BJ's Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks ended May 2, 2020.
"Our top priority remains the health and safety of our members and team members during this challenging time and I am deeply thankful for the contributions of our dedicated team members this past quarter," said Lee Delaney, President and Chief Executive Officer, BJ's Wholesale Club. "While the coronavirus pandemic increased demand for our services, our team's hard work and the capabilities we have built over the last four years have enabled us to thrive and deliver very strong merchandise comparable sales. Furthermore, we drove earnings and cash flow growth and invested in our team members and our business. These efforts will allow us to continue to build on this momentum and position ourselves for success over the long-term."
Key Measures for the Thirteen Weeks Ended May 2, 2020 (First Quarter of Fiscal 2020): |
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BJ'S WHOLESALE CLUB HOLDINGS, INC. |
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|
|||||||||
(Amounts in thousands, except per share amounts) |
|||||||||||
|
|
|
|
|
|
|
|||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
|||||
|
|
May 2, 2020 |
|
May 4, 2019 |
|
% Growth |
|||||
Net sales |
|
$ |
3,718,040 |
|
|
$ |
3,069,763 |
|
|
21.1 |
% |
Membership fee income |
|
79,565 |
|
|
73,373 |
|
|
8.4 |
% |
||
Total revenues |
|
3,797,605 |
|
|
3,143,136 |
|
|
20.8 |
% |
||
|
|
|
|
|
|
|
|||||
Operating income |
|
143,750 |
|
|
70,682 |
|
|
103.4 |
% |
||
Income from continuing operations |
|
95,742 |
|
|
36,085 |
|
|
165.3 |
% |
||
Adjusted EBITDA (a) |
|
193,915 |
|
|
124,076 |
|
|
56.3 |
% |
||
Net income |
|
95,734 |
|
|
35,798 |
|
|
167.4 |
% |
||
EPS (b) |
|
0.69 |
|
|
0.25 |
|
|
176.0 |
% |
||
Adjusted net income(a) |
|
95,734 |
|
|
36,678 |
|
|
161.0 |
% |
||
Adjusted EPS (a) |
|
0.69 |
|
|
0.26 |
|
|
165.4 |
% |
||
Basic weighted average shares outstanding |
|
136,090 |
|
|
136,810 |
|
|
(0.5 |
)% |
||
Diluted weighted average shares outstanding |
|
138,428 |
|
|
140,463 |
|
|
(1.4 |
)% |
a) | See "Note Regarding Non-GAAP Financial Information" |
|||
b) | EPS represents earnings per diluted share |
Additional Highlights:
Response to COVID-19:
In response to the coronavirus pandemic, BJ's implemented a number of operational changes to support team members, members and communities we serve.
Team Member Support
Member Support:
Community Support:
To learn more about our response to the coronavirus pandemic and the additional measures we have taken, please visit: https://newsroom.bjs.com/BJs-Response-to-Coronavirus/default.aspx
Conference Call Details
A conference call to discuss the first quarter fiscal 2020 financial results is scheduled for today, May 21, 2020, 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 8152109. The recorded replay will be available until May 28, 2020 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 218 clubs and 146 BJ's Gas® locations in 17 states.
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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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Amounts in thousands, except per share amounts) |
||||||||
(Unaudited) |
|
|
|
|
||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
||||
|
|
May 2, 2020 |
|
May 4, 2019 |
||||
Net sales |
|
$ |
3,718,040 |
|
|
$ |
3,069,763 |
|
Membership fee income |
|
79,565 |
|
|
73,373 |
|
||
Total revenues |
|
3,797,605 |
|
|
3,143,136 |
|
||
Cost of sales |
|
3,060,893 |
|
|
2,568,977 |
|
||
Selling, general and administrative expenses |
|
590,361 |
|
|
501,181 |
|
||
Pre-opening expense |
|
2,601 |
|
|
2,296 |
|
||
Operating income |
|
143,750 |
|
|
70,682 |
|
||
Interest expense, net |
|
21,844 |
|
|
27,789 |
|
||
Income from continuing operations before income taxes |
|
121,906 |
|
|
42,893 |
|
||
Provision for income taxes |
|
26,164 |
|
|
6,808 |
|
||
Income from continuing operations |
|
95,742 |
|
|
36,085 |
|
||
Loss from discontinued operations, net of income taxes |
|
(8 |
) |
|
(287 |
) |
||
Net income |
|
$ |
95,734 |
|
|
$ |
35,798 |
|
Income per share attributable to common stockholders - basic: |
|
|
|
|
||||
Income from continuing operations |
|
$ |
0.70 |
|
|
$ |
0.26 |
|
Loss from discontinued operations |
|
? |
|
|
? |
|
||
Net income |
|
$ |
0.70 |
|
|
$ |
0.26 |
|
Income per share attributable to common stockholders - diluted: |
|
|
|
|
||||
