GameStop Corp. (NYSE: GME), today reported results
for the first quarter ended May 1, 2021.
First Quarter Fiscal 2021 Highlights
- Net sales increased 25.1% to $1.277
billion, compared to $1.021 billion in the fiscal 2020 first
quarter, overcoming a nearly 12% reduction in the Company’s global
store base due to strategic de-densification efforts, and continued
store closures across Europe due to the COVID-19 pandemic;
- Gross margin was 25.9%, a decline
of 180 basis points compared to the fiscal 2020 first quarter;
- Reported selling, general and
administrative expenses were $370.3 million, a decline of $16.2
million, or 4.2%, from $386.5 million in the fiscal 2020 first
quarter. Adjusted for severance, transformation and other costs,
selling, general and administrative expenses were $351.7 million, a
decline of $29.5 million, or 7.7%, from $381.2 million in the
fiscal 2020 first quarter;
- Operating loss of ($40.8) million
compared to ($108.0) million in the fiscal 2020 first quarter.
Adjusted operating loss of ($21.6) million compared to ($98.8)
million in the fiscal 2020 first quarter;
- Net loss of ($66.8) million, or
($1.01) per diluted share as compared to net loss of ($165.7)
million, or ($2.57) per diluted share, in the fiscal 2020 first
quarter. Adjusted net loss of ($29.4) million or ($0.45) per
diluted share, compared to adjusted net loss of ($157.6) million or
($2.44) per diluted share in the fiscal 2020 first quarter;
- Adjusted EBITDA of ($0.7) million
compared to ($75.5) million in the fiscal 2020 first quarter,
and;
- Income tax expense was $1.3 million
compared to income tax expense of $50.4 million in the fiscal 2020
first quarter.
Capital Structure and Liquidity Update
As of May 1, 2021, the Company had $770.8
million in cash and restricted cash, compared to $583.9 million in
cash and restricted cash in the prior year. The Company had no
borrowings under its asset-based revolving credit facility and no
long-term debt.
On April 26, 2021, the Company announced it
raised approximately $551.7 million in net proceeds through the
issuance of 3.5 million shares of common stock under its
“at-the-market” equity offering program, resulting in total shares
outstanding of approximately 71.9 million. The Company has used and
intends to continue using net proceeds to accelerate GameStop’s
transformation as well as for general corporate purposes and
further strengthening the balance sheet.
On April 30, 2021, the Company completed its
voluntary early redemption of $216.4 million in principal amount of
its 10.0% Senior Notes due 2023 on April 30, 2021. This voluntary
early redemption covered the entire amount of the outstanding 10.0%
Senior Notes, which represented all of the Company’s long-term
debt.
In addition, the Company intends to file with
the U.S. Securities and Exchange Commission a prospectus supplement
to the base prospectus included in the Company’s shelf registration
statement on Form S-3 (File No. 333-251197) under which the Company
may offer and sell up to 5 million shares of its common stock, from
time to time, in “at-the-market” offerings. The Company intends to
use net proceeds for general corporate purposes as well as for
investing in growth initiatives and maintaining a strong balance
sheet. The timing and amount of any sales of shares, if any, will
depend on a variety of factors, including prevailing market
conditions, the trading price of shares and other factors as
determined by the Company.
Before investing, read the prospectus supplement
(after it is filed) and the base prospectus in the registration
statement and other documents the Company files with the SEC for
more complete information about the Company and the offering.
Documents filed with the SEC may be obtained for free by visiting
EDGAR on the SEC Web site at www.sec.gov. This press release shall
not constitute an offer to sell or a solicitation of an offer to
buy any security, nor shall there be any sale of the Company's
common stock in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
Corporate Update
GameStop today announced the appointments of
Matt Furlong as Chief Executive Officer and Mike Recupero as Chief
Financial Officer. Messrs. Furlong and Recupero join from Amazon,
where they held senior roles and oversaw various growth initiatives
during their respective tenures. The Company is continuing to
actively pursue senior talent with gaming, retail and technology
experience.
2021 Outlook
GameStop is continuing to suspend guidance at
this time; however, it believes total net sales is the most
appropriate metric to evaluate performance at this time. The
Company’s second quarter sales trends continue to reflect momentum,
with May total sales increasing approximately 27% compared to last
year.
Webcast and Conference Call
Information
A webcast with GameStop management is scheduled
for June 9, 2021, at 5:00 p.m. ET to discuss the Company’s
financial results and can be accessed on GameStop’s investor
relations home page at http://investor.GameStop.com/. The phone
number for the call is 877-451-6152 and the confirmation code is
13720011. This webcast will be archived for two months on
GameStop’s corporate website.
