Five Below, Inc. Announces Fourth Quarter and Fiscal 2013 Financial Results

Five Below, Inc. Announces Fourth Quarter and Fiscal 2013 Financial Results

           Fourth quarter sales increase of 22.1% to $212.0 million

       Fourth quarter GAAP diluted EPS of $0.45; adjusted EPS of $0.47

PHILADELPHIA, March 25, 2014 (GLOBE NEWSWIRE) -- Five Below, Inc.
(Nasdaq:FIVE) today announced financial results for the thirteen weeks and
fifty-two weeks ended February 1, 2014.

For the thirteen weeks ended February 1, 2014:

  *Net sales increased by 22.1% to $212.0 million from $173.6 million in the
    fourth quarter of fiscal 2012, which consisted of fourteen weeks;
    comparable store sales increased by 0.3% on a thirteen week basis.
  *Operating income increased to $40.3 million from $33.0 million in the
    fourth quarter of fiscal 2012. Adjusted operating income, which excludes
    the impact of the founders' transaction in both periods and costs
    associated with the Company's secondary public offering in the fourth
    quarter of fiscal 2012 (see GAAP/Non-GAAP reconciliation table), increased
    to $41.9 million from $35.6 million in the fourth quarter of fiscal 2012.
  *The Company ended the quarter with 304 stores in 19 states, an increase of
    25% from the end of the fourth quarter of fiscal 2012.
  *Net interest expense decreased to $0.3 million from $0.5 million in the
    fourth quarter of fiscal 2012. The decrease in net interest expense
    resulted from the decrease in the outstanding balance of the Company's
    term loan. During the second quarter of fiscal 2013, the Company repaid
    $15.0 million of principal on the term loan.
  *Net income was $24.8 million compared to $19.2 million in the fourth
    quarter of fiscal 2012. Adjusted net income, which excludes the impact of
    the founders' transaction in both periods and costs associated with the
    secondary public offering in the fourth quarter of 2012 (see GAAP/Non-GAAP
    reconciliation table), was $25.8 million compared to $21.4 million for the
    fourth quarter of fiscal 2012.
  *U.S. generally accepted accounting principles, or GAAP, diluted income per
    common share was $0.45 compared to $0.35 in the fourth quarter of fiscal
    2012. Adjusted diluted income per common share, which is adjusted net
    income on an adjusted diluted weighted average shares outstanding basis
    (see GAAP/Non-GAAP reconciliation table), was $0.47 per share compared to
    $0.39 per share in the fourth quarter of fiscal 2012.

Thomas Vellios, Co-Founder, and CEO, stated: "Despite the adverse weather
impact during the most important shopping weeks of the year, we are pleased to
have ended the fourth quarter with improving trends. Our first quarter of
fiscal 2014 is underway and our stores are set for spring. We believe we are
well positioned to continue to deliver excitement to our customers with the
high quality, trend-right product and the exceptional values they expect from
us."

Mr. Vellios added, "We expect 2014 to be an exciting year for Five Below. Our
new stores continue to generate strong performance and returns on investment.
We have 62 openings planned this year across new markets like Houston and the
state of Tennessee, as well as existing markets that allow for densification
opportunities. We are focused on building a solid infrastructure with our
investments in people, technology and distribution. This will position our
company to execute at the highest levels while solidifying our foundation for
the substantial growth that lies ahead. As importantly, it will ensure that we
continue to fulfill our promise to our customers as we scale the business."

