Second Quarter Diluted EPS Increased 11.6% to a Quarterly Record of
Comparable Sales Declined 6.0% and Improved Sequentially to the First Quarter
E-commerce Sales Grew 12.1%; Increased Double Digits for the
Company Reiterates 2022 Full-Year Net and Comparable Sales Guidance
Second Quarter 2022 Results
“Our performance this quarter was in line with our expectations as Academy continues to substantially outperform our pre-pandemic levels of sales and profits. We remain confident that the durability of our strong assortments and everyday value model positions us well to deliver consistent sales and profitability growth going forward,” stated
Net sales were
Gross margin was
Selling, general and administrative ("SG&A") expenses were 20.1% of sales, a 160 basis point decrease, due to non-recurring stock compensation and payroll expenses associated with the accelerated share vesting, which occurred in the second quarter of 2021. Excluding this non-recurring expense of
In the second quarter, pre-tax income was
GAAP net income decreased 0.9% to
Adjusted net income, which excludes the impact of certain non-cash and extraordinary items, was
Year-to-date 2022 Results
Year-to-date, net sales decreased 6.4% to
Gross margin was
Pre-tax income was
GAAP net income decreased 8.1% to
Adjusted net income, which excludes the impact of certain non-cash and extraordinary items, decreased 14.5% to
Balance Sheet and Capital Allocation Update
At the end of the second quarter, the Company’s cash and cash equivalents totaled
During the second quarter, Academy returned
Subsequent to the end of the second quarter, on
New Store Openings
During the second quarter, Academy opened one new store, bringing the total number of stores opened as of
2022 Outlook
“Academy delivered record quarterly earnings per share results, which demonstrates our earnings potential as well as our ability to deliver strong results in a challenging environment,” said
Academy is reiterating its net and comparable sales guidance for fiscal 2022 and updating its EPS forecast. The revised guidance is as follows:
Previous Guidance | Current Guidance | ||||||||||
(in millions, except per share amounts) | Low end | High end | Low end | High end | |||||||
$ | 6,430.0 | $ | 6,630.0 | no change | |||||||
Comparable Sales | -6.0 | % | -3.0 | % | no change | ||||||
Gross Margin Rate | 33.0 | % | 33.5 | % | no change | ||||||
GAAP Income Before Taxes | $ | 725.0 | $ | 805.0 | no change | ||||||
GAAP Net Income | $ | 550.0 | $ | 615.0 | no change | ||||||
GAAP Earnings per Common Share, Diluted | $ | 6.30 | $ | 7.00 | $ | 6.50 | $ | 7.25 | |||
Adjusted Earnings per Common Share, Diluted | $ | 6.55 | $ | 7.25 | $ | 6.75 | $ | 7.50 | |||
Diluted Weighted Average Common Shares Outstanding | 88.0 | 88.0 | 85.0 | 85.0 | |||||||
The earnings per common share estimate reflects a tax rate of 24.0% and the year-to-date share repurchase activity, but does not include any potential future share repurchases.
Conference Call Info
Academy will host a conference call today at
A telephonic replay of the conference call will be available for approximately 30 days, by dialing 1-844-512-2921 (
About
Academy is a leading full-line sporting goods and outdoor recreation retailer in
Non-GAAP Measures
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Common 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 the fiscal year ended
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 Statements
This 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 include, among other things, statements regarding the payment of the dividend and declaration of future dividends, including the timing and amount thereof, share repurchases, the Company's expectations regarding its future performance, and the Company's future financial condition to support future dividend growth and 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, including ongoing inflation and continued increases in interest rates, 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
Investor Contact | Media Contact | |
VP, Investor Relations | VP, Communications | |
281-646-5362 | 281-944-6041 | |
matt.hodges@academy.com | elise.hasbrook@academy.com |
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
Thirteen Weeks Ended | |||||||||||||||
Percentage of Sales (1) | Percentage of Sales (1) | ||||||||||||||
Net sales | $ | 1,686,915 | 100.0 | % | $ | 1,791,530 | 100.0 | % | |||||||
Cost of goods sold | 1,090,852 | 64.7 | % | 1,149,034 | 64.1 | % | |||||||||
Gross margin | 596,063 | 35.3 | % | 642,496 | 35.9 | % | |||||||||
