Bed Bath & Beyond Inc. (NASDAQ:BBBY) Q2 2017 Earnings Conference Call - Final Transcript

Sep 19, 2017 • 05:00 pm ET

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Bed Bath & Beyond Inc. (NASDAQ:BBBY) Q2 2017 Earnings Conference Call - Final Transcript

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Presentation
Executive
Susan E. Lattmann

expense.

We continue to model SG&A as a percentage of net sales to deleverage for the full-year, including increases in payroll and payroll-related expenses, advertising expense, the store management restructuring charges, technology-related expenses including related appreciation, the estimated costs related to Hurricanes Harvey and Irma and the impact from One Kings Lane and PMall, both of which were acquired during fiscal 2016.

We are modeling 2017 depreciation expense to be in the range of approximately $310 million to $320 million. We are modeling net interest expense of approximately $75 million to $80 million for the full-year. We're modeling our 2017 tax rate to be higher than last year, but still within the mid to high-30s percentage range, primarily due to the impact of adopting the new share-based payment accounting standard. We also anticipate the net after-tax benefits from other distinct tax events will be lower than in 2016.

Capital expenditures are modeled to be in the range of $350 million to $400 million, which remains subject to the timing and composition of projects. We continue to believe that for the foreseeable future, we are plateauing at about these levels. In addition, more than half of the 2017 spend is planned for technology-related projects, in support of our growing omnichannel capabilities.

We plan to open approximately 25 new stores in fiscal 2017 and closed approximately 15 stores, leading to a net reduction in Bed Bath & Beyond stores and net increases in stores for the other concepts, where we are focusing our new markets and formats. We continue to expect our positive cash flow to fund our operations and capital expenditures, as well as our quarterly dividend and share repurchase programs, which is subject to several factors, including business and market conditions.

We believe we will end the year with approximately the same or slightly higher cash and investment balances than last year. All of this considered, we are modeling net earnings per diluted share for the full-year to be about $3, with the balance of the net earnings per diluted share to be split roughly 20% in the third quarter and roughly 80% in the fourth quarter.

We will review our third quarter results and provide an update on the progress of our ongoing initiatives and our full-year modeling assumptions during our next quarterly conference call scheduled for Wednesday, December 20th.

We'll now turn to the Q&A portion of our call. Adrian, we're ready to take questions.