EX-99.1 2 l26354aexv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
PRESS RELEASE
Dick’s Sporting Goods Reports First Quarter Results:
  •   EPS Increases 81% over Last Year to $0.38
  •   Comparable Store Sales Increase 2.0%
PITTSBURGH, Pa., May 23, 2007 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the first quarter ended May 5, 2007. The results include the operating results of the recently purchased Golf Galaxy for the first quarter of 2007, but not for 2006 as Golf Galaxy was acquired on February 13, 2007.
First Quarter Results
Net income increased 90% to $21.7 million and earnings per diluted share increased 81% to $0.38, compared to prior year net income of $11.4 million, or $0.21 per share. The operating results of Golf Galaxy have been included in the results beginning with the February 13, 2007 date of acquisition. Earnings guidance provided on March 13, 2007 was for earnings per share of $0.35 - 0.38.
Net sales for the quarter increased 28% to $823.6 million due to a comparable store sales increase of 2.0% (or 0.1% adjusting for the shifted retail calendar, compared to a 6.5% increase in Q1 last year), the opening of new stores, and the inclusion of Golf Galaxy in this years’ quarterly results (which will be included in Dick’s comparable store sales calculation beginning in Q2 2008). Comparable store sales for Golf Galaxy on a pro-forma basis increased 5.5%, or were flat after adjusting for the shifted retail calendar.
“We were very pleased with our sales results considering the later than expected start to the spring sports seasons. There are several reasons that a number of locales postponed the start of these seasons, including timing of spring break due to the Easter shift and unplayable field conditions in the Northeast and Midwest. Even in these challenging conditions, we were able to provide earnings at the high end of our range,” said Edward W. Stack, Chairman and CEO.
New Stores
In the first quarter, the Company opened 15 Dick’s Sporting Goods stores and ten Golf Galaxy stores. The stores that opened in the first quarter are listed in a table later in the release under the heading “Store Count and Square Footage”.
2007 Outlook
The Company’s current outlook for 2007 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

 

  •   Full Year 2007 — (52-Week Year) Comparisons to Fiscal 2006 — (53-Week Year)
  •   Based on an estimated 58 million shares outstanding, we reaffirm our previous guidance for consolidated earnings per diluted share of approximately $2.37 - 2.40. This represents an approximate 18% increase over earnings per diluted share for the full year 2006 of $2.03 and includes the expected results of Golf Galaxy.
 
  •   Comparable store sales for Dick’s stores are expected to increase approximately 1 - 2% compared to a 6.0% increase last year.
 
  •   The Company expects to open 45 new Dick’s stores, 17 new Golf Galaxy stores and relocate one Dick’s store in 2007 .
  •   Second Quarter 2007
  •   Based on an estimated 58 million diluted shares outstanding, the Company anticipates consolidated earnings per diluted share of approximately $0.74 - 0.77. This represents an approximate 61% increase over earnings per diluted share for the second quarter 2006 of $0.47 and includes the expected results from Golf Galaxy.
 
  •   Comparable store sales for Dick’s stores are expected to increase approximately 3 - 5%, or approximately 2 - 4%, adjusting for the shifted retail calendar which compares to a 6.5% increase in Q2 last year. Golf Galaxy will be included in the quarterly comparable store base beginning in Q2 2008, which will be the first full quarter following the anniversary of the date of acquisition.
 
  •   The Company expects to open six new Dick’s stores, two new Golf Galaxy stores and relocate one Dick’s store.
Conference Call Info
The Company will be hosting a conference call today at 10:00 am eastern time to discuss the first quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, the webcast will be archived on the Company’s web site for approximately 30 days. In addition, a dial-in replay will be available shortly after the call. To listen, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 95805411. The dial-in replay will be available for 30 days following the live call.
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
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. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “guidance,” “estimate,” “intend,” “predict,” and “continue” or similar words. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended February 3, 2007 as filed with the Securities and Exchange Commission on March 23, 2007. The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws.

 

 

About Dick’s Sporting Goods, Inc.
Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment. As of May 5, 2007, the Company operated 309 stores in 34 states primarily throughout the eastern half of the U.S. The Company also owns Golf Galaxy, a multi-channel golf specialty retailer, with 75 stores in 28 states, ecommerce websites and catalog operations.
Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).
Contact:
Timothy E. Kullman, SVP — Chief Financial Officer or
Dennis Magulick, Director, Investor Relations
724-273-3400
investors@dcsg.com

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
(In thousands, except per share data)
                                 
    13 Weeks Ended  
    May 5,     % of     April 29,     % of  
    2007     Sales (1)     2006     Sales  
 
                                
Net sales
   $ 823,553       100.00 %   $ 645,498       100.00 %
Cost of goods sold, including occupancy and distribution costs
     579,134       70.32       467,833       72.48  
 
                        
 
                                
GROSS PROFIT
     244,419       29.68       177,665       27.52  
 
                                
Selling, general and administrative expenses
     198,007       24.04       152,235       23.58  
Pre-opening expenses
     7,121       0.86       4,151       0.64  
 
                        
 
