Big Lots Reports Third Quarter Results
Big Lots Reports Third Quarter Results
Company Updates Full Year Guidance
PR Newswire
COLUMBUS, Ohio, Dec. 4, 2012
COLUMBUS, Ohio, Dec. 4, 2012 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today
reported a loss from continuing operations of $6.0 million, or $0.10 per
diluted share, for the third quarter of fiscal 2012 ended October 27, 2012.
This compares to guidance of a loss from continuing operations of $0.20 to
$0.30 per diluted share for the third quarter of fiscal 2012, and income from
continuing operations of $4.2 million, or $0.06 per diluted share, for the
third quarter of fiscal 2011.
(Logo: http://photos.prnewswire.com/prnh/20011026/BIGLOTSLOGO )
For the year-to-date period ended October 27, 2012, income from continuing
operations totaled $56.9 million, or $0.93 per diluted share. As previously
disclosed in our March 2, 2012, press release, we incurred an after-tax charge
of $3.4 million during the first quarter of fiscal 2012 related to an
inventory accounting change associated with the successful implementation of
new retail inventory systems. Excluding this non-recurring, non-cash charge,
adjusted income from continuing operations for the year-to-date period ended
October 27, 2012 totaled $60.3 million, or $0.98 per diluted share (non-GAAP),
compared to income from continuing operations of $92.5 million, or $1.31 per
diluted share, for the same period in fiscal 2011. Discontinued operations
activity was minimal for the third quarter and year-to-date period of fiscal
2012 and the corresponding periods in fiscal 2011.
THIRD QUARTER HIGHLIGHTS
o Loss from continuing operations of $0.10 per diluted share versus income
from continuing operations of $0.06 per diluted share last year
o Opened 27 new stores
o Invested $51 million to repurchase 1.6 million shares, completing the $200
million share repurchase program announced in May 2012
EPS From Continuing Operations ^(1)
Q3 '12 Q3 '11 YTD '12 YTD '11
U.S. Operations ($0.03) $0.17 $1.15 $1.42
Add back: Inventory - - $0.06 -
charge
U.S. Operations - ($0.03) $0.17 $1.20 $1.42
adjusted basis
Canada Operations ^(2) ($0.07) ($0.11) ($0.22) ($0.12)
Consolidated - adjusted ($0.10) $0.06 $0.98 $1.31
basis
(1) Non-GAAP
(2) Canadian operations were acquired on July 18, 2011; YTD '11 results
include ownership and financial results since that date.
Based on materiality, we have not provided pro forma financial results.
Note: See detailed segment reporting attached.
Third Quarter Results
U.S. Operations
Net sales for U.S. operations for the third quarter of fiscal 2012 decreased
1.9% to $1,095.2 million, compared to $1,116.8 million for the same period of
fiscal 2011. Comparable store sales for U.S. stores open at least fifteen
months decreased 4.6% for the quarter. Loss from continuing U.S. operations
totaled $1.7 million, or $0.03 per diluted share (non-GAAP), compared to
income from continuing U.S. operations of $11.4 million, $0.17 per diluted
share (non-GAAP), for the same period of fiscal 2011.
Canadian Operations
Net sales for Canadian operations for the third quarter of fiscal 2012 totaled
$39.0 million, while incurring a net loss of $4.3 million, or $0.07 per
diluted share (non-GAAP), compared to net sales of $21.5 million and a net
loss of $7.1 million, or $0.11 per diluted share (non-GAAP) for the same
period of fiscal 2011.
Inventory and Cash Management
On a consolidated basis, Inventory ended the third quarter of fiscal 2012 at
$1,191 million compared to $1,100 million in the third quarter of fiscal 2011,
an increase of 8%. The increase represents 3% growth in the number of U.S.
stores, growth of 3% in inventory per store for our U.S. stores, and the
balance of the increase is associated with growth and improvement of inventory
content related to our Canadian operations.
We ended the third quarter of fiscal 2012 with $66 million of Cash and Cash
Equivalents and $463 million of borrowings under our credit facility compared
to $60 million of Cash and Cash Equivalents and $285 million of borrowings
under our credit facility as of the end of the third quarter of fiscal 2011.
