10-Q 1 boot-20221224x10q.htm 10-Q
http://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMember00http://www.bootbarn.com/20221224#FinanceAndOperatingLeaseRightOfUseAssethttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseRightOfUseAssethttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrent0001610250false--04-012023Q3http://fasb.org/us-gaap/2022#ProductMemberhttp://fasb.org/us-gaap/2022#ProductMember0P8YP4YP1YP1YP4YP1YP3YP3YP1YP4YP4YP1YP5Yhttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseRightOfUseAssethttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseRightOfUseAssethttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrent http://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrenthttp://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityCurrent http://www.bootbarn.com/20221224#FinanceAndOperatingLeaseLiabilityNoncurrent0001610250boot:GolubTermLoanMemberus-gaap:InterestExpenseMember2021-03-282021-12-250001610250us-gaap:TreasuryStockCommonMember2022-12-240001610250us-gaap:TreasuryStockCommonMember2022-09-240001610250us-gaap:TreasuryStockCommonMember2022-06-250001610250us-gaap:TreasuryStockCommonMember2022-03-260001610250us-gaap:TreasuryStockCommonMember2021-12-250001610250us-gaap:TreasuryStockCommonMember2021-09-250001610250us-gaap:TreasuryStockCommonMember2021-06-260001610250us-gaap:TreasuryStockCommonMember2021-03-270001610250us-gaap:CommonStockMember2022-09-252022-12-240001610250us-gaap:CommonStockMember2022-06-262022-09-240001610250us-gaap:CommonStockMember2022-03-272022-06-250001610250us-gaap:CommonStockMember2021-09-262021-12-250001610250us-gaap:CommonStockMember2021-06-272021-09-250001610250us-gaap:CommonStockMember2021-03-282021-06-260001610250us-gaap:RetainedEarningsMember2022-12-240001610250us-gaap:AdditionalPaidInCapitalMember2022-12-240001610250us-gaap:RetainedEarningsMember2022-09-240001610250us-gaap:AdditionalPaidInCapitalMember2022-09-2400016102502022-09-240001610250us-gaap:RetainedEarningsMember2022-06-250001610250us-gaap:AdditionalPaidInCapitalMember2022-06-2500016102502022-06-250001610250us-gaap:RetainedEarningsMember2022-03-260001610250us-gaap:AdditionalPaidInCapitalMember2022-03-260001610250us-gaap:RetainedEarningsMember2021-12-250001610250us-gaap:AdditionalPaidInCapitalMember2021-12-250001610250us-gaap:RetainedEarningsMember2021-09-250001610250us-gaap:AdditionalPaidInCapitalMember2021-09-2500016102502021-09-250001610250us-gaap:RetainedEarningsMember2021-06-260001610250us-gaap:AdditionalPaidInCapitalMember2021-06-2600016102502021-06-260001610250us-gaap:RetainedEarningsMember2021-03-270001610250us-gaap:AdditionalPaidInCapitalMember2021-03-270001610250us-gaap:EmployeeStockOptionMember2022-03-260001610250us-gaap:EmployeeStockOptionMember2022-09-252022-12-240001610250us-gaap:EmployeeStockOptionMember2021-09-262021-12-250001610250us-gaap:EmployeeStockOptionMember2021-03-282021-12-250001610250srt:ChiefExecutiveOfficerMemberboot:EquityIncentivePlan2020Member2022-12-240001610250us-gaap:RestrictedStockUnitsRSUMember2022-09-252022-12-240001610250us-gaap:PerformanceSharesMember2022-09-252022-12-240001610250us-gaap:PerformanceSharesMember2021-09-262021-12-250001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:ThresholdMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:TargetMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:MaximumTargetMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:BelowThresholdMember2022-03-272022-12-240001610250srt:MinimumMemberus-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250srt:MaximumMemberus-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250srt:ChiefExecutiveOfficerMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-03-272022-12-240001610250srt:ChiefExecutiveOfficerMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-03-272022-12-240001610250srt:ChiefExecutiveOfficerMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:ThresholdMember2021-03-282021-12-250001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:TargetMember2021-03-282021-12-250001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:MaximumTargetMember2021-03-282021-12-250001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Memberboot:BelowThresholdMember2021-03-282021-12-250001610250srt:MinimumMemberus-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250srt:MaximumMemberus-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Memberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2014Memberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2014Memberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2014Memberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-03-272022-12-240001610250srt:MinimumMemberus-gaap:RestrictedStockMemberboot:EquityIncentivePlan2014Member2022-03-272022-12-240001610250srt:MinimumMemberus-gaap:EmployeeStockOptionMemberboot:EquityIncentivePlan2014Member2022-03-272022-12-240001610250srt:MaximumMemberus-gaap:RestrictedStockMemberboot:EquityIncentivePlan2014Member2022-03-272022-12-240001610250srt:MaximumMemberus-gaap:EmployeeStockOptionMemberboot:EquityIncentivePlan2014Member2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMemberboot:EquityIncentivePlan2020Member2021-09-262021-12-250001610250us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementNonemployeeMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250us-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250srt:ChiefExecutiveOfficerMember2022-03-272022-12-240001610250boot:FloorAndDecorHoldingsIncMember2022-09-252022-12-240001610250boot:FloorAndDecorHoldingsIncMember2022-03-272022-12-240001610250boot:FloorAndDecorHoldingsIncMember2021-09-262021-12-250001610250boot:FloorAndDecorHoldingsIncMember2021-03-282021-12-250001610250boot:AmericanWorkerStoreNameMember2022-12-240001610250us-gaap:RetainedEarningsMember2022-09-252022-12-240001610250us-gaap:RetainedEarningsMember2022-06-262022-09-240001610250us-gaap:RetainedEarningsMember2022-03-272022-06-250001610250us-gaap:RetainedEarningsMember2021-09-262021-12-250001610250us-gaap:RetainedEarningsMember2021-06-272021-09-250001610250us-gaap:RetainedEarningsMember2021-03-282021-06-260001610250us-gaap:RevolvingCreditFacilityMember2022-07-110001610250boot:WellsFargoBankLettersOfCreditMember2022-07-110001610250us-gaap:RevolvingCreditFacilityMember2021-07-260001610250us-gaap:RevolvingCreditFacilityMember2019-06-060001610250us-gaap:RevolvingCreditFacilityMember2017-05-260001610250us-gaap:RevolvingCreditFacilityMember2015-06-290001610250srt:MinimumMember2022-12-240001610250srt:MaximumMember2022-12-240001610250us-gaap:RevolvingCreditFacilityMember2022-09-252022-12-240001610250us-gaap:RevolvingCreditFacilityMember2022-03-272022-12-240001610250us-gaap:RevolvingCreditFacilityMember2021-09-262021-12-250001610250boot:GolubTermLoanMember2021-09-262021-12-250001610250us-gaap