EX-99.1 2 dks-20160430xex99earningsr.htm EXHIBIT 99.1 SEC Exhibit



Exhibit 99.1
FOR IMMEDIATE RELEASE 

DICK'S Sporting Goods Reports First Quarter Results
 
•
Consolidated earnings per diluted share totaled $0.50 during the first quarter of 2016, at the high end of guidance of $0.48 to 0.50
 
•
Consolidated same store sales for the first quarter increased 0.5%

•
Company repurchased $50 million of common stock and also declared a $0.15125 per share quarterly dividend

PITTSBURGH, May 19, 2016 - DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the first quarter ended April 30, 2016.

First Quarter Results

The Company reported consolidated net income for the first quarter ended April 30, 2016 of $56.9 million, or $0.50 per diluted share, compared to the Company's expectations provided on March 8, 2016 of $0.48 to 0.50 per diluted share. For the first quarter ended May 2, 2015, the Company reported consolidated net income of $63.3 million, or $0.53 per diluted share.

Net sales for the first quarter of 2016 increased 6.1% to approximately $1.7 billion. Consolidated same store sales increased 0.5%, compared to the Company's guidance of approximately flat to an increase of 1%. Same store sales for DICK'S Sporting Goods increased 0.4%, while Golf Galaxy increased 1.7%. First quarter 2015 consolidated same store sales increased 1.0%.
 
"We are pleased to have delivered first quarter earnings at the high end of our expectations in a challenging retail environment," said Edward W. Stack, Chairman and CEO. "The consolidation that is occurring among sporting goods retailers is creating a unique time in the industry. Given the expected near-term liquidation activity in the market, we have adjusted our guidance to contemplate this dynamic. Over the longer term, we remain confident in our ability to aggressively capture displaced market share and to strengthen our leadership position."


Omni-channel Development

eCommerce penetration for the first quarter of 2016 was 9.2% of total net sales, compared to 8.5% during the first quarter of 2015.

In the first quarter, the Company opened three new DICK'S Sporting Goods stores and two new Field & Stream stores. The Company also relocated three DICK'S Sporting Goods stores. As of April 30, 2016, the Company operated 647 DICK'S Sporting Goods stores in 47 states, with approximately 34.5 million square feet, 73 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet, and 21 Field & Stream stores in ten states, with approximately 1.1 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."





Balance Sheet
 
The Company ended the first quarter of 2016 with approximately $92 million in cash and cash equivalents and approximately $158 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the Company continued to invest in omni-channel growth, while returning over $322 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 7.3% at the end of the first quarter of 2016 as compared to the end of the first quarter of 2015. This increase includes the cold-weather merchandise the Company packed away for the 2016 winter season.

Capital Allocation

On May 13, 2016, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.15125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on June 30, 2016 to stockholders of record at the close of business on June 10, 2016.

During the first quarter of 2016, the Company repurchased approximately 1.1 million shares of its common stock at an average cost of $46.81 per share, for a total cost of $50 million. Since starting its initial $1 billion share repurchase authorization at the beginning of fiscal 2013, the Company has repurchased approximately $863 million of common stock, and has approximately $137 million remaining under this authorization. On March 16, 2016, the Board of Directors authorized a five-year share repurchase program of up to $1 billion of the Company's common stock. The Company will continue to purchase under the 2013 program until it is exhausted or expired.

Current 2016 Outlook
 
The Company's current outlook for 2016 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as described later in this release. Although the Company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct. 

v
Full Year 2016 

•
Based on an estimated 111 to 112 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share in the range of $2.60 to 2.90. The Company's consolidated earnings per diluted share guidance contemplates expected liquidation activity in the market. It also includes the expectation of approximately $100 to 200 million of share repurchases in 2016. The Company reported consolidated earnings per diluted share of $2.83 for the 52 weeks ended January 30, 2016. On a non-GAAP basis, the Company reported consolidated earnings per diluted share of $2.87, excluding a litigation settlement charge, for the 52 weeks ended January 30, 2016.

•
Consolidated same store sales are currently expected to be in the range of negative 1.0% to positive 1.0%, compared to a 0.2% decrease in fiscal 2015.

•
The Company expects to open approximately 36 new DICK'S Sporting Goods stores and relocate approximately nine DICK'S Sporting Goods stores in 2016. The Company also expects to open approximately nine new Field & Stream stores and two new Golf Galaxy stores in 2016, largely adjacent to new or relocated DICK'S Sporting Goods stores.





v
Second Quarter 2016
    
•
Based on an estimated 112 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share in the range of $0.62 to 0.72 in the second quarter of 2016, contemplating expected liquidation activity in the market. This is compared to consolidated earnings per diluted share of $0.77 in the second quarter of 2015.

•
Consolidated same store sales are currently expected to be in the range of negative 4.0% to negative 1.0% in the second quarter of 2016, as compared to a 1.2% increase in the second quarter of 2015.
 
