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): June 3, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
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 | ||||||||||||||
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 June 3, 2021, Conn’s, Inc. issued a press release reporting its first quarter fiscal year 2022 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* | |||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | ||||||||||||||||
* 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: | June 3, 2021 | By: | /s/ George L. Bchara | ||||||||
| Name: | George L. Bchara | ||||||||||
| Title: | Executive Vice President and Chief Financial Officer | ||||||||||
Exhibit 99.1
Conn’s, Inc. Reports First Quarter Fiscal Year 2022 Financial Results
THE WOODLANDS, Texas, June 3, 2021 - Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), 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 April 30, 2021.
“Same store sales exceeded our expectations and increased 19.4% and total sales increased 26.5% as our team capitalized on robust consumer demand and the successful execution of our strategic growth initiatives. Strong first quarter sales were driven by a 70.0% increase in retail sales financed through cash, credit card, and third-party offerings, as our in-house credit underwriting strategy remained conservative during the quarter,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer.
“We generated the highest quarterly net earnings in our 131 year history as a result of strong operating performance from both our retail and credit segments. We significantly grew retail sales, while simultaneously managing credit risk demonstrating the power of our unique and hybrid business model, which we believe supports a meaningful and long-term opportunity to expand our platform and attract more consumers.”
“Throughout fiscal year 2022, we are focused on building on the positive momentum underway and pursuing our strategic initiatives, which include increasing retail sales across our best-in-class financing options, executing on our digital transformation, and expanding our brick-and-mortar footprint. I am extremely encouraged by the direction we are headed, and proud of our team’s resiliency and dedication over the past year,” concluded Mr. Miller.
First Quarter Financial Highlights:
•Net earnings for the first quarter increased to a quarterly record of $1.52 per diluted share, compared to a loss of $1.95 per diluted share for the same period last fiscal year;
•Same store sales increased 19.4% for the first quarter of fiscal year 2022 as compared to the first quarter of fiscal year 2021 and increased 1.8% on a two-year basis as compared to the first quarter of fiscal year 2020, primarily due to higher cash and third-party credit sales and an increase in demand across most of the Company’s home-related product categories;
•E-commerce sales during the first quarter of fiscal year 2022 increased 95.7% as compared to the prior fiscal year period;
•Lease-to-own sales during the first quarter of fiscal year 2022 increased 82.0%, as compared to the prior fiscal year period;
•During the first quarter of fiscal year 2022, the Company added six new showrooms, including five within the state of Florida, bringing the total number of showrooms at April 30, 2021 to 152, compared to 139 at April 30, 2020; and
•At April 30, 2021, the carrying value of customer accounts receivable 60+ days past due declined 49.4% year-over-year to the lowest level in seven fiscal years, and the carrying value of re-aged accounts declined 45.1% year-over-year to the lowest level in four fiscal years.
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First Quarter Results
Net income for the three months ended April 30, 2021 was $45.4 million, or $1.52 per diluted share, compared to net loss for the three months ended April 30, 2020 of $56.2 million, or $1.95 per diluted share. The increase in net income was primarily due to an increase in retail revenue and a decrease in the provision for bad debts. On a non-GAAP basis, adjusted net income for the three months ended April 30, 2021 was $46.3 million, or $1.55 per diluted share, which excludes a loss on extinguishment of debt. This compares to adjusted net loss for the three months ended April 30, 2020 of $54.6 million, or $(1.89) per diluted share, which excludes professional fees associated with non-recurring expenses related to fiscal year 2020.
Retail Segment First Quarter Results
Retail revenues were $291.5 million for the three months ended April 30, 2021 compared to $230.6 million for the three months ended April 30, 2020, an increase of $60.9 million or 26.4%. The increase in retail revenue was primarily driven by an increase in same store sales of 19.4% and by new store growth. The increase in same store sales reflects higher cash and third-party credit sales and increase in demand across most of the Company’s home-related product categories. The increase also reflects the impact of prior year reductions in store hours, state mandated stay-at-home orders and lower sales of discretionary categories as a result of the COVID-19 pandemic.
For the three months ended April 30, 2021 and 2020, retail segment operating income was $15.7 million and $5.2 million, respectively. The increase in retail segment operating income for the three months ended April 30, 2021 was primarily due to an increase in revenue.
