Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH) Q4 2020 Results Earnings Conference Call March 29, 2022 4:30 PM ET Company Participants Riley Timmer - Vice President of Investor Relations and Corporate Development Jon Barker - Chief Executive Officer Jeff White - Chief Financial Officer Conference Call Participants Mark Smith - Lake Street Capital Markets Ryan Sigdahl - Craig-Hallum Capital Group Operator Greetings and welcome to Sportsman's Warehouse Fourth Quarter and Full-Year 2021 Earnings Call. At t ...

| --- | --- | --- | --- | |----------------|--------------------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | FOURTH QUARTER AND | | | | FULL YEAR 2021 | EARNINGS CONFERENCE CALL | | | | | | | | | | | | | | | | | | | March 29, 2022 | | | | FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation 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 21 ...

Financial Performance & Key Metrics - Sportsman's Warehouse's net sales for the December 2021 TTM period were $1528 million[11] - The gross profit for the same period was $494 million[11] - Adjusted EBITDA for the December 2021 TTM period was $138 million, representing a 9.1% margin[11] - The company's targeted marketing budget is approximately 1% of sales[20] - Over 10% of fiscal year 2021 sales were driven by e-commerce[21] Growth & Expansion - The company opened 10 new stores in 2021 and plans to open 7-10 new stores in 2022[36] - The company aims for >10% four-wall EBITDA margin upon maturity and >20% ROIC upon maturity for new stores[38] - The company has a long-term growth strategy targeting 300+ stores[60] Market & Industry - The estimated industry size is over $70 billion[13] - The company notes that 53% of Americans participate in outdoor activities[13] - Hunting and Shooting Sports see repeat customers, with 22.1% purchasing a second firearm within 18 months of their initial purchase[13] - 44.5% of first-time gun buyers in 2021 were under the age of 40[13] Balance Sheet - Total liquidity increased significantly, up $125 million since 2019[47] - The company has reduced debt, paying off $79 million compared to 2019[47]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements, management's analysis, and market risk disclosures [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's assets, liabilities, and stockholders' equity at the end of the reporting period **Condensed Consolidated Balance Sheets (Amounts in Thousands):** | Metric | October 30, 2021 | January 30, 2021 | | :--- | :--- | :--- | | Cash | $2,532 | $65,525 | | Merchandise inventories | $428,497 | $243,434 | | Total current assets | $447,419 | $324,653 | | Total assets | $814,714 | $660,818 | | Revolving line of credit | $57,551 | $0 | | Total current liabilities | $328,640 | $227,428 | | Total liabilities | $560,138 | $456,158 | | Total stockholders' equity | $254,576 | $204,660 | - A significant increase in merchandise inventories from **$243,434 thousand to $428,497 thousand** indicates a strategic buildup[14](index=14&type=chunk) - Introduction of a **$57,551 thousand revolving line of credit** as of October 30, 2021, compared to zero at January 30, 2021[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Outlines revenues, costs, and profits over the thirteen and thirty-nine week periods **Condensed Consolidated Statements of Operations (Amounts in Thousands, Except Per Share Data):** **Thirteen Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $401,014 | $385,748 | +4.0% | | Gross profit | $129,622 | $130,582 | -0.7% | | Income from operations | $29,648 | $38,330 | -22.6% | | Net income | $21,863 | $30,482 | -28.3% | | Diluted EPS | $0.49 | $0.68 | -27.9% | **Thirty-Nine Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $1,089,784 | $1,013,572 | +7.5% | | Gross profit | $353,723 | $334,450 | +5.8% | | Income from operations | $67,460 | $83,373 | -19.1% | | Net income | $50,036 | $61,813 | -19.0% | | Diluted EPS | $1.13 | $1.40 | -19.3% | - For the thirteen weeks, net sales increased by **4.0%**, but net income and diluted EPS decreased by **28.3%** and **27.9%** respectively, indicating margin pressure[17](index=17&type=chunk) - For the thirty-nine weeks, net sales increased by **7.5%**, but net income and diluted EPS decreased by **19.0%** and **19.3%** respectively[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Summarizes the changes in stockholders' equity over the reporting period **Condensed Consolidated Statements of Stockholders' Equity (Amounts in Thousands):** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Total stockholders' equity | $254,576 | $174,101 | | Accumulated earnings | $164,445 | $84,842 | | Additional paid-in capital | $89,693 | $88,823 | - Total stockholders' equity increased by **$80,475 thousand** from October 31, 2020, to October 30, 2021, primarily driven by accumulated earnings[20](index=20&type=chunk)[22](index=22&type=chunk) - Net income contributed **$21,863 thousand** for the 13 weeks and **$50,036 thousand** for the 39 weeks ended October 30, 2021, to accumulated earnings[20](index=20&type=chunk)[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports the cash inflows and outflows from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (Amounts in Thousands, Thirty-Nine Weeks Ended):** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(78,343) | $171,736 | | Net cash used in investing activities | $(38,463) | $(20,172) | | Net cash provided by (used in) financing activities | $53,813 | $(133,935) | | Cash at end of period | $2,532 | $19,314 | - A significant shift in operating cash flow from **$171,736 thousand provided in 2020 to $(78,343) thousand used in 2021**, primarily due to a substantial increase in merchandise inventories[25](index=25&type=chunk)[152](index=152&type=chunk) - Financing activities provided **$53,813 thousand in 2021**, a reversal from **$(133,935) thousand used in 2020**, driven by net borrowings on the revolving line of credit[25](index=25&type=chunk)[154](index=154&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides supplementary details on accounting policies and specific financial statement items - The Company operates **119 stores in 29 states** and an e-commerce platform, aggregated into one operating segment[27](index=27&type=chunk) - The merger agreement with Great Outdoors Group, LLC was terminated on December 2, 2021, resulting in a **$55.0 million termination fee** paid to Sportsman's Warehouse[83](index=83&type=chunk)[95](index=95&type=chunk) **Disaggregation of Revenue by Department (Percentage of Net Sales):** **Thirteen Weeks Ended:** | Department | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Camping | 12.6% | 12.9% | | Apparel | 9.1% | 8.6% | | Fishing | 7.7% | 7.8% | | Footwear | 6.4% | 5.6% | | Hunting and Shooting | 55.4% | 57.4% | | Optics, Electronics, Accessories, and Other | 8.8% | 7.7% | **Thirty-Nine Weeks Ended:** | Department | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Camping | 13.9% | 13.8% | | Apparel | 7.4% | 6.5% | | Fishing | 11.3% | 11.5% | | Footwear | 6.3% | 5.3% | | Hunting and Shooting | 53.7% | 56.3% | | Optics, Electronics, Accessories, and Other | 7.4% | 6.6% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial results, liquidity, and critical accounting policies [Overview](index=21&type=section&id=Overview) Summarizes the company's business, the terminated merger, and the impact of the COVID-19 pandemic - The Company operates **119 stores in 29 states** and an e-commerce platform, focusing on outdoor sporting goods[102](index=102&type=chunk) - The proposed merger with Great Outdoors Group was terminated on December 2, 2021, resulting in a **$55.0 million termination fee** received by the Company[105](index=105&type=chunk) - Experienced significant sales increases since March 2020 due to the COVID-19 pandemic, but **demand has begun to stabilize**[107](index=107&type=chunk) [How We Assess the Performance of Our Business](index=22&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) Details the key metrics and strategies used to evaluate business performance and drive growth - Key performance measures include net sales, same store sales, gross margin, SG&A expenses, income from operations, and **Adjusted EBITDA**[111](index=111&type=chunk) - Growth strategy targets annual square footage growth of **greater than 8%-10%** through new store openings or acquisitions[113](index=113&type=chunk) - Key drivers for increasing total net sales include expanding gross square footage, increasing same store sales, and enhancing **omni-channel capabilities**[115](index=115&type=chunk)[116](index=116&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Analyzes the company's operational results, comparing current and prior-year periods **Key Components as a Percentage of Net Sales:** **Thirteen Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Net