 751,454 749,369 771,953
Current liabilities:      
Accounts payable 62,313 43,692 61,224
Accrued liabilities 63,497 70,494 64,144
Revolving lines of credit 1,128    
Current portion of long-term debt 7,052 7,771 9,345
Income taxes payable 1,851 4,580 960
Other current liabilities 702    
Total current liabilities 136,543 126,537 135,673
Noncurrent liabilities:      
Long-term debt 282,289 277,394 301,296
Noncurrent deferred tax liabilities, net 50,630 54,839 79,091
Deferred rent and other long-term liabilities 41,020 41,892 33,012
Total noncurrent liabilities 373,939 374,125 413,399
Total liabilities 510,482 500,662 549,072
Commitments and contingencies (Note 6)
Shareholders' equity:      
Common stock, $0.01 par value, 250,000,000 shares authorized; 48,138,907 shares issued at September 29, 2018; 48,072,187 shares issued at March 31, 2018; 48,063,222 shares issued at September 30, 2017 481 481 481
Additional paid-in capital 862,495 861,263 860,196
Accumulated other comprehensive loss (23,167) (17,316) (14,095)
Retained deficit (598,837) (595,721) (623,701)
Total shareholders' equity 240,972 248,707 222,881
Total liabilities and shareholders' equity $ 751,454 $ 749,369 $ 771,953
v3.10.0.1
Consolidated balance sheets (Parenthetical) - $ / shares
Sep. 29, 2018
Mar. 31, 2018
Sep. 30, 2017
Consolidated balance sheets      
Common stock, par value (in dollars per share) $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 250,000,000 250,000,000 250,000,000
Common stock, shares issued 48,138,907 48,072,187 48,063,222
v3.10.0.1
Consolidated statements of operations - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Consolidated statements of operations        
Net sales $ 224,453 $ 218,410 $ 420,276 $ 401,478
Cost of sales (excluding depreciation and amortization) 93,878 92,036 174,930 171,494
Gross profit 130,575 126,374 245,346 229,984
Selling, general, and administrative expenses (excluding depreciation and amortization) 105,656 106,332 212,261 202,972
Stock-based compensation 769 510 1,355 1,004
Pre-opening costs 881 1,418 1,227 2,804
Depreciation and amortization 9,128 9,505 18,465 19,047
Other expenses 24 623 217 4,157
Loss on disposal of assets   102 40 153
Income (loss) from operations 14,117 7,884 11,781 (153)
Interest expense, net 7,377 5,873 15,285 10,098
Loss on extinguishment of debt 2,082 2,369 2,082 2,369
Income (loss) before taxes 4,658 (358) (5,586) (12,620)
Provision (benefit) for income taxes 1,417 517 (2,063) (4,068)
Net income (loss) $ 3,241 $ (875) $ (3,523) $ (8,552)
Net income (loss) per common share—basic and diluted $ 0.07 $ (0.02) $ (0.07) $ (0.18)
Weighted-average common shares - basic (in shares) 48,138,907 48,058,231 48,138,907 48,053,084
Weighted-average common shares - diluted (in shares) 48,519,166 48,058,231 48,138,907 48,053,084
v3.10.0.1
Consolidated statements of comprehensive income (loss) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Consolidated statements of comprehensive income (loss)        
Net income (loss) $ 3,241 $ (875) $ (3,523) $ (8,552)
Unrealized gain (loss) on financial instruments, net of tax provision (benefit) of $154, $652, ($412) and $1,546 438 1,010 (1,347) 2,400
Pension liability adjustment (18) (70) 135 (180)
Foreign currency translation adjustment 652 2,366 (4,639) 6,328
Comprehensive income (loss) $ 4,313 $ 2,431 $ (9,374) $ (4)
v3.10.0.1
Consolidated statements of comprehensive income (loss) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Consolidated statements of comprehensive income (loss)        
Unrealized gain (loss) on financial instruments, tax provision (benefit) $ 154 $ 652 $ (412) $ 1,546
v3.10.0.1
Consolidated statements of cash flows - USD ($)
$ in Thousands
6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Operating activities    
Net loss $ (3,523) $ (8,552)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 18,465 19,047
Stock-based compensation 1,355 1,004
Loss on disposal of assets 40 153
Loss on extinguishment of debt 2,082 2,369
Deferred tax benefit (2,927) (4,338)
Non-cash interest 1,418 1,146
Other   283
Changes in operating assets and liabilities:    
Accounts receivable (373) 2,599
Inventory (17,066) (2,259)
Prepaid expenses and other assets 1,875 (1,312)
Accounts payable and accrued liabilities 13,304 17,808
Income taxes (6,083) (3,261)
Other noncurrent liabilities (431) (1,731)
Net cash provided by operating activities 8,136 22,956
Investing activities    
Additions to property and equipment (10,669) (13,129)
Proceeds from sale of property and equipment 7 18
Net cash used in investing activities (10,662) (13,111)
Financing activities    
Borrowings on revolving lines of credit 45,404 19,694
Payments on revolving lines of credit (19,267) (19,694)
Borrowings on long-term debt 272,500 330,000
Payments on long-term debt and capital leases (294,497) (329,551)
Payment of debt issuance costs (2,244) (11,234)
Payment of taxes with shares withheld upon restricted stock vesting (122) (39)
Net cash provided by (used in) financing activities 1,774 (10,824)
Effect of exchange rate changes on cash (435) 388
Net decrease in cash (1,187) (591)
Cash at beginning of fiscal period 8,399 10,736
Cash at end of fiscal period 7,212 10,145
Supplemental information for non-cash investing and financing activities:    
Purchases of property and equipment (included in accounts payable) 1,192 945
Capital lease obligation incurred $ 132 $ 91
v3.10.0.1
Description of business and basis of presentation
6 Months Ended
Sep. 29, 2018
Nature of business and summary of significant accounting policies  
Description of business and basis of presentation

The Container Store Group, Inc.

Notes to consolidated financial statements (unaudited)

(In thousands, except share amounts and unless otherwise stated)

September 29, 2018

 

1. Description of business and basis of presentation

 

These financial statements should be read in conjunction with the financial statement disclosures in our Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed with the Securities and Exchange Commission on May 31, 2018. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).  We use the same accounting policies in preparing quarterly and annual financial statements.  All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. Certain items in these consolidated financial statements have been reclassified to conform to the current period presentation.

 

Description of business

 

The Container Store, Inc. was founded in 1978 in Dallas, Texas, as a retailer with a mission to provide customers with storage and organization solutions through an assortment of innovative products and unparalleled customer service. In 2007, The Container Store, Inc. was sold to The Container Store Group, Inc. (the “Company”), a holding company, of which a majority stake was purchased by Leonard Green and Partners, L.P. (“LGP”), with the remainder held by certain employees of The Container Store, Inc.  On November 6, 2013, the Company completed its initial public offering (the “IPO”).  As the majority shareholder, LGP retains a controlling interest in the Company.  As of September 29, 2018, The Container Store, Inc. (“TCS”) operates 92 stores with an average size of approximately 25,000 square feet (19,000 selling square feet) in 33 states and the District of Columbia. The Container Store, Inc. also offers all of its products directly to its customers, including business-to-business customers, through its website and call center. The Container Store, Inc.’s wholly-owned Swedish subsidiary, Elfa International AB (“Elfa”), designs and manufactures component-based shelving and drawer systems and made-to-measure sliding doors.  elfa® branded products are sold exclusively in the United States in The Container Store retail stores, website and call center, and Elfa sells to various retailers on a wholesale basis in approximately 30 countries around the world, with a concentration in the Nordic region of Europe.

 

Seasonality

 

The Company’s business is moderately seasonal in nature and, therefore, the results of operations for the twenty-six weeks ended September 29, 2018 are not necessarily indicative of the operating results for the full year. The Company has historically realized a higher portion of net sales, operating income, and cash flows from operations in the fourth fiscal quarter, attributable primarily to the timing and impact of Our Annual elfa® Sale, which traditionally starts in late December and runs into February.

