Burlington stores, inc. announces fourth quarter and fiscal year 2015
results
Burlington, n.j.--(business wire)--burlington stores, inc. (nyse:burl), a nationally recognized off-price retailer of high-quality, branded apparel at everyday low prices, today announced its results for the fourth quarter and fiscal year ended january 30, 2016. tom kingsbury, president and chief executive officer stated, “we are pleased with our 26% increase in adjusted net income per share, which was driven by our 5.9% total sales growth, expansion in aebitda margin, and share repurchase activity. in addition, we ended the year with reductions in both comparable store and aged inventories and began fiscal 2016 with strong product offerings and significant open-to-buy to capitalize on the many opportunities we see in the market place.” fiscal 2015 fourth quarter operating results (for the 13 week period ended january 30, 2016 compared with the 13 week period ended january 31, 2015): comparable store sales increased 0.1%, which follows a comparable store sales increase of 6.7% in the fiscal 2014 fourth quarter. comparable store sales excluding cold weather categories increased 4.0% vs. last year. net sales increased 3.7%, or $55.4 million, to $1,540.8 million. this increase includes the 0.1% increase in comparable store sales, as well as an increase of $58.3 million from new and non-comparable stores. gross margin declined by 120 basis points to 41.0% during the fourth quarter of fiscal 2015, driven by increased shrink and markdown expense. during the quarter, product sourcing costs, which are included in selling, general and administrative expenses (sg&a), were roughly flat to last year as a percentage of net sales. sg&a, less product sourcing costs and adjustments consistent with our definition of adjusted net income, as a percentage of net sales was 23.3%, which represented an approximate 100 basis points of improvement compared with the fourth quarter of fiscal 2014. this improvement was primarily driven by a reduction in incentive compensation and worker’s compensation and general liability insurance, partially offset by an increase in stock based compensation. other revenue/other income decreased $6.7 million from last year to $9.6 million, driven by a reduction in income from third party fragrance sales within our stores as the company transitions to an owned category. in addition, the fourth quarter of fiscal 2014 included a favorable $3.2 million one-time legal settlement. adjusted ebitda declined 0.2%, or $0.5 million, to $224.7 million. gross margin contraction and a reduction of other revenue/other income, partially offset by sales growth and the improvement in sg&a as a percentage of net sales contributed to a 60 basis point decrease in adjusted ebitda as a percentage of net sales. depreciation and amortization expense, exclusive of net favorable lease amortization, increased $2.0 million to $38.9 million. interest expense improved $0.2 million to $14.8 million from last year, driven by interest savings realized as a result of our term loan debt repayments since january 31, 2015, offset by increased borrowings on our abl. adjusted tax expense was $61.6 million compared to $64.3 million last year. the adjusted effective tax rate was 36.0% vs. 37.1% last year. the decrease in the effective tax rate was the result of an increase in federal hiring credits and a decrease in state tax rate. adjusted net income increased 0.3% to $109.3 million, or $1.49 per share vs. $1.43 per share last year. fully diluted shares outstanding were 73.4 million at the end of the quarter compared with 76.3 million outstanding last year. fiscal 2015 operating results (for the 52 week period ended january 30, 2016 compared with the 52 week period ended january 31, 2015): comparable store sales increased 2.1% following a 4.9% increase in fiscal 2014. net sales increased 5.9%, or $284.4 million, to $5,098.9 million. this increase includes the 2.1% increase in comparable store sales, as well as an increase of $198.2 million from new and non-comparable stores. gross margin expanded by 30 basis points to 40.0% from 39.7%. this improvement was due to a reduction in markdown rate, which offset an approximate 30 basis point increase in product sourcing costs that are included in sg&a. sg&a, less product sourcing costs and adjustments consistent with our definition of adjusted net income, as a percentage of net sales was 26.7% vs. 27.2% last year. the 50 basis point improvement was driven by a reduction of incentive compensation, store payroll and advertising, partially offset by an increase in stock based compensation. other revenue/other income decreased $9.1 million from last year to $36.8 million, driven by a reduction in income from third party fragrance sales within our stores as the company transitions to an owned category. in addition, fiscal 2014 included a favorable $3.2 million one-time legal settlement. adjusted ebitda improved 8.0%, or $36.0 million, to $484.0 million. the 20 basis point expansion in adjusted ebitda as a percent of net sales was driven by sales growth coupled with a decrease in sg&a as a percentage of sales, partially offset by a decline in other revenue/other income. depreciation and amortization expense, exclusive of net favorable lease amortization, increased $6.3 million to $148.0 million. interest expense improved $24.7 million to $59.0 million from last year, driven by interest savings realized as a result of the 2014 term loan refinancing and debt repayments since january 31, 2015. adjusted tax expense was $102.5 million compared with $84.2 million last year. the adjusted effective tax rate was 37.0% vs. 37.8% last year. the decrease in the effective tax rate was primarily driven by a decrease in state tax rate. adjusted net income increased 26% to $174.6 million vs. $138.6 million last year, or $2.31 per share vs. $1.83 per share last year. fully diluted shares outstanding were 75.4 million vs. 75.9 million shares last year. inventory: merchandise inventories were $783.5 million vs. $788.7 million last year, primarily driven by a comparable store inventory decrease of 6%. this decrease was partially offset by new store inventory at our 25 net new stores. pack and hold inventory represented 25% of inventory at quarter end versus 27% last year. share repurchase activity during the fourth quarter, the company invested $77.4 million of cash to repurchase 1.6 million shares of its common stock, bringing the total investment in share repurchases to $200.4 million for 3.9 million shares repurchased during fiscal 2015. at year end, the company had $199.6 million remaining on its share repurchase authorization. full year fiscal 2016 and q1 outlook for the full fiscal year 2016 (the 52-weeks ending january 28, 2017), the company currently expects: net sales to increase in the range of 6.5% to 7.5%; comparable store sales to increase between 2.5% to 3.5%, inclusive