Financial Data and Key Metrics Changes - The company reported net sales of $1.75 billion for Q4 2022, with a comparable sales decline of 5.1% compared to the previous year [4][13] - For the full year, net sales reached $6.4 billion, with a comparable sales decline of 6.4% [13] - Adjusted net income for Q4 grew by 12.5% to $163.5 million, resulting in adjusted diluted earnings per share of $2.04 [5][15] - The gross margin for Q4 was $572.5 million, with a rate of 32.8%, reflecting a 50 basis point improvement year-over-year [14][26] - The company maintained a strong balance sheet with $337 million in cash and no outstanding borrowings on its credit facility at year-end [15][16] Business Line Data and Key Metrics Changes - Footwear and apparel sales increased, with footwear up 2.2% and apparel up 1.8% compared to the previous year, while outdoor and sports recreation sales declined [22][24] - The e-commerce segment accounted for 10.7% of total merchandising sales, up 140 basis points from 2021, with over 75% of e-commerce sales fulfilled through stores [6][7] - The company opened 9 new stores in 2022, marking its first new store openings since 2019, and plans to open 13 to 15 new stores in 2023 [6][11] Market Data and Key Metrics Changes - The company reported a 27.4% increase in Q4 sales compared to 2019, indicating strong market share retention [13] - The overall market position as a value leader is emphasized, appealing to a wide demographic with a broad assortment of products [10][11] Company Strategy and Development Direction - The focus for 2023 includes expanding the store base, enhancing the omnichannel business, and improving service and productivity in existing stores [11][19] - The company aims to leverage its strong relationships with key vendors and maintain a differentiated market position based on value, assortment, and service [12][19] - The strategic plan includes a comprehensive capital allocation strategy, returning $614 million to stakeholders in 2022 [9][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the macroeconomic environment but expressed confidence in the company's ability to navigate these challenges [10][33] - The company anticipates continued consumer pressure in the near term but believes that its value proposition will resonate with customers [10][80] - The outlook for 2023 includes expectations for net sales growth of 2.5% to 5% and a gross margin rate between 34% and 34.4% [20][21] Other Important Information - The company reported a 20% increase in dividends to $0.09 per share, payable in April 2023 [16] - The year-end inventory balance was $1.3 billion, a 9.5% increase compared to Q4 2021, with improved inventory management practices [17][27] Q&A Session Summary Question: Can you provide insights on the gross margin expectations for 2023? - Management indicated that gross margin rates are expected to be lower due to increased promotional activity, but supply chain savings may offset some of this decline [34][35] Question: How are transactions versus ticket sizes expected to trend in 2023? - Management noted that while transactions may be under pressure, the assortment and pricing strategies should help maintain growth [38][39] Question: What is the company's approach to store openings in 2023? - The company plans to open 13 to 15 new stores, focusing on both new and existing markets, and has learned valuable lessons from previous openings [66][67] Question: How is the company evaluating its debt and cash returns? - The company has generated over $2 billion in free cash flow over the past three years and plans to continue a balanced approach to buybacks and debt management [72][73]

Part I [Business](index=6&type=section&id=Item%201.%20Business) Academy Sports + Outdoors is a leading US sporting goods retailer operating 268 stores across 18 states, diversifying sales across Outdoors, Apparel, Sports & Recreation, and Footwear divisions - As of January 28, 2023, the company operates **268** stores in **18** contiguous states, primarily in the southern United States, with Texas having the highest concentration of stores (**107**)[17](index=17&type=chunk)[36](index=36&type=chunk) FY2022 Merchandise Sales Breakdown by Division | Division | % of 2022 Net Sales | | :--- | :--- | | Outdoors | 31% | | Apparel | 28% | | Sports & Recreation | 21% | | Footwear | 20% | Net Sales by Merchandise Division (in thousands) | Merchandise Division | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Outdoors | $1,940,811 | $2,174,650 | $1,968,514 | | Sports & Recreation | $1,366,785 | $1,463,172 | $1,256,357 | | Apparel | $1,759,005 | $1,810,345 | $1,390,519 | | Footwear | $1,291,224 | $1,290,197 | $1,044,502 | | **Total Merchandise Sales** | **$6,357,825** | **$6,738,364** | **$5,659,892** | - E-commerce sales constituted **10.7%** of total merchandise sales in fiscal 2022, up from **9.3%** in 2021[30](index=30&type=chunk) - The company plans to open **13 to 15** new stores in fiscal 2023, indicating a resumption of its expansion strategy[36](index=36&type=chunk) - Firearms sales represented approximately **6%** of net sales in fiscal 2022, with the company subject to extensive regulation as a federally licensed dealer[63](index=63&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including economic dependence, intense competition, supply chain disruptions, cybersecurity threats, extensive firearms regulations, high indebtedness, and stock price volatility - **Business & Industry Risks:** Performance is highly dependent on the U.S. economy, consumer spending, and ability to react to changing consumer tastes, with intense competition and reliance on foreign-manufactured goods (especially from China) posing significant threats[67](index=67&type=chunk)[69](index=69&type=chunk)[78](index=78&type=chunk) - **Cybersecurity & Data Risks:** The company faces risks of data breaches and system failures, which could result in lost sales, fines, and reputational damage, making protection of customer, team member, and vendor data critical[76](index=76&type=chunk)[77](index=77&type=chunk) - **Legal & Regulatory Risks:** The company is subject to extensive regulations, particularly for firearms sales, which accounted for **6%** of net sales in 2022, and changes in these laws or increased enforcement could reduce sales and profitability[109](index=109&type=chunk) - **Indebtedness Risks:** The company's debt requires significant cash flow for service payments, limiting funds for other purposes, and covenants in debt agreements impose operational and financial restrictions[118](index=118&type=chunk)[124](index=124&type=chunk) - **Stock Ownership Risks:** The stock price may be volatile, anti-takeover provisions in organizational documents could deter potential acquisitions, and future dividend payments are not guaranteed[130](index=130&type=chunk)[132](index=132&type=chunk)[136](index=136&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties) The company is headquartered in Katy, Texas, and operates three leased distribution centers and 268 leased stores totaling approximately 18.8 million square feet, with typical initial lease terms of 15 to 20 years Corporate and Distribution Facilities | Location | Use | Approx. Square Footage (sq ft) | | :--- | :--- | :--- | | Katy, Texas | Corporate Office Building 1 | 400,000 | | Katy, Texas | Corporate Office Building 2 | 200,000 | | Katy, Texas | Bulk Warehouse | 200,000 | | Katy, Texas | Distribution Center | 1,400,000 | | Twiggs County, Georgia | Distribution Center | 1,600,000 | | Cookeville, Tennessee | Distribution Center | 1,600,000 | - All **268** retail stores are leased, with initial lease terms typically ranging from **15 to 