BJ BJs Wholesale Club Holdings Inc

 

Strong comparable sales growth highlights record third quarter

Company raises fiscal year 2022 guidance  

Third Quarter Fiscal 2022 Highlights

• Total comparable club sales increased by 9.7% year-over-year.
• Comparable club sales, excluding gasoline sales, increased by 5.3% year-over-year.
• Membership fee income increased by 8.7% year-over-year to $99.5 million.
• Digitally enabled sales growth was 43.0% year-over-year.
• Earnings per diluted share of $0.95 reflects a 3.3% year-over-year increase.
• Adjusted earnings per diluted share of $0.99 reflects a 8.8% year-over-year increase.
• Cash from operating activities was $173.1 million and free cash flow was $78.7 million.
• The Company opened three new clubs in the third quarter.

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and thirty-nine weeks ended October 29, 2022.

“We reported another quarter of strong results, demonstrating the power of our business model,” said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club. “Our consistent focus on delivering value to our members at a time when they need it most will bolster our business for the future. Our member base is growing in both size and quality. We are improving our merchandising to deliver amazing value. We are offering more convenience for our members through a great digital experience. We are expanding our footprint into new and existing markets. We have a great team and a competitive strategy, and the investments we continue to make in our Company position us well for long-term growth and sustainable value creation.”

Key Measures for the Thirteen Weeks Ended October 29, 2022 (Third Quarter Fiscal 2022) and for the Thirty-Nine Weeks Ended October 29, 2022 (Year-to-date Fiscal 2022):

 

BJ'S WHOLESALE CLUB HOLDINGS, INC. 

(Amounts in thousands, except per share amounts)

 

 

13 Weeks Ended October 29, 2022

 

13 Weeks Ended October 30, 2021

 

% Growth

 

39 Weeks Ended October 29, 2022

 

39 Weeks Ended October 30, 2021

 

% Growth

Net sales

$

4,685,834

 

$

4,172,594

 

12.3

%

 

$

14,090,673

 

$

12,042,830

 

17.0

%

Membership fee income

 

99,485

 

 

91,493

 

8.7

%

 

 

294,897

 

 

266,634

 

10.6

%

Total revenues

 

4,785,319

 

 

4,264,087

 

12.2

%

 

 

14,385,570

 

 

12,309,464

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

191,968

 

 

170,156

 

12.8

%

 

 

545,193

 

 

460,194

 

18.5

%

Income from continuing operations

 

131,394

 

 

126,602

 

3.8

%

 

 

384,862

 

 

319,185

 

20.6

%

Adjusted EBITDA (a)

 

272,305

 

 

228,399

 

19.2

%

 

 

766,804

 

 

650,949

 

17.8

%

Net income

 

129,942

 

 

126,517

 

2.7

%

 

 

383,396

 

 

319,084

 

20.2

%

EPS (b)

 

0.95

 

 

0.92

 

3.3

%

 

 

2.81

 

 

2.31

 

21.6

%

Adjusted net income (a)

 

135,830

 

 

125,935

 

7.9

%

 

 

398,550

 

 

338,954

 

17.6

%

Adjusted EPS (a)

 

0.99

 

 

0.91

 

8.8

%

 

 

2.92

 

 

2.45

 

19.2

%

Basic weighted average shares outstanding

 

134,091

 

 

135,582

 

(1.1

) %

 

 

134,225

 

 

135,604

 

(1.0

) %

Diluted weighted average shares outstanding

 

136,621

 

 

138,005

 

(1.0

) %

 

 

136,630

 

 

138,288

 

(1.2

) %

 (a)  

See “Note Regarding Non-GAAP Financial Information.”

 (b)  

EPS represents earnings per diluted share. 

 Additional Highlights:

• Total comparable club sales increased by 9.7% in the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021. Excluding the impact of gasoline sales, comparable club sales increased by 5.3% in the third quarter of fiscal 2022 compared to the same period in fiscal 2021. Total year-to-date comparable club sales increased by 14.6% in fiscal 2022 compared to fiscal 2021. Excluding the impact of gasoline sales, year-to-date comparable club sales increased by 5.7% in fiscal 2022 compared to fiscal 2021.

• Gross profit increased to $877.1 million in the third quarter of fiscal 2022 from $791.2 million in the third quarter of fiscal 2021. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased 30 basis points over the same quarter of fiscal 2021. Gross profit increased to $2,528.3 million year-to-date in fiscal 2022 from $2,281.5 million in fiscal 2021. Merchandise gross margin rate decreased 40 basis points year-to-date in fiscal 2022 compared to fiscal 2021. The quarter-to-date merchandise margins were impacted by increased supply chain costs and investments in inflationary categories. On a year-to-date basis, merchandise margins were impacted by increased supply chain costs as well as investments in inflationary categories and markdowns in general merchandise inventory.

• Selling, general and administrative expenses ("SG&A") increased to $674.4 million in the third quarter of fiscal 2022 compared to $618.0 million in the third quarter of fiscal 2021. SG&A increased to $1,961.6 million year-to-date in fiscal 2022 compared to $1,816.0 million in fiscal 2021. The quarter-to-date increase was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings, as well as incremental costs related to the transition of the Company’s new home office. The year-to-date increase was driven by increased labor costs as a result of last year’s wage investments as well as the acquisition and integration expenses related to the acquisition of assets from Burris Logistics.

• Operating income increased to $192.0 million, or 4.0% of total revenues, in the third quarter of fiscal 2022 compared to $170.2 million, or 4.0% of total revenues, in the third quarter of fiscal 2021. Operating income increased to $545.2 million, or 3.8% of total revenues, year-to-date in fiscal 2022 compared to $460.2 million, or 3.7% of total revenues, year-to-date in fiscal 2021.

• Adjusted EBITDA increased 19.2% to $272.3 million in the third quarter of fiscal 2022 compared to $228.4 million in the third quarter of fiscal 2021. Adjusted EBITDA increased 17.8% to $766.8 million year-to-date in fiscal 2022 compared to $650.9 million year-to-date in fiscal 2021.

• Income tax expense increased to $48.1 million in the third quarter of fiscal 2022 compared to $31.7 million in the third quarter of fiscal 2021. Income tax expense increased to $129.2 million year-to-date in fiscal 2022 compared to $93.4 million year-to-date in fiscal 2021. For both periods, this increase was primarily due to higher operating income year-over-year and lower excess tax benefits.

• Inventory increased to $1.50 billion at the end of the third quarter of fiscal 2022 from $1.26 billion in the same quarter in fiscal 2021. Inventory balances at the end of the third quarter of fiscal 2022 include $96.3 million of perishable inventory related to the acquisition of four distribution centers and related private transportation fleet from Burris Logistics earlier in the year.

• The Company reduced outstanding debt in the third quarter of fiscal 2022 by $154.3 million from the second quarter of fiscal 2022, maintaining a net debt to last twelve month adjusted EBITDA ratio of 0.9x.

• Under its existing share repurchase program, the Company repurchased 684,819 shares of common stock, totaling $50.1 million in the third quarter of fiscal 2022. Year-to-date in fiscal 2022, the Company repurchased 1,608,325 shares of common stock, totaling $108.7 million, under such program.

Fiscal 2022 Ending January 28, 2023 Outlook

“We are optimistic about the outlook on our business given the sustained strength in our grocery business and our gains in market share,” said Laura Felice, Executive Vice President, Chief Financial Officer, BJ's Wholesale Club. “We now expect fiscal year 2022 comparable club sales growth, excluding the impact of gasoline sales, to be in the 5.0% to 5.5% range. While we expect continued merchandise margin rate pressure, we also now expect fiscal year 2022 EPS to be in the $3.70 to $3.80 range. We remain confident that the strength of our core business and our intense focus on delivering value will continue to drive long-term growth.”

Conference Call Details

A conference call to discuss the third quarter of fiscal 2022 financial results is scheduled for today, November 17, 2022, at 8:30 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 (844) 200-6205 within the U.S. or (929) 526-1599 outside the U.S. and reference conference ID 239834. 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 614801.

About BJ’s Wholesale Club Holdings, Inc.

Headquartered in Marlborough, Massachusetts, BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) is a leading operator of membership warehouse clubs in the Eastern United States focused on delivering significant value to its members. The Company provides a curated assortment of grocery, general merchandise, gasoline and other ancillary services to offer a differentiated shopping experience that is further enhanced by its omnichannel capabilities. Since pioneering the warehouse club model in New England in 1984, the Company currently operates 233 clubs and 163 BJ's Gas® locations in 18 states. For more information, please visit us at www.bjs.com or on Facebook, Twitter or Instagram.

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 2022 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, 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); the risks and uncertainties related to the impact of the COVID-19 pandemic, including the duration, scope and severity of the pandemic, federal, state and local government actions or restrictive measures implemented in response to COVID-19, the effectiveness of such measures, as well as the effect of any relaxation or revocation of current restrictions, and the direct and indirect impact of such measures; 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 realize the benefits of the Burris acquisition; 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 17, 2022 and our Form 10-Q filed with the SEC on August 26, 2022, which is 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 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.

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

Thirteen Weeks Ended October 29, 2022

 

Thirteen Weeks Ended October 30, 2021

 

Thirty-Nine Weeks Ended October 29, 2022

 

Thirty-Nine Weeks Ended October 30, 2021

Net sales

$

4,685,834

 

 

$

4,172,594

 

 

$

14,090,673

 

 

$

12,042,830

 

Membership fee income

 

99,485

 

 

 

91,493

 

 

 

294,897

 

 

 

266,634

 

Total revenues

 

4,785,319

 

 

 

4,264,087

 

 

 

14,385,570

 

 

 

12,309,464

 

Cost of sales

 

3,908,219

 

 

 

3,472,869

 

 

 

11,857,263

 

 

 

10,027,991

 

Selling, general and administrative expenses

 

674,426

 

 

 

617,991

 

 

 

1,961,606

 

 

 

1,816,014

 

Pre-opening expense

 

10,706

 

 

 

3,071

 

 

 

21,508

 

 

 

5,265

 

Operating income

 

191,968

 

 

 

170,156

 

 

 

545,193

 

 

 

460,194

 

Interest expense, net

 

12,450

 

 

 

11,854

 

 

 

31,166

 

 

 

47,567

 

Income from continuing operations before income taxes

 

179,518

 

 

 

158,302

 

 

 

514,027

 

 

 

412,627

 

Provision for income taxes

 

48,124

 

 

 

31,700

 

 

 

129,165

 

 

 

93,442

 

Income from continuing operations

 

131,394

 

 

 

126,602

 

 

 

384,862

 

 

 

319,185

 

Loss from discontinued operations, net of income taxes

 

(1,452

)

 

 

(85

)

 

 

(1,466

)

 

 

(101

)

Net income

$

129,942

 

 

$

126,517

 

 

$

383,396

 

 

$

319,084

 

Income per share attributable to common stockholders - basic:

 

 

 

 

 

 

 

Income from continuing operations

$

0.98

 

 

$

0.93

 

 

$

2.87

 

 

$

2.35

 

Loss from discontinued operations

 

(0.01

)

 

 

—

 

 

 

(0.01

)

 

 

—

 

Net income

$

0.97

 

 

$

0.93

 

 

$

2.86

 

 

$

2.35

 

Income per share attributable to common stockholders - diluted:

 

 

 

 

 

 

 

Income from continuing operations

$

0.96

 

 

$

0.92

 

 

$

2.82

 

 

$

2.31

 

Loss from discontinued operations

 

(0.01

)

 

 

—

 

 

 

(0.01

)

 

 

—

 

Net income

$

0.95

 

 

$

0.92

 

 

$

2.81

 

 

$

2.31

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

134,091

 

 

 

135,582

 

 

 

134,225

 

 

 

135,604

 

Diluted

 

136,621

 

 

 

138,005

 

 

 

136,630

 

 

 

138,288

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

October 29, 2022

 

October 30, 2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

34,644

 

$

84,691

Accounts receivable, net

 

251,978

 

 

200,315

Merchandise inventories

 

1,504,368

 

 

1,255,659

Prepaid expense and other current assets

 

72,285

 

 

58,622

Total current assets

 

1,863,275

 

 

1,599,287

 

 

 

 

Operating lease right-of-use assets, net

 

2,163,504

 

 

2,151,255

Property and equipment, net

 

1,296,151

 

 

880,904

Goodwill

 

1,008,816

 

 

924,134

Intangibles, net

 

117,814

 

 

127,260

Deferred taxes

 

4,341

 

 

5,167

Other assets

 

25,002

 

 

22,233

Total assets

$

6,478,903

 

$

5,710,240

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

295,000

 

$

—

Current portion of operating lease liabilities

 

176,659

 

 

137,036

Accounts payable

 

1,363,734

 

 

1,235,763

Accrued expenses and other current liabilities

 

764,572

 

 

731,297

Total current liabilities

 

2,599,965

 

 

2,104,096

 

 

 

 

Long-term lease liabilities

 

2,085,625

 

 

2,082,287

Long-term debt

 

600,123

 

 

748,149

Deferred income taxes

 

70,432

 

 

33,995

Other noncurrent liabilities

 

179,883

 

 

173,977

 

 

 

 

STOCKHOLDERS' EQUITY

 

942,875

 

 

567,736

Total liabilities and stockholders' equity

$

6,478,903

 

$

5,710,240

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 29, 2022

 

Thirty-Nine Weeks Ended October 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net income

$

383,396

 

 

$

319,084

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

149,259

 

 

 

135,664

 

Amortization of debt issuance costs and accretion of original issue discount

 

2,282

 

 

 

2,555

 

Debt extinguishment charges

 

687

 

 

 

657

 

Stock-based compensation expense

 

27,965

 

 

 

42,428

 

Deferred income tax provision (benefit)

 

18,474

 

 

 

(17,659

)

Changes in leases and other non-cash items

 

32,972

 

 

 

6,112

 

Increase (decrease) in cash due to changes in:

 

 

 

Accounts receivable

 

(76,649

)

 

 

(27,596

)

Merchandise inventories

 

(173,361

)

 

 

(49,964

)

Accounts payable

 

250,951

 

 

 

247,689

 

Accrued expenses

 

(3,802

)

 

 

72,525

 

Other operating assets and liabilities, net

 

3,933

 

 

 

1,680

 

Net cash provided by operating activities

 

616,107

 

 

 

733,175

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Additions to property and equipment, net of disposals and proceeds from sale leaseback transactions

 

(283,216

)

 

 

(203,418

)

Acquisition

 

(376,521

)

 

 

—

 

Net cash used in investing activities

 

(659,737

)

 

 

(203,418

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Payments on long term debt

 

(50,000

)

 

 

—

 

Payments on First Lien Term Loan

 

(100,000

)

 

 

(100,000

)

Proceeds from revolving lines of credit

 

1,110,000

 

 

 

—

 

Payments on revolving lines of credit

 

(815,000

)

 

 

(260,000

)

Debt issuance costs paid

 

(2,733

)

 

 

—

 

Net cash received from stock option exercises

 

6,545

 

 

 

18,479

 

Net cash received from Employee Stock Purchase Program (ESPP)

 

2,331

 

 

 

1,877

 

Acquisition of treasury stock

 

(127,458

)

 

 

(149,449

)

Proceeds from financing obligations

 

13,699

 

 

 

1,333

 

Changes in finance leases and other financing activities

 

(4,546

)

 

 

(824

)

Net cash provided by (used in) financing activities

 

32,838

 

 

 

(488,584

)

Net increase (decrease) in cash and cash equivalents

 

(10,792

)

 

 

41,173

 

Cash and cash equivalents at beginning of period

 

45,436

 

 

 

43,518

 

Cash and cash equivalents at end of period

$

34,644

 

 

$

84,691

 

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; acquisition and integration costs; incremental home office expense; severance; charges related to debt payments; gain or 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; acquisition and integration costs; 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 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 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 29, 2022

 

13 Weeks Ended October 30, 2021

 

39 Weeks Ended October 29, 2022

 

39 Weeks Ended October 30, 2021

Net income as reported

$

129,942

 

 

$

126,517

 

 

$

383,396

 

 

$

319,084

 

Adjustments:

 

 

 

 

 

 

 

Stock-based compensation related to acceleration of stock awards (a)

 

—

 

 

 

—

 

 

 

—

 

 

 

17,494

 

Acquisition and integration costs (b)

 

857

 

 

 

—

 

 

 

12,324

 

 

 

—

 

Home office transition costs (c)

 

5,897

 

 

 

—

 

 

 

7,096

 

 

 

—

 

Impairment expense on discontinued operations club lease

 

1,199

 

 

 

—

 

 

 

1,199

 

 

 

—

 

(Gain) loss on cash flow hedge (d)

 

—

 

 

 

(808

)

 

 

(165

)

 

 

7,146

 

Charges related to debt payments (e)

 

298

 

 

 

—

 

 

 

687

 

 

 

657

 

Severance (f)

 

—

 

 

 

—

 

 

 

—

 

 

 

2,300

 

Tax impact of adjustments to net income (g)

 

(2,363

)

 

 

226

 

 

 

(5,987

)

 

 

(7,727

)

Adjusted net income

$

135,830

 

 

$

125,935

 

 

$

398,550

 

 

$

338,954

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

136,621

 

 

 

138,005

 

 

 

136,630

 

 

 

138,288

 

Adjusted net income per diluted share (h)

$

0.99

 

 

$

0.91

 

 

$

2.92

 

 

$

2.45

 

(a)  

Represents accelerated vesting of equity awards, which were related to the passing of a former executive.