For the fifty-two weeks ended February 1, 2014:

  *Net sales increased by 27.8% to $535.4 million from $418.8 million in
    fiscal 2012, which consisted of fifty-three weeks; comparable store sales
    increased by 4.0% on a fifty-two week basis.
  *Operating income increased to $53.7 million from $37.7 million in fiscal
    2012. Adjusted operating income, which excludes the impact of the
    founders' transaction and costs associated with the Company's secondary
    public offerings in both periods (see GAAP/Non-GAAP reconciliation table),
    increased to $60.8 million from $49.5 million in fiscal 2012.
  *The Company opened 60 net new stores compared to 52 new stores opened in
    fiscal 2012.
  *Net interest expense decreased to $1.5 million from $2.4 million in fiscal
    2012.
  *Loss on debt extinguishment was $0.3 million as compared to $1.6 million
    in fiscal 2012. The loss on debt extinguishment was related to the
    write-off of deferred financing costs in connection with $15.0 million and
    $65.5 million partial repayments of the Company's term loan in fiscal 2013
    and fiscal 2012, respectively.
  *Net income was $32.1 million compared to $20.0 million in fiscal 2012.
    Adjusted net income, which excludes the impact of the founders'
    transaction and costs associated with the secondary public offerings in
    both periods (see GAAP/Non-GAAP reconciliation table), was $36.9 million
    compared to $27.4 million in fiscal 2012.
  *GAAP diluted income per common share was $0.59 as compared to a loss per
    share of $1.28 in fiscal 2012, which included dividends paid to preferred
    and unvested restricted shareholders in fiscal 2012. Adjusted diluted
    income per common share, which is adjusted net income on an adjusted
    diluted weighted average shares outstanding basis (see GAAP/Non-GAAP
    reconciliation table), was $0.68 per share compared to $0.51 per share in
    fiscal 2012.

Balance sheet highlights as of February 1, 2014:

  *Cash and cash equivalents: $50.2 million
  *Total debt: $19.5 million. In February 2014, subsequent to the fiscal year
    ended February 1, 2014, the remaining $19.5 million of principal on the
    term loan was repaid.
  *Total liquidity (cash and cash equivalents plus availability on a $20
    million revolver facility): $70.2 million

First Quarter and Fiscal 2014 Outlook:

For the first quarter of fiscal 2014, net sales are expected to be in the
range of $120 million to $122 million based on opening 14 new stores and
assuming a 3% to 4% increase in comparable store sales. GAAP net income is
expected to be in the range of $2.0 million to $2.5 million, with a GAAP
diluted income per common share range of $0.04 to $0.05 on approximately 54.3
million estimated diluted weighted average shares outstanding. Excluding $0.5
million, or $0.01 per adjusted diluted share in tax-effected expenses related
to the founders' transaction, adjusted net income is expected to be
approximately $2.5 million to $3.0 million, or $0.05 to $0.06 per diluted
share based on estimated adjusted diluted weighted average shares outstanding
of approximately 54.7 million.

For fiscal 2014, net sales are expected to be in the range of $672 million to
$678 million based on opening 62 new stores for the full year and assuming a
4% increase in comparable store sales. GAAP net income is expected to be in
the range of $46.4 million to $48.0 million, with a GAAP diluted income per
common share of $0.85 to $0.88 on approximately 54.7 million estimated diluted
weighted average shares outstanding. Excluding $0.5 million, or $0.01 per
adjusted diluted share in tax-effected expenses related to the founders'
transaction, adjusted net income is expected to be in the range of $46.9
million to $48.5 million, or $0.86 to $0.89 per diluted share based on
estimated adjusted diluted weighted average shares outstanding of
approximately 54.8 million.

Conference Call Information:

A conference call to discuss the fourth quarter and fiscal 2013 financial
results and 2014 outlook is scheduled for today, March 25, 2014, at 4:30 PM
Eastern Time. Investors and analysts interested in participating in the call
are invited to dial 888-240-9314 (international callers please dial
913-312-1430) approximately 10 minutes prior to the start of the call. A live
audio webcast of the conference call will be available online at
www.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 (toll/international 858-384-5517.) The pin number to access the
telephone replay is 5772261. The replay will be available until April 1, 2014.

