SPWH
$13.99
Sportsman's Wareh
($.32)
(2.24%)
Earnings Details
3rd Quarter October 2020
Wednesday, December 2, 2020 4:06:00 PM
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Summary

Sportsman's Wareh Beats

Sportsman's Wareh (SPWH) reported 3rd Quarter October 2020 earnings of $0.71 per share on revenue of $385.7 million. The consensus earnings estimate was $0.52 per share on revenue of $326.2 million. The Earnings Whisper number was $0.56 per share. Revenue grew 59.1% on a year-over-year basis.

The company said it expects fourth quarter earnings of $0.39 to $0.45 per share on revenue of $356.0 million to $386.0 million. The current consensus earnings estimate is $0.26 per share on revenue of $292.80 million for the quarter ending January 31, 2021.

Sportsman’s Warehouse Holdings Inc is an outdoor sporting goods retailer providing a one-stop shopping experience that equips its customers with the right hunting, shooting, fishing and camping gear.

Results
Reported Earnings
$0.71
Earnings Whisper
$0.56
Consensus Estimate
$0.52
Reported Revenue
$385.7 Mil
Revenue Estimate
$326.2 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2020 Financial Results

WEST JORDAN, Utah, Dec. 02, 2020 (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 31, 2020.

“Sportsman’s Warehouse continued its exceptional performance in the third quarter of 2020. We were extremely pleased with the efforts of associates in all of our facilities as we worked as a team to safely and effectively serve customers, both new and returning,” said Jon Barker, Sportsman’s Warehouse CEO. “During the third quarter, same store sales increased 41% compared to the same period last year, driven by elevated participation in fishing, camping and hunting, and our continued market share gains in firearms.”

Mr. Barker stated, “We continue to be excited about the expansion of our ecommerce capabilities, with ecommerce-driven sales up over 200% from the prior year period. We are also highly encouraged by the strong visitor traffic on both our website and inside of our stores. We opened 9 new stores year-to-date in 2020, taking the total Sportsman’s Warehouse store count to 111. In addition, our first Legacy Shooting Center, which opened earlier this year, is performing ahead of expectations.”

“We believe we are well positioned to continue to capitalize on substantial growth opportunities, including heightened participation in outdoor activities, ecommerce growth, and new store expansion to create long-term shareholder value.”

For the thirteen weeks ended October 31, 2020:

  • Net sales were $385.7 million, an increase of $143.2 million, or 59.1%, as compared to the third quarter of fiscal year 2019. The net sales increase was primarily due to a surge in demand across all major categories, led by our hunting and shooting category, as well as strong growth in our ecommerce platform compared to the prior year period.

  • Same store sales increased 40.9% during the third quarter of 2020 compared to the third quarter of 2019.

  • Gross profit was $130.6 million or 33.9% of net sales, compared to $84.2 million or 34.7% of net sales in the comparable prior year period, a year-over-year increase of $46.4 million in gross profit and an 80-basis point decrease in gross profit margin.

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

  • Adjusted EBITDA was $49.9 million compared to $23.2 million in the comparable prior year period (see "GAAP and Non-GAAP Measures").

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

For the thirty-nine weeks ended October 31, 2020:

  • Net sales were $1,013.6 million, an increase of $385.3 million, or 61.3%, as compared to the first three quarters of fiscal year 2019. The net sales increase was primarily due to a surge in demand across all major categories, led by our hunting and shooting category, as well as strong growth in our ecommerce platform compared to the prior year period.

  • Same store sales increased 44.4% during the first three quarters of 2020 compared to the comparable period in 2019.

  • Gross profit was $334.5 million or 33.0% of net sales, as compared to $211.6 million or 33.7% of net sales for the comparable prior year period, a year-over-year increase of $122.9 million in gross profit and a 70-basis point decrease in gross profit margin.

  • Net income was $61.8 million compared to net income of $10.5 million in the first quarters of 2019. Adjusted net income was $65.6 million compared to adjusted net income of $11.3 million in the first three quarters of 2019 (see “GAAP and Non-GAAP Measures”).

  • Adjusted EBITDA was $111.7 million compared to $39.4 million in the first three quarters of 2019 (see "GAAP and Non-GAAP Measures").

