J.Jill, Inc. Announces Second Quarter 2024 Results

Q2 FY24 Net Sales of $155.2 Million, Total Company Comparable Sales Up 1.7% vs. Q2 FY23

Q2 FY24 Gross Margin of 70.5%

Q2 FY24 Operating Income of $23.0 Million; Operating Income Margin of 14.8%

J.Jill, Inc. (NYSE:JILL) today announced financial results for the second quarter of fiscal year 2024.

Claire Spofford, President and Chief Executive Officer of J.Jill, Inc. stated, “We delivered solid second quarter results driven by a strong start to the quarter and ongoing disciplined execution of our operating model amidst a dynamic consumer environment. While we have seen changes in consumer behavior during the summer months which has extended into the start of the third quarter and reflected in our updated guidance, we are continuing to operate the business with great discipline and continue to realize healthy margin performance and deliver significant cash flow generation. We remain focused on delivering against our long-term objectives as we continue to advance our strategic initiatives focused on increasing brand awareness, strengthening our omni-channel capabilities and enhancing the overall customer experience which we believe will position J.Jill for long-term sustainable growth.”

For the second quarter ended August 3, 2024:

  • Net sales for the second quarter of fiscal 2024 decreased 0.9% to $155.2 million compared to $156.6 million for the second quarter of fiscal 2023. The decrease includes approximately $7.0 million of impact due to the calendar shift associated with the 53rd week in fiscal 2023.
  • Total company comparable sales, which includes comparable store and direct to consumer sales, increased by 1.7% for the second quarter of fiscal 2024.
  • Direct to consumer net sales, which represented 47.1% of net sales, were up 3.6% compared to the second quarter of fiscal 2023.
  • Gross profit was $109.4 million compared to $112.4 million in the second quarter of fiscal 2023. Gross margin was 70.5% compared to 71.7% in the second quarter of fiscal 2023.
  • SG&A was $86.3 million compared to $84.3 million in the second quarter of fiscal 2023. Excluding non-recurring items from both periods, SG&A as a percentage of total net sales was 55.5% compared to 53.8% for the second quarter of fiscal 2023.
  • Operating income was $23.0 million compared to $28.0 million in the second quarter of fiscal 2023. Operating income margin for the second quarter of fiscal 2024 was 14.8% compared to 17.9% in the second quarter of fiscal 2023. Adjusted Income from Operations* was $24.9 million compared to $29.1 million in the second quarter of fiscal 2023.
  • Interest expense was $3.7 million compared to $6.6 million in the second quarter of fiscal 2023. Interest income was $0.5 million in the second quarter of fiscal 2024 and fiscal 2023.
  • During the second quarter of fiscal 2024, the Company recorded an income tax provision of $3.1 million compared to $6.7 million in the second quarter of fiscal 2023 and the effective tax rate was 27.3% compared to 30.5% in the second quarter of fiscal 2023.
  • Net Income was $8.2 million compared to $15.2 million in the second quarter of fiscal 2023.
  • Net Income per Diluted Share was $0.54 compared to $1.06 in the second quarter of fiscal 2023. Adjusted Net Income per Diluted Share* in the second quarter of fiscal 2024 was $1.05 compared to $1.15 in the second quarter of fiscal 2023.
  • Adjusted EBITDA* for the second quarter of fiscal 2024 was $30.2 million compared to $34.6 million in the second quarter of fiscal 2023. Adjusted EBITDA margin* for the second quarter of fiscal 2024 was 19.4% compared to 22.1% in the second quarter of fiscal 2023.
  • The Company opened one new store in the second quarter of fiscal 2024 and temporarily closed one store for relocation which will reopen in the third quarter of fiscal 2024. The store count at the end of the quarter remained unchanged at 244 stores.

For the twenty-six weeks ended August 3, 2024:

  • Net sales for the twenty-six weeks ended August 3, 2024 increased 3.2% to $316.8 million compared to $306.9 million for the twenty-six weeks ended July 29, 2023.
  • Total company comparable sales, which includes comparable store and direct to consumer sales, increased by 2.4% for the twenty-six weeks ended August 3, 2024.
  • Direct to consumer net sales, which represented 47.0% of net sales, were up 7.5% compared to the twenty-six weeks ended July 29, 2023.
  • Gross profit was $227.1 million compared to $220.7 million for the twenty-six weeks ended July 29, 2023. Gross margin was 71.7% compared to 71.9% for the twenty-six weeks ended July 29, 2023.
  • SG&A was $175.4 million compared to $167.3 million for the twenty-six weeks ended July 29, 2023. Excluding non-recurring items from both periods, SG&A as a percentage of total net sales was 55.4% compared to 54.5% for the twenty-six weeks ended July 29, 2023.
  • Operating income was $51.4 million compared to $53.4 million for the twenty-six weeks ended July 29, 2023. Operating income margin for the twenty-six weeks ended August 3, 2024 was 16.2% compared to 17.4% for the twenty-six weeks ended July 29, 2023. Adjusted Income from Operations* was $54.5 million compared to $55.3 million for the twenty-six weeks ended July 29, 2023.
  • Interest expense was $10.2 million compared to $13.3 million for the twenty-six weeks ended July 29, 2023. Interest income was $1.5 million compared to $1.0 million for the twenty-six weeks ended July 29, 2023.
  • During the twenty-six weeks ended August 3, 2024, the Company recorded an income tax provision of $9.3 million compared to $8.6 million for the twenty-six weeks ended July 29, 2023 and the effective tax rate was 27.2% compared to 30.3% for the twenty-six weeks ended July 29, 2023.
  • Net Income was $24.9 million compared to $19.8 million for the twenty-six weeks ended July 29, 2023.
  • Net Income per Diluted Share was $1.69 compared to $1.38 for the twenty-six weeks ended July 29, 2023. Adjusted Net Income per Diluted Share* for the twenty-six weeks ended August 3, 2024 was $2.27 compared to $2.16 for the twenty-six weeks ended July 29, 2023.
  • Adjusted EBITDA* for the twenty-six weeks ended August 3, 2024 was $65.8 million compared to $66.5 million for the twenty-six weeks ended July 29, 2023. Adjusted EBITDA margin* for the twenty-six weeks ended August 3, 2024 was 20.8% compared to 21.7% for the twenty-six weeks ended July 29, 2023.
  • The Company opened one new store for the twenty-six weeks ended August 3, 2024 and temporarily closed one store for relocation which will reopen in the third quarter of fiscal 2024. The store count at the end of the twenty-six weeks ended August 3, 2024 remained unchanged at 244 stores.

Balance Sheet Highlights

  • Net Cash provided by Operating Activities for the twenty-six weeks ended August 3, 2024 was $37.9 million compared to $35.6 million for the twenty-six weeks ended July 29, 2023. Free cash flow* was $33.3 million compared to $28.5 million for the twenty-six weeks ended July 29, 2023. The Company ended the second quarter of fiscal 2024 with a cash balance of $28.5 million.
  • Inventory at the end of the second quarter of fiscal 2024 was $52.7 million compared to $45.7 million at the end of the second quarter of fiscal 2023. The increase in inventory compared to the prior year period was driven by timing and the strategic decision to expedite shipping goods one week early.

*Non-GAAP financial measures. Please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP Net Income to Adjusted EBITDA,” “Reconciliation of GAAP Operating Income to Adjusted Income from Operations,” “Reconciliation of GAAP Net Income to Adjusted Net Income,” and “Reconciliation of GAAP Cash from Operations to Free Cash Flow” for more information.

Subsequent Events

On August 20, 2024, the Company issued 3,317,488 shares of common stock following the exercise of 3,318,443 warrants. The exercise price of the warrants was net share settled as specified in the Warrant Agreement. As a result of this transaction, the number of shares outstanding increased to 15,084,356 and the number of warrants outstanding decreased to 255,265. As the exercise of the warrants is near certain due to its non-substantive exercise price in relation to the fair value of the common shares issuable upon exercise, the exercise of these warrants has no impact on net income per common share, both basic and diluted.

On August 28, 2024, the Board of Directors declared quarterly cash dividend of $0.07 per share of the Company’s common stock. The dividend is payable on October 2, 2024, to stockholders of record as of September 18, 2024. The Company intends to pay dividends quarterly in the future, subject to market conditions and approval by the Board of Directors.

Outlook

For the third quarter of fiscal 2024, the Company expects net sales to be down 1% to up 2% compared to the third quarter of fiscal 2023. The Company also expects Adjusted EBITDA to be in the range of $23.0 million to $27.0 million.

For fiscal 2024, the Company is lowering its guidance and now expects net sales to be about flat to up 1% compared to fiscal 2023, and for Adjusted EBITDA to decline in the range of 4% to 9% compared to fiscal 2023. This guidance reflects the negative impact from the loss of the 53rd week in fiscal 2023 of $7.9 million in net sales and $2.2 million in Adjusted EBITDA as well as investments to support profitable sales growth, including approximately $2 million in operating expenses related to the Company’s Order Management System (“OMS”) project.

