DICK'S SPORTING GOODS, INC. PITTSBURGH, Nov. 14, 2017 /PRNewswire/ -- DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the third quarter ended October 28, 2017.
Third Quarter Results
The Company reported consolidated net income for the third quarter ended October 28, 2017 of $36.9 million, or $0.35 per diluted share, compared to the Company's expectations provided on August 15, 2017 of $0.22 to 0.30 per diluted share. For the third quarter ended October 29, 2016, the Company reported consolidated net income of $48.9 million, or $0.44 per diluted share.
On a non-GAAP basis, the Company reported consolidated net income for the third quarter ended October 28, 2017 of $31.9 million, or $0.30 per diluted share. For the third quarter ended October 29, 2016, the Company reported consolidated net income of $53.6 million, or $0.48 per diluted share. Third quarter 2017 non-GAAP results exclude the benefit from a multi-year sales tax refund. Third quarter 2016 non-GAAP results exclude conversion costs for former Sports Authority ("TSA") stores. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."
Net sales for the third quarter of 2017 increased 7.4% to approximately $1.94 billion. Consolidated same store sales decreased 0.9%, compared to the Company's guidance of a low single-digit decrease. Third quarter 2016 consolidated same store sales increased 5.2%.
"In the third quarter, we delivered earnings per diluted share and comp sales at the high end of our expectations, with continued double-digit growth in eCommerce. As expected, margins were under pressure in this highly promotional environment, but our strategy for this environment enabled us to continue to capture market share," said Edward W. Stack, Chairman and Chief Executive Officer. "As we look to the fourth quarter, we are comfortable with our prior implied sales and earnings outlook, and believe we are well positioned to gain additional market share."
Mr. Stack continued, "Looking ahead, we see tremendous opportunity in our industry as it continues to evolve. We plan to make significant investments in our business, which will have a short-term negative impact on our earnings; however, we expect these investments will pay meaningful dividends in the future. We plan to increase investments in our eCommerce business, the technology in our stores and store payroll in order to enhance the customer experience. Meaningful investments will also be made to DICK'S Team Sports HQ, and in the development and support of our private brands. Given these investments, continued gross margin pressure and approximately flat comp sales, we expect earnings per diluted share to decline by as much as 20 percent in 2018."
Omni-channel Development
eCommerce sales for the third quarter of 2017 increased approximately 16%. eCommerce penetration for the third quarter of 2017 was 10.3% of total net sales, compared to 9.6% during the third quarter of 2016.
In the third quarter, the Company opened 15 new DICK'S Sporting Goods stores and six new Field & Stream stores. The Company also closed two specialty concept stores. As of October 28, 2017, the Company operated 719 DICK'S Sporting Goods stores in 47 states, with approximately 38.2 million square feet, 98 Golf Galaxy stores in 32 states, with approximately 2.1 million square feet, and 35 Field & Stream stores in 16 states, with approximately 1.6 million square feet. Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."
Balance Sheet
The Company ended the third quarter of 2017 with approximately $112 million in cash and cash equivalents and approximately $455 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the Company continued to invest in omni-channel growth, while returning over $343 million to shareholders through share repurchases and quarterly dividends.
Total inventory increased 4.1% at the end of the third quarter of 2017 as compared to the end of the third quarter of 2016.
Year-to-Date Results
The Company reported consolidated net income for the 39 weeks ended October 28, 2017 of $207.5 million, or $1.91 per diluted share. For the 39 weeks ended October 29, 2016, the Company reported consolidated net income of $197.2 million, or $1.75 per diluted share.
On a non-GAAP basis, the Company reported consolidated net income for the 39 weeks ended October 28, 2017 of $197.0 million, or $1.81 per diluted share, excluding a corporate restructuring charge, conversion costs for former TSA stores, income related to a contract termination payment and the benefit from a multi-year sales tax refund. For the 39 weeks ended October 29, 2016, the Company reported consolidated net income of $201.9 million, or $1.80 per diluted share, excluding conversion costs for former TSA stores. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."
Net sales for the 39 weeks ended October 28, 2017 increased 9.0% to approximately $5.93 billion, reflecting the growth of our store network and a 0.5% increase in consolidated same store sales.