of a 0.5% increase related to the transfer of our fragrance business from a leased to an owned category; adjusted ebitda margin expansion of 20 to 30 basis points; interest expense of approximately $62 million; tax rate to approximate 37.8%; adjusted net income per share in the range of $2.62 to $2.72, utilizing a fully diluted share count of approximately 73.2 million shares. this compares with an adjusted net income per share of $2.31 in fiscal 2015; to open 25 net new stores. for the first quarter of fiscal 2016 (the 13 weeks ending april 30, 2016), the company currently expects: net sales to increase in the range of 6.2% to 7.2%; comparable store sales to increase in the range of 2.5% to 3.5%; adjusted net income per share in the range of $0.44 to $0.48, utilizing a fully diluted share count of approximately 72.9 million shares. note regarding non-gaap financial measures the foregoing discussion includes references to adjusted ebitda, adjusted tax expense, adjusted net income, and adjusted net income per share. the company believes these measures are useful in evaluating the operating performance of the business and for comparing its results to that of other retailers. these non-gaap financial measures are defined and reconciled to the most comparable gaap measure later in this document. fourth quarter 2015 conference call the company will hold a conference call on thursday, march 3, 2016 at 8:30 a.m. eastern time to discuss the company’s fourth quarter and fiscal 2015 results. the u.s. toll free dial-in for the conference call is 1-877-407-0789 and the international dial-in number is 1-201-689-8562. a live webcast of the conference call will also be available on the investor relations page of the company's website at www.burlingtoninvestors.com. for those unable to participate in the conference call, a replay will be available beginning at 11:30 am et, march 3, 2016 until 11:59 pm et on march 10, 2016. the u.s. toll-free replay dial-in number is 1-877-870-5176 and the international replay dial-in number is 1-858-384-5517. the replay passcode is 1360504. additionally, a replay of the call will be available on the investor relations page of the company's website at www.burlingtoninvestors.com. investors and others should note that burlington stores currently announces material information using sec filings, press releases, public conference calls and webcasts. in the future, burlington stores will continue to use these channels to distribute material information about the company, and may also utilize its website and/or various social media sites to communicate important information about the company, key personnel, new brands and services, trends, new marketing campaigns, corporate initiatives and other matters. information that the company posts on its website or on social media channels could be deemed material; therefore, the company encourages investors, the media, our customers, business partners and others interested in burlington stores to review the information posted on its website, as well as the following social media channels: facebook (https://www.facebook.com/burlingtoncoatfactory/) and twitter (https://twitter.com/burlington). any updates to the list of social media channels the company may use to communicate material information will be posted on the investor relations page of the company's website at www.burlingtoninvestors.com. about burlington stores, inc. the company, through its wholly-owned subsidiaries, operates a national chain of off-price retail stores offering ladies’, men’s and children’s apparel and accessories, home goods, baby products and coats, principally under the name burlington stores. for more information about burlington stores, inc., visit the company's website at www.burlingtonstores.com. safe harbor for forward-looking and cautionary statements this release contains forward-looking statements within the meaning of section 27a of the securities act of 1933, as amended, and section 21e of the securities exchange act of 1934, as amended (exchange act). all statements other than statements of historical fact included in this release are forward-looking statements. forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. you can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. we do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized. if we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. all forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those we expected, including competition in the retail industry, seasonality of our business, adverse weather conditions, changes in consumer preferences and consumer spending patterns, import risks, inflation, general economic conditions, our ability to implement our strategy, our substantial level of indebtedness and related debt-service obligations, restrictions imposed by covenants in our debt agreements, availability of adequate financing, our dependence on vendors for our merchandise, events affecting the delivery of merchandise to our stores, existence of adverse litigation and risks, availability of desirable locations on suitable terms and other factors that may be described from time to time in our filings with the securities and exchange commission (sec). for each of these factors, the company claims the protection of the safe harbor for forward-looking statements contained in the private securities litigation reform act of 1995, as amended. burlington stores, inc. consolidated balance sheets (unaudited) (all amounts in thousands, except share and per share data) accounts receivable—net of allowance for doubtful accounts of $272 and $111 at january 30, 2016 and january 31, 2015, respectively preferred stock, $0.0001 par value: authorized: 50,000,000 shares; no shares issued and outstanding at january 30, 2016 and january 31, 2015 issued: 76,711,663 shares at january 30, 2016 and 75,925,507 shares at and january 31, 2015; treasury stock, at cost: 4,640,486 shares and 670,825 shares at january 30, 2016 and january 31, 2015, respectively burlington stores, inc. consolidated statements of operations (unaudited) (all amounts in thousands) burlington stores, inc. consolidated statements of cash flows (unaudited) (all amounts in thousands) non-cash loss on extinguishment of debt—write-off of deferred financing costs and original issue discount other (3,466 ) (5,418 ) reconciliation of non-gaap financial measures (unaudited) (amounts in thousands except per share data) adjusted net income, adjusted net income per share, adjusted ebitda and adjusted tax expense the following table shows the company’s reconciliation of net income to adjusted ebitda for the twelve months ended january 30, 2016 compared with the twelve months ended january 31, 2015: the following table shows the company’s reconciliation of income tax expense to adjusted tax expense for the twelve months ended january 30, 2016 compared with the twelve months ended january 31, 2015:
