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Dick's Sporting Goods Reports Fourth Quarter and Full Year Results:- EPS Increases 30% for Full Year Over Last Year- Comparable Store Sales Increase 2.7% and 2.4% in Fourth Quarter and Full Year, Respectively
PITTSBURGH, March 11 /PRNewswire-FirstCall/ -- Dick's Sporting Goods, Inc. NYSE: DKS today reported sales and earnings results for the fourth quarter and year ended February 2, 2008. The results include the operating results of Golf Galaxy and Chick's Sporting Goods for 2007 from their respective acquisition dates, but not for 2006 as Golf Galaxy and Chick's were acquired on February 13, 2007 and November 30, 2007, respectively. Fourth Quarter Results (13 weeks compared to 14 weeks last year) Net income for the 13 weeks ended February 2, 2008 increased 8% to $73.2 million and earnings per diluted share increased 3.3% to $0.62, compared to prior year net income of $67.7 million, or $0.60 per diluted share for the 14 week quarter, which provided an extra week of operations and included the favorable impact of sales of licensed merchandise relating to the Super Bowl, which combined contributed approximately $0.05 to our fiscal 2006 earnings. The Company's most recent guidance provided on January 15, 2008 was for earnings per diluted share of at least $0.60 - 0.61. The operating results of Golf Galaxy are included in the current period results and the results for Chick's are included from its November 30, 2007 acquisition date. Net sales for the 13 weeks increased 18% to $1,212.6 million due to the opening of new stores, the inclusion of Golf Galaxy in this year's quarterly results (which will be included in Dick's Sporting Goods comparable store sales calculation beginning in Q1 2008), and a comparable store sales increase of 2.7% on a 13-week to 13-week comparable basis (or an increase of 3.4%, adjusting for the shifted retail calendar). Comparable store sales for Golf Galaxy on a 13-week to 13-week proforma basis decreased 8.8%, or 9.8% after adjusting for the shifted retail calendar. "We are pleased to have delivered 4th quarter sales and earnings in excess of our guidance, culminating a year in which our business generated a 30% EPS increase. We also made two acquisitions, continued to capture market share in new and existing markets, expanded our merchandise margin, and improved our operating efficiency," said Edward W. Stack, Chairman and CEO. New Stores In the fourth quarter, the Company opened four Golf Galaxy stores, one each in Baltimore, MD; Fairfax, VA; Phoenix, AZ and Washington DC. In addition, Golf Galaxy closed two stores, one each in Memphis, TN and Pittsburgh, PA. As of February 2, 2008, the Company operated 340 Dick's Sporting Goods stores in 36 states, with approximately 19.0 million square feet, 79 Golf Galaxy stores in 29 states, with approximately 1.3 million square feet, and 15 Chick's Sporting Goods stores in California, with approximately 0.8 million square feet. Full Year Results (52 weeks compared to 53 weeks last year) Net income for the 52 weeks ended February 2, 2008 increased 38% to $155.0 million and earnings per diluted share increased 30% to $1.33, as compared to prior year 53 week net income of $112.6 million, or $1.02 per diluted share. The operating results of Golf Galaxy and Chick's have been included in the results from their respective acquisition dates. Net sales for the 52 weeks increased 25% to $3,888.4 million as compared to the 53 weeks ended February 3, 2007, while comparable store sales at Dick's stores on a 52-week to 52-week basis increased 2.4%, compared to a 6.0% increase last year. The increase in sales this year was also attributable to the opening of new stores and the inclusion of Golf Galaxy and Chick's in this year's results. Comparable store sales for Golf Galaxy on a proforma basis were flat for the year. 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. "We are cautiously optimistic about our business prospects in 2008," said Edward W. Stack, Chairman & CEO. "This year we will add approximately 46 Dick's stores, 10 Golf Galaxy stores, and will open a new distribution center in Atlanta to support our continued growth. We will continue to build our private brand strategy with partnerships with Nike ACG, adidas baseball, Reebok apparel and our newest brand Maxfli. Even with all of these key initiatives we can't ignore the uncertain macro economic environment we are all currently facing."
-- Full Year 2008
-- Based on an estimated 121 million diluted shares outstanding, the
Company anticipates reporting consolidated earnings per diluted
share of approximately $1.49 - 1.54. This represents an approximate
12 - 16% increase over earnings per diluted share for the full year
2007 of $1.33.
-- Comparable store sales, which include Dick's Sporting Goods and Golf
Galaxy stores, are expected to be approximately flat to an increase
of 1%. The Golf Galaxy stores are included in the comparable store
sales calculation beginning in the first quarter of 2008. The
comparable store sales calculation excludes the Chick's Sporting
Goods stores.
