Net sales for the quarter increased 4.3% to $3.2 billion

Comparable club sales excluding gasoline sales increased 2.0%

Loss from continuing operations of $5.5 million and record second quarter adjusted EBITDA of $143.0 million, a 5.4% increase over the second quarter of fiscal 2017

Net loss of $5.6 million or $0.05 per share. Adjusted net income of $43.3 million, or $0.31 per diluted share, an increase of 42% over the second quarter of fiscal 2017

Provides initial outlook for fiscal 2018

Net sales increased 4.3% to $3.2 billion compared to $3.1 billion in the second quarter of fiscal 2017.

Comparable sales increased 5.0% compared to the second quarter of fiscal 2017. Excluding the impact of gasoline sales, merchandise comparable sales for the quarter increased 2.0% representing the fourth consecutive quarter of positive merchandise comparable sales.

Membership fee income (“MFI”) increased 9.7% to $70.4 million compared to $64.2 million in the second quarter of fiscal 2017.

Gross profit increased to $588.5 million from $553.3 million in the second quarter of fiscal 2017. Excluding the impact of gasoline sales, merchandise gross margin rate during the quarter increased by approximately 80 basis points over the second quarter of fiscal 2017 driven primarily by continued progress in our category profitability improvement program.

Selling, general and administrative expenses (“SG&A”) increased to $549.2 million from $477.3 million in the second quarter of fiscal 2017. Excluding charges associated with stock-based compensation related to the Company’s initial public offering (“IPO”), IPO-related costs, management fees and compensatory payments related to stock options, SG&A was $498.2 million in the second quarter of fiscal 2018, compared to $473.2 million in the second quarter of fiscal 2017.

Operating income was $38.7 million compared to $74.8 million in the second quarter of fiscal 2017. Operating income excluding charges associated with stock-based compensation related to the IPO, IPO-related costs, management fees, compensatory payments related to stock options was $89.7 million, up from $78.9 million in the second quarter of fiscal 2017.

Interest expense, net, increased to $59.6 million compared to $43.8 million in the second quarter of fiscal 2017. During the second quarter of fiscal 2018, the Company fully repaid its second lien term loan with proceeds from the Company’s IPO. Excluding interest expense, a prepayment penalty and a write-off of deferred financing costs related to the second lien term loan that occurred during the quarter, interest expense for the second quarter of fiscal 2018 would have been $30.9 million.

Income tax benefit was $15.4 million compared to income tax expense of $11.1 million in the second quarter of fiscal 2017. The benefit was influenced by the windfall tax benefit recorded during the second quarter.

Loss from continuing operations was $5.5 million compared to income from continuing operations of $19.8 million in the second quarter of fiscal 2017. Adjusted EBITDA increased 5.4% to $143.0 million compared to $135.7 million in the comparable period last year.

Net loss was $5.6 million, or $0.05 per diluted share, compared to net income of $19.7 million, or $0.22 per diluted share, in the second quarter of fiscal 2017.

Adjusted net income was $43.3 million, or $0.31 per diluted share, compared to $30.5 million, or $0.22 per diluted share, in the second quarter of fiscal 2017.

Net sales increased to $6.2 billion from $6.0 billion in the first half of fiscal 2017.

Comparable sales increased 4.2% compared to the first half of fiscal 2017. Excluding the impact of gasoline sales, merchandise comparable sales for the first half of fiscal 2018 increased 2.0%.

MFI increased 8.4% to $138.4 million compared to $127.7 million in the first half of fiscal 2017.

Gross profit increased to $1.14 billion from $1.06 billion the first half of fiscal 2017. Excluding the impact of gasoline sales, merchandise gross margin increased by 90 basis points driven by continued progress in our category profitability improvement program.

SG&A increased to $1.03 billion from $1.01 billion in the first half of fiscal 2017. Excluding charges associated with stock-based compensation related to the IPO, IPO-related costs, management fees, compensatory payments related to stock options and club asset impairment, SG&A was $978.7 million, up from $932.1 million in the first half of fiscal 2017.

Operating income increased to $103.2 million from $47.0 million in the first half of fiscal 2017. Excluding charges associated with stock-based compensation related to the IPO, IPO-related costs, management fees, compensatory payments related to options and club asset impairment, operating income was $159.3 million, up from $124.8 million in the first half of fiscal 2017.

Interest expense, net, decreased to $104.8 million from $107.9 million in the first half of fiscal 2017. Excluding interest expense, a prepayment penalty and a write-off of deferred financing costs related to the second lien term loan that occurred during the first half of fiscal 2018, interest expense for the first half of fiscal 2018 would have been $61.3 million.

Income tax benefit was $10.3 million compared to $21.9 million in the first half of fiscal 2017. The benefit in the first half of fiscal 2018 was influenced by the windfall tax benefit recorded during the second quarter.

Income from continuing operations was $8.8 million compared to a loss from continuing operations of $39.0 million in the first half of fiscal 2017. Adjusted EBITDA increased 12.9% to $264.6 million compared to $234.4 million in the first half of fiscal 2017.

