What changed in this filing

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Item 1. Financial Statements

2024-06-11 compared with 2023-11-30 · 89 added, 177 removed, 321 unchanged (45% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except per share data)

October 28, 2023 January 28, 2023 October 29, 2022

May 4, 2024 February 3, 2024 April 29, 2023

CURRENT ASSETS:

29 unchanged sentences

Common stock, $ 0.01 par value, authorized 300,000,000 shares;

76,711,720 and 77,959,530 issued and outstanding as of October 28, 2023, January 28, 2023 and October 29, 2022, respectively.

74,349,927 and 76,439,594 issued and outstanding as of May 4, 2024, February 3, 2024 and April 29, 2023, respectively.

Additional paid-in capital 240,559 242,098 229,633

6 unchanged sentences

(Amounts in thousands, except per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

NET SALES $ 1,364,220 $ 1,383,609

4 unchanged sentences

INTEREST EXPENSE, NET 9,486 11,230

WRITE OFF OF DEFERRED LOAN COSTS 449 —

OTHER (INCOME), NET ( 5,204 ) ( 3,713 )

14 unchanged sentences

Shares Amount

Balances as of January 28, 2023 76,712 $ 767 $ 216,209 $ 1,411,330 $ 1,628,306

Net income — — — 93,970 93,970

Equity compensation — — 11,382 — 11,382

Repurchase of common stock for retirement ( 750 ) ( 8 ) ( 2,450 ) ( 47,806 ) ( 50,264 )

Settlement of vested Restricted Stock Units, net of shares withheld 93 1 ( 2,470 ) — ( 2,469 )

Stock option exercises, net of shares withheld 385 4 6,962 — 6,966

Cash dividends declared, $ 0.09 per share

— — — ( 6,929 ) ( 6,929 )

Balances as of April 29, 2023 76,440 $ 764 $ 229,633 $ 1,450,565 $ 1,680,962

Net income — — — 157,075 157,075

Equity compensation — — 8,501 — 8,501

Repurchase of common stock for retirement ( 1,994 ) ( 20 ) ( 7,087 ) ( 100,242 ) ( 107,349 )

Settlement of vested Restricted Stock Units, net of shares withheld 41 0 ( 268 ) — ( 268 )

Issuance of common stock under employee stock purchase plan 67 1 2,886 — 2,887

Stock option exercises, net of shares withheld 292 3 3,124 — 3,127

Cash dividends declared, $ 0.09 per share

— — — ( 6,896 ) ( 6,896 )

Balances as of July 29, 2023 74,846 $ 748 $ 236,789 $ 1,500,502 $ 1,738,039

Balances as of February 3, 2024 74,350 $ 743 $ 242,098 $ 1,711,809 $ 1,954,650

Net income — — — 76,465 76,465

5 unchanged sentences

— — — ( 8,182 ) ( 8,182 )

Balances as of October 28, 2023 74,144 $ 741 $ 239,447 $ 1,552,899 $ 1,793,087

ACADEMY SPORTS AND OUTDOORS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands, except per share data)

Balances as of May 4, 2024 72,591 $ 726 $ 240,559 $ 1,664,236 $ 1,905,521

Paid-In Capital Retained Earnings Total Stockholders' Equity

4 unchanged sentences

Repurchase of common stock for retirement ( 750 ) ( 8 ) ( 2,450 ) ( 47,806 ) ( 50,264 )

Settlement of vested Restricted Stock Units 63 1 ( 1 ) — —

Stock option exercises 201 2 3,292 — 3,294

Settlement of vested Restricted Stock Units, net of shares withheld 93 1 ( 2,470 ) — ( 2,469 )

Stock option exercises, net of shares withheld 385 4 6,962 — 6,966

Cash dividends declared, $ 0.09 per share

1 unchanged sentence

Balances as of April 29, 2023 76,440 $ 764 $ 229,633 $ 1,450,565 $ 1,680,962

Net income — — — 188,801 188,801

Equity compensation — — 6,158 — 6,158

Repurchase of common stock for retirement ( 5,551 ) ( 55 ) ( 13,391 ) ( 186,665 ) ( 200,111 )

