2014

Big Lots Reports First Quarter Adjusted Consolidated Income from Continuing Operations of $0.61 per Diluted Share Company Provides Q2 Guidance and Updated Outlook for Fiscal 2013

COLUMBUS, Ohio, May 30, 2013 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported consolidated income from continuing operations of $32.3 million, or $0.56 per diluted share, for the first quarter of fiscal 2013 ended May 4, 2013. This result includes a non-recurring, after-tax charge of $3.2 million, or $0.06 per diluted share, associated with store-related legal activity. Excluding this non-recurring charge, adjusted consolidated income from continuing operations totaled $35.5 million, or $0.61 per diluted share (non-GAAP), consistent with our guidance of $0.53 to $0.65 per diluted share issued on March 6, 2013. This result compares to adjusted consolidated income from continuing operations of $44.2 million, or $0.68 per diluted share (non-GAAP), for the first quarter of fiscal 2012. Consolidated net sales for the first quarter of fiscal 2013 increased 1.3% to $1,311.3 million, compared to $1,294.5 million for the same period of fiscal 2012. Consolidated comparable store sales decreased 2.5% for the quarter, consistent with our guidance of negative low single digits.

(Logo:  http://photos.prnewswire.com/prnh/20011026/BIGLOTSLOGO)

FIRST QUARTER HIGHLIGHTS

  • Adjusted consolidated income from continuing operations of $0.61 per diluted share (non-GAAP), compared to adjusted consolidated income from continuing operations of $0.68 per diluted share (non-GAAP) last year
  • Consolidated net sales of $1.3 billion, an increase of 1.3% compared to last year
  • Opened 14 stores in the U.S. and the first Big Lots branded store in Canada







EPS From Continuing Operations (1)









Q1 2013


Q1 2012








U.S. Operations


$0.64


$0.72


Add back non-recurring charges


$0.06


$0.05








U.S. Operations - adjusted basis


$0.69


$0.77








Canadian Operations


($0.08)


($0.09)








Consolidated Operations - adjusted basis


$0.61


$0.68








(1)  Non-GAAP.  See detailed segment reporting below.


First Quarter Results

U.S. Operations

Net sales for U.S. operations for the first quarter of fiscal 2013 increased 1.0% to $1,274.7 million, compared to $1,262.2 million for the same period of fiscal 2012. Comparable store sales for U.S. stores open at least fifteen months decreased 2.9% for the quarter. Adjusted income from continuing U.S. operations totaled $40.0 million, or $0.69 per diluted share (non-GAAP), compared to adjusted income from continuing U.S. operations of $50.3 million, or $0.77 per diluted share (non-GAAP), for the same period of fiscal 2012. Results for our U.S. operations were consistent with our communicated guidance.

Canadian Operations

Net sales for Canadian operations for the first quarter of fiscal 2013 increased 13.5% to $36.6 million, while comparable stores sales increased 13.2%. For the first quarter of fiscal 2013, we incurred a net loss of $4.4 million, or $0.08 per diluted share (non-GAAP), compared to a net loss of $6.1 million, or $0.09 per diluted share (non-GAAP) for the same period of fiscal 2012. Results for our Canadian operations were consistent with our communicated guidance.















Comparable Store Sales


Store Count

















Q1 2013


Q1 2012




Q1 2013


Q1 2012
















U.S. Operations


-2.9%


-0.8%




1,505


1,454



Canadian Operations (1)


+13.2%


na




80


82
















Consolidated Operations


-2.5%


-0.8%




1,585


1,536
















(1)  Comparable store sales for Canada for fiscal 2012 do not qualify under our calculation due to an acquisition date of July 2011.









Inventory and Cash Management

On a consolidated basis, Inventory ended the first quarter of fiscal 2013 at $885 million, compared to $848 million for the first quarter of fiscal 2012. The growth in inventory was driven by an increase in U.S. store count, as inventory per store in our U.S. stores was essentially flat to last year.

