Ollie’s Bargain Outlet Holdings, Inc. Announces Fiscal 2017 First Quarter Financial Results
First Quarter Summary:
- Total net sales increased 17.5% to
$227.6 million ; - Comparable store sales increased 1.7%;
- The Company opened 5 new stores and entered one new state during the quarter, ending the quarter with a total of 239 stores in 20 states, an increase in store count of 14.9% year over year;
- Operating income increased 30.3% to
$27.3 million ; - Net income increased 61.4% to
$19.0 million and Net income per diluted share increased 52.6% to$0.29 ; - Adjusted net income(1) increased 30.0% to
$16.0 million and Adjusted net income per diluted share(1) increased 25.0% to$0.25 ; and - Adjusted EBITDA(1) increased 24.0% to
$32.1 million .
(1) Adjusted operating income, Adjusted net income, Adjusted net income per diluted share, EBITDA, and Adjusted EBITDA are not measures recognized under generally accepted accounting principles (“GAAP”). Please see the reconciliation of GAAP to non-GAAP tables included later in this release.
First Quarter Results
Net sales increased 17.5% to
Gross profit increased 17.6% to
Operating income increased 30.3% to
Net income increased 61.4% to
Adjusted EBITDA(1) increased 24.0% to
Balance Sheet and Cash Flow Highlights
The Company's cash balance as of the end of the first quarter of fiscal 2017 was
Inventory at the end of the first quarter of fiscal 2017 increased 19.5% to
Capital expenditures for the first quarter of fiscal 2017 totaled
(1) Adjusted operating income, Adjusted net income, Adjusted net income per diluted share, EBITDA, and Adjusted EBITDA are not measures recognized under generally accepted accounting principles (“GAAP”). Please see the reconciliation of GAAP to non-GAAP tables included later in this release.
Outlook
Ollie’s currently estimates the following results for the fiscal year ending
- Total net sales of
$1.032 billion to $1.040 billion ; - Comparable store sales growth of 1.0% to 2.0%;
- The opening of 33 to 35 new stores and no planned closures;
- Operating income of
$123.0 million to $125.0 million ; - Net income per diluted share of
$1.18 to $1.21 ; - Excluding the loss on extinguishment of debt and income tax benefits due to the accounting change for stock based compensation, Adjusted net income per diluted share(2) of
$1.14 to $1.17 ; - Estimated weighted diluted average shares outstanding of approximately 64.7 million; and
- Capital expenditures of
$18.0 million to $20.0 million .
Conference Call Information
A conference call to discuss the fiscal 2017 first quarter financial results is scheduled for today,
About Ollie’s
We are a highly differentiated and fast growing, extreme value retailer of brand name merchandise at drastically reduced prices. We are known for our assortment of merchandise offered as Good Stuff Cheap®. We offer name brand products,
(2) Adjusted net income per diluted share is not a measure recognized under GAAP. For a definition of Adjusted net income per diluted share, please see the disclosures related to the reconciliation of GAAP to non-GAAP tables elsewhere in this release. The
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections, the outlook for the Company’s future business, prospects, financial performance, industry outlook, our fiscal 2017 business outlook and financial guidance. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following: our failure to adequately procure and manage our inventory or anticipate consumer demand; changes in consumer confidence and spending; risks associated with intense competition; our failure to open new profitable stores, or successfully enter new markets, on a timely basis or at all; our ability to manage our inventory balances; our failure to hire and retain key personnel and other qualified personnel; our inability to obtain favorable lease terms for our properties; the loss of, or disruption in the operations of, our centralized distribution centers; fluctuations in comparable store sales and results of operations, including on a quarterly basis; risks associated with our lack of operations in the growing online retail marketplace; our inability to successfully implement our marketing, advertising and promotional efforts; the seasonal nature of our business; the risks associated with doing business with international manufacturers; changes in government regulations, procedures and requirements; and our ability to service our indebtedness and to comply with our financial covenants together with the other factors set forth under “Risk Factors” in our filings with the
