CEO.CA Chairman's Briefing

- On track to open 15 new stores during fiscal 2023 
- Jon Barker to retire as CEO and Director 
- Board announces leadership succession plan and search for new CEO 
- Appoints Erica Fortune as a new Independent Director of the Board

WEST JORDAN, Utah, April 12, 2023 (GLOBE NEWSWIRE) -- Sportsman's Warehouse Holdings, Inc. ("Sportsman's Warehouse" or the “Company”) (Nasdaq: SPWH) today announced financial results for the thirteen and fifty-two weeks ended January 28, 2023.

For the thirteen weeks ended January 28, 2023:

• Net sales were $379.3 million, a decrease of 8.9%, compared to $416.3 million in the fourth quarter of fiscal year 2021. The net sales decrease was primarily due to lower sales demand from consumer inflationary pressures and recession concerns, partially offset by the opening of 9 new stores over the last year. Compared to the fourth quarter of fiscal year 2019, net sales increased 46.9% from $258.2 million.
• Same store sales decreased 12.5% during the fourth quarter of 2022, compared to the fourth quarter of 2021. Compared to the same period of 2019, same store sales increased 24.9%.
• Gross profit was $122.8 million or 32.4% of net sales, compared to $136.6 million or 32.8% of net sales in the comparable prior year period. The 40 basis point decrease as a percentage of net sales can be attributed to lower overall product margins due to promotional activity, partially offset by lower overall transportation and freight costs.
• Selling, general and administrative (SG&A) expenses were $106.7 million or 28.1% of net sales, compared to $113.4 million or 27.2% of net sales in the fourth quarter of fiscal year 2021. The decrease in absolute dollars is primarily due to lower total payroll and bonus expenses, partially offset by higher rent and depreciation expenses from the addition of 9 new stores opened during 2022.
• Net income was $11.0 million, compared to net income of $58.4 million in the fourth quarter of 2021. Adjusted net income was $12.7 million compared to adjusted net income of $22.0 million in the fourth quarter of 2021 (see “GAAP and Non-GAAP Measures”).
• Adjusted EBITDA was $28.9 million, compared to $38.5 million in the comparable prior year period (see "GAAP and Non-GAAP Measures").
• Diluted earnings per share were $0.29 compared to a diluted earnings per share of $1.31 in the comparable prior year period. Adjusted diluted earnings per share were $0.33 compared to adjusted diluted earnings per share of $0.49 for the comparable prior year period (see "GAAP and Non-GAAP Measures").
  

For the fifty-two weeks ended January 28, 2023:

• Net sales were $1,399.5 million, compared with $1,506.1 million or a decrease of 7.1% compared to fiscal year 2021. The Company’s net sales decreased primarily due to lower demand across most product categories as it anniversaried the increased demand during the first half of fiscal 2021 driven by the COVID-19 economic stimulus package and social unrest and were impacted by current year consumer inflationary pressures and recessionary concerns. These headwinds were partially offset by the Company’s opening of nine new stores since January 29, 2022.
• Same store sales decreased 12.2% during fiscal year 2022 compared to fiscal year 2021. This decrease was due to lower sales in all categories. Compared to fiscal year 2019, same store sales increased 27.6%.
• The Company opened nine new stores during 2022 and ended the year with 131 total stores in operation.
• Gross profit was $460.2 million or 32.9% of net sales, as compared to $490.3 million or 32.6% of net sales for fiscal year 2021. This year-over-year increase of 30-basis points in gross profit margin was due to lower transportation and freight costs.
• SG&A expenses increased to $402.2 million or 28.7% of net sales, compared with $399.7 million or 26.5% of net sales for fiscal year 2021. This increase was primarily due to higher rent, depreciation and other SG&A expenses due to the addition of nine new stores, partially offset by lower total payroll expenses.
• Net income was $40.5 million compared to net income of $108.5 million in fiscal year 2021. Adjusted net income was $43.0 million compared to adjusted net income of $76.8 million in fiscal year 2021 (see “GAAP and Non-GAAP Measures”).
• Adjusted EBITDA was $101.6 million compared to $136.6 million in fiscal year 2021 (see "GAAP and Non-GAAP Measures").
• Diluted earnings per share were $1.00 for fiscal year 2022, compared to diluted earnings per share of $2.44 last year. Adjusted diluted earnings per share were $1.06 for fiscal year 2022 compared to adjusted diluted earnings per share of $1.72 last year (see "GAAP and Non-GAAP Measures").