Capital Allocation
On November 9, 2017, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.17 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 29, 2017 to stockholders of record at the close of business on December 8, 2017.
During the third quarter of 2017, the Company repurchased approximately 2.9 million shares of its common stock at an average cost of $26.57 per share, for a total cost of $76 million. During fiscal 2017, the Company repurchased approximately 6.8 million shares of its common stock at an average cost of $35.70 per share, for a total cost of $242 million, and has approximately $0.8 billion remaining under its authorization that extends through 2021.
Current 2017 Outlook
The Company's current outlook for 2017 is based on current expectations and includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as described later in this release. Although the Company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct.
-- Full Year 2017
-- Based on an estimated 107 to 108 million diluted shares outstanding,
the Company currently anticipates reporting earnings per diluted
share in the range of $2.95 to 3.07, which includes approximately
$0.05 per diluted share for the 53(rd) week. The Company's earnings
per diluted share guidance is not dependent upon share repurchases
beyond the $242 million executed through the third quarter of fiscal
2017. The Company reported earnings per diluted share of $2.56 for
the 52 weeks ended January 28, 2017.
-- The Company currently anticipates reporting non-GAAP earnings per
diluted share in the range of $2.92 to 3.04. This excludes a
corporate restructuring charge, conversion costs for former TSA
stores, income related to a contract termination payment, the
benefit from a multi-year sales tax refund and a one-time cost the
Company expects to incur to enhance its ScoreCard loyalty program.
On a non-GAAP basis, the Company reported earnings per diluted share
of $3.12 for the 52 weeks ended January 28, 2017.
-- Consolidated same store sales are currently expected to be in the
range of approximately flat to a low single-digit decline on a 52
week to 52 week comparative basis, compared to an increase of 3.5%
in 2016.
-- The Company expects to open 43 new DICK'S Sporting Goods stores and
relocate seven DICK'S Sporting Goods stores in 2017. The Company
also expects to open eight new Golf Galaxy stores, relocate one Golf
Galaxy store and open eight new Field & Stream stores adjacent to
DICK'S Sporting Goods stores. These openings include former TSA and
Golfsmith stores that the Company converted to DICK'S Sporting Goods
and Golf Galaxy stores, respectively.
-- Fourth Quarter 2017
-- Based on an estimated 105 million diluted shares outstanding, the
Company currently anticipates reporting earnings per diluted share
in the range of $1.05 to 1.17, which includes approximately $0.05
per diluted share for the 53(rd) week. The Company reported earnings
per diluted share of $0.81 in the fourth quarter of 2016.
-- The Company currently anticipates reporting non-GAAP earnings per
diluted share in the range of $1.12 to 1.24. This excludes a
one-time cost the Company expects to incur to enhance its ScoreCard
loyalty program. On a non-GAAP basis, the Company reported earnings
per diluted share of $1.32 in the fourth quarter of 2016.
-- Consolidated same store sales are currently expected to decline in
the low single-digits in the fourth quarter of 2017, compared to an
increase of 5.0% in the fourth quarter of 2016.
-- The Company expects to relocate one DICK'S Sporting Goods store in
the fourth quarter of 2017.
-- Capital Expenditures
-- In 2017, the Company anticipates capital expenditures to be
approximately $400 million on a net basis and approximately $515
million on a gross basis. In 2016, capital expenditures were $242
million on a net basis and $422 million on a gross basis.
Conference Call Info
The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the third quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at investors.DICKS.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software.
In addition to the webcast, the call can be accessed by dialing (877) 443-5743 (domestic callers) or (412) 902-6617 (international callers) and requesting the "DICK'S Sporting Goods Earnings Call."
For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10113127. The dial-in replay will be available for approximately 30 days following the live call.
Non-GAAP Financial Measures
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company reports certain financial results that differ from what is reported under GAAP. These non-GAAP financial measures include consolidated non-GAAP net income, non-GAAP earnings per diluted share, EBITDA, and adjusted EBITDA which management believes provides investors with useful supplemental information to evaluate the Company's ongoing operations and to compare with past and future periods. Management also uses certain non-GAAP measures internally for forecasting, budgeting, and measuring its operating performance. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. A reconciliation of the Company's non-GAAP measures to the most directly comparable GAAP financial measures are provided below and on the Company's website at investors.DICKS.com.
