FOR IMMEDIATE RELEASE | Media Contact: Joe Arterburn 308-255-1204 Cabela’s Incorporated Investor Contact: Chris Gay 308-255-2905 Cabela’s Incorporated Chad A. Jacobs 203-222-9013 Integrated Corporate Relations |
CABELA’S INC. REPORTS SECOND QUARTER RESULTS
-Q2 Total Revenue Increased 23.2% to a Record $343.9 Million-
-Q2 Total Direct Revenue Increased 10.5% -
-Company Reported Q2 Fully-Diluted EPS of $0.09 -
-Company Reiterates Mid-teens Growth Rate Targets-
SIDNEY, Neb. (July 28, 2005) - Cabela’s Incorporated (NYSE: CAB), the World’s Foremost Outfitterâ of hunting, fishing, and outdoor gear, today reported record financial results for its second fiscal quarter ended July 2, 2005.
Total revenue for the second quarter of fiscal 2005 increased 23.2% to a record $343.9 million compared to $279.1 million for the same period last year. Second quarter net income increased to $6.0 million, or $0.09 per diluted share, compared to $2.0 million, or $0.03 per diluted share for the same period a year ago. As a result of the Company’s initial public offering, weighted average diluted shares outstanding increased 10.6% to 66.3 million for the second quarter of fiscal 2005 compared to 59.9 million for the second quarter of fiscal 2004.
During the second quarter of fiscal 2005, direct revenue increased 10.5% to a record $183.2 million. Total retail revenue increased 13.2% to $109.2 million and same store sales decreased 6.0%, due in part to the strong performance, during the second quarter of fiscal 2004, of the Company’s Hamburg, Pennsylvania, retail store. The Hamburg store contributed 2.8% to the same store sales decline. Financial services revenue increased 103.0% to $30.4 million for the second quarter of fiscal 2005.
Dennis Highby, Cabela’s President and Chief Executive Officer commented, “We are extremely pleased with our second quarter performance, which exceeded our expectations. Importantly, all three of our operating segments achieved double-digit revenue gains, and we experienced increases in both our consolidated gross margin and consolidated operating margin. However, operating margin in our retail segment decreased primarily due to new store pre-opening costs. Based on our strong momentum heading into the key fall and winter selling seasons, we are confident we will achieve our long-term top and bottom line mid-teens growth rates for fiscal 2005.”
Mr. Highby continued, “The second quarter was an exciting period for our company as we successfully opened two new destination retail stores in Texas. Both our Fort Worth and Buda locations are off to a solid start, which gives us a heightened degree of confidence as we enter new markets later this year, including Lehi, Utah in August and Rogers, Minnesota in October. We also put in place a series of strategic initiatives aimed at enhancing our infrastructure and improving our overall retail operations, including the installation of a new labor scheduling system and the implementation of a new on-line training platform for our store associates. We take great pride in our world class level of service and we continually look at ways to improve our processes and better serve our customers.”
“Over the past several months we have taken a number of important steps to increase our liquidity and more efficiently utilize our balance sheet to better support our future growth plans,” continued Mr. Highby. “During the quarter we signed a new five-year $325 million credit facility. We also completed $21 million in sales of land near our Buda, Dundee, Wheeling and Mitchell locations. Furthermore, we have made significant progress with regard to the monetization of certain of our economic bonds. We expect to receive approximately $57 million within the next few weeks from the municipality involved with our Kansas City store as a result of the retirement of Cabela’s owned bonds related to that location.”
Mr. Highby concluded, “Our performance for the first half of fiscal 2005 underscores the ongoing strength of our multi-channel strategy, which includes our direct business, our growing retail operations, and our rapidly expanding financial services division. We remain very encouraged about our future prospects and believe that Cabela’s powerful brand, multi-channel business model and strong financial position distinguishes us from our peers and enhances our competitive position in the marketplace. We are committed to successfully executing our long-term growth strategy in order to maximize value for our shareholders.”
