EX-99.1 2 q32018fivebelowexhibit991.htm PRESS RELEASE Exhibit


 

fivebelowlogoq12015a08.jpg
NEWS RELEASE
Five Below, Inc. Announces Third Quarter Fiscal 2018 Financial Results
Q3 net sales increased 22% to $312.8 million
Q3 EPS increased 33% to $0.24
Raises full year fiscal 2018 guidance
PHILADELPHIA, PA – (December 5, 2018) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the thirteen and thirty-nine weeks ended November 3, 2018.

For the thirteen weeks ended November 3, 2018:
•
Net sales increased by 21.6% to $312.8 million from $257.2 million in the third quarter of fiscal 2017; comparable sales increased by 4.8%.
•
The Company opened 53 new stores and ended the quarter with 745 stores in 33 states. This represents an increase in stores of 19.2% from the end of the third quarter of fiscal 2017.
•
Operating income increased by 5.0% to $15.5 million from $14.8 million in the third quarter of fiscal 2017.
•
Net income increased by 36.8% to $13.5 million compared to $9.9 million in the third quarter of fiscal 2017.
•
Diluted income per common share was $0.24 compared to $0.18 per share in the third quarter of fiscal 2017. Diluted income per common share included a $0.02 benefit in the third quarter of fiscal 2018 due to the accounting for employee share-based payments.

Joel Anderson, President and CEO, said, "We are very pleased to have delivered third quarter results that exceeded the high end of our guidance ranges against last year’s strong third quarter comparison. Continued robust performance from new stores, with a record 53 openings during the quarter, and above-plan comp results were driven by a positive customer response to our compelling assortment of trend-right products across our worlds. Given our performance, we are raising our guidance for the year.”

Mr. Anderson continued, “With the most important weeks of the fourth quarter ahead of us, we look forward to amazing our customers and delivering the magic of the holidays with freshness and newness at outstanding value, further reinforcing Five Below’s position as a favorite destination for holiday shopping and gift giving."

For the thirty-nine weeks ended November 3, 2018:
•
Net sales increased by 23.7% to $956.9 million from $773.4 million in the comparable period of fiscal 2017; comparable sales increased by 3.6%.
•
The Company opened 120 new stores compared to 103 new stores opened in the comparable period of fiscal 2017.
•
Operating income increased by 31.1% to $70.7 million from $53.9 million in the comparable period of fiscal 2017.
•
Net income increased by 72.2% to $60.4 million compared to $35.1 million in the comparable period of fiscal 2017.
•
Diluted income per common share was $1.07 compared to $0.63 per share in the comparable period of fiscal 2017. Diluted income per common share included a $0.08 benefit in the thirty-nine weeks ended November 3, 2018 due to the accounting for employee share-based payments.


53rd Week and Calendar Shift:
•
The fourth quarter and full year of fiscal 2017 included one additional week ("53rd week") versus the same periods in the prior year. Net sales and diluted earnings per share in the 53rd week were $15.7 million and $0.03, respectively.
•
Financial results for the thirteen and thirty-nine weeks ended November 3, 2018 include the thirteen and thirty-nine weeks ended November 3, 2018, as compared to the thirteen and thirty-nine weeks ended October 28, 2017.
•
Comparable sales are reported using the National Retail Federation's restated calendar comparing similar weeks, which are the thirteen and thirty-nine weeks ended November 3, 2018 as compared to the thirteen and thirty-nine weeks ended November 4, 2017.

Fourth Quarter and Fiscal 2018 Outlook:
For the fourth quarter of fiscal 2018, net sales are expected to be in the range of $593 million to $600 million based on opening approximately 5 net new stores and assuming a 3% to 4% increase in comparable sales. Net income is expected to be in the range of $86.5 million to $88.5 million, with a diluted income per common share range of $1.53 to $1.57 on approximately 56.4 million estimated diluted weighted average shares outstanding.

