GlobeNewswire Inc | Dec 10, 2021 08:00AM EST

December 10, 2021

Net Sales Increased 18.1%; 39.1% Growth over Two Years

Pre-Tax Income Grew 251.6% to $205.3 million

Company Raises Full Year Diluted GAAP EPS Range to $6.75 to $6.85from $5.45 to $5.80

KATY, Texas, Dec. 10, 2021 (GLOBE NEWSWIRE) -- Academy Sports and Outdoors, Inc. (Nasdaq: ASO) ("Academy" or the "Company") today announced its financial results for the third quarter ended October 30, 2021. Unless otherwise indicated, comparisons are to the same period in the prior fiscal year.

Third Quarter 2021 ResultsFor the third quarter, net sales increased 18.1% to a third quarter record of $1.59 billion. When compared to the third quarter of 2019, sales increased 39.1%. Comparable sales were 17.9% on top of 16.5% last year, making it the 9th consecutive quarter of positive comparable sales. The Company continued to benefit from the strategic initiatives implemented to improve merchandise planning and allocation, operations, customer service and supply chain. As a result of these actions and the continued strong consumer demand for sports and outdoors products, all four product divisions saw significant growth. E-commerce sales grew 25.9% compared to the prior year quarter and 146.6% compared to the third quarter of 2019.

Gross margin increased 27.3% to $560.8 million. The gross margin rate improved by 250 basis points to 35.2%. This growth was primarily driven by higher merchandise margins resulting from effective pricing and promotions management, a favorable product mix shift and fewer clearance sales.

Selling, general and administrative ("SG&A") expenses were 21.6% of sales, a 500 basis point decrease. Compared to the third quarter of 2020 adjusted SG&A, which excludes certain initial public offering costs, SG&A leveraged 230 basis points, primarily attributable to workforce management, marketing cost efficiencies and leveraging expenses from the growth of comparable sales.

Pre-tax income increased 251.6% to $205.3 million compared to $58.4 million.

GAAP net income was $161.3 million compared to $59.6 million. Diluted earnings per share increased 132.4% to $1.72 compared to $0.74 per share last year. Pro forma adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 122.6% to $164.1 million. Pro forma diluted earnings per share increased 92.3% to $1.75 compared to $0.91 per share.

"The Academy Sports + Outdoors team did a great job again delivering our 9th consecutive quarterly sales and profit increase," said Ken Hicks, Chairman, President and Chief Executive Officer. "We are confident that our strong assortment and value offering, coupled with our great store service, enhanced omnichannel capabilities, and resilient supply chain will enable Academy to continue to achieve excellent results through this holiday season and beyond."

Year-to-Date 2021 ResultsYear-to-date, net sales increased 21.3% to $4.96 billion, while comparable sales increased 21.2%. Year-to-date sales grew 43.5% compared to 2019. E-commerce sales declined 1.5% versus 2020 and increased 203.9% compared to 2019.

Gross margin increased 43.1% to $1.77 billion. The gross margin rate improved by 540 basis points to 35.6%. This growth was primarily driven by higher merchandise margins resulting from effective pricing and promotions management, strong inventory productivity, greater product localization, fewer clearance sales and a favorable product mix shift.

The growth in gross profit and 210 basis points of expense leverage, resulted in a 208.5% increase in pre-tax income to $671.1 million compared to $217.6 million.

GAAP net income increased 143.8% to $529.6 million compared to $217.2 million. Diluted earnings per share were $5.55 compared to $2.82 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 173.8% to $571.2 million. Pro forma diluted earnings per share were $5.98 compared to $2.70 per share in the prior year to date.

Balance Sheet UpdateAs of the end of the third quarter, the Companys cash and cash equivalents totaled $401.3 million and the credit facility had no outstanding balance. Adjusted free cash flow was $84.4 million. Merchandise inventories were $1.3 billion, an increase of 22.4% compared to the prior year quarter and 18.9% higher than the second quarter of 2021.

As previously reported, on September 14, 2021, Academy's largest shareholder ("KKR") sold its remaining ownership of the Company. As part of this event, Academy purchased 4.5 million shares for approximately $200 million. Additionally, during the quarter, the Company made open market purchases of 1.2 million shares for $50 million. Year-to-date, the Company has repurchased and retired 8.9 million shares of its common stock for approximately $350 million. As of October 31, 2021, the Company had approximately $254 million remaining under its share repurchase program.

