BJ 8-K
BJ's Wholesale Club Holdings, Inc. (BJ)
8-K
2023-11-17
For: 2023-11-17
View Original
Added on
April 12, 2026
.
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) November 17, 2023
(Exact name of registrant as specified in its charter)
__________________________________
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (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 | ||||||
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 November 17, 2023 , BJ’s Wholesale Club Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter (thirteen weeks) of fiscal year 2023 ended October 28, 2023. 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 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 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: November 17, 2023
| BJ’S WHOLESALE CLUB HOLDINGS, INC. | ||||||||
| By: | /s/ Laura Felice | |||||||
| Name: | Laura Felice | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
.
.
Exhibit 99.1
BJ’s Wholesale Club Holdings, Inc. Announces Third Quarter Fiscal 2023 Results
Strong third quarter earnings led by membership growth, traffic and margin improvement
Third Quarter Fiscal 2023 Highlights
•Comparable club sales, excluding gasoline sales, remained approximately flat year-over-year
•Digitally enabled comparable sales growth was 16.0% year-over-year
•Membership fee income increased by 6.6% year-over-year to $106.1 million
•Merchandise gross margin rate increased by 30 basis points year-over-year
•Earnings per diluted share of $0.97 and adjusted earnings per diluted share of $0.98
•Income from continuing operations of $130.5 million
•Adjusted EBITDA of $274.9 million
Marlborough, Mass. (November 17, 2023) – BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks and thirty-nine weeks ended October 28, 2023.
“Our advantaged model and strong value proposition continue to resonate with our members. During the third quarter, we posted accelerating membership growth, robust traffic gains and continued increases in market share. These gains continue to reinforce the underlying strength of our business and we remain confident in the long-term growth prospects of our Company,” said Bob Eddy, Chairman and Chief Executive Officer, BJ’s Wholesale Club. “I am proud of our team members for their continued dedication to our members during these dynamic times.”
Key Measures for the Thirteen Weeks Ended October 28, 2023 (Third Quarter of Fiscal 2023) and for the Thirty-Nine Weeks Ended October 28, 2023, (First Nine Months of Fiscal 2023):
BJ'S WHOLESALE CLUB HOLDINGS, INC.
(Amounts in thousands, except per share amounts)
| 13 Weeks Ended October 28, 2023 | 13 Weeks Ended October 29, 2022 | % Growth (Decline) | 39 Weeks Ended October 28, 2023 | 39 Weeks Ended October 29, 2022 | % Growth (Decline) | ||||||||||||||||||||||||||||||
| Net sales | $ | 4,818,670 | $ | 4,685,834 | 2.8 | % | $ | 14,299,132 | $ | 14,090,673 | 1.5 | % | |||||||||||||||||||||||
| Membership fee income | 106,053 | 99,485 | 6.6 | % | 312,273 | 294,897 | 5.9 | % | |||||||||||||||||||||||||||
| Total revenues | 4,924,723 | 4,785,319 | 2.9 | % | 14,611,405 | 14,385,570 | 1.6 | % | |||||||||||||||||||||||||||
| Operating income | 199,375 | 191,968 | 3.9 | % | 586,414 | 545,193 | 7.6 | % | |||||||||||||||||||||||||||
| Income from continuing operations | 130,467 | 131,394 | (0.7) | % | 377,780 | 384,862 | (1.8) | % | |||||||||||||||||||||||||||
Adjusted EBITDA (a) | 274,920 | 272,305 | 1.0 | % | 800,663 | 766,804 | 4.4 | % | |||||||||||||||||||||||||||
| Net income | 130,467 | 129,942 | 0.4 | % | 377,869 | 383,396 | (1.4) | % | |||||||||||||||||||||||||||
EPS (b) | 0.97 | 0.95 | 2.1 | % | 2.79 | 2.81 | (0.7) | % | |||||||||||||||||||||||||||
Adjusted net income (a) | 131,779 | 135,830 | (3.0) | % | 378,617 | 398,550 | (5.0) | % | |||||||||||||||||||||||||||
Adjusted EPS (a) | 0.98 | 0.99 | (1.0) | % | 2.80 | 2.92 | (4.1) | % | |||||||||||||||||||||||||||
| Basic weighted-average shares outstanding | 133,069 | 134,091 | 133,232 | 134,225 | |||||||||||||||||||||||||||||||
| Diluted weighted-average shares outstanding | 134,984 | 136,621 | 135,338 | 136,630 | |||||||||||||||||||||||||||||||
(a)See “Note Regarding Non-GAAP Financial Information.”
