BJ’s Wholesale Club's Q1 net earnings rise 37.8% year-over-year to US$112.45B from US$81.58B; total revenue up 16.2% to US$4.50B, comp sales up 14.4% as company reaches 6.5 million members, acquires perishable distribution network to further growth

Sample article from our Consumer packaged goods (CPG)

WESTBOROUGH, Massachusetts , May 20, 2022 (press release) –

Company reports record MFI and surpasses 6.5 million members

First Quarter Fiscal 2022 Highlights

BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks ended April 30, 2022.

“Our performance in the first quarter was strong, as gains in member traffic underscored the value we provide. Our business model remains more relevant than ever in the current inflationary environment,” said Bob Eddy, President and Chief Executive Officer, BJ’s Wholesale Club.

“We also continued to build on the transformational gains we have driven over the last two years,” continued Mr. Eddy. “Our membership has never been stronger. We reached 6.5 million members in the first quarter, which serves as a testament to the value that we consistently deliver to our members. Our digital business remains a key competitive advantage. We’re quickly expanding our footprint and we recently closed the acquisition of our perishable distribution network, which will support our future growth efforts and drive long-term shareholder value.”

Key Measures for the Thirteen Weeks Ended April 30, 2022 (First Quarter of Fiscal 2022):

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

(Amounts in thousands, except per share amounts)

           

 

13 Weeks Ended
April 30, 2022

 

13 Weeks Ended
May 1, 2021

 

%
Growth

Net sales

$

4,399,810

 

$

3,781,834

 

16.3

%

Membership fee income

 

96,625

 

 

86,388

 

11.9

%

Total revenues

 

4,496,435

 

 

3,868,222

 

16.2

%

 

 

 

 

 

 

Operating income

 

150,317

 

 

126,254

 

19.1

%

Income from continuing operations

 

112,457

 

 

81,586

 

37.8

%

Adjusted EBITDA (a)

 

220,801

 

 

202,410

 

9.1

%

Net income

 

112,450

 

 

81,579

 

37.8

%

EPS (b)

 

0.82

 

 

0.59

 

39.0

%

Adjusted net income (a)

 

118,426

 

 

99,694

 

18.8

%

Adjusted EPS (a)

 

0.87

 

 

0.72

 

20.8

%

Basic weighted average shares outstanding

 

134,244

 

 

135,709

 

(1.1

)%

Diluted weighted average shares outstanding

 

136,702

 

 

138,662

 

(1.4

)%

           

(a) See “Note Regarding Non-GAAP Financial Information.”

(b) EPS represents earnings per diluted share.

Additional Highlights:

Fiscal 2022 Ending January 28, 2023 Outlook

“We are pleased with our performance in the first quarter and remain optimistic that the strength of our core business will continue to drive long-term growth,” said Laura Felice, Executive Vice President, Chief Financial Officer, BJ's Wholesale. “Our fiscal year 2022 EPS outlook of flat year-over-year remains unchanged.”

Conference Call Details

A conference call to discuss the first quarter of fiscal 2022 financial results is scheduled for today, May 19, 2022, 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 068574. A live audio webcast of the conference call will be available online at https://investors.bjs.com" target="_blank" >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" target="_blank" >https://investors.bjs.com and by dialing 929-458-6194 or 866-813-9403 and referencing conference ID 857294. 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 229 clubs and 159 BJ's Gas® locations in 17 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 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 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, 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
April 30, 2022

 

Thirteen Weeks Ended
May 1, 2021

Net sales

$

4,399,810

 

 

$

3,781,834

 

Membership fee income

 

96,625

 

 

 

86,388

 

Total revenues

 

4,496,435

 

 

 

3,868,222

 

Cost of sales

 

3,705,838

 

 

 

3,141,497

 

Selling, general and administrative expenses

 

635,380

 

 

 

599,910

 

Pre-opening expense

 

4,900

 

 

 

561

 

Operating income

 

150,317

 

 

 

126,254

 

Interest expense, net

 

7,841

 

 

 

19,285

 

Income from continuing operations before income taxes

 

