Sportsman’s Warehouse Holdings, Inc. reported net sales increased 9.0 percent to $151.6 million in the 13 weeks ended April 30 compared with the first quarter of fiscal 2015. Same store sales decreased by 2.2 percent over the same period.

“Once again, our company’s operating discipline and local market focus enabled us to quickly adapt to changing market conditions, including both the continued strength in firearms as well as the continued weather headwinds which impacted performance in our apparel areas, demonstrating the strength of our business model and our execution on an everyday basis,” said John Schaefer, President and Chief Executive Officer.

Income from operations doubled to $2.4 million and adjusted income from operations, which excludes expenses related to the company’s secondary offering in April, increased to $2.5 million as compared to $1.2 million in the first quarter of fiscal year 2015. Net income was $0.3 million compared to a net loss of ($1.4) million in the first quarter of fiscal year 2015. Adjusted net loss, which excludes secondary offering expenses as well as prior-year tax credits, was ($0.1) million compared to adjusted net loss of ($1.4) million for the first quarter of fiscal year 2015.

Diluted earnings per share was $0.01 compared to diluted loss per share of ($0.03) in the first quarter of fiscal year 2015. Adjusted diluted loss per share, was ($0.00) compared to adjusted diluted loss per share of ($0.03) in the first quarter of fiscal year 2015. Adjusted EBITDA was $7.4 million compared to $5.4 million in the first quarter of fiscal 2015. When adjusting for a revision in revenue presentation, earnings were within the company’s guidance.

“While we have changed our presentation as it relates to hunting and fishing license sales from a gross revenue basis to a net revenue basis, this revision has had no impact on our gross margin dollars and net income,” Schaefer said. “We are adjusting our annual sales guidance to conform to this revision in revenue presentation.”

Balance sheet highlights
Sportsman’s Warehouse, which  opened three new stores in the first quarter of fiscal 2016, ended the period with merchandise inventory valued at $251.0 million, up 15.2 percent from Jan. 30.  It ended the quarter with 67 stores in 20 states, a unit increase of 17.5 percent from the end of the first quarter of fiscal 2015.

Total debt of $198.6 million, compared to $180.3 million at the end of fiscal year 2015. The $198.6 million of total debt as of April 30, 2016 consists of $63.3 million outstanding under the company’s revolving credit facility and $135.3 million outstanding under the term loan, net of unamortized discount and debt issuance costs.

Total liquidity (cash plus $49.6 million of availability on revolving credit facility) was $52.0 million.

Change in accounting
The company has historically presented the sales of state fish and game licenses, duck stamps, and state government-mandated firearm background checks in net sales and cost of goods sold under the gross method.

The company’s management determined that the proper presentation for these transactions is under the net method, thereby recognizing only the commission received in net sales for acting as the agent under the principal versus agent model. This revision does not have any impact upon gross profit, net income or earnings per share.
As a result of the revision, the company has updated its sales outlook to conform to the net presentation.

Second Quarter and Fiscal Year 2016 Outlook
For the second quarter of fiscal year 2016, net sales are expected to be in the range of $178.0 million to $183.0 million based on same store sales change in the range of negative 1.0 to 1.0 percent compared to the corresponding period of fiscal year 2015. Net income is expected to be in the range of $6.5 million to $7.2 million, with diluted earnings per share of $0.15 to $0.17 on approximately 42.6 million estimated weighted average common shares outstanding.

For fiscal 2016, net sales are expected to be in the range of $770.0 million to $790.0 million based on opening 11 new stores for the full year and same-store sales change in the range of 0.0 to 2.0 percent compared to fiscal year 2015. The company reaffirms its previously provided annual guidance of adjusted net income in the range of $27.5 million to $31.1 million, with adjusted diluted earnings per share of $0.65 to $0.73, on approximately 42.5 million estimated weighted average common shares outstanding