Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a
specialty retailer of home goods, including furniture and
mattresses, appliances, and consumer electronics, today announced
its financial results for the quarter ended July 31,
2023.
“Strategic initiatives focused on turning around
our retail performance and better serving our core
credit-constrained consumers are taking hold and continue to
perform in line with our expectations. During the
second quarter, we experienced improving sales trends in our Conn’s
in-house and lease-to-own offerings and record quarterly eCommerce
revenue. In addition, the recent enhancements to our
marketing strategies and credit application process drove a 30.6%
increase in applications during the second quarter, which resulted
in an increase in sales financed through Conn’s in-house credit
offering,” stated Norm Miller, Interim President and Chief
Executive Officer.
“Retail gross margin grew 230 basis points over the
prior year period to the highest level in seven quarters, as we
benefit from pricing and assortment changes we have made since the
end of last year. In addition, credit quality remains stable and in
line with our expectations. As we navigate a fluid economic
environment, we continue to leverage our powerful value proposition
to serve our core credit-constrained consumers and drive sales,
while remaining focused on improving profitability and controlling
credit risk,” concluded Mr. Miller.
"Under Norm's leadership, the Company has quickly
moved to stabilize performance throughout a challenging
macro-economic environment. Conn's return to a strategy focused on
serving the core credit-constrained customer is turning around
retail performance and repositioning the business for growth. The
Board is confident in the direction Conn’s is headed and believes
the Company is well positioned to create lasting value for
shareholders,” added Bob Martin, lead independent director.
Second Quarter Financial Highlights as
Compared to the Prior Fiscal Year Period (Unless Otherwise
Noted):
- Total
consolidated revenue declined 11.5% to $306.9 million, due to a
12.8% decline in total net sales, and a 5.5% reduction in finance
charges and other revenues;
- Same store sales
decreased 15.4%, which is the third quarter of sequential
improvement and an over 1,000 basis point improvement from last
year’s third quarter;
- eCommerce sales
increased 41.5% to a second quarter record of $27.2 million;
- Retail gross margin
increased to 36.9% from 34.6% in the prior year;
- Credit applications
increased by 30.6% year-over-year, which resulted in the first
quarter of positive sales financed through Conn’s in-house credit
offering in six quarters;
- Reported a net
loss of $1.39 per diluted share, compared to net income of $0.09
per diluted share for the same period last fiscal year; and
- The Company
improved its capital position and access to liquidity by closing a
$50 million Delayed Draw Term Loan on July 31, 2023 and closing a
$273.7 million asset-backed security (ABS) transaction on August
17, 2023 demonstrating the Company’s ability to access the capital
markets even during volatile market conditions.
Second Quarter Results
Net loss for the three months ended
July 31, 2023 was $33.5 million, or $1.39 per diluted share,
compared to net income for the three months ended July 31,
2022 of $2.1 million, or $0.09 per diluted share or adjusted net
income of $1.0 million, or $0.04 per diluted share. There were no
non-GAAP adjustments for the three months ended July 31, 2023.
Retail Segment Second Quarter
Results
Retail revenues were $246.3 million for the
three months ended July 31, 2023 compared to $279.8 million
for the three months ended July 31, 2022, a decrease of $33.4
million or 12.0%. The decrease in retail revenue was primarily
driven by a decrease in same store sales of 15.4%. The decrease in
same store sales resulted from lower discretionary spending for
home-related products following several periods of excess consumer
liquidity resulting in the acceleration of sales. The decrease in
same store sales was partially offset by new store growth.
For the three months ended July 31, 2023,
retail segment operating loss was $10.4 million compared to retail
segment operating income of $0.1 million for three months ended
July 31, 2022. The decrease in retail segment operating income was
primarily due to a decrease in revenue as described above, and
higher selling, general and administrative costs ("SG&A"). This
increase was partially offset by an improvement in retail gross
margin.