Income from continuing operations |
|
$ |
0.69 |
|
|
$ |
0.26 |
|
Loss from discontinued operations |
|
? |
|
|
(0.01 |
) |
||
Net income |
|
$ |
0.69 |
|
|
$ |
0.25 |
|
Weighted average number of shares outstanding: |
|
|
|
|
||||
Basic |
|
136,090 |
|
|
136,810 |
|
||
Diluted |
|
138,428 |
|
|
140,463 |
|
BJ'S WHOLESALE CLUB HOLDINGS, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Amounts in thousands) |
||||||||
(Unaudited) |
|
|
|
|||||
|
|
|
|
|
||||
|
|
May 2, 2020 |
|
May 4, 2019 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
132,915 |
|
|
$ |
29,877 |
|
Accounts receivable, net |
|
193,884 |
|
|
180,379 |
|
||
Merchandise inventories |
|
1,024,937 |
|
|
1,085,565 |
|
||
Prepaid expense and other current assets |
|
46,631 |
|
|
47,403 |
|
||
Total current assets |
|
1,398,367 |
|
|
1,343,224 |
|
||
|
|
|
|
|
||||
Operating lease right-of-use assets, net |
|
2,087,902 |
|
|
2,055,733 |
|
||
Property and equipment, net |
|
753,297 |
|
|
728,762 |
|
||
Goodwill |
|
924,134 |
|
|
924,134 |
|
||
Intangibles, net |
|
144,019 |
|
|
157,103 |
|
||
Other assets |
|
20,350 |
|
|
17,760 |
|
||
Total assets |
|
$ |
5,328,069 |
|
|
$ |
5,226,716 |
|
|
|
|
|
|
||||
LIABILITIES |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
15,377 |
|
|
$ |
246,377 |
|
Current portion of operating lease liabilities |
|
125,976 |
|
|
121,878 |
|
||
Accounts payable |
|
990,420 |
|
|
820,489 |
|
||
Accrued expenses and other current liabilities |
|
588,431 |
|
|
485,168 |
|
||
Total current liabilities |
|
1,720,204 |
|
|
1,673,912 |
|
||
|
|
|
|
|
||||
Long-term lease liabilities |
|
2,016,206 |
|
|
1,966,688 |
|
||
Long-term debt |
|
1,334,795 |
|
|
1,543,537 |
|
||
Deferred income taxes |
|
42,369 |
|
|
44,934 |
|
||
Other noncurrent liabilities |
|
181,998 |
|
|
145,954 |
|
||
|
|
|
|
|
||||
STOCKHOLDERS' EQUITY (DEFICIT) |
|
32,497 |
|
|
(148,309 |
) |
||
Total liabilities and stockholders' equity (deficit) |
|
$ |
5,328,069 |
|
|
$ |
5,226,716 |
|
BJ'S WHOLESALE CLUB HOLDINGS, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Amounts in thousands) |
||||||||
(Unaudited) |
||||||||
|
|
13 Weeks Ended
|
|
13 Weeks Ended
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
Net income |
|
$ |
95,734 |
|
|
$ |
35,798 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
40,839 |
|
|
38,670 |
|
||
Amortization of debt issuance costs and accretion of original issue discount |
|
1,197 |
|
|
1,323 |
|
||
Other non-cash items, net |
|
2,637 |
|
|
287 |
|
||
Stock-based compensation expense |
|
5,514 |
|
|
3,844 |
|
||
Deferred income tax provision |
|
1,590 |
|
|
4,501 |
|
||
Increase (decrease) in cash due to changes in: |
|
|
|
|
||||
Accounts receivable |
|
12,469 |
|
|
13,921 |
|
||
Merchandise inventories |
|
56,565 |
|
|
(33,259 |
) |
||
Accounts payable |
|
204,008 |
|
|
(516 |
) |
||
Accrued expenses |
|
40,983 |
|
|
(41,801 |
) |
||
Other operating assets and liabilities, net |
|
8,366 |
|
|
22,168 |
|
||
Net cash provided by operating activities |
|
469,902 |
|
|
44,936 |
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
||||
Additions to property and equipment, net of disposals |
|
(35,212 |
) |
|
(36,534 |
) |
||
Net cash used in investing activities |
|
(35,212 |
) |
|
(36,534 |
) |
||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
Payments on long term debt |
|
(3,297 |
) |
|
(3,844 |
) |
||
Net payments on ABL Facility |
|
(328,000 |
) |
|
(8,000 |
) |
||
Net cash received from stock option exercises |
|
5,608 |
|
|
6,320 |
|
||
Acquisition of treasury stock |
|
(6,073 |
) |
|
? |
|
||
Other financing activities |
|
(217 |
) |
|
(147 |
) |
||
Net cash used in financing activities |
|
(331,979 |
) |
|
(5,671 |
) |
||
Net increase in cash and cash equivalents |
|
102,711 |
|
|
2,731 |
|
||
Cash and cash equivalents at beginning of period |
|
30,204 |
|
|
27,146 |
|
||
Cash and cash equivalents at end of period |
|
$ |
132,915 |
|
|
$ |
29,877 |
|
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 closing and impairment charges; reduction in force severance; gain on sale leaseback transactions; charges related to debt restructurings and retirements; 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.
We define adjusted EBITDA as income from continuing operations before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including: stock-based compensation expense; pre-opening expenses; non-cash rent; strategic consulting; offering costs; and other adjustments.
