Big Lots Reports Record First Quarter EPS From Continuing Operations of $0.79 ($0.82 on an Adjusted Basis)

COMPARABLE STORE SALES INCREASE 3.0%

COMPANY INCREASES OUTLOOK FOR FISCAL 2016 ADJUSTED EPS

COLUMBUS, Ohio, May 27, 2016 /PRNewswire/ -- Big Lots, Inc. BIG today reported income from continuing operations of $38.6 million, or $0.79 per diluted share, for the first quarter of fiscal 2016 ended April 30, 2016. This result includes an after tax expense of $1.3 million, or $0.03 per diluted share, associated with legacy pension plans which have been terminated. Excluding this expense, adjusted income from continuing operations totaled $39.9 million, or $0.82 per diluted share (see non-GAAP table included later in this release), which compares to our guidance of adjusted income from continuing operations of $0.66 to $0.72 per diluted share (non-GAAP). Adjusted income from continuing operations for the first quarter of fiscal 2015 was $33.0 million, or $0.61 per diluted share (non-GAAP). Comparable store sales for stores open at least fifteen months increased 3.0% for the quarter, compared to our guidance of an increase in the low single digits. Net sales for the first quarter of fiscal 2016 increased 2.5% to $1,312.6 million, as our comparable store sales increase was partially offset by a lower store count compared to last year.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm very pleased with our first quarter results. Q1 comps increased for the 9th consecutive quarter and were at the high end of our guidance range. Jennifer continues to respond positively to our strategic focus on ownable and winnable merchandise categories, improved merchandise presentations and more consistent in-store execution."

FIRST QUARTER HIGHLIGHTS

  • Record adjusted income from continuing operations of $0.82 per diluted share (non-GAAP), compared to adjusted income from continuing operations of $0.61 per diluted share (non-GAAP) last year
  • Comparable store sales increase 3.0%

 


Earnings per Share








Q1 2016


Q1 2015






Continuing operations


$0.79


$0.60

Impact of legacy pension costs (1)


$0.03


$0.01

Continuing operations - adjusted basis (1)


$0.82


$0.61











(1)  Non-GAAP detailed reconciliation provided below.

 

Inventory and Cash Management

Inventory ended the first quarter of fiscal 2016 at $807 million, compared to $835 million for the first quarter of fiscal 2015. Inventory per store decreased compared to last year, combined with a lower store count year over year.

We ended the first quarter of fiscal 2016 with $64 million of Cash and Cash Equivalents and $154 million of borrowings under our credit facility compared to $67 million of Cash and Cash Equivalents and $41 million of borrowings under our credit facility as of the end of the first quarter of fiscal 2015. Cash flow (cash provided by operating activities less cash used in investing activities) for the first quarter of fiscal 2016 was $60 million compared to $59 million for the first quarter of fiscal 2015. Cash flow was focused on reinvesting in the Company's strategic initiatives to support long-term sustainable growth and returning cash to our shareholders through our share repurchase and dividend efforts.

Total Cash Returned To Shareholders

As a reminder, on March 1, 2016, our Board of Directors approved a share repurchase program ("2016 Share Repurchase Program") providing for the repurchase of up to $250 million of our common shares. During the first quarter of fiscal 2016, we invested $138 million to purchase 3.0 million shares, leaving us with approximately $112 million of authorization remaining at the end of the first quarter. The combination of this share repurchase activity and our quarterly dividend payment represents approximately $148 million returned to shareholders during the first fiscal quarter of 2016.

Subsequent to the end of the first quarter of fiscal 2016, we exhausted the authorization remaining under our 2016 Share Repurchase Program on May 25, 2016. In total for the program, we invested $250 million to repurchase 5.6 million shares, or approximately 11% of the Company's shares outstanding. Common shares acquired through the 2016 Share Repurchase Program will be available to meet obligations under our equity compensation plans and for general corporate purposes. 

As announced earlier today in a separate press release, on May 26, 2016, our Board of Directors declared a quarterly cash dividend of $0.21 per common share. This dividend payment of approximately $10 million is payable on June 24, 2016, to shareholders of record as of the close of business on June 10, 2016.

FISCAL Q2 2016 GUIDANCE

  • Provides initial Q2 guidance for adjusted income from continuing operations of $0.42 to $0.47 per diluted share (non-GAAP), compared to adjusted income from continuing operations of $0.41 per diluted share (non-GAAP) for the same period last year
  • Provides initial Q2 guidance for comparable store sales in the range of flattish to an increase of 2%

For the second quarter of fiscal 2016, we estimate adjusted income from continuing operations will be in the range of $0.42 to $0.47 per diluted share (non-GAAP), compared to adjusted income from continuing operations of $0.41 per diluted share (non-GAAP) for the second quarter of fiscal 2015. This guidance is based on an estimated comparable store sales in the range of flattish to an increase of 2% compared to a 2.8% comparable store sales increase in Q2 of fiscal 2015.

