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Boot Barn Holdings, Inc. Announces Fourth Quarter and Fiscal Year 2017 Financial Results

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Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial
results for the fourth quarter and fiscal year ended April 1, 2017.

For the fourth quarter ended April 1, 2017:

  • Net sales increased 9.1% to $163.0 million;
  • Consolidated same store sales declined 0.9%;
  • GAAP net income was $2.6 million, or $0.10 per diluted share, compared
    to $1.0 million, or $0.04 per diluted share in the prior-year period.
    Adjusted net income was $3.3 million, or $0.12 per diluted share,
    compared to adjusted net income of $2.5 million, or $0.09 per diluted
    share in the prior-year period;
  • Two new stores were opened.

For the fiscal year ended April 1, 2017:

  • Net sales increased 10.7% to $629.8 million;
  • Consolidated same store sales increased 0.3%;
  • GAAP net income was $14.2 million, or $0.53 per diluted share,
    compared to $9.9 million, or $0.37 per diluted share in the prior-year
    period. Adjusted net income was $14.9 million, or $0.55 per diluted
    share, compared to adjusted net income of $18.7 million, or $0.69 per
    diluted share in the prior-year period;
  • Twelve new stores were opened and one store was closed, bringing the
    total count at year-end to 219 stores.

Other developments:

  • Acquired certain assets of Country Outfitter, including the
    countryoutfitter.com domain name, customer list and social media
    assets for $1.8 million of cash and assumed liabilities;
  • Increased the capacity under the revolving credit facility $10 million
    to $135 million and extended the maturity date for two additional
    years;
  • Amended the financial covenant under the term loan facility to
    increase the maximum net leverage ratio requirements.

Note: Adjusted net income is a non-GAAP measure. An explanation of the
computation of this measure and a reconciliation to GAAP net income is
included below. See also "Non-GAAP Financial Measures."

Jim Conroy, Chief Executive Officer, commented, "While we reported
slightly negative consolidated same store sales for the quarter, we are
pleased that comparable sales in our physical stores improved on a
sequential basis, and we were able to achieve 30 basis points of
improvement in our core merchandise margin. Unfortunately, our fourth
quarter earnings per share fell short of our expectations due to lower
than expected retail store sales, unanticipated operating expenses, and
disruption in sales at sheplers.com arising from the transition of the
e-commerce site to a new software platform. We are continuing to work to
improve the site performance and return sheplers.com to positive sales
growth."

Mr. Conroy continued, "Looking ahead, we are excited to announce that we
have further strengthened our position as the leading omni-channel
western and work wear retailer in the U.S. with the purchase of certain
assets of countryoutfitter.com, a large pure-play e-commerce retailer
targeting a younger, female country customer. While more difficult than
anticipated, we have also completed the transition of sheplers.com to
our new e-commerce platform which now includes the newly acquired
countryoutfitter.com. Additionally, we are encouraged that same store
sales at our physical stores are improving and are positive fiscal
year-to-date partly driven by a recovery in the oil and gas markets. We
remain confident that our industry-leading position, advanced
omni-channel capabilities and ongoing merchandising opportunities will
allow us to continue to capture market share and drive profitable growth
over the long-term."