2021 OutlookMichael Mullican, Executive Vice President and Chief Financial Officer said, The ongoing successful execution of our strategic priorities has allowed us to achieve yet another period of record-setting sales and profitability. In addition, the strength of the entire Academy team was apparent as we were able to grow our inventory position in a challenging environment. As our initiatives continue to mature, we believe the best days at Academy are still to come. In light of these exceptional results and expectations, we are raising our annual guidance."

The Company is raising its fiscal 2021 guidance based on the strong third quarter performance, dynamic consumer trends and current visibility. 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 $6,675 $6,740 $5,689 $4,830 18% 39% Comparable sales 17.0% 18.0% 16.1% (0.7)% Income before taxes $814 $827 $339 $123 142% 567% Net income * $638 $647 $309 $120 108% 435% GAAP earnings per $6.75 $6.85 $3.79 $1.60 79% 325%share-diluted Non-GAAP earnings per $7.21 $7.31 $3.83 $1.02 90% 612%share-diluted Diluted weighted average 94,500 94,500 81,431 74,795 shares outstanding

*Prior to October 1, 2020, the Company was treated as a flow through entity for U.S. income tax purposes and no federal income tax was recorded.

The earnings per share 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 13725072. 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 13725072. An archive of the webcast will be available at investors.academy.comfor 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 20 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, Adjusted Selling, General and Administrative Expenses 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 of 1933, as amended, 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 October 30, 2021 of Sales ^ October 31, 2020 of Sales ^ (1) (1)Net sales $ 1,592,795 100.0 % $ 1,349,076 100.0 %Cost of goods 1,031,957 64.8 % 908,565 67.3 %soldGross margin 560,838 35.2 % 440,511 32.7 %Selling,general and 344,725 21.6 % 358,955 26.6 %administrativeexpensesOperating 216,113 13.6 % 81,556 6.0 %incomeInterest 11,424 0.7 % 22,399 1.7 %expense, netOther (income) (614 ) 0.0 % 764 0.1 %expense, netIncome before 205,303 12.9 % 58,393 4.3 %income taxesIncome tax(benefit) 43,998 2.8 % (1,193 ) (0.1 ) %expenseNet income $ 161,305 10.1 % $ 59,586 4.4 % Earnings Per Common Share:Basic $ 1.77 $ 0.78 Diluted $ 1.72 $ 0.74 WeightedAverage Common SharesOutstanding:Basic 91,140 76,771 Diluted 93,844 80,714

(1) Column may not add due to rounding

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

Thirty-Nine Weeks Ended Percentage Percentage October 30, 2021 of Sales ^ October 31, 2020 of Sales ^ (1) (1)Net sales $ 4,964,658 100.0 % $ 4,091,797 100.0 %Cost of goods 3,197,623 64.4 % 2,856,840 69.8 %soldGross margin 1,767,035 35.6 % 1,234,957 30.2 %Selling,general and 1,057,290 21.3 % 955,591 23.4 %administrativeexpensesOperating 709,745 14.3 % 279,366 6.8 %incomeInterest 38,130 0.8 % 70,487 1.7 %expense, net(Gain) loss onearly 2,239 0.0 % (7,831 ) (0.2 ) %retirement ofdebt, netOther (1,746 ) 0.0 % (857 ) 0.0 %(income), netIncome before 671,122 13.5 % 217,567 5.3 %income taxesIncome tax 141,511 2.9 % 325 0.0 %expenseNet income $ 529,611 10.7 % $ 217,242 5.3 % Earnings Per Common Share:Basic $ 5.76 $ 2.94 Diluted $ 5.55 $ 2.82 WeightedAverage Common SharesOutstanding:Basic 91,951 73,908 Diluted 95,504 77,171

