Attached files
| file | filename |
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| 8-K - 8-K - DICK'S SPORTING GOODS, INC. | dks-2013803xform8xk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE |  |
DICK’S Sporting Goods Reports Second Quarter Results
• | Consolidated non-GAAP earnings per diluted share increased to $0.71 in the second quarter of 2013 from $0.65 per diluted share in the second quarter of 2012 |
• | Board authorizes quarterly dividend of $0.125 per share |
PITTSBURGH, Pa., August 20, 2013 - DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S.-based full-line sporting goods retailer, today reported sales and earnings results for the second quarter ended August 3, 2013.
Second Quarter Results
The Company reported consolidated non-GAAP net income for the second quarter ended August 3, 2013 of $88.9 million, or $0.71 per diluted share, excluding an asset impairment charge, compared to the Company’s expectations provided on May 21, 2013 of $0.75 to 0.77 per diluted share. For the second quarter ended July 28, 2012, the Company reported consolidated non-GAAP net income of $81.3 million, or $0.65 per diluted share, excluding an impairment charge related to the Company's investment in JJB Sports.
On a GAAP basis, the Company reported consolidated net income for the second quarter ended August 3, 2013 of $84.2 million, or $0.67 per diluted share. For the second quarter ended July 28, 2012, the Company reported consolidated net income of $53.7 million, or $0.43 per diluted share. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading “Non-GAAP Net Income and Earnings Per Share Reconciliations.”
Net sales for the second quarter of 2013 increased 6.6% to $1.5 billion. Adjusted for the shifted calendar due to the 53rd week in 2012, consolidated same store sales decreased 0.4%, compared to the Company's guidance of an approximate 2 to 3% increase. Second quarter 2012 consolidated same store sales increased 3.8%. Shifted same store sales in the second quarter of 2013 for DICK'S Sporting Goods increased 0.1% while Golf Galaxy decreased 6.1%.
Unshifted consolidated same store sales increased 1.2%, compared to the Company's guidance of an approximate 3.5 to 4.5% increase. Unshifted same store sales in the second quarter of 2013 for DICK'S Sporting Goods increased 1.9% while Golf Galaxy decreased 7.2%. eCommerce penetration was 5.6% of total sales.
“Our second quarter results were below our guidance as a sluggish consumer environment along with higher levels of precipitation and cooler temperatures contributed to a decrease in traffic, resulting in lower than expected same store sales,” said Edward W. Stack, Chairman and CEO. “Despite these challenges in the second quarter, we were able to generate record non-GAAP earnings per share.”
Mr. Stack continued, “We are revising our full year guidance to a range of $2.60 to $2.65 per share, primarily due to lower sales expectations for the second half of the year, which are a result of our belief that consumers will remain relatively cautious. In order to drive traffic and respond to the consumer environment we are increasing our advertising levels, enhancing the customer experience, and investing in growth categories.”
Mr. Stack concluded, “The current challenges we are facing are short-term in nature and we are actively pursuing strategies to address them. This does not change our view of the profitable long-term growth opportunities for our business.”
New Stores
In the second quarter, the Company opened seven new DICK'S Sporting Goods stores. These stores are listed in a table later in the release under the heading “Store Count and Square Footage."
As of August 3, 2013, the Company operated 527 DICK'S Sporting Goods stores in 44 states, with approximately 28.7 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.4 million square feet.
Balance Sheet
The Company ended the second quarter of 2013 with approximately $135 million in cash and cash equivalents as compared to $350 million at the end of the second quarter of 2012. As of the end of the second quarter of 2013, the Company did not have any outstanding borrowings under its $500 million revolving credit facility. Over the course of the past twelve months, the Company utilized capital to invest in omni-channel growth, remodel stores, build a distribution center, fund shares purchased pursuant to share repurchase programs, pay a special dividend and quarterly dividends, and acquire intellectual property rights to the Field & Stream brand.
Inventory per square foot was 5.0% higher at the end of the second quarter of 2013 as compared to the end of the second quarter of 2012, while clearance inventory per square foot decreased 4.1% during the same period.
