Cover
Cover - shares | 9 Months Ended | |
Oct. 31, 2021 | Nov. 29, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-34956 | |
Entity Registrant Name | CONN’S, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 06-1672840 | |
Entity Address, Address Line One | 2445 Technology Forest Blvd., | |
Entity Address, Address Line Two | Suite 800, | |
Entity Address, City or Town | The Woodlands, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77381 | |
City Area Code | 936 | |
Local Phone Number | 230-5899 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CONN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 29,516,584 | |
Entity Central Index Key | 0001223389 | |
Current Fiscal Year End Date | --01-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 10,597 | $ 9,703 |
Restricted cash (includes VIE balances of $23,478 and $48,622, respectively) | 25,528 | 50,557 |
Customer accounts receivable, net of allowances (includes VIE balances of $131,754 and $259,811, respectively) | 460,808 | 478,734 |
Other accounts receivable | 74,811 | 61,716 |
Inventories | 263,134 | 196,463 |
Income taxes receivable | 8,787 | 38,059 |
Prepaid expenses and other current assets | 9,745 | 8,831 |
Total current assets | 853,410 | 844,063 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $42,047 and $184,304, respectively) | 426,220 | 430,749 |
Property and equipment, net | 188,502 | 190,962 |
Operating lease right-of-use assets | 265,592 | 265,798 |
Deferred income taxes | 0 | 9,448 |
Other assets | 52,855 | 14,064 |
Total assets | 1,786,579 | 1,755,084 |
Current liabilities: | ||
Current finance lease obligations | 942 | 934 |
Accounts payable | 91,084 | 69,367 |
Accrued compensation and related expenses | 38,546 | 24,944 |
Accrued expenses | 89,508 | 58,046 |
Operating lease liability - current | 50,390 | 44,011 |
Income taxes payable | 2,718 | 1,447 |
Deferred revenues and other credits | 13,684 | 13,007 |
Total current liabilities | 286,872 | 211,756 |
Operating lease liability - non current | 345,756 | 354,598 |
Long-term debt and finance lease obligations (includes VIE balances of $146,862 and $411,551, respectively) | 459,319 | 608,635 |
Deferred tax liability | 8,693 | 0 |
Other long-term liabilities | 22,424 | 22,940 |
Total liabilities | 1,123,064 | 1,197,929 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock ($0.01 par value, 1,000,000 shares authorized; none issued or outstanding) | 0 | 0 |
Common stock ($0.01 par value, 100,000,000 shares authorized; 32,982,249 and 32,711,623 shares issued, respectively) | 330 | 327 |
Treasury stock (at cost; 3,485,441 shares and 3,485,441 shares, respectively) | (66,290) | (66,290) |
Additional paid-in capital | 137,824 | 132,108 |
Retained earnings | 591,651 | 491,010 |
Total stockholders’ equity | 663,515 | 557,155 |
Total liabilities and stockholders’ equity | $ 1,786,579 | $ 1,755,084 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Restricted cash (includes VIE balances of $23,478 and $48,622, respectively) | $ 25,528 | $ 50,557 |
Customer accounts receivable, net of allowances (includes VIE balances of $131,754 and $259,811, respectively) | 460,808 | 478,734 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $42,047 and $184,304, respectively) | 426,220 | $ 430,749 |
Long-term debt | $ 147,425 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred Stock, Shares Issued (in shares) | 0 | 0 |
Preferred Stock, Shares Outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 32,982,249 | 32,711,623 |
Treasury stock, shares (in shares) | 3,485,441 | 3,485,441 |
Variable Interest Entity | ||
Restricted cash (includes VIE balances of $23,478 and $48,622, respectively) | $ 23,478 | $ 48,622 |
Customer accounts receivable, net of allowances (includes VIE balances of $131,754 and $259,811, respectively) | 131,754 | 259,811 |
Long-term portion of customer accounts receivable, net of allowances (includes VIE balances of $42,047 and $184,304, respectively) | 42,047 | 184,304 |
Long-term debt | $ 146,862 | $ 411,551 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Revenues: | ||||
Total net sales | $ 334,583 | $ 259,772 | $ 972,664 | $ 769,838 |
Finance charges and other revenues | 70,875 | 74,386 | 214,879 | 248,396 |
Total revenues | 405,458 | 334,158 | 1,187,543 | 1,018,234 |
Costs and expenses: | ||||
Cost of goods sold | 211,298 | 160,378 | 612,219 | 484,015 |
Selling, general and administrative expense | 138,081 | 122,158 | 402,000 | 350,443 |
Provision for bad debts | 26,532 | 27,493 | 19,658 | 176,864 |
Charges and credits | 0 | 0 | 0 | 3,589 |
Total costs and expenses | 375,911 | 310,029 | 1,033,877 | 1,014,911 |
Operating income | 29,547 | 24,129 | 153,666 | 3,323 |
Interest expense | 5,206 | 11,563 | 20,498 | 39,778 |
Loss on extinguishment of debt | 0 | 0 | 1,218 | 0 |
Income (loss) before income taxes | 24,341 | 12,566 | 131,950 | (36,455) |
Provision (benefit) for income taxes | 6,102 | 5,147 | 31,309 | (8,192) |
Net income (loss) | $ 18,239 | $ 7,419 | $ 100,641 | $ (28,263) |
Income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.62 | $ 0.25 | $ 3.42 | $ (0.97) |
Diluted (in dollars per share) | $ 0.60 | $ 0.25 | $ 3.34 | $ (0.97) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 29,488,321 | 29,142,843 | 29,418,047 | 29,013,759 |
Diluted (in shares) | 30,261,421 | 29,483,481 | 30,127,419 | 29,013,759 |
Product sales | ||||
Revenues: | ||||
Total net sales | $ 308,301 | $ 239,157 | $ 897,757 | $ 702,497 |
Repair service agreement commissions | ||||
Revenues: | ||||
Total net sales | 23,769 | 17,465 | 66,600 | 57,730 |
Service revenues | ||||
Revenues: | ||||
Total net sales | $ 2,513 | $ 3,150 | $ 8,307 | $ 9,611 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock |
Beginning balance ( in shares) at Jan. 31, 2020 | 32,125,055 | ||||
Beginning balance at Jan. 31, 2020 | $ 627,180 | $ 321 | $ 122,513 | $ 570,636 | $ (66,290) |
Beginning balance (Accounting Standards Update 2016-13) at Jan. 31, 2020 | (76,490) | (76,490) | |||
Treasury stock, beginning balance (in shares) at Jan. 31, 2020 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 321,468 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | (1,285) | $ 3 | (1,288) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 47,450 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 177 | $ 1 | 176 | ||
Stock-based compensation | 2,430 | 2,430 | |||
Net income (loss) | (56,202) | (56,202) | |||
Ending balance (in shares) at Apr. 30, 2020 | 32,493,973 | ||||
Ending balance at Apr. 30, 2020 | $ 495,810 | $ 325 | 123,831 | 437,944 | $ (66,290) |
Treasury stock, ending balance (in shares) at Apr. 30, 2020 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 | ||||
Beginning balance ( in shares) at Jan. 31, 2020 | 32,125,055 | ||||
Beginning balance at Jan. 31, 2020 | $ 627,180 | $ 321 | 122,513 | 570,636 | $ (66,290) |
Beginning balance (Accounting Standards Update 2016-13) at Jan. 31, 2020 | (76,490) | (76,490) | |||
Treasury stock, beginning balance (in shares) at Jan. 31, 2020 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (28,263) | ||||
Ending balance (in shares) at Oct. 31, 2020 | 32,645,472 | ||||
Ending balance at Oct. 31, 2020 | 528,471 | $ 326 | 128,552 | 465,883 | $ (66,290) |
Treasury stock, ending balance (in shares) at Oct. 31, 2020 | (3,485,441) | ||||
Beginning balance ( in shares) at Apr. 30, 2020 | 32,493,973 | ||||
Beginning balance at Apr. 30, 2020 | 495,810 | $ 325 | 123,831 | 437,944 | $ (66,290) |
Treasury stock, beginning balance (in shares) at Apr. 30, 2020 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 70,271 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | (158) | $ 1 | (159) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 51,643 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 160 | 160 | |||
Stock-based compensation | 2,254 | 2,254 | |||
Net income (loss) | 20,520 | 20,520 | |||
Ending balance (in shares) at Jul. 31, 2020 | 32,615,887 | ||||
Ending balance at Jul. 31, 2020 | 518,586 | $ 326 | 126,086 | 458,464 | $ (66,290) |
Treasury stock, ending balance (in shares) at Jul. 31, 2020 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 6,856 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | (32) | (32) | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 22,729 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 194 | 194 | |||
Stock-based compensation | 2,304 | 2,304 | |||
Net income (loss) | 7,419 | 7,419 | |||
Ending balance (in shares) at Oct. 31, 2020 | 32,645,472 | ||||
Ending balance at Oct. 31, 2020 | 528,471 | $ 326 | 128,552 | 465,883 | $ (66,290) |
Treasury stock, ending balance (in shares) at Oct. 31, 2020 | (3,485,441) | ||||
Beginning balance ( in shares) at Jan. 31, 2021 | 32,711,623 | ||||
Beginning balance at Jan. 31, 2021 | $ 557,155 | $ 327 | 132,108 | 491,010 | $ (66,290) |
Treasury stock, beginning balance (in shares) at Jan. 31, 2021 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 115,159 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | $ (998) | $ 1 | (999) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 18,240 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 180 | 180 | |||
Stock-based compensation | 2,039 | 2,039 | |||
Net income (loss) | 45,398 | 45,398 | |||
Ending balance (in shares) at Apr. 30, 2021 | 32,845,022 | ||||
Ending balance at Apr. 30, 2021 | 603,774 | $ 328 | 133,328 | 536,408 | $ (66,290) |
Treasury stock, ending balance (in shares) at Apr. 30, 2021 | (3,485,441) | ||||
Beginning balance ( in shares) at Jan. 31, 2021 | 32,711,623 | ||||
Beginning balance at Jan. 31, 2021 | $ 557,155 | $ 327 | 132,108 | 491,010 | $ (66,290) |
Treasury stock, beginning balance (in shares) at Jan. 31, 2021 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | $ 100,641 | ||||
Ending balance (in shares) at Oct. 31, 2021 | 32,982,249 | ||||
Ending balance at Oct. 31, 2021 | $ 663,515 | $ 330 | 137,824 | 591,651 | $ (66,290) |
Treasury stock, ending balance (in shares) at Oct. 31, 2021 | (3,485,441) | (3,485,441) | |||
Beginning balance ( in shares) at Apr. 30, 2021 | 32,845,022 | ||||
Beginning balance at Apr. 30, 2021 | $ 603,774 | $ 328 | 133,328 | 536,408 | $ (66,290) |
Treasury stock, beginning balance (in shares) at Apr. 30, 2021 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 112,223 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | (228) | $ 1 | (229) | ||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 10,563 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 187 | 187 | |||
Stock-based compensation | 1,713 | 1,713 | |||
Net income (loss) | 37,004 | 37,004 | |||
Ending balance (in shares) at Jul. 31, 2021 | 32,967,808 | ||||
Ending balance at Jul. 31, 2021 | 642,450 | $ 329 | 134,999 | 573,412 | $ (66,290) |
Treasury stock, ending balance (in shares) at Jul. 31, 2021 | (3,485,441) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of options and vesting of restricted stock, net of withholding tax (in shares) | 3,394 | ||||
Exercise of options and vesting of restricted stock, net of withholding tax | (25) | (25) | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 11,047 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 221 | $ 1 | 220 | ||
Stock-based compensation | 2,630 | 2,630 | |||
Net income (loss) | 18,239 | 18,239 | |||
Ending balance (in shares) at Oct. 31, 2021 | 32,982,249 | ||||
Ending balance at Oct. 31, 2021 | $ 663,515 | $ 330 | $ 137,824 | $ 591,651 | $ (66,290) |
Treasury stock, ending balance (in shares) at Oct. 31, 2021 | (3,485,441) | (3,485,441) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 100,641 | $ (28,263) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Depreciation | 34,233 | 30,506 |
Change in right-of-use asset | 25,910 | 21,926 |
Amortization of debt issuance costs | 4,098 | 6,388 |
Provision for bad debts and uncollectible interest | 45,120 | 225,713 |
Stock-based compensation expense | 6,382 | 6,988 |
Charges, net of credits | 0 | 3,589 |
Deferred income taxes | 18,141 | (3,954) |
Loss on extinguishment of debt | 1,218 | 0 |
Loss on disposal of property and equipment | 514 | 198 |
Tenant improvement allowances received from landlords | 11,537 | 15,137 |
Change in operating assets and liabilities: | ||
Customer accounts receivable | (22,468) | 79,357 |
Other accounts receivables | (13,291) | 11,918 |
Inventories | (66,672) | 3,595 |
Other assets | (132) | (342) |
Accounts payable | 21,717 | 23,423 |
Accrued expenses | 47,323 | 24,666 |
Operating leases | (39,704) | (29,151) |
Income taxes | (6,574) | (4,370) |
Deferred revenues and other credits | (317) | (1,862) |
Net cash provided by operating activities | 167,676 | 385,462 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (33,150) | (46,644) |
Net cash used in investing activities | (33,150) | (46,644) |
Cash flows from financing activities: | ||
Proceeds from issuance of asset-backed notes | 62,900 | 240,100 |
Payments on asset-backed notes | (329,464) | (438,523) |
Borrowings under revolving credit facility | 1,092,106 | 1,143,311 |
Payments on revolving credit facility | (837,106) | (1,172,411) |
Payments of debt issuance costs and amendment fees | (4,350) | (4,570) |
Proceeds from stock issued under employee benefit plans | 587 | 533 |
Tax payments associated with equity-based compensation transactions | (1,252) | (1,477) |
Payment for extinguishment of debt | (141,279) | 0 |
Other | (803) | (440) |
Net cash used in financing activities | (158,661) | (233,477) |
Net change in cash, cash equivalents and restricted cash | (24,135) | 105,341 |
Cash, cash equivalents and restricted cash, beginning of period | 60,260 | 80,855 |
Cash, cash equivalents and restricted cash, end of period | 36,125 | 186,196 |
Non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange for new finance lease liabilities | 1,160 | 1,045 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 34,896 | 65,958 |
Property and equipment purchases not yet paid | 5,545 | 7,023 |
Supplemental cash flow data: | ||
Cash interest paid | 14,756 | 28,803 |
