09/16/2021 | Press release | Distributed by Public on 09/16/2021 14:17
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Price to
Public(1)
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Underwriting
Discounts and
Commissions(2)(3)
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Proceeds to
the Selling
Stockholders
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Per Share
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$44.75
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$1.230625
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$43.519375
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Total
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$834,390,689.50
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$22,945,743.96
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$811,444,945.54
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(1)
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The public offering price for the 14,145,602 shares offered to the public was $44.75 per share. The price for the 4,500,000 shares we intend to repurchase from the underwriters was $43.519375 per share.
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(2)
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The underwriting discount for the 14,145,602 shares offered to the public was $1.230625 per share. No underwriting discount or commissions will be paid to the underwriters with respect to the 4,500,000 shares we intend to repurchase.
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(3)
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See 'Underwriting (Conflicts of Interest)' for additional information regarding underwriting compensation.
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Credit Suisse
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KKR
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J.P. Morgan
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BofA Securities
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Industry and Market Data
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ii
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Trademarks, Tradenames, Service Marks and Copyrights
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ii
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Basis of Presentation
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iii
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Non-GAAP Financial Measures
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v
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Summary
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1
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Risk Factors
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18
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Forward-Looking Statements
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23
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Use of Proceeds
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25
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Dividend Policy
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26
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Selling Stockholders
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27
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Description of Capital Stock
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28
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Shares Eligible for Future Sale
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35
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Material U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders
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37
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Underwriting (Conflicts of Interest)
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40
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Legal Matters
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45
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Experts
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45
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Where You Can Find More Information
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45
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Incorporation by Reference
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46
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'2015 Term Loan Facility' means our senior secured term loans facility due July 2, 2022, which was repaid in full on November 6, 2020 with the net proceeds from the 2027 Notes and the Term Loan Facility, together with cash on hand;
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'2021 Vesting Event' means the vesting event that occurred in connection with the secondary offering of our shares of common stock in May 2021 which resulted in a reduction of KKR's ownership interest in the Company, as described under Note 1 to our financial statements included in our Q2 Quarterly Report incorporated by reference herein;
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'2027 Notes' means our 6.00% senior secured notes due November 15, 2027, as described under Note 4 to our audited consolidated financial statements in our Annual Report incorporated by reference herein;
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'ABL Facility' means our senior secured asset-based revolving credit facility, as described under Note 4 to our audited consolidated financial statements in our Annual Report incorporated by reference herein;
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'Academy,' 'Academy Sports + Outdoors,' the 'Company,' 'we,' 'us' and 'our' refer to, (1) prior to October 1, 2020, New Academy Holding Company, LLC, a Delaware limited liability company and the prior parent holding company for our operations, and its consolidated subsidiaries; and (2) on and after October 1, 2020, Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company for our operations, and its consolidated subsidiaries;
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'Adviser' means Kohlberg Kravis Roberts & Co. L.P.;
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'Annual Report' means our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed on April 7, 2021;
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'Average order value' means in-store and e-commerce merchandise sales divided by the number of sales transactions, which indicates the average amount of a sales receipt;
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'BOPIS' means our buy-online-pickup-in-store program;
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'Comparable sales' means 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. See 'Management's Discussion and Analysis of Financial Condition and Results of Operations-How We Assess the Performance of Our Business-Comparable Sales' in our Annual Report incorporated by reference herein. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data included, or incorporated by reference, in this prospectus regarding our comparable sales may not be comparable to similar data made available by other retailers;
