Second Consecutive Quarter of Profitability
Conn's, Inc. (NASDAQ:CONN), 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 third quarter ended October
31, 2017.
“Our third quarter results demonstrate the
continued success of Conn’s transformation, as we benefited from a
record net yield, a widening credit spread, and strong retail gross
margins, despite the impact Hurricane Harvey had on many of our
communities,” stated Norm Miller, Conn’s Chairman and Chief
Executive Officer.
Conn’s achieved a record net yield of 19.8%, and
our credit spread increased to 460 basis points in the third
quarter of fiscal year 2018, which was the highest level in the
past 11 quarters. During the third quarter, new direct loan
programs were successfully implemented in Oklahoma and Tennessee.
As a result, approximately 90% of current originations are now at
higher rates and the average APR on total originations for the
month of October was 27.9%, compared to 21.4% in July of last
fiscal year.
During the third quarter of fiscal year 2018,
the company’s 60+ delinquency rate fell year-over-year for the
first time in four years. This represents a significant
milestone, and based on the performance of originations since June
of last fiscal year, we anticipate credit segment profitability
will continue to improve as newer accounts become a larger
percentage of the portfolio.
“Retail performance remains solid and Conn’s
achieved record third quarter retail gross margins, which helped
produce another quarter of strong retail operating income. With
improving credit trends, we are increasingly confident that the
investments we have made in the credit platform can support
profitable growth. For fiscal year 2019 we are planning to
open five to nine new stores, all in existing states which will
allow us to leverage our current infrastructure. I am
encouraged by the successful transformation underway at Conn’s, and
the long-term opportunities to create sustainable growth and
profitability,” concluded Mr. Miller.
Third Quarter Results
Net income for the third quarter of fiscal year
2018 was $1.6 million, or $0.05 per diluted share, compared to a
net loss for the third quarter of fiscal year 2017 of $3.8 million,
or $0.12 per diluted share. On a non-GAAP basis, adjusted net
income for the third quarter of fiscal year 2018 was $5.6 million,
or $0.18 per diluted share, which excludes a loss from the
write-off of previously capitalized costs for a software project
that was abandoned during the third quarter of fiscal year 2018
related to the implementation of a new point of sale system that
began in fiscal year 2013 and a loss from extinguishment of debt
related to the early redemption of our 2016-A Notes. This
compares to adjusted net loss for the third quarter of fiscal year
2017 of $2.5 million, or $0.08 per diluted share, which excludes
costs associated with store and facility closures, impairments from
disposals, legal and professional fees related to our
securities-related litigation and severance costs due to changes in
the executive management team. The impairments from disposals
included the write-off of leasehold improvements for one store we
relocated prior to the end of the useful life of the leasehold
improvements and incurred costs for a terminated store project
prior to starting construction.
Retail Segment Third Quarter
Results
Total retail revenues were $291.9 million for
the third quarter of fiscal year 2018 compared to $308.4 million
for the third quarter of fiscal year 2017, a decrease of
5.3%. The decrease in retail revenue was primarily driven by
a decrease in same store sales of 7.0%, partially offset by new
store growth. Sales for the three months ended October 31,
2017 were impacted negatively by general softness in consumer
spending. For the third quarter of fiscal year 2018, retail
segment operating income was $29.6 million and, on a non-GAAP
basis, adjusted retail segment operating income was $35.4 million,
which excludes a loss from the write-off of previously capitalized
costs for a software project that was abandoned during the third
quarter of fiscal year 2018 related to the implementation of a new
point of sale system that began in fiscal year 2013.
