10-Q 1 aso-20220430.htm 10-Q aso-20220430
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission File No. 001-39589
aso-20220430_g1.jpg
Academy Sports and Outdoors, Inc.
(Exact name of registrant as specified in its charter)
Delaware85-1800912
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1800 North Mason Road
Katy, Texas 77449
(Address of principal executive offices) (Zip Code)
(281) 646-5200
(Registrant’s Telephone Number, including Area Code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareASOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑
As of May 31, 2022, Academy Sports and Outdoors, Inc. had 85,096,754 shares of common stock, par value $0.01 per share, outstanding.

1


ACADEMY SPORTS AND OUTDOORS, INC.
TABLE OF CONTENTS



2


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except per share data)
April 30, 2022January 29, 2022May 1, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$472,395 $485,998 $593,288 
Accounts receivable - less allowance for doubtful accounts of $808, $732 and $1,450, respectively
12,666 19,718 10,831 
Merchandise inventories, net1,323,886 1,171,808 1,080,804 
Prepaid expenses and other current assets39,578 36,460 30,369 
Assets held for sale1,763 1,763 1,763 
Total current assets1,850,288 1,715,747 1,717,055 
PROPERTY AND EQUIPMENT, NET339,529 345,836 366,005 
RIGHT-OF-USE ASSETS1,085,805 1,079,546 1,127,645 
TRADE NAME577,246 577,215 577,000 
GOODWILL861,920 861,920 861,920 
OTHER NONCURRENT ASSETS4,368 4,676 7,685 
Total assets$4,719,156 $4,584,940 $4,657,310 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable$825,456 $737,826 $864,966 
Accrued expenses and other current liabilities274,399 303,207 287,592 
Current lease liabilities85,719 83,077 82,676 
Current maturities of long-term debt3,000 3,000 4,000 
Total current liabilities1,188,574 1,127,110 1,239,234 
LONG-TERM DEBT, NET683,325 683,585 781,035 
LONG-TERM LEASE LIABILITIES1,081,871 1,077,667 1,132,196 
DEFERRED TAX LIABILITIES, NET224,366 217,212 164,038 
OTHER LONG-TERM LIABILITIES12,512 12,420 26,932 
Total liabilities3,190,648 3,117,994 3,343,435 
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, authorized 50,000,000 shares; none issued and outstanding
   
Common stock, $0.01 par value, authorized 300,000,000 shares; 85,071,234; 87,079,394 and 93,887,109 issued and outstanding as of April 30, 2022, January 29, 2022 and May 1, 2021, respectively.
850 870 939 
Additional paid-in capital199,559 198,016 150,370 
Retained earnings1,328,099 1,268,060 1,164,964 
Accumulated other comprehensive loss  (2,398)
Stockholders' equity1,528,508 1,466,946 1,313,875 
Total liabilities and stockholders' equity$4,719,156 $4,584,940 $4,657,310 

See Condensed Notes to Consolidated Financial Statements
3


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)

Thirteen Weeks Ended
April 30, 2022May 1, 2021
NET SALES$1,467,730 $1,580,333 
COST OF GOODS SOLD946,306 1,016,632 
GROSS MARGIN521,424 563,701 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES315,931 324,627 
OPERATING INCOME205,493 239,074 
INTEREST EXPENSE, NET10,920 14,549 
OTHER (INCOME), NET(697)(397)
INCOME BEFORE INCOME TAXES195,270 224,922 
INCOME TAX EXPENSE45,464 47,126 
NET INCOME$149,806 $177,796 
EARNINGS PER COMMON SHARE:
BASIC$1.73 $1.93 
DILUTED$1.69 $1.84 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC86,658 92,088 
DILUTED88,614 96,472 



See Condensed Notes to Consolidated Financial Statements
4


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Amounts in thousands)

Thirteen Weeks Ended
April 30, 2022May 1, 2021
COMPREHENSIVE INCOME:
Net income$149,806 $177,796 
Recognized interest expense on interest rate swaps 1,196 
Tax expense (270)
Total comprehensive income$149,806 $178,722 

See Condensed Notes to Consolidated Financial Statements

5



ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands, except per share amounts)

Additional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Common Stock
SharesAmount
Balances as of January 29, 202287,079 $870 $198,016 $1,268,060 $ $1,466,946 
Net income   149,806  149,806 
Equity compensation  3,499   3,499 
Repurchase of common stock for retirement(2,272)(23)(5,247)(83,231) (88,501)
Settlement of vested Restricted Stock Units63 1 (1)   
Stock option exercises201 2 3,292   3,294 
Cash dividends declared, $0.075 per share
   (6,536) (6,536)
Balances as of April 30, 202285,071 $850 $199,559 $1,328,099 $ $1,528,508 



Additional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Common Stock
SharesAmount
Balances as of January 30, 202191,114 $911 $127,228 $987,168 $(3,324)$1,111,983 
Net income— — — 177,796 — 177,796 
Equity compensation— — 5,874 — — 5,874 
Settlement of vested Restricted Stock Units87 1 (1)— —  
Share-Based Award Payments adjustment for forfeitures— — 39 — — 39 
Stock option exercises2,686 27 17,230 — — 17,257 
Recognized interest expense on interest rate swaps (net of tax impact of $270)
— — — — 926 926 
Balances as of May 1, 202193,887 $939 $150,370 $1,164,964 $(2,398)$1,313,875 


See Condensed Notes to Consolidated Financial Statements
6


ACADEMY SPORTS AND OUTDOORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Thirteen Weeks Ended
April 30, 2022May 1, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$149,806 $177,796 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization25,578 25,298 
Non-cash lease expense586 500 
Equity compensation3,499 5,874 
Amortization of terminated interest rate swaps, deferred loan and other costs777 2,030 
Deferred income taxes7,154 25,064 
Changes in assets and liabilities:
Accounts receivable, net7,052 6,474 
Merchandise inventories, net(152,078)(90,769)
Prepaid expenses and other current assets(3,118)(2,055)
Other noncurrent assets23 612 
Accounts payable85,640 77,326 
Accrued expenses and other current liabilities(66,475)(29,039)
Income taxes payable38,561 21,357 
Other long-term liabilities92 (1,240)
Net cash provided by operating activities97,097 219,228 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(17,280)(16,808)
Purchases of intangible assets(32) 
Net cash used in investing activities(17,312)(16,808)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Term Loan(750)(1,000)
Share-Based Award Payments (2,993)
Proceeds from exercise of stock options3,294 17,257 
Taxes paid related to net share settlement of equity awards(895) 
Repurchase of common stock for retirement(88,501) 
Dividends paid(6,536) 
Net cash provided by (used in) financing activities(93,388)13,264 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(13,603)215,684 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD485,998 377,604 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$472,395 $593,288 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest$3,909 $6,253 
Cash paid for income taxes$260 $1,773 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:
Non-cash issuance of common shares$ $501 
Change in capital expenditures in accounts payable and accrued liabilities$1,991 $3,765 
Right-of-use assets obtained in exchange for new operating leases$30,019 $5,939 