We ended the first quarter of fiscal 2013 with $72 million of Cash and Cash Equivalents and $137 million of borrowings under our credit facility compared to $83 million of Cash and Cash Equivalents and no borrowings under our credit facility as of the end of the first quarter of fiscal 2012. Our use of cash generated by our U.S. operations and debt incurred during the last 12 months was focused on share repurchase activity and funding our Canadian operations.

As part of our ongoing focus on capital structure, we have extended our current $700 million, 5-year unsecured credit facility. The strength of our credit profile, operations, balance sheet and cash flow generation, enabled us to work collaboratively with our existing banking group to extend the term of our current credit facility by nearly two years. The credit facility now covers a five year period (expiration May 2018), provides us lower rates and fees, and maintains the same structure, bank participants, and financial covenants as our previous facility. 

FISCAL Q2 2013 GUIDANCE

  • Provides initial Q2 guidance for consolidated income from continuing operations of $0.17 to $0.27 per diluted share, compared to consolidated income from continuing operations of $0.36 per diluted share for the same period last year
  • Provides initial Q2 guidance for consolidated net sales in the range of +1% to -1%, with consolidated comparable stores sales in the range of -2% to -4%

For the second quarter of fiscal 2013, we estimate consolidated income from continuing operations will be in the range of $0.17 to $0.27 per diluted share, compared to consolidated income from continuing operations of $0.36 per diluted share for the second quarter of fiscal 2012. This guidance is based on estimated consolidated net sales in the range of +1% to -1% for the second quarter of fiscal 2013 and consolidated comparable store sales in the range of -2% to -4% (see table below).

We estimate income from U.S. operations in a range of $0.27 to $0.32 per diluted share (non-GAAP, see reconciliation below), compared to $0.42 per diluted share (non-GAAP) for the same period last year. This guidance is based on estimated net sales for U.S. operations in the range of +1% to -1% for the second quarter of fiscal 2013 and comparable store sales in the range of -2% to -4%.

We estimate a loss from our Canadian operations in the range of $3 to $6 million, or $0.05 to $0.10 per diluted share (non-GAAP), compared to a loss of $3.3 million, or $0.05 per diluted share (non-GAAP), for the second quarter of fiscal 2012. This guidance is based on estimated net sales of $37 to $41 million and a comparable store sales increase in the range of 4% to 14%.

2013 OUTLOOK

  • Fiscal 2013 adjusted consolidated income from continuing operations projected to be $2.87 to $3.12 per diluted share (non-GAAP), compared to fiscal 2012 adjusted consolidated income from continuing operations of $2.99 per diluted share (non-GAAP)
  • Cash Flow estimated to be approximately $175 million (defined as operating activities less investing activities)
  • Fiscal 2013 consolidated net sales increase of 1% to 2%, with consolidated comparable store sales in the range of 0% to -1%

Based on the actual results for the first quarter and the guidance provided above for the second quarter, we are updating our full year fiscal 2013 outlook. We estimate fiscal 2013 adjusted consolidated income from continuing operations will be in the range of $2.87 to $3.12 per diluted share (non-GAAP, see reconciliation below) compared to adjusted consolidated income from continuing operations of $2.99 per diluted share for fiscal 2012 (non-GAAP). This outlook excludes the previously mentioned non-recurring charge associated with store-related legal activity and is based on an estimated consolidated net sales increase in the range of 1% to 2% for fiscal 2013 and consolidated comparable store sales in the range of 0% to -1% (see table below). We estimate this financial performance will result in cash flow of approximately $175 million in fiscal 2013. As a reminder, we are operating under a 52-week retail calendar compared to 53-weeks in fiscal 2012.

U.S. Operations

We are forecasting adjusted income from continuing U.S. operations to be in the range of $3.00 to $3.20 per diluted share (non-GAAP), compared to fiscal 2012 adjusted income from continuing U.S. operations of $3.21 per diluted share (non-GAAP). This outlook excludes the previously mentioned non-recurring charge associated with store-related legal activity and is based on an estimated net sales increase for U.S. operations in the range of 1% to 2% and comparable store sales for U.S. operations in the range of 0% to -1%.