Retail gross margin for the three months ended
July 31, 2023 was 36.9%, an increase of 230 basis points from the
reported 34.6% for the three months ended July 31, 2022. The
increase in retail gross margin was primarily driven by pricing and
assortment changes, a more profitable product mix and normalizing
freight costs. The increase was partially offset by the
deleveraging of fixed distribution costs.
SG&A for the retail segment during the three
months ended July 31, 2023 was $101.4 million compared to SG&A
for the retail segment of $98.0 million for the three months ended
July 31, 2022. The SG&A increase in the retail segment was
primarily due to an increase in occupancy from new stores,
partially offset by a decline in variable costs and a decline in
labor costs as a result of cost savings initiatives.
The following table presents net sales and
changes in net sales by category:
|
Three Months Ended July 31, |
|
|
|
|
|
Same Store |
(dollars in thousands) |
2023 |
|
% of Total |
|
2022 |
|
% of Total |
|
Change |
|
% Change |
|
% Change |
Furniture and mattress |
$ |
81,267 |
|
|
33.1 |
% |
|
$ |
86,320 |
|
|
30.9 |
% |
|
$ |
(5,053 |
) |
|
(5.9 |
)% |
|
(10.2 |
)% |
Home appliance |
|
90,584 |
|
|
36.8 |
|
|
|
120,748 |
|
|
43.2 |
|
|
|
(30,164 |
) |
|
(25.0 |
) |
|
(27.2 |
) |
Consumer electronics |
|
26,941 |
|
|
11.0 |
|
|
|
31,860 |
|
|
11.4 |
|
|
|
(4,919 |
) |
|
(15.4 |
) |
|
(17.7 |
) |
Home office |
|
8,982 |
|
|
3.7 |
|
|
|
8,857 |
|
|
3.2 |
|
|
|
125 |
|
|
1.4 |
|
|
(1.1 |
) |
Other |
|
17,034 |
|
|
6.9 |
|
|
|
7,664 |
|
|
2.7 |
|
|
|
9,370 |
|
|
122.3 |
|
|
100.6 |
|
Product sales |
|
224,808 |
|
|
91.5 |
|
|
|
255,449 |
|
|
91.4 |
|
|
|
(30,641 |
) |
|
(12.0 |
) |
|
(15.5 |
) |
Repair service agreement commissions(1) |
|
18,757 |
|
|
7.6 |
|
|
|
21,615 |
|
|
7.7 |
|
|
|
(2,858 |
) |
|
(13.2 |
) |
|
(14.3 |
) |
Service revenues |
|
2,274 |
|
|
0.9 |
|
|
|
2,448 |
|
|
0.9 |
|
|
|
(174 |
) |
|
(7.1 |
) |
|
|
Total net sales |
$ |
245,839 |
|
|
100.0 |
% |
|
$ |
279,512 |
|
|
100.0 |
% |
|
$ |
(33,673 |
) |
|
(12.0 |
)% |
|
(15.4 |
)% |
(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 $63.1 million for the three
months ended July 31, 2023 compared to $66.8 million for the
three months ended July 31, 2022, a decrease of $3.7 million
or 5.5%. The decrease in credit revenue was primarily due to a 6.4%
decrease in the average outstanding balance of the customer
accounts receivable portfolio. The decrease was partially offset by
an increase in insurance commissions and late fee revenues.
Provision for bad debts increased to $33.2 million
for the three months ended July 31, 2023 from $26.8 million
for the three months ended July 31, 2022, an overall change of
$6.4 million. The year-over-year increase was primarily driven by a
year-over-year increase in net charge-offs of $2.7 million
during the three months ended July 31, 2023 compared to the three
months ended July 31, 2022. For the three months ended July 31,
2023, the allowance for bad debts was reduced by $5.6 million
compared to a reduction in the allowance for bad debts of $9.3
million for the three months ending July 31, 2022. This resulted in
an increase to the provision for bad debts of $3.7 million and was
due primarily to a smaller decline in the customer accounts
receivable portfolio balance in the current period.
