SPWH - NASDAQ

Thank you for standing by, and welcome to the Sportsman's Warehouse Holdings, Inc. Second Quarter 2025 Earnings Conference Call. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press 11 again. As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Riley Timmer, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Participating on our Q2 call today is Paul Stone, our Chief Executive Officer, and Jennifer Paul Young, our Chief Financial Officer. I will now remind everyone of the company's safe harbor language. The statements we make today contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which includes statements regarding expectations about our future results of operations, demand for our products, and growth of our industry. Actual results may differ materially from those suggested in such statements due to a number of risks and uncertainties, including those described in the company's most recent Form 10 and on the company's other filings made with the SEC. We will also disclose non-GAAP financial measures during today's call. Definitions of such non-GAAP measures, as well as reconciliations to the most directly comparable GAAP financial measures, are provided as supplemental financial information in our press release included as Exhibit 99.1 to the Form 8-Ks we furnished with the SEC today, which is also available on the Investor Relations section of our website at sportsmans.com. I will now turn the call over to Paul.

Thank you, Riley, and good afternoon, everyone. Before we begin, I want to recognize our team of dedicated outfitters across the country. Each and every day, they deliver on our promise of great gear and exceptional service. I would also like to welcome our Chief Financial Officer, Jennifer Paul Young, who brings more than two decades of experience across both large-scale and specialty retail. She is a proven financial leader, and I look forward to partnering with her to further accelerate the transformation of our business. Turning now to our second quarter results. I'm encouraged by the strong progress our team continues to make as we advance our transformation strategy in the second quarter. Despite ongoing consumer macroeconomic headwinds, we delivered our second consecutive quarter of comp store sales growth. Same-store sales were up 2.1% compared to last year, with positive comps achieved each month of the quarter. Importantly, this growth came even as June faced a difficult comparison due to last year's pull-forward of sales in California ahead of the new firearm and ammunition taxes that took effect in July. Our efforts to localize merchandise assortments and geo-target our marketing are delivering strong early results. For example, in Alaska, sales in the second quarter grew by high single digits, reflecting how well these initiatives are resonating with customers. Aligning our merchandising and marketing to local outdoor pursuits and solution selling is proving to be a critical unlock not only for driving growth but also for improving inventory productivity and efficiency. Our firearms business once again outperformed the industry. While adjusted NICS checks declined 4.9% in the quarter, our unit sales increased more than 4% versus last year, further evidence that we are capturing market share. Consistent with broader consumer trends, we did see some trade-down behavior, reflected in a 4% decline in average unit retail for firearms again this quarter. However, attachment remains strong as average order value continues to be at all-time highs. In ammunition, our strategic shift to an everyday low price model on core ammo calibers and improved in-stock continues to resonate strongly with our customers. Ammunition sales grew 10% in the quarter, with average unit retail up in low single digits. We are also sharpening and investing in our firearm-related merchandise assortment to drive higher basket attachment and greater overall customer value. Looking now at our key categories. Driving our comp increase in the quarter was our hunting and shooting sports and fishing departments. Hunt and Shoot increased 4% in Q2, driven by firearms, ammo, and products related to personal protection. Fishing was up nearly 11% over last year and is up 20% on a two-year stack. This is a category with expanding market participation and clear opportunities for us to capture additional share. We are well-positioned with our late-season fishing inventory to sell down and end the season strong with clean inventory. We were disappointed with Camping's performance this quarter, as sales were down 10% compared to last year. As part of our ongoing transformation, we made a deliberate decision late last year to eliminate certain slow-moving categories that were tying up working capital. But we have not yet seen the level of offsetting growth we anticipated in other areas of the department. To address this, we recently implemented an EDLP strategy on core consumables similar to what has been effective in ammunition, and we are confident this will strengthen the business over time. Additionally, we invested in compelling new assortments, most notably with YETI, and early results indicate that these additions are resonating with our customers. Our e-commerce business grew 3% over last year and continues to be a strength of our omnichannel retail strategy. Importantly, over 70% of online transactions were fulfilled through our buy online pick up in store (BOPUS) program, underscoring how e-commerce drives significant traffic and sales into our brick-and-mortar locations. At the same time, our ship-to-home business remains strong, reflecting our ability to capture consumer demand well beyond our physical store footprint. With these dual strengths, we are uniquely positioned to gain market share as e-commerce continues to outpace traditional retail channels. The improvements we are seeing across the business are directly tied to our strategic focus, which remains centered on our four key priorities. One, inventory precision. Inventory readiness for the critical fall hunting season was foundational in Q2. In prior years, we were often late to the season. This year, we are ahead. Our inventory is healthier, our in-stock levels are stronger, and we have depth in our core products. With Q2 representing our peak inventory build, we are now well-positioned to sell through as we move into the key fall hunting and holiday season. Two, local relevance. We continue to strengthen our role as a trusted local destination. This quarter, we launched our partnership with the United States Concealed Carry Association (USCCA) to provide in-store training and education. Their robust market-specific programs are a natural complement to our localization strategy. In addition, we are expanding in-store events that leverage the expertise of our outfitters, further strengthening our role as a trusted resource and deepening our connection to the communities we serve. Three, personal protection. This category continues to outpace our total company performance. We have expanded the number of stores that carry the Burna product line, where we offer the customer a chance to try before you buy, leveraging our archery lanes and enclosed shooting pods. We also launched TASER, a well-known less-lethal brand, earlier this week in our top-performing personal protection stores. We will continue to lean into this category as we establish Sportsman's Warehouse Holdings, Inc. as the authority in personal protection. Four, brand awareness. As a differentiated omnichannel retailer, we are strengthening brand recognition and trust. Our new "Adventure Like a Local" campaign underscores the expertise and authenticity that set Sportsman's apart. While our refined digital strategy is accelerating customer acquisition and positioning us for sustained long-term growth, despite ongoing consumer macroeconomic challenges, I remain confident in both our strategic plan and our team's ability to deliver against it. Our competitive advantage is clear: out-local the big box retailers, out-assort the smaller specialty shops, providing customers with a differentiated combination of value, quality, breadth of selection, and personalized service rooted in the communities we serve. We remain disciplined in managing the levers within our control: variable cost, inventory productivity, and merchandise margins. As we advance our strategic initiatives, we are confident these efforts will drive sustainable sales growth, operating margin improvement, and debt reduction in 2025. Finally, we continue to anticipate ending the year with lower total inventory than last year and generating positive free cash flow. I'll now turn the call over to Jennifer.