sales | 100.0% | 100.0% | | Cost of goods sold | 67.7% | 66.1% | | Gross profit | 32.3% | 33.9% | | Selling, general, and administrative expenses | 24.9% | 23.9% | | Income from operations | 7.4% | 10.0% | | Net income | 5.5% | 8.0% | | Adjusted EBITDA | 9.8% | 12.9% | **Thirty-Nine Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Net sales | 100.0% | 100.0% | | Cost of goods sold | 67.5% | 67.0% | | Gross profit | 32.5% | 33.0% | | Selling, general, and administrative expenses | 26.3% | 24.8% | | Income from operations | 6.2% | 8.2% | | Net income | 4.6% | 6.1% | | Adjusted EBITDA | 9.0% | 11.0% | - Net sales increased by **4.0% for the 13 weeks** and **7.5% for the 39 weeks** ended October 30, 2021, primarily driven by seven new store openings[127](index=127&type=chunk)[135](index=135&type=chunk) - Same store sales **decreased by 1.5% for the 13 weeks** but **increased by 1.5% for the 39 weeks**, with strong growth in footwear and apparel[127](index=127&type=chunk)[130](index=130&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) - **Gross profit margin decreased** for both periods (1.6 percentage points for 13 weeks, 0.5 percentage points for 39 weeks) due to higher freight costs[131](index=131&type=chunk)[139](index=139&type=chunk) [Seasonality](index=27&type=section&id=Seasonality) Discusses the seasonal patterns affecting the company's sales and profitability - Net sales are typically higher in the **third and fourth fiscal quarters** due to hunting season and holiday buying patterns[145](index=145&type=chunk) - The company does not expect higher sales volume in Q4 FY2021 compared to Q4 FY2020 due to the **significant sales spike in the prior year**[145](index=145&type=chunk) - New retail store openings incur **non-recurring expenses** and typically result in lower initial operating profit[146](index=146&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Details the company's sources of liquidity, capital requirements, and cash flow activities - Primary capital requirements are for **seasonal working capital** and capital expenditures for new store openings and acquisitions[148](index=148&type=chunk) - Received a **$55.0 million cash payment** from Great Outdoors Group on December 2, 2021, following the termination of the merger agreement[149](index=149&type=chunk) - Net cash used in operating activities was **$(78.3) million** for the 39 weeks ended October 30, 2021, a significant decrease from **$171.7 million provided** in the prior year, primarily due to inventory buildup[151](index=151&type=chunk)[152](index=152&type=chunk) - Net cash provided by financing activities was **$53.8 million** for the 39 weeks ended October 30, 2021, compared to net cash used of **$(133.9) million** in the prior year[151](index=151&type=chunk)[154](index=154&type=chunk) - As of October 30, 2021, **$73.8 million was outstanding** under the $250.0 million revolving credit facility, with **$149.3 million available** for borrowing[155](index=155&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Outlines the key accounting policies that require significant management judgment and estimates - Financial statements are prepared in accordance with GAAP, requiring assumptions, estimates, and judgments[163](index=163&type=chunk) - **No significant changes** to critical accounting policies from the Fiscal 2020 Form 10-K[164](index=164&type=chunk) [Off Balance Sheet Arrangements](index=29&type=section&id=Off%20Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet arrangements - The company is **not party to any off-balance sheet arrangements**[166](index=166&type=chunk) [Contractual Obligations](index=29&type=section&id=Contractual%20Obligations) Presents a summary of the company's contractual payment obligations as of the reporting date **Contractual Obligations as of October 30, 2021 (Amounts in Thousands):** | Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $389,334 | $15,408 | $119,289 | $90,410 | $164,227 | | Standby letters of credit | $1,955 | $1,955 | - | - | - | | Revolving line of credit | $73,763 | $73,763 | - | - | - | - Operating lease obligations do not include additional payments for common area maintenance, real estate, taxes, and insurance[169](index=169&type=chunk) - Purchase/construction obligations with vendors are not included as they do not contain termination payments or other penalties if