Balance sheet and capital allocation highlights as of January 28, 2023:                                       

• The Company ended the year with net debt of $85.1 million, comprised of $2.4 million of cash on hand and $87.5 million of borrowings outstanding under the Company’s revolving credit facility. Inventory was $399.1 million compared with $386.6 million at the end of the prior year.
• Total liquidity was $161.5 million as of the end of fiscal 2022, comprised of $159.1 million of availability on the revolving credit facility and $2.4 million of cash on hand.
• During the fourth quarter, the Company repurchased approximately 0.3 million shares of its common stock in the open market, returning $2.3 million to shareholders. For the full year 2022, repurchases totaled 6.8 million shares of common stock, for a return of capital of $64.7 million. As of the end of the fourth quarter, the Company had $10.3 million of remaining capacity under its authorized repurchase program.
  

First Quarter 2023 Outlook:

For the first quarter of fiscal year 2023, net sales are expected to be in the range of $265 million to $270 million, anticipating that same store sales will be down 19% to 17% year-over-year. Adjusted diluted earnings per share for the first quarter are expected to be in the range of ($0.40) to ($0.35)

Jeff White, Chief Financial Officer of Sportsman’s Warehouse said, “While we believe outdoor participation remains strong, the macroeconomic environment and inflationary pressures are weighing on the consumer and their discretionary spending. Additionally, the unusually wet and cold weather in the western U.S., where a large portion of our stores are located, is creating a later than normal start to the spring shooting, fishing and camping seasons, negatively impacting our current business.”

Mr. White continued, “As we look forward, we believe we are on track to open 15 new stores during 2023, the highest number of stores we’ve ever opened in a single year. We remain committed to further expanding our merchandising and omni-channel strategies and capabilities, while maintaining financial discipline and rigor throughout the organization. Although we expect the first half of fiscal 2023 to be pressured, we anticipate improvements during the back half of the year.”

2023 New Store Opening Schedule:

Leadership Transition and Board Update:

Sportsman’s Warehouse announced today that Jon Barker has decided to retire as Chief Executive Officer and as a member of the Board of Directors, effective Friday, April 14, 2023, in order to spend time on personal interests. Joseph P. Schneider, current Chair of the Board, has been appointed as Interim Chief Executive Officer and Martha Bejar has been appointed as Lead Independent Director, each effective as of April 14, 2023. Mr. Schneider will also continue in his role as Chair of the Board. Mr. Barker will be available to advise the Company for 30 days after his retirement to aid in an effective and smooth transition. The Board has hired EgonZehnder, a leading national executive search firm, to conduct a global search for Mr. Barker’s successor. The Board intends to consider all qualified internal and external candidates.

“On behalf of the Board of Directors, I would like to express my sincere gratitude to Jon for his years of commitment to Sportsman’s Warehouse,” said Joseph P. Schneider, Chair of the Board and incoming Interim CEO. “Jon played an integral role in implementing the Company’s strategic vision including navigating the Company through the pandemic and the unparalleled operational, financial and administrative hurdles that were caused by such unprecedented times. We wish Jon the best of luck."

“The last six years have been an honor for me to work with such a talented team and be part of the incredible transformation and growth of our business,” said Mr. Barker. “Now is the right time for me to turn the page and focus my next chapter on personal interests. I look forward to watching the Company continue to succeed.”

In addition to Mr. Barker’s transition, the Board also announced the appointment of Erica Fortune as a new Independent Director of the Board. Ms. Fortune has been appointed a Class II Director with a term expiring in 2025.

“We are excited to welcome Erica to the Sportsman’s Warehouse Board. Erica is an accomplished executive that brings a wealth of e-commerce and marketing experience to the Board. On behalf of the Board, we all look forward to working with Erica as we undergo a leadership transition and work to execute on our mission of providing outstanding gear and exceptional service to inspire outdoor memories,” concluded Mr. Schneider.

