GlobeNewswire Inc | Dec 8, 2021 04:05PM EST

December 08, 2021

WEST JORDAN, Utah, Dec. 08, 2021 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the Company) (Nasdaq: SPWH) today announced financial results for the thirteen and thirty-nine weeks ended October 30, 2021.

I am very proud of our team and pleased with the performance of the business during the third quarter. said Jon Barker, Sportsmans Warehouse CEO. Despite a very difficult comparison and the terminated merger agreement with the Great Outdoors Group, Inc., our team has been able to achieve incredible results in the quarter and year-to-date periods.

Notable Achievements

-- Topline sales growth of 4% for the third quarter compared to the third quarter of fiscal year 2020, which includes the opening of 7 new stores in an 8 week period. As of today, the Company has opened 10 stores in fiscal 2021, including in 2 new states. This brings our total store count to 122 stores in 29 states. -- Same store sales decline of 1.5% for the third quarter of fiscal year 2021 compared to the third quarter of fiscal year 2020. Compared to the same period of 2019, the Company saw same store sales growth of 39.4%. -- E-commerce sales growth of over 15% for the third quarter of fiscal year 2021 versus the same period of fiscal year 2020. The Company saw over 260% E-commerce sales growth compared to the same period in fiscal year 2019. -- Significant growth of our customer database with new co-branded Explorewards credit card issuances up over 100% and collected customer e-mail addresses up over 30% year-to-date.

For the thirteen weeks ended October 30, 2021:

-- Net sales were $401.0 million, an increase of $15.3 million, or 4.0%, compared to the third quarter of fiscal year 2020, primarily due to the opening of seven new stores since October 31, 2020. Compared to the third quarter of fiscal year 2019, net sales increased 65.3% from $242.5 million. -- Same store sales decreased 1.5% during the third quarter of fiscal year 2021 compared to the third quarter of fiscal year 2020. Compared to the same period of 2019, same stores sales increased 39.4%. -- Gross profit was $129.6 million, or 32.3% of net sales, compared to $130.6 million, or 33.9% of net sales in the comparable prior year period, a year-over-year decrease of $1.0 million in gross profit and a 160-basis point decrease in gross profit margin. The decrease in gross profit margin can be attributed to an increase in freight costs partially offset by higher product margins and vendor programs. -- Net income was $21.9 million compared to net income of $30.5 million in the third quarter of fiscal year 2020. Adjusted net income was $22.7 million compared to adjusted net income of $31.5 million in the third quarter of fiscal year 2020. Net income and adjusted net income for the third quarter of fiscal year 2019 was $10.5 million and $10.8 million, respectively (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $39.3 million compared to $49.9 million in the comparable prior year period. Adjusted EBITDA for the third quarter of fiscal year 2019 was $23.2 million (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $0.49 compared to diluted earnings per share of $0.68 in the comparable prior year period. Adjusted diluted earnings per share were $0.51 compared to adjusted diluted earnings per share of $0.71 for the comparable prior year period. Diluted earnings per share and adjusted diluted earnings per share for the comparable period of fiscal year 2019 was $0.24 and $0.25, respectively (see "GAAP and Non-GAAP Measures").

For the thirty-nine weeks ended October 30, 2021:

