EX-99.1 2 q32016fivebelowexhibit991.htm PRESS RELEASE Exhibit


 

fivebelowlogoq12015a05.jpg
NEWS RELEASE
Five Below, Inc. Announces Third Quarter Fiscal 2016 Financial Results
Q3 sales increased 18% to $199.5 million
Q3 EPS increased 25% to $0.10
Raises low end and reiterates high end of fiscal 2016 sales and EPS guidance

PHILADELPHIA, PA – (December 1, 2016) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the thirteen and thirty-nine weeks ended October 29, 2016.


For the thirteen weeks ended October 29, 2016:
•
Net sales increased by 17.6% to $199.5 million from $169.7 million in the third quarter of fiscal 2015; comparable sales decreased by 0.2%.
•
Operating income increased by 23.4% to $8.6 million from $7.0 million in the third quarter of fiscal 2015.
•
The Company opened 26 new stores and ended the quarter with 517 stores in 31 states. This represents an increase in stores of 19.1% from the end of the third quarter of fiscal 2015.
•
Net income was $5.4 million compared to $4.3 million in the third quarter of fiscal 2015.
•
Diluted income per common share was $0.10 compared to $0.08 per share in the third quarter of fiscal 2015.


“We are pleased to have delivered earnings at the high-end of our guidance range in our fiscal third quarter,” stated Joel Anderson, CEO of Five Below.  “Our track record of outstanding new store performance continued and, despite being up against a strong third quarter last year, we delivered solid sales growth, expanded operating margins and increased EPS by 25% for the quarter.”

Mr. Anderson continued, “As we look to the all-important fourth quarter, we believe we are well-positioned to wow our customers with our compelling holiday assortment accompanied by exciting marketing plans, including our new and expanded TV campaign. We are pleased with the start to the holiday season and look forward to delivering our customers a steady stream of amazing products at exceptional values, reinforcing our position as a destination of choice for their holiday gift-giving and stocking stuffer needs.”


For the thirty-nine weeks ended October 29, 2016:
•
Net sales increased by 21.1% to $612.3 million from $505.6 million in the comparable period of fiscal 2015; comparable sales increased by 2.6%.
•
Operating income increased to $35.1 million from $25.6 million in the comparable period of fiscal 2015.
•
The Company opened 80 new stores compared to 68 net new stores opened in the comparable period in fiscal 2015.
•
Net income was $22.1 million compared to $15.7 million in the comparable period of fiscal 2015.
•
Diluted income per common share was $0.40 compared to $0.29 per share in the comparable period of fiscal 2015.

Fourth Quarter and Fiscal 2016 Outlook:
For the fourth quarter of fiscal 2016, net sales are expected to be in the range of $391 million to $397 million based on opening 5 net new stores and assuming a 2% to 3% increase in comparable sales. Net income is expected to be in the range of $49.2 million to $50.6 million, with a diluted income per common share range of $0.89 to $0.92 on approximately 55.3 million estimated diluted weighted average shares outstanding.

For fiscal 2016, net sales are expected to be in the range of $1,003 million to $1,009 million based on opening 85 net new stores for the full year and assuming a 2.3% to 2.7% increase in comparable sales. Net income is expected to be in the range of $71.3 million to $72.7 million, with a diluted income per common share of $1.29 to $1.32 on approximately 55.3 million estimated diluted weighted average shares outstanding.


Conference Call Information:
A conference call to discuss the third quarter fiscal 2016 financial results is scheduled for today, December 1, 2016, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 888-661-5176 (international callers please dial 913-312-1273) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.fivebelow.com in the investor relations section of the website.
A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 877-870-5176 (international callers please dial 858-384-5517). The pin number to access the telephone replay is 3771037. The replay will be available until December 8, 2016.


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, the availability of suitable new store locations and the dependence on the success of shopping centers in which our stores are located, risks that consumer spending may decline and that U.S. and global macroeconomic conditions may worsen, risks related to the Company's continued retention of its 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 the Company's distribution centers, quality or safety concerns about the Company's merchandise, events that may affect the Company's vendors, increased competition from other retailers including online retailers, risks related to cyber security, risks related to customers' payment methods, risks related to trade restrictions, 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 rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the teen and pre-teen customer. Five Below offers a dynamic, edited assortment of exciting products in a fun and differentiated store environment, all priced at $5 and below. Select brands and licensed merchandise fall into the Five Below worlds: Style, Room, Sports, Tech, Crafts, Party, Candy, and Now. Five Below was founded in 2002 and is headquartered in Philadelphia, Pennsylvania, with over 500 stores in 31 states. For more information, please visit www.fivebelow.com or come into one of our stores!


