GlobeNewswire Inc | Sep 1, 2021 04:15PM EDT

September 01, 2021

WEST JORDAN, Utah, Sept. 01, 2021 (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 July 31, 2021.

The business continued to perform well during the second quarter, said Jon Barker, Sportsmans Warehouse CEO. While second quarter same store sales decreased 9.9% compared to the same period last year, I believe this was a favorable result considering the many factors that drove our elevated second quarter 2020 sales. For the first half of fiscal year 2021, same store sales increased 3.4% compared to the same period last year.

Mr. Barker continued, We believe customers are responding favorably to our brand, product assortment, and customer service. I am grateful to the entire Sportsmans Warehouse team who continue to provide 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 was approved by the board of directors of Sportsmans Warehouse and subsequently approved by the stockholders of Sportsmans Warehouse 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 July 31, 2021:

-- Net sales were $361.8 million, a decrease of $19.2 million, or 5.0%, compared to the second quarter of fiscal year 2020. The net sales decrease was primarily due to lower demand across our hunting and shooting, fishing and camping categories compared to significantly elevated sales in the prior year period. -- Same store sales decreased 9.9% during the second quarter of 2021 compared to the second quarter of 2020. -- Gross profit was $120.1 million, or 33.2% of net sales, compared to $129.1 million, or 33.9% of net sales in the comparable prior year period, a year-over-year decrease of $9.0 million in gross profit and a 70-basis point decrease in gross profit margin. -- Net income was $17.7 million compared to net income of $32.5 million in the second quarter of 2020. Adjusted net income was $19.5 million compared to adjusted net income of $33.6 million in the second quarter of 2020 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $35.2 million compared to $53.6 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.40 compared to a diluted earnings per share of $0.73 in the comparable prior year period. Adjusted diluted earnings per share were $0.44 compared to adjusted diluted earnings per share of $0.76 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

For the twenty-six weeks ended July 31, 2021:

-- Net sales were $688.8 million, an increase of $60.9 million, or 9.7%, compared to the first half of fiscal year 2020. The net sales increase was primarily due to increased demand across all categories, as well as strong growth in our ecommerce platform compared to the prior year period. -- Same store sales increased 3.4% during the first half of 2021 compared to the first half of 2020. -- Gross profit was $224.1 million, or 32.5% of net sales, compared to $203.9 million, or 32.5% of net sales in the comparable prior year period, a year-over-year decrease of $20.2 million in gross profit. -- Net income was $28.2 million compared to net income of $31.3 million in the first half of 2020. Adjusted net income was $32.0 million compared to adjusted net income of $34.0 million in the first half of 2020 (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $58.7 million compared to $61.8 million in the comparable prior year period (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.63 compared to a diluted earnings per share of $0.71 in the comparable prior year period. Adjusted diluted earnings per share were $0.72 compared to adjusted diluted earnings per share of $0.77 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of July 31, 2021:

-- Total net debt was $17.6 million at the end of the second quarter of fiscal year 2021, comprised of $2.6 million of cash on hand and $20.2 million of borrowings outstanding under the Companys revolving credit facility. -- Total liquidity was $188.6 million as of the end of the second quarter of fiscal 2021 with $186.0 million of availability on the revolving credit facility and $2.6 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. The Company defines 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. The Company defines adjusted diluted earnings per share as adjusted net income divided by diluted weighted average shares outstanding. The Company defines 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 July 31, % of August 1, % of YOY 2021 net 2020 net Variance sales sales Net sales $ 361,778 100.0 % $ 380,989 100.0 % $ (19,211 )Cost of goods sold 241,724 66.8 % 251,896 66.1 % (10,172 )Gross profit 120,054 33.2 % 129,093 33.9 % (9,039 ) Operating expenses: Selling, generaland administrative 95,870 26.5 % 83,606 21.9 % 12,264 expensesIncome from 24,184 6.7 % 45,487 12.0 % (21,303 )operationsInterest expense 266 0.1 % 1,017 0.3 % (751 )Income before 23,918 6.6 % 44,470 11.7 % (20,552 )income tax expenseIncome tax expense 6,195 1.7 % 12,009 3.2 % (5,814 )Net income $ 17,723 4.9 % $ 32,461 8.5 % $ (14,738 ) Earnings per share Basic $ 0.40 $ 0.75 $ (0.34 )Diluted $ 0.40 $ 0.73 $ (0.34 ) Weighted average shares outstandingBasic 43,860 43,537 323 Diluted 44,716 44,368 348

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Statements of Income (Unaudited) (in thousands, except per share data) For the Twenty-Six Weeks Ended July 31, % of August 1, % of YOY 2021 net 2020 net Variance sales sales Net sales $ 688,770 100.0 % $ 627,824 100.0 % $ 60,946 Cost of goods sold 464,669 67.5 % 423,957 67.5 % 40,712 Gross profit 224,101 32.5 % 203,867 32.5 % 20,234 Operating expenses:Selling, generaland administrative 186,289 27.0 % 158,825 25.3 % 27,464 expensesIncome from 37,812 5.5 % 45,042 7.2 % (7,230 )operationsInterest expense 492 0.1 % 2,551 0.4 % (2,059 )Income before 37,320 5.4 % 42,491 6.8 % (5,171 )income tax expenseIncome tax expense 9,147 1.3 % 11,160 1.8 % (2,013 )Net income $ 28,173 4.1 % $ 31,331 5.0 % $ (3,158 ) Earnings per share Basic $ 0.64 $ 0.72 $ (0.08 )Diluted $ 0.63 $ 0.71 $ (0.08 ) Weighted average shares outstandingBasic 43,775 43,430 345 Diluted 44,600 44,098 502

