Ollie’s Bargain Outlet Holdings, Inc. Reports Record Second Quarter Fiscal 2020 Financial Results
Ollie’s Bargain Outlet (NASDAQ: OLLI) reported remarkable financial results for Q2 2020, with net sales rising 58.5% to $529.3 million. Comparable store sales surged 43.3%, and net income soared 294.8% to $99.4 million, translating to $1.50 per diluted share. Operating income jumped 199.3% to $92.0 million, and gross profit increased 66.8% to $206.8 million. Despite excellent performance, the company forecasts a slowdown in sales growth for the latter half of the year, citing COVID-19 uncertainties.
- Net sales increased 58.5% to $529.3 million.
- Comparable store sales surged 43.3%.
- Net income rose 294.8% to $99.4 million.
- Diluted EPS increased 294.7% to $1.50.
- Operating margin increased 820 basis points to 17.4%.
- Cash balance improved to $305.1 million, up from $78.5 million.
- Sales growth is expected to slow in the second half of the year due to COVID-19 uncertainty.
~ Comparable Store Sales Increase
~ Operating Margin Increases 820 Basis Points to
~ Diluted EPS Increases
~ Adjusted Diluted EPS Increases
HARRISBURG, Pa., Aug. 27, 2020 (GLOBE NEWSWIRE) -- Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) today reported financial results for the second quarter ended August 1, 2020.
Second Quarter Summary:
- Total net sales increased
58.5% to$529.3 million . - Comparable store sales increased
43.3% . - The Company opened 6 stores, ending the quarter with 366 stores in 25 states, a year-over-year increase in store count of
10.2% . - Operating income increased
199.3% to$92.0 million and operating margin increased 820 basis points to17.4% . - Net income increased
294.8% to$99.4 million and net income per diluted share increased294.7% to$1.50 . - Adjusted net income(1) increased
193.5% to$68.9 million and adjusted net income per diluted share(1) increased197.1% to$1.04 . - Adjusted EBITDA(1) increased
164.9% to$99.4 million .
John Swygert, President and Chief Executive Officer, stated, “We delivered our best quarter in our 38-year history with record top- and bottom-line results. Our performance reflects the strength of our business model as we remained nimble and responsive to opportunities in the marketplace to meet heightened levels of customer demand during the COVID-19 pandemic. We executed the Ollie’s formula—buy cheap and sell cheap—and had the right products at great prices. I am very grateful for the extraordinary contributions of our entire team—our merchants, distribution centers, store support center and store associates—who have worked tirelessly to keep pace with the spike in demand and to ensure the continued health and safety of our customers and each other.”
Mr. Swygert continued, “We continue to be pleased with customer response to our great deals, with comparable store sales trends currently tracking in the high teens. However, we fully expect sales growth to continue to slow as we progress through the second half of the year. Due to the uncertainty related to COVID-19, we are not providing guidance for the second half of fiscal 2020. We remain confident that we are very well-positioned to benefit from the continued disruption in the marketplace as we continue to leverage our strong vendor relationships and the expertise of our teams. It’s the effectiveness of our model, our strong financial position and long-term growth opportunities that keep us very excited about our future.”
| (1) | As used throughout this release, adjusted operating income, adjusted net income, adjusted net income per diluted share, EBITDA and adjusted EBITDA are not measures recognized under U.S. generally accepted accounting principles (“GAAP”). Please see the accompanying financial tables which reconcile GAAP to these non-GAAP measures. |
Second Quarter Results
Net sales increased
The Company experienced robust comparable store sales growth throughout the second quarter of fiscal 2020, driven by higher traffic levels and a significantly larger average basket. The Company effectively responded to changing consumer needs in the period, creating a strong alignment between a value-driven merchandise assortment and customer demand. The Company also benefited from consumer spending in response to federal stimulus funds for the COVID-19 pandemic and having its stores open during the quarter while several other retailers were closed for a portion of the period.