(b)EPS represents net income per diluted share.
1
.
Additional Highlights:
•Total comparable club sales increased by 0.3% in the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022. Excluding the impact of gasoline sales, comparable club sales remained approximately flat, with a decrease of 0.1% in the third quarter of fiscal 2023 compared to the same period in fiscal 2022. Total comparable club sales decreased by 1.2% in the first nine months of fiscal 2023 compared to the first nine months of fiscal 2022. Excluding the impact of gasoline sales, comparable club sales increased by 2.1% in the first nine months of fiscal 2023 compared to the first nine months of fiscal 2022.
•Gross profit increased to $902.5 million in the third quarter of fiscal 2023 from $877.1 million in the third quarter of fiscal 2022. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by 30 basis points over the same quarter of fiscal 2022. Gross profit increased to $2,679.3 million in the first nine months of fiscal 2023 from $2,528.3 million in the first nine months of fiscal 2022. Merchandise gross margin rate increased by 70 basis points in the first nine months of fiscal 2023. Merchandise margins were positively impacted by moderated supply chain costs and improved inventory management for both comparative periods.
•Selling, general and administrative expenses ("SG&A") increased to $697.1 million in the third quarter of fiscal 2023 compared to $674.4 million in the third quarter of fiscal 2022. SG&A increased to $2,081.4 million in the first nine months of fiscal 2023 compared to $1,961.6 million in the first nine months of fiscal 2022. The increase in both comparative periods was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings in addition to other investments to drive strategic priorities.
•Income from continuing operations before income taxes increased to $181.4 million in the third quarter of fiscal 2023 compared to $179.5 million in the third quarter of fiscal 2022. Income from continuing operations before income taxes increased to $537.4 million in the first nine months of fiscal 2023 compared to $514.0 million in the first nine months of fiscal 2022.
•Income tax expense increased to $50.9 million in the third quarter of fiscal 2023 compared to $48.1 million in the third quarter of fiscal 2022. Income tax expense increased to $159.7 million in the first nine months of fiscal 2023 compared to $129.2 million in the first nine months of fiscal 2022. The increases in the income tax expense for both comparative periods are driven by lower tax benefits from stock-based compensation. Income tax expense for the first nine months of fiscal 2023 also increased due to an immaterial adjustment to certain deferred tax assets related to prior periods.
•Net income increased to $130.5 million in the third quarter of fiscal 2023 compared to $129.9 million in the third quarter of fiscal 2022. Net income decreased to $377.9 million in the first nine months of fiscal 2023 compared to $383.4 million in the first nine months of fiscal 2022.
•Adjusted EBITDA increased by 1.0% to $274.9 million in the third quarter of fiscal 2023 compared to $272.3 million in the third quarter of fiscal 2022. Adjusted EBITDA increased by 4.4% to $800.7 million in the first nine months of fiscal 2023 compared to $766.8 million in the first nine months of fiscal 2022.
•The Company repaid $50.0 million of principal and amended its senior secured first lien term loan in the third quarter of fiscal 2023, extending the maturity date from February 3, 2027 to February 3, 2029. The interest rate was reduced from the Secured Overnight Financing Rate (“SOFR”) plus 275 basis points per annum to SOFR plus 200 basis points per annum.
•Under its existing share repurchase program, the Company repurchased 242,000 shares of common stock, totaling $17.1 million, inclusive of associated costs, in the third quarter of fiscal 2023. In the first nine months of fiscal 2023, the Company repurchased 1,161,162 shares of common stock, totaling $77.0 million, inclusive of associated costs, under such program.
2
.
