COLUMBUS, Ohio, Dec. 1, 2017 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported income of $4.4 million, or $0.10 per diluted share, for the third quarter of fiscal 2017 ended October 28, 2017. This result includes after tax income of $1.9 million, or $0.04 per diluted share, associated with a gain from insurance recoveries on merchandise-related legal matters. Excluding this gain, adjusted income totaled $2.5 million, or $0.06 per diluted share (see non-GAAP table included later in this release), which compares to our guidance of income in the range of $0.01 to $0.05 per diluted share. Comparable store sales increased 1.0% for the third quarter of fiscal 2017, compared to our guidance of a low single digit increase. Net sales for the third quarter of fiscal 2017 increased 0.5% to $1,111 million, a result of the comparable store sales increase partially offset by a lower store count year-over-year.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm very pleased with our third quarter results. In a challenging retail environment, the team delivered on our financial commitments with sales in line with our communicated guidance and EPS growth above our expectations. Jennifer continues to respond positively to our strategy focusing on ownable and winnable merchandise categories, improved merchandise presentations, and more consistent, friendly customer service and in-store execution."

THIRD QUARTER HIGHLIGHTS

  • Adjusted income of $0.06 per diluted share (non-GAAP), compared to last year's adjusted income of $0.04 per diluted share (non-GAAP)
  • Comparable store sales increase of 1.0%

 








Earnings per diluted share









Q3 2017


Q3 2016








Earnings per diluted share


$0.10


$0.03


Impact of gain from insurance recoveries (1)


($0.04)


-


Impact of legacy pension costs (1)


-


$0.01








Earnings per diluted share - adjusted basis


$0.06


$0.04


% change to LY


+50%
















(1)  Non-GAAP detailed reconciliation provided below.

 

Inventory and Cash Management
Inventory ended the third quarter of fiscal 2017 at $1,038 million, compared to $1,036 million for the third quarter of fiscal 2016. Inventory levels per store increased 1% compared to last year, partially offset by a lower store count year-over-year.

We ended the third quarter of fiscal 2017 with $58 million of Cash and Cash Equivalents and $372 million of borrowings under our credit facility compared to $60 million of Cash and Cash Equivalents and $363 million of borrowings under our credit facility as of the end of the third quarter of fiscal 2016. Cash flow (cash provided by operating activities less cash used in investing activities) was focused on reinvesting in the Company's strategic initiatives to support long-term sustainable growth, including the Store of the Future, and returning cash to our shareholders through share repurchases and dividend payments.

Total Cash Returned To Shareholders
As a reminder, on February 28, 2017, our Board of Directors approved a share repurchase program ("2017 Share Repurchase Program") providing for the repurchase of up to $150 million of our common shares in open market and/or privately negotiated transactions at our discretion, subject to market conditions and other factors. During the third quarter of fiscal 2017, we completed the 2017 Share Repurchase Program. In total for the program, we invested $150 million to repurchase 3.1 million shares, or approximately 7% of the Company's shares outstanding, at an average price of $48.04 per share. Common shares acquired through the 2017 Share Repurchase Program will be available to meet obligations under our equity compensation plans and for general corporate purposes.

As announced in a separate press release earlier today, on November 29, 2017, our Board of Directors declared a quarterly cash dividend of $0.25 per common share. This dividend payment of approximately $11 million is payable on December 29, 2017, to shareholders of record as of the close of business on December 15, 2017.

Year to date, the combination of share repurchase activity and our quarterly dividend payments have returned approximately $184 million to shareholders.

FISCAL Q4 2017 GUIDANCE

  • Increases Q4 guidance for income of $2.35 to $2.40 per diluted share, compared to adjusted income of $2.26 per diluted share (non-GAAP) for the same period last year
  • Affirms Q4 guidance for comparable store sales in the range of flat to +2%

For the fourth quarter of fiscal 2017, we estimate income will be in the range of $2.35 to $2.40 per diluted share, compared to our prior guidance of $2.30 to $2.38 per diluted share. This compares to adjusted income of $2.26 per diluted share (non-GAAP) for the fourth quarter of fiscal 2016. This guidance is based on comparable store sales in the range of flat to +2%.

