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BGFV Big 5 Sporting Goods

Participants
Steve Miller President & Chief Executive Officer
Barry Emerson Chief Financial Officer
Mark Smith Lake Street Capital
Call transcript
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Operator

Good day, ladies and gentlemen. Welcome to the Big 5 Sporting Goods' Second Quarter 2021 Earnings Results Conference Call. Today's call is being recorded. With us today are Mr. Steve Miller, President and Chief Executive Officer and Mr. Officer X Financial Goods. Chief Emerson, of Sporting Big Barry introductions, opening to Mr. At for and I'd to this time, over remarks like conference turn the Miller. go sir. Please ahead

Steve Miller

our to conference Thank quarter. XXXX for I harbor the the as the safe fiscal turn review everyone. provide Good of you, results call Welcome will quarter Barry as operator. our financial now second Today, to call. over third XXXX quarter second we an will afternoon, for read our statement. to well outlook

Barry Emerson

Thanks for that of plans, fact, we Litigation statements safe historical may constitute Securities Act expectations, Private the made Reform prospects Steve. future harbor of statements Except the any provisions pursuant to make remarks about and of forward-looking our XXXX.

risks and actual with statements cause unknown or that on behalf. made described periods more that no or our Forward-looking forward-looking in These reports and any forecasted quarterly future those annual Commission. and time-to-time by update from known and results obligation to Form differ current other and reports undertake statements our materially the our Form may from our risks fully our to results. We Exchange on and may Securities revise in include uncertainties uncertainties involve XX-K, XX-Q, us filings be on

Steve Miller

Thank you, Barry.

to earnings record and This delivering is earnings. respective that excited exceeded fifth another sales record quarter our the report of results are second quarter quarter. achieved now We of expectations, as quarter we for consecutive our

of to is for a operating compared pre-pandemic a merchandise expansion, as margin driven enhanced Our with $XX.X We quarter. performance generated the rate, was that structure as once combination million period. of sales by EBITDA broad-based again cost well meaningfully

the dividends, addition represented the period, $XX.X balance cash regular And share during we special $XXX.X $X quarter. dividends shareholders including a the to results, dividend. of of we in an course these sheet increased to cash million. this our quarterly paying did improvement per million over while $XX.X This increased million With an on the

announced to of Additionally, will $X.XX today given strength $X.XX the our in continued move we quarterly which XX% our and regular it from up cents. financial another increase condition, business dividend,

We regular our each four increased have of quarterly quarters. last the now dividend

overview results touch like continued quarter-to-date. second would to and in our of then the quarter strength on provide I an our Now third

net quarter first for compared quarter. highest Second This our by quarter store to history. XXX.X the which were impacted negatively $XXX temporary net million XXXX, of half sales sales second of million, the sales the significant company's for of pandemic-related the over any fiscal was closures quarter in

perhaps XXXX, On we unusual million quarter the $XXX circumstances XXXX. was this more last million net Given of by that year's impacted XXX performance fiscal of it quarter for this the believe basis, the net compare pandemic. year's not sales second which period to the sales with comparable in year, is of quarter obviously compared relevant second to second

July holiday as with In the company's XX reflects addition XXXX. related as from closures, in XXXX fiscal in fiscal them with into pre-Fourth temporary the to stores quarter benefit XXXX These XXXX five sales weeks comping benefit also third quarter which fiscal certainly of to second muddy Easter shift deal get years. moving net fiscal that shift XXXX, calendar six during from we shift, glad the so the fiscal we can of calendar the in fiscal only comparisons a net holidays, every or the against of to second calendar COVID-related last of the sales of the closed have quarter first are are store quarter a our sales resulted well in increase to the year's of

prior year basis, Looking XXXX, of which period. a day reported XX.X% versus were the and fiscal sales comparable quarter the second period on the versus at store same our increased sales XXXX for XX.X%

Turning days April was second Hardgoods XXXX. two-year Apparel versus to compared XX% our demand In May XX% more strength approximately nearly up more XXXX. major June, up sales offerings, comping And On versus XXXX, last Footwear was up our of year-over-year XX% quarter versus versus was of versus to of same store and approximately than the three compared XXXX, last year, increased of team store up than up XXXX. product X% all more XXXX. sales XXX% over business. versus April versus up to were by second than year across the was the return [ph] monthly more XX% were XX% healthy than we categories. strong month in were up part a versus last transactions XX% to quarter, against XXXX April and were basis, broad-based XXXX, sports up we XXXX. versus On versus compared and a year, XXXX, saw April a cadence most our and sales and team sports more by closures. including XX% increased than basis, The our markets. mid-single approximately the across were in XXXX. driven low-double versus the we temporary sales XX% return up was digits for XXXX, XX% merchandise to up a up store high surge of XXXX of comparable sales, in in in digits most same and our over when impacted by XX%.

