Form 8-K Petco Health & Wellness For: May 24

May 24, 2022 7:46 AM EDT

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Exhibit 99.1

 

 

Contacts:

 

 

 

 

 

Investor Relations

 

Media Relations

[email protected]

 

Benjamin Thiele-Long

 

 

benjamin.thiele-

 

 

[email protected]

 

FOR IMMEDIATE RELEASE: May 24, 2022

 

Petco Health + Wellness Company, Inc. Reports First Quarter Earnings

 

Momentum continued into first quarter with comparable sales growth of 5.1 percent year over year and 33.5 percent on a two-year basis, on top of record comparable sales a year ago

Delivered fourteenth consecutive quarter of comparable sales growth

Revenue growth of 4.3 percent, net income growth of 227 percent and strong Adjusted EBITDA1 growth of 5.4 percent

Earnings per share of $0.09, up $0.06 or 226 percent from prior year; Adjusted Earnings Per Share1 of $0.17 consistent with prior year

Maintained full year guidance, with revenue of $6.15 billion to $6.25 billion; Adjusted EBITDA1 between $630 million and $645 million, and Adjusted Earnings Per Share1 between $0.97 and $1.00

 

San Diego, May 24, 2022 – Petco Health and Wellness Company, Inc. (Nasdaq: WOOF), a complete partner in pet health and wellness, today announced its first quarter 2022 financial results, which reflected increases in both comparable sales and profitability, on top of record comparable sales a year ago.

 

In the first quarter of 2022, Petco delivered net revenue of $1.48 billion, up 4.3 percent versus prior year. Net income improved by $17.1 million from prior year to $24.7 million or $0.09 per share. Adjusted Net Income1 increased $1.7 million to $46.1 million or $0.17 per share, consistent with prior year.

 

“Petco’s strong Q1 results were driven by our incredible team’s ‘no excuses’ execution approach, a pet category that continues to surge, and the power of our one-of-a-kind end to end offering that now includes over 200 fully owned veterinary hospitals.” said Ron Coughlin, CEO of Petco. “This is our 14th consecutive growth quarter and we are confident that continued category momentum—combined with our differentiated services, merchandise and advantaged Retail 3.0 omnichannel capabilities—positions us to continue delivering growth.”

 

 

-1-


 

Fiscal Q1 2022 Operating Results:

Comparisons are first quarter of 2022 ended April 30, 2022 versus first quarter of 2021 ended May 1, 2021 unless otherwise noted

 

First quarter results demonstrated continued operational excellence, while simultaneously delivering on the promise of purpose driven performance.

 

 

Net revenue increased 4.3 percent to $1.48 billion driven by comparable sales growth of 5.1 percent

 

Net income increased $17.1 million to $24.7 million or $0.09 per share

 

Adjusted Net Income1 increased $1.7 million to $46.1 million or $0.17 per share

 

Adjusted EBITDA1 increased $6.8 million to $132.6 million

 

(1)

Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Trailing Twelve Month Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.

 

Fiscal 2022 Guidance:

Petco has maintained its full year 2022 financial guidance as previously stated, and as set out in the schedules below.

 

Earnings Conference Call Webcast Information:

 

Management will host an earnings conference call on May 24, 2022 at 8:30 AM Eastern Time to discuss the company’s financial results. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast, earnings release, earnings presentation, and infographic via the company’s investor relations page at ir.petco.com. A replay of the webcast will be archived on the company’s investor relations page through June 7, 2022 at approximately 5:00 PM Eastern Time.

 

About Petco, The Health + Wellness Co.:

 

Founded in 1965, Petco is a category-defining health and wellness company focused on improving the lives of pets, pet parents and our own Petco partners. We’ve consistently set new standards in pet care while delivering comprehensive pet wellness products, services and solutions, and creating communities that deepen the pet-pet parent bond. We operate more than 1,500 pet care centers across the U.S., Mexico and Puerto Rico, which offer merchandise, companion animals, grooming, training and a growing network of on-site veterinary hospitals and mobile veterinary clinics. Our complete pet health and wellness ecosystem is accessible through our pet care centers and digitally at petco.com and on the Petco app. In tandem with Petco Love (formerly the Petco Foundation), an independent nonprofit organization, we work with and support thousands of local animal welfare groups across the country and, through in-store adoption events, we’ve helped find homes for more than 6.5 million animals.

