Industry Press Releases

DICK'S Sporting Goods Reports First Quarter Results

Wednesday, May 17, 2017
Pressreleases

DICK'S Sporting Goods, Inc., the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the first quarter ended April 29, 2017.

First Quarter Results

The Company reported consolidated net income for the first quarter ended April 29, 2017 of $58.2 million, or $0.52 per diluted share, compared to the Company's expectations provided on March 7, 2017 of $0.48 to 0.53 per diluted share. For the first quarter ended April 30, 2016, the Company reported consolidated net income of $56.9 million, or $0.50 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the first quarter ended April 29, 2017 of $60.3 million, or $0.54 per diluted share, compared to the Company's expectations provided on March 7, 2017 of $0.50 to 0.55 per diluted share. First quarter 2017 non-GAAP results exclude costs incurred to convert former The 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 first quarter of 2017 increased 9.9% to approximately $1.8 billion. Consolidated same store sales increased 2.4%, compared to the Company's guidance of an approximate 3 to 4% increase. First quarter 2016 consolidated same store sales increased 0.5%.

"In the first quarter, we generated non-GAAP earnings per diluted share near the high end of our guidance. Despite a challenging retail environment, we realized growth across each of our three primary categories of hardlines, apparel and footwear, and were pleased with the performance of our newly relaunched eCommerce site," said Edward W. Stack, Chairman and Chief Executive Officer. "We remain optimistic as we drive profitable growth on our new eCommerce platform, make marked progress on our new merchandising strategy and continue to capture market share."

Mr. Stack continued, "Looking ahead, we continue to evaluate and adjust our business model, and are taking actions to reduce our expense structure in order to fund and develop our longer-term strategic initiatives."

Omni-channel Development

Following the launch of the Company's new eCommerce platform at the beginning of the first quarter of 2017, eCommerce sales increased 11.0%. eCommerce penetration for the first quarter of 2017 was 9.3% of total net sales, compared to 9.2% during the first quarter of 2016.

In the first quarter, the Company opened 15 new DICK'S Sporting Goods stores, two new Field & Stream stores, and eight new Golf Galaxy stores. The Company also relocated two DICK'S Sporting Goods stores, and closed one Golf Galaxy store. As of April 29, 2017, the Company operated 691 DICK'S Sporting Goods stores in 47 states, with approximately 36.8 million square feet, 98 Golf Galaxy stores in 32 states, with approximately 2.1 million square feet, and 29 Field & Stream stores in 14 states, with approximately 1.4 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 first quarter of 2017 with approximately $108 million in cash and cash equivalents and approximately $92 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 $188 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 10.0% at the end of the first quarter of 2017 as compared to the end of the first quarter of 2016.

Capital Allocation

On May 11, 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 June 30, 2017 to stockholders of record at the close of business on June 9, 2017.

During the first quarter of 2017, the Company repurchased approximately 0.5 million shares of its common stock at an average cost of $47.92 per share, for a total cost of $23 million. Since the beginning of fiscal 2013, the Company has repurchased approximately $982 million of its common stock, and has approximately $1.0 billion remaining under its authorizations that extend 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 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.

•    Second Quarter 2017

•      Based on an estimated 112 million diluted shares outstanding, the Company currently anticipates reporting earnings per diluted share in the range of $0.98 to 1.03 in the second quarter of 2017. This is compared to earnings per diluted share of $0.82 in the second quarter of 2016.       
•      The Company has conducted a corporate reorganization to streamline its operations and reduce expense. In the second quarter, the Company expects to record a pre-tax charge of approximately $7 million for severance and other employee-related costs associated with the elimination of positions, primarily at the Company's Store Support Center.   
•      On a non-GAAP basis, the Company currently anticipates reporting earnings per diluted share in the range of $1.02 to 1.07 in the second quarter of 2017, excluding severance and other employee-related costs.
        
•     Consolidated same store sales are currently expected to increase approximately 2 to 3% in the second quarter of 2017, as compared to a 2.8% increase in the second quarter of 2016.
       
•      The Company expects to open 13 new DICK'S Sporting Goods stores in the second quarter of 2017. These openings include former TSA stores that the Company plans to convert to DICK'S Sporting Goods stores.
     
•    Full Year 2017

•        Based on an estimated 111 to 112 million diluted shares outstanding, the Company currently anticipates reporting earnings per diluted share in the range of $3.59 to 3.69, which includes approximately $0.05 per diluted share for the 53rd week. The Company's earnings per diluted share guidance includes the expectation of share repurchases to fully offset dilution in 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 $3.65 to 3.75. This excludes severance and other employee-related costs, as well as TSA conversion costs. The Company reported non-GAAP earnings per diluted share of $3.12 for the 52 weeks ended January 28, 2017.

