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Dick's Sporting Goods Reports Second Quarter Results; Exceeds Guidance
PITTSBURGH
(Map)
-
Second Quarter Results
The Company reported net income for the second quarter ended
Including the after-tax impact of costs related to the Golf Galaxy
integration of
Net sales for the quarter increased 7% to
"We are pleased to deliver results that exceeded our guidance. We have
demonstrated that our culture of financial discipline and emphasis on
execution is evident even in these difficult times," said
Golf Galaxy Integration
By the end of this fiscal year, the Company expects to integrate Golf
Galaxy's operations. Costs related to the integration are expected to be
approximately
New Stores
In the second quarter, the Company opened nine Dick's Sporting Goods stores and one Golf Galaxy store. The stores that opened in the second quarter are listed in a table later in the release under the heading "Store Count and Square Footage."
Year-to-Date Results
The Company reported net income for the 26 weeks ended
Including the impact of the gain on the sale of the corporate aircraft and
the integration costs related to Golf Galaxy, which totals
Net sales increased 9% to
Current 2008 Outlook
The Company's current outlook for 2008 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
-- Full Year 2008
-- Based on an estimated 118 million diluted shares outstanding, the
Company currently anticipates reporting consolidated earnings per diluted
share of approximately
-- Comparable store sales, which include Dick's Sporting Goods stores only, are expected to decrease approximately 5 to 3%. The comparable store sales calculation for the full year excludes the Golf Galaxy and Chick's Sporting Goods stores.
-- The Company expects to open approximately 43 new Dick's Sporting Goods stores, ten new Golf Galaxy stores, relocate one Dick's Sporting Goods store and convert one Chick's Sporting Goods store to a Dick's Sporting Goods store in 2008.
-- Third Quarter 2008
-- Based on an estimated 117 million diluted shares outstanding, the
Company anticipates reporting consolidated earnings per diluted share of
approximately
-- Comparable store sales are expected to decrease approximately 5 to 2%, which compares to a 1% decrease in the third quarter last year, as adjusted for the shifted retail calendar. The comparable store sales calculation for the third quarter includes Golf Galaxy stores and excludes the Chick's Sporting Goods stores.
-- The Company expects to open approximately 26 new Dick's Sporting Goods stores and convert one Chick's Sporting Goods store to a Dick's Sporting Goods store.
Conference Call Info
The Company will be hosting a conference call today at
For those who cannot listen to the live broadcast, the web cast will be archived on the Company's web site for 30 days. In addition, a dial-in replay will be available shortly after the call. To listen to the replay, investors should dial 888-286-8010 (domestic callers) or 617-801-6888 (international callers) and enter confirmation code 88334087. The dial-in replay will be available for 30 days following the live call.
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "guidance," "estimate," "intend," "predict," and
"continue" or similar words. Forward-looking statements involve known and
unknown risks and uncertainties, which may cause the Company's actual results
in future periods to differ materially from forecasted results. Those risks
and uncertainties include, without limitation, changes in economic and market
conditions that affect consumer spending, changes in consumer demand,
competitive pressures, currency exchange rate fluctuations, weather
conditions, litigation, risks and costs associated with combining businesses
and/or assimilating acquired companies and our ability to manage our
operations and growth. Known and unknown risks and uncertainties are more
fully described in the Company's Annual Report on Form 10-K for the year ended
The prior period EPS numbers presented in this press release have been
adjusted to give effect to the two-for-one stock split, in the form of a stock
dividend, which became effective on
About Dick's Sporting Goods, Inc.
Dick's Sporting Goods, Inc. is an authentic full-line sporting goods
retailer offering a broad assortment of brand name sporting goods equipment,
apparel, and footwear in a specialty store environment. As of
Dick's Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page).
