Sportsman's Warehouse Holdings, Inc. ("Sportsman's" or the
“Company”) (Nasdaq:SPWH) today announced financial results for the
thirteen weeks ended April 29, 2017.
For the thirteen weeks ended April 29,
2017:
- Net sales increased by 3.5% to $156.9 million from $151.6
million in the first quarter of fiscal year 2016. Same store sales
decreased by 6.9% over the same period.
- Income (loss) from operations was ($3.8) million compared to
$2.4 million in the first quarter of fiscal year 2016. Adjusted
income (loss) from operations, which excludes professional and
other fees incurred in connection with the evaluation of a
strategic acquisition was ($2.0) million, compared to adjusted
income from operations of $2.5 million in the first quarter of
fiscal year 2016, which excludes secondary offering expenses (see
“GAAP and Non-GAAP Measures).
- The Company opened four new stores in the first quarter of
fiscal year 2017 and ended the quarter with 79 stores in 22 states,
or square footage growth of 10.7% from the end of the first quarter
of fiscal year 2016.
- Interest expense decreased to $3.2 million from $3.6 million in
the first quarter of fiscal year 2016.
- Net income (loss) was ($4.5) million compared to $0.3 million
in the first quarter of fiscal year 2016. Adjusted net loss, which
excludes professional and other fees incurred in connection with
the evaluation of a strategic acquisition, was ($3.4) million,
compared to an adjusted loss which excludes secondary offering
expenses as well as prior-year tax credits (see “GAAP and Non-GAAP
Measures”) of ($0.1) million for the first quarter of fiscal
year 2016.
- Diluted earnings (loss) per share were $(0.11) compared to
$0.01 in the first quarter of fiscal year 2016. Adjusted earnings
(loss) per share were $(0.08) compared to $(0.00) in the first
quarter of fiscal year 2016. (See “GAAP and Non-GAAP
Measures”)
- Adjusted EBITDA decreased to $4.2 million from $7.4 million in
the first quarter of fiscal year 2016 (see "GAAP and Non-GAAP
Measures").
John Schaefer, Chief Executive Officer, stated,
"As expected, we saw continued softness in firearm demand during
the first quarter as we anniversaried difficult compares post the
San Bernardino shooting and executive orders that were issued at
the beginning of 2016. The industry remained highly
promotional and we increased our promotional activity in order to
maintain our share position, resulting in slightly better than
planned sales, and in-line adjusted earnings performance for the
first quarter. We are pleased with the progress we continued to
make on our key strategic initiatives of maximizing the potential
of our loyalty program, growing our private label segment,
enhancing our e-commerce platform, and investing in our store
teams.”
Mr. Schaefer continued, “We are maintaining a
conservative approach for the second quarter until we anniversary
the unfortunate events that took place in Orlando in June 2016 that
caused increased demand in our firearm and ammunition categories.
We continue to expect year over year trends in the second half of
2017 to show improvement relative to year on year performance
trends in the first half of the year, and are reiterating our full
year guidance. Despite the recent slowdown in firearm demand across
the industry, we believe we are the best positioned retailer in our
niche to capture market share given our extensive offering of brand
name products, everyday low pricing strategy and knowledgeable
customer service, combined with our convenience as a neighborhood
store in larger markets or big box appeal in smaller markets, and
our growth plans of opening 12 stores in fiscal year 2017.”
Mr. Schaefer concluded, “We are pleased to
announce today that we have entered into an amendment to our term
loan agreement with our lender which provides us with increased
covenant flexibility. In addition, as we look ahead to fiscal year
2018, we are moderating our planned store growth and currently
expect to open 5 to 9 stores. While we remain confident in the 300
store potential that we believe exists for Sportsman’s Warehouse,
given current industry conditions and continued market
consolidation, we believe this moderation is prudent. It will also
allow us to allocate more free cash flow to debt paydown next
year.”
Balance sheet highlights as of April 29,
2017:
- Total debt: $212.5 million consisting of $78.1 million
outstanding under the Company’s revolving credit facility and
$134.4 million outstanding under the term loan, net of unamortized
discount and debt issuance costs.
- Total liquidity (cash plus $33.0 million of availability on
revolving credit facility): $35.2 million
Subsequent to April 29,
2017
On May 18, 2017, the Company agreed with its
lender to amend certain financial covenants of its term loan,
providing additional flexibility for the Company. With this
amendment, the Company increased the maximum leverage ratio in each
of the remaining quarters by amounts ranging from 0.2x to 1.3x with
an average quarterly increase of 0.75x. The largest increase
of the covenant level is in fiscal year 2018 which includes
increases of 1.1x to 1.3x. As a result of the amendment, the
interest rate on the company's revolver will increase 25 basis
points to LIBOR plus 6.25% with a 1.25% LIBOR floor, up from LIBOR
plus 6.0% with a 1.25% LIBOR floor previously.
