The Container Store Group (TCS) Tops Q3 EPS by 9c, Revenues Beat; Offers 4Q & FY21 EPS Guidance Above Consensus
The Container Store Group (NYSE: TCS) reported Q3 EPS of $0.42, $0.09 better than the analyst estimate of $0.33. Revenue for the quarter came in at $275.5 million versus the consensus estimate of $262.16 million.
- Consolidated net sales were $275.5 million, up 20.5%. Net sales in The Container Store retail business (“TCS”) were $256.5 million, up 21.0%, inclusive of the 19.5% increase in Custom Closets. Online sales increased 98.1% in the third quarter of fiscal 2020. Elfa International AB (“Elfa”) third-party net sales were $19.0 million, up 13.5% compared to the third quarter of fiscal 2019; excluding the impact of foreign currency translation, Elfa third-party net sales were up 3.3%.
- Consolidated net income and net income per diluted share (“EPS”) were $19.7 million and $0.40 compared to $2.4 million and $0.05, respectively, in the third quarter of fiscal 2019. Adjusted net income per diluted share (“Adjusted EPS”)* was $0.42 compared to $0.05 in the third quarter of fiscal 2019.
- Adjusted EBITDA* was $42.4 million in the third quarter of fiscal 2020 compared to $22.0 million in the third quarter of fiscal 2019.
- Net cash provided by operating activities was $116.7 million in the thirty-nine weeks ended December 26, 2020 compared to ($1.1) million in the thirty-nine weeks ended December 28, 2019. Free cash flow* increased to $105.0 million compared to ($30.4) million in the thirty-nine weeks ended December 28, 2019.
- The Company utilized $52.3 million of cash to pay down principal on the Senior Secured Term Loan Facility in the thirty-nine weeks ended December 26, 2020.
Melissa Reiff, Chairwoman commented, “Our third quarter results meaningfully exceeded our original expectations. The strong customer demand we saw in the second quarter persisted into the third quarter, and our entire organization continued to make significant strides against our strategic priorities positioning us extremely well to capitalize on our business opportunities. Our Custom Closets business significantly accelerated in the third quarter as compared to the second quarter and, combined with strong performance from our other product categories, drove our record-breaking sales.”
Ms. Reiff continued, “I am very proud of our teams and the accomplishments we have made the last several years, and specifically these past 11 months. With our business firing on all cylinders both financially and operationally, and the strength of our performance quarter-to-date, we are very confident we will end our fiscal year with strong momentum.
This is the ideal time for our previously announced leadership transition of my CEO and President responsibilities to Satish Malhotra, which occurred yesterday. Satish and I will ensure a smooth transition until my retirement March 1, 2021. And as we look ahead, I am confident that our business is well-positioned to continue to drive results into our next chapter of growth.”
The Container Store Group sees Q4 2020 EPS of $0.52-$0.57, versus the consensus of $0.42.
The Container Store Group sees FY2020 EPS of $1.05-$1.10, versus the consensus of $0.85.
- The Company currently expects fiscal fourth quarter sales growth of 20% to 25% inclusive of the benefit from the 53rd week. Diluted earnings per share for the fiscal fourth quarter are expected to be $0.51 to $0.56, or $0.52 to $0.57 on an adjusted* basis, resulting in full fiscal 2020 diluted earnings per share of $0.98 to $1.03 or $1.05 to $1.10 on an adjusted* basis.
- The 53rd week is expected to contribute approximately $13.0 million to sales and approximately $0.05 to earnings per share in the fiscal fourth quarter.
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