:RevolvingCreditFacilityMember2021-03-282021-12-250001610250boot:GolubTermLoanMember2021-03-282021-12-250001610250us-gaap:TrademarksMember2022-12-240001610250us-gaap:TrademarksMember2022-03-260001610250us-gaap:SubsequentEventMember2022-03-272023-04-0100016102502021-03-282022-03-260001610250us-gaap:CustomerListsMember2022-03-272022-12-240001610250us-gaap:CustomerListsMember2021-03-282022-03-260001610250us-gaap:CustomerListsMember2022-12-240001610250us-gaap:CustomerListsMember2022-03-260001610250us-gaap:EmployeeStockOptionMember2022-12-240001610250us-gaap:RestrictedStockMember2022-12-240001610250us-gaap:RestrictedStockMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMember2022-03-272022-12-240001610250us-gaap:EmployeeStockOptionMember2022-03-272022-12-240001610250us-gaap:PerformanceSharesMember2022-12-240001610250boot:GolubTermLoanMember2021-12-250001610250us-gaap:RevolvingCreditFacilityMember2022-12-240001610250us-gaap:RevolvingCreditFacilityMember2022-03-260001610250boot:GolubTermLoanMember2015-06-290001610250srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-112022-07-110001610250srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2022-07-112022-07-110001610250srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-112022-07-110001610250srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2022-07-112022-07-110001610250us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-112022-07-110001610250us-gaap:RevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2022-07-112022-07-110001610250us-gaap:RevolvingCreditFacilityMemberboot:AdjustedTermSecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2022-07-112022-07-110001610250srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2015-06-292015-06-290001610250srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2015-06-292015-06-290001610250srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2015-06-292015-06-290001610250srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2015-06-292015-06-290001610250us-gaap:RevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2015-06-292015-06-290001610250us-gaap:RevolvingCreditFacilityMemberboot:OneMonthLiborRateMember2015-06-292015-06-290001610250boot:GiftCardProgramMember2022-12-240001610250boot:CustomerLoyaltyProgramMember2022-12-240001610250boot:GiftCardProgramMember2022-03-260001610250boot:CustomerLoyaltyProgramMember2022-03-260001610250boot:GiftCardProgramMember2021-12-250001610250boot:CustomerLoyaltyProgramMember2021-12-250001610250boot:GiftCardProgramMember2021-03-270001610250boot:CustomerLoyaltyProgramMember2021-03-270001610250us-gaap:CommonStockMember2022-12-240001610250us-gaap:CommonStockMember2022-09-240001610250us-gaap:CommonStockMember2022-06-250001610250us-gaap:CommonStockMember2022-03-260001610250us-gaap:CommonStockMember2021-12-250001610250us-gaap:CommonStockMember2021-09-250001610250us-gaap:CommonStockMember2021-06-260001610250us-gaap:CommonStockMember2021-03-270001610250boot:EquityIncentivePlan2020Member2020-08-260001610250boot:EquityIncentivePlan2014Member2014-10-1900016102502021-12-2500016102502021-03-270001610250srt:MaximumMember2022-09-252022-12-240001610250srt:MaximumMember2022-03-272022-12-240001610250srt:MaximumMember2021-09-262021-12-250001610250srt:MaximumMember2021-03-282021-12-250001610250us-gaap:InterestExpenseMember2022-09-252022-12-240001610250us-gaap:InterestExpenseMember2022-03-272022-12-240001610250us-gaap:InterestExpenseMember2021-09-262021-12-250001610250us-gaap:InterestExpenseMember2021-03-282021-12-250001610250us-gaap:CostOfSalesMember2022-09-252022-12-240001610250us-gaap:CostOfSalesMember2022-03-272022-12-240001610250us-gaap:CostOfSalesMember2021-09-262021-12-250001610250us-gaap:CostOfSalesMember2021-03-282021-12-250001610250us-gaap:AdditionalPaidInCapitalMember2022-09-252022-12-240001610250us-gaap:AdditionalPaidInCapitalMember2022-06-262022-09-240001610250us-gaap:AdditionalPaidInCapitalMember2022-03-272022-06-250001610250us-gaap:AdditionalPaidInCapitalMember2021-09-262021-12-250001610250us-gaap:AdditionalPaidInCapitalMember2021-06-272021-09-250001610250us-gaap:AdditionalPaidInCapitalMember2021-03-282021-06-260001610250us-gaap:TreasuryStockCommonMember2022-06-262022-09-2400016102502022-06-262022-09-240001610250us-gaap:TreasuryStockCommonMember2022-03-272022-06-2500016102502022-03-272022-06-250001610250us-gaap:TreasuryStockCommonMember2021-09-262021-12-250001610250us-gaap:TreasuryStockCommonMember2021-06-272021-09-2500016102502021-06-272021-09-250001610250us-gaap:TreasuryStockCommonMember2021-03-282021-06-2600016102502021-03-282021-06-2600016102502023-01-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Member2021-09-262021-12-250001610250us-gaap:RestrictedStockUnitsRSUMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250us-gaap:PerformanceSharesMemberboot:EquityIncentivePlan2020Member2021-03-282021-12-250001610250srt:ChiefExecutiveOfficerMemberboot:EquityIncentivePlan2020Member2022-03-272022-12-240001610250boot:StoresChannelMember2022-09-252022-12-240001610250boot:HatsAccessoriesAndOtherMember2022-09-252022-12-240001610250boot:FootwearMember2022-09-252022-12-240001610250boot:ECommerceChannelMember2022-09-252022-12-240001610250boot:ApparelMember2022-09-252022-12-240001610250boot:StoresChannelMember2022-03-272022-12-240001610250boot:HatsAccessoriesAndOtherMember2022-03-272022-12-240001610250boot:FootwearMember2022-03-272022-12-240001610250boot:ECommerceChannelMember2022-03-272022-12-240001610250boot:ApparelMember2022-03-272022-12-240001610250boot:StoresChannelMember2021-09-262021-12-250001610250boot:HatsAccessoriesAndOtherMember2021-09-262021-12-250001610250boot:FootwearMember2021-09-262021-12-250001610250boot:ECommerceChannelMember2021-09-262021-12-250001610250boot:ApparelMember2021-09-262021-12-250001610250boot:StoresChannelMember2021-03-282021-12-250001610250boot:HatsAccessoriesAndOtherMember2021-03-282021-12-250001610250boot:FootwearMember2021-03-282021-12-250001610250boot:ECommerceChannelMember2021-03-282021-12-250001610250boot:ApparelMember2021-03-282021-12-250001610250boot:GiftCardProgramMember2022-03-272022-12-240001610250boot:GiftCardProgramMember2021-03-282021-12-250001610250boot:CustomerLoyaltyProgramMember2021-03-282021-12-250001610250boot:WellsFargoBankLettersOfCreditMember2022-12-240001610250boot:WellsFargoBankLettersOfCreditMember2022-03-260001610250boot:CustomerLoyaltyProgramMember2022-03-272022-12-2400016102502022-09-252022-12-2400016102502021-09-262021-12-2500016102502022-12-2400016102502022-03-260001610250srt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2015-06-292015-06-290001610250us-gaap:RevolvingCreditFacilityMember2015-06-292015-06-2900016102502022-03-272022-12-2400016102502021-03-282021-12-25iso4217:USDxbrli:pureboot:itemboot:Votexbrli:sharesiso4217:USDxbrli:sharesboot:segmentboot:stateboot:store