For additional details regarding the amendment,
please see exhibit 10.1 included in the Company’s 10-Q filing that
will be filed with the SEC in the next few days.
Second Quarter and Fiscal Year 2017
Outlook:
For the second quarter of fiscal year 2017, net
sales are expected to be in the range of $189.0 million to $194.0
million based on a same store sales decline in the range of 8.0% to
10.0% compared to the corresponding period of fiscal year 2016. Net
income is expected to be in the range of $5.1 million to $6.0
million with diluted earnings per share of $0.12 to $0.14 on a
weighted average of approximately 42.8 million estimated common
shares outstanding.
For fiscal year 2017, the Company is reiterating
its previously provided annual guidance. Net sales are expected to
be in the range of $825.0 million to $845.0 million based on a same
store sales decline in the range of 4.0% to 6.0% compared to fiscal
year 2016. Adjusted net income is expected to be in the range of
$25.5 million to $29.0 million with adjusted earnings per diluted
share of $0.60 to $0.68 on a weighted average of approximately 42.8
million estimated common shares outstanding, when adjusted for the
professional fees and other fees incurred in connection with the
evaluation of a strategic acquisition in the first quarter of
fiscal year 2017.
The Company's fiscal year 2017 will include 53
weeks, while fiscal year 2016 included 52 weeks. The estimated
fiscal year 2017 impact of the additional week is roughly $10.0 to
$12.0 million in revenue and approximately $0.01 on earnings per
share. There is no impact on expected same store sales as those are
presented on a 52 week comparative basis.
Conference Call
Information:
A conference call to discuss first quarter 2017
financial results is scheduled for today, May 18, 2017, 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 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, but
are not limited to, our outlook for the fourth quarter and full
fiscal year 2017. 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 January 28, 2017 which was filed with the SEC on
March 24, 2017 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 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
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.
|
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|
|
|
SPORTSMAN’S WAREHOUSE HOLDINGS,
INC. |
Condensed Consolidated Statements of
Operations (Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Thirteen Weeks
Ended |
|
|
|
|
|
|
|
|
|
|
|
April 29, 2017 |
|
% of net sales |
|
April 30, 2016 |
|
% of net sales |
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
156,898 |
|
|
100.0 |
% |
|
$ |
151,615 |
|
|
100.0 |
% |
|
Cost of
goods sold |
|
108,283 |
|
|
69.0 |
% |
|
|
103,143 |
|
|
68.0 |
% |
|
Gross
profit |
|
48,615 |
|
|
31.0 |
% |
|
|
48,472 |
|
|
32.0 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
52,382 |
|
|
33.4 |
% |
|
|
46,116 |
|
|
30.4 |
% |
|
Income
from operations |
|
(3,767 |
) |
|
(2.4 |
%) |
|
|
2,356 |
|
|
1.6 |
% |
|
Interest
expense |
|
(3,150 |
) |
|
(2.0 |
%) |
|
|
(3,588 |
) |
|
(2.4 |
%) |
|
Income
(loss) before income tax benefit |
|
(6,917 |
) |
|
(4.4 |
%) |
|
|
(1,232 |
) |
|
(0.8 |
%) |
|
Income
tax benefit |
|
2,410 |
|
|
1.5 |
% |
|
|
1,543 |
|
|
1.0 |
% |
|
Net
(loss) income |
$ |
(4,507 |
) |
|
(2.9 |
%) |
|
$ |
311 |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.11 |
) |
|
|
|
$ |
0.01 |
|
|
|
|
Diluted |
$ |
(0.11 |
) |
|
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
42,277 |
|
|
|
|
|
42,032 |
|
|
|
|
Diluted |
|
42,277 |
|
|
|
|
|
42,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPORTSMAN’S WAREHOUSE HOLDINGS,
