West Marine Reports First Quarter Results
WATSONVILLE, Calif.--April 17, 2003--West Marine, Inc. today reported net sales for the quarter ended March 29, 2003 of $111.1 million, which includes the net sales of 62 newly acquired BoatU.S. stores, up 14.4% from $97.2 million in 2002. Comparable store net sales decreased 10.2% from 2002. Net loss for the quarter was ($6.1 million), or ($0.32) per share, compared to a net loss of ($2.4 million), or ($0.13) per share, a year ago.Excluding $2.8 million in pre-tax costs related to the acquisition of certain BoatU.S. operations, or $0.09 per share after-tax, net loss for the quarter is ($4.4 million), or ($0.23) per share. Acquisition-related costs include $0.9 million for incremental costs incurred to integrate the newly acquired operations and $1.9 million for early debt extinguishment costs incurred to finance the acquisition.
John Edmondson, West Marine's chief executive officer, stated, "Our operational execution was very good in the first quarter. We completed the integration of our BoatU.S. acquisition ahead of schedule.
"Weather was clearly a factor in the first quarter when compared to a mild winter last year. The economy clearly affected our more discretionary product lines such as electronics.
"Based upon a disappointing start in April, we remain cautious about sales trends in the second quarter. Our current estimate for comparable store sales is -3% for the quarter. However, we continue to experience a positive gross margin trend. As a result we are comfortable with the current consensus estimate of $1.03 earnings per share for the second quarter."
West Marine, Inc. is the nation's largest specialty retailer of boating supplies and apparel with 325 stores (including 62 acquired BoatU.S. stores) in 38 states, Puerto Rico and Canada, and more than $500 million in annual sales. The Company's highly successful Catalog and Internet channels offer customers approximately 50,000 products -- far more than any competitor -- and the convenience of being able to exchange Catalog and Internet purchases at its retail stores. The Company's Port Supply division is the country's largest wholesale distributor of marine equipment serving boat manufacturers, marine services, commercial vessel operators and government agencies. Because the overwhelming majority of West Marine's revenues come from aftermarket sales, the Company has traditionally been less affected by economic downturns than manufacturers and sellers of new boats.
West Marine's new initiatives for 2003 include opening more new stores in Canada and opening more West Marine Express stores, which are smaller format stores located next to marinas. In January 2003, West Marine acquired all 62 BoatU.S. retail stores, as well as its catalog and wholesale operations.
Special Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, among other things, statements that relate to West Marine's future plans, expectations, objectives, performance and similar projections, as well as facts and assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements due to various risks, uncertainties or other factors. Risks and uncertainties include the Company's ability to increase sales at its existing stores and expand through the opening of new stores, competitive pricing pressures, inventory management and shrink issues, the market share erosion faced by the Company's Catalog division as the Company and its competitors open new stores, the impact of the Internet on the supply chain, weather-related issues, the level of consumer spending on recreational water sports and boating supplies and other risk factors disclosed from time to time in the Company's SEC filings.
Comparable store sales are defined as sales from stores where selling square footage did not change by more than 40% in the previous thirteen months and that have been open at least thirteen months.
West Marine, Inc.
Condensed Consolidated Statements of Operations
For the quarters ended March 29, 2003 and March 30, 2002
(Unaudited, in thousands except per share amounts)
March 29, 2003 March 30, 2002
---------------- ---------------
Net sales $111,148 100.0% $97,166 100.0%
Cost of goods sold, including
buying and occupancy 81,395 73.2% 72,052 74.2%
--------- ------ -------- ------
Gross profit 29,753 26.8% 25,114 25.8%
Selling, general and
administrative expenses 35,306 31.8% 28,055 28.8%
Acquisition integration costs 909 0.8%
--------- ------ -------- ------
Loss from operations (6,462) -5.8% (2,941) -3.0%
Interest expense 1,627 1.5% 1,085 1.1%
Loss on extinguishment of debt 1,902 1.7%
--------- ------ -------- ------
Loss before taxes (9,991) -9.0% (4,026) -4.1%
Benefit for income taxes 3,896 3.5% 1,590 1.6%
--------- ------ -------- ------
Net loss $(6,095) -5.5% $(2,436) -2.5%
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Net loss per common and common
equivalent share - (basic &
diluted) ($0.32) ($0.13)
Weighted average common and
common equivalent shares
outstanding - (basic & diluted) 19,344 18,487
Stores open at the end of period 325 244
WEST MARINE, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands except share data)
Mar. 29, Dec. 29, Mar. 30,
2003 2002 2002
--------- --------- ---------
ASSETS
Current assets:
Cash $8,217 $4,722 $6,667
Accounts receivable, net 7,117 5,577 6,209
Merchandise inventories, net 309,163 221,248 214,549
Prepaid expenses and other current
assets 22,134 16,955 12,496
--------- --------- ---------
Total current assets 346,631 248,502 239,921
Property and equipment, net 82,646 74,320 74,029
Intangibles and other assets, net 56,951 35,665 35,361
--------- --------- ---------
Total assets $486,228 $358,487 $349,311
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities:
Accounts payable $82,450 $47,723 $38,225
Accrued expenses 19,523 20,706 9,613
Deferred current liabilities 3,510 3,510 3,825
Line of credit and current portion of
long-term debt 432 8,625 8,778
--------- --------- ---------
Total current liabilities 105,915 80,564 60,441
Long-term debt 154,993 48,731 87,006
Deferred items and other non-current
obligations 7,152 7,128 5,837
--------- --------- ---------
Total liabilities 268,060 136,423 153,284
Stockholders' equity:
Preferred stock, $.001 par value:
1,000,000 shares authorized; no
shares outstanding - - -
Common stock, $.001 par value:
50,000,000 shares authorized;
issued and outstanding:
19,463,776 at March 29, 2003,
19,270,957 at December 28, 2002,
and 18,931,037 at March 30, 2002 19 19 19
Additional paid-in capital 130,953 128,933 124,272
Retained earnings 87,196 93,112 71,736
--------- --------- ---------
Total stockholders'
equity 218,168 222,064 196,027
--------- --------- ---------
Total liabilities and
stockholders' equity $486,228 $358,487 $349,311
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