bj20200929_8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 20, 2021

BJ’S WHOLESALE CLUB HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-38559	45-2936287
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

25 Research Drive
Westborough, Massachusetts		01581
(Address of principal executive offices)		(Zip Code)

(774) 512-7400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	BJ	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition.

On May 20, 2021, BJ’s Wholesale Club Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter (thirteen weeks) of fiscal year 2021 ended January 29, 2022. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filings.

Item 8.01

Other Events.

The following risk factor supplements the risk factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended January 30, 2021, and should be read in conjunction with the other risk factors presented in such Annual Report on Form 10-K.

The outbreak of the novel coronavirus, or COVID-19, has caused, and could continue to cause, severe disruptions in the United States, regional and global economies and could have a material adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic has caused significant disruptions to the United States, regional and global economies and has contributed to significant volatility and negative pressure in financial markets. The global impact of the COVID-19 pandemic has been rapidly evolving and many U.S. states and cities, including where our clubs and distribution centers are located, have imposed measures intended to control its spread, such as instituting shelter-in-place orders and restrictions on the types of businesses that may continue to operate and the manner in which they may do so. Generally, under these orders, our operations have been deemed “essential” by U.S. federal, state and local authorities, which have allowed our clubs and distribution centers to remain open. However, many of these orders and other government regulations have resulted in reduced operating hours and limited access for our members, including limits on the number of people that can be in a club at a time, and member traffic may decline if more severe restrictions are implemented or if members opt to shop less frequently or use other online outlets and delivery systems in order to reduce their risk of potential exposure to COVID-19. Further, any alleged failure to comply with governmental orders or regulations, which vary across states and localities, could result in costly litigation, enforcement actions and penalties.

The extent to which the COVID-19 pandemic, or the future outbreak of any other highly infectious or contagious disease, effects our business, operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of such pandemic, the actions taken to contain the pandemic or mitigate its impact, including the adoption of available COVID-19 vaccines, or the impact of relaxing or revoking existing restrictions too quickly, and the direct and indirect economic effects of the pandemic and containment measures, among others. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. Nevertheless, the COVID-19 pandemic may materially adversely affect our business, financial condition and results of operations, and may have the effect of heightening many of the risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended January 30, 2021 including:

•

a complete or partial closure of, or a decrease in member traffic at, one or more of our clubs, due to government restrictions and limitations intended to promote social distancing and contain the spread of COVID-19, which could adversely affect our net sales and operating results;

•

any difficulties and delays in obtaining products from our distributors and suppliers, delivering products to our clubs and adequately staffing our clubs and distribution centers, which could result in an inability to maintain inventory levels and meet our members’ demands and may cause us to seek alternative and potentially more expensive sources of supply;

•

a decrease in consumer discretionary spending and confidence, changes in our members needs or decreased traffic from stockpiling in preparation for the pandemic, each of which could adversely affect member demand for the products we sell, result in shifts in demand to lower priced options and change the mix of products we sell, result in slower inventory turnover and greater markdowns of inventory, cause us to lose existing members and/or fail to attract new members, or otherwise materially adversely affect our net sales and operating results;

•

any inability to continue to provide our team members with appropriate compensation and protective measures, which could cause us to be unable to retain current or attract new team members to perform necessary functions within our clubs and distribution centers;

•

any spread of COVID-19 among our team members or employees of our distributors or suppliers, within a particular club, distribution center or geographical area, may necessitate that impacted clubs, distribution centers or suppliers be temporarily closed, which could negatively impact our business and financial condition, as well as our reputation;

•

any belief by members or team members that they have contracted COVID-19 in one of our clubs or that we have not taken appropriate precautionary measures to prevent the spread of COVID-19 in our clubs, which could result in costly and time consuming litigation and negatively impact our reputation;

•

severe disruption and instability in the U.S. and global financial markets or deteriorations in credit and financing conditions, which could make it difficult for us to access debt and equity capital on attractive terms, or at all;

•

any potential negative impact on the health of our executive management team or key employees or the executive management team or key employees of our suppliers and distributors, particularly if a significant number of our or their executive management team or key employees are impacted, which could result in a deterioration in our or their ability to ensure business continuity during a disruption;

•

any inability to effectively manage our operations while certain of our employees continue to work remotely due to the COVID-19 pandemic, which could adversely impact our business; and

•

limited access to our management, support staff and professional advisors, which could decrease the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, increase our susceptibility to security breaches, or hamper our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of BJ's Wholesale Club Holdings, Inc. dated May 20, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 20, 2021

BJ’S WHOLESALE CLUB HOLDINGS, INC.

