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OFFON

SPORTSMAN'S WAREHOUSE HOLDINGS, INC.

(SPWH)
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Sportsman's Warehouse Holdings, Inc. Announces Second Quarter and First Half Fiscal Year 2021 Financial Results

09/01/2021 | 04:16pm EDT

WEST JORDAN, Utah, Sept. 01, 2021 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the “Company”) (Nasdaq: SPWH) today announced financial results for the thirteen and twenty-six weeks ended July 31, 2021.

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

Mr. Barker continued, “We believe customers are responding favorably to our brand, product assortment, and customer service. I am grateful to the entire Sportsman’s Warehouse team who continue to provide outstanding gear and exceptional service to inspire outdoor memories.”

Pending Merger with Great Outdoors Group, LLC

As previously announced on December 21, 2020, Great Outdoors Group, LLC has agreed to acquire Sportsman’s Warehouse Holdings, Inc. for $18.00 per share in an all cash transaction. The transaction was approved by the board of directors of Sportsman’s Warehouse and subsequently approved by the stockholders of Sportsman’s Warehouse at the special stockholders meeting held on March 23, 2021. Completion of the merger is subject to the satisfaction of several conditions, including the expiration or termination of any applicable waiting period (and any extensions thereof) relating to the merger under the Hart-Scott-Rodino Act. Assuming receipt of required clearance pursuant to the Hart-Scott-Rodino Act and timely satisfaction of other conditions to closing, we currently expect the closing of the merger to occur in the second half of calendar year 2021.

Due to the pending acquisition by Great Outdoors Group, LLC, Sportsman’s Warehouse management will not be hosting an earnings conference call and will not be providing forward looking guidance.

For the thirteen weeks ended July 31, 2021:

  • Net sales were $361.8 million, a decrease of $19.2 million, or 5.0%, compared to the second quarter of fiscal year 2020. The net sales decrease was primarily due to lower demand across our hunting and shooting, fishing and camping categories compared to significantly elevated sales in the prior year period.

  • Same store sales decreased 9.9% during the second quarter of 2021 compared to the second quarter of 2020.

  • Gross profit was $120.1 million, or 33.2% of net sales, compared to $129.1 million, or 33.9% of net sales in the comparable prior year period, a year-over-year decrease of $9.0 million in gross profit and a 70-basis point decrease in gross profit margin.

  • Net income was $17.7 million compared to net income of $32.5 million in the second quarter of 2020. Adjusted net income was $19.5 million compared to adjusted net income of $33.6 million in the second quarter of 2020 (see “GAAP and Non-GAAP Measures”).

  • Adjusted EBITDA was $35.2 million compared to $53.6 million in the comparable prior year period (see "GAAP and Non-GAAP Measures").

  • Diluted earnings per share were $0.40 compared to a diluted earnings per share of $0.73 in the comparable prior year period. Adjusted diluted earnings per share were $0.44 compared to adjusted diluted earnings per share of $0.76 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

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

  • Net sales were $688.8 million, an increase of $60.9 million, or 9.7%, compared to the first half of fiscal year 2020. The net sales increase was primarily due to increased demand across all categories, as well as strong growth in our ecommerce platform compared to the prior year period.

  • Same store sales increased 3.4% during the first half of 2021 compared to the first half of 2020.

  • Gross profit was $224.1 million, or 32.5% of net sales, compared to $203.9 million, or 32.5% of net sales in the comparable prior year period, a year-over-year decrease of $20.2 million in gross profit.

  • Net income was $28.2 million compared to net income of $31.3 million in the first half of 2020. Adjusted net income was $32.0 million compared to adjusted net income of $34.0 million in the first half of 2020 (see “GAAP and Non-GAAP Measures”).

  • Adjusted EBITDA was $58.7 million compared to $61.8 million in the comparable prior year period (see "GAAP and Non-GAAP Measures").

  • Diluted earnings per share were $0.63 compared to a diluted earnings per share of $0.71 in the comparable prior year period. Adjusted diluted earnings per share were $0.72 compared to adjusted diluted earnings per share of $0.77 for the comparable prior year period (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of July 31, 2021:

  • Total net debt was $17.6 million at the end of the second quarter of fiscal year 2021, comprised of $2.6 million of cash on hand and $20.2 million of borrowings outstanding under the Company’s revolving credit facility.

  • Total liquidity was $188.6 million as of the end of the second quarter of fiscal 2021 with $186.0 million of availability on the revolving credit facility and $2.6 million of cash on hand.

Non-GAAP Information

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the “SEC”): adjusted net income, adjusted diluted earnings per share, and Adjusted EBITDA. The Company defines adjusted net income as net income, plus expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, expenses incurred relating to the acquisition of Field and Stream store locations and the pending merger with the Great Outdoors Group, LLC, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, less recognized tax benefits, as applicable. The Company defines adjusted diluted earnings per share as adjusted net income divided by diluted weighted average shares outstanding. The Company defines Adjusted EBITDA as net income plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation expense, bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, expenses incurred relating to the acquisition of Field and Stream store locations and the pending merger with the Great Outdoors Group, LLC, pre-opening expenses, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures under “GAAP and Non-GAAP Measures” in this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Company’s 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 Company’s 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 Company’s results as reported under GAAP.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this release include, but are not limited to, statements regarding our ability to close on the planned merger with Great Outdoors Group, LLC. Investors can identify these statements by the fact that they use words such as "continue", "expect", "may", “opportunity”, "plan", "future", “ahead” and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to many factors including, but not limited to: the potential impact of, and any potential developments related to, the pending merger with Great Outdoors Group, including the risk that the conditions to the consummation of the merger are not satisfied or waived, litigation challenging the merger, the impact on our stock price, business, financial condition and results of operations if the merger is not consummated, and the potential negative impact to our business and employee relationships due to the merger; current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the Company’s products and the Company’s ability to conduct its business; the impacts of COVID-19 and measures intended to reduce its spread on the Company’s operations; the Company’s retail-based business model, which is impacted by general economic, market and financial uncertainties that may cause a decline in consumer spending; the Company’s concentration of stores in the Western United States, which makes the Company susceptible to adverse conditions in this region and could affect the Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s assumptions prove incorrect, the Company’s 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 Company’s 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.

