UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 4, 2018
Conn's, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 001-34956 | 06-1672840 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2445 Technology Forest Blvd., Suite 800 The Woodlands, Texas | 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)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | o | |||
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
Item 2.02. Results of Operations and Financial Condition.
On September 4, 2018, Conn's, Inc. (the "Company") issued a press release reporting its second quarter fiscal year 2019 financial results. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
None of the information contained in Item 2.02 or Exhibit 99.1 of this Form 8-K shall be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and none of it shall be incorporated by reference in any filing under the Securities Act of 1933, as amended. Furthermore, this report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1* |
* Furnished herewith
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 hereunto duly authorized.
CONN'S, INC. | |||
Date: | September 4, 2018 | By: | /s/ Lee A. Wright |
Name: | Lee A. Wright | ||
Title: | Executive Vice President and Chief Financial Officer | ||
Exhibit 99.1
Conn's, Inc. Reports Second Quarter Fiscal 2019 Financial Results
First Quarter of Positive Same Store Sales in Three Years
Record Retail Gross Margin of 41.4%
Credit Segment Benefitting from Record Quarterly Revenues, Strong Credit Quality, and Lower Funding Costs
Record Second Quarter GAAP Earnings per Diluted Share of $0.53, an Increase of 279% over the Prior Year Period
THE WOODLANDS, Texas, September 4, 2018 - Conn's, Inc. (NASDAQ: CONN), a specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products, and provider of consumer credit, today announced its financial results for the quarter ended July 31, 2018.
“We achieved many operating and financial milestones during the second quarter of fiscal year 2019, highlighted by significant growth in earnings to a second quarter record of $0.53 per diluted share. Second quarter financial results were driven primarily by positive same store sales, the contribution of new store growth, record retail gross margin, and continued improvement in credit segment performance. The initiatives to drive retail growth are starting to take hold and second quarter same store sales increased for the first time since the second quarter of fiscal year 2016, while total retail sales were up 3.5% over the prior year period. The momentum in our business is encouraging and we continue to believe fiscal year 2019 will be a strong year,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer.
Second quarter of fiscal year 2019 highlights include:
• | First quarter of positive same store sales in three years, with total revenues up 3.5% over prior year period |
• | Record retail gross margin of 41.4% |
• | Credit spread of 750 basis points, the best second quarter credit spread in four years |
• | Record quarterly credit segment revenues of $88.2 million |
• | 60+ day delinquency rate of 9.0%, representing the fourth consecutive quarter that the rate has declined year-over-year and the first decline from the first quarter rate in seven years |
• | Second consecutive quarter of positive credit segment operating income |
• | Interest expense of $15.6 million, compared to $20.0 million for the same period last fiscal year |
• | GAAP earnings of $0.53 per diluted share, an increase of 279% over prior year period to a second quarter record |
• | Adjusted earnings of $0.57 per diluted share, an increase of 119% over prior year period |
1
Second Quarter Results
Net income for the three months ended July 31, 2018 was $17.0 million, or $0.53 per diluted share, compared to net income for the three months ended July 31, 2017 of $4.3 million, or $0.14 per diluted share. On a non-GAAP basis, adjusted net income for the three months ended July 31, 2018 was $18.3 million, or $0.57 per diluted share, which excludes the loss on extinguishment of debt from the early retirement of our Series 2017-A Class B and C Notes and a contingency reserve related to a regulatory matter. This compares to adjusted net income for the three months ended July 31, 2017 of $8.2 million, or $0.26 per diluted share, which excludes charges and credits and the loss from extinguishment of debt related to the early redemption of our Series 2015-A Class B Notes.
Retail Segment Second Quarter Results
Total retail revenues were $296.4 million for the three months ended July 31, 2018 compared to $286.5 million for the three months ended July 31, 2017. The increase of 3.5% was primarily driven by new store growth and an increase in same store sales. For the three months ended July 31, 2018 and 2017, retail segment operating income was $39.2 million and $31.3 million, respectively. On a non-GAAP basis, adjusted retail segment operating income for the three months ended July 31, 2018 was $39.5 million, after excluding a contingency reserve related to a regulatory matter. On a non-GAAP basis, adjusted retail segment operating income for the three months ended July 31, 2017 was $32.8 million, after excluding severance costs related to a change in the executive management team.
