Five Below (FIVE) Q4 2015 earnings summary

Executive summary

• Value-retail concept sells trend-right merchandise at $5 and below; 366 stores operated across 21 states at Jan. 31, 2015.

• Fiscal 2014 net sales rose 27.0% to $680.2M and operating income reached $77.0M; comparable sales grew 3.4%.

• Store expansion remains central: 62 stores opened in fiscal 2014, with approximately 70 planned for fiscal 2015 and a long-term target above 2,000 locations.

Financial highlights

• Revenue $680.2M, up 27.0% YoY; gross profit $237.8M, up 26.5%; operating income $77.0M vs. $53.7M.

• Net income $48.0M vs. $32.1M, up 49.4%; diluted EPS $0.88 vs. $0.59.

• Operating cash flow $61.4M vs. $31.2M; capital expenditures $32.3M; cash and equivalents $63.2M at year-end.

• SG&A included $5.9M share-based compensation, down from $10.1M; fiscal 2014 included $0.9M related to prior option cancellations and restricted-share awards.

Outlook and guidance

• Fiscal 2015 plan: approximately 70 new stores; 52 leases had been executed by Jan. 31, 2015.

• Fiscal 2015 capital expenditure plan is approximately $56M, including approximately $22M for 70 new stores; remaining spending targets distribution, corporate infrastructure, relocations and remodels.

• New-store model targets approximately $1.6M first-full-year sales, approximately $0.3M initial cash investment and payback in less than one year.

• Long-term U.S. opportunity exceeds 2,000 stores; growth plans depend on distribution capacity, hiring, systems and suitable sites.