The Michaels Companies Announces Fourth Quarter and Full Year Fiscal 2020 Results

3/4/21 9:00:00 AM ET

Recreational Products/Toys

Consumer Services

Get the next $MIK alert in real time by email

IRVING, Texas--(BUSINESS WIRE)--The Michaels Companies, Inc. (NASDAQ: MIK) today announced financial results for the fourth quarter and full year fiscal 2020 ended January 30, 2021.

Key Financial Results:

	13 Weeks Ended January 30, 2021	13 Weeks Ended February 1, 2020	52 Weeks Ended January 30, 2021	52 Weeks Ended February 1, 2020
Net Sales	$1,916.8M	$1,722.6M	$5,271.1M	$5,072.0M
Comp. Store Sales	12.9%	-2.4%	4.8%	-1.9%
Operating Income	$342.0M	$275.0M	$533.5M	$515.0M
Net Income	$255.1M	$181.7M	$294.9M	$272.6M
Diluted Earnings per Share	$1.72	$1.24	$1.98	$1.78
Adjusted Operating Income¹	$361.0M	$278.6M	$607.6M	$572.6M
Adjusted Net Income ¹	$249.3M	$185.1M	$347.0M	$323.8M
Adjusted Diluted Earnings per Share¹	$1.69	$1.26	$2.33	$2.11

¹See additional information in this release for a reconciliation of non-GAAP financial measures to the respective GAAP measures.

Conference Call

Given the recently announced agreement for Michaels to be acquired by funds affiliated with Apollo Global Management, the Company will not be hosting a conference call to discuss its financial results.

Non-GAAP Information

This press release includes non-GAAP measures including adjusted operating income, adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in a table accompanying this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Company's business and facilitate a meaningful evaluation of its quarterly and fiscal 2020 results on a comparable basis with its quarterly and fiscal 2019 results.

The Company has provided this information as a means to evaluate the results of its ongoing operations. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP. The Company's presentation of non-GAAP financial measures should not be construed to imply that its future results will be unaffected by any such adjustments. Other companies in the Company's industry may calculate these items differently than it does.

IMPORTANT INFORMATION

The tender offer for the outstanding shares of The Michaels Companies, Inc. (“Michaels”) common stock has not yet commenced. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares of Michaels common stock. The solicitation and offer to buy shares of Michaels common stock will only be made pursuant to the tender offer materials that Magic MergeCo, Inc. (“Merger Sub”) intends to file with the U.S. Securities and Exchange Commission (the “SEC”). Merger Sub is beneficially owned by certain equity funds managed by Apollo Management IX, L.P. At the time the tender offer is commenced, Merger Sub will file a tender offer statement on Schedule TO with the SEC, and Michaels will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the tender offer. MICHAELS’ STOCKHOLDERS ARE ADVISED TO READ THE SCHEDULE TO (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE 14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO. Both the tender offer statement and the solicitation/recommendation statement will be mailed to Michaels’ stockholders free of charge. Investors and stockholders may obtain free copies of the Schedule TO and Schedule 14D-9, as each may be amended or supplemented from time to time, and other documents filed by the parties (when available) at the SEC’s web site at www.sec.gov, by contacting Michaels’ Investor Relations either by telephone at 972-409-1393, e-mail at [email protected] or on Michaels’ website at www.Michaels.com.

About The Michaels Companies, Inc.:

The Michaels Companies, Inc. is North America's largest specialty provider of arts, crafts, framing, floral, wall décor, and seasonal merchandise for Makers and do-it-yourself home decorators. The Company operates more than 1,250 Michaels stores in 49 states and Canada. Additionally, the Company serves customers through digital platforms including Michaels.com and Canada.michaels.com. The Michaels Companies, Inc., also owns Artistree, a manufacturer of high-quality custom and specialty framing merchandise. For a list of store locations or to shop online, visit www.michaels.com or download the Michaels app.





