Big 5 Sporting Goods(BGFV) - 2026 Q2 - Quarterly Results

Fiscal 2025 Second Quarter Highlights Big 5 Sporting Goods reported a challenging Q2 FY2025 with significant financial declines and ongoing progress towards a go-private transaction Financial Overview Big 5 Sporting Goods Corporation reported a challenging fiscal 2025 second quarter with significant declines in net sales, same store sales, and gross profit margin, leading to an increased net loss and negative Adjusted EBITDA compared to the prior year Key Financial Highlights | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :-------------------------- | :---------- | :---------- | :----------- | | Net Sales | $184.9 M | $199.8 M | -7.4% | | Same Store Sales | -6.1% | N/A | -6.1 pp | | Gross Profit | $52.2 M | $58.7 M | -11.1% | | Gross Profit Margin | 28.2% | 29.4% | -1.2 pp | | Net Loss | $(24.5) M | $(10.0) M | -145.0% | | Basic EPS | $(1.11) | $(0.46) | -141.3% | | Adjusted EBITDA | $(14.7) M | $(8.7) M | -68.9% | Strategic Update The Company's CEO acknowledged the challenging macroeconomic and geopolitical environment impacting consumer spending. Progress is being made towards the previously announced go-private transaction, with an expected closing in the second half of 2025, subject to customary conditions and stockholder approval - CEO Steven G. Miller noted that second quarter results reflect the challenging macroeconomic and geopolitical environment affecting consumer discretionary spending[7] - The pending go-private transaction with Worldwide Golf and Capitol Hill Group is progressing towards an expected closing in the second half of 2025, subject to customary closing conditions and stockholder approval[7][11] Financial Performance The company experienced a substantial decline in Q2 FY2025 net sales and profitability, exacerbated by merger-related expenses and asset impairment charges Second Quarter 2025 Results The second quarter of fiscal 2025 saw a decline in net sales and profitability, with increased operating expenses contributing to a higher net loss compared to the prior year. The results were impacted by merger-related expenses and asset impairment charges Net Sales and Same Store Sales Net sales declined by 7.4% year-over-year, accompanied by a 6.1 percentage point decrease in same store sales Net Sales and Same Store Sales Performance | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :---------------- | :----------- | :----------- | :----------- | | Net Sales | $184.9 M | $199.8 M | -7.4% | | Same Store Sales | -6.1% | N/A | -6.1 pp | Gross Profit and Margin Gross profit decreased by 11.1%, with the gross profit margin declining by 1.2 percentage points due to lower merchandise margins and higher expenses Gross Profit and Margin Analysis | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------ | :-------- | :-------- | :----------- | | Gross Profit | $52.2 M | $58.7 M | -11.1% | | Gross Profit Margin | 28.2% | 29.4% | -1.2 pp | - The decrease in gross profit margin was primarily due to a 50 basis point decline in merchandise margins year-over-year, coupled with higher store occupancy and distribution expenses as a percentage of net sales[3] Selling and Administrative Expense Selling and administrative expenses increased by 4.4%, rising to 40.8% of net sales, driven by merger-related costs and asset impairment charges Selling and Administrative Expense Overview | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :----------------------------------- | :-------- | :-------- | :----------- | | Selling and Administrative Expense | $75.4 M | $72.2 M | +4.4% | | S&A Expense as % of Net Sales | 40.8% | 36.1% | +4.7 pp | - The increase in selling and administrative expense was primarily driven by higher legal and third-party expenses related to the merger proposal, increased employee benefit-related expenses, and store asset impairment charges, partially offset by lower employee labor expense[4] Net Loss and Earnings Per Share The company reported a significantly higher net loss of $(24.5) million and a basic EPS of $(1.11), impacted by merger expenses and asset impairment Net Loss and EPS Summary | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :---------- | :---------- | :---------- | :----------- | | Net Loss | $(24,540) K | $(10,004) K | -145.3% | | Basic EPS | $(1.11) | $(0.46) | -141.3% | - The net loss for Q2 FY2025 included $2.8 million ($0.13 per basic share) in merger transaction-related expenses and $1.3 million ($0.06 per basic share) for a non-cash asset impairment charge for certain underperforming stores[5] - Unlike Q2 FY2024, which included a $3.6 million income tax benefit, Q2 FY2025 net loss does not reflect an income tax benefit due to a valuation allowance related to deferred tax assets established in Q3 FY2024[5] Non-GAAP Financial Measures Adjusted EBITDA for the second quarter of fiscal 2025 was significantly more negative than the prior year, reflecting the overall decline in financial performance and the impact of specific adjustments Adjusted EBITDA Summary | Metric | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :-------------- | :---------- | :---------- | :----------- | | Adjusted EBITDA | $(14,723) K | $(8,735) K | -68.5% | Adjusted EBITDA Adjusted EBITDA for Q2 FY2025 was $(14.7) million, a significant decline from $(8.7) million in Q2 FY2024, after accounting for merger and impairment expenses Adjusted EBITDA Reconciliation | Metric | 13 Weeks Ended June 29, 2025 (in thousands) | 13 Weeks Ended June 30, 2024 (in thousands) | | :-------------- | :---------------------------------------- | :---------------------------------------- | | GAAP Net Loss | $(24,540) | $(10,004) | | Interest expense| 1,330 | 82 | | Income tax | 8 | (3,581) | | Depreciation | 4,354 | 4,768 | | EBITDA | $(18,848) | $(8,735) | | Merger expense | 2,814 | — | | Store impairment| 1,311 | — | | Adjusted EBITDA | $(14,723) | $(8,735) | Financial Position The balance sheet at Q2 FY2025 reflects increased credit facility borrowings, slightly reduced cash, and stable merchandise inventories Balance Sheet Overview As of the end of fiscal 2025 second