| UNITED STATES | ||||||||||||||
| SECURITIES AND EXCHANGE COMMISSION | ||||||||||||||
| Washington, D.C. 20549 | ||||||||||||||
| FORM 8-K | ||||||||||||||
| CURRENT REPORT | ||||||||||||||
| Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||||||||
| Date of report (Date of earliest event reported): December 8, 2020 | ||||||||||||||
 | ||||||||||||||
Academy Sports and Outdoors, Inc. | ||||||||||||||
(Exact name of registrant as specified in its charter) | ||||||||||||||
Delaware | 001-39589 | 85-1800912 | ||||||||||||
(State or other jurisdiction of | (Commission | (I.R.S. Employer | ||||||||||||
incorporation or organization) | File No.) | Identification No.) | ||||||||||||
| 1800 North Mason Road | ||||||||||||||
| Katy, Texas 77449 | ||||||||||||||
(Address of principal executive offices) (Zip code) | ||||||||||||||
| (281) 646-5200 | ||||||||||||||
(Registrant’s Telephone Number, including Area Code) | ||||||||||||||
Not Applicable | ||||||||||||||
| (Former name or former address, if changed since last report) | ||||||||||||||
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||||||||||||||
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||||||||
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||||||||
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||||||||
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, $0.01 par value per share | ASO | The Nasdaq Stock Market LLC | ||||||||||||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||||||||||||
| Emerging Growth Company ☐ | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||||||||
Item 2.02 Results of Operations and Financial Condition.
On December 10, 2020, Academy Sports and Outdoors, Inc. (the “Company”) issued a press release announcing financial results for the quarter ended October 31, 2020. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated by reference herein.
The information in this Current Report on Form 8-K, including exhibits, is being furnished to the Securities and Exchange Commission (the “SEC”) pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of the Company’s filings with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02 Election of Director.
Appointment of Wendy A. Beck to Board of Directors
Effective December 8, 2020, the Board of Directors (the “Board”) of the Company increased the size of the Board by one director (to a total size of nine directors) and filled the vacancy created by such increase by appointing Wendy A. Beck, age 56, as a Class II director, effective December 8, 2020. Ms. Beck will hold office until the date of the Company’s 2022 Annual Meeting of Stockholders and until her successor shall be elected and qualified or until her earlier death, resignation, retirement, disqualification or removal. Ms. Beck will serve on the audit committee.
Ms. Beck previously served as the Executive Vice President and Chief Financial Officer of Norwegian Cruise Line Holdings Ltd. (“NCLH”) from September 2010 to March 2018, and served in a consulting role for NCLH from March 2018 to December 2019. Prior to NCLH, Ms. Beck served as Executive Vice President and Chief Financial Officer of Domino’s Pizza, Inc. from May 2008 to September 2010. Prior to that, she served as Senior Vice President, Chief Financial Officer and Treasurer of Whataburger Restaurants, LP from May 2004 through April 2008 and served as their Vice President and Chief Accounting Officer from August 2001 through April 2004. Ms. Beck was also employed at Checkers Drive-In Restaurants, Inc. from 1993 through July 2001, serving as Vice President, Chief Financial Officer and Treasurer from 2000 through July 2001. Ms. Beck has been on the Board of Directors and the Compensation Committee of Bloomin’ Brands, Inc. since February 2018 and on the Board of Directors and has chaired the Audit Committee of At Home Group Inc. since September 2014. Ms. Beck also serves on a private company board, Jack’s Family Restaurants owned by AEA Investors, since October 2019. She previously served on the Board of Directors and the Audit Committee of SpartanNash Company from September 2010 to December 2013. She is a graduate of the University of South Florida with a Bachelor of Science in Accounting and is a Certified Public Accountant. Ms. Beck was selected to the Board because of her extensive executive leadership, management and financial experience.
The Board has determined that Ms. Beck qualifies as an independent director under the corporate governance standards of Nasdaq and the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Ms. Beck was not appointed to the Board pursuant to any arrangement or understanding with any other person. Ms. Beck has no family relationships with any director or executive officer of the Company and there are no transactions in which Ms. Beck has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Ms. Beck will be entitled to the annual compensation paid to non-employee directors, consisting of an annual cash retainer of $100,000 (prorated for commencing service during the fiscal year), payable quarterly in arrears, and an annual grant of restricted stock units having a grant date fair market value equal to $130,000 (prorated for commencing service during the fiscal year) pursuant to the Academy Sports and Outdoors, Inc. 2020 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). In connection with her appointment to the Board on December 8, 2020, Ms. Beck was granted a restricted stock unit award pursuant to the Omnibus Incentive Plan with a grant date fair value of $63,041.10, which will vest in full on the earliest of (i) the first anniversary of the date of grant, or, if earlier, the date which is the business day immediately preceding the date of the Company’s 2021 Annual Meeting of Stockholders, (ii) her termination due to death or Disability (as defined in the Omnibus Incentive Plan) or (iii) a
Change in Control (as defined in the Omnibus Incentive Plan), subject to continued service through the applicable vesting date.
