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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C.  20549 
FORM 10-Q
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 31, 2022
 or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from to .
Commission File Number 001-34956
CONN’S, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1672840
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2445 Technology Forest Blvd., Suite 800, The Woodlands, TX
77381
(Address of principal executive offices)
(Zip Code)
 Registrant’s telephone number, including area code:  (936) 230-5899
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareCONNNASDAQ Global Select Market
Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý  No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
ý
Non-accelerated filer
o
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes   No ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 22, 2022: 
Class Outstanding
Common stock, $0.01 par value per share 23,902,888


Table of Contents
CONN’S, INC. AND SUBSIDIARIES

FORM 10-Q
FOR THE FISCAL QUARTER ENDED JULY 31, 2022

TABLE OF CONTENTS
Page No.
PART I.FINANCIAL INFORMATION 
Item 1.Financial Statements 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II.OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
This Quarterly Report on Form 10-Q includes our trademarks such as “Conn’s,” “Conn’s HomePlus,” “YE$ YOU’RE APPROVED,” “YES Money,” “YE$ Money,” “YES Lease,” “YE$ Lease,” and our logos, which are protected under applicable intellectual property laws and are the property of Conn’s, Inc.  This report also contains trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.  Solely for convenience, trademarks and trade names referred to in this Quarterly Report may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.
References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its consolidated bankruptcy-remote variable-interest entities (“VIEs”), and its wholly-owned subsidiaries.



Table of Contents
PART I.    FINANCIAL INFORMATION
ITEM 1.     FINANCIAL STATEMENTS
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
July 31,
2022
January 31,
2022
Assets(unaudited)
Current assets:
Cash and cash equivalents$24,256 $7,707 
Restricted cash (includes VIE balances of $45,773 and $29,872, respectively)
47,855 31,930 
Customer accounts receivable, net of allowances (includes VIE balances of $311,745 and $212,259, respectively)
434,824 455,787 
Other accounts receivable55,565 63,055 
Inventories262,952 246,826 
Income taxes receivable6,813 6,745 
Prepaid expenses and other current assets10,101 8,756 
Total current assets842,366 820,806 
Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $335,710 and $167,905, respectively)
398,127 432,431 
Property and equipment, net210,814 192,763 
Operating lease right-of-use assets252,653 256,267 
Other assets50,849 52,199 
Total assets$1,754,809 $1,754,466 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Current finance lease obligations$909 $889 
Accounts payable77,691 74,705 
Accrued compensation and related expenses13,083 36,677 
Accrued expenses76,851 73,035 
Operating lease liability - current57,940 54,534 
Income taxes payable2,315 3,007 
Deferred revenues and other credits13,202 15,569 
Total current liabilities241,991 258,416 
Operating lease liability - non current321,104 330,439 
Long-term debt and finance lease obligations (includes VIE balances of $597,655 and $367,925, respectively)
602,412 522,149 
Deferred tax liability 7,351 
Other long-term liabilities29,425 21,292 
Total liabilities1,194,932 1,139,647 
Commitments and contingencies (Note 6)
Stockholders’ equity:  
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding)
  
Common stock ($0.01 par value, 100,000,000 shares authorized; 33,273,456 and 33,015,053 shares issued, respectively)
332 330 
Treasury stock (at cost; 9,404,920 shares and 6,088,920 shares issued, respectively)
(193,370)(125,145)
Additional paid-in capital145,350 140,419 
Retained earnings607,565 599,215 
Total stockholders’ equity559,877 614,819 
Total liabilities and stockholders’ equity
$1,754,809 $1,754,466 
See notes to condensed consolidated financial statements.

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Table of Contents
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and dollars in thousands, except per share amounts)
Three Months Ended
July 31,
Six Months Ended
July 31,
 2022202120222021
Revenues:
Product sales$255,449 $320,245 $505,422 $589,456 
Repair service agreement commissions21,615 23,700 41,452 42,831 
Service revenues2,448 2,840 4,901 5,794 
Total net sales279,512 346,785 551,775 638,081 
Finance charges and other revenues67,120 71,598 134,677 144,004 
Total revenues346,632 418,383 686,452 782,085 
Costs and expenses:
Cost of goods sold182,718 216,042 361,100 400,921 
Selling, general and administrative expense130,142 137,870 262,925 263,919 
Provision (benefit) for bad debts27,226 10,262 41,956 (6,874)
Charges and credits(1,484) (1,484) 
Total costs and expenses338,602 364,174 664,497 657,966 
Operating income8,030 54,209 21,955 124,119 
Interest expense6,808 6,088 12,329 15,292 
Loss on extinguishment of debt   1,218 
Income before income taxes1,222 48,121 9,626 107,609 
Provision (benefit) for income taxes(907)11,117 1,276 25,207 
Net income $2,129 $37,004 $8,350 $82,402 
Income per share:
Basic$0.09 $1.26 $0.34 $2.80 
Diluted$0.09 $1.22 $0.34 $2.74 
Weighted average common shares outstanding:
Basic23,833,100 29,438,605 24,306,524 29,382,162 
Diluted23,916,269 30,212,448 24,461,836 30,072,401 
See notes to condensed consolidated financial statements.

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Table of Contents
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited and in thousands, except for number of shares)
Additional Paid-in Capital
Common StockRetained EarningsTreasury Stock
SharesAmountSharesAmountTotal
Balance January 31, 202233,015,053 $330 $140,419 $599,215 (6,088,920)$(125,145)$614,819 
Exercise of options and vesting of restricted stock, net of withholding tax163,032 2 (2,029)— — — (2,027)
Issuance of common stock under Employee Stock Purchase Plan14,192 — 194 — — — 194 
Stock-based compensation— — 3,409 — — — 3,409 
Common stock repurchase— — — — (3,316,000)(68,225)(68,225)
Net income— — — 6,221 — — 6,221 
Balance April 30, 202233,192,277 $332 $141,993 $605,436 (9,404,920)$(193,370)$554,391 
Exercise of options and vesting of restricted stock, net of withholding tax49,931 — (83)— — — (83)
Issuance of common stock under Employee Stock Purchase Plan31,248 — 216 — — — 216 
Stock-based compensation— — 3,224 — — — 3,224 
Net income— — — 2,129 — — 2,129 
Balance July 31, 202233,273,456 $332 $145,350 $607,565 (9,404,920)$(193,370)$559,877 
Additional Paid-in Capital
Common StockRetained EarningsTreasury Stock
SharesAmountSharesAmountTotal
Balance January 31, 202132,711,623 $327 $132,108 $491,010 (3,485,441)$(66,290)$557,155 
Exercise of options and vesting of restricted stock, net of withholding tax115,159 1 (999)— — — (998)
Issuance of common stock under Employee Stock Purchase Plan18,240  180 — — — 180 
Stock-based compensation— — 2,039 — — — 2,039 
Net income— — — 45,398 — — 45,398 
Balance April 30, 202132,845,022 $328 $133,328 $536,408 (3,485,441)$(66,290)$603,774 
Exercise of options and vesting of restricted stock, net of withholding tax112,223 1 (229)— — — (228)
Issuance of common stock under Employee Stock Purchase Plan10,563 — 187 — — — 187 
Stock-based compensation— — 1,713 — — — 1,713 
Net income— — — 37,004 — — 37,004 
Balance July 31, 202132,967,808 $329 $134,999 $573,412 (3,485,441)$(66,290)$642,450 
See notes to condensed consolidated financial statements.

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CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Six Months Ended July 31,
 20222021
Cash flows from operating activities:
Net income$8,350 $82,402 
Adjustments to reconcile net income to net cash from operating activities:  
Depreciation22,781 22,836 
Change in right-of-use asset19,409 17,005 
Amortization of debt issuance costs2,863 3,254 
Provision (benefit) for bad debts and uncollectible interest61,521 8,071 
Stock-based compensation expense6,633 3,752 
Charges, net of credits(1,484) 
Deferred income taxes25 17,251 
Loss on extinguishment of debt 1,218 
Loss on disposal of property and equipment441 104 
Tenant improvement allowances received from landlords8,048 10,864 
Change in operating assets and liabilities:  
Customer accounts receivable(5,666)24,873 
Other accounts receivables6,902 6,296 
Inventories(16,126)(27,199)
Other assets(825)(11,390)
Accounts payable2,987 19,633 
Accrued expenses(22,373)17,907 
Operating leases(28,288)(26,293)
Income taxes(166)5,622 
Deferred revenues and other credits(2,206)733 
Net cash provided by operating activities62,826 176,939 
Cash flows from investing activities:  
Purchases of property and equipment(35,146)(19,162)
Net cash used in investing activities(35,146)(19,162)
Cash flows from financing activities:  
Proceeds from issuance of asset-backed notes407,690 62,900 
Payments on asset-backed notes(174,437)(261,356)
Borrowings under revolving credit facility662,364 740,850 
Payments on revolving credit facility(811,364)(573,850)
Payments of debt issuance costs and amendment fees(5,634)(4,231)
Proceeds from stock issued under employee benefit plans410 367 
Tax payments associated with equity-based compensation transactions(2,110)(1,227)
Payment from extinguishment of debt (141,279)
Purchase of treasury stock(71,696) 
Other(429)(514)
Net cash (provided by) used in financing activities4,794 (178,340)
Net change in cash, cash equivalents and restricted cash32,474 (20,563)
Cash, cash equivalents and restricted cash, beginning of period39,637 60,260 
Cash, cash equivalents and restricted cash, end of period$72,111 $39,697 
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities$1 $493 
Right-of-use assets obtained in exchange for new operating lease liabilities$21,728 $12,415 
Property and equipment purchases not yet paid$15,184 $5,962 
Accrual for purchase of treasury stock$(3,471)$ 
Supplemental cash flow data:
Cash interest paid$8,340 $10,931 
Cash income taxes paid, net$1,418 $2,334 
See notes to condensed consolidated financial statements.

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Table of Contents
CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.     Summary of Significant Accounting Policies 
Business. Conn’s, Inc., a Delaware corporation, is a holding company with no independent assets or operations other than its investments in its subsidiaries. References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its subsidiaries. Conn’s is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. We operate an integrated and scalable business through our retail stores and website. Our complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives.
We operate two reportable segments: retail and credit. Our retail stores bear the “Conn’s HomePlus” name with all of our stores providing the same products and services to a common customer group. Our stores follow the same procedures and methods in managing their operations. Our retail business and credit business are operated independently from each other. The credit segment is dedicated to providing short- and medium-term financing to our retail customers. The retail segment is not involved in credit approval decisions or collection efforts. Our management evaluates performance and allocates resources based on the operating results of the retail and credit segments.
Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements of Conn’s, Inc. and its wholly-owned subsidiaries, including its Variable Interest Entities (“VIEs”), have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) and prevailing industry practice for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 31, 2022 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 (the “2022 Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on March 29, 2022.
Fiscal Year. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends.
Principles of Consolidation. The Condensed Consolidated Financial Statements include the accounts of Conn’s, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. 
Variable Interest Entities. VIEs are consolidated if the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has (i) the power to direct the activities that most significantly impact the performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
We securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. We retain the servicing of the securitized portfolio and have a variable interest in each corresponding VIE by holding the residual equity. We have determined that we are the primary beneficiary of each respective VIE because (i) our servicing responsibilities for the securitized portfolio give us the power to direct the activities that most significantly impact the performance of the VIE and (ii) our variable interest in the VIE gives us the obligation to absorb losses and the right to receive residual returns that potentially could be significant. As a result, we consolidate the respective VIEs within our Condensed Consolidated Financial Statements.
Refer to Note 5, Debt and Financing Lease Obligations, and Note 7, Variable Interest Entities, for additional information.
Use of Estimates. The preparation of financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ, even significantly, from these estimates. Management evaluates its estimates and related assumptions regularly, including those related to the allowance for doubtful accounts and allowances for no-interest option credit programs, which are particularly sensitive given the size of our customer portfolio balance.
Cash and Cash Equivalents. As of July 31, 2022 and January 31, 2022, cash and cash equivalents included cash and credit card deposits in transit. Credit card deposits in transit included in cash and cash equivalents were $7.8 million and $5.2 million as of July 31, 2022 and January 31, 2022, respectively. 

