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Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE:

Conn’s, Inc. Reports Second-Quarter Fiscal 2015 Financial Results

Twelfth consecutive quarter of same store sales growth

Provision for credit losses higher than expected

THE WOODLANDS, TEXAS, Sept. 2, 2014 – Conn’s, Inc. (NASDAQ:CONN), a specialty retailer of furniture, mattresses, home appliances, consumer electronics and provider of consumer credit, today announced its financial results for the second quarter ended July 31, 2014.

Second-quarter fiscal 2015 significant items include (on a year-over-year basis unless noted):

 

    Consolidated revenues increased 30.4% to $353.0 million;

 

    Same store sales increased 11.7%, on top of an 18.4% increase a year ago;

 

    Retail gross margin increased 250 basis points to 40.8%;

 

    Furniture and mattress sales increased 60.6% and accounted for 30.8% of total product sales;

 

    Opened eight Conn’s HomePlus® stores in seven new markets;

 

    Invested in employees and marketing in advance of the opening of four new stores in August;

 

    Adjusted retail segment operating income increased 39.1% to $35.7 million;

 

    Credit segment operating income declined $7.7 million to an operating loss of $0.2 million;

 

    The percentage of the customer portfolio balance 60+ days delinquent increased 70 basis points sequentially to 8.7% as of July 31, 2014;

 

    Credit segment provision for bad debts on an annualized basis was 13.9% of the average outstanding portfolio balance in the current quarter and 11.1% on an annualized basis for the first six months of fiscal 2015;

 

    Diluted earnings was $0.48 per share, compared to $0.52 per share in the prior year;

 

    Adjusted diluted earnings was $0.50 per share, compared to $0.52 per share a year ago; and

 

    Full-year fiscal 2015 guidance was updated to a range of $2.80 to $3.00 adjusted earnings per diluted share. The new full-year guidance reflects primarily the impact of higher expected provision for bad debts and the issuance of $250 million in 7.25% senior unsecured notes in July 2014.

Theodore M. Wright, Conn’s chairman and chief executive officer commented, “The retail segment had another outstanding quarter with higher gross margins, expanded operating margins, and the 12th consecutive quarter of increasing same store sales. Strategies to grow sales of our most profitable product lines are proving enduringly successful.

“Over the last five months we have successfully opened an additional 14 stores, in 11 markets. We are reaching customers that were underserved before, giving low-income consumers the opportunity to purchase quality, durable, branded products for their homes at affordable monthly payments.

“Overall results were not satisfactory. Our credit operations ran into unexpected headwinds, resulting in portfolio performance deterioration. Despite tighter underwriting, lower early-stage delinquency and improved collections staffing and execution, delinquency unexpectedly deteriorated across all credit quality levels, customer groups, product categories, geographic regions and years of origination. Tighter underwriting and better collections execution did not offset deterioration in our customer’s ability to resolve delinquency.

“Delinquency rates improved through May and increased modestly in June, consistent with typical seasonal trends. However, over sixty-day delinquency rates unexpectedly deteriorated a combined 90 basis points in July and August. We now expect future 60-plus day delinquency to increase to levels above our historical highs in the third and fourth quarter of fiscal 2015. Early stage delinquency remains lower than historical averages through August.


“We have made additional minor changes to tighten underwriting in August. Over time, more of the total portfolio will have been originated under the tighter underwriting policies implemented in late fiscal 2014 and early fiscal 2015. Declining sales of electronics as a percentage of total sales, slower expected originations growth and an expected reduction in the percentage of originations to new customers should also benefit future portfolio performance. Longer term, we believe the changes necessary to optimize portfolio performance are in place, although we may not return to credit loss rates of prior years.

“In response to higher delinquency, we are reducing the level of no-interest programs and raising the interest rates in some markets to increase portfolio yield.

“As it has been for half a century, our combined retail and credit business model proved its strength and resiliency. Retail profitability cushioned the impact of credit performance volatility inherent in subprime consumer credit. Had we not pushed ahead to expand our retail sales, we would not have mitigated negative credit trends by strongly growing retail profits.

