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| Dick's Sporting Goods Reports Third Quarter Results: |
- EPS Increases 43% over Last Year to $0.10, Exceeds Guidance - Increases Full Year Guidance
PITTSBURGH, Nov. 20 /PRNewswire-FirstCall/ -- Dick's Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended November 3, 2007. The results include the operating results of Golf Galaxy for 2007 from the acquisition date, but not for 2006 as Golf Galaxy was acquired on February 13, 2007. Third Quarter Results Net income increased 57% to $12.2 million and earnings per diluted share increased 43% to $0.10, compared to prior year net income of $7.8 million, or $0.07 per diluted share. Earnings guidance provided on August 21, 2007 was for earnings per diluted share of $0.05 - 0.06. The operating results of Golf Galaxy are included in the current period results. Net sales for the quarter increased 18% to $838.8 million due to the opening of new stores and the inclusion of Golf Galaxy in this years' quarterly results (which will be included in Dick's Sporting Goods comparable store sales calculation beginning in Q2 2008), partially offset by a comparable store sales decrease of 2.5% (or a decrease of 1.0% adjusting for the shifted retail calendar). Comparable store sales at Dick's stores were in- line with our guidance and compared to an 8.9% increase in Q3 last year. Comparable store sales for Golf Galaxy on a proforma basis decreased 2.7%, or increased 4.7% after adjusting for the shifted retail calendar. "Our performance this quarter demonstrates once again how our emphasis on execution, combined with the strength of our business model delivers consistent financial performance. Improved margins, greater efficiencies, the strength of our golf business and strong cash flow continue to drive our earnings increases. As we head into our seasonally largest quarter, our inventory is on plan and our stores are well positioned to deliver solid results," said Edward W. Stack, Chairman and CEO. New Stores In the third quarter, the Company opened 25 Dick's Sporting Goods stores. The stores that opened in the third quarter are listed in a table later in the release under the heading "Store Count and Square Footage". Year-to-Date Results Net income for the 39 weeks ended November 3, 2007 increased 82% to $81.9 million and earnings per diluted share increased 73% to $0.71, as compared to prior year net income of $44.9 million, or $0.41 per diluted share. The operating results of Golf Galaxy have been included in the results beginning with the February 13, 2007 date of acquisition. Net sales increased 28% to $2,675.8 million due to a comparable store sales increase of 2.3% (or 1.7% adjusting for the shifted retail calendar, compared to a 7.7% increase year-to-date last year), the opening of new stores, and the inclusion of Golf Galaxy in this year's results. Comparable store sales for Golf Galaxy on a proforma basis increased 2.2%, or 2.8% after adjusting for the shifted retail calendar. Current 2007 Outlook The Company's current outlook for 2007 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 2007 - (52-Week Year) Comparisons to Fiscal 2006 -
(53-Week Year)
-- We are currently increasing earnings guidance for the full year.
Based on an estimated 117 million diluted shares outstanding, the
Company is increasing its consolidated earnings per diluted share
guidance from the previous estimate of approximately $1.24 - 1.25 to
the new estimate of approximately $1.29. This new guidance
represents an approximate 26% increase over earnings per diluted
share for the full year 2006 of $1.02 and includes the expected
results of Golf Galaxy, which we continue to expect to be accretive
for the year.
-- Comparable store sales for Dick's Sporting Goods stores are expected
to increase approximately 2.0% compared to a 6.0% increase last
year.
-- The Company has opened 46 new Dick's Sporting Goods stores and
relocated one Dick's Sporting Goods store, completing the new store
program for Dick's stores in 2007. The Company expects to open 16
new Golf Galaxy stores in 2007.
-- Fourth Quarter 2007 - (13 weeks compared to 14 weeks last year)
-- Based on an estimated 119 million diluted shares outstanding, the
Company anticipates consolidated earnings per diluted share of
approximately $0.59, as compared to $0.60 in 2006. The year-over-
year comparison is impacted by several factors, including the shift
in the 2007 retail calendar, which positively impacted Q1 and Q2
this year and is offset in Q3 and Q4. Additionally, the year-over-
year comparison is impacted by the 53rd week in fiscal 2006, 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 2006 earnings.
