Third Quarter Fiscal 2021 and Recent
Highlights
Third Quarter Fiscal 2021 Highlights
- Board authorizes share repurchase program of up to $500
million
- Membership size and quality continues to improve; first-year
renewal rates remain at historic levels.
- Total comparable sales increased by 13.1%, reflecting two-year
stacked comp of 27.2%.
- Comparable club sales, excluding gasoline sales, increased by
5.7%, reflecting two-year stacked comp of 24.2%.
- Digitally-enabled sales growth was 44%, reflecting two-year
stacked comp growth of 244%.
- Earnings per diluted share of $0.92 reflects a 4.5%
year-over-year increase.
- Net cash provided by operating activities was $173.9 million
and free cash flow was $99.2 million.
BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company")
today announced its financial results for the thirteen and
thirty-nine weeks ended October 30, 2021.
"We are proud of delivering another strong quarter," said Bob
Eddy, President and Chief Executive Officer, BJ’s Wholesale Club.
"Our business accelerated during Q3 on broad based strength, and we
saw growth in all of our divisions, with acceleration in traffic
and ticket, growth in digitally-enabled sales and conventional
sales, all underpinned by strong membership statistics in both new
and tenured members. Our growth flywheel is spinning faster than it
has in a long time, and we look forward to continue building on
that momentum."
Key Measures for the Thirteen Weeks Ended October 30, 2021
(Third Quarter of Fiscal 2021) and for the Thirty-Nine Weeks Ended
October 30, 2021 (First Nine Months of Fiscal 2021):
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
(Amounts in thousands, except per share
amounts)
13 Weeks Ended October 30,
2021
13 Weeks Ended October 31,
2020
% Growth
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
% Growth
Net sales
$
4,172,594
$
3,646,723
14.4
%
$
12,042,830
$
11,236,403
7.2
%
Membership fee income
91,493
84,946
7.7
%
266,634
247,001
7.9
%
Total revenues
4,264,087
3,731,669
14.3
%
12,309,464
11,483,404
7.2
%
Operating income
170,156
190,355
(10.6
)%
460,194
497,700
(7.5
)%
Income from continuing operations
126,602
122,883
3.0
%
319,185
325,293
(1.9
)%
Adjusted EBITDA (a)
228,399
242,209
(5.7
)%
650,949
652,974
(0.3
)%
Net income
126,517
122,796
3.0
%
319,084
325,148
(1.9
)%
EPS (b)
0.92
0.88
4.5
%
2.31
2.34
(1.3
)%
Adjusted net income (a)
125,935
128,477
(2.0
)%
338,954
331,753
2.2
%
Adjusted EPS (a)
0.91
0.92
(1.1
)%
2.45
2.39
2.5
%
Basic weighted average shares
outstanding
135,582
136,011
(0.3
)%
135,604
136,269
(0.5
)%
Diluted weighted average shares
outstanding
138,005
139,060
(0.8
)%
138,288
139,003
(0.5
)%
(a)
See “Note Regarding Non-GAAP Financial
Information.”
(b)
EPS represents earnings per diluted
share.
Additional Highlights:
- Total comparable club sales increased by 13.1% in the third
quarter of fiscal 2021 compared to the third quarter of fiscal
2020. Excluding the impact of gasoline sales, comparable club sales
increased by 5.7% in the third quarter of fiscal 2021 compared to
the third quarter of fiscal 2020. Comparable club sales increased
by 5.7% in the first nine months of fiscal 2021 compared to the
first nine months of fiscal 2020. Excluding the impact of gasoline
sales, comparable club sales decreased by 1.0% in the first nine
months of fiscal 2021 compared to the first nine months of fiscal
2020.