-- The Company expects to open approximately 46 new Dick's Sporting
Goods stores, ten new Golf Galaxy stores and relocate one Dick's
store in 2008.
-- First Quarter 2008
-- Based on an estimated 119 million diluted shares outstanding, the
Company anticipates reporting consolidated earnings per diluted
share of approximately $0.16 - 0.19, as compared to first quarter
2007 earnings per diluted share of $0.19.
-- Comparable store sales, which include Dick's and Golf Galaxy stores,
are expected to decrease approximately 1 - 4%. The comparable store
sales calculation excludes the Chick's Sporting Goods stores.
-- The Company expects to open approximately eight new Dick's stores
and four new Golf Galaxy stores in the first quarter.
Conference Call Info The Company will be hosting a conference call today at 10:00 am eastern time to discuss the fourth quarter and full year results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, the webcast will be archived on the Company's web site for approximately 30 days. In addition, a dial-in replay will be available shortly after the call. To listen, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 99877384. 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, weather conditions, litigation 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 Amendment No. 1 to Form 10-K/A for the year ended February 3, 2007 as filed with the Securities and Exchange Commission on June 5, 2007, and other reports filed with the Securities and Exchange Commission. The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws. 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 October 19, 2007 to our stockholders of record on September 28, 2007. 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 February 2, 2008, the Company operated 340 Dick's Sporting Goods stores in 36 states primarily throughout the eastern half of the U.S. The Company also owns Golf Galaxy, a multi-channel golf specialty retailer, with 79 stores in 29 states, ecommerce websites and catalog operations and Chick's Sporting Goods which operates 15 specialty sporting goods stores in Southern California. 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: Timothy E. Kullman, EVP - Finance, Administration & Chief Financial Officer or Anne-Marie Megela, Director, Investor Relations 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 14 Weeks Ended
-----------------------------------------
February 2, % of February 3, % of
2008 Sales(1) 2007 Sales
------------ ------- ---------- -------
Net sales $1,212,615 100.00% $1,026,275 100.00%
Cost of goods sold, including
occupancy and distribution
costs 836,295 68.97 705,973 68.79
------------ ------- ---------- -------
GROSS PROFIT 376,320 31.03 320,302 31.21
Selling, general and
administrative expenses 250,356 20.65 203,759 19.85
Pre-opening expenses 1,314 0.11 1,427 0.14
------------ ------- ---------- -------
INCOME FROM OPERATIONS 124,650 10.28 115,116 11.22
Interest expense, net 2,730 0.23 2,253 0.22
------------ ------- ---------- -------
INCOME BEFORE INCOME TAXES 121,920 10.05 112,863 11.00
Provision for income taxes 48,749 4.02 45,145 4.40
------------ ------- ---------- -------
NET INCOME $73,171 6.03% $67,718 6.60%
============ ======= ========== =======
EARNINGS PER COMMON SHARE:
Basic $0.66 $0.65
Diluted $0.62 $0.60
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 111,033 104,982
Diluted 117,721 113,130
(1) Column does not add due to rounding
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
52 Weeks Ended 53 Weeks Ended
-----------------------------------------
February 2, % of February 3, % of
2008 Sales(1) 2007 Sales(1)
------------ ------- ---------- -------
Net sales $3,888,422 100.00% $3,114,162 100.00%
Cost of goods sold, including
occupancy and distribution
costs 2,730,359 70.22 2,217,463 71.21
------------ ------- ---------- -------
GROSS PROFIT 1,158,063 29.78 896,699 28.79
Selling, general and
administrative expenses 870,415 22.38 682,625 21.92
Pre-opening expenses 18,831 0.48 16,364 0.53
------------ ------- ---------- -------
INCOME FROM OPERATIONS 268,817 6.91 197,710 6.35
Interest expense, net 11,290 0.29 10,025 0.32
------------ ------- ---------- -------
INCOME BEFORE INCOME TAXES 257,527 6.62 187,685 6.03
Provision for income taxes 102,491 2.64 75,074 2.41
------------ ------- ---------- -------
NET INCOME $155,036 3.99% $112,611 3.62%
============ ======= ========== =======
EARNINGS PER COMMON SHARE:
Basic $1.42 $1.10
Diluted $1.33 $1.02
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 109,383 102,512
Diluted 116,504 110,790
(1) Column does not add due to rounding
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
February 2, February 3,
2008 2007
------------ ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $50,307 $135,942
Accounts receivable, net 62,035 39,687
Income taxes receivable - 15,671
Inventories, net 887,364 641,464
Prepaid expenses and other current
assets 50,274 37,015