Cash income taxes paid, net | $ 19,733 | $ 394 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Business. Conn’s, Inc., a Delaware corporation, is a holding company with no independent assets or operations other than its investments in its subsidiaries. References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its subsidiaries. Conn’s is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. We operate an integrated and scalable business through our retail stores and website. Our complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. We operate two reportable segments: retail and credit. Our retail stores bear the “Conn’s HomePlus” name with all of our stores providing the same products and services to a common customer group. Our stores follow the same procedures and methods in managing their operations. Our retail business and credit business are operated independently from each other. The credit segment is dedicated to providing short- and medium-term financing to our retail customers. The retail segment is not involved in credit approval decisions or collection efforts. Our management evaluates performance and allocates resources based on the operating results of the retail and credit segments. Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements of Conn’s, Inc. and its wholly-owned subsidiaries, including its Variable Interest Entities (“VIEs”), have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) and prevailing industry practice for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 31, 2021 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 (the “2021 Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on March 31, 2021. Fiscal Year. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends. Principles of Consolidation. The Condensed Consolidated Financial Statements include the accounts of Conn’s, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Variable Interest Entities. VIEs are consolidated if the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has (i) the power to direct the activities that most significantly impact the performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. We retain the servicing of the securitized portfolio and have a variable interest in each corresponding VIE by holding the residual equity. We have determined that we are the primary beneficiary of each respective VIE because (i) our servicing responsibilities for the securitized portfolio give us the power to direct the activities that most significantly impact the performance of the VIE and (ii) our variable interest in the VIE gives us the obligation to absorb losses and the right to receive residual returns that potentially could be significant. As a result, we consolidate the respective VIEs within our Condensed Consolidated Financial Statements. Refer to Note 4, Debt and Financing Lease Obligations , and Note 6, Variable Interest Entities , for additional information. Use of Estimates. The preparation of financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ, even significantly, from these estimates. Management evaluates its estimates and related assumptions regularly, including those related to the allowance for doubtful accounts and allowances for no-interest option credit programs, which are particularly sensitive given the size of our customer portfolio balance. Cash and Cash Equivalents. As of October 31, 2021 and January 31, 2021, cash and cash equivalents included cash and credit card deposits in transit. Credit card deposits in transit included in cash and cash equivalents were $8.2 million and $7.9 million as of October 31, 2021 and January 31, 2021, respectively. Restricted Cash. The restricted cash balance as of October 31, 2021 and January 31, 2021 includes $18.7 million and $41.6 million, respectively, of cash we collected as servicer on the securitized receivables that was subsequently remitted to the VIEs and $4.8 million and $7.0 million, respectively, of cash held by the VIEs as additional collateral for the asset-backed notes. Customer Accounts Receivable. Customer accounts receivable reported in the Condensed Consolidated Balance Sheet includes total receivables managed, including both those transferred to the VIEs and those not transferred to the VIEs. Customer accounts receivable are recognized at the time the customer takes possession of the product. Expected lifetime losses on customer accounts receivable are recognized upon origination through an allowance for credit losses account that is deducted from the customer account receivable balance and presented net. Customer accounts receivable include the net of unamortized deferred fees charged to customers and origination costs. Customer receivables are considered delinquent if a payment has not been received on the scheduled due date. Accounts that are delinquent more than 209 days as of the end of a month are charged-off against the allowance for doubtful accounts along with interest accrued subsequent to the last payment. In an effort to mitigate losses on our accounts receivable, we may make loan modifications to a borrower experiencing financial difficulty. The loan modifications are intended to maximize net cash flow after expenses and avoid the need to exercise legal remedies available to us. We may extend or “re-age” a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to refinance their account, which typically does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extend the term. We consider accounts that have been re-aged in excess of three months or refinanced as Troubled Debt Restructurings (“TDR” or “Restructured Accounts”). On March 27, 2020 the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law to address the economic impact of the COVID-19 pandemic. Under the CARES Act, modifications deemed to be COVID-19 related are not considered a TDR if the loan was current (not more than 30 days past due as of March 31, 2020) and the deferral was executed between April 1, 2020 and the earlier of 60 days after the termination of the COVID-19 national emergency or December 31, 2020. In response to the CARES Act, the Company implemente d short-term d eferral programs for our customers. The carrying value of the customer receivables on accounts which were current prior to receiving a COVID-19 related deferment was $25.7 million and $65.2 million as of October 31, 2021 and January 31, 2021, respectively. All COVID-19 specific deferral programs ended during the third quarter of fiscal year 2021. Interest Income on Customer Accounts Receivable. Interest income, which includes interest income and amortization of deferred fees and origination costs, is recorded using the interest method and is reflected in finance charges and other revenues. Typically, interest income is recorded until the customer account is paid off or charged-off and we provide an allowance for estimated uncollectible interest. We reserve for interest that is more than 60 days past due. Any contractual interest income received from customers in excess of the interest income calculated using the interest method is recorded as deferred revenue on our balance sheets. At October 31, 2021 and January 31, 2021, there was $8.5 million and $8.9 million, respectively, of deferred interest included in deferred revenues and other credits and other long-term liabilities. The deferred interest will ultimately be brought into income as the accounts pay off or charge-off. We offer a 12-month no-interest option program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived. Interest income is recognized based on estimated accrued interest earned to date on all no-interest option finance programs with an offsetting reserve for those customers expected to satisfy the requirements of the program based on our historical experience. We recognize interest income on TDR accounts using the interest income method, which requires reporting interest income equal to the increase in the net carrying amount of the loan attributable to the passage of time. Cash proceeds and other adjustments are applied to the net carrying amount such that it equals the present value of expected future cash flows. We place accounts in non-accrual status when legally required. Payments received on non-accrual loans are applied to principal and reduce the balance of the loan. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable in non-accrual status was $6.7 million and $8.5 million, respectively. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable that were past due 90 days or more and still accruing interest totaled $70.2 million and $111.5 million, respectively. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable in a bankruptcy status that were less than 60 days past due of $6.2 million and $5.2 million, respectively, were included within the customer receivables balance carried in non-accrual status. Allowance for Doubtful Accounts. The determination of the amount of the allowance for credit losses is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the allowance for credit losses. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers to service their debts or our ability to collect will impact the future performance of the portfolio. We establish an allowance for credit losses, including estimated uncollectible interest, to cover expected credit losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer accounts receivable portfolio balance consists of a large number of relatively small, homogeneous accounts. None of our accounts are large enough to warrant individual evaluation for impairment. The allowance for credit losses is measured on a collective (pool) basis where similar risk characteristics exist. The allowance for credit losses is determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis. We use a risk-based, pool-level segmentation framework to calculate the expected loss rate. This framework is based on our historical gross charge-off history. In addition to adjusted historical gross charge-off rates, estimates of post-charge-off recoveries, including cash payments from customers, sales tax recoveries from taxing jurisdictions, and payments received under credit insurance and repair service agreement (“RSA”) policies are also considered. We also consider forward-looking economic forecasts based on a statistical analysis of economic factors (specifically, forecast of unemployment rates over the reasonable and supportable forecasting period). To the extent that situations and trends arise which are not captured in our model, management will layer on additional qualitative adjustments. Pursuant to ASC 326 requirements, the Company uses a 24-month reasonable and supportable forecast period for the customer accounts receivable portfolio. We estimate losses beyond the 24-month forecast period based on historic loss rates experienced over the life of our historic loan portfolio by loan pool type. We revisit our measurement methodology and assumption annually, or more frequently if circumstances warrant. As of October 31, 2021 and January 31, 2021, the balance of allowance for doubtful accounts and uncollectible interest for non-TDR customer receivables was $158.4 million and $219.7 million, respectively. As of October 31, 2021 and January 31, 2021, the amount included in the allowance for doubtful accounts associated with principal and interest on TDR accounts was $49.8 million and $78.3 million, respectively. Debt Issuance Costs. Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. We present debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the Revolving Credit Facility, as defined in Note 4, Debt and Financing Lease Obligations , are included in other assets on our Condensed Consolidated Balance Sheet and were $5.5 million and $3.5 million as of October 31, 2021 and January 31, 2021, respectively. Loss on Extinguishment. During the nine months ended October 31, 2021, we incurred a loss of $1.0 million related to the retirement of the remaining $141.2 million aggregate principal amount of our 7.25% Senior Notes due 2022 (“Senior Notes”) and a loss of $0.2 million related to the amendment of our Fifth Amended and Restated Loan and Security Agreement. Income Taxes. For the nine months ended October 31, 2021 and 2020, we utilized the estimated annual effective tax rate based on our estimated fiscal year 2022 and 2021 pre-tax income, respectively, in determining income tax expense. Provision for income taxes for interim periods is based on an estimated annual income tax rate, adjusted for discrete tax items. As a result, our interim effective tax rates may vary significantly from the statutory tax rate and the annual effective tax rate. For the nine months ended October 31, 2021 and 2020, the effective tax rate was 23.7% and 22.5%, respectively. The primary factor affecting the decrease in our effective tax rate for the nine months ended October 31, 2021 was the impact of the tax loss carryback provisions of the CARES Act that was reflected in the prior period. Stock-based Compensation. During the nine months ended October 31, 2021, the Company granted performance stock awards (“PSUs”) and restricted stock awards (“RSUs”). The awards had a combined aggregate grant date fair value of $17.8 million. The PSUs will vest in fiscal year 2025, if at all, upon certification by the Compensation Committee of the Board of Directors of satisfaction of certain total stockholder return performance conditions over the three Stock-based compensation expense is recorded, net of actual forfeitures, for share-based compensation awards over the requisite service period using the straight-line method. For equity-classified share-based compensation awards, expense is recognized based on the grant-date fair value. For stock option grants, we use the Black-Scholes model to determine fair value. For grants of restricted stock units, the fair value of the grant is the market value of our stock at the date of issuance. For grants of performance-based restricted stock units, the fair value is the market value of our stock at the date of issuance adjusted for the market condition using a Monte Carlo model. The following table sets forth the RSUs and PSUs granted during the three and nine months ended October 31, 2021 and 2020: Three Months Ended Nine Months Ended 2021 2020 2021 2020 RSUs (1) 204,376 — 586,107 622,195 PSUs (2) 115,688 — 268,037 270,828 Total stock awards granted 320,064 — 854,144 893,023 Aggregate grant date fair value (in thousands) $ 8,599 $ — $ 17,849 $ 7,957 (1) The RSUs issued during the nine months ended October 31, 2021 and 2020 are scheduled to vest ratably over periods of three years to four years from the date of grant. (2) The weighted-average assumptions used in the Monte Carlo models for the PSUs granted during the nine months ended October 31, 2021 included expected volatility of 83.0%-87.0%, an expected term of 3 years and risk-free interest rates of 0.17%-0.67%. No dividend yield was included in the weighted-average assumptions for the PSUs granted during the nine months ended October 31, 2021. The weighted-average assumptions used in the Monte Carlo model for the PSUs granted during the nine months ended October 31, 2020 included expected volatility of 60.0%, an expected term of 3 years and risk-free interest rate of 1.42%. No dividend yield was included in the weighted average assumptions for the PSUs granted during the nine months ended October 31, 2020. For the three months ended October 31, 2021 and 2020, stock-based compensation expense was $2.6 million and $2.3 million, respectively. For the nine months ended October 31, 2021 and 2020, stock-based compensation expense was $6.4 million and $7.0 million, respectively. Earnings (Loss) Per Share. Basic earnings (loss) per share for a particular period is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, which are calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Weighted-average common shares outstanding - Basic 29,488,321 29,142,843 29,418,047 29,013,759 Dilutive effect of stock options, PSUs and RSUs 773,100 340,638 709,372 — Weighted-average common shares outstanding - Diluted 30,261,421 29,483,481 30,127,419 29,013,759 For the three months ended October 31, 2021 and 2020, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 715,051 and 894,130, respectively. For the nine months ended October 31, 2021 and 2020, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 734,407 and 1,225,771, respectively. Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to subjectivity associated with the inputs to fair value measurements as follows: • Level 1 – Inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated inputs). • Level 3 – Inputs that are not observable from objective sources such as our internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in our internally developed present value of future cash flows model that underlies the fair-value measurement). In determining fair value, we use observable market data when available, or models that incorporate observable market data. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost or income approach depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of future net cash flows and discounts the expected cash flows using a commensurate risk-adjusted discount rate. Such evaluations involve significant judgment, and the results are based on expected future events or conditions such as sales prices, economic and regulatory climates, and other factors, most of which are often outside of management’s control. However, we believe assumptions used reflect a market participant’s view of long-term prices, costs, and other factors and are consistent with assumptions used in our business plans and investment decisions. In arriving at fair-value estimates, we use relevant observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based on the lowest level of input that is significant to the fair-value measurement. The fair value of cash and cash equivalents, restricted cash and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivable, determined using a Level 3 discounted cash flow analysis, approximates their carrying value, net of the allowance for doubtful accounts. The fair value of our Revolving Credit Facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At October 31, 2021, the fair value of the asset backed notes was $148.0 million as compared to the carrying value of $147.4 million and was determined using Level 2 inputs based on inactive trading activity. Deferred Revenue. Deferred revenue related to contracts with customers consists of deferred customer deposits and deferred RSA administration fees. During the nine months ended October 31, 2021, we recognized $4.7 million of revenue for customer deposits deferred as of January 31, 2021. During the nine months ended October 31, 2021, we recognized $2.7 million of revenue for RSA administrative fees deferred as of January 31, 2021. Recent Accounting Pronouncements Adopted. Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU 2019-12, I ncome Taxes (Topic 740): Simplifying the Accounting for Income Taxes , an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This accounting standards update became effective for us in the first quarter of fiscal year 2022. The adoption did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Yet to Be Adopted. Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , an update that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), Scope, to clarify the scope of the guidance and reduce potential diversity in practice. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These accounting standard updates were effective upon issuance, with adoption permitted through December 31, 2022. We expect to adopt ASC 2020-04 and ASC 2021-01 upon transition from LIBOR, prior to December 31, 2022. We do not expect the adoption to have a material impact on our consolidated financial statements. |