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Balance Sheets (Unaudited)(in thousands) Assets July 31, January 30, 2021 2021Current assets: Cash $ 2,620 $ 65,525 Accounts receivable, net 616 581 Merchandise inventories 367,351 243,434 Prepaid expenses and other 12,373 15,113 Total current assets 382,960 324,653 Operating lease right of use asset 251,684 235,262 Property and equipment, net 109,592 99,118 Goodwill 1,496 1,496 Definite lived intangible assets, net 270 289 Total assets $ 746,002 $ 660,818 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 103,136 $ 77,441 Accrued expenses 112,853 109,056 Operating lease liability, current 38,741 36,014 Income taxes payable 2,251 4,917 Revolving line of credit 20,191 - Total current liabilities 277,172 227,428 Long-term liabilities: Deferred income taxes 196 434 Operating lease liability, noncurrent 236,027 228,296 Total long-term liabilities 236,223 228,730 Total liabilities 513,395 456,158 Stockholders? equity: Common stock 438 436 Additional paid-in capital 89,587 89,815 Accumulated earnings 142,582 114,409 Total stockholders? equity 232,607 204,660 Total liabilities and stockholders' equity $ 746,002 $ 660,818

SPORTSMAN?S WAREHOUSE HOLDINGS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) July 31, August 1, 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 28,173 $ 31,331 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,116 10,670 Amortization of discount on debt and deferred 126 311 financing feesAmortization of Intangible assets 20 10 Loss on asset dispositions - 803 Noncash operating lease expense 7,962 13,787 Deferred income taxes (238 ) 2,908 Stock based compensation 2,043 1,554 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net (35 ) 353 Operating lease liabilities (13,926 ) (15,807 ) Merchandise inventory (123,917 ) (16,943 ) Prepaid expenses and other 2,614 (3,863 ) Accounts payable 21,349 87,665 Accrued expenses (1,403 ) 24,866 Income taxes payable and receivable (2,666 ) 8,103 Net cash provided by (used in) operating (67,782 ) 145,748 activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of (17,936 ) (8,579 ) amounts acquiredAcquisition of Field and Stream stores, net of - (3,444 ) cash acquiredNet cash used in investing activities (17,936 ) (12,023 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit 20,191 (113,220 ) Increase in book overdraft 4,891 4,512 Proceeds from issuance of common stock per - 273 employee stock purchase planPayment of withholdings on restricted stock (2,269 ) (687 ) unitsPrincipal payments on long-term debt - (14,000 ) Net cash provided by (used in) financing 22,813 (123,122 ) activities Net change in cash (62,905 ) 10,603 Cash at beginning of year 65,525 1,685 Cash at end of period $ 2,620 $ 12,288

SPORTSMAN?SWAREHOUSE HOLDINGS, INC.GAAP and Non-GAAPMeasures (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 Weeks For the Twenty-Six Ended Weeks Ended July 31, August 1, July 31, August 1, 2021 2020 2021 2020Numerator: Net income $ 17,723 $ 32,461 $ 28,173 $ 31,331 Acquisition costs 2,461 6 5,306 35 (1)Hazard pay (2) - 1,500 - 2,600 Store closing - - - 1,039 write-off (3)Less tax benefit (663 ) (408 ) (1,433 ) (997 ) Adjusted net $ 19,521 $ 33,559 $ 32,046 $ 34,008 income Denominator: Diluted weightedaverage shares 44,716 44,368 44,600 44,098 outstanding Reconciliation ofearnings per share:Dilutive earnings $ 0.40 $ 0.73 $ 0.63 $ 0.71 per shareImpact ofadjustments to 0.04 0.03 0.09 0.06 numerator anddenominatorAdjusted dilutedearnings per $ 0.44 $ 0.76 $ 0.72 $ 0.77 share Reconciliation ofnet income to adjusted EBITDA: For the Thirteen Weeks For the Twenty-Six Ended Weeks Ended July 31, August 1, July 31, August 1, 2021 2020 2021 2020Net income $ 17,723 $ 32,461 $ 28,173 $ 31,331 Interest expense 266 1,017 492 2,551 Income tax 6,195 12,009 9,147 11,160 expense (benefit)Depreciation and 6,360 5,318 12,136 10,681 amortizationStock-basedcompensation 1,027 818 2,043 1,554 expense (4)Pre-opening 1,183 431 1,378 819 expenses (5)Acquisition costs 2,461 6 5,306 35 (1)Hazard pay (2) - 1,500 - 2,600 Store closing - - - 1,039 write-off (3)Adjusted EBITDA $ 35,215 $ 53,560 $ 58,675 $ 61,770 (1) Expenses incurred relating to the acquisition of Field & Stream locations in 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-19 pandemic.(3) Costs and impairments recorded relatingto the closure of one store during the first quarter of 2020.(4) 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.(5) 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 inventory or capital expendituresrequired to open a new store location.