About GameStop
GameStop, a Fortune 500 company headquartered in
Grapevine, Texas, is a leading specialty retailer offering games
and entertainment products through its E-Commerce properties and
thousands of stores. Visit www.GameStop.com to explore our products
and offerings. Follow @GameStop and @GameStopCorp on Twitter and
find us on Facebook at www.facebook.com/GameStop.
NON-GAAP MEASURES AND OTHER
METRICS As a supplement to our financial results
presented in accordance with U.S. generally accepted accounting
principles (GAAP), GameStop may use certain non-GAAP
measures, such as adjusted SG&A, adjusted operating income
(loss), adjusted net income (loss), adjusted diluted earnings
(loss) per share, adjusted EBITDA and free cash flow. We believe
these non-GAAP financial measures provide useful information to
investors in evaluating our core operating performance. Adjusted
selling, general and administrative expenses (“Adjusted SG&A”),
adjusted operating income (loss), adjusted net income (loss) and
adjusted earnings (loss) per share exclude the effect of items such
as transformation costs, asset impairments, store closure costs,
severance, as well as divestiture costs. Results reported as
constant currency exclude the impact of fluctuations in foreign
currency exchange rates by converting our local currency financial
results using the prior period exchange rates and comparing these
adjusted amounts to our current period reported results. Our
definition and calculation of non-GAAP financial measures may
differ from that of other companies. Non-GAAP financial measures
should be viewed as supplementing, and not as an alternative or
substitute for, the Company’s financial results prepared in
accordance with GAAP. Certain of the items that may be excluded or
included in non-GAAP financial measures may be significant items
that could impact the Company’s financial position, results of
operations or cash flows and should therefore be considered in
assessing the Company’s actual and future financial condition and
performance.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS - SAFE HARBORThis press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
are based upon management’s current beliefs, views, estimates and
expectations, including as to the Company’s industry, business
strategy, goals and expectations concerning its market position,
strategic and transformation initiatives, future operations,
margins, profitability, comparable store growth, capital
expenditures, liquidity, capital resources, expansion of technology
expertise, and other financial and operating information, including
expectations as to future operating profit improvement. Such
statements include without limitation those about the Company’s
expectations for fiscal 2021, future financial and operating
results, projections and other statements that are not historical
facts. Forward-looking statements are subject to significant risks
and uncertainties and actual developments, business decisions,
outcomes and results may differ materially from those reflected or
described in the forward-looking statements. The following factors,
among others, could cause actual developments, business decisions,
outcomes and results to differ materially from those reflected or
described in the forward-looking statements: macroeconomic
pressures, including the effects of the COVID-19 pandemic on
consumer spending and the Company’s ability to keep stores open;
the impact of the COVID-19 pandemic on the Company’s business and
financial results; the economic conditions in the U.S. and certain
international markets; the amounts devoted to strategic
investments, including in E-Commerce capabilities and other
business transformation initiatives, and failure to achieve
anticipated profitability increases and benefits from such
initiatives within the expected time-frames or at all; the
cyclicality of the video game industry; the Company’s dependence on
the timely delivery of new and innovative products from its
vendors; the impact of technological advances in the video game
industry and related changes in consumer behavior on the Company’s
sales; the Company’s ability to keep pace with changing industry
technology and consumer preferences; decrease in popularity of
certain types of video games; the Company’s ability to react to
trends in pop culture with regard to its sales of collectibles and
dependence on licensed products for a substantial portion of such
sales; the competitive nature of the Company’s industry, including
competition from mass retailers, E-Commerce businesses, and
traditional store-based retailers; the ability and willingness of
the Company’s vendors to provide marketing and merchandise support
at historical or anticipated levels; the Company’s ability to
attract and retain executive officers and other key personnel; the
Company’s ability to obtain favorable terms from its current and
future suppliers and vendors, including those engaged as part of
the Company’s shift to E-Commerce sales; the international nature
of the Company’s business; foreign currency fluctuations; changes
in the Company’s global tax rate; the impact of international
crises and trade restrictions and tariffs on the delivery of the
Company’s products; the Company’s dependence on sales during the
holiday selling season; fluctuations in the Company’s results of
operations from quarter to quarter; the Company’s ability to
de-densify its global store base; the Company’s ability to renew,
terminate or enter into new leases on favorable terms; the adequacy
of the Company’s management information systems; the Company’s
reliance on centralized facilities for refurbishment of its
pre-owned products; the Company’s ability to maintain security of
its customer, employee or company information; potential harm to
the Company’s reputation, including from cybersecurity breaches;
the Company’s ability to maintain effective control over financial
reporting; restrictions on the Company’s ability to purchase and
sell pre-owned video games; potential future litigation and other
legal proceedings; changes in accounting rules and regulations; and
the Company’s ability to comply with federal, state, local and
international law. Additional factors that could cause results to
differ materially from those reflected or described in the
forward-looking statements can be found in GameStop's Annual Report
on Form 10-K for the fiscal year ended January 30, 2021 being filed
on the date of this press release and other filings made from time
to time with the SEC and available at the SEC's Internet site at
http://www.sec.gov or http://investor.GameStop.com. Forward-looking
statements contained in this press release speak only as of the
date of this press release. The Company undertakes no obligation to
publicly update any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may
be required by any applicable securities laws.
