Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the
“Company”), a specialty retailer of furniture and
mattresses, home appliances, consumer electronics and home office
products, and provider of consumer credit, today announced its
financial results for the quarter ended July 31, 2020.
“Throughout the COVID-19 pandemic, we have
focused on serving our customers by providing access to essential
home-related products, while supporting our team members and
communities. Overall, our second quarter results were better than
expected given the unprecedented disruption the COVID-19 crisis has
caused and I want to personally thank all of our associates for
their continued dedication during this challenging period.
While the current environment remains uncertain, I am proud of our
performance, which highlights the resiliency of our business model
and the actions our team has taken to successfully navigate this
unprecedented pandemic,” stated Norm Miller, Conn’s Chairman and
Chief Executive Officer.
Second quarter of fiscal year 2021 highlights
include:
- Earnings of $0.70 per diluted share, a 13% increase from the
prior fiscal year period, driven by positive credit segment
operating results and cost saving initiatives
- Cash and third-party sales grew 51% compared to the prior
fiscal year period reflecting strong demand for home-related
products
- Sales financed by Conn’s in-house credit declined by 36% from
the prior fiscal year period as a result of tighter underwriting,
despite a 5% year-over-year increase in applications
- E-commerce sales grew 72% from the prior fiscal year
period
- Cash payment rate on outstanding loans increased to the highest
second-quarter level in 9 fiscal years
- Operating cash flow increased 242% year-over-year driven by
growth of cash and third-party sales, strong payment rates on our
customer receivables portfolio and a decline in Conn’s in-house
credit originations
Second Quarter Results
Net income for the three months ended
July 31, 2020 was $20.5 million, or $0.70 per diluted share,
compared to net income for the three months ended July 31,
2019 of $20.0 million, or $0.62 per diluted share. On a
non-GAAP basis, adjusted net income for the three months ended
July 31, 2020 was $21.7 million, or $0.75 per diluted share,
which excludes professional fees associated with non-recurring
expenses. This compares to adjusted net income for the three
months ended July 31, 2019 of $20.0 million, or $0.62 per
diluted share.
Retail Segment Second Quarter
Results
Retail revenues were $279.9 million for the
three months ended July 31, 2020 compared to $306.3 million
for the three months ended July 31, 2019, a decrease of $26.4
million or 8.6%. The decrease in retail revenue was primarily
driven by a decrease in same store sales of 13.2%, partially offset
by new store growth. The decrease in same store sales
reflects proactive underwriting changes and industry wide supply
chain disruptions, each of which was the result of the COVID-19
pandemic.
For the three months ended July 31, 2020
and 2019, retail segment operating income was $23.2 million and
$36.1 million, respectively. On a non-GAAP basis, adjusted
retail segment operating income for the three months ended
July 31, 2020 was $24.5 million after excluding professional
fees associated with non-recurring expenses. On a non-GAAP
basis, adjusted retail segment operating income for the three
months ended July 31, 2019 was $36.1 million.
