GlobeNewswire Inc | Mar 31, 2021 04:08PM EDT

March 31, 2021

WEST JORDAN, Utah, March 31, 2021 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the Company) (Nasdaq: SPWH) today announced financial results for the thirteen and fifty-two weeks ended January 30, 2021.

Sportsmans Warehouse finished fiscal 2020 with record performance for the fourth quarter and full year. I am proud of our associates who made tremendous efforts to safely serve our customers, said Jon Barker, Sportsmans Warehouse CEO. Fourth quarter same store sales increased 58% compared to the same period last year due to an exceptionally strong holiday season, elevated participation in outdoor activities, and our continued market share gains in firearms. For fiscal year 2020, we grew same store sales by 48% compared to the prior year as we capitalized on historic surges in first-time firearm ownership and outdoor activity participation.

Mr. Barker continued, We continue to expand digitally as well as through additional brick-and-mortar stores. In 2020, we opened nine new Sportsmans Warehouse stores and one Legacy Shooting Center, taking our total store count to 112.

Pending Merger with Great Outdoors Group, LLC

As previously announced on December 21, 2020, Great Outdoors Group, LLC has agreed to acquire Sportsmans Warehouse Holdings, Inc. for $18.00 per share in an all cash transaction. The transaction has been approved by the board of directors of Sportsmans Warehouse and the stockholders of Sportsmans Warehouse approved the merger at the special stockholders meeting held on March 23, 2021. Completion of the merger is subject to the satisfaction of several conditions, including the expiration or termination of any applicable waiting period (and any extensions thereof) relating to the merger under the Hart-Scott-Rodino Act. Assuming receipt of required clearance pursuant to the Hart-Scott-Rodino Act and timely satisfaction of other conditions to closing, we currently expect the closing of the merger to occur in the second half of calendar year 2021.

Due to the pending acquisition by Great Outdoors Group, LLC, Sportsmans Warehouse management will not be hosting an earnings conference call and will not be providing forward looking guidance.

For the thirteen weeks ended January 30, 2021:

-- Net sales were $438.2 million, an increase of $180.0 million, or 69.7%, compared to the fourth quarter of fiscal year 2019. The net sales increase was primarily due to an exceptional 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 57.7% during the fourth quarter of 2020 compared to the fourth quarter of 2019. -- Gross profit was $142.0 million or 32.4% of net sales, compared to $85.0 million or 32.9% of net sales in the comparable prior year period, a year-over-year increase of $57.0 million in gross profit and a 50-basis point decrease in gross profit margin. -- Net income was $29.6 million compared to net income of $9.7 million in the fourth quarter of 2019. Adjusted net income was $33.5 million compared to adjusted net income of $9.3 million in the fourth quarter of 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $51.5 million compared to $19.6 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.66 compared to a diluted earnings per share of $0.22 in the comparable prior year period. Adjusted diluted earnings per share were $0.75 compared to adjusted diluted earnings per share of $0.21 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

For the fifty-two weeks ended January 30, 2021:

-- Net sales were $1,451.8 million, an increase of $565.4 million, or 63.8%, compared to fiscal year 2019. The net sales increase was primarily due to an exceptional 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. -- Same store sales increased 48.3% during fiscal year 2020 compared to fiscal year 2019. -- Gross profit was $476.4 million or 32.8% of net sales, as compared to $296.6 million or 33.5% of net sales for the comparable prior year, a year-over-year increase of $179.8 million in gross profit and a 70-basis point decrease in gross profit margin. -- Net income was $91.4 million compared to net income of $20.2 million in fiscal year 2019. Adjusted net income was $99.1 million compared to adjusted net income of $20.6 million in fiscal year 2019 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $163.2 million compared to $59.0 million in fiscal year 2019 (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $2.06 for fiscal year 2020 compared to diluted earnings per share of $0.46 last year. Adjusted diluted earnings per share were $2.23 for fiscal year 2020 compared to adjusted diluted earnings per share of $0.47 last year (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of January 30, 2021:

-- The Company was in a net cash position at the end of fiscal year 2020 with $65.5 million in cash on hand and no borrowings outstanding under the Companys revolving credit facility. We also repaid in full our term loan during fiscal year 2020. -- Total liquidity was $220 million as of the end of fiscal 2020, comprised of $155 million of availability on the revolving credit facility and $65 million of cash on hand.

