Attached files
| file | filename |
|---|---|
| 8-K - 8-K - BIG LOTS INC | big-8xkxearningsreleasexq3.htm |
| EX-99.2 - EXHIBIT 99.2 - BIG LOTS INC | exhibit992-eventtranscript.htm |
Exhibit 99.1
PRESS RELEASE | ||||
FOR IMMEDIATE RELEASE | Contact: Andrew D. Regrut | |||
Director, Investor Relations | ||||
614.278.6622 | ||||
BIG LOTS REPORTS THIRD QUARTER RESULTS
COMPANY ANNOUNCES PLAN TO CLOSE CANADIAN OPERATIONS
COMPANY UPDATES FISCAL 2013 GUIDANCE
COLUMBUS, Ohio, December 5, 2013 -- Big Lots, Inc. (NYSE: BIG) today reported a consolidated loss from continuing operations of $9.5 million, or $0.17 per diluted share, for the third quarter of fiscal 2013 ended November 2, 2013, which compares to a consolidated loss from continuing operations of $6.0 million, or $0.10 per diluted share, for the third quarter of fiscal 2012. This year’s result includes an after tax gain on the sale of real estate of $2.2 million, or $0.04 per diluted share, and an after tax loss for our wholesale operations of $2.6 million, or $0.05 per diluted share. Consolidated net sales for the third quarter of fiscal 2013 increased 1.6% to $1,152.4 million, compared to consolidated net sales of $1,134.2 million for the same period of fiscal 2012. Consolidated comparable store sales decreased 2.5%.
As a reminder, we recently announced our intention to close our wholesale operations in the fourth quarter of this fiscal year, at which time it will be treated as discontinued operations. Excluding the real estate gain and wholesale loss, our third quarter adjusted consolidated loss from continuing operations totaled $9.1 million, or $0.16 per diluted share (non-GAAP), which compares to last year’s third quarter adjusted consolidated loss from continuing operations of $6.2 million, or $0.11 per diluted share (non-GAAP). Adjusted consolidated net sales for the third quarter of fiscal 2013 increased 1.6% to $1,143.2 million (non-GAAP), compared to adjusted consolidated net sales of $1,124.9 million (non-GAAP) for the same period of fiscal 2012. A reconciliation of all non-GAAP amounts to the most comparable GAAP amounts is provided later in this release.
For the year-to-date period ended November 2, 2013, income from continuing operations totaled $40.9 million, or $0.71 per diluted share, compared to income from continuing operations of $56.9 million, or $0.93 per diluted share, for the same period last year. Excluding the after tax gain on the sale of real estate noted above, the after tax year-to-date loss for our wholesale operations of $2.8 million, or $0.05 per diluted share, and the after tax non-recurring store-related legal settlement activity of $2.8 million, or $0.05 per diluted share, incurred in the second quarter of fiscal 2013, adjusted consolidated income from continuing operations for the year-to-date period ended November 2, 2013 totaled $44.4 million, or $0.77 per diluted share (non-GAAP). This result compared to adjusted consolidated income from continuing operations of $60.2 million, or $0.98 per diluted share (non-GAAP), for the same period in fiscal 2012.
EPS From Continuing Operations (1) | ||||||||
Q3 2013 | Q3 2012 | YTD 2013 | YTD 2012 | |||||
U.S. Operations | ($0.08) | ($0.03) | $0.94 | $1.15 | ||||
Impact of wholesale operations | $0.05 | ($0.00) | $0.05 | ($0.00) | ||||
Impact of real estate sale | ($0.04) | — | ($0.04) | — | ||||
Impact of other non-recurring charges | — | — | $0.05 | $0.06 | ||||
U.S. Operations - adjusted basis | ($0.07) | ($0.03) | $0.99 | $1.20 | ||||
Canadian Operations | ($0.09) | ($0.07) | ($0.23) | ($0.22) | ||||
Consolidated Operations - adjusted basis | ($0.16) | ($0.11) | $0.77 | $0.98 | ||||
(1) Non-GAAP. See detailed segment reporting below. | ||||||||
 | Shareholder Relations Department | |
300 Phillipi Road | ||
Columbus, OH 43228-5311 | ||
Phone: (614) 278-6622 Fax: (614) 278-6666 | ||
E-mail: aschmidt@biglots.com | ||
THIRD QUARTER HIGHLIGHTS
• | Adjusted consolidated loss from continuing operations of $0.16 per diluted share (non-GAAP), compared to adjusted consolidated loss from continuing operations of $0.11 per diluted share (non-GAAP) last year |
• | Adjusted consolidated net sales of $1.143 billion (non-GAAP), an increase of 1.6% compared to last year |
• | Opened 25 stores in the U.S. |
Third Quarter Results
U.S. Operations
Adjusted net sales for U.S. operations for the third quarter of fiscal 2013, which excludes our wholesale operations, increased 1.8% to $1,104.9 million (non-GAAP), compared to adjusted net sales of $1,085.9 million (non-GAAP) for the same period of fiscal 2012. Comparable store sales for U.S. stores open at least fifteen months decreased 2.5% for the quarter. Adjusted loss from continuing U.S. operations totaled $4.1 million, or $0.07 per diluted share (non-GAAP), compared to an adjusted loss from continuing U.S. operations of $1.9 million, or $0.03 per diluted share (non-GAAP), for the same period of fiscal 2012.