Our use of cash generated by our U.S. operations and debt incurred during the
last 12 months was focused on share repurchase activity, and acquiring and
funding our Canadian operations.
Share Repurchase Activity
During the third quarter of fiscal 2012, we invested $51 million to repurchase
1.6 million of our shares. This activity exhausted our May 2012 share
repurchase program. On a year-to-date basis, we have invested $299 million to
repurchase 8.1 million of our common shares, or approximately 13% of our
outstanding share base as of the beginning of fiscal 2012. Common shares
acquired through the repurchase program will be available to meet obligations
under equity compensation plans and for general corporate purposes.
2012 OUTLOOK
o Updates Q4 guidance for consolidated income from continuing operations to
$1.91 to $2.10 per diluted share versus income from continuing operations
of $1.75 per diluted share for fiscal 2011
o Updates fiscal 2012 annual guidance for adjusted consolidated income from
continuing operations to $2.86 to $3.05 per diluted share (non-GAAP)
versus income from continuing operations of $2.99 per diluted share for
fiscal 2011
o Reiterates Cash Flow guidance of $125 million
We update our guidance for fourth quarter fiscal 2012 consolidated income from
continuing operations to be in the range of $1.91 to $2.10 per diluted share.
This guidance assumes U.S. comparable store sales decline in the range of low
to mid single digits and a total U.S. sales increase in the range of 3% to
7%. For our Canadian operations, sales are expected to be in the range of
$48 to $52 million for the fourth quarter of fiscal 2012. As a reminder, the
fourth quarter of fiscal 2012 includes 14 weeks of operations, compared to 13
weeks of operations in last year's fourth quarter results.
Based on operating results for the first three quarters and our expectations
for the fourth quarter of fiscal 2012, we update our guidance for fiscal 2012
consolidated adjusted income from continuing operations to be in the range of
$2.86 to $3.05 per diluted share (non-GAAP). This guidance excludes the
previously mentioned non-recurring, non-cash inventory charge and assumes U.S.
comparable store sales decline in the low single digit range and a total U.S.
sales increase in the range of 1% to 3%. For our Canadian operations, sales
are expected to be in the range of $154 to $158 million for fiscal 2012. In
addition, we reiterate our Cash Flow guidance (defined as operating activities
less investing activities) of approximately $125 million for fiscal 2012. As
a reminder, fiscal 2012 includes 53 weeks of operations, compared to 52 weeks
last year.
EPS from Continuing Q4 Full Year
Operations(non-GAAP) 2012 2011 2012 2011
Guidance Guidance
U.S. Operations $1.95 - $1.83 $3.06 - $3.18
$2.10 $3.21
Add back: Inventory charge - - $0.06 -
U.S. Operations - adjusted $1.95 - $1.83 $3.12 - $3.18
basis $2.10 $3.27
Canada Operations ^(1) ($0.04) - ($0.08) ($0.26) - ($0.19)
$0.00 ($0.22)
Consolidated - adjusted $1.91 - $1.75 $2.86 - $2.99
basis $2.10 $3.05
(1) Canadian operations were acquired on July 18, 2011. Full year
fiscal 2011 results reflect performance from acquisition date
through the end of fiscal 2011 (January 28, 2012). Based on
materiality, we are not required and have not provided pro forma
fiscal 2011 results.
Conference Call/Webcast
We will host a conference call today at 8:00 a.m. to discuss our financial
results for the third quarter and provide commentary on our outlook for fiscal
2012. We invite you to listen to the webcast of the conference call through
the Investor Relations section of our website (www.biglots.com).
If you are unable to join the live webcast, an archive of the call will be
available through the Investor Relations section of our website
(www.biglots.com) beginning two hours after the call ends and will remain
available through midnight on Tuesday, December 18. A replay of the call will
be available beginning today at 12:00 noon through December 18 at midnight by
dialing: 1.888.203.1112 (United States and Canada) or 1.719.457.0820
(International). The Replay Confirmation Code is 6404714. All times are
Eastern Time.
Big Lots is North America's largest broadline closeout retailer. As of the end
of the third quarter of fiscal 2012, we operated 1,482 BIG LOTS stores in the
48 contiguous United States and 79 LIQUIDATION WORLD and LW stores in Canada.
