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8-K - FORM 8-K - DICK'S SPORTING GOODS, INC. | l42729e8vk.htm |
Exhibit 99.1
PRESS RELEASE
Dicks Sporting Goods Reports First Quarter Results; Exceeds Earnings Expectations
| Consolidated earnings per diluted share increased 36% to $0.30 per diluted share in the first quarter of 2011 from $0.22 per diluted share in the first quarter of 2010 | ||
| Consolidated same store sales increased 2.1% in the first quarter of 2011 | ||
| Company raises full year estimated earnings range from $1.89 to 1.91 per diluted share to $1.91 to 1.93 per diluted share | ||
| Company ended the first quarter of 2011 with $533 million in cash, without any outstanding borrowings under its credit facility |
PITTSBURGH, Pa., May 17, 2011 Dicks Sporting Goods, Inc. (NYSE: DKS) today reported sales
and earnings results for the first quarter ended April 30, 2011.
First Quarter Results
The Company reported consolidated net income for the first quarter ended April 30, 2011 of $37.5
million, or $0.30 per diluted share, exceeding the Companys earnings expectations provided on
March 8, 2011 of $0.26 0.28 per diluted share. For the first quarter ended May 1, 2010, the
Company reported consolidated net income of $26.2 million, or $0.22 per diluted share.
Net sales for the first quarter of 2011 increased by 6.3% to $1.1 billion due primarily to a 2.1%
increase in consolidated same store sales and the opening of new stores. The 2.1% consolidated same
store sales increase consisted of a 1.4% increase at Dicks Sporting Goods stores, a 3.3% increase
at Golf Galaxy and a 25.2% increase in its e-commerce business.
In the first quarter, we demonstrated our ability to effectively run our business and generate
better than expected earnings, despite unfavorable weather conditions in many of our markets, said
Edward W. Stack, Chairman and CEO. With several multi-year growth opportunities, a strong balance
sheet, and a talented team of associates, we are optimistic about the near and long-term prospects
of our business.
New Stores
In the first quarter, the Company opened three Dicks Sporting Goods stores. These stores are
listed in a table later in the release under the heading Store Count and Square Footage.
As of April 30, 2011, the Company operated 447 Dicks Sporting Goods stores in 42 states, with
approximately 24.7 million square feet and 81 Golf Galaxy stores in 30 states, with approximately
1.3 million square feet.
Balance Sheet
The Company ended the first quarter of 2011 with $533 million in cash and cash equivalents and did
not have any outstanding borrowings under its $440 million Credit Agreement. At the end of the
first quarter of 2010, the Company had $207 million in cash and cash equivalents and did not have
any outstanding borrowings under its credit facility.
The inventory per square foot was 0.6% higher at the end of the first quarter 2011 as compared to
the end of the first quarter of 2010.
Current 2011 Outlook
The Companys current outlook for 2011 is based on current expectations and includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 as described later in this release. Although
the Company believes that the expectations and other comments reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations or comments will prove
to be correct.
v Full Year 2011 |
| Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.91 1.93. For the full year 2010, the Company reported consolidated non-GAAP earnings per diluted share of $1.63, excluding Golf Galaxy store closing costs and litigation settlement costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $1.50 in 2010. | ||
| Consolidated same store sales are currently expected to increase approximately 3.0% compared to a 7.4% increase last year. | ||
| The Company currently expects to open approximately 34 new Dicks Sporting Goods stores, remodel 14 Dicks Sporting Goods stores, open approximately three Golf Galaxy stores and relocate one Golf Galaxy store in 2011. |
v Second Quarter 2011 |
| Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.47 - 0.49 in the second quarter of 2011. In the second quarter of 2010, the Company reported consolidated earnings per diluted share of $0.43. | ||
| Consolidated same store sales are currently expected to increase approximately 3.0% compared to a 5.7% increase in the second quarter last year. | ||
| The Company expects to open approximately eight new Dicks Sporting Goods stores and relocate one Golf Galaxy store in the second quarter of 2011. |
v Capital Expenditures |
| In 2011, the Company anticipates capital expenditures to be approximately $252 million on a gross basis and approximately $197 million on a net basis. |
Conference Call Info
The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the first
quarter results. Investors will have the opportunity to listen to the earnings conference call
over the internet through the Companys web site located at
http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site
at least fifteen minutes early to register and download and install any necessary audio software.
In addition to the web cast, the call can be accessed by dialing (800) 215-2410 (domestic callers)
or (617) 597-5410 (international callers) and entering confirmation code 10749323.