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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Cash. The restricted cash balance as of July 31, 2022 and January 31, 2022 includes $40.6 million and $25.7 million, respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $5.2 million and $4.2 million, respectively, of cash held by the VIEs as additional collateral for the asset-backed notes.
Customer Accounts Receivable. Customer accounts receivable reported in the Condensed Consolidated Balance Sheet includes total receivables managed, including both those transferred to the VIEs and those not transferred to the VIEs. Customer accounts receivable are recognized at the time the customer takes possession of the product. Expected lifetime losses on customer accounts receivable are recognized upon origination through an allowance for credit losses account that is deducted from the customer account receivable balance and presented net. Customer accounts receivable include the net of unamortized deferred fees charged to customers and origination costs. Customer receivables are considered delinquent if a payment has not been received on the scheduled due date. Accounts that are delinquent more than 209 days as of the end of a month are charged-off against the allowance for doubtful accounts along with interest accrued subsequent to the last payment.
In an effort to mitigate losses on our accounts receivable, we may make loan modifications to a borrower experiencing financial difficulty. The loan modifications are intended to maximize net cash flow after expenses and avoid the need to exercise legal remedies available to us. We may extend or “re-age” a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to refinance their account, which typically does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extend the term. We consider accounts that have been re-aged in excess of three months or refinanced as Troubled Debt Restructurings (“TDR” or “Restructured Accounts”).
Interest Income on Customer Accounts Receivable. Interest income, which includes interest income and amortization of deferred fees and origination costs, is recorded using the interest method and is reflected in finance charges and other revenues. Typically, interest income is recorded until the customer account is paid off or charged-off and we provide an allowance for estimated uncollectible interest. We reserve for interest that is more than 60 days past due. Any contractual interest income received from customers in excess of the interest income calculated using the interest method is recorded as deferred revenue on our balance sheets. At July 31, 2022 and January 31, 2022, there was $8.3 million and $8.6 million, respectively, of deferred interest included in deferred revenues and other credits and other long-term liabilities. The deferred interest will ultimately be brought into income as the accounts pay off or charge-off.
We offer a 12-month no-interest option program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived. Interest income is recognized based on estimated accrued interest earned to date on all no-interest option finance programs with an offsetting reserve for those customers expected to satisfy the requirements of the program based on our historical experience.
We recognize interest income on TDR accounts using the interest income method, which requires reporting interest income equal to the increase in the net carrying amount of the loan attributable to the passage of time. Cash proceeds and other adjustments are applied to the net carrying amount such that it equals the present value of expected future cash flows.
We place accounts in non-accrual status when legally required. Payments received on non-accrual loans are applied to principal and reduce the balance of the loan. At July 31, 2022 and January 31, 2022, the carrying value of customer accounts receivable in non-accrual status was $7.0 million and $5.9 million, respectively. At July 31, 2022 and January 31, 2022, the carrying value of customer accounts receivable that were past due 90 days or more and still accruing interest totaled $82.1 million and $84.1 million, respectively. At July 31, 2022 and January 31, 2022, the carrying value of customer accounts receivable in a bankruptcy status that were less than 60 days past due of $6.5 million and $5.5 million, respectively, were included within the customer receivables balance carried in non-accrual status.
Allowance for Doubtful Accounts. The determination of the amount of the allowance for credit losses is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the allowance for credit losses. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers to service their debts or our ability to collect will impact the future performance of the portfolio.
We establish an allowance for credit losses, including estimated uncollectible interest, to cover expected credit losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer accounts receivable portfolio balance consists of a large number of relatively small, homogeneous accounts. None of our accounts are large enough to warrant individual evaluation for impairment. The allowance for credit losses is measured on a collective (pool) basis where similar risk characteristics exist. The allowance for credit losses is determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis.

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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We use a risk-based, pool-level segmentation framework to calculate the expected loss rate. This framework is based on our historical gross charge-off history. In addition to adjusted historical gross charge-off rates, estimates of post-charge-off recoveries, including cash payments from customers, sales tax recoveries from taxing jurisdictions, and payments received under credit insurance and repair service agreement (“RSA”) policies are also considered. We also consider forward-looking economic forecasts based on a statistical analysis of economic factors (specifically, forecast of unemployment rates over the reasonable and supportable forecasting period). To the extent that situations and trends arise which are not captured in our model, management will layer on additional qualitative adjustments.
Pursuant to ASC 326 requirements, the Company uses a 24-month reasonable and supportable forecast period for the customer accounts receivable portfolio. We estimate losses beyond the 24-month forecast period based on historic loss rates experienced over the life of our historic loan portfolio by loan pool type. We revisit our measurement methodology and assumption annually, or more frequently if circumstances warrant.
As of July 31, 2022 and January 31, 2022, the balance of allowance for doubtful accounts and uncollectible interest for non-TDR customer receivables was $144.2 million and $165.0 million, respectively. As of July 31, 2022 and January 31, 2022, the amount included in the allowance for doubtful accounts associated with principal and interest on TDR accounts was $35.6 million and $44.0 million, respectively.
Debt Issuance Costs. Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. We present debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the Revolving Credit Facility, as defined in Note 5, Debt and Financing Lease Obligations, are included in other assets on our Condensed Consolidated Balance Sheet and were $4.3 million and $5.1 million as of July 31, 2022 and January 31, 2022, respectively.
Loss on Extinguishment. During the six months ended July 31, 2021, we incurred a loss of $1.0 million related to the retirement of the remaining $141.2 million aggregate principal amount of our 7.25% Senior Notes due 2022 and a loss of $0.2 million related to the amendment of our Fifth Amended and Restated Loan and Security Agreement.
Income Taxes. For the six months ended July 31, 2022 and 2021, we utilized the estimated annual effective tax rate based on our estimated fiscal year 2023 and 2022 pre-tax income, respectively, in determining income tax expense.
Provision for income taxes for interim periods is based on an estimated annual income tax rate, adjusted for discrete tax items. As a result, our interim effective tax rates may vary significantly from the statutory tax rate and the annual effective tax rate.
For the six months ended July 31, 2022 and 2021, the effective tax rate was 13.3% and 23.4%, respectively. The primary factor affecting the decrease in our effective tax rate for the six months ended July 31, 2022 was the impact of state taxes and compensation expense.
Stock-based Compensation. During the six months ended July 31, 2022, the Company granted performance stock awards (“PSUs”) and restricted stock awards (“RSUs”). The awards had a combined aggregate grant date fair value of $15.8 million. The PSUs will vest in fiscal year 2025, if at all, upon certification by the Compensation Committee of the Board of Directors of satisfaction of certain total stockholder return performance conditions over the three fiscal years commencing with fiscal year 2023. The RSUs will vest ratably, over periods of three years from the date of grant.
Stock-based compensation expense is recorded, net of actual forfeitures, for share-based compensation awards over the requisite service period using the straight-line method. For equity-classified share-based compensation awards, expense is recognized based on the grant-date fair value. For stock option grants, we use the Black-Scholes model to determine fair value. For grants of restricted stock units, the fair value of the grant is the market value of our stock at the date of issuance. For grants of performance-based restricted stock units, the fair value is the market value of our stock at the date of issuance adjusted for the market condition using a Monte Carlo model.

7

CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the RSUs and PSUs granted during the three and six months ended July 31, 2022 and 2021: 
Three Months Ended
July 31,
Six Months Ended
July 31,
2022202120222021
RSUs (1)
82,206 41,087 476,586 381,731 
PSUs (2)
  176,509 152,349 
Total stock awards granted82,206 41,087 653,095 534,080 
Aggregate grant date fair value (in thousands)$1,071 $960 $15,762 $9,250 
(1)The RSUs issued during the three and six months ended July 31, 2022 and 2021 are scheduled to vest ratably over periods of three years to four years from the date of grant with the exception of RSU grants issued to the Board of Directors.
(2)The weighted-average assumptions used in the Monte Carlo model for the PSUs granted during the six months ended July 31, 2022 included expected volatility of 78.0%-80.0%, an expected term of 3 years and risk-free interest rate of 1.39%-2.58%.  No dividend yield was included in the weighted-average assumptions for the PSUs granted during the six months ended July 31, 2022. The weighted-average assumptions used in the Monte Carlo model for the PSUs granted during the six months ended July 31, 2021 included expected volatility of 83.0%, an expected term of 3 years and risk-free interest rate of 0.17%. No dividend yield was included in the weighted average assumptions for the PSUs granted during the six months ended July 31, 2021.
For the three months ended July 31, 2022 and 2021, stock-based compensation expense was $3.2 million and $1.7 million, respectively. For the six months ended July 31, 2022 and 2021, stock-based compensation expense was $6.6 million and $3.8 million, respectively.
Earnings per Share. Basic earnings per share for a particular period is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, which are calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: 
 Three Months Ended
July 31,
Six Months Ended
July 31,
2022202120222021
Weighted-average common shares outstanding - Basic23,833,100 29,438,605 24,306,524 29,382,162 
Dilutive effect of stock options, PSUs and RSUs83,169 773,843 155,312 690,239 
Weighted-average common shares outstanding - Diluted23,916,269 30,212,448 24,461,836 30,072,401 
For the three months ended July 31, 2022 and 2021, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 1,548,376 and 656,987, respectively. For the six months ended July 31, 2022 and 2021, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 1,234,872 and 731,647, respectively.
Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to subjectivity associated with the inputs to fair value measurements as follows:  
Level 1 – Inputs represent unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated inputs).
Level 3 – Inputs that are not observable from objective sources such as our internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in our internally developed present value of future cash flows model that underlies the fair-value measurement).
In determining fair value, we use observable market data when available, or models that incorporate observable market data. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost or income approach depending on the quality of information available to support

8

CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of future net cash flows and discounts the expected cash flows using a commensurate risk-adjusted discount rate. Such evaluations involve significant judgment, and the results are based on expected future events or conditions such as sales prices, economic and regulatory climates, and other factors, most of which are often outside of management’s control. However, we believe assumptions used reflect a market participant’s view of long-term prices, costs, and other factors and are consistent with assumptions used in our business plans and investment decisions.
In arriving at fair-value estimates, we use relevant observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based on the lowest level of input that is significant to the fair-value measurement.
The fair value of cash and cash equivalents, restricted cash and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivable, determined using a Level 3 discounted cash flow analysis, approximates their carrying value, net of the allowance for doubtful accounts. The fair value of our Revolving Credit Facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At July 31, 2022, the fair value of the asset backed notes was $595.1 million as compared to the carrying value of $604.0 million and was determined using Level 2 inputs based on inactive trading activity.
Deferred Revenue. Deferred revenue related to contracts with customers consists of deferred customer deposits and deferred RSA administration fees. During the six months ended July 31, 2022, we recognized $5.0 million of revenue for customer deposits deferred as of January 31, 2022. During the six months ended July 31, 2022, we recognized $1.8 million of revenue for RSA administrative fees deferred as of January 31, 2022.
Recent Accounting Pronouncements Adopted.
Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This accounting standards update became effective for us in the first quarter of fiscal year 2022. The adoption did not have a material impact on our consolidated financial statements.
Recent Accounting Pronouncements Yet to Be Adopted.
Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, an update that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), Scope, to clarify the scope of the guidance and reduce potential diversity in practice. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. We expect to adopt ASC 2020-04 and ASC 2021-01 upon transition from LIBOR, prior to December 31, 2022. We do not expect the adoption to have a material impact on our consolidated financial statements.
Financial Instruments - Troubled Debt Restructurings and Vintage Disclosures. In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, an update that eliminate the accounting guidance for troubled debt restructurings (TDRs) by creditors in ASC 310-40 while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in ASC 310-20 to determine whether a modification results in a new loan or a continuation of an existing loan. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively, with an option to apply a modified retrospective transition approach for the recognition and measurement of TDRs. We expect to adopt ASU 2022-02 during the first quarter of fiscal year 2024. We are currently assessing the impact this ASU will have on our consolidated financial statements.