Ollie’s Bargain Outlet Holdings, Inc. | ||||||
Condensed Consolidated Statements of Income | ||||||
(In thousands except for per share amounts) |
||||||
(Unaudited) | ||||||
Thirteen weeks ended | ||||||
April 29, | April 30, | |||||
2017 | 2016 | |||||
Net sales | $ | 227,602 | $ | 193,719 | ||
Cost of sales | 134,667 | 114,704 | ||||
Gross profit | 92,935 | 79,015 | ||||
Selling, general and administrative expenses | 61,731 | 54,809 | ||||
Depreciation and amortization expenses | 2,272 | 1,978 | ||||
Pre-opening expenses | 1,598 | 1,249 | ||||
Operating income | 27,334 | 20,979 | ||||
Interest expense, net | 1,334 | 1,664 | ||||
Loss on extinguishment of debt | 397 | - | ||||
Income before income taxes | 25,603 | 19,315 | ||||
Income tax expense | 6,637 | 7,567 | ||||
Net income | $ | 18,966 | $ | 11,748 | ||
Earnings per common share: | ||||||
Basic | $ | 0.31 | $ | 0.20 | ||
Diluted | $ | 0.29 | $ | 0.19 | ||
Weighted average common shares outstanding: | ||||||
Basic | 60,880 | 59,669 | ||||
Diluted | 64,389 | 61,867 |
Ollie’s Bargain Outlet Holdings, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
April 29, | April 30, | |||||||
Assets | 2017 | 2016 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 33,720 | $ | 37,129 | ||||
Inventories | 246,630 | 206,413 | ||||||
Accounts receivable | 330 | 262 | ||||||
Prepaid expenses and other assets | 3,312 | 6,153 | ||||||
Total current assets | 283,992 | 249,957 | ||||||
Property and equipment, net | 47,061 | 41,203 | ||||||
Goodwill | 444,850 | 444,850 | ||||||
Trade name and other intangible assets, net | 232,890 | 233,259 | ||||||
Other assets | 2,338 | 2,497 | ||||||
Total assets | $ | 1,011,131 | $ | 971,766 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 6,340 | $ | 5,018 | ||||
Accounts payable | 62,935 | 58,387 | ||||||
Income taxes payable | 11,919 | 3,251 | ||||||
Accrued expenses | 39,939 | 33,895 | ||||||
Total current liabilities | 121,133 | 100,551 | ||||||
Revolving credit facility | - | - | ||||||
Long-term debt | 121,905 | 192,268 | ||||||
Deferred income taxes | 88,360 | 86,603 | ||||||
Other long-term liabilities | 5,259 | 4,498 | ||||||
Total liabilities | 336,657 | 383,920 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 61 | 60 | ||||||
Additional paid-in capital | 570,108 | 550,463 | ||||||
Retained earnings | 104,391 | 37,409 | ||||||
Treasury - common stock | (86 | ) | (86 | ) | ||||
Total stockholders’ equity | 674,474 | 587,846 | ||||||
Total liabilities and stockholders’ equity | $ | 1,011,131 | $ | 971,766 | ||||
Ollie’s Bargain Outlet Holdings, Inc. | |||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(In thousands) | |||||||||
(Unaudited) |
|||||||||
Thirteen weeks ended | |||||||||
April 29, | April 30, | ||||||||
2017 | 2016 | ||||||||
Net cash provided by operating activities | $ | 1,919 | $ | 341 | |||||
Net cash used in investing activities | (2,945 | ) | (4,821 | ) | |||||
Net cash provided by (used in) financing activities | (63,937 | ) | 11,350 | ||||||
Net increase (decrease) during period in cash | (64,963 | ) | 6,870 | ||||||
Cash and cash equivalents at the beginning of the period | 98,683 | 30,259 | |||||||
Cash and cash equivalents at the end of the period | $ | 33,720 | $ | 37,129 | |||||
Ollie’s
Supplemental Information – Consolidated Adjusted Operating Income
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except for per share amounts)
(Unaudited)
The Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). We have included the non-GAAP measures of Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per diluted share in this press release as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions, and evaluate compensation decisions. Management believes it is useful to investors and analysts to evaluate these non-GAAP measures on the same basis as management uses to evaluate the Company’s operating results. We believe that excluding items that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, from operating income, Net income and Net income per diluted share, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.
The tables below reconcile the non-GAAP financial measures of Adjusted operating income to operating income, Adjusted net income to Net income, Adjusted net income per diluted share to Net income per diluted share, and EBITDA and Adjusted EBITDA to Net income, in each case the most directly comparable GAAP measure.