- Gross profit increased to $791.2 million in the third quarter
of fiscal 2021 from $743.3 million in the third quarter of fiscal
2020. Merchandise gross margin rate, which excludes gasoline sales
and membership fee income, decreased 20 basis points over the third
quarter of fiscal 2020. Merchandise margins were impacted by
increased freight costs and price investments in inflationary
categories. Gross profit increased to $2,281.5 million in the first
nine months of fiscal 2021 from $2,236.4 million in the first nine
months of fiscal 2020. Merchandise gross margin rate, which
excludes gasoline sales and membership fee income, increased by
approximately 30 basis points over the first nine months of fiscal
2020. Merchandise margins benefited from the mix of our general
merchandise sales, improved private label penetration and continued
execution of our category profitability improvement initiatives,
partially offset by increased freight costs and price investments
in inflationary categories.
- Selling, general and administrative expenses ("SG&A")
increased to $618.0 million in the third quarter of fiscal 2021,
compared to $552.3 million in the third quarter of fiscal 2020. The
increase was primarily driven by $24.3 million in investments in
club team member wages, $13.7 million in management incentive
compensation and other expenses related to volume and continued
investments to drive the Company’s strategic priorities. SG&A
increased to $1,816.0 million in the first nine months of fiscal
2021 compared to $1,733.5 million in the first nine months of
fiscal 2020. The increase was primarily driven by $24.3 million in
investments in club team member wages, $15.1 million in occupancy
costs, $12.4 million in depreciation and amortization expense,
$17.5 million of accelerated stock-based compensation expense
related to a former executive, and $13.2 million of other operating
costs.
- Operating income decreased to $170.2 million, or 4.0% of total
revenues, in the third quarter of fiscal 2021 compared to $190.4
million, or 5.1% of total revenues, in the third quarter of fiscal
2020. Operating income decreased to $460.2 million, or 3.7% of
total revenues, in the first nine months of fiscal 2021 compared to
$497.7 million, or 4.3% of total revenues, in the first nine months
of fiscal 2020.
- Interest expense, net, decreased to $11.9 million in the third
quarter of fiscal 2021 compared to $25.9 million in the third
quarter of fiscal 2020. Interest expense, net, decreased to $47.6
million in the first nine months of fiscal 2021 compared to $68.5
million in the first nine months of fiscal 2020. The decrease in
interest expense was driven by continued de-levering.
- Income tax expense decreased to $31.7 million in the third
quarter of fiscal 2021 compared to $41.6 million in the third
quarter of fiscal 2020, primarily due to higher excess tax benefits
related to stock-based compensation. Income tax expense decreased
to $93.4 million in the first nine months of fiscal 2021 compared
to $103.9 million in the first nine months of fiscal 2020. The
increase in excess tax benefits is a result of increased share
price and one-time exercises related to a former executive.
- Under our existing share repurchase program, we repurchased
1,261,873 shares of common stock, totaling $71.5 million in the
third quarter of fiscal 2021. In the first nine months of fiscal
2021, we repurchased 2,630,989 shares of common stock, totaling
$135.0 million, under such program. As of November 17, 2021, there
was no capacity remaining under our existing share repurchase
program.
Share Repurchase Program
On November 16, 2021, the Company's Board of Directors approved
a new share repurchase program, effective immediately. The
authorization allows the Company to repurchase up to $500.0 million
of its outstanding common stock. The share repurchase program
expires in January 2025 and gives management the flexibility to
determine the terms and conditions under which shares may be
purchased. The amount and timing of any repurchases made under the
share repurchase program will depend on a variety of factors,
including available liquidity, cash flow and market conditions. The
share repurchase program does not obligate the Company to
repurchase any dollar amount or number of shares of common stock,
and the program may be suspended or discontinued at any time.
Fiscal 2021 Ending January 29, 2022 Outlook
"We are pleased with the performance of our business and
optimistic that many of the trends contributing to this performance
will be enduring in nature," said Laura Felice, Executive Vice
President, Chief Financial Officer, BJ's Wholesale Club. "However,
there continue to be external factors and uncertainties in the
market, and as a result we will continue to refrain from offering
formal detailed guidance."
Conference Call Details
A conference call to discuss the third quarter of fiscal 2021
financial results is scheduled for today, November 18, 2021, at
8:30 A.M. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial 844-200-6205
(international callers please dial 929-526-1599 approximately 10
minutes prior to the start of the call and reference conference ID
891866. 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
929-458-6194 or 866-813-9403 and referencing conference ID 228263.
