Conns (CONNQ) 8-K Conn’s, Inc. Announces Record Fourth-quarter Fiscal 2013 Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE:

CONN’S, INC. ANNOUNCES RECORD FOURTH-QUARTER FISCAL 2013 EARNINGS

Adjusted diluted earnings per share of $0.54 for the quarter

Fiscal 2014 earnings guidance raised to $2.40 – $2.50 per diluted share

THE WOODLANDS, TEXAS (April 3, 2013) – Conn’s, Inc. (NASDAQ:CONN), a specialty retailer of home appliances, furniture, mattresses, consumer electronics and provider of consumer credit, today announced its results for the quarter ended January 31, 2013.

Significant items for the fourth quarter of fiscal 2013 include:

- Consolidated revenues grew 10.4% from the prior-year period to $250.3 million;

- Same store sales increased 7.0% year-over-year, on top of same store sales growth of 12.1% last year;

- Retail gross margin equaled 36.9% for the quarter;

- Retail segment operating income was $19.8 million on an adjusted basis, over double the level reported in the prior-year period;

- Adjusted credit segment operating income totaled $13.6 million, an increase of 12.2% from the prior-year quarter; and

- Diluted earnings per share was $0.50 on a reported basis, versus $0.24 per share last year.

“Continued revenue and profitability improvement in our retail and credit operations generated record fourth-quarter and full-year results," stated Theodore M. Wright, the Company's Chairman and CEO. "Our five new Conn’s HomePlus stores are performing well and we plan to open 10 to 12 more over the balance of fiscal 2014.  Average revenue for the new stores was 1.6 times the overall Company average for the three months ended March 31, 2013, with approximately 36% of those sales generated from furniture and mattresses. Same store sales for February and March rose 15% on a combined basis over last year despite a 3% decline in same store sales of consumer electronics."

Retail Segment Results

Revenues were $208.7 million for the three-month period ended January 31, 2013, an increase of $18.4 million, or 9.7%, over the prior-year period. Furniture and mattress sales rose 54.2% from the same quarter last year, accounting for the majority of the reported growth.  Double-digit revenue growth was also reported for appliances and home office equipment. The year-over-year comparison also reflects the benefit of the five new Conn’s HomePlusTM stores opened in fiscal 2013 – with January 2013 being the first full month all new stores were operating.  Additionally, 20 existing stores were updated to the Conn’s HomePlus format as of year-end, favorably influencing results. The closure of one store during the current quarter and seven stores in the previous four quarters tempered the reported growth.

For the quarter ended January 31, 2013, retail gross margin was 36.9%, an increase of 720 basis points over last year. Continued margin improvement was realized in each of the product categories – reflecting the benefit of the sale of higher price-point, higher-margin goods, and sourcing opportunities. The majority of the margin expansion was driven by the consumer electronic and appliance categories which accounted for almost two-thirds of product revenue for the current quarter.  Product margin on furniture and mattress sales rose 11.1 percentage points from the prior-year period to 46.7% of sales, also favorably impacting retail gross margin. Furniture and mattress sales were 20.9% of total product revenue in the current period and accounted for 30.8% of the total product gross profit.

Credit Segment Results

Revenues were $41.6 million for the current quarter, up 14.5% from the prior-year period.  The revenue increase was attributable primarily to a comparable year-over-year increase in the average receivable portfolio balance outstanding.  The portfolio balance rose to $741.5 million at year-end, from $643.3 million as of January 31, 2012, due to higher retail sales volumes and credit penetration over the past year. The portfolio interest and fee income yield was 18.7% for the three months ended January 31, 2013, relatively consistent with the prior-year period but down 60 basis points sequentially as a result of increased short-term, no-interest financing.

Provision for bad debts rose $2.4 million over last year to $12.7 million for the quarter ended January 31, 2013.  This additional provision was driven by the $57.8 million increase in the receivable portfolio during the current quarter – 53.5% above the growth experienced in the fourth quarter of fiscal 2012.

Additional information on the credit portfolio and its performance may be found in the table included within this press release and in the Company’s Form 10-K to be filed with the Securities and Exchange Commission.

For the quarter ended January 31, 2013, the Company reported net income of $0.50 per diluted share, which includes pre-tax charges of $1.9 million associated with store closures and lease terminations, employee severance and the relocation of the Company’s corporate office to The Woodlands, Texas.  The Company’s reported net income was $0.24 per diluted share in the fourth quarter of fiscal 2012, and includes pre-tax costs and impairment charges of $5.1 million related to store closures.

