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, 2021.
“Strong second quarter retail and credit results
exceeded our expectations and demonstrate that our growth
strategies are taking hold. Second quarter same store sales
increased 16.4% and total retail sales are up 24.0% over the prior
year period. Strong retail performance combined with a second
quarter credit spread of 1,200 basis points, contributed to record
second quarter earnings per diluted share. In fact, earnings per
diluted share of $2.74 for the first six months of the year are
higher than any annual earnings in Conn’s 131-year history,” stated
Chandra Holt, Conn’s Chief Executive Officer.
“Momentum remains positive across our business
reflecting strong consumer demand and the growth strategies we have
put in place. Total retail sales for the first half have increased
at the fastest growth rate in seven years. As a result, we are
increasing our fiscal year 2022 same store sales expectation from
high single-digit same store sales growth to mid-teens same store
sales growth,” continued Ms. Holt.
“I believe Conn’s is well positioned to continue
to innovate, grow and capitalize on an enormous addressable market.
As my tenure as CEO begins, I am excited by the direction Conn’s is
headed and the opportunities we have to create sustainable value
for our shareholders. I also want to thank all our team members for
their contributions to our success and their continued dedication,”
concluded Ms. Holt.
Second Quarter Financial Highlights as Compared
to the Prior Fiscal Year Period (Unless Otherwise Noted):
- Net earnings
increased to a second quarter record of $1.22 per diluted share,
compared to $0.70 per diluted share for the same period last fiscal
year;
- Same store sales
increased 16.4% for the second quarter of fiscal year 2022 as
compared to the second quarter of fiscal year 2021 and increased
3.2% on a two-year basis;
- Strong same
store sales combined with the contribution of new showrooms drove a
24.0% increase in total retail sales for the second quarter;
- eCommerce sales
increased 210.9% to a quarterly record of $17.3 million;
- Lease-to-own
sales increased 70.3% to $41.6 million;
- At July 31,
2021, the carrying value of customer accounts receivable 60+ days
past due declined 42.1% year-over-year to the lowest level in eight
fiscal years, and the carrying value of re-aged accounts declined
44.5% year-over-year to the lowest level in six fiscal years;
and
- Total debt decreased from $749.7
million at July 31, 2020 to $439.6 million at July 31, 2021, a
decrease of 41%. Net debt as a percent of the portfolio balance at
July 31, 2021, was approximately 36%, compared to 50% at July 31,
2020, and represents the lowest level in over a decade.
Second Quarter Results
Net income for the three months ended
July 31, 2021 was $37.0 million, or $1.22 per diluted share,
compared to net income for the three months ended July 31,
2020 of $20.5 million, or $0.70 per diluted share. On a non-GAAP
basis, adjusted net income for the three months ended July 31,
2021 was $37.0 million, or $1.22 per diluted share. This compares
to adjusted net income for the three months ended July 31,
2020 of $21.7 million, or $0.75 per diluted share, which excludes
professional fees associated with non-recurring expenses.
Retail Segment Second Quarter
Results
Retail revenues were $347.0 million for the
three months ended July 31, 2021 compared to $279.9 million
for the three months ended July 31, 2020, an increase of $67.1
million or 24.0%. The increase in retail revenue was primarily
driven by an increase in same store sales of 16.4% and by new store
growth. The increase in same store sales reflects an increase in
demand across all of the Company’s home-related product categories.
The increase also reflects the impact of prior year 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, 2021
and 2020, retail segment operating income was $28.7 million and
$23.2 million, respectively. The increase in retail segment
operating income for the three months ended July 31, 2021 was
primarily due to an increase in revenue.