 

Forward-Looking Statements:

 

This earnings release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not statements of historical fact, including statements regarding our fiscal year 2022 guidance, our growth plans, and execution on our transformation initiatives. Such forward-looking statements can generally be identified by the use of forward-looking terms such as “believes,” “expects,”

 

-2-


“may,” “intends,” “will,” “shall,” “should,” “anticipates,” “opportunity,” “illustrative”, or the negative thereof or other variations thereon or comparable terminology. Although Petco believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this earnings release is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of the operations or business or financial condition of Petco. All forward-looking statements are based on expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Petco. Forward-

looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in the forward-looking statements, including, without limitation, those identified in this earnings release as well as the following: (i) increased competition (including from multi-channel retailers and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate including inflation; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances         or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflict in Ukraine), health crises, and pandemics, including the potential effects that the ongoing COVID-19 pandemic and/or corresponding macroeconomic uncertainty could have on our financial position, results of operations and cash flows; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; and (xx) the other risks, uncertainties and other factors identified under “Risk Factors” and elsewhere in Petco’s Securities and Exchange Commission filings. The occurrence of any such factors could significantly alter the results set forth in these statements.

 

Petco cautions that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. Petco undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

 

-3-


PETCO HEALTH AND WELLNESS COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited and subject to reclassification)

 

 

 

13 Weeks Ended

 

 

 

April 30,

2022

 

 

May 1,

2021

 

 

Percent

Change

 

Net sales

 

$

1,475,991

 

 

$

1,414,994

 

 

 

4

%

Cost of sales

 

 

868,317

 

 

 

818,009

 

 

 

6

%

Gross profit

 

 

607,674

 

 

 

596,985

 

 

 

2

%

Selling, general and administrative expenses

 

 

557,735

 

 

 

549,236

 

 

 

2

%

Operating income

 

 

49,939

 

 

 

47,749

 

 

 

5

%

Interest income

 

 

(20

)

 

 

(21

)

 

 

(5

%)

Interest expense

 

 

19,634

 

 

 

20,529

 

 

 

(4

%)

Loss on extinguishment and modification of debt

 

 

 

 

 

20,838

 

 

 

(100

%)

Other non-operating income

 

 

(314

)

 

 

 

 

N/M

 

Income before income taxes and income from

   equity method investees

 

 

30,639

 

 

 

6,403

 

 

 

379

%

Income tax expense

 

 

10,000

 

 

 

2,679

 

 

 

273

%

Income from equity method investees

 

 

(3,163

)

 

 

(2,425

)

 

 

30

%

Net income

 

 

23,802

 

 

 

6,149

 

 

 

287

%

Net loss attributable to noncontrolling interest

 

 

(891

)

 

 

(1,411

)

 

 

(37

%)

Net income attributable to Class A and B-1 common

   stockholders

 

$

24,693

 

 

$

7,560

 

 

 

227

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per Class A and B-1 common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

$

0.03

 

 

 

226

%

Diluted

 

$

0.09

 

 

$

0.03

 

 

 

226

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing net income per Class A

   and B-1 common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

265,050

 

 

 

264,215

 

 

 

0

%

Diluted

 

 

265,701

 

 

 

265,028

 

 

 

0

%

 

 

-4-


 

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited and subject to reclassification)

 

 

 

April 30,

2022

 

 

January 29,

2022

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,90,893

 

 

$

2,11,602

 

Receivables, less allowance for credit losses1

 

 

42,221

 

 

 

55,618

 

Merchandise inventories, net

 

 

6,82,040

 

 

 

6,75,111

 

