DICK'S Sporting Goods Reports Fourth Quarter and Full Year Results

"Our 2022 results provide a strong foundation upon which we will build in 2023 and well into the future. In 2023, we will grow both our sales and earnings through positive comps, a return to square footage growth and higher merchandise margin. Our consistent performance and financial strength position us to increase the rate of investment in our business to fuel long-term growth opportunities, and also return significant capital to shareholders. The step-change increase in our dividend clearly reflects our strong conviction in our structurally higher sales and earnings."

"Our fourth quarter was a strong ending to another strong year. We achieved record quarterly sales and our comps grew 5.3% as we continued to gain market share. As planned, we continued to address targeted inventory overages, and as a result our inventory is in great shape as we start 2023. We couldn't be more excited about our spring assortment."

Fourth Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change ⁽¹⁾

January 28,
2023

January 29,
2022

$               3,597

$                3,352

$        245

7.3 %

Comparable store sales ⁽²⁾

5.3 %

Income before income taxes (% of net sales) ⁽³⁾

8.9 %

13.7 %

(482) bps

Non-GAAP income before income taxes (% of net sales) ^{(3) (4)}

9.7 %

14.0 %

(423) bps

Net income

$                   236

$                   346

$       (110)

(32) %

Non-GAAP net income ⁽⁴⁾

$                   258

$                   352

$         (94)

(27) %

Earnings per diluted share

$                  2.60

$                  3.16

$      (0.56)

(18) %

Non-GAAP earnings per diluted share ⁽⁴⁾

$                  2.93

$                  3.64

$      (0.71)

(20) %

Year-to-Date Operating Results

(dollars in millions, except per share data)

52 Weeks Ended

Change ⁽¹⁾

January 28,
2023

January 29,
2022

Net sales

$             12,368

$              12,293

$           75

0.6 %

Comparable store sales ⁽²⁾

(0.5) %

27.4 %

Income before income taxes (% of net sales) ⁽³⁾

11.2 %

16.2 %

(503) bps

Non-GAAP income before income taxes (% of net sales) ^{(3) (4)}

11.4 %

16.5 %

(504) bps

Net income

$                1,043

$                1,520

$       (477)

(31) %

Non-GAAP net income ⁽⁴⁾

$                1,065

$                1,543

$       (477)

(31) %

Earnings per diluted share

$                10.78

$                13.87

$      (3.09)

(22) %

Non-GAAP earnings per diluted share ⁽⁴⁾

$                12.04

$                15.70

$      (3.66)

(23) %

Balance Sheet

(in millions)

As of

January 28, 2023

As of
January 29, 2022

$

Change ⁽¹⁾

Cash and cash equivalents

$                1,924

$               2,643

$         (719)

(27) %

Inventories, net

$                2,831

$               2,298

$          533

23 %

Total debt ⁽⁶⁾

$                1,541

$               1,931

$         (390)

(20) %

Capital Allocation

(in millions)

$

Change ⁽¹⁾

% Change ⁽¹⁾

January 29,
2022

Share repurchases ⁽⁷⁾

$                 427

$               1,176

$         (750)

(64) %

Dividends paid ⁽⁸⁾

$                 163

$                  603

$         (440)

(73) %

Gross capital expenditures

$                 364

$                  308

$            56

18 %

Net capital expenditures ⁽⁵⁾

$                 328

$                  268

$            60

22 %

 Principal paid in connection with exchange of Convertible Senior Notes  ⁽⁹⁾

$                 516

$                    —

$          516

Notes

^1. 

Column may not recalculate due to rounding.

^2. 

Beginning in fiscal 2022, the Company revised its method for calculating comparable store sales by including relocated store locations. Prior year fiscal 2021 information was revised to reflect this change for comparability purposes. See additional details as furnished in Exhibit 99.2 of the Company's Form 8-K, which was filed with the SEC on March 8, 2022. Comparable store sales information prior to fiscal 2021 has not been revised to reflect this change in methodology.

^3. 

Also referred to by management as earnings before income taxes margin ("EBT margin").

^4. 

During the fourth quarter of 2022, the Company decided to exit the Field & Stream brand. As a result, the Company closed 12 of the remaining 17 stores for conversion into eight DICK'S House of Sport stores and four expanded DICK'S Sporting Goods stores during the fourth quarter of 2022 and incurred pre-tax charges totaling $30.1 million. For additional information see New Accounting Pronouncement later in the release and GAAP to non-GAAP reconciliations included in a table under the heading "GAAP to Non-GAAP Reconciliations."

^5. 

For additional information, see GAAP to non-GAAP reconciliations included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

^6.

