Cabela's Inc. Reports Record Fourth Quarter 2012 Results

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Cabela's Inc. Reports Record Fourth Quarter 2012 Results

- EPS Increased 18% to $1.25 Compared to $1.06 a Year Ago, Excluding Certain Items

- Comparable Store Sales Up 12.0%


-Direct Revenue Increased 1.7%

- New Next-Generation Stores Significantly Outperform Legacy Store Base

- After-Tax Return on Invested Capital Increased 160 Basis Points to 15.9% for the Full Year

SIDNEY, Neb.--(BUSINESS WIRE)-- Cabela's Incorporated (NYS: CAB) today reported strong financial results for fourth quarter fiscal 2012.

For the quarter, adjusted for certain items, total revenue increased 15.2% to $1.133 billion; Retail store revenue increased 26.3% to $663.6 million; Direct revenue increased 1.7% to $385.5 million; and Financial Services revenue increased 7.2% to $83.2 million. For the quarter, comparable store sales increased 12.0%. During the quarter, the Company recognized a $12.5 million revenue reduction in its Financial Services business related to the previously disclosed Visa antitrust settlement. On a reported basis, total revenue increased 13.9% and Financial Services revenue decreased 8.9%. A detailed reconciliation and explanation regarding the Visa antitrust settlement is provided later in this release.

For the quarter, net income increased 19.7% to $89.8 million compared to $75.0 million in the year ago quarter, and earnings per diluted share were $1.25 compared to $1.06 in the year ago quarter, each adjusted for certain items. The Company reported GAAP net income of $68.0 million and earnings per diluted share of $0.95 as compared to GAAP net income of $69.8 million and earnings per diluted share of $0.99 in the year ago quarter. Fourth quarter 2012 GAAP results include impairment charges of $20.3 million primarily related to land held for sale and a $12.5 million revenue reduction related to the Visa antitrust settlement. Fourth quarter 2011 GAAP results include impairment charges of $7.8 million mostly related to the value of economic development bonds. See the supporting schedules to this earnings release labeled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of the GAAP to non-GAAP financial measures.

For fiscal 2012, net income increased 29.5% to $195.3 million compared to $150.8 million last year, and earnings per diluted share were $2.72 compared to $2.12 a year ago, each excluding certain items. The Company reported GAAP net income of $173.5 million and earnings per diluted share of $2.42 as compared to GAAP net income of $142.6 million and earnings per diluted share of $2.00 a year ago. Fiscal 2012 GAAP results include impairment charges of $20.3 million primarily related to land held for sale and a $12.5 million revenue reduction related to the Visa antitrust settlement. Fiscal year 2011 results include impairment and restructuring charges of $12.2 million. See the supporting schedules to this earnings release labeled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of the GAAP to non-GAAP financial measures.

"Every area of our Company performed at very high levels in the fourth quarter," said Tommy Millner, Cabela's Chief Executive Officer. "Sales and profit per square foot at our next-generation stores were 40% higher than our legacy stores. Comparable store sales, aided by a surge in firearms and ammunition, increased 12.0%, a new record, and our Direct business grew 1.7%, the first increase in 11 quarters. Assuming more normalized sales of firearms and ammunition, comparable store sales would have increased 5.0%. These strong results combined to improve ROIC by 160 basis points to 15.9% for the full year, the highest level we have seen in eight years."

"During the quarter, we made significant additional omni-channel investments in advertising," Millner said. "These investments helped accelerate comparable store sales and growth in Direct revenue. This acceleration has continued into the first quarter of 2013. Additionally, we are very encouraged with increases in new customers as it further expands our market share and has a positive long-term impact on our consumer franchise."

For the quarter, excluding firearms and ammunition, merchandise margin increased 60 basis points. Merchandise margin increased in each of the Company's 13 merchandise sub categories, including firearms and ammunition. Ongoing focus on Cabela's branded products, improved markdown management and greater vendor collaboration contributed to this improvement. Consolidated merchandise gross margin declined 20 basis points as a direct result of the mix effect from the firearm and ammunition surge.