Year-to-Date Results
The Company reported consolidated non-GAAP net income for the 26 weeks ended August 3, 2013 of $149.4 million, or $1.19 per diluted share. For the 26 weeks ended July 28, 2012, the Company reported consolidated non-GAAP net income of $138.5 million, or $1.10 per diluted share.
On a GAAP basis, the Company reported consolidated net income for the 26 weeks ended August 3, 2013 of $149.0 million, or $1.18 per diluted share. For the 26 weeks ended July 28, 2012, the Company reported consolidated net income of $110.8 million, or $0.88 per diluted share.
Net sales for the first half of 2013 increased 5.4% from the first half of 2012 to $2.9 billion primarily due to the opening of new stores, partially offset by a consolidated same store sales decrease of 0.2% on an unshifted basis.
Dividend
On August 14, 2013, the Company’s Board of Directors authorized and declared a quarterly dividend in the amount of $0.125 per share on the Company’s Common Stock and Class B Common Stock. The dividend is payable in cash on September 27, 2013 to stockholders of record at the close of business on September 6, 2013.
Current 2013 Outlook
The Company’s current outlook for 2013 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 2013 – (52 Week Year) Comparisons to Fiscal 2012 – (53 Week Year) |
• | Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.60 to 2.65, excluding an asset impairment charge and the partial recovery of a previously impaired asset. For the 53 weeks ended February 2, 2013, the Company reported consolidated non-GAAP earnings per diluted share of $2.53, excluding an impairment charge. The 53rd week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share. |
• | Consolidated same store sales are currently expected to be approximately flat to an increase of 1% on a 52-week to 52-week comparative basis, compared to a 4.3% increase in fiscal 2012. |
• | The Company expects to open approximately 40 new DICK'S Sporting Goods stores, relocate one DICK'S Sporting Goods store and complete four full and 75 partial remodels of DICK'S Sporting Goods stores in 2013. The Company also expects to open one new Golf Galaxy store and relocate one Golf Galaxy store in 2013, both of which will be in the new, larger format. |
• | The Company expects to open approximately one new True Runner store and approximately two new Field & Stream stores in 2013. |
v | Third Quarter 2013 |
• | Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.37 to 0.39 in the third quarter of 2013, compared to third quarter 2012 consolidated earnings per diluted share of $0.40. |
• | Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to be approximately flat to an increase of 1% in the third quarter of 2013, or decrease approximately 2 to 3% on an unshifted basis, as compared to a 5.1% increase in the third quarter of 2012. |
• | The Company expects to open approximately 20 new DICK'S Sporting Goods stores, relocate one DICK'S Sporting Goods store and remodel three DICK'S Sporting Goods stores in the third quarter of 2013. |
• | The Company expects to open one new True Runner store and one new Field & Stream store in the third quarter of 2013. |
v | Fourth Quarter 2013 |
• | Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.04 to 1.07 in the fourth quarter of 2013, compared to fourth quarter 2012 consolidated earnings per diluted share of $1.03. The 14th week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share. |
• | Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to increase approximately 3 to 4% in the fourth quarter of 2013, or approximately negative 2 to negative 1% on an unshifted basis, as compared to a 1.2% increase in the fourth quarter of 2012. |
• | The Company expects to open approximately eleven new DICK'S Sporting Goods stores and remodel one DICK'S Sporting Goods store in the fourth quarter of 2013. |
• | The Company expects to open approximately one new Field & Stream store in the fourth quarter of 2013. |
v | Capital Expenditures |
• | In 2013, the Company anticipates capital expenditures to be approximately $299 million on a gross basis and approximately $258 million on a net basis. |
Conference Call Info
The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the second quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s website located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the website at least fifteen minutes early to register and download and install any necessary audio software.
In addition to the webcast, the call can be accessed by dialing (866) 652-5200 (domestic callers) or (412) 317-6060 (international callers) and requesting the “DICK'S Sporting Goods Earnings Call.”