See Condensed Notes to Consolidated Financial Statements
7


ACADEMY SPORTS AND OUTDOORS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Nature of Operations

The Company
All references to "we", "us," "our" or the "Company" in the financial statements refer to Academy Sports and Outdoors, Inc., a Delaware corporation ("ASO, Inc.") and the current parent holding company of our operations, and its consolidated subsidiaries. We conduct our operations primarily through our parent holding company's indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as "Academy Sports + Outdoors", or Academy, Ltd. Our fiscal year represents the 52 or 53 weeks ending on the Saturday closest to January 31. On August 3, 2011, an investment entity owned by investment funds and other entities affiliated with Kohlberg Kravis Roberts & Co. L.P. (collectively, "KKR"), acquired a majority interest in the Company. On October 6, 2020, ASO, Inc. completed an initial public offering and as of September 17, 2021, KKR no longer held an ownership interest in the Company.
The Company is one of the leading full-line sporting goods and outdoor recreational products retailers in the United States in terms of net sales. As of April 30, 2022, we operated 260 "Academy Sports + Outdoors" retail locations in 16 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.
Secondary Offering
On January 27, 2021, ASO, Inc. entered into an Underwriting Agreement (the “Underwriting Agreement”), by and among ASO, Inc., Allstar LLC, Allstar Co-Invest Blocker L.P., KKR 2006 Allstar Blocker L.P., MSI 2011 LLC, MG Family Limited Partnership and the former management selling stockholder named therein (collectively, the “Selling Stockholders”), and Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to an underwritten offering of 12,000,000 shares of common stock (the “Secondary Offering”), pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-252390), filed on January 25, 2021. The Selling Stockholders granted the Underwriters the option to purchase, within 30 days from the date of the Underwriting Agreement, an additional 1,800,000 shares of common stock. On January 29, 2021, the Underwriters exercised in full their option to purchase the additional shares. The Secondary Offering was completed on February 1, 2021. Pursuant to the Underwriting Agreement, the Underwriters purchased the shares from the Selling Stockholders at a price of approximately $20.69 per share. The Company did not receive any proceeds from the Secondary Offering.


2. Summary of Significant Accounting Policies
The accompanying unaudited financial statements of the Company have been prepared as though they were required to be in accordance with Rule 10-01 of Regulation S-X for interim financial statements, however, they do not include all information and footnotes required by United States generally accepted accounting principles ("GAAP") for complete financial statements. Certain information and footnote disclosures normally included in our annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. 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 29, 2022, as filed with the Securities and Exchange Commission on March 29, 2022 (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 weeks ended April 30, 2022 are not necessarily indicative of the results that will be realized for the fiscal year ending January 28, 2023 or any other period. The balance sheet as of January 29, 2022 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.

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Basis of Presentation and Principles of Consolidation
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. NAHC, Academy Managing Co., LLC, and Associated Investors, LLC are intermediate holding companies. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Our management bases its estimates on historical experience and other assumptions it believes to be reasonable under the circumstances. Actual results could differ significantly from those estimates. 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 and the possibility of additional unforeseen effects from the COVID-19 pandemic, 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 weeks ended May 1, 2021 for comparability purposes. This reclassification is in divisional presentation only and did not impact the overall net sales balances previously disclosed.
Share Repurchases
On September 2, 2021, the Board of Directors of the Company authorized a share repurchase program (the "2021 Share Repurchase Program") under which the Company may purchase up to $500 million of its outstanding shares during the three-year period ending September 2, 2024. Under the 2021 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, 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 2021 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 2021 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.
During the thirteen weeks ended April 30, 2022, we repurchased and concurrently retired 2,272,349 shares of ASO, Inc. common stock for an aggregate amount of $88.5 million pursuant to the 2021 Share Repurchase Program. The Company allocates the excess of the repurchase price over the par value of shares acquired to Retained Earnings and Additional Paid-in Capital. The portion allocated to Additional Paid-in Capital is determined by dividing the number of shares to be retired by the number of shares issued multiplied by the balance of Additional Paid-in Capital as of the retirement date. As of April 30, 2022, approximately $100.2 million remained available for share repurchases pursuant to our 2021 Share Repurchase Program (see Note 13).
Recent Accounting Pronouncements
Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): 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. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the expedients and exceptions provided by this amendment as it relates to our transition from LIBOR to another reference rate to determine the impact.
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3. Net Sales
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. Store merchandise sales are recognized at the point of sale and e-commerce sales are recognized upon delivery to the customer.
The following table sets forth the approximate amount of sales by merchandise divisions for the periods presented (amounts in thousands):
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Merchandise division sales (1)
Outdoors$457,854 $485,661 
Sports and recreation354,049 402,424 
Apparel342,368 375,757 
Footwear303,132 310,447 
Total merchandise sales (2)
1,457,403 1,574,289 
Other sales (3)
10,327 6,044 
Net Sales$1,467,730 $1,580,333 
(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 weeks ended May 1, 2021 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 9.5% and 7.4% of merchandise sales for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively.
(3) Other sales consisted primarily of the sales return allowance, gift card breakage income, credit card bounties and royalties, shipping income, net hunting and fishing license income and other items.
We sell gift cards in stores, online and in third-party retail locations. A liability for gift cards, which is recorded in accrued expenses and other liabilities on our balance sheets is established at the time of sale and revenues are recognized as the gift cards are redeemed in stores or on our website.
The following is a reconciliation of the gift card liability (amounts in thousands):
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Gift card liability, beginning balance$86,568 $74,253 
Issued18,209 18,442 
Redeemed(30,278)(28,490)
Recognized as breakage income(1,010)(963)
Gift card liability, ending balance$73,489 $63,242 