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'footprint' means, in the aggregate, the geographic locations where our stores are located. As of the date of this prospectus, our stores are located in the following states: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee and Texas;
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'full-line sporting goods and outdoor recreation retailers' means: retailers who offer all three of the following categories, across all price points and brands (i) sporting goods (e.g., team and individual sports, footwear/apparel, fitness), (ii) outdoor goods (e.g., hunting gear, fishing rods, outdoor cooking, camping), and (iii) recreation goods (e.g., pools, backyard living, bikes). Among the current full-line sporting goods and outdoor recreation retailers in the United States, management has determined that the Company is one of the leading full-line sporting goods and outdoor recreation retailers because its annual revenue in each of the years from 2014 to 2020 is the second highest;
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'IPO' means the initial public offering of our common stock, which closed on October 6, 2020;
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'KKR' means, collectively, investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co. L.P.;
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'KKR Stockholders' means, collectively, investment entities owned by KKR;
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'largest value-oriented sporting goods and outdoor recreation retailer in the country' refers to management's determination of the Company's comparative position based upon (i) the Company's competitive pricing index, which illustrates the Company's prices are lower on average compared to those full-line sporting goods and recreational retailers with higher annual revenue, and (ii) the Company's 2019 and 2020 customer surveys, which indicate that customers perceive the Company as being more value-oriented than all of the other full-line sporting goods and recreation retailers;
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'mature stores' means stores that have been in operation for longer than four years;
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'number of sales transactions' means total quantity of sales transactions generated, whether in-store or online;
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'owned brands' means our private label brands, which include both our own brands, as well as brands we license under exclusive license contracts;
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'Proxy Statement' means our Proxy Statement on Schedule 14A for our 2021 Annual Meeting of Stockholders filed on April 23, 2021;
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'Q2 Quarterly Report' means our Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, filed on September 9, 2021; and
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'Term Loan Facility' means our senior secured term loan facility, as described under Note 4 to our audited consolidated financial statements in our Annual Report incorporated by reference herein.
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Value-based assortment that enables our customers to participate and have fun, no matter their budget.
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Broad assortment that extends beyond sporting goods and apparel to outdoor recreation.
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Emerging, rapidly growing and profitable omnichannel strategy that leverages our strong BOPIS and shipping fulfillment capabilities.
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Strong customer loyalty, with opportunities to increase penetration in existing markets.
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Regional focus in the southern United States with a strong and growing presence in six of the top 10 fastest-growing Metropolitan Statistical Areas ('MSAs').
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Core customers comprising active families that we support with one-stop shop convenience.
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Significant whitespace opportunity for both in-fill and adjacent geographies and new markets.
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Strong financial profile with accelerating performance and attractive cash flow generation.
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Strengthened leadership team - Our leadership team comprises nine highly experienced and proven individuals, seven of whom joined Academy since 2017, led by our Chief Executive Officer and including our Chief Financial Officer, Chief Merchandising Officer, EVP of Retail Operations, SVP of Logistics and Supply Chain, SVP of Omnichannel, and Chief Information Officer. Our leadership team also recently demonstrated its ability to adapt, operate and gain market share and new customers during the most challenging of retail environments, including its ability to safely operate our stores and distribution centers, source and deliver our merchandise, and manage our liquidity and expenses in all elements of our business during the COVID-19 pandemic.
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Build omnichannel - After investing approximately $50 million in our omnichannel capabilities from 2017 through 2019, we launched several new omnichannel initiatives in 2019, including our BOPIS program, ship-to-store program and new website design, content and functionality. Our mobile app, which launched in the second quarter of 2021, also supports our stores with digital marketing and our BOPIS and ship-to-store programs. While still early in our omnichannel strategy, we have built a profitable omnichannel business that is poised for continued growth and improvement of capabilities.
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Localized merchandising - Since 2018, we improved the localization of our assortment across selected inventory offerings. This initiative resulted in an improved customer shopping experience and increased sales.
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Category focus - In 2019 and continuing into 2020, we improved and focused our assortments in priority product categories, such as team sports, fishing and outdoors, while exiting certain other product categories, such as luggage, electronics and toys, that were less profitable or unprofitable, slower moving, and not core to our sporting goods and outdoor offering.
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Enhance store optimization - We leverage technology to enable our store team members to better manage, prioritize and reduce tasks to give them more time to engage in customer service, thereby increasing our productivity and sales conversion.