Canadian Operations

Canadian net sales are expected to be in the range of $175 to $185 million for fiscal 2013, resulting in a net loss in the range of $5 to $8 million, or $0.08 to $0.13 per diluted share (non-GAAP). This compares to a net loss for fiscal 2012 of $13.5 million, or $0.22 per diluted share (non-GAAP). Our outlook for fiscal 2013 is based on a Canadian net sales increase in the range of 13% to 20% and a comparable store sales increase in the range of 12% to 19%. From a real estate perspective, we expect to open 2 new stores in Canada under the Big Lots banner.










EPS from Continuing Operations (non-GAAP)


Q2


Full Year










2013 Guidance


2012


2013 Guidance


2012










U.S. Operations


$0.27 - $0.32


$0.42


$2.95 - $3.15


$3.15

Add back non-recurring charge


-


-


$0.05


$0.06










U.S. Operations - adjusted basis


$0.27 - $0.32


$0.42


$3.00 - $3.20


$3.21










Canadian Operations


($0.10) - ($0.05)


($0.05)


($0.13) - ($0.08)


($0.22)










Consolidated Operations - adjusted basis


$0.17 - $0.27


$0.36


$2.87 - $3.12


$2.99










 









Sales Guidance

Q2 2013


Full Year 2013










Total Sales


Comp


Total Sales


Comp









U.S. Operations

+1% to -1%


-2% to -4%


+1% to +2%


0% to -1%

Canadian Operations

+6% to +17%


+4% to +14%


+13% to +20%


+12% to +19%









Consolidated Operations

+1% to -1%


-2% to -4%


+1% to +2%


0% to -1%









Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the first quarter and provide commentary on our outlook for fiscal 2013. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website (www.biglots.com).

If you are unable to join the live webcast, an archive of the call will be available through the Investor Relations section of our website (www.biglots.com) beginning two hours after the call ends and will remain available through midnight on Thursday, June 20. A replay of the call will be available beginning today at 12:00 noon through June 20 at midnight by dialing: 1.888.203.1112 (United States and Canada) or 1.719.457.0820 (International). The Replay Confirmation Code is 6565635.  All times are Eastern Time.

Big Lots is North America's largest broadline closeout retailer. As of the end of the first quarter of fiscal 2013, we operated 1,505 BIG LOTS stores in the 48 contiguous United States, 1 BIG LOTS store in Canada, and 79 LIQUIDATION WORLD and LW stores in Canada. Wholesale operations are conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY and with online sales at www.biglotswholesale.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. Although we believe the  expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, the current economic and credit crisis, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.







BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)










MAY 4


APRIL 28




2013


2012




(Unaudited)


(Unaudited)








ASSETS











Current assets:






Cash and cash equivalents


$71,669


$82,571


Inventories


884,846


847,655


Deferred income taxes


43,148


45,997


Other current assets


75,078


68,646


   Total current assets


1,074,741


1,044,869







Property and equipment - net


583,496


569,146







Deferred income taxes


8,716


3,402

Goodwill


13,385


15,030

Other assets


56,425


44,358




$1,736,763


$1,676,805














LIABILITIES AND SHAREHOLDERS' EQUITY      











Current liabilities:






Accounts payable


$362,421


$433,505


Property, payroll and other taxes


74,937


79,106


Accrued operating expenses


67,309


100,327


Insurance reserves


36,414


35,441


KB bankruptcy lease obligation


3,069


3,069


Accrued salaries and wages


27,194


25,307


Income taxes payable


36,129


19,303


   Total current liabilities


607,473


696,058







Long-term obligations under bank credit facility


137,200


0







Deferred rent


76,400


62,016

Insurance reserves


63,447


50,811

Unrecognized tax benefits


16,845


17,274

Other liabilities


39,485


41,219







Shareholders' equity


795,913


809,427




$1,736,763


$1,676,805







                     









BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












13 WEEKS ENDED


13 WEEKS ENDED




MAY 4, 2013


APRIL 28, 2012





%



%




(Unaudited)


(Unaudited)

















Net sales


$1,311,338

100.0


$1,294,481

100.0










Gross margin


516,629

39.4


512,449

39.6










Selling and administrative expenses 


432,467

33.0


418,319

32.3










Depreciation expense


27,470

2.1


25,288

2.0









Operating profit


56,692

4.3


68,842

5.3










Interest expense


(726)

(0.1)


(336)

(0.0)










Other (expense) income


(146)

(0.0)


37

0.0









Income from continuing operations before income taxes


55,820

4.3


68,543

5.3










Income tax expense


23,487

1.8


27,763

2.1









Income from continuing operations


32,333

2.5


40,780

3.2










Loss from discontinued operations, net of tax








   benefit of $0 and $22, respectively


0

0.0


(34)

(0.0)









Net income


$32,333

2.5


$40,746

3.1

















Earnings per common share - basic (a)
















Continuing operations


$0.56



$0.64











Discontinued operations


0.00



0.00











Net income


$0.56



$0.64


















Earnings per common share - diluted (a)
















Continuing operations


$0.56



$0.63











Discontinued operations


0.00



0.00











Net income


$0.56



$0.63


















Weighted average common shares outstanding
















Basic


57,305



64,119











Dilutive effect of share-based awards


538



1,046











Diluted


57,843



65,165










(a)

The earnings per share for Continuing Operations, Discontinued Operations and Net Income are separately calculated in accordance with accounting pronouncements; therefore, the sum of earnings per share for Continuing Operations and Discontinued Operations may differ, due to rounding, from the calculated earnings per share of Net Income.









         











BIG LOTS, INC. AND SUBSIDIARIES

SEGMENT OPERATING PERFORMANCE

(In thousands, except per share data)














13 WEEKS ENDED




MAY 4, 2013


APRIL 28, 2012


MAY 4, 2013


APRIL 28, 2012




U.S.


U.S.


Canada


Canada




(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Net sales


$1,274,744


$1,262,235


$36,594


$32,246












Gross margin


503,090


500,945


13,539


11,504












Selling and administrative expenses 


415,219


401,526


17,248


16,793












Depreciation expense


26,880


24,424


590


864











Operating profit (loss)


60,991


74,995


(4,299)


(6,153)












Interest expense


(726)


(336)


0


0












Other income (expense)


0


0


(146)


37











Income (loss) from continuing operations before income taxes


60,265


74,659


(4,445)


(6,116)












Income tax expense


23,487


27,763


0


0











Income (loss) from continuing operations


36,778


46,896


(4,445)


(6,116)











Diluted earnings (loss) per common share from continuing operations (a)    

$0.64


$0.72


($0.08)


($0.09)











(a)

The diluted earnings (loss) per share from continuing operations by segment are separately calculated; therefore, the sum of diluted earnings (loss) per share from continuing operations by segment may differ, due to rounding, from the calculated consolidated diluted (loss) earnings per share from continuing operations.  Diluted earnings (loss) per share from continuing operations by segment is a "non-GAAP financial measure," as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229), which our management believes is useful information to investors.



                       







BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)










13 WEEKS ENDED


13 WEEKS ENDED




MAY 4, 2013


APRIL 28, 2012




 (Unaudited) 


 (Unaudited) 


  Net cash provided by operating activities 


$60,183


$125,582








  Net cash used in investing activities


(15,823)


(17,989)








  Net cash used in financing activities


(33,164)


(93,648)








    Impact of foreign currency on cash


(108)


79







Increase in cash and cash equivalents


11,088


14,024


Cash and cash equivalents:






   Beginning of period


60,581


68,547


   End of period


$71,669


$82,571













                             

BIG LOTS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)


The following tables reconcile: (1) selling and administrative expenses, selling and administrative expense rate, operating profit, operating profit rate, income tax expense, effective income tax rate, income from continuing operations, net income, diluted earnings per share from continuing operations, and diluted earnings per share for the first quarter of 2013 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share (non-GAAP financial measures); and (2) gross margin, gross margin rate, operating profit, operating profit rate, income tax expense, effective income tax rate, income from continuing operations, net income, diluted earnings per share from continuing operations, and diluted earnings per share for the first quarter of 2012 (GAAP financial measures) to adjusted gross margin, adjusted gross margin rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share (non-GAAP financial measures).