For those who cannot listen to the live webcast, it will be archived on the Company’s website for 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10031652. 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 statements regarding, among other things, our expectations for future performance, our efforts to drive traffic, our belief that current challenges are short-term and will not impact profitable long-term growth, investing in new, relocated or remodeled stores and expectations on capital expenditures.
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 2013 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: ongoing economic and financial uncertainties may cause a decline in consumer spending; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; competition in the sporting goods industry; changes in consumer demand; limitations on the availability of attractive store locations; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; access to adequate capital; changing laws and regulations affecting our business including the regulation of firearms and ammunition; factors affecting our vendors; litigation risks; foreign trade issues and currency exchange rate fluctuations; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; protection of our intellectual property; disruptions with our eCommerce services provider or of our information systems; disruption at our distribution facilities; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; regional risks; risks associated with strategic investments or acquisitions; labor needs; risks associated with being a controlled company; our anti-takeover provisions; our current intention to issue quarterly cash dividends; and our share repurchase activity, if any.
Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended February 2, 2013 as filed with the Securities and Exchange Commission (“SEC”) on March 22, 2013 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 or assess the impact of all such risk factors. Forward-looking statements included in this release are made as of the date of this release. We do not assume any obligation and do not intend to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the securities laws.
About DICK'S Sporting Goods, Inc.
DICK'S Sporting Goods, Inc. is an authentic full-line sports and fitness specialty omni-channel retailer offering a broad assortment of high quality, competitively-priced 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 August 3, 2013, the Company operated 527 DICK'S Sporting Goods stores in 44 states, 81 Golf Galaxy stores in 30 states and eCommerce websites and catalog operations for DICK'S Sporting Goods and Golf Galaxy. DICK'S Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/investors. The Company’s website is not part of this release.
Contact:
André J. Hawaux, EVP – Finance, Administration and Chief Financial Officer or
Anne-Marie Megela, VP – Treasury Services and Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400
###
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
13 Weeks Ended | ||||||||||||||
August 3, 2013 | % of Sales (1) | July 28, 2012 | % of Sales (1) | |||||||||||
Net sales | $ | 1,531,431 | 100.00 | % | $ | 1,437,041 | 100.00 | % | ||||||
Cost of goods sold, including occupancy and distribution costs | 1,052,101 | 68.70 | 989,261 | 68.84 | ||||||||||
GROSS PROFIT | 479,330 | 31.30 | 447,780 | 31.16 | ||||||||||
Selling, general and administrative expenses | 336,950 | 22.00 | 310,864 | 21.63 | ||||||||||
Pre-opening expenses | 5,285 | 0.35 | 2,276 | 0.16 | ||||||||||
INCOME FROM OPERATIONS | 137,095 | 8.95 | 134,640 | 9.37 | ||||||||||
Impairment of available-for-sale investments | — | — | 32,370 | 2.25 | ||||||||||