Conference Call Information
A conference call to discuss second quarter fiscal 2005 operating results is scheduled for today (Thursday, July 28, 2005) at 4:30 PM Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela’s website at www.cabelas.com. 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’sâ 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 Outfitterâ. Through Cabela’s well-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 also issues the Cabela’s Clubâ 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
Statements in this press release that are not historical or current fact are "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. Such forward-looking statements included, but are not limited to, the Company’s statements regarding future growth rate targets and receipt of funds from the retirement of bonds. 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: the ability to negotiate favorable purchase, lease, and/or economic development arrangements; 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 or unseasonal weather conditions; fluctuations in operating results; adverse economic conditions; increased fuel prices; 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 “Factors Affecting Future Results” section of the Company's Form 10-K for the fiscal year ended January 1, 2005, which is available at the Company’s website at www.cabelas.com and the SEC’s website at www.sec.gov. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company’s forward-looking statements speak only as of the date they are made. 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) (Unaudited) | |
ASSETS | | July 2, 2005 | | January 1, 2005 | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 71,068 | | $ | 248,184 | |
Accounts receivable, net of allowances | | | 29,270 | | | 33,524 | |
Credit card loans held for sale | | | 59,463 | | | 64,019 | |
Credit card loans receivable, net of allowances | | | 8,189 | | | 5,209 | |
Inventories | | | 411,016 | | | 313,002 | |
Prepaid expenses and deferred catalog costs | | | 36,720 | | | 31,294 | |
Other current assets | | | 39,497 | | | 33,255 | |
Total current assets | | | 655,223 | | | 728,487 | |
| | | | | | | |
PROPERTY AND EQUIPMENT, NET | | | 438,916 | | | 294,141 | |
| | | | | | | |
OTHER ASSETS: | | | | | | | |
Marketable securities | | | 163,066 | | | 145,587 | |
Other | | | 53,919 | | | 60,016 | |
Total other assets | | | 216,985 | | | 205,603 | |
| | | | | | | |
Total assets | | $ | 1,311,124 | | $ | 1,228,231 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 160,856 | | $ | 100,826 | |
Unpresented checks net of bank balance | | | 13,944 | | | 34,653 | |
Accrued expenses and other liabilities | | | 37,896 | | | 50,264 | |
Gift certificates and credit card reward points | | | 92,916 | | | 97,242 | |
Accrued employee compensation and benefits | | | 32,177 | | | 54,925 | |
Time deposits | | | 41,442 | | | 48,953 | |
Revolving credit borrowings | | | 102,000 | | | - | |
Current maturities of long-term debt | | | 28,731 | | | 28,327 | |
Income taxes payable | | | 26,246 | | | 38,551 | |
Total current liabilities | | | 536,208 | | | 453,741 | |
| | | | | | | |
LONG-TERM LIABILITIES | | | 193,185 | | | 208,136 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY | | | 581,731 | | | 566,354 | |
| | | | | | | |
Total liabilities and stockholders’ equity | | $ | 1,311,124 | | $ | 1,228,231 | |
| | | | | | | |
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 2, 2005 | | July 3, 2004 | | July 2, 2005 | | July 3, 2004 | |
REVENUES: | | | | | | | | | |
Merchandise sales | | $ | 292,382 | | $ | 262,326 | | $ | 618,977 | | $ | 558,685 | |
Financial services revenue | | | 30,418 | | | 14,986 | | | 53,334 | | | 31,433 | |
Other revenue | | | 21,072 | | | 1,827 | | | 22,150 | | | 2,938 | |
Total revenues | | | 343,872 | | | 279,139 | | | 694,461 | | | 593,056 | |
| | | | | | | | | | | | | |
COST OF REVENUE: | | | | | | | | | | | | | |
Cost of merchandise sales | | | 188,848 | | | 170,823 | | | 402,217 | | | 357,796 | |
Cost of other revenue | | | 19,864 | | | 1,463 | | | 19,856 | | | 3,165 | |
Total cost of revenue (exclusive of depreciation and amortization) | | | 208,712 | | | 172,286 | | | 422,073 | | | 360,961 | |