Credit segment operating loss was $4.5 million
for the three months ended July 31, 2023, compared to
operating income of $7.9 million for the three months ended
July 31, 2022. The decrease was primarily due to the
increase in the provision for bad debts and 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, 2023, to be filed with the Securities and Exchange
Commission on August 30, 2023 (the “Second Quarter Form
10-Q”).
Store and Facilities Update
The Company opened four new standalone stores
during the second quarter of fiscal year 2024 bringing the total
store count to 175 in 15 states. During fiscal year 2024, the
Company plans to open a total of ten standalone locations.
Liquidity and Capital
Resources
On July 31, 2023, the Company entered into a
$50.0 million three-year Delayed Draw Term Loan with Stephens
Investments Holding, LLC and Stephens Group, LLC. Proceeds from
borrowings made under the Delayed Draw Term Loan Agreement may be
used by the Company for general corporate purposes. The Delayed
Draw Term Loan is secured by liens on substantially all of the
assets of the Company and its subsidiaries.
On August 17, 2023, the Company completed an ABS
transaction resulting in the issuance and sale of $273.7 million
aggregate principal amount of Class A, Class B and Class C Notes
secured by customer accounts receivables and restricted cash held
by a consolidated VIE, which resulted in net proceeds of $266.2
million, net of debt issuance costs.
As of July 31, 2023, the Company had $181.1
million of immediately available borrowing capacity under its
$650.0 million revolving credit facility. In addition, the Company
had $50.0 million of borrowing capacity available under the Delayed
Draw Term Loan resulting in a total immediately available borrowing
capacity of $231.1 million. The Company also had $8.6 million of
unrestricted cash available for use.
Conference Call Information
The Company will host a conference call on
August 30, 2023, at 10 a.m. CT / 11 a.m. ET, to discuss its
three months ended July 31, 2023 financial results. 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 2024 conference call presentation will
be available at ir.conns.com.
Replay of the telephonic call can be accessed
through September 6, 2023 by dialing 844-512-2921 or 412-317-6671
and Conference ID: 13738737.
About Conn’s, Inc.
Conn's HomePlus (NASDAQ: CONN) is a specialty
retailer of home goods, including furniture and mattresses,
appliances and consumer electronics. With 175 stores across 15
states and online at Conns.com, our approximately 4,000 employees
strive to help all customers create a home they love through access
to high-quality products, next-day delivery and personalized
payment options, including our flexible, in-house credit program.
Additional information can be found by visiting our investor
relations website at https://ir.conns.com and social channels
(@connshomeplus on Twitter, Instagram, Facebook and LinkedIn).
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; expansion of our
e-commerce business; 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 or our Delayed Draw Term Loan; 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, 2023 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 SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)(dollars