The Michaels Companies, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(in thousands, except per share data)	2021			2020			2021			2020
Net sales	$	1,916,842		$	1,722,608		$	5,271,112		$	5,072,037
Cost of sales and occupancy expense		1,106,815			1,076,610			3,315,035			3,199,780
Gross profit		810,027			645,998			1,956,077			1,872,257
Selling, general and administrative		447,032			370,803			1,390,620			1,304,280
Restructure and impairment charges		19,447			—			28,835			48,332
Store pre-opening costs		1,554			238			3,082			4,608
Operating income		341,994			274,957			533,540			515,037
Interest expense		40,209			37,816			152,442			154,090
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Other (income) expense, net		(124	)		(1,671	)		(1,550	)		1,260
Income before income taxes		301,909			238,812			360,604			358,371
Income taxes		46,834			57,161			65,669			85,776
Net income	$	255,075		$	181,651		$	294,935		$	272,595

Other comprehensive income, net of tax:
Foreign currency and cash flow hedges		10,853			85			9,387			(8,273	)
Comprehensive income	$	265,928		$	181,736		$	304,322		$	264,322

Earnings per common share:
Basic	$	1.76		$	1.24		$	2.01		$	1.78
Diluted	$	1.72		$	1.24		$	1.98		$	1.78
Weighted-average common shares outstanding:
Basic		144,598			146,638			146,541			153,134
Diluted		147,844			146,701			148,531			153,202

The following table sets forth the percentage relationship to net sales of each line item of our unaudited consolidated statements of comprehensive income:
		13 Weeks Ended						52 Weeks Ended
		January 30,			February 1,			January 30,			February 1,
		2021			2020			2021			2020
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales and occupancy expense		57.7			62.5			62.9			63.1
Gross profit		42.3			37.5			37.1			36.9
Selling, general and administrative		23.3			21.5			26.4			25.7
Restructure and impairment charges		1.0			—			0.5			1.0
Store pre-opening costs		0.1			—			0.1			0.1
Operating income		17.8			16.0			10.1			10.2
Interest expense		2.1			2.2			2.9			3.0
Losses on early extinguishments of debt and refinancing costs		—			—			0.4			—
Other (income) expense, net		—			(0.1	)		—			—
Income before income taxes		15.8			13.9			6.8			7.1
Income taxes		2.4			3.3			1.2			1.7
Net income		13.3	%		10.5	%		5.6	%		5.4	%






The Michaels Companies, Inc.
Consolidated Balance Sheets
(Unaudited)

	January 30,			February 1,
(in thousands, except per share data)	2021			2020
ASSETS
Current Assets:
Cash and equivalents	$	1,194,389		$	409,964
Merchandise inventories		1,007,043			1,097,109
Prepaid expenses and other		56,822			62,287
Accounts receivable, net		14,039			30,442
Total current assets		2,272,293			1,599,802
Property and equipment, net		472,563			430,432
Operating lease assets		1,594,554			1,610,013
Goodwill		94,290			94,290
Other intangible assets, net		57,121			66,417
Deferred income taxes		19,394			18,201
Other assets		18,190			18,940
Total assets	$	4,528,405		$	3,838,095

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	858,790		$	476,298
Accrued liabilities and other		488,658			347,136
Current portion of operating lease liabilities		324,238			306,796
Current portion of long-term debt		16,700			24,900
Income taxes payable		27,313			41,236
Total current liabilities		1,715,699			1,196,366
Long-term debt		2,480,953			2,644,460
Long-term operating lease liabilities		1,378,394			1,357,821
Deferred income taxes		54,200			—
Other liabilities		96,329			85,912
Total liabilities		5,725,575			5,284,559

Stockholders’ Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 141,608 shares issued and outstanding at January 30, 2021, 146,803 shares issued and outstanding at February 1, 2020.		9,508			9,852
Additional paid-in-capital		—			4,872
Accumulated deficit		(1,193,234	)		(1,438,357	)
Accumulated other comprehensive loss		(13,444	)		(22,831	)
Total stockholders’ deficit		(1,197,170	)		(1,446,464	)
Total liabilities and stockholders’ deficit	$	4,528,405		$	3,838,095






