DICK'S Sporting Goods Reports First Quarter Results; Reaffirms 2023 Outlook

"We are very pleased with our first quarter results. Even as consumers face macroeconomic uncertainties, our athletes have continued to prioritize sport and rely on DICK'S to meet their needs, and we continue to gain market share. Our Q1 sales grew 5.3%, driven by strong comps and healthy transaction growth, and we delivered another strong double-digit EBT margin. We remain confident in our ability to drive sales and profitability growth in 2023 and over the long term."

First Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change ⁽¹⁾

April 29, 2023

April 30, 2022

Net sales

$              2,842

$              2,700

$         142

5.3 %

Comparable store sales

3.4 %

(8.4) %

Income before income taxes (% of net sales) ⁽²⁾

11.6 %

12.3 %

$                 261

Earnings per diluted share

$        0.93

38 %

Non-GAAP earnings per diluted share ⁽³⁾

$                3.40

$                2.85

$        0.55

19 %

Balance Sheet

(in millions)

As of

April 29, 2023

As of

April 30, 2022

$

Change ⁽¹⁾

% Change
⁽¹⁾

Cash and cash equivalents

$               1,643

$               2,251

(27) %

Inventories, net

$               3,034

$               2,825

$         209

7 %

Total debt ⁽⁴⁾

$               1,483

$               1,948

$        (465)

(24) %

Capital Allocation

(in millions)

13 Weeks Ended

$

Change ⁽¹⁾

% Change
⁽¹⁾

April 29, 2023

April 30, 2022

Share repurchases ⁽⁵⁾

$                   58

$                   42

$            16

37 %

Dividends paid ⁽⁶⁾

$                 105

$                   46

$            59

127 %

Gross capital expenditures

$                   85

$                   74

$            11

15 %

Net capital expenditures ⁽³⁾

$                   61

$                   54

$              7

13 %

 Principal paid in connection with exchange of Convertible
      Senior Notes ⁽⁷⁾

$                   —

$                 100

$         (100)

Notes

^1.

Column may not recalculate due to rounding.

^2.

Also referred to by management as earnings before income taxes margin ("EBT margin").

^3.

In the fiscal 2023 period, there were no non-GAAP adjustments to reported earnings per diluted share. For additional information for 2022, see GAAP to non-GAAP reconciliations included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

^4.

Fiscal 2022 included debt with a carrying value of $466 million related to the Company's Convertible Senior Notes, which were fully retired as of April 29, 2023. The Company had no outstanding borrowings under its revolving credit facility in 2023 and 2022.

^5.

During the 13 weeks ended April 29, 2023, the Company repurchased 0.4 million shares of its common stock at an average price of $137.95 per share, for a total cost of $57.7 million under its share repurchase program. The Company has $1.4 billion remaining under its authorization as of April 29, 2023.

^6.

In the 2023 and 2022 periods, declared and paid quarterly dividends of $1.00 per share and $0.4875 per share, respectively.

^7.

During the first quarter of 2023, the Company retired the remaining $59.1 million of aggregate principal amount outstanding of the Convertible Senior Notes and related bond hedge and warrant transactions for 1.7 million shares of the Company's common stock. Refer to the Company's Form 8-K filed with the SEC on April 24, 2023 for additional information. During the first quarter of 2022, the Company exchanged $100 million aggregate principal amount of Convertible Senior Notes and unwound the corresponding portion of the convertible bond hedge and warrants for $100 million of cash and 1.8 million shares of the Company's common stock. 