FISCAL 2016 GUIDANCE

  • Updates guidance for fiscal 2016 adjusted income from continuing operations to be in the range of $3.35 to $3.50 per diluted share (non-GAAP), representing an 11% to 16% increase compared to fiscal 2015 adjusted income from continuing operations of $3.01 per diluted share (non-GAAP)
  • Affirms guidance for fiscal 2016 comparable store sales increase in the low single digits
  • Affirms guidance for fiscal 2016 cash flow of $200 million

Based on the actual results for the first quarter and the guidance provided for the second quarter, we are updating our guidance for the full year of fiscal 2016. We estimate fiscal 2016 adjusted income from continuing operations will be in the range of $3.35 to $3.50 per diluted share (non-GAAP) compared to prior guidance of $3.20 to $3.35 per diluted share (non-GAAP).  This compares to adjusted income from continuing operations of $3.01 per diluted share (non-GAAP) for fiscal 2015. This outlook is based on a comparable store sales increase in the low single digit range and total sales up slightly. We estimate this financial performance will result in cash flow of approximately $200 million.

 



Q2


Full Year












2016 Guidance (1)


2015 (2)


2016 Guidance (1)


2015 (2)










Adjusted EPS from continuing operations


$0.42  -  $0.47


$0.41


$3.35  -  $3.50


$3.01



















(1) Non-GAAP - excludes potential impact of legacy pension costs.

(2) Non-GAAP - see attached reconciliation.

 

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 2016. 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 through the Investor Relations section of our website http://www.biglots.com/ after 12:00 noon today and will remain available through midnight on Friday, June 10, 2016. A replay of this call will also be available beginning today at 12:00 noon through June 10 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 4012430. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. BIG is a unique, non-traditional, discount retailer operating 1,448 BIG LOTS stores in 47 states with product assortments in the merchandise categories of Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. Our vision is to be recognized for providing an outstanding shopping experience for our customers, valuing and developing our associates, and creating growth for our shareholders. Big Lots supports the communities it serves through the Big Lots Foundation, a charitable organization focused on four areas of need: hunger, housing, healthcare, and education. For more information about the Company, 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.

 

 

















BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)












APRIL 30


MAY 2






2016


2015






(Unaudited)


(Recast)












ASSETS















Current assets:








Cash and cash equivalents


$64,390


$67,191




Inventories


807,058


835,378




Other current assets


84,717


76,924




   Total current assets


956,165


979,493











Property and equipment - net


552,289


566,939



Deferred income taxes


54,924


57,132



Other assets


43,243


45,248






$1,606,621


$1,648,812




















LIABILITIES AND SHAREHOLDERS' EQUITY      















Current liabilities:








Accounts payable


$363,473


$368,094




Property, payroll and other taxes


85,205


77,177




Accrued operating expenses


93,122


81,755




Insurance reserves


41,870


39,918




Accrued salaries and wages


48,345


26,443




Income taxes payable


22,786


18,926




   Total current liabilities


654,801


612,313











Long-term obligations under bank credit facility


153,800


40,500











Deferred rent


58,142


65,871



Insurance reserves


57,814


56,675



Unrecognized tax benefits


16,275


17,796



Other liabilities


45,715


61,571











Shareholders' equity


620,074


794,086






$1,606,621


$1,648,812



 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












13 WEEKS ENDED


13 WEEKS ENDED




APRIL 30, 2016


MAY 2, 2015





%



%




(Unaudited)


(Unaudited)

















Net sales


$1,312,575

100.0


$1,280,455

100.0










Gross margin


517,681

39.4


504,116

39.4










Selling and administrative expenses 


425,412

32.4


420,246

32.8










Depreciation expense


29,699

2.3


31,225

2.4









Operating profit


62,570

4.8


52,645

4.1










Interest expense


(634)

(0.0)


(496)

(0.0)










Other income (expense)


679

0.1


28

0.0









Income from continuing operations before income taxes


62,615

4.8


52,177

4.1










Income tax expense


24,002

1.8


19,869

1.6









Income from continuing operations


38,613

2.9


32,308

2.5










Income (loss) from discontinued operations, net of tax








   (expense) benefit of ($28) and $60, respectively


46

0.0


(95)

(0.0)









Net income


$38,659

2.9


$32,213

2.5

















Earnings per common share - basic (a)
















Continuing operations


$0.80



$0.61











Discontinued operations


0.00



0.00











Net income


$0.80



$0.61


















Earnings per common share - diluted (a)
















Continuing operations


$0.79



$0.60











Discontinued operations


0.00



0.00











Net income


$0.79



$0.60


















Weighted average common shares outstanding
















Basic


48,466



53,087











Dilutive effect of share-based awards


422



570











Diluted


48,888



53,657










Cash dividends declared per common share


$0.21



$0.19










(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


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)












13 WEEKS ENDED


13 WEEKS ENDED






APRIL 30, 2016


MAY 2, 2015






 (Unaudited) 


 (Unaudited) 




  Net cash provided by operating activities 


$78,611


$87,525












  Net cash used in investing activities


(18,752)


(28,752)












  Net cash used in financing activities


(49,613)


