DICK'S Sporting Goods Reports Second Quarter Results

- Consolidated non-GAAP earnings per diluted share totaled $0.67, at the high end of guidance of $0.62 to 0.67

- Consolidated same store sales increased 3.2%

- Company repurchased $100 million of common stock and declared a $0.125 per share quarterly dividend

- Company records charges as it restructures its golf business

19 Aug, 2014, 07:30 ET from DICK'S Sporting Goods, Inc.

PITTSBURGH, Aug. 19, 2014 /PRNewswire/ -- DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the second quarter ended August 2, 2014.

Second Quarter Results

The Company reported consolidated non-GAAP net income for the second quarter ended August 2, 2014 of $81.7 million, or $0.67 per diluted share, excluding golf restructuring charges, compared to the Company's expectations provided on May 20, 2014 of $0.62 to 0.67 per diluted share. For the second quarter ended August 3, 2013, the Company reported consolidated non-GAAP net income of $88.9 million, or $0.71 per diluted share, excluding an asset impairment charge.

On a GAAP basis, the Company reported consolidated net income for the second quarter ended August 2, 2014 of $69.5 million, or $0.57 per diluted share. For the second quarter ended August 3, 2013, the Company reported consolidated net income of $84.2 million, or $0.67 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 2014 increased 10.3% to approximately $1.7 billion. Consolidated same store sales increased 3.2%, compared to the Company's guidance of an approximate 1 to 3% increase. Same store sales for DICK'S Sporting Goods increased 4.1%, while Golf Galaxy decreased 9.3%. Second quarter 2013 consolidated same store sales decreased 0.4%, adjusted for the shifted retail calendar due to the 53rd week in 2012.

"Our second quarter results came in at the high end of our expectations," said Edward W. Stack, Chairman and CEO. "As anticipated, the golf and hunting businesses continued to experience negative comps. However, excluding these two categories, the remainder of the business delivered a 7.8% same store sales increase. We saw significant strength in several areas, including categories that have received more space within our stores, such as women's and youth athletic apparel."

Mr. Stack continued, "The headwinds in our hunting business continued in the second quarter. However, as we look at the entirety of our outdoor business, strength in other outdoor categories offset the declines in hunting, and our total outdoor comps were flat for the quarter. This gives us confidence and enthusiasm for the outdoor business as we continue to grow our Field & Stream and DICK'S stores."

Golf Restructuring

In the second quarter, the Company recorded pre-tax charges totaling $20.4 million related to the restructuring of its golf business. These actions were taken to align the cost structure with current and expected trends in golf. 

The pre-tax charges include:

  • A $14.3 million non-cash impairment of trademarks and store assets used in the Company's golf business;
  • Severance charges totaling $3.7 million relating to the elimination of specific golf positions from the DICK'S stores, and from the combination of DICK'S golf and Golf Galaxy corporate and administrative functions; and,
  • A $2.4 million write-down of golf-related inventory.

Mr. Stack concluded, "We have consolidated our Golf Galaxy merchandising, marketing and store operations into DICK'S Sporting Goods. In addition, we have eliminated specific staff in our golf area within our DICK'S Sporting Goods stores. These changes are necessitated by the current and expected trends in golf. We will invest these cost savings into other aspects of our store operations and into the growth areas of our business."

Omni-channel Development

eCommerce penetration for the second quarter of 2014 was 6.3% of total sales, compared to 5.6% in the second quarter last year.

In the second quarter, the Company opened eight new DICK'S Sporting Goods stores and one new Field & Stream store. These stores are listed in a table later in the release under the heading "Store Count and Square Footage." The Company also relocated three DICK'S Sporting Goods stores during the second quarter. As of August 2, 2014, the Company operated 574 DICK'S Sporting Goods stores in 46 states, with approximately 30.9 million square feet and 79 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet.

Balance Sheet

The Company ended the second quarter of 2014 with $100 million in cash and cash equivalents and no outstanding borrowings under its revolving credit facility. This compares to cash and cash equivalents of approximately $135 million and no outstanding borrowings under its $500 million revolving credit facility at the end of the second quarter of 2013. Over the course of the past twelve months, the Company utilized capital to invest in omni-channel growth, including Field & Stream stores, and returned over $360 million to shareholders through share repurchases and quarterly dividends.

