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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 28, 2018

 SPORTSMAN'S WAREHOUSE HOLDINGS, INC. 
 (Exact Name of Registrant as Specified in Its Charter) 
   
 DELAWARE 
 (State or Other Jurisdiction of Incorporation) 

 

001-36401 39-1975614
(Commission File Number) (I.R.S. Employer Identification No.)
   
7035 South High Tech Drive
Midvale, Utah		 84047
(Address of Principal Executive Offices) (Zip Code)

 

 (801) 566-6681 
 (Registrant's Telephone Number, Including Area Code) 
   
 (Not Applicable) 
 (Former Name or Former Address, if Changed Since Last Report) 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

   [  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   [  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   [  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   [  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ X ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ X ]

 

Item 2.02. Results of Operations and Financial Condition.

On November 28, 2018, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated November 28, 2018

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

   SPORTSMAN'S WAREHOUSE HOLDINGS, INC.
    
    
  By:/s/ Kevan P. Talbot
 Date: November 28, 2018 Kevan P. Talbot
   Chief Financial Officer and Secretary
     

EdgarFiling

EXHIBIT 99.1

Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2018 Financial Results

MIDVALE, Utah, Nov. 28, 2018 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's" or the “Company”) (Nasdaq:SPWH) today announced financial results for the thirteen and thirty-nine weeks ended November 3, 2018.

Jon Barker, Chief Executive Officer, stated, “We are pleased with our third quarter performance as our top and bottom line results were in line with expectations. Our results are reflective of the solid progress we continue to make against our key strategic priorities centered around our omni-channel strategy of store growth and expansion of our e-commerce platform, customer acquisition and engagement, and merchandising. We believe our continued investments across the business are fueling market share gains as we continue to differentiate ourselves and strengthen our competitive positioning within the outdoor sporting goods industry.”

Mr. Barker continued “Given our year-to-date performance, we are narrowing our full year guidance. As we look to fiscal 2019, we will continue to maintain our strategy of moderated store growth and we expect to open between four and five stores, which will allow us to further invest in our e-commerce capabilities and allocate free cash flow towards debt reduction.”

For the thirteen weeks ended November 3, 2018:

For the thirty-nine weeks ended November 3, 2018:

Balance sheet highlights as of November 3, 2018:                                                                       

Fourth Quarter and Fiscal Year 2018 Outlook:

For the fourth quarter of fiscal year 2018, net sales are expected to be in the range of $238.0 million to $246.0 million based on a change in same store sales in the range of (1.0)% to 2.0% compared to the corresponding period of fiscal year 2017. Adjusted net income is expected to be in the range of $10.0 million to $11.3 million with diluted earnings per share of $0.23 to $0.26 on a weighted average of approximately 43.0 million estimated common shares outstanding.

For fiscal year 2018, net sales are expected to be in the range of $844.0 million to $852.0 million based on a change in same store sales in the range of 0.0% to 2.0% compared to fiscal year 2017. Adjusted net income is expected to be in the range of $25.2 million to $26.6 million with adjusted earnings per diluted share of $0.59 to $0.62 on a weighted average of approximately 43.0 million estimated common shares outstanding, when adjusted for the one-time expense incurred in connection with the announcement of the retirement of the Company’s former Chief Executive Officer, John Schaefer, in the first quarter of fiscal 2018, the write-off of the debt discount and deferred financing fees relating to the Company’s old term loan incurred in the second quarter of fiscal 2018, and a non-recurring tax benefit recognized in the third quarter of fiscal 2018. (see “GAAP and Non-GAAP Measures”).

Fiscal Year

We operate on a fiscal calendar that, in a given fiscal year, consists of the 52- or 53-week period ending on the Saturday closest to January 31st. Our fiscal third quarters ended November 3, 2018 and October 28, 2017, both consisted of 13 weeks and are referred to herein as the third quarter of fiscal year 2018 and the third quarter of fiscal year 2017, respectively. Fiscal year 2018 contains 52 weeks of operations and will end on February 2, 2019. Fiscal year 2017 contained 53 weeks of operations ended on February 3, 2018. Due to the 53rd week in fiscal year 2017, all references to same store sales for fiscal year 2018 are compared to the shifted period for the comparable period for fiscal year 2017.  For the third fiscal quarter, same store sales for the period ended November 3, 2018 are compared to the same number of weeks for the period ended November 4, 2017, which is the comparable period.