2023 Outlook

●  $12.90 to 13.80

○  Includes approximately $0.20 per diluted share for the 53^rd week

○  Based on approximately 88 million diluted shares outstanding

○  Based on an effective tax rate of approximately 21%

○  Includes the impact of the Moosejaw acquisition

Comparable store sales

●  Flat to positive 2.0% on a 52-week basis

Capital expenditures

●  $670 to 720 million on a gross basis

●  $550 to 600 million on a net basis

13 Weeks Ended April 29, 2023

13 Weeks Ended April 30, 2022

DICK'S
Sporting
Goods ⁽¹⁾

Specialty
Concept Stores
⁽²⁾

Total ⁽³⁾

DICK'S
Sporting
Goods

Specialty
Concept Stores
⁽²⁾

Total ⁽³⁾

Beginning stores

728

125

853

730

131

861

—

—

—

—

1

Stores acquired ⁽⁴⁾

—

12

12

—

—

—

Closed stores

—

2

2

1

3

4

Ending stores

728

135

863

729

129

858

Relocated stores

1

—

1

1

—

1

 Square Footage:

 (in millions)

DICK'S Sporting Goods
⁽¹⁾

Specialty Concept
Stores ⁽²⁾

Total ^{(3) (6)}

Q1 2022

38.7

3.6

42.3

Q2 2022

38.8

3.6

42.4

Q3 2022

38.8

3.9

42.7

Q4 2022

39.2

3.4

42.6

Q1 2023 ⁽⁵⁾

39.2

3.4

42.6

⁽¹⁾

As of April 29, 2023, includes three DICK'S House of Sport stores.

⁽²⁾

Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of April 29, 2023, we operated 97 Golf Galaxy stores, 7 Public Lands stores, 15 Going Going Gone! stores, and other specialty concept stores. In some markets, we operate DICK'S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for our athletes. We refer to this format as a "combo store" and include combo store openings within both the DICK'S Sporting Goods and specialty concept store reconciliations, as applicable. As of April 29, 2023, the Company operated 16 combo stores.

⁽³⁾

Excludes temporary Warehouse Sale store locations, of which the Company operated 39 and 17 as of April 29, 2023 and April 30, 2022, respectively.

⁽⁴⁾

Represents Moosejaw store locations acquired by the Company during the first quarter of fiscal 2023, which average approximately 4,000 square feet per store.

⁽⁵⁾

Includes square footage from 13 Field & Stream store closures as we plan in the near-term to convert them into DICK'S House of Sport stores, expanded DICK'S Sporting Goods stores, or other specialty concept stores.

⁽⁶⁾

Column may not add due to rounding.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)

13 Weeks Ended

April 29,
2023

% of

Sales

April 30,
2022

% of

Sales

Net sales

$          2,842,181

100.00 %

$         2,700,205

100.00 %

Cost of goods sold, including occupancy and
distribution costs

1,813,564

63.81

1,715,491

63.53

GROSS PROFIT

1,028,617

36.19

984,714

36.47

Selling, general and administrative expenses

693,904

24.41

615,293

22.79

Pre-opening expenses

9,090

0.32

2,900

0.11

INCOME FROM OPERATIONS

325,623

11.46

366,521

13.57

Interest expense

15,043

0.53

25,642

0.95

Other (income) expense

(17,707)

(0.62)

9,022

0.33

INCOME BEFORE INCOME TAXES

328,287

11.55

331,857

12.29

Provision for income taxes

23,638

0.83

71,298

2.64

NET INCOME

$            304,649

10.72 %

$            260,559

9.65 %

EARNINGS PER COMMON SHARE:

Basic

$                    3.67

$                    3.42

Diluted

$                    3.40

$                    2.47

NUMERATOR USED TO COMPUTE EARNINGS PER
COMMON SHARE:

Basic

$            304,649

$            260,559

Diluted

$            304,986

$            268,768

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:

Basic

83,071

76,181

Diluted

89,664

108,629

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands)

