WESTBOROUGH, Mass.--(BUSINESS WIRE)--BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and thirty-nine weeks ended November 2, 2019.
“We delivered solid margin improvement and continued earnings growth in the third quarter ” said Christopher J. Baldwin, Chairman and Chief Executive Officer, BJ’s Wholesale Club. "We remain focused on executing against our strategic plan and transforming our business to be well positioned for the long-term. The board's decision to authorize a stock repurchase program reflects the strength of our cash flow and confidence in our growth strategy and long-term outlook."
Key Measures for the Thirteen Weeks Ended November 2, 2019 (Third Quarter of Fiscal 2019) and for the Thirty-Nine Weeks Ended November 2, 2019 (First Nine Months of Fiscal 2019):
BJ'S WHOLESALE CLUB HOLDINGS, INC.
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13 Weeks Ended |
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13 Weeks Ended |
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39 Weeks Ended |
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39 Weeks Ended |
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November 2, 2019 |
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November 3, 2018 |
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% Growth |
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November 2, 2019 |
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November 3, 2018 |
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% Growth |
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Net sales |
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$ |
3,152,887 |
|
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$ |
3,150,234 |
|
|
0.1 |
% |
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$ |
9,493,795 |
|
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$ |
9,380,640 |
|
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1.2 |
% |
Membership fee income |
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76,517 |
|
|
71,429 |
|
|
7.1 |
% |
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224,587 |
|
|
209,825 |
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7.0 |
% |
||||
Total revenues |
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3,229,404 |
|
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3,221,663 |
|
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0.2 |
% |
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9,718,382 |
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9,590,465 |
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1.3 |
% |
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Operating income |
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100,932 |
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90,327 |
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11.7 |
% |
|
270,355 |
|
|
193,571 |
|
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39.7 |
% |
||||
Income from continuing operations |
|
55,196 |
|
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54,568 |
|
|
1.2 |
% |
|
145,574 |
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63,379 |
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129.7 |
% |
||||
Adjusted EBITDA (a) |
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154,144 |
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148,464 |
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3.8 |
% |
|
431,407 |
|
|
413,057 |
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4.4 |
% |
||||
Net income |
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55,092 |
|
|
54,431 |
|
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1.2 |
% |
|
145,413 |
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|
62,954 |
|
|
131.0 |
% |
||||
EPS (b) |
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0.40 |
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0.39 |
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2.6 |
% |
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1.04 |
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0.55 |
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89.1 |
% |
||||
Adjusted net income(a) |
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56,575 |
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53,822 |
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5.1 |
% |
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148,304 |
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|
125,029 |
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18.6 |
% |
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Adjusted EPS (a) |
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0.41 |
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0.39 |
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5.1 |
% |
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1.06 |
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0.90 |
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17.8 |
% |
||||
Basic weighted average shares outstanding |
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135,521 |
|
|
135,018 |
|
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0.4 |
% |
|
136,301 |
|
|
110,162 |
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23.7 |
% |
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Diluted weighted average shares outstanding |
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138,192 |
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|
139,368 |
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(0.8 |
)% |
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139,390 |
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114,944 |
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21.3 |
% |
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a) |
See “Note Regarding Non-GAAP Financial Information” |
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b) |
EPS represents earnings per diluted share |
Additional Highlights:
- Comparable club sales for the third quarter of fiscal 2019 decreased 0.4%, compared to the third quarter of fiscal 2018. Comparable club sales, excluding the impact of gasoline sales increased 1.1%. Comparable club sales for the first nine months of fiscal 2019 increased 0.7%, compared to the first nine months of fiscal 2018. Excluding the impact of gasoline sales, comparable club sales increased 1.5%.
- Gross profit increased to $617.6 million in the third quarter of fiscal 2019 from $592.1 million in the third quarter of fiscal 2018. Gross profit increased to $1,804.6 million in the first nine months of fiscal 2019 from $1,732.0 million in the first nine months of fiscal 2018. Excluding the impact of gasoline sales and membership fee income, merchandise gross margin rate increased by approximately 50 basis points over the third quarter of fiscal 2018 and by approximately 40 basis points over the first nine months of fiscal 2018. The improvement was primarily driven by continued progress in our category profitability improvement program.