Total inventory was 11.2% higher at the end of the second quarter of 2014 as compared to the end of the second quarter of 2013. Approximately 2% of inventory growth reflects inventory to support Field & Stream, including the seven new stores scheduled to open in the third quarter.

Year-to-Date Results

The Company reported consolidated non-GAAP net income for the 26 weeks ended August 2, 2014 of $143.0 million, or $1.17 per diluted share. For the 26 weeks ended August 3, 2013, the Company reported consolidated non-GAAP net income of $149.4 million, or $1.19 per diluted share.

On a GAAP basis, the Company reported consolidated net income for the 26 weeks ended August 2, 2014 of $139.5 million, or $1.14 per diluted share. For the 26 weeks ended August 3, 2013, on a GAAP basis, the Company reported consolidated net income of $149.0 million, or $1.18 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 26 weeks ended August 2, 2014 increased 9.2% from last year's period to $3.1 billion due to the opening of new stores coupled with a consolidated same store sales increase of 2.4%.

Capital Allocation

In the second quarter of 2014, the Company repurchased approximately 2.2 million shares of its common stock at an average cost of $44.51 per share, for a total cost of $100.0 million. To date, the Company has repurchased $380.6 million of common stock under its $1 billion share repurchase authorization.

On August 14, 2014, 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 26, 2014 to stockholders of record at the close of business on September 5, 2014.

Current 2014 Outlook

The Company's current outlook for 2014 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. 

For the second half of 2014, the Company is cautiously optimistic although it does expect, due to the cautious consumer, an increase in promotional activity with margins and advertising expense continuing to be under pressure and impacting earnings per diluted share by approximately $0.04.

  • Full Year 2014
    • Based on an estimated 122 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.70 to 2.85, excluding a gain on the sale of an asset and golf restructuring charges. For the 52 weeks ended February 1, 2014, the Company reported consolidated earnings per diluted share of $2.69
    • Consolidated same store sales are currently expected to increase approximately 1 to 3%, compared to a 1.9% increase in fiscal 2013.
    • The Company now expects to open approximately 46 new DICK'S Sporting Goods stores, relocate five DICK'S Sporting Goods stores and remodel five DICK'S Sporting Goods stores in 2014. The Company also expects to open approximately eight new Field & Stream stores, relocate two Golf Galaxy stores and open one new Golf Galaxy store in 2014.
  • Third Quarter 2014 
    • Based on an estimated 121 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.38 to 0.42 in the third quarter of 2014, compared to consolidated earnings per diluted share of $0.40 in the third quarter of 2013.
    • Consolidated same store sales are currently expected to increase approximately 1 to 3% in the third quarter of 2014, as compared to a 3.3% increase in the third quarter of 2013, adjusted for the shifted retail calendar due to the 53rd week in 2012.
    • The Company expects to open approximately 24 new DICK'S Sporting Goods stores, relocate one DICK's Sporting Goods store and remodel five DICK's Sporting Goods stores in the third quarter of 2014. The Company also expects to open seven new Field & Stream stores and one new Golf Galaxy store, and relocate one Golf Galaxy store in the third quarter of 2014.
  • Capital Expenditures
    • In 2014, the Company now anticipates capital expenditures to be approximately $340 million on a gross basis and approximately $245 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 www.DICKS.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 (877) 443-5743 (domestic callers) or (412) 902-6617 (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 approximately 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 10049787. The dial-in replay will be available for approximately 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, the Company's expectations for the continuation of negative trends and challenges in the golf business and the hunting business, the Company's confidence in the outdoor business, the investment of cost savings as a result of the restructuring of the Company's golf business, the Company's expectation for a cautious consumer and increased promotional activity, the Company's future performance, growth in the omni-channel network, number of new store openings and 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 2014 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: economic and financial uncertainties may cause a decline in consumer spending; intense competition in the sporting goods industry; changes in consumer demand or shopping patterns; limitations on the availability of attractive store locations and/or lease terms; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; disruptions with our eCommerce services provider or of our information systems; access to adequate capital; changing laws and regulations affecting our business including the regulation of consumer products; 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; ability to attract and retain qualified business leaders; disruption at our distribution centers; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; risks associated with strategic investments or acquisitions; 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 1, 2014 as filed with the Securities and Exchange Commission ("SEC") on March 28, 2014 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.

Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of August 2, 2014, the Company operated 574 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated associates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.

