Big 5 Sporting Goods Corporation (Nasdaq: BGFV) (the “Company,”
“we,” “our,” “us,” “Big 5”), a leading sporting goods retailer,
today reported financial results for the fiscal 2021 first quarter
ended April 4, 2021.
Steven G. Miller, the Company’s Chairman,
President and Chief Executive Officer, said, “We are pleased to
report record first quarter results driven by a combination of top
line sales strength, merchandise margin expansion and an improved
cost structure. Our team continues to do a tremendous job
satisfying the incredible consumer demand we are seeing across our
diverse product mix.”
Mr. Miller continued, “Same store sales were up
31.8% for the fiscal 2021 first quarter reflecting broad-based
strength across apparel, footwear and hardgoods, including very
robust demand for winter-related products. These results were
especially remarkable given the headwinds impacting sales of team
sports products due to the widespread suspension of league play
over most of the quarter. Our sales accelerated beyond expectations
in March, benefitting from the resumption of team sports
activities, along with school re-openings and stimulus checks. Our
strong sales momentum has continued into the second quarter with
sales performing at historically high levels for the quarter to
date. We are excited by the strength in our business, which has
translated to our balance sheet, as we continue to operate with
zero debt while growing our cash position. In light of
this strength and to continue to return value to shareholders, our
Board of Directors has declared a 20% increase in our regular cash
dividend to an annual rate of $0.72 per share and also has declared
a special cash dividend of $1.00 per share.”
Net sales for the fiscal 2021 first quarter were
$272.8 million compared to net sales of $217.7 million for the
first quarter of fiscal 2020, which included significant store
closures due to COVID-19 over the last ten days of the period. Same
store sales increased 31.8% for the first quarter of fiscal 2021.
The increase in net sales was partially offset by an approximately
$10.0 million unfavorable impact from the calendar shift related to
the Company’s 53-week fiscal 2020 that caused fiscal 2021 to begin
one week later than fiscal 2020, as well as an unfavorable impact
from the calendar shift related to the Easter holiday, during which
the Company’s stores are closed, from the second quarter in fiscal
2020 to the first quarter in fiscal 2021. Same store sales
comparisons are made on a comparable-week basis and the calendar
shifts did not have a material impact on same store sales
comparisons.
Gross profit for the fiscal 2021 first quarter
increased to $97.9 million from $64.6 million in the first quarter
of the prior year. The Company’s gross profit margin was 35.9% in
the fiscal 2021 first quarter versus 29.6% in the first quarter of
the prior year. The increase in gross profit margin largely
reflects a 350-basis point increase in merchandise margins, lower
store occupancy and warehousing costs as a percentage of net sales
and, to a lesser degree, the favorable impact from an insurance
settlement, partially offset by lower distribution costs
capitalized into inventory for the quarter.
Selling and administrative expense as a
percentage of net sales was 25.7% in the fiscal 2021 first quarter
versus 32.8% in the fiscal 2020 first quarter. Overall selling and
administrative expense for the quarter decreased $1.3 million from
the prior year primarily due to lower print advertising expense and
the elimination of a liability for an employment agreement,
partially offset by higher performance-based incentive compensation
accruals.
Net income for the first quarter of fiscal 2021
was $21.5 million, or $0.96 per diluted share, which includes a
benefit of $0.06 per diluted share related to the elimination of
the employment agreement liability and the insurance
settlement. Net loss for the first quarter of fiscal
2020 was $4.6 million, or $0.22 per basic share.
Adjusted EBITDA for the first quarter of fiscal
2021 was $30.3 million, compared to a loss of $2.2 million in the
prior year period. EBITDA and Adjusted EBITDA are non-GAAP
financial measures. See “Non-GAAP Financial Measures” below for
more details and a reconciliation of non-GAAP Adjusted EBITDA and
EBITDA to the most comparable GAAP measure, net income.
