Pier 1 Imports, Inc. Reports 2014 First Quarter Results

  Pier 1 Imports, Inc. Reports 2014 First Quarter Results

                  Raises Full Year Fiscal 2014 EPS Guidance

Business Wire

FORT WORTH, Texas -- June 20, 2013

Pier 1 Imports, Inc. (NYSE:PIR) today reported financial results for the first
quarter ended June 1, 2013.

First Quarter Financial Highlights

  *Total sales increased 9.3%
  *Comparable store sales rose 5.9%
  *Gross profit as a percentage of sales up 80 basis points to 42.4%
  *Operating margin expanded 80 basis points to 8.4%
  *Net income increased 14% to $20.3 million; Earnings per share growth of
    19% to $0.19

“Our results for the period, our 15^th consecutive quarter of significant
sales and profit growth, reflect a solid quarter of execution,” stated Alex W.
Smith, President and Chief Executive Officer. “The continued improvement of
our gross profit speaks to the success of our merchandising strategies, both
in-store and online, and reflects strong full-price selling during the period.
We also leveraged expenses, enabling us to deliver operating margins of 8.4%
and earnings per share growth of 19%.”

Mr. Smith continued, “We’re pleased with the ongoing progress we are making
towards building out our multi-channel functionality and executing our '1 Pier
1' vision. The rollout of our new point-of-sale system is on track for
completion later this summer; we will then begin the integration of our stores
and e-Commerce businesses, laying the foundation to provide a seamless and
significantly enhanced shopping experience for our customers.”

First Quarter Fiscal 2014 Results

For the first quarter ended June 1, 2013, the Company reported net income of
$20.3 million, or $0.19 per share, compared to last year’s first quarter net
income of $17.8 million, or $0.16 per share. Total sales for the first quarter
were $394.9 million, a 9.3% increase versus $361.1 million in the year-ago
quarter. Comparable store sales increased 5.9% during the first quarter
compared to last year’s comparable store sales gain of 7.2%. Comparable store
sales results for the quarter were primarily attributable to increases in
store traffic and higher average ticket.

Gross profit for the quarter improved to $167.6 million, or 42.4% of sales,
from $150.3 million, or 41.6% of sales in the first quarter of last year.
Gross profit primarily benefitted from the leveraging of store occupancy
costs.

First quarter selling, general and administrative expenses were $125.5
million, or 31.8% of sales, compared to $116.3 million, or 32.2% of sales, in
the first quarter of last year.

Operating income for the first quarter increased 21.2% to $33.2 million, or
8.4% of sales, compared to $27.4 million, or 7.6% of sales, last year.

Balance Sheet and Share Repurchase Program

As of June 1, 2013, the Company remained in strong financial condition with
$241.9 million of cash and cash equivalents. Inventory totaled $383.3 million,
an increase of 14.9% compared to $333.5 million a year ago, which was in line
with management’s expectations. Capital expenditures totaled $14.1 million for
the quarter and were primarily used for new store openings, existing store
improvements, and infrastructure and technology development, including the
rollout of the Company’s new point-of-sale system and enhancements to its
e-Commerce platform.

During the first quarter, the Company repurchased 727,400 shares of its common
stock at an average cost of $23.36 per share and a total cost of approximately
$17.0 million. Subsequent to the end of the first quarter, the Company
repurchased an additional 238,900 shares of its common stock at an average
cost of $23.89 per share and a total cost of approximately $5.7 million. To
date the Company has repurchased 966,300 shares of common stock under its
current $100.0 million share repurchase program at an average cost of $23.49
per share and a total cost of approximately $22.7 million and $77.3 million
remains available for repurchase under the plan. As of June 20, 2013,
approximately 106.9 million shares of the Company’s common stock were
outstanding.

Secured Credit Facility

The Company reported today that it has amended, renewed and extended its
secured, asset-based revolving credit facility. The facility was amended to
extend the maturity date from April 2016 to June 2018 and increase the size of
the facility from $300 million to $350 million. The amended facility includes
a $100 million accordion feature, which if the Company chose to utilize, would
enable it to increase the line to as much as $450 million under certain
circumstances. The facility is secured by Pier 1 Imports’ merchandise
inventory and credit card receivables. The Company expects to continue funding
its working capital requirements with cash flow from operations but may use
the facility for general corporate purposes.

