GlobeNewswire Inc | Sep 9, 2021 08:00AM EDT

September 09, 2021

Net Sales Increased 11.5%; 44.8% Growth over Two Years

Pre-Tax Income Grew 42.8% to $240.9 million

Company Raises Full Year Diluted EPS Range to $5.45 to $5.80from $4.15 to $4.50

Company Announces New $500 Million Share Repurchase Authorization

KATY, Texas, Sept. 09, 2021 (GLOBE NEWSWIRE) -- Academy Sports and Outdoors, Inc. (Nasdaq: ASO) ("Academy" or the "Company") today announced its financial results for the second quarter ended July 31, 2021. Unless otherwise indicated, comparisons are to the same period in the prior fiscal year.

Second Quarter 2021 ResultsNet sales increased 11.5% to an all-time quarterly high of $1.79 billion. When compared to the same quarter in 2019, sales increased 44.8%. Comparable sales grew 11.4% on top of 27.0% last year, making it the eighth consecutive quarter of positive comparable sales. The sales growth was driven by the sustained strength in the sporting goods and outdoor recreation market, improving in-stocks and strong consumer demand across all product categories. Sales were particularly strong in Apparel, Footwear, Field, Fitness and Team Sports. E-commerce sales declined slightly (0.9%) after growing 210.3% in the prior year quarter. When compared to the second quarter of 2019, E-commerce sales increased 207.2%.

Gross margin increased 29.4% to $642.5 million, the highest quarterly gross profit in the Company's history. The gross margin rate improved by 500 basis points to 35.9%. This growth was primarily driven by stronger merchandise margins from a favorable product mix shift, higher average unit retails and less promotional activity.

Selling, general and administrative ("SG&A") expenses were 21.7% of sales, a 220 basis point increase. The change was a result of higher advertising and payroll expenses that had been pared back last year due to the pandemic as well as non-recurring stock compensation and payroll expenses associated with accelerated share vesting. Excluding the non-recurring expenses, SG&A expenses would have been 19.2% of sales.

Pre-tax income increased by 42.8% to $240.9 million compared to $168.7 million.

Net income was $190.5 million compared to $167.7 million. Diluted earnings per share were $1.99 compared to $2.25 per share. The decline in earnings per share was the result of an increase in the number of shares outstanding and higher federal income tax. Pro forma adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 67.1% to $224.6 million. Pro forma diluted earnings per share increased 29.3% to $2.34 compared to $1.81 per share.

"The Academy Sports + Outdoors team delivered the best quarterly financial results in the Companys history as we surpassed the very strong store comparables from last year," said Ken Hicks, Chairman, President and Chief Executive Officer. "We plan to build on this continued success by further sharpening our focus on the fundamentals of the business and investing in our strategic initiatives with the goal of adding new customers, gaining market share and driving sales and profit growth. I am also excited to announce the authorization of our new share repurchase program. This program signifies the current strength of the Company and the confidence we have in the future of Academy."

Year-to-Date 2021 ResultsNet sales increased 22.9% to $3.37 billion, while comparable sales increased 22.8%. Year-to-date sales grew 45.7% compared to 2019. E-commerce sales increased 241.9% compared to 2019 and declined 10.8% versus 2020.

Gross margin increased 51.8% to $1.21 billion. The gross margin rate improved by 680 basis points to 35.8%.

The growth in gross profit, coupled with 70 basis points of selling, general & administrative expense leverage, resulted in a 192.6% increase in pre-tax income to $465.8 million compared to $159.2 million.

Net income increased 133.6% to $368.3 million compared to $157.7 million. Diluted earnings per share were $3.82 compared to $2.12 per share in the prior year to date. Pro forma adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 201.9% to $407.1 million. Pro forma diluted earnings per share were $4.22 compared to $1.81 per share in the prior year to date.

Balance Sheet UpdateThe company also took steps to enhance its balance sheet. As of the end of the second quarter, the Companys cash and cash equivalents totaled $553.8 million with no outstanding balance on its credit facility. Adjusted free cash flow was $169.5 million. Merchandise inventories were $1.1 billion, an increase of 24.0% compared to the prior year quarter and 3.2% compared to Q1 2021.