Contact:
724-273-3400
investors@dcsg.com
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
13 Weeks Ended
----------------------------------------
August 2, % of August 4, % of
2008 Sales 2007 Sales
----------- ------- ----------- -------
Net sales $1,086,294 100.00% $1,013,421 100.00%
Cost of goods sold, including
occupancy and distribution costs 766,636 70.57 714,761 70.53
----------- ------- ----------- -------
GROSS PROFIT 319,658 29.43 298,660 29.47
Selling, general and
administrative expenses 237,667 21.88 212,747 20.99
Pre-opening expenses 3,681 0.34 2,719 0.27
Merger and integration costs 2,879 0.27 - -
----------- ------- ----------- -------
INCOME FROM OPERATIONS 75,431 6.94 83,194 8.21
Interest expense, net 2,429 0.22 3,629 0.36
----------- ------- ----------- -------
INCOME BEFORE INCOME TAXES 73,002 6.72 79,565 7.85
Provision for income taxes 31,887 2.94 31,635 3.12
----------- ------- ----------- -------
NET INCOME $41,115 3.78% $47,930 4.73%
=========== ======= =========== =======
EARNINGS PER COMMON SHARE:
Basic $0.37 $0.44
Diluted $0.35 $0.41
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 111,483 108,580
Diluted 116,806 115,528
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
26 Weeks Ended
----------------------------------------
August 2, % of August 4, % of
2008 Sales 2007 Sales
----------- ------- ----------- -------
Net sales $1,998,405 100.00% $1,836,975 100.00%
Cost of goods sold,
including occupancy and
distribution costs 1,419,641 71.04 1,293,896 70.44
----------- ------- ----------- -------
GROSS PROFIT 578,764 28.96 543,079 29.56
Selling, general and
administrative expenses 457,631 22.90 410,755 22.36
Pre-opening expenses 8,604 0.43 9,840 0.54
Merger and integration costs 2,879 0.14 - -
----------- ------- ----------- -------
INCOME FROM OPERATIONS 109,650 5.49 122,484 6.67
Gain on sale of asset (2,356) (0.12) - -
Interest expense, net 4,088 0.20 6,835 0.37
----------- ------- ----------- -------
INCOME BEFORE INCOME TAXES 107,918 5.40 115,649 6.30
Provision for income taxes 46,028 2.30 46,017 2.51
----------- ------- ----------- -------
NET INCOME $61,890 3.10% $69,632 3.79%
=========== ======= =========== =======
EARNINGS PER COMMON SHARE:
Basic $0.56 $0.65
Diluted $0.53 $0.61
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 111,350 107,840
Diluted 117,051 114,986
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
August 2, August 4, February 2,
2008 2007 2008
----------- ----------- ----------
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $51,530 $50,489 $50,307
Accounts receivable, net 84,114 62,514 62,035
Inventories, net 912,619 791,654 887,364
Prepaid expenses and other current
assets 48,942 41,811 50,274
Deferred income taxes 18,255 1,079 19,714
------------ ----------- ----------
Total current assets 1,115,460 947,547 1,069,694
Property and equipment, net 541,413 499,109 531,779
Construction in progress - leased
facilities 16,476 7,681 23,744
Intangible assets, net 97,636 9,276 80,038
Goodwill 304,363 320,156 304,366
Other assets 50,651 62,382 26,014
----------- ----------- ----------
TOTAL ASSETS $2,125,999 $1,846,151 $2,035,635
=========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $416,550 $357,184 $365,750
Accrued expenses 228,584 208,061 228,816
Deferred revenue and other liabilities 82,275 74,631 104,549
Income taxes payable 10,177 2,717 62,583
Current portion of other long-term
debt and capital leases 243 152 250
----------- ----------- ----------
Total current liabilities 737,829 642,745 761,948
----------- ----------- ----------
LONG-TERM LIABILITIES:
Senior convertible notes 172,500 172,500 172,500
Revolving credit borrowings 10,137 52,307 -
Other long-term debt and capital
leases 8,555 8,320 8,685
Non-cash obligations for construction
in progress - leased facilities 16,476 7,681 23,744
Deferred revenue and other liabilities 205,636 187,994 180,238
------------ ----------- ----------
Total long-term liabilities 413,304 428,802 385,167
------------ ----------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 854 838 848
Class B common stock 262 266 263
Additional paid-in capital 441,163 387,425 416,423
Retained earnings 530,864 383,570 468,974
Accumulated other comprehensive income 1,723 2,505 2,012
------------ ----------- ----------
Total stockholders' equity 974,866 774,604 888,520
------------ ----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,125,999 $1,846,151 $2,035,635
=========== =========== ===========
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
26 Weeks Ended
---------------------------
August 2, August 4,
2008 2007
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $61,890 $69,632
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 42,212 38,036
Deferred income taxes (15,927) (10,391)
Stock-based compensation 15,150 14,781
Excess tax benefit from stock-based
compensation (1,004) (30,592)
Tax benefit from exercise of stock options 242 3,745
Tax benefit from convertible bond hedge 1,483 1,370
Gain on sale of asset (2,356) -
Changes in assets and liabilities:
Accounts receivable (2,049) (12,056)
Income taxes payable/receivable (51,250) 46,551
Inventories (25,254) (79,217)
Prepaid expenses and other assets (12,138) (2,550)
Accounts payable 61,841 57,967
Accrued expenses (6,909) 1,527
Deferred construction allowances 15,288 22,593
