- Total sales increased 10% to $55.5 million
- Glasses sales increased 21% to $14.0 million
- Glasses Average Order Value increased 73% to $93.07
- Contact lens sales increased 7% to $41.5 million
- 47th consecutive quarter of year-over-year revenue growth
VANCOUVER, British Columbia, Sept. 12, 2013 (GLOBE NEWSWIRE)-
Coastal Contacts Inc. ("Coastal.com" or "the Company") (Nasdaq:COA)
(TSX:COA), the leading manufacturer and digital retailer of
high-quality glasses and contact lenses today announced financial
results for the third fiscal quarter ended July 31, 2013.
"Coastal.com had a strong third quarter demonstrating continued
execution and momentum in our business," said Roger Hardy, CEO. "We
have secured an anchor tenancy in the online optical category that
we believe will become one of the best locations and categories in
internet commerce over the next decade. We believe Coastal.com is
well positioned in the early stages of several large market
opportunities and as such, are making investments for both short
and long-term success."
During the quarter, our North American business grew 13% to
$27.0 million, while our European business likewise grew 13% to
$22.9 million. Our Asia Pacific business declined 9% to $5.6
million, due to foreign exchange fluctuations in Japan.
During the quarter, our contact lens business in North America
and Europe grew 11% and 10%, respectively, compared to the same
period in 2012. During the same period, our contact lens
business in the Asia Pacific region declined 10%. Overall, our
geographically diversified contact lens business grew 7% to $41.5
million. During the quarter, our contact lens business generated
10% Adjusted EBITDA margins, or $4.3 million, exclusive of a 1%
decline due to foreign currency fluctuations in Japan.
Approximately 80% of contact lens orders and revenue were generated
from returning customers.
Coastal.com's glasses business grew 21% over the same period
last year to $14 million. Revenues from our glasses business in
Canada grew 25% during the quarter while glasses revenue in the
United States increased 6%. Growth was driven by a 73%
increase in average order value to $93.07. Our average order
values for returning glasses customers grew to $112 in the United
States and grew to $173 in Canada, up significantly over the prior
period in part due to our reduction in 'First Pair Free' orders as
well as our focus on serving enduring and attractive segments
within the optical category. These increases demonstrate our
customers growing confidence in our online order processing,
manufacturing and delivery.
We continue to pursue partnership opportunities with significant
eCommerce and managed care organizations that we expect would
extend the reach of Coastal.com's offering to large user bases.
Total sales for the first quarter increased 10% to $55.5
million. Net loss, totaled $2.7 million, or $0.08 per basic and
diluted share. Non-IFRS adjusted EBITDA for the quarter totaled a
loss of $1.9 million.
Second Quarter 2013 Financial Highlights
- Sales totaled $55.5 million, a 10% year-over-year
increase.
- Gross profit was $22.8 million or 41% of sales compared with
$21.4 million or 43% during the same period in 2012, primarily
attributable to the expansion of our North American glasses
infrastructure.
- Fulfillment expenses were $4.9 million or 9% of sales compared
to $5.1 million or 10% of sales during the same period in
2012.
- General and Administrative expenses were $5.1 million or 9% of
sales compared to $5.2 million or 10% of sales during the same
period in 2012.
- Adjusted EBITDA was a loss of $1.9 million compared with a loss
of $0.1 million during the same period in 2012.
- Cash and equivalents of $25.9 million compared with $19.2
million at October 31, 2012.
Glasses Business
- Sales totaled $14 million, 21% year-over-year increase.
- Shipped 185,114 frames during the quarter.
- Average order value increased 73% to $93.07.
- Gross profit was $5.8 million or 42% of sales.
- Coastal.com exclusive brands represented 44% of frames shipped
during the quarter.
- USA returning glasses customer average order sizes increased to
$112
- Canada returning glasses customer average order value grew to
$173
Contact Lens Business
- Sales totaled $41.5 million a 7% increase over the same period
in 2012.
- Contact lens sales in North America grew 11% over the same
period in 2012.
- Contact lens sales in Europe grew 10% over the same period in
2012.
- Gross margins for contact lenses were 41% of sales compared
with 41% of sales during the same period in 2012.
