WESTBOROUGH, Mass.--(BUSINESS WIRE)--Aug 22, 2019--

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and twenty-six weeks ended August 3, 2019.

“Second quarter results for sales and earnings were in line with our expectations,” said Christopher J. Baldwin, Chairman and Chief Executive Officer, BJ’s Wholesale Club. "We delivered improved margins and continued to grow earnings as we executed against our strategic priorities. Our sales were particularly strong in the second half of the quarter as weather improved, and we ended with strong momentum. We are confident that we will deliver on our full-year expectations as we continue to transform BJ’s Wholesale Club."

Key Measures for the Thirteen Weeks Ended August 3, 2019 (Second Quarter of Fiscal 2019) and for the Twenty-Six Weeks Ended August 3, 2019 (First Half of Fiscal 2019):

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

 

 

 

 

 

 

 

 

(Amounts in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

26 Weeks Ended

 

26 Weeks Ended

 

 

 

 

August 3, 2019

 

August 4, 2018

 

% Growth

 

August 3, 2019

 

August 4, 2018

 

% Growth

Net sales

 

$

3,271,145

 

 

$

3,236,664

 

 

1.1

%

 

$

6,340,908

 

 

$

6,230,406

 

 

1.8

%

Membership fee income

 

74,697

 

 

70,441

 

 

6.0

%

 

148,070

 

 

138,396

 

 

7.0

%

Total revenues

 

3,345,842

 

 

3,307,105

 

 

1.2

%

 

6,488,978

 

 

6,368,802

 

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

98,741

 

 

38,674

 

 

155.3

%

 

169,423

 

 

103,244

 

 

64.1

%

Income (loss) from
continuing operations

 

54,293

 

 

(5,490

)

 

N/A

 

90,378

 

 

8,811

 

 

N/A

Adjusted EBITDA (a)

 

153,187

 

 

143,036

 

 

7.1

%

 

277,263

 

 

264,593

 

 

4.8

%

Net income (loss)

 

54,523

 

 

(5,614

)

 

N/A

 

90,321

 

 

8,523

 

 

N/A

EPS (b)

 

0.39

 

 

(0.05

)

 

N/A

 

0.65

 

 

0.09

 

 

N/A

Adjusted net income (a)

 

55,050

 

 

43,302

 

 

27.1

%

 

91,728

 

 

71,415

 

 

28.4

%

Adjusted EPS (a)

 

0.39

 

 

0.31

 

 

25.8

%

 

0.66

 

 

0.51

 

 

29.4

%

Basic weighted
average shares
outstanding

 

136,571

 

 

106,915

 

 

27.7

%

 

136,690

 

 

97,734

 

 

39.9

%

Diluted weighted
average shares
outstanding

 

139,516

 

 

106,915

 

 

30.5

%

 

139,989

 

 

102,732

 

 

36.3

%

  1. See “Note Regarding Non-GAAP Financial Information”
  2. EPS represents earnings per diluted share

Additional Highlights:

