SVV Savers Value Village Inc

Quarterly net sales increased 4.4% or 4.5% in constant currency1

Quarterly comparable store sales increased 2.6%

Opened five new stores in the quarter

Savers Value Village, Inc. (NYSE: SVV), (the “Company”) today announced financial results for the thirteen weeks ended December 30, 2023 (the “fourth quarter”) and the fifty-two weeks ended December 30, 2023 (“fiscal 2023”).

Highlights for the Fourth Quarter of 2023, Compared to the Fourth Quarter of 2022

• Net sales increased 4.4% to $382.8 million. Constant currency net sales1 increased 4.5% to $383.5 million.
• Comparable store sales increased 2.6%, with the U.S. and Canada up 3.1% and 2.0%, respectively.
• Sales yield2 increased 2.0% to $1.54 per pound.
• The Company opened five new stores during the fourth quarter, ending the fourth quarter with a total of 326 stores.
• Net income increased 66.0% to $43.9 million, or $0.27 per diluted share, from $26.4 million, or $0.18 per diluted share.
• Adjusted net income1 and Adjusted net income per diluted share1 were $25.4 million and $0.15, respectively.
• Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)1 increased 5.0% to $83.1 million, and Adjusted EBITDA margin1 increased 10 basis points to 21.7%. Adjusted EBITDA1 included a $0.1 million negative impact from changes in foreign currency rates.

Mark Walsh, Chief Executive Officer, commented, “We finished the year on a strong note and are pleased with the underlying performance and resiliency of our business. We believe our results, once again, demonstrate the power of our vertically integrated model – which allows us to align our processing levels with demand trends to generate strong profitability and cash flow. Despite some weather impact early in the fourth quarter, we delivered better than expected adjusted EBITDA of more than $83 million in the fourth quarter and $322 million in 2023.”

Mr. Walsh continued, “With the strong secular trends and the investments in people, processes and technology we have made over the last few years, we are well-positioned to accelerate our organic unit growth up to the high-single-digit percent range over the next few years. We feel very good about our 22 planned store openings in 2024 and the tremendous growth opportunities ahead of us.”

1 Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, as well as amounts presented on a constant currency basis, are not measures recognized under U.S. generally accepted accounting principles (“GAAP”). For additional information on our use of non-GAAP financial measures, see “Non-GAAP Financial Measures”, “Constant Currency” and the accompanying financial tables which reconcile GAAP financial measures to these non-GAAP measures. 2 We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis.

Balance Sheet Highlights

• As of December 30, 2023, cash and cash equivalents totaled $180.0 million, compared to $112.1 million as of December 31, 2022.
• As of December 30, 2023, the Company had total borrowings of $816.8 million outstanding and its net leverage, defined as total debt less cash and cash equivalents, divided by Adjusted EBITDA for the trailing twelve months, was 2.0x.
• There were no borrowings under the Company’s $75.0 million revolving credit facility as of December 30, 2023.

On January 30, 2024, the Company entered into an amendment to its Senior Secured Credit Facilities resulting in a reduction of approximately 175 basis points on existing borrowings under the Term Loan Facility as a result of a reduction in the margin at the time of the reprice, the elimination of the SOFR adjustment margin and an additional reduction of the margin conditional on the Company achieving certain public corporate family ratings, which condition was met during February when Moody’s upgraded the Company’s corporate family rating to B1 Stable from B2 Stable.

On March 4, 2024, the Company redeemed $49.5 million aggregate principal amount of the Senior Secured Notes. Subsequent to the redemption, the Company had total borrowings of $767.3 million outstanding.

Fiscal 2024 Outlook

The Company expects the following for the fifty-two weeks ending December 28, 2024 (“fiscal 2024”):

• The opening of approximately 22 new stores;
• Total net sales of approximately $1.57 to $1.59 billion;
• Comparable store sales growth of approximately 2% to 3%;
• Net income of approximately $78 million;
• Adjusted net income1 of approximately $123 million;
• Adjusted EBITDA2 of approximately $340 million;
• Capital expenditures in the range of $105 to $115 million; and
• GAAP-based diluted weighted average common shares outstanding of approximately 172 million.

1 Adjusted net income is not a measure recognized under U.S. GAAP. For additional information on our use of non-GAAP financial measures, see “Non-GAAP Financial Measures” below and the accompanying financial tables which reconcile GAAP financial measures to non-GAAP financial measures. 2 We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we cannot determine the probable significance of the various reconciling items, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.

Conference Call Information

A conference call to discuss the fourth quarter and fiscal 2023 financial results is scheduled for today, March 7, 2024, at 4:30 p.m. ET.

