Ollie’s Bargain Outlet Holdings, Inc. Reports Record Fourth Quarter and Fiscal 2017 Financial Results
Fourth Quarter Summary:
- Total net sales increased 25.9% to
$356.7 million . Excluding the impact of the 53rd week, net sales increased 20.0%. - Net sales in the 53rd week were
$16.5 million and contributed less than$0.01 to diluted earnings per share. - Comparable store sales increased 4.4% on a 13-week basis.
- The Company opened three stores during the quarter, ending the year with a total of 268 stores in 20 states, an increase in store count of 14.5% year over year.
- Operating income increased 34.0% to
$54.4 million . - Net income increased 186.9% to
$70.1 million and net income per diluted share increased 174.4% to$1.07 . - Adjusted net income(1) increased 35.6% to
$33.1 million and adjusted net income per diluted share(1) increased 30.8% to$0.51 . - Adjusted EBITDA(1) increased 31.0% to
$59.2 million .
Fiscal Year Summary:
- Total net sales increased 21.0% to
$1.077 billion . Excluding the impact of the 53rd week, net sales increased 19.1%. - Comparable store sales increased 3.3% on a 52-week basis.
- Operating income increased 32.8% to
$135.8 million . - Net income increased 113.5% to
$127.6 million and net income per diluted share increased 104.2% to$1.96 . - Adjusted net income(1) increased 33.4% to
$81.1 million and adjusted net income per diluted share(1) increased 28.9% to$1.25 . - Adjusted EBITDA(1) increased 28.2% to
$155.4 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 U.S. generally accepted accounting principles (“GAAP”). Please see the accompanying financial tables which reconcile these non-GAAP measures to GAAP.
Fourth Quarter Results
Net sales in the fourth quarter of fiscal 2017 increased 25.9% to
Gross profit increased 23.9% to
Operating income increased 34.0% to
Net income increased 186.9% to
Adjusted EBITDA(1) increased 31.0% to
Fiscal 2017 Results
Net sales in fiscal 2017 increased 21.0% to
Gross profit increased 19.8% to
Operating income increased 32.8% to
Net income increased 113.5% to
Adjusted EBITDA (1) increased 28.2% to
Balance Sheet and Cash Flow Highlights
The Company's cash balance as of the end of fiscal 2017 was
Inventory as of the end of fiscal 2017 increased 21.5% to
Capital expenditures in fiscal 2017 totaled
Fiscal 2018 Outlook
Guidance for the fiscal year ending
- Total net sales of
$1.20 billion to $1.21 billion , an increase of 13.2% to 14.1% on a 52-week basis; - Comparable store sales growth of 1.0% to 2.0%;
- The opening of 36 to 38 new stores and no planned closures;
- Operating income of
$149.0 million to $152.0 million ; - Adjusted net income(2) of
$109.0 million to $112.0 million , which excludes income tax benefits due to the accounting change for stock-based compensation; - Adjusted net income per diluted share(2) of
$1.65 to $1.69 , which excludes income tax benefits due to the accounting change for stock-based compensation; - An effective tax rate of 26.0%, lower than prior years due to the 2017 Tax Act;
- Estimated diluted weighted average shares outstanding of 66.0 million; and
- Capital expenditures of
$23.0 million to $25.0 million .
The Company expects to realize a benefit from the lower effective tax rate in fiscal 2018 of approximately
(2) The guidance ranges as provided for adjusted net income and adjusted net income per diluted share exclude any income tax benefits due to the change in accounting for stock-based compensation as the Company cannot predict such estimates without unreasonable effort.