(1) Column may not add due to rounding

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

October 30, January 30, October 31, 2021 2021 2020ASSETS CURRENT ASSETS: Cash and cash equivalents $ 401,297 $ 377,604 $ 869,725 Accounts receivable -less allowance fordoubtful accounts of 12,368 17,306 11,908 $1,139, $1,172 and$1,286, respectivelyMerchandise inventories, 1,325,979 990,034 1,082,907 netPrepaid expenses and 44,491 28,313 25,789 other current assetsAssets held for sale 1,763 1,763 1,763 Total current assets 1,785,898 1,415,020 1,992,092 PROPERTY AND EQUIPMENT, 358,110 378,260 382,620 NETRIGHT-OF-USE ASSETS 1,087,407 1,143,699 1,163,361 TRADE NAME 577,144 577,000 577,000 GOODWILL 861,920 861,920 861,920 OTHER NONCURRENT ASSETS 5,516 8,583 4,923 Total assets $ 4,675,995 $ 4,384,482 $ 4,981,916 LIABILITIES ANDSTOCKHOLDERS' / PARTNERS' EQUITYCURRENT LIABILITIES: Accounts payable $ 919,196 $ 791,404 $ 868,879 Accrued expenses and 304,488 291,351 274,612 other current liabilitiesCurrent lease liabilities 86,701 80,338 79,361 Current maturities of 3,000 4,000 18,250 long-term debtTotal current liabilities 1,313,385 1,167,093 1,241,102 LONG-TERM DEBT, NET 683,845 781,489 1,408,885 LONG-TERM LEASE 1,088,142 1,150,088 1,171,420 LIABILITIESDEFERRED TAX LIABILITIES, 188,243 138,703 132,701 NETOTHER LONG-TERM 26,386 35,126 43,244 LIABILITIESTotal liabilities 3,300,001 3,272,499 3,997,352 COMMITMENTS AND CONTINGENCIES REDEEMABLE MEMBERSHIP ? ? ? UNITS STOCKHOLDERS' / PARTNERS' EQUITY :Preferred stock, $0.01par value, authorized ? ? ? 50,000,000 shares; noneissued and outstandingCommon stock, $0.01 parvalue, authorized300,000,000 shares;88,164,878; 91,114,475;and 88,103,975 issued and 882 911 881 outstanding as of October30, 2021, January 30,2021, and October 31,2020, respectively.Additional paid-in 188,329 127,228 93,064 capitalRetained earnings 1,188,271 987,168 895,646 Accumulated other (1,488 ) (3,324 ) (5,027 ) comprehensive lossStockholders' / partners' 1,375,994 1,111,983 984,564 equityTotal liabilities andstockholders' / partners' $ 4,675,995 $ 4,384,482 $ 4,981,916 equity

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

Thirty-Nine Weeks Ended October 30, October 31, 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 529,611 $ 217,242 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 77,767 79,718 Non-cash lease expense 708 14,870 Equity compensation 36,126 27,049 Amortization of terminated interest rate swaps, 4,787 2,734 deferred loan and other costsLoss on swaps from debt refinancing ? 1,330 Deferred income taxes 48,991 (11,739 ) Non-cash (gain) loss on early retirement of 2,239 (7,831 ) debt, netCasualty loss ? 114 Changes in assets and liabilities: Accounts receivable, net 4,938 2,121 Merchandise inventories, net (335,945 ) 16,727 Prepaid expenses and other current assets (16,177 ) (1,151 ) Other noncurrent assets 2,207 245 Accounts payable 128,743 439,682 Accrued expenses and other current liabilities 34,683 44,733 Income taxes payable (1,830 ) 9,590 Other long-term liabilities (1,785 ) 21,784 Net cash provided by operating activities 515,063 857,218 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (58,567 ) (21,915 ) Purchases of intangible assets (144 ) ? Notes receivable from member ? 8,125 Net cash used in investing activities (58,711 ) (13,790 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from ABL Facility ? 500,000 Repayment of ABL Facility ? (500,000 ) Repayment of Term Loan (101,500 ) (29,653 ) Debt issuance fees (927 ) (556 ) Share-Based Award Payments (11,214 ) (20,724 ) Distribution ? (257,000 ) Proceeds from issuance of common stock, net of ? 184,882 Offering CostsProceeds from exercise of stock options 41,292 ? 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 (345,837 ) ? Repurchase of Redeemable Membership Units ? (37 ) Net cash used in financing activities (432,659 ) (123,088 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 23,693 720,340 CASH AND CASH EQUIVALENTS AT BEGINNING OF 377,604 149,385 PERIODCASH AND CASH EQUIVALENTS AT END OF PERIOD $ 401,297 $ 869,725