(b)  

Represents costs related to the acquisition and integration of assets from Burris Logistics, including due diligence, legal, and other consulting expenses.

(c)

Represents incremental rent expense, other non-recurring lease costs and write-off of impaired assets as the Company transitions home office locations in fiscal 2022.

(d)

Represents the reclassification into earnings of accumulated other comprehensive income associated with the de-designation of hedge accounting.

(e)

Represents the expensing of fees and deferred fees and original issue discount associated with the partial prepayment of debt in fiscal 2021 and extinguishment cost related to the ABL Facility in fiscal 2022.

(f)

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

(g)

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

(h)

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 29, 2022

 

13 Weeks Ended October 30, 2021

 

39 Weeks Ended October 29, 2022

 

39 Weeks Ended October 30, 2021

Income from continuing operations

$

131,394

 

$

126,602

 

$

384,862

 

$

319,185

Interest expense, net

 

12,450

 

 

11,854

 

 

31,166

 

 

47,567

Provision for income taxes

 

48,124

 

 

31,700

 

 

129,165

 

 

93,442

Depreciation and amortization

 

52,166

 

 

45,830

 

 

149,259

 

 

135,664

Stock-based compensation expense

 

9,463

 

 

7,794

 

 

27,965

 

 

42,428

Pre-opening expenses (a)

 

10,707

 

 

3,071

 

 

21,508

 

 

5,265

Non-cash rent (b)

 

1,025

 

 

1,387

 

 

3,127

 

 

4,569

Acquisition and integration costs (c)

 

857

 

 

—

 

 

12,324

 

 

—

Home office transition costs (d)

 

5,897

 

 

—

 

 

7,096

 

 

—

Severance (e)

 

—

 

 

—

 

 

—

 

 

2,300

Other adjustments (f)

 

222

 

 

161

 

 

332

 

 

529

Adjusted EBITDA

$

272,305

 

$

228,399

 

$

766,804

 

$

650,949

(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 transitions home office locations in fiscal 2022. (e) Represents severance charges associated with labor reductions that resulted from the realignment of our field operations. (f) Other non-cash items, including non-cash accretion on asset retirement obligations, 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 29, 2022

 

13 Weeks Ended October 30, 2021

 

39 Weeks Ended October 29, 2022

 

39 Weeks Ended October 30, 2021

Net cash provided by operating activities

$

173,055

 

$

173,862

 

$

616,107

 

$

733,175

Less: Additions to property and equipment, net of disposals

 

102,774

 

 

74,690

 

 

294,308

 

 

222,498

Plus: Proceeds from sale leaseback transactions

 

8,418

 

 

—

 

 

11,092

 

 

19,080

Free cash flow

$

78,699

 

$

99,172

 

$

332,891

 

$

529,757

BJ'S WHOLESALE CLUB HOLDINGS, INC.

Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA

(Amounts in thousands)

(Unaudited)

 

 

October 29, 2022

Total debt

$

895,123

Less: Cash and cash equivalents

 

34,644

Net Debt

$

860,479

 

 

Income from continuing operations

$

492,437

Interest expense, net

 

43,043

Provision for income taxes

 

166,842

Depreciation and amortization

 

194,142

Stock-based compensation expense

 

39,374

Pre-opening expenses

 

31,145

Non-cash rent

 

4,704

Acquisition and integration costs

 

15,828

Home Office Transition Costs

 

7,096

Other adjustments

 

794

Adjusted EBITDA

$

995,405

 

 

Net debt to LTM adjusted EBITDA

0.9x

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/20221117005375/en/

Investors: Catherine Park Vice President, Investor Relations cpark@bjs.com 774-512-6744

Media: Peter Frangie Vice President, Corporate Communications pfrangie@bjs.com 774-512-6978