Indiana | 47-4850538 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Item 5.07. | Submission of Matters to a Vote of Security Holders |
Director Nominee | For | Withheld | Broker Non-Votes | ||||||
Gregory M. Bettinelli | 19,527,599 | 111,138 | 5,637,430 | ||||||
William P. Carmichael | 19,529,995 | 108,742 | 5,637,430 | ||||||
Lawrence P. Castellani | 19,511,584 | 127,153 | 5,637,430 | ||||||
Benjamin D. Geiger | 19,517,913 | 120,824 | 5,637,430 | ||||||
Kenneth J. Kocher | 19,532,330 | 106,407 | 5,637,430 | ||||||
Catherine A. Langham | 19,510,681 | 128,056 | 5,637,430 | ||||||
John M. Roth | 19,515,477 | 123,260 | 5,637,430 | ||||||
Peter M. Starrett | 19,511,594 | 127,143 | 5,637,430 | ||||||
Kathleen C. Tierney | 19,517,033 | 121,704 | 5,637,430 |
For | Against | Abstain | Broker Non-Votes | |||||||
25,200,911 | 66,559 | 8,697 | — |
Item 7.01. | Regulation FD Disclosure |
Item 9.01. | Financial Statements and Exhibits |
Exhibit No. | Description | |
99.1 | Press release of hhgregg, Inc. dated August 4, 2016. | |
99.2 | Press release of hhgregg, Inc. dated August 1, 2016 |
hhgregg, Inc. | ||||
Date: August 4, 2016 | By: | /s/ Robert J. Riesbeck | ||
Robert J. Riesbeck | ||||
President and Chief Executive Officer and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press release of hhgregg, Inc. dated August 4, 2016. | |
99.2 | Press release of hhgregg, Inc. dated August 1, 2016 |
• | Net sales decreased 4.0% to $424 million compared to prior year first fiscal quarter. |
• | Comparable store sales decreased 3.9% compared to the prior year first fiscal quarter, a sequential improvement compared to the prior year fiscal quarter. Appliance comparable store sales increased 3.7%. |
• | Continued to successfully shift more sales mix to appliances, which accounted for 64% of sales for the first fiscal quarter. |
• | Gross margin increased to 31.0% compared to 30.5% in the prior year first fiscal quarter. |
• | Net loss per diluted share was $0.26. Net loss per diluted share, as adjusted, was $0.21. In the prior year first fiscal quarter, net loss per diluted share was $0.32 and net loss per diluted share, as adjusted, was $0.17. |
• | As of June 30, 2016, there were no borrowings outstanding on the recently amended $300 million credit facility. |
Three Months Ended | ||||||||
June 30, | ||||||||
(unaudited, amounts in thousands, except share and per share data) | 2016 | 2015 | ||||||
Net sales | $ | 423,572 | $ | 441,063 | ||||
Net sales % decrease | (4.0 | )% | (6.6 | )% | ||||
Comparable store sales % decrease (1) | (3.9 | )% | (6.3 | )% | ||||
Gross profit as a % of net sales | 31.0 | % | 30.5 | % | ||||
SG&A as a % of net sales | 25.5 | % | 25.2 | % | ||||
Net advertising expense as a % of net sales | 5.4 | % | 5.2 | % | ||||
Depreciation and amortization expense as a % of net sales | 1.6 | % | 1.9 | % | ||||
Loss from operations as a % of net sales | (1.5 | )% | (1.9 | )% | ||||
Net interest expense as a % of net sales | 0.2 | % | 0.1 | % | ||||
Net loss | $ | (7,227 | ) | $ | (8,755 | ) | ||
Net loss, as adjusted (2) | $ | (5,742 | ) | $ | (4,822 | ) | ||
Net loss per diluted share | $ | (0.26 | ) | $ | (0.32 | ) | ||
Net loss per diluted share, as adjusted (2) | $ | (0.21 | ) | $ | (0.17 | ) | ||
Adjusted EBITDA | $ | 2,016 | $ | 4,132 | ||||
Weighted average shares outstanding—diluted | 27,741,261 | 27,680,209 | ||||||
Number of stores open at the end of period | 226 | 227 |
(1) | Comprised of net sales at stores in operation for at least 14 full months, including remodeled and relocated stores, as well as net sales for the Company’s e-commerce site. |