Fiscal 2023 Ending February 3, 2024 Outlook
“As we look ahead to the rest of the year, we remain confident in our ability to maintain the momentum in our traffic and market share gains due to our unrelenting focus on value. We also continue to navigate shifts in consumer behavior driven by the broader macroeconomic environment. As a result, we are refining our sales outlook for the rest of the year,” said Laura Felice, Executive Vice President, Chief Financial Officer, BJ's Wholesale Club. “We expect our comparable club sales, excluding the impact of gasoline sales, to range from a 2% decrease to 1% increase year-over-year in the fourth quarter fiscal 2023, and to increase by 1.0% to 1.8% year-over-year for the full year fiscal 2023. Our outlook on fiscal 2023 GAAP and adjusted EPS remains unchanged in the $3.80 to $3.92 range.”
Conference Call Details
A conference call to discuss the third quarter of fiscal 2023 financial results is scheduled for today, November 17, 2023, at 8:00 A.M. Eastern Time. The live audio webcast of the call can be accessed under the “Events & Presentations” section of the Company’s investor relations website at https://investors.bjs.com and will remain available for one year. Participants may also dial (833) 470-1428 within the U.S. or (646) 904-5544 outside the U.S. and reference conference ID 604879. A telephonic replay will be available two hours after the conclusion of the call for one week and can be accessed by dialing (929) 458-6194 or (866) 813-9403 and referencing conference ID 413792.
About BJ’s Wholesale Club Holdings, Inc.
BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) is a leading operator of membership warehouse clubs focused on delivering significant value to its members and serving a shared purpose: “We take care of the families who depend on us.” The Company provides a curated assortment of grocery, general merchandise, gasoline and ancillary services to offer a differentiated shopping experience that is further enhanced by its omnichannel capabilities. Headquartered in Marlborough, Massachusetts, the Company pioneered the warehouse club model in New England in 1984 and currently operates 239 clubs and 169 BJ's Gas® locations in 20 states. For more information, please visit us at www.bjs.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our strategic priorities; our anticipated fiscal 2023 outlook; and our future progress, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: uncertainties in the financial markets, including, without limitation, as a result of disruptions and instability in the banking and financial services industries or as a result of wars and global political conflicts, consumer and small business spending patterns and debt levels; our dependence on having a large and loyal membership; domestic and international economic conditions, including inflation and exchange rates; our ability to procure the merchandise we sell at the best possible prices; the effects of competition and regulation; our dependence on vendors to supply us with quality merchandise at the right time and at the right price; breaches of security or privacy of member or business information; conditions affecting the acquisition, development, ownership or use of real estate; our capital spending; actions of vendors; our ability to attract and retain a qualified management team and other team members; costs associated with employees (generally including health care costs), energy and certain commodities, geopolitical conditions (including tariffs); changes in our product mix or in our revenues from gasoline sales; our failure to successfully maintain a relevant omnichannel experience for our members; risks related to our growth strategy to open new clubs; risks related to our e-commerce business; our ability to grow our BJ's One Mastercard® program; and other important factors discussed under the caption “Risk Factors” in our Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 16, 2023, and subsequent filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by law, we disclaim any obligation to do so, even
3
.
if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
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.
4
.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended October 28, 2023 | Thirteen Weeks Ended October 29, 2022 | Thirty-Nine Weeks Ended October 28, 2023 | Thirty-Nine Weeks Ended October 29, 2022 | ||||||||||||||||||||
| Net sales | $ | 4,818,670 | $ | 4,685,834 | $ | 14,299,132 | $ | 14,090,673 | |||||||||||||||
| Membership fee income | 106,053 | 99,485 | 312,273 | 294,897 | |||||||||||||||||||
