Delaware

001-36107

80-0895227

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Exhibit

No.

Description

99.1

Press Release dated March 8, 2018.

BURLINGTON STORES, INC.

/s/ Robert L. LaPenta, Jr.

Robert L. LaPenta, Jr.

Vice President and Treasurer

o

On a GAAP 14 week basis, total sales rose 15%, net income increased 92%, and EPS increased 96%

o

On a non-GAAP 13 week basis,

-

Comparable store sales increased 5.9%

-

Adjusted EBITDA increased 14% to $290 million, up 50 basis points

-

Adjusted EPS, excluding the estimated impact of the 2017 Tax Reform, rose 22% to $2.17

o

Introducing outlook for FY18 Adjusted EPS of $5.73-$5.83

•

Total sales on a 14 week basis increased 14.9% over the prior year period to $1,937 million, while sales increased 10.0% on a 13 week basis to $1,855 million. This growth on a 13 week basis was driven by an incremental $79 million from new and non-comparable stores, as well as a 5.9% increase in comparable store sales. The contribution from new and non-comparable stores was reduced by approximately $25 million due to previously disclosed weather related store closings.

•

Gross margin on a 14 week basis was $814 million. On a 13 week basis, gross margin expanded by 20 basis points over last year’s levels to 42.0%, driven primarily by increased merchandise margin. The gross margin increase was achieved while reducing 91 day and older inventory by 26% vs. the prior year. Product sourcing costs, which are included in selling, general and administrative expenses (SG&A), were flat as a percentage of sales to the Fiscal 2016 fourth quarter.

•

SG&A, less product sourcing costs, on a 14 week basis was $446 million. On a 13 week basis, SG&A, less product sourcing costs, as a percentage of sales was 22.8%, representing a 40 basis point improvement compared with the Fiscal 2016 fourth quarter. This leverage was attained despite the negative impact of 10 basis points each from stock based compensation and incentive compensation.

•

The effective tax rate on a GAAP basis was a benefit of 8.0% vs. last year’s rate of 34.1%, driven lower by the accounting change for stock based compensation and the estimated impact of the Tax Cuts

and Jobs Act, enacted in December 2017 (“2017 Tax Reform”). The Adjusted Effective Tax Rate was a benefit of 5.9% vs. last year’s rate of 37.2%, due to the same factors. Our Adjusted Effective Tax Rate was 36.6%, excluding the change in accounting for stock based compensation and the estimated impact of the 2017 Tax Reform. Please see the table following the financial statements below for a reconciliation of our effective tax rates.

•

Net income on a 14 week basis increased 92% over the prior year period to $241 million, or $3.47 per share vs. $1.77 last year; this result included $0.04 in EPS from the 14^th week. Adjusted Net Income on a 13 week basis, excluding the estimated impact of the 2017 Tax Reform, was $2.17 per share vs. $1.78 last year. This improvement in Adjusted Net Income, excluding the estimated impact of the 2017 Tax Reform, was driven primarily by top line growth, gross margin expansion, tight expense control, share repurchases and a $0.03 per share benefit from the accounting change for stock based compensation.

•

Fully diluted shares outstanding amounted to 69.3 million for the fourth quarter compared with 70.9 million for last year’s fourth quarter. The decrease was primarily the result of share repurchases under the Company’s share repurchase program, discussed in more detail below.

•

Adjusted EBITDA on a 14 week basis increased 17%, or $43 million above the prior year period, to $298 million. On a 13 week basis, Adjusted EBITDA increased 14%, or $35 million above the prior year period, to $290 million, representing a 50 basis point expansion. This improvement was primarily driven by gross margin expansion and SG&A leverage, slightly offset by a reduction in Other Income/Revenue.

•

On a 53 week GAAP basis, total sales increased 9.3% to $6,085 million, net income increased 78% to $385 million, and EPS increased 82% to $5.48 vs. the 52 week Fiscal 2016 period.

•

On a 52 week basis, total sales increased 7.8% to $6,003 million. This growth was driven by a comparable store sales increase of 3.4% and $274 million in new and non-comparable sales. The impact of previously disclosed weather related store closings reduced the sales from new and non-comparable sales by approximately $42 million.