Thank you, Paul, and good afternoon, everyone. It's great to be on the call and to be part of a very exciting transformation happening at Sportsman's Warehouse Holdings, Inc. We delivered our second consecutive quarter of same-store sales growth in Q2, with comps up 2.1% year over year, representing an improvement from the first quarter trend. Net sales for the quarter were $393.9 million, an increase of 1.8% compared to the prior year. Our sales momentum from Q1 carried into the second quarter, led by strength in our hunting and shooting sports department, which grew 4%, and fishing, which increased 10.9% versus last year. These gains were partially offset by softer performance in other departments. Gross margin for the quarter was 32%, an 80 basis point improvement versus Q2 last year. The increase was largely driven by improved overall product margins from healthier inventory and higher penetration of sales from our fishing department. This increase was partially offset by a mix shift to firearms and ammo, which has a lower gross margin, a lower penetration in camping, which carries a higher margin rate, and increased freight tied to our strategic pull-forward of inventory to be store-ready for our key hunting season. The freight expense due to the inventory pull-forward resulted in an estimated 40 basis points drag on margin in the quarter. SG&A expenses were $97.2 million, or 33.1% of net sales, versus 32.7% in the prior year. The increase was driven by a reinvestment in our customer-facing areas of the business, including store labor and digital marketing to drive sales and omnichannel traffic. We will continue to closely manage our variable operating expenses to align with sales trends. Net loss for 2025 was $7.1 million, or negative $0.18 per diluted share, compared with a net loss of $5.9 million, or negative $0.16 per diluted share in the second quarter of last year. Adjusted net loss in the quarter was $4.7 million, or negative $0.12 per diluted share, compared with an adjusted net loss of $5.3 million, or negative $0.14 per diluted share in the second quarter of last year. Adjusted EBITDA for the second quarter improved to $8.3 million, compared with adjusted EBITDA of $7.4 million in the second quarter of last year, an improvement of 20 basis points as a percentage of net sales. Now turning to inventory. As anticipated, total inventory at the end of Q2 was $443.5 million compared to $363.4 million in the same period last year. As Paul noted earlier, this increase was a deliberate and strategic decision to ensure our stores are well-prepared and set on time for the key late summer and early fall hunting seasons. Our focus has been on building depth in core items that are seasonally and regionally relevant, faster churning, and supported by predictable customer demand. We believe our inventory remains healthy and of high quality, as evidenced by cleaner sell-through during the spring and summer seasons. Importantly, Q2 represents our peak inventory position for 2025. We expect a slight sell-down in our inventory in Q3 and remain confident in our ability to finish the year with total inventory below last year's level. Looking ahead, we are continuing to simplify our product assortment to drive efficiency in working capital and support margin improvement over time. With new systems, processes, and enhanced buying discipline, our goal is to be in season earlier, exit earlier, and achieve clean sell-throughs across categories, which will drive down the working capital investment needed for inventory. In regards to liquidity, during the second quarter, we exercised our $20 million deferred draw feature on our term loan to strengthen the balance sheet. We ended the second quarter with a total debt balance of $195.1 million and total liquidity of $109.5 million. We expect that Q2 will be our peak for reported debt balance as we sell down our inventory, generate improved EBITDA, and begin to pay down our debt. Inventory efficiency and tight control of variable expenses will remain top priorities. Finally, let me speak to our update on full-year guidance. Our priorities for 2025 remain focused on the execution of our strategic priorities to profitably grow sales, improve margins, and closely manage our variable operating expenses. We have confidence in our second-half strategy to drive profitable sales despite the macroeconomic headwinds and potential margin pressure from higher tariffs. For the full fiscal year 2025, we are raising the lower end of our net sales outlook to reflect flat growth versus our prior guide of down 1%, while maintaining the top end of our range at up 3.5%. We are reiterating our adjusted EBITDA guide to be between $33 and $45 million, driven by modest gross margin improvement and disciplined expense management. We are reiterating our capital expenditures target to be between $20 million and $25 million, primarily related to technology investments to improve store service and merchandising productivity, as well as our normal store maintenance. We remain focused on growing sales, generating positive free cash flow for the year, paying down debt, and returning value to all of our stakeholders. I will now turn the call back to the operator to facilitate any questions.