in thousands, except per share amounts) |
|
|
|
|
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Total net sales |
$ |
243,645 |
|
|
$ |
279,512 |
|
|
$ |
466,192 |
|
|
$ |
551,775 |
|
Finance charges and other revenues |
|
63,261 |
|
|
|
67,120 |
|
|
|
125,284 |
|
|
|
134,677 |
|
Total revenues |
|
306,906 |
|
|
|
346,632 |
|
|
|
591,476 |
|
|
|
686,452 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
|
153,985 |
|
|
|
182,718 |
|
|
|
301,918 |
|
|
|
361,100 |
|
Selling, general and administrative expense |
|
134,974 |
|
|
|
130,142 |
|
|
|
264,212 |
|
|
|
262,925 |
|
Provision for bad debts |
|
33,302 |
|
|
|
27,226 |
|
|
|
62,211 |
|
|
|
41,956 |
|
Charges and credits, net |
|
— |
|
|
|
(1,484 |
) |
|
|
(807 |
) |
|
|
(1,484 |
) |
Total costs and expenses |
|
322,261 |
|
|
|
338,602 |
|
|
|
627,534 |
|
|
|
664,497 |
|
Operating (loss) income |
|
(15,355 |
) |
|
|
8,030 |
|
|
|
(36,058 |
) |
|
|
21,955 |
|
Interest expense |
|
16,787 |
|
|
|
6,808 |
|
|
|
33,166 |
|
|
|
12,329 |
|
(Loss) income before income taxes |
|
(32,142 |
) |
|
|
1,222 |
|
|
|
(69,224 |
) |
|
|
9,626 |
|
Provision (benefit) for income taxes |
|
1,375 |
|
|
|
(907 |
) |
|
|
(327 |
) |
|
|
1,276 |
|
Net (loss) income |
$ |
(33,517 |
) |
|
$ |
2,129 |
|
|
$ |
(68,897 |
) |
|
$ |
8,350 |
|
(Loss) income per share: |
|
|
|
|
|
|
|
Basic |
$ |
(1.39 |
) |
|
$ |
0.09 |
|
|
$ |
(2.85 |
) |
|
$ |
0.34 |
|
Diluted |
$ |
(1.39 |
) |
|
$ |
0.09 |
|
|
$ |
(2.85 |
) |
|
$ |
0.34 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
24,190,035 |
|
|
|
23,833,100 |
|
|
|
24,162,550 |
|
|
|
24,306,524 |
|
Diluted |
|
24,190,035 |
|
|
|
23,916,269 |
|
|
|
24,162,550 |
|
|
|
24,461,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONN’S, INC. AND SUBSIDIARIESCONDENSED
RETAIL SEGMENT FINANCIAL INFORMATION(unaudited)(dollars in
thousands) |
|
|
|
|
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Product sales |
$ |
224,808 |
|
|
$ |
255,449 |
|
|
$ |
429,231 |
|
|
$ |
505,422 |
|
Repair service agreement commissions |
|
18,757 |
|
|
|
21,615 |
|
|
|
35,662 |
|
|
|
41,452 |
|
Service revenues |
|
2,274 |
|
|
|
2,448 |
|
|
|
4,432 |
|
|
|
4,901 |
|
Total net sales |
|
245,839 |
|
|
|
279,512 |
|
|
|
469,325 |
|
|
|
551,775 |
|
Finance charges and other |
|
497 |
|
|
|
273 |
|
|
|
1,015 |
|
|
|
544 |
|
Total revenues |
|
246,336 |
|
|
|
279,785 |
|
|
|
470,340 |
|
|
|
552,319 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
|
155,242 |
|
|
|
182,718 |
|
|
|
303,804 |
|
|
|
361,100 |
|
Selling, general and administrative expense |
|
101,420 |
|
|
|
98,035 |
|
|
|
197,245 |
|
|
|
194,065 |
|
Provision for bad debts |
|
93 |
|
|
|
409 |
|
|
|
199 |
|
|
|
588 |
|
Charges and credits, net |
|
— |
|
|
|
(1,484 |
) |
|
|
(1,184 |
) |
|
|
(1,484 |
) |
Total costs and expenses |
|
256,755 |
|
|
|
279,678 |
|
|
|
500,064 |
|
|
|
554,269 |
|
Operating (loss) income |
$ |
(10,419 |
) |
|
$ |
107 |
|
|
$ |
(29,724 |
) |
|
$ |
(1,950 |
) |
Retail gross margin |
|
36.9 |
% |
|
|
34.6 |
% |
|
|
35.3 |
% |
|
|
34.6 |
% |
Selling, general and administrative expense as percent of
revenues |
|
41.2 |
% |
|
|
35.0 |
% |
|
|
41.9 |
% |
|
|
35.1 |
% |
Operating margin |
(4.2 |
)% |
|
|
— |
% |
|
(6.3 |
)% |
|
(0.4 |
)% |
Store count: |
|
|
|
|
|
|
|
Beginning of period |
|
171 |
|
|
|
161 |
|
|
|
168 |
|
|
|
158 |
|
Opened |
|
4 |
|
|
|
2 |
|
|
|
7 |
