Exhibit 99.1
 | PRESS RELEASE |
Dick’s Sporting Goods Reports Second Quarter Results:
| * | EPS Increases 24% over Proforma Last Year to $0.47 | ||
| * | Comparable Store Sales Increase 6.5% |
PITTSBURGH, Pa., August 15, 2006 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the second quarter ended July 29, 2006.
Second Quarter Results
Net income for the second quarter ended July 29, 2006 increased 25% to $25.7 million and earnings per share increased 24% to $0.47, as compared to prior year proforma net income of $20.6 million, or $0.38 per share (which has been adjusted for $0.07 of stock option expense per share as if the Company expensed stock options, and excludes merger integration and store closing costs and gain on sale of investment). Earnings guidance provided on May 16, 2006 was for earnings per share of $0.43 — 0.44.
On a GAAP basis, net income increased to $25.7 million and earnings per share increased to $0.47, as compared to prior year net income of $22.1 million, or $0.41 per share which included $5.3 million pre-tax of merger integration costs and a $1.8 million pre-tax gain on sale of investment.
Net sales for the quarter increased 18% to $734.0 million while comparable store sales increased 6.5%. The former Galyan’s stores are included in the second quarter comparable store sales calculation.
“I am pleased with the strong results for the second quarter and I am excited about our position as we enter the second half of the year. We are clearly gaining market share as legacy stores, former Galyan’s stores and new stores all performed well during the quarter,” said Edward W. Stack, Chairman and CEO.
New Stores
In the second quarter, the Company opened five stores, one each in Atlanta, GA; Melbourne, FL; Winston-Salem, NC; Cedar Rapids, IA and Nashville, TN.
As of July 29, 2006, the Company operated 268 stores, with approximately 15.5 million square feet, in 34 states.
Year-to-Date Results
Net income for the 26 weeks ended July 29, 2006 increased 26% to $37.1 million and earnings per share increased 24% to $0.68, as compared to prior year proforma net income of $29.4 million, or $0.55 per share (which has been adjusted for $0.13 of stock option expense per share as if the Company expensed stock options, and excludes merger integration and store closing costs and gain on sale of investment).
On a GAAP basis, net income increased to $37.1 million and earnings per share increased to $0.68, as compared to prior year net income of $14.8 million, or $0.27 per share which included $37.8 million pre-tax of merger integration costs and a $1.8 million pre-tax gain on sale of investment.
Net sales increased 16% to $1,380 million while comparable store sales increased 6.9%. The former Galyan’s stores are not included in the year-to-date comparable store sales calculation as they were not in the comp store base at the beginning of 2006.
2006 Outlook
The Company’s current outlook for 2006 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 2006 Comparisons to Fiscal 2005 |
| • | We are increasing earnings guidance for the full year as a result of our second quarter performance. Based on an estimated 55 million shares outstanding, the Company is increasing earnings guidance from the previous guidance of approximately $1.81 — 1.85 to the new guidance of approximately $1.84 — 1.88 per share (which includes $0.27 of stock option expense per share). This represents an approximate 24% increase over fiscal 2005 proforma earnings per share of $1.50 (which has been adjusted for $0.25 of stock option expense per share as if the Company expensed stock options, and excludes merger integration and store closing costs and gain on sale of investment). | ||
| • | Comparable store sales are expected to increase approximately 4% on a 52-week to 52-week comparative basis. | ||
| • | The Company expects to open approximately 40 new stores in 2006. Two stores were relocated in the first quarter of 2006. |
| * | Third Quarter 2006 |
| • | Based on an estimated 55 million shares outstanding, the Company is providing earnings guidance of approximately $0.03 — 0.04 per share (which includes $0.07 of stock option expense per share). This represents an increase over third quarter 2005 proforma earnings per share of $0.02 (which has been adjusted for $0.06 of stock option expense per share as if the Company expensed stock options). | ||
| • | Comparable store sales are expected to increase approximately 3 — 4%. | ||
| • | The Company expects to open approximately 27 new stores in the third quarter. |
Conference Call Info
The Company will be hosting a conference call today at 10:00 am Eastern time to discuss the second quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s web site located athttp://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 83639431. 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 January 28, 2006 as filed with the Securities and Exchange Commission on March 23, 2006. 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.
Pittsburgh-based 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 July 29, 2006, the Company operated 268 stores in 34 states primarily throughout the Eastern half of the U.S.
Dick’s Sporting Goods, Inc. news releases are available athttp://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).
