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Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2021 Financial Results

December 8, 2021 at 4:05 PM EST

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

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

Notable Achievements

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

For the thirteen weeks ended October 30, 2021:

  • Net sales were $401.0 million, an increase of $15.3 million, or 4.0%, compared to the third quarter of fiscal year 2020, primarily due to the opening of seven new stores since October 31, 2020. Compared to the third quarter of fiscal year 2019, net sales increased 65.3% from $242.5 million.

  • Same store sales decreased 1.5% during the third quarter of fiscal year 2021 compared to the third quarter of fiscal year 2020. Compared to the same period of 2019, same stores sales increased 39.4%.

  • Gross profit was $129.6 million, or 32.3% of net sales, compared to $130.6 million, or 33.9% of net sales in the comparable prior year period, a year-over-year decrease of $1.0 million in gross profit and a 160-basis point decrease in gross profit margin. The decrease in gross profit margin can be attributed to an increase in freight costs partially offset by higher product margins and vendor programs.

  • Net income was $21.9 million compared to net income of $30.5 million in the third quarter of fiscal year 2020. Adjusted net income was $22.7 million compared to adjusted net income of $31.5 million in the third quarter of fiscal year 2020. Net income and adjusted net income for the third quarter of fiscal year 2019 was $10.5 million and $10.8 million, respectively (see “GAAP and Non-GAAP Measures”).

  • Adjusted EBITDA was $39.3 million compared to $49.9 million in the comparable prior year period. Adjusted EBITDA for the third quarter of fiscal year 2019 was $23.2 million (see "GAAP and Non-GAAP Measures").

  • Diluted earnings per share were $0.49 compared to diluted earnings per share of $0.68 in the comparable prior year period. Adjusted diluted earnings per share were $0.51 compared to adjusted diluted earnings per share of $0.71 for the comparable prior year period. Diluted earnings per share and adjusted diluted earnings per share for the comparable period of fiscal year 2019 was $0.24 and $0.25, respectively (see "GAAP and Non-GAAP Measures").

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

  • Net sales were $1,089.8 million, an increase of $76.2 million, or 7.5%, compared to the 39 weeks ended October 31, 2020, primarily due to a combination of opening of seven new stores since October 31, 2020, and an increase in same store sales of 1.5% as we saw strong demand across all categories. Compared to the first 39 weeks of fiscal 2019, net sales increased 73.5% from $628.2 million.

  • Gross profit was $353.7 million, or 32.5% of net sales, compared to $334.5 million, or 33.0% of net sales in the comparable prior year period, a year-over-year increase of $19.3 million in gross profit and a 50 basis point decrease in gross profit margin. The decline in gross profit margin can be attributed to higher freight costs for the period versus the prior year, partially offset by increased product margins and vendor programs.

  • Net income was $50.0 million compared to net income of $61.8 million in the first 39 weeks of fiscal year 2020. Adjusted net income was $54.7 million compared to adjusted net income of $65.6 million in the first 39 weeks of fiscal year 2020. Net income and adjusted net income for the first 39 weeks of fiscal 2019 was $10.5 million and $11.3 million, respectively (see “GAAP and Non-GAAP Measures”).

  • Adjusted EBITDA was $98.0 million compared to $111.7 million in the comparable prior year period. Adjusted EBITDA for the first 39 weeks of fiscal year 2019 was $39.4 million (see "GAAP and Non-GAAP Measures").

  • Diluted earnings per share were $1.13 compared to a diluted earnings per share of $1.40 in the comparable prior year period. Adjusted diluted earnings per share were $1.23 compared to adjusted diluted earnings per share of $1.48 for the comparable prior year period. Diluted earnings per share and adjusted diluted earnings per share for the first 39 weeks of fiscal year 2019 was $0.24 and $0.26, respectively (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of October 30, 2021:

  • Total net debt was $55.1 million at the end of the third quarter of fiscal year 2021, comprised of $2.5 million of cash on hand and $57.6 million of borrowings outstanding under the Company’s revolving credit facility. In comparison, total net debt as of the end of the third quarter of fiscal year 2019 was $160.5 million consisting of $130.8 million outstanding under the Company’s revolving credit facility and $29.7 million outstanding under the prior term loan, net of unamortized debt issuance costs.

  • Total liquidity was $151.8 million as of the end of the third quarter of fiscal year 2021 with $149.3 million of availability on the revolving credit facility and $2.5 million of cash on hand. As of December 8, 2021, the Company had approximately $57.5 million of cash on hand due to the $55.0 million payment received in conjunction with the termination of the merger agreement with Great Outdoors Group, Inc.

  • Total inventory was $428.5 million as of the end of the third quarter of fiscal year 2021. Inventory per store has recovered as compared to 2020 levels with an increase of 25.2% more on a per store basis.

Q4 2021 and Full Year Outlook:

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

Non-GAAP Information

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the “SEC”): adjusted net income, adjusted diluted earnings per share, and Adjusted EBITDA. The Company defines adjusted net income as net income, plus expenses incurred relating to the acquisition of Field and Stream store locations and the proposed merger with the Great Outdoors Group, LLC, expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, an accrual relating to pending labor litigation in the state of California, the excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal 2020 and expenses incurred relating to the transition of our former Chief Financial Officer and the recruitment and hiring of various key members of our senior management team, less recognized tax benefits, as applicable. The Company defines adjusted diluted earnings per share as adjusted net income divided by diluted weighted average shares outstanding. The Company defines Adjusted EBITDA as net income plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation expense, pre-opening expenses, expenses incurred relating to the acquisition of Field and Stream store locations and the proposed merger with the Great Outdoors Group, LLC, bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, the excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal 2020, expenses incurred relating to the transition of our former Chief Financial Officer and the recruitment and hiring of various key members of our senior management team and an accrual relating to pending labor litigation in the state of California . The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures under “GAAP and Non-GAAP Measures” in this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the 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. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to many factors including, but not limited to:  the potential impact of the termination of our merger agreement with Great Outdoors Group, LLC, including any impact on our stock price, business, financial condition and results of operations, and the potential negative impact to our business and employee relationships; current and future government regulations, in particular regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the 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:
ICR Inc.
Rachel Schacter
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      
                     
