Boot Barn(BOOT) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) These unaudited statements detail the company's financial position, operations, and cash flows, showing significant growth in sales and income Condensed Consolidated Balance Sheets Total assets increased to $1.037 billion, driven by inventories, while stockholders' equity grew to $481.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 25, 2021 | March 27, 2021 | | :--- | :--- | :--- | | Total Assets | $1,037,419 | $933,581 | | Cash and cash equivalents | $39,545 | $73,148 | | Inventories | $350,274 | $275,760 | | Total Liabilities | $556,162 | $538,690 | | Accounts payable | $140,530 | $104,641 | | Long-term portion of notes payable, net | $49,399 | $109,781 | | Total Stockholders' Equity | $481,257 | $394,891 | Condensed Consolidated Statements of Operations Net sales and income significantly increased for both the thirteen and twenty-six-week periods ending September 25, 2021 Statement of Operations Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Sep 25, 2021 | Thirteen Weeks Ended Sep 26, 2020 | Twenty-Six Weeks Ended Sep 25, 2021 | Twenty-Six Weeks Ended Sep 26, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $312,717 | $184,515 | $619,044 | $332,281 | | Gross profit | $118,151 | $55,490 | $234,578 | $95,691 | | Income from operations | $50,114 | $10,042 | $103,757 | $11,840 | | Net income | $37,861 | $5,758 | $78,506 | $5,268 | | Diluted EPS | $1.25 | $0.20 | $2.59 | $0.18 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased to $481.3 million due to strong net income, partially offset by treasury stock purchases - Stockholders' equity grew to $481.3 million as of September 25, 2021, up from $394.9 million at the start of the fiscal year, mainly due to strong net income[15] Condensed Consolidated Statements of Cash Flows Operating activities provided $48.6 million cash, while investing and financing activities used cash, resulting in a net decrease Cash Flow Summary for Twenty-Six Weeks Ended (in thousands) | Cash Flow Activity | September 25, 2021 | September 26, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,628 | $43,891 | | Net cash used in investing activities | ($22,251) | ($14,881) | | Net cash used in financing activities | ($59,980) | ($62,901) | | Net decrease in cash | ($33,603) | ($33,891) | | Cash and cash equivalents, end of period | $39,545 | $35,672 | Notes to Condensed Consolidated Financial Statements Notes detail business operations, accounting policies, debt structure, and revenue recognition for 278 stores - The company operates specialty retail stores and e-commerce sites for western and work boots and apparel, with 278 stores in 36 states as of September 25, 2021[22] - The company's two operating segments, retail stores and e-commerce, are aggregated into one reporting segment due to similar economic characteristics[30] Disaggregated Net Sales by Channel (% of Net Sales) | Channel | Thirteen Weeks Ended Sep 25, 2021 | Twenty-Six Weeks Ended Sep 25, 2021 | | :--- | :--- | :--- | | Stores | 86% | 86% | | E-commerce | 14% | 14% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes significant sales and profitability growth to strong same-store sales and margin expansion - Boot Barn is the largest lifestyle retail chain in the U.S. devoted to western and work-related footwear and apparel, with 278 stores in 36 states as of September 25, 2021[125] - Key performance indicators for the business include net sales, gross profit, same store sales, new store openings, and SG&A expenses, along with non-GAAP measures like Adjusted EBITDA[128] Results of Operations Substantial growth in net sales and income from operations for both periods, driven by strong same-store sales Financial Performance Summary (Thirteen Weeks Ended) | Metric | September 25, 2021 | September 26, 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $312.7M | $184.5M | +69.5% | | Gross Profit | $118.2M | $55.5M | +112.9% | | Gross Margin | 37.8% | 30.1% | +770 bps | | Income from Operations | $50.1M | $10.0M | +399.0% | | Net Income | $37.9M | $5.8M | +553.4% | Financial Performance Summary (Twenty-Six Weeks Ended) | Metric | September 25, 2021 | September 26, 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $619.0M | $332.3M | +86.3% | | Gross Profit | $234.6M | $95.7M | +145.1% | | Gross Margin | 37.9% | 28.8% | +910 bps | | Income from Operations | $103.8M | $11.8M | +776.3% | | Net Income | $78.5M | $5.3M | +1381.1% | - Same store sales for the thirteen weeks ended September 25, 2021, increased by 61.7%, with retail stores up 66.0% and e-commerce up 41.6%[163] Liquidity and Capital Resources Liquidity is supported by cash from operations and credit facilities, with significant debt prepayments - The company's primary cash needs are for inventory, operating expenses, capital expenditures for new stores, and debt service[186] - During the twenty-six weeks ended September 25, 2021, the company made voluntary prepayments totaling $61.5 million on its 2015 Golub Term Loan, reducing the outstanding principal balance to $50.0 million[193] - As of September 25, 2021, there was no outstanding balance under the June 2015 Wells Fargo Revolver, which was increased to $180.0 million in July 2021[190] Item 3. Quantitative and Qualitative Disclosure of Market Risk Interest rate risk on variable-rate debt could impact annual costs by $0.5 million for a 1.0% rate change - The company is subject to interest rate risk on its variable-rate debt. A 1.0% rate change on the $50.0 million outstanding term loan as of September 25, 2021, would have an annual impact of approximately $0.5 million[212] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Management concluded that as of September 25, 2021, the company's disclosure controls and procedures were effective[215] - No changes occurred during the quarter ended September 25, 2021, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[216] PART II. OTHER INFORMATION Item 1. Legal Proceedings Incidental litigation, including class-action lawsuits, is ongoing, with no material financial impact expected - The company is a defendant in a class-action complaint alleging deceptive pricing on its Sheplers e-commerce site, with an estimated cost accrued as of September 25, 2021[95] - A class-action lawsuit filed in February 2020 alleges violations of California's wage and hour laws. The company has recorded an amount for the estimated probable loss, which is not material[96] Item 1A. Risk Factors Investors should review the Fiscal 2021 10-K for risk factors, as no new material risks are reported - The company directs investors to review the risk factors disclosed in its Fiscal 2021 10-K for a comprehensive understanding of potential risks[221] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[223] Item 6. Exhibits Exhibits filed with Form 10-Q include CEO and CFO certifications and interactive data files - The exhibits filed include required certifications from the Chief Executive Officer and Chief Financial Officer, as well as interactive data files for financial reporting[225]