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Boot Barn Holdings, Inc. Announces First Quarter Fiscal Year 2018 Financial Results

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Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial
results for the first fiscal quarter ended July 1, 2017.

Highlights for the quarter ended July 1, 2017, were as follows:

  • Net sales increased 4.5% to $139.4 million.
  • Same store sales increased 1.3%.
  • Net income was $0.8 million, or $0.03 per diluted share, compared to
    net income of $0.6 million, or $0.02 per diluted share in the
    prior-year period.
  • The Company opened one new store.

Jim Conroy, Chief Executive Officer, commented, "We are encouraged with
our start to fiscal 2018 as sales and earnings per share both exceeded
expectations. Same store sales increased 1.3% as low single-digit growth
in our physical stores and a strong double-digit gain in our
bootbarn.com business more than offset a decline at sheplers.com. We
believe our commitment and focus on the store business have helped
return us to positive store comps during the quarter, a trend that has
carried into the second quarter. Importantly, our stores in oil and gas
markets also continued to improve, highlighted by a low single-digit
sales increase for our stores in Texas. Meanwhile, we continue to make
progress on improving organic search and increasing the site speed at
sheplers.com following the technical problems we encountered upon
transition of the e-commerce site to a new software platform in
February. Despite this temporary setback, we believe an upgraded
e-commerce platform was a necessary investment, and will position us
well for the next level of omni-channel leadership and contribute to
future earnings growth."

Operating Results for the First Quarter Ended July 1, 2017

  • Net sales increased 4.5% to $139.4 million from $133.4 million in the
    prior-year period. Net sales increased due to the opening of 11 new
    stores over the past twelve months, a 1.3% increase in same store
    sales, and sales from the recently acquired Country Outfitter site.
  • Gross profit was $41.4 million, or 29.7% of net sales, compared to
    $40.8 million, or 30.5% of net sales in the prior-year period. Gross
    profit increased primarily due to increased sales. As a percentage of
    sales, consolidated gross margin declined as a result of increased
    buying and occupancy costs.
  • Selling, general and administrative expense was $36.5 million, or
    26.2% of net sales, compared to $36.3 million, or 27.2% of net sales
    in the prior-year period. Selling, general and administrative expenses
    declined as a percentage of sales as a result of lower corporate
    payroll and overhead costs.
  • Income from operations was $4.9 million, or 3.5% of net sales,
    compared to $4.5 million, or 3.3% of net sales in the prior-year
    period.
  • The Company opened one new store and ended the quarter with 220 stores
    in 31 states.
  • Net income was $0.8 million, or $0.03 per diluted share, compared to
    $0.6 million, or $0.02 per diluted share in the prior-year period.

Balance Sheet Highlights as of July 1, 2017

  • Cash of $7.3 million.
  • Average inventory per store decreased 4% compared to June 25, 2016.
  • Total net debt of $245.2 million, including $62.8 million outstanding
    on revolving credit facility.

Fiscal Year 2018 Outlook

For the fiscal year ending March 31, 2018, the Company continues to
expect:

  • To open 12 new stores, including one store opened in the first quarter.
  • Flat to slightly positive 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.

For the fiscal second quarter ending September 30, 2017 the Company
expects:

  • Same store sales to be roughly in line with first quarter sales.
  • Net income per diluted share of $0.00 to $0.02 based on 27.0 million
    weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the first quarter
of fiscal year 2018 is scheduled for today, August 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 September 1, 2017, by dialing (844)
512-2921 (domestic) or (412) 317-6671 (international) and entering the
conference identification number: 13666743. 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 EBITDA to help the Company describe its
operating and financial performance. Adjusted EBITDA is a non-GAAP
financial measure and should not be construed in isolation or as an
alternative to net 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. Adjusted EBITDA, 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 adjusted EBITDA
provides investors with transparency and helps illustrate financial
results. See the table at the end of this press release for a
reconciliation of adjusted EBITDA to net income.

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; inability to compete effectively; failure to maintain good
relationships with its key suppliers; and inability 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)

 
July 1, April 1,
2017 2017
Assets
Current assets:
Cash and cash equivalents $ 7,305 $ 8,035
Accounts receivable, net 4,144 4,354
Inventories 192,343 189,096
Prepaid expenses and other current assets   14,394     22,818  
Total current assets 218,186 224,303
Property and equipment, net 84,389 82,711
Goodwill 193,095 193,095
Intangible assets, net 64,149 64,511
Other assets   977     961  
Total assets $ 560,796   $ 565,581  
Liabilities and stockholders' equity
Current liabilities:
Line of credit $ 62,819 $ 33,274
Accounts payable 60,745 77,482
Accrued expenses and other current liabilities 35,887 35,983
Current portion of notes payable, net       1,062  
Total current liabilities 159,451 147,801
Deferred taxes 11,735 20,961
Long-term portion of notes payable, net 182,419 191,517
Capital lease obligation 7,703 7,825
Other liabilities   18,305     17,568  
Total liabilities   379,613     385,672  
 