The following table presents net sales and
changes in net sales by category:
|
Three Months Ended July 31, |
|
|
|
|
|
Same Store |
(dollars in thousands) |
2021 |
|
% of Total |
|
2020 |
|
% of Total |
|
Change |
|
% Change |
|
% Change |
Furniture and mattress |
$ |
109,259 |
|
|
31.5 |
% |
|
$ |
80,984 |
|
|
29.0 |
% |
|
$ |
28,275 |
|
|
34.9 |
% |
|
22.0 |
% |
Home appliance |
135,444 |
|
|
39.1 |
|
|
107,682 |
|
|
38.5 |
|
|
27,762 |
|
|
25.8 |
|
|
17.8 |
|
Consumer electronics |
48,413 |
|
|
14.0 |
|
|
47,384 |
|
|
16.9 |
|
|
1,029 |
|
|
2.2 |
|
|
0.1 |
|
Home office |
17,986 |
|
|
5.2 |
|
|
14,979 |
|
|
5.4 |
|
|
3,007 |
|
|
20.1 |
|
|
10.4 |
|
Other |
9,143 |
|
|
2.6 |
|
|
5,113 |
|
|
1.8 |
|
|
4,030 |
|
|
78.8 |
|
|
71.3 |
|
Product sales |
320,245 |
|
|
92.4 |
|
|
256,142 |
|
|
91.6 |
|
|
64,103 |
|
|
25.0 |
|
|
16.7 |
|
Repair service agreement
commissions (1) |
23,700 |
|
|
6.8 |
|
|
20,164 |
|
|
7.2 |
|
|
3,536 |
|
|
17.5 |
|
|
13.6 |
|
Service revenues |
2,840 |
|
|
0.8 |
|
|
3,430 |
|
|
1.2 |
|
|
(590 |
) |
|
(17.2 |
) |
|
|
Total net sales |
$ |
346,785 |
|
|
100.0 |
% |
|
$ |
279,736 |
|
|
100.0 |
% |
|
$ |
67,049 |
|
|
24.0 |
% |
|
16.4 |
% |
(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 $71.4 million for the three
months ended July 31, 2021 compared to $87.0 million for the
three months ended July 31, 2020, a decrease of $15.6 million
or 17.9%. The decrease in credit revenue was primarily due to a
22.7% decrease in the average outstanding balance of the customer
receivable portfolio. These decreases were partially offset by an
increase in the yield rate, from 23.2% for the three months ended
July 31, 2020 to 23.3% for the three months ended July 31,
2021 and an increase in insurance commissions.
Provision for bad debts was $10.1 million for
the three months ended July 31, 2021 compared to $31.9 million
for the three months ended July 31, 2020, a decrease of $21.8
million. The change was primarily driven by a year-over-year
decrease in net charge-offs of $43.8 million, partially offset by a
smaller decrease in the allowance for bad debts during the three
months ended July 31, 2021 compared to the three months ended July
31, 2020. The smaller decrease was driven by a lower year-over-year
decline in the customer accounts receivable portfolio balance,
partially offset by a $5.0 million decrease in the economic
adjustment that was driven by an improvement in the forecasted
unemployment rate.
Credit segment operating income was $25.5
million for the three months ended July 31, 2021, compared to
$18.2 million for the three months ended July 31, 2020. The
increase was primarily due to the decrease in the provision for bad
debts partially offset by the decrease in credit revenue.
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, 2021, to be filed with the Securities and Exchange
Commission on September 1, 2021 (the “Second Quarter Form
10-Q”).
Showroom and Facilities
Update
The Company opened three new Conn’s HomePlus®
showrooms during the second quarter of fiscal year 2022, all within
the state of Florida, bringing the total showroom count to 155 in
15 states. During fiscal year 2022, the Company plans to open a
total of eleven to thirteen new showrooms (inclusive of the nine
new showrooms opened during the first half of fiscal year
2022).
Liquidity and Capital
Resources
As of July 31, 2021, the Company had $362.9
million of immediately available borrowing capacity under its
$650.0 million revolving credit facility. The Company also had $8.7
million of unrestricted cash available for use.
Conference Call Information
The Company will host a conference call on
September 1, 2021, at 10 a.m. CT / 11 a.m. ET, to discuss its
financial results for the three months ended July 31, 2021.
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 2022
conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed
through September 8, 2021 by dialing 844-512-2921 or 412-317-6671
and Conference ID: 13722190.
About Conn’s, Inc.