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 24, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 001-36711

Boot Barn Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

90-0776290

(I.R.S. employer

identification no.)

15345 Barranca Pkwy

Irvine, California

(Address of principal executive offices)

92618

(Zip code)

(949) 453-4400

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value

BOOT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Emerging growth company

Non-accelerated filer

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of January 24, 2023, the registrant had 29,815,074 shares of common stock outstanding, $0.0001 par value.

Boot Barn Holdings, Inc. and Subsidiaries

Form 10-Q

For the Thirteen and Thirty-Nine Weeks Ended December 24, 2022

Page

PART I.

FINANCIAL INFORMATION

3

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets as of December 24, 2022 and March 26, 2022

3

Condensed Consolidated Statements of Operations for the Thirteen and Thirty-Nine Weeks Ended December 24, 2022 and December 25, 2021

4

Condensed Consolidated Statements of Stockholders’ Equity for the Thirteen and Thirty-Nine Weeks Ended December 24, 2022 and December 25, 2021

5

Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended December 24, 2022 and December 25, 2021

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosure of Market Risk

30

Item 4.

Controls and Procedures

30

PART II.

OTHER INFORMATION

31

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

Signatures

33

2

Part 1. Financial Information

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

December 24,

    

March 26,

    

2022

    

2022

Assets

Current assets:

Cash and cash equivalents

$

50,392

$

20,674

Accounts receivable, net

 

14,811

 

9,662

Inventories

 

592,151

 

474,300

Prepaid expenses and other current assets

 

51,524

 

37,195

Total current assets

 

708,878

 

541,831

Property and equipment, net

 

231,651

 

155,247

Right-of-use assets, net

307,146

241,147

Goodwill

 

197,502

 

197,502

Intangible assets, net

 

60,766

 

60,813

Other assets

 

6,509

 

3,315

Total assets

$

1,512,452

$

1,199,855

Liabilities and stockholders’ equity

Current liabilities:

Line of credit

$

59,071

$

28,549

Accounts payable

153,934

131,394

Accrued expenses and other current liabilities

 

182,790

 

133,408

Short-term lease liabilities

49,226

43,117

Total current liabilities

 

445,021

 

336,468

Deferred taxes

 

27,401

 

26,895

Long-term lease liabilities

308,165

234,584

Other liabilities

 

2,655

 