The Cabela's CLUB Visa program also posted very strong results in the quarter. For the quarter, net charge-offs as a percentage of average credit card loans decreased 21 basis points to 1.91% compared to 2.12% in the prior year quarter. During the quarter, growth in average active credit card accounts accelerated to 9.4% due to retail square footage growth and increases in new customers in all channels. Additionally, average active credit card balance increased 2.9%.

"During the quarter, we opened our first Outpost store in Union Gap, Washington," Millner said. "This store is running ahead of our expectations, and we are thrilled with how this store is performing. As a result, our Board of Directors has authorized us to open an additional ten Outpost stores over the next four years. These stores will be a more effective tool for us to reach smaller markets across North America and further grow our market share. Our strategy is to use our significant cash flows to fund retail store expansion, and we expect to be able to open all of our planned stores in 2013 and 2014 with no external financing."

As previously announced, the Company's Board of Directors has approved a share repurchase program designed primarily to offset shareholder dilution resulting from the granting of equity-based compensation awards. As a result, the Company intends to repurchase up to 750,000 shares of its common stock in open market transactions through February 2014.

"So far this year, our revenue and profit growth remains strong," Millner said. "This growth, along with the strong performance of our new stores, makes us comfortable with the external earnings estimates for 2013."

Conference Call Information

A conference call to discuss fourth quarter fiscal 2012 operating results is scheduled for today (Thursday, February 14, 2013) at 11:00 a.m. Eastern Time. A webcast of the call will take place simultaneously and can be accessed by visiting the Investor Relations section of Cabela's website at www.cabelas.com. A replay of the call will be archived on www.cabelas.com.

About Cabela's Incorporated

Cabela's Incorporated, headquartered in Sidney, Nebraska, is a leading specialty retailer, and the world's largest direct marketer, of hunting, fishing, camping and related outdoor merchandise. Since the Company's founding in 1961, Cabela's® has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter®. Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB® Visa credit card, which serves as its primary customer loyalty rewards program. Cabela's stock is traded on the New York Stock Exchange under the symbol "CAB".

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical or current fact are "forward-looking statements" that are based on the Company's beliefs, assumptions and expectations of future events, taking into account the information currently available to the Company. Such forward-looking statements include, but are not limited to, the Company's statements regarding opening an additional ten Outpost stores over the next four years, opening all planned stores in 2013 and 2014 with no external financing, repurchasing up to 750,000 shares of the Company's common stock through February 2014, and being comfortable with the external earnings estimates for 2013. Forward-looking statements involve risks and uncertainties that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that the Company expresses or implies in any forward-looking statements. These risks and uncertainties include, but are not limited to: the state of the economy and the level of discretionary consumer spending, including changes in consumer preferences and demographic trends; adverse changes in the capital and credit markets or the availability of capital and credit; the Company's ability to successfully execute its omni-channel strategy; increasing competition in the outdoor sporting goods industry and for credit card products and reward programs; the cost of the Company's products, including increases in fuel prices; the availability of the Company's products due to political or financial instability in countries where the goods the Company sells are manufactured; supply and delivery shortages or interruptions, and other interruptions or disruptions to the Company's systems, processes, or controls, caused by system changes or other factors; increased or adverse government regulations, including regulations relating to firearms and ammunition; the Company's ability to protect its brand, intellectual property, and reputation; the outcome of litigation, administrative, and/or regulatory matters (including a Commissioner's charge the Company received from the Chair of the U. S. Equal Employment Opportunity Commission in January 2011); the Company's ability to manage credit, liquidity, interest rate, operational, legal, and compliance risks; the Company's ability to increase credit card receivables while managing credit quality; the Company's ability to securitize its credit card receivables at acceptable rates or access the deposits market at acceptable rates; the impact of legislation, regulation, and supervisory regulatory actions in the financial services industry, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; and other risks, relevant factors and uncertainties identified in the Company's filings with the SEC (including the information set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended December 31, 2011, and Form 10-Q for the fiscal quarter ended June 30, 2012), which filings are available at the Company's website at www.cabelas.com and the SEC's website at www.sec.gov. Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. The Company's forward-looking statements speak only as of the date they are made. Other than as required by law, the Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Earnings Per Share)
(Unaudited)
 
