Exhibit 99.2
| FOR IMMEDIATE RELEASE | Company Contact: | |
| Ralph Castner/Chief Financial Officer | ||
| 308-255-1227 | ||
| Joe Arterburn/Corporate Communications | ||
| 308-255-1204 | ||
| Cabela’s Incorporated | ||
| Investor/Media Contact: | ||
| Integrated Corporate Relations | ||
| 203-222-9013 | ||
| Investor: Chad A. Jacobs | ||
| Media: Mike Fox/Megan McDonnell | ||
CABELA’S INC. REPORTS SECOND QUARTER RESULTS
-Q2 Total Revenue Increased 11.3% to a Record $279.1 Million-
-Q2 Total Retail Revenue Increased 32.1% and Same Store Sales Increased 2.5%-
-Company Reported Q2 Fully-Diluted EPS of $0.03 vs. $0.06 on an 11.7% Increase in Diluted Shares-
- Year-to-Date Total Revenues Increased 15.6% to $593.1 Million-
-Year-to-Date Fully-Diluted EPS Increased 54.5% to $0.17-
SIDNEY, Neb. (July 28, 2004) – Cabela’s Incorporated (NYSE: CAB) today reported financial results for the second quarter and six months ended July 3, 2004.
Total revenue for the second quarter of fiscal 2004 increased 11.3% to $279.1 million compared to $250.8 million for the same period last year. Second quarter net income was $2.0 million, or $0.03 per diluted share, compared to $3.1 million, or $0.06 per diluted share for the same period a year ago. The Company noted, as a result of the third quarter fiscal 2003 recapitalization, and the Company’s recent public offering, weighted average diluted shares outstanding increased by 11.7% to 59.9 million over the year-ago quarter’s total of 53.6 million.
The Company also noted that the financial services’ securitization income was negatively impacted by approximately $2.0 million after tax, or $0.03 per diluted share, in the second quarter of fiscal 2004. This was primarily due to a securitization transaction involving the Company’s credit card receivables. The Company engages in securitization transactions on an annual basis, and a similar transaction occurred in the first quarter of 2003.
During the second quarter of fiscal 2004, direct revenue increased 1.7% to $166.0 million. Total retail revenue increased 32.1% to $96.5 million with a same store sales increase of 2.5%. Financial services revenue, which includes the impact of the securitization transaction, increased 10.0% to $15.0 million for the second quarter of fiscal 2004.
Total revenue for the six months ended July 3, 2004 increased 15.6% to $593.1 million compared to $513.1 million for the six months ended June 28, 2003. Net income for the six-month period increased 62.7% to $10.0 million, compared to $6.2 million for the six months ended June 28, 2003. The Company reported diluted earnings per share growth of 54.5% to $0.17, on 59.4 million weighted average diluted shares for the first six months of fiscal 2004, compared to $0.11, on 53.6 million weighted average diluted shares for the six months ended June 28, 2003.
Also for the six months ended July 3, 2004: direct revenue increased 5.5% to $371.7 million; retail revenue increased 40.6% to $187.0 million on a same store sales increase of 4.4%; and financial services revenue increased 25.2% to $31.4 million, all over the six-month period ended June 28, 2003.
Dennis Highby, Cabela’s President and Chief Executive Officer commented, “During the second quarter we were able to achieve record sales across all of our operating divisions. In addition, effective cost containment enabled us to outperform internal projections for profitability. Our strong performance in the first half of the year gives us confidence as we head into our peak selling season.”
Mr. Highby continued, “Total retail sales increased more than 32% during the quarter, primarily driven by an excellent performance from our Hamburg, PA store. It is our newest retail location, having opened in September of 2003, and also our largest. We are also excited to open our 10th store in August, a new 175,000 square foot store in Wheeling, West Virginia. Further, we remain on track to open two large-format destination stores in Ft. Worth, Texas and Buda, Texas in 2005. In addition, we are pleased to announce that we are in the final stages of negotiations for a new store site. We expect to make a formal announcement concerning this store in the next three to four weeks.”