The Michaels Companies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

	52 Weeks Ended
	January 30,			February 1,
(in thousands)	2021			2020
Cash flows from operating activities:
Net income	$	294,935		$	272,595
Adjustments to reconcile net income to cash provided by operating activities:
Non-cash operating lease expense		308,777			325,962
Depreciation and amortization		130,303			125,499
Share-based compensation		25,010			22,910
Debt issuance costs amortization		3,507			4,451
Loss on write-off of investment		—			5,036
Accretion of long-term debt, net		1,391			(129	)
Restructure and impairment charges		28,835			48,332
Impairment of intangible assets		3,500			—
Deferred income taxes		52,114			9,455
Losses on early extinguishments of debt and refinancing costs		22,044			1,316
Gain on sale of building		(101	)		—
Changes in assets and liabilities:
Merchandise inventories		88,183			9,504
Prepaid expenses and other		4,869			1,671
Accounts receivable		14,627			29,516
Other assets		198			(3,562	)
Operating lease liabilities		(277,375	)		(323,010	)
Accounts payable		389,756			(14,787	)
Accrued interest		6,978			(2,192	)
Accrued liabilities and other		128,671			(36,020	)
Income taxes		(5,323	)		17,647
Other liabilities		1,537			(1,019	)
Net cash provided by operating activities		1,222,436			493,175

Cash flows from investing activities:
Additions to property and equipment		(162,004	)		(120,545	)
Proceeds from sale of building		875			—
Acquisition of intangible assets		—			(58,000	)
Net cash used in investing activities		(161,129	)		(178,545	)

Cash flows from financing activities:
Common stock repurchased		(91,118	)		(107,997	)
Payments on term loan credit facility		(545,950	)		(24,900	)
Borrowings on asset-based revolving credit facility		600,000			23,200
Payments on asset-based revolving credit facility		(600,000	)		(23,200	)
Payment of 2020 senior subordinated notes		—			(510,000	)
Issuance of senior notes		—			500,000
Issuance of senior secured notes		375,000			—
Payment of debt refinancing costs		(26,812	)		(8,162	)
Proceeds from stock options exercised		12,473			506
Other financing activities		(475	)		—
Net cash used in financing activities		(276,882	)		(150,553	)

Net change in cash and equivalents		784,425			164,077
Cash and equivalents at beginning of period		409,964			245,887
Cash and equivalents at end of period	$	1,194,389		$	409,964






The Michaels Companies, Inc.
Reconciliation of Adjusted EBITDA
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(in thousands)	2021			2020			2021			2020
Net cash provided by operating activities	$	509,576		$	386,808		$	1,222,436		$	493,175
Non-cash operating lease expense		(67,737	)		(81,704	)		(308,777	)		(325,962	)
Depreciation and amortization		(34,921	)		(31,474	)		(130,303	)		(125,499	)
Share-based compensation		(5,251	)		(4,246	)		(25,010	)		(22,910	)
Debt issuance costs amortization		(750	)		(942	)		(3,507	)		(4,451	)
Loss on write-off of investment		—			—			—			(5,036	)
Accretion of long-term debt, net		(911	)		(66	)		(1,391	)		129
Restructure and impairment charges		(19,447	)		—			(28,835	)		(48,332	)
Impairment of intangible assets		—			—			(3,500	)		—
Deferred income taxes		(52,403	)		(19,439	)		(52,114	)		(9,455	)
Losses on early extinguishments of debt and refinancing costs		—			—			(22,044	)		(1,316	)
Gain on sale of building		—			—			101			—
Changes in assets and liabilities		(73,081	)		(67,286	)		(352,121	)		322,252
Net income		255,075			181,651			294,935			272,595
Interest expense		40,209			37,816			152,442			154,090
Income taxes		46,834			57,161			65,669			85,776
Depreciation and amortization		34,921			31,474			130,303			125,499
Interest income		(144	)		(1,172	)		(1,570	)		(3,185	)
EBITDA		376,895			306,930			641,779			634,775
Adjustments:
COVID-19 expense ⁽¹⁾		683			—			19,842			—
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Share-based compensation		5,251			4,246			25,010			22,910
Restructure and impairment charges		19,447			—			28,835			48,332
Darice liquidation charges		(467	)		—			45,244			—
Severance costs		3,435			431			8,972			5,607
Store pre-opening costs		1,554			238			3,082			4,608
Store remodel costs		64			94			1,739			337
Foreign currency transaction losses (gains), net		314			(383	)		(8	)		276
Store closing costs		621			313			1,528			(156	)
Consultant costs		6,476			—			20,625			—
CEO transition costs⁽²⁾		—			3,668			—			9,236
Other⁽³⁾		4,203			2,173			11,846			6,661
Adjusted EBITDA	$	418,476		$	317,710		$	830,538		$	733,902

