GlobeNewswire Inc | Dec 2, 2020 04:06PM EST

December 02, 2020

WEST JORDAN, Utah, Dec. 02, 2020 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the Company) (Nasdaq: SPWH) today announced financial results for the thirteen and thirty-nine weeks ended October 31, 2020.

Sportsmans Warehouse continued its exceptional performance in the third quarter of 2020. We were extremely pleased with the efforts of associates in all of our facilities as we worked as a team to safely and effectively serve customers, both new and returning, said Jon Barker, Sportsmans Warehouse CEO. During the third quarter, same store sales increased 41% compared to the same period last year, driven by elevated participation in fishing, camping and hunting, and our continued market share gains in firearms.

Mr. Barker stated, We continue to be excited about the expansion of our ecommerce capabilities, with ecommerce-driven sales up over 200% from the prior year period. We are also highly encouraged by the strong visitor traffic on both our website and inside of our stores. We opened 9 new stores year-to-date in 2020, taking the total Sportsmans Warehouse store count to 111. In addition, our first Legacy Shooting Center, which opened earlier this year, is performing ahead of expectations.

We believe we are well positioned to continue to capitalize on substantial growth opportunities, including heightened participation in outdoor activities, ecommerce growth, and new store expansion to create long-term shareholder value.

For the thirteen weeks endedOctober31, 2020

-- Net sales were $385.7 million, an increase of $143.2 million, or 59.1%, as compared to the third quarter of fiscal year 2019. The net sales increase was primarily due to a surge in demand across all major categories, led by our hunting and shooting category, as well as strong growth in our ecommerce platform compared to the prior year period. -- Same store sales increased 40.9% during the third quarter of 2020 compared to the third quarter of 2019. -- Gross profit was $130.6 million or 33.9% of net sales, compared to $84.2 million or 34.7% of net sales in the comparable prior year period, a year-over-year increase of $46.4 million in gross profit and an 80-basis point decrease in gross profit margin. -- Net income was $30.5 million compared to net income of $10.5 million in the third quarter of 2019. Adjusted net income was $31.5 million compared to adjusted net income of $10.8 million in the third quarter of 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $49.9 million compared to $23.2 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.68 compared to a diluted earnings per share of $0.24 in the comparable prior year period. Adjusted diluted earnings per share were $0.71 compared to adjusted diluted earnings per share of $0.25 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

For the thirty-nine weeks ended October31, 2020:

-- Net sales were $1,013.6 million, an increase of $385.3 million, or 61.3%, as compared to the first three quarters of fiscal year 2019. The net sales increase was primarily due to a surge in demand across all major categories, led by our hunting and shooting category, as well as strong growth in our ecommerce platform compared to the prior year period. -- Same store sales increased 44.4% during the first three quarters of 2020 compared to the comparable period in 2019. -- Gross profit was $334.5 million or 33.0% of net sales, as compared to $211.6 million or 33.7% of net sales for the comparable prior year period, a year-over-year increase of $122.9 million in gross profit and a 70-basis point decrease in gross profit margin. -- Net income was $61.8 million compared to net income of $10.5 million in the first quarters of 2019. Adjusted net income was $65.6 million compared to adjusted net income of $11.3 million in the first three quarters of 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $111.7 million compared to $39.4 million in the first three quarters of 2019 (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $1.40 for the thirty-nine weeks ended October 31, 2020 compared to diluted earnings per share of $0.24 for the same period last year. Adjusted diluted earnings per share were $1.48 for the thirty-nine weeks ended October 31, 2020 compared to adjusted diluted earnings per share of $0.26 for the same period last year (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as ofOctober31, 2020

-- The Company was in a net cash position at the end of the third quarter of 2020 with of $19.3 million in cash on hand, no borrowings under the Companys revolving credit facility, and $8.0 million outstanding under the term loan, net of unamortized debt issuance costs. This is an improvement in net debt of $170.1 million year-over-year. -- Total liquidity was $238 million as of the end of the second quarter of 2020, comprised of $218 million of availability on the revolving credit facility and $19 million of cash on hand, compared to $80 million in total liquidity at the end of the third quarter of 2019.

Fourthquarter and fiscal year 2020outlook:

For the fourth quarter of fiscal year 2020, net sales are expected to be in the range of $356 million to $386 million based on same store sales growth in the range of 32% to 42% compared to the corresponding period of fiscal year 2019. Adjusted EBITDA is expected to be in the range of $31.0 million to $35.0 million with diluted earnings per share of $0.39 to $0.45 on a weighted average of approximately 44.5 million estimated common shares outstanding.