(2) | Amounts are adjusted to exclude the impact of severance and personnel costs related to organizational changes related to our transformation efforts, consulting expenses paid to outside parties to assist with our transformation efforts, costs associated with our logistics optimization project and debt issuance costs written off with the June 2016 amendment to our Facility. See the attached reconciliation of non-GAAP measures to GAAP measures |
Net Sales Mix Summary | Comparable Store Sales Summary | |||||||||||
Three Months Ended June 30 | Three Months Ended June 30 | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Appliances | 64 | % | 59 | % | 3.7 | % | (2.2 | )% | ||||
Consumer electronics (1) | 30 | % | 35 | % | (17.4 | )% | (14.8 | )% | ||||
Home products (2) | 6 | % | 6 | % | 0.3 | % | 12.1 | % | ||||
Total | 100 | % | 100 | % | (3.9 | )% | (6.3 | )% |
(1) | Primarily consists of televisions, audio, personal electronics, computers and tablets and accessories. |
(2) | Primarily consists of furniture and mattresses. |
Comparable Store Sales | Average Selling Price | Sales Unit Volume | |||||
Appliances | 3.7 | % | Decrease | Increase | |||
Consumer electronics (1) | (17.4 | )% | Decrease | Decrease | |||
Home products (2) | 0.3 | % | Increase | Decrease | |||
Total | (3.9 | )% |
• | The Company's increase in gross profit margin for the period was primarily a result of a favorable product sales mix to categories with higher gross margin rates in addition to higher gross margin rates in appliances and home products, partially offset by lower gross profit margin rates in consumer electronics. |
• | The decrease in advertising expense of $0.2 million for the first fiscal quarter was due to a reduction of gross advertising spend driven by continued efficiency and effectiveness in our advertising spend. |
• | The increase in SG&A as a percentage of net sales to 25.5% from 25.2% for the three month comparable prior year period was primarily a result of: |
▪ | Increase of 34 basis points in occupancy costs due primarily to increased utility expenses and the deleveraging effect of the sales decline. |
▪ | Increase of 32 basis points in delivery services primarily due to the increased number of deliveries in all categories due to free delivery promotions. |
▪ | Increase of 17 basis points in wages primarily due to one time labor costs related to the distribution center consolidation. |
▪ | Increase of 13 basis points for credit card charge backs. |
▪ | Decrease of 86 basis points for consulting expenses incurred in the prior year to assist in our cost saving initiatives for fiscal 2016. |
Contact: | Lance Peterson, Director, Finance & Investor Relations |
investorrelations@hhgregg.com | |
(317) 848-8710 |
Three Months Ended | |||||||
June 30, 2016 | June 30, 2015 | ||||||
(In thousands, except share and per share data) | |||||||
Net sales | $ | 423,572 | $ | 441,063 | |||
Cost of goods sold | 292,063 | 306,706 | |||||
Gross profit | 131,509 | 134,357 | |||||
Selling, general and administrative expenses | 108,109 | 111,104 | |||||
Net advertising expense | 22,869 | 23,054 | |||||
Depreciation and amortization expense | 6,978 | 8,369 | |||||
Loss from operations | (6,447 | ) | (8,170 | ) | |||
Other expense (income): | |||||||
Interest expense | 785 | 590 | |||||
Interest income | (5 | ) | (5 | ) | |||
Total other expense | 780 | 585 | |||||
Loss before income taxes | (7,227 | ) | (8,755 | ) | |||
Income taxes | — | — | |||||
Net loss | $ | (7,227 | ) | $ | (8,755 | ) | |
Net loss per share | |||||||
Basic and diluted | $ | (0.26 | ) | $ | (0.32 | ) | |
Weighted average shares outstanding-basic and diluted | 27,741,261 | 27,680,209 |
Three Months Ended | ||||||
June 30, 2016 | June 30, 2015 | |||||
Net sales | 100.0 | % | 100.0 | % | ||
Cost of goods sold | 69.0 | 69.5 | ||||
Gross profit | 31.0 | 30.5 | ||||
Selling, general and administrative expenses | 25.5 | 25.2 | ||||
Net advertising expense | 5.4 | 5.2 | ||||
Depreciation and amortization expense | 1.6 | 1.9 | ||||