Customer Accounts Receivable
Customer Accounts Receivable | 9 Months Ended |
Oct. 31, 2021 | |
Receivables [Abstract] | |
Customer Accounts Receivable | Customer Accounts Receivable Customer accounts receivable consisted of the following: (in thousands) October 31, January 31, Customer accounts receivable (1) $ 1,124,872 $ 1,233,717 Deferred fees and origination costs, net (13,482) (14,212) Allowance for no-interest option credit programs (16,208) (11,985) Allowance for uncollectible interest (13,777) (21,427) Carrying value of customer accounts receivable 1,081,405 1,186,093 Allowance for credit losses (2) (194,377) (276,610) Carrying value of customer accounts receivable, net of allowance for credit losses 887,028 909,483 Short-term portion of customer accounts receivable, net (460,808) (478,734) Long-term customer accounts receivable, net $ 426,220 $ 430,749 Carrying Value (in thousands) October 31, January 31, Customer accounts receivable 60+ days past due (3) $ 95,534 $ 146,820 Re-aged customer accounts receivable (4) 198,279 306,845 Restructured customer accounts receivable (5) 115,928 178,374 (1) As of October 31, 2021 and January 31, 2021, the customer accounts receivable balance included $21.4 million and $31.1 million , respectively, in interest receivable. Net of the allowance for uncollectible interest, interest receivable outstanding as of October 31, 2021 and January 31, 2021 was $7.6 million and $9.7 million , respectively. (2) Our current methodology to estimate expected credit losses utilized macroeconomic forecasts as of October 31, 2021 and January 31, 2021, which incorporated the continued estimated impact of the global COVID-19 outbreak on the U.S. economy. Our forecast utilized economic projections from a major rating service reflecting a decrease in unemployment rates. (3) As of October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable past due one day or greater was $270.2 million and $340.8 million, respectively. These amounts include the 60+ days past due balances shown above. (4) The re-aged carrying value as of October 31, 2021 and January 31, 2021 includes $48.8 million and $88.0 million, respectively, in carrying value that are both 60+ days past due and re-aged. (5) The restructured carrying value as of October 31, 2021 and January 31, 2021 includes $30.8 million and $57.1 million, respectively, in carrying value that are both 60+ days past due and restructured. The allowance for credit losses included in the current and long-term portion of customer accounts receivable, net as shown in the Condensed Consolidated Balance Sheet were as follows: (in thousands) October 31, 2021 January 31, 2021 Customer accounts receivable - current $ 578,250 $ 643,903 Allowance for credit losses for customer accounts receivable - current (117,442) (165,169) Customer accounts receivable, net of allowances 460,808 478,734 Customer accounts receivable - non current 516,932 563,617 Allowance for credit losses for customer accounts receivable - non current (90,712) (132,868) Long-term portion of customer accounts receivable, net of allowances 426,220 430,749 Total customer accounts receivable, net $ 887,028 $ 909,483 The following presents the activity in our allowance for credit losses and uncollectible interest for customer receivables: Nine Months Ended October 31, 2021 Nine Months Ended October 31, 2020 (in thousands) Customer Customer Allowance at beginning of period, prior to adoption of ASC 326 $ 219,740 $ 78,297 $ 298,037 $ 145,680 $ 88,123 $ 233,803 Impact of adoption ASC 326 — — — 95,136 3,526 98,662 Provision for (benefit from) credit losses (1) 21,845 23,079 44,924 164,697 60,595 225,292 Principal charge-offs (2) (81,710) (50,691) (132,401) (144,048) (62,678) (206,726) Interest charge-offs (22,432) (13,917) (36,349) (40,340) (17,553) (57,893) Recoveries (3) 20,947 12,996 33,943 16,922 7,363 24,285 Allowance at end of period $ 158,390 $ 49,764 $ 208,154 $ 238,047 $ 79,376 $ 317,423 Average total customer portfolio balance $ 985,634 $ 149,745 $ 1,135,379 $ 1,219,794 $ 216,433 $ 1,436,227 (1) Includes provision for uncollectible interest, which is included in finance charges and other revenues, and changes in expected future recoveries. (2) Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include the principal amount collected during the period for previously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and recoveries. (3) Recoveries include the principal amount collected during the period for previously charged-off balances. We manage our customer accounts receivable portfolio using delinquency as a key credit quality indicator. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination. The information is presented as of October 31, 2021: (in thousands) Delinquency Bucket 2021 2020 2019 2018 Prior Total % of Total Current $ 474,139 $ 219,476 $ 102,045 $ 13,529 $ 2,042 $ 811,231 75.0 % 1-30 52,445 42,934 30,315 7,286 1,195 134,175 12.4 % 31-60 15,199 12,681 9,369 2,741 475 40,465 3.8 % 61-90 8,945 7,768 6,165 1,901 324 25,103 2.3 % 91+ 17,531 24,488 20,410 6,809 1,193 70,431 6.5 % Total $ 568,259 $ 307,347 $ 168,304 $ 32,266 $ 5,229 $ 1,081,405 100.0 % |
Finance Charges and Other Reven
Finance Charges and Other Revenue | 9 Months Ended |
Oct. 31, 2021 | |
Supplemental Disclosure of Finance Charges and Other Revenue [Abstract] | |
Finance Charges and Other Revenues | Finance Charges and Other Revenues Finance charges and other revenues consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Interest income and fees $ 63,621 $ 69,996 $ 196,303 $ 235,438 Insurance income 6,992 4,222 17,881 12,359 Other revenues 262 168 695 599 Total finance charges and other revenues $ 70,875 $ 74,386 $ 214,879 $ 248,396 Interest income and fees and insurance income are derived from the credit segment operations, whereas other revenues are derived from the retail segment operations. Insurance income is comprised of sales commissions from third-party insurance companies that are recognized when coverage is sold and retrospective income paid by the insurance carrier if insurance claims are less than earned premiums. |
Debt and Financing Lease Obliga
Debt and Financing Lease Obligations | 9 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt and Financing Lease Obligations | Debt and Financing Lease Obligations Debt and financing lease obligations consisted of the following: (in thousands) October 31, January 31, Revolving Credit Facility $ 307,000 $ 52,000 Senior Notes — 141,172 2019-A VIE Asset-backed Class A Notes — 19,521 2019-A VIE Asset-backed Class B Notes — 25,069 2019-A VIE Asset-backed Class C Notes — 24,202 2019-B VIE Asset-backed Class A Notes — 17,860 2019-B VIE Asset-backed Class B Notes — 85,540 2019-B VIE Asset-backed Class C Notes 70,691 83,270 2020-A VIE Asset-backed Class A Notes 15,584 93,326 2020-A VIE Asset-backed Class B Notes 31,124 65,200 2020-A VIE Asset-backed Class C Notes 30,026 — Financing lease obligations 6,399 6,072 Total debt and financing lease obligations 460,824 613,232 Less: Discount on debt — (524) Deferred debt issuance costs (563) (3,139) Current maturities of long-term debt and financing lease obligations (942) (934) Long-term debt and financing lease obligations $ 459,319 $ 608,635 Senior Notes. On July 1, 2014, we issued an aggregate principal amount of $250.0 million in unsecured 7.25% Senior Notes due 2022 (the “Senior Notes”) pursuant to an indenture dated July 1, 2014 (as amended, the “Indenture”), among Conn’s, Inc., its subsidiary guarantors (the “Guarantors”) and U.S. Bank National Association, as trustee. On April 15, 2021 we completed the redemption of all of our outstanding Senior Notes in an aggregate principal amount of $141.2 million. Asset-backed Notes. From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. In turn, the VIEs issue asset-backed notes secured by the transferred customer accounts receivables and restricted cash held by the VIEs. Under the terms of the securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of issued notes, and then to us as the holder of non-issued notes, if any, and residual equity. We retain the servicing of the securitized portfolios and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables. In addition, we, rather than the VIEs, retain all credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which are reflected as a reduction to net charge-offs on a consolidated basis. The asset-backed notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act of 1933. If an event of default were to occur under the indenture that governs the respective asset-backed notes, the payment of the outstanding amounts may be accelerated, in which event the cash proceeds of the receivables that otherwise might be released to the residual equity holder would instead be directed entirely toward repayment of the asset-backed notes, or if the receivables are liquidated, all liquidation proceeds could be directed solely to repayment of the asset-backed notes as governed by the respective terms of the asset-backed notes. The holders of the asset-backed notes have no recourse to assets outside of the VIEs. Events of default include, but are not limited to, failure to make required payments on the asset-backed notes or specified bankruptcy-related events. The asset-backed notes outstanding as of October 31, 2021 consisted of the following: (dollars in thousands) Asset-Backed Notes Original Principal Amount Original Net Proceeds (1) Current Principal Amount Issuance Date Maturity Date Contractual Interest Rate Effective Interest Rate (2) 2019-B Class B Notes $ 85,540 $ 84,916 $ — 11/26/2019 6/17/2024 3.62% 4.59% 2019-B Class C Notes 83,270 82,456 70,691 11/26/2019 6/17/2024 4.60% 5.15% 2020-A Class A Notes 174,900 173,716 15,584 10/16/2020 6/16/2025 1.71% 4.51% 2020-A Class B Notes 65,200 64,754 31,124 10/16/2020 6/16/2025 4.27% 5.52% 2020-A Class C Notes 62,900 62,535 30,026 2/24/2021 6/16/2025 4.20% 5.71% Total $ 471,810 $ 468,377 $ 147,425 (1) After giving effect to debt issuance costs. (2) For the nine months ended October 31, 2021, and inclusive of the impact of changes in timing of actual and expected cash flows. On February 24, 2021, the Company completed the sale of $62.9 million aggregate principal amount of 4.20% Asset Backed Notes, Class C, Series 2020-A, which were previously issued and held by the Company. The asset-backed notes are secured by the transferred customer accounts receivables and restricted cash held by a consolidated VIE, which resulted in net proceeds to us of $62.5 million, net of debt issuance costs. Net proceeds from the sale were used to repay amounts outstanding under the Company’s Revolving Credit Facility. On May 12, 2021, the Company completed the redemption of the 2019-A Asset Backed Notes at an aggregate redemption price of $41.1 million (which was equal to the entire outstanding principal balance plus accrued interest). We funded the redemption with cash on hand and borrowings under our Revolving Credit Facility. Revolving Credit Facility. On March 29, 2021, Conn’s, Inc. and certain of its subsidiaries (the “Borrowers”) entered into the Fifth Amended and Restated Loan and Security Agreement (the “Fifth Amended and Restated Loan Agreement”), with certain lenders, which provides for a $650.0 million asset-based revolving credit facility (as amended, the “Revolving Credit Facility”) under which credit availability is subject to a borrowing base and a maturity date of March 29, 2025. The Fifth Amended and Restated Loan Agreement, among other things, permits borrowings under the Letter of Credit Subline (as defined in the Fifth Amended and Restated Loan Agreement) that exceed the cap of $40 million to $100 million, solely at the discretion of the lenders for such amounts in excess of $40 million. The obligations under the Revolving Credit Facility are secured by substantially all assets of the Company, excluding the assets of the VIEs. As of October 31, 2021, we had immediately available borrowing capacity of $320.5 million under our Revolving Credit Facility, net of standby letters of credit issued of $22.5 million. Loans under the Revolving Credit Facility bear interest, at our option, at a rate of LIBOR plus a margin ranging from 2.50% to 3.25% per annum (depending on a pricing grid determined by our total leverage ratio) or the alternate base rate plus a margin ranging from 1.50% to 2.25% per annum (depending on a pricing grid determined by our total leverage ratio). We also pay an unused fee on the portion of the commitments that is available for future borrowings or letters of credit at a rate ranging from 0.25% to 0.50% per annum, depending on the average outstanding balance and letters of credit of the Revolving Credit Facility in the immediately preceding quarter. The weighted-average interest rate on borrowings outstanding and including unused line fees under the Revolving Credit Facility was 4.1% for the nine months ended October 31, 2021. The Revolving Credit Facility places restrictions on our ability to incur additional indebtedness, grant liens on assets, make distributions on equity interests, dispose of assets, make loans, pay other indebtedness, engage in mergers, and other matters. The Revolving Credit Facility restricts our ability to make dividends and distributions unless no event of default exists and a liquidity test is satisfied. Subsidiaries of the Company may pay dividends and make distributions to the Company and other obligors under the Revolving Credit Facility without restriction. As of October 31, 2021, we were restricted from making distributions in excess of $164.9 million as a result of the Revolving Credit Facility distribution and payment restrictions. The Revolving Credit Facility contains customary default provisions, which, if triggered, could result in acceleration of all amounts outstanding under the Revolving Credit Facility. Debt Covenants. We were in compliance with our debt covenants at October 31, 2021. A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at October 31, 2021 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio for the quarter must equal or exceed minimum 10.12:1.00 1.00:1.00 Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum 12.34:1.00 1.50:1.00 Leverage Ratio must not exceed maximum 1.25:1.00 4.50:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.06:1.00 2.50:1.00 Capital Expenditures, net, must not exceed maximum $24.8 million $100.0 million All capitalized terms in the above table are defined in the Revolving Credit Facility and may or may not match directly to the financial statement captions in this document. The covenants are calculated quarterly, except for capital expenditures, which is calculated for a period of four consecutive fiscal quarters, as of the end of each fiscal quarter. |
