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Section 1: 8-K (8-K)

Document
false0001089063 0001089063 2019-11-21 2019-11-21
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  November 21, 2019
 
DICK'S SPORTING GOODS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
001-31463
16-1241537
(State or Other Jurisdiction of Incorporation)

(Commission File Number)
(IRS Employer Identification No.)

345 Court Street, Coraopolis, PA 15108
(Address of Principal Executive Offices)
 
(724273-3400
(Registrant's Telephone Number, Including Area Code)
 
N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
DKS
The New York Stock Exchange

 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




TABLE OF CONTENTS
 
 




ITEM 2.02.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On November 26, 2019, the Company issued a press release announcing its results for the third fiscal quarter ended November 2, 2019 and certain other information that is furnished as Exhibit 99.1 to this Form 8-K.

ITEM 8.01.
OTHER EVENTS
 
On November 21, 2019, the Board of Directors of Dick's Sporting Goods, Inc. authorized and declared a quarterly dividend in the amount of $0.275 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 31, 2019 to stockholders of record at the close of business on December 13, 2019.

ITEM 9.01. 
FINANCIAL STATEMENTS AND EXHIBITS
 
(d)  Exhibits.

The following exhibit is being furnished pursuant to Item 601 of Regulation S-K and General Instruction B.2 to this Form 8-K:

Exhibit No.
 
Description
 
 
 
99.1
 
Press Release dated November 26, 2019 by Dick's Sporting Goods, Inc. furnished herewith




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
DICK'S SPORTING GOODS, INC.
 
 
 
 
 
 
Date: November 26, 2019
By:
/s/ LEE J. BELITSKY
 
Name:
Lee J. Belitsky
 
Title:
Executive Vice President – Chief Financial Officer




Exhibit Index
 
 
Exhibit No.
 
Description
 
 
 
 
Press Release dated November 26, 2019 by Dick's Sporting Goods, Inc. furnished herewith


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
FOR IMMEDIATE RELEASE 
401221636_dkslogoa01.jpg

DICK'S Sporting Goods Reports Third Quarter Results; Delivers 6.0% Increase in Same Store Sales and Raises Full Year Guidance
 
Consolidated same store sales for the third quarter increased 6.0%, driven by increases in both average ticket and transactions, and represents the Company's strongest quarterly comp sales gain since 2013

Company delivered third quarter 2019 earnings per diluted share of $0.66 and non-GAAP earnings per diluted share of $0.52, up 69% and 33% respectively versus $0.39 per diluted share in the prior year

Company raises full year 2019 earnings per diluted share guidance to $3.63 to 3.73 and raises full year 2019 non-GAAP earnings per diluted share guidance to $3.50 to 3.60, both up from the previous range of $3.30 to 3.45

Company repurchased approximately $100 million of common stock during the third quarter

PITTSBURGH, November 26, 2019 - DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the third quarter ended November 2, 2019.

Third Quarter Results

The Company reported consolidated net income for the third quarter ended November 2, 2019 of $57.6 million, or $0.66 per diluted share. The Company reported consolidated net income for the third quarter ended November 3, 2018 of $37.8 million, or $0.39 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the third quarter ended November 2, 2019 of $44.8 million, or $0.52 per diluted share. Third quarter 2019 non-GAAP results exclude the gain on sale of subsidiaries, charges related to the exit of eight Field & Stream stores, and a non-cash asset impairment. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Net sales for the third quarter of 2019 increased 5.6% to approximately $1.96 billion. Consolidated same store sales increased 6.0%. Third quarter 2018 consolidated same store sales decreased 3.9%, adjusted for the calendar shift due to the 53rd week in fiscal 2017, which the Company believes is the best view of its business.

“We are very pleased with our strong third quarter results, as we delivered a 6.0% comp sales increase and meaningful gross margin expansion. We saw increases in both average ticket and transactions, as well as growth across each of our three primary categories of hardlines, apparel and footwear,” said Edward W. Stack, Chairman and Chief Executive Officer. “As we head into the holiday season, we remain very enthusiastic about our business, and we are pleased to increase our full year sales and earnings outlook for the third time this year."

Lauren R. Hobart, President, added, “The momentum in our stores continued to build with our focus on service standards, recognition of great results and stronger marketing. Combining this with the successful openings of our new eCommerce fulfillment centers and enhanced website functionality, we continue to build one of the best omni-channel experiences in retail."





