Big Lots Reports Second Quarter Adjusted Income From Continuing Operations Of $0.40 Per Diluted Share

COMPARABLE STORE SALES INCREASE 2.8%

COMPANY UPDATES OUTLOOK FOR FISCAL 2015

Aug 28, 2015, 06:00 ET from Big Lots, Inc.

COLUMBUS, Ohio, Aug. 28, 2015 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income from continuing operations of $17.7 million, or $0.35 per diluted share, for the second quarter of fiscal 2015 ended August 1, 2015. This result includes a non-recurring, after tax expense of $2.7 million, or $0.05 per diluted share, associated with a merchandise-related legal contingency. Excluding this non-recurring expense, adjusted income from continuing operations totaled $20.4 million, or $0.40 per diluted share (see non-GAAP table included later in this release), which compares to our guidance of income in the range of $0.31 to $0.35 per diluted share. This result compares to income from continuing operations of $17.2 million, or $0.31 per diluted share, for the second quarter of fiscal 2014. Comparable store sales for stores open at least fifteen months increased 2.8% for the second quarter of fiscal 2015, compared to our guidance of +2% to +3%. Net sales for the second quarter of fiscal 2015 increased 1.2% to $1,209.7 million, as our comparable store sales increase was partially offset by a lower store count compared to last year.

For the year-to-date period ended August 1, 2015, income from continuing operations totaled $50.0 million, or $0.95 per diluted share. Excluding the non-recurring legal expense noted above, adjusted income from continuing operations for the year-to-date period ended August 1, 2015, totaled $52.7 million, or $1.00 per diluted share (non-GAAP). This result compares to income from continuing operations of $45.8 million, or $0.81 per diluted share, for the same period in fiscal 2014.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm pleased with our second quarter results. Despite unseasonable weather conditions, Q2 comps increased 2.8% reflecting strength in our winnable and ownable categories and improved consistency in all aspects of our operations. Jennifer continues to respond positively to our strategic improvements in merchandising, marketing, and in-store execution resulting in our sixth consecutive quarter of comp sales growth. Healthy comp sales growth and consistent execution across the business enabled us to exceed earnings expectations for Q2."

SECOND QUARTER HIGHLIGHTS

  • Adjusted income from continuing operations of $0.40 per diluted share (non-GAAP), a 29% increase compared to income from continuing operations of $0.31 per diluted share last year
  • Comparable store sales increase of 2.8% representing the sixth consecutive quarter of comp store sales growth
  • Operating profit growth, both in dollars and in rate
  • Company returned $175 million to shareholders in the forms of share repurchases and dividend payments

 

Earnings per Share

Q2 2015

Q2 2014

YTD 2015

YTD 2014

Continuing operations

$0.35

$0.31

$0.95

$0.81

Impact of non-recurring expense

$0.05

-

$0.05

-

Continuing operations - adjusted basis (1)

$0.40

$0.31

$1.00

$0.81

% Change (2015 versus 2014)

+29%

+23%

(1)  Non-GAAP

Inventory and Cash Management Inventory ended the second quarter of fiscal 2015 at $821 million, compared to $799 million for the second quarter of fiscal 2014. Inventory per store increased compared to last year, partially offset by a lower store count year over year.

We ended the second quarter of fiscal 2015 with $57 million of Cash and Cash Equivalents and $223 million of borrowings under our credit facility compared to $62 million of Cash and Cash Equivalents and $57 million of borrowings under our credit facility as of the end of the second quarter of fiscal 2014. Cash flow generated by our continuing operations (defined as cash provided by operating activities less cash used in investing activities) was focused on returning cash to our shareholders through share repurchases and dividend payments.

Total Cash Returned To Shareholders As a reminder, 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. During the second quarter of fiscal 2015, we exhausted the 2015 Share Repurchase Program by investing $165 million to purchase 3.6 million shares. On a year-to-date basis, we completed our March 2015 Share Repurchase Program by investing $200 million to repurchase 4.4 million shares. Common shares acquired through the 2015 Share Repurchase Program are 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 27, 2015, our Board of Directors declared a quarterly cash dividend of $0.19 per common share. This dividend payment of approximately $9.5 million is payable on September 25, 2015, to shareholders of record as of the close of business on September 11, 2015.

The combination of share repurchase activity and our quarterly dividend payments represents approximately $220 million returned to shareholders during the first half of fiscal 2015.

FISCAL Q3 2015 GUIDANCE

  • Provides initial Q3 guidance for continuing operations of a loss of $0.04 to income of $0.01 per share, compared to a loss from continuing operations of $0.06 per share for the same period last year
  • Provides initial Q3 guidance for comparable store sales increase in the range of 2% to 3%

For the third quarter of fiscal 2015, we estimate continuing operations will be in the range of a loss of $0.04 to income of $0.01 per share, compared to a loss from continuing operations of $0.06 per share for the third quarter of fiscal 2014. This guidance is based on an estimated comparable store sales increase in the 2% to 3% range compared to a 1.4% comparable store sales increase in the third quarter of fiscal 2014. We expect operating profit improvement driven by higher sales, a flat gross margin rate, and a lower expense rate.