Fiscal 2022 and 2021 includes debt with a carrying value of $1,482 million and $1,481 million, respectively, from the Company's issuance of the Senior Notes during the fourth quarter of 2021. Fiscal 2022 and 2021 includes debt with a carrying value of $58 million and $449 million, respectively, from the Company's issuance of the Convertible Senior Notes during fiscal 2020. The Company had no outstanding borrowings under its revolving credit facility in 2022 and 2021.

^7.

During fiscal 2022 the Company repurchased 5.0 million shares of its common stock at an average price of $85.84 per share, for a total cost of $427 million under its share repurchase program. The Company has $1.4 billion remaining under its authorization as of January 28, 2023. The Company also paid $31.7 million during fiscal 2022 for shares repurchased during 2021.

^8.

During the fourth quarter of fiscal 2022 and 2021, the Company declared and paid quarterly dividends of $0.4875 and $0.4375 per share, respectively, on the Company's Common Stock and Class B Common Stock. In fiscal 2021, the Company also declared and paid a special dividend in the amount of $5.50 per share on the Company's Common Stock and Class B Common Stock.

^9.

During fiscal 2022 the Company exchanged $516 million aggregate principal amount of Convertible Senior Notes and unwound the corresponding portion of the convertible bond hedge and warrants for $516 million of cash and 9.8 million shares of our common stock. On February 9, 2023, the Company provided irrevocable notice to the noteholders of our Convertible Senior Notes of our election to redeem the remaining $59 million aggregate principal in shares. The Company intends to offset share dilution from this settlement through share repurchases using excess cash, free cash flow or borrowings on our Credit Facility. See additional details as furnished in Exhibit 99.1 of the Company's Form 8-K, which was filed with the SEC on February 9, 2023.

Comparable store sales

•  Flat to positive 2.0% on a 52-week basis

Capital expenditures

•  $670 to 720 million on a gross basis

•  $550 to 600 million on a net basis

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

13 Weeks Ended

January 28,
2023

% of

Sales ⁽¹⁾

January 29,
2022

% of

Sales ⁽¹⁾

Net sales

$     3,596,713

100.00 %

$     3,352,160

100.00 %

Cost of goods sold, including occupancy and distribution costs

2,430,674

67.58

2,092,555

62.42

GROSS PROFIT

1,166,039

32.42

1,259,605

37.58

Selling, general and administrative expenses

853,054

23.72

783,578

23.38

Pre-opening expenses

2,129

0.06

755

0.02

INCOME FROM OPERATIONS

310,856

8.64

475,272

14.18

Interest expense

17,953

0.50

16,867

0.50

Other income

(27,508)

(0.76)

(1,881)

(0.06)

INCOME BEFORE INCOME TAXES

320,411

8.91

460,286

13.73

Provision for income taxes

84,790

2.36

114,193

3.41

NET INCOME

$        235,621

6.55 %

$       346,093

10.32 %

EARNINGS PER COMMON SHARE:

Basic

$              2.91

$             4.33

Diluted

$              2.60

$             3.16

NUMERATOR USED TO COMPUTE EARNINGS PER COMMON SHARE:

Basic

$         235,621

$       346,093

Diluted

$         238,007

$       346,093

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

81,107

79,933

Diluted

91,395

109,366

⁽¹⁾ Column does not add due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

52 Weeks Ended

January 28,
2023

% of

Sales ⁽¹⁾

January 29,
2022

% of

Sales 

Net sales

$   12,368,198

100.00 %

$   12,293,368

100.00 %

Cost of goods sold, including occupancy and distribution costs

8,083,640

65.36

7,581,482

61.67

GROSS PROFIT

4,284,558

34.64

4,711,886

38.33

Selling, general and administrative expenses

2,805,462

22.68

2,664,083

21.67

Pre-opening expenses

16,077

0.13

13,300

0.11

INCOME FROM OPERATIONS

1,463,019

11.83

2,034,503

16.55

Interest expense

95,220

0.77

57,839

0.47

Other income

(15,949)

(0.13)

(17,774)

(0.14)

INCOME BEFORE INCOME TAXES

1,383,748

11.19

1,994,438

16.22

Provision for income taxes

340,610

2.75

474,567

3.86

NET INCOME

$     1,043,138

8.43 %

$     1,519,871

12.36 %

EARNINGS PER COMMON SHARE:

Basic

$            13.43

$            18.27

Diluted

$            10.78

$            13.87

NUMERATOR USED TO COMPUTE EARNINGS PER COMMON SHARE:

    Basic

$      1,043,138

$      1,519,871

    Diluted

$      1,070,198

$      1,519,871

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

77,672

83,183

Diluted

99,274

109,578

⁽¹⁾ Column does not add due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands)

