Pennsylvania | 001-35600 | 75-3000378 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release dated March 25, 2014 announcing the Company's fourth quarter and fiscal 2013 financial results. |
Five Below, Inc. | ||||||||
Date: March 25, 2014 | By: | /s/ Kenneth R. Bull | ||||||
Name: | Kenneth R. Bull | |||||||
Title: | Chief Financial Officer, Secretary and Treasurer |
Exhibit No. | Description | |
99.1 | Press Release dated March 25, 2014 announcing the Company's fourth quarter and fiscal 2013 financial results. |
• | Net sales increased by 22.1% to $212.0 million from $173.6 million in the fourth quarter of fiscal 2012, which consisted of fourteen weeks; comparable store sales increased by 0.3% on a thirteen week basis. |
• | Operating income increased to $40.3 million from $33.0 million in the fourth quarter of fiscal 2012. Adjusted operating income, which excludes the impact of the founders’ transaction in both periods and costs associated with the Company's secondary public offering in the fourth quarter of fiscal 2012 (see GAAP/Non-GAAP reconciliation table), increased to $41.9 million from $35.6 million in the fourth quarter of fiscal 2012. |
• | The Company ended the quarter with 304 stores in 19 states, an increase of 25% from the end of the fourth quarter of fiscal 2012. |
• | Net interest expense decreased to $0.3 million from $0.5 million in the fourth quarter of fiscal 2012. The decrease in net interest expense resulted from the decrease in the outstanding balance of the Company’s term loan. During the second quarter of fiscal 2013, the Company repaid $15.0 million of principal on the term loan. |
• | Net income was $24.8 million compared to $19.2 million in the fourth quarter of fiscal 2012. Adjusted net income, which excludes the impact of the founders’ transaction in both periods and costs associated with the secondary public offering in the fourth quarter of 2012 (see GAAP/Non-GAAP reconciliation table), was $25.8 million compared to $21.4 million for the fourth quarter of fiscal 2012. |
• | U.S. generally accepted accounting principles, or GAAP, diluted income per common share was $0.45 compared to $0.35 in the fourth quarter of fiscal 2012. Adjusted diluted income per common share, which is adjusted net income on an adjusted diluted weighted average shares outstanding basis (see GAAP/Non-GAAP reconciliation table), was $0.47 per share compared to $0.39 per share in the fourth quarter of fiscal 2012. |
• | Net sales increased by 27.8% to $535.4 million from $418.8 million in fiscal 2012, which consisted of fifty-three weeks; comparable store sales increased by 4.0% on a fifty-two week basis. |
• | Operating income increased to $53.7 million from $37.7 million in fiscal 2012. Adjusted operating income, which excludes the impact of the founders’ transaction and costs associated with the Company's secondary public offerings in both periods (see GAAP/Non-GAAP reconciliation table), increased to $60.8 million from $49.5 million in fiscal 2012. |
• | The Company opened 60 net new stores compared to 52 new stores opened in fiscal 2012. |
• | Net interest expense decreased to $1.5 million from $2.4 million in fiscal 2012. |
• | Loss on debt extinguishment was $0.3 million as compared to $1.6 million in fiscal 2012. The loss on debt extinguishment was related to the write-off of deferred financing costs in connection with $15.0 million and $65.5 million partial repayments of the Company’s term loan in fiscal 2013 and fiscal 2012, respectively. |
