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Financial

At Home Group Inc. Announces Q1 2022 Financial Results; Comparable Store Sales soar 187.3%

The home decor superstore reports net sales of $537.1 million and a comparable store sales increase of 187.3 percent.

6/2/2021
store exterior
At Home's net sales jumped almost 183 percent at the end of Q1 2021.
 
PLANO, Texas -- At Home Group Inc. (NYSE: HOME), the home décor superstore, today announced its financial results for the first quarter ended May 1, 2021.

For the Thirteen Weeks Ended May 1, 2021

The Company opened nine and closed two stores in the first quarter of fiscal 2022, ending the quarter with 226 stores in 40 states. The Company opened a net eight stores since the first quarter of fiscal 2021, representing a 3.7% increase.

Net sales increased 182.9% to $537.1 million from $189.8 million in the first quarter of fiscal 2021.

Comparable store sales increased 187.3% driven by strong demand, including approximately $45 million of estimated sales benefit attributable to stimulus payments not expected to recur in future quarters and the continued execution of our strategic initiatives. Reported comparable store sales in the first and second quarters of fiscal 2021 were (46.5%) and 42.3% respectively. Adjusting for the calendar shift as a result of the 53rd week in fiscal year 2021, comparable store sales in the first and second quarters of fiscal 2021 would have been approximately 300 basis points lower and 800 basis points higher, respectively, largely due to the impact of temporary store closures during those periods related to the COVID-19 pandemic.

Gross profit was $200.3 million compared to $16.4 million in the first quarter of fiscal 2021. Gross margin was 37.3% compared to 8.6% in the prior year period primarily due to occupancy, depreciation, freight and distribution center expense leverage as a result of increased net sales and, to a lesser extent, product margin expansion. The Company continues to expect increased freight costs to significantly impact gross margin in the second half of fiscal 2022.

Selling, general and administrative expenses (“SG&A”) increased 63.3% to $108.5 million from $66.5 million in the first quarter of fiscal 2021. As a percentage of net sales, SG&A decreased to 20.2% from 35.0% in the prior year period primarily due to expense leverage as a result of increased sales.

Operating income was $89.4 million compared to a loss of $(372.1) million in the first quarter of fiscal 2021 that included a non-cash goodwill impairment charge of $319.7 million. Adjusted operating income1 increased to $90.0 million from a loss of $(52.3) million in the prior year period. Adjusted operating margin1 increased to 16.8% from (27.6)% driven by the gross margin and SG&A factors described above.

Interest expense increased to $8.1 million from $7.0 million in the first quarter of fiscal 2021 primarily due to interest incurred on our 8.750% senior secured notes and $35.0 million term loan tranche (the “FILO Loans”), and partially offset by interest avoided by the repayment of our term loan and no borrowings outstanding under our revolving credit facility (the “ABL Facility”).

Income tax expense was $19.7 million, and our effective tax rate was 25.9%. In the first quarter of fiscal 2021, income tax benefit was $20.1 million, and our effective tax rate was 5.3%.

Net income was $56.3 million compared to a loss of $(358.9) million in the first quarter of fiscal 2021. Adjusted Net Income1 was $60.7 million compared to a loss of $(39.2) million in the prior year period.

EPS was $0.81 compared to $(5.60) in the first quarter of fiscal 2021 and adjusted EPS1 was $0.87 compared to $(0.61) in the prior year period.
Adjusted EBITDA1 was $110.6 million compared to $(14.6) million in the first quarter of fiscal 2021.

Balance Sheet Highlights as of May 1, 2021

The Company had $150.5 million of cash and no borrowings outstanding under the ABL Facility compared to $43.6 million of cash and $342.0 million of borrowings as of April 25, 2020. Borrowing availability under the ABL Facility was $325.2 million, inclusive of $35.0 million of minimum required availability.
Net inventories decreased 9.3% to $369.0 million from $407.0 million as of April 25, 2020.

Long-term debt was $308.6 million compared to $334.2 million as of April 25, 2020. On April 30, 2021, the Company repaid in full the FILO Loans for $34.6 million, including a $2.0 million prepayment premium, which resulted in a $5.3 million loss on extinguishment of debt.
(1)
Represents a non-GAAP financial measure. For additional information about non-GAAP measures, including, where applicable, reconciliations to the most directly comparable financial measures presented in accordance with GAAP, please see “Non-GAAP Measures” below. Refer to “Terminology” section for the Company’s non-GAAP definitions.

Subsequent Events

On May 6, 2021, the Company announced it has entered into a definitive agreement to be acquired by funds affiliated with Hellman & Friedman LLC (“the transaction”). Under the terms of the agreement, At Home stockholders will receive $36.00 per share in cash. The parties currently expect the transaction to be completed in the third quarter of calendar year 2021, subject to the satisfaction of customary closing conditions, including the approval of At Home’s stockholders and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is not subject to a financing condition. Upon completion of the transaction, At Home will become a privately-held company and At Home’s shares will no longer trade on The New York Stock Exchange.

Outlook and At Home Preliminary Proxy Filing Regarding Pending Transaction

Given the pending transaction and the continued uncertainty related to COVID-19, the Company is not providing formal guidance at this time.
In a separate press release issued today, At Home announced the filing of its preliminary proxy materials with the Securities and Exchange Commission in connection with the transaction. Among other things, the preliminary proxy and press release include the Company’s financial projections through fiscal 2026.

The release and corresponding filing are available on the Company’s investor relations page at investor.athome.com.
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