Adjusted net income and Adjusted net income per diluted share give effect, net of tax, to transaction related expenses, loss on extinguishment of debt, and income tax benefits due to the accounting change for stock based compensation, which may not occur with the same frequency or magnitude in future periods. Adjusted operating income also gives effect to transaction related expenses. We define EBITDA as net income before net interest expense, loss on extinguishment of debt, depreciation and amortization expenses and income taxes. Adjusted EBITDA represents EBITDA as further adjusted for non-cash stock based compensation expense, non-cash purchase accounting items, and transaction related expenses, which we do not consider representative of our ongoing operating performance.
Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company’s financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company's financial position, results of operations and cash flows and should therefore be considered in assessing the Company's actual financial condition and performance. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.
Reconciliation of GAAP operating income to Adjusted operating income
Thirteen weeks ended | ||||||
April 29, | April 30, | |||||
2017 | 2016 | |||||
Operating income | $ | 27,334 | $ | 20,979 | ||
Transaction related expenses | - | 890 | ||||
Adjusted operating income | $ | 27,334 | $ | 21,869 | ||
Ollie’s
Supplemental Information – Adjusted Net Income and Adjusted Net Income Per Diluted Share
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
Reconciliation of GAAP net income to Adjusted net income
Thirteen weeks ended | ||||||||
April 29, | April 30, | |||||||
2017 | 2016 | |||||||
Net income | $ | 18,966 | $ | 11,748 | ||||
Transaction related expenses | - | 890 | ||||||
Loss on extinguishment of debt | 397 | - | ||||||
Adjustment to provision for income taxes (1) | (153 | ) | (349 | ) | ||||
Income tax benefits due to accounting change for stock based compensation (2) | (3,231 | ) | - | |||||
Adjusted net income | $ | 15,979 | $ | 12,289 | ||||
(1) The effective tax rate used for the adjustment to the provision for income taxes was the effective tax rate in the quarter the related costs were incurred which was 38.5% for the thirteen weeks ended
(2) Amount represents the impact from the recognition of excess tax benefits pursuant to Accounting Standards Update (“ASU”) 2016-09, Stock Compensation, which became effective and the Company adopted for the thirteen weeks ended
Reconciliation of Adjusted net income per diluted share
Thirteen weeks ended | |||||||
April 29, | April 30, | ||||||
2017 | 2016 | ||||||
Net income per share, diluted | $ | 0.29 | $ | 0.19 | |||
Adjustments | (0.05 | ) | 0.01 | ||||
Adjusted net income per share, diluted (1) | $ | 0.25 | $ | 0.20 | |||
Weighted-average common shares outstanding, diluted | 64,389 | 61,867 | |||||
(1) Totals may not foot due to rounding
Ollie’s
Supplemental Information – Consolidated EBITDA, and Adjusted EBITDA and Key Statistics
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
Reconciliation of net income to EBITDA and Adjusted EBITDA
Thirteen weeks ended | ||||||||
April 29, | April 30, | |||||||
2017 | 2016 | |||||||
Net income | $ | 18,966 | $ | 11,748 | ||||
Interest expense, net | 1,334 | 1,664 | ||||||
Loss on extinguishment of debt | 397 | - | ||||||
Depreciation and amortization expenses | 2,862 | 2,505 | ||||||
Income tax expense | 6,637 | 7,567 | ||||||
EBITDA | 30,196 | 23,484 | ||||||
Non-cash stock based compensation expense | 1,911 | 1,545 | ||||||
Non-cash purchase accounting items | (22 | ) | (48 | ) | ||||
Transaction related expenses | - | 890 | ||||||
Adjusted EBITDA | $ | 32,085 | $ | 25,871 | ||||
Key Statistics
Thirteen weeks ended | ||||||||
April 29, | April 30, | |||||||
2017 | 2016 | |||||||
Number of stores open at the beginning of period | 234 | 203 | ||||||
New stores openings | 5 | 5 | ||||||
Number of stores open at end of period | 239 | 208 | ||||||
Average net sales per store (1) | $ | 962 | $ | 945 | ||||
Comparable stores sales change | 1.7 | % | 6.0 | % | ||||
Comparable store count – end of period | 202 | 172 | ||||||
(1)Average net sales per store represents the weighted average of total net sales divided by the number of stores open, in each case at the end of each week in a fiscal quarter.
Investor Contact:John Rouleau ICR 203-682-8200 John.Rouleau@icrinc.com Media Contact:Dan Haines VicePresident – Marketing & Advertising 717-657-2300 dhaines@ollies.us