Conn's (CONN) Tops Q4 EPS by 68c

Conn’s, Inc. Reports Fourth Quarter Fiscal Year 2021 Financial Results

March 31, 2021 6:00 AM EDT

THE WOODLANDS, Texas, March 31, 2021 (GLOBE NEWSWIRE) -- Conns, Inc. (NASDAQ: CONN) (Conns or the Company), a specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products, and provider of consumer credit, today announced its financial results for the quarter ended January 31, 2021.

Throughout fiscal year 2021, we took decisive actions focused on supporting our employees, customers, and communities, while de-risking our business, enhancing our balance sheet, and investing in digital and e-commerce. These actions combined with the dedication of our associates directly contributed to our ability to successfully navigate the COVID-19 pandemic. Quarterly same store sales improved sequentially throughout fiscal year 2021, despite continued conservative underwriting strategies, which we believe demonstrates strong underlying demand for our products, and we anticipate positive same store sales momentum will continue into fiscal year 2022, stated Norm Miller, Conns Chairman and Chief Executive Officer.

We have emerged from the pandemic stronger, more efficient and well positioned to compete in a rapidly changing market, and fiscal year 2022 is off to a strong start. Same store sales are up over 3.0% quarter-to-date, despite the impacts of the historic winter storm across many of our markets, one fewer selling day as a result of leap year and continued supply chain challenges. These quarter-to-date results still reflect our more conservative underwriting strategy.

Overall, we believe Conns is at an inflection point in our growth strategy as we continue to leverage our best-in-class in-house and third-party credit offerings, increase digital and e-commerce investments, expand our brick-and-mortar footprint, and enhance our merchandising and marketing strategies. We believe these strategic initiatives, combined with our unique value proposition, will support long-term and sustainable growth, concluded Mr. Miller.

Fourth Quarter Financial Highlights:

Earnings for the fourth quarter increased approximately 400% to $0.85 per diluted share, compared to $0.17 per diluted share for the same period last fiscal year;Increased fourth quarter cash and third-party credit sales nearly 35% compared to the prior fiscal year period reflecting strong demand for home-related products; andSame store sales declined 10.1% for the fourth quarter, primarily due to a nearly 29% decline in sales financed by Conns in-house credit because of tighter underwriting associated with the COVID-19 crisis.

Fiscal Year 2021 Financial Highlights:

Improved capital position as net cash provided by operating activities was $462.1 million compared to $80.1 million for the year ended January 31, 2020;Reduced overall debt balance by $416.6 million as compared to fiscal year 2020 resulting in debt as a percent of the portfolio balance of approximately 49% at January 31, 2021. Net debt as a percent of the portfolio balance at January 31, 2021 was approximately 45%, representing the lowest level in seven fiscal years;Carrying value of customer accounts receivable 60+ days past due at January 31, 2021 24% lower than the prior fiscal year;Carrying value of re-aged customer accounts receivable at January 31, 2021 33% lower than the prior fiscal year period; andMore than doubled e-commerce sales during fiscal year 2021 as compared to the prior fiscal year.

Fourth Quarter Results

Net income for the fourth quarter of fiscal year 2021 was $25.1 million, or $0.85 per diluted share, compared to net income for the fourth quarter of fiscal year 2020 of $5.1 million, or $0.17 per diluted share. The increase in net income was primarily due to a decrease in provision for bad debts and tax benefit related to the CARES ACT, partially offset by a decline in revenue. The CARES ACT tax benefit was $12.4 million, or $0.42 per diluted share, for the fourth quarter of fiscal year 2021. On a non-GAAP basis, adjusted net income for the fourth quarter of fiscal year 2021 was $27.1 million, or $0.91 per diluted share, which excludes charges and credits for severance costs related to a change in the executive management team and a gain on extinguishment of debt. This compares to adjusted net income for the fourth quarter of fiscal year 2020 of $5.9 million, or $0.20 per diluted share, which excludes a loss on extinguishment of debt.

Retail Segment Fourth Quarter Results

Retail revenues were $294.7 million for the three months ended January 31, 2021 compared to $315.3 million for the three months ended January 31, 2020, a decrease of $20.6 million or 6.5%. The decrease in retail revenue was primarily driven by a decrease in same store sales of 10.1% and a decrease in RSA commissions and retrospective income, partially offset by new store growth. The decrease in same store sales reflects proactive tightening of underwriting standards which were the result of the COVID-19 pandemic.

For the three months ended January 31, 2021 and January 31, 2020, retail segment operating income was $12.7 million and $35.7 million, respectively. On a non-GAAP basis, adjusted retail segment operating income for the three months ended January 31, 2021 was $15.4 million, after excluding charges and credits for severance costs related to a change in the executive management team. On a non-GAAP basis, adjusted retail segment operating income for the three months ended January 31, 2020 was $35.7 million.

The following table presents net sales and changes in net sales by category:

 Three... More