Operating Results for the Fourth Quarter Ended April 1, 2017

  • Net sales increased 9.1% to $163.0 million in the fourth quarter of
    fiscal year 2017 (14 weeks), from $149.5 million in the fourth quarter
    of fiscal year 2016 (13 weeks). Net sales increased due primarily to
    the extra week of sales in the fourth quarter of fiscal year 2017 and
    contributions from the 12 new stores opened during fiscal year 2017.
    Sales growth was partially offset by a decrease of 0.9% in
    consolidated same store sales and the closure of one store in the
    fourth quarter. Sales at sheplers.com declined in February and March
    when compared to fiscal year 2016 as a result of disruption from the
    conversion to a new e-commerce platform, resulting in sales below plan.
  • Gross profit was $49.3 million, or 30.3% of net sales in the fourth
    quarter of fiscal year 2017, compared to gross profit of $42.4
    million, or 28.4% of net sales, in the prior-year period. Gross profit
    increased $5.4 million, or 12.4%, from adjusted gross profit of $43.9
    million, or 29.4% of net sales, in the prior-year period. Gross profit
    increased as a result of additional sales in the 14-week fourth
    quarter in fiscal year 2017, the opening of 12 new stores, and
    improvement in merchandise margin rate. As a percentage of sales,
    consolidated gross profit increased primarily due to merchandise
    margin expansion and occupancy leverage from the 14-week fourth
    quarter. Adjusted gross profit in the prior-year period excludes
    acquisition-related integration costs, contract termination costs and
    the amortization of inventory fair value adjustment. See "Non-GAAP
    Financial Measures."
  • On a GAAP basis, income from operations was $8.1 million in the fourth
    quarter of fiscal year 2017 compared to $5.6 million in the prior-year
    period. Adjusted income from operations was $9.2 million in the fourth
    quarter of fiscal year 2017, an increase of 20.6%, compared to $7.7
    million in the prior-year period. In each case, the increase was
    driven primarily by the extra week of sales in the fourth quarter of
    fiscal year 2017. Adjusted income from operations was below guidance
    as a result of disruption in sales at sheplers.com during the quarter.
    Also contributing to lower income from operations and adjusted income
    from operations were unanticipated store expenses, repairs and
    maintenance, and outside services primarily related to transitioning
    and operating the newly acquired Country Outfitter e-commerce site. In
    the fourth quarter of fiscal year 2017, adjusted income from
    operations excludes a store impairment charge of $1.2 million.
    Adjusted income from operations in fourth quarter of fiscal year 2016
    excludes acquisition-related integration costs, loss on disposal of
    assets and contract termination costs, and the amortization of
    inventory fair value adjustment. See "Non-GAAP Financial Measures."
  • During the fourth quarter, the Company opened two stores and closed
    one store.
  • On a GAAP basis, net income was $2.6 million, or $0.10 per diluted
    share, in the fourth quarter of fiscal year 2017, compared to $1.0
    million or $0.04 per diluted share in the prior-year period. Adjusted
    net income was $3.3 million, or $0.12 per diluted share, in the fourth
    quarter of fiscal year 2017, compared to $2.5 million, or $0.09 per
    diluted share, in the prior-year period. See "Non-GAAP Financial
    Measures."

A reconciliation of adjusted gross profit, adjusted income from
operations, adjusted net income and adjusted net income per diluted
share, each a non-GAAP financial measure, to their most directly
comparable GAAP financial measures is included in the accompanying
financial data. See "Non-GAAP Financial Measures."

Operating Results for the Fiscal Year Ended April 1, 2017

  • Net sales for fiscal year 2017 (53 weeks) increased 10.7% to $629.8
    million from $569.0 million in fiscal year 2016 (52 weeks). Net sales
    increased from twelve months of sales contributions from Sheplers
    (compared to nine months in the prior-year period), additional sales
    from the 53rd week, the opening of 12 new stores over the
    last twelve months, and a 0.3% increase in consolidated same store
    sales.
  • Gross profit was $189.9 million, or 30.2% of net sales, compared to
    gross profit of $173.2 million, or 30.4% of net sales, in fiscal year
    2016. Gross profit increased 6.7% compared to adjusted gross profit of
    $178.0 million, or 31.3% of net sales, in the prior-year period. Gross
    profit increased from an entire year of Sheplers in fiscal year 2017,
    additional sales from the 53rd week, and the opening of 12
    new stores. The decline in gross profit rate was driven primarily by
    an increase in store occupancy costs and a decline in merchandise
    margin rate. The decline in merchandise margin rate resulted from an
    increase in lower margin e-commerce sales penetration and twelve
    months of lower margin Sheplers sales compared to nine months in the
    prior-year period. Adjusted gross profit in fiscal year 2016 excludes
    acquisition-related integration costs, contract termination costs and
    the amortization of inventory fair value adjustment. See "Non-GAAP
    Financial Measures."
  • On a GAAP basis, income from operations was $37.8 million, compared to
    $30.2 million in fiscal year 2016, the increase primarily resulting
    from the acquisition-related expenses and integration costs in fiscal
    year 2016 that were not incurred in fiscal year 2017. Adjusted income
    from operations was $39.0 million in fiscal year 2017, a decrease of
    8.6%, compared to $42.7 million in fiscal year 2016. The decrease in
    adjusted income from operations compared to the prior year's adjusted
    income from operations was driven primarily by an increase in adjusted
    operating expenses related to twelve months of the Sheplers business
    compared to nine months in the prior-year period and the increase in
    adjusted operating expenses related to increased sales. In fiscal year
    2017, adjusted income from operations excludes a store impairment
    charge of $1.2 million. Adjusted income from operations in fiscal year
    2016 excludes acquisition-related expenses and integration costs, loss
    on disposal of assets and contract termination costs, and the
    amortization of inventory fair value adjustment. See "Non-GAAP
    Financial Measures."
  • The Company opened 12 stores and closed one store, ending the fiscal
    year with 219 stores in 31 states.
  • On a GAAP basis, net income was $14.2 million, or $0.53 per diluted
    share, compared to $9.9 million, or $0.37 per diluted in the
    prior-year period. Adjusted net income was $14.9 million, or $0.55 per
    diluted share, in fiscal year 2017, compared to $18.7 million or $0.69
    per diluted share in fiscal year 2016.

