Chewy, Inc. (NYSE: CHWY) (“Chewy”), a trusted destination for
pet parents and partners everywhere, has released its financial
results for the fiscal fourth quarter and full year 2022 ended
January 29, 2023, and posted a letter to its shareholders on its
investor relations website at https://investor.chewy.com.
Fiscal Q4 2022 Highlights:
- Net sales of $2.71 billion improved 13.4 percent year over
year
- Gross margin of 28.1 percent expanded 270 basis points year
over year
- Net income of $6.1 million, including share-based compensation
expense of $50.2 million
- Net margin of 0.2 percent expanded 290 basis points year over
year
- Basic and diluted earnings per share of $0.01, an increase of
$0.16 year over year
- Adjusted EBITDA(1) of $92.0 million, an increase of $120.1
million year over year
- Adjusted EBITDA margin(1) of 3.4 percent expanded 460 basis
points year over year
- Adjusted net income(1) of $69.6 million, an increase of $117.4
million year over year
- Adjusted basic and diluted earnings per share(1) of $0.16, an
increase of $0.27 year over year
Fiscal 2022 Highlights:
- Net sales of $10.1 billion improved 13.6 percent year over
year
- Gross margin of 28.0 percent expanded 130 basis points year
over year
- Net income of $49.2 million, including share-based compensation
expense of $163.2 million
- Net margin of 0.5 percent expanded 130 basis points year over
year
- Basic and diluted earnings per share of $0.12, an increase of
$0.30 year over year
- Adjusted EBITDA(1) of $305.9 million, an increase of $227.4
million year over year
- Adjusted EBITDA margin(1) of 3.0 percent expanded 210 basis
points year over year
- Adjusted net income(1) of $225.8 million, an increase of $214.3
million year over year
- Adjusted basic and diluted earnings per share(1) of $0.53, an
increase of $0.50 year over year
“Our fourth quarter and full year fiscal 2022 results cap an
incredible year. Against the backdrop of a rapidly changing
operating and economic environment, Chewy produced record-high
revenue, profitability, and free cash flow,” said Sumit Singh,
Chief Executive Officer of Chewy. “Chewy’s disciplined execution
and dedication to serving pet parents and partners with a widening
ecosystem of offerings led to another year of market share gains in
the pet category, which continues to demonstrate its resilience in
the present environment.”
Management will host a conference call and webcast to discuss
Chewy’s financial results today at 5:00 pm ET.
Chewy Fiscal Fourth Quarter and Full Year 2022 Financial
Results Conference Call When: Wednesday, March 22, 2023
Time: 5:00 pm ET Conference ID: 140225 Live
Call: 1-844-200-6205 (US Toll-Free), 1-646-904-5544 (US Local),
1-833-950-0062 (Canada), or +1-929-526-1599 (International)
Replay: 1-866-813-9403 (US Toll-Free), 1-929-458-6194 (US
Local), or +44-204-525-0658 (International) Replay Access
Code: 896084 (The replay will be available approximately two
hours after the completion of the live call until 11:59 pm ET on
March 29, 2023) Webcast: https://investor.chewy.com
(1)
Adjusted EBITDA, adjusted EBITDA margin,
adjusted net income (loss), and adjusted basic and diluted earnings
(loss) per share are non-GAAP financial measures. See “Non-GAAP
Financial Measures” for additional information on non-GAAP
financial measures and a reconciliation to the most comparable GAAP
measures.
About Chewy
Our mission is to be the most trusted and convenient destination
for pet parents and partners everywhere. We believe that we are the
preeminent online source for pet products, supplies and
prescriptions as a result of our broad selection of high-quality
products and services, which we offer at competitive prices and
deliver with an exceptional level of care and a personal touch to
build brand loyalty and drive repeat purchasing. We seek to
continually develop innovative ways for our customers to engage
with us, as our website and mobile app allow our pet parents to
manage their pets’ health, wellness, and merchandise needs, while
enabling them to conveniently shop for our products. We partner
with more than 3,500 of the best and most trusted brands in the pet
industry offering more than 110,000 products and services
offerings, to bring what we believe is a high-bar, customer-centric
experience to our customers.