•
The Company expects to open approximately five new DICK'S Sporting Goods stores and relocate two DICK'S Sporting Goods stores in the second quarter of 2016.

v
Capital Expenditures
 
•
In 2016, the Company anticipates capital expenditures to be approximately $230 million on a net basis and approximately $420 million on a gross basis. In 2015, capital expenditures were $204 million on a net basis and $370 million on a gross basis.

Conference Call Info
 
The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the first quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at investors.DICKS.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software.
 
In addition to the webcast, the call can be accessed by dialing (877) 443-5743 (domestic callers) or (412) 902-6617 (international callers) and requesting the "DICK'S Sporting Goods Earnings Call."

For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10085740. The dial-in replay will be available for approximately 30 days following the live call.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

This release contains forward-looking statements within the meaning of the securities laws. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond our control. Our future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon by investors as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the Company's future performance, capturing market share, making the right strategic investments, capital expenditures, outstanding borrowings in future periods and share repurchases.

Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: the weather; changes in consumer discretionary spending; our development of an eCommerce platform; success of our transition to our own eCommerce platform; inventory turn; changes in the competitive market and competition amongst retailers; changes in consumer demand or shopping patterns and our ability to identify new trends and have the right trending products in our stores and on our website; limitations on the availability of attractive retail store sites; omni-channel growth; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings and new retail concepts; disruptions with our eCommerce service provider or our information systems; factors affecting our vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, our Chairman and Chief Executive Officer; disruptions of our information systems; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of our business; and risks associated with being a controlled company.





For additional information on these and other factors that could affect our actual results, see our risk factors, which may be amended from time to time, set forth in our filings with the SEC, including our most recent Annual Report filed with the Securities and Exchange Commission on March 25, 2016. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation. Forward-looking statements included in this release are made as of the date of this release.

About DICK'S Sporting Goods, Inc.
 
Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of April 30, 2016, the Company operated more than 645 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated associates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.

Headquartered in Pittsburgh, PA, DICK'S also owns and operates Golf Galaxy, Field & Stream, True Runner and Chelsea Collective specialty stores. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. For more information, visit the Press Room or Investor Relations pages at DICKS.com.

Contacts:
Investor Relations:
Anne-Marie Megela, Vice President – Treasury Services and Investor Relations, or
Nate Gilch, Director of Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400

Media Relations:
(724) 273-5552 or press@dcsg.com


###





DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
 
 
 
13 Weeks Ended
 
 
April 30,
2016
 
% of
Sales(1)
 
May 2,
2015
 
% of
Sales(1)
 
 
 
 
 
 
 
 
 
Net sales
 
$
1,660,343

 
100.00
%
 
$
1,565,308

 
100.00
%
Cost of goods sold, including occupancy and distribution costs
 
1,164,546

 
70.14

 
1,096,320

 
70.04

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
495,797

 
29.86

 
468,988

 
29.96

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
398,568

 
24.01

 
360,736

 
23.05

Pre-opening expenses
 
6,518

 
0.39

 
6,340

 
0.41

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
90,711

 
5.46

 
101,912

 
6.51

 
 
 
 
 
 
 
 
 
Interest expense
 
1,131

 
0.07

 
634

 
0.04

Other income
 
(2,067
)
 
(0.12
)
 
(2,150
)
 
(0.14
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
91,647

 
5.52

 
103,428

 
6.61

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
34,770

 
2.09

 
40,083

 
2.56

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
56,877

 
3.43
%
 
$
63,345

 
4.05
%
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
0.51

 
 
 
$
0.54

 
 

Diluted
 
$
0.50

 
 
 
$
0.53

 
 

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 
 
 

 
 

Basic
 
112,105

 
 
 
117,044

 
 

Diluted
 
113,276

 
 
 
118,906

 
 

 
 
 
 
 
 
 
 
 
Cash dividend declared per share
 
$
0.15125

 
 
 
$
0.13750

 
 

 
 
 
 
 
 
 
 
 
(1) Column does not add due to rounding
 
 
 
 
 
 
 
 
 






DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
 
 
April 30,
2016
 
May 2,
2015
 
January 30,
2016
ASSETS
 
 

 
 

 
 

CURRENT ASSETS:
 
 

 
 

 
 

Cash and cash equivalents
 
$
92,493

 
$
81,409

 
$
118,936

Accounts receivable, net
 
111,973

 
63,871

 
61,395

Income taxes receivable
 
2,787

 
5,748

 
5,432

Inventories, net
 
1,742,948

 
1,623,753

 
1,527,187

Prepaid expenses and other current assets
 
120,477

 
108,773

 
99,740

Total current assets
 
2,070,678

 
1,883,554

 
1,812,690

 
 
 
 
 
 
