Coastal Contacts Inc. ("Coastal" or "the Company") (Nasdaq:COA)
(TSX:COA) (Stockholm:COA), the largest online retailer of vision
care products in the world, announced today its financial results
for the fourth quarter and fiscal year ended October 31, 2012.
For the year ended October 31, 2012:
- Total eyeglasses sales increased 22% to $48 million from $39
million during the same period in 2011.
- Sales increased by $13.4 million or 7% to $196.1 million from
$182.7 million during the same period in 2011.
- Total contact lens sales increased 3% to $148.2 million from
$143.5 million during the same period in 2011.
- Gross profit increased 11% to $84.5 million and as a percentage
of sales, gross margin increased to 43% compared with 42% during
the same period in 2011.
- Adjusted EBITDA* was $1.4 million compared with $0.7 million
during the same period in 2011.
- Cash and equivalents of $19.2 million compared with $16.9
million at the end of the same period in 2011.
* Adjusted EBITDA is a non-IFRS measure that does not have a
standardized meaning prescribed by IFRS and is therefore unlikely
to be comparable to similar measures presented by other companies.
Refer to table for a reconciliation of net earnings to Adjusted
EBITDA.
The Company noted the following operating highlights for
2012:
- Total order volume was approximately 2.3 million orders in
fiscal 2012.
- Customer base grew to 4.3 million vision corrected
customers.
- Eyeglasses shipments grew to 987,000 pairs, an increase of 27%
over 2011.
- Splashâ„¢, Coastal's proprietary contact lens brand, comprised 6%
of contact lens unit sales during the period.
- Exclusive designer eyeglasses frames accounted for 72% of
overall eyeglasses sales.
For the fourth quarter ended October 31, 2012:
- Total eyeglasses sales increased 27% to $13.8 million from
$10.9 million during the same period in 2011.
- Sales increased to $50.7 million from $48.7 million during the
same period of 2011.
- Gross profit increased 18% to $23.3 million and as a percentage
of sales, gross margin increased to 46% compared with 40% during
the same period in 2011.
- Adjusted EBITDA was a loss of $0.4 million compared with $0.1
million during the same period in 2011.
- Net loss for the period was $2.6 million compared with $1.5
million during the same period in 2011.
- Eyeglasses sales into the United States market increased by
100% when compared with the same period in 2011.
Mr. Roger Hardy, Coastal's founder and CEO, commented, "Coastal
is changing the way the world buys eyewear and doing it in a way
that serves customers the way they want to be served. We
continually survey our customers to gain current feedback on how we
are doing using Net Promoter Score (NPS) methodology.
We believe our ratings are well ahead of traditional eyewear
retailers and we are convinced this difference will continue to
propel the shift from traditional eyewear channels to
Coastal. We are well positioned to benefit from this emerging
change in consumer habits.
We are fortunate to have built a team of experts in internet
marketing, customer acquisition, social media, business
development, information systems, finance and logistics. This
talented team is using one of the world's most
technologically advanced eyeglasses labs to drive Coastal forward
with leading edge solutions on every front.
We continue to leverage the predictable recurring revenue and
earnings generated in the contact lens category and invest in the
rapidly growing and higher margin eyeglasses business. We
shipped approximately one million pairs of eyeglasses during 2012,
which is a significant milestone for Coastal after launching this
category in 2009.
In 2012 our eyeglasses business grew 22% to $47.9 million and we
increased units shipped by 27% in units shipped during 2012 when
compared to 2011. A particular highlight was growth of 100%
year over year in the U.S. eyeglasses market during the fourth
quarter, which was in line with our expectations and remains a key
focus for the Company. We believe the eyeglasses category holds
significant potential for both rapid growth and earnings expansion
as markets develop.
During the fourth fiscal quarter of 2012 gross profit increased
to $23.3 million or 46% of sales, compared to $19.7 million or 40%
of sales for the same period in 2011. This margin expansion is
the result of favorable product mix changes, the success of
Coastal's exclusive branded eyeglasses and contact lenses and
increased contribution by the higher margin eyeglasses
business.
Coastal ended fiscal 2012 with $19.2 million in cash and
equivalents compared to $16.9 million at the end of fiscal
2011. We have sufficient working capital to execute on
our business plan going forward.