Excluding the impact of the 53rd week as well as the operating expense investment in the OMS project, the Company expects fiscal 2024 net sales to grow in the range of 2% to 3% and Adjusted EBITDA to decline in the range of 1% to 6% compared to the prior year.

The Company continues to expect net store count growth of up to 5 stores to end fiscal 2024. The Company now expects total capital expenditures of approximately $22.0 million, which reflects the treatment of cloud based software implementation costs as pre-paid expense.

Conference Call Information

A conference call to discuss second quarter 2024 results is scheduled for today, September 4, 2024, at 8:00 a.m. Eastern Time. Those interested in participating in the call are invited to dial (888) 596-4144 or (646) 968-2525 if calling internationally. Please dial in approximately 10 minutes prior to the start of the call and reference Conference ID 7311773 when prompted. A live audio webcast of the conference call will be available online at http://investors.jjill.com/Investors-Relations/News-Events/events.

A taped replay of the conference call will be available approximately two hours following the call and can be accessed both online and by dialing (800) 770-2030 or (609) 800-9909. The pin number to access the telephone replay is 7311773. The telephone replay will be available until September 11, 2024.

About J.Jill, Inc.

J.Jill is a national lifestyle brand that provides apparel, footwear and accessories designed to help its customers move through a full life with ease. The brand represents an easy, thoughtful and inspired style that celebrates the totality of all women and designs its products with its core brand ethos in mind: keep it simple and make it matter. J.Jill offers a high touch customer experience through over 200 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston. For more information, please visit www.jjill.com or http://investors.jjill.com. The information included on our websites is not incorporated by reference herein.

Non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), we use the following non-GAAP measures of financial performance:

  • Adjusted EBITDA, which represents net income plus depreciation and amortization, income tax provision, interest expense, interest expense - related party, interest income, equity-based compensation expense, write-off of property and equipment, amortization of cloud-based software implementation costs, loss on extinguishment of debt, loss on debt refinancing, adjustment for exited retail stores, impairment of long-lived assets and other non-recurring items, primarily consisting of outside legal and professional fees associated with certain non-recurring transactions and events. We present Adjusted EBITDA on a consolidated basis because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA as a commonly used measure in determining business value and as such, use it internally to report results. We also use Adjusted EBITDA margin which represents, for any period, Adjusted EBITDA as a percentage of net sales.
  • Adjusted Income from Operations, which represents operating income plus equity-based compensation expense, write-off of property and equipment, adjustment for exited retail stores, impairment of long-lived assets and other non-recurring items. We present Adjusted Income from Operations because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts, and other interested parties as a measure of our comparative operating performance from period to period.
  • Adjusted Net Income, which represents net income plus income tax provision, equity-based compensation expense, write-off of property and equipment, loss on extinguishment of debt, loss on debt refinancing, adjustment for exited retail stores, impairment of long-lived assets and other non-recurring items. We present Adjusted Net Income because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period.
  • Adjusted Net Income per Diluted Share represents Adjusted Net Income divided by the number of fully diluted shares outstanding. Adjusted Net Income per Diluted Share is presented as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period.
  • Free Cash Flow represents cash flow from operations less capital expenditures. Free Cash Flow is presented as a supplemental measure in assessing our liquidity, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative liquidity and operating performance from period to period.