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Digital marketing program - During the last two years, we shifted our primary marketing focus from print to digital marketing. Our improved website also supports our stores with digital marketing and our BOPIS program. Each of these initiatives has given us a closer connection with our customers.
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Implement loyalty program - We launched the Academy Credit Card program in May 2019, which constituted approximately 4.5% of 2020 net sales. Academy Credit Card represents a significant opportunity to build customer loyalty, as our Academy Credit Card customers both spend more per trip and visit our stores more often.
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Programmatic inventory management - We implemented a new disciplined price markdown strategy that has improved our margins and inventory management, as well as a new merchandise planning and allocation system that enables us to target inventory by store market to allow us to localize our offerings and sizes. This along with automated inventory ordering drove a significant amount of our margin expansion and improved inventory turns from 2.84x in 2019 to 3.89x in 2020.
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Develop small box format - We opened our first small format store (approximately 40,000 square feet) in Dallas, Texas in 2019. We believe this new smaller format store allows us to open new stores in urban and less dense areas. During 2020, this smaller format store experienced approximately 28% higher sales per square foot and 37% higher inventory turns than the average of all Academy stores, the latter of which had $311 sales per square foot and 3.89x inventory turns. We evaluate performance inclusive of store sales, as well as BOPIS sales and other fulfilled sales from the location.
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Mass general merchants
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Large format sporting goods stores
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Traditional sporting goods stores
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Specialty outdoor retailers
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Specialty footwear retailers
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Catalogue & Internet retailers
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overall decline in the health of the economy and consumer discretionary spending;
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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;
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the impact of COVID-19 on our business and financial results;
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intense competition in the sporting goods and outdoor recreation retail industries;
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our ability to safeguard sensitive or confidential data relating to us and our customers, team members and vendors;
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risks associated with our reliance on internationally manufactured merchandise;
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our ability to comply with laws and regulations affecting our business, including those relating to the sale, manufacture and import of consumer products;
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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;
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our ability to operate, update or implement our information technology systems;
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risks associated with disruptions in our supply chain and losses of merchandise purchasing incentives;
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harm to our reputation;
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our substantial indebtedness; and
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our qualification for exemptions from certain corporate governance requirements during the one-year transition period after our loss of 'controlled company' status within the meaning of Nasdaq listing rules upon completion of the April 2021 Sale.
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4,689,376 shares of common stock issuable upon exercise of outstanding options, all of which were vested with a weighted-average exercise price of $15.20 per share, granted under the 2011 Equity Plan;
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1,046,473 shares of common stock issuable upon exercise of outstanding options, (i) 23,956 of which were vested, with a weighted-average exercise price of $26.99, (ii) 1,022,517 of which were not vested, with a weighted average price of $25.00 per share, (iii) 374,338 shares of common stock issuable upon settlement of outstanding restricted stock units, none of which were vested, and (iv) 3,725,110 shares of common stock reserved for future issuance, in each case, granted under our new 2020 Omnibus Incentive Plan, or the 2020 Equity Plan; and
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1,964,614 shares of common stock reserved for future issuance under our new 2020 Employee Stock Purchase Plan, or the ESPP.
