| FOR IMMEDIATE RELEASE | Investor Contact: Chris Gay 308-255-2905 Cabela’s Incorporated Media Contact: Joe Arterburn 308-255-1204 Cabela’s Incorporated |
CABELA’S INC. REPORTS FIRST QUARTER FISCAL 2009 RESULTS
-First Quarter Comparable Store Sales Increased 8.2% Exceeding External Estimates
-First Quarter Diluted Earnings Per Share of $0.08
-Inventories Decreased $47 Million Year/Year to $574 Million
-Cash Flow From Operations Improved $104 Million Year/Year
-Reduced Total Debt $151 Million Year/Year
SIDNEY, Neb. (April 30, 2009) – Cabela’s Incorporated (NYSE:CAB) today reported that first quarter fiscal 2009 retail store revenue increased 8.3% to $275.5 million driven by an 8.2% increase in comparable store sales; direct revenue decreased 4.7% to $225.4 million; and financial services revenue decreased 16.7% to $33.9 million. Total revenue for the first quarter of 2009 increased 0.7% to $539.5 million compared to $535.5 million for the first quarter of 2008.
“We are very pleased with the revenue growth we achieved during the quarter,” said Thomas Millner, Cabela’s Chief Executive Officer. “Our 8.2% comparable store sales increase in the quarter is a strong validation of the strength of our brand and the loyalty of our customers. Additionally, we were able to lower direct channel marketing costs by 13.0% while holding revenues to only a 4.7% decline, which performed better than our expectations.”
“Our focus on sustainable improvements in operating efficiencies and our ongoing focus on the balance sheet reaped benefits during the quarter as inventories decreased $47 million and cash flow from operations improved $104 million, each compared to the prior year quarter,” Millner said. “Additionally, total debt was reduced by $151 million compared to the prior year quarter.”
Gross margin, while lower in the quarter due to a product mix shift, came in slightly above external estimates. Due to ongoing efforts to reduce costs and improve efficiencies, selling, distribution, and administrative expenses declined as a percentage of total revenue to 37.2% of sales from 37.5% of sales in the year ago quarter. Net income for the first quarter of 2009 was $5.1 million, or $0.08 per diluted share, compared to $10.0 million, or $0.15 per diluted share, in the first quarter of 2008. Compared to the first quarter of 2008, net income for the first quarter of 2009 was adversely impacted by $14.7 million (pre-tax) of additional bad debt expense which reduced securitization income. Additionally, we incurred a $1.7 million (pre-tax) charge, or $0.02 per diluted share, related to severance and fixed asset write downs.
As of March 28, 2009, the Company had $541 million in cash and cash equivalents compared to $78 million as of March 29, 2008. Inventories totaled $574 million at the end of the first quarter 2009, a decrease of 7.6% compared to inventories of $621 million at the end of the first quarter 2008. Total debt as of March 28, 2009, was $475 million compared to $626 million as of March 29, 2008, a decrease of $151 million or 24.2%.
Mr. Millner continued, “We are pleased with the progress we made to control costs, drive operational excellence, strengthen our balance sheet, and improve liquidity at our wholly-owned subsidiary, World’s Foremost Bank. While bad debts at World’s Foremost Bank have increased due to the economy, we are adjusting pricing and implementing new products to help mitigate the impact throughout the year. We have made considerable progress generating increased liquidity at World’s Foremost Bank having successfully raised $425 million through the issuance of a three-year securitization transaction under the TALF program in addition to increasing outstanding certificates of deposit by $121 million during the quarter. With our strong cash position and the completion of this securitization, we don’t expect to complete another term securitization until the second quarter of 2010.”
“As we look ahead into the second quarter, we remain encouraged with the favorable trends in our retail and direct segments. We are confident that our brand equity, our strong vendor relationships, our solid balance sheet and our multi-channel integrated business model, combined with a focus on operating excellence and balance sheet improvements, will continue to make Cabela’s our customers’ preferred outdoor shopping destination and our suppliers choice for growth. Because of these trends, we are increasing our revenue guidance for both comparable store sales and total revenue. Reflecting our improved expectations, we now forecast comparable store sales and total revenue growth to be at least flat for 2009 as compared to our previous guidance of down low-single digits. Due to recent trends in our credit card portfolio, we now expect charge-offs to be between 5.1% and 5.5% for 2009 as compared to our previous guidance of 4.5-4.6%. Higher revenue expectations in our retail segment are expected to be offset by lower revenue in our financial services segment; therefore, we continue to expect earnings per share for 2009 to be roughly equal with 2008 levels.”
