Business Wire | Jan 25, 2021 04:10PM EST

Boot Barn Holdings, Inc. Announces Third Quarter Fiscal Year 2021 Financial Results

Jan. 25, 2021

IRVINE, Calif.--(BUSINESS WIRE)--Jan. 25, 2021--Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the third fiscal quarter ended December 26, 2020.

For the quarter ended December 26, 2020:

* Net sales increased 6.5% to $302.3 million. * Same store sales increased 4.6%, comprised of an increase in retail store same store sales of 1.9% and an increase in e-commerce sales of 16.3%. * Net income was $29.6 million, or $1.00 per diluted share, compared to net income of $24.8 million, or $0.85 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.04 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.99, compared to $0.81 in the prior-year period. * Cash and cash equivalents were $76.3 million.

Jim Conroy, Chief Executive Officer, commented, "Our strong third quarter results against a difficult economic backdrop demonstrate the power of our business model. The work we've done over the last several years successfully executing our key strategic initiatives has provided the foundation to navigate the ongoing headwinds from COVID-19 and deliver mid-single digit same store sales growth and a 150-basis point improvement in operating margin. We are encouraged that same store sales have accelerated in the fourth quarter with continued strength in margin. While the near term is likely to remain volatile, we believe our merchandising strategies, omni-channel capabilities and organizational expertise, combined with the adjustments we've made to our operating model during the pandemic, have us well positioned to build on our recent accomplishments and head into fiscal 2022 with good momentum."

Operating Results for the Third Quarter Ended December 26, 2020

* Net sales increased 6.5% to $302.3 million from $284.0 million in the prior-year period. Consolidated same store sales increased 4.6% with retail store same store sales up 1.9% and e-commerce same store sales up 16.3%. The increase in net sales was the result of an increase of 4.6% in same store sales and the sales contribution from new and acquired stores over the past twelve months.

* Gross profit was $106.8 million, or 35.3% of net sales, compared to $97.0 million, or 34.2% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 120 basis points was driven by a 150-basis point increase in merchandise margin, partially offset by 30 basis points of deleverage in buying and occupancy costs. Merchandise margin increased 150 basis points primarily as a result of better full-price selling and reduced promotions.

* Selling, general and administrative expenses were $65.2 million, or 21.6% of net sales, compared to $62.1 million, or 21.9% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of additional costs to support higher sales and expenses for both new and acquired stores. Selling, general and administrative expenses as a percentage of net sales decreased by 30 basis points primarily as a result of expense leverage on higher sales.

* Income from operations increased 19.0% to $41.6 million, or 13.8% of net sales, compared to $35.0 million, or 12.3% of net sales, in the prior-year period. This increase represents approximately 150 basis points of improvement in operating profit margin.

* Net income was $29.6 million, or $1.00 per diluted share, compared to net income of $24.8 million, or $0.85 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.04 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.99, compared to $0.81 in the prior-year period.

Operating Results for the Nine Months Ended December 26, 2020

* Net sales decreased 3.4% to $634.6 million from $656.9 million in the prior-year period. Consolidated same store sales decreased 3.2% with retail store same store sales down 8.9% and e-commerce same store sales up 24.9%. The decrease in retail store sales was primarily due to decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures.

* Gross profit was $202.5 million, or 31.9% of net sales, compared to $218.5 million, or 33.3% of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from the COVID-19 crisis. The decrease in gross profit rate was driven by 140 basis points of deleverage in buying and occupancy costs primarily as a result of lower sales.

* Selling, general and administrative expenses were $149.0 million, or 23.5% of net sales, compared to $154.6 million, or 23.5% of net sales, in the prior-year period. The decrease in selling, general and administrative expenses was primarily a result of reduced marketing expenses and lower payroll.

* Income from operations decreased 16.4% to $53.5 million, or 8.4% of net sales, compared to $64.0 million, or 9.7% of net sales, in the prior-year period. The decline in income from operations is primarily a result of the negative impact on sales and gross margin from decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures.

* Net income was $34.8 million, or $1.19 per diluted share, compared to net income of $42.2 million, or $1.45 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.07 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.18, compared to $1.38 in the prior-year period.