Canadian Operations
Net sales for Canadian operations for the third quarter of fiscal 2013 decreased 1.9% to $38.3 million, and comparable stores sales decreased 0.9%. For the third quarter of fiscal 2013, we incurred a net loss of $5.0 million, or $0.09 per diluted share (non-GAAP), compared to a net loss of $4.3 million, or $0.07 per diluted share (non-GAAP) for the same period of fiscal 2012.
Comparable Store Sales | Store Count | |||||||
Q3 2013 | Q3 2012 | Q3 2013 | Q3 2012 | |||||
U.S. Operations | -2.5% | -4.6% | 1,525 | 1,482 | ||||
Canadian Operations (1) | -0.9% | na | 78 | 79 | ||||
Consolidated Operations | -2.5% | -4.6% | 1,603 | 1,561 | ||||
(1) Comparable store sales for Canada for fiscal 2012 do not qualify under our calculation due to an acquisition date of July 2011. | ||||||||
Inventory and Cash Management
On a consolidated basis, inventory ended the third quarter of fiscal 2013 at $1,238 million, compared to $1,191 million for the third quarter of fiscal 2012. The growth in inventory was driven by an increase in U.S. store count, and a 2% increase in inventory per store in our U.S. stores.
We ended the third quarter of fiscal 2013 with $68 million of cash and cash equivalents and $324 million of borrowings under our credit facility, compared to $66 million of cash and cash equivalents and $463 million of borrowings under our credit facility as of the end of the third quarter of fiscal 2012. Our use of cash generated by our U.S. operations during the last 12 months was focused on repaying debt and funding our Canadian operations.
| Shareholder Relations Department | |
300 Phillipi Road | ||
Columbus, OH 43228-5311 | ||
Phone: (614) 278-6622 Fax: (614) 278-6666 | ||
E-mail: aschmidt@biglots.com | ||
PLAN TO CLOSE CANADIAN OPERATIONS
As our new management team develops a comprehensive, long-range strategic plan, we have been conducting a detailed evaluation of our current operations and business prospects. As part of this evaluation and after careful exploration of available options, we have decided to exit the unprofitable Canadian market, where we currently operate 73 stores under the Liquidation World or LW brand names, 5 stores under the Big Lots brand name, 2 distribution centers, and an office. We intend to begin an orderly wind-down process immediately and expect that principal operations will cease during the first quarter of fiscal 2014.
We acquired a struggling Canadian business in July 2011 with the intention of revitalizing it and using it as the base for bringing extreme value merchandising and the Big Lots brand to customers in Canada. Over the last two years, we have invested in this business and our team in Canada has worked diligently to turn it around. However, we have not been able to gain the necessary traction in the Canadian marketplace that had originally been anticipated and believe that the significant further capital investments and execution risk associated with continuing to pursue a turnaround would not be in the best interests of our company and shareholders. While the strategic and financial rationale supporting this decision is clear, we regret the impact that the closings will have on our associates, our customers and the communities in Canada where our stores, distribution centers, and office are located. We are committed to exiting our operations in a thoughtful and deliberate manner in order to minimize disruption for our associates and customers.
Our new management team remains focused on identifying the best opportunities in the U.S. to serve our target customer in a manner that brings value to our customers, shareholders and associates. The strategic decision to exit Canada will enable us to focus our resources on introducing e-commerce and omnichannel capabilities, rolling out coolers and freezers to our chain of stores, launching a furniture financing program, significantly realigning our merchandising organization, and moving swiftly to implement our “edit to amplify” merchandising strategy. These bold steps forward all possess the singularly focused goal of strengthening the Big Lots brand and reinvigorating our U.S. business.
Looking forward, we expect to cease operations of our distribution centers in the fourth quarter of fiscal 2013, and we expect to cease operations of our stores in the first quarter of fiscal 2014.
For the fourth quarter of fiscal 2013, we anticipate a loss from Canadian operations in the range of $38 to $43 million, or $0.65 to $0.75 per diluted share. This estimate includes a charge in the range of $32 to $34 million, related to severance, lease liabilities, and asset impairment (inventory, fixed assets, and goodwill). For the full year of fiscal 2013, we anticipate a loss from operations in the range of $52 to $57 million, or $0.90 to $0.98 per diluted share.
Given we expect to close all store locations during the first quarter of fiscal 2014, we plan to begin reporting our Canadian business as discontinued operations beginning at that time. For the first quarter of fiscal 2014, we anticipate a loss from discontinued operations in the range of $44 to $47 million, or $0.75 to $0.80 per diluted share.