Conference Call Information
A conference call to discuss first quarter fiscal 2009 operating results is scheduled for today (Thursday, April 30) at 4:30 p.m. 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 world’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 world, and has long been recognized as the World’s Foremost Outfitter®. Through Cabela’s growing number of retail stores and its well-established direct business, 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 CLUB® Visa credit card, which serves as its primary customer loyalty rewards program. Cabela’s stock is traded on the New York Stock Exchange under the symbol “CAB”.
Caution Concerning Forward-Looking Statements
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 include, but are not limited to, the Company's statements regarding the timing of future term securitization transactions, comparable store sales and total revenue growth being at least flat for 2009, charge-offs being between 5.1% and 5.5% for 2009; and earnings per share for 2009 being roughly equal with 2008 levels. 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 level of discretionary consumer spending; the strength of the economy; changes in the capital and credit markets or the availability of capital and credit; the Company's ability to comply with the financial covenants in its credit arrangements; counterparty risk on the Company's unsecured revolving credit facility; changes in consumer preferences and demographic trends; the Company's ability to successfully execute its multi-channel strategy; the ability to negotiate favorable purchase, lease and/or economic development arrangements for new retail store locations; expansion into new markets; market saturation due to new 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; trade restrictions; political or financial instability in countries where the goods the Company sells are manufactured; adverse fluctuations in foreign currencies; increases in postage rates or paper and printing costs; supply and delivery shortages or interruptions caused by system changes or other factors; adverse or unseasonal weather conditions; fluctuations in operating results; the cost of fuel increasing; road construction around the Company's retail stores; labor shortages or increased labor costs; increased government regulation, including regulations relating to firearms and ammunition; inadequate protection of the Company's intellectual property; the Company's ability to protect its brand and reputation; changes in accounting rules applicable to securitization transactions; the Company's ability to manage credit and liquidity risks; any downgrade of the ratings on the outstanding notes issued by the Company's financial services business' securitization trust; the ability of the Company's financial services business to securitize credit card receivables at acceptable rates or access the deposits market; decreased interchange fees received by the Company's financial services business as a result of credit card industry litigation; other factors that the Company may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended December 27, 2008), which filings are 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 | |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| (Dollars in Thousands Except Earnings Per Share) | |
| (Unaudited) | |
| |
| | | | |
| | | Three Months Ended | |
| | | March 28, | | | March 29, | |
| | | 2009 | | | 2008 | |
| Revenue: | | | | | | |
| Merchandise sales | | $ | 500,878 | | | $ | 490,911 | |
| Financial services revenue | | | 33,894 | | | | 40,708 | |
| Other revenue | | | 4,768 | | | | 3,920 | |
| Total revenue | | | 539,540 | | | | 535,539 | |
| | | | | | | | | |
| Total cost of revenue (exclusive of depreciation and amortization) | | | 326,314 | | | | 313,802 | |
| Selling, distribution, and administrative expenses | | | 200,900 | | | | 200,651 | |
| Operating income | | | 12,326 | | | | 21,086 | |
| | | | | | | | | |
| Interest expense, net | | | (5,834 | ) | | | (7,141 | ) |
| Other non-operating income, net | | | 2,046 | | | | 1,859 | |
| Income before provision for income taxes | | | 8,538 | | | | 15,804 | |
| Provision for income taxes | | | 3,410 | | | | 5,848 | |
| | | | | | | | | |
| Net income | | $ | 5,128 | | | $ | 9,956 | |
| | | | | | | | | |
| Basic net income per share | | $ | 0.08 | | | $ | 0.15 | |
| Diluted net income per share | | $ | 0.08 | | | $ | 0.15 | |
| | | | | | | | | |
| Basic weighted average shares outstanding | | | 66,578,213 | | | | 65,934,381 | |
| Diluted weighted average shares outstanding | | | 66,663,239 | | | | 66,575,573 | |
| | | | | | | | | |
| CABELA'S INCORPORATED AND SUBSIDIARIES | |
| CONDENSED CONSOLIDATED BALANCE SHEETS | |
| (Dollars in Thousands Except Par Value) | |
