Big Lots Reports Q4 Adjusted Income From Continuing Operations Of $2.00 Per Share

COMPANY PROVIDES GUIDANCE FOR FISCAL 2016

COMPANY ANNOUNCES $250 MILLION SHARE REPURCHASE PROGRAM AND 11% INCREASE IN QUARTERLY CASH DIVIDEND

Mar 04, 2016, 06:00 ET from Big Lots, Inc.

COLUMBUS, Ohio, March 4, 2016 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income from continuing operations of $94.7 million, or $1.91 per diluted share, for the fourth quarter of fiscal 2015 ended January 30, 2016. This result includes an after tax expense of $4.6 million, or $0.09 per diluted share, associated with the termination of legacy pension plans. Excluding this expense, adjusted income from continuing operations totaled $99.3 million, or $2.00 per diluted share (see non-GAAP table included later in this release), which compares to our guidance of adjusted income of $1.95 to $2.00 per diluted share (non-GAAP) and to income from continuing operations of $94.0 million, or $1.76 per diluted share, for the fourth quarter of fiscal 2014. Comparable store sales for stores open at least fifteen months increased 0.7% for the fourth quarter of fiscal 2015, compared to our guidance of an increase of 1% to 2%. Net sales for the fourth quarter of fiscal 2015 decreased 0.6% to $1,584.0 million, compared to net sales from continuing operations of $1,593.3 million for the same period of fiscal 2014, as our comparable store sales increase was offset by a lower store count compared to last year.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm pleased with our results and another strong year for the Company. Fourth quarter earnings were at the high end of our guidance range and comps increased for an eighth consecutive quarter, despite the disruption from winter storm Jonas and a later start to the tax refund season for our customers. Throughout 2015, we remained focused on our strategy and the consistency of our performance and Jennifer has responded positively."

FOURTH QUARTER HIGHLIGHTS

  • Adjusted income from continuing operations of $2.00 per diluted share (non-GAAP), a 14% increase compared to last year's income from continuing operations of $1.76 per diluted share
  • Comparable store sales increase of 0.7%, representing the eighth consecutive quarter of growth

 

Earnings per Share

Q4 2015 (1)

Q4 2014

FY 2015 (1)

FY 2014

Continuing operations

$1.91

$1.76

$2.81

$2.46

Impact of non-recurring legal expense

-

-

$0.05

-

Impact of legacy pension termination

$0.09

-

$0.11

-

Continuing operations - adjusted basis

$2.00

$1.76

$2.97

$2.46

Discontinued operations

$0.00

$0.01

$0.00

($0.40)

(1)  Non-GAAP detailed reconciliation provided below.

 

Inventory and Cash Management

Inventory ended fiscal 2015 at $850 million, compared to $852 million for fiscal 2014. Inventory levels per store were up slightly to last year, offset by a lower overall store count year-over-year.

We ended fiscal 2015 with $54 million of Cash and Cash Equivalents and $62 million of borrowings under our credit facility compared to $52 million of Cash and Cash Equivalents and $62 million of borrowings under our credit facility as of the end of fiscal 2014. Cash flow (cash provided by operating activities less cash used in investing activities) was focused on reinvesting in the Company's strategic initiatives to support long-term sustainable growth and returning cash to our shareholders.

FISCAL 2015 HIGHLIGHTS

  • Adjusted income from continuing operations of $2.97 per diluted share (non-GAAP), representing a 21% increase compared to fiscal 2014 income from continuing operations of $2.46 per diluted share
  • Comparable store sales increase of 1.8%
  • Cash flow of $229 million
  • Returned $239 million of cash to shareholders in the form of dividends and share repurchases

FISCAL 2015

For fiscal 2015, income from continuing operations totaled $143.0 million, or $2.81 per diluted share. Excluding non-recurring merchandise-related legal contingency expenses and legacy pension termination costs, adjusted income from continuing operations for the full year period ended January 30, 2016, totaled $151.3 million, or $2.97 per diluted share (non-GAAP). This result represents a 21% increase compared with income from continuing operations of $136.7 million, or $2.46 per diluted share, for fiscal 2014. Net sales from continuing operations for fiscal 2015 increased 0.3% to $5,190.6 million compared to net sales from continuing operations of $5,177.1 million for fiscal 2014. Comparable store sales increased 1.8% for fiscal 2015. A reconciliation of all non-GAAP amounts to the most comparable GAAP amounts is provided later in this release.

Total Cash Returned To Shareholders

For fiscal 2015, we returned $239 million to shareholders in the form of quarterly dividend payments totaling $39 million and share repurchases totaling $200 million.

2016 GUIDANCE

  • Forecasting fiscal 2016 adjusted income from continuing operations to be $3.20 to $3.35 per diluted share (non-GAAP) representing an 8% to 13% increase compared to fiscal 2015 adjusted income from continuing operations of $2.97 per diluted share (non-GAAP)
  • Forecasting comparable store sales to increase in the low single digit range
  • Forecasting cash flow of approximately $200 million
  • Forecasting cash returned to shareholders of approximately $290 million, including share repurchases and quarterly dividend payments

We estimate fiscal 2016 adjusted income from continuing operations will be in the range of $3.20 to $3.35 per diluted share (non-GAAP), compared to adjusted income from continuing operations of $2.97 per diluted share (non-GAAP) for fiscal 2015. This guidance is based on a comparable store sales increase in the low single digit range and total sales approximately flat. We estimate this financial performance will result in cash flow of approximately $200 million.