Fiscal 2014 Financial Guidance

The Company provided the following updated financial guidance for fiscal year
2014 on a comparable 52-week basis:

  *Comparable store sales growth in the mid single-digit range
  *EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
    growth in the range of 15% to 18%
  *Depreciation and amortization of approximately $38 million compared to $31
    million in FY13
  *Effective annual income tax rate of approximately 38% compared to 35.6% in
    FY13
  *Earnings per share in the range of $1.27 to $1.32, representing
    year-over-year growth of 9% to 13%, compared to prior guidance of $1.26 to
    $1.31
  *Capital expenditures of approximately $75 million
  *Approximately 30 store openings and 14 closing/relocations for a net
    increase of 16 stores

First Quarter Results Conference Call and Annual Meeting of Shareholders
Information

The Company will host a live conference call to discuss fiscal 2014 first
quarter financial results at 10:00 a.m. Central Time today, June 20, 2013.
Investors will be able to connect to the call through the Company’s website at
www.pier1.com. The conference call can be accessed by linking through to the
“Investor Relations” page to the “Events” page, or you can listen to the
conference call by dialing 1-800-498-7872, or if international,
1-706-643-0435. The conference ID number is 76404842.

A replay will be available after 12:00 p.m. Central Time for a 24-hour period
and the replay can be accessed by dialing 1-855-859-2056, or if international,
1-404-537-3406 using conference ID number 76404842.

Pier 1 Imports, Inc. will host its annual meeting of shareholders on Tuesday,
July 2, 2013 at 10:00 a.m. Central Time. The meeting will be held on the
Mezzanine Level, Conference Center Room C, Pier 1 Imports, Inc. Headquarters,
100 Pier 1 Place, Fort Worth, Texas 76102.

Financial Disclosure Advisory

The Company reports its financial results in accordance with U.S. generally
accepted accounting principles (GAAP). This press release references a
non-GAAP financial measure, EBITDA.

EBITDA represents earnings before interest, taxes, depreciation and
amortization. Management believes EBITDA is a meaningful indicator of the
Company’s performance that provides useful information to investors regarding
its financial condition and results of operations. Management uses EBITDA,
together with financial measures prepared in accordance with GAAP, to assess
the Company’s operating performance, to enhance its understanding of core
operating performance and to compare the Company’s operating performance to
other retailers. This non-GAAP financial measure should not be considered in
isolation or used as an alternative to GAAP financial measures and does not
purport to be an alternative to net income as a measure of operating
performance.

A reconciliation of net income to EBITDA is shown below for the 13-weeks ended
June 1, 2013 and May 26, 2012 (in millions).

                                13-Weeks Ended
                                 June 1, 2013  May 26, 2012
                                                
Net Income                       $    20.3      $    17.8
Add Back: Income Tax Provision        12.5           10.2
Interest Expense (Income), net        0.6            0.7
Depreciation and Amortization        8.9           6.5
EBITDA                           $    42.3      $    35.2
                                                     

Management’s expectations and assumptions regarding future results are subject
to risks, uncertainties and other factors that could cause actual results to
differ materially from the anticipated results or other expectations expressed
in the forward-looking statements included in this press release. Any
forward-looking projections or statements should be considered in conjunction
with the cautionary statements and risks contained in the Company’s Annual
Report on Form 10-K. Refer to the Company’s most recent SEC filings for any
updates concerning these and other risks and uncertainties that may affect the
Company’s operations and performance. The Company assumes no obligation to
update or revise its forward-looking statements even if experience or future
changes make it clear that any projected results expressed or implied will not
be realized.

Pier 1 Imports, Inc. is the original global importer of imported decorative
home furnishings and gifts. Information about the Company is available on
www.pier1.com.

                                                                  
                                                                       
Pier 1 Imports, Inc.
                                                                       
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
                                                                       
                                 Three Months Ended
                                 June 1,       % of      May 26,       % of
                                 2013          Sales     2012          Sales
                                                                       
Net sales                        $ 394,853     100.0 %   $ 361,119     100.0 %
                                                                       
Cost of sales                     227,256    57.6  %    210,844    58.4  %
                                                                       
Gross Profit                       167,597     42.4  %     150,275     41.6  %
                                                                       
Selling, general and               125,470     31.8  %     116,330     32.2  %
administrative expenses
Depreciation and amortization     8,912      2.2   %    6,532      1.8   %
                                                                       
Operating income                   33,215      8.4   %     27,413      7.6   %
                                                                       
Nonoperating (income) and
expenses:
Interest, investment income        (352    )               (1,428  )
and other
Interest expense                  749                  814        
                                  397        0.1   %    (614    )   -0.2  %
                                                                       
Income before income taxes         32,818      8.3   %     28,027      7.8   %
Income tax provision              12,471     3.1   %    10,202     2.9   %
                                                                       