to sale over compared average last down up X% versus Our year, but XX% XXXX. approximately was

customers points margin prior trips, the second favorable achieve compared to to making reduced and a last up the and over continued larger merchandise with XXXX quarter. height basis reflected to during shift points of XXX XXX We've baskets. healthy over margins year As reminder, in store very mix product basis we promotional quarter, primarily compared The the up year, but pandemic, activity. a fewer the second gains saw

periods, results cost also to continued as hours and continue from store historical margins, benefiting an spend advertising we levels. with improved merchandise to operate pre-pandemic our addition compared to from and significantly below In to strong benefit sales structure

of to share. quarter second for net history. our million Turning net $X.XX line, This in company's any earned $XX.X highest or income was we for income the bottom per the the quarter,

previously results these mentioned, throughout our reflect markets. for products goods broad-based strong recreational sporting demand I and As

high at facing level, were performed reported a by sales disruptions Although constrained retailers. still very many chain we the widely supply

product the center, is our variety store in team managing Our our caused staffing issues through to delays which a of throughout issues at wide chain, supply delivering shelves. distribution including have

last will categories. many be I in our As up demand I noted to it quarter, for call catches suspect supply before sometime

the strength lack sales of this digits up our in in the with running should impacted July's year, same versus of and comps, comps the perspective, to to broader back-to-school of peak and period XX% team quarter, quarter as Looking Compared very we running the versus last year over year, considerably, third was XXXX. up a sports, now are year of our the by at high-single this our XXXX our currently will last anticipated absolute were over for significantly given high-teens ease sales business. comparable sales July pleased year. return sustained represented largely approximately are surge. which store comparable believe the sales compared From the We remainder the days, the last period sales down which last a down we

re-engaging been constraints tremendous staffing and certainly engaging our translated to year, to or and pandemic, product increased including challenges people issues, challenges sales an the have strength been past across navigate over supply related and the of trends that While still face able we have have we activities With recreational to-date, to before. recreational focus these in margin categories. than staying healthy leverage more

results. and fitness Over the the impacts established further to In our and Our assortment which Big many course and expanded base the over pandemic. on as line bottom well-recognized enthusiastic about positive we are capitalize to destination our our is the or deliver structure and trusted recreation our for pandemic. to very confident trends, well have ability our remain very sporting strong years, of continue improved we of these our enduring are X we in business of a products goods beyond trending sum, and peak situated cost have markets, customer

Barry Now, additional over provide I to will turn the to details. call

Barry Emerson

for quarter of XXX.X million XXXX million for quarter the for to million the of quarter sales of XXXX. second XXX Net second were net Thanks, fiscal sales fiscal compared of second Steve. XXXX fiscal XXX and the net sales

The second period. fiscal XXXX store particularly due of of half COVID-XX, to quarter included closures first over significant temporary the the

versus For store increased the prior fiscal XXXX, sales periods. versus and XX.X% year period the quarter XXXX XX.X% the second of same

for million quarter second from The from occupancy store XXXX capitalized XX.X% COVID-related quarter. the increase quarter mentioned. second increase and closures, leveraging profit cost In store million the sales sales, inventory of the the Gross from a XXXX fiscal versus significant merchandise in the second The in the calendar XXX to prior in net temporary gross prior XX.X% increase against margins, the for profit as basis of margin impacts comping year. impact a to largely also last in costs of in company's margin increased quarter the XXX.X point addition reflects the percent gross the year. fiscal net favorable reflects shifts quarter higher that in in Steve year's of positive distribution profit second XX.X the was

provision XX.X% increases and XX% activities, year product a purchase administrative last product each increased the performance-based precautions. result second and the in of temporary fiscal compensation. XXXX due merchandise a mix costs. percentage period selling prices year the year-over-year also in a special and a bonus COVID-XX impacted year expense, to safety XX.X higher the and incentive lesser second our employees. included to lower To expense Our versus improved store-based degree, prior prior store reflect in closures higher million SG&A administrative expense SG&A primarily promotional was year to margins in for and as XX% the net primarily from quarter. quarter period, XXXX the quarter significant higher prior response sales shift a sales, as year, current by in increase the in compared fiscal for also certain to of recognition the period expense favorably Selling the in by in sales