The recorded replay will be available for one week 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 222
clubs and 152 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 October 30,
2021
13 Weeks Ended October 31,
2020
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
Net sales
$
4,172,594
$
3,646,723
$
12,042,830
$
11,236,403
Membership fee income
91,493
84,946
266,634
247,001
Total revenues
4,264,087
3,731,669
12,309,464
11,483,404
Cost of sales
3,472,869
2,988,397
10,027,991
9,247,042
Selling, general and administrative
expenses
617,991
552,307
1,816,014
1,733,482
Pre-opening expense
3,071
610
5,265
5,180
Operating income
170,156
190,355
460,194
497,700
Interest expense, net
11,854
25,882
47,567
68,467
Income from continuing operations before
income taxes
158,302
164,473
412,627
429,233
Provision for income taxes
31,700
41,590
93,442
103,940
Income from continuing operations
126,602
122,883
319,185
325,293
Loss from discontinued operations, net of
income taxes
(85
)
(87
)
(101
)
(145
)
Net income
$
126,517
$
122,796
$
319,084
$
325,148
Income per share attributable to common
stockholders - basic:
Income from continuing operations
$
0.93
$
0.90
$
2.35
$
2.39
Loss from discontinued operations
—
—
—
—
Net income
$
0.93
$
0.90
$
2.35
$
2.39
Income per share attributable to common
stockholders - diluted:
Income from continuing operations
$
0.92
$
0.88
$
2.31
$
2.34
Loss from discontinued operations
—
—
—
—
Net income
$
0.92
$
0.88
$
2.31
$
2.34
Weighted average number of shares
outstanding:
Basic
135,582
136,011
135,604
136,269
Diluted
138,005
139,060
138,288
139,003
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Amounts in thousands, except per share
amounts)
(Unaudited)
October 30, 2021
October 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
84,691
$
46,116
Accounts receivable, net
194,315
188,413
Merchandise inventories
1,255,659
1,264,323
Prepaid expense and other current
assets
58,622
97,116
Total current assets
1,593,287
1,595,968
Operating lease right-of-use assets,
net
2,151,255
2,034,742
Property and equipment, net
880,904
769,258
Goodwill
924,134
924,134
Intangibles, net
127,260
138,088
Deferred taxes
5,167
—
Other assets
22,233
20,094
Total assets
$
5,704,240
$
5,482,284
LIABILITIES
Current liabilities:
Current portion of long-term debt
$
—
$
260,000
Current portion of operating lease
liabilities
137,036
131,025
Accounts payable
1,235,763
1,176,104
Accrued expenses and other current
liabilities
730,547
643,309
Total current liabilities
2,103,346
2,210,438
Long-term lease liabilities
2,082,287
1,961,321
Long-term debt
748,149
845,696
Deferred income taxes
33,995
47,241
Other noncurrent liabilities
168,727
200,210
STOCKHOLDERS' EQUITY
567,736
217,378
Total liabilities and stockholders'
equity
$
5,704,240
$
5,482,284
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in thousands, except per share
amounts)
(Unaudited)
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income
$
319,084
$
325,148
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
135,664
124,331
Amortization of debt issuance costs and
accretion of original issue discount
2,555
3,470
Debt extinguishment charges
657
4,077
Stock-based compensation expense
42,428
23,245
Deferred income tax provision
(benefit)
(17,659
)
2,289
Changes in operating leases and other
non-cash items
6,112
5,441
Increase (decrease) in cash due to changes
in:
Accounts receivable
(21,596
)
17,940
Merchandise inventories
(49,964
)
(182,821
)
Accounts payable
247,689
389,692
Accrued expenses
71,775
61,829
Other operating assets and liabilities,
net
(3,570
)
27,331
Net cash provided by operating
activities
733,175
801,972
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property and equipment, net
of disposals and proceeds from sale leaseback transactions
(203,418
)
(126,907
)
Net cash used in investing activities
(203,418
)
(126,907
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments on First Lien Term Loan
(100,000
)
(513,297
)
