Big Lots Reports Third Quarter Adjusted Results Consistent With Guidance

COLUMBUS, Ohio, Dec. 4, 2015 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported a loss from continuing operations of $1.7 million, or $0.03 per share, for the third quarter of fiscal 2015 ended October 31, 2015. This result includes an after tax expense of $1.0 million, or $0.02 per share, associated with the termination of a legacy pension plan. Excluding this expense, adjusted loss from continuing operations totaled $0.7 million, or $0.01 per share (see non-GAAP table included later in this release), which compares to our guidance in the range of a loss of $0.04 per share to income of $0.01 per diluted share. This result compares to a loss from continuing operations of $0.06 per share for the third quarter of fiscal 2014. Comparable store sales for stores open at least fifteen months increased 2.6% for the third quarter of fiscal 2015, compared to our guidance of an increase of 2% to 3%. Net sales for the third quarter of fiscal 2015 increased 0.8% to $1,116.5 million, as our comparable store sales increase was partially offset by a lower store count compared to last year.

For the year-to-date period ended October 31, 2015, income from continuing operations totaled $48.3 million, or $0.94 per diluted share. Excluding year-to-date non-recurring legal expense and legacy pension termination costs, adjusted income from continuing operations for the year-to-date period ended October 31, 2015, totaled $52.0 million, or $1.01 per diluted share (non-GAAP). This result represents a 33% increase compared with income from continuing operations of $42.7 million, or $0.76 per diluted share, for the same period in fiscal 2014.

Commenting on today's release, David Campisi, Chief Executive Officer and President of Big Lots, stated, "I'm pleased with the results we reported today as Jennifer continues to respond positively to our strategic improvements in merchandising, marketing, and in-store execution. For the seventh consecutive quarter, our sales comps were positive with notable strength in our ownable and winnable merchandise categories and we delivered upon our financial commitments. Our inventory levels were lean and on forecast to end Q3 and we are well-positioned by merchandise category for the all-important Q4 selling season."

THIRD QUARTER HIGHLIGHTS

• Adjusted loss from continuing operations of $0.01 per share (non-GAAP), compared to a loss from continuing operations of $0.06 per share last year
• Comparable store sales increase of 2.6% representing the seventh consecutive quarter of comp store sales growth

Inventory and Cash Management

Inventory ended the third quarter of fiscal 2015 at $1,047 million, compared to $1,075 million for the third quarter of fiscal 2014. Inventory levels per store were flat to last year with the overall $28 million reduction directly attributable to a lower overall store count.

We ended the third quarter of fiscal 2015 with $62 million of Cash and Cash Equivalents and $335 million of borrowings under our credit facility compared to $62 million of Cash and Cash Equivalents and $283 million of borrowings under our credit facility as of the end of the third quarter of fiscal 2014. Our growth in year-over-year borrowings resulted from returning a higher amount of cash to shareholders (dividends and share repurchases) and investing in capital expenditures to support our strategic plan.

Total Cash Returned To Shareholders

As announced in a separate press release earlier today, on December 2, 2015, our Board of Directors declared a quarterly cash dividend of $0.19 per common share. This dividend payment of approximately $9.3 million is payable on December 31, 2015, to shareholders of record as of the close of business on December 17, 2015.

Year-to-date for fiscal 2015, we have returned $229 million to shareholders in the form of a prior share repurchase program ($200 million) and quarterly dividend payments ($29 million).

FISCAL Q4 2015 GUIDANCE

• Affirms Q4 guidance for adjusted income from continuing operations of $1.95 to $2.00 per diluted share (non-GAAP), an 11% to 14% increase compared to income from continuing operations of $1.76 per diluted share for the same period last year
• Affirms Q4 guidance for comparable store sales increase in the range of 1% to 2%

For the fourth quarter of fiscal 2015, we estimate adjusted income from continuing operations will be in the range of $1.95 to $2.00 per diluted share (non-GAAP), compared to income from continuing operations of $1.76 per diluted share for the fourth quarter of fiscal 2014. This guidance is based on an estimated comparable store sales increase in the 1% to 2% range compared to a 2.9% comparable store sales increase in the fourth quarter of fiscal 2014. We expect operating profit improvement driven by higher sales, a flat gross margin rate, and a lower adjusted expense rate.