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

ICR, Inc.
Farah Soi/Caitlin Morahan
203-682-8200
Farah.Soi@icrinc.com/Caitlin.Morahan@icrinc.com


Media Contact:
ICR, Inc.
Jessica Liddell/Julia Young
203-682-8200
FivePR@icrinc.com




FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
 
 
October 29, 2016
 
January 30, 2016
 
October 31, 2015
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
53,537

 
$
53,081

 
$
18,083

Short-term investment securities
 
9,912

 
46,335

 
—

Inventories
 
228,175

 
148,370

 
213,635

Prepaid income taxes
 
5,789

 
1,341

 
10,328

Prepaid expenses and other current assets
 
33,200

 
15,618

 
24,698

Total current assets
 
330,613

 
264,745

 
266,744

Property and equipment, net
 
135,939

 
119,784

 
119,974

Deferred income taxes
 
9,045

 
8,507

 
10,349

Other assets
 
1,312

 
258

 
318

 
 
$
476,909

 
$
393,294

 
$
397,385

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

 
$
—

 
$
—

Accounts payable
 
104,684

 
58,225

 
110,135

Income taxes payable
 
126

 
11,942

 
239

Accrued salaries and wages
 
8,677

 
7,661

 
6,170

Other accrued expenses
 
32,051

 
24,368

 
34,504

Total current liabilities
 
145,538

 
102,196

 
151,048

Deferred rent and other
 
53,220

 
46,617

 
46,850

Total liabilities
 
198,758

 
148,813

 
197,898

Shareholders’ equity:
 
 
 
 
 
 
Common stock
 
549

 
546

 
545

Additional paid-in capital
 
318,137

 
306,522

 
303,533

Accumulated deficit
 
(40,535
)
 
(62,587
)
 
(104,591
)
Total shareholders’ equity
 
278,151

 
244,481

 
199,487

 
 
$
476,909

 
$
393,294

 
$
397,385







FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
 
 
Thirteen Weeks Ended
 
Thirty-Nine Weeks Ended
 
 
October 29, 2016
 
October 31, 2015
 
October 29, 2016
 
October 31, 2015
Net sales
 
$
199,475

 
$
169,685

 
$
612,320

 
$
505,603

Cost of goods sold
 
135,472

 
116,920

 
414,700

 
345,851

Gross profit
 
64,003

 
52,765

 
197,620

 
159,752

Selling, general and administrative expenses
 
55,372

 
45,768

 
162,523

 
134,177

Operating income
 
8,631

 
6,997

 
35,097

 
25,575

Interest income (expense), net
 
64

 
23

 
211

 
12

Other expense
 
—

 
—

 
—

 
325

Income before income taxes
 
8,695

 
7,020

 
35,308

 
25,262

Income tax expense
 
3,248

 
2,683

 
13,256

 
9,586

Net income
 
$
5,447

 
$
4,337

 
$
22,052

 
$
15,676

Basic income per common share
 
$
0.10

 
$
0.08

 
$
0.40

 
$
0.29

Diluted income per common share
 
$
0.10

 
$
0.08

 
$
0.40

 
$
0.29

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic shares
 
54,871,172

 
54,529,403

 
54,809,768

 
54,525,797

Diluted shares
 
55,170,686

 
54,833,252

 
55,100,534

 
54,811,978







FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
 
 
Thirty-Nine Weeks Ended
 
 
October 29, 2016
 
October 31, 2015
Operating activities:
 
 
 
 
Net income
 
$
22,052

 
$
15,676

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
19,449

 
16,126

Share-based compensation expense
 
9,014

 
8,400

Deferred income tax benefit
 
(538
)
 
(2,468
)
Other non-cash expenses
 
53

 
47

Changes in operating assets and liabilities:
 
 
 
 
Inventories
 
(79,805
)
 
(97,983
)
Prepaid income taxes
 
(4,448
)
 
(8,389
)
Prepaid expenses and other assets
 
(18,656
)
 
(6,572
)
Accounts payable
 
47,240

 
64,971

Income taxes payable
 
(11,816
)
 
(14,203
)
Accrued salaries and wages
 
1,016

 
895

Deferred rent
 
7,623

 
6,916

Other accrued expenses
 
5,946

 
15,078

Net cash used in operating activities
 
(2,870
)
 
(1,506
)
Investing activities:
 
 
 
 
Purchases of investment securities
 
(35,856
)
 
—

Sales, maturities, and redemptions of investment securities
 
72,279

 
—

Capital expenditures
 
(35,714
)
 
(44,749
)
Net cash provided by (used in) investing activities
 
709

 
(44,749
)
Financing activities:
 
 
 
 
Net proceeds from issuance of common stock
 
93

 
81

Proceeds from exercise of options to purchase common stock
 
2,736

 
811

Common shares withheld for taxes
 
(1,819
)
 
(322
)
Excess tax benefit related to exercises of stock options and vesting of restricted stock units
 
1,607

 
582

Net cash provided by financing activities
 
2,617

 
1,152

Net increase (decrease) in cash and cash equivalents
 
456

 
(45,103
)
Cash and cash equivalents at beginning of period
 
53,081

 
63,186

Cash and cash equivalents at end of period
 
$
53,537

 
$
18,083