Stockholders' equity:
Common stock, $0.0001 par value; July 1, 2017 - 100,000 shares
authorized, 26,618 shares issued; April 1, 2017 - 100,000 shares
authorized, 26,575 shares issued
3 3
Preferred stock, $0.0001 par value; 10,000 shares authorized, no
shares issued or outstanding
Additional paid-in capital 142,759 142,184
Retained earnings 38,568 37,791
Less: Common stock held in treasury, at cost, 26 and 14 shares at
July 1, 2017 and April 1, 2017, respectively
  (147 )   (69 )
Total stockholders' equity   181,183     179,909  
Total liabilities and stockholders' equity $ 560,796   $ 565,581  
 

     
Boot Barn Holdings, Inc.
Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 
Thirteen Weeks Ended
July 1,   June 25,
2017 2016
Net sales $ 139,379 $ 133,414
Cost of goods sold   97,987   92,664
Gross profit 41,392 40,750
Selling, general and administrative expenses   36,451   36,300
Income from operations 4,941 4,450
Interest expense, net   3,658   3,560
Income before income taxes 1,283 890
Income tax expense   506   266
Net income $ 777 $ 624
 
Earnings per share:
Basic shares $ 0.03 $ 0.02
Diluted shares $ 0.03 $ 0.02
Weighted average shares outstanding:
Basic shares 26,559 26,373
Diluted shares 26,969 26,616
 

       
Boot Barn Holdings, Inc.
Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 
Thirteen Weeks Ended
July 1, June 25,
2017 2016
Cash flows from operating activities
Net income $ 777 $ 624
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation 3,751 3,518
Stock-based compensation 575 756
Amortization of intangible assets 362 561
Amortization and write-off of debt issuance fees and debt discount 289 281
Loss on disposal of property and equipment 14 59
Accretion of above market leases (14 )
Deferred taxes 564 (141 )
Changes in operating assets and liabilities:
Accounts receivable, net 210 671
Inventories (3,247 ) (2,890 )
Prepaid expenses and other current assets (1,296 ) (1,201 )
Other assets (16 ) 1,040
Accounts payable (16,922 ) (7,815 )
Accrued expenses and other current liabilities (113 ) (3,666 )
Other liabilities   737     567  
Net cash used in operating activities $ (14,315 ) $ (7,650 )
Cash flows from investing activities
Purchases of property and equipment $ (5,258 ) $ (4,721 )
Net cash used in investing activities $ (5,258 ) $ (4,721 )
Cash flows from financing activities
Borrowings on line of credit - net $ 29,545 $ 11,375
Repayments on debt and capital lease obligations (10,105 ) (603 )
Debt issuance fees (519 )
Tax withholding payments for net share settlement (78 ) (25 )
Proceeds from the exercise of stock options       268  
Net cash provided by financing activities $ 18,843   $ 11,015  
 
Net decrease in cash and cash equivalents (730 ) (1,356 )
Cash and cash equivalents, beginning of period   8,035     7,195  
Cash and cash equivalents, end of period $ 7,305   $ 5,839  
 
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 308 $ 399
Cash paid for interest $ 3,384 $ 3,306
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment $ 2,086 $ 1,253
 

                 

Boot Barn Holdings, Inc.

Store Count

 
Fiscal Year Ended Fiscal Year Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended
March 28, March 26, June 25, September 24, December 24, April 1, July 1,
2015 2016 2016 2016 2016 2017 2017
Store Count (BOP) 152 169 208 210 212 219 219
Opened/Acquired 18 47 2 2 6 2 1
Relocated 1 (1 )
Closed Boot Barn Stores (1 ) (2 ) (1 )
Closed Sheplers Stores   (6 )  
Store Count (EOP) 169   208   210 212 219 219   220
 
             
Debt Covenant EBITDA Reconciliation

(Unaudited)

 
Thirteen Weeks Ended Fourteen Weeks Ended Thirteen Weeks Ended

July 1,
2017

April 1,
2017

December 24,
2016

September 24,
2016

June 25,
2016

Boot Barn's Net income $ 777 $ 2,588 $ 10,507 $ 479 $ 624
Income tax expense 506 1,624 6,719 313 266
Interest expense, net 3,658 3,851 3,637 3,651 3,560
Depreciation and intangible asset amortization   4,113   4,407     4,207     4,017   4,079
Boot Barn's EBITDA $ 9,054 $ 12,470 $ 25,070 $ 8,460 $ 8,529
 
Non-cash stock-based compensation (a) $ 575 $ 763 $ 754 $ 750 $ 756
Non-cash accrual for future award redemptions (b) 5 (489 ) 399 133 42
Loss/(gain) on disposal of assets and contract termination costs (c) 14 204 (22 ) 126 59
Store impairment charge (d)   -   1,164     -       -     -
Boot Barn's Adjusted EBITDA $ 9,648 $ 14,112 $ 26,201 $ 9,469 $ 9,386
 
Additional adjustments1   628   156     778     891   1,345
Consolidated EBITDA per Loan Agreements $ 10,276 $ 14,268 $ 26,979 $ 10,360 $ 10,731

____________________

1Adjustments 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 loss/(gain) on disposal of assets and contract
termination costs from store closures and unused office and
warehouse space.

(d)

Represents the store impairment charge recorded at three stores in
the fourteen weeks ended April 1, 2017 in order to reduce the
carrying amount of the assets to their estimated fair values.

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