-- Net sales were $1,089.8 million, an increase of $76.2 million, or 7.5%, compared to the 39 weeks ended October 31, 2020, primarily due to a combination of opening of seven new stores since October 31, 2020, and an increase in same store sales of 1.5% as we saw strong demand across all categories. Compared to the first 39 weeks of fiscal 2019, net sales increased 73.5% from $628.2 million. -- Gross profit was $353.7 million, or 32.5% of net sales, compared to $334.5 million, or 33.0% of net sales in the comparable prior year period, a year-over-year increase of $19.3 million in gross profit and a 50 basis point decrease in gross profit margin. The decline in gross profit margin can be attributed to higher freight costs for the period versus the prior year, partially offset by increased product margins and vendor programs. -- Net income was $50.0 million compared to net income of $61.8 million in the first 39 weeks of fiscal year 2020. Adjusted net income was $54.7 million compared to adjusted net income of $65.6 million in the first 39 weeks of fiscal year 2020. Net income and adjusted net income for the first 39 weeks of fiscal 2019 was $10.5 million and $11.3 million, respectively (see GAAP and Non-GAAP Measures). -- Adjusted EBITDA was $98.0 million compared to $111.7 million in the comparable prior year period. Adjusted EBITDA for the first 39 weeks of fiscal year 2019 was $39.4 million (see "GAAP and Non-GAAP Measures"). -- Diluted earnings per share were $1.13 compared to a diluted earnings per share of $1.40 in the comparable prior year period. Adjusted diluted earnings per share were $1.23 compared to adjusted diluted earnings per share of $1.48 for the comparable prior year period. Diluted earnings per share and adjusted diluted earnings per share for the first 39 weeks of fiscal year 2019 was $0.24 and $0.26, respectively (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of October 30, 2021:

-- Total net debt was $55.1 million at the end of the third quarter of fiscal year 2021, comprised of $2.5 million of cash on hand and $57.6 million of borrowings outstanding under the Companys revolving credit facility. In comparison, total net debt as of the end of the third quarter of fiscal year 2019 was $160.5 million consisting of $130.8 million outstanding under the Companys revolving credit facility and $29.7 million outstanding under the prior term loan, net of unamortized debt issuance costs. -- Total liquidity was $151.8 million as of the end of the third quarter of fiscal year 2021 with $149.3 million of availability on the revolving credit facility and $2.5 million of cash on hand. As of December 8, 2021, the Company had approximately $57.5 million of cash on hand due to the $55.0 million payment received in conjunction with the termination of the merger agreement with Great Outdoors Group, Inc. -- Total inventory was $428.5 million as of the end of the third quarter of fiscal year 2021. Inventory per store has recovered as compared to 2020 levels with an increase of 25.2% more on a per store basis.

Q4 2021 and Full Year Outlook:

At this time the Company will not be providing guidance for the fourth quarter or full fiscal year 2021.

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 the acquisition of Field and Stream store locations and the proposed merger with the Great Outdoors Group, LLC, expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, an accrual relating to pending labor litigation in the state of California, the excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal 2020 and expenses incurred relating to the transition of our former Chief Financial Officer and the recruitment and hiring of various key members of our senior management team, 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, pre-opening expenses, expenses incurred relating to the acquisition of Field and Stream store locations and the proposed merger with the Great Outdoors Group, LLC, bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, the excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal 2020, expenses incurred relating to the transition of our former Chief Financial Officer and the recruitment and hiring of various key members of our senior management team and an accrual relating to pending labor litigation in the state of California . 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. 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 the termination of our merger agreement with Great Outdoors Group, LLC, including any impact on our stock price, business, financial condition and results of operations, and the potential negative impact to our business and employee relationships; 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:ICR Inc. Rachel Schacterinvestors@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 October net October 31, sales Variance 30, 2021 sales 2020 Net sales $ 401,014 100.0 % $ 385,748 100.0 % $ 15,266 Cost of goods 271,392 67.7 % 255,166 66.1 % 16,226 soldGross profit 129,622 32.3 % 130,582 33.9 % (960 ) Operating expenses:Selling,general and 99,974 24.9 % 92,252 23.9 % 7,722 administrativeexpensesIncome from 29,648 7.4 % 38,330 10.0 % (8,682 ) operationsBargain - 0.0 % (2,218 ) (0.6 %) 2,218 purchase gainInterest 413 0.1 % 536 0.1 % (123 ) expenseIncome beforeincome tax 29,235 7.3 % 40,012 10.5 % (10,777 ) expenseIncome tax 7,372 1.8 % 9,530 2.5 % (2,158 ) expenseNet income $ 21,863 5.5 % $ 30,482 8.0 % $ (8,619 ) Earnings per shareBasic $ 0.50 $ 0.70 $ (0.20 ) Diluted $ 0.49 $ 0.68 $ (0.19 ) Weightedaverage shares outstandingBasic 43,878 43,609 269 Diluted 44,582 44,510 72