A reconciliation of adjusted gross profit, adjusted income from
operations, adjusted net income and adjusted net income per diluted
share, each a non-GAAP financial measure, to their most directly
comparable GAAP financial measures is included in the accompanying
financial data. See also "Non-GAAP Financial Measures."

Balance Sheet Highlights as of April 1, 2017

  • Cash: $8.0 million
  • Inventories: Average inventory per store decreased 5% compared to
    March 26, 2016
  • Total net debt: $225.9 million, including $33.3 million outstanding on
    revolving credit facility

Fiscal Year 2018 Outlook

For the fiscal year ending March 31, 2018 the Company expects:

  • To open 12 new stores.
  • Flat to slightly positive consolidated same store sales growth.
  • Income from operations between $37.8 million and $40.0 million.
  • Net income of $14.0 million to $15.4 million.
  • Net income per diluted share of $0.52 to $0.57 based on 27.1 million
    weighted average diluted shares outstanding. The Company estimates
    that $0.03 of the $0.55 adjusted net income per diluted share in
    fiscal year 2017 relates to the 53rd week. Therefore,
    fiscal year 2018 net income per diluted share will compare to $0.52
    adjusted net income per diluted share in fiscal year 2017.

For the fiscal first quarter ending July 1, 2017 the Company expects:

  • Flat consolidated same store sales.
  • Break-even earnings per diluted share based on 27.1 million weighted
    average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the fourth
quarter of fiscal year 2017 is scheduled for today, June 1, 2017, at
4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in
participating in the call are invited to dial (877) 407-4018. 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 July 1, 2017, by dialing (844) 512-2921 (domestic) or
(412) 317-6671 (international) and entering the conference
identification number: 13662996. 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 219 stores in 31 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.
Sheplers has been part of the western, outdoor, and work lifestyle for
over 100 years. Beginning in February 2017, the Company has operated 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.

Non-GAAP Financial Measures

The Company presents adjusted gross profit, adjusted income from
operations, adjusted net income and adjusted net income per diluted
share to help the Company describe its operating and financial
performance. These financial measures are non-GAAP financial measures
and should not be construed in isolation or as an alternative to actual
gross profit, actual income from operations, actual net income and
actual earnings per diluted share and other income or cash flow
statement data (as presented in the Company's consolidated financial
statements in accordance with generally accepted accounting principles
in the United States, or GAAP), or as a better indicator of operating
performance or as a measure of liquidity. These non-GAAP financial
measures, as defined by the Company, may not be comparable to similar
non-GAAP financial measures presented by other companies. The Company's
management believes that these non-GAAP financial measures provide
investors with transparency and help illustrate financial results by
excluding items that may not be indicative of, or are unrelated to, the
Company's core operating results, thereby providing a better baseline
for analyzing trends in the underlying business. See the table at the
end of this press release for a reconciliation of adjusted gross profit
to gross profit, adjusted income from operations to income from
operations, adjusted net income to net income, and adjusted net income
per diluted share to net income per diluted share.

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: decreases in consumer spending due to declines in
consumer confidence, local economic conditions or changes in consumer
preferences and the Company's ability to effectively execute on its
growth strategy; the 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)

 
April 1, March 26,
2017 2016
Assets
Current assets:
Cash and cash equivalents $ 8,035 $ 7,195
Accounts receivable, net 4,354 4,131
Inventories 189,096 176,335
Prepaid expenses and other current assets   22,818     15,558
Total current assets 224,303 203,219
Property and equipment, net 82,711 76,076
Goodwill 193,095 193,095
Intangible assets, net 64,511 64,861
Other assets   961     2,075
Total assets $ 565,581   $ 539,326
Liabilities and stockholders' equity
Current liabilities:
Line of credit $ 33,274 $ 48,815
Accounts payable 77,482 66,553
Accrued expenses and other current liabilities 35,983 35,896
Current portion of notes payable, net   1,062     1,035
Total current liabilities 147,801 152,299
Deferred taxes 20,961 12,255
Long-term portion of notes payable, net 191,517 192,579
Capital lease obligation 7,825 8,272
Other liabilities   17,568     12,431
Total liabilities   385,672     377,836
 
Stockholders' equity:
Common stock, $0.0001 par value; April 1, 2017 - 100,000 shares
authorized, 26,575 shares issued; March 26, 2016 - 100,000 shares
authorized, 26,354 shares issued
3 3
Preferred stock, $0.0001 par value; 10,000 shares authorized, no
shares issued or outstanding

-

-

Additional paid-in capital 142,184 137,893
Retained earnings 37,791 23,594
Less: Common stock held in treasury, at cost, 14 and 4 shares at
April 1, 2017 and March 26, 2016, respectively
  (69 )  

-

Total stockholders' equity   179,909     161,490
Total liabilities and stockholders' equity $ 565,581   $ 539,326
 
       
Boot Barn Holdings, Inc.
Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 
Fourteen Thirteen Fifty-Three Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
April 1, March 26, April 1, March 26,
2017 2016 2017 2016
 
Net sales $ 163,003 $ 149,466 $ 629,816 $ 569,020
Cost of goods sold 113,675 107,141 439,930 396,317
Amortization of inventory fair value adjustment   -   (47 )   -   (500 )
Total cost of goods sold   113,675   107,094     439,930   395,817  
Gross profit 49,328 42,372 189,886 173,203
Operating expenses:
Selling, general and administrative expenses 41,265 36,755 152,068 142,078
Acquisition-related expenses   -   -     -   891  
Total operating expenses   41,265   36,755     152,068   142,969  
Income from operations 8,063 5,617 37,818 30,234
Interest expense, net   3,851   3,576     14,699   12,923  
Income before income taxes 4,212 2,041 23,119 17,311
Income tax expense   1,624   1,029     8,922   7,443  
Net income $ 2,588 $ 1,012   $ 14,197 $ 9,868  
 
Earnings per share:
Basic shares $ 0.10 $ 0.04 $ 0.54 $ 0.38
Diluted shares $ 0.10 $ 0.04 $ 0.53 $ 0.37
Weighted average shares outstanding:
Basic shares 26,535 26,329 26,459 26,170
Diluted shares 27,068 26,630 26,939 26,955
 
   
Boot Barn Holdings, Inc.
Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
Fiscal Year Ended
April 1,   March 26, March 28,
2017 2016 2015
Cash flows from operating activities
Net income $ 14,197 $ 9,868 $ 13,730
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 14,555 11,480 6,615
Stock-based compensation 3,023 2,881 2,048
Excess tax benefit

-

(3,621 ) (681 )
Amortization of intangible assets 2,155 2,536 2,592
Amortization and write-off of debt issuance fees and debt discount 1,145 2,274 3,684
Loss on disposal of property and equipment 367 463 134
Store impairment charge 1,164

-

-

Accretion of above market leases (36 ) (72 ) (149 )
Deferred taxes 6,175 981 1,402
Amortization of inventory fair value adjustment

-

(500 )

-

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net (223 ) 1,524 (1,672 )
Inventories (12,761 ) (16,087 ) (26,610 )
Prepaid expenses and other current assets (3,805 ) 7,543 (1,667 )
Other assets 5 (2,713 ) (362 )
Accounts payable 10,501 6,835 7,364
Accrued expenses and other current liabilities (483 ) 5,068 3,298
Other liabilities   5,172     4,469     1,782  
Net cash provided by operating activities $ 41,151   $ 32,929   $ 11,508  
Cash flows from investing activities
Purchases of property and equipment $ (22,293 ) $ (36,127 ) $ (14,074 )
Acquisition of business or assets, net of cash acquired   (1,305 )   (146,541 )  

-

 
Net cash used in investing activities $ (23,598 ) $ (182,668 ) $ (14,074 )
Cash flows from financing activities
Borrowings/(payments) on line of credit - net $ (15,541 ) $ 32,615 $ (12,424 )
Proceeds from loan borrowings