January 28,
2023

January 29,
2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$         1,924,386

$         2,643,205

Accounts receivable, net

71,286

68,263

Income taxes receivable

8,187

1,978

Inventories, net

2,830,917

2,297,609

Prepaid expenses and other current assets

128,410

95,601

Total current assets

4,963,186

5,106,656

Property and equipment, net

1,312,988

1,319,681

Operating lease assets

2,138,366

2,044,819

Intangible assets, net

60,364

86,767

Goodwill

245,857

245,857

Deferred income taxes

41,189

35,024

Other assets

230,246

202,872

TOTAL ASSETS

$         8,992,196

$         9,041,676

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$         1,206,066

$         1,281,322

Accrued expenses

508,573

620,143

Operating lease liabilities

546,755

480,318

Income taxes payable

29,624

13,464

Deferred revenue and other liabilities

350,428

317,433

Total current liabilities

2,641,446

2,712,680

LONG-TERM LIABILITIES:

Revolving credit borrowings

—

—

 Senior notes

1,482,336

1,481,443

 Convertible senior notes

58,271

449,287

Long-term operating lease liabilities

2,117,773

2,099,146

Other long-term liabilities

167,747

197,534

Total long-term liabilities

3,826,127

4,227,410

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

585

520

Class B common stock

236

236

Additional paid-in capital

1,416,847

1,488,834

Retained earnings

4,878,404

3,956,602

 Accumulated other comprehensive loss

(252)

(82)

Treasury stock, at cost

(3,771,197)

(3,344,524)

Total stockholders' equity

2,524,623

2,101,586

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$         8,992,196

$         9,041,676

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

Fiscal Year Ended

January 28,
2023

January 29,
2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$         1,043,138

$         1,519,871

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

365,475

322,551

Amortization of deferred financing fees and debt discount

4,250

30,794

Deferred income taxes

23,100

16,451

Stock-based compensation

50,603

52,800

Other, net

15,306

—

Changes in assets and liabilities:

Accounts receivable

(13,558)

2,011

Inventories

(533,308)

(344,041)

Prepaid expenses and other assets

(9,690)

(16,047)

Accounts payable

13,983

37,782

Accrued expenses

(74,205)

61,307

Income taxes payable / receivable

12,256

(23,115)

Construction allowances provided by landlords

36,100

40,195

Deferred revenue and other liabilities

22,689

20,648

Operating lease assets and liabilities

(34,258)

(104,335)

Net cash provided by operating activities

921,881

1,616,872

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(364,075)

(308,261)

Proceeds from sale of other assets

14,261

9,671

Deposits and other investing activities

(43,080)

(45,389)

Net cash used in investing activities

(392,894)

(343,979)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of convertible senior notes

(515,865)

—

Transaction costs for debt issuance

—

(15,268)

Proceeds from senior notes, net of debt discount

—

1,496,671

Payments on finance lease obligations

(740)

(726)

Proceeds from exercise of stock options

23,681

26,348

Minimum tax withholding requirements

(43,936)

(32,597)

Cash paid for treasury stock

(458,456)

(1,144,633)

Cash dividends paid to stockholders

(163,081)

(602,964)

Decrease in bank overdraft

(89,239)

(14,553)

Net cash used in financing activities

(1,247,636)

(287,722)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(170)

(33)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(718,819)

985,138

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

2,643,205

1,658,067

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         1,924,386

$         2,643,205

13 Weeks Ended January 28, 2023

Gross profit

Selling,
general and
administrative
expenses

Income before
income taxes

Net

 income ⁽³⁾

After tax
interest from
Convertible
Senior Notes ⁽³⁾

Numerator used
to compute
earnings per
diluted share

Weighted average
diluted shares

Earnings per
diluted share

GAAP Basis

$ 1,166,039

$       853,054

$  320,411

$  235,621

$      2,386

$   238,007

91,395

$       2.60

% of Net Sales

32.42 %

23.72 %

8.91 %

6.55 %

0.07 %

6.62 %

Convertible Senior Notes ⁽¹⁾

—

—

—

—

(2,386)

(2,386)

(3,381)

Field & Stream exit charges ⁽²⁾

740

(29,340)

30,080

22,259

—

22,259

—

Non-GAAP Basis

$ 1,166,779

$       823,714

$  350,491

$  257,880

$            —

$   257,880

88,014

$       2.93

% of Net Sales

32.44 %

22.90 %

9.74 %

7.17 %

— %

7.17 %

⁽¹⁾

Adjustment eliminates the impact of assumed share settlement of the Convertible Senior Notes as required by the if-converted method. During the 13 weeks ended January 28, 2023, the Company settled $95.3 million of its Convertible Senior Notes without dilutive effect, as the related principal was settled in cash and due to the shares received from its convertible bond hedge. The Company does not expect the shares underlying the remaining $59.1 million will have a dilutive effect upon conversion and believes reflecting the notes as debt more closely represents the economics of the transaction upon future conversion.