    
Three Months EndedFiscal Year Ended

December 29,
2012

December 31,
2011

December 29,
2012

December 31,
2011

Revenue:
Merchandise sales$1,048,651$903,926$2,778,903$2,505,733
Financial Services revenue70,74577,660319,399291,746
Other revenue1,350 2,159 14,380 13,687 
Total revenue1,120,746 983,745 3,112,682 2,811,166 
 
Cost of revenue:
Merchandise costs668,730575,2781,769,1611,613,241
Cost of other revenue3  637 8 

Total cost of revenue
 (exclusive of depreciation and amortization)

668,733575,2781,769,7981,613,249
Selling, distribution, and administrative expenses327,507290,8031,046,861954,125
Impairment and restructuring charges20,324 7,801 20,324 12,244 
 
Operating income104,182109,863275,699231,548
 
Interest expense, net(3,948)(6,105)(20,123)(24,427)
Other non-operating income, net1,999 1,690 6,138 7,346 
 
Income before provision for income taxes102,233105,448261,714214,467
Provision for income taxes34,201 35,620 88,201 71,847 
 
Net income$68,032 $69,828 $173,513 $142,620 
 
Earnings per basic share$0.97 $1.01 $2.48 $2.06 
Earnings per diluted share$0.95 $0.99 $2.42 $2.00 
 
Basic weighted average shares outstanding70,041,784 69,166,725 69,856,258 69,194,663 
Diluted weighted average shares outstanding71,700,567 70,718,826 71,709,873 71,274,242 
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Par Values)
(Unaudited)
 
   
ASSETS

December 29,
2012

December 31,
2011

CURRENT
Cash and cash equivalents$288,750$304,679
Restricted cash of the Trust17,29218,296
Accounts receivable, net46,08147,127
Credit card loans (includes restricted credit card loans of the Trust of $3,523,133 and $3,142,151), net of allowance for loan losses of $65,600 and $73,3503,497,4723,094,163
Inventories552,575494,828
Prepaid expenses and other current assets132,694146,479
Income taxes receivable and deferred income taxes54,164 5,709 
Total current assets4,589,0284,111,281
Property and equipment, net1,021,656866,899
Land held for sale or development23,44838,393
Economic development bonds85,04186,563
Other assets28,990 30,635 
Total assets$5,748,163 $5,133,771 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable, including unpresented checks of $30,125 and $19,124$285,039$266,793
Gift instruments, and credit card and loyalty rewards programs262,653227,414
Accrued expenses180,906143,695
Time deposits367,35088,401
Current maturities of secured variable funding obligations of the Trust325,000460,000
Current maturities of secured long-term obligations of the Trust425,000
Current maturities of long-term debt8,402 8,387 
Total current liabilities1,429,3501,619,690
Long-term time deposits680,668893,912
Secured long-term obligations of the Trust, less current maturities1,827,500977,500
Long-term debt, less current maturities328,133336,535
Deferred income taxes10,57126,367
Other long-term liabilities95,96298,451
 
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; Authorized - 10,000,000 shares; Issued - none
Common Stock, $0.01 par value; Authorized - 245,000,000 shares;
Issued - 70,545,558 and 69,641,818 shares
Outstanding - 70,053,144 and 68,840,883 shares705696
Additional paid-in capital351,161334,925
Retained earnings1,036,427862,914
Accumulated other comprehensive income5,5422,731
Treasury stock, at cost - 492,414 and 800,935 shares(17,856)(19,950)
Total stockholders' equity1,375,979 1,181,316 
Total liabilities and stockholders' equity$5,748,163 $5,133,771 
 
 
CABELA'S INCORPORATED AND SUBSIDIARIES
SEGMENT INFORMATION
(Dollars in Thousands)
(Unaudited)
 
    

Three Months Ended

Fiscal Year Ended

December 29,
2012

December 31,
2011

December 29,
2012

December 31,
2011

Revenue:

Retail$663,593$525,607$1,849,582$1,550,442
Direct385,477378,931930,943956,834
Financial Services70,74577,660319,399291,746
Other931 1,547 12,758 12,144 
Total revenue$1,120,746 $983,745 $3,112,682 $2,811,166 
 

Operating Income (Loss):

Retail$144,151$108,425$345,040$263,010
Direct61,67868,055155,237172,163
Financial Services67415,91074,18259,032
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