For those who cannot listen to the live web cast, it will be archived on the Companys web site for
30 days. In addition, a dial-in replay of the call will be available. To listen to the replay,
investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and
enter confirmation code 21061424. The dial-in replay will be available for 30 days following the
live call.
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
Except for historical information contained herein, the statements in this release or
otherwise made by our management in connection with the subject matter of this release are
forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act
of 1995) and involve risks and uncertainties and are subject to change based on various important
factors, many of which may be beyond our control. Our future performance and financial results may
differ materially from those included in any such forward-looking statements and such
forward-looking statements should not be relied upon by investors as a prediction of actual
results. You can identify these statements as those that may predict, forecast, indicate or imply
future results, performance or advancements and by forward-looking words such as believe,
anticipate, expect, estimate, predict, intend, plan, project, goal, will, will
be, will continue, will result, could, may, might or other words with similar meanings.
Forward-looking statements include, among other things, statements about our future expectations
regarding growth, revenues, earnings, profitability, spending, margins, costs, liquidity, store
openings and operations, inventory, private brand products, our actions, plans or strategies.
The following factors, among others, in some cases have affected and in the future could affect our
financial performance and actual results, and could cause actual results for fiscal 2011 and beyond
to differ materially from those expressed or implied in any forward-looking statements included in
this release or otherwise made by our management: continuation of the recent economic and financial
downturn and other changes in macroeconomic factors or market conditions that impact consumer
spending; changes in the general economic and business conditions and in the specialty retail or
sporting goods industry in particular; fluctuations in our quarterly operating results or same
store sales; volatility in our stock price; our ability to access adequate capital; competition in
the sporting goods industry; limitations on the availability of attractive store locations;
inability to manage our growth, open new stores on a timely basis or expand successfully in new and
existing markets; changes in consumer demand; unauthorized disclosure of sensitive, personal or
confidential information; disruptions in our or our vendors supply chains; factors affecting our
vendors, including potential increases in the costs of products, their ability to maintain their
inventory and production levels and their ability or willingness to provide us with sufficient
quantities of products at acceptable prices; factors that could negatively affect our private brand
offerings; risks and costs relating to product liability claims, product recalls and the regulation
of and other hazards associated with certain products we sell; the loss of our key executives;
costs and risks associated with increased or changing laws and regulations affecting our business;
our ability to secure and protect our intellectual property; risks relating to operating as a
multi-channel retailer, including the impact of rapid technological change, internet security and
privacy issues and the threat of systems failure or inadequacy; problems with our current
management information systems or software; disruption at our distribution facilities; the
seasonality of our business; regional risks because our stores are generally concentrated in the
eastern half of the United States; costs and risks related to litigation or other claims against
us; costs and uncertainties associated with pursuing strategic acquisitions; our ability to meet
our labor needs; currency exchange rate fluctuations; risks associated with our Chief Executive
Officer and his relatives controlling interest in the Company; the impact of foreign instability
and conflict; our anti-takeover provisions, which could prevent or delay a change in control of the
Company; and impairment in the carrying value of goodwill or other acquired intangibles.
Known and unknown risks and uncertainties are more fully described in the Companys Annual Report
on Form 10-K for the year ended January 29, 2011 as filed with the Securities and Exchange
Commission (SEC) on March 18, 2011 and in other reports filed with the SEC. In addition, we
operate in a highly competitive and rapidly changing environment; therefore, new risk factors can
arise, and it is not possible for management to predict all such risk factors, nor to assess the
impact of all such risk factors on our business or the extent to which any individual risk factor,
or combination of risk factors, may cause results to differ materially from those contained in any
forward-looking statement. We do not assume any obligation and do not intend to update any
forward-looking statements except as may be required by the securities laws.
About Dicks Sporting Goods, Inc.
Dicks Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad
assortment of brand name sporting goods equipment, apparel and footwear in a specialty store
environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer. As of
April 30, 2011, the Company operated 447 Dicks Sporting Goods stores in 42 states, 81 Golf Galaxy
stores in 30 states and e-commerce web sites and catalog operations for both Dicks Sporting Goods
and Golf Galaxy. Dicks Sporting Goods, Inc. news releases are available at
http://www.dickssportinggoods.com/investors. The Companys web site is not part of this release.