- Selling, general and administrative expenses ("SG&A") increased to $510.4 million in the third quarter of fiscal 2019, compared to $499.6 million in the third quarter of fiscal 2018. In the first nine months of fiscal 2019, SG&A decreased to $1,523.5 million, compared to $1,534.3 million in the first nine months of fiscal 2018. Excluding charges associated with stock-based compensation related to the Company’s initial public offering (“IPO”), costs related to our IPO and the registered offerings by selling stockholders (such offering costs, collectively, "offering costs"), club asset impairment and management fees(1), SG&A was $510.4 million in the third quarter of fiscal 2019 compared to $496.2 million in the prior year period and $1,521.6 million in the first nine months of fiscal 2019 compared to $1,474.9 million in the prior year period. The increase in SG&A reflects continued investments to drive the Company’s strategic priorities.
- Operating income increased to $100.9 million, or 3.1% of total revenues in the third quarter of fiscal 2019, compared to $90.3 million, or 2.8% of total revenues in the third quarter of fiscal 2018. Operating income increased to $270.4 million, or 2.8% of total revenues, in the first nine months of fiscal 2019, compared to $193.6 million, or 2.0% of total revenues in the first nine months of fiscal 2018. Excluding charges associated with stock-based compensation related to the IPO, offering costs, club asset impairment and management fees(1), operating income was $100.9 million, or 3.1% of total revenues in the third quarter of fiscal 2019, compared to $93.7 million, or 2.9% of total revenues in the prior year period and $272.3 million, or 2.8% of total revenues, in the first nine months of fiscal 2019, compared to $252.9 million, or 2.6% of total revenues in the prior year period.
- Interest expense, net, decreased to $27.7 million in the third quarter of fiscal 2019, compared to $33.0 million in the third quarter of fiscal 2018. Excluding $2.0 million of write-off of deferred fees and the original issue discount associated with the 2019 partial payoff of our first lien term loan facility (the "First Lien Term Loan"), interest expense would have been $25.7 million in the third quarter of fiscal 2019. During the third quarter of fiscal 2018, the Company repriced its First Lien Term Loan and senior secured asset based revolving credit and term facility (the "ABL Facility"). Excluding $6.2 million in fees and write-off of deferred financing fees associated with the repricing, interest expense would have been $26.8 million for the third quarter of fiscal 2018. In the first nine months of fiscal 2019, interest expense, net, decreased to $82.3 million, compared to $137.8 million in the first nine months of fiscal 2018. Excluding $24.3 million in interest expense, $6.2 million in a prepayment penalty and $13.0 million in a write-off of deferred financing costs related to the Second Lien Term Loan that occurred during the second quarter of fiscal 2018 and excluding $6.2 million of expenses associated with the repricing of the First Lien Term Loan and ABL Facility in third quarter of fiscal 2018, interest expense for the first nine months of fiscal 2018 would have been $88.0 million.
- Income tax expense was $18.0 million in the third quarter of fiscal 2019, compared to income tax expense of $2.7 million in the third quarter of fiscal 2018. The third quarter of fiscal 2019 included a benefit of $1.8 million from windfall tax benefits related to stock compensation awards compared to $7.6 million in the third quarter of fiscal 2018. Income tax expense was $42.5 million in the first nine months of fiscal 2019, compared to an income tax benefit of $7.6 million in the first nine months of fiscal 2018. The first nine months of fiscal 2019 included a benefit of $8.4 million from windfall tax benefits related to stock compensation awards, compared to $17.4 million in the first nine months of fiscal 2018.
(1) See reconciliation to Adjusted Net Income table
Stock Repurchase Program
- On November 20, 2019, the Company's Board of Directors approved a stock repurchase program, effective immediately. The authorization allows the Company to repurchase up to $250.0 million of its outstanding common stock. The stock repurchase program expires in January 2022 and gives management the flexibility to determine the terms and conditions under which shares may be purchased. The amount and timing of any repurchases made under the stock repurchase program will depend on a variety of factors, including available liquidity, cash flow and market conditions. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and the program may be suspended or discontinued at any time.