The following table presents net sales and
changes in net sales by category:
|
Three Months Ended July 31, |
|
|
|
|
|
Same Store |
(dollars in thousands) |
2020 |
|
% of Total |
|
2019 |
|
% of Total |
|
Change |
|
% Change |
|
% Change |
Furniture and mattress |
$ |
80,984 |
|
|
29.0 |
% |
|
$ |
99,455 |
|
|
32.5 |
% |
|
$ |
(18,471 |
) |
|
(18.6 |
) |
% |
|
(21.9 |
) |
% |
Home appliance |
107,682 |
|
|
38.5 |
|
|
99,356 |
|
|
32.5 |
|
|
8,326 |
|
|
8.4 |
|
|
|
3.6 |
|
|
Consumer electronics |
47,384 |
|
|
16.9 |
|
|
53,692 |
|
|
17.5 |
|
|
(6,308 |
) |
|
(11.7 |
) |
|
|
(16.2 |
) |
|
Home office |
14,979 |
|
|
5.4 |
|
|
17,883 |
|
|
5.8 |
|
|
(2,904 |
) |
|
(16.2 |
) |
|
|
(20.3 |
) |
|
Other |
5,113 |
|
|
1.8 |
|
|
4,192 |
|
|
1.4 |
|
|
921 |
|
|
22.0 |
|
|
|
16.7 |
|
|
Product sales |
256,142 |
|
|
91.6 |
|
|
274,578 |
|
|
89.7 |
|
|
(18,436 |
) |
|
(6.7 |
) |
|
|
(10.9 |
) |
|
Repair service agreement
commissions (1) |
20,164 |
|
|
7.2 |
|
|
27,647 |
|
|
9.0 |
|
|
(7,483 |
) |
|
(27.1 |
) |
|
|
(30.2 |
) |
|
Service revenues |
3,430 |
|
|
1.2 |
|
|
3,837 |
|
|
1.3 |
|
|
(407 |
) |
|
(10.6 |
) |
|
|
|
Total net sales |
$ |
279,736 |
|
|
100.0 |
% |
|
$ |
306,062 |
|
|
100.0 |
% |
|
$ |
(26,326 |
) |
|
(8.6 |
) |
% |
|
(13.2 |
) |
% |
(1) The total change in sales of repair service
agreement commissions includes retrospective commissions, which are
not reflected in the change in same store sales.
Credit Segment Second Quarter
Results
Credit revenues were $87.0 million for the three
months ended July 31, 2020 compared to $94.8 million for the
three months ended July 31, 2019, a decrease of $7.8 million
or 8.2%. The decrease in credit revenue was primarily due to
a decrease of 7.3% in the average balance of the customer
receivable portfolio, a decrease in insurance commissions due to a
decline in the balance of sale of our in-house credit financing,
and a decrease in insurance retrospective income. The decrease was
partially offset by an increase in the yield rate to 23.2% during
the three months ended July 31, 2020, 130 basis points higher than
the three months ended July 31, 2019.
Provision for bad debts decreased to $31.9
million for the three months ended July 31, 2020, from $49.8
million for the three months ended July 31, 2019, a decrease
of $17.9 million. The decrease was driven by a greater
decrease in the allowance for bad debts during the three months
ended July 31, 2020 compared to the three months ended July 31,
2019. The decrease in the allowance for bad debts was
primarily driven by the year-over-year decrease in the customer
accounts receivable portfolio, a decrease in the estimated loss
rate driven by a decline in delinquencies and higher
charge-offs.
Credit segment operating income was $18.2
million for the three months ended July 31, 2020, compared to
$5.7 million for the three months ended July 31, 2019.
On a non-GAAP basis, adjusted credit segment operating income
for the three months ended July 31, 2020 was $18.4 million
after excluding professional fees associated with non-recurring
expenses. On a non-GAAP basis, adjusted credit segment
operating income for the three months ended July 31, 2019 was
$5.7 million.
Additional information on the credit portfolio
and its performance may be found in the Customer Accounts
Receivable Portfolio Statistics table included within this press
release and in the Company’s Form 10-Q for the quarter ended
July 31, 2020, to be filed with the Securities and Exchange
Commission on September 3, 2020 (the “Second Quarter Form
10-Q”).
Showroom and Facilities
Update
The Company opened two new Conn’s HomePlus®
showrooms during the second quarter of fiscal year 2021 and has
opened two new Conn’s HomePlus® showrooms during the third quarter
of fiscal year 2021, bringing the total showroom count to 143 in 14
states. During fiscal year 2021, the Company plans to open a
total of seven to nine new showrooms in existing states to leverage
current infrastructure.
Liquidity and Capital
Resources
As of July 31, 2020, the Company had $409.7
million of immediately available borrowing capacity under its
$650.0 million revolving credit facility, prior to giving effect to
a minimum liquidity requirement of $125.0 million pursuant to
the third amendment to our revolving credit facility. The
Company also had $6.4 million of unrestricted cash available for
use.
Conference Call Information
The Company will host a conference call on
September 3, 2020, at 10 a.m. CT / 11 a.m. ET, to discuss its
financial results for the three months ended July 31, 2020.