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2.    Customer Accounts Receivable
Customer accounts receivable consisted of the following:
(in thousands)July 31,
2022
January 31,
2022
Customer accounts receivable (1)
$1,042,777 $1,130,395 
Deferred fees and origination costs, net(12,347)(13,503)
Allowance for no-interest option credit programs(17,704)(19,654)
Allowance for uncollectible interest(14,184)(15,124)
Carrying value of customer accounts receivable998,542 1,082,114 
Allowance for credit losses (2)
(165,591)(193,896)
Carrying value of customer accounts receivable, net of allowance for credit losses832,951 888,218 
  Short-term portion of customer accounts receivable, net(434,824)(455,787)
Long-term customer accounts receivable, net$398,127 $432,431 
Carrying Value
(in thousands)July 31,
2022
January 31,
2022
Customer accounts receivable 60+ days past due (3)
$109,928 $112,858 
Re-aged customer accounts receivable (4)
160,552 181,996 
Restructured customer accounts receivable (5)
78,600 99,557 
(1)As of July 31, 2022 and January 31, 2022, the customer accounts receivable balance included $21.2 million and $22.3 million, respectively, in interest receivable. Net of the allowance for uncollectible interest, interest receivable outstanding as of July 31, 2022 and January 31, 2022 was $7.0 million and $7.2 million, respectively.
(2)Our current methodology to estimate expected credit losses utilized macroeconomic forecasts as of July 31, 2022 and January 31, 2022, which incorporated the continued estimated impact of the global COVID-19 outbreak on the U.S. economy. Our forecast utilized economic projections from a major rating service reflecting an increase in unemployment rates.
(3)As of July 31, 2022 and January 31, 2022, the carrying value of customer accounts receivable past due one day or greater was $298.2 million and $299.0 million, respectively. These amounts include the 60+ days past due balances shown above.
(4)The re-aged carrying value as of July 31, 2022 and January 31, 2022 includes $44.8 million and $48.6 million, respectively, in carrying value that are both 60+ days past due and re-aged.
(5)The restructured carrying value as of July 31, 2022 and January 31, 2022 includes $22.0 million and $29.0 million, respectively, in carrying value that are both 60+ days past due and restructured.

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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The allowance for credit losses included in the current and long-term portion of customer accounts receivable, net as shown in the Condensed Consolidated Balance Sheet were as follows:
(in thousands)July 31, 2022January 31, 2022
Customer accounts receivable - current$528,420 $564,825 
Allowance for credit losses for customer accounts receivable - current(93,596)(109,038)
Customer accounts receivable, net of allowances434,824 455,787 
Customer accounts receivable - non current484,306 532,413 
Allowance for credit losses for customer accounts receivable - non current(86,179)(99,982)
Long-term portion of customer accounts receivable, net of allowances398,127 432,431 
Total customer accounts receivable, net$832,951 $888,218 
The following presents the activity in our allowance for credit losses and uncollectible interest for customer receivables: 
 Six Months Ended July 31, 2022Six Months Ended July 31, 2021
(in thousands)Customer
Accounts
Receivable
 
Restructured
Accounts
 
 
Total
Customer
Accounts
Receivable
 
Restructured
Accounts
 
 
Total
Allowance at beginning of period$165,044 $43,976 $209,020 $219,740 $78,297 $298,037 
Provision (benefit) for credit loss expense (1)
45,326 15,607 60,933 (5,422)13,333 7,911 
Principal charge-offs (2)
(65,919)(23,882)(89,801)(61,323)(38,709)(100,032)
Interest charge-offs(15,887)(5,756)(21,643)(16,997)(10,729)(27,726)
Recoveries (2)
15,610 5,656 21,266 14,657 9,252 23,909 
Allowance at end of period$144,174 $35,601 $179,775 $150,655 $51,444 $202,099 
Average total customer portfolio balance$982,639 $92,262 $1,074,901 $982,186 $159,894 $1,142,080 
(1)Includes provision for uncollectible interest, which is included in finance charges and other revenues, and changes in expected future recoveries.
(2)Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include the principal amount collected during the period for previously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and recoveries.
We manage our customer accounts receivable portfolio using delinquency as a key credit quality indicator. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination. The information is presented as of July 31, 2022:
(in thousands)
Delinquency Bucket2022202120202019PriorTotal% of Total
Current$298,380 $292,662 $87,626 $18,858 $2,767 $700,293 70.1 %
1-3035,983 69,396 25,441 9,927 2,145 142,892 14.3 %
31-609,571 22,902 8,234 3,913 809 45,429 4.6 %
61-905,130 13,958 5,220 2,650 629 27,587 2.8 %
91+7,644 45,783 17,569 9,126 2,219 82,341 8.2 %
Total$356,708 $444,701 $144,090 $44,474 $8,569 $998,542 100.0 %


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.     Charges and Credits
Charges and credits consisted of the following:
Three Months Ended
July 31,
Six Months Ended
July 31,
(in thousands)2022202120222021
Lease termination$(1,484)$— $(1,484)$— 
Total charges and credits$(1,484)$— $(1,484)$— 

During the three months ended July 31, 2022, we recognized a $1.5 million gain related to the termination of a lease for a single store location.

4.     Finance Charges and Other Revenues 
Finance charges and other revenues consisted of the following:
Three Months Ended
July 31,
Six Months Ended
July 31,
(in thousands)2022202120222021
Interest income and fees$61,760 $65,003 $124,474 $132,682 
Insurance income5,087 6,371 9,659 10,889 
Other revenues273 224 544 433 
Total finance charges and other revenues$67,120 $71,598 $134,677 $144,004 
Interest income and fees and insurance income are derived from the credit segment operations, whereas other revenues are derived from the retail segment operations. Insurance income is comprised of sales commissions from third-party insurance companies that are recognized when coverage is sold and retrospective income paid by the insurance carrier if insurance claims are less than earned premiums.
During the three months ended July 31, 2022 and 2021, interest income and fees reflected provisions for uncollectible interest of $10.3 million and $7.4 million, respectively. The amounts included in interest income and fees related to TDR accounts for the three months ended July 31, 2022 and 2021 were $3.8 million and $6.7 million, respectively. During the six months ended July 31, 2022 and 2021, interest income and fees reflected provisions for uncollectible interest of $19.6 million and $14.9 million, respectively. The amounts included in interest income and fees related to TDR accounts for the six months ended July 31, 2022 and 2021 were $7.9 million and $14.2 million, respectively.


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5.     Debt and Financing Lease Obligations 
Debt and financing lease obligations consisted of the following:
(in thousands)July 31,
2022
January 31,
2022
Revolving Credit Facility$ $149,000 
2020-A VIE Asset-backed Class A Notes 9,184 
2020-A VIE Asset-backed Class B Notes 18,342 
2020-A VIE Asset-backed Class C Notes 17,695 
2021-A VIE Asset-backed Class A Notes66,378 195,595 
2021-A VIE Asset-backed Class B Notes66,090 66,090 
2021-A VIE Asset-backed Class C Notes63,890 63,890 
2022-A VIE Asset-backed Class A Notes275,600  
2022-A VIE Asset-backed Class B Notes132,090  
Financing lease obligations5,666 6,115 
Total debt and financing lease obligations609,714 525,911 
Less:
Deferred debt issuance costs(6,393)(2,873)
Current maturities of long-term debt and financing lease obligations(909)(889)
Long-term debt and financing lease obligations$602,412 $522,149 
Asset-backed Notes. From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issue asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by the VIEs.
Under the terms of the securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of issued notes, and then to us as the holder of non-issued notes, if any, and residual equity. We retain the servicing of the securitized portfolios and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables. In addition, we, rather than the VIEs, retain all credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which are reflected as a reduction to net charge-offs on a consolidated basis.
The asset-backed notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act of 1933. If an event of default were to occur under the indenture that governs the respective asset-backed notes, the payment of the outstanding amounts may be accelerated, in which event the cash proceeds of the receivables that otherwise might be released to the residual equity holder would instead be directed entirely toward repayment of the asset-backed notes, or if the receivables are liquidated, all liquidation proceeds could be directed solely to repayment of the asset-backed notes as governed by the respective terms of the asset-backed notes. The holders of the asset-backed notes have no recourse to assets outside of the VIEs. Events of default include, but are not limited to, failure to make required payments on the asset-backed notes or specified bankruptcy-related events.
The asset-backed notes outstanding as of July 31, 2022 consisted of the following:
(dollars in thousands)
Asset-Backed NotesOriginal Principal Amount
Original Net Proceeds (1)
Current Principal AmountIssuance DateMaturity DateContractual Interest Rate
Effective Interest Rate (2)
2021-A Class A Notes$247,830 $246,152 $66,378 11/23/20215/15/20261.05%3.15%
2021-A Class B Notes66,090 65,635 66,090 11/23/20215/15/20262.87%3.53%
2021-A Class C Notes63,890 63,450 63,890 11/23/20215/15/20264.59%5.21%
2022-A Class A Notes275,600 273,731 275,600 7/21/202212/15/20265.87%8.57%
2022-A Class B Notes132,090 129,050 132,090 7/21/202212/15/20269.52%10.40%
Total$785,500 $778,018 $604,048 
(1)After giving effect to debt issuance costs.

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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(2)For the six months ended July 31, 2022, and inclusive of the impact of changes in timing of actual and expected cash flows.
On July 21, 2022, the Company completed the issuance and sale of approximately $407.7 million in aggregate principal amount of asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds to us of approximately $402.8 million, net of debt issuance costs. Net proceeds from the offering were used to repay indebtedness under the Company’s Revolving Credit Facility, as defined below, and for other general corporate purposes. The asset-backed notes mature on December 15, 2026 and consist of $275.6 million of 5.87% Asset Backed Fixed Rate Notes, Class A, Series 2022-A (the "Class A Notes"), approximately $132.1 million of 9.52% Asset Backed Fixed Rate Notes, Class B, Series 2022-A (the "Class B Notes"). Additionally, the Company issued approximately $63.1 million in aggregate principal amount of zero coupon Asset Backed Fixed Rate Notes, Class C, Series 2022-A (the "Class C Notes") which mature on December 15, 2026. The Class C Notes are currently being retained by the Company.
Revolving Credit Facility. On March 29, 2021, Conn’s, Inc. and certain of its subsidiaries (the “Borrowers”) entered into the Fifth Amended and Restated Loan and Security Agreement (the “Fifth Amended and Restated Loan Agreement”), with certain lenders, which provides for a $650.0 million asset-based revolving credit facility (as amended, the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base and a maturity date of March 29, 2025.
The Fifth Amended and Restated Loan Agreement, among other things, permits borrowings under the Letter of Credit Subline (as defined in the Fifth Amended and Restated Loan Agreement) that exceed the cap of $40 million to $100 million, solely at the discretion of the lenders for such amounts in excess of $40 million. The obligations under the Revolving Credit Facility are secured by substantially all assets of the Company, excluding the assets of the VIEs. As of July 31, 2022, under our Revolving Credit Facility, we had immediately available borrowing capacity of $186.8 million, net of standby letters of credit issued of $22.3 million, and an additional $441.0 million that may become available if the balance of eligible customer receivables and total eligible inventory balances increases.
Loans under the Revolving Credit Facility bear interest, at our option, at a rate of LIBOR plus a margin ranging from 2.50% to 3.25% per annum (depending on a pricing grid determined by our total leverage ratio) or the alternate base rate plus a margin ranging from 1.50% to 2.25% per annum (depending on a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.50% per annum, depending on the average outstanding balance and letters of credit of the Revolving Credit Facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the Revolving Credit Facility was 3.8% for the six months ended July 31, 2022.
The Revolving Credit Facility places restrictions on our ability to incur additional indebtedness, grant liens on assets, make distributions on equity interests, dispose of assets, make loans, pay other indebtedness, engage in mergers, and other matters. The Revolving Credit Facility restricts our ability to make dividends and distributions unless no event of default exists and a liquidity test is satisfied. Subsidiaries of the Company may pay dividends and make distributions to the Company and other obligors under the Revolving Credit Facility without restriction. As of July 31, 2022, we were restricted from making distributions in excess of $151.5 million as a result of the Revolving Credit Facility distribution and payment restrictions. The Revolving Credit Facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the Revolving Credit Facility.
Debt Covenants. We were in compliance with our debt covenants at July 31, 2022. A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at July 31, 2022 is presented below: 
 ActualRequired Minimum/ Maximum
Interest Coverage Ratio for the quarter must equal or exceed minimum4.04:1.001.00:1.00
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum5.38:1.001.50:1.00
Leverage Ratio must not exceed maximum1.57:1.004.50:1.00
ABS Excluded Leverage Ratio must not exceed maximum0.57:1.002.50:1.00
Capital Expenditures, net, must not exceed maximum$49.5 million$100.0 million
All capitalized terms in the above table are defined in the Revolving Credit Facility and may or may not match directly to the financial statement captions in this document. The covenants are calculated quarterly, except for capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter.