- Contact lens category generated $4.3 million or 9% Adjusted
EBITDA margins reduced from 10% owing to currency exchange
fluctuations in Japan.
- Approximately 80% of our contact lens revenues and orders were
derived from repeat customers.
- Average order value was $112.01 compared to $106.30 in the same
period in 2012.
- Splash™, our proprietary brand of contact lenses comprised 5%
of contact lens unit sales during the quarter.
COASTAL CONTACTS
INC. |
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION |
(CAD $000's) |
(Unaudited) |
|
|
|
|
July 31 |
October 31 |
|
2013 |
2012 |
|
|
|
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 25,870 |
$ 19,153 |
Trade and other receivables |
7,962 |
6,681 |
Inventories |
27,826 |
25,435 |
Prepaid expenses |
3,373 |
2,250 |
Total current assets |
65,031 |
53,519 |
Non-current assets |
|
|
Property, equipment and leasehold
improvements |
10,751 |
9,887 |
Intangible assets |
12,606 |
11,376 |
Goodwill |
8,647 |
8,322 |
Total non-current
assets |
32,004 |
29,585 |
TOTAL ASSETS |
$ 97,035 |
$ 83,104 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current liabilities |
|
|
Trade and other payables |
$ 46,928 |
$ 40,144 |
Provisions |
1,807 |
1,284 |
Income taxes payable |
389 |
839 |
Finance lease obligations, current |
901 |
101 |
Loans, current |
2,725 |
5,015 |
Other current
liabilities |
274 |
3,210 |
Total current
liabilities |
53,024 |
50,593 |
Non-current liabilities |
|
|
Other long-term liabilities |
271 |
270 |
Finance lease obligations |
1,102 |
457 |
Loans |
2,425 |
-- |
Deferred tax liabilities |
3,172 |
2,905 |
Total non-current
liabilities |
6,970 |
3,632 |
Total liabilities |
59,994 |
54,225 |
|
|
|
Shareholders' equity |
|
|
Share capital |
63,197 |
42,501 |
Share-based payments reserve |
3,633 |
3,395 |
Accumulated other comprehensive income
(loss) |
104 |
(137) |
Deficit |
(29,893) |
(16,880) |
Total shareholders'
equity |
37,041 |
28,879 |
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ 97,035 |
$ 83,104 |
|
COASTAL CONTACTS
INC. |
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS |
(CAD $000's) |
(Unaudited) |
|
|
|
|
|
|
Three months
ended July 31 |
Nine months ended
July 31 |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Sales |
$ 55,548 |
$ 50,324 |
$ 164,191 |
$ 145,385 |
Cost of sales |
32,733 |
28,898 |
96,902 |
84,130 |
Gross profit |
22,815 |
21,426 |
67,289 |
61,255 |
|
|
|
|
|
Fulfillment |
4,874 |
5,090 |
15,770 |
13,964 |
Selling and marketing |
16,183 |
12,180 |
47,634 |
33,483 |
General and administration |
5,067 |
5,227 |
16,647 |
14,919 |
Results from operating
activities |
(3,309) |
(1,071) |
(12,762) |
(1,111) |
|
|
|
|
|
Financing costs (income) |
(775) |
848 |
212 |
917 |
|
|
|
|
|
Loss before income
taxes |
(2,534) |
(1,919) |
(12,974) |
(2,028) |
|
|
|
|
|
Income tax expense (recovery) - current |
59 |
(43) |
(100) |
527 |
Income tax expense (recovery) -
deferred |
61 |
(15) |
139 |
(256) |
Net income tax expense
(recovery) |
120 |
(58) |
39 |
271 |
|
|
|
|
|
Net loss for the period |
(2,654) |
(1,861) |
(13,013) |
(2,299) |
|
|
|
|
|
Other comprehensive income
(loss) |
|
|
|
|
Foreign
currency translation differences |
(283) |
(33) |
241 |
(845) |
Comprehensive loss for the
period |
$ (2,937) |
$ (1,894) |
$ (12,772) |
$ (3,144) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ (0.08) |
$ (0.07) |
$ (0.43) |
$ (0.08) |
|
|
|
|
|
Weighted average number of common
shares |
|
|
|
|
outstanding - basic and
diluted |
32,346,033 |
28,335,556 |
30,268,616 |
28,226,417 |
Coastal.com will host a conference call to review the
financial results and Company operations on Thursday, September 12,
2013 at 10:30 a.m. Eastern time. Participating in the call
will be Roger Hardy, founder and CEO, Gary Collins, President and
Nick Bozikis, CFO.