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Fiscal Year Ended
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Twenty-Six Weeks Ended
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January 30,
2021
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February 1,
2020
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February 2,
2019
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July 31,
2021
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August 1,
2020
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Period length
(In thousands)
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52 weeks
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52 weeks
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52 weeks
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26 weeks
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26 weeks
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Statement of Income Data:
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Net sales
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$5,689,233
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$4,829,897
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$4,783,893
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$3,371,863
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$2,742,721
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Costs of goods sold
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3,955,188
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3,398,743
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3,415,941
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2,165,666
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1,948,275
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Gross margin
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1,734,045
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1,431,154
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1,367,952
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1,206,197
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794,446
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Selling, general and administrative expenses
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1,313,647
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1,251,733
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1,239,002
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712,565
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596,636
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Operating income
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420,398
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179,421
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128,950
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493,632
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197,810
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Interest expense, net
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86,514
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101,307
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108,652
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26,706
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48,088
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(Gain) loss on early retirement of debt, net(1)
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(3,582)
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(42,265)
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-
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2,239
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(7,831)
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Other (income), net
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(1,654)
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(2,481)
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(3,095)
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(1,132)
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(1,621)
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Income before income taxes
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339,120
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122,860
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23,393
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465,819
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159,174
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Income tax expense
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30,356
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2,817
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1,951
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97,513
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1,518
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Net income
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$308,764
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$120,043
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$21,442
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$368,306
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$157,656
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Fiscal Year Ended
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Twenty-Six Weeks Ended
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January 30,
2021
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February 1,
2020
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February 2,
2019
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July 31,
2021
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August 1,
2020
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Period length
(In thousands, except store data and per share data)
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52 weeks
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52 weeks
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52 weeks
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26 weeks
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26 weeks
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Balance Sheet Data (end of period):
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Cash and cash equivalents
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$377,604
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$149,385
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$75,691
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$553,825
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$884,029
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Merchandise inventories, net
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990,034
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1,099,749
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1,134,156
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1,115,020
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899,086
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Total assets(2)
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4,384,482
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4,331,321
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3,238,957
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4,634,027
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4,842,848
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Total equity
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1,111,983
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988,219
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857,039
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1,447,618
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1,149,096
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Cash Flow Data:
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Net cash provided by operating activities
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$1,011,597
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$263,669
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$198,481
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$405,674
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$773,621
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Net cash used in investing activities
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(33,144)
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(66,783)
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(99,027)
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(33,767)
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(13,850)
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Net cash provided by (used in) financing activities
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(750,234)
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(123,192)
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(54,808)
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(195,686)
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(25,127)
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Capital expenditures
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(41,269)
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62,818
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107,905
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(33,767)
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(13,850)
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Store Data (unaudited):
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Comparable sales increase (decrease)
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16.1%
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(0.7)%
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(2.5)%
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22.8%
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15.9%
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Number of stores at end of period
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259
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259
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253
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259
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259
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Other Financial Data (unaudited):
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Adjusted EBITDA(3)
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$607,023
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$322,814
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$300,259
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$595,409
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$282,902
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Adjusted Net Income(3)
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384,536
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101,469
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55,405
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407,081
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179,106
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Adjusted Free Cash Flow(3)
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| |
978,453
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196,886
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99,454
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371,907
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759,771
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(1)
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In first half 2020 and in 2019, we repurchased principal on our 2015 Term Loan Facility, which was trading at a discount and recognized a gain, net of the write-off of related deferred loan costs. In first half 2020, we repurchased a total of $23.9 million of principal in open market transactions for an aggregate price of $16.0 million and recognized a related net gain of $7.8 million. In 2019, we repurchased a total of $147.7 million of principal in open market transactions for an aggregate purchase price of $104.6 million and recognized a related net gain of $42.3 million. In connection with the Refinancing Transaction, we repaid in full outstanding borrowings under our 2015 Term Loan Facility, in the amount of $1,431.4 million and recognized a non-cash loss on early retirement of debt of $4.2 million from the write-off of deferred loan costs and expenses related to the original issuance discount associated with our 2015 Term Loan Facility. In first half of 2021, we recognized a non-cash loss on early retirement of debt of $2.2 million from the write-off of deferred loan costs and expense related to the original issuance discount associated with our Term Loan Facility.
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(2)
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Effective February 3, 2019, we adopted the New Lease Standard, which requires that lessees recognize assets and liabilities arising from operating leases on the balance sheet. Adoption of the new standard resulted in $1.2 billion in right-of-use assets and a combined $1.2 billion between current lease liabilities and long-term lease liabilities included on the balance sheet as of February 3, 2019.