“We remain confident in the business model. The mid-point of our revised guidance for the full year assumes EPS growth of 12% and a 17% return on equity. This performance is expected to be achieved while absorbing high customer acquisition costs from credit losses on new customers, elevated advertising expenses in new markets and inefficiently utilized distribution infrastructure. As our expansions mature and growth pace declines to more stable and predictable rates, we anticipate our performance will be more stable as well.”

Retail Segment Second-Quarter Results (on a year-over-year basis unless otherwise noted)

Total retail revenues increased $64.6 million, or 28.8%, to $288.6 million for the quarter ended July 31, 2014. The retail revenue growth reflects the impact of the net addition of 14 stores over the past 12 months as well as an 11.7% increase in same store sales this quarter. The company’s decision to discontinue sales of lower-margin lawn equipment reduced the reported year-over-year sales increase by $9.3 million. Excluding the impact of lawn equipment revenues, same store sales rose 17.1% over the prior year period.

The following table presents net sales by category and changes in net sales for the current and prior-year quarter:

 

     Three Months Ended July 31,     Change     % Change     Same store
% change
 
     2014      % of Total     2013      % of Total        
     (dollars in thousands)                    

Furniture and mattress

   $ 81,373         28.2   $ 50,668         22.6   $ 30,705        60.6     30.3

Home appliance

     84,355         29.3        63,857         28.5        20,498        32.1        19.4   

Consumer electronics

     68,945         23.9        55,766         24.9        13,179        23.6        7.8   

Home office

     24,061         8.3        18,712         8.4        5,349        28.6        14.2   

Other

     5,432         1.9       14,460         6.5       (9,028     (62.4     (66.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

     

Product sales

     264,166         91.6        203,463         90.9        60,703        29.8        11.8   

Repair service agreement commissions

     20,732         7.2        17,166         7.7        3,566        20.8        11.4   

Service revenues

     3,383         1.2       3,083         1.4       300        9.7     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

     

Total net sales

   $ 288,281         100.0   $ 223,712         100.0   $ 64,569        28.9     11.7
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

     

The following provides a summary of items influencing Conn’s product category performance during the quarter, compared to the prior-year period:

 

    Furniture unit sales increased 49.1% and the average selling price increased 6.8%;

 

    Mattress unit volume increased 32.2% and the average selling price increased 24.7%;

 

    Home appliance unit volume increased 20.3% with an 8.9% increase in average selling price. Laundry sales increased 41.1%, refrigeration sales increased 30.8%, cooking sales increased 27.4%, air conditioning sales declined 1.6%;


    Television sales increased 16.2% in total and 0.8% on a same store basis. Gaming hardware sales increased more than 500% and home theater sales increased 36.6%;

 

    Computer sales increased 56.2% and tablet sales declined 27.7%; and

 

    Other sales declined 62.4% due to the exit from the lawn equipment category.

Retail gross margin increased 250 basis points to 40.8% for the quarter ended July 31, 2014. The year-over-year increase in retail gross margin is attributable to the significant growth in higher-margin furniture and mattress sales and gross product margin expansion in each of the major product categories. Furniture and mattress sales contributed 30.8% of the total product sales and 42.0% of the total product gross profit in the current period. For the second quarter of fiscal 2015, home appliance accounted for 29.2% of total product gross profit, consumer electronics generated 21.0% of total product gross profit and home office contributed 5.6% of total product gross profit.

In connection with the opening of eight stores in the second quarter of fiscal 2015, the company incurred $6.6 million in unlevered operating expenses reducing current-quarter adjusted operating income to $35.7 million. Approximately two-thirds of these costs were included in selling, general and administrative expenses, with the balance in cost of goods sold. This compares with $2.5 million of similar expenses in the prior-year period. The pace of new store opening will decline over the balance of fiscal 2015, with a total of six planned in the third quarter and two scheduled to open in the fourth quarter.

Credit Segment First-Quarter Results (on a year-over-year basis unless otherwise noted)

Credit revenues increased 37.8%, to $64.3 million. The credit revenue growth was attributable to the increase in the average receivable portfolio balance outstanding. The customer portfolio balance equaled $1.18 billion at July 31, 2014, rising 39.9%, or $336.2 million from the prior year. The portfolio interest and fee income yield was 18.2% for the second quarter, up 30 basis points from the prior year.