The Company and Ms. Beck will enter into the Company’s standard form of indemnification agreement for directors, a copy of which was previously filed as Exhibit 10.37 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-248683) filed with the SEC on September 23, 2020.
Item 7.01 Regulation FD Disclosure.
A copy of the press release issued by the Company announcing the appointment of Ms. Beck to the Board described in Item 5.02 is furnished as Exhibit 99.2 to this Current Report and is incorporated herein by reference.
The information included in this Current Report on Form 8-K is being furnished under Item 7.01, “Regulation FD Disclosure” of Form 8-K. As such, the information herein shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, nor shall it be incorporated by reference into a filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
See the Exhibit Index immediately preceding the signature page hereto, which is incorporated herein by reference.
| Exhibit No. | Description of Exhibit | |||||||
| Academy Sports and Outdoors, Inc. Press Release December 10, 2020 | ||||||||
| Academy Sports and Outdoors, Inc. Press Release December 8, 2020 | ||||||||
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 8-K on its behalf by the undersigned, thereto duly authorized.
ACADEMY SPORTS AND OUTDOORS, INC. | ||
| Date: December 10, 2020 | By: | /s/ | Rene G. Casares | |||||||||||
| Name: | Rene G. Casares | |||||||||||||
| Title: | Senior Vice President, General Counsel and Secretary | |||||||||||||
Exhibit 99.1
PRESS RELEASE FOR IMMEDIATE RELEASE |  | |||||||||||||
Academy Sports + Outdoors Reports
Record-Breaking Third Quarter 2020 Sales and Earnings
•Net sales of $1.35 billion, a 17.8% increase over the third quarter 2019; Comparable sales up 16.5%
•Net income of $59.6 million, a 109% increase over the third quarter 2019
•Earnings per diluted share of $0.74, a 95% increase over the third quarter 2019; Pro Forma Adjusted Earnings per diluted share of $0.91, a 168% increase over the third quarter 2019
KATY, TEXAS (PRNewswire — December 10, 2020) – Academy Sports and Outdoors, Inc. (NASDAQ: ASO) today reported financial results for the third quarter ended October 31, 2020.
Third Quarter Summary for the Period Ending October 31, 2020
Net sales for the third quarter 2020 were $1.35 billion, a 17.8% increase over $1.15 billion in the third quarter 2019. Comparable sales for the third quarter 2020 increased 16.5% over the third quarter 2019.
Academy reported net income for the third quarter 2020 of $59.6 million, or $0.74 per diluted share, a 109% net income increase over $28.6 million, or $0.38 per diluted share, in the third quarter 2019. Pro Forma Adjusted Net Income, which excludes the impact of certain non-cash and extraordinary items, was $73.7 million or $0.91 per diluted share, a 188% increase in Pro Forma Adjusted Net Income over $25.6 million or $0.34 per diluted share, in the third quarter 2019.
The Company’s gross margin rate for the third quarter 2020 was 32.7% of net sales, a 110 basis point increase over 31.6% in the third quarter of 2019, while the selling, general, and administrative (“SG&A”) expense rate was 26.6% of net sales on $359.0 million of SG&A expenses, a 40 basis point improvement over 27.0% on $309.2 million of SG&A expenses in the third quarter 2019. Excluding nonrecurring expenses associated with the Company’s October initial public offering (“IPO”), consisting of $19.9 million in additional stock compensation expense and $12.3 million for the settlement of the Company’s private equity sponsor’s monitoring agreement, SG&A expenses for third quarter 2020 would have been $326.8 million or 24.2% of net sales, a 280 basis point improvement over the third quarter 2019.
The Company reported eCommerce sales growth of 95.9% over the third quarter 2019 and that stores facilitated over 95% of the Company’s total sales, including ship-from-store, buy-online-pick-up-in-store, and in-store retail sales.
Ken Hicks, Chairman, President and Chief Executive Officer, said, “I am proud to report record-breaking quarterly sales and net income and our fifth consecutive quarter with a comparable sales increase. This was a significant accomplishment that our entire team delivered in a challenging quarter filled with many important achievements. We continue to work on our key strategic initiatives, including power merchandising, omnichannel, and customer focus, which we believe will position us well for the future.”
Year-to-date 2020 Summary
Net sales for the 39 weeks ended October 31, 2020 (“year-to-date 2020”) was $4.1 billion, an 18.3% increase over the 39 weeks ended November 2, 2019 (“year-to-date 2019”). Comparable sales for the year-to-date 2020 increased 16.1% over the year-to-date 2019.
The Company reported net income for the year-to-date 2020 of $217.2 million, a 112.3% increase over the year-to-date 2019. This resulted in earnings per diluted share of $2.82 compared to $1.37 per diluted share for the year-to-date 2019. Pro Forma Adjusted Net Income for the year-to-date 2020 was $208.6 million, a 257.6% improvement over the year-to-date 2019. This resulted in Pro Forma Adjusted Earnings per diluted share of $2.70 compared to $0.78 per diluted share for the year-to-date 2019.
