Business Wire | Oct 28, 2020 04:10PM EDT

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

Oct. 28, 2020

IRVINE, Calif.--(BUSINESS WIRE)--Oct. 28, 2020--Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the second fiscal quarter ended September 26, 2020.

For the quarter ended September 26, 2020:

* Net sales decreased 1.4% to $184.5 million. * Same store sales decreased 5.1%, comprised of a decrease in retail store same store sales of 9.1% and an increase in e-commerce sales of 17.6%. * Net income was $5.8 million, or $0.20 per diluted share, compared to net income of $7.7 million, or $0.26 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.02 per share benefit due to income tax accounting for share-based compensation. * The company opened 1 new store during the quarter. * Cash and cash equivalents were $35.7 million.

Jim Conroy, Chief Executive Officer, commented, "Our business continues to show resilience amidst challenging operating conditions. Following a slow start to the second quarter due to the changing sentiment around COVID-19, same store sales trends improved each month, turning positive in September driven by stronger store traffic. Our teams have done an outstanding job serving our customers in whichever channel they choose to engage with us and we have adjusted our merchandise assortments to reflect the shift in demand towards more functional and work-related categories. The speed at which we adapted our operations and reconfigured our inventory drove strong full price selling in the quarter. I am particularly pleased with the contributions from our e-commerce business, whose second quarter operating income more than doubled when compared to the prior-year period."

Mr. Conroy continued, "Our third quarter has started well with retail store same store sales improving to flat and e-commerce sales trends remaining strong. In addition to solid demand for work boots, we've also seen a nice sequential improvement in western boots, western apparel, and hats. As we approach the beginning of the holidays, we are encouraged with our current momentum and are prepared to execute well as we enter the busy holiday shopping season."

Operating Results for the Second Quarter Ended September 26, 2020

* Net sales decreased 1.4% to $184.5 million from $187.2 million in the prior-year period. Consolidated same store sales decreased 5.1% with retail store same store sales down 9.1% and e-commerce same store sales up 17.6%. 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.

* Gross profit was $55.5 million, or 30.1% of net sales, compared to $59.3 million, or 31.7% 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 of 160 basis points was driven by 110 basis points of deleverage in buying and occupancy costs and a 50-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 50 basis points primarily as a result of 30 basis points of pressure from e-commerce mix shift. Higher freight, partially offset by improved product margin, comprised the balance of the decline.

* Selling, general and administrative expenses were $45.4 million, or 24.6% of net sales, compared to $46.4 million, or 24.8% of net sales, in the prior-year period. The decrease in selling, general and administrative expenses and 20 basis points of leverage as a percentage of sales was primarily a result of lower marketing and pay-per-click expenses.

* Income from operations decreased 22.4% to $10.0 million, or 5.4% of net sales, compared to $12.9 million, or 6.9% of net sales, in the prior-year period. This decline in income from operations is 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.

* Net income was $5.8 million, or $0.20 per diluted share, compared to net income of $7.7 million, or $0.26 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.02 per share benefit due to income tax accounting for share-based compensation.

Operating Results for the Six Months Ended September 26, 2020

* Net sales decreased 10.9% to $332.3 million from $373.0 million in the prior-year period. Consolidated same store sales decreased 9.7% with retail store same store sales down 17.4% and e-commerce same store sales up 33.7%. 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 $95.7 million, or 28.8% of net sales, compared to $121.5 million, or 32.6% 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 of 380 basis points was driven by 260 basis points of deleverage in buying and occupancy costs and a 120-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 120 basis points primarily as a result of 80 basis points of pressure from e-commerce mix shift.

* Selling, general and administrative expenses were $83.9 million, or 25.2% of net sales, compared to $92.5 million, or 24.8% of net sales, in the prior-year period. The decrease in selling, general and administrative expenses was primarily a result of lower payroll and reduced marketing expenses. Selling, general and administrative expenses as a percentage of sales increased by 40 basis points as a result of deleverage from lower sales.

* Income from operations decreased 59.2% to $11.8 million, or 3.6% of net sales, compared to $29.0 million, or 7.8% of net sales, in the prior-year period. This decline in income from operations is a result of the negative impact on sales, gross margin and selling, general and administrative expenses 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 $5.3 million, or $0.18 per diluted share, compared to net income of $17.4 million, or $0.60 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.03 per share benefit due to income tax accounting for share-based compensation.

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 Four Weeks Fiscal Fiscal Fiscal Ended Fiscal July August September September October 26, 2020

Retail Stores SSS (15)% (13)% (1)% (9)% 0%

E-commerce SSS 24% 16% 14% 18% 13%

Total SSS (10)% (9)% 1% (5)% 2%

Net Sales (7)% (4)% 5% (1)% 6%

E-commerce as % 18% 17% 16% 17% 16%of Net Sales

Fiscal Year 2021 Outlook

The COVID-19 crisis continues to adversely affect the Company's results. Due to the ongoing uncertainty created by COVID-19, the Company is not providing third quarter and fiscal year 2021 guidance at this time.

Conference Call Information

A conference call to discuss the financial results for the second quarter of fiscal year 2021 is scheduled for today, October 28, 2020, 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 November 28, 2020, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13712343. 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 266 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)

September March 28, 26,

2020 2020

AssetsCurrent assets:Cash and cash equivalents $ 35,672 $ 69,563

Accounts receivable, net 13,281 12,087

Inventories 260,940 288,717

Prepaid expenses and other current assets 14,428 14,284

Total current assets 324,321 384,651

Property and equipment, net 107,764 109,603

Right-of-use assets, net 171,601 170,243

Goodwill 197,502 197,502

Intangible assets, net 60,929 60,974

Other assets 2,189 1,738

Total assets $ 864,306 $ 924,711

Liabilities and stockholders' equityCurrent liabilities:Line of credit $ 67,763 $ 129,900

Accounts payable 81,003 95,334

Accrued expenses and other current liabilities 53,180 52,612

Short-term lease liabilities 35,941 34,779

Total current liabilities 237,887 312,625

Deferred taxes 19,551 19,801

Long-term portion of notes payable, net 109,402 109,022

Long-term lease liabilities 166,243 160,935

Other liabilities 1,189 635

Total liabilities 534,272 603,018

Stockholders' equity:Common stock, $0.0001 par value; September 26, 2020- 100,000 shares authorized, 28,958 shares issued; 3 3 March 28, 2020 - 100,000 shares authorized, 28,880shares issuedPreferred stock, $0.0001 par value; 10,000 shares - - authorized, no shares issued or outstandingAdditional paid-in capital 172,839 169,249

Retained earnings 158,909 153,641

Less: Common stock held in treasury, at cost, 92 and (1,717 ) (1,200 )71 shares at September 26, 2020 and March 28, 2020,respectivelyTotal stockholders' equity 330,034 321,693

Total liabilities and stockholders' equity $ 864,306 $ 924,711

Boot Barn Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Thirteen Weeks Ended Twenty-Six Weeks Ended

September September September September 26, 28, 26, 28,

2020 2019 2020 2019

Net sales $ 184,515 $ 187,183 $ 332,281 $ 372,950

Cost of goods sold 129,025 127,845 236,590 251,456

Gross profit 55,490 59,338 95,691 121,494

Selling, general and 45,448 46,404 83,851 92,499administrative expensesIncome from operations 10,042 12,934 11,840 28,995

Interest expense, net 2,383 3,310 5,024 7,214

Other income, net 78 3 142 14

Income before income taxes 7,737 9,627 6,958 21,795

Income tax expense 1,979 1,947 1,690 4,394

Net income $ 5,758 $ 7,680 $ 5,268 $ 17,401



Earnings per share:

Basic shares $ 0.20 $ 0.27 $ 0.18 $ 0.61

Diluted shares $ 0.20 $ 0.26 $ 0.18 $ 0.60

Weighted average shares outstanding:Basic shares 28,860 28,502 28,843 28,441

Diluted shares 29,223 29,161 29,165 29,091

Boot Barn Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Twenty-Six Weeks Ended

September September 26, 28,

2020 2019

Cash flows from operating activitiesNet income $ 5,268 $ 17,401

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:Depreciation 11,948 9,757

Stock-based compensation 3,529 2,145

Amortization of intangible assets 44 72

Amortization of right-of-use assets 16,757 15,115

Amortization of debt issuance fees and debt discount 442 503

Loss on disposal of property and equipment 42 12

Loss/(gain) on adjustment of right-of-use assets and 295 (193 )lease liabilitiesStore impairment charge 384 -

Deferred taxes (250 ) (835 )

Changes in operating assets and liabilities, net of acquisition:Accounts receivable, net 3,681 1,865

Inventories 27,777 (58,642 )

Prepaid expenses and other current assets (206 ) (4,239 )

Other assets (450 ) (369 )

Accounts payable (9,985 ) 24,599

Accrued expenses and other current liabilities 568 3,014

Other liabilities 554 302

Operating leases (16,507 ) (14,645 )

Net cash provided by/(used in) operating activities $ 43,891 $ (4,138 )

Cash flows from investing activities

Purchases of property and equipment $ (14,881 ) $ (15,475 )

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

Net cash used in investing activities $ (14,881 ) $ (19,163 )

Cash flows from financing activities

(Payments)/Borrowings on line of credit - net $ (62,137 ) $ 85,000

Repayments on debt and finance lease obligations (308 ) (65,300 )

Debt issuance fees paid - (1,233 )

Tax withholding payments for net share settlement (517 ) (483 )

Proceeds from the exercise of stock options 61 1,922

Net cash (used in)/provided by financing activities $ (62,901 ) $ 19,906



Net decrease in cash and cash equivalents (33,891 ) (3,395 )

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

Cash and cash equivalents, end of period $ 35,672 $ 13,219



Supplemental disclosures of cash flow information:

Cash paid for income taxes $ 1,182 $ 4,704

Cash paid for interest $ 4,905 $ 6,494

Supplemental disclosure of non-cash activities:

Unpaid purchases of property and equipment $ 1,349 $ 3,543

Boot Barn Holdings, Inc.

Store Count

Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended Ended Ended Ended

September June March December September June March December 26, 27, 28, 28, 28, 29, 30, 29,

2020 2020 2020 2019 2019 2019 2019 2018

StoreCount 264 259 251 248 240 240 234 232(BOP)

Opened/ 1 5 8 3 8 1 6 2Acquired

Closed - - - - - (1 ) - -

StoreCount 265 264 259 251 248 240 240 234(EOP)

Boot Barn Holdings, Inc.

Selected Store Data

Thirteen Weeks Ended

September 26,

June 27,

March 28,

December 28,

September 28,

June 29,

March 30,

December 29,

2020

2020

2020

2019

2019

2019

2019

2018

Selected Store Data:

Same Store Sales (decline)/growth

(5.1

)

%

(14.9

)

%

(4.7

)

%

6.7

%

7.8

%

9.4

%

8.7

%

9.2

%

Stores operating at end of period

265

264

259

251

248

240

240

234

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

2,779

2,770

2,722

2,639

2,616

2,537

2,539

2,486

Average store square footage, end of period

10,486

10,491

10,508

10,514

10,549

10,570

10,580

10,624

Average net sales per store (in thousands)

$

565

$

410

$

590

$

903

$

635

$

660

$

666

$

862

Boot Barn Holdings, Inc.

Selected Store Data

Thirteen Weeks Ended

September June 27, March 28, December September June 29, March December 26, 28, 28, 30, 29,

2020 2020 2020 2019 2019 2019 2019 2018

SelectedStoreData:

Same StoreSales (5.1 ) % (14.9 ) % (4.7 ) % 6.7 % 7.8 % 9.4 % 8.7 % 9.2 %(decline)/growth

Storesoperating 265 264 259 251 248 240 240 234at end ofperiod

Totalretailstoresquare 2,779 2,770 2,722 2,639 2,616 2,537 2,539 2,486footage,end ofperiod (inthousands)

Averagestoresquare 10,486 10,491 10,508 10,514 10,549 10,570 10,580 10,624footage,end ofperiod

Averagenet salesper store $ 565 $ 410 $ 590 $ 903 $ 635 $ 660 $ 666 $ 862(inthousands)

Debt Covenant EBITDA Reconciliation

(Unaudited)

Thirteen Weeks Ended

September 26, 2020

June 27, 2020

March 28, 2020

December 28, 2019

September 28, 2019

Boot Barn's Net Income/(Loss)

$

5,758

$

(490

)

$

5,729

$

24,819

$

7,680

Income tax expense/(benefit)

1,979

(289

)

930

7,040

1,947

Interest expense, net

2,383

2,641

2,941

3,155

3,310

Depreciation and intangible asset amortization

6,282

5,710

5,872

5,682

5,027

Boot Barn's EBITDA

$

16,402

$

7,572

$

15,472

$

40,696

$

17,964

Non-cash stock-based compensation (a)

$

1,705

$

1,824

$

1,582

$

1,181

$

1,180

Non-cash accrual for future award redemptions (b)

372

(302

)

(447

)

575

(11

)

Loss/(gain) on disposal of assets (c)

46

(4

)

28

377

-

Loss on adjustment of right-of-use assets and lease liabilities (d)

295

-

-

7

-

Store impairment charge (e)

384

-

191

-

-

Boot Barn's Adjusted EBITDA

$

19,204

$

9,090

$

16,826

$

42,836

$

19,133

Additional adjustments (f)

1,115

1,590

2,269

1,404

1,442

Consolidated EBITDA per Loan Agreements

$

20,319

$

10,680

$

19,095

$

44,240

$

20,575

Debt Covenant EBITDA Reconciliation

(Unaudited)

Thirteen Weeks Ended

September June 27, March 28, December September 26, 2020 2020 28, 28, 2020 2019 2019

Boot Barn's Net $ 5,758 $ (490 ) $ 5,729 $ 24,819 $ 7,680 Income/(Loss)

Income tax expense 1,979 (289 ) 930 7,040 1,947 /(benefit)

Interest expense, 2,383 2,641 2,941 3,155 3,310 net

Depreciation andintangible asset 6,282 5,710 5,872 5,682 5,027 amortization

Boot Barn's EBITDA $ 16,402 $ 7,572 $ 15,472 $ 40,696 $ 17,964



Non-cashstock-based $ 1,705 $ 1,824 $ 1,582 $ 1,181 $ 1,180 compensation (a)

Non-cash accrualfor future award 372 (302 ) (447 ) 575 (11 )redemptions (b)

Loss/(gain) ondisposal of assets 46 (4 ) 28 377 - (c)

Loss on adjustmentof right-of-use 295 - - 7 - assets and leaseliabilities (d)

Store impairment 384 - 191 - - charge (e)

Boot Barn's $ 19,204 $ 9,090 $ 16,826 $ 42,836 $ 19,133 Adjusted EBITDA



Additional 1,115 1,590 2,269 1,404 1,442 adjustments (f)

ConsolidatedEBITDA per Loan $ 20,319 $ 10,680 $ 19,095 $ 44,240 $ 20,575 Agreements

(a) Represents non-cash compensation expenses related to stock options, restricted stock awards, restricted stock units and performance share units granted to certain of our employees and directors.(b) Represents the non-cash accrual for future award redemptions in connection with our customer loyalty program.(c) Represents loss/(gain) 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 the carrying amount of the assets to their estimated fair values.(f) Adjustments to Boot Barn's Adjusted EBITDA as provided in the 2015 Golub Term 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/20201028006007/en/

CONTACT: Investor Contact: ICR, Inc. Brendon Frey, 203-682-8216 BootBarnIR@icrinc.com

CONTACT: or

CONTACT: Media Contact: Boot Barn Holdings, Inc. Jim Watkins, 949-453-4428 Senior Vice President, Finance & Investor Relations BootBarnIRMedia@bootbarn.com