INC. |
Condensed Consolidated Balance Sheets
(Unaudited) |
(in thousands) |
|
|
|
|
|
Assets |
|
|
|
|
April 29, 2017 |
|
January 28, 2017 |
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
2,269 |
|
|
$ |
1,911 |
|
|
Accounts
receivable, net |
|
382 |
|
|
|
411 |
|
|
Merchandise inventories |
|
288,308 |
|
|
|
246,289 |
|
|
Prepaid
expenses and other |
|
11,494 |
|
|
|
7,313 |
|
|
Income
taxes receivable |
|
2,363 |
|
|
|
- |
|
|
Total
current assets |
|
304,816 |
|
|
|
255,924 |
|
|
Property
and equipment, net |
|
94,940 |
|
|
|
83,109 |
|
|
Deferred
income taxes |
|
4,212 |
|
|
|
5,097 |
|
|
Definite
lived intangible assets, net |
|
1,666 |
|
|
|
2,118 |
|
|
Total assets |
$ |
405,634 |
|
|
$ |
346,248 |
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$ |
74,176 |
|
|
$ |
31,549 |
|
|
Accrued
expenses |
|
54,370 |
|
|
|
49,586 |
|
|
Income
taxes payable |
|
- |
|
|
|
979 |
|
|
Revolving
line of credit |
|
78,067 |
|
|
|
60,972 |
|
|
Current
portion of long-term debt, net of discount and debt issuance
costs |
|
983 |
|
|
|
983 |
|
|
Current
portion of deferred rent |
|
3,407 |
|
|
|
3,150 |
|
|
Total
current liabilities |
|
211,003 |
|
|
|
147,219 |
|
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
Long-term
debt, net of discount, debt issuance costs, and current
portion |
|
133,455 |
|
|
|
133,721 |
|
|
Deferred
rent credit, net of current portion |
|
35,673 |
|
|
|
35,307 |
|
|
Total
long-term liabilities |
|
169,128 |
|
|
|
169,028 |
|
|
Total
liabilities |
|
380,131 |
|
|
|
316,247 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common
stock |
|
425 |
|
|
|
422 |
|
|
Additional paid-in capital |
|
80,154 |
|
|
|
80,146 |
|
|
Accumulated deficit |
|
(55,076 |
) |
|
|
(50,567 |
) |
|
Total
stockholders’ equity |
|
25,503 |
|
|
|
30,001 |
|
|
Total liabilities and stockholders' equity |
$ |
405,634 |
|
|
$ |
346,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPORTSMAN’S WAREHOUSE HOLDINGS,
INC. |
Condensed Consolidated Statements of Cash Flows
(Unaudited) |
(in thousands) |
|
|
|
|
|
|
|
April 29, 2017 |
|
April 30, 2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
Net
income (loss) |
|
$ |
(4,507 |
) |
|
$ |
311 |
|
Adjustments to reconcile net income
(loss) to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
|
|
3,490 |
|
|
|
2,681 |
|
Amortization of discount on debt and deferred financing
fees |
|
173 |
|
|
|
355 |
|
Amortization of Intangible |
|
|
452 |
|
|
|
451 |
|
Change in
deferred rent |
|
|
624 |
|
|
|
1,906 |
|
Deferred
taxes |
|
|
885 |
|
|
|
633 |
|
Excess tax benefits from stock-based compensation
arrangements |
|
- |
|
|
|
(470 |
) |
Stock
based compensation |
|
|
650 |
|
|
|
625 |
|
Change in assets and
liabilities: |
|
|
|
|
Accounts
receivable, net |
|
|
29 |
|
|
|
23 |
|
Merchandise inventory |
|
|
(42,019 |
) |
|
|
(33,171 |
) |
Prepaid
expenses and other |
|
|
(4,221 |
) |
|
|
4,498 |
|
Accounts
payable |
|
|
42,049 |
|
|
|
11,913 |
|
Accrued
expenses |
|
|
(3,115 |
) |
|
|
(2,037 |
) |
Income
taxes |
|
|
(3,342 |
) |
|
|
(3,364 |
) |
Net cash used in operating
activities |
|
(8,852 |
) |
|
|
(15,646 |
) |
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
Purchase
of property and equipment |
|
|
(13,204 |
) |
|
|
(8,720 |
) |
Net cash used in investing
activities |
|
(13,204 |
) |
|
|
(8,720 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
Net
borrowings on line of credit |
|
|
17,094 |
|
|
|
38,076 |
|
Increase
in book overdraft |
|
|
6,359 |
|
|
|
7,887 |
|
Payment of withholdings on restricted stock units |
|
(639 |
) |
|
|
(1,228 |
) |
Principal
payments on long-term debt |
|
|
(400 |
) |
|
|
(20,074 |
) |
Net cash provided by financing
