Sportsman’s Warehouse Holdings Inc. reported sales increased by 13 percent in the third quarter ended October 29 to $217.2 million from $192.1 million in the third quarter of fiscal year 2015. Same-store sales increased by 2.1 percent over the same period.

Income from operations increased 7.2 percent to $20.5 million from $19.2 million in the third quarter of fiscal year 2015. Adjusted income from operations, which excludes expenses related to the company’s secondary offering in the third quarter of fiscal 2015, increased 3.3 percent to $20.5 million from $19.9 million in the prior-year period.

The company opened five new stores in the third quarter of fiscal year 2016 and ended the quarter with 75 stores in 20 states, a unit increase of 17.2 percent from the end of the third quarter of fiscal year 2015.

Interest expense decreased to $3.4 million from $3.7 million in the third quarter of fiscal year 2015.

Net income increased 10.2 percent to $10.5 million from $9.5 million in the third quarter of fiscal year 2015. Adjusted net income increased 5.3 percent to $10.5 million from $10 million in the third quarter of fiscal year 2015. Adjusted net income excludes offering costs related to the company’s secondary offering incurred during the third quarter 2015.

Diluted earnings per share (EPS) increased 8.7 percent to 25 cents a share from 23 cents in the third quarter of fiscal year 2015. Adjusted diluted earnings per share increased 4.2 percent to 25 cents from 24 cents in the third quarter of fiscal 2015.

Adjusted EBITDA increased 8.3 percent to $26.1 million, from $24.1 million in the third quarter of fiscal year 2015.

Results came generally in line with expectations. Previously, Sportsman’s Warehouse said sales would be in the range of $212 million to $217 million based on a same-store sales change in the range of 2 to 4 percent. Net income was expected to be in the range of $9.8 million to $11.1 million, with diluted earnings per share of 23 cents to 26 cents a share.

John Schaefer, president and CEO, stated: “We are very pleased with our third-quarter results as we again met each of our financial targets while maintaining and, in some cases, improving category-level gross margins against an industry backdrop that remained very promotional at both the national and the local level. We believe our unique localization strategy, efficient business model and disciplined execution allowed us to continue to take share in our hard goods as well as apparel and footwear categories in the third quarter, as we further strengthen our position as the high growth retailer in the outdoor sporting goods segment of the retail marketplace.”

Schaefer continued, “We continue to make progress on our strategic priorities that enhance both our in-store experience and e-commerce platform, which are resonating with our customer. As we look toward the fourth quarter and beyond, we remain focused on building on our track record of consistently delivering against our operational and financial goals.”

For the 39 weeks ended October 29, 2016, net sales increased by 12.1 percent to $558.6 million from $498.2 million in the corresponding period of fiscal year 2015. Same-store sales increased by 1.1 percent in the first three quarters of fiscal year 2016 compared to the same period of fiscal year 2015.

Income from operations increased 6.4 percent to $39.6 million from $37.2 million in the first three quarters of fiscal year 2015. Adjusted income from operations, which excludes expenses related to the company’s secondary offerings in April 2016 and September 2015, as well as the reversal of an accrual related to a litigation matter in the second quarter of 2015, increased 17.1 percent to $39.7 million as compared to $33.9 million in the first three quarters of fiscal year 2015.

The company opened 11 new stores in the first three quarters of fiscal year 2016.

Interest expense decreased to $10.1 million from $10.6 million in the first three quarters of fiscal year 2015.

Net income increased 16.8 percent to $19.1 million from $16.4 million in the first three quarters of fiscal year 2015. Adjusted net income, which excludes expenses related to the company’s secondary offerings in April 2016 and September 2015, as well as the reversal of an accrual related to a litigation matter in the second quarter of 2015, net of taxes, and prior-year tax credits, increased 29.9 percent to $18.7 million during the first three quarters of fiscal year 2016 compared to adjusted net income of $14.4 million in the corresponding period of fiscal year 2015.

Diluted earnings per share increased 15.4 percent to 45 cents from 39 cents in the first three quarters of fiscal year 2015. Adjusted diluted earnings per share increased 29.4 percent to 44 cents from adjusted diluted earnings per share of 34 cents in the first three quarters of fiscal year 2015.

Adjusted EBITDA increased 19.2 percent to $55.9 million from $46.9 million in the first three quarters of fiscal year 2015.

Balance Sheet Highlights
Total debt was $220.3 million, consisting of $85.3 million outstanding under the company’s revolving credit facility and $135 million outstanding under the term loan, net of un-amortized discount and debt issuance costs.
Total liquidity (cash plus $25.4 million of availability on revolving credit facility) was $28.1 million.

Fourth Quarter And Fiscal Year 2016 Outlook
For the fourth quarter of fiscal year 2016, net sales are expected to be in the range of $230 million to $235 million based on a same-store sales change of 1 percent compared to the corresponding period of fiscal year 2015. Net income is expected to be in the range of $11.4 million to $12.6 million. Earnings per diluted share is expected to be 27 cents to 30 cents on a weighted average of approximately 42.6 million estimated common shares outstanding.

For fiscal year 2016, net sales are expected to be in the range of $789 million to $794 million based on a same-store sales change in the range of 0 to 2 percent compared to fiscal year 2015. Net income is expected to be in the range of $30.5 million to $31.7 million, with diluted earnings per share of 72 cents to 75 cents. Adjusted net income is expected to be in the range of $30 million to $31.2 million, with adjusted earnings per diluted share of 71 cents to 74 cents on a weighted average of approximately 42.5 million estimated common shares outstanding.

Under its former guidance, it expected net sales in the range of $780 million to $790 million, with a same-store sales change in the range of 0 percent to 2 percent. Net income was expected to be in the range of $30.1 million to $32.6 million, with diluted earnings per share of 71 cents to 77 cents. Adjusted net income was expected to be in the range of $29.6 million to $32.1 million, with adjusted diluted earnings per share of 70 cents to 76 cents.

Store Openings
In a separate release, the company announced plans to open stores in Yuma, AZ, Henderson, NV and Eureka, CA.

The Yuma location will be the eighth store in Arizona and will be located in the Las Palimillas Shopping Center. The Henderson store will be the fourth in Nevada and will be located in the Sunmark Plaza. The Eureka store will be the eighth store in California and will be located adjacent to the Bayshore Mall. It is anticipated that these stores will open in the first half of 2017. With the planned openings, Sportsman’s Warehouse will operate 82 stores in 22 states.

Photo courtesy Sportsman’s Warehouse