Conn's (CONN) Tops Q3 EPS by 1c, Revenues Miss

December 4, 2018 6:07 AM EST

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Conn's (NASDAQ: CONN) reported Q3 EPS of $0.59, $0.01 better than the analyst estimate of $0.58. Revenue for the quarter came in at $373.82 million versus the consensus estimate of $385.69 million.

“Fiscal year 2019 is shaping up to be one of the best years of profitability in Conn’s 128-year history. This is primarily due to our growing credit spread and strong retail gross and operating margins. Conn’s credit spread was 940 basis points in the third quarter of fiscal year 2019 as a result of record interest income and fee yield and lower charge-offs of bad debts. From a retail perspective, even with Hurricane Harvey’s impact on same store sales, we achieved a retail operating margin of 12.4% during the third quarter of fiscal year 2019,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer.

“Our successful credit transformation combined with the investments underway to maximize our retail performance have created the strongest foundation since I came to the company over three years ago. We are well positioned headed into the fourth quarter as November same store sales increased 8.5% in our non-Harvey markets. Total same store sales increased 3.6% in November, even as we lapped strong sales in the prior year in our Hurricane Harvey impacted markets.”

“As we plan for our next fiscal year, we expect stronger retail growth driven by improving same store sales trends, coupled with opening 12 to 15 new Conn’s HomePlus locations. I am pleased with the progress we are making, and the positive momentum our highly profitable and differentiated business is achieving,” concluded Mr. Miller.

Third quarter of fiscal year 2019 highlights include:

  • Opened three new Conn’s HomePlus locations in Virginia
  • Record third quarter retail gross margin of 41.2%
  • Retail operating margin of 12.4%, 230 basis points higher than the third quarter of last fiscal year
  • Credit spread of 940 basis points, the best third quarter credit spread in five years
  • Record quarterly credit segment revenues of $89.8 million
  • 60+ day delinquency rate of 9.7%, representing the fifth consecutive quarter that the rate has declined year-over-year
  • Third consecutive quarter of positive credit segment operating income, which has generated a $24.5 million improvement fiscal year-to-date compared to the prior fiscal year period
  • Interest expense of $15.1 million, compared to $18.1 million for the same period last fiscal year
  • GAAP earnings of $0.45 per diluted share, compared to $0.05 per diluted share for the same period last fiscal year
  • Adjusted earnings of $0.59 per diluted share, an increase of 228% over the prior year period

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

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