Contact:
Michael F. Hines, EVP — Chief Financial Officer or
Dennis Magulick, Director, Investor Relations
724-273-3400
investors@dcsg.com
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)
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
(In thousands, except per share data)
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
| July 29, | July 30, | July 29, | July 30, | |||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| Net sales | $ | 734,047 | $ | 621,972 | $ | 1,379,545 | $ | 1,192,815 | ||||||||
| Cost of goods sold, including occupancy and distribution costs | 526,650 | 447,556 | 994,482 | 866,427 | ||||||||||||
| GROSS PROFIT | 207,397 | 174,416 | 385,063 | 326,388 | ||||||||||||
| Selling, general and administrative expenses | 159,239 | 129,449 | 311,474 | 255,718 | ||||||||||||
| Pre-opening expenses | 2,451 | 1,592 | 6,604 | 4,237 | ||||||||||||
| Merger integration and store closing costs | — | 5,309 | — | 37,790 | ||||||||||||
| INCOME FROM OPERATIONS | 45,707 | 38,066 | 66,985 | 28,643 | ||||||||||||
| Gain on sale of investment | — | (1,844 | ) | — | (1,844 | ) | ||||||||||
| Interest expense, net | 2,906 | 3,079 | 5,155 | 5,875 | ||||||||||||
| INCOME BEFORE INCOME TAXES | 42,801 | 36,831 | 61,830 | 24,612 | ||||||||||||
| Provision for income taxes | 17,120 | 14,733 | 24,732 | 9,845 | ||||||||||||
| NET INCOME | $ | 25,681 | $ | 22,098 | $ | 37,098 | $ | 14,767 | ||||||||
| EARNINGS PER COMMON SHARE: | ||||||||||||||||
| Basic | $ | 0.51 | $ | 0.44 | $ | 0.73 | $ | 0.30 | ||||||||
| Diluted | $ | 0.47 | $ | 0.41 | $ | 0.68 | $ | 0.27 | ||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 50,746 | 49,750 | 50,583 | 49,418 | ||||||||||||
| Diluted | 54,887 | 54,115 | 54,742 | 53,902 | ||||||||||||
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| July 29, | July 30, | January 28, | ||||||||||
| 2006 | 2005 | 2006 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
ASSETS | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 32,926 | $ | 29,921 | $ | 36,564 | ||||||
| Accounts receivable, net | 53,091 | 41,154 | 29,365 | |||||||||
| Income taxes receivable | — | 18,139 | — | |||||||||
| Inventories, net | 636,839 | 536,820 | 535,698 | |||||||||
| Prepaid expenses and other current assets | 18,133 | 12,837 | 11,961 | |||||||||
| Deferred income taxes | 3,954 | 5,344 | 429 | |||||||||
| Total current assets | 744,943 | 644,215 | 614,017 | |||||||||
| Property and equipment, net | 392,412 | 351,936 | 370,277 | |||||||||
| Construction in progress — leased facilities | 11,254 | 20,695 | 7,338 | |||||||||
| Goodwill | 156,628 | 156,252 | 156,628 | |||||||||
| Other assets | 47,900 | 38,736 | 39,529 | |||||||||
TOTAL ASSETS | $ | 1,353,137 | $ | 1,211,834 | $ | 1,187,789 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accounts payable | $ | 296,221 | $ | 272,858 | $ | 253,395 | ||||||
| Accrued expenses | 166,756 | 119,217 | 136,520 | |||||||||
| Deferred revenue and other liabilities | 51,325 | 39,099 | 62,792 | |||||||||
| Income taxes payable | 4,940 | — | 18,381 | |||||||||
| Current portion of other long-term debt and capital leases | 141 | 560 | 181 | |||||||||
| Total current liabilities | 519,383 | 431,734 | 471,269 | |||||||||
| LONG-TERM LIABILITIES: | ||||||||||||
| Senior convertible notes | 172,500 | 172,500 | 172,500 | |||||||||
| Revolving credit borrowings | 41,430 | 121,206 | — | |||||||||
| Other long-term debt and capital leases | 8,444 | 8,427 | 8,520 | |||||||||
| Non-cash obligations for construction in progress — leased facilities | 11,254 | 20,695 | 7,338 | |||||||||
| Deferred revenue and other liabilities | 121,695 | 105,600 | 113,369 | |||||||||
| Total long-term liabilities | 355,323 | 428,428 | 301,727 | |||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||||
| Common stock | 373 | 362 | 365 | |||||||||
| Class B common stock | 136 | 139 | 137 | |||||||||
| Additional paid-in capital | 236,620 | 204,458 | 209,526 | |||||||||
| Retained earnings | 239,940 | 144,629 | 202,842 | |||||||||
| Accumulated other comprehensive income | 1,362 | 2,084 | 1,923 | |||||||||
