The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

Big Lots Reports First Quarter Adjusted EPS From Continuing Operations Of $0.68 Per Diluted Share

Wednesday, May 23, 2012

Big Lots Reports First Quarter Adjusted EPS From Continuing Operations Of $0.68 Per Diluted Share06:00 EDT Wednesday, May 23, 2012COMPANY PROVIDES UPDATED EPS AND CASH FLOW GUIDANCE COMPANY ANNOUNCES NEW $200 MILLION SHARE REPURCHASE PROGRAMCOLUMBUS, Ohio, May 23, 2012 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income from continuing operations of $40.8 million, or $0.63 per diluted share, for the first quarter of fiscal 2012 ended April 28, 2012. As previously disclosed in our March 2, 2012 press release, we incurred an after-tax charge of $3.4 million, or $0.05 per diluted share, during the first quarter 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 totaled $44.2 million, or $0.68 per diluted share (non-GAAP), for the first quarter of fiscal 2012. This compares to income from continuing operations of $52.5 million, or $0.70 per diluted share, for the first quarter of fiscal 2011.(Logo: http://photos.prnewswire.com/prnh/20011026/BIGLOTSLOGO ) FIRST QUARTER HIGHLIGHTSAdjusted income from continuing operations of $0.68 per diluted share (non-GAAP) versus income from continuing operations of $0.70 per diluted share last year Generated $108 million of Cash Flow (defined as operating activities less investing activities) Opened 10 new stores Invested $99 million to repurchase 2.5 million shares and completed our 2011 $400 million share repurchase program by repurchasing 11.7 million shares, or 16% of our outstanding shares, at an average price per share of $34.11EPS from Continuing OperationsQ1 '12 (1)Q1 '11 (2)U.S. Operations$0.72$0.70Add back: Inventory charge$0.05-U.S. Operations - adjusted basis$0.77$0.70Canada Operations (3)($0.09)-Consolidated - adjusted basis$0.68$0.70(1) Non-GAAP(2) GAAP(3) Canadian operations were acquired on July 18, 2011. Based on materiality, we have not provided pro-forma 2011 results.First Quarter ResultsU.S. OperationsNet sales for U.S. operations for the first quarter of fiscal 2012 increased 2.8% to $1,262.2 million, compared to $1,227.3 million for the same period of fiscal 2011. Comparable store sales for U.S. stores open at least fifteen months decreased 0.8% for the quarter. Adjusted income from continuing U.S. operations totaled $0.77 per diluted share (non-GAAP) compared to income from continuing operations of $0.70 per diluted share for the same period of fiscal 2011.Canadian OperationsNet sales for Canadian operations for the first quarter of fiscal 2012 totaled $32.2 million, while incurring a net loss of $6.1 million, or $0.09 per diluted share (non-GAAP). We acquired our Canadian operations on July 18, 2011. Based on materiality to our total operations, we are not required to and have not provided pro-forma information for Canadian operations.Inventory and Cash ManagementOn a consolidated basis, inventory ended the first quarter of fiscal 2012 at $848 million compared to $785 million last year. The increase of approximately 8% represents growth in the number of U.S. stores, approximately 1% per store growth of inventory in our U.S. stores, and our Canadian acquisition.We ended the first quarter of fiscal 2012 with $83 million of Cash and Cash Equivalents and no borrowings under our credit facility compared to $284 million of Cash and Cash Equivalents and no borrowings under our credit facility as of the end of the first quarter of fiscal 2011. Our net use of cash and debt during the last twelve months was focused on share repurchase activity, acquiring and funding our Canadian operations, and repaying borrowings under our credit facility offset by positive cash flow (defined as operating activities less investing activities) generated by our U.S. business. Share Repurchase ActivityDuring the first quarter of fiscal 2012, we invested $99 million to repurchase 2.5 million of our shares at an average price of $39.32 per share. This activity exhausted our 2011 share repurchase program which resulted in a total investment of $400 million to repurchase 11.7 million shares at an average share price of $34.11 per share.On May 22, 2012, our Board of Directors approved a new share repurchase program ("2012 share repurchase program") providing for the repurchase of up to $200 million of our common shares. The $200 million authorization is expected to be utilized to repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the repurchase