Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2014 Financial Results
MIDVALE, Utah, Dec. 4, 2014 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's" or the "Company") (Nasdaq: SPWH) today announced financial results for the thirteen weeks ended November 1, 2014.
For the thirteen weeks ended November 1, 2014:
- Net sales increased by 4.3% to $182.5 million from $175.1 million in the third quarter of fiscal 2013. Same store sales decreased by 6.2%, primarily as a result of the decline in demand for firearms and ammunition.
- Income from operations increased to $18.6 million from $17.0 million in the third quarter of fiscal 2013.
- The Company opened one new store in the third quarter of fiscal 2014 and ended the quarter with 55 stores in 18 states, a unit increase of 17.0% from the end of the third quarter of fiscal 2013.
- Interest expense decreased to $4.1 million from $13.3 million in the third quarter of fiscal 2013.
- Net income was $8.9 million compared to $2.2 million in the third quarter of fiscal 2013. Adjusted net income, which excludes expenses related to refinancing our term loan in the third quarter of fiscal 2013, net of taxes (see "GAAP and Non-GAAP Measures"), was $8.9 million compared to adjusted net income of $7.1 million for the third quarter of fiscal 2013.
- Diluted earnings per share was $0.21 compared to diluted earnings per share of $0.07 in the third quarter of fiscal 2013. Adjusted diluted earnings per share (see "GAAP and Non-GAAP Measures"), was $0.21 compared to adjusted diluted earnings per share of $0.17 in the third quarter of fiscal 2013.
- Adjusted EBITDA was $21.8 million compared to $19.2 million in the third quarter of fiscal 2013 (see "GAAP and Non-GAAP Measures").
John Schaefer, President and Chief Executive Officer, stated: "Our third quarter earnings came in above our guidance range driven by solid results from our non-hunting and shooting product categories combined with positive new store performance and margin expansion. We remain focused on our strategic growth initiatives and continue to see significant opportunities to capture additional share of the outdoor sporting goods market given the abundant white space opportunity and our unique positioning. We believe our everyday value, high service levels and local shopping convenience continue to be important distinguishing factors that drive our customer value proposition."
For the thirty-nine weeks ended November 1, 2014:
- Net sales increased by 1.5% to $474.4 million from $467.4 million in the first nine months of fiscal 2013. Same store sales decreased by 9.5%, primarily as a result of the decline in demand for firearms and ammunition.
- Income from operations decreased to $30.7 million from $43.6 million in the first nine months of fiscal 2013. Adjusted income from operations, which excludes expenses related to bonuses paid as a result of the successful completion of our initial public offering ("IPO") in the first quarter of fiscal 2014 (see "GAAP and Non-GAAP Measures"), was $32.9 million as compared to $43.6 million in the first nine months of fiscal 2013.
- The Company opened eight new stores in the first nine months of fiscal 2014.
- Interest expense decreased to $13.5 million from $19.9 million in the first nine months of fiscal 2013.
- Net income was $10.6 million compared to $14.3 million in the first nine months of fiscal 2013. Adjusted net income, which excludes expenses related to bonuses paid in connection with our IPO in the first quarter of 2014, net of taxes and expenses related to the refinancing of our term loan in 2013, net of taxes (see "GAAP and Non-GAAP Measures"), was $12.0 million compared to adjusted net income of $19.2 million for the first nine months of fiscal 2013.
- Diluted earnings per share was $0.27 compared to diluted earnings per share of $0.43 in the first nine months of fiscal 2013. Adjusted diluted earnings per share (see "GAAP and Non-GAAP Measures"), was $0.28 compared to adjusted diluted earnings per share of $0.46 in the first nine months of fiscal 2013.
- Adjusted EBITDA was $44.6 million compared to $51.5 million in the first nine months of fiscal 2013 (see "GAAP and Non-GAAP Measures").
Balance sheet highlights as of November 1, 2014:
- Cash: $1.7 million
- Total debt: $219.3 million, consisting of $62.9 million outstanding under our revolving credit facility and $156.4 million outstanding under our term loans, net of unamortized discount.
