Good morning, ladies and gentlemen, and welcome to Academy Sports and Outdoors' fourth quarter and fiscal year-end 2022 results conference call. At this time, this call is being recorded and all participant lines are in a listen-only mode. Following the prepared remarks, there will be a brief question and answer session. Questions will be limited to analysts and investors. Please limit yourself to one question and one follow-up. To ask a question during the call, please press star one. If you require any operator assistance during the call, please press star zero. I will now turn the call over to Matt Hodges, Vice President of Investor Relations for Academy Sports and Outdoors. Matt, please go ahead. Good morning, everyone. Thank you for joining the Academy Sports and Outdoors fourth quarter and fiscal 2022 financial results call. Participating on the call are Ken Hicks, Chairman, President, and CEO; Michael Mullican, Executive Vice President and CFO and Steve Lawrence, Executive Vice President and Chief Merchandising Officer. As a reminder, statements in today's earnings release and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release, which is available at investors.academy.com. Unless otherwise noted, comparisons are to 2021, with 2019 comparisons also provided where appropriate to benchmark performance given the impact of the pandemic in 2020 and 2021. I will now turn the call over to our CEO, Ken Hicks. Thank you, Matt. Good morning, thank you all for joining us today. As we wrap up and reflect upon fiscal 2022, we close out a year that was both rewarding and challenging. During the fourth quarter and the full year, we faced pressure from the uncertain macroeconomic environment and comp periods of our strongest financial results. Our team effectively executed against our strategic plan, and as a result, we delivered solid earnings, generated and returned a significant amount of free cash flow, grew market share, and created value for our stakeholders despite not meeting our sales expectations. Turning to our fourth quarter results, we reported net sales of $1.75 billion and -5.1% comparable sales. During the quarter, we had our highest sales day ever on Black Friday and a strong Cyber Monday. We saw the return of the traditional shopping lull the first couple of weeks of December, followed by consumers returning the week of Christmas. Overall, footwear and apparel sales grew, while outdoors and sports and recreation experienced sales declines. Steve will discuss our sales results in more detail later in the call. In terms of profitability, fourth quarter adjusted net income grew 12.5% to $163.5 million or $2.04 of adjusted diluted earnings per share, led by gross margin expansion from lower freight costs, a sales mix shift towards soft goods, and efficiently managing our SG&A expenses. During the year, led by our dedicated team members, Academy accomplished many of the strategic and operational goals we set at the beginning of the year. We strengthened existing markets and entered new markets with the successful opening of 9 new stores. This was our first year of opening new stores since 2019. We're pleased with the overall performance of this class of stores. Each opening also provided unique opportunities that we are learning from and leveraging to improve future store openings. We grew our omnichannel business by adding new features to enhance our customer shopping experience. In 2022, e-commerce sales were 10.7% of total merchandising sales, up 140 basis points from 2021, one year ahead of our goal to achieve a 10% penetration rate. For the full year, approximately half of our e-commerce sales were buy online, pick up in store. Over 75% of all e-commerce sales were fulfilled through our stores. Our mobile app saw a 180% increase in the number of downloads compared to 2021. Our omnichannel business is a competitive advantage for us as it utilizes our store base to drive higher sales conversion with healthy margins. We provided a great customer experience. We continued to invest in the look and feel of the stores to increase engagement. In 2022, we remodeled 11 existing stores. We also upgraded our technology throughout the store chain to improve checkout times and to manage store labor, resulting in more customer-facing hours to focus on delivering an enjoyable and fun shopping experience to our customers. We also continued to enhance our product assortment with our preferred vendor partners as well as new ones to ensure we're in stock with the inventory our customers want, while not losing our focus on value. In 2022, these efforts led to record customer service scores exceeding last year's strong results. We invested in and completed several internal projects to increase efficiency of our store operations, merchandise planning and allocation, and supply chain. These efforts will pay dividends for years to come. We increased our engagement in meaningful ESG practices by publishing an updated ESG report in May, followed by a greenhouse gas emission supplement reporting our scope one and two emissions in December. We generated solid profits and cash flow. We used our cash flow to execute our comprehensive capital allocation strategy in order to increase total shareholder return. In 2022, Academy returned $614 million to stakeholders through $490 million worth of share repurchases, $24 million in dividend payouts, and $100 million in debt reduction, while also supporting our growth initiatives and financial stability. The team's accomplishments in 2022 have strengthened the foundation we have built over the past several years and positioned Academy for a major growth phase as we head into fiscal 2023. I'd like to thank all of the Academy team members for their efforts over the past year. As we begin fiscal 2023, we anticipate that consumers will remain pressured and mindful of their spending due to the current economy. With this as the backdrop, our market position as a value leader is more important than ever. We appeal to a wide demographic of consumers with our everyday value proposition and broad assortment of good, better, best national and private brands to meet our customers' needs of having fun at an affordable price. Our focus in 2023 will be investing for the long-term growth. We plan to continue the progress made over the last few years by continuing to improve our operations and focusing on the things we can control as a company to grow the business. The main growth priorities for Academy in 2023 are expanding the store base in existing and new markets with the opening of 13-15 new stores. Continuing to build a more powerful omnichannel business. Driving growth from our existing stores by improving service and productivity, strengthening our merchandising assortment, and attracting and engaging customers. Leveraging and scaling our supply chain to support our future growth. These priorities, along with our established differentiated market position built on value, assortment, and service, as well as our strong relationships with key vendors, give us an excellent runway for growth in 2023 and beyond. The Academy team is excited about the opportunities that are in front of us as we strive towards achieving our vision of