Five Below(FIVE) - 2025 Q3 - Quarterly Results

Financial Performance and Outlook This section provides an overview of Five Below's financial results for the third quarter and year-to-date fiscal 2024, along with management's commentary and future guidance Third Quarter Fiscal 2024 Performance In the third quarter of fiscal 2024, Five Below reported a 14.6% increase in net sales to $843.7 million, with a modest 0.6% rise in comparable sales, while GAAP diluted EPS fell to $0.03 from $0.26 in the prior year, though adjusted diluted EPS was $0.42 | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $843.7M | $736.4M | +14.6% | | Comparable Sales | +0.6% | N/A | N/A | | Operating (Loss)/Income (GAAP) | ($0.6M) | $16.1M | -103.7% | | Adjusted Operating Income | $27.6M | $16.1M | +71.2% | | Net Income (GAAP) | $1.7M | $14.6M | -88.4% | | Adjusted Net Income | $23.3M | $14.6M | +59.6% | | Diluted EPS (GAAP) | $0.03 | $0.26 | -88.5% | | Adjusted Diluted EPS | $0.42 | $0.26 | +61.5% | - The company opened 82 new stores in Q3, ending the quarter with 1,749 stores across 44 states, representing an 18.1% increase in store count year-over-year[2] Year-to-Date Fiscal 2024 Performance For the year-to-date period ending November 2, 2024, net sales grew 11.9% to $2.49 billion, while comparable sales decreased by 2.6%, and GAAP net income declined to $66.2 million from $98.9 million year-over-year | Metric | YTD 2024 | YTD 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2.49B | $2.22B | +11.9% | | Comparable Sales | -2.6% | N/A | N/A | | Operating Income (GAAP) | $77.1M | $117.1M | -34.2% | | Adjusted Operating Income | $102.8M | $117.1M | -12.2% | | Net Income (GAAP) | $66.2M | $98.9M | -33.1% | | Adjusted Net Income | $85.5M | $98.9M | -13.5% | | Diluted EPS (GAAP) | $1.20 | $1.78 | -32.6% | | Adjusted Diluted EPS | $1.55 | $1.78 | -12.9% | - The company opened 205 new stores year-to-date, an increase from the 141 new stores opened in the same period of fiscal 2023[2] - During the year-to-date period, the company repurchased approximately 267,000 shares at a cost of about $40.0 million[3] Management Commentary and Corporate Developments Management expressed satisfaction with Q3 results, which surpassed their outlook due to improved performance across merchandise categories and strong new store results, while also announcing the appointment of Winnie Park as the new Chief Executive Officer - Interim CEO Ken Bull stated that Q3 results exceeded the company's outlook, driven by stronger performance in merchandise, improved operational execution, and new stores surpassing expectations[2] - The company announced the appointment of Winnie Park as the new Chief Executive Officer, effective December 16, 2024, with Ken Bull continuing as COO[4] Fourth Quarter and Full Year 2024 Outlook Five Below provided guidance for the fourth quarter and the full fiscal year 2024, anticipating a comparable sales decrease of 3% to 5% for Q4 and approximately 3% for the full year Q4 Fiscal 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $1.35B - $1.38B | | Comparable Sales | -3% to -5% | | Net Income | $174M - $184M | | Adjusted Net Income | $179M - $189M | | Diluted EPS | $3.15 - $3.33 | | Adjusted Diluted EPS | $3.23 - $3.41 | Full Year Fiscal 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $3.84B - $3.87B | | Comparable Sales | Approx. -3% | | Net Income | $240M - $250M | | Adjusted Net Income | $265M - $275M | | Diluted EPS | $4.34 - $4.52 | | Adjusted Diluted EPS | $4.78 - $4.96 | | Gross Capital Expenditures | Approx. $340M | Consolidated Financial Statements This section presents Five Below's consolidated balance sheets, statements of operations, and cash flows, providing a detailed view of the company's financial position and performance Consolidated Balance Sheets As of November 2, 2024, Five Below's total assets increased to $4.19 billion from $3.87 billion at fiscal year-end 2023, driven by growth in property and equipment and operating lease assets, with total liabilities rising to $2.57 billion Key Balance Sheet Items (in millions) | Account | Nov 2, 2024 | Feb 3, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $169.7 | $179.7 | | Inventories | $817.8 | $584.6 | | Total current assets | $1,212.2 | $1,203.5 | | Total assets | $4,185.3 | $3,872.0 | | Total current liabilities | $875.4 | $715.9 | | Total liabilities | $2,569.5 | $2,287.1 | | Total shareholders' equity | $1,615.9 | $1,585.0 | Consolidated Statements of Operations For the third quarter, the company reported a net income of $1.7 million on net sales of $843.7 million, a significant decrease from the prior-year quarter, primarily due to higher cost of goods sold and SG&A expenses, with year-to-date net income also declining Q3 