20** years, totaling approximately **18.8 million** square feet of leased store space[143](index=143&type=chunk) [Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various lawsuits incidental to its business, primarily related to product, premises, and employment liability, with no expected material effect on its financial position - The company states that no current legal proceeding is expected to have a material impact on its financial position, operations, or liquidity[144](index=144&type=chunk) - Lawsuits filed against the company related to the 2017 Sutherland Springs, Texas shooting were dismissed with prejudice on April 13, 2022, following a favorable ruling from the Supreme Court of Texas[145](index=145&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (ASO) trades on the Nasdaq, with a $600 million share repurchase program authorized through June 2025, and consistent quarterly cash dividends paid since fiscal 2021 Share Repurchases (Q4 2022) | Period | Total Shares Purchased | Average Price per Share ($) | | :--- | :--- | :--- | | Nov 27 - Dec 31, 2022 | 1,125,350 | $52.38 | | Jan 1 - Jan 28, 2023 | 778,582 | $52.78 | | **Total Q4** | **1,903,932** | **$52.54** | - A **$600 million** share repurchase program was authorized on June 2, 2022, valid for three years, with approximately **$299.4 million** remaining available as of January 28, 2023[151](index=151&type=chunk) - On March 2, 2023, the Board declared a quarterly cash dividend of **$0.09** per share, payable on April 13, 2023[153](index=153&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2022, net sales decreased **5.6%** to **$6.40 billion** and net income fell **6.5%** to **$628.0 million**, driven by lower comparable sales and partially offset by e-commerce growth [Results of Operations](index=53&type=section&id=Results%20of%20Operations) For fiscal year 2022, net sales decreased **5.6%** to **$6.40 billion** due to a **6.4%** drop in comparable sales, leading to a **6.5%** decline in net income to **$628.0 million** Fiscal 2022 vs. 2021 Performance (in thousands) | Metric | FY 2022 | FY 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $6,395,073 | $6,773,128 | (5.6)% | | Gross Margin | $2,212,502 | $2,351,095 | (5.9)% | | Operating Income | $846,549 | $907,947 | (6.8)% | | Net Income | $628,001 | $671,381 | (6.5)% | - The **6.4%** decrease in comparable sales was driven by an **8.2%** decline in transactions, partially offset by a **2.0%** increase in average ticket, attributed to the absence of prior-year government stimulus payments[181](index=181&type=chunk) - E-commerce sales increased by **9.1%** in 2022, representing **10.7%** of merchandise sales compared to **9.3%** in 2021[182](index=182&type=chunk) - Gross margin as a percentage of net sales decreased by **10 basis points** to **34.6%**, primarily due to higher e-commerce shipping costs and unfavorable inventory valuation adjustments[182](index=182&type=chunk) [Non-GAAP Measures](index=54&type=section&id=Non-GAAP%20Measures) The company uses non-GAAP measures like Adjusted EBITDA and Adjusted EBIT to supplement GAAP results, with Adjusted EBITDA at **$994.7 million** and Pro Forma Adjusted Diluted EPS at **$7.70** for fiscal 2022 Adjusted EBITDA and Adjusted EBIT Reconciliation (in thousands) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net Income | $628,001 | $671,381 | $308,764 | | **Adjusted EBITDA** | **$994,661** | **$1,073,842** | **$607,023** | | **Adjusted EBIT** | **$887,899** | **$968,568** | **$501,542** | Pro Forma Adjusted Earnings per Share (Diluted) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Pro Forma Adjusted Diluted EPS | $7.70 | $7.60 | $3.83 | [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) As of January 28, 2023, the company maintained strong liquidity with **$337.1 million** in cash and **$947.8 million** available under its ABL Facility, while repurchasing **$489.5 million** in stock and planning **$200-$250 million** in capital expenditures for fiscal 2023 - As of January 28, 2023, the company had **$337.1 million** in cash and cash equivalents and **$947.8 million** of available capacity under its ABL Facility[198](index=198&type=chunk)[218](index=218&type=chunk) Cash Flow Summary (in thousands) | Activity | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $552,005 | $673,265 | $1,011,597 | | Net cash used in investing activities | ($108,806) | ($76,017) | ($33,144) | | Net cash used in financing activities | ($592,052) | ($488,854) | ($750,234) | | **Net (Decrease) Increase in Cash** | **($148,853)** | **$108,394** | **$228,219** | - In fiscal 2022, the company repurchased **11.9 million** shares for **$489.5 million** and paid **$24.6 million** in dividends[207](index=207&type=chunk)[212](index=212&type=chunk) - Capital expenditures were **$108.3 million** in fiscal 2022, with a forecast of between **$200 million** and **$250 million** for fiscal 2023, with **55%** allocated to new stores[213](index=213&type=chunk)[214](index=214&type=chunk) [Critical Accounting Policies and Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant judgments and estimates for merchandise inventories, impairment of long-lived assets, goodwill, and intangible assets, with no impairment recorded in recent fiscal years - **Merchandise Inventories:** Valued at the lower of LIFO cost or net realizable value, requiring estimates for inventory shrinkage, vendor allowances, and valuation adjustments for slow-moving or obsolete items[220](index=220&type=chunk)[221](index=221&type=chunk) - **Impairment of Long-Lived Assets:** Assets are reviewed for impairment when events indicate the carrying value may not be recoverable, comparing carrying value to estimated undiscounted future cash flows, with no impairment recorded in 2022, 2021, or 2020[223](index=223&type=chunk)[316](index=316&type=chunk) - **Goodwill and Intangible Assets:** Goodwill and the indefinite-lived trade name are tested for impairment annually, with a qualitative assessment performed in 2022 determining a quantitative test was not necessary and no impairment recorded[226](index=226&type=chunk)[230](index=230&type=chunk)[318](index=318&type=chunk)[321](index=321&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate debt, with a **100 basis point** increase raising annual interest expense by **$2.0 million**, and the business experiences significant seasonality in sales and profits - The company is exposed to interest rate risk from its variable-rate Term Loan and ABL Facility, where a hypothetical **100 basis point** increase in interest rates would increase annual interest expense by approximately **$2.0 million**[236](index=236&type=chunk) - The business experiences significant seasonality, with sales peaks in the second quarter (driven by summer holidays) and the fourth quarter (driven by the holiday selling season and cold weather products)[237](index=237&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for the fiscal year ended January 28, 2023, including Balance Sheets, Statements of Income, Statements of Stockholders' Equity, and Statements of Cash Flows, along with detailed notes [Consolidated Balance Sheets](index=76&type=section&id=Consolidated%20Balance%20Sheets) As of January 28, 2023, total assets were **$4.60 billion**, with merchandise inventories at **$1.28 billion** and goodwill at **$861.9 million**, while total liabilities decreased to **$2.97 billion** and stockholders' equity increased to **$1.63 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 28, 2023 | Jan 29, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | **$1,686,675** | **$1,715,747** | | Cash and cash equivalents | $337,145 | $485,998 | | Merchandise inventories, net | $1,283,517 | $1,171,808 | | **Total Assets** | **$4,595,439** | **$4,584,940** | | **Total Current Liabilities** | **$1,038,716** | **$1,127,110** | | Accounts payable | $686,472 | $737,826 | | Long-term debt, net | $584,456 | $683,585 | | **Total Liabilities** | **$2,967,133** | **$3,117,994** | | **Total Stockholders' Equity** | **$1,628,306** | **$1,466,946** | [Consolidated Statements of Income](index=77&type=section&id=Consolidated%20Statements%20of%20Income) For fiscal year 2022, the company reported net sales of **$6.40 billion**, a gross margin of **$2.21 billion**, operating income of **$846.5 million**, and net income of **$628.0 million**, resulting in diluted earnings per share of **$7.49** Consolidated Income Statement Summary (in thousands, except per share data) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net Sales | $6,395,073 | $6,773,128 | $5,689,233 | | Gross Margin | $2,212,502 | $2,351,095 | $1,734,045 | | Operating Income | $846,549 | $907,947 | $420,398 | | Net Income | $628,001 | $671,381 | $308,764 | | Diluted EPS | $7.49 | $7.12 | $3.79 | [Consolidated Statements of Cash Flows](index=81&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal 2022, net cash provided by operating activities was **$552.0 million**, while net cash used in investing activities was **$108.8 million** and net cash used in financing activities was **$592.1 million**, resulting in a net decrease in cash of **$148.9 million** Consolidated Cash Flow Summary (in thousands) | Activity | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $552,005 | $673,265 | $1,011,597 | | Net cash used in investing activities | ($108,806) | ($76,017) | ($33,144) | | Net cash used in financing activities | ($592,052) | ($488,854) | ($750,234) | | **Net (Decrease) Increase in Cash** | **($148,853)** | **$108,394** | **$228,219** | [Controls and Procedures](index=60&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of January 28, 2023, a conclusion affirmed by the independent auditor - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of January 28, 2023[241](index=241&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of January 28, 2023, based on the COSO framework[243](index=243&type=chunk) - The independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on the company's internal control over financial reporting as of January 28, 2023[247](index=247&type=chunk) Part III [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=62&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) This section details the company's equity compensation plans as of January 28, 2023, showing approximately **4.5 million** securities to be issued upon exercise and over **4.1 million** available for future issuance Equity Compensation Plan Information as of January 28, 2023 | Plan Category | Securities to be issued upon exercise (units) | Weighted-average exercise price ($) | Securities remaining for future issuance (units) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 4,525,208 | $23.83 | 4,148,311 | Part IV [Exhibits and Financial Statement Schedules](index=64&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K, including consolidated financial statements, the auditor's consent, and various corporate and debt agreements - This part includes the Consolidated Financial Statements, the report of the Independent Registered Public Accounting Firm, and a schedule of Valuation and Qualifying Accounts[260](index=260&type=chunk)[261](index=261&type=chunk) - A comprehensive list of exhibits is provided, including the company's certificate of incorporation, bylaws, debt indentures, credit agreements, equity incentive plans, and executive employment agreements[445](index=445&type=chunk)[447](index=447&type=chunk)[449](index=449&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Academy Sports and Outdoors, Inc., along with detailed notes on accounting and financial items [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of July 30, 2022, total assets were $4.65 billion, with merchandise inventories increasing and cash decreasing, while liabilities remained stable and equity grew Consolidated Balance Sheet Highlights (in thousands) | Account | July 30, 2022 | Jan 29, 2022 | July 31, 2021 | | :--- | :--- | :--- | :--- | | **Total Assets** | **$4,653,969** | **$4,584,940** | **$4,634,027** | | Cash and cash equivalents | $399,857 | $485,998 | $553,825 | | Merchandise inventories, net | $1,304,556 | $1,171,808 | $1,115,020 | | **Total Liabilities** | **$3,132,698** | **$3,117,994** | **$3,186,409** | | Accounts payable | $778,016 | $737,826 | $816,427 | | Long-term debt, net | $683,065 | $683,585 | $684,103 | | **Total Stockholders' Equity** | **$1,521,271** | **$1,466,946** | **$1,447,618** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2022, net sales decreased to $1.69 billion, net income remained flat at $188.8 million, while diluted EPS increased to $2.22 due to share reduction Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended July 30, 2022 | Thirteen Weeks Ended July 31, 2021 | Twenty-Six Weeks Ended July 30, 2022 | Twenty-Six Weeks Ended July 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,686,915 | $1,791,530 | $3,154,645 | $3,371,863 | | Gross Margin | $596,063 | $642,496 | $1,117,487 | $1,206,197 | | Operating Income | $256,734 | $254,558 | $462,227 | $493,632 | | Net Income | $188,801 | $190,510 | $338,607 | $368,306 | | Diluted EPS | $2.22 | $1.99 | $3.90 | $3.82 | | Diluted Shares | 84,906 | 95,891 | 86,792 | 96,391 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $258.4 million, while financing cash outflow increased to $296.4 million due to stock repurchases, resulting in a net cash decrease of $86.1 million Cash Flow Summary (in thousands) | Cash Flow Activity | Twenty-Six Weeks Ended July 30, 2022 | Twenty-Six Weeks Ended July 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $258,406 | $405,674 | | Net cash used in investing activities | ($48,134) | ($33,767) | | Net cash used in financing activities | ($296,413) | ($195,686) | | **Net (decrease) increase in cash** | **($86,141)** | **$176,221** | - The primary use of cash in financing activities was the repurchase of common stock for retirement, amounting to **$288.6 million** in the first half of 2022, compared to **$100.0 million** in the same period of 2021[16](index=16&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=9&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's operations, accounting policies, share repurchase programs, sales breakdown, debt structure, and subsequent events like dividends - As of July 30, 2022, the company operated **261** "Academy Sports + Outdoors" retail locations in 16 states and three distribution centers[20](index=20&type=chunk) - On June 2, 2022, the Board authorized a new share repurchase program for up to **$600 million**, with approximately **$500.2 million** remaining available as of July 30, 2022[29](index=29&type=chunk)[30](index=30&type=chunk) Net Sales by Merchandise Division (in thousands) | Merchandise Division | Thirteen Weeks Ended July 30, 2022 | Thirteen Weeks Ended July 31, 2021 | | :--- | :--- | :--- | | Outdoors | $492,804 | $539,497 | | Sports and recreation | $400,244 | $410,491 | | Apparel | $463,729 | $493,471 | | Footwear | $322,558 | $337,290 | | **Total Merchandise Sales** | **$1,679,335** | **$1,780,749** | - E-commerce sales grew to **10.0%** of merchandise sales for the thirteen weeks ended July 30, 2022, up from **8.4%** in the prior-year period[34](index=34&type=chunk) - On September 1, 2022, the Board of Directors declared a quarterly cash dividend of **$0.075 per share**, payable on October 13, 2022[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2022 