As previously reported, Academy's largest shareholder (KKR) completed two transactions, reducing their ownership to approximately 20% of the Company as of the end of the quarter. As part of one of these events, Academy purchased and retired 3.2 million shares for approximately $100 million. In addition to the stock repurchase, the Company paid down $99 million of its outstanding term loan and refinanced the loan's interest rate from LIBOR + 5.0% to LIBOR + 3.75%. Based on these positive actions, S&P (B+ from B) and Moody's (Ba3 from B1) both upgraded the Company's debt rating.

Capital AllocationOn September 2, 2021, the Academy Board of Directors authorized a new share repurchase program under which the Company may purchase up to $500 million of its outstanding shares over the next three years.

2021 OutlookMichael Mullican, Executive Vice President and Chief Financial Officer, said, "Our second quarter performance set Company records across numerous financial metrics, including revenue, gross margin dollars and rate, pre-tax income and net earnings. Importantly, we continue to improve profitability at a higher rate than our sales growth. As a result, we are increasing our fiscal 2021 guidance. Looking ahead, we expect to utilize our capabilities to accelerate our omnichannel, new store and other growth initiatives."

This forecast accounts for various market scenarios due to the uncertainty from the impact of COVID-19 on the economy and consumer. The new guidance is as follows:

% change (at mid-point) Updated Fiscal 2021 2020 2019 vs. vs. (e) Guidance 2020 2019(in millions, except per Low end High end share amounts)Net Sales $6,465 $6,620 $5,689 $4,830 15% 35% Comparable sales 14.0% 17.0% 16.1% (0.7)% Income before taxes $670 $715 $339 $123 104% 463% Net income $525 $560 $309 $120 76% 352% Earnings per share-diluted $5.45 $5.80 $3.79 $1.60 48% 252% Diluted weighted average 96,500 96,500 81,431 74,795 shares outstanding

The EPS estimate reflects a tax rate of 22.0% and does not include any potential future share repurchases.

Conference Call InfoAcademy will host a conference call today at 11:00 a.m. Eastern Time to discuss its financial results. Listeners may access the call by dialing 1-877-407-3982 (U.S.) or 1-201-493-6780 (International). The passcode is 13721945. A webcast of the call can be accessed at investors.academy.com.

A telephonic replay of the conference call will be available for approximately 30 days, by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) and entering passcode 13721945. An archive of the webcast will be available at investors.academy.comfor approximately 30 days.

About Academy Sports + OutdoorsAcademy is a leading full-line sporting goods and outdoor recreation retailer in the United States. Originally founded in 1938 as a family business in Texas, Academy has grown to 259 stores across 16 contiguous states. Academys mission is to provide Fun for All and Academy fulfills this mission with a localized merchandising strategy and value proposition that strongly connects with a broad range of consumers. Academys product assortment focuses on key categories of outdoor, apparel, footwear and sports & recreation through both leading national brands and a portfolio of 19 private label brands, which go well beyond traditional sporting goods and apparel offerings.

All references to "Academy," "Academy Sports + Outdoors," "we," "us," "our" or the "Company" in this press release refer to (1) prior to October 1, 2020 (the "IPO pricing date"), New Academy Holding Company, LLC, a Delaware limited liability company ("NAHC") and the prior parent holding company for our operations, and its consolidated subsidiaries; and (2) on and after the IPO pricing date, Academy Sports and Outdoors, Inc., a Delaware corporation ("ASO, Inc.") and the current parent holding company of our operations, and its consolidated subsidiaries.

On the IPO pricing date, we completed a series of reorganization transactions (the "Reorganization Transactions") that resulted in NAHC being contributed to ASO, Inc. by its members and becoming a wholly owned subsidiary of ASO, Inc. and one share of common stock of ASO, Inc. issued to then-existing members of NAHC for every 3.15 membership units of NAHC contributed to ASO, Inc. (the "Contribution Ratio"). Unless indicated otherwise, the information in this press release has been adjusted to give retrospective effect to the Contribution Ratio.