Deferred revenue and other liabilities (7,259) (8,460)
---------- ----------
Net cash provided by operating activities 73,960 112,936
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (108,794) (76,884)
Purchase of corporate aircraft (25,107) -
Proceeds from sale of corporate aircraft 27,463 -
Proceeds from sale-leaseback
transactions 16,384 9,226
Payment for purchase of Golf Galaxy,
net of $4,859 cash acquired - (221,461)
---------- ----------
Net cash used in investing activities (90,054) (289,119)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings, net 10,137 52,307
Payments on other long-term debt and
capital leases (136) (97)
Construction allowance receipts 10,424 2,699
Proceeds from sale of common stock
under employee stock purchase plan 2,986 2,466
Proceeds from exercise of stock options 3,953 24,712
Excess tax benefit from stock-based
compensation 1,004 30,592
Decrease in bank overdraft (11,043) (22,013)
---------- ----------
Net cash provided by financing activities 17,325 90,666
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (8) 64
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,223 (85,453)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 50,307 135,942
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $51,530 $50,489
========== ==========
Supplemental disclosure of cash flow
information:
Construction in progress - leased
facilities $(7,268) $(5,406)
Accrued property and equipment $671 $1,027
Cash paid for interest $4,084 $7,509
Cash paid for income taxes $112,811 $5,426
Stock options issued for acquisition $7,234 $8,647
Store Count and Square Footage
The stores that opened during the second quarter of 2008 are as follows:
DICK'S SPORTING GOODS
Store Market
------------------------ ----------------
S. Fredericksburg, VA Fredericksburg
San Antonio (Rim), TX San Antonio
Garland, TX Dallas-Ft. Worth
Montgomeryville, PA Philadelphia
St. Peters, MO St. Louis
Gilbert, AZ Phoenix
Brighton, CO Denver-Boulder
Cedar Hill, TX Dallas-Ft. Worth
San Antonio (Alamo), TX San Antonio
GOLF GALAXY
Store Market
------------------------ ----------------
Encinitas, CA San Diego
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
Fiscal 2008 Fiscal 2007
------------------------------- -----------------------
Dick's Chick's Dick's
Sporting Golf Sporting Sporting Golf
Goods Galaxy Goods Total Goods Galaxy Total
--------- ------ -------- ----- -------- ------ -----
Beginning stores 340 79 15 434 294 65 359
Q1 New 8 4 - 12 15 10 25
Q2 New 9 1 - 10 6 2 8
--------- ------ -------- ----- -------- ------ -----
Ending stores 357 84 15 456 315 77 392
========= ====== ======== ===== ======== ====== =====
Relocated stores - - - - 1 - 1
========= ====== ======== ===== ======== ====== =====
Square Footage:
(in millions)
Dick's Chick's
Sporting Golf Sporting
Goods Galaxy Goods Total
--------- ------ ------- ------
Q1 2007 17.4 1.1 - 18.5
Q2 2007 17.8 1.1 - 18.9
Q3 2007 19.0 1.2 - 20.2
Q4 2007 19.0 1.3 0.8 21.1
---------- --------- ------ ------- ------
Q1 2008 19.5 1.3 0.8 21.6
Q2 2008 20.0 1.3 0.8 22.1
Non-GAAP Financial Measures
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding net income and earnings per diluted share adjusted for merger integration costs and the gain on sale of asset, pro-forma comparable store sales, earnings before interest, taxes and depreciation ("EBITDA") as well as a reconciliation from the Company's gross capital expenditures, net of tenant allowances. The following measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company's management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company's website at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page). The Company's website is not part of this press release.
Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation
(in thousands, except per share data):
Fiscal 2008
13 Weeks Ended August 2, 2008
Merger and Non-GAAP
As Integration Pro-forma
Reported Costs Total
Net sales $1,086,294 $- $1,086,294
Cost of goods sold,
including occupancy
and distribution costs 766,636 - 766,636
GROSS PROFIT 319,658 - 319,658
Selling, general and
administrative expenses 237,667 237,667
Pre-opening expenses 3,681 - 3,681
Merger and integration costs 2,879 (2,879) -
INCOME FROM OPERATIONS 75,431 2,879 78,310
Interest expense, net 2,429 - 2,429
INCOME BEFORE INCOME TAXES 73,002 2,879 75,881
Provision for income taxes, excluding
tax impact of non deductible
executive separation costs 29,272 (1,119) 30,391
Tax impact of non deductible
executive separation costs 2,615 2,615 -
Provision for income taxes 31,887 1,496 30,391
NET INCOME $41,115 $4,375 $45,490
EARNINGS PER COMMON SHARE:
Basic $0.37
Diluted $0.35 $0.04 $0.39
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 111,483 111,483
Diluted 116,806 116,806
Note: Costs related to the Golf Galaxy integration total $5.5 million,
which includes $2.9 million of pre tax "merger and integration costs"
and $2.6 million included in the Company's provision for income taxes
reflecting the "tax impact of non deductible executive separation
costs." The net income impact of costs related to the Golf Galaxy
integration equals $4.4 million, which includes $1.8 million for the
after tax amount of "merger and integration costs" and the $2.6 million
included in the Company's provision for income taxes reflecting the "tax
impact of non deductible executive separation costs."