financial performance, highlighting decreased sales against a strong prior year, gross margin pressures, SG&A management, non-GAAP measures, liquidity, and share repurchases [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2022 net sales decreased 5.8% to $1.69 billion, and H1 sales decreased 6.4% to $3.15 billion, primarily due to lower comparable sales against a strong prior year, though operating income slightly increased Q2 2022 vs Q2 2021 Performance (in thousands) | Metric | Thirteen Weeks Ended July 30, 2022 | Thirteen Weeks Ended July 31, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,686,915 | $1,791,530 | ($104,615) | (5.8)% | | Gross margin | $596,063 | $642,496 | ($46,433) | (7.2)% | | SG&A expenses | $339,329 | $387,938 | ($48,609) | (12.5)% | | Operating income | $256,734 | $254,558 | $2,176 | 0.9% | | Net income | $188,801 | $190,510 | ($1,709) | (0.9)% | - Q2 2022 comparable sales decreased by **6.0%**, driven by lower transaction volume across all merchandise divisions, partially offset by a higher average ticket, against a strong prior year impacted by COVID-19 demand and government stimulus[110](index=110&type=chunk)[111](index=111&type=chunk) - Q2 2022 gross margin rate decreased by **60 basis points** to **35.3%**, primarily due to unfavorable inventory overhead, higher e-commerce shipping costs, and increased import freight costs[112](index=112&type=chunk) - Q2 2022 SG&A expenses decreased by **$48.6 million**, improving by **160 basis points** to **20.1%** of sales, mainly due to lower equity compensation and incentive costs[113](index=113&type=chunk) [Non-GAAP Measures](index=30&type=section&id=Non-GAAP%20Measures) The company presents non-GAAP measures like Adjusted EBITDA ($292.5 million for Q2 2022) and Adjusted Net Income ($194.9 million), and Adjusted Free Cash Flow ($210.3 million for H1 2022) to show core operating performance Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Reconciliation Item | Thirteen Weeks Ended July 30, 2022 | Thirteen Weeks Ended July 31, 2021 | | :--- | :--- | :--- | | Net income | $188,801 | $190,510 | | Interest expense, net | $11,157 | $12,157 | | Income tax expense | $58,217 | $50,387 | | Depreciation and amortization | $26,274 | $26,010 | | Equity compensation | $6,158 | $27,331 | | Other adjustments | $1,864 | $18,021 | | **Adjusted EBITDA** | **$292,471** | **$324,416** | Reconciliation of Net Income to Adjusted Net Income (in thousands) | Reconciliation Item | Thirteen Weeks Ended July 30, 2022 | Thirteen Weeks Ended July 31, 2021 | | :--- | :--- | :--- | | Net income | $188,801 | $190,510 | | Adjustments (pre-tax) | $8,022 | $45,352 | | Tax effects of adjustments | ($1,887) | ($11,312) | | **Adjusted Net Income** | **$194,936** | **$224,550** | Adjusted Free Cash Flow (in thousands) | Metric | Twenty-Six Weeks Ended July 30, 2022 | Twenty-Six Weeks Ended July 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $258,406 | $405,674 | | Net cash used in investing activities | ($48,134) | ($33,767) | | **Adjusted Free Cash Flow** | **$210,272** | **$371,907** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of July 30, 2022, the company maintained strong liquidity with $399.9 million in cash and $980.3 million available under its ABL facility, while engaging in significant share repurchases and dividend payments - As of July 30, 2022, the company had **$399.9 million** in cash and cash equivalents and **$980.3 million** in available borrowing capacity under its ABL Facility[139](index=139&type=chunk)[144](index=144&type=chunk) - The company repurchased **7,823,241 shares** for a total of **$288.6 million** in the first half of 2022[153](index=153&type=chunk) - Total dividends paid in the first half of 2022 amounted to **$12.8 million**, at a rate of **$0.075 per share per quarter**[155](index=155&type=chunk) - Projected capital expenditures for fiscal year 2022 are approximately **$140.0 million**, allocated to corporate/IT programs (**45%**), new stores (**35%**), and existing store/DC updates (**20%**)[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its primary market risk exposures or their management since the last Annual Report on Form 10-K - There have been **no material changes** in the company's primary risk exposures or management of market risks since the last Annual Report[164](index=164&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** at a reasonable assurance level as of the end of the quarter[166](index=166&type=chunk) - **No material changes** occurred during the quarter that have affected, or are reasonably likely to affect, the company's internal control over financial reporting[167](index=167&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits incidental to its business, but management does not expect a material impact on its financial position or results - The company is a defendant in various lawsuits incidental to its business but does not expect any individual or group of cases to have a **material effect** on its operations or financial condition[168](index=168&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to previously disclosed risk factors in its Annual Report on Form 10-K, advising investors to consider existing risks potentially amplified by global conditions - There have been **no material changes** to the risk factors discussed in the company's Annual Report[170](index=170&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2022, the company repurchased 5.55 million shares for $200.1 million, with approximately $500.2 million remaining available under authorized repurchase programs Share Repurchases in Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | Total Amount Repurchased | | :--- | :--- | :--- | :--- | | May 1 - May 28, 2022 | — | $— | $— | | May 29 - July 2, 2022 | 4,502,121 | $36.20 | ~$162.9M | | July 3 - July 30, 2022 | 1,048,771 | $35.43 | ~$37.2M | | **Total Q2 2022** | **5,550,892** | **$36.05** | **~$200.1M** | - As of July 30, 2022, approximately **$500.2 million** remained available for share repurchases under the company's combined 2021 and 2022 Share Repurchase Programs[172](index=172&type=chunk) [Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[173](index=173&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not Applicable[173](index=173&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other material information was reported - None[173](index=173&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and compensatory agreements - Exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32.1, 32.2**) and various compensatory agreements[174](index=174&type=chunk)