While we believe that Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow are useful in evaluating our business, they are non-GAAP financial measures that have limitations as analytical tools. These non-GAAP measures should not be considered alternatives to, or substitutes for, Net Income, Income from Operations, Net Income per Diluted Share or Cash from Operations, which are calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate these non-GAAP measures differently or not at all, which reduces the usefulness of such non-GAAP financial measures as tools for comparison. We recommend that you review the reconciliation and calculation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Operations, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow to Net Income, Income from Operations, Net Income per Diluted Share and Cash from Operations, respectively, the most directly comparable GAAP financial measures, under “Reconciliation of GAAP Net Income to Adjusted EBITDA”, “Reconciliation of GAAP Operating Income to Adjusted Income from Operations”, “Reconciliation of GAAP Net Income to Adjusted Net Income” and “Reconciliation of Cash from Operations to Free Cash Flows” and not rely solely on Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Income from Operations, Adjusted Net Income, Adjusted Net Income per Diluted Share, Free Cash Flow or any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains, and oral statements made from time to time by our representatives may contain, “forward-looking statements.” All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, expected market growth and any activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. Such statements are often identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects,” “goal,” “target” (although not all forward-looking statements contain these identifying words) and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on our current expectations and assumptions regarding capital market conditions, our business, the economy and other future conditions and are not guarantees of future performance. Because forward-looking statements relate to the future, by their nature, they are inherently subject to a number of risks, uncertainties, potentially inaccurate assumptions and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in any forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks regarding: (1) our sensitivity to changes in economic conditions and discretionary consumer spending; (2) the material adverse impact of pandemics or other health crises on our operations, business and financial results; (3) our ability to anticipate and respond to changing customer preferences, shifts in fashion and industry trends in a timely manner; (4) our ability to maintain our brand image, engage new and existing customers and gain market share; (5) the impact of operating in a highly competitive industry with increased competition; (6) our ability to successfully optimize our omnichannel operations, including our ability to enhance our marketing efforts and successfully realize the benefits from our investments in new technology, for example our recently implemented point-of-sale system and the forthcoming upgrade to our order management system; (7) our ability to use effective marketing strategies and increase existing and new customer traffic; (8) any interruptions in our foreign sourcing operations and the relationships with our suppliers and agents; (9) any increases in the demand for, or the price of, raw materials used to manufacture our merchandise and other fluctuations in sourcing and distribution costs; (10) any material damage or interruptions to our information systems; (11) our ability to protect our trademarks and other intellectual property rights; (12) our indebtedness restricting our operational and financial flexibility; (13) our ability to manage our inventory levels, size assortments and merchandise mix; (14) the fact that we are no longer a controlled company; and (15) other factors that may be described in our filings with the Securities and Exchange Commission (the “SEC”), including the factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. We caution investors, potential investors and others not to place considerable reliance on the forward-looking statements in this press release and in the oral statements made by our representatives. Any such forward-looking statement speaks only as of the date on which it is made. J.Jill undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

(Tables Follow)

 

J.Jill, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(Amounts in thousands, except share and per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

 

 

Net sales (a)

 

$

155,242

 

 

$

156,631

 

Costs of goods sold (exclusive of depreciation and amortization)

 

 

45,848

 

 

 

44,260

 

Gross profit

 

 

109,394

 

 

 

112,371

 

Selling, general and administrative expenses (a)

 

 

86,314

 

 

 

84,282

 

Impairment of long-lived assets

 

 

58

 

 

 

45

 

Operating income

 

 

23,022

 

 

 

28,044

 

Loss on extinguishment of debt

 

 

8,570

 

 

 

 

Interest expense (b)

 

 

3,724

 

 

 

6,630

 

Interest income (b)

 

 

538

 

 

 

473

 

Income before provision for income taxes

 

 

11,266

 

 

 

21,887

 

Income tax provision

 

 

3,075

 

 

 

6,665

 

Net income and total comprehensive income

 

$

8,191

 

 

$

15,222

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

0.55

 

 

$

1.08

 

Diluted

 

$

0.54

 

 

$

1.06

 

Weighted average common shares:

 

 

 

 

 

 

Basic

 

 

14,906,662

 

 

 

14,158,837

 

Diluted

 

 

15,098,301

 

 

 

14,367,751

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

For the second quarter of fiscal 2023, Net sales includes $1.0 million of processing fee income related to customer sales returns that was previously included in Selling, general and administrative expenses.

(b)

Beginning fiscal 2024, Interest income is presented separately from Interest expense. The prior period has been conformed with the current period presentation

 

J.Jill, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(Amounts in thousands, except share and per share data)

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

 

 

Net sales (a)

 

$

316,755

 

 

$

306,877

 

Costs of goods sold (exclusive of depreciation and amortization)

 

 

89,624

 

 

 

86,140

 

Gross profit

 

 

227,131

 

 

 

220,737

 

Selling, general and administrative expenses (a)

 

 

175,426

 

 

 

167,254

 

Impairment of long-lived assets

 

 

311

 

 

 

45

 

Operating income

 

 

51,394

 

 

 

53,438

 

Loss on extinguishment of debt

 

 

8,570

 

 

 

 

Loss on debt refinancing

 

 

 

 

 

12,702

 

Interest expense (b)

 

 

10,160

 

 

 

12,257

 

Interest expense - related party

 

 

 