becoming the best sports and outdoors retailer in the country while providing fun for all and creating value for our stakeholders. I'd like to extend an invitation to you to tune in to Academy's upcoming Analyst and Investor Day on April 3rd and 4th here in Katy, Texas, where we will introduce the company's new long-range plan with financial targets. More details will be announced soon. I'll now turn the call over to Michael to provide more details on our fourth quarter financial results, new stores, and provide our initial 2023 guidance. Michael? Thanks, Ken. Good morning, everyone. I will start by reviewing our fourth quarter and full year performance and then move on to discuss our initial financial outlook for 2023. Net sales for the fourth quarter were $1.75 billion, with comparable sales of -5.1%. Sales were lower than planned due to fewer transactions, partially offset by an increase in average ticket size. When compared to 2019, Q4 sales increased by 27.4%. For the full year, net sales were $6.4 billion, with comparable sales of -6.4%. When compared to 2019, our full-year sales increased by 32.4%. We maintained or gained market share in all product divisions for the full year, and our market share is well above 2019 levels. Switching to gross margin. In the fourth quarter, gross margin was $572.5 million, with a rate of 32.8%, a 50 basis point improvement over Q4 of last year. The rate improvement was driven primarily by lower freight costs and a sales mix shift towards soft goods, partially offset by more promotional activity. For the full year, gross margin was $2.2 billion, with a rate of 34.6% of sales. This rate is 10 basis points below fiscal 2021, but 500 basis points higher than fiscal 2019. This is the second consecutive year Academy has finished with an annual margin rate above 34%. We are realizing sustainable benefits driven by the merchandising changes made over the last few years, including more thoughtful inventory management, systems upgrades, and greater localization. In the fourth quarter, our operating income rate increased by 70 basis points to 11.7%, making this the eighth quarter in a row Academy has reported double-digit operating income rates. Taken all together, net income grew 11.2% in the fourth quarter to $157.7 million. When compared to Q4 2019, net income increased by more than 780%. Fourth quarter GAAP diluted earnings per share increased 25.5% to $1.97 per share. Fourth quarter adjusted diluted earnings per share increased 26.7% to $2.04 per share. For the full year, net income was $628 million or 9.8% of sales, compared to $671.4 million or 9.9% of sales in 2021. Fiscal 2022 GAAP diluted earnings per share increased 5.2% to a record $7.49 per share. Fiscal 2022 adjusted diluted earnings per share increased 1.3% to $7.70 per share. Our balance sheet remains very strong with $337 million in cash and no outstanding borrowings on our billion-dollar credit facility at the end of the fiscal year. Academy continues to generate meaningful positive cash flow, delivering $242.8 million in net cash from operating activities during Q4 and $552 million for the full year. During the fourth quarter, we continued to execute our comprehensive capital allocation plan by returning cash to our stakeholders in the following manner: repurchasing 1.9 million shares for approximately $100 million, paying out $6 million in dividends, and paying down $100 million of our term loan, reducing our total debt to $595 million, which is not due until 2027. The board recently approved a 20% dividend increase to $0.09 per share, payable on April 13, 2023 to stockholders of record as of March 23, 2023. Our year-end inventory balance was $1.3 billion, a 9.5% increase compared to Q4 2021. Compared to Q4 of 2019, inventory dollars were up 16.7%, while units declined by 7%. Drilling down to store-level metrics, sales per sq ft in 2022 were $340 per foot, and operating income per store was $3.2 million. When compared to 2019, sales per sq ft have increased 29%, and operating income per sq ft has grown by more than 350%. These industry-leading productivity measures give us great optimism as we increase the pace of our store opening program. 2022 was a test and learn year as we built up the capability to open new stores at scale again. We opened to brand new markets such as Virginia and West Virginia. We also built new capabilities by retrofitting takeover spaces and designing and implementing new store layouts. To summarize, we have proven over the last several years that our business model is durable and able to produce profits through various macroeconomic environments. 2022 was the second consecutive year that Academy has delivered gross margins greater than 30%, operating margins above 13%, and free cash flow margin greater than 6%. Our free cash flow has enabled us to repurchase more than $400 million of shares and pay down $100 million of debt in each of the last two years. Turning to 2023, we enter the year in a very strong financial position with good inventory levels and a healthy cash balance. Our goal is to improve our ability to increase sales and profits over the long term through new store openings, omnichannel expansion, and increasing the productivity of existing stores, all while generating significant free cash flow. Academy is providing the following initial guidance for fiscal 2023. Net sales of $6.5 billion-$6.7 billion, which is 2.5%-5% growth. Comparable sales are expected to range from -2% to +1%. Gross margin rate between 34% and 34.4%. GAAP income before taxes is expected to range from $705 million-$780 million. GAAP net income of between $535 million and $595 million. GAAP diluted earnings of $6.70 per share to $7.45 per share. Adjusted diluted earnings per share, which excludes certain estimated expenses such as stock compensation, are expected to range from $7.00 per share to $7.75 per share. The earnings per share estimates are calculated on a share count of 80.2 million diluted weighted average shares outstanding for the full year and do not include any potential repurchase activity using our remaining $300 million repurchase authorization. Fiscal 2023 is a 53-week year for us. We expect this extra week to add approximately $85 million of sales to the year. Here are additional modeling assumptions reflected in our additional guidance. SG&A expenses are expected to be approximately 100 basis points higher than in 2022. This is the result of the 53rd week and from investments in new stores, technology to support growth, and an increase in digital marketing. Interest expense is expected to be $43 million, down from $46 million in fiscal 2022 due to our reduced debt levels. Capital expenditures are forecasted to range from $200 million-$250 million. We expect to generate $450 million-$500 million of free cash flow. With that, I will turn the call over to Steve for more details around our merchandising and operations performance. Steve? Thanks, Michael. As you heard from Michael and Ken, our Q4 sales came in at $1.75 billion, which is a 5.1% comp decline versus 2021. It was up 27% versus our 2019 baseline, and it was fairly similar to our Q3 trend, which was up 30% versus 2019. In terms of how the quarter played out, we saw