GameStop Corp.Condensed
Consolidated Statements of Operations(in millions,
except per share data)(unaudited)
|
|
13 Weeks Ended May 1, 2021 |
|
13 Weeks Ended May 2, 2020 |
Net sales |
|
$ |
1,276.8 |
|
|
|
$ |
1,021.0 |
|
|
Cost of sales |
|
946.7 |
|
|
|
738.6 |
|
|
Gross profit |
|
330.1 |
|
|
|
282.4 |
|
|
Selling, general and
administrative expenses |
|
370.3 |
|
|
|
386.5 |
|
|
Asset impairments |
|
0.6 |
|
|
|
3.9 |
|
|
Operating loss |
|
(40.8 |
) |
|
|
(108.0 |
) |
|
Interest expense, net |
|
24.7 |
|
|
|
6.7 |
|
|
Loss from continuing operations before income taxes |
|
(65.5 |
) |
|
|
(114.7 |
) |
|
Income tax expense |
|
1.3 |
|
|
|
50.4 |
|
|
Net loss from continuing
operations |
|
(66.8 |
) |
|
|
(165.1 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
(0.6 |
) |
|
Net loss |
|
$ |
(66.8 |
) |
|
|
$ |
(165.7 |
) |
|
|
|
|
|
|
Basic loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.01 |
) |
|
|
$ |
(2.56 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Basic loss per share |
|
$ |
(1.01 |
) |
|
|
$ |
(2.57 |
) |
|
|
|
|
|
|
Diluted loss per share: |
|
|
|
|
Continuing operations |
|
$ |
(1.01 |
) |
|
|
$ |
(2.56 |
) |
|
Discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
Diluted loss per share |
|
$ |
(1.01 |
) |
|
|
$ |
(2.57 |
) |
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
|
66.0 |
|
|
|
64.5 |
|
|
Diluted |
|
66.0 |
|
|
|
64.5 |
|
|
|
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
|
|
Net sales |
|
100.0 |
|
% |
|
100.0 |
|
% |
Cost of sales |
|
74.1 |
|
|
|
72.3 |
|
|
Gross profit |
|
25.9 |
|
|
|
27.7 |
|
|
Selling, general and
administrative expenses |
|
29.1 |
|
|
|
37.9 |
|
|
Asset impairments |
|
— |
|
|
|
0.4 |
|
|
Operating loss |
|
(3.2 |
) |
|
|
(10.6 |
) |
|
Interest expense, net |
|
1.9 |
|
|
|
0.6 |
|
|
Loss from continuing operations before income taxes |
|
(5.1 |
) |
|
|
(11.2 |
) |
|
Income tax expense |
|
0.1 |
|
|
|
5.0 |
|
|
Net loss from continuing
operations |
|
(5.2 |
) |
|
|
(16.2 |
) |
|
Loss from discontinued
operations, net of tax |
|
— |
|
|
|
— |
|
|
Net loss |
|
(5.2 |
) |
% |
|
(16.2 |
) |
% |
|
|
|
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Balance Sheets(in
millions)(unaudited)
|
|
May 1, 2021 |
|
May 2, 2020 |
ASSETS: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
694.7 |
|
|
$ |
570.3 |
|
Restricted cash |
|
57.4 |
|
|
— |
|
Receivables, net |
|
102.1 |
|
|
86.7 |
|
Merchandise inventories |
|
570.9 |
|
|
654.7 |
|
Prepaid expenses and other current assets |
|
232.1 |
|
|
99.1 |
|
Assets held-for-sale |
|
— |
|
|
9.1 |
|
Total current assets |
|
1,657.2 |
|
|
1,419.9 |
|
Property and equipment,
net |
|
192.6 |
|
|
256.3 |
|
Operating lease right-of-use
assets |
|
654.2 |
|
|
706.2 |
|
Deferred income taxes |
|
— |
|
|
29.2 |
|
Long-term restricted cash |
|
18.7 |
|
|
13.6 |
|
Other noncurrent assets |
|
40.0 |
|
|
43.8 |
|
Total assets |
|
$ |
2,562.7 |
|
|
$ |
2,469.0 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
388.6 |
|
|
$ |
212.1 |
|
Accrued liabilities and other current liabilities |
|
561.8 |
|
|
506.0 |
|
Current portion of operating lease liabilities |
|
219.4 |
|
|
249.4 |
|
Short-term debt, including current portion of long-term debt,
net |
|
48.1 |
|
|
417.2 |
|
Borrowings under revolving line of credit |
|
— |
|
|
135.0 |
|
Total current liabilities |
|
1,217.9 |
|
|
1,519.7 |
|
Operating lease
liabilities |
|
445.0 |
|
|
493.9 |
|
Other long-term
liabilities |
|
20.3 |
|
|
20.4 |
|
Total liabilities |
|
1,683.2 |
|
