SPWH - Earnings call transcript Q4 2019 | Sportsman's Warehouse Holdings, Inc.

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Operator

Greetings. And welcome to the Sportsman’s Warehouse Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

conference recorded. this reminder a is being As I’d your host, to turn over to the conference Rachel now like Schacter of ICR. you. Thank

begin. may You

Rachel Schacter

Thank Julian, the Executive on you. Jon With Chief Barker, call Officer; Financial Chief is Robert Officer. and me

our Reform like includes the Before remind about the demand Private meaning expectations The we of you language. statements contain will Litigation to make we the industry. Harbor I and today results Safe Act forward-looking future of which of started, our statements get for regarding of growth would XXXX, company’s our statements of our Securities within operations, products,

Risk Actual may XX-K for in year results risks in number made the ended those suggested the of and SEC. XXXX, the February filings such caption statements and other uncertainties, future described the Factors materially to with those company’s a differ company’s due including X, from the under

at financial such most well today’s financial also during call. disclose will information comparable GAAP Relations of XX.X of directly release our reconciliations non-GAAP also as provided financial Exhibit the Investor Form on furnished in measures Definitions investors.sportsmanswarehouse.com. is as We are as to the the which as included supplemental measures to measures, we X-K website non-GAAP the SEC press our today, available to section

also website. like at our sportsmans.com that would earnings Investor today’s is section note, presentation to of which available I conference in also materials include call an Relations the

to steps the utilize with today’s remarks. can along You the prepared follow

call Executive of Officer turn Now, Chief I’d Sportsman’s like over to the Barker, Jon to Warehouse.

Jon Barker

well. families, milestone. reaches today. afternoon, friends, thank seems that new I your COVID-XX you, joining Every Good for it and us Rachel. you, everyone, day Thank colleagues are all a hope you

addressing a will performance the Robert are my and growth of it our more fiscal framework how and QX updates quarter full I remarks key approaching then situation review Warehouse. also results XXXX for and Sportsman’s on will fourth trends provide and that such, seeing strategy. as I As our year full highlights provide in I business. will are discuss XXXX and then review we we our in omni-channel begin XXXX. COVID-XX will financial our to year year detail QX pertains by

will the we questions. open for call Finally, up

I four and COVID-XX of am slide now address on that presentation will the pandemic.

most and their the and families. focused efforts importantly, and of our First, our are health customers on safety associates, protecting

To we operations, one sufficient assist stores our our at this limiting for instituted and in in like to including several home, to leveraging customers changes pickup. distancing reduced and additional e-commerce now have the restock BOPUS time shift hours any to to to curbside end social to of store perform cleaning, and allow store time capabilities number our protocols

the remains developments. fluid As you situation are and are monitoring closely aware, new we

we seen to business China, primarily with I the want have our far. some to related respect chain, share and With camping impacts we products. supply out have were fishing to of seen you so interruption

We have impact supply significant due these a chain disruptions. financial yet to not seen

impact. but this with be fully may not to closely are We its vendors working able limit mitigate disruption, our to we

demand relates pandemic. is during side, as there our impact, uncertainty to near-term and on it the open this be On will significant duration remain to stores able whether the

has the long-term. confident done in the share we capture that over past Warehouse years are we everything However, to market have few Sportsman’s significant positioned

at guidance Due points either and But for few year to or time. share a we I do this situation, issuing trends. this want XXXX QX unprecedented fiscal key to are not

as at starting normal early exited Our de-emphasized firearms business accelerated and returned January even the or competitors and ammunition key to categories.

by from believe fewer election and We this competitors, increased is acceleration sales demand have cycle. QX the into We further of uncertainty experienced COVID-XX driven XXXX. current

contribution the exact possible. not out of is parsing each Although

likely is sales substantial decrease in or in far, a due store liquidity pandemic managing this While actively the regulations, The capital, traffic may given government plans increases distancing due result in on long-term. have seen closings more social with chain. and in we to in first But disruption so store assured, not significant sustainable working the COVID-XX and rest our a to contingency great expenses uncertainties. significant in are supply discipline, these we are our quarter

on updated exceeded and guidance of our of EPS fourth five, slide which high-end guidance. Now updated high-end I results will our a sales quarter review met the our

increase prior net by growth to primarily For year. $XXX sales the of factors. X.X% quarter, -- driven This an million were sales was three or primarily compared