Prepaid expenses

 

 

52,129

 

 

 

42,355

 

Other current assets

 

 

81,602

 

 

 

86,091

 

Total current assets

 

 

10,48,885

 

 

 

10,70,777

 

Fixed assets

 

 

17,92,202

 

 

 

17,45,691

 

Less accumulated depreciation

 

 

(10,56,858

)

 

 

(10,18,769

)

Fixed assets, net

 

 

7,35,344

 

 

 

7,26,922

 

Operating lease right-of-use assets

 

 

13,56,879

 

 

 

13,38,465

 

Goodwill

 

 

21,83,991

 

 

 

21,83,991

 

Trade name

 

 

10,25,000

 

 

 

10,25,000

 

Other long-term assets

 

 

1,55,688

 

 

 

1,52,786

 

Total assets

 

$

65,05,787

 

 

$

64,97,941

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and book overdrafts

 

$

3,92,662

 

 

$

4,03,976

 

Accrued salaries and employee benefits

 

 

1,25,616

 

 

 

1,50,630

 

Accrued expenses and other liabilities

 

 

2,13,396

 

 

 

2,10,872

 

Current portion of operating lease liabilities

 

 

2,58,349

 

 

 

2,65,897

 

Current portion of long-term debt and other lease liabilities

 

 

21,789

 

 

 

21,764

 

Total current liabilities

 

 

10,11,812

 

 

 

10,53,139

 

Senior secured credit facilities, net, excluding current portion

 

 

16,37,365

 

 

 

16,40,390

 

Operating lease liabilities, excluding current portion

 

 

11,14,268

 

 

 

10,96,133

 

Deferred taxes, net

 

 

3,22,626

 

 

 

3,18,355

 

Other long-term liabilities

 

 

1,32,009

 

 

 

1,34,105

 

Total liabilities

 

 

42,18,080

 

 

 

42,42,122

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Class A common stock2

 

 

227

 

 

 

227

 

Class B-1 common stock3

 

 

38

 

 

 

38

 

Class B-2 common stock4

 

 

 

 

 

 

Preferred stock5

 

 

 

 

 

 

Additional paid-in-capital

 

 

21,43,505

 

 

 

21,33,821

 

Retained earnings

 

 

1,66,859

 

 

 

1,42,166

 

Accumulated other comprehensive loss

 

 

(3,836

)

 

 

(2,238

)

Total stockholders’ equity

 

 

23,06,793

 

 

 

22,74,014

 

Noncontrolling interest

 

 

(19,086

)

 

 

(18,195

)

Total equity

 

 

22,87,707

 

 

 

22,55,819

 

Total liabilities and equity

 

$

65,05,787

 

 

$

64,97,941

 

 

(1)

Allowances for credit losses are $1,114 and $931, respectively

(2)

Class A common stock, $0.001 par value: Authorized - 1.0 billion shares; Issued and outstanding - 227.5 million and 227.2 million shares, respectively

(3)

Class B-1 common stock, $0.001 par value: Authorized - 75.0 million shares; Issued and outstanding - 37.8 million shares

(4)

Class B-2 common stock, $0.000001 par value: Authorized - 75.0 million shares; Issued and outstanding - 37.8 million shares,

(5)

Preferred stock, $0.001 par value: Authorized - 25.0 million shares; Issued and outstanding – none

 

-5-


PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited and subject to reclassification)

 

 

 

13 Weeks Ended

 

 

 

April 30,

2022

 

 

May 1,

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

23,802

 

 

$

6,149

 

Adjustments to reconcile net income to net cash provided by

  operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

46,967

 

 

 

41,607

 

Amortization of debt discounts and issuance costs

 

 

1,224

 

 

 

2,165

 

Provision for deferred taxes

 

 

4,832

 

 

 

1,708

 

Equity-based compensation

 

 

12,222

 

 

 

11,604

 

Impairments, write-offs and losses on sale of fixed and other assets

 

 

162

 

 

 

947

 