For fiscal year 2020, net sales are expected to be in the range of $1,370 million to $1,400 million based on same store sales growth in the range of 42% to 46% compared to fiscal year 2019. Adjusted EBITDA is expected to be in the range of $143.6 million to $147.2 million with adjusted earnings per diluted share of $1.87 to $1.93 on a weighted average of approximately 44.3 million estimated common shares outstanding (see GAAP and Non-GAAP Measures).

Conference Call Information:

A conference call to discuss third quarter and third quarter year-to-date 2020 financial results is scheduled for today, December 2, 2020, at 4:30 PM Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Companys website at www.sportsmans.com.

Non-GAAP Information

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the SEC): adjusted income from operations, adjusted net income, adjusted diluted earnings per share and Adjusted EBITDA. We define adjusted income from operations and adjusted net income as income from operations and net income, respectively, in each case, plus expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, costs incurred for the recruitment and hiring of key members of management, certain expenses incurred relating to the acquisition of Field and Stream stores, tax benefits recognized, a legal settlement accrual, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, as applicable. We define adjusted diluted earnings per share as diluted earnings per share excluding the impact of expenses incurred related to the bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, expenses incurred relating to the recruitment and hiring of key members of management, certain expenses incurred relating to the acquisition of Field and Stream stores, a legal settlement accrual, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, as applicable. We define Adjusted EBITDA as net income plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation expense, bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, pre-opening expenses, and other gains, losses and expenses that we do not believe are indicative of our ongoing expenses. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures under GAAP and Non-GAAP Measures in this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Companys business and facilitate a more meaningful comparison of its diluted earnings per share and actual results on a period-over-period basis. The Company has provided this information as a means to evaluate the results of its ongoing operations. Other companies in the Companys industry may calculate these items differently than the Company does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Companys results as reported under GAAP.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this release include, but are not limited to, statements regarding our outlook for the fourth quarter and fiscal year 2020, our ability to execute on our growth strategy. Investors can identify these statements by the fact that they use words such as "continue", "expect", "may", opportunity, "plan", "future", ahead and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to many factors including, but not limited to: the potential effects of COVID-19 and measures intended to reduce its spread on the Companys operations; the Companys retail-based business model; general economic, market and other conditions and changes in consumer spending; the Companys concentration of stores in the Western United States; competition in the outdoor activities and specialty retail market; changes in consumer demands; the Companys expansion into new markets and planned growth; current and future government regulations; risks related to the Companys continued retention of its key management; the Companys existing distribution center or the Companys planned new distribution center; quality or safety concerns about the Companys merchandise; events that may affect the Companys vendors; trade restrictions; public health crises and social unrest; and other factors that are set forth in the Company's filings with the SEC, including under the caption Risk Factors in the Companys Form 10-K for the fiscal year ended February 1, 2020 which was filed with the SEC on April 9, 2020, and the Companys other public filings made with the SEC and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Companys assumptions prove incorrect, the Companys actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this release speaks only as of the date on which the Company makes it. Factors or events that could cause the Companys actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Sportsman's Warehouse Holdings, Inc.

Sportsmans Warehouse Holdings, Inc. is an outdoor specialty retailer focused on meeting the needs of the seasoned outdoor veteran, the first-time participant, and everyone in between. We provide outstanding gear and exceptional service to inspire outdoor memories.

For press releases and certain additional information about the Company, visit the Investor Relations section of the Company's website at www.sportsmans.com.

Investor ContactsRobert Julian, Chief Financial OfficerCaitlin Howe, Vice President, Corporate Development & Investor Relations(801) 566-6681investors@sportsmans.com

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Statements of Loss (Unaudited) (in thousands, except per share data) For the Thirteen Weeks Ended October 31, % of net November % of YOY 2020 sales 2, 2019 net Variance sales Net sales $ 385,748 100.0 % $ 242,466 100.0 % $ 143,282 Cost of goods 255,166 66.1 % 158,256 65.3 % 96,910 soldGross profit 130,582 33.9 % 84,210 34.7 % 46,372 Operating expenses:Selling, generaland 92,252 23.9 % 68,336 28.2 % 23,916 administrativeexpensesIncome from 38,330 10.0 % 15,874 6.5 % 22,456 operationsBargain purchase (2,218 ) (0.6 %) - 0.0 % (2,218 )gainInterest expense 536 0.1 % 2,094 0.9 % (1,558 )Income beforeincome tax 40,012 9.9 % 13,780 5.6 % 26,232 expenseIncome tax 9,530 2.5 % 3,287 1.4 % 6,243 expenseNet income $ 30,482 7.4 % $ 10,493 4.2 % $ 19,989 Earnings per shareBasic $ 0.70 $ 0.24 $ 0.46 Diluted $ 0.68 $ 0.24 $ 0.44 Weighted averageshares outstandingBasic 43,609 43,230 379 Diluted 44,510 43,559 951