Balance SheetThe Company ended
the fiscal 2021 first quarter with no borrowings under its credit
facility and with cash and cash equivalents of $100.1 million. This
compares to zero borrowings and $64.7 million of cash and cash
equivalents as of the end of the 2020 fiscal year and to $124.3
million of borrowings and $44.2 million of cash as of the end of
the fiscal 2020 first quarter, reflecting a $180.2 million
improvement in net cash (cash less revolver borrowings) on a
year-over-year basis and a $35.4 million improvement in net cash
compared to the end of fiscal 2020. Total merchandise inventories
decreased by approximately 20.8% as of the end of the fiscal 2021
first quarter versus the first quarter of the prior year.
Quarterly Cash Dividend and Special Cash
DividendIn light of the continued strength of the
Company’s business, cash flow generation and improved balance
sheet, the Company’s Board of Directors has declared a 20% increase
in its quarterly cash dividend from $0.15 per share of outstanding
common stock to $0.18 per share of outstanding common stock, which
will be paid on June 15, 2021 to stockholders of record as of June
1, 2021. Additionally, to further return value to shareholders, the
Company’s Board of Directors has declared a special cash dividend
of $1.00 per share of outstanding common stock, which will be paid
on June 1, 2021 to stockholders of record as of May 17, 2021.
Second Quarter GuidanceFor the
fiscal 2021 second quarter, the Company expects same store sales to
increase in the range of 22% to 27% and expects to realize earnings
per diluted share in the range of $1.05 to $1.25. Fiscal 2021
second quarter guidance reflects the combined positive impact of
calendar shifts of the Easter holiday, during which the Company’s
stores are closed, from the second quarter of fiscal 2020 into the
first quarter of fiscal 2021, and the Fourth of July holiday from
the third quarter of fiscal 2020 into the second quarter of fiscal
2021. The Company’s second quarter guidance compares to a same
store sales decrease of 4.2% and earnings per diluted share of
$0.52 in the second quarter of fiscal 2020, which included a net
benefit of approximately $0.13 per diluted share related to rent
abatement savings and a recovery in eminent domain litigation,
partially offset by expense associated with special employee
recognition bonus awards.
Store OpeningsThe Company
currently has 430 stores in operation. During fiscal 2021, the
Company expects to open approximately five stores and close
approximately two stores.
Conference Call InformationThe
Company will host a conference call and audio webcast today, May 4,
2021, at 2:00 p.m. Pacific (5:00 p.m. Eastern), to discuss
financial results for the first quarter of fiscal 2021. To access
the conference call, participants in North America may dial (877)
407-9039 and international participants may dial (201) 689-8470.
Participants are encouraged to dial in to the conference call ten
minutes prior to the scheduled start time. The call will also be
broadcast live over the Internet and accessible through the
Investor Relations section of the Company’s website at
www.big5sportinggoods.com. Visitors to the website should select
the “Investor Relations” link to access the webcast. The webcast
will be archived and accessible on the same website for 30 days
following the call. A telephonic replay will be available through
May 11, 2021 by calling (844) 512-2921 to access the playback; the
passcode is 13719234.
About Big 5 Sporting Goods
Corporation Big 5 is a leading sporting goods
retailer in the western United States, operating 430 stores under
the “Big 5 Sporting Goods” name as of the fiscal quarter ended
April 4, 2021. Big 5 provides a full-line product offering in a
traditional sporting goods store format that averages 11,000 square
feet. Big 5’s product mix includes athletic shoes, apparel and
accessories, as well as a broad selection of outdoor and athletic
equipment for team sports, fitness, camping, hunting, fishing, home
recreation, tennis, golf, and winter and summer recreation.
