DICK'S Sporting Goods Reports First Quarter Results

- Company delivered first quarter 2018 earnings per diluted share of $0.59 compared to earnings per diluted share of $0.52 in the first quarter of 2017

- Company raises its full year 2018 guidance and now expects earnings per diluted share of $2.92 to 3.12, an increase versus the previous range of $2.80 to 3.00

- eCommerce sales increased 24% during the first quarter

- Company repurchased $108 million of common stock

News provided by

DICK'S Sporting Goods, Inc.

May 30, 2018, 07:30 ET

PITTSBURGH, May 30, 2018 /PRNewswire/ -- DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the first quarter ended May 5, 2018.

First Quarter Results

The Company reported consolidated net income for the first quarter ended May 5, 2018 of $60.1 million, or $0.59 per diluted share. The Company reported consolidated net income for the first quarter ended April 29, 2017 of $58.2 million, or $0.52 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the first quarter ended April 29, 2017 of $60.3 million, or $0.54 per diluted share. First quarter 2017 non-GAAP results excluded costs incurred to convert former The Sports Authority ("TSA") stores. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Net sales for the first quarter of 2018 increased 4.6% to approximately $1.91 billion. Adjusted for the calendar shift due to the 53^rd week in 2017, consolidated same store sales decreased 2.5% on a 13-week to 13-week comparable basis. Based on an unshifted calendar, consolidated same store sales for the first quarter decreased 0.9%. Consolidated same store sales were impacted by a continued deceleration in hunt and electronics sales, as well as colder spring weather, which resulted in a delayed start to key outdoor sports and activities. First quarter 2017 consolidated same store sales increased 2.4%.

"Our strong first quarter earnings reflect improved execution against our merchandising strategy, which resulted in higher merchandise margins. Product newness, strength in our private brands and a more refined assortment led to a much healthier business, with fewer promotions and cleaner inventory throughout the quarter. We believe these benefits will continue as we further optimize our assortments," said Edward W. Stack, Chairman and Chief Executive Officer. "We are also continuing to see the results of investments in our digital experience, and we will continue to invest as we build the best omni-channel experience for all athletes."

"This is an exciting time for our Company as we focus on driving executional excellence, delivering an improved shopping experience and differentiating ourselves to create a premier omni-channel experience," added Lauren R. Hobart, President of DICK'S Sporting Goods. "We continue to see significant opportunity to drive competitive marketplace advantage and win with our athletes longer-term."

Omni-channel Development

Adjusted for the calendar shift due to the 53^rd week in 2017, eCommerce sales for the first quarter of 2018 increased 24%. eCommerce penetration for the first quarter of 2018 was approximately 11% of total net sales, compared to approximately 9% during the first quarter of 2017.

In the first quarter, the Company opened eight new DICK'S Sporting Goods stores. As of May 5, 2018, the Company operated 724 DICK'S Sporting Goods stores in 47 states, with approximately 38.4 million square feet, 94 Golf Galaxy stores in 32 states, with approximately 2.0 million square feet, and 35 Field & Stream stores in 16 states, with approximately 1.7 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."

Balance Sheet

The Company ended the first quarter of 2018 with approximately $105 million in cash and cash equivalents and approximately $280 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the Company continued to invest in omni-channel growth, while returning over $446 million to shareholders through share repurchases and quarterly dividends.

Total inventory decreased 3.8% at the end of the first quarter of 2018 as compared to the end of the first quarter of 2017.

Capital Allocation

On May 17, 2018, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.225 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on June 29, 2018 to stockholders of record at the close of business on June 8, 2018.

During the first quarter of 2018, the Company repurchased approximately 3.3 million shares of its common stock at an average cost of $32.33 per share, for a total cost of $107.9 million. The Company has approximately $650 million remaining under its authorization that extends through 2021.

Full Year 2018 Outlook

Based on an estimated 101 million diluted shares outstanding, the Company currently anticipates reporting earnings per diluted share in the range of $2.92 to 3.12, compared to the previous range of $2.80 to 3.00. The Company's earnings per diluted share guidance is not dependent upon share repurchases beyond the $107.9 million executed through the first quarter of fiscal 2018. The Company reported GAAP and non-GAAP earnings per diluted share of $3.01 for the 53 weeks ended February 3, 2018.
Consolidated same store sales are currently expected to be in the range of approximately flat to a low single-digit decline on a 52-week to 52-week comparative basis, compared to a decline of 0.3% in 2017.
The Company expects to open 19 new DICK'S Sporting Goods stores and relocate four DICK'S Sporting Goods stores in 2018. The Company does not expect to open any new Field & Stream or Golf Galaxy stores in 2018.
In 2018, the Company anticipates net capital expenditures to be approximately $250 million. In 2017, net capital expenditures were $373 million.