The following table presents net sales and changes in net sales by category:
| Three Months Ended April 30, | Same Store | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2021 | % of Total | 2020 | % of Total | Change | % Change | % Change | ||||||||||||||||||||||||||||||||||
| Furniture and mattress | $ | 94,491 | 32.4 | % | $ | 68,893 | 29.9 | % | $ | 25,598 | 37.2 | % | 27.0 | % | |||||||||||||||||||||||||||
| Home appliance | 113,261 | 38.9 | 81,285 | 35.3 | 31,976 | 39.3 | 32.3 | ||||||||||||||||||||||||||||||||||
| Consumer electronics | 38,038 | 13.1 | 35,776 | 15.5 | 2,262 | 6.3 | 3.6 | ||||||||||||||||||||||||||||||||||
| Home office | 14,521 | 5.0 | 17,366 | 7.5 | (2,845) | (16.4) | (19.3) | ||||||||||||||||||||||||||||||||||
| Other | 8,900 | 3.1 | 3,878 | 1.8 | 5,022 | 129.5 | 116.7 | ||||||||||||||||||||||||||||||||||
| Product sales | 269,211 | 92.5 | 207,198 | 90.0 | 62,013 | 29.9 | 22.9 | ||||||||||||||||||||||||||||||||||
Repair service agreement commissions (1) | 19,131 | 6.6 | 20,101 | 8.7 | (970) | (4.8) | (7.6) | ||||||||||||||||||||||||||||||||||
| Service revenues | 2,954 | 0.9 | 3,031 | 1.3 | (77) | (2.5) | |||||||||||||||||||||||||||||||||||
| Total net sales | $ | 291,296 | 100.0 | % | $ | 230,330 | 100.0 | % | $ | 60,966 | 26.5 | % | 19.4 | % | |||||||||||||||||||||||||||
(1) The total change in sales of repair service agreement commissions includes retrospective commissions, which are not reflected in the change in same store sales.
Credit Segment First Quarter Results
Credit revenues were $72.2 million for the three months ended April 30, 2021 compared to $86.6 million for the three months ended April 30, 2020, a decrease of $14.4 million or 16.6%. The decrease in credit revenue was primarily due to a 24.8% decrease in the average outstanding balance of the customer accounts receivable portfolio. These decreases were partially offset by an increase in the yield rate, from 21.3% for the three months ended April 30, 2020 to 23.7% for the three months ended April 30, 2021.
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Provision for bad debts decreased to $(17.2) million for the three months ended April 30, 2021 from $117.2 million for the three months ended April 30, 2020, a decrease of $134.4 million. The year-over-year decrease was primarily driven by a decrease in the allowance for bad debts during the three months ended April 30, 2021 compared to an increase during the three months ended April 30, 2020 and by a year-over-year decrease in net charge-offs of $13.9 million. The decrease in the allowance for bad debts during the three months ended April 30, 2021 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 $20.0 million decrease in the economic adjustment. During the three months ended April 31, 2020, the increase in the allowance for bad debts was primarily due to a $65.5 million increase in the economic adjustment driven by an increase in forecasted unemployment rates stemming from the COVID-19 pandemic.
Credit segment operating income was $54.2 million for the three months ended April 30, 2021, compared to a loss of $67.5 million for the three months ended April 30, 2020. The increase was primarily due to the decrease in the provision for bad debts partially offset by the decrease in credit revenue.
Additional information on the credit portfolio and its performance may be found in the Customer Accounts Receivable Portfolio Statistics table included within this press release and in the Company’s Form 10-Q for the quarter ended April 30, 2021, to be filed with the Securities and Exchange Commission on June 3, 2021 (the “First Quarter Form 10-Q”).
Showroom and Facilities Update
The Company opened six new Conn’s HomePlus® showrooms during the first quarter of fiscal year 2022 and has opened one new Conn’s HomePlus® showroom during the second quarter of fiscal year 2022, bringing the total showroom count to 153 in 15 states. During fiscal year 2022, the Company plans to open a total of eleven to thirteen new showrooms in existing states, including the seven already opened, to leverage current infrastructure.