 

Revenue recognition

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, an updated standard on revenue recognition. The Company adopted this standard in the first quarter of fiscal 2018 and elected to use the modified-retrospective approach for implementation of the standard. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the Company expects to be entitled in exchange for those goods or services.

 

The Company has identified certain impacts to our accounting for gift cards given away for promotional or marketing purposes. Under previous GAAP, the value of promotional gift cards was recorded as selling, general, and administrative (“SG&A”) expense. The new standard requires these types of gift cards to be accounted for as a reduction of revenue (i.e. a discount). Additionally, ASU 2014-09 disallows the capitalization of direct-response advertising costs which will impact the timing of recognition of certain advertising production and distribution costs. 

 

Upon transition on April 1, 2018, the Company recorded a cumulative adjustment to increase retained earnings/(deficit) and to decrease accrued liabilities by approximately $400. The Company also reclassified the asset balance for the estimate of future returned merchandise, which was approximately $900 as of March 31, 2018, from the “Inventory” line to the “Other current assets” line on the balance sheet. Overall, the adoption of ASU 2014-09 did not result in a material impact to the Company’s financial statements. Note 10 provides the related disaggregated revenue disclosures.

We recognize revenues and the related cost of goods sold for our TCS segment when merchandise is received by our customers. We recognize revenues and the related cost of goods sold for our Elfa segment upon shipment. We recognize shipping and handling fees as revenue when the merchandise is shipped to the customer. Costs of shipping and handling are included in cost of goods sold. We recognize fees for installation and other services as revenue upon completion of the service to the customer. Costs of installation and other services are included in cost of goods sold. Sales tax collected is not recognized as revenue as it is ultimately remitted to governmental authorities. We reserve for projected merchandise returns based on historical experience and various other assumptions that we believe to be reasonable. The reserve reduces sales and cost of sales, accordingly. Merchandise exchanges of similar product and price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve.

Contract Balances

Contract balances as a result of transactions with customers primarily consist of trade receivables included in Accounts receivable, net, unearned revenue included in Accrued liabilities, and gift cards and store credits outstanding included in Accrued liabilities in the Company's Consolidated Balance Sheets. Note 2 provides the Company's trade receivables, unearned revenue, and gift cards and store credits outstanding with customers as of September 29, 2018,  March 31, 2018, and September 30, 2017.

 

Below is a rollforward of contract liability balances from March 31, 2018 to September 29, 2018, which illustrates the amount of contract liability as of March 31, 2018 which was subsequently recognized into revenue in the twenty-six weeks ended September 29, 2018:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract liability

 

Revenue recognized

 

Contract liabilities

 

Contract liability

 

 

balance at

 

from beginning

 

added during

 

balance at

 

    

March 31, 2018 (1)

    

liability

 

period (2)

 

September 29, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Unearned revenue

 

$

11,080

 

$

(10,571)

 

$

9,555

 

$

10,064

Gift cards and store credits outstanding

 

$

8,470

 

$

(2,000)

 

$

1,936

 

$

8,406


(1)

Gift cards and store credits outstanding balance is net of revenue recognition transition adjustment

(2)

Net of estimated breakage

 

Recent accounting pronouncements

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to revise lease accounting guidance. The update requires most leases to be recorded on the balance sheet as a lease liability, with a corresponding right-of-use asset, whereas these leases currently have an off-balance sheet classification. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company currently intends to adopt this standard in the first quarter of fiscal 2019 and expects to elect certain practical expedients permitted under the transition guidance.  Additionally, the Company will elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods. The Company is still evaluating the impact of implementation of this standard on its financial statements, but expects that adoption will have a material impact to the Company’s total assets and liabilities given the Company has a significant number of operating leases not currently recognized on its balance sheet. 

 

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires entities to recognize the income tax effects of intercompany sales and transfers of assets, other than inventory, in the period in which the transfer occurs. This is a change from current GAAP, which requires entities to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (i.e. depreciated, amortized, impaired). The income tax effects of intercompany sales and transfers of inventory will continue to be deferred until the inventory is sold to an outside party. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted ASU 2016-16 in the first quarter of fiscal 2018.  The adoption of this standard did not result in a material impact to the Company’s financial statements.

 

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which provides guidance that requires an employer to present the service cost component separate from the other components of net periodic benefit cost. The update requires that employers present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered by participating employees during the period. The other components of the net periodic benefit cost are required to be presented separately from the line item that includes service cost and outside of the subtotal of income from operations. If a separate line item is not used, the line item used in the income statement must be disclosed. In addition, only the service cost component is eligible for capitalization in assets. The Company adopted ASU 2017-07 in the first quarter of fiscal 2018 on a retrospective basis.  The adoption of this standard did not result in a material impact to the Company’s financial statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when modification accounting should be applied for changes to terms or conditions of a share-based payment award. The Company adopted ASU 2017-09 in the first quarter of fiscal 2018 on a prospective basis.  The adoption of this standard did not result in a material impact to the Company’s financial statements.

 

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which is intended to improve and simplify hedge accounting and improve the disclosures of hedging arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting the new standard on its financial statements.

 

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services.  Under this ASU, the guidance on share-based payments to nonemployees would be aligned with the requirements for share-based payments granted to employees, with certain exceptions.  This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted.  The Company is currently evaluating the impact of adopting the new standard on its financial statements, but does not expect it to have a material impact to the financial statements.

 

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification (“ASC”) 350-40 to determine which implementation costs to capitalize as assets.  A customer’s accounting for the costs of the hosting component of the arrangement are not affected by the new guidance.  This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting the new standard on its financial statements.

v3.10.0.1
Detail of certain balance sheet accounts
6 Months Ended
Sep. 29, 2018
Detail of certain balance sheet accounts  
Detail of certain balance sheet accounts

2.  Detail of certain balance sheet accounts

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

    

2018

    

2018

    

2017

Accounts receivable, net:

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

$

15,789

 

$

15,968

 

$

15,821

Credit card receivables

 

 

7,472

 

 

6,939

 

 

7,649

Tenant allowances

 

 

445

 

 

998

 

 

1,264

Other receivables

 

 

1,694

 

 

1,623

 

 

1,349

 

 

$

25,400

 

$

25,528

 

$

26,083

Inventory:

 

 

 

 

 

 

 

 

 

Finished goods

 

$

105,355

 

$

91,970

 

$

104,482

Raw materials

 

 

4,904

 

 

4,840

 

 

4,372

Work in progress

 

 

542

 

 

552

 

 

423

 

 

$

110,801

 

$

97,362

 

$

109,277

Accrued liabilities:

 

 

 

 

 

 

 

 

 

Accrued payroll, benefits and bonuses

 

$

19,810

 

$

23,833

 

$

20,748

Unearned revenue

 

 

10,064

 

 

11,080

 

 

8,819

Accrued transaction and property tax

 

 

10,805

 

 

12,846

 

 

11,888

Gift cards and store credits outstanding

 

 

8,406

 

 

8,891

 

 

8,561

Accrued lease liabilities

 

 

4,573

 

 

5,105

 

 

6,072

Accrued interest

 

 

966

 

 

292

 

 

246

Other accrued liabilities

 

 

8,873

 

 

8,447

 

 

7,810

 

 

$

63,497

 

$

70,494

 

$

64,144

 

v3.10.0.1
Long-term debt and revolving lines of credit
6 Months Ended
Sep. 29, 2018
Long-term debt and revolving lines of credit  
Long-term debt and revolving lines of credit

3.  Long-term debt and revolving lines of credit

 

On September 14, 2018 (the “Effective Date”), the Company entered into a fifth amendment (the “Fifth Amendment”) to the Credit Agreement dated as of April 6, 2012 (“Senior Secured Term Loan Facility”). The Fifth Amendment amended the Senior Secured Term Loan Facility to, among other things, (i) extend the maturity date of the loans under the Senior Secured Term Loan Facility to September 14, 2023, (ii) decrease the applicable interest rate margin to 5.00% for LIBOR loans and 4.00% for base rate loans and, beginning from the date that a compliance certificate is delivered to the administrative agent for the fiscal year ending March 30, 2019, allow the applicable interest rate margin to step down to 4.75% for LIBOR loans and 3.75% for base rate loans upon achievement of a consolidated leverage ratio equal to or less than 2.75:1.00, and (iii) impose a 1.00% premium if a voluntary prepayment is made from the proceeds of a repricing transaction within 12 months after the Effective Date.