Further, the inclusion of Golf Galaxy is approximately $0.04 per
share dilutive in the fourth quarter of 2007.
-- Comparable store sales for Dick's stores are expected to increase
approximately 2.0%, or approximately 2.5%, adjusting for the shifted
retail calendar which compares to a 2.0% increase in Q4 last year.
Golf Galaxy will be included in the quarterly comparable store base
beginning in Q2 2008, which will be the first full quarter following
the anniversary of the date of acquisition.
-- The Company expects to open four new Golf Galaxy stores.
Conference Call Info
The Company will be hosting a conference call today at 10:00 am 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 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 14987387. 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 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. 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 November 3, 2007, the Company operated 340 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 77 stores in 29 states, ecommerce websites and catalog operations. 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, SVP - Chief Financial Officer or
Dennis Magulick, 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
--------------------------------------
November % of October % of
3, 2007 Sales 28, 2006 Sales
---------- ------- -------- -------
Net sales $838,831 100.00% $708,343 100.00%
Cost of goods sold, including
occupancy and distribution costs 600,168 71.55 517,008 72.99
---------- ------- -------- -------
GROSS PROFIT 238,663 28.45 191,335 27.01
Selling, general and administrative
expenses 209,303 24.95 167,393 23.63
Pre-opening expenses 7,678 0.92 8,333 1.18
---------- ------- -------- -------
INCOME FROM OPERATIONS 21,682 2.58 15,609 2.20
Interest expense, net 1,725 0.21 2,617 0.37
---------- ------- -------- -------
INCOME BEFORE INCOME TAXES 19,957 2.38 12,992 1.83
Provision for income taxes 7,724 0.92 5,197 0.73
---------- ------- -------- -------
NET INCOME $12,233 1.46% $7,795 1.10%
========== ======= ======== =======
EARNINGS PER COMMON SHARE:
Basic $0.11 $0.08
Diluted $0.10 $0.07
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 110,804 102,544
Diluted 118,305 110,874
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
39 Weeks Ended
----------------------------------------
November % of October % of
3, 2007 Sales 28, 2006 Sales
---------- ------- ---------- -------
Net sales $2,675,806 100.00% $2,087,888 100.00%
Cost of goods sold, including
occupancy and distribution
costs 1,894,063 70.78 1,511,490 72.39
---------- ------- ---------- -------
GROSS PROFIT 781,743 29.22 576,398 27.61
Selling, general and
administrative expenses 620,059 23.17 478,868 22.94
Pre-opening expenses 17,518 0.65 14,936 0.72
---------- ------- ---------- -------
INCOME FROM OPERATIONS 144,166 5.39 82,594 3.96
Interest expense, net 8,560 0.32 7,772 0.37
---------- ------- ---------- -------
INCOME BEFORE INCOME TAXES 135,606 5.07 74,822 3.58
Provision for income taxes 53,741 2.01 29,929 1.43
---------- ------- ---------- -------
NET INCOME $81,865 3.06% $44,893 2.15%
========== ======= ========== =======
EARNINGS PER COMMON SHARE:
Basic $0.75 $0.44
Diluted $0.71 $0.41
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 108,827 101,624
Diluted 116,092 109,946
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 3, October 28, February 3,
2007 2006 2007
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $39,657 $35,137 $135,942
Accounts receivable, net 68,841 62,922 39,687
Income taxes receivable 294 16,100 15,671
Inventories, net 1,024,817 787,103 641,464
Prepaid expenses and other
current assets 42,711 19,241 37,015
Deferred income taxes 3,888 - -
----------- ----------- -----------
Total current assets 1,180,208 920,503 869,779
Property and equipment, net 504,114 425,970 433,071
Construction in progress - leased
facilities 13,179 22,229 13,087
Intangible assets 75,648 2,525 4,070
Goodwill 266,912 156,628 156,628
Other assets 30,544 49,930 47,630
----------- ----------- -----------
TOTAL ASSETS $2,070,605 $1,577,785 $1,524,265