2,232

Total liabilities

783,242

600,179

Commitments and contingencies (Note 6)

Stockholders’ equity:

Common stock, $0.0001 par value; December 24, 2022 - 100,000 shares authorized, 30,005 shares issued; March 26, 2022 - 100,000 shares authorized, 29,820 shares issued

 

3

 

3

Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding

 

 

Additional paid-in capital

 

208,945

 

199,054

Retained earnings

 

529,621

 

405,477

Less: Common stock held in treasury, at cost, 190 and 135 shares at December 24, 2022 and March 26, 2022, respectively

(9,359)

(4,858)

Total stockholders’ equity

 

729,210

 

599,676

Total liabilities and stockholders’ equity

$

1,512,452

$

1,199,855

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

December 24,

December 25,

December 24,

December 25,

    

2022

    

2021

    

2022

    

2021

Net sales

$

514,553

$

485,904

$

1,231,954

$

1,104,948

Cost of goods sold

 

326,739

 

294,245

 

777,214

 

678,711

Gross profit

 

187,814

 

191,659

 

454,740

 

426,237

Selling, general and administrative expenses

 

115,318

 

99,467

 

285,669

 

230,288

Income from operations

 

72,496

 

92,192

 

169,071

 

195,949

Interest expense

 

2,258

 

1,667

 

4,345

 

5,392

Other income/(loss), net

63

43

(210)

161

Income before income taxes

 

70,301

 

90,568

 

164,516

 

190,718

Income tax expense

 

17,529

 

21,337

 

40,372

 

42,981

Net income

$

52,772

$

69,231

$

124,144

$

147,737

Earnings per share:

Basic

$

1.77

$

2.34

$

4.17

$

5.01

Diluted

$

1.74

$

2.27

$

4.09

$

4.86

Weighted average shares outstanding:

Basic

 

29,813

 

29,637

 

29,790

 

29,518

Diluted

 

30,294

 

30,443

 

30,340

 

30,382

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

Additional

 

Common Stock

Paid-In

Retained

Treasury Shares

 

    

Shares

    

Amount

    

Capital

    

Earnings

    

Shares

    

Amount

    

Total

Balance at March 26, 2022

29,820

$

3

$

199,054

$

405,477

(135)

$

(4,858)

$

599,676

Net income

39,318

39,318

Issuance of common stock related to stock-based compensation

175

247

247

Tax withholding for net share settlement

(53)

(4,408)

(4,408)

Stock-based compensation expense

4,701

4,701

Balance at June 25, 2022

29,995

$

3

$

204,002

$

444,795

(188)

$

(9,266)

$

639,534

Net income

32,054

32,054

Issuance of common stock related to stock-based compensation

6

Tax withholding for net share settlement

(2)

(93)

(93)

Stock-based compensation expense

2,442

2,442

Balance at September 24, 2022

30,001

$

3

$

206,444

$

476,849

(190)

$

(9,359)

$

673,937

Net income

 

52,772

52,772

Issuance of common stock related to stock-based compensation

 

4

82

82

Stock-based compensation expense

 

2,419

2,419

Balance at December 24, 2022

30,005

$

3

$

208,945

$

529,621

(190)

$

(9,359)

$

729,210

Additional

 

Common Stock

Paid-In

Retained

Treasury Shares

 

    

Shares

    

Amount

    

Capital

    

Earnings

Shares

    

Amount

Total

Balance at March 27, 2021

29,348

$

3

$

183,815

$

213,027

(96)

$

(1,954)

$

394,891

Net income

 

40,645

40,645

Issuance of common stock related to stock-based compensation

313

3,616

3,616

Tax withholding for net share settlement

(34)

(2,476)

(2,476)

Stock-based compensation expense

 

3,201

3,201

Balance at June 26, 2021

 

29,661

$

3

$

190,632

$

253,672

(130)

$

(4,430)

$

439,877

Net income

37,861

37,861

Issuance of common stock related to stock-based compensation

73

924

924

Tax withholding for net share settlement

(2)

(172)

(172)

Stock-based compensation expense

2,767

2,767

Balance at September 25, 2021

29,734

$

3

$

194,323

$

291,533

(132)

$

(4,602)

$

481,257

Net income

69,231

69,231

Issuance of common stock related to stock-based compensation

69

1,014

1,014

Tax withholding for net share settlement

(1)

(62)

(62)

Stock-based compensation expense

1,839

1,839

Balance at December 25, 2021

29,803

$

3

$

197,176

$

360,764

(133)

$

(4,664)

$

553,279

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Thirty-Nine Weeks Ended

December 24,

    

December 25,

    

2022

    

2021

Cash flows from operating activities

Net income

$

124,144

$

147,737

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

 

25,968

 

19,800

Stock-based compensation

 

9,562

 

7,807

Amortization of intangible assets

 

47

 

54

Noncash lease expense

35,203

28,701

Amortization and write-off of debt issuance fees and debt discount

 

101

 

1,834

Loss on disposal of assets

 

250

 

150

Gain on adjustment of right-of-use assets and lease liabilities

(258)

Deferred taxes

 

506

 

689

Changes in operating assets and liabilities:

Accounts receivable, net

 

(4,571)

 

5,797

Inventories

 

(117,851)

 

(109,882)

Prepaid expenses and other current assets

 

(14,430)

 

(41,596)

Other assets

 

(3,194)

 

(608)

Accounts payable

 

19,571

 

84,411

Accrued expenses and other current liabilities

 

32,785

 

73,490

Other liabilities

 

423

 

1,306

Operating leases

(21,464)

(28,876)