The following table presents net sales and
changes in net sales by category:
|
Three Months Ended October 31, |
|
|
|
% |
|
Same store |
(dollars in
thousands) |
2017 |
|
% of Total |
|
2016 |
|
% of Total |
|
Change |
|
Change |
|
% change |
Furniture and
mattress |
$ |
97,146 |
|
|
33.3 |
% |
|
$ |
98,898 |
|
|
32.1 |
% |
|
$ |
(1,752 |
) |
|
(1.8 |
)% |
|
(6.1 |
)% |
Home appliance |
83,837 |
|
|
28.7 |
|
|
$ |
85,785 |
|
|
27.8 |
|
|
$ |
(1,948 |
) |
|
(2.3 |
) |
|
(3.3 |
) |
Consumer
electronics |
58,062 |
|
|
19.9 |
|
|
65,670 |
|
|
21.3 |
|
|
(7,608 |
) |
|
(11.6 |
) |
|
(10.7 |
) |
Home office |
20,295 |
|
|
7.0 |
|
|
22,747 |
|
|
7.5 |
|
|
(2,452 |
) |
|
(10.8 |
) |
|
(8.1 |
) |
Other |
4,446 |
|
|
1.5 |
|
|
4,956 |
|
|
1.6 |
|
|
(510 |
) |
|
(10.3 |
) |
|
(11.1 |
) |
Product
sales |
263,786 |
|
|
90.4 |
|
|
278,056 |
|
|
90.3 |
|
|
(14,270 |
) |
|
(5.1 |
) |
|
(6.6 |
) |
Repair service
agreement commissions |
24,488 |
|
|
8.4 |
|
|
26,354 |
|
|
8.5 |
|
|
(1,866 |
) |
|
(7.1 |
) |
|
(10.1 |
) |
Service revenues |
3,534 |
|
|
1.2 |
|
|
3,623 |
|
|
1.2 |
|
|
(89 |
) |
|
(2.5 |
) |
|
|
Total net
sales |
291,808 |
|
|
100.0 |
% |
|
308,033 |
|
|
100.0 |
% |
|
(16,225 |
) |
|
(5.3 |
) |
|
(7.0 |
)% |
The following provides a summary of items
impacting the performance of our product categories during the
third quarter of fiscal year 2018 compared to the third quarter of
fiscal year 2017:
- Furniture unit volume decreased 12.5%, partially offset by a
9.3% increase in average selling price;
- Mattress unit volume decreased 15.1%, partially offset by a
4.5% increase in average selling price;
- Home appliance unit volume decreased 5.0%, partially offset by
a 1.8% increase in average selling price;
- Consumer electronic unit volume decreased 11.9%, partially
offset by a 1.5% increase in average sales price; and
- Home office unit volume decreased 20.4%, partially offset by a
15.5% increase in average selling price.
Credit Segment Third Quarter
Results
Credit revenues were $81.3 million for the third
quarter of fiscal year 2018 compared to $68.4 million for the third
quarter of fiscal year 2017, an increase of 18.8%. The
increase in credit revenue was primarily the result of increased
originations of our higher-yielding direct loan product, which
contributed to the increase in the portfolio yield rate to 19.8%
from 15.0%, partially offset by the impact of a 3.7% decline in the
average balance of the customer receivables portfolio. Credit
revenues for the third quarter of fiscal year 2018 also reflect a
decline in insurance income primarily due to a decrease in
retrospective commissions as a result of higher claim volumes
related to Hurricane Harvey. The total customer portfolio
balance was $1.49 billion at October 31, 2017 compared to
$1.53 billion at October 31, 2016, a decrease of 3.0%.
Provision for bad debts was $56.3 million for
the third quarter of fiscal year 2018 compared to $51.3 million for
the third quarter of fiscal year 2017, an increase of $5.0
million. The most significant reasons for the increase in the
provision for bad debts for the three months ended October 31,
2017 compared to the three months ended October 31, 2016
were:
- growth in the customer receivables portfolio in the three
months ended October 31, 2017 compared to a decline in the
three months ended October 31, 2016;
- higher net-charge offs in the three months ended
October 31, 2017 compared to the three months ended
October 31, 2016; and
- an increase in the qualitative reserve related to Hurricane
Harvey of $1.1 million; partially offset by
- a decrease in our estimated TDR loss rate as a result of
improvements in TDR delinquency rates.
Additional information on the credit portfolio
and its performance may be found in the Customer Receivable
Portfolio Statistics table included within this press release and
in the Company's Form 10-Q for the quarter ended October 31,
2017, to be filed with the Securities and Exchange Commission.
Store Update
During fiscal year 2018, the Company has opened
three new Conn's HomePlus® stores, two of which were opened during
the first quarter of fiscal year 2018 in North Carolina, and one of
which was opened during the second quarter of fiscal year 2018 in
Virginia, bringing the total store count to 116 in 14 states.
The Company does not intend to open any additional stores in fiscal
year 2018. The Company currently plans to open between five
and nine stores in fiscal year 2019, all in existing states to
leverage current infrastructure.