Contact:
Timothy E. Kullman, EVP Finance, Administration, and Chief Financial Officer or
Anne-Marie Megela, Director, Investor Relations
(724) 273-3400
investors@dcsg.com
investors@dcsg.com
DICKS SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME UNAUDITED
(In thousands, except per share data)
CONSOLIDATED STATEMENTS OF INCOME UNAUDITED
(In thousands, except per share data)
13 Weeks Ended | ||||||||||||||||
April 30, | % of | May 1, | % of | |||||||||||||
2011 | Sales (1) | 2010 | Sales (1) | |||||||||||||
Net sales |
$ | 1,113,849 | 100.00 | % | $ | 1,047,531 | 100.00 | % | ||||||||
Cost of goods sold, including occupancy
and distribution costs |
783,406 | 70.33 | 745,311 | 71.15 | ||||||||||||
GROSS PROFIT |
330,443 | 29.67 | 302,220 | 28.85 | ||||||||||||
Selling, general and administrative expenses |
263,735 | 23.68 | 253,149 | 24.17 | ||||||||||||
Pre-opening expenses |
2,266 | 0.20 | 2,079 | 0.20 | ||||||||||||
INCOME FROM OPERATIONS |
64,442 | 5.79 | 46,992 | 4.49 | ||||||||||||
Interest expense |
3,484 | 0.31 | 3,508 | 0.33 | ||||||||||||
Other income |
(1,108 | ) | (0.10 | ) | (688 | ) | (0.07 | ) | ||||||||
INCOME BEFORE INCOME TAXES |
62,066 | 5.57 | 44,172 | 4.22 | ||||||||||||
Provision for income taxes |
24,568 | 2.21 | 17,963 | 1.71 | ||||||||||||
NET INCOME |
$ | 37,498 | 3.37 | % | $ | 26,209 | 2.50 | % | ||||||||
EARNINGS PER COMMON SHARE: |
||||||||||||||||
Basic |
$ | 0.31 | $ | 0.23 | ||||||||||||
Diluted |
$ | 0.30 | $ | 0.22 | ||||||||||||
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
||||||||||||||||
Basic |
119,361 | 115,155 | ||||||||||||||
Diluted |
125,367 | 120,387 |
(1) | Column does not add due to rounding |
DICKS SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS UNAUDITED
(Dollars in thousands)
CONSOLIDATED BALANCE SHEETS UNAUDITED
(Dollars in thousands)
April 30, | May 1, | January 29, | ||||||||||
2011 | 2010 | 2011 | ||||||||||
ASSETS |
||||||||||||
CURRENT ASSETS: |
||||||||||||
Cash and cash equivalents |
$ | 532,525 | $ | 206,958 | $ | 546,052 | ||||||
Accounts receivable, net |
43,474 | 37,649 | 34,978 | |||||||||
Income taxes receivable |
5,695 | 7,438 | 9,050 | |||||||||
Inventories, net |
1,054,871 | 1,009,749 | 896,895 | |||||||||
Prepaid expenses and other current assets |
67,099 | 61,914 | 58,394 | |||||||||
Deferred income taxes |
17,731 | 11,467 | 18,961 | |||||||||
Total current assets |
1,721,395 | 1,335,175 | 1,564,330 | |||||||||
Property and equipment, net |
712,812 | 655,378 | 684,886 | |||||||||
Intangible assets, net |
51,446 | 47,421 | 51,070 | |||||||||
Goodwill |
200,594 | 200,594 | 200,594 | |||||||||
Other assets: |
||||||||||||
Deferred income taxes |
22,057 | 70,993 | 27,157 | |||||||||
Investments |
13,992 | 13,026 | 10,789 | |||||||||
Other |
51,914 | 38,664 | 58,710 | |||||||||
Total other assets |
87,963 | 122,683 | 96,656 | |||||||||
TOTAL ASSETS |
$ | 2,774,210 | $ | 2,361,251 | $ | 2,597,536 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Accounts payable |
$ | 602,280 | $ | 532,859 | $ | 446,511 | ||||||
Accrued expenses |
243,814 | 213,279 | 279,284 | |||||||||
Deferred revenue and other liabilities |
99,660 | 89,082 | 121,753 | |||||||||
Income taxes payable |
| 24,435 | | |||||||||
Current portion of other long-term debt and
leasing obligations |
995 | 978 | 995 | |||||||||
Total current liabilities |
946,749 | 860,633 | 848,543 | |||||||||
LONG-TERM LIABILITIES: |
||||||||||||
Revolving credit borrowings |
| | | |||||||||
Other long-term debt and leasing obligations |
139,605 | 141,034 | 139,846 | |||||||||
Deferred revenue and other liabilities |
255,686 | 228,907 | 245,566 | |||||||||
Total long-term liabilities |
395,291 | 369,941 | 385,412 | |||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||||
STOCKHOLDERS EQUITY: |
||||||||||||
Common stock |
951 | 907 | 938 | |||||||||
Class B common stock |
250 | 250 | 250 | |||||||||
Additional paid-in capital |
654,226 | 546,722 | 625,184 | |||||||||
Retained earnings |
