Conn's, Inc. Reports Earnings for Quarter Ending April 30, 2006.BEAUMONT, Texas Beaumont is a city and county seat of Jefferson County, Texas and is within the Beaumont-Port Arthur metropolitan area. As of the 2000 U.S. Census, the city had a population of 113,866. -- Conn's, Inc. (NASDAQ/NM:CONN CONN Connecticut (old style) CONN Connection CONN Connector CONN Connotation ), a specialty retailer of home appliances, consumer electronics, computers, mattresses, furniture and lawn and garden products, today announced earnings results for the quarter ended April 30, 2006. Net income available for common stockholders for the first fiscal quarter increased 18.8% to $11.4 million compared to $9.6 million for the first quarter of last year. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of available for common stockholders were $0.47 compared with $0.40 for the first quarter of last year after adjusting for adoption of FAS 123R. Total revenues for the quarter ended April 30, 2006 increased 21.5% to $192.1 million compared with $158.2 million for the quarter ended April 30, 2005. This increase in revenue included net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increases of $32.8 million, or 23.6%, and increases from "Finance charges and other" of $1.2 million, or 6.1%. Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of (revenues earned in stores operated for the entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. of both periods) increased 16.1% for the first quarter of fiscal 2007. As previously disclosed, during the third quarter of fiscal 2006 two significant hurricanes impacted a portion of our market area. This has resulted in increased sales, but also negatively impacted our credit portfolios. Same store sales, excluding the storm-impacted markets of Southeast Texas Southeast Texas is a subregion of East Texas located in the southeast corner of the U.S. state of Texas. The subregion is geographically centered around the Houston–Sugar Land–Baytown and Beaumont–Port Arthur metropolitan areas. and Louisiana, increased 11.6%. The markets excluding the Southeast Texas and Louisiana markets accounted for 78.7% of same store Product sales and Service maintenance agreement commissions during the quarter ended April 30, 2006. "We continue to enjoy strong sales growth with comp comp See comparison. store increases in the mid-teens as well as the benefit of new store sales," said Thomas J. Frank, Conn's Chairman and Chief Executive Officer. "We expect to open five to six stores during this fiscal year, with one opened during the first quarter and another just opened in late May. Both of these stores were opened in our Houston market. Product margin remained constant while overall margin was down due in part to the previously reported effects of loan losses caused by the disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in our credit collection activities during our Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. evacuation evacuation /evac·u·a·tion/ (e-vak?u-a´shun) 1. an emptying. 2. catharsis; emptying of the bowels. e·vac·u·a·tion n. ." Overall margin decreased approximately 170 basis points with 70 basis points of the reduction due to slower growth in securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. income, which was impacted by higher loan losses, primarily as a result of the impact of Hurricane Rita on our credit operations, and increased program costs, 70 basis points coming from reduced penetration on the sales of service maintenance agreements and credit insurance and 30 basis points due to various other factors. Partially offsetting the margin shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. was a decrease in SG&A expense as a percentage of revenue of approximately 90 basis points. During the first quarter, the Company opened a new store in Baytown, Texas Baytown is a city located along the Gulf Coast region in the U.S. state of Texas within the Houston–Sugar Land–Baytown metropolitan area. The city is mostly in Harris County with small portion in Chambers County, located along both State Highway 146 and . In May 2006, the Company opened another new store in the Houston market to bring the total store count to 58. By the end of January 2007, the Company expects to operate approximately 61 to 62 stores. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Guidance The Company reaffirmed its guidance for fiscal year 2007 (the year ending January 31, 2007) of earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of approximately $1.85 to $1.90. The earnings guidance does give effect for changes resulting from the required adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment, on February 1, 2006. The effect on earnings as a result of FAS 123R was described in a previous press release. Comparable store sales increases are projected in the mid to high single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. range for the year including consideration for the impact of the prior year storms. Conference Call Information Conn's, Inc. will host a conference call and audio webcast today, June 1, 2006, at 10:00 AM, CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. , to discuss financial results for the quarter ended April 30, 2006. The webcast will be available live at www.conns.com and will be archived for one year. Participants can join the call by dialing (800) 822-4794. About Conn's, Inc. The Company is a specialty retailer currently operating 58 retail locations in Texas and Louisiana: twenty stores in the Houston area, twelve in the Dallas/Fort Worth Metroplex The Dallas–Fort Worth–Arlington metropolitan area, a title designated by the U.S. Census as of 