Participants can join the call by dialing 877-451-6152 or
201-389-0879. The conference call will also be broadcast
simultaneously via webcast on a listen-only basis. A link to
the earnings release, webcast and second quarter fiscal year 2021
conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed
through September 10, 2020 by dialing 844-512-2921 or 412-317-6671
and Conference ID: 13705652.
About Conn’s, Inc.
Conn’s is a specialty retailer currently
operating 143 retail locations in Alabama, Arizona, Colorado,
Georgia, Louisiana, Mississippi, Nevada, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas and
Virginia. The Company’s primary product categories
include:
- Furniture and mattress, including furniture and related
accessories for the living room, dining room and bedroom, as well
as both traditional and specialty mattresses;
- Home appliance, including refrigerators, freezers, washers,
dryers, dishwashers and ranges;
- Consumer electronics, including LED, OLED, QLED, 4K Ultra HD,
8K and smart televisions, gaming products and home theater and
portable audio equipment; and
- Home office, including computers, printers and
accessories.
Additionally, Conn’s offers a variety of
products on a seasonal basis. Unlike many of its competitors,
Conn’s provides flexible in-house credit options for its customers
in addition to third-party financing programs and third-party
lease-to-own payment plans.
This press release contains forward-looking
statements within the meaning of the federal securities laws,
including but not limited to, the Private Securities Litigation
Reform Act of 1995, that involve risks and uncertainties. Such
forward-looking statements include information concerning our
future financial performance, business strategy, plans, goals and
objectives. Statements containing the words “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“project,” “should,” “predict,” “will,” “potential,” or the
negative of such terms or other similar expressions are generally
forward-looking in nature and not historical facts. Such
forward-looking statements are based on our current expectations.
We can give no assurance that such statements will prove to be
correct, and actual results may differ materially. A wide variety
of potential risks, uncertainties, and other factors could
materially affect our ability to achieve the results either
expressed or implied by our forward-looking statements, including,
but not limited to: general economic conditions impacting our
customers or potential customers; our ability to execute periodic
securitizations of future originated customer loans on favorable
terms; our ability to continue existing customer financing programs
or to offer new customer financing programs; changes in the
delinquency status of our credit portfolio; unfavorable
developments in ongoing litigation; increased regulatory oversight;
higher than anticipated net charge-offs in the credit portfolio;
the success of our planned opening of new stores; technological and
market developments and sales trends for our major product
offerings; our ability to manage effectively the selection of our
major product offerings; our ability to protect against
cyber-attacks or data security breaches and to protect the
integrity and security of individually identifiable data of our
customers and employees; our ability to fund our operations,
capital expenditures, debt repayment and expansion from cash flows
from operations, borrowings from our revolving credit facility, and
proceeds from accessing debt or equity markets; the effects of
epidemics or pandemics, including the COVID-19 outbreak; the impact
of our previous restatement and correction of the Company’s
previously issued financial statements; the previously identified
material weakness in the Company’s internal control over financial
reporting and the Company’s ability to remediate that material
weakness; the initiation of legal or regulatory proceedings with
respect to the prior restatement and corrections; the adverse
effects on the Company’s business, results of operations, financial
condition and stock price as a result of the previous restatement
and correction process; and other risks detailed in Part I, Item
1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal
year ended January 31, 2020 and other reports filed with the
Securities and Exchange Commission. If one or more of these or
other risks or uncertainties materialize (or the consequences of
such a development changes), or should our underlying assumptions
prove incorrect, actual outcomes may vary materially from those
reflected in our forward-looking statements. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. We disclaim any
intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events
or otherwise, or to provide periodic updates or guidance. All
forward-looking statements attributable to us, or to persons acting
on our behalf, are expressly qualified in their entirety by these
cautionary statements.