Investors and analysts who wish to participate in the call are invited to dial +1 888 886-7786 (international callers, please dial +1 416 764-8658) approximately 10 minutes prior to the start of the call. Please reference Conference ID 51129642 when prompted. A live webcast of the conference call will be available over the Internet, which you may access by logging on to the Investor Relations section on the Company’s website at https://ir.savers.com/events-and-presentations/default.aspx.

A recorded replay of the call will be available shortly after the conclusion of the call and remain available until March 21, 2024. To access the telephone replay, dial +1 877 674-7070 (international callers, please dial +1 416 764-8692). The access code for the replay is 129642#. A replay of the webcast will also be available within two hours of the conclusion of the call and will remain available on the website for one year.

About the Savers Value Village™ family of thrift stores

As the largest for-profit thrift operator in the United States and Canada for value priced pre-owned clothing, accessories and household goods, our mission is to champion reuse and inspire a future where secondhand is second nature. Learn more about the Savers family of thrift stores, our impact, and the #ThriftProud movement at savers.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements can be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections, the outlook for the Company’s future business, prospects, financial performance, including its fiscal 2024 outlook or financial guidance, and industry outlook. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the impact on both the supply and demand for the Company’s products caused by general economic conditions and changes in consumer confidence and spending; the Company’s ability to anticipate consumer demand and to source and process a sufficient quantity of quality secondhand items at attractive prices on a recurring basis risks related to attracting new, and retaining existing customers, including by increasing acceptance of secondhand items among new and growing customer demographics; risks associated with its status as a “brick and mortar” only retailer and its lack of operations in the growing online retail marketplace; its failure to open new profitable stores, or successfully enter new markets on a timely basis or at all; the risks associated with doing business with international manufacturers and suppliers including, but not limited to, transportation and shipping challenges, regulatory risks in foreign jurisdictions (particularly in Canada, where the Company maintains extensive operations) and exchange rate risks, which the Company may not be able to fully hedge; the loss of, or disruption or interruption in the operations of, its centralized distribution centers; risks associated with litigation, the expense of defense, and the potential for adverse outcomes; its failure to properly hire and to retain key personnel and other qualified personnel; risks associated with the timely and effective deployment, protection, and defense of computer networks and other electronic systems, including e-mail; changes in government regulations, procedures and requirements; its ability to maintain an effective system of controls and produce timely and accurate financial statements or comply with applicable regulations; and risks associated with heightened geopolitical instability due to the conflicts in the Middle East and Eastern Europe; outbreak of viruses or widespread illness, including the continued impact of COVID-19 and continuing or renewed regulatory responses thereto; ; together with each of the other factors set forth under the heading “Risk Factors” in its filings with the United States Securities and Exchange Commission (“SEC”). Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company is not under any obligation (and specifically disclaims any such obligation) to update or alter these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP. Non-GAAP financial measures used by the Company include Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin. The Company has included these non-GAAP financial measures in this press release as they are key measures used by its management and its board of directors to evaluate its operating performance and the effectiveness of its business strategies, make budgeting decisions, and evaluate compensation decisions. Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. There are limitations to using non-GAAP financial measures, including those amounts presented in accordance with the Company’s definitions of Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, as they may not be comparable to similar measures disclosed by its competitors, because not all companies and analysts calculate Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin in the same manner. Because of these limitations, you should consider Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including, as applicable, net income and the Company’s other GAAP results. The Company presents Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin because we consider these meaningful measures to share with investors because they best allow comparison of the performance of one period with that of another period. In addition, by presenting Adjusted net income, Adjusted net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin, we provide investors with management’s perspective of the Company’s operating performance.

Adjusted net income is defined as net income excluding the impact of loss on extinguishment of debt, IPO-related stock-based compensation expense, transaction costs, dividend-related bonus, (gain) loss on foreign currency, net, certain other adjustments, the tax effect on the above adjustments, and non-recurring tax benefit. The Company defines Adjusted net income per diluted share as Adjusted net income divided by diluted weighted average common shares outstanding.

The Company defines Adjusted EBITDA as net income excluding the impact of interest expense, net, income tax (benefit) expense, depreciation and amortization, loss on extinguishment of debt, stock-based compensation expense, non-cash occupancy-related costs, lease intangible asset expense, pre-opening expenses, store closing expenses, executive transition costs, transaction costs, dividend-related bonus, gain (loss) on foreign currency, net, and certain other adjustments. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by net sales, expressed as a percentage.