First we experienced strong and January. in sales ammunition firearm

at including Field XX during added acquired we of growth our significant eight in new sales QX. we have by sportsmans.com. stores and end seen Stream Second, the website XXXX, stores generated third, And

in completed share X.X% was updated gains fourth exit Wal-Mart normal, better behavior trends decreased out ammunition. our When -- than of only performance our certain other did experienced this January, our we sales and same-store market its firearms business in While the Not of outlook. quarter, key they normalize our than expectations. in and updated categories returned to competitors ammunition categories exceeded promotional

one holiday XX% assortment year. from which provides products can scale, bring sales expansive the during website and to Also our deliver. This season by strong opportunity online prior generated to our growth versus market that the else increased was us driven no with

progress manage orders maximize categories. reduce on shipping successfully to all capability in inventories. seeing a have and to BOPUS choices out This made our relevant customer significant rolling long-tail us enables ship-from-store online for We also nice time are and increase customers,

we our of enhanced federal reach is to able drive. quarter, store XX a U.S. now population of the growing which partners, further our Finally, expanded over our within geographic footprint reach combined minute the base license XXX XX% during are firearms by to with with

around slightly than marketing holiday to store higher anticipated due additional openings. Operating expenses the quarter and for new spend season the the were

operating In three addition, weeks Christmas. we to due deleveraged the up reduce during an leading sales to expenses

earnings met the for which fourth high-end Adjusted share updated the of guidance. were $X.XX per quarter, our

adjusted and were per increase year X.X% full $XXX million share sales For earnings of $X.XX. XXXX, were net an or

six. to now slide Turning

to we Sportsmen’s XXX our are Warehouse industry while our We are physical will continue and exiting stores ammunition. We in expand ended online footprint, and deemphasizing store competitors states. are XX firearms committed with to XXXX and this national grow and

five We for have we stores XXXX. two new already announcing are today, for stores and XXXX, additional announced new

the and located XX in Crescent new total are Michigan. and Field Stream This brings locations acquired Field Kalamazoo of XXXX Kentucky stores Springs there to in total Stream two seven in and Included us stores and XXXX. a

we secured a which to open stores, Marquette, As Parker, is the which part previous now Michigan, brand Gander in today seven that already stores Colorado, open new in is and announced, is planned also another announcement of one new this summer. two

penetrate today opening format small to of concept which Laramie, of our square announcement is at to couldn’t store. view that higher larger format store this feet, successful, underserved could store to markets We in support build approximately new If concept as costs. a an the larger plan second offer competitors format national opportunities first a smaller our stores advantage Wyoming. shop The X,XXX is additional located over

range is Warehouse opened and Utah. Center. West new In first stores, facility the branded indoor recently we retail and addition Jordan, in Legacy indoor to Sportsman’s concept our range Shooting new This retail

associates, protect situation on closely slide seven, and found of impact in its but business. as our we health real-time the COVID-XX monitoring the fully are cannot on our summary the to well-being predict we In

COVID-XX fiscal growth focused XXXX initiatives. with on notwithstanding, our and very begin are -- our we we pleased of we core the as remain moment Notwithstanded business

Importantly, on expanding market through growing enhanced our opportunities, long-term, store uniquely and to the e-commerce. capitalize base positioned share we reach given are brand,

We XXXX expect to QX on report June. in results

financial With in discuss the to call will our that, I more results turn over detail. Robert to

Robert Julian

earlier by today with remarks my begin fiscal discussed non-GAAP will where today’s measures, non-GAAP the fiscal I we GAAP few GAAP measures on of have reconciled a earnings basis. and today. press the financial measures year quarter call release, report fourth in a a are Most results, financial Jon. reported followed you, XXXX we XXXX. on to was Thank the of about our U.S. which remarks our review corresponding In figures instances the year issued

or net Turning the $XXX.X X.X%. Fourth the of million XXXX million, to presentation. quarter of were $XX.X compared an to of $XXX.X in XXXX, million slide fourth sales increase eight quarter PowerPoint

compared camping in footwear. of X% categories updated the product decreased guidance our Same-store sales negative to to and most X.X% challenging in clothing, quarter, were X%. The negative range QX

nicely XX.X%, in January growth led firearms. firearms ammunition ammunition However, and XX.X% X.X%. by Same-store of same-store and rebounded positive respectively, starting January, in in the our sales in Overall, early performance was month increased sales sales January. of

for QX million, or the of versus XXXX $X.X flat $XX.X quarter at quarter compared margin year the the gross profit was to million prior fourth XX.X% of in $XX.X period. XX.X% XXXX, relatively X.X%. was Gross increase in million an

points in of points, Gross vendor negatively Stream basis purchases. the XX quarter due the acquisition incentives to stores was due improved of on primarily total a acquired QX. the result margin XX inventory received impacted lower by basis we discount as margin to eight and Field in in reduced the Product

$X.X increase $X.X primarily compared $XX.X SG&A increases, expense store expense increased plus million of fourth incurred quarter $X.X due to million an of Rent of store new XXXX new or due million, growth. for XX.X% minimum to expense payroll to QX approximately XXXX. and million, benefit additional We of wage openings. the was primarily

software expenses increased increased and operating primarily and audit expense to utilities, approximately security incremental Store store marketing, fees. due new operating expense, due support $X.X including Other million, janitorial opening. to

transactions. also expenses costs and associated with million and the preopening transaction incurred Stream $X.X of incremental Field We

basis SG&A points to increased a XXX XX.X% As in percentage of quarter. sales, the net approximately