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(3)
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We define Adjusted EBITDA as net income before interest expense, net, income tax expense and depreciation, amortization and impairment, further adjusted to exclude consulting fees, Adviser 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 initiative, payroll taxes associated with the 2021 Vesting Event and other adjustments. We describe these adjustments reconciling net income to Adjusted EBITDA in the applicable table below. We define Adjusted Net Income as net income, plus consulting fees, Adviser 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 initiative, payroll taxes associated with the 2021 Vesting Event and other adjustments, less the tax effect of these adjustments. We describe these adjustments reconciling net income to Adjusted Net Income in the applicable table below. 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 applicable table below.
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Adjusted EBITDA and Adjusted Net Income do not reflect costs or cash outlays for capital expenditures or contractual commitments;
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Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;
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Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt, and Adjusted Free Cash Flow does not reflect the cash requirements necessary to service principal payments on our debt;
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Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
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Adjusted EBITDA and Adjusted Net Income do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;
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although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted Free Cash Flow do not reflect cash requirements for such replacements; and
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other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
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Fiscal Year Ended
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Twenty-Six Weeks Ended
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January 30,
2021
|
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February 1,
2020
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February 2,
2019
|
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July 31,
2021
|
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August 1,
2020
|
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(In thousands)
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Net income
|
| |
$308,764
|
| |
$120,043
|
| |
$21,442
|
| |
$368,306
|
| |
$157,656
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Interest expense, net
|
| |
86,514
|
| |
101,307
|
| |
108,652
|
| |
26,706
|
| |
48,088
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Income tax expense
|
| |
30,356
|
| |
2,817
|
| |
1,951
|
| |
97,513
|
| |
1,518
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Depreciation, amortization and impairment
|
| |
105,481
|
| |
117,254
|
| |
134,190
|
| |
51,308
|
| |
54,151
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Consulting fees(a)
|
| |
285
|
| |
3,601
|
| |
949
|
| |
-
|
| |
92
|
Adviser monitoring fee(b)
|
| |
14,793
|
| |
3,636
|
| |
3,522
|
| |
-
|
| |
1,840
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Equity compensation(c)
|
| |
31,617
|
| |
7,881
|
| |
4,633
|
| |
33,205
|
| |
3,690
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(Gain) loss on early extinguishment of debt, net
|
| |
(3,582)
|
| |
(42,265)
|
| |
-
|
| |
2,239
|
| |
(7,831)
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Severance and executive transition costs(d)
|
| |
6,571
|
| |
1,429
|
| |
4,350
|
| |
-
|
| |
4,137
|
Costs related to the COVID-19 pandemic(e)
|
| |
17,632
|
| |
-
|
| |
-
|
| |
-
|
| |
17,632
|
Inventory write-down adjustments associated with strategic merchandising initiative(f)
|
| |
-
|
| |
-
|
| |
18,225
|
| |
-
|
| |
-
|
Payroll taxes associated with the 2021 Vesting Event
|
| |
-
|
| |
-
|
| |
-
|
| |
15,418
|
| |
-
|
Other(g)
|
| |
8,592
|
| |
7,111
|
| |
2,345
|
| |
714
|
| |
1,929
|
Adjusted EBITDA
|
