Sportsman’s Warehouse Holdings Inc. on Wednesday raised its full-year comparable sales growth range to flat to 2 percent, up from -1 percent to 1 percent, after reporting a strong quarter that saw the company beat revenue and earnings estimates.
Jon Barker, CEO, stated, “We are pleased with our second quarter results, which were above our expectations on the top line, including a comparable store sales increase of 1.7 percent, and towards the high end of our outlook on the bottom line. This performance is a testament to our strong competitive positioning, as we remain one of few national retailers dedicated to outdoor sports, including hunting, with an expansive breadth of assortment at everyday low prices and a high level of customer service. This, combined with the ongoing success of our merchandising initiatives, customer acquisition and engagement focus, and omni-channel strategy, is driving our outperformance relative to the industry.”
Barker continued, “We will continue to focus on our strategic growth priorities in the second half of the year with an increased focus on innovation through various initiatives including a small format concept test shop, expansion of our partnerships with select licensed firearms dealers across the country, and the continued roll out of our used firearm program. We expect continued progress against these strategic priorities which, combined with our omni-channel focus, will reinforce our competitive positioning and drive market share gains.”
For the thirteen weeks ended August 3, 2019:
- Net sales increased by 4.2 percent to $211.8 million from $203.3 million in the second quarter of fiscal year 2018 primarily due to new store openings and increased demand for firearms and ammunition due to legislative changes in some states in which the company operates. That beat Wall Street’s estimates by $4.5 million. Same store sales increased by 1.7 percent from the comparable prior year period.
- Income from operations was $9.8 million compared to $13.2 million in the second quarter of fiscal year 2018. Adjusted income from operations was $10 million in the second quarter of fiscal 2019, which excludes expenses related to the recruitment and hiring of various key members of the senior management team. Adjusted income from operations was $13.2 million in the second quarter of fiscal 2018.
- The company opened two new stores in the second quarter of fiscal 2019 and ended the quarter with 94 stores in 24 states, or square footage growth of 2.4 percent from the end of the second quarter of fiscal year 2018.
- Interest expense decreased to $2.3 million from $4.3 million in the second quarter of fiscal year 2018. Interest expense for the second quarter of fiscal year 2018 included a $1.6 million write-off of debt discount and deferred financing fees associated with the company’s prior term loan.
- Net income was $5.5 million compared to net income of $6.6 million in the second quarter of fiscal year 2018. Adjusted net income in the second quarter of fiscal 2019 was $5.7 million, which excludes expenses incurred relating to the recruitment and hiring of various key members of the senior management team. Adjusted net income in the second quarter of fiscal 2018 was $7.8 million, which excludes the write-off of deferred financing fees and debt discount associated with the company’s old term loan.
- Diluted earnings per share was 13 cents compared to diluted earnings per share of 15 cents for the second quarter of fiscal year 2018. Adjusted diluted earnings per share was 13 cents in the second quarter of fiscal 2019 compared to adjusted diluted earnings per share of 18 cents in the second quarter of fiscal 2018. Estimates called for 12 cents a share.
- Adjusted EBITDA was $15.8 million compared to $19 million in the second quarter of fiscal year 2018.
For the twenty-six weeks ended August 3, 2019:
- Net sales increased by 0.6 percent to $385.8 million from $383.3 million in the first half of fiscal year 2019 primarily due to new store openings. Same store sales decreased by 1.8 percent from the comparable prior year period.
- Income from operations was $4.4 million compared to $9.5 million in the first half of fiscal year 2018. Adjusted income from operations was $5 million in the first half of fiscal 2019, which excludes expenses related to the transition of our CFO and recruitment and hiring of various key members of the senior management team. Adjusted income from operations was $12.2 million in the second quarter of fiscal 2018, which excludes charges incurred with the retirement of the company’s former CEO.
- Interest expense decreased to $4.5 million from $7.9 million in the first half of fiscal year 2018. Interest expense for the first half of fiscal year 2018 included a $1.6 million write-off of debt discount and deferred financing fees associated with the company’s prior term loan.
- Net income was $0.04 million compared to net income of $0.7 million in the first half of fiscal year 2018. Adjusted net income in the first half of fiscal 2019 was $0.5 million, which excludes expenses incurred relating to the transition of our CFO and the recruitment and hiring of various key members of the senior management team. Adjusted net income in the first half of fiscal 2018 was $4.2 million, which excludes the write-off of deferred financing fees and debt discount associated with the company’s prior term loan and the charges incurred with the retirement of the company’s former CEO.
- Diluted earnings per share was $0.00 compared to diluted earnings per share of $0.02 for the first half of fiscal year 2018. Adjusted diluted earnings per share was $0.01 in the first half of fiscal 2019 compared to adjusted diluted earnings per share of $0.10 in the first half of fiscal 2018.
- Adjusted EBITDA was $16.2 million compared to $23.8 million in the first half of fiscal year 2018 (see “GAAP and Non-GAAP Measures”).
Balance sheet highlights as of August 3, 2019:
- Total debt: $158.8 million consisting of $127.1 million outstanding under the company’s revolving credit facility and $31.7 million outstanding under the term loan, net of unamortized debt issuance costs.
- Total liquidity (cash plus $51.6 million of availability on revolving credit facility): $53.1 million
Third Quarter and Fiscal Year 2019 Outlook:
For the third quarter of fiscal year 2019, net sales are expected to be in the range of $231 million to $239 million based on a change in same store sales in the range of 1.5 percent to 4.5 percent compared to the corresponding period of fiscal year 2018. Net income is expected to be in the range of $9 million to $11.7 million with diluted earnings per share of $0.21 to $0.27 on a weighted average of approximately 43.2 million estimated common shares outstanding.
For fiscal year 2019, net sales are expected to be in the range of $866 million to $884 million based on a change in same store sales in the range of 0 percent to 2 percent compared to fiscal year 2018. Adjusted net income is expected to be in the range of $20.8 million to $26 million with adjusted earnings per diluted share of $0.48 to $0.60 on a weighted average of approximately 43.2 million estimated common shares outstanding, when adjusted for the executive transition costs incurred in the first half of fiscal 2019 relating to the transition of the company’s CFO and the recruitment and hiring of various key members of the senior management team.
Photo courtesy Sportsman’s Warehouse Holdings Inc.