OLLI Ollies Bargain Outlet Holdings Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

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

Date of report: August 31, 2023

(Date of earliest event reported)

 (Exact name of registrant as specified in its charter)

(717) 657-2300

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

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. ☐.

---

On August 31, 2023, Ollie’s Bargain Outlet Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended July 29, 2023. A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated by reference herein.

The information furnished in this Item 2.02 of on this Form 8-K, including the exhibit attached, 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 incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

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.

EXHIBIT INDEX

Exhibit 99.1

Ollie’s Bargain Outlet Holdings, Inc. Reports

 Second Quarter Fiscal 2023 Financial Results

~ Raising Fiscal Year Sales and Earnings Outlook ~

~ Net Sales increased 13.7% ~

~ Comparable Store Sales increased 7.9% ~

~  Earnings per Share increased 209.1% to $0.68 ~

~  Adjusted Earnings per Share increased 204.5% to $0.67 ~

Second Quarter Summary:

“We feel very good about the current trends and momentum of our business. With over 40 years of closeout buying experience and growing relationships across the industry, we are seeing very strong deal flow, and our customers are clearly responding. In the second quarter, comparable store sales increased 7.9%, with nearly 70% of our product categories contributing to the increase. On top of the strong deal flow, changes to our marketing program and investments in our people and supply chain are driving better execution and an even more exciting shopping experience for our customers. This is raising productivity levels across the organization, which contributed to the more than doubling of our adjusted EBITDA margin in the second quarter to 12.4% of sales,” said John Swygert, President and Chief Executive Officer.

“Given the better than expected performance in the second quarter and continued momentum in our business, we are raising our full-year guidance and remain confident in our ability to return to our long-term algorithm of double-digit sales growth, 40% gross margin, and double-digit EBITDA growth,” Mr. Swygert concluded.

Second Quarter Results

Net sales increased 13.7% to $514.5 million in the second quarter of fiscal 2023 as compared with net sales of $452.5 million in the second quarter of fiscal 2022.  The increase in net sales was the result of new store unit growth in addition to a comparable store sales increase of 7.9%.

Gross profit increased 37.0% to $196.7 million in the second quarter of fiscal 2023 from $143.6 million in the second quarter of fiscal 2022. Gross margin increased 650 basis points to 38.2% in the second quarter of fiscal 2023 from 31.7% in the second quarter of fiscal 2022. The increase in gross margin was primarily due to favorable supply chain costs as well as higher merchandise margins.

Selling, general, and administrative expenses increased 13.6% to $134.6 million in the second quarter of fiscal 2023 from $118.5 million in the second quarter of fiscal 2022. The increase was primarily driven by higher selling expenses related to new store openings and higher incentive compensation.  As a percentage of net sales, SG&A remained flat at 26.2% in the second quarter of fiscal 2023 compared to the second quarter of fiscal 2022, primarily the result of higher incentive compensation, offset by the leverage of fixed expenses on the increase in comparable store sales.

Pre-opening expenses for new stores decreased to $2.9 million in the second quarter of fiscal 2023 from $3.0 million in the second quarter of fiscal 2022 due to timing of new stores, partially offset by the impact of incremental investments in our store remodel program.

Operating income increased 217.5% to $52.5 million in the second quarter of fiscal 2023 from $16.5 million in the second quarter of fiscal 2022.  Operating margin increased 650 basis points to 10.2% in the second quarter of fiscal 2023 from 3.7% in the second quarter of fiscal 2022.

Net income increased 199.2% to $42.2 million, or $0.68 per diluted share, in the second quarter of fiscal 2023 compared with net income of $14.1 million, or $0.22 per diluted share, in the second quarter of fiscal 2022.  Adjusted net income⁽¹⁾ increased 205.5% to $41.7 million, or $0.67 per diluted share, in the second quarter of fiscal 2023 from $13.7 million, or $0.22 per diluted share, in the second quarter of fiscal 2022.

Adjusted EBITDA⁽¹⁾ increased 146.7% to $64.0 million in the second quarter of fiscal 2023  from $25.9 million in the second quarter of fiscal 2022.  Adjusted EBITDA margin⁽¹⁾ increased 670 basis points to 12.4% in the second quarter of fiscal 2023 from 5.7% in the second quarter of fiscal 2022.  Adjusted EBITDA excludes non-cash stock-based compensation expense.

Balance Sheet and Cash Flow Highlights

The Company's cash and cash equivalents and short-term investments were $310.2 million as of the end of the second quarter of fiscal 2023 compared with cash and cash equivalents of $218.0 million as of the end of the second quarter of fiscal 2022. The Company had no borrowings outstanding under its $100 million revolving credit facility and $91.6 million of availability under the facility as of the end of the second quarter of fiscal 2023. The Company ended the period with total borrowings, consisting solely of finance lease obligations, of $1.7 million as of the end of the second quarter of fiscal 2023.