Liquidity and Capital
Resources
As of October 31, 2017, the Company had
$110.5 million of immediately available borrowing capacity under
its $750.0 million revolving credit facility, with an additional
$284.8 million that may become available under the Company's
revolving credit facility if the Company grows the balance of
eligible customer receivables and eligible inventory balances under
the borrowing base. The Company also had $12.7 million of
unrestricted cash available for use.
Outlook and Guidance
The following are the Company's expectations for
the business for the fourth quarter of fiscal year 2018:
- Change in same store sales down mid single digits;
- Retail gross margin between 39.0% and 39.5% of total retail net
sales;
- Selling, general and administrative expenses between 27.0% and
29.0% of total revenues;
- Provision for bad debts between $55.0 million and $59.5
million;
- Finance charges and other revenues between $86.0 million and
$90.0 million; and
- Interest expense between $19.0 million and $20.5 million.
Conference Call Information
The Company will host a conference call on
December 7, 2017 at 10 a.m. CT / 11 a.m. ET to discuss its
third quarter fiscal 2018 financial results. Participants can join
the call by dialing 877-754-5302 or 678-894-3020. The conference
call will also be broadcast simultaneously via webcast on a
listen-only basis. A link to the earnings release, webcast and
third quarter fiscal 2018 conference call presentation will be
available at ir.conns.com.
Replay of the telephonic call can be accessed
through December 14, 2017 by dialing 855-859-2056 or 404-537-3406
and Conference ID: 5182279. A link to the earnings release and
webcast will be available at ir.conns.com.
About Conn's, Inc.
Conn's is a specialty retailer currently
operating 116 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, Ultra HD, and
internet-ready televisions, Blu-ray players, 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; 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, 2017 and other reports filed with the SEC.
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
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)(dollars in thousands, except per
share amounts) |
|
|
|
|
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
Total net sales |
$ |
291,808 |
|
|
$ |
308,033 |
|
|
$ |
857,506 |
|
|
$ |
958,574 |
|
Finance charges and
other revenues |
81,364 |
|
|
68,740 |
|
|
238,139 |
|
|
205,469 |
|
Total revenues |
373,172 |
|
|
376,773 |
|
|
1,095,645 |
|
|
1,164,043 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
175,591 |
|
|
192,374 |
|
|
519,847 |
|
|
605,709 |
|
Selling, general and
administrative expenses |
114,355 |
|
|
114,457 |
|
|
332,524 |
|
|
347,550 |
|
Provision for bad
debts |
56,512 |
|
|
51,564 |
|
|
161,891 |
|
|
169,978 |
|
Charges and
credits |
5,861 |
|
|
1,987 |
|
|
11,156 |
|
|
5,408 |
|
Total costs and expenses |
352,319 |
|
|
360,382 |
|
|
1,025,418 |
|
|
1,128,645 |
|
Operating income |
20,853 |
|
|
16,391 |
|
|
70,227 |
|
|
35,398 |
|
Interest expense |
18,095 |
|
|
23,470 |
|
|
62,142 |
|
|
73,504 |
|
Loss on extinguishment
of debt |
461 |
|
|
— |
|
|
2,907 |
|
|
— |
|
Income (loss) before income taxes |
2,297 |
|
|
(7,079 |
) |
|
5,178 |
|
|
(38,106 |
) |
Provision (benefit) for
income taxes |
728 |
|
|
(3,264 |
) |
|
1,916 |
|
|
(12,618 |
) |
Net income (loss) |
$ |
1,569 |
|
|
$ |
(3,815 |
) |
|