 

 

1,074

 

Interest income (b)

 

 

1,526

 

 

 

1,043

 

Income before provision for income taxes

 

 

34,190

 

 

 

28,448

 

Income tax provision

 

 

9,303

 

 

 

8,630

 

Net income and total comprehensive income

 

$

24,887

 

 

$

19,818

 

Net income per common share:

 

 

 

 

 

 

Basic

 

$

1.71

 

 

$

1.40

 

Diluted

 

$

1.69

 

 

$

1.38

 

Weighted average common shares:

 

 

 

 

 

 

Basic

 

 

14,581,796

 

 

 

14,111,124

 

Diluted

 

 

14,746,749

 

 

 

14,345,179

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.07

 

 

 

 

(a)

For the twenty-six weeks ended July 29, 2023, Net sales includes $1.8 million of processing fee income related to customer sales returns that was previously included in Selling, general and administrative expenses.

(b)

Beginning fiscal 2024, Interest income is presented separately from Interest expense. The prior period has been conformed with the current period presentation.

 

J.Jill, Inc.

Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands, except common share data)

 

 

 

August 3, 2024

 

 

February 3, 2024

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,466

 

 

$

62,172

 

Accounts receivable

 

 

5,068

 

 

 

5,042

 

Inventories, net

 

 

52,709

 

 

 

53,259

 

Prepaid expenses and other current assets

 

 

19,447

 

 

 

17,656

 

Total current assets

 

 

105,690

 

 

 

138,129

 

Property and equipment, net

 

 

50,883

 

 

 

54,118

 

Intangible assets, net

 

 

63,430

 

 

 

66,246

 

Goodwill

 

 

59,697

 

 

 

59,697

 

Operating lease assets, net

 

 

107,842

 

 

 

108,203

 

Other assets

 

 

3,260

 

 

 

1,787

 

Total assets

 

$

390,802

 

 

$

428,180

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

44,552

 

 

$

41,112

 

Accrued expenses and other current liabilities

 

 

36,533

 

 

 

42,283

 

Current portion of long-term debt

 

 

4,375

 

 

 

35,353

 

Current portion of operating lease liabilities

 

 

33,903

 

 

 

36,204

 

Total current liabilities

 

 

119,363

 

 

 

154,952

 

Long-term debt, net of discount and current portion

 

 

68,831

 

 

 

120,595

 

Deferred income taxes

 

 

9,539

 

 

 

10,967

 

Operating lease liabilities, net of current portion

 

 

101,405

 

 

 

103,070

 

Other liabilities

 

 

1,300

 

 

 

1,378

 

Total liabilities

 

 

300,438

 

 

 

390,962

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

Common stock, par value $0.01 per share; 50,000,000 shares authorized; 11,766,868 and 10,614,454 shares issued and outstanding at August 3, 2024 and February 3, 2024, respectively

 

 

117

 

 

 

107

 

Additional paid-in capital

 

 

241,485

 

 

 

213,236

 

Accumulated deficit

 

 

(151,238

)

 

 

(176,125

)

Total shareholders’ equity

 

 

90,364

 

 

 

37,218

 

Total liabilities and shareholders’ equity

 

$

390,802

 

 

$

428,180

 

 

J.Jill, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Unaudited)

(Amounts in thousands)

 

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net income

 

$

8,191

 

 

$

15,222

 

Add (Less):

 

 

 

 

 

 

Depreciation and amortization

 

 

5,007

 

 

 

5,491

 

Income tax provision

 

 

3,075

 

 

 

6,665

 

Interest expense (a)

 

 

3,724

 

 

 

6,630

 

Interest income (a)

 

 

(538

)

 

 

(473

)

Adjustments:

 

 

 

 

 

 

Equity-based compensation expense (b)

 

 

1,696

 

 

 

937

 

Write-off of property and equipment (c)

 

 

51

 

 

 

26

 

Amortization of cloud-based software implementation costs (d)

 

 

244

 

 

 

61

 

Loss on extinguishment of debt (e)

 

 

8,570

 

 

 

 

Adjustment for exited retail stores (f)

 

 

(106

)

 

 

 

Impairment of long-lived assets (g)

 

 

58

 

 

 

45

 

Other non-recurring items (h)

 

 

215

 

 

 

2

 

Adjusted EBITDA

 

$

30,187

 

 

$

34,606

 

Net sales (i)

 

$

155,242

 

 

$

156,631

 

Adjusted EBITDA margin

 

 

19.4

%

 

 

22.1

%

(a)

Beginning fiscal 2024, Interest income is presented separately from Interest expense. The prior period has been conformed with the current period presentation.

