COLUMBUS, Ohio, March 8, 2019 /PRNewswire/ — Big Lots, Inc. (NYSE: BIG) today reported income of $108.0 million, or $2.68 per diluted share, for the fourth quarter of fiscal 2018 ended February 2, 2019. This result exceeds our previously communicated guidance of income of $2.20 to $2.40 per diluted share, and compares favorably to adjusted income of $109.3 million, or $2.57 per diluted share (a reconciliation of all non-GAAP amounts to the most comparable GAAP amounts is provided later in this release), for the fourth quarter of fiscal 2017. As a reminder, the fourth quarter of fiscal 2017 included an extra week of operations as compared to the fourth quarter of fiscal 2018 due to a shift in the retail calendar. We estimate the impact of the extra week was approximately $0.09 per diluted share in fiscal 2017.

Comparable store sales increased 3.1% for the fourth quarter of fiscal 2018, compared to our guidance of flat to an increase of 2%. Net sales for the fourth quarter of fiscal 2018 were $1,598.6 million compared to $1,640.6 million for the same period last year as our increase in comparable stores sales for the fourth quarter of fiscal 2018 was more than offset by a lower store count year-over-year and the extra week of operations in fiscal 2017.

Commenting on today’s announcement, Bruce Thorn, President and CEO of Big Lots stated, «After a slow start to the quarter, we experienced meaningful sales acceleration in December and January driving Q4 sales and earnings above the high end of our guidance.  Our holiday plans were well executed and led to broad based growth across the majority of our merchandise categories and a comp store sales increase in excess of 3% for the second consecutive quarter.  Our merchandise category results were supplemented by continued strong performance in our store of the future remodel efforts and our marketing and stores’ focus on growth of our Rewards loyalty program.»

Mr. Thorn continued, «I am particularly proud of the team’s focus to deliver the all-important fourth quarter while also undertaking a strategic review of our competitive positioning and our opportunities for long-term, profitable sales growth.  As mentioned on our December earnings call, we’ve engaged an industry leading consultative firm to help us take an outside in view of our business and there was significant progress and learnings achieved during the quarter.  I look forward to sharing an update on this topic on our earnings call later this morning, and future updates in the months and quarters ahead.»

FOURTH QUARTER HIGHLIGHTS

  • Income of $2.68 per diluted share compared to last year’s adjusted income of $2.57 per diluted share (non-GAAP), exceeding our previously communicated guidance of $2.20 to $2.40 per diluted share
  • Comparable store sales increase 3.1%, exceeding our previously communicated guidance of flat to +2%

 

Earnings per Share

Q4 2018

Q4 2017

FY 2018

FY 2017

Earnings per diluted share

$2.68

$2.46

$3.83

$4.38

Impact of CEO retirement (1)

$0.15

Impact of settlement of shareholder litigation matters (1)

$0.06

Impact of write down of deferred tax assets (1)

$0.11

$0.10

Impact of gain from insurance recoveries (1)

($0.04)

Earnings per diluted share – adjusted basis

$2.68

$2.57

$4.04

$4.45

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

 

FISCAL 2018 HIGHLIGHTS

  • Adjusted income of $4.04 per diluted share (non-GAAP), compared to fiscal 2017 adjusted income of $4.45 per diluted share (non-GAAP)
  • Comparable store sales increase 1.2%
  • Returned $151 million of cash to shareholders in the form of dividends and share repurchases

FISCAL 2018

For fiscal 2018, income totaled $156.9 million, or $3.83 per diluted share. Excluding non-recurring expenses associated with the retirement of our former CEO and the settlement of shareholder litigation matters reported in the first quarter of fiscal 2018, adjusted income for the full year period ended February 2, 2019, totaled $165.6 million, or $4.04 per diluted share (non-GAAP), compared to adjusted income of $192.5 million, or $4.45 per diluted share (non-GAAP), for fiscal 2017.

Comparable store sales increased 1.2% for fiscal 2018. Net sales for fiscal 2018 were $5,238.1 million compared to $5,264.4 million with the decrease resulting from a lower store count year-over-year and the extra week of operations in fiscal 2017, partially offset by the 1.2% comparable store sales increase.

Inventory and Cash Management

Inventory ended fiscal 2018 at $970 million, compared to $873 million for fiscal 2017, with the increase largely attributed to the strategic decision to deliver certain imported merchandise earlier than normal to minimize the risk associated with potential, incremental tariff related costs.  This growth was partially offset by a lower store count year-over-year.

We ended fiscal 2018 with $46 million of Cash and Cash Equivalents and $374 million of borrowings under our credit facility compared to $51 million of Cash and Cash Equivalents and $200 million of borrowings under our credit facility as of the end of fiscal 2017.

Total Cash Returned To Shareholders

For fiscal 2018, we returned $151 million of cash to shareholders in the form of quarterly dividend payments totaling $51 million and share repurchases totaling $100 million.