Selling, general and administrative expenses | 339,329 | 20.1 | % | 387,938 | 21.7 | % | |||||||||
Operating income | 256,734 | 15.2 | % | 254,558 | 14.2 | % | |||||||||
Interest expense, net | 11,157 | 0.7 | % | 12,157 | 0.7 | % | |||||||||
Loss on early retirement of debt | — | — | % | 2,239 | 0.1 | % | |||||||||
Other (income), net | (1,441 | ) | (0.1 | ) | % | (735 | ) | (0.0 | ) | % | |||||
Income before income taxes | 247,018 | 14.6 | % | 240,897 | 13.4 | % | |||||||||
Income tax expense | 58,217 | 3.5 | % | 50,387 | 2.8 | % | |||||||||
Net income | $ | 188,801 | 11.2 | % | $ | 190,510 | 10.6 | % | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 2.28 | $ | 2.06 | |||||||||||
Diluted | $ | 2.22 | $ | 1.99 | |||||||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 82,960 | 92,627 | |||||||||||||
Diluted | 84,906 | 95,891 |
(1) Column may not add due to rounding
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
Twenty-Six Weeks Ended | |||||||||||||||
Percentage of Sales (1) | Percentage of Sales (1) | ||||||||||||||
Net sales | $ | 3,154,645 | 100.0 | % | $ | 3,371,863 | 100.0 | % | |||||||
Cost of goods sold | 2,037,158 | 64.6 | % | 2,165,666 | 64.2 | % | |||||||||
Gross margin | 1,117,487 | 35.4 | % | 1,206,197 | 35.8 | % | |||||||||
Selling, general and administrative expenses | 655,260 | 20.8 | % | 712,565 | 21.1 | % | |||||||||
Operating income | 462,227 | 14.7 | % | 493,632 | 14.6 | % | |||||||||
Interest expense, net | 22,077 | 0.7 | % | 26,706 | 0.8 | % | |||||||||
Loss on early retirement of debt | — | — | % | 2,239 | 0.1 | % | |||||||||
Other (income), net | (2,138 | ) | (0.1 | ) | % | (1,132 | ) | (0.0 | ) | % | |||||
Income before income taxes | 442,288 | 14.0 | % | 465,819 | 13.8 | % | |||||||||
Income tax expense | 103,681 | 3.3 | % | 97,513 | 2.9 | % | |||||||||
Net income | $ | 338,607 | 10.7 | % | $ | 368,306 | 10.9 | % | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 3.99 | $ | 3.99 | |||||||||||
Diluted | $ | 3.90 | $ | 3.82 | |||||||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||
Basic | 84,809 | 92,357 | |||||||||||||
Diluted | 86,792 | 96,391 |
(1) Column may not add due to rounding
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except per share data)
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 399,857 | $ | 485,998 | $ | 553,825 | ||||
Accounts receivable - less allowance for doubtful accounts of | 14,521 | 19,718 | 10,791 | |||||||
Merchandise inventories, net | 1,304,556 | 1,171,808 | 1,115,020 | |||||||
Prepaid expenses and other current assets | 46,448 | 36,460 | 39,050 | |||||||
Assets held for sale | 1,763 | 1,763 | 1,763 | |||||||
Total current assets | 1,767,145 | 1,715,747 | 1,720,449 | |||||||
PROPERTY AND EQUIPMENT, NET | 350,628 | 345,836 | 362,784 | |||||||
RIGHT-OF-USE ASSETS | 1,087,085 | 1,079,546 | 1,105,272 | |||||||
577,299 | 577,215 | 577,000 | ||||||||
861,920 | 861,920 | 861,920 | ||||||||
OTHER NONCURRENT ASSETS | 9,892 | 4,676 | 6,602 | |||||||
Total assets | $ | 4,653,969 | $ | 4,584,940 | $ | 4,634,027 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable | $ | 778,016 | $ | 737,826 | $ | 816,427 | ||||
Accrued expenses and other current liabilities | 251,569 | 303,207 | 277,157 | |||||||
Current lease liabilities | 87,042 | 83,077 | 84,981 | |||||||
Current maturities of long-term debt | 3,000 | 3,000 | 3,000 | |||||||
Total current liabilities | 1,119,627 | 1,127,110 | 1,181,565 | |||||||
LONG-TERM DEBT, NET | 683,065 | 683,585 | 684,103 | |||||||
LONG-TERM LEASE LIABILITIES | 1,081,790 | 1,077,667 | 1,107,709 | |||||||
DEFERRED TAX LIABILITIES, NET | 235,187 | 217,212 | 185,765 | |||||||
OTHER LONG-TERM LIABILITIES | 13,029 | 12,420 | 27,267 | |||||||
Total liabilities | 3,132,698 | 3,117,994 | 3,186,409 | |||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
STOCKHOLDERS' EQUITY : | ||||||||||
Preferred stock, | — | — | — | |||||||
Common stock, | 797 | 870 | 929 | |||||||
Additional paid-in capital | 196,510 | 198,016 | 187,746 | |||||||
Retained earnings | 1,323,964 | 1,268,060 | 1,260,805 | |||||||
Accumulated other comprehensive loss | — | — | (1,862 | ) | ||||||
Stockholders' equity | 1,521,271 | 1,466,946 | 1,447,618 | |||||||
Total liabilities and stockholders' equity | $ | 4,653,969 | $ | 4,584,940 | $ | 4,634,027 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Twenty-Six Weeks Ended | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 338,607 | $ | 368,306 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 51,852 | 51,308 | ||||||
Non-cash lease expense | 548 | 691 | ||||||
Equity compensation | 9,657 | 33,205 | ||||||