| |
$607,023
|
| |
$322,814
|
| |
$300,259
|
| |
$595,409
|
| |
$282,902
|
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| |
Fiscal Year Ended
|
| |
Twenty-Six Weeks Ended
|
||||||||||
| |
January 30,
2021
|
| |
February 1,
2020
|
| |
February 2,
2019
|
| |
July 31,
2021
|
| |
August 1,
2020
|
|
(In thousands, except per share data)
|
| | | | | | | | | | |||||
Net income
|
| |
$308,764
|
| |
$120,043
|
| |
$21,442
|
| |
$368,306
|
| |
$157,656
|
Consulting fees(a)
|
| |
285
|
| |
3,601
|
| |
949
|
| |
-
|
| |
92
|
Adviser monitoring fee(b)
|
| |
14,793
|
| |
3,636
|
| |
3,522
|
| |
-
|
| |
1,840
|
Equity compensation(c)
|
| |
31,617
|
| |
7,881
|
| |
4,633
|
| |
33,205
|
| |
3,690
|
(Gain) loss on early extinguishment of debt, net
|
| |
(3,582)
|
| |
(42,265)
|
| |
-
|
| |
2,239
|
| |
(7,831)
|
Severance and executive transition costs(d)
|
| |
6,571
|
| |
1,429
|
| |
4,350
|
| |
-
|
| |
4,137
|
Costs related to the COVID-19 pandemic(e)
|
| |
17,632
|
| |
-
|
| |
-
|
| |
-
|
| |
17,632
|
Inventory write-down adjustments associated with strategic merchandising initiative(f)
|
| |
-
|
| |
-
|
| |
18,225
|
| |
-
|
| |
-
|
Payroll taxes associated with the 2021 Vesting Event
|
| |
-
|
| |
-
|
| |
-
|
| |
15,418
|
| |
-
|
Other(g)
|
| |
8,592
|
| |
7,111
|
| |
2,345
|
| |
714
|
| |
1,929
|
Tax effects of these adjustments(h)
|
| |
(136)
|
| |
33
|
| |
(61)
|
| |
(12,801)
|
| |
(39)
|
Adjusted Net Income
|
| |
$384,536
|
| |
$101,469
|
| |
$55,405
|
| |
$407,081
|
| |
$179,106
|
(a)
|
Represents outside consulting fees associated with our strategic cost savings and business optimization initiatives.
|
(b)
|
Represents our contractual payments under our Monitoring Agreement. See Note 13 to our audited consolidated financial statements in our Annual Report incorporated by reference herein and Note 12 to the financial statements included in our Q2 Quarterly Report incorporated by reference herein.
|
(c)
|
Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors such as the 2021 Vesting Event (see Note 1 to the financial statements included in our Q2 Quarterly Report incorporated by reference herein), 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 during the first half of 2020 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. These costs were no longer added back beginning in the third quarter of 2020.
|
(f)
|
Represents inventory write-down adjustments in connection with our new merchandising strategy adopted as part of our strategic transformation, including exiting certain categories of products.
|
(g)
|
Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted Net Income, as applicable) 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 members of New Academy Holding Company, LLC and our 2020 Equity Plan, store exit costs and other costs associated with strategic cost savings and business optimization initiatives.
|
(h)
|
For the twenty-six weeks ended July 31, 2021, this represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at the estimated effective tax rate for the fiscal year ended January 31, 2022. For periods on or before January 30, 2021, this represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate.
|
| |
Fiscal Year Ended
|
| |
Twenty-Six Weeks Ended
|
||||||||||
| |
January 30,
2021
|
| |
February 1,
2020
|
| |
February 2,
2019
|
| |
July 31,
2021
|
| |
August 1,
2020
|
|
(In thousands)
|
| | | | | | | | | | |||||
Net cash provided by operating activities
|
| |
$1,011,597
|
| |
$263,669
|
| |
$198,481
|
| |
$405,674
|
| |
$773,621
|
Net cash used in investing activities
|
| |
(33,144)
|
| |
(66,783)
|
| |
(99,027)
|
| |
(33,767)
|
| |
(13,850)
|
Adjusted Free Cash Flow
|
| |
$978,453
|
| |
$196,886
|
| |
$99,454
|
| |
$371,907
|
| |
$759,771
|
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•
|
a majority of our board of directors consist of 'independent directors' as defined under the listing rules of Nasdaq;
|
•
|
our director nominees be selected, or recommended for our board of directors' selection by a nominating/governance committee comprised solely of independent directors; and
|
•
|
the compensation of our executive officers be determined, or recommended to our board of directors for determination, by a compensation committee comprised solely of independent directors.