cancelled[172](index=172&type=chunk) [Non-GAAP Measures](index=29&type=section&id=Non-GAAP%20Measures) Defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA, to their GAAP counterparts - **Adjusted EBITDA** is defined as net income plus interest expense, income tax expense, depreciation and amortization, and other specified adjustments[171](index=171&type=chunk) **Reconciliation of Net Income to Adjusted EBITDA (Amounts in Thousands):** **Thirteen Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Net income (loss) | $21,863 | $30,482 | | Interest expense | $413 | $465 | | Income tax expense (benefit) | $7,372 | $9,530 | | Depreciation and amortization | $6,665 | $5,404 | | Stock-based compensation expense | $194 | $882 | | Pre-opening expenses | $1,712 | $958 | | Hazard pay | — | $2,000 | | Acquisition costs | $1,113 | $297 | | Bargain purchase | — | $(2,218) | | Legal accrual | — | $2,125 | | Store closure | — | — | | **Adjusted EBITDA** | **$39,332** | **$49,925** | | Net sales | $401,014 | $380,989 | | Adjusted EBITDA margin | 9.8% | 12.9% | **Thirty-Nine Weeks Ended:** | Metric | October 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | Net income (loss) | $50,036 | $61,813 | | Interest expense | $905 | $3,016 | | Income tax expense (benefit) | $16,519 | $20,691 | | Depreciation and amortization | $18,801 | $16,085 | | Stock-based compensation expense | $2,237 | $2,436 | | Pre-opening expenses | $3,090 | $1,778 | | Hazard pay | — | $4,600 | | Acquisition costs | $6,419 | $332 | | Bargain purchase | — | $(2,218) | | Legal accrual | — | $2,125 | | Store closure | — | $1,039 | | **Adjusted EBITDA** | **$98,007** | **$111,697** | | Net sales | $1,089,784 | $1,013,572 | | Adjusted EBITDA margin | 9.0% | 11.0% | - **Adjusted EBITDA margin decreased** from 12.9% to 9.8% for the 13 weeks and from 11.0% to 9.0% for the 39 weeks ended October 30, 2021, compared to the prior year[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discloses the company's exposure to market risks, primarily interest rate fluctuations - Principal market risk exposure relates to changes in interest rates on its **revolving credit facility and term loan**, which carry floating interest rates[182](index=182&type=chunk) - A **100 basis point increase** in interest rates would not have significantly increased interest expense based on a sensitivity analysis as of October 30, 2021[182](index=182&type=chunk) - The company does **not use derivative financial instruments** for speculative or trading purposes[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures as of the reporting date - Disclosure controls and procedures were evaluated as **effective** as of October 30, 2021[184](index=184&type=chunk) - Management acknowledges that control systems provide only **reasonable, not absolute, assurance** against error and fraud due to inherent limitations[185](index=185&type=chunk) - **No material changes** in internal control over financial reporting occurred during the 13 weeks ended October 30, 2021[186](index=186&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains information on legal proceedings, risk factors, exhibits, and report signatures [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Refers to financial statement notes for details on legal proceedings incidental to the company's business - Refers to **Note 11, "Commitments and Contingencies"** for additional information on legal proceedings[189](index=189&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) States there are no material changes to previously disclosed business and operational risk factors - The business faces **significant risks and uncertainties**[190](index=190&type=chunk) - **No material changes** in the assessment of risk factors from the Fiscal 2020 Form 10-K[190](index=190&type=chunk) [Item 5. Exhibits](index=34&type=section&id=Item%205.