GlobeNewswire Inc | Sep 2, 2020 04:06PM EDT

September 02, 2020

WEST JORDAN, Utah, Sept. 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 twenty-six weeks ended August 1, 2020.

The second quarter was record-breaking for Sportsmans Warehouse. I am very proud of the Sportsmans Warehouse team as they worked to keep our associates and customers safe during this sustained surge in our business, said Jon Barker, Sportsmans Warehouse CEO. Same store sales were up 61% in the second quarter of 2020 as compared to the same period last year, primarily due to market share gains, a significant increase in participants in outdoor activities, and social unrest.

Mr. Barker continued, We are very pleased with the growth of our ecommerce-driven business, which increased over 300% for the quarter versus prior year. We are also highly encouraged by the strong start of our new small-format store in Laramie, Wyoming that opened at the beginning of August. We believe this concept will facilitate our ability to profitably penetrate many small and mid-sized markets across the country.

Thanks to the strong financial performance of our business so far this year, we paid down a significant portion of our debt and ended the second quarter nearly debt-free. We see our financial flexibility as a competitive advantage enabling us to invest for long-term growth and profitability.

For the thirteen weeks ended August 1, 2020:

-- Net sales were $381.0 million, an increase of $169.2 million, or 79.9%, as compared to the second 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 61.0% during the second quarter of 2020 compared to the second quarter of 2019. -- Gross profit was $129.1 million or 33.9% of net sales, as compared to $73.2 million or 34.6% of net sales in the comparable prior year period, a year-over-year increase of $55.9 million in gross profit and a 70-basis point decrease in gross profit margin. -- Net income was $32.5 million compared to net income of $5.5 million in the second quarter of 2019. Adjusted net income was $33.6 million compared to adjusted net income of $5.7 million in the second quarter of 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $53.6 million compared to $15.8 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.73 compared to a diluted earnings per share of $0.13 in the comparable prior year period. Adjusted diluted earnings per share were $0.76 compared to adjusted diluted earnings per share of $0.13 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

For the twenty-six weeks ended August 1, 2020:

-- Net sales were $627.8 million, an increase of $242.0 million, or 62.7%, as compared to the first half 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 46.5% during the first half of 2020 compared to the first half of 2019. -- Gross profit was $203.9 million or 32.5% of net sales, as compared to $127.4 million or 33.0% of net sales for the comparable prior year period, a year-over-year increase of $76.5 million in gross profit and a 60-basis point decrease in gross profit margin. -- Net income was $31.3 million compared to net income of $0.0 million in the first half of 2019. Adjusted net income was $34.0 million compared to adjusted net income of $0.5 million in the first half of 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $61.8 million compared to $16.2 million in the first half of 2019 (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.71 for the twenty-six weeks ended August 1, 2020 compared to diluted earnings per share of $0.00 for the same period last year. Adjusted diluted earnings per share were $0.77 for the twenty-six weeks ended August 1, 2020 compared to adjusted diluted earnings per share of $0.01 for the same period last year (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of August 1, 2020:

-- Total net debt was $6.5 million, consisting of $12.3 million in cash on hand, $2.9 million outstanding under the Companys revolving credit facility, and $15.9 million outstanding under the term loan, net of unamortized debt issuance costs. This is a reduction of $150.9 million of net debt year-over-year. -- Total liquidity was $183.5 million as of the end of the second quarter of 2020, comprised of $171.2 million of availability on the revolving credit facility and $12.3 million of cash, as compared to $52.9 million in total liquidity at the end of the second quarter of 2019.

Third Quarter and Fiscal Year 2020 Outlook:

We will not be issuing forward guidance at this time.