CONN-G
S.M. Berger & CompanyAndrew Berger (216) 464-6400
|
CONN’S, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)(dollars
in thousands, except per share amounts) |
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
279,736 |
|
|
$ |
306,062 |
|
|
$ |
510,066 |
|
|
$ |
568,041 |
|
Finance charges and other
revenues |
|
87,180 |
|
|
94,997 |
|
|
174,010 |
|
|
186,530 |
|
Total revenues |
|
366,916 |
|
|
401,059 |
|
|
684,076 |
|
|
754,571 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
176,623 |
|
|
182,065 |
|
|
323,637 |
|
|
339,293 |
|
Selling, general and
administrative expense |
|
115,278 |
|
|
127,484 |
|
|
228,285 |
|
|
245,398 |
|
Provision for bad debts |
|
32,045 |
|
|
49,736 |
|
|
149,371 |
|
|
89,782 |
|
Charges and credits |
|
1,534 |
|
|
— |
|
|
3,589 |
|
|
(695 |
) |
Total costs and expenses |
|
325,480 |
|
|
359,285 |
|
|
704,882 |
|
|
673,778 |
|
Operating income (loss) |
|
41,436 |
|
|
41,774 |
|
|
(20,806 |
) |
|
80,793 |
|
Interest expense |
|
13,222 |
|
|
14,396 |
|
|
28,215 |
|
|
28,893 |
|
Income (loss) before income taxes |
|
28,214 |
|
|
27,378 |
|
|
(49,021 |
) |
|
51,900 |
|
Provision (benefit) for income
taxes |
|
7,694 |
|
|
7,404 |
|
|
(13,339 |
) |
|
12,417 |
|
Net income (loss) |
|
$ |
20,520 |
|
|
$ |
19,974 |
|
|
$ |
(35,682 |
) |
|
$ |
39,483 |
|
Income (loss) per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.71 |
|
|
$ |
0.64 |
|
|
$ |
(1.23 |
) |
|
$ |
1.25 |
|
Diluted |
|
$ |
0.70 |
|
|
$ |
0.62 |
|
|
$ |
(1.23 |
) |
|
$ |
1.23 |
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
29,070,607 |
|
|
31,442,909 |
|
|
28,948,216 |
|
|
31,660,320 |
|
Diluted |
|
29,140,546 |
|
|
31,958,704 |
|
|
28,948,216 |
|
|
32,198,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONN’S, INC. AND SUBSIDIARIES CONDENSED
RETAIL SEGMENT FINANCIAL INFORMATION(unaudited)(dollars in
thousands) |
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
|
Product sales |
|
$ |
256,142 |
|
|
$ |
274,578 |
|
|
$ |
463,340 |
|
|
$ |
509,023 |
|
Repair service agreement
commissions |
|
20,164 |
|
|
27,647 |
|
|
40,265 |
|
|
51,671 |
|
Service revenues |
|
3,430 |
|
|
3,837 |
|
|
6,461 |
|
|
7,347 |
|
Total net sales |
|
279,736 |
|
|
306,062 |
|
|
510,066 |
|
|
568,041 |
|
Finance charges and other |
|
196 |
|
|
203 |
|
|
431 |
|
|
405 |
|
Total revenues |
|
279,932 |
|
|
306,265 |
|
|
510,497 |
|
|
568,446 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
176,623 |
|
|
182,065 |
|
|
323,637 |
|
|
339,293 |
|
Selling, general and
administrative expense |
|
78,584 |
|
|
88,147 |
|
|
156,758 |
|
|
167,769 |
|
Provision for bad debts |
|
182 |
|
|
(19 |
) |
|
350 |
|
|
110 |
|
Charges and credits |
|
1,355 |
|
|
— |
|
|
1,355 |
|
|
(695 |
) |
Total costs and expenses |
|
256,744 |
|
|
270,193 |
|
|
482,100 |
|
|
506,477 |
|
Operating income |
|
$ |
23,188 |
|
|
$ |
36,072 |
|
|
$ |
28,397 |
|
|
$ |
61,969 |
|
Retail gross margin |
|
36.9 |
% |
|
40.5 |
% |
|
36.5 |
% |
|
40.3 |
% |
Selling, general and
administrative expense as percent of revenues |
|
28.1 |
% |
|
28.8 |
% |
|
30.7 |
% |
|
29.5 |
% |
Operating margin |
|
8.3 |
% |
|
11.8 |
% |
|
5.6 |
% |
|
10.9 |
% |
Store
count: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
139 |
|
|
127 |
|
|
137 |
|
|
123 |
|
Opened |
|
2 |
|
|
4 |
|
|
4 |
|
|
8 |
|
End of period |
|
141 |
|
|
131 |
|
|
141 |
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONN’S, INC. AND SUBSIDIARIES CONDENSED
CREDIT SEGMENT FINANCIAL INFORMATION(unaudited)(dollars in
