PHOENIX--(BUSINESS WIRE)--PetSmart, Inc. (NASDAQ: PETM) today announced financial results for the third quarter of 2013 and provided guidance for the fourth quarter and fiscal year 2013.
Third Quarter Results
Earnings of $0.88 per share, up 17.3% compared to $0.75 per share in the third quarter of 2012. Net income totaled $92 million in the third quarter of 2013, compared to $82 million in the third quarter of 2012.
Total sales for the third quarter of 2013 increased 4.0% to $1.7 billion. Comparable store sales, or sales in stores open at least a year, grew 2.7%, including comparable transactions growth of 0.2%. Services sales, which are included in total sales, grew 5.2% to $184 million.
The company generated $107 million in cash flows from operating activities, spent $51 million in capital expenditures, distributed $17 million in dividends, and repurchased $30 million of PetSmart stock. The company ended the quarter with $367 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility.
“Given the challenged consumer environment during the quarter, we are pleased with our results and level of execution,” said David Lenhardt, Chief Executive Officer. “Our performance demonstrates the strength and stability of our business.”
Guidance
Fiscal year 2013 is a 52-week year. Except for comparable stores sales growth, which is calculated on an equivalent basis, comparisons to fiscal year 2012, a 53-week year, are based on U.S. GAAP, unless otherwise noted.
- Comparable store sales growth of 3% to 3.5%
- Total sales growth of approximately 3% (on a 52 to 52-week basis, total sales growth of approximately 5%)
- Earnings before tax margin expansion of 20 to 40 basis points (on a 52 to 52-week basis, earnings before tax margin expansion of 50 to 70 basis points)
- Earnings per share of $3.94 to $3.98
The fourth quarter of 2013 is a 13-week quarter. Except for comparable stores sales growth, which is calculated on an equivalent basis, comparisons to the fourth quarter of 2012, a 14-week quarter, are based on U.S. GAAP, unless otherwise noted.
- Comparable store sales growth of 2.5% to 3.5%
- Total sales growth of -3% to -2% (on a 13 to 13-week basis, total sales growth of 4% to 5%)
- Earnings before tax margin expansion of -45 to -15 basis points (on a 13 to 13-week basis, earnings before tax margin expansion of 45 to 75 basis points)
- Earnings per share of $1.19 to $1.23
Conference call information
PetSmart management has scheduled a teleconference for 9:00 a.m. EST on November 22, 2013 to discuss results for the third quarter 2013. This teleconference will be webcast live for all investors at www.petm.com. The webcast will be available until the company announces results for the fourth quarter of 2013. In addition, you can listen to the call live by dialing 866-219-5631 (within the United States and Canada) or 703-639-1122 (for international callers), code 1627400.
A phone replay will be available through December 22, 2013, 11:59 p.m. EST, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1627400.
About PetSmart
PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets and is a leading online provider of pet supplies and pet care information (http://www.petsmart.com). The company employs approximately 54,000 associates and operates more than 1,314 pet stores in the United States, Canada and Puerto Rico, and over 196 in-store PetSmart® PetsHotel® dog and cat boarding facilities. PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet grooming, pet boarding, PetSmart Doggie Day CampSM day care services and pet adoption services. Through its in-store pet adoption partnership with PetSmart Charities®, PetSmart has helped save the lives of more than 5 million pets since 1994. PetSmart Charities, Inc. and PetSmart Charities of Canada, Inc. (“PetSmart Charities”) are independent, nonprofit organizations that save the lives of homeless pets and reduce shelter intake through spay/neuter efforts. In 2012, nearly 450,000 dogs and cats found homes through PetSmart Charities’ adoption centers in all PetSmart stores and by sponsoring community adoption events. PetSmart Charities is the leader in granting money to help pets in need, with more than $28 million given in 2012 throughout North America.