Fiscal Year (FY) 2019 Outlook
Outlook |
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Prior Outlook |
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Current Outlook |
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FY Ending February 1, 2020(a) |
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FY 2019 |
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FY 2019 |
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Net sales |
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$12.9 - $13.2 |
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Approx. $12.9 |
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Merchandise Comparable Store Sales (b) |
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1.5% - 2.5% |
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1.3% - 1.5% |
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Income from Continuing Operations |
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$200 - $212 |
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$200 - $204 |
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Adjusted EBITDA |
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$590 - $600 |
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$585 - $592 |
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Interest expense |
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$105- $110 |
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$106- $108 |
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Tax Rate(c) |
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Approx. 25% |
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Approx. 24% |
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Net income |
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$200 - $212 |
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$200 - $205 |
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EPS (d) |
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$1.42 - $1.50 |
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$1.44 - $1.48 |
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Capital Expenditures |
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Approx. $200 |
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Approx. $200 |
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a) |
Amounts in millions, except for per share amounts. Net sales is in billions. Outlook reflects the immaterial impact of adopting the new lease accounting standard. |
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b) |
Merchandise comparable store sales are defined as comparable club sales, excluding the impact of gasoline sales. |
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c) |
Tax rate reflects statutory rate of 27.9%, offset by future windfall stock benefits. |
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d) |
Based on estimated diluted weighted average shares outstanding of approximately 139 million. |
Conference Call Details
A conference call to discuss the third quarter of fiscal 2019 financial results is scheduled for today, November 21, 2019, at 8:30 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-274-0290 (international callers please dial 647-689-5405) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at https://investors.bjs.com.
A recorded replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online at https://investors.bjs.com and by dialing 416-621-4642 and entering the access code 9697299. The recorded replay will be available until November 28, 2019 and an online archive of the webcast will be available for one year.
About BJ’s Wholesale Club Holdings, Inc.
Headquartered in Westborough, Massachusetts, BJ's Wholesale Club Holdings, Inc. is a leading operator of membership warehouse clubs in the Eastern United States. The company currently operates 219 clubs and 144 BJ's Gas® locations in 17 states.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our strategic priorities; our anticipated fiscal 2019 outlook and longer-term position and outlook; and our future progress, as well as statements that include the words "will", "could", "predict", "continue", "would", “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” or the negative of these terms or other similar expressions. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: uncertainties in the financial markets, consumer and small business spending patterns and debt levels; our dependence on having a large and loyal membership; domestic and international economic conditions, including exchange rates; our ability to procure the merchandise we sell at the best possible prices; the effects of competition and regulation; our dependence on vendors to supply us with quality merchandise at the right time and at the right price; breaches of security or privacy of member or business information; conditions affecting the acquisition and development; our ability to attract and retain a qualified management team and other team members; costs associated with employees (generally including health care costs), energy and certain commodities, geopolitical conditions (including tariffs); disruptions in merchandise distribution; our ability to identify and respond effectively to consumer trends; the effects of payment related risks, including risks to the security of payment card information; changes in laws related to, or the governments administration of the Supplemental Nutrition Assistance Program or its electronic benefit transfer systems; union attempts to organize our team members; failure or disruption of our primary and back-up systems; our ability to attract and retain a qualified management team and other team members; fluctuation of our comparable club sales and quarterly operating results; changes in our product mix or in our revenues from gasoline sales; the effects of product recalls; our failure to successfully maintain a relevant omnichannel experience for our members; risks related to our growth strategy to open new clubs; risks related to our e-commerce business; and other important factors discussed under the captions “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 filed with the United States Securities and Exchange Commission (“SEC”) on March 25, 2019, as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Non-GAAP Financial Measures