Capital and Liquidity

During the fourth quarter of fiscal 2013, the Company completed a common stock offering in which it sold approximately 2.2 million shares of common stock and received net proceeds of $56.0 million, after deducting underwriting discounts and commissions and other offering-related expenses. Additionally, the Company received net proceeds of $22.4 million in connection with the sale and lease back of four properties.  The proceeds from these transactions were used to reduce outstanding debt balances.

As of January 31, 2013, the Company had $262.4 million outstanding under its asset-based loan facility, excluding $4.3 million of letters of credit. Additionally, as of January 31, 2013, the Company had $209.5 million of immediately available borrowing capacity, and an additional $68.8 million that could become available upon increases in eligible inventory and customer receivable balances under the borrowing base.

On March 27, 2013, the Company received an additional $40 million of lender commitments under its asset-based loan facility increasing total commitments to $585 million.

Outlook and Guidance

The Company increased earnings guidance for the fiscal year ending January 31, 2014, to diluted earnings per share of $2.40 to $2.50 on an adjusted basis. The following expectations were considered in developing the guidance for the full year:

- Same stores sales up 3% to 8%;

- New store openings of between 10 and 12;

- Retail gross margin between 35.5% and 36.5%;

- An increase in the credit portfolio balance;

- Provision for bad debts of between 6.0% and 6.5% of the average portfolio balance outstanding;

- Selling, general and administrative expense of between 28.0% and 29.0% of total revenues; and

- Diluted shares outstanding of approximately 36.5 million.

Conference Call Information

Conn’s, Inc. will host a conference call and audio webcast on Wednesday, April 3, 2013, at 10:00 A.M. CT,  to discuss its earnings and operating performance for the quarter. A link to the live webcast, which will be archived for one year, and slides to be referred to during the call will be available at ir.Conns.com. Participants can join the call by dialing 877-754-5302 or 678-894-3020.

About Conn’s, Inc.

Conn’s is a specialty retailer currently operating 68 retail locations in Texas, Louisiana, Oklahoma, New Mexico and Arizona. The Company’s primary product categories include:

- Home appliance, including refrigerators, freezers, washers, dryers, dishwashers and ranges;

- Furniture and mattress, including furniture and related accessories for the living room, dining room and bedroom as well as both traditional and specialty mattresses;

- Consumer electronic, including LCD, LED, 3-D and plasma televisions, Blu-ray players, home theater and video game products, camcorders, digital cameras, and portable audio equipment; and

- Home office, including computers, tablets, printers and accessories.

Additionally, the Company offers a variety of products on a seasonal basis, including lawn and garden equipment, room air conditioners and outdoor furniture. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers, in addition to third-party financing programs and third-party rent-to-own payment plans.

This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to continue existing or offer new customer financing programs; changes in the delinquency status of our credit portfolio; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores and the updating of existing stores; technological and market developments and sales trends for our major product offerings; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our revolving credit facility, and proceeds from accessing debt or equity markets; and the other risks detailed from time-to-time in our SEC reports, including but not limited to, our Annual Report on Form 10-K. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

CONN'S, INC. AND SUBSIDIARIES

CONDENSED, CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Revenues
Total net sales	$	208,352		$	189,671		$	714,267		$	653,684
Finance charges and other		41,992			37,000			150,765			138,618
Total revenues		250,344			226,671			865,032			792,302
Cost and expenses
Cost of goods sold, including warehousing and occupancy costs		129,641			130,719			454,682			455,493
Cost of parts sold, including warehousing and occupancy costs		1,452			1,554			5,965			6,527
Selling, general and administrative expense		72,942			62,491			253,189			237,098
Provision for bad debts		12,821			10,440			47,659			53,555
Charges and credits		1,875			5,082			3,025			9,928
Total cost and expenses		218,731			210,286			764,520			762,601
Operating income		31,613			16,385			100,512			29,701
Interest expense		3,888			3,978			17,047			22,457
Loss on early extinguishment of debt		79			-			897			11,056
Other (income) expense, net		(48	)		(11	)		(153	)		70
Income (loss) before income taxes		27,694			12,418			82,721			(3,882	)
Provision (benefit) for income taxes		10,029			4,717			30,109			(159	)
Net income (loss)	$	17,665		$	7,701		$	52,612		$	(3,723	)
Earnings (loss) per share:
Basic	$	0.52		$	0.24		$	1.60		$	(0.12	)
Diluted	$	0.50		$	0.24		$	1.56		$	(0.12	)
Average common shares outstanding:
Basic		34,072			31,997			32,862			31,860
Diluted		35,161			32,572			33,768			31,860

