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Nov 20, 2015

CORRECTING and REPLACING -- Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2015 Financial Results

MIDVALE, Utah, Nov. 20, 2015 (GLOBE NEWSWIRE) -- In a release issued under the same headline yesterday by Sportsman's Warehouse Holdings, Inc., underneath the section titled "Fourth Quarter and Fiscal 2015 Outlook," the second sentence of the first paragraph should read: "Adjusted net income for the fourth quarter of fiscal 2015 is expected to be in the range of $10.3 million to $11.1 million, with adjusted diluted earnings per share of $0.24 to $0.26 on a weighted average of approximately 42.4 million estimated common shares outstanding."

Additionally, the second sentence of the second paragraph under such section should read: "Adjusted net income for fiscal 2015 is expected to be in the range of $24.7 million to $25.5 million, with adjusted diluted earnings per share of $0.58 to $0.60 on a weighted average of approximately 42.3 million estimated common shares outstanding."

The corrected release reads as follows:

Sportsman's Warehouse Holdings, Inc. Announces Third Quarter 2015 Financial Results

Sportsman's Warehouse Holdings, Inc. ("Sportsman's" or the "Company") (Nasdaq:SPWH) today announced financial results for the thirteen weeks and thirty-nine weeks ended October 31, 2015.

For the thirteen weeks ended October 31, 2015:

  • Net sales increased by 9.4% to $199.7 million from $182.5 million in the third quarter of fiscal 2014. Same store sales were flat.
     
  • Income from operations increased to $19.2 million from $18.6 million in the third quarter of fiscal 2014. Adjusted income from operations, which excludes expenses related to our secondary offering in the third quarter of fiscal 2015 (see "GAAP and Non-GAAP Measures"), was $19.9 million as compared to $18.6 million in the corresponding period of fiscal 2014.
     
  • The Company opened three new stores in the third quarter of fiscal 2015 and ended the quarter with 64 stores in 19 states, a unit increase of 16.4% from the end of the third quarter of fiscal 2014.
     
  • Interest expense decreased to $3.7 million from $4.1 million in the third quarter of fiscal 2014.
     
  • Net income was $9.5 million compared to $8.9 million in the third quarter of fiscal 2014. Adjusted net income, which excludes expenses related to our secondary offering in the third quarter of fiscal 2015 (see "GAAP and Non-GAAP Measures"), was $10.0 million during the third quarter of fiscal 2015 compared to adjusted net income of $8.9 million in the corresponding period of fiscal 2014.
     
  • Diluted earnings per share were $0.23 compared to diluted earnings per share of $0.21 in the third quarter of fiscal 2014. Adjusted diluted earnings per share (see "GAAP and Non-GAAP Measures"), were $0.24 compared to adjusted diluted earnings per share of $0.21 in the third quarter of fiscal 2014.
     
  • Adjusted EBITDA was $24.1 million compared to $21.8 million in the third quarter of fiscal 2014 (see "GAAP and Non-GAAP Measures").

John Schaefer, President and Chief Executive Officer, stated: "We are pleased with our third quarter results which came in within our guidance on both the top and bottom line. Our solid results were driven by store growth and continued sequential improvement in our non-hunting and shooting product categories which were offset by the negative impact that the unseasonably warm weather had on our footwear and apparel business."

Mr. Schaefer added: "Despite the positive trends that we see in the hunting, fishing and camping categories, we are taking a more conservative view for the fourth quarter due to the weather impact on clothing and footwear. We remain focused on our strategic initiatives of store expansion, growth of our loyalty program, enhancement of operating margins and maintaining best in class customer service. We believe our everyday value, high service levels and local shopping convenience continue to be important differentiating attributes that are resonating with our customer and driving our value proposition."

For the thirty-nine weeks ended October 31, 2015:

  • Net sales increased by 9.0% to $517.2 million from $474.4 million in the first three quarters of fiscal 2014. Same store sales were flat.
     
  • Income from operations increased to $37.2 million from $30.7 million in the first three quarters of fiscal 2014. Adjusted income from operations, which excludes expenses related to our secondary offering in the third quarter of fiscal 2015, the reversal of an accrual related to a litigation in the second quarter of 2015, and 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 $33.9 million as compared to $32.9 million in the first three quarters of fiscal 2014.
     
  • The Company opened nine new stores in the first three quarters of fiscal 2015.
     
  • Interest expense decreased to $10.6 million from $13.5 million in the three quarters of fiscal 2014.
     