the traffic patterns return to a more normalized pre-COVID holiday season. We did not get the same pull forward of demand in November that we've seen in the past couple of years when there was scarcity of supply in the market across many key categories. Improved inventory levels across most retailers allowed customers to wait later in the calendar to take advantage of the deals they anticipated would be out there. As we expected, we did see customers turn out to shop during the normal kickoff to holiday that is the Thanksgiving weekend and had the largest shopping day in the company's history on Black Friday. Similar to pre-COVID years, once we got past Thanksgiving, we saw the early December lull return with the shopping and traffic ramping back up the last week leading up to Christmas. While the holiday season had its challenges, we were pleased that we held on to the majority of the gains we've made in the past couple of years. Breaking Q4 down by division, we saw continued sales momentum in the softgoods half of the business, with footwear up 2.2% to last year and apparel running a 1.8% increase versus 2021. The footwear business was driven by strength in our big brands such as Nike, Brooks, and Skechers, along with new brands like HEYDUDE. We also continue to benefit from more controlled distribution by some of our key vendor partners as it allows us to get access to more products while also driving consumers to our stores. On the apparel side, we benefited from having a much better inventory position across all of our cold weather seasonal categories from key national brands such as Nike and Carhartt. Another win for us on the softgoods side of the business was the performance of key private brands such as BCG, Magellan, Freely, and R.O.W. These brands are packed with value and continue to be growth engines for us. The hardgoods side of the business had a more challenging Q4, with sports and rec sales down 7.2% and outdoor sales down 9.3%. In terms of our sports and rec business, we saw strength in our sporting goods products, but continued softness in some of the COVID surge categories, such as bikes and fitness equipment. On the outdoor front, our biggest challenge remains the hunting business, which, while still up 15% versus 2019, was down 7% versus last year. While we ran a decline to last year, Q4 was an improvement over the third quarter of 2022 as we continue to anniversary large surges in demand brought about by the scarcity of supply that were still prevalent a year ago. Shifting to margins. Our gross margin rate for Q4 came in at 32.8%, which was a 50 basis point increase versus 2021. It was up 580 basis points versus 2019. Our merchandise margin was down 110 basis points versus last year, which was in line with where we had planned it. Knowing that this year was going to be a return to a more normalized promotional holiday, we strategically layered in discounts around key time periods to help drive traffic and provide great value offerings to our customers while maintaining strong profitability. Our fourth quarter merchandise margins, while down to last year, was still up 490 basis points versus 2019. We continue to attribute the majority of the gross margin gain versus 2019 to the hard work the teams have done over the past couple of years around improving buying and planning and allocation disciplines and processes. We expect to see more promotions during 2023 and have accounted for this in our initial gross margin guidance that Michael shared with you earlier. Turning to inventory. We were pleased that our teams continue to show strong inventory management disciplines. We ended the year with inventory up 9.5% versus last year, which is lower than the 12.8% increase we entered the fourth quarter with. When you compare against 2019, our sales are up 32.4% with only 16.7% more inventory. You may remember that last year we still had several businesses that were operating with a constrained supply chain. We are no longer in this situation, and for the most part, we're at healthy stock levels across most categories. Beneath the surface, we're also in a much better place in terms of our inventory content, with a much greater emphasis on forward-facing spring categories. The supply chain was still fairly disrupted in Q4 of 2021, and as a result, we did not get the level of spring transitional product that we needed. With a more normalized supply chain this year, we're entering 2023 with our inventories in a much better place. As we turn the page and shift our focus to 2023, we have several reasons for optimism. First, the improved inventory levels and content that I just mentioned has positioned us well in many of our seasonal categories to take advantage when the weather warms up. Second, we've increased our investment in hot trending businesses such as team sports and cleats, while also going after categories such as fishing and camping, where competitors have continued to pull back. Third, we're redoubling our focus on value with an expanded list of everyday value items across all of our categories, coupled with increased emphasis across all customer touch points in stores, online, and in marketing. Fourth, we're continuing to lean into new initiatives and brands that resonate with our core target customer. Fun new ideas you'll see in our stores and on academy.com for the spring include such ideas as the launch of Birkenstocks in footwear and extending Googan, which is one of our most popular brands in fishing baits and equipment, into apparel and rolling out Bogg Bags, the new must-have all-purpose summer tote that works equally well on the sidelines or at the beach. Finally, we continue to make strides towards having a much more digitally targeted advertising focus while reducing our reliance on traditional broadcast and print. We have several new enhancements coming this year, including a new and much more robust customer data platform. A combination of better tools, coupled with constantly improving and refining our strategies and tactics around digital marketing, should allow us to continue to improve our overall marketing reach and effectiveness by increasing customer engagement. In closing, we believe that we're well positioned to grow sales and gain market share in 2023. Customers continue to gravitate towards the categories we carry and the work we're doing to reinforce our position as the value leader in the space, coupled with our new store expansion, positions us well to take up market share. Now I'd like to turn the call back over to Ken for some closing comments. Ken? Thank you, Steve. Academy's shown that the operational improvements we've made to our business over the past 4 years were structural and have driven higher levels of performance and profitability compared to when we began making them. By making the changes you've heard us describe many times on these calls, we have operationally and financially transformed the company and laid the foundation for an exciting growth phase. We expect to achieve this growth by opening a significant number of new stores over the next several years, continuing to expand our omni-channel business, elevating the performance of the existing store base, and leveraging and scaling