Conn's (CONN) Tops Q4 EPS by 20c, Revenues Miss; Provides FY20 Business Outlook

March 26, 2019 6:09 AM EDT
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Price: $20.89 +6.42%

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Income before income taxes: -7.08M

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Conn's (NASDAQ: CONN) reported Q4 EPS of $0.96, $0.20 better than the analyst estimate of $0.76. Revenue for the quarter came in at $338.73 million versus the consensus estimate of $438.12 million.

“Fiscal year 2019 was a historic year for Conn’s and reflects the growing momentum in our business. For fiscal year 2019, same-store sales, retail gross margin, bad debt charge-offs and overall profitability improved significantly compared to the prior year. Retail growth strategies underway produced a 3.7% increase in non-Harvey same store sales during the fourth quarter. Fourth quarter GAAP earnings increased significantly to $0.91 per diluted share, which are the best quarterly earnings we have achieved in our 128-year history. In addition, we generated $73.8 million in GAAP net income and a record adjusted EBITDA of $212.8 million for fiscal year 2019,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer.

“For fiscal year 2020, we continue to expect positive same store sales trends and plan to open 12 to 15 new Conn’s HomePlus locations. With only 125 stores across 14 states, we have a significant opportunity to serve customers throughout the country with our unmatched value proposition. As we enter the new fiscal year, we are excited with our strong financial and operating position allowing us to focus on retail expansion,” concluded Mr. Miller.

Fourth quarter of fiscal year 2019 highlights include:

  • Opened two new Conn’s HomePlus locations in Virginia and in Louisiana bringing the total new store openings for fiscal year 2019 to seven
  • Total retail sales of $338.7 million, an increase of 1.3% compared to the fourth quarter of fiscal year 2018
  • Non-Harvey same store sales up +3.7%
  • Same store sales of -1.4%, an improvement of 660 basis points from the fourth quarter of fiscal year 2018, despite lapping the benefit Hurricane Harvey rebuilding efforts had in the fourth quarter of fiscal year 2018
  • Record retail gross margin of 42.4%
  • Retail operating margin of 16.1%, 160 basis points higher than the fourth quarter of last fiscal year
  • Credit spread of 890 basis points, the best fourth quarter credit spread in six years
  • Record quarterly credit segment revenues of $94.1 million
  • Bad debt charge-offs (net of recoveries) as a percentage of the average outstanding balance of 12.7%
  • Interest expense of $15.2 million, compared to $18.0 million for the same period last fiscal year
  • Record GAAP earnings of $0.91 per diluted share, compared to $0.10 per diluted share for the same period last fiscal year
  • Record adjusted earnings of $0.96 per diluted share, an increase of 71.4% over prior fiscal year period
  • Fourth quarter net income of $29.5 million
  • Fourth quarter adjusted EBITDA of $67.7 million, or 15.6% of total revenues

Outlook and Guidance

The following are the Company’s expectations for the business for the first quarter of fiscal year 2020:

  • Change in same store sales between negative 5% and negative 1%;
    • Markets not impacted by Hurricane Harvey between negative 2% and positive 2%; and
    • Markets impacted by Hurricane Harvey between negative 12% and negative 8%;
  • Retail gross margin between 39.5% and 40.0% of total net retail sales;
  • Selling, general and administrative expenses between 32.5% and 33.5% of total revenues;
  • Provision for bad debts between $38.5 million and $42.5 million;
  • Finance charges and other revenues between $88.5 million and $92.5 million; and
  • Interest expense between $15.0 million and $16.0 million.

For earnings history and earnings-related data on Conn's (CONN) click here.



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