Gross profit | | | 135,160 | | | 106,853 | | | 272,388 | | | 232,095 | |
| | | | | | | | | | | | | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | | | 126,338 | | | 103,621 | | | 252,543 | | | 216,160 | |
| | | | | | | | | | | | | |
OPERATING INCOME | | | 8,822 | | | 3,232 | | | 19,845 | | | 15,935 | |
| | | | | | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | | | | | |
Interest income | | | 16 | | | 23 | | | 450 | | | 137 | |
Interest expense | | | (2,435 | ) | | (2,025 | ) | | (4,505 | ) | | (4,045 | ) |
Other income, net | | | 2,939 | | | 1,750 | | | 5,612 | | | 3,330 | |
| | | 520 | | | (252 | ) | | 1,557 | | | (578 | ) |
| | | | | | | | | | | | | |
INCOME BEFORE PROVISION FOR INCOME TAXES | | | 9,342 | | | 2,980 | | | 21,402 | | | 15,357 | |
INCOME TAX EXPENSE | | | 3,326 | | | 993 | | | 7,619 | | | 5,324 | |
NET INCOME | | $ | 6,016 | | $ | 1,987 | | $ | 13,783 | | $ | 10,033 | |
| | | | | | | | | | | | | |
EARNINGS PER SHARE: | | | | | | | | | | | | | |
Basic | | $ | 0.09 | | $ | 0.03 | | $ | 0.21 | | $ | 0.17 | |
Diluted | | $ | 0.09 | | $ | 0.03 | | $ | 0.21 | | $ | 0.17 | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | |
Basic | | | 64,648,768 | | | 58,223,489 | | | 64,618,424 | | | 57,529,535 | |
Diluted | | | 66,267,571 | | | 59,906,085 | | | 66,282,574 | | | 59,373,374 | |
| | | | | | | | | | | | | |
CABELA’S INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar Amounts in Thousands) (Unaudited) | |
| | Six Months Ended | |
| | July 2, 2005 | | July 3, 2004 | |
| | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | $ | (100,534 | ) | $ | (133,129 | ) |
| | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | (136,557 | ) | | (50,841 | ) |
| | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | 59,975 | | | 103,060 | |
| | | | | | | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | | | (177,116 | ) | | (80,910 | ) |
| | | | | | | |
CASH AND CASH EQUIVALENTS, Beginning of Year | | | 248,184 | | | 192,581 | |
| | | | | | | |
CASH AND CASH EQUIVALENTS, End of Period | | $ | 71,068 | | $ | 111,671 | |
| | | | | | | |
| | | | | |
(Dollar Amounts in Thousands) | | | | | |
Segment Information: | | Three Months Ended | | Six Months Ended | |
| | July 2, 2005 | | July 3, 2004 | | July 2, 2005 | | July 3, 2004 | |
| | | | | | | | | |
| | | | | | | | | |
Direct revenue | | $ | 183,232 | | $ | 165,869 | | $ | 412,613 | | $ | 371,693 | |
Retail revenue | | | 109,150 | | | 96,457 | | | 206,364 | | | 186,992 | |
Financial services revenue | | | 30,418 | | | 14,986 | | | 53,334 | | | 31,433 | |
Other revenue | | | 21,072 | | | 1,827 | | | 22,150 | | | 2,938 | |
Total revenue | | $ | 343,872 | | $ | 279,139 | | $ | 694,461 | | $ | 593,056 | |
| | | | | | | | | | | | | |
Direct operating income | | $ | 23,233 | | $ | 18,361 | | $ | 51,772 | | $ | 48,537 | |
Retail operating income | | | 5,451 | | | 7,572 | | | 10,146 | | | 18,918 | |
Financial services operating income | | | 17,295 | | | 3,949 | | | 28,684 | | | 10,599 | |
Other operating income (loss) | | | (37,157 | ) | | (26,650 | ) | | (70,757 | ) | | (62,119 | ) |
Total operating income | | $ | 8,822 | | $ | 3,232 | | $ | 19,845 | | $ | 15,935 | |
| | | | | | | | | | | | | |
As a percentage of total revenue: | | | | | | | | | | | | | |
Direct revenue | | | 53.3 | % | | 59.4 | % | | 59.4 | % | | 62.7 | % |
Retail revenue | | | 31.7 | % | | 34.6 | % | | 29.7 | % | | 31.5 | % |
Financial services revenue | | | 8.9 | % | | 5.3 | % | | 7.7 | % | | 5.3 | % |
Other revenue | | | 6.1 | % | | 0.7 | % | | 3.2 | % | | 0.5 | % |
Total revenue | | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
| | | | | | | | | | | | | |
As a percentage of segment revenue: | | | | | | | | | | | | | |
Direct operating income | | | 12.7 | % | | 11.1 | % | | 12.5 | % | | 13.1 | % |
Retail operating income | | | 5.0 | % | | 7.9 | % | | 4.9 | % | | 10.1 | % |
Financial services operating income | | | 56.9 | % | | 26.4 | % | | 53.8 | % | | 33.7 | % |
Total operating income | | | 2.6 | % | | 1.2 | % | | 2.9 | % | | 2.7 | % |
Financial Services Information:
The following table summarizes the results of the Company’s financial services segment on a GAAP basis. For credit card loans 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 are 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.