Non-GAAP MeasuresAdjusted EBITDA, Adjusted EBIT, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss), Pro Forma Adjusted Earnings Per Share, and Adjusted Free Cash Flow have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP). These non-GAAP measures have limitations as analytical tools. For information on these limitations, as well as information on why management believes these non-GAAP measures are useful, please see our Annual Report for fiscal year 2020 filed on April 7, 2021 (the Annual Report), as such limitations and information may be updated from time to time in our periodic filings with the Securities and Exchange commission (the "SEC"), which are accessible on the SEC's website at www.sec.gov.

We compensate for these limitations by primarily relying on our GAAP results in addition to using these non-GAAP measures supplementally.

See Reconciliations of Non-GAAP to GAAP Financial Measures below for reconciliations of non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures.

Forward Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Academy's current expectations and are not guarantees of future performance. You can identify these forward-looking statements by the use of words such as outlook, guidance, believes, expects, potential, continues, may, will, should, could, seeks, projects, predicts, intends, plans, estimates, anticipates or the negative version of these words or other comparable words. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond Academy's control. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Academy's filings with the SEC, including the Annual Report, under the caption "Risk Factors," as may be updated from time to time in our periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. Academy undertakes no obligation to publicly update or review 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.

Investor Contact Media ContactMatt Hodges Elise HasbrookVP, Investor Relations VP, Communications281-646-5362 281-944-6041Matt.hodges@academy.com Elise.hasbrook@academy.com

ACADEMY SPORTS AND OUTDOORS, INC.CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(Amounts in thousands, except per share data)

Thirteen Weeks Ended Percentage Percentage July 31, 2021 of Sales ^ August 1, 2020 of Sales ^ (2) (2)Net sales $ 1,791,530 100.0 % $ 1,606,420 100.0 %Cost of goods 1,149,034 64.1 % 1,109,919 69.1 %soldGross margin 642,496 35.9 % 496,501 30.9 %Selling,general and 387,938 21.7 % 312,713 19.5 %administrativeexpensesOperating 254,558 14.2 % 183,788 11.4 %incomeInterest 12,157 0.7 % 23,566 1.5 %expense, net(Gain) loss onearly 2,239 0.1 % (7,831 ) (0.5 ) %extinguishmentof debt, netOther (735 ) 0.0 % (628 ) 0.0 %(income), netIncome before 240,897 13.4 % 168,681 10.5 %income taxesIncome tax 50,387 2.8 % 1,005 0.1 %expenseNet income $ 190,510 10.6 % $ 167,676 10.4 % Earnings Per Common Share:Basic^ (1) $ 2.06 $ 2.31 Diluted^ (1) $ 1.99 $ 2.25 WeightedAverage Common SharesOutstanding:Basic^ (1) 92,627 72,478 Diluted^ (1) 95,891 74,439

(1) After effect of the retrospective presentation of the Reorganization Transactions and Contribution Ratio(2) Column may not add due to rounding

ACADEMY SPORTS AND OUTDOORS, INC.CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(Amounts in thousands, except per share data)

Twenty-Six Weeks Ended Percentage Percentage July 31, 2021 of Sales ^ August 1, 2020 of Sales ^ (2) (2)Net sales $ 3,371,863 100.0 % $ 2,742,721 100.0 %Cost of goods 2,165,666 64.2 % 1,948,275 71.0 %soldGross margin 1,206,197 35.8 % 794,446 29.0 %Selling,general and 712,565 21.1 % 596,636 21.8 %administrativeexpensesOperating 493,632 14.6 % 197,810 7.2 %incomeInterest 26,706 0.8 % 48,088 1.8 %expense, net(Gain) loss onearly 2,239 0.1 % (7,831 ) (0.3 ) %extinguishmentof debt, netOther (1,132 ) 0.0 % (1,621 ) (0.1 ) %(income), netIncome before 465,819 13.8 % 159,174 5.8 %income taxesIncome tax 97,513 2.9 % 1,518 0.1 %expenseNet income $ 368,306 10.9 % $ 157,656 5.7 % Earnings Per Common Share:Basic^ (1) $ 3.99 $ 2.18 Diluted^ (1) $ 3.82 $ 2.12 WeightedAverage Common SharesOutstanding:Basic^ (1) 92,357 72,476 Diluted^ (1) 96,391 74,487