Constant Currency

The Company reports certain operating results on a constant-currency basis in order to facilitate period-to-period comparisons of its results without regard to the impact of fluctuating foreign currency exchange rates. The term foreign currency exchange rates refer to the exchange rates used to translate the Company's operating results for all countries where the transactional currency is not the U.S. Dollar into U.S. Dollars. Because the Company is a global company, foreign currency exchange rates used for translation may have a significant effect on its reported results. In general, the Company's financial results are affected positively by a weaker U.S. Dollar and are affected negatively by a stronger U.S. Dollar. References to operating results on a constant-currency basis mean operating results without the impact of foreign currency exchange rate fluctuations.

The Company believes disclosure of constant-currency results is helpful to investors because it facilitates period-to-period comparisons of its results by increasing the transparency of the underlying performance by excluding the impact of fluctuating foreign currency exchange rates. However, constant-currency results are non-GAAP financial measures and are not meant to be considered as an alternative or substitute for comparable measures prepared in accordance with GAAP. Constant-currency results have no standardized meaning prescribed by GAAP, are not prepared under any comprehensive set of accounting rules or principles and should be read in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. Constant-currency results have limitations in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.

Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. During the thirteen and fifty-two weeks ended December 30, 2023, as compared to the thirteen and fifty-two weeks ended December 31, 2022, the U.S. dollar was stronger relative to the Canadian and Australian dollars which resulted in an unfavorable foreign currency impact on our operating results. To present this information, our current operating results in currencies other than the U.S. dollar are converted into U.S. dollars using the average exchange rates from the comparative prior period rather than the actual average exchange rates in effect.

SAVERS VALUE VILLAGE, INC.

 

Condensed Consolidated Balance Sheets

(All amounts in thousands, except per share amounts, unaudited)

 

 

December 30, 2023

 

December 31, 2022

Current assets:

 

 

 

Cash and cash equivalents

$

179,955

 

 

$

112,132

 

Trade receivables, net

 

11,767

 

 

 

14,092

 

Inventories

 

32,820

 

 

 

21,822

 

Prepaid expenses and other current assets

 

25,691

 

 

 

35,647

 

Derivative assets – current

 

7,691

 

 

 

8,625

 

Total current assets

 

257,924

 

 

 

192,318

 

Property and equipment, net

 

229,405

 

 

 

190,518

 

Right-of-use lease assets

 

499,375

 

 

 

437,843

 

Goodwill

 

687,368

 

 

 

681,447

 

Intangible assets, net

 

166,681

 

 

 

170,651

 

Derivative assets – non-current

 

23,519

 

 

 

31,077

 

Other assets

 

3,133

 

 

 

3,961

 

Total assets

$

1,867,405

 

 

$

1,707,815

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

92,550

 

 

$

80,748

 

Accrued payroll and related taxes

 

65,096

 

 

 

62,046

 

Lease liabilities – current

 

79,306

 

 

 

79,838

 

Current portion of long-term debt and short-term borrowings

 

4,500

 

 

 

50,250

 

Total current liabilities

 

241,452

 

 

 

272,882

 

Long-term debt, net

 

784,593

 

 

 

783,347

 

Lease liabilities – non-current

 

419,407

 

 

 

349,194

 

Deferred tax liabilities, net

 

27,909

 

 

 

63,141

 

Other liabilities

 

17,989

 

 

 

11,916

 

Total liabilities

 

1,491,350

 

 

 

1,480,480

 

Stockholders’ equity:

 

 

 

Preferred stock

 

—

 

 

 

—

 

Common stock

 

—

 

 

 

—

 

Additional paid-in capital

 

593,109

 

 

 

226,327

 

Accumulated deficit

 

(247,541

)

 

 

(38,443

)

Accumulated other comprehensive income

 

30,487

 

 

 

39,451

 

Total stockholders’ equity

 

376,055

 

 

 

227,335

 

Total liabilities and stockholders’ equity

$

1,867,405

 

 

$

1,707,815

 

SAVERS VALUE VILLAGE, INC.

 

Condensed Consolidated Statements of Income

(All amounts in thousands, except per share amounts, unaudited)

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

 

Amount

 

% of Sales

 

Amount

 

% of Sales

 

Amount

 

% of Sales

 

Amount

 

% of Sales

Net sales

$

382,765

 

 

100.0

%

 

$

366,802

 

 

100.0

%

 

$

1,500,249

 

 

100.0

%

 

$

1,437,229

 

 

100.0

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of merchandise sold, exclusive of depreciation and amortization

 

160,721

 

 

42.0

 

 

 

156,554

 

 

42.7

 

 

 

619,671

 

 

41.3

 

 

 

599,926

 

 

41.7

 

Salaries, wages and benefits

 