Provision for bad debts increased $18.3 million to $39.6 million for the second quarter, for a 13.9% annualized provision rate, up 330 basis points from the prior year. The increase was driven primarily by a 41.1% increase in the average portfolio balance, on a 24.9% increase in loan originations over the same period in the prior year, and higher than expected delinquency and future charge-offs. An increase in the balance of accounts which are accounted for as troubled debt restructurings to $62.1 million, or 5.3% of the total portfolio balance, was responsible for $3.4 million of the increase in the provision for bad debts. The percentage of the customer portfolio balance greater than 60-days delinquent was 8.7% as of July 31, 2014, which compares to 8.0% as of April 30, 2014 and 8.2% as of July 31, 2013. As of August 31, 2014, the percentage of the customer portfolio balance greater than 60-days delinquent was 9.2%.

Additional information on the credit portfolio and its performance may be found in the table included within this press release and in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2014, to be filed with the Securities and Exchange Commission.

Second-Quarter Net Income Results

For the quarter ended July 31, 2014, Conn’s reported net income of $0.48 per diluted share, which includes a pretax charge of $1.5 million associated with facility closures, compared to $0.52 per diluted share for the prior-year quarter.

Store Update

Conn’s opened a total of eight HomePlus® stores in several new markets during the second quarter. In addition to the two previously announced stores that opened in Tennessee in May, stores were opened in Phoenix, Ariz.; Florence, S.C.; Las Vegas, Nev.; Madison (Nashville), Tenn.; Jackson, Miss.; and Odessa, Texas. In addition, the company closed one store in Louisiana and remodeled or relocated three other stores during the second quarter. With new store openings and the remodeling or relocation of existing stores, 65 of our 86 stores were operating in the Conn’s HomePlus® format at July 31, 2014.


In August, Conn’s opened four additional stores in Arvada (Denver), Colo.; Greenville, S.C.; Lubbock, Texas; and Tucson, Ariz.

Capital and Liquidity

On July 1, 2014, Conn’s issued $250.0 million of 7.25% senior unsecured notes due 2022 (the “Senior Notes”). The Senior Notes were sold at par, and resulted in net proceeds to the company of $243.4 million, after deducting the initial purchasers’ discounts and commissions and other offering expenses. In July, Conn’s also sold and leased back three owned properties, which resulted in the receipt of net proceeds of $19.3 million. The proceeds from the offering and the sale of properties were used to reduce borrowings under the company’s $880 million asset-based credit facility.

As of July 31, 2014, the company had $361.2 million of borrowings outstanding under its asset-based credit facility. The company had $395.5 million of immediately available borrowing capacity, with an additional $121.6 million that could become available upon increases in eligible inventory and customer receivable balances under the borrowing base.

Outlook and Guidance

Conn’s updated its fiscal year 2015 earnings guidance to a range of $2.80 to $3.00 per diluted share on an adjusted basis. The company expects to generate diluted earnings per share of between $2.75 and $2.95 for the 12 months ended January 31, 2015, which includes charges of approximately $0.05 per diluted share associated with facility closures and lease terminations during the first six months of fiscal 2015. The following assumptions were considered in developing the full-year guidance:

 

    General economic conditions impacting our customers or potential customers;

 

    Same stores sales up 5% to 10%;

 

    New store openings of 18;

 

    Ten store closures;

 

    Discontinued sales of lawn equipment;

 

    Retail gross margin between 40.0% and 41.0%;

 

    An increase in the credit portfolio balance;

 

    Credit portfolio interest and fee yield of between 17.5% to 18.0%;

 

    Credit segment provision for bad debts of between 11.0% and 12.0% of the average portfolio balance outstanding based on the same store sales expectations presented above, and influenced by the level of customer receivables accounted for as troubled debt restructurings;

 

    Selling, general and administrative expense of between 28.5% and 29.0% of total revenues;

 

    Issuance of $250.0 million of 7.25% senior unsecured notes on July 1, 2014; and

 

    Diluted shares outstanding of approximately 37.0 million.

Conference Call Information

Conn’s will host a conference call and audio webcast on Tuesday, September 2, at 10 a.m. CT / 11 a.m. ET, to discuss its earnings and operating performance for the fiscal 2015 second quarter. A link to the live webcast, which will be archived for one year, and slides to be referred to during the call will be available at http://ir.Conns.com. Participants may also join the live call by dialing 877-754-5302 or 678-894-3020.

