BIG
$20.51
Big Lots
($.76)
(3.57%)
Earnings Details
2nd Quarter July 2019
Friday, August 30, 2019 6:00:00 AM
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Summary

Big Lots Beats

Big Lots (BIG) reported 2nd Quarter July 2019 earnings of $0.53 per share on revenue of $1.3 billion. The consensus earnings estimate was $0.40 per share on revenue of $1.3 billion. The Earnings Whisper number was $0.44 per share. Revenue grew 2.5% on a year-over-year basis.

The company said it expects a third quarter loss of $0.25 to $0.15 per share and continues to expect fiscal year earnings of $3.70 to $3.85 per share. The current consensus estimate is a loss of $0.33 per share for the quarter ending October 31, 2019 and $3.76 per share for the year ending January 31, 2020.

Big Lots Inc operates as a broadline closeout retailer in the United States. It offers products under six merchandising categories: Food, Consumables, Soft Home, Hard Home, Furniture & Home Decor, Seasonal, and Electronics & Accessories.

Results
Reported Earnings
$0.53
Earnings Whisper
$0.44
Consensus Estimate
$0.40
Reported Revenue
$1.25 Bil
Revenue Estimate
$1.25 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Big Lots Reports Results For The Second Quarter Of Fiscal 2019

COLUMBUS, Ohio, Aug. 30, 2019 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income of $6.2 million, or $0.16 per diluted share, for the second quarter of fiscal 2019 ended August 3, 2019. This result includes after tax charges totaling $14.5 million, or $0.37 per diluted share, associated with the implementation of our strategic business transformation. Excluding these charges, adjusted income totaled $20.6 million, or $0.53 per diluted share (see non-GAAP table included later in this release), which compares to our guidance of adjusted income of $0.35 to $0.45 per diluted share (non-GAAP). Income for the second quarter of fiscal 2018 was $24.2 million, or $0.59 per diluted share.

Comparable store sales increased 1.2% for the second quarter of fiscal 2019, compared to our guidance of an increase in the low single digits. Net sales for the second quarter of fiscal 2019 totaled $1,252 million, a 2.5% increase compared to $1,222 million for the same period last year, with the increase resulting from positive comparable store sales and sales growth in high volume new stores, or non-comp stores, partially offset by a lower store count year-over-year.

Commenting on today's announcement, Bruce Thorn, President and CEO of Big Lots stated, "We are pleased with our performance for the second quarter, which was in line with our sales guidance and ahead on earnings. Going forward, despite the current tariff headwinds, we are confident we will be able to navigate through this environment to deliver a good outcome for 2019. More significantly, I am highly encouraged by the progress we have made over the last 90 days on our strategic transformation. Our existing initiatives are working, and we have important new strategies in progress to drive profitable long-term growth and deliver value to our shareholders." 

 


Earnings per diluted share









Q2 2019


Q2 2018








Earnings per diluted share


$0.16


$0.59


Impact of costs associated with the implementation






of our strategic business transformation review (1)


$0.37


-








Earnings per diluted share - adjusted basis


$0.53


$0.59








(1)  Non-GAAP detailed reconciliation provided in our statements below.

 

Inventory and Cash Management

Inventory ended the second quarter of fiscal 2019 at $874 million compared to $854 million for the same period last year with the 2% increase resulting from moving forward inventory commitments to support earlier resets of new assortments in the key categories of Furniture and Soft Home, and the slower than anticipated sell through of seasonally sensitive product in Q2 largely due to weather. This growth was partially offset by a lower store count year-over-year.

We ended the second quarter of fiscal 2019 with $54 million of Cash and Cash Equivalents and $468 million of borrowings under our credit facility compared to $58 million of Cash and Cash Equivalents and $325 million of borrowings under our credit facility as of the end of the second quarter of fiscal 2018. Our increase in borrowings is a result of elevated investments in strategic initiatives to support future growth and higher inventory levels as noted above.

Total Cash Returned To Shareholders

As announced in a separate press release earlier today, on August 28, 2019, our Board of Directors declared a quarterly cash dividend of $0.30 per common share. This dividend payment of approximately $12 million is payable on September 27, 2019, to shareholders of record as of the close of business on September 13, 2019. Year-to-date, approximately $75 million has been returned to shareholders in the form of share repurchases and dividend payments.

