Big Lots Reports Third Quarter Results Consistent With Guidance

COLUMBUS, Ohio, Dec. 5, 2014 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported a loss from continuing operations of $3.1 million, or $0.06 per share, for the third quarter of fiscal 2014 ended November 1, 2014. This result compares to our guidance of a loss of $0.04 to $0.10 per share affirmed on September 29, 2014 and to an adjusted loss from continuing U.S. operations of $4.1 million, or $0.07 per share (non-GAAP), for the third quarter of fiscal 2013. Net sales from continuing operations for the third quarter of fiscal 2014 increased 0.2% to $1,107.1 million, compared to net sales from continuing U.S. operations of $1,104.9 million for the same period of fiscal 2013. Comparable store sales increased 1.4% for the quarter, compared to our guidance of a low single digit increase. A reconciliation of all non-GAAP amounts to the most comparable GAAP amounts is provided later in this release.

For the year-to-date period ended November 1, 2014, income from continuing operations totaled $42.7 million, or $0.76 per diluted share, which compares to adjusted income from continuing U.S. operations of $57.6 million, or $0.99 per diluted share (non-GAAP), for the same period in fiscal 2013.

Commenting on today's earnings release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm pleased with the results we reported today. For the third consecutive quarter, our comps were positive as we continue to gain traction and build sales consistency in our business. Jennifer, our core customer, is responding positively to our improved merchandising strategies like the recent expansion of our Food category, our Furniture lease-to-purchase program, and our emphasis on the quality, brand, fashion, and value components of our assortments."

THIRD QUARTER HIGHLIGHTS

• Loss from continuing operations of $0.06 per share, compared to an adjusted loss from continuing U.S. operations of $0.07 per share (non-GAAP) last year
• Comparable store sales increase of 1.4%
• Returned $124 million of cash to shareholders in the form of share repurchases and dividend payments

Discontinued Operations

Loss from discontinued operations for the third quarter of fiscal 2014 was $0.3 million, or $0.01 per share.

Inventory and Cash Management

Inventory ended the third quarter of fiscal 2014 at $1,075 million, compared to $1,238 million for the third quarter of fiscal 2013. The $163 million reduction in inventory was driven by an 8% decrease in inventory per store, a lower store count, and the strategic decisions to liquidate our Canadian business and our wholesale operations.

We ended the third quarter of fiscal 2014 with $62 million of Cash and Cash Equivalents and $283 million of borrowings under our credit facility compared to $68 million of Cash and Cash Equivalents and $324 million of borrowings under our credit facility as of the end of the third quarter of fiscal 2013. Our use of cash generated by our U.S. operations was focused on returning cash to our shareholders, lowering debt levels, and funding the closure of our Canadian operations.

Total Cash Distributed To Shareholders

As announced in a separate press release earlier today, on December 3, 2014, the Board of Directors declared a quarterly cash dividend for the fourth quarter of fiscal 2014 of $0.17 per common share payable on December 30, 2014, to shareholders of record as of the close of business on December 16, 2014. This dividend is part of the quarterly dividend program established in June 2014 and represents the third dividend declared under the program.

As a reminder, in August 2014, our Board of Directors authorized a share repurchase program ("August 2014 Share Repurchase Program") providing for the repurchase of up to $125 million of our common shares. During the third quarter of fiscal 2014, we invested $114.8 million to repurchase 2.6 million common shares, or approximately 4.7% of our outstanding shares, at an average price of $44.13, leaving $10.2 million of authorization remaining at the end of the third quarter. Subsequent to the end of the third quarter of fiscal 2014, we completed our August 2014 Share Repurchase Program during November 2014. In total, we invested $125 million to repurchase 2.8 million common shares at an average price of $44.21. Common shares acquired through the August 2014 Share Repurchase Program are available to meet obligations under equity compensation plans and for general corporate purposes.

2014 GUIDANCE

• Updates Q4 guidance for income from continuing operations of $1.70 to $1.80 per diluted share, compared to income from continuing U.S. operations of $1.45 per diluted share for the fourth quarter of fiscal 2013
• Affirms Q4 comparable store sales range of a low single digit increase
• Affirms guidance for fiscal 2014 income from continuing operations of $2.40 to $2.50 per diluted share, compared to fiscal 2013 adjusted income from continuing U.S. operations of $2.45 per diluted share (non-GAAP)
• Affirms fiscal 2014 comparable store sales range of +1% to +2%
• Affirms fiscal 2014 estimate of cash flow from continuing U.S. operations of $250 million

We update our guidance for fourth quarter fiscal 2014 income from continuing operations to be in the range of $1.70 to $1.80 per diluted share. This guidance compares to our previous guidance of $1.70 to $1.76 per diluted share, and to income from continuing U.S. operations of $1.45 per diluted share for the fourth quarter of fiscal 2013. Comparable store sales for the fourth quarter of fiscal 2014 are estimated to increase in the low single digit range.

Based on operating results for the first three quarters and our expectations for the fourth quarter of fiscal 2014, we affirm our guidance for fiscal 2014 income from continuing operations in the range of $2.40 to $2.50 per diluted share compared to adjusted income from continuing U.S. operations of $2.45 per diluted share for fiscal 2013 (non-GAAP). This outlook is based on comparable store sales in the range of +1% to +2%. We estimate this financial performance will result in cash flow (defined as cash provided by operating activities less cash used in investing activities) of approximately $250 million from continuing U.S. operations.

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the third quarter and provide commentary on our outlook for fiscal 2014. 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, December 19, 2014. A replay of this call will also be available beginning today at 12:00 noon through December 19 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 1366606. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,495 BIG LOTS stores in 48 states with product assortments in the merchandise categories of Food, Consumables, Furniture & Home Decor, 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 tables reconcile: (1) selling and administrative expenses, selling and administrative expense rate, operating profit (loss), operating profit (loss) rate, income tax expense (benefit), effective income tax rate, income (loss) from continuing operations, net income (loss), diluted earnings (loss) per share from continuing operations, and diluted earnings (loss) per share for the third quarter of 2013, the year-to-date 2013, and the full year of 2013 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit (loss), adjusted operating profit (loss) rate, adjusted income tax expense (benefit), adjusted effective income tax rate, adjusted  income (loss) from continuing operations, adjusted net income (loss), adjusted diluted earnings (loss) per share from continuing operations, and adjusted diluted earnings (loss) per share (non-GAAP financial measures).

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted loss from continuing operations, adjusted net loss, adjusted diluted earnings (loss) per share from continuing operations, and adjusted diluted earnings (loss) 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 adjustment for the gain on the sale of real estate of $3,579 ($2,179, net of tax).

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).

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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