- Total liquidity (cash plus $24.0 million of availability on revolving credit facility): $25.7 million
Fourth Quarter and Fiscal 2014 Outlook:
For the fourth quarter of fiscal 2014, net sales are expected to be in the range of $185.0 million to $190.0 million based on a decrease in same store sales from the fourth quarter of fiscal year 2013 in the range of 3.0% to 6.0%. Net income is expected to be in the range of $4.9 million to $5.6 million, with diluted earnings per share of $0.12 to $0.13 on a weighted average of approximately 42.0 million estimated common shares outstanding. Adjusted net income, which excludes $5.7 million in pre-tax charges, or $3.4 million in after-tax charges, related to the refinancing of our term loan in the fourth quarter, is expected to be in the range of $8.4 million to $9.1 million, or $0.20 to $0.22 per diluted share, on a weighted average of approximately 42.0 million estimated common shares outstanding.
For fiscal 2014, net sales are expected to be in the range of $660.0 million to $665.0 million based on opening eight new stores for the full year and a decrease in same store sales from fiscal year 2013 in the range of 7.0% to 8.0%. Net income is expected to be in the range of $15.5 million to $16.3 million, with diluted earnings per share of $0.37 to $0.39 (which includes the impact of $1.4 million in expenses related to IPO bonuses and the $3.5 million of term loan refinance expenses, net of taxes) on approximately 42.0 million estimated weighted average common shares outstanding. Excluding $4.9 million, or $0.11 per adjusted diluted share, in expenses related to the IPO bonuses and term loan refinance costs, adjusted net income for fiscal 2014 is expected to be in the range of $20.4 million to $21.1 million, or $0.48 to $0.50 per diluted share, based on a weighted average diluted share count of 42.0 million.
Conference Call Information:
A conference call to discuss third quarter fiscal 2014 financial results is scheduled for today, December 4, 2014, 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.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 weighted average shares outstanding, adjusted diluted earnings per share and adjusted EBITDA. 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 it 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 our outlook for the fourth quarter and full fiscal year 2014. 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 our Form 10-Q for the fiscal quarter ended May 3, 2014 filed with the SEC on June 11, 2014 and our 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 a high-growth 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 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.
| SPORTSMAN'S WAREHOUSE HOLDINGS, INC. | ||||||||
| Condensed Consolidated Statements of Income (Unaudited) | ||||||||
| (in thousands, except share and per share data) | ||||||||
| For the Thirteen Weeks Ended | For the Thirty Nine Weeks Ended | |||||||
| November 1, 2014 | % of net sales | November 2, 2013 | % of net sales | November 1, 2014 | % of net sales | November 2, 2013 | % of net sales | |
| Net sales | $ 182,532 | 100.0% | $ 175,059 | 100.0% | $ 474,425 | 100.0% | $ 467,436 | 100.0% |
| Cost of goods sold | 121,881 | 66.8% | 119,836 | 68.5% | 320,819 | 67.6% | 317,090 | 67.8% |
| Gross profit | 60,651 | 33.2% | 55,223 | 31.5% | 153,606 | 32.4% | 150,346 | 32.2% |
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | 42,026 | 23.0% | 38,240 | 21.8% | 122,859 | 25.9% | 106,642 | 22.8% |
| Bankruptcy related expenses | -- | 0.0% | -- | 0.0% | -- | 0.0% | 55 | 0.0% |
| 42,026 | 23.0% | 38,240 | 21.8% | 122,859 | 25.9% | 106,697 | 22.8% | |
| Income from operations | 18,625 | 10.2% | 16,983 | 9.7% | 30,747 | 6.5% | 43,649 | 9.3% |
| Interest expense | (4,122) | (2.3%) | (13,302) | (7.6%) | (13,487) | (2.8%) | (19,895) | (4.3%) |
| Income before income tax expense | 14,503 | 7.9% | 3,681 | 2.1% | 17,260 | 3.6% | 23,754 | 5.1% |
| Income tax expense | (5,587) | (3.1%) | (1,459) | (0.8%) | (6,649) | (1.4%) | (9,417) | (2.0%) |
| Net income | $ 8,916 | 4.9% | $ 2,222 | 1.3% | $ 10,611 | 2.2% | $ 14,337 | 3.1% |