%20Exhibits) Lists all exhibits filed with the report, including key agreements and certifications - Includes a **Severance Agreement** with Jeff White, dated September 26, 2021[192](index=192&type=chunk) - Includes the **Termination Agreement**, dated December 2, 2021, among Sportsman's Warehouse Holdings, Inc., Great Outdoors Group, LLC, and Phoenix Merger Sub I, Inc[192](index=192&type=chunk) - Includes **Certifications of the CEO and Interim CFO** pursuant to the Sarbanes-Oxley Act of 2002[192](index=192&type=chunk) [Signatures](index=35&type=section&id=Signatures) Provides the official sign-off by the company's executive officers on the specified date - Signed by **Jon Barker**, President and Chief Executive Officer[196](index=196&type=chunk) - Signed by **Jeff White**, Interim Chief Financial Officer[196](index=196&type=chunk) - Date of signing: **December 8, 2021**[196](index=196&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36401 SPORTSMAN'S WAREHOUSE HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 39-1975614 (State or other jurisdiction of incorporation or organization) 1475 West 9000 South, Suite A, West Jordan, Utah 84088 (Address of principal executive offices) (Zip code) Registr ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 1, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36401 SPORTSMAN'S WAREHOUSE HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 39-1975614 (State or other jurisdiction o ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Sportsman's Warehouse operates 112 outdoor sporting goods stores across 27 states, with a proposed merger with Great Outdoors Group for $18.00 per share pending regulatory approval - As of January 30, 2021, the company operates **112 stores** across **27 states**, primarily in the Western United States and Alaska[19](index=19&type=chunk)[38](index=38&type=chunk) - On December 21, 2020, the company entered into a merger agreement with Great Outdoors Group, LLC, to be acquired for **$18.00 per share** in cash, pending regulatory approval and expected to close in the second half of calendar year 2021[21](index=21&type=chunk)[22](index=22&type=chunk)[28](index=28&type=chunk) Net Sales by Department (Fiscal Years 2019-2021) | Department | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Hunting and Shooting | 57.6% | 49.1% | 48.3% | | Camping | 12.7% | 14.4% | 14.2% | | Fishing | 9.9% | 11.1% | 10.6% | | Apparel | 7.5% | 9.3% | 8.9% | | Optics, Electronics, Accessories, and Other | 6.7% | 8.6% | 10.7% | | Footwear | 5.6% | 7.5% | 7.3% | | **Total** | **100.0%** | **100.0%** | **100.0%** | - The company plans to open **8 to 12 new stores** in fiscal year 2021, targeting an annual square footage growth rate of **6% to 10%**[45](index=45&type=chunk)[59](index=59&type=chunk) - The company's loyalty program has approximately **2.7 million participants** and generated about **45% of revenue** as of January 30, 2021[81](index=81&type=chunk) - In response to the COVID-19 pandemic, the company provided **$6.5 million** in 'hero pay' to its employees during fiscal year 2020[139](index=139&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including potential merger failure, extensive firearms regulation, COVID-19 impacts, and operational reliance on a single distribution center - The consummation of the merger with Great Outdoors Group is subject to closing conditions, including HSR Act clearance, and failure to complete it could adversely affect stock price and business operations[147](index=147&type=chunk)[149](index=149&type=chunk)[154](index=154&type=chunk) - The business is highly susceptible to changes in federal, state, and local regulations concerning the sale of firearms and ammunition, which could decrease demand and increase operating expenses[164](index=164&type=chunk)[168](index=168&type=chunk) - The COVID-19 pandemic poses risks including potential store closures, supply chain interruptions, and shifts in consumer discretionary spending, with current high demand for firearms and ammunition outpacing supply[172](index=172&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - A majority of stores are located in the Western U.S., making the company vulnerable to regional economic conditions, natural disasters, and specific regulatory changes[177](index=177&type=chunk) - The company relies on a **single distribution center** in Salt Lake City, Utah, where any disruption could significantly impair its ability to stock stores and fulfill orders[183](index=183&type=chunk) - The discontinuation of LIBOR, a reference rate for the company's variable-rate debt, by the end of 2021 (or June 2023 for some tenors) could lead to increased interest costs[217](index=217&type=chunk)[218](index=218&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[236](index=236&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) The company leases all 112 retail stores, its corporate headquarters, and its 507,000 square foot distribution center in Salt Lake