Settlement of vested Restricted Stock Units 29 0 ( 0 ) — —

Issuance of common stock under employee stock purchase plan 93 1 2,796 — 2,797

Stock option exercises 83 1 1,388 — 1,389

Cash dividends declared, $ 0.075 per share

— — — ( 6,271 ) ( 6,271 )

Balances as of July 30, 2022 79,725 $ 797 $ 196,510 $ 1,323,964 $ 1,521,271

Net income — — — 131,741 131,741

Equity compensation — — 5,829 — 5,829

Repurchase of common stock for retirement ( 2,176 ) ( 22 ) ( 5,477 ) ( 95,325 ) ( 100,824 )

Settlement of vested Restricted Stock Units 3 0 ( 0 ) — —

Stock option exercises 408 4 6,872 — 6,876

Cash dividends declared, $ 0.075 per share

— — — ( 5,974 ) ( 5,974 )

Balances as of October 29, 2022 77,960 $ 779 $ 203,734 $ 1,354,406 $ 1,558,919

See Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

(Amounts in thousands)

Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Deferred income taxes ( 1,726 ) ( 1,923 )

Gain on disposal of property and equipment ( 363 ) —

Write off of deferred loan costs 449 —

Changes in assets and liabilities:

11 unchanged sentences

Purchases of intangible assets ( 128 ) ( 83 )

Proceeds from the sale of property and equipment 2,126 —

Net cash used in investing activities ( 32,355 ) ( 40,547 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Revolving Credit Facilities 3,900 —

Repayment of Revolving Credit Facilities ( 3,900 ) —

Repayment of Term Loan ( 750 ) ( 750 )

Debt issuance fees ( 5,690 ) —

Proceeds from exercise of stock options 2,789 7,090

Proceeds from issuance of common stock under employee stock purchase program 2,887 2,797

Taxes paid related to net share settlement of equity awards ( 2,839 ) ( 2,593 )

2 unchanged sentences

Net cash used in financing activities ( 137,097 ) ( 53,197 )

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 62,318 ) ( 167,831 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30,225 ( 41,609 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 347,920 337,145

16 unchanged sentences

The Company is a leading full-line sporting goods and outdoor recreational products retailer in the United States in terms of net sales.

As of October 28, 2023, we operated 275 "Academy Sports + Outdoors" retail locations in 18 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

As of May 4, 2024, we operated 284 "Academy Sports + Outdoors" retail locations in 18 states and three distribution centers located in Katy, Texas, Twiggs County, Georgia and Cookeville, Tennessee.

We also sell merchandise to customers across most of the United States via our academy.com website.

3 unchanged sentences

However, we believe that the disclosures included herein are adequate to make the information presented not misleading.

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023, as filed with the Securities and Exchange Commission on March 16, 2023 (the "Annual Report").

These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024, as filed with the Securities and Exchange Commission on March 21, 2024 (the "Annual Report").

The information furnished herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.

The results of operations for the thirteen and thirty-nine weeks ended October 28, 2023 are not necessarily indicative of the results that will be realized for the fiscal year ending February 3, 2024 or any other period.

The balance sheet as of January 28, 2023 has been derived from our audited financial statements as of that date.

The results of operations for the thirteen weeks ended May 4, 2024 are not necessarily indicative of the results that will be realized for the fiscal year ending February 1, 2025 or any other period.

The balance sheet as of February 3, 2024 has been derived from our audited financial statements as of that date.

For further information, refer to our audited financial statements and notes thereto included in the Annual Report.

1 unchanged sentence

These unaudited condensed consolidated financial statements include the accounts of ASO, Inc.

and its subsidiaries, New Academy Holding Company, LLC ("NAHC"), Academy Managing Co., LLC, Associated Investors, LLC, Academy, Ltd., the Company's operating company, and Academy International Limited.

and its subsidiaries, New Academy Holding Company, LLC ("NAHC"), Academy Managing Co., L.L.C., Associated Investors, L.L.C., Academy, Ltd., the Company's operating company, Academy Procurement Co., LLC, and Academy International Limited.

NAHC, Academy Managing Co., LLC, and Associated Investors, LLC are intermediate holding companies.