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4. Long-Term Debt

Our debt consisted of the following (amounts in thousands) as of:
April 30, 2022January 29, 2022May 1, 2021
ABL Facility, due November 2025$ $ $ 
Term Loan, due November 2027297,000 297,750 399,000 
Notes, due November 2027400,000 400,000 400,000 
Total debt697,000 697,750 799,000 
Less current maturities(3,000)(3,000)(4,000)
Less unamortized discount on Term Loan(2,353)(2,463)(3,714)
Less deferred loan costs (1)
(8,322)(8,702)(10,251)
Long-term debt, net$683,325 $683,585 $781,035 
(1) Deferred loan costs are related to the Term Loan and Notes.
As of April 30, 2022, January 29, 2022 and May 1, 2021, the balance in deferred loan costs related to the ABL Facility (as defined below) was approximately $4.0 million, $4.3 million and $5.2 million, respectively, and was included in other noncurrent assets on our consolidated balance sheets. Total amortization of deferred loan costs was $0.7 million and $0.7 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively. Total expenses related to accretion of original issuance discount were $0.1 million and $0.1 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, 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.
Term Loan

We refer to the 2020 Term Loan and the Amendment collectively as the "Term Loan".
On November 6, 2020, Academy, Ltd. entered into a seven-year $400.0 million senior secured term loan (the "2020 Term Loan") with Credit Suisse AG, Cayman Island Branch ("Credit Suisse"), as the administrative agent and collateral agent and the several other lenders and parties. The 2020 Term Loan will mature on November 6, 2027. The 2020 Term Loan bore interest, at Academy, Ltd.’s election, at either (1) LIBOR rate with a floor of 0.75%, plus a margin of 5.00%, or (2) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) Credit Suisse’s "prime rate", or (c) the one-month LIBOR rate plus 1.00%, plus a margin of 4.00%. Quarterly principal payments of approximately $1.0 million were required through September 30, 2027, with the balance due in full on the maturity date of November 6, 2027.
On May 25, 2021, Academy, Ltd. entered into Amendment No. 4 (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of November 6, 2020, among Academy, Ltd., as Borrower, Credit Suisse AG, Cayman Islands Branch, as the administrative agent and collateral agent, the several lenders party thereto and the several other parties named therein (as previously amended, the “Existing Credit Agreement” and as amended by the Amendment, the “Amended Credit Agreement”). Pursuant to the terms of the Amendment, Academy, Ltd. (i) reduced the applicable margin on LIBOR borrowings under the Existing Credit Agreement from 5.00% to 3.75% and (ii) utilized cash on hand to repay $99.0 million of outstanding borrowings under the Existing Credit Agreement, leaving an outstanding principal balance of $300.0 million under the Amended Credit Agreement. Quarterly principal payments of $750.0 thousand are required through September 30, 2027 and borrowings under the Amended Credit Agreement will continue to mature on November 6, 2027. All other material terms and provisions of the 2020 Term Loan remain substantially the same as the terms and provisions in place immediately prior to the effectiveness of the Amendment. As of April 30, 2022, the weighted average interest rate was 4.50%, with interest payable monthly. The terms and conditions of the Amendment also require that the outstanding balance under the Loan is prepaid under certain circumstances. As of April 30, 2022, no prepayment was due under the terms and conditions of the Term Loan.
Notes
On November 6, 2020, Academy, Ltd. issued $400.0 million of 6.00% senior secured notes which are due November 15, 2027 (the "Notes"), pursuant to an indenture, dated as of November 6, 2020 (the "Indenture") with The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent. The Notes require cash interest payments semi-annually in arrears on May 15 and November 15 of each year at a rate of 6.00% per year.
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ABL Facility
On November 6, 2020, Academy, Ltd., as borrower, and the guarantors, amended the previously existing secured asset-based revolving credit facility by entering into an 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, Ltd.’s asset-based revolving credit facility thereunder to November 6, 2025 (the "ABL Facility").
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 April 30, 2022, we had outstanding letters of credit of approximately $21.4 million, of which $17.8 million were issued under the ABL Facility, and we had no borrowings outstanding under the ABL Facility, leaving the available borrowing capacity under the ABL Facility of $982.2 million.
Borrowings under the ABL Facility bear interest, at our election, at either (1) LIBOR 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 LIBOR rate plus 1.00%, plus a margin of 0.25% to 0.75%. The ABL Facility also provides a fee applicable to the unused commitments of 0.25%. The terms and conditions of the ABL Facility also require that we prepay outstanding loans under the ABL Facility under certain circumstances. As of April 30, 2022, no future prepayments of outstanding loans have been triggered under the terms and conditions of the ABL Facility.
Covenants. The ABL Facility, Term Loan and Notes agreements contain covenants, including, among other things, covenants that 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. Additionally, at certain times, the ABL Facility is subject to a minimum adjusted fixed charge coverage ratio. These covenants are subject to certain qualifications and limitations. We were in compliance with these covenants as of April 30, 2022.


5. Derivative Financial Instruments
We have historically used interest rate swap agreements to hedge market risk relating to possible adverse changes in interest rates. All interest rate swaps had been designated as cash flow hedges of variable rate interest payments on borrowings under the Term Loan. As of April 30, 2022, we do not have any derivative financial instruments outstanding.
For derivatives which were designated as hedging instruments, amounts included in Accumulated Other Comprehensive Income (Loss) ("AOCI") were reclassified to interest expense in the same period during which the hedged transaction affected earnings, which was as interest expense was recorded on the underlying Term Loan. The impact of gains and losses related to interest rate swaps that were deferred into AOCI and subsequently reclassified into expense are as follows (amounts in thousands):

Thirteen Weeks Ended
April 30, 2022May 1, 2021
Accumulated Other Comprehensive Loss, beginning$ $(3,324)
Increase to interest expense (net of tax impact of $270 for the thirteen weeks ended May 1, 2021)
 926 
Accumulated Other Comprehensive Loss, ending$ $(2,398)


6. Fair Value Measurements
Fair value is defined as an exit price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Authoritative guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of the assets and liabilities.
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The fair value measurements are classified as either:
Level 1 which represents valuations based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 which represents valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 which represents valuations based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy in which the fair value measurement is classified in its entirety, is based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers made into or out of the Level 1, 2 or 3 categories during any period presented.
Periodically we make cash investments in money market funds comprised of U.S. Government treasury bills and securities, which are classified as cash and redeemable on demand. As of April 30, 2022, January 29, 2022 and May 1, 2021, we held $357.1 million, $401.0 million and $476.0 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 April 30, 2022, January 29, 2022, and May 1, 2021 the estimated fair value of the Term Loan and Notes was $0.7 billion, $0.7 billion, and $0.8 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.