During the second quarter of fiscal 2023, the Company repurchased 276,758 shares of its common stock for $16.7 million. As of the end of the second quarter, the Company had $109.2 million of remaining capacity under its current share repurchase program.

Inventories as of the end of the second quarter of fiscal 2023 increased 0.8% to $498.3 million compared with $494.1 million as of the end of the second quarter of fiscal 2022, driven by new store growth, partially offset by the impact of lower capitalized freight costs and normalization of lead times on our in-transit inventory, partially offset by new store unit growth.

Capital expenditures were $26.2 million in the second quarter of fiscal 2023, primarily related to the development of new stores, the remodeling of existing stores, the completion of the Company’s distribution center expansion in York, PA, and the development of the Company’s new distribution center in Princeton, IL.

 

Fiscal 2023 Outlook

The Company is raising its sales and earnings outlook for the 53-week fiscal year ending February 3, 2024. A comparison of new and previous outlook figures is contained in the table below:

Conference Call Information

A replay of the conference call webcast will be available at the investor relations website for one year.

 

About Ollie’s

We are America’s largest retailer of Closeout merchandise and excess inventory, offering Real Brands and Real Bargain prices®!  We offer extreme value on brand name products in a variety of departments, including housewares, food, books and stationery, bed and bath, floor coverings, toys, health and beauty aids, and more. We currently operate 492 stores in 29 states and growing! For more information, visit www.ollies.us

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 2023 business outlook or financial guidance, and industry outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, capital market conditions, 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, but not limited to, supply chain challenges, legislation, national trade policy, and the following: our failure to adequately procure and manage our inventory, anticipate consumer demand or achieve favorable product margins; changes in consumer confidence and spending; risks associated with our status as a “brick and mortar” only retailer; risks associated with intense competition; our failure to open new profitable stores, or successfully enter new markets, on a timely basis or at all; fluctuations in comparable store sales and results of operations, including on a quarterly basis; factors such as inflation, cost increases and energy prices; the risks associated with doing business with international manufacturers and suppliers including, but not limited to, potential increases in tariffs on imported goods; our inability to operate our stores due to civil unrest and related protests or disturbances; our failure to properly hire and to retain key personnel and other qualified personnel; changes in market levels of wages; risks associated with cybersecurity events and the timely and effective deployment, protection and defense of computer networks and other electronic systems, including email; our inability to obtain favorable lease terms for our properties; the failure to timely acquire, develop, open, and operate, or the loss of, or disruption or interruption in the operations of, any of our centralized distribution centers; risks associated with our lack of operations in the growing online retail marketplace; risks associated with litigation, the expense of defense, and potential for adverse outcomes; our inability to successfully develop or implement our marketing, advertising and promotional efforts; the seasonal nature of our business; risks associated with natural disasters, whether or not caused by climate change; outbreak of viruses, global health epidemics, pandemics, or widespread illness, including the continued impact of COVID-19 and continuing or renewed regulatory responses thereto; changes in government regulations, procedures and requirements; and our ability to service indebtedness and to comply with our financial covenants together with each of the other factors set forth under the heading “Risk Factors” in our filings with the United States Securities and Exchange Commission (“SEC”). Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.  Ollie’s undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.  You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

Investor Contact:

John Rouleau

ICR

Media Contact:

Tom Kuypers

Senior Vice President – Marketing & Advertising

717-657-2300

Ollie’s Bargain Outlet Holdings, Inc.

 

Condensed Consolidated Statements of Income

 

 

(Unaudited)

(1)	Components may not add to totals due to rounding.

Ollie’s Bargain Outlet Holdings, Inc.

Condensed Consolidated Balance Sheets

 

(In thousands)

 

(Unaudited)

 

Ollie’s Bargain Outlet Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

 

(In thousands)

 

(Unaudited)

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 GAAP.  We have included the non-GAAP measures of EBITDA, adjusted EBITDA, adjusted EBITDA margin, 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: 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 net income and adjusted net income per diluted share exclude excess tax benefits related to stock-based compensation, 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.

 

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 Bargain Outlet Holdings, Inc.

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

Reconciliation of GAAP net income per diluted share to adjusted net income per diluted share

(1)	Components may not add to totals due to rounding.

Ollie’s Bargain Outlet Holdings, Inc.

Supplemental Information

 

Reconciliation of GAAP to Non-GAAP Financial Measures

 

 (Dollars in thousands)

 

 (Unaudited)

 Reconciliation of GAAP net income to EBITDA and adjusted EBITDA

 Key Statistics

11

---