Non-GAAP Information:

This press release includes non-GAAP adjusted operating income, adjusted net
income, adjusted diluted weighted average shares outstanding and adjusted
diluted income per common share, each a non-GAAP financial measure. The
Company has reconciled these non-GAAP financial measures with the most
directly comparable GAAP financial measures in tables accompanying this
release. The Company believes that these non-GAAP financial measures not only
provide its management with comparable financial data for internal financial
analysis but also provide meaningful supplemental information to investors.
Specifically, these non-GAAP financial measures allow investors to better
understand the performance of the Company's business and facilitate a
meaningful evaluation of its quarterly and fiscal year 2013 diluted income per
common share and actual results on a comparable basis with its quarterly and
fiscal year 2012 results. In evaluating these non-GAAP financial measures,
investors should be aware that in the future the Company may incur expenses or
be involved in transactions that are the same as or similar to some of the
adjustments in this presentation. The Company's presentation of non-GAAP
financial measures should not be construed to imply that its future results
will be unaffected by any such adjustments. The Company has provided this
information as a means to evaluate the results of its ongoing operations.
Other companies in the Company's industry may calculate these items
differently than it does. Each of these measures is not a measure of
performance under GAAP and should not be considered as a substitute for the
most directly comparable financial measures prepared in accordance with GAAP.
Non-GAAP financial measures have limitations as analytical tools, and
investors should not consider them in isolation or as a substitute for
analysis of the Company's results as reported under GAAP.

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 relating to the Company's strategy and expansion
plans, the availability of suitable new store locations, 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 relating to changes in consumer
preferences and economic conditions, risks relating to extreme weather, risks
relating 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
relating to cyber security, risks relating to trade restrictions, risks
associated with leasing substantial amounts of space, and other factors that
are set forth in the Company's filings with the Securities and Exchange
Commission ("SEC"), including risk factors contained in the Company's Annual
Report on Form 10-K for the fiscal year ended February 2, 2013 and Quarterly
Reports on Form 10-Q for the fiscal year ended February 1, 2014 filed with the
SEC 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, all priced at $5 and below, including select brands and licensed
merchandise across a number of category worlds – Style, Room, Sports, Tech
(also known as "Media"), Crafts, Party, Candy and Now. Five Below is
headquartered in Philadelphia, Pennsylvania.

FIVE BELOW, INC.

Consolidated Balance Sheets
(Unaudited)
(in thousands)
                                                         
                                         February 1, 2014 February 2, 2013
Assets                                                    
Current assets:                                           
Cash and cash equivalents                 $50,184        $56,081
Inventories                               89,377           60,831
Prepaid income taxes                      1,497            36
Deferred income taxes                     4,586            1,295
Prepaid expenses and other current assets 15,255           11,433
Total current assets                      160,899          129,676
Property and equipment, net               70,381           59,040
Deferred income taxes                     232              —
Other assets                              542              944
                                         $232,054       $189,660
                                                         
Liabilities and Shareholders' Equity                      
Current liabilities:                                      
Line of credit                            $—             $—
Current portion of note payable           19,500           15,000
Accounts payable                          34,013           27,952
Income taxes payable                      6,007            7,083
Accrued salaries and wages                2,672            4,204
Other accrued expenses                    17,550           14,545
Total current liabilities                 79,742           68,784
Notes payable                             —                19,500
Deferred rent and other                   35,439           29,082
Deferred income taxes                     —                1,550
Total liabilities                         115,181          118,916
Shareholders' equity:                                     
Common stock                              542              540
Additional paid-in capital                284,622          270,637
Accumulated deficit                       (168,291)        (200,433)
Total shareholders' equity                116,873          70,744
                                         $232,054       $189,660


FIVE BELOW, INC.

Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
                                                               
                              Thirteen    Fourteen    Fifty-two   Fifty-three
                               weeks ended weeks ended weeks ended weeks ended
                              February 1, February 2, February 1, February 2,
                               2014        2013        2014        2013
Net sales                      $211,964  $173,589  $535,402  $418,825
Cost of goods sold             127,795     102,451     347,386     268,989
Gross profit                   84,169      71,138      188,016     149,836
Selling, general and           43,828      38,095      134,279     112,182
administrative expenses
Operating income               40,341      33,043      53,737      37,654
Interest expense, net          290         545         1,513       2,374
Loss on debt extinguishment    —           —           266         1,594
Other income                   —           (150)       —           (408)
Income before income taxes     40,051      32,648      51,958      34,094
Income tax expense             15,225      13,442      19,816      14,069
Net income                     24,826      19,206      32,142      20,025
Dividend paid to preferred and
unvested restricted            —           —           —           (65,403)
shareholders
Net income attributable to     (314)       (494)       (465)       —
participating securities
Net income (loss) attributable $24,512   $18,712   $31,677   $(45,378)
to common shareholders
Basic income (loss) per common $0.46     $0.36     $0.59     $(1.28)
share
Diluted income (loss) per      $0.45     $0.35     $0.59     $(1.28)
common share
Dividends declared and paid    $ —        $—        $ —        $2.02
per common share
Weighted average shares                                         
outstanding:
Basic shares                   53,487,300  52,583,441  53,294,805  35,444,200
Diluted shares                 53,956,802  52,976,793  53,741,860  35,444,200


FIVE BELOW, INC.
                                                           
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                           
                                           Fifty-two weeks  Fifty-three weeks
                                            ended            ended
                                           February 1, 2014 February 2, 2013
Operating activities:                                       
Net income                                  $32,142        $20,025
Adjustments to reconcile net income to net                  
cash provided by operating activities:
Depreciation and amortization               13,469           9,599
Gain on conversion of note payable          —                (200)
Loss on debt extinguishment                 266              1,594
Loss on disposal of property and equipment  515              58
Amortization of deferred financing costs    251              455
Warrant expense related to professional     —                43
service providers for services rendered
Stock-based compensation expense            10,092           12,324
Deferred income tax (benefit) expense       (5,074)          3,812
Changes in operating assets and                             
liabilities:
Prepaid income taxes                        (1,461)          (36)
Inventories                                 (28,546)         (22,041)
Prepaid expenses and other assets           (3,597)          (4,133)
Accounts payable                            4,083            3,369
Income taxes payable                        (1,076)          (2,056)
Accrued salaries and wages                  (1,532)          (5,050)
Deferred rent                               8,384            7,723
Other accrued expenses                      3,271            4,877
Net cash provided by operating activities   31,187           30,363
Investing activities:                                       
Capital expenditures                        (25,931)         (22,890)
Net cash used in investing activities       (25,931)         (22,890)
Financing activities:                                       
Borrowing on note payable under Term Loan   —                100,000
Facility
Repayment of note payable under Term Loan   (15,000)         (65,500)
Facility
Cash paid for debt financing costs          (40)             (2,751)
Repayment of other note payable             —                (50)
Net proceeds from issuance of common stock  148              73,198
Proceeds from exercise of warrants and      1,484            239
options to purchase common stock
Repurchase of unvested restricted shares    (7)              (17)
related to stock option exercises
Dividends paid to shareholders              —                (99,451)
Excess tax benefit related to restricted
shares and exercise of stock options and    2,262            1,647
warrants
Net cash (used in) provided by financing    (11,153)         7,315
activities
Net (decrease) increase in cash and cash    (5,897)          14,788
equivalents
Cash and cash equivalents at beginning of   56,081           41,293
year
Cash and cash equivalents at end of year    $50,184        $56,081


FIVE BELOW, INC.
GAAP to Non-GAAP Reconciliation of Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
                                                               
Reconciliation of operating income, as reported, to adjusted operating income
                                                               
                             Thirteen     Fourteen    Fifty-two   Fifty-three
                              weeks ended  weeks ended weeks ended weeks ended
                             February 1,  February 2, February 1, February 2,
                              2014         2013        2014        2013
Operating income              $40,341    $33,043   $53,737   $37,654
Adjustments:                                                    
Founders' transaction ^(1)    1,515        1,515       6,060       10,797
Secondary public offering     —            1,000       1,000       1,000
fees ^(2)
Adjusted operating income     $41,856    $35,558   $60,797   $49,451
                                                               
