Exhibit 99.1
Contacts: West Marine, Inc.
Eric Nelson, Senior Vice President and Chief Financial Officer
(831) 761-4489
Russell Solt, Director of Investor Relations
(831) 761-4229
WEST MARINE BESTS 2003 EARNINGS GUIDANCE
WATSONVILLE, CA, February 19, 2004 - West Marine, Inc. (Nasdaq: WMAR) today reported net income for the year ended January 3, 2004 of $20.1 million, or $0.99 per share, an increase of 6.3% compared to net income of $18.9 million, or $0.97 per share, a year ago. Excluding $2.8 million in pre-tax costs related to the acquisition of certain BoatU.S. operations, or $0.08 per share after-tax, net income for 2003 would have been $21.8 million, or $1.07 per share. This exceeds previously issued guidance ranging from $1.03 to $1.05 per share. Acquisition-related costs include $0.9 million for incremental costs incurred to integrate the newly acquired operations of BoatU.S. and $1.9 million for early debt extinguishment costs incurred to finance the acquisition.
Net sales for the fifty-three weeks ended January 3, 2004 were $660.9 million, up 24.6% from $530.6 million for the fifty-two weeks ended December 28, 2002. Comparable store net sales for 2003 decreased 2.5% compared to the similar period a year ago. Sales from the 62 BoatU.S. stores acquired in January 2003 are included in total sales, but are not reflected in comparable store sales statistics for 2003. BoatU.S. stores acquired in January 2003 will be included in the comparable store sales base beginning in March 2004. Comparable store sales are defined as sales from stores that have been open at least thirteen months and where selling square footage did not change by more than 40% in the previous thirteen months.
The Company’s net loss for the fourth quarter ended January 3, 2004 was ($1.6 million), or ($0.08) per share, compared to a net loss of ($1.4 million), or ($0.07) per share, a year ago. Net sales for the fourteen weeks ended January 3, 2004 were $124.9 million, up 34.8% from $92.7 million for the thirteen weeks ended December 28, 2002. Comparable store net sales for the fourth quarter increased 2.9% compared to the similar period a year ago.
Results for both the fourth quarter and the year 2003 include an income tax benefit of approximately $0.3 million, or $0.01 per share, related to the recognition of state tax credits.
John Edmondson, West Marine’s chief executive officer, stated, “We are pleased with our fourth quarter results, which compare favorably with our previously issued guidance of a loss of ($0.09) to ($0.11) per share, primarily due to good gross margins. February sales have started off strongly, continuing the trend established by our previously reported January results.”
West Marine, Inc. is the nation’s largest specialty retailer of boating supplies and apparel, with 346 stores in 38 states, Canada and Puerto Rico, and more than $650 million in annual sales. The Company’s successful Catalog and Internet channels offer customers approximately 50,000 products – far more than any competitor – and the convenience of being able to exchange Catalog and Internet purchases at its retail stores. The Company’s Port Supply division is the country’s largest wholesale distributor of marine equipment serving boat manufacturers, marine services, commercial vessel operators and government agencies. Because the overwhelming majority of West Marine’s revenues come from aftermarket sales, the Company has traditionally been less affected by economic downturns than manufacturers and sellers of new boats.
Special Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, among other things, statements that relate to West Marine’s future plans, expectations, objectives, performance, and similar projections, as well as facts and assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements due to various risks, uncertainties or other factors. Risks and uncertainties include the Company’s ability to increase sales at its existing stores and expand through the opening of new stores, competitive pricing pressures, inventory management and shrink issues, the market share erosion faced by the Company’s Catalog division as West Marine and its competitors open new stores, weather-related issues, the level of consumer spending on recreational water sports and boating supplies, and other risk factors described from time to time in West Marine’s filings with the Securities and Exchange Commission, including West Marine’s quarterly report on Form 10-Q for the period ended September 27, 2003. West Marine assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.
West Marine, Inc.
Condensed Consolidated Statements of Operations
For the Fourteen Weeks Ended January 3, 2004 and the Thirteen Weeks Ended December 28, 2002
(Unaudited, in thousands except per share amounts)
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| | | 14 Weeks January 3, 2004
| | | 13 Weeks
December 28, 2002
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Net sales | | $ | 124,908 | | | 100.0 | % | | $ | 92,665 | | | 100.0 | % |
Cost of goods sold, including buying and occupancy | | | 87,154 | | | 69.8 | % | | | 65,901 | | | 71.1 | % |
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Gross profit | | | 37,754 | | | 30.2 | % | | | 26,764 | | | 28.9 | % |
Selling, general and administrative expenses | | | 39,188 | | | 31.3 | % | | | 28,333 | | | 30.6 | % |
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Loss from operations | | | (1,434 | ) | | -1.2 | % | | | (1,569 | ) | | -1.7 | % |
Interest expense | | | 1,771 | | | 1.4 | % | | | 730 | | | 0.8 | % |
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Loss before income taxes | | | (3,205 | ) | | -2.6 | % | | | (2,299 | ) | | -2.5 | % |
Benefit for income taxes | | | (1,574 | ) | | -1.3 | % | | | (908 | ) | | -1.0 | % |
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Net loss | | $ | (1,631 | ) | | -1.3 | % | | $ | (1,391 | ) | | -1.5 | % |
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Net loss per share - basic and diluted | | $ | (0.08 | ) | | | | | $ | (0.07 | ) | | | |
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Weighted average common and common equivalent shares outstanding - basic and diluted | | | 20,064 | | | | | | | 19,248 | | | | |
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Stores open at the end of period | | | 345 | | | | | | | 257 | | | | |
West Marine, Inc.