Loss on extinguishment and modification of debt

 

 

 

 

 

20,838

 

Income from equity method investees

 

 

(3,163

)

 

 

(2,425

)

Non-cash operating lease costs

 

 

105,249

 

 

 

105,188

 

Other non-operating income

 

 

(314

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

13,397

 

 

 

3,748

 

Merchandise inventories

 

 

(6,930

)

 

 

(36,008

)

Prepaid expenses and other assets

 

 

(9,896

)

 

 

(9,140

)

Accounts payable and book overdrafts

 

 

(11,314

)

 

 

20,119

 

Accrued salaries and employee benefits

 

 

(16,478

)

 

 

(2,483

)

Accrued expenses and other liabilities

 

 

11,290

 

 

 

66,120

 

Operating lease liabilities

 

 

(112,272

)

 

 

(116,994

)

Other long-term liabilities

 

 

(1,259

)

 

 

1,859

 

Net cash provided by operating activities

 

 

57,519

 

 

 

115,002

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash paid for fixed assets

 

 

(65,910

)

 

 

(47,351

)

Net cash used in investing activities

 

 

(65,910

)

 

 

(47,351

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under long-term debt agreements

 

 

 

 

 

1,700,000

 

Repayments of long-term debt

 

 

(4,250

)

 

 

(1,678,111

)

Debt refinancing costs

 

 

 

 

 

(24,665

)

Payments for finance lease liabilities

 

 

(1,022

)

 

 

(593

)

Proceeds from employee stock purchase plan and stock option exercises

 

 

1,453

 

 

 

 

Tax withholdings on stock-based awards

 

 

(11,441

)

 

 

 

Payment of offering costs

 

 

 

 

 

(3,844

)

Net cash used in financing activities

 

 

(15,260

)

 

 

(7,213

)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(23,651

)

 

 

60,438

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

221,890

 

 

 

119,540

 

Cash, cash equivalents and restricted cash at end of period

 

$

198,239

 

 

$

179,978

 

 

 

-6-


 

NON-GAAP FINANCIAL MEASURES

 

The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.

 

Adjusted EBITDA and Trailing Twelve Month Adjusted EBITDA

 

Adjusted EBITDA, including Trailing Twelve Month Adjusted EBITDA, is considered a non-GAAP financial measure under the Securities and Exchange Commission’s (SEC) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it   facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Petco’s core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period.

 

Please see the company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 filed with the SEC on March 24, 2022 for additional information on Adjusted EBITDA. The tables below reflect the calculation of Adjusted EBITDA for the thirteen and trailing twelve months ended April 30, 2022 compared to the thirteen and trailing twelve months ended May 1, 2021, respectively, as well as the twelve-month period ended January 29, 2022.

 

(dollars in thousands)

 

13 Weeks Ended

 

Reconciliation of Net Income Attributable to Class A and B-1

   Common Stockholders to Adjusted EBITDA

 

April 30,

2022

 

 

May 1,

2021

 

Net income attributable to Class A and B-1 common stockholders

 

$

24,693

 

 

$

7,560

 

Add (deduct):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

19,614

 

 

 

20,508

 

Income tax expense

 

 

10,000

 

 

 

2,679

 

Depreciation and amortization

 

 

46,967

 

 

 

41,607

 

Income from equity method investees

 

 

(3,163

)

 

 

(2,425

)

Loss on debt extinguishment and modification

 

 

 

 

 

20,838

 

Asset impairments and write offs

 

 

162

 

 

 

947

 

Equity-based compensation

 

 

12,222

 

 

 

11,604

 

Other non-operating income

 

 

(314

)

 

 

 

Mexico joint venture EBITDA (1)

 

 

6,778

 

 

 

6,006

 

Store pre-opening expenses

 

 

3,359

 

 

 

4,029

 

Store closing expenses

 

 

1,860

 

 

 

1,103

 

Non-cash occupancy-related costs (2)

 

 

2,194

 

 

 

1,139

 