Forward-Looking
Statements
This communication contains forward-looking statements about us
and our industry that involve substantial risks and uncertainties.
All statements other than statements of historical facts contained
in this communication, including statements regarding our future
results of operations or financial condition, business strategy and
plans and objectives of management for future operations, are
forward-looking statements.
In some cases, you can identify forward-looking statements
because they contain words such as “anticipate,” “believe,”
“contemplate,” “continue,” “could,” “estimate,” “expect,”
“forecast,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will” or “would” or the
negative of these words or other similar terms or expressions.
These forward-looking statements include, but are not limited to,
statements concerning our ability to: sustain our recent growth
rates and successfully manage challenges to our future growth,
including introducing new products or services, improving existing
products and services, and expanding into new offerings;
successfully manage risks related to coronavirus, including any
adverse impacts on our business operations, financial performance,
supply chain, workforce, facilities, customer services and
operations; acquire and retain new customers in a cost-effective
manner and increase our net sales, improve margins and maintain
profitability; manage our growth effectively; maintain positive
perceptions of our company and preserve, grow, and leverage the
value of our reputation and our brand; limit operating losses as we
continue to expand our business; forecast net sales and
appropriately plan our expenses in the future; estimate the size of
our addressable market; strengthen our current supplier
relationships, retain key suppliers and source additional
suppliers; negotiate acceptable pricing and other terms with
third-party service providers, suppliers and outsourcing partners
and maintain our relationships with such parties; mitigate changes
in, or disruptions to, our shipping arrangements and operations;
optimize, operate and manage the expansion of the capacity of our
fulfillment centers; provide our customers with a cost-effective
platform that is able to respond and adapt to rapid changes in
technology; limit our losses related to online payment methods;
maintain and scale our technology, including the reliability of our
website, mobile applications, and network infrastructure; maintain
adequate cybersecurity with respect to our systems and ensure that
our third-party service providers do the same with respect to their
systems; maintain consumer confidence in the safety, quality and
health of our products; limit risks associated with our suppliers
and our outsourcing partners; comply with existing or future laws
and regulations in a cost-efficient manner; compete with other
retailers and service providers; utilize tax attributes, net
operating loss and tax credit carryforwards, and limit fluctuations
in our tax obligations and effective tax rate; adequately protect
our intellectual property rights; successfully defend ourselves
against any allegations or claims that we may be subject to;
attract, develop, motivate and retain highly-qualified and skilled
employees; predict and respond to economic conditions, industry
trends, and market conditions, and their impact on the pet products
market; reduce merchandise returns or refunds; respond to severe
weather and limit disruption to normal business operations; manage
new acquisitions, investments or alliances, and integrate them into
our existing business; successfully enter the pet insurance market;
manage challenges presented by international markets; successfully
compete in the pet products and services health and retail
industry, especially in the e-commerce sector; raise capital as
needed; and maintain effective internal control over financial
reporting and disclosure controls and procedures.
You should not rely on forward-looking statements as predictions
of future events, and you should understand that these statements
are not guarantees of performance or results, and our actual
results could differ materially from those expressed in the
forward-looking statements due to a variety of factors. We have
based the forward-looking statements contained in this
communication primarily on our current assumptions, expectations,
and projections about future events and trends that we believe may
affect our business, financial condition, and results of
operations. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties and
other factors described in the section titled “Risk Factors”
included under Part I, Item 1A of our Annual Report on Form 10-K
and in other filings with the Securities and Exchange Commission
and elsewhere in this communication. Moreover, we operate in a very
competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this communication.
The results, events and circumstances reflected in the
forward-looking statements may not be achieved or occur, and actual
results, events or circumstances could differ materially from those
described in the forward-looking statements. In addition,
statements that “we believe” and similar statements reflect our
beliefs and opinions on the relevant subject. These statements are
based on information available to us as of the date of this
communication. While we believe that information provides a
reasonable basis for these statements, that information may be
limited or incomplete. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all relevant information. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements. The forward-looking statements made in
this communication relate only to events as of the date on which
the statements are made. We undertake no obligation to update any
forward-looking statements made in this communication to reflect
events or circumstances after the date of this communication or to
reflect new information or the occurrence of unanticipated events,
except as required by law. We may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments.
