UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): February 1, 2018  

TUESDAY MORNING CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware0-1965875-2398532
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

6250 LBJ Freeway, Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)

(972) 387-3562
(Registrant's telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On February 1, 2018, Tuesday Morning Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial results for the second fiscal quarter and six month period ended December 31, 2017.

The information furnished in this Item 2.02 – “Results of Operations and Financial Condition” of this Current Report on Form 8-K and the press release attached hereto as Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits 

Exhibit Number Description
   
99.1 Press Release of Tuesday Morning Corporation dated February 1, 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 TUESDAY MORNING CORPORATION
   
  
Date: February 1, 2018By: /s/ STACIE R. SHIRLEY        
  Stacie R. Shirley
  Executive Vice President, Chief Financial Officer and Treasurer
  


EXHIBIT INDEX

 

Exhibit Number Description
   
99.1 Press Release of Tuesday Morning Corporation dated February 1, 2018

EdgarFiling

EXHIBIT 99.1

Tuesday Morning Corporation Announces Second Quarter Fiscal 2018 Results

·   Net sales increased 1.7% to $333.8 million; Comparable store sales increased 1.8%

·   Reaffirms fiscal 2018 comp sales guidance of 2% - 5%

DALLAS, Feb. 01, 2018 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (NASDAQ:TUES), one of the original off-price retailers currently with over 715 stores across the United States specializing in name-brand, high quality products for the home, selling luxury textiles, furnishings, housewares and seasonal decor, today announced financial results for the second quarter and six months ended December 31, 2017.

Steve Becker, Chief Executive Officer, stated, “We are pleased to have delivered positive comparable store sales during the holiday season and we are making progress on each of our strategic initiatives.  We see opportunities for improvement across the business and are focused on optimizing store-level inventory to drive productivity throughout our entire store base.  The shifting retail landscape is providing an attractive environment for quality, branded merchandise and new vendor relationships.  Heading into the spring selling season, we are well positioned from an inventory standpoint with fresh receipts and consistent flow of new product.”

Second Quarter Fiscal 2018 Results of Operations

Six Months ended December 31, 2017 Results of Operations

The Company ended the second quarter of fiscal 2018 with $9.4 million in cash and cash equivalents, no outstanding balance under its line of credit, and availability on the line of $102.9 million.  Inventories at the end of the second quarter of fiscal 2018 were $220.0 million compared to $251.5 million at the end of the second quarter of fiscal 2017, a decrease of $31.5 million or 12.5%.  The decrease in inventory was driven primarily by lower distribution center and in-transit inventory levels, due in part to the Company’s continued supply chain and inventory management improvements.   The Company’s inventory turnover for the trailing five quarters as of December 31, 2017 was 2.6 turns, an improvement of approximately 9% from the trailing five quarter turnover as of December 31, 2016 of 2.4 turns.

Fiscal Year 2018 Outlook
The Company continues to expect comparable sales for fiscal 2018 to increase 2% to 5%.  Gross margin is expected to show year over year improvement beginning in the second half of fiscal 2018 resulting in significant projected EBITDA improvement.  Capital expenditures are expected to be in the range of approximately $25 million to $30 million in fiscal 2018, with a continuing focus on real estate strategy for new stores, relocations and expansions of existing stores, and IT infrastructure and enhancements.

About Tuesday Morning
Tuesday Morning Corporation (NASDAQ:TUES) is one of the original off-price retailers specializing in name-brand, high quality products for the home, selling luxury textiles, furnishings, housewares and seasonal decor.  Based in Dallas, Texas, the Company opened its first store in 1974 and operates over 715 stores in 40 states.  More information and a list of store locations may be found on the Company’s website at www.tuesdaymorning.com.

