American Eagle Outfitters : Presentation PDF 529 KB

FOURTH QUARTER 2020 FINANCIAL RESULTS

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This release and related statements by management contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which represent our expectations or beliefs concerning future events, including first quarter 2021 results. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on many important factors, some of which may be beyond the company's control. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," "potential," and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise and even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. The following factors, in addition to the risks disclosed in Item 1A., Risk Factors, of the company's Annual Report on Form 10-K for the fiscal year ended February 1, 2020 and in any subsequently-filed Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission in some cases have affected, and in the future could affect, the company's financial performance and could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this release or otherwise made by management: the impact that the COVID-19 pandemic and operational disruptions; the risk that the company's operating, financial and capital plans may not be achieved; our inability to anticipate customer demand and changing fashion trends and to manage our inventory commensurately; seasonality of our business; our inability to achieve planned store financial performance; our inability to react to raw material cost, labor and energy cost increases; our inability to gain market share in the face of declining shopping center traffic; our inability to respond to changes in e-commerce and leverage omni-channel demands; our inability to expand internationally; difficulty with our international merchandise sourcing strategies; challenges with information technology systems, including safeguarding against security breaches; and changes in global economic and financial conditions, and the resulting impact on consumer confidence and consumer spending, as well as other changes in consumer discretionary spending habits, which could have a material adverse effect on our business, results of operations and liquidity.

Non-GAAP Measures

This press release includes information on non-GAAP financial measures including earnings per share, excluding non-GAAP items, which is a non-GAAP or "adjusted" financial measure. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles ("GAAP") and are not necessarily comparable to similar measures presented by other companies. Management believes that this non-GAAP information more clearly reflects our financial results and is useful for an alternate presentation of the company's performance, when reviewed in conjunction with the company's GAAP financial statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company's business and operations.

STATEMENTS OF OPERATIONS SUMMARY-GAAP BASIS

(In thousands, except per share amounts)

January 30, 2021

Fourth Quarter Ended

% of Revenue

February 1, 2020

% of Revenue

Total net revenue

Cost of sales, including certain buying, occupancy and warehousing expenses Gross profit

Selling, general and administrative expenses Impairment and COVID-19 related charges Depreciation and amortization

Operating income

Interest expense (income), net Other income (expense), net (Loss) Income before taxes (Benefit) from income taxes Net income

Net income per basic share Net income per diluted share

• $ 1,292,294

100.0%

852,429

66.0%

439,865

34.0%

292,059

22.6%

102,639

7.9%

41,583

3.2%

3,584

0.3%

7,993

0.6%

(2,889)

-0.2%

(1,520)

-0.1%

(5,056)

-0.4%

$ 1,314,631 100.0%

906,884 69.0%

407,747 31.0%

286,647 21.8%

76,223 5.8%

44,401 3.4%

476 0.0%

(1,405) -0.1%

221 0.0%

1,660 0.1%

(3,104) -0.3%

$ $ $

3,536

0.3% $ 4,764 0.4%

0.02 $ 0.03 0.02 $ 0.03

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - diluted

166,310 167,412

196,585 168,282

STATEMENTS OF OPERATIONS SUMMARY-GAAP BASIS

(In thousands, except per share amounts)

January 30, 2021

YTD Fourth Quarter Ended

% of Revenue

February 1, 2020

% of Revenue

Total net revenue

Cost of sales, including certain buying, occupancy and warehousing expenses Gross profit

Selling, general and administrative expenses Impairment, COVID-19 related charges, and restructuring Depreciation and amortization

Operating (loss) income Interest expense (income), net Other (income), net

(Loss) income before taxes (Benefit) provision for income taxes Net (loss) income

Net (loss) income per basic share Net (loss) income per diluted share

$

3,759,113

100.0%

2,610,966

69.5%

1,148,147

30.5%

977,264

26.0%

279,826

7.4%

162,402

4.3%

(271,345)

-7.2%

24,610

0.7%

(3,682)

-0.1%

(292,273)

-7.8%

(82,999)

-2.2%

$

4,308,212 100.0%

2,785,911 64.7%

1,522,301 35.3%

1,029,412 23.9%

80,494 1.9%

179,050 4.1%

233,345 5.4%

(6,202) -0.2%

(5,731) -0.1%

245,278 5.7%

54,021 1.3%

$ $ $

(209,274)