FISCAL 2017 GUIDANCE

  • Increases guidance for fiscal 2017 adjusted income to be in the range of $4.23 to $4.28 per diluted share (non-GAAP), representing a 16% to 18% increase compared to fiscal 2016 adjusted income of $3.64 per diluted share (non-GAAP)
  • Estimates fiscal 2017 cash flow of approximately $180 million

Based on operating results for the first three quarters and our expectations for the fourth quarter of fiscal 2017 noted above, we now estimate fiscal 2017 adjusted income to be in the range of $4.23 to $4.28 per diluted share (non-GAAP), compared to our prior guidance of $4.15 to $4.25 per diluted share. This compares to adjusted income of $3.64 per diluted share (non-GAAP) for fiscal 2016. This annual guidance is based on a comparable store sales increase of approximately 1% and total sales up approximately 2% to last year as the comp and the 53rd week in fiscal 2017 are expected to be partially offset by a lower overall store count.









Full Year










2017 Guidance (1)


2016 (2)








Earnings per diluted share


$4.23 -  $4.28


$3.64








% Change (2017 vs. 2016)


+16% to +18%
















(1)  Non-GAAP - excludes impact of gain from insurance recovery.

(2)  Non-GAAP detailed reconciliation provided below.

 

Conference Call/Webcast
We will host a conference call today at 8:00 a.m. to discuss our financial results for the third quarter of fiscal 2017 and provide commentary on our outlook for the fourth quarter and full year of fiscal 2017. 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 after 12:00 noon today and will remain available through midnight on Friday, December 15, 2017. A replay of this call will also be available beginning today at 12:00 noon through December 15 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 8562612. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a community retailer operating 1,430 BIG LOTS stores in 47 states, dedicated to friendly service, trustworthy value, and affordable solutions in every season and category – furniture, food, décor, and more. We exist to serve everyone like family, providing a better 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. logo. (PRNewsfoto/Big Lots, Inc.)

 

 

















BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)












OCTOBER 28


OCTOBER 29






2017


2016






(Unaudited)


(Unaudited)












ASSETS















Current assets:








Cash and cash equivalents


$58,012


$59,743




Inventories


1,038,156


1,036,337




Other current assets


118,822


112,251




   Total current assets


1,214,990


1,208,331











Property and equipment - net


537,563


540,669











Deferred income taxes


47,027


56,102



Other assets


46,529


42,141






$1,846,109


$1,847,243




















LIABILITIES AND SHAREHOLDERS' EQUITY      















Current liabilities:








Accounts payable


$493,097


$503,625




Property, payroll and other taxes


87,007


88,941




Accrued operating expenses


77,683


80,227




Insurance reserves


41,561


42,141




Accrued salaries and wages


31,563


50,243




Income taxes payable


865


1,407




   Total current liabilities


731,776


766,584











Long-term obligations under bank credit facility


371,900


362,900











Deferred rent


56,622


55,291



Insurance reserves


56,948


58,647



Unrecognized tax benefits


15,732


14,639



Other liabilities


47,467


44,107











Shareholders' equity


565,664


545,075






$1,846,109


$1,847,243



 

 

















BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












13 WEEKS ENDED


13 WEEKS ENDED




OCTOBER 28, 2017


OCTOBER 29, 2016





%



%




(Unaudited)


(Unaudited)

















Net sales


$1,110,824

100.0


$1,105,498

100.0










Gross margin


443,626

39.9


441,992

40.0










Selling and administrative expenses 


408,314

36.8


409,695

37.1










Depreciation expense


29,508

2.7


30,294

2.7









Operating profit


5,804

0.5


2,003

0.2










Interest expense


(2,077)

(0.2)


(1,665)

(0.2)










Other income (expense)


405

0.0


673

0.1









Income before income taxes


4,132

0.4


1,011

0.1










Income tax benefit


(240)

(0.0)


(365)

(0.0)









Net income


$4,372

0.4


$1,376

0.1

















Earnings per common share
















Basic


$0.10



$0.03











Diluted


$0.10



$0.03


















Weighted average common shares outstanding
















Basic


41,967



44,165











Dilutive effect of share-based awards


557



761











Diluted


42,524



44,926










Cash dividends declared per common share


$0.25



$0.21


 