FISCAL 2015 GUIDANCE

• Updates outlook for fiscal 2015 adjusted income from continuing operations to be in the range of $2.95 to $3.00 per diluted share (non-GAAP), representing a 20% to 22% increase compared to fiscal 2014 income from continuing operations of $2.46 per diluted share
• Affirms comparable store sales in the range of a low single digit increase for fiscal 2015
• Affirms cash flow of $175 million for fiscal 2015

Based on operating results for the first three quarters and our expectations for the fourth quarter of fiscal 2015 noted above, we now estimate fiscal 2015 adjusted income from continuing operations to be in the range of $2.95 to $3.00 per diluted share (non-GAAP) compared to our previous guidance of $2.90 to $3.00 per diluted share (non-GAAP) and income from continuing operations of $2.46 per diluted share for fiscal 2014. This outlook is based on a comparable store sales increase in the low single digit range, total sales approximately flat, a slightly higher gross margin rate, and a lower adjusted expense rate. We estimate this financial performance will result in cash flow (cash provided by operating activities less cash used in investing activities) of approximately $175 million.

Conference Call/Webcast

We will host a conference call today at 8:00 a.m. to discuss our financial results for the third quarter and provide commentary on our outlook for fiscal 2015. We invite you to listen to the webcast of the conference call through the Investor Relations section of our website http://www.biglots.com. If you are unable to join the live webcast, an archive of the call will be available through the Investor Relations section of our website http://www.biglots.com/ after 12:00 noon today and will remain available through midnight on Friday, December 18, 2015. A replay of this call will also be available beginning today at 12:00 noon through December 18 by dialing 1.888.203.1112 (Toll Free USA and Canada) or 1.719.457.0820 (International), and entering Replay Passcode 409848. All times are Eastern Time.

Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is a unique, non-traditional, discount retailer operating 1,463 BIG LOTS stores in 47 states with product assortments in the merchandise categories of Food, Consumables, Furniture, Seasonal, Soft Home, Hard Home, and Electronics & Accessories. Our vision is to be recognized for providing an outstanding shopping experience for our customers, valuing and developing our associates, and creating growth for our shareholders. Big Lots supports the communities it serves through the Big Lots Foundation, a charitable organization focused on four areas of need: hunger, housing, healthcare, and education. For more information about the Company, visit www.biglots.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.

Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, current economic and credit conditions, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

BIG LOTS, INC. AND SUBSIDIARIES 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data) 
(Unaudited)

The following tables reconcile: (1) selling and administrative expenses, selling and administrative expense rate, operating profit (loss), operating profit (loss) rate, income tax expense (benefit), effective income tax rate, income (loss) from continuing operations, net income (loss), diluted earnings (loss) per share from continuing operations, and diluted earnings (loss) per share for the third quarter of 2015 and the year-to-date 2015 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit (loss), adjusted operating profit (loss) rate, adjusted income tax expense (benefit), adjusted effective income tax rate, adjusted income (loss) from continuing operations, adjusted net income (loss), adjusted diluted earnings (loss) per share from continuing operations, and adjusted diluted earnings (loss) per share (non-GAAP financial measures).

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted loss from continuing operations, adjusted net loss, adjusted diluted earnings (loss) per share from continuing operations, and adjusted diluted earnings (loss) per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") items associated with the Company's decision to freeze benefits and terminate the qualified defined benefit pension plan, including curtailment and settlement charges and professional fees in support of the  actions to facilitate the plan termination, which totaled $1,619 ($978, net of tax).

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted income from continuing operations, adjusted net income, adjusted diluted earnings per share from continuing operations, and adjusted diluted earnings per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"): (1) a pretax accrual of a loss contingency associated with merchandise-related legal matters of $4,487 ($2,711, net of tax); and (2) items associated with the Company's decision to freeze benefits and terminate the qualified defined benefit pension plan, including curtailment and settlement charges and professional fees in support of the  actions to facilitate the plan termination, which totaled $1,619 ($978, net of tax). 

Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.

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SOURCE Big Lots, Inc.

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