Conn's, Inc. Reports Results for the Quarter Ended April 30, 2010
BEAUMONT, Texas, May 27, 2010 (BUSINESS WIRE) -- Conn's, Inc. (NASDAQ/NM: CONN), a specialty retailer of consumer electronics, home appliances, furniture, mattresses, computers and lawn and garden products today announced its operating results for the quarter ended April 30, 2010.
Significant items for the quarter include:
The change in total revenues was comprised of a total net sales decline of 18.6% to $163.0 million, and a decrease in finance charges and other of 13.1% to $34.5 million, as compared to the same quarter in the prior fiscal year. Same store sales (revenues earned in stores operated for the entirety of both periods) decreased 19.7% during the first quarter of fiscal 2011, as compared to the same quarter in the prior fiscal year. The sales results were impacted primarily by:
The Company improved its retail gross margin, which includes gross profit from both product and repair service agreement sales, to 27.9% for the quarter ended April 30, 2010, as compared to 23.7% in the quarter ended January 31, 2010, and 25.0% in the quarter ended April 30, 2009.
The key credit portfolio performance metrics reported for the quarter included:
More information on the credit portfolio and its performance may be found in the table included with this press release and in the Company's filing with the Securities and Exchange Commission on Form 10-Q which will be filed later today.
"I am encouraged by the positive trends we saw across our retail and credit operations this quarter, driven by improved execution by our team," said the Company's President and CEO, Tim Frank. "I believe we can continue to deliver improved performance, especially in the third and fourth quarters, given our higher level of execution and the recent stabilization of the economic conditions in our markets. The comparison for the third and fourth quarters will be against the periods that we saw the steepest declines in the economic conditions in our markets last year."
The Company reported Net income of $5.5 million, or diluted earnings per share of $0.25, for the first quarter of fiscal 2011, compared to Net income of $11.4 million, or diluted earnings per share of $0.50, for the first quarter of fiscal 2010.
During the quarter ended April 30, 2010, the Company reduced its debt balances by $32.5 million. The total amount immediately available for borrowing under all of the Company's borrowing agreements at April 30, 2010, was $65.4 million.
Conference Call Information
Conn's, Inc. will host a conference call and audio webcast today, May 27, 2010, at 10:00 AM, CDT, to discuss its financial results for the quarter ended April 30, 2010. The webcast will be available live at www.conns.com and will be archived for one year. Participants can join the call by dialing 877-754-5302 or 678-894-3020.
About Conn's, Inc.
The Company is a specialty retailer currently operating 76 retail locations in Texas, Louisiana and Oklahoma: with 23 stores in the Houston area, 20 in the Dallas/Fort Worth Metroplex, nine in San Antonio, five in Austin, five in Southeast Texas, one in Corpus Christi, four in South Texas, six in Louisiana and three in Oklahoma. It sells home appliances, including refrigerators, freezers, washers, dryers, dishwashers and ranges, and a variety of consumer electronics, including LCD, LED, 3-D, plasma and DLP televisions, camcorders, digital cameras, computers and computer accessories, Blu-ray and DVD players, video game equipment, portable audio, MP3 players, GPS devices and home theater products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. In the last three years, the Company financed, on average, approximately 61% of its retail sales.
This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to be correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to:
Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K/A filed on April 12, 2010. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
|CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS|
|(in thousands, except earnings per share)|
Three Months Ended
|Total net sales||$||200,151||$||163,039|
|Finance charges and other||39,700||34,480|
|Cost and expenses|
Cost of goods sold, including warehousing and occupancy costs
Cost of parts sold, including warehousing and occupancy costs
|Selling, general and administrative expense||62,738||60,743|
|Provision for bad debts||5,644||6,274|
|Total cost and expenses||216,839||183,546|
|Interest expense, net||5,004||4,785|
|Other (income) expense, net||(8||)||171|
|Income before income taxes||18,016||9,017|
|Provision for income taxes||6,660||3,470|
|Earnings per share|
|Average common shares outstanding|
|CONDENSED, CONSOLIDATED BALANCE SHEETS|
|January 31,||April 30,|
|Cash and cash equivalents||$||12,247||$||5,708|
|Other accounts receivable, net||23,254||30,291|
|Customer accounts receivable, net||368,304||353,551|
|Deferred income taxes||15,237||14,826|
|Prepaid expenses and other assets||16,198||6,628|
|Total current assets||498,739||499,905|
|Non-current deferred income tax asset||5,485||6,404|
|Long-term customer accounts receivable, net||318,341||302,070|
|Total property and equipment, net||59,703||56,363|
|Other assets, net||10,198||12,287|
|Liabilities and Stockholders' Equity|
|Current portion of long-term debt||$||64,055||$||100,162|
|Accrued compensation and related expenses||5,697||5,049|
|Other current liabilities||17,236||21,294|
|Total current liabilities||158,617||205,924|
|Other long-term liabilities||6,437||6,120|
|Total stockholders' equity||339,163||345,374|
|Total liabilities and stockholders' equity||$||892,466||$||877,029|
CALCULATION OF GROSS MARGIN PERCENTAGES
(dollars in thousands)
|Three Months Ended|
|B||Repair service agreement commissions, net||9,790||7,917|
|D||Total net sales||200,151||163,039|
|E||Finance charges and other||39,700||34,480|
Cost of goods sold, including warehousing and occupancy cost
Cost of parts sold, including warehousing and occupancy cost
|I||Gross margin dollars (F+G+H)||$||91,394||$||80,990|
|Gross margin percentage (I/F)||38.1||%||41.0||%|
|J||Retail margin dollars (A+B+G)||$||48,737||$||44,125|
|Retail margin percentage (J/(A+B))||25.0||%||27.9||%|
|MANAGED PORTFOLIO STATISTICS|
|For the periods ended January 31, 2007, 2008, 2009 and 2010 and April 30, 2009 and 2010|
|(dollars in thousands, except average outstanding balance per account)|
|January 31,||April 30,|
|Total outstanding balance||$||569,551||$||654,867||$||753,513||$||736,041||$||734,552||$||700,492|
|Average outstanding balance per account||$||1,241||$||1,282||$||1,401||$||1,335||$||1,401||$||1,335|
|60+ day delinquency||$||37,662||$||49,778||$||55,141||$||73,391||$||50,911||$||59,932|
|Percent of portfolio reaged||17.8||%||16.6||%||18.7||%||19.6||%||18.8||%||19.1||%|
|Net charge-off ratio (YTD annualized)||3.3||%||2.9||%||3.2||%||3.9||%||3.0||%||4.6||%|
SOURCE: Conn's, Inc.
Conn's, Inc., Beaumont
Chief Financial Officer
Michael J. Poppe, 409-832-1696 Ext. 3294
Copyright Business Wire 2010