Ulta Beauty Inc (ULTA US) - GAAP

In Millions of USD except Per Share FY 2016 FY 2017 FY 2018 Last 12M
12 Months Ending 01/30/2016 01/28/2017 02/03/2018 11/03/2018
Revenue 3,924.1 4,854.7 5,884.5 6,529.5
+ Sales & Services Revenue 3,924.1 4,854.7 5,884.5 6,529.5
- Cost of Revenue 2,539.8 3,107.5 3,787.7 4,202.7
+ Cost of Goods & Services 2,539.8 3,107.5 3,787.7 4,202.7
Gross Profit 1,384.3 1,747.2 2,096.8 2,326.8
+ Other Operating Income 0.0 0.0 0.0 0.0
- Operating Expenses 878.0 1,092.4 1,311.5 1,499.5
+ Selling, General & Admin 863.4 1,073.8 1,287.2 1,477.9
+ Research & Development 0.0 0.0 0.0
+ Other Operating Expense 14.7 18.6 24.3 21.7
Operating Income (Loss) 506.3 654.8 785.3 827.3
- Non-Operating (Income) Loss -1.1 -0.9 -1.6 -4.1
+ Interest Expense, Net -1.1 -0.9 -1.6 -4.1
+ Interest Expense — — —
- Interest Income — — —
+ Other Investment (Inc) Loss — — —
+ Foreign Exch (Gain) Loss 0.0 0.0 0.0
+ (Income) Loss from Affiliates — — —
+ Other Non-Op (Income) Loss 0.0 0.0 0.0 0.0
Pretax Income 507.4 655.7 786.9 831.4
- Income Tax Expense (Benefit) 187.4 246.0 231.6 179.4
+ Current Income Tax 181.7 219.0 258.7
+ Deferred Income Tax 5.7 26.9 -27.1
+ Tax Allowance/Credit — — —
Income (Loss) from Cont Ops 320.0 409.8 555.2 652.1
- Net Extraordinary Losses (Gains) 0.0 0.0 0.0 0.0
+ Discontinued Operations 0.0 0.0 0.0 0.0
+ XO & Accounting Changes 0.0 0.0 0.0 0.0
Income (Loss) Incl. MI 320.0 409.8 555.2 652.1
- Minority Interest 0.0 0.0 0.0 0.0
Net Income, GAAP 320.0 409.8 555.2 652.1
- Preferred Dividends 0.0 0.0 0.0 0.0
- Other Adjustments 0.0 0.0 0.0 0.0
Net Income Avail to Common, GAAP 320.0 409.8 555.2 652.1

Net Income Avail to Common, Adj 322.4 415.7 520.2 614.2

Net Abnormal Losses (Gains) 2.4 5.9 -35.1 -37.8
Net Extraordinary Losses (Gains) 0.0 0.0 0.0 0.0

Basic Weighted Avg Shares 63.9 62.5 61.6 59.7

Basic EPS, GAAP 5.00 6.55 9.02 10.80
Basic EPS from Cont Ops 5.00 6.55 9.02 10.80
Basic EPS from Cont Ops, Adjusted 5.04 6.65 8.45 10.17

Diluted Weighted Avg Shares 64.3 62.9 62.0 60.1

Diluted EPS, GAAP 4.98 6.52 8.96 10.74
Diluted EPS from Cont Ops 4.98 6.52 8.96 10.74
Diluted EPS from Cont Ops, Adjusted 5.02 6.61 8.39 10.12

Reference Items
Accounting Standard US GAAP US GAAP US GAAP
EBITDA 671.3 865.1 1,038.0 1,099.9
EBITDA Margin (T12M) 17.11 17.82 17.64 16.85
EBIT 506.3 654.8 785.3 827.3
Gross Margin 35.28 35.99 35.63 35.64
Operating Margin 12.90 13.49 13.35 12.67
Profit Margin 8.15 8.44 9.44 9.99
Sales per Employee 404,548.04 418,511.81 429,525.99
Dividends per Share 0.00 0.00 0.00 0.00
Total Cash Common Dividends 0.0 0.0 0.0 0.0
Capitalized Interest Expense 0.0 0.0 0.0 0.0
Rental Expense 181.5 202.9 241.6 66.8
Source: Bloomberg
FY 2019 Est FY 2020 Est
01/31/2019 01/31/2020
6,698.4 7,495.3