Conference Call Information
Tuesday Morning Corporation’s management will hold a conference call to review first quarter fiscal 2018 financial results and provide a general business update today, February 1, 2018, at 8:00 a.m. Central Time.  A live webcast of the conference call will be available in the Investor Relations section of the Company’s website at www.tuesdaymorning.com, or you may dial into the conference call at (877) 312-5376 (no access code required) approximately ten minutes prior to the start of the call.  A replay of the webcast will be accessible through the Company’s website for 90 days.  A replay of the conference call will be available from 11:00 a.m., Central Time, February 1, 2018 through 10:59 a.m., Central Time, Sunday, February 4, 2018 by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID number 9882325.

Non-GAAP Financial Measures
This press release includes financial measures that are presented both in accordance with U.S. generally accepted accounting principles (“GAAP”) and using a non-GAAP financial measure, Adjusted EBITDA.  For more information regarding the Company’s use of non-GAAP financial measures, including the definition of Adjusted EBITDA, and a reconciliation to net income/(loss), the most directly comparable GAAP measure, see “Non-GAAP Financial Measures” within this press release.

Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, which are based on management’s current expectations, estimates and projections.  Forward-looking statements typically are identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend” and similar words, although some forward-looking statements are expressed differently.  You should consider statements that contain these words carefully because they describe management’s current expectations, plans, strategies and goals and management’s current beliefs concerning future business conditions, future results of operations, future financial position, and their current business outlook or state other “forward-looking” information.  Forward-looking statements in this press release also include, but are not limited to, statements of management’s current plans and expectations in this press release and statements in the “Outlook” section of this press release.  Forward-looking statements also include statements regarding management’s sales and growth expectations, Adjusted EBITDA projections, liquidity, capital expenditure plans, inventory management plans, productivity of our store base, real estate strategy and their merchandising and marketing strategies.

Reference is hereby made to the Company’s filings with the Securities and Exchange Commission, including, but not limited to, "Cautionary Statement Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2017, for examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. These risks, uncertainties and events also include, but are not limited to, the following: our ability to successfully implement our long-term business strategy; changes in economic and political conditions which may adversely affect consumer spending; our failure to identify and respond to changes in consumer trends and preferences; our ability to continuously attract buying opportunities for off-price merchandise and anticipate consumer demand; our ability to successfully manage our inventory balances profitably; our ability to effectively manage our supply chain operations; loss of, disruption in operations, or increased costs in the operation of our distribution center facilities; unplanned loss or departure of one or more members of our senior management or other key management; increased or new competition; our ability to successfully execute our strategy of opening new stores and relocating and expanding existing stores; increases in fuel prices and changes in transportation industry regulations or conditions; our ability to generate strong cash flows from operations and to continue to access credit markets; increases in the cost or a disruption in the flow of our imported products; changes in federal tax policy; the success of our marketing, advertising and promotional efforts; our ability to attract, train and retain quality employees in appropriate numbers, including key employees and management; increased variability due to seasonal and quarterly fluctuations; our ability to maintain and protect our information technology systems and technologies and related improvements to support our growth; our ability to protect the security of information about our business and our customers, suppliers, business partners and employees; our ability to comply with existing, changing, and new government regulations; our ability to manage litigation risks from our customers, employees and other third parties; our ability to manage risks associated with product liability claims and product recalls; the impact of adverse local conditions, natural disasters and other events; our ability to manage the negative effects of inventory shrinkage; our ability to manage exposure to unexpected costs related to our insurance programs; our ability to mitigate reductions of customer traffic in shopping centers where our stores are located; and increased costs or exposure to fraud or theft resulting from payment card industry related risk and regulations.  The Company’s filings with the SEC are available at the SEC’s web site at www.sec.gov.

The forward-looking statements made in this press release relate only to events as of the date on which the statements were made. Except as may be required by law, the Company disclaims obligations to update any forward-looking statements to reflect events and circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events.  Investors are cautioned not to place undue reliance on any forward-looking statements.