• | Net income was $32.1 million compared to $20.0 million in fiscal 2012. Adjusted net income, which excludes the impact of the founders’ transaction and costs associated with the secondary public offerings in both periods (see GAAP/Non-GAAP reconciliation table), was $36.9 million compared to $27.4 million in fiscal 2012. |
• | GAAP diluted income per common share was $0.59 as compared to a loss per share of $1.28 in fiscal 2012, which included dividends paid to preferred and unvested restricted shareholders in fiscal 2012. Adjusted diluted income per common share, which is adjusted net income on an adjusted diluted weighted average shares outstanding basis (see GAAP/Non-GAAP reconciliation table), was $0.68 per share compared to $0.51 per share in fiscal 2012. |
• | Cash and cash equivalents: $50.2 million |
• | Total debt: $19.5 million. In February 2014, subsequent to the fiscal year ended February 1, 2014, the remaining $19.5 million of principal on the term loan was repaid. |
• | Total liquidity (cash and cash equivalents plus availability on a $20 million revolver facility): $70.2 million |
February 1, 2014 | February 2, 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 50,184 | $ | 56,081 | ||||
Inventories | 89,377 | 60,831 | ||||||
Prepaid income taxes | 1,497 | 36 | ||||||
Deferred income taxes | 4,586 | 1,295 | ||||||
Prepaid expenses and other current assets | 15,255 | 11,433 | ||||||
Total current assets | 160,899 | 129,676 | ||||||
Property and equipment, net | 70,381 | 59,040 | ||||||
Deferred income taxes | 232 | — | ||||||
Other assets | 542 | 944 | ||||||
$ | 232,054 | $ | 189,660 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Line of credit | $ | — | $ | — | ||||
Current portion of note payable | 19,500 | 15,000 | ||||||
Accounts payable | 34,013 | 27,952 | ||||||
Income taxes payable | 6,007 | 7,083 | ||||||
Accrued salaries and wages | 2,672 | 4,204 | ||||||
Other accrued expenses | 17,550 | 14,545 | ||||||
Total current liabilities | 79,742 | 68,784 | ||||||
Notes payable | — | 19,500 | ||||||
Deferred rent and other | 35,439 | 29,082 | ||||||
Deferred income taxes | — | 1,550 | ||||||
Total liabilities | 115,181 | 118,916 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 542 | 540 | ||||||
Additional paid-in capital | 284,622 | 270,637 | ||||||
Accumulated deficit | (168,291 | ) | (200,433 | ) | ||||
Total shareholders’ equity | 116,873 | 70,744 | ||||||
$ | 232,054 | $ | 189,660 |
Thirteen weeks ended | Fourteen weeks ended | Fifty-two weeks ended | Fifty-three weeks ended | |||||||||||||
February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | |||||||||||||
Net sales | $ | 211,964 | $ | 173,589 | $ | 535,402 | $ | 418,825 | ||||||||
Cost of goods sold | 127,795 | 102,451 | 347,386 | 268,989 | ||||||||||||
Gross profit | 84,169 | 71,138 | 188,016 | 149,836 | ||||||||||||
Selling, general and administrative expenses | 43,828 | 38,095 | 134,279 | 112,182 | ||||||||||||
Operating income | 40,341 | 33,043 | 53,737 | 37,654 | ||||||||||||
Interest expense, net | 290 | 545 | 1,513 | 2,374 | ||||||||||||
Loss on debt extinguishment | — | — | 266 | 1,594 | ||||||||||||
Other income | — | (150 | ) | — | (408 | ) | ||||||||||
Income before income taxes | 40,051 | 32,648 | 51,958 | 34,094 | ||||||||||||
Income tax expense | 15,225 | 13,442 | 19,816 | 14,069 | ||||||||||||
Net income | 24,826 | 19,206 | 32,142 | 20,025 | ||||||||||||
Dividend paid to preferred and unvested restricted shareholders | — | — | — | (65,403 | ) | |||||||||||
Net income attributable to participating securities | (314 | ) | (494 | ) | (465 | ) | — | |||||||||
Net income (loss) attributable to common shareholders | $ | 24,512 | $ | 18,712 | $ | 31,677 | $ | (45,378 | ) | |||||||