For the full year of fiscal 2018, net sales are expected to be in the range of $1.550 billion to $1.557 billion based on opening approximately 125 net new stores and assuming a 3.3% to 3.7% increase in comparable sales. Net income is expected to be in the range of $146.9 million to $148.9 million, with a diluted income per common share of $2.60 to $2.64 on approximately 56.4 million estimated diluted weighted average shares outstanding.

Conference Call Information:
A recording and transcript of management's remarks to discuss the third quarter fiscal 2018 financial results will be available on December 6, 2018 at 7:00 a.m. Eastern Time, with a separate live Q&A-only conference call with management at 8:00 a.m. Eastern Time on December 6, 2018. Investors and analysts interested in participating in the Q&A-only conference call are invited to dial 412-902-6753 approximately 10 minutes prior to the start of the call. A live audio webcast of the Q&A-only conference call will be available online at investor.fivebelow.com. The recording and transcript of management's remarks can be accessed either online at investor.fivebelow.com or by dialing 412-317-0088, access code 10126019. A combined recording of both management's remarks and the Q&A-only conference call will be available within two hours of the conclusion of the Q&A-only conference call at the same number. The replay will be available until December 20, 2018.

Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect management's current views and estimates regarding the Company's industry, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Investors can identify these statements by the fact that they use words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks related to the Company's strategy and expansion plans, risks related to the inability to successfully implement our expansion into online retail, risks related to our ability to select, obtain, distribute and market merchandise profitably, risks related to our reliance on merchandise manufactured outside of the United States, risks related to any legal proceedings that we may become subject to, the availability of suitable new store locations and the dependence on the volume of traffic to our stores, risks related to the Company's continued retention of its executive officers, senior management and other key personnel, risks related to changes in consumer preferences and economic conditions, risks related to increased operating costs, including wage rates, risks related to extreme weather, risks related to leasing, owning or building distribution centers, risks related to our ability to successfully manage inventory balance and inventory shrinkage, quality or safety concerns about the Company's merchandise, increased competition from other retailers including online retailers, risks related to the seasonality of our business, risks related to cyber security, risks related to our ability to protect our brand name and other intellectual property, risks related to customers' payment methods, risks related to domestic and foreign trade restrictions including duties and tariffs affecting our domestic and foreign suppliers, including, among others, the direct and indirect impact of recent and potential tariffs imposed and proposed by the United States on foreign imports, risks associated with the restrictions imposted by our indebtedness on our current and future operations, the impact of changes in tax legislation and accounting standards and risks associated with leasing substantial amounts of space. For further details and a discussion of these risks and uncertainties, see the Company's periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company's assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this news release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Five Below:
Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities. We make it easy to say YES! to the newest, coolest stuff because everything is just $5 and below across awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has approximately 750 stores in 33 states. For more information, please visit www.fivebelow.com and a store!

Investor Contact:
Five Below, Inc.
Christiane Pelz
Vice President, Investor Relations
215-207-2658
Christiane.Pelz@fivebelow.com




FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
 
 
November 3, 2018
 
February 3, 2018
 
October 28, 2017
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
103,262

 
$
112,669

 
$
54,917

Short-term investment securities
 
85,029

 
131,958

 
56,678

Inventories
 
339,898

 
187,037

 
271,685

Prepaid income taxes
 
11,443

 
2,264

 
4,891

Prepaid expenses and other current assets
 
59,500

 
45,434

 
41,894

Total current assets
 
599,132

 
479,362

 
430,065

Property and equipment, net
 
245,631

 
180,349

 
177,903

Deferred income taxes
 
3,243

 
6,676

 
10,512

Long-term investment securities
 
—

 
27,702

 
23,177

Other assets
 
1,730

 
1,619

 
1,659

 
 