Certainly. And as a reminder, ladies and gentlemen, if you have a question at this time, please press 11 on your telephone. Our first question comes from the line of Anna Glaessgen from B. Riley Securities. Your question, please.

Hey. Good afternoon, guys. Thanks for taking my question. First, I'd like to talk or start with the comp performance. Really nice to see another quarter of positive comp. Can you talk about the drivers of that? I know lapping out of stock has been a really key driver of outperforming the industry. As we think about that easing benefit into 2026, how should we think about the durability of that growth?

Yes. And I'll take it. I think just overall, the strategy that we put in place to start the year really aligned around hunting and shooting, fish, and personal protection. And that's really where we've seen all of our strength. And at the same time, continued to invest our inventory dollars to be able to continue to see the momentum as we've seen it from Q1 to Q2 and even as we start Q3, good strong momentum in particular in firearms. So I look at it and think we've positioned ourselves extremely well with the strategy. We've opportunities as we continue to work on our attached categories as we pulled small sub-categories out of the business that didn't have the generality that we wanted and reinvest the working capital back into our strategic focus. Our key will be as we think about it and the merchants really in place and the team humming at this point, is putting ourselves in a position where we'll continue to refine what our inventory mix is, the long tail that we have in our categories, and be able to reinvest that back into the strong and our top-performing items, which I still think we have opportunity there as we work through multiple seasons of buys as we go on. And you know, I'll reiterate that I think as we look at fish, and our performance overall in fish and our two-year stack, we're not in a position where we're lackadaisical there. We think that we have even more room to grow in fish. We comped last year a lot of high-end merchandise that we got out of, and we were able to see it pick up and the performance really be driven through units. And we think we even have more upside as we think about that. So I would just wrap it up to say the entire strategy, we love where we're at with hunt and shoot, in particular, where we are starting the month of August compared to last year and where our inventory position was for the hunting season. We feel really good with where fish will be. We think we'll have another strong quarter of fish due to weather and what's happening there. And then the newness of personal protection that we continue to add into the business, it's really outperforming all of our other parts of the business today. That we have, I think, continued upside in that as we think about the back half of the year and starting next year.

Great. And then turning to the implied back half guide, it seems to be implying some escalating margin improvement while facing a little bit of more difficult comps in the back half. Can you talk a little bit about the margin drivers or puts and takes in the back half of the year?

