Sportsman's Warehouse Holdings, Inc. reported net sales increased by 2.3 percent to $159.5 million from $155.9 million in the second quarter and 13 weeks ended Aug. 2, compared with the second quarter of fiscal 2013. Same store sales decreased by 6.1 percent, primarily as a result of the decline in demand for firearms and ammunition. Income from operations decreased to $12.3 million from $16.1 million in the second quarter of fiscal 2013.
The Utah-based retailer opened four new stores in the second quarter of fiscal 2014 and ended the quarter with 54 stores in 18 states, a unit increase of 17.4 percent from the end of the second quarter of fiscal 2013.
Interest expense increased to $4.1 million from $3.4 million in the second quarter of fiscal 2013. Net income was $5.1 million compared to $7.7 million in the second quarter of fiscal 2013. Diluted earnings per share were $0.12 compared to diluted earnings per share of $0.23 in the second quarter of fiscal 2013. Adjusted, or non-GAAP diluted earnings per share were $0.12 compared to adjusted diluted earnings per share of $0.18 in the second quarter of fiscal 2013. Adjusted EBITDA was $16.0 million compared to $17.9 million in the second quarter of fiscal 2013.
"We are pleased with our second quarter results which came in better than our expectations, driven by strong results from our categories outside of hunting and solid new store performance," said John Schaefer, President and Chief Executive Officer. "Industry dynamics suggest potential stabilization of the hunting category as we enter the fall hunting season. We continue to see significant opportunities to capture additional share of the outdoor sporting goods market given the fragmented nature of the industry and our unique positioning and value proposition. We remain excited about the many opportunities that we have to grow the company and continue to expand the Sportsman's Warehouse brand."
First half results
For the twenty-six weeks ended August 2, 2014 the company reported net sales decreased by 0.2 percent to $291.9 million from $292.4 million in the first half of fiscal 2013. Same store sales decreased by 11.6 percent, primarily as a result of the decline in demand for firearms and ammunition. Income from operations decreased to $12.1 million from $26.7 million in the first half of fiscal 2013. Adjusted income from operations, which excludes expenses related to bonuses paid as a result of the successful completion of our initial public offering ("IPO") in the first quarter of fiscal 2014 (see "GAAP and Non-GAAP Measures"), was $14.3 million as compared to $26.7 million in the first half of fiscal 2013.
The Company opened seven new stores in the first half of fiscal 2014.
Interest expense increased to $9.4 million from $6.6 million in the first half of fiscal 2013. Net income was $1.7 million compared to $12.1 million in the first half of fiscal 2013. Adjusted net income, which excludes expenses related to the IPO bonuses in the first quarter of 2014, net of taxes (see "GAAP and Non-GAAP Measures"), was $3.0 million compared to adjusted net income of $12.1 million for the first half of fiscal 2013. Diluted earnings per share were $0.04 compared to diluted earnings per share of $0.36 in the first half of fiscal 2013. Adjusted diluted earnings per share (see "GAAP and Non-GAAP Measures") were $0.07 compared to adjusted diluted earnings per share of $0.29 in the first half of fiscal 2013.
Adjusted EBITDA was $22.8 million compared to $32.3 million in the first half of fiscal 2013.
The company ended the quarter with $1.7 million in cash, inclusive of net proceeds of $3.0 million from the underwriter's partial exercise of the over-allotment option related to the company's IPO in April 2014. Total debt was $219.8 million, consisting of $62.9 million outstanding under the revolving credit facility and $156.9 million outstanding under the term loans, net of unamortized discount. Total liquidity, or cash plus $23.0 million of availability on a $105.0 million revolving credit facility, was $24.7 million
Third Quarter and Fiscal 2014 outlook:
For the third quarter of fiscal 2014, net sales are expected to be in the range of $183.0 million to $188.0 million based on the opening of one new store on Aug. 16, 2014 and a decrease in same store sales from the third quarter of fiscal year 2013 in the range of 4.0 percent to 6.0 percent. Net income is expected to be in the range of $7.8 million to $8.6 million, with diluted earnings per share of $0.19 to $0.20 on a weighted average of approximately 42.0 million estimated common shares outstanding.
For fiscal 2014, net sales are expected to be in the range of $665.0 million to $675.0 million based on opening eight new stores for the full year and a decrease in same store sales from fiscal year 2013 in the range of 6.0 percent to 8.0 percent. Net income is expected to be in the range of $18.2 million to $20.3 million, with diluted earnings per share of $0.43 to $0.48 (which includes the impact of $1.4 million in expenses related to IPO bonuses, net of taxes) on approximately 42.0 million estimated weighted average common shares outstanding. Excluding $1.4 million, or $0.04 per adjusted diluted share, in expenses related to the IPO bonuses, adjusted net income for fiscal 2014 is expected to be in the range of $19.6 million to $21.7 million, or $0.47 to $0.52 per diluted share, based on a weighted average diluted share count of 42.0 million.
