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Conn’s, Inc. Reports Fourth Quarter and Full Year Fiscal Year 2023 Financial Results

Conn's, Inc.
Conn's, Inc.

THE WOODLANDS, Texas, March 29, 2023 (GLOBE NEWSWIRE) -- 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, 2023.

“Our fourth quarter performance reflects the actions underway to refocus our efforts on serving our core credit constrained customers as we continue to face the impacts of macroeconomic headwinds and changes in consumer behavior. Providing multiple financing options is our key differentiator and we are pursuing profitable growth strategies aimed at enhancing the payment options we provide the tens of millions of consumers who visit our stores and website each year,” stated Norm Miller Interim President and Chief Executive Officer.

“During the fourth quarter, we completed the final phase of our eCommerce platform conversion, which further enhances our digital capabilities and produced record fourth-quarter and full-year eCommerce sales. In addition, we recently began originating our first in-house lease-to-own transactions and we expect to expand this program throughout fiscal year 2024. We believe our in-house lease-to-own program will be a transformative opportunity for the Company that has the potential to significantly benefit revenue and earnings in the coming years,” continued Mr. Miller.

“While we believe the economic landscape will remain challenging throughout the coming fiscal year, we are confident that the strategies we are pursuing will enable us to emerge from this period stronger, more focused and better positioned to create lasting value for our customers, employees, and shareholders,” concluded Mr. Miller.

Fiscal Year 2023 Financial Highlights as Compared to the Prior Fiscal Year (Unless Otherwise Noted):

  • Total consolidated revenue declined 15.6% to $1.3 billion, due to a 17.5% decline in total net sales, and a 6.6% reduction in finance charges and other revenues;

  • Same store sales decreased 20.5%;

  • eCommerce sales increased 10.8% to an annual record of $79.0 million;

  • Carrying value of re-aged accounts declined to $160.9 million from $182.0 million;

  • Credit spread was 910 basis points;

  • Reported a net loss of $2.46 per diluted share, compared to net income of $3.61 per diluted share for the same period last fiscal year; and

  • Reported an adjusted net loss of $2.00 per diluted share, compared to an adjusted net income of $3.71 per diluted share last fiscal year.

Fourth Quarter Financial Highlights as Compared to the Prior Fiscal Year Period (Unless Otherwise Noted):

  • Total consolidated revenue declined 16.8% to $334.9 million, due to an 18.7% decline in total net sales, and a 7.7% reduction in finance charges and other revenues;

  • Same store sales decreased 21.8%;

  • eCommerce sales increased to a quarterly record of $24.2 million;

  • Reported a net loss of $1.79 per diluted share, compared to net income of $0.26 per diluted share for the same period last fiscal year; and

  • Reported an adjusted net loss of $1.53 per diluted share, compared to an adjusted net income of $0.33 per diluted share for the same period last fiscal year.

Fourth Quarter Results

Net loss for the fourth quarter of fiscal year 2023 was $42.8 million, or $1.79 per diluted share, compared to net income for the fourth quarter of fiscal year 2022 of $7.6 million, or $0.26 per diluted share. On a non-GAAP basis, adjusted net loss for the fourth quarter of fiscal year 2023 was $36.7 million, or $1.53 per diluted share, which excludes charges and credits for asset disposal and store closure costs. This compares to adjusted net income for the fourth quarter of fiscal year 2022 of $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.

Retail Segment Fourth Quarter Results

Retail revenues were $270.8 million for the three months ended January 31, 2023 compared to $333.0 million for the three months ended January 31, 2022, a decrease of $62.2 million, or 18.7%. The decrease in retail revenue was primarily driven by a decrease in same store sales of 21.8%. The decrease in same store sales was primarily driven by lower discretionary spending for home-related products and lower lease-to-own sales. These decreases were partially offset by new store growth.

For the three months ended January 31, 2023, retail segment operating loss was $19.5 million compared to retail segment operating income of $10.9 million for the three months ended January 31, 2022. On a non-GAAP basis, adjusted retail segment operating loss for the three months ended January 31, 2023 was $11.7 million, which excludes charges and credits for asset disposal and store closure costs. 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.

