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 second quarter
ended July 4, 2021.
Steven G. Miller, the Company’s Chairman,
President and Chief Executive Officer, said, “Our second quarter
results exceeded expectations, as we achieved another quarter of
record sales and earnings results. Same store sales for the fiscal
2021 second quarter were up 31.2% versus the prior year period and
were up 33.4% versus the fiscal 2019 second quarter, reflecting a
continuation of strong broad-based demand across our product mix.
For the second quarter, we generated record net income of $36.8
million with $88.7 million of operating cash flow. Our bottom-line
results benefitted from further expansion of our merchandise
margins, as well as operating with a cost structure that is
meaningfully enhanced compared to pre-pandemic. Although we are
cycling the peak of the 2020 COVID-19 related sales surge and we
are being impacted by the widely reported supply chain disruptions
and staffing challenges in the retail industry, we have continued
to produce strong sales growth and margins versus historical
pre-pandemic levels. In light of the overall strength of our
business, our Board of Directors has declared a 39% increase in our
regular cash dividend to an annual rate of $1.00 per share, which
is our fourth dividend increase over the past four quarters.”
Net sales for the fiscal 2021 second quarter
were $326.0 million compared to net sales of $227.9 million for the
second quarter of fiscal 2020, which included significant temporary
store closures due to COVID-19, particularly over the first half of
the period. Same store sales increased 31.2% for the second quarter
of fiscal 2021. In addition to comping against last year’s
COVID-related temporary store closures, the increase in net sales
also reflects the positive impact from a calendar shift related to
our 53-week fiscal 2020 that resulted in a benefit from pre-Fourth
of July holiday sales moving from the third quarter in fiscal 2020
to the second quarter in fiscal 2021, as well as a calendar shift
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.
Gross profit for the fiscal 2021 second quarter
increased to $126.9 million from $72.2 million in the second
quarter of the prior year. The Company’s gross profit margin was
38.9% in the fiscal 2021 second quarter versus 31.7% in the second
quarter of the prior year. The increase in gross profit margin
largely reflects a 380-basis point increase in merchandise margins,
significant leverage of store occupancy costs as a percentage of
net sales and a favorable impact from higher distribution costs
capitalized into inventory for the quarter.
Selling and administrative expense as a
percentage of net sales was 24.0% in the fiscal 2021 second quarter
versus 25.6% in the fiscal 2020 second quarter. Overall selling and
administrative expense for the quarter increased by $20.1 million
from the prior year primarily because the prior year period
included significant temporary store closures due to COVID-19 and
also because the fiscal 2021 second quarter included higher
performance-based incentive compensation accruals. Selling and
administrative expense for the fiscal 2021 second quarter and for
the fiscal 2020 second quarter each included a special recognition
bonus provision for certain store-based employees.
Net income for the second quarter of fiscal 2021
was $36.8 million, or $1.63 per diluted share, compared to net
income for the second quarter of fiscal 2020 of $11.1 million, or
$0.52 per diluted share.
For the 26-week period ended July 4, 2021, net
sales were $598.8 million compared to net sales of $445.7 million
in the first 26 weeks of last year. Same store sales increased
31.5% in the first half of fiscal 2021 versus the comparable period
last year. Net income for the first 26 weeks of fiscal 2021 was
$58.3 million, or $2.59 per diluted share, including a net benefit
in the first quarter of $0.06 per diluted share related to an
insurance settlement and the elimination of an employment agreement
liability. This compares to net income for the first 26 weeks of
fiscal 2020 of $6.5 million, or $0.31 per diluted share, including
a previously reported net benefit of $0.13 per diluted share.
Adjusted EBITDA was $52.9 million for the second
quarter of fiscal 2021 and $83.2 million for the 26-week period
ended July 4, 2021. EBITDA and Adjusted EBITDA are non-GAAP
financial measures. See “Non-GAAP Financial Measures” below for
more details and a reconciliation of non-GAAP EBITDA and Adjusted
EBITDA to the most comparable GAAP measure, net income.