$ |
3,262 |
|
|
$ |
(25,488 |
) |
Income (loss)
per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.05 |
|
|
$ |
(0.12 |
) |
|
$ |
0.10 |
|
|
$ |
(0.83 |
) |
Diluted |
$ |
0.05 |
|
|
$ |
(0.12 |
) |
|
$ |
0.10 |
|
|
$ |
(0.83 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
31,292,913 |
|
|
30,816,319 |
|
|
31,121,177 |
|
|
30,736,636 |
|
Diluted |
31,764,594 |
|
|
30,816,319 |
|
|
31,457,420 |
|
|
30,736,636 |
|
CONN'S, INC. AND
SUBSIDIARIESCONDENSED RETAIL SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands) |
|
|
|
|
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
Product sales |
$ |
263,786 |
|
|
$ |
278,056 |
|
|
$ |
774,741 |
|
|
$ |
864,269 |
|
Repair service
agreement commissions |
24,488 |
|
|
26,354 |
|
|
72,703 |
|
|
82,849 |
|
Service revenues |
3,534 |
|
|
3,623 |
|
|
10,062 |
|
|
11,456 |
|
Total net
sales |
291,808 |
|
|
308,033 |
|
|
857,506 |
|
|
958,574 |
|
Other revenues |
95 |
|
|
337 |
|
|
267 |
|
|
1,268 |
|
Total revenues |
291,903 |
|
|
308,370 |
|
|
857,773 |
|
|
959,842 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
175,591 |
|
|
192,374 |
|
|
519,847 |
|
|
605,709 |
|
Selling, general and
administrative expenses |
80,676 |
|
|
79,777 |
|
|
233,290 |
|
|
244,598 |
|
Provision for bad
debts |
189 |
|
|
286 |
|
|
584 |
|
|
811 |
|
Charges and
credits |
5,861 |
|
|
1,987 |
|
|
11,156 |
|
|
5,408 |
|
Total costs and expenses |
262,317 |
|
|
274,424 |
|
|
764,877 |
|
|
856,526 |
|
Operating income |
$ |
29,586 |
|
|
$ |
33,946 |
|
|
$ |
92,896 |
|
|
$ |
103,316 |
|
Retail gross
margin |
39.8 |
% |
|
37.5 |
% |
|
39.4 |
% |
|
36.8 |
% |
Selling, general and
administrative expense as percent of revenues |
27.6 |
% |
|
25.9 |
% |
|
27.2 |
% |
|
25.5 |
% |
Operating margin |
10.1 |
% |
|
11.0 |
% |
|
10.8 |
% |
|
10.8 |
% |
Store
count: |
|
|
|
|
|
|
|
Beginning of
period |
116 |
|
|
112 |
|
|
113 |
|
|
103 |
|
Opened |
— |
|
|
1 |
|
|
3 |
|
|
10 |
|
End of
period |
116 |
|
|
113 |
|
|
116 |
|
|
113 |
|
CONN'S, INC. AND
SUBSIDIARIESCONDENSED CREDIT SEGMENT FINANCIAL
INFORMATION(unaudited)(dollars in thousands) |
|
|
|
|
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
Finance charges and other revenues |
$ |
81,269 |
|
|
$ |
68,403 |
|
|
$ |
237,872 |
|
|
$ |
204,201 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
33,679 |
|
|
34,680 |
|
|
99,234 |
|
|
102,952 |
|
Provision for bad
debts |
56,323 |
|
|
51,278 |
|
|
161,307 |
|
|
169,167 |
|
Total costs and expenses |
90,002 |
|
|
85,958 |
|
|
260,541 |
|
|
272,119 |
|
Operating loss |
(8,733 |
) |
|
(17,555 |
) |
|
(22,669 |
) |
|
(67,918 |
) |
Interest expense |
18,095 |
|
|
23,470 |
|
|
62,142 |
|
|
73,504 |
|
Loss on extinguishment
of debt |
461 |
|
|
— |
|
|
2,907 |
|
|
— |
|
Loss before income taxes |
$ |
(27,289 |
) |
|
$ |
(41,025 |
) |
|
$ |
(87,718 |
) |
|
$ |
(141,422 |
) |
Selling, general and
administrative expense as percent of revenues |
41.4 |
% |
|
50.7 |
% |
|
41.7 |
% |
|
50.4 |
% |
Selling, general and
administrative expense as percent of average total customer
portfolio balance (annualized) |
9.1 |
% |
|
9.0 |
% |
|
8.9 |
% |
|
8.9 |
% |
Operating margin |
(10.7 |
)% |
|
(25.7 |
)% |
|
(9.5 |
)% |
|
(33.3 |
)% |
CONN'S, INC. AND
SUBSIDIARIESCUSTOMER RECEIVABLE PORTFOLIO
STATISTICS(unaudited) |
|
|
|
As of October 31, |
|
2017 |
|
2016 |
Weighted average credit
score of outstanding balances (1) |
589 |
|
|
591 |
|
Average outstanding