| (Unaudited) | |
| | | | | | | | | | |
| | | | | | | | | | |
| ASSETS | | March 28, | | | December 27, | | | March 29, | |
| | | 2009 | | | 2008 | | | 2008 | |
| CURRENT | | | | | | | | | |
| Cash and cash equivalents | | $ | 540,500 | | | $ | 410,104 | | | $ | 78,085 | |
| Accounts receivable, net of allowance for doubtful accounts of $854, $556 and $1,861 | | | 37,722 | | | | 45,788 | | | | 56,713 | |
| Credit card loans, net of allowances of $1,180, $1,507 and $1,210 | | | 141,932 | | | | 167,226 | | | | 175,254 | |
| Inventories | | | 573,953 | | | | 517,657 | | | | 620,925 | |
| Prepaid expenses and other current assets | | | 146,849 | | | | 133,439 | | | | 139,924 | |
| Total current assets | | | 1,440,956 | | | | 1,274,214 | | | | 1,070,901 | |
| Property and equipment, net | | | 880,105 | | | | 881,080 | | | | 900,280 | |
| Land held for sale or development | | | 40,414 | | | | 39,318 | | | | 34,811 | |
| Retained interests in securitized loans | | | 57,225 | | | | 61,605 | | | | 36,864 | |
| Economic development bonds | | | 116,161 | | | | 112,585 | | | | 106,314 | |
| Other assets | | | 26,123 | | | | 27,264 | | | | 30,685 | |
| Total assets | | $ | 2,560,984 | | | $ | 2,396,066 | | | $ | 2,179,855 | |
| | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
| CURRENT | | | | | | | | | | | | |
| Accounts payable, including unpresented checks of $22,946, $28,217 and $18,352 | | $ | 187,522 | | | $ | 189,766 | | | $ | 190,328 | |
| Gift instruments, and credit card and loyalty rewards programs | | | 164,480 | | | | 184,834 | | | | 169,006 | |
| Accrued expenses | | | 90,076 | | | | 123,296 | | | | 88,627 | |
| Time deposits | | | 184,841 | | | | 178,817 | | | | 65,494 | |
| Current maturities of long-term debt | | | 237 | | | | 695 | | | | 26,564 | |
| Income taxes payable | | | 2,278 | | | | 11,689 | | | | 4,468 | |
| Deferred income taxes | | | 11,556 | | | | 11,707 | | | | 15,568 | |
| Total current liabilities | | | 640,990 | | | | 700,804 | | | | 560,055 | |
| Long-term debt, less current maturities | | | 474,683 | | | | 379,336 | | | | 599,802 | |
| Long-term time deposits | | | 422,181 | | | | 307,382 | | | | 118,071 | |
| Deferred income taxes | | | 38,228 | | | | 38,707 | | | | 31,063 | |
| Other long-term liabilities | | | 61,170 | | | | 56,132 | | | | 32,059 | |
| | | | | | | | | | | | | |
| COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
| Preferred stock, $0.01 par value; Authorized -- 10,000,000 shares; Issued – none | | | - | | | | - | | | | - | |
| Common stock, $0.01 par value: | | | | | | | | | | | | |
Class A Voting, Authorized – 245,000,000 shares; Issued – 66,923,128, 66,833,984, and 66,011,696 shares | | | 669 | | | | 668 | | | | 660 | |
| Class B Non-voting, Authorized – 245,000,000 shares; Issued – none | | | - | | | | - | | | | - | |
| Additional paid-in capital | | | 274,228 | | | | 271,958 | | | | 260,047 | |
| Retained earnings | | | 652,804 | | | | 647,676 | | | | 581,228 | |
| Accumulated other comprehensive loss | | | (3,969 | ) | | | (6,597 | ) | | | (3,130 | ) |
| Total stockholders’ equity | | | 923,732 | | | | 913,705 | | | | 838,805 | |
| Total liabilities and stockholders’ equity | | $ | 2,560,984 | | | $ | 2,396,066 | | | $ | 2,179,855 | |
| | | | | | | | | | | | | |
| CABELA'S INCORPORATED AND SUBSIDIARIES | |
| SEGMENT INFORMATION | |
| (Dollars in Thousands) | |
| (Unaudited) | |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended | |
| | | March 28, | | | March 29, | |
| | | 2009 | | | 2008 | |
| Revenue: | | | | | | |
| Retail | | $ | 275,526 | | | $ | 254,375 | |
| Direct | | | 225,352 | | | | 236,536 | |
| Financial Services | | | 33,894 | | | | 40,708 | |
| Other | | | 4,768 | | | | 3,920 | |
| Total revenue | | $ | 539,540 | | | $ | 535,539 | |
| | | | | | | | | |
| Operating Income (Loss): | | | | | | | | |
| Retail | | | 18,054 | | | | 26,939 | |
| Direct | | | 29,416 | | | | 33,476 | |
| Financial Services | | | 11,969 | | | | 10,777 | |
| Other | | | (47,113 | ) | | | (50,106 | ) |
| Total operating income | | $ | 12,326 | | | $ | 21,086 | |
| | | | | | | | | |
| As a Percentage of Total Revenue: | | | | | | | | |
| Retail revenue | | | 51.0 | % | | | 47.5 | % |
| Direct revenue | | | 41.8 | | | | 44.2 | |
| Financial Services revenue | | | 6.3 | | | | 7.6 | |
| Other revenue | | | 0.9 | | | | 0.7 | |
| Total revenue | | | 100.0 | % | | | 100.0 | % |
| | | | | | | | | |
| As a Percentage of Segment Revenue: | | | | | | | | |
| Retail operating income | | | 6.6 | % | | | 10.6 | % |
| Direct operating income | | | 13.1 | | | | 14.2 | |
| Financial Services operating income | | | 35.3 | | | | 26.5 | |
Total operating income (1) | | | 2.3 | | | | 3.9 | |
| | | | | | | | | |
(1) The percentage of total operating income is a percentage of total consolidated revenue.