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $466,679 $384,727 $286,668
Accrued expenses 216,537 190,370 190,365
Deferred revenue and other
liabilities 71,296 50,461 87,798
Current portion of other long-term
debt and capital leases 152 141 152
----------- ----------- -----------
Total current liabilities 754,664 625,699 564,983
----------- ----------- -----------
LONG-TERM LIABILITIES:
Senior convertible notes 172,500 172,500 172,500
Revolving credit borrowings 140,313 101,823 -
Other long-term debt and capital
leases 8,278 8,412 8,365
Non-cash obligations for construction
in progress - leased facilities 13,179 22,229 13,087
Deferred revenue and other
liabilities 175,644 140,793 144,780
----------- ----------- -----------
Total long-term liabilities 509,914 445,757 338,732
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock 424 380 397
Class B common stock 132 135 134
Additional paid-in capital 406,288 256,091 302,766
Retained earnings 395,803 247,735 315,453
Accumulated other comprehensive income 3,380 1,988 1,800
----------- ----------- -----------
Total stockholders' equity 806,027 506,329 620,550
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,070,605 $1,577,785 $1,524,265
=========== =========== ===========
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
39 Weeks Ended
-----------------------------
November 3, October 28,
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $81,865 $44,893
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 55,567 39,378
Deferred income taxes (12,920) (11,109)
Stock-based compensation 22,490 18,719
Excess tax benefit from stock-based
compensation (34,606) (11,776)
Tax benefit from exercise of stock
options 4,902 996
Other non-cash items 2,084 1,951
Changes in assets and liabilities:
Accounts receivable (24,857) (26,944)
Inventories (312,379) (251,405)
Prepaid expenses and other assets 2,875 (9,546)
Accounts payable 150,745 128,303
Accrued expenses 17,068 32,353
Income taxes payable / receivable 45,220 (5,663)
Deferred construction allowances 28,388 11,694
Deferred revenue and other
liabilities (8,813) (3,646)
------------ ------------
Net cash provided by (used in)
operating activities 17,629 (41,802)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (119,959) (109,191)
Proceeds from sale-leaseback
transactions 17,568 7,658
Payment for purchase of Golf Galaxy,
net of $4,859 cash acquired (222,095) -
------------ ------------
Net cash used in investing activities (324,486) (101,533)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings, net 140,313 101,823
Payments on other long-term debt
and capital leases (140) (148)
Construction allowance receipts 8,324 12,292
Proceeds from sale of common stock
under employee stock purchase plan 2,466 2,098
Proceeds from exercise of stock
options 29,568 11,038
Excess tax benefit from stock-based
compensation 34,606 11,776
(Decrease) increase in bank overdraft (4,739) 3,029
------------ ------------
Net cash provided by financing
activities 210,398 141,908
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 174 -
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (96,285) (1,427)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 135,942 36,564
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $39,657 $35,137
============ ============
Supplemental disclosure of cash flow
information:
Construction in progress - leased
facilities $92 $14,891
Accrued property and equipment $(4,835) $21,497
Cash paid for interest $9,239 $6,905
Cash paid for income taxes $10,346 $60,940
Stock options issued for acquisition $9,117 $-
Store Count and Square Footage
The stores that opened during the third quarter of 2007 are as follows:
Store Market Store Market
----------------- ---------- ------------------- ----------
Cumming, GA Atlanta Opelika, AL Auburn
Augusta, GA Augusta Oxford, AL Birmingham
Carbondale, IL Carbondale Hilliard, OH Columbus
Rockwall, TX Dallas Hurst, TX Dallas
Galleria, TX Dallas Southwest Plaza, CO Denver
Chesterfield, MI Detroit Hanover, PA Harrisburg
E. York, PA Harrisburg Jackson, TN Jackson
Wolfchase, TN Memphis Papillion, NE Omaha