 

















BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)












39 WEEKS ENDED


39 WEEKS ENDED




OCTOBER 28, 2017


OCTOBER 29, 2016





%



%




(Unaudited)


(Unaudited)

















Net sales


$3,628,912

100.0


$3,621,228

100.0










Gross margin


1,460,401

40.2


1,446,096

39.9










Selling and administrative expenses 


1,239,440

34.2


1,251,844

34.6










Depreciation expense


87,489

2.4


90,770

2.5









Operating profit


133,472

3.7


103,482

2.9










Interest expense


(4,705)

(0.1)


(3,793)

(0.1)










Other income (expense)


323

0.0


1,031

0.0









Income before income taxes


129,090

3.6


100,720

2.8










Income tax expense


44,086

1.2


37,970

1.0









Net income


$85,004

2.3


$62,750

1.7

















Earnings per common share
















Basic


$1.97



$1.37











Diluted


$1.95



$1.36


















Weighted average common shares outstanding
















Basic


43,155



45,678











Dilutive effect of share-based awards


409



578











Diluted


43,564



46,256










Cash dividends declared per common share


$0.75



$0.63


 

 

















BIG LOTS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)












13 WEEKS ENDED


13 WEEKS ENDED






OCTOBER 28, 2017


OCTOBER 29, 2016






 (Unaudited) 


 (Unaudited) 




  Net cash used in operating activities


($70,890)


($67,964)












  Net cash used in investing activities


(41,602)


(26,812)












  Net cash provided by financing activities


114,495


96,150











Increase in cash and cash equivalents


2,003


1,374




Cash and cash equivalents:








  Beginning of period


56,009


58,369




  End of period


$58,012


$59,743



 

 

















BIG LOTS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)












39 WEEKS ENDED


39 WEEKS ENDED






OCTOBER 28, 2017


OCTOBER 29, 2016






 (Unaudited) 


 (Unaudited) 




  Net cash provided by operating activities


$29,072


$43,536












  Net cash used in investing activities


(93,293)


(71,842)












  Net cash provided by financing activities


71,069


33,905











Increase in cash and cash equivalents


6,848


5,599




Cash and cash equivalents:








  Beginning of period


51,164


54,144




  End of period


$58,012


$59,743



 

 

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

The following tables reconcile: selling and administrative expenses, selling and administrative expense rate, operating profit, operating profit rate, income tax expense (benefit), effective income tax rate, net income, and diluted earnings per share for the third quarter of 2017, the year-to-date 2017, the third quarter of 2016, the year-to-date 2016, the fourth quarter of 2016, and the full-year 2016 (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 (benefit), adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share (non-GAAP financial measures).

 Third quarter of 2017 - Thirteen weeks ended October 28, 2017 












 As Reported 


  Adjustment to
exclude gain on
insurance
recoveries 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$             408,314


$                      3,000


$             411,314

 Selling and administrative expense rate 

36.8%


0.3%


37.0%

 Operating profit 


5,804


(3,000)


2,804

 Operating profit rate 


0.5%


(0.3%)


0.3%

 Income tax benefit 


(241)


(1,149)


(1,390)

 Effective income tax rate 


(5.8%)


(117.0%)


(122.8%)

 Net income 


4,372


(1,851)


2,521

 Diluted earnings per share  


$                    0.10


$                       (0.04)


$                    0.06

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax benefit, 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") a pretax gain on insurance recoveries associated with merchandise-related legal matters of $3,000 ($1,851, net of tax).

 Year-to-date 2017 - Thirty-nine weeks ended October 28, 2017 














 As Reported 


 Adjustment to
exclude gain on
insurance
recoveries 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$          1,239,440


$                      3,000


$          1,242,440

 Selling and administrative expense rate 

34.2%


0.1%


34.2%

 Operating profit 


133,472


(3,000)


130,472

 Operating profit rate 


3.7%


(0.1%)


3.6%

 Income tax expense 


44,086


(1,149)


42,937

 Effective income tax rate 


34.2%


(0.1%)


34.1%

 Net income 


85,004


(1,851)


83,153

 Diluted earnings per share  


$                    1.95


$                       (0.04)


$                    1.91

 

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 a pretax gain on insurance recoveries associated with merchandise-related legal matters of $3,000 ($1,851, net of tax).