Net cash provided by operating activities

$

87,050

$

190,556

Cash flows from investing activities

Purchases of property and equipment

$

(83,056)

$

(39,749)

Net cash used in investing activities

$

(83,056)

$

(39,749)

Cash flows from financing activities

Borrowings on line of credit, net

$

30,522

$

Repayments on debt and finance lease obligations

(626)

(112,085)

Tax withholding payments for net share settlement

(4,501)

(2,710)

Proceeds from the exercise of stock options

329

5,554

Net cash provided by/(used in) financing activities

$

25,724

$

(109,241)

Net increase in cash and cash equivalents

 

29,718

 

41,566

Cash and cash equivalents, beginning of period

 

20,674

 

73,148

Cash and cash equivalents, end of period

$

50,392

$

114,714

Supplemental disclosures of cash flow information:

Cash paid for income taxes

$

58,324

$

41,694

Cash paid for interest

$

4,002

$

3,497

Supplemental disclosure of non-cash activities:

Unpaid purchases of property and equipment

$

27,474

$

9,620

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of the Company, Recent Developments and Basis of Presentation

Boot Barn Holdings, Inc. (the “Company”), the parent holding company of the group of operating subsidiaries that conduct the Boot Barn business, was formed on November 17, 2011, and is incorporated in the State of Delaware. The equity of the Company consists of 100,000,000 authorized shares and 30,004,719 issued and 29,814,906 outstanding shares of common stock as of December 24, 2022. The shares of common stock have voting rights of one vote per share.

The Company operates specialty retail stores and e-commerce websites that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the United States and sells its merchandise via the internet. The Company operated a total of 333 stores in 41 states as of December 24, 2022 and 300 stores in 38 states as of March 26, 2022. As of December 24, 2022, all stores operate under the Boot Barn name, with the exception of two stores that operate under the “American Worker” name.

Recent Developments

Our business and opportunities for growth depend on consumer discretionary spending, and as such, our results are particularly sensitive to economic conditions and consumer confidence. Inflation (which has occurred over the past twelve months and is continuing) and other challenges affecting the global economy could impact our operations and will depend on future developments, which are uncertain. These and other effects make it more challenging for us to estimate the future performance of our business, particularly over the near-to-medium term. For further discussion of the uncertainties and business risks affecting the Company, see Item 1A, Risk Factors, of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), on May 12, 2022 (the “Fiscal 2022 10-K”).

Basis of Presentation

The Company’s condensed consolidated financial statements as of and for the thirteen and thirty-nine weeks ended December 24, 2022 and December 25, 2021 are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of the Company and each of its subsidiaries, consisting of Boot Barn, Inc., RCC Western Stores, Inc., Baskins Acquisition Holdings, LLC, Sheplers, LLC and Sheplers Holding LLC (collectively with Sheplers, LLC, “Sheplers”). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. The vast majority of the Company’s identifiable assets are in the United States. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted.

In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company’s financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending April 1, 2023.

Fiscal Periods

The Company reports its results of operations and cash flows on a 52- or 53-week basis ending on the last Saturday of March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52-week year, each quarter includes thirteen weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. The current fiscal year ending on April 1, 2023 (“fiscal 2023”) will consist of 53 weeks; whereas, the fiscal year ended on March 26, 2022 (“fiscal 2022”) consisted of 52 weeks.

7

2. Summary of Significant Accounting Policies

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in the Company’s Fiscal 2022 10-K. Presented below in the following notes is supplemental information that should be read in conjunction with those consolidated financial statements.

Comprehensive Income

The Company does not have any components of other comprehensive income recorded within its condensed consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its condensed consolidated financial statements.

Segment Reporting

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company’s retail stores and e-commerce websites represent two operating segments. Given the similar qualitative and economic characteristics of the two operating segments, the Company’s retail stores and e-commerce websites are aggregated into one reporting segment in accordance with guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“ASC 280”). The Company’s operations represent two reporting units, retail stores and e-commerce, for the purpose of its goodwill impairment analysis.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s condensed consolidated financial statements are those relating to revenue recognition, lease accounting, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

Inventories

Inventory consists primarily of purchased merchandise and is valued at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method (which approximates the first-in, first-out method) and includes the cost of merchandise and import-related costs, including freight, duty and agent commissions. The Company assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected to be sold at or above cost is written down to its estimated net realizable value.

Leases

Operating and finance lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments using the Company's incremental borrowing rates for its population of leases. Related operating and finance lease right-of-use (“ROU”) assets are recognized based on the initial present value of the fixed lease payments, reduced by cash payments received from landlords as lease incentives, plus any prepaid rent and other direct costs from executing the leases. Amortization of both operating and finance lease right-of-use assets is performed on a straight-line basis and recorded as part of rent expense. The majority of total lease costs is recorded as part of cost of goods sold, with the balance recorded in selling, general and administrative expenses on the condensed consolidated

8

statements of operations. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the condensed consolidated statements of operations.

Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as lease expense as they are incurred.

Fair Value of Certain Financial Assets and Liabilities

The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates, incremental borrowing rates, and volatility, can be corroborated by readily observable market data.

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company’s Level 3 assets include certain acquired businesses and the evaluation of store impairment.

Cash and cash equivalents, accounts receivable and accounts payable are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximates their current fair values because of their nature and respective relatively short maturity dates or duration.

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 4, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements on a recurring basis as of December 24, 2022.