CABELA'S INCORPORATED AND SUBSIDIARIES
FINANCIAL SERVICES REVENUE AS REPORTED ON A GAAP BASIS
(Dollars in Thousands)
Financial Services Information:
The following table summarizes the results of the Company’s financial services segment on a generally accepted accounting principles (“GAAP”) basis. For credit card loans securitized and sold, the loans are removed from the Company’s consolidated 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 for the credit card loans receivable the Company owns. Non-interest income on a GAAP basis includes servicing income, gains on sales of loans and income recognized on retained interests, as well as interchange income.
| | | Three Months Ended | |
| | | March 28, 2009 | | | March 29, 2008 | |
| | | | | | | |
| Interest and fee income, net of provision for loan losses | | $ | 10,989 | | | $ | 10,380 | |
| Interest expense | | | (6,173 | ) | | | (3,502 | ) |
| Net interest income, net of provision for loan losses | | | 4,816 | | | | 6,878 | |
| Non-interest income: | | | | | | | | |
| Securitization income | | | 39,034 | | | | 43,698 | |
| Other non-interest income | | | 15,033 | | | | 16,588 | |
| Total non-interest income | | | 54,067 | | | | 60,286 | |
| Less: Customer rewards costs | | | (24,989 | ) | | | (26,456 | ) |
| | | | | | | | | |
| Financial Services revenue | | $ | 33,894 | | | $ | 40,708 | |
CABELA'S INCORPORATED AND SUBSIDIARIES
MANAGED FINANCIAL SERVICES REVENUE PRESENTED ON A NON-GAAP BASIS
(Dollars in Thousands)
“Managed” credit card loans represent credit card loans receivable 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, the Company believes the following table 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 owned by the Company plus those that have been sold and includes the effect of recording the retained interest at fair value. Interest income, interchange income (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 the Company’s consolidated financial statements are not presented in this manner, management reviews the performance of the managed portfolio in order to evaluate the effectiveness of the Company’s origination and collection activities, which ultimately affects the income received for servicing the portfolio.
| | | Three Months Ended | |
| | | March 28, 2009 | | March 29, 2008 | |
| | | | | | | |
| Interest income | | $ | 56,889 | | | $ | 51,809 | |
| Interchange income, net of customer rewards costs | | | 20,244 | | | | 17,827 | |
| Other fee income | | | 11,983 | | | | 7,477 | |
| Interest expense | | | (23,922 | ) | | | (21,710 | ) |
| Provision for loan losses | | | (27,115 | ) | | | (12,402 | ) |
| Other | | | (4,185 | ) | | | (2,293 | ) |
| Managed Financial Services revenue | | $ | 33,894 | | | $ | 40,708 | |
| | | | | | | | | |
| Managed Financial Services Revenue as a Percentage of Average Managed Credit Card Loans: | |
| Interest income | | | 10.2 | % | | | 10.6 | % |
| Interchange income, net of customer rewards costs | | | 3.6 | | | | 3.6 | |
| Other fee income | | | 2.1 | | | | 1.5 | |
| Interest expense | | | (4.3 | ) | | | (4.4 | ) |
| Provision for loan losses | | | (4.8 | ) | | | (2.5 | ) |
| Other | | | (0.7 | ) | | | (0.5 | ) |
| Managed Financial Services revenue | | | 6.1 | % | | | 8.3 | % |
| | | | | | | | | |
| Average managed credit loans | | $ | 2,238,339 | | | $ | 1,962,064 | |