Headquartered in Pittsburgh, PA, DICK'S also owns and operates Golf Galaxy, Field & Stream and True Runner specialty stores. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. DICK'S Sporting Goods, Inc. news releases are available at www.DICKS.com/Investors. The Company's website is not part of this release.

Contacts:

Anne-Marie Megela, Vice President – Treasury Services and Investor Relations, or Scott W. McKinney, Director of 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 2,  2014

% of Sales

August 3,  2013

% of

Sales (1)

Net sales

$

1,688,890

100.00

%

$

1,531,431

100.00

%

Cost of goods sold, including occupancy and   distribution costs

1,186,334

70.24

1,052,101

68.70

GROSS PROFIT

502,556

29.76

479,330

31.30

Selling, general and administrative expenses

383,054

22.68

336,950

22.00

Pre-opening expenses

7,940

0.47

5,285

0.35

INCOME FROM OPERATIONS

111,562

6.61

137,095

8.95

Interest expense

763

0.05

716

0.05

Other income

(2,013)

(0.12)

(1,735)

(0.11)

INCOME BEFORE INCOME TAXES

112,812

6.68

138,114

9.02

Provision for income taxes

43,345

2.57

53,951

3.52

NET INCOME

$

69,467

4.11

%

$

84,163

5.50

%

EARNINGS PER COMMON SHARE:

Basic

$

0.58

$

0.68

Diluted

$

0.57

$

0.67

WEIGHTED AVERAGE COMMON SHARES   OUTSTANDING:

Basic

119,950

122,901

Diluted

121,840

125,593

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 2,  2014

% of

Sales

August 3, 2013

% of

Sales (1)

Net sales

$

3,127,798

100.00

%

$

2,865,132

100.00

%

Cost of goods sold, including occupancy and   distribution costs

2,184,359

69.84

1,974,149

68.90

GROSS PROFIT

943,439

30.16

890,983

31.10

Selling, general and administrative expenses

705,643

22.56

649,658

22.67

Pre-opening expenses

14,146

0.45

6,614

0.23

INCOME FROM OPERATIONS

223,650

7.15

234,711

8.19

Interest expense

1,372

0.04

1,385

0.05

Other income

(4,377)

(0.14)

(7,940)

(0.28)

INCOME BEFORE INCOME TAXES

226,655

7.25

241,266

8.42

Provision for income taxes

87,205

2.79

92,282

3.22

NET INCOME

$

139,450

4.46

%

$

148,984

5.20

%

EARNINGS PER COMMON SHARE:

Basic

$

1.16

$

1.21

Diluted

$

1.14

$

1.18

WEIGHTED AVERAGE COMMON SHARES   OUTSTANDING:

Basic

120,544

122,802

Diluted

122,600

125,728

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 2,  2014

August 3,  2013

February 1,  2014

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

100,132

$

134,765

$

181,731

Accounts receivable, net

102,248

84,956

60,779

Income taxes receivable

6,328

2,455

7,275

Inventories, net

1,418,660

1,275,215

1,232,065

Prepaid expenses and other current assets

90,369

109,146

99,386

Deferred income taxes

39,423

46,138

38,835

Total current assets

1,757,160

1,652,675

1,620,071

Property and equipment, net

1,138,182

937,310

1,084,529

Intangible assets, net

84,901

97,858

98,255

Goodwill

200,594

200,594

200,594

Other assets:

Deferred income taxes

3,169

4,114

2,477

Other

71,477

126,920

65,561

Total other assets

74,646

131,034

68,038

TOTAL ASSETS

$

3,255,483

$

3,019,471

$

3,071,487

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

688,442

$

598,263

$

562,439

Accrued expenses

305,937

295,010

265,040

Deferred revenue and other liabilities

125,258

111,101

154,384

Income taxes payable

12,784

12,777

19,825

Current portion of other long-term debt and leasing obligations

461

8,300

899

Total current liabilities

1,132,882

1,025,451

1,002,587

LONG-TERM LIABILITIES:

Other long-term debt and leasing obligations

6,232

6,360

6,476

Deferred income taxes

18,473

8,449

38,617

Deferred revenue and other liabilities

401,021

314,756

331,628

Total long-term liabilities

425,726

329,565

376,721

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

941

981

961

Class B common stock

249

249

249

Additional paid-in capital

979,696

913,580

958,943

Retained earnings

1,296,434

1,030,108

1,187,514

Accumulated other comprehensive income

40

81

24

Treasury stock, at cost

(580,485)