Deferred income taxes 19,714 -
------------ ------------
Total current assets 1,069,694 869,779
Property and equipment, net 531,779 433,071
Construction in progress - leased
facilities 23,744 13,087
Intangible assets 80,038 9,374
Goodwill 304,366 156,628
Other assets 26,014 42,326
------------ ------------
TOTAL ASSETS $2,035,635 $1,524,265
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $365,750 $286,668
Accrued expenses 228,816 190,365
Deferred revenue and other
liabilities 104,549 87,798
Income taxes payable 62,583 -
Current portion of other long-term
debt and capital leases 250 152
------------ ------------
Total current liabilities 761,948 564,983
------------ ------------
LONG-TERM LIABILITIES:
Senior convertible notes 172,500 172,500
Revolving credit borrowings - -
Other long-term debt and capital
leases 8,685 8,365
Non-cash obligations for construction
in progress - leased facilities 23,744 13,087
Deferred revenue and other
liabilities 180,238 144,780
------------ ------------
Total long-term liabilities 385,167 338,732
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 848 397
Class B common stock 263 134
Additional paid-in capital 416,423 302,766
Retained earnings 468,974 315,453
Accumulated other comprehensive
income 2,012 1,800
------------ ------------
Total stockholders' equity 888,520 620,550
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,035,635 $1,524,265
============ ============
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended
------------------------------
February 2, February 3,
2008 2007
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES: (unaudited)
Net income $155,036 $112,611
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 75,052 54,929
Deferred income taxes (32,696) (1,110)
Stock-based compensation 29,039 24,303
Excess tax benefit from stock-based
compensation (34,918) (36,932)
Tax benefit from exercise of stock
options 5,396 2,572
Other non-cash items 2,811 2,686
Changes in assets and liabilities, net
of acquired assets and liabilities:
Accounts receivable (8,952) (2,142)
Inventories (127,027) (105,766)
Prepaid expenses and other assets (4,267) (29,039)
Accounts payable 12,337 24,444
Accrued expenses 26,222 42,479
Income taxes payable / receivable 114,706 4,750
Deferred construction allowances 22,256 19,264
Deferred revenue and other liabilities 27,839 26,560
----------- -----------
Net cash provided by operating activities 262,834 139,609
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (172,366) (162,995)
Proceeds from sale-leaseback
transactions 28,440 32,509
Payment for purchase of Golf Galaxy,
net of $4,859 cash acquired (222,170) -
Payment for purchase of Chick's
Sporting Goods (69,200) -
----------- -----------
Net cash used in investing activities (435,296) (130,486)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on other long-term debt and
capital leases (1,058) (184)
Construction allowance receipts 13,282 17,902
Proceeds from sale of common stock
under employee stock purchase plan 4,507 3,734
Proceeds from exercise of stock
options 30,259 23,042
Excess tax benefit from stock-based
compensation 34,918 36,932
Increase in bank overdraft 4,785 8,829
----------- -----------
Net cash provided by financing activities 86,693 90,255
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 134 -
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (85,635) 99,378
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 135,942 36,564
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $50,307 $135,942
=========== ===========
Supplemental disclosure of cash flow
information:
Construction in progress - leased
facilities $10,657 $5,749
Accrued property and equipment $(6,928) $11,475
Cash paid for interest $11,195 $9,286
Cash paid for income taxes $17,832 $68,483
Stock options issued for acquisition
(net of $1,810 tax benefit upon
exercise) $7,307 $-
Store Count and Square Footage
------------------------------
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
Fiscal Fiscal
2007 2006
---------------
Dick's Chick's Dick's
Sporting Golf Sporting Sporting
Goods Galaxy Goods (1) Total Goods
-------- ------ --------- ----- -------
Beginning stores 294 65 - 359 255
Q1 New 15 10 - 25 8
Q2 New 6 2 - 8 5
Q3 New 25 - - 25 26
Q4 New - 4 15 19 -
-------- ------ --------- ----- -------
340 81 15 436 294
-------- ------ --------- ----- -------
Q4 Closed - (2) - (2) -
-------- ------ --------- ----- -------
Ending stores 340 79 15 434 294
======== ====== ========= ===== =======
Relocated stores 1 - - 1 2
======== ====== ========= ===== =======
Square Footage:
(in millions)
Dick's Chick's
Sporting Golf Sporting
Goods Galaxy Goods Total
-------- ------ -------- -----
Q1 2006 15.2 0.9 - 16.1
Q2 2006 15.5 0.9 - 16.4
Q3 2006 16.7 0.9 - 17.6
Q4 2006 16.7 0.9 - 17.6
-------- ------ -------- -----
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
(1) - Column reflects the 15 Chick's Sporting Goods stores acquired in
the fourth quarter.
