Burlington Stores, Inc. Announces First Quarter 2016 Results, Exceeding Guidance; Raises Fiscal Year 2016 Outlook
-
On a GAAP basis, net sales rose 8.4%, net income increased 46%
and diluted net income per share rose 53% -
On a Non-GAAP basis,
- Comparable store sales increased 4.3%
- Adjusted Net Income per Share rose 39% to $0.57
- Adjusted EBITDA increased 19% to $121 million
-
Comparable store inventory decreased 9% and turnover
improved 7%
BURLINGTON, N.J.–(BUSINESS WIRE)–Burlington Stores, Inc. (NYSE: BURL), a nationally recognized off-price
retailer of high-quality, branded apparel at everyday low prices, today
announced its results for the first quarter ended April 30, 2016.Tom Kingsbury, Chief Executive Officer stated, “We are very pleased to
report first quarter results that exceeded our top and bottom line
guidance. Our performance was highlighted by an 8.4% increase in net
sales, a 4.3% increase in comparable store sales and an 80 basis point
expansion in adjusted EBITDA margin driven by the ongoing traction and
successful execution of our off-price operating model. I would like to
thank our store and corporate teams for these results.”Fiscal 2016 First Quarter Operating Results
(for the 13 week period ended April 30, 2016 compared with the 13 week
period ended May 2, 2015):-
Net sales increased 8.4%, or $99.6 million, to $1,282.7 million. This
increase includes the 4.3% increase in comparable store sales, as well
as an increase of $52.6 million from new and non-comparable stores. -
Gross margin improved approximately 35 basis points to 40.1% during
the Fiscal 2016 first quarter. This more than offset an approximate 20
basis point increase in product sourcing costs, which are included in
selling, general and administrative expenses (SG&A). -
SG&A, less product sourcing costs, as a percentage of net sales was
26.7%, which represented an approximate 60 basis points of improvement
compared with the Fiscal 2015 first quarter. Approximately 20 basis
points of this improvement represented timing of certain expenses
related to activities that were moved to the second quarter of the
year. - The effective tax rate was 37.6% compared with 37.8% last year.
-
Net income increased 46.0% to $37.5 million, or $0.52 per diluted
share. -
Adjusted Net Income increased 32.5% to $41.6 million, or $0.57 per
share vs. $0.41 per share last year. -
Fully diluted shares outstanding were 72.4 million at the end of the
quarter compared with 76.5 million outstanding at the end of last
year’s first quarter, primarily driven by the repurchase of 4.9
million shares since the 2015 first quarter. -
Adjusted EBITDA increased 19.3%, or $19.5 million, to $121.0 million.
Sales growth, SG&A leverage and gross margin expansion led to an 80
basis point expansion in Adjusted EBITDA as a percentage of net sales.
Inventory
-
Merchandise inventories were $804.7 million vs. $822.3 million last
year, primarily driven by a comparable store inventory decrease of 9%.
Pack and hold inventory represented 28% of inventory at quarter end
versus 26% last year.
Share Repurchase Activity
-
During the first quarter, the Company invested $50 million of cash to
repurchase 924,953 shares of its common stock ending the period with
approximately $150 million remaining on its share repurchase
authorization.
Full Year Fiscal 2016 and Second Quarter 2016
OutlookThe Company is raising its Full Year Fiscal 2016 outlook based on its
very strong first quarter results. The Company notes that given changes
in share count, simple addition of its quarterly adjusted net income per
share will not round to the full fiscal year.For the full Fiscal Year 2016 (the 52-weeks ending January 28, 2017),
the Company expects:- Net sales now to increase in the range of 7.1% to 7.6%;
-
Comparable store sales now to increase between 3.0% to 3.5%, inclusive
of a 0.5% increase related to the transfer of our fragrance business
from a leased to an owned category; - Interest expense of approximately $62 million;
- Tax rate to approximate 37.8%;
-
Adjusted Net Income per Share in the range of $2.68 to $2.78, compared
to our prior guidance of $2.62 to $2.72, utilizing a fully diluted
share count of approximately 72.4 million shares, as compared with
$2.31 in Fiscal 2015; - Adjusted EBITDA margin expansion now to increase 30 to 40 basis points;
- To open 25 net new stores.
For the second quarter of Fiscal 2016 (the 13 weeks ending July 30,
2016), the Company expects:- Net sales to increase in the range of 6.3% to 7.3%;
- Comparable store sales to increase in the range of 2.5% to 3.5%;
-
Adjusted Net Income per Share in the range of $0.20 to $0.23,
utilizing a fully diluted share count of approximately 72.3 million
shares, as compared to $0.19 last year. The guidance range for the
quarter includes a shift of approximately $0.02 per diluted share in
expenses from the first quarter.