Contingencies
Contingencies | 9 Months Ended |
Oct. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Securities Litigation. On May 15, 2020, a putative securities class action lawsuit was filed against us and two of our executive officers in the United States District Court for the Southern District of Texas, captioned Uddin v. Conn’s, Inc., et al., No. 4:20-1705 (“Uddin Action”). On November 16, 2020, the lead plaintiff voluntarily dismissed the action without prejudice. The court entered an order recognizing the dismissal on November 17, 2020. On April 2, 2018, MicroCapital Fund, LP, MicroCapital Fund, Ltd., and MicroCapital LLC (collectively, “MicroCapital”) filed a lawsuit against us and certain of our former executive officers in the U.S. District Court for the Southern District of Texas, Cause No. 4:18-CV-01020 (the “MicroCapital Action”). The plaintiffs in this action allege that the defendants made false and misleading statements or failed to disclose material facts about our credit and underwriting practices, accounting and internal controls. Plaintiffs allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, Texas and Connecticut common law fraud, and Texas common law negligent misrepresentation against all defendants; as well as violations of section 20A of the Securities Exchange Act of 1934; and Connecticut common law negligent misrepresentation against certain defendants arising from plaintiffs’ purchase of Conn’s, Inc. securities between April 3, 2013 and February 20, 2014. The complaint does not specify the amount of damages sought. The Court previously stayed the MicroCapital Action pending resolution of other outstanding litigation (In re Conn’s Inc. Sec. Litig., Cause No. 14-CV-00548 (S.D. Tex.) (the “Consolidated Securities Action”)), which was settled in October 2018. After that settlement, the stay was lifted, and the defendants filed a motion to dismiss plaintiff’s complaint in the MicroCapital Action on November 6, 2018. On July 26, 2019, the magistrate judge issued a report recommending that defendants’ motion to dismiss the complaint be granted in part and denied in part. On September 25, 2019, the district court adopted the magistrate judge’s report, which permitted MicroCapital to file an amended complaint, which MicroCapital filed on October 30, 2019. Defendants filed their answer to the amended complaint on November 27, 2019. The parties reached a settlement agreement in this matter on October 28, 2021, that resolves the claims against the defendants in their entirety, and the case was dismissed with prejudice on November 18, 2021. Neither the Company nor any individual defendant admitted any wrongdoing. Derivative Litigation. On December 1, 2014, an alleged shareholder, purportedly on behalf of the Company, filed a shareholder derivative lawsuit in federal court against us and certain of our current and former directors and former executive officers captioned Robert Hack, derivatively on behalf of Conn’s, Inc., v. Theodore M. Wright (former executive officer and former director), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson, Douglas H. Martin, David Schofman, Scott L. Thompson (former director), Brian Taylor (former executive officer) and Michael J. Poppe (former executive officer) and Conn’s, Inc., Case No. 4:14-cv-03442 (S.D. Tex.). The complaint asserts claims for breach of fiduciary duty, unjust enrichment, gross mismanagement, and insider trading based on substantially similar factual allegations as those asserted in the Consolidated Securities Action. The plaintiff seeks unspecified damages against these persons and does not request any damages from Conn’s. On February 25, 2015, an additional federal derivative action, captioned 95250 Canada LTEE, derivatively on Behalf of Conn’s, Inc. v. Wright et al., Cause No. 4:15-cv-00521 (S.D. Tex.), was filed, asserting substantially similar claims against the same defendants. It was consolidated with the Hack litigation (collectively, the Federal Derivative Actions). The parties have reached a settlement in principle to fully resolve the Federal Derivative Actions. The settlement remains subject to court approval. Neither the Company nor any individual defendant admits any wrongdoing through the settlement agreement. In addition to the Federal Derivative Actions, a derivative action was filed in Texas state court on January 27, 2015, captioned Richard A. Dohn v. Wright, et al., Cause No. 2015-04405, in the 281st Judicial District Court, Harris County, Texas. This action makes substantially similar allegations to the Federal Derivative Actions against the same defendants. This case is stayed until at least April 29, 2022. Prior to filing his lawsuit, another alleged shareholder, Robert J. Casey II (“Casey”), submitted a demand under Delaware law, which our Board of Directors refused. On May 19, 2016, Casey, purportedly on behalf of the Company, filed a second state court lawsuit against us and certain of our current and former directors and former executive officers in the 55th Judicial District Court, Harris County, Texas, captioned Casey, derivatively on behalf of Conn’s, Inc., v. Theodore M. Wright (former executive officer and former director), Michael J. Poppe (former executive officer), Brian Taylor (former executive officer), Bob L. Martin, Jon E.M. Jacoby (former director), Kelly M. Malson (former director), Douglas H. Martin, David Schofman, Scott L. Thompson (former director) and William E. Saunders Jr., and Conn’s, Inc., Cause No. 2016-33135. The complaint asserts claims for breach of fiduciary duties and unjust enrichment based on substantially similar factual allegations as those asserted in the Federal Derivative Actions. The complaint does not specify the amount of damages sought. Since April 2018, this case has been abated pending the resolution of related cases. In July 2021, the parties requested that the court extend the abatement pending further developments in the Federal Derivative Actions. The case currently remains abated. Other than Casey, none of the plaintiffs in the other derivative actions made a demand on our Board of Directors prior to filing their respective lawsuits. The defendants in the two state court derivative actions intend to vigorously defend against these claims. It is not possible at this time to predict the timing or outcome of any unsettled litigation, and we cannot reasonably estimate the possible loss or range of possible loss from such claims. We are involved in other routine litigation and claims, incidental to our business from time to time which, individually or in the aggregate, are not expected to have a material adverse effect on us. As required, we accrue estimates of the probable costs for the resolution of these matters. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. However, the results of these proceedings cannot be predicted with certainty, and changes in facts and circumstances could impact our estimate of reserves for litigation. The Company believes that any probable and reasonably estimable loss associated with the foregoing has been adequately reflected in the accompanying financial statements. |
Variable Interest Entity
Variable Interest Entity | 9 Months Ended |
Oct. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. Under the terms of the respective securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. We retain the servicing of the securitized portfolio and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables, and we currently hold all of the residual equity. In addition, we, rather than the VIEs, will retain certain credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as we consolidate the VIEs. We consolidate VIEs when we determine that we are the primary beneficiary of these VIEs, we have the power to direct the activities that most significantly impact the performance of the VIEs and our obligation to absorb losses and the right to receive residual returns are significant. The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn’s, Inc.): (in thousands) October 31, January 31, Assets: Restricted cash $ 23,478 $ 48,622 Due from Conn’s, Inc., net (12,307) (5,661) Customer accounts receivable: Customer accounts receivable 171,036 509,574 Restructured accounts 68,433 105,395 Allowance for uncollectible accounts (64,025) (159,849) Allowance for no-interest option credit programs — (5,502) Deferred fees and origination costs (1,643) (5,503) Total customer accounts receivable, net 173,801 444,115 Total assets $ 184,972 $ 487,076 Liabilities: Accrued expenses $ 1,497 $ 3,707 Other liabilities 1,682 4,459 Long-term debt: 2019-A Class A Notes — 19,521 2019-A Class B Notes — 25,069 2019-A Class C Notes — 24,202 2019-B Class A Notes — 17,860 2019-B Class B Notes — 85,540 2019-B Class C Notes 70,691 83,270 2020-A Class A Notes 15,584 93,326 2020-A Class B Notes 31,124 65,200 2020-A Class C Notes 30,026 — 147,425 413,988 Less: deferred debt issuance costs (563) (2,437) Total debt $ 146,862 $ 411,551 Total liabilities $ 150,041 $ 419,717 |
Segment Information
Segment Information | 9 Months Ended |
Oct. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We evaluate a segment’s performance based upon operating income before taxes. Selling, general and administrative expenses (“SG&A”) includes the direct expenses of the retail and credit operations, allocated overhead expenses, and a charge to the credit segment to reimburse the retail segment for expenses it incurs related to occupancy, personnel, advertising and other direct costs of the retail segment, which benefit the credit operations by sourcing credit customers and collecting payments. The reimbursement received by the retail segment from the credit segment is calculated using an annual rate of 2.5% times the average outstanding portfolio balance for each applicable period. As of October 31, 2021, we operated retail stores in 15 states with no operations outside of the United States. No single customer accounts for more than 10% of our total revenues. Financial information by segment is presented in the following tables: Three Months Ended October 31, 2021 Three Months Ended October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 106,756 $ — $ 106,756 $ 82,793 $ — $ 82,793 Home appliance 128,385 — 128,385 99,872 — 99,872 Consumer electronics 46,751 — 46,751 35,517 — 35,517 Home office 17,373 — 17,373 16,711 — 16,711 Other 9,036 — 9,036 4,264 — 4,264 Product sales 308,301 — 308,301 239,157 — 239,157 Repair service agreement commissions 23,769 — 23,769 17,465 — 17,465 Service revenues 2,513 — 2,513 3,150 — 3,150 Total net sales 334,583 — 334,583 259,772 — 259,772 Finance charges and other revenues 262 70,613 70,875 168 74,218 74,386 Total revenues 334,845 70,613 405,458 259,940 74,218 334,158 Costs and expenses: Cost of goods sold 211,298 — 211,298 160,378 — 160,378 Selling, general and administrative expense (1) 100,969 37,112 138,081 84,245 37,913 122,158 Provision for bad debts 36 26,496 26,532 72 27,421 27,493 Total costs and expenses 312,303 63,608 375,911 244,695 65,334 310,029 Operating income 22,542 7,005 29,547 15,245 8,884 24,129 Interest expense — 5,206 5,206 — 11,563 11,563 Income (loss) before income taxes $ 22,542 $ 1,799 $ 24,341 $ 15,245 $ (2,679) $ 12,566 Nine Months Ended October 31, 2021 Nine Months Ended October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 310,505 $ — $ 310,505 $ 232,670 $ — $ 232,670 Home appliance 377,090 — 377,090 288,839 — 288,839 Consumer electronics 133,202 — 133,202 118,677 — 118,677 Home office 49,881 — 49,881 49,056 — 49,056 Other 27,079 — 27,079 13,255 — 13,255 Product sales 897,757 — 897,757 702,497 — 702,497 Repair service agreement commissions 66,600 — 66,600 57,730 — 57,730 Service revenues 8,307 — 8,307 9,611 — 9,611 Total net sales 972,664 — 972,664 769,838 — 769,838 Finance charges and other revenues 695 214,184 214,879 599 247,797 248,396 Total revenues 973,359 214,184 1,187,543 770,437 247,797 1,018,234 Costs and expenses: Cost of goods sold 612,219 — 612,219 484,015 — 484,015 Selling, general and administrative expense (1) 294,019 107,981 402,000 241,003 109,440 350,443 Provision for bad debts 196 19,462 19,658 422 176,442 176,864 Charges and credits — — — 1,355 2,234 3,589 Total costs and expenses 906,434 127,443 1,033,877 726,795 288,116 1,014,911 Operating income (loss) 66,925 86,741 153,666 43,642 (40,319) 3,323 Interest expense — 20,498 20,498 — 39,778 39,778 Loss on extinguishment of debt — 1,218 1,218 — — — Income (loss) before income taxes $ 66,925 $ 65,025 $ 131,950 $ 43,642 $ (80,097) $ (36,455) October 31, 2021 October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Total assets $ 707,402 $ 1,079,177 $ 1,786,579 $ 743,568 $ 1,189,888 $ 1,933,456 (1) For the three months ended October 31, 2021 and 2020, the amount of corporate overhead allocated to each segment reflected in SG&A was $11.1 million and $8.5 million, respectively. For the three months ended October 31, 2021 and 2020, the amount of reimbursement made to the retail segment by the credit segment was $7.0 million and $8.2 million, respectively. For the nine months ended October 31, 2021 and 2020, the amount of corporate overhead allocated to each segment reflected in SG&A was $30.0 million and $24.2 million, respectively. For the nine months ended October 31, 2021 and 2020, the amount of reimbursement made to the retail segment by the credit segment was $21.2 million and $26.9 million, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Asset-backed Note. On November 23, 2021, an affiliate of the Company (“the Issuer”) completed the issuance and sale of asset-backed notes in the aggregate principal amount of $377.8 million secured by the transferred customer accounts receivable and restricted cash held by a VIE, which resulted in net proceeds to us of $375.2 million, net of debt issuance costs. Net proceeds from the offering were used to repay indebtedness under the Company’s asset-based credit facility and for other general corporate purposes. The asset-backed notes mature on May 15, 2026 and consist of $247.8 million of the Issuer’s 1.05% Class A, Series 2021-A Asset Backed Fixed Rate Notes, $66.1 million of 2.87% Class B, Series 2021-A Asset Backed Fixed Rate Notes, and $63.9 million of 4.59% Class C, Series 2021-A Asset Backed Fixed Rate Notes. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business. Conn’s, Inc., a Delaware corporation, is a holding company with no independent assets or operations other than its investments in its subsidiaries. References to “we,” “our,” “us,” “the Company,” “Conn’s” or “CONN” refer to Conn’s, Inc. and, as apparent from the context, its subsidiaries. Conn’s is a leading specialty retailer that offers a broad selection of quality, branded durable consumer goods and related services in addition to proprietary credit solutions for its core credit-constrained consumers. We operate an integrated and scalable business through our retail stores and website. Our complementary product offerings include furniture and mattresses, home appliances, consumer electronics and home office products from leading global brands across a wide range of price points. Our credit offering provides financing solutions to a large, under-served population of credit-constrained consumers who typically have limited credit alternatives. We operate two reportable segments: retail and credit. Our retail stores bear the “Conn’s HomePlus” name with all of our stores providing the same products and services to a common customer group. Our stores follow the same procedures and methods in managing their operations. Our retail business and credit business are operated independently from each other. The credit segment is dedicated to providing short- and medium-term financing to our retail customers. The retail segment is not involved in credit approval decisions or collection efforts. Our management evaluates performance and allocates resources based on the operating results of the retail and credit segments. Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements of Conn’s, Inc. and its wholly-owned subsidiaries, including its Variable Interest Entities (“VIEs”), have been prepared by management in accordance with U.S. generally accepted accounting principles (“GAAP”) and prevailing industry practice for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 31, 2021 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 (the “2021 Form 10-K”) filed with the United States Securities and Exchange Commission (the “SEC”) on March 31, 2021. |