This million $XX.X compared in million to borrowings, prior to reduction in compared of year. $X.X in $X.X of lower XXXX, $XX.X to was QX the $X.X a total million. million, QX from XXXX, a Income capital Interest QX was XXXX operations result primarily million expense working attributable of improvements. is improvement in

QX changes of tax items $X.X state million QX tax discrete million in credits, QX XXXX. is to in income and in reduction deferred of XXXX the tax the $X.X provision, expense including This recorded tax R&D rates. result state compared tax $X.X credits We inventory impacting million several XXXX,

or $X.XX based $XX.X for count was XXXX. on a $X.X the of to share quarter the of net share income million a million of in weighted on based or million, $X.XX income per share average $XX.X per average compared as million count $XX.X weighted share Net

based $X.X $XX.X share $XX.X income $X.XX or count adjusted XXXX. was in compared per diluted million quarter share income XXXX, based average of to average $X.XX of diluted million $XX.X diluted a net count on diluted a of net in the million share of share per on million Adjusted weighted weighted or fourth

the compared period. fourth for EBITDA million, prior the quarter to XXXX was in of $XX.X Adjusted million year $XX.X

now XXXX. fiscal XXXX full million, This year Same-store I an of million compares guidance year Turning to $XX.X comment slide for million $XXX.X sales year or X.X%. on results. X.X% X.X% XXXX negative in the full $XXX.X of decreased updated XXXX, and to will year negative our our net in increase were to sales the Fiscal to nine, year. compared X.X%

with Total XXX XXXX. year fiscal stores operating the year compared states. XXXX We grew fiscal XX.X% in footage in ended the XX square to

Full or year million of year at XXXX flat gross increase million in period. margin was the million an to X.X%. Gross profit compared XXXX, relatively was prior versus $XXX.X in XX.X% XX.X% $XXX.X the $XX.X

the on due inventory vendor received Product and margin Gross improved to the purchased in total eight XX stores. result acquisition as basis points XX due negatively of year Stream we by of for Field year lower impacted the purchases. incentives points margin a to QX reduced discount was basis primarily for the

increased store million $XXX.X We due for to million, growth. million and $X.X additional minimum or incurred was $X.X openings. wage expense store XXXX benefit $XX.X of an of new due expense of new XXXX. expense X.X% to Rent to fiscal compared million, payroll primarily primarily increases, increase SG&A by plus year

approximately incremental transaction million, openings. store of new Stream and $X.X preopening to audit primarily expense acquired Store software marketing, stores. $X.X incremental due Field in support cost increased increased due expense million We operating associated the operating with incurred expenses to Other fees. and

increased $X.X year. million compared Depreciation to XXXX expense prior in

SG&A of points approximately XX.X%. As a basis percentage increased XXX net to sales,

inventory XXXX, $XX.X of working is million lower was improvement operations reduction result to XXXX, prior year $X.X borrowings, for $XX.X attributable $X.X from primarily other fiscal of a This $XX.X to million, compared the expense in Income and period. compared million. reduction XXXX million total improvements. to Interest capital was fiscal year a in for million

tax $X.X XXXX, We in $X.X year million benefits year-over-year fiscal income addressed XXXX. in of remarks. to reduction for is QX million attributable earlier expense The primarily to my discrete tax recorded compared the

on per $XX.X weighted share That’s of per for on to income compared or average based of XXXX based share million million million. a count $X.XX Net of $XX.X or million income in was year net a fiscal average $XX.X weighted $X.XX share $XX.X XXXX. share count

income fiscal Adjusted year of per of was net million adjusted $XX.X income in in a weighted $XX.X XXXX $XX.X average on share share EBITDA XXXX, $X.XX diluted to based or million year. based fiscal in $XX.X $XX.X on net million million compared for share share $XX.X Adjusted compared weighted prior of XXXX. count per average to a million, was year $X.XX diluted count or million the

Turning sheet. per $X now $XXX to was million million ending to Fiscal store year, a achieved compared the slide at XX million, and compared was adding XXXX. inventory to XXXX basis, reduction. stores down despite last our XX.X% a end XX result new prior was This On year. year $XXX inventory balance in of

compared $XX.X million and of This year XXXX Full corporate $X.X the of to to an new increase associated build incurred expenditures with XXXX. $X.X compared in capital Shooting million. headquarters We expenditures in increase our primarily new QX fourth was were million, XXXX, out capital million Center. million the in quarter Legacy of of XXXX, our $XX.X $X.X

cash XXXX. primarily operating a XXXX operating flow capital. year-over-year improvement due million year working $XX.X in million $XX.X million was reduction versus to The $XX.X is for flow cash in Fiscal

we the revolving on line Our liquidity outstanding year facility. of on with the credit million availability remains strong, $XX.X as ended million the in and $XXX.X approximately borrowings credit

fund the last year, was XXXX. $XX.X outstanding of of long-term to end of Field of million at million XXXX, lower at $XX.X to while reduction utilizing the and outstanding our XXXX, acquisition million. on the debt fiscal period QX credit balance The our new XXXX, The in compared year-end $X.X a compared at Stream stores balance end $XX.X even revolving year million to this on eight same of line was facility the

would to like few XXXX. make I comments fiscal year on a Finally,

not As are Jon uncertainties forward to guidance providing noted of time due the impact his remarks, at COVID-XX the we in this surrounding pandemic.