5 unchanged sentences

Our most significant estimates and assumptions that materially affect the financial statements involve difficult, subjective or complex judgments by management, including the valuation of merchandise inventories and performing goodwill, intangible and long-lived asset impairment analyses.

Given the global economic climate, these estimates remain challenging, and actual results could differ materially from our estimates.

Reclassifications

Within the merchandise division sales table presented in Note 3, certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions in the thirteen and thirty-nine weeks ended October 29, 2022 for comparability purposes.

As a result, we have reclassified sales between divisions in the thirteen weeks ended April 29, 2023 for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed.

Change in Accounting Principle

Effective January 29, 2023, the Company changed the method of accounting for its inventories from the last-in-first-out (“LIFO”) method to the weighted average cost method.

The Company believes that this inventory method change is preferable because we believe it improves comparability with industry peers and is a more accurate representation of merchandise inventories, net and cost of goods sold.

Due to historical price deflation on the Company’s merchandise purchases, the Company was in a position where the LIFO merchandise inventories value exceeded the cost of its inventory for all periods presented in the consolidated financial statements.

In considering the lower of cost or market principle, merchandise inventories valued at LIFO, including necessary valuation adjustments, approximated the cost of such inventories using the weighted average inventory method.

As such, there is no impact to the prior periods from the retrospective presentation of the change.

The following tables show the pro forma effect to our consolidated financial statements as if the Company had remained on LIFO (amounts in thousands):

Thirteen Weeks Ended October 28, 2023 Thirty-Nine Weeks Ended October 28, 2023

As Reported Effect of Change Pro Forma LIFO As Reported Effect of Change Pro Forma LIFO

Consolidated Statements of Income:

Cost of goods sold $ 915,136 $ 383 $ 915,519 $ 2,851,261 $ 4,443 $ 2,855,704

Gross margin 482,641 ( 383 ) 482,258 1,513,202 ( 4,443 ) 1,508,759

Operating income 136,731 ( 383 ) 136,348 473,890 ( 4,443 ) 469,447

Income before income taxes 129,947 ( 383 ) 129,564 451,899 ( 4,443 ) 447,456

Income tax expense 29,969 ( 98 ) 29,871 100,876 ( 933 ) 99,943

Net income 99,978 ( 285 ) 99,693 351,023 ( 3,510 ) 347,513

Earnings per common share:

Basic $ 1.34 $ ( 0.00 ) $ 1.34 $ 4.63 $ ( 0.05 ) $ 4.58

Diluted $ 1.31 $ ( 0.00 ) $ 1.31 $ 4.51 $ ( 0.05 ) $ 4.46

October 28, 2023

As Reported Effect of Change Pro Forma LIFO

Consolidated Balance Sheet:

Merchandise inventories, net $ 1,492,219 $ ( 4,443 ) $ 1,487,776

Total current assets 1,895,575 ( 4,443 ) 1,891,132

Total assets 4,921,270 ( 4,443 ) 4,916,827

Accrued expenses and other current liabilities 232,046 ( 18,733 ) 213,313

Total current liabilities 1,172,615 ( 18,733 ) 1,153,882

Deferred tax liabilities, net 264,565 17,800 282,365

Total liabilities 3,128,183 ( 933 ) 3,127,250

Retained earnings 1,552,899 ( 3,510 ) 1,549,389

Stockholders' equity 1,793,087 ( 3,510 ) 1,789,577

Total liabilities and stockholders' equity 4,921,270 ( 4,443 ) 4,916,827

Thirty-Nine Weeks Ended October 28, 2023

As Reported Effect of Change Pro Forma LIFO

Consolidated Statements of Cash Flows:

Net income $ 351,023 $ ( 3,510 ) $ 347,513

Deferred income taxes 5,522 17,800 23,322

LIFO charge — 4,443 4,443

Income taxes payable ( 7,910 ) ( 18,733 ) ( 26,643 )

Net cash provided by operating activities 301,042 — 301,042

Share Repurchases

1 unchanged sentence

On June 2, 2022, the Board of Directors of the Company authorized a new share repurchase program (the "2022 Share Repurchase Program") under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending June 2, 2025.