2,390.4 2,683.8

852.4 982.3

856.8 983.9

656.2 748.4

656.2 748.4

656.2 748.4

656.2 748.4
 10.88 12.73
10.88 12.73
10.88 12.73

10.88 12.73
10.88 12.73
10.88 12.73

1,136.9 1,285.8
16.97 17.15
852.4 982.3

12.73 13.11
9.80 9.98

0.00 0.00
Ulta Beauty Inc (ULTA US) - Standardized
In Millions of USD except Per Share FY 2013 FY 2014 FY 2015 FY 2016
12 Months Ending 02/02/2013 02/01/2014 01/31/2015 01/30/2016
Total Assets
+ Cash, Cash Equivalents & STI 320.5 419.5 539.4 475.8
+ Cash & Cash Equivalents 320.5 419.5 389.1 345.8
+ ST Investments 0.0 0.0 150.2 130.0
+ Accounts & Notes Receiv 41.5 47.0 52.4 65.0
+ Accounts Receivable, Net 41.5 47.0 52.4 65.0
+ Notes Receivable, Net 0.0 0.0 0.0 0.0
+ Inventories 361.1 457.9 581.2 761.8
+ Raw Materials 0.0 0.0 0.0 0.0
+ Work In Process 0.0 0.0 0.0 0.0
+ Finished Goods 361.1 457.9 581.2 761.8
+ Other Inventory 0.0 0.0 0.0 0.0
+ Other ST Assets 66.2 78.2 87.3 72.5
+ Prepaid Expenses — — — —
+ Derivative & Hedging Assets 0.0 0.0 0.0 0.0
+ Deferred Tax Assets 15.8 22.2 20.8 0.0
+ Misc ST Assets 50.5 56.0 66.5 72.5
Total Current Assets 789.3 1,002.7 1,260.4 1,375.2
+ Property, Plant & Equip, Net 483.1 595.7 717.2 847.6
+ Property, Plant & Equip 838.4 1,022.7 1,243.2 1,502.0
- Accumulated Depreciation 355.3 426.9 526.1 654.4
+ LT Investments & Receivables 0.0 0.0 0.0 0.0
+ Other LT Assets 2.9 4.3 5.7 8.1
+ Total Intangible Assets 0.0 0.0 0.0 0.0
+ Goodwill 0.0 0.0 0.0 0.0
+ Other Intangible Assets 0.0 0.0 0.0 0.0
+ Derivative & Hedging Assets 0.0 0.0 0.0 0.0
+ Misc LT Assets 2.9 4.3 5.7 8.1
Total Noncurrent Assets 485.9 600.0 722.8 855.7
Total Assets 1,275.2 1,602.7 1,983.2 2,230.9