90,101

 

 

23.5

 

 

 

73,944

 

 

20.2

 

 

 

366,189

 

 

24.4

 

 

 

273,587

 

 

19.0

 

Selling, general and administrative

 

79,008

 

 

20.6

 

 

 

74,501

 

 

20.3

 

 

 

311,388

 

 

20.8

 

 

 

301,737

 

 

21.0

 

Depreciation and amortization

 

16,056

 

 

4.2

 

 

 

15,643

 

 

4.3

 

 

 

61,144

 

 

4.0

 

 

 

55,753

 

 

3.9

 

Total operating expenses

 

345,886

 

 

90.3

 

 

 

320,642

 

 

87.5

 

 

 

1,358,392

 

 

90.5

 

 

 

1,231,003

 

 

85.6

 

Operating income

 

36,879

 

 

9.7

 

 

 

46,160

 

 

12.5

 

 

 

141,857

 

 

9.5

 

 

 

206,226

 

 

14.4

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(17,588

)

 

(4.6

)

 

 

(18,889

)

 

(5.1

)

 

 

(88,500

)

 

(5.9

)

 

 

(64,744

)

 

(4.5

)

Gain (loss) on foreign currency, net

 

1,073

 

 

0.3

 

 

 

5,902

 

 

1.6

 

 

 

6,660

 

 

0.4

 

 

 

(20,737

)

 

(1.4

)

Other income, net

 

3,515

 

 

0.9

 

 

 

4,367

 

 

1.2

 

 

 

3,688

 

 

0.2

 

 

 

4,576

 

 

0.3

 

Loss on extinguishment of debt

 

—

 

 

—

 

 

 

—

 

 

—

 

 

 

(16,626

)

 

(1.1

)

 

 

(1,023

)

 

(0.1

)

Other expense, net

 

(13,000

)

 

(3.4

)

 

 

(8,620

)

 

(2.3

)

 

 

(94,778

)

 

(6.4

)

 

 

(81,928

)

 

(5.7

)

Income before income taxes

 

23,879

 

 

6.3

 

 

 

37,540

 

 

10.2

 

 

 

47,079

 

 

3.1

 

 

 

124,298

 

 

8.7

 

Income tax (benefit) expense

 

(19,993

)

 

(5.2

)

 

 

11,106

 

 

3.0

 

 

 

(6,036

)

 

(0.4

)

 

 

39,578

 

 

2.8

 

Net income

$

43,872

 

 

11.5

%

 

$

26,434

 

 

7.2

%

 

$

53,115

 

 

3.5

%

 

 

84,720

 

 

5.9

%

Net income per share, basic

$

0.27

 

 

 

 

$

0.19

 

 

 

 

$

0.35

 

 

 

 

$

0.60

 

 

 

Net income per share, diluted

$

0.27

 

 

 

 

$

0.18

 

 

 

 

$

0.34

 

 

 

 

$

0.58

 

 

 

Basic weighted average shares outstanding

 

160,453

 

 

 

 

 

141,590

 

 

 

 

 

151,027

 

 

 

 

 

141,561

 

 

 

Diluted weighted average shares outstanding

 

165,223

 

 

 

 

 

146,312

 

 

 

 

 

156,156

 

 

 

 

 

146,049

 

 

 

SAVERS VALUE VILLAGE, INC.

 

Condensed Consolidated Statements of Cash Flows

(All amounts in thousands, unaudited)

 

 

Fifty-Two Weeks Ended

 

December 30, 2023

 

December 31, 2022

Cash flows from operating activities:

 

 

 

Net income

$

53,115

 

 

$

84,720

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Stock-based compensation expense

 

72,604

 

 

 

1,943

 

Amortization of debt issuance costs and debt discount

 

6,051

 

 

 

4,005

 

Depreciation and amortization

 

61,144

 

 

 

55,753

 

Operating lease expense

 

119,908

 

 

 

114,788

 

Deferred income taxes, net

 

(35,249

)

 

 

20,261

 

Loss on extinguishment of debt

 

16,626

 

 

 

1,023

 

Other items

 

(15,055

)

 

 

22,795

 

Changes in operating assets and liabilities:

 

 

 

Trade receivables

 

740

 

 

 

(8,053

)

Inventories

 

(10,926

)

 

 

2,246

 

Prepaid expenses and other current assets

 

3,659

 

 

 

(16,928

)

Accounts payable and accrued liabilities

 

8,154

 

 

 

6,887

 

Accrued payroll and related taxes

 

2,428

 

 

 

(12,632

)

Operating lease liabilities

 

(110,438

)