-

200,938 104,938
Repayments on debt and capital lease obligations (2,378 ) (77,899 ) (130,326 )
Debt issuance fees

-

(6,487 ) (1,361 )
Net proceeds from initial public offering

-

-

82,224
Tax withholding payments for net share settlement (69 )

-

-

Excess tax benefits from stock options

-

3,621 681
Proceeds from the exercise of stock options 1,275 2,698 464
Dividends paid  

-

   

-

    (41,300 )
Net cash (used in)/provided by financing activities $ (16,713 ) $ 155,486   $ 2,896  
 
Net increase in cash and cash equivalents 840 5,747 330
Cash and cash equivalents, beginning of period   7,195     1,448     1,118  
Cash and cash equivalents, end of period $ 8,035   $ 7,195   $ 1,448  
 
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 4,192 $ 3,296 $ 8,297
Cash paid for interest $ 13,646 $ 10,333 $ 11,167
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment $ 2,421 $ 1,992 $ 1,374
Equipment acquired through capital lease $

-

$ 38 $ 36
 

Boot Barn Holdings, Inc.
Supplemental Information -
Consolidated Statements of Operations

Reconciliation of GAAP
to Non-GAAP Financial Measures

(In thousands, except per share
amounts)
(Unaudited)

The tables below reconcile the non-GAAP financial measures of adjusted
gross profit, adjusted income from operations, adjusted net income, and
adjusted net income per diluted share, to the most directly comparable
GAAP financial measures of gross profit, income from operations, net
income, and net income per diluted share.

       
Fourteen Thirteen Fifty-Three Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
April 1, March 26, April 1, March 26,
2017 2016 2017 2016
Reconciliation of GAAP gross profit to adjusted gross profit
Gross profit, as reported $ 49,328 $ 42,372 $ 189,886 $ 173,203
Amortization of inventory fair value adjustment (a)

-

(47 )

-

(500 )
Acquisition-related integration costs (b)

-

1,518

-

4,848
Contract termination costs (c)  

-

    41    

-

    444  
Adjusted gross profit $ 49,328   $ 43,884   $ 189,886   $ 177,995  
 
Reconciliation of GAAP income from operations to adjusted income
from operations
Income from operations, as reported $ 8,063 $ 5,617 $ 37,818 $ 30,234
Amortization of inventory fair value adjustment (a)

-

(47 )

-

(500 )
Acquisition-related expenses (d)

-

-

-

891
Acquisition-related integration costs (b)

-

1,817

-

10,338
Loss on disposal of assets and contract termination costs (c)

-

267

-

1,374
Store impairment charge (e) 1,164

-

1,164

-

SEC filing costs (f)  

-

   

-

   

-

    317  
Adjusted income from operations $ 9,227   $ 7,654   $ 38,982   $ 42,654  
 

Reconciliation of GAAP net income to adjusted net income

Net income, as reported

$ 2,588 $ 1,012 $ 14,197 $ 9,868
Amortization of inventory fair value adjustment (a)

-

(47 )

-

(500 )
Acquisition-related expenses (d)

-

-

-

891
Acquisition-related integration costs (b)

-

1,817

-

10,338
Loss on disposal of assets and contract termination costs (c)

-

267

-

1,374
Store impairment charge (e) 1,164

-

1,164

-

SEC filing costs (f)

-

-

-

317
Write-off of debt discount (g)

-

-

-

1,355
Provision for income taxes, as reported 1,624 1,029 8,922 7,443
Adjusted provision for income taxes (h)   (2,073 )   (1,610 )   (9,371 )   (12,419 )

Adjusted net income

$ 3,303   $ 2,468   $ 14,912   $ 18,667  
 
Reconciliation of adjusted net income per diluted share to net
income per diluted share
Net income per share, diluted:
Net income per share, as reported $ 0.10 $ 0.04 $ 0.53 $ 0.37
Adjustments   0.02     0.05     0.02     0.32  
Adjusted net income per share, diluted $ 0.12   $ 0.09   $ 0.55   $ 0.69  
 
Weighted average diluted shares outstanding, as reported 27,068 26,630 26,939 26,955
 

(a) Represents the amortization of purchase-accounting adjustments that
decreased the value of inventory acquired to its fair value.