To attend the call, participants may
dial: |
|
North American Toll Free: 1-877-941-1427 |
|
To listen live via your PC and view the
presentation, log into |
http://public.viavid.com/index.php?id=105993. |
|
The link can also be accessed at
www.Coastal.com under the investor relations tab. |
|
A replay of the call will be available for 7
days. To access the replay, listeners may dial: |
|
Local/International: 1-877-941-1230 |
Passcode: 4639108 |
The following selected financial information is qualified
in its entirety by, and should be read in conjunction with our
audited consolidated financial statements for the fiscal year ended
October 31, 2012 and accompanying notes and Management's Discussion
and Analysis which may be viewed on SEDAR at www.sedar.com and
EDGAR at http://www.sec.gov/edgar/searchedgar/webusers.htm
Coastal.com's risks and uncertainties are discussed in detail in
the Company's Annual Information Form dated December 19, 2012 which
is also available on SEDAR and EDGAR.
Adjusted EBITDA as referenced in this news release is a Non-IFRS
measure and is defined as earnings (loss) before interest, taxes,
depreciation and amortization, share based compensation, listing
and financing costs and restructuring charges. See "Supplemental
Non-IFRS Measures" herein.
The following table provides a reconciliation of net earnings
(loss) to adjusted EBITDA:
|
For the three
months ended July 31 |
($000's) |
2013 |
2012 |
|
|
|
Net loss |
(2,654) |
(1,861) |
Depreciation and Amortization |
1,132 |
752 |
Interest expense , net |
58 |
98 |
Income tax expense (recovery) |
120 |
(58) |
Share-based payments expense |
241 |
171 |
Foreign exchange loss
(gain) |
(833) |
750 |
Adjusted EBITDA |
(1,936) |
(148) |
Supplemental Non-IFRS Measures
Coastal.com reports its results in accordance with IFRS,
however, it presents Adjusted EBITDA and the number of orders
shipped in our filings because the Company believes our investors
use these figures to make investment decisions about
us.
Adjusted EBITDA is a non-IFRS measure that does not have any
standardized meaning prescribed by IFRS and is therefore unlikely
to be comparable to similar measures presented by other companies.
Adjusted EBITDA should be considered in addition to, and not as a
substitute for, net earnings, cash flows and other measures of
financial performance and liquidity reported in accordance with
IFRS.
Adjusted EBITDA is a measure we believe is useful in assessing
performance and highlighting trends on an overall basis. Adjusted
EBITDA differs from the most comparable IFRS measure, net earnings,
primarily because it does not include interest, income taxes,
foreign exchange, depreciation and amortization, restructuring cost
and share-based payments expense.
New orders, reorders, shipped orders and active customers are
non-IFRS measures that do not have a standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other companies. New orders are
orders shipped to new customers, net of returns. Reorders are
orders shipped to returning customers, net of returns. Active
customers are customers who have placed an order with us in the
last 24 months.
About Coastal.com
Coastal.com is the leading manufacturer and online retailer of
eyewear products offered through a family of world class
websites. Established in 2000, the Coastal.com family of
brands provides customers with an extensive, in stock selection of
prescription eyewear, contact lenses and
sunglasses. Coastal.com's vision is to provide our customers
with stylish high quality eyewear quickly, so they can see
everything life has to offer. For more information about
Coastal.com (Nasdaq:COA), visit www.coastal.com.
