Brian Wells Hibbett Pitch Edit
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Brian Wells July 10, 2014 HIBBETT SPORTS (NASDAQ: HIBB) 1
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Foolish intern Brian Wells recently put together a slide deck on Hibbett Sports as a potential investment idea.
Transcript of Brian Wells Hibbett Pitch Edit
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Brian WellsJuly 10, 2014
HIBBETT SPORTS(NASDAQ: HIBB)
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HIBBETT SPORTS
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Valuation
Free Cash Flow
Returns on Capital Growth
Share Buy Back
THE VIRTOUS CIRCLE
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• 19% below 52 week high• Fair Value $54 - $61
2006 2007 2008 2009 2010 2011 2012 2013 2014
28.0
23.6
18.4
17.9 20
.9
21.6 24
.0
20.8
19.5
17.7
13.9
10.7
10.6 11
.9
12.1 13
.9
12 11.9
P/E EV/EBIT
WHAT IS THE COMPANY WORTH?
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2010 2011 2012 2013 2014$0
$10
$20
$30
$40
$50
$60
$70
$27
$51
$42
$65
$2
In Millions of Dollars
Cap Ex2010 – $9.6M 2011 – $10.5M2012 – $13M2013 – $22M2014 – $50.5M
FREE CASH FLOW
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RETURNS ON CAPITAL
2010 2011 2012 2013 20145%
10%
15%
20%
25%
30%
35%ROIC
HIBB DKS BGFV
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RETURNS ON CAPITAL
2010 2011 2012 2013 20145%
10%
15%
20%
25%
30%
35%ROE
HIBB DKS BGFV
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Improving Margins
2005 2006 2007 2008 2009 2010 2011 2012 2013 201425%
27%
29%
31%
33%
35%
37%
Gross Margin
HIBB DKS BGFV
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SMALL MARKET FOCUS939 Stores in 31 States
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SMALL MARKET FOCUS
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COMPETETIVE OVERLAP
1 mile 3 miles 5 miles 10 miles0%
5%
10%
15%
20%
25%
Overlap with competitors by mile radiusSource: Hibbett Roadshow Presentation
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• FY 2013 – 900K shares at $49.9M– Avg Cost Basis $55/share
• FY 2014 – 400K shares at $20.1M– Avg Cost Basis $50/share
• All time – 12.4M shares at $343.4M– Avg Cost Basis $28/share
• FY 2015 – Planned 4%
SHARE REPURCHSES
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• Separate Chairman and CEO– Chairman started in 1965 as retail clerk
• Comparable pay to competitors• Glassdoor rating 3.2, CEO 66% approval• IT focus to improve efficiency• Return capital to shareholders• Conservative with debt
MANAGEMENT
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Wonderful Company + Fair Price + Long-Term Thinking = Outsized Returns
– Andy Cross
SOLVING FOR X
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• Store Model Prototype• Financial Highlights 1• Financial Highlights 2
Appendix
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HIBBETT STORE MODEL
AppendixSource: Hibbett Roadshow Presentation
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FINANCIAL HIGHLIGHTS 1
AppendixSource: Hibbett Roadshow Presentation
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FINANCIAL HIGHLIGHTS 2
AppendixSource: Hibbett Roadshow Presentation