our that our of unusually including high items. In first experienced generators, the of remain this can for our demand aid access stores provide ammunition. short-term we many Most so and we certainly food, firearms to open at have supplies, dehydrated propane, water essential products, customers filtration, these time,

and fluid and very that rapidly. we our However, expenses Therefore, and recognize is very plans are closely. liquidity this manage developing we also actively situation could inventory, change contingency cash,

feel We due financial the negative have to in COVID-XX. our confident impact flexibility that to the potential weather to business we sufficient future for

in more hope provide clarity you We next June. and update will our again to call on earnings

that, turn will now call the operator With for I to over the questions. back

Operator

from Craig-Hallum. you. [Operator Please Ryan First from question Thank go Great. ahead. Instructions] here is Sigdahl

Ryan Sigdahl

quarter-to-date, thanks was growth mentioned Robert, later and in for or questions. bunch you Good to our of Jon, and as a same-store afternoon, guys, quantify you able quarter-to-date are categories sales taking mentioning significant sales as well what performance e-commerce QX?

Jon Barker

the can, of is, question. The -- service products Robert many the of customers those to demand thanks for our seen last say few quarter-to-date for caused within stores have products. lot for Ryan, weeks demand that, a to the you has our significant What as as I we us thank take our stores unprecedented loyal can’t we actions mentioned. in given

stores. customers partners in our off have third-party We protect turned shipping of third-party to all our to

firearms day meet per ammunition limited quantities have to needs. those and We customer per

to was store and website off product of shipped to made only. We it taken that some of home shipped have the our

And directly. stores of we were in handful unable to customers running and a serve

our curbside We website where pickup are do necessary. using to

we providing categories. So we have unprecedented quarter-to-date but today, so tell are in numbers I far there’s you can certain demand exact not we ---- seen been

Ryan Sigdahl

seeing from guess, from issue are chain, those, guess, you the of you But are that demand in or, what amu And then just supply gone you a mentioned a supply coming I some I China. maybe is limiting manufacturers stuff from constraint? or purchases why major different,

Jon Barker

U.S.-based across manufacturers. issue demand activity look of have mix the a a happening am at now and speaking as manufacturers the we we the I of it’s primarily, chain, Again supply

manufacturing a some impacted requirement. and by have limitation operating have facilities distribution of that government been by We

more to manufacturers We had fluid reduced in eye our But been to this is factories some ramp-up and have situation are have up. of ramped few I would to most that outputting factories than keep our an able they that on that been able have are we they a tell It’s which a due and production we on. have production years as keeping many output you a ramp really attendance up. mix. are

The it, throughput. key we not our ammunition, is D.C., in that attendance in we and flow I those in good it D.C., categories, and re-dispersing are again, The product primarily trucks call happening to these good of new store. and and firearms this had our firearms ammunition, are with arriving just product the out

can manufacturers So this. optimistic up we keep that are the with

already, years. have regular market having Warehouse can. forecast we Sportsman’s has as to customers are demand from and can a up, saw serve we position we to top to possible inventory many the us, that with given for we that secure us of as on share had ramp vendors work and the as these ensure much many to They top Our Ryan, as we conversations basis as ability loyal

Ryan Sigdahl

That’s then helpful. to the it and me others. for Thank you. One turn I over more will

acquired you appear anything stories any discount, potential the of but of acquire those then a to can from be four and nice terms Stream share Gander, from you more deals and at stories and Field So to both them? those

Robert Julian

Yeah.

Ryan, we similar the Stream So, first stores The -- were eight. we two this and Robert. deals acquired is to stores that very that the acquired two Field

a this the did similar -- in deal so the eight, very bit little Gander… case. locations in little acquire a very of on did those inventory We discount It transaction the was and the to less we the So previous that investment receive for assets first was transaction.

Jon Barker

of open fantastic and weren’t Gander. real-estate a in Gander was is a store. front on fit Gander Colorado, It that range one for opportunity, purchase we operating. us. referenced were It a to as more is Parker agreement of larger The -- facilities necessarily a that They which

is closed. been announcing that’s was Marquette, I in That door referenced which Gander other The we Michigan. one today are

to We with in later have year Michigan. and in the that landlord are come terms Northern opening the

Robert Julian

a and… deals we little those So different, are not inventory requiring are

Jon Barker

They more any were of real a case estate. not in

Robert Julian

location. The Right.

