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Conn’s, Inc. Announces Record Third Quarter Net Income

Capital and Liquidity

As of October 31, 2012, the Company had $272.2 million, excluding $4.3 million of letters of credit, outstanding under its asset-based loan facility. Additionally, as of October 31, 2012, the Company had $157.5 million of immediately available borrowing capacity, and an additional $91.0 million that could become available upon increases in eligible inventory and customer receivable balances under the borrowing base.

On November 27, 2012, the Company added an additional lender to its asset-based loan facility. As a result, total commitments under the facility increased by $20.0 million to $545.0 million.

Outlook and Guidance

The Company increased earnings guidance for the fiscal year ending January 31, 2013, to diluted earnings per share of $1.55 to $1.60 on an adjusted basis. The following expectations were considered in developing the guidance for the full year:

  • Same stores sales up 13% to 16%;
  • New store openings of five;
  • Retail gross margin between 34.5% and 35.0%;
  • An increase in the credit portfolio balance;
  • Selling, general and administrative expense, as a percent of revenues, between 29.0% and 29.5% of total revenues; and
  • No significant change in the number of shares outstanding.

The Company also initiated earnings guidance of diluted earnings per share of $2.05 to $2.15 for the fiscal year ending January 31, 2014. The following expectations were considered in developing the guidance:

  • Same stores sales up 0% to 5%;
  • New store openings of between 10 and 12;
  • Retail gross margin between 34.5% and 35.5%;
  • An increase in the credit portfolio balance;
  • Selling, general and administrative expense, as a percent of revenues, between 28.0% and 29.0% of total revenues; and
  • No significant change in the number of shares outstanding.

Management Departure

After 14 years of valuable service, Rey de la Fuente, President – Credit Division, is leaving the Company to pursue other opportunities. He is staying through January 31, 2013, to complete the transition of his duties, which began early this year. Mr. de la Fuente, who reports to the Company’s Chief Operating Officer, has been with the Company since 1998 and has focused his attention in recent quarters on credit underwriting.

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