Wholesale operations are conducted through BIG LOTS WHOLESALE, CONSOLIDATED
INTERNATIONAL, and WISCONSIN TOY and with online sales at
www.biglotswholesale.com.
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 our
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 we believe the
expectations expressed in forward-looking statements are based on reasonable
assumptions within the bounds of our knowledge, forward-looking statements, by
their nature, involve risks, uncertainties and other factors, any one or a
combination of which could materially affect our business, financial
condition, results of operations or liquidity.
Forward-looking statements that we make 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, the current economic
and credit crisis, the cost of goods, our inability to successfully execute
strategic initiatives, competitive pressures, economic pressures on our
customers and us, the availability of brand name closeout merchandise, trade
restrictions, freight costs, the risks discussed in the Risk Factors section
of our most recent Annual Report on Form 10-K, and other factors discussed
from time to time in our other filings with the SEC, including Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. This release should be
read in conjunction with such filings, and you should consider all of these
risks, uncertainties and other factors carefully in evaluating forward-looking
statements.
You are cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date thereof. We undertake 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 we make on related subjects in our public
announcements and SEC filings.
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
OCTOBER 27 OCTOBER 29
2012 2011
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $66,257 $59,947
Inventories 1,190,749 1,100,457
Deferred income taxes 45,598 50,005
Other current assets 102,907 101,465
Total current assets 1,405,511 1,311,874
Property and equipment - net 601,943 578,856
Deferred income taxes 3,845 10,480
Goodwill 13,513 12,423
Other assets 40,090 49,288
$2,064,902 $1,962,921
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $574,183 $549,724
Property, payroll and other taxes 81,275 82,580
Accrued operating expenses 68,628 69,116
Insurance reserves 36,784 37,124
KB bankruptcy lease obligation 3,069 3,233
Accrued salaries and wages 27,155 26,115
Income taxes payable 372 811
Total current liabilities 791,466 768,703
Long-term obligations under bank credit facility 463,100 285,100
Deferred rent 72,491 59,371
Insurance reserves 50,702 47,415
Unrecognized tax benefits 15,799 16,970
Other liabilities 38,553 35,157
Shareholders' equity 632,791 750,205
$2,064,902 $1,962,921
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
13 WEEKS ENDED 13 WEEKS ENDED
OCTOBER 27, 2012 OCTOBER 29, 2011
% %
(Unaudited) (Unaudited)
Net sales $1,134,205 100.0 $1,138,286 100.0
Gross margin 432,590 38.1 444,360 39.0
Selling and 412,692 36.4 412,581 36.2
administrative expenses
Depreciation expense 26,590 2.3 22,873 2.0
Operating profit (loss) (6,692) (0.6) 8,906 0.8
Interest expense (1,491) (0.1) (922) (0.1)
Other income (expense) 46 0.0 (219) (0.0)
Income (loss) from
continuing operations before (8,137) (0.7) 7,765 0.7
income taxes
Income tax expense (2,149) (0.2) 3,524 0.3
(benefit)
Income (loss) from (5,988) (0.5) 4,241 0.4
continuing operations
Income (loss) from
discontinued operations,
net of tax expense 1 0.0 (51) (0.0)
(benefit) of $0 and
$(33), respectively
Net income (loss) ($5,987) (0.5) $4,190 0.4
Earnings (loss) per common
share - basic (a)
Continuing operations ($0.10) $0.07
Discontinued operations 0.00 0.00
Net income (loss) ($0.10) $0.06
Earnings (loss) per common
share - diluted (a)
Continuing operations ($0.10) $0.06
Discontinued operations 0.00 0.00
Net income (loss) ($0.10) $0.06
Weighted average common
shares outstanding
Basic 57,756 64,949
Dilutive effect of - 982
share-based awards
Diluted 57,756 65,931
The earnings (loss) per share for Continuing Operations, Discontinued
Operations and Net Income are separately calculated in accordance with
(a) accounting pronouncements; therefore, the sum of earnings (loss) per share
for Continuing Operations and Discontinued Operations may differ, due to
rounding, from the calculated earnings (loss) per share of Net Income
(loss).