Omni-channel Development

eCommerce sales for the third quarter of 2019 increased 13%. eCommerce penetration for the third quarter of 2019 was approximately 13% of total net sales, compared to approximately 12% during the third quarter of 2018.

In the third quarter, the Company opened six new DICK'S Sporting Goods stores and one new Golf Galaxy store, completing its 2019 store development program. The Company also exited eight Field & Stream stores, which were subleased to Sportsman's Warehouse, and closed one Golf Galaxy Store. As of November 2, 2019, the Company operated 733 DICK'S Sporting Goods stores in 47 states, with approximately 38.8 million square feet, 95 Golf Galaxy stores in 32 states, with approximately 2.0 million square feet, and 27 Field & Stream stores in 16 states, with approximately 1.2 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."

Balance Sheet
 
The Company ended the third quarter of 2019 with approximately $87.6 million in cash and cash equivalents and approximately $719.3 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the Company continued to invest in omni-channel growth, while returning over $495 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 17.1% at the end of the third quarter of 2019 as compared to the end of the third quarter of 2018. This planned increase was due primarily to strategic investments to support key growth categories.

Year-to-Date Results

The Company reported consolidated net income for the 39 weeks ended November 2, 2019 of $227.6 million, or $2.53 per diluted share. For the 39 weeks ended November 3, 2018, the Company reported consolidated net income of $217.3 million, or $2.18 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the 39 weeks ended November 2, 2019 of $215.8 million, or $2.39 per diluted share, which excludes the gain on sale of subsidiaries, non-cash asset impairments, charges related to the exit of eight Field and Stream stores, and the favorable settlement of a litigation contingency. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Net sales for the 39 weeks ended November 2, 2019 increased 3.3% to approximately $6.14 billion. Consolidated same store sales increased 3.1%. Consolidated same store sales decreased 3.5% for the 39-weeks ended November 3, 2018, adjusted for the calendar shift due to the 53rd week in 2017, which the Company believes is the best view of its business.

Capital Allocation

On November 21, 2019, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.275 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 31, 2019 to stockholders of record at the close of business on December 13, 2019.

During the third quarter of 2019, the Company repurchased approximately 2.8 million shares of its common stock at an average cost of $35.07 per share, for a total cost of $99.5 million. Under the five-year share repurchase program authorized by the Board of Directors in March 2016, the Company has repurchased approximately $933 million of common stock and has approximately $67 million remaining under the program. On June 12, 2019, the Company's Board of Directors authorized an additional five-year share repurchase program of up to $1 billion of the Company's common stock. The Company plans to continue to purchase under the 2016 program until it is exhausted or expired.





Full Year 2019 Outlook
 
Based on an estimated 89 million average diluted shares outstanding, the Company currently projects earnings per diluted share to be approximately $3.63 to 3.73. The Company reported earnings per diluted share of $3.24 for the 52 weeks ended February 2, 2019.

The Company's earnings per diluted share guidance includes approximately $30 million of net investments in business transformation initiatives.

The Company's earnings per diluted share guidance includes the expected impact from all tariffs currently in effect, as well as any new tariffs slated to go into effect.

The Company currently projects non-GAAP earnings per diluted share to be approximately $3.50 to 3.60. This excludes the gain on sale of subsidiaries, non-cash asset impairments, charges related to the exit of eight Field & Stream stores, and the favorable settlement of a litigation contingency.

The Company is continuing the strategic review of its hunt business, including Field & Stream.

Consolidated same store sales are currently expected to increase 2.5% to 3%, compared to a 3.1% decrease in 2018.

In 2019, the Company anticipates capital expenditures to be approximately $230 million on a gross basis and approximately $200 million on a net basis. In 2018, capital expenditures were $198 million on a gross basis and $170 million on a net basis.

Conference Call Info
 
The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the third quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at investors.DICKS.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately twelve months.

Non-GAAP Financial Measures
 
In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company reports certain financial results that differ from what is reported under GAAP. These non-GAAP financial measures include consolidated non-GAAP net income, non-GAAP earnings per diluted share, and net capital expenditures, which management believes provides investors with useful supplemental information to evaluate the Company’s ongoing operations and to compare with past and future periods. Management also uses certain non-GAAP measures internally for forecasting, budgeting, and measuring its operating performance. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. A reconciliation of the Company's non-GAAP measures to the most directly comparable GAAP financial measures are provided below and on the Company's website at investors.DICKS.com.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond the Company's control. The Company's future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon by investors as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the Company's future performance, including 2019 outlook for earnings and sales; investments in business transformation initiatives; the impact of tariffs; capital expenditures; and share repurchases and dividends.





Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: changes in consumer discretionary spending; investments in omni-channel growth not producing the anticipated benefits within the expected time-frame or at all; risks relating to private brands and new retail concepts; investments in business transformation initiatives not producing the anticipated benefits within the expected time-frame or at all; the amount devoted to strategic investments and the timing and success of those investments; the integration of strategic acquisitions being more difficult, time-consuming, or costly than expected; the results of the strategic review of the hunt business, including Field & Stream; inventory turn; changes in the competitive market and competition amongst retailers, including an increase in promotional activity; changes in consumer demand or shopping patterns and the ability to identify new trends and have the right trending products in stores and online; changes in existing tax, labor, foreign trade and other laws and regulations, including those imposing new taxes, surcharges, or tariffs; limitations on the availability of attractive retail store sites; unauthorized disclosure of sensitive or confidential customer information; website downtime, disruptions or other problems with the eCommerce platform, including interruptions, delays or downtime caused by high volumes of users or transactions, deficiencies in design or implementation, or platform enhancements; disruptions or other problems with information systems; factors affecting vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, Chairman and Chief Executive Officer; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of the Company's business; and risks associated with being a controlled company.

For additional information on these and other factors that could affect the Company's actual results, see the risk factors set forth in the Company's filings with the Securities and Exchange Commission ("SEC"), including the most recent Annual Report filed with the SEC on March 29, 2019 and the Quarterly Report filed with the SEC on August 29, 2019. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation. Forward-looking statements included in this release are made as of the date of this release.

About DICK'S Sporting Goods, Inc.
 
Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of November 2, 2019, the Company operated 733 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated teammates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.

Headquartered in Pittsburgh, PA, DICK’S also owns and operates Golf Galaxy and Field & Stream specialty stores, as well as GameChanger, a youth sports mobile app for scheduling, communications and live scorekeeping. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. For more information, visit the Investor Relations page at dicks.com.

Contacts:
Investor Relations:
Nate Gilch, Director of Investor Relations
DICK'S Sporting Goods, Inc.
[email protected]
(724) 273-3400
Media Relations:
(724) 273-5552 or [email protected]
###




DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
 
 
 
13 Weeks Ended
 
 
November 2,
2019
 
% of
Sales
(2)
 
November 3,
2018
 
% of
Sales
(2)
 
 
 
 
 
 
 
 
 
Net sales
 
$
1,962,204

 
100.00
%
 
$
1,857,273

 
100.00
%
Cost of goods sold, including occupancy and distribution costs (1)
 
1,381,562

 
70.41

 
1,333,719

 
71.81

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
580,642

 
29.59

 
523,554

 
28.19

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
531,704

 
27.10

 
468,691

 
25.24

Pre-opening expenses
 
3,313

 
0.17

 
1,997

 
0.11

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
45,625

 
2.33

 
52,866

 
2.85

 
 
 
 
 
 
 
 
 
Gain on sale of subsidiaries
 
(33,779
)
 
(1.72
)
 

 

Interest expense
 
4,278

 
0.22

 
2,606

 
0.14

Other (income) expense
 
(2,020
)
 
(0.10
)
 
68

 

 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
77,146

 
3.93

 
50,192

 
2.70

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
19,562

 
1.00

 
12,365

 
0.67

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
57,584

 
2.93
%
 
$
37,827

 
2.04
%
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
0.68

 
 
 
$
0.39

 
 

Diluted
 
$
0.66

 
 
 
$
0.39

 
 

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 
 
 

 
 

Basic
 
85,048

 
 
 
96,677

 
 

Diluted
 
86,601

 
 
 
97,890

 
 

 
 
 
 
 
 
 
 
 
(1) Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost and net realizable value); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold.
 