Except for historical information contained
herein, the statements in this release are forward-looking and made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties and other factors that
may cause Big 5’s actual results in current or future periods to
differ materially from forecasted results. These risks and
uncertainties include, among other things, the economic impacts of
COVID-19 on Big 5’s business operations, including as a result of
regulations that may be issued in response to COVID-19, changes in
the consumer spending environment, fluctuations in consumer holiday
spending patterns, increased competition from e-commerce retailers,
breach of data security or other unauthorized disclosure of
sensitive personal or confidential information, the competitive
environment in the sporting goods industry in general and in Big
5’s specific market areas, inflation, product availability and
growth opportunities, changes in the current market for (or
regulation of) firearm-related products, a reduction or loss of
product from a key supplier, disruption in product flow, seasonal
fluctuations, weather conditions, changes in cost of goods,
operating expense fluctuations, increases in labor and
benefit-related expense, changes in laws or regulations, including
those related to tariffs and duties, public health issues
(including those caused by COVID-19), impacts from civil unrest or
widespread vandalism, lower than expected profitability of Big 5’s
e-commerce platform or cannibalization of sales from Big 5’s
existing store base which could occur as a result of operating the
e-commerce platform, litigation risks, stockholder campaigns and
proxy contests, risks related to Big 5’s historically leveraged
financial condition, changes in interest rates, credit
availability, higher expense associated with sources of credit
resulting from uncertainty in financial markets and economic
conditions in general. Those and other risks and uncertainties are
more fully described in Big 5’s filings with the Securities and
Exchange Commission, including its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q. Big 5 conducts its business in a
highly competitive and rapidly changing environment. Accordingly,
new risk factors may arise. It is not possible for management to
predict all such risk factors, nor to assess the impact of all such
risk factors on Big 5’s business or the extent to which any
individual risk factor, or combination of factors, may cause
results to differ materially from those contained in any
forward-looking statement. Big 5 undertakes no obligation to revise
or update any forward-looking statement that may be made from time
to time by it or on its behalf.
Non-GAAP Financial
Measures In addition to reporting our financial
results in accordance with generally accepted accounting principles
("GAAP"), we are providing non-GAAP adjusted earnings before
interest, income tax expense, depreciation and amortization
(“EBITDA”) and other adjustments (“Adjusted EBITDA”). EBITDA and
Adjusted EBITDA are not prepared in accordance with GAAP and
exclude certain items presented below. We use EBITDA and Adjusted
EBITDA internally for forecasting purposes and as factors to
evaluate our operating performance. We believe that Adjusted EBITDA
provides useful information to both management and investors by
excluding certain expenses, gains and losses that may not be
indicative of core operating results and business outlook. While we
believe that EBITDA and Adjusted EBITDA can be useful to investors
in evaluating our period-to-period operating results, this
information should be considered supplemental and is not a
substitute for financial information prepared in accordance with
GAAP. In addition, our definition or calculation of these non-GAAP
measures may differ from similarly titled measures used by other
companies, limiting the usefulness of this financial measure for
comparison to other companies. We believe the GAAP measure
that is most comparable to non-GAAP EBITDA and Adjusted EBITDA is
net income, and a reconciliation of our non-GAAP EBITDA and
Adjusted EBITDA to GAAP net income is provided below.
