Net sales for the first quarter of fiscal 2020 totaled
Commenting on today's announcement,
Earnings per diluted share |
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Q1 2020 |
Q1 2019 |
||
Earnings per diluted share |
|
|
|
Impact of costs associated with early implementation |
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phases of our strategic business transformation review (1) |
- |
|
|
Impact of legal settlement loss contingencies (1) |
- |
|
|
Earnings per diluted share - adjusted basis |
|
|
(1) Non-GAAP detailed reconciliation provided in our statements below. |
Inventory and Cash Management
Inventory ended the first quarter of fiscal 2020 at
The company ended the first quarter of fiscal 2020 with
Dividend
As announced in a separate press release today, on
Company Outlook
As of
For the second quarter to date, comparable sales are up strongly, reflecting a continuation of the acceleration in business that began in mid-April. The company expects comp trends to moderate over the balance of the quarter due to a number of factors, including competitors and other retailers reopening, the planned cancellation of the July Friends and Family event, potential inventory constraints in certain categories, and the abatement of stimulus-driven demand.
Assuming comparable sales for the second quarter increased in line with the first quarter, the company would expect diluted EPS to be in the range of
Notwithsanding the prior commentary, given the highly fluid environment and uncertain outlook on consumer behavior, the company believes the range of outcomes is wider than in a normal quarter.
Conference Call/Webcast
The company will host a conference call today at
Headquartered in
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 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 the company believes the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect business, financial condition, results of operations or liquidity.
Forward-looking statements that the company makes 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, the inability to successfully execute strategic initiatives, competitive pressures, economic pressures on customers and the company, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of the company's most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The company undertakes 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 the company makes on related subjects in public announcements and
|
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CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
|
|
|||
2020 |
2019 |
|||
(Unaudited) |
(Unaudited) |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
|
|
||
Inventories |
806,559 |
926,988 |
||
Other current assets |
75,978 |
78,532 |
||
Total current assets |
1,194,409 |
1,069,092 |
||
Operating lease right-of-use assets |
1,206,133 |
1,156,656 |
||
Property and equipment - net |
849,857 |
735,957 |
||
Deferred income taxes |
6,161 |
15,418 |
||
Other assets |
65,226 |
68,522 |
||
|
|
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Accounts payable |
|
|
||
Current operating lease liabilities |
207,899 |
236,016 |
||
Property, payroll and other taxes |
96,248 |
84,016 |
||
Accrued operating expenses |
138,212 |
144,058 |
||
Insurance reserves |
35,572 |
37,492 |
||
Accrued salaries and wages |
34,622 |
32,697 |
||
Income taxes payable |
16,903 |
6,551 |
||
Total current liabilities |
804,917 |
855,469 |
||
Long-term debt |
436,684 |
470,400 |
||
Noncurrent operating lease liabilities |
1,046,711 |
960,754 |
||
Deferred income taxes |
41,171 |
0 |
||
Insurance reserves |
56,759 |
53,018 |
||
Unrecognized tax benefits |
10,279 |
14,002 |
||
Other liabilities |
41,332 |
43,671 |
||
Shareholders' equity |
883,933 |
648,331 |
||
|
|
|
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
(In thousands, except per share data) |
||||||
13 WEEKS ENDED |
13 WEEKS ENDED |
|||||
|
|
|||||
% |
% |
|||||
(Unaudited) |
(Unaudited) |
|||||
Net sales |
|
100.0 |
|
100.0 |
||
Gross margin |
570,756 |
39.7 |
519,047 |
40.1 |
||
Selling and administrative expenses |
458,631 |
31.9 |
460,605 |
35.5 |
||
Depreciation expense |
37,690 |
2.6 |
32,797 |
2.5 |
||
Operating profit |
74,435 |
5.2 |
25,645 |
2.0 |
||
Interest expense |
(3,322) |
(0.2) |
(3,733) |
(0.3) |
||
Other income (expense) |
(3,317) |
(0.2) |
910 |
0.1 |
||
Income before income taxes |
67,796 |
4.7 |
22,822 |
1.8 |
||
Income tax expense |
18,473 |
1.3 |
7,282 |
0.6 |
||
Net income |
|
3.4 |
|
1.2 |
||
Earnings per common share |
||||||
Basic |
|
|
||||
Diluted |
|
|
||||
Weighted average common shares outstanding |
||||||
Basic |
39,129 |
39,922 |
||||
Dilutive effect of share-based awards |
111 |
80 |
||||
Diluted |
39,240 |
40,002 |
||||
Cash dividends declared per common share |
|
|
|
||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(In thousands) |
||||
13 WEEKS ENDED |
13 WEEKS ENDED |
|||
|
|
|||
(Unaudited) |
(Unaudited) |
|||
Net cash provided by operating activities |
|
|
||
Net cash used in investing activities |
(28,913) |
(76,766) |
||
Net cash provided by financing activities |
141,943 |
36,869 |
||
Increase in cash and cash equivalents |
259,151 |
17,538 |
||
Cash and cash equivalents: |
||||
Beginning of period |
52,721 |
46,034 |
||
End of period |
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
The following tables reconcile: gross margin, gross margin rate, selling and administrative expenses, selling and administrative expense rate, gain on sale of distribution center, gain on sale of distribution center rate, operating profit, operating profit rate, income tax expense, effective income tax rate, net income, and diluted earnings per share for the first quarter of 2019, the second quarter of 2019, and the full year 2019 (GAAP financial measures) to adjusted gross margin, adjusted gross margin rate, adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of distribution center, adjusted gain on sale of distribution center rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share (non-GAAP financial measures).