Our estimates for our Canadian business performance exclude any potential income tax effect, and have been factored into our revised company outlook for fiscal 2013.
| Shareholder Relations Department | |
300 Phillipi Road | ||
Columbus, OH 43228-5311 | ||
Phone: (614) 278-6622 Fax: (614) 278-6666 | ||
E-mail: aschmidt@biglots.com | ||
2013 OUTLOOK
• | Updates Q4 guidance for adjusted income from continuing U.S. operations of $1.40 to $1.55 per diluted share (non-GAAP) versus adjusted income from continuing U.S. operations of $2.08 per diluted share (non-GAAP) for fiscal 2012 |
• | Updates fiscal 2013 annual guidance for adjusted income from continuing U.S. operations to $2.40 to $2.55 per diluted share (non-GAAP) versus adjusted income from continuing U.S. operations of $3.21 per diluted share (non-GAAP) for fiscal 2012 |
• | Updates cash flow guidance to $120 million |
We update our guidance for fourth quarter fiscal 2013 adjusted income from continuing U.S. operations to be in the range of $1.40 to $1.55 per diluted share (non-GAAP). This guidance assumes U.S. comparable store sales decline in the range of low to mid single digits and total U.S. sales decrease in the range of 6 to 8%. As a reminder, fourth quarter of fiscal 2013 includes 13 weeks of operations, compared to 14 weeks 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 2013, we update our guidance for fiscal 2013 adjusted income from continuing U.S. operations to be in the range of $2.40 to $2.55 per diluted share (non-GAAP). This guidance assumes U.S. comparable store sales decline 2% to 3% and a total U.S. sales decrease in the range of 1% to 2%. In addition, we update our cash flow guidance to approximately $120 million. As a reminder, fiscal 2013 includes 52 weeks of operations, compared to 53 weeks last year.
EPS from Continuing Operations (non-GAAP) | Q4 | Full Year | ||||||
2013 Guidance | 2012 | 2013 Guidance | 2012 | |||||
U.S. Operations | $1.40 - $1.55 | $2.08 | $2.35 - $2.50 | $3.15 | ||||
Add back: Wholesale Operations | — | — | $0.05 | $0.00 | ||||
Add back: Legal settlement charge | — | — | $0.05 | — | ||||
Less: Impact of Real Estate Gain | — | — | ($0.04) | — | ||||
Add back: Inventory charge | — | — | — | $0.06 | ||||
U.S. Operations - adjusted basis | $1.40 - $1.55 | $2.08 | $2.40 - $2.55 | $3.21 | ||||
Canada Operations | ($0.75) - ($0.65) | $0.00 | ($0.98) - ($0.90) | ($0.22) | ||||
Consolidated - adjusted basis | $0.65 - $0.90 | $2.08 | $1.42 - $1.65 | $2.98 | ||||
| Shareholder Relations Department | |
300 Phillipi Road | ||
Columbus, OH 43228-5311 | ||
Phone: (614) 278-6622 Fax: (614) 278-6666 | ||
E-mail: aschmidt@biglots.com | ||
Conference Call/Webcast
We will host a conference call tomorrow December 6, 2013 at 8:00 a.m. to discuss our financial results for the third quarter and provide commentary on our outlook for fiscal 2013. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website http://www.biglots.com.
If you are unable to join the live webcast, an archive of the call will be available at www.biglots.com in the Investor Relations section of our website after 12:00 noon Eastern Time and will remain available through midnight Friday, December 20, 2013. A replay of this call will also be available beginning December 6 at 12:00 noon Eastern Time through December 20 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 2138376.
Big Lots is North America’s largest broadline closeout retailer. We currently operate 1,526 BIG LOTS stores in the 48 contiguous United States, 5 BIG LOTS stores in Canada, and 73 LIQUIDATION WORLD and LW stores in Canada. For more information, visit www.biglots.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, current economic and credit conditions, 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.
| Shareholder Relations Department | |
300 Phillipi Road | ||
Columbus, OH 43228-5311 | ||
Phone: (614) 278-6622 Fax: (614) 278-6666 | ||
E-mail: aschmidt@biglots.com | ||
BIG LOTS, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(In thousands) | ||||||||||
NOVEMBER 2 | OCTOBER 27 | |||||||||
2013 | 2012 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $67,726 | $66,257 | ||||||||
Inventories | 1,238,140 | 1,190,749 | ||||||||
Deferred income taxes | 48,816 | 45,598 | ||||||||
Other current assets | 111,232 | 102,907 | ||||||||
Total current assets | 1,465,914 | 1,405,511 | ||||||||
Property and equipment - net | 591,314 | 601,943 | ||||||||
Deferred income taxes | 7,341 | 3,845 | ||||||||
Goodwill | 12,944 | 13,513 | ||||||||
Other assets | 57,233 | 40,090 | ||||||||
$2,134,746 | $2,064,902 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $583,235 | $574,183 | ||||||||
Property, payroll and other taxes | 81,633 | 81,275 | ||||||||