thousands) |
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
|
Finance charges and other revenues |
|
$ |
86,984 |
|
|
$ |
94,794 |
|
|
$ |
173,579 |
|
|
$ |
186,125 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense |
|
36,694 |
|
|
39,337 |
|
|
71,527 |
|
|
77,629 |
|
Provision for bad debts |
|
31,863 |
|
|
49,755 |
|
|
149,021 |
|
|
89,672 |
|
Charges and credits |
|
179 |
|
|
— |
|
|
2,234 |
|
|
— |
|
Total costs and expenses |
|
68,736 |
|
|
89,092 |
|
|
222,782 |
|
|
167,301 |
|
Operating income (loss) |
|
18,248 |
|
|
5,702 |
|
|
(49,203 |
) |
|
18,824 |
|
Interest expense |
|
13,222 |
|
|
14,396 |
|
|
28,215 |
|
|
28,893 |
|
Income (loss) before income taxes |
|
$ |
5,026 |
|
|
$ |
(8,694 |
) |
|
$ |
(77,418 |
) |
|
$ |
(10,069 |
) |
Selling, general and
administrative expense as |
|
|
|
|
|
|
|
|
|
|
|
|
percent of revenues |
|
42.2 |
% |
|
41.5 |
% |
|
41.2 |
% |
|
41.7 |
% |
Selling, general and
administrative expense as |
|
|
|
|
|
|
|
|
|
|
|
|
percent of average outstanding customer accounts receivable balance
(annualized) |
|
10.3 |
% |
|
10.2 |
% |
|
9.6 |
% |
|
10.0 |
% |
Operating margin |
|
21.0 |
% |
|
6.0 |
% |
|
(28.3 |
)% |
|
10.1 |
% |
CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO
STATISTICS(unaudited)
|
|
|
|
As of July 31, |
|
|
2020 |
|
2019 |
|
Weighted average
credit score of outstanding balances (1) |
|
596 |
|
|
594 |
|
Average
outstanding customer balance |
|
$ |
2,589 |
|
|
$ |
2,711 |
|
Balances 60+ days
past due as a percentage of total customer portfolio carrying value
(2)(3)(4) |
|
10.0 |
% |
|
8.7 |
% |
Balances 60+ days
past due (in thousands) (2)(4) |
|
$ |
131,696 |
|
|
$ |
132,187 |
|
Re-aged balance as
a percentage of total customer portfolio carrying value
(2)(3)(4) |
|
29.9 |
% |
|
25.8 |
% |
Re-aged balance (in
thousands) (2)(4) |
|
$ |
392,610 |
|
|
$ |
389,591 |
|
Carrying value of
account balances re-aged more than six months (in thousands)
(3) |
|
$ |
103,220 |
|
|
$ |
97,510 |
|
Allowance for bad
debts and uncollectible interest as a percentage of total
customer |
|
|
|
|
|
|
accounts receivable portfolio balance (5) |
|
24.8 |
% |
|
13.3 |
% |
Percent of total
customer accounts receivable portfolio balance represented by
no-interest |
|
|
|
|
|
|
option receivables |
|
18.3 |
% |
|
23.7 |
% |
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
2020 |
|
2019 |
|
2020 |
2019 |
Total applications
processed |
326,958 |
|
|
311,062 |
|
|
|
622,509 |
|
|
569,849 |
|
Weighted average origination
credit score of sales financed (1) |
617 |
|
|
609 |
|
|
|
613 |
|
|
609 |
|
Percent of total applications
approved and utilized |
20.0 |
% |
|
28.0 |
% |
|
|
21.1 |
% |
|
27.8 |
% |
Average income of credit customer at origination |
$ |
46,300 |
|
|
$ |
45,700 |
|
|
$ |
46,300 |
|
|
$ |
45,500 |
|
Percent of retail sales paid
for by: |
|
|
|
|
|
|
|
|
|
In-house financing, including down payments received |
48.5 |
% |
|
68.8 |
% |
|
|
55.1 |
% |
|
68.5 |
% |
Third-party financing |
23.9 |
% |
|
17.7 |
% |
|
|
20.8 |
% |
|
16.9 |
% |
Third-party lease-to-own option |
8.4 |
% |
|
6.5 |
% |
|
|
8.4 |
% |
|
7.3 |
% |
|
80.8 |
% |
|
93.0 |
% |
|
|
84.3 |
% |
|
92.7 |
% |
(1) Credit scores exclude non-scored accounts.(2)
Accounts that become delinquent after being re-aged are included in
both the delinquency and re-aged amounts.(3) Carrying value
reflects the total customer accounts receivable portfolio balance,
net of deferred fees and origination costs, the allowance for
