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Academy Sports Outdoors Reports First Quarter 2024 Results
Source: Nasdaq GlobeNewswire / 11 Jun 2024 08:00:00 America/New_York
Net Sales Decline (1.4)%; Comparable Sales Decline (5.7)%
GAAP Diluted EPS of $1.01, or $1.08 Adjusted Diluted EPS
Opened Two New Stores During the First Quarter
Returned $132 Million to Shareholders Through Share Repurchases and Dividends
KATY, Texas, June 11, 2024 (GLOBE NEWSWIRE) -- Academy Sports and Outdoors, Inc. (Nasdaq: ASO) ("Academy" or the "Company") today announced its financial results for the first quarter ended May 4, 2024.
Steve Lawrence, Chief Executive Officer, commented, "As expected, our first quarter results reflect that our customers remain under pressure in the current economic environment. We will navigate through the remainder of the year by continuing to lean into our position as the value leader in our space, while also inspiring customers to shop through introductions and expansions of new and innovative products. We will also continue making strategic investments in our long-range growth initiatives. We are pleased that we drove a positive comp in our new stores and omnichannel business. Academy has the right elements in place to achieve our long-range goals: a well-established business model, an experienced leadership team and a strong balance sheet."
First Quarter Operating Results
($ in millions, except per share data)Thirteen Weeks Ended Change May 4, 2024 April 29, 2023 % Net sales $ 1,364.2 $ 1,383.6 (1.4 ) % Comparable sales(1) (5.7 ) % (7.3 ) % Income before income tax $ 97.7 $ 118.7 (17.7 ) % Net income $ 76.5 $ 94.0 (18.6 ) % Adjusted net income(2) $ 81.6 $ 103.0 (20.8 ) % Earnings per common share, diluted $ 1.01 $ 1.19 (15.1 ) % Adjusted earnings per common share, diluted(1) $ 1.08 $ 1.30 (16.9 ) % (1) Fiscal 2023 had a 53rd week, so the Company is using a shifted comp sales calculation which compares weeks 1-13 in Q1 2024 to weeks 2-14 in fiscal 2023.
(2) Adjusted net income and adjusted earnings per common share, diluted are non-GAAP measures. See "Non-GAAP Measures" and "Reconciliations of GAAP to Non-GAAP Financial Measures" below for reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures.Thirteen Weeks Ended Change Balance Sheet($ in millions) May 4, 2024 April 29, 2023 % Cash and cash equivalents $ 378.1 $ 295.5 28.0 % Merchandise inventories, net $ 1,356.8 $ 1,386.5 (2.1 ) % Long-term debt, net $ 484.1 $ 584.1 (17.1 ) % Thirteen Weeks Ended Change Capital Allocation($ in millions) May 4, 2024 April 29, 2023 % Share repurchases $ 123.5 $ 50.3 145.5 % Dividends paid $ 8.2 $ 6.9 18.8 % Subsequent to the end of the first quarter, on June 6, 2024, Academy's Board of Directors declared a quarterly cash dividend of $0.11 per share of common stock. The dividend is payable on July 18, 2024, to stockholders of record as of the close of business on June 20, 2024.
Carl Ford, Chief Financial Officer, said, "Academy generated $200 million in cash from operations during the quarter. We believe that investing this cash into the pillars of our long-range plan will result in long-term, sustainable sales and profit growth for Academy and our shareholders. To that end, in the first quarter, we invested $32 million of capital back into the Company, repurchased $124 million in stock, and paid $8 million in dividends. We are focused on driving traffic, managing our inventory to maintain margins, and controlling expenses as we invest in our growth initiatives."
