Exhibit 99.1
Conn's, Inc. Reports Record Earnings for Fourth Quarter and Fiscal Year 2004
BEAUMONT, Texas--(BUSINESS WIRE)--April 12, 2004--Conn's, Inc.
(NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer
electronics, home office products, bedding and lawn and garden
products, today announced record earnings results for the fourth
quarter and year ended January 31, 2004.
Net income available for common stockholders for the fourth
quarter increased 46.5% to $8.2 million compared to $5.6 million for
the fourth quarter of last year. Diluted earnings per share available
for common stockholders increased 11.8% to $0.38 from $0.34 in the
prior year. Total revenues for the quarter ended January 31, 2004
increased 19.4% to $144.0 million compared with $120.6 million for the
quarter ended January 31, 2003. This increase in revenue included net
sales increases of $22.4 million, or 21.1%, and increases from
"Finance charges and other" of $1.0 million, or 6.9%. Same store sales
(revenues earned in stores operated for the entirety of both periods)
increased 11.7% for the fourth quarter of fiscal 2004. On a pro forma
basis, as though all shares issued in the initial public offering were
outstanding in both periods for the full period, diluted earnings per
share increased 33.3% to $0.36 for the quarter ended January 31, 2004
from $0.27 for the previous period in fiscal 2003.
Total revenues for the year ended January 31, 2004 increased 12.0%
to $499.3 million compared with $446.0 million for the year ended
January 31, 2003. This increase in revenue included net sales
increases of $51.4 million, or 13.2%, and increases from "Finance
charges and other" of $1.9 million, or 3.4%. Same store sales
increased 2.6% for the year ended January 31, 2004. Net income
available for common stockholders for the year ended January 31, 2004
increased 21.2% to $22.4 million compared to $18.5 million for the
same period last year. Diluted earnings per share available for the
common stockholder increased 10.9% to $1.22 for the year ended January
31, 2004 from $1.10 in the prior year. On a pro forma basis, as though
all shares issued in the initial public offering were outstanding in
both periods for the full year, diluted earnings per share increased
15.7% to $1.03 for the year ended January 31, 2004 from $0.89 for the
previous fiscal year.
During the fourth quarter, the Company continued its expansion
into the Dallas/Fort Worth metroplex with the opening of one
additional store in November, bringing the store count in this market
to three as of January 31, 2004. Two additional stores were opened in
this market in February and April, bringing the Company's total store
count to 47. The Company is in the process of developing additional
sites in this market and expects to open an additional three to five
new locations in this market in the fiscal year 2005. By the end of
January 2005, the Company expects to operate approximately 50 to 52
stores, of which approximately 8 to 10 will be located in the
Dallas/Fort Worth metroplex.
"We are obviously pleased with our performance for the fourth
quarter, particularly with the same store sales growth of 11.7%," said
Thomas J. Frank, Conn's Chairman and Chief Executive Officer. "We feel
that this sales performance certainly illustrates a turn around in our
recent same store sales trend. Our emphasis on track sales and our
ability to take advantage of new product opportunities in bedding and
lawn and garden categories seems to be providing positive results. Our
holiday selling season was impressive and we saw progressively higher
increases in same store sales in all three months of the quarter."
As a result of the completion of its initial public offering, the
Company paid off all interest bearing debt on its balance sheet in
December 2003. The net proceeds of the offering after underwriters'
discount and expenses were approximately $58.4 million, of which $51.3
million was used to pay off debt.
EPS Guidance
The Company also issued guidance for the first quarter of fiscal
year 2005 of earnings per diluted share of approximately $0.30 to
$0.32. Guidance issued for the entire 2005 fiscal year included
earnings per diluted share of approximately $1.18 to $1.20, an
increase of $0.15 to $0.17 per share from the pro forma earnings per
share of $1.03 as though all shares issued in the initial public
offering were outstanding since February 1, 2003. Comparable store
sales increases are still projected in the low to mid single digit
range. The quarterly and full year estimate of earnings per diluted
share is calculated in accordance with generally accepted accounting
principles. Such estimates are most comparable to the pro forma
earnings per share information for the prior year that include initial
public offering shares as though they were outstanding for the full
year ended January 31, 2004.