Conference Call Information:

A conference call to discuss second quarter and first half of 2020 financial results is scheduled for today, September 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 (loss) from operations, adjusted net income (loss), adjusted diluted earnings (loss) per share and Adjusted EBITDA. We define adjusted income (loss) from operations and adjusted net income (loss) as income (loss) from operations and net income (loss), 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, 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 (loss) per share as diluted earnings (loss) 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, 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 (loss) 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 the expected our ability to profitably penetrate small and mid-sized markets and our ability to invest in long-term growth and profitability. 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 our 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 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 Contacts:Robert 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 August 1, % of net August 3, % of net 2020 sales 2019 sales Net sales $ 380,989 100.0 % $ 211,766 100.0 % Cost of goods sold 251,896 66.1 % 138,544 65.4 % Gross profit 129,093 33.9 % 73,222 34.6 % Operating expenses: Selling, general and 83,606 21.9 % 63,460 30.0 % administrative expensesIncome from operations 45,487 12.0 % 9,762 4.6 % Interest expense 1,017 0.3 % 2,353 1.1 % Income before income tax 44,470 11.7 % 7,409 3.5 % expenseIncome tax expense 12,009 3.2 % 1,911 0.9 % Net income $ 32,461 8.5 % $ 5,498 2.6 % Earnings per share Basic $ 0.75 $ 0.13 Diluted $ 0.73 $ 0.13 Weighted average shares outstandingBasic 43,537 43,130 Diluted 44,368 43,155

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Income (Unaudited)(in thousands, except per share data) For the Twenty-six Weeks Ended August 1, % of net August 3, % of net 2020 sales 2019 sales Net sales $ 627,824 100.0 % $ 385,783 100.0 % Cost of goods sold 423,957 67.5 % 258,388 67.0 % Gross profit 203,867 32.5 % 127,395 33.0 % Operating expenses: Selling, general and 158,825 25.3 % 122,990 31.9 % administrative expensesIncome from operations 45,042 7.2 % 4,405 1.1 % Interest expense 2,551 0.4 % 4,458 1.2 % Income (loss) before income 42,491 6.8 % (53 ) (0.1 %) tax expenseIncome tax expense (benefit) 11,160 1.8 % (92 ) 0.0 % Net Income $ 31,331 5.0 % $ 39 (0.1 %) Earnings per share Basic $ 0.72 $ 0.00 Diluted $ 0.71 $ 0.00 Weighted average shares outstandingBasic 43,430 43,065 Diluted 44,098 43,090

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Balance Sheets (Unaudited)(in thousands) Assets August 1, February 1, 2020 2020Current assets: Cash $ 12,288 $ 1,685 Accounts receivable, net 551 904 Merchandise inventories 296,765 275,505 Income tax receivable - 812 Prepaid expenses and other 16,469 12,732 Total current assets 326,073 291,638 Operating lease right of use asset 223,602 224,520 Property and equipment, net 95,402 98,767 Goodwill 1,496 1,496 Definite lived intangible assets, net 207 220 Total assets $ 646,780 $ 616,641 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 128,054 $ 38,157 Accrued expenses 98,764 70,118 Operating lease liability, current 35,854 34,487 Income taxes payable 7,291 - Revolving line of credit 2,858 116,078 Current portion of long-term debt, net of discount - 5,936 and debt issuance costsTotal current liabilities 272,821 264,776 Long-term liabilities: Long-term debt, net of discount, debt issuance 15,901 23,781 costs, and current portionDeferred income taxes 3,470 562 Operating lease liability, noncurrent 211,851 217,254 Total long-term liabilities 231,222 241,597 Total liabilities 504,043 506,373 Stockholders? equity: Common stock 436 433 Additional paid-in capital 87,941 86,806 Accumulated earnings 54,360 23,029 Total stockholders? equity 142,737 110,268 Total liabilities and stockholders' equity $ 646,780 $ 616,641