Current Business

The following table includes same store sales, net sales and e-commerce as a percentage of net sales for the periods indicated below:

Four Four Five Thirteen Preliminary Weeks Weeks Weeks Weeks Ended Four Weeks Fiscal Fiscal Fiscal December 26, Fiscal October November December 2020 JanuaryRetail Stores SSS 0% 1% 3% 2% 20%

E-commerce SSS 12% 20% 16% 16% 7%

Total SSS 2% 4% 6% 5% 17%

Net Sales 6% 8% 6% 6% 21%IncreaseE-commerce as % 16% 18% 23% 20% 16%of Net Sales Fiscal Year 2021 Outlook

Due to the ongoing uncertainty created by COVID-19, the Company is not providing fourth quarter and fiscal year 2021 guidance at this time.

Conference Call Information

A conference call to discuss the financial results for the third quarter of fiscal year 2021 is scheduled for today, January 25, 2021, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to (877) 451-6152. The conference call will also be available to interested parties through a live webcast at investor.bootbarn.com. Please visit the website and select the "Events and Presentations" link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until February 25, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13715296. Please note participants must enter the conference identification number in order to access the replay.

About Boot Barn

Boot Barn is the nation's leading lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children. The Company offers its loyal customer base a wide selection of work and lifestyle brands. As of the date of this release, Boot Barn operates 265 stores in 36 states, in addition to an e-commerce channel www.bootbarn.com. The Company also operates www.sheplers.com, the nation's leading pure play online western and work retailer and www.countryoutfitter.com, an e-commerce site selling to customers who live a country lifestyle. For more information, call 888-Boot-Barn or visit www.bootbarn.com.

Forward Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity, profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "might", "will", "could", "should", "can have", "likely", "outlook" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. These forward-looking statements are based on assumptions that the Company's management has made in light of their industry experience and on their perceptions of historical trends, current conditions, expected future developments and other factors they believe are appropriate under the circumstances. As you consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. These risks, uncertainties and assumptions include, but are not limited to, the following: the effect of COVID-19 on our business operations, growth strategies, store traffic, employee availability, financial condition, liquidity and cash flow; decreases in consumer spending due to declines in consumer confidence, local economic conditions or changes in consumer preferences; the Company's ability to effectively execute on its growth strategy; and the Company's failure to maintain and enhance its strong brand image, to compete effectively, to maintain good relationships with its key suppliers, and to improve and expand its exclusive product offerings. The Company discusses the foregoing risks and other risks in greater detail under the heading "Risk factors" in the periodic reports filed by the Company with the Securities and Exchange Commission. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. Because of these factors, the Company cautions that you should not place undue reliance on any of these forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict those events or how they may affect the Company. Further, any forward-looking statement speaks only as of the date on which it is made. Except as required by law, the Company does not intend to update or revise the forward-looking statements in this press release after the date of this press release.

Boot Barn Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

December March 28, 26, 2020 2020

AssetsCurrent assets:Cash and cash equivalents $ 76,342 $ 69,563

Accounts receivable, net 13,876 12,087

Inventories 246,008 288,717

Prepaid expenses and other current assets 15,008 14,284

Total current assets 351,234 384,651

Property and equipment, net 109,793 109,603

Right-of-use assets, net 170,311 170,243

Goodwill 197,502 197,502

Intangible assets, net 60,907 60,974

Other assets 2,425 1,738

Total assets $ 892,172 $ 924,711

Liabilities and stockholders' equityCurrent liabilities:Line of credit $ - $ 129,900

Accounts payable 103,095 95,334

Accrued expenses and other current liabilities 94,831 52,612

Short-term lease liabilities 36,796 34,779

Total current liabilities 234,722 312,625

Deferred taxes 18,651 19,801

Long-term portion of notes payable, net 109,591 109,022

Long-term lease liabilities 165,176 160,935

Other liabilities 1,424 635

Total liabilities 529,564 603,018

Stockholders' equity:Common stock, $0.0001 par value; December 26, 2020 -100,000 shares 3 3authorized, 29,044 shares issued; March 28, 2020 -100,000 shares authorized,28,880 shares issuedPreferred stock, $0.0001 par value; 10,000 shares - -authorized, no shares issued or outstandingAdditional paid-in capital 175,865 169,249