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The Company reported net cash provided by operating activities of $857.2 million for the year-to-date 2020, a $762.4 million increase over $94.8 million for the year-to-date 2019. Adjusted Free Cash Flow for the year-to-date 2020 was $843.4 million compared to $42.2 million for the year-to-date 2019.
Michael Mullican, Executive Vice President and Chief Financial Officer, said, "We are proud of our extraordinary team members for delivering strong year-to-date sales and earnings results. Based on our comparable sales growth before and during the ongoing pandemic, we believe our diversified product categories and resilient business model resonate well with our growing customer base. Despite challenges during the year to maintain in-stock levels in certain very productive categories, we believe that our inventory is now at an acceptable level in most categories and that we are in a good position to support our current and planned sales velocity and continue to improve even more in the near future.”
Capital Structure
The Company’s cash and cash equivalents totaled $869.7 million with no borrowings under its $1 billion ABL credit facility as of the end of the third quarter 2020. Subsequent to the third quarter, on November 6, 2020, the Company issued $400 million of senior secured notes and entered into a new $400 million term loan facility, both of which mature in 2027. The net proceeds from the notes and the new term loan, as well as cash on hand, were utilized to repay in full outstanding borrowings under the Company’s existing term loan facility in the amount of $1.4 billion, reducing the Company’s debt by $631 million. In addition, on November 6, 2020, the Company extended its $1 billion ABL facility through 2025.
Conference Call Info
The Company will host a live conference call today at 11:00 a.m. Eastern Time to discuss its financial results. Participants interested in accessing the live call can dial 1-800-289-0438 from the U.S. or 1-323-794-2423 from international locations. The conference passcode is 4060996. An audio webcast of the live call can be accessed on the Investor Relations section of the Company’s website at investors.academy.com. To listen to the live call, please dial in or go to the website at least 10 minutes prior to the start of the call.
A telephonic replay of the conference call will be available shortly after its broadcast for approximately 30 days, by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 from international locations, and entering conference passcode 4060996. A replay of the audio webcast will be archived on the Investor Relations section of the Company’s website for approximately 30 days.
About Academy
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 259 stores across 16 contiguous states. 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 17 private label brands, which go well beyond traditional sporting goods and apparel offerings.
All references to “Academy,” “Academy Sports + Outdoors,” “we,” “us,” “our” or the “Company” in this press release refer to (1) prior to October 1, 2020 (the “IPO pricing date”), New Academy Holding Company, LLC, a Delaware limited liability company (“NAHC”) and the prior parent holding company for our operations, and its consolidated subsidiaries; and (2) on and after the IPO pricing date, Academy Sports and Outdoors, Inc., a Delaware corporation (“ASO, Inc.”) and the current parent holding company of our operations, and its consolidated subsidiaries.
On the IPO pricing date, we completed a series of reorganization transactions (the "Reorganization Transactions") that resulted in NAHC being contributed to ASO, Inc. by its members and becoming a wholly owned subsidiary of ASO, Inc. and one share of common stock of ASO, Inc. issued to then-existing members of NAHC for every 3.15 membership units of NAHC contributed to ASO, Inc. (the "Contribution Ratio"). Unless indicated otherwise, the information in this press release has been adjusted to give retrospective effect to the Contribution Ratio.
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Non-GAAP Measures
Adjusted EBITDA, Adjusted Net Income (Loss), Pro Forma Adjusted Net Income (Loss), Pro Forma Adjusted Earnings Per 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”).
These non-GAAP measures have limitations as analytical tools. For information on these limitations, as well as information on why management believes these non-GAAP measures are useful, please see our final prospectus dated October 1, 2020 (the “Prospectus”), as filed with the Securities and Exchange Commission (“SEC”) on October 2, 2020 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), as such factors may be updated from time to time in our periodic filings with the SEC including our quarterly report on Form 10-Q for the third quarter ended October 31, 2020 (the “Quarterly Report”), which is expected to be filed on or about the date of this press release. We compensate for these limitations by primarily relying on our GAAP results in addition to using these non-GAAP measures supplementally.
See “Reconciliations of Non-GAAP to GAAP Financial Measures” below for reconciliations of non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures.
