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Hhgregg Announces Third 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” sections in the Company’s fiscal 2012 Form 10-K filed May 23, 2012 and Form 10-Q filed November 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. Except as required by law, 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 INCOME
(UNAUDITED)
 
Three Months Ended Nine Months Ended

December 31, 2012

 

December 31, 2011

 

December 31, 2012

 

December 31, 2011

(In thousands, except share and per share data)
Net sales $ 799,635   $ 829,546 $ 1,877,127   $ 1,879,603
Cost of goods sold 581,450   603,640   1,338,136   1,346,705  
Gross profit 218,185 225,906 538,991 532,898
Selling, general and administrative expenses 139,303 140,609 383,871 371,529
Net advertising expense 38,715 39,488 98,085 90,148
Depreciation and amortization expense 10,416 8,765 29,673 24,236
Asset impairment charges 504     504    
Income from operations 29,247 37,044 26,858 46,985
Other expense (income):
Interest expense 704 881 1,692 1,964
Interest income (3 ) (1 ) (8 ) (5 )
Total other expense 701   880   1,684   1,959  
Income before income taxes 28,546 36,164 25,174 45,026
Income tax expense 11,157   13,686   9,726   17,283  
Net income $ 17,389   $ 22,478   $ 15,448   $ 27,743  
Net income per share
Basic $ 0.51 $ 0.60 $ 0.44 $ 0.73
Diluted $ 0.51 $ 0.60 $ 0.44 $ 0.72
Weighted average shares outstanding-basic 33,934,383 37,154,446 35,099,660 38,167,304
Weighted average shares outstanding-diluted 33,985,113 37,603,767 35,168,497 38,522,707
 
   
HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(AS A PERCENTAGE OF NET SALES)
(UNAUDITED)
 
Three Months Ended Nine Months Ended
December 31, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Net sales 100.0 %   100.0 % 100.0 %   100.0 %
Cost of goods sold 72.7   72.8   71.3   71.6  
Gross profit 27.3 27.2 28.7 28.4
Selling, general and administrative expenses 17.4 17.0 20.4 19.8
Net advertising expense 4.8 4.8 5.2 4.8
Depreciation and amortization expense 1.3 1.1 1.6 1.3
Asset impairment charges 0.1        
Income from operations 3.7 4.5 1.4 2.5
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 before income taxes 3.6 4.4 1.3 2.4
Income tax expense 1.4   1.6   0.5   0.9  
Net income 2.2   2.7   0.8   1.5  
 

Certain percentage amounts do not sum due to rounding

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

December 31, 2012

March 31, 2012

December 31, 2011

(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents 15,522 59,244 5,351
Accounts receivable—trade, less allowances of $25 as of December 31, 2012 and March 31, 2012, and $97 as of December 31, 2011 20,674 19,467 31,627
Accounts receivable—other 30,510 18,630 31,744
Merchandise inventories, net 438,378 282,409 415,901
Prepaid expenses and other current assets 5,083 5,562 5,257
Income tax receivable 1,114
Deferred income taxes 10,371   9,639   8,203  
Total current assets 521,652   394,951   498,083  
Net property and equipment 224,026 204,273 207,971
Deferred financing costs, net 2,158 2,656 2,822
Deferred income taxes 34,663 38,970 40,180
Other assets 1,173   1,934   1,219  
Total long-term assets 262,020   247,833   252,192  
Total assets 783,672   642,784   750,275  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable 223,427 122,596 214,093
Line of credit 28,145
Customer deposits 40,271 28,993 32,234
Accrued liabilities 71,110 43,735 69,022
Income Tax Payable 3,616   4,358   3,729  
Total current liabilities 338,424   199,682   347,223  
Long-term liabilities:
Deferred Rent 79,438 71,304 74,279
Other long-term liabilities 12,276   12,278   12,604  
Total long-term liabilities 91,714   83,582   86,883  
Total liabilities 430,138   283,264   434,106  
Stockholders’ equity:
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2012, March 31, 2012 and December 31, 2011, respectively
Common stock, par value $.0001; 150,000,000 shares authorized; 40,611,411, 40,066,005 and 39,955,572 shares issued; and 33,338,522, 36,351,716 and 37,241,283 outstanding as of December 31, 2012, March 31, 2012 and December 31, 2011, respectively 4 4 4
Additional paid-in capital 286,412 277,846 275,555
Retained earnings 144,729 129,281 75,651
Common stock held in treasury at cost, 7,272,889, 3,714,289 and 2,714,289 shares as of December 31, 2012, March 31, 2012 and December 31, 2011, respectively (77,611 ) (47,570 ) (35,000 )
353,534 359,561 316,210
Note receivable for common stock   (41 ) (41 )
Total stockholders’ equity 353,534   359,520   316,169  
Total liabilities and stockholders’ equity 783,672   642,784   750,275  
 