The 2022 Share Repurchase Program and the 2021 Share Repurchase program are collectively referred to as the "Share Repurchase Programs".

On November 29, 2023, the Board of Directors authorized a new share repurchase program (the "2023 Share Repurchase Program") under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending November 29, 2026.

The 2023 Share Repurchase Program, the 2022 Share Repurchase Program and the 2021 Share Repurchase Program are collectively referred to as the "Share Repurchase Programs".

Under the Share Repurchase Programs, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan, all in compliance with the rules of the SEC and other applicable legal requirements.

2 unchanged sentences

The following table summarizes our share repurchases for the periods presented:

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Shares repurchased 1,983,967 750,010

1 unchanged sentence

$ 123.5 $ 50.3

(1) Includes estimated excise tax fees of $ 0.3 million and $ 1.5 million for the thirteen and thirty-nine weeks ended October 28, 2023, respectively.

As of October 28, 2023, we no longer had availability under the 2021 Share Repurchase Program, and we had $ 99.4 million available for share repurchases pursuant to the 2022 Share Repurchase Program.

(1) Includes estimated excise tax fees of $ 1.1 million and $ 0.3 million for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

As of May 4, 2024, we no longer had availability under the 2021 Share Repurchase Program or 2022 Share Repurchase Program, and we had $ 574.3 million available under the 2023 Share Repurchase Program.

Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04:

Liabilities - Supplier Finance Programs Disclosure of Supplier Finance Program Obligations.

This pronouncement requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period and potential magnitude.

The Company adopted the new guidance as of January 29, 2023.

We have previously entered into a supply chain financing arrangement with a third-party financial institution, whereby certain suppliers have the ability to settle outstanding payment obligations earlier than the due date required by our original supplier terms.

1 unchanged sentence

The Company does not have an economic interest in suppliers’ voluntary participation, does not provide any guarantees or pledge assets under these arrangements, and our rights and obligations to our suppliers, including amounts due, are not impacted.

Our liability associated with these arrangements, which is presented within accounts payable on the consolidated balance sheets, was $ 6.9 million, $ 9.0 million and $ 6.8 million as of October 28, 2023, January 28, 2023 and October 29, 2022, respectively.

Our liability associated with these arrangements, which is presented within accounts payable on the consolidated balance sheets, was $ 3.2 million, $ 7.2 million and $ 8.9 million as of May 4, 2024, February 3, 2024 and April 29, 2023, respectively.

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04:

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.

In December 2022, the FASB issued ASU 2022-06 which extended the effectiveness of this guidance to December 31, 2024.

The Company elected to utilize these optional expedients in connection with the amendments to our ABL Facility and Term Loan, which transitioned the facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”) on March 30, 2023 and August 1, 2023, respectively (see Note 4).

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09:

Improvements to Income Tax Disclosures.

This pronouncement is intended to enhance the transparency and decision usefulness of income tax disclosures and establishes new income tax disclosure requirements, including requiring disaggregation of a reporting entity’s effective tax rate reconciliation and disaggregation of the income taxes paid based on the applicable tax jurisdiction.

The new guidance is effective for fiscal years beginning after December 15, 2024 and should be applied on a prospective basis with the option to apply the standard retrospectively.

The Company is currently evaluating the impact that the adoption of this accounting standard will have on its financial disclosures.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which is intended to enhance the disclosures on reportable segments.

Under this pronouncement, all public entities (including those with a single reporting segment) are required to include incremental disclosures related to a public entity’s reportable segments, including disclosure of disaggregated expense information that is regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

The new guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be adopted retrospectively.

The Company is currently evaluating the impact that the adoption of this accounting standard will have on its financial disclosures.

Revenue from merchandise sales is recognized, net of sales tax, when the Company’s performance obligation to the customer is met, which is when the Company transfers control of the merchandise to the customer.

1 unchanged sentence

The following table sets forth the approximate amount of sales by merchandise divisions for the periods presented (amounts in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Merchandise division sales (1)

6 unchanged sentences

Other sales (3)

7,801 8,461 23,869 26,369

Net Sales $ 1,364,220 $ 1,383,609

(1) Certain products and categories were recategorized amongst various categories and divisions, respectively, to better align with our current merchandising strategy and view of the business.