Net income was $8.5 million, or $0.09 per diluted share, compared to a net loss of $39.2 million, or $0.44 per diluted share, in the first half of fiscal 2017.

Adjusted net income was $71.4 million, or $0.51 per diluted share, compared to $38.1 million, or $0.27 per diluted share, in the first half of fiscal 2017.

On July 2, 2018, the Company consummated its IPO at an offering price to the public of $17.00 per share. The Company sold 43.1 million shares of its common stock in the IPO, including the additional 5.6 million shares purchased by the underwriters in the exercise of their overallotment option, resulting in total net proceeds of $691.0 million after deducting underwriters’ discounts and commissions.

The Company used the net proceeds from the IPO to repay the $623.2 million principal amount of indebtedness plus $10.2 million of accrued and unpaid interest and prepayment premium under the Company’s second lien term loan.

Following the IPO, the Company received ratings upgrades from both Moody’s and Standard and Poor’s. The Company’s ratings are now B1 at Moody’s, up from B3, and B at S&P, up from B-.

On August 13, 2018 and August 17, 2018, respectively, the Company completed the repricing of its first lien term loan and its senior secured asset based revolving credit facility and term loan (“ABL Credit Facility”). The Company also extended the maturity of its ABL Credit Facility for an additional five years until August 17, 2023. The repricing of these facilities is expected to reduce the Company’s annual interest expense by approximately $16 million.

Projects net sales to be in a range of $12.6 billion to $12.7 billion and merchandise comparable store sales, which exclude gasoline, of 1.8% to 2.1%;

Projects interest expense for the full year, including the anticipated benefit of the August 2018 credit facility repricing transactions, and excluding interest in the first half of fiscal 2018 related to the second lien term loan to be $115 million to $118 million;

Projects its effective tax rate, excluding any benefit from future windfall stock benefits, to be approximately 27%;

Projects income from continuing operations to be in a range of $102 million to $112 million;

Projects adjusted EBITDA to be in the range of $553 million to $563 million;

Projects net income to be in the range of $101 million to $111 million, with adjusted net income in the range of $163 million to $173 million;

Projects net income per share attributable to common stockholders - diluted to be in a range of $0.83 to $0.91, with adjusted net income per share attributable to common stockholders - diluted in the range of $1.17 to $1.24. These per share metrics are based on estimated diluted weighted average shares outstanding of approximately 121.9 million and adjusted diluted weighted average shares outstanding of approximately 139.2 million, respectively; and

Projects capital expenditures to be in a range of $160 million to $170 million.

Net sales

Membership fee income

Total revenues

Cost of sales

Selling, general and administrative expenses

Preopening expense

Operating income

Interest expense, net

Income (loss) from continuing operations before income taxes

Provision (benefit) for income taxes

Income (loss) from continuing operations

Loss from discontinued operations, net of income taxes

Net income (loss)

Income (loss) per share attributable to common stockholders - basic:

Income (loss) from continuing operations

Loss from discontinued operations

Net income (loss)

Income (loss) per share attributable to common stockholders - diluted:

Income (loss) from continuing operations

Loss from discontinued operations

Net income (loss)

Weighted average number of common shares outstanding:

Basic

Diluted

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net

Merchandise inventories

Prepaid expenses and other current assets

Prepaid federal and state income taxes

Assets held for sale

Total current assets

Total property and equipment, net

Goodwill

Intangibles, net

Other assets

Total assets

LIABILITIES

Current liabilities:

Current portion of long-term debt

Accounts payable

Accrued expenses and other current liabilities

Closed store obligations due within one year

Total current liabilities

Long-term debt

Noncurrent closed store obligations

Deferred income taxes

Other noncurrent liabilities

Contingently redeemable common stock

STOCKHOLDERS’ DEFICIT

Common Stock

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income

Treasury stock, at cost

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

Charges for discontinued operations

Depreciation and amortization

Amortization of debt issuance costs and accretion of original issue discount

Debt refinancing and extinguishment charges

Impairment charges for assets held for sale

Other non-cash items, net

Stock-based compensation expense

Deferred income tax provision

Increase (decrease) in cash due to changes in:

Accounts receivable

Merchandise inventories

Prepaid expenses

Other assets

Accounts payable

Accrued expenses

Accrued income taxes

Closed store obligations

Other noncurrent liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment, net of disposals

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term debt

Principal payments on long term debt

Extinguishment of Second Lien Term Loan

Proceeds from ABL facility

Payments on ABL facility

Debt issuance costs paid

Dividends paid

Capital lease and financing obligations payments

Net cash received (paid) from stock option exercises

Acquisition of treasury stock

Proceeds from stock issuance

Other financing activities

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net income (loss)

Adjustments:

Stock-based compensation related to IPO (a)

IPO-related costs (b)

Management fees (c)

Charges incurred in the 2017 dividend recapitalization (d)

Compensatory payments related to options (e)

Club asset impairment (f)

Charges related to extinguishing Second Lien Term Loan (g)

Interest and amortization on Second Lien Term Loan (h)

Windfall tax benefit from stock exercises (i)

Tax impact of adjustments to net income (loss) (j)

Adjusted net income

Weighted average fully diluted shares outstanding

Fully diluted shares outstanding at August 4, 2018

Adjusted net income per diluted share (k)

Represents stock-based compensation expense for certain restricted stock and stock option awards issued in connection with our IPO.