Comparable Sales
We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this press release regarding our comparable sales may not be comparable to similar data made available by other retailers. For additional information on comparable sales, please see the Prospectus and the Quarterly Report.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to our current beliefs and expectations regarding the performance of our industry, our strategic direction, market position, prospects and future results. You can identify these forward-looking statements by the use of words such as “outlook,” “guidance,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Caution should be taken not to place undue reliance on any forward-looking statement as such statements speak only as of the date when made. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. Forward-looking statements are not guarantees and are subject to various risk factors and uncertainties, which may cause actual results to differ materially from those implied in the forward-looking statements. Such factors include, but are not limited to, overall decline in the health of the economy and consumer discretionary spending; our ability to predict or effectively react to changes in consumer tastes and preferences, to acquire and sell brand name merchandise at competitive prices and/or to manage our inventory balances; intense competition in the sporting goods and outdoor recreation retail industries; the impact of COVID-19 on our business and financial results; our ability to safeguard sensitive or confidential data relating to us and our customers, team members and vendors; risks associated with our reliance on internationally manufactured merchandise; our ability to comply with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products; claims, demands and lawsuits to which we are, and may in the future, be subject and the risk that our insurance or indemnities coverage may not be sufficient; harm to our reputation; our ability to operate, update or implement our information technology systems; risks associated with disruptions in our supply chain and losses of merchandise purchasing incentives; any failure of our third-party vendors of outsourced business services and solutions; our ability to successfully continue our store growth plans or manage our growth effectively, or any failure of our new stores to generate sales and/or achieve profitability; risks associated with our e-commerce business; risks related to our owned brand merchandise; any disruption in the operation of our distribution centers; quarterly and seasonal fluctuations in our operating results; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest; our ability to protect our intellectual property and avoid the infringement of third-party intellectual property rights; our dependence on our ability to meet our labor needs; the geographic concentration of our stores; fluctuations in merchandise costs and availability; our ability to manage the growth of our business; our ability to retain key executives; our ability to successfully
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pursue strategic acquisitions and integrate acquired businesses; payment-related risks; the effectiveness of our marketing and advertising programs; our substantial indebtedness; and our sponsor controls us and their interests may conflict with ours or yours in the future. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under the heading entitled “Risk Factors” in our Prospectus, and Quarterly Report as such factors may be further updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC.
Contact
investors@academy.com
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ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
| Thirteen Weeks Ended | ||||||||||||||||||||||||||
| October 31, 2020 | Percentage of Sales (2) | November 2, 2019 | Percentage of Sales (2) | |||||||||||||||||||||||
| Net sales | $ | 1,349,076 | 100.0 | % | $ | 1,145,203 | 100.0 | % | ||||||||||||||||||
| Cost of goods sold | 908,565 | 67.3 | % | 782,781 | 68.4 | % | ||||||||||||||||||||
| Gross margin | 440,511 | 32.7 | % | 362,422 | 31.6 | % | ||||||||||||||||||||
| Selling, general and administrative expenses | 358,955 | 26.6 | % | 309,246 | 27.0 | % | ||||||||||||||||||||
| Operating income | 81,556 | 6.0 | % | 53,176 | 4.6 | % | ||||||||||||||||||||
| Interest expense, net | 22,399 | 1.7 | % | 24,585 | 2.1 | % | ||||||||||||||||||||
| Other (income) expense, net | 764 | 0.1 | % | (467) | 0.0 | % | ||||||||||||||||||||
| Income before income taxes | 58,393 | 4.3 | % | 29,058 | 2.5 | % | ||||||||||||||||||||
| Income tax expense (benefit) | (1,193) | (0.1) | % | 506 | 0.0 | % | ||||||||||||||||||||
| Net income | $ | 59,586 | 4.4 | % | $ | 28,552 | 2.5 | % | ||||||||||||||||||
| Earnings Per Common Share: | ||||||||||||||||||||||||||
Basic (1) | $ | 0.78 | $ | 0.39 | ||||||||||||||||||||||
Diluted (1) | $ | 0.74 | $ | 0.38 | ||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||
Basic (1) | 76,771 | 72,484 | ||||||||||||||||||||||||
Diluted (1) | 80,714 | 75,201 | ||||||||||||||||||||||||
(1) After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio
(2) Column may not add due to rounding
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ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
| Thirty-Nine Weeks Ended | ||||||||||||||||||||||||||
| October 31, 2020 | Percentage of Sales (2) | November 2, 2019 | Percentage of Sales (2) | |||||||||||||||||||||||