Conn’s is a specialty retailer currently
operating 155 retail locations in Alabama, Arizona, Colorado,
Florida, 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, and 8K
televisions, gaming products, next generation video game consoles
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 pandemic; 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, 2021 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 & Company
Andrew Berger (216) 464-6400
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)(dollars in thousands, except per
share amounts)
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues: |
|
|
|
|
|
|
|
Total net sales |
$ |
346,785 |
|
|
$ |
279,736 |
|
|
$ |
638,081 |
|
|
$ |
510,066 |
|
Finance charges and other
revenues |
71,598 |
|
|
87,180 |
|
|
144,004 |
|
|
174,010 |
|
Total revenues |
418,383 |
|
|
366,916 |
|
|
782,085 |
|
|
684,076 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
216,042 |
|
|
176,623 |
|
|
400,921 |
|
|
323,637 |
|
Selling, general and
administrative expense |
137,870 |
|
|
115,278 |
|
|
263,919 |
|
|
228,285 |
|
Provision for bad debts |
10,262 |
|
|
32,045 |
|
|
(6,874 |
) |
|
149,371 |
|
Charges and credits |
— |
|
|
1,534 |
|
|
— |
|
|
3,589 |
|
Total costs and expenses |
364,174 |
|
|
325,480 |
|
|
657,966 |
|
|
704,882 |
|
Operating income (loss) |
54,209 |
|
|
41,436 |
|
|
124,119 |
|
|
(20,806 |
) |
Interest expense |
6,088 |
|
|
13,222 |
|
|
15,292 |
|
|
28,215 |
|
Loss on extinguishment of
debt |
— |
|
|
— |
|
|
1,218 |
|
|
— |
|
Income (loss) before income taxes |
48,121 |
|
|
28,214 |
|
|
107,609 |
|
|
(49,021 |
) |
Provision (benefit) for income
taxes |
11,117 |
|
|
7,694 |
|
|
25,207 |
|
|
(13,339 |
) |
Net income (loss) |
$ |
37,004 |
|
|
$ |
20,520 |
|
|
$ |
82,402 |
|
|
$ |
(35,682 |
) |
Income (loss) per
share: |
|
|
|
|
|
|
|
Basic |
$ |
1.26 |
|
|
$ |
0.71 |
|
|
$ |
2.80 |
|
|
$ |
(1.23 |
) |
Diluted |
$ |
1.22 |
|
|
$ |
0.70 |
|
|
$ |
2.74 |
|
|
$ |
(1.23 |
) |
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
29,438,605 |
|
|
29,070,607 |
|
|
29,382,162 |
|
|
28,948,216 |
|
Diluted |
30,212,448 |
|
|
29,140,546 |
|
|
30,072,401 |
|
|
28,948,216 |
|
CONN’S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands)
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues: |
|
|
|
|
|
|
|
Product sales |
$ |
320,245 |
|
|
$ |
256,142 |
|
|
$ |
589,456 |
|
|
$ |
463,340 |
|
Repair service agreement
commissions |
23,700 |
|
|
20,164 |
|
|
42,831 |
|
|
40,265 |
|
Service revenues |
2,840 |
|
|
3,430 |
|
|
5,794 |
|
|
6,461 |
|
Total net sales |
346,785 |
|
|
279,736 |
|
|
638,081 |
|
|
510,066 |
|
Finance charges and other |
224 |
|
|
196 |
|
|
433 |
|
|
431 |
|
Total revenues |
347,009 |
|
|
279,932 |
|
|
638,514 |
|
|
510,497 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
216,042 |
|
|
176,623 |
|
|
400,921 |
|
|
323,637 |
|
Selling, general and
administrative expense |
102,157 |
|
|
78,584 |
|
|
193,050 |
|
|
156,758 |
|
Provision for bad debts |
142 |
|
|
182 |
|
|
160 |
|
|
350 |
|
Charges and credits |
— |
|
|
1,355 |
|
|
— |
|
|
1,355 |
|
Total costs and expenses |
318,341 |
|
|
256,744 |
|
|
594,131 |
|
|
482,100 |
|
Operating income |
$ |
28,668 |
|
|
$ |
23,188 |
|
|
$ |
44,383 |
|
|
$ |
28,397 |
|
Retail gross margin |
37.7 |
% |
|
36.9 |
% |
|
37.2 |
% |
|
36.5 |
% |
Selling, general and
administrative expense as percent of revenues |
29.4 |
% |
|
28.1 |
% |
|
30.2 |
% |
|
30.7 |
% |
Operating margin |
8.3 |
% |
|
8.3 |
% |
|
7.0 |
% |
|
5.6 |
% |
Store
count: |
|
|
|
|
|
|
|
Beginning of period |
