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May 24, 2018

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

MIDVALE, Utah, May 24, 2018 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's" or the “Company”) (Nasdaq:SPWH) today announced financial results for the thirteen weeks ended May 5, 2018.

Jon Barker, Chief Executive Officer, stated, “We are excited with the start to the fiscal year as our top and bottom line results for the first quarter came in at the high end of our expectations. Our topline was driven by strong new store performance and comp growth of 3.4%, which, when combined with consistent gross margins and disciplined cost control, resulted in bottom line performance at the high end of our outlook. We continued to make progress against each of our strategic initiatives including our comprehensive omni-channel strategy, which includes growth of brick and mortar as well as ecommerce, customer acquisition & engagement and merchandising assortment. We look forward to building on this progress throughout fiscal 2018 and strengthening our competitive positioning.”

Mr. Barker added, “We are also very pleased to announce today the amendment and restatement of our credit agreement. We increased our borrowing capacity to $250 million under our revolving credit facility and added a new $40 million term loan.  We used proceeds from our revolving credit facility and new term loan to repay our prior term loan, which we expect to reduce our interest expense by approximately $4.5 million on an annualized basis, as we focus on managing our capital structure through continued collaboration with our lenders.”

For the thirteen weeks ended May 5, 2018:

  • Net sales increased by 14.8% to $180.1 million from $156.9 million in the first quarter of fiscal year 2017. Same store sales increased by 3.4% from the comparable prior year period.
     
  • Loss from operations was $3.7 million compared to $3.8 million in the first quarter of fiscal year 2017. Adjusted loss from operations, which excludes charges incurred in conjunction with the retirement of the Company’s former CEO, was $1.0 million, compared to adjusted loss from operations, which excludes professional and other fees incurred in connection with evaluation of a strategic acquisition, of $2.0 million for the first quarter of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).
     
  • The Company opened two new stores in the first quarter of fiscal 2018 and ended the quarter with 89 stores in 22 states, or square footage growth of 8.9% from the end of the first quarter of fiscal year 2017.
     
  • Interest expense increased to $3.6 million from $3.2 million in the first quarter of fiscal year 2017. 
     
  • Net loss was $5.8 million compared to net loss of $4.5 million in the first quarter of fiscal year 2017. Adjusted net loss, which excludes charges incurred in conjunction with the retirement of the Company’s former CEO, was $3.6 million compared to adjusted net loss, which excludes professional and other fees incurred in connection with evaluation of a strategic acquisition, of $3.4 million for the first quarter of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).
     
  • Diluted loss per share was $(0.14) compared to $(0.11) in the first quarter of fiscal year 2017. Adjusted diluted loss per share was $(0.08) compared to $(0.08) in the first quarter of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).
     
  • Adjusted EBITDA was $4.8 million compared to $4.2 million in the first quarter of fiscal year 2017 (see "GAAP and Non-GAAP Measures").

Second Quarter and Fiscal Year 2018 Outlook:

For the second quarter of fiscal year 2018, net sales are expected to be in the range of $199.0 million to $206.0 million based on a same store sales increase in the range of (2.0)% to 2.0% compared to the corresponding period of fiscal year 2017. Adjusted net income is expected to be in the range of $5.9 million to $7.1 million with adjusted diluted earnings per share of $0.14 to $0.17 on a weighted average of approximately 43.0 million estimated common shares outstanding.

For fiscal year 2018, net sales are expected to be in the range of $837.0 million to $860.0 million based on same store sales in the range of (1.0%) to 2.0% compared to fiscal year 2017. Adjusted net income is expected to be in the range of $23.8 million to $27.6 million with adjusted earnings per diluted share of $0.55 to $0.64 on a weighted average of approximately 43.0 million estimated common shares outstanding, when adjusted for the one-time expense incurred in connection with the announcement of the retirement of the Company’s former Chief Executive Officer, John Schaefer, in the first quarter of fiscal 2018 (see “GAAP and Non-GAAP Measures”).

Conference Call Information:

A conference call to discuss first quarter and fiscal 2018 financial results is scheduled for today, May 24, 2018, at 8:30 AM Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Company’s website at www.sportsmanswarehouse.com.