Acquisition-related integration costs (3)

 

 

2,236

 

 

 

 

Other costs (4)

 

 

5,943

 

 

 

10,151

 

Adjusted EBITDA

 

$

132,551

 

 

$

125,746

 

Net sales

 

$

1,475,991

 

 

$

1,414,994

 

Net margin (5)

 

 

1.7

%

 

 

0.5

%

Adjusted EBITDA Margin

 

 

9.0

%

 

 

8.9

%

 

-7-


 

 

(dollars in thousands)

 

Trailing Twelve Months

 

Reconciliation of Net Income Attributable to Class A and B-1

   Common Stockholders to Adjusted EBITDA

 

April 30,

2022

 

 

January 29,

2022

 

 

May 1,

2021

 

Net income attributable to Class A and B-1 common stockholders

 

$

181,550

 

 

$

164,417

 

 

$

12,245

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

76,442

 

 

 

77,335

 

 

 

178,314

 

Income tax expense

 

 

60,795

 

 

 

53,473

 

 

 

9,897

 

Depreciation and amortization

 

 

177,791

 

 

 

172,431

 

 

 

172,876

 

Income from equity method investees

 

 

(11,622

)

 

 

(10,883

)

 

 

(8,575

)

Loss on debt extinguishment and modification

 

 

 

 

 

20,838

 

 

 

38,387

 

Asset impairments and write offs

 

 

10,133

 

 

 

10,918

 

 

 

13,144

 

Equity-based compensation

 

 

49,883

 

 

 

49,265

 

 

 

22,214

 

Other non-operating income

 

 

(34,812

)

 

 

(34,497

)

 

 

 

Mexico joint venture EBITDA (1)

 

 

27,609

 

 

 

26,837

 

 

 

21,061

 

Store pre-opening expenses

 

 

14,095

 

 

 

14,765

 

 

 

11,349

 

Store closing expenses

 

 

5,785

 

 

 

5,028

 

 

 

7,858

 

Non-cash occupancy-related costs (2)

 

 

9,169

 

 

 

8,114

 

 

 

13,179

 

Acquisition-related integration costs (3)

 

 

2,236

 

 

 

 

 

 

 

Other costs (4)

 

 

29,229

 

 

 

33,437

 

 

 

31,309

 

Adjusted EBITDA

 

$

598,283

 

 

$

591,478

 

 

$

523,258

 

Net sales

 

$

5,868,146

 

 

$

5,807,149

 

 

$

5,221,675

 

Net margin (5)

 

 

3.1

%

 

 

2.8

%

 

 

0.2

%

Adjusted EBITDA Margin

 

 

10.2

%

 

 

10.2

%

 

 

10.0

%

 

Adjusted Net Income and Adjusted EPS

 

Adjusted Net Income and Adjusted diluted earnings per share attributable to Petco common stockholders (Adjusted EPS) are considered non-GAAP financial measures under the SEC’s rules because they exclude certain amounts included in the net income attributable to Petco common stockholders and diluted earnings per share attributable to Petco common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Petco’s core earnings performance as well as the ability to make a more informed assessment of such earnings performance with that of the prior period.

 

 

-8-


 

The tables below reflect the calculation of Adjusted Net Income and Adjusted EPS for the thirteen weeks ended April 30, 2022 compared to the thirteen weeks ended May 1, 2021.

 

(in thousands, except per share amounts)

 

13 Weeks Ended

 

Reconciliation of Diluted EPS to Adjusted EPS

 

April 30, 2022

 

 

May 1, 2021

 

 

 

Amount

 

 

Per share

 

 

Amount

 

 

Per share

 

Net income attributable to common stockholders / diluted EPS

 

$

24,693

 

 

$

0.09

 

 

$

7,560

 

 

$

0.03

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

10,000

 

 

 

0.04

 

 

 

2,679

 

 

 

0.01

 

Loss on debt extinguishment and modification

 

 

 

 

 

 

 

 

20,838

 

 

 

0.08

 