 

 

(104,685

)

Other liabilities

 

2,404

 

 

 

(2,690

)

Net cash provided by operating activities

 

175,165

 

 

 

169,433

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(91,743

)

 

 

(110,173

)

Purchase of trade name

 

(650

)

 

 

—

 

Settlement of derivative instruments, net

 

28

 

 

 

(329

)

Net cash used in investing activities

 

(92,365

)

 

 

(110,502

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of long-term debt, net

 

529,247

 

 

 

—

 

Principal payments on long-term debt

 

(547,931

)

 

 

(10,991

)

Payment of debt issuance costs

 

(4,359

)

 

 

(626

)

Prepayment premium on extinguishment of debt

 

(1,650

)

 

 

(1,023

)

Advances on revolving line of credit

 

42,000

 

 

 

102,000

 

Repayments of revolving line of credit

 

(84,000

)

 

 

(60,000

)

Dividends paid

 

(262,235

)

 

 

(69,433

)

Proceeds from initial public offering, net

 

314,719

 

 

 

—

 

Payment of offering costs

 

(9,061

)

 

 

—

 

Repurchase of shares and shares withheld to cover taxes

 

(849

)

 

 

(292

)

Settlement of derivative instrument, net

 

8,601

 

 

 

147

 

Principal payments on finance lease liabilities

 

(1,526

)

 

 

—

 

Net cash used in financing activities

 

(17,044

)

 

 

(40,218

)

Effect of exchange rate changes on cash and cash equivalents

 

2,067

 

 

 

(4,496

)

Net change in cash and cash equivalents

 

67,823

 

 

 

14,217

 

Cash and cash equivalents at beginning of period

 

112,132

 

 

 

97,915

 

Cash and cash equivalents at end of period

$

179,955

 

 

$

112,132

 

SAVERS VALUE VILLAGE, INC.

Supplemental Detail on Net Income Per Common Share Calculation (Unaudited)

The following unaudited table sets forth the computation of net income per basic and diluted share as shown on the face of the accompanying condensed consolidated statements of income:

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

(in thousands, except per share data)

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

Numerator

 

 

 

 

 

 

 

Net income

$

43,872

 

$

26,434

 

$

53,115

 

$

84,720

Denominator

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

160,453

 

 

141,590

 

 

151,027

 

 

141,561

Dilutive effect of employee stock options and awards

 

4,770

 

 

4,722

 

 

5,129

 

 

4,488

Diluted weighted average common shares outstanding

 

165,223

 

 

146,312

 

 

156,156

 

 

146,049

Net income per share

 

 

 

 

 

 

 

Basic

$

0.27

 

$

0.19

 

$

0.35

 

$

0.60

Diluted

$

0.27

 

$

0.18

 

$

0.34

 

$

0.58

SAVERS VALUE VILLAGE, INC.

Supplemental Detail on Net Sales by Segment (Unaudited)

The following unaudited tables present net sales by segment for the periods presented:

 

Thirteen Weeks Ended

 

 

 

 

(in thousands)

December 30, 2023

 

December 31, 2022

 

$ Change

 

% Change

U.S. Retail

$

199,478

 

$

192,047

 

$

7,431

 

3.9

%

Canada Retail

 

155,350

 

 

148,511

 

 

6,839

 

4.6

 

Other

 

27,937

 

 

26,244

 

 

1,693

 

6.5

 

Total net sales

$

382,765

 

$

366,802

 

$

15,963

 

4.4

%

 

Fifty-Two Weeks Ended

 

 

 

 

(in thousands)

December 30, 2023

 

December 31, 2022

 

$ Change

 

% Change

U.S. Retail

$

780,126

 

$

747,397

 

$

32,729

 

4.4

%

Canada Retail

 

605,630

 

 

582,944

 

 

22,686

 

3.9

 

Other

 

114,493

 

 

106,888

 

 

7,605

 

7.1

 

Total net sales

$

1,500,249

 

$

1,437,229

 

$

63,020

 

4.4

%

SAVERS VALUE VILLAGE, INC.

Supplemental Information Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

The following information relates to non-GAAP financial measures and should be read in conjunction with the investor call held on March 7, 2024, discussing the Company’s financial condition and results of operations for the fourth quarter and fiscal year 2023.