767,966 | 574,600 | 730,468 | |||||||||
Accumulated other comprehensive income |
8,777 | 8,198 | 6,741 | |||||||||
Total stockholders equity |
1,432,170 | 1,130,677 | 1,363,581 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,774,210 | $ | 2,361,251 | $ | 2,597,536 | ||||||
DICKS SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
(Dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
(Dollars in thousands)
13 Weeks Ended | ||||||||
April 30, | May 1, | |||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 37,498 | $ | 26,209 | ||||
Adjustments to reconcile net income
to net cash used in operating activities: |
||||||||
Depreciation and amortization |
27,436 | 25,866 | ||||||
Deferred income taxes |
5,141 | (17,380 | ) | |||||
Stock-based compensation |
6,504 | 5,999 | ||||||
Excess tax benefit from exercise of stock options |
(11,644 | ) | (5,774 | ) | ||||
Tax benefit from exercise of stock options |
191 | 418 | ||||||
Other non-cash items |
378 | 387 | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
(5,014 | ) | 1,973 | |||||
Inventories |
(157,976 | ) | (113,973 | ) | ||||
Prepaid expenses and other assets |
(9,501 | ) | (8,398 | ) | ||||
Accounts payable |
142,418 | 95,773 | ||||||
Accrued expenses |
(47,896 | ) | (33,460 | ) | ||||
Income taxes payable/receivable |
14,959 | 22,238 | ||||||
Deferred construction allowances |
6,455 | 762 | ||||||
Deferred revenue and other liabilities |
(23,404 | ) | (14,293 | ) | ||||
Net cash used in operating activities |
(14,455 | ) | (13,653 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Capital expenditures |
(32,584 | ) | (24,300 | ) | ||||
Proceeds from sale-leaseback transactions |
10 | | ||||||
Deposits and purchases of other assets |
(2,030 | ) | | |||||
Net cash used in investing activities |
(34,604 | ) | (24,300 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Revolving credit (payments) borrowings, net |
| | ||||||
Payments on other long-term debt and leasing obligations |
(241 | ) | (231 | ) | ||||
Construction allowance receipts |
| | ||||||
Proceeds from exercise of stock options |
14,077 | 8,016 | ||||||
Excess tax benefit from exercise of stock options |
11,644 | 5,774 | ||||||
Repurchase of common stock |
(3,321 | ) | | |||||
Increase in bank overdraft |
13,351 | 5,720 | ||||||
Net cash provided by financing activities |
35,510 | 19,279 | ||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS |
22 | 21 | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(13,527 | ) | (18,653 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
546,052 | 225,611 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 532,525 | $ | 206,958 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Accrued property and equipment |
$ | 12,426 | $ | 325 | ||||
Cash paid for interest |
$ | 3,107 | $ | 3,046 | ||||
Cash paid for income taxes |
$ | 4,139 | $ | 12,027 |
Store Count and Square Footage
The stores that opened during the first quarter of 2011 are as follows:
DICKS | ||
Store | Market | |
Escondido, CA
|
San Diego | |
Renton, WA
|
Seattle | |
White Plains, NY
|
New York Metro |
The following represents a reconciliation of beginning and ending stores and square
footage for the periods indicated:
Fiscal 2011 | Fiscal 2010 | |||||||||||||||||||||||
Dicks | Dicks | |||||||||||||||||||||||
Sporting | Golf | Sporting | Golf | |||||||||||||||||||||
Goods | Galaxy | Total | Goods | Galaxy | Total | |||||||||||||||||||
Beginning stores |
444 | 81 | 525 | 419 | 91 | 510 | ||||||||||||||||||
Q1 New |
3 | | 3 | 5 | | 5 | ||||||||||||||||||
Ending stores |
447 | 81 | 528 | 424 | 91 | 515 | ||||||||||||||||||
Closed |
| | | | | | ||||||||||||||||||
Closed stores |
| | | | | | ||||||||||||||||||
Ending stores |
447 | 81 | 528 | 424 | 91 | 515 | ||||||||||||||||||
Remodeled stores |
| | | | | | ||||||||||||||||||
Relocated stores |
| | | | | | ||||||||||||||||||
Square Footage: (in millions) |
||||||||||||||||||||||||
Dicks | ||||||||||||||||||||||||
Sporting | Golf | |||||||||||||||||||||||