|
2,034.0 |
|
Total stockholders’ equity |
|
879.5 |
|
|
435.0 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,562.7 |
|
|
$ |
2,469.0 |
|
|
|
|
|
|
GameStop Corp.Condensed
Consolidated Statements of Cash Flows(in
millions)(unaudited)
|
|
13 Weeks Ended May 1, 2021 |
|
13 Weeks Ended May 2, 2020 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(66.8 |
) |
|
$ |
(165.7 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
|
Depreciation and amortization (including amounts in cost of
sales) |
|
18.7 |
|
|
21.5 |
|
Loss (gain) on retirement of debt |
|
18.2 |
|
|
(0.7 |
) |
Asset impairments |
|
0.6 |
|
|
3.9 |
|
Stock-based compensation expense |
|
5.7 |
|
|
1.8 |
|
Deferred income taxes |
|
— |
|
|
45.4 |
|
Loss on disposal of property and equipment, net |
|
0.4 |
|
|
0.3 |
|
Other, net |
|
(0.5 |
) |
|
1.2 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Receivables, net |
|
3.1 |
|
|
54.4 |
|
Merchandise inventories |
|
32.4 |
|
|
196.0 |
|
Prepaid expenses and other current assets |
|
(2.9 |
) |
|
5.8 |
|
Prepaid income taxes and income taxes payable |
|
(1.2 |
) |
|
22.3 |
|
Accounts payable and accrued liabilities |
|
(11.4 |
) |
|
(274.1 |
) |
Operating lease right-of-use assets and liabilities |
|
(15.0 |
) |
|
38.8 |
|
Changes in other long-term liabilities |
|
(0.1 |
) |
|
(0.2 |
) |
Net cash flows used in operating activities |
|
(18.8 |
) |
|
(49.3 |
) |
Cash flows from investing
activities: |
|
|
|
|
Purchase of property and equipment |
|
(14.7 |
) |
|
(6.6 |
) |
Other |
|
— |
|
|
0.5 |
|
Net cash flows used in investing activities |
|
(14.7 |
) |
|
(6.1 |
) |
Cash flows from financing
activities: |
|
|
|
|
Proceeds from issuance of common stock, net of cost |
|
551.7 |
|
|
— |
|
Borrowings from the revolver |
|
— |
|
|
150.0 |
|
Repayments of revolver borrowings |
|
(25.0 |
) |
|
(15.0 |
) |
Payments of senior notes |
|
(307.4 |
) |
|
(2.3 |
) |
Settlement of stock-based awards |
|
(49.9 |
) |
|
(0.5 |
) |
Other |
|
(0.1 |
) |
|
(0.3 |
) |
Net cash flows provided by (used in) financing activities |
|
169.3 |
|
|
131.9 |
|
Exchange rate effect on cash, cash equivalents and restricted
cash |
|
— |
|
|
(6.1 |
) |
Increase (decrease) in cash, cash equivalents and restricted
cash |
|
135.8 |
|
|
70.4 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
635.0 |
|
|
513.5 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
770.8 |
|
|
$ |
583.9 |
|
|
|
|
|
|
Schedule ISales
Mix(unaudited)
|
|
13 Weeks Ended May 1, 2021 |
|
13 Weeks Ended May 2, 2020 |
|
|
Net |
|
Percent |
|
Net |
|
Percent |
Net Sales (in millions): |
|
Sales |
|
of Total |
|
Sales |
|
of Total |
|
|
|
|
|
|
|
|
|
Hardware and accessories (1) |
|
$ |
703.5 |
|
|
55.1 |
% |
|
$ |
513.1 |
|
|
50.3 |
% |
Software (2) |
|
397.9 |
|
|
31.2 |
|
|
417.0 |
|
|
40.8 |
|
Collectibles |
|
175.4 |
|
|
13.7 |
|
|
90.9 |
|
|
8.9 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,276.8 |
|
|
100.0 |
% |
|
$ |
1,021.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes sales of new and pre-owned hardware, accessories,
hardware bundles in which hardware and digital or physical software
are sold together in a single SKU, interactive game figures,
strategy guides, mobile and consumer electronics. |
(2) Includes sales of new and pre-owned video game software,
digital software and PC entertainment software. |
GameStop Corp.Schedule
II(in millions, except per share
data)(unaudited)
Non-GAAP results
The following tables reconcile the Company's