Balance SheetThe Company ended
the fiscal 2021 second quarter with zero borrowings under its
credit facility and with cash and cash equivalents of $118.9
million. This compares to zero borrowings and $100.1 million of
cash and cash equivalents as of the end of the fiscal 2021 first
quarter and $35.0 million of borrowings and $16.7 million of cash
as of the end of the fiscal 2020 second quarter. The Company grew
its cash by $18.8 million during the fiscal 2021 second quarter
while also paying shareholders cash dividends of $25.8 million.
Total merchandise inventories decreased by approximately 5.6% as of
the end of the fiscal 2021 second quarter versus the second quarter
of the prior year.
Quarterly 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 39% increase in its quarterly cash
dividend from $0.18 per share of outstanding common stock to $0.25
per share of outstanding common stock, which will be paid on
September 15, 2021 to stockholders of record as of September 1,
2021. In addition to the $1.00 per share special dividend paid in
the second quarter, this represents the fourth increase in our
regular quarterly dividend over the last four quarters, from $0.05
to $0.25 per share.
Third Quarter GuidanceFor the
fiscal 2021 third quarter, the Company expects same store sales in
the flat to positive mid-single digit range and expects to realize
earnings per diluted share in the range of $0.95 to $1.15. This
compares to a same store sales increase of 14.8% and earnings per
diluted share of $1.31 in the third quarter of fiscal 2020, which
at the time were the highest sales and earnings of any quarter in
the company’s history. For the third quarter of fiscal 2019,
earnings per diluted share were $0.30. Fiscal 2021 third quarter
guidance reflects anticipated continued impacts related to the
widely reported supply chain disruptions and staffing challenges in
the retail industry. Additionally, guidance relative to the prior
year period reflects the unfavorable impact of the fiscal calendar
shift related to our 53-week fiscal 2020, which moved the Fourth of
July holiday from the third quarter of fiscal 2020 into the second
quarter of fiscal 2021. As a result, the third quarter of fiscal
2021 excludes the historically high-volume Fourth of July holiday
week, which is replaced by an historically low-volume week in early
October. As a result of this shift, the Company anticipates an
approximately $0.20 unfavorable impact to diluted earnings per
share for the third quarter. This calendar shift does not impact
the Company’s same store sales calculation, which is measured on a
comparable-week basis. The Company’s sales and earnings guidance
for the fiscal 2021 third quarter assumes that any new conditions
relating to the COVID-19 pandemic, including any regulations that
may be issued in response to the pandemic, will not materially
impact the Company’s operations during the period.
Store OpeningsThe Company
currently has 429 stores in operation, which reflects one store
closure in the third quarter to date. Over the remainder of fiscal
2021, the Company expects to open approximately five stores and
close approximately one store.
Conference Call InformationThe
Company will host a conference call and audio webcast today, August
3, 2021, at 2:00 p.m. Pacific (5:00 p.m. Eastern), to discuss
financial results for the second 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
August 10, 2021 by calling (844) 512-2921 to access the playback;
the passcode is 13721634.
About Big 5 Sporting Goods
CorporationBig 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 July 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, including any potential variants, 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 or any potential variants), 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 MeasuresIn
addition to reporting our financial results in accordance with
generally accepted accounting principles ("GAAP"), we are providing
non-GAAP earnings before interest, income tax expense, depreciation
and amortization (“EBITDA”) and any 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 endedJuly 4,
2021 |
|
|
26 weeks endedJuly 4,
2021 |
|
|
|
(In thousands) |
|
GAAP net income (as reported) |
|
|
$ |
36,803 |
|
|
|
$ |
58,349 |
|
|
+ Interest (as reported) |
|
|
|
184 |
|
|
|
|
526 |
|
|