the XX income first per the diluted to Now fiscal XX.X were diluted looking fiscal of for $X.XX including second income XX.X compares benefit line, weeks fiscal fiscal previously share, of period first an for or of July sales XX was first diluted $X.XX quarter of million half insurance last XXXX that net sales XXXX. per share. of the or settlement our reported million million was related share, XXXX reported weeks or and XXX.X benefit million year. liabilities. which of diluted fiscal This net diluted previously a Briefly million XX income diluted for period the or X, week of at weeks in comparable the share. share. a $X.XX million in XX.X% to elimination half XX.X XXXX net XX.X EBITDA results, per X.X the first million last diluted store ended first quarter in share, of XXXX $X.XX approximately Net year. per Same net healthy $X.XX first quarter including This of of to XXX.X XXXX million, increased the compared the the quarter the was reviewing income $X.XX net of and XXXX for XXXX per a per for a for XX of second net versus agreement employment sales bottom fiscal included net Adjusted XX.X an our per of compares to second of benefit $X.XX share net

merchandise fiscal at down balance was quarter the of our end XXXX the year, to sheet, to being second Turning prior X.X% first inventory the XX.X% year-over-year at after quarter. end of our down compared the the

indicated, return product Steve year negatively experienced of team was which a due across have our sports, broad-based As to COVID. we impacted including last demand categories,

vendors and disruptions continues team manufacturing freight caused buying with to which some shortages. categories, and associated seeing closely work some issues, are delays obtain key in our to Our have with we merchandise. But

CapEx, our million spending, non-cash Looking for the totaled year-to-date X.X at capital period. fiscal XXXX acquisitions, excluding our

primarily we fiscal CapEx and stores, level ramp representing to full in remodeling, the and year, expect store-related our the purchases. of software a computer in million, center range XX investments equipment new more For distribution hardware to XX million normalized up to

improved year, close operating stores. For us combination substantial cost growth, we and The flow of and allowed stores margin new open to five merchandise the approximately to approximately expansion sales the cash two expect year-to-date for generate period. structure

XX.X million flow increase of versus million a year cash XXXX operating for half Our the of prior the first fiscal period. positive was or an XX.X

quarterly impact fiscal cash positively and declared zero to to the continue and which facility, flow outstanding be second the results quarter to XXX.X during zero of paid of of our credit operating share enhanced XX, our balance cash under borrowings XX.X million shareholders September with and stockholders financial strong sheets borrowings of the Further, cash, outstanding quarter. net as and dividend company's stock We XXXX the $X.XX XXXX. year's in a share the grew Board continued of XXX.X while second Our and XX.X net has of first last per cash as of of us cash by year-over-year quarter our the XX Directors with million XXXX, of deal sheet, of in million the basis. also great of million. mentioned, reflects million end cash end XX% compares improvement $X.XX from of stock, flexibility. quarter and strength XXXX quarter, of business balance common of increase million ended common as record on We fiscal cash X, per company's year. of a equivalents provide This light to XXX.X This in its paying the cash cash the of of and million generation a second as over XX.X course equivalents, of borrowings dividends of Steve on September cash this a will and the

our the dividend the In the Board's regular share, to over ongoing increase per dividend from $X.XX $X in four represents last shareholders. addition this to quarters quarterly return and special quarter, in per to $X.XX fourth to the demonstrates share paid the second value commitment

guidance. Now our I'll spend a on minute

XXXX the same prior quarter, the range versus versus positive and in XXXX in period, fiscal range high-teens the diluted the the low-teens earnings to to store increase of and year to quarter, third expect $X.XX share store This which quarters third For fiscal fiscal mid-single-digit to earnings we of sales any $X.XX the per flat in in quarter earnings $X.XX. and guidance per of a the earnings share $X.XX of the per XX.X% were compares same company's quarter increase third at past of diluted share sales to history. this highest in the of XXXX, until range

earnings XXXX for comparison, the third For $X.XX. quarter diluted fiscal per of were share

reported retail the continued supply disruptions Over impacts related the the remainder challenges we of and quarter, to the employment anticipate third chain throughout widely industry.

prior shift year moved related quarter reflects Additionally, calendar impact second fiscal the XX week guidance XXXX, from our XXXX of third the holiday the relative to unfavorable the the of the to fiscal period quarter of into fiscal which Fourth of July XXXX.

As XXXX approximately early in Fourth quarter. low the which we impact holiday shift, third volume the historically an week, by October. historically anticipate the third earnings a quarter high this replaced is July a to calendar excludes result, Because $X.XX share week for of unfavorable volume of diluted of per

operations during Our impact our will new pandemic materially also period. to guidance the COVID-XX that assumes the conditions any not relating

third gains achieve a are Additionally, expectation basis. we That prepared on our margin that questions. any Operator, to remarks. our for concludes merchandise reflects we guidance quarter will for ready our continue year-over-year the

Operator

Smith Thank ahead from question you. [Operator first Capital. comes Please with Lake with your go Instructions] Our question. Street Mark