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond our control. Our future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon by investors as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the Company's future performance, including outlook for earnings and sales in the fourth quarter and 2018; plans to accelerate investments in eCommerce capabilities, technology, DICK'S Team Sports HQ, private brand development, people and our customer experience; anticipated store openings and store relocations; capital expenditures; and share repurchases.
Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: changes in consumer discretionary spending; our eCommerce platform not producing the anticipated benefits within the expected time-frame or at all; the streamlining of the Company's vendor base and execution of the Company's new merchandising strategy not producing the anticipated benefits within the expected time-frame or at all; the amount that we devote to strategic investments and the timing and success of those investments; the integration of strategic acquisitions being more difficult, time-consuming, or costly than expected; inventory turn; changes in the competitive market and competition amongst retailers, including an increase in promotional activity; changes in consumer demand or shopping patterns and our ability to identify new trends and have the right trending products in our stores and on our website; changes in existing tax, labor and other laws and regulations, including those changing tax rates and imposing new taxes and surcharges; limitations on the availability of attractive retail store sites; omni-channel growth; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings and new retail concepts; website downtime, disruptions or other problems with our eCommerce platform, including interruptions, delays or downtime caused by high volumes of users or transactions, deficiencies in design or implementation, or platform enhancements; disruptions or other problems with our information systems; factors affecting our vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, our Chairman and Chief Executive Officer; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of our business; and risks associated with being a controlled company.
For additional information on these and other factors that could affect our actual results, see our risk factors, which may be amended from time to time, set forth in our filings with the Securities and Exchange Commission ("SEC"), including our most recent Annual Report filed with the SEC on March 24, 2017. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation. Forward-looking statements included in this release are made as of the date of this release.
About DICK'S Sporting Goods, Inc.
Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of October 28, 2017, the Company operated more than 715 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated associates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.
Headquartered in Pittsburgh, PA, DICK'S also owns and operates Golf Galaxy and Field & Stream specialty stores, as well as DICK'S Team Sports HQ, an all-in-one youth sports digital platform offering free league management services, mobile apps for scheduling, communications and live scorekeeping, custom uniforms and FanWear and access to donations and sponsorships. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. For more information, visit the Press Room or Investor Relations pages at dicks.com.
Contacts:
Investor Relations:
Nate Gilch, Director of Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400
Media Relations:
(724) 273-5552 or press@dcsg.com
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
13 Weeks Ended
October 28, % of October 29, % of
2017 Sales(1) 2016 Sales
---- ------- ---- -----
Net sales $1,944,187 100.00% $1,810,347 100.00%
Cost of goods sold, including occupancy and 1,410,067 72.53 1,257,504 69.46
distribution costs
GROSS PROFIT 534,120 27.47 552,843 30.54
Selling, general and administrative expenses 475,899 24.48 459,782 25.40
Pre-opening expenses 8,220 0.42 19,304 1.07
----- ---- ------ ----
INCOME FROM OPERATIONS 50,001 2.57 73,757 4.07