Forward-looking statements
This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2013 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.
| PetSmart, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||||||||||||||||||
| (in thousands, except per share and store data) | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirteen Weeks Ended | Thirty-Nine Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||||||||||
| November 3, 2013 | % of Sales | October 28, 2012 | % of Sales | November 3, 2013 | % of Sales | October 28, 2012 | % of Sales | |||||||||||||||||||||||||||||
| Merchandise sales | $ | 1,500,443 | 88.5 | % | $ | 1,444,683 | 88.7 | % | $ | 4,502,272 | 88.0 | % | $ | 4,303,625 | 88.2 | % | ||||||||||||||||||||
| Services sales | 184,190 | 10.9 | % | 175,018 | 10.7 | % | 580,474 | 11.4 | % | 546,899 | 11.2 | % | ||||||||||||||||||||||||
| Other revenue | 10,535 | 0.6 | % | 9,810 | 0.6 | % | 29,015 | 0.6 | % | 28,547 | 0.6 | % | ||||||||||||||||||||||||
| Net sales | 1,695,168 | 100.0 | % | 1,629,511 | 100.0 | % | 5,111,761 | 100.0 | % | 4,879,071 | 100.0 | % | ||||||||||||||||||||||||
| Cost of merchandise sales | 1,045,743 | 61.7 | % | 1,008,278 | 61.9 | % | 3,123,671 | 61.1 | % | 2,989,671 | 61.3 | % | ||||||||||||||||||||||||
| Cost of services sales | 133,917 | 7.9 | % | 128,911 | 7.9 | % | 409,136 | 8.0 | % | 392,152 | 8.0 | % | ||||||||||||||||||||||||
| Cost of other revenue | 10,535 | 0.6 | % | 9,810 | 0.6 | % | 29,015 | 0.6 | % | 28,547 | 0.6 | % | ||||||||||||||||||||||||
| Total cost of sales | 1,190,195 | 70.2 | % | 1,146,999 | 70.4 | % | 3,561,822 | 69.7 | % | 3,410,370 | 69.9 | % | ||||||||||||||||||||||||
| Gross profit | 504,973 | 29.8 | % | 482,512 | 29.6 | % | 1,549,939 | 30.3 | % | 1,468,701 | 30.1 | % | ||||||||||||||||||||||||
| Operating, general and administrative expenses | 352,304 | 20.8 | % | 342,958 | 21.0 | % | 1,073,202 | 21.0 | % | 1,038,736 | 21.3 | % | ||||||||||||||||||||||||
| Operating income | 152,669 | 9.0 | % | 139,554 | 8.6 | % | 476,737 | 9.3 | % | 429,965 | 8.8 | % | ||||||||||||||||||||||||
| Interest expense, net | (12,930 | ) | -0.8 | % | (13,375 | ) | -0.8 | % | (38,926 | ) | -0.8 | % | (41,054 | ) | -0.8 | % | ||||||||||||||||||||
|
Income before income tax expense and equity income from Banfield |
139,739 | 8.2 | % | 126,179 | 7.8 | % | 437,811 | 8.5 | % | 388,911 | 8.0 | % | ||||||||||||||||||||||||
| Income tax expense | (51,054 | ) | -3.0 | % | (48,335 | ) | -3.0 | % | (161,094 | ) | -3.2 | % | (144,840 | ) | -3.0 | % | ||||||||||||||||||||
| Equity income from Banfield | 3,536 | 0.2 | % | 4,472 | 0.3 | % | 11,287 | 0.2 | % | 11,448 | 0.2 | % | ||||||||||||||||||||||||
| Net income | $ | 92,221 | 5.4 | % | $ | 82,316 | 5.1 | % | $ | 288,004 | 5.5 | % | $ | 255,519 | 5.2 | % | ||||||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.89 | $ | 0.76 | $ | 2.78 | $ | 2.36 | ||||||||||||||||||||||||||||
| Diluted | $ | 0.88 | $ | 0.75 | $ | 2.75 | $ | 2.32 | ||||||||||||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||||||
| Basic | 103,957 | 107,719 | 103,579 | 108,303 | ||||||||||||||||||||||||||||||||
| Diluted | 104,753 | 109,333 | 104,637 | 110,117 | ||||||||||||||||||||||||||||||||