7. Property and Equipment
Property and equipment consists of the following (amounts in thousands) as of:
April 30, 2022January 29, 2022May 1, 2021
Leasehold improvements$458,752 $456,918 $443,513 
Equipment and software607,752 602,289 565,873 
Furniture and fixtures339,265 336,679 322,326 
Construction in progress20,414 11,147 23,926 
Land3,698 3,698 3,698 
Total property and equipment1,429,881 1,410,731 1,359,336 
Accumulated depreciation and amortization(1,090,352)(1,064,895)(993,331)
Property and equipment, net$339,529 $345,836 $366,005 

Depreciation expense was $25.6 million and $25.3 million in the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively, and is included in selling, general and administrative expenses on the consolidated statements of income.

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8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (amounts in thousands) as of:
April 30, 2022January 29, 2022May 1, 2021
Accrued interest$12,804 $6,583 $14,003 
Accrued personnel costs42,859 115,073 60,830 
Accrued professional fees1,849 4,534 3,453 
Accrued sales and use tax18,276 13,054 29,493 
Accrued self-insurance14,420 15,824 14,125 
Deferred revenue - gift cards and other76,146 88,713 66,309 
Income taxes payable48,163 9,602 45,087 
Property taxes25,684 17,747 24,798 
Sales return allowance6,600 6,200 6,100 
Other27,598 25,877 23,394 
Accrued expenses and other current liabilities$274,399 $303,207 $287,592 


9. Share-Based Compensation
On September 29, 2020, the ASO, Inc. Board of Directors adopted the 2020 Omnibus Incentive Plan (the "2020 Omnibus Incentive Plan"), which became effective on October 1, 2020. The 2020 Omnibus Incentive plan provides for the grant of certain equity incentive awards (each, an "Award"), such as options to purchase ASO, Inc. common stock (each, a "Stock Option") and restricted units that may settle in ASO, Inc. common stock (each, a "Restricted Stock Unit") to our directors, executives and eligible employees of the Company. Awards granted under the 2020 Omnibus Incentive Plan consist of Stock Options that vest upon the satisfaction of time-based requirements (each, a "Service Option"), Restricted Stock Units that vest upon the satisfaction of time-based requirements (each, a "Service Restricted Stock Unit") and Restricted Stock Units that vest upon the satisfaction of time and performance and/or market based requirements (each, a "Performance Restricted Stock Unit"). The plan reserved a total of 5,150,000 shares of common stock for issuance. As of April 30, 2022, there were 2,445,685 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 April 30, 2022, there were 1,885,546 shares authorized and available for future issuance under the ESPP.
Equity compensation expense was $3.5 million and $5.9 million for the thirteen weeks ended April 30, 2022 and May 1, 2021, respectively. These costs are included in selling, general and administrative expenses in the statements of income.
Distribution
On August 28, 2020, New Academy Holding Company, LLC, the parent holding company for our operations prior to our initial public offering, paid a $257.0 million distribution to its members of record as of August 25, 2020. Cash payments ("Share-Based Award Payments") of $32.2 million for unvested Awards were paid upon vesting of such Awards, which was completed and paid in-full as of July 31, 2021. No further Share-Based Award Payments relative to the distribution are payable as of April 30, 2022.

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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 the 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 thirteen weeks ended April 30, 2022:
Expected life in years6.2
Expected volatility43 %
Weighted-average volatility43.0 %
Risk-free interest rate
2.4% to 2.8%
Dividend yield0.8 %

The following table presents the Award grants during the thirteen weeks ended April 30, 2022:
Service OptionsService Restricted Stock UnitsPerformance Restricted Stock Units
Number of shares810,708 136,913 168,703 
Weighted average grant date fair value per Award$16.33 $39.37 $39.18 
Weighted average exercise price per Award$39.18 N/AN/A

The following table presents the unrecognized compensation cost as of April 30, 2022:
Service OptionsService Restricted Stock UnitsPerformance Restricted Stock Units
Remaining expense$21,176,307 $14,048,722 $8,374,632 
Weighted average life remaining in years3.53.03.5


10. Earnings per Common Share
Basic earnings per common share is calculated based on net income divided by the basic weighted average common shares outstanding during the period, and diluted earnings per common share is calculated based on net income divided by the diluted weighted average common shares outstanding. 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 or liquidity event target which has yet to be achieved.
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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
April 30, 2022May 1, 2021
Net income$149,806 $177,796 
Weighted average common shares outstanding - basic86,658 92,088 
Dilutive effect of Service Restricted Units and Service Restricted Stock Units36  
Dilutive effect of Performance Restricted Stock Units and Liquidity Event Restricted Units101 910 
Dilutive effect of Service Options1,607 2,095 
Dilutive effect of Performance Unit Options and Performance Stock Options212 1,379 
Dilutive effect of ESPP Shares  
Weighted average common shares outstanding - diluted88,614 96,472 
Earnings per common share - basic$1.73 $1.93 
Earnings per common share - diluted$1.69 $1.84 
Anti-dilutive stock-based awards excluded from diluted calculation311 303 


11. Related Party Transactions
On January 27, 2021, in connection with the Secondary Offering, the Company entered into an Underwriting Agreement with affiliates of KKR (as selling stockholders), the several other selling stockholders named therein, and the several underwriters named therein, including KCM (as underwriter). The Secondary Offering was completed on February 1, 2021. The Company did not pay KCM any fees in connection with this secondary offering.