April 29,
2023

April 30,
2022

January 28,
2023

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$             1,642,680

$             2,251,338

$             1,924,386

Accounts receivable, net

132,788

76,253

71,286

Income taxes receivable

16,249

1,639

8,187

Inventories, net

3,034,202

2,824,832

2,830,917

Prepaid expenses and other current assets

117,070

102,603

128,410

Total current assets

4,942,989

5,256,665

4,963,186

Property and equipment, net

1,372,776

1,305,137

1,312,988

Operating lease assets

2,207,631

2,048,151

2,138,366

Intangible assets, net

63,600

86,160

60,364

Goodwill

250,398

245,857

245,857

Deferred income taxes

31,282

66,080

41,189

Other assets

239,136

211,750

230,246

TOTAL ASSETS

$              9,107,812

$             9,219,800

$             8,992,196

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$             1,220,003

$              1,491,931

$            1,206,066

Accrued expenses

495,743

462,085

508,573

Operating lease liabilities

466,911

476,343

546,755

Income taxes payable

44,865

80,023

29,624

Deferred revenue and other liabilities

297,633

292,457

350,428

Total current liabilities

2,525,155

2,802,839

2,641,446

LONG-TERM LIABILITIES:

Revolving credit borrowings

—

—

—

 Senior Notes

1,482,565

1,481,664

1,482,336

 Convertible Senior Notes

—

466,026

58,271

Long-term operating lease liabilities

2,256,068

2,095,314

2,117,773

Other long-term liabilities

169,854

179,351

167,747

Total long-term liabilities

3,908,487

4,222,355

3,826,127

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

617

544

585

Class B common stock

236

236

236

Additional paid-in capital

1,405,767

1,368,211

1,416,847

Retained earnings

5,096,789

4,212,451

4,878,404

Accumulated other comprehensive loss

(345)

(89)

(252)

Treasury stock, at cost

(3,828,894)

(3,386,747)

(3,771,197)

Total stockholders' equity

2,674,170

2,194,606

2,524,623

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$              9,107,812

$             9,219,800

$             8,992,196

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)

13 Weeks Ended

April 29,
2023

April 30,
2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$           304,649

$           260,559

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

82,348

79,673

Amortization of deferred financing fees and debt discount

637

1,371

Deferred income taxes

9,907

(1,791)

Stock-based compensation

12,809

15,177

Other, net

(1,464)

264

Changes in assets and liabilities:

Accounts receivable

(25,991)

(17,435)

Inventories

(166,582)

(527,223)

Prepaid expenses and other assets

(11,913)

(6,138)

Accounts payable

(99,959)

237,076

Accrued expenses

(70,362)

(132,185)

Income taxes payable / receivable

7,383

66,898

Construction allowances provided by landlords

23,684

19,891

Deferred revenue and other liabilities

(42,183)

(35,047)

Operating lease assets and liabilities

(71,343)

(21,391)

Net cash used in operating activities

(48,380)

(60,301)

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(84,507)

(73,783)

Proceeds from sale of other assets

27,500

14,261

Other investing activities

(31,360)

(10,780)

Net cash used in investing activities

(88,367)

(70,302)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of Convertible Senior Notes

(137)

(100,000)

        Payments on finance lease obligations

(198)

(178)

Proceeds from exercise of stock options

12,370

12,665

Minimum tax withholding requirements

(94,695)

(33,287)

Cash paid for treasury stock

(57,701)

(67,909)

Cash dividends paid to stockholders

(104,783)

(46,081)

Increase (decrease) in bank overdraft

100,278

(26,467)

Net cash used in financing activities

(144,866)

(261,257)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(93)

(7)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(281,706)

(391,867)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1,924,386

2,643,205

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         1,642,680

$         2,251,338

13 Weeks Ended April 30, 2022

Net income

After tax
interest from
Convertible
Senior Notes ⁽²⁾

Numerator used
to compute
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 eliminates the impact of assumed share settlement of the Convertible Senior Notes as required by "the if-converted method" under GAAP. The Company retired its Convertible Senior Notes without dilutive effect, due to cash payments for principal, shares received from its convertible bond hedge and shares repurchased to offset share settlement of remaining $59.1 million principal during the 13 weeks ended April 29, 2023. Accordingly, the Company believes reflecting the notes as debt more closely represents the economics of the transaction.

⁽²⁾

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

13 Weeks Ended

April 29,
2023

Gross capital expenditures

$                  (84,507)

$                  (73,783)

Construction allowances provided by landlords

23,684

19,891

Net capital expenditures

$                  (60,823)

$                  (53,892)