⁽¹⁾

Includes costs attributable to the COVID-19 pandemic including hazard pay for team members, costs associated with furloughed employees, certain inventory charges and sanitation supplies. This amount also includes $8.0 million of wage subsidies resulting form COVID-19 relief legislation.

⁽²⁾

CEO transition costs include $5.6 million of severance paid to our previous CEO and a $3.7 million sign-on bonus for our new CEO.

⁽³⁾

Other adjustments primarily relate to items such as moving and relocation expenses, franchise taxes, sign-on bonuses, director's fees, search costs and the support center move.






The Michaels Companies, Inc.
Reconciliation of GAAP basis to Adjusted operating income, Adjusted net income and Adjusted earnings per share
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(In thousands, except per share)	2021			2020			2021			2020
Operating income	$	341,994		$	274,957		$	533,540		$	515,037
Restructure and impairment charges (a)		19,447			—			28,835			48,332
Darice liquidation (income) charges (b)		(467	)		—			45,244			—
CEO transition costs (c)		—			3,668			—			9,237
Adjusted operating income	$	360,974		$	278,625		$	607,619		$	572,606

Net income	$	255,075		$	181,651		$	294,935		$	272,595
Restructure and impairment charges (a)		19,447			—			28,835			48,332
Darice liquidation (income) charges (b)		(467	)		—			45,244			—
CEO transition costs (c)		—			3,668			—			9,237
Write-off of investment (d)		—			—			—			5,036
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Interest on 2020 senior subordinated notes (e)		—			—			—			1,748
Tax adjustment for above items		(6,358	)		(257	)		(25,706	)		(14,489	)
Tax benefit in connection with the CARES Act		(18,374	)		—			(18,374	)		—
Adjusted net income	$	249,323		$	185,062		$	346,978		$	323,775

Earnings per common share, diluted	$	1.72		$	1.24		$	1.98		$	1.78
Restructure and impairment charges (a)		0.13			—			0.19			0.32
Darice liquidation (income) charges (b)		(0.00	)		—			0.30			—
CEO transition costs (c)		—			0.02			—			0.06
Write-off of investment (d)		—			—			—			0.03
Losses on early extinguishments of debt and refinancing costs		—			—			0.15			0.01
Interest on 2020 senior subordinated notes (e)		—			—			—			0.01
Tax adjustment for above items		(0.04	)		(0.00	)		(0.17	)		(0.09	)
Tax benefit in connection with the CARES Act		(0.12	)		—			(0.12	)		-
Adjusted earnings per common share, diluted	$	1.69		$	1.26		$	2.33		$	2.11

(a)

Fiscal 2020 excludes $19.4 million of impairment charges related to the closure of 13 underperforming stores and $9.4 million of impairment charges related to the relocation of our support center. Fiscal 2019 excludes charges related to the closure of our Pat Catan's stores and impairment charges recorded as a result of lower than expected operating performance in our wholesale business.

(b)

Excludes (income) charges related to the closure of the Darice wholesale business.

(c)

Excludes $5.6 million of severance paid to our previous CEO and a $3.7 million sign-on bonus for our new CEO.

(d)

Excludes the write-off of an investment in a liquidated business.

(e)

Excludes interest paid on our 2020 Senior Subordinated notes during the period between the issuance of our 2027 Senior Notes and when the proceeds from that issuance were used to redeem the 2020 Senior Subordinated Notes.