•        Consolidated same store sales are currently expected to increase approximately 1 to 3% on a 52 week to 52 week comparative basis, compared to an increase of 3.5% in 2016.

•         The Company expects to open approximately 43 new DICK'S Sporting Goods stores and relocate approximately six DICK'S Sporting Goods stores in 2017. The Company also expects to open approximately eight new Golf Galaxy stores, relocate one Golf Galaxy store and open eight new Field & Stream stores adjacent to new or relocated DICK'S Sporting Goods stores. These openings include former TSA and Golfsmith stores that the Company plans to convert to DICK'S Sporting Goods and Golf Galaxy stores, respectively.

•  Capital Expenditures

•        In 2017, the Company anticipates capital expenditures to be approximately $350 million on a net basis and approximately $465 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 first 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 10105145. 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, the conversion of the TSA stores, severance and other employee-related costs, reducing our expense structure in order to fund and develop longer-term strategic initiatives, 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 invest in strategic transactions 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; 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; disruptions with our eCommerce platform or 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 SEC, including our most recent Annual Report filed with the Securities and Exchange Commission 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 April 29, 2017, the Company operated more than 690 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

   

April 29,
 2017

 

% of 
Sales(1)

 

April 30,
 2016

 

% of 
Sales(1)

                 

Net sales

 

$

1,825,252

   

100.00

%

 

$

1,660,343

   

100.00

%

Cost of goods sold, including occupancy and 
     distribution costs

 

1,283,387

   

70.31

   

1,164,546

   

70.14

 
                 

GROSS PROFIT

 

541,865

   

29.69

   

495,797

   

29.86

 
                 

Selling, general and administrative expenses

 

439,341

   

24.07

   

398,568

   

24.01

 

Pre-opening expenses

 

12,456

   

0.68

   

6,518

   

0.39

 
                 

INCOME FROM OPERATIONS

 

90,068

   

4.93

   

90,711

   

5.46

 
                 

Interest expense

 

1,264

   

0.07

   

1,131

   

0.07

 

Other income

 

(2,879)

   

(0.16)

   

(2,067)

   

(0.12)

 
                 

INCOME BEFORE INCOME TAXES

 

91,683

   

5.02

   

91,647

   

5.52

 
                 

Provision for income taxes

 

33,488

   

1.83

   

34,770

   

2.09

 
                 

NET INCOME

 

$

58,195

   

3.19

%

 

$

56,877

   

3.43

%

                 

EARNINGS PER COMMON SHARE:

               

Basic

 

$

0.53

       

$

0.51

     

Diluted

 

$

0.52

       

$

0.50

     
                 

WEIGHTED AVERAGE COMMON SHARES 
     OUTSTANDING:

               

Basic

 

110,441

       

112,105

     

Diluted

 

111,406

       

113,276

     
                 

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 BALANCE SHEETS - UNAUDITED

(Dollars in thousands)

 
   

April 29,
 2017

 

April 30,
 2016

 

January 28,
 2017

ASSETS

           

CURRENT ASSETS:

           

Cash and cash equivalents

 

$

108,400

   

$

92,493

   

$

164,777

 

Accounts receivable, net

 

85,918

   

111,973

   

75,199

 

Income taxes receivable

 

2,046

   

2,787

   

2,307

 

Inventories, net

 

1,916,508

   

1,742,948

   

1,638,632

 

Prepaid expenses and other current assets

 

141,744

   

120,477

   

114,763

 

Total current assets

 

2,254,616

   

2,070,678

   

1,995,678

 
             

Property and equipment, net

 

1,568,523

   

1,406,471

   

1,522,574

 

Intangible assets, net

 

139,447

   

109,053

   

140,835

 

Goodwill

 

245,059

   

200,594

   

245,059

 

Other assets:

           

Deferred income taxes

 

10,546

   

4,456

   

45,927

 

Other

 

114,533

   

87,115

   

108,223

 

Total other assets

 

125,079

   

91,571

   

154,150

 

TOTAL ASSETS

 

$

4,332,724

   

$

3,878,367

   

$

4,058,296

 
             

LIABILITIES AND STOCKHOLDERS' EQUITY

           

CURRENT LIABILITIES:

           

Accounts payable

 

$

930,291

   

$

778,977

   

$

755,537

 

Accrued expenses

 

356,478

   

328,177

   

384,210

 

Deferred revenue and other liabilities

 

183,949

   

162,365

   

203,788

 

Income taxes payable

 

43,117

   

13,201

   

53,234

 

Current portion of other long-term debt and leasing 
     obligations

 

648

   

590

   

646

 

Total current liabilities

 

1,514,483

   

1,283,310

   

1,397,415

 

LONG-TERM LIABILITIES:

           

Revolving credit borrowings

 