TUESDAY MORNING CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)

The Company defines EBITDA as net income or net loss before interest, income taxes, depreciation, and amortization.  Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items, including certain non-cash items and other items that the Company does not believe are representative of its core operating performance.  These measures are not presentations made in accordance with GAAP.  EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or loss as a measure of operating performance.  In addition, EBITDA and Adjusted EBITDA are not presented as, and should not be considered as, alternatives to cash flows as a measure of liquidity.  EBITDA and Adjusted EBITDA should not be considered in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP and Adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by such adjustments.  The Company believes it is useful for investors to see these EBITDA and Adjusted EBITDA measures that management uses to evaluate the Company’s operating performance.  These non-GAAP financial measures are included to supplement the Company’s financial information presented in accordance with GAAP and because the Company uses these measures to monitor and evaluate the performance of its business as a supplement to GAAP measures and believes the presentation of these non-GAAP measures enhances investors’ ability to analyze trends in the Company’s business and evaluate the Company’s performance.  EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry.  The non-GAAP measures presented in this press release may not be comparable to similarly titled measures used by other companies.

Reconciliation of GAAP Net Income/(Loss) to Non-GAAP Adjusted EBITDA:

The following table reconciles net income/(loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA, a non-GAAP financial measure:

(unaudited - in thousands) Three Months Ended
December 31,
 Six Months Ended
December 31,
 
  2017 2016 2017 2016 
Net income/(loss) (GAAP) $8,692 $8,430 $(3,562)$(426)
Depreciation and amortization 6,516 5,393 12,724 9,976 
Interest expense, net 530 403 965 658 
Income tax provision/(benefit) (587)312 (408)11 
EBITDA $15,151 $14,538 $9,719 $10,219 
Share-based compensation expense  (1) 1,171 1,578 1,946 2,316 
Cease-use rent expense  (2) 449 166 794 473 
Phoenix distribution center related expenses  (3)  1,087  2,137 
Stockholder nominations related expenses  (4) 29  408  
Gain on sale of assets  (5) (186)(185)(371)(371)
Adjusted EBITDA (non-GAAP) $16,614 $17,184 $12,496 $14,774 
 
(1) Charges related to share-based compensation programs, which vary from period to period depending on volume and vesting timing of awards.  The Company adjusts for these charges to facilitate comparisons from period to period.
(2) Adjustment includes accelerated rent expense recognized in relation to closing stores prior to lease termination.  While accelerated rent expense may occur in future periods, the amount and timing of such expenses will vary from period to period.
(3) Adjustment includes only certain expenses related to the Phoenix distribution center preparation, ramp up and post go-live activities, including incremental detention costs and certain consulting costs.
(4) Adjustment includes only certain incremental expenses which relate to the stockholder nominations as described in the Company’s Preliminary and Definitive Proxy Statements filed with the SEC on September 25, 2017 and October 5, 2017, respectively.
(5) Adjustment includes the gain recognized from the sale-leaseback transaction which occurred in the fourth quarter of fiscal 2016.
 


Tuesday Morning Corporation               
Consolidated Statement of Operations             
(In thousands, except per share data)             
        Three Months Ended December 31,  Six Months Ended December 31,    
                    
         2017   2016    2017   2016     
                            
        (unaudited)  (unaudited)    
                  
Net sales  $   333,807 $   328,137  $   552,564 $   540,023     
Cost of sales      228,122     222,155      368,929     356,702     
   Gross profit      105,685     105,982      183,635     183,321     
                    
Selling, general and administrative expenses    97,409     97,215      187,353     183,794     
                    
   Operating income/(loss)      8,276     8,767      (3,718)    (473)    
                    
Other income/(expense):               
 Interest expense      (542)    (412)     (980)    (684)    
 Other income, net      371     387      728     742     
Income/(loss) before income taxes     8,105     8,742      (3,970)    (415)    
                    
Income tax provision/(benefit)      (587)    312      (408)    11     
                    
Net income/(loss)  $   8,692  $    8,430  $   (3,562)$   (426)    
                    
Earnings per share               
Income/(loss) per common share:              
  Basic   $  0.19  $  0.19   $  (0.08) $  (0.01)    
  Diluted   $  0.19  $  0.19   $  (0.08) $  (0.01)    
                    
Weighted average number of common shares:             
  Basic      44,260     43,298      44,173     43,875     
  Diluted      44,263     43,943      44,173     43,875     
                    
                    
Tuesday Morning Corporation               
Consolidated Balance Sheets               
(in thousands)               
             December 31, June 30,  December 31, 
              2017   2017   2016 
             (unaudited) (audited)  (unaudited) 
Assets               
Current assets:               
 Cash and cash equivalents       $   9,409 $   6,263  $  12,632 
 Inventories           220,018     221,906     251,474 
 Prepaid expenses           6,681     6,367     6,204 
 Other current assets            2,970     1,982     538 
   Total Current Assets           239,078     236,518     270,848 
Property and equipment, net           122,031     118,397     103,514 
Deferred financing costs           829     986     1,144 
Other assets           2,306     2,252     2,224 
   Total Assets       $   364,244 $   358,153  $  377,730 
                    
Liabilities and Stockholders' Equity             
Current liabilities:               
 Accounts payable       $   94,760 $   67,326  $  84,431 
 Accrued liabilities           48,653     44,260     52,609 
 Income taxes payable           154     11     4 
   Total Current Liabilities           143,567     111,597     137,044 
                    
Borrowings under revolving credit facility         —     30,500     — 
Deferred rent           19,593     13,883     8,836 
Asset retirement obligation — non current         3,100     2,307     2,326 
Other liabilities — non current           874     1,027     359 
   Total Liabilities           167,134     159,314     148,565 
                    
Stockholders' equity           197,110     198,839     229,165 
   Total Liabilities and Stockholders' Equity     $   364,244 $   358,153  $  377,730 
                    
                    
Tuesday Morning Corporation             
Consolidated Statement of Cash Flows             
(in thousands)               
             Six Months Ended December 31,    
                    
              2017   2016     
                        
             (unaudited)    
Cash flows from operating activities:             
 Net loss       $   (3,562)$   (426)    
 Adjustments to reconcile net loss to net cash provided by operating activities:            
 Depreciation and amortization           12,724     9,976     
 Amortization of financing costs           157     168     
 Gain on disposal of assets           (59)    (4)    
 Gain on sale-leaseback transaction         (371)    (371)    
 Share-based compensation            1,946     2,316     
 Construction allowances from landlords         3,503     —     
 Change in operating assets and liabilities:             
  Inventories           1,774     (9,147)    
  Prepaid and other assets           (1,391)    498     
  Accounts payable           14,433     3,578     
  Accrued liabilities           7,488     9,985     
  Deferred rent           2,760     2,089     
  Income taxes payable           147     4     
  Other liabilities — non-current          661     (235)    
Net cash provided by operating activities         40,210     18,431     
                    
Cash flows from investing activities:             
 Capital expenditures           (19,532)    (19,951)    
 Purchase of intellectual property          (13)    —     
 Proceeds from sale of assets           59     23     
Net cash used in investing activities         (19,486)    (19,928)    
                    
Cash flows from financing activities:             
 Proceeds under revolving credit facility         87,800     95,200     
 Repayments under revolving credit facility         (118,300)    (95,200)    
 Change in cash overdraft           13,001     —     
 Payments on capital leases           (79)    —     
 Purchase of treasury stock           —     (23)    
 Proceeds from exercise of common stock options         —     2     
Net cash used in financing activities         (17,578)    (21)    
                    
Net increase/(decrease) in cash and cash equivalents         3,146     (1,518)    
                    
Cash and cash equivalents, beginning of period         6,263     14,150     
                    
Cash and cash equivalents, end of period     $   9,409  $    12,632     
                    


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