(280,544)

(455,512)

Total stockholders' equity

1,696,875

1,664,455

1,692,179

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

3,255,483

$

3,019,471

$

3,071,487

 

 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

26 Weeks Ended

August 2,  2014

August 3,  2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

139,450

$

148,984

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

Depreciation and amortization

89,771

76,314

Deferred income taxes

(21,424)

(14,545)

Stock-based compensation

12,915

13,925

Excess tax benefit from exercise of stock options

(6,588)

(15,475)

Tax benefit from exercise of stock options

22

102

Gain on sale of asset

(14,428)

Other non-cash items

290

290

Changes in assets and liabilities:

Accounts receivable

(11,023)

(21,690)

Inventories

(186,595)

(179,029)

Prepaid expenses and other assets

(10,980)

(12,738)

Accounts payable

133,245

83,458

Accrued expenses

7,697

(15,561)

Income taxes payable / receivable

494

(27,212)

Deferred construction allowances

44,934

12,756

Deferred revenue and other liabilities

(25,561)

(44,173)

Net cash provided by operating activities

152,219

5,406

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(150,382)

(95,479)

Proceeds from sale of other assets

73,392

11,000

Deposits and purchases of other assets

(79)

(48,469)

Net cash used in investing activities

(77,069)

(132,948)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on other long-term debt and leasing obligations

(682)

(1,615)

Construction allowance receipts

Proceeds from exercise of stock options

8,879

22,736

Excess tax benefit from exercise of stock options

6,588

15,475

Minimum tax withholding requirements

(7,645)

(12,877)

Cash paid for treasury stock

(124,999)

(80,603)

Cash dividends paid to stockholders

(31,664)

(33,550)

(Decrease) increase in bank overdraft

(7,242)

7,558

Net cash used in financing activities

(156,765)

(82,876)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

16

(31)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(81,599)

(210,449)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

181,731

345,214

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

100,132

$

134,765

 

 

Store Count and Square Footage

The stores that opened during the second quarter of 2014 are as follows:

Store

Market

Concept

Pleasant Hill, CA

San Francisco

DICK'S Sporting Goods

Culpeper, VA

Culpeper

DICK'S Sporting Goods

Arden, NC

Asheville

DICK'S Sporting Goods

Lawrence, KS

Lawrence

DICK'S Sporting Goods

Chicago (South Loop), IL

Chicago

DICK'S Sporting Goods

Seabrook, NH

Portsmouth

DICK'S Sporting Goods

Clermont, FL

Orlando

DICK'S Sporting Goods

South San Antonio, TX

San Antonio

DICK'S Sporting Goods

Erie, PA

Erie

Field & Stream

 

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Store Count:

Fiscal 2014

Fiscal 2013

DICK'S Sporting Goods

Golf Galaxy / Specialty Store Concepts (1)

Total

DICK'S Sporting Goods

Golf Galaxy / Specialty Store Concepts (1)

Total

Beginning stores

558

84

642

518

83

601

Q1 New stores

8

8

2

2

Q2 New stores

8

1

9

7

7

Ending stores

574

85

659

527

83

610

Relocated stores

4

1

5

Square Footage:

(in millions)

DICK'S Sporting Goods

Golf Galaxy / Specialty Store Concepts (1)

Total (2)

Q1 2013

28.3

1.4

29.7

Q2 2013

28.7

1.4

30.0

Q3 2013

29.9

1.5

31.4

Q4 2013

30.1

1.5

31.6

Q1 2014

30.6

1.5

32.1

Q2 2014

30.9

1.6

32.5

(1)

Includes the Company's Field & Stream and True Runner stores.

(2)

Column may not add due to rounding.

 

 

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 non-recurring, infrequent or unusual items ("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 www.DICKS.com/Investors.