Liabilities & Shareholders' Equity

+ Payables & Accruals 221.1 266.8 359.6 396.2
+ Accounts Payable 118.9 148.3 190.8 196.2
+ Accrued Taxes 10.1 15.3 37.2 33.2
+ Interest & Dividends Payable 0.0 — — —
+ Other Payables & Accruals 92.1 103.2 131.6 166.9
+ ST Debt 0.0 0.0 0.0 0.0
+ ST Borrowings 0.0 0.0 0.0 0.0
+ ST Capital Leases 0.0 0.0 0.0 0.0
 + Other ST Liabilities 0.0 0.0 0.0 0.0
+ Deferred Revenue 0.0 0.0 0.0 0.0
+ Derivatives & Hedging 0.0 0.0 0.0 0.0
+ Deferred Tax Liabilities 0.0 0.0 0.0 —
+ Misc ST Liabilities 0.0 0.0 0.0 0.0
Total Current Liabilities 221.1 266.8 359.6 396.2
+ LT Debt 0.0 0.0 0.0 0.0
+ LT Borrowings 0.0 0.0 0.0 0.0
+ LT Capital Leases 0.0 0.0 0.0 0.0
+ Other LT Liabilities 267.2 332.8 376.1 391.8
+ Accrued Liabilities 0.0 0.0 0.0 0.0
+ Pension Liabilities 0.0 0.0 0.0 0.0
+ Pensions 0.0 0.0 0.0 0.0
+ Other Post-Ret Benefits 0.0 0.0 0.0 0.0
+ Deferred Revenue 0.0 0.0 0.0 0.0
+ Deferred Tax Liabilities 56.4 66.7 74.5 59.5
+ Derivatives & Hedging 0.0 0.0 0.0 0.0
+ Misc LT Liabilities 210.9 266.1 301.6 332.3
Total Noncurrent Liabilities 267.2 332.8 376.1 391.8
Total Liabilities 488.3 599.6 735.7 788.0
+ Preferred Equity and Hybrid Capital 0.0 0.0 0.0 0.0
+ Share Capital & APIC 497.6 548.8 577.6 622.4
+ Common Stock 0.6 0.6 0.6 0.6
+ Additional Paid in Capital 496.9 548.2 577.0 621.7
- Treasury Stock 7.5 8.1 9.7 11.7
+ Retained Earnings 296.9 462.4 679.6 832.2
+ Other Equity 0.00 0.00 0.00 0.00
Equity Before Minority Interest 786.9 1,003.1 1,247.5 1,442.9
+ Minority/Non Controlling Interest 0.0 0.0 0.0 0.0
Total Equity 786.9 1,003.1 1,247.5 1,442.9
Total Liabilities & Equity 1,275.2 1,602.7 1,983.2 2,230.9

Reference Items
Accounting Standard US GAAP US GAAP US GAAP US GAAP
Shares Outstanding 64.0 64.2 64.2 63.5
Number of Treasury Shares 0.6 0.6 0.6 0.6
Pension Obligations 0.0 0.0 0.0 0.0
Future Minimum Operating Lease Obligation 1,208.5 1,407.7 1,602.9 1,759.1
Capital Leases - Total 0.0 0.0 0.0 0.0
Options Granted During Period 0.2 0.3 0.4 0.3
Options Outstanding at Period End 1.8 1.1 1.1 0.9
Net Debt -320.5 -419.5 -539.4 -475.8
Net Debt to Equity -40.72 -41.82 -43.23 -32.98
Tangible Common Equity Ratio 61.71 62.59 62.90 64.68
Current Ratio 3.57 3.76 3.50 3.47
Cash Conversion Cycle 59.35 65.61 67.75 75.80
Number of Employees — — 8,100.00 9,700.00
Source: Bloomberg
 FY 2017 FY 2018
01/28/2017 02/03/2018

415.0 397.4
385.0 277.4
30.0 120.0
88.6 99.7
88.6 99.7
0.0 0.0
944.0 1,096.4
0.0 0.0
0.0 0.0
944.0 1,096.4
0.0 0.0
88.6 100.2
— —
0.0 0.0
0.0 1.5
88.6 98.7
1,536.2 1,693.7
1,004.4 1,189.5
1,803.1 2,148.7
798.8 959.2
0.0 0.0
11.3 25.5
0.0 0.0
0.0 0.0
0.0 0.0
0.0 0.0
11.3 25.5
1,015.6 1,214.9
2,551.9 2,908.7

529.3 642.2
259.5 325.8
33.9 41.7
— —
236.0 274.7
0.0 0.0
0.0 0.0
0.0 0.0
 0.0 0.0
0.0 0.0
0.0 0.0
— —
0.0 0.0
529.3 642.2
0.0 0.0
0.0 0.0
0.0 0.0
472.3 492.3
0.0 0.0
0.0 0.0
0.0 0.0
0.0 0.0
0.0 0.0
86.5 59.4
0.0 0.0
385.8 432.9
472.3 492.3
1,001.7 1,134.5
0.0 0.0
659.0 699.5
0.6 0.6
658.3 698.9
14.5 18.8
905.8 1,093.5
0.00 0.00
1,550.2 1,774.2
0.0 0.0
1,550.2 1,774.2
2,551.9 2,908.7