On June 30, 2004, Cabela’s Inc. closed its initial public offering of 7,812,500 shares of its common stock at a price of $20 per share, as well as the underwriter’s over-allotment option for 1,171,875 shares. Of the total offering, 6,250,000 shares were sold by the Company, raising net proceeds of approximately $115.2 million for the Company. “After 43 years of successful growth, we have entered a new era as a publicly traded company. We are excited about the opportunities this presents for Cabela’s,” Mr. Highby further commented. “We thank our employees for their dedication and hard work and our customers for their on-going loyalty and support which has helped Cabela’s become recognized as the World’s Foremost Outfitter®.”
Mr. Highby concluded, “Looking ahead, we are very excited about the prospects for Cabela’s. We believe that our multi-channel retailing model and our destination store status afford us significant expansion opportunities into the future. We are optimistic about our profit potential for this year, and we continue to target long-term growth rates in the mid-teens, as we are committed to fully capitalizing on our unique position in the industry.”
Conference Call Information
A conference call to discuss second quarter 2004 operating results is scheduled for today (Wednesday, July 28) at 4:30 PM Eastern Time. A web cast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela’s website atwww.Cabelas.com and clicking on Cabela’s Second Quarter 2004 Earnings Conference Call Web Cast. A replay of the call will be archived on www.cabelas.com.
About Cabela’s Incorporated
Cabela’s Incorporated, headquartered in Sidney, Nebraska, is the nation’s largest direct marketer, and a leading specialty retailer, of hunting, fishing, camping and related outdoor merchandise. Since the Company’s founding in 1961, Cabela’s has grown to become one of the most well known outdoor recreation brands in the United States, and has long been recognized as the World’s Foremost Outfitter®. Through Cabela’s established direct business and its growing number of destination retail stores, it offers a wide and distinctive selection of high quality outdoor products at competitive prices while providing superior customer service. Cabela’s operates as an integrated multi-channel retailer, offering its customers a seamless shopping experience through its catalogs, website and destination retail stores. Cabela’s also issues the Cabela’s Club® VISA credit card through which it offers a related customer loyalty rewards program as a vehicle for strengthening its customer relationships.
CAUTIONARY STATEMENT FOR THE PURPOSE OF THE SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release and the related web cast (other than historical information) contain “forward-looking statements” that are based on the Company’s beliefs, assumptions and expectations of future events, taking into account the information
currently available to the Company. Forward-looking statements involve risks and uncertainties that may cause the Company’s actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: expansion into new markets; market saturation due to new destination retail store openings; the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support the Company’s growth initiatives; increasing competition in the outdoor segment of the sporting goods industry; the cost of the Company’s products; supply and delivery interruptions; adverse weather conditions; fluctuations in operating results; adverse economic conditions; labor