program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2012 share repurchase program is eligible to begin on May 25, 2012 and will continue until exhausted.FISCAL Q2 2012 GUIDANCEProvides initial Q2 guidance for income from continuing operations of $0.37 to $0.42 per diluted share versus income from continuing operations of $0.50 per diluted share for the same period last year Provides initial Q2 guidance for U.S. comparable store sales in a range of slightly positive to slightly negative For the second quarter of fiscal 2012, we estimate consolidated income from continuing operations will be in the range of $0.37 to $0.42 per diluted share, compared to income from continuing operations of $0.50 per diluted share for the second quarter of fiscal 2011.We estimate income from U.S. operations in a range of $0.44 to $0.49 per diluted share (non-GAAP), compared to last year's $0.52 per diluted share (non-GAAP). This is based on U.S. comparable store sales in a range of slightly positive to slightly negative and a total U.S. sales increase in the range of 3% to 4%.Sales from our Canadian operations are expected to be in the range of $32 to $35 million for the second quarter of fiscal 2012, resulting in an operating loss in the range of $4 to $6 million, or $0.07 to $0.10 per diluted share (non-GAAP).2012 OUTLOOK Updates fiscal 2012 annual guidance for adjusted income from continuing operations to $3.25 to $3.40 per diluted share (non-GAAP) versus income from continuing operations of $2.99 per diluted share for fiscal 2011 Updates fiscal 2012 U.S. comparable stores sales estimates to be in a range of flat to 1% increase Updates Cash Flow guidance to $190 millionBased on first quarter operating results and our expectations for the second fiscal quarter, we now estimate our fiscal 2012 consolidated adjusted income from continuing operations to be in the range of $3.25 to $3.40 per diluted share (non-GAAP), compared to our prior guidance of $3.40 to $3.50 per diluted share (non-GAAP). We have revised our Cash Flow guidance to $190 million compared to our prior guidance of $200 million.We now estimate adjusted income from U.S. operations will be in the range of $3.50 to $3.60 per diluted share (non-GAAP), compared to our prior guidance of $3.63 to $3.73 per diluted share (non-GAAP). This is based on U.S. comparable store sales in the range of flat to a 1% increase and a total U.S. sales increase in the range of 5.5% to 6.5%.For our Canadian operations, sales are expected to be in the range of $142 to $152 million for fiscal 2012 resulting in an operating loss in the range of $14 to $16 million, or $0.23 to $0.26 per diluted share (non-GAAP).EPS from Continuing Operations(non-GAAP)Full YearQ22012 Guidance20112012 Guidance2011U.S. Operations$3.45 - $3.55$3.18$0.44 - $0.49$0.52Add back: Inventory charge$0.05---U.S. Operations - adjusted basis$3.50 - $3.60$3.18$0.44 - $0.49$0.52Canada Operations (1)($0.23) - ($0.26)($0.19)($0.07) - ($0.10)($0.02)Consolidated - adjusted basis$3.25 - $3.40$2.99(2)$0.37 - $0.42$0.50 (2)(1) Canadian operations were acquired on July 18, 2011. Based on materiality, we have not provided pro-forma fiscal 2011 results.(2) All results presented above are on a non-GAAP basis with the exception of Full Year 2011 and Q2 2011 Consolidated EPS.Conference Call/Webcast We will host a conference call today at 8:00 a.m. to discuss our financial results for the first 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 Wednesday, June 6. A replay of the call will be available beginning today at 12:00 noon through June 6 at midnight by dialing: 1.888.203.1112 (United States and Canada) or 1.719.457.0820 (International). The Replay Confirmation Code is 1866714. All times are Eastern Time.Big Lots is North America's largest broadline closeout retailer. As of May 23, 2012, we operated 1,459 BIG LOTS stores in the 48 contiguous United States and 82 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 StatementsCertain 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)APRIL 28APRIL 3020122011(Unaudited)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents$82,571$283,895Inventories847,655784,865Deferred income taxes45,99751,136Other current assets68,64663,206Total current assets1,044,8691,183,102Property and equipment - net569,146521,925Deferred income taxes3,40210,786Goodwill15,0300Other assets44,35842,009$1,676,805$1,757,822LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:Accounts payable$433,505$372,425Property, payroll and other taxes79,10679,845Accrued operating expenses100,32760,270Insurance