Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2019 Financial Results
Mr. Barker continued, “As we look to the final quarter of the year, we feel very good about our competitive positioning and the underlying strength of our business. That said, multiple competitors are making assortment changes that are creating some short term sales headwinds which we have incorporated in our fourth quarter outlook. We believe these competitive changes bode well for Sportsman’s Warehouse longer term, and, combined with the investments we have made across our business, we are well positioned to capitalize on the increased market share opportunities moving forward.”
For the thirteen weeks ended
- Net sales increased by 8.7% to
$242.5 million from$223.1 million in the third quarter of fiscal year 2018 primarily due to a same store sales increase of 4.8% compared to the prior year period. - Income from operations was
$15.9 million compared to$17.5 million in the third quarter of fiscal year 2018. Adjusted income from operations was$16.3 million in the third quarter of fiscal 2019, which excludes certain expenses related to the acquisition of eight stores during the period. There were no non-GAAP adjustments to income from operations in the third quarter of fiscal 2018 (see “GAAP and Non-GAAP Measures”).
- The Company opened one new store and acquired eight stores in the third quarter of fiscal year 2019 and ended the quarter with 103 stores in 27 states, or square footage growth of 13.6% from the end of the third quarter of fiscal 2018.
- Interest expense decreased to
$2.1 million from$2.6 million in the third quarter of fiscal year 2018.
- Net income was
$10.5 million compared to net income of$12.4 million in the third quarter of fiscal year 2018. Adjusted net income in the third quarter of fiscal year 2019 was$10.8 million , which excludes certain expenses incurred related to the acquisition of eight stores. Adjusted net income in the third quarter of fiscal year 2018 was$11.1 million , which excludes a non-recurring tax benefit (see “GAAP and Non-GAAP Measures”).
- Diluted earnings per share was
$0.24 compared to diluted earnings per share of$0.29 for the third quarter of fiscal year 2018. Adjusted diluted earnings per share was$0.25 in the third quarter of fiscal year 2019 compared to adjusted diluted earnings per share of$0.26 in the third quarter of fiscal year 2018 (see “GAAP and Non-GAAP Measures”).
- Adjusted EBITDA was
$23.2 million compared to$22.6 million in the third quarter of fiscal year 2018 (see "GAAP and Non-GAAP Measures").
For the thirty-nine weeks ended
- Net sales increased by 3.6% to
$628.2 million from$606.4 million in the first three quarters of fiscal year 2019 primarily due to new store openings and the acquisition of eight new store locations. Same store sales increased by 0.6% from the comparable prior year period.
- Income from operations was
$20.3 million compared to$27.1 million in the first three quarters of fiscal year 2018. Adjusted income from operations was$21.3 million in the first three quarters of fiscal 2019, which excludes expenses related to the transition of the Company’s CFO, recruitment and hiring of various key members of the senior management team, and certain expenses related to the acquisition of eight stores. Adjusted income from operations was$29.7 million in the first three quarters of fiscal 2018, which excludes charges incurred in connection with the retirement of the Company’s former CEO (see “GAAP and Non-GAAP Measures”).
- Interest expense decreased to
$6.6 million from$10.5 million in the first three quarters of fiscal year 2018. Interest expense for the first three quarters of fiscal year 2018 included a$1.6 million write-off of debt discount and deferred financing fees associated with the Company’s prior term loan.
- Net income was
$10.5 million compared to net income of$13.1 million in the first three quarters of fiscal year 2018. Adjusted net income in the first three quarters of fiscal 2019 was$11.3 million , which excludes expenses incurred related to the transition of the Company’s CFO, the recruitment and hiring of various key members of the senior management team, and certain expenses related to the acquisition of eight stores. Adjusted net income in the first three quarters of fiscal year 2018 was$15.3 million , which excludes charges incurred in connection with the retirement of the Company’s former CEO, the write-off of deferred financing fees and debt discount associated with the Company’s old term loan, and a non-recurring tax benefit (see “GAAP and Non-GAAP Measures”).
- Diluted earnings per share was
$0.24 compared to diluted earnings per share of$0.31 for the first three quarters of fiscal year 2018. Adjusted diluted earnings per share was$0.26 in the first three quarters of fiscal 2019 compared to adjusted diluted earnings per share of$0.36 in the first three quarters of fiscal 2018 (see “GAAP and Non-GAAP Measures”).
- Adjusted EBITDA was
$39.4 million compared to$46.5 million in the first three quarters of fiscal year 2018 (see "GAAP and Non-GAAP Measures").
Balance sheet highlights as of
- Total debt:
$160.5 million consisting of$130.8 million outstanding under the Company’s revolving credit facility and$29.7 million outstanding under the term loan, net of unamortized debt issuance costs.