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 and amortization, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early retirement of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, payroll taxes associated with a vesting event, as a result of a secondary offering, of certain time and performance-based equity awards, both of which occurred in May 2021 (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 earlyretirement 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 Thirty-Nine Weeks Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020Net income $ 161,305 $ 59,586 $ 529,611 $ 217,242 Interest expense, 11,424 22,399 38,130 70,487 netIncome tax 43,998 (1,193 ) 141,511 325 expenseDepreciation and 26,459 25,567 77,767 79,718 amortizationConsulting fees ? 102 ? 194 (a)Private equitysponsor ? 12,953 ? 14,793 monitoring fee(b)Equity 2,921 23,359 36,126 27,049 compensation (c)(Gain) loss onearly retirement ? ? 2,239 (7,831 ) of debt, netSeverance andexecutive ? ? ? 4,137 transition costs(d)Costs related tothe COVID-19 ? ? ? 17,632 pandemic (e)Payroll taxesassociated with ? ? 15,418 ? the 2021 VestingEvent (f)Other (g) 595 2,965 1,309 4,894 Adjusted EBITDA $ 246,702 $ 145,738 $ 842,111 $ 428,640 Less:Depreciation and (26,459 ) (25,567 ) (77,767 ) (79,718 ) amortizationAdjusted EBIT $ 220,243 $ 120,171 $ 764,344 $ 348,922

(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 former 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 thirty-nine weeks ended October 31, 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(g) income, installation costs for energy savings associated with our profitability initiatives, legal fees associated with our 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.

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 retirement 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 Thirty-Nine Weeks Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020Net income $ 161,305 $ 59,586 $ 529,611 $ 217,242 Consulting fees ? 102 ? 194 (a)Private equitysponsor monitoring ? 12,953 ? 14,793 fee (b)Equity 2,921 23,359 36,126 27,049 compensation (c)(Gain) loss onearly retirement ? ? 2,239 (7,831 ) of debt, netSeverance andexecutive ? ? ? 4,137 transition costs(d)Costs related tothe COVID-19 ? ? ? 17,632 pandemic (e)Payroll taxesassociated with ? ? 15,418 ? the 2021 VestingEvent (f)Other (g) 595 2,965 1,309 4,894 Tax effects ofthese adjustments (686 ) (71 ) (13,487 ) (109 ) (h)Adjusted Net 164,135 98,894 571,216 278,001 IncomeEstimated taxeffect of change ? (25,147 ) ? (69,410 ) to C-Corporationstatus (i)Pro Forma Adjusted $ 164,135 $ 73,747 $ 571,216 $ 208,591 Net Income Pro Forma Adjusted Earnings per ShareBasic $ 1.80 $ 0.96 $ 6.21 $ 2.82 Diluted $ 1.75 $ 0.91 $ 5.98 $ 2.70 Weighted averagecommon shares outstandingBasic 91,140 76,771 91,951 73,908 Diluted 93,844 80,714 95,504 77,171

(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 former 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 thirty-nine weeks ended October 31, 2020, as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores,(e) 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(g) income, installation costs for 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 thirty-nine weeks ended October 30, 2021, this represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at the estimated effective tax rate for the fiscal(h) year ended January 31, 2022. For thirteen and thirty-nine weeks ended October 31, 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 Selling, General and Administrative Expenses

We define Adjusted Selling, General and Administrative Expenses as selling, general and administrative expenses, less consulting fees, private equity sponsor monitoring fees, equity compensation expense, 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 selling, general and administrative expenses to Adjusted Selling, General and Administrative Expenses in the following table.

Thirteen Weeks Ended Thirty-Nine Weeks Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020Selling,General and $ 344,725 $ 358,955 $ 1,057,290 $ 955,591 AdministrativeExpensesLess: Consulting fees ? (102 ) ? (194 ) (a)Private equitysponsor ? (12,953 ) ? (14,793 ) monitoring fee(b)Equitycompensation (2,921 ) (23,359 ) (36,126 ) (27,049 ) (c)Severance andexecutive ? ? ? (4,137 ) transitioncosts (d)Costs relatedto the COVID-19 ? ? ? (17,632 ) pandemic (e)Payroll taxesassociated withthe 2021 ? ? (15,418 ) ? Vesting Event(f)Other (g) (595 ) (2,965 ) (1,309 ) (4,894 ) AdjustedSelling,General and $ 341,209 $ 319,576 $ 1,004,437 $ 886,892 AdministrativeExpenses AdjustedSelling,General andAdministrative 21.4 % 23.7 % 20.2 % 21.7 %Expenses as apercentage ofNet Sales

(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 former 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 thirty-nine weeks ended October 31, 2020, as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores,(e) 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 Selling, General and Administrative Expenses) amounts that management believes are not representative of our operating performance,(g) including investment income, installation costs for 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.

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 Thirty-Nine Weeks Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020Net cashprovidedby $ 109,389 $ 83,597 $ 515,063 $ 857,218 operatingactivitiesNet cashused in (24,944 ) 60 (58,711 ) (13,790 ) investingactivitiesAdjustedFree Cash $ 84,445 $ 83,657 $ 456,352 $ 843,428 Flow