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, expenses incurred relating to the acquisition of Field and Stream store locations and the pending merger with the Great Outdoors Group, LLC, a legal settlement accrual, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, less the gain on a bargain purchase of tangible assets acquired in connection with the Field & Stream store locations acquired during fiscal year 2020 and recognized tax benefits, as applicable. We define adjusted diluted earnings per share as adjusted net income divided by diluted weighted average shares outstanding. 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, expenses incurred relating to the acquisition of Field and Stream store locations and the pending merger with the Great Outdoors Group, LLC, pre-opening expenses, the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, a legal settlement accrual costs incurred for the recruitment and hiring of key members of management, less the gain on a bargain purchase of tangible assets acquired in connection with the Field & Stream store locations acquired during fiscal year 2020. 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 ability to close on the planned merger with Great Outdoors Group, LLC. 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 impact of, and any potential developments related to, the pending merger with Great Outdoors Group, including the risk that the conditions to the consummation of the merger are not satisfied or waived, litigation challenging the merger, the impact on our stock price, business, financial condition and results of operations if the merger is not consummated, and the potential negative impact to our business and employee relationships due to the merger; current and future government regulations; the potential effects of COVID-19; 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; 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 Income (Unaudited)(in thousands, except per share data) For the Thirteen Weeks Ended January 30, % of February 1, % of YOY 2021 net 2020 net Variance sales sales Net sales $ 438,195 100.0 % $ 258,152 100.0 % $ 180,043 Cost of goods 296,190 67.6 % 173,125 67.1 % 123,065 soldGross profit 142,005 32.4 % 85,027 32.9 % 56,978 Operating expenses:Selling,general and 102,630 23.4 % 71,842 27.8 % 30,788 administrativeexpensesIncome from 39,375 9.0 % 13,185 5.1 % 26,190 operationsInterest 419 0.1 % 1,443 0.6 % (1,024 )expenseIncome beforeincome tax 38,956 8.9 % 11,742 4.5 % 27,214 expenseIncome tax 9,389 2.1 % 2,059 0.8 % 7,330 expenseNet income $ 29,567 6.8 % $ 9,683 3.7 % $ 19,884 Earnings per shareBasic $ 0.68 $ 0.22 $ 0.45 Diluted $ 0.66 $ 0.22 $ 0.44 Weightedaverage shares outstandingBasic 43,622 43,253 369 Diluted 44,681 43,796 885

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Income (Unaudited)(in thousands, except per share data) For the Fifty-Two Weeks Ended January 30, % of net February 1, % of YOY 2021 sales 2020 net Variance sales Net sales $ 1,451,767 100.0 % $ 886,401 100.0 % $ 565,366 Cost of goods 975,313 67.2 % 589,768 66.5 % 385,545 soldGross profit 476,454 32.8 % 296,633 33.5 % 179,821 Operating expenses:Selling,general and 353,706 24.4 % 263,169 29.7 % 90,537 administrativeexpensesIncome from 122,748 8.4 % 33,464 3.8 % 89,284 operationsBargain (2,218 ) (0.2 %) - 0.0 % (2,218 )purchase gainInterest 3,506 0.2 % 7,995 0.9 % (4,489 )expenseIncome (loss)before income 121,460 8.2 % 25,469 2.9 % 95,991 tax expenseIncome taxexpense 30,080 2.1 % 5,254 0.6 % 24,826 (benefit)Net Income $ 91,380 6.1 % $ 20,215 2.3 % $ 71,165 Earnings per shareBasic $ 2.10 $ 0.47 $ 1.63 Diluted $ 2.06 $ 0.46 $ 1.59 Weightedaverage shares outstandingBasic 43,525 43,166 359 Diluted 44,430 43,588 842

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Balance Sheets (Unaudited)(in thousands) Assets January 30, February 1, 2021 2020Current assets: Cash $ 65,525 $ 1,685 Accounts receivable, net 581 904 Merchandise inventories 243,434 275,505 Income tax receivable - 812 Prepaid expenses and other 15,113 12,732 Total current assets 324,653 291,638 Operating lease right of use asset 235,262 224,520 Property and equipment, net 99,118 98,767 Goodwill 1,496 1,496 Definite lived intangible assets, net 289 220 Total assets $ 660,818 $ 616,641 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 77,441 $ 38,157 Accrued expenses 109,056 70,118 Operating lease liability, current 36,014 34,487 Income taxes payable 4,917 - Revolving line of credit - 116,078 Current portion of long-term debt, net of discount - 5,936 and debt issuance costsTotal current liabilities 227,428 264,776 Long-term liabilities: Long-term debt, net of discount, debt issuance - 23,781 costs, and current portionDeferred income taxes 434 562 Operating lease liability, noncurrent 228,296 217,254 Total long-term liabilities 228,730 241,597 Total liabilities 456,158 506,373 Stockholders? equity: Common stock 436 433 Additional paid-in capital 89,815 86,806 Accumulated earnings 114,409 23,029 Total stockholders? equity 204,660 110,268 Total liabilities and stockholders' equity $ 660,818 $ 616,641