our supply chain. We remain realistic about the challenges the macroeconomic environment presents. We are confident in our plan and in our ability to navigate uncertain times with our value offering, compelling assortments, and position of financial strength as we strive to be the best sports and outdoor retailer in the country. We look forward to sharing our new long-range plan with you in April. Until then, have fun out there. We'll now open up the call for your questions. Thank you. Thank you. Ladies and gentlemen, at this time, the company will now open the call up for your questions. To ask your question, please press star one. We will pause for a minute to wait for the queue to fill. Our first question comes from the line of Robbie Ohmes from Bank of America. Please go ahead. Hi, this is Alex Perry for Robbie. Thanks for taking our questions here. I just wanted to ask a little bit about the gross margin. It's expected to come down year-over-year. Maybe just help us with the key components that you're sort of contemplating there. It sounds like a more promotional environment and pressure on merch margins. Are you gonna see mixed tailwinds as the hunt business continues to remain under pressure? How does freight play into this? How would you characterize the overall apparel environment right now? Is it promotional out there? There seems to be lots of mixed commentary there. Thanks. Hey, Alex Perry. It's Michael. I'll take the first question and then pass it over to Steve Lawrence. With respect to gross margin rate, I'd like to remind everyone keep in mind, we're starting from a pretty high place. We're 500 basis points higher than we were in 2019. We've been hanging out on top of the gross margin rate mountain for a really long time. Merchandise margins next year, we believe, will be a bit lower to allow for some additional promotional activity and to maintain our everyday value positioning with our customer that they expect from us, particularly right now in this environment. That will be offset in some degree by some supply chain tailwinds. We will see some supply chain savings next year due to lower container costs. All other gross margin puts and takes will maintain relatively consistent. I think Steve can take a question on the apparel side. Yeah. We're actually very happy with where our apparel business is. It was one of our better trending categories for Q4. We expect that to be a growth engine for us as we go into 2023. If you go back a year ago and you think about where we were, there was still a pretty constrained supply chain, and we really weren't happy with the level of transition merchandise we got last year post-Christmas heading into spring. As we said in the prepared comments the place we're at today is a much better forward-facing inventory position. We feel really ready to take advantage when the weather turns warm. You know, that certainly was a win for us on the margin front in Q4 as we do mix forward with more apparel, more footwear. That is a tailwind for us. We have that baked into the guidance that Michael shared with you earlier. Perfect. Just my follow-up question is, how are you thinking about transactions versus ticket this year, especially with the better inventory positions on a year-over-year basis? Would you still expect traffic to remain under pressure? What is driving that? Is that still pressure from the lapping of the multi-trips from the ammo stock-outs? Thank you. Yeah. I think the consumer's obviously under pressure and that has an impact on traffic. That said we believe that people still are excited about having the experience that they can have with sports and outdoors. You know, we believe that while transactions may be challenged some in the coming year that the assortment that we have, what we've done with pricing, what we're doing with our in-stocks will help us continue to grow and develop the business even though the consumer is challenged. Yeah. Just a little bit of additional color on that one, Alex. One of the things we look at when we've got businesses that are running down, and our field business was down, is whether the business is demand challenged or share challenged. The biggest portion of our sales miss was really compartmentalized in our field division. That corresponds with some of the traffic decline that we've seen. We took share in the quarter in that business. We've taken a lot of share over the few years. Ammunition is the biggest piece of that, and we are seeing that stabilize. We certainly think the traffic will rebound. Those trends are improving. We look forward to that business stabilizing going forward. Perfect. That's really helpful. Best of luck going forward. Thanks, Alex. Thank you. Our next question comes from the line of Christopher Horvers from JPMorgan. Please go ahead. Hi, this is Megan Alexander on for Chris. Maybe a couple of related questions on the top line. You know, similar to what you provided on 3q are you able to strip out the ammo headwind and kind of tell us how the business performed excluding that? Then as you think about how you're planning the business for 2023 are you still looking at 2019 as the reference point, kind of assuming that trend X ammo holds broadly assuming normal seasonality? If so how should we think about the cadence of comps over the year? Yeah. This is Steve. I'll take the first part. You know, when you look at our business, we called out strength in the soft goods side, apparel, footwear, both ran increases for the year. As Michael Mullican said, the hunting category was probably the biggest headwind we faced. You know, we also had some challenges in some of the search categories that we saw pull forward a demand in the last couple of years, like bikes and fitness equipment. You know, as we got past holiday, a lot of those things start to even out. As we look into this year, what we really see happening, is that ammo headwind and that hunting headwind starts to diminish as we go through the quarters and starts to normalize. We're up against 1, kinda last, surge, quarter in Q1, but as we get through the quarters, we expect them to sequentially get better and improve as we progress through the year. We're seeing a good, result in not just apparel and footwear, there are a number of other businesses. Steve Lawrence talked about team sports and things like outdoor cooking. You know, we look forward to seeing, some of the camping areas come back. This is, one of the strengths of the company is the breadth of our assortment and our ability to compete in a bunch of different classifications. With regards to 2023, we think that the pattern of the sales will get to be more normalized, more like, historical and not some of the surges that we've seen in the last, few years. That said we're moving off of the 2019. We've set a much higher plateau, and that's where we are. You know, I think 3 years is enough to prove that we're not gonna fall back down to 2019. That's where we're moving from. We look at the business being more normalized in terms of the flow through the year. This year, as Michael said in the guidance we anticipate the first part being a little bit more challenged, we look forward to sequential improvement as we move through the