Loss from operations | (1.5 | ) | (1.9 | ) | ||
Other expense (income): | ||||||
Interest expense | 0.2 | 0.1 | ||||
Interest income | — | — | ||||
Total other expense | 0.2 | 0.1 | ||||
Loss before income taxes | (1.7 | ) | (2.0 | ) | ||
Income taxes | — | — | ||||
Net loss | (1.7 | ) | (2.0 | ) |
June 30, 2016 | March 31, 2016 | June 30, 2015 | ||||||||||
(In thousands, except share data) | ||||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash | $ | 1,214 | $ | 3,703 | $ | 9,742 | ||||||
Accounts receivable—trade, less allowances of $3, $5 and $13 as of June 30, 2016, March 31, 2016 and June 30, 2015, respectively | 17,131 | 11,106 | 17,178 | |||||||||
Accounts receivable—other | 18,672 | 14,937 | 16,109 | |||||||||
Merchandise inventories, net | 292,025 | 256,559 | 324,551 | |||||||||
Prepaid expenses and other current assets | 10,021 | 6,333 | 10,229 | |||||||||
Income tax receivable | 1,107 | 1,130 | 5,345 | |||||||||
Total current assets | 340,170 | 293,768 | 383,154 | |||||||||
Net property and equipment | 85,236 | 87,472 | 123,985 | |||||||||
Deferred financing costs, net | 2,432 | 1,257 | 1,661 | |||||||||
Deferred income taxes | — | — | 7,816 | |||||||||
Other assets | 3,239 | 2,855 | 2,914 | |||||||||
Total long-term assets | 90,907 | 91,584 | 136,376 | |||||||||
Total assets | $ | 431,077 | $ | 385,352 | $ | 519,530 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 145,383 | $ | 107,474 | $ | 167,108 | ||||||
Line of credit | — | — | — | |||||||||
Customer deposits | 54,682 | 43,235 | 49,737 | |||||||||
Accrued liabilities | 49,466 | 43,370 | 52,161 | |||||||||
Deferred income taxes | — | — | 7,816 | |||||||||
Total current liabilities | 249,531 | 194,079 | 276,822 | |||||||||
Long-term liabilities: | ||||||||||||
Deferred rent | 56,598 | 59,101 | 66,107 | |||||||||
Other long-term liabilities | 10,381 | 10,818 | 10,870 | |||||||||
Total long-term liabilities | 66,979 | 69,919 | 76,977 | |||||||||
Total liabilities | 316,510 | 263,998 | 353,799 | |||||||||
Stockholders’ equity: | ||||||||||||
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2016, March 31, 2016 and June 30, 2015, respectively | — | — | — | |||||||||
Common stock, par value $.0001; 150,000,000 shares authorized; 41,291,415, 41,204,660 and 41,204,660 shares issued; and 27,794,733, 27,707,978 and 27,707,978 outstanding as of June 30, 2016, March 31, 2016, and June 30, 2015, respectively | 4 | 4 | 4 | |||||||||
Additional paid-in capital | 304,765 | 304,325 | 302,578 | |||||||||
Accumulated deficit | (39,974 | ) | (32,747 | ) | 13,377 | |||||||
Common stock held in treasury at cost; 13,496,682 shares as of June 30, 2016, March 31, 2016, and June 30, 2015 | (150,228 | ) | (150,228 | ) | (150,228 | ) | ||||||
Total stockholders’ equity | 114,567 | 121,354 | 165,731 | |||||||||
Total liabilities and stockholders’ equity | $ | 431,077 | $ | 385,352 | $ | 519,530 |
Three Months Ended | |||||||
June 30, 2016 | June 30, 2015 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (7,227 | ) | $ | (8,755 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 6,978 | 8,369 | |||||
Amortization of deferred financing costs | 135 | 135 | |||||
Stock-based compensation | 440 | 898 | |||||
Excess tax benefit from stock based compensation | 126 | — | |||||
Gain on sales of property and equipment | (63 | ) | (78 | ) | |||
Tenant allowances received from landlords | — | 580 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable—trade | (6,025 | ) | (5,277 | ) | |||
Accounts receivable—other | (3,735 | ) | 46 | ||||
Merchandise inventories | (35,466 | ) | (67,082 | ) | |||
Income tax receivable | 23 | (19 | ) | ||||
Prepaid expenses and other assets | (4,004 | ) | (3,645 | ) | |||
Accounts payable | 44,905 | 55,081 | |||||
Customer deposits | 11,447 | 995 | |||||
Accrued liabilities | 6,096 | 5,438 | |||||