Fiscal Year | Fiscal Year. Our fiscal year ends on January 31. References to a fiscal year refer to the calendar year in which the fiscal year ends. |
Principles of Consolidation | Principles of Consolidation. The Condensed Consolidated Financial Statements include the accounts of Conn’s, Inc. and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. |
Variable Interest Entity | Variable Interest Entities. VIEs are consolidated if the Company is the primary beneficiary. The primary beneficiary of a VIE is the party that has (i) the power to direct the activities that most significantly impact the performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. We retain the servicing of the securitized portfolio and have a variable interest in each corresponding VIE by holding the residual equity. We have determined that we are the primary beneficiary of each respective VIE because (i) our servicing responsibilities for the securitized portfolio give us the power to direct the activities that most significantly impact the performance of the VIE and (ii) our variable interest in the VIE gives us the obligation to absorb losses and the right to receive residual returns that potentially could be significant. As a result, we consolidate the respective VIEs within our Condensed Consolidated Financial Statements. Refer to Note 4, Debt and Financing Lease Obligations , and Note 6, Variable Interest Entities , for additional information. |
Use of Estimates | Use of Estimates. The preparation of financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ, even significantly, from these estimates. Management evaluates its estimates and related assumptions regularly, including those related to the allowance for doubtful accounts and allowances for no-interest option credit programs, which are particularly sensitive given the size of our customer portfolio balance. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents. As of October 31, 2021 and January 31, 2021, cash and cash equivalents included cash and credit card deposits in transit. Credit card deposits in transit included in cash and cash equivalents were $8.2 million and $7.9 million as of October 31, 2021 and January 31, 2021, respectively. |
Customer Accounts Receivable | Customer Accounts Receivable. Customer accounts receivable reported in the Condensed Consolidated Balance Sheet includes total receivables managed, including both those transferred to the VIEs and those not transferred to the VIEs. Customer accounts receivable are recognized at the time the customer takes possession of the product. Expected lifetime losses on customer accounts receivable are recognized upon origination through an allowance for credit losses account that is deducted from the customer account receivable balance and presented net. Customer accounts receivable include the net of unamortized deferred fees charged to customers and origination costs. Customer receivables are considered delinquent if a payment has not been received on the scheduled due date. Accounts that are delinquent more than 209 days as of the end of a month are charged-off against the allowance for doubtful accounts along with interest accrued subsequent to the last payment. In an effort to mitigate losses on our accounts receivable, we may make loan modifications to a borrower experiencing financial difficulty. The loan modifications are intended to maximize net cash flow after expenses and avoid the need to exercise legal remedies available to us. We may extend or “re-age” a portion of our customer accounts, which involves modifying the payment terms to defer a portion of the cash payments due. Our re-aging of customer accounts does not change the interest rate or the total principal amount due from the customer and typically does not reduce the monthly contractual payments. To a much lesser extent, we may provide the customer the ability to refinance their account, which typically does not change the interest rate or the total principal amount due from the customer but does reduce the monthly contractual payments and extend the term. We consider accounts that have been re-aged in excess of three months or refinanced as Troubled Debt Restructurings (“TDR” or “Restructured Accounts”). On March 27, 2020 the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law to address the economic impact of the COVID-19 pandemic. Under the CARES Act, modifications deemed to be COVID-19 related are not considered a TDR if the loan was current (not more than 30 days past due as of March 31, 2020) and the deferral was executed between April 1, 2020 and the earlier of 60 days after the termination of the COVID-19 national emergency or December 31, 2020. In response to the CARES Act, the Company implemente d short-term d eferral programs for our customers. The carrying value of the customer receivables on accounts which were current prior to receiving a COVID-19 related deferment was $25.7 million and $65.2 million as of October 31, 2021 and January 31, 2021, respectively. All COVID-19 specific deferral programs ended during the third quarter of fiscal year 2021. |
Interest Income on Customer Accounts Receivable | Interest Income on Customer Accounts Receivable. Interest income, which includes interest income and amortization of deferred fees and origination costs, is recorded using the interest method and is reflected in finance charges and other revenues. Typically, interest income is recorded until the customer account is paid off or charged-off and we provide an allowance for estimated uncollectible interest. We reserve for interest that is more than 60 days past due. Any contractual interest income received from customers in excess of the interest income calculated using the interest method is recorded as deferred revenue on our balance sheets. At October 31, 2021 and January 31, 2021, there was $8.5 million and $8.9 million, respectively, of deferred interest included in deferred revenues and other credits and other long-term liabilities. The deferred interest will ultimately be brought into income as the accounts pay off or charge-off. We offer a 12-month no-interest option program. If the customer is delinquent in making a scheduled monthly payment or does not repay the principal in full by the end of the no-interest option program period (grace periods are provided), the account does not qualify for the no-interest provision and none of the interest earned is waived. Interest income is recognized based on estimated accrued interest earned to date on all no-interest option finance programs with an offsetting reserve for those customers expected to satisfy the requirements of the program based on our historical experience. We recognize interest income on TDR accounts using the interest income method, which requires reporting interest income equal to the increase in the net carrying amount of the loan attributable to the passage of time. Cash proceeds and other adjustments are applied to the net carrying amount such that it equals the present value of expected future cash flows. We place accounts in non-accrual status when legally required. Payments received on non-accrual loans are applied to principal and reduce the balance of the loan. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable in non-accrual status was $6.7 million and $8.5 million, respectively. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable that were past due 90 days or more and still accruing interest totaled $70.2 million and $111.5 million, respectively. At October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable in a bankruptcy status that were less than 60 days past due of $6.2 million and $5.2 million, respectively, were included within the customer receivables balance carried in non-accrual status. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts. The determination of the amount of the allowance for credit losses is, by nature, highly complex and subjective. Future events that are inherently uncertain could result in material changes to the level of the allowance for credit losses. General economic conditions, changes to state or federal regulations and a variety of other factors that affect the ability of borrowers to service their debts or our ability to collect will impact the future performance of the portfolio. We establish an allowance for credit losses, including estimated uncollectible interest, to cover expected credit losses on our customer accounts receivable resulting from the failure of customers to make contractual payments. Our customer accounts receivable portfolio balance consists of a large number of relatively small, homogeneous accounts. None of our accounts are large enough to warrant individual evaluation for impairment. The allowance for credit losses is measured on a collective (pool) basis where similar risk characteristics exist. The allowance for credit losses is determined for each pool and added to the pool’s carrying amount to establish a new amortized cost basis. We use a risk-based, pool-level segmentation framework to calculate the expected loss rate. This framework is based on our historical gross charge-off history. In addition to adjusted historical gross charge-off rates, estimates of post-charge-off recoveries, including cash payments from customers, sales tax recoveries from taxing jurisdictions, and payments received under credit insurance and repair service agreement (“RSA”) policies are also considered. We also consider forward-looking economic forecasts based on a statistical analysis of economic factors (specifically, forecast of unemployment rates over the reasonable and supportable forecasting period). To the extent that situations and trends arise which are not captured in our model, management will layer on additional qualitative adjustments. Pursuant to ASC 326 requirements, the Company uses a 24-month reasonable and supportable forecast period for the customer accounts receivable portfolio. We estimate losses beyond the 24-month forecast period based on historic loss rates experienced over the life of our historic loan portfolio by loan pool type. We revisit our measurement methodology and assumption annually, or more frequently if circumstances warrant. |
Debt Issuance Costs and Loss on Extinguishment | Debt Issuance Costs. Costs that are direct and incremental to debt issuance are deferred and amortized to interest expense using the effective interest method over the expected life of the debt. All other costs related to debt issuance are expensed as incurred. We present debt issuance costs associated with long-term debt as a reduction of the carrying amount of the debt. Unamortized costs related to the Revolving Credit Facility, as defined in Note 4, Debt and Financing Lease Obligations , are included in other assets on our Condensed Consolidated Balance Sheet and were $5.5 million and $3.5 million as of October 31, 2021 and January 31, 2021, respectively. |
Income Taxes | Income Taxes. For the nine months ended October 31, 2021 and 2020, we utilized the estimated annual effective tax rate based on our estimated fiscal year 2022 and 2021 pre-tax income, respectively, in determining income tax expense. Provision for income taxes for interim periods is based on an estimated annual income tax rate, adjusted for discrete tax items. As a result, our interim effective tax rates may vary significantly from the statutory tax rate and the annual effective tax rate. For the nine months ended October 31, 2021 and 2020, the effective tax rate was 23.7% and 22.5%, respectively. The primary factor affecting the decrease in our effective tax rate for the nine months ended October 31, 2021 was the impact of the tax loss carryback provisions of the CARES Act that was reflected in the prior period. |
Share-based Compensation | Stock-based Compensation. During the nine months ended October 31, 2021, the Company granted performance stock awards (“PSUs”) and restricted stock awards (“RSUs”). The awards had a combined aggregate grant date fair value of $17.8 million. The PSUs will vest in fiscal year 2025, if at all, upon certification by the Compensation Committee of the Board of Directors of satisfaction of certain total stockholder return performance conditions over the three |
Earnings (loss) per Share | Earnings (Loss) Per Share. Basic earnings (loss) per share for a particular period is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effects of any stock options, RSUs and PSUs, which are calculated using the treasury-stock method. The following table sets forth the shares outstanding for the earnings per share calculations: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Weighted-average common shares outstanding - Basic 29,488,321 29,142,843 29,418,047 29,013,759 Dilutive effect of stock options, PSUs and RSUs 773,100 340,638 709,372 — Weighted-average common shares outstanding - Diluted 30,261,421 29,483,481 30,127,419 29,013,759 For the three months ended October 31, 2021 and 2020, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 715,051 and 894,130, respectively. For the nine months ended October 31, 2021 and 2020, the weighted average number of stock options, RSUs and PSUs not included in the calculation due to their anti-dilutive effect, was 734,407 and 1,225,771, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to subjectivity associated with the inputs to fair value measurements as follows: • Level 1 – Inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated inputs). • Level 3 – Inputs that are not observable from objective sources such as our internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in our internally developed present value of future cash flows model that underlies the fair-value measurement). In determining fair value, we use observable market data when available, or models that incorporate observable market data. When we are required to measure fair value and there is not a market-observable price for the asset or liability or for a similar asset or liability, we use the cost or income approach depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach is based on management’s best assumptions regarding expectations of future net cash flows and discounts the expected cash flows using a commensurate risk-adjusted discount rate. Such evaluations involve significant judgment, and the results are based on expected future events or conditions such as sales prices, economic and regulatory climates, and other factors, most of which are often outside of management’s control. However, we believe assumptions used reflect a market participant’s view of long-term prices, costs, and other factors and are consistent with assumptions used in our business plans and investment decisions. In arriving at fair-value estimates, we use relevant observable inputs available for the valuation technique employed. If a fair-value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement is characterized based on the lowest level of input that is significant to the fair-value measurement. The fair value of cash and cash equivalents, restricted cash and accounts payable approximate their carrying amounts because of the short maturity of these instruments. The fair value of customer accounts receivable, determined using a Level 3 discounted cash flow analysis, approximates their carrying value, net of the allowance for doubtful accounts. The fair value of our Revolving Credit Facility approximates carrying value based on the current borrowing rate for similar types of borrowing arrangements. At October 31, 2021, the fair value of the asset backed notes was $148.0 million as compared to the carrying value of $147.4 million and was determined using Level 2 inputs based on inactive trading activity. |