| Total stockholders’ equity | 478,431 | 351,672 | 414,793 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,353,137 | $ | 1,211,834 | $ | 1,187,789 | ||||||
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
| 26 Weeks Ended | ||||||||
| July 29, | July 30, | |||||||
| 2006 | 2005 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 37,098 | $ | 14,767 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 26,246 | 24,324 | ||||||
| Deferred income taxes | (10,419 | ) | (2,738 | ) | ||||
| Stock-based compensation | 12,525 | — | ||||||
| Excess tax benefit from stock-based compensation | (4,419 | ) | — | |||||
| Tax benefit from exercise of stock options | 609 | 13,452 | ||||||
| Gain on sale of investment | — | (1,844 | ) | |||||
| Other non-cash items | 1,288 | 1,216 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 6,844 | (13,146 | ) | |||||
| Inventories | (101,141 | ) | (78,994 | ) | ||||
| Prepaid expenses and other assets | (9,024 | ) | (3,237 | ) | ||||
| Accounts payable | 49,135 | 47,094 | ||||||
| Accrued expenses | 15,015 | (5,727 | ) | |||||
| Income taxes payable | (8,196 | ) | — | |||||
| Deferred construction allowances | 9,000 | 1,594 | ||||||
| Deferred revenue and other liabilities | (6,485 | ) | 3,379 | |||||
| Net cash provided by operating activities | 18,076 | 140 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (73,370 | ) | (69,521 | ) | ||||
| Proceeds from sale-leaseback transactions | 7,901 | 12,262 | ||||||
| Increase in recoverable costs from developed properties | (3,917 | ) | (2,007 | ) | ||||
| Proceeds from sale of investment | — | 1,922 | ||||||
| Net cash used in investing activities | (69,386 | ) | (57,344 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Revolving credit borrowings, net | 41,430 | 45,112 | ||||||
| Payments on other long-term debt and capital leases | (116 | ) | (274 | ) | ||||
| Proceeds from exercise of stock options | 6,150 | 6,347 | ||||||
| Proceeds from sale of common stock under employee stock purchase plan | 2,098 | 2,135 | ||||||
| Excess tax benefit from stock-based compensation | 4,419 | — | ||||||
| (Decrease) increase in bank overdraft | (6,309 | ) | 14,919 | |||||
| Net cash provided by financing activities | 47,672 | 68,239 | ||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (3,638 | ) | 11,035 | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 36,564 | 18,886 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 32,926 | $ | 29,921 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Construction in progress — leased facilities | $ | 3,916 | $ | 5,462 | ||||
| Accrued property and equipment | $ | 15,223 | $ | (14,203 | ) | |||
| Cash paid for interest | $ | 4,551 | $ | 5,369 | ||||
| Cash paid for income taxes | $ | 42,083 | $ | 3,310 | ||||
Store Count and Square Footage
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
| Fiscal 2006 | Fiscal 2005 | ||||||||||||||||||||||||
| Q1 | Q2 | Total | Q1 | Q2 | Total | ||||||||||||||||||||
| Beginning stores | 255 | 263 | 255 | 234 | 236 | 234 | |||||||||||||||||||
| New | 8 | 5 | 13 | 7 | 3 | 10 | |||||||||||||||||||
| Closed | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||||
| Ending stores | 263 | 268 | 268 | 236 | 239 | 239 | |||||||||||||||||||
| Relocated stores | 2 | — | 2 | — | 1 | 1 | |||||||||||||||||||
| Square Footage: | ||||||||||||
| (in millions) | ||||||||||||
| Fiscal 2006 | Fiscal 2005 | % Increase | ||||||||||
| Q1 | 15.2 | 13.6 | 12% | |||||||||
| Q2 | 15.5 | 13.8 | 12% | |||||||||
| Q3 | N/A | 14.7 | N/A | |||||||||
| Q4 | N/A | 14.7 | N/A | |||||||||
Reconciliation of Non-GAAP Financial Measures
The Company has provided non-GAAP financial information in this earnings release which includes net income and earnings per share adjusted for merger integration and store closing costs, gain on sale of investment and stock option expense had the Company applied SFAS 123, “Accounting for Stock-Based Compensation” in fiscal 2005. 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. A reconciliation of these non-GAAP measures to the applicable 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).