Jon Barker

about some estate from or few real point play last months It’s that’s years. of couple exited at a been the in Gander last

Ryan Sigdahl

Thanks Got guys. to it. quarter Got and on the finish it. Good solid the luck. quarter-to-date. Congratulations

Jon Barker

Ryan. Thanks,

Operator

next Please The from Peter Sandler. question Keith is go ahead. Piper from

Peter Keith

Hi. my for questions. everyone. afternoon, Thanks Good taking

don’t unprecedented sounds you us I on as give and a John, want you sales, quarter-to-date it guess Robert, but like same-store it did characterize So, demand. to

at same-store -- I about for is talking think post XX% that certain new you guys did we I quarter-to-date higher. around there we go or quarters above if level think, time Are would back XXXX, around to a that late be unprecedented? sales,

Robert Julian

in Peter, thanks am growing -- XX% not those that I are mentioned them terms I of products with some rates types growth that can growth are categories the rates for I in the question. referencing. actually I you don’t the digits. growing are that of earlier triple tell you some familiar digits. double of are that product of same-store There

only would are are say, it to-date how The reluctant bit over reason would be seeing a are I just we the number we very, to fluid the quarter I one giving little we -- can the but also very guidance. guess, is, why we concerned change it’s reasons quickly, of give not exuberance, and about situation very

If closed way we the growth the growth mean, range give in quarter, can see sales they the are quarter. double-digit expectation. same-store such the negative a an we sales down for rest in see things We could actually stores could if the of quarter. continue at, for I were large our significant same-store

So such particularly giving might helpful. misleading like information not or fluid to-date specific a just we be situation quarter it’s feel

Jon Barker

were of events dynamic concerns driven or events situation, categories consumer’s different This than different much political of a specific certain a is It’s regulatory. or were XXXX driven to in Yeah. the mind. Those XXXX. Peter, because

have or from need -- consumer would again triple seeing double, They not that standpoint. XXXX just the are we up are categories not it’s digits We ‘XX. seen in not same a

spray, goods, long-term What ammunition, new and just there a and into the and tell Warehouse. ammunition, seeking for that Warehouse are new believe around bear will firearms we good industry and lot not are protection of customers and a I handguns can consumers but bringing looking you net pepper Sportsman’s spray that, is Sportsman’s be of the for personal we in lot

Peter Keith

actually That want I question Thanks. Okay. address ask does another new to customers. about

able how credit an in I like sounds trending pretty card to environment, well. and it new get applicants? So uptick curious offering this you are am the is cross-sell of participating that’s that new

Jon Barker

Peter. are, We

we that the, We of the and of fourth progress. are the good into the from and technology of our I point acceptance The our provider quarter the expectations. initial the sale training -- exceeding making is marketing are the in integration rate at call, website, program materials

date. to pleased we this are So performance with

of We customers and a brand new of, loyalty I lot a poised our bringing into the our are in to introduced overall are Warehouse getting lot and being said, data as Sportsman’s customers consumer to base. new

we the seen with performance to-date. pleased are we So have

Peter Keith

to be sort Okay. are mixing all a little categories And a I of mix out margin It of together, growth pressure will maybe that of standpoint average but margin. kind say lot your fair is think, to calling least that lastly quarter-t-date, the you on at maybe strong. might also just dollar just lower the quite it very -- strength is profit bit gross the gross say simple it

Robert Julian

Yeah.

So, that’s correct. Peter,

products could for so be XXX that. fairly seeing pressure points basis We that mix bag gross margin. XXX basis on of company could And points is to our average be margin and a gross it significant. we lower the into are are than It mixing

higher it at but we the sort line so see in in mix ways to not profit degree short-term. least not this gross we seen some dollars shift wash could event And and revenue, that in can had gross of some had a if profit on similar the occurred

ammunition the in is the run, that and so in this being we We results run heavy but the in continue in QX long don’t seeing short a certainly mix of our expect dynamic that far. will at so level firearms are

Jon Barker

I may add. Robert, if

was years event sets in And last XXXX, incredible the are because in year great than made much we were actually been apparel shape. over our organization in strides of healthier on at we have the We inventory. as prior in clearance our getting had our smaller help January we exited inventory

our make sure We and terms have margin a things department cost and footwear or heavy individually in in with and way category from our every mix apparel a place also in every product category as company put user is job in partnering -- done say the first great this we on in vendors this far up quarter-to-date. such the so into short-term. overall margin margin and the in the will But categories pressure referenced and product

proud So of the different over team going has this going up what I in in categories am The us is done in forecasted product really be the to position. we margin. last year mix QX. put to ever all have would certainly than have They

Robert Julian

Yeah. I glad… am

Peter Keith

Okay.

