Boot Barn(BOOT) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the company's unaudited financial statements, management's analysis, and risk disclosures for the period Item 1. Condensed Consolidated Financial Statements (Unaudited) Provides unaudited financial statements including balance sheets, operations, equity, and cash flows for the quarter Condensed Consolidated Balance Sheets Total assets grew to $1.32 billion, driven by higher inventories and an increased line of credit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 25, 2022 | March 26, 2022 | | :--- | :--- | :--- | | Total Current Assets | $617,415 | $541,831 | | Inventories | $534,380 | $474,300 | | Total Assets | $1,321,218 | $1,199,855 | | Line of credit | $74,873 | $28,549 | | Total Current Liabilities | $390,856 | $336,468 | | Total Liabilities | $681,684 | $600,179 | | Total Stockholders' Equity | $639,534 | $599,676 | Condensed Consolidated Statements of Operations Net sales rose to $365.9 million, but higher expenses led to a slight decline in net income to $39.3 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | | :--- | :--- | :--- | | Net sales | $365,856 | $306,327 | | Gross profit | $137,830 | $116,427 | | Selling, general and administrative expenses | $85,405 | $62,784 | | Income from operations | $52,425 | $53,643 | | Net income | $39,318 | $40,645 | | Diluted earnings per share | $1.29 | $1.35 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased to $639.5 million, primarily driven by quarterly net income - Stockholders' equity grew to $639.5 million, mainly due to net income of $39.3 million for the quarter[18] Condensed Consolidated Statements of Cash Flows The company reported a net cash outflow from operations of $25.8 million due to increased inventory investment Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(25,768) | $46,328 | | Net cash used in investing activities | $(20,835) | $(9,294) | | Net cash provided by/(used in) financing activities | $41,943 | $(60,542) | | Net decrease in cash and cash equivalents | $(4,660) | $(23,508) | Notes to Condensed Consolidated Financial Statements Details the company's accounting policies, store operations, and disaggregated revenue by category and channel - The company operates specialty retail stores and e-commerce websites for western and work-related apparel and accessories. As of June 25, 2022, it operated 311 stores in 38 states, an increase from 300 stores at the end of the previous fiscal year[25] Disaggregated Net Sales by Merchandise Category | % of Net Sales | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | | :--- | :--- | :--- | | Footwear | 48% | 51% | | Apparel | 34% | 32% | | Hats, accessories and other | 18% | 17% | Disaggregated Net Sales by Channel | % of Net Sales | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | | :--- | :--- | :--- | | Stores | 88% | 87% | | E-commerce | 12% | 13% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes a 19.4% sales increase, margin pressure from higher SG&A, and future capital expenditure plans Results of Operations Sales grew 19.4% on strong same-store sales, but higher SG&A expenses compressed operating income Q1 FY2023 vs Q1 FY2022 Performance (dollars in thousands) | Metric | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $365,856 | $306,327 | +19.4% | | Same Store Sales Growth | 10.0% | 78.9% | N/A | | Gross Profit | $137,830 | $116,427 | +18.4% | | Gross Profit % | 37.7% | 38.0% | -30 bps | | SG&A Expenses | $85,405 | $62,784 | +36.0% | | SG&A as % of Sales | 23.3% | 20.5% | +280 bps | | Income from Operations | $52,425 | $53,643 | -2.3% | - The decrease in gross profit rate was driven by 70 basis points of deleverage in buying, occupancy, and distribution center costs, partially offset by a 40 basis-point increase in merchandise margin rate, despite a 70 basis-point headwind from increased freight charges[150] Liquidity and Capital Resources Outlines liquidity sources, capital expenditure plans, and a recent amendment to its credit facility - Primary cash needs are for inventories, operating expenses, and capital expenditures for new stores, remodels, and technology improvements[160] - Estimated capital expenditures for fiscal 2023 are projected to be between $80.0 million and $87.0 million, net of landlord allowances[165] - Subsequent to quarter end, the revolving credit facility was increased to $250.0 million and the maturity was extended to July 11, 2027[173] Cash Flow Summary (in thousands) | Activity | Thirteen Weeks Ended June 25, 2022 | Thirteen Weeks Ended June 26, 2021 | | :--- | :--- | :--- | | Operating Activities | $(25,768) | $46,328 | | Investing Activities | $(20,835) | $(9,294) | | Financing Activities | $41,943 | $(60,542) | Item 3. Quantitative and Qualitative Disclosure of Market Risk The company's primary market risk exposure is interest rate fluctuations on its variable-rate debt - The primary market risk is interest rate fluctuations on its variable-rate credit facilities. As of June 25, 2022, $74.9 million was outstanding under the Wells Fargo Revolver[186] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - Based on an evaluation as of June 25, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[188] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[189] PART II. OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, and filed exhibits Item 1. Legal Proceedings The company is involved in incidental litigation with accrued losses not considered material - For information on legal proceedings, the report refers to Note 6, "Commitments and Contingencies" in the financial statements[195] Item 1A. Risk Factors No material changes to risk factors were reported since the last annual report - The company states that there are no material changes from the risk factors disclosed in its Fiscal 2022 10-K[196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the quarter - None[197] Item 6. Exhibits Lists the exhibits filed with the report, including Sarbanes-Oxley certifications and iXBRL data - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and interactive data files (101, 104)[200][201]