The following table presents net sales and changes in net sales by category:

 

Three Months Ended January 31,

 

 

 

 

 

Same Store

(dollars in thousands)

 

2023

 

% of Total

 

 

2022

 

% of Total

 

Change

 

% Change

 

% Change

Furniture and mattress

$

85,984

 

31.8

%

 

$

100,662

 

30.3

%

 

$

(14,678

)

 

(14.6)%

 

(18.3)%

Home appliance

 

96,891

 

35.8

 

 

 

122,961

 

37.0

 

 

 

(26,070

)

 

(21.2

)

 

(23.3

)

Consumer electronics

 

42,493

 

15.7

 

 

 

58,032

 

17.4

 

 

 

(15,539

)

 

(26.8

)

 

(28.7

)

Home office

 

9,871

 

3.6

 

 

 

16,826

 

5.1

 

 

 

(6,955

)

 

(41.3

)

 

(42.0

)

Other

 

12,763

 

4.8

 

 

 

9,307

 

2.8

 

 

 

3,456

 

 

37.1

 

 

10.5

 

Product sales

 

248,002

 

91.7

 

 

 

307,788

 

92.6

 

 

 

(59,786

)

 

(19.4

)

 

(22.7

)

Repair service agreement commissions (1)

 

20,190

 

7.5

 

 

 

22,501

 

6.8

 

 

 

(2,311

)

 

(10.3

)

 

(12.4

)

Service revenues

 

2,265

 

0.8

 

 

 

2,436

 

0.6

 

 

 

(171

)

 

(7.0

)

 

 

Total net sales

$

270,457

 

100.0

%

 

$

332,725

 

100.0

%

 

$

(62,268

)

 

(18.7)%

 

(21.8)%

(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 $64.1 million for the three months ended January 31, 2023 compared to $69.5 million for the three months ended January 31, 2022, a decrease of $5.4 million or 7.8%. The decrease in credit revenue was primarily due to a decrease of 8.9% in the average balance of the customer receivable portfolio as well as a decrease in insurance commissions.

Provision for bad debts increased to $44.1 million for the three months ended January 31, 2023 compared to $28.2 million for the three months ended January 31, 2022, an increase of $15.9 million. The change was driven by an increase in net charge-offs of $16.3 million in the three months ended January 31, 2023.

Credit segment operating loss was $13.9 million for the three months ended January 31, 2023, compared to operating income of $4.2 million for the three months ended January 31, 2022. The decrease in credit segment operating income for the three months ended January 31, 2023 as compared to the three months ended January 31, 2022 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 fiscal year ended January 31, 2023, to be filed with the Securities and Exchange Commission on March 29, 2023.

Store and Facilities Update

The Company opened four new standalone stores and closed one standalone store during the fourth quarter of fiscal year 2023 bringing the total store count to 168 in 15 states. During fiscal year 2024, the Company plans to open 11 new standalone locations.

Liquidity and Capital Resources

As of January 31, 2023, the Company had $143.8 million of immediately available borrowing capacity under its $650.0 million revolving credit facility. The Company also had $19.5 million of unrestricted cash available for use.

On November 21, 2022, the Company entered into an Amendment No.1 (the "Amendment") to the Fifth Amended and Restated Loan and Security Agreement. The Amendment, among other things, replaces the interest rate benchmark and provides for a covenant relief period beginning with the third quarter of fiscal year 2023 and continuing until the Company delivers financial statements and compliance certificate for the fiscal quarter ending April 30, 2024, unless earlier terminated pursuant to the terms of the Amendment. Additional detail with respect to the Amendment No.1 to the Fifth Amended and Restated Loan Agreement may be found in the Third Quarter Form 10-Q.

On November 30, 2022, the Company completed the sale of $63.1 million in aggregate principal amount of zero coupon Asset Backed Fixed Rate Notes, Class C, Series 2022-A (the "Class C Notes") which were previously issued and held by the Company. The asset backed notes are secured by the transferred customer accounts receivables and restricted cash held by a consolidated VIE. Net proceeds from the sale were used for general corporate purposes.

On February 21, 2023, the Company entered into a $100.0 million three-year Term Loan that was used to pay down the balance of our ABL facility. The Term Loan is secured by liens on substantially all of the assets of the Company and their subsidiaries. As of March 24, 2023, the Company had $209.2 million of cash plus availability under our $650.0 million revolving credit facility.

Conference Call Information

The Company will host a conference call on March 29, 2023, at 10 a.m. CT / 11 a.m. ET, to discuss its financial results for the three months and full year ended January 31, 2023. 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 2023 conference call presentation will be available at ir.conns.com.

Replay of the telephonic call can be accessed through April 5, 2023 by dialing 844-512-2921 or 412-317-6671 and using Conference ID: 13734642.