FISCAL 2019 GUIDANCE

  • Forecasting fiscal 2019 adjusted income in the range of $3.55 to $3.75 per diluted share (non-GAAP) compared to fiscal 2018 adjusted income of $4.04 per diluted share (non-GAAP)
  • Forecasting comparable store sales to increase in the low single digit range
  • Forecasting cash flow (cash provided by operating activities less capital expenditures) of approximately $95 to $105 million
  • Forecasting cash returned to shareholders of approximately $100 million, including share repurchases and quarterly dividend payments

We estimate fiscal 2019 adjusted income will be in the range of $3.55 to $3.75 per diluted share (non-GAAP), compared to adjusted income of $4.04 per diluted share (non-GAAP) for fiscal 2018. This guidance is based on a comparable store sales increase in the low single digit range and a total sales increase in the low singles. We estimate this financial performance will result in cash flow of approximately $95 to $105 million.

On March 6, 2019, our Board of Directors approved a share repurchase program («2019 Share Repurchase Program») providing for the repurchase of up to $50 million of our common shares. The $50 million authorization is expected to be utilized to repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2019 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The 2019 Share Repurchase Program is eligible to begin on March 11, 2019 and will continue until exhausted.

As announced in a separate press release earlier today, on March 6, 2019, our Board of Directors declared a quarterly cash dividend for the first quarter of fiscal 2019 of $0.30 per common share. This dividend is payable on April 5, 2019, to shareholders of record as of the close of business on March 22, 2019.

Fiscal Q1 2019 Guidance

For the first quarter of fiscal 2019, we estimate adjusted income in the range of $0.65 to $0.75 per diluted share (non-GAAP) compared to last year’s adjusted income of $0.95 per diluted share. This guidance assumes a comparable store sales increase in the low single digit range.

 

Q1

Full Year

2019 Guidance (1)

2018 (2)

2019 Guidance (1)

2018 (2)

Earnings per diluted share – adjusted

$0.65  –  $0.75

$0.95

$3.55  –  $3.75

$4.04

(1)  Excludes potential costs associated with strategy review and implementation.

(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 fourth quarter of fiscal 2018 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 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, March 22, 2019. A replay of this call will also be available beginning today at 12:00 noon through March 22 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International) and entering Replay Passcode 8047456. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a community retailer operating 1,401 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)

FEBRUARY 2

FEBRUARY 3

2019

2018

(Unaudited)

(Recast)

ASSETS

Current assets:

Cash and cash equivalents

$46,034

$51,176

Inventories

969,561

872,790

Other current assets

112,408

98,007

   Total current assets

1,128,003

1,021,973

Property and equipment – net

822,338

565,977

Deferred income taxes

8,633

13,986

Other assets

64,373

49,790

$2,023,347

$1,651,726

LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities:

Accounts payable

$396,903

$351,226

Property, payroll and other taxes

75,317

80,863

Accrued operating expenses

99,422

72,013

Insurance reserves

38,883

38,517

Accrued salaries and wages

26,798

39,321

Income taxes payable

1,237

7,668

   Total current liabilities

638,560

589,608

Long-term obligations under bank credit facility

374,100

199,800

Deferred rent

60,700

58,246

Insurance reserves

54,507

55,015

Unrecognized tax benefits

14,189

14,929

Synthetic lease obligation

144,477

15,606

Other liabilities

43,773

48,935

Shareholders’ equity

693,041

669,587

$2,023,347

$1,651,726

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

13 WEEKS ENDED

14 WEEKS ENDED

FEBRUARY 2, 2019

FEBRUARY 3, 2018

%

%

(Unaudited)

(Unaudited)

Net sales

$1,598,551

100.0

$1,640,611

100.0

Gross margin

659,344

41.2

682,041

41.6

Selling and administrative expenses 

476,893

29.8

484,556

29.5

Depreciation expense

34,034

2.1

29,604

1.8

Operating profit

148,417

9.3

167,881

10.2

Interest expense

(3,217)

(0.2)

(2,006)

(0.1)

Other income (expense)

(1,274)

(0.1)

389

0.0

Income before income taxes

143,926

9.0

166,264

10.1

Income tax expense

35,879

2.2

61,436

3.7

Net income

$108,047

6.8

$104,828

6.4

Earnings per common share

Basic

$2.70

$2.50

Diluted

$2.68

$2.46

Weighted average common shares outstanding

Basic

40,043

41,878

Dilutive effect of share-based awards

318

723

Diluted

40,361

42,601

Cash dividends declared per common share

$0.30

$0.25

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

52 WEEKS ENDED

53 WEEKS ENDED

FEBRUARY 2, 2019

FEBRUARY 3, 2018

%

%

(Unaudited)

(Unaudited)