Sales Performance - For the first quarter of 2022, comparable sales decreased by 7.5% compared to an increase of 38.9% in the first quarter of 2021, influenced by prior U.S. government stimulus packages [93]. - Net sales decreased by $112.6 million, or 7.1%, in the first quarter of 2022 compared to the same period in 2021, primarily due to a 7.5% decline in comparable sales [110]. - E-commerce net sales increased by $21.9 million, or 18.8%, in the first quarter of 2022, representing 9.5% of merchandise sales compared to 7.4% in the first quarter of 2021 [112]. Store Operations - As of April 30, 2022, the company operated 260 stores, an increase from 259 stores in the prior year quarter [86]. - The average store size is approximately 70,000 gross square feet, with locations primarily in the southern United States [86]. - The company plans to open at least eight new stores in 2022, with expectations for significant new store openings over the next five years [99]. Financial Performance - Adjusted EBITDA for the thirteen weeks ended April 30, 2022, was $236,229 thousand, compared to $270,993 thousand for the same period in 2021, reflecting a decrease of approximately 12.8% [122]. - Adjusted Net Income for the thirteen weeks ended April 30, 2022, was $153,227 thousand, down from $182,531 thousand in the prior year, representing a decline of about 16.1% [125]. - Adjusted Earnings per Share (EPS) for the thirteen weeks ended April 30, 2022, was $1.77 (basic) and $1.73 (diluted), compared to $1.98 (basic) and $1.89 (diluted) for the same period in 2021, indicating a decrease of 10.6% and 8.5% respectively [125]. Cost Management - Selling, general and administrative (SG&A) expenses decreased by $8.7 million, or 2.7%, to $315.9 million in the first quarter of 2022, but as a percentage of net sales, SG&A increased to 21.5% [114]. - SG&A expenses as a percentage of sales declined from 25.9% in 2019 to 21.3% in 2021, indicating improved cost management [102]. - The gross margin is influenced by factors such as promotional activities, product mix, and cost control measures [100]. Cash Flow and Debt - As of April 30, 2022, the company had cash and cash equivalents totaling $472.4 million, which is expected to be sufficient to meet cash requirements for at least the next 12 months [130]. - The company repaid $99.0 million of outstanding borrowings under the Term Loan, leaving an outstanding principal balance of $300.0 million under the Amended Credit Agreement [131]. - The total debt obligations for the company amount to $402,727 thousand for the fiscal year 2022, with a total of $544,000 thousand due by 2026 and beyond [133]. Share Repurchase and Dividends - As of April 30, 2022, the company has $100.2 million remaining available for share repurchases under the 2021 Share Repurchase Program, which allows for up to $500 million in total [138]. - In the fiscal year ended January 29, 2022, the company repurchased a total of 10,566,796 shares for $411.4 million, with an average price of $38.93 per share [140]. - The company declared a quarterly cash dividend of $0.075 per share, totaling $6.5 million paid in the first quarter of 2022 [143]. Investment and Capital Expenditures - The company expects capital expenditures for fiscal year 2022 to be approximately $140 million, with 50% allocated to corporate, e-commerce, and IT programs [144]. - Cash used in investing activities increased by $0.5 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to higher capital expenditures [148]. Omnichannel Strategy - The company aims to deepen customer relationships through enhanced omnichannel capabilities, integrating e-commerce with physical stores [86]. - The company continues to invest in enhancing its omnichannel capabilities, which have driven growth in net sales and gross margin [98]. Supply Chain and Inventory Management - The product assortment for the first quarter of 2022 included outdoor (31%), sports & recreation (24%), apparel (24%), and footwear (21%) categories [84]. - The company has implemented new tools for inventory management, improving handling and vendor relations to better meet customer demand [96]. - The impact of COVID-19 has led to supply chain disruptions, affecting transportation and inventory costs [101].

[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from expectations Part I [Item 1. Business](index=8&type=section&id=Item%201.%20Business) Academy Sports + Outdoors is a leading US sporting goods retailer with 259 stores, focusing on omnichannel growth and managing regulatory risks - Academy Sports + Outdoors is one of the leading full-line sporting goods and outdoor recreation retailers in the United States, operating **259 stores** across **16 contiguous states** as of January 29, 2022[18](index=18&type=chunk)[36](index=36&type=chunk) 2021 Net Sales by Product Category | Category | % of 2021 Net Sales | | :------------------ | :------------------ | | Outdoor | 32% | | Apparel | 27% | | Sports & Recreation | 22% | | Footwear | 19% | - Approximately **80% of 2021 merchandise sales** were national brand products, with **20 owned brands** accounting for approximately **20% of sales**[21](index=21&type=chunk)[28](index=28&type=chunk) - Key strategic priorities for 2022 include creating a consistent omnichannel business, providing a great customer experience, growing the store base, strengthening the supply chain, developing an industry-leading retail team, and maintaining/scaling IT capabilities[23](index=23&type=chunk) - Firearms, ammunition, and related accessories represented approximately **6% of net sales in 2021** and are subject to numerous federal, state, and local laws and regulations[65](index=65&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) Significant risks include economic dependence, supply chain disruptions, competition, regulatory compliance, and indebtedness - The company's results are highly dependent on the **U.S. economy and consumer discretionary spending**[70](index=70&type=chunk) - The **COVID-19 pandemic** has negatively impacted global supply chains, increased operating costs, and shifted consumer demand, creating ongoing uncertainty[74](index=74&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - A significant portion of merchandise is manufactured in foreign countries, primarily **China**, exposing the company to risks from tariffs, trade disputes, and supply chain disruptions[85](index=85&type=chunk)[86](index=86&type=chunk) - The company's indebtedness, approximately **$297.8 million** under the Term Loan and **$400.0 million** under the Notes as of January 29, 2022, requires substantial cash flows for debt service and imposes restrictive covenants[132](index=132&type=chunk)[137](index=137&type=chunk) - Ownership of common stock carries risks of dilution from future equity issuances, high stock price volatility, and uncertainty regarding future dividend payments[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk) [Item 1B. Unresolved Staff Comments](index=48&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - There are no unresolved staff comments[157](index=157&type=chunk) [Item 2. Properties](index=48&type=section&id=Item%202.%20Properties) Academy's headquarters and key facilities are in Texas, with all 259 retail stores leased under long-term agreements - Academy's headquarters are located at **1800 North Mason Road, Katy, Texas**[157](index=157&type=chunk) Key Properties and Facilities | Location | Use | Approximate Square Footage (sq ft) | | :------------------------- | :------------------------ | :--------------------------------- | | Katy, Texas | Corporate Office Building 1 | 400,000 | | Katy, Texas | Corporate Office Building 2 | 200,000 | | Katy, Texas | Bulk Warehouse | 200,000 | | Katy, Texas | Distribution Center | 1,400,000 | | Twiggs County, Georgia | Distribution Center | 1,600,000 | | Cookeville, Tennessee | Distribution Center | 1,600,000 | | Kowloon, Hong Kong | Global Sourcing Office | 5,000 | - All retail stores are leased under long-term agreements, typically **15 to 20 years**, with total leased store square footage of approximately **18.3 million square feet** as of January 29, 2022[158](index=158&type=chunk) [Item 3. Legal Proceedings](index=48&type=section&id=Item%203.