FISCAL Q3 2019 GUIDANCE (non-GAAP)

  • Provides initial Q3 guidance for adjusted loss of $0.15 to $0.25 per share (non-GAAP), compared to a loss of $0.16 per share for the same period last year        
  • Provides initial Q3 guidance for comparable store sales of approximately flat

For the third quarter of fiscal 2019, we estimate an adjusted loss in the range of $0.15 to $0.25 per share (non-GAAP), compared to a loss of $0.16 per share for the third quarter of fiscal 2018. This guidance is based on comparable store sales of approximately flat.

FISCAL 2019 GUIDANCE (non-GAAP)

  • Maintains guidance for fiscal 2019 adjusted income in the range of $3.70 to $3.85 per diluted share (non-GAAP)
  • Updates guidance for fiscal 2019 comparable store sales of flat to slightly positive

Based on the actual results for the first two quarters and our expectations for the third quarter of fiscal 2019 noted above, we are maintaining our guidance for the full year of fiscal 2019 of adjusted income in the range of $3.70 to $3.85 per diluted share (non-GAAP). This compares to adjusted income of $4.04 per diluted share (non-GAAP) for fiscal 2018. This outlook is based on a comparable store sales increase of flat to slightly positive. The level of non-GAAP items on an after-tax basis is expected to be in the range of $36 million, or $0.90 per diluted share, for the fiscal year. We estimate cash flow (cash provided by operating activities less capital expenditures) to be approximately $75 million as compared to our prior guidance of $65 million.

 



Full Year










2019 Guidance (1)


2018 (2)








Earnings per diluted share


$2.80  -  $2.95


$3.83


Non-GAAP items


~$0.90


$0.21


Earnings per diluted share - adjusted basis


$3.70  -  $3.85


$4.04














(1)  Non-GAAP items in fiscal 2019 principally relate to our strategic business transformation review.

(2)  Non-GAAP detailed reconciliation provided in our statements below.

 

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the second quarter of fiscal 2019 and provide commentary on our outlook for fiscal 2019. 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, September 13, 2019. A replay of this call will also be available beginning today at 12:00 noon through September 13 by dialing 1.877.660.6853 (Toll Free) or 1.201.612.7415 (Toll) and entering Replay Conference ID 13694043. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a discount retailer operating 1,415 BIG LOTS stores in 47 states with product assortments in the merchandise categories of Furniture, Seasonal, Soft Home, Food, Consumables, Hard Home, and Electronics, Toys & Accessories. Our mission is to help people Live BIG and Save Lots. We strive to be the BIG difference for a better life by delivering unmatched value to our customers through surprise and delight, being a "best places to work" culture for our associates, rewarding our shareholders with consistent growth and top tier returns, and doing good in our communities as we do well. 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. logo. (PRNewsfoto/Big Lots, Inc.)

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)












AUGUST 3


AUGUST 4






2019


2018






(Unaudited)


(Unaudited)












ASSETS















Current assets:








Cash and cash equivalents


$53,705


$58,457




Inventories


874,058


854,192




Other current assets


112,675


140,393




   Total current assets


1,040,438


1,053,042











Operating lease right-of-use assets


1,208,349


0











Property and equipment - net


860,648


701,672











Deferred income taxes


16,077


23,664



Other assets


66,783


50,352






$3,192,295


$1,828,730




















LIABILITIES AND SHAREHOLDERS' EQUITY      















Current liabilities:








Accounts payable


$345,355


$355,721




Current operating lease liabilities


239,592


0




Property, payroll and other taxes


86,177


84,008




Accrued operating expenses


206,733


120,761




Insurance reserves


37,745


37,787




Accrued salaries and wages


35,192


22,942




Income taxes payable


614


1,266




   Total current liabilities


951,408


622,485











Long-term obligations under bank credit facility


467,800


324,700











Noncurrent operating lease liabilities


1,021,130


0



Deferred rent


0


58,296



Insurance reserves


52,122


56,321



Unrecognized tax benefits


13,381


15,451



Synthetic lease obligation


0


98,213



Other liabilities


41,911


47,539











Shareholders' equity


644,543


605,725






$3,192,295


$1,828,730



 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












13 WEEKS ENDED


13 WEEKS ENDED




AUGUST 3, 2019


AUGUST 4, 2018





%



%




(Unaudited)