| Total revenues | 4,924,723 | 4,785,319 | 14,611,405 | 14,385,570 | |||||||||||||||||||
| Cost of sales | 4,022,243 | 3,908,219 | 11,932,120 | 11,857,263 | |||||||||||||||||||
| Selling, general and administrative expenses | 697,104 | 674,426 | 2,081,392 | 1,961,606 | |||||||||||||||||||
| Pre-opening expense | 6,001 | 10,706 | 11,479 | 21,508 | |||||||||||||||||||
| Operating income | 199,375 | 191,968 | 586,414 | 545,193 | |||||||||||||||||||
| Interest expense, net | 18,004 | 12,450 | 48,968 | 31,166 | |||||||||||||||||||
| Income from continuing operations before income taxes | 181,371 | 179,518 | 537,446 | 514,027 | |||||||||||||||||||
| Provision for income taxes | 50,904 | 48,124 | 159,666 | 129,165 | |||||||||||||||||||
| Income from continuing operations | 130,467 | 131,394 | 377,780 | 384,862 | |||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | — | (1,452) | 89 | (1,466) | |||||||||||||||||||
| Net income | $ | 130,467 | $ | 129,942 | $ | 377,869 | $ | 383,396 | |||||||||||||||
| Income per share attributable to common stockholders - basic: | |||||||||||||||||||||||
| Income from continuing operations | $ | 0.98 | $ | 0.98 | $ | 2.84 | $ | 2.87 | |||||||||||||||
| Income (loss) from discontinued operations | — | (0.01) | — | (0.01) | |||||||||||||||||||
| Net income | $ | 0.98 | $ | 0.97 | $ | 2.84 | $ | 2.86 | |||||||||||||||
| Income per share attributable to common stockholders - diluted: | |||||||||||||||||||||||
| Income from continuing operations | $ | 0.97 | $ | 0.96 | $ | 2.79 | $ | 2.82 | |||||||||||||||
| Income (loss) from discontinued operations | — | (0.01) | — | (0.01) | |||||||||||||||||||
| Net income | $ | 0.97 | $ | 0.95 | $ | 2.79 | $ | 2.81 | |||||||||||||||
| Weighted-average number of shares outstanding: | |||||||||||||||||||||||
| Basic | 133,069 | 134,091 | 133,232 | 134,225 | |||||||||||||||||||
| Diluted | 134,984 | 136,621 | 135,338 | 136,630 | |||||||||||||||||||
5
.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
(Unaudited)
| October 28, 2023 | October 29, 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 33,551 | $ | 34,644 | |||||||
| Accounts receivable, net | 224,505 | 251,978 | |||||||||
| Merchandise inventories | 1,661,852 | 1,504,368 | |||||||||
| Prepaid expense and other current assets | 80,550 | 72,285 | |||||||||
| Total current assets | 2,000,458 | 1,863,275 | |||||||||
| Operating lease right-of-use assets, net | 2,174,706 | 2,163,504 | |||||||||
| Property and equipment, net | 1,495,912 | 1,296,151 | |||||||||
| Goodwill | 1,008,816 | 1,008,816 | |||||||||
| Intangibles, net | 109,600 | 117,814 | |||||||||
| Deferred taxes | 7,429 | 4,341 | |||||||||
| Other assets | 40,323 | 25,002 | |||||||||
| Total assets | $ | 6,837,244 | $ | 6,478,903 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | 434,000 | $ | 295,000 | |||||||
| Current portion of operating lease liabilities | 180,490 | 176,659 | |||||||||
| Accounts payable | 1,318,959 | 1,363,734 | |||||||||
| Accrued expenses and other current liabilities | 805,607 | 764,572 | |||||||||
| Total current liabilities | 2,739,056 | 2,599,965 | |||||||||
| Long-term operating lease liabilities | 2,084,744 | 2,085,625 | |||||||||
| Long-term debt | 398,355 | 600,123 | |||||||||
| Deferred income taxes | 65,104 | 70,432 | |||||||||
| Other non-current liabilities | 196,289 | 179,883 | |||||||||
| STOCKHOLDERS' EQUITY | 1,353,696 | 942,875 | |||||||||
| Total liabilities and stockholders' equity | $ | 6,837,244 | $ | 6,478,903 | |||||||
6
.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands, except per share amounts)
(Unaudited)
| Thirty-Nine Weeks Ended October 28, 2023 | Thirty-Nine Weeks Ended October 29, 2022 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 377,869 | $ | 383,396 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 166,421 | 149,259 | |||||||||
| Amortization of debt issuance costs and accretion of original issue discount | 900 | 2,282 | |||||||||
| Debt extinguishment charges | 1,830 | 687 | |||||||||
| Stock-based compensation expense | 29,011 | 27,965 | |||||||||
| Deferred income tax provision | 12,149 | 18,474 | |||||||||
| Changes in operating leases and other non-cash items | 3,684 | 26,235 | |||||||||
| Increase (decrease) in cash due to changes in: | |||||||||||
| Accounts receivable | 15,205 | (73,162) | |||||||||
| Merchandise inventories | (283,301) | (173,361) | |||||||||
| Accounts payable | 123,262 | 250,951 | |||||||||
| Accrued expenses and other current liabilities | 29,916 | (3,802) | |||||||||
| Other operating assets and liabilities, net | (32,415) | 3,933 | |||||||||
