Boot Barn(BOOT) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents Boot Barn Holdings' unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and Cash Flows, with accompanying notes Condensed Consolidated Balance Sheet (Unaudited) | Assets & Liabilities (In thousands) | June 26, 2021 | March 27, 2021 | | :--- | :--- | :--- | | Total current assets | $376,457 | $374,456 | | Total assets | $950,495 | $933,581 | | Total current liabilities | $248,828 | $221,656 | | Total liabilities | $510,618 | $538,690 | | Total stockholders' equity | $439,877 | $394,891 | | Total liabilities and stockholders' equity | $950,495 | $933,581 | Condensed Consolidated Statements of Operations (Unaudited) | (In thousands, except per share data) | Thirteen Weeks Ended June 26, 2021 | Thirteen Weeks Ended June 27, 2020 | | :--- | :--- | :--- | | Net sales | $306,327 | $147,766 | | Gross profit | $116,427 | $40,201 | | Income from operations | $53,643 | $1,798 | | Net income/(loss) | $40,645 | $(490) | | Diluted earnings/(loss) per share | $1.35 | $(0.02) | Condensed Consolidated Statements of Cash Flows (Unaudited) | (In thousands) | Thirteen Weeks Ended June 26, 2021 | Thirteen Weeks Ended June 27, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $46,328 | $23,133 | | Net cash used in investing activities | $(9,294) | $(8,944) | | Net cash used in financing activities | $(60,542) | $(629) | | Net (decrease)/increase in cash and cash equivalents | $(23,508) | $13,560 | | Cash and cash equivalents, end of period | $49,640 | $83,123 | Notes to Condensed Consolidated Financial Statements Detailed explanations of accounting policies and financial statement items, covering COVID-19 impact, revenue, assets, debt, and legal matters - As of June 26, 2021, the company operated 276 stores in 36 states, an increase from 273 stores as of March 27, 2021[26] Disaggregated Net Sales by Merchandise Category (Q1 FY22 vs Q1 FY21) | % of Net Sales | Thirteen Weeks Ended June 26, 2021 | Thirteen Weeks Ended June 27, 2020 | | :--- | :--- | :--- | | Footwear | 51% | 59% | | Apparel | 32% | 28% | | Hats, accessories and other | 17% | 13% | Disaggregated Net Sales by Channel (Q1 FY22 vs Q1 FY21) | % of Net Sales | Thirteen Weeks Ended June 26, 2021 | Thirteen Weeks Ended June 27, 2020 | | :--- | :--- | :--- | | Stores | 87% | 75% | | E-commerce | 13% | 25% | - During the thirteen weeks ended June 26, 2021, the Company made voluntary prepayments on its 2015 Golub Term Loan totaling $61.5 million, reducing the outstanding principal balance to $50.0 million. This resulted in a $0.9 million write-off of associated debt issuance costs[61][66] - The company is a defendant in two class-action lawsuits: one alleging deceptive pricing on its Sheplers e-commerce site and another alleging violations of California wage and hour laws. The company has accrued for estimated probable losses, which are not considered material[91][92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial performance, covering key indicators, operational results, liquidity, capital resources, and debt, highlighting strong recovery - The company operates as a lifestyle retail chain focused on western and work-related footwear, apparel, and accessories, with 276 stores in 36 states and e-commerce sites as of June 26, 2021[124] - Key performance indicators used by management include net sales, gross profit, same-store sales, new store openings, SG&A, and non-GAAP measures like Adjusted EBITDA and Adjusted EBIT[127] Results of Operations Detailed comparative analysis of operating results, showing dramatic recovery with doubled net sales, significant improvements in profit, income, and margin Key Operating Results (Q1 FY22 vs Q1 FY21) | (dollars in thousands) | Thirteen Weeks Ended June 26, 2021 | Thirteen Weeks Ended June 27, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $306,327 | $147,766 | +107.3% | | Gross profit | $116,427 | $40,201 | +189.6% | | Income from operations | $53,643 | $1,798 | +2,883.5% | | Net income/(loss) | $40,645 | $(490) | N/A | - Consolidated same-store sales increased by 78.9%. Retail store same-store sales grew by 104.5%, while e-commerce same-store sales increased by 9.8%[159][161] - Gross profit rate increased by 1,080 basis points to 38.0%, driven by 660 basis points of leverage in buying and occupancy costs and a 420-basis point increase in merchandise margin rate[163] - SG&A expenses as a percentage of net sales decreased by 550 basis points to 20.5% due to expense leverage on higher sales[164] Liquidity and Capital Resources Primary liquidity sources are cash from operations and credit facilities, with strong operating cash flow, significant debt prepayments, and continued investment - The company's cash and cash equivalents were $49.6 million as of June 26, 2021, a decrease from $73.1 million at the end of the prior fiscal year, primarily due to debt repayments[186] - Net cash provided by operating activities was $46.3 million for the quarter, a significant increase from $23.1 million in the prior-year period[187][189] - Net cash used in financing activities was $60.5 million, mainly due to a $61.7 million repayment on debt and finance lease obligations[187][194] - The company estimates total capital expenditures for fiscal 2022 to be between $33.0 million and $36.0 million, net of landlord allowances[175] - Subsequent to the quarter's end, the company amended its Wells Fargo Revolver, increasing the aggregate facility from $165.0 million to $180.0 million[177] Item 3. Quantitative and Qualitative Disclosure of Market Risk Discusses the company's exposure to market risks, primarily interest rate risk associated with its variable-rate credit facilities and outstanding debt - The company is subject to interest rate risk from its variable-rate borrowings. As of June 26, 2021, $50.0 million was outstanding under the 2015 Golub Term Loan[200] - A hypothetical 1.0% change in interest rates would have an approximate annual impact of $0.5 million on the outstanding debt balance as of the quarter-end[200] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 26, 2021, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[204] - No changes occurred during the quarter ended June 26, 2021, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[205] PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 6 for legal matters, noting the company's involvement in class-action lawsuits not expected to materially impact financial position - For information on legal proceedings, the report refers to Note 6, "Commitments and Contingencies," in the financial statements[209] Item 1A. Risk Factors States no material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K for fiscal year 2021 - The company refers to the risk factors detailed in its Fiscal 2021 10-K report, indicating no material changes from that disclosure[210] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[211] Item 6. Exhibits Lists exhibits filed with the Quarterly Report on Form 10-Q, including agreements and certifications by the CEO and CFO - Lists various exhibits filed with the report, including forms of stock unit issuance agreements and officer certifications pursuant to the Sarbanes-Oxley Act[213]