Big Lots Reports Q4 Income From Continuing Operations Of $1.76 Per Share As Comparable Store Sales Increase 2.9%

COLUMBUS, Ohio, March 6, 2015 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income from continuing operations of $94.0 million, or $1.76 per diluted share, for the fourth quarter of fiscal 2014 ended January 31, 2015. This result compares to our guidance of income of $1.70 to $1.80 per diluted share and to income from continuing operations of $84.2 million, or $1.45 per diluted share, for the fourth quarter of fiscal 2013. Net sales for the fourth quarter of fiscal 2014 increased 1.4% to $1,593.3 million, compared to net sales from continuing operations of $1,571.9 million for the same period of fiscal 2013. Comparable store sales increased 2.9% for the quarter compared to our guidance of a low single digit increase.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm very pleased with our fourth quarter results and strong finish to the year. Earnings for the quarter were solidly in line with our guidance as comps increased 2.9% representing our strongest performance of the year. Throughout 2014, we remained focused on our strategy and the consistency of our performance allowed us to drive positive comps in all four quarters for the first time in eight years. Jennifer has responded positively to new marketing messaging and our improved merchandise assortments focused on quality, brands, fashion, and value."

FOURTH QUARTER HIGHLIGHTS

• Income from continuing operations of $1.76 per diluted share, compares to guidance of $1.70 to $1.80 per diluted share and last year's income from continuing operations of $1.45 per diluted share
• Comparable store sales increase of 2.9%, compares to guidance of a low single digit increase

Inventory and Cash Management

Inventory ended fiscal 2014 at $852 million, compared to $915 million for fiscal 2013. The $63 million reduction in inventory was driven by a 4% decrease in inventory per store, a lower store count, and the strategic decision to liquidate our Canadian business.

We ended fiscal 2014 with $52 million of Cash and Cash Equivalents and $62 million of borrowings under our credit facility compared to $69 million of Cash and Cash Equivalents and $77 million of borrowings under our credit facility as of the end of fiscal 2013. Cash flow generated by our continuing U.S. operations (defined as cash provided by operating activities less cash used in investing activities) was focused on returning cash to our shareholders, lowering debt levels, and funding the closure of our Canadian operations.

FISCAL 2014 HIGHLIGHTS

• Income from continuing operations of $2.46 per diluted share, compares to guidance of $2.40 to $2.50 per diluted share and last year's adjusted income from continuing operations of $2.45 per diluted share (non-GAAP)
• Comparable store sales increase of 1.8%
• Cash flow from continuing U.S. operations of $254 million
• Returned $278 million of cash to shareholders in the form of dividends and share repurchases

FISCAL 2014

For fiscal 2014, income from continuing operations totaled $136.7 million, or $2.46 per diluted share, which compares to adjusted income from continuing operations of $141.9 million, or $2.45 per diluted share (non-GAAP), for fiscal 2013. Net sales from continuing operations for fiscal 2014 increased 1.0% to $5,177.1 million compared to net sales from continuing operations of $5,124.8 for the same period of fiscal 2013. Comparable store sales increased 1.8% for fiscal 2014. A reconciliation of all non-GAAP amounts to the most comparable GAAP amounts is provided later in this release.

Total Cash Returned To Shareholders

During our June 2014 Investor Conference, our management team and Board of Directors made a commitment to return cash to our shareholders in a balanced approach. At that time, we announced our first ever quarterly dividend program and committed to continue to repurchase shares in the open market. 

For fiscal 2014, we invested $250 million to repurchase 6.1 million shares, or 10% of our outstanding share base, at a weighted average price of $40.94 per share, or approximately 17% lower than yesterday's market close. Common shares acquired through share repurchase programs are available to meet obligations under equity compensation plans and for general corporate purposes. Additionally, we returned $28 million to shareholders in the form of three quarterly dividend payments (July, September, and December).   

2015 GUIDANCE

• Forecasting fiscal 2015 income from continuing operations to be $2.75 to $2.90 per diluted share representing a 12% to 18% increase compared to fiscal 2014 income from continuing operations of $2.46 per diluted share
• Forecasting comparable store sales to increase in the low single digit range
• Forecasting cash flow of approximately $175 million
• Forecasting cash returned to shareholders of approximately $240 million, including share repurchases and four quarterly dividend payments

We estimate fiscal 2015 income from continuing operations will be in the range of $2.75 to $2.90 per diluted share, compared to income from continuing operations of $2.46 per diluted share for fiscal 2014. 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 $175 million.

On March 4, 2015, our Board of Directors approved a share repurchase program ("2015 Share Repurchase Program") providing for the repurchase of up to $200 million of our common shares. The $200 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 2015 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2015 Share Repurchase Program is eligible to begin on March 11, 2015 and will continue until exhausted.

As announced in a separate press release earlier today, on March 4, 2015, the Board of Directors increased the company's quarterly dividend payment rate by approximately 12% by declaring a quarterly cash dividend for the first quarter of fiscal 2015 of $0.19 per common share. This dividend is payable on April 3, 2015, to shareholders of record as of the close of business on March 20, 2015.

Fiscal Q1 2015 Guidance

For the first quarter of fiscal 2015, we estimate income from continuing operations in the range of $0.55 to $0.60 per diluted share representing a 10% to 20% increase compared to last year's income from continuing operations of $0.50 per diluted share. This guidance assumes a comparable store sales increase in the 1% to 2% range.

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the fourth quarter and provide commentary on our outlook for fiscal 2015. 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 http://www.biglots.com/ after 12:00 noon today and will remain available through midnight on Friday, March 20, 2015. A replay of this call will also be available beginning today at 12:00 noon through March 20 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 5083776. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,461 BIG LOTS stores in 48 states with product assortments in the merchandise categories of Food, Consumables, Furniture & Home Décor, 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. For more information, 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
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

The following table reconciles: (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 year-to-date 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).

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 charge related to the settlement of a legal matter of $4,375 ($2,760, net of tax); and (2) a pretax adjustment for the gain on the sale of real estate of $3,579 ($2,179, 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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