•

Adjusted EBITDA on a 53 week basis increased 19%, or $112 million above last year, to $696 million.

•

On a 52 week basis, Adjusted EBITDA grew by 18%, or $104 million above last year, to $688 million, representing a 95 basis point increase in rate vs. Fiscal 2016. Excluding the estimated impact of the 2017 Tax Reform, Adjusted Net Income was $4.37 per share vs. $3.24 last year.

•

Merchandise inventories at Fiscal 2017 year-end were $753 million vs. $702 million last year. The increase was primarily due to inventory related to the 37 net new stores opened during Fiscal 2017, and an increase in pack and hold inventory, which was 25% of total inventory at the end of the fourth quarter of Fiscal 2017 compared to 23% at the end of the fourth quarter of Fiscal 2016. Comparable store inventory turnover for the fourth quarter of Fiscal 2017 improved 10%, and comparable store inventory was down 7% vs. the comparable period a year ago. Inventory aged 91 days and older decreased 26%.

•

During the fourth quarter of Fiscal 2017, the Company invested $52 million of cash to repurchase 457,528 shares of its common stock, bringing the total investment in share repurchases to $282 million (representing approximately 3 million shares) during Fiscal 2017. As of the end of the fourth quarter, the Company had $217 million remaining on its current share repurchase authorization.

•

Total sales growth in the range of 9% to 10% compared to Fiscal 2017, excluding the 53^rd week;

•

Comparable store sales to increase in the range of 2% to 3% on top of last year’s 3.4% increase;

•

Adjusted EBITDA margin expansion of 30 to 40 basis points;

•

Depreciation and amortization, exclusive of favorable lease amortization, to be approximately $200 million;

•

Adjusted EBIT margin expansion of 20 to 30 basis points;

•

Interest expense of approximately $60 million;

•

An effective tax rate of 23% to 24%;

•

To open 35 to 40 net new stores, and invest Net Capital Expenditures of approximately $250 million; and

•

Adjusted EPS in the range of $5.73 to $5.83. The Company expects Adjusted EPS excluding the estimated impact of the 2017 Tax Reform and the accounting for stock based compensation to be in the range of $4.71 to $4.81, representing an increase of 14% to 16% over the comparable 52 week 2017 Adjusted EPS of $4.14.

•

Total sales to increase in the range of 9.5% to 10.5%;

•

Comparable store sales to increase in the range of 2% to 3%; and

•

Adjusted EPS in the range of $1.05 to $1.09, as compared to $0.79 last year. Excluding the estimated benefit of the 2017 Tax Reform and the accounting change for stock based compensation, the Company expects Adjusted EPS growth to be in the range of 16% to 21%.

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

(14 Weeks)

(53 Weeks)

REVENUES:

Net sales

$

1,936,829

$

1,685,715

$

6,084,766

$

5,566,038

Other revenue

7,443

6,589

25,277

24,912

Total revenue

1,944,272

1,692,304

6,110,043

5,590,950

COSTS AND EXPENSES:

Cost of sales

1,122,908

981,212

3,559,158

3,297,373

Selling, general and administrative expenses

525,254

461,692

1,863,501

1,723,251

Costs related to debt amendments

2,262

—

2,262

1,346

Stock option modification expense

10

81

142

601

Depreciation and amortization

53,555

46,956

201,103

183,586

Impairment charges - long-lived assets

1,140

2,340

2,127

2,450

Other income - net

(1,939

)

(3,475

)

(8,888

)

(10,835

)

Loss on extinguishment of debt

2,881

—

2,881

3,805

Interest expense

15,368

12,966

58,777

56,161

Total costs and expenses

1,721,439

1,501,772

5,681,063

5,257,738

Income before income tax expense

222,833

190,532

428,980

333,212

Income tax (benefit) expense

(17,870

)