Robert Julian

…Jon expansion and going wash actually up. product product basis our portfolio positive might and rate more or less be on brought to is are basis category that and margin rate have that so across a a we overall. mix, Every negative on experiencing a

Peter Keith

and detail. insights great the luck. good That’s Okay. Appreciate

Jon Barker

Peter. you, Thank

Operator

W. Peter here question Please Robert next is from Benedict from go Your Baird. ahead.

Peter Benedict

question. Hi, the guys. Thanks Thanks. for taking

guys could event that employees the a the process about thought plans guess in not for -- closed, more many, where like stores per store handful but just the remind the and thinking kind they point of it Sportsman’s, the at us structured of for how employees of question, what number First or how just, model maybe are looks I pay generally are you this there? is that store you you have staffing what’s the closed you have

Jon Barker

actually feet. square now all level, well, square Peter, way from vary to with legacy the XX,XXX feet, our feet High Yeah. X,XXX stores square up XX,XXX

to the throughout the XX part-time widely cycle of So associates call it a in stores. fairly high XX probably balance XX-ish that and percentage varies help those over from We and week our month. employees quantity or demand to are do larger us the the have

that. we clarity that the greater and now you government I will evaluating for around develop us as us the of help compensation are build that all plan execution us front of some of referenced are programs and our Right in coming the believe it. options on to

Peter Benedict

terms, my at the I end million question you. little million. the quarter. $XX it Okay. liquidity next That’s I just think, the helpful, over availabilities guess, position be, Jon. now, million third $XX would know a Remind revolver the the Thank over right us on the of was $XX I

remind the are, how how just So cetera? and that et -- up the covenants sets Robert, us, maybe what Thanks.

Robert Julian

And Sure. We end QX at seasonal glad would can point you availability. brought up, a availability million. for our you just normal And Yeah. line as calculating us. low about be I availability of basis availability And that on that we Peter, a XXXX. about about and am every I tell day reported today would the on $XX current the are liquidity be and our of

million. availability So that’s bit back of seasonality our kind seasonality, normal a a over normal or -- at saw just just and the number you of as so $XX we lower so a number little depressed on speak is up to

amount we at loan maximum mentioned that revolving XXXX. and was million our $XX of of then of we been have what the we of had a $XXX that balance credit that term a and down facility of So line a has million is end the paying

on a and so things, covenant and that the and I our There like, covenants. of debt it’s is covenants on. would say that, describe and reporting inspections series books allowing providing affirmative with simple would notice And of for very negative covenants, laws records affirmative I events, compliance some the as the of light. the financial structure certain side

or liquidate that’s additional pay not negative On dividends. assets our or to our And covenant or the investments to incur liens the to of side, much certain allowed to make close the to it we relative types pretty or stores or are covenant.

So quite light actually.

Peter Benedict

are question, talk about can you the Okay. I know CapEx just guess, not my Thanks. you then, the That’s I budget year. helpful. last And giving for guidance.

committed us year give you. could terms you spend a of in be capital maybe that sense would this what’s Thank helpful? already So for

Jon Barker

expenditures -- should stores. -- with It capital announced new normal and we sort of already so we some Yeah. in is -- expect it year. this say I -- growth It’s we that, you seven would of store have associated new the

happens that will we want and in that maintenance is some the had situation. CapEx, naturally if have deferred then we have defer CapEx There you as and and basic maybe some XXXX flexibility committed, monitor we to to that, on maintenance some something consider just some it’s frankly, we choose

But may in have positive our We in -- normal-ish CapEx. But CapEx XXXX, a of that’s was a back sort $XX on sort of level than a a a more capital. million that way we this or if general things about year progress range. might of little cut at

Robert Julian

Yeah.

have significantly Peter. ability to change question I get to things that ratchet to because back may, drastically If in to think were capital your COVID-XX the on business, I our we if plan. in

The other capital pretty because in lower partially were already Gander committed are much way Stream, historically stores the we them partially expense we been have per would the laid unit lay out. or physically out and that Field to than stores opening of are because much

economy in Some would that have will will Warehouse. in Those and have our is be or -- deferred. new D.C., things some we XXXX material understand whether for flexibility as year. Sportsman’s a the we this And plan impact year’s this XXXX, on be in capital we the plan maintenance have spending of on or the it CapEx progress and part could open opening which capital we would be COVID-XX start of not would could deferred in and would

Peter Benedict

much, so Thanks luck. right. All Terrific. Good Okay. guys.

Jon Barker

availability Yeah. pretty say, it would monthly thing that accurate confirm the I so I of And cash analysis. and mention did Peter, was an well. total analysis It is, would one one go done unnamed analysts was recently fixed will pretty expenses. about which in I will our

Operator

Hofkin Daniel Please Next question here William from from go is ahead. Blair.