  • Diluted earnings per share were $1.40 for the thirty-nine weeks ended October 31, 2020 compared to diluted earnings per share of $0.24 for the same period last year. Adjusted diluted earnings per share were $1.48 for the thirty-nine weeks ended October 31, 2020 compared to adjusted diluted earnings per share of $0.26 for the same period last year (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of October 31, 2020:

  • The Company was in a net cash position at the end of the third quarter of 2020 with of $19.3 million in cash on hand, no borrowings under the Company’s revolving credit facility, and $8.0 million outstanding under the term loan, net of unamortized debt issuance costs. This is an improvement in net debt of $170.1 million year-over-year.

  • Total liquidity was $238 million as of the end of the second quarter of 2020, comprised of $218 million of availability on the revolving credit facility and $19 million of cash on hand, compared to $80 million in total liquidity at the end of the third quarter of 2019.

Fourth quarter and fiscal year 2020 outlook:

For the fourth quarter of fiscal year 2020, net sales are expected to be in the range of $356 million to $386 million based on same store sales growth in the range of 32% to 42% compared to the corresponding period of fiscal year 2019. Adjusted EBITDA is expected to be in the range of $31.0 million to $35.0 million with diluted earnings per share of $0.39 to $0.45 on a weighted average of approximately 44.5 million estimated common shares outstanding.

For fiscal year 2020, net sales are expected to be in the range of $1,370 million to $1,400 million based on same store sales growth in the range of 42% to 46% compared to fiscal year 2019. Adjusted EBITDA is expected to be in the range of $143.6 million to $147.2 million with adjusted earnings per diluted share of $1.87 to $1.93 on a weighted average of approximately 44.3 million estimated common shares outstanding (see “GAAP and Non-GAAP Measures”).

Conference Call Information:

A conference call to discuss third quarter and third quarter year-to-date 2020 financial results is scheduled for today, December 2, 2020, at 4:30 PM Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Company’s website at www.sportsmans.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 define adjusted income from operations and adjusted net income as income from operations and net income, respectively, in each case, plus expenses incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, costs incurred for the recruitment and hiring of key members of management, certain expenses incurred relating to the acquisition of Field and Stream stores, tax benefits recognized, a legal settlement accrual, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, as applicable. We define adjusted diluted earnings per share as diluted earnings per share excluding the impact of expenses incurred related to the bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19, expenses incurred relating to the recruitment and hiring of key members of management, certain expenses incurred relating to the acquisition of Field and Stream stores, a legal settlement accrual, and the costs and impairments recorded relating to the closure of one store during the first quarter of 2020, as applicable. We define 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, pre-opening expenses, 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 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 outlook for the fourth quarter and fiscal year 2020, our ability to execute on our growth strategy. 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 effects of COVID-19 and measures intended to reduce its spread on the Company’s operations; the Company’s retail-based business model; general economic, market and other conditions and changes in consumer spending; the Company’s concentration of stores in the Western United States; competition in the outdoor activities and specialty retail 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 existing distribution center or the Company’s planned new distribution center; quality or safety concerns about the Company’s merchandise; events that may affect the Company’s vendors; trade restrictions; public health crises and social unrest; 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 1, 2020 which was filed with the SEC on April 9, 2020, 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 Loss (Unaudited) 
(in thousands, except per share data) 
          
          
 For the Thirteen Weeks Ended  
          
 October 31, 2020 % of net
sales
   November 2, 2019   % of net
sales
 YOY
Variance
          
Net sales$385,748  100.0% $242,466 100.0% $143,282 
Cost of goods sold 255,166  66.1%  158,256 65.3%  96,910 
Gross profit 130,582  33.9%  84,210 34.7%  46,372 
          
Operating expenses:         
Selling, general and administrative expenses 92,252  23.9%  68,336 28.2%  23,916 
Income from operations 38,330  10.0%  15,874 6.5%  22,456 
Bargain purchase gain (2,218) (0.6%)  - 0.0%  (2,218)
Interest expense 536  0.1%  2,094 0.9%  (1,558)
Income before income tax expense 40,012  9.9%  13,780 5.6%  26,232 
Income tax expense 9,530  2.5%  3,287 1.4%  6,243 
Net income$30,482  7.4% $10,493 4.2% $19,989 
          
Earnings per share         
Basic$0.70    $0.24   $0.46 
Diluted$0.68    $0.24   $0.44 
          
Weighted average shares outstanding         
Basic 43,609     43,230    379 
Diluted 44,510     43,559    951 



          
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
Condensed Consolidated Statements of Income (Unaudited) 
(in thousands, except per share data) 
          
          
 For the Thirty-Nine Weeks Ended  
          
 October 31, 2020   % of net
sales
   November 2, 2019   % of net
sales
 YOY
Variance
          