no-interest option credit programs and the allowance for
uncollectible interest.(4) Increase was primarily driven by
higher risk loans originated during the first half of fiscal year
2020 and an increase in new customer mix.(5) For the period
ended July 31, 2020, the allowance for bad debts and uncollectible
interest is based on the expected loss methodology. For the period
ended July 31, 2019, the allowance for bad debts and uncollectible
interest is based on the incurred loss methodology.
|
CONN’S, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS(unaudited)(in thousands) |
|
|
July 31, 2020 |
|
January 31, 2020 |
Assets |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
6,385 |
|
|
$ |
5,485 |
|
Restricted cash |
63,836 |
|
|
75,370 |
|
Customer accounts receivable,
net of allowances |
514,528 |
|
|
673,742 |
|
Other accounts receivable |
55,335 |
|
|
68,753 |
|
Inventories |
180,893 |
|
|
219,756 |
|
Income taxes receivable |
15,539 |
|
|
4,315 |
|
Prepaid expenses and other
current assets |
9,440 |
|
|
11,445 |
|
Total current assets |
845,956 |
|
|
1,058,866 |
|
Long-term portion of customer
accounts receivable, net of allowances |
479,632 |
|
|
663,761 |
|
Property and equipment,
net |
192,300 |
|
|
173,031 |
|
Operating lease right-of-use
assets |
266,046 |
|
|
242,457 |
|
Deferred income taxes |
43,243 |
|
|
18,599 |
|
Other assets |
14,523 |
|
|
12,055 |
|
Total assets |
$ |
1,841,700 |
|
|
$ |
2,168,769 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Current finance lease
obligations |
$ |
758 |
|
|
$ |
605 |
|
Accounts payable |
63,269 |
|
|
48,554 |
|
Accrued expenses |
73,719 |
|
|
63,090 |
|
Operating lease liability -
current |
38,003 |
|
|
35,390 |
|
Other current liabilities |
18,084 |
|
|
14,631 |
|
Total current liabilities |
193,833 |
|
|
162,270 |
|
Operating lease liability -
non current |
355,577 |
|
|
329,081 |
|
Long-term debt and finance
lease obligations |
748,902 |
|
|
1,025,535 |
|
Other long-term
liabilities |
24,802 |
|
|
24,703 |
|
Total liabilities |
1,323,114 |
|
|
1,541,589 |
|
Stockholders’ equity |
518,586 |
|
|
627,180 |
|
Total liabilities and stockholders’ equity |
$ |
1,841,700 |
|
|
$ |
2,168,769 |
|
|
|
|
|
|
|
|
|
CONN’S, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS(unaudited)(dollars in
thousands, except per share amounts)
Basis for presentation of non-GAAP
disclosures:
To supplement the Condensed Consolidated Financial Statements,
which are prepared and presented in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”), the Company also provides the following non-GAAP
financial measures: adjusted retail segment operating income,
adjusted credit segment operating income (loss), adjusted net
income (loss), adjusted net income (loss) per diluted share. These
non-GAAP financial measures are not meant to be considered as a
substitute for, or superior to, comparable GAAP measures and should
be considered in addition to results presented in accordance with
GAAP. They are intended to provide additional insight into
our operations and the factors and trends affecting the
business. Management believes these non-GAAP financial
measures are useful to financial statement readers because (1) they
allow for greater transparency with respect to key metrics we use
in our financial and operational decision making and (2) they are
used by some of our institutional investors and the analyst
community to help them analyze our operating results.