Interest expense 2,839 0.15 1,265 0.07
Other income (10,768) (0.55) (3,778) (0.21)
------- ----- ------ -----
INCOME BEFORE INCOME TAXES 57,930 2.98 76,270 4.21
Provision for income taxes 21,017 1.08 27,356 1.51
------ ---- ------ ----
NET INCOME $36,913 1.90% $48,914 2.70%
======= ==== ======= ====
EARNINGS PER COMMON SHARE:
Basic $0.35 $0.44
Diluted $0.35 $0.44
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 105,466 110,607
Diluted 105,814 111,826
Cash dividend declared per share $0.17000 $0.15125
(1) Column does not add due to rounding.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
39 Weeks Ended
October 28, % of October 29, % of
2017 Sales(1) 2016
Sales(1)
-------
Net sales $5,926,350 100.00% $5,438,548 100.00%
Cost of goods sold, including occupancy and 4,213,143 71.09 3,792,529 69.73
distribution costs
GROSS PROFIT 1,713,207 28.91 1,646,019 30.27
Selling, general and administrative expenses 1,385,506 23.38 1,300,071 23.90
Pre-opening expenses 28,441 0.48 34,309 0.63
------ ---- ------ ----
INCOME FROM OPERATIONS 299,260 5.05 311,639 5.73
Interest expense 6,319 0.11 4,014 0.07
Other income (28,117) (0.47) (7,775) (0.14)
------- ----- ------ -----
INCOME BEFORE INCOME TAXES 321,058 5.42 315,400 5.80
Provision for income taxes 113,564 1.92 118,192 2.17
------- ---- ------- ----
NET INCOME $207,494 3.50% $197,208 3.63%
======== ==== ======== ====
EARNINGS PER COMMON SHARE:
Basic $1.92 $1.77
Diluted $1.91 $1.75
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 108,027 111,328
Diluted 108,633 112,407
Cash dividends declared per share $0.51000 $0.45375
(1) Column does not add due to rounding
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
October 28, October 29, January 28,
2017 2016 2017
---- ---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $111,815 $85,408 $164,777
Accounts receivable, net 88,979 121,189 75,199
Income taxes receivable 72,911 32,583 2,307
Inventories, net 2,178,495 2,092,402 1,638,632
Prepaid expenses and other current assets 129,876 112,523 114,763
Total current assets 2,582,076 2,444,105 1,995,678
--------- --------- ---------
Property and equipment, net 1,679,872 1,492,274 1,522,574
Intangible assets, net 144,896 137,155 140,835
Goodwill 245,126 200,594 245,059
Other assets:
Deferred income taxes 10,425 5,345 45,927
Other 122,519 102,733 108,223
------- ------- -------
Total other assets 132,944 108,078 154,150
------- ------- -------
TOTAL ASSETS $4,784,914 $4,382,206 $4,058,296
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,061,776 $1,031,587 $755,537
Accrued expenses 378,477 375,553 384,210
Deferred revenue and other liabilities 161,193 146,585 203,788
Income taxes payable 488 - 53,234
Current portion of other long-term debt and leasing 5,175 615 646
obligations
Total current liabilities 1,607,109 1,554,340 1,397,415
--------- --------- ---------
LONG-TERM LIABILITIES:
Revolving credit borrowings 454,700 260,900 -
Other long-term debt and leasing obligations 61,413 4,861 4,679
Deferred income taxes 23,710 8,252 -
Deferred revenue and other liabilities 764,996 683,988 726,713
------- ------- -------
Total long-term liabilities 1,304,819 958,001 731,392
--------- ------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 797 860 856
Class B common stock 247 247 247
Additional paid-in capital 1,166,370 1,114,622 1,130,830
Retained earnings 2,106,086 1,882,934 1,956,066
Accumulated other comprehensive loss (85) (147) (132)
Treasury stock, at cost (1,400,429) (1,128,651) (1,158,378)
---------- ---------- ----------
Total stockholders' equity 1,872,986 1,869,865 1,929,489
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,784,914 $4,382,206 $4,058,296
========== ========== ==========
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
39 Weeks Ended
October 28, October 29,
2017 2016
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $207,494 $197,208
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization 166,521 149,131
Deferred income taxes 59,145 2,618
Stock-based compensation 24,762 24,746
Other non-cash items 595 541
Changes in assets and liabilities:
Accounts receivable (18,145) (38,002)
Inventories (539,863) (565,215)
Prepaid expenses and other assets (20,847) (10,931)