Conference Call Info

The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the first quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at investors.DICKS.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software.

In addition to the webcast, the call can be accessed by dialing (877) 443-5743 (domestic callers) or (412) 902-6617 (international callers) and requesting the "DICK'S Sporting Goods Earnings Call."

For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10119905. The dial-in replay will be available for approximately 30 days following the live call.

Non-GAAP Financial Measures

In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company reports certain financial results that differ from what is reported under GAAP. These non-GAAP financial measures include consolidated non-GAAP net income, and non-GAAP earnings per diluted share, which management believes provides investors with useful supplemental information to evaluate the Company's ongoing operations and to compare with past and future periods. Management also uses certain non-GAAP measures internally for forecasting, budgeting, and measuring its operating performance. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. A reconciliation of the Company's non-GAAP measures to the most directly comparable GAAP financial measures are provided below and on the Company's website at investors.DICKS.com.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond our control. Our future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon by investors as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the Company's future performance, including outlook for earnings and sales in 2018; anticipated store openings and store relocations; capital expenditures; and share repurchases.

Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: changes in consumer discretionary spending; our eCommerce platform not producing the anticipated benefits within the expected time frame or at all; the streamlining of the Company's vendor base and execution of the Company's new merchandising strategy not producing the anticipated benefits within the expected time frame or at all; the amount that we devote to strategic investments and the timing and success of those investments; the integration of strategic acquisitions being more difficult, time-consuming, or costly than expected; negative reactions to our policies related to the sale of firearms and accessories; vendors continuing to sell or increasingly selling their products directly to customers or through broadened or alternative distribution channels; inventory turn; changes in the competitive market and competition amongst retailers, including an increase in promotional activity; changes in consumer demand or shopping patterns and our ability to identify new trends and have the right trending products in our stores and on our website; changes in existing tax, labor and other laws and regulations, including those changing tax rates and imposing new taxes and surcharges; limitations on the availability of attractive retail store sites; omni-channel growth; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings and new retail concepts; website downtime, disruptions or other problems with our eCommerce platform, including interruptions, delays or downtime caused by high volumes of users or transactions, deficiencies in design or implementation, or platform enhancements; disruptions or other problems with our information systems; factors affecting our vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, our Chairman and Chief Executive Officer; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of our business; and risks associated with being a controlled company.

For additional information on these and other factors that could affect our actual results, see our risk factors, which may be amended from time to time, set forth in our filings with the Securities and Exchange Commission ("SEC"), including our most recent Annual Report filed with the SEC on March 30, 2018. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation. Forward-looking statements included in this release are made as of the date of this release.

About DICK'S Sporting Goods, Inc.

Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of May 5, 2018, the Company operated more than 720 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated associates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.

Headquartered in Pittsburgh, PA, DICK'S also owns and operates Golf Galaxy and Field & Stream specialty stores, as well as DICK'S Team Sports HQ, an all-in-one youth sports digital platform offering a comprehensive range of services including technology solutions such as online registration and league management services, and mobile apps for scheduling, communications and live scorekeeping; team gear such as uniforms and equipment, fan wear, and access to donations and sponsorships. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. For more information, visit the Press Room or Investor Relations pages at dicks.com.

Contacts:
Investor Relations:
Steve West, Vice President of Investor Relations
DICK'S Sporting Goods, Inc.
[email protected]
(724) 273-3400

Media Relations:
(724) 273-5552 or [email protected]

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)

	13 Weeks Ended
	May 5, 2018		% of Sales⁽¹⁾		April 29, 2017		% of Sales ⁽¹⁾

Net sales	$	1,909,719	100.00	%	$	1,825,252	100.00	%
Cost of goods sold, including occupancy and distribution costs ⁽²⁾	1,349,350		70.66		1,283,387		70.31

GROSS PROFIT	560,369		29.34		541,865		29.69

Selling, general and administrative expenses	470,328		24.63		439,341		24.07
Pre-opening expenses	2,709		0.14		12,456		0.68

INCOME FROM OPERATIONS	87,332		4.57		90,068		4.93

Interest expense	2,656		0.14		1,264		0.07
Other expense (income)	886		0.05		(2,879)		(0.16)

