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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Stein Mart, Inc. Reports First Quarter Fiscal 2019 Results

May 22, 2019

-- Net income of $4.0 million, or $0.08 per share in the first quarter of 2019 compared to $7.3 million, or $0.16 per share in 2018 -- Outstanding debt $55.6 million lower compared to end of first quarter of 2018 -- Comparable sales decreased 1.7%

JACKSONVILLE, Fla., May 22, 2019 (GLOBE NEWSWIRE) -- Stein Mart, Inc. (NASDAQ: SMRT) today announced financial results for the first quarter ended May 4, 2019.

Net income for the first quarter of 2019 was $4.0 million or $0.08 per diluted share compared to a net income of $7.3 million or $0.16 per diluted share in 2018. Adjusted earnings before interest, income taxes, depreciation and amortization for the first quarter of 2019 was $13.9 million compared to $18.4 million for the first quarter of 2018 (see Note 1).

“With a late start to spring in the South and West, February was a challenging month with negative mid-single digit comp sales. Our comp sales for the combined March and April period dramatically improved. Comp sales in the first quarter also benefited by approximately 150 basis points from the shift of a 12-Hour Sale event from the second quarter to the first. With the event shift and slow selling thus far in May, we expect headwinds to impact the second quarter,” said Hunt Hawkins, Chief Executive Officer. “Looking forward, with our 2019 sales-driving initiatives rolling out this fall, we believe that our comp sales trends and results will improve in the second half.” Stein Mart’s second half sales initiatives include:

-- Launching two new product lines (kids and fine jewelry), which will increase transactions and appeal to a broader customer base -- Buy online, pick up in store (“BOPIS”), which will drive store traffic and deliver incremental sales -- Implementation of a marketing campaign management tool, which will analyze customer data to create personalized email and direct mail messaging to unlock additional sales

Mr. Hawkins continued, “Our lower gross profit rate reflects a planned rate decrease for the quarter from a change in our 2019 markdown cadence, the impact of the highly promotional event shift, and slightly higher markdowns to clear Fall merchandise. Despite the lower rate in the first quarter, we continue to expect our full year rate to be consistent with 2018. Finally, we are very pleased that we reduced borrowings by more than $55 million compared to the end of the first quarter of 2018.”

Net SalesNet sales for the first quarter of 2019 were $314.2 million compared to $326.6 million for the first quarter of 2018. Net sales were impacted by comparable sales results and fewer stores operating during the quarter.

Comparable sales decreased 1.7 percent (see Note 2) during the first quarter due to lower store traffic and average unit retail, partially offset by higher units per transaction. Digital sales increased 14 percent in the first quarter of 2019.

Gross ProfitGross profit for the first quarter of 2019 was $87.5 million or 27.8 percent of sales compared to $96.0 million or 29.4 percent of sales in 2018. The decrease in the gross profit rate was driven primarily by a planned reduction from accelerated markdown cadence and the impact of the sales event shift.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses for the first quarter of 2019 decreased $4.4 million to $86.1 million compared to $90.5 million in 2018. The decrease in SG&A expenses was primarily from lower store related expenses including the impact of closed stores.

Income Taxes Income tax expense was less than $0.1 million for first quarter of 2019 and 2018. The small amount of income taxes reflects our estimated minimal taxable income for the year.

Cash FlowsInventories were $274.3 million at the end of the first quarter of 2019 compared to $297.0 million at the same time last year. Average inventories per store were down 5 percent to last year.

Accounts payable was $20.9 million higher at the end of the first quarter of 2019 compared to the end of the first quarter of 2018, reflecting improved credit terms from our vendors and factors since the first quarter of 2018.

Debt decreased $55.6 million to $153.8 million at the end of the first quarter of 2019 compared to $209.4 million at the end of the first quarter of 2018. Unused availability under our credit facility increased $62.0 million to $102.0 million at the end of the first quarter of 2019 compared to $40.0 million at the end of the first quarter of 2018. In addition, we had $15.2 million available to borrow which would be collateralized by life insurance policies at the end of the first quarter of 2019.

Store Activity We had 283 stores at the end of the first quarter of 2019 compared to 289 at the end of the first quarter of 2018. We closed four stores during the first quarter of 2019, which completes our store plans for the year.

Lease AccountingWe adopted the new lease accounting standard during the first quarter of 2019. The new standard required us to recognize right-of-use assets and lease liabilities for operating leases on the Condensed Consolidated Balance Sheet.

Filing of Form 10-QReported results are preliminary and not final until the filing of our Form 10-Q for the fiscal quarter ended May 4, 2019 with the Securities and Exchange Commission (“SEC”), and therefore remain subject to adjustment.