| Net cash provided by operating activities | 444,531 | 612,857 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Additions to property and equipment, net of disposals and proceeds from sale leaseback transactions | (335,641) | (283,216) | |||||||||
| Acquisition | — | (376,521) | |||||||||
| Net cash used in investing activities | (335,641) | (659,737) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | 305,041 | — | |||||||||
| Payments on long-term debt | (355,041) | (150,000) | |||||||||
| Proceeds from revolving lines of credit | 564,000 | 1,110,000 | |||||||||
| Payments on revolving lines of credit | (535,000) | (815,000) | |||||||||
| Debt issuance costs paid | (1,722) | (2,733) | |||||||||
| Net cash received from stock option exercises | 2,369 | 6,545 | |||||||||
| Net cash received from Employee Stock Purchase Program (ESPP) | 3,255 | 2,331 | |||||||||
| Acquisition of treasury stock | (101,819) | (127,458) | |||||||||
| Proceeds from financing obligations | 11,691 | 16,949 | |||||||||
| Other financing activities | (2,028) | (4,546) | |||||||||
| Net cash (used in) provided by financing activities | (109,254) | 36,088 | |||||||||
| Net decrease in cash and cash equivalents | (364) | (10,792) | |||||||||
| Cash and cash equivalents at beginning of period | 33,915 | 45,436 | |||||||||
| Cash and cash equivalents at end of period | $ | 33,551 | $ | 34,644 | |||||||
7
.
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 last twelve months (“LTM”) adjusted EBITDA.
We define adjusted net income as net income attributable to common stockholders adjusted for: acquisition and integration costs; home office transition costs; impairment charges; charges related to debt payments; other adjustments 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; acquisition and integration 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 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 assist 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
8
.
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.
The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, including the information under "Fiscal 2023 Ending February 3, 2024" above, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items or there are no meaningful adjustments to be presented in the reconciliation and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income per diluted share, if any, which is the most directly comparable forward-looking GAAP financial measure. This includes items that have not yet occurred, are out of the Company's control, cannot be reasonably predicted and/or for which there would not be any meaningful adjustment or difference. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The information under "Fiscal 2023 Ending February 3, 2024" above, including expectations that GAAP and adjusted EPS reflects management’s view of current and future market conditions. To the extent actual results differ from our current expectations, the Company’s results may differ materially from the expectations set forth above. Other factors, as referenced elsewhere in this press release, may also cause the Company’s results to differ materially from the expectations set forth above.
9
.
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 October 28, 2023 | 13 Weeks Ended October 29, 2022 | 39 Weeks Ended October 28, 2023 | 39 Weeks Ended October 29, 2022 | ||||||||||||||||||||
| Net income as reported | $ | 130,467 | $ | 129,942 | $ | 377,869 | $ | 383,396 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Acquisition and integration costs (a) | — | 857 | — | 12,324 | |||||||||||||||||||
Home office transition costs (b) | — | 5,897 | — | 7,096 | |||||||||||||||||||
| Impairment expense on discontinued operations club lease | — | 1,199 | — | 1,199 | |||||||||||||||||||
Charges related to debt (c) | 1,830 | 298 | 1,830 | 687 | |||||||||||||||||||
Other adjustments (d) | — | — | (786) | (165) | |||||||||||||||||||
Tax impact of adjustments to net income (e) | (518) | (2,363) | (296) | (5,987) | |||||||||||||||||||
| Adjusted net income | $ | 131,779 | $ | 135,830 | $ | 378,617 | $ | 398,550 | |||||||||||||||
| Weighted-average diluted shares outstanding | 134,984 | 136,621 | 135,338 | 136,630 | |||||||||||||||||||
Adjusted EPS (f) | $ | 0.98 | $ | 0.99 | $ | 2.80 | $ | 2.92 | |||||||||||||||
(a)Represents costs related to the acquisition and integration of assets from Burris Logistics, including due diligence, legal, and other consulting expenses.
(b)Represents incremental rent expense, other non-recurring lease costs and write-off of impaired assets as the Company transitioned home office locations in fiscal 2022.