The Company has provided non-GAAP guidance as set out above. This does
not reflect the impact of potential future non-GAAP adjustments on GAAP
net income or GAAP diluted net income per share because the need for
some of these adjustments, and their impact, cannot be predicted with
reasonable certainty. The adjustments that cannot be predicted with
reasonable certainty include, but are not limited to, costs related to
debt amendments, secondary offerings, loss on extinguishment of debt,
and impairment charges as well as the tax effect of such items.Note regarding Non-GAAP financial measures
The foregoing discussion includes references to Adjusted EBITDA,
Adjusted Net Income, and Adjusted Net Income per Share. The Company
believes these measures are useful in evaluating the operating
performance of the business and for comparing its results to that of
other retailers. These non-GAAP financial measures are defined and
reconciled to the most comparable GAAP measure later in this document.First Quarter 2016 Conference Call
The Company will hold a conference call on Thursday, May 26, 2016 at
8:30 a.m. Eastern Time to discuss the Company’s first quarter results.
The U.S. toll free dial-in for the conference call is 1-877-407-0789 and
the international dial-in number is 1-201-689-8562.A live webcast of the conference call will also be available on the
investor relations page of the Company’s website at www.burlingtoninvestors.com.
For those unable to participate in the conference call, a replay will be
available beginning at 11:30 am ET, May 26, 2016 until 11:59 pm ET on
June 2, 2016. The U.S. toll-free replay dial-in number is 1-877-870-5176
and the international replay dial-in number is 1-858-384-5517. The
replay passcode is 13637670. Additionally, a replay of the call will be
available on the investor relations page of the Company’s website at www.burlingtoninvestors.com.Investors and others should note that Burlington Stores currently
announces material information using SEC filings, press releases, public
conference calls and webcasts. In the future, Burlington Stores will
continue to use these channels to distribute material information about
the Company, and may also utilize its website and/or various social
media sites to communicate important information about the Company, key
personnel, new brands and services, trends, new marketing campaigns,
corporate initiatives and other matters. Information that the Company
posts on its website or on social media channels could be deemed
material; therefore, the Company encourages investors, the media, our
customers, business partners and others interested in Burlington Stores
to review the information posted on its website, as well as the
following social media channels:Facebook (https://www.facebook.com/BurlingtonCoatFactory/)
and Twitter (https://twitter.com/burlington).Any updates to the list of social media channels the Company may use to
communicate material information will be posted on the investor
relations page of the Company’s website at www.burlingtoninvestors.com.About Burlington Stores, Inc.
The Company, through its wholly-owned subsidiaries, operates a national
chain of off-price retail stores offering ladies’, men’s and children’s
apparel and accessories, home goods, baby products and coats,
principally under the name Burlington Stores.For more information about Burlington Stores, Inc., visit the Company’s
website at www.burlingtonstores.com.Safe Harbor for Forward-Looking and Cautionary Statements
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (Exchange Act). All
statements other than statements of historical fact included in this
release are forward-looking statements. Forward-looking statements
discuss our current expectations and projections relating to our
financial condition, results of operations, plans, objectives, future
performance and business. You can identify forward-looking statements by
the fact that they do not relate strictly to historical or current
facts. We do not undertake to publicly update or revise our
forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied in such statements
will not be realized. If we do update one or more forward-looking
statements, no inference should be made that we will make additional
updates with respect to those or other forward-looking statements. All
forward-looking statements are subject to risks and uncertainties that
may cause actual results to differ materially from those we expected,
including competition in the retail industry, seasonality of our
business, adverse weather conditions, changes in consumer preferences
and consumer spending patterns, import risks, inflation, general
economic conditions, our ability to implement our strategy, our
substantial level of indebtedness and related debt-service obligations,
restrictions imposed by covenants in our debt agreements, availability
of adequate financing, our dependence on vendors for our merchandise,
events affecting the delivery of merchandise to our stores, existence of
adverse litigation and risks, availability of desirable locations on
suitable terms and other factors that may be described from time to time
in our filings with the Securities and Exchange Commission (SEC). For
each of these factors, the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, as amended.BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(All amounts in thousands)
)
)
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(All amounts in thousands)
)
)
)
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(All amounts in thousands)
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts
in thousands except per share data)Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA
and Adjusted Tax ExpenseThe following tables calculate the Company’s Adjusted Net Income,
Adjusted Net Income per Share, Adjusted EBITDA (earnings before (i) net
interest expense, (ii) loss on extinguishment of debt, (iii) costs