Amortization of terminated interest rate swaps, deferred loan and other costs | 1,552 | 3,521 | ||||||
Deferred income taxes | 17,976 | 46,628 | ||||||
Non-cash loss on early retirement of debt | — | 2,239 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net | 5,197 | 6,515 | ||||||
Merchandise inventories, net | (132,748 | ) | (124,986 | ) | ||||
Prepaid expenses and other current assets | (9,987 | ) | (10,737 | ) | ||||
Other noncurrent assets | (5,788 | ) | 1,408 | |||||
Accounts payable | 31,596 | 22,958 | ||||||
Accrued expenses and other current liabilities | (47,447 | ) | 18,517 | |||||
Income taxes payable | (3,219 | ) | (12,996 | ) | ||||
Other long-term liabilities | 610 | (903 | ) | |||||
Net cash provided by operating activities | 258,406 | 405,674 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (48,050 | ) | (33,767 | ) | ||||
Purchases of intangible assets | (84 | ) | — | |||||
Net cash used in investing activities | (48,134 | ) | (33,767 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayment of Term Loan | (1,500 | ) | (100,750 | ) | ||||
Debt issuance fees | — | (927 | ) | |||||
Share-Based Award Payments | — | (11,214 | ) | |||||
Proceeds from exercise of stock options | 4,683 | 31,678 | ||||||
Proceeds from issuance of common stock under employee stock purchase program | 2,797 | 945 | ||||||
Taxes paid related to net share settlement of equity awards | (974 | ) | (15,418 | ) | ||||
Repurchase of common stock for retirement | (288,612 | ) | (100,000 | ) | ||||
Dividends paid | (12,807 | ) | — | |||||
Net cash used in financing activities | (296,413 | ) | (195,686 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (86,141 | ) | 176,221 | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 485,998 | 377,604 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 399,857 | $ | 553,825 |
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 costs such as 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, pre-opening expenses, payroll taxes associated with a vesting event, as a result of a secondary offering, of certain time and performance-based equity awards, which occurred in
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
Net income | $ | 188,801 | $ | 190,510 | $ | 338,607 | $ | 368,306 | ||||||||
Interest expense, net | 11,157 | 12,157 | 22,077 | 26,706 | ||||||||||||
Income tax expense | 58,217 | 50,387 | 103,681 | 97,513 | ||||||||||||
Depreciation and amortization | 26,274 | 26,010 | 51,852 | 51,308 | ||||||||||||
Equity compensation (a) | 6,158 | 27,331 | 9,657 | 33,205 | ||||||||||||
Loss on early retirement of debt | — | 2,239 | — | 2,239 | ||||||||||||
Pre-opening Expenses (b) | 1,864 | — | 2,826 | — | ||||||||||||
Payroll taxes associated with the 2021 Vesting Event (c) | — | 15,418 | — | 15,418 | ||||||||||||
Other (d) | — | 364 | — | 714 | ||||||||||||
Adjusted EBITDA | $ | 292,471 | $ | 324,416 | $ | 528,700 | $ | 595,409 | ||||||||
Less: Depreciation and amortization | (26,274 | ) | (26,010 | ) | (51,852 | ) | (51,308 | ) | ||||||||
Adjusted EBIT | 266,197 | 298,406 | 476,848 | 544,101 |
(a) | Represents non-cash charges related to equity-based compensation, which 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. |
(b) | Represents pre-opening expenses which are non-capital expenditures associated with opening new stores and incurred prior to the store opening and generating sales. These costs consist primarily of occupancy costs, marketing, payroll and recruiting costs. These costs are expensed as incurred. |
(c) | Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event. |
(d) | Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted EBIT) amounts that management believes are not representative of our operating performance, such as costs associated with secondary offerings, installation costs for energy savings associated with our profitability initiatives and other costs associated with business optimization initiatives. |
Adjusted Net Income and Adjusted Earnings Per Common Share
We define “Adjusted Net Income (Loss)” as net income (loss), plus costs such as 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, pre-opening expenses, payroll taxes associated with the 2021 Vesting Event and other adjustments, less the tax effect of these adjustments. We define “Adjusted Earnings per Common Share, Basic” as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and “Adjusted Earnings per Common Share, Diluted” as 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, and Adjusted Earnings Per Common Share in the following table.