Reconciliation of net income (loss) attributable to common shareholders, as
reported, to adjusted net income
                                                               
                             Thirteen     Fourteen    Fifty-two   Fifty-three
                              weeks ended  weeks ended weeks ended weeks ended
                             February 1,  February 2, February 1, February 2,
                              2014         2013        2014        2013
Net income (loss)
attributable to common        $24,512    $18,712   $31,677   $(45,378)
shareholders
Adjustments:                                                    
Dividends paid to preferred
and unvested restricted       —            —           —           65,403
shareholders
Net income attributable to    314          494         465         —
participatingsecurities
Net income                    24,826       19,206      32,142      20,025
Adjustments:                                                    
Founders' transaction ^(1)    1,515        1,515       6,060       10,797
Secondary public offering     —            1,000       1,000       1,000
fees ^(2)
Less tax benefit              (559)        (348)       (2,311)     (4,373)
Adjusted net income           $25,782    $21,373   $36,891   $27,449
                                                               
Reconciliation of diluted weighted average shares outstanding, as reported, to
adjusted diluted weighted average shares outstanding
                                                               
                             Thirteen     Fourteen    Fifty-two   Fifty-three
                              weeks ended  weeks ended weeks ended weeks ended
                             February 1,  February 2, February 1, February 2,
                              2014         2013        2014        2013
Diluted weighted average      53,956,802   52,976,793  53,741,860  35,444,200
shares outstanding
Adjustments:                                                    
Preferred shares conversion   —            —           —           14,739,641
Initial public offering       —            —           —           2,293,697
shares issuance
Unvested and vested           683,885      1,393,438   783,166     1,519,512
restricted stock ^(3)
Diluted effect of stock       —            —           —           224,223
options and warrants ^(4)
Adjusted diluted weighted     54,640,687   54,370,231  54,525,026  54,221,273
average shares outstanding


FIVE BELOW, INC.
GAAP to Non-GAAP Reconciliation of Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
                                                             
Reconciliation of diluted income (loss) per common share, as reported, to
adjusted diluted income per common share
                                                             
                      Thirteen      Fourteen      Fifty-two     Fifty-three
                       weeks ended   weeks ended   weeks ended   weeks ended
                      February 1,   February 2,   February 1,   February 2,
                       2014          2013          2014          2013
Diluted income (loss)
per common share, as   $0.45       $0.35       $0.59       $(1.28)
reported
Adjustments to                                                
numerator:
Dividends paid to
preferred and unvested —             —             —             1.85
restricted
shareholders per share
Founders' transaction
and secondary public   0.03          0.05          0.13          0.33
offering fees per
share ^(1) (2)
Income tax benefit per (0.01)        (0.01)        (0.04)        (0.12)
share
Adjustments to
weighted average       —             —             —             (0.27)
shares outstanding per
share
Adjusted diluted
income per common      $0.47       $0.39       $0.68       $0.51
share
                                                             
(1) Founders' transaction relates to the on-going expense recognition for the
options granted to the founders in fiscal 2010 and their modification in March
2012, which cancelled the fiscal 2010 option award to purchase 2,020,620
shares of common stock and granted an equal number of restricted shares that
vest through March 2014.
(2) During each of the second quarter of fiscal 2013 and fourth quarter of
fiscal 2012, the Company incurred $1.0 million of non-tax deductible expenses
related to legal, accounting, and other fees in connection with secondary
public offerings.
(3) Assumes the impact of all unvested and vested restricted stock as of the
beginning of the period.
(4) Assumes the diluted impact of stock options and warrants and the
Company's Employee Stock Purchase Plan utilizing the treasury stock method.

CONTACT: Investor Contact:
         ICR, Inc.
         Farah Soi
         203-682-8200
         Farah.soi@icrinc.com
        
         Media Contact:
         ICR, Inc.
         Alecia Pulman/Jessica Liddell
         203-682-8200
         FivePR@icrinc.com
 
Press spacebar to pause and continue. Press esc to stop.