 

In connection with the Fifth Amendment, the Company repaid $20,000 of the outstanding loans under the Senior Secured Term Loan Facility, which reduced the aggregate principal amount of the Senior Secured Term Loan Facility to $272,500.  The Company drew down a net amount of approximately $10,000 on its $100,000 asset-based revolving credit agreement (the “Revolving Credit Facility”) in connection with the closing of the Fifth Amendment. In addition, the Company recorded a loss on extinguishment of debt of $2,082 in the thirteen weeks ended September 29, 2018 associated with the Fifth Amendment.

 

The Company capitalizes certain costs associated with issuance of various debt instruments. These deferred financing costs are amortized to interest expense on a straight-line method, which is materially consistent with the effective interest method, over the terms of the related debt agreements. In the thirteen weeks ended September 29, 2018, the Company capitalized $2,217 of fees associated with the Fifth Amendment which will be amortized through September 14, 2023.

 

Long-term debt and revolving lines of credit consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

 

    

2018

    

2018

    

2017

    

Senior secured term loan facility

 

$

272,500

 

$

294,375

 

$

298,125

 

2014 Elfa term loan facility

 

 

 —

 

 

 —

 

 

2,943

 

2014 Elfa revolving credit facility

 

 

1,128

 

 

 —

 

 

 —

 

Obligations under capital leases

 

 

509

 

 

662

 

 

869

 

Other loans

 

 

 —

 

 

16

 

 

75

 

Revolving credit facility

 

 

25,000

 

 

 —

 

 

20,000

 

Total debt

 

 

299,137

 

 

295,053

 

 

322,012

 

Less current portion

 

 

(8,180)

 

 

(7,771)

 

 

(9,345)

 

Less deferred financing costs (1)

 

 

(8,668)

 

 

(9,888)

 

 

(11,371)

 

Total long-term debt

 

$

282,289

 

$

277,394

 

$

301,296

 


(1)

Represents deferred financing costs related to our Senior Secured Term Loan Facility, which are presented net of long-term debt in the consolidated balance sheet.

 

v3.10.0.1
Net income (loss) per common share
6 Months Ended
Sep. 29, 2018
Net income (loss) per common share  
Net income (loss) per common share

4. Net income (loss) per common share

 

Basic net income (loss) per common share is computed as net income (loss) divided by the weighted-average number of common shares for the period. Diluted net income (loss) per share is computed as net income (loss) divided by the weighted-average number of common shares for the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of the Company’s common stock for the period, to the extent their inclusion would be dilutive. Potentially dilutive securities are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive.

 

The following is a reconciliation of net income (loss) and the number of shares used in the basic and diluted net income (loss) per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

 

September 29,

 

September 30,

 

September 29,

 

September 30,

 

 

    

2018

    

2017

    

2018

    

2017

    

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

3,241

 

$

(875)

 

$

(3,523)

 

$

(8,552)

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares—basic

 

 

48,138,907

 

 

48,058,231

 

 

48,138,907

 

 

48,053,084

 

Options and other dilutive securities

 

 

380,259

 

 

 —

 

 

 —

 

 

 —

 

Weighted-average common shares—diluted

 

 

48,519,166

 

 

48,058,231

 

 

48,138,907

 

 

48,053,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share—basic and diluted

 

$

0.07

 

$

(0.02)

 

$

(0.07)

 

$

(0.18)

 

Antidilutive securities not included:

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options outstanding

 

 

2,350,339

 

 

2,958,961

 

 

2,637,068

 

 

2,945,881

 

Nonvested restricted stock awards

 

 

14,492

 

 

107,614

 

 

120,709

 

 

95,455

 

 

v3.10.0.1
Income taxes
6 Months Ended
Sep. 29, 2018
Income taxes  
Income taxes

5.  Income taxes

 

The provision for income taxes in the thirteen weeks ended September 29, 2018 was $1,417 as compared to $517 in the thirteen weeks ended September 30, 2017. The effective tax rate for the thirteen weeks ended September 29, 2018 was 30.4%, as compared to -144.4% in the thirteen weeks ended September 30, 2017. During the thirteen weeks ended September 29, 2018, the effective tax rate rose above the U.S statutory rate primarily due to the impact of the global intangible low-taxed income (“GILTI”) provision and the officer compensation limitation provision from the Tax Cuts and Jobs Act (the “Tax Act”) enacted in fiscal 2017, and U.S state income taxes. During the thirteen weeks ended September 30, 2017, the effective tax rate fell below the U.S. statutory rate due to earnings mix between domestic and foreign jurisdictions, the expiration of certain stock-based compensation awards, state tax rate changes and the effect of near breakeven pre-tax loss when in an income tax provision position.

 

The Company’s effective income tax rate for the twenty-six weeks ended September 29, 2018 was 36.9% compared to 32.2% for the twenty-six weeks ended September 30, 2017. During the first half of fiscal 2018, the effective tax rate rose above the statutory rate due to the recognition of a  $604 tax benefit for the remeasurement of deferred tax balances as a result of a change in the Swedish tax rate combined with a year-to-date pre-tax loss, as well as the impact of the GILTI provision and the officer compensation limitation provision from the Tax Act enacted in fiscal 2017, and U.S. state income taxes. During the first half of fiscal 2017, the effective tax rate fell below the statutory rate due to earnings mix between domestic and foreign jurisdictions coupled with the worldwide net loss position at that time.

 

Tax Cuts and Jobs Act

 

The Company recorded a net provisional tax benefit in fiscal 2017 related to the Tax Act of $15,689, which includes a provisional benefit of $24,210 related to the remeasurement of the Company’s deferred tax balances, partially offset by a provisional expense of $8,521 related to the one-time transition tax on foreign earnings. Pursuant to Staff Accounting Bulletin (“SAB”) No. 118 (“SAB 118”), the Company’s measurement period for implementing the accounting changes required by the Tax Act will close before December 22, 2018 and the Company anticipates completing the accounting under ASC Topic 740, Income Taxes (“ASC 740”) in the third quarter of fiscal 2018.

 

The Company believes the remeasurement of its deferred tax balances is complete, except for changes in estimates that may result from finalizing the filing of its 2017 U.S. income tax return and changes that may be a direct impact of changes to other provisional amounts due to the enactment of the Tax Act. In addition, the estimate may be impacted as the Company further analyzes state tax conformity to the federal tax changes and guidance issued by regulatory bodies that provide interpretive guidance of the Tax Act. Any adjustments to the provisional amounts will be recognized as a component of the provision for income taxes in the period in which such adjustments are determined within the measurement period. Additionally, the Company is continuing to gather additional information to be able to more precisely compute the final amount of the one-time transition tax on foreign earnings.

 

The Tax Act creates a new requirement that certain GILTI earned by controlled foreign corporations (CFC) must be included currently in the taxable income of the CFC’s U.S. shareholder.  The Company became subject to the GILTI provisions beginning in fiscal 2018.  Because of the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act and the application of ASC 740.  The Company has not yet elected an accounting policy to determine whether it will recognize GILTI as a period cost when incurred or to recognize deferred taxes for basis differences expected to reverse.  For purposes of calculating the estimated annual effective tax rate at quarter end, the Company has used the period cost method.  The Company will continue to assess the appropriateness of this method during the measurement period allowed for under SAB 118.

 

v3.10.0.1
Commitments and contingencies
6 Months Ended
Sep. 29, 2018
Commitments and contingencies  
Commitments and contingencies

6.  Commitments and contingencies

 

In connection with insurance policies and other contracts, the Company has outstanding standby letters of credit totaling $3,852 as of September 29, 2018.