- Total liquidity (cash plus
$78.7 million of availability on revolving credit facility):$80.4 million
Fourth Quarter and Fiscal Year 2019 Outlook:
For the fourth quarter of fiscal year 2019, net sales are expected to be in the range of
For fiscal year 2019, net sales are expected to be in the range of
Conference Call Information:
A conference call to discuss third quarter fiscal 2019 financial results is scheduled for today,
Non-GAAP Information
This press release includes the following financial measures defined as non-GAAP financial measures by the
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 market share opportunities and competitive positioning and our outlook for the fourth quarter and full fiscal year 2019. 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 our ability to integrate the eight recently acquired stores; the Company’s retail-based business model, general economic conditions and consumer spending, the Company’s concentration of stores in the
About
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 Contact:
(203) 682-8200
investors@sportsmanswarehouse.com
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. | |||||||||||
Condensed Consolidated Statements of Income (Unaudited) |
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(in thousands, except per share data) | |||||||||||
For the Thirteen Weeks Ended | |||||||||||
November 2, 2019 | % of net sales |
November 3, 2018 | % of net sales |
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Net sales | $ | 242,466 | 100.0 | % | $ | 223,099 | 100.0 | % | |||
Cost of goods sold | 158,256 | 65.3 | % | 145,518 | 65.2 | % | |||||
Gross profit | 84,210 | 34.7 | % | 77,581 | 34.8 | % | |||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 68,336 | 28.2 | % | 60,070 | 26.9 | % | |||||
Income from operations | 15,874 | 6.5 | % | 17,511 | 7.9 | % | |||||
Interest expense | 2,094 | 0.9 | % | 2,633 | 1.2 | % | |||||
Income before income tax expense | 13,780 | 5.6 | % | 14,878 | 6.7 | % | |||||
Income tax expense | 3,287 | 1.4 | % | 2,480 | 1.1 | % | |||||
Net income | $ | 10,493 | 4.2 | % | $ | 12,398 | 5.6 | % | |||
Earnings per share | |||||||||||
Basic | $ | 0.24 | $ | 0.29 | |||||||
Diluted | $ | 0.24 | $ | 0.29 | |||||||
Weighted average shares outstanding | |||||||||||
Basic | 43,230 | 42,938 | |||||||||
Diluted | 43,559 | 43,094 |
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. | |||||||||||
Condensed Consolidated Statements of Income (Unaudited) |
|||||||||||
(in thousands, except per share data) | |||||||||||
For the Thirty-nine Weeks Ended | |||||||||||
November 2, 2019 | % of net sales |
November 3, 2018 | % of net sales |
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Net sales | $ | 628,249 | 100.0 | % | $ | 606,447 | 100.0 | % | |||
Cost of goods sold | 416,644 | 66.3 | % | 401,022 | 66.1 | % | |||||
Gross profit | 211,605 | 33.7 | % | 205,425 | 33.9 | % | |||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 191,326 | 30.5 | % | 178,374 | 29.4 | % | |||||
Income from operations | 20,279 | 3.2 | % | 27,051 | 4.5 | % | |||||
Interest expense | 6,552 | 1.0 | % | 10,524 | 1.7 | % | |||||
Income before income tax expense | 13,727 | 2.2 | % | 16,527 | 2.8 | % | |||||
Income tax expense | 3,195 | 0.5 | % | 3,406 | 0.6 | % | |||||
Net Income | $ | 10,532 | 1.7 | % | $ | 13,121 | 2.2 | % | |||
Earnings per share | |||||||||||
Basic | $ | 0.24 | $ | 0.31 | |||||||
Diluted | $ | 0.24 | $ | 0.31 | |||||||
Weighted average shares outstanding | |||||||||||
Basic | 43,126 | 42,854 | |||||||||
Diluted | 43,316 | 42,937 |
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. | ||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||
(in thousands) | ||||||
Assets | ||||||
November 2, 2019 | February 2, 2019 | |||||
Current assets: | ||||||
Cash | $ | 1,737 | $ | 1,547 | ||
Accounts receivable, net | 620 | 249 | ||||
Merchandise inventories | 337,894 | 276,600 | ||||
Prepaid expenses and other | 11,062 | 15,174 | ||||
Total current assets | 351,313 | 293,570 | ||||
Operating lease right of use asset | 211,957 | - | ||||
Property and equipment, net | 107,627 | 92,084 | ||||
Deferred income taxes | 140 | 2,997 | ||||
Goodwill | 1,749 | - | ||||
Definite lived intangible assets, net | 226 | 246 | ||||
Total assets | $ | 673,012 | $ | 388,897 | ||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 105,527 | $ | 24,953 | ||