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.     Contingencies
Derivative Litigation. On December 1, 2014, an alleged shareholder, purportedly on behalf of the Company, filed a shareholder derivative lawsuit in federal court against us and certain of our current and former directors and former executive officers captioned Robert Hack, derivatively on behalf of Conn’s, Inc., v. Theodore M. Wright (former executive officer and former director), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson (former director), Douglas H. Martin, David Schofman, Scott L. Thompson (former director), Brian Taylor (former executive officer) and Michael J. Poppe (former executive officer) and Conn’s, Inc., Case No. 4:14-cv-03442 (S.D. Tex.) (the "Hack Litigation"). The complaint asserts claims for breach of fiduciary duty, unjust enrichment, gross mismanagement, and insider trading based on substantially similar factual allegations as those asserted in the securities action (In re Conn's Inc. Sec. Litig., Cause No. 14-CV-00548 (S.D. Tex.)), which was settled in October 2018. The plaintiff seeks unspecified damages against these persons and does not request any damages from Conn’s. On February 25, 2015, an additional federal derivative action, captioned 95250 Canada LTEE, derivatively on Behalf of Conn’s, Inc. v. Wright et al., Cause No. 4:15-cv-00521 (S.D. Tex.), was filed, asserting substantially similar claims against the same defendants. It was consolidated with the Hack Litigation (collectively, the "Federal Derivative Actions").
The parties have reached a settlement in principle to fully resolve the Federal Derivative Actions. Judge Ellison approved the settlement and entered a Final Order and Judgement dismissing the derivative action with prejudice on March 15, 2022 (the "Final Order"). Neither the Company nor any individual defendant admits any wrongdoing through the settlement agreement.
In addition to the Federal Derivative Actions, a derivative action was filed in Texas state court on January 27, 2015, captioned Richard A. Dohn v. Wright, et al., Cause No. 2015-04405, in the 281st Judicial District Court, Harris County, Texas. This action makes substantially similar allegations to the Federal Derivative Actions against the same defendants. The parties agreed to stay this case during the Securities Litigation and Federal Derivative Actions. Counsel for Dohn attended the February 17, 2022 and March 15, 2022 settlement hearings in the Federal Derivative Actions and objected to the proposed settlement. Dohn has filed an appeal of the Final Order with the Fifth Circuit Court of Appeals, and on May 17, 2022, the court entered an agreed order staying the case pending the outcome of that appeal.
On April 7, 2022, State Court Plaintiff and Objector Richard Dohn, filed an appeal of the Final Order with the Fifth Circuit Court of Appeals (Hack v. Wright, No. 22-20177 (5th Cir.)). Dohn's opening brief was filed on July 5, 2022. Plaintiffs' and Defendants' respective response briefs are due August 24, 2022.
Prior to filing his lawsuit, another alleged shareholder, Robert J. Casey II (“Casey”), submitted a demand under Delaware law, which our Board of Directors refused. On May 19, 2016, Casey, purportedly on behalf of the Company, filed a second state court lawsuit against us and certain of our current and former directors and former executive officers in the 55th Judicial District Court, Harris County, Texas, captioned Casey, derivatively on behalf of Conn’s, Inc., v. Theodore M. Wright (former executive officer and former director), Michael J. Poppe (former executive officer), Brian Taylor (former executive officer), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson (former director), Douglas H. Martin, David Schofman, Scott L. Thompson (former director) and William E. Saunders Jr., and Conn’s, Inc., Cause No. 2016-33135. The complaint asserts claims for breach of fiduciary duties and unjust enrichment based on substantially similar factual allegations as those asserted in the Federal Derivative Actions. The complaint does not specify the amount of damages sought. Since April 2018, this case has been abated pending the resolution of related cases. In July 2021, the parties requested that the court extend the abatement pending further developments in the Federal Derivative Actions. The case currently remains abated.
Other than Casey, none of the plaintiffs in the other derivative actions made a demand on our Board of Directors prior to filing their respective lawsuits. The defendants in the two state court derivative actions intend to vigorously defend against these claims. It is not possible at this time to predict the timing or outcome of any unsettled litigation, and we cannot reasonably estimate the possible loss or range of possible loss from such claims.
We are involved in other routine litigation and claims, incidental to our business from time to time which, individually or in the aggregate, are not expected to have a material adverse effect on us. As required, we accrue estimates of the probable costs for the resolution of these matters. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. However, the results of these proceedings cannot be predicted with certainty, and changes in facts and circumstances could impact our estimate of reserves for litigation. The Company believes that any probable and reasonably estimable loss associated with the foregoing has been adequately reflected in the accompanying financial statements.


15

CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.     Variable Interest Entities
From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. Under the terms of the respective securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. We retain the servicing of the securitized portfolio and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables, and we currently hold all of the residual equity. In addition, we, rather than the VIEs, will retain certain credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as we consolidate the VIEs.
We consolidate VIEs when we determine that we are the primary beneficiary of these VIEs, we have the power to direct the activities that most significantly impact the performance of the VIEs and our obligation to absorb losses and the right to receive residual returns are significant.
The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn’s, Inc.):
(in thousands)July 31,
2022
January 31,
2022
Assets:
Restricted cash$45,773 $29,872 
Due from Conn’s, Inc., net3,784  
Customer accounts receivable:
Customer accounts receivable788,671 463,411 
Restructured accounts27,552 29,621 
Allowance for uncollectible accounts(143,252)(97,560)
Allowance for no-interest option credit programs(16,495)(10,275)
Deferred fees and origination costs(9,021)(5,033)
Total customer accounts receivable, net647,455 380,164 
Total assets$697,012 $410,036 
Liabilities:
Accrued expenses$4,459 $2,638 
Other liabilities6,909 3,930 
Due to Conn’s, Inc., net 12,755 
Long-term debt:
2020-A Class A Notes 9,184 
2020-A Class B Notes 18,342 
2020-A Class C Notes 17,695 
2021-A Class A Notes66,378 195,595 
2021-A Class B Notes66,090 66,090 
2021-A Class C Notes63,890 63,890 
2022-A Class A Notes275,600  
2022-A Class B Notes132,090  
604,048 370,796 
Less: deferred debt issuance costs(6,393)(2,871)
Total debt597,655 367,925 
Total liabilities$609,023 $387,248 
The assets of the VIEs serve as collateral for the obligations of the VIEs. The holders of asset-backed notes have no recourse to assets outside of the respective VIEs.


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8.     Segment Information 
Operating segments are defined as components of an enterprise that engage in business activities and for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources and assess performance. We are a leading specialty retailer and offer a broad selection of quality, branded durable consumer goods and related services in addition to a proprietary credit solution for our core credit-constrained consumers. We have two operating segments: (i) retail and (ii) credit. Our operating segments complement one another. The retail segment operates primarily through our stores and website. Our retail segment product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit segment offers affordable financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. Our operating segments provide customers the opportunity to comparison shop across brands with confidence in our competitive prices as well as affordable monthly payment options, next day delivery and installation in the majority of our markets, and product repair service. The operating segments follow the same accounting policies used in our Condensed Consolidated Financial Statements.
We evaluate a segment’s performance based upon operating income before taxes. Selling, general and administrative expenses (“SG&A”) includes the direct expenses of the retail and credit operations, allocated overhead expenses, and a charge to the credit segment to reimburse the retail segment for expenses it incurs related to occupancy, personnel, advertising and other direct costs of the retail segment, which benefit the credit operations by sourcing credit customers and collecting payments. The reimbursement received by the retail segment from the credit segment is calculated using an annual rate of 2.5% times the average outstanding portfolio balance for each applicable period.
As of July 31, 2022, we operated retail stores in 15 states with no operations outside of the United States. No single customer accounts for more than 10% of our total revenues.
Financial information by segment is presented in the following tables:
 Three Months Ended July 31, 2022Three Months Ended July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Revenues:
Furniture and mattress$86,320 $ $86,320 $109,259 $ $109,259 
Home appliance120,748  120,748 135,444  135,444 
Consumer electronics31,860  31,860 48,413  48,413 
Home office8,857  8,857 17,986  17,986 
Other7,664  7,664 9,143  9,143 
Product sales255,449  255,449 320,245  320,245 
Repair service agreement commissions21,615  21,615 23,700  23,700 
Service revenues2,448  2,448 2,840  2,840 
Total net sales279,512  279,512 346,785  346,785 
Finance charges and other revenues273 66,847 67,120 224 71,374 71,598 
Total revenues279,785 66,847 346,632 347,009 71,374 418,383 
Costs and expenses:
Cost of goods sold182,718  182,718 216,042  216,042 
Selling, general and administrative expense (1)
98,035 32,107 130,142 102,157 35,713 137,870 
Provision for bad debts409 26,817 27,226 142 10,120 10,262 
Charges and credits(1,484) (1,484)   
Total costs and expenses279,678 58,924 338,602 318,341 45,833 364,174 
Operating income 107 7,923 8,030 28,668 25,541 54,209 
Interest expense 6,808 6,808  6,088 6,088 
Income before income taxes$107 $1,115 $1,222 $28,668 $19,453 $48,121 


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CONN’S, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended July 31, 2022Six Months Ended July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Revenues:
Furniture and mattress$174,414 $ $174,414 $203,750 $ $203,750 
Home appliance230,476  230,476 248,705  248,705 
Consumer electronics65,464  65,464 86,451  86,451 
Home office19,046  19,046 32,507  32,507 
Other16,022  16,022 18,043  18,043 
Product sales505,422  505,422 589,456  589,456 
Repair service agreement commissions41,452  41,452 42,831  42,831 
Service revenues4,901  4,901 5,794  5,794 
Total net sales551,775  551,775 638,081  638,081 
Finance charges and other revenues544 134,133 134,677 433 143,571 144,004 
Total revenues552,319 134,133 686,452 638,514 143,571 782,085 
Costs and expenses:
Cost of goods sold361,100  361,100 400,921  400,921 
Selling, general and administrative expense (1)
194,065 68,860 262,925 193,050 70,869 263,919 
Provision (benefit) for bad debts588 41,368 41,956 160 (7,034)(6,874)
Charges and credits(1,484) (1,484)   
Total costs and expenses554,269 110,228 664,497 594,131 63,835 657,966 
Operating income (loss)(1,950)23,905 21,955 44,383 79,736 124,119 
Interest expense 12,329 12,329  15,292 15,292 
Loss on extinguishment of debt     1,218 1,218 
Income (loss) before income taxes$(1,950)$11,576 $9,626 $44,383 $63,226 $107,609 
July 31, 2022July 31, 2021
(in thousands)RetailCreditTotalRetailCreditTotal
Total assets
$676,303 $1,078,506 $1,754,809 $672,944 $1,036,003 $1,708,947 
(1)For the three months ended July 31, 2022 and 2021, the amount of corporate overhead allocated to each segment reflected in SG&A expense was $6.6 million and $9.8 million, respectively. For the three months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $6.6 million and $6.9 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of corporate overhead allocated to each segment reflected in SG&A was $16.2 million and $18.8 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $13.4 million and $14.2 million, respectively.

9. Stock Repurchases

On December 15, 2021, our Board of Directors approved a stock repurchase program pursuant to which we had the authorization to repurchase up to $150.0 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022. During the three months ended July 31, 2022 we did not repurchase any share of our common stock. During the six months ended July 31, 2022, we repurchased 3,316,000 shares of our common stock at an average weighted cost per share of $20.57 for an aggregate amount of $68.2 million.

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  
Forward-Looking Statements 
This report 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, 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, 2022 (the “2022 Form 10-K”) 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 report. 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.
The Company makes available in the investor relations section of its website at ir.conns.com updated monthly reports to the holders of its asset-backed notes. This information reflects the performance of the securitized portfolio only, in contrast to the financial statements contained herein, which reflect the performance of all of the Company’s outstanding receivables, including those originated subsequent to those included in the securitized portfolio.  The website and the information contained on our website is not incorporated in this Quarterly Report on Form 10-Q or any other document filed with the SEC.
Overview
We encourage you to read this Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends.

