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TheStreet Open House

Hhgregg Announces Second Fiscal Quarter Operating Results

Stocks in this article: HGG

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this press release are more fully described in the “Risk Factors” section in the Company’s fiscal 2012 Form 10-K filed May 23, 2012, and in the “Risk Factors” section in the Company’s fiscal 2013 Form 10-Q filed August 2, 2012. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. hhgregg does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any of these statements to reflect future events or developments.

       

HHGREGG, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended Six Months Ended
September 30,

2012

September 30,

2011

September 30,

2012

September 30,

2011

(In thousands, except share and per share data)
Net sales $ 587,636 $ 618,603 $ 1,077,492 $ 1,050,058
Cost of goods sold   413,489     441,924   756,686     743,065  
Gross profit 174,147 176,679 320,806 306,993
Selling, general and administrative expenses 125,794 127,676 244,567 230,920
Net advertising expense 31,754 30,466 59,370 50,661
Depreciation and amortization expense   9,843     8,184   19,257     15,471  
Income (loss) from operations 6,756 10,353 (2,388 ) 9,941
Other expense (income):
Interest expense 510 571 988 1,083
Interest income   (3 )   -   (5 )   (4 )
Total other expense   507     571   983     1,079  
Income (loss) before income taxes 6,249 9,782 (3,371 ) 8,862
Income tax expense (benefit)   2,489     3,756   (1,431 )   3,597  
Net income (loss) $ 3,760   $ 6,026 $ (1,940 ) $ 5,265  
 
Net income (loss) per share
Basic $ 0.11 $ 0.16 $ (0.05 ) $ 0.14
Diluted $ 0.11 $ 0.16 $ (0.05 ) $ 0.13
Weighted average shares outstanding-basic 35,237,201 37,860,450 35,685,482 38,676,500
Weighted average shares outstanding-diluted 35,291,269 38,097,564 35,685,482 39,021,215
 
       
HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AS A PERCENTAGE OF NET SALES)
(UNAUDITED)
 
Three Months Ended Six Months Ended
September 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 70.4 71.4 70.2 70.8
Gross profit 29.6 28.6 29.8 29.2
Selling, general and administrative expenses 21.4 20.6 22.7 22.0
Net advertising expense 5.4 4.9 5.5 4.8
Depreciation and amortization expense 1.7 1.3 1.8 1.5
Income (loss) from operations 1.1 1.7 (0.2) 0.9
Other expense (income):
Interest expense 0.1 0.1 0.1 0.1
Interest income - - - -
Total other expense 0.1 0.1 0.1 0.1
Income (loss) before income taxes 1.1 1.6 (0.3) 0.8
Income tax expense (benefit) 0.4 0.6 (0.1) 0.3
Net income (loss) 0.6 % 1.0 % (0.2) % 0.5 %
 

Certain percentage amounts do not sum due to rounding

     
HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2012, MARCH 31, 2012 AND SEPTEMBER 30, 2011
(UNAUDITED)
 