selling, general and administrative expenses ("SG&A"),
operating loss, net loss and loss per share as presented in its
unaudited consolidated statements of operations and prepared in
accordance with Generally Accepted Accounting Principles ("GAAP")
to its adjusted SG&A, adjusted operating loss, adjusted net
loss, adjusted EBITDA and adjusted loss per share. The diluted
weighted-average shares outstanding used to calculate adjusted
earnings per share may differ from GAAP weighted-average shares
outstanding. Under GAAP, basic and diluted weighted-average shares
outstanding are the same in periods where there is a net loss. The
reconciliations below are from continuing operations only.
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 1, 2021 |
|
May 2, 2020 |
Adjusted SG&A |
|
|
|
|
|
|
|
|
SG&A |
|
$ |
370.3 |
|
|
$ |
386.5 |
|
Transformation costs |
|
(6.4 |
) |
|
(1.5 |
) |
Significant transactions(1) |
|
(0.2 |
) |
|
— |
|
Divestitures, severance and other(3) |
|
(12.0 |
) |
|
(3.8 |
) |
Adjusted SG&A |
|
$ |
351.7 |
|
|
$ |
381.2 |
|
|
|
|
|
|
Adjusted Operating
Loss |
|
|
|
|
Operating loss |
|
$ |
(40.8 |
) |
|
$ |
(108.0 |
) |
Transformation costs |
|
6.4 |
|
|
1.5 |
|
Asset impairments |
|
0.6 |
|
|
3.9 |
|
Significant transactions(1) |
|
0.2 |
|
|
— |
|
Divestitures, severance and other(3) |
|
12.0 |
|
|
3.8 |
|
Adjusted operating loss |
|
$ |
(21.6 |
) |
|
$ |
(98.8 |
) |
|
|
|
|
|
Adjusted Net
Loss |
|
|
|
|
Net loss |
|
$ |
(66.8 |
) |
|
$ |
(165.7 |
) |
Loss from discontinued operations, net of tax |
|
— |
|
|
0.6 |
|
Net loss from continuing
operations |
|
$ |
(66.8 |
) |
|
$ |
(165.1 |
) |
Transformation costs |
|
6.4 |
|
|
1.5 |
|
Asset impairments |
|
0.6 |
|
|
3.9 |
|
Significant transactions(2) |
|
18.4 |
|
|
(0.7 |
) |
Divestitures, severance and other(3) |
|
12.0 |
|
|
3.8 |
|
Tax effect of non-GAAP adjustments |
|
— |
|
|
(1.0 |
) |
Adjusted net loss |
|
$ |
(29.4 |
) |
|
$ |
(157.6 |
) |
|
|
|
|
|
Adjusted loss per share |
|
|
|
|
Basic |
|
$ |
(0.45 |
) |
|
$ |
(2.44 |
) |
Diluted |
|
$ |
(0.45 |
) |
|
$ |
(2.44 |
) |
|
|
|
|
|
Number of shares used in
adjusted calculation |
|
|
|
|
Basic |
|
66.0 |
|
|
64.5 |
|
Diluted |
|
66.0 |
|
|
64.5 |
|
|
|
|
|
|
(1) Includes
transaction costs associated with our ATM offering and voluntary
early redemptions of the 2023 Senior Notes. |
(2) Includes
transaction costs associated with the ATM offering and transactions
costs, make-whole premium and accelerated amortization of the
deferred financing costs associated with the voluntary early
redemption of the 2023 Senior Notes. Prior year includes the
discount of open market purchases of the 2021 Senior Notes. |
(3) Severance
includes cash and stock based compensation for key personnel that
have separated from the company. |
|
|
13 Weeks Ended |
|
13 Weeks Ended |
|
|
May 1, 2021 |
|
May 2, 2020 |
Reconciliation of Net
Loss to Adjusted EBITDA |
|
|
|
|
Net loss |
|
$ |
(66.8 |
) |
|
$ |
(165.7 |
) |
Loss from discontinued
operations, net of tax |
|
— |
|
|
0.6 |
|
Loss from continuing
operations |
|
$ |
(66.8 |
) |
|
$ |
(165.1 |
) |
Interest expense, net |
|
24.7 |
|
|
6.7 |
|
Depreciation and amortization |
|
18.7 |
|
|
21.5 |
|
Income tax expense |
|
1.3 |
|
|
50.4 |
|
EBITDA |
|
$ |
(22.1 |
) |
|
$ |
(86.5 |
) |
Stock-based compensation |
|
2.2 |
|
|
1.8 |
|
Transformation costs |
|
6.4 |
|
|
1.5 |
|
Asset impairments |
|
0.6 |
|
|
3.9 |
|
Significant transactions(1) |
|
0.2 |
|
|
— |
|
Divestitures, severance and other(2) |
|
12.0 |
|
|
3.8 |
|