CONN'S, INC. AND SUBSIDIARIES

CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Revenues
Product sales	$	189,712		$	173,446		$	649,516		$	596,360
Repair service agreement commissions		15,718			12,629			51,648			42,078
Service revenues		2,922			3,596			13,103			15,246
Total net sales		208,352			189,671			714,267			653,684
Finance charges and other		379			657			1,236			1,335
Total revenues		208,731			190,328			715,503			655,019
Cost and expenses
Cost of goods sold, including warehousing and occupancy costs		129,641			130,719			454,682			455,493
Cost of parts sold, including warehousing and occupancy costs		1,452			1,554			5,965			6,527
Selling, general and administrative expense		57,666			48,631			197,498			180,234
Provision for bad debts		128			121			758			590
Charges and credits		1,348			5,082			2,498			9,522
Total cost and expenses		190,235			186,107			661,401			652,366
Operating income		18,496			4,221			54,102			2,653
Other (income) expense, net		(48	)		(11	)		(153	)		70
Income before income taxes	$	18,544		$	4,232		$	54,255		$	2,583
Retail gross margin		36.9	%		29.7	%		35.2	%		28.7	%
Selling, general and administrative expense as percent of revenues		27.6	%		25.6	%		27.6	%		27.5	%
Operating margin		8.9	%		2.2	%		7.6	%		0.4	%
Number of stores:
Beginning of period		65			71			65			76
Opened		4			-			5			-
Closed		(1	)		(6	)		(2	)		(11	)
End of period		68			65			68			65

CONN'S, INC. AND SUBSIDIARIES

CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION

(unaudited)

(in thousands)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Revenues
Finance charges and other	$	41,613		$	36,343		$	149,529		$	137,283
Cost and expenses
Selling, general and administrative expense		15,276			13,860			55,691			56,864
Provision for bad debts		12,693			10,319			46,901			52,965
Charges and credits		527			-			527			406
Total cost and expenses		28,496			24,179			103,119			110,235
Operating income		13,117			12,164			46,410			27,048
Interest expense		3,888			3,978			17,047			22,457
Loss on early extinguishment of debt		79			-			897			11,056
Income (loss) before income taxes	$	9,150		$	8,186		$	28,466		$	(6,465	)
Selling, general and administrative expense as percent of revenues		36.7	%		38.1	%		37.2	%		41.4	%
Operating margin		31.5	%		33.5	%		31.0	%		19.7	%

MANAGED CUSTOMER RECEIVABLE PORTFOLIO STATISTICS

(dollars in thousands, except average outstanding balance per account)

	January 31,
	2013			2012
Data as of:
Total outstanding balance	$	741,544		$	643,301
Number of active accounts		483,219			484,169
Average outstanding customer balance	$	1,535		$	1,329
Balance 60+ days past due	$	52,839		$	55,190
Percent 60+ days past due		7.1	%		8.6	%
Percent of portfolio re-aged		11.7	%		13.8	%
Weighted average credit score of outstanding balances		600			602

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Data for the periods ended:
Weighted average origination credit score of sales financed		611			617			614			621
Weighted average monthly payment rate		5.1	%		5.2	%		5.4	%		5.6	%
Interest and fee income yield, annualized		18.7	%		18.8	%		18.6	%		18.7	%
Percent of bad debt charge-offs (net of recoveries) to average outstanding balance, annualized		7.4	%		8.0	%		8.0	%		7.5	%
Percent of sales generated by payment option:
In-house financing, including down payment		74.6	%		66.5	%		70.9	%		60.4	%
Third-party financing		16.1	%		15.2	%		14.8	%		12.5	%
Third-party rent-to-own option		3.3	%		2.6	%		3.5	%		3.5	%
Total		94.0	%		84.3	%		89.2	%		76.4	%

CONN'S, INC. AND SUBSIDIARIES

CONDENSED, CONSOLIDATED BALANCE SHEET

(unaudited)

(in thousands)