|
•
|
results of operations that vary from the expectations of securities analysts and investors;
|
•
|
results of operations that vary from those of our competitors;
|
•
|
changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
|
•
|
changes in economic conditions for companies in our industry;
|
•
|
changes in market valuations of, or earnings and other announcements by, companies in our industry;
|
•
|
declines in the market prices of stocks generally, particularly those of sporting goods and outdoor recreation retail companies;
|
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•
|
additions or departures of key management personnel;
|
•
|
strategic actions by us or our competitors;
|
•
|
announcements by us, our competitors our suppliers of significant contracts, price reductions, new products or technologies, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
|
•
|
changes in preference of our customers and our market share;
|
•
|
changes in general economic or market conditions or trends in our industry or the economy as a whole;
|
•
|
changes in business or regulatory conditions;
|
•
|
future sales of our common stock or other securities;
|
•
|
investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives;
|
•
|
changes in the way we are perceived in the marketplace, including due to negative publicity or campaigns on social media to boycott certain of our products, our business or our industry;
|
•
|
the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC;
|
•
|
changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business;
|
•
|
announcements relating to litigation or governmental investigations;
|
•
|
guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
|
•
|
the development and sustainability of an active trading market for our common stock;
|
•
|
changes in accounting principles; and
|
•
|
other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, war, acts of terrorism, civil unrest or responses to these events.
|
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•
|
a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms;
|
•
|
the ability of our board of directors to issue one or more series of preferred stock without stockholder approval;
|
•
|
advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;
|
•
|
certain limitations on convening special stockholder meetings;
|
•
|
the removal of directors only for cause and only upon the affirmative vote of the holders of at least 662/3% of the shares of common stock entitled to vote generally in the election of directors; and
|
•
|
that certain provisions may be amended only by the affirmative vote of at least 662/3% of shares of common stock entitled to vote generally in the election of directors.
|
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•
|
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;
|
•
|
the impact of COVID-19 on our business and financial results;
|
•
|
intense competition in the sporting goods and outdoor recreation retail industries;
|
•
|
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;
|
•
|
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;
|
•
|
harm to our reputation;
|
•
|
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;
|
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•
|
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 (including raw materials) costs and availability;
|
•
|
our ability to successfully pursue strategic acquisitions and integrate acquired businesses;
|
•
|
payment-related risks;
|
•
|
our ability to retain key executives;
|
•
|
the effectiveness of our marketing and advertising programs;
|
•
|
our substantial indebtedness;
|
•
|
this offering; and
|
•
|
ownership of our common stock.
|
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| | | | | | | | ||||||||
| |
Shares Beneficially
Owned Prior to the
Offering and the
Concurrent Share Repurchase
|
| |
Shares to be Sold
in this
Offering
|
| |
Shares Beneficially
Owned After the
Offering and the
Concurrent Share Repurchase
|
|||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percentage
of Total
Common
Stock
|
| |
Number
|
| |
Number
|
| |
Percentage
of Total
Common
Stock
|
Selling Stockholders:
|
| | | | | | | | | | |||||
KKR Stockholders(1)
|
| |
18,645,602
|
| |
20.1%
|
| |
18,645,602
|
| |
-
|
| |
-
|
(1)
|
(x) KKR 2006 Allstar Blocker L.P. holds 3,361,282 shares of our common stock; (y) Allstar Co-Invest Blocker L.P. holds 6,670,127 shares of our common stock; and (z) Allstar LLC holds 8,614,193 shares of our common stock.
|
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1)
|
the designation of the series;
|
2)
|
the number of shares of the series, which our board of directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);
|
3)
|
whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;
|
4)
|
the dates at which dividends, if any, will be payable;
|
5)
|
the redemption rights and price or prices, if any, for shares of the series;
|
6)
|
the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;
|
7)
|
the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Company;
|
8)
|
whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Company or any other corporation and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;
|
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9)
|
restrictions on the issuance of shares of the same series or of any other class or series; and
|
10)
|
the voting rights, if any, of the holders of the series.
|
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•
|
prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or
|
•
|
at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 662⁄3% of the outstanding voting stock that is not owned by the interested stockholder.