Recent Accounting Pronouncements

In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which clarifies some of its guidance around reference rate reform activities as global market participants undertake efforts to transition from using or referencing the London Interbank Offered Rate (LIBOR) and other interbank offered rates to using or referencing alternative reference rates. The amendments in this ASU if elected by an entity, are effective immediately. Unlike other topics, the provisions of this update are only available until December 31, 2022, by which time the reference rate replacement activity is expected to be completed. The revised standard did not have an impact on the Company’s consolidated financial statements.

9

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. Sales are recorded net of taxes collected from customers. Transfer of control takes place at the point at which the customer receives and pays for the merchandise at the register. E-commerce sales are recorded when control transfers to the customer, which generally occurs upon delivery of the product. Shipping and handling revenues are included in total net sales. Shipping costs incurred by the Company are included in cost of goods sold.

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions, estimated future award redemption and other promotions. The sales returns reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. The total reserve for returns is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. The Company accounts for the return asset and liability separately on a gross basis.

The Company maintains a customer loyalty program. Under the program, customers accumulate points based on purchase activity. For customers to maintain their active point balance, they must make a qualifying purchase of merchandise at least once in a 365-day period. Once a loyalty program member achieves a certain point level, the member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards, the member must make a qualifying purchase of merchandise within 60 days of the date the award was granted. Unredeemed awards and accumulated partial points are accrued as unearned revenue until redemption or expiration and, upon redemption and expiration, as an adjustment to net sales using the relative standalone selling price method. The unearned revenue for this program is recorded in accrued expenses and other current liabilities on the consolidated balance sheets and was $5.1 million as of December 24, 2022 and $4.1 million as of December 25, 2021. The following table provides a reconciliation of the activity related to the Company’s customer loyalty program:

Customer Loyalty Program

    

(in thousands)

    

December 24, 2022

December 25, 2021

Beginning balance as of March 26, 2022 and March 27, 2021, respectively

    

$

3,504

$

2,485

Year-to-date provisions

14,785

10,971

Year-to-date award redemptions

(13,191)

(9,333)

Ending balance

$

5,098

$

4,123

Proceeds from the sale of gift cards are deferred until the customers use the cards to acquire merchandise. Gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are subject to state escheatment laws. Amounts remaining after escheatment are recognized in net sales in the period escheatment occurs and the liability is considered to be extinguished. The Company defers recognition of a layaway sale and its related profit to the accounting period when the customer receives the layaway merchandise. Income from the redemption of gift cards, gift card breakage, and the sale of layaway merchandise is included in net sales. Deferred revenue is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. The following table provides a reconciliation of the activity related to the Company’s gift card program:

Gift Card Program

    

(in thousands)

    

December 24, 2022

December 25, 2021

Beginning balance as of March 26, 2022 and March 27, 2021, respectively

    

$

15,392

$

11,569

Year-to-date issued

30,580

24,354

Year-to-date redemptions

(19,482)

(14,199)

Ending balance

$

26,490

$

21,724

10

Disaggregated Revenue

The Company disaggregates net sales into the following major merchandise categories:

    

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

% of Net Sales

    

December 24, 2022

December 25, 2021

December 24, 2022

December 25, 2021

Footwear

    

43%

44%

46%

48%

Apparel

41%

39%

37%

36%

Hats, accessories and other

16%

17%

17%

16%

Total

100%

100%

100%

100%

The Company further disaggregates net sales between stores and e-commerce:

    

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

% of Net Sales

    

December 24, 2022

December 25, 2021

December 24, 2022

December 25, 2021

Stores

    

85%

82%

87%

84%

E-commerce

15%

18%

13%

16%

Total

100%

100%

100%

100%

3. Intangible Assets, Net and Goodwill

Net intangible assets as of December 24, 2022 and March 26, 2022 consisted of the following (in thousands, except for weighted average useful life):

December 24, 2022

Gross

    

    

    

Weighted

Carrying

Accumulated

Average

    

Amount

    

Amortization

    

Net

    

Useful Life

Customer lists—definite lived

$

345

$

(256)

$

89

 

5.0

Trademarks—indefinite lived

 

60,677

 

 

60,677

Total intangible assets

$

61,022

$

(256)

$

60,766

March 26, 2022

Gross

Weighted

Carrying

Accumulated

Average

    

Amount

    

Amortization

    

Net

    

Useful Life

Customer lists—definite lived

$

345

$

(209)

$

136

 

5.0

Trademarks—indefinite lived

 

60,677

 

 

60,677

Total intangible assets

$

61,022

$

(209)

$

60,813

Amortization expense for intangible assets totaled less than $0.1 million for both the thirteen and thirty-nine weeks ended December 24, 2022 and December 25, 2021, and is included in selling, general and administrative expenses.

As of December 24, 2022, estimated future amortization of intangible assets was as follows:

Fiscal Year

    

(in thousands)

2023

    

$

15

2024

 

54

2025

 

20

2026

 

-

2027

 

-

Thereafter

 

-

Total

$

89

11

The Company performs its annual goodwill impairment assessment on the first day of its fourth fiscal quarter, or more frequently if it believes that indicators of impairment exist. The Company’s goodwill balance was $197.5 million as of both December 24, 2022 and March 26, 2022. As of December 24, 2022, the Company had identified no indicators of impairment with respect to its goodwill and intangible asset balances.

During both the thirteen and thirty-nine weeks ended December 24, 2022 and December 25, 2021, the Company did not record any long-lived asset impairment charges.

4. Revolving Credit Facility and Long-Term Debt

On June 29, 2015, the Company, as guarantor, and its wholly-owned primary operating subsidiary, Boot Barn, Inc., refinanced a previous Wells Fargo credit facility with the $125.0 million syndicated senior secured asset-based revolving credit facility for which Wells Fargo Bank, National Association (“June 2015 Wells Fargo Revolver”), is agent, and the $200.0 million syndicated senior secured term loan for which GCI Capital Markets LLC (“2015 Golub Term Loan”) was agent.