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) August 1, August 3, 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 31,331 $ 39 Adjustments to reconcile net income to netcash provided by operating activities:Depreciation and amortization 10,670 9,245 Amortization of discount on debt and deferred 311 170 financing feesAmortization of Intangible assets 10 13 Loss (gain) on asset dispositions 803 (311 ) Noncash operating lease expense 13,787 14,002 Deferred income taxes 2,908 307 Stock based compensation 1,554 948 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net 353 10 Operating lease liabilities (15,807 ) (14,895 ) Merchandise inventory (16,943 ) (12,710 ) Prepaid expenses and other (3,863 ) 634 Accounts payable 87,665 39,040 Accrued expenses 24,866 1,860 Income taxes payable and receivable 8,103 (2,918 ) Net cash provided by operating activities 145,748 35,434 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of amounts (8,579 ) (14,761 ) acquiredAcquisition of Field and Stream stores, net of (3,444 ) - cash acquiredProceeds from sale of property and equipment - 311 Net cash used in investing activities (12,023 ) (14,450 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit (113,220 ) (17,180 ) (Decrease) Increase in book overdraft 4,512 319 Proceeds from issuance of common stock per 273 174 employee stock purchase planPayment of withholdings on restricted stock units (687 ) (369 ) Principal payments on long-term debt (14,000 ) (4,000 ) Net cash used in financing activities (123,122 ) (21,056 ) Net change in cash 10,603 (72 ) Cash at beginning of year 1,685 1,547 Cash at end of period $ 12,288 $ 1,475

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. GAAP and Non-GAAP Measures (Unaudited) (in thousands, except per share data) Reconciliation of GAAP income from operations to adjusted income from operations: For the Thirteen Weeks For the Twenty-six Ended Weeks Ended August 1, August 3, August 1, August 3, 2020 2019 2020 2019Income from operations $ 45,487 $ 9,762 $ 45,042 $ 4,405 Acquisition costs (1) 6 - $ 35 $ - Hazard pay (2) 1,500 - 2,600 - Store closing write-off (3) - - 1,039 - Executive transition costs - 266 - 623 (4)Adjusted income from $ 46,993 $ 10,028 $ 48,716 $ 5,028 operations Reconciliation of GAAP net income and GAAP dilutive earnings per shareto adjusted net income and adjusted diluted earnings per share: Numerator: Net income $ 32,461 $ 5,498 $ 31,331 $ 39 Acquisition costs (1) 6 - 35 - Hazard pay (2) 1,500 - 2,600 - Store Closing Write-off - - 1,039 - (3) Executive Transition - 266 - 623 Costs (4) Less tax benefit (408 ) (69 ) (997 ) (161 ) Adjusted net income $ 33,559 $ 5,695 $ 34,008 $ 501 Denominator: Diluted weighted average 44,414 43,155 44,136 43,090 shares outstanding Reconciliation of earnings per share:Dilutive earnings per share $ 0.73 $ 0.13 $ 0.71 $ - Impact of adjustments to 0.03 - 0.06 0.01 numerator and denominatorAdjusted diluted earnings $ 0.76 $ 0.13 $ 0.77 $ 0.01 per share Reconciliation of net income to adjusted EBITDA:Net income $ 32,461 $ 5,498 $ 31,331 $ 39 Interest expense 1,017 2,353 2,551 4,458 Income tax expense 12,009 1,911 11,160 (92 ) (benefit)Depreciation and 5,318 4,645 10,681 9,258 amortizationStock-based compensation 818 494 1,554 948 expense (5)Pre-opening expenses (6) 431 672 819 1,001 Acquisition costs (1) 6 - 35 - Hazard pay (2) 1,500 - 2,600 - Store closing write-off (3) - - 1,039 - Executive transition costs - 266 - 623 (4)Adjusted EBITDA $ 53,560 $ 15,839 $ 61,770 $ 16,235 (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 to the closure of one store during the first quarter of 2020.(4) Costs incurred for the recruitment and hiring of key members of management.(5) Stock-based compensation expense represents non-cash expenses related toequity instruments granted to employees under our 2019 PerformanceIncentivePlan and employee stock purchase plan.(6) Pre-opening expenses include expenses incurred in the preparation andopening of a new store location, such as payroll, travel and supplies, but donot include the cost of the initial inventory or capital expenditures requiredto open a location.