year. Just add one point to that. You know, as Ken said, we expect it to be more of a normal cadence, but at a higher baseline. I mean, when you look at a lot of these search categories that we talk about we're still way up to where we were in 2019. As a matter of fact, those categories in aggregate are pacing ahead of the company average for that time period. Got it. All really helpful. Maybe as a follow-up. You know, Ken, there's been a lot of investor speculation about you potentially the timing of you announcing your succession plan. Can you maybe share your thoughts on that today and how you think about your role at Academy and what that could look like over, say, the next 1 to 3 years? Yeah. You know me and Mark Twain, the rumors of my demise have been greatly exaggerated. You know, I'm having fun, enjoying it. I like Academy. Our board has taken a very thoughtful approach to succession planning. As with any board there, it's a thorough process. You know, I would envision that I will be associated with Academy for some time to come. i'm would like to. I love Academy, and I'd like to be a part of it for the future. What that is exactly we'll see. For right now I'm enjoying it, having fun. Awesome. Thanks, Ken. Thank you. Our next question comes from the line of Simeon Gutman from Morgan Stanley. Please go ahead. Hi, guys. This is Jackie on for Simeon. Thanks so much for taking our question. Just honing in on the kind of big-ticket durables categories in the business, which are the most economically sensitive. On a unit basis, kind of how are those categories trending versus 2019? Is there stability and deterioration, or are they kind of holding at this higher water level? I guess the broader question with that is, do you think if they're holding, is this indicative of kind of a higher level of growth in sporting goods generally as a category, and what would be driving that? Thanks. I mean, we definitely are seeing the declines versus last year in some of those categories. I mentioned fitness equipment being one, kayaks being one. Those are still though baseline much higher than the company average. We're up 32% versus 2019, and those categories in aggregate are well ahead of that. You know, as we move into 2023, we see some of these search categories starting to level off, and we think we can start moving back to growth. Fishing is a great category where big surge last year's a little choppy, but we expect this year as competitors pull back on that category for there to be growth. Some of the bigger ticket ones with longer replacement cycles like fitness or kayaks we anticipate those will continue to be challenged for a little bit longer, but we've modeled that into our plans, and it's in the guidance that we've given you guys. That said, there are some. You know, it's not a this amorphous group. We've got big-ticket things like outdoor cooking that are. Very good. V ery good and some of the other big-ticket categories within other parts of the business. That said, as I think the important thing is that our base is much higher than it was 3 years ago. You know, we're working from a higher base and look forward to grow from there. Got it. Thanks so much for the color. Just one quick follow-up. On the 34%-34.4% gross margin guide for 2023, this is above the prior long-term range that you guys have given. Is this the kind of right run rate that we should think about post 2023 going forward? I guess what are the key levers we should think about in terms of maintaining that higher gross margin rate over time? Yeah, I think certainly our expectations are higher than they were a few years ago when we rolled out that initial guide, and we certainly look forward to providing more color around our expectations going forward at our Investor Day in a few weeks. we previously said thirty-two to thirty-two and a half, and we expect that to be higher. Great. Thanks so much. Thank you. Our next question comes from the line of Greg Melich from Evercore ISI. Please go ahead. Hi. Thanks. I have two questions. The first one is to help frame sort of the share and traffic gains over the last few years. If the three-year comp is running up high 20s or 30%, is it fair to assume now that transactions are still positive versus 2019, but almost all that comes from ticket size? The transactions are well up versus 2019. We also have seen an increase in ticket size as our hard goods business has become a bigger% of the total. Okay. They're both still up meaningfully. It's not like flat on one and up 30 in ticket. Yeah. Okay. Got it. The second was, Michael, maybe help us understand the SG&A, I guess. How did you manage to leverage it in the fourth quarter, with the sales coming in a bit light? As you described that 100 BIP investment, in 2023, could you tell us when you'd see the biggest pressure, on SG&A, through the year? Yeah. Yeah. Greg, certainly sales were a little softer than we thought in the quarter, but good teams adjust. I'm proud of the team and what we've done to navigate the sales miss and grow adjusted net income by 12%, largely through expense management. I'll tell you, the logistics and supply chain teams did a great job managing expenses, really getting out there and being aggressive managing container costs, managing the distribution centers. Merchants did their role in pursuing some vendor allowances and those kinds of things. We were able to bring the quarter in, I think, in a way that we're very proud of. Despite the challenges, we lead the sector in free cash flow margin. I'm pretty proud of that. This business generates a lot of cash. You know, our ability to return over $600 million to shareholders in a year where we ran down and invested the most capital back into the business that we've invested since 2017 sets us up well for the future and I think shows we've got a very durable business model with a very capable team. With respect to next year, I would say 20 basis points of the deleverage is tech investments related to our initiatives, omni-channel, supply chain, our customer data initiatives. Those are big, big levers for us and they require some tech investments. About 30 basis points of the deleverage relates to new store growth and a combination of the construction of the new stores themselves and some additional marketing that we'll have to deploy to make sure they get off to a good start. I'd say 10 basis points is the 53rd week. You got a little bit of stock comp deleverage, and the rest is just kind of small stuff. I hope that's helpful. That's very helpful. Thanks a lot. I guess the last one, I just wanna make sure, the first quarter, how is it trending? Are we in the range, or could we presumably be below it just given the comps you're cycling? T hey don't let me answer this question because, every time I do, I confuse people. I'll let Michael do it. Look, Greg, I'll go back to what Steve said. We expect that the year will improve as we move along. We can't say a whole lot more about that. We don't provide the inter-quarter guidance, but we expect the year to improve as we go. I think we're off to a start that we expected. Yeah. I'd say beneath the surface, we've hit on this, and we've got some really healthy businesses... out there. I