Accounts payable 316,602 342,369
Accrued expenses 23,404 67,986
Income taxes payable / receivable (123,350) (58,841)
Deferred construction allowances 78,482 114,158
Deferred revenue and other liabilities (49,258) (32,686)
------- -------
Net cash provided by operating activities 125,542 193,082
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (386,600) (307,302)
Acquisitions, net of cash acquired (8,500) -
Deposits and purchases of other assets (2,344) (41,946)
------ -------
Net cash used in investing activities (397,444) (349,248)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings 2,431,200 1,738,200
Revolving credit repayments (1,976,500) (1,477,300)
Proceeds from term loan 62,492 -
Payments on other long-term debt and leasing obligations (1,229) (437)
Construction allowance receipts - -
Proceeds from exercise of stock options 16,558 24,950
Minimum tax withholding requirements (5,771) (6,909)
Cash paid for treasury stock (242,119) (116,006)
Cash dividends paid to stockholders (55,375) (51,246)
(Decrease) increase in bank overdraft (10,363) 11,354
------- ------
Net cash provided by financing activities 218,893 122,606
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH 47 32
EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS (52,962) (33,528)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 164,777 118,936
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $111,815 $85,408
======== =======
Store Count and Square Footage
------------------------------
The stores that opened during the third quarter of 2017 are as follows:
Store Market Concept
----- ------ -------
Houston, TX Houston DICK'S Sporting Goods
Sacramento, CA Sacramento DICK'S Sporting Goods
Medford, MA Boston DICK'S Sporting Goods
Pooler, GA Savannah DICK'S Sporting Goods
Northbrook, IL Chicago DICK'S Sporting Goods
Roseville, CA Sacramento DICK'S Sporting Goods
Fairfield, CA Fairfield DICK'S Sporting Goods
Lincoln, NE Lincoln DICK'S Sporting Goods
Houston, TX Houston DICK'S Sporting Goods
Ellicott City,
MD Baltimore DICK'S Sporting Goods
Fairview
Heights, IL St. Louis DICK'S Sporting Goods
Tukwila, WA Seattle DICK'S Sporting Goods
Tacoma, WA Seattle DICK'S Sporting Goods
Bellevue, WA Seattle DICK'S Sporting Goods
Prosper, TX Dallas DICK'S Sporting Goods (1)
Prosper, TX Dallas Field & Stream (1)
Barboursville,
WV Huntington Field & Stream (1)
Scranton, PA Scranton/Wilkes Barre Field & Stream (1)
Fayetteville,
NC Fayetteville Field & Stream (1)
Florence, AL Florence Field & Stream (1)
Kennesaw, GA Atlanta Field & Stream (1)
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
Store Count:
Fiscal 2017 Fiscal 2016
DICK'S Sporting Specialty Total DICK'S Sporting Specialty Total
Goods(1) Concept Goods(1) Concept
Stores(1) Stores(1)
-------- --------
Beginning stores 676 121 797 644 97 741
Q1 New stores 15 10 25 3 2 5
Q2 New stores 13 - 13 5 - 5
Q3 New stores 15 6 21 27 9 36
Closed stores - 4 4 3 2 5
--- ---
Ending stores 719 133 852 676 106 782
=== === === === === ===
Relocated stores 6 1 7 9 - 9
Square Footage:
(in millions)
DICK'S Sporting Specialty Concept Total(2)
Goods(1) Stores(1)
------- --------
Q1 2016 34.5 2.4 37.0
Q2 2016 34.6 2.4 37.1
Q3 2016 36.1 2.7 38.8
Q4 2016 36.0 3.2 39.3
------- ---- --- ----
Q1 2017 36.8 3.5 40.3
Q2 2017 37.4 3.5 40.9
Q3 2017 38.2 3.7 41.9
(1) Specialty concept stores include the
Company's Golf Galaxy, Field &
Stream and other specialty concept
stores. In some markets we operate
adjacent stores on the same property
with a pass-through for customers.
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 October 28, 2017,
the Company operated 20 combo
stores.
(2) Column may not add due to rounding.
DICK'S SPORTING GOODS, INC.
GAAP to NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
13 Weeks Ended October 28, 2017
Other Income Net Earnings
income before income per diluted
income share
taxes
---
GAAP Basis $(10,768) $57,930 $36,913 $0.35
% of Net
Sales (0.55)% 2.98% 1.90%
Sales tax
refund (1) 8,104 (8,104) (5,024)
Non-GAAP
Basis $(2,664) $49,826 $31,889 $0.30
% of Net
Sales (0.14)% 2.56% 1.64%
(1) Multi-year sales tax refund. The
provision for income taxes was
calculated at 38%, which
approximates the Company's
blended tax rate.
