View:
Download DOC
Download PDF
Download XLS
Download XBRL
conn-20220329
FALSE000122338900012233892022-03-292022-03-29

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): March 29, 2022
CONN’S, INC.
(Exact name of registrant as specified in its charter)
Delaware001-3495606-1672840
(State or other jurisdiction of
incorporation)		(Commission File Number)(IRS Employer Identification No.)
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)

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))
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 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 March 29, 2022, Conn’s, Inc. issued a press release reporting its fourth quarter and full year fiscal 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*
104Cover 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:March 29, 2022By:/s/ George L. Bchara
Name:George L. Bchara
Title:
Executive Vice President and Chief Financial Officer
Document

Exhibit 99.1
https://cdn.kscope.io/f7f6cce75d58eaabc8ef5ca61e8f5665-connshomepluslogoa28a.jpg
Conn’s, Inc. Reports Fourth Quarter and Full Year Fiscal Year 2022 Financial Results
Announces Acquisition of Lease-to-Own Technology Platform
Annual retail sales increased 22.7% to $1.3 billion
Annual eCommerce sales increased 171.3% to a record $71.3 million
Annual credit spread of 1,170 basis points, helps drive record annual credit segment profitability
Annual GAAP earnings increased to a record $3.61 per diluted share
Repurchased 20% of the Company’s outstanding shares

THE WOODLANDS, Texas, March 29, 2022 - Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a specialty retailer of home goods, including furniture, appliances and consumer electronics, with a mission to elevate home life to home love, today announced its financial results for the quarter and year ended January 31, 2022.

“Total retail sales increased 22.7% in fiscal year 2022 despite ongoing industry wide supply chain challenges and the emergence of the COVID-19 Omicron variant during the fourth quarter, reflecting the continued success of our strategic growth plan, our differentiated value proposition and the hard work and dedication of our team members. I am also encouraged by record eCommerce sales as we successfully expand our digital capabilities, and the significant growth in sales to our fast and reliable customer segment as we capitalize on a larger addressable market opportunity,” stated Chandra Holt, Conn's Chief Executive Officer.

“Pursuing growth opportunities across the spectrum of payment options has de-risked our business, increased our addressable market and improved credit segment performance, which helped drive record earnings in fiscal year 2022. In addition, enhancing our credit business is a key strategic priority for the Company. I am excited to announce progress towards this goal with the acquisition of lease-to-own technology assets that will enable us to originate and service lease-to-own customers in-house. I believe owning the lease-to-own platform will allow us to deliver a more seamless experience, capture a greater number of customers and financially benefit from the vertical integration of the lease-to-own business.”

"Throughout fiscal year 2023, we will focus on transforming our business by investing in initiatives that strengthen our core, enhance our credit business and accelerate eCommerce growth. We believe these investments will further increase our competitive advantage, drive controlled revenue and profitability growth and create sustainable value for our shareholders,” concluded Ms. Holt.
Fiscal Year 2022 Financial Highlights as Compared to the Prior Fiscal Year (Unless Otherwise Noted):
•Same store sales increased 15.3%, and increased 2.5% on a two-year basis;
•Strong same store sales combined with the contribution of new stores drove a 22.7% increase in total retail sales;
•eCommerce sales increased 171.3% to an annual record of $71.3 million;
•Credit spread was 1,170 basis points, helping drive record credit segment income before taxes of $63.9 million;
•Net earnings increased to $3.61 per diluted share, compared to a net loss of $0.11 per diluted share last fiscal year; and
•We repurchased 2,603,479 shares as of January 31, 2022, and as of March 25, 2022 repurchased a total of 5,919,479 shares, which equates to approximately 20% of the Company's outstanding shares as of October 31, 2021.
Fourth Quarter Financial Highlights as Compared to the Prior Fiscal Year Period (Unless Otherwise Noted):
•Same store sales increased 6.2%;
•Total retail sales increased 13.0%;
•eCommerce sales increased 131.8% to a quarterly record of $24.1 million;
•Net earnings were $0.26 per diluted share, compared to $0.85 per diluted share for the same period last fiscal year;
1