just wanna reiterate that. I mean, our apparel business, footwear business, our team sports business. We think there's a lot of opportunity in categories like hunting and fishing as they start to cycle some of these trends. Inventory's in the best position it's been in in a long time. Our value position in the space. We have a lot of reasons to be positive. That's great. We'll see you in a couple of weeks. Good luck, guys. Thank you. Thank you. Thank you. Our next question comes from the line of Will Gaertner from Wells Fargo. Please go ahead. Yes. Hi. Good morning. I guess I wanted to switch gears and speak to some of the store openings you guys are targeting this year, 13-15. Can you just expand whether this is a mix of new and existing markets and how we should think about that? You noted some interesting learnings from the 9 new stores you guys had done last year. If you could just provide some more color there. Then I have a question on the balance sheet. Sure. Give you a little bit of color of the program overall. As a reminder, this was a test and learn year and a year about capability building as we entered a new phase for the company, which is really one of accelerated multi-year unit growth. We tested a lot. We learned a lot. We tested new markets. We tested different store layouts. We looked at different marketing approaches. We developed a capability to retrofit existing spaces, which is not one, frankly, this company ever had. I think in the past decade, we might have only retrofitted 1 or 2 spaces. I would tell you, overall, we're pleased with the progress of the new store program. As a whole, the current vintage will clear the 20% ROIC hurdle that we've established. We feel comfortable with that. I will say, when you adopt a test-and-learn mindset, if everything you try works exactly the way you want it to, you probably didn't test enough. We had some stores that did phenomenally well. We had others that came a little bit short of our expectations, and we have learnings in both instances, and we're applying them. You know, I wanna reemphasize a critical point. Only a handful of our mature stores, and I mean a handful, had four-wall EBIT rates in the single digits. Of the 268 stores we have, 258 stores are doing double-digit four-wall EBIT margins. Our bottom quartile stores outperform the competition on a productivity standpoint, on a profit dollar standpoint. Even when we haven't put our best foot forward, this is a powerful part of our toolkit that we look forward to speaking more about going forward. We've never shut a store because of profitability issues in this company, and we're not tinkering with the fundamental business model. We have a business model that works. We just need to scale it. We look forward to accelerating it. We're confident in that. I can't tell you all the learnings because we don't wanna give away our game plan, but look forward to talking more about it in a few weeks at Investor Day. Okay, that's helpful. Just, secondly switching gears to some of the free cash flow priorities for 2023, you guys have been pretty aggressive on the buyback, certainly appreciate the raise in the dividend. I am curious if you could speak to how you are evaluating the debt on the balance sheet. You bought back $100 million in Q4. I believe $400 million of that 2027 note is callable later this year. I am just curious how you're evaluating the debt portion of the balance sheet and cash returns this year. Sure. Over the past three years, we've generated over $2 billion in free cash flow. For a company of our market cap, for a company of our size, that's pretty extraordinary. When you generate $2 billion in free cash flow while investing in the business, you can do a lot of things. We're gonna continue to take the approach we've had. I think we're beyond the point where we've reached the stability point of our journey. We want to invest back in the business, which is why you see the capital dollars increasing next year. After that, I think we've got a lot of runway to do a number of different things, and we'll continue to take that portfolio approach with buybacks, which over the past few years, buying back over $900 million of ASO stock at an average price around $40, it's been a pretty good return. We'll continue to take a dual approach and look at the debt. I think from a debt level standpoint, we're in a pretty good spot. I don't like the rate, and we'll keep looking at the rates, and if those get away from us, we'll take out the variable rate debt before we look at the 6% callable debt to your question. That's how we think about it. One more thing on the stores- Okay, very helpful. ... that I wanna highlight. We get questions all the time about the format. We think that big stores that have broad and exciting assortments do well. We think big stores that are highly profitable can put smaller stores that are less profitable out of business. We're not gonna tinker with our model a heck of a lot as we go forward. We're gonna focus on the stores that are in that 55,000 and above range. You know, as part of your first question also, we are continuing to fill out markets that we've been in, Houston, Atlanta. We are adding on to adjacent markets like Panama City, Lexington, and moving into new areas. We will continue to do that. We will do it in a, in a more powerful way. But one of the things we're seeing, these are all working. Where the competition has done some of the things that they're talking about, our stores continue to do well. As, as Michael said we believe in the big box, and the big box is working. Will Gaertner, last thing, if I didn't hit it. 100% of what we're talking about is self-funded from cash from operations. I think that's obvious, but 100% of what we're talking about is self-funded from the cash that we generate. Okay, great. Very helpful, guys. See you in a few weeks. Yep. Thanks. Thanks. Thank you. Our next question comes from the line of Brian Nagel from Oppenheimer. Please go ahead. Hey, guys. Good morning. Morning, Brian. Congrats on, you're continuing to reposition the business successfully here. Thank you. My question, I do wanna focus my first question on just the macro backdrop or the sector backdrop. As you look at your, the operating environment for academy like I guess Q3 to Q4 and then what we're seeing here in early 2023, are dynamics from the consumer's perspective, do you or even competitively, are they getting more challenging for you, or is it staying the same? You know, Brian, I think Our view of the industry is still very bullish. It's a big industry that's very fragmented. You know, depending on who you talk to, it's well over 120, could be $140 billion, and nobody has a significant share. From that degree, it's open. We are not, I believe, as discretionary as other parts of the discretionary business. You know, the kid's still gonna play baseball. You're still gonna do your hobby of the camping. The families are still gonna get together on the patio. You may not spend as much. The kid may not get a Marucci bat, they may get a Louisville Slugger. You know, you may buy a little less expensive fishing rod. That said, that's where we fit in with our value because we trade from the opening