-5.6% $ 191,257 4.4%

(1.26) $ 1.13 (1.26) $ 1.12

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - diluted

166,455 169,711

166,455 170,867

STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)GAAP Basis % of Revenue

Operating

Income

13 Weeks Ended January 30, 2021

Interest Expense, net

Diluted Earnings per Common Share

$

3,584 0.3%

$

7,993 0.6%

$ 0.02

102,639

Add: Pre-tax impairment and COVID-19 related charges(1):

Less: Convertible debt(2):

- 0.36

- 102,639

(4,209) 0.01

(4,209) 0.37

Non-GAAP Basis % of Revenue

$

• 106,223 $ 8.2%

• (1) $102.6 million pre-tax impairment and COVID-19 related charges: - $95.5 million of long-lived asset impairment charges

  - $7.1 million of incremental COVID-19 related charges

• (2) Amortization of the non-cash discount on the Company's convertible notes

3,784 0.3%

$ 0.39

STATEMENTS OF OPERATIONS

13 Weeks Ended February 1, 2020

(In thousands, except per share amounts)

Operating

IncomeDiluted Earnings per Common Share

GAAP Basis

$ 476

$ 0.03

% of Revenue 0.0%

Add: Pre-tax impairment and restructuring charges(1): 76,223 0.34

76,223 0.34

Non-GAAP Basis % of Revenue

$

76,699 5.8%

$ 0.37

(1) $76.2 million pre-tax impairment and restructuring charges.

• - $64.5 million of long-lived asset impairment charges

• - $1.7 million of goodwill

• - $10.0 million of restructuring charges including $4.2M of joint business venture exit charges, $4.0M of corporate and field severance, and $1.8M of market transition costs in Japan

RESULTS BY SEGMENT

(In thousands)

13 Weeks Ended January 30, 2021

American EagleAerie

Corporate (1 )Total(2)

Total net revenue Operating income (loss) % of Revenue

$ $

Impairment and incremental COVID-19 related charges

Adjusted Operating Income (loss) % of Revenue

$ $

Capital expenditures

$

942,892 91,863 9.7% 53,560 145,423 15.4% 11,245

$ $

$ $

336,709 13,438 4.0% 34,634 48,072

• $ 12,692

  • $ 1,292,294

• $ (101,717)

  $

  3,584 0.3%

• $ 14,445

• $ 102,639

• $ (87,272)

  • $ 106,223

    14.3% 8.2%

    $

    8,915

• $ 15,223

• $ 35,383

13 Weeks Ended February 1, 2020

American EagleAerie

Corporate (1 )Total(2)

Total net revenue Operating income (loss) % of Revenue

$ $

1,035,097

71,260

$ $

270,007 11,467

$

9,527

$ 1,314,631

• $ (82,251) $ 476

  6.9%

  4.2% 0.0%

  Impairment and restructuring charges Adjusted Operating Income (loss) % of Revenue

  $ $

  41,657

  112,917

  $ $

  20,261 31,728

• $ 14,305

  • $ 76,223

• $ (67,946)

  • $ 76,699

    10.9%

    11.8% 5.8%

    Capital expenditures

    $

    25,832

    $

    13,651

• $ 20,932

• $ 60,415

(1) Corporate includes revenue and operating results of the Todd Snyder brand, which is not material to disclose as a separate reportable segment. Corporate operating costs represents certain costs that are not directly attributable to another reportable segment.

(2) The difference between Total Operating Income (loss) and (Loss) Income before Taxes includes the following, which are not allocated to our reportable segments:

- Interest expense (income), net of $8.0 million in Fiscal 2020 and ($1.4) million in Fiscal 2019

- Other income (expense), net of $2.9 million in Fiscal 2020 and ($0.2) million in Fiscal 2019

KEY HIGHLIGHTS

2020

2019

Fourth Quarter

Total Net Revenue Change	(2) %	2 %
Gross Margin	34.0 %	31.0 %
Selling, General and Administrative Expenses	22.6 %	21.8 %
Adjusted Operating Margin (1)	8.2 %	5.8 %
Adjusted EPS (1)	0.39	0.37

$

$

(1) Results shown are on a non-GAAP basis and exclude certain charges for all periods presented. See accompanying tables for a reconciliation of GAAP to non-GAAP results.