 

The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business, none of which is expected to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows on an individual basis or in the aggregate.

v3.10.0.1
Accumulated other comprehensive income
6 Months Ended
Sep. 29, 2018
Accumulated other comprehensive income  
Accumulated other comprehensive income

7.  Accumulated other comprehensive loss

 

Accumulated other comprehensive loss (“AOCL”) consists of changes in our foreign currency forward contracts, pension liability adjustment, and foreign currency translation. The components of AOCL, net of tax, are shown below for the twenty-six weeks ended September 29, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

currency

 

Pension

 

Foreign

 

 

 

 

 

hedge

 

liability

 

currency

 

 

 

 

    

instruments

    

adjustment

    

translation

    

Total

Balance at March 31, 2018

 

$

(102)

 

$

(1,793)

 

$

(15,421)

 

$

(17,316)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income before reclassifications, net of tax

 

 

(1,214)

 

 

135

 

 

(4,639)

 

 

(5,718)

Amounts reclassified to earnings, net of tax

 

 

(133)

 

 

 —

 

 

 —

 

 

(133)

Net current period other comprehensive (loss) income

 

 

(1,347)

 

 

135

 

 

(4,639)

 

 

(5,851)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 29, 2018

 

$

(1,449)

 

$

(1,658)

 

$

(20,060)

 

$

(23,167)

 

Amounts reclassified from AOCL to earnings for the foreign currency forward contracts category are generally included in cost of sales in the Company’s consolidated statements of operations. For a description of the Company’s use of foreign currency forward contracts, refer to Note 8.

v3.10.0.1
Foreign currency forward contracts
6 Months Ended
Sep. 29, 2018
Foreign currency forward contracts.  
Foreign currency forward contracts

8.  Foreign currency forward contracts

 

The Company’s international operations and purchases of inventory products from foreign suppliers are subject to certain opportunities and risks, including foreign currency fluctuations. In the TCS segment, we utilize foreign currency forward contracts in Swedish krona to stabilize our retail gross margins and to protect our domestic operations from downward currency exposure by hedging purchases of inventory from our wholly-owned subsidiary, Elfa. Forward contracts in the TCS segment are designated as cash flow hedges, as defined by ASC 815. In the Elfa segment, we utilize foreign currency forward contracts to hedge purchases, primarily of raw materials, that are transacted in currencies other than Swedish krona, which is the functional currency of Elfa. Forward contracts in the Elfa segment are economic hedges and are not designated as cash flow hedges as defined by ASC 815.

 

During the twenty-six weeks ended September 29, 2018 and September 30, 2017, the TCS segment used forward contracts for 94% and 100% of inventory purchases in Swedish krona, respectively. During the twenty-six weeks ended September 29, 2018 and September 30, 2017, the Elfa segment used forward contracts to purchase U.S. dollars in the amount of $0 and $1,648, which represented 0% and 54% of the Elfa segment’s U.S. dollar purchases, respectively. Generally, the Company’s foreign currency forward contracts have terms from 1 to 12 months and require the Company to exchange currencies at agreed-upon rates at settlement.

 

The counterparties to the contracts consist of a limited number of major domestic and international financial institutions. The Company does not hold or enter into financial instruments for trading or speculative purposes. The Company records its foreign currency forward contracts on a gross basis and generally does not require collateral from these counterparties because it does not expect any losses from credit exposure.

 

The Company records all foreign currency forward contracts on its consolidated balance sheet at fair value. The Company accounts for its foreign currency hedging instruments in the TCS segment as cash flow hedges, as defined. Changes in the fair value of the foreign currency hedging instruments that are considered to be effective, as defined, are recorded in other comprehensive income (loss) until the hedged item (inventory) is sold to the customer, at which time the deferred gain or loss is recognized through cost of sales. Any portion of a change in the foreign currency hedge instrument’s fair value that is considered to be ineffective, as defined, or that the Company has elected to exclude from its measurement of effectiveness, is immediately recorded in earnings as cost of sales. The Company assessed the effectiveness of the foreign currency hedge instruments and determined the foreign currency hedge instruments were highly effective during the twenty-six weeks ended September 29, 2018 and September 30, 2017. Forward contracts not designated as hedges in the Elfa segment are adjusted to fair value as SG&A expenses on the consolidated statements of operations; however, during the twenty-six weeks ended September 29, 2018, the Company did not recognize any amount associated with the change in fair value of forward contracts not designated as hedging instruments, as the Company had none of these instruments outstanding.

 

The Company had a $1,449 loss in accumulated other comprehensive loss related to foreign currency hedge instruments at September 29, 2018, of which $930 represents an unrealized loss for settled foreign currency hedge instruments related to inventory on hand as of September 29, 2018. The Company expects the unrealized loss of $930, net of taxes, to be reclassified into earnings over the next 12 months as the underlying inventory is sold to the end customer.

 

The change in fair value of the Company’s foreign currency hedge instruments that qualify as cash flow hedges and are included in accumulated other comprehensive loss, net of taxes, are presented in Note 7 of these financial statements.

 

v3.10.0.1
Fair value measurements
6 Months Ended
Sep. 29, 2018
Fair value measurements  
Fair value measurements

9.  Fair value measurements

 

Under GAAP, the Company is required to a) measure certain assets and liabilities at fair value or b) disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is calculated assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. Accounting standards pertaining to fair value establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. These tiers include:

 

·

Level 1—Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

·

Level 2—Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·

Level 3—Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

 

As of September 29, 2018,  March 31, 2018 and September 30, 2017, the Company held certain items that are required to be measured at fair value on a recurring basis. These included the nonqualified retirement plan and foreign currency forward contracts. The nonqualified retirement plan consists of investments purchased by employee contributions to retirement savings accounts. The Company’s foreign currency hedging instruments consist of over-the-counter (OTC) contracts, which are not traded on a public exchange. See Note 8 for further information on the Company’s hedging activities.

 

The fair values of the nonqualified retirement plan and foreign currency forward contracts are determined based on the market approach which utilizes inputs that are readily available in public markets or can be derived from information available in publicly quoted markets for comparable assets. Therefore, the Company has categorized these items as Level 2. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of contracts it holds.

 

The following items are measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820, Fair Value Measurements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

Description

    

 

    

Balance Sheet Location

    

2018

    

2018

    

2017

    

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonqualified retirement plan (1)

 

N/A

 

Other current assets

 

$

6,011

 

$

5,848

 

$

5,445

 

Foreign currency forward contracts

 

Level 2

 

Other current assets

 

 

 —

 

 

 —

 

 

2,067

 

Total assets

 

 

 

 

 

$

6,011

 

$

5,848

 

$

7,512

 


(1)

The fair value amount of the nonqualified retirement plan is measured at fair value using the net asset value per share practical expedient, and therefore, is not classified in the fair value hierarchy.

 

The fair value of long-term debt was estimated using quoted prices as well as recent transactions for similar types of borrowing arrangements (Level 2 valuations). As of September 29, 2018,  March 31, 2018 and September 30, 2017, the estimated fair value of the Company’s long-term debt, including current maturities, was $299,137,  $295,605, and $311,578, respectively.

v3.10.0.1
Segment reporting
6 Months Ended
Sep. 29, 2018
Segment reporting  
Segment reporting

10.  Segment reporting

 

The Company’s reportable segments were determined on the same basis as how management evaluates performance internally by the Chief Operating Decision Maker (“CODM”). The Company has determined that the Chief Executive Officer is the CODM and the Company’s two reportable segments consist of TCS and Elfa. The TCS segment includes the Company’s retail stores, website and call center, as well as the installation and organization services business.

 

The Elfa segment includes the manufacturing business that produces the elfa® brand products that are sold domestically exclusively through the TCS segment, as well as on a wholesale basis in approximately 30 countries around the world with a concentration in the Nordic region of Europe. The intersegment sales in the Elfa column represent elfa® product sales to the TCS segment. These sales and the related gross margin on merchandise recorded in TCS inventory balances at the end of the period are eliminated for consolidation purposes in the Eliminations column. The net sales to third parties in the Elfa column represent sales to customers outside of the United States.

 

The Company has determined that adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) is the profit or loss measure that the CODM uses to make resource allocation decisions and evaluate segment performance.