Deer Valley, AZ Phoenix Beaver, PA Pittsburgh
Rochester, MN Rochester Sandusky, OH Sandusky
Shreveport, LA Shreveport Auburn, NY Syracuse
Wesley Chapel, FL Tampa Johnson City, TN Tri Cities
Kingsport, TN Tri Cities
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
Q3 YTD
------------------------------------
Fiscal Fiscal
2007 2006
--------- -------- ------- ---------
Dick's Dick's
Sporting Golf Sporting
Goods Galaxy 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
--------- -------- ------- ---------
Ending stores 340 77 417 294
========= ======== ======= =========
Relocated stores 1 - 1 2
========= ======== ======= =========
Square Footage:
(in millions)
Dick's Sporting
Goods Golf Galaxy 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
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 13 and 39 Weeks Ended October 28, 2006 -
Unaudited (1)
(In thousands, except per share amounts)
Dick's
Sporting
13 Weeks Ended Goods Golf Galaxy Consolidated
----------------------------------------------- ----------- ------------
Net Sales $708,343 $59,530 $767,873
Net Income (loss) 7,795 (508) 7,287
Basic earnings per share $0.08 $0.07
Diluted earnings per share $0.07 $0.07
Weighted Average Common Shares
Outstanding
Basic 102,544 - 102,544
Diluted 110,874 - 110,874
Dick's
Sporting
39 Weeks Ended Goods Golf Galaxy Consolidated
----------------------------------------------- ----------- ------------
Net Sales $2,087,888 $223,829 $2,311,717
Net Income 44,893 3,948 48,841
Basic earnings per share $0.44 $0.48
Diluted earnings per share $0.41 $0.44
Weighted Average Common Shares
Outstanding
Basic 101,624 - 101,624
Diluted 109,946 - 109,946
(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 13 and 39 weeks ended of $2,952 and $8,572 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. 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
Goods Golf Galaxy Consolidated
-------- ----------- ------------
13 weeks ended October 28, 2006 8.9% 3.7% 8.6%
13 weeks ended November 3, 2007 -2.5% -2.7% -2.5%
39 weeks ended October 28, 2006 7.7% 0.8% 7.1%
39 weeks ended November 3, 2007 2.3% 2.2% 2.3%
The proforma 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 will be included in the quarterly comparable store base beginning in Q2 2008, which will be the first full quarter following the anniversary of the date of acquisition. 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
-----------------------------
November 3, October 28,
EBITDA 2007 2006
--------------------------------- ----------- ------------
(dollars in thousands)
Net income $12,233 $7,795
Provision for income taxes 7,724 5,197
Interest expense, net 1,725 2,617
Depreciation and amortization 17,531 13,132
---------- ------------
EBITDA $39,213 $28,741
========== ============
% increase in EBITDA 36%
39 Weeks Ended
-----------------------------
November 3, October 28,
EBITDA 2007 2006
--------------------------------- ----------- ------------
(dollars in thousands)
Net income $81,865 $44,893
Provision for income taxes 53,741 29,929
Interest expense, net 8,560 7,772
Depreciation and amortization 55,567 39,378
---------- ------------
EBITDA $199,733 $121,972
========== ============
% increase in EBITDA 64%
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.
39 Weeks Ended
-----------------------------
November 3, October 28,
2007 2006
----------- -----------
(dollars in thousands)
Gross capital expenditures $(119,959) $(109,191)
Proceeds from sale-leaseback
transactions 17,568 7,658
Changes in deferred construction
allowances 28,388 11,694
Construction allowance receipts 8,324 12,292
----------- -----------
Net capital expenditures $(65,679) $(77,547)
=========== ===========
SOURCE Dick's Sporting Goods, Inc. -0- 11/20/2007 /CONTACT: Timothy E. Kullman, SVP - Chief Financial Officer, or Dennis Magulick, Director, Investor Relations, both of Dick's Sporting Goods, Inc., +1-724-273-3400, investors@dcsg.com / /Web site: http://www.dickssportinggoods.com http://www.dickssportinggoods.com/investors / (DKS) |
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