|
|
13 Weeks Ended |
|
|
April 4, 2021 |
|
|
March 29,2020 |
|
|
|
|
|
(In thousands) |
GAAP net income (loss) (as reported) |
|
$ |
21,546 |
|
|
|
$ |
(4,611 |
) |
+ Interest (as reported) |
|
|
342 |
|
|
|
|
735 |
|
+ Income tax expense (benefit) (as reported) |
|
|
5,861 |
|
|
|
|
(2,939 |
) |
+ Depreciation and amortization (as reported) |
|
|
4,259 |
|
|
|
|
4,606 |
|
EBITDA |
|
$ |
32,008 |
|
|
|
$ |
(2,209 |
) |
- Elimination of liability for an employment agreement |
|
|
(995 |
) |
|
|
|
— |
|
- Gain on recovery of insurance settlement related to civil
unrest |
|
|
(709 |
) |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
30,304 |
|
|
|
$ |
(2,209 |
) |
|
|
|
|
|
|
|
|
|
|
FINANCIAL TABLES FOLLOW
BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
April 4, 2021 |
|
January 3,2021 |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
100,097 |
|
$ |
64,654 |
|
Accounts receivable, net of allowances of $80 and $58,
respectively |
|
11,399 |
|
|
19,879 |
|
Merchandise inventories, net |
|
247,287 |
|
|
251,180 |
|
Prepaid expenses |
|
10,513 |
|
|
11,684 |
|
Total current assets |
|
369,296 |
|
|
347,397 |
|
|
|
|
|
|
Operating lease right-of-use
assets, net |
|
271,964 |
|
|
278,607 |
|
Property and equipment,
net |
|
58,710 |
|
|
57,245 |
|
Deferred income taxes |
|
12,532 |
|
|
13,831 |
|
Other assets, net of
accumulated amortization of $594 and $2,407, respectively |
|
3,610 |
|
|
2,914 |
|
Total assets |
$ |
716,112 |
|
$ |
699,994 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
88,613 |
|
$ |
80,882 |
|
Accrued expenses |
|
78,351 |
|
|
82,877 |
|
Current portion of operating lease liabilities |
|
73,196 |
|
|
73,737 |
|
Current portion of finance lease liabilities |
|
2,664 |
|
|
2,089 |
|
Total current liabilities |
|
242,824 |
|
|
239,585 |
|
|
|
|
|
|
Operating lease liabilities,
less current portion |
|
210,891 |
|
|
217,788 |
|
Finance lease liabilities,
less current portion |
|
4,332 |
|
|
2,504 |
|
Other long-term
liabilities |
|
6,865 |
|
|
7,479 |
|
Total liabilities |
|
464,912 |
|
|
467,356 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $0.01 par value, authorized 50,000,000 shares; issued
25,938,473 and |
|
|
|
|
25,580,541 shares, respectively; outstanding 22,288,260 and
21,930,328 shares, respectively |
|
259 |
|
|
255 |
|
Additional paid-in capital |
|
122,188 |
|
|
121,837 |
|
Retained earnings |
|
171,280 |
|
|
153,073 |
|
Less: Treasury stock, at cost; 3,650,213 shares |
|
(42,527 |
) |
|
(42,527 |
) |
Total stockholders' equity |
|
251,200 |
|
|
232,638 |
|
Total liabilities and stockholders' equity |
$ |
716,112 |
|
$ |
699,994 |
|
|
|
|
|
|
BIG 5 SPORTING GOODS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
April 4, 2021 |
|
March 29, 2020 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
272,806 |
$ |
217,736 |
|
|
|
|
|
|
Cost of sales |
|
174,913 |
|
153,181 |
|
|
|
|
|
|
Gross profit |
|
97,893 |
|
64,555 |
|
|
|
|
|
|
Selling and administrative
expense |
|
70,144 |
|
71,370 |
|
|
|
|
|
|
Operating income (loss) |
|
27,749 |
|
(6,815 |
) |
|
|
|
|
|
Interest expense |
|
342 |
|
735 |
|
|
|
|
|
|
Income (loss) before taxes |
|
27,407 |
|
(7,550 |
) |
|
|
|
|
|
Income tax expense
(benefit) |
|
5,861 |
|
(2,939 |
) |
|
|
|
|
|
Net income (loss) |
$ |
21,546 |
$ |
(4,611 |
) |
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
Basic |
$ |
1.01 |
$ |
(0.22 |
) |
Diluted |
$ |
0.96 |
$ |
(0.22 |
) |
|
|
|
|
|
Weighted-average shares of
common stock outstanding: |
|
|
|
|
Basic |
|
21,417 |
|
21,149 |
|
Diluted |
|
22,371 |
|
21,149 |
|
|
|
|
|
|
Contact:
Big 5 Sporting Goods CorporationBarry EmersonExecutive Vice
President and Chief Financial Officer(310) 536-0611
ICR, Inc.John MillsManaging Partner(646) 277-1254
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