RETAIL SEGMENT ADJUSTED OPERATING INCOME AND
RETAIL SEGMENT ADJUSTED OPERATING MARGIN |
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Retail segment
operating income, as reported |
$ |
23,188 |
|
|
$ |
36,072 |
|
|
$ |
28,397 |
|
|
$ |
61,969 |
|
Adjustments: |
|
|
|
|
|
|
|
Professional fees (1) |
1,355 |
|
|
— |
|
|
1,355 |
|
|
— |
|
Facility relocation costs (2) |
— |
|
|
— |
|
|
— |
|
|
(695 |
) |
Retail segment operating income, as adjusted |
$ |
24,543 |
|
|
$ |
36,072 |
|
|
$ |
29,752 |
|
|
$ |
61,274 |
|
Retail segment total
revenues |
$ |
279,932 |
|
|
$ |
306,265 |
|
|
$ |
510,497 |
|
|
$ |
568,446 |
|
(1) Represents professional fees associated with
non-recurring expenses.
(2) Represents a gain from increased sublease income
related to the consolidation of our corporate headquarters.
|
CREDIT SEGMENT ADJUSTED OPERATING INCOME (LOSS)
AND CREDIT SEGMENT ADJUSTED OPERATING
MARGIN |
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Credit segment operating income (loss), as
reported |
|
$ |
18,248 |
|
|
$ |
5,702 |
|
|
$ |
(49,203 |
) |
|
$ |
18,824 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Professional fees (1) |
|
179 |
|
|
— |
|
|
2,234 |
|
|
— |
|
Credit segment operating income (loss), as
adjusted |
|
$ |
18,427 |
|
|
$ |
5,702 |
|
|
$ |
(46,969 |
) |
|
$ |
18,824 |
|
Credit segment total
revenues |
|
$ |
86,984 |
|
|
$ |
94,794 |
|
|
$ |
173,579 |
|
|
$ |
186,125 |
|
(1) Represents professional fees
associated with non-recurring expenses.
|
ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS)
PER DILUTED SHARE |
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Six Months Ended July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss), as reported |
|
$ |
20,520 |
|
|
$ |
19,974 |
|
|
$ |
(35,682 |
) |
|
$ |
39,483 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees (1) |
|
1,534 |
|
|
— |
|
|
3,589 |
|
|
— |
|
Facility relocation costs (2) |
|
— |
|
|
— |
|
|
— |
|
|
(695 |
) |
Tax impact of adjustments |
|
(343 |
) |
|
— |
|
|
(803 |
) |
|
156 |
|
Net income (loss), as adjusted |
|
$ |
21,711 |
|
|
$ |
19,974 |
|
|
$ |
(32,896 |
) |
|
$ |
38,944 |
|
Weighted average common shares
outstanding - Diluted |
|
29,140,546 |
|
|
31,958,704 |
|
|
28,948,216 |
|
|
32,198,024 |
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
As reported |
|
$ |
0.70 |
|
|
$ |
0.62 |
|
|
$ |
(1.23 |
) |
|
$ |
1.23 |
|
As adjusted |
|
$ |
0.75 |
|
|
$ |
0.62 |
|
|
$ |
(1.14 |
) |
|
$ |
1.21 |
|
(1) Represents professional fees associated with
non-recurring expenses.
(2) Represents a gain from increased sublease income
related to the consolidation of our corporate headquarters.
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