12. Commitments and Contingencies

Freight, Technology Related and Other Commitments
As of April 30, 2022, we have obligations under freight, technology-related, construction and other contractual commitments in the amount of $73.9 million. Of such commitments, approximately $45.4 million is payable in the next 12 months.

Financial Guarantees
During the normal course of business, we enter into contracts that contain a variety of representations and warranties and provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against us that have not yet occurred. However, based on experience, we believe the risk of loss to be remote.

Legal Proceedings
We are a defendant or co-defendant in lawsuits, claims and demands brought by various parties relating to matters normally incident to our business. No individual case, or group of cases presenting substantially similar issues of law or fact, is expected to have a material effect on the manner in which we conduct our business or on our results of operations, financial position or liquidity. The majority of these cases are alleging product, premises, employment and/or commercial liability. Reserves have been established that we believe to be adequate based on our current evaluations and experience in these types of claim situations. However, the ultimate outcome of these cases cannot be determined at this time. We believe, taking into consideration our indemnities, insurance and reserves, the ultimate resolution of these matters will not have a material impact on our financial position, results of operations or cash flows.

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Sponsorship Agreement and Intellectual Property Commitments
We periodically enter into sponsorship agreements generally with professional sports teams, associations, events, networks, or individual professional players and collegiate athletic programs in exchange for marketing and advertising promotions. We also enter into intellectual property agreements whereby the Company receives the right to use third-party owned trademarks typically in exchange for royalties on sales. These agreements typically contain a one to three-year term and contractual payment amounts required to be paid by the Company. As of April 30, 2022, we have $19.5 million in related commitments through 2027, of which $6.8 million is payable in the next 12 months.


13. Subsequent Events
Our management evaluated events or transactions that occurred after April 30, 2022 through June 7, 2022, the issuance date of the consolidated financial statements, and identified the following matters to report:

On June 2, 2022, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended April 30, 2022, of $0.075 per share of the Company's common stock, payable on July 14, 2022, to stockholders of record as of the close of business on June 16, 2022.

On June 2, 2022, 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 June 2, 2025 (the "2022 Share Repurchase Program"). Under the 2022 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 2022 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 2022 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 2022 Share Repurchase Program and the 2021 Share Repurchase Program is approximately $700.2 million.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-looking Statements
This Quarterly Report on Form 10-Q (this "Quarterly Report") includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the "safe harbor" created by those sections. Forward-looking statements include all statements that are not historical facts, including statements reflecting our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are included throughout this Quarterly Report, including this "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in the section entitled "Risk Factors," and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek," "foreseeable," the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report.
The forward-looking statements contained in this Quarterly Report are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include but are not limited to those described under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC") on March 29, 2022, and in this Quarterly Report, as such risk factors have been updated from time to time in our periodic filings with the SEC, and are accessible on the SEC's website at www.sec.gov.
Any forward-looking statement made by us in this Quarterly Report speaks only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
The following is a summary of the principal factors that make an investment in our securities speculative or risky (all of which are more fully described in the section entitled "Risk Factors" in the Annual Report):
Risks Related to Our Business and Industry
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 the communities we serve;
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 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;
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risks associated with our e-commerce business;
risks related to our owned brand merchandise;
any disruption in the operation of our distribution centers;
quarterly and seasonal fluctuations in our operating results;
the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, social and political conditions or civil unrest;
our dependence on our ability to meet our labor needs;
our ability to retain key personnel;
the geographic concentration of our stores;
fluctuations in merchandise (including raw material) costs and availability;
payment-related risks;
our ability to successfully pursue strategic acquisitions and integrate acquired businesses;
the effectiveness of our marketing and advertising programs;
Legal and Regulatory Risks
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 protect our intellectual property and avoid the infringement of third-party intellectual property rights;
new and increased costs, risks, and additional regulations and requirements as a result of becoming a public company;
our ability to have effective internal controls;
Risks Related to Our Indebtedness
our level of indebtedness and related debt service payments and our ability to generate sufficient cash flow to satisfy all of our obligations under our indebtedness;
our ability to incur substantially more debt;
restrictions on our current and future operations imposed by the terms of our indebtedness;
our variable rate indebtedness subjects us to interest rate risk;
our ability to borrow under the ABL Facility (as defined below);
our level of indebtedness may hinder our ability to negotiate favorable terms with our vendors;
Risks Related to the Ownership of Our Common Stock
you may be diluted by any future issuances of shares by us;
our stock price is volatile and may decline;
our ability to raise capital in the future may be limited;
lack of or negative coverage by securities analysts;
our ability to pay dividends on our common stock;
anti-takeover provisions in our organizational documents could delay or prevent a change of control;
our board of directors is authorized to issue and designate shares of preferred stock without stockholder approval; and
our exclusive forum provision.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.


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The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen weeks ended April 30, 2022 and our audited financial statements for the fiscal year ended January 29, 2022 and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report.
All references to "Academy," "Academy Sports + Outdoors," "ASO, Inc.", "we," "us," "our" or the "Company" in this Quarterly Report refer to Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company of our operations, and its consolidated subsidiaries. We conduct our operations through our subsidiaries, including our indirect subsidiary, Academy, Ltd., an operating company which is doing business as "Academy Sports + Outdoors."
We operate on a retail fiscal calendar pursuant to which our fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to January 31, (which such Saturday may occur on a date following January 31) each year. References to any year, quarter, or month mean our fiscal year, fiscal quarter, and fiscal month, respectively, unless the context requires otherwise. References to the "current quarter", "2022 first quarter" or similar reference refers to the thirteen week period ended April 30, 2022, and any reference to the "prior year quarter", "2021 first quarter" or similar reference refers to the thirteen week period ended May 1, 2021. Unless otherwise specified, all comparisons regarding the current period of 2022 are made to the corresponding period of 2021.

All statements in this Quarterly Report concerning our current and planned operations are modified by reference to our discussion of recent developments related to the COVID-19 pandemic, and our ability to carry out our current and planned operations are dependent on further developments associated with the COVID-19 pandemic.

