BJs Wholesale Club Holdings Inc

Previous wording

The following discussion and analysis is intended to promote an understanding of the results of operations and financial condition of the Company and is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for fiscal year 2023. The following discussion may contain forward-looking statements that reflect our plans, estimates and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled "Forward-Looking Statements" and in Part I. "Item 1A. Risk Factors" in our Annual Report on Form 10-K for fiscal year 2023 and subsequent filings with the SEC.

Current wording

The following discussion and analysis is intended to promote an understanding of the results of operations and financial condition of the Company and is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for fiscal year 2024. The following discussion may contain forward-looking statements that reflect our plans, estimates and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled "Forward-Looking Statements" and in Part I. "Item 1A. Risk Factors" in our Annual Report on Form 10-K for fiscal year 2024 and subsequent filings with the SEC.

Previous wording

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of January. Accordingly, references herein to "fiscal year 2024" relate to the 52 weeks ending February 1, 2025, and references herein to "fiscal year 2023" relate to the 53 weeks ended February 3, 2024. The third quarter of fiscal year 2024 ended on November 2, 2024, and the third quarter of fiscal year 2023 ended on October 28, 2023, and both include thirteen weeks.

Current wording

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of January. Accordingly, references herein to "fiscal year 2025" relate to the 52 weeks ending January 31, 2026, and references herein to "fiscal year 2024" relate to the 52 weeks ended February 1, 2025. The first quarter of fiscal year 2025 ended on May 3, 2025, and the first quarter of fiscal year 2024 ended on May 4, 2024, and both included thirteen weeks.

Previous wording

BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States. We deliver significant value to our members, consistently offering up to 25% savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors. The Company providesa curated assortment focused on groceries, fresh foods, general merchandise, gasoline, andother ancillary services to deliver a differentiated shopping experience that is further enhanced by our omnichannel capabilities. Additionally, the Company provides access to coupons and promotions to deliver further value to our members.

Current wording

BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States. We deliver significant value to our members, consistently offering up to 25% savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on groceries, fresh foods, general merchandise, gasoline, and other ancillary services to deliver a differentiated shopping experience that is further enhanced by our digital capabilities. Additionally, we provide access to coupons and promotions to deliver further value to our members.

Previous wording

Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 247 large-format, high volume warehouse clubs and 182 gas stations spanning 20 states as of the date of this filing. In our core New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product, we operate more than three times the number of clubs compared to the next largest warehouse club competitor. In addition to shopping in our clubs, members are able to shop when and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our buy-online-pickup-in-club ("BOPIC") service, curbside delivery, same-day home delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces. We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day grocery deliveries over a one-year period.

Current wording

Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 255 large-format, high volume warehouse clubs and 190 gas stations spanning 21 states as of the date of this filing. In our originating New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product ("GDP"), we operate more than three times the number of clubs compared to the next largest warehouse club competitor. In addition to shopping in our clubs, members are able to shop when and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our buy-online-pickup-in-club ("BOPIC") service, curbside delivery, same-day delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces. We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day deliveries over a one-year period.

Previous wording

Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We have over 7.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. The annual membership fee for our Club Card membership is generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $110. We believe that members can save over ten times their $55 Club Card membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. Inaddition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label brands, Wellsley Farms® and Berkley Jensen®, represented approximately $4.1 billion in annual sales for fiscal year 2023. Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $447.9 million for the trailing twelve-months ended November 2, 2024.

Current wording

Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We have over 7.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. The annual membership fee for our Club Card membership is generally $60, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $120. Prior to January 1, 2025, the Club Card and Club+ membership fees were $55 and $110 per year, respectively. We believe that members can save over ten times their $60 Club Card membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label brands, Wellsley Farms® and Berkley Jensen®, represented approximately 26% of our total net sales, excluding gasoline, for fiscal year 2024. Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $465.5 million for the trailing twelve-months ended May 3, 2025.

Previous wording

The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending in our clubs, while economic weakness, which generally results in a reduction of customer spending, may have a different or more extreme effect on spending at our clubs. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include employment rates, changes to the Supplemental Nutrition Assistance Program (SNAP), government stimulus programs, tax legislation, business conditions, changes in the housing market, the availability of credit, interest rates and inflation, tariffs, tax rates, and fuel and energy costs. In addition, unemployment rates and benefits may cause us to experience higher labor costs.