City, totaling approximately 4.5 million gross square feet - The company does not own any material real property and leases all **112 store locations**, its corporate headquarters, and its distribution center[237](index=237&type=chunk) - The main distribution center is a **507,000 square foot facility** in Salt Lake City, Utah, believed to be sufficient to support a network of **120 or more stores**[238](index=238&type=chunk) - The **112 retail stores** total approximately **4.5 million gross square feet**, with leases typically ranging from five to fifteen years, often with renewal options[239](index=239&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) The company is facing seven purported stockholder lawsuits regarding the Great Outdoors Group merger proxy statement, three of which have been dismissed, and other incidental legal proceedings - As of April 1, 2021, **seven lawsuits** were filed by purported stockholders alleging the merger proxy statement was false and misleading, with **three actions subsequently dismissed**[240](index=240&type=chunk)[241](index=241&type=chunk) - The company is also a defendant in litigation related to the Route 91 Harvest Festival shooting and a lease termination dispute, believing the claims are without merit and unable to estimate potential losses[521](index=521&type=chunk)[522](index=522&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[245](index=245&type=chunk) Part II [Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&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 trades on Nasdaq under "SPWH," with no dividends paid in fiscal 2020 or 2019, nor anticipated due to merger restrictions - The company's common stock is listed on the Nasdaq under the symbol **"SPWH"**[247](index=247&type=chunk) - No cash dividends were paid in fiscal year 2020 or 2019, and none are anticipated in the foreseeable future, with the pending merger agreement also restricting dividend payments[248](index=248&type=chunk)[249](index=249&type=chunk) [Selected Financial Data](index=38&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, Sportsman's Warehouse is not required to provide this information - The company is a smaller reporting company and is not required to provide this information[250](index=250&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal year 2020 saw net sales increase by **63.8%** to **$1.45 billion**, driven by a **48.3%** rise in same-store sales and strong hunting and shooting category growth, while gross margin slightly decreased due to product mix shifts Fiscal Year 2020 vs. 2019 Performance | Metric | Fiscal Year 2020 | Fiscal Year 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,451.8M | $886.4M | +$565.4M | +63.8% | | Same Store Sales | - | - | - | +48.3% | | Gross Profit | $476.4M | $296.6M | +$179.8M | +60.6% | | Gross Margin | 32.8% | 33.5% | - | -70 bps | | Net Income | $91.4M | $20.2M | +$71.2M | +352.2% | - The increase in net sales was driven by heightened demand from the COVID-19 pandemic, the presidential election, social unrest, and strong growth in the e-commerce platform[286](index=286&type=chunk) - The Hunting and Shooting category sales increased by **91.1%** (**$397.1 million**) in fiscal 2020, with firearm and ammunition sales growing **115.5%** and **93.7%**, respectively[287](index=287&type=chunk) - The company repaid its term loan and all outstanding amounts under its revolving credit facility during fiscal year 2020, leaving **no outstanding indebtedness** as of January 30, 2021[291](index=291&type=chunk)[314](index=314&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | | :--- | :--- | :--- | :--- | | **Net income** | **$91,380** | **$20,215** | **$23,750** | | Interest expense | 3,506 | 7,995 | 13,206 | | Income tax expense | 30,080 | 5,254 | 7,063 | | Depreciation and amortization | 21,830 | 19,321 | 18,250 | | Stock-based compensation expense | 3,302 | 2,104 | 1,742 | | Pre-opening expenses | 1,942 | 2,695 | 1,838 | | Hazard pay and CEO retirement | 6,526 | — | 2,647 | | Acquisition costs | 3,710 | 662 | — | | Bargain purchase | (2,218) | — | — | | Legal accrual | 2,125 | — | — | | Store closure | 1,039 | — | — | | Executive transition costs | — | 770 | — | | **Adjusted EBITDA** | **$163,222** | **$59,016** | **$68,496** | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Sportsman's Warehouse is not required to provide this information - The company is a