Replay of the telephonic call can be accessed through September 9 by dialing 855-859-2056 or 404-537-3406 and Conference ID: 85285941.

About Conn’s, Inc.

Conn’s is a specialty retailer currently operating 89 retail locations in Arizona, Colorado, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, South Carolina, Tennessee and Texas. 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 LCD, LED, 3-D, Ultra HD and plasma televisions, Blu-ray players, home theater and video game products, digital cameras and portable audio equipment; and

 

    Home office, including computers, tablets, printers and accessories.

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 rent-to-own payment plans.

This press release contains forward-looking statements within the meaning of 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,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. 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 continue existing 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 and the updating of existing stores; technological and market developments and sales trends for our major product offerings; our ability to protect against cyberattacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and our 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 the other risks detailed in our SEC reports, including but not limited to, our Annual Report on Form 10-K for our fiscal year ended January 31, 2014. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, we are not obligated to publicly release any revisions or update to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.


CONN’S, INC. AND SUBSIDIARIES

CONDENSED, CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended
July 31,
    Six Months Ended
July 31,
 
     2014      2013     2014      2013  

Revenues

          

Total net sales

   $ 288,281       $ 223,712      $ 565,910       $ 433,160   

Finance charges and other

     64,683         46,977        122,502         88,592   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

     352,964         270,689        688,412         521,752   

Cost and expenses

          

Cost of goods sold, including warehousing and occupancy costs

     168,717         136,040        329,499         259,497   

Cost of parts sold, including warehousing and occupancy costs

     1,871         1,318        3,290         2,724   

Selling, general and administrative expense

     107,303         78,757        207,507         152,012   

Provision for bad debts

     39,585         21,382        61,843         35,319   

Charges and credits

     1,492         —          3,246         —     
  

 

 

    

 

 

   

 

 

    

 

 

 

Total cost and expenses

     318,968         237,497        605,385         449,552   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income

     33,996         33,192        83,027         72,200   

Interest expense

     6,247         3,135        10,971         7,006   

Other income, net

     —           (32     —           (38
  

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     27,749         30,089        72,056         65,232   

Provision for income taxes

     10,099         10,927        25,937         23,894   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 17,650       $ 19,162      $ 46,119       $ 41,338   
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings per share:

          

Basic

   $ 0.49       $ 0.54      $ 1.27       $ 1.16   

Diluted

   $ 0.48       $ 0.52      $ 1.25       $ 1.13   

Average common shares outstanding:

          

Basic

     36,209         35,777        36,172         35,549   

Diluted

     36,972         36,849        36,951         36,688   


CONN’S, INC. AND SUBSIDIARIES

CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION

(unaudited)

(dollars in thousands)

 

     Three Months Ended     Six Months Ended  
   July 31,     July 31,  
     2014     2013     2014     2013  

Revenues

        

Product sales

   $ 264,166      $ 203,463      $ 518,386      $ 394,323   

Repair service agreement commissions

     20,732        17,166        40,986        33,155   

Service revenues

     3,383        3,083        6,538        5,682   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

     288,281        223,712        565,910        433,160   
  

 

 

   

 

 

   

 

 

   

 

 

 

Finance charges and other

     343        290        809        629   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     288,624        224,002        566,719        433,789   

Cost and expenses

        

Cost of goods sold, including warehousing and occupancy costs

     168,717        136,040        329,499        259,497   

Cost of parts sold, including warehousing and occupancy costs

     1,871        1,318        3,290        2,724   

Selling, general and administrative expense

     82,336        60,910        158,666        118,420   

Provision for bad debts

     —          72        44        186   

Charges and credits

     1,492        —          3,246        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

     254,416        198,340        494,745        380,827   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     34,208        25,662        71,974        52,962   

Other income, net

     —          (32     —          (38
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 34,208      $ 25,694      $ 71,974      $ 53,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Retail gross margin

     40.8     38.3     41.1     39.3

Selling, general and administrative expense as percent of revenues

     28.5     27.2     28.0     27.3

Operating margin

     11.9     11.5     12.7     12.2

Number of stores:

        

Beginning of period

     79        70        79        68   

Opened

     8        2        10        4   

Closed

     (1     —          (3     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

End of period

     86        72        86        72   
  

 

 

   

 

 

   

 

 

   

 

 

 


CONN’S, INC. AND SUBSIDIARIES

CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION

(unaudited)

(dollars in thousands)

 

     Three Months Ended     Six Months Ended  
     July 31,     July 31,  
     2014     2013     2014     2013  

Revenues

        

Finance charges and other

   $ 64,340      $ 46,687      $ 121,693      $ 87,963   

Cost and expenses

        

Selling, general and administrative expense

     24,967        17,847        48,841        33,592   

Provision for bad debts

     39,585        21,310        61,799        35,133   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost and expenses

     64,552        39,157        110,640        68,725   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (212     7,530        11,053        19,238   

Interest expense

     6,247        3,135        10,971        7,006   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

   $ (6,459   $ 4,395      $ 82      $ 12,232   
  

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expense as percent of revenues

     38.8     38.2     40.1     38.2

Operating margin

     (0.3 )%      16.1     9.1     21.9


CUSTOMER RECEIVABLE PORTFOLIO STATISTICS

(dollars in thousands, except average outstanding balance per account)

 

     July 31,  
     2014     2013  

Total outstanding balance

   $ 1,179,314      $ 843,071   

Weighted average credit score of outstanding balances

     592        595   

Number of active accounts

     666,099        519,867   

Weighted average months since origination of outstanding balance

     8.5        8.9   

Average outstanding customer balance

   $ 1,770      $ 1,622   

Account balances 60+ days past due

   $ 102,063      $ 69,158   

Percent of balances 60+ days past due to total outstanding balance

     8.7     8.2

Total account balances re-aged

   $ 142,917      $ 91,067   

Percent of re-aged balances to total outstanding balance

     12.1     10.8

Account balances re-aged more than six months

   $ 28,224      $ 19,891   

Percent of total allowance for bad debts to total outstanding customer receivable balance

     7.2     6.3

Percent of total outstanding balance represented by short-term, no-interest receivables

     36.6     31.9

 

     Three Months Ended     Six Months Ended  
     July 31,     July 31,  
     2014     2013     2014     2013  

Data for the periods ended:

        

Total applications processed

     295,983        215,850        561,248        414,895   

Weighted average origination credit score of sales financed

     607        601        606        601   

Percent of total applications approved

     45.3     51.7     46.6     51.6

Average down payment

     3.6     3.1     3.9     3.5

Average income of credit customer at origination

   $ 39,700      $ 40,500      $ 39,200      $ 39,900   

Average total outstanding balance

   $ 1,137,890      $ 806,653      $ 1,110,501      $ 780,825   

Bad debt charge-offs (net of recoveries)

   $ 28,556      $ 14,176      $ 49,748      $ 25,731   

Percent of bad debt charge-offs (net of recoveries) to average outstanding balance, annualized

     10.0     7.0     9.0     6.6

Weighted average monthly payment rate

     5.0     5.2     5.4     5.7

Provision for bad debts

   $ 39,585      $ 21,310      $ 61,799      $ 35,133   

Provision for bad debts as a percentage of average outstanding balance

     13.9     10.6     11.1     9.0

Percent of retail sales paid for by:

        

In-house financing, including down payment received

     77.0     76.8     77.2     75.4

Third-party financing

     13.0     12.2     12.1     12.0

Third-party rent-to-own options

     3.9     2.5     4.0     3.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     93.9     91.5     93.3     90.5
  

 

 

   

 

 

   

 

 

   

 

 

 


CONN’S, INC. AND SUBSIDIARIES

CONDENSED, CONSOLIDATED BALANCE SHEET

(unaudited)

(dollars in thousands)

 

     July 31,
2014
     January 31,
2014
 
Assets      

Current Assets

     

Cash and cash equivalents

   $ 4,021       $ 5,727   

Customer accounts receivable, net

     583,687         527,267   

Other accounts receivable, net

     49,993         51,480   

Inventories

     137,624         120,530   

Deferred income taxes

     26,372         20,284   

Prepaid expenses and other assets

     15,257         10,307   
  

 