2003, encompasses 12 counties within the U.S. state of Texas. The metropolitan area is further divided into two metropolitan divisions: Dallas–Plano–Irving , eight in San Antonio San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. , five in Austin, four in Southeast Texas, one in Corpus Christi Corpus Christi, in Christianity Corpus Christi [Lat.,=body of Christ], feast of the Western Church, observed on the Thursday after Trinity Sunday (or on the following Sunday). , two in South Texas and six stores in Louisiana. It sells major home appliances, including refrigerators, freezers, washers, dryers and ranges, and a variety of consumer electronics, including projection, plasma, DLP (Digital Light Processing) A data projection technology from TI that produces clear, readable images on screens in lit rooms. DLP is used in all types of projection devices, from data projectors that weigh only a few pounds to large rear-projection TVs to electronic and LCD (Liquid Crystal Display) A display technology that uses rod-shaped molecules (liquid crystals) that flow like liquid and bend light. Unenergized, the crystals direct light through two polarizing filters, allowing a natural background color to show. televisions, camcorders, computers and computer peripherals, DVD players A stand-alone device that plays DVDs. It contains a DVD drive and the electronics to decode the digital video. The device may play only manufactured DVDs, or it may be able to play DVD-R, DVD-RW and DVD+RW discs. DVD players are cabled to a TV or home theater system for display. , portable audio and home theater An audio/video entertainment center that has a large-screen TV and hi-fi system with three speakers in the front (left, right and center) and left and right speakers in the rear. Starting in the early 1990s, video inputs were added to stereo receivers and preamplifiers. products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. Historically, it has financed, on average, approximately 57% of retail sales. Customer receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed are financed substantially through an asset-backed securitization facility, from which the Company derives servicing fee income and interest income. The Company transfers receivables, consisting of retail installment contracts installment contract n. an agreement in which payments of money, delivery of goods or performance of services are to be made in a series of payments, deliveries or performances, usually on specific dates or upon certain happenings. and revolving accounts A revolving account is a type of debt account where the outstanding balance does not have to be paid in full every month by the borrower to the lender. The borrower maybe required to make a minimum payment, based on the balance amount. for credit extended to its customers, to a qualifying special purpose entity in exchange for cash and subordinated securities represented by asset-backed and variable funding notes issued to third parties. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to be correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: the Company's growth strategy and plans regarding opening new stores and entering new markets; the Company's intention to update or expand existing stores; the Company's estimated capital expenditures and costs related to the opening of new stores or the update or expansion of existing stores; the Company's cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , borrowings from its revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. and proceeds from securitizations to fund operations, debt repayment and expansion; growth trends and projected sales in the home appliance and consumer electronics industry and the Company's ability to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. such growth; relationships with the Company's key suppliers; the results of the Company's litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; interest rates; weather conditions in the Company's markets; changes in the Company's stock price; and the actual number of shares of common stock outstanding. Further information on these risk factors is included in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on March 30, 2006 and the current report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed in connection with this press release. 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, the Company is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to publicly release any revisions to these forward-looking statements to reflect the events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this press release or to reflect the occurrence of unanticipated events.
Conn's, Inc.
CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
Three Months Ended
April 30,
-------------------
2005 2006
--------- ---------
Revenues
Total net sales $138,934 $171,705
Finance charges and other 19,229 20,410
--------- ---------
Total revenues 158,163 192,115
Cost and expenses
Cost of goods sold, including warehousing and
occupancy costs 100,917 125,729
Cost of parts sold, including warehousing and
occupancy costs 1,225 1,565
Selling, general and administrative expense 39,745 46,411
Provision for bad debts 1,152 1,070
--------- ---------
Total cost and expenses 143,039 174,775
--------- ---------
Operating income 15,124 17,340
Interest (income) expense, net 355 (184)
--------- ---------
Income before income taxes 14,769 17,524
Total provision for income taxes 5,188 6,146
--------- ---------
Net income $9,581 $11,378
========= =========
Earnings per share
Basic $0.41 $0.48
Diluted $0.40 $0.47
Average common shares outstanding
Basic 23,307 23,596
Diluted 23,856 24,448
Conn's, Inc.