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 168 standalone stores across 15 states and online at Conns.com, our over 3,800 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,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. We can give no assurance that such statements will prove to be correct, and actual results may differ materially. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements, including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to execute periodic securitizations of future originated customer loans on favorable terms; our ability to continue existing customer financing programs or to offer new customer financing programs; changes in the delinquency status of our credit portfolio; unfavorable developments in ongoing litigation; increased regulatory oversight; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores; expansion of our e-commerce business; technological and market developments and sales trends for our major product offerings; our ability to manage effectively the selection of our major product offerings; our ability to protect against cyber-attacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and employees; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our Revolving Credit Facility and Term Loan; 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, 2023 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

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,

 

 

2023

 

 

 

2022

 

 

2023

 

 

 

2022

Revenues:

 

 

 

 

 

 

 

Total net sales

$

270,457

 

 

$

332,725

 

$

1,076,590

 

 

$

1,305,389

Finance charges and other revenues

 

64,418

 

 

 

69,763

 

 

265,937

 

 

 

284,642

Total revenues

 

334,875

 

 

 

402,488

 

 

1,342,527

 

 

 

1,590,031

Costs and expenses:

 

 

 

 

 

 

 

Cost of goods sold

 

179,292

 

 

 

213,768

 

 

710,234

 

 

 

825,987

Selling, general and administrative expense

 

137,043

 

 

 

142,490

 

 

526,212

 

 

 

544,490

Provision for bad debts

 

44,134

 

 

 

28,526

 

 

121,193

 

 

 

48,184

Charges and credits

 

7,838

 

 

 

2,677

 

 

14,360

 

 

 

2,677

Total costs and expenses

 

368,307

 

 

 

387,461

 

 

1,371,999

 

 

 

1,421,338

Operating (loss) income

 

(33,432

)

 

 

15,027

 

 

(29,472

)

 

 

168,693

Interest expense

 

13,084

 

 

 

5,260

 

 

36,891

 

 

 

25,758

Loss (gain) on extinguishment of debt

 

 

 

 

 

 

 

 

 

1,218

Income (loss) before income taxes

 

(46,516

)

 

 

9,767

 

 

(66,363

)

 

 

141,717

Provision (benefit) for income taxes

 

(3,713

)

 

 

2,203

 

 

(7,071

)

 

 

33,512

Net (loss) income

$

(42,803

)

 

$

7,564

 

$

(59,292

)

 

$

108,205

Income (loss) per share:

 

 

 

 

 

 

 

Basic

$

(1.79

)

 

$

0.26

 

$

(2.46

)

 

$

3.70

Diluted

$

(1.79

)

 

$

0.26

 

$

(2.46

)

 

$

3.61

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

23,953,620

 

 

 

28,815,757

 

 

24,117,265

 

 

 

29,267,691

Diluted

 

23,953,620

 

 

 

29,638,572

 

 

24,117,265

 

 

 

30,001,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONN’S, INC. AND SUBSIDIARIES
RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)

 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Product sales

$

248,002

 

 

$

307,788

 

 

$

986,600

 

 

$

1,205,545

 

Repair service agreement commissions

 

20,190

 

 

 

22,501

 

 

 

80,446

 

 

 

89,101

 

Service revenues

 

2,265

 

 

 

2,436

 

 

 

9,544

 

 

 

10,743

 

Total net sales

 

270,457

 

 

 

332,725

 

 

 

1,076,590

 

 

 

1,305,389

 

Other revenues

 

304

 

 

 

254

 

 

 

1,119

 

 

 

949

 

Total revenues

 

270,761

 

 

 

332,979

 

 

 

1,077,709

 

 

 

1,306,338

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of goods sold

 

179,292

 

 

 

213,768

 

 

 

710,234

 

 

 

825,987

 

Selling, general and administrative expense

 

103,087

 

 

 

105,374

 

 

 

391,393

 

 

 

399,393

 

Provision for bad debts

 

48

 

 

 

283

 

 

 

896

 

 

 

479

 

Charges and credits

 

7,838

 

 

 

2,677

 

 

 

14,360

 

 

 

2,677

 

Total costs and expenses

 

290,265

 

 

 

322,102

 

 

 

1,116,883

 

 

 

1,228,536

 

Operating (loss) income

$

(19,504

)

 

$

10,877

 

 

$

(39,174

)

 

$

77,802

 

Retail gross margin

 

