Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-08897 BIG LOTS, INC. (Exact name of registrant as specified in its charter) Ohio 06-1119097 (State or oth ...

| --- | --- | --- | |-------|-------|-------| | | | | | | | | FORWARD-LOOKING STATEMENTS Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" an ...

Big Lots Inc. (NYSE:BIG) Q4 2021 Earnings Conference Call March 3, 2022 8:00 AM ET Company Participants Jonathan Ramsden - Executive Vice President, Chief Financial Officer Jack Pestello - Executive Vice President, Chief Merchandising Officer Conference Call Participants Spencer Hanus - Wolfe Research Joe Feldman - Telsey Advisory Group Andrew - Keybanc Zane Brock - Barclays Jason Haas - Bank of America Operator Ladies and gentlemen, good morning and welcome to Big Lots fourth quarter conference call. Curre ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-08897 BIG LOTS, INC. (Exact name of registrant as specified in its charter) Ohio 06-1119097 (Stat ...

Financial Data and Key Metrics Changes - Net sales for Q3 were $1.336 billion, a 3.1% decrease compared to $1.378 billion a year ago, but up 14.4% compared to Q3 2019 [45] - The net loss for Q3 was $4.3 million compared to a net income of $29.9 million in Q3 2020, with EPS at a loss of $0.14 [46] - Gross margin rate for Q3 was 38.9%, down 160 basis points from last year's rate and 80 basis points below 2019 [47] - Total expenses for the quarter were $523 million, up from $515 million last year, driven by incremental investments in labor and forward distribution centers [48] Business Line Data and Key Metrics Changes - Comparable sales increased 12% on a two-year basis, while total sales increased over 14% versus 2019 [7] - Furniture delivered strong performance with two-year comps up low double-digits, while Seasonal comps were over 30% on a two-year basis [10] - Consumables experienced single-digit, two-year growth, with food down mid-single-digits due to strategic reduction in square footage [10][101] Market Data and Key Metrics Changes - The company opened 9 new stores and closed 3, ending Q3 with 1,424 stores and total selling square footage of 32.5 million [52] - Year-to-date e-commerce sales growth was around 300% compared to 2019, with expectations for e-commerce to become a billion-dollar business in the coming years [31] Company Strategy and Development Direction - The company is focused on three key drivers for growth: same-store sales growth, accelerated store footprint growth, and scaling e-commerce operations [19] - A new $250 million share repurchase program was authorized, reflecting confidence in the company's growth story [5] - The company plans to enhance its merchandise assortment and expand its seasonal offerings to drive sales [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter despite supply chain challenges, anticipating high sell-through of holiday merchandise [11] - The company expects to face negative comps in Q1 2022 due to the lapping of stimulus effects but anticipates overall sales growth for the year [18] - Management highlighted the importance of supply chain investments to improve product availability and efficiency [92] Other Important Information - The company declared a quarterly cash dividend of $0.30 per common share, payable on December 29, 2021 [56] - Capital expenditures for the quarter were $46 million, with full-year expectations between $170 and $180 million [66] Q&A Session Summary Question: Can you talk about the supply chain challenges and sales cadence in Q4? - Management noted ongoing supply chain difficulties, particularly in Asia, but emphasized successful mitigation efforts to ensure holiday inventory availability [71][73] Question: What are the return metrics targeted for new stores? - The company expects new stores to achieve a 10% or greater 4-wall EBITDA margin, with internal rates of return ideally in the mid-20s [78] Question: How is the Food and Consumables strategy evolving? - Management indicated a focus on refining the food assortment to enhance productivity, despite not seeing positive comps in the last quarter [100][104]

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited consolidated financial statements detail its operational results, financial position, and cash flows [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This statement outlines the company's revenues, expenses, and resulting net income for the specified periods Consolidated Statements of Operations and Comprehensive Income (Unaudited) | Metric | Thirteen Weeks Ended July 31, 2021 ($ in thousands) | Thirteen Weeks Ended August 1, 2020 ($ in thousands) | Twenty-Six Weeks Ended July 31, 2021 ($ in thousands) | Twenty-Six Weeks Ended August 1, 2020 ($ in thousands) | | :------------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | | Net Sales | 1,457,374 | 1,644,197 | 3,082,926 | 3,083,346 | | Gross Margin | 577,797 | 683,564 | 1,231,744 | 1,254,320 | | Operating Profit | 53,850 | 608,643 | 176,402 | 683,078 | | Net Income and Comprehensive Income | 37,707 | 451,972 | 132,270 | 501,295 | | Basic EPS | 1.11 | 11.52 | 3.81 | 12.79 | | Diluted EPS | 1.09 | 11.29 | 3.75 | 12.66 | | Cash Dividends Declared per Common Share | 0.30 | 0.30 | 0.60 | 0.60 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity Consolidated Balance Sheets (Unaudited) | Metric | July 31, 2021 ($ in thousands) | January 30, 2021 ($ in thousands) | | :--------------------------------------- | :----------------------------- | :------------------------------ | | Cash and Cash Equivalents | 293,322 | 559,556 | | Inventories | 943,776 | 940,294 | | Total Current Assets | 1,379,164 | 1,585,789 | | Total Assets | 3,822,725 | 4,037,257 | | Total Current Liabilities | 959,613 | 1,000,624 | | Long-term Debt | — | 35,764 | | Total Shareholders' Equity | 1,153,369 | 1,277,731 | | Total Liabilities and Shareholders' Equity | 3,822,725 | 4,037,257 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement details the changes in the company's equity accounts over the specified period Consolidated Statements of Shareholders' Equity (Unaudited) - Twenty-Six Weeks Ended July 31, 2021 | Metric | January 30, 2021 ($ in thousands) | July 31, 2021 ($ in thousands) | | :---------------------------------- | :------------------------------ | :----------------------------- | | Balance | 1,277,731 | 1,153,369 | | Comprehensive Income | 132,270 | 132,270 | | Dividends Declared | (21,817) | (21,817) | | Purchases of Common Shares | (257,818) | (257,818) | | Share-based Employee Compensation Expense | 22,944 | 22,944 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities Consolidated Statements of Cash Flows (Unaudited) - Twenty-Six Weeks Ended | Metric | July 31, 2021 ($ in thousands) | August 1, 2020 ($ in thousands) | | :------------------------------------------ | :----------------------------- | :------------------------------ | | Net Income | 132,270 | 501,295 | | Net Cash Provided by Operating Activities | 142,158 | 468,384 | | Net Cash (Used in) Provided by Investing Activities | (77,086) | 517,586 | | Net Cash Used in Financing Activities | (331,306) | (140,131) | | (Decrease) Increase in Cash and Cash Equivalents | (266,234) | 845,839 | | Cash and Cash Equivalents: End of Period | 293,322 | 898,560 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide supplementary information and disclosures related to the consolidated financial statements [NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company operates as a neighborhood discount retailer with 1,418 stores and an e-commerce platform - As of July 31, 2021, Big Lots, Inc operated **1,418 stores** in 47 states and an e-commerce platform[15](index=15&type=chunk) - In year-to-date 2021, Big Lots realigned its merchandise categories, renaming 'Electronics, Toys, & Accessories' to 'Apparel, Electronics, & Other' and reclassifying several departments to better align with management reporting[22](index=22&type=chunk)[23](index=23&type=chunk) Warehousing, Distribution, and Outbound Transportation Costs | Period | 2021 ($ in millions) | 2020 ($ in millions) | | :------- | :------------------- | :------------------- | | Q2 | 71.9 | 59.7 | | YTD | 138.1 | 112.0 | Advertising Expenses | Period | 2021 ($ in millions) | 2020 ($ in millions) | | :------- | :------------------- | :------------------- | | Q2 | 21.9 | 21.9 | | YTD | 43.8 | 44.8 | [NOTE 2 – DEBT](index=10&type=section&id=NOTE%202%20%E2%80%93%20DEBT) The company maintains a $700 million credit facility and prepaid its remaining term note in June 2021 - As of July 31, 2021, Big Lots had **no borrowings outstanding** under its $700 million unsecured credit facility, with **$690.9 million available**[27](index=27&type=chunk) - The company prepaid the remaining **$44.3 million principal balance** of the 2019 Term Note on June 7, 2021, incurring a $0.4 million prepayment fee and recognizing a **$0.5 million loss** on debt extinguishment[28](index=28&type=chunk) Total Debt | Instrument | July 31, 2021 ($ in thousands) | January 30, 2021 ($ in thousands) | | :----------- | :----------------------------- | :------------------------------ | | 2019 Term Note | — | 50,264 | | Credit Agreement | — | — | | **Total Debt** | **—** | **50,264** | [NOTE 3 – FAIR VALUE MEASUREMENTS](index=11&type=section&id=NOTE%203%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) The company's investments in money market and mutual funds are recorded at fair value using Level 1 inputs Fair Value of Investments (July 31, 2021) | Asset | Balance Sheet Location | Fair Value ($ in thousands) | | :---------------------------------- | :----------------------- | :-------------------------- | | Money market funds | Cash and cash equivalents | 35,038 | | Mutual funds - deferred compensation plan | Other current assets | 27,354 | Fair Value of Investments (January 30, 2021) | Asset | Balance