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
39 WEEKS ENDED 39 WEEKS ENDED
OCTOBER 27, 2012 OCTOBER 29, 2011
% %
(Unaudited) (Unaudited)
Net sales $3,646,723 100.0 $3,532,695 100.0
Gross margin 1,422,873 39.0 1,399,025 39.6
Selling and 1,243,230 34.1 1,179,095 33.4
administrative expenses
Depreciation expense 78,149 2.1 64,965 1.8
Operating profit 101,494 2.8 154,965 4.4
Interest expense (2,722) (0.1) (2,757) (0.1)
Other income (expense) 45 0.0 (53) (0.0)
Income from continuing
operations before income 98,817 2.7 152,155 4.3
taxes
Income tax expense 41,935 1.1 59,669 1.7
Income from continuing 56,882 1.6 92,486 2.6
operations
Loss from discontinued
operations, net of tax (48) (0.0) (142) (0.0)
benefit of $32 and $93,
respectively
Net income $56,834 1.6 $92,344 2.6
Earnings per common share -
basic (a)
Continuing operations $0.94 $1.33
Discontinued operations 0.00 0.00
Net income $0.94 $1.32
Earnings per common share -
diluted (a)
Continuing operations $0.93 $1.31
Discontinued operations 0.00 0.00
Net income $0.92 $1.30
Weighted average common
shares outstanding
Basic 60,780 69,708
Dilutive effect of 698 1,058
share-based awards
Diluted 61,478 70,766
The earnings per share for Continuing Operations, Discontinued Operations
and Net Income are separately calculated in accordance with accounting
(a) pronouncements; therefore, the sum of earnings per share for Continuing
Operations and Discontinued Operations may differ, due to rounding, from
the calculated earnings per share of Net Income.
BIG LOTS, INC. AND SUBSIDIARIES
SEGMENT OPERATING PERFORMANCE
(In thousands, except per share data)
13 WEEKS ENDED
OCTOBER 27, OCTOBER 29, OCTOBER 27, OCTOBER 29,
2012 2011 2012 2011
U.S. U.S. Canada Canada
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $1,095,180 $1,116,756 $39,025 $21,530
Gross margin 417,759 435,411 14,831 8,949
Selling and
administrative 394,136 397,239 18,556 15,342
expenses
Depreciation 26,006 22,384 584 489
expense
Operating profit (2,383) 15,788 (4,309) (6,882)
(loss)
Interest expense (1,490) (921) (1) (1)
Other income 2 9 44 (228)
(expense)
Income (loss) from
continuing operations (3,871) 14,876 (4,266) (7,111)
before income taxes
Income tax
expense (2,149) 3,524 (0) 0
(benefit)
Income (loss) from (1,722) 11,352 (4,266) (7,111)
continuing operations
Diluted earnings (loss)
per common share from ($0.03) $0.17 ($0.07) ($0.11)
continuing operations
(b)
39 WEEKS ENDED
OCTOBER 27, OCTOBER 29, OCTOBER 27, OCTOBER 29,
2012 2011 2012 2011
U.S. U.S. Canada Canada
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $3,540,438 $3,507,231 $106,285 $25,464
Gross margin 1,384,125 1,388,585 38,748 10,440
Selling and
administrative 1,192,988 1,161,954 50,242 17,141
expenses
Depreciation 75,898 64,397 2,251 568
expense
Operating profit 115,239 162,234 (13,745) (7,269)
(loss)
Interest expense (2,721) (1,966) (1) (791)
Other income 2 163 43 (216)
(expense)
Income (loss) from
continuing operations 112,520 160,431 (13,703) (8,276)
before income taxes
Income tax
expense 41,935 59,669 (0) 0
(benefit)
Income (loss) from 70,585 100,762 (13,703) (8,276)
continuing operations
Diluted earnings (loss)
per common share from $1.15 $1.42 ($0.22) ($0.12)
continuing operations
(b)
(a) The results of the Canadian operating segment reflect activities from the
date of acquisition (July 18, 2011) through the period end.
The diluted earnings (loss) per share from continuing operations by
segment are separately calculated; therefore, the sum of diluted earnings
(loss) per share from continuing operations by segment may differ, due to
rounding, from the calculated consolidated diluted (loss) earnings per
(b) share from continuing operations. Diluted earnings (loss) per share from
continuing operations by segment is a "non-GAAP financial measure," 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), which our management
believes is useful information to investors.