| Net sales | $ | 4,091,797 | 100.0 | % | $ | 3,459,405 | 100.0 | % | ||||||||||||||||||
| Cost of goods sold | 2,856,840 | 69.8 | % | 2,398,783 | 69.3 | % | ||||||||||||||||||||
| Gross margin | 1,234,957 | 30.2 | % | 1,060,622 | 30.7 | % | ||||||||||||||||||||
| Selling, general and administrative expenses | 955,591 | 23.4 | % | 923,418 | 26.7 | % | ||||||||||||||||||||
| Operating income | 279,366 | 6.8 | % | 137,204 | 4.0 | % | ||||||||||||||||||||
| Interest expense, net | 70,487 | 1.7 | % | 77,171 | 2.2 | % | ||||||||||||||||||||
| Gain on early retirement of debt, net | (7,831) | (0.2) | % | (42,265) | (1.2) | % | ||||||||||||||||||||
| Other (income), net | (857) | 0.0 | % | (1,921) | (0.1) | % | ||||||||||||||||||||
| Income before income taxes | 217,567 | 5.3 | % | 104,219 | 3.0 | % | ||||||||||||||||||||
| Income tax expense | 325 | 0.0 | % | 1,914 | 0.1 | % | ||||||||||||||||||||
| Net income | $ | 217,242 | 5.3 | % | $ | 102,305 | 3.0 | % | ||||||||||||||||||
| Earnings Per Common Share: | ||||||||||||||||||||||||||
Basic (1) | $ | 2.94 | $ | 1.41 | ||||||||||||||||||||||
Diluted (1) | $ | 2.82 | $ | 1.37 | ||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||
Basic (1) | 73,908 | 72,480 | ||||||||||||||||||||||||
Diluted (1) | 77,171 | 74,766 | ||||||||||||||||||||||||
(1) After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio
(2) Column may not add due to rounding
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ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands)
| October 31, 2020 | February 1, 2020 | November 2, 2019 | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 869,725 | $ | 149,385 | $ | 43,538 | ||||||||||||||
| Accounts receivable - less allowance for doubtful accounts of $1,286, $3,275 and $3,642, respectively | 11,908 | 13,999 | 9,798 | |||||||||||||||||
| Merchandise inventories, net | 1,082,907 | 1,099,749 | 1,331,969 | |||||||||||||||||
| Prepaid expenses and other current assets | 25,789 | 24,548 | 26,140 | |||||||||||||||||
| Assets held for sale | 1,763 | 1,763 | 1,763 | |||||||||||||||||
| Total current assets | 1,992,092 | 1,289,444 | 1,413,208 | |||||||||||||||||
| PROPERTY AND EQUIPMENT, NET | 382,620 | 441,407 | 454,406 | |||||||||||||||||
| RIGHT-OF-USE ASSETS | 1,163,361 | 1,145,705 | 1,165,826 | |||||||||||||||||
| TRADE NAME | 577,000 | 577,000 | 577,000 | |||||||||||||||||
| GOODWILL | 861,920 | 861,920 | 861,920 | |||||||||||||||||
| OTHER NONCURRENT ASSETS | 4,923 | 15,845 | 16,349 | |||||||||||||||||
| Total assets | $ | 4,981,916 | $ | 4,331,321 | $ | 4,488,709 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS'/PARTNERS' EQUITY | ||||||||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||||||||
| Accounts payable | $ | 868,879 | $ | 428,823 | 529,926 | |||||||||||||||
| Accrued expenses and other current liabilities | 274,612 | 211,381 | 219,992 | |||||||||||||||||
| Current lease liabilities | 79,361 | 76,329 | 73,252 | |||||||||||||||||
| Current maturities of long-term debt | 18,250 | 34,116 | 18,250 | |||||||||||||||||
| Total current liabilities | 1,241,102 | 750,649 | 841,420 | |||||||||||||||||
| LONG-TERM DEBT, net | 1,408,885 | 1,428,542 | 1,492,609 | |||||||||||||||||
| LONG-TERM LEASE LIABILITIES | 1,171,420 | 1,141,896 | 1,163,250 | |||||||||||||||||
| DEFERRED TAX LIABILITIES, NET | 132,701 | — | — | |||||||||||||||||
| OTHER LONG-TERM LIABILITIES | 43,244 | 19,197 | 19,529 | |||||||||||||||||
| Total liabilities | $ | 3,997,352 | $ | 3,340,284 | 3,516,808 | |||||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||
| REDEEMABLE MEMBERSHIP UNITS | — | 2,818 | 2,818 | |||||||||||||||||
STOCKHOLDERS'/PARTNERS' EQUITY (1): | ||||||||||||||||||||
| Preferred stock, $0.01 par value, authorized 50,000,000 shares; none issued and outstanding | — | — | — | |||||||||||||||||
| Partners' equity, membership units authorized, issued and outstanding were 72,468,164 as of February 1, 2020 and November 2, 2019 | — | 996,285 | 976,538 | |||||||||||||||||
| Common stock, $0.01 par value, authorized 300,000,000 shares; 88,103,975 issued and outstanding as of October 31, 2020 | 881 | — | — | |||||||||||||||||
| Additional paid-in capital | 93,064 | — | — | |||||||||||||||||
| Retained earnings | 895,646 | — | — | |||||||||||||||||
| Accumulated other comprehensive loss | (5,027) | (8,066) | (7,455) | |||||||||||||||||
| Stockholders'/partners' equity | 984,564 | 988,219 | 969,083 | |||||||||||||||||
| Total liabilities and stockholders'/partners' equity | $ | 4,981,916 | $ | 4,331,321 | $ | 4,488,709 | ||||||||||||||
(1) After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio
7
ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
| Thirty-Nine Weeks Ended | ||||||||||||||
| October 31, 2020 | November 2, 2019 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | 217,242 | $ | 102,305 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 79,718 | 88,693 | ||||||||||||
| Non-cash lease expense | 14,870 | 2,471 | ||||||||||||
| Equity compensation | 27,049 | 5,872 | ||||||||||||
| Amortization of deferred loan and other costs | 2,734 | 2,796 | ||||||||||||
| Loss on swaps from debt refinancing | 1,330 | — | ||||||||||||
| Deferred income taxes | (11,739) | (246) | ||||||||||||
| Non-cash gain on early retirement of debt, net | (7,831) | (42,265) | ||||||||||||
| Gain on disposal of property and equipment | — | (23) | ||||||||||||
| Casualty loss | 114 | 499 | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable, net | 2,121 | 8,328 | ||||||||||||