Retained earnings 188,475 153,641

Less: Common stock held in treasury, at cost, 93 and 71 (1,735) (1,200)shares at December 26,2020 and March 28, 2020, respectivelyTotal stockholders' equity 362,608 321,693

Total liabilities and stockholders' equity $ 892,172 $ 924,711

Boot Barn Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Thirteen Weeks Ended Thirty-Nine Weeks Ended December December December December 26, 28, 26, 28, 2020 2019 2020 2019

Net sales $ 302,338 $ 283,997 $ 634,619 $ 656,947

Cost of goods sold 195,529 186,961 432,119 438,417

Gross profit 106,809 97,036 202,500 218,530

Selling, general and 65,183 62,059 149,034 154,558administrative expensesIncome from operations 41,626 34,977 53,466 63,972

Interest expense, net 2,303 3,155 7,327 10,369

Other income, net 152 37 294 51

Income before income taxes 39,475 31,859 46,433 53,654

Income tax expense 9,909 7,040 11,599 11,434

Net income $ 29,566 $ 24,819 $ 34,834 $ 42,220

Earnings per share:Basic shares $ 1.02 $ 0.87 $ 1.21 $ 1.48

Diluted shares $ 1.00 $ 0.85 $ 1.19 $ 1.45

Weighted average sharesoutstanding:Basic shares 28,912 28,665 28,866 28,516

Diluted shares 29,581 29,367 29,275 29,188

Boot Barn Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirty-Nine Weeks Ended December December 26, 28, 2020 2019

Cash flows from operating activitiesNet income $ 34,834 $ 42,220

Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation 17,919 15,384

Stock-based compensation 5,011 3,326

Amortization of intangible assets 67 127

Amortization of right-of-use assets 25,342 22,899

Amortization of debt issuance fees and debt discount 663 725

Loss on disposal of property and equipment 23 389

Loss/(gain) on adjustment of right-of-use assets and 295 (186)lease liabilitiesStore impairment charge 384 -

Deferred taxes (1,150) (736)

Changes in operating assets and liabilities, net ofacquisition:Accounts receivable, net 4,242 290

Inventories 42,709 (32,257)

Prepaid expenses and other current assets (818) (1,885)

Other assets (687) (559)

Accounts payable 9,753 17,063

Accrued expenses and other current liabilities 42,219 31,929

Other liabilities 789 396

Operating leases (24,991) (22,324)

Net cash provided by operating activities $ 156,604 $ 76,801

Cash flows from investing activitiesPurchases of property and equipment $ (20,508) $ (27,550)

Acquisition of business, net of cash acquired - (3,688)

Insurance recoveries for property and equipment - 717

Net cash used in investing activities $ (20,508) $ (30,521)

Cash flows from financing activities(Payments)/Borrowings on line of credit - net $ (129,900) $ 45,000

Repayments on debt and finance lease obligations (487) (65,456)

Debt issuance fees paid - (1,221)

Tax withholding payments for net share settlement (535) (483)

Proceeds from the exercise of stock options 1,605 4,712

Net cash used in financing activities $ (129,317) $ (17,448)

Net increase in cash and cash equivalents 6,779 28,832

Cash and cash equivalents, beginning of period 69,563 16,614

Cash and cash equivalents, end of period $ 76,342 $ 45,446

Supplemental disclosures of cash flow information:Cash paid for income taxes $ 3,684 $ 8,139

Cash paid for interest $ 6,731 $ 9,472

Supplemental disclosure of non-cash activities:Unpaid purchases of property and equipment $ 3,703 $ 2,659

Boot Barn Holdings, Inc.

Store Count

Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended Ended Ended Ended December September June March December September June March 26, 26, 27, 28, 28, 28, 29, 30, 2020 2020 2020 2020 2019 2019 2019 2019

Store 265 264 259 251 248 240 240 234Count(BOP)Opened/ 1 1 5 8 3 8 1 6AcquiredClosed - - - - - - (1) -

Store 266 265 264 259 251 248 240 240Count(EOP)Boot Barn Holdings, Inc.

Selected Store Data

Thirteen Weeks EndedDecember 26,September 26,June 27,March 28,December 28,September 28,June 29,March 30,2020

2020

2020

2020

2019

2019

2019

2019

Selected Store Data:Same Store Sales growth/(decline)4.6

%

(5.1)

%

(14.9)

%

(4.7)

%

6.7

%

7.8

%

9.4

%

8.7

%

Stores operating at end of period266

265

264

259

251

248

240

240

Total retail store square footage, end of period (in thousands)2,787

2,779

2,770

2,722

2,639

2,616

2,537

2,539

Average store square footage, end of period10,477

10,486

10,491

10,508

10,514

10,549

10,570

10,580

Average net sales per store (in thousands)$563

$565

$410

$590

$903

$635

$660

$666

Boot Barn Holdings, Inc.

Selected Store Data

Thirteen Weeks Ended December September June March December September June March 26, 26, 27, 28, 28, 28, 29, 30, 2020 2020 2020 2020 2019 2019 2019 2019

Selected StoreData:Same Store 4.6 % (5.1) % (14.9) % (4.7) % 6.7 % 7.8 % 9.4 % 8.7 %Sales growth/(decline)Stores 266 265 264 259 251 248 240 240operating atend of periodTotal retailstore square 2,787 2,779 2,770 2,722 2,639 2,616 2,537 2,539footage, endof period (inthousands)Average storesquare 10,477 10,486 10,491 10,508 10,514 10,549 10,570 10,580footage, endof periodAverage netsales per $ 563 $ 565 $ 410 $ 590 $ 903 $ 635 $ 660 $ 666store (inthousands)Debt Covenant EBITDA Reconciliation (Unaudited)

Thirteen Weeks Ended December September June 27, March December 26, 26, 2020 28, 28, 2020 2020 2020 2019Boot Barn's Net Income/ $ 29,566 $ 5,758 $ (490) $ 5,729 $ 24,819(Loss)Income tax expense/ 9,909 1,979 (289) 930 7,040(benefit)Interest expense, net 2,303 2,383 2,641 2,941 3,155

Depreciation and intangible 5,994 6,282 5,710 5,872 5,682asset amortizationBoot Barn's EBITDA $ 47,772 $ 16,402 $ 7,572 $ 15,472 $ 40,696

Non-cash stock-based $ 1,482 $ 1,705 $ 1,824 $ 1,582 $ 1,181compensation (a)Non-cash accrual for future 697 372 (302) (447) 575award redemptions (b)(Gain)/loss on disposal of (19) 46 (4) 28 377assets (c)Loss on adjustment of - 295 - - 7right-of-use assets andlease liabilities (d)Store impairment charge (e) - 384 - 191 -

Boot Barn's Adjusted EBITDA $ 49,932 $ 19,204 $ 9,090 $ 16,826 $ 42,836

Additional adjustments (f) 165 1,115 1,590 2,269 1,404

Consolidated EBITDA per $ 50,097 $ 20,319 $ 10,680 $ 19,095 $ 44,240Loan Agreements (a) Represents non-cash compensation expenses related to stock options,restricted stock units and performance share units granted to certain of ouremployees and directors.(b) Represents the non-cash accrual for future award redemptions in connectionwith our customer loyalty program.(c) Represents (gain)/loss on disposal of assets.(d) Represents loss on adjustment of right-of-use assets and lease liabilities.(e) Represents store impairment charges recorded in order to reduce thecarrying amount of the assets to their estimated fair values.(f) Adjustments to Boot Barn's Adjusted EBITDA as provided in the 2015 GolubTerm Loan and June 2015 Wells Fargo Revolver include pre-opening costs,franchise and state taxes, and other miscellaneous adjustments. View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005775/en/

CONTACT: Investors: ICR, Inc. Brendon Frey, 203-682-8216 BootBarnIR@icrinc.com or Media: Boot Barn Holdings, Inc. Jim Watkins, 949-453-4428 Senior Vice President, Finance & Investor Relations BootBarnIRMedia@bootbarn.com