33.7

%

 

 

35.8

%

 

 

34.0

%

 

 

36.7

%

Selling, general and administrative expense as percent of revenues

 

38.1

%

 

 

31.6

%

 

 

36.3

%

 

 

30.6

%

Operating margin

(7.2)%

 

 

3.3

%

 

(3.6)%

 

 

6.0

%

Store count:

 

 

 

 

 

 

 

Beginning of period

 

165

 

 

 

157

 

 

 

158

 

 

 

146

 

Opened

 

4

 

 

 

1

 

 

 

11

 

 

 

12

 

Closed

 

(1

)

 

 

 

 

 

(1

)

 

 

 

End of period

 

168

 

 

 

158

 

 

 

168

 

 

 

158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONN’S, INC. AND SUBSIDIARIES
CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)

 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Finance charges and other revenues

$

64,114

 

 

$

69,509

 

 

$

264,818

 

 

$

283,693

 

Costs and expenses:

 

 

 

 

 

 

 

Selling, general and administrative expense

 

33,956

 

 

 

37,116

 

 

 

134,819

 

 

 

145,097

 

Provision for bad debts

 

44,086

 

 

 

28,243

 

 

 

120,297

 

 

 

47,705

 

Charges and credits

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

78,042

 

 

 

65,359

 

 

 

255,116

 

 

 

192,802

 

Operating (loss) income

 

(13,928

)

 

 

4,150

 

 

 

9,702

 

 

 

90,891

 

Interest expense

 

13,084

 

 

 

5,260

 

 

 

36,891

 

 

 

25,758

 

Loss (gain) on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

1,218

 

Income (loss) before income taxes

$

(27,012

)

 

$

(1,110

)

 

$

(27,189

)

 

$

63,915

 

Selling, general and administrative expense as percent of revenues

 

53.0

%

 

 

53.4

%

 

 

50.9

%

 

 

51.1

%

Selling, general and administrative expense as percent of average outstanding customer accounts receivable balance (annualized)

 

13.1

%

 

 

13.1

%

 

 

12.8

%

 

 

12.8

%

Operating margin

(21.7)%

 

 

6.0

%

 

 

3.7

%

 

 

32.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO STATISTICS
(unaudited)

 

January 31,

 

 

2023

 

 

 

2022

 

Weighted average credit score of outstanding balances (1)

 

613

 

 

 

606

 

Average outstanding customer balance

$

2,597

 

 

$

2,498

 

Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)

 

12.7

%

 

 

10.4

%

Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)

 

16.5

%

 

 

16.8

%

Carrying value of account balances re-aged more than six months (in thousands) (3)

$

29,511

 

 

$

50,282

 

Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance

 

18.0

%

 

 

18.5

%

Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables

 

34.1

%

 

 

33.7

%


 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Total applications processed

 

278,249

 

 

 

325,569

 

 

 

1,034,860

 

 

 

1,297,025

 

Weighted average origination credit score of sales financed(1)

 

620

 

 

 

619

 

 

 

620

 

 

 

616

 

Percent of total applications approved and utilized

 

22.9

%

 

 

21.3

%

 

 

22.5

%

 

 

21.8

%

Average income of credit customer at origination

$

53,800

 

 

$

51,100

 

 

$

51,500

 

 

$

49,100

 

Percent of retail sales paid for by:

 

 

 

 

 

 

 

In-house financing, including down payments received

 

56.8

%

 

 

51.2

%

 

 

53.2

%

 

 

51.0

%

Third-party financing

 

16.4

%

 

 

18.3

%

 

 

17.7

%

 

 

17.7

%

Third-party lease-to-own option

 

7.8

%

 

 

8.9

%

 

 

7.3

%

 

 

10.4

%

 

 

81.0

%

 

 

78.4

%

 

 

78.2

%

 

 

79.1

%

(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.