(b)

Represents expenses associated with equity incentive instruments granted to our management and Board of Directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant.

(c)

Represents net gain or loss on the disposal of fixed assets.

(d)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within Selling, general and administrative expenses. Adjusted EBITDA for the second quarter of fiscal 2023 has been restated to include such adjustments to Net income.

(e)

Represents loss on the prepayment of a portion of the term loan.

(f)

Represents non-cash gains associated with exiting store leases earlier than anticipated.

(g)

Represents impairment of long-lived assets related to right of use assets and leasehold improvements.

(h)

Represents items management believes are not indicative of ongoing operating performance, including legal and professional fees.

(i)

For the second quarter of fiscal 2023, Net sales includes $1.0 million of processing fee income that was previously included in Selling, general and administrative expenses.

 

J.Jill, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Unaudited)

(Amounts in thousands)

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net income

 

$

24,887

 

 

$

19,818

 

Add (Less):

 

 

 

 

 

 

Depreciation and amortization

 

 

10,834

 

 

 

11,062

 

Income tax provision

 

 

9,303

 

 

 

8,630

 

Interest expense (a)

 

 

10,160

 

 

 

12,257

 

Interest expense - related party

 

 

 

 

 

1,074

 

Interest income (a)

 

 

(1,526

)

 

 

(1,043

)

Adjustments:

 

 

 

 

 

 

Equity-based compensation expense (b)

 

 

2,950

 

 

 

1,815

 

Write-off of property and equipment (c)

 

 

57

 

 

 

46

 

Amortization of cloud-based software implementation costs (d)

 

 

465

 

 

 

116

 

Loss on extinguishment of debt (e)

 

 

8,570

 

 

 

 

Loss on debt refinancing (f)

 

 

 

 

 

12,702

 

Adjustment for exited retail stores (g)

 

 

(615

)

 

 

 

Impairment of long-lived assets (h)

 

 

311

 

 

 

45

 

Other non-recurring items (i)

 

 

438

 

 

 

2

 

Adjusted EBITDA

 

$

65,834

 

 

$

66,524

 

Net sales (j)

 

$

316,755

 

 

$

306,877

 

Adjusted EBITDA margin

20.8

%

21.7

(a)

Beginning fiscal 2024, Interest income is presented separately from Interest expense. The prior period has been conformed with the current period presentation.

(b)

Represents expenses associated with equity incentive instruments granted to our management and Board of Directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant.

(c)

Represents net gain or loss on the disposal of fixed assets.

(d)

Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within Selling, general and administrative expenses. Adjusted EBITDA for the twenty-six weeks ended July 29, 2023 has been restated to include such adjustments to Net income.

(e)

Represents loss on the prepayment of a portion of the term loan.

(f)

Represents loss on the repayment of priming and the subordinated credit agreement.

(g)

Represents non-cash gains associated with exiting store leases earlier than anticipated.

(h)

Represents impairment of long-lived assets related to right of use assets and leasehold improvements.

(i)

Represents items management believes are not indicative of ongoing operating performance, including legal and professional fees.

(j)

For the twenty-six weeks ended July 29, 2023, Net sales includes $1.8 million of processing fee income that was previously included in Selling, general and administrative expenses.

 

J.Jill, Inc.

Reconciliation of GAAP Operating Income to Adjusted Income from Operations

(Unaudited)

(Amounts in thousands)

 

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

 

 

Operating income

 

$

23,022

 

 

$

28,044

 

Add (Less):

 

 

 

 

 

 

Equity-based compensation expense (a)

 

 

1,696

 

 

 

937

 

Write-off of property and equipment (b)

 

 

51

 

 

 

26

 

Adjustment for exited retail stores (c)

 

 

(106

)

 

 

 

Impairment of long-lived assets (d)

 

 

58

 

 

 

45

 

Other non-recurring items (e)

 

 

215

 

 

 

2

 

Adjusted income from operations

 

$

24,936

 

 

$

29,054

 

 

 

 

 

 

 

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

 

 

 

 

 

 

 

Operating income

 

$

51,394

 

 

$

53,438

 

Add (Less):

 

 

 

 

 

 

Equity-based compensation expense (a)

 

 

2,950

 

 

 

1,815

 

Write-off of property and equipment (b)

 

 

57

 

 

 