Deferred Revenue | Deferred Revenue. Deferred revenue related to contracts with customers consists of deferred customer deposits and deferred RSA administration fees. During the nine months ended October 31, 2021, we recognized $4.7 million of revenue for customer deposits deferred as of January 31, 2021. During the nine months ended October 31, 2021, we recognized $2.7 million of revenue for RSA administrative fees deferred as of January 31, 2021. |
Recent Accounting Pronouncements Adopted and Recent Accounting Pronouncements Yet To Be Adopted | Recent Accounting Pronouncements Adopted. Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued ASU 2019-12, I ncome Taxes (Topic 740): Simplifying the Accounting for Income Taxes , an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This accounting standards update became effective for us in the first quarter of fiscal year 2022. The adoption did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Yet to Be Adopted. Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , an update that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), Scope, to clarify the scope of the guidance and reduce potential diversity in practice. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These accounting standard updates were effective upon issuance, with adoption permitted through December 31, 2022. We expect to adopt ASC 2020-04 and ASC 2021-01 upon transition from LIBOR, prior to December 31, 2022. We do not expect the adoption to have a material impact on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
RSUs, PSUs and stock options granted during the period | The following table sets forth the RSUs and PSUs granted during the three and nine months ended October 31, 2021 and 2020: Three Months Ended Nine Months Ended 2021 2020 2021 2020 RSUs (1) 204,376 — 586,107 622,195 PSUs (2) 115,688 — 268,037 270,828 Total stock awards granted 320,064 — 854,144 893,023 Aggregate grant date fair value (in thousands) $ 8,599 $ — $ 17,849 $ 7,957 (1) The RSUs issued during the nine months ended October 31, 2021 and 2020 are scheduled to vest ratably over periods of three years to four years from the date of grant. (2) The weighted-average assumptions used in the Monte Carlo models for the PSUs granted during the nine months ended October 31, 2021 included expected volatility of 83.0%-87.0%, an expected term of 3 years and risk-free interest rates of 0.17%-0.67%. No dividend yield was included in the weighted-average assumptions for the PSUs granted during the nine months ended October 31, 2021. The weighted-average assumptions used in the Monte Carlo model for the PSUs granted during the nine months ended October 31, 2020 included expected volatility of 60.0%, an expected term of 3 years and risk-free interest rate of 1.42%. No dividend yield was included in the weighted average assumptions for the PSUs granted during the nine months ended October 31, 2020. |
Shares outstanding for the earnings per share calculations | The following table sets forth the shares outstanding for the earnings per share calculations: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Weighted-average common shares outstanding - Basic 29,488,321 29,142,843 29,418,047 29,013,759 Dilutive effect of stock options, PSUs and RSUs 773,100 340,638 709,372 — Weighted-average common shares outstanding - Diluted 30,261,421 29,483,481 30,127,419 29,013,759 |
Customer Accounts Receivable (T
Customer Accounts Receivable (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Receivables [Abstract] | |
Allowance for doubtful accounts and uncollectible interest for customer receivables | Customer accounts receivable consisted of the following: (in thousands) October 31, January 31, Customer accounts receivable (1) $ 1,124,872 $ 1,233,717 Deferred fees and origination costs, net (13,482) (14,212) Allowance for no-interest option credit programs (16,208) (11,985) Allowance for uncollectible interest (13,777) (21,427) Carrying value of customer accounts receivable 1,081,405 1,186,093 Allowance for credit losses (2) (194,377) (276,610) Carrying value of customer accounts receivable, net of allowance for credit losses 887,028 909,483 Short-term portion of customer accounts receivable, net (460,808) (478,734) Long-term customer accounts receivable, net $ 426,220 $ 430,749 Carrying Value (in thousands) October 31, January 31, Customer accounts receivable 60+ days past due (3) $ 95,534 $ 146,820 Re-aged customer accounts receivable (4) 198,279 306,845 Restructured customer accounts receivable (5) 115,928 178,374 (1) As of October 31, 2021 and January 31, 2021, the customer accounts receivable balance included $21.4 million and $31.1 million , respectively, in interest receivable. Net of the allowance for uncollectible interest, interest receivable outstanding as of October 31, 2021 and January 31, 2021 was $7.6 million and $9.7 million , respectively. (2) Our current methodology to estimate expected credit losses utilized macroeconomic forecasts as of October 31, 2021 and January 31, 2021, which incorporated the continued estimated impact of the global COVID-19 outbreak on the U.S. economy. Our forecast utilized economic projections from a major rating service reflecting a decrease in unemployment rates. (3) As of October 31, 2021 and January 31, 2021, the carrying value of customer accounts receivable past due one day or greater was $270.2 million and $340.8 million, respectively. These amounts include the 60+ days past due balances shown above. (4) The re-aged carrying value as of October 31, 2021 and January 31, 2021 includes $48.8 million and $88.0 million, respectively, in carrying value that are both 60+ days past due and re-aged. |
Schedule of allowance for credit losses | The allowance for credit losses included in the current and long-term portion of customer accounts receivable, net as shown in the Condensed Consolidated Balance Sheet were as follows: (in thousands) October 31, 2021 January 31, 2021 Customer accounts receivable - current $ 578,250 $ 643,903 Allowance for credit losses for customer accounts receivable - current (117,442) (165,169) Customer accounts receivable, net of allowances 460,808 478,734 Customer accounts receivable - non current 516,932 563,617 Allowance for credit losses for customer accounts receivable - non current (90,712) (132,868) Long-term portion of customer accounts receivable, net of allowances 426,220 430,749 Total customer accounts receivable, net $ 887,028 $ 909,483 |
Activity in the allowance for doubtful accounts and uncollectible interest for customer receivables | The following presents the activity in our allowance for credit losses and uncollectible interest for customer receivables: Nine Months Ended October 31, 2021 Nine Months Ended October 31, 2020 (in thousands) Customer Customer Allowance at beginning of period, prior to adoption of ASC 326 $ 219,740 $ 78,297 $ 298,037 $ 145,680 $ 88,123 $ 233,803 Impact of adoption ASC 326 — — — 95,136 3,526 98,662 Provision for (benefit from) credit losses (1) 21,845 23,079 44,924 164,697 60,595 225,292 Principal charge-offs (2) (81,710) (50,691) (132,401) (144,048) (62,678) (206,726) Interest charge-offs (22,432) (13,917) (36,349) (40,340) (17,553) (57,893) Recoveries (3) 20,947 12,996 33,943 16,922 7,363 24,285 Allowance at end of period $ 158,390 $ 49,764 $ 208,154 $ 238,047 $ 79,376 $ 317,423 Average total customer portfolio balance $ 985,634 $ 149,745 $ 1,135,379 $ 1,219,794 $ 216,433 $ 1,436,227 (1) Includes provision for uncollectible interest, which is included in finance charges and other revenues, and changes in expected future recoveries. (2) Charge-offs include the principal amount of losses (excluding accrued and unpaid interest). Recoveries include the principal amount collected during the period for previously charged-off balances. Net charge-offs are calculated as the net of principal charge-offs and recoveries. |
Schedule of delinquency bucket | We manage our customer accounts receivable portfolio using delinquency as a key credit quality indicator. The following table presents the delinquency distribution of the carrying value of customer accounts receivable by year of origination. The information is presented as of October 31, 2021: (in thousands) Delinquency Bucket 2021 2020 2019 2018 Prior Total % of Total Current $ 474,139 $ 219,476 $ 102,045 $ 13,529 $ 2,042 $ 811,231 75.0 % 1-30 52,445 42,934 30,315 7,286 1,195 134,175 12.4 % 31-60 15,199 12,681 9,369 2,741 475 40,465 3.8 % 61-90 8,945 7,768 6,165 1,901 324 25,103 2.3 % 91+ 17,531 24,488 20,410 6,809 1,193 70,431 6.5 % Total $ 568,259 $ 307,347 $ 168,304 $ 32,266 $ 5,229 $ 1,081,405 100.0 % |
Finance Charges and Other Rev_2
Finance Charges and Other Revenue (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Supplemental Disclosure of Finance Charges and Other Revenue [Abstract] | |
Schedule of finance charges and other revenues | Finance charges and other revenues consisted of the following: Three Months Ended Nine Months Ended (in thousands) 2021 2020 2021 2020 Interest income and fees $ 63,621 $ 69,996 $ 196,303 $ 235,438 Insurance income 6,992 4,222 17,881 12,359 Other revenues 262 168 695 599 Total finance charges and other revenues $ 70,875 $ 74,386 $ 214,879 $ 248,396 |
Debt and Financing Lease Obli_2
Debt and Financing Lease Obligations (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-term debt | Debt and financing lease obligations consisted of the following: (in thousands) October 31, January 31, Revolving Credit Facility $ 307,000 $ 52,000 Senior Notes — 141,172 2019-A VIE Asset-backed Class A Notes — 19,521 2019-A VIE Asset-backed Class B Notes — 25,069 2019-A VIE Asset-backed Class C Notes — 24,202 2019-B VIE Asset-backed Class A Notes — 17,860 2019-B VIE Asset-backed Class B Notes — 85,540 2019-B VIE Asset-backed Class C Notes 70,691 83,270 2020-A VIE Asset-backed Class A Notes 15,584 93,326 2020-A VIE Asset-backed Class B Notes 31,124 65,200 2020-A VIE Asset-backed Class C Notes 30,026 — Financing lease obligations 6,399 6,072 Total debt and financing lease obligations 460,824 613,232 Less: Discount on debt — (524) Deferred debt issuance costs (563) (3,139) Current maturities of long-term debt and financing lease obligations (942) (934) Long-term debt and financing lease obligations $ 459,319 $ 608,635 |
Schedule of asset-backed notes | The asset-backed notes outstanding as of October 31, 2021 consisted of the following: (dollars in thousands) Asset-Backed Notes Original Principal Amount Original Net Proceeds (1) Current Principal Amount Issuance Date Maturity Date Contractual Interest Rate Effective Interest Rate (2) 2019-B Class B Notes $ 85,540 $ 84,916 $ — 11/26/2019 6/17/2024 3.62% 4.59% 2019-B Class C Notes 83,270 82,456 70,691 11/26/2019 6/17/2024 4.60% 5.15% 2020-A Class A Notes 174,900 173,716 15,584 10/16/2020 6/16/2025 1.71% 4.51% 2020-A Class B Notes 65,200 64,754 31,124 10/16/2020 6/16/2025 4.27% 5.52% 2020-A Class C Notes 62,900 62,535 30,026 2/24/2021 6/16/2025 4.20% 5.71% Total $ 471,810 $ 468,377 $ 147,425 (1) After giving effect to debt issuance costs. |
Covenant compliance | A summary of the significant financial covenants that govern our Revolving Credit Facility compared to our actual compliance status at October 31, 2021 is presented below: Actual Required Minimum/ Maximum Interest Coverage Ratio for the quarter must equal or exceed minimum 10.12:1.00 1.00:1.00 Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum 12.34:1.00 1.50:1.00 Leverage Ratio must not exceed maximum 1.25:1.00 4.50:1.00 ABS Excluded Leverage Ratio must not exceed maximum 1.06:1.00 2.50:1.00 Capital Expenditures, net, must not exceed maximum $24.8 million $100.0 million |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of assets and liabilities held by the VIE | The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn’s, Inc.): (in thousands) October 31, January 31, Assets: Restricted cash $ 23,478 $ 48,622 Due from Conn’s, Inc., net (12,307) (5,661) Customer accounts receivable: Customer accounts receivable 171,036 509,574 Restructured accounts 68,433 105,395 Allowance for uncollectible accounts (64,025) (159,849) Allowance for no-interest option credit programs — (5,502) Deferred fees and origination costs (1,643) (5,503) Total customer accounts receivable, net 173,801 444,115 Total assets $ 184,972 $ 487,076 Liabilities: Accrued expenses $ 1,497 $ 3,707 Other liabilities 1,682 4,459 Long-term debt: 2019-A Class A Notes — 19,521 2019-A Class B Notes — 25,069 2019-A Class C Notes — 24,202 2019-B Class A Notes — 17,860 2019-B Class B Notes — 85,540 2019-B Class C Notes 70,691 83,270 2020-A Class A Notes 15,584 93,326 2020-A Class B Notes 31,124 65,200 2020-A Class C Notes 30,026 — 147,425 413,988 Less: deferred debt issuance costs (563) (2,437) Total debt $ 146,862 $ 411,551 Total liabilities $ 150,041 $ 419,717 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Oct. 31, 2021 | |
Segment Reporting [Abstract] | |
Financial information by segment | Financial information by segment is presented in the following tables: Three Months Ended October 31, 2021 Three Months Ended October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 106,756 $ — $ 106,756 $ 82,793 $ — $ 82,793 Home appliance 128,385 — 128,385 99,872 — 99,872 Consumer electronics 46,751 — 46,751 35,517 — 35,517 Home office 17,373 — 17,373 16,711 — 16,711 Other 9,036 — 9,036 4,264 — 4,264 Product sales 308,301 — 308,301 239,157 — 239,157 Repair service agreement commissions 23,769 — 23,769 17,465 — 17,465 Service revenues 2,513 — 2,513 3,150 — 3,150 Total net sales 334,583 — 334,583 259,772 — 259,772 Finance charges and other revenues 262 70,613 70,875 168 74,218 74,386 Total revenues 334,845 70,613 405,458 259,940 74,218 334,158 Costs and expenses: Cost of goods sold 211,298 — 211,298 160,378 — 160,378 Selling, general and administrative expense (1) 100,969 37,112 138,081 84,245 37,913 122,158 Provision for bad debts 36 26,496 26,532 72 27,421 27,493 Total costs and expenses 312,303 63,608 375,911 244,695 65,334 310,029 Operating income 22,542 7,005 29,547 15,245 8,884 24,129 Interest expense — 5,206 5,206 — 11,563 11,563 Income (loss) before income taxes $ 22,542 $ 1,799 $ 24,341 $ 15,245 $ (2,679) $ 12,566 Nine Months Ended October 31, 2021 Nine Months Ended October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Revenues: Furniture and mattress $ 310,505 $ — $ 310,505 $ 232,670 $ — $ 232,670 Home appliance 377,090 — 377,090 288,839 — 288,839 Consumer electronics 133,202 — 133,202 118,677 — 118,677 Home office 49,881 — 49,881 49,056 — 49,056 Other 27,079 — 27,079 13,255 — 13,255 Product sales 897,757 — 897,757 702,497 — 702,497 Repair service agreement commissions 66,600 — 66,600 57,730 — 57,730 Service revenues 8,307 — 8,307 9,611 — 9,611 Total net sales 972,664 — 972,664 769,838 — 769,838 Finance charges and other revenues 695 214,184 214,879 599 247,797 248,396 Total revenues 973,359 214,184 1,187,543 770,437 247,797 1,018,234 Costs and expenses: Cost of goods sold 612,219 — 612,219 484,015 — 484,015 Selling, general and administrative expense (1) 294,019 107,981 402,000 241,003 109,440 350,443 Provision for bad debts 196 19,462 19,658 422 176,442 176,864 Charges and credits — — — 1,355 2,234 3,589 Total costs and expenses 906,434 127,443 1,033,877 726,795 288,116 1,014,911 Operating income (loss) 66,925 86,741 153,666 43,642 (40,319) 3,323 Interest expense — 20,498 20,498 — 39,778 39,778 Loss on extinguishment of debt — 1,218 1,218 — — — Income (loss) before income taxes $ 66,925 $ 65,025 $ 131,950 $ 43,642 $ (80,097) $ (36,455) October 31, 2021 October 31, 2020 (in thousands) Retail Credit Total Retail Credit Total Total assets $ 707,402 $ 1,079,177 $ 1,786,579 $ 743,568 $ 1,189,888 $ 1,933,456 (1) For the three months ended October 31, 2021 and 2020, the amount of corporate overhead allocated to each segment reflected in SG&A was $11.1 million and $8.5 million, respectively. For the three months ended October 31, 2021 and 2020, the amount of reimbursement made to the retail segment by the credit segment was $7.0 million and $8.2 million, respectively. For the nine months ended October 31, 2021 and 2020, the amount of corporate overhead allocated to each segment reflected in SG&A was $30.0 million and $24.2 million, respectively. For the nine months ended October 31, 2021 and 2020, the amount of reimbursement made to the retail segment by the credit segment was $21.2 million and $26.9 million, respectively. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 31, 2021USD ($)shares | Oct. 31, 2020USD ($)shares | Oct. 31, 2021USD ($)segmentaccountshares | Oct. 31, 2020USD ($)shares | Apr. 15, 2021USD ($) | Jan. 31, 2021USD ($) | Jan. 31, 2020USD ($) | Jul. 01, 2014 | |