INCOME BEFORE INCOME TAXES	83,790		4.39		91,683		5.02

Provision for income taxes	23,705		1.24		33,488		1.83

NET INCOME	$	60,085	3.15	%	$	58,195	3.19	%

EARNINGS PER COMMON SHARE:
Basic	$	0.59			$	0.53
Diluted	$	0.59			$	0.52

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	101,384				110,441
Diluted	102,153				111,406

Cash dividend declared per share	$	0.225			$	0.170

⁽¹⁾ Column does not add due to rounding.
⁽²⁾ Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost and net realizable value); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)

	May 5, 2018		April 29, 2017		February 3, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	104,599	$	108,400	$	101,253
Accounts receivable, net	67,225		85,918		60,107
Income taxes receivable	4,018		2,046		4,433
Inventories, net	1,842,897		1,916,508		1,711,103
Prepaid expenses and other current assets	144,827		141,744		129,189
Total current assets	2,163,566		2,254,616		2,006,085

Property and equipment, net	1,644,388		1,568,523		1,677,340
Intangible assets, net	134,979		139,447		136,587
Goodwill	250,476		245,059		250,476
Other assets:
Deferred income taxes	11,842		10,546		13,639
Other	114,163		114,533		119,812
Total other assets	126,005		125,079		133,451
TOTAL ASSETS	$	4,319,414	$	4,332,724	$	4,203,939

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	791,646	$	930,291	$	843,075
Accrued expenses	302,985		356,478		354,181
Deferred revenue and other liabilities	183,042		183,949		212,080
Income taxes payable	29,698		43,117		10,476
Current portion of other long-term debt and leasing obligations	5,184		648		5,202
Total current liabilities	1,312,555		1,514,483		1,425,014
LONG-TERM LIABILITIES:
Revolving credit borrowings	280,100		92,450		—
Other long-term debt and leasing obligations	58,769		4,520		60,084
Deferred income taxes	17,190		4,544		10,232
Deferred rent and other liabilities	752,590		755,903		767,108
Total long-term liabilities	1,108,649		857,417		837,424
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock	754		858		783
Class B common stock	246		247		247
Additional paid-in capital	1,185,522		1,148,022		1,177,778
Retained earnings	2,262,552		1,993,426		2,205,651
Accumulated other comprehensive loss	(100)		(159)		(78)
Treasury stock, at cost	(1,550,764)		(1,181,570)		(1,442,880)
Total stockholders' equity	1,898,210		1,960,824		1,941,501
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	4,319,414	$	4,332,724	$	4,203,939

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)

	13 Weeks Ended
	May 5, 2018		April 29, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	60,085	$	58,195
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation and amortization	56,433		53,044
Deferred income taxes	1,557		39,925
Stock-based compensation	11,666		9,147
Other non-cash items	233		180
Changes in assets and liabilities:
Accounts receivable	(2,463)		1,993
Inventories	(112,332)		(277,876)
Prepaid expenses and other assets	(4,815)		(26,662)
Accounts payable	19,958		209,201
Accrued expenses	(39,322)		(21,533)
Income taxes payable / receivable	19,637		(9,856)
Deferred construction allowances	5,734		25,117
Deferred revenue and other liabilities	(35,470)		(24,403)
Net cash (used in) provided by operating activities	(19,099)		36,472
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(49,349)		(113,892)
Deposits and purchases of other assets	—		(2,344)
Net cash used in investing activities	(49,349)		(116,236)
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings	692,800		645,200
Revolving credit repayments	(412,700)		(552,750)
Payments on other long-term debt and leasing obligations	(1,333)		(157)
Construction allowance receipts	—		—
Proceeds from exercise of stock options	—		13,592
Minimum tax withholding requirements	(3,919)		(5,540)
Cash paid for treasury stock	(107,917)		(23,197)
Cash dividend paid to stockholders	(23,728)		(19,287)
Decrease in bank overdraft	(71,387)		(34,447)
Net cash provided by financing activities	71,816		23,414
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(22)		(27)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	3,346		(56,377)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	101,253		164,777
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	104,599	$	108,400

Store Count and Square Footage

The stores that opened during the first quarter of 2018 are as follows:

Store	Market	Concept
Baxter, MN	Baxter	DICK'S Sporting Goods
St. Petersburg, FL	Tampa	DICK'S Sporting Goods
Santa Maria, CA	Santa Maria	DICK'S Sporting Goods
Lancaster, PA	Lancaster	DICK'S Sporting Goods
Pace, FL	Pensacola	DICK'S Sporting Goods
Mesquite, TX	Dallas	DICK'S Sporting Goods
Waco, TX	Waco	DICK'S Sporting Goods
North Little Rock, AR	Little Rock	DICK'S Sporting Goods

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Store Count:

	Fiscal 2018			Fiscal 2017
	DICK'S Sporting Goods⁽¹⁾	Specialty Concept Stores⁽¹⁾	Total	DICK'S Sporting Goods⁽¹⁾	Specialty Concept Stores⁽¹⁾	Total
Beginning stores	716	129	845	676	121	797
Q1 New stores	8	—	8	15	10	25
Closed stores	—	—	—	—	1	1
Ending stores	724	129	853	691	130	821

Relocated stores	2	—	2	2	—	2


Square Footage:
(in millions)

				DICK'S Sporting Goods⁽¹⁾	Specialty Concept Stores⁽¹⁾	Total
Q1 2017				36.8	3.5	40.3
Q2 2017				37.4	3.5	40.9
Q3 2017				38.2	3.7	41.9
Q4 2017				38.0	3.7	41.7
Q1 2018				38.4	3.7	42.1

⁽¹⁾ Includes the Company's Golf Galaxy, Field & Stream and other specialty concept stores. In some markets we operate adjacent stores on the same property with a pass-through for customers. We refer to this format as a "combo store" and include combo store openings within both the DICK'S Sporting Goods and specialty concept store reconciliations, as applicable. As of May 5, 2018, the Company operated 20 combo stores.

DICK'S SPORTING GOODS, INC.
GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED
(Dollars in thousands, except per share amounts)

	13 Weeks Ended April 29, 2017

	Pre-opening expenses			Income before income taxes			Net income ⁽²⁾			Earnings per diluted share
GAAP Basis	$	12,456		$	91,683		$	58,195		$	0.52
% of Net Sales	0.68		%	5.02		%	3.19		%
TSA conversion costs ⁽¹⁾	(3,474)			3,474			2,154
Non-GAAP Basis	$	8,982		$	95,157		$	60,349		$	0.54
% of Net Sales	0.49		%	5.21		%	3.31		%

⁽¹⁾Costs related to converting former TSA stores.
⁽²⁾The provision for income taxes for non-GAAP adjustments was calculated at 38%, which approximated the Company's blended tax rate.

	53 Weeks Ended February 3, 2018

	Cost of goods sold			Selling, general and administrative expenses			Pre- opening expenses			Other income		Income before income taxes			Net income⁽⁸⁾			Earnings per diluted share
GAAP Basis	$	6,101,412		$	1,982,363		$	29,123		$	(31,810)	$	501,337		$	323,445		$	3.01
% of Net Sales	71.03		%	23.08		%	0.34		%	(0.37)%		5.84		%	3.77		%
Corporate restructuring charge ⁽¹⁾	—			(7,077)			—			—		7,077			4,388
TSA conversion costs⁽²⁾	—			—			(3,474)			—		3,474			2,154
Contract termination payment ⁽³⁾	—			—			—			12,000		(12,000)			(12,000)
Sales tax refund ⁽⁴⁾	—			—			—			8,104		(8,104)			(5,024)
Loyalty program enhancement costs ⁽⁵⁾	(11,478)			—			—			—		11,478			7,231
Litigation contingency ⁽⁶⁾	—			(6,592)			—			—		6,592			4,153
Tax Act impact ⁽⁷⁾	—			—			—			—		—			(24)
Non-GAAP Basis	$	6,089,934		$	1,968,694		$	25,649		$	(11,706)	$	509,854		$	324,323		$	3.01
% of Net Sales	70.89		%	22.92		%	0.30		%	(0.14)%		5.94		%	3.78		%

⁽¹⁾Severance, other employee-related costs and asset write-downs related to corporate restructuring.
⁽²⁾Costs related to converting former TSA stores.
⁽³⁾Contract termination payment. There was no related tax expense as the Company utilized net capital loss carryforwards that were previously subject to a valuation allowance.
⁽⁴⁾Multi-year sales tax refund.
⁽⁵⁾Transition costs incurred to enhance the Company's Scorecard loyalty program.
⁽⁶⁾Costs related to a litigation contingency.
⁽⁷⁾Change to blended tax rate for adjustments recorded prior to enactment of the Tax Act.
⁽⁸⁾The provision for income taxes for Non-GAAP adjustments was calculated at the Company's approximate blended tax rate, unless otherwise noted.

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.

	13 Weeks Ended
	May 5, 2018		April 29, 2017
	(dollars in thousands)
Gross capital expenditures	$	(49,349)	$	(113,892)
Proceeds from sale-leaseback transactions	—		—
Deferred construction allowances	5,734		25,117
Construction allowance receipts	—		—
Net capital expenditures	$	(43,615)	$	(88,775)