Basic income (loss) per common share | $ | 0.46 | $ | 0.36 | $ | 0.59 | $ | (1.28 | ) | |||||||
Diluted income (loss) per common share | $ | 0.45 | $ | 0.35 | $ | 0.59 | $ | (1.28 | ) | |||||||
Dividends declared and paid per common share | $ | — | $ | — | $ | — | $ | 2.02 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic shares | 53,487,300 | 52,583,441 | 53,294,805 | 35,444,200 | ||||||||||||
Diluted shares | 53,956,802 | 52,976,793 | 53,741,860 | 35,444,200 |
Fifty-two weeks ended | Fifty-three weeks ended | |||||||
February 1, 2014 | February 2, 2013 | |||||||
Operating activities: | ||||||||
Net income | $ | 32,142 | $ | 20,025 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,469 | 9,599 | ||||||
Gain on conversion of note payable | — | (200 | ) | |||||
Loss on debt extinguishment | 266 | 1,594 | ||||||
Loss on disposal of property and equipment | 515 | 58 | ||||||
Amortization of deferred financing costs | 251 | 455 | ||||||
Warrant expense related to professional service providers for services rendered | — | 43 | ||||||
Stock-based compensation expense | 10,092 | 12,324 | ||||||
Deferred income tax (benefit) expense | (5,074 | ) | 3,812 | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid income taxes | (1,461 | ) | (36 | ) | ||||
Inventories | (28,546 | ) | (22,041 | ) | ||||
Prepaid expenses and other assets | (3,597 | ) | (4,133 | ) | ||||
Accounts payable | 4,083 | 3,369 | ||||||
Income taxes payable | (1,076 | ) | (2,056 | ) | ||||
Accrued salaries and wages | (1,532 | ) | (5,050 | ) | ||||
Deferred rent | 8,384 | 7,723 | ||||||
Other accrued expenses | 3,271 | 4,877 | ||||||
Net cash provided by operating activities | 31,187 | 30,363 | ||||||
Investing activities: | ||||||||
Capital expenditures | (25,931 | ) | (22,890 | ) | ||||
Net cash used in investing activities | (25,931 | ) | (22,890 | ) | ||||
Financing activities: | ||||||||
Borrowing on note payable under Term Loan Facility | — | 100,000 | ||||||
Repayment of note payable under Term Loan Facility | (15,000 | ) | (65,500 | ) | ||||
Cash paid for debt financing costs | (40 | ) | (2,751 | ) | ||||
Repayment of other note payable | — | (50 | ) | |||||
Net proceeds from issuance of common stock | 148 | 73,198 | ||||||
Proceeds from exercise of warrants and options to purchase common stock | 1,484 | 239 | ||||||
Repurchase of unvested restricted shares related to stock option exercises | (7 | ) | (17 | ) | ||||
Dividends paid to shareholders | — | (99,451 | ) | |||||
Excess tax benefit related to restricted shares and exercise of stock options and warrants | 2,262 | 1,647 | ||||||
Net cash (used in) provided by financing activities | (11,153 | ) | 7,315 | |||||
Net (decrease) increase in cash and cash equivalents | (5,897 | ) | 14,788 | |||||
Cash and cash equivalents at beginning of year | 56,081 | 41,293 | ||||||
Cash and cash equivalents at end of year | $ | 50,184 | $ | 56,081 |
Reconciliation of operating income, as reported, to adjusted operating income | ||||||||||||||||
Thirteen weeks ended | Fourteen weeks ended | Fifty-two weeks ended | Fifty-three weeks ended | |||||||||||||
February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | |||||||||||||
Operating income | $ | 40,341 | $ | 33,043 | $ | 53,737 | $ | 37,654 | ||||||||
Adjustments: | ||||||||||||||||
Founders’ transaction (1) | 1,515 | 1,515 | 6,060 | 10,797 | ||||||||||||
Secondary public offering fees (2) | — | 1,000 | 1,000 | 1,000 | ||||||||||||
Adjusted operating income | $ | 41,856 | $ | 35,558 | $ | 60,797 | $ | 49,451 | ||||||||