•At January 31, 2022, the carrying value of customer accounts receivable 60+ days past due declined 23.1% year-over-year, and the carrying value of re-aged accounts declined 40.7% year-over-year;
•Debt as a percent of the portfolio balance at January 31, 2022, was approximately 46.3%, compared to approximately 49.4% at January 31, 2021; and
•Net debt as a percent of the portfolio balance at January 31, 2022, was approximately 42.8%, compared to approximately 44.5% at January 31, 2021.
Fourth Quarter Results
Net income for the fourth quarter of fiscal year 2022 was $7.6 million, or $0.26 per diluted share, compared to net income for the fourth quarter of fiscal year 2021 of $25.1 million, or $0.85 per diluted share. On a non-GAAP basis, adjusted net income for the fourth quarter of fiscal year 2022 was $9.6 million, or $0.33 per diluted share, which excludes charges and credits for excess import freight costs related to unprecedented congestion in U.S. ports. This compares to adjusted net income for the fourth quarter of fiscal year 2021 of $27.1 million, or $0.91 per diluted share, which excludes charges and credits for severance costs related to a change in the executive management team and a gain on extinguishment of debt.
Retail Segment Fourth Quarter Results
Retail revenues were $333.0 million for the three months ended January 31, 2022 compared to $294.7 million for the three months ended January 31, 2021, an increase of $38.3 million or 13.0%. The increase in retail revenue was primarily driven by an increase in same store sales of 6.2%, an increase in RSA commissions and new store sales growth. The increase in same store sales reflects an increase in demand across most of the Company's home-related product categories. The increase also reflects the impact of prior year proactive underwriting changes, which were the result of the COVID-19 pandemic.
For the three months ended January 31, 2022 and January 31, 2021, retail segment operating income was $10.9 million and $12.7 million, respectively. On a non-GAAP basis, adjusted retail segment operating income for the three months ended January 31, 2022 was $13.6 million, which excludes charges and credits for excess import freight costs related to unprecedented congestion in U.S. ports. On a non-GAAP basis, adjusted retail segment operating income for the three months ended January 31, 2021 was $15.4 million, after excluding severance costs related to a change in the executive management team and a gain on extinguishment of debt.
The following table presents net sales and changes in net sales by category:
Three Months Ended January 31,Same Store
(dollars in thousands)2022% of Total2021% of TotalChange% Change% Change
Furniture and mattress$100,662 30.3 %$90,100 30.6 %$10,562 11.7 %2.4 %
Home appliance122,961 37.0 102,125 34.7 20,836 20.4 13.0 
Consumer electronics58,032 17.4 54,255 18.4 3,777 7.0 2.3 
Home office16,826 5.1 16,349 5.6 477 2.9 (4.5)
Other9,307 2.8 7,705 2.6 1,602 20.8 26.8 
Product sales307,788 92.6 270,534 91.9 37,254 13.8 6.6 
Repair service agreement commissions (1)
22,501 6.8 21,108 7.2 1,393 6.6 2.2 
Service revenues2,436 0.6 2,831 0.9 (395)(14.0) 
Total net sales$332,725 100.0 %$294,473 100.0 %$38,252 13.0 %6.2 %
(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 Fourth Quarter Results
Credit revenues were $69.5 million for the three months ended January 31, 2022 compared to $73.1 million for the three months ended January 31, 2021, a decrease of $3.6 million or 4.9%. The decrease in credit revenue was primarily due to a decrease of 10.2% in the average balance of the customer receivable portfolio, which was slightly offset by an increase in insurance commissions. The yield rate for the three months ended January 31, 2022 was 22.1% compared to 21.3% for the three months ended January 31, 2021. The total customer accounts receivable portfolio balance was $1.1 billion at January 31, 2022 compared to $1.2 billion at January 31, 2021, a decrease of 8.4%.
2

Provision for bad debts increased to $28.2 million for the three months ended January 31, 2022 compared to $25.1 million for the three months ended January 31, 2021, an increase of $3.1 million. The change was primarily driven by an increase in the change in allowance for bad debts, partially offset by a decrease in net charge-offs of $16.9 million. The increase in the change in allowance for bad debts was primarily driven by an increase in the customer account receivable portfolio balance during the fourth quarter of fiscal year 2022 versus a decrease in the fourth quarter of fiscal year 2021 and greater benefit related to the improvement of macroeconomic conditions in the prior year.