Adjusted EBITDA |
|
$ |
(0.7 |
) |
|
$ |
(75.5 |
) |
|
|
|
|
|
(1) Includes
transaction costs associated with our ATM offering and voluntary
early redemption of the 2023 Senior Notes. |
(2) Severance
includes cash and stock based compensation for key personnel that
have separated from the company. |
|
GameStop Corp.Schedule
III(in
millions)(unaudited)
Non-GAAP results
The following table reconciles the Company's
cash flows provided by operating activities as presented in its
unaudited Consolidated Statements of Cash Flows and prepared in
accordance with GAAP to its free cash flow. Free cash flow is
considered a non-GAAP financial measure. Management believes,
however, that free cash flow, which measures our ability to
generate additional cash from our business operations, is an
important financial measure for use by investors in evaluating the
company’s financial performance.
|
13 Weeks Ended |
|
13 Weeks Ended |
|
May 1, 2021 |
|
May 2, 2020 |
Net cash flows used in operating activities |
$ |
(18.8 |
) |
|
$ |
(49.3 |
) |
Purchase of property and equipment |
(14.7 |
) |
|
(6.6 |
) |
Free cash flow |
$ |
(33.5 |
) |
|
$ |
(55.9 |
) |
|
|
|
|
|
|
|
|
Non-GAAP Measures and Other Metrics
Adjusted EBITDA is a supplemental financial
measure of the Company’s performance that is not required by, or
presented in accordance with, GAAP. We believe that the
presentation of this non-GAAP financial measure provides useful
information to investors in assessing our financial condition and
results of operations. We define Adjusted EBITDA as net income
(loss) before income taxes, plus interest expense, net and
depreciation and amortization, excluding stock-based compensation,
transformation costs, business divestitures, asset impairments,
severance and other non-cash charges. Net income (loss) is the GAAP
financial measure most directly comparable to Adjusted EBITDA. Our
non-GAAP financial measures should not be considered as an
alternative to the most directly comparable GAAP financial measure.
Furthermore, non-GAAP financial measures have limitations as an
analytical tool because they exclude some but not all items that
affect the most directly comparable GAAP financial measures. Some
of these limitations include:
- certain items excluded from Adjusted EBITDA are significant
components in understanding and assessing a company’s financial
performance, such as a company’s cost of capital and tax
structure;
- Adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements; and
- our computations of Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies.
We compensate for the limitations of Adjusted
EBITDA as an analytical tool by reviewing the comparable GAAP
financial measure, understanding the differences between the GAAP
and non-GAAP financial measures and incorporating these data points
into our decision-making process. Adjusted EBITDA is provided in
addition to, and not as an alternative to, the Company’s financial
results prepared in accordance with GAAP, and should not be
considered in isolation or as a substitute for analysis of our
results as reported under GAAP. Because Adjusted EBITDA may be
defined and determined differently by other companies in our
industry, our definitions of these non-GAAP financial measures may
not be comparable to similarly titled measures of other companies,
thereby diminishing their utility.
ContactGameStop Corp. Investor
Relations(817) 424-2001investorrelations@gamestop.com
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