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| 8-K - FORM 8-K - PETSMART INC | d686800d8k.htm |
Exhibit 99.1
CONTACT:
PetSmart Investor Relations
(623) 587-2025
PetSmart Reports Results for the Fourth Quarter and Fiscal Year 2013
Fourth Quarter Earnings per Share of $1.28; Fiscal Year Earnings per Share of $4.02;
Fourth consecutive year of double-digit Earnings per Share growth
PHOENIX, AZ—(March 5, 2014)—PetSmart, Inc. (NASDAQ: PETM) today announced financial results for the fourth quarter and fiscal year 2013, and provided guidance for 2014. Fourth quarter 2013 was a 13-week quarter, and fiscal year 2013 was a 52-week year. Fourth quarter 2012 was a 14-week quarter, and fiscal year 2012 was a 53-week year. In 2012, the extra week represented an additional $126 million in net sales, $48 million in gross margin, $18 million in OG&A, $30 million in earnings before tax, and $0.17 in earnings per share. For comparative purposes, the fourth quarter and fiscal year results are discussed on an equivalent 13-week and 52-week basis, respectively.
Fourth Quarter Results (13 weeks versus 13 weeks)
Earnings of $1.28 per share were up 19.6% compared to $1.07 per share in the fourth quarter of 2012. Net income increased 14.0% to $132 million in the fourth quarter of 2013, compared to $115 million in the fourth quarter of 2012.
Net sales for the fourth quarter of 2013 increased 2.9% to $1.8 billion. Comparable store sales, or sales in stores open at least one year plus internet sales, grew 1.2%. Services sales, which are included in net sales, grew 2.6% to $186 million.
Fiscal Year Results (52 weeks versus 52 weeks)
For the year, the company delivered earnings per share of $4.02, up 18.9% compared to $3.38 last year. Comparable store sales grew 2.7%. Net sales for the year were $6.9 billion, up 4.3%.
The company generated $615 million in cash flows from operating activities, spent $147 million in capital expenditures, distributed $54 million in dividends, and repurchased $464 million of PetSmart stock. The company ended the quarter with $357 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility.
“We are pleased to report our results for fiscal year 2013, marking the fourth consecutive year of double-digit earnings per share growth,” said David Lenhardt, Chief Executive Officer. “I would like to thank our associates for their hard work and caring for our customers and communities.”
Guidance
Fiscal year 2014
| • | Comparable store sales growth of 2% to 4% |
| • | Net sales growth of 4% to 6% |
| • | Earnings per share between $4.42 to $4.54 |
| • | Capital expenditures of $150 million to $160 million |
First quarter 2014
| • | Comparable store sales growth of low-single digits |
| • | Earnings per share between $0.99 to $1.03 |
Conference call information
PetSmart management has scheduled a teleconference for 10:00 a.m. EST on March 5, 2014 to discuss results for the fourth quarter and fiscal year 2013. 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 first 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 1633721.
A phone replay will be available through April 5, 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 1633721.
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 1,333 pet stores in the United States, Canada and Puerto Rico, over 199 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
Consolidated Statements of Operations
(in thousands, except per share and store data)
(Unaudited)
| Thirteen Weeks Ended | Fourteen Weeks Ended | Fifty-Two Weeks Ended | Fifty-Three Weeks Ended | |||||||||||||||||||||||||||||
| February 2, 2014 |
% of Sales | February 3, 2013 |
% of Sales | February 2, 2014 |
% of Sales | February 3, 2013 |
% of Sales | |||||||||||||||||||||||||
| Merchandise sales |
$ | 1,609,430 | 89.2 | % | $ | 1,675,979 | 89.2 | % | $ | 6,111,702 | 88.3 | % | $ | 5,979,604 | 88.4 | % | ||||||||||||||||
| Services sales |
185,532 | 10.3 | % | 193,572 | 10.3 | % | 766,006 | 11.1 | % | 740,471 | 11.0 | % | ||||||||||||||||||||
| Other revenue |
9,904 | 0.5 | % | 9,615 | 0.5 | % | 38,919 | 0.6 | % | 38,162 | 0.6 | % | ||||||||||||||||||||
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| Net sales |