Conference Call Information
A conference call to discuss fiscal 2017 fourth quarter and full-year 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,
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, including our fiscal 2018 business outlook or financial guidance, and industry outlook. 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, including recently enacted tax legislation, 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 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; risks associated with the timely and effective deployment and protection of computer networks and other electronic systems; 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
Investor Contact:
ICR
203-682-8200
John.Rouleau@icrinc.com
Media Contact:
Vice
717-657-2300
dhaines@ollies.us
Ollie’s Bargain Outlet Holdings, Inc. Condensed Consolidated Statements of Income (In thousands except for per share amounts) (Unaudited) |
||||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net sales | $ | 356,669 | $ | 283,355 | $ | 1,077,032 | $ | 890,315 | ||||||||
Cost of sales | 216,172 | 169,963 | 645,385 | 529,904 | ||||||||||||
Gross profit | 140,497 | 113,392 | 431,647 | 360,411 | ||||||||||||
Selling, general and administrative expenses | 82,541 | 69,823 | 278,174 | 242,891 | ||||||||||||
Depreciation and amortization expenses | 2,667 | 2,255 | 9,817 | 8,443 | ||||||||||||
Pre-opening expenses | 895 | 731 | 7,900 | 6,883 | ||||||||||||
Operating income | 54,394 | 40,583 | 135,756 | 102,194 | ||||||||||||
Interest expense, net | 870 | 1,395 | 4,471 | 5,935 | ||||||||||||
Loss on extinguishment of debt | 401 | - | 798 | - | ||||||||||||
Income before income taxes | 53,123 | 39,188 | 130,487 | 96,259 | ||||||||||||
Income tax expense | (16,931 | ) | 14,768 | 2,893 | 36,495 | |||||||||||
Net income | $ | 70,054 | $ | 24,420 | $ | 127,594 | $ | 59,764 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 1.13 | $ | 0.40 | $ | 2.08 | $ | 0.99 | ||||||||
Diluted | $ | 1.07 | $ | 0.39 | $ | 1.96 | $ | 0.96 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 61,786 | 60,623 | 61,353 | 60,160 | ||||||||||||
Diluted | 65,351 | 62,918 | 64,950 | 62,415 | ||||||||||||
Percentage of net sales (1): | ||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales | 60.6 | 60.0 | 59.9 | 59.5 | ||||||||||||
Gross profit | 39.4 | 40.0 | 40.1 | 40.5 | ||||||||||||
Selling, general and administrative expenses | 23.1 | 24.6 | 25.8 | 27.3 | ||||||||||||
Depreciation and amortization expenses | 0.7 | 0.8 | 0.9 | 0.9 | ||||||||||||
Pre-opening expenses | 0.3 | 0.3 | 0.7 | 0.8 | ||||||||||||
Operating income | 15.3 | 14.3 | 12.6 | 11.5 | ||||||||||||
Interest expense, net | 0.2 | 0.5 | 0.4 | 0.7 | ||||||||||||
Loss on extinguishment of debt | 0.1 | — | 0.1 | — | ||||||||||||
Income before income taxes | 14.9 | 13.8 | 12.1 | 10.8 | ||||||||||||
Income tax expense | (4.7 | ) | 5.2 | 0.3 | 4.1 | |||||||||||
Net income | 19.6 | % | 8.6 | % | 11.8 | % | 6.7 | % | ||||||||
(1) Components may not add to totals due to rounding. |
Ollie’s Bargain Outlet Holdings, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
February 3, | January 28, | |||||||
Assets | 2018 | 2017 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 39,234 | $ | 98,683 | ||||
Inventories | 255,185 | 210,107 | ||||||
Accounts receivable | 1,271 | 301 | ||||||
Prepaid expenses and other assets | 7,986 | 3,739 | ||||||
Total current assets | 303,676 | 312,830 | ||||||
Property and equipment, net | 54,888 | 46,333 | ||||||
Goodwill | 444,850 | 444,850 | ||||||
Trade name and other intangible assets, net | 232,639 | 232,977 | ||||||
Other assets | 2,146 | 2,385 | ||||||
Total assets | $ | 1,038,199 | $ | 1,039,375 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 10,158 | $ | 5,077 | ||||
Accounts payable | 74,206 | 50,448 | ||||||
Income taxes payable | 6,035 | 4,548 | ||||||
Accrued expenses | 46,327 | 44,748 | ||||||
Total current liabilities | 136,726 | 104,821 | ||||||
Revolving credit facility | - | - | ||||||
Long-term debt | 38,835 | 188,923 | ||||||
Deferred income taxes | 59,073 | 89,224 | ||||||
Other long-term liabilities | 7,103 | 5,146 | ||||||
Total liabilities | 241,737 | 388,114 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 62 | 61 | ||||||
Additional paid-in capital | 583,467 | 565,861 | ||||||
Retained earnings | 213,019 | 85,425 | ||||||
Treasury - common stock | (86 | ) | (86 | ) | ||||
Total stockholders’ equity | 796,462 | 651,261 | ||||||
Total liabilities and stockholders’ equity | $ | 1,038,199 | $ | 1,039,375 | ||||
Ollie’s Bargain Outlet Holdings, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
||||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net cash provided by operating activities | $ | 75,552 | $ | 62,927 | $ | 95,936 | $ | 67,088 | ||||||||
Net cash used in investing activities | (4,038 | ) | (2,205 | ) | (19,157 | ) | (16,423 | ) | ||||||||
Net cash provided by (used in) financing activities | (74,444 | ) | 2,000 | (136,228 | ) | 17,759 | ||||||||||
Net increase (decrease) in cash and cash equivalents | (2,930 | ) | 62,722 | (59,449 | ) | 68,424 | ||||||||||
Cash and cash equivalents at the beginning of the period | 42,164 | 35,961 | 98,683 | 30,259 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | 39,234 | $ | 98,683 | $ | 39,234 | $ | 98,683 | ||||||||
Ollie’s Bargain Outlet Holdings, Inc.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(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 operating income, as defined by us, gives effect to transaction related expenses, which we believe are unrelated to our core operating results. 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 and recently enacted federal tax reform, which may not occur with the same frequency or magnitude in future periods. 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 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.