The following table presents net sales and changes in net sales by category:
Three Months Ended July 31, | % | Same Store | |||||||||||||||||||||
(dollars in thousands) | 2018 | % of Total | 2017 | % of Total | Change | Change | % Change | ||||||||||||||||
Furniture and mattress (1) | $ | 97,066 | 32.8 | % | $ | 95,297 | 33.3 | % | $ | 1,769 | 1.9 | % | (2.3 | )% | |||||||||
Home appliance | 91,471 | 30.9 | 89,085 | 31.1 | 2,386 | 2.7 | 0.4 | ||||||||||||||||
Consumer electronics (1) | 55,654 | 18.8 | 52,946 | 18.5 | 2,708 | 5.1 | 5.3 | ||||||||||||||||
Home office (1) | 19,289 | 6.5 | 17,862 | 6.2 | 1,427 | 8.0 | 8.5 | ||||||||||||||||
Other | 3,699 | 1.2 | 4,403 | 1.5 | (704 | ) | (16.0 | ) | (18.2 | ) | |||||||||||||
Product sales | 267,179 | 90.2 | 259,593 | 90.6 | 7,586 | 2.9 | 0.6 | ||||||||||||||||
Repair service agreement commissions (2) | 25,662 | 8.6 | 23,519 | 8.2 | 2,143 | 9.1 | (1.9 | ) | |||||||||||||||
Service revenues | 3,472 | 1.2 | 3,301 | 1.2 | 171 | 5.2 | |||||||||||||||||
Total net sales | $ | 296,313 | 100.0 | % | $ | 286,413 | 100.0 | % | $ | 9,900 | 3.5 | % | 0.3 | % | |||||||||
(1) | During the three months ended July 31, 2017, we reclassified certain products from the consumer electronics and home office product categories into the furniture and mattress product category. Net sales of these products reflected in the consumer electronics and home office product categories for the three months ended July 31, 2017 were $2.6 million and $0.8 million, respectively. The change in same store sales reflects the current product classification for both periods presented. |
(2) | The total change in sales of repair service agreement commissions includes retrospective commissions, which are not reflected in the change in same store sales. |
The following provides a summary of the same store sales performance of our product categories during the three months ended July 31, 2018 as compared to the three months ended July 31, 2017:
• | Furniture unit volume decreased 4.3%, partially offset by a 2.5% increase in average selling price; |
• | Mattress unit volume decreased 13.8%, partially offset by a 11.8% increase in average selling price; |
• | Home appliance average selling price increased 7.4%, partially offset by a 6.5% decrease in unit volume; |
• | Consumer electronic unit volume increased 2.2% and average sales price increased 3.0%; and |
• | Home office unit volume increased 13.7%, partially offset by a 4.5% decrease in average selling price. |
2
Credit Segment Second Quarter Results
Credit revenues were $88.2 million for the three months ended July 31, 2018 compared to $80.1 million for the three months ended July 31, 2017. The 10.1% increase in credit revenue was primarily due to the origination of our higher-yielding direct loan product, which resulted in an increase in the portfolio yield rate to 21.3% from 18.7%, and a 1.5% increase in the average balance of the customer receivable portfolio. The total customer portfolio balance was $1.51 billion at July 31, 2018 compared to $1.48 billion at July 31, 2017, an increase of 1.9%.
Provision for bad debts was $50.5 million for the three months ended July 31, 2018 compared to $49.3 million for the three months ended July 31, 2017, an increase of $1.2 million. The change reflects a greater decrease in the allowance for bad debts during the three months ended July 31, 2017 as compared to the three months ended July 31, 2018, partially offset by a year-over-year reduction in net charge-offs of $3.0 million.