The Michaels Companies, Inc.
Summary of Operating Data
(Unaudited)

The following table sets forth certain of our unaudited operating data:
	13 Weeks Ended				52 Weeks Ended
	January 30,		February 1,		January 30,		February 1,
	2021		2020		2021		2020

Store open at beginning of period	1,272		1,274		1,274		1,258
New stores	-		-		6		21
Relocated stores opened	1		-		8		13
Closed stores	(18	)	-		(25	)	(5	)
Relocated stores closed	(3	)	-		(11	)	(13	)
Store open at end of period	1,252		1,274		1,252		1,274



Other Operating Data:
Average inventory per store (in thousands)	$ 800		$ 816		$ 800		$ 816
Comparable store sales	12.9	%	(2.4	)%	4.8	%	(1.9	)%
Comparable store sales, at constant currency	12.7	%	(2.5	)%	4.8	%	(1.8	)%

Get the next $MIK alert in real time by email

The Michaels Companies Announces Fourth Quarter and Full Year Fiscal 2020 Results

3/4/21 9:00:00 AM ET

$MIK

Recreational Products/Toys

Consumer Services

Get the next $MIK alert in real time by email

IRVING, Texas--(BUSINESS WIRE)--The Michaels Companies, Inc. (NASDAQ: MIK) today announced financial results for the fourth quarter and full year fiscal 2020 ended January 30, 2021.

Key Financial Results:

	13 Weeks Ended January 30, 2021	13 Weeks Ended February 1, 2020	52 Weeks Ended January 30, 2021	52 Weeks Ended February 1, 2020
Net Sales	$1,916.8M	$1,722.6M	$5,271.1M	$5,072.0M
Comp. Store Sales	12.9%	-2.4%	4.8%	-1.9%
Operating Income	$342.0M	$275.0M	$533.5M	$515.0M
Net Income	$255.1M	$181.7M	$294.9M	$272.6M
Diluted Earnings per Share	$1.72	$1.24	$1.98	$1.78
Adjusted Operating Income¹	$361.0M	$278.6M	$607.6M	$572.6M
Adjusted Net Income ¹	$249.3M	$185.1M	$347.0M	$323.8M
Adjusted Diluted Earnings per Share¹	$1.69	$1.26	$2.33	$2.11

¹See additional information in this release for a reconciliation of non-GAAP financial measures to the respective GAAP measures.

Conference Call

Non-GAAP Information

IMPORTANT INFORMATION

About The Michaels Companies, Inc.:





The Michaels Companies, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(in thousands, except per share data)	2021			2020			2021			2020
Net sales	$	1,916,842		$	1,722,608		$	5,271,112		$	5,072,037
Cost of sales and occupancy expense		1,106,815			1,076,610			3,315,035			3,199,780
Gross profit		810,027			645,998			1,956,077			1,872,257
Selling, general and administrative		447,032			370,803			1,390,620			1,304,280
Restructure and impairment charges		19,447			—			28,835			48,332
Store pre-opening costs		1,554			238			3,082			4,608
Operating income		341,994			274,957			533,540			515,037
Interest expense		40,209			37,816			152,442			154,090
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Other (income) expense, net		(124	)		(1,671	)		(1,550	)		1,260
Income before income taxes		301,909			238,812			360,604			358,371
Income taxes		46,834			57,161			65,669			85,776
Net income	$	255,075		$	181,651		$	294,935		$	272,595

Other comprehensive income, net of tax:
Foreign currency and cash flow hedges		10,853			85			9,387			(8,273	)
Comprehensive income	$	265,928		$	181,736		$	304,322		$	264,322

Earnings per common share:
Basic	$	1.76		$	1.24		$	2.01		$	1.78
Diluted	$	1.72		$	1.24		$	1.98		$	1.78
Weighted-average common shares outstanding:
Basic		144,598			146,638			146,541			153,134
Diluted		147,844			146,701			148,531			153,202