Non-GAAP Financial
Measures
Adjusted EBITDA and Adjusted EBITDA Margin
To provide investors with additional information regarding our
financial results, we have disclosed in this earnings release
adjusted EBITDA, a non-GAAP financial measure that we calculate as
net income (loss) excluding depreciation and amortization;
share-based compensation expense and related taxes; income tax
provision; interest income (expense), net; transaction related
costs; changes in the fair value of equity warrants; and litigation
matters and other items that we do not consider representative of
our underlying operations. We have provided a reconciliation below
of adjusted EBITDA to net income (loss), the most directly
comparable GAAP financial measure.
We have included adjusted EBITDA and adjusted EBITDA margin in
this earnings release because each is a key measure used by our
management and board of directors to evaluate our operating
performance, generate future operating plans and make strategic
decisions regarding the allocation of capital. In particular, the
exclusion of certain expenses in calculating adjusted EBITDA and
adjusted EBITDA margin facilitates operating performance
comparability across reporting periods by removing the effect of
non-cash expenses and certain variable charges. Accordingly, we
believe that adjusted EBITDA and adjusted EBITDA margin provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management and board of directors.
We believe it is useful to exclude non-cash charges, such as
depreciation and amortization and share-based compensation expense
from our adjusted EBITDA because the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of our business operations. We believe it is useful to
exclude income tax provision; interest income (expense), net;
transaction related costs; changes in the fair value of equity
warrants; and litigation matters and other items which are not
components of our core business operations. Adjusted EBITDA has
limitations as a financial measure and you should not consider it
in isolation or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future and adjusted EBITDA does not reflect capital
expenditure requirements for such replacements or for new capital
expenditures;
- adjusted EBITDA does not reflect share-based compensation and
related taxes. Share-based compensation has been, and will continue
to be for the foreseeable future, a recurring expense in our
business and an important part of our compensation strategy;
- adjusted EBITDA does not reflect interest income (expense),
net; or changes in, or cash requirements for, our working
capital;
- adjusted EBITDA does not reflect transaction related costs and
other items which are either not representative of our underlying
operations or are incremental costs that result from an actual or
planned transaction and include changes in the fair value of equity
warrants, litigation matters, integration consulting fees, internal
salaries and wages (to the extent the individuals are assigned
full-time to integration and transformation activities) and certain
costs related to integrating and converging IT systems; and
- other companies, including companies in our industry, may
calculate adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider adjusted
EBITDA and adjusted EBITDA margin alongside other financial
performance measures, including various cash flow metrics, net
income (loss), net margin, and our other GAAP results.
The following table presents a reconciliation of net income
(loss) to adjusted EBITDA, as well as the calculation of net margin
and adjusted EBITDA margin, for each of the periods indicated.
(in thousands, except percentages)
13 Weeks Ended
52 weeks ended
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
January 29, 2023
January 30, 2022
January 29, 2023
January 30, 2022
Net income (loss)
$
6,104
$
(63,609
)
$
49,232
$
(73,817
)
Add:
Depreciation and amortization
22,611
16,868
83,307
55,009
Share-based compensation expense and
related taxes
50,188
15,831
163,211
85,308
Interest (income) expense, net
(6,200
)
424
(9,291
)
1,639
Change in fair value of equity
warrants
13,340
—
13,340
—
Income tax provision
2,646
—
2,646
—
Transaction related costs
1,852
302
3,953
2,423
Other
1,427
2,064
(460
)
7,990
Adjusted EBITDA
$
91,968
$
(28,120
)
$
305,938
$
78,552
Net sales
$
2,707,479
$
2,388,398
$
10,098,939
$
8,890,773
Net margin
0.2
%
(2.7
) %
0.5
%
(0.8
) %
Adjusted EBITDA margin
3.4
%
(1.2
) %
3.0
%
0.9
%
We define net margin as net income (loss) divided by net sales
and adjusted EBITDA margin as adjusted EBITDA divided by net
sales.