Daniel Hofkin

you Good all job. well. doing afternoon. Nice are Hope

to expense store close what can in side, just variable. versus the you. But more asked degree And little earlier reverses that so apologize you the degree this results something you to of wanted -- covenants, the strong of if discussed up if reason already. have or which the a call, addition stores, you extremely Just was recent on that and whatever to you of Thank to I had some structure to -- missed needed? flex on the obviously, follow-up fixed then labor, bit for in think limitations, flip I that you I the can other terms

Robert Julian

Yeah.

caveat expenses any was analysis to analysis what considered any expense is So, would assume be or And relative our so Daniel, that and Robert. reference does our about payroll is our further not on. the and occupancy rents, pulled this cash cam could that fixed that just making or levers to I an actions to be one

then million interest taking you extreme burn minimum include of again, with fixed cash for accurate to not And that further the more $XX actions. it expenditures, cash of us, our a $XX month million caveat sort us is or is if and probably that, other other capital

pretty of feel to to financial our for we COVID-XX so negative about flexibility the impact weather potential able on good be business. And our

least stores so, we some And was at have that and if an there liquidity action. of said, period analysis shut suggest time you had what your further analysis on all for four that of that down months without to that and would taking based

stores would many a have Only our our mention, identified this recognizing I handful majority have as essential. cases impacted. could been of of The open. in However, change stores quickly. are business governments that also And very vast

And makes not of whole and so mentioned and dehydrated are our I’d of my cases in that there business essential companies feel and because other products variety we food is guns prepared on, comments, hand a even in and where that being ammunition generators closed. propane just

hope case we kind and stores your potential the worst scenario down viewing are or a possibility. of I of a question answers terms of is shutting So that that how in

Daniel Hofkin

were stronger, remain to remain that you prior other the were chain or But addressed maybe earlier. above think, That’s things your side, basis if do, could expectations? you staffing And besides I this very the to on Yeah. little helpful. on sales supply I sales a bit flip guess, if anything

Jon Barker

Yeah.

we looking we whether like good shape we that think, it’s It’s to in and that regard. on. -- And or Wal-Mart would it for think interesting I that in stories be is heard so feel companies to work. be are anecdotal who be this regards would would time, staffing maybe there with have are folks possible hiring during available I that some who Amazon about us,

side, staffing think, good. I So feel on the we

of net-net, on our at issues like supply some service time. chain our be those feel period would customer again, gap chain flow time China were back different not the ports like take factories supply There customers. a chain are have and that’s feel little and meet to the to our be is shutdown, But we to side, that think, will again, some but to for ships I and On we the be waiver the might so unloading we for needs maybe in starting able supply flowing, understanding normal. the to and things there getting advantage

Daniel Hofkin

Yeah.

Robert Julian

point get Dan, for recruiting for roles I had Lake. can with to the in in hiring D.C. tell less marketing D.C. XXX to of applicants of hours in with XXX weeks marketing hiring you, a D.C. to we be in for XX and here it’s applicants historically, work could and our the that And no than few South

So are become unemployment and there, in positioned roles here ramp-up those believe to an and available. fill people are we few clearly, happening well as there’s, of that��s they a we we need and

Daniel Hofkin

Best helpful. Great. luck this. of Very throughout all of

Robert Julian

Dan. Thanks,

Jon Barker

Daniel. Thanks,

Operator

Smith next from ahead. is Please Capital Markets. go The Street Lake Mark question from

Mark Smith

guys. Hi,

Sorry, but about if I more stores, on eight the for? you missed the impacted Field quarter? profit impact gross and How paid the from those you what this, or talk Stream inventory and margin that can quantify

Robert Julian

Yeah.

only -- only time we $X.XX week for that Field in that stores on at So It we and two QX. operated eight talked inventory a gross dollar. bought purchased to in we margin or or impact about for the in disclosed had stores growth the because those marginal a we that QX, Stream those

QX of full full a just gross was about which the On margin quarter’s in inventory selling lifting impact discounted in basis on over points XX points of year. We had is QX. by worth full percent that about had the our lift QX the a year, XX and really year basis full basis, basically it the

Mark Smith

Okay. inventory? And have least -- for two impact paid that on at you that were you expect type on maybe dollar a a to that acquired, recently of do similar

Robert Julian

A more the was eight, now discount smaller stores instead of impact, smaller XX%. of only little two bit -- a a like X% of instead

business as and impact And especially total find not so other the over of the maybe in overall harder an margin large is to totals. gross --

Mark Smith

you what then of at QX e-comm? maybe if how And bit of ammo kind talk you and maybe a e-commerce and quantify all about shutting trended in percent can sales of then more can about how little give -- pre that some saw And down talk Okay. as QX. you a typically in ammo us it, can mix you mixes the online