customer balance |
$ |
2,405 |
|
|
$ |
2,354 |
|
Balances 60+ days past
due as a percentage of total customer portfolio balance (2)(3) |
9.9 |
% |
|
11.0 |
% |
Re-aged balance as a
percentage of total customer portfolio balance (2)(4) |
23.8 |
% |
|
16.0 |
% |
Account balances
re-aged more than six months (in thousands) |
$ |
80,516 |
|
|
$ |
73,385 |
|
Allowance for bad debts
as a percentage of total customer portfolio balance |
13.6 |
% |
|
13.3 |
% |
Percent of total
customer portfolio balance represented by no-interest option
receivables |
22.3 |
% |
|
28.3 |
% |
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Total applications
processed |
321,373 |
|
|
326,131 |
|
|
909,287 |
|
|
975,363 |
|
Weighted average
origination credit score of sales financed (1) |
611 |
|
|
610 |
|
|
609 |
|
|
610 |
|
Percent of total
applications approved and utilized |
29.1 |
% |
|
32.7 |
% |
|
31.1 |
% |
|
35.1 |
% |
Average down
payment |
2.9 |
% |
|
3.1 |
% |
|
3.2 |
% |
|
3.4 |
% |
Average income of
credit customer at origination |
$ |
43,500 |
|
|
$ |
42,200 |
|
|
$ |
42,700 |
|
|
$ |
41,400 |
|
Percent of retail sales
paid for by: |
|
|
|
|
|
|
|
In-house
financing, including down payments received |
72.0 |
% |
|
72.3 |
% |
|
71.7 |
% |
|
69.8 |
% |
Third-party financing |
15.1 |
% |
|
16.4 |
% |
|
15.8 |
% |
|
15.4 |
% |
Third-party lease-to-own options |
5.7 |
% |
|
5.2 |
% |
|
5.7 |
% |
|
5.1 |
% |
|
92.8 |
% |
|
93.9 |
% |
|
93.2 |
% |
|
90.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(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) The balance of 60+ days past due as a percentage of total
customer portfolio balance as of October 31, 2017 reflects the
impact of first time re-ages related to customers within
FEMA-designated Hurricane Harvey disaster areas.
(4) The re-aged balance as a percentage of total customer
portfolio as of October 31, 2017 includes $71.8 million in first
time re-ages related to customers within FEMA-designated Hurricane
Harvey disaster areas.
CONN'S, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited)(in thousands) |
|
|
October 31, 2017 |
|
January 31, 2017 |
Assets |
|
|
|
Current
Assets: |
|
|
|
Cash and cash
equivalents |
$ |
12,742 |
|
|
$ |
23,566 |
|
Restricted cash |
71,099 |
|
|
110,698 |
|
Customer accounts
receivable, net of allowances |
635,700 |
|
|
702,162 |
|
Other accounts
receivable |
63,203 |
|
|
69,286 |
|
Inventories |
235,479 |
|
|
164,856 |
|
Income taxes
recoverable |
1,194 |
|
|
2,150 |
|
Prepaid expenses and
other current assets |
14,721 |
|
|
14,955 |
|
Total current assets |
1,034,138 |
|
|
1,087,673 |
|
Long-term portion of
customer accounts receivable, net of allowances |
616,665 |
|
|
615,904 |
|
Property and equipment,
net |
144,747 |
|
|
159,202 |
|
Deferred income
taxes |
72,554 |
|
|
71,442 |
|
Other assets |
6,285 |
|
|
6,913 |
|
Total assets |
$ |
1,874,389 |
|
|
$ |
1,941,134 |
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Current maturities of
long-term debt and capital lease obligations |
$ |
65,651 |
|
|
$ |
849 |
|
Accounts payable |
109,738 |
|
|
101,612 |
|
Accrued expenses |
62,403 |
|
|
39,781 |
|
Other current
liabilities |
24,531 |
|
|
25,139 |
|
Total current liabilities |
262,323 |
|
|
167,381 |
|
Deferred rent |
87,152 |
|
|
87,957 |
|
Long-term debt and
capital lease obligations |
973,278 |
|
|
1,144,393 |
|
Other long-term
liabilities |
22,245 |
|
|
23,613 |
|