smaller reporting company and is not required to provide this information[350](index=350&type=chunk) [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Fiscal year 2020 consolidated financial statements show total assets of **$660.8 million**, total liabilities of **$456.2 million**, net sales of **$1.45 billion**, and net income of **$91.4 million**, with strong operating cash flow of **$238.8 million** Consolidated Balance Sheet Data (in thousands) | | Jan 30, 2021 | Feb 1, 2020 | | :--- | :--- | :--- | | Total current assets | $324,653 | $291,638 | | Total assets | $660,818 | $616,641 | | Total current liabilities | $227,428 | $264,776 | | Total liabilities | $456,158 | $506,373 | | Total stockholders' equity | $204,660 | $110,268 | Consolidated Income Statement Data (in thousands, except per share data) | | FY ended Jan 30, 2021 | FY ended Feb 1, 2020 | FY ended Feb 2, 2019 | | :--- | :--- | :--- | :--- | | Net sales | $1,451,767 | $886,401 | $849,129 | | Gross profit | $476,454 | $296,633 | $284,930 | | Income from operations | $122,748 | $33,464 | $44,019 | | Net income | $91,380 | $20,215 | $23,750 | | Diluted EPS | $2.06 | $0.46 | $0.55 | Consolidated Cash Flow Data (in thousands) | | FY ended Jan 30, 2021 | FY ended Feb 1, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $238,816 | $77,866 | | Net cash used in investing activities | ($26,227) | ($49,064) | | Net cash used in financing activities | ($148,749) | ($28,664) | - In fiscal 2020, the company acquired **four Field & Stream stores** from DICK'S Sporting Goods for approximately **$6.5 million**, resulting in a bargain purchase gain of **$2.2 million**[440](index=440&type=chunk)[443](index=443&type=chunk)[445](index=445&type=chunk) - The company's Term Loan, with a **$30.0 million balance** at the beginning of the fiscal year, was paid in full during fiscal year 2020[486](index=486&type=chunk)[487](index=487&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=83&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[529](index=529&type=chunk) [Controls and Procedures](index=83&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of January 30, 2021, having remediated a prior material weakness in IT general controls, and the independent auditor issued an unqualified opinion on internal control effectiveness - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of January 30, 2021[530](index=530&type=chunk) - A material weakness in IT general controls (ITGCs) previously reported for the fiscal year ended February 1, 2020, has been **remediated** as of January 30, 2021[537](index=537&type=chunk)[539](index=539&type=chunk) - Management's assessment of internal controls excluded the **four Field & Stream stores** acquired during fiscal 2020, which represent **4.5% of total assets** and **2.4% of total revenues**[535](index=535&type=chunk) - The independent auditor, Grant Thornton LLP, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of January 30, 2021[542](index=542&type=chunk) [Other Information](index=87&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[550](index=550&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=88&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for these items is incorporated by reference from the company's Definitive Proxy Statement for its 2021 Annual Meeting of Shareholders - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Registrant's Definitive Proxy Statement for the 2021 Annual Meeting of Shareholders[553](index=553&type=chunk)[554](index=554&type=chunk)[555](index=555&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=89&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed with the Form 10-K report, including the Merger Agreement and credit agreements - This section contains the list of financial statements and exhibits filed with the report[562](index=562&type=chunk) - Key exhibits filed include the Merger Agreement with Great Outdoors Group, credit agreements, and management compensation plans[561](index=561&type=chunk)[563](index=563&type=chunk) [Form 10-K Summary](index=91&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not Applicable[565](index=565&type=chunk)

| --- | --- | --- | --- | --- | |--------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | THIRD QUARTER 2020 | | | | | | | | | | | | EARNINGS CONFERENCE CALL | | | | | | December 2, 2020 | | | | | FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the S ...