Sheet Location | Fair Value ($ in thousands) | | :---------------------------------- | :----------------------- | :-------------------------- | | Money market funds | Cash and cash equivalents | 175,113 | | Mutual funds - deferred compensation plan | Other Assets | 32,484 | [NOTE 4 – SHAREHOLDERS' EQUITY](index=12&type=section&id=NOTE%204%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) The company executed share repurchases under a $500 million program and paid consistent quarterly dividends - The Board of Directors authorized a **$500 million share repurchase program** on August 27, 2020, with no scheduled termination date[37](index=37&type=chunk) - As of July 31, 2021, **$96.8 million was available** for future repurchases under the 2020 Repurchase Authorization[38](index=38&type=chunk) Common Shares Repurchased (Year-to-Date 2021) | Period | Number of Shares Repurchased (in thousands) | Amount of Repurchased Shares (in thousands) | | :--------------- | :---------------------------------------- | :------------------------------------------ | | First quarter | 1,149 | 77,533 | | Second quarter | 2,405 | 152,883 | | **Total** | **3,554** | **230,416** | Cash Dividends Declared and Paid (2021) | Period | Dividends Per Share | Amount Declared ($ in thousands) | Amount Paid ($ in thousands) | | :--------------- | :------------------ | :----------------------------- | :--------------------------- | | First quarter | $0.30 | 11,206 | 12,460 | | Second quarter | $0.30 | 10,611 | 10,204 | | **Total** | **$0.60** | **21,817** | **22,664** | [NOTE 5 – SHARE-BASED PLANS](index=13&type=section&id=NOTE%205%20%E2%80%93%20SHARE-BASED%20PLANS) Share-based compensation expense increased significantly year-over-year due to vesting of performance-based awards - All Performance Restricted Share Units (PRSUs) awarded in 2020 **vested in the year-to-date 2021**[45](index=45&type=chunk) - The total unearned compensation cost related to all share-based awards outstanding (excluding 2021 PSUs) at July 31, 2021, was approximately **$37.0 million**, with a weighted-average remaining expense recognition period of approximately **1.6 years**[53](index=53&type=chunk) Share-based Compensation Expense | Period | Q2 2021 ($ in millions) | Q2 2020 ($ in millions) | YTD 2021 ($ in millions) | YTD 2020 ($ in millions) | | :------- | :---------------------- | :---------------------- | :----------------------- | :----------------------- | | Expense | 11.0 | 4.5 | 22.9 | 7.4 | Non-vested Restricted Stock Units Activity (Year-to-Date 2021) | Activity | Number of Shares | Weighted Average Grant-Date Fair Value Per Share | | :------------------------------------------------ | :--------------- | :----------------------------------------------- | | Outstanding at January 30, 2021 | 1,214,212 | $22.71 | | Granted | 241,532 | $69.07 | | Vested | (427,570) | $24.27 | | Forfeited | (44,032) | $25.35 | | Outstanding at July 31, 2021 | 984,142 | $33.77 | [NOTE 6 – INCOME TAXES](index=15&type=section&id=NOTE%206%20%E2%80%93%20INCOME%20TAXES) The company anticipates a net decrease in unrecognized tax benefits over the next 12 months - The estimated net decrease in unrecognized tax benefits for the next 12 months is approximately **$4.0 million**[54](index=54&type=chunk) [NOTE 7 – CONTINGENCIES](index=15&type=section&id=NOTE%207%20%E2%80%93%20CONTINGENCIES) The company is involved in various legal actions which are not expected to have a material financial impact - Management believes current legal actions and claims will be resolved **without a material effect** on the company's financial condition, results of operations, or liquidity[55](index=55&type=chunk) [NOTE 8 – BUSINESS SEGMENT DATA](index=15&type=section&id=NOTE%208%20%E2%80%93%20BUSINESS%20SEGMENT%20DATA) Net sales are reported across seven merchandise categories, with most showing a decline in Q2 2021 - The company's seven merchandise categories are Food, Consumables, Soft Home, Hard Home, Furniture, Seasonal, and Apparel, Electronics, & Other[56](index=56&type=chunk) Net Sales by Merchandise Category (Second Quarter) | Category | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | Change (%) | | :---------------------------- | :-------------------- | :-------------------- | :---------------------- | :--------- | | Furniture | 409,078 | 439,737 | (30,659) | (7.0)% | | Seasonal | 259,682 | 299,700 | (40,018) | (13.4)% | | Soft Home | 183,249 | 242,664 | (59,415) | (24.5)% | | Food | 178,167 | 205,797 | (27,630) | (13.4)% | | Consumables | 159,301 | 177,236 | (17,935) | (10.1)% | | Hard Home | 145,241 | 174,291 | (29,050) | (16.7)% | | Apparel, Electronics, & Other | 122,656 | 104,772 | 17,884 | 17.1% | | **Net Sales** | **1,457,374** | **1,644,197** | **(186,823)** | **(11.4)%** | [NOTE 9 – GAIN ON SALE OF DISTRIBUTION CENTERS](index=15&type=section&id=NOTE%209%20%E2%80%93%20GAIN%20ON%20SALE%20OF%20DISTRIBUTION%20CENTERS) The company generated a