+ Income tax expense (as
reported) |
|
|
|
11,557 |
|
|
|
|
17,418 |
|
|
+ Depreciation and
amortization (as reported) |
|
|
|
4,389 |
|
|
|
|
8,648 |
|
|
EBITDA |
|
|
$ |
52,933 |
|
|
|
$ |
84,941 |
|
|
- Elimination of liability for an
employment agreement |
|
|
|
– |
|
|
|
|
(995 |
) |
|
- Gain on recovery of insurance
settlement related to civil unrest |
|
|
|
– |
|
|
|
|
(709 |
) |
|
Adjusted EBITDA |
|
|
$ |
52,933 |
|
|
|
$ |
83,237 |
|
|
FINANCIAL TABLES FOLLOW
|
|
|
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|
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|
BIG 5 SPORTING GOODS CORPORATION |
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
(Unaudited) |
|
|
(In thousands, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
July 4, 2021 |
|
January 3, 2021 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
118,940 |
|
$ |
64,654 |
|
|
|
Accounts receivable, net of allowances of $92 and $58,
respectively |
|
15,648 |
|
|
19,879 |
|
|
|
Merchandise inventories, net |
|
258,905 |
|
|
251,180 |
|
|
|
Prepaid expenses |
|
11,997 |
|
|
11,684 |
|
|
|
Total current assets |
|
405,490 |
|
|
347,397 |
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets, net |
|
278,781 |
|
|
278,607 |
|
|
|
Property and equipment, net |
|
58,120 |
|
|
57,245 |
|
|
|
Deferred income taxes |
|
13,396 |
|
|
13,831 |
|
|
|
Other assets, net of accumulated amortization of $695 and $2,407,
respectively |
|
3,627 |
|
|
2,914 |
|
|
|
Total assets |
$ |
759,414 |
|
$ |
699,994 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
105,470 |
|
$ |
80,882 |
|
|
|
Accrued expenses |
|
86,486 |
|
|
82,877 |
|
|
|
Current portion of operating lease liabilities |
|
74,382 |
|
|
73,737 |
|
|
|
Current portion of finance lease liabilities |
|
2,847 |
|
|
2,089 |
|
|
|
Total current liabilities |
|
269,185 |
|
|
239,585 |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities, less current portion |
|
215,956 |
|
|
217,788 |
|
|
|
Finance lease liabilities, less current portion |
|
4,836 |
|
|
2,504 |
|
|
|
Other long-term liabilities |
|
6,486 |
|
|
7,479 |
|
|
|
Total liabilities |
|
496,463 |
|
|
467,356 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Common stock, $0.01 par value, authorized 50,000,000 shares; issued
26,070,483 and 25,580,541 shares, respectively; outstanding
22,420,270 and 21,930,328 shares, respectively |
|
260 |
|
|
255 |
|
|
|
Additional paid-in capital |
|
123,490 |
|
|
121,837 |
|
|
|
Retained earnings |
|
181,728 |
|
|
153,073 |
|
|
|
Less: Treasury stock, at cost; 3,650,213 shares |
|
(42,527 |
) |
|
(42,527 |
) |
|
|
Total stockholders' equity |
|
262,951 |
|
|
232,638 |
|
|
|
Total liabilities and stockholders' equity |
$ |
759,414 |
|
$ |
699,994 |
|
|
|
|
|
|
|
|
|
|
BIG 5
SPORTING GOODS CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
26 Weeks Ended |
|
|
July 4, 2021 |
|
June 28, 2020 |
|
July 4, 2021 |
|
June 28, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
326,020 |
$ |
227,935 |
|
$ |
598,826 |
$ |
445,671 |
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
199,097 |
|
155,742 |
|
|
374,010 |
|
308,923 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
126,923 |
|
72,193 |
|
|
224,816 |
|
136,748 |
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expense |
|
78,379 |
|
58,333 |
|
|
148,523 |
|
129,703 |
|
|
|
|
|
|
|
|
|
|
Other
income |
|
— |
|
(2,500 |
) |
|
— |
|
(2,500 |
) |
|
|
|
|
|
|
|
|
|
Operating income |
|
48,544 |
|
16,360 |
|
|
76,293 |
|
9,545 |
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
184 |
|
749 |
|
|
526 |
|
1,484 |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
48,360 |
|
15,611 |
|
|
75,767 |
|
8,061 |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
11,557 |
|
4,475 |
|
|
17,418 |
|
1,536 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
36,803 |
$ |
11,136 |
|
$ |
58,349 |
$ |
6,525 |
|
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
1.69 |
$ |
0.52 |
|
$ |
2.70 |
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
1.63 |
$ |
0.52 |
|
$ |
2.59 |
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
21,746 |
|
21,252 |
|
|
21,582 |
|
21,200 |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
22,593 |
|
21,358 |
|
|
22,507 |
|
21,356 |
|
|
|
|
|
|
|
|
|
|
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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