shortages or increased labor costs; changes in consumer preferences and demographic trends; increased government regulation; inadequate protection of the Company’s intellectual property; other factors that the Company may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in the Company’s final prospectus relating to its initial public offering, which is available at the Company’s website atwww.cabelas.com and the SEC’s website atwww.sec.gov. The Company’s forward-looking statements speak only as of the date of this press release and the related web cast. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
CABELA’S INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)
July 3, 2004 | January 3, 2004 | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ | 111,671 | $ | 192,581 | ||
Accounts receivable | 29,214 | 32,826 | ||||
Credit card loans receivable held for sale | 79,858 | 28,013 | ||||
Inventories | 318,356 | 262,763 | ||||
Prepaid expenses and deferred catalog costs | 32,947 | 31,035 | ||||
Other current assets | 28,224 | 34,413 | ||||
Total current assets | 600,270 | 581,631 | ||||
PROPERTY AND EQUIPMENT, NET | 270,416 | 264,991 | ||||
OTHER ASSETS: | ||||||
Marketable securities | 106,546 | 72,632 | ||||
Other | 43,890 | 44,299 | ||||
Total other assets | 150,436 | 116,931 | ||||
Total assets | $ | 1,021,122 | $ | 963,553 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Accounts payable | $ | 85,714 | $ | 91,524 | ||
Bank overdrafts | 16,215 | 36,788 | ||||
Accrued expenses and other liabilities | 29,831 | 42,939 | ||||
Gift certificates and credit card reward points | 77,976 | 80,570 | ||||
Accrued employee compensation, benefits, and savings plan | 26,290 | 58,217 | ||||
Time deposits | 37,053 | 12,900 | ||||
Current maturities of long-term debt | 2,998 | 3,013 | ||||
Income taxes payable | 18,539 | 27,100 | ||||
Total current liabilities | 294,616 | 353,051 | ||||
LONG-TERM LIABILITIES: | 217,059 | 237,987 | ||||
| STOCKHOLDERS’ EQUITY: | 509,447 | 372,515 | ||||
Total liabilities and stockholders’ equity | $ | 1,021,122 | $ | 963,553 | ||
CABELA’S INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands Except Per Share and Share Amounts)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
July 3, 2004 | June 28, 2003 | July 3, 2004 | June 28, 2003 | |||||||||||||
REVENUES: | ||||||||||||||||
Merchandise sales | $ | 262,326 | $ | 236,155 | $ | 558,685 | $ | 485,309 | ||||||||
Financial services revenue | 14,986 | 13,628 | 31,433 | 25,107 | ||||||||||||
Other revenue | 1,827 | 1,063 | 2,938 | 2,733 | ||||||||||||
Total revenues | 279,139 | 250,846 | 593,056 | 513,149 | ||||||||||||
COST OF REVENUE: | ||||||||||||||||
Cost of merchandise sales | 170,823 | 151,295 | 357,796 | 309,177 | ||||||||||||
Cost of other revenue | 1,463 | 1,763 | 3,165 | 2,853 | ||||||||||||
Total cost of revenue (exclusive of depreciation and amortization) | 172,286 | 153,058 | 360,961 | 312,030 | ||||||||||||
Gross profit | 106,853 | 97,788 | 232,095 | 201,119 | ||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 103,621 | 92,446 | 216,160 | 189,462 | ||||||||||||
OPERATING INCOME | 3,232 | 5,342 | 15,935 | 11,657 | ||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest income | 23 | 68 | 137 | 254 | ||||||||||||
Interest expense | (2,025 | ) | (2,797 | ) | (4,045 | ) | (5,559 | ) | ||||||||
Other income, net | 1,750 | 2,105 | 3,330 | 3,092 | ||||||||||||
| (252 | ) | (624 | ) | (578 | ) | (2,213 | ) | |||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 2,980 | 4,718 | 15,357 | 9,444 | ||||||||||||