significant gain from the sale and leaseback of four distribution centers in 2020 - On June 12, 2020, Big Lots completed sale and leaseback transactions for four distribution centers, with an aggregate sale price of **$725.0 million**[58](index=58&type=chunk) - The transactions resulted in an aggregate gain on sales of **$463.1 million** and **$134.0 million** in financing liability proceeds[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on financial performance, condition, and future outlook [CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS](index=16&type=section&id=CAUTIONARY%20STATEMENT%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the risks and uncertainties associated with the company's forward-looking statements - Forward-looking statements are identified by terms such as "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," and "outlook"[60](index=60&type=chunk) - Actual results may differ materially due to various factors, including developments related to the **COVID-19 pandemic**, economic conditions, cost of goods, execution of strategic initiatives, competitive pressures, and **supply chain issues**[61](index=61&type=chunk) [OVERVIEW](index=17&type=section&id=OVERVIEW) This section provides a summary of key operating performance indicators for the second quarter - The Q2 2020 operating profit and diluted EPS were significantly boosted by a **$463.1 million pre-tax gain** on the sale of distribution centers, which contributed approximately **$8.54 per share** to diluted EPS[64](index=64&type=chunk) Key Operating Performance Indicators (Q2 2021 vs. Q2 2020) | Metric | Q2 2021 | Q2 2020 | Change ($ in millions) | Change (%) | | :------------------------------------ | :------ | :------ | :--------------------- | :--------- | | Net sales | $1,457.4M | $1,644.2M | $(186.8)M | (11.4)% | | Comparable sales | N/A | N/A | $(211.3)M | (13.2)% | | Gross margin dollars | $577.8M | $683.6M | $(105.8)M | (15.5)% | | Gross margin rate | 39.6% | 41.6% | (200 bps) | N/A | | Selling and administrative expenses | $488.7M | $504.0M | $(15.3)M | (3.0)% | | Selling and administrative expenses (% of net sales) | 33.5% | 30.7% | 280 bps | N/A | | Operating profit | $53.9M | $608.6M | $(554.7)M | (91.1)% | | Diluted earnings per share | $1.09 | $11.29 | $(10.20) | (90.3)% | | Cash and cash equivalents | $293.3M | $898.5M | $(605.2)M | (67.4)% | | Inventory | $943.8M | $713.5M | $230.3M | 32.3% | | Long-term debt | $0 | $43.1M | $(43.1)M | (100.0)% | | Cash dividends declared per common share | $0.30 | $0.30 | $0 | 0.0% | | Common shares acquired | 2.4M | N/A | N/A | N/A | [STORES](index=17&type=section&id=STORES) This section details the changes in the company's store count during the year-to-date period - The company expects its store count to **increase by approximately 20 stores** by the end of fiscal year 2021 compared to the end of 2020[66](index=66&type=chunk) Stores Opened and Closed (Year-to-Date) | Metric | 2021 | 2020 | | :------------------------------------ | :--- | :--- | | Stores open at the beginning of the fiscal year | 1,408 | 1,404 | | Stores opened during the period | 25 | 11 | | Stores closed during the period | (15) | (11) | | **Stores open at the end of the period** | **1,418** | **1,404** | [RESULTS OF OPERATIONS](index=18&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed comparison of operational results for the second quarter and year-to-date periods [SECOND QUARTER OF 2021 COMPARED TO SECOND QUARTER OF 2020](index=18&type=section&id=SECOND%20QUARTER%20OF%202021%20COMPARED%20TO%20SECOND%20QUARTER%20OF%202020) Q2 net sales and gross margin declined due to lapping prior-year stimulus and rising freight costs - The decrease in net sales and comparable sales was primarily driven by the larger impact of **government stimulus** on consumer behavior during Q2 2020 and the easing of COVID-19 nesting trends in Q2 2021[71](index=71&type=chunk)[72](index=72&type=chunk) - Gross margin rate **decreased 200 basis points to 39.6%** primarily due to higher inbound freight costs, exacerbated by increased ocean carriage rates and domestic transportation rates, partially offset by a lower markdown rate[75](index=75&type=chunk) - Selling and administrative expenses decreased by $15.3 million but **increased 280 basis points** as a percentage of net sales, driven by lower store payroll (absence of temporary wage increase), lower bonus expense, and absence of sale and leaseback transaction expenses, partially offset by increased distribution/transportation costs and share-based compensation[76](index=76&type=chunk)[78](index=78&type=chunk) Net Sales and Comparable Sales by Merchandise Category (Q2 2021 vs. Q2 2020) | Category | Q2 2021 Net Sales ($ in thousands) | Q2 2020 Net Sales ($ in thousands) | Net Sales Change (%) | Comps Change (%) | | :---------------------------- | :--------------------------------- | :--------------------------------- | :------------------- | :--------------- | | Furniture | 409,078 | 439,737 | (7.0)% | (9.5)% | | Seasonal | 259,682 | 299,700 | (13.4)% | (14.6)% | | Soft Home | 183,249 | 242,664 | (24.5)% | (26.1)% | | Food | 178,167 | 205,797 | (13.4)% | (14.9)% | | Consumables | 159,301 | 177,236 | (10.1)% | (11.4)% | | Hard Home | 145,241 | 174,291 | (16.7)% | (18.0)% | | Apparel, Electronics, & Other | 122,656 | 104,772 | 17.1% | 15.2% | | **Total Net Sales** | **1,457,374** | **1,644,197** | **(11.4)%** | **(13.2)%** | [YEAR-TO-DATE 2021 COMPARED TO YEAR-TO-DATE 2020](index=21&type=section&id=YEAR-TO-DATE%202021%20COMPARED%20TO%20YEAR-TO-DATE%202020) Year-to-date net sales were flat as higher freight and operating costs compressed profitability - Year-to-date net sales were flat, with a **1.7% comparable sales decrease** offset by a **$51.6 million increase** from non-comparable sales (new/relocated stores)[85](index=85&type=chunk) - Gross margin rate **decreased 70 basis points to 40.0%** primarily due to higher inbound freight costs, including ocean carriage rates, domestic transportation rates, fuel costs, and detention/demurrage charges[89](index=89&type=chunk) - Selling and administrative expenses **increased $23.5 million**, or 80 basis points as a percentage of net sales, driven by higher distribution and transportation costs, increased share-based compensation, and higher store occupancy costs, partially offset by lower store-related payroll and the absence of prior year's sale and leaseback transaction expenses and proxy contest costs[90](index=90&type=chunk)[91](index=91&type=chunk) Net Sales and Comparable Sales by Merchandise Category (YTD 2021 vs. YTD 2020) | Category | YTD 2021 Net Sales ($ in thousands) | YTD 2020 Net Sales ($ in thousands) | Net Sales Change (%) | Comps Change (%) | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------------------- | :--------------- | | Furniture | 890,509 | 855,438 | 4.1% | 1.8% | | Seasonal | 563,600 | 496,021 | 13.6% | 12.2% | | Soft Home | 407,103 | 439,416 | (7.4)% | (9.0)% | | Food | 358,464 | 420,911 | (14.8)% | (16.0)% | | Consumables | 321,689 | 372,931 | (13.7)% | (14.8)% | | Hard Home | 297,002 | 304,834 | (2.6)% | (4.0)% | | Apparel, Electronics, & Other | 244,559 | 193,795 | 26.2% | 24.4% | | **Total Net Sales** | **3,082,926** | **3,083,346** | **0.0%** | **(1.7)%** | [2021 Guidance](index=23&type=section&id=2021%20Guidance) The company provides its financial outlook for the third quarter and full fiscal year 2021 - The company anticipates significant **supply chain challenges** (COVID-19 related shutdowns) and a highly competitive domestic labor market (increased payroll expenses) to adversely impact net sales and gross margin in Q3 and Q4 2021[98](index=98&type=chunk) Q3 2021 Guidance (excluding share repurchases) | Metric | Guidance | | :------------------------------------ | :------------------------------------ | | Comparable sales | Decline in the mid-single digits | | Gross margin rate | Down approximately 175 basis points (due to freight) | | Selling and administrative expenses | Up slightly | | Diluted loss per share | $0.10 to $0.20 | Full Year 2021 Guidance (excluding share repurchases) | Metric | Guidance | | :------------------------------------ | :------------------------------------ | | Comparable sales | Decline in the low single digits | | Gross margin rate | Down approximately 100 basis points | | Selling and administrative expenses | Up | | Diluted earnings per share | $5.90 to $6.05 | [Capital Resources and Liquidity](index=23&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains strong liquidity through cash on hand and its unsecured credit facility - As of July 31, 2021, Big Lots had **$690.9 million available** under its $700 million unsecured credit facility and no outstanding borrowings[101](index=101&type=chunk) - The company prepaid the remaining **$44.3 million principal balance** of the 2019 Term Note in Q2 2021[102](index=102&type=chunk) - Big Lots intends to fund working capital, capital expenditures, share repurchases, and other commitments using **current cash and projected cash flows from operations**, without borrowing under the Credit Agreement[103](index=103&type=chunk) - Year-to-date 2021, the company purchased **3.6 million common shares for $230.4 million** under the 2020 Repurchase Authorization, with **$96.8 million remaining available** as of July 31, 2021[104](index=104&type=chunk) Cash Flow Components (YTD 2021 vs. YTD 2020) | Cash Flow Component | YTD 2021 ($ in thousands) | YTD 2020 ($ in thousands) | Change ($ in thousands) | | :------------------------------------------ | :------------------------ | :------------------------ | :---------------------- | | Net cash provided by operating activities | 142,158 | 468,384 | (326,226) | | Net cash (used in) provided by investing activities | (77,086) | 517,586 | (594,672) | | Net cash used in financing activities | (331,306) | (140,131) | (191,175) | [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=25&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) The preparation of financial statements relies on management's estimates, judgments, and assumptions - The preparation of financial statements requires management to make estimates, judgments, and assumptions that are evaluated on an ongoing basis using historical experience, current trends, and other reasonable factors[110](index=110&type=chunk) - Critical accounting policies and estimates are outlined in detail in the company's **2020 Form 10-K**[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk from interest rates and diesel fuel price volatility - An increase of **1% in the variable interest rate** on expected future borrowings would not currently materially affect the company's financial condition, results of operations, or liquidity[112](index=112&type=chunk) - As of July 31, 2021, the company had outstanding derivative instruments (collars) covering **2.4 million gallons of diesel fuel**[113](index=113&type=chunk) - A **10% difference** in the forward curve for diesel fuel prices could affect unrealized gains (losses) in other income (expense) by approximately **$0.8 million**[114](index=114&type=chunk) Diesel Fuel Derivatives (July 31, 2021) | Calendar Year of Maturity | Diesel Fuel Puts (Gallons, in thousands) | Diesel Fuel Calls (Gallons, in thousands) | Fair Value Asset (Liability) ($ in thousands) | | :------------------------ | :--------------------------------------- | :---------------------------------------- | :-------------------------------------------- | | 2021 | 1,200 | 1,200 | 224 | | 2022 | 1,200 | 1,200 | 404 | | **Total** | **2,400** | **2,400** | **628** | [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective - Management concluded that disclosure controls and procedures were **effective** as of July 31, 2021[115](index=115&type=chunk) - There were **no material changes** in internal control over financial reporting during the most recent fiscal quarter[116](index=116&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings are detailed in Note 7 of the financial statements - For information regarding legal proceedings, refer to **Note 7** to the accompanying consolidated financial statements[118](index=118&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to previously disclosed risk factors during the quarter - **No material changes** to the risk factors previously disclosed in the 2020 Form 10-K occurred during the second quarter of 2021[119](index=119&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 2.4 million common shares for approximately $152.9 million in Q2 2021 - During the second quarter of 2021, the company purchased **2.4 million common shares** for approximately **$152.9 million** under the 2020 Repurchase Authorization[119](index=119&type=chunk) Common Share Repurchase Activity (Q2 2021) | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans (in thousands) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (in thousands) | | :-------------------------- | :-------------------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------ | | May 2, 2021 - May 29, 2021 | 46 | $69.07 | 42 | 246,750 | | May 30, 2021 - June 26, 2021 | 1,521 | $65.81 | 1,519 | 146,750 | | June 27, 2021 - July 31, 2021 | 844 | $59.26 | 844 | 96,751 | | **Total** | **2,411** | **$63.58** | **2,405** | **96,751** | [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There were **no defaults** upon senior securities[120](index=120&type=chunk) [Item 4. Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - There were **no mine safety disclosures**[120](index=120&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) The company reported no other information - There was **no other information** to report[120](index=120&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including award agreements and officer certifications - Exhibits include Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement and Restricted Stock Units Award Agreement[123](index=123&type=chunk) - Certifications of Principal Executive Officer and Principal Financial Officer pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002** are filed as exhibits[123](index=123&type=chunk) - **XBRL Taxonomy** Definition, Presentation, Labels, Calculation, and Schema Linkbase Documents are included[123](index=123&type=chunk)

Big Lots, Inc. (NYSE:BIG) Q2 2021 Earnings Conference Call August 27, 2021 8:00 AM ET Company Participants Bruce Thorn - President and Chief Executive Officer Jonathan Ramsden - Executive Vice President, Chief Financial and Administrative Officer Conference Call Participants Spencer Hanus - Wolfe Research Peter Keith - Piper Sandler Joe Feldman - Telsey Advisory Group Jason Haas - Bank of America Anthony Chukumba - Loop Capital Brad Thomas - KeyBanc Capital Markets Operator Ladies and gentlemen, good mornin ...

