BJ BJs Wholesale Club Holdings Inc

Continued club growth, comparable club sales, and all-time high renewal rates highlight a record fourth quarter and fiscal year

Fourth Quarter of Fiscal 2022 and Recent Highlights

• Total comparable club sales increased by 9.8% year-over-year
• Comparable club sales, excluding gasoline sales, increased by 8.7% year-over-year
• Membership fee income increased by 8.0% year-over-year to $101.8 million
• The Company achieved a record 90% tenured member renewal rate
• Digitally-enabled sales growth was 22% year-over-year
• Earnings per diluted share of $0.95 reflects a 21.8% year-over-year increase
• Adjusted earnings per diluted share of $1.00 reflects a 25.0% year-over-year increase
• Year-to-date income from continuing operations of $514.3 million and year-to-date adjusted EBITDA of $1.0 billion
• The Company opened five new clubs since the end of the third quarter
• The Company successfully launched its co-brand credit card program with Capital One in February of fiscal year 2023

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and fifty-two weeks ended January 28, 2023.

“2022 was a record year, having surpassed $1 billion in Adjusted EBITDA for the first time in the Company’s history,” said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club. “Our membership base is stronger than ever with our tenured renewal rate reaching an all-time high of 90%. Our continued focus on value has driven traffic and market share gains all year. Our digital business is growing and we’re successfully expanding our footprint. 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 January 28, 2023 (Fourth Quarter of Fiscal 2022) and for the Fifty-Two Weeks Ended January 28, 2023 (Fiscal 2022):

BJ'S WHOLESALE CLUB HOLDINGS, INC.

(Amounts in thousands, except per share amounts)

 

 

13 Weeks Ended January 28, 2023

 

13 Weeks Ended January 29, 2022

 

% Growth

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

 

% Growth

Net sales

$

4,827,762

 

$

4,263,535

 

13.2

%

 

$

18,918,435

 

$

16,306,365

 

16.0

%

Membership fee income

 

101,833

 

 

94,303

 

8.0

%

 

 

396,730

 

 

360,937

 

9.9

%

Total revenues

 

4,929,595

 

 

4,357,838

 

13.1

%

 

 

19,315,165

 

 

16,667,302

 

15.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

192,793

 

 

157,129

 

22.7

%

 

 

737,986

 

 

617,323

 

19.5

%

Income from continuing operations

 

129,400

 

 

107,575

 

20.3

%

 

 

514,262

 

 

426,760

 

20.5

%

Adjusted EBITDA (a)

 

271,329

 

 

228,601

 

18.7

%

 

 

1,038,133

 

 

879,550

 

18.0

%

Net income

 

129,781

 

 

107,568

 

20.7

%

 

 

513,177

 

 

426,652

 

20.3

%

EPS (b)

 

0.95

 

 

0.78

 

21.8

%

 

 

3.76

 

 

3.09

 

21.7

%

Adjusted net income (a)

 

136,692

 

 

109,905

 

24.4

%

 

 

535,242

 

 

448,859

 

19.2

%

Adjusted EPS (a)

 

1.00

 

 

0.80

 

25.0

%

 

 

3.92

 

 

3.25

 

20.6

%

Basic weighted-average shares outstanding

 

133,393

 

 

134,731

 

(1.0

) %

 

 

134,017

 

 

135,386

 

(1.0

) %

Diluted weighted-average shares outstanding

 

136,000

 

 

137,314

 

(1.0

) %

 

 

136,473

 

 

138,045

 

(1.1

) %

(a)

See “Note Regarding Non-GAAP Financial Information.”

(b)

EPS represents net income per diluted share.

Additional Highlights:

• Total comparable club sales increased by 9.8% in the fourth quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021. Excluding the impact of gasoline sales, comparable club sales increased by 8.7% in the fourth quarter of fiscal 2022 compared to the fourth quarter of fiscal 2021. Comparable club sales increased by 13.4% in fiscal 2022 compared to fiscal 2021. Excluding the impact of gasoline sales, comparable club sales increased by 6.5% in fiscal 2022 compared to fiscal 2021.
• Gross profit increased to $903.2 million in the fourth quarter of fiscal 2022 from $797.2 million in the fourth quarter of fiscal 2021. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased by 30 basis points over the fourth quarter of fiscal 2021. Gross profit increased to $3.43 billion in fiscal 2022 from $3.08 billion in fiscal 2021. Merchandise gross margin rate decreased by approximately 20 basis points over fiscal 2021. The quarter-to-date merchandise margin rate benefited as a result of improved inventory management. On a year-to-date basis, merchandise margin was 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 $707.0 million in the fourth quarter of fiscal 2022 compared to $630.5 million in the fourth quarter of fiscal 2021. SG&A increased to $2.67 billion in fiscal 2022 compared to $2.45 billion in fiscal 2021. The quarter-to-date and year-to-date increases were 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 club support center and other variable costs related to company growth and continued investments to drive strategic priorities.
• Operating income increased to $192.8 million, or 3.9% of total revenues, in the fourth quarter of fiscal 2022 compared to $157.1 million, or 3.6% of total revenues, in the fourth quarter of fiscal 2021. Operating income increased to $738.0 million, or 3.8% of total revenues, in fiscal 2022 compared to $617.3 million, or 3.7% of total revenues, in fiscal 2021.
• Income tax expense increased to $47.1 million in the fourth quarter of fiscal 2022 compared to $37.7 million in the fourth quarter of fiscal 2021. Income tax expense increased to $176.3 million in fiscal 2022 compared to $131.1 million in fiscal 2021. Quarter-to-date and year-to-date increases are primarily due to higher pre-tax book income and lower excess tax benefits from share-based compensation.
• Income from continuing operations increased to $129.4 million in the fourth quarter of fiscal 2022 compared to $107.6 million in the fourth quarter of fiscal 2021. Year-to-date income from continuing operations increased to $514.3 million in fiscal 2022 from $426.8 million in fiscal 2021. Net income increased to $129.8 million in the fourth quarter of fiscal 2022 compared to $107.6 million in the fourth quarter of fiscal 2021. Year-to-date net income increased to $513.2 million in fiscal 2022 compared to $426.7 million in fiscal 2021.
• Adjusted EBITDA increased 18.7% to $271.3 million in the fourth quarter of fiscal 2022, compared to $228.6 million in the fourth quarter of fiscal 2021. Adjusted EBITDA increased 18.0% to $1.04 billion in fiscal 2022 compared to $879.6 million in fiscal 2021.
• Inventory increased to $1.38 billion at the end of fiscal 2022 from $1.24 billion at the end of fiscal 2021. Inventory balances at the end of the fourth quarter of fiscal 2022 include $97.3 million of perishable inventory related to the acquisition of our perishable supply chain earlier in the year.
• The Company paid approximately $152 million of principal and amended its senior secured first lien term loan in the fourth quarter of fiscal 2022, extending the maturity date from February 3, 2024 to February 3, 2027. The interest rate was transitioned from London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) and the applicable margin changed from LIBOR plus 200 - 225 basis points per annum to SOFR plus 275 basis points per annum.
• Under its existing share repurchase program, the Company repurchased 626,383 shares of common stock, totaling $43.8 million in the fourth quarter of fiscal 2022. Year-to-date in fiscal 2022, the Company repurchased 2,234,708 shares of common stock, totaling $152.5 million, under such program.
• On February 27, 2023, the Company launched its new credit card program with Capital One and Mastercard, officially named the BJ's One™ Mastercard® program. This program will provide a first-class rewards and customer service experience, delivering more value back to its members. The program will offer up to 5% rewards on in-club earnings and up to 2% rewards on out-of-club earnings as well as up to 15 cents off/gallon at BJ’s Gas.

Fiscal 2023 Ending February 3, 2024 Outlook

“We remain confident that our advantaged business model, continued focus on executing our strategic priorities, and commitment to delivering great value to our members will continue to drive strong results for our business,” said Laura Felice, Executive Vice President, Chief Financial Officer, BJ’s Wholesale Club. “We look ahead to fiscal 2023 with the understanding that there is still significant uncertainty in the macroeconomic backdrop as well as its influence on the U.S. consumer.”

The Company provided the following guidance for fiscal 2023:

• Comparable club sales, excluding the impact of gasoline sales, to increase 4% to 5% year-over-year
• Membership fee income to increase 5% to 6% year-over-year
• Merchandise gross margins to improve approximately 40 basis points year-over-year
• EPS to remain approximately flat year-over-year, including the 53rd week benefit of low-teens cents per share
• Capital expenditures of approximately $450 million

Long-Term Financial Outlook

As part of its Investor Day, the Company also provided its long-term financial targets for annual growth, on average:

• Comparable club sales growth of low-to-mid single digit percent, excluding the impact of gasoline sales
• Total revenue growth of mid-single digit percent
• EPS growth of high-single to low-double digit percent

“As we reflect on the past five years, we have transformed our Company, delivering significant growth across virtually every aspect of our business,” continued Mr. Eddy. “Looking ahead, we are excited to continue this momentum, which is powered by a world-class team and a culture of operational excellence. We are laser-focused on improving member loyalty, driving an unbeatable member experience, delivering value conveniently through our digital offerings, and expanding our footprint. Furthermore, we remain committed to maximizing shareholder value through prudent capital allocation.”

Investor Day Webcast

The investor event, which will include a discussion on the Company’s fourth quarter and Fiscal 2022 results, is scheduled for today, March 9, 2023, at 8:30 A.M. Eastern Time. The live webcast can be accessed under the “Events and Presentations” section of the Company’s investor relations website at https://investors.bjs.com. A replay of the event, including the accompanying presentation materials, will be available on the website for approximately one year following the event.

About BJ’s Wholesale Club Holdings, Inc.

Headquartered in Marlborough, Massachusetts, BJ's Wholesale Club Holdings, Inc. is a leading operator of membership warehouse clubs in the Eastern United States. The company currently operates 237 clubs and 165 BJ's Gas® locations in 18 states.

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; our anticipated long-term financial 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 continued high inflation rates or further increases in inflation rates or interest rates, supply chain disruptions, construction delays; 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 ongoing impact of the COVID-19 pandemic, or the impact of any future pandemic, epidemic or outbreak of any other highly infectious disease, 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 anticipated 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 in subsequent Form 10-Q’s filed 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 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)

 

 

13 Weeks Ended January 28, 2023

 

13 Weeks Ended January 29, 2022

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

Net sales

$

4,827,762

 

$

4,263,535

 

 

$

18,918,435

 

 

$

16,306,365

 

Membership fee income

 

101,833

 

 

94,303

 

 

 

396,730

 

 

 

360,937

 

Total revenues

 

4,929,595

 

 

4,357,838

 

 

 

19,315,165

 

 

 

16,667,302

 

Cost of sales

 

4,026,414

 

 

3,560,621

 

 

 

15,883,677

 

 

 

13,588,612

 

Selling, general and administrative expenses

 

706,963

 

 

630,451

 

 

 

2,668,569

 

 

 

2,446,465

 

Pre-opening expense

 

3,425

 

 

9,637

 

 

 

24,933

 

 

 

14,902

 

Operating income

 

192,793

 

 

157,129

 

 

 

737,986

 

 

 

617,323

 

Interest expense, net

 

16,296

 

 

11,877

 

 

 

47,462

 

 

 

59,444

 

Income from continuing operations before income taxes

 

176,497

 

 

145,252

 

 

 

690,524

 

 

 

557,879

 

Provision for income taxes

 

47,097

 

 

37,677

 

 

 

176,262

 

 

 

131,119

 

Income from continuing operations

 

129,400

 

 

107,575

 

 

 

514,262

 

 

 

426,760

 

Gain (loss) from discontinued operations, net of income taxes

 

381

 

 

(7

)

 

 

(1,085

)

 

 

(108

)

Net income

$

129,781

 

$

107,568

 

 

$

513,177

 

 

$

426,652

 

Income per share attributable to common stockholders—basic:

 

 

 

 

 

 

 

Income from continuing operations

$

0.97

 

$

0.80

 

 

$

3.84

 

 

$

3.15

 

Loss from discontinued operations

 

—

 

 

—

 

 

 

(0.01

)

 

 

—

 

Net income

$

0.97

 

$

0.80

 

 

$

3.83

 

 

$

3.15

 

Income per share attributable to common stockholders—diluted:

 

 

 

 

 

 

 

Income from continuing operations

$

0.95

 

$

0.78

 

 

$

3.77

 

 

$

3.09

 

Loss from discontinued operations

 

—

 

 

—

 

 

 

(0.01

)

 

 

—

 

Net income

$

0.95

 

$

0.78

 

 

$

3.76

 

 

$

3.09

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

133,393

 

 

134,731

 

 

 

134,017

 

 

 

135,386

 

Diluted

 

136,000

 

 

137,314

 

 

 

136,473

 

 

 

138,045

 

  BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

January 28, 2023

 

January 29, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

33,915

 

$

45,436

Accounts receivable, net

 

239,746

 

 

173,951

Merchandise inventories

 

1,378,551

 

 

1,242,935

Prepaid expense and other current assets

 

51,033

 

 

54,734

Total current assets

 

1,703,245

 

 

1,517,056

 

 

 

 

Operating lease right-of-use assets, net

 

2,142,925

 

 

2,131,986

Property and equipment, net

 

1,337,029

 

 

942,331

Goodwill

 

1,008,816

 

 

924,134

Intangibles, net

 

115,505

 

 

124,640

Deferred income taxes

 

11,498

 

 

5,507

Other assets

 

30,938

 

 

23,240

Total assets

$

6,349,956

 

$

5,668,894

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Short-term debt

$

405,000

 

$

—

Current portion of operating lease liabilities

 

177,233

 

 

141,453

Accounts payable

 

1,195,697

 

 

1,112,783

Accrued expenses and other current liabilities

 

767,411

 

 

748,245

Total current liabilities

 

2,545,341

 

 

2,002,481

 

 

 

 

Long-term lease liabilities

 

2,058,797

 

 

2,059,760

Long-term debt

 

447,880

 

 

748,568

Deferred income taxes

 

57,024

 

 

52,850

Other non-current liabilities

 

194,077

 

 

157,127

 

 

 

 

STOCKHOLDERS' EQUITY

 

1,046,837

 

 

648,108

Total liabilities and stockholders' equity

$

6,349,956

 

$

5,668,894

  BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net income

$

513,177

 

 

$

426,652

 

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

 

 

 

Depreciation and amortization

 

200,934

 

 

 

180,548

 

Amortization of debt issuance costs and accretion of original issue discount

 

2,765

 

 

 

3,387

 

Debt extinguishment and refinancing charges

 

3,256

 

 

 

657

 

Stock-based compensation expense

 

42,617

 

 

 

53,837

 

Deferred income tax benefit

 

(1,938

)

 

 

(507

)

Changes in operating leases and other non-cash items

 

27,730

 

 

 

9,226

 

Increase (decrease) in cash due to changes in:

 

 

 

Accounts receivable

 

(60,967

)

 

 

(1,232

)

Merchandise inventories

 

(47,544

)

 

 

(37,240

)

Accounts payable

 

82,914

 

 

 

124,709

 

Accrued expenses

 

4,784

 

 

 

81,419

 

Other operating assets and liabilities, net

 

20,437

 

 

 

(9,801

)

Net cash provided by operating activities

 

788,165

 

 

 

831,655

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

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

 

(370,537

)

 

 

(304,511

)

Acquisition

 

(376,521

)

 

 

—

 

Net cash used in investing activities

 

(747,058

)

 

 

(304,511

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Proceeds from the issuance of long-term debt

 

67,610

 

 

 

—

 

Payments on long-term debt

 

(50,000

)

 

 

—

 

Payments on First Lien Term Loan

 

(320,655

)

 

 

(100,000

)

Proceeds from revolving lines of credit

 

1,402,000

 

 

 

—

 

Payments on revolving lines of credit

 

(997,000

)

 

 

(260,000

)

Debt issuance costs paid

 

(4,783

)

 

 

—

 

Dividends paid

 

(25

)

 

 

(25

)

Net cash received from stock option exercises

 

8,438

 

 

 

18,713

 

Net cash received from Employee Stock Purchase Program (ESPP)

 

4,830

 

 

 

3,822

 

Acquisition of treasury stock

 

(172,288

)

 

 

(194,316

)

Proceeds from financing obligations

 

15,388

 

 

 

7,692

 

Other financing activities

 

(6,143

)

 

 

(1,112

)

Net cash used in financing activities

 

(52,628

)

 

 

(525,226

)

Net (decrease) increase in cash and cash equivalents

 

(11,521

)

 

 

1,918

 

Cash and cash equivalents at beginning of period

 

45,436

 

 

 

43,518

 

Cash and cash equivalents at end of period

$

33,915

 

 

$

45,436

 

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 EPS”), 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; 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; 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 January 28, 2023