| Stores open at beginning of each period | 1,301 | 1,249 | 1,278 | 1,232 | ||||||||||||||||||||||||||||||||
| Stores opened during each period | 16 | 24 | 41 | 49 | ||||||||||||||||||||||||||||||||
| Stores closed during each period | (3 | ) | (4 | ) | (5 | ) | (12 | ) | ||||||||||||||||||||||||||||
| Stores open at end of each period | 1,314 | 1,269 | 1,314 | 1,269 | ||||||||||||||||||||||||||||||||
| PetSmart, Inc. and Subsidiaries | |||||||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||||||
| (In thousands, except par value) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| November 3, | February 3, | October 28, | |||||||||||||||
| 2013 | 2013 | 2012 | |||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents | $ | 295,868 | $ | 335,155 | $ | 298,090 | |||||||||||
| Short-term investments | 1,967 | 9,150 | 13,862 | ||||||||||||||
| Restricted cash | 71,226 | 71,916 | 71,916 | ||||||||||||||
| Receivables, net | 52,576 | 72,198 | 49,811 | ||||||||||||||
| Merchandise inventories | 797,533 | 679,090 | 765,831 | ||||||||||||||
| Deferred income taxes | 62,859 | 62,859 | 51,381 | ||||||||||||||
| Prepaid expenses and other current assets | 118,757 | 86,768 | 111,164 | ||||||||||||||
| Total current assets | 1,400,786 | 1,317,136 | 1,362,055 | ||||||||||||||
| Property and equipment, net | 956,653 | 985,707 | 997,361 | ||||||||||||||
| Equity investment in Banfield | 30,326 | 39,934 | 35,412 | ||||||||||||||
| Deferred income taxes | 101,321 | 102,992 | 85,308 | ||||||||||||||
| Goodwill | 42,951 | 44,242 | 44,248 | ||||||||||||||
| Other noncurrent assets | 63,945 | 46,970 | 44,623 | ||||||||||||||
| Total assets | $ | 2,595,982 | $ | 2,536,981 | $ | 2,569,007 | |||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||
| Accounts payable and bank overdraft | $ | 240,603 | $ | 202,122 | $ | 266,708 | |||||||||||
| Accrued payroll, bonus and employee benefits | 164,111 | 176,082 | 161,030 | ||||||||||||||
| Accrued occupancy expenses and deferred rents | 79,716 | 70,671 | 74,106 | ||||||||||||||
| Current maturities of capital lease obligations | 66,517 | 61,581 | 60,023 | ||||||||||||||
| Other current liabilities | 208,133 | 244,436 | 181,381 | ||||||||||||||
| Total current liabilities | 759,080 | 754,892 | 743,248 | ||||||||||||||
| Capital lease obligations | 453,620 | 464,578 | 475,552 | ||||||||||||||
| Deferred rents | 67,439 | 73,855 | 75,948 | ||||||||||||||
| Other noncurrent liabilities | 110,769 | 120,064 | 117,248 | ||||||||||||||
| Total liabilities | 1,390,908 | 1,413,389 | 1,411,996 | ||||||||||||||
| Stockholders' Equity: | |||||||||||||||||
| Preferred stock; $.0001 par value | - | - | - | ||||||||||||||
| Common stock; $.0001 par value | 17 | 17 | 17 | ||||||||||||||
| Additional paid-in capital | 1,504,135 | 1,418,411 | 1,393,158 | ||||||||||||||
| Retained earnings | 2,061,254 | 1,827,996 | 1,711,574 | ||||||||||||||
| Accumulated other comprehensive income | 2,082 | 5,506 | 5,600 | ||||||||||||||
| Less: Treasury stock | (2,362,414 | ) | (2,128,338 | ) | (1,953,338 | ) | |||||||||||
| Total stockholders' equity | 1,205,074 | 1,123,592 | 1,157,011 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,595,982 | $ | 2,536,981 | $ | 2,569,007 | |||||||||||