 First quarter of 2013 - Thirteen weeks ended May 4, 2013 









 Consolidated Results 








 As reported 


 Adjustment to

exclude loss

contingency 


 As Adjusted

(non-GAAP) 

 Selling and administrative expenses 

$      432,467


$               (5,052)


$          427,415

 Selling and administrative expense rate 

33.0%


(0.4%)


32.6%

 Operating profit 


56,692


5,052


61,744

 Operating profit rate 


4.3%


0.4%


4.7%

 Income tax expense 


23,487


1,862


25,349

 Effective income tax rate 

42.1%


0.5%


41.6%

 Income from continuing operations 

32,333


3,190


35,523

 Net income 


32,333


3,190


35,523

 Diluted earnings per share from  






      continuing operations 

$             0.56


$                   0.06


$                 0.61

 Diluted earnings per share  

$             0.56


$                   0.06


$                 0.61









 U.S. Segment Results 










 As reported 


 Adjustment to

exclude loss

contingency 


 As Adjusted

(non-GAAP) 

 Selling and administrative expenses 

$      415,219


$               (5,052)


$          410,167

 Selling and administrative expense rate     

32.6%


(0.4%)


32.2%

 Operating profit 


60,991


5,052


66,043

 Operating profit rate 


4.8%


0.4%


5.2%

 Income tax expense 


23,487


1,862


25,349

 Effective income tax rate 

39.0%


(0.2%)


38.8%

 Income from continuing operations 

36,778


3,190


39,968

 Diluted earnings per share from  






     continuing operations 

$             0.64


$                  0.06


$                 0.69










The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") a pretax accrual of a loss contingency related to legal matters of $5,052 ($3,190, net of tax).


                   

 First quarter of 2012 - Thirteen weeks ended April 28, 2012 











 Consolidated Results 








 As reported 


 Adjustment to

exclude change in

inventory accounting

principle 


 As Adjusted

(non-GAAP) 

 Gross margin 


$      512,449


$                    5,574


$           518,023

 Gross margin rate 


39.6%


0.4%


40.0%

 Operating profit 


68,842


5,574


74,416

 Operating profit rate 


5.3%


0.4%


5.7%

 Income tax expense 


27,763


2,186


29,949

 Effective income tax rate 

40.5%


(0.1%)


40.4%

 Income from continuing operations      

40,780


3,388


44,168

 Net income 


40,746


3,388


44,134

 Diluted earnings per share from  






      continuing operations 

$             0.63


$                      0.05


$                  0.68

 Diluted earnings per share  

$             0.63


$                      0.05


$                  0.68









 U.S. Segment Results 










 As reported 


 Adjustment to

exclude change in

inventory accounting

principle 


 As Adjusted  (non-GAAP) 

 Gross margin 


$      500,945


$                    5,574


$           506,519

 Gross margin rate 


39.7%


0.4%


40.1%

 Operating profit 


74,995


5,574


80,569

 Operating profit rate 


5.9%


0.5%


6.4%

 Income tax expense 


27,763


2,186


29,949

 Effective income tax rate 

37.2%


0.1%


37.3%

 Income from continuing operations 

46,896


3,388


50,284

 Diluted earnings per share from  






      continuing operations 

$             0.72


$                      0.05


$                  0.77










The above adjusted gross margin, adjusted gross margin rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") a pretax charge for a change in an accounting principle associated with our implementation of new inventory management information systems of $5,574 ($3,388, net of tax).


Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.


SOURCE Big Lots, Inc.



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