On March 1, 2016, our Board of Directors approved a share repurchase program ("2016 Share Repurchase Program") providing for the repurchase of up to $250 million of our common shares. The $250 million authorization is expected to be utilized to repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2016 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2016 Share Repurchase Program is eligible to begin on March 9, 2016 and will continue until exhausted.

As announced in a separate press release earlier today, on March 1, 2016, the Board of Directors increased the Company's quarterly dividend payment rate by approximately 11% by declaring a quarterly cash dividend for the first quarter of fiscal 2016 of $0.21 per common share. This dividend is payable on April 1, 2016, to shareholders of record as of the close of business on March 18, 2016.

Fiscal Q1 2016 Guidance

For the first quarter of fiscal 2016, we estimate adjusted income from continuing operations in the range of $0.66 to $0.72 per diluted share (non-GAAP) representing a 10% to 20% increase compared to last year's income from continuing operations of $0.60 per diluted share. This guidance assumes a comparable store sales increase in the low single digit range.

 

Q1

Full Year

2016 Guidance (1)

2015

2016 Guidance (1)

2015 (2)

Adjusted EPS from continuing operations

$0.66  -  $0.72

$0.60

$3.20  -  $3.35

$2.97

(1) Non-GAAP - excludes potential impact of legacy pension termination costs.

(2) Non-GAAP - see attached reconciliation.

 

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the fourth quarter of fiscal 2015 and provide commentary on our outlook for fiscal 2016. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website http://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 after 12:00 noon today and will remain available through midnight on Friday, March 18, 2016. A replay of this call will also be available beginning today at 12:00 noon through March 18 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 8658064. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,449 BIG LOTS stores in 47 states with product assortments in the merchandise categories of Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. Our vision is to be recognized for providing an outstanding shopping experience for our customers, valuing and developing our associates, and creating growth for our shareholders. Big Lots supports the communities it serves through the Big Lots Foundation, a charitable organization focused on four areas of need: hunger, housing, healthcare, and education. For more information about the Company, visit www.biglots.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, current economic and credit conditions, 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)

JANUARY 30

JANUARY 31

2016

2015

(Unaudited)

(Recast)

ASSETS

Current assets:

Cash and cash equivalents

$54,144

$52,261

Inventories

849,982

851,669

Other current assets

90,306

95,345

   Total current assets

994,432

999,275

Property and equipment - net

559,924

550,555

Deferred income taxes

47,739

46,293

Other assets

38,275

39,768

$1,640,370

$1,635,891

LIABILITIES AND SHAREHOLDERS' EQUITY      

Current liabilities:

Accounts payable

$382,277

$358,932

Property, payroll and other taxes

76,568

76,924

Accrued operating expenses

81,756

62,955

Insurance reserves

40,661

38,824

Accrued salaries and wages

72,250

47,878

Income taxes payable

24,936

2,316

   Total current liabilities

678,448

587,829

Long-term obligations under bank credit facility

62,300

62,100

Deferred rent

59,454

65,930

Insurance reserves

58,359

55,606

Unrecognized tax benefits

17,789

17,888

Other liabilities

43,550

56,988

Shareholders' equity

720,470

789,550

$1,640,370

$1,635,891

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

13 WEEKS ENDED

13 WEEKS ENDED

JANUARY 30, 2016

JANUARY 31, 2015

%

%

(Unaudited)

(Unaudited)

Net sales

$1,583,967

100.0

$1,593,349

100.0

Gross margin

647,229

40.9

649,929

40.8

Selling and administrative expenses 

462,172

29.2

465,344

29.2

Depreciation expense

30,349

1.9

31,167

2.0

Operating profit

154,708

9.8

153,418

9.6

Interest expense

(946)

(0.1)

(972)

(0.1)

Other income (expense)

(2,812)

(0.2)

0

0.0

Income from continuing operations before income taxes

150,950

9.5

152,446

9.6

Income tax expense

56,258

3.6

58,463

3.7

Income from continuing operations

94,692

6.0

93,983

5.9

Loss (income) from discontinued operations, net of tax

   (expense) benefit of ($125) and $849, respectively

(160)

(0.0)

448

0.0

Net income

$94,532

6.0

$94,431

5.9

Earnings per common share - basic (a)

Continuing operations

$1.93

$1.78

Discontinued operations

0.00

0.01

Net income 

$1.93

$1.79

Earnings per common share - diluted (a)

Continuing operations

$1.91

$1.76

Discontinued operations

0.00

0.01

Net income 

$1.91

$1.77

Weighted average common shares outstanding

Basic

49,094

52,889

Dilutive effect of share-based awards

452

578

Diluted

49,546

53,467

Cash dividends declared per common share

$0.19

$0.17

(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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

52 WEEKS ENDED

52 WEEKS ENDED

JANUARY 30, 2016

JANUARY 31, 2015

%

%

(Unaudited)