Conference CallA conference call to discuss the Company’s first quarter results will be held at 9:00 a.m. ET on May 22, 2019. The call may be heard on the Company’s investor relations website at http://ir.steinmart.com. A replay of the conference call will be available on the website through June 30, 2019.

Investor PresentationStein Mart’s first quarter 2019 investor presentation has been posted to the investor relations portion of the Company’s website at http://ir.steinmart.com.

About Stein MartStein Mart, Inc. is a national specialty off-price retailer offering designer and name-brand fashion apparel, home décor, accessories and shoes at everyday discount prices. Stein Mart provides real value that customers love every day both in stores and online. For more information, please visit www.steinmart.com.

Cautionary Statement Regarding Forward-Looking Statements Except for historical information contained herein, the statements in this release may be forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company does not assume any obligation to update or revise any forward-looking statements even if experience or future changes make it clear that projected results expressed or implied will not be realized. Forward-looking statements involve known and unknown risks and uncertainties that may cause Stein Mart’s actual results in future periods to differ materially from forecasted or expected results. Those risks include, without limitation: dependence on our ability to purchase merchandise at competitive terms through relationships with our vendors and their factors, consumer sensitivity to economic conditions, competition in the retail industry, changes in fashion trends and consumer preferences, ability to implement our strategic plans to sustain profitable growth, effectiveness of advertising and marketing, capital availability and debt levels, ability to negotiate acceptable lease terms with current and potential landlords, ability to successfully implement strategies to exit under-performing stores, extreme and/or unseasonable weather conditions, adequate sources of merchandise at acceptable prices, dependence on certain key personnel and ability to attract and retain qualified employees, increases in the cost of compensation and employee benefits, impacts of seasonality, disruption of the Company’s distribution process, dependence on imported merchandise, information technology failures, data security breaches, single supplier for shoe department, single provider for Ecommerce website, acts of terrorism, ability to adapt to new regulatory compliance and disclosure obligations, material weaknesses in internal control over financial reporting and other risks and uncertainties described in the Company’s filings with the SEC.

Stein Mart, Inc.Condensed Consolidated Statements of Income(Unaudited)(In thousands, except per share amounts)

13 Weeks 13 Weeks Ended Ended May 4, May 5, 2019 2018 --------- --------- Net sales $ 314,157 $ 326,605 Other revenue 5,225 4,382 - ------- - ------- Total revenue 319,382 330,987 Cost of merchandise sold 226,698 230,621 Selling, general and administrative expenses 86,136 90,509 - ------- - ------- Operating income 6,548 9,857 Interest expense, net 2,526 2,463 - ------- - ------- Income before income taxes 4,022 7,394 Income tax expense 53 60 Net income $ 3,969 $ 7,334 - ------- - ------- Net income per share: Basic $ 0.08 $ 0.16 Diluted $ 0.08 $ 0.16 - ------- - ------- Weighted-average shares outstanding: Basic 47,111 46,610 Diluted 47,489 46,659 - ------- - -------

Stein Mart, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In thousands, except for share and per share data)

May 4, 2019 February 2, May 5, 2018 2019 ----------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 21,933 $ 9,049 $ 16,165 Inventories 274,281 255,884 296,964 Prepaid expenses and other current assets 31,838 28,326 35,597 - ------- - - ------- - - ------- - Total current assets 328,052 293,259 348,726 Property and equipment, net 118,350 123,838 144,109 Operating lease assets 376,172 - - Other assets 24,255 24,108 24,838 Total assets $ 846,829 $ 441,205 $ 517,673 - ------- - - ------- - - ------- - LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 114,495 $ 89,646 $ 93,632 Current portion of debt - - 159,415 Current portion of operating lease liabilities 84,153 - - Accrued expenses and other current liabilities 84,118 77,650 78,418 - ------- - - ------- - - ------- - Total current liabilities 282,766 167,296 331,465 Long-term debt 152,999 153,253 49,266 Deferred rent - 39,708 41,535 Noncurrent operating lease liabilities 328,093 - - Other liabilities 31,335 33,897 38,785 - ------- - - ------- - - ------- - Total liabilities 795,193 394,154 461,051 - ------- - - ------- - - ------- - COMMITMENTS AND CONTINGENCIES Shareholders’ equity: Preferred stock - $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding Common stock - $.01 par value; 100,000,000 shares authorized; 48,065,250, 47,874,286 and 47,910,450 shares issued and outstanding, respectively 481 479 479 Additional paid-in capital 60,797 60,172 56,961 Retained deficit (9,879 ) (13,853 ) (576 ) Accumulated other comprehensive income (loss) 237 253 (242 ) - ------- - - ------- - - ------- - Total shareholders’ equity 51,636 47,051 56,622 Total liabilities and shareholders’ equity $ 846,829 $ 441,205 $ 517,673 - ------- - - ------- - - ------- -