reserves35,44137,848KB bankruptcy lease obligation3,0693,452Accrued salaries and wages25,30724,222Income taxes payable19,30332,792Total current liabilities696,058610,854Long-term obligations under bank credit facility00Deferred rent62,01644,924Insurance reserves50,81147,077Unrecognized tax benefits17,27418,221Other liabilities41,21929,930Shareholders' equity809,4271,006,816$1,676,805$1,757,822BIG LOTS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)13 WEEKS ENDED13 WEEKS ENDEDAPRIL 28, 2012APRIL 30, 2011%%(Unaudited)(Unaudited)Net sales$1,294,481100.0$1,227,274100.0Gross margin512,44939.6494,12940.3Selling and administrative expenses 418,31932.3387,16731.5Depreciation expense25,2882.020,6641.7Operating profit68,8425.386,2987.0Interest expense(336)(0.0)(501)(0.0)Other income (expense)370.01120.0Income from continuing operations before income taxes68,5435.385,9097.0Income tax expense 27,7632.133,3782.7Income from continuing operations40,7803.252,5314.3Loss from discontinued operations, net of tax benefit of $22 and $40, respectively(34)(0.0)(60)(0.0)Net income $40,7463.1$52,4714.3Earnings per common share - basic (a)Continuing operations$0.64$0.71Discontinued operations0.000.00Net income $0.64$0.71Earnings per common share - diluted (a)Continuing operations$0.63$0.70Discontinued operations0.000.00Net income $0.63$0.70Weighted average common shares outstandingBasic64,11974,047Dilutive effect of share-based awards1,0461,219Diluted65,16575,266(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 SUBSIDIARIESSEGMENT OPERATING PERFORMANCE(In thousands, except per share data)13 WEEKS ENDEDAPRIL 28, 2012 (a)U.S.CanadaConsolidated(Unaudited)(Unaudited)(Unaudited)Net sales$1,262,235$32,246$1,294,481Gross margin500,94511,504512,449Selling and administrative expenses401,52616,793418,319Depreciation expense24,42486425,288Operating profit (loss)74,995(6,153)68,842Interest expense(336)0(336)Other income (expense)03737Income (loss) from continuing operations before income taxes74,659(6,116)68,543Income tax expense 27,763027,763Income (loss) from continuing operations46,896(6,116)40,780Diluted earnings (loss) per common share from continuing operations (b)$0.72($0.09)$0.63(a)The consolidated results of operations are comprised of the U.S. and Canadian operating segments. Prior year results are not presented as we operated only one segment during the first quarter of fiscal 2011.(b)The diluted earnings per share from continuing operations by segment are separately calculated; therefore, the sum of diluted earnings per share from continuing operations by segment may differ, due to rounding, from the calculated consolidated diluted earnings per share from continuing operations. Diluted earnings 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)13 WEEKS ENDED13 WEEKS ENDEDAPRIL 28, 2012APRIL 30, 2011(Unaudited) (Unaudited) Net cash provided by operating activities $125,582$125,545Net cash used in investing activities(17,989)(19,099)Net cash used in financing activities(93,648)(90)Impact of foreign currency on cash79-Increase in cash and cash equivalents14,024106,356Cash and cash equivalents:Beginning of period68,547177,539End of period$82,571$283,895BIG LOTS, INC. AND SUBSIDIARIESRECONCILIATION 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 first quarter of 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).First quarter of 2012 - Thirteen weeks ended April 28, 2012 Consolidated Results As reported Adjustment to excludechange in inventory accounting principle As Adjusted(non-GAAP) Gross margin $ 512,449$ 5,574$ 518,023Gross margin rate 39.6%0.4%40.0%Operating profit 68,8425,57474,416Operating profit rate 5.3%0.4%5.7%Income tax expense 27,7632,18629,949Effective income tax rate 40.5%-0.1%40.4%Income from continuing operations 40,7803,38844,168Net income 40,7463,38844,134Diluted earnings per share from continuing operations$ 0.63$ 0.05$ 0.68Diluted earnings per share $ 0.63$ 0.05$ 0.68U.S. Segment Results As reported Adjustment to excludechange in inventoryaccounting principle As Adjusted(non-GAAP) Gross margin $ 500,945$ 5,574$ 506,519Gross margin rate 39.7%0.4%40.1%Operating profit 74,9955,57480,569Operating profit rate 5.9%0.5%6.4%Income tax expense 27,7632,18629,949Effective income tax rate 37.2%0.1%37.3%Income from continuing operations 46,8963,38850,284Diluted earnings per share from continuing operations $ 0.72$ 0.05$ 0.77The 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.For further information: Timothy A. Johnson, Senior Vice President of Finance, +1-614-278-6622