Debt Instrument [Line Items] | ||||||||
Number of operating segments | segment | 2 | |||||||
Cash and Cash Equivalents and Restricted Cash | ||||||||
Cash and cash equivalents include credit card deposits in-transit | $ 8,200 | $ 8,200 | $ 7,900 | |||||
Restricted cash, VIE | 25,528 | 25,528 | 50,557 | |||||
Customer Accounts Receivable | ||||||||
Customer receivables which were current prior to receiving a COVID-19 related deferment | 25,700 | $ 25,700 | 65,200 | |||||
Interest Income on Customer Accounts Receivable | ||||||||
No-interest option program period | 12 months | |||||||
Nonaccrual status | 6,700 | $ 6,700 | 8,500 | |||||
90 days past due and still accruing | 70,200 | 70,200 | 111,500 | |||||
Financing Receivable, Not past Due | 6,200 | $ 6,200 | 5,200 | |||||
Allowance for Doubtful Accounts | ||||||||
Number of accounts, warrant individual evaluation for impairment | account | 0 | |||||||
Accounts receivable, allowance for credit loss | 208,154 | $ 317,423 | $ 208,154 | $ 317,423 | 298,037 | $ 233,803 | ||
Debt Issuance Costs | ||||||||
Deferred debt issuance costs | 563 | 563 | 3,139 | |||||
Loss on Extinguishment | ||||||||
Loss on extinguishment of debt | 0 | 0 | $ 1,218 | $ 0 | ||||
Income Taxes | ||||||||
Effective tax rate | 23.70% | 22.50% | ||||||
Stock-based Compensation | ||||||||
Aggregate grant date fair value | 8,599 | 0 | $ 17,849 | $ 7,957 | ||||
Stock-based compensation expense | 2,600 | $ 2,300 | 6,382 | $ 6,988 | ||||
Fair Value of Financial Instruments | ||||||||
Long-term debt | $ 147,425 | 147,425 | ||||||
Customer Deposits | ||||||||
Deferred Revenue | ||||||||
Deferred revenue | 4,700 | |||||||
RSA Administration Fees | ||||||||
Deferred Revenue | ||||||||
Deferred revenue | $ 2,700 | |||||||
Performance Shares | ||||||||
Stock-based Compensation | ||||||||
Number of award vesting years | 3 years | |||||||
Restricted Stock Units And Phantom Share Units | ||||||||
Earnings (loss) per Share | ||||||||
Weighted average number of stock options and restricted stock units not included in the calculation of the dilutive effect of stock options and restricted stock units (in shares) | shares | 715,051 | 894,130 | 734,407 | 1,225,771 | ||||
Minimum | ||||||||
Stock-based Compensation | ||||||||
Vesting period | 3 years | 3 years | ||||||
Minimum | (RSUs) | ||||||||
Stock-based Compensation | ||||||||
Vesting period | 3 years | |||||||
Maximum | ||||||||
Stock-based Compensation | ||||||||
Vesting period | 4 years | 4 years | ||||||
Maximum | (RSUs) | ||||||||
Stock-based Compensation | ||||||||
Vesting period | 4 years | |||||||
Revolving Credit Facility | ||||||||
Loss on Extinguishment | ||||||||
Loss on extinguishment of debt | $ 200 | |||||||
Secured Debt | ||||||||
Fair Value of Financial Instruments | ||||||||
Debt fair value | $ 148,000 | 148,000 | ||||||
Senior Notes | ||||||||
Loss on Extinguishment | ||||||||
Loss on extinguishment of debt | 1,000 | |||||||
Debt instrument, repurchase amount | $ 141,200 | |||||||
Fair Value of Financial Instruments | ||||||||
Long-term debt | 0 | 0 | 141,172 | |||||
Senior Notes | Senior Unsecured Notes Due July 2022 | ||||||||
Loss on Extinguishment | ||||||||
Interest rate on notes | 7.25% | |||||||
Secured Debt | ||||||||
Fair Value of Financial Instruments | ||||||||
Long-term debt | 147,400 | 147,400 | ||||||
Revolving Credit Facility | ||||||||
Debt Issuance Costs | ||||||||
Deferred debt issuance costs | 5,500 | 5,500 | 3,500 | |||||
Deferred Revenues And Other Credits | ||||||||
Interest Income on Customer Accounts Receivable | ||||||||
Deferred revenue | 8,500 | 8,500 | ||||||
Other long-term liabilities | ||||||||
Interest Income on Customer Accounts Receivable | ||||||||
Deferred revenue | 8,900 | |||||||
Accounts Receivable | ||||||||
Allowance for Doubtful Accounts | ||||||||
Accounts receivable, allowance for credit loss | 158,390 | $ 238,047 | 158,390 | $ 238,047 | 219,740 | 145,680 | ||
Restructured Accounts | ||||||||
Allowance for Doubtful Accounts | ||||||||
Accounts receivable, allowance for credit loss | 49,764 | $ 79,376 | 49,764 | $ 79,376 | 78,297 | $ 88,123 | ||
Collateral Held by VIE | ||||||||
Cash and Cash Equivalents and Restricted Cash | ||||||||
Restricted cash, VIE | 18,700 | 18,700 | 41,600 | |||||
Securitized Receivables Servicer | ||||||||
Cash and Cash Equivalents and Restricted Cash | ||||||||
Restricted cash, VIE | $ 4,800 | $ 4,800 | $ 7,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock awards granted (in shares) | 320,064 | 0 | 854,144 | 893,023 |
Aggregate grant date fair value | $ 8,599 | $ 0 | $ 17,849 | $ 7,957 |
Dividend yield (as a percent) | 0.00% | 0.00% | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | 3 years | ||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | 4 years | ||
(RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs and PSUs (in shares) | 204,376 | 0 | 586,107 | 622,195 |
(RSUs) | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
(RSUs) | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
(PSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs and PSUs (in shares) | 115,688 | 0 | 268,037 | 270,828 |
Expected volatility rate (as a percent) | 60.00% | |||
Expected term | 3 years | 3 years | ||
Risk free interest rate (as a percent) | 1.42% | |||
(PSUs) | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility rate (as a percent) | 83.00% | |||
Risk free interest rate (as a percent) | 0.17% | |||
(PSUs) | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility rate (as a percent) | 87.00% | |||
Risk free interest rate (as a percent) | 0.67% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Earnings per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Accounting Policies [Abstract] | ||||
Weighted average common shares outstanding - Basic (in shares) | 29,488,321 | 29,142,843 | 29,418,047 | 29,013,759 |
Dilutive effect of stock options, RSUs and PSUs (in shares) | 773,100 | 340,638 | 709,372 | 0 |
Weighted average common shares outstanding - Diluted (in shares) | 30,261,421 | 29,483,481 | 30,127,419 | 29,013,759 |
Customer Accounts Receivable -
Customer Accounts Receivable - Allowance for Doubtful Accounts and Uncollectible Interest for Customer Receivables (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Quantitative information about the receivables portfolio managed [Abstract] | ||
Customer accounts receivable | $ 1,124,872 | $ 1,233,717 |
Deferred fees and origination costs, net | (13,482) | (14,212) |
Allowance for no-interest option credit programs | (16,208) | (11,985) |
Allowance for uncollectible interest | (13,777) | (21,427) |
Carrying value of customer accounts receivable | 1,081,405 | 1,186,093 |
Allowance for credit losses | (194,377) | (276,610) |
Total customer accounts receivable, net | 887,028 | 909,483 |
Short-term portion of customer accounts receivable, net | (460,808) | (478,734) |
Long-term customer accounts receivable, net | 426,220 | 430,749 |
Customer accounts receivable 60+ days past due | 95,534 | 146,820 |
Re-aged customer accounts receivable | 198,279 | 306,845 |
Restructured customer accounts receivable | 115,928 | 178,374 |
Interest receivable | 21,400 | 31,100 |
Interest receivable outstanding net of allowance for uncollectible interest | 7,600 | 9,700 |
Financing receivable past due | 270,200 | 340,800 |
Amounts included within past due and reaged accounts | 48,800 | 88,000 |
Accounts receivable, restructured accounts, past due | $ 30,800 | $ 57,100 |
Customer Accounts Receivable _2
Customer Accounts Receivable - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Receivables [Abstract] | ||
Customer accounts receivable - current | $ 578,250 | $ 643,903 |
Allowance for credit losses for customer accounts receivable - current | (117,442) | (165,169) |
Customer accounts receivable, net of allowances | 460,808 | 478,734 |
Customer accounts receivable - non current | 516,932 | 563,617 |
Allowance for credit losses for customer accounts receivable - non current | (90,712) | (132,868) |
Long-term portion of customer accounts receivable, net of allowances | 426,220 | 430,749 |
Total customer accounts receivable, net | $ 887,028 | $ 909,483 |
Customer Accounts Receivable _3
Customer Accounts Receivable - Activity in the Allowance for Doubtful Accounts and Uncollectible Interest for Customer Receivables (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | $ 298,037 | $ 233,803 |
Provision for (benefit from) credit losses | 44,924 | 225,292 |
Principal charge-offs | (132,401) | (206,726) |
Interest charge-offs | (36,349) | (57,893) |
Recoveries | 33,943 | 24,285 |
Allowance at end of period | 208,154 | 317,423 |
Average total customer portfolio balance | 1,135,379 | 1,436,227 |
Customer Accounts Receivable | ||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | 219,740 | 145,680 |
Provision for (benefit from) credit losses | 21,845 | 164,697 |
Principal charge-offs | (81,710) | (144,048) |
Interest charge-offs | (22,432) | (40,340) |
Recoveries | 20,947 | 16,922 |
Allowance at end of period | 158,390 | 238,047 |
Average total customer portfolio balance | 985,634 | 1,219,794 |
Restructured Accounts | ||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | 78,297 | 88,123 |
Provision for (benefit from) credit losses | 23,079 | 60,595 |
Principal charge-offs | (50,691) | (62,678) |
Interest charge-offs | (13,917) | (17,553) |
Recoveries | 12,996 | 7,363 |
Allowance at end of period | 49,764 | 79,376 |
Average total customer portfolio balance | 149,745 | 216,433 |
Accounting Standards Update 2016-13 | Cumulative Effect, Period Of Adoption, Adjustment | ||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | 0 | 98,662 |
Accounting Standards Update 2016-13 | Cumulative Effect, Period Of Adoption, Adjustment | Customer Accounts Receivable | ||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | 0 | 95,136 |
Accounting Standards Update 2016-13 | Cumulative Effect, Period Of Adoption, Adjustment | Restructured Accounts | ||
Allowance for doubtful accounts and uncollectible interest for customer receivables [Abstract] | ||
Allowance at beginning of period, prior to adoption of ASC 326 | $ 0 | $ 3,526 |
Customer Accounts Receivable _4
Customer Accounts Receivable - Delinquency Bucket (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 568,259 | |
2020 | 307,347 | |
2019 | 168,304 | |
2018 | 32,266 | |
Prior | 5,229 | |
Total | $ 1,081,405 | $ 1,186,093 |
% of Total | 100.00% | |
Current | ||
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 474,139 | |
2020 | 219,476 | |
2019 | 102,045 | |
2018 | 13,529 | |
Prior | 2,042 | |
Total | $ 811,231 | |
% of Total | 75.00% | |
1-30 | ||
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 52,445 | |
2020 | 42,934 | |
2019 | 30,315 | |
2018 | 7,286 | |
Prior | 1,195 | |
Total | $ 134,175 | |
% of Total | 12.40% | |
31-60 | ||
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 15,199 | |
2020 | 12,681 | |
2019 | 9,369 | |
2018 | 2,741 | |
Prior | 475 | |
Total | $ 40,465 | |
% of Total | 3.80% | |
61-90 | ||
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 8,945 | |
2020 | 7,768 | |
2019 | 6,165 | |
2018 | 1,901 | |
Prior | 324 | |
Total | $ 25,103 | |
% of Total | 2.30% | |
91+ | ||
Financing Receivable, Past Due [Line Items] | ||
2021 | $ 17,531 | |
2020 | 24,488 | |
2019 | 20,410 | |
2018 | 6,809 | |
Prior | 1,193 | |
Total | $ 70,431 | |
% of Total | 6.50% |
Finance Charges and Other Rev_3
Finance Charges and Other Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||||
Interest income and fees | $ 63,621 | $ 69,996 | $ 196,303 | $ 235,438 |
Insurance income | 6,992 | 4,222 | 17,881 | 12,359 |
Other revenues | 262 | 168 | 695 | 599 |
Other Income | 70,875 | 74,386 | 214,879 | 248,396 |
Provisions for uncollectible interest | 10,500 | 16,900 | 25,500 | 48,800 |
Financing Receivable | ||||
Troubled Debt Restructuring, Debtor, Subsequent Periods [Line Items] | ||||
Interest income and fees | $ 5,800 | $ 9,300 | $ 20,000 | $ 28,800 |
Debt and Financing Lease Obli_3
Debt and Financing Lease Obligations - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 |
Long-term debt [Abstract] | ||
Long-term debt | $ 147,425 | |
Financing lease obligations | 6,399 | $ 6,072 |
Total debt and financing lease obligations | 460,824 | 613,232 |
Less: | ||
Discount on debt | 0 | (524) |
Deferred debt issuance costs | (563) | (3,139) |
Current maturities of long-term debt and financing lease obligations | (942) | (934) |
Long-term debt and finance lease obligations (includes VIE balances of $146,862 and $411,551, respectively) | 459,319 | 608,635 |
2019-B VIE Asset-backed Class B Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | |
2019-B VIE Asset-backed Class C Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 70,691 | |
2020-A VIE Asset-backed Class A Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 15,584 | |
2020-A VIE Asset-backed Class B Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 31,124 | |
2020-A VIE Asset-backed Class C Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 30,026 | |
Senior Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 141,172 |
Secured Debt | ||
Long-term debt [Abstract] | ||
Long-term debt | 147,400 | |
Secured Debt | 2019-A VIE Asset-backed Class A Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 19,521 |
Secured Debt | 2019-A VIE Asset-backed Class B Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 25,069 |
Secured Debt | 2019-A VIE Asset-backed Class C Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 24,202 |
Secured Debt | 2019-B VIE Asset-backed Class A Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 17,860 |
Secured Debt | 2019-B VIE Asset-backed Class B Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 0 | 85,540 |
Secured Debt | 2019-B VIE Asset-backed Class C Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 70,691 | 83,270 |
Secured Debt | 2020-A VIE Asset-backed Class A Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 15,584 | 93,326 |
Secured Debt | 2020-A VIE Asset-backed Class B Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 31,124 | 65,200 |
Secured Debt | 2020-A VIE Asset-backed Class C Notes | ||
Long-term debt [Abstract] | ||
Long-term debt | 30,026 | 0 |
Revolving Credit Facility | ||
Less: | ||
Deferred debt issuance costs | (5,500) | (3,500) |
Revolving Credit Facility | Line of Credit | ||
Long-term debt [Abstract] | ||
Long-term debt | $ 307,000 | $ 52,000 |
Debt and Financing Lease Obli_4
