Bed Bath & Beyond, Inc. · NYSE:BBBY
Bed Bath & Beyond — Q2 2020 Earnings Presentation
32 slides from Bed Bath & Beyond's earnings presentation, Oct 1, 2020
Slide 1: Fiscal 2020 Q2 Results
October 1, 2020 Fiscal 2020 Q2 Results June-July-August (May 31st – August 29th) BED BATH & BEYOND
Slide 2: Forward looking statements
forward looking statements This press release contains forward-looking statements, including, but not limited to, the Company’s progress and anticipated progress towards its long-term objectives, the future impact of the novel coronavirus (COVID-19), the potential impact and success of its strategic
Slide 3: Participants
participants Mark Tritton Gustavo Arnal President & CEO CFO & Treasurer Cindy Davis John Hartmann John Hartmann COO;CBO; President, President, buybuy Decorist BABY COO; President, buybuy Baby BED BATH & BEYOND 3
Slide 4: Agenda
agenda 1) Performance Highlights & Strategic Update (CEO) 2) FY 2020 Q2 Results (May-June-July) (CFO) 3) Commercial Update (CBO) 4) Operations Update (COO) 5) Q&A BED BATH & BEYOND 4
Slide 5: Q2 performance highlights & strategy update
Q2 performance highlights & strategy update BED BATH & BEYOND 5
Slide 6: Significant improvement in key performance metrics
Q2 PERFORMANCE HIGHLIGHTS & STRATEGIC UPDATE significant improvement in key performance metrics Comp Sales Digital Comp Adj. Gross Margin Adj. EBITDA Growth Growth +6% +89% +200bps +36% vs vs vs vs LY LY LY LY Cash Generation Gross Debt Strong Liquidity ~30% Reduction ~2x $>750M vs Higher FY20 Q1 th
Slide 7: Comparable sales turn positive
Q2 PERFORMANCE HIGHLIGHTS & STRATEGIC UPDATE comparable sales turn positive Quarterly comparable sales * * FY20 Q1: No comparable sales reported due to extensive store closures BED BATH & BEYOND 7
Slide 8: Building a modern, durable business model
Q2 PERFORMANCE HIGHLIGHTS & STRATEGIC UPDATE building a modern, durable business model BED BATH & BEYOND 8
Slide 9: Growth strategy unlocking strong financial performance
Q2 PERFORMANCE HIGHLIGHTS & STRATEGIC UPDATE growth strategy unlocking strong financial performance Sales Stronger Cash Flow Accelerated Restructuring Stronger Margin and Optimized Capital Plan Improvement Profit Performance Generation Structure Announced major Solid Comp Sales Adj. Gross
Slide 10: Q2 results
Q2 results June-July-August (May 31st – August 29th) BED BATH & BEYOND 10
Slide 11: Financial performance
Q2 2020 FINANCIAL RESULTS financial performance • Solid comparable sales growth of ~6%, led by significantly strong digital comp sales growth of ~89% • Adj. Gross Margin increased ~200bps, driven primarily by: ‐ Favorable product mix, including lower coupon expense and better optimization of promoti
Slide 12: Strong cash flow generation and total liquidity
Q2 2020 FINANCIAL RESULTS unlocked strong cash flow generation of >$750mn; total liquidity of ~$2.2bn $0.2bn Cashflow$0.2bn generation >$750mn $0.2b Q2 actions enhanced cash & liquidity: n ~$208mn ~$543mn • $2.2bn Strong cash generation of >$750mn ~$221mn3 $1.8bn ~$236mn ~$0.7mn o Cash flow from ope
Slide 13: Pivoted from net debt to net cash surplus
Q2 2020 FINANCIAL RESULTS pivoted from a net debt position of $0.5bn to a net cash surplus position of $0.3bn $0.2bnFY20 Q1 vs FY20 Q2 – net debt Q2 actions optimized debt balance: $0.2bn$0.2bn • Significant cash flow generation • Paid down ~$236mn bank loan portion of ABL Facility $0.2bn • Reduced
Slide 14: Q2 key P&L metrics
Q2 2020 FINANCIAL RESULTS Q2 key p&l metrics • Comparable sales growth of ~6%, led by significantly strong digital comp sales growth of ~89% Three Months Ended (in millions, except per • Net sales declined ~1%, partially due to the divestiture of share data) FY2019 Q2 FY2020 Q2 Diff One Kings Lane C
Slide 15: Q2 monthly sales trends
Q2 2020 FINANCIAL RESULTS Q2 monthly sales trends • The Company began its phased approach to store re-openings Sales trends by month from May through June, and by early July, nearly all stores were open June July August Q2 • Comparable sales were positive in each month of the quarter, Comps 6% and d
Slide 16: Gross margin expansion
Q2 2020 FINANCIAL RESULTS gross margin expansion • Adj. Gross Margin increased ~200bps to 35.9% vs 33.9% in FY19 Q2 vs FY20 Q2 – gross margin bridge FY19 Q2 driven primarily by: ‐ Favorable product mix, including lower coupon expense 190ps and better optimization of promotion & markdowns ‐ Leverage
