GlobeNewswire Inc | Jun 2, 2021 04:15PM EDT

June 02, 2021

WEST JORDAN, Utah, June 02, 2021 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the Company) (Nasdaq: SPWH) today announced financial results for the thirteen weeks ended May 1, 2021.

Sportsmans Warehouse is off to a strong start this fiscal year, said Jon Barker, Sportsmans Warehouse CEO. First quarter same store sales increased 24% compared to the same period last year as we continue to capitalize on elevated participation in outdoor activities.

Mr. Barker continued, I would like to thank the Sportsmans Warehouse team for an extraordinary first quarter, and their dedication to serving customers and executing on our mission of providing outstanding gear and exceptional service to inspire outdoor memories.

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 May 1, 2021:

-- Net sales were $327.0 million, an increase of $80.2 million, or 32.5%, compared to the first quarter of fiscal year 2020. The net sales increase was primarily due to higher 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 24.1% during the first quarter of 2021 compared to the first quarter of 2020. -- Gross profit was $104.0 million or 31.8% of net sales, compared to $74.8 million or 30.3% of net sales in the comparable prior year period, a year-over-year increase of $29.3 million in gross profit and a 150-basis point increase in gross profit margin. -- Net income was $10.5 million compared to a net loss of $1.1 million in the first quarter of 2020. Adjusted net income was $12.5 million compared to adjusted net income of $0.5 million in the first quarter of 2020 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $23.5 million compared to $8.2 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.23 compared to a diluted loss per share of $0.03 in the comparable prior year period. Adjusted diluted earnings per share were $0.28 compared to adjusted diluted earnings per share of $0.01 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of May 1, 2021:

-- The Company was in a net cash position at the end of the first quarter of fiscal year 2021 with $60.0 million in cash on hand and no borrowings outstanding under the Companys revolving credit facility. -- Total liquidity was $250 million as of the end of the first quarter of fiscal 2021, comprised of $190 million of availability on the revolving credit facility and $60 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 net income, adjusted diluted earnings per share, and Adjusted EBITDA. We define adjusted net income as net income, plus expenses incurred relating to 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, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, less 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, and the costs and impairments recorded relating to the closure of one store during the first quarter of 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, in particular regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the Companys products and the Companys ability to conduct its business; the impacts of COVID-19 and measures intended to reduce its spread on the Companys operations; the Companys retail-based business model, which is impacted by general economic, market and financial uncertainties that may cause a decline in consumer spending; the Companys concentration of stores in the Western United States, which makes the Company susceptible to adverse conditions in this region and could affect the Companys sales and cause its operating results to suffer; the highly fragmented and competitive industry in which the Company operates and the potential for increased competition; changes in consumer demands, including regional preferences, which the Company may not be able to identify and respond to in a timely manner; the Companys entrance into new markets or operations in existing markets, which may not be successful; and other factors that are set forth in the Company's filings with the SEC, including under the caption Risk Factors in the Companys Annual Report on Form 10-K for the fiscal year ended January 30, 2021 which was filed with the SEC on April 2, 2021, 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 % of % of net YOY May 1, 2021 net May 2, 2020 sales Variance sales Net sales $ 326,992 100.0 % $ 246,835 100.0 % $ 80,157 Cost of goods sold 222,945 68.2 % 172,061 69.7 % 50,884 Gross profit 104,047 31.8 % 74,774 30.3 % 29,273 Operating expenses: Selling, generaland administrative 90,419 27.7 % 75,219 30.5 % 15,200 expensesIncome from 13,628 4.1 % (445 ) (0.2 %) 14,073 operationsInterest expense 226 0.1 % 1,534 0.6 % (1,308 )Income before 13,402 4.0 % (1,979 ) (0.8 %) 15,381 income tax expenseIncome tax expense 2,952 0.9 % (849 ) (0.3 %) 3,801 Net income $ 10,450 3.1 % $ (1,130 ) (0.5 %) $ 11,580 Earnings per share Basic $ 0.24 $ (0.03 ) $ 0.27 Diluted $ 0.23 $ (0.03 ) $ 0.26 Weighted average shares outstandingBasic 43,690 43,327 363 Diluted 44,514 43,327 1,187