Yeah. Hi, Anna. This is Jennifer. Nice to meet you. If you think about the margin in the back half of the year, there's a couple of things you need to keep in mind. As Paul was just mentioning, hunt continues to be a focus in the back half, and it does have lower margins than the rest of our business based on the firearms and the ammo, and those have been drivers. So those will be putting a mix component into margin in the back half. And then also echoing where fish has actually been a beneficiary to margin in Q2 based on its rate and its penetration as that category falls off as we get more into the quarter, that will also have a mix shift on the margin. So as you think about margin and also keep in mind, as a retailer, Q4 is a very promotional time. These are just things to contemplate as you're thinking about it.

Great. Thanks, guys. And welcome to the team.

Thanks.

Thank you. And our next question comes from the line of Matt Koranda from ROTH Capital Partners. Your question, please.

Hey, guys. Thanks for taking the questions, and welcome, Jennifer. I guess maybe just taking a crack at the comp guide for the back half. I guess it implies, up against a little bit of tougher comps, so maybe a little bit of deceleration. But still positive for the back half. Any color on how demand trended through August? And just sort of how we feel about the setup into the back half in terms of comps?

Yeah. Hey, Matt. We like how August looked. We really liked our NICS performance that we got back yesterday in August, so we saw an acceleration compared to what our Q2 performance looked like. So good position there, good start to Q3. We like the way it looks. I think we've shared with you before as we come into Q4, we're clearly going to be in a position of comping apples to apples. And from a marketing standpoint, we'll be digital to digital. So I think Q3, we still have a little bit of a tailwind as we go through Q3 just based on the more productive ROAS measurement that we're going to have as we close out Q3, but Q4 we're going to be an apples to apples comparison with digital to digital is the way I would think about it. So we like the way August started out. And I think momentum as we think about right now, Q3.

Okay. Understood. And then maybe just, if you could break down the AOV trend a little bit more, I think it would be helpful. I know the strategy has been typically to kind of build a larger basket around a firearms purchase, typically to generate more accessories purchases. And so while you mentioned lower AUR in firearms, I think the AOVs have gone up. Maybe if you could just break that down a little bit, and how much room, I guess, more room for improvement do we have on that strategy? Have we capped out in terms of AOVs, or is there more room to run? And I guess, is there AOV improvement built into the guidance for the back half of the year? Sorry. There's a lot in there, but just figured it'd be helpful to break it all down.

I think we're just really getting started around what we can do about attachment and in particular in the firearms and getting loaded in with the inventory that we need and part of this working capital reinvestment out of some of these other sub-categories and our attached categories to put back into attaching to firearms or even to our ammo basket as we get those customers in that we're in kind of mid-stages of getting that build out. Matt is the way that I would see it. I will tell you, we're extremely bullish on what we were able to do from an inventory position and be able to get our inventory aligned to start the queue and in comparison to where really we would have peaked last year in October or closer to October, missed a good portion of hunt, in particular, the western hunt. And just flex cells from the table. So I think your first question, there's huge opportunity from an AOV standpoint and a UPT. The team has done a fantastic job. Don't know the stores, converting and being able to increase the basket size. And I think as we looked at last month, we continue to be above COVID marks there and all-time highs both on UPT and AOV. With an opportunity to be able to be more sharp in inventory to continue to grow that. So I think that's part of the business that we continue to put a spotlight on and how do we invest more into it to be able to grow and to be able to help our overall mix as we're growing firearms at the rate we are, Matt.

Okay. Appreciate all the detail. I'll leave it there. Thank you.

Thank you. And our next question comes from the line of Ryan Sigdahl from Craig Hallum Capital Markets. Your question, please.

Hey. Good afternoon. Wanted to stick on guns and the non-lethal. So impressive. You said accelerating NICS performance in August, but that trend has continued here. But you're also simultaneously leaning in on the non-lethal TASERs, Burna, etcetera. I guess, are those two things related that the foot traffic is a similar customer, or is it really mixed assortment, store layout, all of the things that you can drive kind of growth in both?