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Statements of Income (Unaudited) (in thousands, except per share data) For the Thirty-Nine Weeks Ended October 31, % of net November % of YOY 2020 sales 2, 2019 net Variance sales Net sales $ 1,013,572 100.0 % $ 628,249 100.0 % $ 385,323 Cost of goods 679,122 67.0 % 416,644 66.3 % 262,478 soldGross profit 334,450 33.0 % 211,605 33.7 % 122,845 Operating expenses:Selling,general and 251,077 24.8 % 191,326 30.5 % 59,751 administrativeexpensesIncome from 83,373 8.2 % 20,279 3.2 % 63,094 operationsBargain (2,218 ) (0.2 %) - 0.0 % (2,218 )purchase gainInterest 3,088 0.3 % 6,552 1.0 % (3,464 )expenseIncome (loss)before income 82,503 7.9 % 13,727 2.2 % 68,776 tax expenseIncome taxexpense 20,690 2.0 % 3,195 0.5 % 17,495 (benefit)Net Income $ 61,813 5.9 % $ 10,532 1.7 % $ 51,281 Earnings per shareBasic $ 1.42 $ 0.24 $ 1.18 Diluted $ 1.40 $ 0.24 $ 1.15 Weightedaverage shares outstandingBasic 43,490 43,126 364 Diluted 44,260 43,316 944

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Balance Sheets (Unaudited) (in thousands) Assets October 31, February 1, 2020 2020Current assets: Cash $ 19,314 $ 1,685 Accounts receivable, net 462 904 Merchandise inventories 322,078 275,505 Income tax receivable - 812 Prepaid expenses and other 14,564 12,732 Total current assets 356,418 291,638 Operating lease right of use asset 239,254 224,520 Property and equipment, net 99,495 98,767 Goodwill 1,496 1,496 Definite lived intangible assets, net 299 220 Total assets $ 696,962 $ 616,641 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 135,949 $ 38,157 Accrued expenses 106,430 70,118 Operating lease liability, current 35,730 34,487 Income taxes payable 5,315 - Revolving line of credit - 116,078 Current portion of long-term debt, net of discount - 5,936 and debt issuance costsTotal current liabilities 283,424 264,776 Long-term liabilities: Long-term debt, net of discount, debt issuance 7,950 23,781 costs, and current portionDeferred income taxes 4,154 562 Operating lease liability, noncurrent 227,333 217,254 Total long-term liabilities 239,437 241,597 Total liabilities 522,861 506,373 Stockholders? equity: Common stock 436 433 Additional paid-in capital 88,823 86,806 Accumulated earnings 84,842 23,029 Total stockholders? equity 174,101 110,268 Total liabilities and stockholders' equity $ 696,962 $ 616,641

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) October 31, November 2, 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 61,813 $ 10,532 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,992 14,070 Amortization of discount on debt and deferred 422 252 financing feesAmortization of Intangible assets 21 20 Loss (gain) on asset dispositions 937 (311 ) Gain on bargain purchase (2,218 ) - Noncash operating lease expense 17,760 22,132 Deferred income taxes 2,801 (245 ) Stock based compensation 2,436 1,567 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net 442 (371 ) Operating lease liabilities (20,781 ) (22,571 ) Merchandise inventory (38,887 ) (42,142 ) Prepaid expenses and other (2,021 ) 165 Accounts payable 94,900 70,270 Accrued expenses 31,992 3,449 Income taxes payable and receivable 6,127 1,030 Net cash provided by operating 171,736 57,847 activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of (15,394 ) (22,914 ) amounts acquiredAcquisition of Field and Stream stores, net of (4,778 ) (19,074 ) cash acquiredProceeds from sale of property and equipment - 311 Net cash used in investing activities (20,172 ) (41,677 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit (116,078 ) (13,541 ) (Decrease) Increase in book overdraft 4,559 3,756 Proceeds from issuance of common stock per employee 273 174 stock purchase planPayment of withholdings on restricted stock units (689 ) (369 ) Principal payments on long-term debt (22,000 ) (6,000 ) Net cash used in financing activities (133,935 ) (15,980 ) Net change in cash 17,629 190 Cash at beginning of year 1,685 1,547 Cash at end of period $ 19,314 $ 1,737