Accrued expenses | 64,198 | 56,384 | ||||
Operating lease liability, current | 35,451 | - | ||||
Income taxes payable | 2,868 | 1,838 | ||||
Revolving line of credit | 130,765 | 144,306 | ||||
Current portion of long-term debt, net of discount and debt issuance costs | 7,915 | 7,915 | ||||
Current portion of deferred rent | - | 5,270 | ||||
Total current liabilities | 346,724 | 240,666 | ||||
Long-term liabilities: | ||||||
Long-term debt, net of discount, debt issuance costs, and current portion | 21,781 | 27,717 | ||||
Operating lease liability, noncurrent | 204,688 | - | ||||
Deferred rent, noncurrent | - | 41,854 | ||||
Total long-term liabilities | 226,469 | 69,571 | ||||
Total liabilities | 573,193 | 310,237 | ||||
Stockholders’ equity: | ||||||
Common stock | 432 | 430 | ||||
Additional paid-in capital | 86,041 | 84,671 | ||||
Accumulated earnings (deficit) | 13,346 | (6,441 | ) | |||
Total stockholders’ equity | 99,819 | 78,660 | ||||
Total liabilities and stockholders' equity | $ | 673,012 | $ | 388,897 | ||
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
(in thousands) | ||||||||
November 2, 2019 | November 3, 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net Income | $ | 10,532 | $ | 13,121 | ||||
Adjustments to reconcile net income to net | ||||||||
cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 14,070 | 13,317 | ||||||
Amortization and write-off of discount on debt and deferred financing fees | 252 | 1,959 | ||||||
Amortization of Intangible | 20 | 283 | ||||||
Change in deferred rent | - | (280 | ) | |||||
Gain on asset dispositions | (311 | ) | 30 | |||||
Noncash lease expense | 22,132 | - | ||||||
Deferred income taxes | (245 | ) | 2,194 | |||||
Stock based compensation | 1,567 | 2,435 | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable, net | (371 | ) | (100 | ) | ||||
Operating lease liabilities | (22,571 | ) | - | |||||
Merchandise inventory | (42,142 | ) | (98,463 | ) | ||||
Prepaid expenses and other | 165 | (2,195 | ) | |||||
Accounts payable | 70,270 | 55,204 | ||||||
Accrued expenses | 3,449 | 2,277 | ||||||
Income taxes payable and receivable | 1,030 | (4,203 | ) | |||||
Net cash provided by (used in) operating activities | 57,847 | (14,421 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (22,914 | ) | (15,183 | ) | ||||
Acquisition of intangible asset | - | (259 | ) | |||||
Acquisition of Field and Stream stores, net of cash acquired | (19,074 | ) | - | |||||
Proceeds from deemed sales-leaseback transactions | - | 1,717 | ||||||
Proceeds from sale of property and equipment | 311 | 226 | ||||||
Net cash used in investing activities | (41,677 | ) | (13,499 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net (payments) borrowings on line of credit | (13,541 | ) | 121,574 | |||||
Increase in book overdraft | 3,756 | 5,424 | ||||||
Proceeds from issuance of common stock per employee stock purchase plan | 174 | 202 | ||||||
Payment of withholdings on restricted stock units | (369 | ) | (699 | ) | ||||
Borrowings on term loan | - | 40,000 | ||||||
Payment of deferred financing costs | - | (1,331 | ) | |||||
Principal payments on long-term debt | (6,000 | ) | (137,127 | ) | ||||
Net cash (used in) provided by financing activities | (15,980 | ) | 28,043 | |||||
Net change in cash | 190 | 123 | ||||||
Cash at beginning of year | 1,547 | 1,769 | ||||||
Cash at end of period | $ | 1,737 | $ | 1,892 | ||||
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. |
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GAAP and Non-GAAP Measures (Unaudited) |
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(in thousands, except per share data) |
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Reconciliation of GAAP income from operations to adjusted income from operations: | ||||||||||||||||
For the Thirteen Weeks Ended | For the Thirty-nine Weeks Ended | |||||||||||||||
November 2, 2019 | November 3, 2018 | November 2, 2019 | November 3, 2018 | |||||||||||||
Income from operations | $ | 15,874 | $ | 17,511 | $ | 20,279 | $ | 27,051 | ||||||||
Acquisition costs (1) | $ | 387 | $ | - | $ | 387 | $ | - | ||||||||
Executive transition costs (2) | - | - | 623 | - | ||||||||||||
CEO retirement (3) | - | - | - | 2,647 | ||||||||||||
Adjusted income from operations | $ | 16,261 | $ | 17,511 | $ | 21,289 | $ | 29,698 | ||||||||