A reconciliation of net income and net income per diluted share on a GAAP basis to Adjusted net income and Adjusted net income per diluted share for the thirteen and fifty-two weeks ended December 30, 2023 and December 31, 2022 is presented in the table below:

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

(in thousands, except per share amounts)

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

Net income:

 

 

 

 

 

 

 

Net income

$

43,872

 

 

$

26,434

 

 

$

53,115

 

 

$

84,720

 

Loss on extinguishment of debt(1)(2)

 

—

 

 

 

—

 

 

 

16,626

 

 

 

1,023

 

IPO-related stock-based compensation expense(1)(3)

 

20,784

 

 

 

—

 

 

 

69,108

 

 

 

—

 

Transaction costs(1)(4)

 

770

 

 

 

422

 

 

 

3,103

 

 

 

4,728

 

Dividend-related bonus(1)(5)

 

—

 

 

 

6,499

 

 

 

24,097

 

 

 

6,499

 

(Gain) loss on foreign currency, net(1)

 

(1,073

)

 

 

(5,902

)

 

 

(6,660

)

 

 

20,737

 

Other adjustments(1)(6)

 

(2,415

)

 

 

(334

)

 

 

(3,260

)

 

 

2,698

 

Tax effect on adjustments(7)

 

(5,239

)

 

 

(218

)

 

 

(29,874

)

 

 

(11,348

)

Non-recurring tax benefit(8)

 

(31,340

)

 

 

—

 

 

 

(31,340

)

 

 

—

 

Adjusted net income

$

25,359

 

 

$

26,901

 

 

$

94,915

 

 

$

109,057

 

 

 

 

 

 

 

 

 

Net income per share - diluted:

 

 

 

 

 

 

 

Net income per diluted share

$

0.27

 

 

$

0.18

 

 

$

0.34

 

 

$

0.58

 

Loss on extinguishment of debt(1)(2)

 

—

 

 

 

—

 

 

 

0.11

 

 

 

0.01

 

IPO-related stock-based compensation expense(1)(3)

 

0.13

 

 

 

—

 

 

 

0.44

 

 

 

—

 

Transaction costs(1)(4)

 

—

 

 

 

—

 

 

 

0.02

 

 

 

0.03

 

Dividend-related bonus(1)(5)

 

—

 

 

 

0.04

 

 

 

0.15

 

 

 

0.04

 

(Gain) loss on foreign currency, net(1)

 

(0.01

)

 

 

(0.04

)

 

 

(0.04

)

 

 

0.14

 

Other adjustments(1)(6)

 

(0.01

)

 

 

—

 

 

 

(0.02

)

 

 

0.02

 

Tax effect on adjustments(7)

 

(0.03

)

 

 

—

 

 

 

(0.19

)

 

 

(0.08

)

Non-recurring tax benefit(8)

 

(0.20

)

 

 

—

 

 

 

(0.20

)

 

 

—

 

Adjusted net income per diluted share*

$

0.15

 

 

$

0.18

 

 

$

0.61

 

 

$

0.75

 

*May not foot due to rounding

(1)

Presented pre-tax.

(2)

Removes the effect of the loss on debt extinguishment in relation to the partial repayment of outstanding borrowings under the Term Loan Facility on February 6, 2023 and July 5, 2023, the partial redemption of our Senior Secured Notes on July 3, 2023, and the repayment of a mortgage loan on January 6, 2022.

(3)

Reflects stock-based compensation expense for performance-based options triggered by the completion of our IPO and expense related to restricted stock units issued in connection with the Company’s IPO.

(4)

Transaction costs are comprised of non-capitalizable expenses related to offering costs and the 2nd Ave. acquisition, such as accounting, consulting and legal fees.

(5)

Represents dividend-related bonuses and related taxes paid in conjunction with the Company’s February 2023 and December 2022 dividends.

(6)

 

Other adjustments include the effect of asset disposals. The thirteen and fifty-two weeks ended December 30, 2023 further includes legal and insurance settlement proceeds of $3.8 million and $4.7 million, respectively.

(7)

Tax effect on adjustments is calculated based on the effective tax rates for the respective periods. The effective tax rate for fiscal 2023 is adjusted to remove Section 162(m) limitations and the tax benefit of restructuring.

(8)

Represents a one-time tax benefit of $31.3 million associated with an internal legal entity restructuring.

A reconciliation of the Company’s fiscal 2024 outlook for net income on a GAAP basis to Adjusted net income is presented in the table below:

 

Fifty-Two Weeks Ended

(in millions)

December 28, 2024

Net income:

 

Net income

$

78

 

Loss on extinguishment of debt(1)(2)

 

4

 

IPO-related stock-based compensation expense(1)(3)

 

61

 

Transaction costs(1)(4)

 

1

 

Tax effect on adjustments

 

(21

)

Adjusted net income

$

123

 

(1)

Presented pre-tax.