(1) After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio(2) Column may not add due to rounding

ACADEMY SPORTS AND OUTDOORS, INC.CONSOLIDATED BALANCE SHEETS(Unaudited)(Dollar amounts in thousands, except per share data)

July 31, 2021 January 30, August 1, 2020 2021ASSETS CURRENT ASSETS: Cash and cash equivalents $ 553,825 $ 377,604 $ 884,029 Accounts receivable -less allowance fordoubtful accounts of 10,791 17,306 9,181 $822, $1,172 and $3,323,respectivelyMerchandise inventories, 1,115,020 990,034 899,086 netPrepaid expenses and 39,050 28,313 30,495 other current assetsAssets held for sale 1,763 1,763 1,763 Total current assets 1,720,449 1,415,020 1,824,554 PROPERTY AND EQUIPMENT, 362,784 378,260 396,559 NETRIGHT-OF-USE ASSETS 1,105,272 1,143,699 1,171,736 TRADE NAME 577,000 577,000 577,000 GOODWILL 861,920 861,920 861,920 OTHER NONCURRENT ASSETS 6,602 8,583 11,079 Total assets $ 4,634,027 $ 4,384,482 $ 4,842,848 LIABILITIES ANDSTOCKHOLDERS' / PARTNERS' EQUITYCURRENT LIABILITIES: Accounts payable $ 816,427 $ 791,404 $ 726,666 Accrued expenses and 277,157 291,351 245,072 other current liabilitiesCurrent lease liabilities 84,981 80,338 76,485 Current maturities of 3,000 4,000 18,250 long-term debtTotal current liabilities 1,181,565 1,167,093 1,066,473 LONG-TERM DEBT, NET 684,103 781,489 1,412,800 LONG-TERM LEASE 1,107,709 1,150,088 1,181,819 LIABILITIESDEFERRED TAX LIABILITIES, 185,765 138,703 ? NETOTHER LONG-TERM 27,267 35,126 29,683 LIABILITIESTotal liabilities 3,186,409 3,272,499 3,690,775 COMMITMENTS AND CONTINGENCIES REDEEMABLE MEMBERSHIP ? ? 2,977 UNITS STOCKHOLDERS' / PARTNERS' EQUITY ^(1):Preferred stock, $0.01par value, authorized ? ? ? 50,000,000 shares; noneissued and outstandingPartners' equity,membership unitsauthorized, issued and ? ? 1,157,435 outstanding were72,478,106 as of August1, 2020Common stock, $0.01 parvalue, authorized300,000,000 shares;92,883,540 and 91,114,475 929 911 ? issued and outstanding asof July 31, 2021 andJanuary 30, 2021respectively.Additional paid-in 187,746 127,228 ? capitalRetained earnings 1,260,805 987,168 ? Accumulated other (1,862 ) (3,324 ) (8,339 ) comprehensive lossStockholders' / partners' 1,447,618 1,111,983 1,149,096 equityTotal liabilities andstockholders' / partners' $ 4,634,027 $ 4,384,482 $ 4,842,848 equity

(1) After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio

ACADEMY SPORTS AND OUTDOORS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(Amounts in thousands)