  • Net income was $16.4 million compared to $10.6 million in the first three quarters of fiscal 2014. Adjusted net income, which excludes expenses related to our secondary offering in the third quarter of fiscal 2015, the reversal of an accrual related to a litigation matter in the second quarter of 2015, and expenses related to the IPO bonuses in the first quarter of 2014, net of taxes (see "GAAP and Non-GAAP Measures"), was $14.4 million during the first three quarters of fiscal 2015 compared to adjusted net income of $12.0 million in the corresponding period of fiscal 2014.
     
  • Diluted earnings per share were $0.39 compared to diluted earnings per share of $0.27 in the first three quarters of fiscal 2014. Adjusted diluted earnings per share (see "GAAP and Non-GAAP Measures"), were $0.34 compared to adjusted diluted earnings per share of $0.28 in the first three quarters of fiscal 2014.
     
  • Adjusted EBITDA was $46.9 million compared to $44.6 million in the first three quarters of fiscal 2014 (see "GAAP and Non-GAAP Measures").

Balance sheet highlights as of October 31, 2015:

  • Total debt: $206.7 million, consisting of $49.7 million outstanding under the revolving credit facility and $157.0 million outstanding under the term loans, net of unamortized discount.
     
  • Total liquidity (cash plus $63.7 million of availability on a $135.0 million revolving credit facility): $65.6 million.

Fourth Quarter and Fiscal 2015 Outlook:

For the fourth quarter of fiscal 2015, net sales are expected to be in the range of $203.0 million to $208.0 million based on approximately flat same store sales. Adjusted net income for the fourth quarter of fiscal 2015 is expected to be in the range of $10.3 million to $11.1 million, with adjusted diluted earnings per share of $0.24 to $0.26 on a weighted average of approximately 42.4 million estimated common shares outstanding.

For fiscal 2015, net sales are expected to be in the range of $720.0 million to $725.0 million based on opening nine new stores for the full year and approximately flat same store sales. Adjusted net income for fiscal 2015 is expected to be in the range of $24.7 million to $25.5 million, with adjusted diluted earnings per share of $0.58 to $0.60 on a weighted average of approximately 42.3 million estimated common shares outstanding.

Conference Call Information:

A conference call to discuss third quarter 2015 financial results is scheduled for today, November 19, 2015, 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 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 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 third quarter of fiscal year 2015 and for the full fiscal year 2015. 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-K for the fiscal year ended January 31, 2015 filed with the SEC on April 2, 2015 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  
                 
  October 31, 2015 % of net
sales
November 1, 2014 % of net
sales
October 31, 2015 % of net
sales
November 1, 2014 % of net
sales
                 
Net sales  $ 199,704 100.0%  $ 182,532 100.0%  $ 517,182 100.0%  $ 474,425 100.0%
Cost of goods sold  133,139 66.7%  121,881 66.8%  349,464 67.6%  320,819 67.6%
Gross profit  66,565 33.3%  60,651 33.2%  167,718 32.4%  153,606 32.4%
                 
Operating expenses:                
Selling, general and administrative expenses  47,396 23.7%  42,026 22.9%  130,515 25.2%  122,859 25.8%
Income from operations  19,169 9.6%  18,625 10.3%  37,203 7.2%  30,747 6.6%
Interest expense  (3,659) (1.8%)  (4,122) (2.3%)  (10,567) (2.0%)  (13,487) (2.8%)
Income before income tax expense  15,510 7.8%  14,503 8.0%  26,636 5.2%  17,260 3.8%
Income tax expense  (5,969) (3.0%)  (5,587) (3.1%)  (10,255) (2.0%)  (6,649) (1.4%)
Net income  $ 9,541 4.8%  $ 8,916 4.9%  $ 16,381 3.2%  $ 10,611 2.4%
                 
Earnings per share                
Basic  $ 0.23    $ 0.21    $ 0.39    $ 0.27  
Diluted  $ 0.23    $ 0.21    $ 0.39    $ 0.27  
                 
Weighted average shares outstanding                
Basic  42,004    41,818    41,953    39,342  
Diluted  42,362    41,931    42,286    39,553  
 
SPORTSMAN'S WAREHOUSE HOLDINGS, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
     
Assets    
  October 31, 2015 January 31, 2015
Current assets:    
Cash and cash equivalents  $ 1,941  $ 1,751
Accounts receivable, net  393  425
Merchandise inventories  253,882  185,909
Prepaid expenses and other  5,557  7,468
Income taxes receivable  --   5,190
Deferred income taxes  2,743  2,928
Total current assets  264,516  203,671
 Property and equipment, net  69,163  54,317
 Deferred income taxes  3,858  5,398
 Definite lived intangible assets, net   4,375  5,729
 Other long-term assets, net  1,511  1,608
   $ 343,423  $ 270,723
  . .
Liabilities and Stockholders' Deficit    
Current liabilities:    
Accounts payable  $ 61,908  $ 28,500
Accrued expenses  54,157  42,620
Income taxes payable  2,266  -- 
Revolving line of credit  49,676  41,899
Current portion of long-term debt, net of discount  1,333  1,333
Current portion of deferred rent  3,337  2,873
Total current liabilities  172,677  117,225
     