Credit segment operating income was $4.2 million for the three months ended January 31, 2022, compared to operating income of $14.6 million for the three months ended January 31, 2021. The decrease in credit segment operating income for the three months ended January 31, 2022 as compared to the three months ended January 31, 2021 was primarily driven by an increase in provision for bad debts as well as by a decline in credit revenue, as described above.
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-K for the year ended January 31, 2022, to be filed with the Securities and Exchange Commission on March 29, 2022.
Store and Facilities Update
The Company opened one new Conn’s HomePlus® store during the fourth quarter of fiscal year 2022 and has opened two new Conn’s HomePlus® stores during the first quarter of fiscal year 2023, bringing the total store count to 160 in 15 states. During fiscal year 2023, the Company plans to open 13 to 16 new stores, including the two already opened, in existing states to leverage current infrastructure.
Liquidity and Capital Resources
As of January 31, 2022, the Company had $352.2 million of immediately available borrowing capacity under its $650.0 million revolving credit facility. The Company also had $7.7 million of unrestricted cash available for use.
On November 23, 2021, the Company completed an ABS transaction resulting in the issuance and sale of $377.8 million aggregate principal amount of Class A, Class B and Class C Notes secured by customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds of $375.2 million, and an all-in cost of funds of 3.91%.
On December 30, 2021 the Company completed the redemption of the 2019-B Asset Backed Notes at an aggregate redemption price of $52.4 million (which was equal to the entire outstanding principal balance plus accrued interest).
Share Repurchase Program

On December 15, 2021, the board of directors approved a stock repurchase program pursuant to which the Company is authorized to repurchase up to $150.0 million of our outstanding common stock. The stock repurchase program expires on December 14, 2022. For the year ended January 31, 2022, we repurchased 2,603,479 shares of our common stock at an average weighted cost per share of $22.61 for an aggregate amount of $58.9 million. As of March 25, 2022, we have repurchased a total of 5,919,479 shares, which equates to approximately 20% of the Company's shares outstanding as of October 31, 2021.

Conference Call Information
The Company will host a conference call on March 29, 2022, at 10 a.m. CT / 11 a.m. ET, to discuss its financial results for the three months and full year ended January 31, 2022. 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 fourth quarter and full year fiscal year 2022 conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed through April 5, 2022 by dialing 844-512-2921 or 412-317-6671 and Conference ID: 13725847.
About Conn’s, Inc.
Conn's HomePlus (NASDAQ: CONN) is a specialty retailer of home goods, including furniture, appliances and consumer electronics, with a mission to elevate home life to home love. With 160 stores across 15 states and online at Conns.com, our over 4,000 employees strive to help all customers create a home they love through access to high-quality products, next-day delivery and personalized payment options, including our flexible, in-house credit program. Additional information can be found by visiting our investor relations website at https://ir.conns.com and social channels (@connshomeplus on Twitter, Instagram, Facebook and LinkedIn).

This press release contains forward-looking statements within the meaning of the federal securities laws, including but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,”
3

“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 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 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

4

CONN’S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Revenues:
Total net sales$332,725 $294,473 $1,305,389 $1,064,311 
Finance charges and other revenues69,763 73,318 284,642 321,714 
Total revenues402,488 367,791 1,590,031 1,386,025 
Costs and expenses:
Cost of goods sold213,768 184,300 825,987 668,315 
Selling, general and administrative expense142,490 128,324 544,490 478,767 
Provision for bad debts28,526 25,139 48,184 202,003 
Charges and credits2,677 2,737 2,677 6,326 
Total costs and expenses387,461 340,500 1,421,338 1,355,411 
Operating income15,027 27,291 168,693 30,614 
Interest expense5,260 10,603 25,758 50,381 
Loss (gain) on extinguishment of debt— (440)1,218 (440)
Income (loss) before income taxes9,767 17,128 141,717 (19,327)
Provision (benefit) for income taxes2,203 (7,998)33,512 (16,190)
Net income (loss)$7,564 $25,126 $108,205 $(3,137)
Earnings (loss) per share:
Basic$0.26 $0.86 $3.70 $(0.11)
Diluted$0.26 $0.85 $3.61 $(0.11)
Weighted average common shares outstanding:
Basic28,815,757 29,199,678 29,267,691 29,060,512 
Diluted29,638,572 29,647,593 30,001,490 29,060,512 