INVENTORY DATA

January 30,	February 1,
(in thousands)	2021	2020
Ending Inventory	$405,445	$446,278
% Change to prior year	-9%	5%
Quarterly Inventory turn (1)	1.77	1.66

(1) - Inventory turn is calculated as the total GAAP cost of goods sold for the quarterly periods divided by the straight average of the beginning and ending inventory balances from the consolidated balance sheets.

BALANCE SHEET SUMMARY

(in thousands)

ASSETS

Cash and cash equivalents

Short-term investments

Merchandise inventory

Accounts receivable

Prepaid expenses and other

Total current assets

Property and equipment, net

Operating lease right-of-use assets

Intangible assets net, including goodwill

Non-current deferred income taxes

Other assets

Total Assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

Current portion of operating lease credits Total other current liabilities

Total current liabilities Long-term debt, net

Non-current operating lease liabilities Other non-current liabilities

Total non-current liabilities

January 30,	February 1,	February 1,
2021	2020	2019

$

850,477 -

405,445

146,102

120,619

1,522,643

623,808

1,155,965

70,332

33,045

29,013

$

$

361,930 $ 333,330

55,000 92,135

446,278 424,404

119,064 93,477

65,658 102,907

1,047,930 735,120 1,418,916

1,046,253 742,149 -53,004 58,167

22,724 14,062

50,985 42,747

3,434,806

$

$

3,328,679

255,912

328,624

273,946

858,482

325,290

1,148,742

15,627

1,489,659

$

$

1,903,378

285,746

299,161

166,849

751,756 -

1,301,735

27,335

1,329,070

$

240,671 -

301,974

542,645 - -

73,178

73,178

Total stockholders' equity

Total Liabilities and Stockholders' Equity

1,086,665

$

1,247,853

3,434,806

1,287,555

$

3,328,679

$

1,903,378

Total Cash and Short-Term Investments Total Working Capital

$ $

850,477 664,161 1.77

$ $

416,930 $ 425,465

296,174 $ 503,608

Current Ratio

1.39

1.93

CASH RETURNED TO SHAREHOLDERS

Fourth Quarter Ended

YTD Fourth Quarter Ended

January 30,	February 1,	January 30,	February 1,
(In millions, except per share amounts)	2021	2020	2021	2020
Cash used for share repurchases	$0.0	$0.0	$20.0	$112.4
Number of shares repurchased	0.0	0.0	1.7	6.3
Cash used for regular quarterly dividends	$22.9	$23.0	$22.9	$92.8
Total dividends per share	$0.138	$0.138	$0.138	$0.550
Total cash returned to shareholders	$22.9	$23.0	$42.9	$205.2

REAL ESTATE SUMMARY

Fourth Quarter	YTD Fourth Quarter
2020	2020
Consolidated stores at beginning of period	1,105	1,095
Consolidated stores opened during the period
AE Brand	2	8
Aerie stand-alone(3)	9	31
Todd Snyder	0	1
Consolidated stores closed during the period
AE Brand	(36)	(52)
Aerie stand-alone	(1)	(4)
Todd Snyder	(1)	(1)
Total consolidated stores at end of period	1,078	1,078
AE Brand	901
Aerie stand-alone(3)	175
Todd Snyder	2
Stores remodeled and refurbished during the period	3	8
Total gross square footage at end of period (in '000)	6,709	6,709
International license locations at end of period (1)	229	229
Aerie openings
Aerie stand-alone	9	31
Total Aerie side-by-side stores (2)	1	8
Total Aerie openings	10	39

• (1) International license locations are not included in the consolidated store data or the total gross square footage calculation.

• (2) Aerie side-by-side stores and Offline side-by-side stores are included in the AE Brand store count as they are considered part of the AE Brand store to which they are attached.

(3) Aerie stand alone stores include 4 Offline and 1 Unsubscribed store.