Accrued operating expenses | 64,593 | 68,628 | ||||||||
Insurance reserves | 36,660 | 36,784 | ||||||||
KB bankruptcy lease obligation | 3,069 | 3,069 | ||||||||
Accrued salaries and wages | 27,435 | 27,155 | ||||||||
Income taxes payable | 1,519 | 372 | ||||||||
Total current liabilities | 798,144 | 791,466 | ||||||||
Long-term obligations under bank credit facility | 324,000 | 463,100 | ||||||||
Deferred rent | 78,598 | 72,491 | ||||||||
Insurance reserves | 62,906 | 50,702 | ||||||||
Unrecognized tax benefits | 16,678 | 15,799 | ||||||||
Other liabilities | 41,125 | 38,553 | ||||||||
Shareholders' equity | 813,295 | 632,791 | ||||||||
$2,134,746 | $2,064,902 | |||||||||
BIG LOTS, INC. AND SUBSIDIARIES | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
13 WEEKS ENDED | 13 WEEKS ENDED | |||||||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | |||||||||||||
% | % | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Net sales | $1,152,444 | 100.0 | $1,134,205 | 100.0 | ||||||||||
Gross margin | 443,459 | 38.5 | 432,590 | 38.1 | ||||||||||
Selling and administrative expenses | 425,985 | 37.0 | 412,692 | 36.4 | ||||||||||
Depreciation expense | 29,459 | 2.6 | 26,590 | 2.3 | ||||||||||
Operating loss | (11,985 | ) | (1.0 | ) | (6,692 | ) | (0.6 | ) | ||||||
Interest expense | (1,039 | ) | (0.1 | ) | (1,491 | ) | (0.1 | ) | ||||||
Other income (expense) | (147 | ) | (0.0 | ) | 46 | 0.0 | ||||||||
Loss from continuing operations before income taxes | (13,171 | ) | (1.1 | ) | (8,137 | ) | (0.7 | ) | ||||||
Income tax benefit | (3,655 | ) | (0.3 | ) | (2,149 | ) | (0.2 | ) | ||||||
Loss from continuing operations | (9,516 | ) | (0.8 | ) | (5,988 | ) | (0.5 | ) | ||||||
Income (loss) from discontinued operations, net of tax expense of $0 and $0, respectively | (1 | ) | (0.0 | ) | 1 | 0.0 | ||||||||
Net loss | ($9,517 | ) | (0.8 | ) | ($5,987 | ) | (0.5 | ) | ||||||
Earnings (loss) per common share - basic (a) | ||||||||||||||
Continuing operations | ($0.17 | ) | ($0.10 | ) | ||||||||||
Discontinued operations | 0.00 | 0.00 | ||||||||||||
Net loss | ($0.17 | ) | ($0.10 | ) | ||||||||||
Earnings (loss) per common share - diluted (a) | ||||||||||||||
Continuing operations | ($0.17 | ) | ($0.10 | ) | ||||||||||
Discontinued operations | 0.00 | 0.00 | ||||||||||||
Net loss | ($0.17 | ) | ($0.10 | ) | ||||||||||
Weighted average common shares outstanding | ||||||||||||||
Basic | 57,461 | 57,756 | ||||||||||||
Dilutive effect of share-based awards | — | — | ||||||||||||
Diluted | 57,461 | 57,756 | ||||||||||||
(a) | The earnings (loss) per share for Continuing Operations, Discontinued Operations and Net Loss are separately calculated in accordance with 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 Loss. | |||||||||||||
BIG LOTS, INC. AND SUBSIDIARIES | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
39 WEEKS ENDED | 39 WEEKS ENDED | |||||||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | |||||||||||||
% | % | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Net sales | $3,689,354 | 100.0 | $3,646,723 | 100.0 | ||||||||||
Gross margin | 1,439,543 | 39.0 | 1,422,873 | 39.0 | ||||||||||
Selling and administrative expenses | 1,276,947 | 34.6 | 1,243,230 | 34.1 | ||||||||||
Depreciation expense | 85,078 | 2.3 | 78,149 | 2.1 | ||||||||||
Operating profit | 77,518 | 2.1 | 101,494 | 2.8 | ||||||||||
Interest expense | (2,498 | ) | (0.1 | ) | (2,722 | ) | (0.1 | ) | ||||||
Other income (expense) | (411 | ) | (0.0 | ) | 45 | 0.0 | ||||||||
Income from continuing operations before income taxes | 74,609 | 2.0 | 98,817 | 2.7 | ||||||||||
Income tax expense | 33,667 | 0.9 | 41,935 | 1.1 | ||||||||||
Income from continuing operations | 40,942 | 1.1 | 56,882 | 1.6 | ||||||||||
Income (Loss) from discontinued operations, net of tax expense (benefit) of $0 and ($32), respectively | 0 | 0.0 | (48 | ) | (0.0 | ) | ||||||||
Net income | $40,942 | 1.1 | $56,834 | 1.6 | ||||||||||
Earnings per common share - basic (a) | ||||||||||||||
Continuing operations | $0.71 | $0.94 | ||||||||||||
Discontinued operations | 0.00 | 0.00 | ||||||||||||
Net income | $0.71 | $0.94 | ||||||||||||
Earnings per common share - diluted (a) | ||||||||||||||
Continuing operations | $0.71 | $0.93 | ||||||||||||
Discontinued operations | 0.00 | 0.00 | ||||||||||||
Net income | $0.71 | $0.92 | ||||||||||||
Weighted average common shares outstanding | ||||||||||||||
Basic | 57,383 | 60,780 | ||||||||||||
Dilutive effect of share-based awards | 550 | 698 | ||||||||||||
Diluted | 57,933 | 61,478 | ||||||||||||