We define free cash flow as net cash provided by operating activities less additions to property and equipment, net of disposals plus proceeds from sale leaseback transaction.
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 such measures 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 pre-opening expenses, because we do not believe these expenses are indicative of the underlying operating performance of our stores. The amount and timing of pre-opening 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 |
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BJ'S WHOLESALE CLUB HOLDINGS, INC. |
||||||||
Reconciliation of net income 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 |
|||||
|
May 2,
|
|
May 4,
|
|||||
Net income as reported |
$ |
95,734 |
|
|
$ |
35,798 |
|
|
Adjustments: |
|
|
|
|||||
Offering costs (a) |
? |
|
|
1,222 |
|
|||
Tax impact of adjustments to net income (b) |
? |
|
|
(342 |
) |
|||
Adjusted net income |
$ |
95,734 |
|
|
$ |
36,678 |
|
|
|
|
|
|
|||||
Weighted average diluted shares outstanding |
138,428 |
|
|
140,463 |
|
|||
Adjusted net income per diluted share (c) |
$ |
0.69 |
|
|
$ |
0.26 |
|
(a) | Represents costs related to registered offerings by selling stockholders. |
|
(b) | Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%. |
|
(c) | Adjusted net income per diluted share is measured using weighted average diluted shares outstanding. |
BJ'S WHOLESALE CLUB HOLDINGS, INC. | ||||||||
Reconciliation to Adjusted EBITDA |
||||||||
(Amounts in thousands) |
||||||||
(Unaudited) |
||||||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
||||
|
|
May 2,
|
|
May 4,
|
||||
Income from continuing operations |
|
$ |
95,742 |
|
|
$ |
36,085 |
|
Interest expense, net |
|
21,844 |
|
|
27,789 |
|
||
Provision for income taxes |
|
26,164 |
|
|
6,808 |
|
||
Depreciation and amortization |
|
40,839 |
|
|
38,670 |
|
||
Stock-based compensation expense (a) |
|
5,514 |
|
|
3,844 |
|
||
Pre-opening expenses (b) |
|
2,601 |
|
|
2,296 |
|
||
Non-cash rent (c) |
|
1,504 |
|
|
754 |
|
||
Strategic consulting (d) |
|
? |
|
|
6,739 |
|
||
Offering costs (e) |
|
? |
|
|
1,222 |
|
||
Other adjustments (f) |
|
(293 |
) |
|
(131 |
) |
||
Adjusted EBITDA |
|
$ |
193,915 |
|
|
$ |
124,076 |
|
(a) | Represents total stock-based compensation expense. |
|
(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 registered offerings by selling stockholders. |
|
(f) | Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan. |
BJ'S WHOLESALE CLUB HOLDINGS, INC. | ||||||||
Reconciliation to Free Cash Flow |
||||||||
(Amounts in thousands) |
||||||||
(Unaudited) |
|
|
|
|
||||
|
|
13 Weeks Ended |
|
13 Weeks Ended |
||||
|
|
May 2, 2020 |
|
May 4, 2019 |
||||
Net cash provided by operating activities |
|
$ |
469,902 |
|
|
$ |
44,936 |
|
Less: Additions to property and equipment, net of disposals |
|
35,212 |
|
|
36,534 |
|
||
Plus: Proceeds from sale leaseback transaction |
|
? |
|
|
? |
|
||
Free cash flow |
|
$ |
434,690 |
|
|
$ |
8,402 |
|
BJ'S WHOLESALE CLUB HOLDINGS, INC. |
||||
Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA |
||||
(Amounts in thousands) |
||||
(Unaudited) |
|
|
||
|
|
May 2, 2020 |
||
Total debt |
|
$ |
1,350,172 |
|
Less: Cash and cash equivalents |
|
132,915 |
|
|
Net Debt |
|
$ |
1,217,257 |
|
|
|
|
||
Income from continuing operations |
|
247,414 |
|
|
Interest expense, net |
|
102,285 |
|
|
Provision for income taxes |
|
75,568 |
|
|
Depreciation and amortization |
|
159,169 |
|
|
Stock-based compensation expense (a) |
|
20,466 |
|
|
Pre-opening expenses (b) |
|
15,457 |
|
|
Non-cash rent (c) |
|
9,124 |
|
|
Strategic consulting (d) |
|
4,610 |
|
|
Reduction in force severance (g) |
|
3,994 |
|
|
Offering costs (e) |
|
706 |
|
|
Club closings and impairment charges (h) |
|
15,383 |
|
|
Other adjustments (f) |
|
(2,713 |
) |
|
Adjusted EBITDA |
|
$ |
651,463 |
|
|
|
|
||
Net debt to LTM adjusted EBITDA |
|
1.9 |
x |
(a) | Represents total stock-based compensation expense. |
|
(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 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. |
|
(g) | Represents severance charges associated with a reduction in workforce announced in January 2020. |
|
(h) | Represents primarily closing costs associated with our clubs in Charlotte, N.C. and Geneva, N.Y., which closed in the fourth quarter of fiscal 2019 and other impairment charges. |
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