The Lovesac Company Announces a Five-Year Extension of Its Credit Facility and Inaugural Share Repurchase Program

Rhea-AI Summary

The Lovesac Company (Nasdaq: LOVE) has announced two significant developments: a five-year extension of its revolving credit facility and a new share repurchase program. The credit facility, previously set to mature on September 30, 2024, has been extended to July 2029 with an added $10 million uncommitted accordion feature. Concurrently, Lovesac's Board of Directors has authorized a $40 million share repurchase program, to be funded through existing cash and future free cash flow. This program allows for open market purchases, privately negotiated transactions, and accelerated share repurchases, with the timing and amount at management's discretion. These moves aim to increase financial flexibility for business investment while delivering value to shareholders.

Positive

• Extension of revolving credit facility to July 2029, providing long-term financial stability
• Addition of $10 million uncommitted accordion feature to potentially increase credit facility size
• Authorization of $40 million share repurchase program, potentially boosting shareholder value
• Increased financial flexibility for business investment and shareholder returns

Negative

• Potential reduction in cash reserves due to share repurchase program
• Possible increase in debt if accordion feature is utilized

Insights

Financial Analyst

The Lovesac Company's announcement of a five-year extension to its credit facility and a new share repurchase program is a significant development for investors. The extension of the revolving credit facility to July 2029 provides enhanced financial flexibility and stability for the company. This move suggests confidence from lenders in Lovesac's long-term prospects and ability to manage debt.

The addition of an uncommitted accordion feature allowing for a potential $10 million increase in the facility size is particularly noteworthy. This provision gives Lovesac additional room for growth and the ability to respond to opportunities or challenges as they arise.

The $40 million share repurchase program is a strategic use of capital that signals management's belief that the stock may be undervalued. This program could potentially boost earnings per share and return value to shareholders. However, investors should note that the actual impact will depend on the timing, price and volume of repurchases.

From a financial perspective, Lovesac's ability to extend its credit facility while simultaneously announcing a share buyback program indicates a strong balance sheet and positive cash flow expectations. This dual approach of securing long-term financing while returning capital to shareholders is often seen as a sign of financial health and management confidence in the company's future performance.

Market Research Analyst

Lovesac's strategic moves reflect broader trends in the home furnishings industry and consumer behavior. The company's focus on adaptable, long-lasting furniture aligns with growing consumer preferences for sustainable and versatile home goods. This positioning could be particularly advantageous in the current economic climate, where consumers may be more inclined to invest in durable, multi-functional pieces.

The extension of the credit facility and share repurchase program suggests that Lovesac is preparing for potential market volatility while also signaling confidence in its business model. This balanced approach could resonate well with investors who are looking for companies with both growth potential and financial prudence.

It's worth noting that Lovesac's direct-to-consumer approach, supported by a mix of online sales and physical showrooms, positions the company well in the evolving retail landscape. The flexibility provided by the extended credit facility could allow Lovesac to further invest in its omnichannel strategy, potentially capturing more market share in the competitive furniture industry.

Investors should keep an eye on how Lovesac leverages this financial flexibility to drive growth, particularly in terms of product innovation and market expansion. The company's ability to execute on these fronts will be important in justifying the confidence implied by these financial maneuvers.

Expands Revolving Credit Facility with 5-Year Extended Maturity

Board of Directors Authorizes $40 Million Share Repurchase Program

STAMFORD, Conn., July 31, 2024 (GLOBE NEWSWIRE) -- The Lovesac Company (Nasdaq: LOVE) (“Lovesac” or the “Company”), the home furnishing brand best known for its Sactionals, The World's Most Adaptable Couch, today announced that it has entered into a five-year extension of its revolving credit facility and that its Board of Directors has authorized a share repurchase program.

The Company’s revolving credit facility had been set to mature on September 30, 2024. The amendment extends the maturity to July 2029 and adds an uncommitted accordion feature that allows the Company, subject to certain customary conditions, to increase the size of the revolving credit facility by $10 million.