(Dollar Amounts in Thousands) | |
| |
| | Three Months Ended | | Six Months Ended | |
Financial Services Revenue as reported in the Financial Statements: | | July 2, 2005 | | July 3, 2004 | | July 2, 2005 | | July 3, 2004 | |
| | | | | | | | | |
Interest and fee income | | $ | 4,445 | | $ | 2,628 | | $ | 8,550 | | $ | 5,011 | |
| | | | | | | | | | | | | |
Interest expense | | | (790 | ) | | (764 | ) | | (1,613 | ) | | (1,526 | ) |
Net interest income | | | 3,655 | | | 1,864 | | | 6,937 | | | 3,485 | |
| | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | |
Securitization income | | | 33,136 | | | 20,221 | | | 58,919 | | | 40,371 | |
Other non-interest income | | | 7,137 | | | 5,715 | | | 14,571 | | | 11,268 | |
Total non-interest income | | | 40,273 | | | 25,936 | | | 73,490 | | | 51,639 | |
Less: Customer rewards costs | | | (13,510 | ) | | (12,814 | ) | | (27,093 | ) | | (23,691 | ) |
| | | | | | | | | | | | | |
Financial Services revenue | | $ | 30,418 | | $ | 14,986 | | $ | 53,334 | | $ | 31,433 | |
| | | | | | | | | | | | | |
“Managed” credit card loans represent credit card loans owned by the Company plus securitized credit card loans. Since the financial performance of the managed portfolio has a significant impact on the earnings received from servicing the portfolio, we believe the following table (see next page) on a “managed” basis is important information to analyze revenue in the financial services segment. The following non-GAAP presentation reflects the financial performance of the credit card loans receivable we own plus those that have been sold and includes the effects of recording the retained interest 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 credit card loans 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 our financial statements are not presented in this manner, management reviews the performance of the managed portfolio in order to evaluate the effectiveness of its origination and collection activities, which ultimately affects the income received for servicing the portfolio.
(Dollar Amounts in Thousands Except Other Data) | |
| |
Managed Financial Services Revenue: | | Three Months Ended | | Six Months Ended | |
| | July 2, 2005 | | July 3, 2004 | | July 2, 2005 | | July 3, 2004 | |
Interest income | | $ | 23,676 | | $ | 16,049 | | $ | 46,545 | | $ | 32,271 | |
Interchange income, net of customer reward costs | | | 14,873 | | | 8,959 | | | 24,562 | | | 16,978 | |
Other fee income | | | 4,659 | | | 3,553 | | | 9,242 | | | 7,202 | |
Interest expense | | | (9,338 | ) | | (6,377 | ) | | (18,021 | ) | | (12,067 | ) |
Provision for loan losses | | | (6,138 | ) | | (5,125 | ) | | (11,473 | ) | | (9,935 | ) |
Other | | | 2,686 | | | (2,073 | ) | | 2,479 | | | (3,016 | ) |
Net managed financial services revenue | | $ | 30,418 | | $ | 14,986 | | $ | 53,334 | | $ | 31,433 | |
| | | | | | | | | | | | | |
As a Percentage of Managed Credit Card Loans | | | | | | | | | |
Managed Financial Services Revenue | | | | | | | | | | | | | |
Interest income | | | 9.1 | % | | 7.5 | % | | 9.1 | % | | 7.7 | % |
Interchange income, net of customer reward costs | | | 5.7 | % | | 4.2 | % | | 4.8 | % | | 4.0 | % |
Other fee income | | | 1.9 | % | | 1.7 | % | | 1.7 | % | | 1.7 | % |
Interest expense | | | ( 3.6 | )% | | ( 3.0 | )% | | ( 3.5 | )% | | ( 2.9 | )% |
Provision for loan losses | | | ( 2.4 | )% | | ( 2.4 | )% | | ( 2.2 | )% | | ( 2.4 | )% |
Other | | | 1.0 | % | | ( 1.0 | )% | | 0.5 | % | | ( 0.6 | )% |
Net managed financial services revenue | | | 11.7 | % | | 7.0 | % | | 10.4 | % | | 7.5 | % |
Average reported credit card loans | | $ | 110,695 | | $ | 78,310 | | $ | 105,009 | | $ | 74,659 | |
Average managed credit card loans | | $ | 1,038,465 | | $ | 852,828 | | $ | 1,022,452 | | $ | 840,471 | |
| | | | | | | | | | | | | |
Other Data: | | | | | | | | | | | | | |
Average Active Accounts | | | 699,114 | | | 599,802 | | | 693,241 | | | 593,656 | |
Average Account Balance | | $ | 1,485 | | $ | 1,422 | | $ | 1,475 | | $ | 1,416 | |