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): May 7, 2019  

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. [   ]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareTUESThe Nasdaq Stock Market LLC
 
 

Item 2.02. Results of Operations and Financial Condition.

On May 7, 2019, Tuesday Morning Corporation, a Delaware corporation (the “Company”), issued a press release announcing its financial results for the third fiscal quarter and nine month period ended March 31, 2019.

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 May 7, 2019


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: May 7, 2019By: /s/ Stacie R. Shirley        
  Stacie R. Shirley
  Executive Vice President and Chief Financial Officer
  


EXHIBIT INDEX

Exhibit Number Description
   
99.1 Press Release of Tuesday Morning Corporation dated May 7, 2019

EdgarFiling

EXHIBIT 99.1

Tuesday Morning Corporation Announces Third Quarter Fiscal 2019 Results


DALLAS, May 07, 2019 (GLOBE NEWSWIRE) -- Tuesday Morning Corporation (NASDAQ: TUES) today reported a net loss of $8.3 million, or $0.18 per share, for the third quarter of fiscal 2019 compared to a net loss of $8.1 million, or $0.18 per share, for the third quarter of fiscal 2018.  Adjusted EBITDA, a non-GAAP measure, was negative $0.4 million for the third quarter of fiscal 2019, compared to Adjusted EBITDA of negative $0.9 million for the prior year period.  A reconciliation of GAAP and non-GAAP measures is provided below.

Steve Becker, Chief Executive Officer, stated, “Over the last two years we have built a foundation for profitable growth at Tuesday Morning.  Our third quarter top line results are not indicative of our potential, especially as we faced a challenging comparison from last year, headwinds from a late start to the spring season in many parts of the country, and Easter timing.  These top-line headwinds were exacerbated by our previously announced strategic decision to reduce our traditional promotional events. In addition, we identified missed merchandise opportunities that we are taking steps to address.”

Mr. Becker continued, “It is clear that the categories of merchandise where we are having the most success are consistently managed with a greater proportion of close-outs, providing a treasure hunt with sharp pricing and great values. We intend to deliver this experience more consistently across our entire assortment. To that end, we are continuing to recruit additional veteran off-price leadership to our merchandise organization and have reorganized the team to improve our execution and remain true to our 45 year off-price heritage. We are pleased with our year to date improvement in operating profitability despite our third quarter sales shortfall, and remain focused on executing our strategy and delivering improved financial performance.”

Third Quarter Fiscal 2019 Results of Operations

Nine Months ended March 31, 2019 Results of Operations

The Company ended the third quarter of fiscal 2019 with $13.8 million in cash and cash equivalents.  The Company had $35.2 million outstanding under its line of credit with availability on the line of $71.1 million.  Inventories at the end of the third quarter of fiscal 2019 were $238.3 million compared to $245.0 million at the end of the third quarter of fiscal 2018.  The Company’s inventory turnover for the trailing five quarters as of March 31, 2019 was 2.6 turns, a decrease of approximately 4% from the trailing five quarter turnover as of March 31, 2018 of 2.7 turns.

Fiscal Year 2019 Outlook
Based on results to date, the Company has revised its guidance for fiscal 2019 and currently expects comparable store sales for the fiscal year to be approximately flat and is expecting its fourth quarter comparable stores sales to be flat to slightly negative.  The Company now expects its net loss to be approximately $13 million to $15 million, EBITDA to be approximately $14 million to $16 million, and Adjusted EBITDA to be approximately $17 million to $19 million, a significant improvement compared to fiscal 2018.  A reconciliation of GAAP and non-GAAP measures is provided below.

Net capital expenditures for fiscal 2019 are expected to be in the range of approximately $12 million to $15 million.  The Company currently anticipates its fiscal 2019 ending net debt balance to be at or below its fiscal 2018 ending position.

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, including upscale home textiles, home furnishings, housewares, gourmet food, toys and seasonal décor, at prices generally below those found in boutique, specialty and department stores, catalogs and on-line retailers.  Based in Dallas, Texas, the Company opened its first store in 1974 and currently operates 712 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 third quarter fiscal 2019 financial results and provide a general business update today, May 7, 2019, 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, May 7, 2019 through 10:59 a.m., Central Time, Friday, May 10, 2019 by dialing (855) 859-2056 or (404) 537-3406 and entering conference ID number 2749067.

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 certain non-GAAP financial measures, EBITDA and Adjusted EBITDA.  For more information regarding the Company’s use of non-GAAP financial measures, including the definition of EBITDA and 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, EBITDA and Adjusted EBITDA projections, liquidity, capital expenditure plans, inventory management plans, productivity of the Company’s 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 most recent Annual Report on Form 10-K, 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 ability to identify and respond to changes in consumer trends and preferences; our ability to mitigate reductions of customer traffic in shopping centers where our stores are located; 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 including tariffs; 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; 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               
Consolidated Statement of Operations             
(In thousands, except per share data)             
        Three Months Ended March 31,  Nine Months Ended March 31,    
                    
         2019   2018    2019   2018     
                            
        (unaudited)  (unaudited)    
                  
Net sales  $   210,984 $   223,296  $   776,716 $   775,860     
Cost of sales      134,486     142,993      501,054     511,922     
   Gross profit      76,498     80,303      275,662     263,938     
                    
Selling, general and administrative expenses    84,309     88,092      274,751     275,445     
                    
   Operating income/(loss)      (7,811)    (7,789)     911     (11,507)    
                    
Other income/(expense):               
 Interest expense      (513)    (493)     (1,868)    (1,473)    
 Other income, net      165     179      597     907     
Loss before income taxes      (8,159)    (8,103)     (360)    (12,073)    
                    
Income tax provision/(benefit)      130     (23)     31     (431)    
                    
                    
Net loss  $   (8,289) $    (8,080) $   (391)$   (11,642)    
                    
                    
                    
                    
                    
                    
Earnings per share               
Loss per common share:               
  Basic   $  (0.18) $  (0.18)  $  (0.01) $  (0.26)    
  Diluted   $  (0.18) $  (0.18)  $  (0.01) $  (0.26)    
                    
Weighted average number of common shares:             
  Basic      44,811     44,365      44,677     44,236     
  Diluted      44,811     44,365      44,677     44,236     
                    
                    
Tuesday Morning Corporation (continued)             
                    
Consolidated Balance Sheets               
(in thousands)               
             March 31, June 30,  March 31, 
             2019 2018  2018 
             (unaudited) (audited)  (unaudited) 
Assets               
Current assets:               
 Cash and cash equivalents       $   13,768 $   9,510     12,277 
 Inventories           238,280     234,365     244,990 
 Prepaid expenses           4,756     6,301     6,242 
 Other current assets            2,052     1,206     1,245 
   Total Current Assets           258,856     251,382     264,754 
Property and equipment, net           111,518     121,117     122,115 
Deferred financing costs           1,050     671     750 
Other assets           3,185     3,086     2,781 
   Total Assets       $   374,609 $   376,256  $  390,400 
                    
Liabilities and Stockholders' Equity             
Current liabilities:               
 Accounts payable       $   82,954 $   88,912     86,662 
 Accrued liabilities           46,114     41,765     43,789 
 Income taxes payable           141     66     77 
   Total Current Liabilities           129,209     130,743     130,528 
                    
Borrowings under revolving credit facility         35,200     38,480     44,400 
Deferred rent           23,864     22,883     21,645 
Asset retirement obligation — non current         3,002     3,100     3,100 
Other liabilities — non current           809     796     835 
   Total Liabilities           192,084     196,002     200,508 
                    
Stockholders' equity           182,525     180,254     189,892 
   Total Liabilities and Stockholders' Equity     $   374,609 $   376,256  $  390,400 
                    
Tuesday Morning Corporation (continued)             
                    
Consolidated Statement of Cash Flows             
(in thousands)               
             Nine Months Ended March 31,    
                    
              2019   2018     
                        
             (unaudited)    
Cash flows from operating activities:          
 Net loss  $   (391)$   (11,642)    
 Adjustments to reconcile net loss to net          
  cash provided by operating activities:          
 Depreciation and amortization      19,727     19,087     
 Amortization of financing costs      220     236     
 Gain on disposal of assets      (10)    (69)    
 Gain on sale-leaseback transaction      -     (371)    
 Deferred Income Taxes      -     (571)    
 Share-based compensation      2,671     2,729     
 Construction allowances from landlords      1,121     6,688     
 Change in operating assets and liabilities:          
  Inventories      (3,931)    (23,122)    
  Prepaid and other assets      885     883     
  Accounts payable      (15,349)    19,396     
  Accrued liabilities      5,063     2,199     
  Deferred rent      (141)    1,921     
  Income taxes payable      82     71     
  Other liabilities — non-current      34     367     
Net cash provided by operating activities      9,981     17,802     
             
Cash flows from investing activities:          
 Capital expenditures      (10,924)    (25,552)    
 Purchase of intellectual property      (292)    (30)    
 Proceeds from sale of assets      25     69     
Net cash used in investing activities      (11,191)    (25,513)    
             
Cash flows from financing activities:          
 Proceeds under revolving credit facility      156,200     153,900     
 Repayments under revolving credit facility      (159,480)    (140,000)    
 Change in cash overdraft      9,391     (60)    
 Payments on capital leases      (121)    (119)    
 Purchase of treasury stock      -     -     
 Payment of financing fees      (529)    -     
 Proceeds from exercise of common stock options      7     4     
Net cash provided by financing activities      5,468     13,725     
             
Net increase in cash and cash equivalents      4,258     6,014     
             
Cash and cash equivalents, beginning of period      9,510     6,263     
             
Cash and cash equivalents, end of period  $   13,768  $    12,277     
                    

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 believes are not 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 Loss to Non-GAAP EBITDA and Adjusted EBITDA:

The following table reconciles actual net loss, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA, both of which are non-GAAP financial measures:

(unaudited - in thousands) Three Months Ended
March 31,
 Nine Months Ended
March 31,
 
  2019 2018 2019 2018 
Net loss (GAAP) $(8,289)$(8,080)$(391)$(11,642)
Depreciation and amortization 6,444 6,363 19,727 19,087 
Interest expense, net 510 485 1,846 1,450 
Income tax provision/(benefit) 130 (23)31 (431)
EBITDA (non-GAAP) $(1,205 $(1,255)$21,213 $8,464 
Share-based compensation expense  (1) 839 784 2,671 2,729 
Cease-use rent expense  (2) (3)(396)68 398 
Stockholder nominations related expenses  (3)    408 
Gain on sale of assets  (4)    (371)
Adjusted EBITDA (non-GAAP) $(369)$(867)$23,952 $11,628 
  1. Adjustment includes charges related to share-based compensation programs, which vary from period to period depending on volume, timing, and vesting 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.  A favorable lease buyout agreement was negotiated and executed in the third quarter of fiscal 2018, resulting in the reversal of previously recorded accelerated cease-use rent expense.  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 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.
  4. Adjustment includes the deferred gain recognized from the sale-leaseback transaction which occurred in the fourth quarter of fiscal 2016.

The following table reconciles expected fiscal 2019 net loss, the most directly comparable GAAP financial measure, to expected full year EBITDA and expected full year Adjusted EBITDA, both of which are non-GAAP financial measures:

 (unaudited - in millions) Fiscal 2019 Outlook 
   Low end High end 
 Net loss (GAAP) $(15)$(13)
 Depreciation and amortization 27 27 
 Interest expense, net 2 2 
 Income tax provision   
 EBITDA (non-GAAP) $14 $16 
 Share-based compensation expense  (1) 3 3 
 Cease-use rent expense  (2)   
 Adjusted EBITDA (non-GAAP) $17 $19 
  1. Adjustment includes charges related to share-based compensation programs, which vary from period to period depending on volume, timing, and vesting 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. 

 

INVESTOR RELATIONS:
Farah Soi / Caitlin Churchill
ICR
203-682-8200
Farah.Soi@icrinc.com
Caitlin.Churchill@icrinc.com

MEDIA:
Jonathan Morgan
PERRY STREET COMMUNICATIONS
214-965-9955
JMorgan@perryst.com