(2)

Removes the effects of the loss on debt extinguishment in relation to the repricing of existing borrowings under the Term Loan Facility on January 30, 2024 and the redemption of $49.5 million aggregate principal amount of Senior Secured Notes on March 4, 2024.

(3)

Reflects stock-based compensation expense for performance-based options triggered by the completion of our IPO and expense related to restricted stock units issued in connection with the Company’s IPO.

(4)

Removes the effect of expenses incurred pursuant to the Third Amendment.

A reconciliation of GAAP net income to Adjusted EBITDA for the thirteen and fifty-two weeks ended December 30, 2023 and December 31, 2022 is presented in the table below:

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

(dollars in thousands)

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

Net income

$

43,872

 

 

$

26,434

 

 

$

53,115

 

 

$

84,720

 

Interest expense, net

 

17,588

 

 

 

18,889

 

 

 

88,500

 

 

 

64,744

 

Income tax (benefit) expense

 

(19,993

)

 

 

11,106

 

 

 

(6,036

)

 

 

39,578

 

Depreciation and amortization

 

16,056

 

 

 

15,643

 

 

 

61,144

 

 

 

55,753

 

Loss on extinguishment of debt(1)

 

—

 

 

 

—

 

 

 

16,626

 

 

 

1,023

 

Stock-based compensation expense(2)

 

21,634

 

 

 

862

 

 

 

72,604

 

 

 

1,943

 

Non-cash occupancy-related costs(3)

 

2,837

 

 

 

841

 

 

 

5,902

 

 

 

1,464

 

Lease intangible asset expense(4)

 

939

 

 

 

1,170

 

 

 

4,093

 

 

 

7,677

 

Pre-opening expenses(5)

 

2,309

 

 

 

2,150

 

 

 

7,536

 

 

 

5,858

 

Store closing expenses(6)

 

582

 

 

 

938

 

 

 

1,613

 

 

 

2,732

 

Executive transition costs(7)

 

—

 

 

 

408

 

 

 

—

 

 

 

1,532

 

Transaction costs(8)

 

770

 

 

 

422

 

 

 

3,103

 

 

 

4,728

 

Dividend-related bonuses(9)

 

—

 

 

 

6,499

 

 

 

24,097

 

 

 

6,499

 

(Gain) loss on foreign currency, net

 

(1,073

)

 

 

(5,902

)

 

 

(6,660

)

 

 

20,737

 

Other adjustments(10)

 

(2,415

)

 

 

(334

)

 

 

(3,260

)

 

 

2,698

 

Adjusted EBITDA

$

83,106

 

 

$

79,126

 

 

$

322,377

 

 

$

301,686

 

Net income margin

 

11.5

%

 

 

7.2

%

 

 

3.5

%

 

 

5.9

%

Adjusted EBITDA margin

 

21.7

%

 

 

21.6

%

 

 

21.5

%

 

 

21.0

%

(1)

Removes the effects of the loss on debt extinguishment in relation to the partial repayment of outstanding borrowings under the Term Loan Facility on February 6, 2023 and July 5, 2023, the partial redemption of our Senior Secured Notes on July 3, 2023, and the repayment of a mortgage loan on January 6, 2022.

(2)

Represents non-cash stock based compensation expense related to stock options and restricted stock units granted to certain of the Company’s employees and directors.

(3)

Represents the difference between cash and straight-line lease expense.

(4)

Represents lease expense associated with acquired lease intangibles. Prior to the adoption of Topic 842, this expense was included within depreciation and amortization.

(5)

Pre-opening expenses include expenses incurred in the preparation and opening of new stores and

processing locations, such as payroll, training, travel, occupancy and supplies.

(6)

Costs associated with the closing of certain retail locations, including lease termination costs, amounts paid to third parties for rent reduction negotiations, and fees paid to landlords for store closings.

(7)

Represents severance costs associated with executive leadership changes and the 2nd Ave. Acquisition.

(8)

Transaction costs are comprised of non-capitalizable expenses related to offering costs and the 2nd Ave. acquisition, such as accounting, consulting and legal fees.

(9)

Represents dividend-related bonuses and related taxes paid in conjunction with the Company’s February 2023 and December 2022 dividends.

(10)

Other adjustments include the effect of asset disposals. The thirteen and fifty-two weeks ended December 30, 2023 further includes legal and insurance settlement proceeds of $3.8 million and $4.7 million, respectively.

Constant-currency

The Company calculates constant-currency net sales by translating current-period net sales using the average exchange rates from the comparative prior period rather than the actual average exchange rates in effect. The Company’s constant-currency net sales are not financial measures prepared in accordance with GAAP.