5

CONN’S, INC. AND SUBSIDIARIES
RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Revenues:
Product sales$307,788 $270,534 $1,205,545 $973,031 
Repair service agreement commissions22,501 21,108 89,101 78,838 
Service revenues2,436 2,831 10,743 12,442 
Total net sales332,725 294,473 1,305,389 1,064,311 
Other revenues254 217 949 816 
Total revenues332,979 294,690 1,306,338 1,065,127 
Costs and expenses:
Cost of goods sold213,768 184,300 825,987 668,315 
Selling, general and administrative expense105,374 94,951 399,393 335,954 
Provision for bad debts283 21 479 443 
Charges and credits2,677 2,737 2,677 4,092 
Total costs and expenses322,102 282,009 1,228,536 1,008,804 
Operating income$10,877 $12,681 $77,802 $56,323 
Retail gross margin35.8 %37.4 %36.7 %37.2 %
Selling, general and administrative expense as percent of revenues31.6 %32.2 %30.6 %31.5 %
Operating margin3.3 %4.3 %6.0 %5.3 %
Store count:
Beginning of period157 143 146 137 
Opened1 3 12 9 
End of period158 146 158 146 

6

CONN’S, INC. AND SUBSIDIARIES
CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Revenues:
Finance charges and other revenues$69,509 $73,101 $283,693 $320,898 
Costs and expenses:
Selling, general and administrative expense37,116 33,373 145,097 142,813 
Provision for bad debts28,243 25,118 47,705 201,560 
Charges and credits— — — 2,234 
Total costs and expenses65,359 58,491 192,802 346,607 
Operating income (loss)4,150 14,610 90,891 (25,709)
Interest expense5,260 10,603 25,758 50,381 
Loss (gain) on extinguishment of debt— (440)1,218 (440)
Income (loss) before income taxes$(1,110)$4,447 $63,915 $(75,650)
Selling, general and administrative expense as percent of revenues53.4 %45.7 %51.1 %44.5 %
Selling, general and administrative expense as percent of average outstanding customer accounts receivable balance (annualized)13.1 %10.6 %12.8 %10.2 %
Operating margin6.0 %20.0 %32.0 %(8.0)%

7

CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO STATISTICS
(unaudited)
January 31,
20222021
Weighted average credit score of outstanding balances (1)
606 600 
Average outstanding customer balance$2,498 $2,463 
Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)(4)
10.4 %12.4 %
Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)(5)
16.8 %25.9 %
Carrying value of account balances re-aged more than six months (in thousands) (3)
$50,282 $92,883 
Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance18.5 %24.2 %
Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables (7)
33.7 %20.5 %
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Total applications processed325,569 342,924 1,297,025 1,251,002 
Weighted average origination credit score of sales financed (1)
619 617 616 615 
Percent of total applications approved and utilized21.3 %21.2 %21.8 %21.5 %
Average income of credit customer at origination$51,100 $48,500 $49,100 $47,100 
Percent of retail sales paid for by:
In-house financing, including down payments received51.2 %50.9 %51.0 %52.1 %
Third-party financing18.3 %19.9 %17.7 %20.4 %
Third-party lease-to-own option8.9 %9.8 %10.4 %8.5 %
 78.4 %80.6 %79.1 %81.0 %
(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)Decrease was primarily due to an increase in cash collections that occurred in fiscal year 2022 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.
(6)Increase is due to a shift in underwriting strategy that occurred in the first quarter of fiscal year 2022.