We refer to certain financial measures that are not recognized under United States generally accepted accounting principles (“GAAP”). Please see “Note Regarding Non-GAAP Financial Information" and “Reconciliation of GAAP to Non-GAAP Financial Information” below for additional information and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
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13 Weeks Ended |
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13 Weeks Ended |
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39 Weeks Ended |
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39 Weeks Ended |
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November 2, 2019 |
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November 3, 2018 |
|
November 2, 2019 |
|
November 3, 2018 |
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Net sales |
|
$ |
3,152,887 |
|
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$ |
3,150,234 |
|
|
$ |
9,493,795 |
|
|
$ |
9,380,640 |
|
Membership fee income |
|
76,517 |
|
|
71,429 |
|
|
224,587 |
|
|
209,825 |
|
||||
Total revenues |
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3,229,404 |
|
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3,221,663 |
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|
9,718,382 |
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9,590,465 |
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Cost of sales |
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2,611,758 |
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2,629,575 |
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7,913,820 |
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7,858,515 |
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Selling, general and administrative expenses |
|
510,410 |
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|
499,554 |
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1,523,480 |
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1,534,314 |
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Preopening expense |
|
6,304 |
|
|
2,207 |
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|
10,727 |
|
|
4,065 |
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Operating income |
|
100,932 |
|
|
90,327 |
|
|
270,355 |
|
|
193,571 |
|
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Interest expense, net |
|
27,702 |
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|
33,029 |
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|
82,274 |
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|
137,787 |
|
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Income from continuing operations before income taxes |
|
73,230 |
|
|
57,298 |
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|
188,081 |
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|
55,784 |
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Provision (benefit) for income taxes |
|
18,034 |
|
|
2,730 |
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|
42,507 |
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(7,595 |
) |
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Income from continuing operations |
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55,196 |
|
|
54,568 |
|
|
145,574 |
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|
63,379 |
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Loss from discontinued operations, net of income taxes |
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(104 |
) |
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(137 |
) |
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(161 |
) |
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(425 |
) |
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Net income |
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$ |
55,092 |
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$ |
54,431 |
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$ |
145,413 |
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$ |
62,954 |
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Income per share attributable to common stockholders - basic: |
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Income from continuing operations |
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$ |
0.41 |
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$ |
0.40 |
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$ |
1.07 |
|
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$ |
0.58 |
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Loss from discontinued operations |
|
— |
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|
— |
|
|
— |
|
|
— |
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Net income |
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$ |
0.41 |
|
|
$ |
0.40 |
|
|
$ |
1.07 |
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|
$ |
0.58 |
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Income per share attributable to common stockholders - diluted: |
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|
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|
|
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|