Mark Smith

guys. Hi,

of inventory stand hunting. us thinking you gone, being perspective year from the down. a how some to, of be high maybe versus would great. ago where some question me, like can I inventory is year a a Anything wanted completely just for and that give sounds ago ago. you recall, on about demand today the inventory store shooting, a just to of First back versus stand exercise you I talk about can little ask But you and equipment, now as year categories kind bit today fishing a It

Steve Miller

so year your moving there's at we're if of mean, parts Yeah, many me seeing I this let product last I throughout strain see looking can versus our year, some but mix. issues. address

we're throughout But initial the we're created caught and is don't surge I to the were norm. that there, XXX% category, standpoint, that It's has mean, the probably the a operating the it that fitness, year not position getting virtually inventory, become have, from supply we being empty in new I some every the up in if produce late, seeing we're we an fitness an we're we're were or not out the of were better caught almost certainly know XXX% sales stores. of inventory Some couldn't categories ridiculously chasing inventory not supply short Deliveries up. of in was in chain degree wagons. disruptions. that we last

producing problem we're argue, you issue. maybe amount selling can very a - would high-class Mark, we're your it guess answer - fair I which it's on? But, but are say, one quickly, We question? it of an that inventory does very, getting can because zero I a

Mark Smith

no, to team kind helps. want as is sports I a of is are at Yeah, benefit year this football, Historically, last kind where into some category that better which One sports, soccer, qX, of the be team you just look year maybe that ago. much. year, going what will year, it in the versus didn't exist see school

Steve Miller

didn't mean, those seeing fall girls' helpful. that non-existent - early last I get soccer, the - there year. were we in it's are we're volleyball get some the indications positive volleyball, We football, third is we in quarter, occur season almost of little a last baseball get participation but sports that very year, fundamentally already some

will think incredibly perform lot versus we we that have year. a So positively categories last of

quarter over the what be quarter. solid that for why of that's the the anticipate performance much we more than our start was sales And it so, balance will of

Mark Smith

assume real that issues it'll would comparable I year we here to a the bit year ago. more that looking any And this then QX be due versus QX, have sense Okay. with timing out little a sheer further into don't

some talk activities seeing any you about weren't you're the can pick maybe feel from your up consumers year able maybe last and pre-buying sports winter of some you those about If QX? going and how and into to who categories in of if anything inventory

Steve Miller

summer we're the the we've last truth our of got any winter matter pre-buying not product the orders - Well, the in much in certainly so we've year, winter we're of seeing to product bone our and outstanding. hardest replenished pretty is sold

for and in given room hopeful the bring have with supply I enough winter the think season. are to wiggle the time we ourselves product in We all hopefully issues

the about as excited really a we're to on now, products, So, of indications couldn't begin make I comment as but, any winter far refreshment our that.

Mark Smith

nothing Okay. perspective be that should aware assume And from timing QX? we a in of, I

Steve Miller

the I Well, to only aware thing a year, last think be was XX-week is mean, QX I of that period.

start the one last this New QX week and as effectively than most week Year's of or include, year it. it like Christmas the will well, So, holiday will year later obviously, but of

Mark Smith

It I down sounds the And just it heard ago sure Okay. to-date, last a quarter. and one digits that high-single of comps like guess make clarify continued third year throughout right. improvement me, expect you sequential for to I are versus kind

Steve Miller

extent, start impact to a August little I little period, over a - were approximately mostly sales, in to. we days yes. last up a July. Yeah, year, that of you because, in up sports give absolute we the were were over last up the XX%. July And point, large surging XX% towards September, comparable X%, spoke In year, just the period were we team to significantly, the last peak in the July Very we the for some year, reference

Mark Smith

of people more kind in that with July, families with credits talking heard in can bumps spending or mid-month haven't out talked many money, in But checks out maybe, tax children stores? early one we out that to Maybe of went and I'll any and coming those call it we that others yet. you about, that your squeeze about retailers some haven't

Steve Miller

strongest. believe Honestly, I and backwards mean, our XXXX, from looking why were obviously, some to checks it think I months second strong - not over April all stimulus the has Mark. was acknowledge April the mean, help. strong contributed the the quarter, to we to that I relative can I was so - we I but think bump

that product assume some effects issues I surge from I there's our in comparing benefit don't again, But we positive know July. last being in of put any there. with can received checks and the to So, are that July, finger year, on

Mark Smith

you Okay, This guys. helpful. great. is Thank

Steve Miller

right. you, All Mark. Thank

Barry Emerson

any Operator, questions? I other are there think -

Steve Miller

Hello.

Steve Miller

Alright. speaking you Sporting Big today's X your our conclusion you Well, of forward Goods Thank in third We thank again to in and us quarter. you. after for joining call. all look with appreciate the interest

Operator

I'll Thank to now the delay. back you. Mr. turn remarks. Miller Mr. Apologies for That our conference. it closing for concludes