As a result, we have reclassified sales between divisions in the thirteen and thirty-nine weeks ended October 29, 2022, for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed (see Note 2).

(2) E-commerce sales consisted of 9.4 % and 9.0 % of merchandise sales for the thirteen and thirty-nine weeks ended October 28, 2023, respectively, and 9.5 % and 9.7 % for thirteen and thirty-nine weeks ended October 29, 2022, respectively.

As a result, we have reclassified sales between divisions in the thirteen weeks ended April 29, 2023, for comparability purposes.

This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed.

(2) E-commerce sales consisted of 9.0 % and 8.2 % for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

(3) Other sales consisted primarily of the gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income, sales return allowance and other items.

2 unchanged sentences

The following is a reconciliation of the gift card liability (amounts in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Gift card liability, beginning balance $ 94,155 $ 90,650

5 unchanged sentences

Our debt consisted of the following (amounts in thousands) as of:

October 28, 2023 January 28, 2023 October 29, 2022

ABL Facility, due November 2025 $ — $ — $ —

May 4, 2024 February 3, 2024 April 29, 2023

ABL Facility, due March 2029 $ — $ — $ —

Term Loan, due November 2027 91,000 91,750 194,000

7 unchanged sentences

(1) Deferred loan costs are related to the Term Loan and Notes.

As of October 28, 2023, January 28, 2023 and October 29, 2022, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 2.3 million, $ 3.2 million and $ 3.5 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

Total amortization of deferred loan costs was $ 0.6 million and $ 1.8 million for the thirteen and thirty-nine weeks ended October 28, 2023, respectively, and $ 0.7 million and $ 2.0 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively.

Total expenses related to accretion of original issuance discount was $ 0.1 million and $ 0.2 million for the thirteen and thirty-nine weeks ended October 28, 2023, respectively, and $ 0.1 million and $ 0.3 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively.

As of May 4, 2024, February 3, 2024 and April 29, 2023, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $ 7.2 million, $ 2.1 million and $ 2.9 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets.

Total amortization of deferred loan costs was $ 0.6 million for each of the thirteen weeks ended May 4, 2024 and April 29, 2023.

Total expenses related to accretion of original issuance discount was $ 0.1 million for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

The expenses related to amortization of deferred loan costs and accretion of original issuance discount are included in interest expense, net on the consolidated statements of income.

We refer to the 2020 Term Loan and the Amendment collectively as the "Term Loan".

We refer to the 2020 Term Loan and the amendments thereto collectively as the "Term Loan".

On November 6, 2020, Academy, Ltd.

9 unchanged sentences

"prime rate" announced by the administrative agent, or (c) the one-month Adjusted Term SOFR with a floor of 0.75 % rate, plus a margin of 3.75 %.

As of October 28, 2023, the weighted average interest rate was 9.18 %, with interest payable monthly.

Quarterly principal payments of $ 750 thousand are required through September 30, 2027 and borrowings mature on November 6, 2027.

As of May 4, 2024, the weighted average interest rate was 9.19 %, with interest payable monthly.

The terms and conditions of the Term Loan also require that the outstanding balance under the Term Loan is prepaid under certain circumstances.

As of October 28, 2023, no prepayment was due under the terms and conditions of the Term Loan.

As of May 4, 2024, no prepayment was due under the terms and conditions of the Term Loan.

On November 6, 2020, Academy, Ltd.

6 unchanged sentences

as the ABL Agent and the several lenders party thereto, which ABL amendment updated its benchmark base interest rate from LIBOR to Adjusted Term SOFR.