Condensed Consolidated Statements of Income
For the Fifty-three Weeks Ended January 3, 2004 and the Fifty-two Weeks Ended December 28, 2002
(Unaudited, in thousands except per share amounts)
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| | | 53 Weeks Ended
January 3, 2004
| | | 52 Weeks Ended
December 28, 2002
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Net sales | | $ | 660,936 | | 100.0 | % | | $ | 530,588 | | 100.0 | % |
Cost of goods sold, including buying and occupancy | | | 454,315 | | 68.7 | % | | | 367,422 | | 69.2 | % |
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Gross profit | | | 206,621 | | 31.3 | % | | | 163,166 | | 30.8 | % |
Selling, general and administrative expenses | | | 164,426 | | 24.9 | % | | | 128,353 | | 24.2 | % |
Acquisition integration costs | | | 909 | | 0.1 | % | | | 0 | | 0.0 | % |
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Income from operations | | | 41,286 | | 6.3 | % | | | 34,813 | | 6.6 | % |
Interest expense | | | 6,981 | | 1.0 | % | | | 3,560 | | 0.7 | % |
Loss on extinguishment of debt | | | 1,902 | | 0.3 | % | | | 0 | | 0.0 | % |
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Income before income taxes | | | 32,403 | | 4.9 | % | | | 31,253 | | 5.9 | % |
Income taxes | | | 12,313 | | 1.9 | % | | | 12,345 | | 2.3 | % |
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Net income | | $ | 20,090 | | 3.0 | % | | $ | 18,908 | | 3.6 | % |
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Net income per common and common equivalent share: | | | | | | | | | | | | |
Basic | | $ | 1.02 | | | | | $ | 1.00 | | | |
Diluted | | $ | 0.99 | | | | | $ | 0.97 | | | |
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Weighted average common and common equivalent shares outstanding: | | | | | | | | | | | | |
Basic | | | 19,716 | | | | | | 18,816 | | | |
Diluted | | | 20,380 | | | | | | 19,521 | | | |
WEST MARINE, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except share data)
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| | | Jan 3, 2004
| | Dec 28, 2002
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ASSETS | | | | | | |
Current assets: | | | | | | |
Cash | | $ | 4,737 | | $ | 4,722 |
Trade receivables, net | | | 6,094 | | | 5,577 |
Merchandise inventories | | | 310,517 | | | 221,248 |
Prepaid expenses and other current assets | | | 23,874 | | | 16,955 |
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Total current assets | | | 345,222 | | | 248,502 |
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Property and equipment, net | | | 80,764 | | | 74,320 |
Goodwill | | | 60,290 | | | 33,998 |
Intangibles and other assets | | | 6,863 | | | 1,667 |
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Total assets | | $ | 493,139 | | $ | 358,487 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 72,635 | | $ | 47,723 |
Accrued expenses | | | 26,282 | | | 24,215 |
Current portion of long-term debt | | | 0 | | | 8,626 |
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Total current liabilities | | | 98,917 | | | 80,564 |
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Long-term debt | | | 128,851 | | | 48,731 |
Deferred items and other non-current obligations | | | 11,324 | | | 7,128 |
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Total liabilities | | | 239,092 | | | 136,423 |
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Stockholders’ equity: | | | | | | |
Preferred stock, $.001 par value: 1,000,000 shares authorized; no shares outstanding | | | — | | | — |
Common stock, $.001 par value: 50,000,000 shares authorized; issued and outstanding: 20,130,053 January 3, 2004 and 19,270,957 at December 28, 2002. | | | 20 | | | 19 |
Additional paid-in capital | | | 140,348 | | | 128,933 |
Accumulated other comprehensive income | | | 508 | | | 31 |
Retained earnings | | | 113,171 | | | 93,081 |
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Total stockholders’ equity | | | 254,047 | | | 222,064 |
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Total liabilities and stockholders’ equity | | $ | 493,139 | | $ | 358,487 |
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