39 Weeks Ended October 28, 2017
Selling, Pre- Other Income Net Earnings
general and opening income before income (5) per diluted
administrative expenses income share
expenses taxes
-------- -----
GAAP Basis $1,385,506 $28,441 $(28,117) $321,058 $207,494 $1.91
% of Net Sales 23.38% 0.48% (0.47)% 5.42% 3.50%
Corporate restructuring charge (1) (7,077) - - 7,077 4,388
TSA conversion costs (2) - (3,474) - 3,474 2,154
Contract termination payment (3) - - 12,000 (12,000) (12,000)
Sales tax refund (4) - - 8,104 (8,104) (5,024)
Non-GAAP Basis $1,378,429 $24,967 $(8,013) $311,505 $197,012 $1.81
% of Net Sales 23.26% 0.42% (0.14)% 5.26% 3.32%
(1) Severance, other employee-related
costs and asset write-downs related
to corporate restructuring.
(2) Costs related to converting former TSA
stores.
(3) Contract termination payment. There
was no related tax expense as the
Company utilized net capital loss
carryforwards that were previously
subject to a valuation allowance.
(4) Multi-year sales tax refund.
(5) The provision for income taxes for
Non-GAAP adjustments was calculated
at 38%, which approximates the
Company's blended tax rate, unless
otherwise noted.
13 Weeks Ended October 29, 2016
Selling, Pre- Income Net Earnings
general and opening before income per diluted
administrative expenses income share
expenses taxes
-------- -----
GAAP Basis $459,782 $19,304 $76,270 $48,914 $0.44
% of Net Sales 25.40% 1.07% 4.21% 2.70%
TSA conversion costs (1) (6,491) (1,145) 7,636 4,734
Non-GAAP Basis $453,291 $18,159 $83,906 $53,648 $0.48
% of Net Sales 25.04% 1.00% 4.63% 2.96%
(1) Costs related to converting former
TSA stores. The provision for
income taxes was calculated at
38%, which approximated the
Company's blended tax rate.
39 Weeks Ended October 29, 2016
Selling, Pre- Income Net Earnings
general and opening before income per diluted
administrative expenses income share
expenses taxes
-------- -----
GAAP Basis $1,300,071 $34,309 $315,400 $197,208 $1.75
% of Net Sales 23.90% 0.63% 5.80% 3.63%
TSA conversion costs (1) (6,491) (1,145) 7,636 4,734
Non-GAAP Basis $1,293,580 $33,164 $323,036 $201,942 $1.80
% of Net Sales 23.79% 0.61% 5.94% 3.71%
(1) Costs related to converting former
TSA stores. The provision for
income taxes was calculated at
38%, which approximated the
Company's blended tax rate.
13 Weeks Ended January 28, 2017
Cost of Selling, Pre- Income Net Earnings
goods sold general and opening before income (5) per diluted
administrative expenses income share
expenses taxes
-------- -----
GAAP Basis $1,763,669 $575,573 $5,977 $143,020 $90,188 $0.81
% of Net Sales 71.02% 23.18% 0.24% 5.76% 3.63%
Inventory write-down (1) (46,379) - - 46,379 28,755
Non-cash impairment and - (32,821) - 32,821 20,349
store closing charge (2)
Non-operating asset - (7,707) - 7,707 4,778
impairment (3)
TSA and Golfsmith conversion - (2,054) (3,957) 6,011 3,727
costs (4)
Non-GAAP Basis $1,717,290 $532,991 $2,020 $235,938 $147,797 $1.32
% of Net Sales 69.15% 21.46% 0.08% 9.50% 5.95%
(1) Inventory write-down to net
realizable value in connection with
the Company's new merchandising
strategy.
(2) Included non-cash impairment of
store assets and store closing
charges primarily related to ten
Golf Galaxy stores in overlapping
trade areas with former Golfsmith
stores.
(3) Non-cash impairment charge to
reduce the carrying value of a
corporate aircraft held for sale to
its fair market value.
(4) Costs related to converting former
TSA and Golfsmith stores.
(5) The provision for income taxes for
Non-GAAP adjustments was
calculated at 38%, which
approximated the Company's blended
tax rate.