|
|
|
5 |
|
End of period |
|
175 |
|
|
|
163 |
|
|
|
175 |
|
|
|
163 |
|
|
|
|
|
|
|
|
|
|
CONN’S, INC. AND SUBSIDIARIESCONDENSED
CREDIT SEGMENT FINANCIAL INFORMATION(unaudited)(dollars in
thousands) |
|
|
|
|
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Finance charges and other revenues |
$ |
63,091 |
|
|
$ |
66,847 |
|
|
$ |
124,878 |
|
|
$ |
134,133 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of goods sold |
$ |
579 |
|
|
|
— |
|
|
|
694 |
|
|
|
— |
|
Selling, general and administrative expense |
|
33,804 |
|
|
|
32,107 |
|
|
|
67,467 |
|
|
|
68,860 |
|
Provision for bad debts |
|
33,209 |
|
|
|
26,817 |
|
|
|
62,012 |
|
|
|
41,368 |
|
Total costs and expenses |
|
67,592 |
|
|
|
58,924 |
|
|
|
130,173 |
|
|
|
110,228 |
|
Operating (loss) income |
|
(4,501 |
) |
|
|
7,923 |
|
|
|
(5,295 |
) |
|
|
23,905 |
|
Interest expense |
|
16,680 |
|
|
|
6,808 |
|
|
|
33,059 |
|
|
|
12,329 |
|
(Loss) income before income taxes |
$ |
(21,181 |
) |
|
$ |
1,115 |
|
|
$ |
(38,354 |
) |
|
$ |
11,576 |
|
Selling, general and administrative expense as percent of
revenues |
|
53.6 |
% |
|
|
48.0 |
% |
|
|
54.0 |
% |
|
|
51.3 |
% |
Selling, general and administrative expense as percent of average
outstanding customer accounts receivable balance (annualized) |
|
13.7 |
% |
|
|
12.2 |
% |
|
|
13.6 |
% |
|
|
12.8 |
% |
Operating margin |
(7.1 |
)% |
|
|
11.9 |
% |
|
(4.2 |
)% |
|
|
17.8 |
% |
|
|
|
|
|
|
|
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|
CONN’S, INC. AND SUBSIDIARIESCUSTOMER
ACCOUNTS RECEIVABLE PORTFOLIO STATISTICS(unaudited) |
|
|
|
As of July 31, |
|
2023 |
|
2022 |
Weighted average credit score of outstanding balances(1) |
|
615 |
|
|
|
611 |
|
Average outstanding customer balance |
$ |
2,645 |
|
|
$ |
2,508 |
|
Balances 60+ days past due as
a percentage of total customer portfolio carrying value(2)(3) |
|
11.1 |
% |
|
|
11.0 |
% |
Re-aged balance as a percentage of total customer portfolio
carrying value(2)(3) |
|
15.9 |
% |
|
|
16.1 |
% |
Carrying value of account balances re-aged more than six months (in
thousands)(3) |
$ |
31,085 |
|
|
$ |
35,808 |
|
Allowance for bad debts and
uncollectible interest as a percentage of total customer accounts
receivable portfolio balance |
|
16.6 |
% |
|
|
17.2 |
% |
Percent of total customer
accounts receivable portfolio balance represented by no-interest
option receivables |
|
35.9 |
% |
|
|
34.0 |
% |
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Total applications processed |
|
341,118 |
|
|
|
257,381 |
|
|
|
634,949 |
|
|
|
525,085 |
|
Weighted average origination credit score of sales financed(1) |
|
623 |
|
|
|
620 |
|
|
|
621 |
|
|
|
620 |
|
Percent of total applications approved and utilized |
|
21.5 |
% |
|
|
23.5 |
% |
|
|
20.6 |
% |
|
|
21.8 |
% |
Average income of credit customer at origination |
$ |
52,600 |
|
|
$ |
50,800 |
|
|
$ |
51,800 |
|
|
$ |
50,500 |
|
Percent of retail sales paid for by: |
|
|
|
|
|
|
|
In-house financing, including down payments received |
|
62.2 |
% |
|
|
52.1 |
% |
|
|
60.7 |
% |
|
|
51.0 |
% |
Third-party financing |
|
14.1 |
% |
|
|
18.9 |
% |
|
|
14.7 |
% |
|
|
18.4 |
% |
Third-party lease-to-own option |
|
8.0 |
% |
|
|
6.8 |
% |
|
|
8.1 |
% |
|
|
7.1 |
% |
|
|
84.3 |
% |
|
|
77.8 |
% |
|
|
83.5 |
% |
|
|
76.5 |
% |
(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.
