Sportsman’s Warehouse Holdings Inc. on Wednesday reported diluted earnings per share for the fiscal third quarter ended November 3 of 29 cents. Adjusted diluted earnings per share of 26 cents was up from diluted earnings per share of 23 cents in the third quarter of fiscal year 2017 and in line with Wall Street’s targets.

The company’s net income of $12.4 million was up from $9.8 million in the third quarter of fiscal year 2017. Adjusted net income, which excludes a non-recurring tax benefit, was $11.1 million compared to net income of $9.8 million for the third quarter of fiscal year 2017.

Net sales increased by 2.3 percent to $223.1 million from $218.1 million in the third quarter of fiscal year 2017. Same store sales decreased by 0.5 percent from the comparable prior year period.

Jon Barker, CEO, stated, “We are pleased with our third quarter performance as our top and bottom line results were in line with expectations. Our results are reflective of the solid progress we continue to make against our key strategic priorities centered around our omni-channel strategy of store growth and expansion of our e-commerce platform, customer acquisition and engagement, and merchandising. We believe our continued investments across the business are fueling market share gains as we continue to differentiate ourselves and strengthen our competitive positioning within the outdoor sporting goods industry.”

Barker continued “Given our year-to-date performance, we are narrowing our full year guidance. As we look to fiscal 2019, we will continue to maintain our strategy of moderated store growth and we expect to open between four and five stores, which will allow us to further invest in our e-commerce capabilities and allocate free cash flow towards debt reduction.”

For the thirteen weeks ended November 3, 2018:

  • Net sales increased by 2.3 percent to $223.1 million from $218.1 million in the third quarter of fiscal year 2017. Same store sales decreased by 0.5 percent from the comparable prior year period.
  • Income from operations was $17.5 million compared to $19.5 million in the third quarter of fiscal year 2017.
  • The company opened one new store in the third quarter of fiscal 2018 and ended the quarter with 92 stores in 23 states, or square footage growth of 4.4 percent from the end of the third quarter of fiscal year 2017.
  • Interest expense decreased to $2.6 million from $3.5 million in the third quarter of fiscal year 2017.
  • Net income was $12.4 million compared to net income of $9.8 million in the third quarter of fiscal year 2017. Adjusted net income, which excludes a non-recurring tax benefit, was $11.1 million compared to net income of $9.8 million for the third quarter of fiscal year 2017.
  • Diluted earnings per share was $0.29 compared to diluted earnings per share of $0.23 for the third quarter of fiscal year 2017. Adjusted diluted earnings per share was $0.26 compared to diluted earnings per share of $0.23 in the third quarter of fiscal year 2017.
  • Adjusted EBITDA was $22.6 million compared to $25.1 million in the third quarter of fiscal year 2017.

For the thirty-nine weeks ended November 3, 2018:

  • Net sales increased by 7.1 percent to $606.4 million from $566.5 million in the first three quarters of fiscal year 2017. Same store sales increased by 0.8 percent from the comparable prior year period.
  • Income from operations was $27.1 million compared to $30 million in the first three quarters of fiscal year 2017. Adjusted income from operations, which excludes charges incurred in conjunction with the retirement of the company’s former CEO, was $29.7 million, compared to adjusted income from operations of $31.7 million, which excludes professional and other fees incurred in connection with evaluation of a strategic acquisition for the first three quarters of fiscal year 2017.
  • Interest expense increased to $10.5 million from $10.1 million in the first three quarters of fiscal year 2017. Excluding a $1.6 million write off in debt discount and deferred financing fees associated with the company’s old term loan, interest expense was $8.9 million in the first three quarters of fiscal 2018.
  • Net income was $13.1 million compared to net income of $11.9 million in the first three quarters of fiscal year 2017. Adjusted net income, which excludes charges incurred in conjunction with the retirement of the company’s former CEO, the write-off of deferred financing fees and debt discount associated with the company’s old term loan, and a non-recurring tax benefit, was $15.3 million compared to adjusted net income, which excludes professional and other fees incurred in connection with evaluation of a strategic acquisition, of $12.9 million for the first three quarters of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).
  • Diluted earnings per share was $0.31 compared to $0.28 in the first three quarters of fiscal year 2017. Adjusted diluted earnings per share was $0.36 compared to $0.30 in the first three quarters of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).
  • Adjusted EBITDA was $46.5 million compared to $49.8 million in the first three quarters of fiscal year 2017 (see “GAAP and Non-GAAP Measures”).

Balance sheet highlights as of November 3, 2018:

  • Total debt: $219.2 million consisting of $181.6 million outstanding under the company’s revolving credit facility and $37.6 million outstanding under the term loan, net of unamortized debt issuance costs.
  • Total liquidity (cash plus $28.8 million of availability on revolving credit facility): $30.7 million

Fourth Quarter and Fiscal Year 2018 Outlook:

For the fourth quarter of fiscal year 2018, net sales are expected to be in the range of $238 million to $246 million based on a change in same store sales in the range of (1.0) percent to 2 percent compared to the corresponding period of fiscal year 2017. Adjusted net income is expected to be in the range of $10 million to $11.3 million with diluted earnings per share of $0.23 to $0.26 on a weighted average of approximately 43 million estimated common shares outstanding.

For fiscal year 2018, net sales are expected to be in the range of $844 million to $852 million based on a change in same store sales in the range of 0 percent to 2 percent compared to fiscal year 2017. Adjusted net income is expected to be in the range of $25.2 million to $26.6 million with adjusted earnings per diluted share of $0.59 to $0.62 on a weighted average of approximately 43 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, the write-off of the debt discount and deferred financing fees relating to the company’s old term loan incurred in the second quarter of fiscal 2018, and a non-recurring tax benefit recognized in the third quarter of fiscal 2018. (see “GAAP and Non-GAAP Measures”).

Fiscal Year

We operate on a fiscal calendar that, in a given fiscal year, consists of the 52- or 53-week period ending on the Saturday closest to January 31st. Our fiscal third quarters ended November 3, 2018 and October 28, 2017, both consisted of 13 weeks and are referred to herein as the third quarter of fiscal year 2018 and the third quarter of fiscal year 2017, respectively. Fiscal year 2018 contains 52 weeks of operations and will end on February 2, 2019. Fiscal year 2017 contained 53 weeks of operations ended on February 3, 2018. Due to the 53rd week in fiscal year 2017, all references to same store sales for fiscal year 2018 are compared to the shifted period for the comparable period for fiscal year 2017.  For the third fiscal quarter, same store sales for the period ended November 3, 2018 are compared to the same number of weeks for the period ended November 4, 2017, which is the comparable period.

Photo courtesy Sportsman’s Warehouse