quarter, the Company's balance sheet showed increased borrowings under its credit facility, a slight decrease in cash, and merchandise inventories consistent with the prior year Liquidity and Capital Resources Borrowings under the credit facility significantly increased to $71.4 million, while cash balances slightly decreased to $4.9 million Liquidity and Capital Resources Summary | Metric | June 29, 2025 | December 29, 2024 | | :----------------------------------- | :------------ | :---------------- | | Borrowings under credit facility | $71.4 M | $13.8 M | | Cash | $4.9 M | $5.4 M | Merchandise Inventories Merchandise inventories remained consistent with the prior year period, totaling $283.3 million at the end of Q2 FY2025 - Merchandise inventories at the end of the second quarter of fiscal 2025 were consistent with the prior year period[8] Merchandise Inventories Overview | Metric | June 29, 2025 | December 29, 2024 | | :---------------------- | :------------ | :---------------- | | Merchandise Inventories | $283,271 K | $260,307 K | Operational Update Big 5 Sporting Goods operates 414 stores, with plans for approximately four closures in Q3 FY2025 and no new store openings Store Operations Big 5 Sporting Goods currently operates 414 stores and anticipates closing approximately four additional stores in the fiscal 2025 third quarter, with no new store openings planned Store Operations Summary | Metric | Value | | :---------------------- | :---- | | Current Stores in Operation | 414 | | Expected Q3 FY2025 Closures | ~4 | | Expected Q3 FY2025 New Stores | 0 | Definitive Agreement to be Acquired Big 5 Sporting Goods has entered a definitive merger agreement for $1.45 per share, with closing expected in H2 2025 pending stockholder approval Transaction Details Big 5 Sporting Goods entered into a definitive merger agreement to be acquired by a partnership of Worldwide Golf and Capitol Hill Group for $1.45 per share in an all-cash transaction, representing a significant premium - The Company entered into a definitive merger agreement with a partnership comprised of Worldwide Golf and Capitol Hill Group[10] Acquisition Terms | Metric | Value | | :---------------------- | :---------- | | Acquisition Price per Share | $1.45 | | Premium to 60-day VWAP | ~36% | Closing Conditions and Stockholder Approval The acquisition is anticipated to close in the second half of 2025, contingent upon customary closing conditions and the approval of Big 5's stockholders, after which the company will become private and delist from Nasdaq - The Transaction is expected to close in the second half of 2025[11] - Closing is subject to certain conditions, including the approval of Big 5's stockholders[11] - Upon completion, Big 5's common stock will no longer be listed on the Nasdaq Stock Exchange, and Big 5 will become a private company[11] Additional Information and Solicitation A special stockholder meeting will be announced to obtain approval for the merger, and Big 5 has filed a proxy statement and other relevant documents with the SEC, urging investors to review these materials for important information - A special stockholder meeting will be announced soon to obtain stockholder approval for the proposed merger[12] - Big 5 has filed a proxy statement (Proxy Statement) and other relevant documents with the SEC, which will contain important information about the Company and the proposed merger[12] - Big 5 and certain directors, executive officers, and other management may be deemed participants in soliciting proxies from stockholders[13] Company Profile Big 5 Sporting Goods is a leading western US sporting goods retailer, operating 414 stores offering a comprehensive range of athletic and outdoor products About Big 5 Sporting Goods Corporation Big 5 Sporting Goods is a prominent sporting goods retailer in the western United States, operating 414 stores that offer a comprehensive range of athletic and outdoor equipment, apparel, and accessories - Big 5 is a leading sporting goods retailer in the western United States, operating 414 stores[14] - The company provides a full-line product offering in a traditional sporting goods store format, averaging 12,000 square feet[14] - Product mix includes athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment for various sports and recreational activities[14] Disclosures and Non-GAAP Information This section outlines forward-looking statements, their inherent risks, and explanations of non-GAAP financial measures used for performance evaluation Forward-Looking Statements The communication contains forward-looking statements subject to various risks and uncertainties, particularly concerning the proposed merger and general business operations, and should not be unduly relied upon - The communication contains forward-looking statements regarding the proposed acquisition of Big 5 and its expected timing, identifiable by terms such as 'expect,' 'plan,' 'will,' etc[15] - These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially[16] - Key risks include the merger not being completed, failure to realize anticipated benefits, competing offers, satisfaction of closing conditions, termination fees, impact on personnel and operations, unknown liabilities, transaction costs, legal proceedings, stock price decline if merger fails, and general business strategies and catastrophic events[16] Non-GAAP Financial Measures Explanation The Company provides non-GAAP financial measures, EBITDA and Adjusted EBITDA, as supplemental information to GAAP results, used internally for forecasting and performance evaluation, despite potential differences from other companies' calculations - The Company provides non-GAAP EBITDA and Adjusted EBITDA, which are not prepared in accordance with GAAP and exclude certain items[18] - These non-GAAP measures are used internally for forecasting and evaluating operating performance, providing useful information by excluding expenses not indicative of core operating results[18] - The GAAP measure most comparable to non-GAAP EBITDA and Adjusted EBITDA is net (loss) income, with a reconciliation provided[18]