Five Below (FIVE) Q4 2017 earnings summary

Executive summary

• FY2016 net sales rose 20.2% to $1,000.4M, with 85 net new stores; comparable sales increased 2.0%.

• Net income increased 24.5% to $71.8M; Q4 net income was $49.8M and diluted EPS was $0.91.

• Growth plans called for ~100 new stores and $78M in capital expenditures in FY2017.

Financial highlights

• FY2016 gross profit rose 22.3% to $357.0M; operating income increased to $114.0M from $92.9M.

• FY2016 net income was $71.8M versus $57.7M; diluted EPS was $1.30 versus $1.05.

• Operating cash flow was $106.6M; investing cash outflow was $86.8M; cash and equivalents ended at $76.1M.

• Q4 FY2016 net sales were $388.1M versus $326.4M; net income was $49.8M versus $42.0M YoY.

Outlook and guidance

• FY2017 plan: approximately 100 new stores, within a long-term opportunity to exceed 2,000 U.S. locations.

• FY2017 capital expenditures expected at approximately $78M, including ~$35M for new stores; funded from operating cash flow.

• New-store model targets ~$1.6M first-full-year sales and ~$0.3M average cash investment, with payback under one year.

• Cash, operating cash flow and revolving-credit availability expected to cover planned capex and working capital needs for the foreseeable future.