Long-term liabilities:    
Long-term debt, net of discount and current portion  155,713  156,713
Deferred rent credit, net of current portion  29,066  28,117
Total long-term liabilities  184,779  184,830
Total liabilities  357,456  302,055
     
Stockholders' deficit:    
Common stock  420  418
Additional paid-in capital  77,173  76,257
Accumulated deficit  (91,626)  (108,007)
Total stockholders' deficit  (14,033)  (31,332)
   $ 343,423  $ 270,723
 
SPORTSMAN'S WAREHOUSE HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
     
  October 31, 2015 November 1, 2014
 CASH FLOWS FROM OPERATING ACTIVITIES   
 Net income   $ 16,381  $ 10,611
 Adjustments to reconcile net income to net   
 cash provide by (used in) operating activities:   
 Depreciation and amortization   7,210  5,183
 Amortization of discount on debt and deferred financing fees   552  977
 Amortization of Intangible assets   1,354  1,354
 Change in deferred rent   1,413  5,252
 Deferred taxes   1,725  (403)
 Stock based compensation   1,671  2,780
 Change in assets and liabilities:     
 Accounts receivable, net   32  (57)
 Merchandise inventory   (67,973)  (69,268)
 Prepaid expenses and other   1,656  (1,338)
 Accounts payable   33,408  34,448
 Accrued expenses   (1,029)  303
 Income taxes   7,456  (3,595)
 Net cash provided by (used in) operating activities   3,856  (13,753)
     
 CASH FLOWS FROM INVESTING ACTIVITIES:   
 Purchase of property and equipment   (29,820)  (23,538)
 Proceeds from sale-leaseback transactions   7,764  --
 Net cash used in investing activities   (22,056)  (23,538)
     
 CASH FLOWS FROM FINANCING ACTIVITIES:   
 Net borrowings on line of credit   7,777  33,842
 Issuance of common stock   --  73,393
 Increase in book overdraft   12,566  6,209
 Excess tax benefits from stock-based compensation   283  287
 Payment of withholdings on restricted stock units  (1,036)  (993)
 Principal payments on long-term debt   (1,200)  (75,063)
 Net cash provided by financing activities   18,390  37,675
     
 Net change in cash and cash equivalents   190  384
 Cash and cash equivalents at beginning of year   1,751  1,354
 Cash and cash equivalents at end of period   $ 1,941  $ 1,738
 
 
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
  October 31, 2015 November 1, 2014 October 31, 2015 November 1, 2014
Income from operations  $ 19,169  $ 18,625  $ 37,203  $ 30,747
IPO bonus (1)  --   --   --   2,200
Litigation accrual reversal (2)  --   --   (4,000)  -- 
Secondary offering expenses (3)  727  --   727  -- 
Adjusted income from operations  $ 19,896  $ 18,625  $ 33,930  $ 32,947
         
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  $ 9,541  $ 8,916  $ 16,381  $ 10,611
IPO bonus (1)  --  --  --   2,200
Litigation accrual reversal (2) -- --  (4,000) --
Secondary offering expenses (3) 727  -- 727 --
Less tax impact  (280)  --  1,260   (847)
Adjusted net income  $ 9,988  $ 8,916  $ 14,368  $ 11,964
         
Denominator:        
Diluted weighted average shares outstanding  42,362  41,931  42,286  39,553
Initial public offering shares issuance (4)  --   --   --   2,476
Adjusted diluted weighted average shares outstanding  42,362  41,931  42,286  42,029
         
Reconciliation of earnings per share:        
Diluted earnings per share  $ 0.23  $ 0.21  $ 0.39  $ 0.27
Impact of adjustments to numerator and denominator  0.01  --   (0.05)  0.01
Adjusted diluted earnings per share  $ 0.24  $ 0.21  $ 0.34  $ 0.28
         
Reconciliation of net income to adjusted EBITDA:        
Net income  $ 9,541  $ 8,916  $ 16,381  $ 10,611
Interest expense  3,659  4,122  10,567  13,487
Income tax expense  5,969  5,587  10,255  6,649
Depreciation and amortization  3,033  2,468  8,564  6,538
Stock-based compensation expense (5)  594  522  1,671  2,780
Pre-opening expenses (6)  606  230  2,697  2,359
IPO bonus (1)  --   --   --   2,200
Litigation accrual reversal (2)  --   --   (4,000)  -- 
Secondary offering expenses (3)  727  --   727  -- 
Adjusted EBITDA  $ 24,129  $ 21,845  $ 46,862  $ 44,624
         