(a) | The earnings per share for Continuing Operations, Discontinued Operations and Net Income are separately calculated in accordance with accounting 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 | |||||||||||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | NOVEMBER 2, 2013 | OCTOBER 27, 2013 | ||||||||||||||
U.S. | U.S. | Canada | Canada | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Net sales | $1,114,142 | $1,095,180 | $38,802 | $39,025 | |||||||||||||
Gross margin | 429,260 | 417,759 | 14,199 | 14,831 | |||||||||||||
Selling and administrative expenses | 407,357 | 394,136 | 18,628 | 18,556 | |||||||||||||
Depreciation expense | 29,051 | 26,006 | 408 | 584 | |||||||||||||
Operating loss | (7,148 | ) | (2,383 | ) | (4,837 | ) | (4,309 | ) | |||||||||
Interest expense | (1,034 | ) | (1,490 | ) | (5 | ) | (1 | ) | |||||||||
Other income (expense) | 0 | 2 | (147 | ) | 44 | ||||||||||||
Loss from continuing operations before income taxes | (8,182 | ) | (3,871 | ) | (4,989 | ) | (4,266 | ) | |||||||||
Income tax benefit | (3,655 | ) | (2,149 | ) | 0 | 0 | |||||||||||
Loss from continuing operations | (4,527 | ) | (1,722 | ) | (4,989 | ) | (4,266 | ) | |||||||||
Diluted earnings (loss) per common share from continuing operations (a) | ($0.08 | ) | ($0.03 | ) | ($0.09 | ) | ($0.07 | ) | |||||||||
39 WEEKS ENDED | |||||||||||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | NOVEMBER 2, 2013 | OCTOBER 27, 2013 | ||||||||||||||
U.S. | U.S. | Canada | Canada | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Net sales | $3,576,563 | $3,540,438 | $112,791 | $106,285 | |||||||||||||
Gross margin | 1,397,637 | 1,384,125 | 41,906 | 38,748 | |||||||||||||
Selling and administrative expenses | 1,223,750 | 1,192,988 | 53,197 | 50,242 | |||||||||||||
Depreciation expense | 83,501 | 75,898 | 1,577 | 2,251 | |||||||||||||
Operating profit (loss) | 90,386 | 115,239 | (12,868 | ) | (13,745 | ) | |||||||||||
Interest expense | (2,489 | ) | (2,721 | ) | (9 | ) | (1 | ) | |||||||||
Other income (expense) | (12 | ) | 2 | (399 | ) | 43 | |||||||||||
Income (loss) from continuing operations before income taxes | 87,885 | 112,520 | (13,276 | ) | (13,703 | ) | |||||||||||
Income tax expense | 33,667 | 41,935 | 0 | 0 | |||||||||||||
Income (loss) from continuing operations | 54,218 | 70,585 | (13,276 | ) | (13,703 | ) | |||||||||||
Diluted earnings (loss) per common share from continuing operations (a) | $0.94 | $1.15 | ($0.23 | ) | ($0.22 | ) | |||||||||||
(a) | 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 earnings (loss) per 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 | |||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
Net cash used in operating activities | ($153,116 | ) | ($124,654 | ) | ||||||
Net cash used in investing activities | (26,507 | ) | (39,341 | ) | ||||||
Net cash provided by financing activities | 183,545 | 168,913 | ||||||||
Impact of foreign currency on cash | (6 | ) | (340 | ) | ||||||
Increase in cash and cash equivalents | 3,916 | 4,578 | ||||||||
Cash and cash equivalents: | ||||||||||
Beginning of period | 63,810 | 61,679 | ||||||||
End of period | $67,726 | $66,257 | ||||||||
BIG LOTS, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(In thousands) | ||||||||||
39 WEEKS ENDED | 39 WEEKS ENDED | |||||||||
NOVEMBER 2, 2013 | OCTOBER 27, 2012 | |||||||||
(Unaudited) | (Unaudited) | |||||||||
Net cash used in operating activities | ($71,098 | ) | ($35,905 | ) | ||||||
Net cash used in investing activities | (76,608 | ) | (99,614 | ) | ||||||
Net cash provided by financing activities | 155,183 | 133,718 | ||||||||
Impact of foreign currency on cash | (332 | ) | (489 | ) | ||||||
Increase (decrease) in cash and cash equivalents | $7,145 | ($2,290 | ) | |||||||
Cash and cash equivalents: | ||||||||||
Beginning of period | 60,581 | 68,547 | ||||||||
End of period | $67,726 | $66,257 | ||||||||
BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
The following tables reconcile net sales, gross margin, selling and administrative expenses, depreciation expense, operating (loss) profit, income tax (benefit) expense, (loss) income from continuing operations, net (loss) income, diluted earnings (loss) per share from continuing operations, diluted earnings (loss) per share, and effective income tax rate for each of the third quarter of 2013, the third quarter of 2012, the year-to-date 2013, and the year-to-date 2012 (GAAP financial measures) to adjusted net sales, adjusted gross margin, adjusted selling and administrative expenses, adjusted depreciation expense, adjusted operating (loss) profit, adjusted income tax (benefit) expense, adjusted (loss) income from continuing operations, adjusted net (loss) income, adjusted diluted earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share, and adjusted effective income tax rate (non-GAAP financial measures).
