Academy Sports + Outdoors Reports Fourth Quarter and Fiscal 2022 Results

Record Fiscal 2022 GAAP Diluted EPS of $7.49; Adjusted Diluted EPS of $7.70; Comparable Sales Declined 6.4%

Fourth Quarter GAAP Diluted EPS of $1.97; Adjusted Diluted EPS of $2.04; Comparable Sales Declined 5.1%

Increases Quarterly Dividend by 20%

Provides 2023 Outlook for Top-Line Growth and New Store Openings

KATY, Texas, March 16, 2023 (GLOBE NEWSWIRE) -- Academy Sports and Outdoors, Inc. (Nasdaq: ASO) ("Academy" or the "Company") today announced its financial results for the fourth quarter and fiscal year ended January 28, 2023. Unless otherwise indicated, comparisons are to the same period in the prior fiscal year.

"For Academy, 2022 was a year that was both rewarding and challenging. The Company accomplished many of the strategic goals we set at the beginning of the year to build a strong foundation for the future, including opening nine new stores," said Ken Hicks, Chairman, President and Chief Executive Officer. "While our business faced pressures from the uncertain macro-economic environment throughout the year, our team effectively executed against our strategic plan, and as a result, we delivered solid earnings, generated and returned a significant amount of free cash flow, and created value for our stakeholders, even though we did not meet our sales expectations. Our focus in 2023 will be investing for growth by opening new stores, building a more powerful omnichannel business, strengthening our current store base, and leveraging and scaling our supply chain."

Fourth Quarter Results

For the fourth quarter, net sales decreased 3.4% to $1.75 billion and comparable sales declined 5.1%. Sales were impacted by 6.4% fewer transactions, partially offset by a 1.3% increase in average ticket size. When compared to the fourth quarter of 2019, net sales increased 27.4%.

E-commerce sales grew 1.4% compared to the prior year quarter and 100.0% compared to the fourth quarter of 2019.

For the fourth quarter, gross margin was $572.5 million, or 32.8% of net sales. The gross margin rate improved by 50 basis points compared to the fourth quarter of 2021, primarily driven by a reduction in freight costs.

For the fourth quarter, pre-tax income increased 9.4% to $206.1 million compared to $188.4 million.

For the fourth quarter, GAAP net income increased 11.2% to $157.7 million compared to $141.8 million. GAAP diluted earnings per share were $1.97, an increase of 25.5% compared to $1.57 per share.

Adjusted net income, which excludes the impact of certain non-cash and extraordinary items, increased 12.5% to $163.5 million. Adjusted diluted earnings per share were $2.04, an increase of 26.7% compared to $1.61 per share.

Fiscal 2022 Results

For fiscal 2022, net sales decreased 5.6% to $6.40 billion and comparable sales decreased 6.4%. Sales were impacted by 8.2% fewer transactions, partially offset by a 2.0% increase in average ticket size. When compared to fiscal 2019, net sales increased 32.4%.

E-commerce sales increased 9.1% compared to 2021 and more than 175% compared to 2019. E-commerce sales penetration increased 140 basis points to 10.7% for fiscal 2022.

For fiscal 2022, gross margin was $2.2 billion, or 34.6% of net sales.

For fiscal 2022, pre-tax income was $818.3 million, a decline of 4.8% compared to $859.5 million.

For fiscal 2022, GAAP net income decreased 6.5% to $628.0 million compared to $671.4 million. GAAP diluted earnings per share increased 5.2% to a record $7.49 per share.

Adjusted net income decreased 9.9% to $645.8 million. Adjusted diluted earnings per share were $7.70, an increase of 1.3% compared to $7.60 per share.

Balance Sheet and Capital Allocation Update

As of the end of fiscal 2022 (January 28, 2023), the Company’s cash and cash equivalents totaled $337.1 million with no borrowings under the $1 billion credit facility. Net cash provided by operating activities was $242.8 million during the fourth quarter and $552.0 million for the full year. Merchandise inventories were $1.28 billion, an increase of 9.5% compared to the end of fiscal 2021.

During the fourth quarter, Academy returned $105.9 million to stockholders through a combination of share repurchases and dividends. The Company repurchased 1.9 million shares for $100 million and paid a quarterly cash dividend of $0.075 per share, or $5.9 million. In addition, Academy utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings under its senior secured term loan.

For the full year, Academy returned $614.1 million to stakeholders, which consisted of share repurchases totaling $489.5 million, $24.6 million in dividend payments and $100 million of debt reduction. As of the end of the fiscal year, Academy has approximately $300 million remaining under its share repurchase program.

Subsequent to the end of fiscal 2022, on March 2, 2023, Academy announced that its Board of Directors declared a quarterly cash dividend with respect to the quarter ended January 28, 2023, of $0.09 per share of common stock. This is a 20% increase from the previous dividend payment. The dividend is payable on April 13, 2023, to stockholders of record as of the close of business on March 23, 2023.

