VANCOUVER, British Columbia, June 13, 2011 (GLOBE NEWSWIRE) -- Coastal Contacts Inc. ("Coastal" or "the Company") (TSX:COA) (Stockholm:COA) the world's largest online retailer of eyeglasses and contact lenses, today announced its financial results for the second fiscal quarter ended April 30, 2011. A conference call will be held today at 4:30 p.m. Eastern Time to discuss the results.
Sales for the second fiscal quarter increased 17% and set a quarterly record of $43.8 million compared to $37.3 million in 2010. Second quarter 2011 gross margins increased to $13.7 million or 31% compared with $10.3 million or 27% during the same period in the prior year. Adjusted EBITDA for the fiscal quarter was $1.0 million compared with $1.8 million during the same period in 2010. Net earnings for the second fiscal quarter were $0.02 million or $0.00 per share compared to net earnings of $0.4 million or $0.01 per share in the second quarter of fiscal 2010.
Coastal shipped a total of 513,603 orders during the quarter, an increase of 129,345 orders or 34% over the same period last year. Approximately 33% were to new customers with the remaining amount representing reorders.
In the second fiscal quarter of 2011 Coastal's eyeglasses sales grew to $10.1 million compared with $4.7 million during the same period in 2010. Eyeglasses shipments grew 205% as compared to the same period last year. Coastal shipped 188,170 pairs of eyeglasses in the quarter to 160,674 customers of which 126,845 were new eyeglasses customers and 33,829 were repeat customers.
Coastal's core contact lens business continued to grow organically 3% in the second quarter, compared with the same period in 2010.
"Our investments in the eyeglasses category continue to generate rapid growth from new customers and a growing base of repeat orders from existing customers," commented Mr. Roger Hardy, Coastal's Founder and CEO. "We are encouraged by Coastal's progress in the eyeglasses business in the quarter. We are well positioned to support continued growth in the upcoming quarters and to achieve our eyeglasses sales targets for fiscal 2011, as we position Coastal to lead this exciting channel.
"Coastal is actively investing in acquiring eyeglasses customers, as we added approximately 127,000 new eyeglasses customers during the quarter. All in all it was an exciting and productive quarter at Coastal and we are looking forward to a strong finish to the year."
Business highlights for the second fiscal quarter:
- Sales in the second fiscal quarter of 2011 set a record of $43.8 million as compared to $37.3 million in the second quarter of the previous fiscal year, an increase of 17%.
- Gross margin increased 33% to $13.7 million or 31% of sales.
- 513,603 orders were shipped during the quarter, an increase of 129,345 orders or 34% over the same period in 2010.
- Coastal acquired 126,845 new eyeglasses customers in the second fiscal quarter of 2011.
- Eyeglasses sales grew to $10.1 million in the second fiscal quarter of 2011, an increase of 116% over the same period in fiscal 2010.
- Shipped more than 188,000 pairs of eyeglasses in the quarter, an increase of 205% over the same period in 2010.
- $14.4 million in cash and cash equivalents as at April 30, 2011.
- Sales in North America grew 30% in the second quarter of 2011 as compared to the same period of last fiscal year.
- Sales in Sweden grew 15% in the second quarter of 2011 as compared to the same period of the last fiscal year.
- As at March 10, 2011 Coastal now has approximately 500,000 Facebook™ fans in multiple markets around the world.
Conference Call Today
Coastal will host a conference call to review the financial results and operations on Monday, June 13, 2011 at 4:30pm Eastern Daylight Time. Participating in the call will be Roger Hardy, Founder and CEO and Glen Kayll, CFO.
To attend the call, participants may dial:
| North American Toll Free | 1-888-892-3255 |
| Sweden | 02 007 919 89 |
A replay of the call will be available for 7 days. To access the replay listeners may dial:
| North American Toll Free | 1-800-937-6305 |
| Passcode | 569950 |
Adjusted EBITDA, reorders and orders shipped as referenced in this news release are Non-GAAP financial measures. Adjust EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, share based compensation expense, management change costs and unrealized foreign exchange gains and losses. See "Supplemental Non-GAAP Measures" herein.
The following selected financial information is qualified in its entirety by, and should be read in conjunction with our unaudited consolidated financial statements for the second fiscal quarter ended April 30th, 2011 and accompanying notes and Management's Discussion and Analysis which will be available on SEDAR at www.sedar.com.