About Joseph P. Schneider:

Joseph P. Schneider, 63, has served as a member of the Board of Directors since April 2014 and as the Chairman of the Board since April 2019. From 2000 until 2012, Mr. Schneider served as President and Chief Executive Officer of LaCrosse Footwear Inc., a publicly traded footwear company until its acquisition by ABC-Mart in August 2012. Additionally, he served on the board of directors of LaCrosse Footwear Inc. from 1999 through 2012. Between 1985 and 2000, Mr. Schneider held various other positions with LaCrosse Footwear Inc. and its subsidiary, Danner, Inc., including serving as President and Chief Executive Officer of Danner, Inc. from 1998 to 2000. Mr. Schneider received a bachelor’s degree in business administration from Northern Arizona University.

About Erica Fortune:

Erica Fortune, 41, has served as the Senior Vice President, eCommerce and Digital Marketing of Advance Auto Parts, Inc. (NYSE: AAP), a multiunit and omnichannel retailer of automotive aftermarket parts, since December 2022. Prior to joining Advance Auto Parts, Ms. Fortune served as Senior Vice President, eCommerce from March 2021 to November 2022 and Vice President, eCommerce from March 2017 to March 2021 at Big Lots, Inc. (NYSE: BIG), a home discount retailer. Ms. Fortune also served in various ecommerce and merchandising roles, including as Director, Merchandising, eCommerce, Women’s Division at Express, Inc., a fashion retailer and Senior Merchant, eCommerce at The Limited, a clothing retailer. Ms. Fortune holds a Bachelor of Science in Fashion Merchandising from Kent State University.

Conference Call Information:

A conference call to discuss fourth quarter and fiscal year 2022 financial results is scheduled for April 12, 2023, at 5:00PM Eastern Time. The conference call will be webcast and may be accessed via the Investor Relations section of the Company’s website at www.sportsmans.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 net income, adjusted diluted earnings per share and Adjusted EBITDA. The Company defines adjusted net income as net income plus expenses incurred relating to costs incurred for the recruitment and hiring of key members of management, expenses incurred and a one-time payment received relating to the terminated merger with the Great Outdoors Group, LLC, an accrued settlement for a closed store and recognized tax benefits, as applicable. The Company defines adjusted diluted earnings per share as adjusted net income divided by diluted weighted average shares outstanding. The Company defines Adjusted EBITDA as net income plus interest expense, income tax (benefit) expense, depreciation and amortization, stock-based compensation expense, pre-opening expenses, expenses incurred and a one-time payment received relating to the terminated merger with the Great Outdoors Group, LLC, pre-opening expenses, an accrued settlement for a closed store and costs incurred for the recruitment and hiring of key members of management. 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 earnings 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 ability to have sufficient inventory of products in demand by our customers and our guidance for the first quarter of fiscal year 2023. Investors can identify these statements by the fact that they use words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and similar terms and phrases. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results. 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 many factors including, but not limited to: current and future government regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the Company’s products and ability to conduct its business; the Company’s retail-based business model; general economic, market and other conditions and changes in consumer spending; macroeconomic factors, such as political trends, social unrest, inflationary pressures, and recessionary trends; the Company’s concentration of stores in the Western United States; competition in the outdoor activities and specialty retail market; changes in consumer demands; the Company’s expansion into new markets and planned growth; the impact of COVID-19 on the Company’s operations; 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 January 29, 2022 which was filed with the SEC on March 30, 2022, 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 Holdings, Inc. is an outdoor specialty retailer focused on meeting the needs of the seasoned outdoor veteran, the first-time participant, and everyone in between. We provide outstanding gear and exceptional service to inspire outdoor memories.

For press releases and certain additional information about the Company, visit the Investor Relations section of the Company's website at www.sportsmans.com.

Investor Contact:

Riley Timmer
Vice President, Investor Relations & Corp. Development
Sportsman’s Warehouse
(801) 566-6681
investors@sportsmans.com

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