 
HHGREGG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(UNAUDITED)
 
Nine Months Ended

December 31, 2012

 

December 31, 2011

(In thousands)
Cash flows from operating activities:
Net income $ 15,448 $ 27,743
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 29,673 24,236
Amortization of deferred financing costs 498 498
Stock-based compensation 3,882 4,541
Excess tax benefits from stock based compensation (585 ) (419 )
Gain on sales of property and equipment (216 ) (195 )
Deferred income taxes 3,575 9,608
Asset impairment charges 504
Tenant allowances received from landlords 8,424 17,097
Changes in operating assets and liabilities:
Accounts receivable—trade (1,207 ) (22,696 )
Accounts receivable—other (8,071 ) (8,277 )
Merchandise inventories (155,969 ) (203,893 )
Income tax receivable (1,356 )
Prepaid expenses and other assets 1,240 5,626
Accounts payable 84,699 94,207
Customer deposits 11,278 10,443
Accrued liabilities 27,375 23,979
Deferred rent (4,099 ) (1,719 )
Other long-term liabilities 198   323  
Net cash provided by (used in) operating activities 15,291   (18,898 )
Cash flows from investing activities:
Purchases of property and equipment (50,291 ) (74,996 )
Proceeds from sales of property and equipment 34   4  
Net cash used in investing activities (50,257 ) (74,992 )
Cash flows from financing activities:
Purchases of treasury stock (30,041 ) (35,000 )
Proceeds from exercise of stock options 4,184 1,880
Excess tax benefits from stock-based compensation 585 419
Net increase in bank overdrafts 12,153 31,091
Net borrowings on line of credit 28,145
Net borrowings on inventory financing facility 4,322
Payment of financing costs (88 )
Payments received on notes receivable-related parties 41    
Net cash (used in) provided by financing activities (8,756 ) 26,447  
Net decrease in cash and cash equivalents (43,722 ) (67,443 )
Cash and cash equivalents
Beginning of period 59,244   72,794  
End of period $ 15,522   $ 5,351  
Supplemental disclosure of cash flow information:
Interest paid $ 226 $ 445
Income taxes paid $ 7,509 $ 5,542
Capital expenditures included in accounts payable $ 873 $ 1,013
 
   
HHGREGG, INC. AND SUBSIDIARIES
NON-GAAP RECONCILATION OF NET INCOME, AS ADJUSTED AND
DILUTED NET INCOME PER SHARE, AS ADJUSTED
(UNAUDITED)
 
Three Months Ended December 31, Nine Months Ended December 31,
(Amounts in thousands, except share data) 2012   2011 2012   2011
Net income as reported $ 17,389 $ 22,478 $ 15,448 $ 27,743
Adjustments to net income:
Asset impairment charges 504 504
Tax impact of adjustments to net income (202 )   (202 )
Net income, as adjusted $ 17,691 $ 22,478 $ 15,750 $ 27,743
Weighted average shares outstanding – Diluted 33,985,113 37,603,767 35,168,497 38,522,707
Diluted net income per share as reported $ 0.51 $ 0.60 $ 0.44 $ 0.72
Tax adjusted impact of above adjustments $ 0.01 $ $ 0.01 $
Diluted net income per share, as adjusted $ 0.52 $ 0.60 $ 0.45 $ 0.72
 
       
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   Q3
Beginning Store Count 131 157 169 173 173 180 204 208 208 210 223
Store Openings 26 12 4 1 7 24 4 2 13 5
Store Closures       (1 )              
Ending Store Count 157   169   173   173   180   204   208   208   210   223   228

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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