Academy Sports and Outdoors, Inc.

Good morning, ladies and gentlemen, and welcome to Academy Sports and Outdoors fourth quarter and fiscal year end 2022 results conference call. At this time, this call is being recorded, and all participant lines are in a listen-only mode. Following the prepared remarks, there will be a brief question and answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask a question during the call, please press star 1. If you require any operator assistance during the call, please press star 0. I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead.

Good morning, everyone. Thank you for joining the Academy Sports and Outdoors fourth quarter fiscal 2022 financial results call. Participating on the call are Ken Hicks, Chairman, President, and CEO, Michael Mulliken, Executive Vice President and CFO, and Steve Lawrence, Executive Vice President and Chief Merchandising Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risk and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings relief and in RSEC filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings relief, which is available at investors.academy.com. Unless otherwise noted, comparisons are to 2021 The 2019 comparisons also provided, where appropriate, the benchmark performance given the impact of the pandemic in 2020 and 2021. I will now turn the call over to our CEO, Ken Hicks.

Thank you, Matt. Good morning and thank you all for joining us today. As we wrap up and reflect upon fiscal 2022, we close out a year that was both rewarding and challenging. During the fourth quarter and the full year, we faced pressure from the uncertain macroeconomic environment and comp periods of our strongest financial results. Our team effectively executed against our strategic plan, and as a result, we delivered solid earnings, generated and returned a significant amount of free cash flow, grew market share, and created value for our stakeholders, despite not meeting our sales expectations. Turning to our fourth quarter results, We reported net sales of $1.75 billion and negative 5.1% comparable sales. During the quarter, we had our highest sales day ever on Black Friday and a strong Cyber Monday. We then saw the return of the traditional shopping lull the first couple of weeks of December, followed by consumers returning the week of Christmas. Overall, footwear and apparel sales grew, while outdoors and sports and recreation experienced sales declines. Steve will discuss our sales results in more detail later in the call. In terms of profitability, fourth quarter adjusted net income grew 12.5% to $163.5 million, or $2.04 of adjusted diluted earnings per share, led by gross margin expansion from lower freight costs, a sales mix shift towards soft goods, and efficiently managing our SG&A expenses. During the year, led by our dedicated team members, Academy accomplished many of the strategic and operational goals we set at the beginning of the year. For example, we strengthened existing markets and entered new markets with the successful opening of nine new stores. This was our first year of opening new stores since 2019, and we're pleased with the overall performance of this class of stores. Each opening also provided unique opportunities that we are learning from and leveraging to improve future store openings. We grew our omnichannel business by adding new features to enhance our customer shopping experience. In 2022, e-commerce sales were 10.7% of total merchandising sales, up 140 basis points from 2021, and one year ahead of our goal to achieve a 10% penetration rate. For the full year, approximately half of our e-commerce sales were buy online, pick up in store, and over 75% of all e-commerce sales were fulfilled through our stores. In addition, our mobile app saw a 180% increase in the number of downloads compared to 2021. Our omnichannel business is a competitive advantage for us as it utilizes our store base to drive higher sales, conversion with healthy margins. We provided a great customer experience. We continue to invest in the look and feel of the stores to increase engagement. In 2022, we remodeled 11 existing stores. We also upgraded our technology throughout the store chain to improve checkout times and to manage store labor, resulting in more customer-facing hours to focus on delivering an enjoyable and fun shopping experience to our customers. We also continue to enhance our product assortment with our preferred vendor partners, as well as new ones to ensure we're in stock with the inventory our customers want, while not losing our focus on value. In 2022, these efforts led to record customer service scores exceeding last year's strong results. We invested in and completed several internal projects to increase efficiency of our store operations, merchandise planning and allocation, and supply chain. These efforts will pay dividends for years to come. We increased our engagement in meaningful ESG practices by publishing an updated ESG report in May, followed by a greenhouse gas emissions supplement reporting our scope one and two emissions in December. And we generated solid profits and cash flow. We used our cash flow to execute our comprehensive capital allocation strategy in order to increase total shareholder return. In 2022, Academy returned $614 million to stakeholders through $490 million worth of share repurchases, $24 million in dividend payouts, and $100 million in debt reduction, while also supporting our growth initiatives and financial stability. The team's accomplishments in 2022 has strengthened the foundation we have built over the past several years and positioned Academy for a major growth phase as we head into fiscal 2023. I'd like to thank all of the Academy team members for their efforts over the past year. As we begin fiscal 2023, We anticipate that consumers will remain pressured and mindful of their spending due to the current economy. With this as the backdrop, our market position as a value leader is more important than ever. We appeal to a wide demographic of consumers with our everyday value proposition and broad assortment of good, better, best national and private brands to meet our customers' needs of having fun at an affordable price. Our focus in 2023 will be investing for the long-term growth. We plan to continue the progress made over the last few years by continuing to improve our operations and focusing on the things we can control as a company to grow the business. The main growth priorities for Academy in 2023 are expanding the store base and existing in new markets with the opening of 13 to 15 new stores. continuing to build a more powerful omnichannel business, driving growth from our existing stores by improving service and productivity, strengthening our merchandising assortment, and attracting and engaging customers, and leveraging and scaling our supply chain to support our future growth. These priorities, along with our established, differentiated market position, built-on value, assortment, and service, as well as our strong relationships with key vendors, give us an excellent runway for growth in 2023 and beyond. The Academy team is excited about the opportunities that are in front of us as we strive towards achieving our vision of becoming the best sports and outdoors retailer in the country, while providing fun for all and creating value for our stakeholders. Finally, I'd like to extend an invitation to you to tune in to Academy's upcoming Analyst and Investor Day on April 3rd and 4th here in Katy, Texas, where we will introduce the company's new long-range plan with financial targets. More details will be announced soon. I'll now turn the call over to Michael to provide more details on our fourth quarter financial results, new stores, and provide our initial 2023 guidance. Michael?