Non-GAAP Information

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (the “SEC”): adjusted income from operations, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA. We defined adjusted income from operations and adjusted net income as income from operations and net income, respectively, in each case, plus professional and other fees incurred in connection with the evaluation of a strategic acquisition, charges incurred in conjunction with the retirement of the Company’s former CEO, and the impact of the Tax Cuts and Jobs Act and prior year tax credits, as applicable.  Adjusted diluted earnings per share is diluted earnings per share excluding the impact of professional and other fees incurred in connection with the evaluation of a strategic acquisition, charges incurred in conjunction with the retirement of the Company’s former CEO and the impact of the Tax Cuts and Jobs Act prior year tax credits. We define Adjusted EBITDA as net income plus interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, and other gains, losses and expenses that we do not believe are indicative of our ongoing expenses. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures under “GAAP and Non-GAAP Measures” in this release. The Company believes that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of the Company’s business and facilitate a more meaningful comparison of its diluted income per share and actual results on a period-over-period basis. The Company has provided this information as a means to evaluate the results of its ongoing operations. Other companies in the Company’s industry may calculate these items differently than the Company does. Each of these measures is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

Forward-Looking Statements 

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements in this release include, but are not limited to, statements regarding our strategic initiatives and our outlook for the second quarter and full fiscal year 2018.  Investors can identify these statements by the fact that they use words such as "continue", "expect", "may", “opportunity”, "plan", "future", “ahead” and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks relating to the Company’s retail-based business model, general economic conditions and consumer spending, the Company’s concentration of stores in the Western United States, competition in the outdoor activities and sporting goods market, changes in consumer demands, the Company’s expansion into new markets and planned growth, current and future government regulations,  risks related to the Company’s continued retention of its key management, the Company’s distribution center, quality or safety concerns about the Company’s merchandise, events that may affect the Company’s vendors, trade restrictions, and other factors that are set forth in the Company's filings with the SEC, including under the caption “Risk Factors” in the Company’s Form 10-K for the fiscal year ended February 3, 2018 which was filed with the SEC on March 29, 2018 and the Company’s other public filings made with the SEC and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company’s assumptions prove incorrect, the Company’s actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Sportsman's Warehouse Holdings, Inc.

Sportsman's Warehouse is 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.

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

 

                 
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
                 
                 
  For the Thirteen Weeks Ended      
                 
  May 5, 2018   % of net
sales
  April 29, 2017   % of net
sales
 
                 
Net sales $   180,059     100.0 %   $   156,898     100.0 %  
Cost of goods sold     124,493     69.1 %       108,283     69.0 %  
  Gross profit     55,566     30.9 %       48,615     31.0 %  
                 
Operating expenses:                
Selling, general and administrative expenses     59,216     32.9 %       52,382     33.4 %  
  Loss from operations     (3,650 )   (2.0 %)       (3,767 )   (2.4 %)  
Interest expense     (3,557 )   (2.0 %)       (3,150 )   (2.0 %)  
Loss before income tax benefit     (7,207 )   (4.0 %)       (6,917 )   (4.4 %)  
Income tax benefit     1,379     0.8 %       2,410     1.5 %  
  Net loss $   (5,828 )   (3.2 %)   $   (4,507 )   (2.9 %)  
                 
Earnings per share                
  Basic $   (0.14 )       $   (0.11 )      
  Diluted $   (0.14 )       $   (0.11 )      
                 
Weighted average shares outstanding                
  Basic     42,727             42,277        
  Diluted     42,727             42,277        
                 


         
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.        
Consolidated Balance Sheets (Unaudited)        
(in thousands)        
         
         
Assets        
  May 5, 2018   February 3, 2018  
Current assets:        
Cash and cash equivalents $   2,379     $   1,769    
Accounts receivable, net     382         319    
Merchandise inventories     306,201         270,594    
Prepaid expenses and other     9,183         8,073    
   Total current assets     318,145         280,755    
  Property and equipment, net     94,809         94,035    
  Deferred income taxes     3,474         4,595    
  Definite lived intangible assets, net      -          276    
   Total assets $   416,428     $   379,661    
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable $   64,012     $   36,788    
Accrued expenses     58,089         50,602    
Income taxes payable     967         2,586    
Revolving line of credit     66,866         59,992    
Current portion of long-term debt, net of discount and debt issuance costs     968         990    
Current portion of deferred rent     4,703         4,593    
   Total current liabilities     195,605         155,551    
         
Long-term liabilities:        
Long-term debt, net of discount, debt issuance costs, and current portion     132,142         132,349    
Deferred rent credit, net of current portion     41,204         41,963    
   Total long-term liabilities     173,346         174,312    
   Total liabilities     368,951         329,863    
         
Stockholders’ equity:        
Common stock     428         426    
Additional paid-in capital     83,068         82,197    
Accumulated deficit     (36,019 )       (32,825 )  
   Total stockholders’ equity     47,477         49,798    
   Total liabilities and stockholders' equity $   416,428     $   379,661    
         
         


         
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.        
Consolidated Statements of Cash Flows (Unaudited)        
(in thousands)        
         