Conference Call Information:

A conference call to discuss third quarter and fiscal 2018 financial results is scheduled for today, November 28, 2018, at 8:30 AM Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Company’s website at www.sportsmanswarehouse.com.

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 income from operations, adjusted net income, adjusted diluted earnings per share and Adjusted EBITDA. We defined adjusted income from operations and adjusted net income as income from operations and net income, respectively, in each case, plus professional and other fees incurred in connection with the evaluation of a strategic acquisition, charges incurred in conjunction with the retirement of the Company’s former CEO, deferred financing fees and debt discount associated with the Company’s prior term loan, and non-recurring tax benefit adjustments, as applicable. Adjusted diluted earnings per share is diluted earnings per share excluding the impact of professional and other fees incurred in connection with the evaluation of a strategic acquisition, charges incurred in conjunction with the retirement of the Company’s former CEO, deferred financing fees and debt discount associated with the Company’s prior term loan, and non-recurring tax benefit adjustments. We define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, and other gains, losses and expenses that we do not believe are indicative of our ongoing expenses. 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 income 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 strategic initiatives and our outlook for the fourth quarter and full fiscal year 2018.  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 risks relating to the Company’s retail-based business model, general economic conditions and consumer spending, the Company’s concentration of stores in the Western United States, competition in the outdoor activities and sporting goods market, changes in consumer demands, the Company’s expansion into new markets and planned growth, current and future government regulations,  risks related to the Company’s continued retention of its key management, the Company’s distribution center, quality or safety concerns about the Company’s merchandise, events that may affect the Company’s vendors, trade restrictions, 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 Form 10-K for the fiscal year ended February 3, 2018 which was filed with the SEC on March 29, 2018 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 is an outdoor sporting goods retailer focused on meeting the everyday needs of the seasoned outdoor veteran, the first-time participant and every enthusiast in between. Our mission is to provide a one-stop shopping experience that equips our customers with the right quality, brand name hunting, shooting, fishing and camping gear to maximize their enjoyment of the outdoors.

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

Investor Contact:
ICR, Inc.
Rachel Schacter
(203) 682-8200
investors@sportsmanswarehouse.com

 

         
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
         
         
 For the Thirteen Weeks Ended   
         
 November 3, 2018 % of net
sales		 October 28, 2017 % of net
sales		 
         
Net sales$  223,099  100.0 % $  218,115  100.0 % 
Cost of goods sold   145,518  65.2 %    141,152  64.7 % 
                   Gross profit   77,581  34.8 %    76,963  35.3 % 
         
Operating expenses:        
Selling, general and administrative expenses   60,070  26.9 %    57,443  26.3 % 
                   Income from operations   17,511  7.9 %    19,520  9.0 % 
Interest expense   (2,633) (1.2%)    (3,494) (1.6%) 
Income before income tax expense   14,878  6.7 %    16,026  7.4 % 
Income tax expense   (2,480) (1.1%)    (6,218) (2.9%) 
                   Net Income$  12,398  5.6 % $  9,808  4.5 % 
         
Earnings per share        
                   Basic$  0.29    $  0.23    
                   Diluted$  0.29    $  0.23    
         
Weighted average shares outstanding        
                   Basic   42,938       42,576    
                   Diluted   43,094       42,611    
         

 

         
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
         
         
 For the Thirty-nine Weeks Ended   
         
 November 3, 2018 % of net
sales		 October 28, 2017 % of net
sales		 
         
Net sales$  606,447  100.0 % $  566,506  100.0 % 
Cost of goods sold   401,022  66.1 %    372,310  65.7 % 
                  Gross profit   205,425  33.9 %    194,196  34.3 % 
         
Operating expenses:        
Selling, general and administrative expenses   178,374  29.4 %    164,207  29.0 % 
                  Income from operations   27,051  4.5 %    29,989  5.3 % 
Interest expense   (10,524) (1.7%)    (10,081) (1.8%) 
Income before income tax expense   16,527  2.8 %    19,908  3.5 % 
Income tax expense   (3,406) (0.6%)    (8,053) (1.4%) 
                  Net Income$  13,121  2.2 % $  11,855  2.1 % 
         