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Income from continuing operations |
|
$ |
0.40 |
|
|
$ |
0.39 |
|
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$ |
1.04 |
|
|
$ |
0.55 |
|
Loss from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Net income |
|
$ |
0.40 |
|
|
$ |
0.39 |
|
|
$ |
1.04 |
|
|
$ |
0.55 |
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Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
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||||||||
Basic |
|
135,521 |
|
|
135,018 |
|
|
136,301 |
|
|
110,162 |
|
||||
Diluted |
|
138,192 |
|
|
139,368 |
|
|
139,390 |
|
|
114,944 |
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BJ'S WHOLESALE CLUB HOLDINGS, INC.
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November 2, 2019 |
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November 3, 2018 |
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ASSETS |
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Current assets: |
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|
||||||
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Cash and cash equivalents |
|
$ |
29,968 |
|
|
$ |
31,502 |
|
|
|
Accounts receivable, net |
|
185,983 |
|
|
179,091 |
|
|||
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Merchandise inventories |
|
1,271,172 |
|
|
1,245,110 |
|
|||
|
Prepaid expense and other current assets |
|
55,285 |
|
|
104,258 |
|
|||
|
|
Total current assets |
|
1,542,408 |
|
|
1,559,961 |
|
||
|
|
|
|
|
|
|
||||
Operating lease right-of-use assets, net |
|
2,067,626 |
|
|
— |
|
||||
Property and equipment, net |
|
775,659 |
|
|
745,889 |
|
||||
Goodwill |
|
924,134 |
|
|
924,134 |
|
||||
Intangibles, net |
|
150,357 |
|
|
206,706 |
|
||||
Other assets |
|
17,897 |
|
|
28,265 |
|
||||
|
|
Total assets |
|
$ |
5,478,081 |
|
|
$ |
3,464,955 |
|
|
|
|
|
|
|
|
||||
LIABILITIES |
|
|
|
|
||||||
Current liabilities: |
|
|
|
|
||||||
|
Current portion of long-term debt |
|
$ |
449,377 |
|
|
$ |
389,377 |
|
|
|
Current portion of operating lease liabilities |
|
121,961 |
|
|
— |
|
|||
|
Accounts payable |
|
973,328 |
|
|
976,518 |
|
|||
|
Accrued expenses and other current liabilities |
|
507,141 |
|
|
487,912 |
|
|||
|
|
Total current liabilities |
|
2,051,807 |
|
|
1,853,807 |
|
||
|
|
|
|
|
|
|
||||
Long-term lease liabilities |
|
1,980,447 |
|
|
— |
|
||||
Long-term debt |
|
1,339,700 |
|
|
1,549,406 |
|
||||
Deferred income taxes |
|
50,486 |
|
|
51,810 |
|
||||
Other noncurrent liabilities |
|
160,127 |
|
|
266,550 |
|
||||
|
|
|
|
|
|
|
||||
STOCKHOLDERS' DEFICIT |
|
(104,486 |
) |
|
(256,618 |
) |
||||
|
|
Total liabilities and stockholders' deficit |
|
$ |
5,478,081 |
|
|
$ |
3,464,955 |
|
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
||||||||
|
||||||||
|
|
39 Weeks Ended
|
|
39 Weeks Ended
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
Net income |
|
$ |
145,413 |
|
|
$ |
62,954 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
116,920 |
|
|
122,434 |
|
||
Amortization of debt issuance costs and accretion of original issue discount |
|
3,969 |
|
|
5,233 |
|
||
Debt extinguishment and refinancing charges |
|
2,032 |
|
|
23,602 |
|
||
Impairment charges |
|
— |
|
|
3,962 |
|
||
Other non-cash items, net |
|
2,539 |
|
|
1,826 |
|
||
Stock-based compensation expense |
|
13,984 |
|
|
54,746 |
|
||
Deferred income tax provision (benefit) |
|
14,846 |
|
|
(2,802 |
) |
||
Increase (decrease) in cash due to changes in: |
|
|
|
|
||||
Accounts receivable |
|
8,317 |
|
|
11,233 |
|
||
Merchandise inventories |
|
(218,866 |
) |
|
(225,972 |
) |
||
Accounts payable |
|
160,291 |
|
|
202,630 |
|
||
Accrued expenses |
|
(38,847 |
) |
|
(14,687 |
) |
||
Other operating assets and liabilities, net |
|
10,924 |
|
|
5,734 |
|
||
Net cash provided by operating activities |
|
221,522 |
|
|
250,893 |
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
||||
Additions to property and equipment, net of disposals |
|
(144,428 |
) |
|
(103,340 |
) |
||
Net cash used in investing activities |
|
(144,428 |
) |
|
(103,340 |
) |
||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
Payments on long term debt |
|
(11,533 |
) |
|
(32,323 |
) |
||
Paydown of First Lien Term Loan and extinguishment of Second Lien Term Loan |
|
(200,000 |
) |
|
(975,633 |
) |
||
Net borrowings on ABL Facility |
|
195,000 |
|
|
207,000 |
|
||
Debt issuance costs paid |
|
— |
|
|
(982 |
) |
||
Net cash received (paid) from stock option exercises |
|
9,293 |
|
|
(15,277 |
) |
||
Net cash received from Employee Stock Purchase Program (ESPP) |
|
726 |
|
|
— |
|
||
Acquisition of treasury stock |
|
(67,305 |
) |
|
(19,109 |
) |
||
Net proceeds from stock issuance |
|
— |
|
|
685,889 |
|
||
Other financing activities |
|
(453 |
) |
|
(570 |
) |
||
Net cash used in financing activities |
|
(74,272 |
) |
|
(151,005 |
) |
||
Net increase (decrease) in cash and cash equivalents |
|
2,822 |
|
|
(3,452 |
) |
||
Cash and cash equivalents at beginning of period |
|
27,146 |
|
|
34,954 |
|
||
Cash and cash equivalents at end of period |
|
$ |
29,968 |
|
|
$ |
31,502 |
|
Note Regarding Non-GAAP Financial Information
This press release includes financial measures that are not calculated in accordance with GAAP, including adjusted net income, adjusted net income per diluted share, adjusted EBITDA, free cash flow and net debt and net debt to LTM adjusted EBITDA.
We define adjusted net income as net income attributable to common stockholders adjusted for: stock-based compensation related to the IPO; offering costs; management fees; club asset impairment; charges related to debt restructurings and retirements; the windfall tax benefit from stock exercises; and the tax impact of the foregoing adjustments on net income.