Third quarter of 2013 - Thirteen weeks ended November 2, 2013 | ||||||||||||||||||||||
Consolidated Results | As reported | Gain on sale of real estate | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||
Net sales | $ | 1,152,444 | 100.0 | % | $ | — | $ | (9,224 | ) | $ | 1,143,220 | 100.0 | % | |||||||||
Gross margin | 443,459 | 38.5 | — | 2,167 | 445,626 | 39.0 | ||||||||||||||||
Selling and administrative expenses | 425,985 | 37.0 | 3,579 | (2,127 | ) | 427,437 | 37.4 | |||||||||||||||
Depreciation expense | 29,459 | 2.6 | — | — | 29,459 | 2.6 | ||||||||||||||||
Operating (loss) profit | (11,985 | ) | (1.0 | ) | (3,579 | ) | 4,294 | (11,270 | ) | (1.0 | ) | |||||||||||
Income tax (benefit) expense | (3,655 | ) | (0.3 | ) | (1,400 | ) | 1,707 | (3,348 | ) | (0.3 | ) | |||||||||||
(Loss) Income from continuing operations | (9,516 | ) | (0.8 | ) | (2,179 | ) | 2,587 | (9,108 | ) | (0.8 | ) | |||||||||||
Income (loss) from discontinued operations | (1 | ) | (0.0 | ) | — | — | (1 | ) | (0.0 | ) | ||||||||||||
Net (loss) income | $ | (9,517 | ) | (0.8 | ) | % | $ | (2,179 | ) | $ | 2,587 | $ | (9,109 | ) | (0.8 | ) | % | |||||
Diluted earnings (loss) per share from | ||||||||||||||||||||||
continuing operations | $ | (0.17 | ) | $ | (0.04 | ) | $ | 0.05 | $ | (0.16 | ) | |||||||||||
Diluted earnings (loss) per share | $ | (0.17 | ) | $ | (0.04 | ) | $ | 0.05 | $ | (0.16 | ) | |||||||||||
Effective income tax rate | 27.8 | % | 39.1 | % | 39.8 | % | 26.9 | % | ||||||||||||||
U.S. Segment Results | As reported | Gain on sale of real estate | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||
Net sales | $ | 1,114,142 | 100.0 | % | $ | — | $ | (9,224 | ) | $ | 1,104,918 | 100.0 | % | |||||||||
Gross margin | 429,260 | 38.5 | — | 2,167 | 431,427 | 39.0 | ||||||||||||||||
Selling and administrative expenses | 407,357 | 36.6 | 3,579 | (2,127 | ) | 408,809 | 37.0 | |||||||||||||||
Depreciation expense | 29,051 | 2.6 | — | — | 29,051 | 2.6 | ||||||||||||||||
Operating (loss) profit | (7,148 | ) | (0.6 | ) | (3,579 | ) | 4,294 | (6,433 | ) | (0.6 | ) | |||||||||||
Income tax (benefit) expense | (3,655 | ) | (0.3 | ) | (1,400 | ) | 1,707 | (3,348 | ) | (0.3 | ) | |||||||||||
(Loss) Income from continuing operations | $ | (4,527 | ) | (0.4 | ) | % | $ | (2,179 | ) | $ | 2,587 | $ | (4,119 | ) | (0.4 | ) | % | |||||
Diluted earnings (loss) per share from | ||||||||||||||||||||||
continuing operations | $ | (0.08 | ) | $ | (0.04 | ) | $ | 0.05 | $ | (0.07 | ) | |||||||||||
Effective income tax rate | 44.7 | % | 39.1 | % | 39.8 | % | 44.8 | % | ||||||||||||||
The above adjusted net sales, adjusted gross margin, adjusted selling and administrative expenses, adjusted depreciation expense, adjusted operating (loss) profit, adjusted income tax (benefit) expense, adjusted (loss) income from continuing operations, adjusted net (loss) income, adjusted diluted earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share, and adjusted effective income tax rate 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”): (1) a pretax adjustment for the gain on the sale of real estate of $3,579 ($2,179, net of tax); and (2) the impact of the exclusion of the results of our wholesale business related to the announced wind down of its operations.