64,971

44,128

117,339

Net income

$

240,703

$

125,561

$

384,852

$

215,873

February 3,

January 28,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

133,286

$

81,597

Restricted cash and cash equivalents

27,800

27,800

Accounts receivable—net

71,649

43,252

Merchandise inventories

752,562

701,891

Prepaid and other current assets

115,136

73,784

Total current assets

1,100,433

928,324

Property and equipment—net

1,134,772

1,049,447

Goodwill and intangible assets—net

474,011

498,244

Deferred tax assets

6,952

7,973

Other assets

96,661

90,495

Total assets

$

2,812,829

$

2,574,483

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

736,252

$

640,326

Other current liabilities

370,215

354,870

Current maturities of long term debt

13,164

1,638

Total current liabilities

1,119,631

996,834

Long term debt

1,113,808

1,128,843

Other liabilities

313,130

290,683

Deferred tax liabilities

179,486

207,935

Stockholders' equity (deficit)

86,774

(49,812

)

Total liabilities and stockholders' equity (deficit)

$

2,812,829

$

2,574,483

Fiscal Year Ended

February 3,

January 28,

2018

2017

(53 Weeks)

OPERATING ACTIVITIES

Net income

$

384,852

$

215,873

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

201,103

183,586

Deferred income taxes

(30,727

)

(2,919

)

Non-cash loss on extinguishment of debt

2,881

3,805

Non-cash stock compensation expense

27,034

15,953

Non-cash rent

(24,689

)

(27,910

)

Deferred rent incentives

48,834

32,212

Changes in assets and liabilities:

Accounts receivable

(19,983

)

(3,489

)

Merchandise inventories

(50,671

)

81,048

Accounts payable

97,003

41,543

Other current assets and liabilities

(40,346

)

61,552

Long term assets and liabilities

(2,109

)

5,715

Other operating activities

14,068

8,947

Net cash provided by operating activities

607,250

615,916

INVESTING ACTIVITIES

Cash paid for property and equipment

(268,194

)

(187,507

)

Proceeds from insurance recoveries related to property and equipment

5,980

—

Other investing activities

6

7,156

Net cash (used in) investing activities

(262,208

)

(180,351

)

FINANCING ACTIVITIES

Proceeds from long term debt—ABL Line of Credit

1,215,500

1,392,700

Principal payments on long term debt—ABL Line of Credit

(1,215,500

)

(1,560,100

)

Proceeds from long term debt—Term Loan Facility

1,114,207

1,114,208

Principal payments on long term debt—Term Loan Facility

(1,119,793

)

(1,117,000

)

Purchase of treasury shares

(289,777

)

(202,371

)

Other financing activities

2,010

(2,320

)

Net cash used in financing activities

(293,353

)

(374,883

)

Increase in cash and cash equivalents

51,689

60,682

Cash and cash equivalents at beginning of period

81,597

20,915

Cash and cash equivalents at end of period

$

133,286

$

81,597

(unaudited)

(in thousands, except per share data)

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

(14 Weeks)

(53 Weeks)

Reconciliation of net income to Adjusted Net Income:

Net income

$

240,703

$

125,561

$

384,852

$

215,873

Net favorable lease amortization (a)

5,574

5,902

23,325

23,828

Costs related to debt amendments (b)

2,262

—

2,262

1,346

Stock option modification expense (c)

10

81

142

601

Loss on extinguishment of debt (b)

2,881

—

2,881

3,805

Impairment charges (d)

1,140

2,340

2,127

2,450

Litigation accrual (e)

—

2,057

—

3,457

Tax effect (f)

(3,561

)

(9,807

)

(9,836

)

(19,092

)

Adjusted Net Income

$

249,009

$

126,134

$

405,753

$

232,268

Fully diluted weighted average shares outstanding (g)

69,305

70,878

70,288

71,721

Adjusted Earnings per Share

$

3.59

$

1.78

$

5.77

$

3.24

(unaudited)

(in thousands)

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

(14 Weeks)

(53 Weeks)

Reconciliation of net income to Adjusted EBITDA:

Net income

$

240,703

$

125,561

$

384,852

$

215,873

Interest expense

15,368

12,966

58,777

56,161

Interest income

(73

)

(14

)

(206

)

(56

)

Loss on extinguishment of debt (b)