| Merchandise inventories, net | 16,727 | (197,812) | ||||||||||||
| Prepaid expenses and other current assets | (1,151) | (5,134) | ||||||||||||
| Other noncurrent assets | 245 | 433 | ||||||||||||
| Accounts payable | 439,682 | 99,557 | ||||||||||||
| Accrued expenses and other current liabilities | 44,733 | 30,240 | ||||||||||||
| Income taxes payable | 9,590 | — | ||||||||||||
| Other long-term liabilities | 21,784 | (958) | ||||||||||||
| Net cash provided by operating activities | 857,218 | 94,756 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Capital expenditures | (21,915) | (48,614) | ||||||||||||
| Proceeds from the sale of property and equipment | — | 23 | ||||||||||||
| Notes receivable from member | 8,125 | (3,988) | ||||||||||||
| Net cash used in investing activities | (13,790) | (52,579) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Proceeds from revolving credit facility | 500,000 | 401,100 | ||||||||||||
| Repayment of revolving credit facility | (500,000) | (356,800) | ||||||||||||
| Repayment of term loan facility | (29,653) | (118,257) | ||||||||||||
| Debt issuance fees | (556) | — | ||||||||||||
| Share-Based Award Payments | (20,724) | — | ||||||||||||
| Distribution | (257,000) | — | ||||||||||||
| Equity contributions from Managers | — | 100 | ||||||||||||
| Proceeds from issuance of common stock, net of Offering Costs | 184,882 | — | ||||||||||||
| Repurchase of Redeemable Membership Units | (37) | (473) | ||||||||||||
| Net cash used in financing activities | (123,088) | (74,330) | ||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 720,340 | (32,153) | ||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 149,385 | 75,691 | ||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 869,725 | $ | 43,538 | ||||||||||
8
ACADEMY SPORTS AND OUTDOORS, INC.
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL MEASURES
(Unaudited)
(Dollar amounts in thousands)
Adjusted EBITDA
We define “Adjusted EBITDA” as net income (loss) before interest expense, net, income tax expense and depreciation, amortization and impairment, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, stock based compensation expense, gain on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, inventory write-down adjustments associated with strategic merchandising initiatives and other adjustments. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA in the following table.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||||||||||||
| October 31, 2020 | November 2, 2019 | October 31, 2020 | November 2, 2019 | ||||||||||||||||||||||||||
| Net income | $ | 59,586 | $ | 28,552 | $ | 217,242 | $ | 102,305 | |||||||||||||||||||||
| Interest expense, net | 22,399 | 24,585 | 70,487 | 77,171 | |||||||||||||||||||||||||
| Income tax expense | (1,193) | 506 | 325 | 1,914 | |||||||||||||||||||||||||
| Depreciation, amortization and impairment | 25,567 | 29,596 | 79,718 | 88,693 | |||||||||||||||||||||||||
| Consulting fees (a) | 102 | 237 | 194 | 3,517 | |||||||||||||||||||||||||
| Adviser monitoring fee (b) | 12,953 | 937 | 14,793 | 2,697 | |||||||||||||||||||||||||
| Equity compensation (c) | 23,359 | 1,405 | 27,049 | 5,872 | |||||||||||||||||||||||||
| Gain on early extinguishment of debt, net | — | — | (7,831) | (42,265) | |||||||||||||||||||||||||
| Severance and executive transition costs (d) | — | 1,237 | 4,137 | 1,237 | |||||||||||||||||||||||||
| Costs related to the COVID-19 pandemic (e) | — | — | 17,632 | — | |||||||||||||||||||||||||
| Other (f) | 2,965 | 1,704 | 4,894 | 4,455 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 145,738 | $ | 88,759 | $ | 428,640 | $ | 245,596 | |||||||||||||||||||||
| (a) | Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives. | ||||||||||||||||||||||||||||
| (b) | Represents our contractual payments under a monitoring agreement ("Monitoring Agreement") with Kohlberg Kravis Roberts & Co. L.P. ("Adviser"). | ||||||||||||||||||||||||||||
| (c) | 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. | ||||||||||||||||||||||||||||
| (d) | Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes. | ||||||||||||||||||||||||||||
| (e) | Represents costs incurred as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock, and legal fees associated with consulting in local jurisdictions. | ||||||||||||||||||||||||||||
| (f) | Other adjustments include (representing deductions or additions to Adjusted EBITDA) amounts that management believes are not representative of our operating performance, including investment income, installation costs for energy savings associated with our profitability initiatives, legal fees associated with our distribution and the omnibus incentive plan, store exit costs and other costs associated with strategic cost savings and business optimization initiatives. | ||||||||||||||||||||||||||||
9
Adjusted Net Income, Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share
We define “Adjusted Net Income (Loss)” as net income (loss), plus consulting fees, private equity sponsor monitoring fees, stock based compensation expense, gain on early extinguishment of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, inventory write-down adjustments associated with strategic merchandising initiatives and other adjustments, less the tax effect of these adjustments. We define “Pro Forma Adjusted Net Income (Loss)” as Adjusted Net Income (Loss) less the retroactive tax effect of Adjusted Net Income at our estimated effective tax rate of approximately 25% for periods prior to October 1, 2020, the effective date of our conversion to a C-Corporation. We define “Pro Forma Adjusted Earnings per Common Share, Basic” as Pro Forma Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and “Pro Forma Adjusted Earnings per Common Share, Diluted” as Pro Forma 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 (Loss), Pro Forma Adjusted Net Income (Loss), and Pro Forma Adjusted Earnings Per Share in the following table.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||||||||||||