Slide 17: Transformation underway to re-establish authority in home
Q2 2020 FINANCIAL RESULTS transformation underway to re-establish authority in home • Transformation plan expected to deliver between $250mn to $350mn in annualized EBITDA improvement over the next 2 to 3 years vs fiscal 2019 • Significant workforce reduction and major organizational realignment in
Slide 18: Commercial update
commercial update BED BATH & BEYOND 18
Slide 19: Destination for college
COMMERCIAL UPDATE destination for college Modern • Sales of college specific product increased 21% Glam season-to-date (5/1/20 – 9/8/20) • Back-to-College campaign designed to showcase new branding strategy and enhanced customer value proposition ‐ Informed by insights and market data ‐ Integrated m
Slide 20: Operations update
operations update BED BATH & BEYOND 20
Slide 21: Driving omni-always transformation
OPERATIONS UPDATE driving omni-always transformation • The end-to-end modernization of the Company’s technology infrastructure is driving substantial digital growth and strong customer adoption of new services like Buy-Online-Pickup-In- Store (BOPIS) and Curbside Pickup • Expanded relationship with
Slide 22: Wrap up: inaugural virtual investor day
WRAP UP inaugural (virtual) investor day oct. 28th @9am EDT Building a modern, durable platform for success How are we rebuilding authority in the Home? . Strategic framework of transformation . Experienced leadership team . Foundational capabilities What does value creation look like? . Multi-y
Slide 23: Q2 performance – transformation is underway
WRAP UP Q2 performance – transformation is underway Comp Sales Adj. EBITDA Cash Generation Growth [+200] [+88%] bps +6% +36% vs vs $>750M LY LY BED BATH & BEYOND 23
Slide 24: Appendix
appendix SEPTEMBER 30, 2020 BED BATH & BEYOND 24
Slide 25: Non-GAAP reconciliation: adjusted net earnings per diluted share
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Net Earnings (Loss) per Diluted Share Reported net earnings (loss) per diluted share $ 1.75 $ (1.12 ) Impairments, severance, incremental inventory reserve for future markdowns, costs assoc
Slide 26: Non-GAAP reconciliation: adjusted gross profit
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Gross Profit Reported gross profit $ 987,537 $ 726,988 Adjustments: Incremental inventory reserve for future markdowns (23,000 ) 193,735 Total adjustments (23,000 ) 193,735 Adjusted gross p
Slide 27: Non-GAAP reconciliation: adjusted gross margin
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Gross Margin Reported gross margin 36.7 % 26.7 % Adjustments: Incremental inventory reserve for future markdowns (0.8 )% 7.2 % Total adjustments (0.8 )% 7.2 % Adjusted gross margin 35.9 % 3
Slide 28: Non-GAAP reconciliation: adjusted SG&A expenses
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Selling, General and Administrative Expenses Reported selling, general and administrative expenses $ 850,218 $ 880,889 Adjustments: Severance costs — (22,537 ) Costs associated with portfol
Slide 29: Non-GAAP reconciliation: adjusted SG&A as percent of net sales
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Selling, General and Administrative Expenses (SG&A) as a Percent of Net Sales Reported SG&A as a percent of net sales 31.6 % 32.4 % Adjustments: Severance costs — % (0.8 )% Costs associated
Slide 30: Non-GAAP reconciliation: EBITDA and adjusted EBITDA
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA Reported net earnings (loss) $ 217,900 $ (138,765 ) Depreciation and amortization 85,277 84,430 Interest expense, net 23,371 16,342 Gain on extinguish
Slide 31: Non-GAAP reconciliation: adjusted effective income tax rate
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Effective Income Tax Rate Reported effective income tax rate 32.8 % 30.1 % Impairments, severance, incremental inventory reserve for future markdowns, costs associated with portfolio optimi
Slide 32: Non-GAAP reconciliation: adjusted net earnings
APPENDIX non-gaap reconciliation* (in thousands, except for share data) (unaudited) Reconciliation of Adjusted Net Earnings (Loss) Reported net earnings (loss) $ 217,900 $ (138,765 ) Pre-tax Adjustments: Incremental inventory reserve for future markdowns (23,000 ) 193,735 Impairments (a) 29,176 28,3