1,804,866 | 100.0 | % | 1,879,166 | 100.0 | % | 6,916,627 | 100.0 | % | 6,758,237 | 100.0 | % | ||||||||||||||||||||
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| Cost of merchandise sales |
1,098,871 | 60.9 | % | 1,134,761 | 60.4 | % | 4,222,542 | 61.0 | % | 4,124,432 | 61.0 | % | ||||||||||||||||||||
| Cost of services sales |
130,093 | 7.2 | % | 141,352 | 7.5 | % | 539,229 | 7.8 | % | 533,504 | 7.9 | % | ||||||||||||||||||||
| Cost of other revenue |
9,904 | 0.5 | % | 9,615 | 0.5 | % | 38,919 | 0.6 | % | 38,162 | 0.6 | % | ||||||||||||||||||||
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| Total cost of sales |
1,238,868 | 68.6 | % | 1,285,728 | 68.4 | % | 4,800,690 | 69.4 | % | 4,696,098 | 69.5 | % | ||||||||||||||||||||
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| Gross profit |
565,998 | 31.4 | % | 593,438 | 31.6 | % | 2,115,937 | 30.6 | % | 2,062,139 | 30.5 | % | ||||||||||||||||||||
| Operating, general, and administrative expenses |
349,417 | 19.4 | % | 372,186 | 19.8 | % | 1,422,619 | 20.6 | % | 1,410,922 | 20.9 | % | ||||||||||||||||||||
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| Operating income |
216,581 | 12.0 | % | 221,252 | 11.8 | % | 693,318 | 10.0 | % | 651,217 | 9.6 | % | ||||||||||||||||||||
| Interest expense, net |
(12,853 | ) | -0.7 | % | (13,275 | ) | -0.7 | % | (51,779 | ) | -0.7 | % | (54,329 | ) | -0.8 | % | ||||||||||||||||
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| Income before income tax expense and equity income from Banfield |
203,728 | 11.3 | % | 207,977 | 11.1 | % | 641,539 | 9.3 | % | 596,888 | 8.8 | % | ||||||||||||||||||||
| Income tax expense |
(78,350 | ) | -4.3 | % | (78,489 | ) | -4.2 | % | (239,444 | ) | -3.5 | % | (223,329 | ) | -3.3 | % | ||||||||||||||||
| Equity income from Banfield |
6,138 | 0.3 | % | 4,522 | 0.2 | % | 17,425 | 0.3 | % | 15,970 | 0.2 | % | ||||||||||||||||||||
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| Net income |
$ | 131,516 | 7.3 | % | $ | 134,010 | 7.1 | % | $ | 419,520 | 6.1 | % | $ | 389,529 | 5.7 | % | ||||||||||||||||
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| Earnings per common share: |
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| Basic |
$ | 1.29 | $ | 1.26 | $ | 4.06 | $ | 3.61 | ||||||||||||||||||||||||
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| Diluted |
$ | 1.28 | $ | 1.24 | $ | 4.02 | $ | 3.55 | ||||||||||||||||||||||||
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| Weighted average shares outstanding: |
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| Basic |
102,076 | 106,470 | 103,203 | 107,819 | ||||||||||||||||||||||||||||
| Diluted |
102,992 | 108,071 | 104,316 | 109,611 | ||||||||||||||||||||||||||||
| Stores open at beginning of each period |
1,314 | 1,269 | 1,278 | 1,232 | ||||||||||||||||||||||||||||
| Stores opened during each period |
19 | 11 | 60 | 60 | ||||||||||||||||||||||||||||
| Stores closed during each period |
— | (2 | ) | (5 | ) | (14 | ) | |||||||||||||||||||||||||
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| Stores open at end of each period |
1,333 | 1,278 | 1,333 | 1,278 | ||||||||||||||||||||||||||||
PetSmart, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
| February 2, 2014 |
February 3, 2013 |
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| Assets |
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| Cash and cash equivalents |
$ | 285,622 | $ | 335,155 | ||||
| Short-term investments |
— | 9,150 | ||||||
| Restricted cash |
71,226 | 71,916 | ||||||
| Receivables, net |
72,685 | 72,198 | ||||||
| Merchandise inventories |
740,302 | 679,090 | ||||||
| Deferred income taxes |
71,945 | 62,859 | ||||||
| Prepaid expenses and other current assets |
76,463 | 86,768 | ||||||
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| Total current assets |
1,318,243 | 1,317,136 | ||||||
| Property and equipment, net |
952,955 | 985,707 | ||||||
| Equity investment in Banfield |
33,577 | 39,934 | ||||||
| Deferred income taxes |
110,408 | 102,992 | ||||||
| Goodwill |
41,140 | 44,242 | ||||||
| Other noncurrent assets |
65,645 | 46,970 | ||||||
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| Total assets |
$ | 2,521,968 | $ | 2,536,981 | ||||
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| Liabilities and Stockholders’ Equity |
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| Accounts payable and bank overdraft |
$ | 255,251 | $ | 202,122 | ||||
| Accrued payroll, bonus, and employee benefits |
160,008 | 176,082 | ||||||
| Accrued occupancy expenses and deferred rents |
81,867 | 70,671 | ||||||
| Current maturities of capital lease obligations |
66,887 | 61,581 | ||||||
| Other current liabilities |
230,332 | 244,436 | ||||||
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| Total current liabilities |
794,345 | 754,892 | ||||||
| Capital lease obligations |
451,597 | 464,578 | ||||||
| Deferred rents |
65,932 | 73,855 | ||||||
| Other noncurrent liabilities |
116,312 | 120,064 | ||||||
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| Total liabilities |
1,428,186 | 1,413,389 | ||||||
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| Stockholders’ Equity: |
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| Preferred stock; $.0001 par value |
— | — | ||||||
| Common stock; $.0001 par value |
17 | 17 | ||||||
| Additional paid-in capital |
1,515,333 | 1,418,411 | ||||||
| Retained earnings |
2,173,005 | 1,827,996 | ||||||
| Accumulated other comprehensive (loss) income |
(2,159 | ) | 5,506 | |||||
| Less: Treasury stock |
(2,592,414 | ) | (2,128,338 | ) | ||||
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| Total stockholders’ equity |
1,093,782 | 1,123,592 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 2,521,968 | $ | 2,536,981 | ||||
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PetSmart, Inc. and Subsidiaries
Non-GGAP Reconciliation: Impact of Extra Week in 2012 on Comparative Results of Operations
(in thousands, except per share amounts and % change)
(Unaudited)
| Quarter Ended |
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| February 2, 2014 | February 3, 2013 | January 27, 2013 | % Change | |||||||||||||||||||||
| 13 Weeks |
As Reported 14 Weeks |
Less 14th Week |
Proforma 13 Weeks |
13 vs.
14 Weeks - |
13 vs.
13 Weeks - |
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| Services sales |
$ | 185,532 | $ | 193,573 | $ | (12,814 | ) | $ | 180,758 | -4.2 | % | 2.6 | % | |||||||||||
| Net sales |
$ | 1,804,866 | $ | 1,879,166 | $ | (125,952 | ) | $ | 1,753,214 | -4.0 | % | 2.9 | % | |||||||||||
| Gross profit |
$ | 565,998 | $ | 593,438 | $ | (48,253 | ) | $ | 545,185 | -4.6 | % | 3.8 | % | |||||||||||
| Operating, general, and administrative expenses |
$ | 349,417 | $ | 372,186 | $ | (18,327 | ) | $ | 353,859 | -6.1 | % | -1.3 | % | |||||||||||
| Income before income tax expense and equity income from Banfield |
$ | 203,728 | $ | 207,977 | $ | (29,934 | ) | $ | 178,043 | -2.0 | % | 14.4 | % | |||||||||||
| Net Income |
$ | 131,516 | $ | 134,010 | $ | (18,639 | ) | $ | 115,371 | -1.9 | % | 14.0 | % | |||||||||||
| Diluted Earnings per common share |
$ | 1.28 | $ | 1.24 | $ | (0.17 | ) | $ | 1.07 | 3.2 | % | 19.6 | % | |||||||||||
| Year Ended |
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| February 2, 2014 | February 3, 2013 | January 27, 2013 | % Change | |||||||||||||||||||||
| 52 Weeks |
As Reported 53 Weeks |
Less 53rd Week |
Proforma 52 Weeks |
52 vs. 53 Weeks - |
52 vs. 52 Weeks - |
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| Services sales |
$ | 766,006 | $ | 740,471 | $ | (12,814 | ) | $ | 727,657 | 3.4 | % | 5.3 | % | |||||||||||
| Net sales |
$ | 6,916,627 | $ | 6,758,237 | $ | (125,952 | ) | $ | 6,632,285 | 2.3 | % | 4.3 | % | |||||||||||
| Gross profit |
$ | 2,115,937 | $ | 2,062,139 | $ | (48,253 | ) | $ | 2,013,886 | 2.6 | % | 5.1 | % | |||||||||||
| Operating, general, and administrative expenses |
$ | 1,422,619 | $ | 1,410,922 | $ | (18,327 | ) | $ | 1,392,595 | 0.8 | % | 2.2 | % | |||||||||||
| Income before income tax expense and equity income from Banfield |
$ | 641,539 | $ | 596,888 | $ | (29,934 | ) | $ | 566,954 | 7.5 | % | 13.2 | % | |||||||||||
| Net Income |
$ | 419,520 | $ | 389,529 | $ | (18,639 | ) | $ | 370,890 | 7.7 | % | 13.1 | % | |||||||||||
| Diluted Earnings per common share |
$ | 4.02 | $ | 3.55 | $ | (0.17 | ) | $ | 3.38 | 13.2 | % | 18.9 | % | |||||||||||