Net sales$1,013,572  100.0% $628,249 100.0% $385,323 
Cost of goods sold 679,122  67.0%  416,644 66.3%  262,478 
Gross profit 334,450  33.0%  211,605 33.7%  122,845 
          
Operating expenses:         
Selling, general and administrative expenses 251,077  24.8%  191,326 30.5%  59,751 
Income from operations 83,373  8.2%  20,279 3.2%  63,094 
Bargain purchase gain (2,218) (0.2%)  - 0.0%  (2,218)
Interest expense 3,088  0.3%  6,552 1.0%  (3,464)
Income (loss) before income tax expense 82,503  7.9%  13,727 2.2%  68,776 
Income tax expense (benefit) 20,690  2.0%  3,195 0.5%  17,495 
Net Income$61,813  5.9% $10,532 1.7% $51,281 
          
Earnings per share         
Basic$1.42    $0.24   $1.18 
Diluted$1.40    $0.24   $1.15 
          
Weighted average shares outstanding         
Basic 43,490     43,126    364 
Diluted 44,260     43,316    944 



       
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.      
Condensed Consolidated Balance Sheets (Unaudited)      
(in thousands)      
       
       
Assets      
 October 31, 2020 February 1, 2020 
Current assets:      
Cash$19,314 $1,685 
Accounts receivable, net 462  904 
Merchandise inventories 322,078  275,505 
Income tax receivable -  812 
Prepaid expenses and other 14,564  12,732 
Total current assets 356,418  291,638 
Operating lease right of use asset 239,254  224,520 
Property and equipment, net 99,495  98,767 
Goodwill 1,496  1,496 
Definite lived intangible assets, net 299  220 
Total assets$696,962 $616,641 
       
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable$135,949 $38,157 
Accrued expenses 106,430  70,118 
Operating lease liability, current 35,730  34,487 
Income taxes payable 5,315  - 
Revolving line of credit -  116,078 
Current portion of long-term debt, net of discount and debt issuance costs -  5,936 
Total current liabilities 283,424  264,776 
       
Long-term liabilities:      
Long-term debt, net of discount, debt issuance costs, and current portion 7,950  23,781 
Deferred income taxes 4,154  562 
Operating lease liability, noncurrent 227,333  217,254 
Total long-term liabilities 239,437  241,597 
Total liabilities 522,861  506,373 
       
Stockholders’ equity:      
Common stock 436  433 
Additional paid-in capital 88,823  86,806 
Accumulated earnings 84,842  23,029 
Total stockholders’ equity 174,101  110,268 
Total liabilities and stockholders' equity$696,962 $616,641 
       



        
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.       
Condensed Consolidated Statements of Cash Flows (Unaudited)       
(in thousands)       
        
  October 31, 2020 November 2, 2019 
CASH FLOWS FROM OPERATING ACTIVITIES       
Net income $61,813  $10,532  
  Adjustments to reconcile net income to net       
    cash provided by operating activities:       
Depreciation and amortization  15,992   14,070  
Amortization of discount on debt and deferred financing fees  422   252  
Amortization of Intangible assets  21   20  
Loss (gain) on asset dispositions  937   (311) 
Gain on bargain purchase  (2,218)  -  
Noncash operating lease expense  17,760   22,132  
Deferred income taxes  2,801   (245) 
Stock based compensation  2,436   1,567  
    Change in assets and liabilities, net of amounts acquired:       
Accounts receivable, net  442   (371) 
Operating lease liabilities  (20,781)  (22,571) 
Merchandise inventory  (38,887)  (42,142) 
Prepaid expenses and other  (2,021)  165  
Accounts payable  94,900   70,270  
Accrued expenses  31,992   3,449  
Income taxes payable and receivable  6,127   1,030  
            Net cash provided by operating activities  171,736   57,847  
        
CASH FLOWS FROM INVESTING ACTIVITIES:       
Purchase of property and equipment, net of amounts acquired  (15,394)  (22,914) 
Acquisition of Field and Stream stores, net of cash acquired  (4,778)  (19,074) 
Proceeds from sale of property and equipment  -   311  
            Net cash used in investing activities  (20,172)  (41,677) 
        
CASH FLOWS FROM FINANCING ACTIVITIES:       
Net (payments) borrowings on line of credit  (116,078)  (13,541) 
(Decrease) Increase in book overdraft  4,559   3,756  
Proceeds from issuance of common stock per employee stock purchase plan 273   174  
Payment of withholdings on restricted stock units  (689)  (369) 
Principal payments on long-term debt  (22,000)  (6,000) 
            Net cash used in financing activities  (133,935)  (15,980) 
        