US GAAP US GAAP
62.1 60.8
0.6 0.6
0.0 0.0
2,006.0 2,234.5
0.0 0.0
0.1 0.1
0.8 0.8
-415.0 -397.4
-26.77 -22.40
60.75 61.00
2.90 2.64
 80.45 78.31
11,600.00 13,700.00
Project: ULTA

MACRS Cash Flows Year 0 Year 1 Year 2 Year 3 Year 4

Revenue 485.4737 500.037911 515.039048 530.49022
Cost 248.60064 256.058659 263.740419 271.652632
EBITDA 236.87306 243.979252 251.298629 258.837588
Depreciation -540.9351 108.18702 173.099232 103.859539 62.3157235
Pretax Income 128.68604 70.8800198 147.43909 196.521865
Taxes (21%) 27.0240684 14.8848042 30.9622089 41.2695916
Profit After Tax 101.661972 55.9952156 116.476881 155.252273
Depreciation -540.9351 108.18702 173.099232 103.859539 62.3157235
Operating CF 209.848992 229.094448 220.33642 217.567997

Summary of Cash Flows (MACRS) CF0 CF1 CF2 CF3 CF4

Capital Incestment -540.9351
NWC -81.140265 -8.1140265 -7.14034332 -4.81973174 101.214367
OCF 209.848992 229.094448 220.33642 217.567997
AT Salvage 147.831072
Net CFs -622.075365 201.734965 221.954104 215.516689 466.613435
NPV 246.796061
IRR 0.23638491

Bonus Depreciation Cash Flows Year 0 Year 1 Year 2 Year 3 Year 4

Revenue 485.4737 500.037911 515.039048 530.49022
Cost 248.60064 256.058659 263.740419 271.652632
EBITDA 236.87306 243.979252 251.298629 258.837588
Depreciation -540.9351 540.9351 0 0 0
Pretax Income -304.06204 243.979252 251.298629 258.837588
Taxes (21%) -63.8530284 51.2356429 52.7727122 54.3558935
Profit After Tax -240.209012 192.743609 198.525917 204.481695
Depreciation -540.9351 540.9351 0 0 0
Operating CF 300.726088 192.743609 198.525917 204.481695

Summary of Cash Flows (Bonus) CF0 CF1 CF2 CF3 CF4

Capital Incestment -540.9351
NWC -81.140265 -8.1140265 -7.14034332 -4.81973174 101.214367
OCF 300.726088 192.743609 198.525917 204.481695
AT Salvage 128.201619
Net CFs -622.075365 292.612062 185.603266 193.706185 433.89768
NPV 259.555395
IRR 0.25657358
Recommendation: Both approaches give a positive NPV and great IRR so I would accept both projects based on their NPV and
The best approach for the company is the 100% bonus depreciation because both the NPV and IRR are higher compared to th
 Other Data

MACRS 5 year Deprciation

1 0.2
Year 5 Year 6 2 0.32
3 0.192
4 0.1152
5 0.1152
62.3157235 31.1578618 6 0.0576

WACC 0.09

Salvage Value 162.28053

Book Value ( 93.47358528

Gain on Salv 68.80694472 Gain on Salvage (Bonus)
Taxes on Sal 14.4494583912 Taxes on Salvage (Bonus)
After Tax Sal 147.8310716088 After Tax Salvage (Bonus)

Net Working C
Year 0 Year 1
NWC -81.140265 -89.2542915
Change in N -81.140265 -8.11402650000001
 jects based on their NPV and IRR.
RR are higher compared to the MACRS approach.
 162.28053
34.0789113
128.201619

Year 2 Year 3 Year 4

-96.3946348 -101.214367 0
-7.14034332 -4.81973174 101.214367