Net income                       $ 20,347     5.2   %   $ 17,825     4.9   %
                                                                       
Earnings per share:
Basic                            $ 0.19                 $ 0.16    
                                                                       
Diluted                          $ 0.19                 $ 0.16    
                                                                       
Dividends declared per share:    $ 0.05                 $ 0.04    
                                                                       
Average shares outstanding
during period:
Basic                             105,989               108,597 
                                                                       
Diluted                           107,790               110,564 

                                                              
                                                                  
Pier 1 Imports, Inc.
                                                                  
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
                                                                  
                                                                  
                                    June 1,        March 2,       May 26,
                                    2013           2013           2012
ASSETS
                                                                  
Current assets:
Cash and cash equivalents,
including temporary investments
of $202,316, $191,568 and           $ 241,898      $ 231,556      $ 217,898
$178,679, respectively
Accounts receivable, net              20,418         22,309         21,554
Inventories                           383,321        356,053        333,523
Prepaid expenses and other           50,453       49,016       31,838   
current assets
Total current assets                  696,090        658,934        604,813
                                                                  
Properties, net                       154,026        150,615        108,414
Other noncurrent assets              45,830       47,666       70,785   
                                    $ 895,946     $ 857,215     $ 784,012  
                                                                  
LIABILITIES AND SHAREHOLDERS'
EQUITY
                                                                  
Current liabilities:
Accounts payable                    $ 108,977      $ 58,701       $ 80,223
Gift cards and other deferred         53,206         51,740         50,859
revenue
Accrued income taxes payable          17,963         25,249         9,260
Other accrued liabilities            97,353       112,437      96,841   
Total current liabilities             277,499        248,127        237,183
                                                                  
Long-term debt                        9,500          9,500          9,500
Other noncurrent liabilities          64,870         62,457         75,091
                                                                  
Shareholders' equity:
Common stock, $0.001 par,
500,000,000 shares authorized,
125,232,000 issued                    125            125            125
Paid-in capital                       223,666        233,518        225,911
Retained earnings                     589,280        574,206        476,228
Cumulative other comprehensive        (4,813   )     (4,828   )     (5,066   )
loss
Less 18,174,000, 18,906,000 and
17,491,000
common shares in treasury, at        (264,181 )    (265,890 )    (234,960 )
cost, respectively
                                     544,077      537,131      462,238  
                                    $ 895,946     $ 857,215     $ 784,012  

                                                                
                                                                   
Pier 1 Imports, Inc.
                                                                   
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                                   
                                                     Three Months Ended
                                                     June 1,       May 26,
                                                     2013          2012
                                                                   
Cash flow from operating activities:
Net income                                           $ 20,347      $ 17,825
Adjustments to reconcile to net cash provided by
(used in)
operating activities:
Depreciation and amortization                          10,679        8,722
Stock-based compensation expense                       4,054         2,916
Deferred compensation                                  2,237         2,675
Amortization of deferred gains                         (729    )     (4,652  )
Other                                                  629           (564    )
Changes in cash from:
Inventories                                            (27,268 )     (11,041 )
Proprietary credit card receivables                    (888    )     (2,892  )
Prepaid expenses and other assets                      (19     )     (12,217 )
Accounts payable and accrued expenses                  37,282        1,811
Accrued income taxes payable, net of payments         (7,286  )    (7,499  )
Net cash provided by (used in) operating              39,038      (4,916  )
activities
                                                                   
Cash flow from investing activities:
Capital expenditures                                   (14,070 )     (12,224 )
Proceeds from disposition of properties                2,542         -
Proceeds from sale of restricted investments           356           211
Purchase of restricted investments                    (1,551  )    (1,488  )
Net cash used in investing activities                 (12,723 )    (13,501 )
                                                                   
Cash flow from financing activities:
Cash dividends                                         (5,273  )     (4,348  )
Purchases of treasury stock                            (16,992 )     (48,711 )
Proceeds from stock options exercised,
stock purchase plan and other, net                     6,317         1,506
Debt issuance costs                                   (25     )    -       
Net cash used in financing activities                 (15,973 )    (51,553 )
                                                                   
Change in cash and cash equivalents                    10,342        (69,970 )
Cash and cash equivalents at beginning of period      231,556     287,868 
                                                                   
Cash and cash equivalents at end of period           $ 241,898    $ 217,898 

Contact:

Pier 1 Imports, Inc.
Cary Turner, 817-252-8400
 
Press spacebar to pause and continue. Press esc to stop.