The net loss in the first quarter was $27.9 million, compared to a net loss of $3.9 million in the first quarter of fiscal 2013. The increase in the net loss was primarily due to transaction expenses and fees related to the IPO, a change in the income tax provision and an increase in non-cash equity compensation. The adjusted net loss in the quarter was $2.4 million, a decrease of $1.5 million from the adjusted net loss of $3.8 million in the first quarter of the prior year. See the discussion under the "Non-GAAP Financial Information" section below for an explanation of adjusted net loss.
The following table sets forth a reconciliation to Adjusted Net Loss from Net Loss:
|Net Loss Reconciliation ($ in millions, % of net sales)|
|13 weeks||13 weeks|
|Quarter Ended:||July 1, 2012||June 30, 2013|
|Net Loss||$ (3.9)||(2.5)%||$ (27.9)||(15.0)%|
|Management agreement termination||--||0.0%||9.2||4.9%|
|Contractual IPO bonuses||--||0.0%||8.1||4.3%|
|Other IPO related expenses||--||0.0%||0.8||0.4%|
|(+) Sub-total IPO transaction expenses||--||0.0%||18.1||9.7%|
|(+) Management fees||0.8||0.5%||0.9||0.5%|
|(+) Non-recurring items||1.6||1.0%||0.9||0.5%|
|(+) Non-cash interest||0.4||0.3%||1.2||0.6%|
|(+) Equity compensation charge||0.0||0.0%||2.1||1.1%|
|(+) Income tax (benefit) expense||(2.7)||(1.7)%||2.4||1.3%|
|Adjusted Net Loss||$ (3.8)||(2.5)%||$ (2.4)||(1.3)%|
- The Company ended the quarter with approximately $91 million of liquidity, which included approximately $70 million of cash and cash equivalents and approximately $21 million in borrowing capacity under the senior credit facility.
- The Company incurred a non-cash tax charge of $2.4 million in the quarter compared to a tax benefit of $2.7 million in the first quarter of fiscal 2013. The non-cash tax charge for the full 2014 fiscal year is projected to be approximately $3.5 million.
Supplemental Non-GAAP DisclosureThis press release presents Adjusted EBITDA, which is a non-GAAP financial measure within the meaning of applicable SEC rules and regulations. The Company believes that Adjusted EBITDA is a useful performance measure and is used to facilitate a comparison of operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting the business than GAAP measures can provide alone. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization expense, store opening costs, production center start-up costs, transaction expenses, non-recurring expenses, equity compensation expenses, pre-opening advertising costs and management fees. This press release presents Central Services, which is a non-GAAP financial measure within the meaning of applicable SEC rules and regulations. The Company believes that Central Services is a useful performance measure and is used to facilitate an evaluation of infrastructure investments without distortions that may result from general and administrative expenses that do not directly relate to the operations of the business. The Company defines Central Services as general and administrative expenses less: depreciation and amortization related to general and administrative activities, management fees, transaction expenses, pre-opening advertising costs, equity compensation and non-recurring items. This press release presents adjusted net loss, which is a non-GAAP financial measure within the meaning of applicable SEC rules and regulations. The Company believes that adjusted net loss is a useful performance measure and is used to facilitate a comparison of operating performance on a consistent basis from period-to-period without distortions that may result from one-time items and non-cash charges. The Company defines adjusted net loss as net loss plus any transaction expenses, non-recurring expenses, expenses that will not continue after the IPO and any other non-cash charges which may distort period comparisons. Conference Call Information Fairway will host a conference call today, August 8, 2013 at 8:30 am. ET. The call, which will be hosted by Charles Santoro, Executive Chairman; Herb Ruetsch, Chief Executive Officer; and Edward Arditte, Executive Vice President and Chief Financial Officer, will be broadcast live over the Internet and accessible through the Investor Relations section of the Company's website at www.fairwaymarket.com . The webcast will also be archived online until August 22, 2013 following the call. In addition, listeners may dial (877) 353-0039 to access the live call. A telephonic playback will be available after the call through Thursday, August 22, 2013. Participants can dial (855) 859-2056 to hear the playback and enter the conference passcode 22268220. About Fairway Market Fairway Market is a high-growth food retailer offering customers a differentiated one-stop shopping experience "Like No Other Market". Fairway has established itself as a leading food retailing destination in the Greater New York City metropolitan area, with stores that emphasize an extensive selection of fresh, natural and organic products, prepared foods and hard-to-find specialty and gourmet offerings, along with a full assortment of conventional groceries. Fairway is headquartered in New York, New York.