Cautionary Note Regarding Forward-Looking Statements
All statements made in the News Release which are not current
statements or historical facts constitute "forward-looking
information" within the meaning of applicable Canadian securities
laws and "forward-looking statements" as defined in Section 27A of
the United States Securities Act of 1933, Section 21E of the United
States Securities Exchange Act of 1934, the Private Securities
Litigation Reform Act of 1995, or in releases made by the United
States Securities and Exchange Commission, all as may be amended
from time to time, and the words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "estimate", "expect",
"goal", "target", "should", "likely", "potential", "continue",
"project", "forecast", "prospects", and similar expressions
typically are used to identify forward-looking information and
statements. Examples of such forward-looking information and
statements within this News Release include information and
statements relating to: Coastal.com's perceptions of the contact
lens and eyeglasses industry or market and anticipated trends in
that market in any of the countries in which Coastal.com does
business; Coastal.com's anticipated ability to procure products and
supplies, or the terms under which it may procure its products and
supplies; Coastal.com's anticipated business operations, inventory
levels, ability to handle specific order and call volumes, ability
to fill and ship orders in a timely manner, ability to achieve
greater marketing efficiency or similar statements; Coastal.com's
ability to increase production; Coastal.com's capital expenditure
plans; the results of further investments in Coastal.com's retail
brands; Coastal.com's relationships with suppliers; Coastal.com's
anticipated results of operations, including but not limited to
anticipated sales, revenues, earnings, tax benefits or similar
matters; the effects of seasonality; sufficiency of cash flows;
Coastal.com's perceptions regarding volatility in and impact of
foreign currency exchange rates; the effect of the current economic
climate on Coastal.com's business and consumer behavior; and
Coastal.com's ability to address challenges and opportunities
resulting from current economic conditions.
Forward-looking information and statements are based on the
then-current expectations, beliefs, assumptions, estimates and
forecasts about Coastal.com's business and the industry and markets
in which it operates. Forward-looking information and
statements are not guarantees of future performance and involve
risks, uncertainties and assumptions which are difficult to
predict. Assumptions underlying Coastal.com's expectations
regarding forward-looking information and statements contained
within this News Release include, among others: that Coastal.com
will maintain its position in the markets it operates in and expand
into other markets in a favourable manner; that Coastal.com will
have sufficient capital to continue making investments in
advertising, inventory, property, equipment and leasehold
improvements as well as personnel to support its business and new
product lines, including its eyeglasses business; that Coastal.com
will be able to generate and maintain sufficient cash flows to
support its operations; that Coastal.com will be successful in
complying with industry regulatory requirements in British Columbia
and other jurisdictions in which it operates; that Coastal will be
able to establish and/or maintain necessary relationships with
suppliers; and that Coastal.com will retain key personnel. The
foregoing list of assumptions is not exhaustive.
You are cautioned that forward-looking information and
statements are subject to a number of known and unknown risks,
uncertainties and other factors, many of which are beyond
Coastal.com's control, that could cause Coastal.com's actual future
results or performance to be materially different from those that
are disclosed in or implied by the forward-looking
information. These factors include, but are not limited to
changes in the market; potential downturns in economic conditions;
consumer credit risk; Coastal.com's ability to implement its
business strategies; competition from traditional and online
retailers; limited suppliers; limited availability of inventory;
disruption in Coastal's distribution facilities; mergers and
acquisitions; foreign currency exchange rate fluctuations;
regulatory requirements; demand for contact lenses, eyeglasses and
related vision care products; the risk that Coastal.com will not be
successful in defending against litigation; dependence on the
Internet; and the other risks detailed in Coastal.com's filings
with the Canadian securities regulatory authorities.
You should not place undue reliance on forward-looking
information and statements which are qualified in their entirety by
this cautionary note.
Forward-looking information and statements in this news release
are made as of the date hereof and Coastal.com expressly disclaims
any intent or obligation to update such forward-looking information
or statements, unless Coastal.com specifically states otherwise or
as required by applicable law.
For a complete discussion of the assumptions, risks and
uncertainties related to Coastal.com's business, you are encouraged
to review Coastal.com's filings with the Canadian securities
regulatory authorities filed on SEDAR at http://www.sedar.com.
CONTACT: Terry Vanderkruyk
Vice President, Corporate Development
Coastal Contacts Inc.
604.676.4498
terryv@coastal.com
or
Liolios Group Inc.
Scott Liolios or Cody Slach
949.574.3860
COA@liolios.com
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