 

Adjusted EBITDA assists management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations and, therefore, are not included in measuring segment performance. Adjusted EBITDA is calculated in accordance with the Senior Secured Term Loan Facility and the Revolving Credit Facility and we define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, certain non-cash items, and other adjustments that we do not consider in our evaluation of ongoing operating performance from period to period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal thirteen weeks ended September 29, 2018

    

TCS

    

Elfa

    

Eliminations

    

Total

Net sales to third parties

 

$

208,915

 

$

15,538

 

$

 —

 

$

224,453

Intersegment sales

 

 

 —

 

 

14,650

 

 

(14,650)

 

 

 —

Adjusted EBITDA

 

 

21,228

 

 

3,839

 

 

(720)

 

 

24,347

Interest expense, net

 

 

7,295

 

 

82

 

 

 —

 

 

7,377

Assets (1)

 

 

650,644

 

 

104,585

 

 

(3,775)

 

 

751,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal thirteen weeks ended September 30, 2017

    

TCS

    

Elfa

 

Eliminations

 

Total

Net sales to third parties

 

$

202,321

 

$

16,089

 

$

 —

 

$

218,410

Intersegment sales

 

 

 —

 

 

13,497

 

 

(13,497)

 

 

 —

Adjusted EBITDA

 

 

23,446

 

 

3,448

 

 

(378)

 

 

26,516

Interest expense, net

 

 

5,800

 

 

73

 

 

 —

 

 

5,873

Assets (1)

 

 

661,994

 

 

113,554

 

 

(3,595)

 

 

771,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal twenty-six weeks ended September 29, 2018

    

TCS

    

Elfa

    

Eliminations

    

Total

Net sales to third parties

 

$

388,997

 

$

31,279

 

$

 —

 

$

420,276

Intersegment sales

 

 

 —

 

 

25,045

 

 

(25,045)

 

 

 —

Adjusted EBITDA

 

 

31,332

 

 

5,438

 

 

(32)

 

 

36,738

Interest expense, net

 

 

15,140

 

 

145

 

 

 —

 

 

15,285

Assets (1)

 

 

650,644

 

 

104,585

 

 

(3,775)

 

 

751,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal twenty-six weeks ended September 30, 2017

    

TCS

    

Elfa

 

Eliminations

 

Total

Net sales to third parties

 

$

369,380

 

$

32,098

 

$

 —

 

$

401,478

Intersegment sales

 

 

 —

 

 

22,541

 

 

(22,541)

 

 

 —

Adjusted EBITDA

 

 

29,210

 

 

4,591

 

 

(855)

 

 

32,946

Interest expense, net

 

 

9,957

 

 

141

 

 

 —

 

 

10,098

Assets (1)

 

 

661,994

 

 

113,554

 

 

(3,595)

 

 

771,953


(1)

Tangible assets in the Elfa column are located outside of the United States.

 

A reconciliation of income (loss) before taxes to Adjusted EBITDA is set forth below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

Twenty-Six Weeks Ended

 

 

    

September 29,

    

September 30,

    

September 29,

    

September 30,

    

 

 

 

2018

 

 

2017

 

2018

 

2017

 

Income (loss) before taxes

 

$

4,658

 

$

(358)

 

$

(5,586)

 

$

(12,620)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,128

 

 

9,505

 

 

18,465

 

 

19,047

 

Interest expense, net

 

 

7,377

 

 

5,873

 

 

15,285

 

 

10,098

 

Pre-opening costs (a)

 

 

881

 

 

1,418

 

 

1,227

 

 

2,804

 

Non-cash rent (b)

 

 

(581)

 

 

(276)

 

 

(1,218)

 

 

(737)

 

Stock-based compensation (c)

 

 

769

 

 

510

 

 

1,355

 

 

1,004

 

Loss on extinguishment of debt (d)

 

 

2,082

 

 

2,369

 

 

2,082

 

 

2,369

 

Foreign exchange losses (e)

 

 

 9

 

 

130

 

 

47

 

 

54

 

Optimization Plan implementation charges (f)

 

 

 —

 

 

6,786

 

 

4,864

 

 

10,320

 

Elfa manufacturing facility closure (g)

 

 

 —

 

 

517

 

 

 —

 

 

517

 

Other adjustments (h)

 

 

24

 

 

42

 

 

217

 

 

90

 

Adjusted EBITDA

 

$

24,347

 

$

26,516

 

$

36,738

 

$

32,946

 


(a)

Non-capital expenditures associated with opening new stores and relocating stores, including rent, marketing expenses, travel and relocation costs, and training costs. We adjust for these costs to facilitate comparisons of our performance from period to period.

 

(b)

Reflects the extent to which our annual GAAP rent expense has been above or below our cash rent payment due to lease accounting adjustments. The adjustment varies depending on the average age of our lease portfolio (weighted for size), as our GAAP rent expense on younger leases typically exceeds our cash cost, while our GAAP rent expense on older leases is typically less than our cash cost.

 

(c)

Non-cash charges related to stock-based compensation programs, which vary from period to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period to period.

 

(d)

Loss recorded as a result of the amendments made to the Senior Secured Term Loan Facility in September 2018 and the amendments made to the Senior Secured Term Loan Facility and the Revolving Credit Facility in August 2017, which we do not consider in our evaluation of our ongoing operations.

 

(e)

Realized foreign exchange transactional gains/losses our management does not consider in our evaluation of our ongoing operations.

 

(f)

Charges incurred to implement our Optimization Plan, which include certain consulting costs recorded in SG&A expenses in the first quarter of fiscal 2018 and the first and second quarters of fiscal 2017, cash severance payments associated with the elimination of certain full-time positions at the TCS segment recorded in other expenses in the first and second quarters of fiscal 2017, and cash severance payments associated with organizational realignment at the Elfa segment recorded in other expenses in the first and second quarters of fiscal 2017, which we do not consider in our evaluation of ongoing performance.

 

(g)

Charges related to the closure of an Elfa manufacturing facility in Lahti, Finland in December 2017, recorded in other expenses, which we do not consider in our evaluation of our ongoing performance.

 

(h)

Other adjustments include amounts our management does not consider in our evaluation of our ongoing operations, including certain severance and other charges.

 

 

 

 

v3.10.0.1
Description of business and basis of presentation
6 Months Ended
Sep. 29, 2018
Nature of business and summary of significant accounting policies  
Rollforward of contract liabilities

Below is a rollforward of contract liability balances from March 31, 2018 to September 29, 2018, which illustrates the amount of contract liability as of March 31, 2018 which was subsequently recognized into revenue in the twenty-six weeks ended September 29, 2018:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract liability

 

Revenue recognized

 

Contract liabilities

 

Contract liability

 

 

balance at

 

from beginning

 

added during

 

balance at

 

    

March 31, 2018 (1)

    

liability

 

period (2)

 

September 29, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Unearned revenue

 

$

11,080

 

$

(10,571)

 

$

9,555

 

$

10,064

Gift cards and store credits outstanding

 

$

8,470

 

$

(2,000)

 

$

1,936

 

$

8,406


(1)

Gift cards and store credits outstanding balance is net of revenue recognition transition adjustment

(2)

Net of estimated breakage

v3.10.0.1
Detail of certain balance sheet accounts (Tables)
6 Months Ended
Sep. 29, 2018
Detail of certain balance sheet accounts  
Schedule of detail of certain balance sheet accounts

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

    

2018

    

2018

    

2017

Accounts receivable, net:

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

$

15,789

 

$

15,968

 

$

15,821

Credit card receivables

 

 

7,472

 

 

6,939

 

 

7,649

Tenant allowances

 

 

445

 

 

998

 

 

1,264

Other receivables

 

 

1,694

 

 

1,623

 

 

1,349

 

 

$

25,400

 

$

25,528

 

$

26,083

Inventory:

 

 

 

 

 

 

 

 

 

Finished goods

 

$

105,355

 

$

91,970

 

$

104,482

Raw materials

 

 

4,904

 

 

4,840

 

 

4,372

Work in progress

 

 

542

 

 

552

 

 

423

 

 

$

110,801

 

$

97,362

 

$

109,277

Accrued liabilities:

 

 

 

 

 

 

 

 