Current wording

The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending in our clubs, while economic weakness, which generally results in a reduction of customer spending, may have a different or more extreme effect on spending at our clubs. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include, among others, employment rates, changes to the Supplemental Nutrition Assistance Program (SNAP), government stimulus programs, tax legislation, business conditions, changes in the housing market, the availability of credit, interest rates and inflation, tariffs, tax rates, and fuel and energy costs. In addition, unemployment rates and benefits may cause us to experience higher labor costs.

Previous wording

The membership model is a critical element of our business. Members drive our results of operations through their membership fee income and their purchases. The majority of members renew within six months following their renewal date. Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. We have grown our membership fee income each year for over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in the first thirty-nine weeks of fiscal year 2024. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2023.

Current wording

The membership model is a critical element of our business. Members drive our results of operations through their membership fee income and their purchases. The majority of members renew within six months following their renewal date. Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. We have grown our membership fee income each year for over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in the first thirteen weeks of fiscal year 2025. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2024.

Previous wording

Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, ExpressPay, curbside pickup, and same- day home delivery will enable us to replicate our profitable club format and provide a differentiated shopping experience. We expect these infrastructure investments to support our successful operating model across our club operations.

Current wording

Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, ExpressPay, and a digital coupon gallery will enable us to replicate our profitable club format and provide a differentiated shopping experience. We expect these infrastructure investments to support our successful operating model across our club operations.

Previous wording

Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, which could lead to a reduction in our sales, as well as greater margin pressure, as costs may not be able to be passed on to consumers. Changes in commodity prices and changes in inflation rates have impacted several categories of our business. Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, and other factors. In response to general inflationary volatility, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mix or increasing our pricing when necessary.

Current wording

Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, which could lead to a reduction in our sales, as well as greater margin pressure, as costs may not be able to be passed on to consumers. Changes in commodity prices and changes in inflation rates have impacted several categories of our business and may continue to do so. Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, tariffs, and other factors. In response to general inflationary volatility, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mix or increasing our pricing when necessary.

Previous wording

Net sales for the third quarter of fiscal year 2024 were $5.0 billion, a 3.4% increase from net sales reported for the third quarter of fiscal year 2023 of $4.8 billion.

Current wording

Net sales for the first quarter of fiscal year 2025 were $5.0 billion, a 4.7% increase from net sales reported for the first quarter of fiscal year 2024 of $4.8 billion.

Previous wording

The increase for both comparative periods was due primarily to traffic and unit growth, particularly in the perishables, grocery, and sundries division, an increase of nine clubs from the prior year period, as well as gasoline sales at our gas stations.

Current wording

The increase was due primarily to traffic and unit growth, particularly in the perishables, grocery, and sundries division, as well as an increase of 11 clubs from the prior year period, partially offset by a decrease in gasoline sales.

Previous wording

Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period. Merchandise comparable club sales increased 3.8% in the third quarter of fiscal year 2024 compared to the third quarter of fiscal year 2023, primarily driven by increased sales of perishables with sales of general merchandise and services remaining relatively flat. Additionally, we estimate that an increase in sales, temporarily driven by a port strike and recent hurricanes, had a favorable impact of slightly less than one percentage point on its third quarter sales.

Current wording

Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period. Merchandise comparable club sales increased 3.9% in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024, primarily driven by increased sales in the perishables, grocery, and sundries division, partially offset by a slight decline in sales of general merchandise and services compared to the prior year period.

Previous wording

In the perishables, grocery, and sundries division, growth was led by fresh produce, dairy, fresh beef and poultry, beverages, candy, snacks, nutrition, vitamins, packaged goods, household cleaning, and paper categories when compared to the third quarter of fiscal year 2023, slightly offset by decreased demand for alcohol.

Current wording

In the perishables, grocery, and sundries division, growth was led by fresh meat and produce, dairy, candy, snacks, nutrition, household cleaning, and paper categories when compared to the first quarter of fiscal year 2024, slightly offset by decreased demand for alcohol.

Previous wording

The impact of gasoline sales is a result of a decrease in retail prices year over year, partially offset by an increase in comparable gallons sold in the third quarter of fiscal 2024 as compared to the third quarter of fiscal year 2023.