New Store Openings
Academy opened two new stores during the first quarter. The Company plans to open 15 to 17 stores in 2024.2024 Outlook
Academy is reiterating its previous sales and net income guidance for fiscal 2024, while updating its earnings per share forecast to reflect the share repurchase activity completed in the first quarter.Updated Guidance Previous Guidance (in millions, except per share data) Low end High end Low end High end Net sales no change no change $ 6,070.0 $ 6,350.0 Sales growth no change no change (1.5 ) % +3.0 % Comparable sales no change no change (4.0 ) % 1.0 % Gross margin rate no change no change 34.3 % 34.7 % GAAP net income no change no change $ 455 $ 530 GAAP earnings per common share, diluted $ 6.05 $ 7.05 $ 5.90 $ 6.90 Diluted weighted average common shares ~75 ~75 ~77 ~77 Capital expenditures no change no change $ 225 $ 275 Adjusted free cash flow(1) no change no change $ 290 $ 375 (1) Adjusted free cash flow is a non-GAAP measure. We have not reconciled it to the most comparable GAAP measure because it is not possible to do so without unreasonable efforts given the uncertainty and potential variability of reconciling items , which are dependent on future events and often outside of management's control and could be significant. Because such items cannot be predicted with the level of precision required, we are unable to provide an estimate of the most closely comparable GAAP measure at this time.
Note: Fiscal year 2023 included 53 weeks compared to 52 weeks in fiscal 2024.The earnings per common share guidance reflects a tax rate of approximately 22.0% and does not include any potential future share repurchases.
Conference Call Info
Academy will host a conference call today at 10:00 a.m. Eastern Time to discuss its financial results. The call will be webcast at investors.academy.com. The following information is provided for those who would like to participate in the conference call:U.S. callers 1-877-407-3982 International callers 1-201-493-6780 Passcode 13746678 A replay of the conference call will be available for approximately 30 days on the Company's website.
About Academy Sports + Outdoors
Academy is a leading full-line sporting goods and outdoor recreation retailer in the United States. Originally founded in 1938 as a family business in Texas, Academy has grown to 284 stores across 18 states as of the end of the quarter. Academy’s mission is to provide “Fun for All” and Academy fulfills this mission with a localized merchandising strategy and value proposition that strongly connects with a broad range of consumers. Academy’s product assortment focuses on key categories of outdoor, apparel, footwear and sports & recreation through both leading national brands and a portfolio of private label brands.Non-GAAP Measures
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Common Share, and Adjusted Free Cash Flow have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, generally accepted accounting principles (“GAAP”). The Company believes that the presentation of these non-GAAP measures is useful to investors as it provides additional information on comparisons between periods by excluding certain items that affect overall comparability. The Company uses these non-GAAP financial measures for business planning purposes, to consider underlying trends of its business, and in measuring its performance relative to others in the market, and believes presenting these measures also provides information to investors and others for understanding and evaluating trends in the Company’s operating results or measuring performance in the same manner as the Company’s management. Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. The calculation of these non-GAAP financial measures may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. For additional information on these non-GAAP financial measures, please see our Annual Report for the fiscal year ended February 3, 2024 (the "Annual Report"), and our Quarterly Report for the thirteen weeks ended May 4, 2024 (the "Quarterly Report"), which may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the "SEC"), which are accessible on the SEC's website at www.sec.gov.See “Reconciliations of GAAP to Non-GAAP Financial Measures” below for reconciliations of non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Academy’s current expectations and are not guarantees of future performance. Forward-looking statements may incorporate words such as “believe,” “expect,” “forward,” “ahead,” “opportunities,” “plans,” “priorities,” “goals,” “future,” “short/long term,” “will,” “should,” or the