    May 5, 2018   April 29, 2017
CASH FLOWS FROM OPERATING ACTIVITIES         
  Net loss    $   (5,828 )   $   (4,507 )
  Adjustments to reconcile net loss to net         
   cash used in operating activities:         
     Depreciation and amortization        4,387         3,490  
     Amortization of discount on debt and deferred financing fees        192         173  
     Amortization of Intangible        276         452  
     Change in deferred rent        (649 )       624  
     Deferred taxes        237         885  
     Stock based compensation        1,572         650  
     Change in assets and liabilities:         
        Accounts receivable, net        (63 )       29  
        Merchandise inventory        (35,607 )       (42,019 )
        Prepaid expenses and other        (78 )       (4,221 )
        Accounts payable        27,501         42,049  
        Accrued expenses        630         (3,115 )
        Income taxes        (1,619 )       (3,342 )
           Net cash used in operating activities        (9,049 )       (8,852 )
         
CASH FLOWS FROM INVESTING ACTIVITIES:         
  Purchase of property and equipment        (4,474 )       (13,204 )
           Net cash used in investing activities        (4,474 )       (13,204 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:         
  Net borrowings on line of credit        6,874         17,094  
  Increase in book overdraft        8,358         6,359  
  Payment of withholdings on restricted stock units        (699 )       (639 )
  Principal payments on long-term debt        (400 )       (400 )
           Net cash provided by financing activities        14,133         22,414  
         
 Net change in cash and cash equivalents        610         358  
 Cash and cash equivalents at beginning of year        1,769         1,911  
 Cash and cash equivalents at end of period    $   2,379     $   2,269  
         


           
SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
GAAP and Non-GAAP Measures (Unaudited)
(in thousands, except per share data)
           
Reconciliation of GAAP income (loss) from operations to adjusted income (loss) from operations:  
           
    For the Thirteen Weeks Ended  
           
    May 5, 2018   April 29, 2017  
Loss from operations $   (3,650 )   $   (3,767 )  
Professional fees (1)     -          1,744    
CEO Retirement (2)     2,647         -     
Adjusted loss from operations $   (1,003 )   $   (2,023 )  
           
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 loss $   (5,828 )   $   (4,507 )  
  Professional fees (1)     -          1,744    
  CEO Retirement (2)     2,647         -     
  Less tax benefit     (399 )       (677 )  
  Adjusted net loss $   (3,580 )   $   (3,440 )  
           
Denominator:        
  Diluted weighted average shares outstanding     42,727         42,277    
           
Reconciliation of loss per share:        
Dilutive loss per share $   (0.14 )   $   (0.11 )  
Impact of adjustments to numerator and denominator     0.06         0.03    
Adjusted diluted loss per share $   (0.08 )   $   (0.08 )  
           
Reconciliation of net income (loss) to adjusted EBITDA:        
Net loss $   (5,828 )   $   (4,507 )  
Interest expense     3,557         3,150    
Income tax benefit     (1,379 )       (2,410 )  
Depreciation and amortization     4,663         3,942    
Stock-based compensation expense (3)     435         650    
Pre-opening expenses (4)     716         1,629    
Professional fees (1)     -          1,744    
CEO Retirement (2)     2,647         -     
Adjusted EBITDA $   4,811     $   4,198    
           
(1) Professional and other fees incurred in connection with the evaluation of a strategic acquisition.  
(2) Expenses incurred in conjunction with the retirement of our former CEO during Q1 2018.  
(3) 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        
(4) 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 second quarter and 2018 full year guidance:              
                 
    Estimated Q2 '18   Estimated FY '18
                 
    Low   High   Low   High
                 
Numerator:              
  Net income $   4,400   $   5,650   $   20,100   $   23,900
  CEO Retirement(1)     -        -        2,248       2,248
  Deferred Finance Cost Write-off(2)     1,479       1,479       1,479       1,479
  Adjusted net income  $   5,879   $   7,129   $   23,827   $   27,627
                 
Denominator:              
  Diluted weighted average shares outstanding     43,000       43,000       43,000       43,000
                 
Reconciliation of earnings per share:              
Diluted earnings per share $   0.14   $   0.17   $   0.47   $   0.56
Impact of adjustments to numerator and denominator     -        -        0.09       0.09
Adjusted diluted earnings per share $   0.14   $   0.17   $   0.55   $   0.64
                 
(1 ) Expenses incurred in conjunction with the retirement of our former CEO during Q1 2018, net of tax        
(2 ) Write-off of deferred financing fees associated with the amendment and restatement of our revolving line of credit and payoff of our term loan, net of tax
                 

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Source: Sportsman's Warehouse Holdings, Inc.