Third quarter of 2012 - Thirteen weeks ended October 27, 2012 | |||||||||||||||||||
Consolidated Results | As reported | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||
Net sales | $ | 1,134,205 | 100.0 | % | $ | (9,298 | ) | $ | 1,124,907 | 100.0 | % | ||||||||
Gross margin | 432,590 | 38.1 | (1,655 | ) | 430,935 | 38.3 | |||||||||||||
Selling and administrative expenses | 412,692 | 36.4 | (1,337 | ) | 411,355 | 36.6 | |||||||||||||
Depreciation expense | 26,590 | 2.3 | — | 26,590 | 2.4 | ||||||||||||||
Operating (loss) profit | (6,692 | ) | (0.6 | ) | (318 | ) | (7,010 | ) | (0.6 | ) | |||||||||
Income tax (benefit) expense | (2,149 | ) | (0.2 | ) | (126 | ) | (2,275 | ) | (0.2 | ) | |||||||||
(Loss) Income from continuing operations | (5,988 | ) | (0.5 | ) | (192 | ) | (6,180 | ) | (0.5 | ) | |||||||||
Income (loss) from discontinued operations | 1 | 0.0 | — | 1 | 0.0 | ||||||||||||||
Net (loss) income | $ | (5,987 | ) | (0.5 | ) | % | $ | (192 | ) | $ | (6,179 | ) | (0.5 | ) | % | ||||
Diluted earnings (loss) per share from | |||||||||||||||||||
continuing operations | $ | (0.10 | ) | $ | (0.00 | ) | $ | (0.11 | ) | ||||||||||
Diluted earnings (loss) per share | $ | (0.10 | ) | $ | (0.00 | ) | $ | (0.11 | ) | ||||||||||
Effective income tax rate | 26.4 | % | 39.6 | % | 26.9 | % | |||||||||||||
U.S. Segment Results | As reported | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||
Net sales | $ | 1,095,180 | 100.0 | % | $ | (9,298 | ) | $ | 1,085,882 | 100.0 | % | ||||||||
Gross margin | 417,759 | 38.1 | (1,655 | ) | 416,104 | 38.3 | |||||||||||||
Selling and administrative expenses | 394,136 | 36.0 | (1,337 | ) | 392,799 | 36.2 | |||||||||||||
Depreciation expense | 26,006 | 2.4 | — | 26,006 | 2.4 | ||||||||||||||
Operating (loss) profit | (2,383 | ) | (0.2 | ) | (318 | ) | (2,701 | ) | (0.2 | ) | |||||||||
Income tax (benefit) expense | (2,149 | ) | (0.2 | ) | (126 | ) | (2,275 | ) | (0.2 | ) | |||||||||
(Loss) Income from continuing operations | $ | (1,722 | ) | (0.2 | ) | % | $ | (192 | ) | $ | (1,914 | ) | (0.2 | ) | % | ||||
Diluted earnings (loss) per share from | |||||||||||||||||||
continuing operations | $ | (0.03 | ) | $ | (0.00 | ) | $ | (0.03 | ) | ||||||||||
Effective income tax rate | 55.5 | % | 39.6 | % | 54.3 | % | |||||||||||||
The above adjusted net sales, adjusted gross margin, adjusted selling and administrative expenses, adjusted depreciation expense, adjusted operating (loss) profit, adjusted income tax (benefit) expense, adjusted (loss) income from continuing operations, adjusted net (loss) income, adjusted diluted earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share, and adjusted effective income tax rate 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”) the impact of the exclusion of the results of our wholesale business related to the announced wind down of its operations.
Year-to-date 2013 - Thirty-nine weeks ended November 2, 2013 | |||||||||||||||||||||||||
Consolidated Results | As reported | Adjustment to loss contingency accrual | Gain on sale of real estate | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||||
Net sales | $ | 3,689,354 | 100.0 | % | $ | — | $ | — | $ | (23,720 | ) | $ | 3,665,634 | 100.0 | % | ||||||||||
Gross margin | 1,439,543 | 39.0 | — | — | 99 | 1,439,642 | 39.3 | ||||||||||||||||||
Selling and administrative expenses | 1,276,947 | 34.6 | (4,375 | ) | 3,579 | (4,595 | ) | 1,271,556 | 34.7 | ||||||||||||||||
Depreciation expense | 85,078 | 2.3 | — | — | — | 85,078 | 2.3 | ||||||||||||||||||
Operating (loss) profit | 77,518 | 2.1 | 4,375 | (3,579 | ) | 4,694 | 83,008 | 2.3 | |||||||||||||||||
Income tax (benefit) expense | 33,667 | 0.9 | 1,615 | (1,400 | ) | 1,866 | 35,748 | 1.0 | |||||||||||||||||
(Loss) Income from continuing operations | 40,942 | 1.1 | 2,760 | (2,179 | ) | 2,828 | 44,351 | 1.2 | |||||||||||||||||
Income (loss) from discontinued operations | — | — | — | — | — | — | — | ||||||||||||||||||
Net (loss) income | $ | 40,942 | 1.1 | % | $ | 2,760 | $ | (2,179 | ) | $ | 2,828 | $ | 44,351 | 1.2 | % | ||||||||||
Diluted earnings (loss) per share from | |||||||||||||||||||||||||
continuing operations | $ | 0.71 | $ | 0.05 | $ | (0.04 | ) | $ | 0.05 | $ | 0.77 | ||||||||||||||
Diluted earnings (loss) per share | $ | 0.71 | $ | 0.05 | $ | (0.04 | ) | $ | 0.05 | $ | 0.77 | ||||||||||||||
Effective income tax rate | 45.1 | % | 36.9 | % | 39.1 | % | 39.8 | % | 44.6 | % | |||||||||||||||
U.S. Segment Results | As reported | Adjustment to loss contingency accrual | Gain on sale of real estate | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||||
Net sales | $ | 3,576,563 | 100.0 | % | $ | — | $ | — | $ | (23,720 | ) | $ | 3,552,843 | 100.0 | % | ||||||||||
Gross margin | 1,397,637 | 39.1 | — | — | 99 | 1,397,736 | 39.3 | ||||||||||||||||||
Selling and administrative expenses | 1,223,750 | 34.2 | (4,375 | ) | 3,579 | (4,595 | ) | 1,218,359 | 34.3 | ||||||||||||||||
Depreciation expense | 83,501 | 2.3 | — | — | — | 83,501 | 2.4 | ||||||||||||||||||
Operating (loss) profit | 90,386 | 2.5 | 4,375 | (3,579 | ) | 4,694 | 95,876 | 2.7 | |||||||||||||||||
Income tax (benefit) expense | 33,667 | 0.9 | 1,615 | (1,400 | ) | 1,866 | 35,748 | 1.0 | |||||||||||||||||
(Loss) Income from continuing operations | $ | 54,218 | 1.5 | % | $ | 2,760 | $ | (2,179 | ) | $ | 2,828 | $ | 57,627 | 1.6 | % | ||||||||||
Diluted earnings (loss) per share from | |||||||||||||||||||||||||
continuing operations | $ | 0.94 | $ | 0.05 | $ | (0.04 | ) | $ | 0.05 | $ | 0.99 | ||||||||||||||
Effective income tax rate | 38.3 | % | 36.9 | % | 39.1 | % | 39.8 | % | 38.3 | % | |||||||||||||||
The above adjusted net sales, adjusted gross margin, adjusted selling and administrative expenses, adjusted depreciation expense, adjusted operating (loss) profit, adjusted income tax (benefit) expense, adjusted (loss) income from continuing operations, adjusted net (loss) income, adjusted diluted earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share, and adjusted effective income tax rate 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”): (1) a pretax charge related to the settlement of a legal matter of $4,375 ($2,760, net of tax); (2) a pretax adjustment for the gain on the sale of real estate of $3,579 ($2,179, net of tax); and (3) the impact of the exclusion of the results of our wholesale business related to the announced wind down of its operations.