September 30, 2012

March 31, 2012

September 30, 2011

(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents $ 8,471 $ 59,244 $ 2,113
Accounts receivable—trade, less allowances of $35, $25 and $51, respectively 30,284 19,467 12,422
Accounts receivable—other 23,065 18,630 31,892
Merchandise inventories, net 339,732 282,409 345,954
Prepaid expenses and other current assets 4,708 5,562 4,948
Income tax receivable 7,813 - 11,566
Deferred income taxes   10,130     9,639     7,457  
Total current assets   424,203     394,951     416,352  
Net property and equipment 223,549 204,273 201,982
Deferred financing costs, net 2,324 2,656 2,988
Deferred income taxes 35,505 38,970 36,829
Other assets   1,179     1,934     1,242  
Total long-term assets   262,557     247,833     243,041  
Total assets $ 686,760   $ 642,784   $ 659,393  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 160,352 $ 122,596 $ 160,454
Line of credit - - 33,900
Customer deposits 38,601 28,993 36,310
Accrued liabilities 50,852 43,735 54,107
Income tax payable   -     4,358     -  
Total current liabilities   249,805     199,682     284,771  
Long-term liabilities:
Deferred rent 79,261 71,304 -
Other long-term liabilities   12,428     12,278     84,424  
Total long-term liabilities   91,689     83,582     84,424  
Total liabilities   341,494     283,264     369,195  
Stockholders’ equity:
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2012, March 31, 2012 and September 30, 2011, respectively - - -
Common stock, par value $.0001; 150,000,000 shares authorized; 40,589,745, 40,066,005 and 39,755,739 shares issued; and 34,600,945, 36,351,716 and 37,041,450 shares outstanding as of September 30, 2012, March 31, 2012 and September 30, 2011, respectively 4 4 4
Additional paid-in capital 284,941 277,846 272,062
Retained earnings 127,341 129,281 53,173
Common stock held in treasury at cost, 5,988,800, 3,714,289 and 2,714,289 shares as of September 30, 2012, March 31, 2012 and September 30, 2011, respectively   (67,020 )   (47,570 )   (35,000 )
345,266 359,561 290,239
Note receivable for common stock   -     (41 )   (41 )
Total stockholders’ equity   345,266     359,520     290,198  
Total liabilities and stockholders’ equity $ 686,760   $ 642,784   $ 659,393  
 
   
HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(UNAUDITED)
 
Six Months Ended
September 30, 2012 September 30, 2011
(In thousands)
Cash flows from operating activities:
Net (loss) income $ (1,940 ) $ 5,265
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization 19,257 15,471
Amortization of deferred financing costs 332 332
Stock-based compensation 2,514 3,100
Excess tax benefits from stock-based compensation (585 ) (21 )
Gain on sales of property and equipment (143 ) (131 )
Deferred income taxes 2,974 13,705
Tenant allowances received from landlords 6,187 10,059
Changes in operating assets and liabilities:
Accounts receivable—trade (10,817 ) (3,491 )
Accounts receivable—other (25 ) (4,928 )
Merchandise inventories (57,323 ) (133,946 )
Income tax receivable (11,613 ) (11,566 )
Prepaid expenses and other assets 1,609 5,912
Accounts payable 21,361 49,119
Customer deposits 9,608 14,519
Accrued liabilities 7,117 4,899
Deferred rent (2,640 ) (300 )
Other long-term liabilities   284     (78 )
Net cash used in operating activities   (13,843 )   (32,080 )
Cash flows from investing activities:
Purchases of property and equipment (35,391 ) (55,793 )
Proceeds from sales of property and equipment   17     4  
Net cash used in investing activities   (35,374 )   (55,789 )
Cash flows from financing activities:
Purchases of treasury stock (19,450 ) (35,000 )
Proceeds from exercise of stock options 4,023 264
Excess tax benefits from stock-based compensation 585 21
Net increase in bank overdrafts - 18,091
Net borrowings on line of credit - 33,900
Net borrowings on inventory financing facility 13,245 -
Payment of financing costs - (88 )
Payment received on notes receivable-related parties   41     -  
Net cash (used in) provided by financing activities   (1,556 )   17,188  
Net decrease in cash and cash equivalents (50,773 ) (70,681 )
Cash and cash equivalents
Beginning of period   59,244     72,794  
End of period $ 8,471   $ 2,113  
Supplemental disclosure of cash flow information:
Interest paid $ 57 $ 88
Income taxes paid $ 7,209 $ 3,375
Capital expenditures included in accounts payable $ 4,366 $ 5,462
 
 
HHGREGG, INC. AND SUBSIDIARIES
Store Count by Quarter for Fiscal Years 2011, 2012 and 2013
(Unaudited)
                     
 
FY2011 FY2012 FY2013
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
 
Beginning Store Count 131 157 169 173 173 180 204 208 208 210
Store Openings 26 12 4 1 7 24 4 2 13
Store Closures - - - (1) - - - - - -
                   
Ending Store Count 157 169 173 173 180 204 208 208 210 223
 
Note: hhgregg, Inc.'s fiscal year is comprised of four quarters ending June 30th, September 30th, December 31st and March 31st.




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