  • Comparable club sales for the second quarter of fiscal 2019 increased 0.6%, compared to the second quarter of fiscal 2018. Excluding the impact of gasoline sales, merchandise comparable sales increased 1.6%. Comparable club sales for the first half of fiscal 2019 increased 1.3%, compared to the first half of fiscal 2018. Excluding the impact of gasoline sales, merchandise comparable sales increased 1.7%.
  • Gross profit increased to $612.8 million in the second quarter of fiscal 2019 from $588.5 million in the second quarter of fiscal 2018. Gross profit increased to $1,186.9 million in the first half of fiscal 2019 from $1,139.9 million in the first half of fiscal 2018. Excluding the impact of gasoline sales and membership fee income, merchandise gross margin rate increased by approximately 30 basis points over the second quarter of fiscal 2018 and by approximately 30 basis points over the first half of fiscal 2018. The improvement was primarily driven by continued progress in our category profitability improvement program.
  • Selling, general and administrative expenses ("SG&A") decreased to $511.9 million in the second quarter of fiscal 2019, compared to $549.2 million in the second quarter of fiscal 2018. In the first half of fiscal 2019, SG&A decreased to $1,013.1 million, compared to $1,034.8 million in the first half 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 $511.2 million in the second quarter of fiscal 2019 compared to $498.2 million in the prior year period and $1,011.1 million in the first half of fiscal 2019 compared to $978.7 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 $98.7 million, or 3.0% of total revenues in the second quarter of fiscal 2019, compared to $38.7 million, or 1.2% of total revenues in the second quarter of fiscal 2018. Operating income increased to $169.4 million, or 2.6% of total revenues, in the first half of fiscal 2019, compared to $103.2 million, or 1.6% of total revenues in the first half 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 $99.4 million, or 3.0% of total revenues in the second quarter of fiscal 2019, compared to $89.7 million, or 2.7% of total revenues in the prior year period and $171.4 million, or 2.6% of total revenues, in the first half of fiscal 2019, compared to $159.3 million, or 2.5% of total revenues in the prior year period.
  • Interest expense, net, decreased to $26.8 million in the second quarter of fiscal 2019, compared to $59.6 million in the second quarter of fiscal 2018. In the first half of fiscal 2019, interest expense, net, decreased to $54.6 million, compared to $104.8 million in the first half of fiscal 2018. Excluding $9.5 million in interest and amortization expense associated with our Second Lien Term Loan prior to its extinguishment, $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, interest expense in the second quarter of fiscal 2018 would have been $30.9 million. 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 first half of fiscal 2018, interest expense for the first half of fiscal 2018 would have been $61.3 million.
  • Income tax expense was $17.7 million in the second quarter of fiscal 2019, compared to an income tax benefit of $15.4 million in the second quarter of fiscal 2018. The second quarter of fiscal 2019 included a benefit of $1.7 million from windfall tax benefits related to stock compensation awards compared to $9.3 million in the second quarter of fiscal 2018. Income tax expense was $24.5 million in the first half of fiscal 2019, compared to an income tax benefit of $10.3 million in the first half of fiscal 2018. The first half of fiscal 2019 included a benefit of $6.6 million from windfall tax benefits related to stock compensation awards, compared to $9.8 million in the second half of fiscal 2018.

Recent Developments:

  • On June 27, 2019, CVC Beacon LP completed the registered sale of 9,977,024 shares of the Company's common stock at a public offering price of $25.41 per share, exiting its position in BJ's. The Company repurchased 2,500,000 shares at a public offering price of $25.41 per share. The Company did not receive any proceeds from the offering or incur underwriters’ discounts or commissions on the sale.

(1) See reconciliation to Adjusted EBITDA table

Fiscal Year (FY) 2019 Outlook

Outlook

 

 

Outlook

FY Ending February 1, 2020(a)

 

FY 2019

 

 

 

Net sales

 

$12.9 - $13.2

Merchandise Comparable Store Sales (b)

 

1.5% - 2.5%

Income from Continuing Operations

 

$200 - $212

Adjusted EBITDA

 

$590 - $600

Interest expense

 

$105- $110

Tax Rate (c)

 

Approx. 25%

Net income

 

$200 - $212

EPS (d)

 

$1.42 - $1.50

Capital Expenditures

 

Approx. $200

  1. 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.
  2. Merchandise comparable store sales excludes gasoline.
  3. Tax rate reflects statutory rate of 28.0%, offset by future windfall stock benefits.
  4. Based on estimated diluted weighted average shares outstanding of approximately 140 million.

Conference Call Details

A conference call to discuss the second quarter of fiscal 2019 financial results is scheduled for today, August 22, 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 9258035. The recorded replay will be available until September 05, 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 217 clubs and 141 BJ's Gas ® locations in 16 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 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.

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

(Amounts in thousands, except per share amounts)

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

26 Weeks Ended

 

26 Weeks Ended

 

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

Net sales

 

$

3,271,145

 

 

$

3,236,664

 

 

$

6,340,908

 

 

$

6,230,406

 

Membership fee income

 

74,697

 

 

70,441

 

 

148,070

 

 

138,396

 

Total revenues

 

3,345,842

 

 

3,307,105

 

 

6,488,978

 

 

6,368,802

 

Cost of sales

 

2,733,085

 

 

2,718,602

 

 

5,302,062

 

 

5,228,940

 

Selling, general and administrative expenses

 

511,889

 

 

549,188

 

 

1,013,070

 

 

1,034,760

 

Preopening expense

 

2,127

 

 

641

 

 

4,423

 

 

1,858

 

Operating income

 

98,741

 

 

38,674

 

 

169,423

 

 

103,244

 

Interest expense, net

 

26,783

 

 

59,555

 

 

54,572

 

 

104,758

 

Income (loss) from continuing operations before income taxes

 

71,958

 

 

(20,881

)

 

114,851

 

 

(1,514

)

Provision (benefit) for income taxes

 

17,665

 

 

(15,391

)

 

24,473

 

 

(10,325

)

Income (loss) from continuing operations

 

54,293

 

 

(5,490

)

 

90,378

 

 

8,811

 

Income (loss) from discontinued operations, net of income taxes

 