Interest expense | 716 | 0.05 | 1,000 | 0.07 | ||||||||||
Other (income) expense | (1,735 | ) | (0.11 | ) | 54 | — | ||||||||
INCOME BEFORE INCOME TAXES | 138,114 | 9.02 | 101,216 | 7.04 | ||||||||||
Provision for income taxes | 53,951 | 3.52 | 47,553 | 3.31 | ||||||||||
NET INCOME | $ | 84,163 | 5.50 | % | $ | 53,663 | 3.73 | % | ||||||
EARNINGS PER COMMON SHARE: | ||||||||||||||
Basic | $ | 0.68 | $ | 0.45 | ||||||||||
Diluted | $ | 0.67 | $ | 0.43 | ||||||||||
WEIGHTED AVERAGE COMMON SHARES | ||||||||||||||
OUTSTANDING: | ||||||||||||||
Basic | 122,901 | 119,928 | ||||||||||||
Diluted | 125,593 | 124,533 | ||||||||||||
Cash dividend declared per share | $ | 0.125 | $ | 0.125 | ||||||||||
(1) Column does not add due to rounding | ||||||||||||||
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
26 Weeks Ended | ||||||||||||||
August 3, 2013 | % of Sales (1) | July 28, 2012 | % of Sales | |||||||||||
Net sales | $ | 2,865,132 | 100.00 | % | $ | 2,718,745 | 100.00 | % | ||||||
Cost of goods sold, including occupancy and distribution costs | 1,974,149 | 68.90 | 1,876,358 | 69.02 | ||||||||||
GROSS PROFIT | 890,983 | 31.10 | 842,387 | 30.98 | ||||||||||
Selling, general and administrative expenses | 649,658 | 22.67 | 606,995 | 22.33 | ||||||||||
Pre-opening expenses | 6,614 | 0.23 | 5,017 | 0.18 | ||||||||||
INCOME FROM OPERATIONS | 234,711 | 8.19 | 230,375 | 8.47 | ||||||||||
Impairment of available-for-sale investments | — | — | 32,370 | 1.19 | ||||||||||
Interest expense | 1,385 | 0.05 | 4,449 | 0.16 | ||||||||||
Other income | (7,940 | ) | (0.28 | ) | (1,811 | ) | (0.07 | ) | ||||||
INCOME BEFORE INCOME TAXES | 241,266 | 8.42 | 195,367 | 7.19 | ||||||||||
Provision for income taxes | 92,282 | 3.22 | 84,547 | 3.11 | ||||||||||
NET INCOME | $ | 148,984 | 5.20 | % | $ | 110,820 | 4.08 | % | ||||||
EARNINGS PER COMMON SHARE: | ||||||||||||||
Basic | $ | 1.21 | $ | 0.92 | ||||||||||
Diluted | $ | 1.18 | $ | 0.88 | ||||||||||
WEIGHTED AVERAGE COMMON SHARES | ||||||||||||||
OUTSTANDING: | ||||||||||||||
Basic | 122,802 | 120,721 | ||||||||||||
Diluted | 125,728 | 125,768 | ||||||||||||
Cash dividends declared per share | $ | 0.250 | $ | 0.250 | ||||||||||
(1) Column does not add due to rounding | ||||||||||||||
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
August 3, 2013 | July 28, 2012 | February 2, 2013 | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 134,765 | $ | 350,404 | $ | 345,214 | ||||||
Accounts receivable, net | 84,956 | 53,704 | 34,625 | |||||||||
Income taxes receivable | 2,455 | 7,845 | 15,737 | |||||||||
Inventories, net | 1,275,215 | 1,134,594 | 1,096,186 | |||||||||
Prepaid expenses and other current assets | 109,146 | 67,071 | 73,838 | |||||||||
Deferred income taxes | 46,138 | 27,689 | 30,289 | |||||||||
Total current assets | 1,652,675 | 1,641,307 | 1,595,889 | |||||||||
Property and equipment, net | 937,310 | 817,427 | 840,135 | |||||||||
Construction in progress - leased facilities | — | 10,207 | — | |||||||||
Intangible assets, net | 97,858 | 75,061 | 98,903 | |||||||||
Goodwill | 200,594 | 200,594 | 200,594 | |||||||||
Other assets: | ||||||||||||
Deferred income taxes | 4,114 | 8,196 | 4,382 | |||||||||
Other | 126,920 | 110,148 | 147,904 | |||||||||
Total other assets | 131,034 | 118,344 | 152,286 | |||||||||
TOTAL ASSETS | $ | 3,019,471 | $ | 2,862,940 | $ | 2,887,807 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Accounts payable | $ | 598,263 | $ | 561,161 | $ | 507,247 | ||||||
Accrued expenses | 295,010 | 275,158 | 269,900 | |||||||||
Deferred revenue and other liabilities | 111,101 | 101,437 | 146,362 | |||||||||
Income taxes payable | 12,777 | — | 68,746 | |||||||||