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Income (Unaudited)(in thousands, except per share data) For the Thirty-Nine Weeks Ended % of % of net YOY October 30, net October 31, sales Variance 2021 sales 2020 Net sales $ 1,089,784 100.0 % $ 1,013,572 100.0 % $ 76,212 Cost of goods 736,061 67.5 % 679,122 67.0 % 56,939 soldGross profit 353,723 32.5 % 334,450 33.0 % 19,273 Operating expenses:Selling,general and 286,263 26.3 % 251,077 24.8 % 35,186 administrativeexpensesIncome from 67,460 6.2 % 83,373 8.2 % (15,913 )operationsBargain - 0.0 % (2,218 ) (0.2 %) 2,218 purchase gainInterest 905 0.1 % 3,088 0.3 % (2,183 )expenseIncome beforeincome tax 66,555 6.1 % 82,503 8.1 % (15,948 )expenseIncome tax 16,519 1.5 % 20,690 2.0 % (4,171 )expenseNet income $ 50,036 4.6 % $ 61,813 6.1 % $ (11,777 ) Earnings per shareBasic $ 1.14 $ 1.42 $ (0.28 )Diluted $ 1.13 $ 1.40 $ (0.27 ) Weightedaverage shares outstandingBasic 43,809 43,490 319 Diluted 44,471 44,260 211

SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Balance Sheets (Unaudited)(in thousands) Assets October 30, 2021 January 30, 2021 Current assets: Cash $ 2,532 $ 65,525 Accounts receivable, net 684 581 Merchandise inventories 428,497 243,434 Prepaid expenses and other 15,706 15,113 Total current assets 447,419 324,653 Operating lease right of use asset 241,951 235,262 Property and equipment, net 123,457 99,118 Deferred income taxes 124 - Goodwill 1,496 1,496 Definite lived intangible assets, net 267 289 Total assets $ 814,714 $ 660,818 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 123,510 $ 77,441 Accrued expenses 105,289 109,056 Operating lease liability, current 39,790 36,014 Income taxes payable 2,500 4,917 Revolving line of credit 57,551 - Total current liabilities 328,640 227,428 Long-term liabilities: Deferred income taxes - 434 Operating lease liability, noncurrent 231,498 228,296 Total long-term liabilities 231,498 228,730 Total liabilities 560,138 456,158 Stockholders? equity: Common stock 438 436 Additional paid-in capital 89,693 89,815 Accumulated earnings 164,445 114,409 Total stockholders? equity 254,576 204,660 Total liabilities and stockholders' $ 814,714 $ 660,818 equity



SPORTSMAN?S WAREHOUSE HOLDINGS, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)(in thousands) October 30, October 31, 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 50,036 $ 61,813 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,778 15,992 Amortization of discount on debt and deferred 188 422 financing feesAmortization of Intangible assets 23 21 Loss on asset dispositions - 937 Gain on bargain purchase - (2,218 ) Noncash operating lease expense 21,204 17,760 Deferred income taxes (558 ) 2,801 Stock based compensation 2,236 2,436 Change in assets and liabilities, net of amounts acquired:Accounts receivable, net (103 ) 442 Operating lease liabilities (20,915 ) (20,781 ) Merchandise inventory (185,063 ) (38,887 ) Prepaid expenses and other (781 ) (2,021 ) Accounts payable 41,723 94,900 Accrued expenses (2,694 ) 31,992 Income taxes payable and receivable (2,417 ) 6,127 Net cash provided by (used in) operating (78,343 ) 171,736 activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of (38,463 ) (15,394 ) amounts acquiredAcquisition of Field and Stream stores, net of - (4,778 ) cash acquiredNet cash used in investing activities (38,463 ) (20,172 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on line of credit 57,551 (116,078 ) Increase in book overdraft (1,382 ) 4,559 Proceeds from issuance of common stock per employee - 273 stock purchase planPayment of withholdings on restricted stock units (2,356 ) (689 ) Principal payments on long-term debt - (22,000 ) Net cash provided by (used in) financing 53,813 (133,935 ) activities Net change in cash (62,993 ) 17,629 Cash at beginning of year 65,525 1,685 Cash at end of period $ 2,532 $ 19,314