Liquidity and Capital Resources
As of April 30, 2021, the Company had $290.4 million of immediately available borrowing capacity under its $650.0 million revolving credit facility. The Company also had $6.6 million of unrestricted cash available for use.
During the three months ended April 30, 2021, cash provided by operating activities of $130.8 million contributed to strengthening the Company's balance sheet and decreasing net debt as a percentage of the portfolio balance at April 30, 2021 to 39%, the lowest level in eight fiscal years.
On May 12, 2021, the Company completed the redemption of the 2019-A Asset Backed Notes at an aggregate redemption price of $41.1 million (which was equal to the entire outstanding principal balance plus accrued interest). We funded the redemption with cash on hand and borrowings under our revolving credit agreement.
Conference Call Information
The Company will host a conference call on June 3, 2021, at 10 a.m. CT / 11 a.m. ET, to discuss its three months ended April 30, 2021 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 first quarter fiscal year 2022 conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed through June 10, 2021 by dialing 844-512-2921 or 412-317-6671 and Conference ID: 13719634.
About Conn’s, Inc.
Conn’s is a specialty retailer currently operating 153 retail locations in Alabama, Arizona, Colorado, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. The Company’s primary product categories include:
•Furniture and mattress, including furniture and related accessories for the living room, dining room and bedroom, as well as both traditional and specialty mattresses;
•Home appliance, including refrigerators, freezers, washers, dryers, dishwashers and ranges;
•Consumer electronics, including LED, OLED, QLED, 4K Ultra HD, and 8K televisions, gaming products, next generation video game consoles and home theater and portable audio equipment; and
•Home office, including computers, printers and accessories.
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Additionally, Conn’s offers a variety of products on a seasonal basis. Unlike many of its competitors, Conn’s provides flexible in-house credit options for its customers in addition to third-party financing programs and third-party lease-to-own payment plans.
This press release contains forward-looking statements within the meaning of the federal securities laws, including but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. We can give no assurance that such statements will prove to be correct, and actual results may differ materially. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements, including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to execute periodic securitizations of future originated customer loans on favorable terms; our ability to continue existing customer financing programs or to offer new customer financing programs; changes in the delinquency status of our credit portfolio; unfavorable developments in ongoing litigation; increased regulatory oversight; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores; technological and market developments and sales trends for our major product offerings; our ability to manage effectively the selection of our major product offerings; our ability to protect against cyber-attacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and employees; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our revolving credit facility, and proceeds from accessing debt or equity markets; the effects of epidemics or pandemics, including the COVID-19 outbreak; 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, 2021 and other reports filed with the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise, or to provide periodic updates or guidance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
CONN-G
S.M. Berger & Company
Andrew Berger (216) 464-6400
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CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Revenues: | |||||||||||
| Total net sales | $ | 291,296 | $ | 230,330 | |||||||
| Finance charges and other revenues | 72,406 | 86,830 | |||||||||
| Total revenues | 363,702 | 317,160 | |||||||||
| Costs and expenses: | |||||||||||
| Cost of goods sold | 184,879 | 147,014 | |||||||||
| Selling, general and administrative expense | 126,049 | 113,007 | |||||||||
| Provision for bad debts | (17,136) | 117,326 | |||||||||
| Charges and credits | — | 2,055 | |||||||||
| Total costs and expenses | 293,792 | 379,402 | |||||||||
| Operating income (loss) | 69,910 | (62,242) | |||||||||
| Interest expense | 9,204 | 14,993 | |||||||||
| Loss on extinguishment of debt | 1,218 | — | |||||||||