We define adjusted net income per diluted share as adjusted net income divided by the weighted average diluted shares outstanding for the thirteen weeks and thirty-nine weeks ended on the last day of the latest periods presented.
We define adjusted EBITDA as income from continuing operations before interest expense, net, provision (benefit) for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including: stock-based compensation expense; pre-opening expenses; management fees; non-cash rent; strategic consulting; offering costs; and other adjustments.
We define free cash flow as net cash provided by operating activities net of capital expenditures.
We define net debt as total debt outstanding less cash and cash equivalents.
We define net debt to LTM adjusted EBITDA as net debt at the balance sheet date divided by adjusted EBITDA for the trailing twelve-month period.
We present adjusted net income, adjusted net income per diluted share and adjusted EBITDA, which are not recognized financial measures under GAAP, because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, adjusted EBITDA excludes preopening expenses, because we do not believe these expenses are indicative of the underlying operating performance of our stores. The amount and timing of preopening expenses are dependent on, among other things, the size of new stores opened and the number of new stores opened during any given period.
Management believes that adjusted net income, adjusted net income per diluted share and adjusted EBITDA are helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We use adjusted net income, adjusted net income per diluted share and adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and to compare our performance against that of other peer companies using similar measures. We also use adjusted EBITDA in connection with establishing discretionary annual incentive compensation.
We present free cash flow, which is not a recognized financial measure under GAAP, because we use it to report to our board of directors and we believe it assists investors and analysts in evaluating our liquidity. Free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We present net debt and net debt to LTM adjusted EBITDA, which are not recognized as financial measures under GAAP, because we use them to report to our board of directors and we believe they assist investors and analysts in evaluating our borrowing capacity. Net debt to LTM adjusted EBITDA is a key financial measure that is used by management to assess the borrowing capacity of the Company.
You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating adjusted net income, adjusted net income per diluted share, adjusted EBITDA and net debt to LTM adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or like some of the adjustments in our presentation of these metrics. Our presentation of adjusted net income, adjusted net income per diluted share, adjusted EBITDA, free cash flow, net debt and net debt to LTM adjusted EBITDA should not be considered as alternatives to any other measure derived in accordance with GAAP and they should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of adjusted net income, adjusted net income per diluted share, adjusted EBITDA or net debt to LTM adjusted EBITDA in the future, and any such modification may be material. In addition, adjusted net income, adjusted net income per diluted share, adjusted EBITDA, free cash flow, net debt and net debt to LTM adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries. Additionally, adjusted net income, adjusted net income per diluted share, adjusted EBITDA, free cash flow, net debt and net debt to LTM adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.
Reconciliation of GAAP to Non-GAAP Financial Information
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
||||||||||||||||
|
||||||||||||||||
|
13 Weeks Ended |
|
13 Weeks Ended |
|
39 Weeks Ended |
|
39 Weeks Ended |
|||||||||
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|||||||||
Net income as reported |
$ |
55,092 |
|
|
$ |
54,431 |
|
|
$ |
145,413 |
|
|
$ |
62,954 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|||||||||