(Unaudited)

















Net sales


$1,252,414

100.0


$1,222,169

100.0










Gross margin


498,230

39.8


491,419

40.2










Selling and administrative expenses 


455,026

36.3


426,605

34.9










Depreciation expense


30,023

2.4


30,496

2.5









Operating profit


13,181

1.1


34,318

2.8










Interest expense


(4,565)

(0.4)


(2,407)

(0.2)










Other income (expense)


(789)

(0.1)


149

0.0









Income before income taxes


7,827

0.6


32,060

2.6










Income tax expense


1,649

0.1


7,896

0.6









Net income


$6,178

0.5


$24,164

2.0

















Earnings per common share
















Basic


$0.16



$0.59











Diluted


$0.16



$0.59


















Weighted average common shares outstanding
















Basic


39,000



41,061











Dilutive effect of share-based awards


77



220











Diluted


39,077



41,281










Cash dividends declared per common share


$0.30



$0.30


 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












26 WEEKS ENDED


26 WEEKS ENDED




AUGUST 3, 2019


AUGUST 4, 2018





%



%




(Unaudited)


(Unaudited)

















Net sales


$2,548,210

100.0


$2,490,152

100.0










Gross margin


1,017,277

39.9


1,003,377

40.3










Selling and administrative expenses 


915,631

35.9


864,697

34.7










Depreciation expense


62,820

2.5


59,025

2.4









Operating profit


38,826

1.5


79,655

3.2










Interest expense


(8,298)

(0.3)


(3,983)

(0.2)










Other income (expense)


121

0.0


657

0.0









Income before income taxes


30,649

1.2


76,329

3.1










Income tax expense


8,931

0.4


20,926

0.8









Net income


$21,718

0.9


$55,403

2.2

















Earnings per common share
















Basic


$0.55



$1.33











Diluted


$0.55



$1.33


















Weighted average common shares outstanding
















Basic


39,461



41,587











Dilutive effect of share-based awards


83



106











Diluted


39,544



41,693










Cash dividends declared per common share


$0.60



$0.60


 

 

BIG LOTS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)












13 WEEKS ENDED


13 WEEKS ENDED






AUGUST 3, 2019


AUGUST 4, 2018






 (Unaudited) 


 (Unaudited) 




  Net cash provided by operating activities


100,850


$13,675












  Net cash used in investing activities


(85,965)


(105,989)












  Net cash (used in) provided by financing activities


(24,752)


85,941











Decrease in cash and cash equivalents


(9,867)


(6,373)




Cash and cash equivalents:








  Beginning of period


63,572


64,830




  End of period


$53,705


58,457



 

 

BIG LOTS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)












26 WEEKS ENDED


26 WEEKS ENDED






AUGUST 3, 2019


AUGUST 4, 2018






 (Unaudited) 


 (Unaudited) 




  Net cash provided by operating activities


$158,285


$110,560












  Net cash used in investing activities


(162,731)


(171,426)












  Net cash provided by financing activities


12,117


68,147











Increase in cash and cash equivalents


7,671


7,281




Cash and cash equivalents:








  Beginning of period


46,034


51,176




  End of period


$53,705


$58,457



 

 

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

The following tables reconcile: gross margin, gross margin rate, selling and administrative expenses, selling and administrative expense rate, operating profit, operating profit rate, income tax expense, effective income tax rate, net income, and diluted earnings per share for the second quarter of 2019, the year-to-date 2019, the year-to-date 2018, and the full year 2018 (GAAP financial measures) to adjusted gross margin, adjusted gross margin rate, 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 net income, and adjusted diluted earnings per share (non-GAAP financial measures).