price to where the enthusiast is, and they can find what they need to afford managing through this. That said, the consumer is challenged. I think we're gonna see at least for the first part of this year, possibly a little bit longer, the consumer being challenged and having to make decisions. We think one of the decisions will be, I'm gonna continue to support my interest in hobbies and I'm going to wanna stay healthy, and I'm going to make sure that I look for value, and we provide both of those things. Brian, back to my earlier point. The businesses that we had that frankly were softer than we thought were demand challenged, not share challenged. I think your question about competition, we have great competition. We respect them. They do a good job. One of the things that's happened over the past three years is there's greater segmentation in our channel, and so I think our lane is more clearly defined, and it's a little bit wider than it was a few years ago. I just wanted to add a couple points around Ken's comment around value. I think that's one of the things that gives us confidence, even if, the economy continues to be a little bumpy. You know, we know customers, even if they stop traveling, will, nest at home. A lot of the categories we carry, certainly service that. When you think about our position as a value provider in the space we definitely think there's also an opportunity for customers to trade down to us. We've been really focused on making sure that all these key items that we have that denote value, we're holding price on. In some cases, we've rolled back price on some items. We've talked about offering value through expanded promotions, you know. That's certainly embedded in what happened in Q4 and what we're doing going forward 'cause we're being more thoughtful about that. then even clearance. Clearance is a way we deliver value, and that's something that we've gotten a lot smarter about how we manage and use as traffic drivers during certain time periods. We actually feel like, even if the economy continues to be a little bumpy, that we're well positioned in terms of the categories we carry, the diverse nature of them and the value that we provide, that we will do fine. That's all very helpful. If I could just follow up with one also, I guess, relatively bigger picture question? A lot of talk within your broader space about bloated inventories at manufacturers, at retailers. I think a lot of these have started to work down, but they remain elevated and then result in price promotions. From an Academy's perspective, I guess, how do you see this dynamic? Is this a challenge for you? Broadly speaking, is this a challenge for you or is it more of an opportunity? I mean, I would start with, I think we've done a really good job of managing our inventory. That's one of the things I think has kind of been a hallmark over the past year of how we've managed through this. You know, our inventory was up 9.5% at the end of the quarter. That was up 16.7% versus where we were in 2019. If you look at it on a unit basis, it was down 7%, and that's with 9 more stores. At the same time, our sales are up 33%. We feel like our inventory is back in stock across most categories. We feel like it's well positioned for spring. I mean, certainly we've seen some more clearance, elevated clearance activity out there, and some increased promotions, and we've tried to address that, but we haven't seen that really creep into our business or impact us as much. Appreciate it. Thank you. Thanks, Brian. Thank you. Our next question comes from the line of Daniel Imbro from Stephens Inc. Please go ahead. Yep. Good morning, guys. Thanks for taking our questions. Michael, I wanna start on the SG&A side. You know, maybe stepping back from this year, that was helpful color on what's gonna drive the deleverage. I think about you guys have mentioned your ability to still drive down SG&A per store over the recent quarters. I guess taking out the tech investments and looking at a same store SG&A level where are we in the journey of profit improvement per store and SG&A improvement per store as you look at the assets today? With respect to the work that the stores are doing, I tell you, I tip my cap to them. They've done a great job really managing tasks out of the stores that don't add a lot of value to the customer. So we've been able to give labor to the customer-facing hours while taking hours out of the store on an overall basis. I think that there's always things you can do, but for the most part, that journey is over with. Where we will have some additional improvement is probably through the supply chain. There'll be some benefit there. Overall, I think the most of that work with respect to stores, that's at the upper end of its maturity curve. Yeah. We are doing some things with labor scheduling. Yeah. We put in a new system, Kronos, this past year, and that has helped us get more of the labor at the right time and the right places. You know, the stores have done a great job. You know, the supply chain, we are just early in the journey there. Great. That dovetails well into the next question to follow up. It's gonna be thinking about some of these supply chain initiatives you guys have talked about, I think a warehouse management software, maybe multi-store delivery on the actual store delivery side. I thought the timing you communicated was maybe those get rolled out later in 2023, and we see some benefit this year, but more into 2024. I guess, one, would that still be your timing expectation? Two, any way to help size up kind of the gross margin benefits that we could see from some of these investments as we think about the out years and what that could look like? We'll talk more about the long-term benefits at our investor day. For this year, we will not get a benefit from the warehouse management systems. We'll be putting it in at the very tail end of the year or beginning to put it in at the end of the year. The benefits that we're gonna have in the supply chain are really coming on the import freight side from lower container costs. Great. A lot more to come for the next several years after this year with the supply chain. There's a lot more that we can do and improve on. Systematically, we're doing some things like the warehouse management system. We've put in place this past year a trailer, a yard management system. We are doing some operational improvements high capacity racking and things that we will see some small benefits early on. But the larger benefits, things like you talked about multi-store trucking and things like that's gonna be occurring over the next couple of three years. You know, we are we're seeing the industry-wide benefit of lower freight costs over this year. Got it. Thanks for all the color, best of luck. Sure. Thanks, Dan. Thank you. Our next question comes from the line of Seth Basham from Wedbush Securities. Please go ahead. Hi, this is Nathan Friedman on for Seth. Thanks so much for taking my question. Just wanted to follow up on the gross margin sustainability. Maybe you can share more color behind the higher expectations versus the prior 32%-32.5%. Is it just merchandise margin improvement is more sticky and sustainable in