%20Legal%20Proceedings) Academy faces various lawsuits, maintaining adequate reserves with no material financial impact expected, and some major claims recently dismissed - Academy is a defendant in lawsuits, claims, and demands arising in the ordinary course of business, primarily alleging product, premises, employment, and/or commercial liability[159](index=159&type=chunk) - The company believes, considering its indemnities, defenses, insurance, and reserves, that the ultimate resolution of these matters will not have a **material impact** on its financial position, results of operations, or cash flows[159](index=159&type=chunk) - Nine lawsuits related to a November 2017 shooting in Sutherland Springs, Texas, were **statutorily barred** by the Supreme Court of Texas in June 2021, with remaining similar claims expected to be dismissed[160](index=160&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[161](index=161&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Academy's common stock began trading on Nasdaq in October 2020, with **$65.6 million** in Q4 2021 share repurchases and an initial **$0.075** quarterly dividend - Academy's common stock began trading on the Nasdaq Stock Market LLC under the symbol **"ASO"** on **October 2, 2020**[163](index=163&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Number of Shares Purchased | Average Price per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares that May be Purchased Under the Plans Programs ($) | | :----------------------------------- | :------------------------------- | :-------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------ | | Oct 31, 2021 to Nov 27, 2021 | — | — | — | — | | Nov 28, 2021 to Jan 1, 2022 | 906,256 | $40.73 | 906,256 | $217,290,407 | | Jan 2, 2022 to Jan 29, 2022 | 707,674 | $40.49 | 707,674 | $188,648,157 | | **Total** | **1,613,930** | **$40.63** | **1,613,930** | **$188,648,157** | - On September 2, 2021, the Board authorized a share repurchase program of up to **$500 million** over three years, with **$188.6 million** remaining available as of January 29, 2022[167](index=167&type=chunk)[229](index=229&type=chunk) - On March 3, 2022, the Board declared a quarterly cash dividend of **$0.075 per share** for the quarter ended January 29, 2022, payable on April 14, 2022[170](index=170&type=chunk) [Item 6. Reserved](index=51&type=section&id=Item%206.%20Reserved) This item is reserved - Item 6 is reserved[171](index=171&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Academy reported **19.1% net sales growth** to **$6.77 billion** in 2021, with **18.9% comparable sales growth**, improved gross margin, and net income more than doubling Key Financial Highlights | Metric | 2021 (in thousands) | 2020 (in thousands) | Change (Dollars in thousands) | Change (Percent) | | :--------------------------------------- | :------------------ | :------------------ | :---------------------------- | :--------------- | | Net sales | $6,773,128 | $5,689,233 | $1,083,895 | 19.1% | | Gross margin | $2,351,095 | $1,734,045 | $617,050 | 35.6% | | Operating income | $907,947 | $420,398 | $487,549 | 116.0% | | Net income | $671,381 | $308,764 | $362,617 | 117.4% | - Comparable sales increased by **18.9% in 2021**, driven by strong performance across all merchandise divisions, particularly apparel and footwear[204](index=204&type=chunk) - Gross margin as a percentage of net sales increased by **420 basis points to 34.7% in 2021**, primarily due to higher merchandise margins and lower inventory overhead, partially offset by increased import freight costs[205](index=205&type=chunk) - SG&A expenses as a percentage of net sales decreased by **180 basis points to 21.3% in 2021**, mainly due to leveraging property and facility fees and employee costs on increased sales[206](index=206&type=chunk) - Interest expense decreased by **$37.5 million (43.4%) in 2021** due to a lower outstanding balance on long-term debt from refinancing and principal repurchases[208](index=208&type=chunk) - As of January 29, 2022, the company had **$486.0 million in cash and cash equivalents** and an available borrowing capacity of approximately **$874.8 million** under its ABL Facility[221](index=221&type=chunk)[242](index=242&type=chunk) - Capital expenditures for fiscal year 2022 are expected to be approximately **$140.0 million**, with **50% allocated** to corporate, e-commerce, and information technology programs[237](index=237&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate exposure from variable-rate debt, with a **100 basis point increase** raising 2021 interest expense by **$3.0 million**, plus seasonal fluctuations - The company's primary exposure to changes in interest rates results from its variable-rate ABL Facility and Term Loan[260](index=260&type=chunk) - A hypothetical **100 basis point increase** in interest rates on current borrowings would increase interest expense by approximately **$3.0 million** for 2021[260](index=260&type=chunk) - The company historically used derivative financial instruments (interest rate swaps) to mitigate interest rate risk but had **no outstanding derivative financial instruments** as of January 29, 2022[260](index=260&type=chunk)[351](index=351&type=chunk) - The business is subject to seasonal fluctuations, with a significant portion of net sales and profits driven by summer holidays (Q2) and the November/December holiday selling season (Q4)[261](index=261&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=74&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Academy's audited consolidated financial statements for fiscal years 2020-2022, including balance sheets, income, equity, and cash flows, with detailed notes - The financial statements required to be filed are set forth on pages **68 through 105** of this Annual Report on Form 10-K[261](index=261&type=chunk) [Index to Consolidated Financial Statements](index=80&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This index lists the consolidated financial statements and accompanying notes, including balance sheets, income statements, and cash flows - The index provides a roadmap to the audited consolidated financial statements and accompanying notes within the report[286](index=286&type=chunk) [Report of Independent Registered Public Accounting Firm](index=81&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) Deloitte & Touche LLP issued unqualified opinions on Academy's 2022 financial statements and internal controls, identifying merchandise inventories as a critical audit matter - Deloitte & Touche LLP issued an **unqualified opinion** on the consolidated financial statements for the year ended January 29, 2022, affirming fair presentation in all material respects[289](index=289&type=chunk) - An **unqualified opinion** was also issued on the effectiveness of the company's internal control over financial reporting as of January 29, 2022[290](index=290&type=chunk) - Merchandise inventories were identified as a **critical audit matter** due to high transaction volume and reliance on highly automated systems, necessitating extensive IT expertise in audit procedures[294](index=294&type=chunk) [Consolidated Balance Sheets](index=83&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Academy's 2022 balance sheets show total assets at **$4.58 billion**, liabilities at **$3.12 billion**, and stockholders' equity at **$1.47 billion** Consolidated Balance Sheet Highlights | Metric | January 29, 2022 (in thousands) | January 30, 2021 (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------ | | Cash and cash equivalents | $485,998 | $377,604 | | Merchandise inventories, net | $1,171,808 | $990,034 | | Total current assets | $1,715,747 | $1,415,020 | | Total assets | $4,584,940 | $4,384,482 | | Total current liabilities | $1,127,110 | $1,167,093 | | Long-term debt, net | $683,585 | $781,489 | | Total liabilities | $3,117,994 | $3,272,499 | | Total stockholders' / partners' equity | $1,466,946 | $1,111,983 | [Consolidated Statements of Income](index=84&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Academy's 2022 income statements show **19.1% net sales growth** to **$6.77 billion**, gross margin up **35.6%**, operating income more