Stock-based compensation related to IPO (a) |
— |
|
|
— |
|
|
— |
|
|
48,927 |
|
|||||
Offering costs (b) |
— |
|
|
2,382 |
|
|
1,928 |
|
|
3,143 |
|
|||||
Management fees (c) |
— |
|
|
— |
|
|
— |
|
|
3,333 |
|
|||||
Club asset impairment (d) |
— |
|
|
962 |
|
|
— |
|
|
3,962 |
|
|||||
Charges related to extinguishing Second Lien Term Loan (e) |
— |
|
|
— |
|
|
— |
|
|
19,159 |
|
|||||
Interest and amortization on Second Lien Term Loan (f) |
— |
|
|
— |
|
|
— |
|
|
24,341 |
|
|||||
Charges and write-offs related to 2018 debt refinancing and 2019 debt paydown (g) |
2,032 |
|
|
6,240 |
|
|
2,032 |
|
|
6,240 |
|
|||||
Windfall tax benefit from stock exercises (h) |
— |
|
|
(7,586 |
) |
|
— |
|
|
(17,353 |
) |
|||||
Tax impact of adjustments to net income (i) |
(549 |
) |
|
(2,607 |
) |
|
(1,069 |
) |
|
(29,677 |
) |
|||||
Adjusted net income |
$ |
56,575 |
|
|
$ |
53,822 |
|
|
$ |
148,304 |
|
|
$ |
125,029 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted average diluted shares outstanding |
138,192 |
|
|
139,368 |
|
|
139,390 |
|
|
114,944 |
|
|||||
Weighted average diluted shares outstanding for the thirteen and thirty-nine weeks ended November 2, 2019 |
138,192 |
|
|
138,192 |
|
|
139,390 |
|
|
139,390 |
|
|||||
Adjusted net income per diluted share (j) |
$ |
0.41 |
|
|
$ |
0.39 |
|
|
$ |
1.06 |
|
|
$ |
0.90 |
|
|
(a) |
Represents stock-based compensation expense for certain restricted stock and stock option awards issued in connection with our IPO. |
|
(b) |
Represents costs related to our IPO, and the registered offerings by selling stockholders. |
|
(c) |
Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO. |
|
(d) |
Represents the impairment charges related to a club relocated in 2018. |
|
(e) |
Represents the write-off of certain deferred financing charges and a prepayment penalty associated with the payoff of our Second Lien Term Loan. |
|
(f) |
Represents the historical interest expense associated with the Second Lien Term Loan that was paid in full with proceeds from our IPO. |
|
(g) |
Represents the write-off of deferred fees associated with the 2019 partial payoff of our First Lien Term Loan and the 2018 repricing of the Company’s First Lien Term Loan and ABL Facility. |
|
(h) |
Represents the windfall tax benefit to the Company due to the exercise of stock options by former employees of the Company. |
|
(i) |
Represents the tax effect of the above adjustments at an effective tax rate of approximately 27% for both periods ended November 2, 2019 and November 3, 2018. |
|
(j) |
Adjusted net income per diluted share is measured using the weighted average diluted shares outstanding of 138.2 million shares for the third quarter of fiscal 2019 and third quarter of fiscal 2018, and 139.4 million shares for the first nine months of fiscal 2019 and first nine months of fiscal 2018. |
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
|||||||||||||||||
|
|||||||||||||||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
39 Weeks Ended |
|
39 Weeks Ended |
|||||||||
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|||||||||
Income from continuing operations |
|
$ |
55,196 |
|
|
$ |
54,568 |
|
|
$ |
145,574 |
|
|
$ |
63,379 |
|
|
Interest expense, net |
|
27,702 |
|
|
33,029 |
|
|
82,274 |
|
|
137,787 |
|
|||||
Provision (benefit) for income taxes |
|
18,034 |
|
|
2,730 |
|
|
42,507 |
|
|
(7,595 |
) |
|||||
Depreciation and amortization |
|
39,249 |
|
|
39,936 |
|
|
116,920 |
|
|
122,434 |
|
|||||
Stock-based compensation expense (a) |
|
5,188 |
|
|
2,620 |
|
|
13,984 |
|
|
55,985 |
|
|||||
Preopening expenses (b) |
|
6,304 |
|
|
2,207 |
|
|
10,727 |
|
|
4,065 |
|
|||||
Management fees (c) |
|
— |
|
|
— |
|
|
— |
|
|
3,333 |
|
|||||
Non-cash rent (d) |
|
2,558 |
|
|
1,150 |
|
|
6,331 |
|
|
3,591 |
|
|||||
Strategic consulting (e) |
|
— |
|
|
9,321 |
|
|
11,349 |
|
|
22,569 |
|
|||||
Offering costs(f) |
|
— |
|
|
2,382 |
|
|
1,928 |
|
|
3,143 |
|
|||||
Other adjustments (g) |
|
(87 |
) |
|
521 |
|
|
(187 |
) |
|
4,366 |
|
|||||
Adjusted EBITDA |
|
$ |
154,144 |
|
|
$ |
148,464 |
|
|
$ |
431,407 |
|
|
$ |
413,057 |
|
|
(a) |
