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Conn’s, Inc. Announces Results For The Quarter Ended April 30, 2012

This press release contains forward-looking statements 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 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, relocate or expand existing stores;
  • the effect of closing or reducing the hours of operation of existing stores;
  • the Company's estimated capital expenditures and costs related to the opening of new stores or the update, relocation or expansion of existing stores;
  • the Company's ability to introduce additional product categories;
  • sales trends in the home appliance, consumer electronic and furniture and mattress industries and the Company's ability to respond to those trends;
  • changes in product sales or gross margin trends;
  • the pricing actions and promotional activities of competitors;
  • relationships with the Company's key suppliers;
  • changes in outstanding balance, delinquency and loss trends in the receivables portfolio;
  • the Company’s ability to offer flexible financing programs;
  • changes in the interest and fee yield earned on the receivables portfolio;
  • changes in the Company’s underwriting and collection practices and policies;
  • changes in the costs to collect the receivables portfolio;
  • the Company’s ability to amend, renew or replace its existing debt or other credit arrangements before the maturity dates of such arrangements;
  • the Company's ability to fund operations, debt repayment and expansion from cash flow from operations, borrowings on its revolving lines of credit and proceeds from securitizations and from accessing debt or equity markets;
  • the ability of the Company to obtain additional funding for the purpose of funding the receivables generated by the Company;
  • the ability of the Company to maintain compliance with the covenants in its debt and other credit arrangements or obtain amendments or waivers of the covenants to avoid violations or potential violations of the covenants;
  • changes in covenant requirements in future debt and other credit arrangements;
  • reduced availability under the Company’s credit facilities as a result of borrowing base requirements and the impact on the borrowing base calculation of changes in the performance or eligibility of the customer receivables financed by that facility;
  • the ability of the financial institutions providing lending facilities to the Company to fund their commitments;
  • the effect on borrowing costs of downgrades by rating agencies or changes in laws or regulations on the Company’s financing providers;
  • the cost of any amended, renewed or replacement debt or other credit arrangements;
  • interest rates;
  • general economic and financial market conditions, including conditions in the capital markets;
  • weather conditions in the Company's markets;
  • the outcome of litigation or government investigations;
  • 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 filed on April 12, 2012. 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 to publicly release any revisions to these forward-looking statements to reflect the 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
April 30,
2012 2011
Revenues
Total net sales $ 166,937 $ 157,070
Finance charges and other   33,914     34,912
Total revenues 200,851 191,982
Cost and expenses

Cost of goods sold, including warehousing and occupancy costs

108,443 106,453

Cost of parts sold, including warehousing and occupancy costs

1,550 1,730
Selling, general and administrative expense 59,656 59,445
Provision for bad debts 9,185 9,564
Store closing costs   163     -
Total cost and expenses   178,997     177,192
Operating income 21,854 14,790
Interest expense 3,759 7,556
Other (income) expense, net   (96 )   52
Income before income taxes 18,191 7,182
Provision for income taxes   6,635     2,781
Net income $ 11,556   $ 4,401
 
Earnings per share:
Basic $ 0.36 $ 0.14
Diluted $ 0.35 $ 0.14
Average common shares outstanding:
Basic 32,195 31,768
Diluted 32,904 31,772

 
CONN'S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
 
Three Months Ended

April 30,

2012 2011
Revenues
Product sales $ 152,115 $ 144,279
Repair service agreement commissions 11,392 8,902
Service revenues   3,430     3,889  
Total net sales   166,937     157,070  
Finance charges and other   241     225  
Total revenues   167,178     157,295  
Cost and expenses

Cost of goods sold, including warehousing and occupancy costs

108,443 106,453

Cost of parts sold, including warehousing and occupancy costs

1,550 1,730
Selling, general and administrative expense 46,049 44,102
Provision for bad debts 212 143
Store closing costs   163     -  
Total cost and expenses   156,417     152,428  
Operating income 10,761 4,867
Other (income) expense, net   (96 )   52  
Segment income before income taxes $ 10,857   $ 4,815  
 
Retail gross margin 33.7 % 30.5 %

Selling, general and administrative expense as percent of revenues

27.5 % 28.0 %
Operating margin 6.4 % 3.1 %
Number of stores, end of period 65 76

 
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(in thousands)
   
Three Months Ended

April 30,

 
2012 2011
Revenues
Finance charges and other $ 33,673   $ 34,687  
Cost and expenses
Selling, general and administrative expense 13,607 15,343
Provision for bad debts   8,973     9,421  
Total cost and expenses   22,580     24,764  
Operating income 11,093 9,923
Interest expense   3,759     7,556  
Segment income before income taxes $ 7,334   $ 2,367  
 

Selling, general and administrative expense as percent of revenues

40.4 % 44.2 %
Operating margin 32.9 % 28.6 %
 
MANAGED PORTFOLIO STATISTICS
(dollars in thousands, except average outstanding balance per account)
   
Three months ended April 30,
2012 2011
Total accounts 458,493 491,441
Total outstanding balance $ 635,233 $ 625,487
Average outstanding balance per account $ 1,385 $ 1,273

Weighted average origination credit score of sales financed

615 623

Weighted average credit score of outstanding balances

601 589
Balance 60+ days delinquent $ 46,438 $ 44,453
Percent 60+ days delinquent 7.3 % 7.1 %
Percent 60-209 days delinquent 7.3 % 5.5 %
Percent of portfolio re-aged 11.6 % 19.4 %
Weighted average monthly payment rate (QTD) 6.1 % 6.4 %
Net charge-off ratio (YTD annualized) 8.5 % 6.8 %
Percentage of sales generated by payment option:
GE Capital 12.5 % 6.3 %
Conn's Credit (including down payment) 66.9 % 55.0 %
RAC Acceptance (Rent-to-Own) 3.7 % 3.5 %
Total 83.1 % 64.8 %

 
CONDENSED, CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
   
April 30, January 31,
2012 2012
 
Assets
Current assets
Cash and cash equivalents $ 6,730 $ 6,265
Customer accounts receivable, net 313,139 316,385
Other accounts receivable, net 35,414 38,715
Inventories 68,890 62,540
Deferred income taxes 16,007 17,111
Prepaid expenses and other assets   15,785   11,542
Total current assets 455,965 452,558
Long-term customer accounts receivable, net 271,984 272,938
Property and equipment, net 40,257 38,484
Non-current deferred income tax asset

9,570

9,754
Other assets, net   10,856   9,564
Total assets $

788,632

$ 783,298
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt $ 103,690 $ 726
Accounts payable 60,812 44,711
Accrued compensation and related expenses 7,494 7,213
Accrued expenses 22,314 24,030
Other current liabilities   18,547   17,994
Total current liabilities 212,857 94,674
Long-term debt 194,396 320,978
Other long-term liabilities 12,894 14,275
Stockholders' equity   368,485   353,371
Total liabilities and stockholders' equity $ 788,632 $ 783,298

CONN-F

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