142,476

 

 

 

106,969

 

Provision for income taxes

 

30,019

 

 

 

25,383

 

Income from continuing operations

 

112,457

 

 

 

81,586

 

Loss from discontinued operations, net of income taxes

 

(7

)

 

 

(7

)

Net income

$

112,450

 

 

$

81,579

 

Income per share attributable to common stockholders - basic:

 

 

 

Income from continuing operations

$

0.84

 

 

$

0.60

 

Loss from discontinued operations

 

 

 

 

 

Net income

$

0.84

 

 

$

0.60

 

Income per share attributable to common stockholders - diluted:

 

 

 

Income from continuing operations

$

0.82

 

 

$

0.59

 

Loss from discontinued operations

 

 

 

 

 

Net income

$

0.82

 

 

$

0.59

 

Weighted average number of shares outstanding:

 

 

 

Basic

 

134,244

 

 

 

135,709

 

Diluted

 

136,702

 

 

 

138,662

 

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except per share amounts)

(Unaudited)

       

 

April 30, 2022

 

May 1, 2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

37,952

 

$

62,954

Accounts receivable, net

 

210,405

 

 

197,991

Merchandise inventories

 

1,462,098

 

 

1,120,334

Prepaid expense and other current assets

 

58,814

 

 

54,258

Total current assets

 

1,769,269

 

 

1,435,537

 

 

 

 

Operating lease right-of-use assets, net

 

2,177,777

 

 

2,119,629

Property and equipment, net

 

989,658

 

 

815,303

Goodwill

 

924,134

 

 

924,134

Intangibles, net

 

122,332

 

 

132,502

Deferred taxes

 

4,595

 

 

3,349

Other assets

 

22,240

 

 

18,752

Total assets

$

6,010,005

 

$

5,449,206

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

80,000

 

$

210,000

Current portion of operating lease liabilities

 

169,423

 

 

132,869

Accounts payable

 

1,267,102

 

 

1,023,140

Accrued expenses and other current liabilities

 

692,530

 

 

669,924

Total current liabilities

 

2,209,055

 

 

2,035,933

 

 

 

 

Long-term lease liabilities

 

2,107,532

 

 

2,050,950

Long-term debt

 

748,987

 

 

747,311

Deferred income taxes

 

58,511

 

 

45,529

Other noncurrent liabilities

 

164,578

 

 

155,959

 

 

 

 

STOCKHOLDERS' EQUITY

 

721,342

 

 

413,524

Total liabilities and stockholders' equity

$

6,010,005

 

$

5,449,206

BJ'S WHOLESALE CLUB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except per share amounts)

(Unaudited)

       

 

Thirteen Weeks Ended
April 30, 2022

 

Thirteen Weeks Ended
May 1, 2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net income

$

112,450

 

 

$

81,579

 

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

 

 

 

Depreciation and amortization

 

47,109

 

 

 

44,386

 

Amortization of debt issuance costs and accretion of original issue discount

 

832

 

 

 

891

 

Debt extinguishment charges

 

 

 

 

657

 

Stock-based compensation expense

 

9,115

 

 

 

27,300

 

Deferred income tax provision (benefit)

 

6,299

 

 

 

(233

)

Changes in operating leases and other non-cash items

 

29,892

 

 

 

1,200

 

Increase (decrease) in cash due to changes in:

 

 

 

Accounts receivable

 

(36,454

)

 

 

(25,272

)

Merchandise inventories

 

(219,163

)

 

 

85,361

 

Accounts payable

 

154,319

 

 

 

35,066

 

Accrued expenses

 

(58,780

)

 

 

13,127

 

Other operating assets and liabilities, net

 

(1,311

)

 

 

(15,097

)

Net cash provided by operating activities

 

44,308

 

 

 

248,965

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

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

 

(90,533

)

 

 

(58,060

)

Net cash used in investing activities

 

(90,533

)

 

 

(58,060

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Payments on First Lien Term Loan

 

 

 

 

(100,000

)

Net proceeds from (payments on) ABL Facility

 

80,000

 

 

 

(50,000

)