| October 31, 2020 | November 2, 2019 | October 31, 2020 | November 2, 2019 | ||||||||||||||||||||||||||
| Net income | $ | 59,586 | $ | 28,552 | $ | 217,242 | $ | 102,305 | |||||||||||||||||||||
| Consulting fees (a) | 102 | 237 | 194 | 3,517 | |||||||||||||||||||||||||
| Adviser monitoring fee (b) | 12,953 | 937 | 14,793 | 2,697 | |||||||||||||||||||||||||
| Equity compensation (c) | 23,359 | 1,405 | 27,049 | 5,872 | |||||||||||||||||||||||||
| Gain on early extinguishment of debt, net | — | — | (7,831) | (42,265) | |||||||||||||||||||||||||
| Severance and executive transition costs (d) | — | 1,237 | 4,137 | 1,237 | |||||||||||||||||||||||||
| Costs related to the COVID-19 pandemic (e) | — | — | 17,632 | — | |||||||||||||||||||||||||
| Other (f) | 2,965 | 1,704 | 4,894 | 4,455 | |||||||||||||||||||||||||
| Tax effects of these adjustments (g) | (71) | (10) | (109) | 44 | |||||||||||||||||||||||||
| Adjusted Net Income | 98,894 | 34,062 | 278,001 | 77,862 | |||||||||||||||||||||||||
| Estimated tax effect of change to C-Corporation status (h) | (25,147) | (8,472) | (69,410) | (19,535) | |||||||||||||||||||||||||
| Pro Forma Adjusted Net Income | $ | 73,747 | $ | 25,590 | $ | 208,591 | $ | 58,327 | |||||||||||||||||||||
| Pro Forma Adjusted Earnings Per Share | |||||||||||||||||||||||||||||
| Basic | $ | 0.96 | $ | 0.35 | $ | 2.82 | $ | 0.80 | |||||||||||||||||||||
| Diluted | $ | 0.91 | $ | 0.34 | $ | 2.70 | $ | 0.78 | |||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||||||||
Basic (1) | 76,771 | 72,484 | 73,908 | 72,480 | |||||||||||||||||||||||||
Diluted (1) | 80,714 | 75,201 | 77,171 | 74,766 | |||||||||||||||||||||||||
(1) | After effect of retrospective presentation of the Reorganization Transactions and Contribution Ratio | ||||||||||||||||||||||||||||
| (a) | Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives. | ||||||||||||||||||||||||||||
| (b) | Represents our contractual payments under our Monitoring Agreement with the Adviser. | ||||||||||||||||||||||||||||
| (c) | 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. | ||||||||||||||||||||||||||||
| (d) | Represents severance costs associated with executive leadership changes and enterprise-wide organizational changes. | ||||||||||||||||||||||||||||
| (e) | Represents costs incurred as a result of the COVID-19 pandemic, including temporary wage premiums, additional sick time, costs of additional cleaning supplies and third party cleaning services for the stores, corporate office and distribution centers, accelerated freight costs associated with shifting our inventory purchase earlier in the year to maintain stock, and legal fees associated with consulting in local jurisdictions. | ||||||||||||||||||||||||||||
| (f) | Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, including investment income, installation costs for energy savings associated with our profitability initiatives, legal fees associated with a distribution to NAHC's members and our omnibus incentive plan, store exit costs and other costs associated with strategic cost savings and business optimization initiatives. | ||||||||||||||||||||||||||||
| (g) | Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate. | ||||||||||||||||||||||||||||
| (h) | Represents the retrospective tax effect of Adjusted Net Income at our estimated effective tax rate of approximately 25% for periods prior to October 1, 2020, the effective date of our conversion to a C-Corporation, upon which we became subject to federal income taxes. | ||||||||||||||||||||||||||||
10
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.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||
| October 31, 2020 | November 2, 2019 | October 31, 2020 | November 2, 2019 | |||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 83,597 | $ | (9,205) | $ | 857,218 | $ | 94,756 | ||||||||||||||||||
| Net cash provided by (used in) investing activities | 60 | (20,812) | (13,790) | (52,579) | ||||||||||||||||||||||
| Adjusted Free Cash Flow | $ | 83,657 | $ | (30,017) | $ | 843,428 | $ | 42,177 | ||||||||||||||||||
11
Exhibit 99.2
PRESS RELEASE |  | |||||||||||||
FOR IMMEDIATE RELEASE | ||||||||||||||
Elise Hasbrook | ||||||||||||||
Vice President Communications | ||||||||||||||
281.253.8200 | ||||||||||||||
elise.hasbrook@academy.com | ||||||||||||||
Academy Sports + Outdoors Announces
Appointment of Wendy A. Beck to Board of Directors, who joins Allen I. Questrom and Jeffrey C. Tweedy as recent additions to the Board
KATY, TEXAS (PRNewswire — December 8, 2020) – Academy Sports and Outdoors, Inc. (“Academy” or the “Company”) (NASDAQ: ASO) today announced the appointment of Wendy A. Beck to its Board of Directors, effective today. Beck joins Allen I. Questrom and Jeffrey C. Tweedy, who were appointed to Academy’s Board on October 1, 2020 in connection with Academy’s initial public offering, as recent independent director additions to the Board. With the additions of Beck, Questrom and Tweedy, Academy’s Board comprises nine directors.