Current wording

The impact of gasoline sales is a result of a decrease in retail prices year over year, partially offset by an increase in comparable gallons sold in the first quarter of fiscal 2025 as compared to the first quarter of fiscal year 2024.

Previous wording

The increase for both comparative periods was primarily driven by strength in membership acquisition and retention across both new and existing clubs. We continued to add new members from our four new club openings in fiscal year 2024 as well as the five new clubs that opened in the fourth quarter of fiscal year 2023. As noted above, we announced an increase in membership fees effective January 1, 2025 which we anticipate will positively impact membership fee income in fiscal year 2025.

Current wording

Membership fee income was $120.4 million in the first quarter of fiscal year 2025 compared to $111.4 million in the first quarter of fiscal year 2024, an 8.1% increase. The increase was primarily driven by strength in membership acquisition, retention and higher tier membership penetration across both new and existing clubs, as well as the increase in annual membership fees which became effective in January 2025. We anticipate the annual membership fee increase will positively impact membership fee income for the remainder of fiscal 2025.

Previous wording

Cost of sales was $4.1 billion, or 82.7% of net sales, in the third quarter of fiscal year 2024 compared to $4.0 billion, or 83.5% of net sales, in the third quarter of fiscal year 2023. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 20 basis points compared to the prior year period, primarily driven by the continued execution of our long-term initiatives and improved cost management.

Current wording

Cost of sales was $4.2 billion, or 83.1% of net sales, in the first quarter of fiscal year 2025 compared to $4.0 billion, or 83.9% of net sales, in the first quarter of fiscal year 2024. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, increased 30 basis points compared to the prior year period. The Company continues to manage the business to drive profitable growth across the broader merchandise assortment.

Previous wording

SG&A includes both fixed and variable components and, therefore, is not directly correlated with net sales. We expect that our SG&A will increase in future periods due to investments to drive comparable club sales growth and our expanding footprint as we open new clubs. In addition, any future increases in wages or stock-based grants or modifications will increase our SG&A.

Current wording

SG&A includes both fixed and variable components and, therefore, is not directly correlated with net sales. We expect that our SG&A will increase in future periods due to investments to drive comparable club sales growth and our expanding footprint as we open new clubs and distribution centers. In addition, any future increases in wages or stock-based grants or modifications will increase our SG&A.

Previous wording

The increase in SG&A for both comparative periods was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings in addition to other investments to drive strategic priorities, such as the restructuring of certain corporate functions, and an increase in accrued incentive compensation. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense. The increases in SG&A were partially offset by the favorable net impact of legal settlements reached of approximately $20 million during the third quarter of fiscal year 2024. We remain focused on investing in member engagement, marketing and digital strategies.

Current wording

SG&A increased by 5.4% to $760.9 million in the first quarter of fiscal year 2025 from $721.8 million in the first quarter of fiscal year 2024. The increase in SG&A was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense year-over-year.

Previous wording

Pre-opening expenses include startup costs for new clubs and costs for relocated clubs. Expenses will vary based on the number of club openings, geography of the club, whether the club is owned or leased, and timing of the opening relative to our period end.

Current wording

Pre-opening expenses include startup costs for new clubs and distribution centers and costs for relocated clubs. Expenses will vary based on the number of club openings, geography of the club, whether the club is owned or leased, and timing of the opening relative to our period end.

Previous wording

Pre-opening expenses fluctuated due to timing of spend and the number of club openings year-over-year for both comparative periods.

Current wording

Pre-opening expenses were $5.0 million in the first quarter of fiscal year 2025 compared to $0.9 million in the first quarter of fiscal year 2024. Pre-opening expenses fluctuated due to timing of spend and the number of club openings year-over-year.

Previous wording

The decrease for both comparative periods was primarily due to a reduction in outstanding borrowings, fluctuations in interest rates year-over-year, and a decrease in debt extinguishment charges as the third quarter of fiscal year 2023 included charges related to the Fourth Amendment of the First Lien Term Loan.

Current wording

The decrease was primarily due to a reduction in outstanding borrowings as well as fluctuations in interest rates year-over-year.