A reconciliation of GAAP net sales to constant-currency net sales for the thirteen and fifty-two weeks ended December 30, 2023 and December 31, 2022 is presented in the table below:

 

Thirteen Weeks Ended

 

 

 

 

(dollars in thousands)

December 30, 2023

 

December 31, 2022

 

$ Change

 

% Change

Net sales

$

382,765

 

$

366,802

 

$

15,963

 

4.4

%

Impact of foreign currency

 

690

 

 

n/a

 

 

690

 

n/m

 

Constant-currency net sales

$

383,455

 

$

366,802

 

$

16,653

 

4.5

%

 

Fifty-Two Weeks Ended

 

 

 

 

(dollars in thousands)

December 30, 2023

 

December 31, 2022

 

$ Change

 

% Change

Net sales

$

1,500,249

 

$

1,437,229

 

$

63,020

 

4.4

%

Impact of foreign currency

 

23,803

 

 

n/a

 

 

23,803

 

n/m

 

Constant-currency net sales

$

1,524,052

 

$

1,437,229

 

$

86,823

 

6.0

%

n/a - not applicable

n/m - not meaningful

Supplemental Metrics

We use the supplemental metrics below to evaluate the performance of our business, identify trends, formulate financial projections and make strategic decisions. The Company believes that these metrics provide useful information to investors and others in understanding and evaluating its results of operations in the same manner as its management team.

The following table summarizes certain supplemental metrics for the thirteen and fifty-two weeks ended December 30, 2023 and December 31, 2022:

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

Comparable Store Sales Growth(1)

 

 

 

 

 

 

 

United States

 

3.1

%

 

 

4.3

%

 

 

4.4

%

 

 

4.5

%

Canada

 

2.0

%

 

 

7.0

%

 

 

5.0

%

 

 

25.3

%

Total(3)

 

2.6

%

 

 

6.1

%

 

 

4.7

%

 

 

13.5

%

Comparable Store Daily Sales Growth(2)

 

 

 

 

 

 

 

United States

 

n/m

 

 

 

4.3

%

 

 

n/m

 

 

 

4.5

%

Canada

 

n/m

 

 

 

6.3

%

 

 

n/m

 

 

 

4.5

%

Total(3)

 

n/m

 

 

 

4.6

%

 

 

n/m

 

 

 

3.3

%

Number of Stores

 

 

 

 

 

 

 

United States

 

155

 

 

 

150

 

 

 

155

 

 

 

150

 

Canada

 

159

 

 

 

152

 

 

 

159

 

 

 

152

 

Total(3)

 

326

 

 

 

314

 

 

 

326

 

 

 

314

 

Pounds processed (lbs mm)

 

250

 

 

 

234

 

 

 

984

 

 

 

985

 

Sales yield(4)

$

1.54

 

 

$

1.51

 

 

$

1.48

 

 

$

1.39

 

n/m - not meaningful

(1)

 

Comparable store sales growth is the percentage change in comparable store sales over the comparable period in the prior fiscal year. We define comparable store sales to be sales by stores that have been in operation for all or a portion of two consecutive fiscal years, or, in other words, stores that are starting their third fiscal year of operation. We consider any store temporarily closed due to the COVID-19 pandemic to be open and comparable during the period for the purposes of calculating comparable store sales growth. Comparable store sales growth excludes stores acquired in the 2nd Ave. acquisition because those stores were not yet fully integrated during the prior year comparative period. Comparable store sales growth is measured in local currency for Canada, while total comparable store sales growth is measured on a constant currency basis.

(2)

 

Comparable store daily sales growth represents net sales by stores in the relevant geography that were or would have been open for the entirety of both periods if not for temporary closures due to the COVID-19 pandemic, divided by the aggregate number of days those stores were open. Comparable store daily sales growth is the percentage change in comparable store daily sales over the comparable period in the prior fiscal year. Comparable store daily sales growth excludes stores acquired in the 2nd Ave. Acquisition, because those stores were not yet fully integrated during the prior year comparative period. Comparable store daily sales growth is measured in local currency for Canada, while total comparable store daily sales growth is measured on a constant currency basis.

(3)

 

Total comparable store sales growth, total comparable store daily sales growth and total number of stores include our Australia retail locations, in addition to the United States and Canada.

(4)

 

We define sales yield as retail sales generated per pound processed on a currency neutral and comparable store basis.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240307425239/en/

Investors: John Rouleau/Lyn Walther ICR, Inc. Investors@savers.com

Media: Edelman Smithfield | 713.299.4115 | Savers@edelman.com Savers | 206.228.2261 | sgaugl@savers.com