Goods | Galaxy | Total | ||||||||||||||||||||||
Q1 2010 |
23.6 | 1.5 | 25.1 | |||||||||||||||||||||
Q2 2010 |
23.7 | 1.5 | 25.2 | |||||||||||||||||||||
Q3 2010 |
24.3 | 1.3 | 25.6 | |||||||||||||||||||||
Q4 2010 |
24.6 | 1.3 | 25.9 | |||||||||||||||||||||
Q1 2011 |
24.7 | 1.3 | 26.0 |
Non-GAAP Financial Measures
In addition to reporting the Companys financial results in accordance with generally accepted
accounting principles (GAAP), the Company provides information regarding earnings before
interest, taxes and depreciation (EBITDA); a reconciliation from the Companys gross capital
expenditures, net of tenant allowances; and calculations of consolidated and Dicks Sporting Goods
new store productivity. These measures are considered non-GAAP and are not preferable to GAAP
financial information; however, the Company believes this information provides additional measures
of performance that the Companys management, analysts and investors can use to compare core,
operating results between reporting periods. These non-GAAP measures are provided below and on the
Companys website at http://www.dickssportinggoods.com/investors.
EBITDA
EBITDA should not be considered as an alternative to net income or any other generally accepted
accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated
it, may not be comparable to similarly titled measures reported by other companies. EBITDA is a
key metric used by the Company that provides a measurement of profitability that eliminates the
effect of changes resulting from financing decisions, tax regulations, and capital investments.
13 Weeks Ended | ||||||||
April 30, | May 1, | |||||||
2011 | 2010 | |||||||
(dollars in thousands) | ||||||||
Net income |
$ | 37,498 | $ | 26,209 | ||||
Provision for income taxes |
24,568 | 17,963 | ||||||
Interest expense |
3,484 | 3,508 | ||||||
Depreciation and amortization |
27,436 | 25,866 | ||||||
EBITDA |
$ | 92,986 | $ | 73,546 | ||||
% increase in EBITDA |
26 | % |
Reconciliation of Gross Capital Expenditures to Net Capital Expenditures
The following table represents a reconciliation of the Companys gross capital expenditures to its
capital expenditures, net of tenant allowances.
13 Weeks Ended | ||||||||
April 30, | May 1, | |||||||
2011 | 2010 | |||||||
(dollars in thousands) | ||||||||
Gross capital expenditures |
$ | (32,584 | ) | $ | (24,300 | ) | ||
Proceeds from sale-leaseback transactions |
10 | | ||||||
Changes in deferred construction allowances |
6,455 | 762 | ||||||
Construction allowance receipts |
| | ||||||
Net capital expenditures |
$ | (26,119 | ) | $ | (23,538 | ) | ||
New Store Productivity Calculation
The following calculations represent: (1) the new store productivity calculation on a consolidated
basis; and (2) the new store productivity calculation for Dicks Sporting Goods for the quarter
ended April 30, 2011. Golf Galaxy stores and the Companys e-commerce business are excluded from
the Dicks Sporting Goods only calculation. New store productivity compares the sales increase for
all stores not included in the same store sales calculation with the increase in store square
footage.
Consolidated | Dicks Sporting Goods Only | |||||||||||||||
13 Weeks Ended | 13 Weeks Ended | |||||||||||||||
April 30, | May 1, | April 30, | May 1, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Sales % increase for the period |
6.3 | % | 6.7 | % | ||||||||||||
Same store sales % increase for the period |
2.1 | % | 1.4 | % | ||||||||||||
New store sales % increase (A) |
4.2 | % | 5.3 | % | ||||||||||||
Store square footage (000s): |
||||||||||||||||
Beginning of period |
25,900 | 24,816 | 24,568 | 23,337 | ||||||||||||
End of period |
26,054 | 25,091 | 24,722 | 23,612 | ||||||||||||
Average for the period |
25,977 | 24,954 | 24,645 | 23,475 | ||||||||||||
Average square footage % increase for the period (B) |
4.1 | % | 5.0 | % | ||||||||||||
New store productivity (A)/(B) (1) |
103.2 | % | 106.3 | % |
(1) | - Amounts do not recalculate due to rounding. |