PetSmart Announces First Quarter 2014 Results Earnings up 6.1% to $1.04 per Share; Total Sales up 1.1% Updates Guidance for Fiscal Year 2014 Business Wire PHOENIX -- May 21, 2014 PetSmart, Inc. (NASDAQ: PETM) today announced financial results for the first quarter of 2014, and updated guidance for fiscal year 2014. First Quarter Results Earnings of $1.04 per share were up 6.1% compared to $0.98 per share in the first quarter of 2013. Net income increased 1.3% to $104 million, compared to $102 million in the first quarter of 2013. Net sales for the first quarter of 2014 increased 1.1% to $1.7 billion. Comparable store sales, or sales in stores open at least one year, including online sales, fell 0.6%, with comparable transactions decreasing 2.2%. Services sales, which are included in net sales, grew 4.5% to $200 million. The company generated $137 million in cash flows from operating activities, spent $32 million in capital expenditures, distributed $20 million in dividends, and repurchased $130 million of PetSmart stock. The company ended the quarter with $301 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility. “We are pleased with the company’s ability to achieve earnings per share growth of 6.1% while continuing to drive earnings before tax margin expansion during the first quarter,” said David Lenhardt, President and Chief Executive Officer. “However, we did not achieve our sales goals, which were impacted by a challenging and volatile consumer environment and a competitive market.” Updated Fiscal Year 2014 Guidance Based on the Company’s year-to-date results and updated assumptions for the remainder of the year in light of the consumer environment and competitive market, the Company updated its fiscal year 2014 outlook. *Comparable store sales relatively flat *Net sales growth in the low-single digits *Earnings per share between $4.29 to $4.39 *Operating cash flow between $600 to $625 million Second Quarter 2014 Guidance *Comparable store sales growth flat to slightly down *Earnings per share of $0.92 to $0.96 Conference Call Information PetSmart management has scheduled a teleconference for 10:00 a.m. EDT on May 21, 2014 to discuss results for the first quarter 2014. This teleconference will be webcast live for all investors at www.petm.com. The webcast will be available until the company announces results for the second quarter of 2014. In addition, you can listen to the call live by dialing 866-814-1933 (within the United States and Canada) or 703-639-1365 (for international callers), code 1637996. A phone replay will be available through June 21, 2014, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1637996. The announcement will also be archived at www.petm.com. About PetSmart PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 53,000 associates and operates more than 1,340 pet stores in the United States, Canada and Puerto Rico, 200 in-store PetSmart^® PetsHotel^® dog and cat boarding facilities and is a leading online provider of pet supplies and pet care information (http://www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet grooming, pet boarding, PetSmart Doggie Day Camp^SM day care services and pet adoption services. Through its in-store pet adoption partnership with PetSmart Charities® and PetSmart Charities® of Canada, PetSmart has helped save the lives of more than 5.7 million pets since 1994. PetSmart Charities, Inc. and PetSmart Charities of Canada (collectively “PetSmart Charities”) are independent, nonprofit organizations that save the lives of homeless pets and reduce shelter intake through spay and neuter efforts. In 2013, nearly 440,000 dogs and cats found homes through PetSmart Charities’ adoption centers in all PetSmart stores and by sponsoring community adoption events. PetSmart Charities is the leader in granting money to help pets in need, with more than $34 million given in 2013 throughout North America. Forward-looking statements This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2014 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. PetSmart, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share and store data) (Unaudited) Thirteen Weeks Ended Thirteen Weeks Ended May 4, 2014 % of May 5, 2013 % of Sales Sales Merchandise sales $ 1,519,006 87.8 % $ 1,509,372 88.2 % Services sales 200,155 11.6 % 191,577 11.2 % Other revenue 9,971 0.6 % 9,647 0.6 % Net sales 1,729,132 100.0 % 1,710,596 100.0 % Cost of 1,051,644 60.8 % 1,037,114 60.6 % merchandise sales Cost of services 136,679 7.9 % 134,089 7.8 % sales Cost of other 9,971 0.6 % 9,647 0.6 % revenue Total cost of 1,198,294 69.3 % 1,180,850 69.0 % sales Gross profit 530,838 30.7 % 529,746 31.0 % Operating, general, and 359,080 20.8 % 362,228 21.2 % administrative expenses Operating income 171,758 9.9 % 167,518 9.8 % Interest expense, (13,183 ) -0.8 % (13,168 ) -0.8 % net Income before income tax expense 158,575 9.2 % 154,350 9.0 % and equity income from Banfield Income tax expense (58,592 ) -3.4 % (55,547 ) -3.2 % Equity income from 3,783 0.2 % 3,612 0.2 % Banfield Net income $ 103,766 6.0 % $ 102,415 6.0 % Earnings per common share: Basic $ 1.05 $ 0.99 Diluted $ 1.04 $ 0.98 Weighted average shares outstanding: Basic 99,205 103,305 Diluted 99,844 104,583 Stores open at beginning of each 1,333 1,278 period Stores opened 7 13 during each period Stores closed - (2 ) during each period Stores open at end 1,340 1,289 of each period PetSmart, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except par value) (Unaudited) May 4, February 2, May 5, 2014 2014 2013 Assets Cash and cash $ 230,102 $ 285,622 $ 252,988 equivalents Short-term - - 7,455 investments Restricted cash 71,226 71,226 71,226 Receivables, net 65,944 72,685 66,272 Merchandise 792,140 740,302 738,568 inventories Deferred income 71,940 71,945 62,859 taxes Prepaid expenses and other current 81,314 76,463 81,041 assets Total current 1,312,666 1,318,243 1,280,409 assets Property and 949,167 952,955 972,679 equipment, net Equity investment 29,272 33,577 28,426 in Banfield Deferred income 102,316 110,408 100,601 taxes Goodwill 41,510 41,140 43,914 Other noncurrent 62,124 65,645 48,155 assets Total assets $ 2,497,055 $ 2,521,968 $ 2,474,184 Liabilities and Stockholders' Equity Accounts payable and bank $ 244,114 $ 255,251 $ 257,628 overdraft Accrued payroll, bonus, and 136,310 160,008 132,705 employee benefits Accrued occupancy expenses and 70,298 81,867 69,626 deferred rents Current maturities of 68,858 66,887 63,180 capital lease obligations Other current 280,633 230,332 246,431 liabilities Total current 800,213 794,345 769,570 liabilities Capital lease 450,538 451,597 462,436 obligations Deferred rents 63,563 65,932 71,565 Other noncurrent 111,400 116,312 119,352 liabilities Total 1,425,714 1,428,186 1,422,923 liabilities Stockholders' Equity: Preferred stock; - - - $.0001 par value Common stock; 17 17 17 $.0001 par value Additional 1,537,707 1,515,333 1,441,863 paid-in capital Retained earnings 2,257,308 2,173,005 1,913,209 Accumulated other comprehensive (1,277 ) (2,159 ) 4,510 (loss) income Less: Treasury (2,722,414 ) (2,592,414 ) (2,308,338 ) stock Total stockholders' 1,071,341 1,093,782 1,051,261 equity Total liabilities and $ 2,497,055 $ 2,521,968 $ 2,474,184 stockholders' equity Contact: PetSmart, Inc. Investor Relations, 623-587-2025
PetSmart Announces First Quarter 2014 Results
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