than doubled, and net income surged **117.4%** Consolidated Statements of Income Highlights | Metric | Fiscal Year Ended Jan 29, 2022 (in thousands) | Fiscal Year Ended Jan 30, 2021 (in thousands) | Fiscal Year Ended Feb 1, 2020 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | | NET SALES | $6,773,128 | $5,689,233 | $4,829,897 | | GROSS MARGIN | $2,351,095 | $1,734,045 | $1,431,154 | | OPERATING INCOME | $907,947 | $420,398 | $179,421 | | NET INCOME | $671,381 | $308,764 | $120,043 | | EARNINGS PER COMMON SHARE: BASIC | $7.38 | $3.96 | $1.66 | | EARNINGS PER COMMON SHARE: DILUTED | $7.12 | $3.79 | $1.60 | [Consolidated Statements of Comprehensive Income](index=85&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Academy's 2022 total comprehensive income was **$674.7 million**, significantly higher than **$313.5 million** in 2021, driven by net income growth Consolidated Statements of Comprehensive Income Highlights | Metric | Fiscal Year Ended Jan 29, 2022 (in thousands) | Fiscal Year Ended Jan 30, 2021 (in thousands) | Fiscal Year Ended Feb 1, 2020 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | | Net income | $671,381 | $308,764 | $120,043 | | Unrealized loss on interest rate swaps | — | $(6,653) | $(16,096) | | Recognized interest (income) expense on interest rate swaps | $2,344 | $11,045 | $(418) | | Loss on swaps from debt refinancing | — | $1,330 | — | | Tax benefit (expense) | $980 | $(980) | — | | **Total comprehensive income** | **$674,705** | **$313,506** | **$103,529** | [Consolidated Statements of Stockholders' / Partners' Equity](index=86&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20%2F%20PARTNERS%27%20EQUITY) Total equity increased from **$1.11 billion** in 2021 to **$1.47 billion** in 2022, driven by net income, offset by **$411.4 million** in share repurchases - Total stockholders' / partners' equity increased from **$1,111,983 thousand** as of January 30, 2021, to **$1,466,946 thousand** as of January 29, 2022[307](index=307&type=chunk)[308](index=308&type=chunk) - Key drivers of equity changes in 2021 included net income of **$671,381 thousand** and equity compensation of **$39,264 thousand**, partially offset by **$411,409 thousand** in common stock repurchases for retirement[307](index=307&type=chunk)[308](index=308&type=chunk) [Consolidated Statements of Cash Flows](index=88&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operations decreased to **$673.3 million** in 2022, investing activities used **$76.0 million**, and financing activities used **$488.9 million**, increasing cash by **$108.4 million** Consolidated Statements of Cash Flows Highlights | Activity | Fiscal Year Ended Jan 29, 2022 (in thousands) | Fiscal Year Ended Jan 30, 2021 (in thousands) | Fiscal Year Ended Feb 1, 2020 (in thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $673,265 | $1,011,597 | $263,669 | | Net cash used in investing activities | $(76,017) | $(33,144) | $(66,783) | | Net cash used in financing activities | $(488,854) | $(750,234) | $(123,192) | | Net increase in cash and cash equivalents | $108,394 | $228,219 | $73,694 | | Cash and cash equivalents at end of period | $485,998 | $377,604 | $149,385 | - Cash paid for interest was **$44.7 million** in 2022, down from **$87.2 million** in 2021. Cash paid for income taxes was **$125.0 million** in 2022, up from **$15.5 million** in 2021[310](index=310&type=chunk) [Notes to the Consolidated Financial Statements](index=89&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail Academy's operations, accounting policies, IPO, debt, and the absence of derivative instruments, with breakdowns of sales, e-commerce, and commitments - Academy Sports and Outdoors, Inc. became the parent holding company on **October 1, 2020**, following an IPO and reorganization transactions[312](index=312&type=chunk)[316](index=316&type=chunk) - The company completed several secondary offerings in 2021, including repurchases and simultaneous retirement of **3,229,974 shares** for **$100.0 million** in May 2021 and **4,500,000 shares** for approximately **$195.8 million** in September 2021[320](index=320&type=chunk)[323](index=323&type=chunk)[457](index=457&type=chunk) - Long-term debt as of January 29, 2022, included a Term Loan of **$297.8 million** and Notes of **$400.0 million**. The Term Loan was refinanced in May 2021, reducing the interest margin and outstanding balance[379](index=379&type=chunk)[386](index=386&type=chunk) - The company had **no derivative financial instruments** (interest rate swaps) outstanding as of January 29, 2022, having settled its remaining swaps in January 2021[351](index=351&type=chunk) Merchandise Sales by Division | Merchandise Division | Fiscal Year Ended Jan 29, 2022 (in thousands) | | :------------------- | :-------------------------------------------- | | Outdoors | $2,174,650 | | Sports and recreation | $1,463,172 | | Apparel | $1,810,345 | | Footwear | $1,290,197 | | **Total merchandise sales** | **$6,738,364** | - E-commerce sales constituted **9.3% of merchandise sales in 2021**, **10.4% in 2020**, and **5.1% in 2019**[376](index=376&type=chunk) - Equity compensation expense was **$39.3 million** in 2021, including approximately **$24.9 million** in non-cash expenses related to the 2021 Vesting Event[414](index=414&type=chunk) - As of January 29, 2022, the company had **$22.6 million** in technology-related, construction, and other contractual commitments, and **$20.7 million** in sponsorship and intellectual property commitments through 2027[463](index=463&type=chunk)[466](index=466&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=74&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes or disagreements with accountants on accounting and financial disclosure have occurred - There have been no changes in and disagreements with accountants on accounting and financial disclosure[261](index=261&type=chunk) [Item 9A. Controls and Procedures](index=74&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal controls were effective as of January 29, 2022, with an unqualified attestation report and no material changes - Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of January 29, 2022[263](index=263&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of January 29, 2022, based on the COSO framework (2013)[266](index=266&type=chunk) - Deloitte & Touche LLP issued an **unqualified attestation report** on the effectiveness of the company's internal control over financial reporting[270](index=270&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[267](index=267&type=chunk) [Item 9B. Other Information](index=77&type=section&id=Item%209B.