Previous wording

The effective income tax rate from continuing operations was 25.7% and 29.7% for the first nine months of fiscal years 2024 and 2023, respectively. The decrease in the effective income tax rate was primarily driven by higher tax benefits from stock-based compensation in the current year period.

Current wording

The effective income tax rate was 22.2% and 24.4% for the first quarter of fiscal years 2025 and 2024, respectively. The decrease in the effective income tax rate was primarily driven by higher tax benefits from stock-based compensation in the current year period.

Previous wording

(c) Adjusted net income for the thirteen and thirty-nine weeks ended October 28, 2023 has been recast to include adjustments for restructuring charges, and the corresponding tax impact, to conform to the current period presentation.

Current wording

Adjusted Net Income and Adjusted EPS

Previous wording

(a) Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees. Adjusted EBITDA for the thirteen and thirty-nine weeks ended October 28, 2023 has been recast to include adjustments for restructuring charges to conform to the current period presentation.

Current wording

(a)Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Previous wording

(d)Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.

Current wording

(b)Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.

Previous wording

(f)Adjusted EPS is measured using weighted-average diluted shares outstanding.

Current wording

(c)Adjusted EPS is measured using weighted-average diluted shares outstanding.

Previous wording

Adjusted EBITDA is defined as income from continuing operations before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments.

Current wording

Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments.

Previous wording

The following is a reconciliation of our income from continuing operations to adjusted EBITDA and adjusted EBITDA as a percentage of net sales for the periods presented:

Current wording

The following is a reconciliation of our net income to adjusted EBITDA for the periods presented:

Previous wording

(b)Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Current wording

(a) Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Previous wording

Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of November 2, 2024, cash and cash equivalents totaled $33.9 million and we had $942.2 million of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures, fund share repurchases, and meet debt service and principal repayment obligations. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.

Current wording

Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of May 3, 2025, cash and cash equivalents totaled $39.5 million and we had $1.0 billion of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures, fund share repurchases, and meet debt service and principal repayment obligations. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.

Previous wording

In the first nine months of fiscal year 2024, we repurchased 1,536,591 shares under the 2021 Repurchase Program for a total purchase price of $129.3 million, inclusive of associated costs.

Current wording

In the first three months of fiscal year 2025, we repurchased 55,000 shares under the 2024 Repurchase Program for a total purchase price of $6.2 million, inclusive of associated costs.

Previous wording

Net cash provided by operating activities was $629.0 million for the first nine months of fiscal year 2024 compared to $444.5 million for the first nine months of fiscal year 2023. The $184.4 million increase was primarily due to fluctuations in working capital, including $113.9 million related to accounts payable as a result of timing of inventory receipts and vendor payments; $51.6 million related to accrued expenses, primarily driven by the change in accrued incentive compensation as a result of differences in the expected achievement from period-to-period; $18.1 million related to merchandise inventories, primarily driven by changes in inventory levels in our perishables, grocery, and sundries divisions; partially offset by $56.2 million related to accounts receivable due to timing of vendor and customer cash receipts. Also contributing to the increase in net operating cash flows was an $33.9 million increase in net income, inclusive of a $27.8 million increase in depreciation and amortization and a net decrease in deferred income tax provisions of $22.3 million.

Current wording

Net cash provided by operating activities was $208.1 million for the first three months of fiscal year 2025 compared to $200.8 million for the first three months of fiscal year 2024. The increase was primarily due to a $38.7 million increase in net income, inclusive of a $6.2 million increase in depreciation and amortization and a net decrease in deferred income tax provision of $6.3 million. Also contributing to the increase in net operating cash flows were fluctuations in working capital, including $36.2 million related to accounts receivable due to timing of vendor and customer cash receipts; $20.4 million related to merchandise inventories, primarily driven by changes in inventory levels in our perishables, grocery, and sundries divisions;

Previous wording

Net cash used in investing activities was $427.6 million for the first nine months of fiscal year 2024, compared to $335.6 million for the first nine months of fiscal year 2023. This fluctuation is primarily driven by an increase in capital spending of $79.6 million primarily due to an increase in the number clubs under construction.

Current wording

Net cash used in investing activities was $142.3 million for the first three months of fiscal year 2025 compared to $105.7 million for the first three months of fiscal year 2024. This fluctuation is primarily driven by an increase in capital spending of $34.8 million as we continue to execute on our growth strategy with new clubs in our pipeline.