Jon Barker

Okay. I sales a not very are next have last it I level we year, our committed we I and XXXX be will We still website, year. can Hey, am I of that give in, discussed that. that -- XX% at its year, if to we but about disclosed time Mark. It’s next believe from X.X%. on was you confident I year would high in John. XXXX, investors XX%. in sales that’s full

couple over in We a year during way year-over-year. saw discuss, stores set in holiday materially away I the believe, sales season or of shopping this a XX% grow that consumer did we from change saw past as we of behavior materials -- greater even website

the consumer behavior. shopping of team maturity experience that was a in buying and change the website also that an improved of Some was and

the an in to in have demand the give some We operating and We to deemphasizing Try from plan seeing for what had ammo. few the out at from by a normal the were within days categories we the turn of nice Wal-Mart website. others. run seen trends color great started you by We of off quarter lift beginning some it expecting we unprecedented saw such QX QX. exit on and actually

that’s you ammo person any whether I a and per started probably we on to but serve back even as be pulled to ammunition it limiting So at we website, any review greater if the under to boxes we to two the believe are home. to many store We needs today still find be that customers shipping ammunition maximum per them and are can. not will as unique day in stores

believe So, don’t I any that numbers.

not business First The just as Mark, e-comm. basis. to to of anecdotal data provide is numbers And consider. provide all, any I not a aren’t to are that sustainable any on on a to in as likely what out a going I plan to would baseline regular provide not in That’s would break typical good you, the growth… our we QX

Mark Smith

Okay.

it the and And a for up XXXX more situation This it firearms demand seems one we we brings maybe XXXX. led point and to look so by at into in be current Okay. compare as ammunition, ammunition. good to

really ammunition, store discounting the in guys. talked you milk recently holiday that’s a have You like about during how season peers grocery for

go for for people or we are looking in of showed traffic weekly, for of seeing round what last demand we on daily ammo? when kind to high supplies new ammunition as truck that showing ammunition, previously stores, you starting the stores, So are the see up, constantly saw in with looking and checking up

Jon Barker

that’s Yeah. I Mark, that dynamics think, say, There happening different now COVID-XX. generally, would the some I are accurate. of because

are distancing all We doing stores. social in

in delivery stores. of We certain appointment-based are firearms doing

call physical every a in backlog will backlog -- day. I So -- there nearly store every it, -- nearly most a a is

me in for XXXX. were to they shorter hard it’s XXXX that visual, a from So or say or are than the lines longer

out protection daily personal are handguns available. To calling ammunition to what are and what your and customers specifically point firearm is find though available our shotguns

trying customers can. many of make as with dealing we hundreds are we day to that a and We serve calls hundreds sure as

So to our are perspective from customers. manage trying expectations we that for

don’t we Thursday delivery. So waiting have ammo XXX every people the on

out to parsing are good day. that serve we in store each make with we sure each many as service customers We can as

Mark Smith

from Okay. And ahead. then last -- go

Jon Barker

make run, our of well just to consistent the serve day as in and can, I we customers consistent become many goods that price, again, always is which flow sure the low manage works the proposition Yeah. this customers our and of our margin every we been goal, say, we long sure have retained -- that in run value and was that as to company, long the as our goal can, make to everyday we our pricing they year. of is

customers environment we this sure had every goal more But some and don’t have scenes more I behind the don’t understand every why are flowing today’s our In there is we that firearms ammo keep it to day. and daily. get day flowing am arriving wish

Mark Smith

looking permanently expect at just that hours change expectations you me, was just we of days there for update, you of were believe look last week I be stores one closed? any Has as or geographies do closed. any over have it last been for earlier then And to in XX next this that certain still an Okay. four the the kind couple

Jon Barker

couple hard it’s will you Mark, give I of say, a to and examples.

shut no. days We us to have morning government later down government said, had shut for us us this back they in back are had They and And allow and think, come in just us situations to we have operate. and come going and have and happening authorities that’s now, us two up, they two come ago, open then days where authorities I down.

right. are you -- we So,

three, it are We maybe we handful that all. have call think, a four of stores I stores, three operating not two, five, have Mark, we or at

One clean is stores sure have to or hours I we after, where a four appropriately. staff pick only for before -- of can every can make to that are appointment restock make two reduced or up. We on we we it doing store reason. three and store couple is and and sure

could by every every by we more stores by day could review county, reopen, night region, that we by city. task day have a day think, we the and store stores though, I -- should meets close, force morning twice your state, expect -- a activities To have point to more

as approach we and to have about unique locations approach every approach retail, to have elements to are one operating the know that these their their XXX ammunition. firearms you their of And now essentials,

we and So, of now, very keeping done curve. complex has us a job ahead great navigating of the a right think, situation that team are I

Mark Smith

the Okay. Great. for Thank you update.

Operator

turn I’d to closing to comments. concludes session. for management over any back question-and-answer like the floor This the

Jon Barker

to plus thank, coming thanks XXXX Thank that, start look especially serve will X,XXX our to to their continuing hardworking in call. customers in our forward the years associates, time our With to all and Thank dedication I effort success the our and you. contributed ahead. to you. to XXXX. today. months Special and close again, the of Warehouse everyone, for appreciate who in Sportsman’s I We want

Operator

This teleconference. concludes today’s

disconnect you this may participation. lines your Thank time. your again at You for

Sportsman's Warehouse (SPWH) 26 Mar 202019 Q4 Earnings call transcript