The borrowing base of the June 2015 Wells Fargo Revolver is calculated on a monthly basis and is based on the amount of eligible credit card receivables, commercial accounts, inventory, and available reserves.

Borrowings under the June 2015 Wells Fargo Revolver bear interest at per annum rates equal to, at the Company’s option, either (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin for LIBOR Loans, or (ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) one-month LIBOR plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For LIBOR Loans, the applicable margin ranges from 1.00% to 1.25%, and for base rate loans it ranges from 0.00% to 0.25%. The Company also pays a commitment fee of 0.25% per annum of the actual daily amount of the unutilized revolving loans. The interest on the June 2015 Wells Fargo Revolver is payable in quarterly installments ending on the maturity date. On May 26, 2017, the Company entered into an amendment to the June 2015 Wells Fargo Revolver (the “2017 Wells Amendment”), increasing the aggregate revolving credit facility to $135.0 million and extending the maturity date to the earlier of May 26, 2022 or 90 days prior to the previous maturity of the 2015 Golub Term Loan, which was then scheduled to mature on June 29, 2021. On June 6, 2019, the Company entered into Amendment No. 3 to the Credit Agreement (the “2019 Wells Amendment”), further increasing the aggregate revolving credit facility to $165.0 million and extending the maturity date to June 6, 2024. The 2019 Wells Amendment further made changes to the 2015 Wells Fargo Revolver in connection with the transition away from LIBOR as the benchmark rate. On July 26, 2021, the Company entered into an amendment (the “2021 Wells Amendment”), increasing the aggregate revolving credit facility to $180.0 million. On July 11, 2022, the Company entered into Amendment No. 4 to the Credit Agreement (the “2022 Wells Amendment”), increasing the aggregate revolving credit facility to $250.0 million, which includes a $10.0 million sublimit for letters of credit. The 2022 Wells Amendment extended the maturity date to July 11, 2027. The 2022 Wells Amendment also made other changes to the June 2015 Wells Fargo Revolver, replacing all LIBOR based provisions with provisions reflecting Term Secured Overnight Financing Rate (“SOFR”), including, without limitation, the use of Term SOFR as the benchmark rate. Following the 2022 Wells Amendment, Revolving Credit Loans bear interest at per annum rates equal to, at the Company’s option, either (i) Adjusted Term SOFR (defined as Term SOFR plus 0.10%) plus an applicable margin for Term SOFR loans, or (ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) Term SOFR for a one month tenor in effect on such day plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For SOFR loans, the applicable margin ranges from 1.00% to 1.25% and for base rate loans it ranges from 0.00% to 0.25%.

The amounts outstanding under the June 2015 Wells Fargo Revolver and letter of credit commitments as of December 24, 2022 were $59.1 million and $0.8 million, respectively. The amounts outstanding under the June 2015 Wells Fargo Revolver and letter of credit commitments as of March 26, 2022 were $28.5 million and zero, respectively. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 24, 2022 on the June 2015 Wells Fargo Revolver was $2.1 million and $3.8 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 24, 2022 was 4.9%. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 25, 2021 on the June 2015 Wells Fargo Revolver was $0.2 million and $0.5 million, respectively.

12

On December 14, 2021, the Company repaid the remaining outstanding principal under the 2015 Golub Term Loan and terminated the agreement. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 25, 2021 on the 2015 Golub Term Loan was $0.6 million and $2.5 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 25, 2021 was 5.5%.

All obligations under the June 2015 Wells Fargo Revolver are unconditionally guaranteed by the Company and each of its direct and indirect domestic subsidiaries (other than certain immaterial subsidiaries) which are not named as borrowers under the June 2015 Wells Fargo Revolver.

The June 2015 Wells Fargo Revolver contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default, and requires the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio of at least 1.00:1.00 during such times as a covenant trigger event shall exist. The June 2015 Wells Fargo Revolver also requires the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate upon an event of default is an embedded derivative. As of December 24, 2022, the fair value of this embedded derivative was estimated and was not significant.

As of December 24, 2022, the Company was in compliance with the June 2015 Wells Fargo Revolver debt covenant.

Debt Issuance Costs

Debt issuance costs totaling $1.7 million were incurred under the June 2015 Wells Fargo Revolver, 2017 Wells Amendment, 2019 Wells Amendment, 2021 Wells Amendment, and 2022 Wells Amendment and are included as assets on the condensed consolidated balance sheets in prepaid expenses and other current assets. Total unamortized debt issuance costs were $0.5 million and $0.2 million as of December 24, 2022 and March 26, 2022, respectively. These amounts are being amortized to interest expense over the term of the June 2015 Wells Fargo Revolver.

Total amortization expense of less than $0.1 million and $0.1 million related to the June 2015 Wells Fargo Revolver is included as a component of interest expense in the thirteen and thirty-nine weeks ended December 24, 2022, respectively.

Total amortization expense of $0.1 million and $0.4 million related to the June 2015 Wells Fargo Revolver and 2015 Golub Term Loan is included as a component of interest expense in the thirteen and thirty-nine weeks ended December 25, 2021, respectively. Interest expense in the thirty-nine weeks ended December 25, 2021 also includes the write-off of $1.4 million of debt issuance costs and debt discount associated with the paydown of the 2015 Golub Term Loan.

