DICK'S Sporting Goods Reports First Quarter Results

First Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change

Net sales

$             2,700.2

$             2,918.7

$    (218.5)

(7.5) %

Comparable store sales ⁽¹⁾

(8.4)       %

117.1      %

Income before income taxes (% of net sales)

12.29      %

16.10      %

(381) bps

Non-GAAP income before income taxes (% of net sales) ⁽²⁾

12.29      %

16.35      %

(406) bps

Net income

$                260.6

$                361.8

$    (101.2)

(28.0) %

Non-GAAP net income ⁽²⁾

$                260.6

$                367.2

$    (106.6)

(29.0) %

Earnings per diluted share

$                  2.47

$                  3.41

$      (0.94)

(27.6) %

Non-GAAP earnings per diluted share ⁽²⁾

$                  2.85

$                  3.79

$      (0.94)

(24.8) %

^1.

Beginning in fiscal 2022, the Company revised its method for determining its comparable store sales calculations to include relocated store locations. Prior year information is revised to reflect this change for comparability purposes. See additional details in Exhibit 99.2 of the Company's Form 8-K as filed with the SEC on March 8, 2022.

^2.

In the fiscal 2022 period, there were no non-GAAP adjustments to reported income before income taxes or net income. In the fiscal 2021 period, there were non-GAAP adjustments due to amortization of the debt discount associated with the convertible senior notes. See New Accounting Pronouncement later in this release for further details. For additional information, the GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Balance Sheet

(dollars in millions)

As of

April 30, 2022

As of

May 1, 2021

$

Change ⁽¹⁾

% Change
⁽¹⁾

Cash and cash equivalents

$             2,251.3

$            1,858.7

$      392.6

21.1 %

Inventories, net

$            2,824.8

$             2,012.1

$       812.8

40.4 %

Total debt ⁽²⁾

$            1,947.7

$               425.8

$    1,521.9

357.4 %

^1.

Column may not recalculate due to rounding.

^2.

Fiscal 2022 includes debt with a carrying value of $1,481.7 million from the Company's issuance of the Senior Notes during the fourth quarter of 2021. Fiscal 2022 and 2021 includes debt with a carrying value of $466.0 million and $425.8 million, respectively, from the Company's issuance of the Convertible Senior Notes during fiscal 2020. The Company had no outstanding borrowings under its revolving credit facility in 2022 and 2021.

Capital Allocation

(dollars in millions)

13 Weeks Ended

$

Change ⁽¹⁾

% Change
⁽¹⁾

April 30, 2022

May 1, 2021

Share repurchases ⁽²⁾

$                42.2

$                 76.8

$       (34.6)

(45.0) %

Dividends ⁽³⁾

$                 46.1

$                 33.3

$          12.7

38.2 %

Gross capital expenditures

$                73.8

$                 71.1

$            2.7

3.8 %

Net capital expenditures ⁽⁴⁾

$                53.9

$                 57.2

$          (3.3)

(5.8) %

^1.

Column may not recalculate due to rounding.

^2.

In the fiscal 2022 period, repurchased 0.4 million shares of common stock at an average price of $101.39 per share under the Company's share repurchase program, under which the Company has $1.8 billion remaining at April 30, 2022.

^3.

In the 2022 and 2021 periods, declared and paid quarterly dividends of $0.4875 per share and $0.3625 per share, respectively.

^4.

For additional information, the GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Metric

Earnings per diluted share

●

○

Based on approximately 103 million diluted shares outstanding

○

Includes a minimum of $300 million of share repurchases

●

$9.15 to 11.70 on a non-GAAP basis, which excludes the impact of assumed
share settlement of the Convertible Senior Notes

○

Based on approximately 88 million diluted shares outstanding

Comparable store sales

●

Negative 8% to negative 2%

Capital expenditures

●

$400 to 425 million on a gross basis

●

$340 to 365 million on a net basis

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

13 Weeks Ended

April 30,
2022

% of

Sales

May 1,
2021

% of

Sales⁽¹⁾

Net sales

$         2,700,205

100.00%

$          2,918,719

100.00%

Cost of goods sold, including occupancy and
  distribution costs

1,715,491

63.53

1,830,092

62.70

     GROSS PROFIT

984,714

36.47

1,088,627

37.30

Selling, general and administrative expenses

615,293

22.79

608,294

20.84

Pre-opening expenses

2,900

0.11

4,524

0.15

     INCOME FROM OPERATIONS

366,521

13.57

475,809

16.30

Interest expense

25,642

0.95

13,381

0.46

Other expense (income)

9,022

0.33

(7,350)

(0.25)

     INCOME BEFORE INCOME TAXES

331,857

12.29

469,778

16.10

Provision for income taxes

71,298

2.64

108,022

3.70

     NET INCOME

$            260,559

9.65%

$             361,756

12.39%

EARNINGS PER COMMON SHARE:

     Basic

$                    3.42

$                    4.27

     Diluted

$                    2.47

$                    3.41

NUMERATOR USED TO COMPUTE EARNINGS PER
  COMMON SHARE:

     Basic

$            260,559

$             361,756

     Diluted

$            268,768

$             361,756

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING:

     Basic

76,181

84,750

     Diluted

108,629

106,010

⁽¹⁾ Column does not add due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands)

April 30,
2022

May 1,
2021

January 29,
2022

ASSETS

CURRENT ASSETS:

  Cash and cash equivalents

$             2,251,338

$             1,858,737

$            2,643,205

  Accounts receivable, net

76,253

67,145

68,263

  Income taxes receivable

1,639

2,803

1,978

  Inventories, net

2,824,832

2,012,054

2,297,609

  Prepaid expenses and other current assets

102,603

100,586

95,601

     Total current assets

5,256,665

4,041,325

5,106,656

  Property and equipment, net

1,305,137

1,319,774

1,319,681

  Operating lease assets

2,048,151

2,150,664

2,044,819

  Intangible assets, net

86,160

89,119

86,767

  Goodwill

245,857

245,857

245,857

  Deferred income taxes

66,080

47,491

35,024

  Other assets

211,750

172,350

202,872

TOTAL ASSETS

$             9,219,800

$            8,066,580

$             9,041,676

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Accounts payable

$              1,491,931

$             1,239,503

$              1,281,322

  Accrued expenses

462,085

499,071

620,143

  Operating lease liabilities

476,343

468,318

480,318

  Income taxes payable

80,023

141,868

13,464

  Deferred revenue and other liabilities

292,457

238,751

317,433

     Total current liabilities

2,802,839

2,587,511

2,712,680

LONG-TERM LIABILITIES:

  Revolving credit borrowings

—

—

—

   Senior notes

1,481,664

—

1,481,443

   Convertible senior notes

466,026

425,799

449,287

  Long-term operating lease liabilities

2,095,314

2,253,883

2,099,146

  Other long-term liabilities

179,351

200,663

197,534

     Total long-term liabilities

4,222,355

2,880,345

4,227,410

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

  Common stock

544

610

520

  Class B common stock

236

237

236

  Additional paid-in capital

1,368,211

1,448,892

1,488,834

  Retained earnings

4,212,451

3,394,067

3,956,602

  Accumulated other comprehensive (loss) income

(89)

15

(82)

  Treasury stock, at cost

(3,386,747)

(2,245,097)

(3,344,524)

     Total stockholders' equity

2,194,606

2,598,724

2,101,586

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$             9,219,800

$            8,066,580

$             9,041,676

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

13 Weeks Ended

April 30,
2022

May 1,
2021

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income

$           260,559

$            361,756

 Adjustments to reconcile net income to net cash (used in) provided by
 operating activities:

  Depreciation and amortization

79,673

78,366

  Amortization of deferred financing fees and debt discount

1,371

7,306

  Deferred income taxes

(1,791)

3,984

  Stock-based compensation

15,177

12,870

  Other, net

264

—

  Changes in assets and liabilities:

     Accounts receivable

(17,435)

(12,439)

     Inventories

(527,223)

(58,486)

     Prepaid expenses and other assets

(6,138)

(9,603)

     Accounts payable

237,076

38,057

     Accrued expenses

(132,185)

(44,310)

     Income taxes payable / receivable

66,898

104,464

     Construction allowances provided by landlords

19,891

13,902

     Deferred revenue and other liabilities

(35,047)

(21,240)

     Operating lease assets and liabilities

(21,391)

(27,276)

  Net cash (used in) provided by operating activities

(60,301)

447,351

CASH FLOWS FROM INVESTING ACTIVITIES:

  Capital expenditures

(73,783)

(71,097)

  Proceeds from sale of other assets

14,261

—

  Deposits and other investing activities

(10,780)

(2,338)

  Net cash used in investing activities

(70,302)

(73,435)

CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal paid in connection with exchange of convertible senior notes

(100,000)

—

  Payments on other long-term debt and finance lease obligations

(178)

(220)

  Proceeds from exercise of stock options

12,665

12,333

  Minimum tax withholding requirements

(33,287)

(18,601)

  Cash paid for treasury stock

(67,909)

(76,841)

  Cash dividends paid to stockholders

(46,081)

(33,334)

  Decrease in bank overdraft

(26,467)

(56,647)

  Net cash used in financing activities

(261,257)

(173,310)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(7)

64

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(391,867)

200,670

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

2,643,205

1,658,067

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         2,251,338

$         1,858,737

DICK'S SPORTING GOODS, INC.

GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED

Non-GAAP Net Income and Earnings Per Share Reconciliations

(in thousands, except per share amounts)

13 Weeks Ended April 30, 2022

Net income

After tax
interest from
Convertible
Senior Notes ⁽²⁾

Net income
for earnings
per diluted
share

Weighted
average
diluted
shares

Earnings
per
diluted
share

GAAP Basis

$   260,559

$                8,209

$     268,768

108,629

$         2.47

     % of Net Sales

9.65  %

0.30  %

9.95  %

Convertible senior notes ⁽¹⁾

—

(8,209)

(8,209)

(17,080)

Non-GAAP Basis

$   260,559

$                      —

$     260,559

91,549

$         2.85

     % of Net Sales

9.65  %

—  %

9.65  %

⁽¹⁾

Adjustment excludes the impact of assumed share settlement of the convertible notes as required by the if-converted method. Due to the Company's intent to settle the convertible notes' principal in cash and the shares the Company expects to receive under its convertible bond hedge, which is designed to offset dilution, the Company does not expect the convertible notes will have a dilutive effect upon conversion. Accordingly, the Company believes reflecting the notes as debt more closely represents the economics of the transaction upon future conversion.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.

Income
from
operations

Interest
expense

Income
before
income taxes

Net

 income ⁽²⁾

Diluted
shares
outstanding
during
period

Earnings
per
diluted
share

GAAP Basis

$   475,809

$    13,381

$     469,778

$      361,756

106,010

$          3.41

     % of Net Sales

16.30  %

0.46  %

16.10 %

12.39 %

Convertible senior notes ⁽¹⁾

—

(7,307)

7,307

5,407

(9,214)

Non-GAAP Basis

$   475,809

$      6,074

$     477,085

$      367,163

96,796

$         3.79

     % of Net Sales

16.30  %

0.21 %

16.35 %

12.58 %

⁽¹⁾

Amortization of the non-cash debt discount on the Company's convertible senior notes and diluted shares that will be offset at settlement by shares delivered from the convertible bond hedge purchased by the Company.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.

52 Weeks Ended January 29, 2022

Income
from
operations

Interest
expense

Income
before
income taxes

Net

 income ⁽²⁾

Diluted
shares
outstanding
during
period

Earnings
per
diluted
share

GAAP Basis

$ 2,034,503

$   57,839

$  1,994,438

$    1,519,871

109,578

$        13.87

     % of Net Sales

16.55 %

0.47  %

16.22 %

12.36 %

Convertible senior notes ⁽¹⁾

—

(30,794)

30,794

22,788

(11,332)

Non-GAAP Basis

$ 2,034,503

$   27,045

$  2,025,232

$  1,542,659

98,246

$       15.70

     % of Net Sales

16.55 %

0.22  %

16.47 %

12.55 %

⁽¹⁾

Amortization of the non-cash debt discount on the Company's convertible senior notes and diluted shares that are designed to be offset at settlement by shares delivered from the convertible bond hedge purchased by the Company.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

(in thousands) 

The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances. 

13 Weeks Ended

April 30,
2022

Gross capital expenditures

$                  (73,783)

$                     (71,097)

Construction allowances provided by landlords

19,891

13,902

Net capital expenditures

$                  (53,892)

$                     (57,195)

Reconciliation of Non-GAAP Consolidated Net Income and Earnings Per Diluted Share Guidance

(in millions, except per share amounts)

52 Weeks Ended January 28, 2023

Low End

High End

Net

income

After tax
interest
from
Convertible
Senior
Notes ⁽²⁾

Net
income
for
earnings
per
diluted
share

Weighted
average
diluted
shares

Earnings
per
diluted
share

Net

income

After tax
interest
from
Convertible
Senior
Notes ⁽²⁾

Net
income
for
earnings
per
diluted
share

Weighted
average
diluted
shares

Earnings
per
diluted
share

GAAP Basis

$     804

$               18

$        822

103

$       7.95

$  1,029

$               18

$     1,047

103

$      10.15

Convertible
     senior notes ⁽¹⁾

—

(18)

(18)

(15)

—

(18)

(18)

(15)

Non-GAAP Basis

$     804

$               —

$        804

88

$       9.15

$  1,029

$               —

$    1,029

88

$      11.70

⁽¹⁾

Adjustment excludes the impact of assumed share settlement of the convertible notes as required by the if-converted method. Due to the Company's intent to settle the convertible notes' principal in cash and the shares the Company expects to receive under its convertible bond hedge, which is designed to offset dilution, the Company does not expect the convertible notes will have a dilutive effect upon conversion. Accordingly, the Company believes reflecting the notes as debt more closely represents the economics of the transaction upon future conversion.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.