230

 

 

(124

)

 

(57

)

 

(288

)

Net income (loss)

 

$

54,523

 

 

$

(5,614

)

 

$

90,321

 

 

$

8,523

 

Income (loss) per share attributable to common stockholders - basic:

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.40

 

 

$

(0.05

)

 

$

0.66

 

 

$

0.09

 

Income (loss) from discontinued operations

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.40

 

 

$

(0.05

)

 

$

0.66

 

 

$

0.09

 

Income (loss) per share attributable to common stockholders - diluted:

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.39

 

 

$

(0.05

)

 

$

0.65

 

 

$

0.09

 

Income (loss) from discontinued operations

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.39

 

 

$

(0.05

)

 

$

0.65

 

 

$

0.09

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

136,571

 

 

106,915

 

 

136,690

 

 

97,734

 

Diluted

 

139,516

 

 

106,915

 

 

139,989

 

 

102,732

 

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(Amounts in thousands)

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 3, 2019

 

August 4, 2018

ASSETS

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

29,092

 

 

$

31,305

 

 

Accounts receivable, net

 

162,278

 

 

165,347

 

 

Merchandise inventories

 

1,026,541

 

 

1,005,045

 

 

Prepaid expense and other current assets

 

47,353

 

 

107,345

 

 

 

Total current assets

 

1,265,264

 

 

1,309,042

 

 

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

2,040,834

 

 

 

Property and equipment, net

 

750,716

 

 

747,681

 

Goodwill

 

924,134

 

 

924,134

 

Intangibles, net

 

153,730

 

 

212,561

 

Other assets

 

17,409

 

 

27,438

 

 

 

Total assets

 

$

5,152,087

 

 

$

3,220,856

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

195,377

 

 

$

62,250

 

 

Current portion of operating lease liabilities

 

118,035

 

 

 

 

Accounts payable

 

798,504

 

 

783,108

 

 

Accrued expenses and other current liabilities

 

499,149

 

 

475,622

 

 

 

Total current liabilities

 

1,611,065

 

 

1,320,980

 

 

 

 

 

 

 

 

Long-term lease liabilities

 

1,957,934

 

 

 

Long-term debt

 

1,540,602

 

 

1,894,071

 

Deferred income taxes

 

46,508

 

 

52,988

 

Other noncurrent liabilities

 

160,564

 

 

270,690

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

(164,586

)

 

(317,873

)

 

 

Total liabilities and stockholders' deficit

 

$

5,152,087

 

 

$

3,220,856

 

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

26 Weeks Ended
August 3, 2019

 

26 Weeks Ended
August 4, 2018

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net income

 

$

90,321

 

 

$

8,523

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

77,671

 

 

82,498

 

Amortization of debt issuance costs and accretion of original issue discount

 

2,646

 

 

3,911

 

Debt extinguishment and refinancing charges

 

 

 

19,159

 

Impairment charges

 

 

 

3,000

 

Other non-cash items, net

 

2,733

 

 

10,560

 

Stock-based compensation expense

 

8,796

 

 

52,126

 

Deferred income tax provision (benefit)

 

10,563

 

 

(1,551

)

Increase (decrease) in cash due to changes in:

 

 

 

 

Accounts receivable

 

32,022

 

 

25,409

 

Merchandise inventories

 

25,765

 

 

14,093

 

Accounts payable

 

(20,911

)

 

9,229

 

Accrued expenses

 

(35,083

)

 

(35,267

)

Other operating assets and liabilities, net

 

20,601

 

 

11,529

 

Net cash provided by operating activities

 

215,124

 

 

203,219

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to property and equipment, net of disposals

 

(88,298

)

 

(75,666

)

Net cash used in investing activities

 

(88,298

)

 

(75,666

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Payments on long term debt

 

(7,689

)

 

(22,829

)

Extinguishment of Second Lien Term Loan

 

 

 

(631,283

)

Net payments on ABL Facility

 

(59,000

)

 

(124,000

)

Net cash received (paid) from stock option exercises

 

8,618

 

 

(19,481

)

Net cash received from Employee Stock Purchase Program (ESPP)

 

726

 

 

 

Acquisition of treasury stock

 

(67,237

)

 

(19,149

)

Net proceeds from stock issuance

 

 

 

685,889

 

Other financing activities

 

(298

)

 

(349

)

Net cash used in financing activities

 

(124,880

)

 

(131,202

)

Net increase (decrease) in cash and cash equivalents

 

1,946

 

 

(3,649

)

Cash and cash equivalents at beginning of period

 

27,146

 

 

34,954

 

Cash and cash equivalents at end of period

 

$

29,092

 

 

$

31,305

 

 

Note Regarding Non-GAAP Financial Information

This press release includes financial measures that are not calculated in accordance with GAAP, including adjusted net income (loss), 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 (loss) as net income (loss) attributable to common stockholders adjusted for: stock-based compensation related to the IPO; offering costs; management fees; club asset impairment; charges related to extinguishing the Second Lien Term Loan; interest and amortization on the Second Lien Term Loan; the windfall tax benefit from stock exercises; and the tax impact of the foregoing adjustments on net income (loss).