Represents total stock-based compensation expense and includes expense related to certain restricted stock and stock option awards issued in connection with our IPO. |
|
(b) |
Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred. |
|
(c) |
Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO. |
|
(d) |
Consists of an adjustment to remove the non-cash portion of rent expense. |
|
(e) |
Represents fees paid to external consultants for strategic initiatives of limited duration. |
|
(f) |
Represents costs related to our IPO and the registered offerings by selling stockholders. |
|
(g) |
Other non-cash items, including non-cash accretion on asset retirement obligations, termination costs to former executives and obligations associated with our post-retirement medical plan. Fiscal year 2018 also includes amortization of a deferred gain from sale leaseback transactions in 2013, and impairment charges related to a club that was relocated in 2018. |
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
39 Weeks Ended |
|
39 Weeks Ended |
|||||||||
|
|
November 2,
|
|
November 3,
|
|
November 2,
|
|
November 3,
|
|||||||||
Net Cash provided by operating activities |
|
$ |
6,398 |
|
|
$ |
47,674 |
|
|
$ |
221,522 |
|
|
$ |
250,893 |
|
|
Less: Capital Expenditures |
|
56,130 |
|
|
27,674 |
|
|
144,428 |
|
|
103,340 |
|
|||||
Free cash flow (a) |
|
$ |
(49,732 |
) |
|
$ |
20,000 |
|
|
$ |
77,094 |
|
|
$ |
147,553 |
|
|
(a) |
Free cash flow for the 13 Weeks Ended November 2, 2019 was primarily impacted by the timing of capital expenditures associated with land purchases and build out of the Company's new clubs in Michigan. |
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
|||||
|
|
|
|||
|
|
November 2, 2019 |
|||
Total debt |
|
$ |
1,789,077 |
|
|
Less: Cash and cash equivalents |
|
29,968 |
|
||
Net Debt |
|
$ |
1,759,109 |
|
|
|
|
|
|||
Income from continuing operations |
|
209,287 |
|
||
Interest expense, net |
|
109,022 |
|
||
Provision for income taxes |
|
61,928 |
|
||
Depreciation and amortization |
|
156,709 |
|
||
Stock-based compensation expense (a) |
|
16,916 |
|
||
Preopening expenses (b) |
|
12,780 |
|
||
Non-cash rent (c) |
|
7,604 |
|
||
Strategic consulting (d) |
|
22,266 |
|
||
Offering costs (e) |
|
2,588 |
|
||
Other adjustments (f) |
|
(2,324 |
) |
||
Adjusted EBITDA |
|
$ |
596,776 |
|
|
|
|
|
|||
Net debt to LTM adjusted EBITDA |
|
2.9x |
|||
(a) |
Represents total stock-based compensation expense and includes expense related to certain restricted stock and stock option awards issued in connection with our IPO. |
|
(b) |
Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred. |
|
(c) |
Consists of an adjustment to remove the non-cash portion of rent expense. |
|
(d) |
Represents fees paid to external consultants for strategic initiatives of limited duration. |
|
(e) |
Represents costs related to our IPO and the registered offerings by selling stockholders. |
|
(f) |
Other non-cash items, including non-cash accretion on asset retirement obligations, termination costs to former executives and obligations associated with our post-retirement medical plan, amortization of a deferred gain from sale leaseback transactions in 2013, impairment charges related to a club that was relocated in 2018 and a gain from a third party settlement. |
BJ'S WHOLESALE CLUB HOLDINGS, INC.
|
|||||||||
|
|||||||||
|
|
Fiscal Year 2019 Outlook |
|||||||
|
|
Low End |
|
High End |
|||||
Income from continuing operations |
|
$ |
200 |
|
|
$ |
205 |
|
|
Interest expense, net |
|
108 |
|
|
106 |
|
|||
Provision for income taxes |
|
65 |
|
|
65 |
|
|||
Depreciation and amortization |
|
156 |
|
|
159 |
|
|||
Stock-based compensation |
|
20 |
|
|
20 |
|
|||
Preopening expenses (a) |
|
14 |
|
|
15 |
|
|||
Non-cash rent (b) |
|
10 |
|
|
10 |
|
|||
Strategic consulting (c) |
|
12 |
|
|
12 |
|
|||
Adjusted EBITDA |
|
$ |
585 |
|
|
$ |
592 |
|
|
(a) |
Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred. |
|
(b) |
Consists of an adjustment to remove the non-cash portion of rent expense. |
|
(c) |
Represents fees paid to external consultants for strategic initiatives of limited duration. |