Additional information on the credit portfolio and its performance may be found in the Customer Receivable Portfolio Statistics table included within this press release and in the Company's Form 10-Q for the quarter ended July 31, 2018, to be filed with the Securities and Exchange Commission.
Store Update
The Company opened two new Conn's HomePlus® stores in Texas during the first half of fiscal year 2019. In August, the Company opened one additional store in Virginia, bringing the total store count to 119 in 14 states. During fiscal year 2019, the Company plans to open a total of seven to nine new stores in existing states to leverage current infrastructure.
Liquidity and Capital Resources
As of July 31, 2018, the Company had $366.6 million of immediately available borrowing capacity under its $650.0 million revolving credit facility, with an additional $19.4 million that may become available under the Company's revolving credit facility if the Company grows the balance of eligible customer receivables and our total eligible inventory balances under the borrowing base. The Company also had $4.4 million of unrestricted cash available for use.
Outlook and Guidance
The following are the Company's expectations for the business for the third quarter of fiscal year 2019:
• | Change in same store sales between negative 5% and 0%: |
◦ | Markets not impacted by Hurricane Harvey between negative 2% and positive 2%; and |
◦ | Markets impacted by Hurricane Harvey between negative 12% and negative 5%; |
• | Retail gross margin between 40.5% and 41.0% of total retail net sales; |
• | Selling, general and administrative expenses between 30.5% and 32.5% of total revenues; |
• | Provision for bad debts between $44.0 million and $48.0 million; |
• | Finance charges and other revenues between $90.5 million and $94.5 million; and |
• | Interest expense between $16.5 million and $17.5 million. |
Conference Call Information
The Company will host a conference call on September 4, 2018 at 10 a.m. CT / 11 a.m. ET to discuss its three months ended July 31, 2018 financial results. Participants can join the call by dialing 877-451-6152 or 201-389-0879. The conference call will also be broadcast simultaneously via webcast on a listen-only basis. A link to the earnings release, webcast and the second quarter fiscal year 2019 conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed through September 11, 2018 by dialing 844-512-2921 or 412-317-6671 and Conference ID: 13682980.
About Conn's, Inc.
Conn's HomePlus is a specialty retailer currently operating 119 retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. The Company's primary product categories include:
• | Furniture and mattress, including furniture and related accessories for the living room, dining room and bedroom, as well as both traditional and specialty mattresses; |
• | Home appliance, including refrigerators, freezers, washers, dryers, dishwashers and ranges; |
3
• | Consumer electronics, including LED, OLED, QLED, 4K Ultra HD, and smart televisions, Blu-ray players, home theaters, portable audio equipment, and gaming products; |
• | Home office, including computers, printers and accessories. |
Additionally, Conn's HomePlus offers a variety of products on a seasonal basis. Unlike many of its competitors, Conn's HomePlus provides flexible in-house credit options for its customers in addition to third-party financing programs and third-party lease-to-own payment plans.