8

CONN’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
January 31,
20222021
Assets
Current Assets:
Cash and cash equivalents$7,707 $9,703 
Restricted cash31,930 50,557 
Customer accounts receivable, net of allowances455,787 478,734 
Other accounts receivable63,055 61,716 
Inventories246,826 196,463 
Income taxes receivable6,745 38,059 
Prepaid expenses and other current assets8,756 8,831 
Total current assets820,806 844,063 
Long-term portion of customer accounts receivable, net of allowances432,431 430,749 
Operating lease right-of-use assets256,267 265,798 
Property and equipment, net192,763 190,962 
Deferred income taxes— 9,448 
Other assets52,199 14,064 
Total assets$1,754,466 $1,755,084 
Liabilities and Stockholders’ Equity
Current liabilities:
Current finance lease obligations$889 $934 
Accounts payable74,705 69,367 
Accrued expenses109,712 82,990 
Operating lease liability - current54,534 44,011 
Other current liabilities18,576 14,454 
Total current liabilities258,416 211,756 
Operating lease liability - non current330,439 354,598 
Long-term debt and finance lease obligations522,149 608,635 
Deferred tax liability7,351 — 
Other long-term liabilities21,292 22,940 
Total liabilities1,139,647 1,197,929 
Stockholders’ equity614,819 557,155 
Total liabilities and stockholders’ equity$1,754,466 $1,755,084 

9

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 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 retail segment operating income, adjusted net income, adjusted net income per diluted share, and net debt. These non-GAAP financial measures are not meant to be considered as a substitute for, or superior to, comparable GAAP measures and should be considered in addition to results presented in accordance with GAAP. They are intended to provide additional insight into our operations and the factors and trends affecting the business. Management believes these non-GAAP financial measures are useful to financial statement readers because (1) they allow for greater transparency with respect to key metrics we use in our financial and operational decision making and (2) they are used by some of our institutional investors and the analyst community to help them analyze our operating results.

RETAIL SEGMENT ADJUSTED OPERATING INCOME
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Retail segment operating income, as reported$10,877 $12,681 $77,802 $56,323 
Adjustments:
Professional fees (1)
— — — 1,355 
Employee severance (2)
— 2,737 — 2,737 
Excess import freight costs (3)
2,677 — 2,677 — 
Retail segment operating income, as adjusted$13,554 $15,418 $80,479 $60,415 
(1)Represents costs related to professional fees associated with non-recurring expenses.
(2)Represents severance costs related to a change in the executive management team.
(3)Represents non-recurring domestic transportation costs incurred due to unprecedented congestion in U.S. ports.
















10

ADJUSTED NET INCOME AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
Three Months Ended
January 31,		Year Ended
January 31,
2022202120222021
Net income (loss), as reported$7,564 $25,126 $108,205 $(3,137)
Adjustments:
Professional fees (1)
— — — 3,589 
Employee severance (2)
— 2,737 — 2,737 
Excess import freight costs(3)
2,677 — 2,677 — 
Loss (gain) on extinguishment of debt (4)
— (440)1,218 (440)
Tax impact of adjustments (5)
(602)(306)(876)(1,111)
Net income, as adjusted$9,639 $27,117 $111,224 $1,638 
Weighted average common shares outstanding - Diluted29,638,572 29,647,593 30,001,490 29,287,950 
Diluted earnings (loss) per share:
As reported$0.26 $0.85 $3.61 $(0.11)
As adjusted$0.33 $0.91 $3.71 $0.06 
(1)Represents costs related to professional fees associated with non-recurring expenses.
(2)Represents severance costs related to a change in the executive management team.
(3)Represents non-recurring domestic transportation costs due to unprecedented congestion in U.S. ports.
(4)Represents benefits and costs incurred for the early retirement of our debt.
(5)Represents the tax effect of the adjusted items based on the applicable statutory tax rate.

NET DEBT
January 31,
20222021
Debt, as reported
Current finance lease obligations$889$934
Long-term debt and finance lease obligations522,149608,635
  Total debt523,038609,569
Cash, as reported
Cash and cash equivalents7,7079,703
Restricted cash31,93050,557
   Total cash39,63760,260
   Net debt$483,401$549,309
Ending portfolio balance, as reported$1,130,395$1,233,717
Net debt as a percentage of the portfolio balance42.8%44.5%
11