 
Property and equipment, net
 
1,406,471

 
1,220,471

 
1,347,885

Intangible assets, net
 
109,053

 
110,179

 
109,440

Goodwill
 
200,594

 
200,594

 
200,594

Other assets:
 
 

 
 
 
 

Deferred income taxes
 
4,456

 
5,448

 
6,165

Other
 
87,115

 
73,863

 
82,562

Total other assets
 
91,571

 
79,311

 
88,727

TOTAL ASSETS
 
$
3,878,367

 
$
3,494,109

 
$
3,559,336

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
 

CURRENT LIABILITIES:
 
 

 
 

 
 

Accounts payable
 
$
778,977

 
$
777,800

 
$
677,864

Accrued expenses
 
328,177

 
275,561

 
289,001

Deferred revenue and other liabilities
 
162,365

 
149,974

 
184,386

Income taxes payable
 
13,201

 
25,176

 
39,835

Current portion of other long-term debt and leasing obligations
 
590

 
539

 
589

Total current liabilities
 
1,283,310

 
1,229,050

 
1,191,675

LONG-TERM LIABILITIES:
 
 

 
 

 
 

Revolving credit borrowings
 
157,600

 
51,200

 
—

Other long-term debt and leasing obligations
 
5,180

 
5,781

 
5,324

Deferred income taxes
 
15,390

 
1,983

 
6,454

Deferred revenue and other liabilities
 
612,754

 
462,974

 
566,696

Total long-term liabilities
 
790,924

 
521,938

 
578,474

COMMITMENTS AND CONTINGENCIES
 
 

 
 

 
 

STOCKHOLDERS' EQUITY:
 
 

 
 

 
 

Common stock
 
870

 
912

 
869

Class B common stock
 
249

 
249

 
249

Additional paid-in capital
 
1,088,980

 
1,029,208

 
1,063,705

Retained earnings
 
1,776,782

 
1,518,237

 
1,737,214

Accumulated other comprehensive loss
 
(87
)
 
(42
)
 
(179
)
Treasury stock, at cost
 
(1,062,661
)
 
(805,443
)
 
(1,012,671
)
Total stockholders' equity
 
1,804,133

 
1,743,121

 
1,789,187

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
3,878,367

 
$
3,494,109

 
$
3,559,336

 
 
 
 
 
 
 






DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
 
 
13 Weeks Ended
 
 
April 30,
2016
 
May 2,
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
56,877

 
$
63,345

Adjustments to reconcile net income to net cash (used in) provided by operating activities
 
 

 
 

Depreciation and amortization
 
47,990

 
42,576

Deferred income taxes
 
10,645

 
5,489

Stock-based compensation
 
8,247

 
7,008

Excess tax benefit from exercise of stock options
 
(7,674
)
 
(5,114
)
Other non-cash items
 
181

 
133

Changes in assets and liabilities:
 
 

 
 

Accounts receivable
 
(19,514
)
 
2,550

Inventories
 
(215,761
)
 
(232,986
)
Prepaid expenses and other assets
 
(20,012
)
 
(16,878
)
Accounts payable
 
145,651

 
163,478

Accrued expenses
 
10,838

 
(9,365
)
Income taxes payable / receivable
 
(16,412
)
 
(8,914
)
Deferred construction allowances
 
16,202

 
40,579

Deferred revenue and other liabilities
 
(17,393
)
 
(16,393
)
Net cash (used in) provided by operating activities
 
(135
)
 
35,508

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Capital expenditures
 
(88,834
)
 
(65,724
)
Deposits and purchases of other assets
 
(8
)
 
(406
)
Net cash used in investing activities
 
(88,842
)
 
(66,130
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 
Revolving credit borrowings
 
609,100

 
124,300

Revolving credit repayments
 
(451,500
)
 
(73,100
)
Payments on other long-term debt and leasing obligations
 
(143
)
 
(130
)
Construction allowance receipts
 
—

 
—

Proceeds from exercise of stock options
 
15,743

 
9,245

Excess tax benefit from exercise of stock options
 
7,674

 
5,115

Minimum tax withholding requirements
 
(6,281
)
 
(7,507
)
Cash paid for treasury stock
 
(50,000
)
 
(150,000
)
Cash dividend paid to stockholders
 
(17,613
)
 
(17,413
)
Decrease in bank overdraft
 
(44,538
)
 
(189
)
Net cash provided by (used in) financing activities
 
62,442

 
(109,679
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
92

 
31

NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(26,443
)
 
(140,270
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
118,936

 
221,679

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
92,493

 
$
81,409






Store Count and Square Footage
 
The stores that opened during the first quarter of 2016 are as follows:
Store
 
Market
 
Concept
Lafayette, LA
 
Lafayette
 
DICK'S Sporting Goods (1)
American Fork, UT
 
Provo-Orem
 
DICK'S Sporting Goods
Folsom, CA
 
Sacramento
 
DICK'S Sporting Goods
Lafayette, LA
 
Lafayette
 
Field & Stream (1)
Kalamazoo, MI
 
Kalamazoo
 
Field & Stream

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Store Count:
 