Represents one-time costs related to our IPO.

Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO.

Represents the write-off of certain deferred financing charges and other amounts in connection with the 2017 dividend recapitalization.

Represents payments to holders of our stock options made pursuant to antidilutive provisions in connection with dividends paid to our shareholders.

Represents the impairment charge related to a club that was relocated during 2018.

Represents the write-off of certain deferred financing charges and a prepayment penalty associated with the payoff of our second lien term loan.

Represents the historical interest expense associated with the second lien term loan that was paid in full with proceeds from our IPO.

Represents the windfall tax benefit to the Company due to the exercise of certain stock options by former employees of the Company.

Represents the tax effect of the above adjustments at an effective tax rate of approximately 27%, as applicable.

Adjusted net income per diluted share is measured using the fully diluted shares outstanding at August 4, 2018 of 139.2 million shares for all periods presented.

Income (loss) from continuing operations

Interest expense, net

Provision (benefit) for income taxes

Depreciation and amortization

Compensatory payments related to options (a)

Stock-based compensation expense (b)

Preopening expenses (c)

Management fees (d)

Noncash rent (e)

Strategic consulting (f)

Severance (g)

IPO-related costs (h)

Other adjustments (i)

Adjusted EBITDA

Represents payments to holders of our stock options made pursuant to antidilutive provisions in connection with dividends paid to our shareholders.

Represents stock-based compensation expense. Amount includes $47.7 million in expense related to certain restricted stock and stock option awards issued in connection with our IPO.

Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.

Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO.

Consists of an adjustment to remove the non-cash portion of rent expense, which has been recorded on a straight-line basis in accordance with GAAP.

Represents fees paid to external consultants for strategic initiatives of limited duration.

Represents termination costs to a former executive.

Represents one-time costs related to our IPO.

Other non-cash items, including amortization of a deferred gain from sale lease back transactions in 2013, non-cash accretion on asset retirement obligations, obligations associated with our post-retirement medical plan and incremental expense to former executives. The first quarter of fiscal year 2018 includes an impairment charge on a club that was relocated.

Net income

Adjustments:

Stock-based compensation related to IPO (a)

IPO-related costs (b)

Management fees (c)

Club asset impairment (d)

Charges related to extinguishing Second Lien Term Loan (e)

Interest and amortization on Second Lien Term Loan (f)

Windfall tax benefit from stock exercises (g)

Tax impact of adjustments to net income (h)

Adjusted net income

Fully diluted shares outstanding at August 4, 2018

Adjusted net income per diluted share (i)

Represents stock-based compensation expense for certain restricted stock and stock option awards issued in connection with our IPO.

Represents one-time costs related to our IPO.

Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO.

Represents the impairment charge related to a club that was relocated during 2018.

Represents the write-off of certain deferred financing charges and a prepayment penalty associated with the payoff of our second lien term loan.

Represents the historical interest expense associated with the second lien term loan that was paid in full with proceeds from our IPO.

Represents the windfall tax benefit to the Company due to the exercise of certain stock options by former executives of the Company.

Represents the tax effect of the above adjustments at an effective tax rate of approximately 27%, as applicable.

Adjusted net income per diluted share is measured using the fully diluted shares outstanding at August 4, 2018 of 139.2 million shares.

Income from continuing operations

Interest expense, net

Provision for income taxes

Depreciation and amortization

Compensatory payments related to options (a)

Stock-based compensation expense (b)

Preopening expenses (c)

Management fees (d)

Noncash rent (e)

Strategic consulting (f)

Severance (g)

IPO-related costs (h)

Other adjustments (i)

Adjusted EBITDA

Represents payments to holders of our stock options made pursuant to antidilutive provisions in connection with dividends paid to our Sponsors.

Represents non-cash-based compensation expense. Amount includes $47.7 million in expense related to certain restricted stock and stock option awards issued in connection with our IPO

Represents direct incremental costs of opening or relocating a facility that are charged to operations as incurred.

Represents management fees paid to our sponsors (or advisory affiliates thereof) in accordance with our management services agreement, which terminated upon closing of the IPO.

Consists of an adjustment to remove the non-cash portion of rent expense, which has been recorded on a straight-line basis in accordance with GAAP.

Represents fees paid to external consultants for strategic initiatives of limited duration.

Represents termination costs to a former executive.

Represents one-time costs related to our IPO.

Other non-cash items, including amortization of a deferred gain from sale lease back transactions in 2013, non-cash accretion on asset retirement obligations, obligations associated with our post-retirement medical plan and incremental expense to former executives. The first quarter of fiscal year 2018 includes an impairment charge on a club that we relocated.