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Balance Sheets (Unaudited)(in thousands) Assets May 1, 2021 January 30, 2021Current assets: Cash $ 59,719 $ 65,525 Accounts receivable, net 574 581 Merchandise inventories 287,077 243,434 Prepaid expenses and other 15,957 15,113 Total current assets 363,327 324,653 Operating lease right of use asset 239,407 235,262 Property and equipment, net 101,364 99,118 Goodwill 1,496 1,496 Definite lived intangible assets, net 280 289 Total assets $ 705,874 $ 660,818 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 113,045 $ 77,441 Accrued expenses 108,116 109,056 Operating lease liability, current 36,386 36,014 Income taxes payable 7,872 4,917 Revolving line of credit - - Current portion of long-term debt, net of discount - - and debt issuance costsTotal current liabilities 265,419 227,428 Long-term liabilities: Long-term debt, net of discount, debt issuance - - costs, and current portionDeferred income taxes 378 434 Operating lease liability, noncurrent 226,220 228,296 Total long-term liabilities 226,598 228,730 Total liabilities 492,017 456,158 Stockholders? equity: Common stock 438 436 Additional paid-in capital 88,560 89,815 Accumulated earnings 124,859 114,409 Total stockholders? equity 213,857 204,660 Total liabilities and stockholders' equity $ 705,874 $ 660,818

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) May 1, 2021 May 2, 2020CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 10,450 $ (1,130 )Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 5,767 5,326 Amortization of discount on debt and deferred 66 84 financing feesAmortization of Intangible assets 10 7 Loss on asset dispositions - 803 Noncash operating lease expense 1,386 6,076 Deferred income taxes (56 ) 2,962 Stock based compensation 1,016 736 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net 7 323 Operating lease liabilities (7,235 ) (7,321 )Merchandise inventory (43,643 ) (23,298 )Prepaid expenses and other (910 ) (2,270 )Accounts payable 34,128 46,645 Accrued expenses (7,951 ) 6,090 Income taxes payable and receivable 2,955 (3,752 )Net cash provided by (used in) operating activities (4,010 ) 31,281 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of amounts (5,615 ) (4,833 )acquiredAcquisition of Field and Stream stores, net of cash - (1,024 )acquiredNet cash used in investing activities (5,615 ) (5,857 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit - 2,345 (Decrease) Increase in book overdraft 6,088 (2,675 )Payment of withholdings on restricted stock units (2,269 ) (689 )Principal payments on long-term debt - (4,000 )Net cash provided by (used in) financing activities 3,819 (5,019 ) Net change in cash (5,806 ) 20,405 Cash at beginning of year 65,525 1,685 Cash at end of period $ 59,719 $ 22,090

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 (loss) per shareto adjusted net income (loss) and adjusted diluted earnings per share: For the Thirteen Weeks Ended May 1, 2021 May 2, 2020Numerator: Net income (loss) $ 10,450 $ (1,130 )Acquisition costs (1) 2,845 29 Hazard pay (2) - 1,100 Store closing write-off (3) - 1,039 Less tax benefit (767 ) (588 )Adjusted net income $ 12,528 $ 450 Denominator: Diluted weighted average shares outstanding 44,514 43,686 Reconciliation of earnings (loss) per share: Dilutive earnings (loss) per share $ 0.23 $ (0.03 )Impact of adjustments to numerator and 0.05 0.04 denominatorAdjusted diluted earnings per share $ 0.28 $ 0.01 Reconciliation of net income (loss) to adjusted EBITDA: For the Thirteen Weeks Ended May 1, 2021 May 2, 2020Net income (loss) $ 10,450 $ (1,130 )Interest expense 226 1,534 Income tax expense (benefit) 2,952 (849 )Depreciation and amortization 5,777 5,365 Stock-based compensation expense (4) 1,016 736 Pre-opening expenses (5) 195 387 Acquisition costs (1) 2,845 29 Hazard pay (2) - 1,100 Store closing write-off (3) - 1,039 Adjusted EBITDA $ 23,461 $ 8,211 (1) Expenses incurred relating to the acquisition of Field & Stream locationsin 2020 and the pending merger with the Great Outdoors Group, LLC in 2021.(2) Expenses incurred relating to bonuses and increased wages paid tofront-line and non-executive back office associates due to the COVID-19pandemic.(3) Costs and impairments recorded relating to the closure of one storeduring the first quarter of 2020.(4) Stock-based compensation expense represents non-cash expenses related toequity instruments granted to employees under our 2019 Performance IncentivePlan and employee stock purchase plan.(5) 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 expendituresrequired to open a new store location.