Big 5 Sporting Goods(BGFV) - 2020 Q1 - Quarterly Report

Financial Performance - Net sales for the thirteen weeks ended March 31, 2019, were $245.286 million, an increase of 4.7% compared to $234.178 million for the same period in 2018[6] - Gross profit for the same period was $75.876 million, representing a gross margin of 30.9%, up from $72.726 million and a gross margin of 31.0% in 2018[6] - Operating income improved to $3.265 million compared to a loss of $0.762 million in the prior year, marking a significant turnaround[6] - Net income for the quarter was $1.664 million, compared to a net loss of $1.309 million in the same quarter of 2018[6] - Basic earnings per share were $0.08, compared to a loss of $0.06 per share in the prior year[6] - Cash flows from operating activities generated $12,540,000, a substantial improvement from a cash outflow of $8,927,000 in the previous year[12] - The company paid dividends of $1,221 during the quarter, down from $3,308 in the same period last year, reflecting a strategic adjustment in capital allocation[11] Assets and Liabilities - Total current assets decreased to $319.449 million from $325.073 million as of December 30, 2018[4] - Total liabilities increased significantly to $489.573 million from $244.700 million at the end of the previous year[4] - Cash and cash equivalents decreased to $5.299 million from $6.765 million as of December 30, 2018[4] - Merchandise inventories increased slightly to $296.239 million from $294.900 million[4] - Stockholders' equity rose to $175.435 million from $174.861 million, reflecting a stable financial position[4] Store Operations - The company operated 433 stores as of March 31, 2019, maintaining its position as a leading sporting goods retailer in the western United States[13] - Hard goods sales were $103.4 million, athletic and sport footwear sales were $71.2 million, and athletic and sport apparel sales were $68.6 million for the same period[26] Lease and Asset Management - Operating lease right-of-use assets recognized upon adoption of ASC 842 amounted to $262.9 million, with corresponding lease liabilities of $279.7 million[20] - Total lease expense for the 13 weeks ended March 31, 2019, was $20.4 million, which included $19.8 million for operating lease expense[57] - The Company’s operating leases have remaining reasonably certain lease terms of up to 12 years, typically including options to extend for up to 5 years[51] - The total undiscounted cash flows for operating leases were $317.831 million as of March 31, 2019[59] Shareholder Information - The company declared a quarterly cash dividend of $0.05 per share, payable on June 14, 2019[92] - As of March 31, 2019, there were 544,950 outstanding share option awards with a weighted average exercise price of $6.14[81] - The aggregate intrinsic value of the outstanding share options was based on the closing stock price of $3.18 as of March 31, 2019[81] - The company recognized $0.5 million in share-based compensation expense for the 13 weeks ended March 31, 2019, down from $0.6 million in the same period of 2018[79] Legal and Regulatory Matters - The company is involved in various claims and legal actions, but management believes these will not materially affect its financial condition[78] - The Company has a valuation allowance for deferred income tax assets of $1.2 million related to unused California Enterprise Zone Tax Credits[70] Future Outlook - The company plans to adopt ASU No. 2018-13 in the first quarter of fiscal 2020, expecting the impact to be immaterial[21]