(1) As a result of the completion of our IPO 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) On March 9, 2015, a jury awarded $11.9 million against the defendants in a litigation matter. We reviewed the decision and accrued $4.0 million in our results for the fiscal year and fourth quarter ended January 31, 2015 related to this matter. We strongly disagreed with the jury's verdict and filed post-trial motions seeking to have the verdict set aside. On July 30, 2015, the court granted our motion for judgment as a matter of law. The plaintiff and a co-defendant have appealed the July 30, 2015 ruling to the appellate court and the appeal is currently in process. Based on the court's most recent judgment in our favor, we determined that the likelihood of loss in this case is not probable, and, as such, we reversed the previous accrual of $4.0 million in our results for the 13 weeks and 26 weeks ended August 1, 2015. The reversal of the $4.0 million accrual is recorded in selling, general, and administrative expenses in the accompanying statements of income.
(3) On September 30, 2015, 6,250,000 shares of common stock were sold in a secondary offering by certain existing shareholders, including affiliates of Seidler Equity Partners III, L.P. We received no proceeds from the secondary offering but incurred $0.7 million in offering expenses. On October 26, 2015, the underwriters of the secondary offering of common stock partially exercised the option granted at the time of the secondary offering to purchase an additional 649,022 shares of common stock at the secondary offering price of $12.25 per share, less underwriting discounts and commissions, which consists solely of shares sold by affiliates of Seidler Equity Partners III, L.P. We received no proceeds from the partial exercise of the option but incurred minimal offering expenses. Total expenses incurred related to the secondary offering and the exercise of the option was $0.7 million and is recorded in selling, general and administrative expenses in the accompanying statements of income.
(4) Assumes our initial public offering was effective as of February 3, 2013, the first day of our fiscal year 2013.    
(5) Stock-based compensation expense represents non-cash expenses related to equity instruments granted to employees under our 2013 Performance Incentive 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 2015 full year guidance:
         
  Estimated Q4 '15 Estimated FY '15
  Low High Low High
         
Numerator:        
Net income  $ 10,291  $ 11,122  $ 26,672  $ 27,503
Litigation accrual reversal (1)  --   --   (4,000)  (4,000)
Secondary offering expenses (2)  --   --   727  727
Less tax impact  --   --   1,260  1,260
Adjusted net income   $ 10,291  $ 11,122  $ 24,659  $ 25,490
         
Denominator:        
Diluted weighted average shares outstanding  42,400  42,400  42,300  42,300
         
Reconciliation of earnings per share:        
Diluted earnings per share  $ 0.24  $ 0.26  $ 0.63  $ 0.65
Impact of adjustments to numerator and denominator   --   --   (0.05)  (0.05)
Adjusted diluted earnings per share  $ 0.24  $ 0.26  $ 0.58  $ 0.60
         
(1) On March 9, 2015, a jury awarded $11.9 million against the defendants in a litigation matter. We reviewed the decision and accrued $4.0 million in our results for the fiscal year and fourth quarter ended January 31, 2015 related to this matter. We strongly disagreed with the jury's verdict and filed post-trial motions seeking to have the verdict set aside. On July 30, 2015, the court granted our motion for judgment as a matter of law. The plaintiff and a co-defendant have appealed the July 30, 2015 ruling to the appellate court and the appeal is currently in process. Based on the court's most recent judgment in our favor, we determined that the likelihood of loss in this case is not probable, and, as such, we reversed the previous accrual of $4.0 million in our results for the 13 weeks and 26 weeks ended August 1, 2015. The reversal of the $4.0 million accrual is recorded in selling, general, and administrative expenses in the accompanying statements of income.
(2) On September 30, 2015, 6,250,000 shares of common stock were sold in a secondary offering by certain existing shareholders, including affiliates of Seidler Equity Partners III, L.P. We received no proceeds from the secondary offering but incurred $0.7 million in offering expenses. On October 26, 2015, the underwriters of the secondary offering of common stock partially exercised the option granted at the time of the secondary offering to purchase an additional 649,022 shares of common stock at the secondary offering price of $12.25 per share, less underwriting discounts and commissions, which consists solely of shares sold by affiliates of Seidler Equity Partners III, L.P. We received no proceeds from the partial exercise of the option but incurred minimal offering expenses. Total expenses incurred related to the secondary offering and the exercise of the option was $0.7 million and is recorded in selling, general and administrative expenses in the accompanying statements of income.
CONTACT: Investor Contact:

         ICR, Inc.Farah Soi/Rachel Schacter

         (203) 682-8200

         investors@sportsmanswarehouse.com

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Source: Sportsman's Warehouse Holdings, Inc.

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