First quarter of 2019 - Thirteen weeks ended May 4, 2019 |
|||||||||
As Reported |
Impact to exclude |
Impact to exclude |
Adjustment to |
As Adjusted |
|||||
Gross margin |
$ 519,047 |
$ 6,050 |
$ - |
$ - |
$ 525,097 |
||||
Gross margin rate |
40.1% |
0.5% |
- |
- |
40.5% |
||||
Selling and administrative expenses |
460,605 |
- |
(15,333) |
(7,250) |
438,022 |
||||
Selling and administrative expense rate |
35.5% |
- |
(1.2%) |
(0.6%) |
33.8% |
||||
Operating profit |
25,645 |
6,050 |
15,333 |
7,250 |
54,278 |
||||
Operating profit rate |
2.0% |
0.5% |
1.2% |
0.6% |
4.2% |
||||
Income tax expense |
7,282 |
1,553 |
3,935 |
1,696 |
14,466 |
||||
Effective income tax rate |
31.9% |
(0.8%) |
(1.6%) |
(1.4%) |
28.1% |
||||
Net income |
15,540 |
4,497 |
11,398 |
5,554 |
36,989 |
||||
Diluted earnings per share |
$ 0.39 |
$ 0.11 |
$ 0.28 |
$ 0.14 |
$ 0.92 |
The above adjusted gross margin, adjusted gross margin rate, 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 net income, 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
Second quarter of 2019 - Thirteen weeks ended August 3, 2019 |
|||||
As Reported |
Impact to exclude |
As Adjusted |
|||
Selling and administrative expenses |
$ 455,026 |
$ (19,452) |
$ 435,574 |
||
Selling and administrative expense rate |
36.3% |
(1.6%) |
34.8% |
||
Operating profit |
13,181 |
19,452 |
32,633 |
||
Operating profit rate |
1.1% |
1.6% |
2.6% |
||
Income tax expense |
1,649 |
4,993 |
6,642 |
||
Effective income tax rate |
21.1% |
3.2% |
24.3% |
||
Net income |
6,178 |
14,459 |
20,637 |
||
Diluted earnings per share |
$ 0.16 |
$ 0.37 |
$ 0.53 |
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 net income, 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 GAAP the costs associated with a transformational restructuring initiative of
Full Year 2019 - Fifty-two weeks ended February 1, 2020 |
|||||||||||
As Reported |
Impact to exclude |
Impact to exclude |
Adjustment to |
Adjustment to |
As Adjusted |
||||||
Gross margin |
$ 2,114,682 |
$ 6,050 |
$ - |
$ - |
$ - |
|
|||||
Gross margin rate |
39.7% |
0.1% |
- |
- |
- |
39.8% |
|||||
Selling and administrative expenses |
1,823,409 |
- |
(38,338) |
(7,250) |
- |
1,777,821 |
|||||
Selling and administrative expense rate |
34.3% |
- |
(0.7%) |
(0.1%) |
- |
33.4% |
|||||
Gain on sale of distribution center |
(178,534) |
- |
- |
- |
178,534 |
- |
|||||
Gain on sale of distribution center rate |
(3.4%) |
- |
- |
- |
3.4% |
- |
|||||
Operating profit |
334,826 |
6,050 |
38,338 |
7,250 |
(178,534) |
207,930 |
|||||
Operating profit rate |
6.3% |
0.1% |
0.7% |
0.1% |
(3.4%) |
3.9% |
|||||
Income tax expense |
75,084 |
1,553 |
9,836 |
1,696 |
(41,930) |
46,239 |
|||||
Effective income tax rate |
23.6% |
0.0% |
0.1% |
(0.0%) |
0.6% |
24.3% |
|||||
Net income |
242,464 |
4,497 |
28,502 |
5,554 |
(136,604) |
144,413 |
|||||
Diluted earnings per share |
$ 6.16 |
$ 0.11 |
$ 0.72 |
$ 0.14 |
$ (3.47) |
$ 3.67 |
The above adjusted gross margin, adjusted gross margin rate, adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of distribution center, adjusted gain on sale of distribution center rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, 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 GAAP (1) an inventory impairment amount of
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
Andrew D. Regrut, Vice President, Investor Relations, (614) 278-6622