Asset impairments and write offs

 

 

162

 

 

 

0.00

 

 

 

947

 

 

 

0.00

 

Equity-based compensation

 

 

12,222

 

 

 

0.04

 

 

 

11,604

 

 

 

0.04

 

Other non-operating income

 

 

(314

)

 

 

(0.00

)

 

 

 

 

 

 

Store pre-opening expenses

 

 

3,359

 

 

 

0.01

 

 

 

4,029

 

 

 

0.02

 

Store closing expenses

 

 

1,860

 

 

 

0.01

 

 

 

1,103

 

 

 

0.00

 

Non-cash occupancy-related costs (2)

 

 

2,194

 

 

 

0.01

 

 

 

1,139

 

 

 

0.01

 

Acquisition-related integration costs (3)

 

 

2,236

 

 

 

0.01

 

 

 

 

 

 

 

Other costs (4)

 

 

5,943

 

 

 

0.02

 

 

 

10,151

 

 

 

0.04

 

Adjusted pre-tax income / diluted earnings per share

 

$

62,355

 

 

$

0.23

 

 

$

60,050

 

 

$

0.23

 

Income tax expense at 26% normalized tax rate

 

 

16,212

 

 

 

0.06

 

 

 

15,613

 

 

 

0.06

 

Adjusted Net Income / Adjusted EPS

 

$

46,143

 

 

$

0.17

 

 

$

44,437

 

 

$

0.17

 

 

Fiscal 2022 Guidance

 

Metric

Current Guidance

Net Revenue

$6.15 - $6.25 billion

Adjusted EBITDA3

$630 - $645 million

Adjusted EPS3

$0.97 - $1.00

Capital Expenditures

$275 - $325 million

 

Assumptions in the previously stated guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. Adjusted EPS guidance assumes approximately $76 million of interest expense, a 26 percent tax rate and a 267 million weighted average diluted share count. We have not reconciled Adjusted EBITDA and Adjusted EPS outlook to the most comparable GAAP outlook because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA and Adjusted EPS are made in a manner consistent with the relevant definitions and assumptions noted herein.

 

Adjusted EBITDA, Adjusted Net Income and Adjusted EPS Footnotes

 

(1)

Mexico Joint Venture EBITDA represents 50 percent of the entity’s operating results for all periods, as adjusted to reflect the results on a basis comparable to Adjusted EBITDA. In the financial statements, this joint venture is accounted for as an equity method investment and reported net of depreciation and income taxes. Because such a presentation would not reflect the adjustments made in the calculation of Adjusted

 

-9-


EBITDA, we include the 50 percent interest in the company’s Mexico joint venture on an Adjusted EBITDA basis to ensure consistency. The table below presents a reconciliation of Mexico joint venture net income to Mexico joint venture EBITDA.

 

 

 

13 Weeks Ended

 

(in thousands)

 

April 30,

2022

 

 

May 1,

2021

 

Net income

 

$

5,133

 

 

$

4,849

 

Depreciation

 

 

4,294

 

 

 

3,400

 

Income tax expense

 

 

2,997

 

 

 

2,780

 

Foreign currency gain

 

 

(64

)

 

 

(145

)

Interest expense, net

 

 

1,196

 

 

 

1,128

 

EBITDA

 

$

13,556

 

 

$

12,012

 

50% of EBITDA

 

$

6,778

 

 

$

6,006

 

 

(2)

Non-cash occupancy-related costs include the difference between cash and straight-line rent for all periods.

 

(3)

Acquisition/integration costs include direct costs resulting from acquiring and integrating businesses. These include third-party professional and legal fees and other integration-related costs that would not have otherwise been incurred as part of the company’s operations.

 

(4)

Other costs include: severance; legal reserves and related fees; one-time consulting and other costs associated with our strategic transformation initiatives; discontinuation and liquidation costs; and costs related to our initial public offering and refinancing.

 

(5)

We define net margin as net income attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales.

 

WOOF-F

 

-10-



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