| Income (loss) before income taxes | 59,488 | (77,235) | |||||||||
| Provision (benefit) for income taxes | 14,090 | (21,033) | |||||||||
| Net income (loss) | $ | 45,398 | $ | (56,202) | |||||||
| Income (loss) per share: | |||||||||||
| Basic | $ | 1.55 | $ | (1.95) | |||||||
| Diluted | $ | 1.52 | $ | (1.95) | |||||||
| Weighted average common shares outstanding: | |||||||||||
| Basic | 29,324,052 | 28,822,396 | |||||||||
| Diluted | 29,881,407 | 28,822,396 | |||||||||
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CONN’S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
| Three Months Ended April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Revenues: | |||||||||||
| Product sales | $ | 269,211 | $ | 207,198 | |||||||
| Repair service agreement commissions | 19,131 | 20,101 | |||||||||
| Service revenues | 2,954 | 3,031 | |||||||||
| Total net sales | 291,296 | 230,330 | |||||||||
| Finance charges and other | 209 | 235 | |||||||||
| Total revenues | 291,505 | 230,565 | |||||||||
| Costs and expenses: | |||||||||||
Cost of goods sold | 184,879 | 147,014 | |||||||||
| Selling, general and administrative expense | 90,893 | 78,174 | |||||||||
| Provision for bad debts | 18 | 168 | |||||||||
| Charges and credits | — | — | |||||||||
| Total costs and expenses | 275,790 | 225,356 | |||||||||
| Operating income | $ | 15,715 | $ | 5,209 | |||||||
| Retail gross margin | 36.5 | % | 36.2 | % | |||||||
Selling, general and administrative expense as percent of revenues | 31.2 | % | 33.9 | % | |||||||
| Operating margin | 5.4 | % | 2.3 | % | |||||||
| Store count: | |||||||||||
| Beginning of period | 146 | 137 | |||||||||
| Opened | 6 | 2 | |||||||||
| End of period | 152 | 139 | |||||||||
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CONN’S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
| Three Months Ended April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Revenues: | |||||||||||
| Finance charges and other revenues | $ | 72,197 | $ | 86,595 | |||||||
| Costs and expenses: | |||||||||||
| Selling, general and administrative expense | 35,156 | 34,833 | |||||||||
| Provision for bad debts | (17,154) | 117,158 | |||||||||
| Charges and credits | — | 2,055 | |||||||||
| Total costs and expenses | 18,002 | 154,046 | |||||||||
| Operating income (loss) | 54,195 | (67,451) | |||||||||
| Interest expense | 9,204 | 14,993 | |||||||||
| Loss on extinguishment of debt | 1,218 | — | |||||||||
| Income (loss) before income taxes | $ | 43,773 | $ | (82,444) | |||||||
Selling, general and administrative expense as percent of revenues | 48.7 | % | 40.2 | % | |||||||
Selling, general and administrative expense as percent of average outstanding customer accounts receivable balance (annualized) | 12.0 | % | 8.9 | % | |||||||
| Operating margin | 75.1 | % | (77.9) | % | |||||||
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CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO STATISTICS
(unaudited)
| As of April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
Weighted average credit score of outstanding balances (1) | 603 | 587 | |||||||||
| Average outstanding customer balance | $ | 2,410 | $ | 2,676 | |||||||
Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)(4) | 9.1 | % | 13.3 | % | |||||||
Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)(5) | 23.8 | % | 32.3 | % | |||||||
Carrying value of account balances re-aged more than six months (in thousands) (3) | $ | 81,033 | $ | 115,830 | |||||||
| Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance | 20.4 | % | 26.2 | % | |||||||
Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables | 24.8 | % | 17.3 | % | |||||||
| Three Months Ended April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Total applications processed | 297,906 | 295,551 | |||||||||
Weighted average origination credit score of sales financed (1) | 617 | 609 | |||||||||
| Percent of total applications approved and utilized | 21.8 | % | 22.3 | % | |||||||
| Average income of credit customer at origination | $ | 48,500 | $ | 45,800 | |||||||
| Percent of retail sales paid for by: | |||||||||||
| In-house financing, including down payments received | 48.7 | % | 63.3 | % | |||||||
| Third-party financing | 16.8 | % | 17.1 | % | |||||||
| Third-party lease-to-own option | 12.3 | % | 8.5 | % | |||||||
| 77.8 | % | 88.9 | % | ||||||||
(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)Decrease was primarily due to an increase in cash collections and the tightening of underwriting standards that occurred in fiscal year 2021.
(5)Decrease was primarily due to an increase in cash collections, 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.