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||
Net income | $ | 188,801 | $ | 190,510 | $ | 338,607 | $ | 368,306 | |||||||||
Equity compensation (a) | 6,158 | 27,331 | 9,657 | 33,205 | |||||||||||||
Loss on early retirement of debt | — | 2,239 | — | 2,239 | |||||||||||||
Pre-opening expenses (b) | 1,864 | — | 2,826 | — | |||||||||||||
Payroll taxes associated with the 2021 Vesting Event (c) | — | 15,418 | — | 15,418 | |||||||||||||
Other (d) | — | 364 | — | 714 | |||||||||||||
Tax effects of these adjustments (e) | (1,887 | ) | (11,312 | ) | (2,927 | ) | (12,801 | ) | |||||||||
Adjusted Net Income | $ | 194,936 | $ | 224,550 | $ | 348,163 | $ | 407,081 | |||||||||
Adjusted Earnings per Common Share: | |||||||||||||||||
Basic | $ | 2.35 | $ | 2.42 | $ | 4.11 | $ | 4.41 | |||||||||
Diluted | $ | 2.30 | $ | 2.34 | $ | 4.01 | $ | 4.22 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 82,960 | 92,627 | 84,809 | 92,357 | |||||||||||||
Diluted | 84,906 | 95,891 | 86,792 | 96,391 |
(a) | Represents non-cash charges related to equity-based compensation, which 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. |
(b) | Represents pre-opening expenses which are non-capital expenditures associated with opening new stores and incurred prior to the store opening and generating sales. These costs consist primarily of occupancy costs, marketing, payroll and recruiting costs. These costs are expensed as incurred. |
(c) | Represents cash expenses related to taxes on equity-based compensation resulting from the 2021 Vesting Event. |
(d) | Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, such as costs associated with secondary offerings, installation costs for energy savings associated with our profitability initiatives and other costs associated with business optimization initiatives. |
(e) | For the thirteen and twenty-six weeks ended |
GAAP to Adjusted Earnings Per Common Share, Diluted, Guidance Reconciliation
Low Range* | High Range* | |||||||
(in millions, except per share amounts) | Fiscal Year Ending | Fiscal Year Ending | ||||||
GAAP Net Income | $ | 550.0 | $ | 615.0 | ||||
Equity compensation (a) | 21.0 | 21.0 | ||||||
Pre-opening expenses (a) | 8.0 | 8.0 | ||||||
Tax effects of these adjustments (a) | (7.0 | ) | (7.0 | ) | ||||
Adjusted Net Income | $ | 572.0 | $ | 637.0 | ||||
GAAP Earnings Per Common Share, Diluted | $ | 6.50 | $ | 7.25 | ||||
Equity compensation (a) | 0.25 | 0.25 | ||||||
Pre-opening expenses (a) | 0.10 | 0.10 | ||||||
Tax effects of these adjustments (a) | (0.10 | ) | (0.10 | ) | ||||
Adjusted Earnings per Common Share, Diluted | $ | 6.75 | $ | 7.50 |
* | Amounts presented have been rounded. |
(a) | Adjustments include new store pre-opening costs (as defined above) and non-cash charges related to equity-based compensation (as defined above), which may vary from period to period. The tax effect of these adjustments is determined by using the projected full year tax rate for the fiscal year. |
Adjusted Free Cash Flow
We define “Adjusted Free Cash Flow” as net cash provided by (used in) operating activities less net cash 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 | |||||||||||||||
Net cash provided by operating activities | $ | 161,309 | $ | 186,446 | $ | 258,406 | $ | 405,674 | ||||||||
Net cash used in investing activities | (30,822 | ) | (16,959 | ) | (48,134 | ) | (33,767 | ) | ||||||||
Adjusted Free Cash Flow | $ | 130,487 | $ | 169,487 | $ | 210,272 | $ | 371,907 |
Source:
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