activities |
|
22,414 |
|
|
|
24,661 |
|
|
|
|
|
|
Net change in cash and
cash equivalents |
|
|
358 |
|
|
|
295 |
|
Cash and
cash equivalents at beginning of year |
|
1,911 |
|
|
|
2,109 |
|
Cash and cash
equivalents at end of period |
|
$ |
2,269 |
|
|
$ |
2,404 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
April 29, 2017 |
|
April 30, 2016 |
|
Income
(loss) from operations |
$ |
(3,767 |
) |
|
$ |
2,356 |
|
|
Secondary
offering expenses (1) |
|
- |
|
|
|
143 |
|
|
Professional fees (2) |
|
1,744 |
|
|
|
- |
|
|
Adjusted
income (loss) from operations |
$ |
(2,023 |
) |
|
$ |
2,499 |
|
|
|
|
|
|
|
|
Reconciliation of GAAP net income (loss) and GAAP diluted
weighted average shares outstanding to adjusted net income
(loss) and adjusted weighted average shares
outstanding: |
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
Net income (loss) |
$ |
(4,507 |
) |
|
$ |
311 |
|
|
|
Secondary offering
expenses (1) |
|
- |
|
|
|
143 |
|
|
|
Professional Fees
(2) |
|
1,744 |
|
|
|
- |
|
|
|
Prior year tax credits
(3) |
|
- |
|
|
|
(602 |
) |
|
|
Less tax impact of the
above items |
|
(677 |
) |
|
|
- |
|
|
|
Adjusted net income
(loss) |
$ |
(3,440 |
) |
|
$ |
(148 |
) |
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Diluted weighted
average shares outstanding |
|
42,277 |
|
|
|
42,334 |
|
|
|
|
|
|
|
|
Reconciliation of earnings (loss) per share: |
|
|
|
|
Dilutive
earnings (loss) per share |
$ |
(0.11 |
) |
|
$ |
0.01 |
|
|
Impact of
adjustments to numerator |
|
0.03 |
|
|
|
(0.01 |
) |
|
Adjusted
earnings (loss) per share |
$ |
(0.08 |
) |
|
$ |
- |
|
|
|
|
|
|
|
|
Reconciliation of net income (loss) to adjusted
EBITDA: |
|
|
|
|
Net income
(loss) |
$ |
(4,507 |
) |
|
$ |
311 |
|
|
Interest
expense |
|
3,150 |
|
|
|
3,588 |
|
|
Income tax
benefit |
|
(2,410 |
) |
|
|
(1,543 |
) |
|
Depreciation and amortization |
|
3,942 |
|
|
|
3,132 |
|
|
Stock-based
compensation expense (4) |
|
650 |
|
|
|
625 |
|
|
Pre-opening
expenses (5) |
|
1,629 |
|
|
|
1,189 |
|
|
Secondary
offering expenses (1) |
|
- |
|
|
|
143 |
|
|
Professional Fees (2) |
|
1,744 |
|
|
|
- |
|
|
Adjusted
EBITDA |
$ |
4,198 |
|
|
$ |
7,445 |
|
|
|
|
|
|
|
|
(1)
Expenses paid by us in connection with secondary offerings of our
common stock by affiliates of Seidler Equity Partners III,
L.P. |
(2)
Professional and other fees incurred in connection with the
evaluation of a strategic acquisition. |
|
(3) Tax
credits recognized in the year that were not previously taken in
prior years. |
|
|
|
(4)
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. |
(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. |
|
|
|
|
|
|
|
|
|
|
|
SPORTSMAN’S WAREHOUSE HOLDINGS,
INC. |
GAAP and Non-GAAP Measures
(Unaudited) |
(in thousands, except per share
data) |
|
|
|
|
|
Reconciliation of 2017 full year guidance: |
|
|
|
|
|
Estimated FY '17 |
|
|
|
|
|
|
|
Low |
|
High |
|
|
|
|
|
Numerator: |
|
|
|
|
Net income |
$ |
23,800 |
|
$ |
27,500 |
|
Professional Fees
(1) |
|
1,744 |
|
|
1,744 |
|
Adjusted net
income |
$ |
25,544 |
|
$ |
29,244 |
|
|
|
|
|
Denominator: |
|
|
|
|
Diluted weighted
average shares outstanding |
|
42,800 |
|
|
42,800 |
|
|
|
|
|
Reconciliation of earnings per share: |
|
|
|
Diluted
earnings per share |
$ |
0.56 |
|
$ |
0.64 |
Impact of
adjustments to numerator and denominator |
|
0.04 |
|
|
0.04 |
Adjusted
diluted earnings per share |
$ |
0.60 |
|
$ |
0.68 |
|
|
|
|
|
(1)
Professional and other fees incurred in connection with the
evaluation of a strategic acquisition. |
|
|
|
|
|
Investor Contact:
ICR, Inc.
Farah Soi/Rachel Schacter
(203) 682-8200
investors@sportsmanswarehouse.com
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