 

 Second quarter of 2019 - Thirteen weeks ended August 3, 2019 















 As Reported 


 Impact to exclude
transformational
restructuring costs 


 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

455,026


(19,452)


435,574

 Selling and administrative expense rate 

36.3%


(1.6%)


34.8%

 Operating profit 


13,181


19,452


32,633

 Operating profit rate 


1.1%


1.6%


2.6%

 Income tax expense 


1,649


4,993


6,642

 Effective income tax rate 


21.1%


3.2%


24.3%

 Net income 


6,178


14,459


20,637

 Diluted earnings per share  


$                    0.16


$                         0.37


$                    0.53

 

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 net income, 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") the costs associated with a transformational restructuring initiative of $19,452 ($14,459, net of tax).

 

 Year-to-date 2019 - Twenty-six weeks ended August 3, 2019 
























 As Reported 


 Impact to exclude
department exit
inventory
impairment 


 Impact to exclude
transformational
restructuring costs 


 Adjustment to
exclude legal
settlement loss
contingencies 


 As Adjusted
(non-GAAP) 

 Gross margin 


$          1,017,277


$                      6,050


$                             -


$                             -


$          1,023,327

 Gross margin rate 


39.9%


0.2%


-


-


40.2%

 Selling and administrative expenses 

915,631


-


(34,785)


(7,250)


873,596

 Selling and administrative expense rate 

35.9%


-


(1.4%)


(0.3%)


34.3%

 Operating profit 


38,826


6,050


34,785


7,250


86,911

 Operating profit rate 


1.5%


0.2%


1.4%


0.3%


3.4%

 Income tax expense 


8,931


1,553


8,928


1,696


21,108

 Effective income tax rate 


29.1%


(0.4%)


(1.2%)


(0.7%)


26.8%

 Net income 


21,718


4,497


25,857


5,554


57,626

 Diluted earnings per share  


$                    0.55


$                         0.11


$                         0.65


$                         0.14


$                    1.46

 

The above adjusted gross margin, adjusted gross margin rate, 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 net income, 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 GAAP (1) an inventory impairment amount of $6,050 ($4,497, net of tax) as a result of a merchandise department exit; (2) the costs associated with a transformational restructuring initiative of $34,785 ($25,857, net of tax); and (3) a pretax charge related to estimated legal settlement of employee class actions of $7,250 ($5,554, net of tax).

 

 Year-to-date 2018 - Twenty-six weeks ended August 4, 2018 




















 As Reported 


 Adjustment to
exclude CEO
retirement costs 


 Adjustment to
exclude
shareholder
litigation matter 


 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$             864,697


$                     (7,018)


$                     (3,500)


$             854,179

 Selling and administrative expense rate 

34.7%


(0.3%)


(0.1%)


34.3%

 Operating profit 


79,655


7,018


3,500


90,173

 Operating profit rate 


3.2%


0.3%


0.1%


3.6%

 Income tax expense 


20,926


895


879


22,700

 Effective income tax rate 


27.4%


(1.0%)


(0.3%)


26.1%

 Net income 


55,403


6,123


2,621


64,147

 Diluted earnings per share  


$                    1.33


$                         0.15


$                         0.06


$                    1.54

 

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 net income, 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 GAAP (1) the costs associated with the retirement of our former CEO of $7,018 ($6,123, net of tax); and (2) a pretax charge related to the settlement in principle of shareholder litigation matters of $3,500 ($2,621, net of tax).

 

 Full Year 2018 - Fifty-two weeks ended February 2, 2019 




















 As Reported 


 Adjustment to
exclude CEO
retirement costs 


 Adjustment to
exclude
shareholder
litigation matter 


 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$          1,778,416


$                     (7,018)


$                     (3,500)


$          1,767,898

 Selling and administrative expense rate 

34.0%


(0.1%)


(0.1%)


33.8%

 Operating profit 


218,509


7,018


3,500


229,027

 Operating profit rate 


4.2%


0.1%


0.1%


4.4%

 Income tax expense 


50,719


895


879


52,493

 Effective income tax rate 


24.4%


(0.4%)


(0.0%)


24.1%

 Net income 


156,894


6,123


2,621


165,638

 Diluted earnings per share  


$                    3.83


$                         0.15


$                         0.06


$                    4.04

 

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 net income, 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 GAAP (1) the costs associated with the retirement of our former CEO of $7,018 ($6,123, net of tax); and (2) a pretax charge related to the settlement in principle of shareholder litigation matters of $3,500 ($2,621, 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 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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SOURCE Big Lots, Inc.