 
October 30, 2021		     % of net
sales		    
October 31, 2020		     % of net
sales		   YOY
Variance		  
                     
Net sales $ 401,014   100.0 %   $ 385,748     100.0 %   $ 15,266    
Cost of goods sold   271,392   67.7 %     255,166     66.1 %     16,226    
Gross profit   129,622   32.3 %     130,582     33.9 %     (960 )  
                     
Operating expenses:                    
Selling, general and administrative expenses   99,974   24.9 %     92,252     23.9 %     7,722    
Income from operations   29,648   7.4 %     38,330     10.0 %     (8,682 )  
Bargain purchase gain   -   0.0 %     (2,218 )   (0.6 %)     2,218    
Interest expense   413   0.1 %     536     0.1 %     (123 )  
Income before income tax expense   29,235   7.3 %     40,012     10.5 %     (10,777 )  
Income tax expense   7,372   1.8 %     9,530     2.5 %     (2,158 )  
Net income $ 21,863   5.5 %   $ 30,482     8.0 %   $ (8,619 )  
                     
Earnings per share                    
Basic $ 0.50       $ 0.70         $ (0.20 )  
Diluted $ 0.49       $ 0.68         $ (0.19 )  
                     
Weighted average shares outstanding                    
Basic   43,878         43,609           269    
Diluted   44,582         44,510           72    


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


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


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


 
 
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
GAAP and Non-GAAP Measures (Unaudited)
(in thousands, except per share data)
                                         
Reconciliation of GAAP net income and GAAP dilutive earnings per share to adjusted net income and adjusted diluted earnings per share:                
                                         
      For the Thirteen Weeks Ended     For the Thirty-Nine Weeks Ended    
                                         
    October 30, 2021   October 31, 2020   November 2, 2019   October 30, 2021   October 31, 2020   November 2, 2019    
Numerator:                                        
Net income   $ 21,863     $ 30,482     $ 10,493     $ 50,036     $ 61,813     $ 10,532      
Acquisition costs (1)     1,113       297       387       6,419       332       387      
Hazard pay (2)     -       2,000       -       -       4,600       -      
Store closing write-off (3)     -       -       -       -       1,039       -      
Gain on bargain purchase (4)     -       (2,218 )     -       -       (2,218 )     -      
Legal accrual (5)     -       2,125       -       -       2,125       -      
Executive transition costs (6)     -       -       -       -       -       623      
Less tax benefit     (301 )     (1,154 )     (100 )     (1,733 )     (2,113 )     (262 )    
Adjusted net income   $ 22,675     $ 31,532     $ 10,780     $ 54,722     $ 65,578     $ 11,280      
                                         
Denominator:                                        
Diluted weighted average shares outstanding     44,582       44,510       43,559       44,471       44,260       43,316      
                                         
Reconciliation of earnings per share:                                        
Dilutive earnings per share   $ 0.49     $ 0.68     $ 0.24     $ 1.13     $ 1.40     $ 0.24      
Impact of adjustments to numerator and denominator     0.02       0.03       0.01       0.10       0.08       0.02      
Adjusted diluted earnings per share   $ 0.51     $ 0.71     $ 0.25     $ 1.23     $ 1.48     $ 0.26      
                                         
                                         
Reconciliation of net income to adjusted EBITDA:                                      
      For the Thirteen Weeks Ended     For the Thirty-Nine Weeks Ended    
    October 30, 2021   October 31, 2020   November 2, 2019   October 30, 2021   October 31, 2020   November 2, 2019    
Net income   $ 21,863     $ 30,482     $ 10,493     $ 50,036     $ 61,813     $ 10,532      
Interest expense     413       465       2,094       905       3,016       6,552      
Income tax expense     7,372       9,530       3,287       16,519       20,691       3,195      
Depreciation and amortization     6,665       5,404       4,832       18,801       16,085       14,090      
Acquisition costs (1)     1,113       297       387       6,419       332       387      
Hazard pay (2)     -       2,000       -       -       4,600       -      
Store closing write-off (3)     -       -       -       -       1,039       -      
Gain on bargain purchase (4)     -       (2,218 )     -       -       (2,218 )     -      
Legal accrual (5)     -       2,125       -       -       2,125       -      
Executive transition costs (6)     -       -       -       -       -       623      
Stock-based compensation expense (7)     194       882       619       2,237       2,436       1,567      
Pre-opening expenses (8)     1,712       958       1,482       3,090       1,778       2,483      
Adjusted EBITDA   $ 39,332     $ 49,925     $ 23,194     $ 98,007     $ 111,697     $ 39,429      
                                         
(1) Expenses incurred relating to the acquisition of Field & Stream locations in 2020 and 2019 and the proposed merger with the Great Outdoors Group, LLC in 2021.  
(2) Expenses incurred relating to bonuses and increased wages paid 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) Excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal year 2020.                
(5) Accrual relating to pending labor litigation in the state of California.                                  
(6) 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.                                        
(7) 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.    
(8) 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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Source: Sportsman's Warehouse Holdings, Inc.