This press release contains forward-looking statements within the meaning of the federal securities laws, including but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. We can give no assurance that such statements will prove to be correct, and actual results may differ materially. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to execute periodic securitizations of future originated customer loans on favorable terms; our ability to continue existing customer financing programs or to offer new customer financing programs; changes in the delinquency status of our credit portfolio; unfavorable developments in ongoing litigation; increased regulatory oversight; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores; technological and market developments and sales trends for our major product offerings; our ability to manage effectively the selection of our major product offerings; our ability to protect against cyber-attacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and employees; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our revolving credit facility, and proceeds from accessing debt or equity markets; and other risks detailed in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended January 31, 2018, Part II, Item 1A, Risk Factors, in our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2018 to be filed with the SEC and other reports filed with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise, or to provide periodic updates or guidance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
CONN-G
S.M. Berger & Company
Andrew Berger (216) 464-6400
4
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Total net sales | $ | 296,313 | $ | 286,413 | $ | 572,069 | $ | 565,698 | |||||||
Finance charges and other revenues | 88,307 | 80,234 | 170,938 | 156,775 | |||||||||||
Total revenues | 384,620 | 366,647 | 743,007 | 722,473 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 173,627 | 172,306 | 340,216 | 344,256 | |||||||||||
Selling, general and administrative expense | 120,690 | 111,632 | 235,568 | 218,169 | |||||||||||
Provision for bad debts | 50,751 | 49,449 | 94,907 | 105,379 | |||||||||||
Charges and credits | 300 | 4,068 | 300 | 5,295 | |||||||||||
Total costs and expenses | 345,368 | 337,455 | 670,991 | 673,099 | |||||||||||
Operating income | 39,252 | 29,192 | 72,016 | 49,374 | |||||||||||
Interest expense | 15,566 | 20,039 | 32,386 | 44,047 | |||||||||||
Loss on extinguishment of debt | 1,367 | 2,097 | 1,773 | 2,446 | |||||||||||
Income before income taxes | 22,319 | 7,056 | 37,857 | 2,881 | |||||||||||
Provision for income taxes | 5,308 | 2,783 | 8,114 | 1,188 | |||||||||||
Net income | $ | 17,011 | $ | 4,273 | $ | 29,743 | $ | 1,693 | |||||||
Income per share: | |||||||||||||||
Basic | $ | 0.54 | $ | 0.14 | $ | 0.94 | $ | 0.05 | |||||||
Diluted | $ | 0.53 | $ | 0.14 | $ | 0.92 | $ | 0.05 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 31,652,017 | 31,093,746 | 31,597,225 | 31,033,880 | |||||||||||
Diluted | 32,242,463 | 31,434,501 | 32,210,759 | 31,292,305 | |||||||||||
5
CONN'S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Product sales | $ | 267,179 | $ | 259,593 | $ | 516,493 | $ | 510,955 | |||||||
Repair service agreement commissions | 25,662 | 23,519 | 48,525 | 48,215 | |||||||||||
Service revenues | 3,472 | 3,301 | 7,051 | 6,528 | |||||||||||
Total net sales | 296,313 | 286,413 | 572,069 | 565,698 | |||||||||||
Other revenues | 98 | 92 | 112 | 172 | |||||||||||
Total revenues | 296,411 | 286,505 | 572,181 | 565,870 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 173,627 | 172,306 | 340,216 | 344,256 | |||||||||||
Selling, general and administrative expense | 83,003 | 78,667 | 160,755 | 152,614 | |||||||||||
Provision for bad debts | 243 | 165 | 503 | 395 | |||||||||||
Charges and credits | 300 | 4,068 | 300 | 5,295 | |||||||||||
Total costs and expenses | 257,173 | 255,206 | 501,774 | 502,560 | |||||||||||
Operating income | $ | 39,238 | $ | 31,299 | $ | 70,407 | $ | 63,310 | |||||||