INCOME TAX EXPENSE | 993 | 1,628 | 5,324 | 3,277 | ||||||||||||
NET INCOME | $ | 1,987 | $ | 3,090 | $ | 10,033 | $ | 6,167 | ||||||||
EARNINGS PER SHARE: | ||||||||||||||||
Basic | $ | 0.03 | $ | 0.06 | $ | 0.17 | $ | 0.12 | ||||||||
Diluted | $ | 0.03 | $ | 0.06 | $ | 0.17 | $ | 0.11 | ||||||||
WEIGHTED AVERAGES SHARES OUTSTANDING: | ||||||||||||||||
Basic | 58,223,489 | 49,899,203 | 57,529,535 | 49,899,203 | ||||||||||||
Diluted | 59,906,085 | 53,631,067 | 59,373,374 | 53,638,421 | ||||||||||||
CABELA’S INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
| Six Months Ended | ||||||||
July 3, 2004 | June 28, 2003 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | (133,129 | ) | (57,805 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | (50,841 | ) | (29,891 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | 103,060 | (16,628 | ) | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (80,910 | ) | (104,324 | ) | ||||
CASH AND CASH EQUIVALENTS, Beginning of Period | 192,581 | 178,636 | ||||||
CASH AND CASH EQUIVALENTS, End of Period | $ | 111,671 | $ | 74,312 | ||||
| Three Months Ended | Six Months Ended | |||||||||||
July 3, 2004 | June 28, 2003 | July 3, 2004 | June 28, 2003 | |||||||||
(Dollar Amounts in Thousands) | ||||||||||||
Segment Information: | ||||||||||||
Direct revenue | 165,869 | 163,137 | 371,693 | 352,306 | ||||||||
Retail revenue | 96,457 | 73,018 | 186,992 | 133,003 | ||||||||
Financial services revenue | 14,986 | 13,628 | 31,433 | 25,107 | ||||||||
Other revenue | 1,827 | 1,063 | 2,938 | 2,733 | ||||||||
Total revenue | 279,139 | 250,846 | 593,056 | 513,149 | ||||||||
Direct operating income | 18,361 | 22,405 | 48,537 | 49,137 | ||||||||
Retail operating income | 7,572 | 6,099 | 18,918 | 8,413 | ||||||||
Financial services operating income | 3,949 | 4,502 | 10,599 | 8,726 | ||||||||
Other operating income (loss) | (26,650 | ) | (27,664 | ) | (62,119 | ) | (54,619 | ) | ||||
Total operating income | 3,232 | 5,342 | 15,935 | 11,657 | ||||||||
As a percentage of total revenue: | ||||||||||||
Direct revenue | 59.4 | % | 65.0 | % | 62.7 | % | 68.7 | % | ||||
Retail revenue | 34.6 | % | 29.1 | % | 31.5 | % | 25.9 | % | ||||
Financial services revenue | 5.3 | % | 5.5 | % | 5.3 | % | 4.9 | % | ||||
Other revenue | 0.7 | % | 0.4 | % | 0.5 | % | 0.5 | % | ||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
As a percentage of segment revenue: | ||||||||||||
Direct operating income | 11.1 | % | 13.7 | % | 13.1 | % | 13.9 | % | ||||
Retail operating income | 7.9 | % | 8.4 | % | 10.1 | % | 6.3 | % | ||||
Financial services operating income | 26.4 | % | 33.0 | % | 33.7 | % | 34.8 | % | ||||
Total operating income | 1.2 | % | 2.1 | % | 2.7 | % | 2.3 | % | ||||
Financial Services Information:
The following table summarizes the results of the Company’s financial services business on a GAAP basis. For credit card receivables securitized and sold, the loans are removed from the Company’s balance sheet and the net earnings on these securitized assets after paying outside investors is reflected as a component of securitization income on a GAAP basis. Net interest income on a GAAP basis includes interest and fee income, interest expense and provision for loan losses from credit card receivables the Company owns. Non-interest income on a GAAP basis includes servicing income, gains on sales of loans and income recognized on retained interests for the entire securitized portfolio, as well as, interchange income on the entire managed portfolio.