92,450

   

157,600

   

 

Other long-term debt and leasing obligations

 

4,520

   

5,180

   

4,679

 

Deferred income taxes

 

4,544

   

15,390

   

 

Deferred revenue and other liabilities

 

755,903

   

612,754

   

726,713

 

Total long-term liabilities

 

857,417

   

790,924

   

731,392

 

COMMITMENTS AND CONTINGENCIES

           

STOCKHOLDERS' EQUITY:

           

Common stock

 

858

   

870

   

856

 

Class B common stock

 

247

   

249

   

247

 

Additional paid-in capital

 

1,148,022

   

1,088,980

   

1,130,830

 

Retained earnings

 

1,993,426

   

1,776,782

   

1,956,066

 

Accumulated other comprehensive loss

 

(159)

   

(87)

   

(132)

 

Treasury stock, at cost

 

(1,181,570)

   

(1,062,661)

   

(1,158,378)

 

Total stockholders' equity

 

1,960,824

   

1,804,133

   

1,929,489

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

4,332,724

   

$

3,878,367

   

$

4,058,296

 
             

 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

 
   

13 Weeks Ended

   

April 29,
 2017

 

April 30,
 2016

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net income

 

$

58,195

   

$

56,877

 

Adjustments to reconcile net income to net cash provided by operating 
     activities

       

Depreciation and amortization

 

53,044

   

47,990

 

Deferred income taxes

 

39,925

   

10,645

 

Stock-based compensation

 

9,147

   

8,247

 

Other non-cash items

 

180

   

181

 

Changes in assets and liabilities:

       

Accounts receivable

 

1,993

   

(19,514)

 

Inventories

 

(277,876)

   

(215,761)

 

Prepaid expenses and other assets

 

(26,662)

   

(20,012)

 

Accounts payable

 

209,201

   

145,651

 

Accrued expenses

 

(21,533)

   

10,838

 

Income taxes payable / receivable

 

(9,856)

   

(16,412)

 

Deferred construction allowances

 

25,117

   

16,202

 

Deferred revenue and other liabilities

 

(24,403)

   

(17,393)

 

Net cash provided by operating activities

 

36,472

   

7,539

 

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Capital expenditures

 

(113,892)

   

(88,834)

 

Deposits and purchases of other assets

 

(2,344)

   

(8)

 

Net cash used in investing activities

 

(116,236)

   

(88,842)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Revolving credit borrowings

 

645,200

   

609,100

 

Revolving credit repayments

 

(552,750)

   

(451,500)

 

Payments on other long-term debt and leasing obligations

 

(157)

   

(143)

 

Construction allowance receipts

 

   

 

Proceeds from exercise of stock options

 

13,592

   

15,743

 

Minimum tax withholding requirements

 

(5,540)

   

(6,281)

 

Cash paid for treasury stock

 

(23,197)

   

(50,000)

 

Cash dividend paid to stockholders

 

(19,287)

   

(17,613)

 

Decrease in bank overdraft

 

(34,447)

   

(44,538)

 

Net cash provided by financing activities

 

23,414

   

54,768

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH 
     EQUIVALENTS

 

(27)

   

92

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(56,377)

   

(26,443)

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

164,777

   

118,936

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

108,400

   

$

92,493

 

 

Store Count and Square Footage

 

The stores that opened during the first quarter of 2017 are as follows:

 

Store

 

Market

 

Concept

Cedar Park, TX

 

Austin

 

DICK'S Sporting Goods(1)

Glendale, NY

 

New York

 

DICK'S Sporting Goods

Hinesville, GA

 

Savannah

 

DICK'S Sporting Goods

Norwalk, CT

 

New Haven

 

DICK'S Sporting Goods

Sunnyvale, CA

 

San Jose

 

DICK'S Sporting Goods

Jensen Beach, FL

 

Port St. Lucie

 

DICK'S Sporting Goods

Fresno, CA

 

Fresno

 

DICK'S Sporting Goods

North Scottsdale, AZ

 

Phoenix

 

DICK'S Sporting Goods

Perimeter Pointe, GA

 

Atlanta

 

DICK'S Sporting Goods

Encinitas, CA

 

San Diego

 

DICK'S Sporting Goods

Bay Shore, NY

 

Long Island

 

DICK'S Sporting Goods

Massapequa, NY

 

Long Island

 

DICK'S Sporting Goods

Pearland, TX

 

Houston

 

DICK'S Sporting Goods

Pueblo, CO

 

Pueblo

 

DICK'S Sporting Goods

Lakewood, CO

 

Denver

 

DICK'S Sporting Goods

Altamonte Springs, FL

 

Orlando

 

Golf Galaxy

Westminster, CO

 

Denver

 

Golf Galaxy

Westheimer, TX

 

Houston

 

Golf Galaxy

Oklahoma City, OK

 

Oklahoma City

 

Golf Galaxy

Brea, CA

 

Los Angeles

 

Golf Galaxy

Pleasant Hill, CA

 

San Francisco

 

Golf Galaxy

Upland, CA

 

Los Angeles

 

Golf Galaxy

Davenport, IA

 

Quad Cities

 

Golf Galaxy(1)

Cedar Park, TX

 

Austin

 

Field & Stream(1)

Davenport, IA

 

Quad Cities

 

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
Goods
(1)

 

Specialty Store
Concepts
(1)

 

Total

 

DICK'S Sporting
Goods
(1)

 

Specialty Store
Concepts
(1)

 

Total

Beginning stores

 

676

   

121

   

797

   

644

   

97

   

741

 

Q1 New stores

 

15

   

10

   

25

   

3

   

2

   

5

 

Closed stores

 

   

1

   

1

   

   

   

 

Ending stores

 

691

   

130

   

821

   

647

   

99

   

746

 
                         

Relocated stores

 

2

   

   

2

   

3

   

   

3

 
                         

 

Square Footage:

(in millions)

 
   

DICK'S Sporting
Goods
(1)

 

Specialty Store
Concepts
(1)

 

Total(2)

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

 
                 

 

 

(1)

Includes 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 store concept reconciliations, as applicable. As of April 29, 2017, the Company operated 14 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 April 29, 2017

         
 

Pre-opening
expenses

Income
before
income
taxes

Net
income
(2)

Earnings per
diluted share

GAAP Basis

$

12,456

 

$

91,683

 

$

58,195

 

$

0.52

 

% of Net Sales

0.68

%

5.02

%

3.19

%

 

TSA conversion costs (1)

(3,474)

 

3,474

 

2,154

   

Non-GAAP Basis

$

8,982

 

$

95,157

 

$

60,349

 

$

0.54

 

% of Net Sales

0.49

%

5.21

%

3.31

%

 
               

 

(1)

Costs related to converting former TSA stores.

(2)

The provision for income taxes for non-GAAP adjustments was calculated at 38%, which approximates the Company's blended tax rate.

 

 

52 Weeks Ended January 28, 2017

             
 

Cost of
goods sold

Selling,
general and
administrative
expenses

Pre-opening
expenses

Income
before
income
taxes

Net
income
(5)

Earnings per
diluted share

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 
     store closing charge (2)

 

(32,821)

 

 

32,821

 

20,349

   

Non-operating asset 
     impairment (3)

 

(7,707)

 

 

7,707

 

4,778

   

TSA and Golfsmith 
     integration costs (4)

 

(8,545)

 

(5,102)

 

13,647

 

8,461

   

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)

Includes 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

   

April 29,
 2017

 

April 30,
 2016

   

(dollars in thousands)

Net income

 

$

58,195

   

$

56,877

 

Provision for income taxes

 

33,488

   

34,770

 

Interest expense

 

1,264

   

1,131

 

Depreciation and amortization

 

53,044

   

47,990

 

EBITDA

 

$

145,991

   

$

140,768

 

Add: TSA conversion costs

 

3,474

   

 

Adjusted EBITDA, as defined

 

$

149,465

   

$

140,768

 
         

% increase in adjusted EBITDA

 

6

%

   

 

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.

 
   

13 Weeks Ended

   

April 29,
 2017

 

April 30,
 2016

   

(dollars in thousands)

Gross capital expenditures

 

$

(113,892)

   

$

(88,834)

 

Proceeds from sale-leaseback transactions

 

   

 

Deferred construction allowances

 

25,117

   

16,202

 

Construction allowance receipts

 

   

 

Net capital expenditures

 

$

(88,775)

   

$

(72,632)

 

 

Reconciliation of Non-GAAP Consolidated Net Income and Earnings Per Diluted Share Guidance

(Dollars in thousands, except per share amounts)

 
   

13 Weeks Ended July 29, 2017

 

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 income and 
     earnings per diluted share

 

$

110,160

   

$

0.98

   

$

115,660

   

$

1.03

   

$

400,506

   

$

3.59

   

$

411,506

   

$

3.69

 

Severance and other employee-
     related costs

 

7,000

       

7,000

       

7,000

       

7,000

     

Costs to convert former TSA stores

 

       

       

3,474

       

3,474

     

Tax effect of the above items

 

2,660

       

2,660

       

3,980

       

3,980

     

Non-GAAP consolidated net income 
     and earnings per diluted share

 

$

114,500

   

$

1.02

   

$

120,000

   

$

1.07

   

$

407,000

   

$

3.65

   

$

418,000

   

$

3.75

 

 

Source:prnewswire.com