Yeah. I would think. The best way to say, we think it's a new customer that is really looking at the less lethal. And we've looked at it and dive on it on the mix and who it's bringing into the store. So we like what it's doing as we think about it and how we've set the site up to really be able to start the process on the site and to be able to drive the folks to the store as well as in Burna's case the way they're able to message it with their influencers to get people to the store. So we like what's happening there. We feel we've got a lot of upside. We've just built out a larger subset of stores to be able to add inventory into a pretty big swath of store count as we get to the back half of the year. So I think we have an opportunity to continue to grow that. And I like the newness piece of it to where we continue to be able to add new partners. Taser coming in. They set the product right, they were able to align, get the product, empty boxes, point of sale, have it all wrapped, ready to go to the store to be able to set and do it very professionally. So I like the way that that's shaping up and we continue, as I mentioned to Matt, I think the opportunity around personal protection is not only the non-lethal, but the lethal component of it as well, and then how we can really meet the customer where they want to be around the attachment of that in particular, from handguns and ammo that we saw great performance. Hunt was really driven as we look at it from a category breakdown from handguns and ammunition. Driving that piece of the business. And then as I think about accessory or the non-lethal, the personal protection, the newness is what drove that part of the business. So it's good to see the mixture that we have there.

And then just as we shift over to store or the store calling. Yep. Sorry. So adding one store in Q3, as you've said, you know, before, I guess, how do you think about the portfolio of stores you have? I know there have been some that were, you know, right around four-wall breakeven-ish, but I think you even referred to them on life support in the past. But how do you think about adding stores, optimizing the existing stores you have? Just an update there would be helpful. Thanks.

I just, you know, our real estate focus will continue to be around one, ensuring that we are paying down our debt before we get into a position of growth around those stores. And that's the commitment that I've made and we've made as a company as we go out that we still think we have a lot of room within our current asset base we have to be able to sweat the assets to get the performance where we need to be and continue to be able to grow. I mean, we have a low unaided awareness in our 30-mile radius that we actually operate in. So we think we have a ton of ups in the markets we actually are in. And to the earlier point of the question, I mean, we'll continue to measure and to look at our nonproductive stores. And given an opportunity, we don't think we're in a position to where the store is going to meet the expectation, we're coming up on the end of the lease, and we make a decision to potentially get out of that location. I think that's been the direction we've shared over the last couple of years is we'll continue to monitor the four-wall. We'll do the right thing from a cash flow perspective as we look at it. And we'll make those decisions as we, in a lot of cases, some of our small sample size of stores that we have that we don't like the way they're performing and we'll look at it as those leases come up.

Thanks. Good luck, guys.

And our next question comes from the line of Justin Kleber from Baird. Your question, please.

Good afternoon, guys. And, Jennifer, welcome to the team. I was hoping if you could break down the comp in terms of transactions versus average ticket. Paul, you mentioned UPT. It seems like that's higher, at least in the firearms category. But I'm curious if your comp transactions are also now tracking positive.

I think there's a couple of ways we can look at it. So we think of it from overall, and based on how, you know, 70% of our purchases start online and then end up in the stores that we feel good from a transactional count where that true BOPUS is living today and the performance of that. And continue to get strength there. And as we look at, you know, the overall of the company from a sales performance and where we actually tracked with e-com driven sales. So we outperformed there. So I think from a transactional account, we like the position we're in. And from a growth standpoint and then what it's able to do, for the overall performance is kind of how I would share that. As we break it down. But I would say both AOV and UPT are up. And that's it's really saying what the team is working from a unit standpoint and being able to add the basket as we get there.

Yep. Okay. That makes sense and good to hear. You mentioned, Jennifer, the potential for some tariff-related margin pressure in the back half of the year. I'm curious if you could share what's happening with pricing real-time in the stores as tariff impacts start to build. Maybe how much do you think retails might go up in the back half of the year? And what sort of unit elasticity you're embedding into your outlook?

Yeah. So thank you for the greetings. So you have kind of how we're thinking about this is the merchants have really done a great job of getting ahead of this and working with our vendors so that we have visibility into cost increases that might be coming our way. We are fairly heavily reliant on MAP pricing, so we do have flexibility to offset some of those tariffs as they come in. And first, you saw the notifications today. There's still so much uncertainty out there on tariffs that, you know, we wanted to make sure that we are mindful of them and that we've considered them in our back half guide. But this, you know, cat's still out on what's actually going to happen with those.