On March 8, 2024, Academy, Ltd., as borrower, and New Academy Holding Company, LLC, Associated Investors, L.L.C.

and Academy Managing Co., L.L.C., as guarantors, entered into an amendment (the “ABL Amendment”) to the First Amended and Restated ABL Credit Agreement, dated as of July 2, 2015, with JPMorgan Chase Bank, N.A.

as the administrative agent and collateral agent, letter of credit issuer and swingline lender, and the several lenders party thereto, which ABL Amendment, among other things, extended the maturity of Academy’s asset-based revolving credit facility (the “ABL Credit Facility”) to March 8, 2029, unless (i) more than $ 100 million of the aggregate principal amount of the Notes or the Term Loan, or any refinancing thereof, in each case, is outstanding on the date that is 91 days prior to the earliest maturity date of any such indebtedness or (ii) equal to or less than $ 100 million of the aggregate principal amount of the Notes or the Term Loan, in either case, is outstanding on the date that is 91 days prior to the earliest maturity date of any such indebtedness and a Reserve (as defined in the ABL Amendment) in the ABL Credit Facility has not been taken for such amount, then the maturity date of the ABL Credit Facility will be the date that is 91 days earlier than the earlier maturity date of the Notes and the Term Loan.

The ABL Facility is used to provide financing for working capital and other general corporate purposes, as well as to support certain letters of credit requirements, and availability is subject to customary borrowing base and availability provisions.

During the normal course of business, we periodically utilize letters of credit primarily for the purchase of import goods and in support of insurance contracts.

As of October 28, 2023, we had outstanding letters of credit of approximately $ 11.6 million, all of which were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving an available borrowing capacity under the ABL Facility of $ 988.4 million.

As of May 4, 2024, we had outstanding letters of credit of approximately $ 11.6 million, all of which were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving an available borrowing capacity under the ABL Facility of $ 981.2 million.

Borrowings under the ABL Facility bear interest, at our election, at either (1) Adjusted Term SOFR plus a margin of 1.25 % to 1.75 %, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50 %, (b) JPMorgan Chase Bank, N.A.'s "prime rate", or (c) the one-month Adjusted Term SOFR rate plus 1.00 %, plus a margin of 0.25 % to 0.75 %.

1 unchanged sentence

The terms and conditions of the ABL Facility also require that we prepay outstanding loans under the ABL Facility under certain circumstances.

As of October 28, 2023, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

As of May 4, 2024, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.

In connection with the reduction of two lenders who dropped out of the ABL Facility, the Company wrote off $ 0.4 million of deferred loan costs related to the ABL Facility.

The ABL Facility, Term Loan and Notes agreements contain covenants, including, among other things, covenants that may restrict Academy, Ltd.'s ability to incur certain additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, pay dividends, make other restricted payments, make loans or advances, engage in transactions with affiliates or amend material documents.

1 unchanged sentence

These covenants are subject to certain qualifications and limitations.

We were in compliance with these covenants as of October 28, 2023.

We were in compliance with these covenants as of May 4, 2024.

Fair Value Measurements

10 unchanged sentences

Government treasury bills and securities, which are classified as cash and redeemable on demand.

As of October 28, 2023, January 28, 2023 and October 29, 2022, we held $ 224.0 million, $ 95.6 million and $ 264.7 million in money market funds, respectively.

As of May 4, 2024, February 3, 2024 and April 29, 2023, we held $ 324.0 million, $ 303.4 million and $ 42.3 million in money market funds, respectively.

The fair value of the Term Loan and Notes is estimated using a discounted cash flow analysis based on quoted market prices for the instrument in an inactive market and is therefore classified as Level 2 within the fair value hierarchy.

As of October 28, 2023, January 28, 2023, and October 29, 2022 the estimated fair value of the Term Loan and Notes was $ 0.6 billion, $ 0.6 billion and $ 0.7 billion, respectively.

As of May 4, 2024, February 3, 2024, and April 29, 2023, the estimated fair value of the Term Loan and Notes was $ 0.5 billion, $ 0.5 billion and $ 0.6 billion, respectively.

As borrowings on the ABL Facility are generally repaid in less than 12 months, we believe that fair value approximates the carrying value.