Conference Call Information
Conn's, Inc. will host a conference call and audio webcast
Tuesday, April 13, 2004 at 10:00 AM, CST, to discuss financial
results for the quarter and year ended January 31, 2004. The webcast
will be available at www.conns.com and will be archived for 30 days.
The webcast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors.
Individual investors can listen to the call through CCBN's individual
investor center at www.fulldisclosure.com. Institutional investors can
access the call via StreetEvents (www.streetevents.com).
About Conn's, Inc.
The Company is a specialty retailer currently operating 46 retail
locations in Texas and Louisiana. It sells major home appliances,
including refrigerators, freezers, washers, dryers and ranges, and a
variety of consumer electronics, including projection, plasma and LCD
televisions, camcorders, VCRs, DVD players and home theater products.
The Company also sells home office equipment, lawn and garden products
and bedding, and continues to introduce additional product categories
for the home to help increase same store sales and to respond to our
customers' product needs.
Unlike many of its competitors, the Company provides in-house
credit options for its customers. Historically, it has financed over
56% of retail sales. Customer receivables are financed substantially
through an asset-backed securitization facility, from which the
Company derives servicing fee income and interest income from these
assets. The Company transfers receivables, consisting of retail
installment contracts and revolving accounts extended to its
customers, to a qualifying special purpose entity, or the issuer, in
exchange for cash and subordinated securities represented by
asset-backed and variable funding notes issued to third parties.
This press release contains forward-looking statements that
involve risks and uncertainties. Such forward-looking statements
generally can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "intend," "could," "estimate,"
"should," "anticipate," or "believe," or the negative thereof or
variations thereon or similar terminology. Although the Company
believes that the expectations reflected in such forward-looking
statements will prove to be correct, the Company can give no assurance
that such expectations will prove to have been correct. The actual
future performance of the Company could differ materially from such
statements. Factors that could cause or contribute to such differences
include, but are not limited to: the Company's growth strategy and
plans regarding opening new stores and entering new markets; the
Company's intention to update or expand existing stores; the Company's
estimated capital expenditures and costs related to the opening of new
stores or the update or expansion of existing stores; the Company's
cash flow from operations, borrowings from its revolving line of
credit and proceeds from securitizations to fund operations, debt
repayment and expansion; growth trends and projected sales in the home
appliance and consumer electronics industry and the Company's ability
to capitalize on such growth; relationships with the Company's key
suppliers; the results of the Company's litigation; interest rates;
weather conditions in the Company's markets; changes in the Company's
stock price; and the actual number of shares of common stock
outstanding. Further information on these risk factors is included in
the Company's filings with the Securities and Exchange Commission,
including the Company's current report on Form 8-K filed in connection
with this press release. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date
of this press release. Except as required by law, the Company is not
obligated to publicly release any revisions to these forward-looking
statements to reflect the events or circumstances after the date of
this press release or to reflect the occurrence of unanticipated
events.
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
Three Months Ended Year Ended
January 31, January 31,
------------------- -------------------
2003 2004 2003 2004
--------- --------- --------- ---------
(unaudited)
Revenues
Total net $106,085 $128,500 $389,497 $440,918
Finance charges and other 14,501 15,504 56,477 58,392
--------- --------- --------- ---------
Total revenues 120,586 144,004 445,974 499,310
Cost and Expenses
Cost of goods sold,
including warehousing and
occupancy costs 75,621 91,079 272,559 313,637
Cost of parts sold,
including warehousing and
occupancy costs 979 984 4,397 4,075
Selling, general and
administrative expense 31,451 37,614 125,712 135,174
Provision for bad debts 1,291 1,254 4,125 4,657
--------- --------- --------- ---------
Total cost and expenses 109,342 130,931 406,793 457,543
--------- --------- --------- ---------
Operating income 11,244 13,073 39,181 41,767
Interest expense 1,758 574 7,236 4,577