 Third quarter of 2016 - Thirteen weeks ended October 29, 2016 












 As Reported 


 Adjustment to
exclude pension
costs 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$             409,695


$                        (863)


$             408,832

 Selling and administrative expense rate 

37.1%


(0.1%)


37.0%

 Operating profit 


2,003


863


2,866

 Operating profit rate 


0.2%


0.1%


0.3%

 Income tax benefit 


(365)


342


(23)

 Effective income tax rate 


(36.1%)


34.9%


(1.2%)

 Net income 


1,376


521


1,897

 Diluted earnings per share  


$                    0.03


$                         0.01


$                    0.04

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax benefit, 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") 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 intentions of completing the termination and distributing all plan assets during 2016, which totaled $863 ($521, 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.

 Year-to-date 2016 - Thirty-nine weeks ended October 29, 2016 












 As Reported 


 Adjustment to
exclude pension
costs 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$          1,251,844


$                     (4,073)


$          1,247,771

 Selling and administrative expense rate 

34.6%


(0.1%)


34.5%

 Operating profit 


103,482


4,073


107,555

 Operating profit rate 


2.9%


0.1%


3.0%

 Income tax expense 


37,970


1,612


39,582

 Effective income tax rate 


37.7%


0.1%


37.8%

 Net income 


62,750


2,461


65,211

 Diluted earnings per share  


$                    1.36


$                         0.05


$                    1.41

 

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 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 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 intentions of completing the termination and distributing all plan assets during 2016, which totaled $4,073 ($2,461, 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.

 Fourth quarter of 2016 - Thirteen weeks ended January 28, 2017 














 As Reported 


 Adjustment to
exclude pension
costs 


 Gain on sale of
real estate 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$             479,112


$                  (23,693)


$                  3,823


$             459,242

 Selling and administrative expense rate 

30.3%


(1.5%)


0.2%


29.1%

 Operating profit 


144,521


23,693


(3,823)


164,391

 Operating profit rate 


9.2%


1.5%


(0.2%)


10.4%

 Income tax expense 


53,501


9,364


(1,412)


61,453

 Effective income tax rate 


37.3%


0.3%


0.0%


37.6%

 Net income 


90,078


14,329


(2,411)


101,996

 Diluted earnings per share  


$                    1.99


$                         0.32


$                  (0.05)


$                    2.26

 

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"): (1) all costs associated with the Company's pension plans, as the Company completed termination and distribution proceedings in the fourth quarter of 2016, which totaled $23,693 ($14,329, net of tax); and (2) a pretax adjustment for a gain on the sale of real estate of $3,823 ($2,411, 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 2016 - Fifty-two weeks ended January 28, 2017 














 As Reported 


 Adjustment to
exclude pension
costs 


 Gain on sale of
real estate 


 As Adjusted (non-
GAAP) 

 Selling and administrative expenses 

$          1,730,956


$                  (27,766)


$                  3,823


$          1,707,013

 Selling and administrative expense rate 

33.3%


(0.5%)


0.1%


32.8%

 Operating profit 


248,003


27,766


(3,823)


271,946

 Operating profit rate 


4.8%


0.5%


(0.1%)


5.2%

 Income tax expense 


91,471


10,976


(1,412)


101,035

 Effective income tax rate 


37.4%


0.2%


0.0%


37.7%

 Net income 


152,828


16,790


(2,411)


167,207

 Diluted earnings per share  


$                    3.32


$                         0.37


$                  (0.05)


$                    3.64

 

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) all costs associated with the Company's pension plans, as the Company completed termination and distribution proceedings in 2016, which totaled $27,766 ($16,790, net of tax); and (2) a pretax adjustment for a gain on the sale of real estate of $3,823 ($2,411, 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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SOURCE Big Lots, Inc.