By:	/s/ Laura Felice
Name:	Laura Felice
Title:	Executive Vice President, Chief Financial and Administrative Officer

Exhibit 99.1

BJ’s Wholesale Club Holdings, Inc. Announces First Quarter and Fiscal 2021 Results

•

Comparable club sales, excluding gasoline sales, decreased by 5.0% year-over-year, reflecting a two-year stacked comp club sales of 22.0% for the first quarter of fiscal 2021.

•

Digitally-enabled sales growth was 31%, reflecting a two-year stacked comp growth of 381% for the first quarter of fiscal 2021.

•

Income from continuing operations decreased 14.8% year-over-year to $81.6 million for the first quarter of fiscal 2021.

•

Adjusted EBITDA increased 4.4% year-over-year to $202.4 million for the first quarter of fiscal 2021.

•

Earnings per diluted share of $0.59 reflect 14.5% year-over-year decline.

•

Adjusted earnings per diluted share of $0.72 reflects 4.3% year-over-year growth.

•

Net cash provided by operating activities was $249.0 million and free cash flow was $190.9 million for the first quarter of fiscal 2021.

Westborough, Mass. (May 20, 2021) – BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks ended May 1, 2021.

"Our team members continue to execute at the highest levels and I’m proud of their hard work and dedication amid a difficult environment. We are pleased to start the year with strong first quarter results, powered by solid execution, market share retention and a continuation of elevated consumer spending," said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club. "As we look ahead, we are confident our business will continue to thrive over the long-term given structural shifts in consumer behavior, the progress we made over the last year and our continued investments in our strategic priorities."

Key Measures for the Thirteen Weeks Ended May 1, 2021 (First Quarter of Fiscal 2021):

BJ'S WHOLESALE CLUB HOLDINGS, INC.

(Amounts in thousands, except per share amounts)

	13 Weeks Ended		13 Weeks Ended
	May 1, 2021		May 2, 2020		% Growth
Net sales	$	3,781,834	$	3,718,040		1.7	%
Membership fee income		86,388		79,565		8.6	%
Total revenues		3,868,222		3,797,605		1.9	%

Operating income		126,254		143,750		(12.2	)%
Income from continuing operations		81,586		95,742		(14.8	)%
Adjusted EBITDA ^(a)		202,410		193,915		4.4	%
Net income		81,579		95,734		(14.8	)%
EPS ^(b)		0.59		0.69		(14.5	)%
Adjusted net income ^(a)		99,694		95,734		4.1	%
Adjusted EPS ^(a)		0.72		0.69		4.3	%
Basic weighted average shares outstanding		135,709		136,090		(0.3	)%
Diluted weighted average shares outstanding		138,662		138,428		0.2	%

(a)

See “Note Regarding Non-GAAP Financial Information.”

(b)

EPS represents earnings per diluted share.

Additional Highlights:

•

Comparable club sales for the first quarter of fiscal 2021 increased 0.3% compared to the first quarter of fiscal 2020. Comparable club sales, excluding the impact of gasoline sales, for the first quarter of fiscal 2021 decreased 5.0% compared to the first quarter of fiscal 2020.

•

Gross profit decreased to $726.7 million in the first quarter of fiscal 2021 from $736.7 million in the first quarter of fiscal 2020. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased approximately 80 basis points over the first quarter of fiscal 2020. This increase was driven by the mix of our general merchandise sales and continued execution of our category profitability improvement initiative.

•

Selling, general and administrative expenses ("SG&A") increased to $599.9 million in the first quarter of fiscal 2021 compared to $590.4 million in the first quarter of fiscal 2020. SG&A included $17.5 million of stock-based compensation expense related to the acceleration of stock awards associated with the passing of Lee Delaney ("acceleration of stock awards"). In addition, SG&A included $2.3 million of severance charges associated with labor reductions that resulted from the realignment of our field operations ("severance charges").

•

Operating income decreased to $126.3 million, or 3.3% of total revenues in the first quarter of fiscal 2021, compared to $143.8 million, or 3.8% of total revenues in the first quarter of fiscal 2020. Operating income included $17.5 million of stock-based compensation expense related to the acceleration of stock awards. In addition, operating income included $2.3 million of severance charges.