Stein Mart, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited)(In thousands)

13 Weeks 13 Weeks Ended Ended May 4, 2019 May 5, 2018 ------------ ------------ Cash flows from operating activities: Net income $ 3,969 $ 7,334 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 7,338 8,070 Share-based compensation 730 995 Store closing (benefits) charges (8 ) 116 Impairment of property and other assets - 299 Loss on disposal of property and equipment 1 99 Changes in assets and liabilities: Inventories (18,397 ) (26,727 ) Prepaid expenses and other current assets (4,311 ) (8,977 ) Other assets 7,553 (2,311 ) Accounts payable 24,951 (25,735 ) Accrued expenses and other current liabilities 10,424 217 Other liabilities (17,051 ) (586 ) Net cash provided by (used in) operating activities 15,199 (47,206 ) - -------- - - -------- - Cash flows from investing activities: Net acquisition of property and equipment (1,679 ) (1,664 ) Proceeds from cancelled corporate owned life insurance policies - 2,514 Net cash (used in) provided by investing activities (1,679 ) 850 - -------- - - -------- - Cash flows from financing activities: Proceeds from borrowings 102,025 428,877 Repayments of debt (102,325 ) (375,587 ) Debit issuance costs - (802 ) Cash dividends paid (49 ) (147 ) Capital lease payments (184 ) (183 ) Repurchase of common stock (103 ) (37 ) Net cash (used in) provided by financing activities (636 ) 52,121 - -------- - - -------- - Net increase in cash and cash equivalents 12,884 5,765 Cash and cash equivalents at beginning of year 9,049 10,400 Cash and cash equivalents at end of period $ 21,933 $ 16,165 - -------- - - -------- -

RECONCILIATION OF NON-GAAP FINANCIAL MEASURESWe report our consolidated financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of the company’s financial information with additional useful information in evaluating operating performance.

Note 1: Adjusted EBITDAEBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under GAAP. However, we present EBITDA in this release because we consider it to be an important supplemental measure of our performance and because it is frequently used by analysts, investors and others to evaluate the performance of companies. EBITDA is not calculated in the same manner by all companies. EBITDA should be used as a supplement to results of operations and cash flows as reported under GAAP and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP.

The following table shows the Company’s reconciliation of net income to EBITDA and Adjusted EBITDA which are considered Non-GAAP financial measures. Adjusted EBITDA excludes non-cash items (impairment charges) and significant non-recurring unusual items.

13 Weeks 13 Weeks Ended Ended May 4, 2019 May 5, 2018 ----------- -------- Net income $ 3,969 $ 7,334 Add back amounts for computation of EBITDA: Interest expense, net 2,526 2,463 Income tax expense 53 60 Depreciation and amortization 7,338 8,070 - --------- - ------ EBITDA 13,886 17,927 Adjustments: Non-cash impairment charges - 299 Expense related to legal settlements - 11 New store pre-opening costs - 192 - --------- - ------ Total adjustments - 502 - --------- - ------ Adjusted EBITDA $ 13,866 $ 18,429 - --------- - ------

Note 2: Changes in Comparable Sales Management believes that providing calculations of changes in comparable sales including and excluding sales from licensed departments assists in evaluating the Company’s ability to generate sales growth, whether through owned businesses or departments licensed to third parties. The following table shows the Company’s reconciliation of these calculations.

13 Weeks Ended May 4, 2019 -------------- Decrease in comparable sales excluding sales from licensed departments (1) (2.5%) Impact of growth in comparable sales of licensed departments (2) 0.8% -------------- Decrease in comparable sales including sales from licensed departments (1.7%) --------------

1. Represents the period-to-period percentage change in net sales from stores open throughout the period presented and the same period in the prior year and all online sales of steinmart.com, excluding commissions from departments licensed to third parties. 2. Represents the impact of including sales of departments licensed to third parties throughout the period presented and the same period in the prior year and all online sales of steinmart.com in the calculation of comparable sales. The company licenses its shoe and vintage handbag departments in its stores and online to third parties and receives a commission from these third parties based on a percentage of their sales. In our financial statements prepared in conformity with GAAP, the company includes commissions (rather than sales of the departments licensed to third parties) in its net sales. The Company does not include the commission amounts from licensed department sales in its comparable sales calculations.

For more information:Linda L. TasseffDirector, Investor Relations(904) 858-2639 ltasseff@steinmart.com

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