 

Accrued payroll, benefits and bonuses

 

$

19,810

 

$

23,833

 

$

20,748

Unearned revenue

 

 

10,064

 

 

11,080

 

 

8,819

Accrued transaction and property tax

 

 

10,805

 

 

12,846

 

 

11,888

Gift cards and store credits outstanding

 

 

8,406

 

 

8,891

 

 

8,561

Accrued lease liabilities

 

 

4,573

 

 

5,105

 

 

6,072

Accrued interest

 

 

966

 

 

292

 

 

246

Other accrued liabilities

 

 

8,873

 

 

8,447

 

 

7,810

 

 

$

63,497

 

$

70,494

 

$

64,144

 

v3.10.0.1
Long-term debt and revolving lines of credit (Tables)
6 Months Ended
Sep. 29, 2018
Long-term debt and revolving lines of credit  
Schedule of long-term debt and revolving lines of credit

Long-term debt and revolving lines of credit consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

 

    

2018

    

2018

    

2017

    

Senior secured term loan facility

 

$

272,500

 

$

294,375

 

$

298,125

 

2014 Elfa term loan facility

 

 

 —

 

 

 —

 

 

2,943

 

2014 Elfa revolving credit facility

 

 

1,128

 

 

 —

 

 

 —

 

Obligations under capital leases

 

 

509

 

 

662

 

 

869

 

Other loans

 

 

 —

 

 

16

 

 

75

 

Revolving credit facility

 

 

25,000

 

 

 —

 

 

20,000

 

Total debt

 

 

299,137

 

 

295,053

 

 

322,012

 

Less current portion

 

 

(8,180)

 

 

(7,771)

 

 

(9,345)

 

Less deferred financing costs (1)

 

 

(8,668)

 

 

(9,888)

 

 

(11,371)

 

Total long-term debt

 

$

282,289

 

$

277,394

 

$

301,296

 


(1)

Represents deferred financing costs related to our Senior Secured Term Loan Facility, which are presented net of long-term debt in the consolidated balance sheet.

v3.10.0.1
Net income (loss) per common share (Tables)
6 Months Ended
Sep. 29, 2018
Net income (loss) per common share  
Schedule of reconciliation of net income and the number of shares used in the basic and diluted net income per share calculations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

 

September 29,

 

September 30,

 

September 29,

 

September 30,

 

 

    

2018

    

2017

    

2018

    

2017

    

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

3,241

 

$

(875)

 

$

(3,523)

 

$

(8,552)

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares—basic

 

 

48,138,907

 

 

48,058,231

 

 

48,138,907

 

 

48,053,084

 

Options and other dilutive securities

 

 

380,259

 

 

 —

 

 

 —

 

 

 —

 

Weighted-average common shares—diluted

 

 

48,519,166

 

 

48,058,231

 

 

48,138,907

 

 

48,053,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share—basic and diluted

 

$

0.07

 

$

(0.02)

 

$

(0.07)

 

$

(0.18)

 

Antidilutive securities not included:

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options outstanding

 

 

2,350,339

 

 

2,958,961

 

 

2,637,068

 

 

2,945,881

 

Nonvested restricted stock awards

 

 

14,492

 

 

107,614

 

 

120,709

 

 

95,455

 

 

v3.10.0.1
Accumulated other comprehensive income (Tables)
6 Months Ended
Sep. 29, 2018
Accumulated other comprehensive income  
Schedule of components of AOCI, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

currency

 

Pension

 

Foreign

 

 

 

 

 

hedge

 

liability

 

currency

 

 

 

 

    

instruments

    

adjustment

    

translation

    

Total

Balance at March 31, 2018

 

$

(102)

 

$

(1,793)

 

$

(15,421)

 

$

(17,316)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income before reclassifications, net of tax

 

 

(1,214)

 

 

135

 

 

(4,639)

 

 

(5,718)

Amounts reclassified to earnings, net of tax

 

 

(133)

 

 

 —

 

 

 —

 

 

(133)

Net current period other comprehensive (loss) income

 

 

(1,347)

 

 

135

 

 

(4,639)

 

 

(5,851)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 29, 2018

 

$

(1,449)

 

$

(1,658)

 

$

(20,060)

 

$

(23,167)

 

v3.10.0.1
Fair value measurements (Tables)
6 Months Ended
Sep. 29, 2018
Fair value measurements  
Schedule of items measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 29,

 

March 31,

 

September 30,

 

Description

    

 

    

Balance Sheet Location

    

2018

    

2018

    

2017

    

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonqualified retirement plan (1)

 

N/A

 

Other current assets

 

$

6,011

 

$

5,848

 

$

5,445

 

Foreign currency forward contracts

 

Level 2

 

Other current assets

 

 

 —

 

 

 —

 

 

2,067

 

Total assets

 

 

 

 

 

$

6,011

 

$

5,848

 

$

7,512

 


(1)

The fair value amount of the nonqualified retirement plan is measured at fair value using the net asset value per share practical expedient, and therefore, is not classified in the fair value hierarchy.

v3.10.0.1
Segment reporting (Tables)
6 Months Ended
Sep. 29, 2018
Segment reporting  
Schedule of segment reporting

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal thirteen weeks ended September 29, 2018

    

TCS

    

Elfa

    

Eliminations

    

Total

Net sales to third parties

 

$

208,915

 

$

15,538

 

$

 —

 

$

224,453

Intersegment sales

 

 

 —

 

 

14,650

 

 

(14,650)

 

 

 —

Adjusted EBITDA

 

 

21,228

 

 

3,839

 

 

(720)

 

 

24,347

Interest expense, net

 

 

7,295

 

 

82

 

 

 —

 

 

7,377

Assets (1)

 

 

650,644

 

 

104,585

 

 

(3,775)

 

 

751,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal thirteen weeks ended September 30, 2017

    

TCS

    

Elfa

 

Eliminations

 

Total

Net sales to third parties

 

$

202,321

 

$

16,089

 

$

 —

 

$

218,410

Intersegment sales

 

 

 —

 

 

13,497

 

 

(13,497)

 

 

 —

Adjusted EBITDA

 

 

23,446

 

 

3,448

 

 

(378)

 

 

26,516

Interest expense, net

 

 

5,800

 

 

73

 

 

 —

 

 

5,873

Assets (1)

 

 

661,994

 

 

113,554

 

 

(3,595)

 

 

771,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal twenty-six weeks ended September 29, 2018

    

TCS

    

Elfa

    

Eliminations

    

Total

Net sales to third parties

 

$

388,997

 

$

31,279

 

$

 —

 

$

420,276

Intersegment sales

 

 

 —

 

 

25,045

 

 

(25,045)

 

 

 —

Adjusted EBITDA

 

 

31,332

 

 

5,438

 

 

(32)

 

 

36,738

Interest expense, net

 

 

15,140

 

 

145

 

 

 —

 

 

15,285

Assets (1)

 

 

650,644

 

 

104,585

 

 

(3,775)

 

 

751,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal twenty-six weeks ended September 30, 2017

    

TCS

    

Elfa

 

Eliminations

 

Total

Net sales to third parties

 

$

369,380

 

$

32,098

 

$

 —

 

$

401,478

Intersegment sales

 

 

 —

 

 

22,541

 

 

(22,541)

 

 

 —

Adjusted EBITDA

 

 

29,210

 

 

4,591

 

 

(855)

 

 

32,946

Interest expense, net

 

 

9,957

 

 

141

 

 

 —

 

 

10,098

Assets (1)

 

 

661,994

 

 

113,554

 

 

(3,595)

 

 

771,953


(1)

Tangible assets in the Elfa column are located outside of the United States.