“We are very pleased to welcome Wendy, Allen, and Jeff to our Board of Directors,” said Ken C. Hicks, Academy Chairman, President, and CEO. “Wendy is a highly skilled financial professional who brings extensive executive leadership, management and financial experience that will be tremendously valuable to our Board. Allen is an exceptional retail leader who brings outstanding management experience resulting from his numerous roles as Chairman and CEO of several major retail companies, and his expertise in merchandising, finance, marketing, and customer service will benefit our Board greatly. Jeff is an accomplished, strategic leader who brings relevant and complementary expertise in the areas of retailing, merchandising, and brand strategy and will be an excellent addition to the Board as we continue to execute our growth strategy.”
Beck is an accomplished senior finance executive with over twenty-five years of leadership experience in both public and privately held companies in the hospitality and travel and leisure industries. Beck, a Certified Public Accountant, most recently served as Executive Vice President and Chief Financial Officer for Norwegian Cruise Line Holdings, Inc. until March 2018. Prior to that, Beck served as Executive Vice President and Chief Financial Officer of Domino’s Pizza Inc. from 2008 to 2010, as Senior Vice President, Chief Financial Officer and Treasurer of Whataburger Restaurants, LP from 2004 through 2008 and as their Vice President and Chief Accounting Officer from 2001 through 2004, and as Vice President, Chief Financial Officer and Treasurer of Checkers Drive-In Restaurants, Inc. from 2000 through 2001. Beck has served on the Board of Directors and the Compensation Committee of Bloomin’ Brands, Inc. since February 2018 and on the Board of Directors and has chaired the Audit Committee of At Home Group Inc. since September 2014. Ms. Beck has also served on a private company board, Jack’s Family Restaurants, owned by AEA Investors, since October 2019. She previously served on the Board of Directors and the Audit Committee of SpartanNash Company from September 2010 to December 2013.
Questrom has achieved more than forty-five years of board and senior executive management experience in the retail industry. Questrom served on the Board of Directors of At Home Group, Inc. from March 2012 to June 2020, Tailored Brands Inc. from August 2013 to June 2017, Sotheby’s from
December 2004 to June 2014, Foot Locker, Inc. from February 2011 to May 2013, and Walmart Inc. from June 2007 to June 2009. Questrom served as a Senior Advisor for Lee Equity Partners from June 2006 to January 2018. From September 2000 through December 2004, Questrom was the Chairman and CEO of J.C. Penney Company, Inc. Questrom also served on the Board of Directors of Barneys New York, Inc. from January 1999 (including as Chairman from May 1999) to January 2001 and as President and CEO from May 1999 to September 2000. Questrom was also Chairman and CEO of Federated Department Stores, Inc. (now Macy’s) from February 1990 to May 1997 and Chairman and CEO of Neiman Marcus, Inc. from 1988 to 1990.
Tweedy brings over twenty-five years of executive management experience developed in the fashion and retail industries. Tweedy has served as the Chief Executive Officer of Sean John Clothing since November 2007, where he previously served as Executive Vice President from February 1998 to March 2005. Tweedy has served on the Advisory Board of the Fashion Institute of Technology since January 2020. Tweedy also served as Vice President of Karl Kani Jeans from March 1993 to June 1996, Vice President of Spike Lee from February 1992 to June 1993, and East Coast Sales Manager of Ralph Lauren Womenswear from February 1990 to December 1992.
About Academy
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 259 stores across 16 contiguous states. 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 17 private label brands, which go well beyond traditional sporting goods and apparel offerings. For more information, visit academy.com.
SOURCE: Academy Sports and Outdoors, Inc.