 

    

 

 

 

Total current assets

     816,954         735,595   

Long-term customer accounts receivable, net

     495,904         457,413   

Property and equipment, net

     112,149         86,842   

Deferred income taxes

     13,612         7,721   

Other assets, net

     10,576         10,415   
  

 

 

    

 

 

 

Total Assets

   $ 1,449,195       $ 1,297,986   
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Current Liabilities

     

Current portion of long-term debt

   $ 401       $ 420   

Accounts payable

     95,963         82,861   

Accrued expenses

     40,214         39,334   

Other current liabilities

     22,006         19,992   
  

 

 

    

 

 

 

Total current liabilities

     158,584         142,607   

Long-term debt

     606,980         535,631   

Other long-term liabilities

     45,299         30,458   

Stockholders’ equity

     638,332         589,290   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 1,449,195       $ 1,297,986   
  

 

 

    

 

 

 


NON-GAAP RECONCILIATION OF RETAIL SEGMENT

OPERATING INCOME, AS ADJUSTED

(unaudited)

(dollars in thousands)

 

     Three Months Ended     Six Months Ended  
     July 31,     July 31,  
     2014     2013     2014     2013  

Operating income, as reported

   $ 34,208      $ 25,662      $ 71,974      $ 52,962   

Adjustments:

        

Costs related to facility closures

     1,492        —          3,246        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income, as adjusted

   $ 35,700      $ 25,662      $ 75,220      $ 52,962   
  

 

 

   

 

 

   

 

 

   

 

 

 

Retail segment revenues

   $ 288,624      $ 224,002      $ 566,719      $ 433,789   

Operating margin

        

As reported

     11.9     11.5     12.7     12.2

As adjusted

     12.4     11.5     13.3     12.2

NON-GAAP RECONCILIATION OF NET INCOME, AS ADJUSTED

AND DILUTED EARNINGS PER SHARE, AS ADJUSTED

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended      Six Months Ended  
     July 31,      July 31,  
     2014     2013      2014     2013  

Net income, as reported

   $ 17,650      $ 19,162       $ 46,119      $ 41,338   

Adjustments:

         

Costs related to facility closures

     1,492        —           3,246        —     

Tax impact of adjustments

     (543     —           (1,164     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income, as adjusted

   $ 18,599      $ 19,162       $ 48,201      $ 41,338   
  

 

 

   

 

 

    

 

 

   

 

 

 

Average common shares outstanding - Diluted

     36,972        36,849         36,951        36,688   

Earnings per share - Diluted

         

As reported

   $ 0.48      $ 0.52       $ 1.25      $ 1.13   

As adjusted

   $ 0.50      $ 0.52       $ 1.30      $ 1.13   

NON-GAAP RECONCILIATION OF FULL-YEAR FISCAL 2015 PROJECTED

GUIDANCE FOR EARNINGS PER DILUTED SHARE TO

ADJUSTED EARNINGS PER DILUTED SHARE

(unaudited)

(dollars per share)

 

     Low      High  

Estimated earnings per share, diluted (GAAP)

   $ 2.75       $ 2.95   

Adjustments:

     

Facility closure costs incurred during the six months ended July 31, 2014

     0.05         0.05   
  

 

 

    

 

 

 

Adjusted earnings per share, diluted (non-GAAP)

   $ 2.80       $ 3.00   
  

 

 

    

 

 

 


Basis for presentation of non-GAAP disclosures:

To supplement the Company’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles (“GAAP”), the Company also provides the following information: adjusted net income and adjusted earnings per diluted share; adjusted retail segment operating income and adjusted operating margin; and full-year fiscal 2015 earnings guidance on an adjusted basis. These non-GAAP financial measures are not meant to be considered as a substitute for comparable GAAP measures but should be considered in addition to results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations and the factors and trends affecting the Company’s business. The Company’s 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 the Company uses in its financial and operational decision making and (2) they are used by some of its institutional investors and the analyst community to help them analyze the Company’s operating results.

CONN-G

Conn’s, Inc.

Director, Investor Relations

Kim P. Canning (936) 230-5899

or

S.M. Berger & Company

Andrew Berger (216) 464-6400