| Earnings per share | ||||||||
| Basic | $ 0.21 | $ 0.07 | $ 0.27 | $ 0.43 | ||||
| Diluted | $ 0.21 | $ 0.07 | $ 0.27 | $ 0.43 | ||||
| Weighted average shares outstanding | ||||||||
| Basic | 41,818 | 33,229 | 39,342 | 33,229 | ||||
| Diluted | 41,931 | 33,229 | 39,553 | 33,229 | ||||
| SPORTSMAN'S WAREHOUSE HOLDINGS, INC. | ||
| Condensed Consolidated Balance Sheets (Unaudited) | ||
| (in thousands) | ||
| Assets | ||
| November 1, 2014 | February 1, 2014 | |
| Current assets: | ||
| Cash and cash equivalents | $ 1,738 | $ 1,354 |
| Accounts receivable, net | 470 | 413 |
| Merchandise inventories, net | 230,602 | 161,334 |
| Prepaid expenses and other | 8,944 | 7,753 |
| Income taxes receivable | 6,828 | 2,229 |
| Deferred income taxes | 2,632 | 3,233 |
| Total current assets | 251,214 | 176,316 |
| Property and equipment, net | 49,849 | 31,494 |
| Deferred income taxes | 6,051 | 6,051 |
| Definite lived intangible assets, net | 6,181 | 7,535 |
| Other long-term assets, net | 2,371 | 2,833 |
| $ 315,666 | $ 224,229 | |
| . | . | |
| Liabilities and Stockholders' Deficit | ||
| Current liabilities: | ||
| Accounts payable | $ 62,112 | $ 27,664 |
| Accrued expenses | 38,396 | 31,884 |
| Revolving line of credit | 62,894 | 29,052 |
| Current portion of long-term debt, net of discount | 1,860 | 1,860 |
| Current portion of deferred rent | 2,674 | 2,640 |
| Total current liabilities | 167,936 | 93,100 |
| Long-term liabilities: | ||
| Long-term debt, net of discount and current portion | 154,577 | 229,272 |
| Deferred rent credit, net of current portion | 28,171 | 22,953 |
| Total long-term liabilities | 182,748 | 252,225 |
| Total liabilities | 350,684 | 345,325 |
| Stockholders' deficit: | ||
| Common stock | 418 | 273 |
| Restricted stock | -- | 57 |
| Additional paid-in capital | 75,744 | 365 |
| Accumulated deficit | (111,180) | (121,791) |
| Total stockholders' deficit | (35,018) | (121,096) |
| $ 315,666 | $ 224,229 | |
| SPORTSMAN'S WAREHOUSE HOLDINGS, INC. | ||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
| (in thousands) | ||
| November 1, 2014 | November 2, 2013 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income | $ 10,611 | $ 14,337 |
| Adjustments to reconcile net income to net cash used in operating activities: | ||
| Depreciation of property and equipment | 5,183 | 3,290 |
| Amortization of discount on debt and deferred financing fees | 977 | 6,607 |
| Amortization of definite lived intangible | 1,354 | 1,065 |
| Net increase (decrease) in deferred rent credit | 5,252 | (65) |
| Gain on asset dispositions | -- | (112) |
| Deferred income taxes | (403) | (1,038) |
| Stock-based compensation | 2,780 | -- |
| Change in assets and liabilities, net of acquisition: | ||
| Accounts receivable, net | (57) | 1,266 |
| Merchandise inventories | (69,268) | (75,499) |
| Prepaid expenses and other | (1,338) | 1,824 |
| Other long-term assets | -- | 49 |
| Accounts payable | 34,448 | 17,051 |
| Accrued expenses | 303 | 1,194 |
| Income taxes receivable and payable | (3,595) | (10,079) |
| Net cash used in operating activities | (13,753) | (40,110) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (23,538) | (15,518) |
| Purchase of business | -- | (47,767) |
| Proceeds from sale of fixed assets | -- | 124 |
| Net cash used in investing activities | (23,538) | (63,161) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Net borrowings on line of credit | 33,842 | 57,313 |
| Borrowings on term loan | -- | 235,000 |
| Issuance of common stock, net | 73,393 | -- |
| Dividends paid | -- | (101,065) |
| Increase in book overdraft | 6,209 | 11,733 |
| Excess tax benefits from stock-based compensation arrangements | 287 | -- |
| Payment of withholdings on restricted stock units | (993) | -- |
| Payment of deferred financing costs | -- | (3,960) |
| Principal payments on unsecured note payable | -- | (2,756) |
| Principal payments on long-term debt | (75,063) | (125,275) |
| Discount on term loan | -- | (2,938) |
| Net cash provided by financing activities | 37,675 | 68,052 |
| Net change in cash and cash equivalents | 384 | (35,219) |
| Cash and cash equivalents at beginning of year | 1,354 | 36,515 |