The following table sets forth the percentage relationship to net sales of each line item of our unaudited consolidated statements of comprehensive income:
		13 Weeks Ended						52 Weeks Ended
		January 30,			February 1,			January 30,			February 1,
		2021			2020			2021			2020
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales and occupancy expense		57.7			62.5			62.9			63.1
Gross profit		42.3			37.5			37.1			36.9
Selling, general and administrative		23.3			21.5			26.4			25.7
Restructure and impairment charges		1.0			—			0.5			1.0
Store pre-opening costs		0.1			—			0.1			0.1
Operating income		17.8			16.0			10.1			10.2
Interest expense		2.1			2.2			2.9			3.0
Losses on early extinguishments of debt and refinancing costs		—			—			0.4			—
Other (income) expense, net		—			(0.1	)		—			—
Income before income taxes		15.8			13.9			6.8			7.1
Income taxes		2.4			3.3			1.2			1.7
Net income		13.3	%		10.5	%		5.6	%		5.4	%






The Michaels Companies, Inc.
Consolidated Balance Sheets
(Unaudited)

	January 30,			February 1,
(in thousands, except per share data)	2021			2020
ASSETS
Current Assets:
Cash and equivalents	$	1,194,389		$	409,964
Merchandise inventories		1,007,043			1,097,109
Prepaid expenses and other		56,822			62,287
Accounts receivable, net		14,039			30,442
Total current assets		2,272,293			1,599,802
Property and equipment, net		472,563			430,432
Operating lease assets		1,594,554			1,610,013
Goodwill		94,290			94,290
Other intangible assets, net		57,121			66,417
Deferred income taxes		19,394			18,201
Other assets		18,190			18,940
Total assets	$	4,528,405		$	3,838,095

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	858,790		$	476,298
Accrued liabilities and other		488,658			347,136
Current portion of operating lease liabilities		324,238			306,796
Current portion of long-term debt		16,700			24,900
Income taxes payable		27,313			41,236
Total current liabilities		1,715,699			1,196,366
Long-term debt		2,480,953			2,644,460
Long-term operating lease liabilities		1,378,394			1,357,821
Deferred income taxes		54,200			—
Other liabilities		96,329			85,912
Total liabilities		5,725,575			5,284,559

Stockholders’ Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 141,608 shares issued and outstanding at January 30, 2021, 146,803 shares issued and outstanding at February 1, 2020.		9,508			9,852
Additional paid-in-capital		—			4,872
Accumulated deficit		(1,193,234	)		(1,438,357	)
Accumulated other comprehensive loss		(13,444	)		(22,831	)
Total stockholders’ deficit		(1,197,170	)		(1,446,464	)
Total liabilities and stockholders’ deficit	$	4,528,405		$	3,838,095






The Michaels Companies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

	52 Weeks Ended
	January 30,			February 1,
(in thousands)	2021			2020
Cash flows from operating activities:
Net income	$	294,935		$	272,595
Adjustments to reconcile net income to cash provided by operating activities:
Non-cash operating lease expense		308,777			325,962
Depreciation and amortization		130,303			125,499
Share-based compensation		25,010			22,910
Debt issuance costs amortization		3,507			4,451
Loss on write-off of investment		—			5,036
Accretion of long-term debt, net		1,391			(129	)
Restructure and impairment charges		28,835			48,332
Impairment of intangible assets		3,500			—
Deferred income taxes		52,114			9,455
Losses on early extinguishments of debt and refinancing costs		22,044			1,316
Gain on sale of building		(101	)		—
Changes in assets and liabilities:
Merchandise inventories		88,183			9,504
Prepaid expenses and other		4,869			1,671
Accounts receivable		14,627			29,516
Other assets		198			(3,562	)
Operating lease liabilities		(277,375	)		(323,010	)
Accounts payable		389,756			(14,787	)
Accrued interest		6,978			(2,192	)
Accrued liabilities and other		128,671			(36,020	)
Income taxes		(5,323	)		17,647
Other liabilities		1,537			(1,019	)
Net cash provided by operating activities		1,222,436			493,175

Cash flows from investing activities:
Additions to property and equipment		(162,004	)		(120,545	)
Proceeds from sale of building		875			—
Acquisition of intangible assets		—			(58,000	)
Net cash used in investing activities		(161,129	)		(178,545	)