2023 Outlook

Michael Mullican, Executive Vice President and Chief Financial Officer said, “Academy’s operational and financial transformation continues to deliver solid financial results. For the second consecutive year, the Company delivered gross margins greater than 34% and operating margin above 13%. Since the beginning of 2021, we have returned over $1.1 billion to our stakeholders through stock buybacks, dividend payments and debt reduction. In 2023, our goal is to accelerate sales and profit growth through new store openings, omnichannel expansion and increasing the productivity of existing stores, all while generating significant free cash flow."

Academy is providing the following initial guidance for fiscal 2023 (year ending February 3, 2024). This guidance takes into account various factors, both internal and external, such as the expected benefits of the Company's sales and profit growth initiatives, current consumer demand, the competitive environment as well as the potential impacts from inflation and other economic risks. It also includes the investments being made in new stores, omnichannel, supply chain and existing stores.

The earnings per share estimate reflects a tax rate of 23.5% and does not include any potential future share repurchases.

Fiscal 2023 guidance includes a 53rd week in the fourth quarter. The Company estimates this week's sales contribution to be approximately $85 million.

Conference Call Info

Academy will host a conference call today at 10:00 a.m. Eastern Time to discuss its financial results. Listeners may access the call by dialing 1-877-407-3982 (U.S.) or 1-201-493-6780 (International). The passcode is 13736469. A webcast of the call can be accessed at investors.academy.com.

A telephonic replay of the conference call will be available for approximately 30 days, by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) and entering passcode 13736469. An archive of the webcast will be available at investors.academy.com for 30 days.

2023 Analyst and Investor Day Information

On April 3 and 4, 2023, Academy’s management team will conduct a store walk at a local store, host a dinner, and discuss the Company's strategy, including the introduction of new long-term financial targets, at the Company's headquarters in Katy, Texas. Please contact Academy's investor relations team for more details.

About Academy Sports + Outdoors

Academy is a leading full-line sporting goods and outdoor recreation retailer in the United States. Originally founded in 1938 as a family business in Texas, Academy has grown to 268 stores across 18 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 private label brands.

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.

Non-GAAP Measures

Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Common Share, and Adjusted Free Cash Flow have been presented in this press release as supplemental measures of financial performance that are not required by, or presented in accordance with, generally accepted accounting principles (“GAAP”). 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 Annual Report for the fiscal year ended January 28, 2023 (the "Annual Report"), as such limitations and information may be updated from time to time in our periodic filings with the Securities and Exchange commission (the "SEC"), which are accessible on the SEC's website at www.sec.gov.

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.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Academy's current expectations and are not guarantees of future performance. 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. The forward-looking statements include, among other things, statements regarding the payment of the dividend and declaration of future dividends, including the timing and amount thereof, share repurchases, the Company's expectations regarding its future performance, and the Company's future financial condition to support future dividend growth and are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory and other factors, including ongoing inflation and continued increases in interest rates, many of which are beyond Academy's control. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in Academy's filings with the SEC, including the Annual Report and the Quarterly Report, under the caption "Risk Factors," as may be updated from time to time in our periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. Academy undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

ACADEMY SPORTS AND OUTDOORS, INC.
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ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED BALANCE SHEETS
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ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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ACADEMY SPORTS AND OUTDOORS, INC.
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL MEASURES
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Adjusted EBITDA and Adjusted EBIT

We define “Adjusted EBITDA” as net income (loss) before interest expense, net, income tax expense and depreciation, and amortization, and impairment, further adjusted to exclude equity compensation expense, (gain) loss on early retirement of debt, net, payroll taxes associated with a vesting event, as a result of a secondary offering, of certain time and performance-based equity awards, both of which occurred in May 2021 (the “2021 Vesting Event”) and other adjustments. We define “Adjusted EBIT” as net income (loss) before interest expense, net, and income tax expense, further adjusted to exclude equity compensation expense, (gain) loss on early retirement of debt, net, payroll taxes associated with the 2021 Vesting Event and other adjustments. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and Adjusted EBIT in the following table.

Adjusted Net Income and Adjusted Earnings Per Common Share

We define “Adjusted Net Income (Loss)” as net income (loss), plus equity compensation expense, (gain) loss on early retirement of debt, net, payroll taxes associated with the 2021 Vesting Event and other adjustments, less the tax effect of these adjustments. We define “Adjusted Earnings per Common Share, Basic” as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and “Adjusted Earnings per Common Share, Diluted” as Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period. We describe these adjustments reconciling net income (loss) to Adjusted Net Income (Loss), Adjusted Net Income (Loss), and Adjusted Earnings Per Share in the following table.

GAAP to Adjusted Earnings Per Common Share, Diluted, Guidance Reconciliation

Adjusted Free Cash Flow

We define “Adjusted Free Cash Flow” as net cash provided by (used in) operating activities less net cash provided by (used in) investing activities. We describe these adjustments reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the following table.