52 Weeks Ended January 28, 2017
Cost of Selling, Pre- Income Net Earnings
goods sold general and opening before income (5) per diluted
administrative expenses income share
expenses taxes
-------- -----
GAAP Basis $5,556,198 $1,875,643 $40,286 $458,422 $287,396 $2.56
% of Net Sales 70.14% 23.68% 0.51% 5.79% 3.63%
Inventory write-down (1) (46,379) - - 46,379 28,755
Non-cash impairment and - (32,821) - 32,821 20,349
store closing charge (2)
Non-operating asset - (7,707) - 7,707 4,778
impairment (3)
TSA and Golfsmith conversion - (8,545) (5,102) 13,647 8,461
costs (4)
Non-GAAP Basis $5,509,819 $1,826,570 $35,184 $558,976 $349,739 $3.12
% of Net Sales 69.55% 23.06% 0.44% 7.06% 4.41%
(1) Inventory write-down to net
realizable value in connection with
the Company's new merchandising
strategy.
(2) Included non-cash impairment of
store assets and store closing
charges primarily related to ten
Golf Galaxy stores in overlapping
trade areas with former Golfsmith
stores.
(3) Non-cash impairment charge to
reduce the carrying value of a
corporate aircraft held for sale to
its fair market value.
(4) Costs related to converting former
TSA and Golfsmith stores.
(5) The provision for income taxes for
Non-GAAP adjustments was
calculated at 38%, which
approximated the Company's blended
tax rate.
Adjusted EBITDA
---------------
Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. Adjusted EBITDA,
as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA is a key metric used by the Company that provides
a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, capital investments and certain non-recurring,
infrequent or unusual items.
13 Weeks Ended
October 28, October 29,
2017 2016
---- ----
(dollars in thousands)
Net income $36,913 $48,914
Provision for income taxes 21,017 27,356
Interest expense 2,839 1,265
Depreciation and amortization 57,436 52,600
------
EBITDA $118,205 $130,135
======== ========
Add: TSA conversion costs - 7,636
Less: Sales tax refund (8,104) -
Adjusted EBITDA, as defined $110,101 $137,771
======== ========
% decrease in adjusted EBITDA (20)%
39 Weeks Ended
October 28, October 29,
2017 2016
---- ----
(dollars in thousands)
Net income $207,494 $197,208
Provision for income taxes 113,564 118,192
Interest expense 6,319 4,014
Depreciation and amortization 166,521 149,131
-------
EBITDA $493,898 $468,545
======== ========
Add: Corporate restructuring charge 6,129 -
Add: TSA conversion costs 3,474 7,636
Less: Contract termination payment (12,000) -
Less: Sales tax refund (8,104) -
Adjusted EBITDA, as defined $483,397 $476,181
======== ========
% increase in adjusted EBITDA 2%
Reconciliation of Gross Capital Expenditures to Net Capital Expenditures
------------------------------------------------------------------------
The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.
39 Weeks Ended
October 28, October 29,
2017 2016
---- ----
(dollars in thousands)
Gross capital expenditures $(386,600) $(307,302)
Proceeds from sale-leaseback transactions - -
Deferred construction allowances 78,482 114,158
Construction allowance receipts - -
--- ---
Net capital expenditures $(308,118) $(193,144)
========= =========
Reconciliation of Non-GAAP Consolidated Net Income and Earnings Per Diluted Share Guidance
------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
14 Weeks Ended February 3, 2018 53 Weeks Ended February 3, 2018
Low-End High-End Low-End High-End
Amount EPS Amount EPS Amount EPS Amount EPS
------ --- ------ --- ------ --- ------ ---
GAAP consolidated net $110,160 $1.05 $122,560 $1.17 $317,043 $2.95 $330,043 $3.07
income and earnings per
diluted share
Corporate restructuring charge - - 7,077 7,077
TSA conversion costs - - 3,474 3,474
Contract termination payment - - (12,000) (12,000)
Sales tax refund - - (8,104) (8,104)
Loyalty program enhancement 12,000 12,000 12,000 12,000
costs
Tax effect of the above items 4,560 4,560 5,490 5,490
----- -----
Non-GAAP consolidated net $117,600 $1.12 $130,000 $1.24 $314,000 $2.92 $327,000 $3.04
income and earnings per
diluted share
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SOURCE DICK'S Sporting Goods, Inc.