Net change in cash  17,629   190  
Cash at beginning of year  1,685   1,547  
Cash at end of period $19,314  $1,737  
        



               
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 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019  
Numerator:              
Net income $30,482  $10,493  $61,813  $10,532   
Acquisition costs (1)  297   -   332   387   
Hazard pay (2)  2,000   -   4,600   -   
Store closing write-off (3)  -   -   1,039   -   
Legal accrual (4)  2,125   -   2,125   -   
Gain on bargain purchase (6)  (2,218)  -   (2,218)  -   
Executive transition costs (5)  -   387   -   623   
Less tax benefit  (1,154)  (100)  (2,113)  (262)  
Adjusted net income $31,532  $10,780  $65,578  $11,280   
               
Denominator:              
Diluted weighted average shares outstanding  44,414   43,559   44,260   43,316   
               
Reconciliation of earnings per share:              
Dilutive earnings per share $0.69  $0.24  $1.40  $0.24   
Impact of adjustments to numerator and denominator  0.02   0.01   0.08   0.02   
Adjusted diluted earnings per share $0.71  $0.25  $1.48  $0.26   
               
               
Reconciliation of net income to adjusted EBITDA:              
   For the Thirteen Weeks Ended  For the Thirty-Nine Weeks Ended  
  October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019  
Net income $30,482  $10,493  $61,813  $10,532   
Interest expense  465   2,094   3,016   6,552   
Income tax expense (benefit)  9,530   3,287   20,691   3,195   
Depreciation and amortization  5,404   4,832   16,085   14,090   
Stock-based compensation expense (7)  882   619   2,436   1,567   
Pre-opening expenses (8)  958   1,482   1,778   2,483   
Acquisition costs (1)  297   387   332   387   
Hazard pay (2)  2,000   -   4,600   -   
Store closing write-off (3)  -   -   1,039   -   
Gain on bargain purchase (6)  (2,218)  -   (2,218)  -   
Legal accrual (4)  2,125   -   2,125   -   
Executive transition costs (5)  -   -   -   623   
Adjusted EBITDA $49,925  $23,194  $111,697  $39,429   
               
(1) Expenses incurred relating to the acquisition of Field & Stream stores.  
(2) Expense incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19.  
(3) Costs and impairments recorded relating to the closure of one store during the first quarter of 2020.        
(4) Accrual relating to pending labor litigation in the state of California.           
(5) Costs incurred for the recruitment and hiring of key members of management.          
(6) Excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal year 2020.  
(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 location.              



          
SPORTSMAN’S WAREHOUSE HOLDINGS, INC. 
GAAP and Non-GAAP Measures (Unaudited) 
(in thousands, except per share data) 
          
Reconciliation of fourth quarter and 2020 fiscal year guidance:       
          
  Estimated Q4 '20 Estimated FY '20 
  Low High Low High 
Numerator:        
Net income$17,160 $19,800 $78,973  $81,613  
Acquisition costs (1) -  -  332   332  
Hazard pay (2) -  -  4,600   4,600  
Store closing write-off (3) -  -  1,039   1,039  
Legal accrual (4) -  -  2,125   2,125  
Gain on bargain purchase (5) -  -  (2,218)  (2,218) 
Less tax benefit -  -  (2,113)  (2,113) 
Adjusted net income$17,160 $19,800 $82,738  $85,378  
Denominator:        
Diluted weighted average shares outstanding 44,450  44,450  44,300   44,300  
          
Reconciliation of earnings per share:        
Diluted earnings per share$0.39 $0.45 $1.78  $1.84  
Impact of adjustments to numerator and denominator  - $-  0.08   0.08  
Adjusted diluted earnings per share$0.39 $0.45 $1.87  $1.93  
          
(1) Expenses incurred relating to the acquisition of Field & Stream stores.
(2) Expense incurred relating to bonuses and increased wages paid to front-line and non-executive back office associates due to COVID-19.
(3) Costs and impairments recorded relating to the closure of one store during the first quarter of 2020.   
(4) Accrual relating to pending labor litigation in the state of California.       
(5) Excess of fair value over the purchase price of tangible assets acquired in connection with the Field & Stream stores acquired during fiscal year 2020.

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Source: Sportsman's Warehouse Holdings, Inc.