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
13 WEEKS ENDED 13 WEEKS ENDED
OCTOBER 27, 2012 OCTOBER 29, 2011
(Unaudited) (Unaudited)
Net cash used in operating ($124,654) ($91,061)
activities
Net cash used in investing activities (39,341) (54,020)
Net cash provided by financing 168,913 147,610
activities
Impact of foreign currency on cash (340) (411)
Increase in cash and cash equivalents 4,578 2,118
Cash and cash equivalents:
Beginning of period 61,679 57,829
End of period $66,257 $59,947
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
39 WEEKS ENDED 39 WEEKS ENDED
OCTOBER 27, 2012 OCTOBER 29, 2011
(Unaudited) (Unaudited)
Net cash (used in) provided by ($35,905) $19,564
operating activities
Net cash used in investing activities (99,614) (91,915)
Net cash provided by (used in) 133,718 (44,830)
financing activities
Impact of foreign currency on cash (489) (411)
Decrease in cash and cash equivalents (2,290) (117,592)
Cash and cash equivalents:
Beginning of period 68,547 177,539
End of period $66,257 $59,947
BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
The following table reconciles gross margin, gross margin rate, operating
profit, operating profit rate, income tax expense, effective income tax rate,
income from continuing operations, net income, diluted earnings per share from
continuing operations, and diluted earnings per share for the year-to-date
2012 for our consolidated and U.S. segment results (GAAP financial measures)
to adjusted gross margin, adjusted gross margin rate, adjusted operating
profit, adjusted operating profit rate, adjusted income tax expense, adjusted
effective income tax rate, adjusted income from continuing operations,
adjusted net income, adjusted diluted earnings per share from continuing
operations, and adjusted diluted earnings per share (non-GAAP financial
measures).
Year-to-date 2012 - Thirty-Nine weeks ended October 27, 2012
Consolidated Results
Adjustment to exclude
As Adjusted
As reported change in inventory
(non-GAAP)
accounting principle
Gross margin $ 1,422,873 $ $
5,574 1,428,447
Gross margin rate 39.0% 0.2% 39.2%
Operating profit 101,494 5,574 107,068
Operating profit 2.8% 0.1% 2.9%
rate
Income tax expense 41,935 2,186 44,121
Effective income tax 42.4% -0.1% 42.3%
rate
Income from continuing 56,882 3,388 60,270
operations
Net income 56,834 3,388 60,222
Diluted earnings per
share from
continuing $ $ $
operations 0.93 0.06 0.98
Diluted earnings per $ $ $
share 0.92 0.06 0.98
U.S. Segment Results
Adjustment to exclude As Adjusted
As reported
change in inventory (non-GAAP)
accounting principle
Gross margin $ 1,384,125 $ $
5,574 1,389,699
Gross margin rate 39.1% 0.2% 39.3%
Operating profit 115,239 5,574 120,813
Operating profit 3.3% 0.2% 3.4%
rate
Income tax expense 41,935 2,186 44,121
Effective income tax 37.3% 0.1% 37.4%
rate
Income from continuing 70,585 3,388 73,973
operations
Diluted earnings per
share from
continuing $ $ $
operations 1.15 0.06 1.20
The adjusted gross margin, adjusted gross margin rate, adjusted operating
profit, adjusted operating profit rate, adjusted income tax expense, adjusted
effective income tax rate, adjusted income from continuing operations,
adjusted net income, adjusted diluted earnings per share from continuing
operations, 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 the United States of America ("GAAP") a pretax charge for a change
in an accounting principle associated with our implementation of new inventory
management information systems of $5,574 ($3,388, net of tax).
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 appropriate method for measuring
our operating performance, excluding certain items included in the most
directly comparable GAAP financial measures. Our management uses these
non-GAAP financial measures, along with the most directly comparable GAAP
financial measures, in evaluating our operating performance.
SOURCE Big Lots, Inc.
Website: http://www.biglots.com
Contact: Andrew D. Regrut, Director, Investor Relations, +1-614-278-6622
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page