(43,843)











Increase in cash and cash equivalents


10,246


14,930




Cash and cash equivalents:








  Beginning of period


54,144


52,261




  End of period


$64,390


$67,191



 

 

BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

 

The following tables reconcile: (1) selling and administrative expenses, selling and administrative expense 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 2016, the first quarter of 2015, the second quarter of 2015, and the full-year 2015 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense 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 2016 - Thirteen weeks ended April 30, 2016 












 As Reported 


 Adjustment to
exclude pension
costs 


 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$             425,412


$                     (2,140)


$             423,272

 Selling and administrative expense rate 

32.4%


(0.2%)


32.2%

 Operating profit 

62,570


2,140


64,710

 Operating profit rate 

4.8%


0.2%


4.9%

 Income tax expense 

24,002


846


24,848

 Effective income tax rate 

38.3%


0.0%


38.4%

 Income from continuing operations 

38,613


1,294


39,907

 Net income 

38,659


1,294


39,953

 Diluted earnings per share from  






      continuing operations 

$                    0.79


$                         0.03


$                    0.82

 Diluted earnings per share  

$                    0.79


$                         0.03


$                    0.82

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense 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") all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intention of completing the termination and distributing all plan assets during 2016, which totaled $2,140 ($1,294, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

 

First quarter of 2015 - Thirteen weeks ended May 2, 2015 









 As Reported 



 Adjustment to
exclude pension
costs 


 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$             420,246



$                     (1,067)


$             419,179

 Selling and administrative expense rate 

32.8%



(0.1%)


32.7%

 Operating profit 

52,645



1,067


53,712

 Operating profit rate 

4.1%



0.1%


4.2%

 Income tax expense 

19,869



419


20,288

 Effective income tax rate 

38.1%



0.0%


38.1%

 Income from continuing operations 

32,308



648


32,956

 Net income 

32,213



648


32,861

 Diluted earnings per share from  







      continuing operations 

$                    0.60



$                         0.01


$                    0.61

 Diluted earnings per share  

$                    0.60



$                         0.01


$                    0.61

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense 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") all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intention of completing the termination and distributing all plan assets during 2016, which totaled $1,067 ($648, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

 

Second quarter of 2015 - Thirteen weeks ended August 1, 2015 














 As Reported 


 Adjustment to exclude loss contingency 


 Adjustment to exclude pension costs 


 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$       414,305


$           (4,487)


$               (1,058)


$     408,760

 Selling and administrative expense rate 

34.2%


(0.4%)


(0.1%)


33.8%

 Operating profit 

30,537


4,487


1,058


36,082

 Operating profit rate 

2.5%


0.4%


0.1%


3.0%

 Income tax expense 

10,115


1,776


418


12,309

 Effective income tax rate 

36.4%


0.4%


0.1%


36.9%

 Income from continuing operations 

17,711


2,711


640


21,062

 Net income 

17,636


2,711


640


20,987

 Diluted earnings per share from  








      continuing operations 

$              0.35


$               0.05


$                   0.01


$            0.41

 Diluted earnings per share  

$              0.34


$               0.05


$                   0.01


$            0.41

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense 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 accrual of a loss contingency associated with merchandise-related legal matters of $4,487 ($2,711, net of tax) and all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intention of completing the termination and distributing all plan assets during 2016, which totaled $1,058 ($640, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

 

 Full-year 2015 - Fifty-two weeks ended January 30, 2016 










 As Reported 


 Adjustment to exclude loss contingency 


 Adjustment to exclude pension costs 


 As Adjusted (non-GAAP) 

 Selling and administrative expenses 

$    1,708,717


$           (4,487)


$             (12,932)


$ 1,691,298

 Selling and administrative expense rate 

32.9%


(0.1%)


(0.2%)


32.6%

 Operating profit 

235,732


4,487


12,932


253,151

 Operating profit rate 

4.5%


0.1%


0.2%


4.9%

 Income tax expense 

83,842


1,776


5,112


90,730

 Effective income tax rate 

37.0%


0.0%


0.1%


37.1%

 Income from continuing operations 

143,008


2,711


7,820


153,539

 Net income 

142,873


2,711


7,820


153,404

 Diluted earnings per share from  








      continuing operations 

$              2.81


$               0.05


$                   0.15


$            3.01

 Diluted earnings per share  

$              2.80


$               0.05


$                   0.15


$            3.01

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense 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 accrual of a loss contingency associated with merchandise-related legal matters of $4,487 ($2,711, net of tax) and all costs associated with the Company's pension plans, as the Company froze benefits and began termination activities for its pension plans in 2015 with the intention of completing the termination and distributing all plan assets during 2016, which totaled $12,932 ($7,820, net of tax).  The pension costs encompass all items associated with net periodic benefit costs, including curtailment and settlement charges, and professional fees associated with the plan and plan termination proceedings.

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.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/big-lots-reports-record-first-quarter-eps-from-continuing-operations-of-079-082-on-an-adjusted-basis-300276031.html

SOURCE Big Lots, Inc.

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