Gross profit increased
Selling, general and administrative expenses increased to
Operating income increased
Net income increased
Adjusted EBITDA(1) increased
Balance Sheet and Cash Flow Highlights
The Company's cash and cash equivalents balance as of the end of the second quarter of fiscal 2020 was
Inventories as of the end of the second quarter of fiscal 2020 decreased
Capital expenditures in the second quarter of fiscal 2020 totaled
Conference Call Information
A conference call to discuss second quarter fiscal 2020 financial results is scheduled for today, August 27, 2020, at 4:30 p.m. Eastern Time. Investors and analysts can participate on the conference call by dialing (800) 219-7052 or (574) 990-1029 and using conference ID #1174635. Interested parties can also listen to a live webcast or replay of the conference call by logging on to the investor relations section on the Company’s website at http://investors.ollies.us/. The replay of the conference call webcast will be available at the investor relations website for one year.
About Ollie’s
We are a highly differentiated and fast growing, extreme value retailer of brand name merchandise at drastically reduced prices. We are known for our assortment of merchandise offered as Good Stuff Cheap®. We offer name brand products, Real Brands! Real Bargains!®, in every department, including housewares, food, books and stationery, bed and bath, floor coverings, toys, health and beauty aids and other categories. We currently operate 370 stores in 25 states throughout half of the United States. For more information, visit www.ollies.us.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections, the outlook for the Company’s future business, prospects, financial performance, including our fiscal 2020 business outlook or financial guidance, and industry outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including, but not limited to, legislation, national trade policy, and the following: our failure to adequately procure and manage our inventory or anticipate consumer demand; changes in consumer confidence and spending; risks associated with intense competition; our failure to open new profitable stores, or successfully enter new markets, on a timely basis or at all; the risks associated with doing business with international manufacturers and suppliers including, but not limited to, potential increases in tariffs on imported goods; outbreak of viruses or widespread illness, including the continued impact of COVID-19 and regulatory responses thereto; our failure to hire and retain key personnel and other qualified personnel; our inability to obtain favorable lease terms for our properties; the failure to timely acquire, develop and open, the loss of, or disruption or interruption in the operations of, our centralized distribution centers; fluctuations in comparable store sales and results of operations, including on a quarterly basis; risks associated with our lack of operations in the growing online retail marketplace; risks associated with litigation, the expense of defense, and potential for adverse outcomes; our inability to successfully develop or implement our marketing, advertising and promotional efforts; the seasonal nature of our business; risks associated with the timely and effective deployment, protection, and defense of computer networks and other electronic systems, including e-mail; changes in government regulations, procedures and requirements; and our ability to service indebtedness and to comply with our financial covenants together with each of the other factors set forth under “Risk Factors” in our filings with the United States Securities and Exchange Commission (“SEC”). Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Ollie’s undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.