Earnings per share        
                  Basic$  0.31    $  0.28    
                  Diluted$  0.31    $  0.28    
         
Weighted average shares outstanding        
                  Basic   42,854       42,464    
                  Diluted   42,937       42,501    
  

 

     
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
Consolidated Balance Sheets (Unaudited) 
(in thousands) 
     
     
Assets    
 November 3, 2018 February 3, 2018 
Current assets:    
Cash$  1,892  $  1,769  
Accounts receivable, net   419     319  
Merchandise inventories   369,057     270,594  
Prepaid expenses and other   12,092     8,073  
Income tax receivable   1,617     -   
                     Total current assets   385,077     280,755  
  Property and equipment, net   93,273     94,035  
  Deferred income taxes   1,517     4,595  
  Definite lived intangible assets, net    252     276  
Total assets$  480,119  $  379,661  
     
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable$  91,511  $  36,788  
Accrued expenses   55,664     50,602  
Income taxes payable   -      2,586  
Revolving line of credit   181,566     59,992  
Current portion of long-term debt, net of discount and debt issuance costs   7,915     990  
Current portion of deferred rent   5,033     4,593  
                      Total current liabilities   341,689     155,551  
     
Long-term liabilities:    
Long-term debt, net of discount, debt issuance costs, and current portion   29,696     132,349  
Deferred rent, noncurrent   41,244     41,963  
                      Total long-term liabilities   70,940     174,312  
                      Total liabilities   412,629     329,863  
     
Stockholders’ equity:    
Common stock   429     426  
Additional paid-in capital   84,131     82,197  
Accumulated deficit   (17,070)    (32,825) 
                     Total stockholders’ equity   67,490     49,798  
                     Total liabilities and stockholders' equity$  480,119  $  379,661  
     

 

     
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
Consolidated Statements of Cash Flows (Unaudited) 
(in thousands) 
     
  November 3, 2018 October 28, 2017
 CASH FLOWS FROM OPERATING ACTIVITIES     
   Net Income  $  13,121  $  11,855 
   Adjustments to reconcile net income to net    
     cash (used in) provided by operating activities:     
     Depreciation and amortization     13,317     11,551 
     Amortization and write-off of discount on debt and deferred financing fees    1,959     534 
     Amortization of Intangible     283     1,355 
     Change in deferred rent     (280)    8,284 
     Loss (gain) on asset dispositions     30     (14)
     Deferred income taxes     2,194     612 
     Stock based compensation     2,435     1,437 
     Change in assets and liabilities:     
       Accounts receivable, net     (100)    7 
       Merchandise inventory     (98,463)    (72,037)
       Prepaid expenses and other     (2,195)    3,202 
       Accounts payable     55,204     40,638 
       Accrued expenses     2,277     (2,078)
       Income taxes payable and receivable     (4,203)    2,231 
           Net cash (used in) provided by operating activities     (14,421)    7,577 
     
 CASH FLOWS FROM INVESTING ACTIVITIES:     
   Purchase of property and equipment     (15,183)    (39,220)
   Acquisition of intangible asset     (259)    - 
   Proceeds from deemed sale-leaseback transactions     1,717     6,130 
   Proceeds from sale of property and equipment     226     14 
         Net cash used in investing activities     (13,499)    (33,076)
     
 CASH FLOWS FROM FINANCING ACTIVITIES:     
   Net borrowings on line of credit     121,574     17,482 
   Increase in book overdraft     5,424     10,157 
   Proceeds from issuance of common stock per employee stock purchase plan    202     283 
   Payment of withholdings on restricted stock units     (699)    (638)
   Borrowings on term loan     40,000     - 
   Payment of deferred financing costs     (1,331)    (341)
   Principal payments on long-term debt     (137,127)    (1,200)
         Net cash provided by financing activities     28,043     25,743 
     
 Net change in cash     123     244 
 Cash at beginning of year     1,769     1,911 
 Cash at end of period  $  1,892  $  2,155 
     