Deferred rent | (2,503 | ) | (1,848 | ) | |||
Other long-term liabilities | (370 | ) | (1,072 | ) | |||
Net cash provided by (used in) operating activities | 10,757 | (16,234 | ) | ||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (3,910 | ) | (4,304 | ) | |||
Proceeds from sales of property and equipment | 4 | 11 | |||||
Purchases of corporate-owned life insurance | (68 | ) | (73 | ) | |||
Net cash used in investing activities | (3,974 | ) | (4,366 | ) | |||
Cash flows from financing activities: | |||||||
Net repayments on inventory financing facility | (7,836 | ) | (59 | ) | |||
Payment of financing costs | (1,436 | ) | — | ||||
Net cash used in financing activities | (9,272 | ) | (59 | ) | |||
Net decrease in cash and cash equivalents | (2,489 | ) | (20,659 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 3,703 | 30,401 | |||||
End of period | $ | 1,214 | $ | 9,742 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 647 | $ | 459 | |||
Income taxes (received) paid | $ | (23 | ) | $ | 19 | ||
Capital expenditures included in accounts payable | $ | 2,105 | $ | 1,352 |
Three Months Ended June 30, | |||||||
(Amounts in thousands, except share data) | 2016 | 2015 | |||||
Net loss as reported | $ | (7,227 | ) | $ | (8,755 | ) | |
Non-cash adjustments to net loss: | |||||||
Severance and personnel costs (1) | 674 | — | |||||
Consulting fees (2) | 138 | 3,933 | |||||
Other (3) | 673 | — | |||||
Net loss, as adjusted | $ | (5,742 | ) | $ | (4,822 | ) | |
Weighted average shares outstanding – Diluted | 27,741,261 | 27,680,209 | |||||
Net loss per diluted share as reported | $ | (0.26 | ) | $ | (0.32 | ) | |
Net loss per diluted share, as adjusted | $ | (0.21 | ) | $ | (0.17 | ) |
(1) | Expenses incurred related to our organizational changes in our transformation efforts. |
(2) | Costs paid to outside consultants to assist with the Company's transformation efforts. |
(3) | Consists of $0.5 million of costs associated with our logistics optimization project and $0.1 million of deferred amortization fees written off with the June 2016 amendment to our Facility. |
Three Months Ended June 30, | |||||||
(Amounts in thousands) | 2016 | 2015 | |||||
Net loss as reported | $ | (7,227 | ) | $ | (8,755 | ) | |
Adjustments: | |||||||
Depreciation and amortization | 6,978 | 8,369 | |||||
Interest expense, net | 780 | 585 | |||||
Income tax expense | — | — | |||||
EBITDA | $ | 531 | $ | 199 | |||
Severance and personnel costs (1) | 674 | — | |||||
Consulting fees (2) | 138 | 3,933 | |||||
Other (3) | 673 | — | |||||
Adjusted EBITDA | $ | 2,016 | $ | 4,132 |
(1) | Expenses incurred related to our transformation efforts. |
(2) | Costs paid to outside consultants to assist with the Company's transformation efforts. |
(3) | Consists of $0.5 million of costs associated with our logistics optimization project and $0.1 million of deferred amortization fees written off with the June 2016 amendment to our Facility. |
• | EBITDA does not reflect the Company's cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
• | EBITDA does not reflect interest expense or the cash requirements necessary to service interest payments on the Company's debt; |
• | EBITDA does not reflect tax expense or the cash requirements necessary to pay for tax obligations; and |
• | Although depreciation and amortization are non-cash charges, the asset being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. |
FY2015 | FY2016 | FY2017 | ||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | ||||||||||||||||||
Beginning Store Count | 228 | 229 | 228 | 228 | 228 | 227 | 227 | 227 | 226 | |||||||||||||||||
Store Openings | 1 | — | — | — | 1 | — | — | — | — | |||||||||||||||||
Store Closings | — | (1 | ) | — | — | (2 | ) | — | — | (1 | ) | — | ||||||||||||||
Ending Store Count | 229 | 228 | 228 | 228 | 227 | 227 | 227 | 226 | 226 |