negative version of these words or other comparable words. The forward-looking statements include, among other things, statements regarding the Company’s fiscal 2024 outlook, the Company’s strategic plans and financial objectives, growth of the Company’s business and operations, the Company’s payment of dividends and declaration of future dividends, including the timing and amount thereof, share repurchases by the Company, the Company's expectations regarding its future performance, and future financial condition, and other such matters, and are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory and other factors that could affect overall consumer spending or our industry, including the possible effects of ongoing macroeconomic challenges, inflation and increases in interest rates, or changes to the financial health of our customers, many of which are beyond Academy's control. These and other important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Academy's filings with the SEC, including the Annual Report and the Quarterly Report, under the caption "Risk Factors," as may be updated from time to time in our periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. Academy undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.Investor Contact Media Contact Matt Hodges Allan Rojas VP, Investor Relations Director, Communications 281-646-5362 281-944-6048 matt.hodges@academy.com allan.rojas@academy.com ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)Thirteen Weeks Ended May 4, 2024 Percentage of Sales(1) April 29, 2023 Percentage of Sales(1) Net sales $ 1,364,220 100.0 % $ 1,383,609 100.0 % Cost of goods sold 908,427 66.6 % 916,494 66.2 % Gross margin 455,793 33.4 % 467,115 33.8 % Selling, general and administrative expenses 353,410 25.9 % 340,919 24.6 % Operating income 102,383 7.5 % 126,196 9.1 % Interest expense, net 9,486 0.7 % 11,230 0.8 % Write off of deferred loan costs 449 0.0 % — 0.0 % Other (income), net (5,204 ) (0.4 ) % (3,713 ) (0.3 ) % Income before income taxes 97,652 7.2 % 118,679 8.6 % Income tax expense 21,187 1.6 % 24,709 1.8 % Net income $ 76,465 5.6 % $ 93,970 6.8 % Earnings Per Common Share: Basic $ 1.03 $ 1.22 Diluted $ 1.01 $ 1.19 Weighted Average Common Shares Outstanding: Basic 73,993 76,862 Diluted 75,798 79,288 (1) Column may not add due to rounding
ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except per share data)May 4, 2024 February 3, 2024 April 29, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 378,145 $ 347,920 $ 295,536 Accounts receivable - less allowance for doubtful accounts of $1,817, $2,217 and $2,286, respectively 13,700 19,371 10,412 Merchandise inventories, net 1,356,811 1,194,159 1,386,457 Prepaid expenses and other current assets 68,320 83,450 34,622 Assets held for sale — — 1,763 Total current assets 1,816,976 1,644,900 1,728,790 PROPERTY AND EQUIPMENT, NET 456,594 445,209 365,024 RIGHT-OF-USE ASSETS 1,116,222 1,111,237 1,087,854 TRADE NAME 578,364 578,236 577,799 GOODWILL 861,920 861,920 861,920 DEFERRED TAX ASSETS — — — OTHER NONCURRENT ASSETS 43,803 35,211 20,547 Total assets $ 4,873,879 $ 4,676,713 $ 4,641,934 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 735,563 $ 541,077 $ 712,643 Accrued expenses and other current liabilities 262,048 217,932 221,388 Current lease liabilities 121,465 117,849 112,333 Current maturities of long-term debt 3,000 3,000 3,000 Total current liabilities 1,122,076 879,858 1,049,364 LONG-TERM DEBT, NET 484,084 484,551 584,093 LONG-TERM LEASE LIABILITIES 1,098,799 1,091,294 1,058,869 DEFERRED TAX LIABILITIES, NET 253,069 254,796 257,120 OTHER LONG-TERM LIABILITIES 10,330 11,564 11,526 Total liabilities 2,968,358 2,722,063 2,960,972 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value, authorized 50,000,000 shares; none issued and outstanding — — — Common stock, $0.01 par value, authorized 300,000,000 shares; 72,590,530; 74,349,927 and 76,439,594 issued and outstanding as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively. 