light of higher promotions? Or is there a larger runway for supply chain that could drive gains to offset this or something else? I'll start on the merch margin. I'll let Michael talk about the other components. I mean we're certainly at a much higher level than where we were 3 years ago from a merch margin perspective. It's up over 500 basis points during that time period. You know, we do see some promotions creeping back in and expect that going forward. To be clear, I don't think we're ever gonna go back to where we were in 2019 and prior from a promotional intensity perspective. I also think that during that time period, we've made a lot of improvements in just the fundamentals to how we manage the business. The inventory management process, the allocation system and being much more thoughtful about where and how we're putting goods, the clearance strategy that we're running. You know, all these things that we've done from an MP&A perspective have long-term benefits that we think are gonna be sticky. There may be a little bit of erosion next year in merch margin relative to this year with some more promotions, but we think the vast majority of what we picked up over the last couple of years is gonna stick to our ribs. Got it. Maybe just a housekeeping question. Just curious where you're expecting your inventory growth for the upcoming year, knowing that you're well positioned for the spring, but any more color there would be great. I think as we progress through the year, you're gonna see the inventory start to normalize closer to where it was last year. We started getting back in stock, about halfway through last year. I think you'll see the inventory start to normalize on a TYLY basis as we get deeper into the year. Great. Thank you so much, and, best of luck. Thanks. Thank you. Our next question comes from the line of John Heinbockel from Guggenheim. Please go ahead. Hi, team. This is William Ark on for John Heinbockel. Thank you for taking our question. A quick question on comp track and what do you expect from bigger ticket items and anything you can call out from maybe your more casual consumers and versus your most engaged? You guys mentioned improvements in targeting and data analytics. Anything you can call out there would be great. I have a quick follow-up. Yeah, I would say that, kind of the story over the past year has been that our best engaged customers, are shopping with us more and are spending more with us. That's certainly embedded in our numbers. You know, we certainly picked up a lot of one-time customers during the pandemic, particularly the early days when we were the only kind of store open and other people weren't. You know, the good news is we've gotten a lot of data on them. We know how to contact them. One of the things that we've really been working on beneath the surface is being much better in terms of our targeted marketing outreach. We've, we've taken our traditional media spend way down, and it's now over 50% targeted, and it's gonna keep increasing from there. We'll talk a little bit about that at the investor day. We've got a new customer data platform coming on board that's gonna really help us be even more sharp in our targeting. We're seeing really high reactivation rates on lapsed customers, which is also something we're really excited about, both happening currently and in the future. Great. Thank you. Appreciate that color. Based on our store visits, inventory, especially apparel and footwear, look about as clean as it's ever been. Are comp store units close to up in like the low single digits area? Can you chase if the demand backdrop is somewhat better than than what it's looking like now? Yeah. I would say, comp store units versus last year are up a little bit, but versus 2019 are still down 7%. Once again, that's with nine more stores. We're operating a lot leaner today than we were three or four years ago when there was top stock throughout the store. That being said what was really interesting is we learned during the pandemic, we could turn faster. We learned how nimble the teams could be in terms of chasing goods. You know, we haven't lost that. That's in our muscle memory now. If business starts to accelerate, we feel like we've got the inventory to do the business and to chase additional goods. Conversely, if we see it slow down, we feel like we've been very nimble in managing it on both sides. Yeah, part of it is also some of the things that Steve and his team have put in place, allow us to flow the merchandise better so we don't have to carry as much inventory to do the volume, and it moves through the system, so better planning and flow. that's our supply chain has been able to handle it, but we think the improvements that we're putting in place for the future will make it even more able to handle the flow and we can improve our inventory productivity. Awesome. Thank you, and best of luck. Thank you. Thanks. Thank you. Ladies and gentlemen, we have time for one more question, and the question is from Patrick Holland from Goldman Sachs. Please go ahead. Hi. Thanks for fitting me in here. You know, you guys opened nine net new stores in 2022. You mentioned you know, took share during the year across categories. We were just wondering if there's any data you can share around the ramp-up in spend from new customers. Has there been kind of different shopping patterns from new customers, in new categories that you're taking share from or new customers at new stores that you've opened in infill markets or new markets? Thank you. We see new stores candidly as a really great way to expand our brand and attract new customers. I mean, you think about some of the new markets we're in, like Short Pump obviously all those customers are new to Academy and new shoppers for us. You know, as we've gone into new markets, we've done, I think, a better job of localizing the assortment. You know, one of the things we've done in the past in prior vintages, in 19 and prior, was we kinda took a Texas-based assortment approach and tried to apply it broadly, and that didn't work. We've actually seen some pretty positive reaction to some of the localization efforts we've put in place this year. That being said, as Michael said, there's always learnings we're gonna have. You know, we're taking those learnings from 22, and we're gonna apply them to 23 and be a heck of a lot smarter about how we market, how we assort, and how we manage those stores. That sounds great. Thank you. Thank you. All right. I appreciate everybody's time and attention and, hopefully, we helped you better understand why we're so bullish on our future and what we've got ahead of us. It was a challenging quarter and challenging times. That said, we're well-positioned for that, and we've got the right team to accomplish what we need to accomplish and achieve our goals. Look forward to seeing all of you at the analyst meeting the first part of April, and we think you'll be excited in our new plan and our outlook for the future. With that, I hope everybody has a great day and a lot of fun out there. Thank you. Thank you. The conference of Academy Sports and Outdoors has now concluded. Thank you for your participation. You may now disconnect your line.