Reconciliation of net income (loss) attributable to common shareholders, as reported, to adjusted net income | ||||||||||||||||
Thirteen weeks ended | Fourteen weeks ended | Fifty-two weeks ended | Fifty-three weeks ended | |||||||||||||
February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | |||||||||||||
Net income (loss) attributable to common shareholders | $ | 24,512 | $ | 18,712 | $ | 31,677 | $ | (45,378 | ) | |||||||
Adjustments: | ||||||||||||||||
Dividends paid to preferred and unvested restricted shareholders | — | — | — | 65,403 | ||||||||||||
Net income attributable to participating securities | 314 | 494 | 465 | — | ||||||||||||
Net income | 24,826 | 19,206 | 32,142 | 20,025 | ||||||||||||
Adjustments: | ||||||||||||||||
Founders’ transaction (1) | 1,515 | 1,515 | 6,060 | 10,797 | ||||||||||||
Secondary public offering fees (2) | — | 1,000 | 1,000 | 1,000 | ||||||||||||
Less tax benefit | (559 | ) | (348 | ) | (2,311 | ) | (4,373 | ) | ||||||||
Adjusted net income | $ | 25,782 | $ | 21,373 | $ | 36,891 | $ | 27,449 | ||||||||
Reconciliation of diluted weighted average shares outstanding, as reported, to adjusted diluted weighted average shares outstanding | ||||||||||||||||
Thirteen weeks ended | Fourteen weeks ended | Fifty-two weeks ended | Fifty-three weeks ended | |||||||||||||
February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | |||||||||||||
Diluted weighted average shares outstanding | 53,956,802 | 52,976,793 | 53,741,860 | 35,444,200 | ||||||||||||
Adjustments: | ||||||||||||||||
Preferred shares conversion | — | — | — | 14,739,641 | ||||||||||||
Initial public offering shares issuance | — | — | — | 2,293,697 | ||||||||||||
Unvested and vested restricted stock (3) | 683,885 | 1,393,438 | 783,166 | 1,519,512 | ||||||||||||
Diluted effect of stock options and warrants (4) | — | — | — | 224,223 | ||||||||||||
Adjusted diluted weighted average shares outstanding | 54,640,687 | 54,370,231 | 54,525,026 | 54,221,273 |
Thirteen weeks ended | Fourteen weeks ended | Fifty-two weeks ended | Fifty-three weeks ended | |||||||||||||
February 1, 2014 | February 2, 2013 | February 1, 2014 | February 2, 2013 | |||||||||||||
Diluted income (loss) per common share, as reported | $ | 0.45 | $ | 0.35 | $ | 0.59 | $ | (1.28 | ) | |||||||
Adjustments to numerator: | ||||||||||||||||
Dividends paid to preferred and unvested restricted shareholders per share | — | — | — | 1.85 | ||||||||||||
Founders’ transaction and secondary public offering fees per share (1) (2) | 0.03 | 0.05 | 0.13 | 0.33 | ||||||||||||
Income tax benefit per share | (0.01 | ) | (0.01 | ) | (0.04 | ) | (0.12 | ) | ||||||||
Adjustments to weighted average shares outstanding per share | — | — | — | (0.27 | ) | |||||||||||
Adjusted diluted income per common share | $ | 0.47 | $ | 0.39 | $ | 0.68 | $ | 0.51 |
(1) | Founders’ transaction relates to the on-going expense recognition for the options granted to the founders in fiscal 2010 and their modification in March 2012, which cancelled the fiscal 2010 option award to purchase 2,020,620 shares of common stock and granted an equal number of restricted shares that vest through March 2014. |
(2) | During each of the second quarter of fiscal 2013 and fourth quarter of fiscal 2012, the Company incurred $1.0 million of non-tax deductible expenses related to legal, accounting, and other fees in connection with secondary public offerings. |
(3) | Assumes the impact of all unvested and vested restricted stock as of the beginning of the period. |
(4) | Assumes the diluted impact of stock options and warrants and the Company's Employee Stock Purchase Plan utilizing the treasury stock method. |