726 743 764 Additional paid-in capital 240,559 242,098 229,633 Retained earnings 1,664,236 1,711,809 1,450,565 Stockholders' equity 1,905,521 1,954,650 1,680,962 Total liabilities and stockholders' equity $ 4,873,879 $ 4,676,713 $ 4,641,934 ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)Thirteen Weeks Ended May 4, 2024 April 29, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 76,465 $ 93,970 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,853 26,261 Non-cash lease expense 6,137 2,165 Equity compensation 6,138 11,382 Amortization of deferred loan and other costs 624 674 Deferred income taxes (1,726 ) (1,923 ) Write off of deferred loan costs 449 — Changes in assets and liabilities: Accounts receivable, net 5,671 6,091 Merchandise inventories, net (162,652 ) (102,940 ) Prepaid expenses and other current assets 15,129 13,125 Other noncurrent assets (3,392 ) (3,215 ) Accounts payable 186,475 26,776 Accrued expenses and other current liabilities 20,819 (31,673 ) Income taxes payable 21,922 12,642 Other long-term liabilities (1,235 ) (1,200 ) Net cash provided by operating activities 199,677 52,135 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (32,227 ) (40,464 ) Purchases of intangible assets (128 ) (83 ) Net cash used in investing activities (32,355 ) (40,547 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Revolving Credit Facilities 3,900 — Repayment of Revolving Credit Facilities (3,900 ) — Repayment of Term Loan (750 ) (750 ) Debt issuance fees (5,690 ) — Repurchase of common stock for retirement (122,425 ) (50,015 ) Proceeds from exercise of stock options 2,789 7,090 Taxes paid related to net share settlement of equity awards (2,839 ) (2,593 ) Dividends paid (8,182 ) (6,929 ) Net cash used in financing activities (137,097 ) (53,197 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30,225 (41,609 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 347,920 337,145 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 378,145 $ 295,536 ACADEMY SPORTS AND OUTDOORS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)Adjusted EBITDA and Adjusted EBIT
We define “Adjusted EBITDA” as net income (loss) before interest expense, net, income tax expense and depreciation, amortization, and impairment, and other adjustments included in the table below. We define “Adjusted EBIT” as Adjusted EBITDA less depreciation and amortization. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and Adjusted EBIT in the following table (amounts in thousands):
Thirteen Weeks Ended May 4, 2024 April 29, 2023 Net income $ 76,465 $ 93,970 Interest expense, net 9,486 11,230 Income tax expense 21,187 24,709 Depreciation and amortization 28,853 26,261 Equity compensation (a) 6,138 11,382 Write off of deferred loan costs 449 — Adjusted EBITDA (b) $ 142,578 $ 167,552 Less: Depreciation and amortization (28,853 ) (26,261 ) Adjusted EBIT (b) $ 113,725 $ 141,291 (a) Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures. (b) Effective January 28, 2023, we no longer exclude pre-opening expenses from our computations of Adjusted EBITDA and Adjusted EBIT. Adjusted EBITDA and Adjusted EBIT for the thirteen weeks ended April 29, 2023 have been revised to the current period computation methodology. Adjusted Net Income and Adjusted Earnings Per Common Share
We define “Adjusted Net Income” as net income (loss) plus other adjustments included in the table below, less the tax effect of these adjustments. We define “Adjusted Earnings per Common Share, Basic” as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and “Adjusted Earnings per Common Share, Diluted” as Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period. We describe these adjustments reconciling net income (loss) to Adjusted Net Income, and Adjusted Earnings Per Common Share in the following table (amounts in thousands, except per share data):
Thirteen Weeks Ended May 4, 2024 April 29, 2023 Net income $ 76,465 $ 93,970 Equity compensation (a) 6,138 11,382 Write off of deferred loan costs 449 — Tax effects of these adjustments (b) (1,432 ) (2,370 ) Adjusted Net Income (c) $ 81,620 $ 102,982 Earnings per common share: Basic $ 1.03 $ 1.22 Diluted $ 1.01 $ 1.19 Adjusted earnings per common share: Basic $ 1.10 $ 1.34 Diluted $ 1.08 $ 1.30 Weighted average common shares outstanding: Basic 73,993 76,862 Diluted 75,798 79,288 (a) Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures. (b) For the thirteen weeks ended May 4, 2024 and April 29, 2023, this represents the estimated tax effect (by using the projected full year tax rates for the respective years) of the total adjustments made to arrive at Adjusted Net Income. (c ) Effective January 28, 2023, we no longer exclude pre-opening expenses from our computations of Adjusted Net Income. Adjusted Free Cash Flow
We define “Adjusted Free Cash Flow” as net cash provided by (used in) operating activities less net cash used in investing activities. We describe these adjustments reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the following table (amounts in thousands):
Thirteen Weeks Ended May 4, 2024 April 29, 2023 Net cash provided by operating activities $ 199,677 $ 52,135 Net cash used in investing activities (32,355 ) (40,547 ) Adjusted Free Cash Flow $ 167,322 $ 11,588 