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 pershare to adjusted net income and adjusted diluted earnings per share: For the Thirteen Weeks Ended For the Thirty-Nine Weeks Ended October October November October October 31, November 30, 2021 31, 2020 2, 2019 30, 2021 2020 2, 2019Numerator: Net income $ 21,863 $ 30,482 $ 10,493 $ 50,036 $ 61,813 $ 10,532 Acquisition 1,113 297 387 6,419 332 387 costs (1)Hazard pay (2) - 2,000 - - 4,600 - Store closing - - - - 1,039 - write-off (3)Gain onbargain - (2,218 ) - - (2,218 ) - purchase (4)Legal accrual - 2,125 - - 2,125 - (5)Executivetransition - - - - - 623 costs (6)Less tax (301 ) (1,154 ) (100 ) (1,733 ) (2,113 ) (262 ) benefitAdjusted net $ 22,675 $ 31,532 $ 10,780 $ 54,722 $ 65,578 $ 11,280 income Denominator: Dilutedweighted 44,582 44,510 43,559 44,471 44,260 43,316 average sharesoutstanding Reconciliationof earnings per share:Dilutiveearnings per $ 0.49 $ 0.68 $ 0.24 $ 1.13 $ 1.40 $ 0.24 shareImpact ofadjustments to 0.02 0.03 0.01 0.10 0.08 0.02 numerator anddenominatorAdjusteddiluted $ 0.51 $ 0.71 $ 0.25 $ 1.23 $ 1.48 $ 0.26 earnings pershare Reconciliationof net income to adjusted EBITDA: For the Thirteen Weeks Ended For the Thirty-Nine Weeks Ended October October November October October 31, November 30, 2021 31, 2020 2, 2019 30, 2021 2020 2, 2019Net income $ 21,863 $ 30,482 $ 10,493 $ 50,036 $ 61,813 $ 10,532 Interest 413 465 2,094 905 3,016 6,552 expenseIncome tax 7,372 9,530 3,287 16,519 20,691 3,195 expenseDepreciationand 6,665 5,404 4,832 18,801 16,085 14,090 amortizationAcquisition 1,113 297 387 6,419 332 387 costs (1)Hazard pay (2) - 2,000 - - 4,600 - Store closing - - - - 1,039 - write-off (3)Gain onbargain - (2,218 ) - - (2,218 ) - purchase (4)Legal accrual - 2,125 - - 2,125 - (5)Executivetransition - - - - - 623 costs (6)Stock-basedcompensation 194 882 619 2,237 2,436 1,567 expense (7)Pre-opening 1,712 958 1,482 3,090 1,778 2,483 expenses (8)Adjusted $ 39,332 $ 49,925 $ 23,194 $ 98,007 $ 111,697 $ 39,429 EBITDA (1) Expenses incurred relating to the acquisition of Field & Stream locationsin 2020 and 2019 and the proposed 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 recordedrelating to the closure of one store during the first quarter of 2020.(4) Excess of fair value over the purchase price of tangibleassets acquired in connection with the Field & Stream stores acquired during fiscal year 2020.(5) Accrual relating topending labor litigation in the state of California.(6) Expenses incurred relating to the transition of our CFO (incurred only inQ1 2019) and the recruitment and hiring of various key members of our senior management team. These events are notexpected to be recurring.(7) 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.(8) 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 inventoryor capital expendituresrequired to open a new store location.