$
849,736

 
$
695,708

 
$
643,316

 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Line of credit
 
$
—

 
$
—

 
$
—

Accounts payable
 
155,986

 
73,033

 
124,187

Income taxes payable
 
281

 
25,275

 
55

Accrued salaries and wages
 
11,139

 
22,906

 
14,770

Other accrued expenses
 
72,019

 
43,246

 
55,154

Total current liabilities
 
239,425

 
164,460

 
194,166

Deferred rent and other
 
85,240

 
72,690

 
67,839

Total liabilities
 
324,665

 
237,150

 
262,005

Shareholders’ equity:
 
 
 
 
 
 
Common stock
 
557

 
554

 
552

Additional paid-in capital
 
351,941

 
346,300

 
336,432

Retained earnings
 
172,573

 
111,704

 
44,327

Total shareholders’ equity
 
525,071

 
458,558

 
381,311

 
 
$
849,736

 
$
695,708

 
$
643,316







FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
November 3, 2018
 
October 28, 2017
 
November 3, 2018
 
October 28, 2017
Net sales
$
312,823

 
$
257,175

 
$
956,879

 
$
773,376

Cost of goods sold
210,733

 
173,544

 
635,799

 
517,453

Gross profit
102,090

 
83,631

 
321,080

 
255,923

Selling, general and administrative expenses
86,542

 
68,818

 
250,404

 
202,027

Operating income
15,548

 
14,813

 
70,676

 
53,896

Interest income, net
1,058

 
334

 
3,120

 
902

Income before income taxes
16,606

 
15,147

 
73,796

 
54,798

Income tax expense
3,090

 
5,268

 
13,413

 
19,724

Net income
$
13,516

 
$
9,879

 
$
60,383

 
$
35,074

Basic income per common share
$
0.24

 
$
0.18

 
$
1.08

 
$
0.64

Diluted income per common share
$
0.24

 
$
0.18

 
$
1.07

 
$
0.63

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic shares
55,742,854

 
55,215,850

 
55,731,098

 
55,148,316

Diluted shares
56,228,305

 
55,608,035

 
56,185,305

 
55,493,452

 
 
 
 
 
 
 
 






FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
 
 
Thirty-Nine Weeks Ended
 
 
November 3, 2018
 
October 28, 2017
Operating activities:
 
 
 
 
Net income
 
$
60,383

 
$
35,074

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
30,267

 
24,193

Share-based compensation expense
 
9,297

 
11,977

Deferred income tax expense
 
3,433

 
527

Other non-cash expenses
 
43

 
67

Changes in operating assets and liabilities:
 
 
 
 
Inventories
 
(152,861
)
 
(117,237
)
Prepaid income taxes
 
(9,179
)
 
(3,339
)
Prepaid expenses and other assets
 
(14,175
)
 
(12,865
)
Accounts payable
 
79,036

 
69,933

Income taxes payable
 
(24,994
)
 
(23,884
)
Accrued salaries and wages
 
(11,767
)
 
3,976

Deferred rent
 
12,785

 
12,799

Other accrued expenses
 
19,351

 
15,806

Net cash provided by operating activities
 
1,619

 
17,027

Investing activities:
 
 
 
 
Purchases of investment securities
 
(91,375
)
 
(124,406
)
Sales, maturities, and redemptions of investment securities
 
166,006

 
132,855

Capital expenditures
 
(82,027
)
 
(49,518
)
Net cash used in investing activities
 
(7,396
)
 
(41,069
)
Financing activities:
 
 
 
 
Net proceeds from issuance of common stock
 
168

 
135

Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units
 
4,019

 
3,799

Common shares withheld for taxes
 
(7,817
)
 
(1,063
)
Net cash (used in) provided by financing activities
 
(3,630
)
 
2,871

Net decrease in cash and cash equivalents
 
(9,407
)
 
(21,171
)
Cash and cash equivalents at beginning of period
 
112,669

 
76,088

Cash and cash equivalents at end of period
 
$
103,262

 
$
54,917