It has been a year of significant contribution and achievements
throughout the Company and I would like to thank each team member
for their commitment to building the service leader in the online
eyewear industry."
Key figures:
Sales for fiscal 2012 increased to $196.1 million compared
to $182.7 million in fiscal 2011. Adjusted EBITDA for fiscal
2012 was $1.4 million compared with $0.7 million for fiscal 2011.
Net loss for the fiscal year was $4.9 million or $0.17 per share
compared with a net loss of $5.3 million or $0.19 per share in
fiscal 2011.
Sales for the fourth quarter of 2012 increased to $50.7 million
compared with $48.7 million in the same period last
year. Adjusted EBITDA during the quarter was a loss of $0.4
million compared to $0.1 million in the fourth quarter of
2011. Net loss for the fourth quarter of 2012 was $2.6
million or $0.09 per share, compared with a net loss of $1.5
million, or $0.05 per share in the fourth quarter of 2011.
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COASTAL CONTACTS
INC. |
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION |
(Expressed in Thousands
of Canadian Dollars) |
|
|
|
|
|
October 31, |
October 31, |
November 1, |
|
2012 |
2011 |
2010 |
|
|
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ 19,153 |
$ 16,864 |
$ 18,266 |
Trade and other receivables |
6,681 |
6,013 |
9,070 |
Inventories |
25,435 |
27,749 |
18,276 |
Prepaid expenses |
2,250 |
3,125 |
3,109 |
Income tax receivable |
-- |
79 |
-- |
Total current assets |
53,519 |
53,830 |
48,721 |
Non-current assets |
|
|
|
Deferred tax assets |
-- |
97 |
97 |
Property, equipment and leasehold
improvements |
9,887 |
8,960 |
4,160 |
Intangible assets |
11,376 |
10,882 |
10,306 |
Goodwill |
8,322 |
8,518 |
7,715 |
Total non-current
assets |
29,585 |
28,457 |
22,278 |
TOTAL ASSETS |
$ 83,104 |
$ 82,287 |
$ 70,999 |
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LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
$ 40,144 |
$ 36,098 |
$ 26,348 |
Provisions |
1,284 |
1,057 |
664 |
Income taxes payable |
839 |
-- |
44 |
Finance lease obligations |
101 |
2,646 |
811 |
Term loan |
3,300 |
-- |
-- |
Credit facilities |
1,715 |
-- |
-- |
Other current liabilities |
3,210 |
2,939 |
1,364 |
Total current
liabilities |
50,593 |
42,740 |
29,231 |
Non-current liabilities |
|
|
|
Other long-term liabilities |
270 |
859 |
425 |
Finance lease obligations |
457 |
1,911 |
2,508 |
Credit facilities |
-- |
1,500 |
-- |
Deferred tax liabilities |
2,905 |
3,306 |
3,359 |
Total non-current
liabilities |
3,632 |
7,576 |
6,292 |
Total liabilities |
54,225 |
50,316 |
35,523 |
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|
Shareholders' Equity |
|
|
|
Share capital |
42,501 |
40,667 |
39,176 |
Share-based payments reserve |
3,395 |
2,934 |
2,610 |
Accumulated other comprehensive income
(loss) |
(137) |
372 |
-- |
Deficit |
(16,880) |
(12,002) |
(6,310) |
Total Shareholders'
Equity |
28,879 |
31,971 |
35,476 |
TOTAL LIABILITIES AND
EQUITY |
$ 83,104 |
$ 82,287 |
$ 70,999 |
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COASTAL CONTACTS
INC. |
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS |
(Expressed in Thousands
of Canadian Dollars, except share and per share
amounts) |
|
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|
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For the years ended October
31 |
2012 |
2011 |
|
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Sales |
$ 196,085 |
$ 182,714 |
Cost of sales |
111,558 |
106,279 |
Gross profit |
84,527 |
76,435 |
|
|
|
Fulfillment |
19,167 |
17,522 |
Selling and marketing |
47,927 |
43,645 |
General and administration |
20,926 |
20,505 |
Results from operating
activities |
(3,493) |
(5,237) |
|
|
|
Financing costs |
825 |
127 |
|
|
|
Loss before income
taxes |
(4,318) |
(5,364) |
|
|
|
Income tax expense - current |
927 |
30 |
Income tax recovery - deferred |
(367) |
(89) |
Net income tax expense
(recovery) |
560 |
(59) |
|
|
|
Net loss for the year |
(4,878) |
(5,305) |
|
|
|
Other comprehensive income
(loss) |
|
|
Foreign currency
translation differences |
(509) |
372 |
Total comprehensive loss for
the year |
$ (5,387) |
$ (4,933) |
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|
|
|
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Basic and diluted loss per share |
$ (0.17) |
$ (0.19) |
|
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Weighted average number of common
shares |
|
outstanding - basic and
diluted |
28,290,127 |
27,745,446 |
Coastal will host a conference call to review the financial
results and Company operations on Wednesday, December 19, 2012 at
1:30 p.m. Pacific 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: |
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North American Toll Free |
1-888-892-3255 |
Sweden |
46 852 503 436 |
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A replay of the call will be
available for 7 days. To access the replay listeners may
dial: |
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Local/International |
1-800-937-6305 |
Passcode |
477096 |
To view the Company presentation that will be reviewed
during the call, please log into Illustrate FX.
To Join Click: http://ifx.mercuri.ca?pc=797999
Please note that Adobe Flash is required to view this
meeting.
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'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 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 to
adjusted EBITDA:
($000's) |
2012 |
2011 |
2010 |
|
|
|
|
Net earnings (loss) |
(4,878) |
(5,305) |
2,566 |
Amortization |
2,920 |
2,825 |
2,272 |
Interest expense (income), net |
517 |
275 |
96 |
Income tax expense (recovery) |
560 |
(59) |
(53) |
Share-based compensation |
967 |
823 |
485 |
Foreign exchange (gain) loss |
308 |
(151) |
97 |
Listing, financing and management
change costs |
987 |
2,335 |
1,784 |
Adjusted EBITDA |
1,381 |
743 |
7,247 |
Supplemental Non-IFRS Measures
Coastal Contacts 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,
amortization, restructuring cost and share-based compensation
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 Contacts
Coastal Contacts Inc. is one of the largest online retailers of
vision care products in the world. Coastal empowers customers to
easily browse, try on and buy eyewear—saving time, money and
sanity. With every pair of qualifying frames purchased, Coastal
donates a pair to someone in need through its Change the View
project. Founded in 2000, Coastal designs, produces and distributes
the largest selection of glasses and contact lenses on the
Internet, including a unique combination of designer glasses,
contact lenses, sunglasses, and vision care accessories. Coastal
serves customers in more than 150 countries through the Coastal
Contacts family of websites including: Coastal.com,
ClearlyContacts.ca, Lensway.com, Lensway.co.uk, Lensway.se,
Lensway.com.br, ClearlyContacts.com.au, ClearlyContacts.co.nz,
Contactsan.com, and Coastallens.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'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 does business;
Coastal's anticipated ability to procure products and supplies, or
the terms under which it may procure its products and supplies;
Coastal's anticipated business operations, inventory levels,
ability to fill and ship orders in a timely manner, ability to
achieve greater marketing efficiency or similar statements;
Coastal's ability to increase production; Coastal's capital
expenditure plans; the results of further investments in Coastal's
retail brands; Coastal's relationships with suppliers; Coastal'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's perceptions regarding volatility in and impact of foreign
currency exchange rates; the effect of the current economic climate
on Coastal's business and consumer behavior; and Coastal'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'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's expectations
regarding forward-looking information and statements contained
within this News Release include, among others: that Coastal will
maintain its position in the markets it operates in and expand into
other markets in a favourable manner; that Coastal 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 will be able to
generate and maintain sufficient cash flows to support its
operations; that Coastal 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 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's
control, that could cause Coastal'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'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 will not be successful in defending
against litigation; dependence on the Internet; and the other risks
detailed in Coastal'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. For a complete discussion of the
assumptions, risks and uncertainties related to Coastal's business,
you are encouraged to review Coastal's filings with the Canadian
securities regulatory authorities filed on SEDAR at
http://www.sedar.com.
CONTACT: For Further Information:
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