%20Other%20Information) No other information to report - No other information to report[275](index=275&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=77&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) No disclosure regarding foreign jurisdictions that prevent inspections - No disclosure regarding foreign jurisdictions that prevent inspections[275](index=275&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=77&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Executive officer information is in Part I, Item 1; further details on directors and governance will be in the 2022 proxy statement - Information concerning executive officers is set forth under the heading "Information about our Executive Officers" in Part I of this report[276](index=276&type=chunk) - Further information required by this item will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders[276](index=276&type=chunk) [Item 11. Executive Compensation](index=77&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders - The information required by this item will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders[277](index=277&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=77&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) As of January 29, 2022, **4,837,920 securities** were issuable under equity plans at a **$18.88** weighted average exercise price, with more shares available under other plans Equity Compensation Plan Information | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights ($) | | :------------------------------------- | :---------------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | | Service-Based Stock Options | 3,898,214 | $19.12 | | Performance-Based Stock Options | 396,909 | $16.48 | | Service-Based Restricted Stock Units | 338,879 | N/A | | Performance-Based Restricted Stock Units | 203,918 | N/A | | 2020 Employee Stock Purchase Plan | — | N/A | | **Total** | **4,837,920** | **$18.88** | - The **2020 Omnibus Incentive Plan** has **3,523,690 shares** available for future issuance, and the **2020 Employee Stock Purchase Plan** has **1,885,546 shares** available[279](index=279&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=78&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders - The information required by this item will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders[280](index=280&type=chunk) [Item 14. Principal Accountant Fees and Services](index=78&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders - The information required by this item will be included in the definitive proxy statement for the 2022 Annual Meeting of Stockholders[281](index=281&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=79&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements, schedules, and exhibits filed as part of this Annual Report on Form 10-K - The section lists the consolidated Financial Statements, Financial Statement Schedule, and Exhibits filed as part of this Annual Report on Form 10-K[283](index=283&type=chunk)[284](index=284&type=chunk) [Item 16. Form 10-K Summary](index=119&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K Summary - There is no Form 10-K Summary[471](index=471&type=chunk)

Financial Performance - In 2020, Academy Sports + Outdoors served 30 million unique customers and completed approximately 80 million transactions, resulting in net sales of $5.7 billion[17]. - The company finished the fiscal year ended January 30, 2021, with approximately $5.7 billion in sales and $308.8 million in net income[26]. - In 2020, the company generated $5.7 billion in net sales, $308.8 million in net income, and $607.0 million in Adjusted EBITDA, reflecting an 88% growth compared to 2019[55]. - Total merchandise sales for the fiscal year ended January 30, 2021, reached $5.66 billion, a 17.7% increase from $4.81 billion in the previous year[79]. - The company reduced its net leverage ratio to 0.7x by the end of 2020, down from 4.1x and 5.2x at the end of 2019 and 2018, respectively[55]. Store Operations and Expansion - The company operates 259 stores across 16 contiguous states, with plans to open 8 to 10 new stores per year starting in 2022[19]. - The average store size is approximately 70,000 gross square feet, with a new smaller store format being tested that is about 40% smaller[72]. - The company has identified approximately 675 greenfield locations for potential expansion beyond its current footprint[71]. - Academy's retail locations range from 40,000 to 130,000 gross square feet, providing a spacious shopping experience[19]. Customer Engagement and Loyalty - Approximately 56% of customers purchased an owned brand item in 2020, indicating strong brand loyalty[22]. - The average customer visits the stores 2 to 3 times per year, with the best customers visiting 9 times per year, demonstrating strong customer loyalty[50]. - The Academy Credit Card program constituted approximately 4.5% of 2020 net sales, indicating a significant opportunity for customer loyalty[30]. - BOPIS (Buy Online, Pick Up In Store) orders accounted for 51% of all e-commerce sales during 2020, highlighting the importance of omnichannel offerings[57]. E-commerce and Omnichannel Strategy - The e-commerce platform achieved year-over-year sales growth of 138% in 2020, with e-commerce sales representing 10% of merchandise sales[24]. - E-commerce sales represented 10.4% of merchandise sales in 2020, with a significant increase of 406% in Q1 2020 compared to the same quarter in the previous year[56]. - E-commerce sales accounted for 10.4% of merchandise sales in 2020, up from 5.1% in 2019 and 4.9% in 2018, indicating a significant growth in online shopping[79]. - The omnichannel strategy includes a strong buy-online-pickup-in-store program, enhancing customer convenience and driving sales[17]. Merchandise and Inventory Management - The product assortment includes outdoor (35%), apparel (25%), sports & recreation (22%), and footwear (18%) categories, with nearly 20% of sales from owned brands[18][22]. - Inventory turns improved from 2.84x in 2019 to 3.89x in 2020 due to a new merchandise planning and allocation system[30]. - Average inventory turns improved from 2.84x in 2019 to 3.89x in 2020 due to enhanced inventory management practices[64]. - The company has a diverse merchandise offering, with no single vendor representing more than 12% of total purchases in 2020, ensuring a stable supply chain[76]. Market Trends and Industry Insights - The outdoor recreation industry is expected to see a long-term increase in customer base, with 49% of Americans planning to engage in more outdoor activities[32]. - The sporting goods and outdoor recreation industry was estimated at $70 billion in 2018, with expected sales growth of approximately 6% per annum from 2019 through 2027[41]. - Female customers constituted 48% of the customer base in 2020, highlighting the importance of targeted merchandise for this demographic[38]. Workforce and Corporate Culture - The company employs over 22,000 team members, with a balanced distribution of full-time and part-time employees[92]. - The company established a Diversity, Inclusion and Belonging Committee in 2020 to enhance team diversity and community representation[94]. - The company focuses on talent management through personal growth opportunities, cross-functional training, and annual performance reviews[95]. - The company engages in annual succession planning to identify internal candidates for key positions[95]. Safety and Regulatory Compliance - The company has implemented enhanced safety measures during the COVID-19 pandemic, including regular professional cleaning and social distancing protocols[97]. - The company has a commitment to a Safety-First culture, focusing on reducing the frequency and severity of safety incidents[96]. - The company is subject to various federal, state, and local regulations that could materially affect operations and financial results[99]. Seasonal Trends - The business is subject to seasonal fluctuations, with significant sales driven by summer holidays and the November/December holiday season[289]. - The business experiences seasonal fluctuations, with significant net sales driven by summer holidays and the November/December holiday season[91]. Financial Sensitivity - A hypothetical 100 basis point increase in interest rates would reduce income before income taxes by approximately $4.0 million for 2020[288]. Marketing Strategy - The company’s marketing strategy includes various media channels and community engagement events to drive customer traffic and enhance brand visibility[85][86]. COVID-19 Impact - Academy's stores have remained open during the COVID-19 pandemic, resulting in market share gains and increased community connections[19].