| Cash and cash equivalents at end of year | $ 1,738 | $ 1,296 |
| 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 1, 2014 | November 2, 2013 | November 1, 2014 | November 2, 2013 | |
| Income from operations | $ 18,625 | $ 16,983 | $ 30,747 | $ 43,649 |
| IPO bonus (1) | -- | -- | 2,200 | -- |
| Adjusted income from operations | $ 18,625 | $ 16,983 | $ 32,947 | $ 43,649 |
| 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 | $ 8,916 | $ 2,222 | $ 10,611 | $ 14,337 |
| IPO bonus (1) | -- | -- | 2,200 | -- |
| Less tax benefit related to IPO bonus | -- | -- | (847) | -- |
| Refinance related costs (2) | -- | 8,080 | -- | 8,080 |
| Less tax benefit related to refinance related costs | -- | (3,200) | -- | (3,200) |
| Adjusted net income | $ 8,916 | $ 7,102 | $ 11,964 | $ 19,217 |
| Denominator: | ||||
| Diluted weighted average shares outstanding | 41,931 | 33,229 | 39,553 | 33,229 |
| Initial public offering shares issuance (3) | -- | 8,683 | 2,476 | 8,683 |
| Adjusted diluted weighted average shares outstanding | 41,931 | 41,912 | 42,029 | 41,912 |
| Earnings per share: | ||||
| Earnings per share | $ 0.21 | $ 0.07 | $ 0.27 | $ 0.43 |
| Impact of adjustments to numerator and denominator | -- | 0.10 | 0.01 | 0.03 |
| Adjusted earnings per common share | $ 0.21 | $ 0.17 | $ 0.28 | $ 0.46 |
| Reconciliation of net income to adjusted EBITDA: | ||||
| Net income | $ 8,916 | $ 2,222 | $ 10,611 | $ 14,337 |
| Interest expense | 4,122 | 13,302 | 13,487 | 19,895 |
| Income tax expense | 5,587 | 1,459 | 6,649 | 9,417 |
| Depreciation and amortization | 2,468 | 1,929 | 6,538 | 4,355 |
| Stock-based compensation expense (4) | 522 | -- | 2,780 | -- |
| Pre-opening expenses (5) | 230 | 234 | 2,359 | 1,071 |
| IPO bonus (1) | -- | -- | 2,200 | -- |
| Bankruptcy-related expenses (6) | -- | -- | -- | 55 |
| Acquisition expenses (7) | -- | 7 | -- | 2,331 |
| Adjusted EBITDA | $ 21,845 | $ 19,153 | $ 44,624 | $ 51,461 |
| (1) As a result of the completion of our initial public offering and pursuant to the terms of the employment agreements with our executive officers, we paid $2.2 million in bonuses to our executive officers. |
| (2) Refinance related costs are one time expenses associated with the prepayment penalty and write off of the issuance discount and other deferred financing costs associated with the August 20, 2013 refinance of the Company's term loan. |
| (3) Assumes our IPO was effective as of February 3, 2013, the first day of our fiscal year 2013. |
| (4) Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2013 Performance Incentive Plan. |
| (5) Pre-opening expenses include expenses incurred in the preparation and opening of a new store location, such as payroll, travel and supplies, but do not include the cost of the initial inventory or capital expenditures required to open a location. |
| (6) On March 21, 2009, Sportsman's Warehouse Holdings, Inc. and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, seeking to reorganize the business under the provisions of the Bankruptcy Code. The plan of reorganization under the Bankruptcy Code was confirmed by the United States Bankruptcy Court for the District of Delaware on July 30, 2009 and became effective when all material conditions of the plan of reorganization were satisfied on August 14, 2009. We incurred certain costs related to our restructuring and emergence from Chapter 11 bankruptcy and included a liability as part of the reorganization value at August 14, 2009, the date of emergence from bankruptcy. Bankruptcy-related expenses are those amounts that are greater than the initial estimated restructuring costs, whereas bankruptcy-related benefits are those amounts that are less than the initial estimated costs. They are expensed as incurred. |
| (7) Acquisition expenses for the 39 and 13 weeks ended November 2, 2013 relate to the costs associated with the acquisition in March 2013 of our ten previously operated stores in Montana, Oregon and Washington. |
CONTACT: Investor Contact:
ICR, Inc.
Farah Soi/Rachel Schacter
(203) 682-8200
[email protected]
Source: Sportsman's Warehouse Holdings, Inc.