•

Interest expense, net, decreased to $19.3 million in the first quarter of fiscal 2021 compared to $21.8 million in the first quarter of fiscal 2020. Interest expense in the first quarter of fiscal 2021 included $4.7 million write-off of accumulated other comprehensive income and $0.7 million write-off of deferred financing costs associated with the partial paydown of the Company's First Lien Term Loan. The decrease in interest expense was driven by continued de-levering.

•

Income tax expense was $25.4 million in the first quarter of fiscal 2021 compared to income tax expense of $26.2 million in the first quarter of fiscal 2020. The first quarter of fiscal 2021 included a benefit of $3.1 million from excess tax benefits related to stock-based compensation compared to $4.5 million in the first quarter of fiscal 2020.

•

Under our share repurchase program, we repurchased 315,000 shares of common stock, totaling $14.0 million in the first quarter of fiscal 2021.

Fiscal 2021 Ending January 29, 2022 Outlook

"Given the level of uncertainty associated with the evolution of the pandemic and consumer behavior, fiscal 2021 remains difficult to forecast," said Laura Felice, Executive Vice President, Chief Financial Officer, BJ's Wholesale Club. "As a result, we will continue to refrain from offering formal detailed guidance."

Conference Call Details

A conference call to discuss the first quarter of fiscal 2021 financial results is scheduled for today, May 20, 2021, 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 and to reference conference ID 7581445. 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 7581445. The recorded replay will be available until May 28, 2021 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 221 clubs and 151 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

	13 Weeks Ended			13 Weeks Ended
	May 1, 2021			May 2, 2020
Net sales	$	3,781,834		$	3,718,040
Membership fee income		86,388			79,565
Total revenues		3,868,222			3,797,605
Cost of sales		3,141,497			3,060,893
Selling, general and administrative expenses		599,910			590,361
Pre-opening expense		561			2,601
Operating income		126,254			143,750
Interest expense, net		19,285			21,844
Income from continuing operations before income taxes		106,969			121,906
Provision for income taxes		25,383			26,164
Income from continuing operations		81,586			95,742
Loss from discontinued operations, net of income taxes		(7	)		(8	)
Net income	$	81,579		$	95,734
Income per share attributable to common stockholders - basic:
Income from continuing operations	$	0.60		$	0.70
Loss from discontinued operations		—			—
Net income	$	0.60		$	0.70
Income per share attributable to common stockholders - diluted:
Income from continuing operations	$	0.59		$	0.69
Loss from discontinued operations		—			—
Net income	$	0.59		$	0.69
Weighted average number of shares outstanding:
Basic		135,709			136,090
Diluted		138,662			138,428

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

	May 1, 2021		May 2, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	62,954	$	132,915
Accounts receivable, net		197,991		193,884
Merchandise inventories		1,120,334		1,024,937
Prepaid expense and other current assets		54,258		46,631
Total current assets		1,435,537		1,398,367

Operating lease right-of-use assets, net		2,119,629		2,087,902
Property and equipment, net		815,303		753,297
Goodwill		924,134		924,134
Intangibles, net		132,502		144,019
Deferred taxes		3,349		—
Other assets		18,752		20,350
Total assets	$	5,449,206	$	5,328,069

LIABILITIES
Current liabilities:
Current portion of long-term debt	$	210,000	$	15,377
Current portion of operating lease liabilities		132,869		125,976
Accounts payable		1,023,140		990,420
Accrued expenses and other current liabilities		669,924		588,431
Total current liabilities		2,035,933		1,720,204

Long-term lease liabilities		2,050,950		2,016,206
Long-term debt		747,311		1,334,795
Deferred income taxes		45,529		42,369
Other noncurrent liabilities		155,959		181,998

STOCKHOLDERS' EQUITY		413,524		32,497
Total liabilities and stockholders' equity	$	5,449,206	$	5,328,069

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	13 Weeks Ended			13 Weeks Ended
	May 1, 2021			May 2, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	81,579		$	95,734
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		44,386			40,839
Amortization of debt issuance costs and accretion of original issue discount		891			1,197
Changes in operating leases and other non-cash items		1,200			2,637
Debt extinguishment charges		657			—
Stock-based compensation expense		27,300			5,514
Deferred income tax provision (benefit)		(233	)		1,590
Increase (decrease) in cash due to changes in:
Accounts receivable		(25,272	)		12,469
Merchandise inventories		85,361			56,565
Accounts payable		35,066			204,008
Accrued expenses		13,127			40,983
Other operating assets and liabilities, net		(15,097	)		8,366
Net cash provided by operating activities		248,965			469,902