Summary of reconciliation of Adjusted EBITDA by segment to income before taxes

A reconciliation of income (loss) before taxes to Adjusted EBITDA is set forth below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

 

Twenty-Six Weeks Ended

 

 

    

September 29,

    

September 30,

    

September 29,

    

September 30,

    

 

 

 

2018

 

 

2017

 

2018

 

2017

 

Income (loss) before taxes

 

$

4,658

 

$

(358)

 

$

(5,586)

 

$

(12,620)

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,128

 

 

9,505

 

 

18,465

 

 

19,047

 

Interest expense, net

 

 

7,377

 

 

5,873

 

 

15,285

 

 

10,098

 

Pre-opening costs (a)

 

 

881

 

 

1,418

 

 

1,227

 

 

2,804

 

Non-cash rent (b)

 

 

(581)

 

 

(276)

 

 

(1,218)

 

 

(737)

 

Stock-based compensation (c)

 

 

769

 

 

510

 

 

1,355

 

 

1,004

 

Loss on extinguishment of debt (d)

 

 

2,082

 

 

2,369

 

 

2,082

 

 

2,369

 

Foreign exchange losses (e)

 

 

 9

 

 

130

 

 

47

 

 

54

 

Optimization Plan implementation charges (f)

 

 

 —

 

 

6,786

 

 

4,864

 

 

10,320

 

Elfa manufacturing facility closure (g)

 

 

 —

 

 

517

 

 

 —

 

 

517

 

Other adjustments (h)

 

 

24

 

 

42

 

 

217

 

 

90

 

Adjusted EBITDA

 

$

24,347

 

$

26,516

 

$

36,738

 

$

32,946

 


(a)

Non-capital expenditures associated with opening new stores and relocating stores, including rent, marketing expenses, travel and relocation costs, and training costs. We adjust for these costs to facilitate comparisons of our performance from period to period.

 

(b)

Reflects the extent to which our annual GAAP rent expense has been above or below our cash rent payment due to lease accounting adjustments. The adjustment varies depending on the average age of our lease portfolio (weighted for size), as our GAAP rent expense on younger leases typically exceeds our cash cost, while our GAAP rent expense on older leases is typically less than our cash cost.

 

(c)

Non-cash charges related to stock-based compensation programs, which vary from period to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period to period.

 

(d)

Loss recorded as a result of the amendments made to the Senior Secured Term Loan Facility in September 2018 and the amendments made to the Senior Secured Term Loan Facility and the Revolving Credit Facility in August 2017, which we do not consider in our evaluation of our ongoing operations.

 

(e)

Realized foreign exchange transactional gains/losses our management does not consider in our evaluation of our ongoing operations.

 

(f)

Charges incurred to implement our Optimization Plan, which include certain consulting costs recorded in SG&A expenses in the first quarter of fiscal 2018 and the first and second quarters of fiscal 2017, cash severance payments associated with the elimination of certain full-time positions at the TCS segment recorded in other expenses in the first and second quarters of fiscal 2017, and cash severance payments associated with organizational realignment at the Elfa segment recorded in other expenses in the first and second quarters of fiscal 2017, which we do not consider in our evaluation of ongoing performance.

 

(g)

Charges related to the closure of an Elfa manufacturing facility in Lahti, Finland in December 2017, recorded in other expenses, which we do not consider in our evaluation of our ongoing performance.

 

(h)

Other adjustments include amounts our management does not consider in our evaluation of our ongoing operations, including certain severance and other charges.