| --- | --- | --- | |-------|-------|-------| | | | | | | | | | Re | | | FORWARD LOOKING STATEMENTS Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "tarqet," "forecast," "guidance," " ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported significant growth in Q1 2021 with increased sales, net income, and operating cash flow [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Strong sales growth and improved gross margin drove a significant increase in operating profit and net income Consolidated Statements of Operations (Q1 2021 vs Q1 2020) | Metric | Thirteen Weeks Ended May 1, 2021 | Thirteen Weeks Ended May 2, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | **Net sales** | $1,625,552 | $1,439,149 | 13.0% | | **Gross margin** | $653,947 | $570,756 | 14.6% | | **Operating profit** | $122,552 | $74,435 | 64.7% | | **Net income** | $94,563 | $49,323 | 91.7% | | **Diluted EPS** | $2.62 | $1.26 | 107.9% | | **Cash dividends per share** | $0.30 | $0.30 | 0.0% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet remained stable with a slight increase in cash and a minor decrease in shareholders' equity Consolidated Balance Sheet Highlights | Account | May 1, 2021 (in thousands) | January 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $613,329 | $559,556 | | **Inventories** | $901,482 | $940,294 | | **Total current assets** | $1,628,812 | $1,585,789 | | **Total assets** | $4,037,536 | $4,037,257 | | **Total current liabilities** | $1,049,919 | $1,000,624 | | **Long-term debt** | $32,063 | $35,764 | | **Total shareholders' equity** | $1,268,502 | $1,277,731 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity slightly decreased due to share repurchases and dividends offsetting net income - Key changes in shareholders' equity for Q1 2021 included **$94.6 million from comprehensive income**, offset by **$11.2 million in dividends** and **$104.5 million used for purchasing treasury shares**[7](index=7&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased while financing activities shifted to a net use of cash due to share repurchases Consolidated Cash Flows (Q1 2021 vs Q1 2020) | Cash Flow Activity | Thirteen Weeks Ended May 1, 2021 (in thousands) | Thirteen Weeks Ended May 2, 2020 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $204,293 | $146,121 | | **Net cash used in investing activities** | ($32,170) | ($28,913) | | **Net cash (used in) provided by financing activities** | ($118,350) | $141,943 | | **Increase in cash and cash equivalents** | $53,773 | $259,151 | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail store count, merchandise category realignment, credit facility status, and share repurchase activity - As of May 1, 2021, the company operated **1,413 stores in 47 states**[11](index=11&type=chunk) - In Q1 2021, the company **realigned its merchandise categories**, eliminating the 'Electronics, Toys, & Accessories' category and absorbing its departments into Soft Home, Seasonal, and Hard Home categories[18](index=18&type=chunk)[19](index=19&type=chunk) - The company had a **$700 million unsecured credit facility** with **$694.2 million available** as of May 1, 2021; subsequent to the quarter end, on June 7, 2021, the company prepaid the remaining **$44.3 million balance** on its 2019 Term Note[24](index=24&type=chunk)[25](index=25&type=chunk) - Under its $500 million share repurchase authorization, the company acquired **1.1 million shares for $77.5 million** in Q1 2021, leaving **$249.6 million available** for future repurchases[35](index=35&type=chunk)[36](index=36&type=chunk) Net Sales by Merchandise Category (Q1 2021 vs Q1 2020) | Category | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :--- | :--- | :--- | | Furniture | $481,431 | $415,700 | | Seasonal | $328,794 | $215,302 | | Soft Home | $303,981 | $248,743 | | Consumables | $204,015 | $237,241 | | Food | $175,131 | $203,819 | | Hard Home | $132,200 | $118,344 | | **Total Net Sales** | **$1,625,552** | **$1,439,149** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 results driven by stimulus and home-related trends, and provides Q2 guidance [Overview](index=16&type=section&id=Overview) The company highlights strong Q1 2021 performance with increased sales, improved margins, and higher EPS Key Performance Indicators (Q1 2021 vs Q1 2020) | Indicator | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Net Sales Increase | 13.0% | - | - | | Comparable Sales Increase | 11.3% | - | - | | Gross Margin Rate | 40.2% | 39.7% | +50 bps | | Operating Profit Rate | 7.5% | 5.2% | +230 bps | | Diluted EPS | $2.62 | $1.26 | +$1.36 | | Cash & Cash Equivalents | $613.3M | $311.8M | +$301.5M | [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Net sales grew due to comparable sales increases, while gross margin improved despite higher freight costs - Net sales growth was driven by an **11.3% increase in comparable sales**, benefiting from government stimulus packages and continued 'nesting' trends where customers invest in their homes[68](index=68&type=chunk)[69](index=69&type=chunk) - Gross margin rate **increased by 50 basis points to 40.2%**, primarily due to lower markdowns and a favorable product mix, which was partially offset by higher inbound freight costs[71](index=71&type=chunk) - Selling and administrative expenses increased by $38.8 million in absolute terms but **decreased as a percentage of net sales by 130 basis points to 30.6%**[72](index=72&type=chunk)[73](index=73&type=chunk) Net Sales and Comparable Sales Change by Category (Q1 2021) | Category | Net Sales Change (%) | Comps Change (%) | | :--- | :--- | :--- | | Furniture | 15.8% | 13.7% | | Seasonal | 52.7% | 51.0% | | Soft Home | 22.2% | 20.6% | | Consumables | (14.0%) | (14.7%) | | Food | (14.1%) | (15.1%) | | Hard Home | 11.7% | 9.3% | | **Total** | **13.0%** | **11.3%** | [2021 Guidance](index=19&type=section&id=2021%20Guidance) The company provides Q2 2021 guidance but refrains from full-year projections due to pandemic-related uncertainty - The company is **not providing full-year 2021 guidance** due to uncertainty related to the COVID-19 pandemic[79](index=79&type=chunk) Q2 2021 Guidance | Metric | Expectation | | :--- | :--- | | Comparable Sales | Decrease in the low double digits | | Gross Margin Rate | Below last year | | Selling & Admin Expenses | Slightly below last year | | Diluted EPS | $1.00 to $1.15 | [Capital Resources and Liquidity](index=20&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains a strong liquidity position, funding operations and shareholder returns with cash on hand - At May 1, 2021, the company had **no borrowings under its $700 million credit facility** and **$694.2 million available**[82](index=82&type=chunk) - The company **repurchased 1.1 million common shares for $77.5 million** in Q1 2021, with **$249.6 million remaining** under the 2020 Repurchase Authorization[85](index=85&type=chunk) - A quarterly cash dividend of **$0.30 per share** was declared and paid in Q1 2021, consistent with the prior year[86](index=86&type=chunk) Change in Cash Flows (Q1 2021 vs Q1 2020) | Cash Flow Activity | Change (in thousands) | | :--- | :--- | | Net cash provided by operating activities | $58,172 | | Net cash used in investing activities | ($3,257) | | Net cash (used in) provided by financing activities | ($260,293) | [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposure is primarily related to diesel fuel prices, with interest rate risk currently immaterial - The company had **no borrowings under its Credit Agreement** at May 1, 2021, so a 1% change in variable interest rates would not materially affect its financials[95](index=95&type=chunk) - To manage fuel cost volatility, the company had outstanding derivative collars covering **3.0 million gallons of diesel fuel** as of May 1, 2021[96](index=96&type=chunk) - A hypothetical **10% change in the forward curve for diesel fuel prices** could affect unrealized gains or losses by approximately **$1.0 million**[97](index=97&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material internal control changes - Based on an evaluation as of the end of the reporting period, the Principal Executive Officer and Principal Financial Officer concluded that the company's **disclosure controls and procedures were effective**[98](index=98&type=chunk) - **No changes occurred in internal control over financial reporting** during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[99](index=99&type=chunk) [Part II. Other Information](index=22&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal matters are not expected to have a material impact on the company's financial condition - The company is involved in ordinary course legal actions and claims but **does not expect them to have a material effect** on its financial condition, results of operations, or liquidity[51](index=51&type=chunk)[100](index=100&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported during the first quarter of 2021 - During the first quarter of 2021, there were **no material changes to the risk factors** previously disclosed in the 2020 Form 10-K[101](index=101&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its Q1 2021 share repurchase activities under its authorized buyback program - The 2020 Repurchase Authorization allows for the repurchase of up to **$500 million of common shares** and has no scheduled termination date[104](index=104&type=chunk) Share Repurchases in Q1 2021 | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | Shares Purchased Under Plan (thousands) | Value Remaining Under Plan (thousands) | | :--- | :--- | :--- | :--- | :--- | | Jan 31 - Feb 27 | 41 | $55.25 | 39 | $325,000 | | Feb 28 - Mar 27 | 543 | $67.85 | 500 | $290,948 | | Mar 28 - May 1 | 954 | $68.56 | 610 | $249,634 | | **Total** | **1,538** | **$67.96** | **1,149** | **$249,634** | [Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - There were **no defaults upon senior securities**[105](index=105&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as the company has no mine safety disclosures to report - There are **no mine safety disclosures**[105](index=105&type=chunk) [Other Information](index=23&type=section&id=Item%205.%20Other%20Information) The company reports no other information for the period - There is **no other information to report**[105](index=105&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL data files - Exhibits filed include award agreements, **Sarbanes-Oxley Act certifications** by the CEO and CFO, and XBRL taxonomy documents[108](index=108&type=chunk)

Big Lots, Inc. (NYSE:BIG) Q1 2021 Earnings Conference Call May 28, 2021 8:00 AM ET Company Participants Bruce Thorn - President & Chief Executive Officer Jonathan Ramsden - Executive Vice President, Chief Financial Officer & Chief Administrative Officer Conference Call Participants Joe Feldman - Telsey Advisory Group Peter Keith - Piper Sandler Anthony Chukumba - Loop Capital Markets Jason Haas - Bank of America Brad Thomas - KeyBanc Capital Markets Karen Short - Barclays Operator Ladies and gentlemen, good ...