Payments on ABL Facility
(260,000
)
(68,000
)
Net cash received from stock option
exercises
18,479
16,431
Net cash received from Employee Stock
Purchase Program (ESPP)
1,877
1,107
Acquisition of treasury stock
(149,449
)
(94,671
)
Proceeds from financing obligations
1,333
—
Other financing activities
(824
)
(723
)
Net cash used in financing activities
(488,584
)
(659,153
)
Net increase in cash and cash
equivalents
41,173
15,912
Cash and cash equivalents at beginning of
period
43,518
30,204
Cash and cash equivalents at end of
period
$
84,691
$
46,116
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: stock-based compensation related
to acceleration of stock awards; severance charges; expenses
related to debt payments; 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 October 30,
2021
13 Weeks Ended October 31,
2020
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
Net income as reported
$
126,517
$
122,796
$
319,084
$
325,148
Adjustments:
Stock-based compensation related to
acceleration of stock awards (a)
—
—
17,494
—
(Gain) loss on cash flow hedge (b)
(808
)
5,097
7,146
5,097
Charges related to debt payments (c)
—
2,794
657
4,077
Severance charges (d)
—
—
2,300
—
Tax impact of adjustments to net income
(e)
226
(2,210
)
(7,727
)
(2,569
)
Adjusted net income
$
125,935
$
128,477
$
338,954
$
331,753
Weighted-average diluted shares
outstanding
138,005
139,060
138,288
139,003
Adjusted net income per diluted share
(f)
$
0.91
$
0.92
$
2.45
$
2.39
(a)
Represents accelerated vesting of equity
awards, which were related to the passing of our former CEO, 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 payment of debt.
(c)
Represents the expensing of fees and
deferred fees and original issue discount associated with the
partial prepayment 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 October 30,
2021
13 Weeks Ended October 31,
2020
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
Income from continuing
operations
$
126,602
$
122,883
$
319,185
$
325,293
Interest expense, net
11,854
25,882
47,567
68,467
Provision for income taxes
31,700
41,590
93,442
103,940
Depreciation and amortization
45,830
42,160
135,664
124,331
Stock-based compensation expense
7,794
8,667
42,428
23,245
Pre-opening expenses (a)
3,071
610
5,265
5,180
Non-cash rent (b)
1,387
274
4,569
2,289
Severance (c)
—
—
2,300
—
Other adjustments (d)
161
143
529
229
Adjusted EBITDA
$
228,399
$
242,209
$
650,949
$
652,974
(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 severance charges associated
with labor reductions that resulted from the realignment of our
field operations.
(d)
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 October 30,
2021
13 Weeks Ended October 31,
2020
39 Weeks Ended October 30,
2021
39 Weeks Ended October 31,
2020
Net cash provided by operating
activities
$
173,862
$
68,280
$
733,175
$
801,972
Less: Additions to property and equipment,
net of disposals
74,690
69,838
222,498
152,800
Plus: Proceeds from sale leaseback
transactions
—
21,832
19,080
25,893
Free cash flow
$
99,172
$
20,274
$
529,757
$
675,065
BJ'S WHOLESALE CLUB HOLDINGS,
INC.
Reconciliation of Net Debt and Net Debt
to LTM adjusted EBITDA
(Amounts in thousands)
(Unaudited)
October 30, 2021
Total debt
$
748,149
Less: Cash and cash equivalents
84,691
Net Debt
$
663,458
Income from continuing operations
$
415,074
Interest expense, net
63,485
Provision for income taxes
126,327
Depreciation and amortization
178,787
Stock-based compensation expense
51,333
Pre-opening expenses
9,894
Non-cash rent
7,222
Severance
2,300
Other adjustments
1,045
Adjusted EBITDA
$
855,467
Net debt to LTM adjusted EBITDA
0.8
x
See descriptions of adjustments in the “Reconciliation to
Adjusted EBITDA (unaudited)” table above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211118005286/en/
Investor Contact: investors@bjs.com (774) 512-5822
Media Contact: Kyle Byrnes, BJ’s Wholesale Club (860)
874-4396 kbyrnes@bjs.com
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