Lovesac’s Board of Directors also authorized the repurchase of up to $40 million of the Company’s outstanding common stock. The program is expected to be funded through the Company’s existing cash and future free cash flow. The timing, manner, price and amount of any repurchases are determined by the discretion of management, depending on market conditions and other factors. Repurchases may be made through open market purchases, privately negotiated transactions, and accelerated share repurchases. The exact number of shares to be repurchased by the Company, if any, is not guaranteed. Depending on market conditions and other factors, these repurchases may be commenced or suspended at any time or periodically without prior notice.

Keith Siegner, Executive Vice President and Chief Financial Officer, stated, “We are pleased to have successfully extended our credit facility, further increasing our financial flexibility to continue to invest in the business while also delivering value to shareholders. To that end, we are also pleased to concurrently announce the authorization of a new share repurchase program. We look forward to discussing this in more detail with fiscal second quarter earnings in September.”

About The Lovesac Company:

Based in Stamford, Connecticut, The Lovesac Company is a technology driven company that designs, manufactures and sells unique, high-quality furniture derived through its proprietary Designed For Life approach which results in products that are built to last a lifetime and designed to evolve as our customers’ lives do. Our current product offering is comprised of modular couches called Sactionals, premium foam beanbag chairs called Sacs, and their associated home decor accessories. Innovation is at the center of our design philosophy with all of our core products protected by a robust portfolio of utility patents. We market and sell our products primarily online directly at www.lovesac.com, supported by direct-to-consumer touch-feel points in the form of our own showrooms as well as through shop-in-shops and pop-up-shops with third party retailers. LOVESAC, SACTIONALS, DESIGNED FOR LIFE, and THE WORLD'S MOST ADAPTABLE COUCH are trademarks of The Lovesac Company and are Registered in the U.S. Patent and Trademark Office.

Forward-Looking Statements

This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the Company’s plans regarding share repurchases. Forward-looking statements can be identified by words such as “may,” “continue(s),” “believe,” “anticipate,” “could,” “should,” “intend,” “plan,” “will,” “aim(s),” “can,” “would,” “expect(s),” “expectation(s),” “estimate(s),” “project(s),” “forecast(s)”, “positioned,” “approximately,” “potential,” “goal,” “pro forma,” “strategy,” “outlook” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. All statements, other than statements of historical facts, included in this Press Release are forward-looking statements. These statements are based on management’s current expectations, beliefs and assumptions concerning the future of our business, anticipated events and trends, the economy and other future conditions. We may not actually achieve the plans, carry out the intentions or meet the expectations disclosed in the forward-looking statements and you should not rely on these forward-looking statements. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors. Among the key factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: the Company’s ability to implement its plans regarding share repurchases and/or to return value to stockholders, changes in the market price of the Company’s common stock, global economic and market conditions, and alternative investment opportunities, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Form 10-K and in our Form 10-Qs filed with the Securities and Exchange Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on our investor relations website at investor.lovesac.com and on the SEC website at www.sec.gov. Any forward-looking statement made by us in this Press Release speaks only as of the date on which we make it. We disclaim any intent or obligation to update these forward-looking statements to reflect events or circumstances that exist after the date on which they were made.

Investor Relations Contact:
Caitlin Churchill, ICR
(203) 682-8200
InvestorRelations@lovesac.com

FAQ

What is the new maturity date for Lovesac's (LOVE) revolving credit facility?

Lovesac's revolving credit facility has been extended to mature in July 2029, a five-year extension from its previous maturity date of September 30, 2024.

How much has Lovesac (LOVE) authorized for its share repurchase program?

Lovesac's Board of Directors has authorized a share repurchase program of up to $40 million of the company's outstanding common stock.

How will Lovesac (LOVE) fund its share repurchase program?

The share repurchase program is expected to be funded through Lovesac's existing cash and future free cash flow.

What is the accordion feature added to Lovesac's (LOVE) credit facility?

The accordion feature is an uncommitted option that allows Lovesac to potentially increase the size of its revolving credit facility by $10 million, subject to certain customary conditions.