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 twenty-six weeks ended on the last day of the latest periods presented.

We define adjusted EBITDA as income (loss) 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 (loss), 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.

Management believes that adjusted net income (loss), 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 (loss), 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 (loss), 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 (loss), 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 (loss), 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 (loss), 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 (loss), 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.

 

 

 

 

 

 

Reconciliation of net income (loss) to adjusted net income and adjusted net income per diluted share

(Amounts in thousands, except per share amounts)

(Unaudited)

 

13 Weeks Ended

 

13 Weeks Ended

 

26 Weeks Ended

 

26 Weeks Ended

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

Net income (loss) as reported

$

54,523

 

 

$

(5,614

)

 

$

90,321

 

 

$

8,523

 

Adjustments:

 

 

 

 

 

 

 

Stock-based compensation related to IPO (a)

 

 

48,927

 

 

 

 

48,927

 

Offering costs (b)

706

 

 

761

 

 

1,928

 

 

761

 

Management fees (c)

 

 

1,333

 

 

 

 

3,333

 

Club asset impairment (d)

 

 

 

 

 

 

3,000

 

Charges related to extinguishing Second Lien Term Loan (e)

 

 

19,159

 

 

 

 

19,159

 

Interest and amortization on Second Lien Term Loan (f)

 

 

9,453

 

 

 

 

24,341

 

Windfall tax benefit from stock exercises (g)

 

 

(9,264

)

 

 

 

(9,767

)

Tax impact of adjustments to net income (loss) (h)

(179

)

 

(21,453

)

 

(521

)

 

(26,862

)

Adjusted net income

$

55,050

 

 

$

43,302

 

 

$

91,728

 

 

$

71,415

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

139,516

 

 

106,915

 

 

139,989

 

 

102,732

 

Weighted average diluted shares outstanding for the
thirteen and twenty-six weeks ended August 3, 2019

139,516

 

 

139,516

 

 

139,989

 

 

139,989

 

Adjusted net income per diluted share (i)

$

0.39

 

 

$

0.31

 

 

$

0.66

 

 

$

0.51

 

 
  1. Represents stock-based compensation expense for certain restricted stock and stock option awards issued in connection with our IPO.
  2. Represents costs related to our IPO, and the registered offerings by selling stockholders.
  3. 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.
  4. Represents the impairment charges related to a club relocated in 2018.
  5. Represents the write-off of certain deferred financing charges and a prepayment penalty associated with the payoff of our Second Lien Term Loan.
  6. Represents the historical interest expense associated with the Second Lien Term Loan that was paid in full with proceeds from our IPO.
  7. Represents the windfall tax benefit to the Company due to the exercise of stock options by former employees of the Company.
  8. Represents the tax effect of the above adjustments at an effective tax rate of approximately 27% for both periods ended August 3, 2019 and August 4, 2018.
  9. Adjusted net income per diluted share is measured using the weighted average diluted shares outstanding of 139.5 million shares for the second quarter of fiscal 2019 and second quarter of fiscal 2018, and 140.0 million shares for the first half of fiscal 2019 and first half of fiscal 2018.
 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

 

 

 

 

 

Reconciliation to Adjusted EBITDA

(Amounts in thousands)

(Unaudited)

 

 

13 Weeks Ended

 

13 Weeks Ended

 

26 Weeks Ended

 

26 Weeks Ended

 

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

Income (loss) from continuing operations

 

$

54,293

 

 

$

(5,490

)

 

$

90,378

 

 

$

8,811

 

Interest expense, net

 

26,783

 

 

59,555

 

 

54,572

 

 

104,758

 

Provision (benefit) for income taxes

 

17,665

 

 

(15,391

)

 

24,473

 

 

(10,325

)

Depreciation and amortization

 

39,001

 

 

41,076

 

 

77,671

 

 

82,498

 

Stock-based compensation expense (a)

 

4,952

 

 

52,395

 

 

8,796

 

 

53,365

 

Preopening expenses (b)

 

2,127

 