Debt and Financing Lease Obligations - Senior Notes (Details) - USD ($) | Oct. 31, 2021 | Apr. 15, 2021 | Jul. 01, 2014 |
Debt Instrument [Line Items] | |||
Original principal amount | $ 471,810,000 | ||
Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, repurchase amount | $ 141,200,000 | ||
Senior Notes | Senior Unsecured Notes Due July 2022 | |||
Debt Instrument [Line Items] | |||
Original principal amount | $ 250,000,000 | ||
Interest rate on notes | 7.25% |
Debt and Financing Lease Obli_5
Debt and Financing Lease Obligations - Asset Backed Notes (Details) - USD ($) $ in Thousands | Feb. 24, 2021 | Oct. 16, 2020 | Nov. 26, 2019 | Oct. 31, 2021 | May 12, 2021 | Jan. 31, 2021 |
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 471,810 | |||||
Proceeds from issuance of debt | 468,377 | |||||
Current Principal Amount | 147,425 | |||||
Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | 147,400 | |||||
2019-B VIE Asset-backed Class B Notes | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 85,540 | |||||
Proceeds from issuance of debt | $ 84,916 | |||||
Current Principal Amount | $ 0 | |||||
Contractual Interest Rate | 3.62% | |||||
Effective interest rate | 4.59% | |||||
2019-B VIE Asset-backed Class B Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 0 | $ 85,540 | ||||
2019-B VIE Asset-backed Class C Notes | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 83,270 | |||||
Proceeds from issuance of debt | $ 82,456 | |||||
Current Principal Amount | $ 70,691 | |||||
Contractual Interest Rate | 4.60% | |||||
Effective interest rate | 5.15% | |||||
2019-B VIE Asset-backed Class C Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 70,691 | 83,270 | ||||
2020-A VIE Asset-backed Class A Notes | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 174,900 | |||||
Proceeds from issuance of debt | $ 173,716 | |||||
Current Principal Amount | $ 15,584 | |||||
Contractual Interest Rate | 1.71% | |||||
Effective interest rate | 4.51% | |||||
2020-A VIE Asset-backed Class A Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 15,584 | 93,326 | ||||
2020-A VIE Asset-backed Class B Notes | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | 65,200 | |||||
Proceeds from issuance of debt | $ 64,754 | |||||
Current Principal Amount | $ 31,124 | |||||
Contractual Interest Rate | 4.27% | |||||
Effective interest rate | 5.52% | |||||
2020-A VIE Asset-backed Class B Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 31,124 | 65,200 | ||||
2020-A VIE Asset-backed Class C Notes | ||||||
Debt Instrument [Line Items] | ||||||
Original Principal Amount | $ 62,900 | 62,900 | ||||
Proceeds from issuance of debt | $ 62,535 | |||||
Current Principal Amount | $ 30,026 | |||||
Contractual Interest Rate | 4.20% | 4.20% | ||||
Effective interest rate | 5.71% | |||||
2020-A VIE Asset-backed Class C Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Current Principal Amount | $ 30,026 | $ 0 | ||||
2019-A VIE Notes | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, repurchase amount | $ 41,100 | |||||
Asset-backed Securities | ||||||
Debt Instrument [Line Items] | ||||||
Monthly fee percentage on outstanding balance | 4.75% |
Debt and Financing Lease Obli_6
Debt and Financing Lease Obligations - Revolving Credit Facility (Details) | Mar. 29, 2021USD ($) | Oct. 31, 2021USD ($)quarter |
Line of Credit Facility [Line Items] | ||
Debt instrument, covenant, threshold consecutive quarter | quarter | 4 | |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Available borrowing capacity | $ 320,500,000 | |
Sub-facility for letters of credit | $ 22,500,000 | |
Revolving Credit Facility | Minimum | LIBOR | ||
Line of Credit Facility [Line Items] | ||
Variable basis spread | 2.50% | |
Revolving Credit Facility | Maximum | LIBOR | ||
Line of Credit Facility [Line Items] | ||
Variable basis spread | 3.25% | |
Revolving Credit Facility | Minimum | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | $ 40,000,000 | |
Revolving Credit Facility | Maximum | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | 100,000,000 | |
Revolving Credit Facility | Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Maximum capacity extended under credit facility | $ 650,000,000 | |
Weighted-average interest rate | 4.10% | |
Debt instrument, restrictions on payment of dividends, amount free from restriction | $ 164,900,000 | |
Revolving Credit Facility | Line of Credit | Minimum | ||
Line of Credit Facility [Line Items] | ||
Unused capacity fee percentage | 0.25% | |
Revolving Credit Facility | Line of Credit | Minimum | Alternate Base Rate | ||
Line of Credit Facility [Line Items] | ||
Variable basis spread | 1.50% | |
Revolving Credit Facility | Line of Credit | Maximum | ||
Line of Credit Facility [Line Items] | ||
Unused capacity fee percentage | 0.50% | |
Revolving Credit Facility | Line of Credit | Maximum | Alternate Base Rate | ||
Line of Credit Facility [Line Items] | ||
Variable basis spread | 2.25% |
Debt and Financing Lease Obli_7
Debt and Financing Lease Obligations - Debt Covenants (Details) $ in Millions | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Actual | |
Interest Coverage Ratio for the quarter must equal or exceed minimum | 10.12 |
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum | 12.34 |
Leverage Ratio must not exceed maximum | 1.25 |
ABS Excluded Leverage Ratio must not exceed maximum | 1.06 |
Capital Expenditures, net, must not exceed maximum | $ 24.8 |
Required Minimum/ Maximum | |
Interest Coverage Ratio for the quarter must equal or exceed minimum | 1 |
Interest Coverage Ratio for the trailing two quarters must equal or exceed minimum | 1.50 |
Leverage Ratio must not exceed maximum | 4.50 |
ABS Excluded Leverage Ratio must not exceed maximum | 2.50 |
Capital Expenditures, net, must not exceed maximum | $ 100 |
Contingencies (Details)
Contingencies (Details) | May 15, 2020officer | Oct. 31, 2021stateCourtplaintiff |
Securities Litigation | ||
Loss Contingencies [Line Items] | ||
Loss contingency, number of defendants | officer | 2 | |
Derivative Action Lawsuits | ||
Loss Contingencies [Line Items] | ||
Number of plaintiffs | plaintiff | 0 | |
Number of state court derivative action | stateCourt | 2 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) | 9 Months Ended |
Oct. 31, 2021 | |
Asset-backed Securities | |
Variable Interest Entity [Line Items] | |
Monthly fee percentage on outstanding balance | 4.75% |
Variable Interest Entities - Sc
Variable Interest Entities - Schedule of Assets and Liabilities Held by the VIE (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jan. 31, 2020 |
Assets: | ||||
Restricted cash | $ 25,528 | $ 50,557 | ||
Customer accounts receivable: | ||||
Restructured accounts | 115,928 | 178,374 | ||
Allowance for uncollectible accounts | (208,154) | (298,037) | $ (317,423) | $ (233,803) |
Allowance for no-interest option credit programs | 16,208 | 11,985 | ||
Deferred fees and origination costs, net | (13,482) | (14,212) | ||
Total customer accounts receivable, net | 887,028 | 909,483 | ||
Total assets | 1,786,579 | 1,755,084 | $ 1,933,456 | |
Liabilities: | ||||
Total debt | 147,425 | |||
Less: deferred debt issuance costs | (563) | (3,139) | ||
Total liabilities | 1,123,064 | 1,197,929 | ||
2019-B VIE Asset-backed Class B Notes | ||||
Liabilities: | ||||
Total debt | 0 | |||
2019-B VIE Asset-backed Class C Notes | ||||
Liabilities: | ||||
Total debt | 70,691 | |||
2020-A VIE Asset-backed Class A Notes | ||||
Liabilities: | ||||
Total debt | 15,584 | |||
2020-A VIE Asset-backed Class B Notes | ||||
Liabilities: | ||||
Total debt | 31,124 | |||
2020-A VIE Asset-backed Class C Notes | ||||
Liabilities: | ||||
Total debt | 30,026 | |||
Secured Debt | ||||
Liabilities: | ||||
Total debt | 147,400 | |||
Secured Debt | 2019-A VIE Asset-backed Class A Notes | ||||
Liabilities: | ||||
Total debt | 0 | 19,521 | ||
Secured Debt | 2019-A VIE Asset-backed Class B Notes | ||||
Liabilities: | ||||
Total debt | 0 | 25,069 | ||
Secured Debt | 2019-A VIE Asset-backed Class C Notes | ||||
Liabilities: | ||||
Total debt | 0 | 24,202 | ||
Secured Debt | 2019-B VIE Asset-backed Class A Notes | ||||
Liabilities: | ||||
Total debt | 0 | 17,860 | ||
Secured Debt | 2019-B VIE Asset-backed Class B Notes | ||||
Liabilities: | ||||
Total debt | 0 | 85,540 | ||
Secured Debt | 2019-B VIE Asset-backed Class C Notes | ||||
Liabilities: | ||||
Total debt | 70,691 | 83,270 | ||
Secured Debt | 2020-A VIE Asset-backed Class A Notes | ||||
Liabilities: | ||||
Total debt | 15,584 | 93,326 | ||
Secured Debt | 2020-A VIE Asset-backed Class B Notes | ||||
Liabilities: | ||||
Total debt | 31,124 | 65,200 | ||
Secured Debt | 2020-A VIE Asset-backed Class C Notes | ||||
Liabilities: | ||||
Total debt | 30,026 | 0 | ||
Variable Interest Entity | ||||
Assets: | ||||
Restricted cash | 23,478 | 48,622 | ||
Due from Conn’s, Inc., net | (12,307) | (5,661) | ||
Customer accounts receivable: | ||||
Customer accounts receivable | 171,036 | 509,574 | ||
Restructured accounts | 68,433 | 105,395 | ||
Allowance for uncollectible accounts | (64,025) | (159,849) | ||
Allowance for no-interest option credit programs | 0 | 5,502 | ||
Deferred fees and origination costs, net | (1,643) | (5,503) | ||
Total customer accounts receivable, net | 173,801 | 444,115 | ||
Total assets | 184,972 | 487,076 | ||
Liabilities: | ||||
Accrued expenses | 1,497 | 3,707 | ||
Other liabilities | 1,682 | 4,459 | ||
Total debt | 146,862 | 411,551 | ||
Long-term debt | 147,425 | 413,988 | ||
Less: deferred debt issuance costs | (563) | (2,437) | ||
Total liabilities | $ 150,041 | $ 419,717 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2021USD ($)statestore | Oct. 31, 2020USD ($) | Oct. 31, 2021USD ($)segmentstatestore | Oct. 31, 2020USD ($) | Jan. 31, 2021USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of operating segments | segment | 2 | ||||
Estimated annual rate of reimbursement (as a percent) | 2.50% | ||||
Number of states with retail stores | state | 15 | 15 | |||
Revenues: | |||||
Total net sales | $ 334,583 | $ 259,772 | $ 972,664 | $ 769,838 | |
Finance charges and other revenues | 70,875 | 74,386 | 214,879 | 248,396 | |
Total revenues | 405,458 | 334,158 | 1,187,543 | 1,018,234 | |
Costs and expenses: | |||||
Cost of goods sold | 211,298 | 160,378 | 612,219 | 484,015 | |
Selling, general and administrative expense | 138,081 | 122,158 | 402,000 | 350,443 | |
Provision for bad debts | 26,532 | 27,493 | 19,658 | 176,864 | |
Charges and credits | 0 | 0 | 0 | 3,589 | |
Total costs and expenses | 375,911 | 310,029 | 1,033,877 | 1,014,911 | |
Operating income | 29,547 | 24,129 | 153,666 | 3,323 | |
Interest expense | 5,206 | 11,563 | 20,498 | 39,778 | |
Loss on extinguishment of debt | 0 | 0 | 1,218 | 0 | |
Income (loss) before income taxes | 24,341 | 12,566 | 131,950 | (36,455) | |
Allocation of overhead by operating segments | 11,100 | 8,500 | 30,000 | 24,200 | |
Total assets | 1,786,579 | 1,933,456 | 1,786,579 | 1,933,456 | $ 1,755,084 |
Intersegment Eliminations | |||||
Revenues: | |||||
Total net sales | 7,000 | 8,200 | 21,200 | 26,900 | |
Retail | |||||
Revenues: | |||||
Total net sales | 334,583 | 259,772 | 972,664 | 769,838 | |
Finance charges and other revenues | 262 | 168 | 695 | 599 | |
Total revenues | 334,845 | 259,940 | 973,359 | 770,437 | |
Costs and expenses: | |||||
Cost of goods sold | 211,298 | 160,378 | 612,219 | 484,015 | |
Selling, general and administrative expense | 100,969 | 84,245 | 294,019 | 241,003 | |
Provision for bad debts | 36 | 72 | 196 | 422 | |
Charges and credits | 0 | 1,355 | |||
Total costs and expenses | 312,303 | 244,695 | 906,434 | 726,795 | |
Operating income | 22,542 | 15,245 | 66,925 | 43,642 | |
Interest expense | 0 | 0 | 0 | 0 | |
Loss on extinguishment of debt | 0 | 0 | |||
Income (loss) before income taxes | 22,542 | 15,245 | 66,925 | 43,642 | |
Total assets | 707,402 | 743,568 | 707,402 | 743,568 | |
Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Finance charges and other revenues | 70,613 | 74,218 | 214,184 | 247,797 | |
Total revenues | 70,613 | 74,218 | 214,184 | 247,797 | |
Costs and expenses: | |||||
Cost of goods sold | 0 | 0 | 0 | 0 | |
Selling, general and administrative expense | 37,112 | 37,913 | 107,981 | 109,440 | |
Provision for bad debts | 26,496 | 27,421 | 19,462 | 176,442 | |
Charges and credits | 0 | 2,234 | |||
Total costs and expenses | 63,608 | 65,334 | 127,443 | 288,116 | |
Operating income | 7,005 | 8,884 | 86,741 | (40,319) | |
Interest expense | 5,206 | 11,563 | 20,498 | 39,778 | |
Loss on extinguishment of debt | 1,218 | 0 | |||
Income (loss) before income taxes | 1,799 | (2,679) | 65,025 | (80,097) | |
Total assets | 1,079,177 | 1,189,888 | 1,079,177 | 1,189,888 | |
Furniture and mattress | |||||
Revenues: | |||||
Total net sales | 106,756 | 82,793 | 310,505 | 232,670 | |
Furniture and mattress | Retail | |||||
Revenues: | |||||
Total net sales | 106,756 | 82,793 | 310,505 | 232,670 | |
Furniture and mattress | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Home appliance | |||||
Revenues: | |||||
Total net sales | 128,385 | 99,872 | 377,090 | 288,839 | |
Home appliance | Retail | |||||
Revenues: | |||||
Total net sales | 128,385 | 99,872 | 377,090 | 288,839 | |
Home appliance | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Consumer electronics | |||||
Revenues: | |||||
Total net sales | 46,751 | 35,517 | 133,202 | 118,677 | |
Consumer electronics | Retail | |||||
Revenues: | |||||
Total net sales | 46,751 | 35,517 | 133,202 | 118,677 | |
Consumer electronics | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Home office | |||||
Revenues: | |||||
Total net sales | 17,373 | 16,711 | 49,881 | 49,056 | |
Home office | Retail | |||||
Revenues: | |||||
Total net sales | 17,373 | 16,711 | 49,881 | 49,056 | |
Home office | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Other | |||||
Revenues: | |||||
Total net sales | 9,036 | 4,264 | 27,079 | 13,255 | |
Other | Retail | |||||
Revenues: | |||||
Total net sales | 9,036 | 4,264 | 27,079 | 13,255 | |
Other | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Product sales | |||||
Revenues: | |||||
Total net sales | 308,301 | 239,157 | 897,757 | 702,497 | |
Product sales | Retail | |||||
Revenues: | |||||
Total net sales | 308,301 | 239,157 | 897,757 | 702,497 | |
Product sales | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Repair service agreement commissions | |||||
Revenues: | |||||
Total net sales | 23,769 | 17,465 | 66,600 | 57,730 | |
Repair service agreement commissions | Retail | |||||
Revenues: | |||||
Total net sales | 23,769 | 17,465 | 66,600 | 57,730 | |
Repair service agreement commissions | Credit | |||||
Revenues: | |||||
Total net sales | 0 | 0 | 0 | 0 | |
Service revenues | |||||
Revenues: | |||||
Total net sales | 2,513 | 3,150 | 8,307 | 9,611 | |
Service revenues | Retail | |||||
Revenues: | |||||
Total net sales | 2,513 | 3,150 | 8,307 | 9,611 | |
Service revenues | Credit | |||||
Revenues: | |||||
Total net sales | $ 0 | $ 0 | $ 0 | $ 0 | |
Outside of US | |||||
Segment Reporting Information [Line Items] | |||||
Number of stores | store | 0 | 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Nov. 23, 2021 | Oct. 31, 2021 |
Subsequent Event [Line Items] | ||
Original principal amount | $ 471,810 | |
Proceeds from issuance of debt | $ 468,377 | |
2021 Asset Backed Fixed Rate Notes | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Original principal amount | $ 377,800 | |
Proceeds from issuance of debt | 375,200 | |
Class A, Series 2021-A Asset Backed Fixed Rate Notes | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Original principal amount | $ 247,800 | |
Interest rate on notes | 1.05% | |
Class B, Series 2021-B Asset Backed Fixed Rate Notes | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Original principal amount | $ 66,100 | |
Interest rate on notes | 2.87% | |
Class C, Series 2021-B Asset Backed Fixed Rate Notes | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Original principal amount | $ 63,900 | |
Interest rate on notes | 4.59% |