5. Stock-Based Compensation

Equity Incentive Plans

On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of August 24, 2016 (as amended, the “2014 Plan”). The 2014 Plan authorizes the Company to issue awards to employees, consultants and directors for up to a total of 3,600,000 shares of common stock, par value $0.0001 per share. As of December 24, 2022, all awards granted by the Company under the 2014 Plan to date have been nonqualified stock options, restricted stock awards, restricted stock units or performance share units. Options granted under the 2014 Plan have a life of eight to ten years and vest over service periods of four or five years or in connection with certain events as defined by the 2014 Plan. Restricted stock awards granted under the 2014 Plan vest over one or four years, as determined by the Compensation Committee of our board of directors. Restricted stock units vest over service periods of one, four or five years, as determined by the Compensation Committee of our board of directors. Performance share units granted under the 2014 Plan are subject to the vesting criteria discussed in Note 9, “Stock-Based Compensation”, to the consolidated financial statements included in the Company’s Fiscal 2022 10-K.

13

On August 26, 2020, the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”). Following the approval of the 2020 Plan, no further grants have been made under the 2014 Plan. The 2020 Plan authorizes the Company to issue awards to employees and directors for up to a total of 2,000,000 shares of common stock, par value $0.0001 per share. As of December 24, 2022, all awards granted by the Company under the 2020 Plan to date have been market-based stock options, restricted stock units or performance share units. Market-based stock options granted under the 2020 Plan are subject to the vesting criteria discussed further below. Restricted stock units vest over service periods of one, three or four years, as determined by the Compensation Committee of our board of directors. Performance share units granted under the 2020 Plan are subject to the vesting criteria discussed further below.

Stock Options

During the thirteen weeks ended December 24, 2022, the Company did not grant options to purchase shares.

During the thirty-nine weeks ended December 24, 2022, the Company granted its Chief Executive Officer ("CEO") an option to purchase 86,189 shares of common stock under the 2020 Plan. This option contains both service and market vesting conditions. Vesting of this option is contingent upon the market price of the Company's common stock achieving three stated price targets for 30 consecutive trading days through the third anniversary of the date of grant. If the first market price target is met, 33% of the option granted will cliff vest on the third anniversary of the date of grant, with an additional 33% of the option vesting on the third anniversary of the date of grant if the second market price target is met, and the last 34% of the option vesting on the third anniversary of the date of grant if the final market price target is met. The total grant date fair value of this option was $4.0 million, with a grant date fair value of $46.41 per share. The Company is recognizing the expense relating to this stock option on a straight-line basis over the three-year service period. The exercise price of this award is $86.96 per share. The fair value of the option was estimated using a Monte Carlo simulation model. The following significant assumptions were used as of May 12, 2022, the date of grant:

Stock price

    

$

86.96

 

Exercise price

$

86.96

Expected option term (1)

 

6.5

years

Expected volatility (2)

 

65.9

%

Risk-free interest rate (3)

2.8

%

Expected annual dividend yield

0

%

(1)The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.
(2)Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s stock over the most recent period equal to the expected option term of the Company’s awards.
(3)The risk-free interest rate is determined using the rate on treasury securities with the same term.

During both the thirteen and thirty-nine weeks ended December 25, 2021, the Company did not grant options to purchase shares.

Intrinsic value for stock options is defined as the difference between the market price of the Company’s common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period.

14

The following table summarizes the stock award activity for the thirty-nine weeks ended December 24, 2022:

Grant Date

Weighted

Weighted

Average

Aggregate

Stock

Average

Remaining

Intrinsic

    

Options

    

Exercise Price

    

Contractual Life 

    

Value

(in years)

(in thousands)

Outstanding at March 26, 2022

 

728,079

$

23.44

Granted

 

86,189

$

86.96

Exercised

(14,297)

$

23.02

$

723

Cancelled, forfeited or expired

 

$

Outstanding at December 24, 2022

 

799,971

$

30.29

 

6.2

$

27,302

Vested and expected to vest after December 24, 2022

 

799,971

$

30.29

 

6.2

$

27,302

Exercisable at December 24, 2022

 

298,465

$

19.59

 

4.6

$

12,569

A summary of the status of non-vested stock options as of December 24, 2022 including changes during the thirty-nine weeks ended December 24, 2022 is presented below:

    

    

Weighted-

Average

Grant Date

    

Shares

    

Fair Value

Nonvested at March 26, 2022

 

626,976

$

9.14

Granted

 

86,189

$

46.41

Vested

 

(211,659)

$

8.20

Nonvested shares forfeited

 

$

Nonvested at December 24, 2022

 

501,506

$

15.94

Restricted Stock Units

During the thirteen weeks ended December 24, 2022, the Company did not grant restricted stock units.

During the thirty-nine weeks ended December 24, 2022, the Company granted 94,262 restricted stock units to various directors and employees under the 2020 Plan. The shares granted to employees vest in three equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates (subject to certain exceptions). The shares granted to the Company’s directors vest on the first anniversary of the date of the grant. The grant date fair value of these awards for the thirty-nine weeks ended December 24, 2022 totaled $8.2 million. Subject to certain exceptions, the Company is recognizing the expense relating to these awards on a straight-line basis over the service period of each award, commencing on the date of the grant.

During the thirteen weeks ended December 25, 2021, the Company granted 1,387 restricted stock units to various employees under the 2020 Plan. The shares granted to employees vest in four equal annual installments beginning on the grant date, provided that the respective award recipient continues to be employed by the Company through each of those dates (subject to certain exceptions). The grant date fair value of these awards for the thirteen weeks ended December 25, 2021 totaled $0.1 million