Cash flows from financing activities:
Common stock repurchased		(91,118	)		(107,997	)
Payments on term loan credit facility		(545,950	)		(24,900	)
Borrowings on asset-based revolving credit facility		600,000			23,200
Payments on asset-based revolving credit facility		(600,000	)		(23,200	)
Payment of 2020 senior subordinated notes		—			(510,000	)
Issuance of senior notes		—			500,000
Issuance of senior secured notes		375,000			—
Payment of debt refinancing costs		(26,812	)		(8,162	)
Proceeds from stock options exercised		12,473			506
Other financing activities		(475	)		—
Net cash used in financing activities		(276,882	)		(150,553	)

Net change in cash and equivalents		784,425			164,077
Cash and equivalents at beginning of period		409,964			245,887
Cash and equivalents at end of period	$	1,194,389		$	409,964






The Michaels Companies, Inc.
Reconciliation of Adjusted EBITDA
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(in thousands)	2021			2020			2021			2020
Net cash provided by operating activities	$	509,576		$	386,808		$	1,222,436		$	493,175
Non-cash operating lease expense		(67,737	)		(81,704	)		(308,777	)		(325,962	)
Depreciation and amortization		(34,921	)		(31,474	)		(130,303	)		(125,499	)
Share-based compensation		(5,251	)		(4,246	)		(25,010	)		(22,910	)
Debt issuance costs amortization		(750	)		(942	)		(3,507	)		(4,451	)
Loss on write-off of investment		—			—			—			(5,036	)
Accretion of long-term debt, net		(911	)		(66	)		(1,391	)		129
Restructure and impairment charges		(19,447	)		—			(28,835	)		(48,332	)
Impairment of intangible assets		—			—			(3,500	)		—
Deferred income taxes		(52,403	)		(19,439	)		(52,114	)		(9,455	)
Losses on early extinguishments of debt and refinancing costs		—			—			(22,044	)		(1,316	)
Gain on sale of building		—			—			101			—
Changes in assets and liabilities		(73,081	)		(67,286	)		(352,121	)		322,252
Net income		255,075			181,651			294,935			272,595
Interest expense		40,209			37,816			152,442			154,090
Income taxes		46,834			57,161			65,669			85,776
Depreciation and amortization		34,921			31,474			130,303			125,499
Interest income		(144	)		(1,172	)		(1,570	)		(3,185	)
EBITDA		376,895			306,930			641,779			634,775
Adjustments:
COVID-19 expense ⁽¹⁾		683			—			19,842			—
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Share-based compensation		5,251			4,246			25,010			22,910
Restructure and impairment charges		19,447			—			28,835			48,332
Darice liquidation charges		(467	)		—			45,244			—
Severance costs		3,435			431			8,972			5,607
Store pre-opening costs		1,554			238			3,082			4,608
Store remodel costs		64			94			1,739			337
Foreign currency transaction losses (gains), net		314			(383	)		(8	)		276
Store closing costs		621			313			1,528			(156	)
Consultant costs		6,476			—			20,625			—
CEO transition costs⁽²⁾		—			3,668			—			9,236
Other⁽³⁾		4,203			2,173			11,846			6,661
Adjusted EBITDA	$	418,476		$	317,710		$	830,538		$	733,902

⁽¹⁾

⁽²⁾

CEO transition costs include $5.6 million of severance paid to our previous CEO and a $3.7 million sign-on bonus for our new CEO.

⁽³⁾

Other adjustments primarily relate to items such as moving and relocation expenses, franchise taxes, sign-on bonuses, director's fees, search costs and the support center move.






The Michaels Companies, Inc.
Reconciliation of GAAP basis to Adjusted operating income, Adjusted net income and Adjusted earnings per share
(Unaudited)

	13 Weeks Ended						52 Weeks Ended
	January 30,			February 1,			January 30,			February 1,
(In thousands, except per share)	2021			2020			2021			2020
Operating income	$	341,994		$	274,957		$	533,540		$	515,037
Restructure and impairment charges (a)		19,447			—			28,835			48,332
Darice liquidation (income) charges (b)		(467	)		—			45,244			—
CEO transition costs (c)		—			3,668			—			9,237
Adjusted operating income	$	360,974		$	278,625		$	607,619		$	572,606

Net income	$	255,075		$	181,651		$	294,935		$	272,595
Restructure and impairment charges (a)		19,447			—			28,835			48,332
Darice liquidation (income) charges (b)		(467	)		—			45,244			—
CEO transition costs (c)		—			3,668			—			9,237
Write-off of investment (d)		—			—			—			5,036
Losses on early extinguishments of debt and refinancing costs		—			—			22,044			1,316
Interest on 2020 senior subordinated notes (e)		—			—			—			1,748
Tax adjustment for above items		(6,358	)		(257	)		(25,706	)		(14,489	)
Tax benefit in connection with the CARES Act		(18,374	)		—			(18,374	)		—
Adjusted net income	$	249,323		$	185,062		$	346,978		$	323,775

Earnings per common share, diluted	$	1.72		$	1.24		$	1.98		$	1.78
Restructure and impairment charges (a)		0.13			—			0.19			0.32
Darice liquidation (income) charges (b)		(0.00	)		—			0.30			—
CEO transition costs (c)		—			0.02			—			0.06
Write-off of investment (d)		—			—			—			0.03
Losses on early extinguishments of debt and refinancing costs		—			—			0.15			0.01
Interest on 2020 senior subordinated notes (e)		—			—			—			0.01
Tax adjustment for above items		(0.04	)		(0.00	)		(0.17	)		(0.09	)
Tax benefit in connection with the CARES Act		(0.12	)		—			(0.12	)		-
Adjusted earnings per common share, diluted	$	1.69		$	1.26		$	2.33		$	2.11

(a)

(b)

Excludes (income) charges related to the closure of the Darice wholesale business.

(c)

Excludes $5.6 million of severance paid to our previous CEO and a $3.7 million sign-on bonus for our new CEO.

(d)

Excludes the write-off of an investment in a liquidated business.

(e)






The Michaels Companies, Inc.
Summary of Operating Data
(Unaudited)

The following table sets forth certain of our unaudited operating data:
	13 Weeks Ended				52 Weeks Ended
	January 30,		February 1,		January 30,		February 1,
	2021		2020		2021		2020

Store open at beginning of period	1,272		1,274		1,274		1,258
New stores	-		-		6		21
Relocated stores opened	1		-		8		13
Closed stores	(18	)	-		(25	)	(5	)
Relocated stores closed	(3	)	-		(11	)	(13	)
Store open at end of period	1,252		1,274		1,252		1,274



Other Operating Data:
Average inventory per store (in thousands)	$ 800		$ 816		$ 800		$ 816
Comparable store sales	12.9	%	(2.4	)%	4.8	%	(1.9	)%
Comparable store sales, at constant currency	12.7	%	(2.5	)%	4.8	%	(1.8	)%

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SEC Form S-8 POS filed by The Michaels Companies, Inc.

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SEC Form 4 filed by COTTON RYAN to satisfy tax liability

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The Michaels Companies Announces Fourth Quarter and Full Year Fiscal 2020 Results

Crush Q1 2026 with the Best AI Superconnector

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Crush Q1 2026 with the Best AI Superconnector

Recent Analyst Ratings for $MIK

$MIK SEC Filings

SEC Form 15-12B filed by The Michaels Companies, Inc.

SEC Form S-8 POS filed by The Michaels Companies, Inc.

SEC Form S-8 POS filed by The Michaels Companies, Inc.

$MIK Press Releases

Michaels and Project Sunshine Bring 30,000 Craft Kits to Pediatric Patients Nationwide

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SEC Form 4: Buchanan Ashley decreased direct ownership by 100% to 0 units to satisfy tax liability

SEC Form 4: Sullivan Jim sold $382,829 worth of Common Stock (17,433 units at $21.96), decreasing direct ownership by 100% to 0 units (tax liability)

SEC Form 4 filed by COTTON RYAN to satisfy tax liability

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JPMorgan Chase & Co. resumed coverage on The Michaels Companies with a new price target

Loop Capital resumed coverage on The Michaels Companies with a new price target

The Michaels Companies upgraded by Morgan Stanley with a new price target

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SEC Form SC 13G/A filed

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