(c)Represents the expensing of fees and deferred fees and original issue discount associated with the extinguishment of the ABL Facility in fiscal 2022 and amendment of the senior secured first lien term loan in fiscal 2023.
(d)Other non-cash items related to the reclassification into earnings of accumulated other comprehensive income/ loss associated with the de-designation of hedge accounting and other adjustments.
(e)Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.
(f)Adjusted EPS 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 October 28, 2023 | 13 Weeks Ended October 29, 2022 | 39 Weeks Ended October 28, 2023 | 39 Weeks Ended October 29, 2022 | ||||||||||||||||||||
| Income from continuing operations | $ | 130,467 | $ | 131,394 | $ | 377,780 | $ | 384,862 | |||||||||||||||
| Interest expense, net | 18,004 | 12,450 | 48,968 | 31,166 | |||||||||||||||||||
| Provision for income taxes | 50,904 | 48,124 | 159,666 | 129,165 | |||||||||||||||||||
| Depreciation and amortization | 57,406 | 52,166 | 166,421 | 149,259 | |||||||||||||||||||
| Stock-based compensation expense | 9,380 | 9,463 | 29,011 | 27,965 | |||||||||||||||||||
Pre-opening expenses (a) | 6,001 | 10,707 | 11,479 | 21,508 | |||||||||||||||||||
Non-cash rent (b) | 2,394 | 1,025 | 6,226 | 3,127 | |||||||||||||||||||
Acquisition and integration costs (c) | — | 857 | — | 12,324 | |||||||||||||||||||
Home office transition costs (d) | — | 5,897 | — | 7,096 | |||||||||||||||||||
Other adjustments (e) | 364 | 222 | 1,112 | 332 | |||||||||||||||||||
| Adjusted EBITDA | $ | 274,920 | $ | 272,305 | $ | 800,663 | $ | 766,804 | |||||||||||||||
(a)Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.
(b)Consists of an adjustment to remove the non-cash portion of rent expense.
(c)Represents costs related to the acquisition and integration of assets from Burris Logistics, including due diligence, legal, and other consulting expenses.
(d)Represents incremental rent expense, other non-recurring lease costs and write-off of impaired assets as the Company transitioned home office locations in fiscal 2022.
(e)Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan.
10
.
BJ'S WHOLESALE CLUB HOLDINGS, INC.
Reconciliation to Free Cash Flow
(Amounts in thousands)
(Unaudited)
13 Weeks Ended October 28, 2023 | 13 Weeks Ended October 29, 2022 | 39 Weeks Ended October 28, 2023 | 39 Weeks Ended October 29, 2022 | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 175,031 | $ | 169,805 | $ | 444,531 | $ | 612,857 | |||||||||||||||
| Less: Additions to property and equipment, net of disposals | (133,711) | (102,774) | (347,951) | (294,308) | |||||||||||||||||||
| Plus: Proceeds from sale leaseback transactions | 6,322 | 8,418 | 12,310 | 11,092 | |||||||||||||||||||
| Free cash flow | $ | 47,642 | $ | 75,449 | $ | 108,890 | $ | 329,641 | |||||||||||||||
BJ'S WHOLESALE CLUB HOLDINGS, INC.
Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA
(Amounts in thousands)
(Unaudited)
| October 28, 2023 | |||||
| Total debt | $ | 832,355 | |||
| Less: Cash and cash equivalents | 33,551 | ||||
| Net Debt | $ | 798,804 | |||
| Income from continuing operations | $ | 507,180 | |||
| Interest expense, net | 65,264 | ||||
| Provision for income taxes | 206,763 | ||||
| Depreciation and amortization | 218,096 | ||||
| Stock-based compensation expense | 43,663 | ||||
| Pre-opening expenses | 14,904 | ||||
| Non-cash rent | 7,090 | ||||
| Home office transition costs | 7,610 | ||||
| Other adjustments | 1,422 | ||||
| Adjusted EBITDA | $ | 1,071,992 | |||
| Net debt to LTM adjusted EBITDA | 0.7x | ||||
See descriptions of adjustments in the “Reconciliation to Adjusted EBITDA (unaudited)” table above.
Investor Contact:
Catherine Park
Vice President, Investor Relations
774-512-6744
Media Contact:
Kirk Saville
Head of Corporate Communications
774-512-5597
11