| COASTAL CONTACTS INC. | ||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||
| (Unaudited) ($000's, except share and per share amounts) | ||||
|
Three months ended April 30 |
Six months ended April 30 |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Sales | $43,835 | $37,318 | $84,447 | $73,226 |
| Cost of sales | 30,143 | 27,062 | 59,249 | 52,659 |
| Gross profit | 13,692 | 10,256 | 25,198 | 20,567 |
| Advertising | 5,934 | 3,920 | 11,490 | 7,911 |
| Selling, general and administration | 6,779 | 4,836 | 14,784 | 9,478 |
| Share-based compensation | 234 | 130 | 458 | 350 |
|
Amortization on property, equipment and leasehold improvements |
443 | 286 | 881 | 568 |
| Amortization on intangible assets | 192 | 391 | 378 | 790 |
| Foreign exchange (gains) losses | (151) | 293 | 6 | 275 |
| Interest expense | 74 | 1 | 135 | 15 |
| Earnings (loss) before income taxes | 187 | 399 | (2,934) | 1,180 |
| Income tax | 170 | 17 | (522) | 48 |
| Net earnings (loss) | 17 | 382 | (2,412) | 1,132 |
| Basic earnings (loss) per share | $0.00 | $0.01 | $ (0.04) | $0.02 |
| Diluted earnings (loss) per share | $0.00 | $0.01 | $ (0.04) | $0.02 |
| Weighted average number of common shares outstanding | ||||
| Basic | 55,146,207 | 56,961,506 | 55,283,999 | 56,931,117 |
| Diluted | 57,263,572 | 58,324,264 | 55,283,999 | 58,286,704 |
| COASTAL CONTACTS INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| ($000's) | ||
|
April 30, 2011 |
October 31, 2010 |
|
| (Unaudited) | ||
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | $14,366 | $18,266 |
| Accounts receivable | 9,189 | 8,866 |
| Inventory | 25,469 | 17,536 |
| Prepaid expenses | 2,575 | 3,109 |
| Income taxes recoverable | 620 | -- |
| Future income tax | 97 | 97 |
| Due from related parties | 211 | 204 |
| 52,527 | 48,078 | |
| Property, equipment and leasehold improvements | 10,576 | 5,558 |
| Intangible assets | 8,964 | 8,908 |
| Goodwill | 7,964 | 7,715 |
| $80,031 | $70,259 | |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities | $32,044 | $26,988 |
| Income tax payable | -- | 44 |
| Deferred revenue | 150 | 17 |
| Deferred gain on sale of equipment | 87 | 88 |
| Capital lease obligation | 939 | 811 |
| Lease inducement | 93 | 7 |
| 33,313 | 27,955 | |
| Deferred gain on sale of equipment | 237 | 285 |
| Long-term debt | 4,500 | -- |
| Capital lease obligation | 4,078 | 2,508 |
| Long-term lease inducement | 408 | 140 |
| Future income tax | 3,422 | 3,359 |
| 45,958 | 34,247 | |
| SHAREHOLDERS' EQUITY | ||
| Share capital | ||
| Authorized: | ||
| Unlimited common shares without par value | ||
| Unlimited Class A preferred shares without par value | ||
| Issued and outstanding: | ||
| 55,194,971 common shares [2010 – 55,396,171] | 39,153 | 39,176 |
| Contributed surplus | 3,047 | 2,663 |
| Accumulated other comprehensive loss | (3,284) | (3,783) |
| Deficit | (4,843) | (2,044) |
| 34,073 | 36,012 | |
| $80,031 | $70,259 | |
Supplemental Non-GAAP Measures
Our reorder rate is defined as the percentage of orders in the quarter shipped to customers that we estimate have ordered from us in the past.
We report our results in accordance with Canadian GAAP, however, we present Adjusted EBITDA as we believe that our investors may use these figures to make more informed investment decisions about us.
Adjusted EBITDA is a non-GAAP measure that does not have any standardized meaning prescribed by Canadian GAAP 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 income, cash flows and other measures of financial performance and liquidity reported in accordance with Canadian GAAP.
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 GAAP measure, net earnings, primarily because it does not include interest, income taxes, amortization and share-based compensation expense foreign exchange gain or loss and management change costs.
The following table provides a reconciliation of net income to Adjusted EBITDA:
| For the three months ended April 30, | ||
| ($000's) | 2011 | 2010 |
| Net earnings (loss) | $17 | $382 |
| Amortization | 635 | 677 |
| Interest expense, net | 74 | 1 |
| Income tax expense | 170 | 17 |
| Share-based compensation | 234 | 130 |
| Foreign exchange (gain) loss | (151) | 293 |
| Management change cost | -- | 273 |
| Adjusted EBITDA | 979 | 1,773 |
Additional Information
Additional information relating to Coastal, including the risks and uncertainties outlined in Coastal's most recently filed annual information form, dated January 28, 2011, can be found on SEDAR at www.sedar.com.
About Coastal Contacts:
Coastal Contacts Inc. has quickly become the world's leading online retailer of vision care products, attributable to a combination of fast delivery, a customer-centric approach and great selection at the lowest possible prices. Founded in 2000, Coastal designs, produces and distributes the largest selection of eyeglasses and contact lenses on the Internet, including a unique combination of designer eyeglasses, contact lenses, sunglasses, and vision care accessories. Coastal Contacts services customers in more than 150 countries through the Coastal Contacts family of websites including: CoastalContacts.com, ClearlyContacts.ca, Lensway.com, Lensway.co.uk, Lensway.se, ClearlyContacts.com.au, ClearlyContacts.co.nz, Contactsan.com, and Coastallens.com.
Forward Looking Statements
All statements made in this news release, other than statements of historical fact, are forward-looking statements. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "goal", "target", "should," "likely," "potential," "continue," "project," "forecast," "prospects," 'healthy", "strong", "resonating", "exciting" and similar expressions typically are used to identify forward-looking statements. Examples of such forward looking statements within this news release include statements relating to the Company's perception of the industries and markets it operates in, its competitive position therein, its 2011 eyeglasses sales target, and its ability to support continued growth.
Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about Coastal's business and the industry and markets in which we operate. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Assumptions underlying our expectations regarding forward-looking statements contained in this news release include, among others, that Coastal will maintain its competitive position in the industries and markets it operates in and expand into other markets in a favorable manner.
Persons reading this news release are cautioned that forward-looking statements or information are only predictions, and that Coastal's actual future results or performance may be materially different due to a number of factors. These factors include, but are not limited to, changes in the market, potential downturn in economic conditions and other risks detailed in Coastal's filings with Canadian and Swedish securities regulatory authorities. Reference should also be made to the section entitled "Risk Factors" contained in Coastal's most recently filed Annual Information Form dated January 28, 2011 for a detailed description of the risks and uncertainties relating to Coastal's business. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. These forward-looking statements are made as of the date of this news release and Coastal expressly disclaims any intent or obligation to update these forward-looking statements, unless it specifically state otherwise and except as required by applicable law.