(b) Represents certain store integration, remerchandising, inventory
obsolescence and corporate consolidation costs incurred in connection
with the integration of Sheplers. Includes an adjustment to normalize
the gross margin impact of discontinued inventory from Sheplers, which
was sold at a discount or written off. The adjustment assumes such
inventory was sold at Sheplers' normalized margin rate.

(c) Represents loss on disposal of assets and contract termination costs
from store closures and unused office and warehouse space.

(d) Includes direct costs and fees related to the Sheplers acquisition.

(e) Represents the store impairment charge recorded at three stores in
order to reduce the carrying amount of the assets to their estimated
fair values.

(f) Represents professional fees and expenses incurred in connection
with a Form S-1 Registration Statement filed in July 2015 and withdrawn
in November 2015.

(g) Represents the write off of debt discounts and debt issuance costs
associated with the previously extinguished Wells Fargo Credit Facility.

(h) The provision for income taxes uses an effective tax rate of 38.6%
for both the fourteen-week and fifty-three week period ended April 1,
2017, and applies it to the non-GAAP income before taxes.

           
Boot Barn Holdings, Inc.
Store Count
 
Fiscal Year Ended Fiscal Year Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended
March 28, March 26, June 25, September 24, December 24, April 1,
2015 2016 2016 2016 2016 2017
Store Count (BOP) 152 169 208 210 212 219
Opened/Acquired 18 47 2 2 6 2
Relocated (a)

-

-

-

-

1 (1 )
Closed Boot Barn Stores (1 ) (2 )

-

-

-

(1 )
Closed Sheplers Stores

-

  (6 )

-

-

-

-

 
Store Count (EOP) 169   208   210 212 219 219  
 

(a) Represents a store opened during the quarter ended December 24, 2016
that replaces a store located less than a mile away whose lease expired
and was closed in January 2017.

         
Debt Covenant Calculation
EBITDA Reconciliation
 
Fourteen

 

Weeks Ended

Thirteen Weeks Ended

April 1, December 24, September 24, June 25, March 26,
2017 2016 2016 2016 2016
Boot Barn's Net income $ 2,588 $ 10,507 $ 479 $ 624 $ 1,012
Income tax expense 1,624 6,719 313 266 1,029
Interest expense, net 3,851 3,637 3,651 3,560 3,576
Depreciation and intangible asset amortization   4,407     4,207     4,017   4,079   4,494  
Boot Barn's EBITDA $ 12,470 $ 25,070 $ 8,460 $ 8,529 $ 10,111
 
Non-cash stock-based compensation (a) $ 763 $ 754 $ 750 $ 756 $ 737
Non-cash accrual for future award redemptions (b) (489 ) 399 133 42 (797 )
Acquisition-related integration costs (c) - - - - 1,817
Amortization of inventory fair value adjustment (d) - - - - (47 )
Loss/(gain) on disposal of assets and contract termination costs (e) 204 (22 ) 126 59 267
Store impairment charge (f)   1,164     -     -   -   -  
Boot Barn's Adjusted EBITDA $ 14,112 $ 26,201 $ 9,469 $ 9,386 $ 12,088
 

Additional adjustments1

  156     778     891   1,345   959  
Consolidated EBITDA per Loan Agreements $ 14,268 $ 26,979 $ 10,360 $ 10,731 $ 13,047

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1 Adjustments to Boot Barn's Adjusted EBITDA as stipulated in
the 2015 Golub Term Loan and June 2015 Wells Fargo Revolver include
pre-opening costs, franchise and state taxes, and other miscellaneous
adjustments.

(a) Represents non-cash compensation expenses related to stock options,
restricted stock awards and restricted stock 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 certain store integration, remerchandising, inventory
obsolescence and corporate consolidation costs incurred in connection
with the integration of Sheplers, which we acquired in June 2015.
Includes an adjustment to normalize the gross margin impact of sales of
discontinued inventory from Sheplers, which was sold at a discount or
written off. The adjustment assumes such inventory was sold at Sheplers'
normalized margin rate.

(d) Represents the amortization of purchase-accounting adjustments that
decreased the value of inventory acquired to its fair value.

(e) Represents loss/(gain) on disposal of assets and contract
termination costs from store closures and unused office and warehouse
space.

(f) Represents the store impairment charge recorded at three stores in
order to reduce the carrying amount of the assets to their estimated
fair values.

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