Adjusted Net Income (Loss) and Adjusted Basic and Diluted
Earnings (Loss) per Share
To provide investors with additional information regarding our
financial results, we have disclosed in this earnings release
adjusted net income (loss) and adjusted basic and diluted earnings
(loss) per share, which represent non-GAAP financial measures. We
calculate adjusted net income (loss) as net income (loss) excluding
share-based compensation expense and related taxes as well as
changes in the fair value of equity warrants. We calculate adjusted
basic and diluted earnings (loss) per share by dividing adjusted
net income (loss) attributable to common stockholders by the
weighted-average shares outstanding during the period. We have
provided a reconciliation below of adjusted net income (loss) to
net income (loss), the most directly comparable GAAP financial
measure.
We have included adjusted net income (loss) and adjusted basic
and diluted earnings (loss) per share in this earnings release
because each is a key measure used by our management and board of
directors to evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the
allocation of capital. In particular, the exclusion of certain
expenses in calculating adjusted net income and adjusted basic and
diluted earnings (loss) per share facilitates operating performance
comparability across reporting periods by removing the effect of
non-cash expenses and certain variable gains and losses that do not
represent a component of our core business operations. We believe
it is useful to exclude non-cash share-based compensation expense
because the amount of such expenses in any specific period may not
directly correlate to the underlying performance of our business
operations. We believe it is useful to exclude changes in the fair
value of equity warrants, because the associated variable gains and
losses are not a component of our core business operations.
Accordingly, we believe that these measures provide useful
information to investors and others in understanding and evaluating
our operating results in the same manner as our management and
board of directors.
Adjusted net income (loss) and adjusted basic and diluted
earnings (loss) per share have limitations as financial measures
and you should not consider them in isolation or as substitutes for
analysis of our results as reported under GAAP. Other companies may
calculate adjusted net income (loss) and adjusted basic and diluted
earnings (loss) per share differently, which reduces their
usefulness as comparative measures. Because of these limitations,
you should consider adjusted net income (loss) and adjusted basic
and diluted earnings (loss) alongside other financial performance
measures, including various cash flow metrics, net income (loss),
basic and diluted earnings (loss) per share, and our other GAAP
results.
The following table presents a reconciliation of net income
(loss) to adjusted net income (loss), as well as the calculation of
adjusted basic and diluted earnings (loss) per share, for each of
the periods indicated.
(in thousands, except per share data)
13 Weeks Ended
52 weeks ended
Reconciliation of Net Income (Loss) to
Adjusted Net Income (Loss)
January 29, 2023
January 30, 2022
January 29, 2023
January 30, 2022
Net income (loss)
$
6,104
$
(63,609
)
$
49,232
$
(73,817
)
Add:
Share-based compensation expense and
related taxes
50,188
15,831
163,211
85,308
Change in fair value of equity
warrants
13,340
—
13,340
—
Adjusted net income (loss)
$
69,632
$
(47,778
)
$
225,783
$
11,491
Weighted-average common shares used in
computing adjusted earnings (loss) per share:
Basic
424,328
419,111
422,331
417,218
Effect of dilutive share-based awards
(1)
5,084
—
5,439
10,068
Diluted (1)
429,412
419,111
427,770
427,286
Earnings (loss) per share attributable to
common Class A and Class B stockholders
Basic
$
0.01
$
(0.15
)
$
0.12
$
(0.18
)
Diluted (1)
$
0.01
$
(0.15
)
$
0.12
$
(0.18
)
Adjusted basic
$
0.16
$
(0.11
)
$
0.53
$
0.03
Adjusted diluted (1)
$
0.16
$
(0.11
)
$
0.53
$
0.03
(1) For the fifty-two weeks ended January
30, 2022, our calculation of adjusted diluted earnings per share
attributable to common Class A and Class B stockholders requires an
adjustment to the weighted-average common shares used in the
calculation to include the weighted-average dilutive effect of
share-based awards.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230322005617/en/
Investor Contact:
Robert A. LaFleur ir@chewy.com
Media Contact:
Diane Pelkey dpelkey@chewy.com
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