 

641

 

 

4,423

 

 

1,858

 

Management fees (c)

 

 

 

1,333

 

 

 

 

3,333

 

Non-cash rent (d)

 

3,019

 

 

1,218

 

 

3,773

 

 

2,441

 

Strategic consulting (e)

 

4,610

 

 

6,299

 

 

11,349

 

 

13,248

 

Offering costs (f)

 

706

 

 

761

 

 

1,928

 

 

761

 

Other adjustments (g)

 

31

 

 

639

 

 

(100

)

 

3,845

 

Adjusted EBITDA

 

$

153,187

 

 

$

143,036

 

 

$

277,263

 

 

$

264,593

 

 
  1. Represents total stock-based compensation expense and includes expense related to certain restricted stock and stock option awards issued in connection with our IPO.
  2. Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.
  3. 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.
  4. Consists of an adjustment to remove the non-cash portion of rent expense.
  5. Represents fees paid to external consultants for strategic initiatives of limited duration.
  6. Represents costs related to our IPO and the registered offerings by selling stockholders.
  7. 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.

 

 

 

 

 

Reconciliation to Free Cash Flow

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

26 Weeks Ended

 

26 Weeks Ended

 

 

August 3, 2019

 

August 4, 2018

 

August 3, 2019

 

August 4, 2018

Net Cash provided by operating activities

 

$

170,188

 

 

$

137,862

 

 

$

215,124

 

 

$

203,219

 

Less: Capital Expenditures

 

51,764

 

 

33,521

 

 

88,298

 

 

75,666

 

Free cash flow

 

$

118,424

 

 

$

104,341

 

 

$

126,826

 

 

$

127,553

 

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

 

 

Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA

 

 

(Amounts in thousands)

 

 

(Unaudited)

 

 

 

 

August 3, 2019

Total debt

 

$

1,735,979

 

Less: Cash and cash equivalents

 

29,092

 

Net Debt

 

1,706,887

 

 

 

 

Income from continuing operations

 

208,659

 

Interest expense, net

 

114,349

 

Provision for income taxes

 

46,624

 

Depreciation and amortization

 

157,396

 

Stock-based compensation expense (a)

 

14,348

 

Preopening expenses (b)

 

8,683

 

Management fees (c)

 

 

Noncash rent (d)

 

6,196

 

Strategic consulting (e)

 

31,587

 

Offering costs (f)

 

4,970

 

Other adjustments (g)

 

(1,716

)

Adjusted EBITDA

 

$

591,096

 

 

 

 

Net debt to LTM adjusted EBITDA

 

2.9x

 
  1. Represents total stock-based compensation expense and includes expense related to certain restricted stock and stock option awards issued in connection with our IPO.
  2. Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.
  3. 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.
  4. Consists of an adjustment to remove the non-cash portion of rent expense.
  5. Represents fees paid to external consultants for strategic initiatives of limited duration.
  6. Represents costs related to our IPO and the registered offerings by selling stockholders.
  7. 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.

Reconciliation of GAAP to Non-GAAP Financial Measures

Fiscal Year 2019 Outlook for Adjusted EBITDA

(Amounts in millions)

(Unaudited)

 

 

Fiscal Year 2019 Outlook

 

 

Low End

 

High End

Income from continuing operations

 

$

200

 

 

$

212

 

Interest expense, net

 

110

 

 

105

 

Provision for income taxes

 

67

 

 

70

 

Depreciation and amortization

 

165

 

 

165

 

Stock-based compensation

 

20

 

 

20

 

Preopening expenses (a)

 

12

 

 

12

 

Non-cash rent (b)

 

4

 

 

4

 

Strategic consulting (c)

 

12

 

 

12

 

Adjusted EBITDA

 

$

590

 

 

$

600

 

 
  1. Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.
  2. Consists of an adjustment to remove the non-cash portion of rent expense.
  3. Represents fees paid to external consultants for strategic initiatives of limited duration.

 

CONTACT: Investor Contact:

Faten Freiha, BJ's Wholesale Club

(774) 512-6320

Media Contact:

Kirk Saville, BJ’s Wholesale Club

(774) 512-7425

KEYWORD: UNITED STATES NORTH AMERICA MASSACHUSETTS

INDUSTRY KEYWORD: RETAIL DISCOUNT/VARIETY DEPARTMENT STORES SUPERMARKET

SOURCE: BJ’s Wholesale Club Holdings, Inc.

Copyright Business Wire 2019.

PUB: 08/22/2019 06:45 AM/DISC: 08/22/2019 06:45 AM

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Copyright Business Wire 2019.