 
 
 
 
 
 
 
 
(2) Column does not add due to rounding








DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)

 
 
39 Weeks Ended
 
 
November 2,
2019
 
% of
Sales
(2)
 
November 3,
2018
 
% of
Sales(2)
 
 
 
 
 
 
 
 
 
Net sales
 
$
6,142,093

 
100.00
%
 
$
5,944,480

 
100.00
%
Cost of goods sold, including occupancy and distribution costs (1)
 
4,320,571

 
70.34

 
4,201,277

 
70.68

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
1,821,522

 
29.66

 
1,743,203

 
29.32

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
1,539,934

 
25.07

 
1,434,344

 
24.13

Pre-opening expenses
 
4,887

 
0.08

 
6,135

 
0.10

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
276,701

 
4.50

 
302,724

 
5.09

 
 
 
 
 
 
 
 
 
Gain on sale of subsidiaries
 
(33,779
)
 
(0.55
)
 

 

Interest expense
 
12,909

 
0.21

 
8,312

 
0.14

Other income
 
(10,340
)
 
(0.17
)
 
(1,233
)
 
(0.02
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
307,911

 
5.01

 
295,645

 
4.97

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
80,268

 
1.31

 
78,336

 
1.32

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
227,643

 
3.71
%
 
$
217,309

 
3.66
%
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
2.57

 
 
 
$
2.20

 
 

Diluted
 
$
2.53

 
 
 
$
2.18

 
 

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 
 
 

 
 

Basic
 
88,671

 
 
 
98,926

 
 

Diluted
 
90,130

 
 
 
99,878

 
 

 
 
 
 
 
 
 
 
 
(1) Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost and net realizable value); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold.

 
 
 
 
 
 
 
 
 
(2) Column does not add due to rounding





DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
 
 
November 2,
2019
 
November 3,
2018
 
February 2,
2019
ASSETS
 
 

 
 

 
 

CURRENT ASSETS:
 
 
 
 

 
 

Cash and cash equivalents
 
$
87,622

 
$
92,103

 
$
113,653

Accounts receivable, net
 
70,463

 
57,559

 
37,970

Income taxes receivable
 
17,122

 
10,422

 
6,135

Inventories, net
 
2,573,250

 
2,196,777

 
1,824,696

Prepaid expenses and other current assets
 
128,458

 
138,468

 
139,944

Total current assets
 
2,876,915

 
2,495,329

 
2,122,398

 
 
 
 
 
 
 
Property and equipment, net
 
1,436,975

 
1,578,313

 
1,565,271

Operating lease assets
 
2,378,399

 

 

Intangible assets, net
 
123,855

 
131,763

 
130,166

Goodwill
 
245,857

 
250,476

 
250,476

Other assets:
 
 

 
 
 
 

Deferred income taxes
 
16,033

 
11,886

 
13,243

Other
 
128,965

 
115,991

 
105,595

Total other assets
 
144,998

 
127,877

 
118,838

TOTAL ASSETS
 
$
7,206,999

 
$
4,583,758

 
$
4,187,149

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
 

CURRENT LIABILITIES:
 
 

 
 

 
 

Accounts payable
 
$
1,097,564

 
$
1,028,234

 
$
889,908

Accrued expenses
 
379,774

 
350,737

 
364,342

Operating lease liabilities
 
417,912

 

 

Income taxes payable
 
2,519

 
2,078

 
20,142

Deferred revenue and other liabilities
 
183,876

 
173,032

 
230,247

Total current liabilities
 
2,081,645

 
1,554,081

 
1,504,639

LONG-TERM LIABILITIES:
 
 

 
 

 
 

Revolving credit borrowings
 
719,300

 
382,300

 

Long-term operating lease liabilities
 
2,509,866

 

 

Deferred income taxes
 
8,530

 
14,951

 
11,776

Other long-term liabilities
 
178,756

 
785,384

 
766,573

Total long-term liabilities
 
3,416,452

 
1,182,635

 
778,349

COMMITMENTS AND CONTINGENCIES
 
 

 
 

 
 

STOCKHOLDERS' EQUITY:
 
 

 
 

 
 

Common stock
 
597

 
703

 
693

Class B common stock
 
243

 
245

 
245

Additional paid-in capital
 
1,240,864

 
1,204,293

 
1,214,287

Retained earnings
 
2,599,495

 
2,374,336

 
2,455,192

Accumulated other comprehensive loss
 
(116
)
 
(118
)
 
(120
)
Treasury stock, at cost
 
(2,132,181
)
 
(1,732,417
)
 
(1,766,136
)
Total stockholders' equity
 
1,708,902

 
1,847,042

 
1,904,161

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
7,206,999

 
$
4,583,758

 
$
4,187,149

 
 
 
 
 
 
 
The Company adopted ASU 2016-02, "Leases (Topic 842)", and related amendments as of February 3, 2019 under the modified retrospective approach and, therefore, has not revised comparative periods.





DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
 
 
39 Weeks Ended
 
 
November 2,
2019
 
November 3,
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
227,643

 
$
217,309

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 

 
 

Depreciation, amortization, and other
 
201,152

 
179,437

Deferred income taxes
 
(3,438
)
 
(726
)
Stock-based compensation
 
31,742

 
31,783

Gain on sale of subsidiaries
 
(33,779
)
 

Changes in assets and liabilities:
 
 

 
 

Accounts receivable
 
(22,636
)
 
(7,218
)
Inventories
 
(758,016
)
 
(466,212
)
Prepaid expenses and other assets
 
3,822

 
7,950

Accounts payable
 
168,259

 
234,859

Accrued expenses
 
11,424

 
11,152

Income taxes payable / receivable
 
(28,610
)
 
(14,387
)
Deferred construction allowances
 
25,598

 
23,440

Deferred revenue and other liabilities
 
(35,936
)
 
(56,859
)
Net cash (used in) provided by operating activities
 
(212,775
)
 
160,528

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Capital expenditures
 
(165,703
)
 
(135,288
)
Proceeds from sale of subsidiaries, net of cash sold
 
40,387

 

Proceeds from sale of other assets
 
4,103

 

Deposits and purchases of other assets
 
(1,000
)
 

Net cash used in investing activities
 
(122,213
)
 
(135,288
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 
Revolving credit borrowings
 
1,778,750

 
1,723,500

Revolving credit repayments
 
(1,059,450
)
 
(1,341,200
)
Payments on other long-term debt and finance lease obligations
 
(3,965
)
 
(3,924
)
Construction allowance receipts
 

 

Proceeds from exercise of stock options
 
1,160

 

Minimum tax withholding requirements
 
(6,320
)
 
(5,264
)
Cash paid for treasury stock
 
(366,148
)
 
(289,623
)
Cash dividends paid to stockholders
 
(74,540
)
 
(68,139
)
Increase (decrease) in bank overdraft
 
39,466

 
(49,700
)
Net cash provided by (used in) financing activities
 
308,953

 
(34,350
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
4

 
(40
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(26,031
)
 
(9,150
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
113,653

 
101,253

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
87,622

 
$
92,103






Store Count and Square Footage
 
The stores that opened during the third quarter of 2019 are as follows:
Store
 
Market
 
Concept
Kennewick, WA
 
Kennewick
 
DICK'S Sporting Goods
Doral, FL
 
Miami / Ft. Lauderdale
 
DICK'S Sporting Goods
Waterbury, CT
 
New Haven
 
DICK'S Sporting Goods
West Jordan, UT
 
Salt Lake City
 
DICK'S Sporting Goods
Conroe, TX
 
Houston
 
DICK'S Sporting Goods
Manchester, NH
 
Nashua
 
DICK'S Sporting Goods
Downers Grove, IL
 
Chicago
 
Golf Galaxy

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Store Count:
 
 
Fiscal 2019
 
Fiscal 2018
 
 
DICK'S Sporting Goods
 
Specialty Concept Stores (1)
 
Total
 
DICK'S Sporting Goods
 
Specialty Concept Stores (1)
 
Total
Beginning stores
 
729

 
129

 
858

 
716

 
129

 
845

Q1 New stores
 

 
1

 
1

 
8

 

 
8

Q2 New stores
 
2

 

 
2

 
5

 

 
5

Q3 New stores
 
6

 
1

 
7

 
6

 

 
6

Closed stores (3)
 
4

 
9

 
13

 
3

 

 
3

Ending stores
 
733

 
122

 
855

 
732

 
129

 
861

 
 
 
 
 
 
 
 
 
 
 
 
 
Relocated stores
 
3

 
2

 
5

 
4

 
1

 
5


Square Footage:
(in millions)
 
 
DICK'S Sporting Goods
 
Specialty Concept Stores (1)
 
Total (2)
Q1 2018
 
38.4

 
3.7

 
42.1

Q2 2018
 
38.7

 
3.7

 
42.3

Q3 2018
 
38.8

 
3.6

 
42.4

Q4 2018
 
38.6

 
3.6

 
42.2

Q1 2019
 
38.6

 
3.6

 
42.2

Q2 2019
 
38.6

 
3.6

 
42.2

Q3 2019
 
38.8

 
3.3

 
42.1


(1) 
Includes the Company's Golf Galaxy and Field & Stream stores. In some markets the Company operates DICK'S Sporting Goods stores adjacent to its specialty concept stores on the same property with a pass-through for customers. The Company refers to this format as a "combo store" and includes combo store openings within both the DICK'S Sporting Goods and specialty concept store reconciliations, as applicable. As of November 2, 2019, the Company operated 25 combo stores.