Executive Summary
Total revenues were $346.6 million for the three months ended July 31, 2022 compared to $418.4 million for the three months ended July 31, 2021, a decrease of $71.8 million or 17.1%. Retail revenues were $279.8 million for the three months ended July 31, 2022 compared to $347.0 million for the three months ended July 31, 2021, a decrease of $67.2 million or 19.4%. The decrease in total retail revenue for the three months ended July 31, 2022 was primarily driven by a decrease in same store sales of 22.0%. The decrease in same store sales was primarily driven by a tightening of underwriting standards from our lease-to-own partners, the effect the benefits stimulus had on sales in the prior period and lower consumer demand in the current period.The decrease in same store sales was partially offset by new store growth. Credit revenues were $66.8 million for the three months ended July 31, 2022 compared to $71.4 million for the three months ended July 31, 2021, a decrease of $4.6 million or 6.4%. The decrease in credit revenue was primarily due to a 4.9% decrease in the average outstanding balance of the customer accounts receivable portfolio as well as a decline in insurance commissions.
Retail gross margin for the three months ended July 31, 2022 was 34.6%, decrease of 310 basis points from the 37.7% reported for the three months ended July 31, 2021. The year-over-year decrease in retail gross margin was primarily driven by increased product costs as a result of higher freight, higher fuel costs and the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions and a more profitable product mix.

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Selling, general and administrative expense (“SG&A”) for the three months ended July 31, 2022 was $130.1 million compared to $137.9 million for the three months ended July 31, 2021, a decrease of $7.7 million or 5.6%. The SG&A decrease in the retail segment was primarily due to a decline in variable costs and declines in advertising and labor costs as a result of cost saving initiatives. These decreases were partially offset by an increase in occupancy costs due to higher utility costs and new store growth. The SG&A decrease in the credit segment was primarily due to a decrease in general operating costs, including legal and professional service fees.
Provision for bad debts increased to $27.2 million for the three months ended July 31, 2022 from $10.3 million for the three months ended July 31, 2021, an overall change of $16.9 million. The year-over-year increase was primarily driven by a smaller decrease in the allowance for bad debts during the three months ended July 31, 2022 compared to the decrease for the three months ended July 31, 2021 and a year-over-year increase in net charge-offs of $4.9 million. The decrease in the allowance for bad debts during the three months ended July 31, 2022 was primarily driven by a decrease in the customer account receivable portfolio balance and an improvement in historical loss rates. During the three months ended July 31, 2021, the decrease was primarily driven by a decrease in the rate of delinquencies and re-ages, a decrease in the customer account receivable portfolio balance and an improvement in the forecasted unemployment rate that drove a $5.0 million decrease in the economic adjustment.
Interest expense was $6.8 million for the three months ended July 31, 2022 and $6.1 million for the three months ended July 31, 2021, an increase of $0.7 million or 11.8%. The increase was driven by a higher average balance of debt offset by a lower effective interest rate.
Net income for the three months ended July 31, 2022 was $2.1 million or $0.09 per diluted share, compared to net income of $37.0 million, or $1.22 per diluted share, for the three months ended July 31, 2021.
How We Evaluate Our Operations
Senior management focuses on certain key indicators to monitor our performance including:
Same store sales - Our management considers same store sales, which consists of both brick and mortar and e-commerce sales, to be an important indicator of our performance because they reflect our attempts to leverage our SG&A costs, which include rent and other store expenses, and they have a direct impact on our total net sales, net income, cash and working capital. Same store sales is calculated by comparing the reported sales for all stores that were open during both comparative fiscal years, starting in the first period in which the store has been open for a full quarter. Sales from closed stores, if any, are removed from each period. Sales from relocated stores have been included in each period if each such store was relocated within the same general geographic market. Sales from expanded stores have also been included in each period.
Retail gross margin - Our management views retail gross margin as a key indicator of our performance because it reflects our pricing power relative to the prices we pay for our products. Retail gross margin is calculated by comparing retail total net sales to the cost of goods sold.
60+ Day Delinquencies - Our management views customer account delinquencies as a key indicator of our performance because it reflects the quality of our credit portfolio, drives future credit performance and credit offerings, and impacts the interest rates we pay on our asset-backed securitizations. Delinquencies are measured as the percentage of balances that are 60+ days past due.
Net yield - Our management considers yield to be a key performance metric because it drives future credit decisions and credit offerings and directly impacts our net income.  Yield reflects the amount of interest we receive from our portfolio. 
Company Initiatives
We delivered the following financial and operational results in the second quarter of fiscal year 2023 as compared to the prior fiscal year period (unless otherwise noted):
Total consolidated revenue declined 17.1% to $346.6 million, due to a 19.4% decline in total net sales, and a 6.3% reduction in finance charges and other revenues;
Same store sales decreased 22.0%;
eCommerce sales increased 11.5% to a second quarter record of $19.3 million;
Credit spread was 960 basis points, and fiscal year-to-date the credit spread was 1,060 basis points;
Net earnings were $0.09 per diluted share, compared to net earnings of $1.22 per diluted share for the same period last fiscal year;

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Added two new standalone stores bringing the total number of stores at July 31, 2022 to 163 and added four store-within-a store locations with Belk, Inc.; and
The Company completed an ABS transaction demonstrating the Company’s ability to access the capital markets even during turbulent market conditions resulting in the issuance and sale of $407.7 million aggregate principal amount of Class A and Class B Notes, and issued and retained the Class C Notes in aggregate principal amount of $63.1 million.
Strategic Update
In response to challenging macroeconomic pressures, the Company has updated its near-term strategic priorities which include:
Reducing operating costs. The Company is conducting an extensive review and prioritization of its cost structure. The Company expects current initiatives, combined with prior actions, to generate cost savings of approximately $12.0 - $16.0 million in the back half of this fiscal year.
Lowering capital expenditures. The Company is delaying or eliminating several planned capital investments, including adjusting planned new store openings and distribution center expansions. As a result, Conn’s expects to reduce investments in capital expenditures for fiscal year 2023 by approximately $20.0 million compared to its prior expectation.
Maintaining conservative credit underwriting. The Company is focused on maintaining conservative credit underwriting and remaining disciplined in its approach to credit collections. At July 31, 2022, the weighted average credit score of outstanding balances was 611, 60+ days past due balances as a percentage of the total customer portfolio carrying value was 11.0%, and re-aged balances as percentages of the total customer portfolio carrying value were 16.1%.
Outlook
The broad appeal of our value proposition to our geographically diverse core demographic and the unit economics of our business should provide the stability necessary to maintain and grow our business. We expect our brand recognition and long history in our core markets to give us the opportunity to further penetrate our existing footprint, particularly as we leverage existing marketing spend, logistics infrastructure, and service footprint. There are also many markets in the U.S. with demographic characteristics similar to those in our existing footprint, which provides substantial opportunities for future growth. We plan to improve our operating results by leveraging our existing infrastructure and seeking to continually optimize the efficiency of our marketing, merchandising, distribution and credit operations. As we expand in existing markets and penetrate new markets, we expect to increase our purchase volumes, achieve distribution efficiencies and strengthen our relationships with our key vendors. Over time, we also expect our increased store base and the resulting higher net sales to further leverage our existing corporate and regional infrastructure.


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Results of Operations 
The following tables present certain financial and other information, on a condensed consolidated basis: 
Consolidated:Three Months Ended
July 31,
Six Months Ended
July 31,
(in thousands)20222021Change20222021Change
Revenues:
Total net sales$279,512 $346,785 $(67,273)$551,775 $638,081 $(86,306)
Finance charges and other revenues67,120 71,598 (4,478)134,677 144,004 (9,327)
Total revenues346,632 418,383 (71,751)686,452 782,085 (95,633)
Costs and expenses: 
Cost of goods sold182,718 216,042 (33,324)361,100 400,921 (39,821)
Selling, general and administrative expense130,142 137,870 (7,728)262,925 263,919 (994)
Provision (benefit) for bad debts27,226 10,262 16,964 41,956 (6,874)48,830 
Charges and credits(1,484)— (1,484)(1,484)— (1,484)
Total costs and expenses338,602 364,174 (25,572)664,497 657,966 6,531 
Operating income8,030 54,209 (46,179)21,955 124,119 (102,164)
Interest expense6,808 6,088 720 12,329 15,292 (2,963)
Loss on extinguishment of debt— — — — 1,218 (1,218)
Income before income taxes1,222 48,121 (46,899)9,626 107,609 (97,983)
Provision (benefit) for income taxes(907)11,117 (12,024)1,276 25,207 (23,931)
Net income$2,129 $37,004 $(34,875)$8,350 $82,402 $(74,052)
Supplementary Operating Segment Information
Operating segments are defined as components of an enterprise that engage in business activities and for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources and assess performance. We are a leading specialty retailer and offer a broad selection of quality, branded durable consumer goods and related services in addition to a proprietary credit solution for our core credit-constrained consumers. We have two operating segments: (i) retail and (ii) credit. Our operating segments complement one another. The retail segment operates primarily through our stores and website and its product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit segment offers affordable financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. Our operating segments provide customers the opportunity to comparison shop across brands with confidence in our competitive prices as well as affordable monthly payment options, next day delivery and installation in the majority of our markets, and product repair service. We believe our large, attractively merchandised retail stores and credit solutions offer a distinctive value proposition compared to other retailers that target our core customer demographic. The operating segments follow the same accounting policies used in our Condensed Consolidated Financial Statements.
We evaluate a segment’s performance based upon operating income (loss). SG&A includes the direct expenses of the retail and credit operations, allocated corporate overhead expenses, and a charge to the credit segment to reimburse the retail segment for expenses it incurs related to occupancy, personnel, advertising and other direct costs of the retail segment which benefit the credit operations by sourcing credit customers and collecting payments. The reimbursement received by the retail segment from the credit segment is calculated using an annual rate of 2.5% multiplied by the average outstanding portfolio balance for each applicable period.

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The following table represents total revenues, costs and expenses, operating income (loss) and income (loss) before taxes attributable to these operating segments for the periods indicated:
Retail Segment:Three Months Ended
July 31,
Six Months Ended
July 31,
(dollars in thousands)20222021Change20222021Change
Revenues:
Product sales$255,449 $320,245 $(64,796)$505,422 $589,456 $(84,034)
Repair service agreement commissions21,615 23,700 (2,085)41,452 42,831 (1,379)
Service revenues2,448 2,840 (392)4,901 5,794 (893)
Total net sales279,512 346,785 (67,273)551,775 638,081 (86,306)
Finance charges and other273 224 49 544 433 111 
Total revenues279,785 347,009 (67,224)552,319 638,514 (86,195)
Costs and expenses:  
Cost of goods sold182,718 216,042 (33,324)361,100 400,921 (39,821)
Selling, general and administrative expense (1)
98,035 102,157 (4,122)194,065 193,050 1,015 
Provision for bad debts409 142 267 588 160 428 
Charges and credits(1,484)— (1,484)(1,484)— (1,484)
Total costs and expenses279,678 318,341 (38,663)554,269 594,131 (39,862)
Operating (loss) income$107 $28,668 $(28,561)$(1,950)$44,383 $(46,333)
Number of stores:
Beginning of period161 152 158 146 
Opened
End of period (2)
163 155 163 155 

Credit Segment:Three Months Ended
July 31,
Six Months Ended
July 31,
(in thousands)20222021Change20222021Change
Revenues:
Finance charges and other revenues$66,847 $71,374 $(4,527)$134,133 $143,571 $(9,438)
Costs and expenses:   
Selling, general and administrative expense (1)
32,107 35,713 (3,606)68,860 70,869 (2,009)
Provision for bad debts26,817 10,120 16,697 41,368 (7,034)48,402 
Total costs and expenses58,924 45,833 13,091 110,228 63,835 46,393 
Operating income7,923 25,541 (17,618)23,905 79,736 (55,831)
Interest expense6,808 6,088 720 12,329 15,292 (2,963)
Loss on extinguishment of debt— — — — 1,218 (1,218)
Income before income taxes$1,115 $19,453 $(18,338)$11,576 $63,226 $(51,650)
(1)For the three months ended July 31, 2022 and 2021, the amount of overhead allocated to each segment reflected in SG&A was $6.6 million and $9.8 million, respectively. For the three months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $6.6 million and $6.9 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of corporate overhead allocated to each segment reflected in SG&A was $16.2 million and $18.8 million, respectively. For the six months ended July 31, 2022 and 2021, the amount of reimbursement made to the retail segment by the credit segment was $13.4 million and $14.2 million, respectively.
(2)Does not include four store-within-a-store locations with Belk, Inc. opened during the three and six months ended July 31, 2022.