Reconciliation of GAAP net income and GAAP dilutive earnings per share | ||||||||||||||||
to adjusted net income and adjusted diluted earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 10,493 | $ | 12,398 | $ | 10,532 | $ | 13,121 | ||||||||
Acquisition costs (1) | 387 | - | 387 | - | ||||||||||||
Executive transition costs (2) | - | - | 623 | - | ||||||||||||
CEO retirement (3) | - | - | - | 2,647 | ||||||||||||
Deferred financing fee write-off (4) | - | - | - | 1,617 | ||||||||||||
Non-recurring tax benefit (5) | - | (1,322 | ) | (1,322 | ) | |||||||||||
Less tax benefit | (100 | ) | - | (262 | ) | (813 | ) | |||||||||
Adjusted net income | $ | 10,780 | $ | 11,076 | $ | 11,280 | $ | 15,250 | ||||||||
Denominator: | ||||||||||||||||
Diluted weighted average shares outstanding | 43,559 | 43,094 | 43,316 | 42,937 | ||||||||||||
Reconciliation of earnings per share: | ||||||||||||||||
Dilutive earnings per share | $ | 0.24 | $ | 0.29 | $ | 0.24 | $ | 0.31 | ||||||||
Impact of adjustments to numerator and denominator | 0.01 | (0.03 | ) | 0.02 | 0.05 | |||||||||||
Adjusted diluted earnings per share | $ | 0.25 | $ | 0.26 | $ | 0.26 | $ | 0.36 | ||||||||
Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||
Net income | $ | 10,493 | $ | 12,398 | $ | 10,532 | $ | 13,121 | ||||||||
Interest expense | 2,094 | 2,633 | 6,552 | 10,524 | ||||||||||||
Income tax expense | 3,287 | 2,480 | 3,195 | 3,406 | ||||||||||||
Depreciation and amortization | 4,832 | 4,438 | 14,090 | 13,600 | ||||||||||||
Stock-based compensation expense (6) | 619 | 366 | 1,567 | 1,348 | ||||||||||||
Pre-opening expenses (7) | 1,482 | 320 | 2,483 | 1,832 | ||||||||||||
Acquisition costs (1) | 387 | - | 387 | - | ||||||||||||
Executive transition costs (2) | - | - | 623 | - | ||||||||||||
CEO retirement (3) | - | - | - | 2,647 | ||||||||||||
Adjusted EBITDA | $ | 23,194 | $ | 22,635 | $ | 39,429 | $ | 46,478 | ||||||||
(1) Expenses incurred relating to the acquisition of eight stores. | ||||||||||||||||
(2) Expenses incurred relating to the transition of our CFO (incurred only in Q1 2019) and the recruitment and hiring of various key members of our senior management team. These events are not expected to be recurring. | ||||||||||||||||
(3) Expenses incurred in conjunction with the retirement of our former CEO during Q1 2018. | ||||||||||||||||
(4) Write-off of deferred financing fees and debt discount relating to our prior term loan. | ||||||||||||||||
(5) Non-recurring tax benefit recognized due to our return to provision adjustments recorded in conjunction with the filing of our 2017 tax return | ||||||||||||||||
(6) 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. | ||||||||||||||||
(7) 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 location. | ||||||||||||||||
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. |
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GAAP and Non-GAAP Measures (Unaudited) |
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(in thousands, except per share data) |
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Reconciliation of fourth quarter and 2019 full year guidance: | |||||||||||||
Estimated Q4 '19 |
Estimated FY '19 | ||||||||||||
Low | High | Low | High | ||||||||||
Numerator: | |||||||||||||
Net income | $ | 12,374 | $ | 15,100 | $ | 22,982 | $ | 25,632 | |||||
Executive transition costs (1) | $ | - | $ | - | $ | 462 | $ | 462 | |||||
Acquisition costs (2) | $ | 223 | $ | 223 | $ | 510 | $ | 510 | |||||
Adjusted net income | $ | 12,597 | $ | 15,323 | $ | 23,954 | $ | 26,604 | |||||
Denominator: | |||||||||||||
Diluted weighted average shares outstanding | 43,500 | 43,500 | 43,500 | 43,500 | |||||||||
Reconciliation of earnings per share: | |||||||||||||
Diluted earnings per share | $ | 0.28 | $ | 0.35 | $ | 0.53 | $ | 0.59 | |||||
Impact of adjustments to numerator and denominator | 0.01 |
- | 0.02 | 0.02 | |||||||||
Adjusted diluted earnings per share | $ | 0.29 | $ | 0.35 | $ | 0.55 | $ | 0.61 | |||||
(1) Expenses incurred relating to the transition of our CFO and the recruitment and hiring of various key members of our senior management team, net of tax. These events are not expected to be recurring. (2) Expenses incurred relating to the acquisition of eight stores. |
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Source: Sportsman's Warehouse Holdings, Inc.