46

 

Adjustment for exited retail stores (c)

 

 

(615

)

 

 

 

Impairment of long-lived assets (d)

 

 

311

 

 

 

45

 

Other non-recurring items (e)

 

 

438

 

 

 

2

 

Adjusted income from operations

 

$

54,535

 

 

$

55,346

 

(a) 

Represents expenses associated with equity incentive instruments granted to our management and Board of Directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant. Adjusted income from operations for the second quarter of fiscal 2023 and for the twenty-six weeks ended July 29, 2023 has been restated to include such adjustments to Operating income. Beginning fiscal 2024, equity-based compensation expense is included as an adjustment. The prior period has been conformed with the current period presentation.

(b)

Represents net gain or loss on the disposal of fixed assets. Adjusted income from operations for the second quarter of fiscal 2023 and for the twenty-six weeks ended July 29, 2023 has been restated to include such adjustments to Operating income. Beginning fiscal 2024, write-off of property and equipment is included as an adjustment. The prior period has been conformed with the current period presentation.

(c)

Represents non-cash gains associated with exiting store leases earlier than anticipated.

(d)

Represents impairment of long-lived assets related to right of use assets and leasehold improvements.

(e)

Represents items management believes are not indicative of ongoing operating performance, including legal and professional fees.

 

J.Jill, Inc.

Reconciliation of GAAP Net Income to Adjusted Net Income

(Unaudited)

(Amounts in thousands, except share and per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net income

 

$

8,191

 

 

$

15,222

 

Add: Income tax provision

 

 

3,075

 

 

 

6,665

 

Income before provision for income tax

 

 

11,266

 

 

 

21,887

 

Adjustments:

 

 

 

 

 

 

Equity-based compensation expense (a)

 

 

1,696

 

 

 

937

 

Write-off of property and equipment (b)

 

 

51

 

 

 

26

 

Loss on extinguishment of debt (c)

 

 

8,570

 

 

 

 

Adjustment for exited retail stores (d)

 

 

(106

)

 

 

 

Impairment of long-lived assets (e)

 

 

58

 

 

 

45

 

Other non-recurring items (f)

 

 

215

 

 

 

2

 

Adjusted income before income tax provision

 

 

21,750

 

 

 

22,897

 

Less: Adjusted tax provision(g)

 

 

5,916

 

 

 

6,388

 

Adjusted net income

 

$

15,834

 

 

$

16,509

 

Adjusted net income per share:

 

 

 

 

 

 

Basic

 

$

1.06

 

 

$

1.17

 

Diluted

 

$

1.05

 

 

$

1.15

 

Weighted average number of common shares:

 

 

 

 

 

 

Basic

 

 

14,906,662

 

 

 

14,158,837

 

Diluted

 

 

15,098,301

 

 

 

14,367,751

 

(a) 

Represents expenses associated with equity incentive instruments granted to our management and Board of Directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant. Adjusted net income for the second quarter of fiscal 2023 has been restated to include such adjustments to Net income. Beginning fiscal 2024, equity-based compensation expense is included as an adjustment. The prior period has been conformed with the current period presentation.

(b)

Represents net gain or loss on the disposal of fixed assets. Adjusted net income for the second quarter of fiscal 2023 has been restated to include such adjustments to Net income. Beginning fiscal 2024, write-off of property and equipment is included as an adjustment. The prior period has been conformed with the current period presentation.

(c)

Represents loss on the prepayment of a portion of the term loan.

(d)

Represents non-cash gains associated with exiting store leases earlier than anticipated.

(e)

Represents impairment of long-lived assets related to right of use assets and leasehold improvements.

(f)

Represents items management believes are not indicative of ongoing operating performance, including legal and professional fees.

(g)

The adjusted tax provision for adjusted net income is estimated by applying a rate of 27.2% for the second quarter of fiscal 2024 and 27.9% for the second quarter of fiscal 2023. Adjusted tax provision for the second quarter of fiscal 2023 has been restated to include items (a) and (b) above.

 

J.Jill, Inc.