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) January 30, February 1, 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 91,380 $ 20,215 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,801 19,294 Amortization of discount on debt and deferred 535 339 financing feesAmortization of Intangible assets 28 26 Loss (gain) on asset dispositions 804 (311 )Gain on bargain purchase (2,218 ) - Noncash operating lease expense 25,307 27,009 Deferred income taxes (919 ) 710 Stock based compensation 3,302 2,104 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net 323 (655 )Operating lease liabilities (24,390 ) (28,374 )Merchandise inventory 39,938 20,247 Prepaid expenses and other (2,633 ) (1,571 )Accounts payable 37,812 12,709 Accrued expenses 42,017 8,774 Income taxes payable and receivable 5,729 (2,650 )Net cash provided by operating activities 238,816 77,866 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of amounts (19,754 ) (30,372 )acquiredAcquisition of Field and Stream stores, net of cash (6,473 ) (28,536 )acquiredProceeds from deemed sales-leaseback transactions - 9,533 Proceeds from sale of property and equipment - 311 Net cash used in investing activities (26,227 ) (49,064 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit (116,078 ) (28,228 )(Decrease) Increase in book overdraft (2,381 ) 5,530 Proceeds from issuance of common stock per employee 580 403 stock purchase planPayment of withholdings on restricted stock units (870 ) (369 )Principal payments on long-term debt (30,000 ) (6,000 )Net cash used in financing activities (148,749 ) (28,664 ) Net change in cash 63,840 138 Cash at beginning of year 1,685 1,547 Cash at end of period $ 65,525 $ 1,685

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 toadjusted net income and adjusted diluted earnings per share: For the Thirteen Weeks For the Fifty-Two Weeks Ended Ended January February January 30, February 30, 2021 1, 2020 2021 1, 2020Numerator: Net income $ 29,567 $ 9,683 $ 91,380 $ 20,215 Acquisition costs (1) 3,379 275 3,710 662 Hazard pay (2) 1,926 - 6,526 - Store closing write-off (3) - - 1,039 - Legal accrual (4) - - 2,125 - Gain on bargain purchase (5) - - (2,218 ) - Executive transition costs - 147 - 770 (6)Non-recurring tax benefit - (686 ) - (686 )(9)Less tax benefit (1,385 ) (109 ) (3,497 ) (370 )Adjusted net income $ 33,487 $ 9,310 $ 99,065 $ 20,591 Denominator: Diluted weighted average 44,681 43,796 44,430 43,588 shares outstanding Reconciliation of earnings per share:Dilutive earnings per share $ 0.66 $ 0.22 $ 2.06 $ 0.46 Impact of adjustments to 0.09 (0.01 ) 0.17 0.01 numerator and denominatorAdjusted diluted earnings $ 0.75 $ 0.21 $ 2.23 $ 0.47 per share Reconciliation of net income to adjusted EBITDA: For the Thirteen Weeks For the Fifty-Two Weeks Ended Ended January February January 30, February 30, 2021 1, 2020 2021 1, 2020Net income $ 29,567 $ 9,683 $ 91,380 $ 20,215 Interest expense 419 1,443 3,506 7,995 Income tax expense (benefit) 9,389 2,059 30,080 5,254 Depreciation and 5,816 5,230 21,830 19,321 amortizationStock-based compensation 867 538 3,302 2,104 expense (7)Pre-opening expenses (8) 164 211 1,942 2,695 Acquisition costs (1) 3,379 275 3,710 662 Hazard pay (2) 1,926 - 6,526 - Store closing write-off (3) - - 1,039 - Gain on bargain purchase (5) - - (2,218 ) - Legal accrual (4) - - 2,125 - Executive transition costs - 147 - 770 (6)Adjusted EBITDA $ 51,527 $ 19,586 $ 163,222 $ 59,016 (1) Expenses incurred relating to the acquisition of Field & Stream stores andthe announced merger with the Great Outdoors Group, LLC.(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 duringthe 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.(6) Costs incurred for the recruitment and hiring of key members of management.(7) Stock-based compensation expense represents non-cash expenses related toequity instruments granted to employees under our 2019 Performance IncentivePlan 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 donot include the cost of the initial inventoryor capital expenditures requiredto open a new store location.(9) Non-recurring tax benefit recognized due to our return to provisionadjustments recorded in conjunction with the estimates used in the preparationofour 2019 provision.