related to secondary offerings, (iv) stock option modification expense,
(v) advisory fees, (vi) depreciation and amortization (vii) impairment
charges and (viii) taxes) and Adjusted Tax Expense (income tax expense
less the tax effect of the reconciling items to get to Adjusted Net
Income (footnote (g) in the table below)), all of which are considered
Non-GAAP financial measures. Generally, a Non-GAAP financial measure is
a numerical measure of a company’s performance, financial position or
cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP.Adjusted Net Income is defined as net income for the period plus (i) net
favorable lease amortization, (ii) costs related to secondary offerings,
(iii) stock option modification expense, (iv) loss on the extinguishment
of debt, (v) impairment charges and (vi) advisory fees, all of which are
tax effected to arrive at Adjusted Net Income.Adjusted Net Income per Share is defined as Adjusted Net Income divided
by the weighted average shares outstanding, as defined in the table
below.The Company presents Adjusted Net Income, Adjusted Net Income per Share,
Adjusted EBITDA and Adjusted Tax Expense because it believes they are
useful supplemental measures in evaluating the performance of the
Company’s business and provide greater transparency into the results of
operations. In particular, the Company believes that excluding certain
items that may vary substantially in frequency and magnitude from
operating income are useful supplemental measures that assist in
evaluating the Company’s ability to generate earnings and leverage
sales, and to more readily compare these metrics between past and future
periods.The Company believes that Adjusted Net Income, Adjusted Net Income per
Share, Adjusted EBITDA and Adjusted Tax Expense provide investors
helpful information with respect to the Company’s operations and
financial condition. Other companies in the retail industry may
calculate these non-GAAP measures differently such that the Company’s
calculation may not be directly comparable. The adjustments to these
metrics are not in accordance with regulations adopted by the SEC that
apply to periodic reports presented under the Exchange Act. Accordingly,
Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA and
Adjusted Tax Expense may be presented differently in filings made with
the SEC than as presented in this report or not presented at all.The following table shows the Company’s reconciliation of net income to
Adjusted Net Income for the three months ended April 30, 2016 compared
with the three months ended May 2, 2015:(unaudited) (in thousands, except per share data) Three Months Ended April 30, May 2, 2016 2015 Reconciliation of net income to Adjusted Net Income: Net income $ 37,514 $ 25,695 Net favorable lease amortization (a) 6,222 6,057 Costs related to secondary offering (b) — 259 Stock option modification expense (c) 236 460 Loss on extinguishment of debt (d) — 649 Impairment charges (e) 109 1,715 Advisory fees (f) — 73 Tax effect (g) (2,471 ) (3,501 ) Adjusted Net Income $ 41,610 $ 31,407 Fully diluted weighted average shares outstanding (h) 72,423 76,501 Adjusted Net Income per Share $ 0.57 $ 0.41 (a) Net favorable lease amortization represents the non-cash
amortization expense associated with favorable and unfavorable
leases that were recorded as a result of purchase accounting related
to the April 13, 2006 Bain Capital acquisition of Burlington Coat
Factory Warehouse Corporation, and are recorded in the line item
“Depreciation and amortization” in our Condensed Consolidated
Statements of Operations.(b) Costs are related to our secondary offering of common stock during
Fiscal 2015.(c) Represents expenses incurred as a result of our May 2013 stock
option modification.(d) Amounts relate to the April 2015 prepayment on our Term Loan
Facility.(e) Represents impairment charges on long-lived assets. (f) Amounts represent reimbursement for out-of-pocket expenses that are
payable to Bain Capital, and are recorded in the line item “Selling,
general and administrative expenses” in our Condensed Consolidated
Statements of Operations.(g) Tax effect is calculated based on the effective tax rates (before
discrete items) for the respective periods, adjusted for the tax
effect for the tax impact of items (a) through (f).(h) Fully diluted weighted average shares outstanding starts with basic
shares outstanding and adds back any potentially dilutive securities
outstanding during the period. Fully diluted weighted average shares
outstanding is equal to basic shares outstanding if the Company is
in an Adjusted Net Loss position.The following table shows the Company’s reconciliation of net income to
Adjusted EBITDA for the three months ended April 30, 2016 compared with
the three months ended May 2, 2015:(unaudited) (in thousands) Three Months Ended April 30, May 2, 2016 2015 Reconciliation of net income to Adjusted EBITDA: Net income $ 37,514 $ 25,695 Interest expense 14,952 14,803 Interest income (14 ) (15 ) Loss on extinguishment of debt (d) — 649 Costs related to secondary offering (b) — 259 Stock option modification expense (c) 236 460 Advisory fees (f) — 73 Depreciation and amortization 45,545 42,155 Impairment charges (e) 109 1,715 Tax expense 22,631 15,646 Adjusted EBITDA $ 120,973 $ 101,440 The following table shows the Company’s reconciliation of income tax
expense to Adjusted Tax Expense for the three months ended April 30,
2016 compared with the three months ended May 2, 2015:(unaudited) (in thousands) Three Months Ended April 30, May 2, 2016 2015 Reconciliation of income tax expense to Adjusted Tax Expense Income tax expense $ 22,631 $ 15,646 Less tax effect of adjustments to net income (2,471 ) (3,501 ) Adjusted Tax Expense $ 25,102 $ 19,147 Contacts
Investor Relations:
Burlington Stores, Inc.
Robert L.
LaPenta, Jr.
855-973-8445
Info@BurlingtonInvestors.com
or
ICR,
Inc.
Allison Malkin
Melissa Calandruccio
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