 
Fiscal 2016
 
Fiscal 2015
 
 
DICK'S Sporting Goods (1)
 
Specialty Store Concepts (1) (2)
 
Total
 
DICK'S Sporting Goods
 
Specialty Store Concepts (2)
 
Total
Beginning stores
 
644

 
97

 
741

 
603

 
91

 
694

Q1 New stores
 
3

 
2

 
5

 
9

 
1

 
10

Ending stores
 
647

 
99

 
746

 
612

 
92

 
704

 
 
 
 
 
 
 
 
 
 
 
 
 
Relocated stores
 
3

 
—

 
3

 
1

 
1

 
2

 
 
 
 
 
 
 
 
 
 
 
 
 

Square Footage:
(in millions)
 
 
DICK'S Sporting Goods (1)
 
Specialty Store Concepts (1) (2)
 
Total (3)
Q1 2015
 
32.7

 
2.0

 
34.7

Q2 2015
 
33.1

 
2.0

 
35.1

Q3 2015
 
34.4

 
2.4

 
36.8

Q4 2015
 
34.4

 
2.3

 
36.7

Q1 2016
 
34.5

 
2.4

 
37.0


(1) 
In some markets we operate adjacent stores on the same property with a pass-through for customers. We refer to this format as a "combo store". Combo stores are reflected in both the DICK'S Sporting Goods and Specialty Store Concepts reconciliations. As of April 30, 2016, the Company operated five combo stores.

(2) 
Includes the Company's Golf Galaxy, Field & Stream, and other specialty concept stores.

(3) 
Column may not add due to rounding.






Non-GAAP Financial Measures
 
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company believes that certain non-GAAP financial information provides users of the Company's financial information with additional useful information in evaluating operating performance between reporting periods. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. A reconciliation of the Company's non-GAAP measures to the most directly comparable GAAP financial measures are provided below and on the Company's website at investors.DICKS.com.
 
Non-GAAP Net Income and Earnings Per Share Reconciliations:
(in thousands, except per share data):
 
 
Fiscal 2015
 
 
52 Weeks Ended January 30, 2016
 
 
 
 
 
 
 
 
 
As Reported
 
Litigation Settlement Charge
 
Non-GAAP Total
Net sales
 
$
7,270,965

 
$
—

 
$
7,270,965

Cost of goods sold, including occupancy and distribution costs
 
5,088,078

 
—

 
5,088,078

 
 
 
 
 
 
 
GROSS PROFIT
 
2,182,887

 
—

 
2,182,887

 
 
 
 
 
 
 
Selling, general and administrative expenses
 
1,613,075

 
(7,884
)
 
1,605,191

Pre-opening expenses
 
34,620

 
—

 
34,620

 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
535,192

 
7,884

 
543,076

 
 
 
 
 
 
 
Interest expense
 
4,012

 
—

 
4,012

Other expense
 
305

 
—

 
305

 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
530,875

 
7,884

 
538,759

 
 
 
 
 
 
 
Provision for income taxes
 
200,484

 
3,154

 
203,638

 
 
 
 
 
 
 
NET INCOME
 
$
330,391

 
$
4,730

 
$
335,121

 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
Basic
 
$
2.87

 
 
 
$
2.91

Diluted
 
$
2.83

 
 
 
$
2.87

 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
Basic
 
115,230

 
 
 
115,230

Diluted
 
116,794

 
 
 
116,794


During the third quarter of 2015, the Company recorded a pre-tax litigation settlement charge of $7.9 million. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.






EBITDA
 
EBITDA is a key metric that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations and capital investments. EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity and may not be comparable to similarly titled measures reported by other companies.

 
 
13 Weeks Ended
 
 
April 30,
2016
 
May 2,
2015
 
 
(dollars in thousands)
Net income
 
$
56,877

 
$
63,345

Provision for income taxes
 
34,770

 
40,083

Interest expense
 
1,131

 
634

Depreciation and amortization
 
47,990

 
42,576

EBITDA
 
$
140,768

 
$
146,638

 
 
 
 
 
% decrease in EBITDA
 
(4
)%
 
 
 

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures
 
The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.
 
 
13 Weeks Ended
 
 
April 30,
2016
 
May 2,
2015
 
 
(dollars in thousands)
Gross capital expenditures
 
$
(88,834
)
 
$
(65,724
)
Proceeds from sale-leaseback transactions
 
—

 
—

Deferred construction allowances
 
16,202

 
40,579

Construction allowance receipts
 
—

 
—

Net capital expenditures
 
$
(72,632
)
 
$
(25,145
)