| Three Months Ended | Six Months Ended | |||||||||||||||
July 3, 2004 | June 28, 2003 | July 3, 2004 | June 28, 2003 | |||||||||||||
(Dollar Amounts in Thousands) | ||||||||||||||||
Financial Services Revenue as reported in the Financial Statements: | ||||||||||||||||
Interest and fee income | $ | 2,628 | $ | 1,689 | $ | 5,011 | $ | 3,387 | ||||||||
Interest expense | (764 | ) | (869 | ) | (1,526 | ) | (1,750 | ) | ||||||||
Net interest income | 1,864 | 820 | 3,485 | 1,637 | ||||||||||||
Noninterest income: | ||||||||||||||||
Securitization income | 20,221 | 18,763 | 40,371 | 32,391 | ||||||||||||
Other non-interest income | 5,715 | 3,994 | 11,268 | 8,895 | ||||||||||||
Total noninterest income | 25,936 | 22,757 | 51,639 | 41,286 | ||||||||||||
Less: Customer Rewards Costs | (12,814 | ) | (9,949 | ) | (23,691 | ) | (17,816 | ) | ||||||||
Financial services revenue | $ | 14,986 | $ | 13,628 | $ | 31,433 | $ | 25,107 | ||||||||
“Managed” credit card receivables represent credit card receivables owned by the Company plus securitized credit card receivables. Since the financial performance of the managed portfolio has a significant impact on the earnings received from servicing the portfolio, the Company believes the following table on a “managed” basis is important information to analyze revenue in the financial services business. The following non-GAAP presentation reflects the financial performance of the credit card receivables owned by the Company plus those that have been sold and includes the effects of recording the retained interests at fair value. Interest, interchange (net of customer rewards) and fee income on both the owned and securitized portfolio are recorded in their respective line items. Interest paid to outside investors on the securitized receivables is included with other interest costs and included in interest expense. Credit losses on the entire managed portfolio are included in provision for loan losses. Although the Company’s financial statements are not presented in this manner, management reviews the performance of its managed portfolio in order to evaluate the effectiveness of its origination and collection activities, which ultimately affects the income received for servicing the portfolio.
| Three Months Ended | Six Months Ended | |||||||||||||||
July 3, 2004 | June 28, 2003 | July 3, 2004 | June 28, 2003 | |||||||||||||
(Dollar Amounts in Thousands Except Other Data) | ||||||||||||||||
Managed Financial Services Revenue: | ||||||||||||||||
Interest income | $ | 16,049 | $ | 12,872 | $ | 32,271 | $ | 25,918 | ||||||||
Interchange income, net of customer reward costs | 8,959 | 6,419 | 16,978 | 12,297 | ||||||||||||
Other fee income | 3,553 | 3,116 | 7,202 | 6,356 | ||||||||||||
Interest expense | (6,377 | ) | (5,482 | ) | (12,067 | ) | (10,333 | ) | ||||||||
Provision for loan losses | (5,125 | ) | (4,572 | ) | (9,935 | ) | (8,417 | ) | ||||||||
Other | (2,073 | ) | 1,275 | (3,016 | ) | (714 | ) | |||||||||
Net managed financial services revenue | 14,986 | 13,628 | 31,433 | 25,107 | ||||||||||||
As a Percentage of Managed Credit Card Loans | ||||||||||||||||
Managed Financial Services Revenue | ||||||||||||||||
Interest income | 7.5 | % | 7.7 | % | 7.7 | % | 7.9 | % | ||||||||
Interchange income, net of customer reward costs | 4.2 | % | 3.8 | % | 4.0 | % | 3.7 | % | ||||||||
Other fee income | 1.7 | % | 1.9 | % | 1.7 | % | 1.9 | % | ||||||||
Interest expense | -3.0 | % | -3.3 | % | -2.9 | % | -3.1 | % | ||||||||
Provision for loan losses | -2.4 | % | -2.7 | % | -2.4 | % | -2.6 | % | ||||||||
Other | -1.0 | % | 0.8 | % | -0.6 | % | -0.2 | % | ||||||||
Net managed financial services revenue | 7.0 | % | 8.2 | % | 7.5 | % | 7.6 | % | ||||||||
Average reported credit card loans | $ | 78,310 | $ | 59,302 | $ | 74,659 | $ | 60,926 | ||||||||
Average managed credit card loans | $ | 852,828 | $ | 667,353 | $ | 840,471 | $ | 658,173 | ||||||||
Other Data: | ||||||||||||||||
Average Active Accounts | 599,802 | 502,930 | 593,656 | 499,168 | ||||||||||||
Average Account Balance | $ | 1,422 | $ | 1,327 | $ | 1,414 | $ | 1,318 | ||||||||