Ollie’s
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except for per share amounts)
(Unaudited)
Reconciliation of GAAP operating income to adjusted operating income | ||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | |||||||||
Ended | Ended | Ended | Ended | |||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Operating income | $ | 54,394 | $ | 40,583 | $ | 135,756 | $ | 102,194 | ||||
Transaction related expenses | - | - | - | 1,736 | ||||||||
Adjusted operating income | $ | 54,394 | $ | 40,583 | $ | 135,756 | $ | 103,930 | ||||
Reconciliation of GAAP net income to adjusted net income | |||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | ||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||
February 3, | January 28, | February 3, | January 28, | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 70,054 | $ | 24,420 | $ | 127,594 | $ | 59,764 | |||||||
Transaction related expenses | - | - | - | 1,736 | |||||||||||
Loss on extinguishment of debt | 401 | - | 798 | - | |||||||||||
Adjustment to provision for income taxes (1) | (153 | ) | - | (306 | ) | (672 | ) | ||||||||
Income tax benefits due to the 2017 Tax Act (2) | (32,557 | ) | - | (32,557 | ) | - | |||||||||
Income tax benefits due to accounting change for stock-based compensation (3) | (4,626 | ) | - | (14,409 | ) | - | |||||||||
Adjusted net income | $ | 33,119 | $ | 24,420 | $ | 81,120 | $ | 60,828 | |||||||
(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 were incurred. The adjustment to the provision for income taxes includes the tax effect for the transaction related expenses and loss on extinguishment of debt.
(2) Amount represents benefits related to changes in the U.S. tax code as a result of the 2017 Tax Act, effective as of
(3) Amount represents the impact from the recognition of excess tax benefits pursuant to Accounting Standards Update (“ASU”) 2016-09, Stock Compensation, which was in effect for the fourteen and fifty-three weeks ended
Ollie’s
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
Reconciliation of GAAP net income per diluted share to adjusted net income per diluted share | |||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | ||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||
February 3, | January 28, | February 3, | January 28, | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income per share, diluted | $ | 1.07 | $ | 0.39 | $ | 1.96 | $ | 0.96 | |||||||
Adjustments as noted above per diluted share: | |||||||||||||||
Transaction related expenses, net of taxes | - | - | - | 0.02 | |||||||||||
Loss on extinguishment of debt, net of taxes | 0.00 | - | 0.01 | - | |||||||||||
Income tax benefits due to the 2017 Tax Act | (0.50 | ) | - | (0.50 | ) | - | |||||||||
Income tax benefits due to accounting change for stock-based compensation | (0.07 | ) | - | (0.22 | ) | - | |||||||||
Adjusted net income per share, diluted (1) | $ | 0.51 | $ | 0.39 | $ | 1.25 | $ | 0.97 | |||||||
Weighted-average common shares outstanding, diluted | 65,351 | 62,918 | 64,950 | 62,415 | |||||||||||
(1) Totals may not foot due to rounding |
Reconciliation of GAAP net income to EBITDA and adjusted EBITDA | ||||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 70,054 | $ | 24,420 | $ | 127,594 | $ | 59,764 | ||||||||
Interest expense, net | 870 | 1,395 | 4,471 | 5,935 | ||||||||||||
Loss on extinguishment of debt | 401 | - | 798 | - | ||||||||||||
Depreciation and amortization expenses | 3,300 | 2,898 | 12,261 | 10,668 | ||||||||||||
Income tax expense | (16,931 | ) | 14,768 | 2,893 | 36,495 | |||||||||||
EBITDA | 57,694 | 43,481 | 148,017 | 112,862 | ||||||||||||
Non-cash stock-based compensation expense | 1,481 | 1,706 | 7,413 | 6,685 | ||||||||||||
Non-cash purchase accounting items | (5 | ) | (22 | ) | (64 | ) | (134 | ) | ||||||||
Transaction related expenses | - | - | - | 1,736 | ||||||||||||
Adjusted EBITDA | $ | 59,170 | $ | 45,165 | $ | 155,366 | $ | 121,149 | ||||||||
Key Statistics | ||||||||||||||||
14 Weeks | 13 Weeks | 53 Weeks | 52 Weeks | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
February 3, | January 28, | February 3, | January 28, | |||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
Number of stores - Beginning of period | 265 | 232 | 234 | 203 | ||||||||||||
New stores | 3 | 2 | 34 | 31 | ||||||||||||
Number of stores - End of period | 268 | 234 | 268 | 234 | ||||||||||||
Average net sales per store (in thousands) (1) | $ | 1,332 | $ | 1,211 | $ | 4,248 | $ | 4,050 | ||||||||
Comparable stores sales change | 4.4 | % | 2.0 | % | 3.3 | % | 3.2 | % | ||||||||
Comparable store count – end of period | 225 | 194 | 225 | 194 | ||||||||||||
(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.