FISCAL Q4 2015 GUIDANCE

  • Provides initial Q4 guidance for income from continuing operations of $1.95 to $2.00 per diluted share, compared to income from continuing operations of $1.76 per diluted share for the same period last year
  • Provides initial Q4 guidance for comparable store sales increase in the range of 1% to 2%

For the fourth quarter of fiscal 2015, we estimate income from continuing operations will be in the range of $1.95 to $2.00 per diluted share, compared to income from continuing operations of $1.76 per diluted share for the fourth quarter of fiscal 2014. This guidance is based on an estimated comparable store sales increase in the 1% to 2% range compared to a 2.9% comparable store sales increase in the fourth quarter of fiscal 2014. We expect operating profit improvement driven by higher sales, a flat gross margin rate, and a lower expense rate.

FISCAL 2015 GUIDANCE

  • Updates outlook for fiscal 2015 adjusted income from continuing operations to be in the range of $2.90 to $3.00 per diluted share (non-GAAP), representing an 18% to 22% increase compared to fiscal 2014 income from continuing operations of $2.46 per diluted share
  • Affirms comparable store sales in the range of a low single digit increase for fiscal 2015
  • Affirms cash flow of $175 million for fiscal 2015

Based on operating results for the first two quarters and our expectations for the third and fourth quarters of fiscal 2015 noted above, we now estimate fiscal 2015 adjusted income from continuing operations to be in the range of $2.90 to $3.00 per diluted share (non-GAAP) compared to our previous guidance of $2.80 to $2.90 per diluted share and income from continuing operations of $2.46 per diluted share for fiscal 2014. This outlook is based on a comparable store sales increase in the low single digit range, total sales approximately flat, a slightly higher gross margin rate, and a lower expense rate. We estimate this financial performance will result in cash flow of approximately $175 million.

Full Year

Earnings per Share

2015 Guidance

2014

Continuing operations

$2.85  -  $2.95

$2.46

Impact of non-recurring expense

$0.05

-

Continuing operations - adjusted basis (1)

$2.90  -  $3.00

$2.46

(1)  Non-GAAP

Conference Call/Webcast We will host a conference call today at 8:00 a.m. to discuss our financial results for the second 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 after 12:00 noon today and will remain available through midnight on Friday, September 11, 2015. A replay of this call will also be available beginning today at 12:00 noon through September 11 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 2289391. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,463 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)

AUGUST 1

AUGUST 2

2015

2014

(Unaudited)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$57,363

$62,033

Inventories

821,444

799,479

Deferred income taxes

43,691

53,464

Other current assets

106,236

121,801

   Total current assets

1,028,734

1,036,777

Property and equipment - net

578,802

551,452

Deferred income taxes

15,968

12,937

Other assets

40,859

41,226

$1,664,363

$1,642,392

LIABILITIES AND SHAREHOLDERS' EQUITY      

Current liabilities:

Accounts payable

$365,640

$379,992

Property, payroll and other taxes

79,140

78,136

Accrued operating expenses

72,593

60,235

Insurance reserves

41,282

37,609

Accrued salaries and wages

34,955

33,167

Income taxes payable

1,244

1,552

   Total current liabilities

594,854

590,691

Long-term obligations under bank credit facility

223,200

56,500

Deferred rent

64,387

71,064

Insurance reserves

56,485

55,840

Unrecognized tax benefits

18,020

17,985

Other liabilities

66,885

27,691

Shareholders' equity

640,532

822,621

$1,664,363

$1,642,392

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

13 WEEKS ENDED

13 WEEKS ENDED

AUGUST 1, 2015

AUGUST 2, 2014

%

%

(Unaudited)

(Unaudited)

Net sales

$1,209,686

100.0

$1,195,363

100.0

Gross margin

475,834

39.3

469,527

39.3

Selling and administrative expenses 

414,305

34.2

412,142

34.5

Depreciation expense

30,992

2.6

29,443

2.5

Operating profit

30,537

2.5

27,942

2.3

Interest expense

(969)

(0.1)

(510)

(0.0)

Other income (expense)

(1,742)

(0.1)

0

0.0

Income from continuing operations before income taxes

27,826

2.3

27,432

2.3

Income tax expense

10,115

0.8

10,220

0.9

Income from continuing operations

17,711

1.5

17,212

1.4

(Loss) Income from discontinued operations, net of tax

   benefit of $48 and $3,841, respectively

(75)

(0.0)

2,726

0.2

Net income

$17,636

1.5

$19,938

1.7

Earnings per common share - basic (a)

Continuing operations

$0.35

$0.31

Discontinued operations

(0.00)

0.05

Net income

$0.35

$0.36

Earnings per common share - diluted (a)