Net sales

$5,238,105

100.0

$5,264,362

100.0

Gross margin

2,121,895

40.5

2,142,442

40.7

Selling and administrative expenses 

1,778,416

34.0

1,723,996

32.7

Depreciation expense

124,970

2.4

117,093

2.2

Operating profit

218,509

4.2

301,353

5.7

Interest expense

(10,338)

(0.2)

(6,711)

(0.1)

Other income (expense)

(558)

(0.0)

712

0.0

Income before income taxes

207,613

4.0

295,354

5.6

Income tax expense

50,719

1.0

105,522

2.0

Net income

$156,894

3.0

$189,832

3.6

Earnings per common share

Basic

$3.84

$4.43

Diluted

$3.83

$4.38

Weighted average common shares outstanding

Basic

40,809

42,818

Dilutive effect of share-based awards

153

482

Diluted

40,962

43,300

Cash dividends declared per common share

$1.20

$1.00

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

13 WEEKS ENDED

14 WEEKS ENDED

FEBRUARY 2, 2019

FEBRUARY 3, 2018

 (Unaudited) 

 (Unaudited) 

  Net cash provided by operating activities

$193,640

$221,296

  Net cash used in investing activities

(95,440)

(63,215)

  Net cash used in financing activities

(114,104)

(164,917)

Decrease in cash and cash equivalents

(15,904)

(6,836)

Cash and cash equivalents:

  Beginning of period

61,938

58,012

  End of period

$46,034

$51,176

 

 

BIG LOTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

52 WEEKS ENDED

53 WEEKS ENDED

FEBRUARY 2, 2019

FEBRUARY 3, 2018

 (Unaudited) 

 (Unaudited) 

  Net cash provided by operating activities 

$234,060

$250,368

  Net cash used in investing activities

(376,473)

(156,508)

  Net cash provided by (used in) financing activities

137,271

(93,848)

(Decrease) increase in cash and cash equivalents

(5,142)

12

Cash and cash equivalents:

  Beginning of period

51,176

51,164

  End of period

$46,034

$51,176

 

 

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, effective income tax rate, net income, and diluted earnings per share for the full year 2018, the fourth quarter of 2017, the full year 2017, and the first quarter of 2018, (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, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share (non-GAAP financial measures).

 

 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 accounting principles generally accepted in the United States of America («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).

 

 Fourth quarter of 2017 – Fourteen weeks ended February 3, 2018 

 As Reported 

 Impact on deferred
taxes resulting from
U.S. tax reform 

 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$             484,556

$                             –

$             484,556

 Selling and administrative expense rate 

29.5%

29.5%

 Operating profit 

167,881

167,881

 Operating profit rate 

10.2%

10.2%

 Income tax expense 

61,436

(4,517)

56,919

 Effective income tax rate 

37.0%

(2.7%)

34.2%

 Net income 

104,828

4,517

109,345

 Diluted earnings per share  

$                    2.46

$                         0.11

$                    2.57

 

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 the impact to deferred taxes resulting from the U.S. Tax Cuts and Jobs Act of 2017 of $4,517.

 

 Full Year 2017 – Fifty-three weeks ended February 3, 2018 

 As Reported 

 Adjustment to
exclude gain on
insurance
recoveries 

 Impact on deferred
taxes resulting from
U.S. tax reform 

 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$          1,723,996

$                      3,000

$                             –

$          1,726,996

 Selling and administrative expense rate 

32.7%

0.1%

32.8%

 Operating profit 

301,353

(3,000)

298,353

 Operating profit rate 

5.7%

(0.1%)

5.7%

 Income tax expense 

105,522

(1,149)

(4,517)

99,856

 Effective income tax rate 

35.7%

(0.0%)

(1.5%)

34.2%

 Net income 

189,832

(1,851)

4,517

192,498

 Diluted earnings per share  

$                    4.38

$                       (0.04)

$                         0.10

$                    4.45

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) a pretax gain on insurance recoveries associated with merchandise-related legal matters of $3,000 ($1,851, net of tax); and (2) the impact to deferred taxes resulting from the U.S. Tax Cuts and Jobs Act of 2017 of $4,517.

 

 First quarter of 2018 – Thirteen weeks ended May 5, 2018 

 As Reported 

 Adjustment to
exclude CEO
retirement costs 

 Adjustment to
exclude
shareholder
itigation matter 

 As Adjusted
(non-GAAP) 

 Selling and administrative expenses 

$             438,092

$                     (7,018)

$                     (3,500)

$             427,574

 Selling and administrative expense rate 

34.6%

(0.6%)

(0.3%)

33.7%

 Operating profit 

45,337

7,018

3,500

55,855

 Operating profit rate 

3.6%

0.6%

0.3%

4.4%

 Income tax expense 

13,030

895

879

14,804

 Effective income tax rate 

29.4%

(2.1%)

(0.3%)

27.0%

 Net income 

31,239

6,123

2,621

39,983

 Diluted earnings per share  

$                    0.74

$                         0.15

$                         0.06

$                    0.95

 

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.