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment, net of disposals and proceeds from sale leaseback transactions		(58,060	)		(35,212	)
Net cash used in investing activities		(58,060	)		(35,212	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long term debt		(100,000	)		(3,297	)
Paydown of ABL Facility		(50,000	)		(328,000	)
Net cash received from stock option exercises		1,497			5,608
Acquisition of treasury stock		(24,031	)		(6,073	)
Proceeds from financing obligations		1,333			—
Other financing activities		(268	)		(217	)
Net cash used in financing activities		(171,469	)		(331,979	)
Net increase in cash and cash equivalents		19,436			102,711
Cash and cash equivalents at beginning of period		43,518			30,204
Cash and cash equivalents at end of period	$	62,954		$	132,915

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, 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 acceleration of stock awards; severance charges and write-offs related to debt paydowns; loss on cash flow hedge; 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; severance 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 transactions.

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 clubs. The amount and timing of pre-opening expenses are dependent on, among other things, the size of new clubs opened and the number of new clubs 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

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 1, 2021			May 2, 2020
Net income as reported	$	81,579		$	95,734
Adjustments:
Stock-based compensation related to acceleration of stock awards ^(a)		17,494			—
Loss on cash flow hedge ^(b)		4,709			—
Charges and write-offs related to debt paydown ^(c)		657			—
Severance charges ^(d)		2,300			—
Tax impact of adjustments to net income ^(e)		(7,045	)		—
Adjusted net income	$	99,694		$	95,734

Weighted-average diluted shares outstanding		138,662			138,428
Adjusted net income per diluted share ^(f)	$	0.72		$	0.69

(a)	Represents accelerated vesting of equity awards, which were related to the passing of Lee Delaney.

(b)	Represents the reclassification into earnings of accumulated other comprehensive income associated with the de-designation of hedge accounting on one of our swap agreements due to the partial paydown of debt.
(c)	Represents the fees and write-off of deferred fees and original issue discount associated with the partial paydown of debt.
(d)	Represents severance charges associated with labor reductions that resulted from the realignment of our field operations.

(e)	Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.

(f)	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 1, 2021		May 2, 2020
Income from continuing operations	$	81,586	$	95,742
Interest expense, net		19,285		21,844
Provision for income taxes		25,383		26,164
Depreciation and amortization		44,386		40,839
Stock-based compensation expense ^(a)		27,300		5,514
Pre-opening expenses ^(b)		561		2,601
Non-cash rent ^(c)		1,417		1,504
Severance charges ^(d)		2,300		—
Other adjustments ^(e)		192		(293	)
Adjusted EBITDA	$	202,410	$	193,915

(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 severance charges associated with labor reductions that resulted from the realignment of our field operations.

(e)	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 1, 2021		May 2, 2020
Net cash provided by operating activities	$	248,965	$	469,902
Less: Additions to property and equipment, net of disposals		74,690		35,212
Plus: Proceeds from sale leaseback transactions		16,630		—
Free cash flow	$	190,905	$	434,690

BJ'S WHOLESALE CLUB HOLDINGS, INC.

Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA

(Amounts in thousands)

(Unaudited)

	May 1, 2021
Total debt	$	957,311
Less: Cash and cash equivalents		62,954
Net Debt	$	894,357

Income from continuing operations	$	407,026
Interest expense, net		81,826
Provision for income taxes		136,044
Depreciation and amortization		171,001
Stock-based compensation expense ^(a)		53,936
Preopening expenses ^(b)		7,769
Noncash rent ^(c)		4,855
Severance ^(d)		2,300
Other adjustments ^(e)		1,230
Adjusted EBITDA	$	865,987

Net debt to LTM adjusted EBITDA	1.0x

(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 severance charges associated with labor reductions that resulted from the realignment of our field operations.

(e)	Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan.

Investor Contact:

Faten Freiha, BJ's Wholesale Club

(774) 512-6320

[email protected]

Media Contact:

Jennie Hardin, BJ’s Wholesale Club

(774) 512-6978

[email protected]