Investor Contact:
Jean Fontana
ICR
646-277-1214
Jean.Fontana@icrinc.com
Media Contact:
Tom Kuypers
Senior Vice President – Marketing & Advertising
717-657-2300
tkuypers@ollies.us
| Ollie’s Bargain Outlet Holdings, Inc. Condensed Consolidated Statements of Income (In thousands except for per share amounts) (Unaudited) | ||||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||
| August 1, | August 3, | August 1, | August 3, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Condensed consolidated statements of income data: | ||||||||||||||||
| Net sales | $ | 529,313 | $ | 333,865 | $ | 878,676 | $ | 658,719 | ||||||||
| Cost of sales | 322,471 | 209,832 | 531,468 | 401,952 | ||||||||||||
| Gross profit | 206,842 | 124,033 | 347,208 | 256,767 | ||||||||||||
| Selling, general and administrative expenses | 109,149 | 87,350 | 198,869 | 170,682 | ||||||||||||
| Depreciation and amortization expenses | 4,122 | 3,512 | 8,066 | 6,921 | ||||||||||||
| Pre-opening expenses | 1,545 | 2,420 | 5,267 | 7,629 | ||||||||||||
| Operating income | 92,026 | 30,751 | 135,006 | 71,535 | ||||||||||||
| Interest income, net | (26 | ) | (372 | ) | (109 | ) | (517 | ) | ||||||||
| Income before income taxes | 92,052 | 31,123 | 135,115 | 72,052 | ||||||||||||
| Income tax (benefit) expense | (7,331 | ) | 5,953 | 2,276 | 8,165 | |||||||||||
| Net income | $ | 99,383 | $ | 25,170 | $ | 132,839 | $ | 63,887 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 1.53 | $ | 0.40 | $ | 2.07 | $ | 1.01 | ||||||||
| Diluted | $ | 1.50 | $ | 0.38 | $ | 2.02 | $ | 0.96 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 65,137 | 63,517 | 64,093 | 63,351 | ||||||||||||
| Diluted | 66,051 | 66,300 | 65,641 | 66,237 | ||||||||||||
| Percentage of net sales (1): | ||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of sales | 60.9 | 62.8 | 60.5 | 61.0 | ||||||||||||
| Gross profit | 39.1 | 37.2 | 39.5 | 39.0 | ||||||||||||
| Selling, general and administrative expenses | 20.6 | 26.2 | 22.6 | 25.9 | ||||||||||||
| Depreciation and amortization expenses | 0.8 | 1.1 | 0.9 | 1.1 | ||||||||||||
| Pre-opening expenses | 0.3 | 0.7 | 0.6 | 1.2 | ||||||||||||
| Operating income | 17.4 | 9.2 | 15.4 | 10.9 | ||||||||||||
| Interest income, net | - | (0.1 | ) | - | (0.1 | ) | ||||||||||
| Income before income taxes | 17.4 | 9.3 | 15.4 | 10.9 | ||||||||||||
| Income tax (benefit) expense | (1.4 | ) | 1.8 | 0.3 | 1.2 | |||||||||||
| Net income | 18.8 | % | 7.5 | % | 15.1 | % | 9.7 | % | ||||||||
| (1) Components may not add to totals due to rounding. | ||||||||||||||||
| Ollie's Bargain Outlet Holdings, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| August 1, | August 3, | |||||||
| Assets | 2020 | 2019 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 305,110 | $ | 78,473 | ||||
| Inventories | 327,164 | 354,576 | ||||||
| Accounts receivable | 2,447 | 1,191 | ||||||
| Prepaid expenses and other assets | 22,539 | 5,403 | ||||||
| Total current assets | 657,260 | 439,643 | ||||||
| Property and equipment, net | 137,467 | 105,321 | ||||||
| Operating lease right-of-use assets | 369,842 | 321,428 | ||||||
| Goodwill | 444,850 | 444,850 | ||||||
| Trade name | 230,559 | 230,559 | ||||||
| Other assets | 2,462 | 2,540 | ||||||
| Total assets | $ | 1,842,440 | $ | 1,544,341 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 320 | $ | 269 | ||||
| Accounts payable | 107,685 | 91,860 | ||||||
| Income taxes payable | - | 1,414 | ||||||
| Current portion of operating lease liabilities | 56,062 | 54,628 | ||||||
| Accrued expenses and other | 77,521 | 58,266 | ||||||
| Total current liabilities | 241,588 | 206,437 | ||||||
| Revolving credit facility | - | - | ||||||
| Long-term debt | 592 | 515 | ||||||
| Deferred income taxes | 64,254 | 55,198 | ||||||
| Long-term operating lease liabilities | 317,948 | 264,715 | ||||||
| Other long-term liabilities | 5 | 7 | ||||||
| Total liabilities | 624,387 | 526,872 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 66 | 64 | ||||||
| Additional paid-in capital | 641,677 | 611,163 | ||||||