CONDENSED, CONSOLIDATED BALANCE SHEETS
(in thousands)
January 31, April 30,
2006 2006
----------- -----------
Assets
Current assets
Cash and cash equivalents $45,176 $30,924
Interests in securitized assets and accounts
receivable, net 146,991 148,938
Inventories 73,987 80,527
Deferred income taxes 4,971 3,518
Prepaid expenses and other assets 4,004 4,510
----------- -----------
Total current assets 275,129 268,417
Non-current deferred income tax asset 2,464 2,881
Total property and equipment, net 54,826 58,828
Goodwill and other assets, net 9,877 9,885
----------- -----------
Total assets $342,296 $340,011
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $- $-
Current portion of long-term debt 136 -
Accounts payable 40,920 36,884
Accrued compensation and related expenses 18,847 10,645
Accrued expenses 17,380 16,842
Fair value of derivatives - -
Other current liabilities 18,049 15,278
----------- -----------
Total current liabilities 95,332 79,649
Long-term debt - -
Non-current deferred income tax liability 903 960
Deferred gain on sale of property 476 435
Total stockholders' equity 245,585 258,967
----------- -----------
Total liabilities and stockholders'
equity $342,296 $340,011
=========== ===========
Conn's, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
April 30,
------------------
2005 2006
-------- --------
Net cash provided by (used in) operating activities $11,656 $(8,384)
Cash flows from investing activities
Purchase of property and equipment (3,273) (7,023)
Proceeds from sale of property 11 48
-------- --------
Net cash used in investing activities (3,262) (6,975)
Cash flows from financing activities
Net borrowings (payments) under bank credit
facilities (10,500) -
Proceeds from stock issued under employee benefit
plans 755 1,132
Excess tax benefits from stock-based compensation - 133
Increase in debt issuance costs - (22)
Payment of promissory notes (7) (136)
-------- --------
Net cash provided by (used in) financing activities (9,752) 1,107
-------- --------
Net change in cash (1,358) (14,252)
Cash and cash equivalents
Beginning of the year 7,027 45,176
-------- --------
End of period $5,669 $30,924
======== ========
CALCULATION OF GROSS MARGIN PERCENTAGE
(dollars in thousands)
Three Months Ended
April 30,
-------------------
2005 2006
--------- ---------
A Product sales $127,275 $158,509
B Service maintenance agreement commissions, net 6,884 7,967
C Service revenues 4,775 5,229
--------- ---------
D Total net sales 138,934 171,705
E Finance charges and other 19,229 20,410
--------- ---------
F Total revenues 158,163 192,115
G Cost of goods sold, including warehousing and
occupancy cost (100,917) (125,729)
H Cost of parts sold, including warehousing and
occupancy cost (1,225) (1,565)
--------- ---------
I Gross margin dollars (F+G+H) $56,021 $64,821
========= =========
Gross margin percentage (I/F) 35.4% 33.7%
J Product margin dollars (A+G) 26,358 32,780
K Product margin percentage (J/A) 20.7% 20.7%
PORTFOLIO STATISTICS
For the periods ended January 31, 2004, 2005 and 2006
and April 30, 2005 and 2006
(dollars in thousands, except average outstanding balance per account)
January 31, April 30,
----------------------------- -------------------
2004 2005 2006 2005 2006
--------- --------- --------- --------- ---------
Total accounts 299,717 350,251 415,338 358,291 415,094
Total outstanding
balance $349,470 $428,700 $519,721 $444,498 $521,532
Average outstanding
balance per account $1,166 $1,224 $1,251 $1,241 $1,256
60 day delinquency $18,267 $23,143 $35,537 $18,491 $30,890
Percent delinquency 5.2% 5.4% 6.8% 4.2% 5.9%
Loan loss ratio 3.4% 2.9% 2.5% 2.9% 2.6%
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion