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ALCO Stores, Inc. Reports Operating Results For First Half Of Fiscal 2013

Stocks in this article: ALCS

Certain Non-GAAP Financial Measures

The Company has included Adjusted SG&A and Adjusted EBITDA, non-GAAP performance measures, as part of its disclosure as a means to enhance its communications with stockholders. Certain stockholders have specifically requested this information to assist them in comparing the Company to other retailers that disclose similar non-GAAP performance measures. Further, management utilizes these measures in internal evaluation, review of performance and in comparing the Company's financial measures to those of its peers. Adjusted EBITDA differs from the most comparable GAAP financial measure (earnings [loss] from continuing operations) in that it does not include certain items, as does Adjusted SG&A. These items are excluded by management to better evaluate normalized operational cash flow and expenses excluding unusual, inconsistent and non-cash charges. To compensate for the limitations of evaluating the Company's performance using Adjusted SG&A and Adjusted EBITDA, management also utilizes GAAP performance measures such as gross margin return on investment, return on equity and cash flow from operating activities. As a result, Adjusted SG&A and Adjusted EBITDA may not reflect important aspects of the results of the Company's operations.

About ALCO Stores, Inc.

ALCO Stores, Inc. is a broad-line retailer, primarily located in small underserved communities across 23 states. The Company currently has 215 ALCO stores that offer both name brand and private label products of exceptional quality at reasonable prices. We are proud to have continually provided friendly, personal service to our customers for the past 111 years. To learn more about the Company, visit www.ALCOstores.com .

The ALCO Stores, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5865

Forward-looking statements

This press release contains forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 ("the Act"). Forward-looking statements can be identified by the inclusion of "will," "believe," "intend," "expect," "plan," "project" and similar future-looking terms. You should not rely unduly on these forward-looking statements. These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments, and Company performance. Forward-looking statements inherently involve risks and uncertainties, and, accordingly, actual results may vary materially. Factors which could significantly change results include but are not limited to: sales performance, expense levels, competitive activity, interest rates, changes in the Company's financial condition, and factors affecting the retail category in general. Additional information regarding these and other factors may be included in the Company's 10-Q filings and other public documents, copies of which are available from the Company on request and are available from the United States Securities and Exchange Commission.

     
     
ALCO Stores, Inc.
Balance Sheets
(dollars in thousands, except share data) 
     
  July 29, 2012 January 29, 2012
  (Unaudited)  
Assets    
Current assets:    
Cash $ 2,407 $ 2,491
Receivables 9,525 10,334
Inventories 159,000 156,215
Prepaid expenses 4,419 3,603
Deferred income tax assets 5,325 5,607
Property held for sale 568 568
Total current assets 181,244 178,818
     
Property and equipment, at cost:    
Land and land improvements 1,529 1,508
Buildings and building improvements 10,425 10,488
Furniture, fixtures and equipment 72,833 71,518
Transportation equipment 846 861
Leasehold improvements 20,000 19,289
Construction work in progress 3,023 1,177
Total property and equipment 108,656 104,841
Less accumulated depreciation and amortization 80,146 76,563
Net property and equipment 28,510 28,278
     
Property under capital leases 26,054 24,054
Less accumulated amortization 11,941 11,498
Net property under capital leases 14,113 12,556
     
Other non-current assets 819 754
Total assets $ 224,686 $ 220,405
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Current maturities of capital lease obligations $ 586 $ 570
Accounts payable 38,225 26,695
Accrued salaries and commissions 3,791 3,984
Accrued taxes other than income taxes 5,702 4,845
Self-insurance claim reserves 4,004 4,112
Income taxes payable 234 --
Other current liabilities 4,793 4,327
Total current liabilities 57,335 44,533
     
Notes payable under revolving loan 41,539 52,063
Capital lease obligations - less current maturities 14,442 12,804
Deferred gain on leases 3,246 3,439
Deferred income taxes – non-current 537 643
Other non-current liabilities 2,517 2,483
Total liabilities 119,616 115,965
     
Stockholders' equity:    
Common stock, $.0001 par value, authorized 20,000,000 shares; 3,808,338 and 3,842,745 shares issued and outstanding, respectively 1 1
Additional paid-in capital 40,045 40,115
Retained earnings 65,024 64,324
Total stockholders' equity 105,070 104,440
Total liabilities and stockholders' equity $ 224,686 $ 220,405
         
ALCO Stores, Inc.
Statements of Operations
(dollars in thousands, except share data)
(Unaudited) 
         
  Thirteen Week Periods Ended Twenty-Six Week Periods Ended
  July 29, 2012 July 31, 2011* July 29, 2012 July 31, 2011*
Net sales $ 121,725 $ 120,543 $ 238,574 $ 233,309
Cost of sales 81,860 81,425 164,222 160,879
         
Gross margin 39,865 39,118 74,352 72,430
         
Selling, general and administrative expenses 33,417 31,674 66,916 64,050
Depreciation and amortization expenses 2,129 2,120 4,239 4,290
         
Total operating expenses 35,546 33,794 71,155 68,340
         
Operating income from continuing operations 4,319 5,324 3,197 4,090
         
Interest expense 792 1,649 1,536 2,717
         
Earnings from continuing operations before income taxes 3,527 3,675 1,661 1,373
         
Income tax expense 1,427 1,364 660 573
         
Earnings from continuing operations 2,100 2,311 1,001 800
         
Loss from discontinued operations, net of income tax benefit of $70, $9, $184, and $116, respectively (115) (14) (301) (26)
Net earnings $ 1,985 $ 2,297 $ 700 $ 774
         
Earnings (loss) per share        
Basic        
Continuing operations $ 0.55 $ 0.60 $ 0.26 $ 0.21
Discontinued operations (0.03) 0.00 (0.08) (0.01)
         
Net earnings per share $ 0.52 $ 0.60 $ 0.18 $ 0.20
         
Earnings (loss) per share        
Diluted        
Continuing operations $ 0.55 $ 0.60 $ 0.26 $ 0.21
Discontinued operations (0.03) 0.00 (0.08) (0.01)
         
Net earnings per share $ 0.52 $ 0.60 $ 0.18 $0.20
 
*Fiscal year 2012 amounts have been revised to reflect the change in accounting for inventory.
         
Weighted-average shares outstanding:        
         
Basic 3,808,338 3,841,932 3,815,172 3,841,914
         
Diluted 3,808,338 3,842,036 3,815,172 3,841,914
     
     
ALCO Stores, Inc.
Schedule of Adjusted SG&A
(Unaudited)
     
  Thirteen Week Periods Ended Twenty-Six Week Periods Ended
(dollars and average selling square feet in thousands, except square footage ratios) July 29, 2012 July 31, 2011 July 29, 2012 July 31, 2011
SG&A Expenses Breakout        
Store support center (1) $ 4,678 4,694 9,963 10,057
Distribution center 1,632 1,699 3,420 3,614
Same-store SG&A (2) 25,816 25,199 51,112 50,197
Non same-store SG&A (3) 1,191 -- 2,191 --
Share-based compensation 100 82 230 182
SG&A as reported 33,417 31,674 66,916 64,050
Less:        
Share-based compensation (100) (82) (230) (182)
Preopening store costs (3) (171) (3) (245) (3)
Executive and corporate staff severance (1) -- (55 (222) (131)
Gain (loss) on sale of assets (1) (1) 112 92 139
Adjusted SG&A $ 33,145 31,646 66,311 63,873
         
Adjusted SG&A % of sales 27.2% 26.3% 27.8% 27.4%
         
Sales per average selling square foot (4) $ 27.66 27.98 54.21 54.15
         
Gross Margin dollars per average selling square feet (4) $ 9.06 9.08 16.89 16.81
         
Adjusted SG&A per average selling square foot (4) $ 7.53 7.35 15.07 14.82
         
Adjusted EBITDA per average selling square foot (4)(5) $ 1.53 1.73 1.83 1.99
         
Average inventory per average selling square foot (4)(6)(7) $ 31.69 31.83 31.69 31.83
         
Average selling square feet (4) 4,401 4,308 4,401 4,308
         
Total stores operating beginning of period 214 214 216 214
Total stores operating end of period 215 213 215 213
Total non same-stores 6 0 6 0
         
Supplemental Data:        
Same-store gross margin dollar change (1.2)% 4.3% 0.0% 1.3%
Same-store SG&A dollar change 2.5% (3.2)% 1.9% (1.5)%
Same-store total customer count change (6.1)% (2.0)% (4.1)% (2.6)%
Same-store average sale per ticket change 4.5% 9.4% 4.0% 8.1%
         
(1) Store support center includes severance and gain (loss) on sale of assets
(2) These amounts may not agree with 10-Qs and 10-Ks of previous quarters due to stores that had reached their fourteenth period of operation. In addition, these amounts may not agree with 10-Qs and 10-Ks of previous quarters due to subsequent store closures. These closed stores are now included in discontinued operations. 
(3) Non same-stores are those stores which have not reached their fourteenth period of operation
(4) Average selling square feet is calculated as beginning square feet plus ending square feet divided by 2
(5) Adjusted EBITDA per average selling square foot is calculated as Adjusted EBITDA divided by average selling square feet
(6) Average store level merchandise inventory is calculated as beginning inventory plus ending inventory divided by 2
(7) Excludes inventory for unopened stores
           
           
ALCO Stores, Inc.
Schedule of Adjusted EBITDA
(Unaudited)
           
    Thirteen Week Periods Ended Trailing 52 Weeks Ended Thirteen Week Periods Ended Trailing 52 Weeks Ended
(dollars in thousands) 52 Weeks Fiscal 2012 April 29, 2012 May 1, 2011 April 29, 2012 July 29, 2012 July 31, 2011 July 29, 2012
Net earnings (loss) from continuing operations (1) $ 1,824 (1,098) (1,511) 2,237 2,100 2,311 2,026
Plus:              
Interest 4,207 744 1,069 3,882 792 1,649 3,025
Tax expense (benefit) (1) 744 (767) (791) 768 1,427 1,364 831
Depreciation and amortization (1) 8,582 2,110 2,170 8,522 2,129 2,120 8,531
Share-based compensation 257 130 100 287 100 82 305
Preopening store costs (2) 557 74 -- 631 171 3 799
Executive and corporate staff severance (3) 143 222 76 289   --   55   234
(Gain) loss on sale of assets 252 (92) (23) 183 1 (112) 296
Insurance proceeds (2,270) -- -- (2,270) -- -- (2,270)
=Adjusted EBITDA (1) (3)(4) 14,296 1,323 1,090 14,529 6,720 7,472 13,777
               
Cash 2,491 612 5,720 612 2,407 6,431 2,407
Debt 65,437 53,208 64,815 53,208 56,567 65,380 56,567
Debt, net of cash $ 62,946 52,596 59,095 52,596 54,160 58,949 54,160
               
(1) These amounts may not agree with 10-Qs and 10-Ks of previous quarters due to subsequent store closures. These closed stores are now included in discontinued operations.
(2) These costs are not consistent quarter to quarter as the Company does not open the same number of stores in each quarter of each fiscal year.  These costs are directly associated with the number of stores that have been or will be opened and are incurred prior to the grand opening of each store. 
(3) During fiscal years 2013 and 2012, the Company made departmental restructuring changes resulting in severance. 
(4) On September 9, 2011, the Company received a $2.3 million settlement from Factory Mutual Insurance Company for damage sustained during the second quarter of fiscal 2012, due to wind and hail.
CONTACT: For more information, contact:
         Wayne S. Peterson
         Senior Vice President - Chief Financial Officer
         785-263-3350 X164
         email: wpeterson@alcostores.com
         or
         Debbie Hagen
         Hagen and Partners
         913-642-6363
         email: dhagen@hagenandpartners.com

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