	January 31,
	2013			2012
Assets
Current Assets
Cash and cash equivalents	$	3,849		$	6,265
Customer accounts receivable, net		378,050			316,385
Other accounts receivable, net		45,759			38,715
Inventories		73,685			62,540
Deferred income taxes		15,302			17,111
Prepaid expenses and other assets		11,599			11,542
Total current assets		528,244			452,558
Long-term customer accounts receivable, net		313,011			272,938
Property and equipment, net		46,994			38,484
Deferred income taxes		11,579			9,754
Other assets, net		10,029			9,564
Total Assets	$	909,857		$	783,298
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt	$	32,526		$	726
Accounts payable		69,608			44,711
Accrued expenses		29,496			31,243
Other current liabilities		19,533			17,994
Total current liabilities		151,163			94,674
Long-term debt		262,531			320,978
Other long-term liabilities		21,713			14,275
Stockholders' equity		474,450			353,371
Total liabilities and stockholders' equity	$	909,857		$	783,298
Total debt as a percentage of stockholders’ equity		62.2	%		91.0	%

NON-GAAP RECONCILIATION OF NET INCOME, AS ADJUSTED

AND DILUTED EARNINGS PER SHARE, AS ADJUSTED

(unaudited)

(in thousands, except earnings per share)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Net income (loss), as reported	$	17,665		$	7,701		$	52,612		$	(3,723	)
Adjustments:
Costs related to store closings and lease terminations		1,032			5,082			1,195			9,115
Costs related to office relocation		215			-			1,202			-
Severance costs		628			-			628			813
Loss from early extinguishment of debt		79			-			897			11,056
Inventory reserve adjustment		-			-			-			4,669
Charge to record reserves required by the adoption of troubled debt restructuring accounting guidance		-			-			-			27,487
Reserves previously provided related to accounts considered restructured under the troubled debt restructuring accounting guidance		-			-			-			(13,350	)
Tax impact of adjustments		(688	)		(1,789	)		(1,381	)		(14,006	)
Net income, as adjusted	$	18,931		$	10,994		$	55,153		$	22,061
Average common shares outstanding - Diluted		35,161			32,572			33,768			31,860
Earnings (loss) per share - Diluted
As reported	$	0.50		$	0.24		$	1.56		$	(0.12	)
As adjusted	$	0.54		$	0.34		$	1.63		$	0.69

NON-GAAP RECONCILIATION OF RETAIL SEGMENT

OPERATING INCOME, AS ADJUSTED

(unaudited)

(in thousands)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Operating income, as reported	$	18,496		$	4,221		$	54,102		$	2,653
Adjustments:
Costs related to store closings and lease terminations		1,032			5,082			1,195			9,115
Costs related to office relocation		215			-			1,202			-
Severance costs		101			-			101			407
Inventory reserve adjustment		-			-			-			4,669
Operating income, as adjusted	$	19,844		$	9,303		$	56,600		$	16,844
Retail segment revenues	$	208,731		$	190,328		$	715,503		$	655,019
Operating margin
As reported		8.9	%		2.2	%		7.6	%		0.4	%
As adjusted		9.5	%		4.9	%		7.9	%		2.6	%

NON-GAAP RECONCILIATION OF CREDIT SEGMENT

OPERATING INCOME, AS ADJUSTED

(unaudited)

(in thousands)

	Three Months Ended January 31,						Year Ended January 31,
	2013			2012			2013			2012
Operating income, as reported	$	13,117		$	12,164		$	46,410		$	27,048
Adjustments:
Severance costs		527			-			527			406
Charge to record reserves required by the adoption of troubled debt restructuring accounting guidance		-			-			-			27,487
Reserves previously provided related to accounts considered restructured under the troubled debt restructuring accounting guidance		-			-			-			(13,350	)
Operating income, as adjusted	$	13,644		$	12,164		$	46,937		$	41,591
Credit segment revenues	$	41,613		$	36,343		$	149,529		$	137,283
Operating margin
As reported		31.5	%		33.5	%		31.0	%		19.7	%
As adjusted		32.8	%		33.5	%		31.4	%		30.3	%

Basis for presentation of non-GAAP disclosures:

To supplement the Company’s consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles ("GAAP"), the Company also provides the following information: adjusted net income and adjusted earnings per diluted share; adjusted retail segment operating income and adjusted operating margin; and adjusted credit segment operating income and operating margin. These non-GAAP financial measures are not meant to be considered as a substitute for comparable GAAP measures but should be considered in addition to results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations and the factors and trends affecting the Company’s business. The Company’s management believes these non-GAAP financial measures are useful to financial statement readers because (1) they allow for greater transparency with respect to key metrics the Company uses in its financial and operational decision making and (2) they are used by some of its institutional investors and the analyst community to help them analyze the Company’s operating results.

CONN-F

Conn’s, Inc.

Chief Financial Officer

Brian Taylor (936) 230-5899

or

Investors:

S.M. Berger & Company

Andrew Berger (216) 464-6400