Statement of Operations Highlights (in millions) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net sales | $843.7 | $736.4 | | Cost of goods sold | $585.7 | $513.6 | | SG&A expenses | $215.4 | $173.1 | | Operating (loss) income | ($0.6) | $16.1 | | Net income | $1.7 | $14.6 | YTD Statement of Operations Highlights (in millions) | Account | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Net sales | $2,485.6 | $2,221.6 | | Cost of goods sold | $1,692.3 | $1,499.4 | | SG&A expenses | $594.4 | $511.4 | | Operating income | $77.1 | $117.1 | | Net income | $66.2 | $98.9 | Consolidated Statements of Cash Flows For the thirty-nine weeks ended November 2, 2024, net cash provided by operating activities decreased to $67.1 million from $91.9 million in the prior year, with significant cash usage in investing and financing activities resulting in a net decrease in cash of $10.0 million YTD Cash Flow Summary (in millions) | Activity | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $67.1 | $91.9 | | Net cash used in investing activities | ($30.7) | ($165.1) | | Net cash used in financing activities | ($46.5) | ($96.2) | | Net decrease in cash and cash equivalents | ($10.0) | ($169.4) | GAAP to Non-GAAP Reconciliation This section reconciles Five Below's GAAP financial measures to non-GAAP measures, providing adjusted views of operating metrics, net income, and earnings per share for enhanced comparability Reconciliation of Operating Metrics The company adjusted its GAAP operating results for several non-recurring or non-cash items, transforming a Q3 2024 GAAP operating loss of $0.6 million into a non-GAAP operating income of $27.6 million, primarily due to a $21.2 million non-recurring inventory write-off - Adjusted Gross Profit for Q3 2024 was $280.1 million, compared to the reported GAAP Gross Profit of $258.0 million, with the difference mainly due to a $21.2 million non-recurring inventory write-off[20] Q3 Reconciliation of Operating (Loss) Income (in thousands) | Description | Amount | | :--- | :--- | | Operating (loss) income, as reported (GAAP) | ($606) | | Non-recurring inventory write-off | $21,208 | | Retention awards | $4,931 | | Cost-optimization initiatives | $1,544 | | Non-recurring asset disposal | $513 | | Adjusted operating income (Non-GAAP) | $27,590 | Reconciliation of Net Income and EPS To provide a clearer view of ongoing performance, GAAP net income of $1.7 million for Q3 2024 was adjusted to a non-GAAP figure of $23.3 million, consequently adjusting GAAP diluted EPS from $0.03 to $0.42, with the largest adjustment related to a non-recurring inventory write-off Q3 Reconciliation of Net Income (in thousands) | Description | Amount | | :--- | :--- | | Net income, as reported (GAAP) | $1,687 | | Non-recurring inventory write-off, net of tax | $16,248 | | Retention awards, net of tax | $3,778 | | Cost-optimization initiatives, net of tax | $1,183 | | Non-recurring asset disposal, net of tax | $393 | | Adjusted net income (Non-GAAP) | $23,289 | Q3 Reconciliation of Diluted EPS | Description | Per Share Amount | | :--- | :--- | | Diluted EPS, as reported (GAAP) | $0.03 | | Non-recurring inventory write-off per share | $0.29 | | Retention awards per share | $0.07 | | Cost-optimization initiatives per share | $0.02 | | Non-recurring asset disposal per share | $0.01 | | Adjusted diluted EPS (Non-GAAP) | $0.42 | Supplementary Information This section provides additional context on Five Below's use of non-GAAP financial measures and forward-looking statements, along with a brief overview of the company's business model and market presence Non-GAAP Information and Forward-Looking Statements The press release includes non-GAAP financial measures to provide meaningful supplemental information for investors to understand business performance and contains forward-looking statements subject to various risks and uncertainties detailed in the company's SEC filings - The company uses non-GAAP financial measures to allow investors to better understand business performance and facilitate comparable evaluation with prior periods[8] - The report includes forward-looking statements regarding business strategy, goals, and future operations, which are subject to risks and uncertainties that could cause actual results to differ materially[10] About Five Below Five Below is a high-growth value retailer targeting teens and pre-teens with trend-right products, primarily priced between $1 and $5, with some items priced higher in its Five Beyond section, operating over 1,750 stores in 44 states - Five Below is a value retailer offering products primarily priced between $1 and $5, with a focus on teens and pre-teens[11] - As of the report date, the company has over 1,750 stores in 44 states[11]