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CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
| April 30, 2021 | January 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 6,568 | $ | 9,703 | |||||||
| Restricted cash | 51,647 | 50,557 | |||||||||
| Customer accounts receivable, net of allowances | 457,215 | 478,734 | |||||||||
| Other accounts receivable | 50,249 | 61,716 | |||||||||
| Inventories | 202,900 | 196,463 | |||||||||
| Income taxes receivable | 34,485 | 38,059 | |||||||||
| Prepaid expenses and other current assets | 10,948 | 8,831 | |||||||||
| Total current assets | 814,012 | 844,063 | |||||||||
| Long-term portion of customer accounts receivable, net of allowances | 404,335 | 430,749 | |||||||||
| Property and equipment, net | 186,613 | 190,962 | |||||||||
| Operating lease right-of-use assets | 260,672 | 265,798 | |||||||||
| Deferred income taxes | — | 9,448 | |||||||||
| Other assets | 16,530 | 14,064 | |||||||||
| Total assets | $ | 1,682,162 | $ | 1,755,084 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current finance lease obligations | $ | 898 | $ | 934 | |||||||
| Accounts payable | 64,947 | 69,367 | |||||||||
| Accrued expenses | 83,276 | 82,990 | |||||||||
| Operating lease liability - current | 51,102 | 44,011 | |||||||||
| Other current liabilities | 17,295 | 14,454 | |||||||||
| Total current liabilities | 217,518 | 211,756 | |||||||||
| Operating lease liability - non current | 345,544 | 354,598 | |||||||||
| Long-term debt and finance lease obligations | 492,055 | 608,635 | |||||||||
| Other long-term liabilities | 23,271 | 22,940 | |||||||||
| Total liabilities | 1,078,388 | 1,197,929 | |||||||||
| Stockholders’ equity | 603,774 | 557,155 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,682,162 | $ | 1,755,084 | |||||||
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CONN’S, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(unaudited)
(dollars in thousands, except per share amounts)
Basis for presentation of non-GAAP disclosures:
To supplement the Condensed Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company also provides the following non-GAAP financial measures: adjusted net income (loss), adjusted net income (loss) per diluted share and net debt as a percentage of the portfolio balance. These non-GAAP financial measures are not meant to be considered as a substitute for, or superior to, comparable GAAP measures and should be considered in addition to results presented in accordance with GAAP. They are intended to provide additional insight into our operations and the factors and trends affecting the business. Management believes these non-GAAP financial measures are useful to financial statement readers because (1) they allow for greater transparency with respect to key metrics we use in our financial and operational decision making and (2) they are used by some of our institutional investors and the analyst community to help them analyze our operating results.
ADJUSTED NET INCOME AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
| Three Months Ended April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net income (loss), as reported | $ | 45,398 | $ | (56,202) | |||||||
| Adjustments: | |||||||||||
Loss on extinguishment of debt (1) | 1,218 | — | |||||||||
Professional fees (2) | — | 2,055 | |||||||||
Tax impact of adjustments | (274) | (461) | |||||||||
| Net income (loss), as adjusted | $ | 46,342 | $ | (54,608) | |||||||
| Weighted average common shares outstanding - Diluted | 29,881,407 | 28,822,396 | |||||||||
| Earnings (loss) per share: | |||||||||||
| As reported | $ | 1.52 | $ | (1.95) | |||||||
| As adjusted | $ | 1.55 | $ | (1.89) | |||||||
(1)Represents a loss of $1.0 million from retirement of $141.2 million aggregate principal amount of our 7.25% senior notes due 2022 (“Senior Notes”) and a loss of $0.2 million related to the amendment of our Fifth Amended and Restated Loan and Security Agreement.
(2)Represents professional fees associated with non-recurring expenses related to fiscal year 2020.
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Net Debt
| April 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Debt, as reported | |||||||||||
| Current finance lease obligations | $ | 898 | $ | 772 | |||||||
| Long-term debt and finance lease obligations | 492,055 | 1,172,987 | |||||||||
| Total debt | 492,953 | 1,173,759 | |||||||||
| Cash, as reported | |||||||||||
| Cash and cash equivalents | 6,568 | 287,337 | |||||||||
| Restricted Cash | 51,647 | 73,455 | |||||||||
| Total cash | 58,215 | 360,792 | |||||||||
| Net debt | $ | 434,738 | $ | 812,967 | |||||||
| Ending portfolio balance, as reported | $ | 1,113,335 | $ | 1,499,965 | |||||||
| Net debt as a percentage of the portfolio balance | 39.0 | % | 54.2 | % | |||||||
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