Total liabilities |
1,344,998 |
|
|
1,423,344 |
|
Stockholders'
equity |
529,391 |
|
|
517,790 |
|
Total liabilities and stockholders' equity |
$ |
1,874,389 |
|
|
$ |
1,941,134 |
|
CONN'S, INC. AND
SUBSIDIARIESNON-GAAP
RECONCILIATIONS(unaudited)(dollars in thousands, except
per share amounts) |
|
RETAIL SEGMENT OPERATING INCOME, AS
ADJUSTED |
|
|
|
|
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Retail segment
operating income, as reported |
$ |
29,586 |
|
|
$ |
33,946 |
|
|
$ |
92,896 |
|
|
$ |
103,316 |
|
Adjustments: |
|
|
|
|
|
|
|
Store and
facility closure costs |
— |
|
|
954 |
|
|
1,349 |
|
|
954 |
|
Impairments from disposals |
— |
|
|
595 |
|
|
— |
|
|
1,980 |
|
Legal and
professional fees related to the exploration of strategic
alternatives and securities-related litigation |
— |
|
|
158 |
|
|
34 |
|
|
747 |
|
Employee
severance |
— |
|
|
280 |
|
|
1,317 |
|
|
1,493 |
|
Indirect
tax audit reserve |
— |
|
|
— |
|
|
2,595 |
|
|
— |
|
Write-off
of capitalized software costs |
5,861 |
|
|
— |
|
|
5,861 |
|
|
— |
|
Executive
management transition costs |
— |
|
|
— |
|
|
— |
|
|
234 |
|
Retail
segment operating income, as adjusted |
$ |
35,447 |
|
|
$ |
35,933 |
|
|
$ |
104,052 |
|
|
$ |
108,724 |
|
Retail segment total
revenues |
291,903 |
|
|
308,370 |
|
|
857,773 |
|
|
959,842 |
|
Retail segment
operating margin: |
|
|
|
|
|
|
|
As reported |
10.1 |
% |
|
11.0 |
% |
|
10.8 |
% |
|
10.8 |
% |
As adjusted |
12.1 |
% |
|
11.7 |
% |
|
12.1 |
% |
|
11.3 |
% |
NET INCOME (LOSS), AS ADJUSTED, AND DILUTED
INCOME (LOSS) PER SHARE, AS ADJUSTED |
|
|
|
|
|
Three Months Ended October
31, |
|
Nine Months Ended October
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income
(loss), as reported |
$ |
1,569 |
|
|
$ |
(3,815 |
) |
|
$ |
3,262 |
|
|
$ |
(25,488 |
) |
Adjustments: |
|
|
|
|
|
|
|
Changes
in estimates |
— |
|
|
— |
|
|
— |
|
|
13,168 |
|
Store and
facility closure costs |
— |
|
|
954 |
|
|
1,349 |
|
|
954 |
|
Impairments from disposals |
— |
|
|
595 |
|
|
— |
|
|
1,980 |
|
Legal and
professional fees related to the exploration of strategic
alternatives and securities-related litigation |
— |
|
|
158 |
|
|
34 |
|
|
747 |
|
Employee
severance |
— |
|
|
280 |
|
|
1,317 |
|
|
1,493 |
|
Indirect
tax audit reserve |
— |
|
|
— |
|
|
2,595 |
|
|
— |
|
Write-off
of capitalized software costs |
5,861 |
|
|
— |
|
|
5,861 |
|
|
— |
|
Executive
management transition costs |
— |
|
|
— |
|
|
— |
|
|
234 |
|
Loss on
extinguishment of debt |
461 |
|
|
— |
|
|
2,907 |
|
|
— |
|
Tax
impact of adjustments |
(2,289 |
) |
|
(719 |
) |
|
(5,092 |
) |
|
(6,159 |
) |
Net income (loss), as adjusted |
$ |
5,602 |
|
|
$ |
(2,547 |
) |
|
$ |
12,233 |
|
|
$ |
(13,071 |
) |
Weighted average common
shares outstanding - Diluted |
31,764,594 |
|
|
30,816,319 |
|
|
31,457,420 |
|
|
30,736,636 |
|
Income (loss)
per share: |
|
|
|
|
|
|
|
As reported |
$ |
0.05 |
|
|
$ |
(0.12 |
) |
|
$ |
0.10 |
|
|
$ |
(0.83 |
) |
As adjusted |
$ |
0.18 |
|
|
$ |
(0.08 |
) |
|
$ |
0.39 |
|
|
$ |
(0.43 |
) |
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"), we provide the following
non-GAAP financial measures: retail segment adjusted operating
income, retail segment adjusted operating margin, adjusted net
income (loss), and adjusted 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 additional
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.
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