152 |
|
|
139 |
|
|
146 |
|
|
137 |
|
Opened |
3 |
|
|
2 |
|
|
9 |
|
|
4 |
|
End of period |
155 |
|
|
141 |
|
|
155 |
|
|
141 |
|
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands)
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues: |
|
|
|
|
|
|
|
Finance charges and other revenues |
$ |
71,374 |
|
|
$ |
86,984 |
|
|
$ |
143,571 |
|
|
$ |
173,579 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative expense |
35,713 |
|
|
36,694 |
|
|
70,869 |
|
|
71,527 |
|
Provision for bad debts |
10,120 |
|
|
31,863 |
|
|
(7,034 |
) |
|
149,021 |
|
Charges and credits |
— |
|
|
179 |
|
|
— |
|
|
2,234 |
|
Total costs and expenses |
45,833 |
|
|
68,736 |
|
|
63,835 |
|
|
222,782 |
|
Operating income (loss) |
25,541 |
|
|
18,248 |
|
|
79,736 |
|
|
(49,203 |
) |
Interest expense |
6,088 |
|
|
13,222 |
|
|
15,292 |
|
|
28,215 |
|
Loss on extinguishment of
debt |
— |
|
|
— |
|
|
1,218 |
|
|
— |
|
Income (loss) before income taxes |
$ |
19,453 |
|
|
$ |
5,026 |
|
|
$ |
63,226 |
|
|
$ |
(77,418 |
) |
Selling, general and
administrative expense as percent of revenues |
50.0 |
% |
|
42.2 |
% |
|
49.4 |
% |
|
41.2 |
% |
Selling, general and
administrative expense as percent of average outstanding customer
accounts receivable balance (annualized) |
12.9 |
% |
|
10.3 |
% |
|
12.4 |
% |
|
9.6 |
% |
Operating margin |
35.8 |
% |
|
21.0 |
% |
|
55.5 |
% |
|
(28.3 |
)% |
CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO
STATISTICS(unaudited)
|
As of July 31, |
|
2021 |
|
2020 |
Weighted average credit score
of outstanding balances (1) |
608 |
|
|
596 |
|
Average outstanding customer balance |
$ |
2,414 |
|
|
$ |
2,589 |
|
Balances 60+ days past due as
a percentage of total customer portfolio carrying value
(2)(3)(4) |
7.2 |
% |
|
10.0 |
% |
Re-aged balance as a
percentage of total customer portfolio carrying value
(2)(3)(5) |
20.4 |
% |
|
29.9 |
% |
Carrying value of account
balances re-aged more than six months (in thousands) (3) |
$ |
70,058 |
|
|
$ |
103,220 |
|
Allowance for bad debts and
uncollectible interest as a percentage of total customer accounts
receivable portfolio balance |
18.3 |
% |
|
24.8 |
% |
Percent of total customer
accounts receivable portfolio balance represented by no-interest
option receivables |
29.8 |
% |
|
18.3 |
% |
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Total applications
processed |
336,438 |
|
|
326,958 |
|
|
634,344 |
|
|
622,509 |
|
Weighted average origination
credit score of sales financed (1) |
614 |
|
|
617 |
|
|
615 |
|
|
613 |
|
Percent of total applications
approved and utilized |
22.5 |
% |
|
20.0 |
% |
|
22.2 |
% |
|
21.1 |
% |
Average income of credit customer at origination |
$ |
47,700 |
|
|
$ |
46,300 |
|
|
$ |
48,100 |
|
|
$ |
46,300 |
|
Percent of retail sales paid
for by: |
|
|
|
|
|
|
|
In-house financing, including down payments received |
50.9 |
% |
|
48.5 |
% |
|
49.9 |
% |
|
55.1 |
% |
Third-party financing |
17.5 |
% |
|
23.9 |
% |
|
17.2 |
% |
|
20.8 |
% |
Third-party lease-to-own option |
11.5 |
% |
|
8.4 |
% |
|
11.9 |
% |
|
8.4 |
% |
|
79.9 |
% |
|
80.8 |
% |
|
79.0 |
% |
|
84.3 |
% |
(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) Decrease was primarily due
to an increase in cash collections and the tightening of
underwriting standards that occurred in fiscal year 2021.
(5) Decrease was primarily due
to an increase in cash collections, the change in the unilateral
re-age policy that occurred in the second quarter of fiscal year
2021 and the tightening of underwriting standards that occurred in
fiscal year 2021.