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.GAAP and Non-GAAP Measures (Unaudited)(in thousands, except per share data) Reconciliation of GAAP net income and GAAP dilutive earnings per share to adjusted net income and adjusted diluted earnings per share: For the Thirteen For the Thirty-Nine Weeks Ended Weeks Ended October November October 31, November 31, 2020 2, 2019 2020 2, 2019Numerator: Net income $ 30,482 $ 10,493 $ 61,813 $ 10,532 Acquisition costs (1) 297 - 332 387 Hazard pay (2) 2,000 - 4,600 - Store closing - - 1,039 - write-off (3)Legal accrual (4) 2,125 - 2,125 - Gain on bargain (2,218 ) - (2,218 ) - purchase (6)Executive transition - 387 - 623 costs (5)Less tax benefit (1,154 ) (100 ) (2,113 ) (262 ) Adjusted net income $ 31,532 $ 10,780 $ 65,578 $ 11,280 Denominator: Diluted weightedaverage shares 44,414 43,559 44,260 43,316 outstanding Reconciliation of earnings per share:Dilutive earnings per $ 0.69 $ 0.24 $ 1.40 $ 0.24 shareImpact of adjustmentsto numerator and 0.02 0.01 0.08 0.02 denominatorAdjusted diluted $ 0.71 $ 0.25 $ 1.48 $ 0.26 earnings per share Reconciliation of netincome to adjusted EBITDA: For the Thirteen For the Thirty-Nine Weeks Ended Weeks Ended October November October 31, November 31, 2020 2, 2019 2020 2, 2019Net income $ 30,482 $ 10,493 $ 61,813 $ 10,532 Interest expense 465 2,094 3,016 6,552 Income tax expense 9,530 3,287 20,691 3,195 (benefit)Depreciation and 5,404 4,832 16,085 14,090 amortizationStock-basedcompensation expense 882 619 2,436 1,567 (7)Pre-opening expenses 958 1,482 1,778 2,483 (8)Acquisition costs (1) 297 387 332 387 Hazard pay (2) 2,000 - 4,600 - Store closing - - 1,039 - write-off (3)Gain on bargain (2,218 ) - (2,218 ) - purchase (6)Legal accrual (4) 2,125 - 2,125 - Executive transition - - - 623 costs (5)Adjusted EBITDA $ 49,925 $ 23,194 $ 111,697 $ 39,429 (1) Expenses incurred relating to the acquisition of Field & Stream stores. (2) Expense incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19.(3) Costs and impairments recorded relating tothe closure of one store during the first quarter of 2020.(4) Accrual relating to pendinglabor litigation in the state of California.(5) Costs incurred for therecruitment and hiring of key members of management.(6) Excess of fair value over the purchase price of tangible assetsacquired in connection with the Field & Stream stores acquired during fiscal year 2020.(7) Stock-based compensation expense represents non-cash expenses related toequity instruments granted to employees under our 2019 Performance Incentive Plan and employee stock purchase plan.(8) Pre-opening expenses include expenses incurred in the preparation andopening of a new store location, such as payroll, travel and supplies, but do not include the cost of the initial inventoryor capitalexpenditures required to open a location.

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. GAAP and Non-GAAP Measures (Unaudited) (in thousands, except per share data) Reconciliation of fourth quarter and 2020 fiscal year guidance: Estimated Q4 '20 Estimated FY '20 Low High Low High Numerator: Net income $ 17,160 $ 19,800 $ 78,973 $ 81,613 Acquisition costs (1) - - 332 332 Hazard pay (2) - - 4,600 4,600 Store closing write-off (3) - - 1,039 1,039 Legal accrual (4) - - 2,125 2,125 Gain on bargain purchase (5) - - (2,218 ) (2,218 ) Less tax benefit - - (2,113 ) (2,113 ) Adjusted net income $ 17,160 $ 19,800 $ 82,738 $ 85,378 Denominator: Diluted weighted average shares 44,450 44,450 44,300 44,300 outstanding Reconciliation of earnings per share:Diluted earnings per share $ 0.39 $ 0.45 $ 1.78 $ 1.84 Impact of adjustments to - $ - 0.08 0.08 numerator and denominatorAdjusted diluted earnings per $ 0.39 $ 0.45 $ 1.87 $ 1.93 share (1) Expenses incurred relating to the acquisition of Field & Stream stores.(2) Expense incurred relating to bonuses and increased wages paid to front-lineand non-executive back office associates due to COVID-19.(3) Costs and impairments recorded relating to the closure of one store during the first quarter of 2020.(4) Accrual relating to pending labor litigation in the state of California.(5) Excess of fair value over the purchase price of tangible assets acquired inconnection with the Field & Stream stores acquired during fiscal year 2020.