Sportsman’s Warehouse Holdings, Inc. is an outdoor specialty retailer focused on meeting the needs of the seasoned outdoor veteran, the first-time participant, and everyone in between. We provide outstanding gear and exceptional service to inspire outdoor memories.

For press releases and certain additional information about the Company, visit the Investor Relations section of the Company's website at www.sportsmans.com.

Investor Contacts:
Robert Julian, Chief Financial Officer
Caitlin Howe, Vice President, Corporate Development & Investor Relations
(801) 566-6681
investors@sportsmans.com


SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
Condensed Consolidated Statements of Income (Unaudited) 
(in thousands, except per share data) 
          
          
 For the Thirteen Weeks Ended  
          
 July 31, 2021 % of net
sales
   August 1, 2020   % of net
sales
 YOY
Variance
          
Net sales$361,778 100.0% $380,989 100.0% $(19,211)
Cost of goods sold 241,724 66.8%  251,896 66.1%  (10,172)
Gross profit 120,054 33.2%  129,093 33.9%  (9,039)
          
Operating expenses:         
Selling, general and administrative expenses 95,870 26.5%  83,606 21.9%  12,264 
Income from operations 24,184 6.7%  45,487 12.0%  (21,303)
Interest expense 266 0.1%  1,017 0.3%  (751)
Income before income tax expense 23,918 6.6%  44,470 11.7%  (20,552)
Income tax expense 6,195 1.7%  12,009 3.2%  (5,814)
Net income$17,723 4.9% $32,461 8.5% $(14,738)
          
Earnings per share         
Basic$0.40   $0.75   $(0.34)
Diluted$0.40   $0.73   $(0.34)
          
Weighted average shares outstanding         
Basic 43,860    43,537    323 
Diluted 44,716    44,368    348 


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


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


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


SPORTSMAN’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 per share to adjusted net income and adjusted diluted earnings per share:  
               
   For the Thirteen Weeks Ended  For the Twenty-Six Weeks Ended  
  July 31, 2021   August 1, 2020   July 31, 2021   August 1, 2020  
Numerator:              
Net income $17,723  $32,461  $28,173  $31,331   
Acquisition costs (1)  2,461   6   5,306   35   
Hazard pay (2)  -   1,500   -   2,600   
Store closing write-off (3)  -   -   -   1,039   
Less tax benefit  (663)  (408)  (1,433)  (997)  
Adjusted net income $19,521  $33,559  $32,046  $34,008   
               
Denominator:              
Diluted weighted average shares outstanding  44,716   44,368   44,600   44,098   
               
Reconciliation of earnings per share:              
Dilutive earnings per share $0.40  $0.73  $0.63  $0.71   
Impact of adjustments to numerator and denominator  0.04   0.03   0.09   0.06   
Adjusted diluted earnings per share $0.44  $0.76  $0.72  $0.77   
               
               
Reconciliation of net income to adjusted EBITDA:             
   For the Thirteen Weeks Ended  For the Twenty-Six Weeks Ended  
  July 31, 2021   August 1, 2020   July 31, 2021   August 1, 2020  
Net income $17,723  $32,461  $28,173  $31,331   
Interest expense  266   1,017   492   2,551   
Income tax expense (benefit)  6,195   12,009   9,147   11,160   
Depreciation and amortization  6,360   5,318   12,136   10,681   
Stock-based compensation expense (4)  1,027   818   2,043   1,554   
Pre-opening expenses (5)  1,183   431   1,378   819   
Acquisition costs (1)  2,461   6   5,306   35   
Hazard pay (2)  -   1,500   -   2,600   
Store closing write-off (3)  -   -   -   1,039   
Adjusted EBITDA $35,215  $53,560  $58,675  $61,770   
               
(1) Expenses incurred relating to the acquisition of Field & Stream locations in 2020 and the pending merger with the Great Outdoors Group, LLC in 2021. 
(2) Expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to the COVID-19 pandemic. 
(3) Costs and impairments recorded relating to the closure of one store during the first quarter of 2020.        
(4) Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2019 Performance Incentive Plan and employee stock purchase plan. 
(5) Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but do not include the cost of the initial inventory 
    or capital expenditures required to open a new store location.           

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Financials (USD)
Sales 2022 1 461 M - -
Net income 2022 78,1 M - -
Net Debt 2022 - - -
P/E ratio 2022 -
Yield 2022 -
Capitalization 778 M 778 M -
Capi. / Sales 2022 0,53x
Capi. / Sales 2023 0,55x
Nbr of Employees 5 000
Free-Float 97,4%
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Technical analysis trends SPORTSMAN'S WAREHOUSE HOLDINGS, INC.
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 3
Last Close Price 17,74 $
Average target price 18,00 $
Spread / Average Target 1,47%
EPS Revisions
Managers and Directors
Jonathan Barker President, Chief Executive Officer & Director
Jeff White Secretary, Chief Financial & Accounting Officer
Joseph P. Schneider Chairman
Phil Stevens Chief Technology Officer
Shane Miller Senior Vice President-Operations
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