Net cash received from stock option exercises

 

2,306

 

 

 

1,497

 

Acquisition of treasury stock

 

(51,342

)

 

 

(24,031

)

Proceeds from financing obligations

 

8,072

 

 

 

1,333

 

Changes in finance leases and other financing activities

 

(295

)

 

 

(268

)

Net cash provided by (used in) financing activities

 

38,741

 

 

 

(171,469

)

Net increase (decrease) in cash and cash equivalents

 

(7,484

)

 

 

19,436

 

Cash and cash equivalents at beginning of period

 

45,436

 

 

 

43,518

 

Cash and cash equivalents at end of period

$

37,952

 

 

$

62,954

 

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; 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
April 30, 2022

 

13 Weeks Ended
May 1, 2021

Net income as reported

$

112,450

 

 

$

81,579

 

Adjustments:

 

 

 

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

 

 

 

 

17,494

 

Acquisition and integration costs (b)

 

7,879

 

 

 

 

Incremental home office expense (c)

 

599

 

 

 

 

(Gain) loss on cash flow hedge (d)

 

(165

)

 

 

4,709

 

Charges related to debt payments (e)

 

 

 

 

657

 

Severance (f)

 

 

 

 

2,300

 

Tax impact of adjustments to net income (g)

 

(2,337

)

 

 

(7,045

)

Adjusted net income

$

118,426

 

 

$

99,694

 

 

 

 

 

Weighted-average diluted shares outstanding

 

136,702

 

 

 

138,662

 

Adjusted net income per diluted share (h)

$

0.87

 

 

$

0.72

 

(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 as the Company transitions from the current home office to a new home office building 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.

(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
April 30, 2022

 

13 Weeks Ended
May 1, 2021

Income from continuing operations

$

112,457

 

$

81,586

Interest expense, net

 

7,841

 

 

19,285

Provision for income taxes

 

30,019

 

 

25,383

Depreciation and amortization

 

47,109

 

 

44,386

Stock-based compensation expense

 

9,115

 

 

27,300

Pre-opening expenses (a)

 

4,900

 

 

561

Non-cash rent (b)

 

846

 

 

1,417

Acquisition and integration costs (c)

 

7,879

 

 

Severance (d)

 

 

 

2,300

Other adjustments (e)

 

635

 

 

192

Adjusted EBITDA

$

220,801

 

$

202,410

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

(e)  

Other non-cash items, including non-cash accretion on asset retirement obligations, obligations associated with our post-retirement medical plan and  incremental rent expense as the Company transitions from the current home office to a new home office building in fiscal 2022.

BJ'S WHOLESALE CLUB HOLDINGS, INC.

Reconciliation to Free Cash Flow

(Amounts in thousands)

(Unaudited)

       

 

13 Weeks Ended
April 30, 2022

 

13 Weeks Ended
May 1, 2021

Net cash provided by operating activities

$

44,308

 

 

$

248,965

Less: Additions to property and equipment, net of disposals

 

90,533

 

 

 

74,690

Plus: Proceeds from sale leaseback transactions

 

 

 

 

16,630

Free cash flow

$

(46,225

)

 

$

190,905

BJ'S WHOLESALE CLUB HOLDINGS, INC.

Reconciliation of Net Debt and Net Debt to LTM adjusted EBITDA

(Amounts in thousands)

(Unaudited)

   

 

April 30, 2022

Total debt

$

828,987

Less: Cash and cash equivalents

 

37,952

Net Debt

$

791,035

 

 

Income from continuing operations

$

457,631

Interest expense, net

 

48,000

Provision for income taxes

 

135,755

Depreciation and amortization

 

183,270

Stock-based compensation expense

 

35,652

Pre-opening expenses

 

19,241

Non-cash rent

 

5,575

Acquisition and integration costs

 

11,383

Other adjustments

 

1,434

Adjusted EBITDA

$

897,941

 

 

Net debt to LTM adjusted EBITDA

0.9x

   

See descriptions of adjustments in the “Reconciliation to Adjusted EBITDA (unaudited)” table above.

 

 

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

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

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