Continuing operations

$0.35

$0.31

Discontinued operations

(0.00)

0.05

Net income

$0.34

$0.36

Weighted average common shares outstanding

Basic

50,831

54,991

Dilutive effect of share-based awards

505

698

Diluted

51,336

55,689

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)

26 WEEKS ENDED

26 WEEKS ENDED

AUGUST 1, 2015

AUGUST 2, 2014

%

%

(Unaudited)

(Unaudited)

Net sales

$2,490,141

100.0

$2,476,634

100.0

Gross margin

979,950

39.4

963,083

38.9

Selling and administrative expenses 

834,551

33.5

829,688

33.5

Depreciation expense

62,217

2.5

58,268

2.4

Operating profit

83,182

3.3

75,127

3.0

Interest expense

(1,465)

(0.1)

(860)

(0.0)

Other income (expense)

(1,714)

(0.1)

0

0.0

Income from continuing operations before income taxes

80,003

3.2

74,267

3.0

Income tax expense 

29,984

1.2

28,474

1.1

Income from continuing operations

50,019

2.0

45,793

1.8

Loss from discontinued operations, net of tax

   benefit of $108 and $12,796, respectively

(170)

(0.0)

(22,507)

(0.9)

Net income 

$49,849

2.0

$23,286

0.9

Earnings per common share - basic (a)

Continuing operations

$0.96

$0.82

Discontinued operations

(0.00)

(0.40)

Net income 

$0.96

$0.42

Earnings per common share - diluted (a)

Continuing operations

$0.95

$0.81

Discontinued operations

(0.00)

(0.40)

Net income 

$0.95

$0.41

Weighted average common shares outstanding

Basic

51,959

56,001

Dilutive effect of share-based awards

536

630

Diluted

52,495

56,631

Cash dividends declared per common share

$0.38

$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 CASH FLOWS

(In thousands)

13 WEEKS ENDED

13 WEEKS ENDED

AUGUST 1, 2015

AUGUST 2, 2014

 (Unaudited) 

 (Unaudited) 

  Net cash provided by operating activities 

$29,138

$55,003

  Net cash used in investing activities

(35,550)

(22,124)

  Net cash used in financing activities

(3,416)

(37,888)

    Impact of foreign currency on cash

-

(119)

Decrease in cash and cash equivalents

(9,828)

(5,128)

Cash and cash equivalents:

  Beginning of period

67,191

67,161

  End of period

$57,363

$62,033

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

26 WEEKS ENDED

26 WEEKS ENDED

AUGUST 1, 2015

AUGUST 2, 2014

 (Unaudited) 

 (Unaudited) 

  Net cash provided by operating activities 

$116,663

$157,169

  Net cash used in investing activities

(64,302)

(37,608)

  Net cash used in financing activities

(47,259)

(131,296)

    Impact of foreign currency on cash

-

5,139

Increase (decrease) in cash and cash equivalents

5,102

(6,596)

Cash and cash equivalents:

  Beginning of period

52,261

68,629

  End of period

$57,363

$62,033

 

 

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 second 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).

 Second quarter of 2015 - Thirteen weeks ended August 1, 2015 

 As Reported 

 Adjustment to exclude loss contingency 

 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$             414,305

$                (4,487)

$             409,818

 Selling and administrative expense rate 

34.2%

(0.4%)

33.9%

 Operating profit 

30,537

4,487

35,024

 Operating profit rate 

2.5%

0.4%

2.9%

 Income tax expense 

10,115

1,776

11,891

 Effective income tax rate 

36.4%

0.4%

36.8%

 Income from continuing operations 

17,711

2,711

20,422

 Net income 

17,636

2,711

20,347

 Diluted earnings per share from  

      continuing operations 

$                    0.35

$                    0.05

$                    0.40

 Diluted earnings per share  

$                    0.34

$                    0.05

$                    0.40

 Year-to-date 2015 - Twenty-six weeks ended August 1, 2015 

 As Reported 

 Adjustment to exclude loss contingency 

 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$             834,551

$                (4,487)

$             830,064

 Selling and administrative expense rate 

33.5%

(0.2%)

33.3%

 Operating profit 

83,182

4,487

87,669

 Operating profit rate 

3.3%

0.2%

3.5%

 Income tax expense 

29,984

1,776

31,760

 Effective income tax rate 

37.5%

0.1%

37.6%

 Income from continuing operations 

50,019

2,711

52,730

 Net income 

49,849

2,711

52,560

 Diluted earnings per share from  

      continuing operations 

$                    0.95

$                    0.05

$                    1.00

 Diluted earnings per share  

$                    0.95

$                    0.05

$                    1.00

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") a pretax accrual of a loss contingency associated with merchandise-related legal matters of $4,487 ($2,711, 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.

 

Logo - http://photos.prnewswire.com/prnh/20011026/BIGLOTSLOGO

SOURCE Big Lots, Inc.



RELATED LINKS

http://www.biglots.com