|
CONN’S, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(in thousands) |
|
|
|
|
|
July 31,2023 |
|
January 31,2023 |
Assets |
(unaudited) |
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
8,560 |
|
|
$ |
19,534 |
|
Restricted cash |
|
29,020 |
|
|
|
40,837 |
|
Customer accounts receivable, net of allowances |
|
426,223 |
|
|
|
421,683 |
|
Other accounts receivable |
|
62,437 |
|
|
|
56,887 |
|
Inventories |
|
234,478 |
|
|
|
240,783 |
|
Income taxes receivable |
|
38,976 |
|
|
|
38,436 |
|
Prepaid expenses and other current assets |
|
13,962 |
|
|
|
12,937 |
|
Total current assets |
|
813,656 |
|
|
|
831,097 |
|
Long-term portion of customer accounts receivable, net of
allowances |
|
368,238 |
|
|
|
389,054 |
|
Property and equipment, net |
|
221,881 |
|
|
|
218,956 |
|
Operating lease right-of-use assets |
|
284,457 |
|
|
|
262,104 |
|
Other assets |
|
13,971 |
|
|
|
15,004 |
|
Total assets |
$ |
1,702,203 |
|
|
$ |
1,716,215 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Short-term debt and current finance lease obligations |
$ |
9,039 |
|
|
$ |
937 |
|
Accounts payable |
|
72,451 |
|
|
|
71,685 |
|
Accrued expenses |
|
92,287 |
|
|
|
82,619 |
|
Operating lease liability - current |
|
60,294 |
|
|
|
53,208 |
|
Other current liabilities |
|
13,675 |
|
|
|
13,912 |
|
Total current liabilities |
|
247,746 |
|
|
|
222,361 |
|
Operating lease liability - non current |
|
349,654 |
|
|
|
331,109 |
|
Long-term debt and finance lease obligations |
|
639,950 |
|
|
|
636,079 |
|
Deferred tax liability |
|
1,952 |
|
|
|
2,041 |
|
Other long-term liabilities |
|
23,579 |
|
|
|
22,215 |
|
Total liabilities |
|
1,262,881 |
|
|
|
1,213,805 |
|
Stockholders’ equity |
|
439,322 |
|
|
|
502,410 |
|
Total liabilities and stockholders’ equity |
$ |
1,702,203 |
|
|
$ |
1,716,215 |
|
|
|
|
|
|
|
|
|
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: retail segment adjusted
operating loss, adjusted net (loss) income, adjusted net (loss)
earnings 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.
