Ollie’s Bargain Outlet Holdings, Inc. Reports First Quarter Fiscal 2020 Financial Results
First Quarter Summary:
- Total net sales increased 7.5% to
$349.4 million . - Comparable store sales decreased 3.3% compared with a 0.8% increase in the prior year.
- The Company opened 17 stores and closed two stores, ending the quarter with 360 stores in 25 states, an increase in store count of 11.1% year over year.
- Operating income increased 5.4% to
$43.0 million . Adjusted operating income(1) increased 6.9%. - Net income decreased 13.6% to
$33.5 million and net income per diluted share decreased 13.6% to$0.51 . - Adjusted net income(1) increased 6.7% to
$32.2 million and adjusted net income per diluted share(1) increased 6.5% to$0.49 . - Adjusted EBITDA(1) increased 6.6% to
$49.7 million .
(1) | As used throughout this release, adjusted operating income, adjusted net income, adjusted net income per diluted share, EBITDA and adjusted EBITDA are not measures recognized under |
First Quarter Results
Net sales totaled
The Company experienced significant volatility in its comparable store sales during the first quarter of fiscal 2020 as traffic and sales significantly decreased in the initial consumer reaction to the COVID-19 pandemic. The Company’s stores remained open during the quarter, and comparable store sales subsequently improved as the Company effectively responded to changing consumer needs and benefited from consumer spending associated with receipt of federal relief funds for the pandemic.
Gross profit increased 5.7% to
Pre-opening expenses related to new stores decreased to
Operating income increased 5.4% to
Net income decreased 13.6% to
Adjusted EBITDA(1) increased 6.6% to
Balance Sheet and Cash Flow Highlights
The Company's cash and cash equivalents balance as of the end of the first quarter of fiscal 2020 was
Inventories as of the end of the first quarter of fiscal 2020 increased 4.5% to
Capital expenditures in the first quarter of fiscal 2020 totaled
Conference Call Information
A conference call to discuss first quarter fiscal 2020 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, Real Brands! Real Bargains!®, in every department, including housewares, food, books and stationery, bed and bath, floor coverings, toys, health and beauty aids and other categories. We currently operate 362 stores in 25 states throughout half of
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the
Investor Contact:
ICR
646-277-1214
Jean.Fontana@icrinc.com
Media Contact:
Senior Vice President – Marketing & Advertising
717-657-2300
tkuypers@ollies.us
Ollie’s
Condensed Consolidated Statements of Income
(In thousands except for per share amounts)
(Unaudited)
Thirteen weeks ended | ||||||||
2020 |
2019 |
|||||||
Condensed consolidated statements of income data: | ||||||||
Net sales | $ | 349,363 | $ | 324,854 | ||||
Cost of sales | 208,997 | 192,120 | ||||||
Gross profit | 140,366 | 132,734 | ||||||
Selling, general and administrative expenses | 89,720 | 83,332 | ||||||
Depreciation and amortization expenses | 3,944 | 3,409 | ||||||
Pre-opening expenses | 3,722 | 5,209 | ||||||
Operating income | 42,980 | 40,784 | ||||||
Interest income, net | (83 | ) | (145 | ) | ||||
Income before income taxes | 43,063 | 40,929 | ||||||
Income tax expense | 9,607 | 2,212 | ||||||
Net income | $ | 33,456 | $ | 38,717 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.53 | $ | 0.61 | ||||
Diluted | $ | 0.51 | $ | 0.59 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 63,061 | 63,188 | ||||||
Diluted | 65,242 | 66,176 | ||||||
Percentage of net sales (1): | ||||||||
Net sales | 100.0 | % | 100.0 | % | ||||
Cost of sales | 59.8 | 59.1 | ||||||
Gross profit | 40.2 | 40.9 | ||||||
Selling, general and administrative expenses | 25.7 | 25.7 | ||||||
Depreciation and amortization expenses | 1.1 | 1.0 | ||||||
Pre-opening expenses | 1.1 | 1.6 | ||||||
Operating income | 12.3 | 12.6 | ||||||
Interest income, net | — | — | ||||||
Income before income taxes | 12.3 | 12.6 | ||||||
Income tax expense | 2.7 | 0.7 | ||||||
Net income | 9.6 | % | 11.9 | % | ||||
(1) Components may not add to totals due to rounding. |
Ollie’s
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Assets | 2020 |
2019 |
||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 119,351 | $ | 58,511 | ||||
Inventories | 343,755 | 329,065 | ||||||
Accounts receivable | 4,146 | 961 | ||||||
Prepaid expenses and other assets | 5,184 | 5,723 | ||||||
Total current assets | 472,436 | 394,260 | ||||||
Property and equipment, net | 135,214 | 134,498 | ||||||
Operating lease right-of-use assets | 357,553 | 273,099 | ||||||
444,850 | 444,850 | |||||||
Trade name | 230,559 | 230,559 | ||||||
Other assets | 2,499 | 2,022 | ||||||
Total assets | $ | 1,643,111 | $ | 1,479,288 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 300 | $ | 197 | ||||
Accounts payable | 56,642 | 92,738 | ||||||
Income taxes payable | 13,811 | 9,429 | ||||||
Current portion of operating lease liabilities | 61,002 | 50,955 | ||||||
Accrued expenses and other | 58,666 | 58,773 | ||||||
Total current liabilities | 190,421 | 212,092 | ||||||
Revolving credit facility | - | - | ||||||
Long-term debt | 576 | 413 | ||||||
Deferred income taxes | 59,194 | 55,424 | ||||||
Long-term operating lease liabilities | 298,736 | 222,976 | ||||||
Other long-term liabilities | 5 | 7 | ||||||
Total liabilities | 548,932 | 490,912 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 64 | 63 | ||||||
Additional paid-in capital | 617,188 | 607,241 | ||||||
Retained earnings | 517,027 | 381,158 | ||||||
(40,100 | ) | (86 | ) | |||||
Total stockholders’ equity | 1,094,179 | 988,376 | ||||||
Total liabilities and stockholders’ equity | $ | 1,643,111 | $ | 1,479,288 |
Ollie’s
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirteen weeks ended | ||||||||
2020 |
2019 |
|||||||
Net cash provided by operating activities | $ | 41,370 | $ | 21,976 | ||||
Net cash used in investing activities | (12,374 | ) | (20,107 | ) | ||||
Net cash provided by financing activities | 405 | 4,701 | ||||||
Net increase in cash and cash equivalents | 29,401 | 6,570 | ||||||
Cash and cash equivalents at the beginning of the period | 89,950 | 51,941 | ||||||
Cash and cash equivalents at the end of the period | $ | 119,351 | $ | 58,511 |
Ollie’s
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
The Company reports its financial results in accordance with 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 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 most directly comparable GAAP measure to non-GAAP financial measures: operating income to adjusted operating income, net income to adjusted net income, net income per diluted share to adjusted net income per diluted share, and net income to EBITDA and adjusted EBITDA.