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Three months ended July 31, 2022 compared to three months ended July 31, 2021
Revenues. The following table provides an analysis of retail net sales by product category in each period, including repair service agreement (“RSA”) commissions and service revenues, expressed both in dollar amounts and as a percent of total net sales:
 Three Months Ended July 31,%Same Store
(dollars in thousands)2022% of Total2021% of TotalChangeChange% Change
Furniture and mattress$86,320 30.9 %$109,259 31.5 %$(22,939)(21.0)%(24.6)%
Home appliance120,748 43.2 135,444 39.1 (14,696)(10.9)(13.1)
Consumer electronics31,860 11.4 48,413 14.0 (16,553)(34.2)(36.2)
Home office8,857 3.2 17,986 5.2 (9,129)(50.8)(50.1)
Other7,664 2.7 9,143 2.6 (1,479)(16.2)(16.9)
Product sales255,449 91.4 320,245 92.4 (64,796)(20.2)(22.7)
Repair service agreement commissions (1)
21,615 7.7 23,700 6.8 (2,085)(8.8)(15.3)
Service revenues2,448 0.9 2,840 0.8 (392)(13.8) 
Total net sales$279,512 100.0 %$346,785 100.0 %$(67,273)(19.4)%(22.0)%
(1) The total change in sales of RSA commissions includes retrospective commissions, which are not reflected in the change in same store sales.
The decrease in total net sales for the three months ended July 31, 2022 was primarily driven by a decrease in same store sales of 22.0%. The decrease in same store sales was primarily driven by a tightening of underwriting standards from our lease-to-own partners, the effect the benefits stimulus had on sales in the prior period and lower demand in the current period. The decrease in same store sales was partially offset by new store growth.
The following table provides the change of the components of finance charges and other revenues:
Three Months Ended
July 31,
(in thousands)20222021Change
Interest income and fees$61,760 $65,003 $(3,243)
Insurance income5,087 6,371 (1,284)
Other revenues273 224 49 
Finance charges and other revenues$67,120 $71,598 $(4,478)
The decrease in finance charges and other revenues was primarily due to a 4.9% decrease in the average outstanding balance of the customer accounts receivable portfolio as well as a decline in insurance commissions.
The following table provides key portfolio performance information: 
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Interest income and fees$61,760 $65,003 $(3,243)
Net charge-offs(36,074)(31,184)(4,890)
Interest expense(6,808)(6,088)(720)
Net portfolio income$18,878 $27,731 $(8,853)
Average outstanding portfolio balance$1,051,952 $1,105,936 $(53,984)
Interest income and fee yield (annualized)23.3 %23.3 %
Net charge-off % (annualized)13.7 %11.3 %

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Retail Gross Margin
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Retail total net sales$279,512 $346,785 $(67,273)
Cost of goods sold182,718 216,042 (33,324)
Retail gross margin$96,794 $130,743 $(33,949)
Retail gross margin percentage34.6 %37.7 %
The decrease in retail gross margin was primarily driven by increased product costs as a result of higher freight, higher fuel costs and the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions and a more profitable product mix.
Selling, General and Administrative Expense
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Retail segment$98,035 $102,157 $(4,122)
Credit segment32,107 35,713 (3,606)
Selling, general and administrative expense - Consolidated$130,142 $137,870 $(7,728)
Selling, general and administrative expense as a percent of total revenues37.5 %33.0 % 
The SG&A decrease in the retail segment was primarily due to a decline in variable costs and declines in advertising and labor costs as a result of cost saving initiatives. These decreases were partially offset by an increase in occupancy costs due to higher utilities costs and new store growth.
As a percent of average total customer portfolio balance (annualized), SG&A for the credit segment was 12.2% for the three months ended July 31, 2022 as compared to 12.9% for the three months ended July 31, 2021. The SG&A decrease in the credit segment was primarily due to a decrease in general operating costs, including legal and professional service fees.
Provision for Bad Debts
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Retail segment$409 $142 $267 
Credit segment26,817 10,120 16,697 
Provision for bad debts - Consolidated$27,226 $10,262 $16,964 
Provision for bad debts - Credit segment, as a percent of average outstanding portfolio balance (annualized)10.2 %3.7 % 

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The provision for bad debts increased to $27.2 million for the three months ended July 31, 2022 from $10.3 million for the three months ended July 31, 2021, an overall change of $16.9 million. The year-over-year increase was primarily driven by a smaller decrease in the allowance for bad debts during the three months ended July 31, 2022 compared to the three months ended July 31, 2021 and a year-over-year increase in net charge-offs of $4.9 million. The decrease in the allowance for bad debts during the three months ended July 31, 2022 was primarily driven by a decrease in the customer account receivable portfolio balance and an improvement in historical loss rates. During the three months ended July 31, 2021, the decrease was primarily driven by a decrease in the rate of delinquencies and re-ages, a decrease in the customer account receivable portfolio and an improvement in the forecasted unemployment rate that drove a $5.0 million decrease in the economic adjustment.
Charges and Credits
During the three months ended July 31, 2022, we recognized a $1.5 million gain related to the termination of a lease.
Interest Expense
Interest expense was $6.8 million for the three months ended July 31, 2022 and $6.1 million for the three months ended July 31, 2021, an increase of $0.7 million or 11.8%. The increase was driven by a higher average balance of debt offset by a lower effective interest rate.
Provision for Income Taxes
Three Months Ended
July 31,
(dollars in thousands)20222021Change
Provision (benefit) for income taxes$(907)$11,117 $(12,024)
Effective tax rate(74.2)%23.1 % 
The decrease in income tax expense for the three months ended July 31, 2022 compared to the three months ended July 31, 2021 was driven by a $46.9 million decrease in pre-tax earnings at the statutory rate of 21%.
Six months ended July 31, 2022 compared to six months ended July 31, 2021
Revenues. The following table provides an analysis of retail net sales by product category in each period, including repair service agreement (“RSA”) commissions and service revenues, expressed both in dollar amounts and as a percent of total net sales:
 Six Months Ended July 31,%Same Store
(dollars in thousands)2022% of Total2021% of TotalChangeChange% Change
Furniture and mattress$174,414 31.6 %$203,750 31.9 %$(29,336)(14.4)%(25.5)%
Home appliance230,476 41.7 248,705 39.0 (18,229)(7.3)(9.7)
Consumer electronics65,464 11.9 86,451 13.5 (20,987)(24.3)(26.3)
Home office19,046 3.5 32,507 5.1 (13,461)(41.4)(41.5)
Other16,022 2.9 18,043 2.8 (2,021)(11.2)(12.5)
Product sales505,422 91.6 589,456 92.3 (84,034)(14.3)(16.9)
Repair service agreement commissions (1)
41,452 7.5 42,831 6.7 (1,379)(3.2)(11.3)
Service revenues4,901 0.9 5,794 1.0 (893)(15.4)
Total net sales$551,775 100.0 %$638,081 100.0 %$(86,306)(13.5)%(16.4)%
(1) The total change in sales of RSA commissions includes retrospective commissions, which are not reflected in the change in same store sales.
The decrease in total net sales for the six months ended July 31, 2022 was primarily driven by a decrease in same store sales of 16.4%. The decrease in same store sales was primarily driven by a tightening of underwriting standards from our lease-to-own partners, the effect the benefits stimulus had on sales in the prior period and lower demand in the current period.

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The following table provides the change of the components of finance charges and other revenues:
Six Months Ended
July 31,
(in thousands)20222021Change
Interest income and fees$124,474 $132,682 $(8,208)
Insurance income9,659 10,889 (1,230)
Other revenues544 433 111 
Finance charges and other revenues$134,677 $144,004 $(9,327)
The decrease in finance charges and other revenues was primarily due to a 5.9% decrease in the average outstanding balance of the customer accounts receivable portfolio and a decline in insurance commissions.
The following table provides key portfolio performance information: 
Six Months Ended
July 31,
(dollars in thousands)20222021Change
Interest income and fees$124,474 $132,682 $(8,208)
Net charge-offs(68,535)(76,123)7,588 
Interest expense(12,329)(15,292)2,963 
Net portfolio income$43,610 $41,267 $2,343 
Average outstanding portfolio balance$1,074,901 $1,142,080 $(67,179)
Interest income and fee yield (annualized)23.4 %23.4 %
Net charge-off % (annualized)12.8 %13.3 %
Retail Gross Margin
Six Months Ended
July 31,
(dollars in thousands)20222021Change
Retail total net sales$551,775 $638,081 $(86,306)
Cost of goods sold361,100 400,921 (39,821)
Retail gross margin$190,675 $237,160 $(46,485)
Retail gross margin percentage34.6 %37.2 %
The decrease in retail gross margin was primarily driven by increased product costs as a result of higher freight, higher fuel costs and the deleveraging of fixed distribution costs. These increases were partially offset by an increase in RSA commissions.
Selling, General and Administrative Expense
Six Months Ended
July 31,
(dollars in thousands)20222021Change
Retail segment$194,065 $193,050 $1,015 
Credit segment68,860 70,869 (2,009)
Selling, general and administrative expense - Consolidated$262,925 $263,919 $(994)
Selling, general and administrative expense as a percent of total revenues38.3 %33.7 % 
The SG&A increase in the retail segment was primarily due to higher occupancy costs associated with new store growth and higher general operating costs. The increase was partially offset by declines in advertising and labor costs.
As a percent of average total customer portfolio balance (annualized), SG&A for the credit segment was 12.8% for the six months ended July 31, 2022 as compared to 12.4% for the six months ended July 31, 2021. The SG&A decrease in the credit segment was primarily due to a decline in labor costs. The increase in the SG&A as a percent of the average customer portfolio balance was due to a year-over-year decline in the portfolio balance.

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Provision for Bad Debts
Six Months Ended
July 31,
(dollars in thousands)20222021Change
Retail segment$588 $160 $428 
Credit segment41,368 (7,034)48,402 
Provision for bad debts - Consolidated$41,956 $(6,874)$48,830 
Provision for bad debts - Credit segment, as a percent of average outstanding portfolio balance (annualized)7.7 %(1.2)% 
The provision for bad debts increased to $42.0 million for the six months ended July 31, 2022 from $6.9 million benefit for the six months ended July 31, 2021, an overall change of $48.9 million. The year-over-year increase was primarily driven by a smaller decrease in the allowance for bad debts during the six months ended July 31, 2022 compared to the decrease for the six months ended July 31, 2021. This is partially offset by a year-over-year decrease in net charge-offs of $7.6 million. The decrease in the allowance for bad debts during the six months ended July 31, 2022 was primarily driven by a decrease in the customer accounts receivable portfolio balance and a decrease in loss rates. During the six months ended July 31, 2021, the decrease was primarily driven by a decrease in the customer accounts receivable portfolio balance, an improvement in the forecasted unemployment rate that drove a $25.0 million decrease in the economic adjustment and a decline in the estimated loss rates driven by a decline in delinquencies.
Charges and Credits
During the six months ended July 31, 2022, we recognized a $1.5 million gain related to the termination of a lease.
Interest Expense
Interest expense was $12.3 million for the six months ended July 31, 2022 and $15.3 million for the six months ended July 31, 2021, a decrease of $3.0 million or 19.6%. The decrease was driven by a lower effective interest rate offset by a higher average balance of debt during the current period.
Provision for Income Taxes
Six Months Ended
July 31,
(dollars in thousands)20222021Change
Provision (benefit) for income taxes$1,276 $25,207 $(23,931)
Effective tax rate13.3 %23.4 % 
The decrease in income tax expense for the six months ended July 31, 2022 compared to the six months ended July 31, 2021 was driven by a $98.0 million decrease in pre-tax earnings at the statutory rate of 21%.

Customer Accounts Receivable Portfolio
We provide in-house financing to individual consumers on a short- and medium-term basis (contractual terms generally range from 12 to 36 months) for the purchase of durable products for the home. A significant portion of our customer credit portfolio is due from customers that are considered higher-risk, subprime borrowers. Our financing is executed using contracts that require fixed monthly payments over fixed terms. We maintain a secured interest in the product financed. If a payment is delayed, missed or paid only in part, the account becomes delinquent. Our collection personnel attempt to contact a customer once their account becomes delinquent. Our loan contracts generally reflect an interest rate of between 18% and 36%. We have implemented our direct consumer loan program across all Texas, Louisiana, Tennessee and Oklahoma locations. The states of Texas, Louisiana, Tennessee and Oklahoma represented approximately 69% of our originations during the six months ended July 31, 2022, with maximum equivalent interest rates of up to 32% in Oklahoma, up to 30% in Texas and Tennessee, and up to 36% in Louisiana. In states where regulations do not generally limit the interest rate charged, our loan contracts generally reflect an interest rate between 29.99% and 35.99%. These states represented 14% of our originations during the six months ended July 31, 2022.
We offer qualified customers a 12-month no-interest option finance program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived.

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We regularly extend or “re-age” a portion of our delinquent customer accounts as a part of our normal collection procedures to protect our investment. Generally, extensions are granted to customers who have experienced a financial difficulty (such as the temporary loss of employment), which is subsequently resolved, and when the customer indicates a willingness and ability to resume making monthly payments. These re-ages involve modifying the payment terms to defer a portion of the cash payments currently required of the debtor to help the debtor improve his or her financial condition and eventually be able to pay the account balance. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. We may also charge the customer an extension fee, which approximates the interest owed for the time period the contract was past due. Our re-age programs consist of extensions and two payment updates, which include unilateral extensions to customers who make two full payments in three calendar months in certain states. Re-ages are not granted to debtors who demonstrate a lack of intent or ability to service the obligation or have reached our limits for account re-aging. To a much lesser extent, we may provide the customer the ability to re-age their obligation by refinancing the account, which typically does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extends the term. Under these options, as with extensions, the customer must resolve the reason for delinquency and show a willingness and ability to resume making contractual monthly payments.
The following tables present, for comparison purposes, information about our managed portfolio (information reflects on a combined basis the securitized receivables transferred to the VIEs and receivables not transferred to the VIEs): 
As of July 31,
20222021
Weighted average credit score of outstanding balances (1)
611 608 
Average outstanding customer balance$2,508 $2,414 
Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)(4)
11.0 %7.2 %
Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)(5)
16.1 %20.4 %
Carrying value of account balances re-aged more than six months (in thousands) (3)
$35,808 $70,058 
Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance 17.2 %18.3 %
Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables
34.0 %29.8 %
Three Months Ended
July 31,
Six Months Ended
July 31,
2022202120222021
Total applications processed 257,381 336,438 525,085 634,344 
Weighted average origination credit score of sales financed (1)
620 614 620 615 
Percent of total applications approved and utilized23.5 %22.5 %21.8 %22.2 %
Average income of credit customer at origination$50,800 $47,700 $50,500 $48,100 
Percent of retail sales paid for by:  
In-house financing, including down payments received52.1 %50.9 %51.0 %49.9 %
Third-party financing18.9 %17.5 %18.4 %17.2 %
Third-party lease-to-own option6.8 %11.5 %7.1 %11.9 %
77.8 %79.9 %76.5 %79.0 %
(1)Credit scores exclude non-scored accounts.
(2)Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts.
(3)Carrying value reflects the total customer accounts receivable portfolio balance, net of deferred fees and origination costs, the allowance for no-interest option credit programs and the allowance for uncollectible interest.
(4)Increase was primarily due to a decrease in cash collections driven by the impact of stimulus benefits in prior year.
(5)Decrease was primarily due to 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 and fiscal year 2022.
Our customer portfolio balance and related allowance for uncollectible accounts are segregated between customer accounts receivable and restructured accounts. Customer accounts receivable include all accounts for which the payment term has not

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been cumulatively extended over three months or refinanced. Restructured accounts include all accounts for which payment term has been re-aged in excess of three months or refinanced.
For customer accounts receivable (excluding restructured accounts), the allowance for uncollectible accounts as a percentage of the total customer accounts receivable portfolio balance decreased to 15.0% as of July 31, 2022 from 15.5% as of July 31, 2021. The decrease was primarily related to a decrease in loss rates.
The percentage of the carrying value of non-restructured accounts greater than 60 days past due increased 430 basis points over the prior year period to 9.6% as of July 31, 2022 from 5.3% as of July 31, 2021. The increase was primarily due to lower payment rates and the impact of stimulus benefits in the prior period.
For restructured accounts, the allowance for uncollectible accounts as a percentage of the portfolio balance was 43.0% as of July 31, 2022 as compared to 37.8% as of July 31, 2021. This increase reflects higher delinquency rates and loss rates on restructured accounts.
The percent of bad debt charge-offs, net of recoveries, to average outstanding portfolio balance was 13.7% for the three months ended July 31, 2022 compared to 11.3% for the three months ended July 31, 2021. This increase is primarily related to the impact of stimulus benefits in the prior period.
As of July 31, 2022 and 2021, balances under no-interest programs included within customer receivables were $354.1 million and $329.6 million, respectively. This increase is due to a shift in the underwriting strategy that occurred in the first quarter of fiscal year 2022.

Liquidity and Capital Resources 
We require liquidity and capital resources to finance our operations and future growth as we add new stores to our operations, which in turn requires additional working capital for increased customer receivables and inventory. We generally finance our operations through a combination of cash flow generated from operations, the use of our Revolving Credit Facility, and through periodic securitizations of originated customer receivables. We plan to execute periodic securitizations of future originated customer receivables.
We believe, based on our current projections, that we have sufficient sources of liquidity to fund our operations, store expansion and renovation activities, and capital expenditures for at least the next 12 months.
Operating cash flows.  For the six months ended July 31, 2022, net cash provided by operating activities was $62.8 million compared to $176.9 million for the six months ended July 31, 2021. The decrease in net cash provided by operating activities was primarily driven by lower cash collections compared to prior year due to lower payment rates, normal fluctuation in accrued expenses and a decrease in net income when adjusted for non-cash activity in comparison to the prior year period.
Investing cash flows.  For the six months ended July 31, 2022, net cash used in investing activities was $35.1 million compared to $19.2 million for the six months ended July 31, 2021. The cash used during the six months ended July 31, 2022 was primarily for investments in new stores and technology investments, including the acquisition of a lease-to-own technology platform. The cash used during the six months ended July 31, 2021 was primarily for investments in new stores.
Financing cash flows.  For the six months ended July 31, 2022, net cash provided by financing activities was $4.8 million compared to net cash used in financing activities of $178.3 million for the six months ended July 31, 2021. During the period ended July 31, 2022, we issued the 2022-A Class A and Class B VIE asset backed notes resulting in net proceeds to us of approximately $273.7 million and $129.1 million, net of transaction costs, respectively. The proceeds were used to pay down the balance of the Company's Revolving Credit Facility and for other general corporate purposes. During the period ended July 31, 2021, we issued 2020-A Class C VIE asset backed notes resulting in net proceeds to us of approximately $62.5 million, net of transaction costs. The proceeds from the 2020-A VIE asset-backed notes were used to partially pay down the balance of the Company's Revolving Credit Facility. Cash collections from the securitized receivables were used to make payments on asset-backed notes of approximately $174.4 million during the six months ended July 31, 2022 compared to approximately $261.4 million in the comparable prior year period. During the period ended July 31, 2022, net payments under the Revolving Credit Facility were $149.0 million compared to net borrowings of $167.0 million during the comparable prior year period. During the six months ended July 31, 2021, we retired the remaining $141.2 million aggregate principal amount of our Senior Notes outstanding.
Stock Repurchase Program. On December 14, 2021, our Board of Directors approved a stock repurchase program pursuant to which we had the authorization to repurchase up to $150 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022. No shares were repurchased for the three months ended July 31, 2022. For the six months ended July 31, 2022, we settled the repurchase of 3,462,848 shares of our common stock at an average weighted cost per share of $20.70 for an aggregate amount of $71.7 million.

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Asset-backed Notes. From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issue asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by the VIEs.
Under the terms of the securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of issued notes, and then to us as the holder of non-issued notes, if any, and residual equity. We retain the servicing of the securitized portfolios and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables. In addition, we, rather than the VIEs, retain all credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which are reflected as a reduction to net charge-offs on a consolidated basis.
The asset-backed notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act of 1933. If an event of default were to occur under the indenture that governs the respective asset-backed notes, the payment of the outstanding amounts may be accelerated, in which event the cash proceeds of the receivables that otherwise might be released to the residual equity holder would instead be directed entirely toward repayment of the asset-backed notes, or if the receivables are liquidated, all liquidation proceeds could be directed solely to repayment of the asset-backed notes as governed by the respective terms of the asset-backed notes. The holders of the asset-backed notes have no recourse to assets outside of the VIEs. Events of default include, but are not limited to, failure to make required payments on the asset-backed notes or specified bankruptcy-related events.
The asset-backed notes outstanding as of July 31, 2022 consisted of the following:
(dollars in thousands)
Asset-Backed NotesOriginal Principal Amount
Original Net Proceeds (1)
Current Principal AmountIssuance DateMaturity DateContractual Interest Rate
Effective Interest Rate (2)
2021-A Class A Notes$247,830 $246,152 $66,378 11/23/20215/15/20261.05%3.15%
2021-A Class B Notes66,090 65,635 66,090 11/23/20215/15/20262.87%3.53%
2021-A Class C Notes63,890 63,450 63,890 11/23/20215/15/20264.59%5.21%
2022-A Class A Notes275,600 273,731 275,600 7/21/202212/15/20265.87%8.57%
2022-A Class B Notes132,090 129,050 132,090 7/21/202212/15/20269.52%10.40%
Total$785,500 $778,018 $604,048 
(1)After giving effect to debt issuance costs.
(2)For the six months ended July 31, 2022, and inclusive of the impact of changes in timing of actual and expected cash flows.
On July 21, 2022, the Company completed the issuance and sale of approximately $407.7 million in aggregate principal amount of asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds to us of approximately 402.8 million, net of debt issuance costs. Net proceeds from the offering were used to repay indebtedness under the Company’s Revolving Credit Facility, as defined below, and for other general corporate purposes. The asset-backed notes mature on December 15, 2026 and consist of $275.6 million of 5.87% Asset Backed Fixed Rate Notes, Class A, Series 2022-A, approximately $132.1 million of 9.52% Asset Backed Fixed Rate Notes, Class B, Series 2022-A. Additionally, the Company issued approximately $63.1 million in aggregate principal amount of zero coupon Asset Backed Fixed Rate Notes, Class C, Series 2022-A (the "Class C Notes") which mature on December 15, 2026. The Class C Notes are currently being retained by the Company.
Revolving Credit Facility. On March 29, 2021, Conn’s, Inc. and certain of its subsidiaries (the “Borrowers”) entered into the Fifth Amended and Restated Loan and Security Agreement (the “Fifth Amended and Restated Loan Agreement”), with certain lenders, which provides for a $650.0 million asset-based revolving credit facility (as amended, the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base and a maturity date of March 29, 2025.
The Fifth Amended and Restated Loan Agreement, among other things, permits borrowings under the Letter of Credit Subline (as defined in the Fifth Amended and Restated Loan Agreement) that exceed the cap of $40 million to $100 million, solely at the discretion of the lenders for such amounts in excess of $40 million. The obligations under the Revolving Credit Facility are secured by substantially all assets of the Company, excluding the assets of the VIEs. As of July 31, 2022, under our Revolving Credit Facility, we had immediately available borrowing capacity of $186.8 million, net of standby letters of credit issued of $22.3 million and an additional $441.0 million that may become available if the balance of eligible customer receivables and total eligible inventory balances increases.
Loans under the Revolving Credit Facility bear interest, at our option, at a rate of LIBOR plus a margin ranging from 2.50% to 3.25% per annum (depending on a pricing grid determined by our total leverage ratio) or the alternate base rate plus a margin

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ranging from 1.50% to 2.25% per annum (depending on a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.50% per annum, depending on the average outstanding balance and letters of credit of the Revolving Credit Facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the Revolving Credit Facility was 3.8% for the six months ended July 31, 2022.
The Revolving Credit Facility places restrictions on our ability to incur additional indebtedness, grant liens on assets, make distributions on equity interests, dispose of assets, make loans, pay other indebtedness, engage in mergers, and other matters. The Revolving Credit Facility restricts our ability to make dividends and distributions unless no event of default exists and a liquidity test is satisfied. Subsidiaries of the Company may pay dividends and make distributions to the Company and other obligors under the Revolving Credit Facility without restriction. As of July 31, 2022, we were restricted from making distributions in excess of $151.5 million as a result of the Revolving Credit Facility distribution and payment restrictions. The Revolving Credit Facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the Revolving Credit Facility.
Debt Covenants. We were in compliance with our debt covenants at July 31, 2022. A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at July 31, 2022 is presented below:
 ActualRequired Minimum/ Maximum
Interest Coverage Ratio for the quarter must equal or exceed minimum4.04:1.001.00:1.00
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum5.38:1.001.50:1.00
Leverage Ratio must not exceed maximum1.57:1.004.50:1.00
ABS Excluded Leverage Ratio must not exceed maximum0.57:1.002.50:1.00
Capital Expenditures, net, must not exceed maximum$49.5 million$100.0 million
All capitalized terms in the above table are defined by the Revolving Credit Facility and may or may not match directly to the financial statement captions in this document. The covenants are calculated quarterly, except for capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter.
Capital Expenditures.  We lease the majority of our stores under operating leases and our plans for future store locations anticipate operating leases, but do not exclude store ownership. Our capital expenditures for future new store projects should primarily be for our tenant improvements to the property leased (including any new distribution centers and cross-dock facilities), the cost of which is estimated to be between $1.5 million and $2.5 million per store (before tenant improvement allowances). In the event we purchase existing properties, our capital expenditures will depend on the particular property and whether it is improved when purchased. We are continuously reviewing new relationships and funding sources and alternatives for new stores, which may include “sale-leaseback” or direct “purchase-lease” programs, as well as other funding sources for our purchase and construction of those projects. If we do not purchase the real property for new stores, our direct cash needs should include only our capital expenditures for tenant improvements to leased properties and our remodel programs for existing stores. We opened two new standalone stores and four new store-within-a-store locations with Belk, Inc. during the six months ended July 31, 2022 and currently plan to open a total of 10 to 12 standalone locations and 15 to 20 store-within-a-store locations. Our anticipated capital expenditures for the remainder of fiscal year 2023 are between $37.5 million and $47.5 million, which includes expenditures for new stores we plan to open in fiscal year 2023.
Cash Flow
We periodically evaluate our liquidity requirements, capital needs and availability of resources in view of inventory levels, expansion plans, debt service requirements and other operating cash needs. To meet our short- and long-term liquidity requirements, including payment of operating expenses, funding of capital expenditures and repayment of debt, we rely primarily on cash from operations. As of July 31, 2022, beyond cash generated from operations, we had (i) immediately available borrowing capacity of $186.8 million under our Revolving Credit Facility and (ii) $24.3 million of cash on hand. However, we have, in the past, sought to raise additional capital.
We expect that, for the next 12 months, cash generated from operations, proceeds from potential accounts receivable securitizations and our Revolving Credit Facility will be sufficient to provide us the ability to fund our operations, provide the increased working capital necessary to support our strategy and fund planned capital expenditures discussed above in Capital Expenditures.

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We may repurchase or otherwise retire our debt and take other steps to reduce our debt or otherwise improve our financial position. These actions could include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and opportunistic refinancing of debt. The amount of debt that may be repurchased or otherwise retired, if any, will depend on market conditions, the Company’s cash position, compliance with debt covenants and restrictions and other considerations.
Off-Balance Sheet Liabilities and Other Contractual Obligations
We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. The following table presents a summary of our minimum contractual commitments and obligations as of July 31, 2022: 
  Payments due by period
(in thousands)TotalLess Than 1
Year
1-3
Years
3-5
Years
More Than
5 Years
Debt, including estimated interest payments (1):
     
Revolving Credit Facility (1)
$— $— $— $— $— 
2021-A Class A Notes (2)
69,021 697 1,394 66,930 — 
2021-A Class B Notes (2)
73,283 1,897 3,794 67,592 — 
2021-A Class C Notes (2)
75,010 2,933 5,865 66,212 — 
2022-A Class A Notes (2)
346,427 16,178 32,355 297,894 — 
2022-A Class B Notes (2)
187,144 12,575 25,150 149,419 — 
Financing lease obligations7,278 1,198 2,120 1,161 2,799 
Operating leases:     
Real estate618,180 90,350 179,956 138,500 209,374 
Equipment52 23 28 — 
Contractual commitments (3)
99,579 95,917 3,629 33 — 
Total$1,475,974 $221,768 $254,291 $787,742 $212,173 
(1)Estimated interest payments are based on the outstanding balance as of July 31, 2022 and the interest rate in effect at that time.
(2)The payments due by period for the asset-backed notes were based on their respective maturity dates at their respective fixed annual interest rate. Actual principal and interest payments on the asset-backed notes will reflect actual proceeds from the securitized customer accounts receivables.
(3)Contractual commitments primarily include commitments to purchase inventory of $78.4 million.

Issuer and Guarantor Subsidiary Summarized Financial Information
Conn’s, Inc. is a holding company with no independent assets or operations other than its investments in its subsidiaries. As of July 31, 2022 and January 31, 2022, the direct or indirect subsidiaries of Conn’s, Inc. that were not Guarantors (the “Non-Guarantor Subsidiaries”) were the VIEs and minor subsidiaries. There are no restrictions under the indenture that governs the asset-backed notes on the ability of any of the Guarantors to transfer funds to Conn’s, Inc. in the form of dividends or distributions.

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The following tables present on a combined basis for the Issuer and the Guarantor Subsidiaries, a summarized Balance Sheet as of July 31, 2022 and January 31, 2022, and a summarized Statement of Operations on a consolidated basis for the six months ended July 31, 2022. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Amounts provided do not represent our total consolidated amounts, as of July 31, 2022 and January 31, 2022, and for the six months ended July 31, 2022:
(in thousands)July 31,
2022
January 31,
2022
Assets
Cash, cash equivalents and restricted cash$26,339 $9,765 
Customer accounts receivable
123,078 243,527 
Inventories262,952 246,826 
Net due from non-guarantor subsidiary
— 14,903 
Other current assets
72,479 78,556 
Total current assets484,848 593,577 
Long-term portion of customer accounts receivable
62,418 264,527 
Property and equipment, net210,814 192,763 
Right of use assets, net252,653 256,267 
Other assets50,849 52,199 
Total assets$1,061,582 $1,359,333 
Liabilities
Current portion of debt
$909 $889 
Lease liability operating - current57,940 54,534 
Net due to non-guarantor subsidiary347 — 
Other liabilities178,793 200,326 
Total current liabilities237,989 255,749 
Lease liability operating - non current
321,104 330,439 
Long-term debt
4,757 154,224 
Other long-term liabilities25,841 26,889 
Total liabilities$589,691 $767,301 
    
Six Months Ended
July 31,
Net sales and finances charges$646,313 
Servicing fee revenue from non-guarantor subsidiary21,332 
Total revenues667,645 
Total costs and expenses656,236 
Net income$11,409 

Critical Accounting Policies and Estimates 
The preparation of financial statements and related disclosures in conformity with GAAP requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Certain accounting policies are considered “critical accounting policies” because they are particularly dependent on estimates made by us about matters that are inherently uncertain and could have a material impact to our Condensed Consolidated Financial Statements. We base our estimates on historical experience and on other assumptions that we believe are reasonable. As a result, actual results could differ because of the use of estimates. Other than with respect to the additional policy below, the description of critical accounting policies is included in our 2022 Form 10-K, filed with the SEC on March 29, 2022.

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Recent Accounting Pronouncements
The information related to recent accounting pronouncements as set forth in Note 1, Summary of Significant Accounting Policies, of the Condensed Consolidated Financial Statements in Part I, Item 1, of this quarterly report on Form 10-Q is incorporated herein by reference.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in our financial instruments represents the potential loss arising from adverse changes in interest rates. We have not been materially impacted by fluctuations in foreign currency exchange rates, as substantially all of our business is transacted in, and is expected to continue to be transacted in, U.S. dollars or U.S. dollar-based currencies. Our asset-backed notes bear interest at a fixed rate and would not be affected by interest rate changes.
During the six months ended July 31, 2022, loans under the Revolving Credit Facility bore interest, at our option, at a rate equal to LIBOR plus a margin ranging from 2.50% to 3.25% per annum (depending on a pricing grid determined by our total leverage ratio). The alternate base rate plus a margin ranging from 1.50% to 2.25% per annum (depending on a pricing grid determined by our total leverage ratio). The alternate base rate is a rate per annum equal to the greatest of the prime rate, the federal funds effective rate plus 0.5%, or LIBOR for a 30-day interest period plus 1.0%. We also pay an unused fee on the portion of the commitments that is available for future borrowing or letters of credit at a rate ranging from 0.25% to 0.50% per annum, depending on the average outstanding balance and letters of credit on the Revolving Credit Facility in the immediately preceding quarter. Accordingly, changes in our quarterly total leverage ratio and LIBOR or the alternate base rate will affect the interest rate on, and therefore our costs under, the Revolving Credit Facility. As of July 31, 2022, there was no outstanding balance under our Revolving Credit Facility. A 100 basis point increase in interest rates on the Revolving Credit Facility would not change our borrowing costs over a 12-month period, based on the outstanding balance at July 31, 2022.

ITEM 4.      CONTROLS AND PROCEDURES 
Based on management’s evaluation (with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”)), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
For the quarter ended July 31, 2022, there have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II.     OTHER INFORMATION 

ITEM 1.      LEGAL PROCEEDINGS 
The information set forth in Note 6, Contingencies, of the Condensed Consolidated Financial Statements in Part I, Item 1, of this quarterly report on Form 10-Q is incorporated herein by reference. 

ITEM 1A.    RISK FACTORS 
As of the date of the filing, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our 2022 Form 10-K.


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ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information with respect to purchases of Conn's common stock by Conn's or its affiliates during the three months ended July 31, 2022.
Period
Total Number of Shares Purchased (in thousands) (1)
Average Price Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands) (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) (1)
May 1 - 31$— $23.0 
June 1 -30$— $23.0 
July 1 -31$— $23.0 
     Total

(1) On December 15, 2021, our Board of Directors approved a stock repurchase program pursuant to which we had the authorization to repurchase up to $150 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022.
(2) Average price paid per share excludes costs associated with the repurchases.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES 
None. 

ITEM 4.     MINE SAFETY DISCLOSURE 
Not applicable.

ITEM 5.      OTHER INFORMATION
None.

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ITEM 6.     EXHIBITS 
The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth with the name of the registrant, the type of report and registration number or last date of the period for which it was filed, and the exhibit number in such filing):
 
Exhibit
Number
Description of Document
3.1
3.1.1
3.1.2
3.1.3
3.1.4
3.2
4.1
4.2
10.1
10.2
10.3
10.4
31.1
31.2
32.1
101*The following financial information from our Quarterly Report on Form 10-Q for the second quarter of fiscal year 2023, filed with the SEC on August 30, 2022, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets at July 31, 2022 and January 31, 2022, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2022 and 2021, (iii) the Condensed Consolidated Statements of Shareholders Equity for the periods ended July 31, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2022 and 2021 and (v) the notes to the Condensed Consolidated Financial Statements.
104*Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

*Filed herewith

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
 CONN’S, INC. 
Date:August 30, 2022
    
 By:/s/ George L. Bchara 
  George L. Bchara 
  Executive Vice President and Chief Financial Officer 
  
(Principal Financial Officer and duly authorized to sign this report on behalf of the registrant)
 

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Document
EXHIBIT 31.1
CERTIFICATION
 
I, Chandra R. Holt, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Conn’s, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 /s/ Chandra R. Holt 
 Chandra R. Holt 
 Chief Executive Officer and President 

Date: August 30, 2022


Document
EXHIBIT 31.2

CERTIFICATION
 
I, George L. Bchara, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Conn’s, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 /s/ George L. Bchara 
 George L. Bchara 
 
Executive Vice President and Chief Financial Officer
 
 
Date: August 30, 2022


Document
EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Conn’s, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Chandra R. Holt, Chief Executive Officer and President of the Company, and George L. Bchara, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 /s/ Chandra R. Holt 
 Chandra R. Holt 
 Chief Executive Officer and President 
 /s/ George L. Bchara 
 George L. Bchara 
 
Executive Vice President and Chief Financial Officer
 

Date: August 30, 2022


A signed original of this written statement required by Section 906 has been provided to Conn’s, Inc. and will be retained by Conn’s, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.  The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.