BJ's Wholesale Club Holdings, Inc. Announces Record First Quarter Fiscal 2020 Results

• Comparable club sales, excluding gasoline sales, increased by 27.0%, including digitally enabled sales growth of 350% for the first quarter of fiscal 2020.
• Income from continuing operations increased by 165.3% year-over-year to $95.7 million, for the first quarter of fiscal 2020.
• Adjusted EBITDA increased by 56.3% year-over-year to $193.9 million, for the first quarter of fiscal 2020.
• Earnings per diluted share of $0.69, reflects a 176.0% year-over-year growth.
• Adjusted earnings per diluted share of $0.69, reflects 165.4% year-over-year growth.
• Net cash provided by operating activities was $469.9 million and free cash flow was $434.7 million, for the first quarter of fiscal 2020.
• Company recognizes dedication of BJ's team members and invests $51 million in wages and bonuses.

BJ's Wholesale Club Holdings, Inc. BJ (the "Company") today announced its financial results for the thirteen weeks ended May 2, 2020.

"Our top priority remains the health and safety of our members and team members during this challenging time and I am deeply thankful for the contributions of our dedicated team members this past quarter," said Lee Delaney, President and Chief Executive Officer, BJ's Wholesale Club. "While the coronavirus pandemic increased demand for our services, our team's hard work and the capabilities we have built over the last four years have enabled us to thrive and deliver very strong merchandise comparable sales. Furthermore, we drove earnings and cash flow growth and invested in our team members and our business. These efforts will allow us to continue to build on this momentum and position ourselves for success over the long-term."

Additional Highlights:

• Comparable club sales for the first quarter of fiscal 2020 increased 19.9%, compared to the first quarter of fiscal 2019. Comparable club sales, excluding the impact of gasoline sales, increased 27.0% compared to the first quarter of fiscal 2019.

• Gross profit increased to $736.7 million in the first quarter of fiscal 2020 from $574.2 million in the first quarter of fiscal 2019. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased by approximately 30 basis points over the first quarter of fiscal 2019. While merchandise margins benefited from the strong sales performance and continued execution of our category profitability improvement initiatives, these drivers were offset by distribution costs associated with the coronavirus pandemic, the decline in our higher-margin apparel business and the temporary shut-down of our higher-margin services business.

• Selling, general and administrative expenses ("SG&A") increased to $590.4 million in the first quarter of fiscal 2020, compared to $501.2 million in the first quarter of fiscal 2019. SG&A in the first quarter of fiscal 2019 included charges related to our initial public offering and the registered offerings by selling stockholders (such offering costs, collectively, "offering costs") of $1.2 million. The year-over-year increase in SG&A expense was primarily driven by costs associated with the coronavirus pandemic, including wage increases, bonuses, safety and protective equipment and other operational costs, such as security.

• Operating income increased to $143.8 million, or 3.8% of total revenues in the first quarter of fiscal 2020, compared to $70.7 million, or 2.2% of total revenues in the first quarter of fiscal 2019. Operating income in the first quarter of fiscal 2019 included charges associated with offering costs of $1.2 million.

• Interest expense, net, decreased to $21.8 million in the first quarter of fiscal 2020, compared to $27.8 million in the first quarter of fiscal 2019. The decrease in interest expense was driven by continued de-levering, the repricing of our first lien term loan facility, which was completed in January 2020.

• Income tax expense was $26.2 million in the first quarter of fiscal 2020, compared to income tax expense of $6.8 million in the first quarter of fiscal 2019. The first quarter of fiscal 2020 included a benefit of $4.5 million from excess tax benefits related to stock-based compensation compared to $4.9 million in the first quarter of fiscal 2019.

• Early in the quarter of fiscal 2020, we repurchased 175,000 shares of common stock, totaling $4.0 million, under the share repurchase program.

Response to COVID-19:

In response to the coronavirus pandemic, BJ's implemented a number of operational changes to support team members, members and communities we serve.

Team Member Support

• Increased all hourly team members wages by an additional $2 per hour.
• Distributed special bonuses for managers and key personnel, incremental to the annual incentive program.
• Issued an emergency paid leave policy to support team members. The emergency paid leave policy includes:
  • Waived absenteeism policy.
  • Pay for up to fourteen days when under mandated quarantine.
  • Pay through a mix of accrued sick time and company paid time if a team member tests positive for coronavirus and needs to self-quarantine.
• Ensured Aisle Help, the Company's employee relief fund, is available to team members facing financial hardship.
• Implemented operational processes to encourage social distancing in clubs, including instructional signage.
• Provided personal protective equipment to all team members.
• Implemented enhanced cleaning and sanitization procedures at clubs, distribution centers and the home office.
• Installed mobile and fixed sneeze-guard barriers at the membership desk, in checkout lanes and at exits.
• Implemented remote working for home office team members.
• Closed all BJ's clubs on Easter Sunday, April 12, 2020 to offer team members a day to rest and recharge.

Member Support:

• Prioritized safety and followed recommendations from the Centers for Disease Control and Prevention (CDC) to ensure clubs exceed the company's already high standards for general hygiene and health practices.
• Focused on getting high-demand products to its clubs as quickly as possible and offering members alternative shopping methods like Buy Online, Pick Up in-Club and Same-Day Delivery.
• Reduced club hours to give team members more time to restock, sanitize and recharge.
• Limited the number of members allowed to shop inside clubs to no more than 20% of total capacity, at any given time.
• Temporarily closed all BJ's Optical centers and cellular services.

Community Support:

• Increased workforce by actively adding permanent and temporary positions in clubs throughout the Eastern United States.
• Announced dedicated shopping hours for members age 60 and over to shop in a less crowded environment.
• Implemented "Appreciation Hour" for first responders and healthcare workers, so they can shop during a designated hour on Sundays without a membership.
• Contributed $1 million from the BJ's Charitable Foundation to support hospitals throughout our footprint and local and national organizations providing essential services and support to those in need during these challenging times.
• Donated countless items to first responders, healthcare workers and nonprofits to help support communities.
• Continued to donate perishable food on a weekly basis to local food banks across our footprint through the Feeding Communities program.

To learn more about our response to the coronavirus pandemic and the additional measures we have taken, please visit: https://newsroom.bjs.com/BJs-Response-to-Coronavirus/default.aspx

Conference Call Details

A conference call to discuss the first quarter fiscal 2020 financial results is scheduled for today, May 21, 2020, at 8:30 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-274-0290 (international callers please dial 647-689-5405) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at 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 and by dialing 416-621-4642 and entering the access code 8152109. The recorded replay will be available until May 28, 2020 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 218 clubs and 146 BJ's Gas^® locations in 17 states.

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.

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 and net debt and net debt to LTM adjusted EBITDA.

We define adjusted net income as net income attributable to common stockholders adjusted for: stock-based compensation related to the IPO; offering costs; management fees; club closing and impairment charges; reduction in force severance; gain on sale leaseback transactions; charges related to debt restructurings and retirements; 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; non-cash rent; strategic consulting; offering costs; 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 transaction.

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 assists 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 stores. The amount and timing of pre-opening expenses are dependent on, among other things, the size of new stores opened and the number of new stores 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.

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