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Stein Mart (SMRT) Revises Q1 Outlook; Includes Increased SG&A Estimate

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June 7, 2016 7:37 AM EDT

Stein Mart, Inc. (Nasdaq: SMRT) announced that it is revising its preliminary financial results for the first quarter ended April 30, 2016 previously released on May 19, 2016. The revision, which increases selling, general and administrative (SG&A) expenses by $675,000, was required to record additional accruals for actual and anticipated legal settlements. Subsequent to the previous release but prior to the filing of our Form 10-Q for the first quarter ended April 30, 2016, new facts developed on these existing matters which resulted in the adjustment.

As a result of this revision, SG&A expenses for the first quarter of 2016 now include $1.4 million of expense for actual and anticipated legal settlements. The financial statements and EBITDA table (see Note 1) included in this release reflect the changes described above.

Our Form 10-Q for the fiscal quarter ended April 30, 2016 will be filed with the Securities and Exchange Commission (SEC) today.

Additional information about Stein Mart, Inc. can be found at www.steinmart.com

Stein Mart, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
13 Weeks Ended13 Weeks Ended
April 30, 2016May 2, 2015
Net sales $355,712 $353,521
Cost of merchandise sold 246,820 245,141
Gross profit 108,892 108,380
Selling, general and administrative expenses 86,474 85,622
Operating income 22,418 22,758
Interest expense, net 966 686
Income before income taxes 21,452 22,072
Income tax expense 8,141 8,508
Net income $13,311 $13,564
Net income per share:
Basic $0.29 $0.30
Diluted $0.29 $0.29
Weighted-average shares outstanding:
Basic 45,595 44,612
Diluted 46,275 45,766

Stein Mart, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except for share and per share data)
April 30, 2016 January 30, 2016 May 2, 2015
ASSETS
Current assets:
Cash and cash equivalents$ 16,317 $ 11,830 $ 17,190
Inventories 316,897 293,608 302,781
Prepaid expenses and other current assets 22,676 18,586 24,586
Total current assets 355,890 324,024 344,557
Property and equipment, net 166,261 162,954 149,254
Other assets 30,141 29,247 31,026
Total assets$ 552,292 $ 516,225 $ 524,837
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$ 152,807 $ 105,569 $ 164,092
Current portion of debt 10,000 10,000 6,667
Accrued expenses and other current liabilities 75,385 71,571 67,219
Total current liabilities 238,192 187,140 237,978
Long-term debt 138,960 180,150 145,777
Deferred rent 41,667 41,146 33,654
Other liabilities 45,738 31,472 36,677
Total liabilities 464,557 439,908 454,086
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity:
Preferred stock - $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding
Common stock - $.01 par value; 100,000,000 shares
authorized; 46,372,908, 45,814,583 and 45,395,851
shares issued and outstanding, respectively 464 458 454
Additional paid-in capital 44,370 42,801 37,476
Retained earnings 43,175 33,337 33,249
Accumulated other comprehensive loss (274) (279) (428)
Total shareholders’ equity 87,735 76,317 70,751
Total liabilities and shareholders’ equity$ 552,292 $ 516,225 $ 524,837

NOTE TO PRESS RELEASE

Note 1 – EBITDA:As used in this release, EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles (GAAP). However, we present EBITDA in this release because we consider it to be an important supplemental measure of our performance and because it is frequently used by analysts, investors and others to evaluate the performance of companies. EBITDA is not calculated in the same manner by all companies. EBITDA should be used as a supplement to results of operations and cash flows as reported under GAAP and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Unaudited (in thousands)
13 Weeks13 Weeks
EndedEnded
April 30, 2016 May 2, 2015
Net income$13,311 $13,564
Add back amounts for computation of EBITDA:
Interest expense, net 966 686
Income tax expense 8,141 8,508
Depreciation and amortization 7,660 7,223
EBITDA 30,078 29,981
Adjustments:
Expense related to legal settlements 1,425 84
E-commerce losses 1,052 501
Store closing and impairment charges 1 55
Pre-opening costs 1,126 344
Total adjustments 3,604 984
Adjusted EBITDA$33,682 $30,965

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