|
RETAIL SEGMENT ADJUSTED OPERATING LOSS |
|
|
|
|
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Retail segment operating (loss) income, as
reported |
$ |
(10,419 |
) |
|
$ |
107 |
|
|
$ |
(29,724 |
) |
|
$ |
(1,950 |
) |
Adjustments: |
|
|
|
|
|
|
|
Store closure(1) |
|
— |
|
|
|
— |
|
|
|
2,340 |
|
|
|
— |
|
Asset sale(2) |
|
— |
|
|
|
— |
|
|
|
(3,147 |
) |
|
|
— |
|
Lease termination(3) |
|
— |
|
|
|
(1,484 |
) |
|
|
— |
|
|
|
(1,484 |
) |
Retail segment operating loss, as adjusted |
$ |
(10,419 |
) |
|
$ |
(1,377 |
) |
|
$ |
(30,531 |
) |
|
$ |
(3,434 |
) |
(1) Represents store closure costs due to the
impairment of assets associated with the decision to end the
store-within-a-store test with Belk, Inc.
(2) Represents a gain related to the sale of a
single store location, net of asset disposal costs.
(3) Represents a gain on the termination of a
lease.
|
ADJUSTED NET (LOSS) INCOME AND ADJUSTED NET (LOSS) INCOME
PER DILUTED SHARE |
|
|
|
|
|
Three Months EndedJuly 31, |
|
Six Months EndedJuly 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net (loss) income, as reported |
$ |
(33,517 |
) |
|
$ |
2,129 |
|
|
$ |
(68,897 |
) |
|
$ |
8,350 |
|
Adjustments: |
|
|
|
|
|
|
|
Store closure(1) |
|
— |
|
|
|
— |
|
|
|
2,340 |
|
|
|
— |
|
Asset sale(2) |
|
— |
|
|
|
— |
|
|
|
(3,147 |
) |
|
|
— |
|
Lease termination(3) |
|
— |
|
|
|
(1,484 |
) |
|
|
— |
|
|
|
(1,484 |
) |
Tax impact of adjustments(4) |
|
— |
|
|
|
337 |
|
|
|
705 |
|
|
|
337 |
|
Net (loss) income, as adjusted |
$ |
(33,517 |
) |
|
$ |
982 |
|
|
$ |
(68,999 |
) |
|
$ |
7,203 |
|
Weighted average common shares outstanding - Diluted |
|
24,190,035 |
|
|
|
23,916,269 |
|
|
|
24,162,550 |
|
|
|
24,461,836 |
|
Net (loss) earnings per share: |
|
|
|
|
|
|
|
As reported |
$ |
(1.39 |
) |
|
$ |
0.09 |
|
|
$ |
(2.85 |
) |
|
$ |
0.34 |
|
As adjusted |
$ |
(1.39 |
) |
|
$ |
0.04 |
|
|
$ |
(2.86 |
) |
|
$ |
0.29 |
|
(1) Represents store closure costs due to the
impairment of assets associated with the decision to end the
store-within-a-store test with Belk, Inc.
(2) Represents a gain related to the sale of a
single store location, net of asset disposal costs.
(3) Represents a gain on the termination of a
lease.
(4) Represents the tax effect of the adjusted
items based on the applicable statutory tax rate.
|
NET DEBT |
|
|
|
July 31, |
|
2023 |
|
2022 |
Debt, as reported |
|
|
|
Current finance lease obligations and other |
$ |
9,039 |
|
|
$ |
909 |
|
Long-term debt and finance lease obligations |
|
639,950 |
|
|
|
602,412 |
|
Total debt |
$ |
648,989 |
|
|
$ |
603,321 |
|
Cash, as reported |
|
|
|
Cash and cash equivalents |
$ |
8,560 |
|
|
$ |
24,256 |
|
Restricted Cash |
|
29,020 |
|
|
|
47,855 |
|
Total cash |
$ |
37,580 |
|
|
$ |
72,111 |
|
Net debt |
$ |
611,409 |
|
|
$ |
531,210 |
|
Ending portfolio balance, as reported |
$ |
987,102 |
|
|
$ |
1,042,777 |
|
Net debt as a percentage of the portfolio
balance |
|
61.9 |
% |
|
|
50.9 |
% |
|
|
|
|
|
|
|
|
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