Fiscal 2005 Reconciliations
Proforma Net Income and Proforma Earnings Per Share Reconciliation
(in thousands, except per share data):
(in thousands, except per share data):
| 13 Weeks Ended | 13 Weeks Ended | 26 Weeks Ended | ||||||||||||||||||||||
| July 30, 2005 | July 29, 2006 | July 30, 2005 | ||||||||||||||||||||||
| Per | Per | % | Per | |||||||||||||||||||||
| Amounts | Share | Share | Increase | Amounts | Share | |||||||||||||||||||
| Net income and earnings per share (GAAP) | $ | 22,098 | $ | 0.41 | $ | 14,767 | $ | 0.27 | ||||||||||||||||
| Less: Stock option expense, after tax | (3,546 | ) | (0.07 | ) | (6,926 | ) | (0.13 | ) | ||||||||||||||||
| Add: Merger integration and store closing costs, after tax | 3,185 | 0.06 | 22,674 | 0.42 | ||||||||||||||||||||
| Less: Gain on sale of investment, after tax | (1,106 | ) | (0.02 | ) | (1,106 | ) | (0.02 | ) | ||||||||||||||||
| Add: Adjustment due to rounding | — | — | — | 0.01 | ||||||||||||||||||||
| Proforma net income and earnings per share | $ | 20,631 | $ | 0.38 | $ | 0.47 | 24 | % | $ | 29,409 | $ | 0.55 | ||||||||||||
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
| October 29, 2005 | January 28, 2006 | |||||||||||||||
| Per | Per | |||||||||||||||
| Amounts | Share | Amounts | Share | |||||||||||||
| Net income and earnings per share (GAAP) | $ | 4,183 | $ | 0.08 | $ | 72,980 | $ | 1.35 | ||||||||
| Less: Stock option expense, after tax | (3,277 | ) | (0.06 | ) | (13,484 | ) | (0.25 | ) | ||||||||
| Add: Merger integration and store closing costs, after tax | — | — | 22,674 | 0.42 | ||||||||||||
| Less: Gain on sale of investment, after tax | — | — | (1,106 | ) | (0.02 | ) | ||||||||||
| Proforma net income and earnings per share | $ | 906 | $ | 0.02 | $ | 81,064 | $ | 1.50 | ||||||||
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.
EBITDA (dollars in thousands)
| Q2 | ||||||||||||
| EBITDA | 2006 | 2005 (GAAP) | 2005 (Proforma) /1 | |||||||||
| Net income | $ | 25,681 | $ | 22,098 | $ | 22,098 | ||||||
| Provision for income taxes | 17,120 | 14,733 | 14,733 | |||||||||
| Interest expense, net | 2,906 | 3,079 | 3,079 | |||||||||
| Depreciation and amortization | 13,737 | 11,545 | 11,545 | |||||||||
| Less: Depreciation and amortization (merger integration) | — | — | (149 | ) | ||||||||
| Add: Merger integration and store closing costs | — | — | 5,309 | |||||||||
| Less: Gain on sale of investment | — | — | (1,844 | ) | ||||||||
| Less: Stock option expense (fiscal 2005) | — | — | (5,910 | ) | ||||||||
| EBITDA | $ | 59,444 | $ | 51,455 | $ | 48,861 | ||||||
| GAAP EBITDA % increase over GAAP Prior Year | 16 | % | ||||||||||
| Proforma EBITDA % increase over Proforma Prior Year | 22 | % | ||||||||||
| YTD | ||||||||||||
| EBITDA | 2006 | 2005 (GAAP) | 2005 (Proforma) /1 | |||||||||
| Net income | $ | 37,098 | $ | 14,767 | $ | 14,767 | ||||||
| Provision for income taxes | 24,732 | 9,845 | 9,845 | |||||||||
| Interest expense, net | 5,155 | 5,875 | 5,875 | |||||||||
| Depreciation and amortization | 26,246 | 24,324 | 24,324 | |||||||||
| Less: Depreciation and amortization (merger integration) | — | — | (869 | ) | ||||||||
| Add: Merger integration and store closing costs | — | — | 37,790 | |||||||||
| Less: Gain on sale of investment | — | — | (1,844 | ) | ||||||||
| Less: Stock option expense (fiscal 2005) | — | — | (11,543 | ) | ||||||||
| EBITDA | $ | 93,231 | $ | 54,811 | $ | 78,345 | ||||||
| GAAP EBITDA % increase over GAAP Prior Year | 70 | % | ||||||||||
| Proforma EBITDA % increase over Proforma Prior Year | 19 | % | ||||||||||
/1 Reflects the effect of expensing stock options as if we had applied SFAS 123, “Accounting for Stock-Based Compensation”, in fiscal 2005.