                                
INCOME FROM OPERATIONS
     39,291       4.77       21,279       3.30  
 
                                
Interest expense, net
     3,207       0.39       2,249       0.35  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     36,084       4.38       19,030       2.95  
 
                                
Provision for income taxes
     14,383       1.75       7,612       1.18  
 
                        
 
                                
NET INCOME
   $ 21,701       2.64 %   $ 11,418       1.77 %
 
                        
 
                                
EARNINGS PER COMMON SHARE:
                                
Basic
   $ 0.41             $ 0.23          
Diluted
   $ 0.38             $ 0.21          
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
     53,549               50,419          
Diluted
     57,221               54,596          
(1) Column does not add due to rounding

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                         
    May 5,     April 29,     February 3,  
    2007     2006     2007  
    (unaudited)     (unaudited)          
 
                        
ASSETS
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 41,424     $ 31,347     $ 135,942  
Accounts receivable, net
     61,474       38,792       39,687  
Income taxes receivable
     11,674       2,909       15,671  
Inventories, net
     818,432       649,880       641,464  
Prepaid expenses and other current assets
     40,771       16,750       37,015  
Deferred income taxes
     1,294       3,726       —  
 
                  
Total current assets
     975,069       743,404       869,779  
 
                        
Property and equipment, net
     489,726       379,632       433,071  
Construction in progress — leased facilities
     14,930       5,247       13,087  
Goodwill
     320,045       156,628       156,628  
Other assets
     63,266       39,517       51,700  
 
                  
TOTAL ASSETS
   $ 1,863,036     $ 1,324,428     $ 1,524,265  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accounts payable
   $ 386,444     $ 324,794     $ 286,668  
Accrued expenses
     180,736       154,552       190,365  
Deferred revenue and other liabilities
     74,420       53,156       87,798  
Income taxes payable
     —       —       —  
Current portion of other long-term debt and capital leases
     152       253       152  
 
                  
Total current liabilities
     641,752       532,755       564,983  
 
                  
 
                        
LONG-TERM LIABILITIES:
                        
Senior convertible notes
     172,500       172,500       172,500  
Revolving credit borrowings
     158,557       48,275       —  
Other long-term debt and capital leases
     8,362       8,370       8,365  
Non-cash obligations for construction in progress — leased facilities
     14,930       5,247       13,087  
Deferred revenue and other liabilities
     181,404       117,902       144,780  
 
                  
Total long-term liabilities
     535,753       352,294       338,732  
 
                  
 
                        
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
                        
Common stock
     407       369       397  
Class B common stock
     133       136       134  
Additional paid-in capital
     346,806       222,676       302,766  
Retained earnings
     335,639       214,260       315,453  
Accumulated other comprehensive income
     2,546       1,938       1,800  
 
                  
Total stockholders’ equity
     685,531       439,379       620,550  
 
                  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 1,863,036     $ 1,324,428     $ 1,524,265  
 
                  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
                 
    13 Weeks Ended  
    May 5,     April 29,  
    2007     2006  
 
                
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 21,701     $ 11,418  
Adjustments to reconcile net income to net cash used in operating activities:
                
Depreciation and amortization
     16,402       12,509  
Deferred income taxes
     (10,830 )     (4,079 )
Stock-based compensation
     6,902       5,972  
Excess tax benefit from stock-based compensation
     (8,957 )     (1,497 )
Tax benefit from exercise of stock options
     2,484       480  
Other non-cash items
     680       636  
Changes in assets and liabilities:
                
Accounts receivable
     (3,148 )     (6,028 )
Income taxes receivable
     3,791       —  
Inventories
     (105,995 )     (114,182 )
Prepaid expenses and other assets
     (777 )     (4,375 )
Accounts payable
     71,021       58,936  
Accrued expenses
     (15,803 )     9,071  
Income taxes payable
     10,526       (16,490 )
Deferred construction allowances
     10,457       3,817  
Deferred revenue and other liabilities
     (4,795 )     (5,541 )
 
            
Net cash used in operating activities
     (6,341 )     (49,353 )
 
            
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Capital expenditures
     (47,281 )     (28,782 )
Proceeds from sale-leaseback transactions
     5,215       4,103  
Increase in recoverable costs from developed properties
     (3,848 )     —  
Proceeds from sale of investment
     —       2,090  
Payment for purchase of Golf Galaxy, net of $4,859 cash acquired
     (221,449 )     —  
 
            
Net cash used in investing activities
     (267,363 )     (22,589 )
 
            
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Revolving credit borrowings, net
     158,557       48,275  
Payments on other long-term debt and capital leases
     (57 )     (78 )
Proceeds from sale of common stock under employee stock purchase plan
     —       —  
Proceeds from exercise of stock options
     17,396       4,568  
Excess tax benefit from stock-based compensation
     8,957       1,497  
(Decrease) increase in bank overdraft
     (5,701 )     12,463  
 
            
Net cash provided by financing activities
     179,152       66,725  
 
            
 
                
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
     34       —  
 
            
 
                
NET DECREASE IN CASH AND CASH EQUIVALENTS
     (94,518 )     (5,217 )
 
                
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     135,942       36,564  
 
            
 