Fiscal 2008
26 Weeks Ended August 2, 2008
Merger and
Integration Non-GAAP
As Costs, Gain Pro-forma
Reported on Asset Sale Total
Net sales $1,998,405 $- $1,998,405
Cost of goods sold,
including occupancy
and distribution costs 1,419,641 - 1,419,641
GROSS PROFIT 578,764 - 578,764
Selling, general and
administrative expenses 457,631 457,631
Pre-opening expenses 8,604 - 8,604
Merger and integration costs 2,879 (2,879) -
INCOME FROM OPERATIONS 109,650 2,879 112,529
Gain on sale of asset (2,356) 2,356 -
Interest expense, net 4,088 - 4,088
INCOME BEFORE INCOME TAXES 107,918 523 108,441
Provision for income taxes, excluding
tax impact of non deductible
executive separation costs 43,413 (172) 43,585
Tax impact of non deductible
executive separation costs 2,615 2,615 -
Provision for income taxes 46,028 2,443 43,585
NET INCOME $61,890 $2,966 $64,856
EARNINGS PER COMMON SHARE:
Basic $0.56
Diluted $0.53 $0.03 $0.55
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 111,350 111,350
Diluted 117,051 117,051
Pro-forma Comparable Store Sales
The following pro-forma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented. The sales have been adjusted to conform to the Company's reporting calendar and method of reporting comparable sales. Golf Galaxy is included in the quarterly comparable store base beginning in Q2 2008, which is the first full quarter following the anniversary of the date of acquisition.
Dick's
Sporting Golf
Goods Galaxy Consolidated
-------- ------ ------------
13 weeks ended August 4, 2007 7.2% 4.7% 7.0%
13 weeks ended August 4, 2007 -
shifted (1) 5.8% 5.5% 5.8%
26 weeks ended August 4, 2007 4.7% 4.7% 4.7%
26 weeks ended August 4, 2007 -
shifted (1) 3.1% 3.0% 3.1%
26 weeks ended August 2, 2008 -3.7% -6.2% -4.0%
(1) Adjusted for the shifted retail calendar
EBITDA
EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. 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, and capital investments.
13 Weeks Ended
---------------------------
August 2, August 4,
EBITDA 2008 2007
------------------------------------ --------- ---------
(dollars in thousands)
Net income $41,115 $47,930
Provision for income taxes 31,887 31,635
Interest expense, net 2,429 3,629
Depreciation and amortization 21,812 21,634
Less: Depreciation and amortization
(merger integration) (100) -
Add: Merger and integration costs 2,879 -
--------- ---------
EBITDA $100,022 $104,828
========= =========
% decrease in EBITDA -5%
26 Weeks Ended
---------------------------
August 2, August 4,
EBITDA 2008 2007
------------------------------------ --------- ---------
(dollars in thousands)
Net income $61,890 $69,632
Provision for income taxes 46,028 46,017
Interest expense, net 4,088 6,835
Depreciation and amortization 42,212 38,036
Less: Depreciation and amortization
(merger integration) (100) -
Add: Merger and integration costs 2,879 -
Less: Gain on sale of asset (2,356) -
--------- ---------
EBITDA $154,641 $160,520
========= =========
% decrease in EBITDA -4%
Reconciliation of Gross Capital Expenditures to Capital Expenditures
The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.
26 Weeks Ended
---------------------------
August 2, August 4,
2008 2007
--------- ---------
(dollars in thousands)
Gross capital expenditures $(108,794) $(76,884)
Proceeds from sale-leaseback
transactions 16,384 9,226
Changes in deferred construction
allowances 15,288 22,593
Construction allowance receipts 10,424 2,699
--------- ---------
Net capital expenditures $(66,698) $(42,366)
========= =========
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