Previous wording

Net cash used in financing activities for the first nine months of fiscal year 2024 was $203.6 million, compared to $109.3 million for the first nine months of fiscal year 2023. The increase in cash used is primarily due to a$103.0 million increase in net payments on our ABL Revolving Facility, as well as an increased outflow of $56.2 million for the acquisition of treasury stock compared to the prior year period; partially offset by a $50.0 million net decrease in principal payments on our First Lien Term Loan, and by an increase in net cash received from stock option exercises of $13.1 million.

Current wording

Net cash used in financing activities for the first three months of fiscal year 2025 was $54.6 million compared to $96.1 million for the first three months of fiscal year 2024. The decrease in cash used is primarily due to a$24.0 million decrease in net payments on our ABL Revolving Facility anda $16.0 million decrease in the acquisition of treasury stock compared to the prior year period.

Previous wording

We present adjusted free cash flow because we use it to report to our board of directors and we believe it assists investors and analysts in evaluating our liquidity. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We define adjusted free cash flow as net cash provided by operating activities less additions to property and equipment, net of disposals, plus proceeds from sale-leaseback transactions.

Current wording

We present adjusted free cash flow because we believe it assists investors and analysts in evaluating our liquidity. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We define adjusted free cash flow as net cash provided by operating activities less additions to property and equipment, net of disposals, plus proceeds from sale-leaseback transactions.

Previous wording

Adjusted free cash flow decreased to $18.8 million for the third quarter of fiscal year 2024 compared to $47.6 million for the third quarter of fiscal year 2023. This decrease in adjusted free cash flow is primarily the result of an increase in capital spending, partially offset by higher cash flows from operating activities due to favorable fluctuations in working capital and higher net income. Adjusted free cash flow increased to $201.4 million for the first nine months of fiscal year 2024 compared to $108.9 million for the first nine months of fiscal year 2023. This increase is primarily the result of higher cash flows from operating activities due to favorable fluctuations in working capital and higher net income, partially offset by an increase in capital spending.

Current wording

Adjusted free cash flow decreased to $67.6 million for the first quarter of fiscal year 2025 compared to $95.1 million for the first quarter of fiscal year 2024. This decrease in adjusted free cash flow is primarily the result of an increase in capital spending, partially offset by higher cash flows from operating activities primarily due to higher net income.

Previous wording

Our primary sources of borrowing capacity are the ABL Revolving Facility and the First Lien Term Loan, which are further discussed in Note 4, "Debt and Credit Arrangements," included in this Quarterly Report on Form 10-Q.

Current wording

Our primary source of borrowing capacity is the ABL Revolving Facility, which is further discussed in Note 4, "Debt and Credit Arrangements," included in this Quarterly Report on Form 10-Q.

Previous wording

On November 4, 2024, we entered into the Fifth Amendment with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lenders party thereto.

Current wording

On November 4, 2024, we entered into the Fifth Amendment of the First Lien Term Loan with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lenders party thereto.

Previous wording

The Fifth Amendment, among other things, provided for a new tranche of term loans in an aggregate principal amount of $400.0 million, which refinanced and replaced in full the existing Tranche B term loans outstanding under the First Lien Term Loan Credit Agreement immediately prior to the effectiveness of the Fifth Amendment. In addition, the Fifth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum.

Current wording

The Fifth Amendment, among other things, provided for a new tranche of term loans in an aggregate principal amount of $400.0 million, which refinanced and replaced in full the existing Tranche B term loans outstanding under the First Lien Term Loan Credit Agreement immediately prior to the effectiveness of the Fifth Amendment. In addition, the Fifth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum. The maturity date of the First Lien Term Loan is February 3, 2029.

Previous wording

At November 2, 2024, there was $245.0 million outstanding in loans under the ABL Revolving Facility and $12.8 million in outstanding letters of credit. The interest rate on the revolving credit facility was 5.77% and unused capacity was $942.2 million.

Current wording

At May 3, 2025, there was $150.0 million outstanding in loans under the ABL Revolving Facility and $13.5 million in outstanding letters of credit. The interest rate on the revolving credit facility was 5.42% and unused capacity was $1.0 billion.