1 unchanged sentence

Property and equipment consists of the following (amounts in thousands) as of:

October 28, 2023 January 28, 2023 October 29, 2022

May 4, 2024 February 3, 2024 April 29, 2023

Leasehold improvements $ 589,714 $ 571,785 $ 491,112

2 unchanged sentences

Construction in progress 41,591 38,873 43,074

Land 3,698 3,698 3,698

Building and Land 14,919 14,919 3,698

Total property and equipment 1,752,066 1,712,135 1,550,645

1 unchanged sentence

Property and equipment, net $ 456,594 $ 445,209 $ 365,024

Depreciation expense was $ 27.4 million and $ 79.4 million in the thirteen and thirty-nine weeks ended October 28, 2023, respectively, and $ 27.0 million and $ 78.9 million in the thirteen and thirty-nine weeks ended October 29, 2022, respectively.

Depreciation expense was $ 28.9 million and $ 26.3 million in the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (amounts in thousands) as of:

October 28, 2023 January 28, 2023 October 29, 2022

May 4, 2024 February 3, 2024 April 29, 2023

Accrued interest $ 13,006 $ 6,717 $ 13,197

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On June 1, 2023, our stockholders approved the First Amendment to the 2020 Omnibus Incentive Plan, which, among other changes, increased the number of shares available for issuance thereunder by 2,600,000 shares.

As of October 28, 2023, there were 4,256,743 shares that were authorized and available for future issuance under the 2020 Omnibus Incentive Plan.

As of May 4, 2024, there were 4,132,613 shares that were authorized and available for future issuance under the 2020 Omnibus Incentive Plan.

On September 29, 2020, the ASO, Inc.

Board of Directors adopted the 2020 Employee Stock Purchase Plan (the "ESPP"), which became effective on October 1, 2020.

We have reserved a total of 2,000,000 shares under the ESPP and as of October 28, 2023, there were 1,650,543 shares authorized and available for future issuance under the ESPP.

Equity compensation expense was $ 6.2 million and $ 26.1 million for the thirteen and thirty-nine weeks ended October 28, 2023, respectively.

Equity compensation expense was $ 5.8 million and $ 15.5 million for the thirteen and thirty-nine weeks ended October 29, 2022, respectively.

We have reserved a total of 2,000,000 shares under the ESPP and as of May 4, 2024, there were 1,593,760 shares authorized and available for future issuance under the ESPP.

Equity compensation expense was $ 6.1 million and $ 11.4 million for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

These costs are included in selling, general and administrative expenses in the consolidated statements of income.

Service Option Fair Value Assumptions

The fair value for Service Options granted was estimated using a Black-Scholes option-pricing model.

The expected lives of the Service Options granted were based on the "SEC simplified" method.

Expected price volatility was determined based on a time-weighted average of the historical volatility for the Company and implied volatilities of comparable companies over a historical period that matches the expected life of the Award.

The risk-free interest rate was based on the expected U.S.

Treasury rate over the expected life.

The dividend yield was calculated based on the most recent annualized quarterly dividend and the valuation date closing stock price.

The assumptions used to calculate the fair value of Awards granted are evaluated and modified, as necessary, to reflect current market conditions and experience.

The following table presents the assumptions and grant date fair values for Service Options granted in the thirty-nine weeks ended October 28, 2023:

Expected life in years 6.0

Expected volatility 45.7 % to 50.8 %

Weighted-average volatility 47.9 %

Risk-free interest rate 3.7 % to 4.4 %

Dividend yield 0.6 %

The following table presents the Award grants during the thirty-nine weeks ended October 28, 2023:

Service Options Service Restricted Stock Units Performance Restricted Stock Units

For all Awards granted in 2023 and 2024, for team members that meet the age and service requirement for retirement eligibility (as defined in the award agreement), such Awards do not require the continued employment of the team member for vesting eligibility.

In such cases, expensing of Awards is accelerated through the retirement eligibility date.

The following table presents the Award grants during the thirteen weeks ended May 4, 2024:

Service Restricted Stock Units Performance Restricted Stock Units

Number of shares 346,418 129,041

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Weighted average exercise price per Award N/A N/A

The following table presents the unrecognized compensation cost as of October 28, 2023:

The following table presents the unrecognized compensation cost as of May 4, 2024:

Service Options Service Restricted Stock Units Performance Restricted Stock Units

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Diluted weighted average common shares outstanding is based on the basic weighted average common shares outstanding plus any potential dilutive effect of stock-based awards outstanding during the period using the treasury stock method, which assumes the potential proceeds received from the dilutive stock options are used to purchase treasury stock.