Summary Proforma Financial Information
--------------------------------------
The following unaudited proforma summary presents information as if Golf Galaxy had been acquired at the beginning of the periods presented.
Proforma Results for 14 and 53 Weeks Ended February 3, 2007 - Unaudited
(1)
(In thousands, except per share amounts)
Dick's
Sporting Golf
14 Weeks Ended Goods Galaxy Consolidated
-------------- --------- -------- ------------
Net Sales $1,026,275 $50,846 $1,077,121
Net Income (loss) 67,718 (4,597) 63,121
Basic earnings per share $0.65 $0.60
Diluted earnings per share $0.60 $0.56
Weighted Average Common Shares
Outstanding
Basic 104,982 - 104,982
Diluted 113,130 - 113,130
Dick's
Sporting Golf
53 Weeks Ended Goods Galaxy Consolidated
-------------- --------- -------- ------------
Net Sales $3,114,162 $274,675 $3,388,837
Net Income (loss) 112,611 (653) 111,958
Basic earnings per share $1.10 $1.09
Diluted earnings per share $1.02 $1.01
Weighted Average Common Shares
Outstanding
Basic 102,512 - 102,512
Diluted 110,790 - 110,790
(1) The unaudited proforma results present information as if Golf Galaxy
had been acquired at the beginning of the periods. The proforma
amounts include certain reclassifications to Golf Galaxy amounts to
conform them to the Company's reporting calendar, an increase in pre-
tax interest expense for the 14 and 53 weeks ended of $3,216 and
$11,787 respectively, to reflect the increase in borrowings under the
amended credit facility to finance the acquisition as if it had
occurred at the beginning of the periods and use of the statutory tax
rate of the Company in effect during the periods presented to
determine net income. In addition, Golf Galaxy's net income for the 14
and 53 weeks ended excludes $1,376 of pre-tax merger related expenses.
Further, the proforma amounts do not reflect any benefits from
economies which might be achieved from combining the operations. The
proforma information does not necessarily reflect the actual results
that would have occurred had the companies been combined during the
periods presented, nor is it necessarily indicative of the future
results of operations of the combined companies.
Non-GAAP Financial Measures
---------------------------
The Company has provided non-GAAP financial information in this earnings release which includes comparable store sales as if Golf Galaxy had been acquired at the beginning of the periods presented. The proforma financial information is considered non-GAAP and is not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company's management 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.
Proforma Comparable Store Sales
Dick's
Sporting Golf
Goods Galaxy Consolidated
-------- ------ ------------
13 weeks ended February 3, 2007 2.0% 1.0% 1.9%
13 weeks ended February 2, 2008 2.7% -8.8% 2.2%
52 weeks ended February 3, 2007 6.0% 0.8% 5.6%
52 weeks ended February 2, 2008 2.4% -0.1% 2.1%
The proforma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented and are calculated on a 13-week to 13-week or a 52-week to 52-week basis. The sales have been adjusted to conform to the Company's reporting calendar and method of reporting comparable sales. Golf Galaxy will be included in the quarterly comparable store base beginning in Q1 2008. 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 14 Weeks Ended
--------------------------------
February 2, February 3,
EBITDA 2008 2007
----------------------------- -------------- ------------
(dollars in thousands)
Net income $73,171 $67,718
Provision for income taxes 48,749 45,145
Interest expense, net 2,730 2,253
Depreciation and amortization 19,485 15,551
-------------- ------------
EBITDA $144,135 $130,667
============== ============
% increase in EBITDA 10%
52 Weeks Ended 53 Weeks Ended
--------------------------------
February 2, February 3,
EBITDA 2008 2007
----------------------------- -------------- ------------
(dollars in thousands)
Net income $155,036 $112,611
Provision for income taxes 102,491 75,074
Interest expense, net 11,290 10,025
Depreciation and amortization 75,052 54,929
-------------- ------------
EBITDA $343,869 $252,639
============== ============
% increase in EBITDA 36%
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.
52 Weeks Ended 53 Weeks Ended
--------------------------------
February 2, February 3,
2008 2007
-------------- ------------
(dollars in thousands)
Gross capital expenditures $(172,366) $(162,995)
Proceeds from sale-leaseback
transactions 28,440 32,509
Changes in deferred construction
allowances 22,256 19,264
Construction allowance receipts 13,282 17,902
-------------- ------------
Net capital expenditures $(108,388) $(93,320)
============== ============
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