Retail gross margin | 41.4 | % | 39.8 | % | 40.5 | % | 39.1 | % | |||||||
Selling, general and administrative expense as percent of revenues | 28.0 | % | 27.5 | % | 28.1 | % | 27.0 | % | |||||||
Operating margin | 13.2 | % | 10.9 | % | 12.3 | % | 11.2 | % | |||||||
Store count: | |||||||||||||||
Beginning of period | 118 | 115 | 116 | 113 | |||||||||||
Opened | — | 1 | 2 | 3 | |||||||||||
End of period | 118 | 116 | 118 | 116 | |||||||||||
6
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Finance charges and other revenues | $ | 88,209 | $ | 80,142 | $ | 170,826 | $ | 156,603 | |||||||
Costs and expenses: | |||||||||||||||
Selling, general and administrative expense | 37,687 | 32,965 | 74,813 | 65,555 | |||||||||||
Provision for bad debts | 50,508 | 49,284 | 94,404 | 104,984 | |||||||||||
Total costs and expenses | 88,195 | 82,249 | 169,217 | 170,539 | |||||||||||
Operating income (loss) | 14 | (2,107 | ) | 1,609 | (13,936 | ) | |||||||||
Interest expense | 15,566 | 20,039 | 32,386 | 44,047 | |||||||||||
Loss on extinguishment of debt | 1,367 | 2,097 | 1,773 | 2,446 | |||||||||||
Loss before income taxes | $ | (16,919 | ) | $ | (24,243 | ) | $ | (32,550 | ) | $ | (60,429 | ) | |||
Selling, general and administrative expense as percent of revenues | 42.7 | % | 41.1 | % | 43.8 | % | 41.9 | % | |||||||
Selling, general and administrative expense as percent of average total customer portfolio balance (annualized) | 10.1 | % | 8.9 | % | 10.0 | % | 8.8 | % | |||||||
Operating margin | — | % | (2.6 | )% | 0.9 | % | (8.9 | )% | |||||||
7
CONN'S, INC. AND SUBSIDIARIES
CUSTOMER RECEIVABLE PORTFOLIO STATISTICS
(unaudited)
As of July 31, | |||||||
2018 | 2017 | ||||||
Weighted average credit score of outstanding balances(1) | 594 | 589 | |||||
Average outstanding customer balance | $ | 2,503 | $ | 2,375 | |||
Balances 60+ days past due as a percentage of total customer portfolio balance(2) | 9.0 | % | 10.4 | % | |||
Re-aged balance as a percentage of total customer portfolio balance(2)(3) | 24.3 | % | 16.0 | % | |||
Account balances re-aged more than six months (in thousands) | $ | 84,148 | $ | 75,694 | |||
Allowance for bad debts as a percentage of total customer portfolio balance | 13.5 | % | 13.7 | % | |||
Percent of total customer portfolio balance represented by no-interest option receivables | 20.9 | % | 24.1 | % | |||
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Total applications processed | 295,564 | 297,587 | 579,050 | 587,914 | |||||||||||
Weighted average origination credit score of sales financed(1) | 610 | 609 | 609 | 608 | |||||||||||
Percent of total applications approved and utilized | 31.4 | % | 32.8 | % | 30.9 | % | 32.1 | % | |||||||
Average down payment | 2.6 | % | 3.0 | % | 2.8 | % | 3.3 | % | |||||||
Average income of credit customer at origination | $ | 43,700 | $ | 42,300 | $ | 43,700 | $ | 42,200 | |||||||
Percent of retail sales paid for by: | |||||||||||||||
In-house financing, including down payment received | 70.5 | % | 72.6 | % | 70.3 | % | 71.6 | % | |||||||
Third-party financing | 16.4 | % | 17.2 | % | 15.7 | % | 16.2 | % | |||||||
Third-party lease-to-own option | 6.4 | % | 3.8 | % | 6.9 | % | 5.7 | % | |||||||
93.3 | % | 93.6 | % | 92.9 | % | 93.5 | % | ||||||||
(1) | Credit scores exclude non-scored accounts. |
(2) | Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts. |
(3) | The re-aged balance as a percentage of total customer portfolio as of July 31, 2018 includes $41.6 million, or 2.8%, in first time re-ages related to customers affected by Hurricane Harvey within FEMA-designated disaster areas. |
8
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
July 31, 2018 | January 31, 2018 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 4,435 | $ | 9,286 | |||
Restricted cash | 51,657 | 86,872 | |||||
Customer accounts receivable, net of allowances | 622,009 | 636,825 | |||||
Other accounts receivable | 87,797 | 71,186 | |||||
Inventories | 195,728 | 211,894 | |||||
Income taxes recoverable | 704 | 32,362 | |||||
Prepaid expenses and other current assets | 13,831 | 31,592 | |||||