v3.10.0.1
Description of business and basis of presentation (Details)
Sep. 29, 2018
ft²
store
state
country
Description of business and basis of presentation  
Number of stores | store 92
Average size of stores (in square feet) 25,000
Average selling square feet in stores (in square feet) 19,000
Number of states | state 33
Elfa  
Description of business and basis of presentation  
Number of countries in which products are sold on wholesale basis | country 30
v3.10.0.1
Description of business and basis of presentation - Recent accounting pronouncements (Details) - USD ($)
$ in Thousands
Sep. 29, 2018
Apr. 01, 2018
Mar. 31, 2018
Sep. 30, 2017
Recent accounting pronouncements        
Retained Earnings (Accumulated Deficit) $ (598,837)   $ (595,721) $ (623,701)
Accrued Liabilities, Current 63,497   70,494 64,144
Inventory, Net 110,801   97,362 109,277
Other Assets, Current $ 10,562   11,609 $ 13,021
ASU 2014-09        
Recent accounting pronouncements        
Retained Earnings (Accumulated Deficit)   $ 400    
Accrued Liabilities, Current   $ (400)    
Inventory, Net     (900)  
Other Assets, Current     $ 900  
v3.10.0.1
Description of business and basis of presentation - Contract Balances (Details)
$ in Thousands
6 Months Ended
Sep. 29, 2018
USD ($)
Rollforward of contract liability balances  
Contract liability beginning balance $ 11,080
Contract liability balance ending balance 10,064
Unearned revenue  
Rollforward of contract liability balances  
Contract liability beginning balance 11,080
Revenue recognized from beginning liability (10,571)
Contract liabilities added during period 9,555
Contract liability balance ending balance 10,064
Gift card and store credits outstanding  
Rollforward of contract liability balances  
Contract liability beginning balance 8,470
Revenue recognized from beginning liability (2,000)
Contract liabilities added during period 1,936
Contract liability balance ending balance $ 8,406
v3.10.0.1
Detail of certain balance sheet accounts (Details) - USD ($)
$ in Thousands
Sep. 29, 2018
Mar. 31, 2018
Sep. 30, 2017
Accounts receivable, net:      
Trade receivables, net $ 15,789 $ 15,968 $ 15,821
Credit card receivables 7,472 6,939 7,649
Tenant allowances 445 998 1,264
Other receivables 1,694 1,623 1,349
Accounts receivable, net 25,400 25,528 26,083
Inventory:      
Finished goods 105,355 91,970 104,482
Raw materials 4,904 4,840 4,372
Work in progress 542 552 423
Inventory 110,801 97,362 109,277
Accrued Liabilities:      
Accrued payroll, benefits and bonuses 19,810 23,833 20,748
Unearned revenue 10,064 11,080 8,819
Accrued transaction and property tax 10,805 12,846 11,888
Gift cards and store credits outstanding 8,406 8,891 8,561
Accrued lease liabilities 4,573 5,105 6,072
Accrued interest 966 292 246
Other accrued liabilities 8,873 8,447 7,810
Accrued liabilities $ 63,497 $ 70,494 $ 64,144
v3.10.0.1
Long-term debt and revolving lines of credit - Term Loan Amendment and Revolving Amendment (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 14, 2018
Sep. 29, 2018
USD ($)
Sep. 30, 2017
USD ($)
Sep. 29, 2018
USD ($)
Sep. 30, 2017
USD ($)
Long-term debt and revolving lines of credit          
Loss on extinguishment of debt   $ 2,082 $ 2,369 $ 2,082 $ 2,369
Revolving credit facility          
Long-term debt and revolving lines of credit          
Aggregate principle amount   100,000   100,000  
Line of credit, draw down       10,000  
Senior secured term loan facility          
Long-term debt and revolving lines of credit          
Fee premium imposed on voluntary prepayments (as a percent) 1.00%        
Period in which a premium is imposed on voluntary prepayments, in months 12 months        
Principal repayments       20,000  
Outstanding borrowings   272,500   272,500  
Loss on extinguishment of debt       2,082  
Deferred financing costs   $ 2,217   $ 2,217  
Senior secured term loan facility | Maximum          
Long-term debt and revolving lines of credit          
Debt Instrument leverage ratio covenant 2.75        
Senior secured term loan facility | LIBOR          
Long-term debt and revolving lines of credit          
Debt instrument annual step down Leverage Ratio 4.75        
Interest rate margin (as a percent) 5.00%        
Senior secured term loan facility | Base rate          
Long-term debt and revolving lines of credit          
Debt instrument annual step down Leverage Ratio 3.75        
Interest rate margin (as a percent) 4.00%        
v3.10.0.1
Long-term debt and revolving lines of credit - Schedule of long-term debt and revolving lines of credit (Details) - USD ($)
$ in Thousands
Sep. 29, 2018
Mar. 31, 2018
Sep. 30, 2017
Long-term debt and revolving lines of credit      
Total debt $ 299,137 $ 295,053 $ 322,012
Less current portion (8,180) (7,771) (9,345)
Less deferred financing costs (8,668) (9,888) (11,371)
Total long-term debt 282,289 277,394 301,296
Senior secured term loan facility      
Long-term debt and revolving lines of credit      
Total debt 272,500 294,375 298,125
Obligations under capital leases      
Long-term debt and revolving lines of credit      
Total debt 509 662 869
Other loans      
Long-term debt and revolving lines of credit      
Total debt   $ 16 75
2014 Elfa term loan facility      
Long-term debt and revolving lines of credit      
Total debt     2,943
2014 Elfa revolving credit facility      
Long-term debt and revolving lines of credit      
Total debt 1,128    
Revolving credit facility      
Long-term debt and revolving lines of credit      
Total debt $ 25,000   $ 20,000
v3.10.0.1
Net income (loss) per common share (Details) - USD ($)
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Numerator:        
Net income (loss) $ 3,241,000 $ (875,000) $ (3,523,000) $ (8,552,000)
Denominator:        
Weighted-average common shares - basic (in shares) 48,138,907 48,058,231 48,138,907 48,053,084
Options and other dilutive securities $ 380,259      
Weighted-average common shares - diluted (in shares) 48,519,166 48,058,231 48,138,907 48,053,084
Net income (loss) per common share—basic and diluted $ 0.07 $ (0.02) $ (0.07) $ (0.18)
Stock options outstanding        
Antidilutive securities not included:        
Antidilutive securities 2,350,339 2,958,961 2,637,068 2,945,881
Nonvested restricted stock awards        
Antidilutive securities not included:        
Antidilutive securities 14,492 107,614 120,709 95,455
v3.10.0.1
Income taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Income taxes        
Provision (benefit) for income taxes $ 1,417 $ 517 $ (2,063) $ (4,068)
Remeasurement of deferred tax balances     $ 604  
Effective income tax rate (as a percent) 30.40% (144.40%) 36.90% 32.20%
v3.10.0.1
Income taxes - Tax Cuts and Jobs Act (Details)
$ in Thousands
12 Months Ended
Mar. 31, 2018
USD ($)
Income taxes  
Net provisional tax benefit $ 15,689
Provisional benefit related to the remeasurement of deferred tax balances 24,210
Provisional expense related to the one-time transition tax on foreign earnings $ 8,521
v3.10.0.1
Commitments and contingencies (Details)
$ in Thousands
Sep. 29, 2018
USD ($)
Standby letters of credit  
Commitments and contingencies  
Amount outstanding $ 3,852
v3.10.0.1
Accumulated other comprehensive income (Details)
$ in Thousands
6 Months Ended
Sep. 29, 2018
USD ($)
Rollforward of the amounts included in AOCI, net of taxes  
Balance beginning of period $ (17,316)
Other comprehensive income (loss) before reclassifications, net of tax (5,718)
Amounts reclassified to earnings, net of tax (133)
Net current period other comprehensive (loss) income (5,851)
Balance end of period (23,167)
Pension liability adjustment  
Rollforward of the amounts included in AOCI, net of taxes  
Balance beginning of period (1,793)
Other comprehensive income (loss) before reclassifications, net of tax 135
Net current period other comprehensive (loss) income 135
Balance end of period (1,658)
Foreign currency translation  
Rollforward of the amounts included in AOCI, net of taxes  
Balance beginning of period (15,421)
Other comprehensive income (loss) before reclassifications, net of tax (4,639)
Net current period other comprehensive (loss) income (4,639)
Balance end of period (20,060)
Foreign currency hedge instruments  
Rollforward of the amounts included in AOCI, net of taxes  
Balance beginning of period (102)
Other comprehensive income (loss) before reclassifications, net of tax (1,214)
Amounts reclassified to earnings, net of tax (133)
Net current period other comprehensive (loss) income (1,347)
Balance end of period $ (1,449)
v3.10.0.1
Foreign currency forward contracts (Details) - USD ($)
$ in Thousands
6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Foreign Currency Forward Contracts    
Purchase of inventory from use of forward contracts in Swedish krona (as a percent) 94.00% 100.00%
Purchase of U.S. dollars from use of forward contracts $ 0 $ 1,648
Purchase of U.S. dollars from use of forward contracts as a percent of Elfa's U.S. Dollar purchases 0.00% 54.00%
Foreign currency forward contracts | Not Designated as Hedging Instrument    
Foreign Currency Forward Contracts    
Loss associated with the change in fair value of forward contracts not designated as hedging instruments $ 0  
Foreign currency hedge instruments | Designated as Hedging Instrument | Cash Flow Hedging    
Foreign Currency Forward Contracts    
Loss in accumulated other comprehensive loss related to foreign currency hedge instruments (1,449)  
Unrealized loss for settled foreign currency hedge instruments (930)  
Unrealized loss to be reclassified into earnings over the next 12 months $ (930)  
Minimum | Foreign currency forward contracts    
Foreign Currency Forward Contracts    
Term of contract 1 month  
Maximum | Foreign currency forward contracts    
Foreign Currency Forward Contracts    
Term of contract 12 months  
v3.10.0.1
Fair value measurements (Details) - USD ($)
$ in Thousands
Sep. 29, 2018
Mar. 31, 2018
Sep. 30, 2017
Fair value      
Liabilities      
Estimated fair value of long-term debt, including current maturities $ 299,137 $ 295,605 $ 311,578
Recurring      
Assets      
Total assets 6,011 5,848 7,512
Recurring | Other current assets      
Assets      
Nonqualified retirement plan $ 6,011 $ 5,848 5,445
Not Designated as Hedging Instrument | Recurring | Foreign currency forward contracts | Level 2 | Other current assets      
Assets      
Foreign currency forward contracts     $ 2,067
v3.10.0.1
Segment reporting (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
USD ($)
segment
country
Sep. 30, 2017
USD ($)
Sep. 29, 2018
USD ($)
country
Sep. 30, 2017
USD ($)
Mar. 31, 2018
USD ($)
Segment reporting          
Number of reportable segments | segment 2        
Segment reporting          
Sales $ 224,453 $ 218,410 $ 420,276 $ 401,478  
Adjusted EBITDA 24,347 26,516 36,738 32,946  
Interest expense, net 7,377 5,873 15,285 10,098  
Assets $ 751,454 771,953 $ 751,454 771,953 $ 749,369
Elfa          
Segment reporting          
Number of countries in which products are sold on wholesale basis | country 30   30    
Operating segments | TCS          
Segment reporting          
Sales $ 208,915 202,321 $ 388,997 369,380  
Adjusted EBITDA 21,228 23,446 31,332 29,210  
Interest expense, net 7,295 5,800 15,140 9,957  
Assets 650,644 661,994 650,644 661,994  
Operating segments | Elfa          
Segment reporting          
Sales 15,538 16,089 31,279 32,098  
Adjusted EBITDA 3,839 3,448 5,438 4,591  
Interest expense, net 82 73 145 141  
Assets 104,585 113,554 104,585 113,554  
lntersegment          
Segment reporting          
Sales (14,650) (13,497) (25,045) (22,541)  
Adjusted EBITDA (720) (378) (32) (855)  
Assets (3,775) (3,595) (3,775) (3,595)  
lntersegment | Elfa          
Segment reporting          
Sales $ 14,650 $ 13,497 $ 25,045 $ 22,541  
v3.10.0.1
Segment reporting - Reconciliation of Adjusted EBITDA by segment to income before taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 29, 2018
Sep. 30, 2017
Segment reporting        
Loss before taxes $ 4,658 $ (358) $ (5,586) $ (12,620)
Depreciation and amortization 9,128 9,505 18,465 19,047
Interest expense, net 7,377 5,873 15,285 10,098
Pre-opening costs (881) (1,418) (1,227) (2,804)
Non-cash rent (581) (276) (1,218) (737)
Stock-based compensation (769) (510) (1,355) (1,004)
Loss on extinguishment of debt (2,082) (2,369) (2,082) (2,369)
Foreign exchange losses (9) (130) (47) (54)
Optimization Plan implementation charges   (6,786) (4,864) (10,320)
Elfa manufacturing facility closure   517   517
Other adjustments 24 42 217 90
Adjusted EBITDA $ 24,347 $ 26,516 $ 36,738 $ 32,946