Overview
We are one of the leading full-line sporting goods and outdoor recreation retailers in the United States. Our mission is to provide “Fun for All” and fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoor, sports & recreation, apparel, and footwear (representing 31%, 24%, 24% and 21% of our 2022 first quarter net sales, respectively) through both leading national brands and a portfolio of owned brands and private label brands, which go well beyond traditional sporting goods and apparel offerings.
We sell a range of sporting and outdoor recreation products, including sporting equipment, apparel, footwear, camping gear, patio furniture, outdoor cooking equipment, and hunting and fishing gear, among many others. Our strong merchandise assortment is anchored by our broad offering of year-round items, such as fitness equipment and apparel, work and casual wear, folding chairs, wagons and tents, training and running shoes, and coolers. We also carry a deep selection of seasonal items, such as sports equipment and apparel, seasonal wear and accessories, hunting and fishing equipment and apparel, patio furniture, trampolines, play sets, bicycles, and severe weather supplies. We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots, and beach towels in coastal markets.
As of April 30, 2022, we operated 260 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 16 contiguous states located primarily in the southern United States. Our stores are supported by approximately 22,000 team members, three distribution centers, and our rapidly growing e-commerce platform, which includes our website at www.academy.com and our mobile app, newly introduced in the 2021 second quarter. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.
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The following table summarizes store activity for the periods indicated:
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Beginning stores259 259 
Q1 new stores1 — 
Closed — 
Ending stores260 259 
Relocated stores 

How We Assess the Performance of Our Business and Recent Trends
Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections. These metrics include operational measures and non-GAAP metrics supplemental to our GAAP results.
Comparable Sales. We define comparable sales as the percentage of period-over-period net sales increase or decrease, in the aggregate, for stores open after thirteen full fiscal months, as well as for all e-commerce sales. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this Quarterly Report regarding our comparable sales may not be comparable to similar data made available by other retailers. Stores which have been significantly remodeled or relocated are removed from this calculation until the new store has been in operation for substantially all of the periods being compared. Stores which have been closed for an extended period of time due to circumstances beyond our control are also removed from the calculation. Any sales made through our website or mobile app are allocated to e-commerce sales for the purpose of measuring comparable sales, regardless of how those sales are fulfilled, whether shipped to home or picked up in-store or curbside through our buy-online-pickup-in-store program ("BOPIS"). For example, all BOPIS transactions, which are originated by our website, are allocated to e-commerce sales for the purpose of comparable sales, despite the fact that our customers pick-up these purchases from a specific store.
Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various factors affect comparable sales, including consumer preferences, buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than 13 months.
We have seen a significant comparable store sales increase in recent full year results from (0.7%) in 2019 to 16.1% and 18.9% in 2020 and 2021, respectively. However, we experienced a decrease in comparable sales of (7.5)% for the 2022 first quarter as compared to an increase in the 2021 first quarter of 38.9%. The large 2021 first quarter comparable sales were affected by U.S. government stimulus packages, which had a positive impact on sales in the first quarter of 2021 and a negative impact to comparable sales for the first quarter of 2022. See the discussion on Net Sales below for some contributing factors to these changes.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow. Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation. See "Non-GAAP Measures" below.
Components of Our Results of Operations. Our profitability is primarily influenced by fluctuations in net sales, gross margin and our ability to leverage selling, general and administrative expenses.
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Net Sales. Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.
Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.
We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net sales. Conversely, we also must seek to avoid accumulating excess inventory to avoid markdowns and clearance which negatively impact sales and gross margin. We have deployed several new tools over recent years to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock and execute a disciplined markdown strategy throughout the year at every location. This implementation, along with other factors, has allowed us to improve our inventory management in stores over the past few years. We have coupled these tools with the data we have been able to collect from our Academy Credit Card program and targeted customer surveys, so that we can better estimate future inventory requirements. It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.
We anticipate that the increased popularity of isolated recreation, outdoor and leisure activity products brought on by customer demand during the COVID-19 pandemic will continue and will result in a long-term increase to our customer base. Additionally, we have benefited from recent shifting of customer spend towards in-home health and wellness and dedicating more time to memory-making experiences. Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add owned brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our owned brand products and fewer units of the national brand products would generally have a positive impact on our gross margin but an adverse impact on our total net sales.
The expansion and enhancement of our omnichannel capabilities has resulted in increased sales in recent years and we expect that it will continue to be a driver of growth in our net sales and gross margin. We continue to invest in initiatives that will increase traffic to our e-commerce platform, which includes our website and mobile app, and drive increased online sales conversion. Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs. Additionally, our e-commerce platform allows us to reach customers outside of our current store footprint and introduces new customers to the Academy brand. It also allows for us to connect further with our customers for marketing and product education. We believe it is important that we continue to grow our omnichannel capabilities, which, together with recent enhancements made to our website and omnichannel capabilities, contributed to the increase in e-commerce sales during 2021 and in the first quarter of 2022. During the year-to-date 2022, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales. We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require significant investments by us.
We expect that new stores will be a key driver of growth in our net sales and gross margin in the future. Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. We are continually assessing the number of locations available that could accommodate our preferred size of stores in markets we would consider, and we expect to open at least eight new stores in 2022. Additionally, we intend to open a significant number of new stores over the next five years. Most of our stores achieve profitability within the first twelve months of opening. We believe our real estate strategy has positioned us well for further expansion.
Gross Margin. Gross margin is our net sales less cost of goods sold. Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution. These costs consist primarily of payroll and benefits, distribution center occupancy costs and freight and are generally variable in nature relative to our sales volume.
Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including owned brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including commodity costs, freight costs, shrinkage and inventory processing costs and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.
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For the past several quarters, we have seen increased competition across the industry for resources throughout the supply chain, which has resulted in disruptions to the flow of products from our vendors, labor shortages, reduced shipping container availability, and longer delays at the port. As a result, we have begun to experience a period of decreased or delayed supply and high inflationary levels. These factors have negatively impacted transportation and inventory costs, as we continue to pay higher prices to maintain our inventory levels. To help mitigate these constraints and potential disruptions to our supply chain, we continue to work with our partners by ordering merchandise earlier, securing transportation capacity, and utilizing different ports of entry.
Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. As sales increase at a higher rate than our SG&A, this results in sales leverage and a higher sales flow through to net income, which we have experienced in recent years with SG&A expenses as a percentage of sales declining from 25.9% to 23.1% to 21.3% for the full years of 2019, 2020 and 2021, respectively. SG&A expenses as a percentage of sales increased from 20.5% in the 2021 first quarter to 21.5% in the 2022 first quarter. We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store, distribution center, and corporate headcount, information technology infrastructure and marketing and advertising expenses, with efficiently and effectively servicing our customers.
Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4 to the financial statements included in this Quarterly Report) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt. In November of 2020, we refinanced our debt resulting in an approximate $630 million reduction in our overall debt outstanding. Subsequently, in May of 2021 we entered into an amendment to our Term Loan which reduced the applicable margin on our LIBOR rate by 1.25% and paid down $99 million. These actions have resulted in interest expense reductions in the full year 2021 and in the 2022 first quarter.
Income Tax Expense. ASO, Inc. is treated as a U.S. corporation for U.S. federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes. Recent fluctuations in income tax expense have been primarily as a result of changes in income before income taxes.
Impact of COVID-19 on Our Business
The COVID-19 pandemic continues to affect our business, as well as our customers, team members and suppliers. Governmental authority safety recommendations and requirements such as stay at home orders and business closures aimed at mitigating the spread of the virus, both in the U.S. and internationally, have contributed to the recent supply chain disruptions. These disruptions have resulted in decreased transportation, goods and labor availability and increased inflationary levels. Additionally, the U.S. government released stimulus packages throughout 2020 and 2021 as a result of the economic situation caused by the pandemic, which had a positive impact on sales during those periods.
The extent to which our operations and business trends will be impacted by, and any unforeseen costs will result from, the pandemic will depend largely on future developments, including whether there are additional periods of increases or spikes in the number of COVID-19 cases, further mutations or related strains of the virus (or even the threat or perception that this could occur), within the markets in which we operate and from which we and our suppliers source products and materials and the related impact on consumer confidence and spending, labor supply or product supply, all of which are highly uncertain. We continue to monitor the evolving situation. See the section of the Annual Report entitled "Risk Factors—Risks Related to Our Business—The impact of COVID-19 may adversely affect our business and financial results."