⁽²⁾

Field & Stream exit charges of $30.1 million included $28.5 million of non-cash impairments of store assets, $0.8 million of severance and a $0.7 million inventory write-down related to our closure of 12 Field & Stream stores in the fourth quarter of fiscal 2022.

⁽³⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26% which approximates the Company's blended tax rate.

52 Weeks Ended January 28, 2023

Gross profit

Selling,
general and
administrative
expenses

Income before
income taxes

Net

 income ⁽³⁾

After tax
interest from
Convertible
Senior Notes ⁽³⁾

Numerator used
to compute
earnings per
diluted share

Weighted average
diluted shares

Earnings per
diluted share

GAAP Basis

$  4,284,558

$   2,805,462

$  1,383,748

$  1,043,138

$    27,060

$  1,070,198

99,274

$     10.78

% of Net Sales

34.64 %

22.68 %

11.19 %

8.43 %

0.22 %

8.65 %

Convertible Senior Notes ⁽¹⁾

—

—

—

—

(27,060)

(27,060)

(10,792)

Field & Stream exit charges ⁽²⁾

740

(29,340)

30,080

22,259

—

22,259

—

Non-GAAP Basis

$  4,285,298

$   2,776,122

$  1,413,828

$  1,065,397

$            —

$  1,065,397

88,482

$     12.04

% of Net Sales

34.65 %

22.45 %

11.43 %

8.61 %

— %

8.61 %

⁽¹⁾

Adjustment eliminates the impact of assumed share settlement of the Convertible Senior Notes as required by the if-converted method. During the 52 weeks ended January 28, 2023, the Company settled $515.9 million of its Convertible Senior Notes without dilutive effect, as the related principal was settled in cash and due to the shares received from its convertible bond hedge. The Company does not expect the shares underlying the remaining $59.1 million will have a dilutive effect upon conversion and believes reflecting the notes as debt more closely represents the economics of the transaction upon future conversion.

⁽²⁾

Field & Stream exit charges of $30.1 million included $28.5 million of non-cash impairments of store assets, $0.8 million of severance and a $0.7 million inventory write-down related to our closure of 12 Field & Stream stores in the fourth quarter of fiscal 2022.

⁽³⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26% which approximates the Company's blended tax rate.

13 Weeks Ended January 29, 2022

Income from
operations

Interest
expense

Income before
income taxes

Net

 income ⁽²⁾

Weighted average
diluted shares

Earnings per
diluted share

GAAP Basis

$     475,272

$    16,867

$      460,286

$       346,093

109,366

$          3.16

% of Net Sales

14.18 %

0.50 %

13.73 %

10.32 %

Convertible Senior Notes ⁽¹⁾

—

(8,101)

8,101

5,995

(12,638)

Non-GAAP Basis

$     475,272

$      8,766

$      468,387

$       352,088

96,728

$          3.64

% of Net Sales

14.18 %

0.26 %

13.97 %

10.50 %

⁽¹⁾

Amortization of the non-cash debt discount on the Company's Convertible Senior Notes and diluted shares that are designed to be offset at settlement by shares delivered from the convertible note hedge purchased by the Company.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.

52 Weeks Ended January 29, 2022

Income from
operations

Interest
expense

Income before
income taxes

Net

 income ⁽²⁾

Weighted average
diluted shares

Earnings per
diluted share

GAAP Basis

$ 2,034,503

$    57,839

$   1,994,438

$   1,519,871

109,578

$        13.87

% of Net Sales

16.55 %

0.47 %

16.22 %

12.36 %

Convertible Senior Notes ⁽¹⁾

—

(30,794)

30,794

22,788

(11,332)

Non-GAAP Basis

$ 2,034,503

$    27,045

$   2,025,232

$   1,542,659

98,246

$        15.70

% of Net Sales

16.55 %

0.22 %

16.47 %

12.55 %

⁽¹⁾

Amortization of the non-cash debt discount on the Company's Convertible Senior Notes and diluted shares that are designed to be offset at settlement by shares delivered from the convertible note hedge purchased by the Company.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.

Fiscal Year Ended

January 28,
2023

January 29,
2022

Gross capital expenditures

$           (364,075)

$           (308,261)

Construction allowances provided by landlords

36,100

40,195

Net capital expenditures

$           (327,975)

$           (268,066)