(2)
Column may not add due to rounding.

(3) 
Includes the Company's exit from eight Field & Stream stores, which were subleased to Sportsman’s Warehouse in the third quarter of 2019.





DICK'S SPORTING GOODS, INC.
GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED
(Dollars in thousands, except per share amounts)

 
13 Weeks Ended November 2, 2019
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
Income from operations
Gain on sale of subsidiaries
Income before income taxes
Net
income (4)
Earnings per diluted share
GAAP Basis
$
531,704

$
45,625

$
(33,779
)
$
77,146

$
57,584

$
0.66

% of Net Sales
27.10
%
2.33
%
(1.72
)%
3.93
%
2.93
%


Gain on sale of subsidiaries (1)


33,779

(33,779
)
(24,996
)


Field & Stream store closing costs (2)
(8,938
)
8,938


8,938

6,614



Non-cash asset impairment (3)
(7,630
)
7,630


7,630

5,646

 
Non-GAAP Basis
$
515,136

$
62,193

$

$
59,935

$
44,848

$
0.52

% of Net Sales
26.25
%
3.17
%
 %
3.05
%
2.29
%



(1) 
Gain on sale of Blue Sombrero and Affinity Sports subsidiaries.
(2) 
Charge related to the Company's exit from eight Field & Stream stores, which were subleased to Sportsman’s Warehouse.
(3) 
Non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to its fair market value.
(4) 
The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.


39 Weeks Ended November 2, 2019



 




Selling, general and administrative expenses
Income from operations
Gain on sale of subsidiaries
Income before income taxes
Net income (5)
Earnings per diluted share
GAAP Basis
$
1,539,934

$
276,701

$
(33,779
)
$
307,911

$
227,643

$
2.53

% of Net Sales
25.07
%
4.50
%
(0.55
)%
5.01
%
3.71
%


Gain on sale of subsidiaries (1)


33,779

(33,779
)
(24,996
)
 
Field & Stream store closing costs (2)
(8,938
)
8,938


8,938

6,614

 
Non-cash asset impairment (3)
(15,253
)
15,253


15,253

11,287

 
Litigation contingency settlement (4)
6,411

(6,411
)

(6,411
)
(4,744
)


Non-GAAP Basis
$
1,522,154

$
294,481

$

$
291,912

$
215,804

$
2.39

% of Net Sales
24.78
%
4.79
%
 %
4.75
%
3.51
%



(1) 
Gain on sale of Blue Sombrero and Affinity Sports subsidiaries.
(2) 
Charge related to the Company's exit from eight Field & Stream stores, which were subleased to Sportsman’s Warehouse.
(3) 
Non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to its fair market value.
(4) 
Favorable settlement of a previously accrued litigation contingency.
(5) 
The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.






Reconciliation of Gross Capital Expenditures to Net Capital Expenditures
 
The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.


39 Weeks Ended
 

November 2,
2019

November 3,
2018
 

(dollars in thousands)
Gross capital expenditures

$
(165,703
)

$
(135,288
)
Proceeds from sale-leaseback transactions




Deferred construction allowances

25,598


23,440

Construction allowance receipts




Net capital expenditures

$
(140,105
)

$
(111,848
)


Reconciliation of Non-GAAP Consolidated Net Income and Earnings Per Diluted Share Guidance
(Dollars in thousands, except per share amounts)



 
52 Weeks Ended February 1, 2020


 
Low-End

High-End


 
Amount

EPS

Amount

EPS
GAAP consolidated net income and earnings per diluted share

 
$
323,339


$
3.63


$
332,239


$
3.73

Gain on sale of subsidiaries (1)
 
 
(24,996
)
 
 
 
(24,996
)
 
 
Field & Stream store closing costs (2)
 
 
6,614

 
 
 
6,614

 
 
Non-cash asset impairment (3)

 
11,287




11,287



Litigation contingency settlement (4)

 
(4,744
)



(4,744
)


Non-GAAP consolidated net income and earnings per diluted share

 
$
311,500


$
3.50


$
320,400


$
3.60



(1) 
Gain on sale of Blue Sombrero and Affinity Sports subsidiaries.
(2) 
Charge related to the Company's exit from eight Field & Stream stores, which were subleased to Sportsman’s Warehouse.
(3) 
Non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to its fair market value.
(4) 
Favorable settlement of a previously accrued litigation contingency.




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