Petco Investor Day Presentation Deck
Non-GAAP Measures and Other Definitions
The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this Presentation to the most directly comparable financial
measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided this non-GAAP financial information, which
is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this Presentation that are calculated
and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered
in conjunction with, the GAAP financial measures presented in this Presentation. The non-GAAP financial measures in this Presentation may differ from similarly-titled
measures used by other companies.
Adjusted EBITDA: Adjusted EBITDA, including Trailing Twelve Month Adjusted EBITDA, is considered a non-GAAP financial measure under the Securities and Exchange
Commision's ("SEC") rules because it excludes certain amounts included in net income (loss) calculated in accordance with GAAP. Management believes that Adjusted EBITDA is
a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition,
Adjusted EBITDA affords investors a view of what management considers to be Petco's core operating performance as well as the ability to make a more informed assessment
of such operating performance as compared with that of the prior period. Please see the company's 10-K filed on April 5, 2021 with the SEC for additional information on
Adjusted EBITDA. The tables on pages 2 of this Presentation reflect the calculation of Adjusted EBITDA for the thirteen and fifty-two week period ended January 29, 2022
compared to the prior year thirteen and fifty-two week period ended January 30, 2021
Adjusted Net Income and Adjusted EPS: Adjusted Net Income and Adjusted diluted earnings per share attributable to Petco common stockholders (Adjusted EPS) are
considered non-GAAP financial measures under the SEC's rules because they exclude certain amounts included in the net income (loss) attributable to Petco common
stockholders and diluted earnings per share attributable to Petco common stockholders calculated in accordance with GAAP. Management believes that Adjusted Net Income
and Adjusted EPS are meaningful measures to share with investors because they facilitate comparison of the current period performance with that of the comparable prior
period. In addition, Adjusted Net Income and Adjusted EPS afford investors a view of what management considers to be Petco's core earnings performance as well as the ability
to make a more informed assessment of such earnings performance with that of the prior period. The tables on page 3 of this Presentation reflect the calculation of Adjusted
Net Income and Adjusted EPS for the thirteen and fifty-two weeks ended January 29, 2022 compared to the thirteen and fifty-two weeks ended January 30, 2021.
Free Cash Flow: Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management
believes that free cash flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the
company's financial performance. The table on page 4 of this Presentation reflects the calculation of free cash flow for the thirteen and fifty-two weeks ended January 29,
2022 compared to the thirteen and fifty-two weeks ended January 30, 2021.
Net Debt: Net Debt is a non-GAAP financial measure that is calculated as the sum of current and non-current debt, less cash and cash equivalents. Management considers this
adjustment useful because it reduces the volatility of total debt caused by fluctuations between cash paid against the company's revolving credit facility and cash held on hand
in cash and cash equivalents. The table on page 5 reflects the calculation of Net Debt as of the period ended January 29, 2022 compared to the prior quarter ended January 30,
2021.
Total Active Customers: Total Active Customers is the total number of customers (including Pals members and eComm customers) trackable by certain personal information
that have made at least one transaction with us during the prior 12-month period. It reflects the inflow of new customers as well as the outflow of customers who have not
made a transaction during the prior 12-month period. Net New Customers is the change in Total Active Customers between this quarter end and the prior quarter end.
Previously, Total Active Customers and Net New Customers included Pals members whose transactions were tracked by member numbers only as opposed to other personal
information. Currently, only Pals members accounts with certain personal information are counted.
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