Big Lots Reports Record Second Quarter Earnings Of $0.67 Per Diluted Share

COLUMBUS, Ohio, Aug. 25, 2017 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income of $29.1 million, or $0.67 per diluted share, for the second quarter of fiscal 2017 ended July 29, 2017. This result compares to our guidance of income in the range of $0.58 to $0.63 per diluted share and represents a 29% increase over adjusted income of $23.4 million, or $0.52 per diluted share (see non-GAAP table included later in this release), for the second quarter of fiscal 2016. Comparable store sales increased 1.8% for the second quarter of fiscal 2017, compared to our guidance of a low single digit increase. Net sales for the second quarter of fiscal 2017 increased 1.5% to $1,221.3 million, a result of the comparable store sales increase partially offset by a lower store count year-over-year.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm very pleased with our second quarter results. In a challenging retail environment with the pressures of online competitors and changing consumer shopping behaviors, our ownable and winnable merchandise categories are resonating with Jennifer and continue to demonstrate resiliency with solid sales growth in Q2. Our strategy is working as evidenced by our comps in ownable categories and our consistency of delivering growth in operating profit dollars and EPS. We are controlling what we can control and our teams are energized and excited as our new Fall merchandise has begun to arrive in stores."

SECOND QUARTER HIGHLIGHTS

• Record income of $0.67 per diluted share, a 29% increase compared to last year's adjusted income of $0.52 per diluted share (non-GAAP)
• Comparable store sales increase of 1.8%

Inventory and Cash Management
Inventory ended the second quarter of fiscal 2017 at $810 million, compared to $809 million for the second quarter of fiscal 2016. Inventory levels per store increased 1% compared to last year, partially offset by a lower store count year-over-year.

We ended the second quarter of fiscal 2017 with $56 million of Cash and Cash Equivalents and $227 million of borrowings under our credit facility compared to $58 million of Cash and Cash Equivalents and $258 million of borrowings under our credit facility as of the end of the second quarter of fiscal 2016. Cash flow (cash provided by operating activities less cash used in investing activities) was focused on returning cash to our shareholders (stock repurchases and dividend payments) and lowering our overall debt levels.

Total Cash Returned To Shareholders
As a reminder, on February 28, 2017, our Board of Directors approved a share repurchase program ("2017 Share Repurchase Program") providing for the repurchase of up to $150 million of our common shares in open market and/or privately negotiated transactions at our discretion, subject to market conditions and other factors. During the second quarter of fiscal 2017, we invested $95 million to repurchase 2.0 million shares at an average price of $47.86 per share. Year to date through the second quarter of fiscal 2017, we invested $128 million to repurchase 2.7 million shares at an average price of $48.00 per share. We ended the second quarter of fiscal 2017 with approximately $22 million of authorization remaining under the 2017 Share Repurchase Program. Common shares acquired through the 2017 Share Repurchase Program will be available to meet obligations under our equity compensation plans and for general corporate purposes.

As announced in a separate press release earlier today, on August 24, 2017, our Board of Directors declared a quarterly cash dividend of $0.25 per common share. This dividend payment of approximately $11 million is payable on September 22, 2017, to shareholders of record as of the close of business on September 8, 2017.

During the second quarter of fiscal 2017, the combination of share repurchase activity and our quarterly dividend payment represents approximately $106 million returned to shareholders. Year to date, approximately $152 million has been returned to shareholders through dividends and share repurchase activity.

FISCAL Q3 2017 GUIDANCE

• Provides initial Q3 guidance for income of $0.01 to $0.05 per diluted share, compared to adjusted income of $0.04 per diluted share (non-GAAP) for the same period last year
• Provides initial Q3 guidance for comparable store sales increase in the low single digits

For the third quarter of fiscal 2017, we estimate income will be in the range of $0.01 to $0.05 per diluted share, compared to adjusted income of $0.04 per diluted share (non-GAAP) for the third quarter of fiscal 2016. This guidance is based on a comparable store sales increase in the low single digit range.

FISCAL Q4 2017 GUIDANCE

• Provides initial Q4 guidance for income of $2.30 to $2.38 per diluted share, compared to adjusted income of $2.26 per diluted share (non-GAAP) for the same period last year
• Provides initial Q4 guidance for comparable store sales in the range of flat to +2%

For the fourth quarter of fiscal 2017, we estimate income will be in the range of $2.30 to $2.38 per diluted share, compared to adjusted income of $2.26 per diluted share (non-GAAP) for the fourth quarter of fiscal 2016. This guidance is based on comparable store sales in the range of flat to +2%.

FISCAL 2017 GUIDANCE

• Increases guidance for fiscal 2017 income to be in the range of $4.15 to $4.25 per diluted share, representing a 14% to 17% increase compared to fiscal 2016 adjusted income of $3.64 per diluted share (non-GAAP)
• Affirms guidance for fiscal 2017 cash flow of $180 to $190 million

Based on the actual results for the first two quarters and our expectations for the third and fourth quarters of fiscal 2017 noted above, we now estimate fiscal 2017 income to be in the range of $4.15 to $4.25 per diluted share, compared to our prior guidance of $4.05 to $4.20 per diluted share. This compares to adjusted income of $3.64 per diluted share (non-GAAP) for fiscal 2016. This annual guidance is based on a comparable store sales increase of 1% to 1.5% and total sales up 2% to 2.5% to last year as the comp and the 53^rd week are expected to be partially offset by a lower overall store count. We estimate this financial performance will result in cash flow of $180 to $190 million.

Conference Call/Webcast
We will host a conference call today at 8:00 a.m. to discuss our financial results for the second quarter of fiscal 2017 and provide commentary on our outlook for fiscal 2017. 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, September 8, 2017. A replay of this call will also be available beginning today at 12:00 noon through September 8 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 7742976. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,428 BIG LOTS stores in 47 states with product assortments in the merchandise categories of Furniture, Seasonal, Soft Home, Food, Consumables, Hard Home, and Electronics, Toys & 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
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

The following tables reconcile: selling and administrative expenses, selling and administrative expense rate, operating profit, operating profit rate, income tax expense, effective income tax rate, net income, and diluted earnings per share for the second quarter of 2016, the year-to-date 2016, the third quarter of 2016, the fourth quarter of 2016, and the full-year 2016 (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 net income, 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 net income, 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") all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intentions of completing the termination and distributing all plan assets during 2016, which totaled $1,070 ($646, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

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 net income, 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 GAAP all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intentions of completing the termination and distributing all plan assets during 2016, which totaled $3,210 ($1,940, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net income, 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") all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intentions of completing the termination and distributing all plan assets during 2016, which totaled $863 ($521, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

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 net income, 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) all costs associated with the Company's pension plans, as the Company completed termination and distribution proceedings in the fourth quarter of 2016, which totaled $23,693 ($14,329, net of tax); and (2) a pretax adjustment for a gain on the sale of real estate of $3,823 ($2,411, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

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 net income, 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 GAAP: (1) all costs associated with the Company's pension plans, as the Company completed termination and distribution proceedings in 2016, which totaled $27,766 ($16,790, net of tax); and (2) a pretax adjustment for a gain on the sale of real estate of $3,823 ($2,411, net of tax). The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

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.