Twenty-Six Weeks Ended July 31, 2021 August 1, 2020CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 368,306 $ 157,656 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 51,308 54,151 Non-cash lease expense 691 14,049 Equity compensation 33,205 3,690 Amortization of terminated interest rate swaps, 3,521 1,827 deferred loan and other costsDeferred income taxes 46,628 ? Non-cash (gain) loss on early retirement of debt, 2,239 (7,831 ) netCasualty loss ? 16 Changes in assets and liabilities: Accounts receivable, net 6,515 4,819 Merchandise inventories, net (124,986 ) 200,647 Prepaid expenses and other current assets (10,737 ) (1,623 ) Other noncurrent assets 1,408 (74 ) Accounts payable 22,958 302,391 Accrued expenses and other current liabilities 18,517 32,335 Income taxes payable (12,996 ) ? Other long-term liabilities (903 ) 11,568 Net cash provided by operating activities 405,674 773,621 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (33,767 ) (13,850 ) Net cash used in investing activities (33,767 ) (13,850 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from ABL Facility ? 500,000 Repayment of ABL Facility ? (500,000 ) Repayment of Term Loan (100,750 ) (25,090 ) Debt issuance fees (927 ) ? Share-Based Award Payments (11,214 ) ? Proceeds from exercise of stock options 31,678 ? Proceeds from issuance of common stock under 945 ? employee stock purchase programTaxes paid related to net share settlement of (15,418 ) ? equity awardsRepurchase of common stock for retirement (100,000 ) ? Repurchase of Redeemable Membership Units ? (37 ) Net cash used in financing activities (195,686 ) (25,127 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 176,221 734,644 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 377,604 149,385 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 553,825 $ 884,029

ACADEMY SPORTS AND OUTDOORS, INC.RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL MEASURES(Unaudited)(Dollar amounts in thousands)

Adjusted EBITDA and Adjusted EBIT

We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax expense and depreciation, amortization and impairment, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, payroll taxes associated with the 2021 Vesting Event and other adjustments. We define Adjusted EBIT as net income (loss) before interest expense, net, and income tax expense, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, payroll taxes associated with the 2021 Vesting Event and other adjustments. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and Adjusted EBIT in the following table.



Thirteen Weeks Ended Twenty-Six Weeks Ended July 31, 2021 August 1, July 31, 2021 August 1, 2020 2020Net income $ 190,510 $ 167,676 $ 368,306 $ 157,656 Interest 12,157 23,566 26,706 48,088 expense, netIncome tax 50,387 1,005 97,513 1,518 expenseDepreciationand 26,010 26,704 51,308 54,151 amortizationConsulting fees ? 36 ? 92 (a)Private equitysponsor ? 920 ? 1,840 monitoring fee(b)Equitycompensation 27,331 1,581 33,205 3,690 (c)(Gain) Loss onearly 2,239 (7,831 ) 2,239 (7,831 ) extinguishmentof debt, netSeverance andexecutive ? 3,909 ? 4,137 transitioncosts (d)Costs relatedto the COVID-19 ? 10,987 ? 17,632 pandemic (e)Payroll taxesassociated withthe 2021 15,418 ? 15,418 ? Vesting Event(f)Other (g) 364 1,092 714 1,929 Adjusted EBITDA $ 324,416 $ 229,645 $ 595,409 $ 282,902 Less:Depreciation (26,010 ) (26,704 ) (51,308 ) (54,151 ) andamortizationAdjusted EBIT $ 298,406 $ 202,941 $ 544,101 $ 228,751

(a) Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives. Represents our contractual payments under a monitoring agreement(b) ("Monitoring Agreement") with our private equity sponsor Kohlberg Kravis Roberts & Co. L.P. Represents non-cash charges related to equity based compensation, which(c) vary from period to period depending on certain factors such as the 2021 Vesting Event, timing and valuation of awards, achievement of performance targets and equity award forfeitures.(d) Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes. Represents costs incurred during the thirteen and twenty-six weeks ended August 1, 2020, as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies(e) and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock, and legal fees associated with consulting in local jurisdictions. These costs were no longer added back beginning in the third quarter of 2020.(f) Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event. Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted EBIT) amounts that management believes are not representative of our operating performance, including investment income,(g) installation costs for energy savings associated with our profitability initiatives, legal fees associated with our distribution and the omnibus incentive plan, store exit costs and other costs associated with strategic cost savings and business optimization initiatives.

Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share

We define Adjusted Net Income (Loss) as net income (loss), plus consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, payroll taxes associated with the 2021 Vesting Event and other adjustments, less the tax effect of these adjustments. We define Pro Forma Adjusted Net Income (Loss) as Adjusted Net Income (Loss) less the retroactive tax effect of Adjusted Net Income at our estimated effective tax rate of approximately 25% for periods prior to October 1, 2020, the effective date of our conversion to a C-Corporation. We define Pro Forma Adjusted Earnings per Common Share, Basic as Pro Forma Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and Pro Forma Adjusted Earnings per Common Share, Diluted as Pro Forma Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period. We describe these adjustments reconciling net income (loss) to Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss), and Pro Forma Adjusted Earnings Per Share in the following table.

Thirteen Weeks Ended Twenty-Six Weeks Ended July 31, 2021 August 1, July 31, 2021 August 1, 2020 2020Net income $ 190,510 $ 167,676 $ 368,306 $ 157,656 Consulting fees ? 36 ? 92 (a)Private equitysponsor ? 920 ? 1,840 monitoring fee(b)Equitycompensation 27,331 1,581 33,205 3,690 (c)(Gain) loss onearly 2,239 (7,831 ) 2,239 (7,831 ) extinguishmentof debt, netSeverance andexecutive ? 3,909 ? 4,137 transitioncosts (d)Costs relatedto the COVID-19 ? 10,987 ? 17,632 pandemic (e)Payroll taxesassociated withthe 2021 15,418 ? 15,418 ? Vesting Event(f)Other (g) 364 1,092 714 1,929 Tax effects ofthese (11,312 ) (19 ) (12,801 ) (39 ) adjustments (h)Adjusted Net 224,550 178,351 407,081 179,106 IncomeEstimated taxeffect ofchange to ? (43,947 ) ? (44,262 ) C-Corporationstatus (i)Pro FormaAdjusted Net $ 224,550 $ 134,404 $ 407,081 $ 134,844 Income Pro FormaAdjusted Earnings perShareBasic $ 2.42 $ 1.85 $ 4.41 $ 1.86 Diluted $ 2.34 $ 1.81 $ 4.22 $ 1.81 Weightedaverage common sharesoutstandingBasic ^(1) 92,627 72,478 92,357 72,476 Diluted ^(1) 95,891 74,439 96,391 74,487

^ After effect of retrospective presentation of the Reorganization(1) Transactions and Contribution Ratio (a) Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.(b) Represents our contractual payments under our Monitoring Agreement with our private equity sponsor Kohlberg Kravis Roberts & Co. L.P. Represents non-cash charges related to equity based compensation, which(c) vary from period to period depending on certain factors such as the 2021 Vesting Event, timing and valuation of awards, achievement of performance targets and equity award forfeitures.(d) Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes. Represents costs incurred during the thirteen and twenty-six weeks ended August 1, 2020, as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies(e) and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock, and legal fees associated with consulting in local jurisdictions. These costs were no longer added back beginning in the third quarter of 2020.(f) Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event. Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, including investment income, installation costs for(g) energy savings associated with our profitability initiatives, legal fees associated with a distribution to NAHC's members and our omnibus incentive plan, store exit costs and other costs associated with strategic cost savings and business optimization initiatives. For the thirteen and twenty-six weeks ended July 31, 2021, this represents the tax effect of the total adjustments made to arrive at Adjusted Net(h) Income at the estimated effective tax rate for the fiscal year ended January 31, 2022. For thirteen and twenty-six weeks ended August 1, 2020, this represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate. Represents the retrospective tax effect of Adjusted Net Income at our(i) estimated effective tax rate of approximately 25% for periods prior to October 1, 2020, the effective date of our conversion to a C-Corporation, upon which we became subject to federal income taxes.

Adjusted Free Cash Flow

We define Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash provided by (used in) investing activities. We describe these adjustments reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the following table.

Thirteen Weeks Ended Twenty-Six Weeks Ended July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020Net cashprovidedby $ 186,446 $ 682,865 $ 405,674 $ 773,621 operatingactivitiesNet cashused in (16,959 ) (3,924 ) (33,767 ) (13,850 ) investingactivitiesAdjustedFree Cash $ 169,487 $ 678,941 $ 371,907 $ 759,771 Flow