Adjusted operating income excludes a gain associated with an insurance settlement. Adjusted net income and adjusted net income per diluted share exclude excess tax benefits related to stock-based compensation and the after-tax gain associated with the insurance settlement, both of which may not occur with the same frequency or magnitude in future periods. We define EBITDA as net income before net interest income or expense, depreciation and amortization expenses and income taxes. Adjusted EBITDA represents EBITDA as further adjusted for non-cash stock-based compensation expense as well as the aforementioned gain from an insurance settlement.
Non-GAAP financial measures should be viewed as supplementing, and not as an alternative to 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 | |||||||
2020 | 2019 |
||||||
Operating income | $ | 42,980 | $ | 40,784 | |||
Gain from insurance settlement | - | (565 | ) | ||||
Adjusted operating income | $ | 42,980 | $ | 40,219 |
Ollie’s
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except for per share amounts)
(Unaudited)
Reconciliation of GAAP net income to adjusted net income
Thirteen weeks ended | ||||||||
2020 |
2019 |
|||||||
Net income | $ | 33,456 | $ | 38,717 | ||||
Gain from insurance settlement | - | (565 | ) | |||||
Adjustment to provision for income taxes(1) | - | 144 | ||||||
Excess tax benefits related to stock-based compensation(2) | (1,247 | ) | (8,113 | ) | ||||
Adjusted net income | $ | 32,209 | $ | 30,183 | ||||
(1) | The effective tax rate used for the adjustment to the provision for income taxes was the normalized effective tax rate in the quarter in which the related costs (gain from an insurance settlement) were incurred. | |
(2) | Amount represents the impact from the recognition of excess tax benefits pursuant to Accounting Standards Update 2016-09, Stock Compensation. |
Reconciliation of GAAP net income per diluted share to adjusted net income per diluted share
Thirteen weeks ended | |||||||
2020 |
2019 |
||||||
Net income per diluted share | $ | 0.51 | $ | 0.59 | |||
Adjustments as noted above, per diluted share: | |||||||
Gain from insurance settlement, net of taxes | - | (0.01 | ) | ||||
Excess tax benefits related to stock-based compensation | (0.02 | ) | (0.12 | ) | |||
Adjusted net income per diluted share(1) | $ | 0.49 | $ | 0.46 | |||
Diluted weighted-average common shares outstanding | 65,242 | 66,176 | |||||
(1) Totals may not foot due to rounding. |
Ollie’s
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
Reconciliation of GAAP net income to EBITDA and adjusted EBITDA
Thirteen weeks ended |
||||||||
2020 |
2019 |
|||||||
Net income | $ | 33,456 | $ | 38,717 | ||||
Interest income, net | (83 | ) | (145 | ) | ||||
Depreciation and amortization expenses | 5,410 | 4,199 | ||||||
Income tax expense | 9,607 | 2,212 | ||||||
EBITDA | 48,390 | 44,983 | ||||||
Gain from insurance settlement | - | (565 | ) | |||||
Non-cash stock-based compensation expense | 1,319 | 2,193 | ||||||
Adjusted EBITDA | $ | 49,709 | $ | 46,611 |
Key Statistics
Thirteen weeks ended | ||||||||
2020 | 2019 | |||||||
Number of stores open at beginning of period | 345 | 303 | ||||||
Number of new stores | 17 | 21 | ||||||
Number of closed stores | (2 | ) | - | |||||
Number of stores open at end of period | 360 | 324 | ||||||
Average net sales per store (1) | $ | 986 | $ | 1,032 | ||||
Comparable stores sales change | (3.3 | )% | 0.8 | % | ||||
Comparable store count – end of period | 301 | 268 | ||||||
(1) | Average net sales per store represents the weighted average of total net weekly sales divided by the number of stores open at the end of each week for the respective periods presented. |
Source: Ollie's Bargain Outlet Holdings, Inc.