 

13 Weeks Ended January 29, 2022

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

Net income as reported

$

129,781

 

 

$

107,568

 

 

$

513,177

 

 

$

426,652

 

Adjustments:

 

 

 

 

 

 

 

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

 

—

 

 

 

—

 

 

 

—

 

 

 

17,494

 

Acquisition and integration costs (b)

 

—

 

 

 

3,504

 

 

 

12,324

 

 

 

3,504

 

Home office transition costs (c)

 

7,610

 

 

 

552

 

 

 

14,706

 

 

 

552

 

(Gain) loss on termination and impairment on discontinued operations club lease

 

(537

)

 

 

—

 

 

 

662

 

 

 

—

 

(Gain) loss on cash flow hedge (d)

 

—

 

 

 

(806

)

 

 

(165

)

 

 

6,340

 

Charges related to debt (e)

 

2,569

 

 

 

—

 

 

 

3,256

 

 

 

657

 

Severance (f)

 

—

 

 

 

—

 

 

 

—

 

 

 

2,300

 

Tax impact of adjustments to net income (g)

 

(2,731

)

 

 

(913

)

 

 

(8,718

)

 

 

(8,640

)

Adjusted net income

$

136,692

 

 

$

109,905

 

 

$

535,242

 

 

$

448,859

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

136,000

 

 

 

137,314

 

 

 

136,473

 

 

 

138,045

 

Adjusted EPS (h)

$

1.00

 

 

$

0.80

 

 

$

3.92

 

 

$

3.25

 

(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 of Burris Logistics, including due diligence, legal, and other consulting expenses.

(c)

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

(d)

Represents the reclassification into earnings of accumulated other comprehensive income/loss 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 costs related to the Company’s ABL Facility and amendment of the senior secured first lien term loan 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 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 January 28, 2023

 

13 Weeks Ended January 29, 2022

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

Income from continuing operations

$

129,400

 

$

107,575

 

$

514,262

 

$

426,760

Interest expense, net

 

16,296

 

 

11,877

 

 

47,462

 

 

59,444

Provision for income taxes

 

47,097

 

 

37,677

 

 

176,262

 

 

131,119

Depreciation and amortization

 

51,675

 

 

44,883

 

 

200,934

 

 

180,547

Stock-based compensation expense

 

14,652

 

 

11,409

 

 

42,617

 

 

53,837

Pre-opening expenses (a)

 

3,425

 

 

9,637

 

 

24,933

 

 

14,902

Acquisition and integration costs (b)

 

—

 

 

3,504

 

 

12,324

 

 

3,504

Non-cash rent (c)

 

864

 

 

1,025

 

 

3,991

 

 

5,594

Home office transition costs (d)

 

7,610

 

 

552

 

 

14,706

 

 

552

Severance (e)

 

—

 

 

—

 

 

—

 

 

2,300

Other adjustments (f)

 

310

 

 

462

 

 

642

 

 

991

Adjusted EBITDA

$

271,329

 

$

228,601

 

$

1,038,133

 

$

879,550

(a)

Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.

(b)

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

(c)

Consists of an adjustment to remove the non-cash portion of rent expense.

(d)

Represents incremental rent expense, termination fee, 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 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 January 28, 2023

 

13 Weeks Ended January 29, 2022

 

52 Weeks Ended January 28, 2023

 

52 Weeks Ended January 29, 2022

Net cash provided by operating activities

$

175,308

 

$

98,480

 

 

$

788,165

 

$

831,655

Less: Additions to property and equipment, net of disposals

 

103,495

 

 

101,093

 

 

 

397,803

 

 

323,591

Plus: Proceeds from sale leaseback transactions

 

16,174

 

 

—

 

 

 

27,266

 

 

19,080

Free cash flow

$

87,987

 

$

(2,613

)

 

$

417,628

 

$

527,144

  BJ'S WHOLESALE CLUB HOLDINGS, INC.

Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA

(Amounts in thousands)

(Unaudited)

 

 

January 28, 2023

Total debt

$

852,880

Less: Cash and cash equivalents

 

33,915

Net Debt

$

818,965

 

 

Adjusted EBITDA(a)

$

1,038,133

 

 

Net debt to LTM adjusted EBITDA

0.8x

(a)

See “Reconciliation to Adjusted EBITDA (unaudited)” table above.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230309005342/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