Year-to-date 2012 - Thirty-nine weeks ended October 27, 2012 | ||||||||||||||||||||||
Consolidated Results | As reported | Adjustment to exclude change in inventory accounting principle | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||
Net sales | $ | 3,646,723 | 100.0 | % | $ | — | $ | (24,141 | ) | $ | 3,622,582 | 100.0 | % | |||||||||
Gross margin | 1,422,873 | 39.0 | 5,574 | (3,861 | ) | 1,424,586 | 39.3 | |||||||||||||||
Selling and administrative expenses | 1,243,230 | 34.1 | — | (3,744 | ) | 1,239,486 | 34.2 | |||||||||||||||
Depreciation expense | 78,149 | 2.1 | — | — | 78,149 | 2.2 | ||||||||||||||||
Operating (loss) profit | 101,494 | 2.8 | 5,574 | (117 | ) | 106,951 | 3.0 | |||||||||||||||
Income tax (benefit) expense | 41,935 | 1.1 | 2,186 | (47 | ) | 44,074 | 1.2 | |||||||||||||||
(Loss) Income from continuing operations | 56,882 | 1.6 | 3,388 | (70 | ) | 60,200 | 1.7 | |||||||||||||||
Income (loss) from discontinued operations | (48 | ) | (0.0 | ) | — | — | (48 | ) | (0.0 | ) | ||||||||||||
Net (loss) income | $ | 56,834 | 1.6 | % | $ | 3,388 | $ | (70 | ) | $ | 60,152 | 1.7 | % | |||||||||
Diluted earnings per share from | ||||||||||||||||||||||
continuing operations | $ | 0.93 | $ | 0.06 | $ | (0.00 | ) | $ | 0.98 | |||||||||||||
Diluted earnings per share | $ | 0.92 | $ | 0.06 | $ | (0.00 | ) | $ | 0.98 | |||||||||||||
Effective income tax rate | 42.4 | % | 39.2 | % | 40.2 | % | 42.3 | % | ||||||||||||||
U.S. Segment Results | As reported | Adjustment to exclude change in inventory accounting principle | Wind down of Wholesale operations | As Adjusted (non-GAAP) | ||||||||||||||||||
Net sales | $ | 3,540,438 | 100.0 | % | $ | — | $ | (24,141 | ) | $ | 3,516,297 | 100.0 | % | |||||||||
Gross margin | 1,384,125 | 39.1 | 5,574 | (3,861 | ) | 1,385,838 | 39.4 | |||||||||||||||
Selling and administrative expenses | 1,192,988 | 33.7 | — | (3,744 | ) | 1,189,244 | 33.8 | |||||||||||||||
Depreciation expense | 75,898 | 2.1 | — | — | 75,898 | 2.2 | ||||||||||||||||
Operating (loss) profit | 115,239 | 3.3 | 5,574 | (117 | ) | 120,696 | 3.4 | |||||||||||||||
Income tax (benefit) expense | 41,935 | 1.2 | 2,186 | (47 | ) | 44,074 | 1.3 | |||||||||||||||
(Loss) Income from continuing operations | $ | 70,585 | 2.0 | % | $ | 3,388 | $ | (70 | ) | $ | 73,903 | 2.1 | % | |||||||||
Diluted earnings per share from | ||||||||||||||||||||||
continuing operations | $ | 1.15 | $ | 0.06 | $ | (0.00 | ) | $ | 1.20 | |||||||||||||
Effective income tax rate | 37.3 | % | 39.2 | % | 40.2 | % | 37.4 | % | ||||||||||||||
The above adjusted net sales, adjusted gross margin, adjusted selling and administrative expenses, adjusted depreciation expense, adjusted operating (loss) profit, adjusted income tax (benefit) expense, adjusted (loss) income from continuing operations, adjusted net (loss) income, adjusted diluted earnings (loss) per share from continuing operations, adjusted diluted earnings (loss) per share, and adjusted effective income tax rate 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”): (1) 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); and (2) the impact of the exclusion of the results of our wholesale business related to the announced wind down of its operations.
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 more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.