|
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•
|
the provision requiring a 662⁄3% supermajority vote for stockholders to amend our amended and restated bylaws;
|
•
|
the provisions providing for a classified board of directors (the election and term of our directors);
|
•
|
the provisions regarding resignation and removal of directors;
|
•
|
the provisions regarding competition and corporate opportunities;
|
•
|
the provisions regarding entering into business combinations with interested stockholders;
|
•
|
the provisions regarding stockholder action by written consent;
|
•
|
the provisions regarding calling special meetings of stockholders;
|
•
|
the provisions regarding filling vacancies on our board of directors and newly created directorships;
|
•
|
the provisions eliminating monetary damages for breaches of fiduciary duty by a director; and
|
•
|
the amendment provision requiring that the above provisions be amended only with a 662⁄3% supermajority vote.
|
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•
|
1% of the number of shares of our common stock then outstanding, which will equal approximately 883,835 shares immediately after this offering; or
|
•
|
the average reported weekly trading volume of our common stock on Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.
|
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•
|
an individual citizen or resident of the United States;
|
•
|
a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
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•
|
the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder);
|
•
|
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met; or
|
•
|
we are or have been a 'U.S. real property holding corporation' for U.S. federal income tax purposes and certain other conditions are met.
|
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Underwriter
|
| |
Number of Shares
|
Credit Suisse Securities (USA) LLC
|
| |
7,085,329
|
KKR Capital Markets LLC
|
| |
7,085,329
|
J.P. Morgan Securities LLC
|
| |
2,237,472
|
BofA Securities, Inc.
|
| |
2,237,472
|
Total
|
| |
18,645,602
|
| |
Price to Public(1)
|
| |
Underwriting
Discounts and
Commissions(2)
|
| |
Proceeds to
the selling
stockholders
|
|
Per Share
|
| |
$44.75
|
| |
$1.230625
|
| |
$43.519375
|
Total
|
| |
$834,390,689.50
|
| |
$22,945,743.96
|
| |
$811,444,945.54
|
(1)
|
The public offering price for the shares offered to the public was $44.75 per share. The price for the shares we intend to repurchase from the underwriters was $43.519375 per share.
|
(2)
|
The underwriting discount for the shares offered to the public was $1.230625 per share. No underwriting discount or commissions will be paid to the underwriters with respect to the shares we intend to repurchase.
|
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•
|
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
|
•
|
Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The underwriters would close out any short position by purchasing shares in the open market.
|
•
|
Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.
|
•
|
Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing transaction or a syndicate covering transaction to cover syndicate short positions.
|
•
|
In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made.
|
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(a)
|
to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
|
(b)
|
to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or
|
(c)
|
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
|
(a)
|
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by it in connection with the issue or sale of the securities in circumstances in which Section 21 of the FSMA does not apply to us; and
|
(b)
|
it has complied with, and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the securities in, from or otherwise involving the United Kingdom.
|
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(i)
|
to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or SFA,
|
(ii)
|
to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or
|
(iii)
|
otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
|
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(a)
|
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
|
(b)
|
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
|
(a)
|
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
|
(b)
|
where no consideration is or will be given for the transfer;
|
(c)
|
where the transfer is by operation of law;
|
(d)
|
as specified in Section 276(7) of the SFA; or
|
(e)
|
as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
|
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•
|
our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed on April 7, 2021 (including information specifically incorporated by reference into such Annual Report on Form 10-K from our Proxy Statement for our 2021 Annual Meeting of Stockholders filed on April 23, 2021);
|
•
|
our Quarterly Report on Form 10-Q for the quarter ended May 1, 2021, filed on June 8, 2021;
|
•
|
our Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, filed on September 9, 2021; and
|
•
|
our Current Reports on Form 8-K filed on February 1, 2021, March 4, 2021, May 10, 2021, May 25, 2021, June 7, 2021, August 5, 2021 and September 9, 2021 (only with respect to Item 8.01).
|
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