Yeah. And we continue to watch it. I think it's what I would add to it is we've seen it, and a portion of our pull-forward that we had coming into the queue to be able to start is a strategic decision on inventory to be able to bring into as we started Q3. And from a timing standpoint, to ensure that we were not on the wrong side from a tariff early and to be able to position it to where we were able to bring it in. Bring it in prior to peak and then be able to kind of ride this thing down Q3 and Q4 from an inventory standpoint. So I feel good with what the team has been able to do there and the low penetration that we have and, you know, private label right now at a 3% ish that we're ringing. And the high percentage of MAP, as Jennifer said, I think this is positioned to be able to manage it as we go to the back half and in particular as we start '26.

Okay. If I could sneak just one more in, that was just one more on gross margin. You mentioned that the 40 basis point of freight headwind, how did the mix pressure compare to that freight headwind?

Yes. So if you look at our margin by category, all categories were up in margin with the exception of hunt. On a rate basis. Hunt is one of our lower margin categories. And due to firearms and ammunition, it did impact margin in a negative way from a mix perspective. So really, rates across the board were up. Mix was negatively affected just simply because of hunt. As well as camping being down on the quarter, and that's one of our higher margin businesses. So the mix did not offset the higher rates. Really, all the improvement driven by rate.

Okay. Thank you both. Best of luck in the fall.

Thank you. And our next question comes from the line of Mark Smith from Lake Street. Your question, please.

Hi, guys. First off, Jennifer, welcome. Second, I'll apologize if you've hit some of these as I've been jumping between calls here. But I want to just hit on the inventory and inventory levels here. You know, if you can quantify or discuss maybe how much was bought ahead of tariffs, and if you it sounds like you feel like you're kind of fully stocked maybe a little earlier this year moving into the hunting season and kind of fall. Compared to other years?

Yeah. So the elevated level of inventory was a distinct strategic decision. The company had discovered that previously we'd been entering into the market after the seasons had already really kicked off and customers already had their gear. So this year, we're bringing it in earlier, and that's what you saw in the big bump, especially around fish and hunt. But then also that we're going to clear out of it earlier. When the season starts to wind down, the customer has all their gear, so it makes sense for us to kind of just shift the inventory up closer. And since we did invest heavily in hunt and fish, you know, it paid off. You know, Paul mentioned the comps on the call. On how those performed. So feeling it was the right strategy to move. As we move forward to the rest of the year, we will continue to kind of move through the inventory and still expect to be below last year's level by the end of the year.

Perfect. And then I did want to ask, you called out kind of margin in that hunt category being the only one kind of down percentage-wise. I'm curious just if you can give some insight into consumer behavior, you know, within hunt or within, you know, primarily firearm and ammo, are you seeing better sales momentum on promotion or lower-priced items? You know, in other words, do you have to be promotional to drive people, or is the consumer continuing to come out even at, we'll call it, regular price levels?

Yeah. So both firearms and ammo do have lower margins in the hunt category, and ammo did outperform the category in and of itself this year. So that really did put a lot of pressure on it from a mix perspective. There has been some pricing that we've strategic pricing that we've done in ammo that we think has helped drive sales as well. So we're feeling good about that. And then firearms, you know, we've talked a little bit about it before, but, you know, we do have a selection of firearms, and we do see a little bit of pressure in AUR in there.

Okay. I think the thing is, Mark, just to add to that, I mean, AUR is down about 4% and then units up 4.2% ish, so kind of offsetting each other there, but AUR under pressure, and I think we've mentioned that earlier.

Okay. And the last I just wanted to ask, I know that it's a very small segment, I think, for you guys. But just as we look at potentially increased demand for suppressors or even short barrel rifles with new tack laws and tax stamp going away in January. You know, is there an opportunity as we look at next calendar year to maybe increase sales or inventory in those products?

Yeah. We're definitely going to lean into both of the categories that you just mentioned there. But we think huge opportunity. And even as we work through the half of the year from a suppressors and working with our partners on how we look at that. But I think we want to get in a position back half of the year where we're able to get it shipped and take a little bit of that noise kind of waiting till the beginning of next year, but we think we have an opportunity in Q4 to be able to get and get it shipped directly to the home, not carry the working capital as we worked with our partners in doing that. And take advantage of what I think will be a hockey stick at year as we think of suppressor sales. In particular.

Excellent. Thank you.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Paul Stone for any further remarks.

Thank you for joining the call today, and thank you to all of our passionate outfitters around the country for their commitment to Sportsman's Warehouse Holdings, Inc. Together, we look forward to providing our customers with great gear and exceptional service. Thank you.