Net sales

$5,190,582

100.0

$5,177,078

100.0

Gross margin

2,067,186

39.8

2,043,954

39.5

Selling and administrative expenses 

1,708,717

32.9

1,699,764

32.8

Depreciation expense

122,737

2.4

119,702

2.3

Operating profit

235,732

4.5

224,488

4.3

Interest expense

(3,683)

(0.1)

(2,588)

(0.0)

Other income (expense)

(5,199)

(0.1)

0

0.0

Income from continuing operations before income taxes

226,850

4.4

221,900

4.3

Income tax expense 

83,842

1.6

85,239

1.6

Income from continuing operations

143,008

2.8

136,661

2.6

Loss from discontinued operations, net of tax

   (expense) benefit of ($135) and $13,852, respectively

(135)

(0.0)

(22,385)

(0.4)

Net income 

$142,873

2.8

$114,276

2.2

Earnings per common share - basic (a)

Continuing operations

$2.83

$2.49

Discontinued operations

0.00

(0.41)

Net income 

$2.83

$2.08

Earnings per common share - diluted (a)

Continuing operations

$2.81

$2.46

Discontinued operations

0.00

(0.40)

Net income 

$2.80

$2.06

Weighted average common shares outstanding

Basic

50,517

54,935

Dilutive effect of share-based awards

447

617

Diluted

50,964

55,552

Cash dividends declared per common share

$0.76

$0.51

(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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

13 WEEKS ENDED

13 WEEKS ENDED

JANUARY 30, 2016

JANUARY 31, 2015

 (Unaudited) 

 (Unaudited) 

  Net cash provided by operating activities 

$290,034

$256,184

  Net cash used in investing activities

(14,895)

(18,841)

  Net cash used in financing activities

(282,536)

(247,570)

    Impact of foreign currency on cash

-

-

Decrease in cash and cash equivalents

(7,397)

(10,227)

Cash and cash equivalents:

  Beginning of period

61,541

62,488

  End of period

$54,144

$52,261

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

52 WEEKS ENDED

52 WEEKS ENDED

JANUARY 30, 2016

JANUARY 31, 2015

 (Unaudited) 

  Net cash provided by operating activities 

$342,352

$318,562

  Net cash used in investing activities

(113,193)

(90,749)

  Net cash used in financing activities

(227,276)

(249,320)

    Impact of foreign currency on cash

-

5,139

Increase (decrease) in cash and cash equivalents

1,883

(16,368)

Cash and cash equivalents:

  Beginning of period

52,261

68,629

  End of period

$54,144

$52,261

 

 

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 fourth quarter of 2015 and the year-to-date 2015 (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).

 Fourth quarter of 2015 - Thirteen weeks ended January 30, 2016 

 As Reported 

 Adjustment to exclude pension termination costs 

 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$             462,172

$                     (7,615)

$             454,557

 Selling and administrative expense rate 

29.2%

(0.5%)

28.7%

 Operating profit 

154,708

7,615

162,323

 Operating profit rate 

9.8%

0.5%

10.2%

 Income tax expense 

56,258

3,011

59,269

 Effective income tax rate 

37.3%

0.1%

37.4%

 Income from continuing operations 

94,692

4,604

99,296

 Net income 

94,532

4,604

99,136

 Diluted earnings per share from  

      continuing operations 

$                   1.91

$                        0.09

$                   2.00

 Diluted earnings per share  

$                   1.91

$                        0.09

$                   2.00

 

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") items associated with the Company's decision to freeze benefits and terminate the qualified and non-qualified defined benefit pension plans, including curtailment and settlement charges and professional fees in support of the actions to facilitate the plan termination, which totaled $7,615 ($4,604, net of tax).

 

 Year-to-date 2015 - Fifty-two weeks ended January 30, 2016 

 As Reported 

 Adjustment to exclude loss contingency 

 Adjustment to exclude pension termination costs 

 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$          1,708,717

$                (4,487)

$                     (9,234)

$          1,694,996

 Selling and administrative expense rate 

32.9%

(0.1%)

(0.2%)

32.7%

 Operating profit 

235,732

4,487

9,234

249,453

 Operating profit rate 

4.5%

0.1%

0.2%

4.8%

 Income tax expense 

83,842

1,776

3,652

89,270

 Effective income tax rate 

37.0%

-

0.1%

37.1%

 Income from continuing operations 

143,008

2,711

5,582

151,301

 Net income 

142,873

2,711

5,582

151,166

 Diluted earnings per share from  

      continuing operations 

$                    2.81

$                    0.05

$                         0.11

$                    2.97

 Diluted earnings per share  

$                    2.80

$                    0.05

$                         0.11

$                    2.97

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"): (1) a pretax accrual of a loss contingency associated with merchandise-related legal matters of $4,487 ($2,711, net of tax); and (2) items associated with the Company's decision to freeze benefits and terminate the qualified and non-qualified defined benefit pension plans, including curtailment and settlement charges and professional fees in support of the actions to facilitate the plan termination, which totaled $9,234 ($5,582, 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.

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SOURCE Big Lots, Inc.



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