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Results of Operations

Thirteen Weeks Ended April 30, 2022 Compared to Thirteen Weeks Ended May 1, 2021
The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):
Thirteen Weeks EndedChange
April 30, 2022May 1, 2021DollarsPercent
Net sales$1,467,730 100.0 %$1,580,333 100.0 %$(112,603)(7.1)%
Cost of goods sold946,306 64.5 %1,016,632 64.3 %(70,326)(6.9)%
Gross margin521,424 35.5 %563,701 35.7 %(42,277)(7.5)%
Selling, general and administrative expenses315,931 21.5 %324,627 20.5 %(8,696)(2.7)%
Operating income205,493 14.0 %239,074 15.1 %(33,581)(14.0)%
Interest expense, net10,920 0.7 %14,549 0.9 %(3,629)(24.9)%
Other (income), net(697)0.0 %(397)0.0 %(300)75.6 %
Income before income taxes195,270 13.3 %224,922 14.2 %(29,652)(13.2)%
Income tax expense45,464 3.1 %47,126 3.0 %(1,662)(3.5)%
Net income$149,806 10.2 %$177,796 11.3 %$(27,990)(15.7)%
*Percentages in table may not sum properly due to rounding.
Net Sales. Net sales decreased $112.6 million, or 7.1%, for the 2022 first quarter compared to 2021 first quarter as a result of decreased comparable sales of 7.5% and partially offset by increased sales from the addition of one new store during the period. The decrease in sales was the result of fewer transactions partially offset by an increase in average ticket.
The decrease of 7.5% in comparable sales was driven by lower sales across all merchandise divisions and higher comparable sales in the prior year quarter that were partially due to stimulus payments issued by the U.S. government during that period. The sports and recreation division sales were lower, primarily driven by recreation and fitness as these divisions were particularly impacted by increased prior year isolated recreation demands brought on by the COVID-19 pandemic, especially in categories such as bikes, outdoor games and fitness equipment. These decreases in the current year were partially offset by increased sales in team sports, including baseball, basketball and soccer. The apparel division experienced declining sales largely due to athletic apparel, youth apparel, and outdoor and seasonal apparel, which were partially offset by increased sales in licensed apparel. The outdoor merchandise division had declines in fishing and shooting sports, partially offset by an increase in camping. The footwear division decreased due to lower sales in the casual and seasonal category and the team sports category, partially offset by increases in the youth category.
E-commerce net sales increased $21.9 million, or 18.8%, in the 2022 first quarter compared to the 2021 first quarter and represented 9.5% of merchandise sales in the 2022 first quarter compared to 7.4% in the 2021 first quarter.
Gross Margin. Gross margin decreased $42.3 million, or 7.5%, to $521.4 million for the 2022 first quarter from $563.7 million for the 2021 first quarter. As a percentage of net sales, gross margin decreased 0.2% from 35.7% in the 2021 first quarter to 35.5% in the 2022 first quarter. The decrease of 20 basis points in gross margin is primarily attributable to:
23 basis points of unfavorability on inventory valuation adjustments;
18 basis points of unfavorability in e-commerce shipping costs due to an increase in e-commerce sales during the 2022 first quarter; partially offset by
20 basis points of favorability related to merchandise margins.
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Selling, General and Administrative Expenses. SG&A expenses decreased $8.7 million, or 2.7%, to $315.9 million for the 2022 first quarter from $324.6 million for the 2021 first quarter. As a percentage of net sales, SG&A expenses were up 1.0% to 21.5% in the 2022 first quarter compared to 20.5% in the 2021 first quarter. The increase of 100 basis points in SG&A is primarily attributable to deleverage from decreased sales on decreased SG&A costs.

Interest Expense. Interest expense decreased $3.6 million, or 24.9%, for the 2022 first quarter when compared to the 2021 first quarter, resulting from a lower outstanding balance and a reduction in interest rates on our long-term debt as a result of the repricing of our Term Loan which occurred in May 2021.

Other (Income), net. Other income, net, remained relatively flat, increasing $0.3 million in the 2022 first quarter when compared to the 2021 first quarter.

Income Tax Expense. Income tax expense decreased $1.7 million to $45.5 million for the 2022 first quarter as compared to $47.1 million for the 2021 first quarter, resulting primarily from decreased income before income taxes. ASO, Inc.’s effective tax rate for the 2022 first quarter was 23.3% compared to 20.9% in the 2021 first quarter. The change in effective tax rate was primarily driven by a prior year benefit from tax deductions related to the exercise of several equity compensation awards during the 2021 first quarter.