Total current assets | 976,161 | 1,080,017 | |||||
Long-term portion of customer accounts receivable, net of allowances | 647,494 | 650,608 | |||||
Property and equipment, net | 142,631 | 143,152 | |||||
Deferred income taxes | 23,086 | 21,565 | |||||
Other assets | 7,129 | 5,457 | |||||
Total assets | $ | 1,796,501 | $ | 1,900,799 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Current maturities of debt and capital lease obligations | $ | 1,149 | $ | 907 | |||
Accounts payable | 85,001 | 71,617 | |||||
Accrued expenses | 93,070 | 66,173 | |||||
Other current liabilities | 22,763 | 25,414 | |||||
Total current liabilities | 201,983 | 164,111 | |||||
Deferred rent | 85,255 | 87,003 | |||||
Long-term debt and capital lease obligations | 916,081 | 1,090,105 | |||||
Other long-term liabilities | 23,535 | 24,512 | |||||
Total liabilities | 1,226,854 | 1,365,731 | |||||
Stockholders' equity | 569,647 | 535,068 | |||||
Total liabilities and stockholders' equity | $ | 1,796,501 | $ | 1,900,799 | |||
9
CONN'S, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(unaudited)
(dollars in thousands, except per share amounts)
RETAIL SEGMENT OPERATING INCOME, AS ADJUSTED
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Retail segment operating income, as reported | $ | 39,238 | $ | 31,299 | $ | 70,407 | $ | 63,310 | |||||||
Adjustments: | |||||||||||||||
Facility closure costs | — | 122 | — | 1,349 | |||||||||||
Securities-related regulatory matter and other legal fees | 300 | 34 | 300 | 34 | |||||||||||
Employee severance | — | 1,317 | — | 1,317 | |||||||||||
Retail segment operating income, as adjusted | $ | 39,538 | $ | 32,772 | $ | 70,707 | $ | 66,010 | |||||||
Retail segment total revenues | $ | 296,411 | $ | 286,505 | $ | 572,181 | $ | 565,870 | |||||||
Retail segment operating margin: | |||||||||||||||
As reported | 13.2 | % | 10.9 | % | 12.3 | % | 11.2 | % | |||||||
As adjusted | 13.3 | % | 11.4 | % | 12.4 | % | 11.7 | % | |||||||
NET INCOME, AS ADJUSTED, AND DILUTED INCOME PER SHARE, AS ADJUSTED
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income, as reported | $ | 17,011 | $ | 4,273 | $ | 29,743 | $ | 1,693 | |||||||
Adjustments: | |||||||||||||||
Facility closure costs | — | 122 | — | 1,349 | |||||||||||
Securities-related regulatory matter and other legal fees | 300 | 34 | 300 | 34 | |||||||||||
Employee severance | — | 1,317 | — | 1,317 | |||||||||||
Indirect tax audit reserve | — | 2,595 | — | 2,595 | |||||||||||
Loss on extinguishment of debt | 1,367 | 2,097 | 1,773 | 2,446 | |||||||||||
Tax impact of adjustments | (397 | ) | (2,232 | ) | (444 | ) | (2,803 | ) | |||||||
Net income, as adjusted | $ | 18,281 | $ | 8,206 | $ | 31,372 | $ | 6,631 | |||||||
Weighted average common shares outstanding - Diluted | 32,242,463 | 31,434,501 | 32,210,759 | 31,292,305 | |||||||||||
Income per share: | |||||||||||||||
As reported | $ | 0.53 | $ | 0.14 | $ | 0.92 | $ | 0.05 | |||||||
As adjusted | $ | 0.57 | $ | 0.26 | $ | 0.97 | $ | 0.21 | |||||||
Basis for presentation of non-GAAP disclosures:
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company also provides the following non-GAAP financial measures: retail segment adjusted operating income, retail segment adjusted operating margin, adjusted net income (loss), and adjusted income (loss) per diluted share. These non-GAAP financial measures are not meant to be considered as a substitute for, or superior to, comparable GAAP measures and should be considered in addition to results presented in accordance with GAAP. They are intended to provide additional insight into our operations and the factors and trends affecting the business. Management believes these non-GAAP financial measures are useful to financial statement readers because (1) they allow for greater transparency with respect to key metrics we use in our financial and operational decision making, and (2) they are used by some of our institutional investors and the analyst community to help them analyze our operating results.
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