Reconciliation of GAAP Net Income to Adjusted Net Income

(Unaudited)

(Amounts in thousands, except share and per share data)

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net income

 

$

24,887

 

 

$

19,818

 

Add: Income tax provision

 

 

9,303

 

 

 

8,630

 

Income before provision for income tax

 

 

34,190

 

 

 

28,448

 

Adjustments:

 

 

 

 

 

 

Equity-based compensation expense (a)

 

 

2,950

 

 

 

1,815

 

Write-off of property and equipment (b)

 

 

57

 

 

 

46

 

Loss on extinguishment of debt (c)

 

 

8,570

 

 

 

 

Loss on debt refinancing(d)

 

 

 

 

 

12,702

 

Adjustment for exited retail stores (e)

 

 

(615

)

 

 

 

Impairment of long-lived assets (f)

 

 

311

 

 

 

45

 

Other non-recurring items (g)

 

 

438

 

 

 

2

 

Adjusted income before income tax provision

 

 

45,901

 

 

 

43,058

 

Less: Adjusted tax provision(h)

 

 

12,485

 

 

 

12,013

 

Adjusted net income

 

$

33,416

 

 

$

31,045

 

Adjusted net income per share:

 

 

 

 

 

 

Basic

 

$

2.29

 

 

$

2.20

 

Diluted

 

$

2.27

 

 

$

2.16

 

Weighted average number of common shares:

 

 

 

 

 

 

Basic

 

 

14,581,796

 

 

 

14,111,124

 

Diluted

 

 

14,746,749

 

 

 

14,345,179

 

(a) 

Represents expenses associated with equity incentive instruments granted to our management and Board of Directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grant. Adjusted net income for the twenty-six weeks ended July 29, 2023 has been restated to include such adjustments to Net income. Beginning fiscal 2024, equity-based compensation expense is included as an adjustment. The prior period has been conformed with the current period presentation.

(b)

Represents net gain or loss on the disposal of fixed assets. Adjusted net income for the twenty-six weeks ended July 29, 2023 has been restated to include such adjustments to Net income. Beginning fiscal 2024, write-off of property and equipment is included as an adjustment. The prior period has been conformed with the current period presentation.

(c)

Represents loss on the prepayment of a portion of the term loan.

(d)

Represents loss on the repayment of priming and subordinated credit agreement.

(e)

Represents non-cash gains associated with exiting store leases earlier than anticipated.

(f)

Represents impairment of long-lived assets related to right of use assets and leasehold improvements.

(g)

Represents items management believes are not indicative of ongoing operating performance, including legal and professional fees.

(h)

The adjusted tax provision for adjusted net income is estimated by applying a rate of 27.2% for the twenty-six weeks ended August 3, 2024 and 27.9% for the twenty-six weeks ended July 29, 2023. Adjusted tax provision for the first quarter of fiscal 2023 has been restated to include items (a) and (b) above.

 

J.Jill, Inc.

Selected Cash Flow Information

(Unaudited)

(Amounts in thousands)

 

Summary Data from the Statement of Cash Flows

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net cash provided by operating activities

 

$

16,381

 

 

$

27,756

 

Net cash used in investing activities

 

 

(2,248

)

 

 

(4,180

)

Net cash used in financing activities

 

 

(62,784

)

 

 

(2,564

)

Net change in cash and cash equivalents

 

 

(48,651

)

 

 

21,012

 

Cash and cash equivalents:

 

 

 

 

 

 

Beginning of Period

 

 

77,117

 

 

 

27,891

 

End of Period

 

$

28,466

 

 

$

48,903

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net cash provided by operating activities

 

$

37,880

 

 

$

35,615

 

Net cash used in investing activities

 

 

(4,560

)

 

 

(7,105

)

Net cash used in financing activities

 

 

(67,026

)

 

 

(66,660

)

Net change in cash and cash equivalents

 

 

(33,706

)

 

 

(38,150

)

Cash and cash equivalents:

 

 

 

 

 

 

Beginning of Period

 

 

62,172

 

 

 

87,053

 

End of Period

 

$

28,466

 

 

$

48,903

 

Reconciliation of GAAP Cash from Operations to Free Cash Flow

 

 

For the Thirteen Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net cash provided by operating activities

 

$

16,381

 

 

$

27,756

 

Less: Capital expenditures (a)

 

 

(2,248

)

 

 

(4,180

)

Free cash flow

 

 

14,133

 

 

$

23,576

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

August 3, 2024

 

 

July 29, 2023

 

Net cash provided by operating activities

 

$

37,880

 

 

$

35,615

 

Less: Capital expenditures (a)

 

 

(4,560

)

 

 

(7,105

)

Free cash flow

 

 

33,320

 

 

$

28,510

 

(a)

Capital expenditures reflects net cash used in investing activities, which includes capitalized interest and excludes cash received from landlords for tenant allowances.

 

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