Financial Data and Key Metrics Changes - Net sales for Q3 2020 were $386 million, an increase of 59% compared to the prior year [15][23] - Same-store sales increased by 41% in Q3 2020, with firearms and ammunition up 98% and 53% respectively [15][23] - Gross profit for Q3 2020 was $130.6 million, a 55.1% increase year-over-year, with a gross margin of 33.9%, down 80 basis points from the previous year [24] - Net income for Q3 2020 was $30.5 million or $0.68 per diluted share, compared to $10.5 million or $0.24 per diluted share in Q3 2019 [27][31] - Adjusted EBITDA for Q3 2020 was $49.9 million, an increase of 115% year-over-year [27] Business Line Data and Key Metrics Changes - The Optics, Electronics, and Accessory category saw a 26% increase in same-store sales during Q3 [16] - Apparel sales grew by 19%, while footwear sales increased by 8% [16] - E-commerce-driven sales grew over 200% year-over-year, accounting for more than 10% of total net sales [17] Market Data and Key Metrics Changes - Hunting participation increased significantly, leading to elevated demand for firearms, ammunition, and related accessories [13] - The company reported a 134% increase in total firearms unit sales compared to Q3 of the previous year [15] - The overall market for outdoor activities, including fishing and camping, remained strong, supported by increased participation [14] Company Strategy and Development Direction - The company plans to continue expanding its store footprint, having opened nine new stores in 2020, with a total of 111 stores currently operating [18] - The focus remains on capitalizing on the growth in outdoor activity participation and e-commerce, which are expected to create long-term shareholder value [21] - The company is optimistic about sustaining growth opportunities from heightened outdoor activity participation and e-commerce growth [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustained demand for outdoor activities, despite uncertainties surrounding the pandemic [21] - Early Q4 trends showed total net sales for November up approximately 70% compared to the prior year, indicating continued strong performance [19] - Management noted that while there is a strong demand for firearms and ammunition, supply chain constraints are expected to persist for several months [41] Other Important Information - The company provided hero pay totaling approximately $2 million to non-executive team members in recognition of their efforts during the pandemic [11] - The company ended Q3 2020 with no outstanding borrowings on its line of credit, compared to $142 million at the end of Q3 2019 [33][34] Q&A Session Summary Question: Changes in demand for guns or ammo pre-election and post-election - Management noted a shift towards hunting products, while personal protection products remained strong [40] Question: Supply chain constraints and their impact - Demand is exceeding supply, particularly in firearms and ammunition, with expectations of shortages continuing for a few more months [41] Question: Impact of wildfires on store performance - The company experienced strong generator sales due to wildfires, but hunting participation was negatively impacted in some areas [42] Question: Long-term outlook on outdoor participation and trends - Management is bullish on future outdoor participation, with millions of new participants expected to continue engaging in outdoor activities [44] Question: Demand for personal protection and MSRs - Demand for personal protection and MSRs remains strong, with inventory levels being light [75] Question: Trends in ammunition demand - The company expects ammunition demand to continue at elevated rates due to a significant number of first-time buyers [77] Question: Gross profit margin and pricing strategies - The company has successfully passed on price increases from manufacturers, and margins in ammunition are currently strong [79] Question: Unit growth opportunities - The company plans to continue opening 8 to 12 new stores annually, focusing on intelligent expansion [81] Question: Same-store sales in November - Management did not provide specific same-store sales numbers for November but indicated overall sales were up over 70% [83]

Sportsman's Warehouse Holdings, Inc. (NASDAQ:SPWH) Q2 2020 Results Earnings Conference Call September 2, 2020 4:30 PM ET Company Participants Caitlin Howe - Vice President, Corporate Development and Investor Relations Jon Barker - Chief Executive Officer Robert Julian - Chief Financial Officer Conference Call Participants Seth Sigman - Credit Suisse Daniel Hofkin - William Blair & Company Peter Benedict - Robert W. Baird & Co. Ryan Sigdahl - Craig-Hallum Capital Group Peter Keith - Piper Sandler Mark Smith ...