INTERNATIONAL LICENSED STORE LOCATIONS

Q4 2020 Ending Licensed Stores: 229

Q4 2020 Openings

India (4)

Colombia (1)

Q4 2020	Q4 2019	Czech Republic (1)
Israel	48	48	Portugal (1)
Saudi Arabia/KSA	25	27	Spain (1)
Colombia	23	17	Switzerland (1)
UAE	22	18
India	21	15	Q4 2020 Closings
Philippines	11	11	South Korea (7)
Chile	10	16
Greece	9	10
Thailand	9	8
Egypt	7	6
Kuwait	7	6
Qatar	6	4
Spain	5	0
Oman	4	3
Bahrain	3	2
Costa Rica	3	2
Panama	3	3
Guatemala	2	2
Paraguay	2	0
Andorra	1	0
Curacao	1	1
Czech Republic	1	0
Dominican Republic	1	1
El Salvador	1	0
Hungary	1	1
Jordan	1	1
Portugal	1	0
Switzerland	1	0
Lebanon	0	4
Peru	0	1
South Korea	0	10
Total	229	217
14

APPENDIX

HISTORICAL QUARTERLY STORE DATA BY BRAND

End Store	End Gross	End Store	End Gross	End Store	End Gross
Count	Square Feet	Count	Square Feet	Count	Square Feet
2004	1st Qtr.	809	4,285,182	-	-	809	4,285,182
2nd Qtr.	825	4,390,790	-	-	825	4,390,790
3rd Qtr.	839	4,489,606	-	-	839	4,489,606
4th Qtr.	846	4,540,095	-	-	846	4,540,095
Total	846	4,540,095	-	-	846	4,540,095
2005	1st Qtr.	845	4,549,729	-	-	845	4,549,729
2nd Qtr.	854	4,631,461	-	-	854	4,631,461
3rd Qtr.	866	4,729,612	-	-	866	4,729,612
4th Qtr.	869	4,772,487	-	-	869	4,772,487
Total	869	4,772,487	-	-	869	4,772,487
2006	1st Qtr.	876	4,847,077	-	-	876	4,847,077
2nd Qtr.	883	4,911,192	-	-	883	4,911,192
3rd Qtr.	900	5,031,014	2	5,054	902	5,036,068
4th Qtr.	903	5,129,625	3	7,337	906	5,136,962
Total	903	5,129,625	3	7,337	906	5,136,962
2007	1st Qtr.	909	5,188,241	3	7,337	912	5,195,578
2nd Qtr.	914	5,278,756	5	10,566	919	5,289,322
3rd Qtr.	928	5,421,689	32	104,810	960	5,526,499
4th Qtr.	929	5,444,174	39	137,595	968	5,581,769
Total	929	5,444,174	39	137,595	968	5,581,769
2008	1st Qtr.	942	5,545,675	55	199,113	997	5,744,788	2017 1st Qtr.
2nd Qtr.	951	5,645,346	81	297,160	1,032	5,942,506	2nd Qtr.
3rd Qtr.	958	5,708,713	111	419,935	1,069	6,128,648	3rd Qtr.
4th Qtr.	954	5,700,320	116	439,343	1,070	6,139,663	4th Qtr.
Total	954	5,700,320	116	439,343	1,070	6,139,663	Total
2009	1st Qtr.	953	5,723,465	129	494,734	1,082	6,218,199	2018 1st Qtr.
2nd Qtr.	954	5,736,761	132	505,695	1,086	6,242,456	2nd Qtr.
3rd Qtr.	952	5,745,294	137	529,123	1,089	6,274,417	3rd Qtr.
4th Qtr.	938	5,686,232	137	529,123	1,075	6,215,355	4th Qtr.
Total	938	5,686,232	137	529,123	1,075	6,215,355	Total
2010	1st Qtr.	938	5,703,529	139	538,190	1,077	6,241,719	2019 1st Qtr.
2nd Qtr.	934	5,691,552	144	560,582	1,078	6,252,134	2nd Qtr.
3rd Qtr.	935	5,708,403	147	575,096	1,082	6,283,499	3rd Qtr.
4th Qtr.	929	5,705,645	148	582,780	1,077	6,288,425	4th Qtr.
Total	929	5,705,645	148	582,780	1,077	6,288,425	Total
2011	1st Qtr.	931	5,727,853	150	590,278	1,081	6,318,131	2019 1st Qtr.
2nd Qtr.	931	5,757,301	151	593,859	1,082	6,351,160	2nd Qtr.
3rd Qtr.	937	5,805,078	158	623,862	1,095	6,428,940	3rd Qtr.
4th Qtr.	911	5,666,422	158	623,862	1,069	6,290,284	4th Qtr.
Total	911	5,666,422	158	623,862	1,069	6,290,284	Total
2012	1st Qtr.	911	5,680,673	157	621,170	1,068	6,301,843	2020 1st Qtr.
2nd Qtr.	908	5,669,359	155	613,669	1,063	6,283,028	2nd Qtr.
3rd Qtr.	909	5,690,552	154	610,110	1,063	6,300,662	3rd Qtr.
4th Qtr.	893	5,606,396	151	596,882	1,044	6,203,278	4th Qtr.
Total	893	5,606,396	151	596,882	1,044	6,203,278	Total