Non-GAAP Measures
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, as shown below, have been presented in this Quarterly Report as supplemental measures of financial performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax expense and depreciation, amortization and impairment, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early retirement of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, pre-opening expenses and other adjustments. We define Adjusted EBIT as net income (loss) before interest expense, net, and income tax expense, further adjusted to exclude consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early retirement of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, pre-opening expenses and other adjustments. We describe these adjustments reconciling net income (loss) to Adjusted EBITDA and to Adjusted EBIT in the applicable table below. We define Adjusted Net Income as net income (loss), plus consulting fees, private equity sponsor monitoring fees, equity compensation expense, (gain) loss on early retirement of debt, net, severance and executive transition costs, costs related to the COVID-19 pandemic, pre-opening expenses and other adjustments, less the tax effect of these adjustments. We define basic Adjusted Earnings per Share as Adjusted Net Income divided by the basic weighted average common shares outstanding during the period and diluted Adjusted Earnings per Share as Adjusted Net Income divided by the diluted weighted average common shares outstanding during the period. We describe these adjustments by reconciling net income (loss) to Adjusted Net Income and Adjusted Earnings per Share in the applicable table below. We describe Adjusted Free Cash Flow as net cash provided by (used in) operating activities less net cash used in investing activities. We describe this adjustment by reconciling net cash provided by operating activities to Adjusted Free Cash Flow in the applicable table below.
We believe Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management believes Adjusted Free Cash Flow is a useful measure of liquidity and an additional basis for assessing our ability to generate cash. Management uses Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. Management also uses Adjusted EBIT as a performance target to establish and award discretionary annual incentive compensation.

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Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or net cash provided by operating activities as a measure of liquidity, or any other performance measures derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be construed to imply that our future results will be unaffected by any such adjustments.
Our Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share do not reflect costs or cash outlays for capital expenditures or contractual commitments;
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share do not reflect changes in, or cash requirements for, our working capital needs;
Adjusted EBITDA and Adjusted EBIT do 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;
Adjusted EBITDA and Adjusted EBIT do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, and Adjusted Earnings per Share do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;
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
other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow supplementally.

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Adjusted EBITDA and Adjusted EBIT
The following table provides reconciliations of net income to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands):
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Net income$149,806 $177,796 
Interest expense, net10,920 14,549 
Income tax expense45,464 47,126 
Depreciation and amortization25,578 25,298 
Equity compensation (a)3,499 5,874 
Pre-opening expenses (b)962 — 
Other (c) 350 
Adjusted EBITDA$236,229 $270,993 
Less: Depreciation and amortization(25,578)(25,298)
Adjusted EBIT$210,651 $245,695 
(a)Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.
(b)Represents pre-opening expenses which are non-capital expenditures associated with opening new stores and incurred prior to the store opening and generating sales. These costs consist primarily of occupancy costs, marketing, payroll and recruiting costs. These costs are expensed as incurred.
(c)
Other adjustments include (representing deductions or additions to Adjusted EBITDA and Adjusted EBIT) amounts that management believes are not representative of our operating performance, such as costs associated with secondary offerings, installation costs for energy savings associated with our profitability initiatives and other costs associated with business optimization initiatives.

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Adjusted Net Income and Adjusted Earnings per Share
The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data):
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Net income$149,806 $177,796 
Equity compensation (a)3,499 5,874 
Pre-opening expenses (b)962 — 
Other (c) 350 
Tax effects of these adjustments (d)(1,040)(1,489)
Adjusted Net Income$153,227 $182,531 
Adjusted Earnings per Share:
Basic$1.77 $1.98 
Diluted$1.73 $1.89 
Weighted average common shares outstanding:
Basic
86,658 92,088 
Diluted
88,614 96,472 
(a)Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.
(b)Represents pre-opening expenses which are non-capital expenditures associated with opening new stores and incurred prior to the store opening and generating sales. These costs consist primarily of occupancy costs, marketing, payroll and recruiting costs. These costs are expensed as incurred.
(c)
Other adjustments include (representing deductions or additions to Adjusted Net Income) amounts that management believes are not representative of our operating performance, such as costs associated with secondary offerings, installation costs for energy savings associated with our profitability initiatives and other costs associated with business optimization initiatives.
(d)
For the thirteen weeks ended April 30, 2022 and May 1, 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 28, 2023 and January 29, 2022, respectively.

Adjusted Free Cash Flow
The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented (amounts in thousands):
Thirteen Weeks Ended
April 30, 2022May 1, 2021
Net cash provided by operating activities$97,097 $219,228 
Net cash used in investing activities(17,312)(16,808)
Adjusted Free Cash Flow$79,785 $202,420 

28



Liquidity and Capital Resources

Sources and Uses of Liquidity
Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and occasionally use cash to repurchase common stock. We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility. On April 30, 2022, our cash and cash equivalents totaled $472.4 million. We believe our cash and cash equivalents, as well as our availability under the ABL Facility, will be sufficient to fund our cash requirements for at least the next 12 months.
Long-Term Debt
On May 25, 2021, the Company entered into an Amendment No. 4 (the "Amendment") to the Second Amended and Restated Credit Agreement (as previously amended, the "Existing Credit Agreement") which (i) reduced the applicable margin on LIBOR borrowings under the Term Loan from 5.00% to 3.75% and (ii) utilized cash on hand to repay $99.0 million of outstanding borrowings under the Term Loan, leaving an outstanding principal balance of $300.0 million under the Amended Credit Agreement. Borrowings under the Amended Credit Agreement will continue to mature on November 6, 2027, and all other material terms and provisions of the Existing Credit Agreement remain substantially the same as the terms and provisions in place immediately prior to the effectiveness of the Amendment (see Note 4 to the financial statements included in this Quarterly Report).
The following table summarizes our current debt obligations by fiscal year (amounts in thousands):
20222023202420252026After 2026Total
Term Loan and related interest (1)
$15,240 $23,576 $22,621 $21,857 $21,408 $298,025 $402,727 
Notes and related interest (2)
24,000 24,000 24,000 24,000 24,000 424,000 544,000 
ABL Facility and related interest (3)
1,868