| Retained earnings | 616,410 | 406,328 | ||||||
| Treasury - common stock | (40,100 | ) | (86 | ) | ||||
| Total stockholders’ equity | 1,218,053 | 1,017,469 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,842,440 | $ | 1,544,341 | ||||
| Ollie’s Bargain Outlet Holdings, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| August 1, | August 3, | August 1, | August 3, | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net cash provided by (used in) operating activities | $ | 168,824 | $ | (3,337 | ) | $ | 210,194 | $ | 18,639 | ||||||
| Net cash (used in) provided by investing activities | (5,671 | ) | 22,449 | (18,045 | ) | 2,342 | |||||||||
| Net cash provided by financing activities | 22,606 | 850 | 23,011 | 5,551 | |||||||||||
| Net increase in cash and cash equivalents | 185,759 | 19,962 | 215,160 | 26,532 | |||||||||||
| Cash and cash equivalents at beginning of period | 119,351 | 58,511 | 89,950 | 51,941 | |||||||||||
| Cash and cash equivalents at end of period | $ | 305,110 | $ | 78,473 | $ | 305,110 | $ | 78,473 | |||||||
Ollie’s Bargain Outlet Holdings, Inc.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands)
(Unaudited)
The Company reports its financial results in accordance with GAAP. We have included the non-GAAP measures of adjusted operating income, EBITDA, adjusted EBITDA, adjusted net income and adjusted net income per diluted share in this press release as these are key measures used by our management and our board of directors to evaluate our operating performance and the effectiveness of our business strategies, make budgeting decisions, and evaluate compensation decisions. Management believes it is useful to investors and analysts to evaluate these non-GAAP measures on the same basis as management uses to evaluate the Company’s operating results. We believe that excluding items that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude from net income and net income per diluted share, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.
The tables below reconcile the most directly comparable GAAP measure to non-GAAP financial measures: operating income to adjusted operating income, net income to adjusted net income, net income per diluted share to adjusted net income per diluted share, and net income to EBITDA and adjusted EBITDA.
Adjusted operating income excludes a gain associated with an insurance settlement. Adjusted net income and adjusted net income per diluted share exclude excess tax benefits related to stock-based compensation and the after-tax gain associated with the insurance settlement, both of which may not occur with the same frequency or magnitude in future periods. We define EBITDA as net income before net interest income or expense, depreciation and amortization expenses and income taxes. Adjusted EBITDA represents EBITDA as further adjusted for non-cash stock-based compensation expense as well as the aforementioned gain from an insurance settlement.
Non-GAAP financial measures should be viewed as supplementing, and not as an alternative to or substitute for, the Company’s financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company's financial position, results of operations and cash flows and should therefore be considered in assessing the Company's actual financial condition and performance. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.
| Reconciliation of GAAP operating income to adjusted operating income | |||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||
| August 1, | August 3, | August 1, | August 3, | ||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Operating income | $ | 92,026 | $ | 30,751 | $ | 135,006 | $ | 71,535 | |||||
| Gain from insurance settlement | - | - | - | (565 | ) | ||||||||
| Adjusted operating income | $ | 92,026 | $ | 30,751 | $ | 135,006 | $ | 70,970 | |||||
| Ollie’s Bargain Outlet Holdings, Inc. Supplemental Information Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands except for per share amounts) (Unaudited) | |||||||||||||||||||
| Reconciliation of GAAP net income to adjusted net income | |||||||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||||||
| August 1 | August 3, | August 1, | August 3, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Net income | $ | 99,383 | $ | 25,170 | $ | 132,839 | $ | 63,887 | |||||||||||
| Gain from insurance settlement | - | - | - | (565 | ) | ||||||||||||||
| Adjustment to provision for income taxes(1) | - | - | - | 144 | |||||||||||||||
| Excess tax benefits related to stock-based compensation(2) | (30,501 | ) | (1,700 | ) | (31,748 | ) | (9,813 | ) | |||||||||||
| Adjusted net income | $ | 68,882 | $ | 23,470 | $ | 101,091 | $ | 53,653 | |||||||||||
| (1) | The effective tax rate used for the adjustment to the provision for income taxes was the normalized effective tax rate in the quarter in which the related costs (gain from an insurance settlement) were incurred. | ||||||||||||||||||
| (2) | Amount represents the impact from the recognition of excess tax benefits pursuant to Accounting Standards Update 2016-09, Stock Compensation. | ||||||||||||||||||
| Reconciliation of GAAP net income per diluted share to adjusted net income per diluted share | |||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||
| August 1, | August 3, | August 1, | August 3, | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net income per diluted share | $ | 1.50 | $ | 0.38 | $ | 2.02 | $ | 0.96 | |||||||
| Adjustments as noted above, per dilutive share: | |||||||||||||||
| Gain from insurance settlement, net of taxes | - | - | - | (0.01 | ) | ||||||||||
| Excess tax benefits related to stock-based compensation | (0.46 | ) | (0.03 | ) | (0.48 | ) | (0.15 | ) | |||||||
| Adjusted net income per diluted share (1) | $ | 1.04 | $ | 0.35 | $ | 1.54 | $ | 0.81 | |||||||
| Diluted weighted-average common shares outstanding | 66,051 | 66,300 | 65,641 | 66,237 | |||||||||||
| (1) Totals may not foot due to rounding | |||||||||||||||
| Ollie’s Bargain Outlet Holdings, Inc. Supplemental Information Reconciliation of GAAP to Non-GAAP Financial Measures (Dollars in thousands) (Unaudited) | ||||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | |||||||||||||||
| August 1, | August 3, | August 1, | August 3, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income | $ | 99,383 | $ | 25,170 | $ | 132,839 | $ | 63,887 | ||||||||
| Interest income, net | (26 | ) | (372 | ) | (109 | ) | (517 | ) | ||||||||
| Depreciation and amortization expenses | 5,653 | 4,337 | 11,063 | 8,536 | ||||||||||||
| Income tax (benefit) expense | (7,331 | ) | 5,953 | 2,276 | 8,165 | |||||||||||
| EBITDA | 97,679 | 35,088 | 146,069 | 80,071 | ||||||||||||
| Gain from insurance settlement | - | - | - | (565 | ) | |||||||||||
| Non-cash stock-based compensation expense | 1,727 | 2,432 | 3,046 | 4,625 | ||||||||||||
| Adjusted EBITDA | $ | 99,406 | $ | 37,520 | $ | 149,115 | $ | 84,131 | ||||||||
| Key Statistics | |||||||||||||||||||
| Thirteen weeks ended | Twenty-six weeks ended | ||||||||||||||||||
| August 1, | August 3, | August 1, | August 3, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Number of stores open at the beginning of period | 360 | 324 | 345 | 303 | |||||||||||||||
| Number of new stores | 6 | 8 | 23 | 29 | |||||||||||||||
| Number of closed stores | - | - | (2 | ) | - | ||||||||||||||
| Number of stores open at end of period | 366 | 332 | 366 | 332 | |||||||||||||||
| Average net sales per store (1) | $ | 1,454 | $ | 1,018 | $ | 2,441 | $ | 2,050 | |||||||||||
| Comparable stores sales change | 43.3 | % | (1.7 | )% | 20.2 | % | (0.5 | )% | |||||||||||
| Comparable store count – end of period | 313 | 273 | 313 | 273 | |||||||||||||||
| (1) | Average net sales per store represents the weighted average of total net weekly sales divided by the number of stores open at the end of each week for the respective periods presented. | ||||||||||||||||||
FAQ
What were Ollie's Bargain Outlet's Q2 2020 earnings results?
How did comparable store sales perform for Ollie's in Q2 2020?
What is Ollie's outlook for the second half of 2020?
What major financial metrics increased for Ollie's in Q2 2020?