                
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 41,424     $ 31,347  
 
            
 
                
Supplemental non-cash investing and financing activities:
                
Construction in progress — leased facilities
   $ 1,843     $ (2,091 )
Accrued property and equipment
   $ (7,647 )   $ 8,961  
Cash paid for interest
   $ 3,340     $ 1,849  
Cash paid for income taxes
   $ 3,318     $ 30,716  

 

 

Store Count and Square Footage
The stores that opened during the first quarter of 2007 are as follows:
             
DICK’S   GOLF GALAXY
Store   Market   Store   Market
Bailey’s Crossroads, VA
  Washington D.C.   Columbus, OH   Columbus
W. Nashville, TN
  Nashville   Oxford Valley, PA   Philadelphia
McHenry, IL
  Chicago   Woodbury, MN   Minneapolis
Orange Park, FL
  Jacksonville   West Madison, WI   Madison
Brandon, FL
  Tampa   Fort Myers, FL   Fort Myers
Citrus Park, FL
  Tampa   Albany, NY   Albany
Columbus Park, GA
  Columbus   Milford, CT   New Haven
Florence, SC
  Florence   Boise, ID   Boise
Chesterfield, MO
  St. Louis   North Charlotte, NC   Charlotte
Chapel Hills, CO
  Colorado Springs   Tucson, AZ   Tucson
Dothan, AL
  Dothan        
Saugus, MA
  Boston        
North Dartmouth, RI
  Providence        
Summerville, SC
  Charleston        
Bradenton, FL
  Sarasota        
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
                                 
    Q1  
    Fiscal     Fiscal     Fiscal     Fiscal  
    2007     2007     2007     2006  
    Dick’s     Golf Galaxy     Total     Dick’s  
Beginning stores
     294       65       359       255  
New
     15       10       25       8  
Closed
     —       —       —       —  
 
                        
Ending stores
     309       75       384       263  
 
                        
Relocated stores
     —       —       —       2  
 
                        
Square Footage:
(in millions)
                         
    Dick’s     Golf Galaxy     Total  
Q1 2006
     15.2       0.9       16.1  
Q2 2006
     15.5       0.9       16.4  
Q3 2006
     16.7       0.9       17.6  
Q4 2006
     16.7       0.9       17.6  
 
                  
Q1 2007
     17.4       1.1       18.5  

 

 

Summary Proforma Financial Information
The following unaudited proforma summary presents information as if Golf Galaxy had been acquired at the beginning of the period presented.
Proforma Results for 13 weeks Ended April 29, 2006 — Unaudited (1)
(In thousands, except per share amounts)
                         
    Dick’s              
    Sporting     Golf        
    Goods     Galaxy     Consolidated  
 
                        
Net sales
   $ 645,498     $ 64,128     $ 709,626  
 
                        
Net income (loss)
     11,418       (416 )     11,002  
 
                        
Basic earnings per share
   $ 0.23             $ 0.22  
 
                        
Diluted earnings per share
   $ 0.21             $ 0.20  
 
                        
Weighted average common shares outstanding
                        
Basic
     50,419               50,419  
Diluted
     54,596               54,596  
(1) The unaudited proforma results present information as if Golf Galaxy had been acquired at the beginning of the period. The proforma amounts include certain reclassifications to Golf Galaxy amounts to conform them to the Company’s reporting calendar, an increase in pre-tax interest expense of $2,766 to reflect the increase in borrowings under the amended credit facility to finance the acquisition as if it had occurred at the beginning of the period and use of the statutory tax rate of the Company in effect during the period presented to determine net income. The proforma amounts do not reflect any benefits from economies which might be achieved from combining the operations. The proforma information does not necessarily reflect the actual results that would have occurred had the companies been combined during the period presented, nor is it necessarily indicative of the future results of operations of the combined companies.

 

 

Non-GAAP Financial Measures
The Company has provided non-GAAP financial information in this earnings release which includes comparable store sales as if Golf Galaxy had been acquired at the beginning of the periods presented. The proforma financial information is considered non-GAAP and is not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company’s management and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company’s website at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).
Proforma Comparable Store Sales
                         
    Dick's              
    Sporting     Golf        
    Goods     Galaxy     Consolidated  
13 weeks ended April 29, 2006
     6.5 %     -0.6 %     5.9 %
13 weeks ended May 5, 2007
     2.0 %     5.5 %     2.3 %
The proforma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented. The sales have been adjusted to conform to the Company’s reporting calendar and method of reporting comparable sales. Golf Galaxy will be included in the quarterly comparable store base beginning in Q2 2008, which will be the first full quarter following the anniversary of the date of acquisition.
EBITDA
EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, and capital investments.
                 
    13 Weeks Ended  
    May 5,     April 29,  
EBITDA   2007     2006  
    (dollars in thousands)  
 
                
Net income
   $ 21,701     $ 11,418  
Provision for income taxes
     14,383       7,612  
Interest expense, net
     3,207       2,249  
Depreciation and amortization
     16,402       12,509  
 
            
EBITDA
   $ 55,693     $ 33,788  
 
            
% increase in EBITDA
     65 %