 

          
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
GAAP and Non-GAAP Measures (Unaudited) 
(in thousands, except per share data) 
          
Reconciliation of GAAP income from operations to adjusted income from operations:     
          
  For the Thirteen Weeks Ended For the Thirty-nine Weeks Ended 
  November 3, 2018 October 28, 2017 November 3, 2018 October 28, 2017 
Income from operations$  17,511  $  19,520 $  27,051  $  29,989  
Professional fees (1)   -      -     -      1,744  
CEO retirement (2)   -      -     2,647     -   
Adjusted income from operations$  17,511  $  19,520 $  29,698  $  31,733  
          
Reconciliation of GAAP net income and GAAP diluted weighted average shares outstanding     
to adjusted net income and adjusted weighted average shares outstanding:      
          
Numerator:        
   Net income$  12,398  $  9,808 $  13,121  $  11,855  
 Professional fees (1)   -      -     -      1,744  
 CEO retirement (2)   -      -     2,647     -   
 Deferred financing fee write-off (3)   -      -     1,617     -   
 Non-recurring tax benefit (4)   (1,322)    -     (1,322)    -   
 Less tax benefit   -      -     (813)    (677) 
 Adjusted net income $  11,076  $  9,808 $  15,250  $  12,922  
          
Denominator:        
 Diluted weighted average shares outstanding   43,094     42,611    42,937     42,501  
          
Reconciliation of income per share:        
Dilutive income per share$  0.29  $  0.23 $  0.31  $  0.28  
Impact of adjustments to numerator and denominator   (0.03)    -     0.05     0.02  
Adjusted diluted income per share$  0.26  $  0.23 $  0.36  $  0.30  
          
Reconciliation of net income to adjusted EBITDA:        
Net income$  12,398  $  9,808 $  13,121  $  11,855  
Interest expense   2,633     3,494    10,524     10,081  
Income tax expense   2,480     6,218    3,406     8,053  
Depreciation and amortization   4,438     4,572    13,600     12,906  
Stock-based compensation expense (5)   366     388    1,349     1,437  
Pre-opening expenses (6)   320     667    1,831     3,691  
Professional fees (1)   -      -     -      1,744  
CEO retirement (2)   -      -     2,647     -   
Adjusted EBITDA$  22,635  $  25,147 $  46,478  $  49,767  
          
(1) Professional and other fees incurred in connection with the evaluation of a strategic acquisition.
(2) Expenses incurred in conjunction with the retirement of our former CEO during Q1 2018.   
(3) Write-off of deferred financing fees and debt discount relating to our old term loan.
(4) Non-recurring tax benefit recognized due to our return to provision adjustments recorded in conjunction with the filing of our 2017 tax return.
(5) Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2013 Performance Incentive Plan and employee stock purchase plan.
(6) 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.
GAAP and Non-GAAP Measures (Unaudited)
(in thousands, except per share data)
         
Reconciliation of fourth quarter and 2018 full year guidance:       
         
  Estimated Q4 '18 Estimated FY '18
  Low High Low High
Numerator:       
 Net income$  9,970 $  11,300 $  23,100  $  24,440 
 CEO retirement (1)   -     -     2,248     2,248 
 Deferred finance cost write-off (2)   -     -     1,203     1,203 
 Non-recurring tax benefit (3) -   -     (1,322)    (1,322)
 Adjusted net income $  9,970 $  11,300 $  25,229  $  26,569 
Denominator:       
 Diluted weighted average shares outstanding   43,000    43,000    43,000     43,000 
         
Reconciliation of earnings per share:       
Diluted earnings per share$  0.23 $  0.26 $  0.54  $  0.57 
Impact of adjustments to numerator and denominator   -     -     0.05     0.05 
Adjusted diluted earnings per share$  0.23 $  0.26 $  0.59  $  0.62 
         
(1) Expenses incurred in conjunction with the retirement of our former CEO during Q1 2018, net of tax.
(2) Write-off of deferred financing fees associated with the amendment and restatement of our revolving line of credit and payoff of our term loan, net of tax.
(3) Non-recurring tax benefit recognized due to our return to provision adjustments recorded in conjunction with the filing of our 2017 tax return.