AE Brand	aerie
End Store	End Gross	End Store	End Gross	End Store	End Gross
Count	Square Feet	Count	Square Feet	Count	Square Feet
2013	1st Qtr.	896	5,632,943	141	558,695	1,037	6,191,638
2nd Qtr.	921	5,840,401	135	532,832	1,056	6,373,233
3rd Qtr.	932	5,935,360	132	520,137	1,064	6,455,497
4th Qtr.	944	6,024,950	122	478,536	1,066	6,503,486
Total	944	6,024,950	122	478,536	1,066	6,503,486
2014	1st Qtr.	949	6,069,574	108	425,786	1,057	6,495,360
2nd Qtr.	966	6,214,646	106	417,410	1,072	6,632,056
3rd Qtr.	988	6,387,514	104	408,559	1,092	6,796,073
4th Qtr.	955	6,216,819	101	396,291	1,056	6,613,110
Total	955	6,216,819	101	396,291	1,056	6,613,110
2015	1st Qtr.	956	6,233,394	98	383,638	1,054	6,617,032
2nd Qtr.	960	6,264,006	97	379,351	1,057	6,643,357
3rd Qtr.	970	6,343,955	98	377,357	1,068	6,721,312
4th Qtr.	949	6,228,755	97	372,357	1,046	6,601,112
Total	949	6,228,755	97	372,357	1,046	6,601,112
2016	1st Qtr.	950	6,237,871	95	363,909	1,046	6,601,780
2nd Qtr.	951	6,245,820	91	346,771	1,042	6,592,591
3rd Qtr.	952	6,265,099	97	363,424	1,049	6,638,008
4th Qtr.	943	6,222,548	102	380,554	1,050	6,619,267
Total	943	6,222,548	102	380,554	1,050	6,619,267
944	6,237,016	103	382,854	1,053	6,637,435
942	6,224,214	109	400,448	1,057	6,642,227
943	6,222,195	110	403,048	1,058	6,641,401
933	6,169,370	109	395,284	1,047	6,580,812
933	6,169,370	109	395,284	1,047	6,580,812
935	6,183,421	109	398,447	1,048	6,598,026
939	6,213,412	109	408,389	1,053	6,640,759
941	6,230,107	110	413,272	1,057	6,662,337
934	6,189,989	115	438,355	1,055	6,647,302
934	6,189,989	115	438,355	1,055	6,647,302
936	6,205,898	119	456,506	1,061	6,662,404
939	6,228,664	131	505,389	1,075	6,740,653
945	6,275,892	142	554,419	1,094	6,836,504
940	6,254,049	148	576,867	1,095	6,830,916
940	6,254,049	148	576,867	1,095	6,830,916
936	6,205,898	119	456,506	1,061	6,662,404
939	6,228,664	131	505,389	1,075	6,740,653
945	6,275,892	142	554,419	1,094	6,836,504
945	6,254,049	148	576,867	1,095	6,830,916
945	6,254,049	148	576,867	1,095	6,830,916
942	6,246,343	148	575,509	1,093	6,821,852
935	6,205,098	160	618,083	1,098	6,827,912
935	6,207,972	167	641,995	1,105	6,858,161
901	6,022,495	175	665,248	1,078	6,709,230
901	6,022,495	175	665,248	1,078	6,709,230

Operations *

AE Brand

aerie

Consolidated from Continuing

Operations

Consolidated from Continuing

*- Consolidated total includes Todd Snyder stores.

LEGEND OF NUMERICAL GUIDANCE

Description	% Range
Flat	0.0%
Slight	0.1% - 0.9%
Low Single Digits	1.0% - 3.3%
Mid Single Digits	3.4% - 6.6%
High Single Digits	6.7% - 9.9%
Low Double Digits	10.0% - 12.9%
Low Teens	13.0% - 13.3%
Mid Teens	13.4% - 16.6%
High Teens	16.7% - 19.9%
Low Twenties	20.0% - 23.3%
Mid Twenties	23.4% - 26.6%
High Twenties	26.7% - 29.9%