Current portion of other long-term debt and leasing obligations | 8,300 | 8,579 | 8,513 | |||||||||
Total current liabilities | 1,025,451 | 946,335 | 1,000,768 | |||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Other long-term debt and leasing obligations | 6,360 | 14,407 | 7,762 | |||||||||
Non-cash obligations for construction in progress - leased facilities | — | 10,207 | — | |||||||||
Deferred income taxes | 8,449 | — | 7,413 | |||||||||
Deferred revenue and other liabilities | 314,756 | 279,927 | 284,540 | |||||||||
Total long-term liabilities | 329,565 | 304,541 | 299,715 | |||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||
Common stock | 981 | 959 | 981 | |||||||||
Class B common stock | 249 | 250 | 249 | |||||||||
Additional paid-in capital | 913,580 | 797,620 | 874,236 | |||||||||
Retained earnings | 1,030,108 | 1,013,087 | 911,704 | |||||||||
Accumulated other comprehensive income | 81 | 106 | 112 | |||||||||
Treasury stock | (280,544 | ) | (199,958 | ) | (199,958 | ) | ||||||
Total stockholders’ equity | 1,664,455 | 1,612,064 | 1,587,324 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,019,471 | $ | 2,862,940 | $ | 2,887,807 | ||||||
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
26 Weeks Ended | ||||||||
August 3, 2013 | July 28, 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 148,984 | $ | 110,820 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 76,314 | 58,100 | ||||||
Impairment of available-for-sale investments | — | 32,370 | ||||||
Deferred income taxes | (14,545 | ) | (10,989 | ) | ||||
Stock-based compensation | 13,925 | 15,207 | ||||||
Excess tax benefit from exercise of stock options | (15,475 | ) | (39,863 | ) | ||||
Tax benefit from exercise of stock options | 102 | 3,141 | ||||||
Other non-cash items | 290 | (84 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (21,690 | ) | (13,228 | ) | ||||
Inventories | (179,029 | ) | (119,597 | ) | ||||
Prepaid expenses and other assets | (12,738 | ) | (688 | ) | ||||
Accounts payable | 83,458 | 41,925 | ||||||
Accrued expenses | (15,561 | ) | 1,369 | |||||
Income taxes payable / receivable | (27,212 | ) | 6,623 | |||||
Deferred construction allowances | 12,756 | 12,191 | ||||||
Deferred revenue and other liabilities | (44,173 | ) | (30,317 | ) | ||||
Net cash provided by operating activities | 5,406 | 66,980 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (95,479 | ) | (95,158 | ) | ||||
Purchase of JJB Sports convertible notes and equity securities | — | (31,986 | ) | |||||
Proceeds from sale of other assets | 11,000 | — | ||||||
Deposits and purchases of other assets | (48,469 | ) | (44,408 | ) | ||||
Net cash used in investing activities | (132,948 | ) | (171,552 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payments on other long-term debt and leasing obligations | (1,615 | ) | (138,611 | ) | ||||
Construction allowance receipts | — | — | ||||||
Proceeds from exercise of stock options | 22,736 | 44,939 | ||||||
Excess tax benefit from exercise of stock options | 15,475 | 39,863 | ||||||
Minimum tax withholding requirements | (12,877 | ) | (5,237 | ) | ||||
Cash paid for treasury stock | (80,603 | ) | (198,774 | ) | ||||
Cash dividend paid to stockholders | (33,550 | ) | (30,417 | ) | ||||
Increase in bank overdraft | 7,558 | 8,823 | ||||||
Net cash used in financing activities | (82,876 | ) | (279,414 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (31 | ) | (12 | ) | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (210,449 | ) | (383,998 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 345,214 | 734,402 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 134,765 | $ | 350,404 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Construction in progress - leased facilities | $ | — | $ | 10,207 | ||||
Accrued property and equipment | $ | 77,409 | $ | 35,213 | ||||
Cash paid for interest | $ | 1,091 | $ | 851 | ||||
Cash paid for income taxes | $ | 140,712 | $ | 92,375 | ||||
Store Count and Square Footage
The stores that opened during the second quarter of 2013 are as follows:
DICK’S | ||
Store | Market | |
Alliance, TX | Dallas | |
Dublin, CA | San Francisco | |
Petaluma, CA | Santa Rosa | |
Pensacola, FL | Pensacola | |
Chico, CA | Chico | |
Colonial Heights, VA | Richmond | |
Portage, MI | Kalamazoo | |
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated (1):
Fiscal 2013 | Fiscal 2012 | |||||||||||||||||
DICK'S Sporting Goods | Golf Galaxy | Total | DICK'S Sporting Goods | Golf Galaxy | Total | |||||||||||||
Beginning stores | 518 | 81 | 599 | 480 | 81 | 561 | ||||||||||||
Q1 New stores | 2 | — | 2 | 6 | — | 6 | ||||||||||||
Q2 New stores | 7 | — | 7 | 4 | — | 4 | ||||||||||||
Ending stores | 527 | 81 | 608 | 490 | 81 | 571 | ||||||||||||
Remodeled stores | — | — | — | — | — | — | ||||||||||||
Relocated stores | — | — | — | 1 | — | 1 | ||||||||||||
Square Footage:
(in millions)
DICK'S Sporting Goods | Golf Galaxy | Total | |||||||
Q1 2012 | 26.5 | 1.3 | 27.8 | ||||||
Q2 2012 | 26.7 | 1.3 | 28.0 | ||||||
Q3 2012 | 27.9 | 1.3 | 29.2 | ||||||
Q4 2012 | 28.2 | 1.4 | 29.6 | ||||||
Q1 2013 | 28.3 | 1.4 | 29.7 | ||||||
Q2 2013 | 28.7 | 1.4 | 30.1 | ||||||
(1) Store count and square footage amounts do not include the Company's True Runner stores.
Non-GAAP Financial Measures
In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company provides information regarding net income and earnings per diluted share adjusted for certain non-recurring, infrequent or unusual items; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses (“adjusted EBITDA”) and a reconciliation from the Company’s gross capital expenditures, net of tenant allowances. 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 Company’s management, analysts and investors can use to compare core operating results between reporting periods. These non-GAAP measures are provided below and on the Company’s website at http://www.dickssportinggoods.com/investors.
Non-GAAP Net Income and Earnings Per Share Reconciliations:
(in thousands, except per share data):
Fiscal 2013 | |||||||||||||
13 Weeks Ended August 3, 2013 | |||||||||||||
As Reported | Asset Impairment Charge | Non-GAAP Total | |||||||||||
Net sales | $ | 1,531,431 | $ | — | $ | 1,531,431 | |||||||
Cost of goods sold, including occupancy and distribution costs | 1,052,101 | — | 1,052,101 | ||||||||||
GROSS PROFIT | 479,330 | — | 479,330 | ||||||||||
Selling, general and administrative expenses | 336,950 | (7,881 | ) | 329,069 | |||||||||
Pre-opening expenses | 5,285 | — | 5,285 | ||||||||||
INCOME FROM OPERATIONS | 137,095 | 7,881 | 144,976 | ||||||||||
Interest expense | 716 | — | 716 | ||||||||||
Other income | (1,735 | ) | — | (1,735 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 138,114 | 7,881 | 145,995 | ||||||||||
Provision for income taxes | 53,951 | 3,152 | 57,103 | ||||||||||
NET INCOME | $ | 84,163 | $ | 4,729 | $ | 88,892 | |||||||
EARNINGS PER COMMON SHARE: | |||||||||||||
Basic | $ | 0.68 | $ | 0.72 | |||||||||
Diluted | $ | 0.67 | $ | 0.71 | |||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||
Basic | 122,901 | 122,901 | |||||||||||
Diluted | 125,593 | 125,593 | |||||||||||
During the second quarter of 2013, the Company recorded a pre-tax $7.9 million non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to fair market value. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.
Fiscal 2013 | |||||||||||||||||
26 Weeks Ended August 3, 2013 | |||||||||||||||||
As Reported | Recovery of Previously Impaired Asset | Asset Impairment Charge | Non-GAAP Total | ||||||||||||||
Net sales | $ | 2,865,132 | $ | — | $ | — | $ | 2,865,132 | |||||||||
Cost of goods sold, including occupancy and distribution costs | 1,974,149 | — | — | 1,974,149 | |||||||||||||
GROSS PROFIT | 890,983 | — | — | 890,983 | |||||||||||||
Selling, general and administrative expenses | 649,658 | — | (7,881 | ) | 641,777 | ||||||||||||
Pre-opening expenses | 6,614 | — | — | 6,614 | |||||||||||||
INCOME FROM OPERATIONS | 234,711 | — | 7,881 | 242,592 | |||||||||||||
Interest expense | 1,385 | — | — | 1,385 | |||||||||||||
Other income | (7,940 | ) | 4,342 | — | (3,598 | ) | |||||||||||
INCOME BEFORE INCOME TAXES | 241,266 | (4,342 | ) | 7,881 | 244,805 | ||||||||||||
Provision for income taxes | 92,282 | — | 3,152 | 95,434 | |||||||||||||
NET INCOME | $ | 148,984 | $ | (4,342 | ) | $ | 4,729 | $ | 149,371 | ||||||||
EARNINGS PER COMMON SHARE: | |||||||||||||||||
Basic | $ | 1.21 | $ | 1.22 | |||||||||||||
Diluted | $ | 1.18 | $ | 1.19 | |||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||||
Basic | 122,802 | 122,802 | |||||||||||||||
Diluted | 125,728 | 125,728 | |||||||||||||||
During the first quarter of 2013, the Company determined that it would recover $4.3 million of its investment in JJB Sports, which it had previously fully impaired. There is no related tax expense as the Company reversed a portion of the deferred tax valuation allowance it had previously recorded for net capital loss carryforwards it did not expect to realize at the time its investment in JJB Sports was fully impaired. During the second quarter of 2013, the Company recorded a pre-tax $7.9 million non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to fair market value. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.
Fiscal 2012 | |||||||||||||
13 Weeks Ended July 28, 2012 | |||||||||||||
As Reported | Impairment of Investments | Non-GAAP Total | |||||||||||
Net sales | $ | 1,437,041 | $ | — | $ | 1,437,041 | |||||||
Cost of goods sold, including occupancy and distribution costs | 989,261 | — | 989,261 | ||||||||||
GROSS PROFIT | 447,780 | — | 447,780 | ||||||||||
Selling, general and administrative expenses | 310,864 | — | 310,864 | ||||||||||
Pre-opening expenses | 2,276 | — | 2,276 | ||||||||||
INCOME FROM OPERATIONS | 134,640 | — | 134,640 | ||||||||||
Impairment of available-for-sale investments | 32,370 | (32,370 | ) | — | |||||||||
Interest expense | 1,000 | — | 1,000 | ||||||||||
Other expense | 54 | — | 54 | ||||||||||
INCOME BEFORE INCOME TAXES | 101,216 | 32,370 | 133,586 | ||||||||||
Provision for income taxes | 47,553 | 4,734 | 52,287 | ||||||||||
NET INCOME | $ | 53,663 | $ | 27,636 | $ | 81,299 | |||||||
EARNINGS PER COMMON SHARE: | |||||||||||||
Basic | $ | 0.45 | $ | 0.68 | |||||||||
Diluted | $ | 0.43 | $ | 0.65 | |||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||
Basic | 119,928 | 119,928 | |||||||||||
Diluted | 124,533 | 124,533 | |||||||||||
During the second quarter of 2012, the Company fully impaired its investment in JJB Sports and recorded a pre-tax charge of $32.4 million. The Company recorded a deferred tax asset valuation allowance of approximately $7.9 million for a portion of the $32.4 million net capital loss carryforward that it expects not to realize as a result of the impairment of its investment in JJB Sports.
Fiscal 2012 | |||||||||||||
26 Weeks Ended July 28, 2012 | |||||||||||||
As Reported | Impairment of Investments | Non-GAAP Total | |||||||||||
Net sales | $ | 2,718,745 | $ | — | $ | 2,718,745 | |||||||
Cost of goods sold, including occupancy and distribution costs | 1,876,358 | — | 1,876,358 | ||||||||||
GROSS PROFIT | 842,387 | — | 842,387 | ||||||||||
Selling, general and administrative expenses | 606,995 | — | 606,995 | ||||||||||
Pre-opening expenses | 5,017 | — | 5,017 | ||||||||||
INCOME FROM OPERATIONS | 230,375 | — | 230,375 | ||||||||||
Impairment of available-for-sale investments | 32,370 | (32,370 | ) | — | |||||||||
Interest expense | 4,449 | — | 4,449 | ||||||||||
Other income | (1,811 | ) | — | (1,811 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 195,367 | 32,370 | 227,737 | ||||||||||
Provision for income taxes | 84,547 | 4,734 | 89,281 | ||||||||||
NET INCOME | $ | 110,820 | $ | 27,636 | $ | 138,456 | |||||||
EARNINGS PER COMMON SHARE: | |||||||||||||
Basic | $ | 0.92 | $ | 1.15 | |||||||||
Diluted | $ | 0.88 | $ | 1.10 | |||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||
Basic | 120,721 | 120,721 | |||||||||||
Diluted | 125,768 | 125,768 | |||||||||||
During the second quarter of 2012, the Company fully impaired its investment in JJB Sports and recorded a pre-tax charge of $32.4 million. The Company recorded a deferred tax asset valuation allowance of approximately $7.9 million for a portion of the $32.4 million net capital loss carryforward that it expects not to realize as a result of the impairment of its investment in JJB Sports.
Adjusted EBITDA
Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. Adjusted EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. Adjusted 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 | ||||||||
August 3, 2013 | July 28, 2012 | |||||||
(dollars in thousands) | ||||||||
Net income | $ | 84,163 | $ | 53,663 | ||||
Provision for income taxes | 53,951 | 47,553 | ||||||
Interest expense | 716 | 1,000 | ||||||
Depreciation and amortization | 43,506 | 30,444 | ||||||
EBITDA | $ | 182,336 | $ | 132,660 | ||||
Add: Impairment of available-for-sale investments | — | 32,370 | ||||||
Adjusted EBITDA, as defined | $ | 182,336 | $ | 165,030 | ||||
% increase in adjusted EBITDA | 10 | % | ||||||
26 Weeks Ended | ||||||||
August 3, 2013 | July 28, 2012 | |||||||
(dollars in thousands) | ||||||||
Net income | $ | 148,984 | $ | 110,820 | ||||
Provision for income taxes | 92,282 | 84,547 | ||||||
Interest expense | 1,385 | 4,449 | ||||||
Depreciation and amortization | 76,314 | 58,100 | ||||||
EBITDA | $ | 318,965 | $ | 257,916 | ||||
Add: Impairment of available-for-sale investments | — | 32,370 | ||||||
Less: Recovery of previously impaired asset | (4,342 | ) | — | |||||
Adjusted EBITDA, as defined | $ | 314,623 | $ | 290,286 | ||||
% increase in adjusted EBITDA | 8 | % | ||||||
Reconciliation of Gross Capital Expenditures to Net Capital Expenditures
The following table represents a reconciliation of the Company’s gross capital expenditures to its capital expenditures, net of tenant allowances.
26 Weeks Ended | ||||||||
August 3, 2013 | July 28, 2012 | |||||||
(dollars in thousands) | ||||||||
Gross capital expenditures | $ | (95,479 | ) | $ | (95,158 | ) | ||
Proceeds from sale-leaseback transactions | — | — | ||||||
Deferred construction allowances | 12,756 | 12,191 | ||||||
Construction allowance receipts | — | — | ||||||
Net capital expenditures | $ | (82,723 | ) | $ | (82,967 | ) | ||