2,881

—

2,881

3,805

Costs related to debt amendments (b)

2,262

—

2,262

1,346

Stock option modification expense (c)

10

81

142

601

Depreciation and amortization

53,555

46,956

201,103

183,586

Impairment charges (d)

1,140

2,340

2,127

2,450

Litigation accrual (e)

—

2,057

—

3,457

Income tax (benefit) expense

(17,870

)

64,971

44,128

117,339

Adjusted EBITDA

$

297,976

$

254,918

$

696,066

$

584,562

(unaudited)

(in thousands)

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

(14 Weeks)

(53 Weeks)

Reconciliation of net income to Adjusted EBIT:

Net income

$

240,703

$

125,561

$

384,852

$

215,873

Interest expense

15,368

12,966

58,777

56,161

Interest income

(73

)

(14

)

(206

)

(56

)

Net favorable lease amortization (a)

5,574

5,902

23,325

23,828

Loss on extinguishment of debt (b)

2,881

—

2,881

3,805

Costs related to debt amendments (b)

2,262

—

2,262

1,346

Stock option modification expense (c)

10

81

142

601

Impairment charges (d)

1,140

2,340

2,127

2,450

Litigation accrual (e)

—

2,057

—

3,457

Income tax (benefit) expense

(17,870

)

64,971

44,128

117,339

Adjusted EBIT

$

249,995

$

213,864

$

518,288

$

424,804

(a)

Net favorable lease amortization represents the non-cash amortization expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 13, 2006 Bain Capital acquisition of Burlington Coat Factory Warehouse Corporation, and are recorded in the line item “Depreciation and amortization” in our Condensed Consolidated Statements of Income.

(b)

Represents costs related to the repricing and extension of our Term Loan Facility during Fiscal 2017 and the repricing of our Term Loan Facility during Fiscal 2016.

(c)

Represents expenses incurred as a result of our May 2013 stock option modification.

(d)

Represents impairment charges on long-lived assets.

(e)

Represents amounts charged for certain litigation.

(f)

Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods for the tax impact of items (a) through (e).

(g)

Fully diluted weighted average shares outstanding starts with basic shares outstanding and adds back any potentially dilutive securities outstanding during the period. Fully diluted weighted average shares outstanding is equal to basic shares outstanding if the Company is in an Adjusted Net Loss position.

(unaudited)

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

(14 Weeks)

(53 Weeks)

Adjusted Effective Tax Rate, excluding the change in accounting for stock based compensation and the impact of the 2017 Tax Reform

36.6

%

34.1

%

37.0

%

35.2

%

Accounting change for stock based compensation

(1.8

)

—

(4.4

)

—

Effect of the 2017 Tax Reform on tax rate and deductions

(1.0

)

—

(0.6

)

—

One-time deferred tax revaluation due to the 2017 Tax Reform

(41.8

)

—

(21.7

)

—

Effective tax rate on a GAAP basis ((benefit) expense)

(8.0

)%

34.1

%

10.3

%

35.2

%

Adjustments to arrive at Adjusted Effective Tax Rate

2.1

3.1

1.4

1.8

Adjusted Effective Tax Rate ((benefit) expense)

(5.9

)%

37.2

%

11.7

%

37.0

%

(unaudited)

Three Months Ended

Fiscal Year Ended

February 3,

January 28,

February 3,

January 28,

2018

2017

2018

2017

Net income per share

$

3.47

$

1.77

$

5.48

$

3.01

53rd week

(0.04

)

—

(0.04

)

—

Adjustments to arrive at Adjusted Earnings per Share

0.12

0.01

0.29

0.23

Adjusted Earnings per Share (13/52 weeks)

3.55

1.78

5.73

3.24

Effect of the 2017 Tax Reform on tax rate and deductions

(0.04

)

—

(0.04

)

—

One-time deferred tax revaluation due to the 2017 Tax Reform

(1.34

)

—

(1.32

)

—

Adjusted Earnings per Share (13/52 weeks), excluding the 2017 Tax Reform

$

2.17

$

1.78

$

4.37

$

3.24