--------- --------- --------- ---------
Income before income taxes 9,486 12,499 31,943 37,190
Total provision for income
taxes 3,346 4,089 11,342 12,850
--------- --------- --------- ---------
Net income 6,140 8,410 20,601 24,340
Less preferred dividends (533) (195) (2,133) (1,954)
--------- --------- --------- ---------
Net income available for common
stockholders $5,607 $8,215 $18,468 $22,386
========= ========= ========= =========
Earnings per share:
Basic $0.34 $0.40 $1.10 $1.26
Diluted $0.34 $0.38 $1.10 $1.22
Average common shares
outstanding:
Basic 16,720 20,744 16,724 17,726
Diluted 16,720 21,379 16,724 18,335
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
January 31, January 31,
2003 2004
Assets
Current Assets
Cash and cash equivalents $2,448 $12,942
Interest in securitized assets and accounts
receivable, net 73,420 93,940
Inventories 46,118 53,742
Deferred income taxes 4,221 4,148
Prepaid expenses and other assets 3,473 3,031
------------ -----------
Total current assets 129,680 167,803
Non-current deferred tax assets and other
costs 5,328 4,195
Total property and equipment, net 38,266 54,825
Goodwill and other 8,524 7,937
------------ -----------
Total assets $181,798 $234,760
============ ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $7,500 $-
Current portion of long-term debt 7,928 338
Accounts payable 24,501 26,412
Fair value of derivatives 2,895 1,121
Other current liabilities 16,872 22,866
------------ -----------
Total current liabilities 59,696 50,737
Long-term debt 36,564 14,174
Non-current deferred tax liability and other 1,227 1,288
Fair value of derivatives 1,642 202
Minority interest in SRDS - 1,769
Total stockholders' equity 82,669 166,590
------------ -----------
Total liabilities and stockholders' equity $181,798 $234,760
============ ===========
CONN'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year
Ended January 31,
2003 2004
Net cash provided (used) by operating activities $(1,151) $12,393
-------- --------
Cash flows from investing activities
Purchase of property and equipment (15,070) (9,401)
Proceeds from sale of property 14 1,291
-------- --------
Net cash used by investing activities (15,056) (8,110)
-------- --------
Cash flows from financing activities
Purchase of treasury stock (200) -
Net proceeds from sale or redemption of common and
preferred stock - 57,300
Net borrowings (payments) under bank credit
facilities 19,529 (46,999)
Debt issuance costs (492) (213)
Payment of promissory notes (1,753) (4,901)
-------- --------
Net cash provided (used) by financing activities 17,084 5,187
-------- --------
Impact on cash of consolidation of SRDS - 1,024
-------- --------
Net change in cash 877 10,494
Cash and cash equivalents
Beginning of the year 1,571 2,448
-------- --------
End of the year $2,448 $12,942
======== ========
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
PRO FORMA EARNINGS PER SHARE
(in thousands, except earnings per share)
Three Months Ended Year Ended
January 31, January 31,
------------------ -----------------
2003 2004 2003 2004
---------- ------- -------- --------
(unaudited)
Net income available for common
stockholders $5,607 $8,215 $18,468 $22,386
Add preferred dividends 533 195 2,133 1,954
---------- ------- -------- --------
Net income $6,140 $8,410 $20,601 $24,340
========== ======= ======== ========
Total shares outstanding pre-IPO 16,720 16,720 16,720 16,720
Shares issued in IPO, including
over-allotment 4,622 4,622 4,622 4,622
Conversion of preferred stock into
common 1,712 1,712 1,712 1,712
Weighted exercise of options - 9 - 2
Dilution due to outstanding
options - 609 - 609
---------- ------- -------- --------
Pro forma shares outstanding 23,054 23,672 23,054 23,665
========== ======= ======== ========
Pro forma diluted earnings per
share $0.27 $0.36 $0.89 $1.03
========== ======= ======== ========
Reconciliation of pro forma shares
outstanding to presentation
according to GAAP:
Pro forma shares outstanding 23,054 23,672 23,054 23,665
Adjustment since shares were
not outstanding for the full
year (6,334) (2,293) (6,330) (5,330)
---------- ------- -------- --------
Weighted diluted outstanding
shares according to GAAP 16,720 21,379 16,724 18,335
========== ======= ======== ========
The use of pro forma information is considered necessary to provide
the reader with more comparable earnings per share information year
over year. As a result of the IPO transaction, the additional shares
issued were significant relative to the shares outstanding in the
prior year and preferred dividends are no longer accrued or paid.
Consequently, the shares outstanding have been adjusted to reflect the
IPO transaction as though it took place on February 1, 2002 and
preferred dividends have been eliminated in all periods in order to
compute earnings per share on a more comparable basis.
CONTACT: Conn's, Inc., Beaumont
Thomas J. Frank, 409-832-1696 Ext. 3218