CONN’S, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)

 

January 31,

 

 

2023

 

 

2022

Assets

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

19,534

 

$

7,707

Restricted cash

 

40,837

 

 

31,930

Customer accounts receivable, net of allowances

 

421,683

 

 

455,787

Other accounts receivable

 

56,887

 

 

63,055

Inventories

 

240,783

 

 

246,826

Income taxes receivable

 

38,436

 

 

6,745

Prepaid expenses and other current assets

 

12,937

 

 

8,756

Total current assets

 

831,097

 

 

820,806

Long-term portion of customer accounts receivable, net of allowances

 

389,054

 

 

432,431

Operating lease right-of-use assets

 

262,104

 

 

256,267

Property and equipment, net

 

218,956

 

 

192,763

Other assets

 

15,004

 

 

52,199

Total assets

$

1,716,215

 

$

1,754,466

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Current finance lease obligations

$

937

 

$

889

Accounts payable

 

71,685

 

 

74,705

Accrued expenses

 

82,619

 

 

109,712

Operating lease liability - current

 

53,208

 

 

54,534

Other current liabilities

 

13,912

 

 

18,576

Total current liabilities

 

222,361

 

 

258,416

Operating lease liability - non current

 

331,109

 

 

330,439

Long-term debt and finance lease obligations

 

636,079

 

 

522,149

Deferred tax liability

 

2,041

 

 

7,351

Other long-term liabilities

 

22,215

 

 

21,292

Total liabilities

 

1,213,805

 

 

1,139,647

Stockholders’ equity

 

502,410

 

 

614,819

Total liabilities and stockholders’ equity

$

1,716,215

 

$

1,754,466

 

 

 

 

 

 

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 retail segment operating income (loss), adjusted net income (loss) and adjusted net 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.

RETAIL SEGMENT ADJUSTED OPERATING (LOSS) INCOME

 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2023

 

 

 

2022

 

 

2023

 

 

 

2022

Retail segment operating (loss) income, as reported

$

(19,504

)

 

$

10,877

 

$

(39,174

)

 

$

77,802

Adjustments:

 

 

 

 

 

 

 

Asset disposal (1)

 

7,250

 

 

 

 

 

7,250

 

 

 

Employee severance (2)

 

 

 

 

 

 

8,006

 

 

 

Store lease termination and closure costs (3)

 

588

 

 

 

 

 

(896

)

 

 

Excess import freight costs (4)

 

 

 

 

2,677

 

 

 

 

 

2,677

Retail segment operating (loss) income, as adjusted

$

(11,666

)

 

$

13,554

 

$

(24,814

)

 

$

80,479

(1) Represents asset disposal costs related to a change in the eCommerce platform.

(2) Represents severance costs related to a change in the executive management team.

(3) Represents store closure costs for the three months ended January 31, 2023, which is offset by a gain on a lease modification for the same location for the year ended January 31, 2023.

(4) Represents non-recurring domestic transportation costs incurred due to unprecedented congestion in U.S. ports.


ADJUSTED NET INCOME AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE

 

Three Months Ended
January 31,

 

Year Ended
January 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net (loss) income, as reported

$

(42,803

)

 

$

7,564

 

 

$

(59,292

)

 

$

108,205

 

Adjustments:

 

 

 

 

 

 

 

Asset disposal (1)

 

7,250

 

 

 

 

 

 

7,250

 

 

 

 

Employee severance (2)

 

 

 

 

 

 

 

8,006

 

 

 

 

Store lease termination and closure costs (3)

 

588

 

 

 

 

 

 

(896

)

 

 

 

Excess import freight costs (4)

 

 

 

 

2,677

 

 

 

 

 

 

2,677

 

Loss (gain) on extinguishment of debt (5)

 

 

 

 

 

 

 

 

 

 

1,218

 

Tax impact of adjustments (6)

 

(1,771

)

 

 

(602

)

 

 

(3,244

)

 

 

(876

)

Net (loss) income, as adjusted

$

(36,736

)

 

$

9,639

 

 

$

(48,176

)

 

$

111,224

 

Weighted average common shares outstanding - Diluted

 

23,953,620

 

 

 

29,638,572

 

 

 

24,117,265

 

 

 

30,001,490

 

Diluted (loss) income per share:

 

 

 

 

 

 

 

As reported

$

(1.79

)

 

$

0.26

 

 

$

(2.46

)

 

$

3.61

 

As adjusted

$

(1.53

)

 

$

0.33

 

 

$

(2.00

)

 

$

3.71

 

(1) Represents asset disposal costs related to a change in the eCommerce platform.

(2) Represents severance costs related to a change in the executive management team.

(3) Represents store closure costs for the three months ended January 31, 2023, which is offset by a gain on a lease modification for the same location for the year ended January 31, 2023.

(4) Represents non-recurring domestic transportation costs due to unprecedented congestion in U.S. ports.

(5) Represents benefits and costs incurred for the early retirement of our debt.

(6) Represents the tax effect of the adjusted items based on the applicable statutory tax rate.



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