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited)(in thousands)
|
July 31, 2021 |
|
January 31, 2021 |
|
|
Assets |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
8,736 |
|
|
$ |
9,703 |
|
Restricted cash |
30,961 |
|
|
50,557 |
|
Customer accounts receivable,
net of allowances |
461,491 |
|
|
478,734 |
|
Other accounts receivable |
55,260 |
|
|
61,716 |
|
Inventories |
223,662 |
|
|
196,463 |
|
Income taxes receivable |
32,223 |
|
|
38,059 |
|
Prepaid expenses and other
current assets |
20,725 |
|
|
8,831 |
|
Total current assets |
833,058 |
|
|
844,063 |
|
Long-term portion of customer
accounts receivable, net of allowances |
415,208 |
|
|
430,749 |
|
Property and equipment,
net |
186,072 |
|
|
190,962 |
|
Operating lease right-of-use
assets |
258,702 |
|
|
265,798 |
|
Deferred income taxes |
— |
|
|
9,448 |
|
Other assets |
15,907 |
|
|
14,064 |
|
Total assets |
$ |
1,708,947 |
|
|
$ |
1,755,084 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Current finance lease
obligations |
$ |
1,371 |
|
|
$ |
934 |
|
Accounts payable |
89,001 |
|
|
69,367 |
|
Accrued expenses |
99,078 |
|
|
82,990 |
|
Operating lease liability -
current |
54,800 |
|
|
44,011 |
|
Other current liabilities |
17,170 |
|
|
14,454 |
|
Total current liabilities |
261,420 |
|
|
211,756 |
|
Operating lease liability -
non current |
338,289 |
|
|
354,598 |
|
Long-term debt and finance
lease obligations |
438,242 |
|
|
608,635 |
|
Deferred tax liability |
7,803 |
|
|
— |
|
Other long-term
liabilities |
20,743 |
|
|
22,940 |
|
Total liabilities |
1,066,497 |
|
|
1,197,929 |
|
Stockholders’ equity |
642,450 |
|
|
557,155 |
|
Total liabilities and stockholders’ equity |
$ |
1,708,947 |
|
|
$ |
1,755,084 |
|
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 net income (loss),
adjusted net income (loss) per diluted share and net debt as a
percentage of the portfolio balance. 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.
ADJUSTED NET INCOME (LOSS) AND ADJUSTED
NET INCOME (LOSS) PER DILUTED SHARE
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss), as reported |
$ |
37,004 |
|
|
$ |
20,520 |
|
|
$ |
82,402 |
|
|
$ |
(35,682 |
) |
Adjustments: |
|
|
|
|
|
|
|
Loss on extinguishment of debt (1) |
— |
|
|
— |
|
|
1,218 |
|
|
— |
|
Professional fees (2) |
— |
|
|
1,534 |
|
|
— |
|
|
3,589 |
|
Tax impact of adjustments |
— |
|
|
(343 |
) |
|
(274 |
) |
|
(803 |
) |
Net income (loss), as adjusted |
$ |
37,004 |
|
|
$ |
21,711 |
|
|
$ |
83,346 |
|
|
$ |
(32,896 |
) |
Weighted average common shares
outstanding - Diluted |
30,212,448 |
|
|
29,140,546 |
|
|
30,072,401 |
|
|
28,948,216 |
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
As reported |
$ |
1.22 |
|
|
$ |
0.70 |
|
|
$ |
2.74 |
|
|
$ |
(1.23 |
) |
As adjusted |
$ |
1.22 |
|
|
$ |
0.75 |
|
|
$ |
2.77 |
|
|
$ |
(1.14 |
) |
(1) Represents a loss of $1.0
million from retirement of $141.2 million aggregate principal
amount of our 7.25% senior notes due 2022 (“Senior Notes”) and a
loss of $0.2 million related to the amendment of our Fifth
Amended and Restated Loan and Security Agreement.
(2) Represents professional fees
associated with non-recurring expenses.
NET DEBT
|
July 31, |
|
2021 |
|
2020 |
Debt, as
reported |
|
|
|
Current finance lease obligations |
$ |
1,371 |
|
$ |
758 |
Long-term debt and finance
lease obligations |
438,242 |
|
748,902 |
Total debt |
$ |
439,613 |
|
$ |
749,660 |
Cash, as
reported |
|
|
|
Cash and cash equivalents |
8,736 |
|
6,385 |
Restricted Cash |
30,961 |
|
63,836 |
Total cash |
$ |
39,697 |
|
$ |
70,221 |
Net debt |
$ |
399,916 |
|
$ |
679,439 |
Ending portfolio
balance, as reported |
$ |
1,105,713 |
|
$ |
1,357,030 |
Net debt as a
percentage of the portfolio balance |
36.2 % |
|
50.1 % |
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