 

Non-GAAP Net Income and Earnings Per Share Reconciliations:

(in thousands, except per share data):

Fiscal 2014

13 Weeks Ended August 2, 2014

As Reported

Golf Restructuring Charges

Non-GAAP Total

Net sales

$

1,688,890

$

$

1,688,890

Cost of goods sold, including occupancy and   distribution costs

1,186,334

(2,405)

1,183,929

GROSS PROFIT

502,556

2,405

504,961

Selling, general and administrative expenses

383,054

(17,960)

365,094

Pre-opening expenses

7,940

7,940

INCOME FROM OPERATIONS

111,562

20,365

131,927

Interest expense

763

763

Other income

(2,013)

(2,013)

INCOME BEFORE INCOME TAXES

112,812

20,365

133,177

Provision for income taxes

43,345

8,146

51,491

NET INCOME

$

69,467

$

12,219

$

81,686

EARNINGS PER COMMON SHARE:

Basic

$

0.58

$

0.68

Diluted

$

0.57

$

0.67

WEIGHTED AVERAGE COMMON SHARES   OUTSTANDING:

Basic

119,950

119,950

Diluted

121,840

121,840

 

During the second quarter of 2014, the Company recorded pre-tax restructuring charges of $20.4 million including a $14.3 million non-cash impairment of trademarks and store assets, severance charges of $3.7 million resulting from the elimination of specific staff in the golf area of its DICK'S stores and consolidation of DICK'S golf and Golf Galaxy corporate and administrative functions, and a $2.4 million write-down of excess golf inventories. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.

 

Fiscal 2014

26 Weeks Ended August 2, 2014

As Reported

Gain on Sale of Asset

Golf Restructuring Charges

Non-GAAP Total

Net sales

$

3,127,798

$

$

$

3,127,798

Cost of goods sold, including   occupancy and distribution costs

2,184,359

(2,405)

2,181,954

GROSS PROFIT

943,439

2,405

945,844

Selling, general and administrative   expenses

705,643

14,428

(17,960)

702,111

Pre-opening expenses

14,146

14,146

INCOME FROM OPERATIONS

223,650

(14,428)

20,365

229,587

Interest expense

1,372

1,372

Other income

(4,377)

(4,377)

INCOME BEFORE INCOME   TAXES

226,655

(14,428)

20,365

232,592

Provision for income taxes

87,205

(5,771)

8,146

89,580

NET INCOME

$

139,450

$

(8,657)

$

12,219

$

143,012

EARNINGS PER COMMON   SHARE:

Basic

$

1.16

$

1.19

Diluted

$

1.14

$

1.17

WEIGHTED AVERAGE COMMON   SHARES OUTSTANDING:

Basic

120,544

120,544

Diluted

122,600

122,600

 

During the first quarter of 2014, the Company recorded a pre-tax $14.4 million gain on sale of a corporate aircraft. During the second quarter of 2014, the Company recorded pre-tax restructuring charges of $20.4 million including a $14.3 million non-cash impairment of trademarks and store assets, severance charges of $3.7 million resulting from the elimination of specific staff in the golf area of its DICK'S stores and consolidation of  DICK'S golf and Golf Galaxy corporate and administrative functions, and a $2.4 million write-down of excess golf inventories. The provision for income taxes for the aforementioned adjustments were calculated at 40%, which approximates the Company's blended tax rate.

 

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.

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, capital investments and certain non-recurring, infrequent or unusual items.

 

13 Weeks Ended

August 2,  2014

August 3,  2013

(dollars in thousands)

Net income

$

69,467

$

84,163

Provision for income taxes

43,345

53,951

Interest expense

763

716

Depreciation and amortization

52,912

43,506

EBITDA

$

166,487

$

182,336

Add: Golf restructuring charges

6,043

Adjusted EBITDA, as defined

$

172,530

$

182,336

% decrease in adjusted EBITDA

(5)%

26 Weeks Ended

August 2,  2014

August 3,  2013

(dollars in thousands)

Net income

$

139,450

$

148,984

Provision for income taxes

87,205

92,282

Interest expense

1,372

1,385

Depreciation and amortization

89,771

76,314

EBITDA

$

317,798

$

318,965

Less: Recovery of previously impaired asset

(4,342)

Less: Gain on sale of asset

(14,428)

Add: Golf restructuring charges

6,043

Adjusted EBITDA, as defined

$

309,413

$

314,623

% decrease in adjusted EBITDA

(2)%

 

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 2,  2014

August 3,  2013

(dollars in thousands)

Gross capital expenditures

$

(150,382)

$

(95,479)

Proceeds from sale-leaseback transactions

Deferred construction allowances

44,934

12,756

Construction allowance receipts

Net capital expenditures

$

(105,448)

$

(82,723)

 

SOURCE DICK'S Sporting Goods, Inc.



RELATED LINKS

http://www.dickssportinggoods.com