Business Context and Reporting Period
Boot Barn Holdings, Inc. filed this Form 8-K on January 16, 2018, to disclose preliminary financial results for the third quarter of fiscal 2018 ended December 30, 2017. The filing coincides with a proposed public offering by certain stockholders. The company is designated as an emerging growth company.
Key Financial Metrics
- Net Sales: $225 million.
- Same Store Sales: Increased 5.2%, with physical stores outperforming e-commerce.
- Net Income Per Diluted Share: $0.73 (based on 27.6 million weighted average diluted shares).
- Adjusted Net Income Per Diluted Share: $0.46, excluding the impact of federal tax law changes.
- Unusual Items: Includes approximately $0.02 per share from a $1.0 million pre-tax net gain related to insurance and other settlements for Hurricane Harvey losses.
- Store Expansion: Four new stores opened during the quarter.
- Tax Impact: A non-cash tax benefit of $6.8 million ($0.24 per share) resulted from re-measuring deferred taxes due to the federal corporate tax rate reduction from 35% to 21%.
Material Changes and Tax Reform
The most significant material change is the impact of recent U.S. tax reform. The company estimates an effective tax rate of 25% for the fiscal year ending March 30, 2019. For the current fiscal year 2018, the effective tax rate is expected to be 36.2% when excluding the one-time $6.8 million re-measurement benefit. This blended rate reflects nine months at the historical rate and three months at the new rate.
Guidance, Outlook, and Risks
The company expects to release finalized financial results on January 31, 2018. Management notes that the preliminary results are subject to revision and are not a substitute for GAAP financial statements. Forward-looking statements in the filing are subject to risks including decreases in consumer spending, changes in consumer preferences, execution of growth strategies, and integration risks related to the Sheplers acquisition. The company cautions against undue reliance on these projections.
Investor Verification Checklist
- Verify the finalized Q3 2018 financial statements upon release on January 31, 2018, to confirm the preliminary figures.
- Review the detailed breakdown of the $6.8 million non-cash tax benefit and its impact on cash flow.
- Assess the sustainability of the 5.2% same-store sales growth and the divergence between store and e-commerce performance.
- Monitor the integration progress and synergy realization of the Sheplers acquisition.
- Confirm the final effective tax rate for fiscal 2018 once the full year closes.