Anti-dilutive stock-based awards do not include awards which have a performance target which has yet to be achieved.

Anti-dilutive stock-based awards do not include awards which have a performance or liquidity event target which has yet to be achieved.

Basic and diluted weighted average common shares outstanding and basic and diluted earnings per common share are calculated as follows (amounts in thousands except per share amounts):

Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Net income $ 76,465 $ 93,970

Weighted average common shares outstanding - basic 73,993 76,862

Dilutive effect of Service Restricted Stock Units 177 144 301 123

Dilutive effect of Performance Restricted Stock Units 155 105 159 96

Dilutive effect of Service Restricted Units and Service Restricted Stock Units 244 247

Dilutive effect of Performance Restricted Stock Units and Liquidity Event Restricted Units 128 186

Dilutive effect of Service Options 1,342 1,841

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Technology Related and Other Commitments

As of October 28, 2023, we have obligations under technology-related, construction and other contractual commitments in the amount of $ 68.4 million.

As of May 4, 2024, we have obligations under technology-related, construction and other contractual commitments in the amount of $ 95.0 million.

Of such commitments, approximately $ 69.0 million is payable in the next 12 months.

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In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business.

On May 9, 2023, the U.S.

In May and December 2023, U.S.

Customs and Border Protection (the "CBP") notified us we owed additional duties relating to certain products that we imported from China that CBP believes are subject to certain anti-dumping and/or countervailing duties.

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While we contest CBP’s determination, we were required to deposit with CBP an amount of duties relating to these products, which are included in prepaid expenses and other current assets on the Company’s consolidated balance sheet while this matter is pending.

We do not believe this matter will have a material adverse effect on our financial position, results of operations or cash flows.

We anticipate that this matter will be resolved without a material adverse effect on our financial position, results of operations or cash flows.

However, the ultimate outcome of this matter cannot be determined at this time, and we cannot assure you that we will be successful in contesting CBP's determination or that we will not need to accrue or pay additional amounts in the future.

There have been no material developments during the fiscal quarter ended October 28, 2023, with respect to any of the matters discussed under the heading "Legal Proceedings" in the Annual Report.

There have been no material developments during the fiscal quarter ended May 4, 2024, with respect to any of the matters discussed under the heading "Legal Proceedings" in the Annual Report.

We are not currently party to any other legal proceedings that we believe would have a material adverse effect on our financial position, results of operations or cash flows.

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These agreements typically contain a one to three-year term and contractual payment amounts required to be paid by the Company.

As of October 28, 2023, we have $ 13.8 million in related commitments through 2027, of which $ 5.1 million is payable in the next 12 months.

As of May 4, 2024, we have $ 13.3 million in related commitments through 2027, of which $ 5.6 million is payable in the next 12 months.

Subsequent Events

Our management evaluated events or transactions that occurred after October 28, 2023 through November 30, 2023, the issuance date of the consolidated financial statements, and identified the following matters to report:

On November 29, 2023, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended October 28, 2023, of $ 0.09 per share of the Company's common stock, payable on January 10, 2024, to stockholders of record as of the close of business on December 13, 2023.

On November 29, 2023, the Company's Board of Directors authorized a new share repurchase program under which the Company may purchase up to $ 600 million of its outstanding shares during the three-year period ending November 29, 2026 (the "2023 Share Repurchase Program").

Under the 2023 Share Repurchase Program repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, privately negotiated transactions and/or a non-discretionary trading plan, all in compliance with the rules of the SEC and other applicable legal requirements.

The timing, manner, price and amount of any common share repurchases under the 2023 Share Repurchase Program will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions.

The 2023 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time.

The total availability under the 2023 Share Repurchase Program and the 2022 Share Repurchase Program is $ 699.4 million.

Our management evaluated events or transactions that occurred after May 4, 2024 through June 11, 2024, the issuance date of the consolidated financial statements, and identified the following matters to report:

On June 6, 2024, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended May 4, 2024, of $ 0.11 per share of the Company's common stock, payable on July 18, 2024, to stockholders of record as of the close of business on June 20, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements